<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 26, 1997
REGISTRATION NO. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
CITYSCAPE FINANCIAL CORP.
AND OTHER REGISTRANT
(SEE "CALCULATION OF REGISTRATION FEE")
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
DELAWARE 11-2994671
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
</TABLE>
565 TAXTER ROAD
ELMSFORD, NEW YORK 10523-5200
(914) 592-6677
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
JONAH L. GOLDSTEIN, ESQ.
GENERAL COUNSEL
CITYSCAPE FINANCIAL CORP.
565 TAXTER ROAD
ELMSFORD, NEW YORK 10523-5200
(914) 592-6677
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
------------------------
WITH A COPY TO:
SEAN P. GRIFFITHS, ESQ.
GIBSON, DUNN & CRUTCHER LLP
200 PARK AVENUE
NEW YORK, NEW YORK 10166
(212) 351-4000
(FACSIMILE) (212) 351-4035
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
===================================================================================================================
PROPOSED MAXIMUM
PROPOSED MAXIMUM AGGREGATE
TITLE OF EACH CLASS OF SECURITIES AMOUNT TO BE OFFERING PRICE OFFERING AMOUNT OF
TO BE REGISTERED REGISTERED PER UNIT PRICE(1) REGISTRATION FEE
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
12 3/4% Series A Senior Notes due 2004.... $300,000,000 100% $300,000,000 $90,910
- -------------------------------------------------------------------------------------------------------------------
Guarantees of the 12 3/4% Series A Senior
Notes due 2004.......................... $300,000,000 100% (2) (2)
===================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(f).
(2) No separate consideration will be received for the Guarantees.
* Other Registrant
<TABLE>
<CAPTION>
EXACT NAME OF REGISTRANT STATE OR OTHER INSTITUTION PRIMARY STANDARD INDUSTRIAL IRS EMPLOYEE
AS SPECIFIED IN ITS CHARTER OF INCORPORATION OR ORGANIZATION CLASSIFICATION CODE NUMBER IDENTIFICATION NUMBER
--------------------------------- -------------------------------- --------------------------- ---------------------
<S> <C> <C> <C>
Cityscape Corp. New York 6162 13-3430697
</TABLE>
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
================================================================================
<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION DATED JUNE 26, 1997
PROSPECTUS
OFFER FOR ALL OUTSTANDING
12 3/4% SENIOR NOTES DUE 2004
IN EXCHANGE FOR
12 3/4% SERIES A SENIOR NOTES DUE 2004 OF
LOGO
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME ON , 1997, UNLESS EXTENDED
------------------------
Cityscape Financial Corp., a Delaware corporation (the "Company"), hereby
offers to exchange an aggregate principal amount of up to $300,000,000 of its
12 3/4% Series A Senior Notes due 2004 (the "New Notes") for a like principal
amount of its 12 3/4% Senior Notes due 2004 (the "Old Notes") outstanding on the
date hereof upon the terms and subject to the conditions set forth in this
Prospectus and in the accompanying Letter of Transmittal (which together
constitute the "Exchange Offer"). The New Notes and the Old Notes are
collectively hereinafter referred to as the "Notes." The terms of the New Notes
are identical in all material respects to those of the Old Notes, except for
certain transfer restrictions and registration rights relating to the Old Notes.
The New Notes will be issued pursuant to, and entitled to the benefits of, the
Indenture governing the Old Notes.
The New Notes will be general senior unsecured obligations of the Company
ranking pari passu in right of payment with all other existing and future
subordinated Indebtedness (as defined herein) of the Company and senior in right
of payment to any Subordinated Obligations (as defined herein) of the Company.
Prior to the receipt of an Investment Grade Rating (as defined herein), the
Notes will be unconditionally guaranteed, on a senior basis, by all domestic
Restricted Subsidiaries (as defined herein) of the Company other than Special
Purpose Subsidiaries (as defined herein). As of the date hereof, the sole
Subsidiary Guarantor (as defined herein) will be Cityscape Corp. ("CSC"). In
addition, the Subsidiary Guarantee (as defined herein) of CSC will be secured by
a pledge of an Intercompany Note (as defined herein) from City Mortgage
Corporation Limited, the Company's wholly-owned indirect United Kingdom
subsidiary. The New Notes will be effectively subordinated in right of payment
to all secured Indebtedness of the Company and any secured Indebtedness of the
Subsidiary Guarantors, except in the case of the Subsidiary Guarantees to the
extent secured by the Intercompany Note. In addition, the New Notes will be
structurally subordinated to any indebtedness of the Company's subsidiaries that
are not Subsidiary Guarantors. As of March 31, 1997, after giving effect to the
offering of the Old Notes and the application of the net proceeds therefrom, the
Company and its subsidiaries would have had $387.1 million of unsubordinated
Indebtedness of which $87.1 million is secured Indebtedness (of which $82.5
million is Warehouse Indebtedness (as defined herein)).
The New Notes will bear interest from and including the date of consummation
of the Exchange Offer. Interest on the New Notes will be payable semiannually on
June 1 and December 1 of each year, commencing December 1, 1997. Additionally,
interest on the New Notes will accrue from the last interest payment date on
which interest was paid on the Old Notes surrendered in exchange therefor or, if
no interest has been paid on the Old Notes, from the date of original issue of
the Old Notes.
The New Notes are being offered hereunder in order to satisfy certain
obligations of the Company contained in the Registration Rights Agreement dated
as of May 14, 1997 (the "Registration Rights Agreement"), among the Company, CSC
and the Initial Purchasers (as defined herein), with respect to the initial sale
of the Old Notes. The Company will not receive any proceeds from the Exchange
Offer. The Company will pay all the expenses incident to the Exchange Offer.
Tenders of Old Notes pursuant to the Exchange Offer may be withdrawn at any time
prior to the Expiration Date (as defined herein) for the Exchange Offer. In the
event the Company terminates the Exchange Offer and does not accept for exchange
any Old Notes with respect to the Exchange Offer, the Company will promptly
return such Old Notes to the holders thereof. See "The Exchange Offer."
Each broker-dealer that receives New Notes for its own account pursuant to
the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of such New Notes. The Letter of Transmittal states
that by so acknowledging and by delivery of a prospectus, a broker-dealer will
not be deemed to admit that it is an "underwriter" within the meaning of the
Securities Act of 1933, as amended (the "Securities Act"). This Prospectus, as
it may be amended or supplemented from time to time, may be used by a broker-
dealer in connection with resales of New Notes received in exchange for Old
Notes where such Old Notes were acquired by such broker-dealer as a result of
market-making activities or other trading activities. The Company has agreed
that, for a period of 180 days after the Expiration Date, it will make this
Prospectus available to any broker-dealer for use in connection with any such
resale. See "Plan of Distribution."
Prior to the Exchange Offer, there has been no public market for the Old
Notes. If a market for the New Notes should develop, such New Notes could trade
at a discount from their principal amount. The Company currently does not intend
to list the New Notes on any securities exchange or to seek approval for
quotation through any automated quotation system and no active public market for
the New Notes is currently anticipated. There can be no assurance that an active
public market for the New Notes will develop.
The Exchange Offer is not conditioned upon any minimum principal amount of
Old Notes being tendered for exchange pursuant to the Exchange Offer.
SEE "RISK FACTORS" COMMENCING ON PAGE 8 FOR A DISCUSSION OF CERTAIN FACTORS
THAT HOLDERS OF OLD NOTES SHOULD CONSIDER IN CONNECTION WITH THE EXCHANGE OFFER.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
THE DATE OF THIS PROSPECTUS IS , 1997
<PAGE> 3
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT PRESENTED
HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS ARE AVAILABLE UPON REQUEST FROM
THE COMPANY'S SECRETARY AT 565 TAXTER ROAD, ELMSFORD, NEW YORK 10523 (TELEPHONE:
914-592-6677). IN ORDER TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY REQUEST
SHOULD BE MADE BY , 1997.
FOR NEW HAMPSHIRE RESIDENTS ONLY:
NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A
LICENSE HAS BEEN FILED UNDER RSA 421-B WITH THE STATE OF NEW HAMPSHIRE NOR THE
FACT THAT A SECURITY IS EFFECTIVELY REGISTERED OR A PERSON IS LICENSED IN THE
STATE OF NEW HAMPSHIRE CONSTITUTES A FINDING BY THE SECRETARY OF STATE THAT ANY
DOCUMENT FILED UNDER RSA 421-B IS TRUE, COMPLETE AND NOT MISLEADING. NEITHER ANY
SUCH FACT NOR THE FACT THAT AN EXEMPTION OR EXCEPTION IS AVAILABLE FOR A
SECURITY OR TRANSACTION MEANS THAT THE SECRETARY OF STATE OF THE STATE OF NEW
HAMPSHIRE HAS PASSED IN ANY WAY UPON THE MERITS OR QUALIFICATIONS OF, OR
RECOMMENDED OR GIVEN APPROVAL TO, ANY PERSON, SECURITY OR TRANSACTION. IT IS
UNLAWFUL TO MAKE, OR CAUSE TO BE MADE, TO ANY PROSPECTIVE PURCHASER, CUSTOMER OR
CLIENT ANY REPRESENTATION INCONSISTENT WITH THE PROVISIONS OF THIS PARAGRAPH.
<PAGE> 4
AVAILABLE INFORMATION
The Company and the Subsidiary Guarantor have filed with the Securities and
Exchange Commission (the "Commission") a registration statement on Form S-4
(referred to herein, together with all amendments and exhibits, as the
"Registration Statement") under the Securities Act with respect to the Notes
offered hereby. This Prospectus, which constitutes a part of the Registration
Statement, does not contain all of the information set forth in the Registration
Statement, certain parts of which are omitted in accordance with the rules and
regulations of the Commission. For further information relating to the Notes and
to the Company, reference is made to the Registration Statement.
The Company is subject to the periodic reporting and other informational
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and in accordance therewith, files reports, proxy statements and other
information with the Commission. For further information with respect to the
Company, reference is hereby made to such reports and other information which
can be inspected and copied (at prescribed rates) at the public reference
facilities maintained by the Commission at 450 Fifth Street, N.W., Room 1025,
Washington, D.C. 20549 and at the Commission's regional offices located at Seven
World Trade Center, 13th Floor, New York, New York 10048 and at 500 West
Madison, Suite 1400, Chicago, Illinois 60661. Copies may also be obtained at
prescribed rates from the Public Reference Section of the Commission at 450
Fifth Street, N.W., Room 1024, Washington, D.C. 20549. The Commission also
maintains a Web site that contains reports, proxy and information statements and
other information regarding the Company at (http://www.sec.gov).
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents have been filed with the Commission and are hereby
incorporated by reference:
1. The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996;
2. The Company's Quarterly Report on Form 10-Q for the fiscal quarter
ended March 31, 1997; and
3. The Company's Current Reports on Form 8-K filed on April 11, 1997,
April 30, 1997 and May 20, 1997.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of the filing of the Registration
Statement of which this Prospectus forms a part and prior to the termination of
the offering of the Notes covered by this Prospectus shall be deemed to be
incorporated by reference herein and to be part hereof from the date of filing
such documents. Any statement contained herein or in a document, all or a
portion of which is incorporated or deemed to be incorporated by reference
herein, shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
The Company hereby undertakes to provide without charge to each person to
whom a copy of this Prospectus has been delivered, upon the oral or written
request of any such person, a copy of any or all of the documents incorporated
herein by reference (other than exhibits to such documents, unless such exhibits
are expressly incorporated by reference into such documents). Written requests
for such copies should be directed to the Company's Secretary at 565 Taxter
Road, Elmsford, New York 10523.
2
<PAGE> 5
SUMMARY
This Prospectus contains forward-looking statements which involve risks and
uncertainties. The Company's actual results could differ materially from those
anticipated in these forward-looking statements as a result of certain factors,
including those set forth under "Risk Factors."
THE COMPANY
Cityscape Financial Corp., a Delaware corporation ("Cityscape" or the
"Company"), is a consumer finance company engaged in the business of
originating, purchasing, selling and servicing mortgage loans secured primarily
by one- to four-family residences. The Company originates and purchases loans in
the US through its subsidiary Cityscape Corp., a New York corporation ("CSC"),
using a network of independent mortgage brokers and loan correspondents, and in
the United Kingdom (excluding Northern Ireland, the "UK") through its indirect
subsidiary City Mortgage Corporation Limited ("CSC-UK"), also using a network of
independent mortgage brokers. The majority of the Company's loans are made to
owners of single family residences who use the loan proceeds for such purposes
as debt consolidation, financing of home improvements and educational
expenditures. The Company focuses on lending to individuals who have impaired or
unsubstantiated credit histories and/or unverifiable income and require or seek
a high degree of personalized service and prompt response to their loan
applications. As a result, the Company's customers generally are not averse to
paying the higher interest rates that the Company charges for its loan programs
as compared to the interest rates charged by conventional mortgage sources.
The Company's principal executive office and mailing address is 565 Taxter
Road, Elmsford, New York 10523-5200 and its telephone number is (914) 592-6677.
For a more detailed discussion of the business of the Company, see the
Company's latest Annual Report on Form 10-K, which is incorporated by reference
herein.
RECENT DEVELOPMENTS
Series A Preferred Stock. In April 1997, the Company completed the private
placement of 5,000 shares of its 6% Convertible Preferred Stock, Series A (the
"Series A Preferred Stock"), with a liquidation preference (the "Liquidation
Preference") of $10,000 per share, and related five-year warrants to purchase
500,000 shares of Common Stock (the "Warrants"). The Series A Preferred Stock is
redeemable at the option of the Company at a redemption price equal to 105% of
the Liquidation Preference at any time prior to July 9, 1997 and thereafter at
120% under certain circumstances. The Series A Preferred Stock is convertible
into shares of Common Stock, subject to certain restrictions and redemption
rights, at a conversion price equal to the lowest daily sales price of the
Common Stock during the four consecutive trading days immediately preceding such
conversion, discounted by up to 4% and subject to certain adjustments. Through
June 1, 1997, an aggregate of 385 shares of Series A Preferred Stock had been
converted into an aggregate of 319,757 shares of Common Stock. The Company has
filed a registration statement with the Commission with respect to the resale of
the Common Stock issuable upon conversion of the Series A Preferred Stock or
exercise of the Warrants.
Conversion Transactions. In April 1997, the Company induced the conversion
of $14.0 million aggregate principal amount of its 6% Convertible Subordinated
Debentures due 2006 (the "Convertible Debentures") resulting in the issuance
upon conversion of 533,332 shares of Common Stock (at a conversion price of
$26.25 per share) pursuant to the terms of the Convertible Debentures. To induce
conversion, the Company issued an additional 342,708 shares of Common Stock and
paid the holders of the induced Convertible Debentures $420,000 in cash. In the
second quarter of 1997, these transactions will result in the reduction of
Convertible Debentures by $14.0 million, a charge to earnings in the amount of
$4.8 million related to the fair market value of such 342,708 shares ($4.4
million) and such cash payment and an increase in stockholders' equity of $18.4
million due to the issuance of the conversion shares and the inducement shares.
The net effect of these transactions will be an increase of $13.6 million to
stockholders' equity in the
3
<PAGE> 6
second quarter of 1997. To date, an aggregate of $14.1 million of Convertible
Debentures have been converted into Common Stock, including the induced
conversion described above. The Company has an effective registration statement
relating to the resale of the Convertible Debentures or the Common Stock
issuable upon conversion of the Convertible Debentures.
THE EXCHANGE OFFER
Securities Offered.......... Up to $300,000,000 aggregate principal amount of
12 3/4% Series A Senior Notes due 2004 (the "New
Notes"). The terms of the New Notes and Old Notes
are identical in all material respects, except
for certain transfer restrictions and
registration rights relating to the Old Notes.
The Exchange Offer.......... The New Notes are being offered in exchange for a
like principal amount of Old Notes. Old Notes may
be exchanged only in integral multiples of
$1,000. The issuance of the New Notes is intended
to satisfy obligations of the Company and CSC
contained in the Registration Rights Agreements.
Expiration Date; Withdrawal
of Tender................... The Exchange Offer will expire at 5:00 p.m. New
York City time, on , 1997, or such
later date and time to which it is extended by
the Company. The tender of Old Notes pursuant to
the Exchange Offer may be withdrawn at any time
prior to the Expiration Date. Any Old Notes not
accepted for exchange for any reason will be
returned without expense to the tendering holder
thereof as promptly as practicable after the
expiration or termination of the Exchange Offer.
Certain Conditions to the
Exchange Offer............ The Company's obligation to accept for exchange,
or to issue New Notes in exchange for, any Old
Notes is subject to certain customary conditions
relating to compliance with any applicable law,
order of any governmental agency or any
applicable interpretation by the staff of the
Commission, which may be waived by the Company in
its reasonable discretion. The Company currently
expects that each of the conditions will be
satisfied and that no waivers will be necessary.
See "The Exchange Offer -- Certain Conditions to
the Exchange Offer."
Procedures for Tendering Old
Notes..................... Each holder of Old Notes wishing to accept the
Exchange Offer must complete, sign and date the
Letter of Transmittal, or a facsimile thereof, in
accordance with the instructions contained herein
and therein, and mail or otherwise deliver such
Letter of Transmittal, or such facsimile,
together with such Old Notes and any other
required documentation, to the Exchange Agent (as
defined herein) at the address set forth herein.
See "The Exchange Offer -- Procedures for
Tendering Old Notes."
Use of Proceeds............. There will be no proceeds to the Company from the
exchange of Notes pursuant to the Exchange Offer.
Exchange Agent.............. The Chase Manhattan Bank is serving as the
Exchange Agent in connection with the Exchange
Offer.
4
<PAGE> 7
Federal Income Tax
Consequences.............. The exchange of Notes pursuant to the Exchange
Offer will not be a taxable event for federal
income tax purposes. See "Certain Federal Income
Tax Considerations."
CONSEQUENCES OF EXCHANGING OLD NOTES PURSUANT
TO THE EXCHANGE OFFER
Based on certain interpretive letters issued by the staff of the Commission
to third parties in unrelated transactions, holders of Old Notes (other than any
holder who is an "affiliate" of the Company within the meaning of Rule 405 under
the Securities Act) who exchange their Old Notes for New Notes pursuant to the
Exchange Offer generally may offer such New Notes for resale, resell such New
Notes, and otherwise transfer such New Notes without compliance with the
registration and prospectus delivery provisions of the Securities Act, provided
such New Notes are acquired in the ordinary course of the holder's business and
such holders have no arrangement with any person to participate in a
distribution of such New Notes. Each broker-dealer that receives New Notes for
its own account in exchange for Old Notes must acknowledge that it will deliver
a prospectus in connection with any resale of such New Notes. See "Plan of
Distribution." In addition, to comply with the securities laws of certain
jurisdictions, if applicable, the New Notes may not be offered or sold unless
they have been registered or qualified for sale in such jurisdiction or an
exemption from registration or qualification is available and is complied with.
The Company has agreed, pursuant to the Registration Rights Agreement and
subject to certain specified limitations therein, to register or qualify the New
Notes for offer or sale under the securities or blue sky laws of such
jurisdictions as any holder of the Notes reasonably requests in writing. If a
holder of Old Notes does not exchange such Old Notes for New Notes pursuant to
the Exchange Offer, such Old Notes will continue to be subject to the
restrictions on transfer contained in the legend thereon. In general, the Old
Notes may not be offered or sold, unless registered under the Securities Act,
except pursuant to an exemption from, or in a transaction not subject to, the
Securities Act and applicable state securities laws. See "The Exchange
Offer -- Consequences of Failure to Exchange; Resales of New Notes."
The Old Notes are currently eligible for trading in the Private Offerings,
Resales and Trading through Automated Linkages ("PORTAL") market. Following
commencement of the Exchange Offer but prior to its consummation, the Old Notes
may continue to be traded in the PORTAL market. Following consummation of the
Exchange Offer, the New Notes will not be eligible for PORTAL trading.
THE NEW NOTES
The terms of the New Notes are identical in all material respects to the
Old Notes, except for certain transfer restrictions and registration rights
relating to the Old Notes. For purposes of this Prospectus, the term "Notes"
shall refer collectively to the New Notes and the Old Notes.
Issuer...................... Cityscape Financial Corp.
Securities Offered.......... $300,000,000 principal amount of 12 3/4% Series A
Senior Notes due 2004 (the "New Notes").
Maturity Date............... June 1, 2004.
Interest Rate............... The New Notes will bear interest at a rate of
12 3/4% per annum.
Interest Payment Dates...... Interest on the New Notes will be payable
semiannually on each June 1 and December 1,
commencing December 1, 1997.
Ranking..................... The New Notes will be general senior unsecured
obligations of the Company ranking pari passu in
right of payment with all other existing and
future unsubordinated Indebtedness of the Company
and senior in right of payment to any
Subordinated Obligations of the Company. The
5
<PAGE> 8
New Notes will be effectively subordinated in
right of payment to all secured Indebtedness of
the Company and any secured Indebtedness of the
Subsidiary Guarantors, except in the case of the
Subsidiary Guarantees to the extent secured by
the Intercompany Note. In addition, the New Notes
will be structurally subordinated to any
indebtedness of the Company's subsidiaries that
are not Subsidiary Guarantors. As of March 31,
1997 after giving effect to the offering of the
Old Notes and the application of the net proceeds
therefrom, the Company and its Subsidiaries would
have had $387.1 million of unsubordinated
Indebtedness of which $87.1 million is secured
Indebtedness (of which $82.5 million is Warehouse
Indebtedness).
Guarantees by
Subsidiaries................ Prior to receipt of an Investment Grade Rating,
the New Notes will be unconditionally guaranteed,
on a senior basis, as to the payment of
principal, premium, if any, and interest (the
"Subsidiary Guarantees"), by all domestic
Restricted Subsidiaries of the Company other than
Special Purpose Subsidiaries (the "Subsidiary
Guarantors"). As of the date hereof, the sole
Subsidiary Guarantor will be CSC. In addition,
the Subsidiary Guarantee of CSC will be secured
by a pledge of an Intercompany Note from CSC-UK,
the Company's wholly-owned indirect UK
subsidiary. The Intercompany Note is a general
senior unsecured obligation of CSC-UK. See
"Description of the Notes -- Security."
Lack of Mandatory
Redemption.................. There will be no mandatory redemption
requirements with respect to the New Notes.
Optional Redemption......... The Company, at its option, may redeem in the
aggregate up to 33 1/3% of the original principal
amount of the Notes at any time and from time to
time prior to June 1, 2000 at a redemption price
equal to 112.75% of the principal amount thereof
plus accrued interest to the redemption date with
the proceeds of one or more Public Equity
Offerings, provided that at least $200.0 million
principal amount of Notes remain outstanding
immediately after the occurrence of any such
redemption.
Change of Control........... In the event of a Change of Control, the Company
will be required to make an offer to repurchase
all outstanding New Notes at a price equal to
101% of the principal amount thereof plus accrued
and unpaid interest to the date of repurchase.
See "Description of the Notes -- Change of
Control." There can be no assurance that the
Company will have sufficient funds or will be
contractually permitted by outstanding
Indebtedness to pay the required purchase price
for all New Notes tendered by holders upon a
Change of Control. See "Risk Factors -- Potential
Inability to Purchase Tendered Notes Upon a
Change of Control."
Asset Sale Proceeds......... The Company will be obligated in certain
instances to make offers to repurchase the New
Notes at a purchase price in cash equal to 100%
of the principal amount thereof plus accrued and
unpaid interest, if any, to the date of
repurchase with the net cash proceeds of certain
asset sales. See "Description of the
Notes -- Certain Covenants -- Limitation on Sales
of Assets."
Certain Covenants........... The Indenture contains covenants for the benefit
of the holders of the New Notes that, among other
things, restrict the ability of the Company and
any Restricted Subsidiaries to: (i) incur
additional Indebted-
6
<PAGE> 9
ness; (ii) pay dividends and make distributions;
(iii) make certain investments; (iv) repurchase
stock; (v) create liens; (vi) enter into
transactions with affiliates; (vii) merge or
consolidate the Company or any Subsidiary
Guarantor; and (viii) transfer and sell assets.
These covenants are subject to a number of
important exceptions. See "Description of the
Notes -- Certain Covenants."
RISK FACTORS
Holders of Old Notes should carefully consider all of the information set
forth under "Risk Factors" in connection with the Exchange Offer.
7
<PAGE> 10
RISK FACTORS
In addition to the other information in this Prospectus, the following risk
factors should be carefully considered by holders of Old Notes in connection
with the Exchange Offer. This Prospectus contains forward-looking statements
which involve risks and uncertainties. The Company's actual results could differ
materially from those anticipated in these forward-looking statements as a
result of certain factors, including those set forth in the following risk
factors and elsewhere in this Prospectus.
HOLDING COMPANY STRUCTURE
The Company is a holding company which derives substantially all of its
operating income from its subsidiaries. The Company must rely upon payments from
its Subsidiaries to generate the funds necessary to meet its obligations,
including the payment of interest on and principal of the Notes. The ability of
the Company's Subsidiaries to make such payments will be subject to, among other
things, applicable state and foreign laws.
Certain of the Company's Subsidiaries, through which the Company conducts
its UK operations, will not be Subsidiary Guarantors of the Notes. Claims of
creditors of such Subsidiaries, the counterparties under such Subsidiaries'
purchase and sale facilities, the purchasers of such Subsidiaries' receivables,
trade creditors, secured creditors and creditors holding indebtedness and
guarantees issued by such Subsidiaries, and claims of preferred stockholders (if
any) of such Subsidiaries generally will have priority with respect to the
assets and earnings of such Subsidiaries over the claims of creditors of the
Company, including holders of the Notes. The Notes, therefore, are effectively
subordinated to creditors (including trade creditors) and preferred stockholders
(if any) of such Subsidiaries. Although the Subsidiary Guarantees are secured by
the pledge of the Intercompany Note, the Intercompany Note is an unsecured
general obligation of CSC-UK and secured creditors of CSC-UK will generally have
priority with respect to the assets and earnings of CSC-UK over the claims of
holders of the Notes making a claim with respect to the Intercompany Note. See
"Description of the Notes -- Ranking; Holding Company Structure."
The Indenture provides that, prior to receipt of an Investment Grade
Rating, the Notes generally will be guaranteed by the Company's domestic
Restricted Subsidiaries (other than Special Purpose Subsidiaries). Although the
Subsidiary Guarantees provide the Note holders with a direct claim against the
assets of such domestic Restricted Subsidiaries, enforcement of the Subsidiary
Guarantees against any existing or future Subsidiary Guarantors would be subject
to certain defenses available to guarantors generally, and would also be subject
to certain defenses available to the Company regarding enforcement of the Notes.
See "-- Fraudulent Conveyances and Preferential Transfers." Although the
Indenture contains waivers of most of those defenses, one or more of such
waivers may not be enforced by a court in a particular case. To the extent that
the Subsidiary Guarantees are not enforceable, the Notes would be effectively
subordinated to all liabilities of the Company's Subsidiaries, including other
Senior Indebtedness, subordinated indebtedness and trade payables of such
Subsidiaries.
As of March 31, 1997, after giving effect to the offering of the Old Notes
and the application of the proceeds therefrom, CSC and its Subsidiaries would
have had approximately $87.1 million of indebtedness (including $82.5 million of
Warehouse Indebtedness).
LEVERAGE
The Company is significantly leveraged. As of March 31, 1997, after giving
effect to the offering of the Old Notes and the application of the net proceeds
therefrom, the total consolidated Indebtedness of (i) the Company and (ii) CSC
and its Subsidiaries was approximately $530.8 million and $87.1 million,
respectively, including in each case $82.5 million of Warehouse Indebtedness.
The Company's ability to make payments of principal or interest on, or to
refinance its indebtedness (including the Notes) depends on its future operating
performance, which to a certain extent is subject to economic, financial,
competitive and other factors beyond its control.
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The degree to which the Company is leveraged could have important
consequences to the holders of the Notes, including (i) the Company's
vulnerability to adverse general economic and industry conditions, (ii) the
Company's ability to obtain additional financing for future working capital
expenditures, acquisitions, general corporate purposes or other purposes, and
(iii) the dedication of a substantial portion of the Company's cash flow from
operations to the payment of principal and interest on indebtedness thereby
reducing the funds available for operations and future business opportunities.
In addition, the Indenture contains certain covenants which could limit the
Company's operating and financial flexibility. See "Description of the
Notes -- Certain Covenants."
The Company's ability to sustain its growth is dependent on its ability to
secure further debt arrangements or warehouse credit facilities. See
"-- Negative Cash Flows" and "-- Uncertainty as to Availability of Funding
Sources."
NEGATIVE CASH FLOWS
Although the Company believes that cash from operations and financing
activities will be sufficient to enable it to make required interest payments on
the Notes and its other debt obligations and other required payments, there can
be no assurance in this regard, and the Company may encounter liquidity problems
which could affect its ability to meet such obligations while attempting to
withstand competitive pressures.
As a result of its increased volume of loan originations and purchases and
its growing use of securitizations, the Company has operated since March 1995,
and expects to continue to operate, on a negative cash flow basis. Prior to
1995, the Company sold loans primarily through whole loan sales which generate
immediate cash flow on the date of sale. The recognition of gain on sale of
loans through securitizations has a negative impact on the cash flow of the
Company because significant costs are incurred upon closing of the transactions
giving rise to such gain and the Company is required to pay income taxes on the
gain on sale in the period recognized, although the Company does not expect to
receive the cash representing the gain until later periods as the related loans
are repaid or otherwise collected.
The Company's principal cash requirements include the funding of loan
originations and purchases, payment of interest expenses (including interest
expenses under the Notes), funding the overcollateralization requirements for
securitizations, operating expenses, income taxes and capital expenditures. The
Company uses its cash flow from whole loan sales, loans sold through
securitizations, capital markets offerings, pre-funding mechanisms through
securitizations, loan origination fees, servicing fees, net interest income and
borrowings under its credit or warehouse facilities to meet its working capital
and other needs. For the years ended December 31, 1995 and 1996 and for the
three months ended March 31, 1997, the Company had negative cash flow from
operations of $76.0 million, $165.6 million and $51.0 million, respectively, due
primarily to the Company's sale of loans through securitizations. Also
contributing to the Company's negative cash flow is the increasing percentage of
its loan volume derived through the Wholesale Loan Acquisition Program and bulk
purchases, which have a greater negative impact on cash flows than loan volume
derived from independent mortgage brokers.
UNCERTAINTY AS TO AVAILABILITY OF FUNDING SOURCES
The Company funds substantially all of the loans which it originates and
purchases through borrowings under warehouse facilities secured by pledges of
its loans, loan purchase facilities under which the Company retains the rights
to repurchase loans sold, lines of credit secured by the residual and
interest-only interests in securitizations, a senior note issuance and
internally generated funds. These borrowings are in turn repaid with the
proceeds received by the Company from selling such loans either through
securitizations or whole loan sales. Any failure to renew or obtain adequate
funding under these credit or warehouse facilities, or other borrowings, or any
substantial reduction in the size of or pricing in the markets for the Company's
loans, could have a material adverse effect on the Company's operations. To the
extent that the Company is not successful in maintaining or replacing existing
financing, it would have to curtail its loan production activities or sell loans
earlier than is optimal, which would have a material adverse effect on the
Company's results of operations and financial condition.
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The type, timing and terms of financing selected by the Company will be
dependent upon the Company's cash needs, the availability of financing sources
and the prevailing conditions in the financial markets. The Company anticipates
that funds currently available will be sufficient to fund the Company's
liquidity requirements into the fourth quarter of 1997. However, the Company has
substantial capital requirements and anticipates that it will need to raise
additional cash by such time through the issuance of additional debt or equity
securities or additional bank borrowings or a combination thereof. The Company
has no commitments for additional debt, equity or bank financings other than
those described in this Prospectus and there can be no assurance that any
sources will be available to the Company at any given time or as to the
favorability of the terms on which such sources may be available.
POTENTIAL INABILITY TO PURCHASE TENDERED NOTES UPON A CHANGE OF CONTROL
Each holder of Notes has the option to cause the Company to purchase its
Notes, in whole or in part, at a purchase price equal to 101% of the principal
amount thereof, plus accrued and unpaid interest thereon through the date of
repurchase, following a Change of Control. There can be no assurance that the
Company will be able to repurchase the Notes upon a Change of Control. See
"Description of the Notes -- Change of Control." In addition, each holder of
Convertible Debentures may elect to have the Company repurchase its Convertible
Debentures, in whole but not in part, at a purchase price equal to 100% of the
principal amount thereof, plus accrued and unpaid interest thereon through the
date of repurchase, upon certain change of control events as set forth in the
related Indenture. Furthermore, the holders of the Series A Preferred Stock may
elect to have the Company redeem such stock at a redemption price equal to 110%
of the Liquidation Preference upon certain change of control events as set forth
in the related Certificate of Designations.
DEPENDENCE ON FUNDING SOURCE
The Company has funded substantially all of its loan origination and
purchase volume and working capital requirements in the US and the UK through
financing facilities and through loan sales pursuant to mortgage loan purchase
agreements that include working capital facilities with Greenwich Capital
Markets, Inc. (referred to herein, including its affiliates, as "Greenwich").
During 1995 and 1996, the Company sold 10.3% and 93.8%, respectively, of its
loan originations and purchases to Greenwich. The US facility (the "US Greenwich
Facility") was provided through Greenwich's affiliate, Greenwich Capital
Financial Products, Inc., and the UK facility (the "UK Greenwich Facility") is
provided through its affiliate, Greenwich International, Ltd. With certain
exceptions, the Company has been required to sell all of its loans directly or
indirectly to Greenwich. The loans are then resold through securitizations or
whole loan sales. These provisions of the US Greenwich Facility and the UK
Greenwich Facility may prevent the Company from taking advantage of other more
favorable financing sources that may become available to the Company.
Additionally, the Company expects to derive a substantial portion of its working
capital through the mortgage loan purchase agreements.
The US Greenwich Facility provided for the purchase and sale of $1.0
billion of loans. The Company and Greenwich continued to purchase and sell loans
after the facility amount was exceeded through December 1996. The Company has a
commitment from Greenwich to enter into agreements to provide a $3.0 billion
mortgage loan financing facility at a rate of LIBOR plus 150 basis points, a
$25.0 million residual financing facility at a rate of LIBOR plus 300 basis
points and a $3.0 billion securitization facility, each for a term of one year,
subject to execution of definitive documents satisfactory to Greenwich as well
as certain other conditions. The Company and Greenwich, pending the completion
of definitive documents, are operating under the terms of the US Greenwich
Facility structured consistent with the new proposed arrangement, however, as a
financing facility. No definitive agreement exists with respect to the new
arrangement nor can any assurance be given that such an agreement will be
reached. Because it is structured as a financing facility and not as a purchase
and sale facility, the new arrangement with Greenwich could affect the timing of
the Company's reported gain on sale, adversely affecting gain on sale in a
future period if the Company fails to sell or securitize the loan origination
and purchase volume for such period. To the extent that the Company is not
successful in maintaining with Greenwich or replacing existing financing, it
would have to curtail its loan production activities or sell loans earlier than
is optimal, thereby adversely affecting the Company's results of operations and
financial condition. CSC-UK paid a fee to Greenwich in connection with the UK
Greenwich Facility in the aggregate amount of $38.0 million. The Company is
amortizing this fee over the 20-year life of
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the facility. If the facility were to be terminated prior to its scheduled
expiration in 2015, the Company would have to write-off the fee earlier than
anticipated, resulting in a charge to earnings in the period of such write-off
of the unamortized amount of the fee at that time, which would have an adverse
effect on the Company's results of operations.
Additionally, the agreement governing the UK Greenwich Facility prohibits
the payment of dividends by CSC-UK to CSC prior to the repayment of all
outstanding balances under the working capital facility of the UK Greenwich
Facility.
DEPENDENCE ON SECURITIZATIONS
General
Since March 1995, the Company has pooled and sold through securitizations
an increasing percentage of the loans which it originates or purchases. The
Company derives a significant portion of its income by recognizing gains upon
the sale of loans through securitizations representing the fair value of the
interest-only and residual certificates received in the US and the fair value of
excess mortgage servicing receivables retained through UK securitizations and on
sales into the UK purchase facility. In determining excess mortgage servicing
receivables recognized through UK securitizations, the Company excludes normal
servicing and other ancillary fees and includes any prepayment interest due. In
loan sales through US securitizations, the Company sells loans that it has
originated or purchased to a real estate mortgage investment conduit ("REMIC")
trust for a cash purchase price and interests in such REMIC trust consisting of
interest-only regular interests and the residual interest which are represented
by the interest-only and residual certificates. The cash purchase price is
raised through an offering by the REMIC trust of pass-through certificates
representing regular interests in the REMIC trust. Following the securitization,
the purchasers of the pass-through certificates receive the principal collected
and the investor pass-through interest rate on the principal balance, while the
Company recognizes as current revenue the fair value of the interest-only and
residual certificates.
Reliance on Securitization Market
Adverse changes in the US or UK securitization market for home equity and
home improvement loans could impair the Company's ability to originate, purchase
and sell loans through securitizations on a favorable or timely basis. Any such
impairment could have a material adverse effect upon the Company's results of
operations and financial condition. Furthermore, the Company's quarterly
operating results can fluctuate significantly as a result of the timing and
level of securitizations. If securitizations do not close when expected, the
Company's results of operations may be adversely affected for that period.
Reliance on Credit Enhancements
In addition, in order to gain access to the securitization market, the
Company has relied on credit enhancements provided by monoline insurance
carriers on the majority of the Company's US securitizations to guarantee
outstanding senior interests in the related REMIC trusts to enable it to obtain
an "AAA/Aaa" rating for such interests. The cost of such credit enhancement
results in a reduction in the gain on sale of loans sold in such securitization.
Any substantial reductions in the size or availability of the securitization
market for the Company's loans, or the unwillingness of insurance companies to
guarantee the senior interests in the Company's loan pools, could have a
material adverse effect on the Company's results of operations and financial
condition.
The documents governing the Company's securitizations require the Company
to build over-collateralization levels through retention of excess servicing
distributions and application thereof to reduce the principal balances of the
senior interests issued by the related trust or to create reserve funds. This
application causes the aggregate principal amount of the loans and cash in the
related pool to exceed the aggregate principal balance of the outstanding
investor certificates. Such excess amounts serve as credit enhancement for the
related trust and therefore fund losses realized on loans held by such trust.
The Company continues to be subject to the risks of default and foreclosure
following the sale of loans through securitizations to the extent
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excess servicing distributions are required to be retained or applied to reduce
principal from time to time. Such retained amounts are pre-determined by the
entity issuing the guarantee of the related senior interests and are a condition
to obtaining an "AAA/Aaa" rating thereon. In addition, such retention diverts
cash which would otherwise flow to the Company through its retained interest in
the transaction represented by the interest-only and residual certificates and
excess mortgage servicing receivables the Company receives upon loan sales
through securitizations, thereby slowing, and in some circumstances, reducing
over the life of the related securitization, the flow of cash to the Company.
Availability and Cost of Pre-Funding Mechanism
In connection with the Company's pre-funding commitments in its
securitization transactions, investors deposit in cash a pre-funded amount into
the related trust to purchase loans the Company commits to sell on a forward
basis. This pre-funded amount is invested pending subsequent transfers of loans
to the trusts in short term obligations which pay a lower interest rate than the
interest rate the trust is obligated to pay the certificate investors on the
outstanding balance of the pre-funded amount. The Company is required to deposit
at the closing of the related transaction an amount sufficient to make up the
difference between these rates. The portion of the deposit that is not recovered
by the Company is recorded as an expense of the securitization transaction which
results in a reduction in the gain on sale of the loans sold in such
securitization. If the Company were unable to make such deposits, it would be
unable to access the pre-funding mechanism that allows it to sell relatively
greater volume through each securitization, which could result in an adverse
effect upon the Company's results of operations and financial condition.
POTENTIAL CHANGE IN VALUATION OF INTEREST-ONLY AND
RESIDUAL CERTIFICATES AND MORTGAGE SERVICING RECEIVABLES
The Company sells over 90% of the loans that it originates or purchases
through securitizations or into loan purchase facilities with servicing
retained. The Company derives a substantial portion of its income by recording a
gain on sale when loans are sold in such a manner. In the case of a US
securitization, the Company receives as an investment the interest-only and
residual certificates the Company receives as a result of such securitization.
In the case of a UK securitization, or the sale of loans into a loan purchase
facility, the Company retains a mortgage servicing receivable. In addition,
since it adopted SFAS No. 122, "Accounting for Mortgage Servicing Rights," in
October 1995, the Company also recognizes as an asset the capitalized value of
mortgage servicing rights (including normal servicing and other ancillary fees)
as a mortgage servicing receivable. The Company calculates the value of its
interest-only and residual certificates and mortgage servicing receivables based
upon their fair values. The fair value of these assets is determined based on
various economic factors, including loan types, balances, interest rates, dates
of origination, terms and geographic locations. The Company also uses other
available information applicable to the types of loans the Company originates
and purchases, such as reports on prepayment rates, interest rates, collateral
value, economic forecasts and historical default and prepayment rates of the
portfolio under review. The Company estimates the expected cash flows that it
will receive over the life of a portfolio of loans. These expected cash flows
constitute the excess of the interest rate payable by the obligors of loans over
the interest rate passed through to the purchasers of the related securities,
less applicable recurring fees and credit losses. The Company discounts the
expected cash flows at a discount rate that it believes is consistent with the
required risk-adjusted rate of return to an independent third party purchaser of
the interest-only and residual certificates or mortgage servicing receivables.
As of March 31, 1997, the Company's balance sheet reflected the fair value of
interest-only and residual certificates and mortgage servicing receivables of
$155.0 million and $220.8 million (net of reserves of $31.4 million),
respectively.
Realization of the value of these interest-only and residual certificates
and mortgage servicing receivables in cash is subject to the prepayment and loss
characteristics of the underlying loans and to the timing and ultimate
realization of the stream of cash flows associated with such loans. If actual
experience differs from the assumptions used in the determination of the asset
value, future cash flows and earnings could be negatively impacted and the
Company could be required to write down the value of its interest-only and
residual certificates and mortgage servicing receivables. For example, in the
fourth quarter of 1996 the
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Company determined that the value of the interest-only and residual certificates
from its August 1995 securitization had been impaired in the amount of $1.4
million and accordingly wrote down the value of such certificates by that
amount. The impairment was primarily attributable to a change in the loss
assumptions with respect to such securitization to be consistent with those of
the Company's subsequent securitizations. No assurance can be given as to
whether, and in what amounts, the Company in the future will have to write down
the value of the interest-only and residual certificates from this or its other
securitizations. In addition, if prevailing interest rates rose, the required
discount rate might also rise, resulting in impairment of the value of the
interest-only and residual certificates and mortgage servicing receivables. The
Company believes that there is no active market for the sale of its
interest-only and residual certificates or its mortgage servicing receivables.
No assurance can be given that these assets could be sold at their stated value
on the balance sheet, if at all.
CONSEQUENCES OF EXCEEDING PERMITTED DELINQUENCY AND DEFAULT LIMITS
The pooling and servicing agreements relating to the Company's
securitization transactions contain provisions with respect to the maximum
permitted loan delinquency rates and loan default rates, which, if exceeded,
would require amounts otherwise payable to the Company to be retained by the
related securitization trusts and would allow the termination of the Company's
right to service the related loans. The default rates on the pools of loans sold
in the March 1995 and August 1995 securitization transactions, the Company's
first two securitization transactions, have exceeded the permitted limits set
forth in the related pooling and servicing agreements. Accordingly,
overcollateralization requirements for these two securitizations have been
increased and cash otherwise payable to the Company from such securitizations is
being retained by the related trusts. No assurance can be given when, if ever,
such amounts will be released to the Company. In addition, this condition could
result in the termination of the Company's servicing rights with respect to the
securitizations' pools of loans by the trustee or the insurance company
providing credit enhancement for those transactions. For 1996, the revenues to
the Company from mortgage servicing rights on these pools of loans were
approximately $625,000. Although none of the parties to these transactions has
indicated its intention to terminate the Company's servicing rights and the
Company has no current expectation that they will do so, no assurance can be
given that any of such parties will not exercise its right to terminate. To
date, the permitted delinquency and default rates relating to the Company's
other securitizations have not been exceeded. However, such securitizations'
loan pools are less seasoned and no assurance can be given that such limits will
not be exceeded in the future. The retention of cash by securitization trusts or
the termination of the Company's servicing rights would have a material adverse
effect on the Company's results of operations and financial condition and could
affect the Company's ability to effect securitizations in the capital markets.
SECURITY
Prior to the receipt of an Investment Grade Rating, the Subsidiary
Guarantee of CSC will be secured by a pledge by CSC to the Trustee (for the
benefit of the holders) of the Intercompany Note (the "Intercompany Note
Collateral"). The Intercompany Note that comprises the Intercompany Note
Collateral is a general senior unsecured obligation of CSC-UK. There can be no
assurance that the proceeds of any sale of the Intercompany Note Collateral
pursuant to the Pledge Agreement would be sufficient to satisfy payments due on
the Notes. In addition, the ability of the holders to realize upon the
Intercompany Note Collateral may be subject to certain bankruptcy law
limitations in the event of a bankruptcy. In a bankruptcy proceeding, the
Intercompany Note may be subject to recharacterization as equity or subordinated
to other indebtedness of the creditor if a court determined that an unaffiliated
lender would not have made a loan on similar terms under then existing
circumstances. Under applicable federal bankruptcy laws, secured creditors are
prohibited from exercising their remedies in respect of their security from a
debtor in a bankruptcy case, or from disposing of such security, without
bankruptcy court approval. Moreover, applicable federal bankruptcy laws
generally permit the debtor to continue to use collateral (such as payments on
the Intercompany Note) even though the debtor is in default under the applicable
debt instruments, provided generally that the secured creditor is given
"adequate protection." See "Description of the Notes -- Security."
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FRAUDULENT CONVEYANCES AND PREFERENTIAL TRANSFERS
The ability of the holders of the Notes or the Trustee to enforce the
Subsidiary Guarantees may be limited by certain fraudulent conveyance laws.
Various fraudulent conveyance and similar laws have been enacted for the
protection of creditors and may be utilized by a court of competent jurisdiction
to avoid the Subsidiary Guarantees or to subordinate the obligations of the
Company under the Notes or the obligations of any Subsidiary Guarantor under its
Subsidiary Guarantee. The requirements for establishing a fraudulent conveyance
vary depending on the law of the jurisdiction which is being applied. Generally,
if in a bankruptcy, reorganization, rehabilitation or similar proceeding in
respect to the Company or a Subsidiary Guarantor, or in a lawsuit by or on
behalf of creditors against the Company or a Subsidiary Guarantor, a court were
to find that (i) the Company or a Subsidiary Guarantor, as the case may be,
incurred indebtedness in connection with the Notes (including the Subsidiary
Guarantees) with the intent of hindering, delaying or defrauding current or
future creditors of the Company or the Subsidiary Guarantor, as the case may be,
or (ii) the Company or a Subsidiary Guarantor, as the case may be, received less
than reasonably equivalent value or fair consideration for incurring such
indebtedness (including the Subsidiary Guarantees), as the case may be, and
either (a) was insolvent at the time of the incurrence of such indebtedness
(including the Subsidiary Guarantees), (b) was rendered insolvent by reason of
incurring such indebtedness (including the Subsidiary Guarantees), (c) was at
such time engaged or about to engage in a business or transaction for which its
assets constituted unreasonably small capital or (d) intended to incur, or
believed that it would incur, debts beyond its ability to pay such debts as they
matured, such court could, with respect to the Company or the Subsidiary
Guarantor, as the case may be, declare void in whole or in part the obligations
of the Company or such Subsidiary Guarantor in connection with the Notes
(including the Subsidiary Guarantees) and/or subordinate claims with respect to
the Notes (including the Subsidiary Guarantees) to all other debts of the
Company or the Subsidiary Guarantors, as applicable. If the obligations of the
Company or the Subsidiary Guarantors were subordinated, there can be no
assurance that after payment of the other debts of the Company or the Subsidiary
Guarantors, there would be sufficient assets to pay such subordinated claims
with respect to the Notes and the Subsidiary Guarantees. Generally, an entity
will be considered insolvent if the sum of its respective debts was greater than
the fair saleable value of all of its property at a fair valuation or if the
present fair saleable value of its assets is less than the amount that will be
required to pay its probable liability on its existing debts, as they become
absolute and mature.
Additionally, under federal bankruptcy or applicable state insolvency law,
if certain bankruptcy or insolvency proceedings were initiated by or against the
Company or any Subsidiary Guarantor within 90 days after any payment by the
Company or such Subsidiary Guarantor with respect to the Notes or a Subsidiary
Guarantee, respectively, or if the Company or such Subsidiary Guarantor
anticipated becoming insolvent, all or a portion of such payment could be
avoided as a preferential transfer and the recipient of such payment could be
required to return such payment.
RISK OF ADVERSE ECONOMIC CONDITIONS
The Company's business may be adversely affected by periods of economic
slowdown or recession which may be accompanied by decreased demand for consumer
credit and declining real estate values. Any material decline in real estate
values reduces the ability of borrowers to use home equity to support borrowings
and increases the loan-to-value ratios of loans previously made by the Company,
thereby weakening collateral coverage and increasing the possibility of a loss
in the event of default. Further, delinquencies, foreclosures and losses
generally increase during economic slowdowns or recessions. Because of the
Company's focus on borrowers who are unable or unwilling to obtain mortgage
financing from conventional mortgage sources, the actual rates of delinquencies,
foreclosures and losses on such loans could be higher under adverse economic
conditions than those currently experienced in the conventional mortgage lending
industry. Any sustained period of such increased delinquencies, foreclosures or
losses could adversely affect the pricing of the Company's loan sales whether
through securitizations or whole loan sales.
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HIGH-RISK BORROWERS
Loans made to borrowers who are unable or unwilling to obtain mortgage
financing from conventional mortgage sources may entail a higher risk of
delinquency and higher losses than loans made to borrowers who utilize
conventional mortgage sources. While the Company believes that the underwriting
criteria and collection methods it employs enable it to mitigate the higher
risks inherent in loans made to these borrowers, no assurance can be given that
such criteria or methods will afford adequate protection against such risks. In
the event that pools of loans sold and serviced by the Company experience higher
delinquencies, foreclosures or losses than anticipated, the Company's results of
operations or financial condition could be adversely affected.
LOAN DELINQUENCIES AND DEFAULTS
The Company is exposed to the risk of loan delinquencies and defaults upon
the closing of the loan. After a loan has been originated or purchased by the
Company, the loan is held as part of a portfolio of loans subject to sale either
through a securitization or on a whole loan basis. During the period a loan is
so held, the Company is at risk for loan delinquencies and defaults. Following
the sale of the loan through a securitization, the Company's direct risk with
respect to loan delinquency or default on such loan is limited to those
circumstances in which it is required to repurchase such loan due to a breach of
a representation or warranty in connection with the securitization. This risk
also exists for loans sold on a whole loan basis. On loans sold through
securitizations, the Company is also at risk of loan delinquency or default from
a first payment default and thereafter to the extent that losses are paid out of
a reserve account, or reduce the over-collateralization to the extent that funds
are available, and will result in a reduction in the value of the interest-only
and residual certificates and mortgage servicing receivables held by the
Company.
RISKS FROM INTEREST RATE FLUCTUATIONS
Profitability may be directly affected by the level of and fluctuations in
interest rates which affect the Company's ability to earn a spread between
interest received on its loans and the costs of borrowings. The profitability of
the Company is likely to be adversely affected during any period of unexpected
or rapid changes in interest rates. A substantial and sustained increase in
interest rates could adversely affect the ability of the Company to originate
and purchase loans and could reduce the gain on sale recognized by the Company
when loans are sold through securitizations. A significant decline in interest
rates could decrease the size of the Company's loan servicing portfolio by
increasing the level of loan prepayments. Additionally, to the extent servicing
spread has been capitalized on the books of the Company or the Company holds
interest-only and residual certificates received upon loan sales through
securitizations, higher than anticipated rates of loan prepayments or losses
would reduce the aggregate amount of payments received by the REMIC trusts
pursuant to the Company's securitizations which would require the Company as
holder of the residual interests in such securitizations to write down the value
of such servicing spread or the fair value of such interest-only and residual
certificates, adversely impacting earnings and the value of the Common Stock.
Fluctuating interest rates also may affect the net interest income earned by the
Company resulting from the difference between the yield to the Company on loans
held pending sale and the interest paid by the Company for funds borrowed under
the Company's warehouse facility. In addition, inverse or flattened interest
yield curves could have an adverse impact on the profitability of the Company
because the loans pooled and sold by the Company generally have long-term rates,
while the senior interests in the related REMIC trusts are priced on the basis
of intermediate rates in the US.
RISKS RELATING TO RECENT EXPANSION AND PRODUCT EXTENSION
Since January 1, 1994, the Company has originated and purchased a
significantly greater number of loans than it had in previous years. In light of
this growth, the historical performance of the Company's earnings may be of
limited relevance in predicting future performance. Any credit or other problems
associated with the larger number of loans originated and purchased in the
recent past will not become apparent until sometime in the future.
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The Company's significant growth and expansion have placed substantial new
and increased pressures on the Company's personnel and systems. In order to
support the growth of its business, the Company has added a significant number
of new operating procedures, facilities and personnel. There can be no assurance
that the addition of these new operating procedures and personnel will be
sufficient to enable the Company to meet its growing operating needs. Failure by
the Company to manage its growth effectively, or to sustain its historical
levels of performance in credit analysis and transaction structuring with
respect to the increased loan origination and purchase volume, could have a
material adverse effect on the Company's results of operations and financial
condition.
In addition, the Company has recently expanded its product offerings to
include conventional home improvement loans (commencing May 1996),
"Sav*-A-Loans(R)" (commencing May 1996), adjustable rate loans (commencing
October 1996), loans for occupants of government-owned residential properties in
the UK (commencing November 1996), conventional loans (commencing February 1997)
and, to a lesser extent, Title I loans (commencing December 1995), with which
the Company has relatively little experience. The Sav*-A-Loan(R) product, for
example, is offered to homeowners with little or no equity in their property but
who possess a favorable credit profile and debt-to-income ratio. The
Sav*-A-Loan(R) product has contributed and is expected to continue to contribute
an increasing percentage of the Company's US originations. The Company has
incurred certain expenses in connection with the development of these new
product offerings. No assurance can be given that the Company will be able to
develop these new product offerings successfully, or that the Company's
extension of its product offerings will not have a material adverse effect on
the Company's results of operations and financial condition.
CREDIT RISK ASSOCIATED WITH HIGH LTV LOANS
Certain of the Company's loan products have high loan-to-value ratios
("LTV") and, although secured by real property, the collateral of such loans
often will not be sufficient to cover the principal amount of the loans in the
event of default. The principal balance of such a loan, such as the Company's
"Sav*-A-Loan(R)" product, inclusive of other loans secured by the same property
often exceeds the value of the underlying property by as much as 25%.
Consequently, the Company is less likely to use foreclosure as a means to
mitigate its losses upon the default of such loans or to recover any meaningful
amounts in the event of a foreclosure. With respect to these loans, LTV
determinations are based on a value of the underlying property, which is set by
a full appraisal, a drive-by appraisal or, if owned less than 12 months, the
sale price. Accordingly, there can be no assurance that such values accurately
reflect prevailing market prices of such properties, either when made or upon a
default on the related loan. For such loans, the Company relies primarily on the
creditworthiness of the borrower and, with respect to Title I loans, also relies
on FHA co-insurance for repayment. Losses not covered by the underlying
properties, if in excess of the Company's allowance for such losses included in
the calculation of the gain on sale, could have a material adverse effect on the
Company's results of operations and financial condition.
ABILITY OF THE COMPANY TO IMPLEMENT ITS GROWTH STRATEGY
The Company's growth strategy is dependent upon its ability to increase its
loan origination and purchase volume while maintaining its customary origination
fees, interest rate spreads and underwriting criteria with respect to such
increased loan origination and purchase volume. Implementation of this strategy
will depend in large part on the Company's ability to: (i) expand its broker
network in markets with a sufficient concentration of borrowers meeting the
Company's underwriting criteria; (ii) obtain adequate financing on favorable
terms; (iii) securitize loans profitably in the secondary market on a regular
basis; (iv) hire, train and retain skilled employees; and (v) continue to expand
in the face of increasing competition from other mortgage lenders. The Company's
failure with respect to any or all of these factors could impair its ability to
successfully implement its growth strategy which could have a material adverse
effect on the Company's results of operations and financial condition. The
Company will also incur start-up costs in connection with entering new markets
including costs associated with establishing new regional infrastructures. Such
additional costs could have a material adverse effect on the Company's results
of operations and financial condition. In addition, the Company's results of
operations will be adversely affected if revenues do not increase sufficiently
to
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compensate for the increase in operating expenses resulting from past, current
and future growth and expansion and there can be no assurance that any expansion
will be profitable or that it will not adversely affect the Company's results of
operations.
RISKS RELATED TO ACQUISITIONS
In September 1995, the Company acquired the remaining 50% of CSC-UK not
then owned by the Company in exchange for 3.6 million shares of Common Stock. In
April 1996, CSC-UK acquired all of the outstanding capital stock of J&J
Securities Limited ("J&J") in exchange for pound sterling 15.3 million ($23.3
million based on the Noon Buying Rate on the date of such acquisition) and
548,000 shares of Common Stock valued at $9.8 million. J&J's business is
substantially similar to that of CSC-UK but with a primary focus of making loans
generally secured by second liens. In June 1996, CSC-UK acquired all of the
outstanding capital stock of Greyfriars Group Limited (formerly known as
Heritable Group Limited and referred to herein as "Greyfriars") in exchange for
pound sterling 41.8 million ($64.1 million based on the Noon Buying Rate on the
date of such acquisition) and 99,362 shares of Common Stock valued at $2.5
million. Greyfriars' business differs from that of CSC-UK in that its loans are
made primarily to borrowers with higher quality credit characteristics, are
generally secured by second liens and generally have higher loan-to-value ratios
and lower interest rates than those made by CSC-UK.
An important part of the Company's growth strategy is the acquisition of
consumer finance companies that complement or supplement the Company's existing
business in the US and in the UK, such as J&J and Greyfriars. Any acquisition
involves inherent uncertainties and risks, such as the effect on the acquired
business of integration into the Company, the availability of management
resources to oversee the operations of the acquired business, the risks of
entering markets in which the Company has no or limited direct prior experience,
operating in different geographical locations with different competitive
conditions, different demographic characteristics and different corporate
cultures and the potential loss of key employees of the acquired company.
Integrating acquired products and operations requires a significant amount of
management's time and skill and may place significant demands on the Company's
operations and financial resources. Although an acquired business may have
enjoyed profitability and growth prior to the acquisition, there can be no
assurance that such profitability or growth would continue thereafter. There can
be no assurance that the Company will be able to locate appropriate acquisition
candidates, that any identified candidates will be acquired or that acquired
operations will be effectively integrated or prove profitable. There can be no
assurance that the financing necessary to complete such acquisitions can be
obtained by the Company on favorable terms, if at all.
In addition, in connection with its acquisitions of CSC-UK, J&J and
Greyfriars, the Company has recognized $19.7 million, $5.2 million and $25.4
million, respectively, of goodwill and, as a result of a recent acquisition in
the UK of a retail mortgage broker, will recognize additional goodwill of
approximately $12.0 million. The Company may also recognize significant amounts
of goodwill in connection with future acquisitions. The Company is amortizing
goodwill recognized in its recent acquisitions over ten years, and the
relatively large amortization charge recognized in each such year may
significantly reduce earnings recorded in such period. In addition, in the event
that the Company determines that the carrying value of goodwill is impaired, it
would write down such carrying value which would result in a charge to earnings
in the period such determination is made. Any such charge could have a material
adverse effect on the Company's financial results. In connection with its
acquisitions, the Company accounted for as a cost of acquisition restructuring
charges in the aggregate amount of $5.0 million for items including charges for
terminated leases and severance payments, and may have to make similar
provisions with respect to future acquisitions. In the event that the actual
charges exceed the provisions made by the Company, such charge will have an
adverse effect on the Company's results of operations.
Future acquisitions by the Company could result in potentially dilutive
issuances of equity securities, the incurrence of debt and contingent
liabilities and amortization expenses of additional goodwill and other
intangible assets, which could materially affect the Company's results of
operations or financial condition.
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RISKS RELATED TO OPERATIONS IN THE UK
General
Since the Company commenced operations in the UK in May 1995, the Company's
UK operations have become an increasingly important contributor to the Company's
overall operating results. For the three months ended March 31, 1997, 20.4% of
the Company's total loan origination and purchase volume (as compared to 14.0%
for the prior year's period) and 50.4% of the Company's total revenues (as
compared to 46.3% for the prior year's period) were attributable to the
Company's UK operations.
The Company's operations in the UK market are subject to most of the same
risks faced by the Company's US operations as well as the additional risks
customarily associated with US corporations conducting foreign activities,
including fluctuations in foreign currency exchange rates. To the extent that
unfavorable fluctuations in foreign currency exchange rates occur, the Company's
results of operations will be adversely affected. Although the Company is
exploring possible programs for hedging this risk, the Company is not aware of
any such program currently available that is suited to the Company's risk. There
can be no assurance that the Company will adopt a program to hedge this risk.
Additional risks in the UK include fluctuations in foreign currency controls,
expropriation, nationalization and other economic, tax and regulatory policies
of the UK government as well as the laws and policies of the US affecting
foreign trade and investment. A general election was held in the UK on May 1,
1997 in which the Labour Party was elected and it is anticipated that some shift
in fiscal and social policy will result. The Company's UK operations may be
adversely affected by any such changes.
Business Prospects Risks
The Company believes that the market in the UK for borrowers who are unable
or unwilling to obtain mortgage financing from conventional mortgage sources at
competitive rates, if at all, is underserved as a result of regulatory policies
imposed on banks and building societies ("Conventional UK Lenders") in the late
1980s. Currently many of such borrowers obtain mortgage financing through
independent mortgage brokers predominantly funded by private investors. Since
commencing operations in the UK, the Company has derived its UK loan
originations primarily from mortgage brokers (with the exception of the loan
portfolios purchased as a result of the acquisitions of J&J and Greyfriars) and,
to a lesser extent, recently through direct marketing to occupants of
government-owned residential properties in the UK. Approximately 60.5% and 30.7%
of the Company's UK loans were originated through three mortgage brokers in 1995
and 1996, respectively. Although the Company believes that its products and
services will attract a consistent flow of loan origination volume from
independent mortgage brokers, there can be no assurance the Company will be able
to obtain similar levels of loan origination volume from brokers in the future.
Further, there can be no assurance that the Company, due to competition or other
factors, will be able to obtain similar terms and pricing for such loan
originations. In particular, the Company has agreed to pay increased commissions
to brokers on loans originated in connection with right of first refusal
agreements.
Legal and Regulatory Risks
The Company's mortgage lending business in the UK is subject to regulations
promulgated under the United Kingdom Consumer Credit Act 1974 (the "CCA")
applicable to loans made to individuals or partnerships with principal balances
of pound sterling 15,000 or less. Loans with principal balances in excess of
pound sterling 15,000 are not currently regulated within the UK, except in
limited circumstances. The government has announced its intention to bring
before Parliament regulations that would increase this amount. The CCA and
regulations promulgated thereunder, among other things, impose licensing
obligations on CSC-UK and its subsidiaries, define certain requirements relating
to the form, content, legibility, execution and delivery to the borrower of loan
documents, restrict communication with the borrower prior to completion of a
transaction, require information and notice of enforcement to be given to the
borrower, generally limit a lender to a one-month deferment with any
calculations of prepayment interest under the "Rule of 78s" method, require
rebates to the borrower on early settlement and create a cause of action for an
"extortionate credit bargain." A license is required to service loans in the UK
irrespective of the size of the loan. Failure to
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comply with the requirements of these rules and regulations can result in the
revocation or suspension of the license to do business and/or render the
mortgage unenforceable in the absence of a court order.
Although the Company believes that CSC-UK has systems and procedures to
facilitate compliance with the requirements under the CCA and is in compliance
in all material respects with applicable laws and regulations, there can be no
assurance that more restrictive laws and regulations will not be adopted in the
future that could make compliance more difficult or expensive (see discussion
regarding the Office of Fair Trading (the "OFT") initiative below).
Approximately 35.8% (as a percentage of aggregate principal balances) of the
Company's UK loans were subject to the CCA and the regulations promulgated
thereunder at March 31, 1997. Of this 35.8%, 3.1% were loans originated by
CSC-UK, 29.0% by J&J and 67.9% by Greyfriars. By way of example, if regulations
were enacted to increase the regulated amount to pound sterling 25,000, an
additional 28.3% of the Company's UK loans at March 31, 1997 would have been
regulated. The Company cannot predict the likelihood of the enactment of these
regulations or the extent of such increase or any other change to the CCA or any
other legislation. The announced OFT regulatory initiative or other future
regulation, if enacted, could limit the Company's ability to impose fees and
charges and could have a material adverse effect on the Company's results of
operations and financial condition.
With regard to prepayment terms, if a UK borrower redeems his loan in full
prior to the maturity date (whether voluntarily or through a default), the
equivalent of an early payment fee is incurred as result of the borrower's
contractual obligation to pay a stated amount of interest for the credit
extended. The Company's UK loans provide for prepayment fees to be determined in
one of two ways. For some of the Company's UK loans, the prepayment fee is based
on an amount equal to a certain number of months' interest; however, for the
majority of the Company's UK loans, the total principal and interest due over
the full term of the loan is calculated and then the borrower is provided a
rebate for the unexpired portion of the loan term, resulting in the equivalent
of an early payment fee. The amount due on a majority of the Company's UK loans
in the case of prepayment is based on the amount of interest, at the Standard
Rate (as defined herein) or the Concessionary Rate (as defined herein)
(whichever is in effect on the date of prepayment), that has been "earned" and
calculated in accordance with the Rule of 78s method. Using this method, the
prepayment of a loan will often result in the Company receiving substantially
more than such loan's original principal balance.
There can be no assurance that regulatory developments in the UK, including
those that might be brought about by a change in the political party whose
members constitute a majority of Parliament as a result of the May 1, 1997
elections, will not result in significant changes relating to certain provisions
of many CSC-UK loans, most notably the calculation of prepayments using the Rule
of 78s and the use of the standard/concessionary rate structure. The Company
believes that these provisions are enforceable under English law and do not
violate common law prohibitions on penalty interest. The enforceability of these
provisions, however, has not been tested in English courts. In the event an
appropriate English court were to address these issues, no assurance can be
given that such a court will not reach a holding that negatively affects the
terms of such loans, which holding could have a material adverse effect on the
Company's results of operations and financial condition.
In addition, CSC-UK received a letter in March 1997 from the OFT, the
Director General of which has responsibility, under the CCA, for the granting of
consumer credit licenses to mortgage lenders and for the subsequent monitoring
of their activities to ensure continued fitness to hold such licenses. The
Company believes the letter was also sent to other lenders, as well as
intermediaries and other entities involved directly or indirectly in the
non-status lending market. The letter states that, when determining the fitness
of licensees, the OFT will consider whether the licensee or its associates have
engaged in business practices which appear to be inappropriate, regardless of
their legality. The letter specifically sets forth certain practices deemed by
the OFT to fall within such categories.
The majority of the stated business practices are either (i) not applicable
to CSC-UK's operations or (ii) practices in which CSC-UK engages and believes
itself to be in compliance or easily able to modify its operations in order to
comply with the OFT letter. The OFT letter, however, questions the
appropriateness of standard/concessionary rate structures, as well as the
calculation of prepayments using the Rule of 78s method. The Company is
reviewing and evaluating its practices with respect to each issue raised in the
letter
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and is in discussion with the OFT regarding its concerns raised in the letter.
The Company does not believe regulatory initiatives set forth in the letter will
have a material adverse effect on any of its existing mortgage loans or to the
continuance of its licenses, although no assurances to that effect can be given
at this time. In partial response to the OFT letter and after preliminary
discussions with OFT, the Company volunteered to discontinue originating
unregulated loans that utilize the Rule of 78s method commencing in the early
part of the second half of 1997.
The Company commenced broadening its UK product offerings with products
that calculate payments without using the Rule of 78s in anticipation of
potential regulatory initiatives like those set forth in the OFT letter. The
elimination of the Rule of 78s loan products could have a material adverse
effect in future periods on the Company's results of operations and financial
condition, especially if the Company is unsuccessful in its product broadening
efforts. In future periods, the OFT's regulatory initiatives could also result
in the Company's elimination or modification of regulated loan products
utilizing the Rule of 78s. Such elimination or modification could also have a
material adverse effect in future periods on the Company's results of operations
and financial condition, especially if the Company is unsuccessful in its
product broadening efforts. In addition, the Company believes that it may be
required to modify aspects of its standard/concessionary rate structure in
response to the regulatory initiatives set forth in the OFT letter. No assurance
can be given as to the effect of such modifications or that the OFT will not
require the elimination of its standard/concessionary rate structure, either of
which could have a material adverse effect in future periods on the Company's
results of operations and financial condition.
Dependence on Secondary Market
Since March 1996, CSC-UK has pooled and sold through securitizations an
increasing percentage of the loans which it originates. Although the Company
believes that a UK secondary market exists for the type of mortgage loans it
originates in the UK, the UK secondary market for such loans is less developed
than the US secondary market for such loans. The Company believes that its March
1996 sale was the first publicly offered, London Stock Exchange listed
securitization of loans of the type originated by the Company sold in the UK
secondary market in several years. No assurances can be given that CSC-UK will
be successful in structuring, marketing and completing loan securitizations in
the UK in the future or that a viable and liquid market for whole loan sales
will develop similar to that in the US. Failure to securitize or sell mortgage
loans in the UK would have a material adverse effect on CSC-UK's, and therefore
the Company's, results of operations and financial condition.
Unseasoned Loan Portfolio
The Company has been servicing loans in the UK only since May 1995 and,
accordingly, the UK loan serviced portfolio is unseasoned. The Company has
experienced an increase in delinquency rates in connection with its UK serviced
portfolio. Further, J&J's historical delinquency experience has been higher than
that of CSC-UK, totaling 43.5% at March 31, 1997.
Potential Change in Valuation of Mortgage Servicing Receivables
Due to the relatively brief period the Company has operated in the UK and
because the UK market for the types of loans sold by the Company has been very
fragmented and underserved, the Company has limited data on which to base
certain of the assumptions, including prepayment assumptions, necessary to
determine the gain on sale recognized when the Company sells UK loans through
securitizations. A component of such gain on sale, which is capitalized on the
Company's balance sheet as mortgage servicing receivables, results from two
attributes of the Company's UK loans that are not shared by the Company's US
loans. Unlike the Company's US loans, certain UK loans have significant
prepayment fees and/or provide the borrower with an opportunity to pay a reduced
interest rate (the "Concessionary Rate") to the extent the borrower pays the
loan when due (as opposed to the standard interest rate (the "Standard Rate")
that would apply at any time during which any payment arrears exist). In its UK
securitizations, the Company acquires an uncertificated residual interest,
carried on the Company's balance sheet as mortgage servicing receivables, in the
excess cash flows generated by such securitizations. Following the sale of UK
loans into securitizations, the Company
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retains no control over the loans sold and has no control over the borrowers'
performance under such loans and no control over the ability to realize
prepayments calculated using the Rule of 78s or interest rates in excess of the
Concessionary Rate. Accordingly, even though under the terms of the Company's UK
securitizations, the Company is entitled to such prepayments and interest in
excess of the Concessionary Rate, there can be no assurance that such
prepayments or excess interest can be achieved. In addition, in the event of a
forced sale, any proceeds would be distributed first to pay related enforcement
expenses, then to pay any aggregate outstanding concessionary interest and then
to pay the holders of the senior interests, before any proceeds were available
to pay the holder of the residual interest. To the extent that actual
prepayments occur at a slower rate than assumed on UK loans, the Company may
realize lower prepayment calculations, or realize the prepayments at a later
time, than assumed at the time the gain on sale was originally determined
resulting in impairment to mortgage servicing receivables. If more borrowers
than were initially assumed earned the opportunity to pay the Concessionary
Rate, the Company will realize a lower than expected yield on such borrowers'
loans also resulting in impairment to mortgage servicing receivables. Although
the Company believes that its assumptions with respect to UK prepayments and
borrowers who will be eligible to pay the Concessionary Rate are reasonable, no
assurance can be given that actual results will not differ substantially. In
addition, no assurance can be given that the regulatory environment will not
adversely change or competitors entering the UK market will not offer to
borrowers better prepayment and interest terms than those currently offered by
the Company. Either of such developments could impair the Company's mortgage
servicing receivables and would have a negative impact on the Company's
financial condition and results of operations.
Mortgage servicing receivables may also be impaired as a result of certain
adjustments in interest rates affecting UK loans. The interest rates on the
majority of the Company's UK loans may be adjusted upward by the Company based
upon a UK base borrowing rate. The Company's UK loans have generally been less
sensitive to fluctuations in interest rates than is typically the case for US
adjustable rate loans. The Company's UK securitizations and loan sales into the
UK Greenwich Facility have variable pass-through rates based on LIBOR, requiring
an increase in the rate upon a specified increase in LIBOR. To the extent that
the Company's UK loan interest rates are not adjusted upward in a timely manner
in response to increases in the variable pass-through rate relating to the
securitization, mortgage servicing receivables will be impaired. In addition, if
such interest rates are adjusted upward and borrowers are unable to make the
resulting higher payments, the Company's UK loans may experience greater
delinquencies and losses which could cause the mortgage servicing receivables to
be impaired.
CONTINGENT RISKS
Although the Company sells substantially all loans which it originates and
purchases on a nonrecourse basis, the Company retains some degree of credit risk
on substantially all loans sold. During the period of time that loans are held
pending sale, the Company is subject to the various business risks associated
with the lending business including the risk of borrower default, the risk of
foreclosure and the risk that a rapid increase in interest rates would result in
a decline in the value of loans to potential purchasers. In addition, documents
governing the UK Greenwich Facility and the Company's securitizations require
the Company to commit to repurchase or replace loans which do not conform to the
representations and warranties made by the Company at the time of sale. When
borrowers are delinquent in making monthly payments on loans included in a REMIC
trust, the Company is required to advance interest payments with respect to such
delinquent loans to the extent that the Company deems such advances ultimately
recoverable. These advances require funding from the Company's capital resources
but have priority of repayment from the succeeding month's collections.
In the ordinary course of its business, the Company is subject to claims
made against it by borrowers and private investors arising from, among other
things, losses that are claimed to have been incurred as a result of alleged
breaches of fiduciary obligations, misrepresentations, errors and omissions of
employees, officers and agents of the Company (including its appraisers),
incomplete documentation and failures by the Company to comply with various laws
and regulations applicable to its business. The Company believes that liability
with respect to any currently asserted claims or legal actions is not likely to
be material to the Company's consolidated results of operations or financial
condition; however, any claims asserted in the future may result
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in legal expenses or liabilities which could have a material adverse effect on
the Company's results of operations and financial condition.
GEOGRAPHIC CONCENTRATION OF US OPERATIONS
Approximately 18.0% of the Company's US loan origination and purchase
volume for 1996 and for the three months ended March 31, 1997 was derived from
the state of New York. Although the Company is licensed or registered in 44
states and the District of Columbia and intends to continue to expand into other
markets, it is expected that the state of New York will continue to provide a
substantial portion of its loan origination and purchase activity. Consequently,
the Company's results of operations and financial condition are affected by
general trends in the New York economy and the residential real estate market.
Should a downturn occur in the New York economy or its residential real estate
market, the Company's equity position or portfolio performance relating to
existing New York loans would be adversely affected. In particular, the economy
and the residential real estate market in and around New York City, where a
significant portion of the Company's New York loans have been originated, has
historically been affected by fluctuations in the financial markets.
COMPETITION
As a consumer finance company specializing in mortgage loans, the Company
faces intense competition, primarily from mortgage banking companies, commercial
banks, credit unions, thrift institutions, credit card issuers, finance
companies and, additionally in the UK, building societies and new market
entrants who are affiliated with some of the Company's US competitors. Many of
these competitors in the financial services business are substantially larger
and have more capital and other resources than the Company. Furthermore, certain
large national finance companies and conforming mortgage originators in the US
have announced their intention to adapt their conforming origination programs
and allocate resources to the origination of non-conforming loans. In addition,
certain of these larger mortgage companies and commercial banks have begun to
offer products similar to those offered by the Company, targeting customers
similar to those of the Company. The entrance of these competitors into the
Company's market could have a material adverse effect on the Company's financial
condition and results of operations.
The UK market for the type of loans the Company originates is highly
fragmented and, for a variety of reasons, underserved by conventional lenders as
compared to the US market. The Company anticipates that it will face additional
competition in the UK in the future which will likely have a negative impact on
the average gain on sale realized upon the sale of UK loans and could have a
material adverse effect on the Company's results of operations and financial
condition.
Competition can take many forms, including convenience in obtaining a loan,
customer service, marketing and distribution channels and interest rates.
Competition may be affected by fluctuations in interest rates and general
economic conditions. During periods of rising rates, competitors that have
"locked in" low borrowing costs may have a competitive advantage. During periods
of declining rates, competitors may solicit the Company's customers to refinance
their loans. During economic slowdowns or recessions, the Company's borrowers
may have new financial difficulties and may be receptive to offers by the
Company's competitors. The current level of gains realized by the Company and
its competitors on the sale of the type of loans they originate and purchase is
attracting additional competitors into this market with the possible effect of
lowering gains that may be realized on the Company's future loan sales. During
1996, the Company experienced an increase in the weighted average loan-to-value
ratio on its Core Products and in the premiums it paid under its Wholesale Loan
Acquisition Program to its correspondents, and experienced a slower rate of
growth in originations from its independent mortgage brokers. The Company is
unable at this time to determine whether such increases and slowing will
continue in 1997. Furthermore, as the Company expands into the market of
borrowers with higher quality credit and loan products that require more
significant capital, the Company will face additional competition with the
possible effect of lowering gains realized by the Company.
The Company depends largely on independent mortgage brokers and financial
institutions and other mortgage bankers for its originations and purchases of
new loans. The Company's competitors also seek to
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establish relationships with the Company's independent mortgage brokers and
financial institutions and other mortgage bankers. In addition, the Company
expects the volume of wholesale loans purchased by the Company to increase and
the relative proportion of wholesale loans to total loans originated and
purchased by the Company to expand. The Company's future results may become more
exposed to fluctuations in the volume and cost of its wholesale loans resulting
from competition from other purchasers of such loans, market conditions and
other factors.
US LEGISLATIVE AND REGULATORY RISKS
Members of Congress and government officials have from time to time
suggested the elimination of the mortgage interest deduction for federal income
tax purposes, either entirely or in part, based on borrower income, type of loan
or principal amount. Because many of the Company's loans are made to borrowers
for the purpose of consolidating consumer debt or financing other consumer
needs, the competitive advantages of tax deductible interest, when compared with
alternative sources of financing, could be eliminated or seriously impaired by
such government action. Accordingly, the reduction or elimination of these tax
benefits could have a material adverse effect on the demand for loans of the
kind offered by the Company.
The Company's US business is subject to extensive regulation, supervision
and licensing by federal, state and local governmental authorities and is
subject to various laws and judicial and administrative decisions imposing
requirements and restrictions on part or all of its operations. The Company's
consumer lending activities are subject to the Federal Truth-in-Lending Act and
Regulation Z (including the Home Ownership and Equity Protection Act of 1994),
the Federal Equal Credit Opportunity Act and Regulation B, as amended ("ECOA"),
the Fair Credit Reporting Act of 1970, as amended, the Federal Real Estate
Settlement Procedures Act ("RESPA") and Regulation X, the Home Mortgage
Disclosure Act, the Federal Debt Collection Practices Act and the National
Housing Act of 1934, as well as other federal and state statutes and regulations
affecting the Company's activities. The Company is also subject to the rules and
regulations of, and examinations by, the Department of Housing and Urban
Development ("HUD") and state regulatory authorities with respect to
originating, processing, underwriting, selling, securitizing and servicing
loans. These rules and regulations, among other things, impose licensing
obligations on the Company, establish eligibility criteria for mortgage loans,
prohibit discrimination, provide for inspections and appraisals of properties,
require credit reports on loan applicants, regulate assessment, collection,
foreclosure and claims handling, investment and interest payments on escrow
balances and payment features, mandate certain disclosures and notices to
borrowers and, in some cases, fix maximum interest rates, fees and mortgage loan
amounts. Failure to comply with these requirements can lead to loss of approved
status, termination or suspension of servicing contracts without compensation to
the servicer, demands for indemnifications or mortgage loan repurchases, certain
rights of rescission for mortgage loans, class action lawsuits and
administrative enforcement actions.
Although the Company believes that it has systems and procedures to
facilitate compliance with these requirements and believes that it is in
compliance in all material respects with applicable local, state and federal
laws, rules and regulations, there can be no assurance that more restrictive
laws, rules and regulations will not be adopted in the future that could make
compliance more difficult or expensive.
IMPACT OF RECENT ACCOUNTING PRONOUNCEMENTS
On January 1, 1997, the Company adopted the Financial Accounting Standards
Board ("FASB") Statement of Financial Accounting Standards ("SFAS") No. 125,
"Accounting for Transfer and Servicing of Financial Assets and Extinguishment of
Liabilities." SFAS No. 125 addresses the accounting for all types of
securitization transactions, securities lending and repurchase agreements,
collateralized borrowing arrangements and other transactions involving the
transfer of financial assets. SFAS No. 125 distinguishes transfers of financial
assets that are sales from transfers that are secured borrowings. SFAS No. 125
is generally effective for transactions that occur after December 31, 1996, and
it is to be applied prospectively. SFAS No. 125 requires the Company to allocate
the total cost of mortgage loans sold to the mortgage loans sold (servicing
released), retained certificates and servicing rights based on their relative
values. The pronouncement also requires the Company to provide additional
disclosure about the retained certificates in its securitizations and to account
for these assets at fair value in accordance with SFAS No. 115. The Company does
not believe that
23
<PAGE> 26
SFAS No. 125 will have a material effect on the Company's securitizations as
currently structured; however, there can be no assurance that SFAS No. 125 will
not have a material adverse effect on future securitization structures the
Company may employ, reduce the Company's gain on sale of loans in the future or
otherwise adversely affect the Company's results of operations or financial
condition.
POSSIBLE ENVIRONMENTAL LIABILITIES
US
In the course of its business, the Company has acquired, and may acquire in
the future, properties securing loans which are in default. Under various
federal, state and local environmental laws, ordinances and regulations, a
current or previous owner or operator of real estate may be required to
investigate and clean up hazardous or toxic substances or chemical releases at
such property, and may be held liable to a governmental entity or to third
parties for property damage, personal injury and investigation and cleanup costs
incurred by such parties in connection with the contamination. Such laws
typically impose cleanup responsibility and liability which, under such laws,
has been interpreted to be joint and several unless the harm is divisible and
there is a reasonable basis for allocation of responsibility. The costs of
investigation, remediation or removal of such substances may be substantial, and
the presence of such substances, or the failure to properly remediate such
property, may adversely affect the owner's ability to sell or rent such property
or to borrow using such property as collateral. Persons who arrange for the
disposal or treatment of hazardous or toxic substances also may be liable for
the costs of removal or remediation of such substances at the disposal or
treatment facility, whether or not the facility is owned or operated by such
person. In addition, the owner or former owners of a contaminated site may be
subject to common law claims by third parties based on damages and costs
resulting from environmental contamination emanating from such property.
UK
"Owners" or "occupiers" of contaminated land in the UK are potentially
liable under UK environmental laws. Such persons can be required to clean up
affected land, cease polluting activities, obtain licenses in connection with
disposal of waste, reimburse relevant enforcement authorities for clean-up costs
related to land and controlled waters and pay fines for non-compliance with
relevant laws and regulations. The potential liability of such persons may be
substantial and the presence of any polluting substances or the failure to
properly remediate such land may adversely affect the owner's or occupier's
ability to sell or rent the property on such land or to borrow using such
property as security. In addition to liability under statute, such persons may
be liable to third parties at common law for property damage, economic loss and
personal injury.
A lender may be deemed to be an "owner" upon enforcement of its interest in
a mortgaged property following default by a borrower depending on the method of
enforcement employed. A lender may also, depending on the degree of control it
has, be liable as a person who has caused or knowingly permitted pollution to
occur. A new statutory framework providing for the identification and allocation
of responsibility for costs associated with the investigation and clean-up of
contaminated land is set out in the Environmental Protection Act 1990, as
amended, and is expected to be implemented during 1997. Under this framework,
local authorities will have a duty to inspect land within their jurisdiction for
the purpose of identifying contamination.
No assurance can be given in either the US or the UK that any prior owner
or tenant of a property did not create any material environmental condition not
known to the Company, that future laws, ordinances or regulations will not
impose any material environmental liability, or that a material environmental
condition does not otherwise exist as to any one or more of the properties now
owned or acquired in the future by the Company, any of which could result in a
material adverse effect on the Company's results of operations and financial
condition.
DEPENDENCE ON KEY PERSONNEL
The Company's growth and development to date have been largely dependent
upon the services of Robert Grosser, Chairman of the Board, Chief Executive
Officer and President of the Company, and Robert C.
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<PAGE> 27
Patent, Vice Chairman of the Board and Executive Vice President of the Company.
Although the Company has been able to hire and retain other qualified and
experienced management personnel, the loss of Mr. Grosser's or Mr. Patent's
services for any reason could have a material adverse effect on the Company. The
Company has entered into employment agreements with Messrs. Grosser and Patent
and maintains key man life insurance in the amount of $2.0 million on Mr.
Grosser.
In the UK, David A. Steene, the Managing Director of CSC-UK, has played an
important role in the development of CSC-UK and the loss of his services could
have a material adverse effect on CSC-UK and therefore on the Company. CSC-UK
has entered into an employment agreement with Mr. Steene.
CONTROL BY CERTAIN STOCKHOLDERS
As of June 2, 1997, certain members of the Company's senior management and
Board of Directors beneficially owned an aggregate of 56.5% of the outstanding
shares of Common Stock. Such persons, if they were to act in concert, have
majority control of the Company, with the ability to approve certain fundamental
corporate transactions (including mergers, consolidations and sales of assets)
and to elect all members of the Board of Directors without further vote of the
minority stockholders.
LACK OF PUBLIC MARKET
The New Notes are new securities for which there currently is no market.
Although CIBC Wood Gundy Securities Corp., Bear, Stearns & Co. Inc. and
Oppenheimer & Co., Inc. (collectively the "Initial Purchasers") have been making
a market in the Old Notes and have informed the Company that they currently
intend to make a market in the New Notes, they are not obligated to do so and
any such market making may be discontinued at any time without notice.
Accordingly, there can be no assurance as to the development or liquidity of any
market for the New Notes. The Old Notes are currently eligible for trading by
qualified buyers in the PORTAL market. The New Notes will not be eligible for
PORTAL trading. The Company does not intend to apply for listing of the New
Notes on any securities exchange or for quotation through The Nasdaq National
Market ("Nasdaq").
The liquidity of, and trading market for, the New Notes also may be
adversely affected by general declines in the market for similar securities.
Such a decline may adversely affect such liquidity and trading markets
independent of the financial performance of, and prospects for, the Company.
USE OF PROCEEDS
There will be no proceeds to the Company from the exchange of Notes
pursuant to the Exchange Offer.
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<PAGE> 28
THE EXCHANGE OFFER
TERMS OF THE EXCHANGE OFFER; PERIOD FOR TENDERING OLD NOTES
General. Upon the terms and subject to the conditions set forth in this
Prospectus and in the accompanying Letter of Transmittal (which together
constitute the Exchange Offer), the Company will accept for exchange Old Notes
which are properly tendered on or prior to the Expiration Date and not withdrawn
as permitted below. As used herein, the term "Expiration Date" means 5:00 p.m.,
New York City time, on , 1997; provided, however, that if the
Company has extended the period of time for which the Exchange Offer is open,
the term "Expiration Date" means the latest time and date to which the Exchange
Offer is extended.
As of the date of this Prospectus, $300.0 million aggregate principal
amount of the Old Notes was outstanding. This Prospectus, together with the
Letter of Transmittal, is first being sent on or about , 1997, to
all holders of Old Notes known to the Company. The Company's obligation to
accept Old Notes for exchange pursuant to the Exchange Offer is subject to
certain conditions as set forth under "-- Certain Conditions to the Exchange
Offer" below.
Extension; Return of Old Notes not Accepted for Exchange. The Company
expressly reserves the right, at any time or from time to time, to extend the
period of time during which the Exchange Offer is open, and thereby delay
acceptance for exchange of any Old Notes, by giving notice of such extension to
the holders thereof. During any such extension, all Old Notes previously
tendered will remain subject to the Exchange Offer and may be accepted for
exchange by the Company. Any Old Notes not accepted for exchange for any reason
will be returned without expense to the tendering holder thereof as promptly as
practicable after the expiration or termination of the Exchange Offer.
Amendment; Termination. The Company expressly reserves the right to amend
or terminate the Exchange Offer, and not to accept for exchange any Old Notes
not theretofor accepted for exchange, upon the occurrence of any of the
conditions of the Exchange Offer specified below under "-- Certain Conditions to
the Exchange Offer."
Notice. The Company will give notice of any extension, amendment,
non-acceptance or termination to the holders of the Old Notes as promptly as
practicable, such notice in the case of any extension to be issued no later than
9:00 a.m., New York City time, on the next business day after the previously
scheduled Expiration Date.
No Appraisal or Dissenters' Rights. Holders of Old Notes do not have any
appraisal or dissenters' rights under the Delaware General Corporation Law in
connection with the Exchange Offer.
PROCEDURES FOR TENDERING OLD NOTES
The tender to the Company of Old Notes by a holder thereof as set forth
below and the acceptance thereof by the Company will constitute a binding
agreement between the tendering holder and the Company upon the terms and
subject to the conditions set forth in this Prospectus and in the accompanying
Letter of Transmittal. Except as set forth below, a holder who wishes to tender
Old Notes for exchange pursuant to the Exchange Offer must transmit a properly
completed and duly executed Letter of Transmittal, including all other documents
required by such Letter of Transmittal, to The Chase Manhattan Bank (the
"Exchange Agent") at the address set forth below under "-- Exchange Agent" on or
prior to the Expiration Date. In addition, either (i) certificates for such Old
Notes must be received by the Exchange Agent along with the Letter of
Transmittal, or (ii) a timely confirmation of a book-entry transfer (a
"Book-Entry Confirmation") of such Old Notes, if such procedure is available,
into the Exchange Agent's account at The Depository Trust Company (the
"Book-Entry Transfer Facility") pursuant to the procedure for book-entry
transfer described below, must be received by the Exchange Agent prior to the
Expiration Date, or (iii) the holder must comply with the guaranteed delivery
procedures described below. THE METHOD OF DELIVERY OF OLD NOTES, LETTERS OF
TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE
HOLDERS. IF SUCH DELIVERY IS BY MAIL, IT IS RECOM-
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<PAGE> 29
MENDED THAT REGISTERED MAIL, PROPERLY INSURED, WITH RETURN RECEIPT REQUESTED, BE
USED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE TIMELY DELIVERY.
NO LETTERS OF TRANSMITTAL OR OLD NOTES SHOULD BE SENT TO THE COMPANY. THE
COMPANY IS NOT ASKING NOTEHOLDERS FOR A PROXY AND NOTEHOLDERS ARE REQUESTED NOT
TO SEND THE COMPANY A PROXY.
Signatures on a Letter of Transmittal or a notice of withdrawal, as the
case may be, must be guaranteed unless the Old Notes surrendered for exchange
pursuant thereto are tendered (i) by a registered holder of the Old Notes who
has not completed the box entitled "Special Issuance Instructions" or "Special
Delivery Instructions" on the Letter of Transmittal or (ii) for the account of
an Eligible Institution (as defined below). In the event that signatures on a
Letter of Transmittal or a notice of withdrawal, as the case may be, are
required to be guaranteed, such guarantees must be by a firm which is a member
of a registered national securities exchange or a member of the National
Association of Securities Dealers, Inc. or by a commercial bank or trust company
having an office or correspondent in the United States (collectively, "Eligible
Institutions"). If Old Notes are registered in the name of a person other than a
signer of the Letter of Transmittal, the Old Notes surrendered for exchange must
be endorsed by, or be accompanied by a written instrument or instruments of
transfer or exchange, in satisfactory form as determined by the Company in its
sole discretion, duly executed by the registered holder with the signature
thereon guaranteed by an Eligible Institution.
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance of Old Notes tendered for exchange will be determined by
the Company in its sole discretion, which determination shall be final and
binding. The Company reserves the absolute right to reject any and all tenders
of any particular Old Notes not properly tendered or to not accept any
particular Old Notes which acceptance might, in the judgment of the Company or
its counsel, be unlawful. The Company also reserves the absolute right to waive
any defects or irregularities or conditions of the Exchange Offer as to any
particular Old Notes either before or after the Expiration Date (including the
right to waive the ineligibility of any holder who seeks to tender Old Notes in
the Exchange Offer). The interpretation of the terms and conditions of the
Exchange Offer as to any particular Old Notes either before or after the
Expiration Date (including the Letter of Transmittal and the instructions
thereto) by the Company shall be final and binding on all parties. Unless
waived, any defects or irregularities in connection with tenders of Old Notes
for exchange must be cured within such reasonable period of time as the Company
shall determine. Neither the Company, the Exchange Agent nor any other person
shall be under any duty to give notification of any defect or irregularity with
respect to any tender of Old Notes for exchange, nor shall any of them incur any
liability for failure to give such notification.
If the Letter of Transmittal is signed by a person or persons other than
the registered holder or holders of Old Notes, such Old Notes must be endorsed
or accompanied by appropriate powers of attorney, in either case signed exactly
as the name or names of the registered holder or holders that appear on the Old
Notes.
If the Letter of Transmittal or any Old Notes or powers of attorney are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing and, unless waived by the
Company, proper evidence satisfactory to the Company of their authority to so
act must be submitted.
By tendering, each broker-dealer will represent to the Company that, among
other things, the New Notes acquired pursuant to the Exchange Offer are being
obtained in the ordinary course of business of the holder and any beneficial
holder, that neither the holder nor any such beneficial holder has an
arrangement or understanding with any person to participate in the distribution
of such New Notes and that neither the holder nor any such other person is an
"affiliate," as defined under Rule 405 of the Securities Act, of the Company. If
the holder is not a broker-dealer, the holder must represent that it is not
engaged in nor does it intend to engage in a distribution of the New Notes.
ACCEPTANCE OF OLD NOTES FOR EXCHANGE; DELIVERY OF NEW NOTES
Upon satisfaction or waiver of all of the conditions to the Exchange Offer,
the Company will accept, promptly after the Expiration Date, all Old Notes
properly tendered and will issue the New Notes promptly
27
<PAGE> 30
after acceptance of the Old Notes. See "-- Certain Conditions to the Exchange
Offer" below. For purposes of the Exchange Offer, the Company shall be deemed to
have accepted properly tendered Old Notes for exchange when, as and if the
Company has given oral and written notice thereof to the Exchange Agent.
For each Old Note accepted for exchange, the holder of such Old Note will
receive a New Note having a principal amount equal to that of the surrendered
Old Note.
In all cases, issuance of New Notes for Old Notes that are accepted for
exchange pursuant to the Exchange Offer will be made only after timely receipt
by the Exchange Agent of certificates for such Old Notes or a timely Book-Entry
Confirmation of such Old Notes into the Exchange Agent's account at the
Book-Entry Transfer Facility, a properly completed and duly executed Letter of
Transmittal and all other required documents. If any tendered Old Notes are not
accepted for any reason set forth in the terms and conditions of the Exchange
Offer or if Old Notes are submitted for a greater principal amount than the
holder desires to exchange, such unaccepted or non-exchanged Old Notes will be
returned without expense to the tendering holder thereof (or, in the case of Old
Notes tendered by book-entry transfer into the Exchange Agent's account at the
Book-Entry Transfer Facility pursuant to the book-entry transfer procedures
described below, such non-exchanged Old Notes will be credited to an account
maintained with such Book-Entry Transfer Facility) as promptly as practicable
after the expiration of the Exchange Offer.
BOOK-ENTRY TRANSFER
Any financial institution that is a participant in the Book-Entry Transfer
Facility's systems may make book-entry delivery of Old Notes by causing the
Book-Entry Transfer Facility to transfer such Old Notes into the Exchange
Agent's account at the Book-Entry Transfer Facility in accordance with the
Book-Entry Transfer Facility's procedures for transfer. However, although
delivery of Old Notes may be effected through book-entry transfer at the
Book-Entry Transfer Facility, the Letter of Transmittal or facsimile thereof
with any required signature guarantees and any other required signature
guarantees and any other required documents must, in any case, be transmitted to
and received by the Exchange Agent at the address set forth below under
"-- Exchange Agent" on or prior to the Expiration Date or the guaranteed
delivery procedures described below must be complied with.
GUARANTEED DELIVERY PROCEDURES
If a registered holder of the Old Notes desires to tender such Old Notes
and the Old Notes are not immediately available, or time will not permit such
holder's Old Notes or other required documents to reach the Exchange Agent
before the Expiration Date, or the procedure for book-entry transfer cannot be
completed on a timely basis, a tender may be effected if (i) the tender is made
through an Eligible Institution, (ii) prior to the Expiration Date, the Exchange
Agent receives from such Eligible Institution a properly completed and duly
executed Letter of Transmittal (or a facsimile thereof) and Notice of Guaranteed
Delivery, substantially in the form provided by the Company (by telegram, telex,
facsimile transmission, mail or hand delivery), setting forth the name and
address of the holder of Old Notes and the amount of Old Notes tendered, stating
that the tender is being made thereby and guaranteeing that within three New
York Stock Exchange ("NYSE") trading days after the date of execution of the
Notice of Guaranteed Delivery, the certificates for all physically tendered Old
Notes, in proper form for transfer, or a Book-Entry Confirmation, as the case
may be, and any other documents required by the Letter of Transmittal will be
deposited by the Eligible Institution with the Exchange Agent and (iii) the
certificates for all physically tendered Old Notes, in proper form for transfer,
or a Book-Entry Confirmation, as the case may be, and all other documents
required by the Letter of Transmittal are received by the Exchange Agent within
three NYSE trading days after the date of execution of the Notice of Guaranteed
Delivery.
WITHDRAWAL RIGHTS
Tenders of Old Notes may be withdrawn at any time prior to the Expiration
Date. For a withdrawal to be effective, a written notice of withdrawal must be
received by the Exchange Agent at the address set forth below under "-- Exchange
Agent." Any such notice of withdrawal must specify the name of the person having
28
<PAGE> 31
tendered the Old Notes to be withdrawn, identify the Old Notes to be withdrawn
(including the principal amount of such Old Notes), and (where certificates for
Old Notes have been transmitted) specify the name in which such Old Notes are
registered, if different from that of the withdrawing holder. If certificates
for Old Notes have been delivered or otherwise identified to the Exchange Agent,
then, prior to the release of such certificates the withdrawing holder must also
submit the serial numbers of the particular certificates to be withdrawn and a
signed notice of withdrawal with signatures guaranteed by an Eligible
Institution unless such holder is an Eligible Institution. If Old Notes have
been tendered pursuant to the procedure for book-entry transfer described above,
any notice of withdrawal must specify the name and number of the account at the
Book-Entry Transfer Facility to be credited with the withdrawn Old Notes and
otherwise comply with the procedures of such facility. All questions as to the
validity, form and eligibility (including time of receipt) of such notices will
be determined by the Company, whose determination shall be final and binding on
all parties. Any Old Notes so withdrawn will be deemed not to have been validly
tendered for exchange for purposes of the Exchange Offer. Any Old Notes that
have been tendered for exchange but that are not exchanged for any reason will
be returned to the holder thereof without cost to such holder (or, in the case
of Old Notes tendered by book-entry transfer into the Exchange Agent's account
at the Book-Entry Transfer Facility pursuant to the book-entry transfer
procedures described above, such Old Notes will be credited to an account
maintained with such Book-Entry Transfer Facility for the Old Notes) as soon as
practicable after withdrawal, rejection of tender or termination of the Exchange
Offer. Properly withdrawn Old Notes may be retendered by following one of the
procedures described under "-- Procedures for Tendering Old Notes" above at any
time on or prior to the Expiration Date.
CERTAIN CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provision of the Exchange Offer, the Company
shall not be required to accept for exchange, or to issue New Notes in exchange
for, any Old Notes and may terminate or amend the Exchange Offer if at any time
before the acceptance of such Old Notes for exchange or the exchange of the New
Notes for such Old Notes, the Company determines that the Exchange Offer
violates applicable law, any applicable interpretation of the staff of the
Commission or any order of any governmental agency or court of competent
jurisdiction.
The foregoing conditions are for the sole benefit of the Company and may be
asserted by the Company regardless of the circumstances giving rise to any such
condition or may be waived by the Company in whole or in part at any time and
from time to time in its reasonable discretion. The failure by the Company at
any time to exercise any of the foregoing rights shall not be deemed a waiver of
any such right and each such right shall be deemed an ongoing right which may be
asserted at any time and from time to time.
In addition, the Company will not accept for exchange any Old Notes
tendered, and no New Notes will be issued in exchange for any such Old Notes, if
at such time any stop order shall be threatened or in effect with respect to the
Registration Statement of which this Prospectus constitutes a part or the
qualification of the Indenture under the Trust Indenture Act of 1939 (the
"TIA"). In any such event, the Company is required to use its reasonable best
efforts to obtain the withdrawal of any stop order at the earliest possible
time.
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<PAGE> 32
EXCHANGE AGENT
The Chase Manhattan Bank has been appointed as the Exchange Agent for the
Exchange Offer. All executed Letters of Transmittal should be directed to the
Exchange Agent at the address set forth below. Questions and requests for
assistance, requests for additional copies of this Prospectus or of the Letter
of Transmittal and requests for Notices of Guaranteed Delivery should be
directed to the Exchange Agent addressed as follows:
BY HAND/OVERNIGHT EXPRESS/MAIL/OVERNIGHT DELIVERY:
(insured if registered recommended)
The Chase Manhattan Bank
450 West 33rd Street, 15th Floor
New York, New York 10001-2697
Attn: Global Trust Services
VIA FACSIMILE:
(212) 946-8177
FOR INFORMATION CALL:
Douglas Lavelle
(212) 946-3009
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE DOES
NOT CONSTITUTE A VALID DELIVERY.
FEES AND EXPENSES
The Company will not make any payments to brokers, dealers or others
soliciting acceptances of the Exchange Offer. The principal solicitation is
being made by mail; however, additional solicitations may be made in person or
by telephone by officers, employees and representatives of the Company.
The estimated cash expenses to be incurred in connection with the Exchange
Offer will be paid by the Company and are estimated in the aggregate to be
approximately $ , which includes fees and expenses of the Trustee,
accounting, legal, printing and related fees and expenses.
ACCOUNTING TREATMENT
The New Notes will be recorded at the same carrying value as the Old Notes,
which is the principal amount as reflected in the Company's accounting records
on the date of the exchange. Accordingly, no gain or loss for accounting
purposes will be recognized. The expenses of the Exchange Offer will be
capitalized for accounting purposes.
TRANSFER TAXES
Holders who tender their Old Notes for exchange will not be obligated to
pay any transfer taxes in connection therewith, except that holders who instruct
the Company to register New Notes in the name of, or request that Old Notes not
tendered or not accepted in the Exchange Offer be returned to, a person other
than the registered tendering holder will be responsible for the payment of any
applicable transfer tax thereon.
CONSEQUENCES OF FAILURE TO EXCHANGE; RESALES OF NEW NOTES
Holders of Old Notes who do not exchange their Old Notes for New Notes
pursuant to the Exchange Offer will continue to be subject to the restrictions
on transfer of such Old Notes as set forth in the legend thereon as a
consequence of the issuance of the Old Notes pursuant to the exemptions from, or
in transactions not subject to, the registration requirements of the Securities
Act and applicable state securities law. Old Notes not exchanged pursuant to the
Exchange Offer will continue to accrue interest at 12 3/4% per annum and
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<PAGE> 33
will otherwise remain outstanding in accordance with their terms. Holders of Old
Notes do not have any appraisal or dissenters' rights under the Delaware General
Corporation Law in connection with the Exchange Offer. In general, the Old Notes
may not be offered or sold unless registered under the Securities Act, except
pursuant to an exemption from, or in a transaction not subject to, the
Securities Act and applicable state securities laws. The Company does not
currently anticipate that it will register the Old Notes under the Securities
Act. However, (i) if any Initial Purchaser so requests with respect to Old Notes
not eligible to be exchanged for New Notes in the Exchange Offer and held by it
following consummation of the Exchange Offer or (ii) if any holder of Old Notes
is not eligible to participate in the Exchange Offer or, in the case of any
holder of Old Notes that participates in the Exchange Offer, does not receive
freely tradable New Notes in exchange for Old Notes, the Company is obligated to
file a registration statement on the appropriate form under the Securities Act
relating to the Old Notes held by such persons.
Based on certain interpretive letters issued by the staff of the Commission
to third parties in unrelated transactions, New Notes issued pursuant to the
Exchange Offer may be offered for resale, resold or otherwise transferred by
holders thereof (other than (i) any such holder which is an "affiliate" of the
Company within the meaning of Rule 405 under the Securities Act or (ii) any
broker-dealer that purchases Notes from the Company to resell pursuant to Rule
144A or any other available exemption) without compliance with the registration
and prospectus delivery requirements of the Securities Act, provided that such
New Notes are acquired in the ordinary course of such holders' business and such
holders have no arrangement or understanding with any person to participate in
the distribution of such New Notes. If any holder has any arrangement or
understanding with respect to the distribution of the New Notes to be acquired
pursuant to the Exchange Offer, such holder (i) could not rely on the applicable
interpretations of the staff of the Commission and (ii) must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with a secondary resale transaction. The Company has not sought, and
does not intend to seek, its own interpretive letter from the Commission with
respect to the resale of the New Notes. There can be no assurance that the
Commission would make similar interpretations with respect to the Exchange
Offer. A broker-dealer who holds Old Notes that were acquired for its own
account as a result of market-making or other trading activities may be deemed
to be an "underwriter" within the meaning of the Securities Act and must,
therefore, deliver a prospectus meeting the requirements of the Securities Act
in connection with any resale of New Notes. Each such broker-dealer who receives
New Notes for its own account in exchange for Old Notes, where such Old Notes
were acquired by such broker-dealer as a result of market-making activities or
other trading activities, must acknowledge in the Letter of Transmittal that it
will deliver a prospectus in connection with any resale of such New Notes. See
"Plan of Distribution." While the Company has an obligation under the
Registration Rights Agreement to update this Prospectus by amendment or
supplement for a period of 180 days following consummation of the Exchange
Offer, the Company has no obligation thereafter to update the Prospectus and,
therefore, holders required to deliver a prospectus may not thereafter be able
to resell because they may be unable to comply with the prospectus delivery
requirements described above.
In addition, to comply with the securities laws of certain jurisdictions,
if applicable, the New Notes may not be offered or sold unless they have been
registered or qualified for sale in such jurisdiction or an exemption from
registration or qualification is available and is complied with. The Company has
agreed, pursuant to the Registration Rights Agreement and subject to certain
specified limitations therein, to register or qualify the New Notes for offer or
sale under the securities or blue sky laws of such jurisdictions as any holder
of the Notes reasonably requests in writing.
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<PAGE> 34
CAPITALIZATION
The following table sets forth the consolidated capitalization of the
Company at March 31, 1997 and pro forma as adjusted to give effect to the
offering of the Old Notes and the application of the net proceeds therefrom and
to give pro forma effect to the issuance of the Series A Preferred Stock and the
induced conversion of $14.0 million of Convertible Debentures. See
"Summary -- Recent Developments." The Exchange Offer will not affect the
capitalization of the Company. This table should be read in conjunction with the
Company's Consolidated Financial Statements and the Notes thereto incorporated
herein by reference.
<TABLE>
<CAPTION>
AT
MARCH 31, 1997
----------------------
PRO FORMA
ACTUAL AS ADJUSTED
-------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Short-term debt:
Warehouse financing facilities..................................... $ 98,981 $ 82,491(1)
Other short-term debt.............................................. 30,103 --(2)
-------- --------
Total short-term debt...................................... $129,084 $ 82,491
======== ========
Long-term debt:
Standby financing facility......................................... $ 7,966 $ --
Notes and loans payable............................................ 150,000 --
12 3/4% Senior Notes due 2004...................................... -- 300,000
Convertible Debentures............................................. 143,620 129,620
Other long-term debt............................................... 4,560 4,560
-------- --------
Total long-term debt....................................... 306,146 434,180
-------- --------
Stockholders' equity:
Preferred Stock, $.01 par value; 5,000,000 shares authorized; no
shares outstanding actual; 5,000 shares issued and outstanding
pro forma as adjusted........................................... -- --
Common Stock, $.01 par value; 50,000,000 shares authorized;
29,744,322 shares issued and outstanding, actual; 30,620,362
shares issued and outstanding, pro forma as adjusted............ 297 306
Additional paid-in capital......................................... 58,201 125,769(3)
Foreign currency translation adjustment, net of taxes.............. 4,576 4,576
Unrealized gain on available-for-sale securities, net of taxes..... 7,282 7,282
Retained earnings.................................................. 79,454 72,612(4)
-------- --------
Total stockholders' equity................................. 149,810 210,545
-------- --------
Total capitalization....................................... $455,956 $ 644,725
======== ========
</TABLE>
- ---------------
(1) Reflects the repayment of $16.5 million of amounts outstanding as of March
31, 1997 under the working capital portion of the UK Greenwich Facility.
(2) Reflects the repayment of amounts outstanding as of March 31, 1997 of $25.0
million under a note to Greenwich, $5.0 million under a facility with The
First National Bank of Boston and $103,000 under the US Greenwich Facility.
(3) Reflects $49.3 million of net proceeds received from the issuance of the
Series A Preferred Stock and the $18.4 million recorded in connection with
the induced conversion of $14.0 million of Convertible Debentures.
(4) Reflects the write-off of deferred issuance costs and prepayment fees, net
of taxes, associated with the Senior Secured Facility and the $4.8 million
charge resulting from the induced conversion of $14.0 million of Convertible
Debentures.
32
<PAGE> 35
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges for the
periods indicated:
<TABLE>
<CAPTION>
CSC(1) COMPANY
--------------- ------------------------------------------
THREE MONTHS
YEAR ENDED YEAR ENDED ENDED
DECEMBER 31, DECEMBER 31, MARCH 31,
--------------- ------------------------ ---------------
1992 1993 1994 1995 1996 1996 1997
------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges(2).... 1.15x 1.45x 2.15x 5.72x 5.09x 9.82x 2.68x
</TABLE>
- ---------------
(1) The historical financial data presented have been derived exclusively from
the financial statements of CSC, which was acquired by the Company on April
27, 1994.
(2) Represents the ratio of (i) the sum of earnings before income taxes plus
interest expense less minority interest to (ii) interest expense.
33
<PAGE> 36
DESCRIPTION OF THE NOTES
GENERAL
The New Notes are to be issued under an Indenture, dated as of May 14, 1997
(the "Indenture"), among the Company, CSC and The Chase Manhattan Bank, as
Trustee (the "Trustee").
The following summary of certain provisions of the Indenture does not
purport to be complete and is subject to, and is qualified in its entirety by
reference to, all the provisions of the Indenture, including the definitions of
certain terms therein and those terms made a part thereof by the TIA.
Principal of, premium, if any, and interest on the Notes will be payable,
and the Notes may be exchanged or transferred, at the office or agency of the
Company in the Borough of Manhattan, The City of New York (which initially shall
be the corporate trust office of the Trustee, at 450 West 33rd Street, 15th
Floor, New York, New York 10001), except that, at the option of the Company,
payment of interest may be made by check mailed to the address of the Holders as
such address appears in the Note register.
The Notes will be issued only in fully registered form, without coupons, in
denominations of $1,000 and any integral multiple of $1,000. No service charge
shall be made for any registration of transfer or exchange of Notes, but the
Company may require payment of a sum sufficient to cover any transfer tax or
other similar governmental charge payable in connection therewith.
TERMS OF THE NOTES
The Notes will be general senior unsecured obligations of the Company,
limited to $300,000,000 aggregate principal amount, and will mature on June 1,
2004. The Notes will bear interest at a rate of 12 3/4% per annum from May 14,
1997 or from the most recent date to which interest has been paid or provided
for, payable semiannually to Holders of record at the close of business on the
May 15 or November 15 immediately preceding the interest payment date on June 1
and December 1 of each year, commencing December 1, 1997. The Company will pay
interest on overdue principal at 1% per annum in excess of such rate, and it
will pay interest on overdue installments of interest at such higher rate to the
extent lawful. Interest on the Notes will be computed on the basis of a 360-day
year of twelve 30-day months.
OPTIONAL REDEMPTION
Except as described in the following sentence, the Notes will not be
redeemable prior to maturity. At any time and from time to time prior to June 1,
2000, the Company may redeem in the aggregate up to 33 1/3% of the original
principal amount of the Notes with the proceeds of one or more Public Equity
Offerings, at a redemption price (expressed as a percentage of principal amount)
of 112.75% plus accrued interest to the redemption date (subject to the right of
Holders of record on the relevant record date to receive interest due on the
relevant interest payment date); provided, however, that at least $200.0 million
aggregate principal amount of the Notes must remain outstanding after each such
redemption.
In the case of any such redemption, selection of the Notes for redemption
will be made by the Trustee on a pro rata basis, by lot or by such other method
as the Trustee in its sole discretion shall deem to be fair and appropriate,
although no Note of $1,000 in original principal amount or less shall be
redeemed in part. If any Note is to be redeemed in part only, the notice of
redemption relating to such Note shall state the portion of the principal amount
thereof to be redeemed. A new Note in principal amount equal to the unredeemed
portion thereof will be issued in the name of the Holder thereof upon
cancellation of the original Note.
RANKING; HOLDING COMPANY STRUCTURE
The indebtedness evidenced by the Notes will be senior obligations of the
Company, will rank pari passu in right of payment with all existing and future
unsubordinated Indebtedness of the Company and will be senior in right of
payment to all existing and future Subordinated Obligations of the Company. As
of March 31, 1997, after giving effect to the issuance of the Old Notes and the
application of the proceeds
34
<PAGE> 37
therefrom, the Company and its Subsidiaries would have had $387.1 million of
unsubordinated Indebtedness of which $87.1 million is secured Indebtedness (of
which $82.5 million is Warehouse Indebtedness).
Substantially all the operations of the Company are conducted through its
Subsidiaries. Claims of creditors of the Company's Subsidiaries that are not
Subsidiary Guarantors, the counterparties under such Subsidiaries' purchase and
sale facilities, the purchasers of such Subsidiaries' receivables, trade
creditors, secured creditors and creditors holding indebtedness and guarantees
issued by such Subsidiaries, and claims of preferred stockholders (if any) of
such Subsidiaries generally will have priority with respect to the assets and
earnings of such Subsidiaries over the claims of creditors of the Company,
including Holders. The Notes, therefore, will be effectively subordinated to
creditors (including trade creditors) and preferred stockholders (if any) of
Subsidiaries of the Company that are not Subsidiary Guarantors. Although the
Subsidiary Guarantee of CSC is secured by the pledge of the Intercompany Note,
the Intercompany Note is an unsecured general obligation of CSC-UK and secured
creditors of CSC-UK will generally have priority with respect to the assets and
earnings of CSC-UK over the claims of holders of the Notes making a claim with
respect to the Intercompany Note. As of March 31, 1997, the Company had $97.7
million of encumbered Retained Interest Receivables. The Company had no
encumbered Retained Interest Receivables as of the issue date of the Old Notes
or as of the date hereof. As of March 31, 1997, the total consolidated
Indebtedness of (i) the Company and (ii) CSC and its Subsidiaries was
approximately $530.8 million and $87.1 million, respectively, including in each
case $82.5 million of Warehouse Indebtedness. Although the Indenture limits the
incurrence of Indebtedness of the Company and certain of the Company's
Subsidiaries, such limitation is subject to a number of significant
qualifications. Moreover, the Indenture does not impose any limitation on the
incurrence of liabilities that are not considered Indebtedness under the
Indenture. See " -- Certain Covenants -- Limitation on Indebtedness."
SECURITY
Prior to the receipt of an Investment Grade Rating, the Subsidiary
Guarantee of CSC is secured by a pledge by CSC to the Trustee (for the benefit
of the Holders) of the Intercompany Note. The Trustee in its capacity as the
holder of the Intercompany Note Collateral is herein referred to as the
"Collateral Agent."
On the Issue Date, the Intercompany Note, which constitutes Senior
Indebtedness of CSC-UK, had a principal amount equal to $115.0 million,
denominated in US dollars. The Intercompany Note matures on June 1, 2004 and
bears interest not less than the rate borne by the Notes. The Indenture provides
that, so long as any Notes remain outstanding, during such time as the
Intercompany Note Collateral is pledged to the Collateral Agent, the Company
shall cause the outstanding aggregate principal amount of the Intercompany Note
to increase or decrease on a pro rata basis with other notes provided by CSC-UK
and pledged to third party lenders to reflect advances made by or repaid to CSC;
provided that the Company shall cause the outstanding aggregate principal amount
of the Intercompany Note to be no less than $115.0 million following the Issue
Date; provided, further, that CSC-UK may (i) redeem or repurchase the
Intercompany Note in connection with any optional redemption or offer to
purchase Notes on a pro rata basis in proportion to the principal amount of
Notes so redeemed or purchased and (ii) prepay the Intercompany Note in
connection with a sale of substantially all of the Capital Stock or assets of
CSC-UK pursuant to a transaction in compliance with the covenant described under
"-- Certain Covenants -- Limitation on Sales of Assets." The Notes will also be
secured by all interest and principal payments made upon or with respect to the
Intercompany Note Collateral; provided, however, that so long as no Event of
Default shall have occurred and be continuing, all interest and principal
payments made upon or with respect to the Intercompany Note Collateral shall not
constitute Intercompany Note Collateral and may be used by CSC subject to the
other terms and conditions of the Indenture. Upon the occurrence and during the
continuance of an Event of Default, all rights of CSC to receive all such
interest and principal payments shall cease, and such interest and principal
payments shall constitute Intercompany Note Collateral and shall be paid or
otherwise delivered to the Collateral Agent. The security interest in the
Intercompany Note Collateral will be a first priority security interest subject
only to certain permitted Liens; provided, however, that the Subsidiary
Guarantee of CSC will cease to be secured by the security interest in the
Intercompany Note Collateral in the event that CSC-UK (i) becomes a direct
Subsidiary of the Company and the Company becomes the holder of the Intercompany
Note or (ii) the Intercompany Note is prepaid in connection with the sale of
substantially all of the Capital
35
<PAGE> 38
Stock or assets of CSC-UK pursuant to a transaction in compliance with the
covenant described under "-- Certain Covenants -- Limitation on Sales of
Assets."
Upon the acceleration of the maturity of the Notes or the failure to pay
the principal at maturity (any such event a "Note Payment Event"), the principal
of the Intercompany Note will become immediately due and payable. Upon the
occurrence of any Note Payment Event, the Pledge Agreement provides for the
foreclosure upon the Intercompany Note Collateral by the Collateral Agent at the
direction of the Trustee. With respect to action to be taken by the Trustee in
respect of the Intercompany Note Collateral, the Trustee will act in accordance
with instructions from Holders of a majority in principal amount of the Notes
or, in the absence of such instructions, in such manner as the Trustee deems
appropriate, as provided in the Indenture. The proceeds received from the sale
of any Intercompany Note Collateral that is the subject of a foreclosure shall
be applied first to pay the expenses of such foreclosure (including those of the
Collateral Agent), second to pay amounts then payable to the Trustee and
thereafter to pay the principal of and interest on the Notes.
There can be no assurance that the proceeds of any sale of the Intercompany
Note Collateral pursuant to the Pledge Agreement would be sufficient to satisfy
payments due on the Notes. In addition, the ability of the Holders to realize
upon the Intercompany Note Collateral may be subject to certain bankruptcy law
limitations in the event of a bankruptcy. In a bankruptcy proceeding, the
Intercompany Note may be subject to recharacterization as equity or subordinated
to other indebtedness of the creditor if a court determined that an unaffiliated
lender would not have made a loan on similar terms under the then existing
circumstances. Under applicable federal bankruptcy laws, secured creditors are
prohibited from exercising their remedies in respect of their security from a
debtor in a bankruptcy case, or from disposing of such security, without
bankruptcy court approval. Moreover, applicable federal bankruptcy laws
generally permit the debtor to continue to use collateral (such as payments on
the Intercompany Note) even though the debtor is in default under the applicable
debt instruments, provided generally that the secured creditor is given
"adequate protection." The meaning of the term "adequate protection" may vary
according to the circumstances, but it is intended in general to protect the
value of the secured creditor's interest in the collateral at the commencement
of the bankruptcy case and may include cash payments or the granting of
additional security, if and at such times as the court in its discretion
determines, for any diminution in the value of the collateral as a result of the
stay of repossession or disposition or use of the collateral by the debtor
during the pendency of the bankruptcy case. In view of the lack of a precise
definition of the term "adequate protection" and the broad discretionary powers
of a bankruptcy court, it is impossible to predict if payments under the Notes
would be made following commencement of and during a bankruptcy case, whether or
when the Collateral Agent could foreclose upon or sell the Intercompany Note
Collateral or whether or to what extent Holders of the Notes would be
compensated for any delay in payment or loss of value of the Intercompany Note
Collateral through the requirement of "adequate protection."
CHANGE OF CONTROL
Upon the occurrence of a Change of Control, each Holder shall have the
right to require that the Company repurchase such Holder's Notes at a purchase
price in cash equal to 101% of the principal amount thereof plus accrued and
unpaid interest, if any, to the date of purchase (subject to the right of
Holders of record on the relevant record date to receive interest due on the
relevant interest payment date).
A "Change of Control" shall be deemed to have occurred (i) upon any merger
or consolidation of the Company with or into any other Person or any sale,
transfer or other conveyance, whether direct or indirect, to any other Person of
all or substantially all of the assets of the Company, on a consolidated basis,
in one transaction or a series of related transactions, if, immediately after
giving effect to such transaction, any "person" or "group" (as such terms are
used for purposes of Sections 13(d) and 14(d) of the Exchange Act, whether or
not applicable) is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of more than 50% of the total
voting power of the Voting Stock of the transferee or surviving entity, other
than any such person or group that held such voting power as of the Issue Date
or any Related Party thereof, (ii) when any "person" or "group" (as such terms
are used for purposes of Sections 13(d) and 14(d) of the Exchange Act, whether
or not applicable) is or becomes the "beneficial
36
<PAGE> 39
owner" (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of more than 50% of the total voting power of the Voting Stock of
the Company, other than any such person or group that held such voting power as
of the Issue Date or any Related Party thereof, or (iii) when, during any period
of 12 consecutive months after the Issue Date, individuals who at the beginning
of any such 12-month period constituted the Board of Directors of the Company
(together with any new directors whose election by such Board or whose
nomination for election by the stockholders of the Company was approved by a
vote of a majority of the directors of the Company then still in office who were
either directors at the beginning of such period or whose election or nomination
for election was previously so approved) cease for any reason to constitute a
majority of the Board of Directors then in office.
Within 30 days following any Change of Control, the Company shall mail a
notice to each Holder with a copy to the Trustee stating: (i) that a Change of
Control has occurred and that such Holder has the right to require the Company
to purchase such Holder's Notes at a purchase price in cash equal to 101% of the
principal amount thereof plus accrued and unpaid interest, if any, to the date
of purchase (subject to the right of Holders of record on the relevant record
date to receive interest on the relevant interest payment date); (ii) the
circumstances and relevant facts regarding such Change of Control (including
information with respect to pro forma results of operations, cash flow and
capitalization after giving effect to such Change of Control); (iii) the
repurchase date (which shall be no earlier than 30 days nor later than 60 days
from the date such notice is mailed); and (iv) the instructions determined by
the Company, consistent with the covenant described hereunder, that a Holder
must follow in order to have its Notes purchased.
The Company shall comply, to the extent applicable, with the requirements
of Section 14(e) of the Exchange Act and any other securities laws or
regulations in connection with the repurchase of Notes pursuant to the covenant
described hereunder. To the extent that the provisions of any securities laws or
regulations conflict with the provisions of the covenant described hereunder,
the Company shall comply with the applicable securities laws and regulations and
shall not be deemed to have breached its obligations under the covenant
described hereunder by virtue thereof.
The phrase "all or substantially all" of the assets of the Company is
likely to be interpreted by reference to applicable state law at the relevant
time, and will be dependent on the facts and circumstances existing at such
time. As a result, there may be a degree of uncertainty in ascertaining whether
a sale or transfer of "all or substantially all" of the assets of the Company
has occurred.
Except as described with respect to a Change of Control, the Indenture does
not contain any covenants or provisions that permit Holders of the Notes to
require that the Company repurchase or redeem the Notes in the event of a highly
leveraged transaction, reorganization or restructuring.
Future indebtedness of the Company may contain prohibitions on the
occurrence of certain events that would constitute a Change of Control or
require such indebtedness to be repurchased upon a Change of Control. Moreover,
the exercise by the Holders of their right to require the Company to repurchase
the Notes could cause a default under such indebtedness, even if the Change of
Control itself does not, due to the financial effect of such repurchase on the
Company. Finally, the Company's ability to pay cash to the Holders of Notes
following the occurrence of a Change of Control may be limited by the Company's
then existing financial resources. There can be no assurance that sufficient
funds will be available when necessary to make any required repurchases.
CERTAIN COVENANTS
Set forth below are descriptions of certain covenants set forth in the
Indenture.
Limitation on Indebtedness. (i) The Company shall not, and shall not
permit any Restricted Subsidiary to, Incur, directly or indirectly, any
Indebtedness; provided, however, that the Company and any Restricted Subsidiary
may Incur Indebtedness if, on the date of such Incurrence and after giving
effect thereto, the Consolidated Leverage Ratio does not exceed 2.00 to 1.00.
(ii) Notwithstanding the foregoing paragraph (i), the Company and any
Restricted Subsidiary may Incur any or all of the following Indebtedness:
(a) (1) Permitted Warehouse Indebtedness and Guarantees thereof by the
Company or any Restricted Subsidiary; provided, however, that to the extent
any such Indebtedness of the Company or a
37
<PAGE> 40
Restricted Subsidiary ceases to constitute Permitted Warehouse
Indebtedness, such Indebtedness shall be deemed to be Incurred by the
Company or such Restricted Subsidiary, as the case may be, at the time such
Indebtedness ceases to constitute Permitted Warehouse Indebtedness; and (2)
additional Indebtedness to finance the general corporate needs of the
Company and its Subsidiaries in an amount not to exceed $25.0 million at
any one time outstanding;
(b) Indebtedness of the Company or a Restricted Subsidiary owed to and
held by the Company or a Restricted Subsidiary; provided, however, that any
designation of such Restricted Subsidiary as an Unrestricted Subsidiary,
any subsequent issuance or transfer of any Capital Stock which results in
any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or any
subsequent transfer of such Indebtedness (other than to the Company or
another Restricted Subsidiary) shall be deemed, in each case, to constitute
the Incurrence of such Indebtedness by the Company or such Restricted
Subsidiary, as the case may be;
(c) the Notes and the Subsidiary Guarantees;
(d) Indebtedness outstanding on the Issue Date (other than
Indebtedness described in clause (a), (b) or (c) of this covenant);
(e) Refinancing Indebtedness in respect of Indebtedness Incurred
pursuant to paragraph (i) or pursuant to clause (c) or (d) or this clause
(e);
(f) Hedging Obligations directly related to: (1) Indebtedness
permitted to be Incurred by the Company or the Restricted Subsidiaries
pursuant to the Indenture; (2) Receivables held by the Company or its
Restricted Subsidiaries pending sale or securitization or that have been
sold pursuant to a Warehouse Facility; (3) Receivables with respect to
which the Company or any Restricted Subsidiary reasonably expects to
purchase or finance or acquire a security interest in or accept as
collateral; or (4) Retained Interest Receivables and other assets owned or
financed by the Company or any Restricted Subsidiary;
(g) Purchase Money Indebtedness and Capital Lease Obligations Incurred
to finance or refinance the construction, purchase or lease of, or repairs,
improvements or additions to, property which Indebtedness does not in the
aggregate exceed $15.0 million in aggregate principal amount at any one
time outstanding;
(h) Non-Recourse Indebtedness of any Qualifying Securitization
Subsidiary; provided, that if, but only to the extent, any such
Indebtedness ceases to constitute Non-Recourse Indebtedness or if the
Subsidiary that Incurred such Indebtedness ceases to be a Qualifying
Securitization Subsidiary, such event shall be deemed to constitute an
Incurrence of Indebtedness by such Subsidiary; and
(i) Indebtedness in an aggregate principal amount which, together with
the principal amount of all other Indebtedness of the Company and its
Restricted Subsidiaries outstanding on the date of such Incurrence (other
than Indebtedness permitted by clauses (a) through (h) above or paragraph
(i)), does not exceed $25.0 million at any one time outstanding.
(iii) For purposes of determining compliance with the foregoing covenant,
(a) in the event that an item of Indebtedness meets the criteria of more than
one of the types of Indebtedness described above, the Company, in good faith,
will classify such item of Indebtedness and only be required to include the
amount and type of such Indebtedness in one of the above clauses and (b) an item
of Indebtedness may be divided and classified in more than one of the types of
Indebtedness described above.
Limitation on Liens. The Company shall not, and shall not permit any
Restricted Subsidiary to, directly or indirectly, Incur or permit to exist any
Lien (i) upon the Intercompany Note Collateral other than the Liens created by
the Notes, the Indenture and the Pledge Agreement and the Liens expressly
permitted by the Pledge Agreement and (ii) of any nature whatsoever on any of
its properties (including Capital Stock of a Restricted Subsidiary), whether
owned at the Issue Date or thereafter acquired, other than, in the case of this
clause (ii), Permitted Liens, without effectively providing that the Notes shall
be secured equally and ratably with (or prior to in the case of Subordinated
Obligations) the obligations so secured for so long as such obligations are so
secured.
38
<PAGE> 41
Limitation on Restricted Payments. (i) The Company shall not, and shall
not permit any Restricted Subsidiary, directly or indirectly, to, make a
Restricted Payment if at the time the Company or such Restricted Subsidiary
makes such Restricted Payment: (a) a Default or an Event of Default shall have
occurred and be continuing (or would result therefrom); (b) the Company is not
able to Incur an additional $1.00 of Indebtedness pursuant to paragraph (i) of
the covenant described under "-- Limitation on Indebtedness"; or (c) the
aggregate amount of such Restricted Payment and all other Restricted Payments
since the Issue Date would exceed the sum of: (1) 25% of Consolidated Net Income
accrued during the period (treated as one accounting period) from the beginning
of the fiscal quarter during which the Issue Date occurs to the end of the most
recent fiscal quarter prior to the date of such Restricted Payment for which
financial statements are available (or, in case such Consolidated Net Income
shall be a deficit, minus 100% of such deficit); (2) the aggregate Net Cash
Proceeds received by the Company from the issuance or sale of its Capital Stock
(other than Disqualified Stock) subsequent to the Issue Date (other than an
issuance or sale (A) occurring substantially contemporaneously with the issuance
of the Notes, (B) to a Subsidiary of the Company or (C) to an employee stock
ownership plan or to a trust established by the Company or any of its
Subsidiaries for the benefit of their employees except to the extent that the
funds used by such plan or trust are attributable to employee contributions);
(3) the amount by which Indebtedness of the Company is reduced on the Company's
balance sheet upon the conversion or exchange (other than by a Subsidiary of the
Company) subsequent to the Issue Date, of any Indebtedness of the Company
convertible or exchangeable for Capital Stock (other than Disqualified Stock) of
the Company (less the amount of any cash, or the fair value of any other
property, distributed by the Company upon such conversion or exchange); and (4)
an amount equal to the sum of (A) the net reduction in Investments in any Person
resulting from dividends or repayments of loans or advances, in each case to the
Company or any Restricted Subsidiary from such Person or from the sale for cash
or other liquidation or repayment in cash, in each case the proceeds of which
are received by the Company or any Restricted Subsidiary, and (B) the portion
(proportionate to the Company's equity interest in such Subsidiary) of the fair
market value of the net assets of an Unrestricted Subsidiary at the time such
Unrestricted Subsidiary is designated a Restricted Subsidiary; provided,
however, that the foregoing sum in this clause (4) shall not exceed, in the case
of any Person, the amount of Investments made since the Issue Date by the
Company or any Restricted Subsidiary in such Person and treated as a Restricted
Payment.
(ii) The provisions of the foregoing paragraph (i) shall not prohibit: (a)
any purchase or redemption of Capital Stock or Subordinated Obligations of the
Company made by, exchanged for, or out of the proceeds of the substantially
concurrent sale of, Capital Stock of the Company (other than Disqualified Stock
and other than Capital Stock issued or sold to a Subsidiary of the Company or an
employee stock ownership plan or to a trust established by the Company or any of
its Subsidiaries for the benefit of their employees except to the extent that
the funds used by such plan or trust are attributable to employee
contributions); provided, however, that (1) such purchase or redemption shall be
excluded from the calculation of the amount of Restricted Payments and (2) the
Net Cash Proceeds from such sale shall be excluded from the calculation of
amounts under clause (c)(2) of paragraph (i) above; (b) any purchase,
repurchase, redemption, defeasance or other acquisition or retirement for value
of Subordinated Obligations made by exchange for, or out of the proceeds of the
substantially concurrent sale of, Indebtedness of the Company which is permitted
to be Incurred pursuant to the covenant described under "-- Limitation on
Indebtedness"; provided, however, that such purchase, repurchase, redemption,
defeasance or other acquisition or retirement for value shall be excluded from
the calculation of the amount of Restricted Payments; (c) dividends paid within
60 days after the date of declaration thereof if at such date of declaration
such dividend would have complied with the covenant described hereunder;
provided, however, that at the time of payment of such dividend, no other
Default or Event of Default shall have occurred and be continuing (or result
therefrom); provided, further, however, that such dividend shall be included in
the calculation of the amount of Restricted Payments; (d) any payments made to
holders of the Convertible Debentures for partial share redemptions in
connection with the conversion thereof into Capital Stock of the Company;
provided, however, that such payments shall be excluded from the calculation of
the amount of Restricted Payments; and (e) any purchase of Capital Stock of the
Company made from time to time to meet the Company's obligations under its
employee stock
39
<PAGE> 42
ownership and option plans; provided, however, that such purchases shall be
excluded from the calculation of the amount of Restricted Payments.
Limitation on Restrictions on Distributions from Restricted
Subsidiaries. The Company shall not, and shall not permit any Restricted
Subsidiary to, directly or indirectly, create or otherwise cause or permit to
exist or become effective any consensual encumbrance or restriction on the
ability of any Restricted Subsidiary (i) to pay dividends or make any other
distributions on its Capital Stock to the Company or a Restricted Subsidiary or
pay any Indebtedness owed to the Company, (ii) to make any loans or advances to
the Company or (iii) to transfer any of its property or assets to the Company,
except: (a) any encumbrance or restriction pursuant to an agreement in effect at
or entered into on the Issue Date and any agreement that constitutes a
Refinancing thereof permitted under the Indenture; (b) any encumbrance or
restriction with respect to a Restricted Subsidiary pursuant to an agreement
applicable to such Restricted Subsidiary on or prior to the date on which such
Restricted Subsidiary was acquired by the Company or was designated a Restricted
Subsidiary (other than an agreement entered into in connection with, or in
anticipation of, the transaction or series of related transactions pursuant to
which such Restricted Subsidiary became a Restricted Subsidiary or was acquired
by the Company) and outstanding on such date; (c) any encumbrance or restriction
with respect to a Restricted Subsidiary pursuant to any other agreement
contained in any amendment to an agreement referred to in clause (a) or (b) of
this covenant or this clause (c); provided, however, that the encumbrances and
restrictions with respect to such Restricted Subsidiary contained in any such
agreement or amendment are not materially less favorable to the Noteholders than
encumbrances and restrictions with respect to such Restricted Subsidiary
contained in the agreements referred to in clause (a) or (b) of the covenant
described hereunder, as the case may be; (d) any such encumbrance or restriction
consisting of customary non-assignment provisions in leases governing leasehold
interests to the extent such provisions restrict the transfer of the lease or
the property leased thereunder; (e) in the case of clause (iii) above,
restrictions contained in security agreements or mortgages securing Indebtedness
of a Restricted Subsidiary to the extent such restrictions restrict the transfer
of the property subject to such security agreements or mortgages; (f) customary
affiliate transactions provisions; (g) any restriction with respect to a
Restricted Subsidiary imposed pursuant to an agreement entered into for the sale
or disposition of all or substantially all the Capital Stock or assets of such
Restricted Subsidiary pending the closing of such sale or disposition; and (h)
encumbrances or restrictions pursuant to Permitted Warehouse Indebtedness.
Limitation on Sales of Assets. (i) The Company shall not, and shall not
permit any Restricted Subsidiary to, directly or indirectly, consummate any
Asset Disposition in excess of $2.0 million unless (a) the Company or such
Restricted Subsidiary receives consideration at the time of such Asset
Disposition at least equal to the fair market value (including as to the value
of any non-cash consideration), as determined in good faith by the Board of
Directors, of the shares and assets subject to such Asset Disposition and at
least 85% of the consideration thereof received by the Company or such
Restricted Subsidiary is in the form of cash or cash equivalents, (b) an amount
equal to 100% of the Net Available Cash from such Asset Disposition is applied
by the Company (or such Restricted Subsidiary, as the case may be) (1) first, to
the extent the Company elects, either to (A) acquire Additional Assets, either
directly or through a Restricted Subsidiary, or (B) prepay, repay, redeem or
purchase Senior Indebtedness of the Company or a Restricted Subsidiary (provided
that the proceeds of an Asset Disposition of the Company's direct assets may not
be used to prepay, repay, redeem or purchase Senior Indebtedness of a Restricted
Subsidiary that is not a Subsidiary Guarantor), as the case may be (other than
in either case Indebtedness owed to the Company or an Affiliate of the Company),
in each case within 180 days from, or prior to, the later of the date of such
Asset Disposition or the receipt of such Net Available Cash; (2) second, to the
extent of the balance of such Net Available Cash after application in accordance
with clause (1), to make an offer to the Holders (and to holders of other Senior
Indebtedness designated by the Company) to purchase Notes (and to prepay, repay
or purchase such other Senior Indebtedness) pursuant to and subject to the
conditions contained in the Indenture in the case of the Notes or the conditions
contained in the agreements governing such other Senior Indebtedness; provided,
that any such offers shall be on a pro rata basis in proportion to the
outstanding principal amounts of the Indebtedness to which such offers apply and
that to the extent any Net Available Cash remains following such pro rata offer
such Net Available Cash shall be applied to the repurchase on a pro rata basis
in proportion to the outstanding principal amount thereof of any such
Indebtedness which continues to remain outstanding
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after such offer has been accepted by the holder thereof; (3) third, to the
extent of the balance of such Net Available Cash after application in accordance
with clauses (1) and (2) to (A) the acquisition by the Company or any Restricted
Subsidiary of Additional Assets or (B) the prepayment, repayment or purchase of
Indebtedness designated by the Company (other than any Disqualified Stock) of
the Company or any Restricted Subsidiary (other than Indebtedness owed to an
Affiliate of the Company), in each case within 180 days from the later of the
receipt of such Net Available Cash and the date the offer described in paragraph
(ii) below is consummated; provided, however, that in connection with any
prepayment, repayment or purchase of Indebtedness pursuant to clause (1), (2) or
(3) above, the Company or such Restricted Subsidiary shall retire such
Indebtedness and shall cause the related loan commitment (if any) to be
permanently reduced in an amount equal to the principal amount so prepaid,
repaid or purchased unless, in the case of clause (3), at the time of such
prepayment, repayment or purchase, and to the extent, the Company would have
been able to Incur such Indebtedness pursuant to the covenant described under
"-- Limitation on Indebtedness"; and (4) fourth, to the extent of the balance of
such Net Available Cash after application in accordance with clauses (1), (2)
and (3), to any application not prohibited by the Indenture, and (c) at the time
of such Asset Disposition no Default shall have occurred and be continuing (or
would result therefrom). Notwithstanding the foregoing provisions of this
paragraph, the Company and the Restricted Subsidiaries shall not be required to
apply any Net Available Cash in accordance with this paragraph except to the
extent that the aggregate Net Available Cash from all Asset Dispositions which
is not applied in accordance with this paragraph exceeds $5.0 million. Pending
application of Net Available Cash pursuant to this covenant, such Net Available
Cash shall be invested in Temporary Cash Investments.
For the purposes of this covenant, the following are deemed to be cash or
cash equivalents: (x) the assumption of Indebtedness or liabilities of the
Company or any Restricted Subsidiary, and the release of the Company or such
Restricted Subsidiary from all liability on such Indebtedness or liabilities in
connection with such Asset Disposition; (y) securities, notes or other
obligations received by the Company or any Restricted Subsidiary from the
transferee that are promptly, but in no event more than 30 days after receipt,
converted by the Company or such Restricted Subsidiary into cash or Temporary
Cash Investments; and (z) an amount equal to the fair market value (evidenced by
a resolution of the Board of Directors) of operating assets (including
Receivables and Retained Interest Receivables) to be used or useful in any
Related Business received by the transferee in connection with such Asset
Disposition.
(ii) In the event of an Asset Disposition that requires an offer to
purchase the Notes (and other Senior Indebtedness) pursuant to clause (i)(b)(2)
above, the Company will be required to purchase Notes tendered pursuant to an
offer by the Company for the Notes (and other Senior Indebtedness) at a purchase
price of 100% of their principal amount plus accrued but unpaid interest (or, in
respect of such other Senior Indebtedness, such lesser price, if any, as may be
provided for by the terms of such Senior Indebtedness) in accordance with the
procedures (including prorating in the event of oversubscription) set forth in
the Indenture. If the aggregate purchase price of Notes (and any other Senior
Indebtedness) tendered pursuant to such offer is less than the Net Available
Cash allotted to the purchase thereof, the Company will be permitted to apply
the remaining Net Available Cash in accordance with clause (i)(b)(3) above. The
Company shall not be required to make such an offer to purchase Notes (and other
Senior Indebtedness) pursuant to this covenant if the Net Available Cash
available therefor is less than $5.0 million (which lesser amount shall be
carried forward for purposes of determining whether such an offer is required
with respect to any subsequent Asset Disposition).
(iii) In the event of the transfer of substantially all (but not all) of
the property and assets of the Company to a Person in a transaction permitted
under "-- Merger and Consolidation" the successor corporation shall be deemed to
have sold the properties and assets of the Company not so transferred for
purposes of this covenant, and shall comply with the provisions of this covenant
with respect to such deemed sale as if it were an Asset Disposition; provided,
that this clause shall not apply to the extent that the properties and assets of
the Company not so transferred are exchanged for Additional Assets received by
the Company or held by such other Person in such transaction. In addition, the
fair market value of such properties and assets of the Company deemed to be sold
shall be deemed to be Net Available Cash.
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(iv) The Company shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Notes pursuant to the
covenant described hereunder. To the extent that the provisions of any
securities laws or regulations conflict with provisions of the covenant
described hereunder, the Company shall comply with the applicable securities
laws and regulations and shall not be deemed to have breached its obligations
under this clause by virtue thereof.
Limitation on Affiliate Transactions. The Company shall not, and shall not
permit any Restricted Subsidiary to, enter into or permit to exist any
transaction (including the purchase, sale, lease or exchange of any property,
employee compensation arrangements or the rendering of any service) with any
Affiliate of the Company (an "Affiliate Transaction") unless the terms thereof
(i) are no less favorable to the Company or such Restricted Subsidiary than
those that could be obtained at the time of such transaction in arm's-length
dealings with a Person who is not such an Affiliate, (ii) if such Affiliate
Transaction involves an amount in excess of $2.0 million, (a) are set forth in
writing and (b) have been approved by a majority of the members of the Board of
Directors having no personal stake in such Affiliate Transaction and (iii) if
such Affiliate Transaction involves an amount in excess of $5.0 million, have
been determined by a nationally recognized investment banking firm to be fair,
from a financial standpoint, to the Company and its Restricted Subsidiaries.
The provisions of the foregoing paragraph shall not apply to (i)
transactions between or among the Company and any Restricted Subsidiary or
between or among Restricted Subsidiaries, (ii) any Restricted Payment permitted
to be made under the covenant described under "-- Limitation on Restricted
Payments" or any Permitted Investment, (iii) loans or advances to employees in
the ordinary course of business, (iv) customary directors fees and indemnities,
(v) ordinary course commercial agreements or renewals thereof on such terms as
are in effect as of the Issue Date and which terms are no less favorable to the
Company or such Restricted Subsidiary than those that could be obtained at the
time of such transaction in arm's-length dealings with a Person who is not such
an Affiliate, (vi) any Indebtedness permitted by paragraph (ii)(b) of the
covenant described under "-- Limitation on Indebtedness," (vii) any issuance of
securities, or other payments, compensation, benefits, awards or grants in cash,
securities or otherwise pursuant to, or the funding of, employment arrangements,
stock options and stock ownership plans approved by the Board of Directors and
(viii) the grant of stock options or similar rights to employees and directors
of the Company or any Restricted Subsidiary pursuant to plans approved by the
Board of Directors.
Merger and Consolidation. The Company shall not consolidate with or merge
with or into, or convey, transfer or lease, in one transaction or a series of
related transactions, all or substantially all its assets to, any Person,
unless: (i) the resulting, surviving or transferee Person (the "Successor
Company") shall be a Person organized and existing under the laws of the United
States of America, any state thereof or the District of Columbia and the
Successor Company (if not the Company) shall expressly assume, by an indenture
supplemental thereto, executed and delivered to the Trustee, in form
satisfactory to the Trustee, all the obligations of the Company under the Notes
and the Indenture; (ii) immediately after giving effect to such transaction (and
treating any Indebtedness that becomes an obligation of the Successor Company or
any Restricted Subsidiary as a result of such transaction as having been
Incurred by such Successor Company or such Restricted Subsidiary at the time of
such transaction), no Default or Event of Default shall have occurred and be
continuing; (iii) immediately after giving effect to such transaction, the
Successor Company would be able to incur an additional $1.00 of Indebtedness
pursuant to paragraph (i) of the covenant described under "-- Limitation on
Indebtedness"; (iv) immediately after giving effect to such transaction, the
Successor Company shall have Consolidated Net Worth in an amount that is not
less than the Consolidated Net Worth of the Company prior to such transaction;
and (v) the Company shall have delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that such consolidation, merger or
transfer and such supplemental indenture (if any) comply with the Indenture.
The Successor Company shall be the successor to the Company and shall
succeed to, and be substituted for, and may exercise every right and power of,
the Company under the Indenture, but the predecessor Company, in the case of a
lease, shall not be released from the obligation to pay the principal of and
interest on the Notes.
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Limitation on Line of Business. The Company shall not, and shall not
permit any Restricted Subsidiary to, engage in any business other than a Related
Business.
Limitation on Creation of Subsidiaries. The Company will not create or
acquire, nor permit any of its Restricted Subsidiaries to create or acquire, any
Subsidiary other than (i) a Restricted Subsidiary existing as of the Issue Date,
(ii) a Restricted Subsidiary that is acquired or created after the date hereof
or (iii) an Unrestricted Subsidiary.
Payments for Consent. Neither the Company nor any of its Subsidiaries
shall, directly or indirectly, pay or cause to be paid any consideration,
whether by way of interest, fee or otherwise, to any Holder of any Notes for or
as an inducement to any consent, waiver or amendment of any of the terms or
provisions of the Indenture or the Notes unless such consideration is offered to
be paid or agreed to be paid to all Holders of the Notes which so consent, waive
or agree to amend in the time frame set forth in the solicitation documents
relating to such consent, waiver or agreement.
SEC Reports. Notwithstanding that the Company may not be required to
remain subject to the reporting requirements of Section 13 or 15(d) of the
Exchange Act, the Company shall file with the SEC and provide the Trustee and
Noteholders with such annual and quarterly reports and such information,
documents and other reports as are specified in Sections 13 and 15(d) of the
Exchange Act and applicable to a U.S. corporation subject to such Sections, such
information, documents and other reports to be so filed and provided at the
times specified for the filing of such information, documents and reports under
such Sections.
Subsidiary Guarantees. Prior to the receipt of an Investment Grade Rating,
the Notes will be unconditionally guaranteed (a "Subsidiary Guarantee") by all
domestic Restricted Subsidiaries of the Company other than Special Purpose
Subsidiaries (together, the "Subsidiary Guarantors", and each of them, a
"Subsidiary Guarantor"). Each Subsidiary Guarantor's obligations under its
Subsidiary Guarantee will be senior obligations of such Subsidiary Guarantor and
will be joint and several with the obligations of each other Subsidiary
Guarantor under its Subsidiary Guarantee of the Notes.
The Indenture includes a covenant by the Company to cause each existing and
future domestic Subsidiary (other than Special Purpose Subsidiaries) to execute
a Subsidiary Guarantee, unless such Subsidiary is designated an "Unrestricted
Subsidiary" in accordance with the terms of the Indenture. The obligations of
each Subsidiary Guarantor are limited to the maximum amount as will, after
giving effect to all other contingent and fixed liabilities of such Subsidiary
Guarantor and after giving effect to any collections from or payments made by or
on behalf of any other Subsidiary Guarantor in respect of the obligations of
such other Subsidiary Guarantor under its Subsidiary Guarantee or pursuant to
its contribution obligations under the Indenture, result in the obligations of
such Subsidiary Guarantor under its Subsidiary Guarantee not constituting a
fraudulent conveyance or fraudulent transfer under federal, state or foreign
law. Each Subsidiary Guarantor that makes a payment or distribution under a
Subsidiary Guarantee shall be entitled to a contribution from each other
Subsidiary Guarantor in a pro rata amount based on the adjusted net assets of
each Subsidiary Guarantor.
Subject to the next sentence and the next succeeding paragraph, no
Subsidiary Guarantor may consolidate or merge with or into (whether or not such
Subsidiary Guarantor is the surviving entity or Person) another Person unless
(i) the Person formed by or surviving any such consolidation or merger (if other
than such Subsidiary Guarantor) assumes all the obligations of such Subsidiary
Guarantor pursuant to a supplemental indenture, in a form reasonably
satisfactory to the Trustee, under the Notes and the Indenture, (ii) immediately
after giving effect to such transaction, no Default or Event of Default shall
have occurred and be continuing and (iii) immediately after giving effect to
such transaction, the Company would have been able to incur at least $1.00 of
additional Indebtedness pursuant to paragraph (i) of the covenant described
under "-- Limitation on Indebtedness." The foregoing will not apply to prohibit
a merger between Subsidiary Guarantors or a merger between the Company and a
Subsidiary Guarantor.
In the event of a sale or other disposition of all or substantially all of
the assets of any Subsidiary Guarantor, by way of merger, consolidation or
otherwise, or a sale or other disposition of all of the capital stock of such
Subsidiary Guarantor, then such Subsidiary Guarantor (in the event of a sale or
other disposition, by
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<PAGE> 46
way of such a merger, consolidation or otherwise, of all of the capital stock of
such Subsidiary Guarantor) or the corporation acquiring the property (in the
event of a sale or other disposition of all or substantially all of the assets
of such Subsidiary Guarantor) will be released and relieved of any obligation
under its Subsidiary Guarantee, provided that the Net Available Cash of such
sale or other disposition is applied in accordance with the provisions of the
Indenture described under "-- Limitation on Sale of Assets." If an Investment
Grade Rating is received by the Company, each Subsidiary Guarantor will be
released and relieved of any obligation under its Subsidiary Guarantee.
DEFAULTS
An Event of Default is defined in the Indenture as (i) a default in the
payment of interest on the Notes when due, continued for 30 days, (ii) a default
in the payment of principal of any Note, (iii) the failure by the Company to
comply with its obligations under "-- Certain Covenants -- Merger and
Consolidation" above, (iv) the failure by the Company or any Subsidiary to
comply for 30 days after notice with any of its other obligations in respect of
the Notes or under the Indenture, (v) Indebtedness of the Company or any
Restricted Subsidiary is not paid within any applicable grace period after final
maturity or is accelerated by the holders thereof because of a default and the
total amount of such Indebtedness unpaid or accelerated exceeds $5.0 million
(the "cross-acceleration provision"), (vi) the failure of a Subsidiary Guarantee
by a Subsidiary Guarantor to be in full force and effect, or the denial or
disaffirmance of a Subsidiary Guarantee by such Subsidiary Guarantor, (vii)
certain events of bankruptcy, insolvency or reorganization of the Company or a
Significant Subsidiary (the "bankruptcy provisions") or (viii) any final
non-appealable judgment or decree for the payment of money in excess of $5.0
million is rendered against the Company or a Restricted Subsidiary, remains
outstanding for a period of 60 days following such judgment and is not
discharged, waived or stayed within 10 days after notice (the "judgment default
provision"). However, a default under clause (iv) will not constitute an Event
of Default until the Trustee or the Holders of at least 25% in principal amount
of the outstanding Notes notify the Company of the default and the Company does
not cure such default within the time specified after receipt of such notice.
If an Event of Default occurs and is continuing, the Trustee or the Holders
of at least 25% in principal amount of the outstanding Notes may declare the
principal of and accrued but unpaid interest on all the Notes to be due and
payable. Upon such a declaration, such principal and interest shall be due and
payable immediately. If an Event of Default relating to certain events of
bankruptcy, insolvency or reorganization of the Company occurs and is
continuing, the principal of and interest on all the Notes will ipso facto
become and be immediately due and payable without any declaration or other act
on the part of the Trustee or any Holders of the Notes. Under certain
circumstances, the Holders of a majority in principal amount of the outstanding
Notes may rescind any such acceleration with respect to the Notes and its
consequences.
Subject to the provisions of the Indenture relating to the duties of the
Trustee, in case an Event of Default occurs and is continuing, the Trustee will
be under no obligation to exercise any of the rights or powers under the
Indenture at the request or direction of any of the Holders of the Notes unless
such Holders have offered to the Trustee reasonable indemnity or security
against any loss, liability or expense. Except to enforce the right to receive
payment of principal, premium (if any) or interest when due, no Holder of a Note
may pursue any remedy with respect to the Indenture or the Notes unless (i) such
Holder has previously given the Trustee notice that an Event of Default is
continuing, (ii) Holders of at least 25% in principal amount of the outstanding
Notes have requested the Trustee to pursue the remedy, (iii) such Holders have
offered the Trustee reasonable security or indemnity against any loss, liability
or expense, (iv) the Trustee has not complied with such request within 60 days
after the receipt thereof and the offer of security or indemnity and (v) the
Holders of a majority in principal amount of the outstanding Notes have not
given the Trustee a direction inconsistent with such request within such 60-day
period. Subject to certain restrictions, the Holders of a majority in principal
amount of the outstanding Notes are given the right to direct the time, method
and place of conducting any proceeding for any remedy available to the Trustee
or of exercising any trust or power conferred on the Trustee. The Trustee,
however, may refuse to follow any direction that conflicts with law or the
Indenture or that the Trustee determines is unduly prejudicial to the rights of
any other Holder of a Note or that would involve the Trustee in personal
liability.
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The Indenture provides that if a Default occurs and is continuing and is
known to the Trustee, the Trustee must mail to each Holder of the Notes notice
of the Default within 90 days after it occurs. Except in the case of a Default
in the payment of principal of, premium, if any, or interest on any Note, the
Trustee may withhold notice if and so long as a committee of its trust officers
determines that withholding notice is not opposed to the interest of the Holders
of the Notes. In addition, the Company is required to deliver to the Trustee,
within 120 days after the end of each fiscal year, a certificate indicating
whether the signers thereof know of any Default that occurred during the
previous year. The Company also is required to deliver to the Trustee, within 30
days after the occurrence thereof, written notice of any event which would
constitute certain Defaults, their status and what action the Company is taking
or proposes to take in respect thereof.
AMENDMENTS AND WAIVERS
Subject to certain exceptions, the Indenture may be amended with the
consent of the Holders of a majority in principal amount of the Notes then
outstanding (including consents obtained in connection with a tender offer or
exchange for the Notes) and any past default or compliance with any provisions
may also be waived with the consent of the Holders of a majority in principal
amount of the Notes then outstanding. However, without the consent of each
Holder of an outstanding Note affected thereby, no amendment may, among other
things, (i) reduce the amount of Notes whose Holders must consent to an
amendment, supplement or waiver, (ii) reduce the rate of or extend the time for
payment of interest on any Note, (iii) reduce the principal of or extend the
Stated Maturity of any Note, (iv) reduce the premium payable upon the redemption
of any Note or change the time at which any Note may be redeemed as described
under "-- Optional Redemption" above, (v) make any Note payable in money other
than that stated in the Note, (vi) impair the right of any Holders of the Notes
to receive payment of principal of, interest on and premium on, if any, such
Holders' Notes on or after the due dates therefor or to institute suit for the
enforcement of any payment on or with respect to such Holders' Notes, (vii)
waive a default on the payment of principal of, interest on, or redemption
payment with respect to any Note, or (viii) make any change in the amendment
provisions which require each holder's consent or in the waiver provisions.
Without the consent of any holders of the Notes, the Company and Trustee
may amend the Indenture to cure any ambiguity, omission, defect or
inconsistency, to provide for the assumption by a successor corporation of the
obligations of the Company under the Indenture, to provide for uncertificated
Notes in addition to or in place of certificated Notes, provided that the
uncertificated Notes are issued in registered form for purposes of Section
163(f) of the Code, or in a manner such that the uncertificated Notes are
described in Section 163(f)(2)(B) of the Code, to add guarantees with respect to
the Notes, to further secure the Notes, to add to the covenants of the Company
for the benefit of the Holders of the Notes or to surrender any right or power
conferred upon the Company, to release Collateral or Subsidiary Guarantees in
accordance with the terms of the Indenture, to make any change that does not
adversely affect the rights of any Holders of the Notes or to comply with any
requirement of the SEC in connection with the qualification of the Indenture
under the Trust Indenture Act.
The consent of the Holders of the Notes is not necessary under the
Indenture to approve the particular form of any proposed amendment. It is
sufficient if such consent approves the substance of the proposed amendment.
After an amendment under the Indenture becomes effective, the Company is
required to mail to Holders of the Notes a notice briefly describing such
amendment. However, the failure to give such notice to all Holders of the Notes,
or any defect therein, will not impair or affect the validity of the amendment.
TRANSFER
The Notes will be issued in registered form and will be transferable only
upon the surrender of the Notes being transferred for registration of transfer.
The Company may require payment of a sum sufficient to cover any tax, assessment
or other governmental charge payable in connection with certain transfers and
exchanges.
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DEFEASANCE
The Company at any time may terminate all its obligations under the Notes
and the Indenture ("legal defeasance"), except for certain obligations,
including those respecting the defeasance trust and obligations to register the
transfer or exchange of the Notes, to replace mutilated, destroyed, lost or
stolen Notes and to maintain a registrar and paying agent in respect of the
Notes. The Company at any time may terminate its obligations under "Change of
Control" and under the covenants described under "-- Certain Covenants" (other
than the covenant described under "-- Merger and Consolidation"), the operation
of the cross-acceleration provision, the bankruptcy provisions with respect to
Significant Subsidiaries and the judgment default provision described under
"-- Defaults" above and the limitations contained in clauses (iii) and (iv)
under "-- Certain Covenants -- Merger and Consolidation" above ("covenant
defeasance").
The Company may exercise its legal defeasance option notwithstanding its
prior exercise of its covenant defeasance option. If the Company exercises its
legal defeasance option, payment of the Notes may not be accelerated because of
an Event of Default with respect thereto. If the Company exercises its covenant
defeasance option, payment of the Notes may not be accelerated because of an
Event of Default specified in clause (iv), (v), (vii) (with respect only to
Significant Subsidiaries) or (viii) under "-- Defaults" above or because of the
failure of the Company to comply with clause (iii) and (iv) under "-- Certain
Covenants -- Merger and Consolidation" above.
In order to exercise either defeasance option, the Company must irrevocably
deposit in trust (the "defeasance trust") with the Trustee money or U.S.
Government Obligations for the payment of principal and interest on the Notes to
redemption or maturity, as the case may be, and must comply with certain other
conditions, including delivery to the Trustee of an Opinion of Counsel to the
effect that holders of the Notes will not recognize income, gain or loss for
Federal income tax purposes as a result of such deposit and defeasance and will
be subject to Federal income tax on the same amount and in the same manner and
at the same times as would have been the case if such deposit and defeasance had
not occurred (and, in the case of legal defeasance only, such Opinion of Counsel
must be based on a ruling of the Internal Revenue Service or other change in
applicable Federal income tax law).
SATISFACTION AND DISCHARGE
The Indenture will cease to be of further effect (except as to transfer or
exchange of the Notes as expressly provided for in the Indenture) and the
Trustee, at the expense of the Company, will execute proper instruments
acknowledging satisfaction and discharge of the Indenture when (i) either (a)
all the Notes theretofore authenticated and delivered (other than destroyed,
lost or stolen Notes which have been replaced or paid and Notes for whose
payment money has been deposited in trust with the Trustee or any Paying Agent
or segregated and held in trust by the Issuer and thereafter repaid to the
Issuer or discharged from such trust as provided for in the Indenture) have been
delivered to the Trustee for cancellation or (b) all Notes not theretofore
delivered to the Trustee for cancellation (1) have become due and payable, (2)
will become due and payable within one year of the Stated Maturity of the Notes
or (3) 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 or any
Guarantor has irrevocably 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 Notes not theretofore delivered to the
Trustee for cancellation, for principal of, premium, if any, and interest on the
Notes to the date of such deposit (in the case of Notes which have become due
and payable) or to the Stated Maturity or redemption date, as the case may be;
(ii) the Company or any Guarantor has paid or caused to be paid all sums payable
under the Indenture by the Company; and (iii) the Company has delivered to the
Trustee an officers' certificate and an opinion of counsel, each stating that
all conditions precedent provided in the Indenture relating to the satisfaction
and discharge of the Indenture have been complied with, and that such
satisfaction and discharge will not result in a breach or violation of, or
constitute a default under, the Indenture or any other material agreement or
instrument to which the Company is a party or by which the Company is bound.
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CONCERNING THE TRUSTEE
The Chase Manhattan Bank is the Trustee under the Indenture and has been
appointed by the Company as Registrar and Paying Agent with regard to the Notes.
The Holders of a majority in principal amount of the outstanding Notes have
the right to direct the time, method and place of conducting any proceeding for
exercising any remedy available to the Trustee, subject to certain exceptions.
The Indenture provides that if an Event of Default occurs (and is not cured),
the Trustee will be required, in the exercise of its power, to use the degree of
care of a prudent man in the conduct of his own affairs. Subject to such
provisions, the Trustee will be under no obligation to exercise any of its
rights or powers under the Indenture at the request of any Holders, unless such
Holders shall have offered to the trustee security and indemnity satisfactory to
it against any loss, liability or expense and then only to the extent required
by the terms of the Indenture.
GOVERNING LAW
The Indenture provides that it and the Notes will be governed by, and
construed in accordance with, the laws of the State of New York without giving
effect to applicable principles of conflicts of law to the extent that the
application of the law of another jurisdiction would be required thereby.
CERTAIN DEFINITIONS
"Additional Assets" means (i) any property or assets (other than
Indebtedness and Capital Stock) used or useful in a Related Business; (ii) the
Capital Stock of a Person that is or becomes a Restricted Subsidiary as a result
of or upon the acquisition of such Capital Stock by the Company or another
Restricted Subsidiary; or (iii) Capital Stock constituting a minority interest
in any Person to the extent in compliance with the covenant described under
"-- Certain Covenants -- Limitation on Restricted Payments."
"Affiliate" of any specified Person means any other Person, directly or
indirectly, controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any 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. For
purposes of the provisions described under "-- Certain Covenants -- Limitation
on Affiliate Transactions" and "-- Certain Covenants -- Limitations on Sales of
Assets " only, "Affiliate" shall also mean any beneficial owner of Capital Stock
representing 10% or more of the total voting power of the Voting Stock (on a
fully diluted basis) of the Company or of rights or warrants to purchase such
Capital Stock (whether or not currently exercisable) and any Person who would be
an Affiliate of any such beneficial owner pursuant to the first sentence hereof.
"Asset Disposition" means any sale, lease, transfer or other disposition
(or series of related sales, leases, transfers or dispositions) by the Company
or any Restricted Subsidiary, including any disposition by means of a merger,
consolidation or similar transaction (each referred to for the purposes of the
definition as a "disposition") but excluding any merger, consolidation or sale
of assets of the Company subject to and permitted by the covenant described
under "-- Certain Covenants -- Merger and Consolidation," of (i) any shares of
Capital Stock of a Restricted Subsidiary (other than director's qualifying
shares or shares required by applicable law to be held by a Person other than
the Company or a Restricted Subsidiary), (ii) all or substantially all the
assets of any division or line of business of the Company or any Restricted
Subsidiary, (iii) any other assets of the Company or any Restricted Subsidiary
outside of the ordinary course of business of the Company or such Restricted
Subsidiary or (iv) any Retained Interest Receivables (other than, in the case of
(i), (ii), (iii) and (iv) above, a disposition by a Restricted Subsidiary to the
Company or by the Company or a Restricted Subsidiary to a Wholly Owned
Subsidiary). Notwithstanding the foregoing, the following shall not be deemed to
be Asset Dispositions: (i) the sale, lease, conveyance or other disposition of
inventory or Hedging Obligations by the Company or a Restricted Subsidiary, (ii)
the sale, lease, conveyance or other disposition of property or equipment that
has become worn out, obsolete or damaged or otherwise unusable for use in
connection with the business of the Company or any Restricted Subsidiary, as the
case
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may be, (iii) a disposition of Receivables in the ordinary course of business,
(iv) any grant of a Permitted Lien, (v) a disposition of Temporary Cash
Investments, (vi) any disposition of the Capital Stock of City Auto Resources,
Inc. or Phoebus Software Limited held by the Company or any of its Restricted
Subsidiaries, (vii) the sale of any property (whether real, personal or mixed)
in connection with the incurrence of Capital Lease Obligations, and (viii) a
Permitted Investment or a Restricted Payment that is permitted by the covenant
described above under "-- Certain Covenants -- Limitation on Restricted
Payments."
"Average Life" means, as of the date of determination, with respect to any
Indebtedness or Preferred Stock, the quotient obtained by dividing (i) the sum
of the products of numbers of years from the date of determination to the dates
of each successive scheduled principal payment of such Indebtedness or
redemption or similar payment with respect to such Preferred Stock multiplied by
the amount of such payment by (ii) the sum of all such payments.
"Board of Directors" means the Board of Directors of the Company or any
committee thereof duly authorized to act on behalf of such Board.
"Business Day" means each day which is not a Legal Holiday.
"Capital Lease Obligations" means an obligation that is required to be
classified and accounted for as a capital lease for financial reporting purposes
in accordance with GAAP, and the amount of Indebtedness represented by such
obligation shall be the capitalized amount of such obligation determined in
accordance with GAAP; and the Stated Maturity thereof shall be the date of the
last payment of rent or any other amount due under such lease prior to the first
date upon which such lease may be terminated by the lessee without payment of a
penalty.
"Capital Stock" of any Person means any and all shares, interests, rights
to purchase, warrants, options, participation or other equivalents of or
interests in (however designated) equity of such Person, including any Preferred
Stock, but excluding any debt securities convertible into such equity.
"Code" means the Internal Revenue Code of 1986, as amended.
"Consolidated Leverage Ratio" as of any date of determination, means the
ratio of (i) the aggregate amount of all Indebtedness of the Company and its
Restricted Subsidiaries, excluding (a) Permitted Warehouse Indebtedness and
Guarantees thereof and (b) Hedging Obligations permitted to be Incurred pursuant
to clause (ii)(f) of the covenant described under "-- Certain
Covenants -- Limitation on Indebtedness" to (ii) the Consolidated Net Worth of
the Company.
"Consolidated Net Income" means, for any period, the net income of the
Company and its consolidated Subsidiaries; provided, however, that there shall
not be included in such Consolidated Net Income: (i) any net income of any
Person if such Person is not a Restricted Subsidiary, except that (a) subject to
the exclusion contained in clause (iv) below, the Company's equity in the net
income of any such Person for such period shall be included in such Consolidated
Net Income up to the aggregate amount of cash actually distributed by such
Person during such period to the Company or a Restricted Subsidiary as a
dividend or other distribution (subject, in the case of a dividend or other
distribution paid to a Restricted Subsidiary, to the limitations contained in
clause (iii) below) and (b) the Company's equity in a net loss of any such
Person for such period shall be included in determining such Consolidated Net
Income; (ii) any net income (or loss) of any Person acquired by the Company or a
Subsidiary in a pooling of interests transaction for any period prior to the
date of such acquisition; (iii) any net income of any Restricted Subsidiary if
such Restricted Subsidiary is subject to restrictions, directly or indirectly,
on the payment of dividends or the making of distributions by such Restricted
Subsidiary, directly or indirectly, to the Company, except that (a) subject to
the exclusion contained in clause (iv) below, the Company's equity in the net
income of any such Restricted Subsidiary for such period shall be included in
such Consolidated Net Income to the extent that cash could have been distributed
by such Restricted Subsidiary during such period to the Company or another
Restricted Subsidiary as a dividend or other distribution (subject, in the case
of a dividend or other distribution paid to another Restricted Subsidiary, to
the limitation contained in this clause) and (b) the Company's equity in a net
loss of any such Restricted Subsidiary for such period shall be included in
determining such Consolidated Net Income; (iv) any gain (but not loss) realized
upon the sale or other disposition of any assets of the Company
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<PAGE> 51
or its consolidated Subsidiaries (including pursuant to any sale-and-leaseback
arrangement) which is not sold or otherwise disposed of in the ordinary course
of business and any gain (but not loss) realized upon the sale or other
disposition of any Capital Stock of any Person; (v) extraordinary gains or
losses; and (vi) the cumulative effect of a change in accounting principles.
Notwithstanding the foregoing, for the purposes of the covenant described under
"-- Certain Covenants -- Limitation on Restricted Payments" only, there shall be
excluded from Consolidated Net Income any dividends, repayments of loans or
advances or other transfers of assets from any Person to the Company or a
Restricted Subsidiary to the extent such dividends, repayments or transfers
increase the amount of Restricted Payments permitted under such covenant
pursuant to clause (i)(c)(4) thereof.
"Consolidated Net Worth" means the total of the amounts shown on the
balance sheet of the Company and its Restricted Subsidiaries, determined on a
consolidated basis in accordance with GAAP, as of the end of the most recent
fiscal quarter of the Company for which financial statements are available, as
(i) the par or stated value of all outstanding Capital Stock of the Company plus
(ii) paid-in capital or capital surplus relating to such Capital Stock plus
(iii) any retained earnings or earned surplus less (a) any accumulated deficit
and (b) any amounts attributable to Disqualified Stock.
"Convertible Debentures" means the Company's 6% Convertible Subordinated
Debentures due 2006 that were outstanding on the Issue Date.
"Currency Agreement" means in respect of a Person any foreign exchange
contract, currency swap agreement of other similar agreement or arrangement to
which such Person is a party or a beneficiary.
"Default" means any event which is, or after notice or passage of time or
both would be, an Event of Default.
"Defaulting Subsidiary" means any Restricted Subsidiary of the Company with
respect to which an Event of Default described in clause (vi) under "Defaults"
has occurred and is continuing.
"Disqualified Stock" means, with respect to any Person, any Capital Stock
which by its terms (or by the terms of any security into which it is convertible
or for which it is exchangeable) or upon the happening of any event (i) matures
or is mandatorily redeemable pursuant to a sinking fund obligation or otherwise,
(ii) is convertible or exchangeable for Indebtedness or Disqualified Stock or
(iii) is redeemable at the option of the holders thereof, in each case in whole
or in part on or prior to 180 days after the Stated Maturity of the Notes;
provided, however, that Capital Stock of the Company or any Restricted
Subsidiary thereof that is issued with the benefit of provisions requiring a
change of control offer to be made for such Capital Stock in the event of a
change of control of the Company or Restricted Subsidiary or an offer to
repurchase such Capital Stock upon a disposition of assets, which provisions
have substantially the same effect as the provisions of the Indenture described
under "Change of Control" or "-- Certain Covenants -- Limitation on Sales of
Assets," as the case may be, shall not be deemed to be Disqualified Stock solely
by virtue of such provisions.
"Domestic Subsidiary" means any Restricted Subsidiary of the Company other
than a Foreign Subsidiary.
"Eligible Retained Interest Receivables" means Retained Interest
Receivables other than any Retained Interest Receivables created as the result
of the securitization or sale of other Retained Interest Receivables. For the
purposes of clause (viii)(a) of the definition of "Permitted Liens" the term
Eligible Retained Interest Receivables shall include only (i) Eligible Retained
Interest Receivables which exist on the Issue Date and are unencumbered or are
created subsequent to the Issue Date which are unencumbered by any Lien (either
directly or on the Capital Stock of any Special Purpose Subsidiary, the assets
of which are limited to Retained Interest Receivables) as of the relevant date
of determination and (ii) Eligible Retained Interest Receivables in existence on
the Issue Date which are encumbered by any Lien (either directly or on the
Capital Stock of any Special Purpose Subsidiary, the assets of which are limited
to Retained Interest Receivables), but only to the extent that the amount of any
such Eligible Retained Interest Receivable exceeds two (2) times the outstanding
principal amount of any Indebtedness secured by a Lien (either directly or on
the Capital Stock of any such Special Purpose Subsidiary) on such Eligible
Retained Interest Receivable as of the relevant date of determination.
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"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Foreign Subsidiary" means any Restricted Subsidiary of the Company that is
either (i) a UK Subsidiary or (ii) is incorporated in a jurisdiction other than
the United States of America or the United Kingdom and 80% of the sales,
earnings or assets of which are located in, generated from or derive from
operations located in jurisdictions outside the United States of America.
"GAAP" means generally accepted accounting principles in the United States
of America as in effect from time to time, including those set forth in (i) the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants, (ii) statements and pronouncements of
the Financial Accounting Standards Board, (iii) such other statements by such
other entity as approved by a significant segment of the accounting profession,
and (iv) the rules and regulations of the SEC governing the inclusion of
financial statements (including pro forma financial statements) in periodic
reports required to be filed pursuant to Section 13 of the Exchange Act,
including opinions and pronouncements in staff accounting bulletins and similar
written statements from the accounting staff of the SEC and releases of the
Emerging Issues Task Force.
"Guarantee" means an obligation, contingent or otherwise, of any Person
directly or indirectly guaranteeing any Indebtedness or other obligation of any
Person and any obligation, direct or indirect, contingent or otherwise, of such
Person (i) to purchase or pay (or advance or supply finds for the purchase or
payment of) such Indebtedness or other obligation of such Person (whether
arising by virtue of partnership arrangements, or by agreements to keep-well, to
purchase assets, goods, securities or services, to take-or-pay or to maintain
financial statement conditions or otherwise) or (ii) entered into for the
purpose of assuring in any other manner the obligee of such Indebtedness or
other obligation of the payment thereof or to protect such obligee against loss
in respect thereof (in whole or in part); provided, however, that the term
"Guarantee" shall not include endorsements for collection or deposit in the
ordinary course of business. The term "Guarantee" used as a verb has a
corresponding meaning. The term "Guarantor" shall mean any person Guaranteeing
any obligation.
"Hedging Obligations" of any Person means the obligations of such Person
pursuant to any Interest Rate Agreement or Currency Agreement.
"Holders" or "Noteholders" means the Person in whose name a Note is
registered on the Registrar's books.
"Incur" means issue, assume, Guarantee, incur or otherwise become liable
for; provided, however, that any Indebtedness or Capital Stock of a Person
existing at the time such Person becomes a Subsidiary (whether by merger,
consolidation, acquisition or otherwise) shall be deemed to be incurred by such
Subsidiary at the time it becomes a Subsidiary. The term "Incurrence" when used
as a noun shall have a correlative meaning. The accretion of principal of a
non-interest bearing or other discount security shall be deemed Incurrence of
Indebtedness.
"Indebtedness" means, with respect to any Person on any date of
determination (without duplication), (i) the principal of and premium, if any,
in respect of (a) indebtedness of such Person for money borrowed and (b)
indebtedness evidenced by notes, debentures, bonds or other similar instruments
for the payment of which such Person is responsible or liable; (ii) all Capital
Lease Obligations of such Person; (iii) all obligations of such Person issued or
assumed as the deferred purchase price of property, all conditional sale
obligations of such Person and all obligations of such Person under any title
retention agreement (but excluding trade accounts payable and expense accruals
arising in the ordinary course of business); (iv) all obligations of such Person
for the reimbursement of any obligor on any letter of credit, banker's
acceptance, surety bond or similar credit transaction (other than obligations
with respect to letters of credit securing obligations (other than obligations
described in (i) through (iii) above) entered into in the ordinary course of
business of such Person to the extent such letters of credit are not drawn upon
or, if and to the extent drawn upon, such drawing is reimbursed no later than
the tenth Business Day following receipt by such Person of a demand for
reimbursement following payment on the letter of credit); (v) the amount of all
obligations of such Person with respect to the redemption, repayment or other
repurchase of any Disqualified Stock (but
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excluding any accrued dividends); (vi) Warehouse Indebtedness; (vii) all
obligations of the type referred to in clauses (i) through (vi) of other Persons
and all dividends of other Persons for the payment of which, in either case,
such Person is responsible or liable, directly or indirectly, as obligor,
guarantor or otherwise, including by means of any Guarantee; (viii) all
obligations of the type referred to in clauses (i) through (vi) of other Persons
secured by any Lien on any property or asset of such Person (whether or not such
obligation is assumed by such Person), the amount of such obligation being
deemed to be the lesser of the value of such property or assets or the amount of
the obligation so secured; and (ix) to the extent not otherwise included in this
definition, Hedging Obligations of such Person. Except in the case of Warehouse
Indebtedness (the amount of which shall be determined in accordance with the
definition thereof), the amount of Indebtedness of any Person at any date shall
be the outstanding balance at such date of all unconditional obligations as
described above and the maximum liability, upon the occurrence of the
contingency giving rise to the obligation, of any contingent obligations at such
date. Notwithstanding the foregoing, any securities issued in a securitization
by a special purpose owner trust or other Person, including without limitation,
any Securitization Trust, formed by or on behalf of a Person and to which
Receivables have been sold or otherwise transferred by or on behalf of such
Person or its Restricted Subsidiaries shall not be treated as Indebtedness of
such Person or its Restricted Subsidiaries under the Indenture, regardless of
whether such securities are treated as indebtedness for tax purposes.
"Intercompany Note" means the note dated as of May 14, 1997 from CSC-UK to
CSC in an initial principal amount equal to $115.0 million denominated in US
dollars, which matures on June 1, 2004 and bears interest at a rate not less
than the rate borne by the Notes.
"Interest Rate Agreement" means any interest rate swap agreement, interest
rate cap agreement, repurchase agreement, futures contract or other financial
agreement or arrangement designed to protect the Company or any Restricted
Subsidiary against fluctuations in interest rates.
"Investment" in any Person means any direct or indirect advance, loan
(other than advances to customers in the ordinary course of business that are
recorded as trade accounts on the balance sheet of the lender) or other
extensions of credit (including by way of Guarantee or similar arrangement) 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 of Capital Stock, Indebtedness or other
similar instruments issued by, such Person. For purposes of the definition of
"Unrestricted Subsidiary," the definition of "Restricted Payment" and the
covenant described under "-- Certain Covenants -- Limitation on Restricted
Payments," (i) "Investment" shall include the portion (proportionate to the
Company's equity interest in such Subsidiary) of the fair market value of the
net assets of any Subsidiary of the Company at the time that such Subsidiary is
designated an Unrestricted Subsidiary; provided, however, that upon a
redesignation of such Subsidiary as a Restricted Subsidiary, the Company shall
be deemed to continue to have a permanent "Investment" in an Unrestricted
Subsidiary equal to an amount (if positive) equal to (a) the Company's
"Investment" in such Subsidiary at the time of such redesignation less (b) the
portion (proportionate to the Company's equity interest in such Subsidiary) of
the fair market value of the net assets of such Subsidiary at the time of such
redesignation; and (ii) any property transferred to or from an Unrestricted
Subsidiary shall be valued at its fair market value at the time of such
transfer, in each case as determined in good faith by the Board of Directors.
"Investment Grade Rating" means with respect to the Notes a rating by
Standard and Poor's Ratings Services, a division of the McGraw-Hill Companies,
Inc., of at least BBB- and a rating by Moody's Investors Service, Inc. of at
least Baa3 which is provided after assuming and giving effect to the (i)
elimination of the applicability of the proviso to clause (viii) of the
definition of "Permitted Liens" and (ii) the release of the Intercompany Note
Collateral, and (iii) the release of the obligations of the Subsidiary
Guarantors under their Subsidiary Guarantees.
"Issue Date" means the date on which the Notes are originally issued.
"Lien" means (i) any mortgage, pledge, security interest, encumbrance, lien
or charge of any kind (including any conditional sale or other title retention
agreement or lease in the nature thereof) and (ii) any
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claim (whether direct or indirect through subordination or other structural
encumbrance) against any Retained Interest Receivables sold unless the seller is
not liable for any losses thereon.
"Net Available Cash" from an Asset Disposition means cash payments received
therefrom (including any cash payment received by way of deferred payment of
principal pursuant to a note or installment receivable or otherwise, but only as
and when received, but excluding any other consideration received in the form of
assumption by the acquiring Person of Indebtedness or other obligations relating
to such properties or assets or received in any other noncash form) in each case
net of (i) all legal, title and recording tax expenses, commissions and
investment banking and other fees and expenses incurred, and all Federal, state,
provincial, foreign and local taxes required to be accrued as a liability under
GAAP, as a consequence of such Asset Disposition, (ii) all payments made on any
Indebtedness which is secured by any assets subject to such Asset Disposition,
in accordance with the terms of any Lien upon or other security agreement of any
kind with respect to such assets, or which must by its terms, or in order to
obtain a necessary consent to such Asset Disposition, or by applicable law be,
repaid out of the proceeds from such Asset Disposition, (iii) all distributions
and other payments required to be made to minority interest holders in
Subsidiaries or joint ventures as a result of such Asset Disposition and (iv)
the deduction of appropriate amounts provided by the seller as a reserve, in
accordance with GAAP, against any liabilities associated with the property or
other assets disposed in such Asset Disposition and retained by the Company or
any Restricted Subsidiary after such Asset Disposition.
"Net Cash Proceeds," with respect to any issuance or sale of Capital Stock,
means the cash proceeds of such issuance or sale net of attorneys' fees,
accountants' fees, underwriters' or placement agents' fees, discounts or
commissions and brokerage, consultant and other fees actually incurred in
connection with such issuance or sale and net of taxes paid or payable as a
result thereof.
"Non-Recourse Indebtedness" means Indebtedness (i) as to which neither the
Company nor any of the Restricted Subsidiaries (other than the Person incurring
such Indebtedness) (a) provides a Guarantee or other credit enhancement of any
kind (including any undertaking, agreement or instruction that would constitute
Indebtedness) or (b) is directly or indirectly liable (as the primary obligor or
otherwise); (ii) no default with respect to which would permit, upon notice,
lapse of time or both, any holder of any other Indebtedness (other than the
Notes) of the Company or any of its Restricted Subsidiaries to declare a default
on such other Indebtedness or cause the payment thereof to be accelerated or
payable prior to its stated maturity; and (iii) as to which the lenders or
holders thereof have been notified in writing that they will not have any
recourse to the Capital Stock or assets of the Company or any of its Restricted
Subsidiaries (other than the Person Incurring such Indebtedness).
"Permitted Investment" means an Investment by the Company or any Restricted
Subsidiary in (i) the Company or a Restricted Subsidiary or a Person that will,
upon the making of such Investment, become a Restricted Subsidiary; provided,
however that the primary business of such Restricted Subsidiary is a Related
Business; and provided, further, except as provided in clause (xiii) below, in
the case of any Investment in a Foreign Subsidiary that is not a Subsidiary
Guarantor, such Investment shall be in the form of a loan constituting Senior
Indebtedness of such Foreign Subsidiary, evidenced by a note; (ii) another
Person if as a result of such Investment such other Person is merged or
consolidated with or into, or transfers or conveys all or substantially all its
assets to, the Company or a Restricted Subsidiary; provided, however, that such
Person's primary business is a Related Business; (iii) Temporary Cash
Investments; (iv) receivables (other than Receivables) owing to the Company or
any Restricted Subsidiary if created or acquired in the ordinary course of
business and payable or dischargeable in accordance with customary trade terms;
(v) payroll, travel and similar advances to cover matters that are expected at
the time of such advances ultimately to be treated as expenses for accounting
purposes and that are made in the ordinary course of business; (vi) loans or
advances to employees made in the ordinary course of business of the Company or
such Restricted Subsidiary; (vii) stock, obligations or securities received in
settlement of debts created in the ordinary course of business and owing to the
Company or any Restricted Subsidiary or in satisfaction of judgments; (viii) any
Person to the extent such Investment represents the non-cash portion of the
consideration received for an Asset Disposition as permitted pursuant to the
covenant described under "-- Certain Covenants -- Limitation on Sales of
Assets"; (ix) Receivables; (x) Interest Rate Agreements and Currency Agreements;
(xi) Retained
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Interest Receivables; (xii) loans to third parties for the origination of
Receivables in the ordinary course of business and any warrants, Capital Stock
or other consideration received in connection therewith; (xiii) capital
contributions to Foreign Subsidiaries not to exceed 10% of the Company's
consolidated stockholders' equity at the time of such contributions; (xiv)
Capital Stock of or in the form of a transfer of Receivables to a Qualifying
Securitization Subsidiary pursuant to a securitization of such Receivables; and
(xv) Investments (other than Investments permitted pursuant to clauses
(i) - (xiv) above) by the Company and the Restricted Subsidiaries in an
aggregate amount not to exceed $7.5 million.
"Permitted Liens" means, with respect to any Person, (i) pledges or
deposits by such Person under worker's compensation laws, unemployment insurance
laws or similar legislation, or good faith deposits in connection with bids,
tenders, contracts (other than for the payment of Indebtedness) or leases to
which such Person is a party, or deposits or Liens to secure public or statutory
obligations of such Person or deposits of cash or United States government bonds
or Liens to secure surety, performance, appeal or other bonds with respect to
such Person, or deposits as security for contested taxes or import duties or for
the payment of rent, in each case Incurred in the ordinary course of business;
(ii) Liens imposed by law, such as carriers', warehousemen's and mechanics'
Liens, in each case for sums not yet due or being contested in good faith by
appropriate proceedings or Liens arising out of judgments or awards against such
Person with respect to which such person shall then be proceeding with an appeal
or other proceedings for review; (iii) Liens for taxes, assessments or other
governmental charges not yet subject to penalties for nonpayment or which are
being contested in good faith and by appropriate proceedings; (iv) Liens in
favor of issuers of surety bonds or letters of credit issued pursuant to the
request of and for the account of such Person in the ordinary course of its
business; provided, however, that such letters of credit do not constitute
Indebtedness; (v) minor survey exceptions, minor encumbrances, easements or
reservations of, or rights of others for, licenses, rights of way, sewers,
electric lines, telegraph and telephone lines and other similar purposes, or
zoning or other restrictions as to the use of real property; or Liens incidental
to the conduct of the business of such Person or to the ownership of its
properties which were not Incurred in connection with Indebtedness and which do
not in the aggregate materially adversely affect the value of said properties or
materially impair their use in the operation of the business of such Person;
(vi) Liens securing Indebtedness Incurred to finance or refinance the
construction, purchase or lease of, or repairs, improvements or additions to,
property of such Person (but excluding Capital Stock of another Person);
provided, however, that the Lien may not extend to any other Property owned by
such Person or any of its Subsidiaries at the time the Lien is Incurred, and the
Indebtedness secured by the Lien may not be Incurred more than 180 days after
the later of the acquisition, completion of construction, repair, improvement,
addition or commencement of full operation of the property subject to the Lien;
(vii) Liens to secure Indebtedness permitted under the provisions described in
clause (ii)(a) or (ii)(d) (to the extent refinancing Indebtedness incurred
pursuant to clause (ii)(a)) under "-- Certain Covenants -- Limitation on
Indebtedness"; (viii) Liens on Retained Interest Receivables (or on the Capital
Stock of any Person substantially all the assets of which are Retained Interest
Receivables); provided, however, that, for so long as the Notes do not have an
Investment Grade Rating, the Company and its Restricted Subsidiaries shall have
satisfied each of the following before incurring any Lien on Eligible Retained
Interest Receivables pursuant to this clause (viii): (a) there shall be Eligible
Retained Interest Receivables at least equal to 150% of the principal amount
then outstanding of unsecured Senior Indebtedness of the Company and its
Restricted Subsidiaries falling within clause (b) of the definition of "Senior
Indebtedness"; and (b) the principal amount of any Indebtedness secured by any
such Liens incurred pursuant to this clause (viii) on any Eligible Retained
Interest Receivables shall be limited, in the aggregate, to Eligible Retained
Interest Receivables representing no more than 75% of the amount of Eligible
Retained Interest Receivables in excess of the limitations described in (a) as
shown on the balance sheet of the Company and its consolidated Restricted
Subsidiaries, determined on a consolidated basis in accordance with GAAP after
giving pro forma effect to the incurrence of such Lien, as of the end of the
most recent fiscal quarter of the Company prior to the date on which such Lien
is first incurred for which financial statements are available; provided,
further, however, that a Lien on Eligible Retained Interest Receivables securing
Indebtedness that is a Permitted Lien at the time such Indebtedness is first
incurred shall continue to constitute a Permitted Lien, notwithstanding any
reduction in value of such Eligible Retained Interest Receivables (as a result
of their revaluation, any adverse change with respect to the underlying "pool"
of
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Receivables or otherwise); (ix) Liens existing on the Issue Date; (x) Liens on
property or shares of Capital Stock of another Person at the time such other
Person becomes a Subsidiary of such Person; provided, however, that such Liens
are not created, incurred or assumed in connection with, or in contemplation of,
such other Person becoming such a Subsidiary; provided further, however, that
such Lien may not extend to any other property owned by such Person or any of
its Subsidiaries; (xi) Liens on property at the time such Person or any of its
Subsidiaries acquires the property, including any acquisition by means of a
merger or consolidation with or into such Person or a Subsidiary of such Person;
provided, however, that such Liens are not created, incurred or assumed in
connection with, or in contemplation of, such acquisition; provided, further,
however, that the Liens may not extend to any other property owned by such
Person or any of its Subsidiaries; (xii) Liens securing Indebtedness or other
obligations of a Subsidiary of such Person owing to such Person or a Restricted
Subsidiary of such Person; (xiii) Liens securing Hedging Obligations so long as
such Hedging Obligations relate to Indebtedness that is, and is permitted under
the Indenture to be, secured by a Lien on the same property securing such
Hedging Obligations; (xiv) Liens on property of a Special Purpose Subsidiary
otherwise in compliance with clause (viii) above; (xv) Liens to secure any
Refinancing (or successive Refinancings) as a whole, or in part, of any
Indebtedness secured by any Lien referred to in the foregoing clauses (vi),
(viii), (ix), (x) and (xi); provided, however, that (a) such new Lien shall be
limited to all or part of the same property that secured the original Lien (plus
improvements to or on such property) and (b) the Indebtedness secured by such
Lien at such time is not increased to any amount greater than the sum of (1) the
outstanding principal amount or, if greater, committed amount of the
Indebtedness described under clauses (vi), (viii), (ix), (x) or (xi), as the
case may be, at the time the original Lien became a Permitted Lien and (2) an
amount necessary to pay any fees and expenses, including premiums, related to
such refinancing, refunding, extension renewal or replacement; (xvi) any Lien in
the form of "over-collateralization" of the senior securities issued in, or
subordination of or recourse to all or a portion of Retained Interest
Receivables of the Company or any Subsidiary attributable to, a securitization
of Receivables (or similar arrangements), in each case to the extent reflected
in the book value of such Retained Interest Receivables, which Lien is in favor
of the holders of other securities issued by the trust or other Person relating
to such securitization; (xvii) judgment and attachment Liens not giving rise to
an Event of Default; (xviii) Liens in favor of the Company or any Restricted
Subsidiary; (xix) a Lien on the Intercompany Note in favor of the Trustee for
the benefit of holders of the Notes; (xx) Liens securing Indebtedness otherwise
permitted to be incurred on any note provided by a Foreign Subsidiary to the
Company or any Domestic Subsidiary initially evidencing loans made by the
Company or such Domestic Subsidiary out of the proceeds of such Indebtedness;
and (xxi) Liens securing Indebtedness of the Company or a Restricted Subsidiary
owed to and held by the Company or a Restricted Subsidiary (a) pledged to a
third party and (b) secured by Retained Interest Receivables, provided that the
Company is in compliance with clause (viii) above. Notwithstanding the
foregoing, "Permitted Liens" will not include any Lien described in clauses
(vi), (x) or (xi) above to the extent such Lien applies to any Additional Assets
acquired directly or indirectly from Net Available Cash pursuant to the covenant
described under "-- Certain Covenants -- Limitation on Sale of Assets."
"Permitted Warehouse Indebtedness" means Warehouse Indebtedness in
connection with a Warehouse Facility; provided, however, that (i) the assets as
to which such Warehouse Indebtedness relates are or, prior to any funding under
the related Warehouse Facility with respect to such assets, were eligible to be
recorded as held for sale on the consolidated balance sheet of the Company in
accordance with GAAP, (ii) such Warehouse Indebtedness will be deemed to be
Permitted Warehouse Indebtedness (a) in the case of a Purchase Facility, only to
the extent the holder of such Warehouse Indebtedness has no contractual recourse
to the Company and its Restricted Subsidiaries to satisfy claims in respect of
such Permitted Warehouse Indebtedness in excess of 20% of the advances made
thereunder, and (b) in the case of any other Warehouse Facility, only to the
extent of the lesser of (1) the amount advanced by the lender with respect to
the Receivables financed under such Warehouse Facility, and (2) 105% of the
principal amount of such Receivables and (iii) any such Indebtedness has not
been outstanding in excess of 364 days.
"Person" means any individual, corporation, partnership, joint venture,
association, joint stock company, limited liability company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.
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"Pledge Agreement" means the pledge agreement dated the Issue Date by and
among The Chase Manhattan Bank, as Collateral Agent, CSC and the Trustee, as the
same may be amended and restated, supplemented or modified from time to time as
permitted thereunder.
"Preferred Stock" as applied to the Capital Stock of any Person, means
Capital Stock of any class or classes (however designated) which is preferred as
to the payment of dividends, or as to the distribution of assets upon any
voluntary or involuntary liquidation or dissolution of such Person, over shares
of Capital Stock of any other class of such corporation.
"principal" of a Note means the principal of the Note plus the premium, if
any, payable on the Note which is due or overdue or is to become due at the
relevant time.
"Public Equity Offering" means an underwritten primary public offering of
common stock of the Company pursuant to an effective registration statement
under the Securities Act other than any such public offering occurring
substantially concurrently with the issuance of the Notes.
"Purchase Facility" means any Warehouse Facility in the form of a purchase
and sale facility pursuant to which the Company or a Restricted Subsidiary sells
Receivables to a financial institution and retains a right of first refusal upon
the subsequent resale of such Receivables by such financial institution.
"Purchase Money Indebtedness" means any Indebtedness incurred by a Person
to finance or refinance the cost of the construction or purchase of, or repairs,
improvements or additions to, an item of property, the principal amount of which
Indebtedness does not exceed the sum of (i) 100% of such cost and (ii)
reasonable fees and expenses of such Person incurred in connection therewith.
"Qualifying Securitization Subsidiary" means any Subsidiary of the Company
that (i) does not engage in, and whose charter prohibits it from engaging in,
any activities other than a securitization of Receivables which have been sold
or otherwise transferred to such Subsidiary by the Company or another Subsidiary
in a transaction that constitutes a "true sale" under GAAP, (ii) constitutes a
"special purpose vehicle" under rating agency guidelines, and (iii) does not
have any Indebtedness other than Non-Recourse Indebtedness.
"Receivables" means consumer and commercial loans, leases and receivables
purchased or originated by the Company or any Restricted Subsidiary; provided,
however, that for purposes of determining the amount of a Receivable at any
time, such amount shall be determined in accordance with GAAP, consistently
applied, as of the most recent practicable date.
"Refinance" means, in respect of any Indebtedness, to refinance, extend,
renew, refund, repay, prepay, redeem, defease or retire, or to issue other
Indebtedness in exchange or replacement for, such Indebtedness. "Refinanced" and
"Refinancing" shall have correlative meanings.
"Refinancing Indebtedness" means Indebtedness that Refinances any
Indebtedness of the Company or any Restricted Subsidiary existing on the Issue
Date or Incurred in compliance with the Indenture, including Indebtedness that
Refinances Refinancing Indebtedness; provided, however, that (i) such
Refinancing Indebtedness has a Stated Maturity no earlier than the Stated
Maturity of the Indebtedness being Refinanced, (ii) such Refinancing
Indebtedness has an Average Life at the time such Refinancing Indebtedness is
Incurred that is equal to or greater than the Average Life of the Indebtedness
being Refinanced and (iii) such Refinancing Indebtedness has an aggregate
principal amount (or if Incurred with original issue discount, an aggregate
issue price) that is equal to or less than the aggregate principal amount (or if
Incurred with original issue discount, the aggregate accreted value) then
outstanding or committed (plus fees and expenses, including any premium and
defeasance costs) under the Indebtedness being Refinanced; provided, further,
however, that Refinancing Indebtedness shall not include (a) Indebtedness of a
Subsidiary that Refinances Indebtedness of the Company or another Subsidiary or
(b) Indebtedness of the Company or a Restricted Subsidiary that Refinances
Indebtedness of an Unrestricted Subsidiary.
"Related Business" means any consumer or commercial finance business or any
financial service business relating thereto, including, without limitation,
businesses of the Company in existence as of the Issue Date.
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"Related Party" with respect to any Person means (i) any spouse, sibling,
parent or lineal descendant of such Person or any spouse of such sibling or
lineal descendant or (ii) any trust, corporation, partnership or other entity
that is controlled by Persons referred to in clause (i).
"Restricted Payment" with respect to any Person means (i) the declaration
or payment of any dividends or any other distributions of any sort in respect of
its Capital Stock (including any payment in connection with any merger or
consolidation involving such Person) (other than (a) dividends or distributions
payable solely in its Capital Stock (other than Disqualified Stock), (b)
dividends or distributions payable solely to the Company or a Restricted
Subsidiary and (c) pro rata dividends or other distributions made by a
Subsidiary that is not a Wholly Owned Subsidiary to minority stockholders (or
owners of an equivalent interest in the case of a Subsidiary that is an entity
other than a corporation)), (ii) the purchase, redemption or other acquisition
or retirement for value of any Capital Stock of the Company held by any Person
or of any Capital Stock of a Restricted Subsidiary (other than Capital Stock
owned by the Company or a Wholly Owned Subsidiary, excluding Disqualified Stock)
held by any Affiliate of the Company, including the exercise of any option to
exchange any Capital Stock (other than into Capital Stock of the Company that is
not Disqualified Stock), (iii) the purchase, repurchase, redemption, defeasance
or other acquisition or retirement for value, prior to scheduled maturity,
scheduled repayment or scheduled sinking fund payment of any Subordinated
Obligations (other than the purchase, repurchase or other acquisition of
Subordinated Obligations purchased in anticipation of satisfying a sinking fund
obligation, principal installment or final maturity, in each case due within one
year of the date of acquisition), (iv) the making of any Investment (other than
a Permitted Investment) in any Person or (v) the forgiveness of any Indebtedness
of an Affiliate of the Company to the Company or a Restricted Subsidiary.
"Restricted Subsidiary" means any Subsidiary of the Company that is not an
Unrestricted Subsidiary.
"Retained Interest" means, over the life of a "pool" of Receivables that
have been sold or otherwise transferred by a Person to a trust or other Person
in a securitization or sale, the direct or indirect rights retained by such
Person or its Restricted Subsidiaries at or subsequent to the closing of such
securitization or sale with respect to such "pool", including any rights to
receive cash flows attributable to such pool and retained by such Person,
whether such rights are contractual, by virtue of such Person being a holder of
Capital Stock of such trust or other Person or otherwise.
"Retained Interest Receivables" of a Person means the direct or indirect
right to Retained Interest capitalized on such Person's or any of its Restricted
Subsidiaries' consolidated balance sheet (the amount of which shall be
determined in accordance with GAAP), including, without limitation, subordinated
and interest-only certificates and any such rights as a holder of Capital Stock
of a trust or other Person to which a "pool" of Receivables has been sold or
otherwise transferred in a securitization or sale.
"SEC" means the Securities and Exchange Commission.
"Securitization Trust" means any Person (whether or not a Subsidiary of the
Company) established exclusively for the purpose of issuing securities in
connection with any securitization, the obligations of which are without
recourse to the Company or any of the Subsidiary Guarantors (including, without
limitation, any Special Purpose Subsidiary of the Company), provided that such
Person is not an obligor with respect to any Indebtedness of the Company or any
Subsidiary Guarantor.
"Senior Indebtedness" means the principal of, premium and accrued and
unpaid interest (including interest accruing on or after the filing of any
petition in bankruptcy or for reorganization relating to the Company to the
extent post-filing interest is allowed in such proceeding) in respect of (i)
indebtedness of such Person for money borrowed and (ii) indebtedness evidenced
by notes, debentures, bonds or other similar instruments for the payment of
which such Person is responsible or liable unless, in the case of either clause
(i) or (ii), in the instrument creating or evidencing the same or pursuant to
which the same is outstanding, it is provided that such obligations are
subordinate in right of payment to the Notes; provided, however, that Senior
Indebtedness shall not include (a) any obligation of such Person to any
Subsidiary of such Person, (b) any liability for Federal, state, local or other
taxes owed or owing by such Person, (c) any accounts payable or other liability
to trade creditors arising in the ordinary course of business (including
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guarantees thereof or instruments evidencing such liabilities), (d) any
obligation in respect of Capital Stock of such Person or (e) that portion of any
Indebtedness which at the time of Incurrence is Incurred in violation of the
Indenture.
"Significant Subsidiary" means any Restricted Subsidiary that, individually
or if merged with all other Defaulting Subsidiaries, would be a "Significant
Subsidiary" of the Company within the meaning of Rule 1-02 under Regulation S-X
promulgated by the SEC.
"Special Purpose Subsidiary" means (i) a Restricted Subsidiary formed in
connection with a securitization (a) all the Capital Stock of which (other than
directors' qualifying shares) is owned by the Company or one or more Restricted
Subsidiaries, (b) that has no assets other than Retained Interest Receivables
created in such securitization and (c) that conducts no business other than
holding such Retained Interest Receivables or (ii) that is a Qualifying
Securitization Subsidiary.
"Stated Maturity" means, with respect to any security, the date specified
in such security as the fixed date on which the final payment of principal of
such security is due and payable, including pursuant to any mandatory redemption
provision (but excluding any provision providing for the repurchase of such
security at the option of the holders thereof upon the happening of any
contingency unless such contingency has occurred).
"Subordinated Obligation" means any Indebtedness of the Company (whether
outstanding on the Issue Date or thereafter Incurred) which is, by its terms
pursuant to a written agreement, subordinate or junior in right of payment to
the Notes to that effect.
"Subsidiary" means, in respect of any Person, any corporation, association,
partnership or other business entity of which more than 50% of the total voting
power of shares of Capital Stock or other interests (including partnership
interests) entitled (without regard to the occurrence of any contingency) to
vote in the election of directors, managers or trustees thereof is at the time
owned or controlled, directly or indirectly, by (i) such Person, (ii) such
Person and one or more Subsidiaries of such Person or (iii) one or more
Subsidiaries of such Person.
"Subsidiary Guarantee" means each Guarantee given by the Subsidiary
Guarantors in accordance with the provisions of the Indenture.
"Subsidiary Guarantor" means a domestic Restricted Subsidiary of the
Company that is or becomes a Subsidiary Guarantor in accordance with the
provisions of the Indenture.
"Temporary Cash Investments" means any of the following: (i) any investment
in direct obligations of the United States of America or any agency thereof or
obligations guaranteed by the United States of America or any agency thereof,
(ii) investments in time deposit accounts, certificates of deposit and money
market deposits maturing within 180 days of the date of acquisition thereof
issued by a bank or trust company that is not an Affiliate of the Company and
which is organized under the laws of the United States of America, any state
thereof or any foreign country recognized by the United States, and which bank
or trust company has capital, surplus and undivided profits aggregating in
excess of $50.0 million (or the foreign currency equivalent thereof) and has
outstanding debt which is rated "A" (or such similar equivalent rating) or
higher by at least one nationally recognized statistical rating organization (as
defined in Rule 436 under the Securities Act) or any money-market fund sponsored
by a registered broker dealer or mutual fund distributor, (iii) repurchase
obligations with a term of not more than 30 days for underlying securities of
the types described in clause (i) above entered into with a bank meeting the
qualifications described in clause (ii) above, (iv) investments in commercial
paper, maturing not more than 180 days after the date of acquisition, issued by
a corporation (other than an Affiliate of the Company) organized and in
existence under the laws of the United States of America or any foreign country
recognized by the United States of America with a rating at the time as of which
any investment therein is made of "P-1" (or higher) according to Moody's
Investors Service, Inc. or "A-l" (or higher) according to Standard and Poor's
Ratings Services, a division of the McGraw-Hill Companies, Inc., and (v)
investments in securities with maturities of six months or less from the date of
acquisition issued or fully guaranteed by any state, commonwealth or territory
of the United States of America, or by any political subdivision or taxing
authority thereof, and rated as least "A" by Standard &
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Poor's Ratings Services, a division of the McGraw-Hill Companies, Inc., or "A"
by Moody's Investors Service, Inc.
"UK Subsidiary" means a Restricted Subsidiary that is incorporated in the
United Kingdom and 80% of the sales, earnings or assets of which are located in,
generated from or derive from operations located in the United Kingdom.
"Unrestricted Subsidiary" means (i) any Subsidiary of the Company that at
the time of determination shall be designated an Unrestricted Subsidiary by the
Board of Directors in the manner provided below and (ii) any Subsidiary of an
Unrestricted Subsidiary. The Board of Directors may designate any Subsidiary of
the Company (including any newly acquired or newly formed Subsidiary) to be an
Unrestricted Subsidiary unless such Subsidiary or any of its Subsidiaries owns
any Capital Stock or Indebtedness of, or holds any Lien on any property of, the
Company or any other Subsidiary of the Company that is not a Subsidiary of the
Subsidiary to be so designated; provided, however, that either (a) the
Subsidiary to be so designated has total assets of $1,000 or less or (b) if such
Subsidiary has assets greater than $1,000, such designation would be permitted
under the covenant described under "-- Certain Covenants -- Limitation on
Restricted Payments." The Board of Directors may designate any Unrestricted
Subsidiary to be a Restricted Subsidiary; provided, however, that immediately
after giving effect to such designation (i) the Company could incur $1.00 of
additional Indebtedness under paragraph (i) of the covenant described under "--
Certain Covenants -- Limitation on Indebtedness" and (ii) no Default shall have
occurred and be continuing. Any such designation by the Board of Directors shall
be evidenced by the Company to the Trustee by promptly filing with the Trustee a
copy of the board resolution giving effect to such designation and an Officers'
Certificate certifying that such designation complied with the foregoing
provisions.
"U.S. Government Obligations" means direct obligations (or certificates
representing an ownership interest in such obligations) of the United States of
America (including any agency or instrumentality thereof) for the payment of
which the full faith and credit of the United States of America is pledged and
which are not callable at the issuer's option.
"Voting Stock" of a Person means all classes of Capital Stock or other
interests (including partnership interests) of such Person then outstanding and
normally entitled (without regard to the occurrence of any contingency) to vote
in the election of directors, managers or trustees thereof.
"Warehouse Facility" means any funding arrangement with a financial
institution or other lender or purchaser to the extent such agreement is to
finance the purchase or origination of Receivables by the Company or a
Subsidiary of the Company, or the making of loans to a Person for the purpose of
financing the purchase or origination by such Person of consumer or commercial
loans, leases or receivables for resale or sale to the Company or any Subsidiary
of the Company, and in each case for the purpose of pooling such Receivables
prior to securitization or sale in the ordinary course of business, including
purchase and sale facilities pursuant to which the Company or a Subsidiary of
the Company sells Receivables to a financial institution and retains a right of
first refusal upon the subsequent resale of such Receivables by such financial
institution.
"Warehouse Indebtedness" means the consideration received by the Company or
its Restricted Subsidiaries under a Warehouse Facility with respect to
Receivables until such time such Receivables are (i) securitized, (ii)
repurchased by the Company or its Restricted Subsidiaries or (iii) sold by the
counterparty under the Warehouse Facility to a Person who is not an Affiliate of
the Company.
"Wholly Owned Subsidiary" means a Restricted Subsidiary all the Capital
Stock of which (other than directors' qualifying shares and shares held by other
Persons to the extent such shares are required by applicable law to be held by a
Person other than the Company or a Restricted Subsidiary) is owned by the
Company or one or more Wholly Owned Subsidiaries.
BOOK-ENTRY; DELIVERY AND FORM
New Notes which may be held in global form initially will be represented by
one or more notes in registered, global form without interest coupons
(collectively, the "Global Note"). The Global Note will be
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deposited upon issuance with the Trustee as custodian for The Depository Trust
Company ("DTC"), in New York, New York, and registered in the name of DTC or its
nominee, in each case for credit to an account of a direct or indirect
participant as described below.
Except as set forth below, the Global Note may be transferred, in whole and
not in part, only to another nominee of DTC or to a successor of DTC or its
nominee. Beneficial interests in the Global Note may not be exchanged for Notes
in certificated form except in the limited circumstances described below. See
"-- Exchange of Book-Entry Notes for Certificated Notes."
Transfer of beneficial interests in the Global Notes will be subject to the
applicable rules and procedures of DTC and its direct or indirect participants
which may change from time to time.
The Notes may be presented for registration of transfer and exchange at the
offices of the Registrar.
DEPOSITORY PROCEDURES
DTC has advised the Company that DTC is a limited-purpose trust company
created to hold securities for its participating organizations (collectively,
the "Participants") and to facilitate the clearance and settlement of
transactions in those securities between the Participants through electronic
book-entry changes in accounts of the Participants. The Participants include
securities brokers and dealers (including the Initial Purchasers), banks, trust
companies, clearing corporations and certain other organizations. Access to
DTC's system is also available to other entities such as banks, brokers, dealers
and trust companies that clear through or maintain a custodial relationship with
a Participant, either directly or indirectly (collectively, the "Indirect
Participants"). Persons who are not Participants may beneficially own securities
held by or on behalf of DTC only through the Participants or the Indirect
Participants. The ownership interest and transfer of ownership interest of each
actual purchaser of each security held by or on behalf of DTC are recorded on
the records of the Participants and the Indirect Participants.
DTC has also advised the Company that pursuant to procedures established by
it, (i) upon deposit of the Global Note, DTC will credit the accounts of
Participants designated to it with portions of the principal amount of the
Global Note and (ii) ownership of such interests in the Global Note will be
shown on, and the transfer of ownership thereof will be effected only through,
records maintained by DTC (with respect to the Participants) or by the
Participants and the Indirect Participants (with respect to other owners of
beneficial interests in the Global Note).
Investors in the Global Note may hold their interests therein directly
through DTC, if they are Participants in such system, or indirectly through
organizations (including Euroclear and Cedel) which are Participants in such
system. The Chase Manhattan Bank, Brussels office, will initially act as
depository for Euroclear, and Citibank, N.A., will initially act as depository
for Cedel. All interests in the Global Note, including those held through
Euroclear or Cedel, may be subject to the procedures and requirements of DTC.
Those interests held through Euroclear or Cedel may also be subject to the
procedures and requirements of such system.
The laws of some states require that certain persons take physical delivery
in definitive form of securities that they own. Consequently, the ability to
transfer beneficial interests in the Global Note to such persons may be limited
to that extent. Because DTC can act only on behalf of the Participants, which in
turn act on behalf of the Indirect Participants and certain banks, the ability
of a person having beneficial interests in the Global Note to pledge such
interests to persons or entities that do not participate in the DTC system, or
otherwise take actions in respect of such interests, may be affected by the lack
of a physical certificate evidencing such interests. For certain other
restrictions on the transferability of the Notes, see "-- Exchange of Book-Entry
Notes for Certificated Notes."
EXCEPT AS DESCRIBED BELOW, OWNERS OF INTERESTS IN THE GLOBAL NOTE WILL NOT
HAVE NOTES REGISTERED IN THEIR NAMES, WILL NOT RECEIVE PHYSICAL DELIVERY OF
NOTES IN CERTIFICATED FORM AND WILL NOT BE CONSIDERED THE REGISTERED OWNERS OR
HOLDERS THEREOF UNDER THE INDENTURE FOR ANY PURPOSE.
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Payments in respect of the principal of, premium, if any, and interest on
the Global Note registered in the name of DTC or its nominee will be payable to
DTC or its nominee in its capacity as the registered holder under the Indenture.
Under the terms of the Indenture, the Company and the Trustee will treat the
persons in whose names the Notes, including the Global Note, are registered as
the owners thereof for the purpose of receiving such payments and for any and
all other purposes whatsoever. Consequently, neither the Company, the Initial
Purchasers, the Trustee nor any agent of the Company, the Initial Purchasers or
the Trustee has or will have any responsibility or liability for (i) any aspect
or accuracy of DTC's records or any Participant's or Indirect Participant's
records relating to or payments made on account of beneficial ownership
interests in the Global Note, or for maintaining, supervising or reviewing any
of DTC's records or any Participant's or Indirect Participant's records relating
to the beneficial ownership interests in the Global Note, or (ii) any other
matter relating to the actions and practices of DTC or any of the Participants
or the Indirect Participants.
DTC has advised the Company that its current practice, upon receipt of any
payment in respect of securities such as the Notes (including principal and
interest), is to credit the accounts of the relevant Participants with the
payment on the payment date, in amounts proportionate to their respective
holdings in principal amount of beneficial interests in the relevant security as
shown on the records of DTC. Payments by the Participants and the Indirect
Participants to the beneficial owners of Notes will be governed by standing
instructions and customary practices and will not be the responsibility of DTC,
the Trustee or the Company. Neither the Company nor the Trustee will be liable
for any delay by DTC or any of the Participants in identifying the beneficial
owners of the Notes, and the Company and the Trustee may conclusively rely on
and will be protected in relying on instructions from DTC or its nominee as the
registered owner of the Global Note for all purposes.
Except for trades involving only Euroclear and Cedel participants,
interests in the Global Note will trade in DTC's Same-Day Funds Settlement
System and secondary market trading activity in such interests will therefore
settle in immediately available funds, subject in all cases to the rules and
procedures of DTC and the Participants.
Transfers between Participants in DTC will be effected in accordance with
DTC's procedures and will be settled in same day funds. Transfers between
accountholders in Euroclear and Cedel will be effected in the ordinary way in
accordance with their respective rules and operating procedures.
Subject to compliance with the transfer restrictions applicable to the
Notes described herein, cross-market transfers between the accountholders in
DTC, on the one hand, and directly or indirectly through Euroclear or Cedel
accountholders, on the other hand, will be effected through DTC in accordance
with DTC's rules on behalf of Euroclear or Cedel, as the case may be, by its
respective depository; however, such cross-market transactions will require
delivery of instructions to Euroclear or Cedel, as the case may be, by the
counterparty in such system in accordance with the rules and procedures and
within the established deadlines (Brussels time) of such system. Euroclear or
Cedel, as the case may be, will, if the transaction meets its settlement
requirements, deliver instructions to its respective depository to take action
to effect final settlement on its behalf by delivering or receiving interests in
the Global Note in DTC, and making or receiving payment in accordance with
normal procedures for same-day funds settlement applicable to DTC. Euroclear and
Cedel accountholders may not deliver instructions directly to the depositories
for Euroclear or Cedel.
Because of time zone differences, the securities account of a Euroclear or
Cedel accountholder purchasing an interest in the Global Note from an
accountholder in DTC will be credited, and any such crediting will be reported
to the relevant Euroclear or Cedel participant, during the securities settlement
processing day (which must be a business day for Euroclear or Cedel) immediately
following the settlement date of DTC. Cash received in Euroclear or Cedel as a
result of sales of interests in the Global Note by or through a Euroclear or
Cedel accountholder to a Participant in DTC will be received with value on the
settlement date of DTC but will be available in the relevant Euroclear or Cedel
cash account only as of the business day for Euroclear or Cedel following DTC's
settlement date.
DTC has advised the Company that it will take any action permitted to be
taken by a holder of Notes only at the direction of one or more Participants to
whose account with DTC interests in the Global Note are
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<PAGE> 63
credited and only in respect of such portion of the aggregate principal amount
of the Notes as to which such Participant or Participants has or have given such
direction. However, if any of the events described under "-- Exchange of Book
Entry Notes for Certificated Notes" occurs, DTC reserves the right to exchange
the Global Note for Notes in certificated form and to distribute such Notes to
its Participants.
The information in this section concerning DTC, Euroclear and Cedel and
their book-entry systems has been obtained from sources that the Company
believes to be reliable, but the Company takes no responsibility for the
accuracy thereof.
Although DTC, Euroclear and Cedel have agreed to the foregoing procedures
to facilitate transfers of interests in the Global Note among accountholders in
DTC and accountholders of Euroclear and Cedel, they are under no obligation to
perform or to continue to perform such procedures, and such procedures may be
discontinued at any time. None of the Company, the Initial Purchasers or the
Trustee nor any agent of the Company, the Initial Purchasers or the Trustee will
have any responsibility for the performance by DTC, Euroclear or Cedel or their
respective participants, indirect participants or accountholders of their
respective obligations under the rules and procedures governing their
operations.
EXCHANGE OF BOOK-ENTRY NOTES FOR CERTIFICATED NOTES
The Global Note is exchangeable for definitive Notes in registered
certificated form if (i) DTC (x) notifies the Company that it is unwilling or
unable to continue as depository for the Global Note and the Company thereupon
fails to appoint a successor depository or (y) has ceased to be a clearing
agency registered under the Exchange Act, (ii) the Company, at its option,
notifies the Trustee in writing that it elects to cause the issuance of the
Notes in certificated form or (iii) there shall have occurred and be continuing
a Default or an Event of Default with respect to the Notes. In all cases,
certificated Notes delivered in exchange for any Global Note or beneficial
interests therein will be registered in the names, and issued in any approved
denominations, requested by or on behalf of DTC (in accordance with its
customary procedures).
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CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following discussion of the material United States federal income tax
consequences of the Exchange Offer is for general information only. It is based
on the Internal Revenue Code of 1986, as amended to the date hereof (the
"Code"), existing and proposed Treasury regulations, and judicial and
administrative determinations, all of which are subject to change at any time,
possibly on a retroactive basis. The following relates only to Old Notes, and
New Notes received therefor, that are held as "capital assets" within the
meaning of Section 1221 of the Code by persons who are citizens or residents of
the United States. It does not discuss state, local, or foreign tax
consequences, nor does it discuss tax consequences to categories of holders that
are subject to special rules, such as foreign persons, tax-exempt organizations,
insurance companies, banks, and dealers in stocks and securities. Tax
consequences may vary depending on the particular status of an investor. No
rulings will be sought from the Internal Revenue Service ("IRS") with respect to
the federal income tax consequences of the Exchange Offer.
THIS SECTION DOES NOT PURPORT TO DEAL WITH ALL ASPECTS OF FEDERAL INCOME
TAXATION THAT MAY BE RELEVANT TO A HOLDER'S DECISION TO PARTICIPATE IN THE
EXCHANGE OFFER. EACH HOLDER SHOULD CONSULT WITH ITS OWN TAX ADVISOR CONCERNING
THE APPLICATION OF THE FEDERAL INCOME TAX LAWS AND OTHER TAX LAWS TO ITS
PARTICULAR SITUATION BEFORE DETERMINING WHETHER TO PARTICIPATE IN THE EXCHANGE
OFFER.
THE EXCHANGE OFFER
In the opinion of Gibson, Dunn & Crutcher LLP, counsel to the Company, the
exchange of Old Notes for New Notes pursuant to the Exchange Offer will not
constitute a material modification of the terms of the Notes and, accordingly,
such exchange will not constitute an exchange for federal income tax purposes.
Accordingly, such exchange will have no federal income tax consequences to
holders of Notes, either those who exchange or those who do not, and each holder
of Notes will continue to be required to include interest on the Notes in its
gross income in accordance with its method of accounting for federal income tax
purposes and the Company intends, to the extent required, to take such position.
BACKUP WITHHOLDING
Under the Code, a holder of a Note may be subject, under certain
circumstances, to "backup withholding" at a 31% rate with respect to payments in
respect of interest thereon or the gross proceeds from the disposition thereof.
This withholding generally applies only if the holder (i) fails to furnish his
or her social security or other taxpayer identification number ("TIN") within a
reasonable time after request therefor, (ii) furnishes an incorrect TIN, (iii)
is notified by the IRS that he or she has failed to report properly payments of
interest and dividends and the IRS has notified the Company that he or she is
subject to backup withholding, or (iv) fails, under certain circumstances, to
provide a certified statement, signed under penalty of perjury, that the TIN
provided is his or her correct number and that he or she is not subject to
backup withholding. Any amount withheld from a payment to a holder under the
backup withholding rules is allowable as a credit against such holder's federal
income tax liability, provide that the required information is furnished to the
IRS. Corporations and certain other entities described in the Code and Treasury
regulations are exempt from such withholding if their exempt status is properly
established.
PLAN OF DISTRIBUTION
Each broker-dealer that receives New Notes for its own account pursuant to
the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of such New Notes. This Prospectus, as it may be
amended or supplemented from time to time, may be used by a broker-dealer in
connection with resales of New Notes received in exchange for Old Notes where
such Old Notes were acquired as a result of market-making activities or other
trading activities. The Company has agreed that for a period of 180 days after
the Expiration Date, it will make this Prospectus, as amended or supplemented,
available to any broker-dealer for use in connection with any such resale. In
addition, until
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<PAGE> 65
, 1997 (90 days after the date of this Prospectus), all dealers effecting
transactions in the New Notes may be required to deliver a prospectus.
The Company will not receive any proceeds from any sale of New Notes by
broker-dealers. New Notes received by broker-dealers for their own account
pursuant to the Exchange Offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions, through
the writing of options on the New Notes or a combination of such methods of
resale, at market prices prevailing at the time of resale, at prices related to
such prevailing market prices or at negotiated prices. Any such resale may be
made directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such
broker-dealer and/or the purchasers of any such New Notes. Any broker-dealer
that resells New Notes that were received by it for its own account pursuant to
the Exchange Offer and any broker or dealer that participates in a distribution
of such New Notes may be deemed to be an "underwriter" within the meaning of the
Securities Act and any profit on any such resale of New Notes and any
commissions or concessions received by any such persons may be deemed to be
underwriting compensation under the Securities Act. The Letter of Transmittal
states that, by acknowledging that it will deliver and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
For a period of 180 days after the Expiration Date, the Company will
promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any broker-dealer that requests such documents
in the Letter of Transmittal. The Company has agreed to pay all expenses
incident to the Exchange Offer (including the expenses of one counsel for the
holders of the Old Notes), other than commissions or concessions of any brokers
or dealers, and will indemnify the holders of the Old Notes (including any
broker-dealers) against certain liabilities, including liabilities under the
Securities Act.
LEGAL MATTERS
The validity of the New Notes offered hereby will be passed upon for the
Company by Gibson, Dunn & Crutcher LLP, New York, New York.
EXPERTS
The consolidated financial statements of the Company for the year ended
December 31, 1994 and as of and for the year ended December 31, 1996 have been
incorporated by reference herein and in the Registration Statement in reliance
upon the report of KPMG Peat Marwick LLP, independent certified public
accountants, incorporated by reference herein, and upon the authority of said
firm as experts in accounting and auditing. The consolidated financial
statements of the Company as of and for the year ended December 31, 1995 have
been incorporated by reference herein and in the Registration Statement in
reliance upon the report of KPMG Peat Marwick LLP, independent certified public
accountants, incorporated by reference herein and upon the authority of said
firm as experts in accounting and auditing, and upon the report of BDO Stoy
Hayward, Registered Auditors, incorporated by reference herein.
The financial statements of J&J as of and for the years ended September 30,
1993, 1994 and 1995 have been incorporated by reference herein and in the
Registration Statement in reliance upon the report of BDO Stoy Hayward,
Registered Auditors, incorporated by reference herein.
The consolidated financial statements of Heritable Finance Limited
(referred to herein as Greyfriars) as of December 31, 1994 and 1995 and for each
of the years in the three-year period ended December 31, 1995 have been
incorporated by reference herein and in the Registration Statement in reliance
upon the report of KPMG, Registered Auditors, incorporated by reference herein,
and upon the authority of said firm as experts in accounting and auditing.
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<PAGE> 66
======================================================
NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFERING MADE BY THIS PROSPECTUS, AND, IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE
MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE AN IMPLICATION THAT THERE
HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY
JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH
THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO
ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information................. 2
Incorporation of Certain Documents by
Reference........................... 2
Summary............................... 3
Risk Factors.......................... 8
Use of Proceeds....................... 25
The Exchange Offer.................... 26
Capitalization........................ 32
Ratio of Earnings to Fixed Charges.... 33
Description of the Notes.............. 34
Certain Federal Income Tax
Considerations...................... 62
Plan of Distribution.................. 62
Legal Matters......................... 63
Experts............................... 63
</TABLE>
UNTIL , 1997 (90 DAYS AFTER THE DATE OF THIS
PROSPECTUS), ALL DEALERS EFFECTING TRANSACTIONS IN THE NOTES, WHETHER OR NOT
PARTICIPATING IN THIS EXCHANGE OFFER, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
======================================================
======================================================
$300,000,000
LOGO
OFFER FOR ALL OUTSTANDING
12 3/4% SENIOR NOTES DUE 2004
IN EXCHANGE FOR
12 3/4% SERIES A SENIOR NOTES
DUE 2004
----------------------------
PROSPECTUS
----------------------------
, 1997
======================================================
<PAGE> 67
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145(a) of the Delaware General Corporation Law (the "GCL") provides
that a Delaware corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that such person is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation or enterprise,
against expenses, judgments, fines and amounts paid in settlement actually and
reasonably incurred by such person in connection with such action, suit or
proceeding if he or she acted in good faith and in a manner he or she reasonably
believed to be in or not opposed to the best interests of the corporation, and,
with respect to any criminal action or proceeding, had no cause to believe his
or her conduct was unlawful.
Section 145(b) of the GCL provides that a Delaware corporation may
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that such
person acted in any of the capacities set forth above, against expenses actually
and reasonably incurred by such person in connection with the defense or
settlement of such action or suit if he or she acted under similar standards,
except that no indemnification may be made in respect of any claim, issue or
matter as to which such person shall have been adjudged to be liable for
negligence or misconduct in the performance of his or her duty to the
corporation unless and only to the extent that the court in which such action or
suit was brought shall determine that, despite the adjudication of liability but
in view of all the circumstances of the case, such person is fairly and
reasonably entitled to be indemnified for such expenses as the court shall deem
proper.
Section 145 of the GCL further provides that to the extent a director or
officer of a corporation has been successful in the defense of any action, suit
or proceeding referred to in subsection (a) and (b) or in the defense of any
claim, issue or matter therein, such officer or director shall be indemnified
against expenses actually and reasonably incurred by him or her in connection
therewith; that indemnification provided for by Section 145 shall not be deemed
exclusive of any other rights to which the indemnified party may be entitled,
and that the corporation may purchase and maintain insurance on behalf of a
director or officer of the corporation against any liability asserted against
such officer or director and incurred by him or her in any such capacity or
arising out of his or her status as such, whether or not the corporation would
have the power to indemnify him or her against such liabilities under Section
145 of the GCL.
As permitted by Section 102(b)(7) of the GCL, the Company's Certificate of
Incorporation provides that a director shall not be liable to the Company or its
stockholders for monetary damages for breach of fiduciary duty as a director.
However, such provision does not eliminate or limit the liability of a director
for acts or omissions not in good faith or for breaching his or her duty of
loyalty, engaging in intentional misconduct or knowingly violating a law, paying
a dividend or approving a stock repurchase which was illegal, or obtaining an
improper personal benefit. A provision of this type has no effect on the
availability of equitable remedies, such as injunction or rescission, for breach
of fiduciary duty.
The Company's Bylaws require the Company to indemnify any person who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Company) by reason
of the fact that he is or was a director, officer, employee or agent of the
Company, or is or was serving at the request of the Company as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by him in connection with such action, suit or proceeding if he acted in good
faith and in a manner he reasonably believed to be in or not opposed to the best
interests of the Company, and with respect to any criminal action or proceeding,
had no reasonable cause to believe his conduct was unlawful. The termination of
any action, suit or proceeding by judgment, order, settlement,
II-1
<PAGE> 68
conviction, or upon a plea of nolo contendere or its equivalent, does not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the Company, and, with respect to any criminal action or
proceeding, that he had reasonable cause to believe that his conduct was
unlawful.
In addition, the Company's Bylaws require the Company to indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
Company to procure a judgment in its favor by reason of the fact that he is or
was a director, officer, employee or agent of the Company, or is or was serving
at the request of the Company as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise
against expenses (including attorneys' fees) actually and reasonably incurred by
him in connection with the defense or settlement of such action or suit if he
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Company, except that no indemnification may
be made in respect of any claim, issue or matter as to which such person shall
have been adjudged to be liable for negligence or misconduct in the performance
of his duty to the Company unless and only to the extent that the Court of
Chancery or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such other court
shall deem proper.
Any indemnification (unless ordered by a court) made by the Company may be
only as authorized in the specific case upon a determination that
indemnification of the director, officer, employee or agent is proper in the
circumstances because he has met the applicable standard of conduct as set forth
above. Such determination must be made (i) by the Board by a majority vote of a
quorum consisting of directors who were not parties to such action, suit or
proceeding, or (ii) if such a quorum is not obtainable, or, even if obtainable,
a quorum of disinterested directors so directs, by independent legal counsel in
a written opinion, or (iii) by the stockholders.
To the extent that a director, officer, employee or agent of the Company
has been successful on the merits or otherwise in defense of any covered action,
suit or proceeding, or in defense of any covered claim, issue or matter therein,
he will be indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith.
Expenses incurred by an officer or director in defending a civil or
criminal action, suit or proceeding may be paid by the Company in advance of the
final disposition of such action, suit or proceeding as authorized by the Board
in the specific case upon receipt of an undertaking by or on behalf of the
director or officer to repay such amount unless it shall ultimately be
determined that he is entitled to be indemnified by the Company as authorized in
this Article. Such expenses incurred by other employees and agents may be so
paid upon such terms and conditions, if any, as the Board deems appropriate.
The Company presently maintains policies of directors' and officers'
liability insurance in the amount of $15.0 million.
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<PAGE> 69
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------ ------------------------------------------------------------------------------------
<C> <S>
3.1 Certificate of Incorporation of the Company, as amended.
3.2 Bylaws of the Company, as amended, incorporated by reference to Exhibit 3.2 to the
Company's Registration Statement on Form S-1 as declared effective by the Commission
on December 20, 1995.
3.3 Certificate of Designation of 6% Convertible Preferred Stock, Series A of the
Company, incorporated by reference to Exhibit 4.1 to the Company's Current Report on
Form 8-K filed with the Commission on April 11, 1997.
4.1 Indenture, dated as of May 14, 1997, among the Company, CSC and The Chase Manhattan
Bank.
4.2 Registration Rights Agreement, dated as of May 14, 1997, among the Company, CSC,
CIBC Wood Gundy Securities Corp., Bear, Stearns & Co. Inc. and Oppenheimer & Co.,
Inc.
5.1* Opinion of Gibson, Dunn & Crutcher LLP.
8.1 Opinion of Gibson, Dunn & Crutcher LLP relating to tax matters.
10.1 Lease Agreement, dated as of September 30, 1993, between CSC and Taxter Park
Associates, as amended by the First Amendment to Lease, dated as of April 19, 1994,
and the Second Amendment to Lease, dated as of May 12, 1995, incorporated by
reference to Exhibit 10.1 to the Company's Registration Statement on Form S-1 as
declared effective by the Commission on December 20, 1995.
10.2 Sublease Agreement between KLM Royal Dutch Airlines and CSC, dated as of December 5,
1994, incorporated by reference to Exhibit 10.2 to the Company's Registration
Statement on Form S-1 as declared effective by the Commission on December 20, 1995.
10.3 Employment Agreement, dated as of January 1, 1995, between CSC and Robert Grosser,
incorporated by reference to Exhibit 10.3 to the Company's Registration Statement on
Form S-1 as declared effective by the Commission on December 20, 1995.
10.4 Employment Agreement, dated as of January 1, 1995, between CSC and Robert C. Patent,
incorporated by reference to Exhibit 10.4 to the Company's Registration Statement on
Form S-1 as declared effective by the Commission on December 20, 1995.
10.5 Employment Agreement, dated as of November 1, 1992, between CSC and Robert M. Stata,
as amended by the Amendment Agreement, dated as of January 1, 1994, incorporated by
reference to Exhibit 10.5 to the Company's Registration Statement on Form S-1 as
declared effective by the Commission on December 20, 1995.
10.6 Employment Agreement, dated as of July 1, 1995, between CSC and Cheryl P. Carl,
incorporated by reference to Exhibit 10.6 to the Company's Registration Statement on
Form S-1 as declared effective by the Commission on December 20, 1995.
10.7 Employment Agreement, dated as of July 1, 1995, between CSC and Eric S. Goldstein,
incorporated by reference to Exhibit 10.7 to the Company's Registration Statement on
Form S-1 as declared effective by the Commission on December 20, 1995.
10.8 Employment Agreement, dated as of July 1, 1995, between CSC and Steven Weiss,
incorporated by reference to Exhibit 10.8 to the Company's Registration Statement on
Form S-1 as declared effective by the Commission on December 20, 1995.
10.9 Employment Agreement, dated as of July 1, 1995, between CSC and Jonah L. Goldstein,
incorporated by reference to Exhibit 10.10 to the Company's Registration Statement
on Form S-1 as declared effective by the Commission on December 20, 1995.
10.10 Standby Financing and Investment Banking Services Agreement, dated as of June 24,
1994, between CSC and ContiTrade, incorporated by reference to Exhibit 10.15 to the
Company's Registration Statement on Form S-1 as declared effective by the Commission
on December 20, 1995.
</TABLE>
II-3
<PAGE> 70
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------ ------------------------------------------------------------------------------------
<C> <S>
10.11 Revolving Credit, Security, and Term Loan Agreement, dated as of June 30, 1995 among
CSC, the Company, CoreStates Bank, N.A., Harris Trust and Savings Bank, NBD Bank and
NatWest Bank N.A., as amended by Amendment No. 1 to the Revolving Credit Agreement,
dated as of August 20, 1995, incorporated by reference to Exhibit 10.19 to the
Company's Registration Statement on Form S-1 as declared effective by the Commission
on December 20, 1995.
10.12 The Company's 1995 Stock Option Plan, incorporated by reference to Exhibit 10.20 to
the Company's Registration Statement on Form S-1 as declared effective by the
Commission on December 20, 1995.
10.13 The Company's 1995 Non-Employee Directors Stock Option Plan, incorporated by
reference to Exhibit 10.21 to the Company's Registration Statement on Form S-1 as
declared effective by the Commission on December 20, 1995.
10.14+ Mortgage Loan Purchase Agreement, dated as of May 26, 1995, between CSC-UK and
Greenwich, incorporated by reference to Exhibit 10.29 to the Company's Registration
Statement on Form S-1 as declared effective by the Commission on December 20, 1995.
10.15+ Letter, dated as of May 26, 1995, from Greenwich to CSC-UK regarding purchase
commitment with respect to first and second mortgage loans located in the United
Kingdom, incorporated by reference to Exhibit 10.30 to the Company's Registration
Statement on Form S-1 as declared effective by the Commission on December 20, 1995.
10.16+ Servicing Agreement, dated as of May 26, 1995, among CSC-UK, City Mortgage Servicing
Limited and Greenwich, incorporated by reference to Exhibit 10.31 to the Company's
Registration Statement on Form S-1 as declared effective by the Commission on
December 20, 1995.
10.17 Stock Purchase Agreement, dated as of September 29, 1995, among the Company, David
Steene, Martin Brand and Gerald Epstein, incorporated by reference to Exhibit 10.32
to the Company's Registration Statement on Form S-1 as declared effective by the
Commission on December 20, 1995.
10.18 Service Agreement, dated as of April 5, 1995, between CSC-UK and David Steene,
incorporated by reference to Exhibit 10.33 to the Company's Registration Statement
on Form S-1 as declared effective by the Commission on December 20, 1995.
10.19 Service Agreement, dated as of April 5, 1995, between CSC-UK and Martin Brand,
incorporated by reference to Exhibit 10.34 to the Company's Registration Statement
on Form S-1 as declared effective by the Commission on December 20, 1995.
10.20 Service Agreement, dated as of April 5, 1995, between CSC-UK and Gerald Epstein,
incorporated by reference to Exhibit 10.35 to the Company's Registration Statement
on Form S-1 as declared effective by the Commission on December 20, 1995.
10.21 Agreement, dated as of May 1, 1995, between CSC-UK and J.L.B. Equities, Inc.,
incorporated by reference to Exhibit 10.36 to the Company's Registration Statement
on Form S-1 as declared effective by the Commission on December 20, 1995.
10.22 Stock Option Agreement, dated as of March 6, 1996, by and among the Company, CSC-UK
and Messrs. Jaye and Johnson, incorporated by reference to Exhibit 2.1 to the
Company's Current Report on Form 8-K filed with the Commission on March 14, 1996.
10.23 Asset Purchase Agreement, dated March 6, 1996, by and among CSC-UK, J&J, UK Credit
Corporation Limited ("UK Credit") and certain shareholders of UK Credit,
incorporated by reference to Exhibit 2.2 to the Company's Current Report on Form 8-K
filed with the Commission on March 14, 1996.
10.24+ Letter Agreement, dated as of March 28, 1996, from Greenwich International, Ltd. to
CSC-UK regarding purchase commitment with respect to first and second mortgage loans
located in the United Kingdom, incorporated by reference to Exhibit 10.46 to the
Company's Annual Report on Form 10-K/A filed with the Commission on November 4,
1996.
10.25 Letter Agreement, dated March 28, 1996, between Greenwich and CSC-UK regarding
termination of prior agreement, incorporated by reference to Exhibit 10.46 to the
Company's Annual Report on Form 10-K filed with the Commission on April 1, 1996.
10.26 Agreement for the Sale and Purchase of the Entire Issued Share Capital of Heritable
Group Limited, dated June 14, 1996, incorporated by reference to Exhibit 2.1 to the
Company's current Report on Form 8-K filed with the Commission on June 28, 1996.
</TABLE>
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<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------ ------------------------------------------------------------------------------------
<C> <S>
10.27 Third Amendment to Lease, dated as of April 17, 1996, between CSC and Taxter Park
Associates, incorporated by reference to Exhibit 10.53 to the Company's Quarterly
Report on Form 10-Q filed with the Commission on August 14, 1996.
10.28 Lease, dated as of April 18, 1996, among The Standard Life Assurance Company, City
Mortgage Servicing Limited and CSC-UK, incorporated by reference to Exhibit 10.54 to
the Company's Quarterly Report on Form 10-Q filed with the Commission on August 14,
1996.
10.29 Purchase and Sale Agreement, dated June 20, 1996 and effective as of February 2,
1996, between CSC and Greenwich Capital Financial Products, Inc., incorporated by
reference to Exhibit 10.55 to the Company's Quarterly Report on Form 10-Q filed with
the Commission on August 14, 1996.
10.30 Lease Agreement, dated as of July 7, 1996, between CSC and Robert Martin Company,
incorporated by reference to Exhibit 10.56 to the Company's Quarterly Report on Form
10-Q filed with the Commission on August 14, 1996.
10.31 Loan Agreement, dated as of August 6, 1996, between CSC and CoreStates, incorporated
by reference to Exhibit 10.31 to the Company's Registration Statement on Form S-3 as
declared effective by the Commission on April 18, 1997.
10.32 Employment Agreement, dated as of January 1, 1996, between CSC and Tim S. Ledwick,
incorporated by reference to Exhibit 10.32 to the Company's Registration Statement
on Form S-3 as declared effective by the Commission on April 18, 1997.
10.33 Employment Agreement, dated as of February 1, 1996, between CSC and Robert J.
Blackwell, incorporated by reference to Exhibit 10.33 to the Company's Registration
Statement on Form S-3 as declared effective by the Commission on April 18, 1997.
10.34 Amendment No. 1 dated as of August 30, 1996, to the Purchase and Sale Agreement,
dated as of February 2, 1996, between CSC and Greenwich Capital Financial Products,
Inc., incorporated by reference to Exhibit 10.63 to Amendment No. 1 to the Company's
Registration Statement on Form S-1 filed with the Commission on September 27, 1996.
10.35 Senior Secured Credit Agreement, dated October 30, 1996, among the Company and CIBC
Wood Gundy Securities Corp. and the lenders named therein, incorporated by reference
to Exhibit 10.60 to the Company's Quarterly Report on Form 10-Q filed with the
Commission on November 19, 1996.
10.36 Amendment No. 2, dated as of October 30, 1996, to the Purchase and Sale Agreement,
dated as of February 2, 1996, between CSC and Greenwich Capital Financial Products,
Inc., incorporated by reference to Exhibit 10.62 to the Company's Quarterly Report
on Form 10-Q filed with the Commission on November 19, 1996.
10.37 Registration Rights Agreement, dated as of November 22, 1996, among the Company,
Mutual Shares Fund, Mutual Qualified Fund, Mutual Beacon Fund, Mutual Discovery
Fund, Mutual European Fund, The Orion Fund Limited, Mutual Shares Securities Fund
and Mutual Discovery Securities Fund, incorporated by reference to Exhibit 10.37 to
the Company's Registration Statement on Form S-3 as declared effective by the
Commission on April 18, 1997.
10.38 Amendment No. 3, dated as of December 30, 1996, to the Purchase and Sale Agreement,
dated as of February 2, 1996, between CSC and Greenwich Capital Financial Products,
Inc., incorporated by reference to Exhibit 10.38 to the Company's Registration
Statement on Form S-3 as declared effective by the Commission on April 18, 1997.
10.39 Amendment No. 4, dated as of December 31, 1996, to the Purchase and Sale Agreement,
dated as of February 2, 1996, between CSC and Greenwich Capital Financial Products,
Inc., incorporated by reference to Exhibit 10.39 to the Company's Registration
Statement on Form S-3 as declared effective by the Commission on April 18, 1997.
10.40 Amendment No. 1, dated as of January 13, 1997, to the Senior Secured Credit
Agreement, dated October 30, 1996, among the Company and CIBC Wood Gundy Securities
Corp. and the lenders named therein, incorporated by reference to Exhibit 10.40 to
the Company's Registration Statement on Form S-3 as declared effective by the
Commission on April 18, 1997.
10.41 Lease, dated as of October 1, 1996, between CSC and Reckson Operating Partnership,
L.P., incorporated by reference to Exhibit 10.41 to the Company's Annual Report on
Form 10-K filed with the Commission on March 31, 1997.
</TABLE>
II-5
<PAGE> 72
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------ ------------------------------------------------------------------------------------
<C> <S>
10.42 Securities Purchase Agreement dated April 9, 1997 by and among the Company and the
purchasers named therein, incorporated by reference to Exhibit 4.2 to the Company's
Current Report on Form 8-K filed with the Commission on April 11, 1997.
10.43 Registration Rights Agreement dated April 9, 1997 by and among the Company and the
purchasers named therein, incorporated by reference to Exhibit 4.3 to the Company's
Current Report on Form 8-K filed with the Commission on April 11, 1997.
10.44 Form of Common Stock Purchase Warrant issued in conjunction with the 6% Convertible
Preferred Stock, Series A, incorporated by reference to Exhibit 4.4 to the Company's
Current Report on Form 8-K filed with the Commission on April 11, 1997.
10.45 Indenture, dated as of May 7, 1996, between the Company and The Chase Manhattan
Bank, N.A., incorporated by reference to Exhibit 4.2 to the Company's Quarterly
Report on Form 10-Q filed with the Commission on May 15, 1996.
10.46 Registration Rights Agreement, dated as of April 26, 1996, among the Company,
NatWest Securities Limited, Bear, Stearns & Co. Inc., CIBC Wood Gundy Securities
Corp. and Wasserstein Perella Securities, Inc., incorporated by reference to Exhibit
4.3 to the Company's Quarterly Report on Form 10-Q filed with the Commission on May
15, 1996.
10.47 Amendment, dated as of September 3, 1996, to the Employment Agreement, dated as of
July 1, 1995, between CSC and Cheryl P. Carl.
10.48 Amendment, dated as of September 3, 1996, to the Employment Agreement, dated as of
July 1, 1995, between CSC and Eric S. Goldstein.
10.49 Amendment, dated as of September 3, 1996, to the Employment Agreement, dated as of
July 1, 1995, between CSC and Jonah L. Goldstein.
10.50 Amendment, dated as of September 3, 1996, to the Employment Agreement, dated as of
November 1, 1992, between CSC and Robert M. Stata, as amended by the Amendment
Agreement, dated as of January 1, 1994.
10.51 Amendment, dated as of September 3, 1996, to the Employment Agreement, dated as of
July 1, 1995, between CSC and Steven P. Weiss.
10.52 Amendment, dated as of September 3, 1996, to the Employment Agreement, dated as of
January 1, 1996, between CSC and Tim S. Ledwick.
10.53 1997 Stock Option Plan
12.1 Computations of ratios of earnings to fixed charges
21.1 Subsidiaries of the Company, incorporated by reference to Exhibit 21.1 to the
Company's Registration Statement on Form S-3 as declared effective by the Commission
on April 18, 1997
23.1 Consent of KPMG Peat Marwick LLP
23.2 Consent of KPMG, Registered Auditors
23.3 Consent of BDO Stoy Hayward
23.4 Consent of BDO Stoy Hayward
23.5* Consent of Gibson, Dunn & Crutcher LLP (contained in Exhibit 5.1)
24.1 Power of Attorney (included on signature page of Registration Statement)
25.1 Statement of Eligibility of Trustee
99.1 Letter of Transmittal
</TABLE>
- ---------------
+ Confidential treatment has been granted with respect to certain provisions,
the redacted portions of which are indicated by brackets. This Exhibit has
been filed in its entirety separately with the Commission pursuant to an
application for confidential treatment.
* To be filed by amendment.
ITEM 22. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
II-6
<PAGE> 73
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) of this
section do not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic
reports filed with or furnished to the Commission by the registrant
pursuant to section 13 or section 15(d) of the Securities Exchange Act of
1934 that are incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each posteffective amendment that contains a form
of prospectus shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby further undertakes that, for purposes
of determining any liability under the Securities Act of 1933, each filing of
the registrant's annual report pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 (and where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered herein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
(d) The undersigned registrant undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11 or 13 of this form, within one business day of receipt of such
request, and to send the incorporated documents by first class mail or other
equally prompt means. This includes information contained in documents filed
subsequent to the effective date of this Registration Statement through the date
of responding to the request.
(e) The undersigned registrant undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in this Registration Statement when it became effective.
II-7
<PAGE> 74
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the Village of Elmsford, State of New
York, on June 25, 1997.
CITYSCAPE FINANCIAL CORP.
By: /s/ ROBERT C. PATENT
------------------------------------
Robert C. Patent
Executive Vice President
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints, jointly and severally, Robert C.
Patent and Jonah L. Goldstein, and each of them, individually and without any
other, his or her attorney-in-fact, each with full power of substitution, for
him or her in any and all capacities, to sign any and all amendments to this
Registration Statement (including post-effective amendments), and to file the
same, with exhibits thereto and other documents in connection therewith, with
the Securities and Exchange Commission, hereby ratifying and confirming all that
each of said attorneys-in-fact, or his or her substitute or substitutes, may do
or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the capacity
indicated on June 25, 1997.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ------------------------------------------ -------------------------------------------------
<C> <S>
/s/ ROBERT GROSSER Chairman of the Board, Chief Executive Officer,
- ------------------------------------------ President and Director (Principal Executive
Robert Grosser Officer)
/s/ ROBERT C. PATENT Vice Chairman of the Board, Executive Vice
- ------------------------------------------ President and Director
Robert C Patent
/s/ ASHER FENSTERHEIM Director
- ------------------------------------------
Asher Fensterheim
/s/ JONAH L. GOLDSTEIN Director
- ------------------------------------------
Jonah L. Goldstein
/s/ ARTHUR P. GOULD Director
- ------------------------------------------
Arthur P. Gould
/s/ HOLLIS W. RADEMACHER Director
- ------------------------------------------
Hollis W. Rademacher
/s/ ROBERT M. STATA Director
- ------------------------------------------
Robert M. Stata
/s/ DAVID A. STEENE Director
- ------------------------------------------
David A. Steene
/s/ TIM S. LEDWICK Chief Financial Officer (Principal Financial and
- ------------------------------------------ Accounting Officer)
Tim S. Ledwick
</TABLE>
II-8
<PAGE> 75
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the Village of Elmsford, State of New
York, on June 25, 1997.
CITYSCAPE CORP.
By: /s/ ROBERT C. PATENT
------------------------------------
Robert C. Patent
Executive Vice President
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints, jointly and severally, Robert C.
Patent and Jonah L. Goldstein, and each of them, individually and without any
other, his or her attorney-in-fact, each with full power of substitution, for
him or her in any and all capacities, to sign any and all amendments to this
Registration Statement (including post-effective amendments), and to file the
same, with exhibits thereto and other documents in connection therewith, with
the Securities and Exchange Commission, hereby ratifying and confirming all that
each of said attorneys-in-fact, or his or her substitute or substitutes, may do
or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the capacity
indicated on June 25, 1997.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ------------------------------------------ -------------------------------------------------
<C> <S>
/s/ ROBERT GROSSER President and Director (Principal Executive
- ------------------------------------------ Officer)
Robert Grosser
/s/ ROBERT C. PATENT Executive Vice President and Director
- ------------------------------------------
Robert C Patent
/s/ ASHER FENSTERHEIM Director
- ------------------------------------------
Asher Fensterheim
/s/ JONAH L. GOLDSTEIN Director
- ------------------------------------------
Jonah L. Goldstein
/s/ ROBERT M. STATA Director
- ------------------------------------------
Robert M. Stata
/s/ CHERY P. CARL Director
- ------------------------------------------
Chery P. Carl
/s/ STEVEN P. WEISS Director
- ------------------------------------------
Steven P. Weiss
/s/ TIM S. LEDWICK Chief Financial Officer (Principal Financial and
- ------------------------------------------ Accounting Officer)
Tim S. Ledwick
</TABLE>
II-9
<PAGE> 76
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ---------- ---------------------------------------------------------------------------------
<C> <S>
3.1 Certificate of Incorporation of the Company, as amended.
3.2 Bylaws of the Company, as amended, incorporated by reference to Exhibit 3.2 to
the Company's Registration Statement of Form S-1 as declared effective by the
Commission on December 20, 1995.
3.3 Certificate of Designation of 6% Convertible Preferred Stock, Series A of the
Company, incorporated by reference to Exhibit 4.1 to the Company's Current Report
on Form 8-K filed with the Commission on April 11, 1997.
4.1 Indenture, dated as of May 14, 1997, among the Company, CSC and The Chase
Manhattan Bank.
4.2 Registration Rights Agreement, dated as of May 14, 1997, among the Company, CSC,
CIBC Wood Gundy Securities Corp., Bear, Stearns and Co. Inc., and Oppenheimer &
Co., Inc.
5.1* Opinion of Gibson, Dunn & Crutcher LLP.
8.1 Opinion of Gibson, Dunn & Crutcher LLP relating to tax matters.
10.1 Lease Agreement, dated as of September 30, 1993, between CSC and Taxter Park
Associates, as amended by the First Amendment to Lease, dated as of April 19,
1994, and the Second Amendment to Lease, dated as of May 12, 1995, incorporated
by reference to Exhibit 10.1 to the Company's Registration Statement on Form S-1
as declared effective by the Commission on December 20, 1995.
10.2 Sublease Agreement between KLM Royal Dutch Airlines and CSC, dated as of December
5, 1994, incorporated by reference to Exhibit 10.2 to the Company's Registration
Statement on Form S-1 as declared effective by the Commission on December 20,
1995.
10.3 Employment Agreement, dated as of January 1, 1995, between CSC and Robert
Grosser, incorporated by reference to Exhibit 10.3 to the Company's Registration
Statement on Form S-1 as declared effective by the Commission on December 20,
1995.
10.4 Employment Agreement, dated as of January 1, 1995, between CSC and Robert C.
Patent, incorporated by reference to Exhibit 10.4 to the Company's Registration
Statement on Form S-1 as declared effective by the Commission on December 20,
1995.
10.5 Employment Agreement, dated as of November 1, 1992, between CSC and Robert M.
Stata, as amended by the Amendment Agreement, dated as of January 1, 1994,
incorporated by reference to Exhibit 10.5 to the Company's Registration Statement
on Form S-1 as declared effective by the Commission on December 20, 1995.
10.6 Employment Agreement, dated as of July 1, 1995, between CSC and Cheryl P. Carl,
incorporated by reference to Exhibit 10.6 to the Company's Registration Statement
on Form S-1 as declared effective by the Commission on December 20, 1995.
10.7 Employment Agreement, dated as of July 1, 1995, between CSC and Eric S.
Goldstein, incorporated by reference to Exhibit 10.7 to the Company's
Registration Statement on Form S-1 as declared effective by the Commission on
December 20, 1995.
10.8 Employment Agreement, dated as of July 1, 1995, between CSC and Steven Weiss,
incorporated by reference to Exhibit 10.8 to the Company's Registration Statement
on Form S-1 as declared effective by the Commission on December 20, 1995.
10.9 Employment Agreement, dated as of July 1, 1995, between CSC and Jonah L.
Goldstein, incorporated by reference to Exhibit 10.10 to the Company's
Registration Statement on Form S-1 as declared effective by the Commission on
December 20, 1995.
10.10 Standby Financing and Investment Banking Services Agreement, dated as of June 24,
1994, between CSC and ContiTrade, incorporated by reference to Exhibit 10.15 to
the Company's Registration Statement on Form S-1 as declared effective by the
Commission on December 20, 1995.
</TABLE>
<PAGE> 77
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ---------- ---------------------------------------------------------------------------------
<C> <S>
10.11 Revolving Credit, Security, and Term Loan Agreement, dated as of June 30, 1995
among CSC, the Company, CoreStates Bank, N.A., Harris Trust and Savings Bank, NBD
Bank and NatWEST Bank N.A., as amended by Amendment No. 1 to the Revolving Credit
Agreement, dated as of August 20, 1995, incorporated by reference to Exhibit
10.19 to the Company's Registration Statement on Form S-1 as declared effective
by the Commission on December 20, 1995.
10.12 The Company's 1995 Stock Option Plan, incorporated by reference to Exhibit 10.20
to the Company's Registration Statement on Form S-1 as declared effective by the
Commission on December 20, 1995.
10.13 The Company's 1995 Non-Employee Directors Stock Option Plan, incorporated by
reference to Exhibit 10.21 to the Company's Registration Statement on Form S-1 as
declared effective by the Commission on December 20, 1995.
10.14+ Mortgage Loan Purchase Agreement, dated as of May 26, 1995, between CSC-UK and
Greenwich, incorporated by reference to Exhibit 10.29 to the Company's
Registration Statement on Form S-1 as declared effective by the Commission on
December 20, 1995.
10.15+ Letter, dated as of May 26, 1995, from Greenwich to CSC-UK regarding purchase
commitment with respect to first and second mortgage loans located in the United
Kingdom, incorporated by reference to Exhibit 10.30 to the Company's Registration
Statement on Form S-1 as declared effective by the Commission on December 20,
1995.
10.16+ Servicing Agreement, dated as of May 26, 1995, among CSC-UK, City Mortgage
Servicing Limited and Greenwich, incorporated by reference to Exhibit 10.31 to
the Company's Registration Statement on Form S-1 as declared effective by the
Commission on December 20, 1995.
10.17 Stock Purchase Agreement, dated as of September 29, 1995, among the Company,
David Steene, Martin Brand and Gerald Epstein, incorporated by reference to
Exhibit 10.32 to the Company's Registration Statement on Form S-1 as declared
effective by the Commission on December 20, 1995.
10.18 Service Agreement, dated as of April 4, 1995, between CSC-UK and David Steene,
incorporated by reference to Exhibit 10.33 to the Company's Registration
Statement on Form S-1 as declared effective by the Commission on December 20,
1995.
10.19 Service Agreement, dated as of April 5, 1995, between CSC-UK and Martin Brand,
incorporated by reference to Exhibit 10.34 to the Company's Registration
Statement on Form S-1 as declared effective by the Commission on December 20,
1995.
10.20 Service Agreement, dated as of April 5, 1995, between CSC-UK and Gerald Epstein,
incorporated by reference to Exhibit 10.35 to the Company's Registration
Statement on Form S-1 as declared effective by the Commission on December 20,
1995.
10.21 Agreement, dated as of May 1, 1995, between CSC-UK and J.L.B. Equities, Inc.,
incorporated by reference to Exhibit 10.36 to the Company's Registration
Statement on Form S-1 as declared effective by the Commission on December 20,
1995.
10.22 Stock Option Agreement, dated as of March 6, 1996, by and among the Company,
CSC-UK and Messrs. Jaye and Johnson, incorporated by reference to Exhibit 2.1 to
the Company's Current Report on Form 8-K filed with the Commission on March 14,
1996.
10.23 Asset Purchase Agreement, dated March 6, 1996, by and among CSC-UK, J&J, UK
Credit Corporation Limited ("UK Credit") and certain shareholders of UK Credit,
incorporated by reference to Exhibit 2.2 to the Company's Current Report on Form
8-K filed with the Commission on March 14, 1996.
10.24+ Letter Agreement, dated as of March 28, 1996, from Greenwich International, Ltd.
to CSC-UK regarding purchase commitment with respect to first and second mortgage
loans located in the United Kingdom, incorporated by reference to Exhibit 10.46
to the Company's Annual Report on Form 10-K/A filed with the Commission on
November 24, 1996.
10.25 Letter Agreement, dated March 28, 1996, between Greenwich and CSC-UK regarding
termination of prior agreement, incorporated by reference to Exhibit 10.46 to the
Company's Annual Report on Form 10-K filed with the Commission on April 1, 1996.
10.26 Agreement for the Sale and Purchase of the Entire Issued Share Capital of
Heritable Group Limited, dated June 14, 1996, incorporated by reference to
Exhibit 2.1 to the Company's Current Report on Form 8-K filed with the Commission
on June 28, 1996.
</TABLE>
<PAGE> 78
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ---------- ---------------------------------------------------------------------------------
<C> <S>
10.27 Third Amendment to Lease, dated as of April 17, 1996, between CSC and Taxter Park
Associates, incorporated by reference to Exhibit 10.53 to the Company's Quarterly
Report on Form 10-Q filed with the Commission on August 14, 1996.
10.28 Lease, dated as of April 18, 1996, among The Standard Life Assurance Company,
City Mortgage Servicing Limited and CSC-UK, incorporated by reference to Exhibit
10.54 to the Company's quarterly Report on Form 10-Q filed with the Commission on
August 14, 1996.
10.29 Purchase and Sale Agreement, dated June 20, 1996 and effective as of February 2,
1996, between CSC and Greenwich Capital Financial Products, Inc., incorporated by
reference to Exhibit 10.55 to the Company's Quarterly Report on Form 10-Q filed
with the Commission on August 14, 1996.
10.30 Lease Agreement, dated as of July 7, 1996, between CSC and Robert Martin Company,
incorporated by reference to Exhibit 10.56 to the Company's Quarterly Report on
Form 10-Q filed with the Commission on August 14, 1996.
10.31 Loan Agreement, dated as of August 6, 1996, between CSC and CoreStates,
incorporated by reference to Exhibit 10.31 to the Company's Registration
Statement on Form S-3 as declared effective by the Commission on April 18, 1997.
10.32 Employment Agreement, dated as of January 1, 1996, between CSC and Tim S.
Ledwick, incorporated by reference to Exhibit 10.32 to the Company's Registration
Statement on Form S-3 as declared effective by the Commission on April 18, 1997.
10.33 Employment Agreement, dated as of February 1, 1996, between CSC and Robert J.
Blackwell, incorporated by reference to Exhibit 10.33 to the Company's
Registration Statement on Form S-3 as declared effective by the Commission on
April 18, 1997.
10.34 Amendment No. 1 dated as of August 30, 1996, to the Purchase and Sale Agreement,
dated as of February 2, 1996, between CSC and Greenwich Capital Financial
Products, Inc., incorporated by reference to Exhibit 10.63 to Amendment No. 1 to
the Company's Registration Statement on Form S-1 filed with the Commission on
September 27, 1996.
10.35 Senior Secured Credit Agreement, dated October 30, 1996, among the Company and
CIBC Wood Gundy Securities Corp. and the lenders named therein, incorporated by
reference to Exhibit 10.60 to the Company's Quarterly Report on Form 10-Q filed
with the Commission on November 19, 1996.
10.36 Amendment No. 2, dated as of October 30, 1996, to the Purchase and Sale
Agreement, dated as of February 2, 1996, between CSC and Greenwich Capital
Financial Products, Inc., incorporated by reference to Exhibit 10.62 to the
Company's Quarterly Report on Form 10-Q filed with the Commission on November 19,
1996.
10.37 Registration Rights Agreement, dated as of November 22, 1996, among the Company,
Mutual Shares Fund, Mutual Qualified Fund, Mutual Beacon Fund, Mutual Discovery
Fund, Mutual European Fund, The Orion Fund Limited, Mutual Shares Securities Fund
and Mutual Discovery Securities Fund, incorporated by reference to Exhibit 10.37
to the Company's Registration Statement on Form S-3 as declared effective by the
Commission on April 18, 1997.
10.38 Amendment No. 3, dated as of December 30, 1996, to the Purchase and Sale
Agreement, dated as of February 2, 1996, between CSC and Greenwich Capital
Financial Products, Inc., incorporated by reference to Exhibit 10.38 to the
Company's Registration Statement on Form S-3 as declared effective by the
Commission on April 18, 1997.
10.39 Amendment No. 4, dated as of December 31, 1996, to the Purchase and Sale
Agreement, dated as of February 2, 1996, between CSC and Greenwich Capital
Financial Products, Inc., incorporated by reference to Exhibit 10.39 to the
Company's Registration Statement on Form S-3 as declared effective by the
Commission on April 18, 1997.
10.40 Amendment No. 1, dated as of January 13, 1997, to the Senior Secured Credit
Agreement, dated October 30, 1996, among the Company and CIBC Wood Gundy
Securities Corp. and the lenders named therein, incorporated by reference to
Exhibit 10.40 to the Company's Registration Statement on Form S-3 as declared
effective by the Commission on April 18, 1997.
10.41 Lease, dated as of October 1, 1996, between CSC and Reckson Operating
Partnership, L.P., incorporated by reference to Exhibit 10.41 to the Company's
Annual Report on Form 10-K filed with the Commission on March 31, 1997.
</TABLE>
<PAGE> 79
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ---------- ---------------------------------------------------------------------------------
<C> <S>
10.42 Securities Purchase Agreement dated April 9, 1997 by and among the Company and
the purchasers named therein, incorporated by reference to Exhibit 4.2 to the
Company's Current Report on Form 8-K filed with the Commission on April 11, 1997.
10.43 Registration Rights Agreement dated April 9, 1997 by and among the Company and
the purchasers named therein, incorporated by reference to Exhibit 4.3 to the
Company's Current Report on Form 8-K filed with the Commission on April 11, 1997.
10.44 Form of Common Stock Purchase Warrant issued in conjunction with the 6%
Convertible Preferred Stock, Series A, incorporated by reference to Exhibit 4.4
to the Company's Current Report on Form 8-K filed with the Commission on April
11, 1997.
10.45 Indenture, dated as of May 7, 1996, between the Company and The Chase Manhattan
Bank, N.A., incorporated by reference to Exhibit 4.2 to the Company's Quarterly
Report on Form 10-Q filed with the Commission on May 15, 1996.
10.46 Registration Rights Agreement, dated as of April 26, 1996, among the Company,
NatWest Securities Limited, Bear, Stearns & Co. Inc., CIBC Wood Gundy Securities
Corp. and Wasserstein Perella Securities, Inc., incorporated by reference to
Exhibit 4.3 to the Company's Quarterly Report on Form 10-Q filed with the
Commission on May 15, 1996.
10.47 Amendment, dated as of September 3, 1996, to the Employment Agreement, dated as
of July 1, 1995, between CSC and Cheryl P. Carl.
10.48 Amendment, dated as of September 3, 1996, to the Employment Agreement, dated as
of July 1, 1995, between CSC and Eric S. Goldstein.
10.49 Amendment, dated as of September 3, 1996, to the Employment Agreement, dated as
of July 1, 1995, between CSC and Jonah L. Goldstein.
10.50 Amendment, dated as of September 3, 1996, to the Employment Agreement, dated as
of November 1, 1992, between CSC and Robert M. Stata, as amended by the Amendment
Agreement, dated as of January 1, 1994.
10.51 Amendment, dated as of September 3, 1996, to the Employment Agreement, dated as
of July 1, 1995, between CSC and Steven P. Weiss.
10.52 Amendment, dated as of September 3, 1996, to the Employment Agreement, dated as
of January 1, 1996, between CSC and Tim S. Ledwick.
10.53 1997 Stock Option Plan
12.1 Computations of ratios of earnings to fixed charges
21.1 Subsidiaries of the Company, incorporated by reference to Exhibit 21.1 to the
Company's Registration Statement on Form S-3 as declared effective by the
Commission on April 18, 1997
23.1 Consent of KPMG Peat Marwick LLP
23.2 Consent of KPMG, Registered Auditors
23.3 Consent of BDO Stoy Hayward
23.4 Consent of BDO Stoy Hayward
23.5* Consent of Gibson, Dunn & Crutcher LLP (contained in Exhibit 5.1)
24.1 Power of Attorney (included on signature page of Registration Statement)
25.1 Statement of Eligibility of Trustee
99.1 Letter of Transmittal
</TABLE>
- ---------------
+ Confidential treatment has been granted with respect to certain provisions,
the redacted portions of which are indicated by brackets. This Exhibit has
been filed in its entirety separately with the Commission pursuant to an
application for confidential treatment.
* To be filed by amendment.
<PAGE> 1
EXHIBIT 3.1
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
CITYSCAPE FINANCIAL CORP.
----------------------------
The undersigned, for the purpose of amending and restating the
Certificate of Incorporation of Cityscape Financial Corp., a Delaware
corporation (the "Corporation"), does hereby certify that:
(1) The name of the Corporation is Cityscape Financial Corp.
(2) The date of filing of its original Certificate of
Incorporation with the Secretary of State of Delaware under the Corporation's
prior name Mandi of Essex, Inc. was December 16, 1988.
(3) Pursuant to Sections 242 and 245 of the General
Corporation Law of the State of Delaware, this Amended and Restated Certificate
of Incorporation was adopted by the Corporation's Board of Directors and
stockholders, the stockholders of the Corporation having approved the Amended
and Restated Certificate of Incorporation by the written consent of the holders
of a majority of the outstanding shares in accordance with Section 228 thereof,
and written notice having been given in accordance with the requirements of such
Section. The Amended and Restated Certificate of Incorporation restates and
integrates and further amends the provisions of the Certificate of Incorporation
of the Corporation.
(4) The Certificate of Incorporation of Cityscape Financial
Corp. is hereby amended and restated in its entirety as follows:
ARTICLE I
NAME OF CORPORATION
The name of the corporation is Cityscape Financial Corp.
<PAGE> 2
ARTICLE II
REGISTERED OFFICE
The address of the registered office of the corporation in the
State of Delaware is Corporation Trust Center, 1209 Orange Street, in the City
of Wilmington, County of New Castle, and its registered Agent at such address is
THE CORPORATION TRUST COMPANY.
ARTICLE III
PURPOSE
The purpose or purposes of the corporation is to engage in any
lawful act or activity for which corporations may be organized under the General
Corporation Law of Delaware.
ARTICLE IV
AUTHORIZED CAPITAL STOCK
(a) The corporation shall be authorized to issue two classes
of shares of stock to be designated, respectively, "Preferred Stock" and "Common
Stock"; the total number of shares which the corporation shall have authority to
issue is 55,000,000; the total number of shares of Preferred Stock shall be
5,000,000 and each such share shall have a par value of $0.01; and the total
number of shares of Common Stock shall be 50,000,000 and each such share shall
have a par value of $0.01.
(b) The shares of Preferred Stock may be issued from time to
time in one or more series. The Board of Directors is hereby vested with
authority to fix by resolution or resolutions the designations and the powers,
preferences and relative, participating, optional or other special rights, and
qualifications, limitations or restrictions thereof, including without
limitation the dividend rate, conversion or exchange rights, redemption price
and liquidation preference, of any series of shares of Preferred Stock, and to
fix the number of shares constituting any such series, and to increase or
decrease the number of shares of any such series (but not below the number of
shares thereof then outstanding). In case the number of shares of any such
series shall be so decreased, the shares constituting such decrease shall resume
the status which they had prior to the adoption of the resolution or resolutions
originally fixing the number of shares of such series.
2
<PAGE> 3
(c) Each share of Class A Common Stock of the corporation
outstanding on the date of filing of this Amended and Restated Certificate of
Incorporation (the "Restatement Date") shall on the Restatement Date, without
any action of the holder thereof, automatically be converted and reclassified
into one share of Common Stock of the corporation.
ARTICLE V
BOARD POWER REGARDING BYLAWS
In furtherance and not in limitation of the powers conferred
by statute, the Board of Directors is expressly authorized to make, repeal,
alter, amend and rescind the bylaws of the corporation.
ARTICLE VI
ELECTION OF DIRECTORS
Elections of directors need not be by written ballot unless
the bylaws of the corporation shall so provide.
ARTICLE VII
BOARD OF DIRECTORS
(a) Subject to the rights of the holders of any series of
Preferred Stock to elect additional directors under specified circumstances, the
number of directors shall be fixed from time to time exclusively by the Board of
Directors pursuant to a resolution adopted by the Board of Directors. Each of
the directors of the corporation shall hold office until his successor shall
have been duly elected and shall qualify or until he shall resign or shall have
been removed in the manner hereinafter provided.
(b) The directors who are in office on the Restatement Date
shall serve until the next annual meeting of stockholders at which directors are
elected following the Restatement Date ("1996 Annual Meeting"). Effective at the
1996 Annual Meeting, the Board shall be divided into three classes: Class I,
Class II and Class III. Such classes shall be as nearly equal in number of
directors as possible. Each director shall serve for a term ending at the third
annual stockholders meeting following the annual meeting at which such director
was elected; provided, however, that the directors first elected to Class I
shall serve for a term ending at the second annual meeting held after the
Restatement Date, the directors first elected to Class II shall serve for a term
ending at the third annual meeting held after the
3
<PAGE> 4
Restatement Date, and the directors first elected to Class III shall serve for a
term ending at the fourth annual meeting held after the Restatement Date.
(c) At each annual election held after the 1996 Annual
Meeting, the directors chosen to succeed those whose terms then expire shall be
identified as being of the same class as the directors they succeed, unless, by
reason of any intervening changes in the authorized number of directors, the
Board of Directors shall designate one or more directorships whose term then
expires as directorships of another class in order more nearly to achieve
equality in the number of directors among the classes. When the Board of
Directors fills a vacancy resulting from the death, resignation or removal of a
director, the director chosen to fill that vacancy shall be of the same class as
the director he succeeds, unless, by reason of any previous changes in the
authorized number of directors, the Board of Directors shall designate the
vacant directorship as a directorship of another class in order more nearly to
achieve equality in the number of directors among the classes.
(d) Notwithstanding the rule that the three classes shall be
as nearly equal in number of directors as possible, in the event of any change
in the authorized number of directors each director then continuing to serve as
such will nevertheless continue as a director of the class of which he is a
member, until the expiration of his current term or his earlier death,
resignation or removal. If any newly created directorship or vacancy on the
Board of Directors, consistent with the rule that the three classes shall be as
nearly equal in number of directors as possible, may be allocated to one or two
or more classes, the Board of Directors shall allocate it to that of the
available class whose term of office is due to expire at the earliest date
following such allocation.
(e) During any period when the holders of Preferred Stock or
any one or more series thereof, voting as a class, shall be entitled to elect a
specified number of directors by reason of dividend arrearages or other
contingencies giving them the right to do so, then and during such time as such
right continues (1) the then otherwise authorized number of directors shall be
increased by such specified number of directors, and the holders of the
Preferred Stock or such series thereof, voting as a class, shall be entitled to
elect the additional directors as provided for, pursuant to the provisions of
such Preferred Stock or series; (2) the additional directors shall be members of
those respective classes of directors in which vacancies are created as a result
of such increase in the authorized number of directors; and (3) each such
additional director shall serve until the annual meeting at which the term of
office of his class shall
4
<PAGE> 5
expire and until his successor shall be elected and shall qualify, or until his
right to hold such office terminates pursuant to the provisions of such
Preferred Stock or series, whichever occurs earlier. Whenever the holders of
such Preferred Stock or series thereof are divested of such rights to elect a
specified number of directors, voting as a class, pursuant to the provisions of
such Preferred Stock or series, the terms of office of all directors elected by
the holders of such Preferred Stock or series, voting as a class pursuant to
such provisions, or elected to fill any vacancies resulting from the death,
resignation or removal of directors so elected by the holders of such Preferred
Stock or series, shall forthwith terminate and the authorized number of
directors shall be reduced accordingly.
(f) Subject to the rights of the holders of any series of
Preferred Stock then outstanding, any director, or the entire Board of
Directors, may be removed from office at any time, but only (1) for cause, and
(2) by the affirmative vote of the holders, voting together as a single class,
of not less than 67% of the total outstanding voting power of the securities of
the corporation which are then entitled to vote in the election of directors of
the corporation.
(g) Notwithstanding anything to the contrary in this Amended
and Restated Certificate of Incorporation, the provisions set forth in this
Article VII may not be repealed, amended or otherwise modified, directly or
indirectly, in any respect (whether by amendment of this Amended and Restated
Certificate of Incorporation or the bylaws of the corporation or otherwise);
provided, however, that the foregoing Article may be repealed or amended in any
respect if such repeal or amendment is approved by such vote as may be required
under applicable law and in addition thereto by the affirmative vote of the
holders, voting together as a single class, of not less than 67% of the total
outstanding voting power of the securities of the corporation which are then
entitled to vote in the election of directors of the corporation.
ARTICLE VIII
LIMITATION OF DIRECTOR LIABILITY
To the fullest extent permitted by the Delaware General
Corporation Law as the same exists or may hereafter be amended, a director of
the corporation shall not be liable to the corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director. If the Delaware
General Corporation Law is amended after the date of the filing of this Restated
Certificate of Incorporation to authorize corporate action further eliminating
or limiting the personal liability of directors, then the liability of a
5
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director of the corporation shall be eliminated or limited to the fullest extent
permitted by the Delaware General Corporation Law, as so amended from time to
time. No repeal or modification of this Article VIII by the stockholders shall
adversely affect any right or protection of a director of the corporation
existing by virtue of this Article VIII at the time of such repeal or
modification.
ARTICLE IX
CORPORATE POWER
The corporation reserves the right to amend, alter, change or
repeal any provision contained in this Restated Certificate of Incorporation, in
the manner now or hereafter prescribed by statute, and all rights conferred on
stockholders herein are granted subject to this reservation.
ARTICLE X
ELIMINATION OF RIGHT TO ACT BY CONSENT
Effective as of February, 1, 1996, no action required to be
taken or which may be taken at any annual or special meeting of stockholders of
the corporation may be taken without a meeting, and the power of stockholders to
consent in writing, without a meeting, to the taking of any action is
specifically denied.
6
<PAGE> 7
IN WITNESS WHEREOF, the undersigned have executed this
Restated Certificate of Incorporation and on behalf of Cityscape Financial Corp.
have attested such execution as of this 28th day of September 1995.
Cityscape Financial Corp.
By: /s/ Robert Grosser
---------------------
Robert Grosser
President
Attest:
By: /s/ Cheryl P. Carl
--------------------------
Cheryl P. Carl
Secretary
7
<PAGE> 8
CERTIFICATE OF AMENDMENT
OF
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF CITYSCAPE FINANCIAL CORP.
Cityscape Financial Corp., a corporation organized and existing under
and by virtue of the General Corporation Law of the State of Delaware (the
"Corporation"), DOES HEREBY CERTIFY:
FIRST: That at a meeting of the Board of Directors of the Corporation,
resolutions were duly adopted setting forth a proposed amendment of the Amended
and Restated Certificate of Incorporation of the Corporation, declaring said
amendment to be advisable and calling for submission of such amendment to the
Corporation's stockholders at the Corporation's 1997 Annual Meeting of
Stockholders for consideration thereof. The resolution setting forth the
proposed amendment is as follows:
RESOLVED, that the Board of Directors approves the amendment to the
Company's Amended and Restated Certificate of Incorporation so that
Section (a) of Article IV will be amended to read substantially in the
form as follows:
"(a) The Corporation shall be authorized to issue two classes
of shares of stock to be designated, respectively, "Preferred Stock"
and "Common Stock;" the total number of shares which the corporation
shall have authority to issue is 110,000,000; the total number of
shares of Preferred Stock shall be 10,000,000 and each such share shall
have a par value of $0.01; and the total number of shares of Common
Stock shall be 100,000,000 and each such share shall have a par value
of $0.01."
SECOND: That thereafter, pursuant to resolution of its Board of
Directors, the 1997 Annual Meeting of Stockholders of the Corporation was duly
called and held, upon notice in accordance with Section 222 of the General
Corporation Law of the State of Delaware at which meeting the necessary number
of shares as required by statute were voted in favor of the amendment.
THIRD: That said amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
<PAGE> 9
IN WITNESS WHEREOF, the Corporation has caused this certificate to be
signed by Robert Grosser, its President, and Cheryl P. Carl, its Secretary this
5th day of June, 1997.
By: /s/ Robert Grosser
----------------------
Robert Grosser
President
ATTEST: /s/ Cheryl P. Carl
------------------
Cheryl P. Carl
Secretary
2
<PAGE> 1
Exhibit 4.1
CITYSCAPE FINANCIAL CORP.
THE SUBSIDIARY GUARANTOR named herein
and
The Chase Manhattan Bank, as Trustee
INDENTURE
Dated as of May 14, 1997
Up to $300,000,000
12-3/4% Senior Notes due 2004
<PAGE> 2
PAGE
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CROSS-REFERENCE TABLE
<TABLE>
<CAPTION>
TIA Indenture
Section Section
- ------- -------
<S> <C>
310(a)(1).................................................................. 7.10
(a)(2)............................................................... 7.10
(a)(3)............................................................... N.A.
(a)(4)............................................................... N.A.
(b).................................................................. 7.08; 7.10; 12.02
(b)(1)............................................................... 7.10
(b)(9)............................................................... 7.10
(c).................................................................. N.A.
311(a)..................................................................... 7.11
(b).................................................................. 7.11
(c).................................................................. N.A.
312(a)..................................................................... 2.05
(b).................................................................. 12.03
(c).................................................................. 12.03
313(a)..................................................................... 7.06
(b)(1)............................................................... 7.06
(b)(2)............................................................... 7.06
(c).................................................................. 7.06
(d).................................................................. 7.06
314(a)..................................................................... 4.02; 4.04; 12.02
(b).................................................................. 11.04
(c)(1)............................................................... 12.04; 12.05
(c)(2)............................................................... 12.04; 12.05
(c)(3)............................................................... N.A.
(d).................................................................. 11.04
(e).................................................................. 12.05
(f).................................................................. N.A.
315(a)..................................................................... 7.01; 7.02
(b).................................................................. 7.05; 12.02
(c).................................................................. 7.01
(d).................................................................. 6.05; 7.01; 7.02
</TABLE>
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N.A. means Not Applicable.
<PAGE> 3
<TABLE>
<CAPTION>
<S> <C> <C>
(e).................................................................. 6.11
316(a)(last sentence) ..................................................... 2.10
(a)(1)(A)............................................................ 6.05
(a)(1)(B)............................................................ 6.04
(a)(2)............................................................... 8.02
(b).................................................................. 6.07
(c).................................................................. 8.04
317(a)(1).................................................................. 6.08
(a)(2)............................................................... 6.09
(b).................................................................. 7.12
318(a)..................................................................... 12.01
</TABLE>
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N.A. means Not Applicable
Note: This Cross-Reference Table shall not, for any purpose, be deemed to be a
part of the Indenture
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
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ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
<S> <C> <C>
Section 1.01. Definitions.................................................................. 1
Section 1.02. Other Definitions............................................................ 24
Section 1.03. Incorporation by Reference of Trust Indenture Act. .......................... 25
Section 1.04. Rules of Construction........................................................ 25
ARTICLE 2
THE NOTES
Section 2.01. Amount of Notes.............................................................. 26
Section 2.02. Form......................................................................... 26
Section 2.03. Execution and Authentication................................................. 27
Section 2.04. Registrar and Paying Agent................................................... 28
Section 2.05. Paying Agent To Hold Money in Trust.......................................... 28
Section 2.06. Noteholder Lists............................................................. 29
Section 2.07. Transfer and Exchange........................................................ 29
Section 2.08. Replacement Notes............................................................ 30
Section 2.09. Outstanding Notes............................................................ 30
Section 2.10. Treasury Notes............................................................... 31
Section 2.11. Temporary Notes.............................................................. 31
Section 2.12. Cancellation................................................................. 31
Section 2.13. Defaulted Interest........................................................... 32
Section 2.14. CUSIP Number................................................................. 32
Section 2.15. Deposit of Moneys............................................................ 32
Section 2.16. Book-Entry Provisions for Global Notes....................................... 33
Section 2.17. Special Transfer Provisions.................................................. 35
Section 2.18. Computation of Interest...................................................... 37
</TABLE>
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ARTICLE 3
REDEMPTION
<S> <C> <C>
Section 3.01. Election to Redeem; Notices to Trustee....................................... 37
Section 3.02. Selection by Trustee of Notes To Be Redeemed................................. 38
Section 3.03. Notice of Redemption......................................................... 38
Section 3.04. Effect of Notice of Redemption............................................... 39
Section 3.05. Deposit of Redemption Price.................................................. 39
Section 3.06. Notes Redeemed in Part....................................................... 40
ARTICLE 4
COVENANTS
Section 4.01. Payment of Notes............................................................. 40
Section 4.02. SEC Reports.................................................................. 40
Section 4.03. Waiver of Stay, Extension or Usury Laws...................................... 41
Section 4.04. Compliance Certificate....................................................... 41
Section 4.05. Taxes........................................................................ 42
Section 4.06. Limitation on Indebtedness................................................... 42
Section 4.07. Limitation on Restricted Payments............................................ 44
Section 4.08. Limitation on Sales of Assets................................................ 46
Section 4.09. Limitation on Affiliate Transactions......................................... 50
Section 4.10. Limitations on Liens......................................................... 51
Section 4.11. Limitation on Creation of Subsidiaries....................................... 51
Section 4.12. Limitation on Restrictions on Distributions from
Restricted Subsidiaries...................................................... 51
Section 4.13. Payments for Consent......................................................... 52
Section 4.14. Legal Existence.............................................................. 53
Section 4.15. Change of Control............................................................ 53
Section 4.16. Maintenance of Properties; Insurance; Books and
Records; Compliance with Law................................................. 55
Section 4.17. Limitation on Line of Business............................................... 56
Section 4.18. Pledged Intercompany Note.................................................... 56
Section 4.19. Subsidiary Guarantees........................................................ 56
</TABLE>
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<TABLE>
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ARTICLE 5
SUCCESSOR CORPORATION
<S> <C> <C>
Section 5.01. Limitation on Consolidation, Merger and Sale of
Assets....................................................................... 57
Section 5.02. Successor Person Substituted................................................. 58
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.01. Events of Default............................................................ 58
Section 6.02. Acceleration................................................................. 60
Section 6.03. Other Remedies............................................................... 60
Section 6.04. Waiver of Past Defaults and Events of Default. .............................. 61
Section 6.05. Control by Majority.......................................................... 61
Section 6.06. Limitation on Suits.......................................................... 61
Section 6.07. Rights of Holders To Receive Payment......................................... 62
Section 6.08. Collection Suit by Trustee................................................... 62
Section 6.09. Trustee May File Proofs of Claim............................................. 62
Section 6.10. Priorities................................................................... 63
Section 6.11. Undertaking for Costs........................................................ 63
Section 6.12. Restoration of Rights and Remedies........................................... 64
ARTICLE 7
TRUSTEE
Section 7.01. Duties of Trustee............................................................ 64
Section 7.02. Rights of Trustee............................................................ 66
Section 7.03. Individual Rights of Trustee................................................. 66
Section 7.04. Trustee's Disclaimer......................................................... 67
Section 7.05. Notice of Defaults........................................................... 67
Section 7.06. Reports by Trustee to Holders................................................ 67
Section 7.07. Compensation and Indemnity................................................... 67
Section 7.08. Replacement of Trustee....................................................... 69
Section 7.09. Successor Trustee by Consolidation, Merger, Etc. ............................ 70
Section 7.10. Eligibility; Disqualification................................................ 70
Section 7.11. Preferential Collection of Claims Against Company. .......................... 70
Section 7.12. Paying Agents................................................................ 70
</TABLE>
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ARTICLE 8
AMENDMENTS, SUPPLEMENTS AND WAIVERS
<S> <C> <C>
Section 8.01. Without Consent of Holders................................................... 71
Section 8.02. With Consent of Holders...................................................... 72
Section 8.03. Compliance with Trust Indenture Act.......................................... 73
Section 8.04. Revocation and Effect of Consents............................................ 74
Section 8.05. Notation on or Exchange of Notes............................................. 74
Section 8.06. Trustee To Sign Amendments, Etc.............................................. 75
ARTICLE 9
SATISFACTION AND DISCHARGE OF INDENTURE; DEFEASANCE
Section 9.01. Satisfaction and Discharge of Indenture...................................... 75
Section 9.02. Legal Defeasance............................................................. 76
Section 9.03. Covenant Defeasance.......................................................... 77
Section 9.04. Conditions to Defeasance or Covenant Defeasance. ............................ 78
Section 9.05. Deposited Money and U.S. Government
Obligations To Be Held in Trust; Other
Miscellaneous Provisions..................................................... 80
Section 9.06. Reinstatement................................................................ 80
Section 9.07. Moneys Held by Paying Agent.................................................. 81
Section 9.08. Moneys Held by Trustee....................................................... 81
Section 9.09. Collateral................................................................... 82
ARTICLE 10
GUARANTEE OF NOTES
Section 10.01. Subsidiary Guarantee ........................................................ 82
Section 10.02. Execution and Delivery of Subsidiary Guarantees ............................. 83
Section 10.03. Limitation of Subsidiary Guarantee .......................................... 84
Section 10.04. Additional Subsidiary Guarantors ............................................ 84
Section 10.05. Release of Subsidiary Guarantor ............................................. 84
</TABLE>
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<TABLE>
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ARTICLE 11
SECURITY
<S> <C> <C>
Section 11.01. Pledge Agreement ............................................................ 85
Section 11.02. Maintenance of the Collateral ............................................... 85
Section 11.03. Interest and Principal on the Collateral .................................... 86
Section 11.04. Recording and Opinions ...................................................... 86
Section 11.05. Authorization of Actions To Be Taken by the
Collateral Agent Under the Pledge Agreement.................................. 87
Section 11.06. Authorization of Receipt of Funds by the Trustee
Under the Pledge Agreement.................................................. 88
Section 11.07. Release of Collateral ....................................................... 88
Section 11.08. Termination of Security Interest ............................................ 89
ARTICLE 12
MISCELLANEOUS
Section 12.01. Trust Indenture Act Controls ................................................ 89
Section 12.02. Notices ..................................................................... 89
Section 12.03. Communications by Holders with Other Holders ................................ 90
Section 12.04. Certificate and Opinion as to Conditions Precedent .......................... 91
Section 12.05. Statements Required in Certificate and Opinion .............................. 91
Section 12.06. Rules by Trustee and Agents ................................................. 91
Section 12.07. Business Days; Legal Holidays ............................................... 92
Section 12.08. Governing Law ............................................................... 92
Section 12.09. No Adverse Interpretation of Other Agreements ............................... 92
Section 12.10. No Recourse Against Others .................................................. 92
Section 12.11. Successors .................................................................. 93
Section 12.12. Multiple Counterparts ....................................................... 93
Section 12.13. Table of Contents, Headings, Etc. ........................................... 93
Section 12.14. Separability ................................................................ 93
EXHIBITS
Exhibit A. Form of Note.................................................................. A-1
Exhibit B. Form of Legend and Assignment for 144A........................................ B-1
Exhibit C. Form of Legend and Assignment for Regulation S Note .......................... C-1
</TABLE>
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<S> <C> <C>
Exhibit D. Form of Legend for Global Note................................................ D-1
Exhibit E. Form of Certificate To Be Delivered in Connection with
Transfers to Non-QIB Accredited Investors................................. E-1
Exhibit F. Form of Certificate To Be Delivered in Connection with
Transfers Pursuant to Regulation S........................................ F-1
Exhibit G. Form of Guarantee............................................................. G-1
Exhibit H. Pledge Agreement.............................................................. H-1
</TABLE>
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INDENTURE, dated as of May 14, 1997, among CITYSCAPE FINANCIAL
CORP., a Delaware corporation (the "Company"), the Subsidiary Guarantors (as
hereinafter defined) and The Chase Manhattan Bank, as trustee (the "Trustee").
Each party agrees as follows for the benefit of the other
parties and for the equal and ratable benefit of the Holders of the Notes.
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01. Definitions.
"Additional Assets" means (i) any property or assets (other
than Indebtedness and Capital Stock) used or useful in a Related Business; (ii)
the Capital Stock of a Person that is or becomes a Restricted Subsidiary as a
result of or upon the acquisition of such Capital Stock by the Company or
another Restricted Subsidiary; or (iii) Capital Stock constituting a minority
interest in any Person to the extent in compliance with Section 4.07.
"Additional Interest" means additional interest on the Notes
which the Company and the Subsidiary Guarantor, jointly and severally, agree to
pay to the Holders pursuant to Section 4 of the Registration Rights Agreement.
"Adjusted Net Assets" of a Subsidiary Guarantor at any date
means the lesser of the amount by which (x) the fair value of the property of
such Subsidiary Guarantor exceeds the total amount of liabilities, including,
without limitation, contingent liabilities (after giving effect to all other
fixed and contingent liabilities), but excluding liabilities under the
Subsidiary Guarantee of such Subsidiary Guarantor at such date and (y) the
present fair salable value of the assets of such Subsidiary Guarantor at such
date exceeds the amount that will be required to pay the probable liability of
such Subsidiary Guarantor on its debts (after giving effect to all other fixed
and contingent liabilities and after giving effect to any collection from any
Subsidiary of such Subsidiary Guarantor in respect of the obligations of such
Subsidiary under the Subsidiary Guarantee) excluding Indebtedness in respect of
the Guarantee, as they become absolute and matured.
"Affiliate" of any specified Person means any other Person,
directly or indirectly, controlling or controlled by or under direct or indirect
common control with such specified Person. For the purposes of this definition,
"control" when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contact or otherwise;
<PAGE> 11
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and the terms "controlling" and "controlled" have meanings correlative to the
foregoing. For purposes of Section 4.08 and 4.09 only, "Affiliate" shall also
mean any beneficial owner of Capital Stock representing 10% or more of the
total voting power of the Voting Stock (on a fully diluted basis) of the
Company or of rights or warrants to purchase such Capital Stock (whether or
not currently exercisable) and any Person who would be an Affiliate of any
such beneficial owner pursuant to the first sentence hereof.
"Agent" means any Registrar, Paying Agent, or agent for
service of notices and demands.
"Asset Disposition" means any sale, lease, transfer or other
disposition (or series of related sales, leases, transfers or dispositions) by
the Company or any Restricted Subsidiary, including any disposition by means of
a merger, consolidation or similar transaction (each referred to for the
purposes of the definition as a "disposition") but excluding any merger,
consolidation or sale of assets of the Company subject to and permitted by
Section 5.01, of (i) any shares of Capital Stock of a Restricted Subsidiary
(other than director's qualifying shares or shares required by applicable law to
be held by a Person other than the Company or a Restricted Subsidiary), (ii) all
or substantially all the assets of any division or line of business of the
Company or any Restricted Subsidiary, (iii) any other assets of the Company or
any Restricted Subsidiary outside of the ordinary course of business of the
Company or such Restricted Subsidiary or (iv) any Retained Interest Receivables
(other than, in the case of (i), (ii) and (iii) above, a disposition by a
Restricted Subsidiary to the Company or by the Company or a Restricted
Subsidiary to a Wholly Owned Subsidiary). Notwithstanding the foregoing, the
following shall not be deemed to be Asset Dispositions: (i) the sale, lease,
conveyance or other disposition of inventory or Hedging Obligations by the
Company or a Restricted Subsidiary, (ii) the sale, lease, conveyance or other
disposition of property or equipment that has become worn out, obsolete or
damaged or otherwise unusable for use in connection with the business of the
Company or any Restricted Subsidiary, as the case may be, (iii) a disposition of
Receivables in the ordinary course of business, (iv) any grant of a Permitted
Lien, (v) a disposition of Temporary Cash Investments, (vi) any disposition of
the Capital Stock of City Auto Resources, Inc. or Phoebus Software Limited held
by the Company or any of its Restricted Subsidiaries, (vii) the sale of any
property (whether real, personal or mixed) in connection with the incurrence of
Capital Lease Obligations, and (viii) a Permitted Investment or a Restricted
Payment that is permitted by Section 4.07.
"Average Life" means, as of the date of determination, with
respect to any Indebtedness or Preferred Stock, the quotient obtained by
dividing (i) the sum of the products of numbers of years from the date of
determination to the dates of each successive scheduled principal payment of
such Indebtedness or redemption or similar payment with
<PAGE> 12
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respect to such Preferred Stock multiplied by the amount of such payment by (ii)
the sum of all such payments.
"Board of Directors" means the board of directors of the
Company or a Subsidiary Guarantor, as appropriate, or any committee thereof duly
authorized to act on behalf of such Board.
"Board Resolution" means a copy of a resolution certified
pursuant to an Officers' Certificate to have been duly adopted by the Board of
Directors of the Company or a Subsidiary Guarantor, as appropriate, and to be in
full force and effect, and delivered to the Trustee.
"Capital Lease Obligation" means an obligation that is
required to be classified and accounted for as a capital lease for financial
reporting purposes in accordance with GAAP, and the amount of Indebtedness
represented by such obligation shall be the capitalized amount of such
obligation determined in accordance with GAAP; and the Stated Maturity thereof
shall be the date of the last payment of rent or any other amount due under such
lease prior to the first date upon which such lease may be terminated by the
lessee without payment of a penalty.
"Capital Stock" of any Person means any and all shares,
interests, rights to purchase, warrants, options, participation or other
equivalents of or interests in (however designated) equity of such Person,
including any Preferred Stock, but excluding any debt securities convertible
into such equity.
A "Change of Control" shall be deemed to have occurred (i)
upon any merger or consolidation of the Company with or into any other Person or
any sale, transfer or other conveyance, whether direct or indirect, to any other
Person of all or substantially all of the assets of the Company, on a
consolidated basis, in one transaction or a series of related transactions, if,
immediately after giving effect to such transaction, any "person" or "group" (as
such terms are used for purposes of Sections 13(d) and 14(d) of the Exchange
Act, whether or not applicable) is or becomes the "beneficial owner" (as defined
in Rule 13d-3 under the Exchange Act), directly or indirectly, of more than 50%
of the total voting power of the Voting Stock of the transferee or surviving
entity, other than any such person or group that held such voting power as of
the Issue Date or any Related Party thereof, (ii) when any "person" or "group"
(as such terms are used for purposes of Sections 13(d) and 14(d) of the Exchange
Act, whether or not applicable) is or becomes the "beneficial owner" (as defined
in Rule 13d-3 under the Exchange Act), directly or indirectly, of more than 50%
of the total voting power of the Voting Stock of the Company, other than any
such person or group that held such voting power as of the Issue Date or any
Related Party thereof, or (iii) when, during any period of 12 consecutive months
after the Issue Date, in-
<PAGE> 13
-4-
dividuals who at the beginning of any such 12-month period constituted the Board
of Directors of the Company (together with any new directors whose election by
such Board of Directors or whose nomination for election by the stockholders of
the Company was approved by a vote of a majority of the directors of the Company
then still in office who were either directors at the beginning of such period
or whose election or nomination for election was previously so approved) cease
for any reason to constitute a majority of the Board of Directors then in
office.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral" means the Intercompany Note and shall have the
meaning assigned thereto in the Pledge Agreement.
"Collateral Agent" shall have the meaning assigned thereto in
the Pledge Agreement.
"Common Stock" of any Person means all Capital Stock of such
Person that is generally entitled to (i) vote in the election of directors of
such Person or (ii) if such Person is not a corporation, vote or otherwise
participate in the selection of the governing body, partners, managers or others
that will control the management and policies of such Person.
"Company" means the party named as such in the first paragraph
of this Indenture until a successor replaces such party pursuant to Article 5 of
this Indenture and thereafter means the successor.
"Company Request" means any written request signed in the name
of the Company by the Chairman of the Board of Directors, the Chief Executive
Officer, the President, any Vice President, the Chief Financial Officer or the
Treasurer of the Company and attested to by the Secretary or any Assistant
Secretary of the Company.
"Consolidated Leverage Ratio" as of any date of determination,
means the ratio of (i) the aggregate amount of all Indebtedness of the Company
and its Restricted Subsidiaries, excluding (A) Permitted Warehouse Indebtedness
and Guarantees thereof and (B) Hedging Obligations permitted to be Incurred
pursuant to clause (b)(6) of Section 4.06 to (ii) the Consolidated Net Worth of
the Company.
"Consolidated Net Income" means, for any period, the net
income of the Company and its consolidated Subsidiaries; provided, however, that
there shall not be included in such Consolidated Net Income: (i) any net income
of any Person if such Person is not a Restricted Subsidiary, except that (A)
subject to the exclusion contained in clause (iv)
<PAGE> 14
-5-
below, the Company's equity in the net income of any such Person for such period
shall be included in such Consolidated Net Income up to the aggregate amount of
cash actually distributed by such Person during such period to the Company or a
Restricted Subsidiary as a dividend or other distribution (subject, in the case
of a dividend or other distribution paid to a Restricted Subsidiary, to the
limitations contained in clause (iii) below) and (B) the Company's equity in a
net loss of any such Person for such period shall be included in determining
such Consolidated Net Income; (ii) any net income (or loss) of any Person
acquired by the Company or a Subsidiary in a pooling of interests transaction
for any period prior to the date of such acquisition; (iii) any net income of
any Restricted Subsidiary if such Restricted Subsidiary is subject to
restrictions, directly or indirectly, on the payment of dividends or the making
of distributions by such Restricted Subsidiary, directly or indirectly, to the
Company, except that (A) subject to the exclusion contained in clause (iv)
below, the Company's equity in the net income of any such Restricted Subsidiary
for such period shall be included in such Consolidated Net Income to the extent
that cash could have been distributed by such Restricted Subsidiary during such
period to the Company or another Restricted Subsidiary as a dividend or other
distribution (subject, in the case of a dividend or other distribution paid to
another Restricted Subsidiary, to the limitation contained in this clause) and
(B) the Company's equity in a net loss of any such Restricted Subsidiary for
such period shall be included in determining such Consolidated Net Income; (iv)
any gain (but not loss) realized upon the sale or other disposition of any
assets of the Company or its consolidated Subsidiaries (including pursuant to
any sale-and-leaseback arrangement) which is not sold or otherwise disposed of
in the ordinary course of business and any gain (but not loss) realized upon the
sale or other disposition of any Capital Stock of any Person; (v) extraordinary
gains or losses; and (vi) the cumulative effect of a change in accounting
principles. Notwithstanding the foregoing, for the purposes of Section 4.07
only, there shall be excluded from Consolidated Net Income any dividends,
repayments of loans or advances or other transfers of assets from any Person to
the Company or a Restricted Subsidiary to the extent such dividends, repayments
or transfers increase the amount of Restricted Payments permitted under Section
4.07 pursuant to clause (a) (3) (D) thereof.
"Consolidated Net Worth" means the total of the amounts shown
on the balance sheet of the Company and its Restricted Subsidiaries, determined
on a consolidated basis in accordance with GAAP, as of the end of the most
recent fiscal quarter of the Company for which financial statements are
available, as (i) the par or stated value of all outstanding Capital Stock of
the Company plus (ii) paid-in capital or capital surplus relating to such
Capital Stock plus (iii) any retained earnings or earned surplus less (A) any
accumulated deficit and (B) any amounts attributable to Disqualified Stock.
"Convertible Debentures" means the Company's 6% Convertible
Subordinated Debentures due 2006 that are outstanding on the Issue Date.
<PAGE> 15
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"Corporate Trust Office" means the office of the Trustee at
which at any particular time its corporate trust business shall be principally
administered, which office at the date of execution of this Indenture is located
at 450 West 33rd Street, New York, New York 10001.
"CSC" means Cityscape Corp., the sole Subsidiary Guarantor as
of the Issue Date.
"CSC-UK" means City Mortgage Corporation Limited, the
Company's wholly- owned indirect U.K. Subsidiary.
"Currency Agreement" means in respect of a Person any foreign
exchange contract, currency swap agreement or other similar agreement or
arrangement to which such Person is a party or beneficiary.
"Default" means any event which is, or after notice or passage
of time or both would be, an Event of Default.
"Defaulting Subsidiary" means any Restricted Subsidiary of the
Company with respect to which an Event of Default described in clause (a)(6) of
Section 6.01 has occurred and is continuing.
"Depository" means, with respect to the Notes issued in the
form of one or more Global Notes, The Depository Trust Company or another Person
designated as Depository by the Company, which Person must be a clearing agency
registered under the Exchange Act.
"Disqualified Stock" means, with respect to any Person, any
Capital Stock which by its terms (or by the terms of any security into which it
is convertible or for which it is exchangeable) or upon the happening of any
event (i) matures or is mandatorily redeemable pursuant to a sinking fund
obligation or otherwise, (ii) is convertible or exchangeable for Indebtedness or
Disqualified Stock or (iii) is redeemable at the option of the holders thereof,
in each case in whole or in part on or prior to 180 days after the Stated
Maturity of the Notes; provided, however, that Capital Stock of the Company or
any Restricted Subsidiary thereof that is issued with the benefit of provisions
requiring a change of control offer to be made for such Capital Stock in the
event of a change of control of the Company or Restricted Subsidiary or an offer
to repurchase such Capital Stock upon a disposition of assets, which provisions
have substantially the same effect as the provisions of Section 4.08 or Section
4.15, as the case may be, shall not be deemed to be Disqualified Stock solely by
virtue of such provisions.
<PAGE> 16
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"Domestic Subsidiary" means any Restricted Subsidiary of the
Company other than a Foreign Subsidiary.
"Eligible Retained Interest Receivables" means Retained
Interest Receivables other than any Retained Interest Receivables created as the
result of the securitization or sale of other Retained Interest Receivables. For
the purposes of clause (h)(A) of the definition of "Permitted Liens" the term
Eligible Retained Interest Receivables shall include only (i) Eligible Retained
Interest Receivables which exist on the Issue Date and are unencumbered or are
created subsequent to the Issue Date which are unencumbered by any Lien (either
directly or on the Capital Stock of any Special Purpose Subsidiary, the assets
of which are limited to Retained Interest Receivables) as of the relevant date
of determination and (ii) Eligible Retained Interest Receivables in existence on
the Issue Date which are encumbered by any Lien (either directly or on the
Capital Stock of any Special Purpose Subsidiary, the assets of which are limited
to Retained Interest Receivables), but only to the extent that the amount of any
such Eligible Retained Interest Receivable exceeds two (2) times the outstanding
principal amount of any Indebtedness secured by a Lien (either directly or on
the Capital Stock of any such Special Purpose Subsidiary) on such Eligible
Retained Interest Receivable as of the relevant date of determination.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exchange Notes" has the meaning provided in the Registration
Rights Agreement or, with respect to Notes issued under this Indenture
subsequent to the Issue Date pursuant to Section 2.01, a registration rights
agreement substantially identical to the Registration Rights Agreement.
"Foreign Subsidiary" means any Restricted Subsidiary of the
Company that is either (i) a U.K. Subsidiary or (ii) is incorporated in a
jurisdiction other than the United States of America or the United Kingdom and
80% of the sales, earnings or assets of which are located in, generated from or
derive from operations located in jurisdictions outside the United States of
America.
"GAAP" means generally accepted accounting principles in the
United States of America as in effect from time to time, including those set
forth in (i) the opinions and pronouncements of the Accounting Principles Board
of the American Institute of Certified Public Accountants, (ii) statements and
pronouncements of the Financial Accounting Standards Board, (iii) such other
statements by such other entity as approved by a significant segment of the
accounting profession, and (iv) the rules and regulations of the SEC governing
the inclusion of financial statements (including pro forma financial statements)
in periodic reports required to be filed pursuant to Section 13 of the Exchange
Act, including
<PAGE> 17
-8-
opinions and pronouncements in staff accounting bulletins and similar written
statements from the accounting staff of the SEC and releases of the Emerging
Issues Task Force.
"Guarantee" means an obligation, contingent or otherwise, of
any Person directly or indirectly guaranteeing any Indebtedness or other
obligation of any Person and any obligation, direct or indirect, contingent or
otherwise, of such Person (i) to purchase or pay (or advance or supply finds for
the purchase or payment of) such Indebtedness or other obligation of such Person
(whether arising by virtue of partnership arrangements, or by agreements to
keep-well, to purchase assets, goods, securities or services, to take-or-pay or
to maintain financial statement conditions or otherwise) or (ii) entered into
for the purpose of assuring in any other manner the obligee of such Indebtedness
or other obligation of the payment thereof or to protect such obligee against
loss in respect thereof (in whole or in part); provided, however, that the term
"Guarantee" shall not include endorsements for collection or deposit in the
ordinary course of business. The term "Guarantee" used as a verb has a
corresponding meaning. The term "Guarantor" shall mean any person Guaranteeing
any obligation.
"Hedging Obligations" of any Person means the obligations of
such Person pursuant to any Interest Rate Agreement or Currency Agreement.
"Holder" or "Noteholder" means the Person in whose name a Note
is registered on the Registrar's books.
"Incur" means issue, assume, Guarantee, incur or otherwise
become liable for; provided, however, that any Indebtedness or Capital Stock of
a Person existing at the time such Person becomes a Subsidiary (whether by
merger, consolidation, acquisition or otherwise) shall be deemed to be incurred
by such Subsidiary at the time it becomes a Subsidiary. The term "Incurrence"
when used as a noun shall have a correlative meaning. The accretion of principal
of a non-interest bearing or other discount security shall be deemed Incurrence
of Indebtedness.
"Indebtedness" means, with respect to any Person on any date
of determination (without duplication), (i) the principal of and premium (if
any) in respect of (A) indebtedness of such Person for money borrowed and (B)
indebtedness evidenced by notes, debentures, bonds or other similar instruments
for the payment of which such Person is responsible or liable; (ii) all Capital
Lease Obligations of such Person; (iii) all obligations of such Person issued or
assumed as the deferred purchase price of property, all conditional sale
obligations of such Person and all obligations of such Person under any title
retention agreement (but excluding trade accounts payable and expense accruals
arising in the ordinary course of business); (iv) all obligations of such Person
for the reimbursement of any obligor on any letter of credit, banker's
acceptance or similar credit transaction (other than
<PAGE> 18
-9-
obligations with respect to letters of credit securing obligations (other than
obligations described in (i) through (iii) above) entered into in the ordinary
course of business of such Person to the extent such letters of credit are not
drawn upon or, if and to the extent drawn upon, such drawing is reimbursed no
later than the tenth Business Day following receipt by such Person of a demand
for reimbursement following payment on the letter of credit); (v) the amount of
all obligations of such Person with respect to the redemption, repayment or
other repurchase of any Disqualified Stock (but excluding any accrued
dividends); (vi) Warehouse Indebtedness; (vii) all obligations of the type
referred to in clauses (i) through (vi) of other Persons and all dividends of
other Persons for the payment of which, in either case, such Person is
responsible or liable, directly or indirectly, as obligor, guarantor or
otherwise, including by means of any Guarantee; (viii) all obligations of the
type referred to in clauses (i) through (vi) of other Persons secured by any
Lien on any property or asset of such Person (whether or not such obligation is
assumed by such Person), the amount of such obligation being deemed to be the
lesser of the value of such property or assets or the amount of the obligation
so secured; and (ix) to the extent not otherwise included in this definition,
Hedging Obligations of such Person. Except in the case of Warehouse Indebtedness
(the amount of which shall be determined in accordance with the definition
thereof), the amount of Indebtedness of any Person at any date shall be the
outstanding balance at such date of all unconditional obligations as described
above and the maximum liability, upon the occurrence of the contingency giving
rise to the obligation, of any contingent obligations at such date.
Notwithstanding the foregoing, any securities issued in a securitization by a
special purpose owner trust or other Person, including without limitation, any
Securitization Trust, formed by or on behalf of a Person and to which
Receivables have been sold or otherwise transferred by or on behalf of such
Person or its Restricted Subsidiaries shall not be treated as Indebtedness of
such Person or its Restricted Subsidiaries under the Indenture, regardless of
whether such securities are treated as indebtedness for tax purposes.
"Indenture" means this Indenture as amended, restated or
supplemented from time to time.
"Initial Purchasers" means, collectively, CIBC Wood Gundy
Securities Corp., Bear, Stearns & Co. Inc. and Oppenheimer & Co., Inc.
"Institutional Accredited Investor" means an institution that
is an "accredited investor" as that term is defined in Rule 501 (a)(1), (2), (3)
or (7) promulgated under the Securities Act.
"Intercompany Note" means the note dated as of May 14, 1997
from CSC-UK to CSC in an initial principal amount equal to $115.0 million
denominated in US dol-
<PAGE> 19
-10-
lars, which matures on June 1, 2004 and bears interest at a rate not less than
the rate borne by the Notes.
"Interest Payment Date" means the stated maturity of an
installment of interest on the Notes.
"Interest Rate Agreement" means any interest rate swap
agreement, interest rate cap agreement, repurchase agreement, futures contract
or other financial agreement or arrangement designed to protect the Company or
any Restricted Subsidiary against fluctuations in interest rates.
"Investment" in any Person means any direct or indirect
advance, loan (other than advances to customers in the ordinary course of
business that are recorded as trade accounts on the balance sheet of the lender)
or other extensions of credit (including by way of Guarantee or similar
arrangement) 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 of Capital Stock, Indebtedness
or other similar instruments issued by, such Person. For purposes of the
definition of "Unrestricted Subsidiary," the definition of "Restricted Payment"
and Section 4.07, (i) "Investment" shall include the portion (proportionate to
the Company's equity interest in such Subsidiary) of the fair market value of
the net assets of any Subsidiary of the Company at the time that such Subsidiary
is designated an Unrestricted Subsidiary; provided, however, that upon a
redesignation of such Subsidiary as a Restricted Subsidiary, the Company shall
be deemed to continue to have a permanent "Investment" in an Unrestricted
Subsidiary equal to an amount (if positive) equal to (x) the Company's
"Investment" in such Subsidiary at the time of such redesignation less (y) the
portion (proportionate to the Company's equity interest in such Subsidiary) of
the fair market value of the net assets of such Subsidiary at the time of such
redesignation; and (ii) any property transferred to or from an Unrestricted
Subsidiary shall be valued at its fair market value at the time of such
transfer, in each case as determined in good faith by the Board of Directors of
the Company.
"Investment Grade Rating" means with respect to the Notes a
rating by S & P of at least BBB- and a rating by Moody's of at least Baa3 which
is provided after assuming and giving effect to the (i) elimination of the
applicability of the proviso to clause (h) of the definition of "Permitted
Liens" and (ii) the release of the Collateral, and (iii) the release of the
obligations of the Subsidiary Guarantors under their Subsidiary Guarantees.
"Issue Date" means May 14 1997.
<PAGE> 20
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"Lien" means (i) any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including any conditional sale or other
title retention agreement or lease in the nature thereof) and (ii) any claim
(whether direct or indirect through subordination or other structural
encumbrance) against any Retained Interest Receivables sold unless the seller is
not liable for any losses thereon.
"Maturity Date" means June 1, 2004.
"Moody's" means Moody's Investors Service, Inc. and its
successors.
"Net Available Cash" from an Asset Disposition means cash
payments received therefrom (including any cash payment received by way of
deferred payment of principal pursuant to a note or installment receivable or
otherwise, but only as and when received, but excluding any other consideration
received in the form of assumption by the acquiring Person of Indebtedness or
other obligations relating to such properties or assets or received in any other
noncash form) in each case net of (i) all legal, title and recording tax
expenses, commissions and investment banking and other fees and expenses
incurred, and all Federal, state, provincial, foreign and local taxes required
to be accrued as a liability under GAAP, as a consequence of such Asset
Disposition, (ii) all payments made on any Indebtedness which is secured by any
assets subject to such Asset Disposition, in accordance with the terms of any
Lien upon or other security agreement of any kind with respect to such assets,
or which must by its terms, or in order to obtain a necessary consent to such
Asset Disposition, or by applicable law be, repaid out of the proceeds from such
Asset Disposition, (iii) all distributions and other payments required to be
made to minority interest holders in Subsidiaries or joint ventures as a result
of such Asset Disposition and (iv) the deduction of appropriate amounts provided
by the seller as a reserve, in accordance with GAAP, against any liabilities
associated with the property or other assets disposed in such Asset Disposition
and retained by the Company or any Restricted Subsidiary after such Asset
Disposition.
"Net Cash Proceeds" means with respect to any issuance or sale
of Capital Stock, the cash proceeds of such issuance or sale net of attorneys'
fees, accountants' fees, underwriters' or placement agents' fees, discounts or
commissions and brokerage, consultant and other fees actually incurred in
connection with such issuance or sale and net of taxes paid or payable as a
result thereof.
"Non-Recourse Indebtedness" means Indebtedness (i) as to which
neither the Company nor any of the Restricted Subsidiaries (other than the
Person incurring such Indebtedness) (a) provides a Guarantee or other credit
enhancement of any kind (including any undertaking, agreement or instruction
that would constitute Indebtedness) or (b) is directly or indirectly liable (as
the primary obligor or otherwise); (ii) no default with respect
<PAGE> 21
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to which would permit, upon notice, lapse of time or both, any holder of any
other Indebtedness (other than the Notes) of the Company or any of its
Restricted Subsidiaries to declare a default on such other Indebtedness or cause
the payment thereof to be accelerated or payable prior to its stated maturity;
and (iii) as to which the lenders or holders thereof have been notified in
writing that they will not have any recourse to the Capital Stock or assets of
the Company or any of its Restricted Subsidiaries (other than the Person
Incurring such Indebtedness).
"Non-U.S. Person" means a Person who is not a U.S. person, as
defined in Regulation S.
"Notes" means the securities issued by the Company pursuant to
this Indenture, including, without limitation, the Private Exchange Notes, if
any, and the Exchange Notes, treated as a single class of securities, as amended
or supplemented from time to time in accordance with the terms hereof.
"Offering" means the offering of the Notes as described in the
Offering Memorandum.
"Offering Memorandum" means the Offering Memorandum dated May
9, 1997 pursuant to which the Notes issued on the Issue Date were offered.
"Officer" with respect to any Person (other than the Trustee),
means the Chairman of the Board of Directors, Chief Executive Officer, the
President, any Vice President, the Chief Financial Officer, the Treasurer, any
Assistant Treasurer, the Secretary or any Assistant Secretary of such Person, or
any other officer of such Person designated by the Board of Directors of such
Person and set forth in an Officers' Certificate delivered to the Trustee.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by the Chairman of the Board of Directors, the Chief
Executive Officer, the President or any Vice President and the Chief Financial
Officer, Controller, the Treasurer or any Assistant Treasurer of such Person
that shall comply with applicable provisions of this Indenture.
"Opinion of Counsel" means a written opinion reasonably
satisfactory in form to the Trustee from legal counsel which counsel is
reasonably acceptable to the Trustee, stating the matters required by Section
12.05 and delivered to the Trustee.
"Permitted Investment" means an Investment by the Company or
any Restricted Subsidiary in (i) the Company or a Restricted Subsidiary or a
Person that will, upon the making of such Investment, become a Restricted
Subsidiary; provided, however, that
<PAGE> 22
-13-
the primary business of such Restricted Subsidiary is a Related Business; and
provided, further, except as provided in clause (xiii) below, in the case of any
Investment in a Foreign Subsidiary that is not a Subsidiary Guarantor, such
Investment shall be in the form of a loan constituting Senior Indebtedness of
such Foreign Subsidiary, evidenced by a note; (ii) another Person if as a result
of such Investment such other Person is merged or consolidated with or into, or
transfers or conveys all or substantially all its assets to, the Company or a
Restricted Subsidiary; provided, however, that such Person's primary business is
a Related Business; (iii) Temporary Cash Investments; (iv) receivables (other
than Receivables) owing to the Company or any Restricted Subsidiary if created
or acquired in the ordinary course of business and payable or dischargeable in
accordance with customary trade terms; (v) payroll, travel and similar advances
to cover matters that are expected at the time of such advances ultimately to be
treated as expenses for accounting purposes and that are made in the ordinary
course of business; (vi) loans or advances to employees made in the ordinary
course of business of the Company or such Restricted Subsidiary; (vii) stock,
obligations or securities received in settlement of debts created in the
ordinary course of business and owing to the Company or any Restricted
Subsidiary or in satisfaction of judgments; (viii) any Person to the extent such
Investment represents the non-cash portion of the consideration received for an
Asset Disposition as permitted pursuant to Section 4.08; (ix) Receivables; (x)
Interest Rate Agreements and Currency Agreements; (xi) Retained Interest
Receivables; (xii) loans to third parties for the origination of Receivables in
the ordinary course of business and any warrants, Capital Stock or other
consideration received in connection therewith; (xiii) capital contributions to
Foreign Subsidiaries not to exceed 10% of the Company's consolidated
stockholder's equity at the time of such contributions; (xiv) Capital Stock of
or in the form of a transfer of Receivables to a Qualifying Securitization
Subsidiary pursuant to a securitization of such Receivables; and (xv)
Investments (other than Investments permitted pursuant to clauses (i) - (xiv)
above) by the Company and the Restricted Subsidiaries in an aggregate amount not
to exceed $7.5 million.
"Permitted Liens" means, with respect to any Person, (a)
pledges or deposits by such Person under worker's compensation laws,
unemployment insurance laws or similar legislation, or good faith deposits in
connection with bids, tenders, contracts (other than for the payment of
Indebtedness) or leases to which such Person is a party, or deposits or Liens to
secure public or statutory obligations of such Person or deposits of cash or
United States government bonds or Liens to secure surety, performance, appeal or
other bonds with respect to such Person, or deposits as security for contested
taxes or import duties or for the payment of rent, in each case Incurred in the
ordinary course of business; (b) Liens imposed by law, such as carriers',
warehousemen's and mechanics' Liens, in each case for sums not yet due or being
contested in good faith by appropriate proceedings or Liens arising out of
judgments or awards against such Person with respect to which such person shall
then be proceeding with an appeal or other proceedings for review; (c) Liens for
<PAGE> 23
-14-
taxes, assessments or other governmental charges not yet subject to penalties
for nonpayment or which are being contested in good faith and by appropriate
proceedings; (d) Liens in favor of issuers of surety bonds or letters of credit
issued pursuant to the request of and for the account of such Person in the
ordinary course of its business; provided, however, that such letters of credit
do not constitute Indebtedness; (e) minor survey exceptions, minor encumbrances,
easements or reservations of, or rights of others for, licenses, rights of way,
sewers, electric lines, telegraph and telephone lines and other similar
purposes, or zoning or other restrictions as to the use of real property; or
Liens incidental to the conduct of the business of such Person or to the
ownership of its properties which were not Incurred in connection with
Indebtedness and which do not in the aggregate materially adversely affect the
value of said properties or materially impair their use in the operation of the
business of such Person; (f) Liens securing Indebtedness Incurred to finance or
refinance the construction, purchase or lease of, or repairs, improvements or
additions to, property of such Person (but excluding Capital Stock of another
Person); provided, however, that the Lien may not extend to any other Property
owned by such Person or any of its Subsidiaries at the time the Lien is
Incurred, and the Indebtedness secured by the Lien may not be Incurred more than
180 days after the later of the acquisition, completion of construction, repair,
improvement, addition or commencement of full operation of the Property subject
to the Lien; (g) Liens to secure Indebtedness permitted under the provisions
described in clause (b) (1) or (b) (4) (to the extent refinancing Indebtedness
incurred pursuant to clause (b) (1)) under Section 4.06; (h) Liens on Retained
Interest Receivables (or on the Capital Stock of any Person substantially all
the assets of which are Retained Interest Receivables); provided, however, that,
for so long as the Notes do not have an Investment Grade Rating, the Company and
its Restricted Subsidiaries shall have satisfied each of the following before
incurring any Lien on Eligible Retained Interest Receivables pursuant to this
clause (h): (A) there shall be Eligible Retained Interest Receivables at least
equal to 150% of the principal amount then outstanding of unsecured Senior
Indebtedness of the Company and its Restricted Subsidiaries falling within
clause (B) of the definition of "Senior Indebtedness"; and (B) the principal
amount of any Indebtedness secured by any such Liens incurred pursuant to this
clause (h) on any Eligible Retained Interest Receivables shall be limited, in
the aggregate, to Eligible Retained Interest Receivables representing no more
than 75% of the amount of Eligible Retained Interest Receivables in excess of
the limitation described in (A) as shown on the balance sheet of the Company and
its consolidated Restricted Subsidiaries, determined on a consolidated basis in
accordance with GAAP after giving pro forma effect to the incurrence of such
Lien, as of the end of the most recent fiscal quarter of the Company prior to
the date on which such Lien is first incurred for which financial statements are
available; provided, further, however, that a Lien on Eligible Retained Interest
Receivables securing Indebtedness that is a Permitted Lien at the time such
Indebtedness is first incurred shall continue to constitute a Permitted Lien,
notwithstanding any reduction in value of such Eligible Retained Interest
Receivables (as a result of their revaluation, any
<PAGE> 24
-15-
adverse change with respect to the underlying "pool" of Receivables or
otherwise); (i) Liens existing on the Issue Date; (j) Liens on Property or
shares of Capital Stock of another Person at the time such other Person becomes
a Subsidiary of such Person; provided, however, that such Liens are not created,
incurred or assumed in connection with, or in contemplation of, such other
Person becoming such a Subsidiary; provided further, however, that such Lien may
not extend to any other Property owned by such Person or any of its
Subsidiaries; (k) Liens on Property at the time such Person or any of its
Subsidiaries acquires the Property, including any acquisition by means of a
merger or consolidation with or into such Person or a Subsidiary of such Person;
provided, however, that such Liens are not created, incurred or assumed in
connection with, or in contemplation of, such acquisition; provided, further,
however, that the Liens may not extend to any other Property owned by such
Person or any of its Subsidiaries; (l) Liens securing Indebtedness or other
obligations of a Subsidiary of such Person owing to such Person or a Restricted
Subsidiary of such Person; (m) Liens securing Hedging Obligations so long as
such Hedging Obligations relate to Indebtedness that is, and is permitted under
the Indenture to be, secured by a Lien on the same property securing such
Hedging Obligations; (n) Liens on property of a Special Purpose Subsidiary
otherwise in compliance with clause (h) above; (o) Liens to secure any
Refinancing (or successive Refinancings) as a whole, or in part, of any
Indebtedness secured by any Lien referred to in the foregoing clauses (f), (h),
(i), (j) and (k); provided, however, that (x) such new Lien shall be limited to
all or part of the same Property that secured the original Lien (plus
improvements to or on such Property) and (y) the Indebtedness secured by such
Lien at such time is not increased to any amount greater than the sum of (A) the
outstanding principal amount or, if greater, committed amount of the
Indebtedness described under clauses (f), (h), (i), (j) or (k), as the case may
be, at the time the original Lien became a Permitted Lien and (B) an amount
necessary to pay any fees and expenses, including premiums, related to such
refinancing, refunding, extension renewal or replacement; (p) any Lien in the
form of "over-collateralization" of the senior securities issued in, or
subordination of or recourse to all or a portion of Retained Interest
Receivables of the Company or any Subsidiary attributable to, a securitization
of Receivables (or similar arrangements), in each case to the extent reflected
in the book value of such Retained Interest Receivables, which Lien is in favor
of the holders of other securities issued by the trust or other Person relating
to such securitization; (q) judgment and attachment Liens not giving rise to an
Event of Default; (r) Liens in favor of the Company or any Restricted
Subsidiary; (s) a Lien on the Intercompany Note in favor of the Trustee for the
benefit of holders of the Notes; (t) Liens securing Indebtedness otherwise
permitted to be incurred on any note provided by a Foreign Subsidiary to the
Company or any Domestic Subsidiary initially evidencing loans made by the
Company or such Domestic Subsidiary out of the proceeds of such Indebtedness;
(u) Liens securing Indebtedness of the Company or a Restricted Subsidiary owed
to and held by the Company or a Restricted Subsidiary (i) pledged to a third
party and (ii) secured by Retained Interest Receivables, provided that the
Company is in compli-
<PAGE> 25
-16-
ance with clause (h) above. Notwithstanding the foregoing, "Permitted Liens"
will not include any Lien described in clauses (f), (j) or (k) above to the
extent such Lien applies to any Additional Assets acquired directly or
indirectly from Net Available Cash pursuant to Section 4.08.
"Permitted Warehouse Indebtedness" means Warehouse
Indebtedness in connection with a Warehouse Facility; provided, however, that
(i) the assets as to which such Warehouse Indebtedness relates are or, prior to
any funding under the related Warehouse Facility with respect to such assets,
were eligible to be recorded as held for sale on the consolidated balance sheet
of the Company in accordance with GAAP, (ii) such Warehouse Indebtedness will be
deemed to be Permitted Warehouse Indebtedness (a) in the case of a Purchase
Facility, only to the extent the holder of such Warehouse Indebtedness has no
contractual recourse to the Company and its Restricted Subsidiaries to satisfy
claims in respect of such Permitted Warehouse Indebtedness in excess of 20% of
the advances made thereunder, and (b) in the case of any other Warehouse
Facility, only to the extent of the lesser of (A) the amount advanced by the
lender with respect to the Receivables financed under such Warehouse Facility,
and (B) 105% of the principal amount of such Receivables and (iii) any such
Indebtedness has not been outstanding in excess of 364 days.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, limited liability company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.
"Physical Notes" means certificated Notes in registered form
in substantially the form set forth in Exhibit A.
"Pledge Agreement" means the Pledge Agreement dated the Issue
Date among the Company, the Collateral Agent and the Trustee in substantially
the form attached as Exhibit H as the same may be amended, supplemented,
restated or modified from time to time.
"Preferred Stock" as applied to the Capital Stock of any
Person, means Capital Stock of any class or classes (however designated) which
is preferred as to the payment of dividends, or as to the distribution of assets
upon any voluntary or involuntary liquidation or dissolution of such Person,
over shares of Capital Stock of any other class of such corporation.
"principal" of a Note means the principal of the Note plus the
premium, if any, payable on the Note which is due or overdue or is to become due
at the relevant time.
<PAGE> 26
-17-
"Private Exchange" has the meaning set forth in the
Registration Rights Agreement.
"Private Exchange Notes" has the meaning set forth in the
Registration Rights Agreement.
"Private Placement Legend" means the legend initially set
forth on the Rule 144A Notes in the form set forth in Exhibit B.
"Property" of any Person means all types of real, personal,
tangible, intangible or mixed property owned by such Person whether or not
included in the most recent consolidated balance sheet of such Person and its
Subsidiaries under GAAP.
"Public Equity Offering" means an underwritten primary public
offering of Common Stock of the Company pursuant to an effective registration
statement under the Securities Act other than any such public offering occurring
substantially concurrently with the issuance of the Notes.
"Purchase Agreement" means the Securities Purchase Agreement
dated as of May 9, 1997 by and among the Company, the Subsidiary Guarantor and
the Initial Purchasers.
"Purchase Facility" means any Warehouse Facility in the form
of a purchase and sale facility pursuant to which the Company or a Restricted
Subsidiary sells Receivables to a financial institution and retains a right of
first refusal upon the subsequent resale of such Receivables by such financial
institution.
"Purchase Money Indebtedness" means any Indebtedness incurred
by a Person to finance or refinance the cost of the construction or purchase of,
or repairs, improvements or additions to, an item of Property, the principal
amount of which Indebtedness does not exceed the sum of (i) 100% of such cost
and (ii) reasonable fees and expenses of such Person incurred in connection
therewith.
"Qualified Institutional Buyer" or "QIB" shall have the
meaning specified in Rule 144A promulgated under the Securities Act.
"Qualifying Securitization Subsidiary" means any Subsidiary of
the Company that (i) does not engage in, and whose charter prohibits it from
engaging in, any activities other than a securitization of Receivables which
have been sold or otherwise transferred to such Subsidiary by the Company or
another Subsidiary in a transaction that constitutes a "true sale" under GAAP,
(ii) constitutes a "special purpose vehicle" under rating agency guidelines, and
(iii) does not have any Indebtedness other than Non-Recourse Indebtedness.
<PAGE> 27
-18-
"Receivables" means consumer and commercial loans, leases and
receivables purchased or originated by the Company or any Restricted Subsidiary;
provided, however, that for purposes of determining the amount of a Receivable
at any time, such amount shall be determined in accordance with GAAP,
consistently applied, as of the most recent practicable date.
"Redemption Date" when used with respect to any Note to be
redeemed means the date fixed for such redemption pursuant to the terms of the
Notes.
"Refinance" means, in respect of any Indebtedness, to
refinance, extend, renew, refund, repay, prepay, redeem, defease or retire, or
to issue other Indebtedness in exchange or replacement for, such Indebtedness.
"Refinanced" and "Refinancing" shall have correlative meanings.
"Refinancing Indebtedness" means Indebtedness that Refinances
any Indebtedness of the Company or any Restricted Subsidiary existing on the
Issue Date or Incurred in compliance with this Indenture, including Indebtedness
that Refinances Refinancing Indebtedness; provided, however, that (i) such
Refinancing Indebtedness has a Stated Maturity no earlier than the Stated
Maturity of the Indebtedness being Refinanced, (ii) such Refinancing
Indebtedness has an Average Life at the time such Refinancing Indebtedness is
Incurred that is equal to or greater than the Average Life of the Indebtedness
being Refinanced and (iii) such Refinancing Indebtedness has an aggregate
principal amount (or if Incurred with original issue discount, an aggregate
issue price) that is equal to or less than the aggregate principal amount (or if
Incurred with original issue discount, the aggregate accreted value) then
outstanding or committed (plus fees and expenses, including any premium and
defeasance costs) under the Indebtedness being Refinanced; provided, further,
however, that Refinancing Indebtedness shall not include (x) Indebtedness of a
Subsidiary that Refinances Indebtedness of the Company or another Subsidiary or
(y) Indebtedness of the Company or a Restricted Subsidiary that Refinances
Indebtedness of an Unrestricted Subsidiary.
"Registration Rights Agreement" means the Registration Rights
Agreement dated as of the Issue Date among the Company, the Subsidiary Guarantor
and the Initial Purchasers, as amended from time to time.
"Regulation S" means Regulation S promulgated under the
Securities Act.
"Related Business" means any consumer or commercial finance
business or any financial service business relating thereto, including, without
limitation, businesses of the Company in existence as of the Issue Date.
<PAGE> 28
-19-
"Related Party" with respect to any Person means (i) any
spouse, sibling, parent or lineal descendant of such Person or any spouse of
such sibling or lineal descendant or (ii) any trust, corporation, partnership or
other entity that is controlled by Persons referred to in clause (i).
"Responsible Officer", when used with respect to the Trustee,
means an officer or assistant officer assigned to the corporate trust department
of the Trustee (or any successor group of the Trustee) with direct
responsibility for the administration of this Indenture and also means, with
respect to a particular corporate trust matter, any other officer to whom such
matter is referred because of his knowledge of and familiarity with the
particular subject.
"Restricted Note" has the same meaning as "Restricted
Security" set forth in Rule 144(a)(3) promulgated under the Securities Act;
provided, that the Trustee shall be entitled to request and conclusively rely
upon an Opinion of Counsel with respect to whether any Note is a Restricted
Note.
"Restricted Payment" with respect to any Person means (i) the
declaration or payment of any dividends or any other distributions of any sort
in respect of its Capital Stock (including any payment in connection with any
merger or consolidation involving such Person) (other than (A) dividends or
distributions payable solely in its Capital Stock (other than Disqualified
Stock), (B) dividends or distributions payable solely to the Company or a
Restricted Subsidiary and (C) pro rata dividends or other distributions made by
a Subsidiary that is not a Wholly Owned Subsidiary to minority stockholders (or
owners of an equivalent interest in the case of a Subsidiary that is an entity
other than a corporation)), (ii) the purchase, redemption or other acquisition
or retirement for value of any Capital Stock of the Company held by any Person
or of any Capital Stock of a Restricted Subsidiary (other than Capital Stock
owned by the Company or a Wholly Owned Subsidiary, excluding Disqualified Stock)
held by any Affiliate of the Company, including the exercise of any option to
exchange any Capital Stock (other than into Capital Stock of the Company that is
not Disqualified Stock), (iii) the purchase, repurchase, redemption, defeasance
or other acquisition or retirement for value, prior to scheduled maturity,
scheduled repayment or scheduled sinking fund payment of any Subordinated
Obligations (other than the purchase, repurchase or other acquisition of
Subordinated Obligations purchased in anticipation of satisfying a sinking fund
obligation, principal installment or final maturity, in each case due within one
year of the date of acquisition), (iv) the making of any Investment (other than
a Permitted Investment) in any Person or (v) the forgiveness of any Indebtedness
of an Affiliate of the Company to the Company or a Restricted Subsidiary.
"Restricted Subsidiary" means any Subsidiary of the Company
that is not an Unrestricted Subsidiary.
<PAGE> 29
-20-
"Retained Interest" means, over the life of a "pool" of
Receivables that have been sold or otherwise transferred by a Person to a trust
or other Person in a securitization or sale, the direct or indirect rights
retained by such Person or its Restricted Subsidiaries at or subsequent to the
closing of such securitization or sale with respect to such "pool", including
any rights to receive cash flows attributable to such pool and retained by such
Person, whether such rights are contractual, by virtue of such Person being a
holder of Capital Stock of such trust or other Person or otherwise.
"Retained Interest Receivables" of a Person means the direct
or indirect right to Retained Interest capitalized on such Person's or any of
its Restricted Subsidiaries' consolidated balance sheet (the amount of which
shall be determined in accordance with GAAP), including, without limitation,
subordinated and interest-only certificates and any such rights as a holder of
Capital Stock of a trust or other Person to which a "pool" of Receivables has
been sold or otherwise transferred in a securitization or sale.
"Rule 144" means Rule 144 promulgated under the Securities
Act.
"Rule 144A" means Rule 144A promulgated under the Securities
Act.
"S&P" means Standard & Poor's Ratings Services, a division of
The McGraw-Hill Companies, Inc., and its successors.
"SEC" means the United States Securities and Exchange
Commission as constituted from time to time or any successor performing
substantially the same functions.
"Securities Act" means the Securities Act of 1933, as amended.
"Securitization Trust" means any Person (whether or not a
Subsidiary of the Company) established exclusively for the purpose of issuing
securities in connection with any securitization, the obligations of which are
without recourse to the Company or any of the Subsidiary Guarantors (including,
without limitation, any Special Purpose Subsidiary of the Company), provided
that such Person is not an obligor with respect to any Indebtedness of the
Company or any Subsidiary Guarantor.
"Senior Indebtedness" means the principal of, premium and
accrued and unpaid interest (including interest accruing on or after the filing
of any petition in bankruptcy or for reorganization relating to the Company to
the extent post-filing interest is allowed in such proceeding) in respect of (A)
indebtedness of such Person for money borrowed and (B) indebtedness evidenced by
notes, debentures, bonds or other similar instruments for the payment of which
such Person is responsible or liable unless, in the case of either clause (A) or
(B), in the instrument creating or evidencing the same or pursuant to which the
same
<PAGE> 30
-21-
is outstanding, it is provided that such obligations are subordinate in right of
payment to the Notes; provided, however that Senior Indebtedness shall not
include (1) any obligation of such Person to any Subsidiary of such Person, (2)
any liability for Federal, state, local or other taxes owed or owing by such
Person, (3) any accounts payable or other liability to trade creditors arising
in the ordinary course of business (including guarantees thereof or instruments
evidencing such liabilities), (4) any obligation in respect of Capital Stock of
such Person or (5) that portion of any Indebtedness which at the time of
Incurrence is Incurred in violation of this Indenture.
"Significant Subsidiary" means any Restricted Subsidiary that,
individually or if merged with all other Defaulting Subsidiaries, would be a
"Significant Subsidiary" of the Company within the meaning of Rule 1-02 under
Regulation S-X promulgated by the SEC.
"Special Purpose Subsidiary" means (i) a Restricted Subsidiary
formed in connection with a securitization (i) all the Capital Stock of which
(other than directors' qualifying shares) is owned by the Company or one or more
Restricted Subsidiaries, (ii) that has no assets other than Retained Interest
Receivables created in such securitization and (iii) that conducts no business
other than holding such Retained Interest Receivables or (ii) that is a
Qualifying Securitization Subsidiary.
"Stated Maturity" means, with respect to any security, the
date specified in such security as the fixed date on which the final payment of
principal of such security is due and payable, including pursuant to any
mandatory redemption provision (but excluding any provision providing for the
repurchase of such security at the option of the holders thereof upon the
happening of any contingency unless such contingency has occurred).
"Subordinated Obligation" means any Indebtedness of the
Company (whether outstanding on the Issue Date or thereafter Incurred) which is,
by its terms pursuant to a written agreement, subordinate or junior in right of
payment to the Notes to that effect.
"Subsidiary" means, in respect of any Person, any corporation,
association, partnership or other business entity of which more than 50% of the
total voting power of shares of Capital Stock or other interests (including
partnership interests) entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof
is at the time owned or controlled, directly or indirectly, by (i) such Person,
(ii) such Person and one or more Subsidiaries of such Person or (iii) one or
more Subsidiaries of such Person.
"Subsidiary Guarantees" means each Guarantee given by the
Subsidiary Guarantors in accordance with this Indenture.
<PAGE> 31
-22-
"Subsidiary Guarantor" means a domestic Restricted Subsidiary
of the Company that is or becomes a Subsidiary Guarantor in accordance with this
Indenture.
"Temporary Cash Investments" means any of the following: (i)
any investment in direct obligations of the United States of America or any
agency thereof or obligations guaranteed by the United States of America or any
agency thereof, (ii) investments in time deposit accounts, certificates of
deposit and money market deposits maturing within 180 days of the date of
acquisition thereof issued by a bank or trust company that is not an Affiliate
of the Company and which is organized under the laws of the United States of
America, any state thereof or any foreign country recognized by the United
States, and which bank or trust company has capital, surplus and undivided
profits aggregating in excess of $50,000,000 (or the foreign currency equivalent
thereof) and has outstanding debt which is rated "A" (or such similar equivalent
rating) or higher by at least one nationally recognized statistical rating
organization (as defined in Rule 436 under the Securities Act) or any
money-market fund sponsored by a registered broker dealer or mutual fund
distributor, (iii) repurchase obligations with a term of not more than 30 days
for underlying securities of the types described in clause (i) above entered
into with a bank meeting the qualifications described in clause (ii) above, (iv)
investments in commercial paper, maturing not more than 180 days after the date
of acquisition, issued by a corporation (other than an Affiliate of the Company)
organized and in existence under the laws of the United States of America or any
foreign country recognized by the United States of America with a rating at the
time as of which any investment therein is made of "P-1" (or higher) according
to Moody's or "A-l" (or higher) according to S&P, and (v) investments in
securities with maturities of six months or less from the date of acquisition
issued or fully guaranteed by any state, commonwealth or territory of the United
States of America, or by any political subdivision or taxing authority thereof,
and rated as least "A" by S&P or "A" by Moody's.
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code
Section 77aaa-77bbbb) as in effect on the date of this Indenture (except
as provided in Section 8.03 hereof).
"Trustee" means the party named as such in this Indenture
until a successor replaces it pursuant to this Indenture and thereafter means
the successor.
"U.K. Subsidiary" means a Restricted Subsidiary that is
incorporated in the United Kingdom and 80% of the sales, earnings or assets of
which are located in, generated from or derive from operations located in the
United Kingdom.
"Unrestricted Subsidiary" means (i) any Subsidiary of the
Company that at the time of determination shall be designated an Unrestricted
Subsidiary by the Board of Directors of the Company in the manner provided below
and (ii) any Subsidiary of an Un-
<PAGE> 32
-23-
restricted Subsidiary. The Board of Directors of the Company may designate any
Subsidiary of the Company (including any newly acquired or newly formed
Subsidiary) to be an Unrestricted Subsidiary unless such Subsidiary or any of
its Subsidiaries owns any Capital Stock or Indebtedness of, or holds any Lien on
any property of, the Company or any other Subsidiary of the Company that is not
a Subsidiary of the Subsidiary to be so designated; provided, however, that
either (A) the Subsidiary to be so designated has total assets of $1,000 or less
or (B) if such Subsidiary has assets greater than $1,000, such designation would
be permitted under Section 4.07. The Board of Directors of the Company may
designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided,
however, that immediately after giving effect to such designation (x) the
Company could incur $1.00 of additional Indebtedness under paragraph (a) of
Section 4.06 and (y) no Default shall have occurred and be continuing. Any such
designation by the Board of Directors of the Company shall be evidenced by the
Company to the Trustee by promptly filing with the Trustee a copy of the board
resolution giving effect to such designation and an Officers' Certificate
certifying that such designation complied with the foregoing provisions.
"U.S. Government Obligations" means direct obligations (or
certificates representing an ownership interest in such obligations) of the
United States of America (including any agency or instrumentality thereof) for
the payment of which the full faith and credit of the United States of America
is pledged and which are not callable at the issuer's option.
"Voting Stock" of a Person means all classes of Capital Stock
or other interests (including partnership interests) of such Person then
outstanding and normally entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof.
"Warehouse Facility" means any funding arrangement with a
financial institution or other lender or purchaser to the extent such agreement
is to finance the purchase or origination of Receivables by the Company or a
Subsidiary of the Company, or the making of loans to a Person for the purpose of
financing the purchase or origination by such Person of consumer or commercial
loans, leases or receivables for resale or sale to the Company or any Subsidiary
of the Company, and in each case for the purpose of pooling such Receivables
prior to securitization or sale in the ordinary course of business, including
purchase and sale facilities pursuant to which the Company or a Subsidiary of
the Company sells Receivables to a financial institution and retains a right of
first refusal upon the subsequent resale of such Receivables by such financial
institution.
"Warehouse Indebtedness" means the consideration received by
the Company or its Restricted Subsidiaries under a Warehouse Facility with
respect to Receivables until such time as such Receivables are (i) securitized,
(ii) repurchased by the Company or its
<PAGE> 33
-24-
Restricted Subsidiaries or (iii) sold by the counterparty under the Warehouse
Facility to a Person who is not an Affiliate of the Company.
"Wholly Owned Subsidiary" means a Restricted Subsidiary all
the Capital Stock of which (other than directors' qualifying shares and shares
held by other Persons to the extent such shares are required by applicable law
to be held by a Person other than the Company or a Restricted Subsidiary) is
owned by the Company or one or more Wholly Owned Subsidiaries.
Section 1.02. Other Definitions.
The definitions of the following terms may be found in the
sections indicated as follows:
<TABLE>
<CAPTION>
Term Defined in Section
---- ------------------
<S> <C>
"Affiliate Transaction".......................................... 4.09
"Agent Members".................................................. 2.16(a)
"Bankruptcy Law"................................................. 6.01(b)
"Business Day"................................................... 12.07
"Cedel".......................................................... 2.16(a)
"Change of Control Offer"........................................ 4.15(a)
"Change of Control Payment Date"................................. 4.15(b)(3)
"Covenant Defeasance"............................................ 9.03
"Custodian"...................................................... 6.01(b)
"Euroclear"...................................................... 2.16(a)
"Event of Default"............................................... 6.01(a)
"Excess Proceeds Offer".......................................... 4.08(b)
"Global Notes"................................................... 2.16(a)
"Legal Defeasance"............................................... 9.02
"Legal Holiday".................................................. 12.07
"Offer Period"................................................... 4.08(d)
"Other Notes".................................................... 2.02
"Paying Agent"................................................... 2.04
"Purchase Date".................................................. 4.08(d)
"Registrar"...................................................... 2.04
"Regulation S Global Notes"...................................... 2.16(a)
"Regulation S Notes"............................................. 2.02
"Reinvestment Date".............................................. 4.08(a)
"Restricted Global Note"......................................... 2.16(a)
"Rule 144A Notes"................................................ 2.02
</TABLE>
<PAGE> 34
-25-
Section 1.03. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the
portion of such provision required to be incorporated herein in order for this
Indenture to be qualified under the TIA is incorporated by reference in and made
a part of this Indenture. The following TIA terms used in this Indenture have
the following meanings:
"Commission" means the SEC.
"indenture securities" means the Notes.
"indenture securityholder" means a Holder or Noteholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the
Trustee.
"obligor on the indenture securities" means the Company, the
Guarantors or any other obligor on the Notes.
All other terms used in this Indenture that are defined by the
TIA, defined in the TIA by reference to another statute or defined by SEC rule
have the meanings therein assigned to them.
Section 1.04. Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it herein, whether
defined expressly or by reference;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the
plural include the singular;
(5) words used herein implying any gender shall apply to both
genders; and
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(6) whenever in this Indenture there is mentioned, in any
context, Principal, interest or any other amount payable under or with
respect to any Note, such mention shall be deemed to include mention of
the payment of Additional Interest to the extent that, in such context,
Additional Interest is, was or would be payable in respect thereof.
ARTICLE 2
THE NOTES
Section 2.01. Amount of Notes.
The Trustee shall, upon receipt of a Company Request,
authenticate Notes for original issue on the Issue Date in the aggregate
principal amount of $300,000,000. Each such written order shall specify the
amount of Notes to be authenticated, the date on which the Notes are to be
authenticated and the title of the Notes of the series (which shall distinguish
the Notes of the series from Notes of any other series). All Notes issued on the
Issue Date shall be identical in all respects other than issue dates and the
date from which interest accrues and except as provided in this Section 2.01.
The aggregate principal amount of Notes outstanding at any time may not exceed
$300,000,000 except as provided in Section 2.08.
Upon receipt of a Company Request and an Officers' Certificate
certifying that a registration statement relating to an exchange offer specified
in the Registration Rights Agreement is effective and that the conditions
precedent to a Private Exchange thereunder have been met, the Trustee shall
authenticate an additional series of Notes in an aggregate principal amount not
to exceed $300,000,000 for issuance in exchange for the Notes tendered for
exchange pursuant to such exchange offer registered under the Securities Act or
pursuant to a Private Exchange. Exchange Notes or Private Exchange Notes may
have such distinctive series designations and such changes in the form thereof
as are specified in the Company Request.
Section 2.02. Form.
The Notes and the Trustee's certificate of authentication with
respect thereto shall be substantially in the form set forth in Exhibit A, which
is incorporated in and forms a part of this Indenture. The Notes may have
notations, legends or endorsements required by law, rule, usage or agreements to
which the Company is subject. Without limiting the generality of the foregoing,
Notes offered and sold to Qualified Institutional Buyers in reli-
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ance on Rule 144A ("Rule 144A Notes") shall bear the legend and include the form
of assignment set forth in Exhibit B, Notes offered and sold in offshore
transactions in reliance on Regulation S ("Regulation S Notes") shall bear the
legend and include the form of assignment set forth in Exhibit C, and Notes
offered and sold to Institutional Accredited Investors in transactions exempt
from registration under the Securities Act not made in reliance on Rule 144A or
Regulation S ("Other Notes") may be represented by the Restricted Global Note
or, if such an investor may not hold an interest in the Restricted Global Note,
a Physical Note bearing the Private Placement Legend. Each Note shall be dated
the date of its authentication.
The terms and provisions contained in the Notes shall
constitute, and are expressly made, a part of this Indenture and, to the extent
applicable, the Company, the Subsidiary Guarantors and the Trustee, by their
execution and delivery of this Indenture, expressly agree to such terms and
provisions and agree to be bound thereby.
The Notes may be presented for registration of transfer and
exchange at the offices of the Registrar.
Section 2.03. Execution and Authentication.
Two Officers shall sign, or one Officer shall sign and one
Officer (each of whom shall, in each case, have been duly authorized by all
requisite corporate actions) shall attest to, the Notes for the Company by
manual or facsimile signature.
If an Officer whose signature is on a Note was an Officer at
the time of such execution but no longer holds that office at the time the
Trustee authenticates the Note, the Note shall be nevertheless valid.
No Note shall be entitled to any benefit under this Indenture
or be valid or obligatory for any purpose unless there appears on such Note a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by manual signature, and such certificate upon any Note
shall be conclusive evidence, and the only evidence, that such Note has been
duly authenticated and delivered hereunder. Notwithstanding the foregoing, if
any Note shall have been authenticated and delivered hereunder but never issued
and sold by the Company, and the Company shall deliver such Note to the Trustee
for cancellation as provided in Section 2.12 and for all purposes of this
Indenture such Note shall be deemed never to have been authenticated and
delivered hereunder and shall not be entitled to the benefits of this Indenture.
The Trustee may appoint an authenticating agent reasonably
acceptable to the Company to authenticate the Notes. Unless otherwise provided
in the appointment, an
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authenticating agent may authenticate the Notes whenever the Trustee may do so.
Each reference in this Indenture to authentication by the Trustee includes
authentication by such agent. An authenticating agent has the same rights as an
Agent to deal with the Company and Affiliates of the Company. Each Paying Agent
is designated as an authenticating agent for purposes of this Indenture.
The Notes shall be issuable only in registered form without
coupons in denominations of $1,000 and any integral multiple thereof. The Notes
shall be dated the date of their authentication.
Section 2.04. Registrar and Paying Agent.
The Company shall maintain an office or agency (which shall be
located in the Borough of Manhattan in The City of New York, State of New York)
where Notes may be presented for registration of transfer or for exchange (the
"Registrar"), and an office or agency where Notes may be presented for payment
(the "Paying Agent") and an office or agency where notices and demands to or
upon the Company, if any, in respect of the Notes and this Indenture may be
served. The Registrar shall keep a register of the Notes and of their transfer
and exchange. The Company may have one or more additional Paying Agents. The
term "Paying Agent" includes any additional Paying Agent. The Company or any of
its domestic Subsidiaries may act as Paying Agent or Registrar.
The Company shall enter into an appropriate agency agreement
with any Agent not a party to this Indenture, which shall incorporate the
provisions of the TIA. The agreement shall implement the provisions of this
Indenture that relate to such Agent. The Company shall notify the Trustee of the
name and address of any such Agent. If the Company fails to maintain a Registrar
or Paying Agent, or fails to give the foregoing notice, the Trustee shall act as
such and shall be entitled to appropriate compensation in accordance with
Section 7.07.
The Company initially appoints the Trustee as Registrar,
Paying Agent and agent for service of notices and demands in connection with the
Notes and this Indenture.
Section 2.05. Paying Agent To Hold Money in Trust.
Each Paying Agent shall hold in trust for the benefit of the
Noteholders or the Trustee all money held by the Paying Agent for the payment of
principal of or premium or interest on the Notes (whether such money has been
paid to it by the Company or any other obligor on the Notes or the Subsidiary
Guarantors), and the Company and the Paying Agent shall notify the Trustee of
any default by the Company (or any other obligor on the Notes) in making any
such payment. Money held in trust by the Paying Agent need not be
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segregated except as required by law and in no event shall the Paying Agent be
liable for any interest on any money received by it hereunder. The Company at
any time may require the Paying Agent to pay all money held by it to the Trustee
and account for any funds disbursed and the Trustee may at any time during the
continuance of any Event of Default specified in Section 6.01(a)(i) or (a)(ii),
upon written request to the Paying Agent, require such Paying Agent to pay
forthwith all money so held by it to the Trustee and to account for any funds
disbursed. Upon making such payment, the Paying Agent shall have no further
liability for the money delivered to the Trustee.
Section 2.06. Noteholder Lists.
The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of the names and
addresses of the Noteholders. If the Trustee is not the Registrar, the Company
shall furnish to the Trustee at least five Business Days before each Interest
Payment Date, and at such other times as the Trustee may request in writing, a
list in such form and as of such date as the Trustee may reasonably require of
the names and addresses of the Noteholders.
Section 2.07. Transfer and Exchange.
Subject to Sections 2.16 and 2.17, when Notes are presented to
the Registrar with a request from the Holder of such Notes to register a
transfer or to exchange them for an equal principal amount of Notes of other
authorized denominations, the Registrar shall register the transfer as
requested. Every Note presented or surrendered for registration of transfer or
exchange shall be duly endorsed or be accompanied by a written instrument of
transfer in form satisfactory to the Company and the Registrar, duly executed by
the Holder thereof or his attorneys duly authorized in writing. To permit
registrations of transfers and exchanges, the Company shall issue and execute
and the Trustee shall authenticate new Notes (and the Subsidiary Guarantors
shall execute the guarantee thereon) evidencing such transfer or exchange at the
Registrar's request. No service charge shall be made to the Noteholder for any
registration of transfer or exchange. The Company may require from the
Noteholder payment of a sum sufficient to cover any transfer taxes or other
governmental charge that may be imposed in relation to a transfer or exchange,
but this provision shall not apply to any exchange pursuant to Section 2.11,
3.06, 4.08, 4.15 or 8.05 (in which events the Company shall be responsible for
the payment of such taxes). The Registrar shall not be required to exchange or
register a transfer of any Note for a period of 15 days immediately preceding
the mailing of notice of redemption of Notes to be redeemed or of any Note
selected, called or being called for redemption except the unredeemed portion of
any Note being redeemed in part.
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Any Holder of the Global Note shall, by acceptance of such
Global Note, agree that transfers of the beneficial interests in such Global
Note may be effected only through a book entry system maintained by the Holder
of such Global Note (or its agent), and that ownership of a beneficial interest
in the Global Note shall be required to be reflected in a book entry.
Section 2.08. Replacement Notes.
If a mutilated Note is surrendered to the Registrar or the
Trustee, or if the Holder of a Note claims that the Note has been lost,
destroyed or wrongfully taken, the Company shall issue and the Trustee shall
authenticate a replacement Note (and the Subsidiary Guarantors shall execute the
guarantee thereon) if the Holder of such Note furnishes to the Company and the
Trustee evidence reasonably acceptable to them of the ownership and the
destruction, loss or theft of such Note and if the requirements of Section 8-405
of the New York Uniform Commercial Code as in effect on the date of this
Indenture are met. If required by the Trustee or the Company, an indemnity bond
shall be posted, sufficient in the judgment of both to protect the Company, the
Subsidiary Guarantors, the Trustee or any Paying Agent from any loss that any of
them may suffer if such Note is replaced. The Company may charge such Holder for
the Company's reasonable out-of-pocket expenses in replacing such Note and the
Trustee may charge the Company for the Trustee's expenses (including, without
limitation, attorneys' fees and disbursements) in replacing such Note. Every
replacement Note shall constitute a contractual obligation of the Company and
shall be entitled to all the benefits of this Indenture equally and
proportionately with all other Notes duly issued hereunder.
Section 2.09. Outstanding Notes.
The Notes outstanding at any time are all Notes that have been
authenticated by the Trustee except for (a) those cancelled by it, (b) those
delivered to it for cancellation and (c) those described in this Section 2.09 as
not outstanding. Subject to Section 2.10, a Note does not cease to be
outstanding because the Company or one of its Affiliates holds the Note.
If a Note is replaced pursuant to Section 2.08, it ceases to
be outstanding unless the Company receives proof satisfactory to it that the
replaced Note is held by a bona fide purchaser in whose hands such Note is a
legal, valid and binding obligation of the Company.
If the Paying Agent holds, in its capacity as such, on any
Maturity Date or on any optional redemption date, money sufficient to pay all
accrued interest and principal with respect to the Notes payable on that date
and is not prohibited from paying such
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money to the Holders thereof pursuant to the terms of this Indenture, then on
and after that date such Notes cease to be outstanding and interest on them
ceases to accrue.
Section 2.10. Treasury Notes.
In determining whether the Holders of the required principal
amount of Notes have concurred in any declaration of acceleration or notice of
default or direction, waiver or consent or any amendment, modification or other
change to this Indenture, Notes owned by the Company or any other Affiliate of
the Company shall be disregarded as though they were not outstanding, except
that for the purposes of determining whether the Trustee shall be protected in
relying on any such direction, waiver or consent or any amendment, modification
or other change to this Indenture, only Notes as to which a Responsible Officer
of the Trustee has received an Officers' Certificate stating that such Notes are
so owned shall be so disregarded. Notes so owned which have been pledged in good
faith shall not be disregarded if the pledgee established to the satisfaction of
the Trustee the pledgee's right so to act with respect to the Notes and that the
pledgee is not the Company, a Subsidiary Guarantor, any other obligor on the
Notes or any of their respective Affiliates.
Section 2.11. Temporary Notes.
Until definitive Notes are prepared and ready for delivery,
the Company may prepare and the Trustee shall authenticate temporary Notes.
Temporary Notes shall be substantially in the form of definitive Notes but may
have variations that the Company considers appropriate for temporary Notes.
Without unreasonable delay, the Company shall prepare and the Trustee shall
authenticate definitive Notes in exchange for temporary Notes. Until such
exchange, temporary Notes shall be entitled to the same rights, benefits and
privileges as definitive Notes.
Section 2.12. Cancellation.
The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and the Paying Agent shall forward to the Trustee
any Notes surrendered to them for registration of transfer, exchange or payment.
The Trustee shall cancel all Notes surrendered for registration of transfer,
exchange, payment, replacement or cancellation and shall destroy cancelled Notes
(subject to the record retention requirement of the Exchange Act) and deliver a
certificate of destruction thereof to the Company. The Company may not reissue
or resell, or issue new Notes to replace, Notes that the Company has redeemed or
paid, or that have been delivered to the Trustee for cancellation.
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Section 2.13. Defaulted Interest.
If the Company defaults on a payment of interest on the Notes,
it shall pay the defaulted interest, plus (to the extent permitted by law) any
interest payable on the defaulted interest, in accordance with the terms hereof,
to the Persons who are Noteholders on a subsequent special record date, which
date shall be at least five Business Days prior to the payment date. The Company
shall fix such special record date and payment date in a manner satisfactory to
the Trustee. At least 15 days before such special record date, the Company shall
mail to each Noteholder a notice that states the special record date, the
payment date and the amount of defaulted interest, and interest payable on
defaulted interest, if any, to be paid. The Company may make payment of any
defaulted interest in any other lawful manner not inconsistent with the
requirements (if applicable) of any securities exchange on which the Notes may
be listed and, upon such notice as may be required by such exchange, if, after
written notice given by the Company to the Trustee of the proposed payment
pursuant to this sentence, such manner of payment shall be deemed practicable by
the Trustee.
Section 2.14. CUSIP Number.
The Company in issuing the Notes may use a "CUSIP" or "CINS"
number, and if so, such CUSIP or CINS number shall be included in notices of
redemption or exchange as a convenience to Holders; provided, that any such
notice may state that no representation is made as to the correctness or
accuracy of the CUSIP or CINS number printed in the notice or on the Notes, and
that reliance may be placed only on the other identification numbers printed on
the Notes. The Company shall promptly notify the Trustee of any such CUSIP
number used by the Company in connection with the issuance of the Notes and of
any change in the CUSIP or CINS number.
Section 2.15. Deposit of Moneys.
Prior to 10:00 a.m., New York City time, on the Business Day
prior to each Interest Payment Date and Maturity Date, the Company shall have
deposited with the Paying Agent in immediately available funds money sufficient
to make cash payments, if any, due on such Interest Payment Date or Maturity
Date, as the case may be, in a timely manner which permits the Trustee to remit
payment to the Holders on such Interest Payment Date or Maturity Date, as the
case may be. The principal and interest on Global Notes shall be payable to the
Depository or its nominee, as the case may be, as the sole registered owner and
the sole holder of the Global Notes represented thereby. The principal and
interest on Physical Notes shall be payable at the office of the Paying Agent.
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Section 2.16. Book-Entry Provisions for Global Notes.
(a) Rule 144A Notes and Other Notes which may be held in
global form, other than Regulation S Notes, initially shall be represented by
one or more notes in registered, global form without interest coupons
(collectively, the "Restricted Global Note"). Regulation S Notes initially shall
be represented by one or more notes in registered, global form without interest
coupons (collectively, the "Regulation S Global Note," and, together with the
Restricted Global Note, the "Global Notes"). The Global Notes initially shall
(i) be registered in the name of the Depository or the nominee of such
Depository, in each case for credit to an account of an Agent Member (as defined
below) (or, in the case of the Regulation S Global Notes, of Morgan Guaranty
Trust Company, Brussels Office, as operator of the Euroclear System
("Euroclear") and Cedel Bank, societe anonyme. ("CEDEL")), (ii) be delivered to
the Trustee as custodian for such Depository and (iii) bear legends as set forth
in Exhibit D.
Members of, or direct or indirect participants in, the
Depository ("Agent Members") shall have no rights under this Indenture with
respect to any Global Note held by the Depository, or the Trustee as its
custodian, or under the Global Notes, and the Depository may be treated by the
Company, the Trustee and any agent of the Company or the Trustee as the absolute
owner of the Global Note for all purposes whatsoever. Notwithstanding the
foregoing, nothing herein shall prevent the Company, the Trustee or any agent of
the Company or the Trustee from giving effect to any written certification,
proxy or other authorization furnished by the Depository or impair, as between
the Depository and its Agent Members, the operation of customary practices
governing the exercise of the rights of a Holder of any Note.
(b) Transfers of Global Notes shall be limited to transfer in
whole, but not in part, to the Depository, its successors or their respective
nominees. Interests of beneficial owners in the Global Notes may be transferred
or exchanged for Physical Notes upon receipt by the Trustee of written
instructions from the Depository or its nominee on behalf of any beneficial
owner and in accordance with the rules and procedures of the Depository and the
provisions of Section 2.17. In addition, a Global Note shall be exchangeable for
Physical Notes if (i) the Depository (x) notifies the Company that it is
unwilling or unable to continue as depository for such Global Note and the
Company thereupon fails to appoint a successor depository or (y) has ceased to
be a clearing agency registered under the Exchange Act, (ii) the Company, at its
option, notifies the Trustee in writing that it elects to cause the issuance of
such Physical Notes or (iii) there shall have occurred and be continuing a
Default or an Event of Default with respect to the Notes. In all cases, Physical
Notes delivered in exchange for any Global Note or beneficial interests therein
shall be registered in the names, and issued in any approved denominations,
requested by or on behalf of the Depository (in accordance with its customary
procedures).
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(c) In connection with any transfer or exchange of a portion
of the beneficial interest in any Global Note to beneficial owners pursuant to
paragraph (b), the Registrar shall (if one or more Physical Notes are to be
issued) reflect on its books and records the date and a decrease in the
principal amount of the Global Note in an amount equal to the principal amount
of the beneficial interest in the Global Note to be transferred, and the Company
shall execute, and the Trustee shall upon receipt of a written order from the
Company authenticate and make available for delivery, one or more Physical Notes
of like tenor and amount.
(d) In connection with the transfer of Global Notes as an
entirety to beneficial owners pursuant to paragraph (b), the Global Notes shall
be deemed to be surrendered to the Trustee for cancellation, and the Company
shall execute, and the Trustee shall authenticate and deliver, to each
beneficial owner identified by the Depository in writing in exchange for its
beneficial interest in the Global Notes, an equal aggregate principal amount of
Physical Notes of authorized denominations.
(e) Any Physical Note constituting a Restricted Note delivered
in exchange for an interest in a Global Note pursuant to paragraph (b), (c) or
(d) shall, except as otherwise provided by paragraphs (a)(i)(x) and (c) of
Section 2.17, bear the Private Placement Legend or, in the case of the
Regulation S Global Note, the legend set forth in Exhibit C, in each case,
unless the Company determines otherwise in compliance with applicable law.
(f) On or prior to the 40th day after the later of the
commencement of the offering of the Notes represented by the Regulation S Global
Note and the issue date of such Notes (such period through and including such
40th day, the "Restricted Period"), a beneficial interest in a Regulation S
Global Note may be transferred to a Person who takes delivery in the form of an
interest in the corresponding Restricted Global Note only upon receipt by the
Trustee of a written certification from the transferor to the effect that such
transfer is being made (i)(a) to a Person whom the transferor reasonably
believes is a Qualified Institutional Buyer in a transaction meeting the
requirements of Rule 144A or (b) pursuant to another exemption from the
registration requirements under the Securities Act which is accompanied by an
opinion of counsel regarding the availability of such exemption and (ii) in
accordance with all applicable securities laws of any state of the United States
or any other jurisdiction. After the Restricted Period, no such certifications
shall be required.
(g) Beneficial interests in the Restricted Global Note may be
transferred to a Person who takes delivery in the form of an interest in the
Regulation S Global Note, whether before or after the expiration of the
Restricted Period, only if the transferor first delivers to the Trustee a
written certificate to the effect that such transfer is being made in accordance
with Rule 903 or 904 of Regulation S or Rule 144 (if available) and that, if
such
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transfer occurs prior to the expiration of the Restricted Period, the interest
transferred will be held immediately thereafter through Euroclear or CEDEL.
(h) Any beneficial interest in one of the Global Notes that is
transferred to a Person who takes delivery in the form of an interest in another
Global Note shall, upon transfer, cease to be an interest in such Global Note
and become an interest in such other Global Note and, accordingly, shall
thereafter be subject to all transfer restrictions and other procedures
applicable to beneficial interests in such other Global Note for as long as it
remains such an interest.
(i) The Holder of any Global Note may grant proxies and
otherwise authorize any Person, including Agent Members and Persons that may
hold interests through Agent Members, to take any action which a Holder is
entitled to take under this Indenture or the Notes.
Section 2.17. Special Transfer Provisions.
(a) Transfers to Non-QIB Institutional Accredited Investors
and Non-U.S. Persons. The following provisions shall apply with respect to the
registration of any proposed transfer of a Note constituting a Restricted Note
to any Institutional Accredited Investor which is not a QIB or to any Non-U.S.
Person:
(i) the Registrar shall register the transfer of any Note
constituting a Restricted Note, whether or not such Note bears the
Private Placement Legend, if (x) the requested transfer is after the
Issue Date plus two years or such other date as such Note shall be
freely transferable under Rule 144 as certified in an Officers'
Certificate or (y) (1) in the case of a transfer to an Institutional
Accredited Investor which is not a QIB (excluding Non-U.S. Persons),
the proposed transferee has delivered to the Registrar a certificate
substantially in the form of Exhibit E hereto or (2) in the case of a
transfer to a Non-U.S. Person (including a QIB), the proposed
transferor has delivered to the Registrar a certificate substantially
in the form of Exhibit F hereto; provided that in the case of a
transfer of a Note bearing the Private Placement Legend for a Note not
bearing the Private Placement Legend, the Registrar has received an
Officers' Certificate authorizing such transfer; and
(ii) if the proposed transferor is an Agent Member holding a
beneficial interest in a Global Note, upon receipt by the Registrar of
(x) the certificate, if any, required by paragraph (i) above and (y)
instructions given in accordance with the Depository's and the
Registrar's procedures,
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whereupon (a) the Registrar shall reflect on its books and records the date and
(if the transfer does not involve a transfer of outstanding Physical Notes) a
decrease in the principal amount of a Global Note in an amount equal to the
principal amount of the beneficial interest in a Global Note to be transferred,
and (b) the Registrar shall reflect on its books and records the date and an
increase in the principal amount of a Global Note in an amount equal to the
principal amount of the beneficial interest in the Global Note transferred or
the Company shall execute and the Trustee shall authenticate and make available
for delivery one or more Physical Notes of like tenor and amount.
(b) Transfers to QIBs. The following provisions shall apply
with respect to the registration of any proposed registration of transfer of a
Note constituting a Restricted Note to a QIB (excluding transfers to Non-U.S.
Persons):
(i) the Registrar shall register the transfer if such
transfer is being made by a proposed transferor who has checked the box
provided for on such Holder's Note stating, or has otherwise advised
the Company and the Registrar in writing, that the sale has been made
in compliance with the provisions of Rule 144A to a transferee who has
signed the certification provided for on such Holder's Note stating, or
has otherwise advised the Company and the Registrar in writing, that it
is purchasing the Note for its own account or an account with respect
to which it exercises sole investment discretion and that it and any
such account is a QIB within the meaning of Rule 144A, and is aware
that the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information regarding the
Company as it has requested pursuant to Rule 144A or has determined not
to request such information and that it is aware that the transferor is
relying upon its foregoing representations in order to claim the
exemption from registration provided by Rule 144A; and
(ii) if the proposed transferee is an Agent Member, and the
Notes to be transferred consist of Physical Notes which after transfer
are to be evidenced by an interest in the Global Note, upon receipt by
the Registrar of instructions given in accordance with the Depository's
and the Registrar's procedures, the Registrar shall reflect on its
books and records the date and an increase in the principal amount of
the Global Note in an amount equal to the principal amount of the
Physical Notes to be transferred, and the Trustee shall cancel the
Physical Notes so transferred.
(c) Private Placement Legend. Upon the registration of
transfer, exchange or replacement of Notes not bearing the Private Placement
Legend, the Registrar shall deliver Notes that do not bear the Private Placement
Legend. Upon the registration of transfer, exchange or replacement of Notes
bearing the Private Placement Legend, the Registrar shall deliver only Notes
that bear the Private Placement Legend unless (i) it has received
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the Officers' Certificate required by paragraph (a)(i)(y) of this Section 2.17,
(ii) there is delivered to the Registrar an Opinion of Counsel reasonably
satisfactory to the Company to the effect that neither such legend nor the
related restrictions on transfer are required in order to maintain compliance
with the provisions of the Securities Act or (iii) such Note has been sold
pursuant to an effective registration statement under the Securities Act and the
Registrar has received an Officers' Certificate from the Company to such effect.
(d) General. By its acceptance of any Note bearing the Private
Placement Legend, each Holder of such Note acknowledges the restrictions on
transfer of such Note set forth in this Indenture and in the Private Placement
Legend and agrees that it will transfer such Note only as provided in this
Indenture.
The Registrar shall retain for a period of two years copies of
all letters, notices and other written communications received pursuant to
Section 2.16 or this Section 2.17. The Company shall have the right to inspect
and make copies of all such letters, notices or other written communications at
any reasonable time upon the giving of reasonable notice to the Registrar.
Section 2.18. Computation of Interest.
Interest on the Notes shall be computed on the basis of a
360-day year of twelve 30-day months.
ARTICLE 3
REDEMPTION
Section 3.01. Election to Redeem; Notices to Trustee.
If the Company elects to redeem Notes pursuant to paragraph 5
of the Notes, at least 45 days prior to the Redemption Date (unless a shorter
notice shall be agreed to in writing by the Trustee) but not more than 65 days
before the Redemption Date, the Company shall notify the Trustee in writing of
the Redemption Date, the principal amount of Notes to be redeemed and the
redemption price, and deliver to the Trustee an Officers' Certificate stating
that such redemption will comply with the conditions contained in paragraph 5 of
the Notes.
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Section 3.02. Selection by Trustee of Notes To Be Redeemed.
In the case of any partial redemption, selection of the Notes
for redemption will be made by the Trustee on a pro rata basis, by lot or by
such other method as the Trustee in its sole discretion shall deem to be fair
and appropriate, although no Note of $1,000 in original principal amount or less
shall be redeemed in part. If any Note is to be redeemed in part only, the
notice of redemption relating to such Note shall state the portion of the
principal amount thereof to be redeemed. A new Note in principal amount equal to
the unredeemed portion thereof will be issued in the name of the Holder thereof
upon cancellation of the original Note.
Section 3.03. Notice of Redemption.
At least 30 days, and no more than 60 days, before a
Redemption Date, the Company shall mail, or cause to be mailed, a notice of
redemption by first-class mail to each Holder of Notes to be redeemed at his or
her last address as the same appears on the registry books maintained by the
Registrar pursuant to Section 2.04 hereof.
The notice shall identify the Notes to be redeemed (including
the CUSIP numbers thereof) and shall state:
(1) the Redemption Date;
(2) the redemption price and the amount of premium and
accrued interest to be paid, if any;
(3) if any Note is being redeemed in part, the portion of
the principal amount of such Note to be redeemed and that, after the
Redemption Date and upon surrender and cancellation of such Note, a new
Note or Notes in principal amount equal to the unredeemed portion will
be issued;
(4) the name and address of the Paying Agent;
(5) that Notes called for redemption must be surrendered to
the Paying Agent to collect the redemption price;
(6) that, unless the Company default in making the
redemption payment, interest on Notes called for redemption ceases to
accrue on and after the Redemption Date;
(7) the provision of paragraph 5 of the Notes pursuant to
which the Notes called for redemption are being redeemed;
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(8) the aggregate principal amount of Notes that are being
redeemed; and
(9) That no representation is made as to the correctness or
accuracy of the CUSIP or CINS numbers, if any, listed in such notice or
provided in the Notes.
At the Company's written request made at least five Business
Days prior to the date on which notice is to be given, the Trustee shall give
the notice of redemption in the Company's name and at the Company's sole
expense.
Section 3.04. Effect of Notice of Redemption.
Once the notice of redemption described in Section 3.03 is
mailed, Notes called for redemption become due and payable on the Redemption
Date and at the redemption price, including any premium, plus interest accrued
and unpaid to the Redemption Date. Upon surrender to the Paying Agent, such
Notes shall be paid at the redemption price, including any premium, plus
interest accrued to the Redemption Date, provided that if the Redemption Date is
after a regular record date and on or prior to the Interest Payment Date, the
accrued interest shall be payable to the Holder of the redeemed Notes registered
on the relevant record date, and provided, further, that if a Redemption Date is
a Legal Holiday, payment shall be made on the next succeeding Business Day and
no interest shall accrue for the period from such Redemption Date to such
succeeding Business Day.
Section 3.05. Deposit of Redemption Price.
On or prior to 10:00 a.m., New York City time, on each
Redemption Date, the Company shall deposit with the Trustee or with the Paying
Agent in immediately available funds money sufficient to pay the redemption
price of, including premium, if any, and accrued and unpaid interest on all
Notes to be redeemed on that date other than Notes or portions thereof called
for redemption on that date which have been delivered by the Company to the
Trustee for cancellation.
On and after any Redemption Date, if money sufficient to pay
the redemption price of, including premium, if any, and accrued and unpaid
interest on Notes called for redemption shall have been made available in
accordance with the preceding paragraph, the Notes called for redemption will
cease to accrue interest and the only right of the Holders of such Notes will be
to receive payment of the redemption price of and, subject to the first proviso
in Section 3.04, accrued and unpaid interest on such Notes to the Redemption
Date. If any Note surrendered for redemption shall not be so paid because of the
failure of the Company to comply with the preceding paragraph, interest will be
paid, from the Redemption Date until such redemption payment is made, on the
unpaid principal of the Note and
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any interest not paid on such unpaid principal, in each case, at the rate and in
the manner provided in the Notes.
Section 3.06. Notes Redeemed in Part.
Upon surrender of a Note that is redeemed in part, the Company
shall issue, and the Trustee shall authenticate, for the Holder thereof a new
Note equal in principal amount to the unredeemed portion of the Note
surrendered.
ARTICLE 4
COVENANTS
Section 4.01. Payment of Notes.
The Company shall pay the principal of, premium, if any, and
interest (including all Additional Interest as provided in the Registration
Rights Agreement) on the Notes on the dates and in the manner provided in the
Notes and this Indenture. An installment of principal, premium, if any, or
interest shall be considered paid on the date it is due if the Trustee or Paying
Agent holds on that date money designated for and sufficient to pay such
installment.
The Company shall pay interest on overdue principal (including
post-petition interest in a proceeding under any Bankruptcy Law), and overdue
interest, to the extent lawful, at the rate specified in the Notes.
Section 4.02. SEC Reports.
(a) The Company will file with the SEC all information,
documents and reports to be filed with the SEC pursuant to Section 13 or 15(d)
of the Exchange Act, whether or not the Company is subject to such filing
requirements. The Company (at its own expense) will file with the Trustee within
15 days after it would have been required to file such information, documents
and reports with the SEC, copies of the annual reports and of the information,
documents and other reports (or copies of such portions of any of the foregoing
as the SEC may by rules and regulations prescribe). Upon qualification of this
Indenture under the TIA, the Company shall also comply with the provisions of
TIA Section 314(a).
(b) At the Company's expense, regardless of whether the
Company is required to furnish such reports and other information referred to in
paragraph (a) above to its
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stockholders pursuant to the Exchange Act, the Company shall cause such reports
and other information to be mailed to the Holders at their addresses appearing
in the register of Notes maintained by the Registrar within 15 days after it
files them with the SEC.
(c) The Company shall, upon request, provide to any Holder of
Notes or any prospective transferee of any such Holder any information
concerning the Company (including financial statements) necessary in order to
permit such Holder to sell or transfer Notes in compliance with Rule 144A under
the Securities Act; provided, however, that the Company shall not be required to
furnish such information in connection with any request made on or after the
date which is two years from the later of (i) the date such Note (or any
predecessor Note) was acquired from the Company or (ii) the date such Note (or
any predecessor Note) was last acquired from an "affiliate" of the Company
within the meaning of Rule 144 under the Securities Act.
Section 4.03. Waiver of Stay, Extension or Usury Laws.
Each of the Company and the Subsidiary Guarantors covenants
(to the extent that it may lawfully do so) that it shall not at any time insist
upon, or plead (as a defense or otherwise) or in any manner whatsoever claim or
take the benefit or advantage of, any stay or extension law or any usury law
that would prohibit or forgive the Company or the Subsidiary Guarantor from
paying all or any portion of the principal of, premium, if any, and/or interest
on the Notes as contemplated herein, wherever enacted, now or at any time
hereafter in force, or that may affect the covenants or the performance of this
Indenture; and (to the extent that it may lawfully do so) each of the Company
and the Subsidiary Guarantors hereby expressly waives all benefit or advantage
of any such law, and covenants that it will not, by resort to any such law,
hinder, delay or impede the execution of any power herein granted to the
Trustee, but will suffer and permit the execution of every such power as though
no such law had been enacted.
Section 4.04. Compliance Certificate.
(a) The Company shall deliver to the Trustee, within 120 days
after the end of each fiscal year an Officers' Certificate (one of the signers
of which on behalf of the Company shall be the principal executive officer,
principal financial officer or principal accounting officer of the Company)
stating that a review of the activities of the Company and its Subsidiaries
during such fiscal year has been made under the supervision of the signing
Officers of the Company with a view to determining whether the Company and the
Subsidiary Guarantors have kept, observed, performed and fulfilled their
obligations under this Indenture, and further stating, as to each such Officer
signing such certificate, that to the best of his or her knowledge, the Company
and the Subsidiary Guarantors have kept, observed, performed and fulfilled each
and every covenant contained in this Indenture and are not in
<PAGE> 51
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default in the performance or observance of any of the terms, provisions and
conditions hereof (or, if a Default or Event of Default shall have occurred,
describing all such Defaults or Events of Default of which he or she may have
knowledge and what action the Company or the Subsidiary Guarantor, as the case
may be, is taking or proposes to take with respect thereto) and that to the best
of his or her knowledge no event has occurred and remains in existence by reason
of which payments on account of the principal of or interest, if any, on the
Notes is prohibited or, if such event has occurred, a description of the event
and what action the Company or the Subsidiary Guarantors, as the case may be, is
taking or proposes to take with respect thereto.
(b) So long as the Trustee has not received an Officers'
Certificate stating that it would be contrary to the then current
recommendations of the American Institute of Certified Public Accountants, the
year-end financial statements delivered pursuant to Section 4.02 above shall be
accompanied by a written statement of the Company's independent public
accountants (who shall be a firm of established national reputation) that in
making the examination necessary for certification of such financial statements
nothing has come to their attention which would lead them to believe that the
Company has violated any provisions of this Article 4 or Article 5 of this
Indenture or, if any such violation has occurred, specifying the nature and
period of existence thereof, it being understood that such accountants shall not
be liable directly or indirectly to any Person for any failure to obtain
knowledge of any such violation.
(c) If any Default or Event of Default has occurred and is
continuing, the Company shall, so long as any of the Notes are outstanding,
deliver to the Trustee, upon any Officer of the Company becoming aware of any
Default or Event of Default, an Officers' Certificate specifying such Default or
Event of Default and what action the Company and the Subsidiary Guarantors are
taking or propose to take with respect thereto, within 30 days after the
occurrence thereof.
Section 4.05. Taxes.
The Company shall, and shall cause each of its Subsidiaries
to, pay prior to delinquency all material taxes, assessments, and governmental
levies except as contested in good faith and by appropriate proceedings.
Section 4.06. Limitation on Indebtedness.
(a) The Company shall not, and shall not permit any Restricted
Subsidiary to Incur, directly or indirectly, any Indebtedness; provided,
however, that the Company and any Restricted Subsidiary may Incur Indebtedness
if, on the date of such Incurrence and after giving effect thereto, the
Consolidated Leverage Ratio does not exceed 2.00 to 1.00.
<PAGE> 52
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(b) Notwithstanding the foregoing paragraph (a), the Company
and any Restricted Subsidiary may Incur any or all of the following
Indebtedness:
(1) (A) Permitted Warehouse Indebtedness and Guarantees
thereof by the Company or any Restricted Subsidiary; provided, however,
that to the extent any such Indebtedness of the Company or a Restricted
Subsidiary ceases to constitute Permitted Warehouse Indebtedness, such
Indebtedness shall be deemed to be Incurred by the Company or such
Restricted Subsidiary, as the case may be, at the time such
Indebtedness ceases to constitute Permitted Warehouse Indebtedness; and
(B) additional Indebtedness to finance the general corporate needs of
the Company and its Subsidiaries in an amount not to exceed $25 million
at any one time outstanding;
(2) Indebtedness of the Company or a Restricted Subsidiary
owed to and held by the Company or a Restricted Subsidiary; provided,
however, that any designation of such Restricted Subsidiary as an
Unrestricted Subsidiary, any subsequent issuance or transfer of any
Capital Stock which results in any such Restricted Subsidiary ceasing
to be a Restricted Subsidiary or any subsequent transfer of such
Indebtedness (other than to the Company or another Restricted
Subsidiary) shall be deemed, in each case, to constitute the Incurrence
of such Indebtedness by the Company or such Restricted Subsidiary, as
the case may be;
(3) the Notes and the Subsidiary Guarantees;
(4) Indebtedness outstanding on the Issue Date (other than
Indebtedness described in clause (1), (2) or (3) of this covenant);
(5) Refinancing Indebtedness in respect of Indebtedness
Incurred pursuant to paragraph (a) or pursuant to clause (3) or (4) or
this clause (5);
(6) Hedging Obligations directly related to: (i)
Indebtedness permitted to be Incurred by the Company or the Restricted
Subsidiaries pursuant to the Indenture; (ii) Receivables held by the
Company or its Restricted Subsidiaries pending sale or securitization
or that have been sold pursuant to a Warehouse Facility; (iii)
Receivables with respect to which the Company or any Restricted
Subsidiary reasonably expects to purchase or finance or acquire a
security interest in or accept as collateral; or (iv) Retained Interest
Receivables and other assets owned or financed by the Company or any
Restricted Subsidiary;
(7) Purchase Money Indebtedness and Capital Lease
Obligations Incurred to finance or refinance the construction, purchase
or lease of, or repairs, improve-
<PAGE> 53
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ments or additions to, property which Indebtedness does not in the
aggregate exceed $15.0 million in aggregate principal amount at any one
time outstanding;
(8) Non-Recourse Indebtedness of any Qualifying
Securitization Subsidiary; provided, that if, but only to the extent,
any such Indebtedness ceases to constitute Non-Recourse Indebtedness or
if the Subsidiary that Incurred such Indebtedness ceases to be a
Qualifying Securitization Subsidiary, such event shall be deemed to
constitute an Incurrence of Indebtedness by such Subsidiary; and
(9) Indebtedness in an aggregate principal amount which,
together with the principal amount of all other Indebtedness of the
Company and its Restricted Subsidiaries outstanding on the date of such
Incurrence (other than Indebtedness permitted by clauses (1) through
(8) above or paragraph (a)), does not exceed $25.0 million at any one
time outstanding.
(c) For purposes of determining compliance with the foregoing
covenant, (i) in the event that an item of Indebtedness meets the criteria of
more than one of the types of Indebtedness described above, the Company, in good
faith, will classify such item of Indebtedness and only be required to include
the amount and type of such Indebtedness in one of the above clauses and (ii) an
item of Indebtedness may be divided and classified in more than one of the types
of Indebtedness described above.
Section 4.07. Limitation on Restricted Payments.
(a) The Company shall not, and shall not permit any Restricted
Subsidiary, directly or indirectly, to, make a Restricted Payment if at the time
the Company or such Restricted Subsidiary makes such Restricted Payment: (1) a
Default or an Event of Default shall have occurred and be continuing (or would
result therefrom); (2) the Company is not able to Incur an additional $1.00 of
Indebtedness pursuant to paragraph (a) of Section 4.06; or (3) the aggregate
amount of such Restricted Payment and all other Restricted Payments since the
Issue Date would exceed the sum of: (A) 25% of Consolidated Net Income accrued
during the period (treated as one accounting period) from the beginning of the
fiscal quarter during which the Issue Date occurs to the end of the most recent
fiscal quarter prior to the date of such Restricted Payment for which financial
statements are available (or, in case such Consolidated Net Income shall be a
deficit, minus 100% of such deficit); (B) the aggregate Net Cash Proceeds
received by the Company from the issuance or sale of its Capital Stock (other
than Disqualified Stock) subsequent to the Issue Date (other than an issuance or
sale (i) occurring substantially contemporaneously with the issuance of the
Notes, (ii) to a Subsidiary of the Company or (iii) to an employee stock
ownership plan or to a trust established by the Company or any of its
Subsidiaries for the benefit of their employees except to the extent that the
funds used by such plan or trust are attributable to em-
<PAGE> 54
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ployee contributions); (C) the amount by which Indebtedness of the Company is
reduced on the Company's balance sheet upon the conversion or exchange (other
than by a Subsidiary of the Company) subsequent to the Issue Date, of any
Indebtedness of the Company convertible or exchangeable for Capital Stock (other
than Disqualified Stock) of the Company (less the amount of any cash, or the
fair value of any other property, distributed by the Company upon such
conversion of exchange); and (D) an amount equal to the sum of (i) the net
reduction in Investments in any Person resulting from dividends or repayments of
loans or advances, in each case to the Company or any Restricted Subsidiary from
such Person or from the sale for cash or other liquidation or repayment in cash,
in each case the proceeds of which are received by the Company or any Restricted
Subsidiary, and (ii) the portion (proportionate to the Company's equity interest
in such Subsidiary) of the fair market value of the net assets of an
Unrestricted Subsidiary at the time such Unrestricted Subsidiary is designated a
Restricted Subsidiary; provided, however, that the foregoing sum in this clause
(D) shall not exceed, in the case of any Person, the amount of Investments made
since the Issue Date by the Company or any Restricted Subsidiary in such Person
and treated as a Restricted Payment.
(b) The provisions of the foregoing paragraph (a) shall not
prohibit: (i) any purchase or redemption of Capital Stock or Subordinated
Obligations of the Company made by, exchanged for, or out of the proceeds of the
substantially concurrent sale of, Capital Stock of the Company (other than
Disqualified Stock and other than Capital Stock issued or sold to a Subsidiary
of the Company or an employee stock ownership plan or to a trust established by
the Company or any of its Subsidiaries for the benefit of their employees except
to the extent that the funds used by such plan or trust are attributable to
employee contributions); provided, however, that (A) such purchase or redemption
shall be excluded from the calculation of the amount of Restricted Payments and
(B) the Net Cash Proceeds from such sale shall be excluded from the calculation
of amounts under clause (3) (B) of paragraph (a) above; (ii) any purchase,
repurchase, redemption, defeasance or other acquisition or retirement for value
of Subordinated Obligations made by, exchanged for, or out of the proceeds of
the substantially concurrent sale of, Indebtedness of the Company which is
permitted to be Incurred pursuant to Section 4.06; provided, however, that such
purchase, repurchase, redemption, defeasance or other acquisition or retirement
for value shall be excluded from the calculation of the amount of Restricted
Payments; (iii) dividends paid within 60 days after the date of declaration
thereof if at such date of declaration such dividend would have complied with
the covenant described hereunder; provided, however, that at the time of payment
of such dividend, no other Default or Event of Default shall have occurred and
be continuing (or result therefrom); provided, further, however, that such
dividend shall be included in the calculation of the amount of Restricted
Payments; (iv) any payments made to holders of the Convertible Debentures for
partial share redemptions in connection with the conversion thereof into Capital
Stock of the Company; provided, however, that such payments shall be excluded
from the calculation of the amount of Restricted Payments; and (v) any purchase
of Capital Stock of the Company made from time to time to meet the Company's
obligations under its employee stock ownership and option plans, provided,
how-
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ever, that such purchases shall be excluded from the calculation of the amount
of Restricted Payments.
Not later than the date of making any Restricted Payment, the
Company shall deliver to the Trustee an Officers' Certificate stating that such
Restricted Payment is permitted and setting forth the basis upon which the
calculations required by this Section 4.07 were computed, which calculations may
be based upon the Company's latest available financial statements, and that no
Default or Event of Default exists and is continuing and no Default or Event of
Default will occur immediately after giving effect to any Restricted Payments.
Section 4.08. Limitation on Sales of Assets.
(a) The Company shall not, and shall not permit any Restricted
Subsidiary to, directly or indirectly, consummate any Asset Disposition in
excess of $2.0 million unless (i) the Company or such Restricted Subsidiary
receives consideration at the time of such Asset Disposition at least equal to
the fair market value (including as to the value of any non-cash consideration),
as determined in good faith by the Board of Directors of the Company, of the
shares and assets subject to such Asset Disposition and at least 85% of the
consideration thereof received by the Company or such Restricted Subsidiary is
in the form of cash or cash equivalents, (ii) an amount equal to 100% of the Net
Available Cash from such Asset Disposition is applied by the Company (or such
Restricted Subsidiary, as the case may be) (A) first, to the extent the Company
elects, either to (x) acquire Additional Assets, either directly or through a
Restricted Subsidiary, or (y) prepay, repay, redeem or purchase Senior
Indebtedness of the Company or a Restricted Subsidiary (provided that the
proceeds of an Asset Disposition of the Company's direct assets may not be used
to prepay, repay, redeem or purchase Senior Indebtedness of a Restricted
Subsidiary that is not a Subsidiary Guarantor), as the case may be (other than
in either case Indebtedness owed to the Company or an Affiliate of the Company),
in each case within 180 days from, or prior to, the later of the date of such
Asset Disposition or the receipt of such Net Available Cash (the date that is
180 days after the later of such dates being the "Reinvestment Date"); (B)
second, to the extent of the balance of such Net Available Cash after
application in accordance with clause (A), to make an offer to the Holders (and
to holders of other Senior Indebtedness designated by the Company) to purchase
Notes (and to prepay, repay or purchase such other Senior Indebtedness) pursuant
to and subject to the conditions contained in this Indenture in the case of the
Notes or the conditions contained in the agreements governing such other Senior
Indebtedness; provided, that any such offers shall be on a pro rata basis in
proportion to the outstanding principal amounts of the Indebtedness to which
such
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offers apply and that to the extent any Net Available Cash remains
following such pro rata offer such Net Available Cash shall be applied to the
repurchase on a pro rata basis in proportion to the outstanding principal amount
thereof of any such Indebtedness which continues to remain outstanding after
such offer has been accepted by the holder thereof; (C) third, to the extent of
the balance of such Net Available Cash after application in accordance with
clauses (A) and (B) to (x) the acquisition by the Company or any Restricted
Subsidiary of Additional Assets or (y) the prepayment, repayment or purchase of
Indebtedness designated by the Company (other than any Disqualified Stock) of
the Company or any Restricted Subsidiary (other than Indebtedness owed to an
Affiliate of the Company), in each case within 180 days from the later of the
receipt of such Net Available Cash and the date the offer described in paragraph
(b) below is consummated; provided, however, that in connection with any
prepayment, repayment or purchase of Indebtedness pursuant to clause (A), (B) or
(C) above, the Company or such Restricted Subsidiary shall retire such
Indebtedness and shall cause the related loan commitment (if any) to be
permanently reduced in an amount equal to the principal amount so prepaid,
repaid or purchased unless, in the case of clause (C), at the time of such
prepayment, repayment or purchase, and, to the extent, the Company would have
been able to Incur such Indebtedness pursuant to Section 4.06; and (D) fourth,
to the extent of the balance of such Net Available Cash after application in
accordance with clauses (A), (B) and C), to any application not prohibited by
the Indenture, and (iii) at the time of such Asset Disposition no Default shall
have occurred and be continuing (or would result therefrom). Notwithstanding the
foregoing provisions of this paragraph, the Company and the Restricted
Subsidiaries shall not be required to apply any Net Available Cash in accordance
with this paragraph except to the extent that the aggregate Net Available Cash
from all Asset Dispositions which is not applied in accordance with this
paragraph exceeds $5 million. Pending application of Net Available Cash pursuant
to this covenant, such Net Available Cash shall be invested in Temporary Cash
Investments.
For the purposes of this Section 4.08, the following are
deemed to be cash or cash equivalents: (x) the assumption of Indebtedness or
liabilities of the Company or any Restricted Subsidiary, and the release of the
Company or such Restricted Subsidiary from all liability on such Indebtedness or
liabilities in connection with such Asset Disposition; (y) securities, notes or
other obligations received by the Company or any Restricted Subsidiary from the
transferee that are promptly, but in no event more than 30 days after receipt,
converted by the Company or such Restricted Subsidiary into cash or Temporary
Cash Investments and (z) an amount equal to the fair market value (evidenced by
a resolution of the Board of Directors of the Company) of operating assets
(including Receivables and Retained Interest Receivables) to be used or useful
in any Related Business received by the transferee in connection with such Asset
Disposition.
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(b) In the event of an Asset Disposition that requires an
offer to purchase the Notes (and other Senior Indebtedness) pursuant to
paragraph (a)(ii)(B) above, the Company will be required to purchase Notes
tendered pursuant to an offer by the Company for the Notes (and other Senior
Indebtedness) at a purchase price of 100% of their principal amount plus accrued
but unpaid interest (or, in respect of such other Senior Indebtedness, such
lesser price, if any, as may be provided for by the terms of such Senior
Indebtedness) in accordance with the procedures (including prorating in the
event of oversubscription) set forth in this Indenture (an "Excess Proceeds
Offer"). If the aggregate purchase price of Notes (and any other Senior
Indebtedness) tendered pursuant to such Excess Proceeds Offer is less than the
Net Available Cash allotted to the purchase thereof, the Company will be
permitted to apply the remaining Net Available Cash in accordance with clause
(a)(ii)(C) above. The Company shall not be required to make such an offer to
purchase Notes (and other Senior Indebtedness) pursuant to this Section 4.08 if
the Net Available Cash available therefor is less than $5.0 million (which
lesser amount shall be carried forward for purposes of determining whether such
an offer is required with respect to any subsequent Asset Disposition).
(c) In the event of the transfer of substantially all (but not
all) of the property and assets of the Company to a Person in a transaction
permitted under Section 5.01 the successor corporation shall be deemed to have
sold the properties and assets of the Company not so transferred for purposes of
this Section 4.08, and shall comply with the provisions of this covenant with
respect to such deemed sale as if it were an Asset Disposition; provided, that
this clause shall not apply to the extent that the properties and assets of the
Company not so transferred are exchanged for Additional Assets received by the
Company or held by such other Person in such transaction. In addition, the fair
market value of such properties and assets of the Company deemed to be sold
shall be deemed to be Net Available Cash.
(d) If the Company is required to make an Excess Proceeds
Offer, the Company shall mail, within 30 days following the Reinvestment Date, a
notice to the Holders stating, among other things: (1) that such Holders have
the right to require the Company to apply Net Available Cash to repurchase such
Notes at a purchase price in cash equal to 100% of the principal amount thereof
plus accrued and unpaid interest, if any, to the date of purchase; (2) the
purchase date (the "Purchase Date"), which shall be no earlier than 30 days and
not later than 60 days from the date such notice is mailed; (3) the
instructions, determined by the Company, that each Holder must follow in order
to have such Notes repurchased; and (4) the calculations to be used in
determining the amount of Net Available Cash to be applied to the repurchase of
such Notes. The Excess Proceeds Offer shall remain open for a period of 20
Business Days following its commencement (the
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"Offer Period"). The notice, which shall govern the terms of the Excess Proceeds
Offer, shall state:
(1) that the Excess Proceeds Offer is being made pursuant to
this Section 4.08 and the length of time the Excess Proceeds Offer will
remain open;
(2) the purchase price and the Purchase Date;
(3) that any Note not tendered or accepted for payment will
continue to accrue interest;
(4) that any Note accepted for payment pursuant to the
Excess Proceeds Offer shall cease to accrue interest on and after the
Purchase Date and the deposit of the purchase price with the Trustee;
(5) that Holders electing to have a Note purchased pursuant
to any Excess Proceeds Offer will be required to surrender the Note,
with the form entitled "Option of Holder to Elect Purchase" on the
reverse of the Note completed, or transfer by book-entry transfer, to
the Company, a depository, if appointed by the Company, or a Paying
Agent at the address specified in the notice prior to the close of
business on the Business Day preceding the Purchase Date;
(6) that Holders will be entitled to withdraw their election
if the Company, depository or Paying Agent, as the case may be,
receives, not later than the expiration of the Offer Period, a
telegram, facsimile transmission or letter setting forth the name of
the Holder, the principal amount of the Note the Holder delivered for
purchase and a statement that such Holder is withdrawing his election
to have the Note purchased;
(7) that, if the aggregate principal amount of Notes
surrendered (or transferred by book-entry transfer) by Holders exceeds
Net Available Cash available therefor, the Company shall select the
Notes to be purchased on a pro rata basis (with such adjustments as may
be deemed appropriate by the Company so that only Notes in
denominations of $1,000, or integral multiples thereof, shall be
purchased); and
(8) that Holders whose Notes were purchased only in part
will be issued new Notes equal in principal amount to the unpurchased
portion of the Notes surrendered (or transferred by book-entry
transfer).
On or before the Purchase Date, the Company shall, to the
extent lawful, accept for payment, on a pro rata basis to the extent necessary,
Notes or portions thereof ten-
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dered pursuant to the Excess Proceeds Offer, deposit with the Paying Agent U.S.
legal tender sufficient to pay the purchase price plus accrued interest, if any,
on the Notes to be purchased and deliver to the Trustee an Officers' Certificate
stating that such Notes or portions thereof were accepted for payment by the
Company in accordance with the terms of this Section 4.08. The Paying Agent
shall promptly (but in any case not later than 5 days after the Purchase Date)
mail or deliver to each tendering Holder an amount equal to the purchase price
of the Note tendered by such Holder and accepted by the Company for purchase,
and the Company shall promptly issue a new Note, the Subsidiary Guarantors shall
endorse the guarantee thereon and the Trustee shall authenticate and mail or
make available for delivery such new Note to such Holder equal in principal
amount to any unpurchased portion of the Note surrendered. Any Note not so
accepted shall be promptly mailed or delivered by the Company to the Holder
thereof. The Company will publicly announce the results of the Excess Proceeds
Offer on the Purchase Date by sending a press release to the Dow Jones News
Service or similar business news service in the United States. If an Excess
Proceeds Offer is not fully subscribed, the Company may retain that portion of
the Net Available Cash not required to repurchase Notes for use in accordance
with this Section 4.08.
(e) The Company shall comply, to the extent applicable, with
the requirements of Section 14(e) of the Exchange Act and any other securities
laws or regulations in connection with the repurchase of Notes pursuant to the
covenant described hereunder. To the extent that the provisions of any
securities laws or regulations conflict with provisions of this Section 4.08,
the Company shall comply with the applicable securities laws and regulations and
shall not be deemed to have breached its obligations under this Section 4.08 by
virtue thereof.
Section 4.09. Limitation on Affiliate Transactions.
The Company shall not, and shall not permit any Restricted
Subsidiary to, enter into or permit to exist any transaction (including the
purchase, sale, lease or exchange of property, employee compensation
arrangements or the rendering of any service) with any Affiliate of the Company
(an "Affiliate Transaction") unless the terms thereof (1) are no less favorable
to the Company or such Restricted Subsidiary than those that could be obtained
at the time of such transaction in arm's-length dealings with a Person who is
not such an Affiliate, (2) if such Affiliate Transaction involves an amount in
excess of $2.0 million, (i) are set forth in writing and (ii) have been approved
by a majority of the members of the Board of Directors of the Company having no
personal stake in such Affiliate Transaction and (3) if such Affiliate
Transaction involves an amount in excess of $5.0 million, have been determined
by a nationally recognized investment banking firm to be fair, from a financial
standpoint, to the Company and its Restricted Subsidiaries.
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The provision of the foregoing paragraph shall not apply to
(i) transactions between or among the Company and any Restricted Subsidiary or
between or among Restricted Subsidiaries, (ii) any Restricted Payment permitted
to be made under Section 4.07 or any Permitted Investment, (iii) loans or
advances to employees in the ordinary course of business, (iv) customary
directors fees and indemnities, (v) ordinary course commercial agreements or
renewals thereof on such terms as are in effect as of the Issue Date and which
terms are no less favorable to the Company or such Restricted Subsidiary than
those that could be obtained at the time of such transaction in arm's-length
dealings with a Person who is not such an Affiliate, (vi) any Indebtedness
permitted by paragraph (b)(2) of Section 4.06, (vii) any issuance of securities,
or other payments, compensation, benefits, awards or grants in cash, securities
or otherwise pursuant to, or the funding of, employment arrangements, stock
options and stock ownership plans approved by the Board of Directors of the
Company and (viii) the grant of stock options or similar rights to employees and
directors of the Company or any Restricted Subsidiary pursuant to plans approved
by the Board of Directors of the Company.
Section 4.10. Limitations on Liens.
The Company shall not, and shall not permit any Restricted
Subsidiary to, directly or indirectly, Incur or permit to exist any Lien (i)
upon the Collateral other than the Liens created by the Notes, the Indenture and
the Pledge Agreement and the Liens expressly permitted by the Pledge Agreement
and (ii) of any nature whatsoever on any of its properties (including Capital
Stock of a Restricted Subsidiary), whether owned at the Issue Date or thereafter
acquired, other than, in the case of this clause (ii), Permitted Liens, without
effectively providing that the Notes shall be secured equally and ratably with
(or prior to in the case of Subordinated Obligations) the obligations so secured
for so long as such obligations are so secured.
Section 4.11. Limitation on Creation of Subsidiaries.
The Company shall not create or acquire, nor permit any of its
Restricted Subsidiaries to create or acquire, any Subsidiary other than (i) a
Restricted Subsidiary existing as of the Issue Date, (ii) a Restricted
Subsidiary that is acquired or created after the date of this Indenture or (iii)
an Unrestricted Subsidiary.
Section 4.12. Limitation on Restrictions on Distributions from Restricted
Subsidiaries.
The Company shall not, and shall not permit any Restricted
Subsidiary to, directly or indirectly, create or otherwise cause or permit to
exist or become effective any consensual encumbrance or restriction on the
ability of any Restricted Subsidiary (a) to pay
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dividends or make any other distributions on its Capital Stock to the Company or
a Restricted Subsidiary or pay any Indebtedness owed to the Company, (b) to make
any loans or advances to the Company or (c) to transfer any of its property or
assets to the Company, except: (i) any encumbrance or restriction pursuant to an
agreement in effect at or entered into on the Issue Date and any agreement that
constitutes a Refinancing thereof permitted under this Indenture; (ii) any
encumbrance or restriction with respect to a Restricted Subsidiary pursuant to
an agreement applicable to such Restricted Subsidiary on or prior to the date on
which such Restricted Subsidiary was acquired by the Company or was designated a
Restricted Subsidiary (other than an agreement entered into in connection with,
or in anticipation of, the transaction or series of related transactions
pursuant to which such Restricted Subsidiary became a Restricted Subsidiary or
was acquired by the Company) and outstanding on such date; (iii) any encumbrance
or restriction with respect to a Restricted Subsidiary pursuant to any other
agreement contained in any amendment to an agreement referred to in clause (i)
or (ii) of this Section 4.12 or this clause (iii); provided, however, that the
encumbrances and restrictions with respect to such Restricted Subsidiary
contained in any such agreement or amendment are not materially less favorable
to the Noteholders than encumbrances and restrictions with respect to such
Restricted Subsidiary contained in the agreements referred to in clause (i) or
(ii) of this Section 4.12, as the case may be; (iv) any such encumbrance or
restriction consisting of customary non-assignment provisions in leases
governing leasehold interests to the extent such provisions restrict the
transfer of the lease or the property leased thereunder; (v) in the case of
clause (c) above, restrictions contained in security agreements or mortgages
securing Indebtedness of a Restricted Subsidiary to the extent such restrictions
restrict the transfer of the property subject to such security agreements or
mortgages; (vi) customary affiliate transactions provisions; (vii) any
restriction with respect to a Restricted Subsidiary imposed pursuant to an
agreement entered into for the sale or disposition of all or substantially all
the Capital Stock or assets of such Restricted Subsidiary pending the closing of
such sale or disposition; and (viii) encumbrances or restrictions pursuant to
Permitted Warehouse Indebtedness.
Section 4.13. Payments for Consent.
Neither the Company nor any of its Subsidiaries shall,
directly or indirectly, pay or cause to be paid any consideration, whether by
way of interest, fee or otherwise, to any Holder of any Notes for or as an
inducement to any consent, waiver or amendment of any of the terms or provisions
of this Indenture or the Notes unless such consideration is offered to be paid
or agreed to be paid to all Holders of the Notes which so consent, waive or
agree to amend in the time frame set forth in solicitation documents relating to
such consent, waiver or agreement.
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Section 4.14. Legal Existence.
Subject to Section 4.08, Article 5 and Article 10 hereof, the
Company shall do or cause to be done all things necessary to preserve and keep
in full force and effect (i) its legal existence, and the corporate, partnership
or other existence of each Restricted Subsidiary, in accordance with the
respective organizational documents (as the same may be amended from time to
time) of the Company and each Restricted Subsidiary and the rights (charter and
statutory), licenses and franchises of the Company and its Restricted
Subsidiaries; provided, however, that the Company shall not be required to
preserve any such right, license or franchise, or the corporate, partnership or
other existence of any of its Restricted Subsidiaries if the Board of Directors
of the Company shall determine that the preservation thereof is no longer
desirable in the conduct of the business of the Company and its Restricted
Subsidiaries, taken as a whole, and that the loss thereof is not adverse in any
material respect to the Holders.
Section 4.15. Change of Control.
(a) Within 30 days of the occurrence of a Change of Control,
the Company shall notify the Trustee in writing of such occurrence and shall
make an offer to purchase (the "Change of Control Offer") the outstanding Notes
at a purchase price equal to 101% of the principal amount thereof plus any
accrued and unpaid interest thereon to the Change of Control Payment Date (as
hereinafter defined) (such applicable purchase price being hereinafter referred
to as the "Change of Control Purchase Price") in accordance with the procedures
set forth below.
(b) Within 30 days of the occurrence of a Change of Control,
the Company also shall (i) cause a notice of the Change of Control Offer to be
sent at least once to the Dow Jones News Service or similar business news
service in the United States and (ii) send by first-class mail, postage prepaid,
to the Trustee and to each Holder of the Notes, at the address appearing in the
register maintained by the Registrar of the Notes, a notice stating:
(1) that the Change of Control Offer is being made pursuant
to this Section 4.15 and that all Notes tendered will be accepted for
payment, and otherwise subject to the terms and conditions set forth
herein;
(2) the circumstances and relevant facts regarding such
Change of Control (including information with respect to pro forma
results of operations, cash flow and capitalization after giving effect
to such Change of Control);
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(3) the Change of Control Purchase Price and the purchase
date (which shall be a Business Day no earlier than 30 days nor later
than 60 days from the date such notice is mailed (the "Change of
Control Payment Date"));
(4) that any Note not tendered will continue to accrue
interest;
(5) that, unless the Company defaults in the payment of the
Change of Control Purchase Price, any Notes accepted for payment
pursuant to the Change of Control Offer shall cease to accrue interest
after the Change of Control Payment Date;
(6) that Holders accepting the offer to have their Notes
purchased pursuant to a Change of Control Offer will be required to
surrender the Notes, with the form entitled "Option of Holder to Elect
Purchase" on the reverse of the Note completed, or transfer by
book-entry transfer, to the Company, a depository, if appointed by the
Company, or the Paying Agent at the address specified in the notice
prior to the close of business on the Business Day preceding the Change
of Control Payment Date;
(7) that Holders will be entitled to withdraw their
acceptance if the Company, the depository or Paying Agent receives, not
later than the close of business on the third Business Day preceding
the Change of Control Payment Date, a telegram, facsimile transmission
or letter setting forth the name of the Holder, the principal amount of
the Notes delivered for purchase and a statement that such Holder is
withdrawing his election to have such Notes purchased;
(8) that Holders whose Notes are being purchased only in
part will be issued new Notes equal in principal amount to the
unpurchased portion of the Notes surrendered, provided that each Note
purchased and each such new Note issued shall be in an original
principal amount in denominations of $1,000 and integral multiples
thereof;
(9) any other procedures that a Holder must follow to accept
a Change of Control Offer or effect withdrawal of such acceptance; and
(10) the name and address of the depository or Paying Agent.
On the Change of Control Payment Date, the Company shall, to
the extent lawful, (i) accept for payment all Notes or portions thereof tendered
pursuant to the Change of Control Offer, (ii) deposit with the depository or
Paying Agent money sufficient to pay the purchase price of all Notes or portions
thereof so tendered and (iii) deliver or cause to
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be delivered to the Trustee the Notes so accepted together with an Officers'
Certificate stating the Notes or portions thereof tendered to the Company. The
Paying Agent shall promptly mail to each Holder of Notes so accepted payment in
an amount equal to the purchase price for such Notes, and the Company shall
execute and issue, and the Trustee shall promptly authenticate and mail to such
Holder, a new Note equal in principal amount to any unpurchased portion of the
Notes surrendered, if any; provided that each such new Note shall be issued in
an original principal amount in denominations of $1,000 and integral multiples
thereof.
(c) (A) If either Company or any Subsidiary thereof has issued
any outstanding (i) Indebtedness that is subordinated in right of payment to the
Notes or (ii) Preferred Stock, and the Company or such Subsidiary is required to
repurchase or redeem, or make an offer to repurchase or redeem, such
Indebtedness or Preferred Stock, in the event of a Change of Control or to make
a distribution with respect to such subordinated Indebtedness or Preferred Stock
in the event of a Change of Control, the Company shall not consummate any such
redemption, repurchase offer or distribution with respect to such subordinated
Indebtedness or Preferred Stock until such time as the Company shall have paid
the Change of Control Purchase Price in full to the Holders of Notes that have
accepted the Company's Change of Control Offer and shall otherwise have
consummated the Change of Control Offer made to Holders of the Notes and (B) the
Company will not issue Indebtedness that is subordinated in right of payment to
the Notes or Preferred Stock with change of control provisions requiring the
payment of such Indebtedness or Preferred Stock prior to the payment of the
Notes in the event of a Change in Control under this Indenture.
The Company shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Notes pursuant to this
Section 4.15. To the extent that the provisions of any securities laws or
regulations conflict with the provisions of this Section 4.15, the Company shall
comply with the applicable securities laws and regulations and shall not be
deemed to have breached its obligations under this Section 4.15 by virtue
thereof.
Section 4.16. Maintenance of Properties; Insurance; Books and Records;
Compliance with Law.
(a) The Company shall, and shall cause each of its Restricted
Subsidiaries to, at all times cause all properties used or useful in the conduct
of their business to be maintained and kept in good condition, repair and
working order (reasonable wear and tear excepted) and supplied with all
necessary equipment, and shall cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as in the judgment of
the Company may be necessary so that the business carried on in connection
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therewith may be properly conducted; provided, however, that nothing in this
paragraph shall prevent the Company or any Restricted Subsidiary from
discontinuing the operation and maintenance of any of their respective
properties if such discontinuance is, in the judgment of the Company or such
Restricted Subsidiary, desirable in the conduct of its business and not
disadvantageous in any material respect to the Holders.
(b) The Company shall, and shall cause each of its Restricted
Subsidiaries to, maintain insurance in such amounts and covering such risks as
are usually and customarily carried with respect to similar facilities according
to their respective locations.
(c) The Company shall, and shall cause each of its
Subsidiaries to, keep proper books of record and account, in which full and
correct entries shall be made of all financial transactions and the assets and
business of the Company and each Subsidiary of the Company, in accordance with
GAAP consistently applied to the Company and its Subsidiaries taken as a whole.
(d) The Company shall, and shall cause each of its
Subsidiaries to, comply with all statutes, laws, ordinances or government rules
and regulations to which they are subject, the non-compliance with which would
materially adversely affect the business, properties, assets or financial
condition of the Company and its Subsidiaries taken as a whole.
Section 4.17. Limitation on Line of Business.
The Company shall not, and shall not permit any Restricted
Subsidiary to, engage in any business other than a Related Business.
Section 4.18. Pledged Intercompany Note.
On the date of this Indenture, the Company will cause the
Collateral to be pledged by CSC to the Trustee for the benefit of the Holders of
the Notes pursuant to the Pledge Agreement as security for payment of principal
and interest under the Notes.
Section 4.19. Subsidiary Guarantees.
(a) The Company will cause each of its domestic Restricted
Subsidiaries that is not a Special Purpose Subsidiary to execute and deliver a
Subsidiary Guarantee to the Trustee on the date of this Indenture.
(b) Prior to the date on which the Notes receive an Investment Grade
Rating, if the Company or any of its domestic Restricted Subsidiaries that is
not a Special Purpose Subsidiary acquires or creates another domestic Restricted
Subsidiary that is not a
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Special Purpose Subsidiary after the date of this Indenture, the Company will
cause such Restricted Subsidiary to execute such Subsidiary Guarantee and
deliver it to the Trustee, together with an Opinion of Counsel in a form
reasonably satisfactory to the Trustee.
Section 4.20. Further Assurance to the Trustee.
The Company shall, upon the reasonable request of the Trustee,
execute and deliver such further instruments and do such further acts as may be
reasonably necessary or proper to carry out more effectively the provisions of
this Indenture.
ARTICLE 5
SUCCESSOR CORPORATION
Section 5.01. Limitation on Consolidation, Merger and Sale of Assets.
(a) Neither the Company nor any Subsidiary Guarantor shall
consolidate with or merge with or into, or convey, transfer or lease, in one
transaction or a series of related transactions, all or substantially all its
assets to, any Person, unless: (i) the resulting, surviving or transferee Person
(the "Successor Company") shall be a Person organized and existing under the
laws of the United States of America, any state thereof or the District of
Columbia and the Successor Company (if not the Company or the Subsidiary
Guarantor, as the case may be) shall expressly assume, by a supplemental
indenture thereto, executed and delivered to the Trustee, in form reasonably
satisfactory to the Trustee, all the obligations of the Company or the
Subsidiary Guarantor, as the case may be, under the Notes and this Indenture;
(ii) immediately after giving effect to such transaction (and treating any
Indebtedness that becomes an obligation of the Successor Company or any
Restricted Subsidiary as a result of such transaction as having been Incurred by
such Successor Company or such Restricted Subsidiary at the time of such
transaction), no Default or Event of Default shall have occurred and be
continuing; (iii) immediately after giving effect to such transaction, the
Successor Company would be able to incur an additional $1.00 of Indebtedness
pursuant to paragraph (a) of Section 4.06; (iv) immediately after giving effect
to any such transaction solely with respect to the Company, the Successor
Company shall have Consolidated Net Worth in an amount that is not less than the
Consolidated Net Worth of the Company prior to such transaction; and (v) solely
with respect to the Company, the Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that such
consolidation, merger or transfer and such supplemental indenture (if any)
comply with the Indenture. The foregoing shall not prohibit any merger or
consolidation between the Company and any Subsidiary Guarantor.
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Section 5.02. Successor Person Substituted.
Upon any consolidation or merger, or any transfer of all or
substantially all of the assets of the Company in accordance with Section 5.01
above, the Successor Company shall succeed to, and be substituted for, and may
exercise every right and power of, the Company under this Indenture with the
same effect as if such Successor Company had been named as the Company herein,
and thereafter the predecessor corporation shall be relieved of all obligations
and covenants under this Indenture and the Notes; provided, however, that the
predecessor corporation, in the case of a lease, shall not be released from the
obligation to pay the principal of and interest on the Notes.
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.01. Events of Default.
(a) An "Event of Default" occurs if
(1) a default in the payment of interest on the Notes when
due, continued for 30 days;
(2) a default in the payment of principal of any Note;
(3) the failure by the Company to comply with its
obligations under Section 5.01 above;
(4) the failure by the Company or any Subsidiary to comply
for 30 days after notice with any of its other obligations in respect
of the Notes or under the Indenture; provided that no Event of Default
shall have occurred until the Trustee or the Holders of at least 25% in
principal amount of the outstanding Notes notify the Company of the
default and the Company does not cure such default within the time
specified after receipt of such notice;
(5) Indebtedness of the Company or any Restricted Subsidiary
is not paid within any applicable grace period after final maturity or
is accelerated by the holders thereof because of a default and the
total amount of such other Indebtedness unpaid or accelerated exceeds
$5.0 million (the "cross-acceleration provision");
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(6) the failure of a Subsidiary Guarantee by a Subsidiary
Guarantor to be in full force and effect, or the denial or
disaffirmance of a Subsidiary Guarantee by such Subsidiary Guarantor;
(7) the Company or any Significant Subsidiary pursuant to or
within the meaning of any Bankruptcy Law:
(A) commences a voluntary case,
(B) consents to the entry of an order for relief
against it in an involuntary case,
(C) consents to the appointment of a Custodian of it
or for all or substantially all of its property,
(D) makes a general assignment for the benefit of its
creditors, or
(E) generally is not paying its debts as they become
due;
(8) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(A) is for relief against either of the Company or
any Significant Subsidiary in an involuntary case,
(B) appoints a Custodian of either of the Company or
any Significant Subsidiary or for all or substantially all of
the property of either of the Company or any Significant
Subsidiary, or
(C) orders the liquidation of either of the Company
or any Significant Subsidiary,
and the order or decree remains unstayed and in effect for 60 days; or
(9) any final non-appealable judgment or decree for the
payment of money in excess of $5.0 million is rendered against the
Company or a Restricted Subsidiary, remains outstanding for a period of
60 days following such judgment and is not discharged, waived or stayed
within 10 days after notice (the "judgment default provision").
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(b) The term "Bankruptcy Law" means Title 11, U.S. Code or any
similar Federal or state law for the relief of debtors. The term "Custodian"
means any receiver, trustee, assignee, liquidator or similar official under any
Bankruptcy Law.
(c) Subject to Sections 7.01 and 7.02, the Trustee shall not
be charged with knowledge of any Default, Event of Default, Change of Control or
Asset Disposition or the requirement for payment of Additional Interest unless
written notice thereof shall have been given to a Responsible Officer at the
Corporate Trust Office of the Trustee by the Company or any other Person.
Section 6.02. Acceleration.
If an Event of Default (other than an Event of Default arising
under Section 6.01(a)(7) or (8) with respect to the Company) occurs and is
continuing, the Trustee by notice to the Company, or the Holders of not less
than 25% in aggregate principal amount of the Notes then outstanding may by
written notice to the Company and the Trustee declare to be immediately due and
payable the entire principal amount of all the Notes then outstanding plus
accrued but unpaid interest to the date of acceleration and such amounts shall
become immediately due and payable; provided, however, that after such
acceleration but before a judgment or decree based on such acceleration is
obtained the Holders of a majority in aggregate principal amount of the
outstanding Notes may rescind and annul such acceleration and its consequences
if all existing Events of Default, other than the nonpayment of accelerated
principal, premium, if any, or interest that has become due solely because of
the acceleration, have been cured or waived and if the rescission would not
conflict with any judgment or decree. No such rescission shall affect any
subsequent Default or impair any right consequent thereto. In case an Event of
Default specified in Section 6.01(a)(7) or (8) with respect to the Company
occurs, such principal, premium, if any, and interest amount with respect to all
of the Notes shall ipso facto become and be due and payable immediately without
any declaration or other act on the part of the Trustee or the Holders of the
Notes.
Section 6.03. Other Remedies.
If an Event of Default occurs and is continuing, the Trustee
may pursue any available remedy by proceeding at law or in equity to collect the
payment of principal of, or premium, if any, and interest on the Notes or to
enforce the performance of any provision of the Notes or this Indenture and may
take any necessary action requested of it as Trustee to settle, compromise,
adjust or otherwise conclude any proceedings to which it is a party.
The Trustee may maintain a proceeding even if it does not
possess any of the Notes or does not produce any of them in the proceeding. A
delay or omission by the
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Trustee or any Noteholder in exercising any right or remedy accruing upon an
Event of Default shall not impair the right or remedy or constitute a waiver of
or acquiescence in the Event of Default. No remedy is exclusive of any other
remedy. All available remedies are cumulative.
Section 6.04. Waiver of Past Defaults and Events of Default.
Subject to Sections 6.02, 6.07 and 8.02 hereof, the Holders of
a majority in principal amount of the Notes then outstanding have the right to
waive any existing Default or Event of Default or compliance with any provision
of this Indenture or the Notes. Upon any such waiver, such Default shall cease
to exist, and any Event of Default arising therefrom shall be deemed to have
been cured for every purpose of this Indenture; but no such waiver shall extend
to any subsequent or other Default or Event of Default or impair any right
consequent thereto.
Section 6.05. Control by Majority.
The Holders of a majority in principal amount of the Notes
then outstanding may direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or exercising any trust or
power conferred on the Trustee by this Indenture. The Trustee, however, may
refuse to follow any direction that conflicts with law or this Indenture or that
the Trustee determines may be unduly prejudicial to the rights of Noteholders
not taking part in such direction, and the Trustee shall have the right to
decline to follow any such direction if the Trustee, being advised by counsel,
determines that the action so directed may not lawfully be taken or if the
Trustee in good faith shall, by a Responsible Officer, determine that the
proceedings so directed may involve it in personal liability; provided that the
Trustee may take any other action deemed proper by the Trustee which is not
inconsistent with such direction.
Section 6.06. Limitation on Suits.
Subject to Section 6.07 below, a Noteholder may not institute
any proceeding or pursue any remedy with respect to this Indenture or the Notes
unless:
(1) the Holder gives to the Trustee written notice of a
continuing Event of Default;
(2) the Holders of at least 25% in aggregate principal
amount of the Notes then outstanding make a written request to the
Trustee to pursue the remedy;
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(3) such Holder or Holders offer and if requested provide to
the Trustee indemnity reasonably satisfactory to the Trustee against
any loss, liability or expense;
(4) the Trustee does not comply with the request within 60
days after receipt of the request and the offer, and, if requested,
provision of, indemnity; and
(5) no direction inconsistent with such written request has
been given to the Trustee during such 60-day period by the Holders of a
majority in aggregate principal amount of the Notes then outstanding.
A Noteholder may not use this Indenture to prejudice the
rights of another Noteholder or to obtain a preference or priority over another
Noteholder.
Section 6.07. Rights of Holders To Receive Payment.
Notwithstanding any other provision of this Indenture, the
right of any Holder of a Note to receive payment of principal of, or premium, if
any, and interest on the Note (including Additional Interest) on or after the
respective due dates expressed in the Note, or to bring suit for the enforcement
of any such payment on or after such respective dates, is absolute and
unconditional and shall not be impaired or affected without the consent of the
Holder.
Section 6.08. Collection Suit by Trustee.
If an Event of Default in payment of principal, premium or
interest specified in Section 6.01(1) or (2) hereof occurs and is continuing,
the Trustee may recover judgment in its own name and as trustee of an express
trust against the Company or the Subsidiary Guarantors (or any other obligor on
the Notes) for the whole amount of unpaid principal and accrued interest
remaining unpaid, together with interest on overdue principal and, to the extent
that payment of such interest is lawful, interest on overdue installments of
interest, in each case at the rate set forth in the Notes, and such further
amounts as shall be sufficient to cover the costs and expenses of collection,
including the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel.
Section 6.09. Trustee May File Proofs of Claim.
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 any other
amounts due the Trustee under Section 7.07 hereof) and the Noteholders allowed
in any judicial proceedings relative to the Company or
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the Subsidiary Guarantors (or any other obligor upon the Notes), its creditors
or its property and shall be entitled and empowered to collect and receive any
monies or other property payable or deliverable on any such claims and to
distribute the same after deduction of its charges and expenses to the extent
that any such charges and expenses are not paid out of the estate in any such
proceedings and any custodian in any such judicial proceeding is hereby
authorized by each Noteholder 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 Noteholders, to pay to the Trustee any amount due to it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section 7.07 hereof.
Nothing herein contained shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any
Noteholder any plan of reorganization, arrangement, adjustment or composition
affecting the Notes or the rights of any Holder thereof, or to authorize the
Trustee to vote in respect of the claim of any Noteholder in any such
proceedings.
Section 6.10. Priorities.
If the Trustee collects any money pursuant to this Article 6,
it shall pay out the money in the following order:
FIRST: to the Trustee for amounts due under Section 7.07
hereof;
SECOND: to Noteholders for amounts due and unpaid on the Notes
for principal, premium, if any, and interest (including Additional
Interest, if any) as to each, ratably, without preference or priority
of any kind, according to the amounts due and payable on the Notes; and
THIRD: to the Company or, to the extent the Trustee collects
any amount from any Subsidiary Guarantor, to such Subsidiary Guarantor.
The Trustee may fix a record date and payment date for any
payment to Noteholders pursuant to this Section 6.11.
Section 6.11. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under
this Indenture or in any suit against the Trustee for any action taken or
omitted by it as Trustee, a court in its discretion may require the filing by
any party litigant in the suit of an undertaking to pay the costs of the suit,
and the court in its discretion may assess reasonable costs, including
reasonable attorneys' fees, against any party litigant in the suit, having due
regard to the
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merits and good faith of the claims or defenses made by the party litigant. This
Section 6.11 does not apply to a suit by the Trustee, a suit by a Holder
pursuant to Section 6.07 hereof or a suit by Holders of more than 10% in
principal amount of the Notes then outstanding.
Section 6.12. 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 Subsidiary Guarantors, the
Trustee and the Holders shall be restored severally and respectively to their
former positions hereunder, and thereafter all rights and remedies of the
Trustee and the Holders shall continue as though no such proceeding had been
instituted.
Section 6.13. Rights and Remedies Cumulative.
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 shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or
new or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or remedy.
ARTICLE 7
TRUSTEE
Section 7.01. Duties of Trustee.
(a) If an Event of Default actually known to a Responsible
Officer of the Trustee has occurred and is continuing, the Trustee shall
exercise such of the rights and powers vested in it by this Indenture and use
the same degree of care and skill in their exercise as a prudent man would
exercise or use under the same circumstances in the conduct of his own affairs.
(b) Except during the continuance of an Event of Default:
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(1) The Trustee need perform only those duties that are
specifically set forth in this Indenture and no others.
(2) In the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Indenture but, in the case of any such certificates or opinions
which by any provision hereof are specifically required to be furnished
to the Trustee, the Trustee shall be under a duty to examine the same
to determine whether or not they conform to the requirements of this
Indenture (but need not confirm or investigate the accuracy of
mathematical calculations or other facts stated therein).
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(1) This paragraph does not limit the effect of paragraph
(b) of this Section 7.01.
(2) The Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer, unless it is
proved that the Trustee was negligent in ascertaining the pertinent
facts.
(3) The Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Sections 6.02, 6.05 or 6.06
hereof.
(d) No provision of this Indenture shall require the Trustee
to expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its rights, powers or duties if it shall have
reasonable grounds for believing that repayment of such funds or adequate
indemnity satisfactory to it against such risk or liability is not reasonably
assured to it.
(e) Whether or not therein expressly so provided, paragraphs
(a), (b), (c), (d) and (f) of this Section 7.01 shall govern every provision of
this Indenture that in any way relates to the Trustee.
(f) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company or
any Subsidiary Guarantor. Money held in trust by the Trustee need not be
segregated from other funds except to the extent required by the law.
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Section 7.02. Rights of Trustee.
Subject to Section 7.01 hereof:
(1) The Trustee may rely on any document reasonably believed
by it to be genuine and to have been signed or presented by the proper
person. The Trustee need not investigate any fact or matter stated in
the document.
(2) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel, or both,
which shall conform to the provisions of Section 12.05 hereof. The
Trustee shall be protected and shall not be liable for any action it
takes or omits to take in good faith in reliance on such certificate or
opinion.
(3) The Trustee may act through its attorneys and agents and
shall not be responsible for the misconduct or negligence of any agent
appointed by it with due care.
(4) The Trustee shall not be liable for any action it takes
or omits to take in good faith which it reasonably believes to be
authorized or within its rights or powers.
(5) The Trustee may consult with counsel of its selection,
and the written advice or opinion of such counsel or any Opinion of
Counsel as to matters of law shall be full and complete authorization
and protection from liability in respect of any action taken, omitted
or suffered by it hereunder in good faith and in reliance thereon.
(6) The Trustee may refuse to perform any duty or exercise
any right or power unless it receives indemnity satisfactory to it in
its sole discretion against any loss, liability, expense or fee.
Section 7.03. Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become
the owner or pledgee of Notes and may make loans to, accept deposits from,
perform services for or otherwise deal with the either of the Company or any
Subsidiary Guarantor, or any Affiliates thereof, with the same rights it would
have if it were not Trustee. Any Agent may do the same with like rights. The
Trustee, however, shall be subject to Sections 7.10 and 7.11 hereof.
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Section 7.04. Trustee's Disclaimer.
The Trustee shall not be responsible for and makes no
representation as to the validity or adequacy of this Indenture or the Notes or
any Subsidiary Guarantee, it shall not be accountable for the Company's or any
Subsidiary Guarantor's use of the proceeds from the sale of Notes or any money
paid to the Company or any Subsidiary Guarantors pursuant to the terms of this
Indenture and it shall not be responsible for any statement in the Notes,
Subsidiary Guarantee or this Indenture other than its certificate of
authentication.
Section 7.05. Notice of Defaults.
If a Default occurs and is continuing and if it is known to
the Trustee, the Trustee shall mail to each Noteholder notice of the Default
within 90 days after it occurs. Except in the case of a Default in payment of
the principal of, or premium, if any, or interest on any Note, the Trustee may
withhold the notice if and so long as a committee of its Responsible Officers in
good faith determine(s) that withholding the notice is in the interest of the
Noteholders.
Section 7.06. Reports by Trustee to Holders.
If required by TIA Section 313(a), within 60 days after May 15
of any year, commencing May 15, 1997, the Trustee shall mail to each Noteholder
a brief report dated as of such May 15 that complies with TIA Section 313(a).
The Trustee also shall comply with TIA Section 313(b)(1) and (2). The Trustee
shall also transmit by mail all reports as required by TIA Section 313(c) and
TIA Section 313(d).
Reports pursuant to this Section 7.06 shall be transmitted by mail
(1) to all Holders of Notes, as the names and addresses of
such Holders appear on the Registrar's books; and
(2) to such Holders of Notes as have, within the two years
preceding such transmission, filed their names and addresses with the
Trustee for that purpose.
A copy of each report at the time of its mailing to
Noteholders shall be filed with the SEC and each stock exchange on which the
Notes are listed. The Company shall promptly notify the Trustee when the Notes
are listed on any stock exchange.
Section 7.07. Compensation and Indemnity.
(a) The Company and the Subsidiary Guarantors shall pay to the
Trustee and Agents from time to time such compensation as shall be agreed in
writing between the
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Company and the Trustee for its services hereunder (which compensation shall not
be limited by any provision of law in regard to the compensation of a trustee of
an express trust). The Company and the Subsidiary Guarantors shall reimburse the
Trustee and Agents upon request for all reasonable disbursements, expenses and
advances incurred or made by it in connection with its duties under this
Indenture, including the reasonable compensation, disbursements and expenses of
the Trustee's agents and counsel.
(b) The Company and the Subsidiary Guarantors shall indemnify
each of the Trustee and any predecessor Trustee for, and hold each of them
harmless against, any and all loss, damage, claim, liability or expense,
including without limitation taxes (other than taxes based on the income of the
Trustee or such Agent) and reasonable attorneys' fees and expenses incurred by
each of them in connection with the acceptance or performance of its duties
under this Indenture including the reasonable 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, except to the extent any
such loss, liability or expense may be attributable to its negligence or bad
faith (including, without limitation, settlement costs). The Trustee or Agent
shall notify the Company and the Subsidiary Guarantors in writing promptly of
any claim asserted against the Trustee or Agent for which it may seek indemnity.
However, the failure by the Trustee or Agent to so notify the Company and the
Subsidiary Guarantors shall not relieve the Company and Subsidiary Guarantors of
their obligations hereunder except to the extent the Company and the Subsidiary
Guarantors are prejudiced thereby.
(c) To secure the payment obligations of the Company and the
Subsidiary Guarantors in this Section 7.07, the Trustee shall have a lien prior
to the Notes on all money or property held or collected by the Trustee except
such money or property held in trust to pay principal of and interest on
particular Notes. The obligations of the Company and the Subsidiary Guarantors
under this Section 7.07 to compensate and indemnify the Trustee, Agents and each
predecessor Trustee and to pay or reimburse the Trustee, Agents and each
predecessor Trustee for expenses, disbursements and advances shall be joint and
several liabilities of the Company and each of the Subsidiary Guarantors and
shall survive the resignation or removal of the Trustee and the satisfaction,
discharge or other termination of this Indenture, including any termination or
rejection hereof under any Bankruptcy Law.
(d) When the Trustee incurs expenses or renders services after
an Event of Default specified in Section 6.01(a)(8) or (9) hereof occurs, the
expenses and the compensation for the services are intended to constitute
expenses of administration under any Bankruptcy Law.
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(e) For purposes of this Section 7.07, the term "Trustee"
shall include any trustee appointed pursuant to Article 9.
Section 7.08. Replacement of Trustee.
(a) A resignation or removal of the Trustee and appointment of
a successor Trustee shall become effective only upon the successor Trustee's
acceptance of appointment and taking of office as provided in this Section 7.08.
(b) The Trustee may resign by so notifying the Company and the
Subsidiary Guarantors in writing. The Holders of a majority in principal amount
of the outstanding Notes may remove the Trustee by notifying the Company and the
removed Trustee in writing and may appoint a successor Trustee with the
Company's written consent, which consent shall not be unreasonably withheld. The
Company may remove the Trustee at its election if:
(1) the Trustee fails to comply with Section 7.10 hereof;
(2) the Trustee is adjudged a bankrupt or an insolvent or an
order for relief is entered with respect to the Trustee under any
Bankruptcy Law;
(3) a receiver or other public officer takes charge of the
Trustee or its property; or
(4) the Trustee otherwise becomes incapable of acting.
(c) If the Trustee resigns or is removed or if a vacancy
exists in the office of Trustee for any reason, the Company shall promptly
appoint a successor Trustee.
(d) If a successor Trustee does not take office within 60 days
after the retiring Trustee resigns or is removed, the retiring Trustee, the
Company or the Holders of a majority in principal amount of the outstanding
Notes may petition any court of competent jurisdiction for the appointment of a
successor Trustee.
(e) If the Trustee fails to comply with Section 7.10 hereof,
any Noteholder may petition any court of competent jurisdiction for the removal
of the Trustee and the appointment of a successor Trustee.
(f) A successor Trustee shall deliver a written acceptance of
its appointment to the retiring Trustee and to the Company. Immediately
following such delivery, the retiring Trustee shall, subject to its rights under
Section 7.07 hereof, transfer all property held by it as Trustee to the
successor Trustee, the resignation or removal of the retiring
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Trustee shall become effective, and the successor Trustee shall have all the
rights, powers and duties of the Trustee under this Indenture. A successor
Trustee shall mail notice of its succession to each Noteholder. Notwithstanding
replacement of the Trustee pursuant to this Section 7.08, the Company
obligations under Section 7.07 hereof shall continue for the benefit of the
retiring Trustee.
Section 7.09. Successor Trustee by Consolidation, Merger, Etc.
If the Trustee consolidates with, merges or converts into, or
transfers all or substantially all of its corporate trust assets to, another
corporation, subject to Section 7.10 hereof, the successor corporation without
any further act shall be the successor Trustee.
Section 7.10. Eligibility; Disqualification.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA Section 310(a)(1) and (2) in every respect. The Trustee
shall have a combined capital and surplus of at least $100,000,000 as set forth
in its most recent published annual report of condition. The Trustee shall
comply with TIA Section 310(b), including the provision in Section 310(b)(1).
Section 7.11. Preferential Collection of Claims Against Company.
The Trustee shall comply with TIA Section 311(a), excluding
any creditor relationship listed in TIA Section 311 (b). A Trustee who has
resigned or been removed shall be subject to TIA Section 311(a) to the extent
indicated therein.
Section 7.12. Paying Agents.
The Company shall cause each Paying Agent other than the
Trustee to execute and deliver to it and the Trustee an instrument in which such
agent shall agree with the Trustee, subject to the provisions of this Section
7.12:
(A) that it will hold all sums held by it as agent for the
payment of principal of, or premium, if any, or interest on, the Notes
(whether such sums have been paid to it by the Company or by any
obligor on the Notes) in trust for the benefit of Holders of the Notes
or the Trustee;
(B) that it will at any time during the continuance of any
Event of Default, upon written request from the Trustee, deliver to the
Trustee all sums so held in trust by it together with a full accounting
thereof; and
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(C) that it will give the Trustee written notice within three
(3) Business Days of any failure of the Company (or by any obligor on
the Notes) in the payment of any installment of the principal of,
premium, if any, or interest on, the Notes when the same shall be due
and payable.
ARTICLE 8
AMENDMENTS, SUPPLEMENTS AND WAIVERS
Section 8.01. Without Consent of Holders.
The Company and the Subsidiary Guarantors, when authorized by
a Board Resolution of each of them, and the Trustee may amend, waive or
supplement this Indenture, the Notes, the Subsidiary Guarantees or the Pledge
Agreement without notice to or consent of any Noteholder:
(1) to comply with Section 5.01 hereof;
(2) to provide for uncertificated Notes in addition to or in
place of certificated Notes;
(3) to comply with any requirements of the SEC under the
TIA;
(4) to cure any ambiguity, omission, defect or
inconsistency;
(5) to add to the covenants of the Company for the benefit
of the Holders of the Notes;
(6) to surrender any right to power conferred upon the
Company or a Subsidiary Guarantor;
(7) to make any other change that does not adversely affect
the rights of any Noteholders hereunder;
(8) to add guarantees with respect to the Notes;
(9) to further secure the Notes;
(10) to release Collateral or Subsidiary Guarantees in
accordance with the terms of this Indenture, the Subsidiary Guarantees
or the Pledge Agreement; or
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(11) to provide for the issuance and authorization of the
Exchange Notes and/or the Private Exchange Notes in a manner that does
not adversely affect the rights of any Noteholder.
The Trustee is hereby authorized to, and shall, join with the
Company and the Subsidiary Guarantors in the execution of any supplemental
indenture authorized or permitted by the terms of this Indenture and to make any
further appropriate agreements and stipulations which may be therein contained,
but the Trustee shall not be obligated to enter into any such supplemental
indenture which adversely affects its own rights, duties or immunities under
this Indenture.
Section 8.02. With Consent of Holders.
The Company (when authorized by a Board Resolution), the
Subsidiary Guarantors (each when authorized by a Board Resolution) and the
Trustee may modify or supplement this Indenture, the Notes, the Subsidiary
Guarantees or the Pledge Agreement with the written consent of the Holders of
not less than a majority in aggregate principal amount of the outstanding Notes
(including consents obtained in connection with a tender offer or exchange for
the Notes). The Holders of not less than a majority in aggregate principal
amount of the outstanding Notes may waive compliance in a particular instance by
the Company or Subsidiary Guarantors with any provision of this Indenture, the
Notes, the Subsidiary Guarantees or the Pledge Agreement. Subject to Section
8.04, without the consent of each Noteholder affected, however, an amendment,
supplement or waiver, including a waiver pursuant to Section 6.04, may not:
(1) reduce the principal amount of outstanding Notes whose
Holders must consent to an amendment, supplement or waiver to this
Indenture, the Notes, the Subsidiary Guarantees or the Pledge
Agreement;
(2) reduce the rate of or change the time for payment of
interest on any Note;
(3) reduce the principal of or premium on or extend the
Stated Maturity of any Note;
(4) make any Note payable in money other than that stated in
the Note;
(5) change the amount or time of any payment required by the
Notes or reduce the premium payable upon any redemption of the Notes in
accordance with Section 3.01 hereof, or change the time before which no
such redemption may be made;
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(6) waive a default in the payment of the principal of, or
interest on, or redemption payment with respect to, any Note;
(7) impair the right of any Holders of the Notes to receive
payment of principal of, interest on and premium on, if any, such
Holders' Notes on or after the due dates therefor or to institute suit
for the enforcement of any payment on or with respect to such Holders'
Notes;
(8) make any changes in Sections 6.04 or 6.07 hereof or this
sentence of Section 8.02; or
(9) affect the ranking of the Notes or the Subsidiary
Guarantees in a manner adverse to the Holders.
After an amendment, supplement or waiver under this Section
8.02 becomes effective, the Company shall mail to the Holders a notice briefly
describing the amendment, supplement or waiver; provided, however, that the
failure to give such notice to all Holders of the Notes, or any defect therein,
will not impair or affect the validity of the amendment.
Upon the written request of the Company, accompanied by a
Board Resolution authorizing the execution of any such amended or supplemental
indenture, Notes, Subsidiary Guarantees or Pledge Agreement, and upon the
receipt by the Trustee of evidence reasonably satisfactory to the Trustee of the
consent of the Noteholders as aforesaid and upon receipt by the Trustee of the
documents described in Section 8.06 hereof, the Trustee shall join with the
Company and the Subsidiary Guarantors in the execution of such amended or
supplemental indenture, Notes, Subsidiary Guarantees or Pledge Agreement unless
such amended or supplemental indenture, Notes, Subsidiary Guarantees or Pledge
Agreement affects the Trustee's own rights, duties or immunities under this
Indenture, in which case the Trustee may, but shall not be obligated to, enter
into such supplemental indenture.
It shall not be necessary for the consent of the Holders under
this Section to approve the particular form of any proposed amendment,
supplement or waiver, but it shall be sufficient if such consent approves the
substance thereof.
Section 8.03. Compliance with Trust Indenture Act.
Every amendment or supplement to this Indenture, the Notes,
the Subsidiary Guarantees or Pledge Agreement shall comply with the TIA as then
in effect. This Indenture shall be construed to comply in every respect with the
TIA.
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Section 8.04. Revocation and Effect of Consents.
Until an amendment, supplement, waiver or other action becomes
effective, a consent to it by a Holder of a Note is a continuing consent
conclusive and binding upon such Holder and every subsequent Holder of the same
Note or portion thereof, and of any Note issued upon the transfer thereof or in
exchange therefor or in place thereof, even if notation of the consent is not
made on any such Note. Any such Holder or subsequent Holder, however, may revoke
the consent as to his Note or portion of a Note, if the Trustee receives the
written notice of revocation before the date the amendment, supplement, waiver
or other action becomes effective.
The Company may, but shall not be obligated to, fix a record
date for the purpose of determining the Holders entitled to consent to any
amendment, supplement, or waiver. If a record date is fixed, then,
notwithstanding the preceding paragraph, those Persons who were Holders at such
record date (or their duly designated proxies), and only such Persons, shall be
entitled to consent to such amendment, supplement, or waiver or to revoke any
consent previously given, whether or not such Persons continue to be Holders
after such record date. No such consent shall be valid or effective for more
than 90 days after such record date unless the consent of the requisite number
of Holders has been obtained.
After an amendment, supplement, waiver or other action becomes
effective, it shall bind every Noteholder, unless it makes a change described in
any of clauses (1) through (9) of Section 8.02 hereof. In that case the
amendment, supplement, waiver or other action shall bind each Holder of a Note
who has consented to it and every subsequent Holder of a Note or portion of a
Note that evidences the same debt as the consenting Holder's Note.
Section 8.05. Notation on or Exchange of Notes.
If an amendment, supplement, or waiver changes the terms of a
Note, the Trustee (in accordance with the specific written direction of the
Company) shall request the Holder of the Note (in accordance with the specific
written direction of the Company) to deliver it to the Trustee. In such case,
the Trustee shall place an appropriate notation on the Note about the changed
terms and return it to the Holder. Alternatively, if the Company or the Trustee
so determines, the Company in exchange for the Note shall issue, the Guarantors
shall endorse, and the Trustee shall authenticate a new Note that reflects the
changed terms. Failure to make the appropriate notation or issue a new Note
shall not affect the validity and effect of such amendment, supplement or
waiver.
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Section 8.06. Trustee To Sign Amendments, Etc.
The Trustee shall sign any amendment, supplement or waiver
authorized pursuant to this Article 8 if the amendment, supplement or waiver
does not adversely affect the rights, duties, liabilities or immunities of the
Trustee. If it does, the Trustee may, but need not, sign it. In signing or
refusing to sign such amendment, supplement or waiver the Trustee shall be
entitled to receive and, subject to Section 7.01 hereof, shall be fully
protected in relying upon an Officers' Certificate and an Opinion of Counsel
stating, in addition to the matters required by Section 11.04, that such
amendment, supplement or waiver is authorized or permitted by this Indenture and
is a legal, valid and binding obligation of the Company and Subsidiary
Guarantors, enforceable against the Company and Subsidiary Guarantors in
accordance with its terms (subject to customary exceptions).
ARTICLE 9
SATISFACTION AND DISCHARGE OF INDENTURE; DEFEASANCE
Section 9.01. Satisfaction and Discharge of Indenture.
The Company may terminate its obligations under the Notes and
this Indenture and the Subsidiary Guarantors may terminate their obligations
under the Subsidiary Guarantees and this Indenture, except the obligations
referred to in the last paragraph of this Section 9.01, when
(a) either
(i) all Notes theretofore authenticated and delivered (other
than (A) Notes that have been destroyed, lost or stolen and that have been
replaced or paid as provided in Section 2.07 or 2.08 hereof and (B) Notes for
whose payment money has theretofore been deposited with the Trustee as provided
in Section 4.01) have been cancelled by the Trustee or have been delivered to
the Trustee for cancellation; or
(ii) all such Notes not theretofore delivered to the Trustee
for cancellation
(A) have become due and payable, or
(B) will become due and payable at their Stated Maturity
within one year, or
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(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, in the case of clause (ii)(A), (ii)(B) or (ii)(C) above, the
Company or any Subsidiary Guarantor has deposited or caused to be
deposited with the Trustee in trust for such purpose, together with a
statement by the Company that such deposit is irrevocable, money in an
amount sufficient to pay and discharge the entire Indebtedness on such
Notes not theretofore delivered to the Trustee for cancellation, for
principal of, premium, if any, and interest on the Notes to the date of
such deposit (in the case of Notes that have become due and payable) or
to the Stated Maturity or redemption date, as the case may be;
(b) the Company or any Subsidiary Guarantor has paid or caused
to be paid all other sums payable hereunder by the Company;
(c) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided relating to the satisfaction and discharge of this
Indenture have been complied with, and that such satisfaction and discharge will
not result in a breach or violation of, or constitute a default under, this
Indenture or any other material agreement or instrument to which the Company is
party or by which the Company is bound; and
(d) the Company and each Guarantor have complied with TIA
Section 314(c) in connection with such satisfaction and discharge.
After such delivery the Trustee, at the expense of the
Company, upon request shall acknowledge in writing the satisfaction and
discharge of the Company's obligations under the Notes and this Indenture except
for those surviving obligations specified below.
Notwithstanding the satisfaction and discharge of this
Indenture, the obligations of the Company in Sections 2.07, 7.07, 9.05, 9.06 and
9.08 hereof shall survive.
Section 9.02. Legal Defeasance.
The Company may at its option, by Board Resolution of the
Board of Directors of the Company, be discharged from its obligations with
respect to the Notes and the Subsidiary Guarantors discharged from their
obligations under the Subsidiary Guarantees on the date the conditions set forth
in Section 9.04 below are satisfied (hereinafter, "Legal De-
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feasance"). For this purpose, such Legal Defeasance means that the Company shall
be deemed to have paid and discharged the entire Indebtedness represented by the
outstanding Notes, which shall thereafter be deemed to be "outstanding" only for
the purposes of Section 9.05 hereof and the other Sections of this Indenture
referred to in clauses (A) and (B) below, and to have satisfied all its other
obligations under such Notes and this Indenture insofar as such Notes are
concerned (and the Trustee, at the expense of the Company, shall, subject to
Section 9.06 hereof, execute instruments in form and substance reasonably
satisfactory to the Trustee and Company acknowledging the same), except for the
following, which shall survive until otherwise terminated or discharged
hereunder: (A) the rights of Holders of outstanding Notes to receive solely from
the trust funds described in Section 9.04 hereof and as more fully set forth in
such Section, payments in respect of the principal of, premium, if any, and
interest on such Notes when such payments are due, (B) the Company's obligations
with respect to such Notes under Sections 2.03, 2.04, 2.05, 2.06, 2.07, 2.08,
2.11 and 4.20 hereof, (C) the rights, powers, trusts, duties and immunities of
the Trustee hereunder (including claims of, or payments to, the Trustee under or
pursuant to Section 7.07 hereof) and (D) this Article 9. Subject to compliance
with this Article 9, the Company may exercise its option under this Section 9.02
with respect to the Notes notwithstanding the prior exercise of its option under
Section 9.03 below with respect to the Notes.
Section 9.03. Covenant Defeasance.
At the option of the Company, pursuant to a Board Resolution
of the Board of Directors of the Company, the Company and the Subsidiary
Guarantors shall be released from their respective obligations under Sections
4.02 (except for obligations mandated by the TIA) and 4.04 through 4.20,
inclusive, and clauses (a)(iii) and (iv) of Section 5.01 hereof with respect to
the outstanding Notes on and after the date the conditions set forth in Section
9.04 hereof are satisfied (hereinafter, "Covenant Defeasance"), and the Notes
shall thereafter be deemed not to be "outstanding" for the purposes of any
direction, waiver, consent, declaration or act of Holders of the Notes (and the
consequences of any thereof) in connection with such covenants, but shall
continue to be deemed to be "outstanding" for all other purposes hereunder
(provided that such Notes shall not be deemed to be outstanding for accounting
purposes). For this purpose, such Covenant Defeasance means that the Company and
the Subsidiary Guarantors may omit to comply with and shall have no liability in
respect of any term, condition or limitation set forth in any such specified
Section or portion thereof, whether directly or indirectly, by reason of any
reference elsewhere herein to any such specified Section or portion thereof or
by reason of any reference in any such specified Section or portion thereof to
any other provision herein or in any other document and such omission to comply
shall not constitute a Default or an Event of Default under Section 6.01 hereof,
but, except as specified above, the remainder of this Indenture, such
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Notes and the Subsidiary Guarantees shall be unaffected thereby. In addition,
upon the Company's exercise of the option applicable to this Section 9.03,
subject to the satisfaction of the conditions set forth in Section 9.04 hereof,
clauses (a)(4), (5), (7) (but only with respect to any Significant Subsidiary),
(8) (but only with respect to any Significant Subsidiary) and (9) of Section
6.01 shall not constitute Events of Default.
Section 9.04. Conditions to Defeasance or Covenant Defeasance.
The following shall be the conditions to application of
Section 9.02 or Section 9.03 hereof to the outstanding Notes:
(1) the Company shall irrevocably have deposited or caused
to be deposited with the Trustee (or another trustee satisfying the
requirements of Section 7.10 hereof who shall agree to comply with the
provisions of this Article 9 applicable to it) as funds in trust for
the purpose of making the following payments, specifically pledged as
security for, and dedicated solely to, the benefit of the Holders of
the Notes, (A) money in an amount, or (B) U.S. Government Obligations
which through the scheduled payment of principal and interest in
respect thereof in accordance with their terms will provide, not later
than the due date of any payment, money in an amount, or (C) a
combination thereof, sufficient, in the opinion of a
nationally-recognized firm of independent public accountants expressed
in a written certification thereof delivered to the Trustee, to pay and
discharge, and which shall be applied by the Trustee (or other
qualifying trustee) to pay and discharge, the principal of, premium, if
any, and accrued interest on the outstanding Notes at the maturity date
of such principal, premium, if any, or interest, or on dates for
payment and redemption of such principal, premium, if any, and interest
selected in accordance with the terms of this Indenture and of the
Notes;
(2) no Event of Default or Default with respect to the Notes
shall have occurred and be continuing on the date of such deposit, or
shall have occurred and be continuing at any time during the period
ending on the 91st day after the date of such deposit or, if longer,
ending on the day following the expiration of the longest preference
period under any Bankruptcy Law applicable to the Company in respect of
such deposit (it being understood that this condition shall not be
deemed satisfied until the expiration of such period);
(3) such Legal Defeasance or Covenant Defeasance shall not
cause the Trustee to have a conflicting interest for purposes of the
TIA with respect to any securities of the Company;
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(4) such Legal Defeasance or Covenant Defeasance shall not
result in a breach or violation of, or constitute default under, any
material agreement or instrument (other than this Indenture) to which
the Company or any Subsidiary Guarantor is a party or by it is are
bound;
(5) the Company shall have delivered to the Trustee an
Opinion of Counsel stating that, as a result of such Legal Defeasance
or Covenant Defeasance, neither the trust nor the Trustee will be
required to register as an investment company under the Investment
Company Act of 1940, as amended;
(6) in the case of an election under Section 9.02 above, the
Company shall have delivered to the Trustee an Opinion of Counsel
stating that (i) the Company has received from, or there has been
published by, the Internal Revenue Service a ruling to the effect that
or (ii) there has been a change in any applicable Federal income tax
law with the effect that, and such opinion shall confirm that, the
Holders of the outstanding Notes will not recognize income, gain or
loss for Federal income tax purposes solely as a result of such Legal
Defeasance and will be subject to Federal income tax on the same
amounts, in the same manner, including as a result of prepayment, and
at the same times as would have been the case if such Legal Defeasance
had not occurred;
(7) in the case of an election under Section 9.03 hereof,
the Company shall have delivered to the Trustee an Opinion of Counsel
to the effect that the Holders of the outstanding Notes will not
recognize income, gain or loss for Federal income tax purposes as a
result of such Covenant Defeasance and will be subject to Federal
income tax on the same amounts, in the same manner and at the same
times as would have been the case if such Covenant Defeasance had not
occurred;
(8) the Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that all
conditions precedent provided for relating to either the Legal
Defeasance under Section 9.02 above or the Covenant Defeasance under
Section 9.03 hereof (as the case may be) have been complied with;
(9) the Company shall have delivered to the Trustee an
Officers' Certificate stating that the deposit under clause (1) was not
made by the Company with the intent of defeating, hindering, delaying
or defrauding any creditors of the Company or others; and
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(10) the Company shall have paid or duly provided for payment
under terms mutually satisfactory to the Company and the Trustee all
amounts then due to the Trustee pursuant to Section 7.07 hereof.
Section 9.05. Deposited Money and U.S. Government Obligations To Be Held in
Trust; Other Miscellaneous Provisions.
All money and U.S. Government Obligations (including the
proceeds thereof) deposited with the Trustee pursuant to Section 9.04 hereof in
respect of the outstanding Notes shall be held in trust and applied by the
Trustee, in accordance with the provisions of such Notes and this Indenture, to
the payment, either directly or through any Paying Agent, to the Holders of such
Notes, of all sums due and to become due thereon in respect of principal,
premium, if any, and accrued interest, but such money need not be segregated
from other funds except to the extent required by law.
The Company and the Subsidiary Guarantors shall (on a joint
and several basis) 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 9.04 hereof or the principal, premium, if any, and interest
received in respect thereof other than any such tax, fee or other charge which
by law is for the account of the Holders of the outstanding Notes.
Anything in this Article 9 to the contrary notwithstanding,
the Trustee shall 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 9.04 hereof which, in the opinion of a nationally-recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee, are in excess of the amount thereof which would then
be required to be deposited to effect an equivalent Legal Defeasance or Covenant
Defeasance.
Section 9.06. Reinstatement.
If the Trustee or Paying Agent is unable to apply any money or
U.S. Government Obligations in accordance with Section 9.01, 9.02 or 9.03 hereof
by reason of any order or judgment of any court or governmental authority
enjoining, restraining or otherwise prohibiting such application, the Company's
and each Subsidiary Guarantor's obligations under this Indenture, the Notes and
the Subsidiary Guarantees shall be revived and reinstated as though no deposit
had occurred pursuant to this Article 9 until such time as the Trustee or Paying
Agent is permitted to apply all such money or U.S. Government Obligations in
accordance with Section 9.01, 9.02 or 9.03 hereof, as the case may be; provided,
however, that if the Company or the Subsidiary Guarantors have made any payment
of
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principal of, premium, if any, or accrued interest on any Notes because of
the reinstatement of their obligations, the Company or the Subsidiary
Guarantors, as the case may be, shall be subrogated to the rights of the Holders
of such Notes to receive such payment from the money or U.S. Government
Obligations held by the Trustee or Paying Agent.
Section 9.07. Moneys Held by Paying Agent.
In connection with the satisfaction and discharge of this
Indenture, all moneys then held by any Paying Agent under the provisions of this
Indenture shall, upon written demand of the Company, be paid to the Trustee, or
if sufficient moneys have been deposited pursuant to Section 9.01 hereof, to the
Company upon a Company Request (or, if such moneys had been deposited by the
Subsidiary Guarantors, to such Subsidiary Guarantors), and thereupon such Paying
Agent shall be released from all further liability with respect to such moneys.
Section 9.08. Moneys Held by Trustee.
Any moneys deposited with the Trustee or any Paying Agent or
then held by the Company or the Subsidiary Guarantors in trust for the payment
of the principal of, or premium, if any, or interest on any Note that are not
applied but remain unclaimed by the Holder of such Note for two years after the
date upon which the principal of, or premium, if any, or interest on such Note
shall have respectively become due and payable shall be repaid to the Company
(or, if appropriate, the Subsidiary Guarantors) upon a Company Request, or if
such moneys are then held by the Company or the Subsidiary Guarantors in trust,
such moneys shall be released from such trust; and the Holder of such Note
entitled to receive such payment shall thereafter, as an unsecured general
creditor, look only to the Company and the Subsidiary Guarantors for the payment
thereof, and all liability of the Trustee or such Paying Agent with respect to
such trust money shall thereupon cease; provided, however, that the Trustee or
any such Paying Agent, before being required to make any such repayment, may, at
the expense of the Company and the Subsidiary Guarantors, either mail to each
Noteholder affected, at the address shown in the register of the Notes
maintained by the Registrar pursuant to Section 2.03 hereof, or cause to be
published once a week for two successive weeks, in a newspaper published in the
English language, customarily published each Business Day and of general
circulation in the City of New York, New York, a notice that such money remains
unclaimed and that, after a date specified therein, which shall not be less than
30 days from the date of such mailing or publication, any unclaimed balance of
such moneys then remaining will be repaid to the Company. After payment to the
Company or the Subsidiary Guarantors or the release of any money held in trust
by the Company or any Subsidiary Guarantors, as the case may be, Noteholders
entitled to the money must look only to the Company and the Subsidiary
Guarantors for
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payment as general creditors unless applicable abandoned property law designates
another Person.
Section 9.09. Collateral.
Upon the Company's exercise under this Article 9 of the option
applicable to either Section 9.02 or 9.03 or the satisfaction and discharge of
this Indenture under Section 9.01 hereof, the Collateral shall be released
pursuant to Section 11.07 hereof.
ARTICLE 10
GUARANTEE OF NOTES
Section 10.01. Subsidiary Guarantee.
Subject to the provisions of this Article 10, each Subsidiary
Guarantor hereby jointly and severally unconditionally guarantees to each Holder
and to the Trustee: (i) the due and punctual payment of the principal of and
premium, if any, and interest on each Note, when and as the same shall become
due and payable, whether at maturity, by acceleration or otherwise, the due and
punctual payment of interest (including Additional Interest) on the overdue
principal of and premium, if any, and interest on the Notes, to the extent
lawful, and the due and punctual performance of all other obligations of the
Company to the Holders or the Trustee (including without limitation amounts due
the Trustee under Section 7.07), all in accordance with the terms of such Note
and this Indenture, and (ii) in the case of any extension of time of payment or
renewal of any Notes or any of such other obligations, that the same will be
promptly paid in full when due or performed in accordance with the terms of the
extension or renewal, at stated maturity, by acceleration or otherwise. Each
Subsidiary Guarantor hereby agrees that its obligations hereunder shall be
absolute and unconditional, irrespective of, and shall be unaffected by, any
invalidity, irregularity or unenforceability of any such Note or this Indenture,
any failure to enforce the provisions of any such Note or this Indenture, any
waiver, modification or indulgence granted to the Company with respect thereto
by the Holder of such Note or the Trustee, or any other circumstances which may
otherwise constitute a legal or equitable discharge of a surety or such
Subsidiary Guarantor (other than a defense of payment or performance).
Each Subsidiary Guarantor, to the extent permitted by law,
hereby waives diligence, presentment, demand for payment, filing of claims with
a court in the event of merger or bankruptcy of the Company, any right to
require a proceeding first against the Company, protest or notice with respect
to any such Note or the Indebtedness evidenced
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thereby and all demands whatsoever, and covenants that this Subsidiary Guarantee
will not be discharged as to any such Note except by payment in full of the
principal thereof, premium, if any, and interest thereon and as provided in
Section 9.01 hereof. Each Subsidiary Guarantor further agrees that, as between
such Subsidiary Guarantor, on the one hand, and the Holders and the Trustee, on
the other hand, (i) the maturity of the obligations guaranteed hereby may be
accelerated as provided in Article 6 hereof for the purposes of this Subsidiary
Guarantee, notwithstanding any stay, injunction or other prohibition preventing
such acceleration in respect of the obligations guaranteed hereby, and (ii) in
the event of any declaration of acceleration of such obligations as provided in
Article 6 hereof, such obligations (whether or not due and payable) shall
forthwith become due and payable by each Subsidiary Guarantor for the purpose of
this Subsidiary Guarantee. In addition, without limiting the foregoing
provisions, upon the effectiveness of an acceleration under Article 6 hereof,
the Trustee shall promptly make a demand for payment on the Notes under the
Subsidiary Guarantee provided for in this Article 10 and not discharged.
The Subsidiary Guarantee set forth in this Section 10.01 shall
not be valid or become obligatory for any purpose with respect to a Note until
the certificate of authentication on such Note shall have been signed by or on
behalf of the Trustee by its manual signature.
Section 10.02. Execution and Delivery of Subsidiary Guarantees.
To evidence the Subsidiary Guarantee set forth in this Article
10, each Subsidiary Guarantor hereby agrees that a notation of such Subsidiary
Guarantee substantially in the form included in Exhibit G hereto shall be placed
on each Note authenticated and made available for delivery by the Trustee and
that the Subsidiary Guarantee in this Indenture shall be executed on behalf of
each Subsidiary Guarantor by the manual or facsimile signature of an Officer of
each Subsidiary Guarantor.
Each Subsidiary Guarantor hereby agrees that the Subsidiary
Guarantee set forth in Section 10.01 shall remain in full force and effect
notwithstanding any failure to endorse on each Note a notation of such
Subsidiary Guarantee.
If an Officer of a Subsidiary Guarantor whose manual or
facsimile signature is on the Subsidiary Guarantee no longer holds that office
at the time the Trustee authenticates the Note on which the Subsidiary Guarantee
is endorsed, the Guarantee shall be valid nevertheless.
The delivery of any Note by the Trustee, after the
authentication thereof hereunder, shall constitute due delivery of the
Subsidiary Guarantee set forth in this Indenture on behalf of each Subsidiary
Guarantor.
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Section 10.03. Limitation of Subsidiary Guarantee.
The obligations of each Subsidiary Guarantor are limited to
the maximum amount as will, after giving effect to all other contingent and
fixed liabilities of such Subsidiary Guarantor and after giving effect to any
collections from or payments made by or on behalf of any other Subsidiary
Guarantor in respect of the obligations of such other Subsidiary Guarantor under
its Subsidiary Guarantee or pursuant to its contribution obligations under this
Indenture, result in the obligations of such Subsidiary Guarantor under the
Subsidiary Guarantee not constituting a fraudulent conveyance or fraudulent
transfer under federal, state or foreign law. Each Subsidiary Guarantor that
makes a payment or distribution under a Subsidiary Guarantee shall be entitled
to a contribution from each other Subsidiary Guarantor in a pro rata amount
based on the Adjusted Net Assets of each Subsidiary Guarantor.
Section 10.04. Additional Subsidiary Guarantors.
The Company covenants and agrees that it shall cause any
Person which becomes obligated to guarantee the Notes, pursuant to the terms of
Section 4.19 hereof, to execute a guarantee satisfactory in form and substance
to the Trustee pursuant to which such Restricted Subsidiary shall guarantee the
obligations of the Company under the Notes and this Indenture in accordance with
this Article 10 with the same effect and to the same extent as if such Person
had been named herein as a Subsidiary Guarantor.
Section 10.05. Release of Subsidiary Guarantor.
A Subsidiary Guarantor (or, in the case of clause (iii) below,
each Subsidiary Guarantor) shall be released from all of its obligations under
its Subsidiary Guarantee if:
(i) the Subsidiary Guarantor has sold all or substantially
all of its assets or the Company and its Restricted Subsidiaries have
sold all of the Capital Stock of the Subsidiary Guarantor owned by
them, in each case in a transaction in compliance with Sections 4.08
and 5.01 hereof;
(ii) the Subsidiary Guarantor merges with or into or
consolidates with, or transfers all or substantially all of its assets
to, the Company or another Subsidiary Guarantor in a transaction in
compliance with Section 5.01 hereof; or
(iii) an Investment Grade Rating is received by the Company
with respect to the Notes;
and in each such case, such Subsidiary Guarantor has delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that all
conditions precedent herein provided for relating to such transactions have been
complied with. The Trustee shall execute
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any documents reasonably required in order to evidence the release of any such
Subsidiary Guarantor from its obligations under its Subsidiary Guarantee.
ARTICLE 11
SECURITY
Section 11.01. Pledge Agreement.
Each Holder, by accepting any Notes, agrees to all of the
terms and provisions of the Pledge Agreement as the same may be in effect or may
be amended from time to time (including, without limitation, the provisions
providing for foreclosure and release of the Collateral) and authorizes and
directs the Collateral Agent under the Pledge Agreement to act as secured party
with respect thereto. The due and punctual payment of the principal of, premium,
if any, and interest on the Notes when and as the same shall be due and payable,
whether on an Interest Payment Date, at maturity, by acceleration, call for
redemption or otherwise, and interest on the overdue principal of, premium and
interest, if any, on the Notes and payment and performance of all other
obligations of the Company and CSC to the Holders or the Trustee under this
Indenture, the Notes and the Subsidiary Guarantee of CSC, according to the terms
hereunder or thereunder, shall, subject to any prior Lien described therein, be
secured as provided in the Pledge Agreement.
Section 11.02. Maintenance of the Collateral.
On the Issue Date, the Intercompany Note (or the
"Collateral"), which will constitute Senior Indebtedness of CSC-UK, will be in a
principal amount equal to $115.0 million, will be denominated in US dollars,
will mature on June 1, 2004 and will bear interest at a rate not less than the
rate borne by the Notes. So long as any Notes remain outstanding, during such
time as the Collateral is pledged to the Collateral Agent, the Company shall
cause the outstanding aggregate principal amount of the Intercompany Note to
increase or decrease on a pro rata basis with other notes provided by CSC-UK and
pledged to third party lenders to reflect advances made by or repaid to CSC;
provided that the Company shall cause the outstanding aggregate principal amount
of the Intercompany Note to be no less than $115.0 million following the Issue
Date; provided, further, that CSC-UK may (i) redeem or repurchase the
Intercompany Note in connection with any optional redemption or offer to
purchase Notes on a pro rata basis in a proportion that is equal to or less than
the proportion that the principal amount of Notes so redeemed or purchased
represents with respect to the amount of Notes outstanding immediately prior to
such purchase or redemption and (ii) prepay the Intercompany Note in connection
with a sale of substantially
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all of the Capital Stock or assets of CSC-UK pursuant to a transaction in
compliance with the covenant described under Section 4.08.
Section 11.03. Interest and Principal on the Collateral.
The Notes will also be secured by all interest and principal
payments made upon or with respect to the Collateral; provided, however, that so
long as no Event of Default shall have occurred and be continuing, all interest
and principal payments made upon or with respect to the Collateral shall not
constitute Collateral and may be used by CSC subject to the other terms and
conditions of this Indenture. Upon the occurrence and during the continuance of
an Event of Default, all rights of CSC to receive all such interest and
principal payments shall cease, and such interest and principal payments shall
constitute Collateral and shall be paid or otherwise delivered to the Collateral
Agent. The security interest in the Collateral will be a first priority security
interest subject only to certain Permitted Liens; provided, however, that the
Subsidiary Guarantee of CSC will cease to be secured by the security interest in
the Collateral, and the Intercompany Note shall cease to constitute Collateral,
in the event that CSC-UK (i) becomes a direct Subsidiary of the Company and the
Company becomes the holder of the Intercompany Note or (ii) the Intercompany
Note is prepaid in connection with the sale of substantially all of the Capital
Stock or assets of CSC-UK pursuant to a transaction in compliance with the
covenant described under Section 4.08.
Section 11.04. Recording and Opinions.
(a) The Company and the Subsidiary Guarantors shall cause any
financing statements, all amendments or supplements thereto and any other
similar security documents as necessary, to be registered, recorded and filed
and/or re-recorded, re-filed and renewed in such manner and in such place or
places, if any, as may be required by law or reasonably requested by the Trustee
in order fully to preserve and protect the Liens securing the obligations under
the Notes and the Subsidiary Guarantees pursuant to the Pledge Agreement and to
effectuate and preserve the security of the Holders and all rights of the
Trustee. Notwithstanding the foregoing, the Trustee has no responsibility for
the validity, perfection, priority or enforceability of the security interests
in any of the Collateral and shall have no obligation to take any action to
procure or maintain such validity, perfection, priority or enforceability.
(b) The Company and the Subsidiary Guarantors shall furnish to
the Trustee: (x) an Opinion of Counsel in the United States either (i) stating
that in the opinion of such counsel, this Indenture, the Pledge Agreement and
all other instruments of further assurance or amendment have been properly
recorded, registered and filed to the extent necessary to make effective the
Lien intended to be created by the Pledge Agreement or (ii)
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stating that, in the opinion of such counsel, no such action is necessary to
make any other Lien created under the Pledge Agreement effective as intended by
such Pledge Agreement; and
(y) On May 14, in each year beginning with the year 1998, an
Opinion of Counsel, dated as of such date, either (A) stating that, in the
opinion of such counsel, such action has been taken with respect to the
recording, registering, filing, re-recording, re-registering and re-filing of
this Indenture and all supplemental indentures, financing statements,
continuation statements or other instruments of further assurance as is
necessary to maintain the Lien of this Indenture and the Pledge Agreement until
the next Opinion of Counsel is required to be rendered pursuant to this
paragraph and reciting the details of such action or referring to prior Opinions
of Counsel in which such details are given, and stating that all financing
statements and continuation statements have been executed and filed that are
necessary fully to perfect the Liens intended to be created by the Pledge
Agreement or (B) stating that in the opinion of such counsel, no such action is
necessary to maintain such Lien, until the next Opinion of Counsel is required
to be rendered pursuant to this paragraph.
(c) The Company shall furnish to the Trustee the certificates
or opinions, as the case may be, required by TIA Section 324(d). Such
certificates or opinions shall be subject to the terms of TIA Section 314(e).
Section 11.05. Authorization of Actions To Be Taken by the
Collateral Agent Under the Pledge Agreement.
The Collateral Agent may (but shall not be obligated to), in
its sole discretion and without the consent of the Holders of the Notes, take
all actions it deems necessary or appropriate in order to (a) enforce or effect
the Pledge Agreement and (b) collect and receive any and all amounts payable in
respect of the obligations of the Company hereunder as provided therein. Such
actions shall include, but not be limited to, advising, instructing or otherwise
directing any agent appointed by it in connection with enforcing or effecting
any term or provision of the Pledge Agreement. Subject to the provisions of the
Pledge Agreement, the Collateral Agent shall have power to institute and to
maintain such suits and proceedings as it may deem expedient to prevent any
impairment of the collateral by any acts which may be unlawful or in violation
of the Pledge Agreement, and such suits and proceedings as the Collateral Agent
may deem expedient to preserve or protect its interests and the interests of any
parties secured by the Collateral (including 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 if the enforcement of, or compliance with,
such enactment, rule or order would
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impair the security under the Pledge Agreement or be prejudicial to the
interests of any parties secured by the Collateral or of the Collateral Agent).
Section 11.06. Authorization of Receipt of Funds by the Trustee
Under the Pledge Agreement.
The Trustee is authorized to receive any funds for the benefit
of Holders distributed under the Pledge Agreement, and to make further
distributions of such funds to the Holders according to the provisions of the
Indenture.
Section 11.07. Release of Collateral.
(a) Subject to paragraphs (b) and (c) of this Section 11.07,
Collateral may be released from the Lien and security interest created by the
Pledge Agreement upon the request of the Company pursuant to an Officers'
Certificate certifying that all terms for release and conditions precedent
hereunder and under the Pledge Agreement have been met, specifically that (i)
the CSC - UK has become a direct Subsidiary of the Company and the Company has
become the holder of the Intercompany Note, (ii) an Investment Grade Rating has
been received by the Company with respect to the Notes or (iii) the Intercompany
Note is prepaid in connection with the sale of substantially all of the Capital
Stock or assets of CSC-UK pursuant to a transaction in compliance with Section
4.08. Upon receipt of such Officers' Certificate the Trustee shall execute,
deliver or acknowledge any necessary or proper instruments of termination,
satisfaction or release to evidence the release of any Collateral permitted to
be released pursuant to this Indenture or the Pledge Agreement.
(b) No Collateral shall be released from the Lien and security
interest created by the Pledge Agreement pursuant to the provisions of the
Pledge Agreement unless there shall have been delivered to the Trustee the
certificate required by this Section 11.07.
(c) To the extent applicable, the Company shall cause TIA
Section 313(b), relating to reports, and TIA Section 314(d), relating to the
release of property or securities from the Lien and security interest of the
Pledge Agreement and relating to the substitution therefor of any property or
securities to be subjected to the Lien and security interest of the Pledge
Agreement to be complied with. Any certificate or opinion required by TIA
Section 314(d) may be made by an Officer of the Company except in cases where
TIA Section 314(d) requires that such certificate or opinion be made by an
independent Person, which Person shall be an independent engineer, appraiser or
other expert selected or approved by the Trustee in the exercise of reasonable
care.
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Section 11.08. Termination of Security Interest.
Upon the payment in full of all obligations of the Company
under this Indenture and the Notes, or in the event of an earlier termination of
the Pledge Agreement pursuant to the terms thereof, the Trustee shall, at the
request and expense of the Company together with an Officers' Certificate to
such effect, deliver notification to the Collateral Agent that such obligations
have been paid in full or, if the Collateral Agent is not the pledgee, send a
certificate executed by a Responsible Officer to such pledgee, stating that such
obligations have been paid in full.
ARTICLE 12
MISCELLANEOUS
Section 12.01. Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies or
conflicts with another provision which is required to be included in this
Indenture by the TIA, the required provision shall control.
Section 12.02. Notices.
Except for notice or communications to Holders, any notice or
communication shall be given in writing and delivered in person, sent by
facsimile, delivered by commercial overnight courier service guaranteeing
overnight delivery or mailed by first-class mail, postage prepaid, addressed as
follows:
If to the Company or any Subsidiary Guarantor:
Cityscape Financial Corp.
565 Taxter Road
Elmsford, New York 10523
Attention: Chief Financial Officer
Fax Number: (914) 592-7101
with, in the case of any notice furnished pursuant to
Article 6, a copy to:
Gibson, Dunn & Crutcher
200 Park Avenue
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New York, NY 10166
Attention: Sean P. Griffiths, Esq.
Fax Number: (212) 351-4035
If to the Trustee:
The Chase Manhattan Bank
450 West 33rd Street
New York, New York 10001
Attention: Corporate Trust Administration
Fax Number: (212) 946-8177
Such notices or communications shall be effective when
received and shall be sufficiently given if so given within the time prescribed
in this Indenture.
The Company, the Subsidiary Guarantors or the Trustee by
written notice to the others may designate additional or different addresses for
subsequent notices or communications.
Any notice or communication mailed to a Noteholder shall be
mailed to him by first-class mail, postage prepaid, or by overnight commercial
courier service guaranteeing next-day delivery at its address shown on the
register kept by the Registrar.
Failure to mail a notice or communication to a Noteholder or
any defect in it shall not affect its sufficiency with respect to other
Noteholders. If a notice or communication to a Noteholder is mailed in the
manner provided above, it shall be deemed duly given, whether or not the
addressee receives it.
In case by reason of the suspension of regular mail service,
or by reason of any other cause, it shall be impossible to mail any notice as
required by this Indenture, then such method of notification as shall be made
with the approval of the Trustee shall constitute a sufficient mailing of such
notice.
Section 12.03. Communications by Holders with Other Holders.
Noteholders may communicate pursuant to TIA Section 312(b)
with other Noteholders with respect to their rights under this Indenture or the
Notes. The Company, the Subsidiary Guarantors, the Trustee, the Registrar and
anyone else shall have the protection of TIA Section 312(c).
<PAGE> 100
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Section 12.04. Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company or any
Subsidiary Guarantor to the Trustee to take or refrain from taking any action
under this Indenture, the Company or such Subsidiary Guarantor shall furnish to
the Trustee:
(1) an Officers' Certificate (which shall include the
statements set forth in Section 12.05 below) stating that, in the
opinion of the signers, all conditions precedent, if any, provided for
in this Indenture relating to the proposed action have been complied
with; and
(2) an Opinion of Counsel (which shall include the
statements set forth in Section 12.05 below) stating that, in the
opinion of such counsel, all such conditions precedent have been
complied with.
Section 12.05. Statements Required in Certificate and Opinion.
Each certificate and opinion with respect to compliance with a
condition or covenant provided for in this Indenture other than a certificate
provided pursuant to TIA Section 314(a)(4) shall comply with the provisions of
TIA Section 314(c) and include:
(1) a statement that the Person making such certificate or
opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such Person, he or
she has made such examination or investigation as is necessary to
enable him or her to express an informed opinion as to whether or not
such covenant or condition has been complied with; and
(4) a statement as to whether or not, in the opinion of such
Person, such covenant or condition has been complied with.
Section 12.06. Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by or
meetings of Noteholders. The Registrar and Paying Agent may make reasonable
rules for their functions.
<PAGE> 101
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Section 12.07. Business Days; Legal Holidays.
A "Business Day" is a day that is not a Legal Holiday. A
"Legal Holiday" is a Saturday, a Sunday, a federally-recognized holiday or a day
on which banking institutions are not required to be open in the State of New
York. If a payment date is a Legal Holiday at a place of payment, payment may be
made at that place on the next succeeding day that is not a Legal Holiday, and
no interest shall accrue for the intervening period.
Section 12.08. Governing Law.
THIS INDENTURE, THE NOTES AND THE SUBSIDIARY GUARANTEES SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK, AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK,
WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE COMPANY AND THE
SUBSIDIARY GUARANTORS AGREE TO SUBMIT TO THE JURISDICTION OF THE COURTS OF THE
STATE OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
INDENTURE OR THE NOTES.
Section 12.09. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture,
loan, security or debt agreement of the Company or any Subsidiary thereof or of
any other Person. No such indenture, loan, security or debt agreement may be
used to interpret this Indenture.
Section 12.10. No Recourse Against Others.
No recourse for the payment of the principal of or premium, if
any, or interest, including Additional Interest, on any of the Notes, or for any
claim based thereon or otherwise in respect thereof, and no recourse under or
upon any obligation, covenant or agreement of the Company or any Subsidiary
Guarantor in this Indenture or in any supplemental indenture, or in any of the
Notes, or because of the creation of any Indebtedness represented thereby, shall
be had against any stockholder, officer, director or employee, as such, past,
present or future, of the Company or of any successor corporation or against the
property or assets of any such stockholder, officer, employee or director,
either directly or through the Company or any Subsidiary Guarantor, or any
successor corporation thereof, whether by virtue of any constitution, statute or
rule of law, or by the enforcement of any assessment or penalty or otherwise; it
being expressly understood that this Indenture and the Notes are solely
obligations of the Company and the Subsidiary Guarantors, and that no such
personal liability whatever shall attach to, or is or shall be incurred by, any
stock-
<PAGE> 102
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holder, officer, employee or director of the Company or any Subsidiary
Guarantor, or any successor corporation thereof, because of the creation of the
indebtedness hereby authorized, or under or by reason of the obligations,
covenants or agreements contained in this Indenture or the Notes or implied
therefrom, and that any and all such personal liability of, and any and all
claims against every stockholder, officer, employee and director, are hereby
expressly waived and released by each Noteholder as a condition of, and as a
consideration for, the execution of this Indenture and the issuance of the
Notes. It is understood that this limitation on recourse is made expressly for
the benefit of any such shareholder, employee, officer or director and may be
enforced by any of them.
Section 12.11. Successors.
All agreements of the Company and the Subsidiary Guarantors in
this Indenture, the Notes and the Subsidiary Guarantees shall bind their
respective successors. All agreements of the Trustee, any additional trustee and
any Paying Agents in this Indenture shall bind its successor.
Section 12.12. Multiple Counterparts.
The parties may sign multiple counterparts of this Indenture.
Each signed counterpart shall be deemed an original, but all of them together
represent one and the same agreement.
Section 12.13. Table of Contents, Headings, Etc.
The table of contents, cross-reference sheet and headings of
the Articles and Sections of this Indenture have been inserted for convenience
of reference only, are not to be considered a part hereof, and shall in no way
modify or restrict any of the terms or provisions hereof.
Section 12.14. Separability.
Each provision of this Indenture shall be considered separable
and if for any reason any provision which is not essential to the effectuation
of the basic purpose of this Indenture or the Notes shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
<PAGE> 103
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IN WITNESS WHEREOF, the parties have caused this Indenture to be duly executed
all as of the date and year first written above.
CITYSCAPE FINANCIAL CORP.
By: /s/ Robert C. Patent
--------------------------
Name: Robert C. Patent
Title: Executive Vice President
CITYSCAPE CORP.,
as Subsidiary Guarantor
By: /s/ Robert C. Patent
--------------------------
Name: Robert C. Patent
Title: Executive Vice President
THE CHASE MANHATTAN BANK,
as Trustee
By: /s/ Douglas Lavelle
--------------------------
Name:
Title:
<PAGE> 104
EXHIBIT A
[FORM OF FACE OF NOTE]
CUSIP [ ]
CITYSCAPE FINANCIAL CORP.
No. [ ] $
12-3/4% SENIOR NOTE DUE 2004
CITYSCAPE FINANCIAL CORP., a Delaware corporation (the
"Company"), for value received, promises to pay to ____________________________
or registered assigns the principal sum of _________________________ dollars on
June 1, 2004.
Interest Payment Dates: June 1 and December 1
Record Dates: May 15 and November 15
Reference is made to the further provisions of this Note
contained herein, which will for all purposes have the same effect as if set
forth at this place.
<PAGE> 105
IN WITNESS WHEREOF, the Company has caused this Note to be
signed manually or by facsimile by its duly authorized officers.
CITYSCAPE FINANCIAL CORP.
By: ______________________________
Title:
By: ______________________________
Title:
Dated:
Certificate of Authentication
This is one of the 12-3/4% Senior Notes due 2004 referred to
in the within-mentioned Indenture.
THE CHASE MANHATTAN BANK,
as Trustee
By: __________________________
Authorized Signatory
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<PAGE> 106
[FORM OF REVERSE OF NOTE]
CITYSCAPE FINANCIAL CORP.
12-3/4% SENIOR NOTE DUE 2004
1. Interest. Cityscape Financial Corp., a Delaware corporation
(the "Company"), promises to pay, until the principal hereof is paid or made
available for payment, interest on the principal amount set forth on the face
hereof at a rate of 12-3/4% per annum. Interest hereon will accrue from and
including the most recent date to which interest has been paid or, if no
interest has been paid, from and including May 14, 1997 to but excluding the
date on which interest is paid. Interest shall be payable in arrears on each
June 1 and December 1 commencing December 1, 1997. Interest will be computed on
the basis of a 360-day year of twelve 30-day months. The Company shall pay
interest on overdue principal and on overdue interest (to the full extent
permitted by law) at a rate of 12-3/4% per annum.
2. Method of Payment. The Company will pay interest hereon
(except defaulted interest) to the Persons who are registered Holders at the
close of business on May 15 or November 15 next preceding the Interest Payment
Date (whether or not a Business Day). Holders must surrender Notes to a Paying
Agent to collect principal payments. The Company will pay principal and interest
in money of the United States of America that at the time of payment is legal
tender for payment of public and private debts. Interest may be paid by check
mailed to the Holder entitled thereto at the address indicated on the register
maintained by the Registrar for the Notes.
3. Paying Agent and Registrar. Initially, The Chase Manhattan
Bank (the "Trustee") will act as a Paying Agent and Registrar. The Company may
change any Paying Agent or Registrar without notice. The Company or any of its
domestic subsidiaries may act as Paying Agent or Registrar.
4. Indenture. The Company issued the Notes under an Indenture
dated as of May 14, 1997 (the "Indenture") among the Company, the Subsidiary
Guarantors (as defined in the Indenture) and the Trustee. This is one of an
issue of Notes of the Company issued, or to be issued, under the Indenture. The
terms of the Notes include those stated in the Indenture and those made part of
the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S. Code
Sections 77aaa-77bbbb), as amended from time to time. The Notes are subject to
all such terms, and Holders are referred to the Indenture and such Act for a
statement of them. Capitalized and certain other terms used herein and not
otherwise defined have the meanings set forth in the Indenture. The Notes are
obligations of the Company limited in aggregate principal amount to $300.0
million.
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<PAGE> 107
5. Optional Redemption. Except as hereinafter set forth, the
Company may not optionally redeem the Notes.
Notwithstanding the foregoing, the Company may redeem in the
aggregate up to 33-1/3% of the original principal amount of Notes at any time
and from time to time on or prior to June 1, 2000 at a redemption price equal to
112.75% of the aggregate principal amount thereof, plus accrued and unpaid
interest thereon to the Redemption Date with the Net Proceeds of one or more
Public Equity Offerings; provided, that at least $200.0 million of the principal
amount of Notes originally issued remains outstanding immediately after the
occurrence of any such redemption and that any such redemption occurs within 90
days following the closing of any such Public Equity Offering.
6. Notice of Redemption. Notice of redemption will be mailed
at least 30 days but not more than 60 days before the Redemption Date to each
Holder of Notes to be redeemed at his registered address. On and after the
Redemption Date, unless the Company defaults in making the redemption payment,
interest ceases to accrue on Notes or portions thereof called for redemption.
7. Offers To Purchase. The Indenture provides that upon the
occurrence of a Change of Control or an Asset Disposition and subject to further
limitations contained therein, the Company shall make an offer to purchase
outstanding Notes in accordance with the procedures set forth in the Indenture.
8. Registration Rights. Pursuant to a Registration Rights
Agreement among the Company, the Subsidiary Guarantors and CIBC Wood Gundy
Securities Corp., Bear, Stearns & Co. Inc., and Oppenheimer & Co. Inc., as
Initial Purchasers of the Notes, the Company will be obligated to consummate an
exchange offer pursuant to which the Holder of this Note shall have the right to
exchange this Note for notes of a separate series issued under the Indenture (or
a trust indenture substantially identical to the Indenture in accordance with
the terms of the Registration Rights Agreement) which have been registered under
the Securities Act, in like principal amount and having substantially identical
terms as the Notes. The Holders shall be entitled to receive certain additional
interest payments in the event such exchange offer is not consummated and upon
certain other conditions, all pursuant to and in accordance with the terms of
the Registration Rights Agreement.
9. Denominations, Transfer, Exchange. The Notes are in
registered form without coupons in denominations of $1,000 and integral
multiples of $1,000. A Holder may transfer or exchange Notes in accordance with
the Indenture. The Registrar may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents and to pay to it any
taxes and fees required by law or permitted by the Inden-
A-4
<PAGE> 108
ture. The Registrar need not register the transfer of or exchange any Notes or
portion of a Note selected for redemption, or register the transfer of or
exchange any Notes for a period of 15 days before a mailing of notice of
redemption.
10. Persons Deemed Owners. The registered Holder of this Note
may be treated as the owner of this Note for all purposes.
11. Unclaimed Money. If money for the payment of principal or
interest remains unclaimed for two years, the Trustee will pay the money back to
the Company at its written request. After that, Holders entitled to the money
must look to the Company for payment as general creditors unless an "abandoned
property" law designates another Person.
12. Amendment, Supplement, Waiver, Etc. The Company, the
Subsidiary Guarantors and the Trustee may, without the consent of the Holders of
any outstanding Notes, amend, waive or supplement the Indenture or the Notes for
certain specified purposes, including, among other things, curing ambiguities,
defects or inconsistencies, to comply with the Trust Indenture Act of 1939, as
amended, and making any change that does not materially and adversely affect the
rights of any Holder. Other amendments and modifications of the Indenture or the
Notes may be made by the Company, the Subsidiary Guarantors and the Trustee with
the consent of the Holders of not less than a majority of the aggregate
principal amount of the outstanding Notes, subject to certain exceptions
requiring the consent of the Holders of the particular Notes to be affected.
13. Restrictive Covenants. The Indenture imposes certain
limitations on the ability of the Company and its Restricted Subsidiaries to,
among other things, incur additional Indebtedness, make payments in respect of
their Capital Stock or certain Indebtedness, make certain Investments, create or
incur liens, enter into transactions with Affiliates, enter into agreements
restricting the ability of Restricted Subsidiaries to pay dividends and make
distributions, and on the ability of the Company to merge or consolidate with
any other Person or transfer all or substantially all of the Company's or any
Subsidiary Guarantor's assets. Such limitations are subject to a number of
important qualifications and exceptions. Pursuant to Section 4.04 of the
Indenture, the Company must annually report to the Trustee on compliance with
such limitations.
14. Successor Corporation. When a successor corporation
assumes all the obligations of its predecessor under the Notes and the Indenture
and the transaction complies with the terms of Article 5 of the Indenture, the
predecessor corporation will, except as provided in Article 5, be released from
those obligations.
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<PAGE> 109
15. Defaults and Remedies. Events of Default are set forth in
the Indenture. Subject to certain limitations in the Indenture, if an Event of
Default (other than an Event of Default specified in Section 6.01(a)(7) or (8)
of the Indenture with respect to the Company) occurs and is continuing, the
Trustee or the Holders of not less than 25% in aggregate principal amount of the
outstanding Notes may, by written notice to the Trustee and the Company, and the
Trustee upon the request of the Holders of not less than 25% in aggregate
principal amount of the outstanding Notes shall, declare all principal of and
accrued interest on all Notes to be immediately due and payable and such amounts
shall become immediately due and payable. If an Event of Default specified in
Section 6.01(a)(8) or (9) of the Indenture occurs with respect to the Company,
the principal amount of and interest on all Notes shall ipso facto become and be
immediately due and payable without any declaration or other act on the part of
the Trustee or any Holder. Holders may not enforce the Indenture or the Notes
except as provided in the Indenture. The Trustee may require indemnity
satisfactory to it before it enforces the Indenture or the Notes. Subject to
certain limitations, Holders of a majority in principal amount of the then
outstanding Notes may direct the Trustee in its exercise of any trust or power.
The Trustee may withhold from Holders notice of any continuing default (except a
default in payment of principal or interest) if it determines that withholding
notice is in their interests.
16. Trustee Dealings with Company. The Trustee, in its
individual or any other capacity, may make loans to, accept deposits from, and
perform services for the Company or its Affiliates, and may otherwise deal with
the Company or its Affiliates, as if it were not Trustee.
17. No Recourse Against Others. No director, officer, employee
incorporator or stockholder of the Company or any Subsidiary Guarantor shall
have any liability for any obligations of the Company or the Subsidiary
Guarantors under the Notes, the Indenture or the Subsidiary Guarantees or for a
claim based on, in respect of, or by reason of, such obligations or their
creation. Each Holder of Notes by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for the issuance
of the Notes.
18. Discharge. The Company's obligations pursuant to the
Indenture will be discharged, except for obligations pursuant to certain
sections thereof, subject to the terms of the Indenture, upon the payment of all
the Notes or upon the irrevocable deposit with the Trustee of United States
dollars or U.S. Government Obligations sufficient to pay when due principal of
and interest on the Notes to maturity or redemption, as the case may be.
19. Guarantees. The Note will be entitled to the benefits of
certain Subsidiary Guarantees made for the benefit of the Holders. Reference is
hereby made to the
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<PAGE> 110
Indenture for a statement of the respective rights, limitations of rights,
duties and obligations thereunder of the Subsidiary Guarantors, the Trustee and
the Holders.
20. Authentication. This Note shall not be valid until the
Trustee signs the certificate of authentication on the other side of this Note.
21. Governing Law. THE INTERNAL LAWS OF THE STATE OF NEW YORK
SHALL GOVERN THIS NOTE WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS. The
Company and the Subsidiary Guarantors agree to submit to the jurisdiction of the
courts of the State of New York in any action or proceeding arising out of or
relating to the Indenture or the Notes.
22. Abbreviations. Customary abbreviations may be used in the
name of a Holder or an assignee, such as: TEN COM (= tenants in common), TENANT
(= tenants by the entireties), JT TEN (= joint tenants with right of
survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (=
Uniform Gifts to Minors Act).
The Company will furnish to any Holder upon written request
and without charge a copy of the Indenture. Requests may be made to:
CITYSCAPE FINANCIAL CORP.
565 Taxter Road
Elmsford, New York 10523
Attention: Chief Financial Officer
A-7
<PAGE> 111
ASSIGNMENT
I or we assign and transfer this Note to:
(Insert assignee's social security or tax I.D. number)
__________________________________________________________
__________________________________________________________
__________________________________________________________
__________________________________________________________
(Print or type name, address and zip code of assignee)
and irrevocably appoint:
__________________________________________________________
__________________________________________________________
Agent to transfer this Note on the books of the Company. The Agent may
substitute another to act for him.
Date: ________________
Your Signature: _____________________________
(Sign exactly as your name appears on the face
of this Note)
A-8
<PAGE> 112
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have all or any part of this Note
purchased by the Company pursuant to Section 4.08 or Section 4.15 of the
Indenture, check the appropriate box:
Section 4.08 [ ] Section 4.15 [ ]
If you want to have only part of the Note purchased by the
Company pursuant to Section 4.08 or Section 4.15 of the Indenture, state the
amount you elect to have purchased:
$--------------------
(multiple of $1,000)
Date: ________________
Your Signature: _____________________________
(Sign exactly as your name appears on the face
of this Note)
- -------------------------
Signature Guaranteed
A-9
<PAGE> 113
EXHIBIT B
[FORM OF LEGEND FOR 144A NOTE]
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE
UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT AS
SET FORTH BELOW. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A)
IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE ACT)
OR (B) IT IS AN "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2), (3) OR
(7) UNDER THE ACT) (AN "ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND
IS ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION, (2) AGREES THAT IT WILL NOT
WITHIN TWO YEARS AFTER THE ORIGINAL ISSUANCE OF THIS NOTE RESELL OR OTHERWISE
TRANSFER THIS NOTE EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, (C) INSIDE THE
UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A
UNDER THE ACT, (D) INSIDE THE UNITED STATES TO AN ACCREDITED INVESTOR THAT,
PRIOR TO SUCH TRANSFER, FURNISHES (OR HAS FURNISHED ON ITS BEHALF BY A U.S.
BROKER-DEALER) TO THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS
AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS NOTE (THE FORM
OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE), (E) OUTSIDE THE UNITED STATES
IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE ACT OR (F)
PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE ACT
(IF AVAILABLE) (3) AGREES THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS NOTE IS
TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION
WITH ANY TRANSFER OF THIS NOTE WITHIN TWO YEARS AFTER ORIGINAL ISSUANCE OF THIS
NOTE, IF THE PROPOSED TRANSFEREE IS AN ACCREDITED INVESTOR, THE HOLDER MUST,
PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE AND THE COMPANY SUCH
CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS EITHER OF THEM MAY
REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN
EXEMPTION FROM OR IN A TRANSACTION NOT SUBJECT TO THE REGISTRATION REQUIREMENTS
OF THE ACT. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES"
AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE ACT.
<PAGE> 114
[FORM OF ASSIGNMENT FOR 144A NOTE]
I or we assign and transfer this Note to:
(Insert assignee's social security or tax I.D number)
___________________________________________________________
___________________________________________________________
___________________________________________________________
___________________________________________________________
(Print or type name, address and zip code of assignee)
and irrevocably appoint:
___________________________________________________________
___________________________________________________________
Agent to transfer this Note on the books of the Company. The Agent may
substitute another to act for him.
[Check One]
[ ] (a) this Note is being transferred in compliance
with the exemption from registration under the
Securities Act provided by Rule 144A thereunder.
or
[ ] (b) this Note is being transferred other than in
accordance with (a) above and documents are being
furnished which comply with the conditions of
transfer set forth in this Note and the Indenture.
If none of the foregoing boxes is checked, the Trustee or Registrar shall not be
obligated to register this Note in the name of any person other than the Holder
hereof unless and until the conditions to any such transfer of registration set
forth herein and in Section 2.17 of the Indenture shall have been satisfied.
B-2
<PAGE> 115
Date:__________________ Your Signature:______________________
--------------------------------
(Sign exactly as your name appears on
the other side of this Note)
Signature Guarantee: ________________________________
B-3
<PAGE> 116
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED
The undersigned represents and warrants that it is purchasing
this Note for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act
and is aware that the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information regarding the Company as the
undersigned has requested pursuant to Rule 144A or has determined not to request
such information and that it is aware that the transferor is relying upon the
undersigned's foregoing representations in order to claim the exemption from
registration provided by Rule 144A.
Dated: __________________ ____________________________
NOTICE: To be executed by
an executive officer
B-4
<PAGE> 117
EXHIBIT C
[FORM OF LEGEND FOR REGULATION S NOTE]
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, UNLESS SO
REGISTERED, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR
THE ACCOUNT OR BENEFIT OF, U.S. PERSONS UNLESS REGISTERED UNDER THE SECURITIES
ACT OR EXCEPT PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO,
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.
<PAGE> 118
[FORM OF ASSIGNMENT FOR REGULATION S NOTE]
I or we assign and transfer this Note to:
(Insert assignee's social security or tax I.D. number)
___________________________________________________________
___________________________________________________________
___________________________________________________________
(Print or type name, address and zip code of assignee)
and irrevocably appoint:
___________________________________________________________
___________________________________________________________
Agent to transfer this Note on the books of the Company. The Agent may
substitute another to act for him.
[Boxes (a) or (b) need only be checked on or prior to June 23, 1997.]
[Check One]
[ ] (a) this Note is being transferred in compliance
with the exemption from registration under the
Securities Act provided by Rule 144A thereunder.
or
[ ] (b) this Note is being transferred other than in
accordance with (a) above and documents are being
furnished which comply with the conditions of
transfer set forth in this Note and the Indenture.
If none of the foregoing boxes is checked, the Trustee or Registrar shall not be
obligated to register this Note in the name of any person other than the Holder
hereof unless and until the conditions to any such transfer of registration set
forth herein and in Section 2.17 of the Indenture shall have been satisfied.
Date: __________________ Your Signature: ________________
---------------------------------
(Sign exactly as your name appears on
the other side of this Note)
Signature Guarantee: ____________________________________
C-2
<PAGE> 119
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED
The undersigned represents and warrants that it is purchasing
this Note for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act
and is aware that the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information regarding the Company as the
undersigned has requested pursuant to Rule 144A or has determined not to request
such information and that it is aware that the transferor is relying upon the
undersigned's foregoing representations in order to claim the exemption from
registration provided by Rule 144A.
Dated: __________________ ________________________
NOTICE: To be executed by
an executive officer
C-3
<PAGE> 120
EXHIBIT D
[FORM OF LEGEND FOR GLOBAL NOTE]
Any Global Note authenticated and delivered hereunder shall
bear a legend (which would be in addition to any other legends required in the
case of a Restricted Note) in substantially the following form:
THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY OR A
NOMINEE OF A DEPOSITORY. THIS NOTE IS NOT EXCHANGEABLE FOR NOTES REGISTERED IN
THE NAME OF A PERSON OTHER THAN THE DEPOSITORY OR ITS NOMINEE EXCEPT IN THE
LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER OF THIS NOTE
(OTHER THAN A TRANSFER OF THIS NOTE AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF
THE DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER
NOMINEE OF THE DEPOSITORY) MAY BE REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES
DESCRIBED IN THE INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY (A NEW YORK CORPORATION) ("DTC") TO THE ISSUER OR
ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME
AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE
TO CEDE & CO. OR SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
<PAGE> 121
EXHIBIT E
Form of Certificate To Be
Delivered in Connection with
Transfers to Non-QIB Accredited Investors
-----------, ----
The Chase Manhattan Bank
450 West 33rd Street
New York, New York 10001
Attention: Corporate Trust Administration
Re: Cityscape Financial Corp. (the "Company")
12-3/4% Senior Notes due 2004 (the "Notes")
Dear Sirs:
In connection with our proposed purchase of Notes, we confirm
that:
1. We understand that any subsequent transfer of the Notes is
subject to certain restrictions and conditions set forth in the
Indenture dated as of May 14, 1997 relating to the Notes and we agree
to be bound by, and not to resell, pledge or otherwise transfer the
Notes except in compliance with, such restrictions and conditions and
the Securities Act of 1933, as amended (the "Securities Act").
2. We understand that the Notes have not been registered under
the Securities Act, and that the Notes may not be offered, sold,
pledged or otherwise transferred except as permitted in the following
sentence. We agree, on our own behalf and on behalf of any accounts for
which we are acting as hereinafter stated, that if we should sell any
Notes, we will do so only (i) to the Company or any subsidiary thereof,
(ii) pursuant to an effective registration statement under the
Securities Act, (iii) in accordance with Rule 144A under the Securities
Act to a "qualified institutional buyer" (as defined in Rule 144A),
(iv) to an institutional "accredited investor" (as defined below) that,
prior to such transfer, furnishes (or has furnished
<PAGE> 122
on its behalf by a U.S. broker-dealer) to you a signed letter
containing certain representations and agreements relating to the
restrictions on transfer of the Notes, (v) outside the United States to
persons other than U.S. persons in offshore transactions meeting the
requirements of Rule 904 of Regulation S under the Securities Act, or
(vi) pursuant to any other exemption from registration under the
Securities Act (if available), and we further agree to provide to any
person purchasing any of the Notes from us a notice advising such
purchaser that resales of the Notes are restricted as stated herein.
3. We understand that, on any proposed resale of any Notes, we
will be required to furnish to you and the Company such certifications,
legal opinions and other information as you and the Company may
reasonably require to confirm that the proposed sale complies with the
foregoing restrictions. We further understand that the Notes purchased
by us will bear a legend to the foregoing effect.
4. We are an institutional "accredited investor" (as defined
in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities
Act) and have such knowledge and experience in financial and business
matters as to be capable of evaluating the merits and risks of our
investment in the Notes, and we and any accounts for which we are
acting each are able to bear the economic risk of our or their
investment, as the case may be.
5. We are acquiring the Notes purchased by us for our account
or for one or more accounts (each of which is an institutional
"accredited investor") as to each of which we exercise sole investment
discretion.
You and the Company are entitled to rely upon this letter and
are irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceeding or official inquiry
with respect to the matters covered hereby.
Very truly yours,
[Name of Transferee]
By: ____________________
Authorized Signature
E-2
<PAGE> 123
EXHIBIT F
Form of Certificate To Be Delivered
in Connection with Transfers
Pursuant to Regulation S
----------, ----
Attention:
Re: Cityscape Financial Corp. (the "Company")
12-3/4% Senior Notes due 2004 (the "Notes")
Dear Sirs:
In connection with our proposed sale of aggregate
principal amount of the Notes, we confirm that such sale has been effected
pursuant to and in accordance with Regulation S under the U.S. Securities Act of
1933, as amended (the "Securities Act"), and, accordingly, we represent that:
(1) the offer of the Notes was not made to a U.S. person or to
a person in the United States;
(2) either (a) at the time the buy offer was originated, the
transferee was outside the United States or we and any person acting on
our behalf reasonably believed that the transferee was outside the
United States, or (b) the transaction was executed in, on or through
the facilities of a designated off-shore securities market and neither
we nor any person acting on our behalf knows that the transaction has
been prearranged with a buyer in the United States;
(3) no directed selling efforts have been made in the United
States in contravention of the requirements of Rule 903(b) or Rule
904(b) of Regulation S, as applicable;
(4) the transaction is not part of a plan or scheme to evade
the registration requirements of the Securities Act; and
(5) we have advised the transferee of the transfer
restrictions applicable to the Notes.
<PAGE> 124
You and the Company are entitled to rely upon this letter and are irrevocably
authorized to produce this letter or a copy hereof to any interested party in
any administrative or legal proceedings or official inquiry with respect to the
matters covered hereby. Terms used in this certificate have the meanings set
forth in Regulation S.
Very truly yours,
[Name of Transferor]
By: __________________________
Authorized Signature
F-2
<PAGE> 125
EXHIBIT G
[FORM OF GUARANTEE]
Each of the undersigned (the "Subsidiary Guarantors") hereby
jointly and severally unconditionally guarantees, to the extent set forth in the
Indenture dated as of May 14, 1997 by and among Cityscape Financial Corp., as
issuer, the Subsidiary Guarantors, as guarantors, and The Chase Manhattan Bank,
as Trustee (as amended, restated or supplemented from time to time, the
"Indenture"), and subject to the provisions of the Indenture, (a) the due and
punctual payment of the principal of, and premium, if any, and interest on the
Notes, when and as the same shall become due and payable, whether at maturity,
by acceleration or otherwise, the due and punctual payment of interest on
overdue principal of, and premium and, to the extent permitted by law, interest,
and the due and punctual performance of all other obligations of the Company to
the Noteholders or the Trustee, all in accordance with the terms set forth in
Article 10 of the Indenture, and (b) in case of any extension of time of payment
or renewal of any Notes or any of such other obligations, that the same will be
promptly paid in full when due or performed in accordance with the terms of the
extension or renewal, whether at stated maturity, by acceleration or otherwise.
The obligations of the Subsidiary Guarantors to the
Noteholders and to the Trustee pursuant to this Guarantee and the Indenture are
expressly set forth in Article 10 of the Indenture and reference is hereby made
to the Indenture for the precise terms and limitations of this Guarantee.
[LIST OF GUARANTORS]
By: ___________________________
Name:
Title:
<PAGE> 1
Exhibit 4.2
Execution Copy
- --------------------------------------------------------------------------------
REGISTRATION RIGHTS AGREEMENT
Dated as of May 14, 1997
by and among
CITYSCAPE FINANCIAL CORP.
CITYSCAPE CORP.
and
THE INITIAL PURCHASERS
named herein
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
SECTION 1. Definitions................................................. 1
SECTION 2. Exchange Offer.............................................. 4
SECTION 3. Shelf Registration.......................................... 7
SECTION 4. Additional Interest......................................... 9
SECTION 5. Registration Procedures..................................... 10
SECTION 6. Registration Expenses....................................... 18
SECTION 7. Indemnification............................................. 19
SECTION 8. Rules 144 and 144A.......................................... 22
SECTION 9. Underwritten Registrations.................................. 23
SECTION 10. Miscellaneous............................................... 23
(a) Remedies........................................... 23
(b) Enforcement........................................ 23
(c) No Inconsistent Agreements......................... 23
(d) Adjustments Affecting Registrable Notes............ 23
(e) Amendments and Waivers............................. 24
(f) Notices............................................ 24
(g) Successors and Assigns............................. 24
(h) Counterparts....................................... 25
(i) Headings........................................... 25
(j) Governing Law...................................... 25
(k) Severability....................................... 25
(l) Entire Agreement................................... 25
(m) Joint and Several Obligations...................... 25
(n) Notes Held by the Company or their Affiliates...... 25
</TABLE>
(i)
<PAGE> 3
REGISTRATION RIGHTS AGREEMENT (the "Agreement") dated as of May 14,
1997, by and among Cityscape Financial Corp., a Delaware corporation (the
"Company"), Cityscape Corp., a New York corporation (the "Subsidiary") and CIBC
Wood Gundy Securities Corp., Bear, Stearns & Co. Inc. and Oppenheimer & Co.,
Inc. as the several Initial Purchasers (the "Initial Purchasers").
This Agreement is entered into in connection with the Securities
Purchase Agreement, dated May 9, 1997 among the Company, the Subsidiary and the
Initial Purchasers (the "Purchase Agreement") relating to the sale by the
Company to the Initial Purchasers of $300,000,000 aggregate principal amount of
the Company's 12 3/4% Senior Notes due 2004 (the "Notes"), and the guarantee of
the Notes by the Subsidiary as Guarantor (the "Guarantee"). In order to induce
the Initial Purchasers to enter into the Purchase Agreement, the Company and the
Subsidiary have agreed to provide the registration rights set forth in this
Agreement to the Initial Purchasers and their direct and indirect transferees
and assigns. The execution and delivery of this Agreement is a condition to the
Initial Purchasers' several obligations to purchase the Notes under the Purchase
Agreement.
The parties hereby agree as follows:
SECTION 1. Definitions.
As used in this Agreement, the following terms shall have the following
meanings:
Additional Interest: See Section 4(a).
Advice: See Section 5.
Applicable Period: See Section 2(b).
Closing: See the Purchase Agreement.
Company: See the introductory paragraph to this Agreement.
Effectiveness Date: The 135th day after the Issue Date.
Effectiveness Period: See Section 3(a).
Event Date: See Section 4(c).
Exchange Act: The Securities Exchange Act of 1934, as amended, and the
rules and regulations of the SEC promulgated thereunder.
Exchange Notes: See Section 2(a).
Exchange Offer: See Section 2(a).
1
<PAGE> 4
Exchange Registration Statement: See Section 2(a).
Filing Date: The 45th day after the Issue Date.
Guarantees: See the introductory paragraph of this Agreement.
Guarantor: Cityscape Corp. and any Person who becomes a Guarantor by
the terms of the Indenture (as defined herein).
Holder: Any holder of a Registrable Note or Registrable Notes.
Indemnified Person: See Section 7(c).
Indemnifying Person: See Section 7(c).
Indenture: The Indenture, dated as of May 14, 1997, among the Company,
the Guarantor and The Chase Manhattan Bank, as trustee, pursuant to which the
Notes are being issued, as amended or supplemented from time to time in
accordance with the terms thereof.
Initial Purchasers: See the introductory paragraph to this Agreement.
Initial Shelf Registration: See Section 3(a).
Inspectors: See Section 5(o).
Issue Date: The date on which the original Notes are sold to the
Initial Purchasers pursuant to the Purchase Agreement.
Lien: See the Indenture.
NASD: See Section 5(t).
Notes: See the introductory paragraphs to this Agreement.
Participant: See Section 7(a).
Participating Broker-Dealer: See Section 2(b).
Person: An individual, corporation, limited liability company,
partnership, joint venture, association, joint stock company, trust,
unincorporated organization or government (including any agency or political
subdivision thereof).
Private Exchange: See Section 2(b).
2
<PAGE> 5
Private Exchange Notes: See Section 2(b).
Prospectus: The prospectus included in any Registration Statement
(including, without limitation, any prospectus subject to completion and a
prospectus that includes any information previously omitted from a prospectus
filed as part of an effective registration statement in reliance upon Rule 430A
promulgated under the Securities Act), as amended or supplemented by any
prospectus supplement, with respect to the terms of the offering of any portion
of the Registrable Notes covered by such Registration Statement, and all other
amendments and supplements to the Prospectus, including post-effective
amendments, and all material incorporated by reference or deemed to be
incorporated by reference in such Prospectus.
Purchase Agreement: See the introductory paragraphs to this Agreement.
Records: See Section 5(o).
Registrable Notes: The Notes upon original issuance of the Notes and at
all times subsequent thereto and, if issued, the Private Exchange Notes, until
in the case of any such Notes or any such Private Exchange Notes, as the case
may be, (i) a Registration Statement covering such Notes or such Private
Exchange Notes has been declared effective by the SEC and such Notes or such
Private Exchange Notes, as the case may be, have been disposed of in accordance
with such effective Registration Statement, (ii) such Notes or such Private
Exchange Notes, as the case may be, are sold in compliance with Rule 144, (iii)
in the case of any Note, such Note has been exchanged for an Exchange Note or
Exchange Notes pursuant to an Exchange Offer or (iv) such Notes or such Private
Exchange Notes, as the case may be, cease to be outstanding.
Registration Default: See Section 4(a).
Registration Statement: Any registration statement of the Company or
the Guarantor, including, but not limited to, the Exchange Registration
Statement, which covers any of the Registrable Notes pursuant to the provisions
of this Agreement, including the Prospectus, amendments and supplements to such
registration statement, including post-effective amendments, all exhibits, and
all material incorporated by reference or deemed to be incorporated by reference
in such registration statement.
Rule 144: Rule 144 promulgated under the Securities Act, as such Rule
may be amended from time to time, or any similar rule (other than Rule 144A) or
regulation hereafter adopted by the SEC providing for offers and sales of
securities made in compliance therewith resulting in offers and sales by
subsequent holders that are not affiliates of an issuer of such securities being
free of the registration and prospectus delivery requirements of the Securities
Act.
Rule 144A: Rule 144A promulgated under the Securities Act, as such Rule
may be amended from time to time, or any similar rule (other than Rule 144) or
regulation hereafter adopted by the SEC providing for offers and sales of
securities made in compliance therewith resulting in offers and
3
<PAGE> 6
sales by subsequent holders that are not affiliates of an issuer of such
securities being free of the registration and prospectus delivery requirements
of the Securities Act.
Rule 415: Rule 415 promulgated under the Securities Act, as such Rule
may be amended from time to time, or any similar rule or regulation hereafter
adopted by the SEC.
SEC: The Securities and Exchange Commission.
Securities Act: The Securities Act of 1933, as amended, and the rules
and regulations of the SEC promulgated thereunder.
Shelf Notice: See Section 2(c).
Shelf Registration: See Section 3(b).
Subsequent Shelf Registration: See Section 3(b).
Subsidiary: Cityscape Corp.
TIA: The Trust Indenture Act of 1939, as amended.
Trustee: The trustee under the Indenture and, if existent, the trustee
under any indenture governing the Exchange Notes and Private Exchange Notes (if
any).
Underwritten registration or underwritten offering: A registration in
which securities of the Company are sold to an underwriter(s) for reoffering to
the public.
SECTION 2. Exchange Offer.
(a) Each of the Company and the Subsidiary jointly and
severally agrees to use its reasonable best efforts to file with the SEC as soon
as practicable after the Closing, but in no event later than the Filing Date, an
offer to exchange (the "Exchange Offer") any and all of the Registrable Notes
(other than the Private Exchange Notes, if any) for a like aggregate principal
amount of debt securities of the Company, guaranteed by the Guarantor, which are
identical to the Notes (the "Exchange Notes") (and which are entitled to the
benefits of the Indenture or a trust indenture which is substantially identical
to the Indenture (other than such changes to the Indenture or any such identical
trust indenture as are necessary to comply with any requirements of the SEC to
effect or maintain the qualification thereof under the TIA) and which, in either
case, has been qualified under the TIA), except that the Exchange Notes (other
than the Private Exchange Notes, if any) shall have been registered pursuant to
an effective registration statement under the Securities Act and will not
contain terms with respect to transfer restrictions. The Exchange Offer will be
registered under the Securities Act on the appropriate form (the "Exchange
Registration Statement") and will comply with all applicable tender offer rules
and regulations under the Exchange Act. Each
4
<PAGE> 7
of the Company and the Subsidiary jointly and severally agrees to use its
reasonable best efforts to (x) cause the Exchange Registration Statement to
become effective under the Securities Act on or before the Effectiveness Date;
(y) keep the Exchange Offer open for at least 30 days (or longer if required by
applicable law) after the date that notice of the Exchange Offer is mailed to
Holders; and (z) consummate the Exchange Offer on or prior to the 195th day
following the Issue Date. Each Holder who participates in the Exchange Offer
will be required to represent that any Exchange Notes received by it will be
acquired in the ordinary course of its business, that at the time of the
consummation of the Exchange Offer such Holder will have no arrangement or
understanding with any Person to participate in the distribution of the Exchange
Notes in violation of the provisions of the Securities Act, that such Holder is
not an affiliate of any of the Company or the Subsidiary within the meaning of
Rule 405 promulgated under the Securities Act or if it is such an affiliate,
that it will comply with the registration and prospectus delivery requirements
of the Securities Act, to the extent applicable and that is not acting on behalf
of any Person who could not truthfully make the foregoing representations. Upon
consummation of the Exchange Offer in accordance with this Section 2, the
provisions of this Agreement shall continue to apply, mutatis mutandis, solely
with respect to Registrable Notes that are Private Exchange Notes and Exchange
Notes held by Participating Broker-Dealers, and the Company and the Subsidiary
shall have no further obligation to register Registrable Notes (other than
Private Exchange Notes and Exchange Notes held by Participating Broker-Dealers)
pursuant to Section 3 of this Agreement.
(b) The Company and the Subsidiary shall include within the
Prospectus contained in the Exchange Registration Statement a section entitled
"Plan of Distribution," reasonably acceptable to the Initial Purchasers, which
shall contain a summary statement of the positions taken or policies made by the
staff of the SEC with respect to the potential "underwriter" status of any
broker-dealer that is the beneficial owner (as defined in Rule 13d-3 promulgated
under the Exchange Act) of Exchange Notes received by such broker-dealer in the
Exchange Offer (a "Participating Broker-Dealer"), whether such positions or
policies have been publicly disseminated by the staff of the SEC or such
positions or policies, in the reasonable judgment of the Initial Purchasers,
represent the prevailing views of the staff of the SEC. Such "Plan of
Distribution" section shall also allow the use of the Prospectus by all Persons
subject to the prospectus delivery requirements of the Securities Act, including
all Participating Broker-Dealers, and include a statement describing the means
by which Participating Broker-Dealers may resell the Exchange Notes.
Each of the Company and the Subsidiary shall use its reasonable best
efforts to keep the Exchange Registration Statement effective and to amend and
supplement the Prospectus contained therein, in order to permit such Prospectus
to be lawfully delivered by all Persons subject to the prospectus delivery
requirements of the Securities Act for such period of time as such Persons must
comply with such requirements in order to resell the Exchange Notes, provided
that such period shall not exceed 180 days (or such longer period if extended
pursuant to the last paragraph of Section 5)
(the "Applicable Period").
5
<PAGE> 8
If, prior to consummation of the Exchange Offer, any of the Initial
Purchasers hold any Notes acquired by any of them and having, or which are
reasonably likely to be determined to have, the status as an unsold allotment in
the initial distribution, the Company and the Subsidiary upon the request of the
Initial Purchasers shall, simultaneously with the delivery of the Exchange Notes
in the Exchange Offer, issue and deliver to the Initial Purchasers, in exchange
(the "Private Exchange") for the Notes held by the Initial Purchasers, a like
principal amount of debt securities of the Company guaranteed by the Guarantor,
that are identical in all material respects to the Exchange Notes (the "Private
Exchange Notes") (and which are issued pursuant to the same indenture as the
Exchange Notes) except for the placement of a restrictive legend on the Private
Exchange Notes. Interest on the Exchange Notes and Private Exchange Notes will
accrue from the last interest payment date on which interest was paid on the
Notes surrendered in exchange therefor or, if no interest has been paid on the
Notes, from the Issue Date.
In connection with the Exchange Offer, the Company and the Subsidiary
shall:
(i) mail to each Holder a copy of the Prospectus
forming part of the Exchange Registration Statement, together with an
appropriate letter of transmittal and related documents;
(ii) utilize the services of a depositary for the
Exchange Offer with an address in the Borough of Manhattan, The City of
New York; and
(iii) permit Holders to withdraw tendered Notes at
any time prior to the close of business, New York time, on the last
business day on which the Exchange Offer shall remain open.
As soon as practicable after the close of the Exchange Offer or the
Private Exchange, as the case may be, the Company and the Subsidiary shall:
(i) accept for exchange all Notes tendered and not
validly withdrawn pursuant to the Exchange Offer or the Private
Exchange;
(ii) deliver to the Trustee for cancellation all
Notes so accepted for exchange; and
(iii) cause the Trustee to authenticate and deliver
promptly to each Holder of Notes, Exchange Notes or Private Exchange
Notes, as the case may be, equal in principal amount to the Notes of
such Holder so accepted for exchange.
The Exchange Notes and the Private Exchange Notes may be issued under
(i) the Indenture or (ii) an indenture substantially identical to the Indenture,
which in either event will provide that (1) the Exchange Notes will not be
subject to the transfer restrictions set forth in the Indenture and (2) the
Private Exchange Notes will be subject to the transfer restrictions set forth in
the Indenture.
6
<PAGE> 9
The Indenture or such indenture shall provide that the Exchange Notes, the
Private Exchange Notes and the Notes will vote and consent together on all
matters as one class and that neither the Exchange Notes, the Private Exchange
Notes nor the Notes will have the right to vote or consent as a separate class
on any matter.
(c) If (1) prior to the consummation of the Exchange Offer,
the Company and the Subsidiary or Holders of at least a majority in aggregate
principal amount of the Registrable Notes reasonably determine in good faith
that the Exchange Notes would not, upon receipt, be tradeable by such Holders
which are not affiliates (within the meaning of the Securities Act) of the
Company or the Subsidiary without restriction under the Securities Act and
without restrictions under applicable state securities laws, (2) subsequent to
the consummation of the Private Exchange, any holder of the Private Exchange
Notes so requests or (3) the Exchange Offer is commenced and not consummated
within 195 days of the date of this Agreement, then the Company and the
Subsidiary shall promptly deliver to the Holders and the Trustee written notice
thereof (the "Shelf Notice") and shall file an Initial Shelf Registration
pursuant to Section 3. Following the delivery of a Shelf Notice to the Holders
of Registrable Notes (in the circumstances contemplated by clauses (1) and (3)
of the preceding sentence), the Company and the Subsidiary shall not have any
further obligation to conduct the Exchange Offer or the Private Exchange under
this Section 2.
SECTION 3. Shelf Registration.
If a Shelf Notice is delivered as contemplated by Section 2(c), then:
(a) Initial Shelf Registration. The Company and the Subsidiary
shall prepare and file with the SEC a Registration Statement for an offering to
be made on a continuous basis pursuant to Rule 415 covering all of the
Registrable Notes (the "Initial Shelf Registration"). If the Company and the
Subsidiary shall have not yet filed an Exchange Registration Statement, each of
the Company and the Subsidiary shall use its reasonable best efforts to file
with the SEC the Initial Shelf Registration on or prior to the Filing Date. In
any other instance, each of the Company and the Subsidiary shall use its
reasonable best efforts to file with the SEC the Initial Shelf Registration
within 30 days of the delivery of the Shelf Notice. The Initial Shelf
Registration shall be on Form S-3 (if applicable, or Form S-1, if not available)
or another appropriate form permitting registration of such Registrable Notes
for resale by such Holders in the manner or manners designated by them
(including, without limitation, one or more underwritten offerings). The Company
and the Subsidiary shall not permit any securities other than the Registrable
Notes to be included in the Initial Shelf Registration or any Subsequent Shelf
Registration. Each of the Company and the Subsidiary shall use its reasonable
best efforts to cause the Initial Shelf Registration to be declared effective
under the Securities Act, if an Exchange Registration Statement has not yet been
declared effective, on or prior to the Effectiveness Date, or, in any other
instance, as soon as practicable thereafter and in no event later than 60 days
after filing of the Initial Shelf Registration, and to keep the Initial Shelf
Registration continuously effective under the Securities Act until the date
which is the second anniversary of the Issue Date (subject to extension pursuant
to the last paragraph of Section 5 hereof), or such shorter period ending when
(i) all Registrable Notes covered by the Initial
7
<PAGE> 10
Shelf Registration have been sold in the manner set forth and as contemplated in
the Initial Shelf Registration or (ii) a Subsequent Shelf Registration covering
all of the Registrable Notes has been declared effective under the Securities
Act (the "Effectiveness Period").
(b) Subsequent Shelf Registrations. If the Initial Shelf
Registration or any Subsequent Shelf Registration ceases to be effective for any
reason at any time during the Effectiveness Period, each of the Company and the
Subsidiary shall use its reasonable best efforts to obtain the prompt withdrawal
of any order suspending the effectiveness thereof, and in any event shall within
45 days of such cessation of effectiveness amend the Shelf Registration in a
manner reasonably expected to obtain the withdrawal of the order suspending the
effectiveness thereof, or file an additional "shelf" Registration Statement
pursuant to Rule 415 covering all of the Registrable Notes (a "Subsequent Shelf
Registration"). If a Subsequent Shelf Registration is filed, each of the Company
and the Subsidiary shall use its reasonable best efforts to cause the Subsequent
Shelf Registration to be declared effective as soon as practicable after such
filing and to keep such Registration Statement continuously effective for a
period equal to the number of days in the Effectiveness Period less the
aggregate number of days during which the Initial Shelf Registration or any
Subsequent Shelf Registration was previously continuously effective. As used
herein the term "Shelf Registration" means the Initial Shelf Registration and
any Subsequent Shelf Registration.
(c) Supplements and Amendments. The Company and the Subsidiary
shall promptly supplement and amend the Shelf Registration if required by the
rules, regulations or instructions applicable to the registration form used for
such Shelf Registration, if required by the Securities Act, or if requested by
the Holders of a majority in aggregate principal amount of the Registrable Notes
covered by such Registration Statement or by any underwriter(s) of such
Registrable Notes.
SECTION 4. Additional Interest.
(a) The Company and the Initial Purchasers agree that the
Holders of Registrable Notes will suffer damages if the Company fails to fulfill
its obligations under Section 2 or Section 3 hereof and that it would not be
feasible to ascertain the extent of such damages with precision. Accordingly,
the Company agrees to pay additional interest on the Notes ("Additional
Interest") under the circumstances and to the extent set forth below:
(i) if neither the Exchange Registration Statement
nor the Initial Shelf Registration has been filed on or prior to the
Filing Date;
(ii) if neither the Exchange Registration Statement
nor the Initial Shelf Registration has been declared effective on or
prior to the Effectiveness Date;
(iii) if an Initial Shelf Registration required by
Section 2(c)(2) has not been filed on or prior to the date required by
Section 3(a);
8
<PAGE> 11
(iv) if an Initial Shelf Registration required by
Section 2(c)(2) has not been declared effective on or prior to the date
required by Section 3(a); and/or
(v) if (A) the Company has not exchanged the Exchange
Notes for all Notes validly tendered in accordance with the terms of
the Exchange Offer on or prior to 60 days after the Exchange
Registration Statement was declared effective or (B) the Exchange
Registration Statement ceases to be effective at any time prior to the
time that the Exchange Offer is consummated or (C) if applicable, the
Shelf Registration has been declared effective and such Shelf
Registration ceases to be effective at any time during the
Effectiveness Period;
(each such event referred to in clauses (i) through (v) above is a "Registration
Default"), the sole remedy available to Holders of the Notes will be the
immediate accrual of Additional Interest as follows: the per annum interest rate
on the Notes will increase by .50% during the first 90-day period following the
occurrence of a Registration Default and until it is waived or cured; and the
per annum interest rate will increase by an additional .25% for each subsequent
90-day period during which the Registration Default remains uncured, up to a
maximum additional interest rate of 2.0% per annum, provided, however, that only
Holders of Private Exchange Notes shall be entitled to receive Additional
Interest as a result of a Registration Default pursuant to clause (iii) or (iv),
provided, further, that (1) upon the filing of the Exchange Registration
Statement or the Initial Shelf Registration (in the case of (i) above), (2) upon
the effectiveness of the Exchange Registration Statement or a Shelf Registration
(in the case of (ii) above), (3) upon the filing of the Shelf Registration (in
the case of (iii) above), (4) upon the effectiveness of the Shelf Registration
(in the case of (iv) above), or (5) upon the exchange of Exchange Notes for all
Notes tendered (in the case of (v)(A) above), or upon the effectiveness of the
Exchange Registration Statement which had ceased to remain effective (in the
case of (v)(B) above), or upon the effectiveness of the Shelf Registration which
had ceased to remain effective (in the case of (v)(C) above), Additional
Interest on the Notes as a result of such clause (i), (ii), (iii), (iv) or (v)
(or the relevant subclause thereof), as the case may be, shall cease to accrue
and the interest rate on the Notes will revert to the interest rate originally
borne by the Notes.
(b) Notwithstanding the foregoing, no Additional Interest will
be payable with respect to a Registration Default described in clause (v)(C)
above, if the Board of Directors of the Company determines in its good faith
judgment, as evidenced by a resolution of the Board of Directors, that the use
of any Prospectus would require the disclosure of material information that the
Company has a bona fide business purpose for preserving as confidential or the
disclosure of which would impede the Company's ability to consummate a
significant transaction, and that the Company is not otherwise required by
applicable securities laws or regulations to disclose, upon written notice of
such determination by the Company, the rights to Additional Interest shall be
suspended until the date upon which the Company notifies the Holders in writing
that suspension of such rights for the grounds set forth in this paragraph is no
longer necessary, and the Company agrees to give such notice as promptly as
practicable following the date that such suspension of rights is no longer
necessary (but in any event, any such suspension shall be effective for a period
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not in excess of 60 consecutive days and 60 days in the aggregate in any twelve
consecutive month period).
(c) The Company and the Subsidiary shall notify the Trustee
within one business day after each and every date on which an event occurs in
respect of which Additional Interest is required to be paid (an "Event Date").
Any amounts of Additional Interest due pursuant to (a)(i), (a)(ii) or (a)(iii)
of this Section 4 will be payable in cash semi-annually on each June 1 and
December 1 (to the Holders of record entitled to such Additional Interest on the
May 15 and November 15 immediately preceding such dates), commencing with the
first such date occurring after any such Additional Interest commences to accrue
and until such Registration Default is cured, by depositing with the Trustee, in
trust for the benefit of such Holders, immediately available funds in sums
sufficient to pay such Additional Interest. The amount of Additional Interest
will be determined by multiplying the applicable Additional Interest rate by the
principal amount of the Registrable Notes, multiplied by a fraction, the
numerator of which is the number of days such Additional Interest rate was
applicable during such period (determined on the basis of a 360-day year
comprised of twelve 30-day months and, in the case of a partial month, the
actual number of days elapsed), and the denominator of which is 360.
SECTION 5. Registration Procedures.
In connection with the filing of any Registration Statement pursuant to
Section 2 or 3 hereof, the Company and the Subsidiary shall effect such
registrations to permit the sale of the securities covered thereby in accordance
with the intended method or methods of disposition thereof, and pursuant thereto
the Company and the Subsidiary shall:
(a) Prepare and file with the SEC, prior to the Filing Date, a
Registration Statement or Registration Statements as prescribed by Section 2 or
3, and use their respective reasonable best efforts to cause each such
Registration Statement to become effective and remain effective as provided
herein, provided that, if (1) such filing is pursuant to Section 3, or (2) a
Prospectus contained in an Exchange Registration Statement filed pursuant to
Section 2 is required to be delivered under the Securities Act by any
Participating Broker-Dealer who seeks to sell Exchange Notes during the
Applicable Period, before filing any Registration Statement or Prospectus or any
amendments or supplements thereto, the Company and the Subsidiary shall, if
requested, furnish to and afford the Holders of the Registrable Notes covered by
such Registration Statement and each such Participating Broker-Dealer, as the
case may be, their counsel and the managing underwriter(s), if any, a reasonable
opportunity to review copies of all such documents (including copies of any
documents to be incorporated by reference therein and all exhibits thereto)
proposed to be filed (at least two business days prior to such filing). The
Company and the Subsidiary shall not file any Registration Statement or
Prospectus or any amendments or supplements thereto in respect of which the
Holders must be afforded an opportunity to review prior to the filing of such
document, if the Holders of a majority in aggregate principal amount of the
Registrable Notes covered by such Registration Statement, or such Participating
Broker-Dealer, as the case may be, their counsel, or the managing
underwriter(s), if any, shall reasonably object.
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(b) Prepare and file with the SEC such amendments and
post-effective amendments to each Shelf Registration or Exchange Registration
Statement, as the case may be, as may be necessary to keep such Registration
Statement continuously effective for the Effectiveness Period or the Applicable
Period, as the case may be; cause the related Prospectus to be supplemented by
any prospectus supplement required by applicable law, and as so supplemented to
be filed pursuant to Rule 424 (or any similar provisions then in force) under
the Securities Act; and comply with the provisions of the Securities Act and the
Exchange Act applicable to them with respect to the disposition of all
securities covered by such Registration Statement as so amended or in such
Prospectus as so supplemented and with respect to the subsequent resale of any
securities being sold by a Participating Broker-Dealer covered by any such
Prospectus; the Company and the Subsidiary shall be deemed not to have used
their reasonable best efforts to keep a Registration Statement effective during
the Applicable Period if any of them voluntarily takes any action that would
result in selling Holders of the Registrable Notes covered thereby or
Participating Broker-Dealers seeking to sell Exchange Notes not being able to
sell such Registrable Notes or such Exchange Notes during that period unless
such action is required by applicable law or unless the Company and the
Subsidiary comply with this Agreement, including without limitation, the
provisions of clause 5(c)(v) below.
(c) If (1) a Shelf Registration is filed pursuant to Section
3, or (2) a Prospectus contained in an Exchange Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities Act by
any Participating Broker-Dealer who seeks to sell Exchange Notes during the
Applicable Period, notify the selling Holders of Registrable Notes, or each such
Participating Broker-Dealer, as the case may be, their counsel and the managing
underwriter(s), if any, promptly (but in any event within two business days),
and confirm such notice in writing, (i) when a Prospectus or any prospectus
supplement or post-effective amendment thereto has been filed, and, with respect
to a Registration Statement or any post-effective amendment thereto, when the
same has become effective under the Securities Act (including in such notice a
written statement that any Holder may, upon request, obtain, without charge, one
conformed copy of such Registration Statement or post-effective amendment
thereto including financial statements and schedules, documents incorporated or
deemed to be incorporated by reference and exhibits), (ii) of the issuance by
the SEC of any stop order suspending the effectiveness of a Registration
Statement or of any order preventing or suspending the use of any preliminary
Prospectus or the initiation of any proceedings for that purpose, (iii) if at
any time when a Prospectus is required by the Securities Act to be delivered in
connection with sales of the Registrable Notes or resales of Exchange Notes by
Participating Broker-Dealers the representations and warranties of the Company
contained in any agreement (including any underwriting agreement) contemplated
by Section 5(n) below cease to be true and correct, (iv) of the receipt by any
of the Company or the Subsidiary of any notification with respect to the
suspension of the qualification or exemption from qualification of a
Registration Statement or any of the Registrable Notes or the Exchange Notes to
be sold by any Participating Broker-Dealer for offer or sale in any
jurisdiction, or the initiation or threatening of any proceeding for such
purpose, (v) of the happening of any event or any information becoming known
that requires the making of any changes in, or amendments or supplements to,
such Registration Statement, Prospectus or documents so that, in the case of the
Registration Statement, it will not
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<PAGE> 14
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading, and that in the case of the Prospectus, it will not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading, and (vi) of the
Company's or any Subsidiary's reasonable determination that a post-effective
amendment to a Registration Statement would be appropriate.
(d) If (1) a Shelf Registration is filed pursuant to Section
3, or (2) a Prospectus contained in an Exchange Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities Act by
any Participating Broker-Dealer who seeks to sell Exchange Notes during the
Applicable Period, use their reasonable best efforts to prevent the issuance of
any order suspending the effectiveness of a Registration Statement or of any
order preventing or suspending the use of a Prospectus or suspending the
qualification (or exemption from qualification) of any of the Registrable Notes
or the Exchange Notes to be sold by any Participating Broker-Dealer, for sale in
any jurisdiction, and, if any such order is issued, to use their reasonable best
efforts to obtain the withdrawal of any such order at the earliest possible
moment.
(e) If a Shelf Registration is filed pursuant to Section 3 and
if requested by the managing underwriter(s), if any, or the Holders of a
majority in aggregate principal amount of the Registrable Notes being sold in
connection with an underwritten offering, (i) promptly incorporate in a
Prospectus supplement or post-effective amendment such information as the
managing underwriter(s), if any, or such Holders reasonably request to be
included therein and (ii) make all required filings of such Prospectus
supplement or such post-effective amendment as soon as practicable after the
Company has received notification of the matters to be incorporated in such
Prospectus supplement or post-effective amendment.
(f) If (1) a Shelf Registration is filed pursuant to Section
3, or (2) a Prospectus contained in an Exchange Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities Act by
any Participating Broker-Dealer who seeks to sell Exchange Notes during the
Applicable Period, furnish to each selling Holder of Registrable Notes who so
requests and to each such Participating Broker-Dealer who so requests and to
counsel and the managing underwriter(s), if any, without charge, one conformed
copy of the Registration Statement or Registration Statements and each
post-effective amendment thereto, including financial statements and schedules,
and, if requested, all documents incorporated or deemed to be incorporated
therein by reference and all exhibits.
(g) If (1) a Shelf Registration is filed pursuant to Section
3, or (2) a Prospectus contained in an Exchange Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities Act by
any Participating Broker-Dealer who seeks to sell Exchange Notes during the
Applicable Period, deliver to each selling Holder of Registrable Notes, or each
such Participating Broker-Dealer, as the case may be, their counsel, and the
managing underwriter or underwriters, if any, without charge, as many copies of
the Prospectus or Prospectuses (including
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<PAGE> 15
each form of preliminary Prospectus) and each amendment or supplement thereto
and any documents incorporated by reference therein as such Persons may
reasonably request; and, subject to the last paragraph of this Section 5, each
of the Company and the Subsidiary hereby consents to the use of such Prospectus
and each amendment or supplement thereto by each of the selling Holders of
Registrable Notes or each such Participating Broker-Dealer, as the case may be,
and the managing underwriter or underwriters or agents, if any, and dealers (if
any), in connection with the offering and sale of the Registrable Notes covered
by, or the sale by Participating Broker-Dealers of the Exchange Notes pursuant
to, such Prospectus and any amendment or supplement thereto.
(h) Prior to any public offering of Registrable Notes or any
delivery of a Prospectus contained in the Exchange Registration Statement by any
Participating Broker-Dealer who seeks to sell Exchange Notes during the
Applicable Period, to use their reasonable best efforts to register or qualify,
and to cooperate with the selling Holders of Registrable Notes or each such
Participating Broker-Dealer, as the case may be, the managing underwriter or
underwriters, if any, and their respective counsel in connection with the
registration or qualification of (or exemption from such registration or
qualification), such Registrable Notes for offer and sale under the securities
or Blue Sky laws of such jurisdictions within the United States as any selling
Holder, Participating Broker-Dealer, or the managing underwriter or
underwriters, if any, reasonably request in writing, provided that where
Exchange Notes held by Participating Broker-Dealers or Registrable Notes are
offered other than through an underwritten offering, the Company and the
Subsidiary agree to cause their counsel to perform Blue Sky investigations and
file registrations and qualifications required to be filed pursuant to this
Section 5(h); keep each such registration or qualification (or exemption
therefrom) effective during the period such Registration Statement is required
to be kept effective and do any and all other acts or things reasonably
necessary or advisable to enable the disposition in such jurisdictions of the
Exchange Notes held by Participating Broker-Dealers or the Registrable Notes
covered by the applicable Registration Statement; provided that neither the
Company nor the Subsidiary shall be required to (A) qualify generally to do
business in any jurisdiction where it is not then so qualified, (B) take any
action that would subject it to general service of process in any such
jurisdiction where it is not then so subject or (C) subject itself to taxation
in excess of a nominal dollar amount in any such jurisdiction.
(i) If a Shelf Registration is filed pursuant to Section 3,
cooperate with the selling Holders of Registrable Notes and the managing
underwriter or underwriters, if any, to facilitate the timely preparation and
delivery of certificates representing Registrable Notes sold pursuant to such
Shelf Registration, which certificates shall not bear any restrictive legends
and shall be in a form eligible for deposit with The Depository Trust Company;
and enable such Registrable Notes to be in such denominations and registered in
such names as the managing underwriter or underwriters, if any, or Holders may
reasonably request.
(j) Use their reasonable best efforts to cause the Registrable
Notes covered by the Registration Statement to be registered with or approved by
such other governmental agencies or authorities as may be necessary to enable
the seller or sellers thereof or the managing underwriter or underwriters, if
any, to consummate the disposition of such Registrable Notes, except as may be
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<PAGE> 16
required solely as a consequence of the nature of such selling Holder's
business, in which case each of the Company and the Subsidiary will cooperate in
all reasonable respects with the filing of such Registration Statement and the
granting of such approvals.
(k) If (1) a Shelf Registration is filed pursuant to Section
3, or (2) a Prospectus contained in an Exchange Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities Act by
any Participating Broker-Dealer who seeks to sell Exchange Notes during the
Applicable Period, upon the occurrence of any event contemplated by paragraph
5(c)(v) or 5(c)(vi), as promptly as reasonably practicable prepare and (subject
to Section 5(a)) file with the SEC, at the joint and several expense of each of
the Company and the Subsidiary, a supplement or post-effective amendment to the
Registration Statement or a supplement to the related Prospectus or any document
incorporated or deemed to be incorporated therein by reference, or file any
other required document so that, as thereafter delivered to the purchasers of
the Registrable Notes being sold thereunder or to the purchasers of the Exchange
Notes to whom such Prospectus will be delivered by a Participating
Broker-Dealer, any such Prospectus will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
(l) Use their reasonable best efforts to cause the Registrable
Notes covered by a Registration Statement or the Exchange Notes, as the case may
be, to be rated with the appropriate rating agencies, if so requested by the
Holders of a majority in aggregate principal amount of Registrable Notes covered
by such Registration Statement or the Exchange Notes, as the case may be, or the
managing underwriter or underwriters, if any.
(m) Prior to the effective date of the first Registration
Statement relating to the Registrable Notes, (i) provide the Trustee with
certificates for the Registrable Notes or Exchange Notes, as the case may be, in
a form eligible for deposit with The Depository Trust Company and (ii) provide a
CUSIP number for the Registrable Notes or Exchange Notes, as the case may be.
(n) In connection with an underwritten offering of Registrable
Notes pursuant to a Shelf Registration, enter into an underwriting agreement as
is customary in underwritten offerings of debt securities similar to the Notes
and take all such other actions as are reasonably requested by the managing
underwriter(s), if any, in order to expedite or facilitate the registration or
the disposition of such Registrable Notes, and in such connection, (i) make such
representations and warranties to the managing underwriter or underwriters on
behalf of any underwriters, with respect to the business of the Company and its
subsidiaries and the Registration Statement, Prospectus and documents, if any,
incorporated or deemed to be incorporated by reference therein, in each case, as
are customarily made by issuers to underwriters in underwritten offerings of
debt securities similar to the Notes, and confirm the same if and when
requested; (ii) obtain opinions of counsel to the Company and the Subsidiary and
updates thereof in form and substance reasonably satisfactory to the managing
underwriter or underwriters, addressed to the managing underwriter or
underwriters covering the matters customarily covered in opinions requested in
underwritten offerings of debt
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<PAGE> 17
securities similar to the Notes and such other matters as may be reasonably
requested by the managing underwriter(s); (iii) obtain "cold comfort" letters
and updates thereof in form and substance reasonably satisfactory to the
managing underwriter or underwriters from the independent certified public
accountants of the Company and the Subsidiary (and, if necessary, any other
independent certified public accountants of any subsidiary of any of the Company
or of any business acquired by any of the Company or the Subsidiary for which
financial statements and financial data are, or are required to be, included in
the Registration Statement), addressed to the managing underwriter or
underwriters on behalf of any underwriters, such letters to be in customary form
and covering matters of the type customarily covered in "cold comfort" letters
in connection with under written offerings of debt securities similar to the
Notes and such other matters as may be reasonably requested by the managing
underwriter or underwriters; and (iv) if an underwriting agreement is entered
into, the same shall contain indemnification provisions and procedures no less
favorable than those set forth in Section 7 hereof (or such other provisions and
procedures acceptable to Holders of a majority in aggregate principal amount of
Registrable Notes covered by such Registration Statement and the managing
underwriter or underwriters or agents) with respect to all parties to be
indemnified pursuant to said Section. The above shall be done at each closing
under such underwriting agreement, or as and to the extent required thereunder.
(o) If (1) a Shelf Registration is filed pursuant to Section
3, or (2) a Prospectus contained in an Exchange Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities Act by
any Participating Broker-Dealer who seeks to sell Exchange Notes during the
Applicable Period, make available for inspection by any selling Holder of such
Registrable Notes being sold, or each such Participating Broker-Dealer, as the
case may be, the managing underwriter or underwriters participating in any such
disposition of Registrable Notes, if any, and any attorney, accountant or other
agent retained by any such selling Holder or each such Participating
Broker-Dealer, as the case may be (collectively, the "Inspectors"), at the
offices where normally kept, during reasonable business hours, all financial and
other records, pertinent corporate documents and properties of the Company and
the Subsidiary and their respective subsidiaries (collectively, the "Records")
as shall be reasonably necessary to enable them to exercise any applicable due
diligence responsibilities, and cause the officers, directors and employees of
the Company and the Subsidiary and their respective subsidiaries to supply all
information in each case reasonably requested by any such Inspector in
connection with such Registration Statement. Records which the Company and the
Subsidiary determine, in good faith, to be confidential and any Records which
they notify the Inspectors are confidential shall not be disclosed by the
Inspectors unless (i) the disclosure of such Records is necessary to avoid or
correct a material misstatement or material omission in such Registration
Statement, (ii) the release of such Records is ordered pursuant to a subpoena or
other order from a court of competent jurisdiction or (iii) the information in
such Records has been made generally available to the public. Each selling
Holder of such Registrable Notes and each such Participating Broker-Dealer or
underwriter will be required to agree that information obtained by it as a
result of such inspections shall be deemed confidential and shall not be used by
it as the basis for any market transactions in the securities of the Company or
for any purpose other than in connection with such Registration Statement unless
and until such is made generally available to the public. Each selling Holder of
such Registrable Notes and each such Participating Broker-Dealer
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<PAGE> 18
will be required to further agree that it will, upon learning that disclosure of
such Records is sought in a court of competent jurisdiction, give prompt notice
to the Company and allow the Company to undertake appropriate action to prevent
disclosure of the Records deemed confidential at their expense.
(p) Provide an indenture trustee for the Registrable Notes or
the Exchange Notes, as the case may be, and cause the Indenture or the trust
indenture provided for in Section 2(a), as the case may be, to be qualified
under the TIA not later than the effective date of the Exchange Registration
Statement or the first Registration Statement relating to the Registrable Notes;
and in connection therewith, cooperate with the trustee under any such indenture
and the Holders of the Registrable Notes, to effect such changes to such
indenture as may be required for such indenture to be so qualified in accordance
with the terms of the TIA; and execute, and use its reasonable best efforts to
cause such trustee to execute, all documents as may be required to effect such
changes, and all other forms and documents required to be filed with the SEC to
enable such indenture to be so qualified in a timely manner.
(q) Comply with all applicable rules and regulations of the
SEC and make generally available to its securityholders earnings statements
satisfying the provisions of Section 11(a) of the Securities Act and Rule 158
thereunder (or any similar rule promulgated under the Securities Act) no later
than 45 days after the end of any 12-month period (or 90 days after the end of
any 12-month period if such period is a fiscal year) (i) commencing at the end
of any fiscal quarter in which Registrable Notes are sold to underwriters in a
firm commitment or reasonable best efforts underwritten offering and (ii) if not
sold to underwriters in such an offering, commencing on the first day of the
first fiscal quarter of the Company after the effective date of a Registration
Statement, which statements shall cover said 12-month periods.
(r) Upon consummation of an Exchange Offer or a Private
Exchange, obtain an opinion of counsel to the Company and the Subsidiary, in a
form customary for underwritten offerings of debt securities similar to the
Notes, addressed to the Trustee for the benefit of all Holders of Registrable
Notes participating in the Exchange Offer or the Private Exchange, as the case
may be, and which includes an opinion that (i) each of the Company and the
Subsidiary has duly authorized, executed and delivered the Exchange Notes and
Private Exchange Notes and the related indenture and (ii) each of the Exchange
Notes or the Private Exchange Notes, as the case may be, and related indenture
constitute a legal, valid and binding obligation of each of the Company and the
Subsidiary, enforceable against each of the Company and the Subsidiary in
accordance with its respective terms (with customary exceptions).
(s) If an Exchange Offer or a Private Exchange is to be
consummated, upon delivery of the Registrable Notes by Holders to the Company
and the Subsidiary (or to such other Person as directed by the Company and the
Subsidiary) in exchange for the Exchange Notes or the Private Exchange Notes, as
the case may be, the Company and the Subsidiary shall mark, or cause to be
marked, on such Registrable Notes that such Registrable Notes are being canceled
in exchange
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<PAGE> 19
for the Exchange Notes or the Private Exchange Notes, as the case may be; and,
in no event shall such Registrable Notes be marked as paid or otherwise
satisfied.
(t) Cooperate with each seller of Registrable Notes covered by
any Registration Statement and the managing underwriter(s), if any,
participating in the disposition of such Registrable Notes and their respective
counsel in connection with any filings required to be made with the National
Association of Securities Dealers, Inc. (the "NASD").
(u) Use their respective reasonable best efforts to take all
other reasonable steps necessary to effect the registration of the Registrable
Notes covered by a Registration Statement contemplated hereby.
The Company and the Subsidiary may require each seller of Registrable
Notes or Participating Broker-Dealer as to which any registration is being
effected to furnish to the Company and the Subsidiary such information regarding
such seller or Participating Broker-Dealer and the distribution of such
Registrable Notes or Exchange Notes to be sold by such Participating
Broker-Dealer, as the case may be, as the Company and the Subsidiary may, from
time to time, reasonably request. The Company may exclude from such registration
the Registrable Notes of any seller or Participating Broker-Dealer who
unreasonably fails to furnish such information within a reasonable time after
receiving such request. Each seller as to which any Shelf Registration is being
effected agrees to furnish promptly to the Company all information required to
be disclosed in order to make the information previously furnished to the
Company by such seller not materially misleading.
Each Holder of Registrable Notes and each Participating Broker-Dealer
agrees by acquisition of such Registrable Notes or Exchange Notes to be sold by
such Participating Broker-Dealer, as the case may be, that, upon receipt of any
notice from the Company of the happening of any event of the kind described in
Section 5(c)(ii), 5(c)(iv), 5(c)(v), or 5(c)(vi) hereof, such Holder will
forthwith discontinue disposition of such Registrable Notes covered by such
Registration Statement or Prospectus or Exchange Notes to be sold by such Holder
or Participating Broker-Dealer, as the case may be, until such Holder's or
Participating Broker-Dealer's receipt of the copies of the supplemented or
amended Prospectus contemplated by Section 5(k), or until it is advised in
writing (the "Advice") by the Company that the use of the applicable Prospectus
may be resumed, and has received copies of any amendments or supplements
thereto. In the event the Company shall give any such notice, each of the
Effectiveness Period and the Applicable Period shall be extended by the number
of days during such periods from and including the date of the giving of such
notice to and including the date when each seller of Registrable Notes covered
by such Registration Statement or Exchange Notes to be sold by such Holder or
Participating Broker-Dealer, as the case may be, shall have received (x) the
copies of the supplemented or amended Prospectus contemplated by Section 5(k) or
(y) the Advice.
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SECTION 6. Registration Expenses.
(a) All fees and expenses incident to the performance of or
compliance with this Agreement by the Company and the Subsidiary shall be borne
by the Company and the Subsidiary, jointly and severally, whether or not the
Exchange Offer or a Shelf Registration is filed or becomes effective, including,
without limitation, (i) all registration and filing fees (including, without
limitation, (A) fees with respect to filings required to be made with the NASD
in connection with an underwritten offering and (B) fees and expenses of
compliance with state securities or Blue Sky laws (including, without
limitation, reasonable fees and disbursements of counsel in connection with Blue
Sky qualifications of the Registrable Notes or Exchange Notes and determination
of the eligibility of the Registrable Notes or Exchange Notes for investment
under the laws of such jurisdictions in the United States (x) where the Holders
of Registrable Notes are located, in the case of the Exchange Notes, or (y) as
provided in Section 5(h), in the case of Registrable Notes or Exchange Notes to
be sold by a Participating Broker-Dealer during the Applicable Period)), (ii)
printing expenses (including, without limitation, expenses of printing
certificates for Registrable Notes or Exchange Notes in a form eligible for
deposit with The Depository Trust Company and of printing Prospectuses if the
printing of Prospectuses is reasonably requested by the managing underwriter or
underwriters, if any, or, in respect of Registrable Notes or Exchange Notes to
be sold by any Participating Broker-Dealer during the Applicable Period, by the
Holders of a majority in aggregate principal amount of the Registrable Notes
included in any Registration Statement or of such Exchange Notes, as the case
may be), (iii) messenger, telephone and delivery expenses, (iv) fees and
disbursements of counsel for the Company, (v) fees and disbursements of all
independent certified public accountants referred to in Section 5(n)(iii)
(including, without limitation, the expenses of any special audit and "cold
comfort" letters required by or incident to such performance), (vi) rating
agency fees, (vii) Securities Act liability insurance, if the Company desire
such insurance, (viii) fees and expenses of the Trustee, (ix) fees and expenses
of all other Persons retained by the Company, (x) internal expenses of the
Company and the Subsidiary (including, without limitation, all salaries and
expenses of officers and employees of the Company and the Subsidiary performing
legal or accounting duties), (xi) the expense of any annual audit, (xii) the
reasonable fees and disbursements of counsel for the sellers of Registrable
Notes (plus any local counsel, deemed appropriate by the sellers of a majority
in aggregate principal amount of such Registrable Notes), in accordance with the
provisions of Section 6(b) hereof; provided, the Company shall not be obligated
to pay the fees and disbursements of the counsel for such sellers if such
counsel is other than Andrews & Kurth L.L.P., counsel to the Initial Purchasers
in connection with the Securities Purchase Agreement and (xiii) the expenses
relating to printing, word processing and distributing all Registration
Statements, underwriting agreements, securities sales agreements, indentures and
any other documents necessary in order to comply with this Agreement.
(b) In connection with any registration hereunder, the Company
shall reimburse the sellers of the Registrable Notes being registered or
tendered for in such registration for the reasonable fees and disbursements of
not more than one firm of attorneys representing such sellers (in addition to
any local counsel), which firm shall be chosen by the sellers of a majority in
aggregate principal amount of the Registrable Notes provided, however, that the
Company shall have no such
18
<PAGE> 21
reimbursement obligation if such firm of attorneys is other than Andrews & Kurth
L.L.P., counsel to the Initial Purchasers in connection with the Securities
Purchase Agreement.
SECTION 7. Indemnification.
(a) Each of the Company and the Subsidiary, jointly and
severally, agrees to indemnify and hold harmless each Holder of Registrable
Notes and each Participating Broker-Dealer selling Exchange Notes during the
Applicable Period, the officers and directors of each such Person, and each
Person, if any, who controls any such Person within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act (each, a
"Participant"), from and against any and all losses, claims, damages and
liabilities (including, without limitation, the reasonable legal fees and other
expenses actually incurred in connection with any suit, action or proceeding or
any claim asserted) caused by, arising out of or based upon any untrue statement
or alleged untrue statement of a material fact contained in any Registration
Statement or Prospectus (as amended or supplemented if the Company shall have
furnished any amendments or supplements thereto) or any preliminary Prospectus,
or caused by, arising out of or based upon any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading, except insofar as such losses, claims, damages or
liabilities are caused by any untrue statement or omission or alleged untrue
statement or omission made in reliance upon and in conformity with information
relating to any Participant furnished to the Company in writing by such
Participant expressly for use therein; provided that the foregoing indemnity
with respect to any preliminary Prospectus shall not inure to the benefit of any
Participant (or to the benefit of an officer or director of such Participant or
any Person controlling such Participant) from whom the Person asserting any such
losses, claims, damages or liabilities purchased Registrable Notes or Exchange
Notes if such untrue statement or omission or alleged untrue statement or
omission made in such preliminary Prospectus is eliminated or remedied in the
related Prospectus (as amended or supplemented if the Company shall have
furnished any amendments or supplements thereto) and a copy of the related
Prospectus (as so amended or supplemented) shall have been furnished to such
Participant at or prior to the sale of such Registrable or Exchange Notes, as
the case may be, to such Person.
(b) Each Participant will be required to agree, severally and
not jointly, to indemnify and hold harmless the Company and the Subsidiary,
their respective directors and officers and each Person who controls any of the
Company or the Subsidiary within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act to the same extent as the foregoing indemnity
from the Company and the Subsidiary to each Participant and shall have the
rights and duties given to the Company and the Subsidiary in paragraph (c) of
this Section 7 (except that if the Company and the Subsidiary shall have assumed
the defense thereof, such Participant shall not be required to do so, but may
employ separate counsel therein and participate in the defense thereof but the
fees and expenses of such counsel shall be at the expense of such holder), but
only with reference to information relating to such Participant furnished to the
Company and the Subsidiary in writing by such Participant expressly for use in
any Registration Statement or
19
<PAGE> 22
Prospectus, any amendment or supplement thereto, or any preliminary Prospectus.
The liability of any Participant under this paragraph (b) shall in no event
exceed the proceeds received by such Participant from sales of Registrable Notes
or Exchange Notes giving rise to such obligations.
(c) If any Person shall be entitled to indemnity hereunder
(each an "Indemnified Party"), such Indemnified Party shall give prompt written
notice to the party or parties from which such indemnity is sought (each an
"Indemnifying Party") of the commencement of any action, suit, investigation or
proceeding, governmental or otherwise (a "Proceeding"), with respect to which
such Indemnified Party seeks indemnification or contribution pursuant hereto;
provided, however, that the failure so to notify the Indemnifying Parties shall
not relieve the Indemnifying Parties from any obligation or liability except to
the extent that the Indemnifying Parties have been prejudiced materially by such
failure. The Indemnifying Parties shall have the right, exercisable by giving
written notice to an Indemnified Party promptly after the receipt of written
notice from such Indemnified Party of such Proceeding, to assume, at the
Indemnifying Parties' expense, the defense of any such Proceeding, with counsel
reasonably satisfactory to such Indemnified Party; provided, however, that an
Indemnified Party or parties (if more than one such Indemnified Party is named
in any Proceeding) shall have the right to employ separate counsel in any such
Proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Party or parties
unless: (1) the Indemnifying Parties agree to pay such fees and expenses; or (2)
the Indemnifying Parties fail promptly to assume the defense of such Proceeding
or fail to employ counsel reasonably satisfactory to such Indemnified Party or
Parties; or (3) the named parties to any such Proceeding (including any
impleaded parties) include both such Indemnified Party or parties and the
Indemnifying Party or an Affiliate of the Indemnifying Party and such
Indemnified Parties, and the Indemnified Parties shall have been advised in
writing by counsel that there may be one or more legal defenses available to
such Indemnified Party or Parties that are different from or additional to those
available to the Indemnifying Parties, in which case, if such Indemnified Party
or parties notifies the Indemnifying Parties in writing that it elects to employ
separate counsel at the expense of the Indemnifying Parties, the Indemnifying
Parties shall not have the right to assume the defense thereof on behalf of such
Indemnified Party or Parties and such counsel shall be at the expense of the
Indemnifying Parties, it being understood, however, that, unless there exists a
conflict among Indemnified Parties, the Indemnifying Parties shall not, in
connection with any one such Proceeding or separate but substantially similar or
related Proceedings in the same jurisdiction, arising out of the same general
allegations or circumstances, be liable for the fees and expenses of more than
one separate firm of attorneys (together with appropriate local counsel) at any
time for such Indemnified Party or parties, or for fees and expenses that are
not reasonable. No Indemnified Party or parties will settle any Proceeding
without the consent of the Indemnifying Party or Parties (but such consent shall
not be unreasonably withheld). No Indemnifying Party shall, without the prior
written consent of the Indemnified Party, effect any settlement of any pending
or threatened Proceeding in respect of which any Indemnified Party is or could
have been a party and indemnity could have been sought hereunder by such
Indemnified Party, unless such settlement includes an unconditional release of
such Indemnified Party from all liability or claims that are the subject of such
Proceeding.
20
<PAGE> 23
(d) If the indemnification provided for in paragraphs (a) and
(b) of this Section 7 is unavailable to an Indemnified Person in respect of any
losses, claims, damages or liabilities referred to therein, then each
Indemnifying Person under such paragraphs, in lieu of indemnifying such
Indemnified Person thereunder, shall contribute to the amount paid or payable by
such Indemnified Person as a result of such losses, claims, damages or
liabilities in such proportion as is appropriate to reflect the relative fault
of the Company and the Subsidiary on the one hand and the Participants on the
other in connection with the statements or omissions that resulted in such
losses, claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative fault of the Company and the Subsidiary on the one
hand and the Participants on the other shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Company and the Subsidiary or by the Participants
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
(e) The parties agree that it would not be just and equitable
if contribution pursuant to this Section 7 were determined by pro rata
allocation (even if the Participants were treated as one entity for such
purpose) or by any other method of allocation that does not take account of the
equitable considerations referred to in the immediately preceding paragraph. The
amount paid or payable by an Indemnified Person as a result of the losses,
claims, damages and liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any reasonable legal or other expenses actually incurred by such
Indemnified Person in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this Section 7, in no event shall a
Participant be required to contribute any amount in excess of the amount by
which proceeds received by such Participant from sales of Registrable Notes or
Exchange Notes exceeds the amount of any damages that such Participant has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation.
(f) The indemnity and contribution agreements contained in
this Section 7 will be in addition to any liability which the Indemnifying
Persons may otherwise have to the Indemnified Persons referred to above.
SECTION 8. Rules 144 and 144A.
Each of the Company and the Subsidiary covenants that it will file the
reports required to be filed by it under the Securities Act and the Exchange Act
and the rules and regulations adopted by the SEC thereunder in a timely manner
and, if at any time the Company is not required to file such reports, it will,
upon the request of any Holder of Registrable Notes, make publicly available
other information of a like nature so long as necessary to permit sales pursuant
to Rule 144 or Rule 144A. Each of the Company and the Subsidiary further
covenants that so long as any Registrable Notes remain outstanding to make
available to any Holder of Registrable Notes in connection with any sale
21
<PAGE> 24
thereof, the information required by Rule 144A(d)(4) under the Securities Act in
order to permit resales of such Registrable Notes pursuant to (a) such Rule
144A, or (b) any similar rule or regulation hereafter adopted by the SEC.
SECTION 9. Underwritten Registrations.
If any of the Registrable Notes covered by any Shelf Registration are
to be sold in an underwritten offering, the investment banker or investment
bankers and manager or managers that will manage the offering will be selected
by the Holders of a majority in aggregate principal amount of such Registrable
Notes included in such offering and shall be reasonably acceptable to the
Company and the Subsidiary.
No Holder of Registrable Notes may participate in any underwritten
registration hereunder unless such Holder (a) agrees to sell such Holder's
Registrable Notes on the basis provided in any underwriting arrangements
approved by the Persons entitled hereunder to approve such arrangements and (b)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents reasonably required under the terms
of such underwriting arrangements.
SECTION 10. Miscellaneous.
(a) Remedies. In the event of a breach by the Company or the
Subsidiary of any of its obligations under this Agreement, other than the
occurrence of an event which requires payment of Additional Interest, each
Holder of Registrable Notes, in addition to being entitled to exercise all
rights provided herein, in the Indenture or, in the case of the Initial
Purchasers, in the Purchase Agreement or granted by law, including recovery of
damages, will be entitled to specific performance of its rights under this
Agreement. Each of the Company and the Subsidiary jointly and severally agree
that monetary damages would not be adequate compensation for any loss incurred
by reason of a breach by it of any of the provisions of this Agreement and
hereby further agrees, jointly and severally, that, in the event of any action
for specific performance in respect of such breach, it shall waive the defense
that a remedy at law would be adequate.
(b) Enforcement. The Trustee shall be authorized to enforce
the provisions of this Agreement for the ratable benefit of the Holders.
(c) No Inconsistent Agreements. Neither the Company nor the
Subsidiary has, as of the date hereof, and the Company and the Subsidiary shall
not, after the date of this Agreement, enter into any agreement with respect to
any of their securities that is inconsistent with the rights granted to the
Holders of Registrable Notes in this Agreement or otherwise conflicts with the
provisions hereof. None of the Company or the Subsidiary has entered or will
enter into any agreement with respect to any of its securities which will grant
to any Person piggy-back rights with respect to a Registration Statement
required to be filed under this Agreement.
22
<PAGE> 25
(d) Adjustments Affecting Registrable Notes. Neither the
Company nor the Subsidiary shall, directly or indirectly, take any action with
respect to the Registrable Notes as a class that would adversely affect the
ability of the Holders of Registrable Notes to include such Registrable Notes in
a registration undertaken pursuant to this Agreement.
(e) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the Company and the Subsidiary have obtained the
written consent of Holders of at least a majority of the then outstanding
aggregate principal amount of Registrable Notes. Notwithstanding the foregoing,
a waiver or consent to depart from the provisions hereof with respect to a
matter that relates exclusively to the rights of Holders of Registrable Notes
whose securities are being sold pursuant to a Registration Statement and that
does not directly or indirectly affect, impair, limit or compromise the rights
of other Holders of Registrable Notes may be given by Holders of at least a
majority in aggregate principal amount of the Registrable Notes being sold by
such Holders pursuant to such Registration Statement, provided that the
provisions of this sentence may not be amended, modified or supplemented except
in accordance with the provisions of the immediately preceding sentence.
(f) Notices. All notices and other communications (including
without limitation any notices or other communications to the Trustee) provided
for or permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, next-day air courier or telecopier:
(i) if to a Holder of Registrable Notes or any
Participating Broker-Dealer, at the most current address given by the
Trustee to the Company; and
(ii) if to the Company, 565 Taxter Road, Elmsford,
New York 10523- 5200, Attention: General Counsel, with a copy to
Gibson, Dunn & Crutcher LLP, 200 Park Avenue, New York, New York
10166, Attention: Sean P. Griffiths, Esq.
All such notices and communications shall be deemed to have been duly
given: (i) when delivered by hand, if personally delivered; (ii) five business
days after being deposited in the mail, postage prepaid, if mailed; (iii) one
business day after being timely delivered to a next-day air courier; and (iv)
when receipt is acknowledged by the addressee, if telecopied.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee under the
Indenture at the address specified in such Indenture.
(g) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties, including without limitation and without the need for an express
assignment, subsequent Holders of Registrable Notes.
23
<PAGE> 26
(h) Counterparts. This Agreement may be executed in any number
of counterparts and by the 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 one and the same agreement.
(i) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(j) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO
CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO
THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT.
(k) Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated.
(l) Entire Agreement. This Agreement, together with the
Purchase Agreement and the Indenture, is intended by the parties as a final
expression of their agreement, and is intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein and therein.
(m) Joint and Several Obligations. Unless otherwise stated
herein, each of the obligations of the Company and the Subsidiary under this
Agreement shall be joint and several obligations of each of them.
(n) Notes Held by the Company or their Affiliates. Whenever
the consent or approval of Holders of a specified percentage of Registrable
Notes is required hereunder, Registrable Notes held by the Company or their
affiliates (as such term is defined in Rule 405 under the Securities Act) shall
not be counted in determining whether such consent or approval was given by the
Holders of such required percentage.
24
<PAGE> 27
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
CITYSCAPE FINANCIAL CORP.
(a Delaware corporation)
By: /s/ Robert C. Patent
---------------------------------------------
Name: Robert C. Patent
------------------------------------
Title: Executive Vice President
and Treasurer
-----------------------------------
CITYSCAPE CORP.
(a New York corporation)
By: /s/ Tim S. Ledwick
---------------------------------------------
Name: Tim S. Ledwick
------------------------------------
Title: Senior Vice President and
Chief Financial Officer
-----------------------------------
The foregoing Agreement is hereby conformed and accepted as of the date first
above written.
CIBC WOOD GUNDY SECURITIES CORP.
BEAR, STEARNS & CO. INC.
OPPENHEIMER & CO., INC.
By: CIBC WOOD GUNDY SECURITIES CORP.
By: /s/ Andrew R. Heyer
-------------------------------
Name: Andrew R. Heyer
-----------------------
Title: Managing Director
----------------------
<PAGE> 1
Exhibit 8.1
[GIBSON, DUNN & CRUTCHER LLP LETTERHEAD]
June 20, 1997
(212) 351-4000 C 15566-00015
Cityscape Financial Corp.
Cityscape Corp.
565 Taxter Road
Elmsford, New York 10523
Re: 12-3/4% Series A Senior Notes due 2004
Ladies and Gentlemen:
At your request, we have examined the Registration Statement
on Form S-4 (the "Registration Statement") of Cityscape Financial Corp., a
Delaware corporation (the "Company") and Cityscape Corp., a New York corporation
("CSC"), filed in connection with the registration under the Securities Act of
1933, as amended (the "Securities Act"), of $300,000,000 aggregate principal
amount of the Company's 12-3/4% Series A Senior Notes due 2004 (the "New
Notes"), the guarantee of the New Notes by CSC and the exchange of the New Notes
for a like principal amount of the Company's 12-3/4% Senior Notes due 2004.
We hereby confirm our opinions set forth in the Registration
Statement under the caption "Certain Federal Income Tax Considerations."
Furthermore, it is our opinion that the discussion under the caption "Certain
Federal Income Tax Considerations," to the extent it discusses matters of law or
legal conclusions, is correct in all material respects.
<PAGE> 2
Cityscape Financial Corp.
Cityscape Corp.
June 20, 1997
Page 2
We hereby consent to the filing of this opinion as an Exhibit
to the Registration Statement, and we further consent to the use of our name
under the captions "Legal Matters" and "Certain Federal Income Tax
Considerations." In giving this consent, we do not thereby admit that we are
within the category of persons whose consent is required under Section 7 of the
Securities Act or the rules and regulations promulgated thereunder.
Very truly yours,
/s/ Gibson, Dunn & Crutcher LLP
<PAGE> 1
EXHIBIT 10.47
AMENDMENT
THIS AMENDMENT (this "Amendment"), dated as of September 3, 1996, to the
Employment Agreement, dated as of July 1, 1995 (as amended, supplemented and
otherwise modified from time to time, the "Agreement"; capitalized terms used
but not defined herein shall have the respective meanings specified in the
Agreement), between Cityscape Corp. (the "Company") and Cheryl P. Carl (the
"Employee").
WHEREAS, the Company and the Employee agree to amend the Agreement, on the
terms and conditions of this Amendment.
NOW, THEREFORE, in consideration of the mutual premises and mutual
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
1. AMENDMENT. Subject to the satisfaction of the condition to
effectiveness specified in Section 4 hereof, Item 5 of the Schedule to the
Agreement shall be amended by the deletion of the text in its entirety and
substituting the following therefor:
"Bonus: The Employee will share in a bonus pool (the "Bonus Pool") of
5% of all pre-tax profits of US Operations (as defined below)
for 1996, 1997 and 1998 (the "Bonus"). "US Operations"
consists of the consolidated financial reports of Cityscape
Financial Corp. and each of its subsidiaries incorporated in
any state of the United States.
In order for any Bonus to be awarded, such pre-tax profits for
1996 must meet a $16.9 million threshold, such pre-tax profits
for 1997 must meet the 1996 pre-tax profits plus the
percentage increase, if any, in the Consumer Price Index
("CPI") (as defined in Section 4(c) of the Agreement), and
such pre-tax profits for 1998 must meet the 1997 pre-tax
profits plus the percentage increase, if any, in the CPI. Any
distributions from the Bonus Pool will be made within 90 days
after the completion of the audit by the independent auditors
of Cityscape Financial Corp. and its subsidiaries for the
applicable year. Notwithstanding the foregoing, any
extraordinary profit item earned in any of 1996, 1997 or 1998,
as determined by the Company, will be deemed to be earned over
three years, one-third in the year in which the extraordinary
profit occurs and one-third in each of the two successive
years.
<PAGE> 2
The Bonus is payable annually in cash up to 200% of Employee's
salary for the prior year; any excess (the "Excess"), if any,
will be deferred and paid over three years with interest at
the Citibank N.A. prime rate plus one percent per annum at
one-third each year, payable each successive January
thereafter.
The Bonus Pool will be divided on the basis of the percentage
of Employee's prior year salary to total prior year salaries
of the Participants (as defined below) in the Bonus Pool. The
"Participants" are Robert M. Stata, Cheryl P. Carl, Steven P.
Weiss, Eric S. Goldstein, Jonah L. Goldstein and Tim S.
Ledwick. If any Participant's employment is terminated for any
reason, the Company may designate a new participant or
participants (each a "New Participant"). Any New Participant
will thereafter share in the Bonus Pool, provided, however,
that for purposes of dividing the Bonus Pool, the aggregate
amount of salaries of any New Participants shall not be deemed
to exceed the aggregate amount of salaries of any such
terminated Participants. If the Company designates a New
Participant within 120 days of the termination of a
Participant's employment, such designation will be deemed to
occur upon the termination of the Participant's employment.
If, after 120 days of the termination of a Participant's
employment, the Company has not designated a New Participant,
any designation of a New Participant will be deemed to occur
on the date on which the designation is made. For any period
in which the Company has not been deemed to have designated a
New Participant, the Pool will be shared by the remaining
Participants on the basis of percentage of Employee's prior
year salary to total prior year salaries of the Participants
then employed after deduction for the pro rata payment to any
such terminated Participant as set forth in the following
paragraph.
If employment terminates for any reason during the term of the
program, the Employee forfeits any further interest in the
Bonus from the date of termination, provided, however, the
Employee will not forfeit the pro rata share for the portion
of the year prior to termination of employment or the Excess,
if any. Notwithstanding the foregoing, the Company may extend
such Participant's interest in the Bonus Pool beyond the date
of termination of such Participant's employment."
2. COUNTERPARTS. This Amendment may be executed by the parties hereto in
any number of separate counterparts and all of said counterparts taken together
shall be deemed to constitute one and the same instrument.
2
<PAGE> 3
3. CONTINUING EFFECT OF THE AGREEMENT. Except for the consents and
modifications expressly set forth herein, the Agreement shall continue to be,
and shall remain, in full force and effect in accordance with its terms.
4. EFFECTIVENESS. This Amendment shall become effective upon the
execution hereof by the Company and Employee.
5. GOVERNING LAW. THIS CONSENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
[The remainder of this page is intentionally left blank.]
3
<PAGE> 4
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed by their proper and duly authorized officers as of the date first
above written.
CITYSCAPE CORP.
By: /s/ Robert Grosser
--------------------------------
Name: Robert Grosser
Title: President
CHERYL P. CARL
By: /s/ Cheryl P. Carl
--------------------------------
Name: Cheryl P. Carl
Title: Senior Vice President
4
<PAGE> 1
EXHIBIT 10.48
AMENDMENT
THIS AMENDMENT (this "Amendment"), dated as of September 3, 1996, to the
Employment Agreement, dated as of July 1, 1995 (as amended, supplemented and
otherwise modified from time to time, the "Agreement"; capitalized terms used
but not defined herein shall have the respective meanings specified in the
Agreement), between Cityscape Corp. (the "Company") and Eric S. Goldstein (the
"Employee").
WHEREAS, the Company and the Employee agree to amend the Agreement, on the
terms and conditions of this Amendment.
NOW, THEREFORE, in consideration of the mutual premises and mutual
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
1. AMENDMENT. Subject to the satisfaction of the condition to
effectiveness specified in Section 4 hereof, Item 5 of the Schedule to the
Agreement shall be amended by the deletion of the text in its entirety and
substituting the following therefor:
"Bonus: The Employee will share in a bonus pool (the "Bonus Pool") of
5% of all pre-tax profits of US Operations (as defined below)
for 1996, 1997 and 1998 (the "Bonus"). "US Operations"
consists of the consolidated financial reports of Cityscape
Financial Corp. and each of its subsidiaries incorporated in
any state of the United States.
In order for any Bonus to be awarded, such pre-tax profits for
1996 must meet a $16.9 million threshold, such pre-tax profits
for 1997 must meet the 1996 pre-tax profits plus the
percentage increase, if any, in the Consumer Price Index
("CPI") (as defined in Section 4(c) of the Agreement), and
such pre-tax profits for 1998 must meet the 1997 pre-tax
profits plus the percentage increase, if any, in the CPI. Any
distributions from the Bonus Pool will be made within 90 days
after the completion of the audit by the independent auditors
of Cityscape Financial Corp. and its subsidiaries for the
applicable year. Notwithstanding the foregoing, any
extraordinary profit item earned in any of 1996, 1997 or 1998,
as determined by the Company, will be deemed to be earned over
three years, one-third in the year in which the extraordinary
profit occurs and one-third in each of the two successive
years.
<PAGE> 2
The Bonus is payable annually in cash up to 200% of Employee's
salary for the prior year; any excess (the "Excess"), if any,
will be deferred and paid over three years with interest at
the Citibank N.A. prime rate plus one percent per annum at
one-third each year, payable each successive January
thereafter.
The Bonus Pool will be divided on the basis of the percentage
of Employee's prior year salary to total prior year salaries
of the Participants (as defined below) in the Bonus Pool. The
"Participants" are Robert M. Stata, Cheryl P. Carl, Steven P.
Weiss, Eric S. Goldstein, Jonah L. Goldstein and Tim S.
Ledwick. If any Participant's employment is terminated for any
reason, the Company may designate a new participant or
participants (each a "New Participant"). Any New Participant
will thereafter share in the Bonus Pool, provided, however,
that for purposes of dividing the Bonus Pool, the aggregate
amount of salaries of any New Participants shall not be deemed
to exceed the aggregate amount of salaries of any such
terminated Participants. If the Company designates a New
Participant within 120 days of the termination of a
Participant's employment, such designation will be deemed to
occur upon the termination of the Participant's employment.
If, after 120 days of the termination of a Participant's
employment, the Company has not designated a New Participant,
any designation of a New Participant will be deemed to occur
on the date on which the designation is made. For any period
in which the Company has not been deemed to have designated a
New Participant, the Pool will be shared by the remaining
Participants on the basis of percentage of Employee's prior
year salary to total prior year salaries of the Participants
then employed after deduction for the pro rata payment to any
such terminated Participant as set forth in the following
paragraph.
If employment terminates for any reason during the term of the
program, the Employee forfeits any further interest in the
Bonus from the date of termination, provided, however, the
Employee will not forfeit the pro rata share for the portion
of the year prior to termination of employment or the Excess,
if any. Notwithstanding the foregoing, the Company may extend
such Participant's interest in the Bonus Pool beyond the date
of termination of such Participant's employment."
2. COUNTERPARTS. This Amendment may be executed by the parties hereto in
any number of separate counterparts and all of said counterparts taken together
shall be deemed to constitute one and the same instrument.
2
<PAGE> 3
3. CONTINUING EFFECT OF THE AGREEMENT. Except for the consents and
modifications expressly set forth herein, the Agreement shall continue to be,
and shall remain, in full force and effect in accordance with its terms.
4. EFFECTIVENESS. This Amendment shall become effective upon the
execution hereof by the Company and Employee.
5. GOVERNING LAW. THIS CONSENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
[The remainder of this page is intentionally left blank.]
3
<PAGE> 4
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed by their proper and duly authorized officers as of the date first
above written.
CITYSCAPE CORP.
By: /s/ Robert Grosser
-----------------------------
Name: Robert Grosser
Title: President
ERIC S. GOLDSTEIN
By: /s/ Eric S. Goldstein
-----------------------------
Name: Eric S. Goldstein
Title: Senior Vice President
4
<PAGE> 1
EXHIBIT 10.49
AMENDMENT
THIS AMENDMENT (this "Amendment"), dated as of September 3, 1996, to the
Employment Agreement, dated as of July 1, 1995 (as amended, supplemented and
otherwise modified from time to time, the "Agreement"; capitalized terms used
but not defined herein shall have the respective meanings specified in the
Agreement), between Cityscape Corp. (the "Company") and Jonah L.
Goldstein (the "Employee").
WHEREAS, the Company and the Employee agree to amend the Agreement, on the
terms and conditions of this Amendment.
NOW, THEREFORE, in consideration of the mutual premises and mutual
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
1. AMENDMENT. Subject to the satisfaction of the condition to
effectiveness specified in Section 4 hereof, Item 5 of the Schedule to the
Agreement shall be amended by the deletion of the text in its entirety and
substituting the following therefor:
"Bonus: The Employee will share in a bonus pool (the "Bonus Pool") of
5% of all pre-tax profits of US Operations (as defined below)
for 1996, 1997 and 1998 (the "Bonus"). "US Operations"
consists of the consolidated financial reports of Cityscape
Financial Corp. and each of its subsidiaries incorporated in
any state of the United States.
In order for any Bonus to be awarded, such pre-tax profits for
1996 must meet a $16.9 million threshold, such pre-tax profits
for 1997 must meet the 1996 pre-tax profits plus the
percentage increase, if any, in the Consumer Price Index
("CPI") (as defined in Section 4(c) of the Agreement), and
such pre-tax profits for 1998 must meet the 1997 pre-tax
profits plus the percentage increase, if any, in the CPI. Any
distributions from the Bonus Pool will be made within 90 days
after the completion of the audit by the independent auditors
of Cityscape Financial Corp. and its subsidiaries for the
applicable year. Notwithstanding the foregoing, any
extraordinary profit item earned in any of 1996, 1997 or 1998,
as determined by the Company, will be deemed to be earned over
three years, one-third in the year in which the extraordinary
profit occurs and one-third in each of the two successive
years.
<PAGE> 2
The Bonus is payable annually in cash up to 200% of Employee's
salary for the prior year; any excess (the "Excess"), if any,
will be deferred and paid over three years with interest at
the Citibank N.A. prime rate plus one percent per annum at
one-third each year, payable each successive January
thereafter.
The Bonus Pool will be divided on the basis of the percentage
of Employee's prior year salary to total prior year salaries
of the Participants (as defined below) in the Bonus Pool. The
"Participants" are Robert M. Stata, Cheryl P. Carl, Steven P.
Weiss, Eric S. Goldstein, Jonah L. Goldstein and Tim S.
Ledwick. If any Participant's employment is terminated for any
reason, the Company may designate a new participant or
participants (each a "New Participant"). Any New Participant
will thereafter share in the Bonus Pool, provided, however,
that for purposes of dividing the Bonus Pool, the aggregate
amount of salaries of any New Participants shall not be deemed
to exceed the aggregate amount of salaries of any such
terminated Participants. If the Company designates a New
Participant within 120 days of the termination of a
Participant's employment, such designation will be deemed to
occur upon the termination of the Participant's employment.
If, after 120 days of the termination of a Participant's
employment, the Company has not designated a New Participant,
any designation of a New Participant will be deemed to occur
on the date on which the designation is made. For any period
in which the Company has not been deemed to have designated a
New Participant, the Pool will be shared by the remaining
Participants on the basis of percentage of Employee's prior
year salary to total prior year salaries of the Participants
then employed after deduction for the pro rata payment to any
such terminated Participant as set forth in the following
paragraph.
If employment terminates for any reason during the term of the
program, the Employee forfeits any further interest in the
Bonus from the date of termination, provided, however, the
Employee will not forfeit the pro rata share for the portion
of the year prior to termination of employment or the Excess,
if any. Notwithstanding the foregoing, the Company may extend
such Participant's interest in the Bonus Pool beyond the date
of termination of such Participant's employment."
2. COUNTERPARTS. This Amendment may be executed by the parties hereto in
any number of separate counterparts and all of said counterparts taken together
shall be deemed to constitute one and the same instrument.
2
<PAGE> 3
3. CONTINUING EFFECT OF THE AGREEMENT. Except for the consents and
modifications expressly set forth herein, the Agreement shall continue to be,
and shall remain, in full force and effect in accordance with its terms.
4. EFFECTIVENESS. This Amendment shall become effective upon the
execution hereof by the Company and Employee.
5. GOVERNING LAW. THIS CONSENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
[The remainder of this page is intentionally left blank.]
3
<PAGE> 4
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed by their proper and duly authorized officers as of the date first
above written.
CITYSCAPE CORP.
By: /s/ Robert Grosser
-------------------------
Name: Robert Grosser
Title: President
JONAH L. GOLDSTEIN
By: /s/ Jonah L. Goldstein
-------------------------
Name: Jonah L. Goldstein
Title: General Counsel
4
<PAGE> 1
EXHIBIT 10.50
AMENDMENT
THIS AMENDMENT (this "Amendment") dated as of September 3, 1996, to the
Employment Agreement, dated as of November 1, 1992 (as amended, supplemented and
otherwise modified from time to time, the "Agreement"; capitalized terms used
but not defined herein shall have the respective meanings specified in the
Agreement), between Cityscape Corp. (the "Company") and Robert M. Stata (the
"Employee").
WHEREAS, the Company and the Employee agree to amend the Agreement, on the
terms and conditions of this Amendment.
NOW, THEREFORE, in consideration of the mutual premises and mutual
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
1. AMENDMENT. Subject to the satisfaction of the condition to
effectiveness specified in Section 4 hereof, Section 2(b) of the Agreement
shall be amended by the deletion of the text in its entirety and substituting
the following therefor:
"Bonus: The Employee will share in a bonus pool (the "Bonus Pool") of
5% of all pre-tax profits of US Operations (as defined below)
for 1996, 1997 and 1998 (the "Bonus"). "US Operations"
consists of the consolidated financial reports of Cityscape
Financial Corp. and each of its subsidiaries incorporated in
any state of the United States.
In order for any Bonus to be awarded, such pre-tax profits for
1996 must meet a $16.9 million threshold, such pre-tax profits
for 1997 must meet the 1996 pre-tax profits plus the
percentage increase, if any, in the Consumer Price Index
("CPI") (as defined in Section 4(c) of the Agreement), and
such pre-tax profits for 1998 must meet the 1997 pre-tax
profits plus the percentage increase, if any, in the CPI. Any
distributions from the Bonus Pool will be made within 90 days
after the completion of the audit by the independent auditors
of Cityscape Financial Corp. and its subsidiaries for the
applicable year. Notwithstanding the foregoing, any
extraordinary profit item earned in any of 1996, 1997 or 1998,
as determined by the Company, will be deemed to be earned over
three years, one-third in the year in which the extraordinary
profit occurs and one-third in each of the two successive
years.
<PAGE> 2
The Bonus is payable annually in cash up to 200% of Employee's
salary for the prior year; any excess (the "Excess"), if any,
will be deferred and paid over three years with interest at
the Citibank N.A. prime rate plus one percent per annum at
one-third each year, payable each successive January
thereafter.
The Bonus Pool will be divided on the basis of the percentage
of Employee's prior year salary to total prior year salaries
of the Participants (as defined below) in the Bonus Pool. The
"Participants" are Robert M. Stata, Cheryl P. Carl, Steven P.
Weiss, Eric S. Goldstein, Jonah L. Goldstein and Tim S.
Ledwick. If any Participant's employment is terminated for any
reason, the Company may designate a new participant or
participants (each a "New Participant"). Any New Participant
will thereafter share in the Bonus Pool, provided, however,
that for purposes of dividing the Bonus Pool, the aggregate
amount of salaries of any New Participants shall not be deemed
to exceed the aggregate amount of salaries of any such
terminated Participants. If the Company designates a New
Participant within 120 days of the termination of a
Participant's employment, such designation will be deemed to
occur upon the termination of the Participant's employment.
If, after 120 days of the termination of a Participant's
employment, the Company has not designated a New Participant,
any designation of a New Participant will be deemed to occur
on the date on which the designation is made. For any period
in which the Company has not been deemed to have designated a
New Participant, the Pool will be shared by the remaining
Participants on the basis of percentage of Employee's prior
year salary to total prior year salaries of the Participants
then employed after deduction for the pro rata payment to any
such terminated Participant as set forth in the following
paragraph.
If employment terminates for any reason during the term of the
program, the Employee forfeits any further interest in the
Bonus from the date of termination, provided, however, the
Employee will not forfeit the pro rata share for the portion
of the year prior to termination of employment or the Excess,
if any. Notwithstanding the foregoing, the Company may extend
such Participant's interest in the Bonus Pool beyond the date
of termination of such Participant's employment."
2. COUNTERPARTS. This Amendment may be executed by the parties hereto in
any number of separate counterparts and all of said counterparts taken together
shall be deemed to constitute one and the same instrument.
2
<PAGE> 3
3. CONTINUING EFFECT OF THE AGREEMENT. Except for the consents and
modifications expressly set forth herein, the Agreement shall continue to be,
and shall remain, in full force and effect in accordance with its terms.
4. EFFECTIVENESS. This Amendment shall become effective upon the
execution hereof by the Company and Employee.
5. GOVERNING LAW. THIS CONSENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
[The remainder of this page is intentionally left blank.]
3
<PAGE> 4
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed by their proper and duly authorized officers as of the date first
above written.
CITYSCAPE CORP.
By: /s/ Robert Grosser
----------------------------
Name: Robert Grosser
Title: President
ROBERT M. STATA
By: /s/ Robert M. Stata
----------------------------
Name: Robert M. Stata
Title: Senior Vice President
4
<PAGE> 1
EXHIBIT 10.51
AMENDMENT
THIS AMENDMENT (this "Amendment"), dated as of September 3, 1996, to the
Employment Agreement, dated as of July 1, 1995 (as amended, supplemented and
otherwise modified from time to time, the "Agreement"; capitalized terms used
but not defined herein shall have the respective meanings specified in the
Agreement), between Cityscape Corp. (the "Company") and Steven P. Weiss (the
"Employee").
WHEREAS, the Company and the Employee agree to amend the Agreement, on the
terms and conditions of this Amendment.
NOW, THEREFORE, in consideration of the mutual premises and mutual
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
1. AMENDMENT. Subject to the satisfaction of the condition to
effectiveness specified in Section 4 hereof, Item 5 of the Schedule to the
Agreement shall be amended by the deletion of the text in its entirety and
substituting the following therefor:
"Bonus: The Employee will share in a bonus pool (the "Bonus Pool") of
5% of all pre-tax profits of US Operations (as defined below)
for 1996, 1997 and 1998 (the "Bonus"). "US Operations"
consists of the consolidated financial reports of Cityscape
Financial Corp. and each of its subsidiaries incorporated in
any state of the United States.
In order for any Bonus to be awarded, such pre-tax profits for
1996 must meet a $16.9 million threshold, such pre-tax profits
for 1997 must meet the 1996 pre-tax profits plus the
percentage increase, if any, in the Consumer Price Index
("CPI") (as defined in Section 4(c) of the Agreement), and
such pre-tax profits for 1998 must meet the 1997 pre-tax
profits plus the percentage increase, if any, in the CPI. Any
distributions from the Bonus Pool will be made within 90 days
after the completion of the audit by the independent auditors
of Cityscape Financial Corp. and its subsidiaries for the
applicable year. Notwithstanding the foregoing, any
extraordinary profit item earned in any of 1996, 1997 or 1998,
as determined by the Company, will be deemed to be earned over
three years, one-third in the year in which the extraordinary
profit occurs and one-third in each of the two successive
years.
<PAGE> 2
The Bonus is payable annually in cash up to 200% of Employee's
salary for the prior year; any excess (the "Excess"), if any,
will be deferred and paid over three years with interest at
the Citibank N.A. prime rate plus one percent per annum at
one-third each year, payable each successive January
thereafter.
The Bonus Pool will be divided on the basis of the percentage
of Employee's prior year salary to total prior year salaries
of the Participants (as defined below) in the Bonus Pool. The
"Participants" are Robert M. Stata, Cheryl P. Carl, Steven P.
Weiss, Eric S. Goldstein, Jonah L. Goldstein and Tim S.
Ledwick. If any Participant's employment is terminated for any
reason, the Company may designate a new participant or
participants (each a "New Participant"). Any New Participant
will thereafter share in the Bonus Pool, provided, however,
that for purposes of dividing the Bonus Pool, the aggregate
amount of salaries of any New Participants shall not be deemed
to exceed the aggregate amount of salaries of any such
terminated Participants. If the Company designates a New
Participant within 120 days of the termination of a
Participant's employment, such designation will be deemed to
occur upon the termination of the Participant's employment.
If, after 120 days of the termination of a Participant's
employment, the Company has not designated a New Participant,
any designation of a New Participant will be deemed to occur
on the date on which the designation is made. For any period
in which the Company has not been deemed to have designated a
New Participant, the Pool will be shared by the remaining
Participants on the basis of percentage of Employee's prior
year salary to total prior year salaries of the Participants
then employed after deduction for the pro rata payment to any
such terminated Participant as set forth in the following
paragraph.
If employment terminates for any reason during the term of the
program, the Employee forfeits any further interest in the
Bonus from the date of termination, provided, however, the
Employee will not forfeit the pro rata share for the portion
of the year prior to termination of employment or the Excess,
if any. Notwithstanding the foregoing, the Company may extend
such Participant's interest in the Bonus Pool beyond the date
of termination of such Participant's employment."
2. COUNTERPARTS. This Amendment may be executed by the parties hereto in
any number of separate counterparts and all of said counterparts taken together
shall be deemed to constitute one and the same instrument.
2
<PAGE> 3
3. CONTINUING EFFECT OF THE AGREEMENT. Except for the consents and
modifications expressly set forth herein, the Agreement shall continue to be,
and shall remain, in full force and effect in accordance with its terms.
4. EFFECTIVENESS. This Amendment shall become effective upon the
execution hereof by the Company and Employee.
5. GOVERNING LAW. THIS CONSENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
[The remainder of this page is intentionally left blank.]
3
<PAGE> 4
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed by their proper and duly authorized officers as of the date first
above written.
CITYSCAPE CORP.
By: /s/ Robert Grosser
----------------------------
Name: Robert Grosser
Title: President
STEVEN P. WEISS
By: /s/ Steven P. Weiss
----------------------------
Name: Steven P. Weiss
Title: Senior Vice President
4
<PAGE> 1
EXHIBIT 10.52
AMENDMENT
THIS AMENDMENT (this "Amendment") dated as of September 3, 1996, to the
Employment Agreement, dated as of January 1, 1996 (as amended, supplemented and
otherwise modified from time to time, the "Agreement"; capitalized terms used
but not defined herein shall have the respective meanings specified in the
Agreement), between Cityscape Corp. (the "Company") and Tim S. Ledwick (the
"Employee").
WHEREAS, the Company and the Employee agree to amend the Agreement, on the
terms and conditions of this Amendment.
NOW, THEREFORE, in consideration of the mutual premises and mutual
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
1. AMENDMENT. Subject to the satisfaction of the condition to
effectiveness specified in Section 4 hereof, Item 4 of the Schedule to the
Agreement shall be amended by the deletion of the text in its entirety and
substituting the following therefor:
"Bonus: The Employee will share in a bonus pool (the "Bonus Pool") of
5% of all pre-tax profits of US Operations (as defined below)
for 1996, 1997 and 1998 (the "Bonus"). "US Operations"
consists of the consolidated financial reports of Cityscape
Financial Corp. and each of its subsidiaries incorporated in
any state of the United States.
In order for any Bonus to be awarded, such pre-tax profits for
1996 must meet a $16.9 million threshold, such pre-tax profits
for 1997 must meet the 1996 pre-tax profits plus the
percentage increase, if any, in the Consumer Price Index
("CPI") (as defined in Section 4(c) of the Agreement), and
such pre-tax profits for 1998 must meet the 1997 pre-tax
profits plus the percentage increase, if any, in the CPI. Any
distributions from the Bonus Pool will be made within 90 days
after the completion of the audit by the independent auditors
of Cityscape Financial Corp. and its subsidiaries for the
applicable year. Notwithstanding the foregoing, any
extraordinary profit item earned in any of 1996, 1997 or 1998,
as determined by the Company, will be deemed to be earned over
three years, one-third in the year in which the extraordinary
profit occurs and one-third in each of the two successive
years.
<PAGE> 2
The Bonus is payable annually in cash up to 200% of Employee's
salary for the prior year; any excess (the "Excess"), if any,
will be deferred and paid over three years with interest at
the Citibank N.A. prime rate plus one percent per annum at
one-third each year, payable each successive January
thereafter.
The Bonus Pool will be divided on the basis of the percentage
of Employee's prior year salary to total prior year salaries
of the Participants (as defined below) in the Bonus Pool. The
"Participants" are Robert M. Stata, Cheryl P. Carl, Steven P.
Weiss, Eric S. Goldstein, Jonah L. Goldstein and Tim S.
Ledwick. If any Participant's employment is terminated for any
reason, the Company may designate a new participant or
participants (each a "New Participant"). Any New Participant
will thereafter share in the Bonus Pool, provided, however,
that for purposes of dividing the Bonus Pool, the aggregate
amount of salaries of any New Participants shall not be deemed
to exceed the aggregate amount of salaries of any such
terminated Participants. If the Company designates a New
Participant within 120 days of the termination of a
Participant's employment, such designation will be deemed to
occur upon the termination of the Participant's employment.
If, after 120 days of the termination of a Participant's
employment, the Company has not designated a New Participant,
any designation of a New Participant will be deemed to occur
on the date on which the designation is made. For any period
in which the Company has not been deemed to have designated a
New Participant, the Pool will be shared by the remaining
Participants on the basis of percentage of Employee's prior
year salary to total prior year salaries of the Participants
then employed after deduction for the pro rata payment to any
such terminated Participant as set forth in the following
paragraph.
If employment terminates for any reason during the term of the
program, the Employee forfeits any further interest in the
Bonus from the date of termination, provided, however, the
Employee will not forfeit the pro rata share for the portion
of the year prior to termination of employment or the Excess,
if any. Notwithstanding the foregoing, the Company may extend
such Participant's interest in the Bonus Pool beyond the date
of termination of such Participant's employment."
2. COUNTERPARTS. This Amendment may be executed by the parties hereto in
any number of separate counterparts and all of said counterparts taken together
shall be deemed to constitute one and the same instrument.
2
<PAGE> 3
3. CONTINUING EFFECT OF THE AGREEMENT. Except for the consents and
modifications expressly set forth herein, the Agreement shall continue to be,
and shall remain, in full force and effect in accordance with its terms.
4. EFFECTIVENESS. This Amendment shall become effective upon the
execution hereof by the Company and Employee.
5. GOVERNING LAW. THIS CONSENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
[The remainder of this page is intentionally left blank.]
3
<PAGE> 4
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed by their proper and duly authorized officers as of the date first
above written.
CITYSCAPE CORP.
By: /s/ Robert Grosser
----------------------------
Name: Robert Grosser
Title: President
TIM S. LEDWICK
By: /s/ Tim S. Ledwick
----------------------------
Name: Tim S. Ledwick
Title: Senior Vice President
4
<PAGE> 1
EXHIBIT 10.53
CITYSCAPE FINANCIAL CORP.
1997 STOCK OPTION PLAN
ARTICLE I
PURPOSE OF PLAN
The Company has adopted this Plan to promote the interests of the
Company and its stockholders by using investment interests in the Company to
attract, retain and motivate its management and other persons, to encourage and
reward their contributions to the performance of the Company and to align their
interests with the interests of the Company's stockholders. Capitalized terms
not otherwise defined herein shall have the meanings ascribed to them in Article
VIII.
ARTICLE II
EFFECTIVE DATE AND TERM OF PLAN
2.1 TERM OF PLAN. This Plan became effective as of the Effective
Date and shall continue in effect until the Expiration Date, at which time this
Plan shall automatically terminate.
2.2 EFFECT ON STOCK OPTIONS. Stock Options may be granted during the
Plan Term, but no Stock Options may be granted after the Plan Term.
Notwithstanding the foregoing, each Stock Option properly granted under this
Plan during the Plan Term shall remain in effect after termination of this Plan
until such Stock Option has been exercised, terminated or expired in accordance
with its terms and the terms of this Plan.
2.3 STOCKHOLDER APPROVAL. This Plan shall be approved by the
Company's stockholders within 12 months after the Effective Date. The
effectiveness of any Stock Options granted prior to such stockholder approval
shall be subject to such stockholder approval.
ARTICLE III
SHARES SUBJECT TO PLAN
3.1 NUMBER OF SHARES. The maximum number of shares of Common Stock
that may be issued pursuant to Stock Options granted under this Plan shall be
1,500,000, subject to adjustment as set forth in Section 3.4.
3.2 SOURCE OF SHARES. The Common Stock to be issued under this Plan
will be made available, at the discretion of the Board, either from authorized
but unissued shares of Common Stock or from previously issued shares of Common
Stock reacquired by the Company, including without limitation shares purchased
on the open market.
3.3 AVAILABILITY OF UNUSED SHARES. Shares of Common Stock subject to
unexercised portions of any Stock Option granted under this Plan that expire,
terminate or are canceled, and shares of Common Stock issued pursuant to Stock
Options under this Plan that are reacquired by
<PAGE> 2
the Company pursuant to the terms of the Stock Options under which such shares
were issued, will again become available for the grant of further Stock Options
under this Plan.
3.4 ADJUSTMENT PROVISIONS.
(a) If (i) the outstanding shares of Common Stock of the Company are
increased, decreased or exchanged for a different number or kind of shares or
other securities, or if additional shares or new or different shares or other
securities are distributed in respect of such shares of Common Stock (or any
stock or securities received with respect to such Common Stock), through merger,
consolidation, sale or exchange of all or substantially all of the properties of
the Company, reorganization, recapitalization, reclassification, stock dividend,
stock split, reverse stock split, spin-off or other distribution with respect to
such shares of Common Stock (or any stock or securities received with respect to
such Common Stock), or (ii) the value of the outstanding shares of Common Stock
of the Company is reduced by reason of an extraordinary cash dividend, an
appropriate and proportionate adjustment may be made in (1) the maximum number
and kind of shares subject to this Plan as provided in Section 3.1, (2) the
number and kind of shares or other securities subject to then outstanding Stock
Options and/or (3) the price for each share or other unit of any other
securities subject to then outstanding Stock Options.
(b) No fractional interests will be issued under this Plan resulting
from any adjustments.
(c) To the extent any adjustments relate to stock or securities of
the Company, such adjustments shall be made by the Administering Body, whose
determination in that respect shall be final, binding and conclusive.
(d) The grant of Stock Options pursuant to this Plan shall not
affect in any way the right or power of the Company to make adjustments,
reclassifications, reorganizations or changes of its capital or business
structure or to merge or to consolidate or to dissolve, liquidate or sell, or
transfer all or any part of its business or assets.
(e) No adjustment to the terms of an Incentive Stock Option shall be
made unless such adjustment either (i) would not cause such Option to lose its
status as an Incentive Stock Option or (ii) is agreed to in writing by the
Administering Body and the Recipient.
3.5 RESERVATION OF SHARES. The Company will at all times reserve and
keep available such number of shares of Common Stock as shall equal at least the
number of shares of Common Stock subject to then outstanding Stock Options
issuable in shares of Common Stock under this Plan.
ARTICLE IV
ADMINISTRATION OF PLAN
4.1 ADMINISTERING BODY.
2
<PAGE> 3
(a) Subject to the provisions of Section 4.1(b)(ii), this Plan shall
be administered by the Board or by the Stock Option Plan Committee of the Board
appointed pursuant to Section 4.1(b).
(b) (i) The Board in its sole discretion may from time to time
appoint a Stock Option Plan Committee of not less than two Board members to
administer this Plan and, subject to applicable law, to exercise all of the
powers, authority and discretion of the Board under this Plan. The Board may
from time to time increase or decrease (but not below two) the number of members
of the Stock Option Plan Committee, remove from membership on the Stock Option
Plan Committee all or any portion of its members, and/or appoint such person or
persons as it desires to fill any vacancy existing on the Stock Option Plan
Committee, whether caused by removal, resignation or otherwise. The Board may
disband the Stock Option Plan Committee at any time and revest in the Board the
administration of this Plan.
(ii) Notwithstanding the foregoing provisions of this
Section 4.1(b) to the contrary, as long as the Company is an Exchange Act
Registered Company, (1) the Board shall appoint the Stock Option Plan Committee,
(2) this Plan shall be administered by the Stock Option Plan Committee and (3)
each member of the Stock Option Plan Committee shall be a Non-employee Director,
and, in addition, if Stock Options are to be made to persons subject to Section
162(m) of the IRC and such Stock Options are intended to constitute
Performance-Based Compensation, then each member of the Stock Option Plan
Committee shall, in addition to being a Non-employee Director, be an Outside
Director.
(iii) The Stock Option Plan Committee shall report to
the Board the names of Eligible Persons granted Stock Options, the number of
shares of Common Stock covered by each Stock Option and the terms and conditions
of each such Stock Option.
4.2 AUTHORITY OF ADMINISTERING BODY
(a) Subject to the express provisions of this Plan, the
Administering Body shall have the power to interpret and construe this Plan and
any Stock Option Documents or other documents defining the rights and
obligations of the Company and Recipients hereunder and thereunder, to determine
all questions arising hereunder and thereunder, to adopt and amend such rules
and regulations for the administration hereof and thereof as it may deem
desirable, and otherwise to carry out the terms of this Plan and such Stock
Option Documents and other documents. The interpretation and construction by the
Administering Body of any provisions of this Plan or of any Stock Option shall
be conclusive and binding. Any action taken by, or inaction of, the
Administering Body relating to this Plan or any Stock Options shall be within
the absolute discretion of the Administering Body and shall be conclusive and
binding upon all persons. Subject only to compliance with the express provisions
hereof, the Administering Body may act in its absolute discretion in matters
related to this Plan and any and all Stock Options.
(b) Subject to the express provisions of this Plan, the
Administering Body may from time to time in its discretion select the Eligible
Persons to whom, and the time or times at which, Stock Options shall be granted,
the nature of each Stock Option, the number of shares of Common Stock that make
up or underlie each Stock Option, the period for the exercise of each
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Stock Option, and such other terms and conditions applicable to each individual
Stock Option as the Administering Body shall determine. The Administering Body
may grant at any time new Stock Options to an Eligible Person who has previously
received Stock Options whether such prior Stock Options are still outstanding,
have previously been exercised as a whole or in part, or are canceled in
connection with the issuance of new Stock Options. The Administering Body may
grant Stock Options singly, in combination or in tandem with other Stock
Options, as it determines in its discretion. Any and all terms and conditions of
the Stock Options, including exercise price, may be established by the
Administering Body without regard to existing Stock Options.
(c) Any action of the Administering Body with respect to the
administration of this Plan shall be taken pursuant to a majority vote of the
authorized number of members of the Administering Body or by the unanimous
written consent of its members; provided, however, that (i) if the Administering
Body is the Stock Option Plan Committee and consists of two members, then
actions of the Administering Body must be unanimous and (ii) if the
Administering Body is the Board, actions taken at a meeting of the Board shall
be valid if approved by directors constituting a majority of the required quorum
for such meeting.
4.3 NO LIABILITY. No member of the Board or the Stock Option Plan
Committee or any designee thereof will be liable for any action or inaction with
respect to this Plan or any Stock Option or any transaction arising under this
Plan or any Stock Option, except in circumstances constituting bad faith of such
member.
4.4 AMENDMENTS.
(a) The Administering Body may, insofar as permitted by applicable
law, rule or regulation, from time to time suspend or discontinue this Plan or
revise or amend it in any respect whatsoever, and this Plan as so revised or
amended will govern all Stock Options hereunder, including those granted before
such revision or amendment; provided, however, that no such revision or
amendment shall alter, impair or diminish any rights or obligations under any
Stock Option previously granted under this Plan, without the written consent of
the Recipient to whom such Stock Option was granted. Without limiting the
generality of the foregoing, the Administering Body is authorized to amend this
Plan to comply with or take advantage of amendments to applicable laws, rules or
regulations, including amendments to the Securities Act, Exchange Act or the IRC
or any rules or regulations promulgated thereunder. No stockholder approval of
any amendment or revision shall be required unless (i) such approval is required
by applicable law, rule or regulation or (ii) an amendment or revision to this
Plan would materially increase the number of shares subject to this Plan (as
adjusted under Section 3.4), materially modify the requirements as to
eligibility for participation in this Plan, extend the final date upon which
Stock Options may be granted under this Plan, or otherwise materially increase
the benefits accruing to Recipients in a manner not specifically contemplated
herein, or affect this Plan's compliance with Rule 16b-3 or applicable
provisions of or regulations under the IRC, and stockholder approval of the
amendment or revision is required to comply with Rule 16b-3 or applicable
provisions of or rules under the IRC.
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(b) The Administering Body may, with the written consent of a
Recipient, make such modifications in the terms and conditions of a Stock Option
as it deems advisable. Without limiting the generality of the foregoing, the
Administering Body may, in its discretion with the written consent of the
Recipient, at any time and from time to time after the grant of any Stock Option
accelerate or extend the vesting or exercise period of any Stock Option as a
whole or in part, and adjust or reduce the exercise price of Stock Options held
by such Recipient by cancellation of such Stock Options and granting of Stock
Options at lower or exercise prices or by modification, extension or renewal of
such Stock Options. In the case of Incentive Stock Options, Recipients
acknowledge that extensions of the exercise period may result in the loss of the
favorable tax treatment afforded incentive stock options under Section 422 of
the IRC.
(c) Except as otherwise provided in this Plan or in the applicable
Stock Option Document, no amendment, revision, suspension or termination of this
Plan will, without the written consent of the Recipient, alter, terminate,
impair or adversely affect any right or obligation under any Stock Option
previously granted under this Plan.
4.5 OTHER COMPENSATION PLANS. The adoption of this Plan shall not
affect any other stock option, incentive or other compensation plans in effect
for the Company, and this Plan shall not preclude the Company from establishing
any other forms of incentive or other compensation for employees, directors,
advisors or consultants of the Company, whether or not approved by stockholders.
4.6 PLAN BINDING ON SUCCESSORS. This Plan shall be binding upon the
successors and assigns of the Company.
4.7 REFERENCES TO SUCCESSOR STATUTES, REGULATIONS AND RULES. Any
reference in this Plan to a particular statute, regulation or rule shall also
refer to any successor provision of such statute, regulation or rule.
4.8 ISSUANCES FOR COMPENSATION PURPOSES ONLY. This Plan constitutes
an "employee benefit plan" as defined in Rule 405 promulgated under the
Securities Act. Stock Options to eligible employees or directors shall be
granted for any lawful consideration, including compensation for services
rendered, promissory notes or otherwise. Stock Options to consultants and
advisors shall be granted only in exchange for bona fide services rendered by
such consultants or advisors and such services must not be in connection with
the offer and sale of securities in a capital-raising transaction.
4.9 INVALID PROVISIONS. In the event that any provision of this Plan
is found to be invalid or otherwise unenforceable under any applicable law, such
invalidity or unenforceability shall not be construed as rendering any other
provisions contained herein invalid or unenforceable, and all such other
provisions shall be given full force and effect to the same extent as though the
invalid and unenforceable provision were not contained herein.
4.10 GOVERNING LAW. This Agreement shall be governed by and
interpreted in accordance with the internal laws of the State of New York,
without giving effect to the principles of the conflicts of laws thereof.
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ARTICLE V
GENERAL AWARD PROVISIONS
5.1 PARTICIPATION IN THE PLAN.
(a) A person shall be eligible to receive grants of Stock Options
under this Plan if, at the time of the grant of the Stock Option, such person is
an Eligible Person.
(b) Incentive Stock Options may be granted only to Eligible Persons
meeting the employment requirements of Section 422 of the IRC.
(c) Notwithstanding anything to the contrary herein, the
Administering Body may, in order to fulfill the purposes of this Plan, modify
grants of Stock Options to Recipients who are foreign nationals or employed
outside of the United States to recognize differences in applicable law, tax
policy or local custom.
5.2 STOCK OPTION DOCUMENTS.
(a) Each Stock Option granted under this Plan shall be evidenced by
an agreement duly executed on behalf of the Company and by the Recipient or, in
the Stock Option Plan Committee's discretion, a confirming memorandum issued by
the Company to the Recipient, setting forth such terms and conditions applicable
to the Stock Option as the Stock Option Plan Committee may in its discretion
determine. Stock Option Documents may but need not be identical and shall comply
with and be subject to the terms and conditions of this Plan, a copy of which
shall be provided to each Recipient and incorporated by reference into each
Stock Option Document. Any Stock Option Document may contain such other terms,
provisions and conditions not inconsistent with this Plan as may be determined
by the Stock Option Plan Committee.
(b) In case of any conflict between this Plan and any Stock Option
Document, this Plan shall control.
5.3 EXERCISE OF STOCK OPTIONS. No Stock Option shall be exercisable
except in respect of whole shares, and fractional share interests shall be
disregarded. Not less than 100 shares of Common Stock (or such other amount as
is set forth in the applicable Stock Option Documents) may be purchased at one
time and Stock Options must be exercised in multiples of 100 unless the number
purchased is the total number at the time available for purchase under the terms
of the Stock Option. A Stock Option shall be deemed to be exercised when the
Secretary or other designated official of the Company receives written notice of
such exercise from the Recipient, together with payment of the exercise price
made in accordance with Section 5.4 and any amounts required under Section 5.11.
Notwithstanding any other provision of this Plan, the Administering Body may
impose, by rule and/or in Stock Option Documents, such conditions upon the
exercise of Stock Options (including without limitation conditions limiting the
time of exercise to specified periods) as may be required to satisfy applicable
regulatory requirements, including without limitation Rule 16b-3 and Rule 10b-5
under the Exchange Act, and any amounts required under Section 5.12 or other
applicable section of or regulation under the IRC.
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5.4 PAYMENT FOR STOCK OPTIONS.
(a) The exercise price or other payment for a Stock Option shall be
payable upon the exercise of a Stock Option pursuant to a Stock Option granted
hereunder by delivery of legal tender of the United States or payment of such
other consideration as the Administering Body may from time to time deem
acceptable in any particular instance.
(b) The Company may assist any person to whom Stock Options are
granted hereunder (including without limitation any officer or director of the
Company) in the payment of the exercise price or other amounts payable in
connection with the receipt or exercise of that Stock Option, by lending such
amounts to such person on such terms and at such rates of interest and upon such
security (if any) as shall be approved by the Administering Body.
(c) In the discretion of the Administering Body, Stock Options may
be exercised by capital stock of the Company delivered in transfer to the
Company by or on behalf of the person exercising the Stock Option and duly
endorsed in blank or accompanied by stock powers duly endorsed in blank, with
signatures guaranteed in accordance with the Exchange Act if required by the
Administering Body, or retained by the Company from the stock otherwise issuable
upon exercise or surrender of vested and/or exercisable Stock Options previously
granted to the Recipient and being exercised (if applicable) (in either case
valued at Fair Market Value as of the exercise date); or such other
consideration as the Administering Body may from time to time in the exercise of
its discretion deem acceptable in any particular instance; provided, however,
that the Administering Body may, in the exercise of its discretion, (i) allow
exercise of Stock Options in a broker-assisted or similar transaction in which
the exercise price is not received by the Company until promptly after exercise,
and/or (ii) allow the Company to loan the exercise price to the person entitled
to exercise the Stock Option, if the exercise will be followed by a prompt sale
of some or all of the underlying shares and a portion of the sale proceeds is
dedicated to full payment of the exercise price and amounts required pursuant to
Section 5.11.
5.5 NO EMPLOYMENT RIGHTS. Nothing contained in this Plan (or in
Stock Option Documents or in any other documents related to this Plan or to
Stock Options granted hereunder) shall confer upon any Eligible Person or
Recipient any right to continue in the employ of the Company or any Affiliated
Entity or constitute any contract or agreement of employment or engagement, or
interfere in any way with the right of the Company or any Affiliated Entity to
reduce such person's compensation or other benefits or to terminate the
employment or engagement of such Eligible Person or Recipient, with or without
cause. Except as expressly provided in this Plan or in any statement evidencing
the grant of Stock Options pursuant to this Plan, the Company shall have the
right to deal with each Recipient in the same manner as if this Plan and any
such statement evidencing the grant of Stock Options pursuant to this Plan did
not exist, including without limitation with respect to all matters related to
the hiring, discharge, compensation and conditions of the employment or
engagement of the Recipient. Any questions as to whether and when there has been
a termination of a Recipient's employment or engagement, the reason (if any) for
such termination, and/or the consequences thereof under the terms of this Plan
or any statement evidencing the grant of Stock Options pursuant to this Plan
shall be determined by the Administering Body and the Administering Body's
determination thereof shall be final and binding.
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5.6 RESTRICTIONS UNDER APPLICABLE LAWS AND REGULATIONS.
(a) All Stock Options granted under this Plan shall be subject to
the requirement that, if at any time the Company shall determine, in its
discretion, that the listing, registration or qualification of the shares
subject to Stock Options granted under this Plan upon any securities exchange or
under any federal, state or foreign law, or the consent or approval of any
government regulatory body, is necessary or desirable as a condition of, or in
connection with, the granting of such Stock Options or the issuance, if any, or
purchase of shares in connection therewith, such Stock Options may not be
exercised as a whole or in part unless and until such listing, registration,
qualification, consent or approval shall have been effected or obtained free of
any conditions not acceptable to the Company. During the term of this Plan, the
Company will use its reasonable efforts to seek to obtain from the appropriate
regulatory agencies any requisite qualifications, consents, approvals or
authorizations in order to issue and sell such number of shares of its Common
Stock as shall be sufficient to satisfy the requirements of this Plan. The
inability of the Company to obtain from any such regulatory agency having
jurisdiction thereof the qualifications, consents, approvals or authorizations
deemed by the Company to be necessary for the lawful issuance and sale of any
shares of its Common Stock hereunder shall relieve the Company of any liability
in respect of the nonissuance or sale of such stock as to which such requisite
authorization shall not have been obtained.
(b) The Company shall be under no obligation to register or qualify
the issuance of Stock Options or underlying shares under the Securities Act or
applicable state securities laws. Unless the issuance of Stock Options and
underlying shares have been registered under the Securities Act and qualified or
registered under applicable state securities laws, the Company shall be under no
obligation to issue any Stock Options or underlying shares of Common Stock
covered by any Stock Options unless the Stock Options and underlying shares may
be issued pursuant to applicable exemptions from such registration or
qualification requirements. In connection with any such exempt issuance, the
Administering Body may require the Recipient to provide a written representation
and undertaking to the Company, satisfactory in form and scope to the Company
and upon which the Company may reasonably rely, that such Recipient is acquiring
such Stock Options and underlying shares for such Recipient's own account as an
investment and not with a view to, or for sale in connection with, the
distribution of any such shares of stock, and that such person will make no
transfer of the same except in compliance with any rules and regulations in
force at the time of such transfer under the Securities Act and other applicable
law, and that if shares of stock are issued without such registration, a legend
to this effect (together with any other legends deemed appropriate by the
Administering Body) may be endorsed upon the securities so issued. The Company
may also order its transfer agent to stop transfers of such shares. The
Administering Body may also require the Recipient to provide the Company such
information and other documents as the Administering Body may request in order
to satisfy the Administering Body as to the investment sophistication and
experience of the Recipient and as to any other conditions for compliance with
any such exemptions from registration or qualification.
5.7 ADDITIONAL CONDITIONS. Any Stock Option may also be subject to
such other provisions (whether or not applicable to any other Stock Option or
Recipient) as the Administering Body determines appropriate including without
limitation provisions to assist the
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Recipient in financing the purchase of Common Stock through the exercise of
Stock Options, provisions for the forfeiture of or restrictions on resale or
other disposition of shares of Common Stock acquired under any form of benefit,
provisions giving the Company the right to repurchase shares of Common Stock
acquired under any form of benefit in the event the Recipient elects to dispose
of such shares, and provisions to comply with federal and state securities laws
and federal and state income tax withholding requirements.
5.8 NO PRIVILEGES OF STOCK OWNERSHIP. Except as otherwise set forth
herein, a Recipient or a permitted transferee of a Stock Option shall have no
rights as a stockholder with respect to any shares issuable or issued in
connection with the Stock Option until the date of the receipt by the Company of
all amounts payable in connection with exercise of the Stock Option and
performance by the Recipient of all obligations thereunder. Status as an
Eligible Person shall not be construed as a commitment that any Stock Option
will be granted under this Plan to an Eligible Person or to Eligible Persons
generally. No person shall have any right, title or interest in any fund or in
any specific asset (including shares of capital stock) of the Company by reason
of any Stock Option granted hereunder. Neither this Plan (or any documents
related hereto) nor any action taken pursuant hereto shall be construed to
create a trust of any kind or a fiduciary relationship between the Company and
any person. To the extent that any person acquires a right to receive Stock
Options hereunder, such right shall be no greater than the right of any
unsecured general creditor of the Company.
5.9 NONASSIGNABILITY. No Stock Option granted under this Plan shall
be assignable or transferable except (a) by will or by the laws of descent and
distribution, or (b) subject to the final sentence of this Section 5.9, upon
dissolution of marriage pursuant to a qualified domestic relations order or, in
the discretion of the Administering Body and under circumstances that would not
adversely affect the interests of the Company, pursuant to a nominal transfer
that does not result in a change in beneficial ownership. During the lifetime of
a Recipient, Stock Options granted to such person shall be exercisable only by
the Recipient (or the Recipient's permitted transferee) or such person's
guardian or legal representative. Notwithstanding the foregoing, (a) no Stock
Option owned by a Recipient subject to Section 16 of the Exchange Act may be
assigned or transferred in any manner inconsistent with Rule 16b-3, and (b)
Incentive Stock Options (or other Stock Options subject to transfer restrictions
under the IRC) may not be assigned or transferred in violation of Section
422(b)(5) of the IRC (or any comparable or successor provision) or the
regulations thereunder, and nothing herein is intended to allow such assignment
or transfer.
5.10 INFORMATION TO RECIPIENTS.
(a) The Administering Body in its sole discretion shall determine
what, if any, financial and other information shall be provided to Recipients
and when such financial and other information shall be provided after giving
consideration to applicable federal and state laws, rules and regulations,
including without limitation applicable federal and state securities laws, rules
and regulations.
(b) The furnishing of financial and other information that is
confidential to the Company shall be subject to the Recipient's agreement that
the Recipient shall maintain the
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confidentiality of such financial and other information, shall not disclose such
information to third parties, and shall not use the information for any purpose
other than evaluating an investment in the Company's securities under this Plan.
The Administering Body may impose other restrictions on the access to and use of
such confidential information and may require a Recipient to acknowledge the
Recipient's obligations under this Section 5.10(b) (which acknowledgment shall
not be a condition to the Recipient's obligations under this Section 5.10(b)).
5.11 WITHHOLDING TAXES. Whenever the granting, vesting or exercise
of any Stock Option granted under this Plan, or the transfer of any shares
issued upon exercise of any Stock Option, gives rise to tax or tax withholding
liabilities or obligations, the Administering Body shall have the right to
require the Recipient to remit to the Company an amount sufficient to satisfy
any federal, state and local withholding tax requirements prior to issuance of
such shares. The Administering Body may, in the exercise of its discretion,
allow satisfaction of tax withholding requirements by accepting delivery of
stock of the Company or by withholding a portion of the stock otherwise issuable
in connection with Stock Options.
5.12 LEGENDS ON STOCK OPTIONS AND STOCK CERTIFICATES. Each Stock
Option Document and each certificate representing shares acquired upon or
exercise of Stock Options shall be endorsed with all legends, if any, required
by applicable federal and state securities and other laws to be placed on the
Stock Option Document and/or the certificate. The determination of which
legends, if any, shall be placed upon Stock Option Documents or the certificates
shall be made by the Administering Body in its sole discretion and such decision
shall be final and binding.
5.13 EFFECT OF TERMINATION OF EMPLOYMENT ON STOCK OPTIONS.
(a) TERMINATION FOR JUST CAUSE. Subject to Section 5.13(c), and
except as otherwise provided in a written agreement between the Company and the
Recipient which may be entered into at any time before or after termination of
employment, in the event of a Just Cause Dismissal of a Recipient, all of the
Recipient's unexercised Stock Options, whether or not vested, shall expire and
become unexercisable as of the date of such Just Cause Dismissal.
(b) TERMINATION OTHER THAN FOR JUST CAUSE. Subject to Section
5.13(c) and except as otherwise provided in a written agreement between the
Company and the Recipient, which may be entered into at any time before or after
termination of employment, in the event of a Recipient's termination of
employment for:
(i) any reason other than for Just Cause Dismissal,
death, Permanent Disability or normal retirement, the Recipient's Stock Options,
whether or not vested, shall expire and become unexercisable as of the earlier
of (A) the date such Stock Options would expire in accordance with their terms
had the Recipient remained employed and (B) 30 days after the date of employment
termination.
(ii) death, Permanent Disability or normal retirement,
the Recipient's unexercised Stock Options shall, whether or not vested, expire
and become unexercisable as of the earlier of (A) the date such Stock Options
would expire in accordance with their terms had the Recipient remained employed
and (B) six months after the date of employment termination.
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(c) ALTERATION OF VESTING AND EXERCISE PERIODS. Notwithstanding
anything to the contrary in Section 5.13(a) or Section 5.13(b), the
Administering Body may in its discretion designate shorter or longer periods to
exercise Stock Options following a Recipient's termination of employment;
provided, however, that any shorter periods determined by the Administering Body
shall be effective only if provided for in the instrument that evidences the
grant to the Recipient of such Stock Options or if such shorter period is agreed
to in writing by the Recipient. Notwithstanding anything to the contrary herein,
Stock Options shall be exercisable by a Recipient (or the Recipient's successor
in interest) following such Recipient's termination of employment only to the
extent that installments thereof had become exercisable on or prior to the date
of such termination; and provided, further, that the Administering Body may, in
its discretion, elect to accelerate the vesting of all or any portion of any
Stock Options that had not become exercisable on or prior to the date of such
termination.
(d) LEAVE OF ABSENCE. In the case of any employee on an approved
leave of absence, the Administering Body may make such provision respecting
continuance of Stock Options as the Administering Body in its discretion deems
appropriate, except that in no event shall a Stock Option be exercisable after
the date such Stock Option would expire in accordance with its terms had the
Recipient remained continuously employed.
5.14 LIMITS ON STOCK OPTIONS TO ELIGIBLE PERSONS. Notwithstanding
any other provision of this Plan, in order for the compensation attributable to
Stock Options hereunder to qualify as Performance-Based Compensation, no one
Eligible Person shall be granted any Stock Options with respect to more than
500,000 shares of Common Stock in any one calendar year. The limitation set
forth in this Section 5.14 shall be subject to adjustment as provided in Section
3.4 or under Article VII, but only to the extent such adjustment would not
affect the status of compensation attributable to Stock Options hereunder as
Performance-Based Compensation.
ARTICLE VI
STOCK OPTIONS
6.1 NATURE OF STOCK OPTIONS. Stock Options may be Incentive Stock
Options or Non-qualified Stock Options.
6.2 OPTION EXERCISE PRICE. The exercise price for each Stock Option
shall be determined by the Administering Body as of the date such Stock Option
is granted. The exercise price shall be no less than the Fair Market Value of
the Common Stock subject to the Option. The Administering Body may, with the
consent of the Recipient and subject to compliance with statutory or
administrative requirements applicable to Incentive Stock Options, amend the
terms of any Stock Option to provide that the exercise price of the shares
remaining subject to the Stock Option shall be reestablished at a price not less
than 100% of the Fair Market Value of the Common Stock on the effective date of
the amendment. No modification of any other term or provision of any Stock
Option that is amended in accordance with the foregoing shall be required,
although the Administering Body may, in its discretion, make such further
modifications of any such Stock Option as are not inconsistent with this Plan.
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6.3 OPTION PERIOD AND VESTING. Stock Options granted hereunder shall
vest and may be exercised as determined by the Administering Body, except that
exercise of such Stock Options after termination of the Recipient's employment
shall be subject to Section 5.13. Each Stock Option granted hereunder and all
rights or obligations thereunder shall expire on such date as shall be
determined by the Administering Body, but not later than 10 years after the date
the Stock Option is granted and shall be subject to earlier termination as
provided herein or in the Stock Option Document. The Administering Body may, in
its discretion at any time and from time to time after the grant of a Stock
Option, accelerate vesting of such Option as a whole or part by increasing the
number of shares then purchasable, provided that the total number of shares
subject to such Stock Option may not be increased. Except as otherwise provided
herein, a Stock Option shall become exercisable, as a whole or in part, on the
date or dates specified by the Administering Body and thereafter shall remain
exercisable until the expiration or earlier termination of the Stock Option.
6.4 SPECIAL PROVISIONS REGARDING INCENTIVE STOCK OPTIONS.
(a) Notwithstanding anything in this Article VI to the
contrary, the exercise price and vesting period of any Stock Option intended to
qualify as an Incentive Stock Option shall comply with the provisions of Section
422 of the IRC and the regulations thereunder. As of the Effective Date, such
provisions require, among other matters, that (i) the exercise price must not be
less than the Fair Market Value of the underlying stock as of the date the
Incentive Stock Option is granted, and not less than 110% of the Fair Market
Value as of such date in the case of a grant to a Significant Stockholder; and
(ii) that the Incentive Stock Option not be exercisable after the expiration of
five years from the date of grant in the case of an Incentive Stock Option
granted to a Significant Stockholder.
(b) The aggregate Fair Market Value (determined as of
the respective date or dates of grant) of the Common Stock for which one or more
Options granted to any Recipient under this Plan (or any other option plan of
the Company or any of its subsidiaries or affiliates) may for the first time
become exercisable as Incentive Stock Options under the federal tax laws during
any one calendar year shall not exceed $100,000.
(c) Any Options granted as Incentive Stock Options
pursuant to this Plan that for any reason fail or cease to qualify as such shall
be treated as Non-qualified Stock Options.
ARTICLE VII
REORGANIZATIONS
7.1 CORPORATE TRANSACTIONS NOT INVOLVING A CHANGE IN CONTROL. If the
Company shall consummate any Reorganization not involving a Change in Control in
which holders of shares of Common Stock are entitled to receive in respect of
such shares any securities, cash or other consideration (including without
limitation a different number of shares of Common Stock), each Stock Option
outstanding under this Plan shall thereafter be exercisable, in accordance with
this Plan, only for the kind and amount of securities, cash and/or other
consideration receivable upon such Reorganization by a holder of the same number
of shares of Common Stock as are subject to that Stock Option immediately prior
to such Reorganization, and any adjustments will
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be made to the terms of the Stock Option in the sole discretion of the
Administering Body as it may deem appropriate to give effect to the
Reorganization.
7.2 CORPORATE TRANSACTIONS INVOLVING A CHANGE IN CONTROL. As of the
effective time and date of any Change in Control, this Plan and any then
outstanding Stock Options (whether or not vested) shall automatically terminate
unless (a) provision is made in writing in connection with such transaction for
the continuance of this Plan and for the assumption of such Stock Options, or
for the substitution for such Stock Options of new awards covering the
securities of a successor entity or an affiliate thereof, with appropriate
adjustments as to the number and kind of securities and exercise prices, in
which event this Plan and such outstanding Stock Options shall continue or be
replaced, as the case may be, in the manner and under the terms so provided; or
(b) the Board otherwise shall provide in writing for such adjustments as it
deems appropriate in the terms and conditions of the then-outstanding Stock
Options (whether or not vested), including without limitation (i) accelerating
the vesting of outstanding Stock Options and/or (ii) providing for the
cancellation of Stock Options and their automatic conversion into the right to
receive the securities, cash or other consideration that a holder of the shares
underlying such Stock Options would have been entitled to receive upon
consummation of such Change in Control had such shares been issued and
outstanding immediately prior to the effective date and time of the Change in
Control (net of the appropriate option exercise prices). If, pursuant to the
foregoing provisions of this Section 7.2, this Plan and the Stock Options shall
terminate by reason of the occurrence of a Change in Control without provision
for any of the actions described in clause (a) or (b) hereof, then any Recipient
holding outstanding Stock Options shall have the right, at such time immediately
prior to the consummation of the Change in Control as the Board shall designate,
to exercise the Recipient's Stock Options to the full extent not theretofore
exercised, including any installments which have not yet become vested.
ARTICLE VIII
DEFINITIONS
Capitalized terms used in this Plan and not otherwise defined shall
have the meanings set forth below:
"ADMINISTERING BODY" shall mean the Board as long as no Stock Option
Plan Committee has been appointed and is in effect and shall mean the Stock
Option Plan Committee as long as the Stock Option Plan Committee is appointed
and in effect.
"AFFILIATED ENTITY" means any Parent Corporation or Subsidiary
Corporation.
"BOARD" means the Board of Directors of the Company.
"CHANGE IN CONTROL" means the following and shall be deemed to occur
if any of the following events occur:
(a) Any Person becomes the beneficial owner (within the meaning of
Rule 13d-3 promulgated under the Exchange Act) of thirty percent (30%) or more
of either the then
13
<PAGE> 14
outstanding shares of Common Stock or the combined voting power of the Company's
then outstanding securities entitled to vote generally in the election of
directors; or
(b) Individuals who, as of the effective date hereof, constitute the
Board of Directors of the Company (the "INCUMBENT BOARD") cease for any reason
to constitute at least a majority of the Board of Directors of the Company,
provided that any individual who becomes a director after the effective date
hereof whose election, or nomination for election by the Company's stockholders,
is approved by a vote of at least a majority of the directors then comprising
the Incumbent Board shall be considered to be a member of the Incumbent Board
unless that individual was nominated or elected by any Person having the power
to exercise, through beneficial ownership, voting agreement and/or proxy, twenty
percent (20%) or more of either the outstanding shares of Common Stock or the
combined voting power of the Company's then outstanding voting securities
entitled to vote generally in the election of directors, in which case that
individual shall not be considered to be a member of the Incumbent Board unless
such individual's election or nomination for election by the Company's
stockholders is approved by a vote of at least two-thirds of the directors then
comprising the Incumbent Board; or
(c) Consummation by the Company of the sale or other disposition by
the Company of all or substantially all of the Company's assets or a
reorganization or merger or consolidation of the Company with any other person,
entity or corporation, other than
(i) a reorganization or merger or consolidation that
would result in the voting securities of the Company outstanding
immediately prior thereto (or, in the case of a reorganization or
merger or consolidation that is preceded or accomplished by an
acquisition or series of related acquisitions by any Person, by
tender or exchange offer or otherwise, of voting securities
representing five percent (5%) or more of the combined voting power
of all securities of the Company, immediately prior to such
acquisition or the first acquisition in such series of acquisitions)
continuing to represent, either by remaining outstanding or by being
converted into voting securities of another entity, more than fifty
percent (50%) of the combined voting power of the voting securities
of the Company or such other entity outstanding immediately after
such reorganization or merger or consolidation (or series of related
transactions involving such a reorganization or merger or
consolidation), or
(ii) a reorganization or merger or consolidation
effected to implement a recapitalization or reincorporation of the
Company (or similar transaction) that does not result in a material
change in beneficial ownership of the voting securities of the
Company or its successor; or
(d) Approval by the stockholders of the Company or any order by a
court of competent jurisdiction of a plan of liquidation of the Company.
Notwithstanding the foregoing, a Change in Control of the type
described in paragraph (b), (c) or (d) shall be deemed to be completed on the
date it occurs, and a Change in Control of the type described in paragraph (a)
shall be deemed to be completed as of the date the entity or group attaining
thirty percent (30%) or greater ownership has elected its representatives to the
14
<PAGE> 15
Company's Board of Directors and/or caused its nominees to become officers of
the Company with the authority to terminate or alter the terms of employee's
employment.
"COMMISSION" means the Securities and Exchange Commission.
"COMMON STOCK" means the common stock of the Company, par value
$0.01 per share, as constituted on the Effective Date of this Plan, and as
thereafter adjusted as a result of any one or more events requiring adjustment
of outstanding Stock Options under Section 3.4 above.
"COMPANY" means Cityscape Financial Corp., a Delaware corporation.
"EFFECTIVE DATE" means April 17, 1997, which is the date this Plan
was adopted by the Board.
"ELIGIBLE PERSON" shall include directors (other than non-employee
directors of the Company), officers, employees, consultants and advisors of the
Company or of any Affiliated Entity.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"EXCHANGE ACT REGISTERED COMPANY" means that the Company has any
class of any equity security registered pursuant to Section 12 of the Exchange
Act.
"EXPIRATION DATE" means the tenth anniversary of the Effective Date.
"FAIR MARKET VALUE" of a share of the Company's capital stock as of
a particular date shall be: (a) if the stock is listed on an established stock
exchange or exchanges (including for this purpose, the Nasdaq National Market),
the average of the highest and lowest sale prices of the stock quoted for such
date as reported in the Transactions Index of each such exchange, as published
in The Wall Street Journal and determined by the Administering Body, or, if no
sale price was quoted in any such Index for such date, then as of the next
preceding date on which such a sale price was quoted; or (b) if the stock is not
then listed on an exchange or the Nasdaq National Market, the average of the
closing bid and asked prices per share for the stock in the over-the-counter
market as quoted on The Nasdaq Small Cap Market on such date (in the case of (a)
or (b), subject to adjustment as and if necessary and appropriate to set an
exercise price not less than 100% of the fair market value of the stock on the
date an option is granted); or (c) if the stock is not then listed on an
exchange or quoted in the over-the-counter market, an amount determined in good
faith by the Administering Body; provided, however, that (i) when appropriate,
the Administering Body, in determining Fair Market Value of capital stock of the
Company, may take into account such other factors as it may deem appropriate
under the circumstances and (ii) if the stock is traded on the Nasdaq Small Cap
Market and both sales prices and bid and asked prices are quoted or available,
the Administering Body may elect to determine Fair Market Value under either
clause (i) or (ii) above. Notwithstanding the foregoing, the Fair Market Value
of capital stock for purposes of grants of Incentive Stock Options shall be
determined in compliance with applicable provisions of the IRC.
15
<PAGE> 16
"INCENTIVE STOCK OPTION" means a Stock Option that qualifies as an
incentive stock option under Section 422 of the IRC, or any successor statute
thereto.
"IRC" means the Internal Revenue Code of 1986, as amended.
"JUST CAUSE DISMISSAL" shall mean a termination of a Recipient's
employment for any of the following reasons: (a) the Recipient violates any
reasonable rule or regulation of the Board, the Company's Chief Executive
Officer or the Recipient's superiors that results in damage to the Company or
which, after written notice to do so, the Recipient fails to correct within a
reasonable time; (b) any willful misconduct or gross negligence by the Recipient
in the responsibilities assigned to the Recipient; (c) any willful failure to
perform the Recipient's job as required to meet Company objectives; (d) any
wrongful conduct of a Recipient which has an adverse impact on the Company or
which constitutes a misappropriation of Company assets; (e) the Recipient's
performing services for any other person or entity which competes with the
Company while the Recipient is employed by the Company, without the written
approval of the Chief Executive Officer of the Company; or (f) any other conduct
that the Administering Body determines constitutes Just Cause for Dismissal;
provided, however, that if a Recipient is party to an employment agreement with
the Company providing for just cause dismissal (or some comparable notion) of
Recipient from Recipient's employment with the Company, "Just Cause Dismissal"
for purposes of this Plan shall have the same meaning as ascribed thereto or to
such comparable notion in such employment agreement.
"NON-EMPLOYEE DIRECTOR" means any director of the Company who
qualifies as a "non-employee director" within the meaning of Rule 16b-3.
"NON-QUALIFIED STOCK OPTION" means a Stock Option that is not an
Incentive Stock Option.
"OUTSIDE DIRECTOR" means an "outside director" as defined in the
regulations adopted under Section 162(m) of the IRC.
"PARENT CORPORATION" means any Parent Corporation as defined in
Section 424(e) of the IRC.
"PERFORMANCE-BASED COMPENSATION" means performance-based
compensation as described in Section 162(m) of the IRC. If the amount of
compensation an Eligible Person will receive under any Stock Option is not based
solely on an increase in the value of Common Stock after the date of grant or
award, the Stock Option Plan Committee, in order to qualify Stock Options as
performance-based compensation under Section 162(m) of the IRC, can condition
the grant, award, vesting, or exercisability of such Stock Options on the
attainment of a preestablished, objective performance goal. For this purpose, a
preestablished, objective performance goal may include one or more of the
following performance criteria: (a) cash flow; (b) earnings per share (including
earning before interest, taxes, and amortization); (c) return on equity; (d)
total stockholder return; (e) return on capital; (f) return on assets or net
assets; (g) income or net income; (h) operating income or net operating income;
(i) operating margin; (j) return on operating revenue; (k) attainment of stated
goals related to the Company's
16
<PAGE> 17
capitalization, costs, financial condition or results of operations; and (l) any
other similar performance criteria.
"PERSON" means any person, entity or group, within the meaning of
Section 13(d) or 14(d) of the Exchange Act, but excluding (a) the Company and
its subsidiaries, (b) any employee stock ownership or other employee benefit
plan maintained by the Company that is qualified under ERISA and (c) an
underwriter or underwriting syndicate that has acquired the Company's securities
solely in connection with a public offering thereof.
"PERMANENT DISABILITY" shall mean that the Recipient becomes
physically or mentally incapacitated or disabled so that the Recipient is unable
to perform substantially the same services as the Recipient performed prior to
incurring such incapacity or disability (the Company, at its option and expense,
being entitled to retain a physician to confirm the existence of such incapacity
or disability, and the determination of such physician to be binding upon the
Company and the Recipient), and such incapacity or disability continues for a
period of three consecutive months or six months in any 12-month period or such
other period(s) as may be determined by the Stock Option Plan Committee with
respect to any Stock Option, provided that for purposes of determining the
period during which an Incentive Stock Option may be exercised pursuant to
Section 5.13(b)(ii) hereof, Permanent Disability shall mean "permanent and total
disability" as defined in Section 22(e) of the IRC.
"PLAN" means this 1997 Stock Option Plan of the Company.
"PLAN TERM" means the period during which this Plan remains in
effect (commencing on the Effective Date and ending on the Expiration Date).
"RECIPIENT" means a person who has received Stock Options under this
Plan.
"REORGANIZATION" means any merger, consolidation or other
reorganization.
"RULE 16B-3" means Rule 16b-3 under the Exchange Act.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SIGNIFICANT STOCKHOLDER" is an individual who, at the time a Stock
Option is granted to such individual under this Plan, owns more than ten percent
(10%) of the combined voting power of all classes of stock of the Company or of
any Parent Corporation or Subsidiary Corporation (after application of the
attribution rules set forth in Section 424(d) of the IRC).
"STOCK OPTION" means a right to purchase stock of the Company
granted under Article VI of this Plan to an Eligible Person.
"STOCK OPTION DOCUMENT" means the agreement or confirming memorandum
setting forth the terms and conditions of Stock Options.
"STOCK OPTION PLAN COMMITTEE" means the committee appointed by the
Board to administer this Plan pursuant to Section 4.1.
17
<PAGE> 18
"SUBSIDIARY CORPORATION" means any Subsidiary Corporation as defined
in Section 425(f) of the IRC.
18
<PAGE> 1
EXHIBIT 12.1
CITYSCAPE FINANCIAL CORP.
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(IN THOUSANDS)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------
1992 1993 1994 1995 1996 1996 1997
------- ------- ------- ------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings:
Earnings before income taxes, minority
interest and extraordinary items $ 93 $ 323 $ 1,853 $22,765 $ 85,108 $15,797 $27,991
Plus:
Interest expense 569 676 1,563 4,610 20,224 1,698 16,455
Portion of rent expense representative of
interest factor 34 35 46 209 602 93 249
------- ------- ------- ------- -------- ------- -------
Adjusted Earnings 696 1,034 3,462 27,584 105,934 17,588 44,695
------- ------- ------- ------- -------- ------- -------
Fixed Charges:
Interest expense 569 676 1,563 4,610 20,224 1,698 16,455
Portion of rent expense representative of
interest factor 34 35 46 209 602 93 249
------- ------- ------- ------- -------- ------- -------
Total fixed charges 603 711 1,609 4,819 20,826 1,791 16,704
------- ------- ------- ------- -------- ------- -------
Coverage Adequacy $ 93 $ 323 $ 1,853 $22,765 $ 85,108 $15,797 $27,991
======= ======= ======= ======= ======== ======= =======
Coverage Ratio 1.15 1.45 2.15 5.72 5.09 9.82 2.68
======= ======= ======= ======= ======== ======= =======
</TABLE>
<PAGE> 1
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Cityscape Financial Corp.:
We consent to the incorporation by reference in the Registration Statement
on Form S-4 of Cityscape Financial Corp. of our report dated February 28, 1997,
which report makes reference to the report of other auditors, relating to the
consolidated statements of financial condition of Cityscape Financial Corp. and
its subsidiaries as of December 31, 1996 and 1995, and the related consolidated
statements of operations, stockholders' equity, and cash flows for each of the
years in the three-year period then ended, which report appears in the December
31, 1996 annual report on Form 10-K of Cityscape Financial Corp, and to the
reference to our firm under the heading "Experts" in the registration statement.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
New York, New York
June 20, 1997
<PAGE> 1
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Cityscape Financial Corp.:
We consent to the incorporation by reference in the Registration Statement
on Form S-4 of Cityscape Financial Corp. of our report dated April 2, 1996,
relating to the consolidated statements of financial condition of Heritable
Finance Limited as of December 31, 1995 and 1994, and the related consolidated
statements of operations, stockholders' equity, and cash flows for each of the
years in the three-year period then ended, which report appears in the December
31, 1996 annual report on Form 10-K of Cityscape Financial Corp, and to the
reference to our firm under the heading "Experts" in the registration statement.
/s/ KPMG
KPMG
Chartered Accountants
Registered Auditors
London, United Kingdom
June 20, 1997
<PAGE> 1
EXHIBIT 23.3
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Cityscape Financial Corp.:
We consent to the incorporation by reference in the Registration Statement
on Form S-4 of Cityscape Financial Corp. of our report dated November 30, 1995
for the three years ended September 30, 1995 relating to J&J Securities Limited,
which report appears in the December 31, 1996 annual report on Form 10-K of
Cityscape Financial Corp, and to the reference to our firm under the heading
"Experts" in the prospectus.
/s/ BDO STOY HAYWARD
BDO STOY HAYWARD
London, England
June 20, 1997
<PAGE> 1
EXHIBIT 23.4
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Cityscape Financial Corp.:
We consent to the incorporation by reference in the Registration Statement
on Form S-4 of Cityscape Financial Corp. of our report dated March 27, 1996,
which report appears in the December 31, 1996 annual report on Form 10-K of
Cityscape Financial Corp, and to the reference to our firm under the heading
"Experts" in the prospectus.
/s/ BDO STOY HAYWARD
BDO STOY HAYWARD
London, England
June 20, 1997
<PAGE> 1
- --------------------------------------------------------------------------------
Exhibit 25.1
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)[ ]
------------------
THE CHASE MANHATTAN BANK
(Exact name of trustee as specified in its charter)
13-4994650
(I.R.S. Employer Identification Number)
270 PARK AVENUE, NEW YORK, NEW YORK
(Address of principal executive offices)
10017
(Zip Code)
---------------
CITYSCAPE FINANCIAL CORP.
(Exact name of obligor as specified in its charter)
DELAWARE 11-2994671
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
565 TAXTER ROAD
ELMSFORD, NEW YORK 10523-5200
(TELEPHONE 914-592-6677)
(Address, including zip code, and telephone number,
including area code of obligor's principal executive offices)
------------------------------------------------------------
12 3/4% SERIES A SENIOR NOTES DUE 2004
(Title of the securities)
- --------------------------------------------------------------------------------
<PAGE> 2
GENERAL
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.
New York State Banking Department, State House, Albany, New York
12110.
Board of Governors of the Federal Reserve System, Washington, D.C.,
20551
Federal Reserve Bank of New York, District No. 2, 33 Liberty Street,
New York, N.Y.
Federal Deposit Insurance Corporation, Washington, D.C., 20429.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with the Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
- 2 -
<PAGE> 3
Item 16. List of Exhibits
List below all exhibits filed as a part of this Statement of
Eligibility.
1. A copy of the Articles of Association of the Trustee as now in
effect, including the Organization Certificate and the Certificates of Amendment
dated February 17, 1969, August 31, 1977, December 31, 1980, September 9, 1982,
February 28, 1985, December 2, 1991 and July 10, 1996 (see Exhibit 1 to Form T-1
filed in connection with Registration Statement No. 333-06249, which is
incorporated herein by reference).
2. A copy of the Certificate of Authority of the Trustee to commence
business (see Exhibit 2 to Form T-1 filed in connection with Registration
Statement No. 33-50010, which is incorporated herein by reference. On July 14,
1996, in connection with the merger of Chemical Bank and The Chase Manhattan
Bank (National Association), Chemical Bank, the surviving corporation, was
renamed The Chase Manhattan Bank.
3. None, authorization to exercise corporate trust powers being
contained in the documents identified above as Exhibits 1 and 2.
4. A copy of the existing by-laws of the Trustee (see Exhibit 4 to Form
T-1 filed in connection with Registration Statement No. 333-06249, which is
incorporated herein by reference).
5. Not applicable.
6. The consent of the Trustee required by Section 321(b) of the Act
(see Exhibit 6 to Form T-1 filed in connection with Registration Statement No.
33-50010, which is incorporated by reference. On July 14, 1996, in connection
with the merger of Chemical Bank and The Chase Manhattan Bank (National
Association), Chemical Bank, the surviving corporation, was renamed The Chase
Manhattan Bank.
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.
On July 14, 1996, in connection with the merger of Chemical Bank and The Chase
Manhattan Bank (National Association), Chemical Bank, the surviving corporation,
was renamed The Chase Manhattan Bank.
8. Not applicable.
9. Not applicable.
-3-
<PAGE> 4
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, The Chase Manhattan Bank, a corporation organized and existing under
the laws of the State of New York, has duly caused this statement of eligibility
to be signed on its behalf by the undersigned, thereunto duly authorized, all in
the City of New York and State of New York, on the 23rd day of June, 1997.
THE CHASE MANHATTAN BANK
/s/ Douglas Lavelle
By: Douglas Lavelle
Second Vice President
-4-
<PAGE> 5
Exhibit 7 to Form T-1
Bank Call Notice
RESERVE DISTRICT NO. 2
CONSOLIDATED REPORT OF CONDITION OF
The Chase Manhattan Bank
of 270 Park Avenue, New York, New York 10017
and Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System,
at the close of business June 30, 1996, in
accordance with a call made by the Federal Reserve Bank of this
District pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
DOLLAR AMOUNTS
ASSETS IN MILLIONS
<S> <C> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and
currency and coin ................................................ $ 4,167
Interest-bearing balances ........................................ 5,094
Securities: ..........................................................
Held to maturity securities............................................ 3,367
Available for sale securities.......................................... 27,786
Federal Funds sold and securities purchased under
agreements to resell in domestic offices of the
bank and of its Edge and Agreement subsidiaries,
and in IBF's:
Federal funds sold ............................................... 7,204
Securities purchased under agreements to resell .................. 136
Loans and lease financing receivables:
Loans and leases, net of unearned income............. $67,215
Less: Allowance for loan and lease losses............ 1,768
Less: Allocated transfer risk reserve ............... 75
-------
Loans and leases, net of unearned income,
allowance, and reserve ........................................... 65,372
Trading Assets ........................................................ 28,610
Premises and fixed assets (including capitalized
leases) .......................................................... 1,326
Other real estate owned ............................................... 26
Investments in unconsolidated subsidiaries and
associated companies.............................................. 68
Customer's liability to this bank on acceptances
outstanding ...................................................... 995
Intangible assets ..................................................... 309
Other assets .......................................................... 6,993
---------
TOTAL ASSETS .......................................................... $ 151,453
=========
</TABLE>
<PAGE> 6
LIABILITIES
<TABLE>
<S> <C> <C>
Deposits
In domestic offices .............................................. $ 46,917
Noninterest-bearing ................................. $ 16,711
Interest-bearing .................................... 30,206
---------
In foreign offices, Edge and Agreement subsidiaries,
and IBF's ........................................................ 31,577
Noninterest-bearing ................................. $ 2,197
Interest-bearing .................................... 29,380
---------
Federal funds purchased and securities sold under agree-
ments to repurchase in domestic offices of the bank and
of its Edge and Agreement subsidiaries, and in IBF's
Federal funds purchased .......................................... 12,155
Securities sold under agreements to repurchase ................... 8,536
Demand notes issued to the U.S. Treasury .............................. 1,000
Trading liabilities ................................................... 20,914
Other Borrowed money:
With a remaining maturity of one year or less .................... 10,018
With a remaining maturity of more than one year .................. 192
Mortgage indebtedness and obligations under capitalized
leases ........................................................... 12
Bank's liability on acceptances executed and outstanding............... 1,001
Subordinated notes and debentures ..................................... 3,411
Other liabilities ..................................................... 8,091
TOTAL LIABILITIES ..................................................... 143,824
----------
EQUITY CAPITAL
Common stock .......................................................... 620
Surplus .............................................................. 4,664
Undivided profits and capital reserves ................................ 2,970
Net unrealized holding gains (Losses)
on available-for-sale securities ...................................... (633)
Cumulative foreign currency translation adjustments ................... 8
TOTAL EQUITY CAPITAL .................................................. 7,629
----------
TOTAL LIABILITIES, LIMITED-LIFE PREFERRED
STOCK AND EQUITY CAPITAL ......................................... $ 151,453
==========
</TABLE>
I, Joseph L. Sclafani, S.V.P. & Controller of the above-named bank, do hereby
declare that this Report of Condition has been prepared in conformance with the
instructions issued by the appropriate Federal regulatory authority and is true
to the best of my knowledge and belief.
JOSEPH L. SCLAFANI
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us, and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the appropriate Federal regulatory authority and is true and correct.
WALTER V. SHIPLEY )
EDWARD D. MILLER )DIRECTORS
THOMAS G. LABRECQUE )
<PAGE> 1
EXHIBIT 99.1
LETTER OF TRANSMITTAL
CITYSCAPE FINANCIAL CORP.
OFFER FOR ALL OUTSTANDING
12 3/4% SENIOR NOTES DUE 2004
IN EXCHANGE FOR
12 3/4% SERIES A SENIOR NOTES DUE 2004
PURSUANT TO THE PROSPECTUS
DATED , 1997
------------------------
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME, ON , 1997, UNLESS THE OFFER IS EXTENDED.
------------------------
THE EXCHANGE AGENT FOR THE EXCHANGE OFFER IS:
THE CHASE MANHATTAN BANK
<TABLE>
<CAPTION>
BY REGISTERED OR CERTIFIED MAIL: BY HAND OR OVERNIGHT DELIVERY:
- -------------------------------------- --------------------------------------
<S> <C>
THE CHASE MANHATTAN BANK THE CHASE MANHATTAN BANK
450 WEST 33RD STREET, 15TH FLOOR 450 WEST 33RD STREET, 15TH FLOOR
NEW YORK, NEW YORK 10001-2697 NEW YORK, NEW YORK 10001-2697
ATTENTION: GLOBAL TRUST SERVICES ATTENTION: GLOBAL TRUST SERVICES
DOUGLAS LAVELLE DOUGLAS LAVELLE
</TABLE>
CONFIRM BY TELEPHONE:
-----------------------
(212) 946-3009
FACSIMILE TRANSMISSIONS:
--------------------------
(ELIGIBLE INSTITUTIONS ONLY)
(212) 946-8177
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE OR TRANSMISSION OF THIS LETTER OF TRANSMITTAL VIA FACSIMILE TO A
NUMBER OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE A VALID DELIVERY.
THE INSTRUCTIONS CONTAINED HEREIN SHOULD BE READ CAREFULLY BEFORE THIS
LETTER OF TRANSMITTAL IS COMPLETED.
<PAGE> 2
Capitalized terms used but not defined herein shall have the same meaning
given them in the Prospectus (as defined below).
This Letter of Transmittal is to be completed by holders of Old Notes (as
defined below) either if Old Notes are to be forwarded herewith or if tenders of
Old Notes are to be made by book-entry transfer to an account maintained by The
Chase Manhattan Bank (the "Exchange Agent") at The Depository Trust Company
("DTC") pursuant to the procedures set forth in "The Exchange
Offer -- Book-Entry Transfer" in the Prospectus and an Agent's Message (as
defined herein) is not delivered.
Holders of Old Notes whose certificates (the "Certificates") for such Old
Notes are not immediately available or who cannot deliver their Certificates and
all other required documents to the Exchange Agent on or prior to the Expiration
Date (as defined in the Prospectus) or who cannot complete the procedures for
book-entry transfer on a timely basis must tender their Old Notes according to
the guaranteed delivery procedures set forth in "The Exchange
Offer -- Guaranteed Delivery Procedures" in the Prospectus.
DELIVERY OF DOCUMENTS TO DTC DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE
AGENT.
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
ALL TENDERING HOLDERS COMPLETE THIS BOX:
- --------------------------------------------------------------------------------
DESCRIPTION OF OLD NOTES TENDERED
<TABLE>
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
IF BLANK, PLEASE PRINT NAME AND ADDRESS OLD NOTES TENDERED
OF REGISTERED HOLDER. (ATTACH ADDITIONAL LIST IF NECESSARY)
------------------------------------------------------------------------------------------------------------------
AGGREGATE PRINCIPAL AMOUNT
PRINCIPAL AMOUNT AT MATURITY OF
CERTIFICATE AT MATURITY OF OLD NOTES TENDERED
NUMBER(S)* OLD NOTES (IF LESS THAN ALL)**
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
TOTAL
AMOUNT
TENDERED:
------------------------------------------------------------------------------------------------------------------
</TABLE>
* Need not be completed by book-entry holders.
** Old Notes may be tendered in whole or in part in denominations of principal
amount at maturity of $1,000 and integral multiples thereof. All Old Notes
held shall be deemed tendered unless a lesser number is specified in this
column. See Instruction 4.
================================================================================
2
<PAGE> 3
(BOXES BELOW TO BE CHECKED BY ELIGIBLE INSTITUTIONS ONLY)
[ ] CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH DTC AND COMPLETE
THE FOLLOWING:
Name of Tendering Institution
----------------------------------------------------------------------------
DTC Account Number
- --------------------------------------------------------------------------------
Transaction Code Number
- --------------------------------------------------------------------------------
[ ] CHECK HERE AND ENCLOSE A PHOTOCOPY OF THE NOTICE OF GUARANTEED DELIVERY IF
TENDERED OLD NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED
DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND COMPLETE THE FOLLOWING:
Name of Registered Holder(s)
----------------------------------------------------------------------------
Window Ticket Number (if any)
--------------------------------------------------------------------------
Date of Execution of Notice of Guaranteed Delivery
-----------------------------------------------------
Name of Institution which Guaranteed Delivery
----------------------------------------------------------
If Guaranteed Delivery is to be made by Book-Entry Transfer:
Name of Tendering Institution
----------------------------------------------------------------------------
DTC Account Number
- --------------------------------------------------------------------------------
Transaction Code Number
- --------------------------------------------------------------------------------
[ ] CHECK HERE IF TENDERED BY BOOK-ENTRY TRANSFER AND NON-EXCHANGED OLD NOTES
ARE TO BE RETURNED BY CREDITING THE DTC ACCOUNT NUMBER SET FORTH ABOVE.
[ ] CHECK HERE IF YOU ARE A BROKER-DEALER WHO ACQUIRED THE OLD NOTES FOR ITS OWN
ACCOUNT AS A RESULT OF MARKET MAKING OR OTHER TRADING ACTIVITIES (A
"PARTICIPATING BROKER-DEALER") AND WISH TO RECEIVE 10 ADDITIONAL COPIES OF
THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO.
Name:
- --------------------------------------------------------------------------------
Address:
- --------------------------------------------------------------------------------
3
<PAGE> 4
Ladies and Gentlemen:
The undersigned hereby tenders to Cityscape Financial Corp., a Delaware
corporation (the "Company") the aggregate principal amount at maturity of the
Company's 12 3/4% Senior Notes due 2004 (the "Old Notes") in exchange for a like
aggregate principal amount at maturity of the Company's 12 3/4% Series A Senior
Notes due 2004 (the "New Notes") which have been registered under the Securities
Act of 1933 (the "Securities Act"), upon the terms and subject to the conditions
set forth in the Prospectus dated , 1997 (as the same may be
amended or supplemented from time to time, the "Prospectus"), receipt of which
is acknowledged, and in this Letter of Transmittal (which, together with the
Prospectus, constitute the "Exchange Offer").
Subject to and effective upon the acceptance for exchange of all or any
portion of the Old Notes tendered herewith in accordance with the terms and
conditions of the Exchange Offer (including, if the Exchange Offer is extended
or amended, the terms and conditions of any such extension or amendment), the
undersigned hereby sells, assigns and transfers to or upon the order of the
Company all right, title and interest in and to such Old Notes as are being
tendered herewith. The undersigned hereby irrevocably constitutes and appoints
the Exchange Agent as its agent and attorney-in-fact (with full knowledge that
the Exchange Agent is also acting as agent of the Company in connection with the
Exchange Offer) with respect to the tendered Old Notes, with full power of
substitution (such power of attorney being deemed to be an irrevocable power
coupled with an interest), subject only to the right of withdrawal described in
the Prospectus, to (i) deliver Certificates for Old Notes to the Company
together with all accompanying evidences of transfer and authenticity to, or
upon the order of, the Company, upon receipt by the Exchange Agent, as the
undersigned's agent, of the New Notes to be issued in exchange for such Old
Notes, (ii) present Certificates for such Old Notes for transfer, and to
transfer the Old Notes on the books of the Company, and (iii) receive for the
account of the Company all benefits and otherwise exercise all rights of
beneficial ownership of such Old Notes, all in accordance with the terms and
conditions of the Exchange Offer.
THE UNDERSIGNED HEREBY REPRESENTS AND WARRANTS THAT THE UNDERSIGNED HAS
FULL POWER AND AUTHORITY TO TENDER, EXCHANGE, SELL, ASSIGN AND TRANSFER THE OLD
NOTES TENDERED HEREBY AND THAT, WHEN THE SAME ARE ACCEPTED FOR EXCHANGE, THE
COMPANY WILL ACQUIRE GOOD, MARKETABLE AND UNENCUMBERED TITLE THERETO, FREE AND
CLEAR OF ALL LIENS, RESTRICTIONS, CHARGES AND ENCUMBRANCES, AND THAT THE OLD
NOTES TENDERED HEREBY ARE NOT SUBJECT TO ANY ADVERSE CLAIMS OR PROXIES. THE
UNDERSIGNED WILL, UPON REQUEST, EXECUTE AND DELIVER ANY ADDITIONAL DOCUMENTS
DEEMED BY THE COMPANY OR THE EXCHANGE AGENT TO BE NECESSARY OR DESIRABLE TO
COMPLETE THE EXCHANGE, SALE, ASSIGNMENT AND TRANSFER OF THE OLD NOTES TENDERED
HEREBY, AND THE UNDERSIGNED WILL COMPLY WITH ITS OBLIGATIONS UNDER THE
REGISTRATION RIGHTS AGREEMENT (AS DEFINED IN THE PROSPECTUS). THE UNDERSIGNED
HAS READ AND AGREES TO ALL OF THE TERMS OF THE EXCHANGE OFFER.
The name(s) and address(es) of the registered holder(s) of the Old Notes
tendered hereby should be printed above, if they are not already set forth
above, as they appear on the Certificates representing such Old Notes. The
Certificate number(s) and the Old Notes that the undersigned wishes to tender
should be indicated in the appropriate boxes above.
If any tendered Old Notes are not exchanged pursuant to the Exchange Offer
for any reason, or if Certificates are submitted for more Old Notes than are
tendered or accepted for exchange, Certificates for such nonexchanged or
nontendered Old Notes will be returned (or, in the case of Old Notes tendered by
book-entry transfer, such Old Notes will be credited to an account maintained at
DTC), without expense to the tendering holder, promptly following the expiration
or termination of the Exchange Offer.
The undersigned understands that tenders of Old Notes pursuant to any one
of the procedures described in "The Exchange Offer -- Procedures for Tendering
Old Notes" in the Prospectus and in the instruction will, upon the Company's
acceptance for exchange of such tendered Old Notes, constitute a binding
agreement between the undersigned and the Company upon the terms and subject to
the conditions of the Exchange Offer. The undersigned recognizes that, under
certain circumstances set forth in the Prospectus, the Company may not be
required to accept for exchange any of the Old Notes tendered hereby.
4
<PAGE> 5
Unless otherwise indicated herein in the box entitled "Special Issuance
Instructions" below, the undersigned hereby directs that the New Notes be issued
in the name(s) of the undersigned or, in the case of a book-entry transfer of
Old Notes, that such New Notes be credited to the account indicated above
maintained at DTC. If applicable, substitute Certificates representing Old Notes
not exchanged or not accepted for exchange will be issued to the undersigned or,
in the case of a book-entry transfer of Old Notes, will be credited to the
account indicated above maintained at DTC. Similarly, unless otherwise indicated
under "Special Delivery Instructions" below, please deliver New Notes to the
undersigned at the address shown below the undersigned's signature.
BY TENDERING OLD NOTES AND EXECUTING THIS LETTER OF TRANSMITTAL, THE
UNDERSIGNED HEREBY REPRESENTS AND AGREES THAT (I) THE UNDERSIGNED IS NOT AN
"AFFILIATE" OF THE COMPANY OR CITYSCAPE CORP. ("CSC") WITHIN THE MEANING OF RULE
405 UNDER THE SECURITIES ACT, (II) ANY NEW NOTES TO BE RECEIVED BY THE
UNDERSIGNED ARE BEING ACQUIRED IN THE ORDINARY COURSE OF ITS BUSINESS, (III) THE
UNDERSIGNED HAS NO ARRANGEMENT OR UNDERSTANDING WITH ANY PERSON TO PARTICIPATE
IN A DISTRIBUTION (WITHIN THE MEANING OF THE SECURITIES ACT) OF NEW NOTES TO BE
RECEIVED IN THE EXCHANGE OFFER, AND (IV) IF THE UNDERSIGNED IS NOT A
BROKER-DEALER, THE UNDERSIGNED IS NOT ENGAGED IN, AND DOES NOT INTEND TO ENGAGE
IN, A DISTRIBUTION (WITHIN THE MEANING OF THE SECURITIES ACT) OF SUCH NEW NOTES.
BY TENDERING OLD NOTES PURSUANT TO THE EXCHANGE OFFER AND EXECUTING THIS LETTER
OF TRANSMITTAL, A HOLDER OF OLD NOTES WHICH IS A BROKER-DEALER REPRESENTS AND
AGREES, CONSISTENT WITH CERTAIN INTERPRETIVE LETTERS ISSUED BY THE STAFF OF THE
DIVISION OF CORPORATION FINANCE OF THE SECURITIES AND EXCHANGE COMMISSION TO
THIRD PARTIES, THAT (A) SUCH OLD NOTES HELD BY THE BROKER-DEALER ARE HELD ONLY
AS A NOMINEE, OR (B) SUCH OLD NOTES WERE ACQUIRED BY SUCH BROKER-DEALER FOR ITS
OWN ACCOUNT AS A RESULT OF MARKET-MAKING ACTIVITIES OR OTHER TRADING ACTIVITIES
AND IT WILL DELIVER A PROSPECTUS (AS AMENDED OR SUPPLEMENTED FROM TIME TO TIME)
MEETING THE REQUIREMENTS OF THE SECURITIES ACT IN CONNECTION WITH ANY RESALE OF
SUCH NEW NOTES (PROVIDED THAT, BY SO ACKNOWLEDGING AND BY DELIVERING A
PROSPECTUS, SUCH BROKER-DEALER WILL NOT BE DEEMED TO ADMIT THAT IT IS AN
"UNDERWRITER" WITHIN THE MEANING OF THE SECURITIES ACT).
THE COMPANY AND CSC HAVE AGREED THAT, SUBJECT TO THE PROVISIONS OF THE
REGISTRATION RIGHTS AGREEMENT, THE PROSPECTUS, AS IT MAY BE AMENDED OR
SUPPLEMENTED FROM TIME TO TIME, MAY BE USED BY A PARTICIPATING BROKER-DEALER (AS
DEFINED BELOW) IN CONNECTION WITH RESALES OF NEW NOTES RECEIVED IN EXCHANGE FOR
OLD NOTES, WHERE SUCH OLD NOTES WERE ACQUIRED BY SUCH PARTICIPATING
BROKER-DEALER FOR ITS OWN ACCOUNT AS A RESULT OF MARKET-MAKING ACTIVITIES OR
OTHER TRADING ACTIVITIES, FOR A PERIOD ENDING 180 DAYS AFTER THE EXPIRATION DATE
(SUBJECT TO EXTENSION UNDER CERTAIN LIMITED CIRCUMSTANCES DESCRIBED IN THE
PROSPECTUS) OR, IF EARLIER, WHEN ALL SUCH NEW NOTES HAVE BEEN DISPOSED OF BY
SUCH PARTICIPATING BROKER-DEALER. IN THAT REGARD, EACH BROKER-DEALER WHO
ACQUIRED OLD NOTES FOR ITS OWN ACCOUNT AS A RESULT OF MARKET-MAKING OR OTHER
TRADING ACTIVITIES (A "PARTICIPATING BROKER-DEALER"), BY TENDERING SUCH OLD
NOTES AND EXECUTING THIS LETTER OF TRANSMITTAL OR DELIVERING AN AGENT'S MESSAGE
IN LIEU THEREOF, AGREES THAT, UPON RECEIPT OF NOTICE FROM THE COMPANY OF THE
HAPPENING OF ANY EVENT OR INFORMATION BECOMING KNOWN THAT REQUIRES THE MAKING OF
ANY CHANGES IN, OR AMENDMENTS TO THE REGISTRATION STATEMENT, PROSPECTUS OR
DOCUMENTS SO THAT, IN THE CASE OF, THE REGISTRATION STATEMENT, IT WILL NOT
CONTAIN ANY UNTRUE STATEMENT OF A MATERIAL FACT OR OMIT TO STATE ANY MATERIAL
FACT REQUIRED TO BE STATED THEREIN OR NECESSARY TO MAKE THE STATEMENTS THEREIN
NOT MISLEADING, AND THAT IN THE CASE OF THE PROSPECTUS, IT WILL NOT CONTAIN ANY
UNTRUE STATEMENT OF A MATERIAL FACT OR OMIT TO STATE ANY MATERIAL FACT REQUIRED
TO BE STATED THEREIN OR NECESSARY TO MAKE THE STATEMENTS THEREIN, IN LIGHT OF
THE CIRCUMSTANCES UNDER WHICH THEY WERE MADE, NOT MISLEADING OR OF THE
OCCURRENCE OF CERTAIN OTHER EVENTS SPECIFIED IN THE REGISTRATION RIGHTS
AGREEMENT, SUCH PARTICIPATING BROKER-DEALER WILL SUSPEND THE SALE OF NEW NOTES
PURSUANT TO THE PROSPECTUS UNTIL THE COMPANY HAS AMENDED OR SUPPLEMENTED THE
PROSPECTUS TO CORRECT SUCH MISSTATEMENT OR OMISSION AND HAS FURNISHED COPIES OF
THE AMENDED OR SUPPLEMENTED PROSPECTUS TO THE PARTICIPATING BROKER-DEALER OR THE
COMPANY HAS GIVEN NOTICE THAT THE SALE OF THE NEW NOTES MAY BE RESUMED, AS THE
CASE MAY BE. IF THE COMPANY GIVES SUCH NOTICE TO SUSPEND THE SALE OF THE NEW
NOTES, IT SHALL EXTEND THE 180-DAY PERIOD REFERRED TO ABOVE DURING WHICH
PARTICIPATING BROKER-DEALERS ARE ENTITLED TO USE THE PROSPECTUS IN CONNECTION
WITH THE RESALE OF NEW NOTES BY THE NUMBER OF DAYS DURING THE PERIOD FROM AND
INCLUDING THE DATE OF THE GIVING OF SUCH NOTICE TO AND INCLUDING THE DATE WHEN
PARTICIPATING BROKER-DEALERS SHALL HAVE RECEIVED COPIES OF THE SUPPLEMENTED OR
AMENDED PROSPECTUS NECESSARY TO PERMIT RESALES OF THE NEW NOTES OR TO AND
INCLUDING THE DATE ON WHICH THE COMPANY HAS GIVEN NOTICE THAT THE SALE OF NEW
NOTES MAY BE RESUMED, AS THE CASE MAY BE.
5
<PAGE> 6
As a result, a Participating Broker-Dealer who intends to use the
Prospectus in connection with resales of New Notes received in exchange for Old
Notes pursuant to the Exchange Offer must notify the Company, or cause the
Company to be notified, on or prior to the Expiration Date, that it is a
Participating Broker-Dealer. Such notice may be given in the space provided
above or may be delivered to the Exchange Agent at the address set forth in the
Prospectus under "The Exchange Offer--Exchange Agent."
Holders of Old Notes whose Old Notes are accepted for exchange will not
receive interest payments on such Old Notes and the undersigned waives the right
to receive any interest payment on such Old Notes accumulated from and including
May 14, 1997. Accordingly, holders of New Notes as of the record date for the
payment of interest on December 1, 1997 will be entitled to interest accumulated
from and including May 14, 1997.
The undersigned will, upon request, execute and deliver any additional
documents deemed by the Company or the Exchange Agent to be necessary or
desirable to complete the exchange, sale, assignment and transfer of the Old
Notes tendered hereby. All authority herein conferred or agreed to be conferred
in this Letter of Transmittal shall survive the death or incapacity of the
undersigned and any obligation of the undersigned hereunder shall be binding
upon the heirs, executors, administrators, personal representatives, trustees in
bankruptcy, legal representatives, successors and assigns of the undersigned.
Except as stated in the Prospectus, this tender is irrevocable.
6
<PAGE> 7
HOLDER(S) SIGN HERE
(SEE INSTRUCTIONS 2, 5 AND 6)
(NOTE: SIGNATURE(S) MUST BE GUARANTEED IF REQUIRED BY INSTRUCTION 2)
(COMPLETE ACCOMPANYING SUBSTITUTE FORM W-9)
Must be signed by registered holder(s) exactly as name(s) appear(s) on
Certificates(s) for the Old Notes hereby tendered or on a security position
listing, or by any person(s) authorized to become the registered holder(s) by
endorsements and documents transmitted herewith (including such opinions of
counsel, certificates and other information as may be required by the Company or
the Exchange Agent to comply with the restrictions on transfer applicable to the
Old Notes). If signature is by an attorney-in-fact, executor, administrator,
trustee, guardian, officer of a corporation or another acting in a fiduciary
capacity or representative capacity, please set forth the signer's full title.
See Instruction 5.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(SIGNATURE(S) OF HOLDER(S))
Date
- --------------------------- , 1997
Name(s) ------------------------------------------------------------------------
(PLEASE PRINT)
- --------------------------------------------------------------------------------
Area Code(s) and Telephone Number
---------------------------------------------------
- --------------------------------------------------------------------------------
(TAX IDENTIFICATION OR SOCIAL SECURITY NUMBER(S))
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 2 AND 5)
Authorized Signature
----------------------------------------------------------------
Name --------------------------------------------------------------------------
(PLEASE PRINT)
Date
- --------------------------- , 1997
Capacity or Title
-------------------------------------------------------------------
Name of Firm
---------------------------------------------------------------------
Address-------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone Number
-----------------------------------------------------
7
<PAGE> 8
THE UNDERSIGNED, BY COMPLETING THE BOX ENTITLED "DESCRIPTION OF OLD NOTES
TENDERED" ABOVE AND SIGNING THIS LETTER, WILL BE DEEMED TO HAVE TENDERED THE OLD
NOTES AS SET FORTH IN SUCH BOX ABOVE.
------------------------------------------------------------
SPECIAL ISSUANCE INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5 AND 6)
To be completed ONLY if New Notes and/or any Old Notes that are not
tendered are to be issued in the name of someone other than the registered
holder of the Old Notes whose name(s) appear(s) above, or if Old Notes
delivered by book-entry transfer which are not accepted for exchange are
to be returned by credit to an account maintained at DTC other than the
account indicated above.
Issue:
[ ] New Notes to:
[ ] Old Notes not tendered to:
Name
----------------------------------------------------
(PLEASE PRINT)
Address
--------------------------------------------------
------------------------------------------------------------
------------------------------------------------------------
(INCLUDE ZIP CODE)
(COMPLETE SUBSTITUTE FORM W-9)
[ ] Credit unexchanged Old Notes delivered by book-entry transfer to the
DTC account set forth below:
------------------------------------------------------------
(DTC Account Number)
------------------------------------------------------------
------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5 AND 6)
To be completed ONLY if New Notes and/or any Old Notes that are not
tendered are to be sent to someone other than the registered holder of the
Old Notes whose name(s) appear(s) above, or to the registered holder(s) at
an address other than that shown above.
Mail:
[ ] New Notes to:
[ ] Old Notes not tendered to:
Name
----------------------------------------------------
(PLEASE PRINT)
Address
--------------------------------------------------
------------------------------------------------------------
------------------------------------------------------------
(INCLUDE ZIP CODE)
(COMPLETE SUBSTITUTE FORM W-9)
------------------------------------------------------------
8
<PAGE> 9
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER
1. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES; GUARANTEED DELIVERY
PROCEDURES. This Letter of Transmittal is to be completed either if (i) tenders
are to be made pursuant to the procedures for tender by book-entry transfer set
forth in "The Exchange Offer -- Book-Entry Transfer" in the Prospectus and an
Agent's Message is not delivered or (ii) Certificates are to be forwarded
herewith. Timely confirmation of a book-entry transfer of such Old Notes into
the Exchange Agent's account at DTC (a "book-entry confirmation"), or
Certificates as well as this Letter of Transmittal (or facsimile thereof),
properly completed and duly executed, with any required signature guarantees,
and any other documents required by this Letter of Transmittal, must be received
by the Exchange Agent at its address set forth herein on or prior to the
Expiration Date. Tenders by book-entry transfer may also be made by delivering
an Agent's Message in lieu of this Letter of Transmittal. The term "Agent's
Message" means a message, transmitted by DTC to and received by the Exchange
Agent and forming a part of a book-entry confirmation, which states that DTC has
received an express acknowledgment from the DTC participant, which
acknowledgment states that such participant has received and agrees to be bound
by the Letter of Transmittal (including the representations contained herein)
and that the Company and CSC may enforce the Letter of Transmittal against such
participant. Old Notes may be tendered in whole or in part in denominations of
principal amount at maturity of $1,000 and integral multiples thereof.
Holders who wish to tender their Old Notes and (i) who cannot complete the
procedures for delivery by book-entry transfer on a timely basis, (ii) who
cannot deliver their Old Notes, this Letter of Transmittal and all other
required documents to the Exchange Agent on or prior to the Expiration Date or
(iii) whose Old Notes are not immediately available may tender their Old Notes
by properly completing and duly executing a Notice of Guaranteed Delivery
pursuant to the guaranteed delivery procedures set forth in "The Exchange
Offer -- Guaranteed Delivery Procedures" in the Prospectus. Pursuant to such
procedures: (a) such tender must be made by or through an Eligible Institution
(as defined below); (b) a properly completed and duly executed Notice of
Guaranteed Delivery, substantially in the form accompanying this Letter of
Transmittal, must be received by the Exchange Agent on or prior to the
Expiration Date; and (c) the Certificates (or a book-entry confirmation)
representing tendered Old Notes, in proper form for transfer, together with a
Letter of Transmittal (or facsimile thereof or Agent's Message in lieu thereof),
properly completed and duly executed, with any required signature guarantees and
any other documents required by this Letter of Transmittal, must be received by
the Exchange Agent within three New York Stock Exchange trading days after the
date of execution of such Notice of Guaranteed Delivery, all as provided in "The
Exchange Offer -- Guaranteed Delivery Procedures" in the Prospectus.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted
by facsimile or mail to the Exchange Agent, and must include a guarantee by an
Eligible Institution in the form set forth in such Notice. For Old Notes to be
properly tendered pursuant to the guaranteed delivery procedure, the Exchange
Agent must receive a Notice of Guaranteed Delivery on or prior to the Expiration
Date. As used herein and in the Prospectus, "Eligible Institution" means a firm
or other entity identified in Rule 17Ad-15 under the Exchange Act as "an
eligible guarantor institution," including (as such terms are defined therein)
(i) a bank; (ii) a broker, dealer, municipal securities broker or dealer or
government securities broker or dealer; (iii) a credit union; (iv) a national
securities exchange, registered securities association or clearing agency; or
(v) a savings association that is a participant in a Securities Transfer
Association.
THE METHOD OF DELIVERY OF OLD NOTES, THIS LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS IS AT THE OPTION AND SOLE RISK OF THE TENDERING HOLDER AND
THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE EXCHANGE
AGENT. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED,
PROPERLY INSURED, OR OVERNIGHT DELIVERY SERVICE IS RECOMMENDED. IN ALL CASES,
SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
9
<PAGE> 10
The Company will not accept any alternative, conditional or contingent
tenders. Each tendering holder, by execution of a Letter of Transmittal (or
facsimile thereof), waives any right to receive any notice of the acceptance of
such tender.
2. GUARANTEE OF SIGNATURES. No signature guarantee on this Letter of
Transmittal is required if:
(i) this Letter of Transmittal is signed by the registered holder
(which term, for purposes of this document, shall include any participant
in DTC whose name appears on a security position listing as the owner of
the Old Notes) of Old Notes tendered herewith, unless such holder(s) has
completed either the box entitled "Special Issuance Instructions" or the
box entitled "Special Delivery Instructions" above, or
(ii) such Old Notes are tendered for the account of a firm that is an
Eligible Institution.
In all other cases, an Eligible Institution must guarantee the signature(s)
on this Letter of Transmittal. See Instruction 5.
3. INADEQUATE SPACE. If the space provided in the box captioned
"Description of Old Notes Tendered" is inadequate, the Certificate number(s)
and/or the aggregate principal amount at maturity of Old Notes and any other
required information should be listed on a separate signed schedule which is
attached to this Letter of Transmittal.
4. PARTIAL TENDERS AND WITHDRAWAL RIGHTS. Tenders of Old Notes will be
accepted only in denominations of principal amount at maturity of $1,000 and
integral multiples thereof. If less than all the Old Notes evidenced by any
Certificate submitted are to be tendered, fill in the aggregate principal amount
at maturity of Old Notes which are to be tendered in the box entitled "Principal
Amount at Maturity of Old Notes Tendered." In such case, new Certificate(s) for
the remainder of the Old Notes that were evidenced by your old Certificate(s)
will be sent to the holder of the Old Notes, promptly after the Expiration Date,
unless the appropriate boxes on this Letter of Transmittal are completed. All
Old Notes represented by Certificates delivered to the Exchange Agent will be
deemed to have been tendered unless otherwise indicated.
Except as otherwise provided herein, tenders of Old Notes may be withdrawn
at any time on or prior to the Expiration Date. In order for a withdrawal to be
effective on or prior to that time, a written, telegraphic, telex or facsimile
transmission of such notice of withdrawal must be timely received by the
Exchange Agent at its address set forth above or in the Prospectus on or prior
to the Expiration Date. Any such notice of withdrawal must specify the name of
the person who tendered the Old Notes to be withdrawn, the aggregate principal
amount at maturity of Old Notes to be withdrawn, and (if Certificates for Old
Notes have been tendered) the name of the registered holder of the Old Notes as
set forth on the Certificates for the Old Notes, if different from that of the
person who tendered such Old Notes. If Certificates for the Old Notes have been
delivered or otherwise identified to the Exchange Agent, then prior to the
physical release of such Certificates for the Old Notes, the tendering holder
must submit the serial numbers shown on the particular Certificates for the Old
Notes to be withdrawn and the signature on the notice of withdrawal must be
guaranteed by an Eligible Institution, except in the case of Old Notes tendered
for the account of an Eligible Institution. If Old Notes have been tendered
pursuant to the procedures for book-entry transfer set forth in "The Exchange
Offer -- Book-Entry Transfer," the notice of withdrawal must specify the name
and number of the account at DTC to be credited with the withdrawal of Old
Notes, in which case a notice of withdrawal will be effective if delivered to
the Exchange Agent by written, telegraphic, telex or facsimile transmission on
or prior to the Expiration Date. Withdrawals of tenders of Old Notes may not be
rescinded. Old Notes properly withdrawn will not be deemed validly tendered for
purposes of the Exchange Offer, but may be retendered at any subsequent time on
or prior to the Expiration Date by following any of the procedures described in
the Prospectus under "The Exchange Offer -- Procedures for Tendering Old Notes."
All questions as to the validity, form and eligibility (including time of
receipt) of such withdrawal notices will be determined by the Company, in its
sole discretion, whose determination shall be final and binding on all parties.
Neither the Company, any affiliates or assigns of the Company, the Exchange
Agent nor any other person shall be under any duty to give any notification of
any irregularities in any notice of withdrawal or incur any liability for
failure to give any such notification. Any Old Notes which have been tendered
but which are withdrawn will be returned to the holder thereof without cost to
such holder promptly after withdrawal.
10
<PAGE> 11
5. SIGNATURES ON LETTER OF TRANSMITTAL, ASSIGNMENTS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder(s) of the Old
Notes tendered hereby, the signature(s) must correspond exactly with the name(s)
as written on the face of the Certificate(s) without alteration, enlargement or
any change whatsoever.
If any of the Old Notes tendered hereby are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
If any tendered Old Notes are registered in different name(s) on several
Certificates, it will be necessary to complete, sign and submit as many separate
Letters of Transmittal (or facsimiles thereof) as there are different
registrations of Certificates.
If this Letter of Transmittal or any Certificates or bond powers are signed
by trustees, executors, administrators, guardians, attorneys-in-fact, officers
of corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing and must submit proper evidence
satisfactory to the Company, in its sole discretion, of such persons' authority
to so act.
When this Letter of Transmittal is signed by the registered owner(s) of the
Old Notes listed and transmitted hereby, no endorsement(s) of Certificate(s) or
separate bond power(s) are required unless New Notes are to be issued in the
name of a person other than the registered holder(s). Signature(s) on such
Certificate(s) or bond power(s) must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered owner(s) of the Old Notes listed, the Certificates must be endorsed
or accompanied by appropriate bond powers, signed exactly as the name or names
of the registered owner(s) appear(s) on the Certificates, and also must be
accompanied by such opinions of counsel, certifications and other information as
the Company or the Exchange Agent may require in accordance with the
restrictions on transfer applicable to the Old Notes. Signatures on such
Certificates or bond powers must be guaranteed by an Eligible Institution.
6. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS. If New Notes are to be
issued in the name of a person other than the signer of this Letter of
Transmittal, or if New Notes are to be sent to someone other than the signer of
this Letter of Transmittal or to an address other than that shown above, the
appropriate boxes on this Letter of Transmittal should be completed.
Certificates for Old Notes not exchanged will be returned by mail or, if
tendered by book-entry transfer, by crediting the account indicated above
maintained at DTC unless the appropriate boxes on this Letter of Transmittal are
completed. See Instruction 4.
7. IRREGULARITIES. The Company will determine, in its sole discretion,
all questions as to the form of documents, validity, eligibility (including time
of receipt) and acceptance for exchange of any tender of Old Notes, which
determination shall be final and binding on all parties. The Company reserves
the absolute right, in its sole and absolute discretion, to reject any and all
tenders determined by it not to be in proper form or the acceptance of which, or
exchange for, may, in the view of counsel to the Company, be unlawful. The
Company also reserves the absolute right, subject to applicable law, to waive
any of the conditions of the Exchange Offer set forth in the Prospectus under
"The Exchange Offer -- Certain Conditions to the Exchange Offer" or any
conditions or irregularity in any tender of Old Notes of any particular holder
whether or not similar conditions or irregularities are waived in the case of
other holders. The Company's interpretation of the terms and conditions of the
Exchange Offer (including this Letter of Transmittal and the instructions
hereto) will be final and binding. No tender of Old Notes will be deemed to have
been validly made until all irregularities with respect to such tender have been
cured or waived. Neither the Company, any affiliates or assigns of the Company,
the Exchange Agent, nor any other person shall be under any duty to give
notification of any irregularities in tenders or incur any liability for failure
to give such notification.
8. QUESTIONS, REQUESTS FOR ASSISTANCE AND ADDITIONAL COPIES. Questions
and requests for assistance may be directed to the Exchange Agent at its address
and telephone number set forth on the front of this Letter of Transmittal.
Additional copies of the Prospectus, this Letter of Transmittal and the Notice
of Guaranteed Delivery may be obtained from the Exchange Agent or from your
broker, dealer, commercial bank, trust company or other nominee.
11
<PAGE> 12
9. WAIVER OF CONDITIONS. The Company reserves the absolute right, subject
to applicable law, to waive satisfaction of any or all conditions enumerated in
the Prospectus.
10. NO CONDITIONAL TENDERS. No alternative, conditional or contingent
tenders will be accepted. All tendering holders of Old Notes, by execution of
this Letter of Transmittal, shall waive any right to receive notice of the
acceptance of Old Notes for exchange.
Neither the Company, the Exchange Agent nor any other person is obligated
to give notice of any defect or irregularity with respect to any tender of Old
Notes nor shall any of them incur any liability for failure to give any such
notice.
11. LOST, DESTROYED OR STOLEN CERTIFICATES. If any Certificate(s)
representing Old Notes have been lost, destroyed or stolen, the holder should
promptly notify the Exchange Agent. The holder will then be instructed as to the
steps that must be taken in order to replace the Certificate(s). This Letter of
Transmittal and related documents cannot be processed until the procedures for
replacing lost, destroyed or stolen Certificate(s) have been followed.
12. SECURITY TRANSFER TAXES. Holders who tender their Old Notes for
exchange will not be obligated to pay any transfer taxes in connection
therewith. If, however, New Notes are to be delivered to, or are to be issued in
the name of, any person other than the registered holder of the Old Notes
tendered, or if a transfer tax is imposed for any reason other than the exchange
of Old Notes in connection with the Exchange Offer, then the amount of any such
transfer tax (whether imposed on the registered holder or any other persons)
will be payable by the tendering holder. If satisfactory evidence of payment of
such taxes or exemption therefrom is not submitted with the Letter of
Transmittal, the amount of such transfer taxes will be billed directly to such
tendering holder.
13. TAX IDENTIFICATION NUMBER. Federal income tax law generally requires
that a tendering holder whose Old Notes are accepted for exchange must provide
the Company (as payer) with such holder's correct Taxpayer Identification Number
("TIN") on Substitute Form W-9 below, which in the case of a tendering holder
who is an individual, is his or her social security number. If the Company is
not provided with the current TIN or an adequate basis for an exemption, such
tendering holder may be subject to a $50 penalty imposed by the Internal Revenue
Service. In addition, delivery to such tendering holder of New Notes may be
subject to backup withholding in an amount equal to 31% of all reportable
payments made after the exchange. If withholding results in an overpayment of
taxes, a refund may be obtained.
Exempt holders of Old Notes (including, among others, all corporations and
certain foreign individuals) are not subject to these backup withholding and
reporting requirements. See the enclosed Guidelines of Certification of Taxpayer
Identification Number on Substitute Form W-9 (the "W-9 Guidelines") for
additional instructions.
To prevent backup withholding, each tendering holder of Old Notes must
provide its correct TIN by completing the "Substitute Form W-9" set forth below,
certifying that the TIN provided is correct (or that such holder is awaiting a
TIN) and that (i) the holder is exempt from backup withholding, or (ii) the
holder has not been notified by the Internal Revenue Service that such holder is
subject to backup withholding as a result of a failure to report all interest or
dividends, or (iii) the Internal Revenue Service has notified the holder that
such holder is no longer subject to backup withholding. If the tendering holder
of Old Notes is a nonresident alien or foreign entity not subject to backup
withholding, such holder must provide the Company a completed Form W-8,
Certificate of Foreign Status. These forms may be obtained from the Exchange
Agent. If the Old Notes are in more than one name or are not in the name of the
actual owner, such holder should consult the W-9 Guidelines for information on
which TIN to report. If such holder does not have a TIN, such holder should
consult the W-9 Guidelines for instructions on applying for a TIN, check the box
in Part 2 of the Substitute Form W-9 and write "applied for" in lieu of its TIN.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR FACSIMILE THEREOF) AND ALL OTHER
REQUIRED DOCUMENTS MUST BE RECEIVED BY THE EXCHANGE AGENT ON OR PRIOR TO THE
EXPIRATION DATE.
12
<PAGE> 13
TO BE COMPLETED BY ALL TENDERING HOLDERS
(SEE INSTRUCTION 13)
<TABLE>
<C> <S> <C>
- -------------------------------------------------------------------------------------------------------------
PAYER'S NAME: CITYSCAPE FINANCIAL CORP.
- -------------------------------------------------------------------------------------------------------------
SUBSTITUTE PART 1 -- PLEASE PROVIDE YOUR TIN IN TIN: --------------------------------
FORM W-9 THE BOX AT RIGHT AND CERTIFY BY Social Security Number or
SIGNING AND DATING BELOW. Employer Identification Number
------------------------------------------------------------------------------
DEPARTMENT OF THE TREASURY PART 2 -- TIN Applied For [ ]
INTERNAL REVENUE SERVICE ------------------------------------------------------------------------------
CERTIFICATION:
UNDER THE PENALTIES OF PERJURY, I CERTIFY THAT:
(1) the number shown on this form is my correct Taxpayer Identification
Number (or I am waiting for a number to be issued to me).
(2) I am not subject to backup withholding either because:
(a) I am exempt from backup withholding, or
(b) I have not been notified by the Internal Revenue Service (the
"IRS") that I am subject to backup withholding as a result of a
failure to report all interest or dividends, or
(c) the IRS has notified me that I am no longer subject to backup
withholding, and
(3) any other information provided on this form is true and correct.
SIGNATURE: DATE: ______________
PAYOR'S REQUEST FOR TAXPAYER
IDENTIFICATION NUMBER
("TIN") AND CERTIFICATION
- -------------------------------------------------------------------------------------------------------------
You must cross out item (2) of the above certification if you have been notified by the IRS that you
are subject to backup withholding because of underreporting of interest or dividends on your tax return and
you have not been notified by the IRS that you are no longer subject to backup withholding.
- -------------------------------------------------------------------------------------------------------------
</TABLE>
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART 2 OF
SUBSTITUTE FORM W-9.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number has
not been issued to me, and either (a) I have mailed or delivered an application
to receive a taxpayer identification number to the appropriate Internal Revenue
Service Center or Social Security Administrative Office or (b) I intend to mail
or deliver an application in the near future. I understand that if I do not
provide a taxpayer identification number by the time of the exchange, 31 percent
of all reportable payments made to me thereafter will be withheld until I
provide the number.
SIGNATURE: DATE: ________________________
