EXECUTION COPY
___________________________________________________________
___________________________________________________________
CONTIFINANCIAL CORPORATION
8 3/8 % Senior Notes Due 2003
INDENTURE
Dated as of August 15, 1996
THE CHASE MANHATTAN BANK,
Trustee
___________________________________________________________
___________________________________________________________
CROSS-REFERENCE TABLE
TIA Indenture
SECTION SECTION
310(a)(1) .............................. 7.10
(a)(2) .............................. 7.10
(a)(3) .............................. N.A.
(a)(4) .............................. N.A.
(b) .............................. 7.08; 7.10
(c) .............................. N.A.
311(a) .............................. 7.11
(b) .............................. 7.11
(c) .............................. N.A.
312(a) .............................. 2.05
(b) .............................. 10.03
(c) .............................. 10.03
313(a) .............................. 7.06
(b)(1) .............................. N.A.
(b)(2) .............................. 7.06
(c) .............................. 10.02
(d) .............................. 7.06
314(a) .............................. 4.02;
4.12; 10.02
(b) .............................. N.A.
(c)(1) .............................. 10.04
(c)(2) .............................. 10.04
(c)(3) .............................. N.A.
(d) .............................. N.A.
(e) .............................. 10.05
(f) .............................. 4.12
315(a) .............................. 7.01
(b) .............................. 7.05; 10.02
(c) .............................. 7.01
(d) .............................. 7.01
(e) .............................. 6.11
316(a)(last sentence) ....................... 10.06
(a)(1)(A) .............................. 6.05
(a)(1)(B) .............................. 6.04
(a)(2) .............................. N.A.
(b) .............................. 6.07
317(a)(1) .............................. 6.08
(a)(2) .............................. 6.09
(b) .............................. 2.04
318(a) .............................. 10.01
N.A. means Not Applicable.
Note: This Cross-Reference Table shall not, for any purpose, be deemed to
be part of the Indenture.
Page 1
TABLE OF CONTENTS
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
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 SECURITIES
SECTION 2.01. Form and Dating ........................ 26
SECTION 2.02. Execution and Authentication ........... 26
SECTION 2.03. Registrar and Paying Agent ............. 27
SECTION 2.04. Paying Agent To Hold Money in Trust..... 28
SECTION 2.05. Securityholder Lists ................... 28
SECTION 2.06. Transfer and Exchange .................. 28
SECTION 2.07. Replacement Securities ................. 29
SECTION 2.08. Outstanding Securities ................. 30
SECTION 2.09. Temporary Securities ................... 30
SECTION 2.10. Cancellation ........................... 30
SECTION 2.11. Defaulted Interest ..................... 31
SECTION 2.12. CUSIP Numbers ........................... 31
SECTION 2.13. Global Securities ....................... 31
ARTICLE 3
REDEMPTION
SECTION 3.01. Notices to Trustee ..................... 33
SECTION 3.02. Selection of Securities To Be
Redeemed ............................. 33
SECTION 3.03. Notice of Redemption ................... 34
SECTION 3.04. Effect of Notice of Redemption ......... 34
SECTION 3.05. Deposit of Redemption Price ............ 35
SECTION 3.06. Securities Redeemed in Part ............ 35
Page 2
ARTICLE 4
COVENANTS
SECTION 4.01. Payment of Securities .................. 35
SECTION 4.02. SEC Reports ............................ 35
SECTION 4.03. Limitation on Indebtedness ............. 36
SECTION 4.04. Limitation on Indebtedness and Preferred
Stock of Restricted Subsidiaries ..... 37
SECTION 4.05. Limitation on Restricted Payments ...... 38
SECTION 4.06. Limitation on Restrictions on Dis-
tributions from Restricted
Subsidiaries ......................... 40
SECTION 4.07. Limitation on Sales of Assets and
Subsidiary Stock ..................... 41
SECTION 4.08. Limitation on Affiliate Transactions ... 45
SECTION 4.09. Change of Control ...................... 46
SECTION 4.10. Limitation on Liens .................... 48
SECTION 4.11. Limitation on Investment Company
Status ............................... 48
SECTION 4.12. Compliance Certificates ................ 48
SECTION 4.13. Further Instruments and Acts ........... 48
SECTION 4.14. Certain Covenants Suspended ............ 49
ARTICLE 5
SUCCESSOR COMPANY
SECTION 5.01. When Company May Merge or Transfer
Assets ............................... 49
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01. Events of Default ...................... 50
SECTION 6.02. Acceleration ........................... 53
SECTION 6.03. Other Remedies ......................... 53
SECTION 6.04. Waiver of Past Defaults ................ 54
SECTION 6.05. Control by Majority .................... 54
SECTION 6.06. Limitation on Suits .................... 54
SECTION 6.07. Rights of Holders To Receive Payment ... 55
SECTION 6.08. Collection Suit by Trustee ............. 55
SECTION 6.09. Trustee May File Proofs of Claim ....... 55
SECTION 6.10. Priorities ............................. 56
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SECTION 6.11. Undertaking for Costs .................. 56
SECTION 6.12. Waiver of Stay or Extension Laws ....... 56
ARTICLE 7
TRUSTEE
SECTION 7.01. Duties of Trustee ...................... 57
SECTION 7.02. Rights of Trustee ...................... 58
SECTION 7.03. Individual Rights of Trustee ........... 59
SECTION 7.04. Trustee's Disclaimer ................... 59
SECTION 7.05. Notice of Defaults ..................... 59
SECTION 7.06. Reports by Trustee to Holders .......... 59
SECTION 7.07. Compensation and Indemnity ............. 60
SECTION 7.08. Replacement of Trustee ................. 61
SECTION 7.09. Successor Trustee by ▇▇▇▇▇▇ ............ 62
SECTION 7.10. Eligibility; Disqualification .......... 62
SECTION 7.11. Preferential Collection of Claims
Against Company ...................... 62
ARTICLE 8
DISCHARGE OF INDENTURE; DEFEASANCE
SECTION 8.01. Discharge of Liability on Securities;
Defeasance ........................... 63
SECTION 8.02. Conditions to Defeasance ............... 64
SECTION 8.03. Application of Trust Money ............. 65
SECTION 8.04. Repayment to Company ................... 66
SECTION 8.05. Indemnity for Government
Obligations .......................... 66
SECTION 8.06. Reinstatement .......................... 66
ARTICLE 9
AMENDMENTS
SECTION 9.01. Without Consent of Holders ............. 67
SECTION 9.02. With Consent of Holders ................ 67
SECTION 9.03. Compliance with Trust Indenture ........ 68
SECTION 9.04. Revocation and Effect of Consents
and Waivers .......................... 68
SECTION 9.05. Notation on or Exchange of
Securities ........................... 69
Page 4
SECTION 9.06. Trustee To Sign Amendments ............. 69
SECTION 9.07. Payment for Consent .................... 70
ARTICLE 10
MISCELLANEOUS
SECTION 10.01. Trust Indenture Act Controls .......... 70
SECTION 10.02. Notices ............................... 70
SECTION 10.03. Communication by Holders with Other
Holders ............................. 71
SECTION 10.04. Certificate and Opinion as to
Conditions Precedent ................ 71
SECTION 10.05. Statements Required in Certificate
or Opinion .......................... 72
SECTION 10.06. When Securities Disregarded ........... 72 SECTION
10.07. Rules by Trustee, Paying Agent and
Registrar ........................... 72
SECTION 10.08. Legal Holidays ........................ 72
SECTION 10.09. Governing Law ......................... 73
SECTION 10.10. No Recourse Against Others ............ 73
SECTION 10.11. Successors ............................ 73
SECTION 10.12. Multiple Originals .................... 73
SECTION 10.13. Table of Contents; Headings ........... 73
Exhibit A - Form of Security
Page 1
INDENTURE dated as of August 15, 1996, between
CONTIFINANCIAL CORPORATION, a Delaware corporation (the
"Company"), and THE CHASE MANHATTAN BANK, a New York banking
corporation (the "Trustee").
Each party agrees as follows for the benefit of the other party
and for the equal and ratable benefit of the Holders of the Company's
8 3/8 % Senior Notes Due 2003 (the "Securities"):
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 becomes a Restricted Subsidiary as a
result of the acquisition of such Capital Stock by the Company or another
Restricted Subsidiary, (iii) Capital Stock constituting a minority interest
in any Person that at such time is a Restricted Subsidiary; PROVIDED,
HOWEVER, that any such Restricted Subsidiary described in clause (ii) or
(iii) above is primarily engaged in a Related Business or (iv) the Capital
Stock or Indebtedness of a Strategic Alliance Client.
"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 Sections 4.07 and 4.08 only,
"Affiliate" shall also mean any beneficial owner of Capital Stock
representing 5% 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
Page 2
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 this definition as a "disposition"), of (i) any shares
of Capital Stock of a Restricted Subsidiary (other than directors'
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, (iv) any Investment in a
Strategic Alliance Client or (v) any Excess Spread Receivables (other than,
in the case of (i), (ii), (iii), (iv) and (v) above, (x) a disposition by a
Restricted Subsidiary to the Company or by the Company or a Restricted
Subsidiary to a Consolidated Restricted Subsidiary, (y) for purposes of
Section 4.07 only, a disposition that constitutes a Restricted Payment
permitted by Section 4.05 or (z) a disposition of assets (including related
assets) for an aggregate consideration of $1.0 million or less).
"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.
Page3
"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, participations or other
equivalents of or interests or membership interests in (however designated)
equity of such Person, including any Preferred Stock, but excluding any
debt securities convertible into such equity.
"Change of Control" means the occurrence of any of the following
events:
(i) Any "person" (as such term is used in Sections 13(d) and
14(d) of the Exchange Act), other than the Permitted Holders, is or
becomes the "beneficial owner" (as defined in Rules 13d-3 and
13d-5 under the Exchange Act, except that such person shall be deemed
to have "beneficial ownership" of all shares that any such person has
the right to acquire, whether such right is exercisable immediately or
only after the passage of time), directly or indirectly, of more than
35% of the total voting power of the Voting Stock of the Company;
PROVIDED, HOWEVER, that the Permitted Holders beneficially own (as
defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act),
directly or indirectly, in the aggregate a lesser percentage of
the total voting power of the Voting Stock of the Company than such
other person and do not have the right or ability by voting
power, contract or otherwise to elect or designate for election a
majority of the Board of Directors (for the purposes of this clause
(i), such other person shall be deemed to beneficially own any
Voting Stock of a corporation held by another corporation (a "parent
corporation"), if such other person is the beneficial owner (as
defined above for such person), directly or indirectly, of more than
35% of the voting power of the Voting Stock of such parent
corporation and the Permitted Holders
Page 4
beneficially own (as defined above for the Permitted Holders), directly or
indirectly, in the aggregate a lesser percentage of the voting power of
the Voting Stock of such parent corporation and do not have the right or
ability by voting power, contract or otherwise to elect or designate for
election a majority of the board of directors of such parent corporation);
(ii) during any period of two consecutive years, individuals who
at the beginning of such period constituted the Board of Directors
(together with any new directors whose election by such Board of
Directors or whose nomination for election by the shareholders of the
Company was approved by a vote of 66-2/3% 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; or
(iii) the merger or consolidation of the Company with or into
another Person or the merger of another Person with or into the
Company, or the sale of all or substantially all the assets of the
Company to another Person (other than a Person that is controlled by
the Permitted Holders), and, in the case of any such merger or
consolidation, the securities of the Company that are outstanding
immediately prior to such transaction and which represent 100% of the
aggregate voting power of the Voting Stock of the Company are changed
into or exchanged for cash, securities or property, unless pursuant to
such transaction such securities are changed into or exchanged for, in
addition to any other consideration, securities of the surviving
corporation that represent immediately after such transaction, at
least a majority of the aggregate voting power of the Voting Stock of
the surviving corporation; PROVIDED, HOWEVER, that the sale by the
Company or its Restricted Subsidiaries from time to time of
Receivables to a trust for the purpose solely of effecting one or more
securitizations shall not be treated hereunder as a sale of all or
substantially all the assets of the Company.
"Code" means the Internal Revenue Code of 1986, as amended.
Page 5
"Company" means the party named as such in this Indenture until a
successor replaces it and, thereafter, means the successor and, for
purposes of any provision contained herein and required by the TIA, each
other obligor on the indenture securities.
"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 on a consolidated basis, excluding
(A) Permitted Warehouse Indebtedness and (B) Hedging Obligations permitted
to be Incurred pursuant to Section 4.03(b)(6) 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
Page 6
(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 asset (excluding any equity Investment
in a Strategic Alliance Client) 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 (excluding Capital Stock in
a Strategic Alliance Client); (v) extraordinary gains or losses; and (vi)
the cumulative effect of a change in accounting principles. Notwithstanding
the foregoing, for the purposes of Section 4.05 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
4.05(a)(iii)(D).
"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, (B) any amounts attributable to
Disqualified Stock and (C) any amounts attributable to deferred
compensation appropriately classified as net worth in accordance with GAAP.
"Consolidated Restricted Subsidiary" means a Restricted
Subsidiary (i) 80% of the Capital Stock and 80% of the Voting Stock of
which is owned by the Company or one or more Consolidated Restricted
Subsidiaries and (ii) which is treated as a consolidated subsidiary for the
purpose of the Company's U.S. Federal income tax reporting.
"Continental Grain" means Continental Grain Company, a Delaware
corporation.
"Currency Agreement" means in respect of a Person any foreign
exchange contract, currency swap agreement or
Page 7
other similar agreement 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.
"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 holder thereof, in each case in whole or in part on or prior to the
first anniversary of the Stated Maturity of the Securities; PROVIDED,
HOWEVER, that any Capital Stock that would not constitute Disqualified
Stock but for provisions thereof giving holders thereof the right to
require such Person to repurchase or redeem such Capital Stock upon the
occurrence of an "asset sale" or "change of control" occurring prior to the
first anniversary of the Stated Maturity of the Securities shall not
constitute Disqualified Stock if the "asset sale" or "change of control"
provisions applicable to such Capital Stock are not more favorable to the
holders of such Capital Stock than the provisions in Sections 4.07 and
4.09.
"Eligible Excess Spread Receivables" means Excess Spread
Receivables created after April 2, 1996; PROVIDED, HOWEVER, that Eligible
Excess Spread Receivables shall not include any Excess Spread Receivables
created as the result of the securitization or sale of other Excess Spread
Receivables.
"Excess Spread" means, over the life of a "pool" of Receivables
that have been sold by a Person to a trust or other Person in a
securitization or sale, the rights retained by such Person or its
Restricted Subsidiaries at or subsequent to the closing of such
securitization or sale to receive cash flows attributable to such "pool".
"Excess Spread Receivables" of a Person means the contractual or
certificated right to Excess Spread capitalized on such Person's
consolidated balance sheet (the
Page 8
amount of which shall be the present value of the Excess Spread,
calculated in accordance with GAAP).
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"GAAP" means generally accepted accounting principles in the
United States of America as in effect as of the Issue Date, including those
set forth (i) in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public Accountants,
(ii) in the statements and pronouncements of the Financial Accounting
Standards Board, (iii) in such other statements by such other entity as
approved by a significant segment of the accounting profession, and (iv) in
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 any 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
funds 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, Currency Agreement or such
other agreement
Page 9
designed to mitigate risks of fluctuations in value of
assets owned, financed or sold, or of liabilities incurred or assumed, in
either case in the ordinary course of business of the Company or its
Restricted Subsidiaries.
"Holder" or "Securityholder" means the Person in whose name a
Security 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 the 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 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);
Page 10
(vi) Warehouse Indebtedness; (vii) in connection with each sale by such Person
of anyExcess Spread Receivables, the maximum aggregate contractual claim (if
any) that the purchaser thereof could have against such Person if the amounts
anticipated at the time of such sale to be received by such purchaser in
connection with such Excess Spread Receivables are not received by such
purchaser; (viii) all obligations of the type referred to in clauses (i)
through (vii) 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; (ix) all obligations of the type referred to in
clauses (i) through (viii) 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 (x) to the extent not otherwise included in this
definition, Hedging Obligations of such Person. 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 similar entity formed by or on behalf of a
Person and to which Receivables or Excess Spread Receivables have been sold
or otherwise transferred by or on behalf of such Person or its Subsidiaries
shall not be treated as Indebtedness of such Person or its Subsidiaries
under this Indenture, regardless of whether such securities are treated as
indebtedness for tax purposes.
"Indenture" means this Indenture as amended or supplemented from
time to time.
"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
Page 11
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 4.05, (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.
"Investment Grade Rating" means a rating equal to or higher than
Baa3 (or the equivalent) and BBB- (or the equivalent) by ▇▇▇▇▇'▇ Investors
Service, Inc. (or any successor to the rating agency business thereof) and
Standard & Poor's Ratings Group (or any successor to the rating agency
business thereof), respectively.
"Issue Date" means the date on which the Securities 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 claim (whether direct or indirect through subordination or other
structural encumbrance) against any Excess Spread Receivables sold unless
the seller is not liable for any losses thereon.
Page 12
"Net Available Cash" from an Asset Disposition means cash
payments received therefrom (including any cash payments 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 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.
"Officer" means the Chairman of the Board, the President, any
Senior Vice President, any Vice President, the Treasurer or the Secretary
of the Company.
"Officers' Certificate" means a certificate signed by two
Officers.
"Opinion of Counsel" means a written opinion from legal counsel
who is acceptable to the Trustee. The counsel
Page 13
may be an employee of or counsel to the Company or the Trustee.
"Permitted Holders" means lineal descendants of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
including any individual legally adopted; spouses of such descendants;
trusts, the beneficiaries of which are any of the foregoing; partnerships,
corporations, or other entities in which any of the foregoing (individually
or collectively) has a controlling interest; and charitable organizations
established by any of the foregoing.
"Permitted Investment" means an Investment by the Company or any
Restricted Subsidiary in (i) 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; (ii) a Strategic Alliance Client to the extent such
Investment consists of options, warrants or other securities that are
convertible or exchangeable for equity securities of such Strategic
Alliance Client and is received by the Company or a Restricted Subsidiary
without the payment of any consideration other than the concurrent
provision by the Company or such Restricted Subsidiary to such Strategic
Alliance Client of financing or asset securitization expertise on terms
determined by the Company to be fair and reasonable to the Company or such
Restricted Subsidiary from a financial point of view without taking into
consideration any value that may inhere in such option, warrant or
convertible or exchangeable security; (iii) 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; (iv) Temporary Cash Investments;
(v) 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; (vi) 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; (vii) loans
or advances to employees made in the ordinary course of business consistent
with past practices of the Company or such Restricted Subsidiary; (viii)
stock, obligations or securities received
Page 14
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; (ix) 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 4.07;
(x) Receivables; (xi) a Strategic Alliance Client to the extent such
Investment consists of (A) Indebtedness of such Strategic Alliance Client
that is secured by Receivables owned by such Strategic Alliance Client in
an aggregate principal amount at any time outstanding not to exceed 100% of
the aggregate market value of such Receivables; PROVIDED, HOWEVER, that
such Receivables are eligible to be characterized under GAAP as held for
sale on the balance sheet of such Strategic Alliance Client and such
Indebtedness has not been outstanding in excess of 364 days; and (B)
Indebtedness of such Strategic Alliance Client that is secured by Excess
Spread Receivables owned by such Strategic Alliance Client; PROVIDED,
HOWEVER, that such Excess Spread Receivables are attributed solely to one
or more "pools" of Receivables that were securitized in one or more
transactions in which the Company or its Restricted Subsidiaries either
acted as underwriters or placement agent or provided all or a portion of
the financing for such "pool" prior to such securitization; and (xii)
Excess Spread Receivables; PROVIDED, HOWEVER, that such Excess Spread
Receivables represent interests in one or more "pools" of Receivables that
were securitized in one or more transactions in which the Company or its
Restricted Subsidiaries acted as sponsor, underwriter or placement agent or
provided all or a portion of the financing for such "pool" prior to such
securitization.
"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 to secure public or
statutory obligations of such Person or deposits of cash or United States
government bonds to secure surety or appeal bonds to which such Person is a
party, 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
Page 15
faith by appropriate proceedings or other 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 property taxes not yet subject to penalties for non-payment
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 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 on Receivables owned by the Company or a Restricted
Subsidiary, as the case may be, to secure Indebtedness permitted under
Section 4.03(b)(1) or Section 4.04(a); (h) Liens on Excess Spread
Receivables (or on the Capital Stock of any Subsidiary of such Person
substantially all the assets of which are Excess Spread Receivables);
PROVIDED, HOWEVER, that (I) unless the Covenant Termination has occurred,
(A) any such Liens shall not pertain to any Excess Spread Receivable
existing on April 2, 1996 which, if created thereafter, would have been an
Eligible Excess Spread Receivable unless such Excess Spread Receivable was
subject to a Lien on such date created by the Company in respect of the
financing thereof (a "predecessor Lien"); PROVIDED FURTHER, HOWEVER, that
in the case of any such Liens (a "subsequent Lien") on Excess Spread
Receivables which were subject to predecessor Liens,
Page 16
the sum of (1) the
aggregate book value of subordinated interests created and retained by the
Company or its Restricted Subsidiaries as a result of the sale or financing
associated with such subsequent Liens and (2) the aggregate book value of
any Excess Spread Receivables which were subject to predecessor Liens but
which are then no longer subject to any Lien (other than Permitted Liens
described under another clause of this definition) shall equal at least the
aggregate book value at such time of all such Excess Spread Receivables
which are then subject to subsequent Liens, as calculated immediately prior
to the creation of each such subsequent Lien, multiplied by a fraction the
numerator of which is the aggregate book value of the subordinated
interests associated with all predecessor Liens on April 2, 1996 and the
denominator of which is the sum of (1) such aggregate book value of such
subordinated interests and (2) the outstanding balance on April 2, 1996 of
the related senior interests; and (B) any such Lien on any Eligible Excess
Spread Receivables shall extend to Eligible Excess Spread Receivables
representing no more than 50% of the amount of Eligible Excess Spread
Receivables shown on the balance sheet of the Company and its consolidated
Restricted Subsidiaries, determined on a consolidated basis in accordance
with GAAP, as of the later of (x) the Issue Date and (y) the end of the
most recent fiscal quarter of the Company prior to the creation of such
Lien for which financial statements are available; and (II) for purposes of
this clause (h), any Lien on the Capital Stock of any Person substantially
all the assets of which are Excess Spread Receivables shall be treated as a
Lien on the Excess Spread Receivables of such Person; (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
Page 17
of its Subsidiaries; (l) Liens securing Indebtedness or other obligations of a
Subsidiary of such Person owing to such Person or a Consolidated Restricted
Subsidiary of such Person; (m) Liens (other than on any Excess Spread
Receivables) securing Hedging Obligations; (n) Liens on cash or other
assets (other than Excess Spread Receivables) securing Warehouse
Indebtedness (other than Permitted Warehouse Indebtedness) of the Company
or its Restricted Subsidiaries; and (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), (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), (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. 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 4.07.
"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 except
to the extent the holders of such Warehouse Indebtedness have contractual
recourse to the Company or its Restricted Subsidiaries to satisfy claims in
respect of such Warehouse Indebtedness in excess of (A) the realizable
value of the assets as to which such Warehouse Indebtedness relates and
(B) any assets securing such Warehouse Indebtedness, and (iii) any such
Indebtedness has not been outstanding in excess of 364 days.
Page 18
"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.
"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 Person.
"principal" of a Security means the principal of the Security
plus the premium, if any, payable on the Security 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.
"Rating Agencies" mean Standard & Poor's Ratings Group, a
division of McGraw Hill, Inc., and ▇▇▇▇▇'▇ Investors Service, Inc. or any
successor to the respective rating agency businesses thereof.
"Receivables" means consumer and commercial loans, leases and
receivables purchased or originated by the Company, any Restricted
Subsidiary or a Strategic Alliance Client in the ordinary course of
business; PROVIDED, HOWEVER, that for purposes of determining the amount of
a Receivable at any time, such amount shall be determined in accordance
with GAAP, consistently applied, as of the most recent practicable date.
"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
Page 19
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.
"Related Business" means any consumer or commercial finance
business or any financial service business.
"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) or similar payment
to the direct or indirect holders of its Capital Stock (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 held by any Affiliate of the Company (other than a
Restricted Subsidiary), including the exercise of any option to exchange
any Capital Stock (other than into Capital Stock of
Page 20
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) or (iv) the making of any
Investment (other than a Permitted Investment) in any Person.
"Restricted Subsidiary" means any Subsidiary of the Company that
is not an Unrestricted Subsidiary.
"SEC" means the Securities and Exchange Commission.
"Securities" means the Securities issued under this Indenture.
"Senior Indebtedness" means (i) Indebtedness of any Person,
whether outstanding on the Issue Date or thereafter Incurred and (ii)
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 (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 Securities; 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.
Page 21
"Significant Subsidiary" means any Restricted Subsidiary that
would be a "Significant Subsidiary" of the Company within the meaning of
Rule 1-02 under Regulation S-X promulgated by the SEC.
"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 holder thereof upon
the happening of any contingency unless such contingency has occurred).
"Strategic Alliance Client" means any Person (other than a
Restricted Subsidiary) engaged in a Related Business to which the Company
provides, or reasonably expects to provide, financing or asset
securitization expertise in return for asset-backed underwriting or
placement agent commitments.
"Subordinated Obligation" means any Indebtedness of the Company
(whether outstanding on the Issue Date or thereafter Incurred) which is
subordinate or junior in right of payment to the Securities pursuant to a
written agreement 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.
"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
Page 22
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 90 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 ▇▇▇▇▇'▇ Investors Service, Inc. or "A-1" (or
higher) according to Standard and Poor's Ratings Group, 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 at least "A" by Standard & Poor's
Ratings Group or "A" by ▇▇▇▇▇'▇ Investors Service, Inc.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C.
77aaa-77bbbb) as in effect on the date of this
Indenture.
"Trustee" means the party named as such in this Indenture until a
successor replaces it and, thereafter, means the successor.
"Trust Officer" means the Chairman of the Board, the President,
any vice president, any assistant vice president, the secretary, any
assistant secretary, the treasurer, any assistant treasurer, the cashier,
any assistant cashier, any trust officer or assistant trust officer of the
Trustee assigned by the Trustee to administer its corporate trust matters.
Page 23
"Uniform Commercial Code" means the New York Uniform Commercial
Code as in effect from time to time.
"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 Section 4.05. The Board of Directors 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 Section 4.03(a) and (y)
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 or membership 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
Page 24
exclusively to finance
the purchase or origination of Receivables by the Company, a Subsidiary of
the Company or a Strategic Alliance Client 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 or debt of a
Strategic Alliance Client secured by Receivables owned or financed by such
Strategic Alliance Client to a financial institution and retains a right of
first refusal upon the subsequent resale of such Receivables or debt by
such financial institution.
"Warehouse Indebtedness" means the greater of (x) the
consideration received by the Company or its Restricted Subsidiaries under
a Warehouse Facility and (y) the book value of the assets financed under a
Warehouse Facility with respect to Receivables or debt of a Strategic
Alliance Client secured by Receivables owned or financed by such Strategic
Alliance Client until such time such Receivables or debt 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.
SECTION 1.02. OTHER DEFINITIONS.
Defined in
TERM SECTION
"Affiliate Transaction" ................ 4.08
"Bankruptcy Law" ....................... 6.01
"covenant defeasance option" ........... 8.01(b)
"Covenant Termination" ................. 4.14
"Custodian" ............................ 6.01
"Event of Default" ..................... 6.01
"legal defeasance option" .............. 8.01(b)
"Legal Holiday" ........................ 10.08
"Offer" ................................ 4.07
"Offer Amount" ......................... 4.07
Page 25
"Offer Period" ......................... 4.07
"Paying Agent" ......................... 2.03
"Purchase Date" ........................ 4.07
"Registrar"............................. 2.03
"Successor Company" .................... 5.01
SECTION 1.03. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.
This Indenture is subject to the mandatory provisions of the TIA which are
incorporated by reference in and made a part of this Indenture. The
following TIA terms have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Securities.
"indenture security holder" means a Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Company and any
other obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by
the TIA, defined by TIA reference to another statute or defined by SEC rule
have the meanings assigned to them by such definitions.
SECTION 1.04. RULES OF CONSTRUCTION. Unless the context
otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) "including" means including without limitation;
(5) words in the singular include the plural and words in the
plural include the singular;
Page 26
(6) unsecured Indebtedness shall not be deemed to be subordinate
or junior to Secured Indebtedness merely by virtue of its nature as
unsecured Indebtedness;
(7) the principal amount of any noninterest bearing or other
discount security at any date shall be the principal amount thereof
that would be shown on a balance sheet of the issuer dated such date
prepared in accordance with GAAP and accretion of principal on such
security shall be deemed to be the Incurrence of Indebtedness; and
(8) the principal amount of any Preferred Stock shall be (i) the
maximum liquidation value of such Preferred Stock or (ii) the maximum
mandatory redemption or mandatory repurchase price with respect to
such Preferred Stock, whichever is greater.
ARTICLE 2
THE SECURITIES
SECTION 2.01. FORM AND DATING. The Securities and the Trustee's
certificate of authentication shall be substantially in the form of Exhibit
A, which is hereby incorporated in and expressly made a part of this
Indenture. The Securities may have notations, legends or endorsements
required by law, stock exchange rule, agreements to which the Company is
subject, if any, or usage (provided that any such notation, legend or
endorsement is in a form acceptable to the Company). Each Security shall
be dated the date of its authentication. The terms of the Securities set
forth in Exhibit A are part of the terms of this Indenture.
SECTION 2.02. EXECUTION AND AUTHENTICATION. Two Officers shall
sign the Securities for the Company by manual or facsimile signature. The
Company's seal shall be impressed, affixed, imprinted or reproduced on the
Securities and may be in facsimile form.
If an Officer whose signature is on a Security no longer holds
that office at the time the Trustee authenticates the Security, the
Security shall be valid nevertheless.
Page 27
A Security shall not be valid until an authorized signatory of
the Trustee manually signs the certificate of authentication on the
Security. The signature shall be conclusive evidence that the Security has
been authenticated under this Indenture.
The Trustee shall authenticate and deliver Securities for
original issue in an aggregate principal amount of $300,000,000, upon a
written order of the Company signed by two Officers or by an Officer and
either an Assistant Treasurer or an Assistant Secretary of the Company.
Such order shall specify the amount of the Securities to be authenticated
and the date on which the original issue of Securities is to be
authenticated. The aggregate principal amount of Securities outstanding at
any time may not exceed that amount except as provided in Section 2.07.
The Trustee may appoint an authenticating agent reasonably
acceptable to the Company to authenticate the Securities. Unless limited
by the terms of such appointment, an authenticating agent may authenticate
Securities 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 any Registrar,
Paying Agent or agent for service of notices and demands.
SECTION 2.03. REGISTRAR AND PAYING AGENT. The Company shall
maintain an office or agency where Securities may be presented for
registration of transfer or for exchange (the "Registrar") and an office or
agency where Securities may be presented for payment (the "Paying Agent").
The Registrar shall keep a register of the Securities and of their transfer
and exchange. The Company may have one or more co-registrars and one or
more additional paying agents. The term "Paying Agent" includes any
additional paying agent.
The Company shall enter into an appropriate agency agreement with
any Registrar, Paying Agent or co-registrar not a party to this Indenture,
which shall incorporate the terms 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, the Trustee
shall act as such and shall be entitled to appropriate compensation therefor
Page 28
pursuant to Section 7.07. The Company or any of its domestically
incorporated Wholly Owned Subsidiaries may act as Paying Agent, Registrar,
co-registrar or transfer agent.
The Company initially appoints the Trustee as Registrar and
Paying Agent in connection with the Securities.
SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST. By 11:00
a.m., New York time, on each due date of the principal and interest on any
Security, the Company shall deposit with the Paying Agent a sum sufficient
to pay such principal and interest when so becoming due. The Company shall
require each Paying Agent (other than the Trustee) to agree in writing that
the Paying Agent shall hold in trust for the benefit of Securityholders or
the Trustee all money held by the Paying Agent for the payment of principal
of or interest on the Securities and shall notify the Trustee of any
default by the Company in making any such payment. If the Company or a
Subsidiary of the Company acts as Paying Agent, it shall segregate the
money held by it as Paying Agent and hold it as a separate trust fund. The
Company at any time may require a Paying Agent to pay all money held by it
to the Trustee and to account for any funds disbursed by the Paying Agent.
Upon complying with this Section, the Paying Agent shall have no further
liability for the money paid to the Trustee.
SECTION 2.05. SECURITYHOLDER 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 Securityholders. If the
Trustee is not the Registrar, the Company shall furnish to the Trustee, in
writing 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 Securityholders.
SECTION 2.06. TRANSFER AND EXCHANGE. The Securities shall be
issued in registered form and shall be transferable only upon the surrender
of a Security for registration of transfer. When a Security is presented
to the Registrar or a co-registrar with a request to register a transfer,
the Registrar shall register the transfer as requested if the requirements
of Section 8-401(1) of the Uniform Commercial Code are met. When
Securities are
Page 29
presented to the Registrar or a co-registrar with a request
to exchange them for an equal principal amount of Securities of other
denominations, the Registrar shall make the exchange as requested if the
same requirements are met. To permit registration of transfers and
exchanges, the Company shall execute and the Trustee shall authenticate
Securities at the Registrar's or co-registrar's request. The Company may
require payment of a sum sufficient to pay all taxes, assessments or other
governmental charges in connection with any transfer or exchange pursuant
to this Section. The Company shall not be required to make and the
Registrar need not register transfers or exchanges of Securities selected
for redemption (except, in the case of Securities to be redeemed in part,
the portion thereof not to be redeemed) or any Securities for a period of
15 days before a selection of Securities to be redeemed or 15 days before
an interest payment date.
Prior to the due presentation for registration of transfer of any
Security, the Company, the Trustee, the Paying Agent, the Registrar or any
co-registrar may deem and treat the person in whose name a Security is
registered as the absolute owner of such Security for the purpose of
receiving payment of principal of and interest on such Security and for all
other purposes whatsoever, whether or not such Security is overdue, and
none of the Company, the Trustee, the Paying Agent, the Registrar or any
co-registrar shall be affected by notice to the contrary.
All Securities issued upon any transfer or exchange pursuant to
the terms of this Indenture will evidence the same debt and will be
entitled to the same benefits under this Indenture as the Securities
surrendered upon such transfer or exchange.
SECTION 2.07. REPLACEMENT SECURITIES. If a mutilated Security
is surrendered to the Registrar or if the Holder of a Security claims that
the Security has been lost, destroyed or wrongfully taken, the Company
shall issue and the Trustee shall authenticate a replacement Security if
the requirements of Section 8-405 of the Uniform Commercial Code are met
and the Holder satisfies any other reasonable requirements of the Trustee.
If required by the Trustee or the Company, such Holder shall furnish an
indemnity bond sufficient in the judgment of the Company and the Trustee to
protect the Company, the Trustee, the Paying Agent, the Registrar and any
co-registrar from any loss which any of
Page 30
them may suffer if a Security is replaced. The Company and the Trustee
may charge the Holder for their expenses in replacing a Security.
Every replacement Security is an additional obligation of the
Company.
SECTION 2.08. OUTSTANDING SECURITIES. Securities outstanding at
any time are all Securities authenticated by the Trustee except for those
canceled by it, those delivered to it for cancellation and those described
in this Section as not outstanding. A Security does not cease to be
outstanding because the Company or an Affiliate of the Company holds the
Security.
If a Security is replaced pursuant to Section 2.07, it ceases to
be outstanding unless the Trustee and the Company receive proof
satisfactory to them that the replaced Security is held by a bona fide
purchaser.
If the Paying Agent segregates and holds in trust, in accordance
with this Indenture, on a redemption date or maturity date money sufficient
to pay all principal and interest payable on that date with respect to the
Securities (or portions thereof) to be redeemed or maturing, as the case
may be, then on and after that date such Securities (or portions thereof)
cease to be outstanding and interest on them ceases to accrue.
SECTION 2.09. TEMPORARY SECURITIES. Until definitive Securities
are ready for delivery, the Company may prepare and the Trustee shall
authenticate temporary Securities. Temporary Securities shall be
substantially in the form of definitive Securities but may have variations
that the Company considers appropriate for temporary Securities. Without
unreasonable delay, the Company shall prepare and the Trustee shall
authenticate definitive Securities and deliver them in exchange for
temporary Securities.
SECTION 2.10. CANCELLATION. The Company at any time may deliver
Securities to the Trustee for cancellation. The Registrar and the Paying
Agent shall forward to the Trustee any Securities surrendered to them for
registration of transfer, exchange or payment. The Trustee and no one else
shall cancel and destroy (subject to the record retention requirements of
the Exchange Act) all Securities
Page 31
surrendered for registration of transfer,
exchange, replacement in the event of a mutilated security, payment or
cancellation and deliver a certificate of such destruction to the Company
unless the Company directs the Trustee to deliver canceled Securities to
the Company. The Company may not issue new Securities to replace
Securities it has redeemed, paid or delivered to the Trustee for
cancellation.
SECTION 2.11. DEFAULTED INTEREST. If the Company defaults in a
payment of interest on the Securities, the Company shall pay defaulted
interest (plus interest on such defaulted interest to the extent lawful) in
any lawful manner. The Company may pay the defaulted interest to the
persons who are Securityholders on a subsequent special record date. The
Company shall fix or cause to be fixed any such special record date (which
shall be no less than 10 days prior to the payment date) and payment date
to the reasonable satisfaction of the Trustee and shall promptly mail to
each Securityholder a notice that states the special record date, the
payment date and the amount of defaulted interest to be paid, which notice
shall be mailed not less than 10 days prior to such special record date.
SECTION 2.12. CUSIP NUMBERS. The Company in issuing the
Securities may use "CUSIP" numbers (if then generally in use) and, if so,
the Trustee shall use "CUSIP" numbers in notices of redemption as a
convenience to Holders; PROVIDED, HOWEVER, that any such notice may state
that no representation is made as to the correctness of such numbers either
as printed on the Securities or as contained in any notice of a redemption
and that reliance may be placed only on the other identification numbers
printed on the Securities, and any such redemption shall not be affected by
any defect in or omission of such numbers.
SECTION 2.13 GLOBAL SECURITIES. (a) The Securities issued on
the Issue Date shall be issued in the form of one or more permanent global
Securities with the global securities legend set forth in Exhibit A hereto
(each, a "Global Security"), which shall be deposited on behalf of the
purchasers of the Securities with the Trustee, at its New York office, as
custodian for The Depository Trust Company ("DTC" and, together with any
successor depositary hereunder, the "Depositary") or with such other
Custodian as the Depositary may direct, and registered in the name of the
Depositary or a nominee of the Depositary.
Page 32
Members of, or participants in, the Depositary ("Agent Members")
shall have no rights under this Indenture with respect to any Global
Security held on their behalf by the Depositary or by the Trustee as the
custodian of the Depositary or under such Global Security, and the
Depositary may be treated by the Company, the Trustee and any agent of the
Company or the Trustee as the absolute owner of such Global Security 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 Depositary or impair, as between the
Depositary and its Agent Members, the operation of customary practices of
such Depositary governing the exercise of the rights of a holder of a
beneficial interest in any Global Security.
(b) A Global Security deposited with the Depositary or with the
Trustee as custodian for the Depositary shall be transferred to the
beneficial owners thereof in the form of certificated Securities in an
aggregate principal amount equal to the principal amount of such Global
Security, in exchange for such Global Security, only if (i) the Depositary
notifies the Company that it is unwilling or unable to continue as
Depositary for such Global Security or if at any time such Depositary
ceases to be a "clearing agency" registered under the Exchange Act and a
successor depositary is not appointed by the Company within 90 days of such
notice, or (ii) an Event of Default has occurred and is continuing or
(iii) the Company, in its sole discretion, notifies the Trustee in writing
that it elects to cause the issuance of certificated Securities under this
Indenture.
Any Global Security that is transferable to the beneficial owners
thereof pursuant to this Section shall be surrendered by the Depositary to
the Trustee located in the Borough of Manhattan, The City of New York, to
be so transferred, without charge, and the Trustee shall authenticate and
deliver, upon such transfer of each portion of such Global Security, an
equal aggregate principal amount of certificated Securities of authorized
denominations.
(c) The registered Holder of a Global Security may grant proxies
and otherwise authorize any Person, including Agent Members and Persons
that may hold interests
Page 33
through Agent Members, to take any action which a Holder is entitled to
take under this Indenture or the Securities.
(d) In the event of the occurrence of either of the events
specified in Section 2.13(b), the Company will promptly make available to
the Trustee a reasonable supply of certificated Securities.
ARTICLE 3
REDEMPTION
SECTION 3.01. NOTICES TO TRUSTEE. If the Company elects to
redeem Securities pursuant to paragraph 5 of the Securities, it shall
notify the Trustee in writing of the redemption date and the principal
amount of Securities to be redeemed.
The Company shall give each notice to the Trustee provided for in
this Section at least 60 days before the redemption date unless the Trustee
consents to a shorter period. Such notice shall be accompanied by an
Officers' Certificate and an Opinion of Counsel from the Company to the
effect that such redemption will comply with the conditions herein.
SECTION 3.02. SELECTION OF SECURITIES TO BE REDEEMED. If fewer
than all the Securities are to be redeemed, the Trustee shall select the
Securities to be redeemed pro rata or by lot or by a method that complies
with applicable legal and securities exchange requirements, if any, and
that the Trustee in its sole discretion considers fair and appropriate.
The Trustee shall make the selection from outstanding Securities not
previously called for redemption. The Trustee may select for redemption
portions of the principal of Securities that have denominations larger than
$1,000. Securities and portions of them the Trustee selects shall be in
amounts of $1,000 or a whole multiple of $1,000. Provisions of this
Indenture that apply to Securities called for redemption also apply to
portions of Securities called for redemption. The Trustee shall notify the
Company promptly of the Securities or portions of Securities to be
redeemed.
SECTION 3.03. NOTICE OF REDEMPTION. At least 30 days but not
more than 60 days before a date for redemp-
Page 34
tion of Securities, the Company shall mail a notice of redemption by
first-class mail to each Holder of Securities to be redeemed.
The notice shall identify the Securities to be redeemed and shall
state:
(1) the redemption date;
(2) the redemption price;
(3) the name and address of the Paying Agent;
(4) that Securities called for redemption must be surrendered to
the Paying Agent to collect the redemption price;
(5) if fewer than all the outstanding Securities are to be
redeemed, the identification and principal amounts of the particular
Securities to be redeemed;
(6) that, unless the Company defaults in making such redemption
payment, interest on Securities (or portion thereof) called for
redemption ceases to accrue on and after the redemption date; and
(7) that no representation is made as to the correctness or
accuracy of the CUSIP number, if any, listed in such notice or printed
on the Securities.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at the Company's expense. In such
event, the Company shall provide the Trustee with the information required
by this Section.
SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION. Once notice of
redemption is mailed, Securities called for redemption become due and
payable on the redemption date and at the redemption price stated in the
notice. Upon surrender to the Paying Agent, such Securities shall be paid
at the redemption price stated in the notice, plus accrued interest to the
redemption date. Failure to give notice or any defect in the notice to any
Holder shall not affect the validity of the notice to any other Holder.
SECTION 3.05. DEPOSIT OF REDEMPTION PRICE. Prior to 11:00 a.m.,
New York time, on the redemption date, the
Page 35
Company shall deposit with the
Paying Agent (or, if the Company or a Subsidiary is the Paying Agent, shall
segregate and hold in trust) money sufficient to pay the redemption price
of and accrued interest on all Securities to be redeemed on that date other
than Securities or portions of Securities called for redemption which have
been delivered by the Company to the Trustee for cancellation.
SECTION 3.06. SECURITIES REDEEMED IN PART. Upon surrender of a
Security that is redeemed in part, the Company shall execute and the
Trustee shall authenticate for the Holder (at the Company's expense) a new
Security equal in principal amount to the unredeemed portion of the
Security surrendered.
ARTICLE 4
COVENANTS
SECTION 4.01. PAYMENT OF SECURITIES. The Company shall promptly
pay the principal of and interest on the Securities on the dates and in the
manner provided in the Securities and in this Indenture. Principal and
interest shall be considered paid on the date due if on such date the
Trustee or the Paying Agent holds in accordance with this Indenture money
sufficient to pay all principal and interest then due. The Company shall
pay interest on overdue principal at the rate specified therefor in the
Securities, and it shall pay interest on overdue installments of interest
at the same rate to the extent lawful.
SECTION 4.02. 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 Securityholders with such annual 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
time specified for the filing of such information, documents and reports
under such Sections. The Company also shall comply with the other
provisions of TIA 314(a).
Page 36
SECTION 4.03. LIMITATION ON INDEBTEDNESS. (a) The Company shall
not Incur, directly or indirectly, any Indebtedness if, on the date of such
Incurrence and after giving effect thereto, the Consolidated Leverage Ratio
exceeds 2.5 to 1.0.
(b) Notwithstanding Section 4.03(a), the Company may Incur any
or all of the following Indebtedness:
(1) Permitted Warehouse Indebtedness;
(2) Indebtedness owed to and held by the Company or a
Consolidated Restricted Subsidiary; PROVIDED, HOWEVER, that any
subsequent issuance or transfer of any Capital Stock which
results in any such Consolidated Restricted Subsidiary ceasing to
be a Consolidated Restricted Subsidiary or any subsequent
transfer of such Indebtedness (other than to the Company or
another Consolidated Restricted Subsidiary) shall be deemed, in
each case, to constitute the Incurrence of such Indebtedness by
the Company;
(3) the Securities;
(4) Indebtedness outstanding on the Issue Date (other than
Indebtedness described in clause (1), (2) or (3) of this Section
4.03(b));
(5) Refinancing Indebtedness in respect of Indebtedness
Incurred pursuant to Section 4.03(a) or pursuant to clause (3) or
(4) or this clause (5) of this Section 4.03(b);
(6) Hedging Obligations directly related to: (i)
Indebtedness Incurred (or reasonably expected to be Incurred) and
permitted to be Incurred by the Company or the Restricted
Subsidiaries pursuant to this Indenture; (ii) Receivables held by
the Company or its Restricted Subsidiaries pending sale or
securitization; (iii) Receivables of the Company or its
Restricted Subsidiaries that have been sold pursuant to a
Warehouse Facility; (iv) Receivables with respect to which the
Company reasonably expects to purchase or commit to purchase,
finance or accept as collateral; or (v) Excess Spread Receivables
and other assets
Page 37
owned or financed by the Company or its
Restricted Subsidiaries in the ordinary course of business;
PROVIDED, HOWEVER, that such Hedging Obligations are eligible to
receive hedge accounting treatment in accordance with GAAP as
applied by the Company as of the Issue Date; and
(7) Indebtedness in an aggregate principal amount which,
together with the principal amount of all other Indebtedness of
the Company outstanding on the date of such Incurrence (other
than Indebtedness permitted by clauses (1) through (6) above of
this Section 4.03(b) or Section 4.03(a) does not exceed $40.0
million.
(c) Notwithstanding Section 4.03(a) and Section 4.03(b), the
Company shall not Incur any Indebtedness if the proceeds thereof are
used, directly or indirectly, to Refinance any Subordinated
Obligations unless such Indebtedness shall be subordinated to the
Securities to at least the same extent as such Subordinated
Obligations.
(d) For purposes of determining compliance with this Section
4.03, (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 its sole discretion, 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 4.04. LIMITATION ON INDEBTEDNESS AND PREFERRED STOCK OF
RESTRICTED SUBSIDIARIES. The Company shall not permit any Restricted
Subsidiary to Incur, directly or indirectly, any Indebtedness or Preferred
Stock except:
(a) Permitted Warehouse Indebtedness;
(b) Indebtedness or Preferred Stock issued to and held by the
Company or a Consolidated Restricted Subsidiary; PROVIDED, HOWEVER,
that any subsequent issuance or transfer of any Capital Stock which
results in any such Consolidated Restricted Subsidiary ceasing
Page 38
to be a Consolidated Restricted Subsidiary or any subsequent transfer of
such Indebtedness or Preferred Stock (other than to the Company or a
Consolidated Restricted Subsidiary) shall be deemed, in each case, to
constitute the issuance of such Indebtedness or Preferred Stock by the
issuer thereof;
(c) Indebtedness or Preferred Stock of a Subsidiary Incurred and
outstanding on or prior to the date on which such Subsidiary was
acquired by the Company (other than Indebtedness or Preferred Stock
Incurred in connection with, or to provide all or any portion of the
funds or credit support utilized to consummate, the transaction or
series of related transactions pursuant to which such Subsidiary
became a Subsidiary or was acquired by the Company); PROVIDED,
HOWEVER, that on the date of such acquisition and after giving effect
thereto, the Company would have been able to Incur at least $1.00
of Indebtedness pursuant to Section 4.03(a);
(d) Indebtedness or Preferred Stock outstanding on the Issue Date
(other than Indebtedness described in clause (a), (b) or (c) of this
Section 4.04); and
(e) Refinancing Indebtedness Incurred in respect of Indebtedness
or Preferred Stock referred to in clause (c) or (d) of this Section
4.04 or this clause (e); PROVIDED, HOWEVER, that to the extent such
Refinancing Indebtedness directly or indirectly Refinances
Indebtedness or Preferred Stock of a Subsidiary described in clause
(c) of this Section 4.04, such Refinancing Indebtedness shall be
Incurred only by such Subsidiary.
SECTION 4.05. 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: (i) a Default shall
have occurred and be continuing (or would result therefrom); (ii) the
Company is not able to Incur an additional $1.00 of Indebtedness pursuant
to Section 4.03(a); or (iii) the aggregate amount of such Restricted
Payment and all other Restricted Payments since the Issue Date would exceed
the sum of: (A) 25% of the Consolidated Net Income accrued during the
period (treated as one
Page 39
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 to a Subsidiary of the Company and other
than an issuance or sale 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); (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 or exchange); (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, 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; and (E) $15 million.
(b) The provisions of Section 4.05(a) shall not prohibit: (i)
any purchase or redemption of Capital Stock or Subordinated Obligations of
the Company made by exchange 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); PROVIDED, HOWEVER, that (A) such purchase or redemption
shall be excluded in the calculation of the amount of Restricted Payments
and (B) the Net Cash Proceeds from such
Page 40
sale shall be excluded from the
calculation of amounts under clause (iii)(B) of Section 4.05(a); (ii) 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 Section 4.03;
PROVIDED, HOWEVER, that such purchase, repurchase, redemption, defeasance
or other acquisition or retirement for value shall be excluded in 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 this Section 4.05;
PROVIDED, HOWEVER, that at the time of payment of such dividend, no other
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 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,
HOWEVER, that such purchase shall be excluded in the calculation of the
amount of Restricted Payments; (v) the exercise or conversion of an option,
warrant or other security convertible or exchangeable for an equity
security of a Strategic Alliance Client in connection with a substantially
simultaneous sale or other disposition by the Company or a Restricted
Subsidiary of such equity security; PROVIDED, HOWEVER, that the exercise
price or other consideration paid by the Company or a Restricted Subsidiary
in connection with such exercise or conversion shall be excluded from the
calculation of the amount of Restricted Payments.
SECTION 4.06. 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
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) 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; (ii) any encumbrance or restriction with respect to a
Page 41
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 (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
4.06 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 no less favorable to the Securityholders
than encumbrances and restrictions with respect to such Restricted
Subsidiary contained in the agreements referred to in clauses (i) or (ii)
of this Section 4.06, 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; and (vi) 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.
SECTION 4.07. LIMITATION ON SALES OF ASSETS AND SUBSIDIARY
STOCK. (a) The Company shall not, and shall not permit any Restricted
Subsidiary to, directly or indirectly, consummate any Asset Disposition
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 all 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 and (ii) an amount equal to 100%
of the Net Available Cash from such Asset Disposition is applied by the
Company (or such Restricted
Page 42
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 any Indebtedness
of a Restricted Subsidiary, as the case may be (other than in either case
Indebtedness owed to the Company or an Affiliate of the Company), in either
case within 180 days from the later of the date of such Asset Disposition
or the receipt of such Net Available Cash; (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 of the Securities (and to
holders of other Senior Indebtedness designated by the Company) to purchase
Securities (and such other Senior Indebtedness) pursuant to and subject to
the conditions contained in this Section 4.07; and (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 (other than any Disqualified Stock) of the
Company (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 clause (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, 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 Section 4.07(a), the
Company and the Restricted Subsidiaries shall not be required to apply any
Net Available Cash in accordance with this Section 4.07(a) except to the
extent that the aggregate Net Available Cash from all Asset Dispositions
which are not applied in accordance with this paragraph exceeds $10
million. Pending application of Net Available Cash pursuant to this Section
4.07(a), such Net Available Cash shall be invested in Temporary Cash
Investments.
For the purposes of this Section 4.07(a), the following are
deemed to be cash or cash equivalents: (x) the assumption of Indebtedness
of the Company or any Restricted
Page 43
Subsidiary, and the release of the Company
and its continuing Restricted Subsidiaries from all liability on such
Indebtedness, in connection with such Asset Disposition and (y) securities
received by the Company or any Restricted Subsidiary from the transferee
that are promptly converted by the Company or such Restricted Subsidiary
into cash.
(b) In the event of an Asset Disposition that requires the
purchase of the Securities (and other Senior Indebtedness) pursuant to
Section 4.07(a)(ii)(B) above, the Company will be required to purchase
Securities tendered pursuant to an offer (the "Offer") by the Company for
the Securities (and other Senior Indebtedness) at a purchase price of 100%
of their principal amount (without premium) 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 Section 4.07. If the aggregate
purchase price of Securities (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 required to apply the remaining Net
Available Cash in accordance with Section 4.07(a)(ii)(C). The Company shall
not be required to make such an offer to purchase Securities (and other
Senior Indebtedness) pursuant to this Section 4.07 if the Net Available
Cash available therefor is less than $10 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) (1) Promptly, and in any event within 10 days after the
Company becomes obligated to make an Offer, the Company shall be obligated
to deliver to the Trustee and send, by first-class mail to each Holder, a
written notice stating that the Holder may elect to have his Securities
purchased by the Company either in whole or in part (subject to
prorationing as hereinafter described in the event the Offer is
oversubscribed) in integral multiples of $1,000 of principal amount, at the
applicable purchase price. The notice shall specify a purchase date not
less than 30 days nor more than 60 days after the date of such notice (the
"Purchase Date") and shall contain such information concerning the business
of the Company which the Company in good faith believes will enable such
Holders to make an informed decision (which at a minimum will include
(i) the
Page 44
most recently filed Annual Report on Form 10-K (including audited
consolidated financial statements) of the Company, the most recent
subsequently filed Quarterly Report on Form 10-Q and any Current Report on
Form 8-K of the Company filed subsequent to such Quarterly Report, other
than Current Reports describing Asset Dispositions otherwise described in
the offering materials (or corresponding successor reports), (ii) a
description of material developments in the Company's business subsequent
to the date of the latest of such Reports, and (iii) if material,
appropriate pro forma financial information) and all instructions and
materials necessary to tender Securities pursuant to the Offer, together
with the information contained in clause (3).
(2) Not later than the date upon which written notice of an
Offer is delivered to the Trustee as provided below, the Company shall
deliver to the Trustee an Officers' Certificate as to (i) the amount of the
Offer (the "Offer Amount"), (ii) the allocation of the Net Available Cash
from the Asset Dispositions pursuant to which such Offer is being made and
(iii) the compliance of such allocation with the provisions of
Section 4.07(a). On such date, the Company shall also irrevocably deposit
with the Trustee or with a Paying Agent (or, if the Company is acting as
its own Paying Agent, segregate and hold in trust) in cash an amount equal
to the Offer Amount to be held for payment in accordance with the
provisions of this Section. Upon the expiration of the period for which
the Offer remains open (the "Offer Period"), the Company shall deliver to
the Trustee for cancellation the Securities or portions thereof which have
been properly tendered to and are to be accepted by the Company. The
Trustee shall, on the Purchase Date, mail or deliver payment to each
tendering Holder in the amount of the purchase price. In the event that
the aggregate purchase price of the Securities delivered by the Company to
the Trustee is less than the Offer Amount, the Trustee shall deliver the
excess to the Company immediately after the expiration of the Offer Period
for application in accordance with this Section.
(3) Holders electing to have a Security purchased will be
required to surrender the Security, with an appropriate form duly
completed, to the Company at the address specified in the notice at least
three Business Days prior to the Purchase Date. Holders will be entitled
to withdraw their election if the Trustee or the Company receives not later
than one Business Day prior to the Purchase Date, a
Page 45
telegram, facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of the Security which was delivered by the Holder for purchase by
the Company and a statement that such ▇▇▇▇▇▇ is withdrawing his election to
have such Security purchased. If at the expiration of the Offer Period the
aggregate principal amount of Securities surrendered by Holders exceeds the
Offer Amount, the Company shall select the Securities to be purchased on a
pro rata basis (with such adjustments as may be deemed appropriate by the
Company so that only Securities in denominations of $1,000, or integral
multiples thereof, shall be purchased). Holders whose Securities are
purchased only in part will be issued new Securities equal in principal
amount to the unpurchased portion of the Securities surrendered.
(4) At the time the Company delivers Securities to the Trustee
which are to be accepted for purchase, the Company will also deliver an
Officers' Certificate stating that such Securities are to be accepted by
the Company pursuant to and in accordance with the terms of this Section
and confirming that the Company has complied with all the provisions of
this Section 4.07. A Security shall be deemed to have been accepted for
purchase at the time the Trustee, directly or through an agent, mails or
delivers payment therefor to the surrendering Holder.
(d) 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 Securities
pursuant to this Section. To the extent that the provisions of any
securities laws or regulations conflict with provisions of this Section,
the Company shall comply with the applicable securities laws and
regulations and shall not be deemed to have breached its obligations under
this Section by virtue thereof.
SECTION 4.08. LIMITATION ON AFFILIATE TRANSACTIONS. (a) 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 (1) are no less favorable
to the Company or such Restricted Subsidiary than those that could be
Page 46
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 having no personal stake in such Affiliate Transaction and (3) if
such Affiliate Transaction involves an amount in excess of $10.0 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.
(b) The provisions of Section 4.08(a) shall not prohibit (i) any
Restricted Payment permitted to be made pursuant to Section 4.05 or any
Permitted Investment, (ii) any issuance of securities, or other payments,
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, (iii) the grant of stock options
or similar rights to employees and directors of the Company pursuant to
plans approved by the Board of Directors, (iv) loans or advances to
employees in the ordinary course of business in accordance with the past
practices of the Company or its Restricted Subsidiaries, but in any event
not to exceed $10 million in aggregate principal amount outstanding at any
one time, (v) the payment of reasonable fees to directors of the Company
and its Restricted Subsidiaries who are not employees of the Company or its
Restricted Subsidiaries, (vi) any Affiliate Transaction between the Company
and a Consolidated Restricted Subsidiary or between Consolidated Restricted
Subsidiaries and (vii) transactions pursuant to any agreement as in
existence as of the Issue Date between the Company or its Restricted
Subsidiaries and Continental Grain or one of its Subsidiaries.
SECTION 4.09. CHANGE OF CONTROL. (a) Upon a Change of Control,
each Holder shall have the right to require that the Company repurchase
such ▇▇▇▇▇▇'s Securities 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),
in accordance with the terms contemplated in Section 4.09(b).
Page 47
(b) Within 30 days following any Change of Control, the Company
shall mail a notice to each Holder with a copy to the Trustee stating:
(1) that a Change of Control has occurred and that such Holder
has the right to require the Company to purchase such Holder's
Securities 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);
(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);
(3) the repurchase date (which shall be no earlier than 30 days
nor later than 60 days from the date such notice is mailed); and
(4) the instructions determined by the Company, consistent with
this Section, that a Holder must follow in order to have its
Securities purchased.
(c) Holders electing to have a Security purchased will be
required to surrender the Security, with an appropriate form duly
completed, to the Company at the address specified in the notice at least
three Business Days prior to the purchase date. Holders will be entitled
to withdraw their election if the Trustee or the Company receives not later
than one Business Day prior to the purchase date, a telegram, facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of the Security which was delivered by the Holder for purchase by
the Company and a statement that such ▇▇▇▇▇▇ is withdrawing his election to
have such Security purchased.
(d) On the purchase date, all Securities purchased by the
Company under this Section shall be delivered by the Trustee for
cancellation, and the Company shall pay the purchase price plus accrued and
unpaid interest, if any, to the Holders entitled thereto.
Page 48
(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 Securities
pursuant to this Section. To the extent that the provisions of any
securities laws or regulations conflict with provisions of this Section,
the Company shall comply with the applicable securities laws and
regulations and shall not be deemed to have breached its obligations under
this Section by virtue thereof.
SECTION 4.10. 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 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 Permitted Liens,
without effectively providing that the Securities shall be secured equally
and ratably with (or prior to) the obligations so secured for so long as
such obligations are so secured.
SECTION 4.11. LIMITATION ON INVESTMENT COMPANY STATUS. The
Company shall not take any action, or otherwise permit to exist any
circumstance, that would require the Company to register as an "investment
company" under the Investment Company Act of 1940, as amended.
SECTION 4.12. COMPLIANCE CERTIFICATE. The Company shall deliver
to the Trustee within 120 days after the end of each fiscal year of the
Company an Officers' Certificate stating that in the course of the
performance by the signers of their duties as Officers of the Company they
would normally have knowledge of any Default and whether or not the signers
know of any Default that occurred during such period. If they do, the
certificate shall describe the Default, its status and what action the
Company is taking or proposes to take with respect thereto. The Company
also shall comply with TIA 314(a)(4).
SECTION 4.13. FURTHER INSTRUMENTS AND ACTS. Upon request of the
Trustee, the Company will execute and deliver such further instruments and
do such further acts as may be reasonably necessary or proper to carry out
more effectively the purpose of this Indenture.
Page 49
SECTION 4.14. CERTAIN COVENANTS SUSPENDED. The covenants set
forth above in this Article 4 will be applicable to the Company, except
that in the event that at any time (i) the ratings assigned to the
Securities by both of the Rating Agencies are Investment Grade Ratings and
(ii) no Default has occurred and is continuing under this Indenture, the
Company and its Restricted Subsidiaries will no longer be subject to the
provisions of Sections 4.03, 4.04, 4.05, 4.06, 4.07 and 4.08 and clause
(iii) of Section 5.01 (the termination of such Sections being herein called
the "Covenant Termination"). The Company will deliver to the Trustee an
Officer's Certificate confirming the occurrence of the Covenant
Termination.
ARTICLE 5
SUCCESSOR COMPANY
SECTION 5.01. WHEN COMPANY MAY MERGE OR TRANSFER ASSETS. 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 hereto, executed and
delivered to the Trustee, in form satisfactory to the Trustee, all the
obligations of the Company under the Securities and this Indenture;
(ii) immediately after giving effect to such transaction (and
treating any Indebtedness which becomes an obligation of the Successor
Company or any Subsidiary as a result of such transaction as having
been Incurred by the Successor Company or such Subsidiary at the time
of such transaction), no 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 Section 4.03(a);
Page 50
(iv) immediately after giving effect to such transaction, the
Successor Company shall have Consolidated Net Worth in an amount which
is not less than the Consolidated Net Worth of the Company immediately
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 this 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 this Indenture, but the predecessor Company in
the case of a lease of all or substantially all its assets shall not be
released from the obligation to pay the principal of and interest on the
Securities.
Notwithstanding the foregoing clauses (ii), (iii) and (iv), any
Restricted Subsidiary may consolidate with, merge into or transfer all or
part of its properties and assets to the Company.
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01. EVENTS OF DEFAULT. An "Event of Default" occurs
if:
(1) the Company defaults in any payment of interest on any
Security when the same becomes due and payable, and such default
continues for a period of 30 days;
(2) the Company (i) defaults in the payment of the principal of
any Security when the same becomes due and payable at its Stated
Maturity, upon redemption, upon declaration or otherwise, or
(ii) fails to redeem or purchase Securities when required pursuant to
this Indenture or the Securities;
(3) the Company fails to comply with Section 5.01;
Page 51
(4) the Company fails to comply with Section 4.02, 4.03, 4.04,
4.05, 4.06, 4.07, 4.08, 4.09, 4.10 or 4.11 (other than a failure to
purchase Securities when required under Section 4.07 or 4.09) and such
failure continues for 30 days after the notice specified below;
(5) the Company fails to comply with any of its agreements in the
Securities or this Indenture (other than those referred to in (1),
(2), (3) or (4) above) and such failure continues for 60 days after
the notice specified below;
(6) Indebtedness of the Company or any Significant 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 $10,000,000
or its foreign currency equivalent at the time;
(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
any substantial part of its property; or
(D) makes a general assignment for the benefit of its
creditors;
or takes any comparable action under any foreign laws relating to
insolvency;
(8) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(A) is for relief against the Company or any Significant
Subsidiary in an involuntary case;
Page 52
(B) appoints a Custodian of the Company or any Significant
Subsidiary or for any substantial part of its property; or
(C) orders the winding up or liquidation of the Company or
any Significant Subsidiary;
or any similar relief is granted under any foreign laws and the order
or decree remains unstayed and in effect for 60 days; or
(9) except for the Wellington Litigation (as defined in the
Prospectus dated August 14, 1996 relating to the offering of the
Securities), any judgment or decree for the payment of money in excess
of $10,000,000 or its foreign currency equivalent at the time is
entered against the Company or any Significant Subsidiary and is not
discharged or satisfied and either (A) an enforcement proceeding has
been commenced by any creditor upon such judgment or decree or
(B) there is a period of 60 days following the entry of such judgment
or decree during which such judgment or decree is not discharged,
satisfied, waived or the execution thereof stayed.
The foregoing will constitute Events of Default whatever the
reason for any such Event of Default and whether it is voluntary or
involuntary or is effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body.
The term "Bankruptcy Law" means Title 11, UNITED STATES CODE, or
any similar Federal or state law for the relief of debtors. The term
"Custodian" means any receiver, trustee, assignee, liquidator, custodian or
similar official under any Bankruptcy Law.
A Default under clause (4), (5) or (9) of this Section 6.01 is
not an Event of Default until the Trustee or the Holders of at least 25% in
principal amount of the Securities notify the Company of the Default and
the Company does not cure such Default within the time specified after
receipt of such notice. Such notice must specify the Default, demand that
it be remedied and state that such notice is a "Notice of Default".
Page 53
The Company shall deliver to the Trustee, within 30 days after
the occurrence thereof, written notice in the form of an Officers'
Certificate of any Event of Default under clause (6) of this Section 6.01
and any event which with the giving of notice or the lapse of time would
become an Event of Default under clause (4), (5) or (9) of this Section
6.01, its status and what action the Company is taking or proposes to take
with respect thereto.
SECTION 6.02. ACCELERATION. If an Event of Default (other than
an Event of Default specified in Section 6.01(7) or (8) with respect to the
Company) occurs and is continuing, the Trustee by notice to the Company, or
the Holders of at least 25% in principal amount of the Securities by notice
to the Company and the Trustee, may declare the principal of and accrued
but unpaid interest on all the Securities to be due and payable. Upon such
a declaration, such principal and interest shall be due and payable
immediately. If an Event of Default specified in Section 6.01(7) or (8)
with respect to the Company occurs and is continuing, the principal of and
interest on all the Securities shall IPSO FACTO become and be immediately
due and payable without any declaration or other act on the part of the
Trustee or any Securityholders. The Holders of a majority in principal
amount of the Securities by notice to the Trustee may rescind an
acceleration and its consequences if the rescission would not conflict with
any judgment or decree and if all existing Events of Default have been
cured or waived except nonpayment of principal or interest that has become
due solely because of acceleration. No such rescission shall affect any
subsequent Default or impair any right consequent thereto.
SECTION 6.03. OTHER REMEDIES. If an Event of Default occurs and
is continuing, the Trustee may pursue any available remedy to collect the
payment of principal of or interest on the Securities or to enforce the
performance of any provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not possess
any of the Securities or does not produce any of them in the proceeding. A
delay or omission by the Trustee or any Securityholder 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.
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SECTION 6.04. WAIVER OF PAST DEFAULTS. The Holders of a
majority in principal amount of the Securities by notice to the Trustee may
waive an existing Default and its consequences except (i) a Default in the
payment of the principal of or interest on a Security or (ii) a Default in
respect of a provision that under Section 9.02 cannot be amended without
the consent of each Securityholder affected. When a Default is waived, it
is deemed cured, but no such waiver shall extend to any subsequent or other
Default or impair any consequent right.
SECTION 6.05. CONTROL BY MAJORITY. The Holders of a majority in
principal amount of the Securities may 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. However, the
Trustee may refuse to follow any direction that conflicts with law or this
Indenture or, subject to Section 7.01, that the Trustee determines is
unduly prejudicial to the rights of other Securityholders or would involve
the Trustee in personal liability; PROVIDED, HOWEVER, that the Trustee may
take any other action deemed proper by the Trustee that is not inconsistent
with such direction. Prior to taking any action hereunder, the Trustee
shall be entitled to indemnification satisfactory to it in its sole
discretion against all losses and expenses caused by taking or not taking
such action.
SECTION 6.06. LIMITATION ON SUITS. A Securityholder may not
pursue any remedy with respect to this Indenture or the Securities unless:
(1) the Holder gives to the Trustee written notice stating that
an Event of Default is continuing;
(2) the Holders of at least 25% in principal amount of the
Securities make a written request to the Trustee to pursue the remedy;
(3) such Holder or Holders offer to the Trustee reasonable
security or indemnity 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 of security or indemnity;
and
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(5) the Holders of a majority in principal amount of the
Securities do not give the Trustee a direction inconsistent with the
request during such 60-day period.
A Securityholder may not use this Indenture to prejudice the
rights of another Securityholder or to obtain a preference or priority over
another Securityholder.
SECTION 6.07. RIGHTS OF HOLDERS TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture, the right of any
Holder to receive payment of principal of and interest on the Securities
held by such Holder, on or after the respective due dates expressed in the
Securities, or to bring suit for the enforcement of any such payment on or
after such respective dates, shall not be impaired or affected without the
consent of such Holder.
SECTION 6.08. COLLECTION SUIT BY TRUSTEE. If an Event of
Default specified in Section 6.01(1) or (2) occurs and is continuing, the
Trustee may recover judgment in its own name and as trustee of an express
trust against the Company for the whole amount then due and owing (together
with interest on any unpaid interest to the extent lawful) and the amounts
provided for in Section 7.07.
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 and the
Securityholders allowed in any judicial proceedings relative to the
Company, its creditors or its property and, unless prohibited by law or
applicable regulations, may vote on behalf of the Holders in any election
of a trustee in bankruptcy or other Person performing similar functions,
and any Custodian in any such judicial proceeding is hereby authorized by
each Holder to make payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the
Holders, to pay to the Trustee any amount due it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its
agents and its counsel, and any other amounts due the Trustee under Section
7.07.
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SECTION 6.10. PRIORITIES. If the Trustee collects any money or
property pursuant to this Article 6, it shall pay out the money or property
in the following order:
FIRST: to the Trustee for amounts due under Section 7.07;
SECOND: to Securityholders for amounts due and unpaid on the
Securities for principal and interest, ratably, without preference or
priority of any kind, according to the amounts due and payable on the
Securities for principal and interest, respectively; and
THIRD: to the Company.
The Trustee may fix a record date and payment date for any
payment to Securityholders pursuant to this Section. At least 15 days
before such record date, the Company shall mail to each Securityholder and
the Trustee a notice that states the record date, the payment date and
amount to be paid.
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
merits and good faith of the claims or defenses made by the party litigant.
This Section does not apply to a suit by the Trustee, a suit by a Holder
pursuant to Section 6.07 or a suit by Holders of more than 10% in principal
amount of the Securities.
SECTION 6.12. WAIVER OF STAY OR EXTENSION LAWS. The Company (to
the extent it may lawfully do so) shall not at any time insist upon, or
plead, or in any manner whatsoever claim or take the benefit or advantage
of, any stay or extension law wherever enacted, now or at any time
hereafter in force, which may affect the covenants or the performance of
this Indenture; and the Company (to the extent that it may lawfully do so)
hereby expressly waives all benefit or advantage of any such law, and shall
not hinder, delay or impede the execution of any power herein granted to the
Page 57
Trustee, but shall suffer and permit the execution of every such power
as though no such law had been enacted.
ARTICLE 7
TRUSTEE
SECTION 7.01. DUTIES OF TRUSTEE. (a) If an Event of Default
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 Person would exercise or use
under the circumstances in the conduct of such Person's own affairs.
(b) Except during the continuance of an Event of Default:
(1) the Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture and no implied
covenants or obligations shall be read into this Indenture against the
Trustee; and
(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. However, the Trustee shall examine the
certificates and opinions to determine whether or not they conform to
the requirements of this Indenture.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own wilful
misconduct, except that:
(1) this paragraph does not limit the effect of paragraph (b) of
this Section;
(2) the Trustee shall not be liable for any error of judgment
made in good faith by a Trust Officer unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts; and
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(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 Section 6.05.
(d) Every provision of this Indenture that in any way relates to
the Trustee is subject to paragraphs (a), (b) and (c) of this Section.
(e) 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.
(f) Money held in trust by the Trustee need not be segregated
from other funds except to the extent required by law.
(g) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers, if it shall have reasonable grounds to believe that
repayment of such funds or adequate indemnity against such risk or
liability is not reasonably assured to it.
(h) Every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section and to the provisions of the TIA.
SECTION 7.02. RIGHTS OF TRUSTEE. (a) 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.
(b) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel. The Trustee
shall not be liable for any action it takes or omits to take in good faith
in reliance on the Officers' Certificate or Opinion of Counsel.
(c) The Trustee may act through agents.
(d) The Trustee shall not be liable for any action it takes or
omits to take in good faith which it believes to be authorized or within
its rights or powers;
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PROVIDED, HOWEVER, that the Trustee's conduct does not constitute wilful
misconduct or negligence.
(e) The Trustee may consult with nationally recognized counsel
with expertise in trust indenture matters, and the advice or opinion of
such counsel with respect to legal matters relating to this Indenture and
the Securities shall be full and complete authorization and protection from
liability in respect to any action taken, omitted or suffered by it
hereunder in good faith and in accordance with the advice or opinion of
such counsel.
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE. The Trustee in its
individual or any other capacity may become the owner or pledgee of
Securities and may otherwise deal with the Company or its Affiliates with
the same rights it would have if it were not Trustee. Any Paying Agent,
Registrar, co-registrar or co-paying agent may do the same with like
rights. However, the Trustee must comply with Sections 7.10 and 7.11.
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 Securities, it shall not be accountable for the
Company's use of the proceeds from the Securities, and it shall not be
responsible for any statement of the Company in the Indenture or in any
document issued in connection with the sale of the Securities or in the
Securities other than the Trustee's 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 Securityholder notice of the Default within 90 days after it occurs.
Except in the case of a Default in payment of principal of or interest on
any Security (including payments pursuant to the optional redemption
provisions or purchase provisions of such Security, if any), the Trustee
may withhold the notice if and so long as a committee of its Trust Officers
in good faith determines that withholding the notice is in the interests of
Securityholders.
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS. As promptly as
practicable after each May 15 beginning with the May following the date of
this Indenture, and in any event prior to July 15 in each year, the Trustee
shall mail to
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each Securityholder a brief report dated as of May 15 that complies with TIA
313(a) to the extent required thereunder. The Trustee also shall
comply with TIA 313(b).
A copy of each report at the time of its mailing to
Securityholders shall be filed with the SEC and each stock exchange (if
any) on which the Securities are listed. The Company shall notify promptly
the Trustee whenever the Securities become listed on any stock exchange and
of any delisting thereof.
SECTION 7.07. COMPENSATION AND INDEMNITY. The Company shall pay
to the Trustee from time to time reasonable compensation for its services.
The Trustee's compensation shall not be limited by any law on compensation
of a trustee of an express trust. The Company shall reimburse the Trustee
upon request for all reasonable out-of-pocket expenses incurred or made by
it, including costs of collection, in addition to the compensation for its
services in connection with its performance of its duties under this
Indenture. Such expenses shall include the reasonable compensation and
expenses, disbursements and advances of the Trustee's agents, counsel,
accountants and experts. The Company shall indemnify the Trustee against
any and all loss, liability or reasonable expense (including reasonable
attorneys' fees) incurred by it in connection with the administration of
this trust and the performance of its duties hereunder. The Trustee shall
notify the Company promptly of any claim for which it may seek indemnity.
Failure by the Trustee to so notify the Company shall not relieve the
Company of its obligations hereunder. The Company shall defend the claim
and the Trustee may have separate counsel but the fees and expenses of such
counsel shall be at the expense of the Trustee unless (i) the employment of
such counsel shall have been authorized in writing by the Company, (ii) the
Company shall not have employed counsel to have charge of the defense of
such action within 10 days after notice of commencement of the action, or
(iii) the Trustee shall have reasonably concluded that there may be
defenses available to it which are different from or additional to the
those available to the Company, in any of which events such fees and
expenses shall be paid by the Company. The Company shall not be liable for
any settlement of any claim or action except with its written consent,
which consent shall not be unreasonably withheld. The Company need not
reimburse any expense or
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indemnify against any loss, liability or expense incurred by the Trustee
through the Trustee's own wilful misconduct, negligence or bad faith.
To secure the Company's payment obligations in this Section, the
Trustee shall have a lien prior to the Securities on all money or property
held or collected by the Trustee other than money or property held in trust
to pay principal of and interest on particular Securities.
The Company's payment obligations pursuant to this Section shall
survive the discharge of this Indenture. When the Trustee incurs expenses
after the occurrence of a Default specified in Section 6.01(7) or (8) with
respect to the Company, the expenses are intended to constitute expenses of
administration under the Bankruptcy Law.
SECTION 7.08. REPLACEMENT OF TRUSTEE. The Trustee may resign at
any time by so notifying the Company. The Holders of a majority in
principal amount of the Securities may remove the Trustee by so notifying
the Trustee and the Company and may appoint a successor Trustee. The
Company shall remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or other public officer takes charge of the
Trustee or its property; or
(4) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns, is removed by the Company or by the
Holders of a majority in principal amount of the Securities and such
Holders do not reasonably promptly appoint a successor Trustee, or if a
vacancy exists in the office of Trustee for any reason (the Trustee in such
event being referred to herein as the retiring Trustee), the Company shall
promptly appoint a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and
the successor Trustee shall have all the rights, powers and duties of the
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Trustee under this Indenture. The successor Trustee shall mail a notice of
its succession to Securityholders. The retiring Trustee shall promptly
transfer all property held by it as Trustee to the successor Trustee,
subject to the lien provided for in Section 7.07.
If a successor Trustee does not take office within 60 days after
the retiring Trustee resigns or is removed, the retiring Trustee or the
Holders of 10% in principal amount of the Securities may petition any court
of competent jurisdiction for the appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any
Securityholder may petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor Trustee.
Notwithstanding the replacement of the Trustee pursuant to this
Section, the Company's obligations under Section 7.07 shall continue for
the benefit of the retiring Trustee.
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER. If the Trustee
consolidates with, merges or converts into, or transfers all or
substantially all its corporate trust business or assets to, another
corporation or banking association, the resulting, surviving or transferee
corporation without any further act shall be the successor Trustee.
In case at the time such successor or successors by merger,
conversion or consolidation to the Trustee shall succeed to the trusts
created by this Indenture any of the Securities shall have been
authenticated but not delivered, any such successor to the Trustee may
adopt the certificate of authentication of any predecessor trustee, and
deliver such Securities so authenticated; and in case at that time any of
the Securities shall not have been authenticated, any successor to the
Trustee may authenticate such Securities either in the name of any
predecessor hereunder or in the name of the successor to the Trustee; and
in all such cases such certificates shall have the full force which it is
anywhere in the Securities or in this Indenture provided that the
certificate of the Trustee shall have.
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION. The Trustee shall
at all times satisfy the requirements of TIA 310(a). The Trustee
shall have a combined capital and
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surplus of at least $50,000,000 as set
forth in its most recent published annual report of condition. The Trustee
shall comply with TIA 310(b); PROVIDED, HOWEVER, that there shall
be excluded from the operation of TIA 310(b)(1) any indenture or
indentures under which other securities or certificates of interest or
participation in other securities of the Company are outstanding if the
requirements for such exclusion set forth in TIA 310(b)(1) are
met.
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
The Trustee shall comply with TIA 311(a), excluding any creditor
relationship listed in TIA 311(b). A Trustee who has resigned or
been removed shall be subject to TIA 311(a) to the extent
indicated.
ARTICLE 8
DISCHARGE OF INDENTURE; DEFEASANCE
SECTION 8.01. DISCHARGE OF LIABILITY ON SECURITIES; DEFEASANCE.
(a) When (i) the Company delivers to the Trustee all outstanding
Securities (other than Securities replaced pursuant to Section 2.07) for
cancellation or (ii) all outstanding Securities have become due and
payable, whether at maturity or as a result of the mailing of a notice of
redemption pursuant to Article 3 hereof and the Company irrevocably
deposits with the Trustee funds sufficient to pay at maturity or upon
redemption all outstanding Securities, including interest thereon to
maturity or such redemption date (other than Securities replaced pursuant
to Section 2.07), and if in either case the Company pays all other sums
payable hereunder by the Company, then this Indenture shall, subject to
Sections 8.01(c), cease to be of further effect. The Trustee shall
acknowledge satisfaction and discharge of this Indenture, other than those
surviving obligations set forth in Section 8.01((c), on demand of the
Company accompanied by an Officers' Certificate and an Opinion of Counsel
and at the cost and expense of the Company.
(b) Subject to Sections 8.01(c) and 8.02, the Company at any
time may terminate (i) all its obligations under the Securities and this
Indenture ("legal defeasance option") or (ii) its obligations under
Sections 4.02, 4.03, 4.04, 4.05, 4.06, 4.07, 4.08, 4.09, 4.10 and 4.11 and the
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operation of Section 6.01(6), 6.01(7) (with respect to Significant
Subsidiaries), 6.01(8) (with respect to Significant Subsidiaries) and
6.01(9) and the limitations contained in clauses (iii) and (iv) of Section
5.01 ("covenant defeasance option"). 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 Securities may not be accelerated because of an Event of Default. If
the Company exercises its covenant defeasance option, payment of the
Securities may not be accelerated because of an Event of Default specified
in 6.01(4), 6.01(6), 6.01(7) (with respect to Significant Subsidiaries),
6.01(8) (with respect to Significant Subsidiaries) and 6.01(9) or because
of the failure of the Company to comply with clause (iii) or (iv) of
Section 5.01.
Upon satisfaction of the conditions set forth herein and upon
request of the Company, the Trustee shall acknowledge in writing the
discharge of those obligations that the Company terminates.
(c) Notwithstanding clauses (a) and (b) above, the Company's
obligations in Sections 2.03, 2.04, 2.05, 2.06, 2.07, 7.07 and 7.08 and
this Article 8 shall survive until the Securities have been paid in full.
Thereafter, the Company's obligations in Sections 7.07, 8.04 and 8.05 shall
survive.
SECTION 8.02. CONDITIONS TO DEFEASANCE. The Company may
exercise its legal defeasance option or its covenant defeasance option only
if:
(1) the Company irrevocably deposits in trust with the Trustee
money or U.S. Government Obligations for the payment of principal of
and interest on the Securities to maturity or redemption, as the case
may be;
(2) the Company delivers to the Trustee a certificate from a
nationally recognized firm of independent accountants expressing their
opinion that the payments of principal and interest when due and
without reinvestment on the deposited U.S. Government Obligations plus
any deposited money without investment will provide cash at such times
and in such amounts as ▇▇▇▇
▇▇▇▇ 65
be sufficient to pay principal and interest when due on all the Securities
to maturity or redemption, as the case may be;
(3) 123 days pass after the deposit is made and during the 123-
day period no Default specified in Section 6.01(7) or (8) with respect
to the Company occurs which is continuing at the end of the period;
(4) the deposit does not constitute a default under any other
agreement binding on the Company;
(5) the Company delivers to the Trustee an Opinion of Counsel to
the effect that the trust resulting from the deposit does not
constitute, or is qualified as, a regulated investment company under
the Investment Company Act of 1940;
(6) in the case of the legal defeasance option, the Company shall
have delivered to the Trustee an Opinion of Counsel stating that
(i) the Company has received from, or there has been published by, the
Internal Revenue Service a ruling, or (ii) since the date of this
Indenture there has been a change in the applicable Federal income tax
law, in either case to the effect that, and based thereon such Opinion
of Counsel shall confirm that, the Securityholders will not recognize
income, gain or loss for Federal income tax purposes as a result of
such defeasance and will be subject to Federal income tax on the same
amounts, in the same manner and at the same times as would have been
the case if such defeasance had not occurred;
(7) in the case of the covenant defeasance option, the Company
shall have delivered to the Trustee an Opinion of Counsel to the
effect that the Securityholders 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; and
(8) the Company delivers to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that all conditions precedent
to the defeasance and discharge of the Securities as contemplated by
this Article 8 have been complied with.
Before or after a deposit, the Company may make arrangements
satisfactory to the Trustee for the redemption of Securities at a future
date in accordance with Article 3.
SECTION 8.03. APPLICATION OF TRUST MONEY. The Trustee shall
hold in trust money or U.S. Government Obligations deposited with it
pursuant to this Article 8. It shall apply the deposited money and the
money from U.S. Government Obligations in accordance with this Indenture to
the payment of principal of and interest on the Securities.
SECTION 8.04. REPAYMENT TO COMPANY. The Trustee and the Paying
Agent shall promptly turn over to the Company upon request any excess money
or securities held by them at any time.
Subject to any applicable abandoned property law and the right of
the Trustee to publish or mail notice to Securityholders prior to making
such payment to the Company, the Trustee and the Paying Agent shall pay to
the Company upon request any money held by them for the payment of
principal or interest that remains unclaimed for two years, and,
thereafter, Securityholders entitled to the money must look to the Company
for payment as general creditors.
SECTION 8.05. INDEMNITY FOR GOVERNMENT OBLIGATIONS. The Company
shall pay and shall indemnify the Trustee against any tax, fee or other
charge imposed on or assessed against deposited U.S. Government Obligations
or the principal and interest received on such U.S. Government Obligations.
SECTION 8.06. REINSTATEMENT. If the Trustee is unable to apply
any money or U.S. Government Obligations in accordance with this Article 8
by reason of any legal proceeding or by reason of any order or judgment of
any court or governmental authority enjoining, restraining or otherwise
prohibiting such application, the Company's obligations under this
Indenture and the Securities shall be revived and reinstated as though no
deposit had occurred pursuant to this Article 8 until such time as the
Trustee or Paying Agent is permitted to apply all such money or U.S.
Government Obligations in accordance with this Article 8; PROVIDED,
HOWEVER, that, if the Company has made any payment
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of interest on or principal of any Securities because of the reinstatement of
its obligations, the Company shall be subrogated to the rights of the Holders
of such Securities to receive such payment from the money or U.S.
Government Obligations held by the Trustee or Paying Agent.
ARTICLE 9
AMENDMENTS
SECTION 9.01. WITHOUT CONSENT OF HOLDERS. The Company, when
authorized by a resolution of its Board of Directors, and the Trustee may
amend this Indenture or the Securities without notice to or consent of any
Securityholder:
(1) to cure any ambiguity, omission, defect or inconsistency;
(2) to comply with Article 5;
(3) to provide for uncertificated Securities in addition to or in
place of certificated Securities; PROVIDED, HOWEVER, that the
uncertificated Securities are issued in registered form for purposes
of Section 163(f) of the Code or in a manner such that the
uncertificated Securities are described in Section 163(f)(2)(B) of the
Code;
(4) to add guarantees with respect to the Securities or to secure
the Securities;
(5) to add to the covenants of the Company for the benefit of the
Holders or to surrender any right or power herein conferred upon the
Company;
(6) to comply with any requirements of the SEC in connection with
qualifying this Indenture under the TIA; or
(7) to make any change that does not adversely affect the rights
of any Securityholder.
After an amendment under this Section becomes effective, the
Company shall mail to Securityholders a notice briefly describing such
amendment. The failure to
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give such notice to all Securityholders, or any defect therein, shall not
impair or affect the validity of an amendment under this Section.
SECTION 9.02. WITH CONSENT OF HOLDERS. The Company, when
authorized by a resolution of its Board of Directors, and the Trustee may
amend this Indenture or the Securities without notice to any Securityholder
but with the written consent of the Holders of at least a majority in
principal amount of the Securities. However, without the consent of each
Securityholder affected, an amendment may not:
(1) reduce the amount of Securities whose Holders must consent to
an amendment;
(2) reduce the rate of or extend the time for payment of interest
on any Security;
(3) reduce the principal of or extend the Stated Maturity of any
Security;
(4) reduce the premium payable upon the redemption of any
Security or change the time at which any Security may be redeemed in
accordance with Article 3;
(5) make any Security payable in money other than that stated in
the Security; or
(6) make any change in Section 6.04 or 6.07 or the second
sentence of this Section.
It shall not be necessary for the consent of the Holders under
this Section to approve the particular form of any proposed amendment, but
it shall be sufficient if such consent approves the substance thereof.
After an amendment under this Section becomes effective, the
Company shall mail to Securityholders a notice briefly describing such
amendment. The failure to give such notice to all Securityholders, or any
defect therein, shall not impair or affect the validity of an amendment
under this Section.
SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT. Every
amendment to this Indenture or the Securities shall comply with the TIA as
then in effect.
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SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS
AND WAIVERS. A consent to an amendment or a waiver by a Holder of a
Security shall bind the Holder and every subsequent Holder of that Security
or portion of the Security that evidences the same debt as the consenting
Holder's Security, even if notation of the consent or waiver is not made on
the Security. However, any such Holder or subsequent Holder may revoke the
consent or waiver as to such Holder's Security or portion of the Security
if the Trustee receives the notice of revocation before the date the
amendment or waiver becomes effective. After an amendment or waiver
becomes effective, it shall bind every Securityholder.
The Company may, but shall not be obligated to, fix a record date
for the purpose of determining the Securityholders entitled to give their
consent or take any other action described above or required or permitted
to be taken pursuant to this Indenture. If a record date is fixed, then
notwithstanding the immediately preceding paragraph, those Persons who were
Securityholders at such record date (or their duly designated proxies), and
only those Persons, shall be entitled to give such consent or to revoke any
consent previously given or to take any such action, whether or not such
Persons continue to be Holders after such record date. No such consent
shall be valid or effective for more than 120 days after such record date.
SECTION 9.05. NOTATION ON OR EXCHANGE OF SECURITIES. If an
amendment changes the terms of a Security, the Trustee may require the
Holder of the Security to deliver it to the Trustee. The Trustee may place
an appropriate notation on the Security regarding the changed terms and
return it to the Holder. Alternatively, if the Company or the Trustee so
determines, the Company in exchange for the Security shall issue and the
Trustee shall authenticate a new Security that reflects the changed terms.
Failure to make the appropriate notation or to issue a new Security shall
not affect the validity of such amendment.
SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS. The Trustee shall
sign any amendment authorized pursuant to this Article 9 if the amendment
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
such amendment the Trustee shall be entitled to receive indemnity
reasonably satisfactory to it and to receive, and
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(subject to Section 7.01) shall be fully protected in relying upon, an
Officers' Certificate and an Opinion of Counsel stating that such amendment
is authorized or permitted by this Indenture.
SECTION 9.07. PAYMENT FOR CONSENT. Neither the Company nor any
Affiliate of the Company shall, directly or indirectly, pay or cause to be
paid any consideration, whether by way of interest, fee or otherwise, to
any Holder for or as an inducement to any consent, waiver or amendment of
any of the terms or provisions of this Indenture or the Securities unless
such consideration is offered to be paid to all Holders that so consent,
waive or agree to amend in the time frame set forth in solicitation
documents relating to such consent, waiver or agreement.
ARTICLE 10
MISCELLANEOUS
SECTION 10.01. 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 10.02. NOTICES. Any notice or communication shall be in
writing and delivered in person or mailed by first-class mail or sent by
facsimile transmission addressed as follows:
if to the Company:
ContiFinancial Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
Attention of Chief Counsel
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if to the Trustee:
The Chase Manhattan Bank
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇/9
Attention of Corporate Trust
Administration, 15th Floor
The Company or the Trustee by notice to the other may designate
additional or different addresses for subsequent notices or communications.
Any notice or communication mailed to a Securityholder shall be
mailed to the Securityholder at the Securityholder's address as it appears
on the registration books of the Registrar and shall be sufficiently given
if so mailed within the time prescribed.
Failure to mail a notice or communication to a Securityholder or
any defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication is mailed in the manner
provided above, it is duly given, whether or not the addressee receives it.
SECTION 10.03. COMMUNICATION BY HOLDERS WITH OTHER HOLDERS.
Securityholders may communicate pursuant to TIA 312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities. The Company, the Trustee, the Registrar and anyone else shall
have the protection of TIA 312(c).
SECTION 10.04. CERTIFICATE AND OPINION AS TO CONDITIONS
PRECEDENT. Upon any request or application by the Company to the Trustee
to take or refrain from taking any action under this Indenture, the Company
shall furnish to the Trustee:
(1) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee 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
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(2) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of such
counsel, all such conditions precedent have been complied with.
SECTION 10.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
Each certificate or opinion with respect to compliance with a covenant or
condition provided for in this Indenture shall include:
(1) a statement that the individual 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 individual, he has
made such examination or investigation as is necessary to enable him
to express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(4) a statement as to whether or not, in the opinion of such
individual, such covenant or condition has been complied with.
SECTION 10.06. WHEN SECURITIES DISREGARDED. In determining
whether the Holders of the required principal amount of Securities have
concurred in any direction, waiver or consent, Securities owned by the
Company or by any Person directly or indirectly controlling or controlled
by or under direct or indirect common control with the Company shall be
disregarded and deemed not to be outstanding, except that, for the purpose
of determining whether the Trustee shall be protected in relying on any
such direction, waiver or consent, only Securities which the Trustee knows
are so owned shall be so disregarded. Also, subject to the foregoing, only
Securities outstanding at the time shall be considered in any such
determination.
SECTION 10.07. RULES BY TRUSTEE, PAYING AGENT AND REGISTRAR.
The Trustee may make reasonable rules for action by or a meeting of
Securityholders. The Registrar and the Paying Agent may make reasonable
rules for their functions.
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SECTION 10.08. LEGAL HOLIDAYS. A "Legal Holiday" is a Saturday,
a Sunday 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, payment
shall be made on the next succeeding day that is not a Legal Holiday, and
no interest shall accrue for the intervening period. If a regular record
date is a Legal Holiday, the record date shall not be affected.
SECTION 10.09. GOVERNING LAW. This Indenture and the Securities
shall be governed by, and construed in accordance with, the laws of the
State of New York but without giving effect to applicable principles of
conflicts of law to the extent that the application of the laws of another
jurisdiction would be required thereby.
SECTION 10.10. NO RECOURSE AGAINST OTHERS. A director, officer,
employee or stockholder, as such, of the Company shall not have any
liability for any obligations of the Company under the Securities or this
Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. By accepting a Security, each
Securityholder shall waive and release all such liability. The waiver and
release shall be part of the consideration for the issue of the Securities.
SECTION 10.11. SUCCESSORS. All agreements of the Company in
this Indenture and the Securities shall bind its successors. All
agreements of the Trustee in this Indenture shall bind its successors.
SECTION 10.12. MULTIPLE ORIGINALS. The parties may sign any
number of copies of this Indenture. Each signed copy shall be an original,
but all of them together represent the same agreement. One signed copy is
enough to prove this Indenture.
SECTION 10.13. TABLE OF CONTENTS; HEADINGS. 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 intended to be
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considered a part hereof and shall not modify or restrict any of the terms or
provisions hereof.
IN WITNESS WHEREOF, the parties have caused this Indenture to be
duly executed as of the date first written above.
CONTIFINANCIAL CORPORATION,
by
/S/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: SENIOR VICE PRESIDENT
THE CHASE MANHATTAN BANK,
by
/S/ ▇▇▇▇ GENERALE
----------------------------
Name: ▇▇▇▇ GENERALE
Title: VICE PRESIDENT
[FORM OF FACE OF INITIAL SECURITY]
[Global Securities Legend]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION
("DTC"), NEW YORK, NEW YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION
OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED
IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR
TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR
TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE &
CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS
IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR
SUCH SUCCESSOR'S NOMINEE.
EXHIBIT A
[FORM OF FACE OF SECURITY]
CUSIP: ▇▇▇▇▇▇▇▇▇
No. $
8 3/8 % Senior Notes Due 2003
CONTIFINANCIAL CORPORATION, a Delaware corporation, promises to
pay to , or registered assigns, the principal sum
of Dollars on August 15, 2003.
Interest Payment Dates: February 15 and August 15.
Record Dates: February 1 and August 1.
Additional provisions of this Security are set forth on the other
side of this Security.
Dated:
CONTIFINANCIAL CORPORATION,
by
_______________________
President
_______________________
Secretary
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
THE CHASE MANHATTAN BANK,
as Trustee, certifies
that this is one of [Seal]
the Securities referred
to in the Indenture.
by
_____________________________
Authorized Signatory
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[FORM OF REVERSE SIDE OF SECURITY]
8 3/8 % Senior Note Due 2003
1. INTEREST
ContiFinancial Corporation, a Delaware corporation (such
corporation, and its successors and assigns under the Indenture hereinafter
referred to, being herein called the "Company"), promises to pay interest
on the principal amount of this Security at the rate per annum shown above.
The Company will pay interest semiannually on February 15 and August 15 of
each year, commencing February 15, 1997. Interest on the Securities will
accrue from the most recent date to which interest has been paid or, if no
interest has been paid, from August 19, 1996. 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 at the rate borne by the Securities plus 1%
per annum, and it shall pay interest on overdue installments of interest at
the same rate to the extent lawful.
2. METHOD OF PAYMENT
The Company will pay interest on the Securities (except defaulted
interest) to the Persons who are registered holders of Securities at the
close of business on the February 1 and August 1 next preceding the
interest payment date even if Securities are canceled after the record date
and on or before the interest payment date. Holders must surrender
Securities to a Paying Agent to collect principal payments. The Company
will pay principal and interest in money of the United States that at the
time of payment is legal tender for payment of public and private debts.
However, the Company may pay principal and interest by check payable in
such money. It may mail an interest check to a Holder's registered
address.
3. PAYING AGENT AND REGISTRAR
Initially, The Chase Manhattan Bank, a New York
banking corporation ("Trustee"), will act as Paying Agent and Registrar.
The Company may appoint and change any Paying Agent, Registrar or co-
registrar without notice. The Company or any of its domestically
incorporated Wholly Owned
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Subsidiaries may act as Paying Agent, Registrar or co-registrar.
4. INDENTURE
The Company issued the Securities under an Indenture dated as of
August 15, 1996 ("Indenture"), between the Company and the Trustee. The
terms of the Securities 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.C. 77aaa-77bbbb) as in effect on the date of the
Indenture (the "Act"). Terms defined in the Indenture and not defined
herein have the meanings ascribed thereto in the Indenture. The Securities
are subject to all such terms, and Securityholders are referred to the
Indenture and the Act for a statement of those terms.
The Securities are general unsecured obligations of the Company
limited to $300 million aggregate principal amount (subject to Section 2.07
of the Indenture). The Indenture contains certain covenants, including
covenants with respect to the following matters: (i) limitations on
Indebtedness; (ii) limitations on Indebtedness and Preferred Stock of
Restricted Subsidiaries; (iii) limitations on Liens; (iv) limitations on
Restricted Payments such as dividends, repurchases of the Company's or its
Subsidiaries' stock and repurchases of Subordinated Obligations; (v)
limitations on restrictions on distributions from Subsidiaries;
(vi) limitations on sales of assets and Subsidiary stock; and (vii)
limitations on merger and consolidation.
5. OPTIONAL REDEMPTION
The Securities will be redeemable as a whole or in part, at the
option of the Company, at any time or from time to time, at a redemption
price equal to the greater of (i) 100% of their principal amount and
(ii) the sum of the present values of the remaining scheduled payments of
principal and interest thereon discounted to the date of redemption on a
semiannual basis (assuming a 360-day year consisting of twelve 30-day
months) at the Treasury Yield plus 50 basis points, plus in each case
accrued interest to the date of redemption.
"Treasury Yield" means, with respect to any redemption date, the
rate per annum equal to the semiannual
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equivalent yield to maturity of the Comparable Treasury Issue, assuming a price
for the Comparable Treasury Issue (expressed as a percentage of its principal
amount) equal to the Comparable Treasury Price for such redemption date.
"Comparable Treasury Issue" means the United States Treasury
security selected by Independent Investment Bankers as having a maturity
comparable to the remaining term of the Securities that would be utilized,
at the time of selection and in accordance with customary financial
practice, in pricing new issues of corporate debt securities of comparable
maturity to the remaining term of the Securities. "Independent Investment
Bankers" means Bear, ▇▇▇▇▇▇▇ & Co. Inc. and CS First Boston Corporation or,
if such firms are unwilling or unable to select the Comparable Treasury
Issue, an independent investment banking institution of national standing
appointed by the Trustee.
"Comparable Treasury Price" means, with respect to any redemption
date, (i) the average of the bid and asked prices for the Comparable
Treasury Issue (expressed in each case as a percentage of its principal
amount) on the third business day preceding such redemption date, as set
forth in the daily statistical release (or any successor release) published
by the Federal Reserve Bank of New York and designated "Composite 3:30 p.m.
Quotations for U.S. Government Securities" or (ii) if such release (or any
successor release) is not published or does not contain such prices on such
business day, the average of the Reference Treasury Dealer Quotations for
such redemption date. "Reference Treasury Dealer Quotations" means, with
respect to each Reference Treasury Dealer and any redemption date, the
average, as determined by the Trustee, of the bid and asked prices for the
Comparable Treasury Issue (expressed in each case as a percentage of its
principal amount) quoted in writing to the Trustee by such Reference
Treasury Dealer at 5:00 p.m. on the third business day preceding such
redemption date.
"Reference Treasury Dealer" means each of Bear, ▇▇▇▇▇▇▇ & Co.
Inc., CS First Boston Corporation and UBS Securities LLC, and their
respective successors; PROVIDED, HOWEVER, that if any of the foregoing
shall cease to be a primary U.S. Government securities dealer in New York
City (a "Primary Treasury Dealer"), the Company shall substitute therefore
another Primary Treasury Dealer.
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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 Securities to be
redeemed at his registered address. Securities in denominations larger
than $1,000 may be redeemed in part but only in whole multiples of $1,000.
If money sufficient to pay the redemption price of and accrued interest on
all Securities (or portions thereof) to be redeemed on the redemption date
is deposited with the Paying Agent on or before the redemption date and
certain other conditions are satisfied, on and after such date interest
ceases to accrue on such Securities (or such portions thereof) called for
redemption.
7. PUT PROVISIONS
Upon a Change of Control, any Holder of Securities will have the
right to cause the Company to repurchase all or any part of the Securities
of such Holder at a repurchase price equal to 101% of the principal amount
of the Securities to be repurchased plus accrued interest to the date of
repurchase (subject to the right of holders of record on the relevant
record date to receive interest due on the relevant interest payment date)
as provided in, and subject to the terms of, the Indenture.
8. DENOMINATIONS; TRANSFER; EXCHANGE
The Securities are in registered form without coupons in
denominations of $1,000 and whole multiples of $1,000. A Holder may
transfer or exchange Securities in accordance with the Indenture. The
Registrar may require a Holder, among other things, to furnish appropriate
endorsements or transfer documents and to pay any taxes and fees required
by law or permitted by the Indenture. The Registrar need not register the
transfer of or exchange any Securities selected for redemption (except, in
the case of a Security to be redeemed in part, the portion of the Security
not to be redeemed) or any Securities for a period of 15 days before a
selection of Securities to be redeemed or 15 days before an interest
payment date.
9. PERSONS DEEMED OWNERS
The registered Holder of this Security may be treated as the
owner of it for all purposes.
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10. UNCLAIMED MONEY
If money for the payment of principal or interest remains
unclaimed for two years, the Trustee or Paying Agent shall pay the money
back to the Company at its request unless an abandoned property law
designates another Person. After any such payment, Holders entitled to the
money must look only to the Company and not to the Trustee for payment.
11. DISCHARGE AND DEFEASANCE
Subject to certain conditions, the Company at any time may
terminate some or all of its obligations under the Securities and the
Indenture if the Company deposits with the Trustee money or U.S. Government
Obligations for the payment of principal of and interest on the Securities
to redemption or maturity, as the case may be.
12. AMENDMENT, WAIVER
Subject to certain exceptions set forth in the Indenture, (i) the
Indenture or the Securities may be amended with the written consent of the
Holders of at least a majority in principal amount outstanding of the
Securities and (ii) any default or noncompliance with any provision may be
waived with the written consent of the Holders of a majority in principal
amount outstanding of the Securities. Subject to certain exceptions set
forth in the Indenture, without the consent of any Securityholder, the
Company and the Trustee may amend the Indenture or the Securities to cure
any ambiguity, omission, defect or inconsistency, or to comply with
Article 5 of the Indenture, or to provide for uncertificated Securities in
addition to or in place of certificated Securities, or to add guarantees
with respect to the Securities or to secure the Securities, or to add
additional covenants or surrender rights and powers conferred on the
Company, or to comply with any request of the SEC in connection with
qualifying the Indenture under the Act, or to make any change that does not
adversely affect the rights of any Securityholder.
13. DEFAULTS AND REMEDIES
Under the Indenture, Events of Default include (i) default for
30 days in payment of interest on the Securities; (ii) default in payment
of principal on the Securities at maturity, upon redemption pursuant to
para-
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graph 5 of the Securities, upon acceleration or otherwise, or failure
by the Company to redeem or purchase Securities when required;
(iii) failure by the Company to comply with other agreements in the
Indenture or the Securities, in certain cases subject to notice and lapse
of time; (iv) certain accelerations (including failure to pay within any
grace period after final maturity) of other Indebtedness of the Company if
the amount accelerated (or so unpaid) exceeds $10 million; (v) certain
events of bankruptcy or insolvency with respect to the Company and the
Significant Subsidiaries; and (vi) certain judgments or decrees for the
payment of money in excess of $10 million. If an Event of Default occurs
and is continuing, the Trustee or the Holders of at least 25% in principal
amount of the Securities may declare all the Securities to be due and
payable immediately. Certain events of bankruptcy or insolvency are Events
of Default which will result in the Securities being due and payable
immediately upon the occurrence of such Events of Default.
Securityholders may not enforce the Indenture or the Securities
except as provided in the Indenture. The Trustee may refuse to enforce the
Indenture or the Securities unless it receives reasonable indemnity or
security. Subject to certain limitations, Holders of a majority in
principal amount of the Securities may direct the Trustee in its exercise
of any trust or power. The Trustee may withhold from Securityholders
notice of any continuing Default (except a Default in payment of principal
or interest) if it determines that withholding notice is in the interest of
the Holders.
14. TRUSTEE DEALINGS WITH THE COMPANY
Subject to certain limitations imposed by the Act, the Trustee
under the Indenture, in its individual or any other capacity, may become
the owner or pledgee of Securities and may otherwise deal with and collect
obligations owed to it by the Company or its Affiliates and may otherwise
deal with the Company or its Affiliates with the same rights it would have
if it were not Trustee.
15. NO RECOURSE AGAINST OTHERS
A director, officer, employee or stockholder, as such, of the
Company or the Trustee shall not have any liability for any obligations of
the Company under the
Page 8
Securities or the Indenture or for any claim based
on, in respect of or by reason of such obligations or their creation. By
accepting a Security, each Securityholder waives and releases all such
liability. The waiver and release are part of the consideration for the
issue of the Securities.
16. AUTHENTICATION
This Security shall not be valid until an authorized signatory of
the Trustee (or an authenticating agent) manually signs the certificate of
authentication on the other side of this Security.
17. ABBREVIATIONS
Customary abbreviations may be used in the name of a
Securityholder or an assignee, such as TEN COM (=tenants in common), TEN
ENT (=tenants by the entireties), JT TEN (=joint tenants with rights of
survivorship and not as tenants in common), CUST (=custodian), and U/G/M/A
(=Uniform Gift to Minors Act).
18. CUSIP NUMBERS
Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures the Company has caused CUSIP
numbers to be printed on the Securities and has directed the Trustee to use
CUSIP numbers in notices of redemption as a convenience to Securityholders.
No representation is made as to the accuracy of such numbers either as
printed on the Securities or as contained in any notice of redemption and
reliance may be placed only on the other identification numbers placed
thereon.
19. GOVERNING LAW.
THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO
APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE
APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
THE COMPANY WILL FURNISH TO ANY SECURITYHOLDER UPON WRITTEN
REQUEST AND WITHOUT CHARGE TO THE SECURITYHOLDER A COPY OF THE INDENTURE
WHICH HAS IN IT THE TEXT OF THIS SECURITY IN LARGER TYPE. REQUESTS MAY BE
MADE TO:
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CONTIFINANCIAL CORPORATION, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇.
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______________________________________________________________________________
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint agent to transfer this
Security 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 other side of this Security.
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OPTION OF HOLDER TO ELECT PURCHASE
IF YOU WANT TO ELECT TO HAVE THIS SECURITY PURCHASED BY THE
COMPANY PURSUANT TO SECTION 4.07 OR 4.09 OF THE INDENTURE, CHECK THE BOX:
[ ]
If you want to elect to have only part of this Security
purchased by the Company pursuant to Section 4.07 or 4.09 of the Indenture,
state the amount:
$
Date: __________________ Your Signature: __________________
(Sign exactly as your name appears on the other
side of the Security)
Signature Guarantee:_______________________________________
(Signature must be guaranteed by amember firm of the
New York StockExchange or a commercial bank or trust
company)