EXHIBIT 4.2
EXECUTION COPY
DVI, INC.,
ISSUER
TO
U.S. BANK TRUST NATIONAL ASSOCIATION,
TRUSTEE
_________________________________
SECOND SUPPLEMENTAL INDENTURE
DATED AS OF DECEMBER 23, 1998
TO
DEBT SECURITIES INDENTURE
DATED AS OF JANUARY 27, 1997.
_________________________________
SECOND SUPPLEMENTAL INDENTURE, dated as of December 23, 1998, between
DVI, Inc., a Delaware corporation, and U.S. Bank Trust National Association
(formerly known as First Trust National Association), a national banking
association, trustee (the "Trustee") under the Debt Securities Indenture dated
as of January 27, 1997 (the "Indenture").
RECITALS
Section 902(7) of the Indenture permits supplements thereto to
establish the form or terms of Securities of any series as permitted by Sections
201 and 301; and
The Company wishes to establish the form and terms of the 9 7/8%
Senior Notes due 2004 (the "Notes") originally issued on December 23, 1998.
NOW THEREFORE, THIS SECOND SUPPLEMENTAL INDENTURE WITNESSETH:
ARTICLE ONE
THE NOTES
SECTION 1.01. Creation of the Debt Securities. In accordance with Section
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301 of the Indenture, the Company hereby creates the Notes as a series of its
Securities issued pursuant to the Indenture. The Notes shall be issued in an
aggregate principal amount initially limited to $55,000,000.
The Company may, subject to Article Three of this Second Supplemental
Indenture, issue Additional Notes having identical terms and conditions to the
Notes offered hereby. The Notes issued on the Closing Date and any Additional
Notes subsequently issued shall be treated as a single class for all purposes
under the Indenture.
SECTION 1.02. Form of the Debt Securities. The Notes shall be represented
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by a single fully-registered global note in book-entry form (the "Global Note")
which shall be deposited with, or on behalf of, The Depository Trust Company,
New York, New York ("DTC") and registered in the name of the nominee of DTC.
The Notes shall be in the form of Exhibit A attached hereto. So long as DTC, or
its nominee, is the registered owner of a Global Note, DTC or its nominee, as
the case may be, shall be considered the sole owner or Holder of the Notes
represented by such Global Note for all purposes under the Indenture. Ownership
of beneficial interests in the Global Notes shall be shown on, and transfers
thereof shall be effected only through, records maintained by DTC (with respect
to beneficial interests of participants or persons that hold interests through
participants) or by participants or persons that hold interests through
participants (with respect to beneficial interests of beneficial owners).
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Except as provided in this Section, owners of beneficial interests in
the Global Note will not have Notes registered in their names, will not receive
physical delivery of Notes in certificated form and will not be considered the
registered owner or Holder thereof under the Indenture for any purpose.
Notes in certificated form shall be transferred to beneficial owners
in exchange for their beneficial interests in the Global Note if (i) the DTC (A)
notifies the Company that it is no longer willing or able to continue to act as
depositary for the Global Note and the Company thereupon fails to appoint a
successor depository or (B) has ceased to be a clearing agency registered under
the Exchange Act, and, in each case, the Company fails to locate a qualified
successor within 90 days; (ii) there shall have occurred and be continuing an
Event of Default with respect to the Notes; or (iii) the Company, at its option,
notifies the Trustee in writing that it elects to cause issuance of the Notes in
certificated form.
SECTION 1.03. Terms and Conditions of the Debt Securities. The Notes
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shall be governed by all the terms and conditions of the Indenture, as
supplemented by this Second Supplemental Indenture, and in particular, the
following provisions shall be terms of the Notes:
(a) Redemption. The Notes shall be redeemable at the election of the
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Company, as a whole or from time to time in part, at any time on or after
February 1, 2002, on not less than 30 nor more than 60 days' prior notice
at the Redemption Prices (expressed as percentages of principal amount) set
forth below, together with accrued interest, if any, to the Redemption
Date, if redeemed during the 12-month period beginning on February 1 of the
years indicated below (subject to the right if Holders of record on the
relevant record date to receive interest due on an Interest Payment Date):
Year Redemption Price
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2002 102.821
2003 101.411
and thereafter at 100% of the principal amount, together with accrued
interest, if any, to the Redemption Date.
If less than all the Notes are to be redeemed, the particular Notes to
be redeemed shall be selected not more than 60 days prior to the Redemption
Date by the Trustee by such method as the Trustee deems fair and
appropriate.
(b) Payment of Principal and Interest. Settlement for the Notes shall
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be made in immediately available funds. Payment of the principal of (and
premium, if any) and interest on this Security shall be made by check
mailed to
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the address of the Person entitled thereto as such address shall appear on
the Security Register; provided that all payments with respect to
Securities represented in either global or certificated form, the Holders
of which have given wire transfer instructions at least five business days
prior to the applicable record date to the Company, will be made by wire
transfer of immediately available funds to the accounts of the holders
thereof. The Notes shall trade in the Same-Day Funds Settlement System of
the DTC until Maturity, and secondary market trading activity for the Notes
shall settle in immediately available funds.
(c) Applicability of Defeasance or Covenant Defeasance. The
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provisions of Article 14 of the Indenture shall apply to the Notes.
(d) Authentication of Additional Notes. At any time and from time to
----------------------------------
time after the execution and delivery of this Supplemental Indenture, the
Company may deliver Additional Notes executed by the Company to the Trustee
for authentication together with a Company Order for the authentication and
delivery of such Additional Notes directing the Trustee to authenticate the
Additional Notes and certifying that the issuance of such additional Notes
is in compliance with the Article Ten hereof and that all other conditions
precedent to the issuance of Notes contained herein have been fully
complied with, and the Trustee in accordance with such company Order shall
authenticate and deliver such Additional Notes.
ARTICLE TWO
DEFINITIONS
SECTION 201. For purposes of this Second Supplemental Indenture, all terms
used herein, unless otherwise defined herein, shall have the meanings assigned
to them in the Indenture.
SECTION 202.
"Acquired Debt" means Debt of a Person (a) existing at the time such
Person is merged with or into the Company or becomes a Subsidiary or (b)
assumed in connection with the acquisition of assets from such Person.
"Additional Notes" means the 9 7/8% Senior Notes due 2004 of the
Company originally issued at any time after the Closing Date under this
Second Supplemental Indenture (other than other Notes issued in exchange
for Outstanding Notes pursuant to the Indenture).
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"Asset Sale" means any sale, issuance, conveyance, transfer, lease or
other disposition (including, without limitation, by way of merger or
consolidation) (collectively, a "transfer") by the Company or a Restricted
Subsidiary, directly or indirectly, in one or a series of related
transactions, to any Person other than the Company or a Restricted
Subsidiary of (a) any Capital Stock of any Restricted Subsidiary, (b) all
or substantially all of the properties and assets of the Company and its
Restricted Subsidiaries representing a division or line of business, (c)
any other properties or assets of the Company or any Restricted Subsidiary,
other than transactions in the ordinary course of business or (d) any
Excess Spread Receivables. For the purposes of this definition, the term
"Asset Sale" does not include any transfer of properties or assets (i) that
is governed by the provisions of Article Eight of the Indenture, (ii)
between or among the Company and its Restricted Subsidiaries pursuant to
transactions that do not violate any other provision of the Indenture or
this Second Supplemental Indenture, (iii) to an Unrestricted Subsidiary, if
permitted under Section 302 hereof, or (iv) the gross proceeds of which do
not exceed $1 million for any particular item. For purposes of this
definition, the term "ordinary course of business" shall include, without
limitation, (x) dispositions of collateral acquired by the Company through
foreclosure or otherwise and (y) disposals of Receivables through
securitization, whole loan sales or other similar transactions.
"Average Life" means, as of the date of determination with respect to
any Debt or Disqualified Stock, the quotient obtained by dividing (a) the
sum of the products of (i) the number of years from the date of
determination to the date or dates of each successive scheduled principal
or liquidation value payment of such Debt or Disqualified Stock,
respectively, multiplied by (ii) the amount of each such principal or
liquidation value payment by (b) the sum of all such principal or
liquidation value payments.
"Change of Control" means the occurrence of any of the following
events:
(a) any Person or "group" (as such term is used in Sections 13(d)
and 14(d) of the Exchange Act) is or becomes the "beneficial owner"
(as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except
that a Person shall be deemed to have "beneficial ownership" of all
securities that such Person has the right to acquire, whether such
right is exercisable immediately or only after the passage of time),
directly or indirectly, of more than 50% of the Voting Stock of the
Company;
(b) during any consecutive two-year period, individuals who at
the beginning of such period constituted the Board of Directors of the
Company (together with any new directors whose election to such Board
of Directors, or whose nomination for election by the stockholders of
the Company, was approved
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by a vote of 66 2/3% of the directors 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 of the
Company then in office; or
(c) the Company is liquidated or dissolved or adopts a plan of
liquidation or dissolution.
"Closing Date" means December 23, 1998.
"Consolidated Adjusted Net Income" means, for any period, the net
income (or net loss) of the Company and its Restricted Subsidiaries for
such period as determined on a consolidated basis in accordance with GAAP,
adjusted to the extent included in calculating such net income or loss by
excluding (a) any net after-tax extraordinary gains or losses (less all
fees and expenses relating thereto), (b) any net after-tax gains or losses
(less all fees and expenses relating thereto) attributable to Asset Sales,
(c) the portion of net income (or loss) of any Person (other than the
Company or a Restricted Subsidiary), including Unrestricted Subsidiaries,
in which the Company or any Restricted Subsidiary has an ownership
interest, except to the extent of the amount of dividends or other
distributions actually paid to the Company or any Restricted Subsidiary in
cash during such period, (d) the net income (or loss) of any Person
combined with the Company or any Restricted Subsidiary on a "pooling of
interests" basis attributable to any period prior to the date of
combination and (e) the net income (but not the net loss) of any Restricted
Subsidiary to the extent that the declaration or payment of dividends or
similar distributions by such Restricted Subsidiary is at the date of
determination restricted, directly or indirectly, except to the extent that
such net income could be paid to the Company or a Restricted Subsidiary
thereof by loans, advances, intercompany transfers, principal repayments or
otherwise.
"Consolidated Leverage Ratio" means, at any date of determination, the
ratio of (i) the aggregate amount of all Debt of the Company and its
Restricted Subsidiaries at such date on a consolidated basis, excluding (A)
Permitted Warehouse Debt and (B) Hedging Obligations permitted to be
incurred pursuant to clause (v) of Section 301 to (ii) the Consolidated Net
Worth of the Company at such date.
"Debt" means (without duplication), with respect to any Person,
whether recourse is to all or a portion of the assets of such Person and
whether or not contingent, (a) every obligation of such Person for money
borrowed, (b) every obligation of such Person evidenced by bonds,
debentures, notes or other similar instruments, (c) every reimbursement
obligation of such Person with respect to letters of credit, bankers'
acceptances or similar facilities issued for the account of such Person,
(d) every
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obligation of such Person issued or assumed as the deferred purchase price
of property or services, (e) Capitalized Lease Obligations, (f) all
Disqualified Stock of such Person valued at its maximum fixed repurchase
price, plus accrued and unpaid dividends, (g) all obligations of such
Person under or in respect of Hedging Obligations, and (h) every obligation
(to the extent guaranteed by such Person) of the type referred to in
clauses (a) through (g) of another Person and all dividends of another
Person the payment of which, in either case, such Person has guaranteed.
For purposes of this definition, the "maximum fixed repurchase price" of
any Disqualified Stock that does not have a fixed repurchase price shall be
calculated in accordance with the terms of such Disqualified Stock as if
such Disqualified Stock were repurchased on any date on which Debt is
required to be determined pursuant to the Indenture, and if such price is
based upon, or measured by, the fair market value of such Disqualified
Stock, such fair market value shall be determined in good faith by the
board of directors of the issuer of such Disqualified Stock.
Notwithstanding the foregoing, trade accounts payable and accrued
liabilities arising in the ordinary course of business and any liability
for federal, state or local taxes or other taxes owed by such Person shall
not be treated as Debt for purposes of this definition. Furthermore, any
securities issued in a securitization by a special purpose owner trust or
other entity formed by or on behalf of a Person and to which Receivables
have been sold or otherwise transferred by or on behalf of such Person or
its Subsidiaries shall not be treated as Debt of such Person or its
Subsidiaries for purposes of this definition, regardless of whether such
securities are treated as indebtedness for tax or accounting purposes;
provided, however, that any guarantee by the Company or a Restricted
Subsidiary (other than such special purpose owner trust or similar entity)
of indebtedness arising in connection with such securitization shall be
treated as Debt for purposes of this definition.
"Disinterested Director" means, with respect to any transaction or
series of transactions in respect of which the Board of Directors is
required to deliver a resolution of the Board of Directors under the
Indenture, a member of the Board of Directors who does not have any
material direct or indirect financial interest in or with respect to such
transaction or series of transactions (other than by ownership of
securities issued by the Company).
"Excess Spread" means, over the life of a "pool" of Receivables that
have been sold by the Company or a Restricted Subsidiary to a trust or
other Person in a securitization or sale, the rights retained by the
Company or its Restricted Subsidiaries at or subsequent to the closing of
such securitization or sale with respect to such "pool", including any
rights to receive cash flows attributable to such pool and any servicing
rights retained.
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"Excess Spread Receivables" of the Company or a Restricted Subsidiary
means the right to Excess Spread capitalized on the Company's consolidated
balance sheet (the amount of which shall be the present value of the Excess
Spread, calculated in accordance with GAAP).
"guarantee" means, as applied to any obligation, (a) a guarantee
(other than by endorsement of negotiable instruments for collection in the
ordinary course of business), direct or indirect, in any manner, of any
part or all of such obligation and (b) an agreement, direct or indirect,
contingent or otherwise, the practical effect of which is to assure in any
way the payment or performance (or payment of damages in the event of non-
performance) of all or any part of such obligation, including, without
limitation, the payment of amounts drawn down under letters of credit. For
purposes of this definition, the following actions, taken by any Person in
connection with a disposition or permanent funding of Receivables through a
securitization, whole loan sale or other similar transaction, shall not
constitute a guarantee by that Person: (i) the furnishing of collateral or
credit enhancement, whether in the form of cash, marketable securities,
Excess Spread Receivables or otherwise; (ii) the acquisition and ownership
of a subordinated or junior class of equity or debt securities issued in a
securitization; or (iii) the provision of customary representations and
warranties regarding the documentation of and credit underwriting practices
followed with respect to, the Receivables being disposed of or funded.
"Hedging Obligations" means the obligations of any Person under (i)
interest rate swap agreements, interest rate cap agreements and interest
rate collar agreements and (ii) other agreements or arrangements designed
to protect such Person against fluctuations in interest rates or the value
of foreign currencies.
"Investment" means, (i) directly or indirectly, any advance, loan or
other extension of credit (including, without limitation, by way of
guarantee or similar arrangement) or capital contribution to, the purchase
of any stock, bonds, notes, debentures or other securities of, or the
acquisition, by purchase or otherwise, of all or substantially all of the
business or assets or stock or other evidence of beneficial ownership of,
any Person or the making of any investment in any Person, (ii) the
designation of any Restricted Subsidiary as an Unrestricted Subsidiary and
(iii) the transfer of any assets or properties from the Company or a
Restricted Subsidiary to any Unrestricted Subsidiary, other than the
transfer of assets or properties made in the ordinary course of business.
Investments exclude extensions of trade credit on commercially reasonable
terms in accordance with normal trade practices.
"Maturity" means, with respect to any Note, the date on which any
principal of such Note becomes due and payable as therein or in the
Indenture provided, whether at
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the Stated Maturity with respect to such principal or by declaration of
acceleration, call for redemption, purchase or otherwise.
"Net Cash Proceeds" means, with respect to any Asset Sale, the
proceeds thereof in the form of cash or cash equivalents, including
payments in respect of deferred payment obligations when received in the
form of, or stock or other assets when disposed for, cash or cash
equivalents (except to the extent that such obligations are financed or
sold with recourse to the Company or any Restricted Subsidiary), net of (a)
brokerage commissions and other fees and expenses (including fees and
expenses of legal counsel and investment banks) related to such Asset Sale,
(b) provisions for all taxes payable as a result of such Asset Sale, (c)
payments made to retire Debt where payment of such Debt is secured by the
assets that are the subject of such Asset Sale, (d) amounts required to be
paid to any Person (other than the Company or any Restricted Subsidiary)
owning a beneficial interest in the assets that are subject to the Asset
Sale and (e) appropriate amounts to be provided by the Company or any
Restricted Subsidiary, as the case may be, as a reserve required in
accordance with GAAP against any liabilities associated with such Asset
Sale and retained by the seller after such Asset Sale, including pension
and other post-employment benefit liabilities, liabilities related to
environmental matters and liabilities under any indemnification obligations
associated with such Asset Sale.
"Permitted Investments" means any of the following:
(a) Investments in (i) securities with a maturity of 180 days or
less issued or directly and fully guaranteed or insured by the United
States or any agency or instrumentality thereof (provided that the
full faith and credit of the United States is pledged in support
thereof); (ii) certificates of deposit or acceptances with a maturity
of 180 days or less of any financial institution that is a member of
the Federal Reserve System having combined capital and surplus of not
less than $500 million; and (iii) commercial paper with a maturity of
180 days or less issued by a corporation that is not an Affiliate of
the Company and is organized under the laws of any state of the United
States or the District of Columbia and having the highest rating
obtainable from ▇▇▇▇▇'▇ Investors Service, Inc. or Standard & Poor's
Ratings Services;
(b) the application, directly or indirectly of up to $5 million
of the net proceeds from the sale of the Notes to an Investment in a
Permitted Joint Venture doing business in Latin America;
(c) Investments by the Company or any Restricted Subsidiary in
another Person, if as a result of such Investment (i) such other
Person becomes a Restricted Subsidiary or (ii) such other Person is
merged or consolidated with or
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into, or transfers or conveys all or substantially all of its assets
to, the Company or a Restricted Subsidiary;
(d) Investments by the Company or any of the Restricted
Subsidiaries in any of the other of them;
(e) Investments in Receivables or assets owned or used in the
ordinary course of business;
(f) Investments in existence on the Closing Date and any
renewals, extensions, substitutions, refinancing or replacements of
any such Investments to the extent they do not require an increase in
the amount of such Investment;
(g) promissory notes received as a result of Asset Sales
permitted under Section 304;
(h) Excess Spread Receivables arising from the securitization or
sale of Receivables by the Company or any of its Restricted
Subsidiaries;
(i) Investments comprised of promissory notes, stock, obligations
or securities received in the ordinary course of business in
settlement of debts owing to the Company or any of its Restricted
Subsidiaries, or on sales of assets acquired through foreclosure or
similar transactions;
(j) other Investments in Permitted Joint Ventures that do not
exceed $20 million at any time outstanding; and
(k) Loans or other extensions of credit from the Company or a
Restricted Subsidiary to a Permitted Joint Venture for the purpose of
providing liquidity to such Permitted Joint Venture to allow it to
originate or acquire Receivables in the ordinary course, provided that
the Company or the Restricted Subsidiary has effective operational
control of such Permitted Joint Venture.
"Permitted Joint Venture" means any joint venture between the Company
or one of its Restricted Subsidiaries and any other Person, which is
primarily engaged in the business of originating, purchasing, brokering and
marketing, pooling, selling, securitizing or servicing medical equipment
loan receivables or medical receivables.
"Permitted Warehouse Debt" means all Warehouse Debt outstanding from
time to time; provided, however, that (i) the Warehouse Debt shall be
deemed to be Permitted Warehouse Debt only to the extent that the assets to
which such Warehouse Debt relates
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are expected by the Company to be permanently funded through a
securitization or sale transaction and (ii) such Warehouse Debt shall be
deemed to be Permitted Warehouse Debt only to the extent of the realizable
value of the Receivables to which such Warehouse Debt relates and that were
not originated or acquired by the Company more than 364 days prior to the
date of determination (such realizable value to be determined in good faith
by the Board of Directors of the Company) if that value is less than the
amount of the Warehouse Debt.
"Preferred Stock" means, with respect to any Person, any and all
shares, interests, participations or other equivalents (however designated)
of such Person's preferred or preference stock, whether now outstanding or
issued after the initial issuance of the Notes, and including, without
limitation, all classes and series of preferred or preference stock of such
Person.
"Qualified Equity Interest" means any Qualified Stock and all
warrants, options or other rights to acquire Qualified Stock (but excluding
any debt security that is convertible into or exchangeable for Capital
Stock).
"Qualified Stock" of any Person means any and all Capital Stock of
such Person, other than Disqualified Stock.
"Receivables" means consumer and commercial loans, leases and
receivables purchased or originated by the Company or any Restricted
Subsidiary 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.
"Subordinated Debt" means Debt of the Company that is subordinated in
right of payment to the Notes.
"Unrestricted Subsidiary" means (a) any Subsidiary that is designated
by the Board of Directors as an Unrestricted Subsidiary in accordance with
Section 309 and (b) any Subsidiary of an Unrestricted Subsidiary.
"Warehouse Debt" means Debt incurred by the Company or a Restricted
Subsidiary under a Warehouse Facility. Warehouse Debt under any Warehouse
Facility shall be deemed to equal the principal amount of such Debt or, if
less, the book value of the Receivables pledged under such Warehouse
Facility to secure such Warehouse Debt.
"Warehouse Facility" means any funding arrangement with a financial
institution or other lender or purchaser a principal purpose of which is to
finance the purchase or
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origination of Receivables by the Company or one or more of its Restricted
Subsidiaries 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 Restricted
Subsidiary sells Receivables to a financial institution and retains a right
of first refusal upon the subsequent resale of such Receivables by such
financial institution.
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ARTICLE THREE
ADDITIONAL COVENANTS
The holders of all Notes shall have the benefits of the following
covenants, in addition to the covenants contained in Article Ten of the
Indenture. To the extent that the covenants contained in this Article Three are
inconsistent with the covenants contained in Article Ten of the Indenture, the
covenants contained in Article Ten of the Indenture shall be deemed to be
superseded for purposes of all Notes issued under this Supplemental Indenture.
SECTION 301. Limitation on Debt.
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The Company shall not, and shall not permit any Restricted Subsidiary
to, create, issue, assume, guarantee or in any manner become directly or
indirectly liable for the payment of, or otherwise incur (collectively,
"incur"), any Debt (including Acquired Debt and the issuance of
Disqualified Stock), except that the Company may incur Debt or issue
Disqualified Stock if, on the date of such incurrence or issuance and after
giving effect thereto, the Consolidated Leverage Ratio does not exceed 2.0
to 1.0.
Notwithstanding the foregoing, the Company may, and may permit its
Restricted Subsidiaries to, incur the following Debt ("Permitted Debt"):
(i) Permitted Warehouse Debt of the Company or any Restricted
Subsidiary;
(ii) Debt of the Company or any Restricted Subsidiary outstanding on
the Closing Date;
(iii) Debt owed by the Company to any Restricted Subsidiary or owed
by any Restricted Subsidiary to the Company or any other Restricted
Subsidiary (provided that such Debt is held by the Company or such
Restricted Subsidiary);
(iv) Debt represented by the Notes (other than any Additional Notes)
and any guarantees thereof by Restricted Subsidiaries;
(v) Debt of the Company or any Restricted Subsidiary in respect of
Hedging Obligations incurred in the ordinary course of business;
(vi) either (A) Capitalized Lease Obligations of the Company or any
Restricted Subsidiary or (B) Debt under purchase money mortgages or secured
by purchase money security interests so long as (x) such Debt is not
secured by any property or assets of the
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Company or any Restricted Subsidiary other than the property and assets so
acquired and (y) such Debt is created within 60 days of the acquisition of
the related property; provided that the aggregate amount of Debt under
clauses (A) and (B) does not exceed in the aggregate $5 million at any one
time outstanding;
(vii) Debt of the Company or any Restricted Subsidiary consisting of
guarantees, indemnities or obligations in respect of purchase price
adjustments in connection with the acquisition or disposition of assets,
including, without limitation, shares of Capital Stock;
(viii) Acquired Debt of a Person, other than Debt incurred in
connection with, or in contemplation of, such Person becoming a Restricted
Subsidiary or the acquisition of assets from such Person, as the case may
be, provided that the Company on a pro forma basis could incur $1.00 of
additional Debt (other than Permitted Debt) pursuant to the first paragraph
of this Section;
(ix) Debt of the Company, not permitted by any other clause of this
definition, in an aggregate principal amount not to exceed $20 million at
any one time outstanding;
(x) Debt incurred under one or more working capital facilities in an
amount not to exceed $10 million at any one time outstanding;
(xi) Debt of the Company or any Restricted Subsidiary, which Debt is
in the form of a guarantee and is incurred in connection with a
securitization or sale of Receivables; provided, that the Company has
concluded (as determined in good faith by the Board of Directors of the
Company) that the incurrence of such Debt is necessary to obtain an
investment grade rating for other Debt issued in connection with such
securitization or sale of Receivables; and
(xii) any renewals, extensions, substitutions, refinancings or
replacements (each, for purposes of this clause, a "refinancing") of any
outstanding Debt, other than Debt incurred pursuant to clause (i), (vi),
(ix), (x) or (xi) of this definition, including any successive refinancings
thereof, so long as (A) any such new Debt is in a principal amount that
does not exceed the principal amount so refinanced, plus the amount of any
premium required to be paid in connection with such refinancing pursuant to
the terms of the Debt refinanced or the amount of any premium reasonably
determined by the Company as necessary to accomplish such refinancing, plus
the amount of the expenses of the Company incurred in connection with such
refinancing, (B) in the case of any refinancing of Subordinated Debt, such
new Debt is made subordinate to the Notes at least to the same extent as
the Debt being refinanced and (C) such refinancing Debt does not have an
Average Life less than the Average Life of the Debt being refinanced and
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does not have a final scheduled maturity earlier than the final scheduled
maturity, or permit redemption at the option of the holder earlier than the
earliest date of redemption at the option of the holder, of the Debt being
refinanced.
SECTION 302. Limitation on Restricted Payments.
---------------------------------
The Company shall not, and shall not permit any Restricted Subsidiary
to, directly or indirectly, take any of the following actions:
(a) declare or pay any dividend on, or make any distribution to
holders of, any shares of the Capital Stock of the Company or any
Restricted Subsidiary (other than dividends or distributions payable solely
in Qualified Equity Interests and other than dividends or distributions by
a Restricted Subsidiary payable to the Company or another Restricted
Subsidiary);
(b) purchase, redeem or otherwise acquire or retire for value,
directly or indirectly, any shares of Capital Stock of the Company or any
Restricted Subsidiary, or any options, warrants or other rights to acquire
such shares of Capital Stock (other than any such Capital Stock owned by
the Company or any of its Restricted Subsidiaries);
(c) make any principal payment on, or repurchase, redeem, defease or
otherwise acquire or retire for value, prior to any scheduled principal
payment, sinking fund payment or maturity, any Subordinated Debt; and
(d) make any Investment (other than a Permitted Investment) in any
Person
(such payments or other actions described in (but not excluded from)
clauses (a) through (d) being referred to as "Restricted Payments"), unless
at the time of, and immediately after giving effect to, the proposed
Restricted Payment:
(i) no Default or Event of Default has occurred and is
continuing,
(ii) the Company could incur at least $1.00 of additional Debt
(other than Permitted Debt) pursuant to the first paragraph of Section
301 and
(iii) the aggregate amount of all Restricted Payments made after
the Closing Date does not exceed the sum of:
(A) 25% of the aggregate Consolidated Adjusted Net Income of
the Company during the period (taken as one accounting period)
from the
15
first day of the Company's fiscal quarter which includes January
30, 1997 to the last day of the Company's most recently ended
fiscal quarter for which internal financial statements are
available at the time of such proposed Restricted Payment (or, if
such aggregate cumulative Consolidated Adjusted Net Income is a
loss, minus 100% of such amount), plus
(B) the aggregate net proceeds including the fair market
value of property other than cash (as determined by the Board of
Directors, whose good faith determination shall be conclusive),
received by the Company after the initial issuance of the Notes
from the issuance or sale (other than to a Subsidiary) of
Qualified Equity Interests of the Company; plus
(C) the aggregate net proceeds including the fair market
value of property other than cash (as determined by the Board of
Directors, whose good faith determination shall be conclusive),
received by the Company after January 30, 1997 from the issuance
or sale (other than to a Restricted Subsidiary) of debt
securities or Disqualified Stock that have been converted into or
exchanged for Qualified Stock of the Company, together with the
aggregate net cash proceeds received by the Company at the time
of such conversion or exchange.
Notwithstanding the foregoing, the Company and its Restricted
Subsidiaries may take the following actions, so long as (with respect to
clauses (e), (f) and (g) below) no Default or Event of Default has occurred
and is continuing or would occur:
(a) the payment of any dividend within 60 days after the date of
declaration thereof, if at the declaration date such payment would not have
been prohibited by the foregoing provision;
(b) the repurchase, redemption or other acquisition or retirement for
value of any shares of Capital Stock of the Company, in exchange for, or
out of the net cash proceeds of a substantially concurrent issuance and
sale (other than to a Subsidiary) of Qualified Equity Interests of the
Company;
(c) the purchase, redemption, defeasance or other acquisition or
retirement for value of any Subordinated Debt in exchange for, or out of
the net cash proceeds of a substantially concurrent issuance and sale
(other than to a Subsidiary) of Qualified Equity Interests of the Company;
16
(d) the purchase, redemption, defeasance or other acquisition or
retirement for value of Subordinated Debt in exchange for, or out of the
net cash proceeds of a substantially concurrent issuance or sale (other
than to a Subsidiary) of, Subordinated Debt, so long as the Company or a
Restricted Subsidiary would be permitted to refinance such original
Subordinated Debt with such new Subordinated Debt pursuant to clause (xii)
of the definition of Permitted Debt;
(e) the repurchase of any Subordinated Debt at a purchase price not
greater than 101% of the principal amount of such Subordinated Debt in the
event of a change of control in accordance with provisions similar to
Section 303, provided that, prior to or simultaneously with such
repurchase, the Company has made the Change of Control Offer as provided in
Section 303 with respect to the Notes and has repurchased all Notes validly
tendered for payment in connection with such Change of Control Offer;
(f) loans or advances to officers, directors and employees of the
Company or any of its Restricted Subsidiaries made in the ordinary course
of business after the Closing Date in an amount not to exceed $1 million in
the aggregate at any one time outstanding;
(g) Investments by the Company or a Restricted Subsidiary in another
Person made with, or out of the net cash proceeds of, a substantially
concurrent issuance and sale (other than to a Subsidiary) of Qualified
Stock of the Company; and
(h) the making of an Investment in a Permitted Joint Venture so long
as the aggregate amount of all such Investments pursuant to this clause (h)
made after January 30, 1997 does not exceed the difference between (A) 25%
of the aggregate Consolidated Adjusted Net Income (without giving effect to
clause (e) of the definition thereof) of the Company during the period
(taken as one accounting period) from the first day of the Company's fiscal
quarter which includes January 30, 1997 to the last day of the Company's
most recently ended fiscal quarter for which internal financial statements
are available at the time of such proposed Investment, minus (B) the
aggregate amount of all Restricted Payments made after January 30, 1997 in
reliance on the foregoing clause (iii)(A); provided, that, at the time of,
and immediately after giving effect to, the proposed Investment in a
Permitted Joint Venture pursuant to this clause (h), the Company could
incur at least $1.00 of additional Debt (other than Permitted Debt)
pursuant to the first paragraph of Section 301.
The actions described in clauses (b), (c), (e), (f), (g) and (h) of
this paragraph shall be Restricted Payments that shall be permitted to be
taken in accordance with this paragraph but shall reduce the amount that
would otherwise be available for Restricted Payments under clause (iii) of
the first paragraph of
17
this Section and the actions described in clauses (a) and (d) of this
paragraph shall be Restricted Payments that shall be permitted to be taken
in accordance with this paragraph and shall not reduce the amount that
would otherwise be available for Restricted Payments under clause (iii) of
the first paragraph of this Section.
For the purpose of making any calculations under this Supplemental
Indenture (i) if a Restricted Subsidiary is designated an Unrestricted
Subsidiary, the Company shall be deemed to have made an Investment in an
amount equal to the fair market value of the net assets of such Restricted
Subsidiary at the time of such designation as determined by the Board of
Directors of the Company, whose good faith determination shall be
conclusive, (ii) any property transferred to or from an Unrestricted
Subsidiary shall be valued at fair market value at the time of such
transfer, as determined by the Board of Directors of the Company, whose
good faith determination shall be conclusive and (iii) subject to the
foregoing, the amount of any Restricted Payment, if other than cash, shall
be determined by the Board of Directors of the Company, whose good faith
determination shall be conclusive.
If the aggregate amount of all Restricted Payments calculated under
the foregoing provision includes an Investment in an Unrestricted
Subsidiary or other Person that thereafter becomes a Restricted Subsidiary,
the aggregate amount of all Restricted Payments calculated under the
foregoing provision shall be reduced by the lesser of (x) the net asset
value of such Subsidiary at the time it becomes a Restricted Subsidiary and
(y) the initial amount of such Investment.
If an Investment resulted in the making of a Restricted Payment, the
aggregate amount of all Restricted Payments calculated under the foregoing
provision shall be reduced by the amount of any net reduction in such
Investment (resulting from the payment of interest or dividends, loan
repayment, transfer of assets or otherwise), to the extent such net
reduction is not included in the Company's Consolidated Adjusted Net
Income; provided that the total amount by which the aggregate amount of all
Restricted Payments may be reduced may not exceed the lesser of (x) the
cash proceeds received by the Company and its Restricted Subsidiaries in
connection with such net reduction and (y) the initial amount of such
Investment.
In computing Consolidated Adjusted Net Income of the Company under the
foregoing clause (iii)(A), (i) the Company may use audited financial
statements for the portions of the relevant period for which audited
financial statements are available on the date of determination and
unaudited financial statements and other current financial data based on
the books and records of the
18
Company for the remaining portion of such period and (ii) the Company shall
be permitted to rely in good faith on the financial statements and other
financial data derived from the books and records of the Company that are
available on the date of determination. If the Company makes a Restricted
Payment that, at the time of the making of such Restricted Payment, would
in the good faith determination of the Company be permitted under the
requirements of this Supplemental Indenture, such Restricted Payment shall
be deemed to have been made in compliance with this Supplemental Indenture
notwithstanding any subsequent adjustments made in good faith to the
Company's financial statements affecting Consolidated Adjusted Net Income
of the Company for any period.
SECTION 303. Purchase of Notes upon a Change of Control.
------------------------------------------
If a Change of Control occurs at any time, then each holder of Notes
shall have the right to require that the Company purchase such holder's
Notes, in whole or in part in integral multiples of $1,000, at a purchase
price in cash equal to 101% of the principal amount of such Notes, plus
accrued and unpaid interest, if any, to the date of purchase, pursuant to
the offer described below (the "Change of Control Offer") and the other
procedures set forth in the Indenture.
Within 30 days following any Change of Control, the Company shall
notify the Trustee thereof and give written notice of such Change of
Control to each holder of Notes by first-class mail, postage prepaid, at
its address appearing in the Security Register, stating, among other
things, (i) the purchase price and the purchase date, which shall be a
Business Day no earlier than 30 days nor later than 60 days from the date
such notice is mailed or such later date as is necessary to comply with
requirements under the Exchange Act; (ii) that any Note not tendered shall
continue to accrue interest; (iii) that, unless the Company defaults in the
payment of the purchase price, any Notes accepted for payment pursuant to
the Change of Control Offer shall cease to accrue interest after the Change
of Control purchase date; and (iv) certain other procedures that a holder
of Notes must follow to accept a Change of Control Offer or to withdraw
such acceptance.
The Company shall comply with the applicable tender offer rules
including Rule l4e-l under the Exchange Act, and any other applicable
securities laws and regulations in connection with a Change of Control
Offer.
The Company shall not, and shall not permit any Restricted Subsidiary
to, create any restriction (other than restrictions existing under Debt as
in effect on the Closing Date or in refinancings of such Debt) that would
materially impair the ability of the Company to make a Change of Control
Offer to purchase the Notes
19
or, if such Change of Control Offer is made, to pay for the Notes tendered
for purchase.
SECTION 304. Limitation on Certain Asset Sales.
---------------------------------
(a) The Company shall not, and shall not permit any Restricted
Subsidiary to, engage in any Asset Sale unless (i) the consideration
received by the Company or such Restricted Subsidiary for such Asset Sale
is not less than the fair market value of the assets sold (as determined by
the Board of Directors of the Company, whose good faith determination shall
be conclusive) and (ii) the consideration received by the Company or the
relevant Restricted Subsidiary in respect of such Asset Sale consists of at
least 85% cash or cash equivalents.
(b) If the Company or any Restricted Subsidiary engages in an Asset
Sale, the Company may, at its option, within 12 months after such Asset
Sale, (i) apply all or a portion of such Net Cash Proceeds to the repayment
of senior Debt of the Company or a Restricted Subsidiary or (ii) invest (or
enter into a legally binding agreement to invest) all or a portion of such
Net Cash Proceeds in properties and assets to replace the properties and
assets that were the subject of the Asset Sale or in properties and assets
that will be used in businesses of the Company or its Restricted
Subsidiaries, as the case may be, existing on the Closing Date, or in
Permitted Joint Ventures. If any such legally binding agreement to invest
such Net Cash Proceeds is terminated, the Company may, within 90 days of
such termination or within 12 months of such Asset Sale, whichever is
later, invest such Net Cash Proceeds as provided in clause (i) or (ii)
(without regard to the parenthetical contained in such clause (ii)) above.
The amount of such Net Cash Proceeds not so used as set forth above in this
paragraph (b) constitutes "Excess Proceeds".
---------------
(c) When the aggregate amount of Excess Proceeds exceeds $5 million,
the Company shall, within 30 days thereafter, make an offer to purchase
from all holders of Notes, on a pro rata basis, in accordance with the
procedures set forth in the Indenture, the maximum principal amount
(expressed as a multiple of $1,000) of Notes that may be purchased with the
Excess Proceeds, at a purchase price in cash equal to 100% of the principal
amount thereof, plus accrued interest, if any, to the date such offer to
purchase is consummated. To the extent that the aggregate principal amount
of Notes tendered pursuant to such offer to purchase is less than the
Excess Proceeds, the Company may use such deficiency for general corporate
purposes. If the aggregate principal amount of Notes validly tendered and
not withdrawn by holders thereof exceeds the Excess Proceeds, the Notes to
be purchased shall be selected on a pro rata basis. Upon completion of such
offer to purchase, the amount of Excess Proceeds shall be reset to zero.
20
SECTION 305. Limitation on Transactions with Affiliates.
------------------------------------------
The Company shall not, and shall not permit any Restricted Subsidiary
to, directly or indirectly, enter into or suffer to exist any transaction
with, or for the benefit of, any Affiliate of the Company or any beneficial
owner of 5% or more of any class of the Capital Stock of the Company at any
time outstanding ("Interested Persons"), unless (a) such transaction is on
terms that are no less favorable to the Company or such Restricted
Subsidiary, as the case may be, than those that could have been obtained in
an arm's length transaction with third parties who are not Interested
Persons and (b) either (i) with respect to any transaction or series of
transactions involving aggregate payments in excess of $1 million, but less
than $5 million, the Company delivers an officers' certificate to the
Trustee certifying that such transaction or transactions comply with clause
(a) above or (ii) with respect to a transaction or series of transactions
involving aggregate payments equal to or greater than $5 million, such
transaction or transactions have been approved by the Board of Directors
(including a majority of the Disinterested Directors) of the Company or the
Company has obtained a written opinion from a nationally recognized
investment banking firm to the effect that such transaction or transactions
are fair to the Company or such Restricted Subsidiary from a financial
point of view.
The foregoing covenant shall not restrict
(A) transactions among the Company and/or its Restricted Subsidiaries;
(B) the Company from paying reasonable and customary regular
compensation and fees to directors of the Company or any Restricted
Subsidiary who are not employees of the Company or any Restricted
Subsidiary; and
(C) the application, directly or indirectly, of up to $5 million of
the net proceeds from the sale of the Notes to fund the Company's
Investment in a Permitted Joint Venture doing business in Latin America.
SECTION 306. Limitation on Dividends and Other Payment Restrictions
------------------------------------------------------
Affecting Restricted Subsidiaries.
---------------------------------
The Company shall not, and shall not permit any Restricted Subsidiary
to, directly or indirectly, create or otherwise cause or suffer to exist or
become effective any consensual encumbrance or restriction of any kind on
the ability of any Restricted Subsidiary to (a) pay dividends, in cash or
otherwise, or make any
21
other distributions on or in respect of its Capital Stock, (b) pay any Debt
owed to the Company or any other Restricted Subsidiary, (c) make loans or
advances to the Company or any other Restricted Subsidiary, (d) transfer
any of its properties or assets to the Company or any other Restricted
Subsidiary or (e) guarantee any Debt of the Company or any other Restricted
Subsidiary, except for such encumbrances or restrictions existing under or
by reason of:
(i) any agreement in effect on the Closing Date;
(ii) customary non-assignment provisions of any lease governing a
leasehold interest of the Company or any Restricted Subsidiary;
(iii) the refinancing or successive refinancings of Debt incurred
under the agreements in effect on the Closing Date, so long as such
encumbrances or restrictions are no less favorable to the Company or any
Restricted Subsidiary than those contained in such original agreement;
(iv) Warehouse Facilities and other credit facilities, provided,
however, that the terms and conditions of any such encumbrances or
restrictions are not materially more restrictive in the aggregate than
those contained in the revolving credit agreement with a syndicate of banks
and Fleet Bank, National Association, as agent, dated March 28, 1995, in
effect on the Closing Date in the judgment of the Board of Directors of the
Company as evidenced by a resolution of the Board of Directors of the
Company and filed with the Trustee; or
(v) any agreement or other instrument of a Person acquired by the
Company or any Restricted Subsidiary in existence at the time of such
acquisition (but not created in contemplation thereof), which encumbrance
or restriction is not applicable to any Person, or the properties or assets
of any Person, other than the Person, or the property or assets of the
Person, so acquired.
SECTION 307. Limitation on Issuances and Sales of Capital Stock of
-----------------------------------------------------
Restricted Subsidiaries.
-----------------------
The Company (a) shall not permit any Restricted Subsidiary to issue
any Capital Stock (other than to the Company or a Restricted Subsidiary)
and (b) shall not permit any Person (other than the Company or a Restricted
Subsidiary) to own any Capital Stock of any Restricted Subsidiary;
provided, however, that this Section shall not prohibit (i) the sale or
other disposition of all, but not less than all, of the issued and
outstanding Capital Stock of a Restricted Subsidiary owned by the Company
and its Restricted Subsidiaries in compliance with the other
22
provisions of this Supplemental Indenture and the provisions of the
Indenture or (ii) the ownership by directors of director's qualifying
shares or the ownership by foreign nationals of Capital Stock of any
Restricted Subsidiary, to the extent mandated by applicable law.
SECTION 308. Limitation on Guarantees of Debt by Restricted
----------------------------------------------
Subsidiaries.
------------
The Company shall not permit any Restricted Subsidiary, directly or
indirectly, to guarantee, assume or in any other manner become liable for
the payment of any Debt of the Company or any Debt of any other Restricted
Subsidiary, unless (a) such Restricted Subsidiary simultaneously executes
and delivers a supplemental indenture providing for a guarantee of payment
of the Notes by such Restricted Subsidiary and (b) with respect to any
guarantee of Subordinated Debt by a Restricted Subsidiary, any such
guarantee is subordinated to such Restricted Subsidiary's guarantee with
respect to the Notes at least to the same extent as such Subordinated Debt
is subordinated to the Notes, provided that the foregoing provision shall
not be applicable to any guarantee by any Restricted Subsidiary that
existed at the time such Person became a Restricted Subsidiary and was not
incurred in connection with, or in contemplation of, such Person becoming a
Restricted Subsidiary.
Any guarantee by a Restricted Subsidiary of the Notes pursuant to the
preceding paragraph shall provide by its terms that it shall be
automatically and unconditionally released and discharged upon (i) any
sale, exchange or transfer to any Person not an Affiliate of the Company of
all of the Company's and the Restricted Subsidiaries' Capital Stock in, or
all or substantially all the assets of, such Restricted Subsidiary (which
sale, exchange or transfer is not prohibited by this Supplemental
Indenture) or (ii) the release or discharge of the guarantee that resulted
in the creation of such guarantee of the Notes, except a discharge or
release by or as a result of payment under such guarantee.
SECTION 309. Unrestricted Subsidiaries.
-------------------------
(a) The Board of Directors of the Company may designate any
Subsidiary (including any newly acquired or newly formed Subsidiary) to be
an Unrestricted Subsidiary so long as (i) neither the Company nor any
Restricted Subsidiary is directly or indirectly liable for any Debt of such
Subsidiary, (ii) no default with respect to any Debt of such Subsidiary
would permit (upon notice, lapse of time or otherwise) any holder of any
other Debt of the Company or any Restricted Subsidiary to declare a default
on such other Debt or cause the payment thereof to be accelerated or
payable prior to its stated maturity, (iii) any Investment in such
Subsidiary made as a result of designating such
23
Subsidiary an Unrestricted Subsidiary shall not violate the provisions of
Section 1008, (iv) neither the Company nor any Restricted Subsidiary has a
contract, agreement, arrangement, understanding or obligation of any kind,
whether written or oral, with such Subsidiary other than those that might
be obtained at the time from Persons who are not Affiliates of the Company
and (v) neither the Company nor any Restricted Subsidiary has any
obligation to subscribe for additional shares of Capital Stock or other
equity interest in such Subsidiary, or to maintain or preserve such
Subsidiary's financial condition or to cause such Subsidiary to achieve
certain levels of operating results. Notwithstanding the foregoing, the
Company may not designate DVI Business Credit Corporation or DVI Financial
Services Inc. as an Unrestricted Subsidiary and may not sell, transfer or
otherwise dispose of any properties or assets of DVI Business Credit
Corporation or DVI Financial Services Inc. to an Unrestricted Subsidiary,
other than in the ordinary course of business.
(b) The Board of Directors of the Company may designate any
Unrestricted Subsidiary as a Restricted Subsidiary; provided that such
designation shall be deemed to be an incurrence of Debt by a Restricted
Subsidiary of any outstanding Debt of such Unrestricted Subsidiary and such
designation shall only be permitted if (i) such Debt is permitted under
Section 301 and (ii) no Default or Event of Default shall have occurred and
be continuing following such designation.
SECTION 310. Limitation on Liens.
-------------------
The Company shall not, and shall not permit any Restricted Subsidiary
to, directly or indirectly, create, incur, assume or suffer to exist any
Lien of any kind on or with respect to any of its property or assets,
including any shares of stock or indebtedness of any Restricted Subsidiary,
whether owned at the Closing Date or thereafter acquired, or any income,
profits or proceeds therefrom, or assign or otherwise convey any right to
receive income thereon, unless (a) in the case of any Lien securing
Subordinated Debt, the Notes are secured by a Lien on such property, assets
or proceeds that is senior in priority to such Lien and (b) in the case of
any other Lien, the Notes are equally and ratably secured with the
obligation or liability secured by such Lien.
Notwithstanding the foregoing, the Company may, and may permit any
Restricted Subsidiary to, incur the following Liens ("Permitted Liens"):
(i) Liens on property or assets securing Permitted Warehouse Debt of
the Company or any Restricted Subsidiary, other than Liens on Excess Spread
Receivables related to such Permitted Warehouse Debt not created in favor
of the lenders under the related Warehouse Facility;
24
(ii) Liens incurred in connection with a securitization or sale of
Receivables, other than Liens on Excess Spread Receivables related to such
securitization or sale transaction that were not created at the time of
such securitization or sale transaction;
(iii) Liens existing as of the Closing Date;
(iv) Liens on any property or assets of a Restricted Subsidiary
granted in favor of the Company or any Restricted Subsidiary;
(v) Liens securing the Notes;
(vi) Liens representing the interest or title of lessors under
Capitalized Lease Obligations or Liens securing purchase money mortgages or
purchase money security interests, so long as the aggregate amount secured
by such Liens does not exceed the amount permitted by clause (vi) of the
definition of "Permitted Debt";
(vii) Liens securing Acquired Debt created prior to (and not in
connection with or in contemplation of) the incurrence of such Debt by the
Company or any Restricted Subsidiary; provided that such Lien does not
extend to any property or assets of the Company or any Restricted
Subsidiary other than the property and assets acquired in connection with
the incurrence of such Acquired Debt;
(viii) Liens (other than on any Excess Spread Receivables) securing
obligations under Hedging Obligations permitted to be incurred pursuant to
clause (v) of the definition of "Permitted Debt";
(ix) statutory Liens or landlords', carriers', warehouseman's,
mechanics', suppliers', materialmen's, repairmen's or other like Liens
arising in the ordinary course of business with respect to (A) amounts not
yet delinquent or (B) amounts being contested in good faith by appropriate
proceedings or (C) an aggregate amount at any one time not in excess of $1
million;
(x) Liens for taxes, assessments, government charges or claims that
are being contested in good faith by appropriate proceedings promptly
instituted and diligently conducted;
(xi) Liens incurred or deposits made to secure the performance of
tenders, bids, leases, statutory obligations, surety and appeal bonds,
government contracts, performance bonds and other obligations of a like
nature incurred in the ordinary course of business (other than contracts
for the payment of money);
25
(xii) easements, rights-of-way, restrictions and other similar
charges or encumbrances not interfering in any material respect with the
business of the Company or any Restricted Subsidiary incurred in the
ordinary course of business;
(xiii) Liens arising by reason of any judgment, decree or order of
any court, so long as such Lien is adequately bonded and any appropriate
legal proceedings that may have been duly initiated for the review of such
judgment, decree or order have not been finally terminated or the period
within which such proceedings may be initiated has not expired;
(xiv) Liens securing reimbursement obligations with respect to
letters of credit that encumber documents and other property relating to
such letters of credit and the products and proceeds thereof;
(xv) Liens in favor of customs and revenue authorities arising as a
matter of law to secure payment of customs duties in connection with the
importation of goods; and
(xvi) any extension, renewal or replacement, in whole or in part, of
any Lien described in the foregoing clauses (i) through (xv); provided that
any such extension, renewal or replacement is no more restrictive in any
material respect than the Lien so extended, renewed or replaced and does
not extend to any additional property or assets.
SECTION 311. Limitation on Investment Company Status.
---------------------------------------
The Company shall not take any action, or otherwise permit to exist any
circumstance, that would require the Company or any of its Subsidiaries to
register as an "investment company" under the Investment Company Act of
1940, as amended.
SECTION 312. Reports.
-------
The Company shall be required to file on a timely basis with the
Commission, to the extent such filings are accepted by the Commission and
whether or not the Company has a class of securities registered under the
Exchange Act, the annual reports, quarterly reports and other documents
that the Company would be required to file if it were subject to Section 13
or 15(d) of the Exchange Act. The Company shall also be required (a) to
file with the Trustee, and provide to each holder of Notes, without cost to
such holder, copies of such reports and documents within 15 days after the
date on which the Company files such reports and documents with the
Commission or the date on which the Company would be required to file such
reports and documents if the Company
26
were so required and (b) if filing such reports and documents with the
Commission is not accepted by the Commission or is prohibited under the
Exchange Act, to supply at the Company's cost copies of such reports and
documents to any prospective holder of Notes promptly upon written request.
ARTICLE FOUR
FURTHER AMENDMENT
SECTION 401. For purposes of the Notes and any Additional Notes
issued hereunder, Section 1403 of the Indenture is deleted and replaced by the
following:
SECTION 1403. Covenant Defeasance.
-------------------
Upon the Company's exercise of the above option applicable to this
Section with respect to any Securities of or within a series, the Company
shall be released from its obligations under Sections 301 through 310 and
312 of the Second Supplemental Indenture on and after the date the
conditions set forth in Section 1404 are satisfied (hereinafter, "covenant
defeasance"), and such Securities shall thereafter be deemed not to be
"Outstanding" for the purposes of any direction, waiver, consent or
declaration or Act of Holders (and the consequences of any thereof) in
connection with such covenants, but shall continue to be deemed
"Outstanding" for all other purposes hereunder. For this purpose, such
covenant defeasance means that, with respect to such Outstanding
Securities, the Company may omit to comply with and shall have no liability
in respect of any term, condition or limitation set forth in any such
covenant, whether directly or indirectly, by reason of any reference
elsewhere herein to any such covenant or by reason of reference in any such
covenant to any other provision herein or in any other document and such
omission to comply shall not constitute a Default or an Event of Default
under Section 501(4) or Section 501(8) or otherwise, as the case may be,
but, except as specified above, the remainder of the Indenture and such
Securities shall be unaffected thereby.
ARTICLE FIVE
MISCELLANEOUS PROVISIONS
27
SECTION 501. This Second Supplemental Indenture shall be deemed to be
a contract made under the laws of the State of New York and for all purposes
shall be construed in accordance with the laws of the State of New York. The
terms and conditions of this Second Supplemental Indenture shall be, and be
deemed to be, part of the terms and conditions of the Indenture for any and all
purposes applicable to the Notes, in accordance with the terms and provisions of
Section 901 of the Indenture. Other than as amended and supplemented by this
Second Supplemental Indenture, the Indenture is in all respects ratified and
confirmed.
SECTION 502. The Trustee hereby accepts this Second Supplemental
Indenture and agrees to perform the same upon the terms and conditions set forth
in the Indenture.
SECTION 503. This Second Supplemental Indenture may be executed in
any number of counterparts, each of which shall be an original; but such
counterparts shall together constitute but one and the same instrument.
28
IN WITNESS WHEREOF, the parties hereto have caused this Second
Supplemental Indenture to be duly executed all as of the day and year first
above written.
DVI, INC.
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
By: _____________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Executive Vice President and
Chief Financial Officer
U.S. BANK TRUST NATIONAL ASSOCIATION
/s/ ▇▇▇ ▇▇▇▇▇▇
By: _____________________________
Name: ▇▇▇ ▇▇▇▇▇▇
Title: Vice President
EXHIBIT A
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FORM OF NOTE
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER
OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME
AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE
TO CEDE & CO. OR TO SUCH OTHER NAME 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.
DVI, INC.
9 7/8% Senior Notes due 2004
CUSIP NO. ▇▇▇▇▇▇▇▇▇
No. 1 $ 55,000,000
DVI, Inc., a Delaware corporation (herein called the "Company", which
term includes any successor entity under the Indenture hereinafter referred to),
for value received, hereby promises to pay to Cede & Co. or registered assigns
the principal sum of FIFTY FIVE MILLION DOLLARS on February 1, 2004, at the
office or agency of the Company referred to below, and to pay interest thereon
on February 1, 1999 and semiannually thereafter, on February 1 and August 1 in
each year, from the most recent Interest Payment Date to which interest has been
paid or duly provided for or, if no interest has been paid, from December 23,
1998, at the rate of 9 7/8% per annum, until the principal hereof is paid or
duly provided for, and (to the extent lawful) to pay on demand interest on any
overdue interest at the rate borne by the Securities from the date of the
Interest Payment Date on which such overdue interest becomes payable to the date
payment of such interest has been made or duly provided for. The interest so
payable, and punctually paid or duly provided for, on any Interest Payment Date
shall, as provided in such Indenture, be paid to the Person in whose name this
Security is registered at the close of business on the Regular Record Date for
such interest, which shall be the January 15 or July 15 (whether or not a
Business Day), as the case may be, next preceding such Interest Payment Date.
Any such interest not so punctually paid or duly provided for, and interest on
such defaulted interest at the interest rate borne by the Securities, to the
extent lawful, shall forthwith cease to be payable to the Holder on such Regular
Record Date, and may be paid to the Person in whose name this Security (or one
or more Predecessor Securities) is registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest to be fixed by
the Trustee,
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notice whereof shall be given to Holders of Securities not less than 10 days
prior to such Special Record Date, or may be paid at any time in any other
lawful manner not inconsistent with the requirements of any securities exchange
on which the Securities may be listed, and upon such notice as may be required
by such exchange, all as more fully provided in said Indenture. Payment of the
principal of (and premium, if any) and interest on this Security shall be made
by check mailed to the address of the Person entitled thereto as such address
shall appear on the Security Register; provided that all payments with respect
to Securities represented in either global or certificated form, the Holders of
which have given wire transfer instructions at least five business days prior to
the applicable record date to the Company, will be made by wire transfer of
immediately available funds to the accounts of the holders thereof.
Reference is hereby made to the further provisions of this Security set forth on
the reverse hereof, which further provisions shall for all purposes have the
same effect as if set forth at this place.
Unless the certificate of authentication hereon has been duly executed by the
Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture, or be valid or
obligatory for any purpose.
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IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
DVI, INC.
By: _______________________________
Name:
Title:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities referred to in the within-mentioned Indenture.
U.S. BANK TRUST NATIONAL ASSOCIATION
as Trustee
By: ______________________________
Authorized Signatory
Dated: _____________
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[FORM OF REVERSE OF SECURITY]
This Security is one of a duly authorized issue of securities of the
Company designated as its 9 7/8% Senior Notes due 2004 (herein called the
"Securities"), limited (except as otherwise provided in the Indenture referred
to below) in aggregate principal amount to $55,000,000 (herein called the
"Indenture") dated as of January 27, 1997, between the Company and U.S. Bank
National Association (formerly known as First Trust National Association),
trustee (herein called the "Trustee", which term includes any successor trustee
under the Indenture with respect to the series of which this Security is a part)
as supplemented by the Second Supplemental Indenture dated as of December 23,
1998 between the Company and the Trustee (together the "Indenture"), to which
Indenture and all indentures supplemental thereto reference is hereby made for a
statement of the respective rights, limitations of rights, duties, obligations
and immunities thereunder of the Company, the Trustee and the Holders of the
Securities, and of the terms upon which the Securities are, and are to be,
authenticated and delivered.
The Securities shall be redeemable at the election of the Company, as
a whole or from time to time in part, at any time on or after February 1, 2002,
on or not less than 30 nor more than 60 days' prior notice at the redemption
prices (expressed as percentages of principal amount) set forth below, together
with accrued interest, if any, to the Redemption Date, if redeemed during the
12-month period beginning on February 1 of the years indicated below (subject to
the right of Holders of record on the relevant record date to receive interest
due on an Interest Payment Date):
Redemption
Year Price
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2002................................... 102.821
2003................................... 101.411
and thereafter at 100% of the principal amount, together with accrued interest,
if any, to the Redemption Date.
If less than all of the Securities are to be redeemed, the particular
Securities to be redeemed shall be selected not more than 60 days prior to the
Redemption Date by the Trustee by such method as the Trustee deems fair and
appropriate.
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If an Event of Default shall occur and be continuing, the principal of
all the Securities may be declared due and payable in the manner and with the
effect provided in the Indenture.
The Indenture contains provisions for defeasance at any time of (a)
the entire indebtedness of the Company on this Security and (b) certain
restrictive covenants and the related Defaults and Events of Default, upon
compliance by the Company with certain conditions set forth therein, which
provisions apply to this Security.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of each series affected under the
Indenture at any time by the Company and the Trustee with the consent of the
Holders of a majority in aggregate principal amount of the Securities of such
series at the time Outstanding. The Indenture also contains provisions
permitting the Holders of specified percentages in aggregate principal amount of
the Securities of each series at the time Outstanding, on behalf of the Holders
of all the Securities of such series, to waive compliance by the Company with
certain provisions of the Indenture and certain past defaults under the
Indenture and their consequences. Any such consent or waiver by or on behalf of
the Holder of this Security shall be conclusive and binding upon such Holder and
upon all future Holders of this Security and of any Security issued upon the
registration of transfer hereof or in exchange herefor or in lieu hereof whether
or not notation of such consent or waiver is made upon this Security.
No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the principal of (and premium, if any) and
interest on this Security at the times, place, and rate, and in the coin or
currency, herein prescribed.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Security is registrable on the Security
Register of the Company, upon surrender of this Security for registration of
transfer at the office or agency of the Company maintained for such purpose in
The City of New York, duly endorsed by, or accompanied by a written instrument
of transfer in form satisfactory to the Company and the Security Registrar duly
executed by, the Holder hereof or his attorney duly authorized in writing, and
thereupon one or more new Securities, of authorized denominations and for the
same aggregate principal amount, shall be issued to the designated transferee or
transferees.
The Securities are issuable only in registered form, without coupons
in denominations of $1,000 and any integral multiple thereof. No service charge
shall be made for any registration of transfer or exchange or redemption of
Securities, but the Company may
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require payment in certain circumstances of a sum sufficient to cover any tax or
governmental charges that may be imposed in connection therewith.
Prior to the time of due presentment of this Security for registration
of transfer, the Company, the Trustee and any agent of the Company or the
Trustee may treat the Person in whose name this Security is registered as the
owner hereof for all purposes, whether or not this Security be overdue, and
neither the Company, the Trustee nor any agent shall be affected by notice to
the contrary.
All terms used in this Security which are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
The following abbreviations, when used in the inscription on the face
of this Security, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - ........Custodian ..............
(Cust.) (Minor)
TEN ENT - as tenants by the entireties under Uniform Gifts to Minors
Act ................................................
(State)
JT TEN - as joint tenants with right of
survivorship and not as tenants
in common
Additional abbreviations may also be used though not in the above list.
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ASSIGNMENT FORM
To assign this Security, fill in the form below:
(I) or (we) assign and transfer this Security to
______________________________________________________________________________
(Insert assignee's social security or tax I.D. no.)
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint ______________________________________________________
agent to transfer this Security on the books of the Company. The agent may
substitute another to act for him.
Date: ______________ Signature: ______________________________________________
(sign exactly as name appears on the other
side of this Security)
Signature guaranteed by: ________________________
