Exhibit 3.2
SENIOR NOTE AGREEMENT dated as of June 9, 1998,
between AUTOBOND ACCEPTANCE
CORPORATION, a Texas corporation (the "Company"),
and DYNEX CAPITAL, INC., as Agent (the "Agent").
The Company has duly authorized the execution and delivery of this
Agreement to provide for the creation of an issue of its 12% Convertible Senior
Notes Due 2003 (the "Securities"), of substantially the tenor and amount
hereinafter set forth, and to provide therefor the Company has duly authorized
the execution and delivery of this Agreement.
Each party agrees as follows for the benefit of the other party and for the
equal and ratable benefit of the Holders of the Securities:
ARTICLE 1.
Definitions and Incorporation by Reference
SECTION 1.1 Definitions
"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 purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; provided that
beneficial ownership of 51% or more of the voting securities of a Person shall
be deemed to be control.
"Agent" means the party named as such in this Agreement until a successor
replaces it and, thereafter, means the successor.
"Agreement" means this Agreement as amended or supplemented from time to
time.
"Asset Disposition" means any sale, lease, transfer or other disposition
(or series of related sales, leases, transfers or dispositions) of assets (of
any kind, nature, or description) by the Company or any Subsidiary, including
any disposition by means of a merger, consolidation or similar transaction.
"Associate" of any Person, means (1) any corporation or organization (other
than the Company or a Subsidiary of the Company) of which such Person is an
officer, employee or partner or is, directly or indirectly, the beneficial owner
of 10% or more of any class of equity securities, (2) any trust or other estate
in which such Person has a substantial beneficial interest or as to which such
Person serves as agent or in a similar fiduciary capacity, and (3) any relative
or spouse of such Person, or any relative of such spouse, who has the same home
as such Person or who is a director or officer of the Company or any of its
Affiliates.
"Average Life" means, as of the date of determination, with respect to any
Indebtedness or Preferred Stock, the quotient obtained by dividing (i) the sum
of the products of numbers of years from the date of determination to the dates
of each successive scheduled principal payment of such Indebtedness or
redemption or similar payment with respect to such Preferred Stock multiplied by
the amount of such payment by (ii) the sum of all such payments.
"Board of Directors" means the Board of Directors of the Company or any
committee thereof duly authorized to act on behalf of such Board.
"Business Day" means each day which is not a Legal Holiday.
"Capital Lease Obligations" means an obligation that is required to be
classified and accounted for as a capital lease for financial reporting purposes
in accordance with GAAP, and the amount of Indebtedness represented by such
obligation shall be the capitalized amount of such obligation determined in
accordance with GAAP; and the Stated Maturity thereof shall be the date of the
last payment of rent or any other amount due under such lease prior to the first
date upon which such lease may be terminated by the lessee without payment of a
penalty.
"Capital Stock" of any Person means, (i) in the case of a corporation,
corporate stock, (ii) in the case of an association, trust or business entity,
any and all shares, interests, participations, rights or other equivalents
(however designated) of corporate stock, (iii) in the case of a partnership,
partnership interests (whether general or limited) and (iv) any other interest
or participation that confers on a Person the right to receive a share of the
profits and losses of, or distributions of assets of, the issuing Person.
"Change of Control" means the occurrence of any of the following: (i) the
sale, lease, transfer, conveyance or other disposition, in one or a series of
related transactions, of all or substantially all of the assets of the Company
to any Person, (ii) the adoption of a plan relating to the liquidation or
dissolution of the Company, or (iii) the acquisition by any Person, together
with any Affiliates or Associates of a direct or indirect interest in more than
51% of the voting power of the voting stock of the Company, by way of merger or
consolidation or otherwise.
"Code" means the Internal Revenue Code of 1986, as amended.
"Common Stock" means any stock of any class of the Company which has no
preference in respect of dividends or of amounts payable in the event of any
voluntary or involuntary liquidation, dissolution or winding up of the Company
and which is not subject to redemption by the Company. However, subject to the
provisions of Section 8.11, shares issuable on conversion of Securities shall
include only shares of the class designated as Common Stock of the Company at
the date of this instrument (or, at the option of the Holder, non-voting Common
Stock) or shares of any class or classes resulting from any reclassification or
reclassifications thereof and which have no preference in respect of dividends
or of amounts payable in the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Company and which are not subject to redemption
by the Company; provided that if any time there shall be more than one such
resulting class, the shares of each such class then so issuable shall be
substantially in the proportion which the total number of shares of such class
resulting from all such reclassifications bears to the total number of shares of
all such classes resulting from all such reclassifications.
"Company" means the party named as such in this Agreement until a successor
replaces it and, thereafter, means the successor.
"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.
"Current Market Price" shall have the meaning specified in Section 8.04(6).
"Currency Agreement" means in respect of a Person any foreign exchange
contract, currency option, currency swap agreement or 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.
"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 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 from time to time, as 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 and (iii) in such other statements by such
other entity as approved by a significant segment of the accounting profession.
"Guarantee" means any obligation, contingent or otherwise, of any Person
directly or indirectly guaranteeing any Indebtedness or other obligation of any
Person; provided, however, that the term "Guarantee" shall not include
endorsements for collection or deposit in the ordinary course of business.
"Hedging Obligations" of any Person means the obligations of such Person
pursuant to any Interest Rate Agreement.
"Holder" or "Securityholder" means the Person in whose name a Security is
registered on the Registrar's books; initially, the Agent.
"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) accrued net liabilities under Hedging
Obligations; (vi) Warehouse Indebtedness; (vii) in connection with each sale by
such Person of any 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 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; and (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. 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 corporation (including a Subsidiary) 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 Agreement, regardless of whether
such securities are treated as indebtedness for tax purposes.
"Initial Purchaser" means Dynex Capital, Inc., a Virginia corporation.
"interest," when used with respect to any Security, means the amount of all
interest accruing on such Security.
"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.
"Issue Date" means the date on which the Securities are originally issued.
"Lien" means 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).
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Officer" means the Chairman of the Board, the Vice Chairman, the
President, the Chief Financial Officer, 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 Agent. The counsel may be an employee of or counsel to the
Company or the Agent.
"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.
"Qualified Institutional Buyer" or "QIB" shall have the meaning specified
in Rule 144A under the Securities Act.
"Receivables" means consumer loans, leases and receivables acquired 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 incurred by the Company or
any Restricted Subsidiary that Refinances any Indebtedness of the Company or
such Restricted Subsidiary existing on the Issue Date or incurred in compliance
with this Agreement, including Indebtedness that Refinances Refinancing
Indebtedness; provided, however, that (a) 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, (b) such
Refinancing Indebtedness has a final maturity date later than the final maturity
date of, and has a weighted Average Life equal to or greater than the weighted
Average Life of, such Refinancing Indebtedness and (c) if the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded is subordinated in
right of payment of the Securities, such Refinancing Indebtedness is
subordinated in right of payment to the Securities on terms at least as
favorable to the Holders of Securities as those contained in the documentation
governing the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded.
"Related Business" means any consumer finance business or any consumer
financial services 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, (B) dividends or distributions payable
solely to the Company or a Restricted Subsidiary, (C) so long as no Event of
Default has occurred and is continuing, dividends or distributions on the
Company's 15% Series A Cumulative Preferred Stock, and (D) 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 the Company) or (iii) any payments due on
Subordinated Obligations, or 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).
"Restricted Subsidiary" means any Subsidiary of the Company that is not an
Unrestricted Subsidiary.
"Rule 144A" means Rule 144A under the Securities Act.
"SEC" means the Securities and Exchange Commission.
"Securities" has the meaning stated in the first recital of this Agreement.
"Securities Act" means the Securities Act of 1933.
"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 obligation, the date specified
in such security as the fixed date on which the final payment of principal of
such obligation is due and payable, including pursuant to any mandatory
redemption provision (but excluding any provision providing for the repurchase
of such obligation 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, origination, servicing, financing or asset
securitization expertise.
"Subordinated Obligation" means any Indebtedness of the Company (whether
outstanding on the Issue Date or thereafter incurred) which is pari passu,
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 agents 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.
"Uniform Commercial Code" means the Texas 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, but only so long as such Subsidiary (a) has no
Indebtedness other than Non-Recourse Debt, (b) is not party to any agreement,
contract, arrangement or understanding with the Company or any Restricted
Subsidiary of the Company unless the terms of any such agreement, contract,
arrangement or understanding are no less favorable to the Company or such
Restricted Subsidiary than those that might be obtained at the time from Persons
who are not Affiliates of the Company, (c) is a person with respect to which
neither the Company nor any of its Restricted Subsidiaries has any direct or
indirect obligation (i) to subscribe for additional equity or (ii) to maintain
or preserve such Person's financial condition or to cause such Person to achieve
any specified levels of operating results, and (d) has not guaranteed or
otherwise directly or indirectly provided credit support for any Indebtedness of
the Company or any of its Restricted Subsidiaries. Any such designation by the
Board of Directors shall be evidenced by the Company to the Agent by promptly
filing with the Agent 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 agents
thereof.
"Warehouse Facility" means any funding arrangement with a financial
institution or other lender or purchaser exclusively to finance the acquisition
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 advances outstanding to the borrower under a
Warehouse Facility.
"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 1.2 Other Definitions Defined in Term Section
"Bankruptcy Law".............................. 5.01
"Custodian"................................... 5.01
"Event of Default"............................ 5.01
"Legal Holiday"............................... 11.05
"Registrar"................................... 2.03
"Successor Company"........................... 4.01
SECTION 1.3 Rules of Construction. Unless the context otherwise requires:
(a) a term has the meaning assigned to it;
(b) an accounting term not otherwise defined has the meaning assigned to it
in accordance with GAAP;
(c) "or" is not exclusive;
(d) "including" means including without limitation;
(e) words in the singular include the plural and words in the plural
include the singular;
(f) unsecured Indebtedness shall not be deemed to be subordinate or junior
to Secured Indebtedness merely by virtue of its nature as unsecured
Indebtedness;
(g) 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
(h) 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 2.1 Form and Dating The Securities shall be substantially in the
form of Exhibit A which is hereby incorporated in and expressly made a part of
this Agreement. In addition, the Securities may be evidenced by a combined
certificate. 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 and the Agent). Each Security shall be dated the date
of its issuance. The terms of the Securities set forth in Exhibit A are part of
the terms of this Agreement.
SECTION 2.2 Execution. Any Officer may sign the Securities for the Company
by manual signature.
The aggregate principal amount of the Securities outstanding at any time
may not exceed $3,000,000.00, in each case except as provided in Section 2.07.
SECTION 2.3 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 Agreement. The
agreement shall implement the provisions of this Agreement that relate to such
agent. The Company shall notify the Agent of the name and address of any such
agent. If the Company fails to maintain a Registrar or Paying Agent, the Agent
shall act as such and shall be entitled to appropriate compensation therefor
pursuant to Section 6.07. The Company may act as Paying Agent, Registrar,
co-registrar or transfer agent.
The Company initially will act as Paying Agent and Registrar in connection
with the Securities.
SECTION 2.4 Paying Agent. By 11:00 a.m., Texas 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 Agent)
to agree in writing that the Paying Agent shall hold in trust for the benefit of
Securityholders all money held by the Paying Agent for the payment of principal
of or interest on the Securities and shall notify the Agent of any default by
the Company in making any such payment. The Paying Agent shall make payments to
Holders in immediately available funds when due. The Company at any time may
require a Paying Agent to pay all money held by it to the Agent 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
Agent.
SECTION 2.5 Securityholder Lists. The Agent 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 Agent is not the Registrar, the
Company shall furnish to the Agent, in writing at least five Business Days
before each interest payment date and at such other times as the Agent may
request in writing, a list in such form and as of such date as the Agent may
reasonably require of the names and addresses of Securityholders.
SECTION 2.6 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. Subject to the restrictions on transfer set forth
in Section 2.12, 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 the Uniform Commercial Code are met. To
permit registration of transfers and exchanges, the Company shall execute
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 for a period of 15 days before an interest
payment date.
Prior to the due presentation for registration of transfer of any Security,
the Company, the Agent, 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 Agent, the Paying Agent,
the Registrar or any co-registrar shall be affected by notice to the contrary.
SECTION 2.7 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 a replacement
Security if the requirements of the Uniform Commercial Code are met and the
Holder satisfies any other reasonable requirements of the Agent. If required by
the Agent or the Company, such Holder shall furnish an indemnity agreement
sufficient in the reasonable judgment of the Company and the Agent to protect
the Company, the Agent, the Paying Agent, the Registrar and any co-registrar
from any loss which any of them may suffer if a Security is replaced. The
Company and the Agent may charge the Holder for their expenses in replacing a
Security.
SECTION 2.8 Outstanding Securities. Securities outstanding at any time are
all Securities executed by the Company except for 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 Agent and the Company receive proof satisfactory to them
that the replaced Security is held by a bona fide purchaser.
SECTION 2.9 Temporary Securities. Until definitive Securities are ready for
delivery, the Company may prepare temporary Securities. Temporary Securities
shall be substantially in the form of definitive Securities but may have
variations that the Company reasonably considers appropriate for temporary
Securities. Without unreasonable delay, the Company shall prepare definitive
Securities and deliver them in exchange for temporary Securities.
SECTION 2.10 Cancellation. The Company at any time may deliver Securities
to the Agent for cancellation. The Registrar and the Paying Agent shall forward
to the Agent any Securities surrendered to them for registration of transfer,
exchange or payment. The Agent and no one else shall cancel and destroy all
Securities 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
Agent 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
Agent 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 Agent 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 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 Special Transfer Provisions. No transfer of any Security may
be made unless such transfer satisfies one of the following: (i) such transfer
is in compliance with Rule 144A under the Securities Act, to a person who the
transferor reasonably believes is a Qualified Institutional Buyer (as defined in
Rule 144A) that is purchasing for its own account or for the account of a
Qualified Institutional Buyer and to whom notice is given that such transfer is
being made in reliance upon Rule 144A under the Securities Act as certified by
such transferee in a letter in the form of Exhibit B hereto; (ii) after the
appropriate holding period, such transfer is pursuant to an exemption from
registration under the Securities Act provided by Rule 144 under the Securities
Act; (iii) such transfer is to a transferee who is an accredited investor in a
transaction exempt from the registration requirements of the Securities Act, in
each case in accordance with any applicable securities laws of any State of the
United States or (iv) such transfer is otherwise exempt from the registration
requirements of the Securities Act. The Company will require, in order to assure
compliance with such laws, that the Securityholder's prospective transferee
referred to in the preceding clauses (iii) or (iv) deliver an investment letter
certifying to the Company and the Agent as to the facts surrounding such
transfer in the Form of Exhibit C hereto. Except in the case of a transfer of
Securities to a transferee referred to in the preceding clause (i), a transfer
to an Affiliate of the Agent or of a Holder, or, in general, a transfer that is
to be made after two years from the Issuance Date, the Agent shall require an
opinion of counsel satisfactory to it to the effect that such transfer may be
made pursuant to an exemption from the Securities Act without such registration
(which opinion of counsel shall not be an expense of the Agent or the Company).
ARTICLE 3.
Covenants
SECTION 3.1 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 Agreement. Principal and interest shall
be considered paid on the date due if by 2:00 p.m. Texas time on such date the
Agent has received from the Company or the Paying Agent in immediately available
funds money sufficient to pay all principal, interest, premiums and any other
amounts 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 3.2 SEC Reports. The Company shall file with the SEC and provide
the Agent 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.
(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 or immediately
thereafter an Event of Default shall have occurred and be continuing (or would
result therefrom). (b) The provisions of Section 3.03(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 by the Company (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); (ii) 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.
SECTION 3.4 Further Assurances. The Company will from time to time execute
and deliver all such supplements and amendments hereto and all such financing
statements, continuation statements, instruments of further assurance, and other
instruments, and will take such other action as may be necessary or advisable to
maintain or preserve the lien of this Agreement or carry out more effectively
the purposes hereof.
SECTION 3.5 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.
ARTICLE 4.
Successor Company
SECTION 4.1 When Company May Merge or Transfer Assets. Subject to Article
13, 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 Agreement supplemental
hereto, executed and delivered to the Agent, in form satisfactory to the Agent,
all the obligations of the Company under the Securities , this Agreement, and,
if applicable, the Purchase Agreement;
(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 (including on a pro forma basis);
and
(iii) the Company shall have delivered to the Agent an Officers'
Certificate and an Opinion of Counsel, each stating that such consolidation,
merger or transfer and such supplemental Agreement (if any) comply with this
Agreement.
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 Agreement, 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, any Restricted Subsidiary may
consolidate with, merge into or transfer all or part of its properties and
assets to the Company.
Defaults and Remedies
SECTION 5.1 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 20
Business Days;
(2) the Company defaults in the payment of the principal of any Security
when the same becomes due and payable at its Stated Maturity, upon declaration
or otherwise;
(3) the Company fails to comply with Section 3.03 or 4.01;
(4) the Company fails to comply with any of its covenants or agreements in
the Securities, this Agreement (other than those referred to in (1), (2) or (3)
above) and such failure continues for 30 days after the occurrence thereof;
(5) 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 aggregate amount of all such unpaid
or accelerated Indebtedness exceeds $1,000,000 or its foreign currency
equivalent at the time or if there is a default under that certain Stock Option
Agreement dated as of June 9, 1998 (the "Option Agreement") by and between Dynex
Holding, Inc. and Messrs. Xxxxxx Xxxx, Xxxxxxx X. Xxxxxxxx and Xxxx X. Xxxxxxxx
(collectively, the "Stockholders") by the Company or the Stockholders, which
default materially impairs the value of the Option (as defined in the Option
Agreement);
(6) the Company within the meaning of any Bankruptcy Law:
(A) commences a voluntary case;
(B) is dissolved (other than pursuant to a consolidation, amalgamation or
merger);
(C) becomes insolvent or is unable to pay its debts or fails or admits in
writing its inability generally to pay its debts as they become due;
(D) has a resolution passed for its winding-up, reorganization or
liquidation (other than pursuant to a consolidation, amalgamation or merger);
(E) has a secured party take possession of all or substantially all its
assets or has a distress, execution, attachment, sequestration or other legal
process levied, enforced or sued on or against all or substantially all its
assets and such secured party maintains possession, or any such process is not
dismissed, discharged, stayed or restrained, in each case within 30 days
thereafter;
(F) consents to the entry of an order for relief against it in an
involuntary case;
(G) seeks to consents to the appointment of a Custodian of it or for
substantially all of its assets; or
(H) makes a general assignment, arrangement or composition with, or for the
benefit of, its creditors;
or takes any comparable action under any foreign laws relating to
insolvency;
(7) a court of competent jurisdiction enters an order or decree under any
Bankruptcy Law that:
(A) is for relief against the Company in an involuntary case;
(B) appoints a Custodian of the Company or for any substantial part of its
property; or
(C) orders the winding up or liquidation of the Company;
or any similar relief is granted under any foreign laws and the order or
decree remains unstayed and in effect for 60 days;
(8) any judgments or decrees for the payment of money in excess of
$1,000,000 in the aggregate (for all such judgments and decrees) or its foreign
currency equivalent at the time is entered against the Company or any
Significant Subsidiary and is not discharged or satisfied and there is a period
of 45 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;
(9) the Agent or any Affiliate of the Agent is a Securityholder, the
material breach of any representation, warranty or covenant of the Company
contained in or the occurrence of a default by the Company under, the Purchase
Agreement, if any, and if such breach or default is susceptible of cure and the
Company is pursuing, and continues to pursue, such cure to the Agent's
reasonable satisfaction, such breach or default remains uncured for 30 days
after its occurrence; or
(10) there shall occur a Change of Control of the Company
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 Xxxxx 00, Xxxxxx Xxxxxx 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.
The Company shall deliver to the Agent, promptly, and in any event within 5
days after the occurrence thereof, written notice in the form of an Officers'
Certificate of any Default, its status and what action the Company is taking or
proposes to take with respect thereto.
SECTION 5.2 Acceleration. If an Event of Default (other than an Event of
Default specified in Section 5.01(6) or (7) with respect to the Company) occurs
and is continuing, the Agent 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
Agent, 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 5.01(6) or (7) 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 Agent or any Securityholders. The Agent or the Holders of a majority in
principal amount of the Securities by notice to the Agent may in their sole
discretion 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 5.3 Other Remedies. If an Event of Default occurs and is
continuing, the Agent may pursue any available remedy to collect the payment of
principal of or interest on and any other amounts due under the Securities or to
enforce the performance of any provision of the Securities or this Agreement,
including remedies available under the Uniform Commercial Code.
The Agent 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 Agent 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.
SECTION 5.4 Waiver of Past Defaults. The Holders of a majority in principal
amount of the Securities by notice to the Agent 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 8.02 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 5.5 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 Agent or of exercising any power
conferred on the Agent. However, the Agent may refuse to follow any direction
that conflicts with law or this Agreement or, subject to Section 6.01, that the
Agent determines is unduly prejudicial to the rights of other Securityholders or
would involve the Agent in personal liability; provided, however, that the Agent
may take any other action deemed proper by the Agent that is not inconsistent
with such direction. Prior to taking any action hereunder, the Agent 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 5.6 Limitation on Suits. A Securityholder may not pursue any remedy
with respect to this Agreement or the Securities unless:
(1) the Holder gives to the Agent 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 Agent to pursue the remedy;
(3) such Holder or Holders offer to the Agent reasonable security or
indemnity against any loss, liability or expense;
(4) the Agent does not comply with the request within 60 days after receipt
of the request and the offer of security or indemnity; and
(5) the Holders of a majority in principal amount of the Securities do not
give the Agent a direction inconsistent with the request during such 60-day
period.
A Securityholder may not use this Agreement to prejudice the rights of
another Securityholder or to obtain a preference or priority over another
Securityholder.
SECTION 5.7 Rights of Holders To Receive Payment. Notwithstanding any other
provision of this Agreement, the right of any Holder to receive payment of
principal of and interest on and any other amounts due under 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 5.8 Collection Suit by Agent. If an Event of Default occurs and is
continuing, the Agent may recover judgment in its own name and on behalf of the
Holders 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 6.07.
SECTION 5.9 Agent May File Proofs of Claim. The Agent 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 Agent 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 Agent and, in the event that
the Agent shall consent to the making of such payments directly to the Holders,
to pay to the Agent any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Agent, its agents and its counsel, and any
other amounts due the Agent under Section 6.06.
SECTION 5.10 Priorities. If the Agent collects any money or property
pursuant to this Article 5, it shall pay out the money or property in the
following order:
FIRST: to the Agent for amounts due under Section 6.07;
SECOND: to Securityholders for amounts due and unpaid on the Securities,
ratably, without preference or priority of any kind, according to the amounts
due and payable on the Securities; and
THIRD: after all amounts due under the Securities have indefeasibly been
paid in full to the Holders, to the Company.
The Agent 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 Agent a notice that
states the record date, the payment date and amount to be paid.
SECTION 5.11 Undertaking for Costs. In any suit for the enforcement of any
right or remedy under this Agreement or in any suit against the Agent for any
action taken or omitted by it as Agent, 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 Agent or by a
Holder against the Company,
SECTION 5.12 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 Agreement; 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 Agent or to any Holder, but shall suffer and
permit the execution of every such power as though no such law had been enacted.
ARTICLE 6.
The Agent
SECTION 6.1 Duties of The Agent. (a) If an Event of Default has occurred
and is continuing, the Agent shall exercise such of the rights and powers vested
in it by this Agreement and use the same degree of care and skill in their
exercise as the Agent would exercise or use under the circumstances in the
conduct of the Agent's own affairs.
(b) Except during the continuance of an Event of Default:
(1) the Agent undertakes to perform such duties and only such duties as are
specifically set forth in this Agreement and no implied covenants or obligations
shall be read into this Agreement against the Agent; and
(2) in the absence of bad faith on its part, the Agent 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 Agent and
conforming to the requirements of this Agreement. However, the Agent shall
examine the certificates and opinions to determine whether or not they conform
to the requirements of this Agreement.
(c) The Agent may not be relieved from liability for its own grossly
negligent action, its own grossly 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 Agent shall not be liable for any error of judgment made in good
faith unless it is proved that the Agent was grossly negligent in ascertaining
the pertinent facts; and
(3) the Agent 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 5.05.
(d) Every provision of this Agreement that in any way relates to the Agent
is subject to paragraphs (a), (b) and (c) of this Section.
(e) The Agent shall not be liable for interest on any money received by it.
(f) Money held in trust by the Agent need not be segregated from other
funds except to the
extent required by law.
(g) No provision of this Agreement shall require the Agent 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 Agreement relating to the conduct or affecting
the liability of or affording protection to the Agent shall be subject to the
provisions of this Section.
SECTION 6.2 Rights of Agent. (a) The Agent may rely on any document
reasonably believed by it to be genuine and to have been signed or presented by
the proper Person. The Agent need not investigate any fact or matter stated in
the document.
(b) Before the Agent acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel. The Agent 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 Agent may act through agents or employees.
(d) The Agent 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;
provided, however, that the Agent's conduct does not constitute wilful
misconduct or gross negligence.
(e) The Agent may consult with counsel with respect to legal matters
relating to this Agreement and the Securities shall be fully and completely
protected 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 6.3 Individual Rights of Agent. The Agent 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 Agent. Any Paying Agent, Registrar, co-registrar or co-paying agent may
do the same with like rights. However, the Agent must comply with Section 6.09.
SECTION 6.4 Agent's Disclaimer. The Agent shall not be responsible for and
makes no representation as to the validity or adequacy of this Agreement 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 Agreement or in any document issued in connection with the sale
of the Securities or in the Securities.
SECTION 6.5 Notice of Defaults. If a Default occurs and is continuing and
if the Agent receives written notice thereof, the Agent 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 purchase provisions of such Security, if any),
the Agent may withhold the notice if and so long as it in good faith determines
that withholding the notice is in the interests of Securityholders.
SECTION 6.6 Compensation and Indemnity. If neither the Agent nor any of its
Affiliates is a Securityholder, the Company shall pay to the Agent from time to
time reasonable compensation for its services. The Company shall reimburse the
Agent 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 Agreement.
Such expenses shall include the reasonable compensation and expenses,
disbursements and advances of the Agent's agents, counsel, accountants and
experts. The Company shall indemnify the Agent against any and all loss,
liability or reasonable expense (including reasonable attorneys' fees) incurred
by it in connection with the administration of this agreement and the
performance of its duties hereunder. The Agent shall notify the Company promptly
of any claim for which it may seek indemnity. Failure by the Agent to so notify
the Company shall not relieve the Company of its obligations hereunder. The
Company shall defend the claim and the Agent may have separate counsel but the
fees and expenses of such counsel shall be at the expense of the Agent 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 Agent 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 indemnify
against any loss, liability or expense to the extent incurred by the Agent
through the Agent's own wilful misconduct, negligence or bad faith.
To secure the Company's payment obligations in this Section, the Agent
shall have a lien prior to the Securities on all money or property held or
collected by the Agent other than money or property held in trust to pay amounts
due under particular Securities.
The Company's payment obligations pursuant to this Section shall survive
the discharge of this Agreement. When the Agent incurs expenses after the
occurrence of a Default specified in Section 5.01(6) or (7) with respect to the
Company, the expenses are intended to constitute expenses of administration
under the Bankruptcy Law.
SECTION 6.7 Successor Agent by Merger. If the Agent 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 Agent.
ARTICLE 7.
Discharge of Agreement
SECTION 7.1 Discharge of Liability on Securities. (a) When all outstanding
Securities have become due and payable and the Company irrevocably and
indefeasibly deposits with the Agent immediately available funds sufficient to
pay at maturity all outstanding Securities, including interest thereon to
maturity and any applicable premiums and other amounts due thereunder and
payable hereunder by the Company, then this Agreement shall, subject to Section
7.01(b), cease to be of further effect. After such irrevocable and indefeasible
payment, the Agent shall acknowledge satisfaction and discharge of this
Agreement, other than those surviving obligations set forth in Section 7.01(b),
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) Notwithstanding clause (a) above, the Company's obligations in Sections
2.03, 2.04, 2.05, 2.06, 2.07, 6.06 and 6.07 and this Article 7 shall survive
until the Securities have been paid in full. Thereafter, the Company's
obligations in Sections 6.06, 7.04 and 7.05 shall survive.
SECTION 7.2 Repayment to Company. The Agent 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 Agent
to publish or mail notice to Securityholders prior to making such payment to the
Company, the Agent 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.
ARTICLE 8.
Optional Conversion of Securities
SECTION 8.1 Optional Conversion Privilege and Conversion Price
Subject to and upon compliance with the provisions of this Article, at the
option of the Holder thereof, any Security or any portion of the principal
amount thereof which is $100,000 or an integral multiple of $1,000 in excess
thereof may be converted at the principal amount thereof (without premium), or
of such portion thereof, into fully paid and nonassessable shares (calculated as
to each conversion to the nearest 1/100 of a share) of voting, or at the
Holder's option, nonvoting Common Stock of the Company, at the conversion price,
determined as hereinafter provided, in effect at the time of conversion. Such
conversion right commences on and after June 9, 1998 and shall expire on May 31,
1999.
The price at which shares of Common Stock shall be delivered upon
conversion (herein called the "conversion price") shall be initially $6.00 per
share of Common Stock. The Conversion Price shall be adjusted in certain
instances as provided in paragraphs (1), (2), (3), (4), (7) and (8) of Section
8.04.
SECTION 8.2 Exercise of Optional Conversion Privilege
In order to exercise the conversion privilege, the Holder of any Security
to be converted shall surrender such Security, duly endorsed or assigned to the
Company or in blank, at any office or agency of the Company maintained for that
purpose accompanied by written notice to the Company at such office or agency
that the Holder elects to convert such Security or, if less than the entire
principal amount thereof is to be converted, the portion thereof to be
converted.
Securities shall be deemed to have been converted immediately prior to the
close of business on the day of surrender of such Securities for conversion in
accordance with the foregoing provisions, and at such time the rights of the
Holders of such Securities as Holders shall cease, and the Person or Persons
entitled to receive the Common Stock issuable upon conversion shall be treated
for all purposes as the record holder or holders of such Common Stock at such
time. As promptly as practicable on or after the conversion date, the Company
shall issue and shall deliver at such office or agency a certificate or
certificates for the number of full shares of Common Stock issuable upon
conversion, together with payment in lieu of any fraction of a share, as
provided in Section 8.03.
In the case of any Security which is converted in part only, upon such
conversion the Company shall execute and deliver to the Holder thereof, at the
expense of the Company, a new Security or Securities of authorized denominations
in aggregate principal amount equal to the unconverted portion of the principal
amount of such Security.
SECTION 8.3 Fractions of Shares.
No fractional shares of Common Stock shall be issued upon conversion of
Securities. If more than one Security shall be surrendered for conversion at one
time by the same Holder, the number of full shares which shall be issuable upon
conversion thereof shall be computed on the basis of the aggregate principal
amount of the Securities (or specified portions thereof) so surrendered. Instead
of any fractional share of Common Stock which would otherwise be issuable upon
conversion of any Security or Securities (or specified portions thereof), the
Company shall pay a cash adjustment in respect of such fraction in an amount
equal to the same fraction of the market price per share of Common Stock (as
determined by the Board of Directors or in any manner prescribed by the Board of
Directors) at the close of business on the day of conversion.
SECTION 8.4 Adjustment of Conversion Price
(1) In case the Company shall pay or make a dividend or other distribution
on any class of capital stock of the Company in Common Stock, the conversion
price in effect at the opening of business on the day following the date fixed
for the determination of stockholders entitled to receive such dividend or other
distribution shall be reduced by multiplying such conversion price by a fraction
of which the numerator shall be the number of shares of Common Stock outstanding
at the close of business on the date fixed for such determination and the
denominator shall be the sum of such number of shares and the total number of
shares constituting such dividend or other distribution, such reduction to
become effective immediately after the opening of business on the day following
the date fixed for such determination. For the purposes of this paragraph (1),
the number of shares of Common Stock at any time outstanding shall not include
shares held in the treasury of the Company but shall include shares issuable in
respect of scrip certificates issued in lieu of fractions of shares of Common
Stock. The Company will not pay any dividend or make any distribution on shares
of Common Stock held in the treasury of the Company.
(2) In case the Company shall issue or sell to any Person shares of Common
Stock or rights or warrants entitling such Person to subscribe for or purchase
shares of Common Stock at a price per share less than the higher of the current
conversion price or the Current Market Price per share (determined as provided
in paragraph (6) of this Section) of the Common Stock on the date fixed for the
determination of stockholders entitled to receive such rights or warrants (or,
in the case of rights or warrants not exercisable until the occurrence of a
contingent event other than the passage of time or other event that is certain
to occur, on the date that such contingent event occurs), the conversion price
in effect at the opening of business on the day following the date fixed for
such determination or the date such contingent event occurs, as the case may be,
shall be reduced by multiplying such conversion price by a fraction of which the
numerator shall be the number of shares of Common Stock outstanding at the close
of business on the date fixed for such determination or the date such contingent
event occurs, as the case may be, plus the number of shares of Common Stock
which the aggregate of the offering price of the total number of shares of
Common Stock so offered for subscription or purchase would purchase at the
higher of the current conversion price or such Current Market Price and the
denominator shall be the number of shares of Common Stock outstanding at the
close of business on the date fixed for such determination or the date such
contingent event occurs, as the case may be, plus the number of shares of Common
Stock so offered for subscription or purchase, such reduction to become
effective immediately after the opening of business on the day following the
date fixed for such determination or the date such contingent event occurs, as
the case may be. For the purposes of this paragraph (2), the number of shares of
Common Stock at any time outstanding shall not include shares held in the
treasury of the Company but shall include shares issuable in respect of scrip
certificates issued in lieu of fractions of shares of Common Stock. The Company
will not issue any rights or warrants in respect of shares of Common Stock held
in the treasury of the Company.
(3) In case outstanding shares of Common Stock shall be subdivided into a
greater number of shares of Common Stock, the conversion price in effect at the
opening of business on the day following the day upon which such subdivision
becomes effective shall be proportionately reduced, and, conversely, in case
outstanding shares of Common Stock shall each be combined into a smaller number
of shares of Common Stock, the conversion price in effect at the opening of
business on the day following the day upon which such combination becomes
effective shall be proportionately increased, such reduction or increase, as the
case may be, to become effective immediately after the opening of business on
the day following the day upon which such subdivision or combination becomes
effective.
(4) In case the Company shall, by dividend or otherwise, distribute to all
holders of its Common Stock evidences of its indebtedness or assets (including
securities, but excluding any rights or warrants referred to in paragraph (2) of
this Section, any dividend or distribution paid in cash out of the retained
earnings of the Company and any dividend or distribution referred to in
paragraph (1) of this Section), the conversion price shall be adjusted so that
the same shall equal the price determined by multiplying the conversion price in
effect immediately prior to the close of business on the date fixed for the
determination of stockholders entitled to receive such distribution by a
fraction of which the numerator shall be the lower of the current conversion
price or the Current Market Price per share (determined as provided in paragraph
(6) of this Section) of the Common Stock on the date fixed for such
determination less the then fair market value (as determined in good faith by
the Board of Directors, whose determination shall be supported by a fairness
opinion by a nationally recognized investment banking firm and described in a
Board Resolution filed with the Agent) of the portion of the assets or evidences
of indebtedness so distributed applicable to one share of Common Stock and the
denominator shall be the lower of the current conversion price or such Current
Market Price per share of the Common Stock, such adjustment to become effective
immediately prior to the opening of business on the day following the date fixed
for the determination of stockholders entitled to receive such distribution.
(5) The reclassification of Common Stock into securities including other
than Common Stock (other than any reclassification upon a consolidation or
merger to which Section 8.11 applies) shall be deemed to involve (a) a
distribution of such securities other than Common Stock to all holders of Common
stock (and the effective date of such reclassification shall be deemed to be
"the date fixed for the determination of stockholders entitled to receive such
distribution" and "the date fixed for such determination" within the meaning of
paragraph (4) of this Section), and (b) a subdivision or combination, as the
case may be, of the number of shares of Common Stock outstanding immediately
prior to such reclassification into the number of shares of Common Stock
outstanding immediately thereafter (and the effective date of such
reclassification shall be deemed to the "the day upon which such subdivision
becomes effective" or "the day upon which such combination becomes effective",
as the case may be, and "the day upon which such subdivision or combination
becomes effective" within the meaning of paragraph (3) of this Section).
(6) For the purpose of any computation under paragraphs (2) and (4) of this
Section, the current market price per share of Common Stock on any date (the
"Current Market Price") shall be deemed to be the average of the daily closing
prices per share of the Company's Common Stock for the 30 consecutive trading
days immediately before the day in question; provided, however, that in the case
of (i) a primary underwritten public offering at a price in excess of the then
current conversion price, the Current Market Price shall be deemed the price to
the underwriter set forth in the prospectus, and (ii) stock options issued to
employees and directors pursuant to a plan adopted by the Company's Board of
Directors, the Current Market Price shall be the exercise price of such options.
The closing price for each day shall be the last reported sale price regular way
or, in case no such reported sale takes place on such day, the average of the
reported closing bid and asked prices regular way, on the principal national
securities exchange on which the Common Stock is listed or admitted to trading
or stock market if the Common Stock is not listed or admitted to trading on any
national securities exchange or stock market, the average of the closing bid and
asked prices in the over-the-counter market as reported by NASDAQ or, if not
quoted by NASDAQ on such day, as furnished by any registered broker/dealer
selected for that purpose.
(7) The Company may make such reductions in the conversion price, in
addition to those required by paragraphs (1),(2),(3) and (4) of this Section, as
it considers to be advisable in order that any event treated for Federal income
tax purposes as a dividend of stock or stock rights shall not be taxable to the
recipients.
(8) No adjustment in the conversion price shall be required unless such
adjustment would require an increase or decrease of at least 1% in the
conversion price; provided, however, that any adjustments which by reason of
this paragraph (8) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All calculations shall be made
to the nearest cent or to the nearest one-thousandth of a share, as the case may
be.
(9) The Company represents and warrants that upon (a) the conversion in
full of this Note and (b) the exercise in full of the option of Dynex Holding,
Inc. ("Dynex") to purchase the shares of the Company's common stock under the
Stock Option Agreement by and between Dynex and Messrs. Xxxxxx Xxxx, Xxxxxxx X.
Xxxxxxxx and Xxxx X. Xxxxxxxx, dated as of June 9, 1998, the combined
shareholdings of Dynex Capital, Inc. and Dynex will be at least 66-2/3% of the
shares of the Company's common stock on a fully-diluted basis. If such
representation and warranty is breached, then the Company agrees to adjust the
conversion price so that such combined holdings would equal 66-2/3%, unless
deemed unnecessary by the Agent.
SECTION 8.5 Notice of Adjustments of Conversion Price.
Whenever the conversion price is adjusted as herein provided:
(a) the Company shall compute the adjusted conversion price in accordance
with Section 8.04 and shall prepare a certificate signed by the Treasurer of the
Company setting forth the adjusted conversion price and showing in reasonable
detail the facts upon which such adjustment is based, and such certificate shall
forthwith be filed (with a copy to the Agent) at each office or agency
maintained for the purpose of conversion of Securities; and
(b) a notice stating that the conversion price has been adjusted and
setting forth the adjusted conversion price shall forthwith be required, and as
soon as practicable after it is required, such notice shall be mailed by the
Company to all Holders at their last addresses as they shall appear in the
Security Register.
SECTION 8.6 Notice of Certain Corporate Action
In case:
(a) the Company shall declare a dividend (or any other distribution) on its
Common Stock payable otherwise than in cash out of its retained earnings; or
(b) the Company shall authorize the granting to the holders of its Common
Stock of rights or warrants to subscribe for or purchase any shares of capital
stock of any class or of any other rights; or
(c) of any reclassification of the Common Stock of the Company (other than
a subdivision or combination of its outstanding shares of Common Stock), or of
any consolidation or merger to which the Company is a party and for which
approval of any stockholders of the Company is required, or of the sale or
transfer of all or substantially all of the assets of the Company; or
(d) of the voluntary or involuntary dissolution, liquidation or winding up
of the Company;
then the Company shall cause to be filed with the Agent and at each office
or agency maintained for the purpose of conversion of Securities, and shall
cause to be mailed to all Holders at their last addresses as they shall appear
in the Security Register, at least 20 days prior to the applicable record or
effective date hereinafter specified, a notice stating (x) the date on which a
record is to be taken for the purpose of such dividend, distribution, rights or
warrants, or, if a record is not to be taken, the date as of which the holders
of Common Stock of record to be entitled to such dividend, distribution, rights
or warrants are to be determined, or (y) the date on which such
reclassification, consolidation, merger, sale, transfer, dissolution,
liquidation or winding up is expected to become effective, and the date as of
which it is expected that holders of Common Stock of record shall be entitled to
exchange their shares of Common Stock for securities, cash or other property
deliverable upon such reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation or winding up.
SECTION 8.7 Company to Reserve Common Stock
The Company shall at all times reserve and keep available, free from
pre-emptive rights, out of its authorized but unissued non-voting and voting
Common Stock, for the purpose of effecting the conversion of Securities, the
full number of shares of Common Stock then issuable upon the conversion of all
outstanding Securities.
SECTION 8.8 Taxes on Conversions
The Company will pay any and all taxes that may be payable in respect of
the issue or delivery of shares of Common Stock on conversion of Securities
pursuant hereto. The Company shall not, however, be required to pay any tax
which may be payable in respect of any transfer involved in the issue and
delivery of shares of Common Stock in a name other than that of the Holder of
the Security or Securities to be converted, and no such issue or delivery shall
be made unless and until the Person requesting such issue has paid to the
Company the amount of any such tax, or has established to the satisfaction of
the Company that such tax has been paid.
SECTION 8.9 Covenant as to Common Stock; Accounting Treatment of
Consideration.
The Company covenants that all shares of Common Stock which may be issued
upon conversion of Securities will upon issue by fully paid and nonassessable
and, except as provided in Section 8.08, the Company will pay all taxes, liens
and charges with respect to the issue thereof.
The Company covenants that, upon conversion of Securities as herein
provided, there will be credited to Common Stock par capital from the
consideration for which the shares of Common Stock issuable upon such conversion
are issued an amount per share of Common Stock so issued as determined by the
Board of Directors, which amount shall not be less than the amount required by
law and by the Company's certificate of incorporation, as amended, as in effect
on the date of such conversion. For the purposes of this covenant the net
proceeds received by the Company from the issuance and sale of the Securities
converted, less any cash paid in respect of fractional share interests upon such
conversion, shall be deemed to be the amount of consideration for which the
shares of Common Stock issuable upon such conversion are issued.
SECTION 8.10 Cancellation of Converted Securities
All Securities delivered for conversion shall be delivered to the Company
to be canceled.
SECTION 8.11 Provisions in Case of Consolidation, Merger or Sale of Assets.
In case of any consolidation of the Company with, or merger of the Company
into, any other Person, any merger of another Person into the Company (other
than a merger which does not result in any reclassification, conversion,
exchange or cancellation of outstanding shares of Common Stock of the Company)
or any sale or transfer of all or substantially all of the assets of the
Company, the Person formed by such consolidation or resulting from such merger
or which acquires such assets, as the case may be, shall execute and deliver to
the Agent a supplemental Agreement providing that the Holder of each Security
then outstanding shall have the right thereafter, during the period such
Security shall be convertible as specified in Section 8.01, to convert such
Security only into the kind and amount of securities, cash and other property
receivable upon such consolidation, merger, sale or transfer by a holder of the
number of shares of Common Stock of the Company in which such Security might
have been converted immediately prior to such consolidation, merger, sale or
transfer, assuming such holder of Common Stock of the Company (i) is not a
Person with which the Company consolidated or into which the Company merged or
which merged into the Company or to which such sale or transfer was made, as the
case may be ("constituent Person"), or an Affiliate of a constituent Person and
(ii) failed to exercise his rights of election, if any, as to the kind or amount
of securities, cash and other property receivable upon such consolidation,
merger, sale or transfer (provided that if the kind or amount of securities,
cash and other property receivable upon such consolidation, merger, sale or
transfer is not the same for each share of Common Stock of the Company held
immediately prior to such consolidation, merger, sale or transfer by others than
a constituent Person or an Affiliate thereof and in respect of which such rights
of election shall not have been exercised ("non-electing share"), then for the
purpose of this Section the kind and amount of securities, cash and other
property receivable upon such consolidation, merger, sale or transfer by each
non-electing share shall be deemed to be the kind and amount so receivable per
share by a plurality of the nonelecting shares). Such supplemental Agreement
shall provide for adjustments which, for events subsequent to the effective date
of such supplemental Agreement, shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Article. The above
provisions of this Section shall similarly apply to successive consolidations,
mergers, sales or transfers.
SECTION 8.12 Registration and Listing of Shares.
The Company covenants that if any shares of Common Stock, required to be
reserved for purposes of conversion of Securities hereunder, require
registration with or approval of any governmental authority under any Federal,
State or District of Columbia law before such shares may be issued upon
conversion, the Company will in good faith and as expeditiously as possible
endeavor to cause such shares to be duly registered or approved, as the case may
be. The Company further covenants that so long as the Common Stock of the
Company is listed on the NASDAQ Stock Market or any national securities
exchange, the Company will, if permitted by the rules of NASDAQ or such
exchange, list and keep listed on such exchange, upon official notice of
issuance, all shares of Common Stock issuable upon conversion of Securities.
SECTION 8.13. Agent and Conversion Agents Not Liable
Neither the Agent nor any conversion agent shall at any time be under any
duty or responsibility to any Holder of Securities to determine whether any
facts exist which may require any adjustment of the conversion rate, or with
respect to the nature or extent of any such adjustment when made, or with
respect to the method employed, or herein or in any supplemental Agreement
provided to be employed, in making the same. Neither the Agent nor any
conversion agent shall be accountable with respect to the validity or value (or
the kind or amount) of any shares of Common Stock or of any securities or cash
or other property which may at any time be issued or delivered upon the
conversion of any Security, or makes any representation with respect thereto.
Neither the Agent nor any conversion agent shall be responsible for any failure
of the Company to make any cash payment or to issue, transfer or deliver any
shares of Common Stock or stock certificates or other securities or property
upon the surrender of any Security for the purpose of conversion, or subject to
Section 6.01, to comply with any of the covenants of the Company contained in
this Article Eight.
SECTION 8.14. Registration Rights.
The Company agrees to provide to the Agent registration rights on
substantially the same terms and conditions as those afforded to Messrs. Xxxxxx
Xxxx, Xxxxxxx X. Xxxxxxxx and Xxxx X. Xxxxxxxx (the "Stockholders") pursuant to
that certain Stock Option Agreement dated as of June 9, 1998 by and between
Dynex Holding, Inc. and the Stockholders; provided, however, that the expense of
such registration shall be borne by the Company.
ARTICLE 9.
[RESERVED]
ARTICLE 10.
Amendments
SECTION 10.1 Without Consent of Holders. The Company, when authorized by a
resolution of its Board of Directors, and the Agent may amend this Agreement 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 4;
(3 to add guarantees with respect to the Securities or to secure the
Securities;
(4 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; or
(5 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 give such notice to all Securityholders, or any defect therein, shall not
impair or affect the validity of an amendment under this Section.
SECTION 10.2 With Consent of Holders. The Company, when authorized by a
resolution of its Board of Directors, and the Agent may amend this Agreement 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 make any Security payable in money other than that stated in the
Security; or
(5 make any change in Section 5.04 or 5.07 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 10.3 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 Agent 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 Agreement. 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 10.4 Notation on or Exchange of Securities. If an amendment changes
the terms of a Security, the Agent may require the Holder of the Security to
deliver it to the Agent. The Agent may place an appropriate notation on the
Security regarding the changed terms and return it to the Holder. Alternatively,
if the Company or the Agent so determines, the Company in exchange for the
Security shall issue 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 10.5 Agent To Sign Amendments. The Agent shall sign any amendment
authorized pursuant to this Article 10 if the amendment does not adversely
affect the rights, duties, liabilities or immunities of the Agent. If it does,
the Agent may but need not sign it. In signing such amendment the Agent shall be
entitled to receive indemnity reasonably satisfactory to it and to receive, and
(subject to Section 6.01) 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 Agreement.
SECTION 10.6 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 Agreement 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 11.
Miscellaneous
SECTION 11.1 Notices. Any notice or communication shall be in writing and
delivered in person or mailed by first-class mail, overnight delivery by a
nationally recognized overnight delivery service, or sent by facsimile
transmission addressed as follows:
if to the Company: 000 Xxxxxxxx Xxxxxx 0xx Xxxxx
Xxxxxx, Xxxxx 00000
Attn: Chairman
Fax: (000) 000-0000
Phone: (000) 000-0000
if to the Agent: 00000 Xxxxxxx Xxxx, Xxxxx Xxxxx
Xxxx Xxxxx, Xxxxxxxx 00000
Attention: Master Servicing Department
Fax: (000) 000-0000
Phone: (000) 000-0000
if to Initial Holder: Dynex Capital, Inc.
00000 Xxxxxxx Xxxx, Xxxxx Xxxxx
Xxxx Xxxxx, Xxxxxxxx 00000
Attention: Chief Financial Officer
Fax: (000) 000-0000
Phone: (000) 000-0000
The Company or the Agent 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 given in the manner provided above, it is duly
given, upon receipt or (a) for mail, three Business Days thereafter, and (b) for
overnight delivery on the following Business Day.
SECTION 11.2 Certificate and Opinion as to Conditions Precedent. Upon any
request or application by the Company to the Agent to take or refrain from
taking any action under this Agreement, the Company shall furnish to the Agent:
(1 an Officers' Certificate in form and substance reasonably satisfactory
to the Agent stating that, in the opinion of the signers, all conditions
precedent, if any, provided for in this Agreement relating to the proposed
action have been complied with; and
(2 an Opinion of Counsel in form and substance reasonably satisfactory to
the Agent stating that, in the opinion of such counsel, all such conditions
precedent have been complied with.
SECTION 11.3 Statements Required in Certificate or Opinion. Each
certificate or opinion with respect to compliance with a covenant or condition
provided for in this Agreement 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 11.4 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 Agent shall
be protected in relying on any such direction, waiver or consent, only
Securities which the Agent 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 11.5 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 or in Texas. 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 11.6 Governing Law. This Agreement 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 11.7 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 Agreement 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 11.8 Successors. All agreements of the Company in this Agreement
and the Securities shall bind its successors. All agreements of the Agent in
this Agreement shall bind its successors.
SECTION 11.9 Multiple Originals. The parties may sign any number of copies
of this Agreement. Each signed copy shall be an original, but all of them
together represent the same agreement. One signed copy is enough to prove this
Agreement.
SECTION 11.10 Table of Contents; Headings. The table of contents,
cross-reference sheet and headings of the Articles and Sections of this
Agreement have been inserted for convenience of reference only, are not intended
to be 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 Agreement to be duly
executed as of the date first written above.
AUTOBOND ACCEPTANCE CORPORATION
By:
Name:
Title:
DYNEX CAPITAL, INC.
By:
Name:
Title:
EXECUTION COPY
AUTOBOND ACCEPTANCE CORPORATION
12% Convertible Senior Notes Due 2003
Senior Note Agreement
Dated as of June 9, 1998
DYNEX CAPITAL, INC.,
Agent
Table of Contents
ARTICLE 1.Definitions and Incorporation by Reference.........................1
SECTION 1.01 Definitions 1
SECTION 1.02 Other Definitions......................................8
SECTION 1.03 Rules of Construction..................................8
ARTICLE 2.The Securities.....................................................9
SECTION 2.01 Form and Dating........................................9
SECTION 2.02 Execution..............................................9
SECTION 2.03 Registrar and Paying Agent.............................9
SECTION 2.04 Paying Agent10
SECTION 2.05 Securityholder Lists..................................10
SECTION 2.06 Transfer and Exchange.................................10
SECTION 2.07 Replacement Securities................................10
SECTION 2.08 Outstanding Securities................................11
SECTION 2.09 Temporary Securities..................................11
SECTION 2.10 Cancellation11
SECTION 2.11 Defaulted Interest....................................11
SECTION 2.12 Special Transfer Provisions...........................11
ARTICLE 3.Covenants.........................................................12
SECTION 3.01 Payment of Securities.................................12
SECTION 3.02 SEC Reports 12
SECTION 3.03 Limitation on Restricted Payments.....................12
SECTION 3.04 Further Assurances. .................................13
SECTION 3.05 Limitation on Investment Company Status...............13
ARTICLE 4.Successor Company.................................................13
SECTION 4.01 When Company May Merge or Transfer Assets.............13
ARTICLE 5.Defaults and Remedies.............................................14
SECTION 5.01 Events of Default.....................................14
SECTION 5.02 Acceleration16
SECTION 5.03 Other Remedies........................................16
SECTION 5.04 Waiver of Past Defaults...............................16
SECTION 5.05 Control by Majority...................................16
SECTION 5.06 Limitation on Suits...................................17
SECTION 5.07 Rights of Holders To Receive Payment..................17
SECTION 5.08 Collection Suit by Agent..............................17
SECTION 5.09 Agent May File Proofs of Claim........................17
SECTION 5.10 Priorities 18
SECTION 5.11 Undertaking for Costs.................................18
SECTION 5.12 Waiver of Stay or Extension Laws......................18
ARTICLE 6.The Agent.........................................................18
SECTION 6.01 Duties of The Agent...................................18
SECTION 6.02 Rights of Agent.......................................19
SECTION 6.03 Individual Rights of Agent............................20
SECTION 6.04 Agent's Disclaimer....................................20
SECTION 6.05 Notice of Defaults....................................20
SECTION 6.06 Compensation and Indemnity............................20
SECTION 6.07 Replacement of Agent..................................21
SECTION 6.08 Successor Agent by Merger.............................22
SECTION 6.09 Eligibility; Disqualification.........................22
ARTICLE 7.Discharge of Agreement............................................22
SECTION 7.01 Discharge of Liability on Securities..................22
SECTION 7.02 Repayment to Company..................................22
ARTICLE 8.Optional Conversion of Securities................................23
SECTION 8.01 Optional Conversion Privilege and Conversion Price...23
SECTION 8.02 Exercise of Optional Conversion Privilege............23
SECTION 8.03 Fractions of Shares..................................23
SECTION 8.04 Adjustment of Conversion Price.......................24
SECTION 8.05 Notice of Adjustments of Conversion Price............26
SECTION 8.06 Notice of Certain Corporate Action...................27
SECTION 8.07 Company to Reserve Common Stock......................27
SECTION 8.08 Taxes on Conversions.................................28
SECTION 8.09 Covenant as to Common Stock; Accounting Treatment of
Consideration........................................28
SECTION 8.10 Cancellation of Converted Securities.................28
SECTION 8.11 Provisions in Case of Consolidation, Merger or Sale
of Assets............................................28
SECTION 8.12 Registration and Listing of Shares...................29
SECTION 8.13. Agent and Conversion Agents Not Liable...............29
ARTICLE 9.[RESERVED].......................................................30
ARTICLE 10.Amendments......................................................30
SECTION 10.01 Without Consent of Holders...........................30
SECTION 10.02 With Consent of Holders..............................30
SECTION 10.03 Revocation and Effect of Consents and Waivers........31
SECTION 10.04 Notation on or Exchange of Securities................31
SECTION 10.05 Agent To Sign Amendments.............................31
SECTION 10.06 Payment for Consent..................................32
ARTICLE 11.Miscellaneous...................................................32
SECTION 11.01 Notices 32
SECTION 11.02 Certificate and Opinion as to Conditions Precedent...33
SECTION 11.03 Statements Required in Certificate or Opinion........33
SECTION 11.04 When Securities Disregarded..........................33
SECTION 11.05 Legal Holidays.......................................33
SECTION 11.06 Governing Law........................................34
SECTION 11.07 No Recourse Against Others...........................34
SECTION 11.08 Successors 34
SECTION 11.09 Multiple Originals ..................................34
SECTION 11.10 Table of Contents; Headings..........................34
Exhibit A - Form of Series A Note
Exhibit B - Form of Transferee Letter
Exhibit C - Form of Investment Letter
Exhibit A
[FORM OF NOTE]
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. BY ITS ACCEPTANCE
HEREOF, EACH PURCHASER REPRESENTS AND AGREES THAT THIS NOTE MAY NOT BE OFFERED,
SOLD, PLEDGED OR OTHERWISE TRANSFERRED, EXCEPT IN COMPLIANCE WITH THE
REGISTRATION PROVISIONS OF THE SECURITIES ACT AND ANY APPLICABLE PROVISIONS
UNDER STATE SECURITIES LAWS OR PURSUANT TO AN AVAILABLE EXEMPTION FROM SUCH
PROVISIONS. THE TRANSFER OF THIS NOTE IS SUBJECT TO CERTAIN CONDITIONS SET FORTH
IN THE AGREEMENT REFERRED TO HEREIN.
12% Convertible Se nior Note due 2003
No. $
AutoBond Acceptance Corporation, a corporation duly organized and existing
under the laws of Texas (herein called the "Company", which term includes any
successor corporation under the Agreement hereinafter referred to), for value
received, hereby promises to pay to Dynex Capital, Inc., or registered assigns,
the principal sum of $3,000,000 on June __, 1999 and to pay interest thereon
from June __, 1998 or from the most recent Interest Payment Date to which
interest has been paid, quarterly on March 1, June 1, September 1, and December
1 in each year, commencing September 1, 1998 (and upon the Stated Maturity), in
arrears at the rate of 12% per annum (14% after Stated Maturity), until the
principal hereof is paid. Payment of the principal of (and premium, if any) and
interest on this Security will be made by wire transfer in immediately available
funds to the Holder. Interest shall be computed on the basis of actual days
elapsed and a 360-day year consisting of twelve 30-day months.
This Security is one of a duly authorized issue of Securities of the
Company designated as its 12% Convertible Notes due 2003 (herein called the
"Securities"), limited in aggregate principal amount to $3,000,000, issued
pursuant to the Note Agreement, dated as of June 9, 1998 (herein called the
"Agreement"), between the Company and Dynex Capital, Inc., as Note Agent (herein
called the "Note Agent", which term includes any successor agent under the
Agreement), to which Agreement and all Agreements supplemental thereto reference
is hereby made for a statement of the respective rights, limitations of rights,
duties and immunities thereunder of the Company, the Agent and the Holders of
the Securities and of the terms upon which the Securities are, and are to be,
executed and delivered.
Optional Conversion. Subject to and upon compliance with the provisions of
the Agreement, the Holder of this Security is entitled, at such Holder's option,
at any time on or before the close of business on June __, 1999, or in case this
Security or a portion hereof is called for redemption, then in respect of this
Security or such portion hereof until and including, but (unless the Company
defaults in making the payment due upon redemption) not after, the close of
business on the Redemption Date, to convert up to the principal amount of this
Security (or any portion of the principal amount hereof which is $100,000 or an
integral multiple thereof in excess of $1,000), at the principal amount hereof,
or of such portion, into fully paid and nonassessable shares (calculated as to
each conversion to the nearest 1/100 of a share) of Common Stock of the Company
at a conversion price equal to $6.00 in aggregate principal amount of Securities
for each share of Common Stock (or at the current adjusted conversion price if
an adjustment has been made as provided in the Agreement) by surrender of this
Security, duly endorsed or assigned to the Company or in blank, to the Company,
accompanied by written notice to the Company that the holder hereof elects to
convert this Security and the portion hereof to be converted. Accrued and unpaid
interest to the date of conversion will be payable by the Company to the Holder.
No payment or adjustment is to be made on conversion for dividends on the Common
Stock issued on conversion. No fractions of shares or scrip representing
fractions of shares will be issued on conversion, but instead of any fractional
interest the Company shall pay a cash adjustment as provided in the Agreement.
The conversion price is subject to adjustment as provided in the Agreement. In
addition, the Agreement provides that in case of certain consolidations or
mergers to which the Company is a party or the transfer of substantially all of
the assets of the Company, the Agreement shall be amended, without the consent
of any holders of Securities, so that this Security, if then outstanding, will
be convertible thereafter, during the period this Security shall be convertible
as specified above, only into the kind and amount of securities, cash and other
property receivable upon the consolidation, merger or transfer by a holder of
the number of shares of Common Stock into which this Security might have been
converted immediately prior to such consolidation, merger or transfer (assuming
such holder of Common Stock failed to exercise any rights of election and
received per share the kind and amount of securities, cash or other property
received per share by a plurality of non-electing shares).
If an Event of Default shall occur and be continuing, the principal of all
the Securities and all other amounts due hereunder may be declared due and
payable in the manner and with the effect provided in the Agreement.
The Agreement permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities under the Agreement at
any time by the Company and the Agent with the consent of the Holders of not
less than a majority in aggregate principal amount of the Securities at the time
outstanding. The Agreement also contains provisions permitting the Holders of
specified percentages in aggregate principal amount of the Securities at the
time outstanding, on behalf of the Holders of all the Securities, to waive
compliance by the Company with certain provisions of the Agreement and certain
past defaults under the Agreement and their consequences. Any such consent or
waiver by the Holder of this Security shall be conclusive and binding upon such
Holder and upon all future Holders of this Security and of any security issued
upon the registration of transfer hereof or in exchange herefor or in lieu
hereof, whether or not notation of such consent or waiver is made upon this
Security.
No reference herein to the Agreement and no provision of this Security or
of the Agreement shall alter or impair the right of the Holder, which is
absolute and unconditional, to receive payment of the principal of (and premium,
if any) and interest on this Security at the times, place and rate, and in the
coin or currency (i.e., U.S. Dollars), herein prescribed or to convert this
Security as provided in the Agreement.
As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Security is registrable in the Security Register,
upon surrender of this Security for registration of transfer at the office or
agency of the Company, 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, will be issued to the designated transferee or
transferees.
The Securities are issuable only in registered form without coupons in
denominations of $100,000 and any integral multiple of $1,000 in excess thereof.
As provided in the Agreement and subject to certain limitations therein set
forth, Securities are exchangeable for a like aggregate principal amount of
Securities of a different authorized denomination, as requested by the Holder
surrendering the same.
No service charge shall be made for any such registration of transfer or
exchange, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of transfer, the
Company, the Note Agent and any agent of the Company or the Note Agent 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
Note Agent nor any such agent shall be affected by notice to the contrary.
This Security shall be governed by the laws of the State of New York
(without reference to choice of law rules).
All terms used in this Security which are defined in the Agreement shall
have the meanings assigned to them in the Agreement.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.
Dated: June 9, 1998
AUTOBOND ACCEPTANCE CORPORATION
By
Name:
Title:
[Form of Election to Convert]
To AutoBond Acceptance Corporation:
The undersigned owner of this Security hereby irrevocably exercises the
option to convert this Security, or the portion below designated, into shares of
Common Stock of AutoBond Acceptance Corporation in accordance with the terms of
the Agreement referred to in this Security, and directs that the shares issuable
and deliverable upon conversion, together with any check in payment for
fractional shares, be issued in the name of and delivered to the undersigned
registered Holder hereof, unless a different name has been indicated in the
assignment below. If shares are to be issued in the name of a person other than
the undersigned, the undersigned will pay all transfer taxes payable with
respect thereto. Any amount required to be paid by the undersigned on account of
interest accompanies this Security.
Dated:
Portion of Security to be converted
($1,000 or an integral multiple thereof):
$
Signature ( for conversion only) If shares of
Common Stock are to be issued and registered
otherwise than to the registered Holder named
above, please print or typewrite name and address,
including zip code, and social security or other
taxpayer identifying number.
