EXHIBIT 4.1
INDENTURE
Dated as of _______________, 2002,
BY AND BETWEEN
ONYX ACCEPTANCE CORPORATION, as obligor
and
U.S. BANK NATIONAL ASSOCIATION,
a national banking association as trustee
$50,000,000.00
Renewable Unsecured Subordinated Notes
TABLE OF CONTENTS
ARTICLE I DEFINITIONS AND INCORPORATION BY REFERENCE........................ 1
Section 1.1 Definitions................................................... 1
Section 1.2 Other Definitions............................................. 5
Section 1.3 Incorporation by Reference of Trust Indenture Act............. 6
Section 1.4 Rules of Construction......................................... 6
ARTICLE II THE SECURITIES................................................... 7
Section 2.1 Security Terms; Amount; Accounts; Interest; Maturity.......... 7
Section 2.2 Written Confirmation; Rejection; Rescission................... 10
Section 2.3 Registrar and Paying Agent.................................... 10
Section 2.4 Paying Agent to Hold Money in Trust........................... 11
Section 2.5 List of Holders............................................... 11
Section 2.6 Transfer and Exchange......................................... 12
Section 2.7 Payment of Principal and Interest; Principal and Interest
Rights Preserved.............................................. 12
Section 2.8 Reserved...................................................... 13
Section 2.9 Outstanding Securities........................................ 13
Section 2.10 Treasury Securities.......................................... 13
Section 2.11 Defaulted Interest........................................... 14
Section 2.12 Temporary Notes.............................................. 14
Section 2.13 Execution, Authentication And Delivery....................... 14
Section 2.14 Book-Entry Registration...................................... 15
Section 2.15 Initial and Periodic Statements.............................. 16
Section 2.16 Appointment of Agents........................................ 16
ARTICLE III REDEMPTION AND REPURCHASE....................................... 17
Section 3.1 Redemption of Securities at the Company's Election............ 17
Section 3.2 Repurchase of Securities at the Holder's Request.............. 17
ARTICLE IV COVENANTS........................................................ 19
Section 4.1 Payment of Securities......................................... 19
Section 4.2 Maintenance of Office or Agency............................... 19
Section 4.3 SEC Reports and Other Reports................................. 20
Section 4.4 Compliance Certificate........................................ 21
Section 4.5 Stay, Extension and Usury Laws................................ 21
Section 4.6 Liquidation................................................... 22
Section 4.7 Financial Covenants........................................... 22
Section 4.8 Restrictions on Dividends and Certain Transactions with
Affiliates ................................................... 22
ARTICLE V SUCCESSORS........................................................ 22
Section 5.1 When the Company May Merge, etc............................... 22
Section 5.2 Successor Entity Substituted.................................. 23
ARTICLE VI DEFAULTS AND REMEDIES............................................ 23
Section 6.1 Events of Default............................................. 23
Section 6.2 Acceleration.................................................. 24
Section 6.3 Other Remedies................................................ 25
Section 6.4 Waiver of Past Defaults....................................... 25
Section 6.5 Control by Majority........................................... 25
Section 6.6 Limitation on Suits........................................... 25
Section 6.7 Rights of Holders to Receive Payment.......................... 26
Section 6.8 Collection Suit by Trustee.................................... 26
Section 6.9 Trustee May File Proofs of Claim.............................. 26
Section 6.10 Priorities................................................... 27
Section 6.11 Undertaking for Costs........................................ 27
ARTICLE VII TRUSTEE......................................................... 28
Section 7.1 Duties of Trustee............................................. 28
Section 7.2 Rights of Trustee............................................. 29
Section 7.3 Individual Rights of Trustee.................................. 29
Section 7.4 Trustee's Disclaimer.......................................... 30
Section 7.5 Notice of Defaults............................................ 30
Section 7.6 Reports by Trustee to Holders................................. 30
Section 7.7 Compensation and Indemnity.................................... 30
Section 7.8 Replacement of Trustee........................................ 31
Section 7.9 Successor Trustee by Merger, etc.............................. 32
Section 7.10 Eligibility; Disqualification................................ 32
Section 7.11 Preferential Collection of Claims Against Company............ 33
ARTICLE VIII DISCHARGE OF INDENTURE......................................... 33
Section 8.1 Termination of Company's Obligations.......................... 33
Section 8.2 Application of Trust Money.................................... 34
Section 8.3 Repayment to Company.......................................... 34
Section 8.4 Reinstatement................................................. 34
ARTICLE IX AMENDMENTS....................................................... 35
Section 9.1 Without Consent of Holders.................................... 35
Section 9.2 With Consent of Holders....................................... 35
Section 9.3 Compliance with Trust Indenture Act........................... 36
Section 9.4 Revocation and Effect of Consents............................. 36
Section 9.5 Notation on or Exchange of Securities......................... 37
Section 9.6 Trustee to Sign Amendments, etc............................... 37
ARTICLE X SUBORDINATION..................................................... 37
Section 10.1 Agreement to Subordinate..................................... 37
Section 10.2 Liquidation; Dissolution; Bankruptcy......................... 38
Section 10.3 Default of Senior Debt....................................... 39
Section 10.4 When Distribution Must Be Paid Over.......................... 39
Section 10.5 Notice by Company............................................ 40
Section 10.6 Subrogation.................................................. 40
Section 10.7 Relative Rights.............................................. 40
Section 10.8 Subordination May Not Be Impaired by the Company or Holders
of Senior Debt .............................................. 41
Section 10.9 Distribution or Notice to Representative..................... 42
Section 10.10 Rights of Trustee and Paying Agent.......................... 42
Section 10.11 Authorization to Effect Subordination....................... 43
INDENTURE - Page ii
Section 10.12 Article Applicable to Paying Agent.......................... 43
Section 10.13 Miscellaneous............................................... 43
ARTICLE XI MISCELLANEOUS.................................................... 43
Section 11.1 Trust Indenture Act Controls................................. 43
Section 11.2 Notices...................................................... 43
Section 11.3 Communication by Holders with Other Holders.................. 45
Section 11.4 Certificate and Opinion as to Conditions Precedent........... 45
Section 11.5 Statements Required in Certificate or Opinion................ 45
Section 11.6 Rules by Trustee and Agents.................................. 46
Section 11.7 Legal Holidays............................................... 46
Section 11.8 No Recourse Against Others................................... 46
Section 11.9 Duplicate Originals.......................................... 46
Section 11.10 Governing Law............................................... 46
Section 11.11 No Adverse Interpretation of Other Agreements............... 46
Section 11.12 Successors.................................................. 46
Section 11.13 Severability................................................ 46
Section 11.14 Counterpart Originals....................................... 47
Section 11.15 Table of Contents, Headings, etc............................ 47
EXHIBITS:
A - Form of Note
INDENTURE - Page iii
CROSS-REFERENCE TABLE
*Trust Indenture Act Section Indenture Section
310(a)(1) ................................................... 7.10
(a)(2) ...................................................... 7.10
(a)(3) ...................................................... N.A.
(a)(4) ...................................................... N.A.
(a)(5) ...................................................... N.A.
(b) ......................................................... 7.8; 7.10
(c) ......................................................... N.A.
311(a) ...................................................... 7.11
(b) ......................................................... 7.11
(c) ......................................................... N.A.
312(a) ...................................................... 2.5
(b) ......................................................... 11.3
(c) ......................................................... 11.3
313(a) ...................................................... 7.6
(b)(1) ...................................................... N.A.
(b)(2) ...................................................... 7.6
(c) ......................................................... 7.6; 11.2
(d) ......................................................... 7.6
314(a) ...................................................... 4.3; 4.4; 11.2
(b) ......................................................... N.A.
(c)(1) ...................................................... 11.4
(c)(2) ...................................................... 11.4
(c)(3) ...................................................... N.A.
(d) ......................................................... N.A.
(e) ......................................................... 11.5
(f) ......................................................... N.A.
315(a) ...................................................... 7.1(b)
(b) ......................................................... 7.5; 11.2
(c) ......................................................... 7.1(a)
(d) ......................................................... 7.1(c)
(e) ......................................................... 6.11
316(a)(last sentence) ....................................... 2.10
(a)(1)(A) ................................................... 6.5
(a)(1)(B) ................................................... 6.4
(a)(2) ...................................................... N.A.
(b) ......................................................... 6.7
(c) ......................................................... N.A.
317(a)(1) ................................................... 6.8
(a)(2) ...................................................... 6.9
(b) ......................................................... 2.4
318(a) ...................................................... 11.1
N.A. means not applicable
* This Cross Reference Table is not part of the Indenture
THIS INDENTURE is hereby entered into as of ______________, 2002, by and
between Onyx Acceptance Corporation, a Delaware corporation (the "Company"), as
obligor, and U.S. Bank National Association, a national banking association, as
trustee (the "Trustee").
The Company and the Trustee agree as follows for the benefit of each other
and for the equal and ratable benefit of the Holders of the renewable,
unsecured, subordinated debt securities of the Company issued pursuant to the
Company's registration statement on Form S-3 declared effective by the
Securities and Exchange Commission on or about ______________, 2002 (the
"Registration Statement"):
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.1 Definitions.
"Account" means the record of beneficial ownership of a Security
maintained by the Registrar.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" (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.
"Agent" means any Registrar, Paying Agent or co-registrar of the
Securities or any Person appointed and retained by the Company to perform
certain of the duties or obligations, or exercise certain of the rights and
discretions, of the Company hereunder, on behalf of the Company pursuant to
Section 2.16 hereof.
"Board of Directors" means the Board of Directors of the Company or any
authorized committee of the Board of Directors.
"Business Day" means any day other than a Legal Holiday.
"Company" means Onyx Acceptance Corporation, a Delaware corporation,
unless and until replaced by a successor in accordance with Article V hereof and
thereafter means such successor.
"Corporate Trust Office" means the office of the Trustee at which the
corporate trust business of the Trustee shall, at any particular time, be
principally administered, which office is, at the date as of which this
Indenture is originally dated, located at 000 Xxxx 0xx Xxxxxx, Xxxxx Xxxx,
Xxxxxxxxx 00000, Attention: Xx. Xxxxxxx Xxxxxxxx, Corporate Finance.
"Default" means any event that is or with the passage of time or the
giving of notice or both would be an Event of Default.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Fiscal Year" means a year ending December 31.
"GAAP" means, as of any date, generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as approved by a significant segment of the
accounting profession, which are in effect from time to time.
"Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness.
"Holder" means a Person in whose name a Security is registered.
"Indebtedness" means, with respect to any Person and without duplication,
any indebtedness of such Person, whether or not contingent, in respect of
borrowed money or evidenced by bonds, notes, debentures or similar instruments
or letters of credit (or reimbursement agreements in respect thereof) or
representing the balance deferred and unpaid of the purchase price of any
property (including capital lease obligations) or the expenditure for any
services or representing any hedging obligations, including without limitation,
any such balance that constitutes an accrued expense or an account or trade
payable, if and to the extent any of the foregoing indebtedness (other than
letters of credit and hedging obligations) would appear as a liability upon a
balance sheet of such Person prepared in accordance with GAAP, and also
includes, to the extent not otherwise included, (a) the Guarantee of items that
would be included within this definition, and (b) liability for items that would
arise by operation of a Person's status as a general partner of a partnership.
"Indenture" means this Indenture as amended or supplemented from time to
time.
"Interest Accrual Period" means, as to each Security, the period from the
later of the Issue Date of such Security or the last Payment Date upon which an
interest payment was made until and including the day before the following
Payment Date during which interest accrues on each Security with respect to any
Payment Date.
"Issue Date" means, with respect to any Security, the date on which such
Security is deemed registered on the books and records of the Registrar, which
shall be (i) the date the Company accepts funds for the purchase of the Security
if such funds are received prior to 12:01 p.m. (Central Time) on a Business Day,
or if such funds are not so received, on the next Business Day, or (ii) the date
that the Security is renewed as of the Maturity Date pursuant to Section 2.1(e).
"Maturity Date" means, with respect to any Security, the date on which the
principal of such Security becomes due and payable as therein provided.
INDENTURE - Page 2
"Maturity Record Date" means, with respect to any Security, as of 11:59
p.m. of the date fifteen days prior to the Maturity Date or Redemption Date
applicable to such Security.
"Notice of Maturity" means a written notice from the Company to a Holder
(as further described in Section 2.1(d)) that the Holder's Securities will be
maturing on the related Maturity Date occurring within fifteen (15) days but not
less than ten (10) days of the delivery of such notice.
"Obligations" means any principal, interest (including Post-Petition
Interest), penalties, fees, indemnifications, reimbursements, damages and other
liabilities payable under the documentation governing any Indebtedness.
"Officer" means the Chairman of the Board or principal executive officer
of the Company, the President or principal operating officer of the Company, the
Chief Financial Officer or principal financial officer of the Company, the
Treasurer, Controller or principal accounting officer of the Company, Secretary
or any Executive or Senior Vice-President of the Company.
"Officers' Certificate" means a certificate signed by two Officers, one of
whom must be the principal executive officer, principal operating officer,
principal financial officer or principal accounting officer of the Company.
"Opinion of Counsel" means an opinion from legal counsel who is reasonably
acceptable to the Trustee. The counsel may be an employee of or counsel to the
Company or the Trustee.
"Payment Account" means the bank account designated by the Holder to
receive payments of interest and/or principal due on such Holder's Securities.
"Payment Date" means (i) with respect to any Security for which monthly
interest payments are required to be made, the last day of the calendar month or
such other date as is designated by the Holder pursuant to subsection 2.1(c),
(ii) with respect to any Security for which interest is required to be made
quarterly, semi-annually or annually, the same day of the month as the
quarterly, semi-annual or annual anniversary of the Issue Date of the Security
(except in the case where the Issue Date of a Security is the 29th, 30th or 31st
day of the month and there is no like date in the anniversary month, in which
case the Payment Date for such month shall be the last day of the month) and
(iii) with respect to each Security, the Maturity Date (or such date following
the Maturity Date on which payment is made pursuant to subsection 2.1(d)
hereof), the Repurchase Date or the Redemption Date of the Security; provided,
that if any such day is not a Business Day, the Business Day immediately
following such day.
"Person" means any individual, corporation, partnership, joint venture,
association, joint stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Post-Petition Interest" means interest accruing after the commencement of
any bankruptcy or insolvency case or proceeding with respect to the Company or
any receivership, liquidation, reorganization or other similar case or
proceeding in connection therewith, at the rate
INDENTURE - Page 3
applicable to the related Indebtedness, whether or not such interest is an
allowable claim in any such proceeding.
"Prospectus" means the prospectus relating to the Securities, including
any prospectus supplement, forming part of the Registration Statement.
"Redemption Notice" means a written notice from the Company to the Holders
(as further described in Section 2.1(f)) stating that the Company is redeeming
all or a specified portion of Securities pursuant to Section 3.1, with a copy to
the Registrar and the Trustee.
"Redemption Price" means, with respect to any Security to be redeemed, the
principal amount of such Security plus the interest accrued but unpaid during
the Interest Accrual Period up to and not including the Redemption Date for such
Security.
"Regular Record Date" means, with respect to each Payment Date, as of
11:59 p.m. of the date fifteen days prior to such Payment Date.
"Repayment Election" means a written notice from a Holder to the Company
(as further described in Section 2.1(d)) stating that repayment of the Holder's
Securities is required in connection with the maturity of such Securities.
"Repurchase Price" means, with respect to any Security to be repurchased,
the principal amount of such Security plus the interest accrued but unpaid
during the Interest Accrual Period up to and not including the Repurchase Date
for such Security, minus the Repurchase Penalty, if any.
"Repurchase Request" means a written notice from a Holder to the Company
(as further described in Section 2.1(g)) stating that such Holder is making an
irrevocable request for the Company to repurchase such Holder's Securities
pursuant to Section 3.2.
"Responsible Officer" when used with respect to the Trustee, means any
officer in its Corporate Trust Office, or any other assistant officer of the
Trustee in its Corporate Trust Office customarily performing functions similar
to those performed by the Persons who at the time shall be such officers,
respectively, or to whom any corporate trust matter is referred because of his
or her knowledge of and familiarity with the particular subject.
"SEC" means the U.S. Securities and Exchange Commission.
"Security" or "Securities" means, the Company's renewable, unsecured,
subordinated securities issued under this Indenture pursuant to the Registration
Statement.
"Senior Debt" means any Indebtedness (whether outstanding on the date
hereof or thereafter created) incurred by the Company (including its
subsidiaries) whether such Indebtedness is or is not specifically designated by
the Company as being "Senior Debt" in its defining instruments, but not
including debt held by the Company's Affiliates, subsidiaries or control
persons, other than debt held by Special Purpose Entities, and not including the
Securities.
INDENTURE - Page 4
"Special Purpose Entities" means Affiliates of the Company formed for the
specific purpose of securitizing auto loan receivables or facilitating the
Company's warehouse, residual and other financing facilities.
"Subscription Agreement" means a Subscription Agreement entered into by a
Person under which such Person has committed to purchase certain Securities as
identified thereby and which is in substantially the form filed as Exhibit 4.4
to the Registration Statement.
"Xxxxxx Xxxxxxxxxx Ltd." means Xxxxxx Xxxxxxxxxx Ltd., a Minnesota
corporation.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. xx.xx.
77aaa-77bbbb) as in effect on the date on which this Indenture is qualified
under the TIA.
"Total Permanent Disability" means a determination by a physician approved
by the Company that the Holder of a Security who is a natural person, who was
gainfully employed on a full time basis at the Issue Date of such Security is
unable to work on a full time basis during the succeeding twenty-four months.
For purposes of this definition, "working on a full time basis" shall mean
working at least forty hours per week.
"Trustee" means U.S. Bank National Association, a national banking
association, until a successor replaces it in accordance with the applicable
provisions of this Indenture and thereafter means the successor serving
hereunder.
"U.S. Government Obligations" means direct obligations of the United
States of America, or any agency or instrumentality thereof for the payment of
which the full faith and credit of the United States of America is pledged.
"Written Confirmation" means a written confirmation of the acceptance of a
subscription for, or the transfer or pledge of, a Security or Securities in the
form of a transaction statement executed or issued by the Company or its duly
authorized Agent and delivered to the Holder of such Security or Securities with
a copy to the Registrar and the Trustee, which is in substantially the form of
Exhibit 4.3 to the Registration Statement.
Section 1.2 Other Definitions.
Term Defined in Section
---- ------------------
"Bankruptcy Law" 6.1
"Custodian" 6.1
"Event of Default" 6.1
"Legal Holiday" 11.7
"Paying Agent" 2.3
"Payment Blockage Period" 10.3
INDENTURE - Page 5
"Payment Notice" 10.3
"Redemption Date" 2.1(f)
"Registrar" 2.3
"Registration Statement" Introduction
"Repurchase Date" 3.2(d)
"Repurchase Penalty" 3.2(b)
"Securities Register" 2.3
Section 1.3 Incorporation by Reference of Trust Indenture Act.
(a) Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this
Indenture. The following TIA terms used in this Indenture have the
following meanings:
"indenture securities" means the Securities;
"indenture security holder" means any Holder of the
Securities;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the
Trustee;
"obligor" on the Securities means the Company or any successor
obligor upon the Securities.
(b) All other terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule
under the TIA have the meanings so assigned to them.
Section 1.4 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) references to GAAP, as of any date, shall mean
GAAP in effect in the United States as of such date; (d) "or" is not
exclusive;(e) words in the singular include the plural, and in the plural
include the singular; and (f) provisions apply to successive events and
transactions.
INDENTURE - Page 6
ARTICLE II
THE SECURITIES
Section 2.1 Security Terms; Amount; Accounts; Interest; Maturity.
(a) Unlimited Amount and Form of Security. The outstanding aggregate
principal amount of Securities outstanding at any time is limited to $50
million, provided, however, that the Company and the Trustee may, without
the consent of any Holder, increase such aggregate principal amount of
Securities which may be outstanding at any time. The Securities are
unsecured obligations of the Company and shall be subordinate in right of
payment to the Senior Debt of the Company as further described in Article
X. The Securities are an obligation and liability of the Company, and not
of any other Person, including without limitation any Affiliate or Agent
of the Company. The Securities are not certificates of deposit or similar
obligations of, and are not guaranteed or insured by, any depository
institution, the Federal Deposit Insurance Corporation, any other
governmental or private fund, any securities insurer or any other Person.
The Securities, together with the Trustee's certificate of
authentication, shall be in substantially the form set forth as Exhibit A
to this Indenture, with any appropriate insertions, omissions,
substitutions and other variations as are required or permitted by this
Indenture and may have such letters, numbers or other marks of
identification and such legends or endorsements placed thereon as may be
required to comply with the rules of any securities exchange or as may,
consistently herewith, be determined by the officers executing such
Securities, as evidenced by their execution of the Securities. Any portion
of the text of any Securities may be set forth on the reverse thereof,
with an appropriate reference thereto on the face of the Securities. The
Securities may be subject to notations, legends or endorsements required
by law, stock exchange rule, or agreements to which the Company is subject
or usage.
(b) Book-Entry; Denominations; Term. Except as provided in Section
2.14(b), each Security shall neither be issued as, nor evidenced by, a
promissory note or certificated security, but rather each Security shall
be issued in book entry or uncertificated form, in which the record of
beneficial ownership of each such Security shall be established and
maintained as Accounts by the Registrar pursuant to Section 2.14. In
connection with the issuance of each Security in book entry form in
accordance with Section 2.14, each such Security shall be deemed to be
represented in an uncertificated form that includes the same terms and
provisions as those set forth in the form of Security in Exhibit A to this
Indenture, and the related Account for each such Security shall be deemed
to include these same terms and provisions.
Each Security shall be in such denominations as may be designated
from time to time by the Company, but in no event in an original
denomination less than $1,000. Separate purchases may not be cumulated to
satisfy the minimum denomination requirements. Each Security shall have a
term of not less than three months and not greater than 120 months as
shall be designated by the Holder at the time of purchase, subject to the
Company's acceptance thereof.
INDENTURE - Page 7
(c) Interest and Interest Payments. Each Security shall bear
interest from and commencing on its Issue Date at such rate of interest as
the Company shall determine from time to time, which rate may vary from
Holder to Holder depending upon the aggregate principal amount of
Securities held by such Holder and any immediate family member, as set
forth in the Prospectus; provided, however, that the interest rate of each
Security will be fixed for the term of such Security upon issuance,
subject to change upon the renewal of the Security at maturity. Interest
on the Securities will compound daily and the Holder thereof may elect to
have interest paid monthly, quarterly, semi-annually, annually, or upon
maturity, which payments shall be made on the Payment Date, except that a
Holder who elects monthly payments may select the day of the month on
which to receive interest payments, subject to the Company's approval;
provided that no interest shall be paid to a Holder until the expiration
of the Holder's rescission right under Section 2.2(b). A Holder may change
this election once during the term of the Security, subject to the
Company's approval, which change shall be effective the first Business Day
following the forty-fifth (45th) day after receipt of written notice from
the Holder requesting such change.
(d) Repayment Election at Maturity. The Company will send each
Holder of a Security (existing as of the applicable Maturity Record Date)
a Notice of Maturity approximately fifteen (15) but not less than ten (10)
days prior to the Maturity Date of the Security held by such Holder
reminding such Holder of the pending maturity of the Security and
reminding the Holder that the automatic renewal provision described in the
next paragraph will take effect, unless (i) the Company states in the
Notice of Maturity that it will not allow the Holder to renew the Security
(in which case the Company shall pay the Holder principal and accrued
interest with regard to the Security on the Maturity Date), or (ii) the
Holder delivers a Repayment Election to the Company for the payment of all
principal and interest due on the Security as of the Maturity Date so that
such Repayment Election is received by the Company within fifteen (15)
days after the Maturity Date. Such Notice of Maturity shall also state
that payment of principal of a Security shall be made upon presentation of
a Repayment Election requiring payment of such Security and shall specify
the place where such Repayment Election may be presented. Upon or
following the delivery of a Notice of Maturity for a Security, the Holder
thereof, in their discretion, may deliver to the Company a Repayment
Election; provided that such Repayment Election must be delivered to the
Company no later than fifteen (15) days after the Maturity Date. If a
Holder delivers a Repayment Election requiring repayment within fifteen
(15) days after the Maturity Date, no interest will accrue after the
Maturity Date and the Holder will be sent payment upon the later of the
Maturity Date or five (5) days following the date the Company receives
such Repayment Election from the Holder; provided that any interest paid
to the Holder accruing after the Maturity Date shall be deducted from such
payment.
The Notice of Maturity also shall state that the Holder may, and the
Holder may, submit a Repayment Election for the repayment of the maturing
Security and use all or a portion of the proceeds thereof to purchase a
new Security with a different term. To exercise this option, the Holder
shall complete a new Subscription Agreement for the new Security and send
it along with the Holder's Repayment Election to the Company. The Issue
Date of the new Security shall be the Maturity Date of the maturing
Security. Any
INDENTURE - Page 8
proceeds from the maturing Security that are not applied to the purchase
of the new Security shall be sent to the Holder of such maturing Security.
If a Security pays interest only on the Maturity Date, then the
Notice of Maturity also shall state that the Holder may, and the Holder
may, submit an "interest-only" Repayment Election in which the Holder
requires the payment of the accrued interest that such Holder has earned
on the maturing Security up to the Maturity Date and allows the principal
amount of such maturing Security to renew in the manner provided in
subsection (e) below.
(e) Automatic Renewal. If, within fifteen (15) days after the
Maturity Date of a Security, a Holder of such Security has not delivered a
Repayment Election for repayment of the Security, and the Company did not
notify the Holder of its intention to repay the Security in the Notice of
Maturity, then such maturing Security shall be extended automatically for
an additional term equal to the original term, and shall be deemed to be
renewed by the Holder and the Company as of the Maturity Date of such
maturing Security, such that a new Security shall be deemed to have been
issued as of such Maturity Date. A maturing Security will continue to
renew as described herein absent a Redemption Notice or Repurchase Request
by the Holder or an indication by the Company that it will repay and not
allow the Security to be renewed in the Notice of Maturity. Interest on
the renewed Security shall accrue from the Issue Date thereof, which is
the first day of such renewed term (i.e., the Maturity Date of the
maturing Security). Such renewed Security will be deemed to have the
identical terms and provisions of the maturing Security, including
provisions relating to payment, except that the interest rate payable
during the term of the renewed Security shall be the interest rate which
is being offered by the Company on other Securities having the same term
as of the Issue Date of such renewal. If other Securities having the same
term are not then being issued on the Issue Date of such renewal, the
interest rate upon renewal will be the rate specified by the Company on or
before the Maturity Date of such Security, or the then existing rate of
the Security being renewed if no such rate is specified. If the maturing
Security pays interest only on the Maturity Date, then, except as provided
in subsection (d) above, all accrued interest thereon shall be added to
the principal amount of the renewed Security upon renewal. If such
maturing Security has a different interest payment option, then interest
will be paid on the renewed Security in the same manner as the maturing
Security.
(f) Redemption Notice from Company. Pursuant to Section 3.1, each
Security shall be redeemable by the Company at any time, without penalty,
upon the delivery of a Redemption Notice to the Holder of such Security.
Such Redemption Notice shall set forth a date for the redemption of such
Security (the "Redemption Date") that is at least thirty (30) days after
the date that such Redemption Notice has been delivered by the Company to
the Holder hereunder.
(g) Repurchase Request by Holder. Pursuant to and subject to the
limitations set forth in Section 3.2, each Security shall be subject to
repurchase at the request of the Holder upon the delivery of a Repurchase
Request to the Company. The payment of interest and principal due upon the
repurchase of a Security shall be made to the Holder
INDENTURE - Page 9
on a Repurchase Date that is within ten (10) days of the delivery of such
Repurchase Request to the Company, subject to the limitations on
repurchase and the Repurchase Penalties described in Section 3.2.
(h) Terms of Securities. The terms and provisions contained in the
Securities shall constitute, and are hereby expressly made, a part of this
Indenture and to the extent applicable, the Company and the Trustee, by
their execution and delivery of this Indenture, and the Holders by
accepting the Securities, expressly agree to such terms and provisions and
to be bound hereby and thereby. In case of a conflict, the provisions of
the Securities shall control.
Section 2.2 Written Confirmation; Rejection; Rescission.
(a) Except with respect to an automatically renewed Security
pursuant to Section 2.1(e), a Security shall not be validly issued to a
Person until the following have occurred: (i) such Person has remitted
good and available funds for the full principal amount of such Security to
the Company; (ii) a Written Confirmation of the acceptance of the
subscription is sent by the Company or a duly authorized Agent of the
Company to such Person; and (iii) an Account is established by the
Registrar in the name of such Person as the Holder of such Security
pursuant to Section 2.14 hereof. The Company or a duly authorized Agent of
the Company, in their sole discretion, may reject any subscription from a
Person for the purchase of Securities, in which event any funds received
from such Person pursuant to such subscription shall be promptly returned
to such Person. No interest shall be paid on any funds returned on a
rejected subscription.
(b) For a period of three (3) Business Days following the receipt by
the Holder of a Written Confirmation that evidences the valid issuance of
a Security at the time of original purchase (but not upon transfer or
automatic renewal of a Security), such Holder shall have the right to
rescind the Security and receive repayment of the principal by presenting
a written request to the Company. Repayment of the principal shall be made
within ten (10) days of the Company's receipt of such request from the
Holder. No interest shall be paid on any such rescinded Security.
Section 2.3 Registrar and Paying Agent.
(a) The Company shall maintain (i) an office or agency where
Securities may be presented for registration of transfer or for exchange
("Registrar") and (ii) an office or agency where Securities may be
presented for payment ("Paying Agent"). The Registrar shall keep a
register of the Securities and of their transfer and exchange, which shall
include the name, address for notices and Payment Account of the Holder
and the payment election information, principal amount, term and interest
rate for each Security (the "Securities Register"). The Company may
appoint one or more co-registrars and one or more additional paying
agents. The term "Registrar" includes any co-registrar, and the term
"Paying Agent" includes any additional paying agent. The Company may
change any Paying Agent or Registrar without prior notice to any Holder;
provided that the Company shall promptly notify the Holders of the name
and address of any Agent not a party to this Indenture. The Company may
act as Paying Agent and/or Registrar. In the
INDENTURE - Page 10
event the Company uses any Agent other than the Company or the Trustee,
the Company shall enter into an appropriate agency agreement with such
Agent, which agreement shall incorporate the provisions of the TIA or
provide that the duties performed thereunder are subject to and governed
by the provisions of this Indenture. The agreement shall implement or be
subject to the provisions of this Indenture that relate to such Agent. The
Company shall notify the Trustee of the name and address of any such
Agent. If the Company fails to maintain a Registrar or Paying Agent, or
fails to give the foregoing notice, the Trustee shall act as such, and
shall be entitled to appropriate compensation in accordance with Section
7.7 hereof.
(b) The Company shall appoint a servicing agent as the initial
Registrar pursuant to Section 2.16. _____________ shall be appointed as
the initial Paying Agent. The Company initially appoints the Trustee as
agent for service of notices and demands in connection with the
Securities. Such servicing agent shall act as Registrar and _____________
shall act as Paying Agent, until such time as the Company gives the
Trustee written notice to the contrary.
Section 2.4 Paying Agent to Hold Money in Trust.
Prior to each due date of the principal or interest on any Security, the
Company shall deposit with the Paying Agent sufficient funds to pay principal
and interest then so becoming due and payable in cash. The Company shall require
each Paying Agent other than the Trustee to agree in writing that the Paying
Agent will hold in trust for the benefit of Holders or the Trustee all money
held by the Paying Agent for the payment of principal or interest on the
Securities, and will notify the Trustee promptly in writing of any default by
the Company in making any such payment. While any such default continues, the
Trustee shall require a Paying Agent (if other than the Company) to pay all
money held by it to the Trustee. The Company at any time may require a Paying
Agent to pay all money held by it to the Trustee. Upon payment over to the
Trustee, the Paying Agent (if other than the Company) shall have no further
liability for the money delivered to the Trustee. If the Company acts as Paying
Agent, then the Company shall segregate and hold in a separate trust fund for
the benefit of the Holders all money held by it as Paying Agent. The Company
shall notify the Trustee in writing at least five (5) days before the Payment
Date of the name and address of the Paying Agent if a person other than the
Trustee is named Paying Agent at any time or from time to time.
Section 2.5 List of Holders.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
Holders and shall otherwise comply with TIA ss.312(a). If the Trustee is not the
Registrar, the Registrar shall furnish to the Trustee each quarter during the
term of this Indenture and at such other times as the Trustee may request in
writing, a copy of the current Securities Register as of such date as the
Trustee may reasonably require and the Company shall otherwise comply with TIA
ss.312(a).
INDENTURE - Page 11
Section 2.6 Transfer and Exchange.
(a) The Securities are not negotiable instruments and cannot be
transferred without the prior written consent of the Company (which
consent shall not be unreasonably withheld). Requests to the Registrar for
the transfer of any Account maintained for the benefit of a Holder shall
be:
(i) made to the Registrar in writing on a form supplied by the
Registrar;
(ii) duly executed by the Holder of the related Account, as
reflected on the Registrar's records as of the date of receipt of
such transfer request, or such Holder's attorney duly authorized in
writing;
(iii) accompanied by the written consent of the Company to the
transfer (which consent may not be unreasonably withheld); and
(iv) if requested by the Registrar, an opinion of Holder's
counsel (which counsel shall be reasonably acceptable to the
Registrar) that the transfer does not violate any applicable
securities laws and/or a signature guarantee.
(b) Upon transfer of a Security, the Company, or the Registrar on
behalf of the Company, will provide the new registered owner of the
Security with a Written Confirmation which will evidence the transfer of
the Account in the Securities Register.
(c) The Company or the Registrar may assess reasonable service
charges to a Holder for any registration or transfer or exchange, and the
Company may require payment of a sum sufficient to cover any transfer tax
or similar governmental charge payable in connection therewith (other than
any such transfer taxes or similar governmental charge payable upon
exchange pursuant to Section 9.5 hereof).
(d) With respect to the relevant Regular Record Date, the Company
shall treat the individual or entity listed on each Account maintained by
the Registrar as the absolute owner of the Security represented thereby
for purposes of receiving payments thereon and for all other purposes
whatsoever.
Section 2.7 Payment of Principal and Interest; Principal and Interest
Rights Preserved.
(a) Each Security shall accrue interest at the rate specified for
such Security in the Securities Register and such interest shall be
payable on each Payment Date following the Issue Date for such Security,
until the principal thereof becomes due and payable. Any installment of
interest payable on a Security that is caused to be punctually paid or
duly provided for by the Company on the applicable Payment Date shall be
paid to the Holder in whose name such Security is registered in the
Securities Register on the applicable Regular Record Date with respect to
the Securities outstanding, by electronic deposit to such Holder's Payment
Account as it appears in the Securities Register on such Regular Record
Date. The payment of any interest payable in connection with the payment
of any principal payable with respect to such Security on a Maturity Date
shall
INDENTURE - Page 12
be payable as provided below. In the event any payments made by electronic
deposit are not accepted into the Holder's Payment Account for any reason,
such funds shall be held in accordance with Sections 2.4 and 8.3 hereof.
Any installment of interest not punctually paid or duly provided for shall
be payable in the manner and to the Holders as specified in Section 2.11
hereof.
(b) Each of the Securities shall have stated maturities of principal
as shall be indicated on such Securities or in the Written Confirmation
and as set forth in the Securities Register. The principal of each
Security shall be paid in full as of the Maturity Date thereof pursuant to
Section 2.1(d), unless the term of such Security is renewed pursuant to
Section 2.1(e) hereof or such Security becomes due and payable at an
earlier date by acceleration, redemption, repurchase or otherwise.
Interest on each Security shall be due and payable on each Payment Date at
the interest rate applicable to such Security for the Interest Accrual
Period related to such Security and such Payment Date. Notwithstanding any
of the foregoing provisions with respect to payments of principal of and
interest on the Securities, if the Securities have become or been declared
due and payable following an Event of Default, then payments of principal
of and interest on the Securities shall be made in accordance with Article
VI hereof. If definitive, certificated securities are issued, then the
principal payment made on any Security on any Maturity Date (or the
Redemption Price or the Repurchase Price of any Security required to be
redeemed or repurchased, respectively), and any accrued interest thereon,
shall be payable on or after the Maturity Date, Redemption Date or the
Repurchase Date therefore at the office or agency of the Company
maintained by it for such purpose pursuant to Section 2.3 hereof or at the
office of any Paying Agent for such Security.
(c) All computations of interest due with respect to any Security
shall be made, unless otherwise specified in the Security, based upon the
actual number of days (e.g., 365 or 366) in the applicable year.
Section 2.8 Reserved.
Section 2.9 Outstanding Securities.
(a) The Securities outstanding at any time are the outstanding
principal balances of all Accounts representing the Securities maintained
by the Company or such other entity as the Company designated as
Registrar.
(b) If the principal amount of any Security is considered paid under
Section 4.1 hereof, it ceases to be outstanding and interest on it ceases
to accrue.
(c) Subject to Section 2.10 hereof, a Security does not cease to be
outstanding because the Company or an Affiliate of the Company holds the
Security.
Section 2.10 Treasury Securities.
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 any Affiliate of the Company shall be considered as though not
outstanding, except that for purposes of
INDENTURE - Page 13
determining whether the Trustee shall be protected in relying on any such
direction, waiver or consent, only Securities that a Responsible Officer of the
Trustee actually knows to be so owned shall be so disregarded.
Section 2.11 Defaulted Interest.
If the Company defaults in a payment of interest on any Security, it shall
pay the defaulted interest plus, to the extent lawful, any interest payable on
the defaulted interest, to the Holder of such Security on a subsequent special
Payment Date, which date shall be at the earliest practicable date, but in all
events within fifteen (15) days following the scheduled Payment Date of the
defaulted interest, in each case at the rate provided in the Security. The
Company shall, with written notification to the Trustee, fix or cause to be
fixed each such special record date and payment date. Prior to any such special
Payment Date, the Company (or the Trustee, in the name of and at the expense of
the Company) shall mail to Holder(s) a notice that states the special Payment
Date and the amount of such interest to be paid.
Section 2.12 Temporary Notes.
If Securities are issued in certificated form in the limited circumstances
contemplated under Section 2.14(b), pending the preparation of definitive
Securities, the Company may execute, and direct that the Trustee authenticate
and deliver, temporary Securities which are printed, lithographed, typewritten,
mimeographed or otherwise produced, in any authorized denomination,
substantially of the tenor of the definitive Securities, in lieu of which they
are issued and with such appropriate insertions, omissions, substitutions and
other variations as the officers executing such Securities may determine, as
evidenced by their execution of such Securities.
If temporary Securities are issued, the Company will cause definitive
Securities to be prepared without unreasonable delay. After the preparation of
definitive Securities, the temporary Securities shall be exchangeable for
definitive Securities upon surrender of the temporary Securities at any office
or agency of the Registrar designated pursuant to Section 2.3, without charge to
the Holder.
Upon surrender for cancellation of any one or more temporary Securities,
the Company shall execute and the Trustee shall authenticate and deliver in
exchange therefor a like principal amount of definitive Securities of authorized
denominations. Until so exchanged the temporary Securities shall in all respects
be entitled to the same benefits under this Indenture as definitive Securities.
Section 2.13 Execution, Authentication And Delivery.
(a) Subject to subsection (b) below, the Securities shall be
executed on behalf of the Company by its President or any Executive or
Senior Vice President and attested by its Secretary or Assistant
Secretary. The signature of any of these officers on the Securities may be
manual or facsimile. Securities bearing the manual or facsimile signatures
of individuals who were at any time the proper officers of the Company
shall bind the Company, notwithstanding that such individuals or any of
them have ceased to
INDENTURE - Page 14
hold such offices prior to the authentication and delivery of such
Securities or did not hold such offices at the date of such Securities.
At the time of and from time to time after the execution and
delivery of this Indenture, the Company will deliver definitive or
certificated forms of Securities, if any, executed by the Company to the
Trustee for authentication, together with a direction from the Company for
the authentication and delivery of such Securities. The Trustee in
accordance with such direction from the Company shall authenticate and
deliver such Securities as in this Indenture provided and not otherwise.
Securities issued hereunder shall be dated as of their Issue Date.
No Security shall be entitled to any benefit under this Indenture or
be valid or obligatory for any purpose unless there appears on such
Security an authentication executed by or on behalf of the Trustee by
manual or facsimile signature, and such authentication upon any Security
shall be conclusive evidence, and the only evidence, that such Security
has been duly authenticated and delivered hereunder and is entitled to the
benefits of the Indenture.
(b) Notwithstanding the preceding subsection (a) of this Section, in
connection with the issuance of each Security in book-entry form pursuant
to Section 2.14, each Security shall be deemed to be executed and attested
to by the Company and authenticated and delivered by the Trustee, in the
same manner as provided in the preceding subsection (a), upon the delivery
by the Company (or the Company's duly authorized Agent) to the Holder of
such Security of a Written Confirmation, with a copy of such Written
Confirmation delivered to the Trustee, and the establishment by the
Registrar of an Account for such Security in the name of the Holder
pursuant to Section 2.14 hereof.
Section 2.14 Book-Entry Registration.
(a) The Registrar shall maintain a book-entry registration and
transfer system through the establishment and maintenance of Accounts for
the benefit of Holders of Securities as the sole method of recording the
ownership and transfer of ownership interests in such Securities. The
registered owners of the Accounts established by the Registrar in
connection with the purchase or transfer of the Securities shall be deemed
to be the Holders of the Securities outstanding for all purposes under
this Indenture. The Company (or its duly authorized Agent) shall promptly
notify the Registrar of the acceptance of a subscriber's order to purchase
a Security by providing a copy of the accepted Subscription Agreement and
the related Written Confirmation, and upon receipt of such notices, the
Registrar shall establish an Account for such Security by recording a
credit to its book-entry registration and transfer system to the Account
of the related Holder of such Security for the principal amount of such
Security owned by such Holder and issue a Written Confirmation to the
Holder, with a copy being delivered to the Trustee, on behalf of the
Company. The Registrar shall make appropriate credit and debit entries
within each Account to record all of the applicable actions under this
Indenture that relate to the ownership of the related Security and issue
Written Confirmations to the related Holders as set forth herein, with
copies being delivered to the Trustee, on behalf
INDENTURE - Page 15
of the Company. For example, the total amount of any principal and/or
interest due and payable to the Holders of the Accounts maintained by the
Registrar as provided in this Indenture shall be credited to such Accounts
by the Registrar within the time frames provided in this Indenture, and
the amount of any payments of principal and/or interest distributed to the
Holders of the Accounts as provided in this Indenture shall be debited to
such Accounts by the Registrar. The Trustee shall review the book-entry
registration and transfer system as it deems necessary to ensure the
Registrar's compliance with the terms of the Indenture.
(b) Book-entry Accounts evidencing ownership of the Securities shall
be exchangeable for definitive or certificated forms of Securities in
denominations of $1,000 and any amount in excess thereof and fully
registered in the names as each Holder directs only if (i) the Company at
its option advises the Trustee and the Registrar in writing of its
election to terminate the book-entry system, or (ii) after the occurrence
of any Event of Default, Holders of a majority of the aggregate
outstanding principal amount of the Securities (as determined based upon
the latest quarterly statement provided to the Trustee pursuant to Section
2.5 hereof) advise the Trustee in writing that the continuation of the
book-entry system is no longer in the best interests of such Holders and
the Trustee notifies all Holders of the Securities, as the case may be, of
such event and the availability of certificated forms of securities to the
Holders of Securities, as the case may be, requesting such Securities in
certificated form.
Section 2.15 Initial and Periodic Statements.
(a) Subject to the rejection of a Subscription Agreement pursuant to
Section 2.2(a), the Registrar shall send Written Confirmations to initial
purchasers, registered owners, registered pledgees, former registered
owners and former pledgees, within two (2) Business Days of its receipt of
proper notice regarding the purchase, transfer or pledge of a Security,
with copies of such Written Confirmations being delivered to the Trustee,
on behalf of the Company.
(b) The Registrar shall send each Holder of a Security (and each
registered pledgee) via U.S. mail not later than ten (10) Business Days
after each quarter end in which such Holder had an outstanding balance in
such Holder's Account, a statement which indicates as of the quarter end
preceding the mailing: (i) the balance of such Account; (ii) interest
credited for the period; (iii) repayments, redemptions or repurchases, if
any, during the period; and (iv) the interest rates paid on the Securities
in such Account during the period. The Company shall provide additional
statements as the Holders or registered pledgees of the Securities may
reasonably request from time to time. The Registrar may charge such
Holders or pledgees requesting such statements a fee to cover the charges
incurred by the Registrar in providing such additional statements.
Section 2.16 Appointment of Agents.
The Company may from time to time engage Agents to perform its obligations
and exercise its rights and discretion under the terms of this Indenture. In
each such case, the Company will provide the Trustee with a copy of each
agreement under which any such Agent is
INDENTURE - Page 16
engaged and the name, address, telephone number and capacity of the Agent
appointed. If any such Agent shall resign, or such Agent's engagement is
terminated by the Company, subsequent to the Agent's appointment by the Company
under this Section 2.16, the Company shall promptly notify the Trustee of such
resignation or termination, along with the name, address, telephone number and
capacity of any successor Agent. Notwithstanding any engagement of an Agent
hereunder, the Company shall remain obligated to fulfill each of its obligations
under this Indenture.
ARTICLE III
REDEMPTION AND REPURCHASE
Section 3.1 Redemption of Securities at the Company's Election.
(a) The Company may redeem, in whole or in part, any Security prior
to the scheduled Maturity Date of the Security by providing pursuant to
Section 2.1(f) a Redemption Notice to the Holder thereof listed on the
records maintained by the Registrar, which notice shall include the
Redemption Date and the Redemption Price to be paid to the Holder on the
Redemption Date. No interest shall accrue on a Security to be redeemed
under this Section 3.1 for any period of time after the Redemption Date
for such Security, provided that the Company or the Paying Agent has
timely tendered the Redemption Price to the Holder.
(b) The Company shall have no mandatory redemption or sinking fund
obligations with respect to any of the Securities.
(c) In its sole discretion, the Company may offer certain Holders
the ability to extend the maturity of an existing Security through the
redemption of such Security and the issuance of a new Security. This
redemption option shall not be subject to the 30 day notice of redemption
described in Section 2.1(f).
Section 3.2 Repurchase of Securities at the Holder's Request.
(a) Repurchase Upon Death or Disability. Subject to subsection (c)
below, within forty-five (45) days of the death or Total Permanent
Disability of a Holder who is a natural person (including Securities held
in an individual retirement account), the estate of such Holder (in the
event of death) or such Holder (in the event of Total Permanent
Disability) may request that the Company repurchase, in whole and not in
part, without penalty, the Security held by such Holder, by delivering to
the Company a Repurchase Request. If a Security is held jointly by natural
persons who are legally married, then a Repurchase Request may be made
when either registered Holder of such Security dies or becomes subject to
a Total Permanent Disability, the surviving Holder or the disabled Holder
may request that the Company repurchase in whole and not in part, without
penalty, such Security as jointly held by the Holders by delivering to the
Company a Repurchase Request. In the event a Security is held jointly by
two or more natural persons that are not legally married, neither of these
persons shall have the right to request that the Company repurchase such
Security unless all joint holders of such Security have either died or
suffered a Total Permanent Disability. If the Security is held
INDENTURE - Page 17
by a Holder who is not a natural person, such as a trust, partnership,
corporation or other similar entity, the right to request repurchase upon
death or disability does not apply.
(b) Repurchase Upon Holder's Election. Subject to subsection (c)
below, a Holder may request the Company to repurchase, in whole and not in
part, the Security held by such Holder by delivering a Repurchase Request
to the Company; provided that an early Repurchase Penalty will be deducted
from the payment of such Holder's Repurchase Price on the Repurchase Date,
unless the Repurchase Request is given pursuant to paragraph (a) above. If
a repurchase is requested pursuant to this subsection (b), then the early
repurchase penalty (the "Repurchase Penalty") shall equal the following:
(i) with respect to a Security with a three (3) month maturity, the
interest accrued on a simple interest basis on such Security from the
Issue Date to the Repurchase Date at the existing interest rate thereof,
but not to exceed three (3) months of simple interest on such Security, or
(ii) with respect to a Security with a maturity of six (6) months or
longer, the interest accrued on a simple interest basis on such Security
from the Issue Date to the Repurchase Date at the existing interest rate
thereof, but not to exceed six (6) months of simple interest on such
Security.
(c) Limitation on Repurchases. The Company will be required to
repurchase Securities for which Repurchase Requests have been received
pursuant to paragraphs (a) and (b) above, except to the extent that the
aggregate Repurchase Price for all Securities for which Repurchase
Requests are then outstanding would exceed $1 million in any calendar
quarter. For the purposes of applying such $1 million limit on the
aggregate Repurchase Price for outstanding Repurchase Requests, such
outstanding Repurchase Requests will be honored in the order received, and
any Repurchase Request not paid in the quarter received due to this
limitation will be honored in the subsequent quarter, to the extent
possible, subject to the applicability of such $1 million limit on
aggregate Repurchase Request in each subsequent quarter.
(d) Repurchase Date. If a Security for which a Repurchase Request
has been received during the then current calendar quarter is determined
not to be subject to the limitation in subsection (c) above and thus, will
be repurchased during the current quarter, then the Company shall
designate a date for the repurchase of such Security (the "Repurchase
Date"), which date shall not be more than ten (10) days after the
Company's receipt of the Repurchase Request or, in the case of a
Repurchase Request following the death or Total Permanent Disability of
the Holder, ten (10) days after the Company's receipt of satisfactory
establishment of such Holder's death or Total Permanent Disability. On the
Repurchase Date, the Company shall pay the Repurchase Price to the Holder
(or the estate of the Holder, in the case of a request following death) in
accordance with Section 2.7. With respect to a Security for which a
Repurchase Request has been received during a prior calendar quarter and
for which the Repurchase Price was not paid during such prior calendar
quarter, but rather the Repurchase Request has been carried over to and is
still outstanding in the current calendar quarter (because of the
limitation in subsection (c) above), the Company shall designate a
Repurchase Date not later than the tenth (10th) day after the start of
such calendar quarter, unless subsection (c) is again applicable, in which
case such obligation shall be met not later than the tenth (10th) day
after the start of the next calendar quarter during which such limitation
is no
INDENTURE - Page 18
longer applicable. No interest shall accrue on a Security to be
repurchased under this Section 3.2 for any period of time on or after the
Repurchase Date for such Security, provided that the Company or the Paying
Agent has timely tendered the Repurchase Price to the Holder or the estate
of the Holder, as the case may be.
(e) Waiver and Modification of Repurchase Policies. The Company may
waive or reduce any early Repurchase Penalty in its sole discretion and
may modify at any time its policy on the repurchase of Securities at the
request of Holders; provided that no such modification shall adversely
affect the rights of Holders to the repurchase of Securities for which
Repurchase Requests are then outstanding.
ARTICLE IV
COVENANTS
Section 4.1 Payment of Securities.
(a) The Company shall duly pay the principal of and interest on each
Security on the dates and in the manner provided under this Indenture.
Principal and interest (to the extent such interest is paid in cash) shall
be considered paid on the date due if the Paying Agent, if other than the
Company, holds at least one Business Day before that date money deposited
by the Company in immediately available funds and designated for and
sufficient to pay all principal and interest then due; provided, however,
that principal and interest shall not be considered paid within the
meaning of this Section 4.1 if money is held by the Paying Agent for the
benefit of holders of Senior Debt pursuant to the provisions of Article X
hereof. Such Paying Agent shall return to the Company, no later than five
(5) days following the date of payment, any money (including accrued
interest) that exceeds such amount of principal and interest paid on the
Securities in accordance with this Section 4.1.
To the extent lawful, the Company shall pay interest (including
Post-Petition Interest in any proceeding under any Bankruptcy Law) on
overdue principal at the rate borne by the Securities, compounded
semi-annually; it shall pay interest (including Post-Petition Interest in
any proceeding under any Bankruptcy Law) on overdue installments of
interest (without regard to any applicable grace period) at the same rate,
compounded semi-annually.
Section 4.2 Maintenance of Office or Agency.
(a) The Company will maintain an office or agency (which may be an
office of the Trustee, Registrar or co-registrar) where Securities may be
surrendered for registration of transfer or exchange and where notices and
demands to or upon the Company in respect of the Securities and this
Indenture may be served. The Company will give prompt written notice to
the Trustee of the location, and any change in the location, of such
office or agency. If at any time the Company shall fail to maintain any
such required office or agency or shall fail to furnish the Trustee with
the address thereof, such presentations, surrenders, notices and demands
may be made or served at the Corporate Trust Office of the Trustee.
INDENTURE - Page 19
(b) The Company may also from time to time designate one or more
other offices or agencies where the Securities may be presented or
surrendered for any or all such purposes and may from time to time rescind
such designations. The Company will give prompt written notice to the
Trustee of any such designation or rescission and of any change in the
location of any such other office or agency.
(c) The Company hereby designates its office at 00000 Xxxxx Xxxxxx
Xxxxx, Xxxxx 000, Xxxxxxxx Xxxxx, Xxxxxxxxxx 00000, as one such office or
agency of the Company in accordance with Section 2.3.
Section 4.3 SEC Reports and Other Reports.
(a) The Company shall file with the Trustee, within 45 days after
filing with the SEC, copies of the annual reports and of the information,
documents, and other reports (or copies of such portions of any of the
foregoing as the SEC may by rules and regulations prescribe) that the
Company is required to file with the SEC pursuant to Section 13 or 15(d)
of the Exchange Act. If the Company is not subject to the requirements of
such Section 13 or 15(d) of the Exchange Act, the Company shall continue
to file with the SEC and the Trustee on the same timely basis such
reports, information and other documents as it would file if it were
subject to the requirements of Section 13 or 15(d) of the Exchange Act.
The Company shall file with the Trustee and the SEC, in accordance with
the rules and regulations prescribed by the SEC, such additional
information, documents and reports with respect to compliance by the
Company with the conditions and covenants of this Indenture as may be
required from time to time by such rules and regulations, and the Company
shall otherwise comply with the provisions of TIA ss.314(a).
Notwithstanding anything to the contrary herein, the Trustee shall have no
duty to review such documents for purposes of determining compliance with
any provisions of the Indenture.
(b) So long as any of the Securities remain outstanding, the Company
shall cause an annual report to stockholders and each quarterly or other
financial report furnished by it generally to stockholders to be filed
with the Trustee at the time of such mailing or furnishing to
stockholders. If the Company is not required to furnish annual or
quarterly reports to its stockholders pursuant to the Exchange Act, the
Company shall cause its financial statements, including any notes thereto
(and, with respect to annual reports, an auditors' report by the Company's
certified independent accountants) and a "Management's Discussion and
Analysis of Financial Condition or Plan of Operations," comparable to that
which would have been required to appear in annual or quarterly reports
filed under Section 13 or 15(d) of the Exchange Act to be so filed with
the Trustee within 120 days after the end of each of the Company's fiscal
years and within 60 days after the end of each of the first three quarters
of each such fiscal year.
(c) The Company, or such other entity as the Company shall designate
as Registrar, shall provide the Trustee with quarterly management reports
which provide the Trustee with such information regarding the Accounts
maintained by the Company for the benefit of the Holders of the Securities
as the Trustee may reasonably request which information shall include at
least the following for the preceding quarterly period: (i) the
INDENTURE - Page 20
outstanding balance of each Account at the end of the period; (ii)
interest credited for the period; (iii) repayments, repurchases and
redemptions, if any, made during the period; and (iv) the interest rate
paid on each Security in such Account maintained by the Registrar during
the period.
Section 4.4 Compliance Certificate.
(a) The Company shall deliver to the Trustee, within 120 days after
the end of each Fiscal Year, beginning in 2003, an Officers' Certificate
stating that a review of the activities of the Company during the
preceding fiscal year has been made under the supervision of the signing
Officers with a view to determining whether the Company has kept,
observed, performed and fulfilled its obligations under this Indenture,
and further stating, as to each such Officer signing such certificate,
that to the best of his knowledge the Company has kept, observed,
performed and fulfilled each and every covenant contained in this
Indenture and is not in default in the performance or observance of any of
the terms, provisions and conditions hereof (or, if a Default or Event of
Default shall have occurred, describing all such Defaults or Events of
Default of which he or she may have knowledge and what action the Company
is taking or proposes to take with respect thereto) and that to the best
of his/her knowledge no event has occurred and remains in existence by
reason of which payments on account of the principal of or interest, if
any, on the Securities are prohibited or if such event has occurred, a
description of the event and what action the Company is taking or proposes
to take with respect thereto.
(b) So long as not contrary to the then current recommendations of
the American Institute of Certified Public Accountants, the annual
financial statements delivered pursuant to Section 4.3 above shall be
accompanied by a written statement of the Company's independent public
accountants that in making the examination necessary for certification of
such financial statements nothing has come to their attention which would
lead them to believe that the Company has violated the provisions of
Section 4.1 of this Indenture or, if any such violation has occurred,
specifying the nature and period of existence thereof, it being understood
that such accountants shall not be liable directly or indirectly to any
Person for any failure to obtain knowledge of any such violation.
(c) The Company will, so long as any of the Securities are
outstanding, deliver to the Trustee, forthwith upon any Officer becoming
aware of any Default or Event of Default, an Officers' Certificate
specifying such Default or Event of Default and what action the Company is
taking or proposes to take with respect thereto.
Section 4.5 Stay, Extension and Usury Laws.
The Company covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay, extension or usury law wherever
enacted, now or at any time hereafter in force, which may affect the covenants
or the performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all beneficial advantage of any such
law, and covenants that it will not, by resort to any such law, hinder, delay or
impede the execution of any
INDENTURE - Page 21
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law has been enacted.
Section 4.6 Liquidation.
The Board of Directors or the stockholders of the Company shall not adopt
a plan of liquidation that provides for, contemplates or the effectuation of
which is preceded by (a) the sale, lease, conveyance or other disposition of all
or substantially all of the assets of the Company, otherwise than substantially
as an entirety (Section 5.1 of this Indenture being the Section hereof which
governs any such sale, lease, conveyance or other disposition substantially as
an entirety), and except for any securitization transaction by the Company, and
(b) the distribution of all or substantially all of the proceeds of such sale,
lease, conveyance or other disposition and of the remaining assets of the
Company to the holders of capital stock of the Company, unless the Company,
prior to making any liquidating distribution pursuant to such plan, makes
provision for the satisfaction of the Company's Obligations hereunder and under
the Securities as to the payment of principal and interest.
Section 4.7 Financial Covenants
The Company covenants that, so long as any of the Securities are
outstanding, the Company will maintain a positive net worth, which includes all
equity held by the Company's common and preferred stockholders and any
subordinated debt of the Company that is subordinate to these Securities.
Section 4.8 Restrictions on Dividends and Certain Transactions with
Affiliates
(a) The Company covenants that, so long as any of the Securities are
outstanding, it shall not declare or pay any dividends or other payments
of cash or other property to its common or preferred stockholders (other
than any dividend of the Company's capital stock on a pro rata basis to
all stockholders), unless no Default or Event of Default with respect to
the Securities then exists or would exist immediately following the
declaration or payment of such dividend or other payment.
(b) The Company covenants that, so long as any of the Securities are
outstanding, it shall not guarantee, endorse or otherwise become liable
for any obligations of any of the Company's Affiliates; provided, that the
Company and its subsidiaries may make investments in and guarantee the
obligations of Special Purpose Entities.
ARTICLE V
SUCCESSORS
Section 5.1 When the Company May Merge, etc.
(a) The Company may not consolidate or merge with or into (whether
or not the Company is the surviving corporation), or sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all
of its properties or assets in one or more related transactions to another
corporation, Person or entity unless (i) the Company is the
INDENTURE - Page 22
surviving corporation or the entity or the Person formed by or surviving
any such consolidation or merger (if other than the Company) or to which
such sale, assignment, transfer, lease, conveyance or other disposition
shall have been made is a corporation, limited liability company or
limited partnership organized or existing under the laws of the United
States, any state thereof or the District of Columbia; (ii) the entity or
Person formed by or surviving any such consolidation or merger (if other
than the Company) or the entity or Person to which such sale, assignment,
transfer, lease, conveyance or other disposition will have been made
assumes all the obligations of the Company pursuant to a supplemental
indenture in a form reasonably satisfactory to the Trustee, under the
Securities and this Indenture; and (iii) immediately after such
transaction no Default or Event of Default exists.
(b) The Company shall deliver to the Trustee prior to the
consummation of the proposed transaction an Officers' Certificate to the
foregoing effect and an Opinion of Counsel stating that the proposed
transaction and such supplemental indenture comply with this Indenture.
The Trustee shall be entitled to conclusively rely upon such Officers'
Certificate and Opinion of Counsel.
Section 5.2 Successor Entity Substituted.
Upon any consolidation or merger, or any sale, lease, conveyance or other
disposition of all or substantially all of the assets of the Company in
accordance with Section 5.1, the successor entity formed by such consolidation
or into or with which the Company, is merged or to which such sale, lease,
conveyance or other disposition is made shall succeed to, and be substituted
for, and may exercise every right and power of, the Company under this Indenture
with the same effect as if such successor Person has been named as the Company
herein, and upon such succession and substitution, the Company shall be released
from all of its obligations and liabilities under this Indenture and the
Securities.
ARTICLE VI
DEFAULTS AND REMEDIES
Section 6.1 Events of Default.
An "Event of Default" occurs if:
(a) the Company fails to pay interest on a Security when the same
becomes due and payable and such failure continues for a period of fifteen
(15) days, whether or not such payment is prohibited by the provisions of
Article X hereof;
(b) the Company fails to pay the principal of any Security when the
same becomes due and payable at maturity, on a Repurchase Date, Redemption
Date or Payment Date or otherwise, and such failure continues for a period
of ten (10) days, whether or not prohibited by the provisions of Article X
hereof;
(c) the Company fails to observe or perform any material covenant,
condition or agreement on the part of the Company under this Indenture or
the breach by the
INDENTURE - Page 23
Company of any material representation or warranty of the Company under
this Indenture;
(d) the Company defaults in any other material financial obligation
of the Company;
(e) the Company pursuant to or within the meaning of any Bankruptcy
Law (i) commences a voluntary case; (ii) consents to the entry of an order
for relief against it in an involuntary case; (iii) consents to the
appointment of a custodian of it or for all or substantially all of its
property; (iv) makes a general assignment for the benefit of its
creditors; or (v) admits in writing its inability to pay debts as the same
become due; or
(f) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that (i) is for relief against the Company in an
involuntary case; (ii) appoints a custodian of the Company or for all or
substantially all of its property; (iii) orders the liquidation of the
Company, and in each case the order or decree remains unstayed and in
effect for 120 consecutive days.
The term "Bankruptcy Law" means Title 11, U.S. Code or any similar Federal
or state law for the relief of debtors. The term "Custodian" means any receiver,
trustee, assignee, liquidator or similar official under any Bankruptcy Law.
A Default under clauses (c) or (d) of this Section 6.1 (except for a
Default with respect to Section 4.6 or 5.1) is not an Event of Default until the
Trustee or the Holders of at least a majority in principal amount of the then
outstanding Securities notify the Company of the Default and the Company does
not cure the Default or such Default is not waived within thirty (30) days after
receipt of the notice pursuant to Section 6.4. The notice must specify the
Default, demand that it be remedied and state that the notice is a "Notice of
Default."
Section 6.2 Acceleration.
If an Event of Default (other than an Event of Default specified in
clauses (e) or (f) of Section 6.1) occurs and is continuing, the Trustee by
notice to the Company or the Holders of at least a majority in principal amount
of the then outstanding Securities by written notice to the Company and the
Trustee may declare the unpaid principal of and any accrued interest on all the
Securities to be due and payable. Upon such declaration, all unpaid principal of
and accrued interest on all Securities shall be due and payable immediately;
provided, however, that if any Indebtedness or Obligation is outstanding
pursuant to the Senior Debt, such a declaration of acceleration by the Holders
shall not become effective until the earlier of (i) the day which is five (5)
Business Days after the receipt by each of the Company and the holders of Senior
Debt of such written notice of acceleration or (ii) the date of acceleration of
any Indebtedness under any Senior Debt. If an Event of Default specified in
clause (e) or (f) of Section 6.1 occurs, all unpaid principal of and accrued
interest on all Securities shall ipso facto become and be immediately due and
payable without any declaration or other act on the part of the Trustee or any
Holder.
INDENTURE - Page 24
Section 6.3 Other Remedies.
If an Event of Default occurs and is continuing, the Trustee may pursue
any available remedy to collect the payment of principal or interest on the
Securities or to enforce the performance of any provision of the Securities or
this Indenture. The Trustee may maintain a proceeding even if it does not
possess any of the Securities or does not produce any of them in the proceeding.
A delay or omission by the Trustee or any Holder 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. All remedies are
cumulative to the extent permitted by law.
Section 6.4 Waiver of Past Defaults.
Holders of a majority in principal amount of the then outstanding
Securities by notice to the Trustee may, on behalf of the Holders of all
Securities, waive any existing Default or Event of Default and its consequences
under this Indenture, including without limitation a rescission of an
acceleration pursuant to Section 6.2, except for a continuing Default or Event
of Default in the payment of interest on or the principal of any Security held
by a non-consenting Holder, or except for a waiver that would conflict with any
judgment or decree. Upon actual receipt of any such notice of waiver by a
Responsible Officer of the Trustee, such Default shall cease to exist, and any
Event of Default arising therefrom shall be deemed to have been cured for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other Default or Event of Default or impair any right consequent thereon.
Section 6.5 Control by Majority.
The Holders of a majority in principal amount of the then outstanding
Securities may direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee or exercising any trust or power
conferred on it, provided, that indemnification for the Trustee's fees and
expenses, in a form reasonably satisfactory to the Trustee, shall have been
provided. However, the Trustee may refuse to follow any direction that conflicts
with law or this Indenture, that the Trustee determines may be unduly
prejudicial to the rights of other Holders, or that may involve the Trustee in
personal liability.
Section 6.6 Limitation on Suits.
A Holder may pursue a remedy with respect to this Indenture or the
Securities only if:
(a) the Holder gives to the Trustee written notice of a continuing
Event of Default;
(b) the Holders of at least a majority in principal amount of the
then outstanding Securities make a written request to the Trustee to
pursue the remedy;
(c) such Holder or Holders offer and, if requested, provide to the
Trustee indemnity satisfactory to the Trustee against any loss, liability
or expense;
(d) the Trustee does not comply with the request within 60 days
after receipt of the request and the offer and, if requested, the
provision of indemnity; and
INDENTURE - Page 25
(e) during such 60 day period the Holders of a majority in principal
amount of the then outstanding Securities do not give the Trustee a
direction inconsistent with the request.
A Holder may not use this Indenture to prejudice the rights of another
Holder or to obtain a preference or priority over another Holder.
Section 6.7 Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Indenture, but subject to
Article X hereof, the right of any Holder of a Security to receive payment of
principal and interest on the Security, on or after the respective due dates
expressed in the Security, 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 the Holder.
Section 6.8 Collection Suit by Trustee.
If an Event of Default specified in Section 6.1 (a) or (b) occurs and is
continuing, the Trustee is authorized to recover judgment in its own name and as
trustee of an express trust against the Company for the whole amount of
principal and interest remaining unpaid on the Securities and interest on
overdue principal and, to the extent lawful, interest and such further amount as
shall be sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel.
Section 6.9 Trustee May File Proofs of Claim.
(a) The Trustee is authorized to file such proofs of claim and other
papers or documents as may be necessary or advisable in order to have the
claims of the Trustee (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its
agents and counsel) and the Holders allowed in any judicial proceedings
relative to the Company (or any other obligor upon the Securities), its
creditors or its property and shall be entitled and empowered to collect,
receive and distribute any money or other property payable or deliverable
on any such claims and any custodian in any such judicial proceeding is
hereby authorized by each Holder to make such payments to the Trustee, and
in the event that the Trustee shall consent to the making of such payments
directly to the Holders, to pay to the Trustee any amount due to it for
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee
under Section 7.7 hereof. To the extent that the payment of any such
compensation, expenses, disbursements and advances of the Trustee, its
agents and counsel, and any other amounts due the Trustee under Section
7.7 hereof out of the estate in any such proceeding, shall be denied for
any reason, payment of the same shall be secured by a lien on, and shall
be paid out of, any and all distributions, dividends, money, securities
and other properties which the Holders of the Securities may be entitled
to receive in such proceeding whether in liquidation or under any plan of
reorganization or arrangement or otherwise. Nothing herein contained shall
be deemed to authorize the Trustee to authorize or consent to or accept or
adopt on
INDENTURE - Page 26
behalf of any Holder any plan of reorganization, arrangement, adjustment
or composition affecting the Securities or the rights of any Holder
thereof, or to authorize the Trustee to vote in respect of the claim of
any Holder in any such proceeding.
(b) If the Trustee does not file a proper claim or proof of debt in
the form required in any such proceeding prior to 30 days before the
expiration of the time to file such claims or proofs, then any holder of
Senior Debt shall have the right to demand, xxx for, collect and receive
the payments and distributions in respect of the Securities which are
required to be paid or delivered to the holders of Senior Debt as provided
in Article X hereof and to file and prove all claims therefor and to take
all such other action in the name of the Holders or otherwise, as such
holder of Senior Debt may determine to be necessary or appropriate for the
enforcement of the provisions of Article X hereof.
Section 6.10 Priorities.
If the Trustee collects any money pursuant to this Article, it shall,
subject to the provisions of Article X hereof, pay out the money in the
following order:
(a) First: to the Trustee, its agents and attorneys for amounts due
under Section 7.7, including payment of all compensation, expenses and
liabilities incurred, and all advances made, if any, by the Trustee and
the costs and expenses of collection;
(b) Second: to holders of Senior Debt to the extent required by
Article X hereof;
(c) Third: to Holders for amounts due and unpaid on the Securities
for principal and interest, ratably, without preference or priority of any
kind, according to the amounts due and payable on the Securities for
principal and interest, respectively; and
(d) Fourth: to the Company or to such party as a court of competent
jurisdiction shall direct.
The Trustee may fix a record date and payment date for any payment to
Holders.
Section 6.11 Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as a Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section does not apply to a suit by the Trustee, a suit by a Holder
pursuant to Section 6.7, or a suit by Holders of more than fifty percent (50%)
in principal amount of the then outstanding Securities.
INDENTURE - Page 27
ARTICLE VII
TRUSTEE
Section 7.1 Duties of Trustee.
(a) If an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in their exercise, as
a prudent man would exercise or use under the circumstances in the conduct
of his own affairs.
(b) Except during the continuance of an Event of Default:
(1) The duties of the Trustee shall be determined solely by
the express provisions of this Indenture and the Trustee need
perform only those duties that are specifically set forth in this
Indenture and no others, and no implied covenants or obligations
shall be read into this Indenture against the Trustee.
(2) In the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon resolutions,
statements, reports, documents, orders, certificates, opinions or
other instruments furnished to the Trustee and conforming to the
requirements of this Indenture. However, in the case of any of the
above that are specifically required to be furnished to the Trustee
pursuant to this Indenture, the Trustee shall examine them to
determine whether they substantially conform to the requirements of
this Indenture.
(c) The Trustee may not be relieved from liabilities for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(1) This paragraph does not limit the effect of paragraph (b)
(2) of this Section.
(2) The Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer, unless it is proved
that the Trustee was negligent or willful in ascertaining the
pertinent facts.
(3) The Trustee shall not be liable to the Holders with
respect to any action it takes or omits to take in good faith in
accordance with a direction received by it pursuant to Section 6.5.
(d) Whether or not therein expressly so provided, every provision of
this Indenture that in any way relates to the Trustee is subject to
paragraphs (a), (b) and (c) of this Section.
(e) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or incur any liability. The Trustee may
refuse to perform any duty or exercise any right or power unless it
receives indemnity satisfactory to it against any loss, liability or
expense.
INDENTURE - Page 28
(f) The Trustee shall not be liable for interest on any money
received by it, except as the Trustee may agree in writing with the
Company. Money held in trust by the Trustee need not be segregated from
other funds except to the extent required by law.
Section 7.2 Rights of Trustee.
(a) The Trustee may conclusively rely upon any document believed by
it to be genuine and to have been signed or presented to it by the proper
Person. The Trustee need not investigate any fact or matter stated in the
document. The Trustee shall have no duty to inquire as to the performance
of the Company's covenants in Article IV hereof. In addition, the Trustee
shall not be deemed to have knowledge of any Default or any Event of
Default except any Default or Event of Default of which the Trustee shall
have received written notification or obtained actual knowledge.
(b) Before the Trustee acts or refrains from acting, it may require
an Officers' Certificate or an Opinion of Counsel or both. The Trustee
shall not be liable for any action it takes or omits to take in good faith
in reliance on such Officers' Certificate or Opinion of Counsel. The
Trustee may consult with counsel and the written advice of such counsel or
any Opinion of Counsel shall be full and complete authorization and
protection from liability in respect of any action taken, suffered or
omitted by it hereunder in good faith and in reliance thereon.
(c) The Trustee may act through agents, attorneys, custodians or
nominees and shall not be responsible for the misconduct or negligence or
the supervision of any agents, attorneys, custodians or nominees appointed
by it with due care.
(d) The Trustee shall not be liable for any action it takes or omits
to take in good faith which it believes to be authorized or within the
rights or powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this Indenture, any
demand, request, direction or notice from the Company shall be sufficient
if signed by an Officer of the Company.
(f) The Trustee shall not be deemed to have notice of an Event of
Default for any purpose under this Indenture unless notified of such Event
of Default by the Company, the Paying Agent (if other than the Company) or
a Holder of the Securities.
Section 7.3 Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become the owner
or pledgee of Securities and may otherwise deal with the Company or an Affiliate
of the Company with the same rights it would have if it were not Trustee. Any
Agent may do the same with like rights. However, the Trustee is subject to
Sections 7.10 and 7.11.
INDENTURE - Page 29
Section 7.4 Trustee's Disclaimer.
The Trustee shall not be responsible for and makes no representation as to
the validity or adequacy of this Indenture or the Securities, it shall not be
accountable for the Company's use of the proceeds from the Securities or any
money paid to the Company or upon the Company's direction under any provision
hereof, it shall not be responsible for the use or application of any money
received by any Paying Agent other than the Trustee and it shall not be
responsible for any statement or recital herein or any statement in the
Securities or any other document in connection with the sale of the Securities
or pursuant to this Indenture other than its certificate of authentication.
Section 7.5 Notice of Defaults.
If a Default or Event of Default occurs and is continuing and if it is
known to a Responsible Officer of the Trustee, the Trustee shall mail to Holders
a notice of the Default or Event of Default within ninety (90) days after it
occurs or first becomes known to the Trustee. At least five (5) Business Days
prior to the mailing of any notice to Holders under this Section 7.5, the
Trustee shall provide the Company with notice of its intent to mail such notice.
Except in the case of a Default or Event of Default in payment on any Security,
the Trustee may withhold the notice if and so long as the Responsible Officer of
the Trustee in good faith determines that withholding the notice would have no
material adverse effect on the Holders.
Section 7.6 Reports by Trustee to Holders.
(a) Within sixty (60) days after December 31 of each calendar year,
commencing December 31, 2002, the Trustee shall mail to Holders (with a
copy to the Company) a brief report dated as of such reporting date that
complies with TIA ss. 313(a) (but if no event described in TIA ss. 313(a)
has occurred within the 12 months preceding the reporting date, no report
need be prepared or transmitted). The Trustee also shall comply with TIA
ss. 313(b). The Trustee shall also transmit by mail all reports as
required by TIA ss. 313(c).
(b) Commencing at the time this Indenture is qualified under the
TIA, a copy of each report mailed to Holders under this Section 7.6 (at
the time of its mailing to Holders) shall be filed with the SEC and each
stock exchange, if any, on which the Securities are listed. The Company
shall promptly notify the Trustee if and when the Securities are listed on
any stock exchange.
Section 7.7 Compensation and Indemnity.
(a) The Company shall pay to the Trustee from time to time
reasonable compensation for its acceptance of this Indenture and its
performance of the duties and services required hereunder. The Trustee's
compensation shall not be limited by any law on compensation of a trustee
of an express trust. The Company shall reimburse the Trustee promptly upon
request for all reasonable disbursements, advances and expenses incurred
or made by it in addition to the compensation for its services. Such
expenses shall include the reasonable compensation, disbursements and
expenses of the Trustee's agents and counsel.
INDENTURE - Page 30
(b) The Company shall indemnify the Trustee against any and all
losses, liabilities or expenses incurred by it arising out of or in
connection with the acceptance or administration of its duties under this
Indenture, except as set forth in Section 7.7(d). The Trustee shall notify
the Company promptly of any claim for which it may seek indemnity. Failure
by the Trustee to so notify the Company shall not relieve the Company of
its obligations hereunder, except to the extent the Company is prejudiced
thereby. The Company shall defend the claim and the Trustee shall
reasonably cooperate in such defense. The Trustee may have separate
counsel and the Company shall pay the reasonable fees and expenses of such
one counsel. The Company need not pay for any settlement made without its
consent, which consent shall not be unreasonably withheld.
(c) The obligations of the Company under this Section 7.7 shall
survive the satisfaction and discharge of this Indenture.
(d) The Company need not reimburse any expense or indemnify against
any loss or liability incurred by the Trustee through its own negligence,
bad faith or willful misconduct.
(e) To secure the Company's payment obligations in this Section, the
Trustee shall have a lien prior to the Securities on all money or property
held or collected by the Trustee, except that held in trust to pay
principal and interest on the Securities or to pay Senior Debt. Such lien
shall survive the satisfaction and discharge of this Indenture.
(f) When the Trustee incurs expenses or renders services after an
Event of Default specified in Section 6.1(e) or (f) occurs, the expenses
and the compensation for the services are intended to constitute expenses
of administration under any Bankruptcy Law.
Section 7.8 Replacement of Trustee.
(a) A resignation or removal of the Trustee and appointment of a
successor Trustee shall become effective only upon the successor Trustee's
acceptance of appointment as provided in this Section 7.8.
(b) The Trustee may resign at any time and be discharged from the
trust hereby created by so notifying the Company. The Holders of a
majority of the aggregate principal amount of the outstanding Securities
may remove the Trustee (including any successor Trustee) at any time by so
notifying the Trustee and the Company in writing. The Company may remove
the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged a bankrupt or an insolvent or an
order for relief is entered with respect to the Trustee under any
Bankruptcy Law;
(3) a Custodian or public officer takes charge of the Trustee
or its property;
INDENTURE - Page 31
(4) the Trustee becomes incapable of acting as Trustee under
this Indenture, or
(5) the Company so elects, provided such replacement Trustee
is qualified and reasonably acceptable.
(c) If the Trustee resigns or is removed or if a vacancy exists in
the office of Trustee for any reason, the Company shall promptly appoint a
successor Trustee.
(d) If a successor Trustee does not take office within 30 days after
notice that the Trustee has resigned or has been removed, the Company or
the Trustee or the Holders of at least a majority in principal amount of
the then outstanding Securities may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
(e) If the Trustee after written request by any Holder who has been
a Holder for at least six (6) months fails to comply with Section 7.10,
such Holder may petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor Trustee.
(f) A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and
the successor Trustee shall have all the rights, powers and duties of the
Trustee under this Indenture. The successor Trustee shall mail a notice of
its succession to all Holders. The retiring Trustee shall promptly
transfer all property held by it as Trustee to the successor Trustee,
provided all sums owing to the Trustee hereunder have been paid and
subject to the lien provided for in Section 7.7. Notwithstanding
replacement of the Trustee pursuant to this Section 7.8, the Company's
obligations under Section 7.7 hereof shall continue for the benefit of the
retiring Trustee.
Section 7.9 Successor Trustee by Merger, etc.
If the Trustee consolidates, merges or converts into, or transfers all or
substantially all of its corporate trust business to, another corporation, the
successor corporation without any further act shall be the successor Trustee.
Section 7.10 Eligibility; Disqualification.
(a) There shall at all times be a Trustee hereunder which shall be a
corporation organized and doing business under the laws of the United
States of America or of any state or territory thereof or of the District
of Columbia authorized under such laws to exercise corporate trustee
power, shall be subject to supervision or examination by Federal, state,
territorial or District of Columbia authority and shall have a combined
capital and surplus of at least $5,000,000 as set forth in its most recent
published annual report of condition.
(b) This Indenture shall always have a Trustee who satisfies the
requirements of TIA ss. 310(a)(1) and (2). The Trustee is subject to TIA
ss. 310(b).
INDENTURE - Page 32
Section 7.11 Preferential Collection of Claims Against Company.
The Trustee is subject to TIA ss. 311(a), excluding any creditor
relationship listed in TIA ss. 311(b). A Trustee who has resigned or been
removed shall be subject to TIA ss. 311(a) to the extent indicated therein.
ARTICLE VIII
DISCHARGE OF INDENTURE
Section 8.1 Termination of Company's Obligations.
(a) This Indenture shall cease to be of further effect (except that
the Company's obligations under Section 7.7 and 8.4, and the Company's,
Trustee's and Paying Agent's obligations under Section 8.3 shall survive)
when all outstanding Securities have been paid in full and the Company has
paid all sums payable by the Company hereunder. In addition, the Company
may terminate all of its obligations under this Indenture if:
(1) the Company irrevocably deposits in trust with the Trustee
or, at the option of the Trustee, with a trustee reasonably
satisfactory to the Trustee and the Company under the terms of an
irrevocable trust agreement in form and substance satisfactory to
the Trustee, money or U.S. Government Obligations sufficient (as
certified by an independent public accountant designated by the
Company) to pay principal and interest on the Securities to maturity
or redemption, as the case may be, and to pay all other sums payable
by it hereunder, provided that (i) the trustee of the irrevocable
trust shall have been irrevocably instructed to pay such money or
the proceeds of such U.S. Government Obligations to the Trustee and
(ii) the Trustee shall have been irrevocably instructed to apply
such money or the proceeds of such U.S. Government Obligations to
the payment of said principal and interest with respect to the
Securities;
(2) the Company delivers to the Trustee an Officers'
Certificate stating that all conditions precedent to satisfaction
and discharge of this Indenture have been complied with; and
(3) no Default or Event of Default with respect to the
Securities shall have occurred and be continuing on the date of such
deposit.
Then, this Indenture shall cease to be of further effect (except as
provided in this paragraph), and the Trustee, on demand of the Company,
shall execute proper instruments acknowledging confirmation of and
discharge under this Indenture. The Company may make the deposit only if
Article X hereof does not prohibit such payment. However, the Company's
obligations in Sections 2.3, 2.4, 2.5, 2.6, 2.7, 4.1, 4.2, 4.3, 7.7, 7.8,
8.3 and 8.4 and the Trustee's and Paying Agent's obligations in Section
8.3 shall survive until the Securities are no longer outstanding.
Thereafter, only the Company's
INDENTURE - Page 33
obligations in Section 7.7 and 8.4 and the Company's, Trustee's and Paying
Agent's obligations in Section 8.3 shall survive.
(b) After such irrevocable deposit made pursuant to this Section 8.1
and satisfaction of the other conditions set forth herein, the Trustee
upon written request shall acknowledge in writing the discharge of the
Company's obligations under this Indenture except for those surviving
obligations specified above.
(c) In order to have money available on a payment date to pay
principal or interest on the Securities, the U.S. Government Obligations
shall be payable as to principal or interest at least one Business Day
before such payment date in such amounts as will provide the necessary
money. U.S. Government Obligations shall not be callable at the issuer's
option.
Section 8.2 Application of Trust Money.
The Trustee or a trustee satisfactory to the Trustee and the Company shall
hold in trust money or U.S. Government Obligations deposited with it pursuant to
Section 8. 1. It shall apply the deposited money and the money from U.S.
Government Obligations through the Paying Agent and in accordance with this
Indenture to the payment of principal and interest on the Securities.
Section 8.3 Repayment to Company.
(a) The Trustee and the Paying Agent shall promptly pay to the
Company upon written request any excess money or securities held by them
at any time.
(b) The Trustee and the Paying Agent shall pay to the Company upon
written request any money held by them for the payment of principal or
interest on the Securities that remains unclaimed for two years after the
date upon which such payment shall have become due; provided, however,
that the Company shall have either caused notice of such payment to be
mailed to each Holder entitled thereto no less than 30 days prior to such
repayment or within such period shall have published such notice in a
newspaper of widespread circulation published in the County of Orange,
State of California. After payment to the Company, Holders entitled to the
money must look to the Company for payment as general creditors unless an
applicable abandoned property law designates another Person, and all
liability of the Trustee and such Paying Agent with respect to such money
shall cease.
Section 8.4 Reinstatement.
If the Trustee or Paying Agent is unable to apply any money or U.S.
Government Obligations in accordance with Section 8.2 by reason of any legal
proceeding or by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application, the
Company's obligations under this Indenture and the Securities shall be revived
and reinstated as though no deposit had occurred pursuant to Section 8.1 until
such time as the Trustee or Paying Agent is permitted to apply all such money or
U.S. Government Obligations in accordance with Section 8.2; provided, however,
that if the Company
INDENTURE - Page 34
has made any payment of interest on or principal of any Securities because of
the reinstatement of its obligations, the Company shall be subrogated to the
rights of the Holders of such Securities to receive such payment, as long as no
money is owed to the Trustee by the Company, from the money or U.S. Government
Obligations held by the Trustee or Paying Agent.
ARTICLE IX
AMENDMENTS
Section 9.1 Without Consent of Holders.
The Company and the Trustee may amend this Indenture or the Securities
without the consent of any Holder:
(a) to cure any ambiguity, defect or inconsistency;
(b) to comply with Section 5.1;
(c) to provide for additional uncertificated Securities or
certificated Securities;
(d) to make any change that does not adversely affect the legal
rights hereunder of any Holder, including but not limited to an increase
in the aggregate dollar amount of Securities which may be outstanding
under this Indenture;
(e) make any change in Section 3.2; provided, however, that no such
change shall adversely affect the rights of any outstanding or issued
Security; or
(f) to comply with any requirements of the SEC in connection with
the qualification of this Indenture under the TIA.
Section 9.2 With Consent of Holders.
(a) The Company and the Trustee may amend this Indenture or the
Securities with the written consent of the Holders of at least a majority
in principal amount of the then outstanding Securities. The Holders of a
majority in principal of the then outstanding Securities may also waive on
behalf of all Holders any existing Default or Event of Default or
compliance with any provision of this Indenture or the Securities.
However, without the consent of the Holder of each Security affected, an
amendment or waiver under this Section may not (with respect to any
Security held by a nonconsenting Holder):
(i) reduce the aggregate principal amount of Securities whose
Holders must consent to an amendment, supplement or waiver;
(ii) reduce the rate of or change the time for payment of
interest, including default interest, on any Security;
INDENTURE - Page 35
(iii) reduce the principal of or change the fixed maturity of
any Security or alter the redemption provisions or the price at
which the Company shall offer to purchase such Security pursuant to
Section 3.1 of Article III hereof;
(iv) make any Security payable in money other than that stated
in the Prospectus;
(v) modify or eliminate the right of the estate of a Holder or
a Holder to cause the Company to repurchase a Security upon the
death or Total Permanent Disability of a Holder pursuant to Article
III; provided, however, that the Company may not modify or eliminate
such right, as it may be in effect on the Issue Date, of any
Security which was issued with such right, and after an amendment
under this subsection 9.2(a)(v) becomes effective, the Company shall
mail to the Holders of each Security then outstanding a notice
briefly describing the amendment;
(vi) make any change in Section 6.4 or 6.7 hereof or in this
sentence of this Section 9.2;
(vii) make any change in Article X that materially adversely
affects the rights of any Holders; or
(viii) waive a Default or Event of Default in the payment of
principal of or interest on any Security (except a rescission of
acceleration of the Securities by the Holders of at least a majority
in aggregate principal amount of the Securities and a waiver of the
payment default that resulted from such acceleration).
(b) It shall not be necessary for the consent of the Holders under
this Section to approve the particular form of any proposed amendment or
waiver, but it shall be sufficient if such consent approves the substance
thereof.
(c) After an amendment or waiver under this Section becomes
effective, the Company shall mail to the Holders of each Security affected
thereby a notice briefly describing the amendment or waiver. Any failure
of the Company to mail such notice, or any defect therein, shall not,
however, in any way impair or affect the validity of any such supplemental
indenture or waiver. Subject to Sections 6.4 and 6.7 hereof, the Holders
of a majority in principal amount of the Securities then outstanding may
waive compliance in a particular instance by the Company with any
provision of this Indenture or the Securities.
Section 9.3 Compliance with Trust Indenture Act.
If at the time this Indenture shall be qualified under the TIA, every
amendment to this Indenture or the Securities shall be set forth in a
supplemental indenture that complies with the TIA as then in effect.
INDENTURE - Page 36
Section 9.4 Revocation and Effect of Consents.
(a) Until an amendment or waiver becomes effective, a consent to it
by a Holder of a Security is a continuing consent by the Holder and every
subsequent Holder of a Security or portion of a Security that evidences
the same debt as the consenting Holder's Security, even if notation of the
consent is not made on any Security. An amendment or waiver becomes
effective in accordance with its terms and thereafter binds every Holder.
(b) The Company may fix a record date for determining which Holders
must consent to such amendment or waivers. If the Company fixes a record
date, the record date shall be fixed at (i) the later of 30 days prior to
the first solicitation of such consent or the date of the most recent list
of Holders furnished to the Trustee prior to such solicitation pursuant to
Section 2.5, or (ii) such other date as the Company shall designate.
Section 9.5 Notation on or Exchange of Securities.
The Trustee may place an appropriate notation about an amendment or waiver
on any Security, if certificated, or any Account statement. Failure to make any
notation or issue a new Security shall not affect the validity and effect of
such amendment or waiver.
Section 9.6 Trustee to Sign Amendments, etc.
The Trustee shall sign any amendment or supplemental indenture authorized
pursuant to this Article IX if, in the Trustee's reasonable discretion, the
amendment does not adversely affect the rights, duties, liabilities or
immunities of the Trustee. If it does, the Trustee may, but need not, sign it.
In signing or refusing to sign such amendment or supplemental indenture, the
Trustee shall be entitled to receive, if requested, an indemnity reasonably
satisfactory to it and to receive and, subject to Section 7.1, shall be fully
protected in relying upon, an Officers' Certificate and an Opinion of Counsel
(or written advice of counsel) as conclusive evidence that such amendment or
supplemental indenture is authorized or permitted by this Indenture, that it is
not inconsistent herewith, and that it will be valid and binding upon the
Company in accordance with its terms. The Company may not sign an amendment or
supplemental indenture until its Board of Directors approves it.
ARTICLE X
SUBORDINATION
Section 10.1 Agreement to Subordinate.
(a) The Company agrees, and each Holder by accepting a Security
consents and agrees, that the Indebtedness evidenced by the Securities and
the payment of the principal of and interest on the Securities is
subordinated in right of payment, to the extent and in the manner provided
in this Article, to the prior payment in full, in cash, cash equivalents
or otherwise in a manner satisfactory to the holders of Senior Debt, of
all Obligations due in respect of Senior Debt of the Company whether
outstanding on the date hereof or hereafter incurred, and that the
subordination is for the benefit of the holders of Senior Debt.
INDENTURE - Page 37
(b) For purposes of this Article X, a payment or distribution on
account of the Securities may consist of cash, property or securities, by
set-off or otherwise, and a payment or distribution on account of any of
the Securities shall include, without limitation, any redemption, purchase
or other acquisition of the Securities.
Section 10.2 Liquidation; Dissolution; Bankruptcy.
(a) Upon any payment or distribution of assets of the Company of any
kind or character, whether in cash, property or securities, to creditors
upon (i) any dissolution or winding-up or total or partial liquidation or
reorganization of the Company whether voluntary or involuntary and whether
or not involving insolvency or bankruptcy or (ii) any bankruptcy or
insolvency case or proceeding or any receivership, liquidation,
reorganization or other similar case or proceeding in connection
therewith, relative to the Company or to its assets, (iii) any assignment
for the benefit of creditors or any other marshaling of assets of the
Company, all obligations due, or to become due, in respect of Senior Debt
(including interest after the commencement of any such proceeding at the
rate specified in the applicable Senior Debt) shall first interfeasibly be
paid in full, or provision shall have been made for such payment, in cash,
cash equivalents or otherwise in a manner satisfactory to the holders of
Senior Debt, before any payment is made on account of the principal of or
interest on the Securities, except that Holders may receive securities
that are subordinated to at least the same extent as the Securities are to
(x) Senior Debt and (y) any securities issued in exchange for Senior Debt.
Upon any such dissolution, winding-up, liquidation or reorganization, any
payment or distribution of assets of the Company of any kind or character,
whether in cash, property or securities, to which the Holders of the
Securities or the Trustee under this Indenture would be entitled, except
for the provisions hereof, shall be paid by the Company or by any
receiver, trustee in bankruptcy, liquidating trustee, agent or other
Person making such payment or distribution, or by the Holders of the
Securities or by the Trustee under this Indenture if received by them,
directly to the holders of Senior Debt (pro rata to such holders on the
basis of the amounts of Senior Debt held by such holders) or their
representative or representatives, or to the trustee or trustees under any
indenture pursuant to which any of such Senior Debt may have been issued,
as their interests may appear, for application to the payment of Senior
Debt remaining unpaid until all such Senior Debt has been indefeasibly
paid in full, or provisions shall have been made for such payment, in
cash, cash equivalents or otherwise in a manner satisfactory to the
holders of Senior Debt, after giving effect to any concurrent payment,
distribution or provision therefor to or for the holders of Senior Debt.
(b) For purposes of this Article X, the words "cash, property or
securities" shall not be deemed to include securities of the Company or
any other corporation provided for by a plan of reorganization or
readjustment which are subordinated, to at least the same extent as the
Securities, to the payment of all Senior Debt then outstanding or to the
payment of all securities issued in exchange therefor to the holders of
Senior Debt at the time outstanding. The consolidation of the Company
with, or the merger of the Company with or into, another corporation or
the liquidation or dissolution of the Company following the conveyance or
transfer of its property as an entirety, or substantially as an entirety,
to another corporation upon the terms and conditions
INDENTURE - Page 38
provided in Article V shall not be deemed a dissolution, winding-up,
liquidation or reorganization for the purposes of this Section if such
other corporation shall, as part of such consolidation, merger, conveyance
or transfer, comply with the conditions stated in Article V.
Section 10.3 Default of Senior Debt.
(a) In the event and during the continuation of any default in the
payment of principal of (or premium, if any) or interest on any Senior
Debt, or any amount owing from time to time under or in respect of Senior
Debt or in the event that any nonpayment event of default with respect to
any Senior Debt shall have occurred and be continuing and shall have
resulted in such Senior Debt becoming or being declared due and payable
prior to the date on which it would otherwise have become due and payable,
or (b) in the event that any other nonpayment event of default with
respect to any Senior Debt shall have occurred and be continuing
permitting the holders of such Senior Debt (or a trustee on behalf of the
holders thereof) to declare such Senior Debt due and payable prior to the
date on which it would otherwise have become due and payable, then the
Company shall make no payment, direct or indirect (including any payment
which may be payable by reason of the payment of any other Indebtedness of
the Company being subordinated to the payment of the Securities) (other
than securities that are subordinated to at least the same extent as the
Securities are to (x) Senior Debt and (y) any securities issued in
exchange for Senior Debt) unless and until (i) such event of default shall
have been cured or waived or shall have ceased to exist or such
acceleration shall have been rescinded or annulled, or (ii) in case of any
nonpayment event of default specified in (b), during the period (a
"Payment Blockage Period") commencing on the date the Company and the
Trustee receive written notice (a "Payment Notice") of such event of
default (which notice shall be binding on the Trustee and the Holders as
to the occurrence of such an event of default) from a holder of the Senior
Debt to which such default relates and ending on the earliest of (A) 179
days after such date, (B) the date, if any, on which such Senior Debt to
which such default relates is discharged or such default is waived by the
holders of such Senior Debt or otherwise cured and (C) the date on which
the Trustee receives written notice from the holder of such Senior Debt to
which such default relates terminating the Payment Blockage Period. No new
Payment Blockage Period may be commenced within 360 days after the receipt
by the Trustee of any prior Payment Notice. For all purposes of this
Section 10.3, no event of default which existed or was commencing with
respect to the Senior Debt to which a Payment Blockage Period relates on
the date such Payment Blockage Period commenced shall be or be made the
basis for the commencement or any subsequent Payment Blockage Period
unless such event of default is cured or waived for a period of not less
than 180 consecutive days.
Section 10.4 When Distribution Must Be Paid Over.
(a) If the Trustee or any Holder receives any payment with respect
to the Securities, whether in cash, property or securities (other than
securities that are subordinated to at least the same extent as the
Securities are to (x) Senior Debt and (y) any securities issued in
exchange for Senior Debt at a time when such payment is prohibited by
Article X hereof), such payment shall be held by the Trustee or such
INDENTURE - Page 39
Holder, in trust for the benefit of, and shall be paid forthwith over and
delivered to, the holders of Senior Debt (pro rata to such holders on the
basis of the amount of Senior Debt held by such holders) for application
to the payment of all Obligations with respect to Senior Debt remaining
unpaid to the extent necessary to pay such Obligations in full, in cash,
cash equivalents or otherwise in a manner satisfactory to the holders of
Senior Debt, in accordance with the terms of such Senior Debt, after
giving effect to any concurrent payment or distribution to or for the
holders of Senior Debt.
(b) With respect to the holders of Senior Debt, the Trustee
undertakes to perform only such obligations on the part of the Trustee as
are specifically set forth in this Article X, and no implied covenants or
obligations with respect to the holders of Senior Debt shall be read into
this Indenture against the Trustee. The Trustee shall not be deemed to owe
any fiduciary duty to the holders of Senior Debt, and shall not be liable
to any such holders if the Trustee shall pay over or distribute to or on
behalf of Holders or the Company or any other Person money or assets to
which any holders of Senior Debt shall be entitled by virtue of this
Article X, except if such payment is made as a result of the willful
misconduct or negligence of the Trustee.
Section 10.5 Notice by Company.
The Company shall promptly notify the Trustee and the Paying Agent in
writing of any facts known to the Company that would cause a payment of any
Obligations with respect to the Company to violate this Article, but failure to
give such notice shall not affect the subordination of the Securities to the
Senior Debt provided in this Article.
Section 10.6 Subrogation.
After all Senior Debt is paid in full, in cash, cash equivalents or
otherwise in a manner satisfactory to the holders of such Senior Debt, and until
the Securities are paid in full, Holders shall be subrogated (equally and
ratably with all other Indebtedness pari passu with the Securities) to the
rights of holders of Senior Debt to receive distributions applicable to Senior
Debt to the extent that distributions otherwise payable to the Holders have been
applied to the payment of Senior Debt.
Section 10.7 Relative Rights.
(a) This Article defines the relative rights of Holders and holders
of Senior Debt. Nothing in this Indenture shall:
(1) impair, as between the Company and Holders, the
obligations of the Company, which are absolute and unconditional, to
pay principal of and interest on the Securities in accordance with
their terms;
(2) affect the relative rights of Holders and creditors of the
Company other than their rights in relation to holders of Senior
Debt; or
(3) prevent the Trustee or any Holder from exercising its
available remedies upon a Default or Event of Default, subject to
the rights of holders and
INDENTURE - Page 40
owners of Senior Debt to receive distributions and payments
otherwise payable to Holders.
(b) If the Company fails because of this Article to pay principal of
or interest on a Security on the due date, the failure is still a Default
or Event of Default.
Section 10.8 Subordination May Not Be Impaired by the Company or Holders
of Senior Debt.
(a) No right of any present or future holder of Senior Debt to
enforce the subordination of the Indebtedness evidenced by the Securities
and the Obligations related thereto shall be prejudiced or impaired by any
act or failure to act by any such holder or by the Company, the Trustee or
any Agent or by the failure of the Company to comply with this Indenture,
regardless of any knowledge thereof which any such holder may have or
otherwise be charged with.
(b) Without limiting the effect of the preceding paragraph, any
holder of Senior Debt may at any time and from time to time without the
consent of or notice to any other holder or to the Trustee, without
impairing or releasing any of the rights of any holder of Senior Debt
under this Indenture, upon or without any terms or conditions and in whole
or in part:
(1) change the manner, place or term of payment, or change or
extend the time of payment of, renew or alter any Senior Debt or any
other liability of the Company to such holder, any security
therefor, or any liability incurred directly or indirectly in
respect thereof, and the provisions of this Article X shall apply to
the Senior Debt as so changed, extended, renewed or altered;
(2) notwithstanding the provisions of Section 5.1 hereof,
sell, exchange, release, surrender, realize upon or otherwise deal
with in any manner and in any order any property by whomsoever at
any time pledged or mortgaged to secure, or howsoever securing, any
Senior Debt or any other liability of the Company to such holder or
any other liabilities incurred directly or indirectly in respect
thereof or hereof or any offset thereagainst;
(3) exercise or refrain from exercising any rights or remedies
against the Company or others or otherwise act or refrain from
acting or, for any reason, fail to file, record or otherwise perfect
any security interest in or lien on any property of the Company or
any other Person; and
(4) settle or compromise any Senior Debt or any other
liability of the Company to such holder, or any security therefor,
or any liability incurred directly or indirectly in respect thereof.
(c) All rights and interests under this Indenture of any holder of
Senior Debt and all agreements and obligations of the Trustee, the
Holders, and the Company under Article VI and under this Article X shall
remain in full force and effect irrespective of (i) any lack of validity
or enforceability of any agreement or instrument relating to any
INDENTURE - Page 41
Senior Debt or (ii) any other circumstance that might otherwise constitute
a defense available to, or a discharge of, the Trustee, any Holder, or the
Company.
(d) Any holder of Senior Debt is hereby authorized to demand
specific performance of the provisions of this Article X, whether or not
the Company shall have complied with any of the provisions of this Article
X applicable to it, at any time when the Trustee or any Holder shall have
failed to comply with any of these provisions. The Trustee and the Holders
irrevocably waive any defense based on the adequacy of a remedy at law
that might be asserted as a bar to such remedy of specific performance.
Section 10.9 Distribution or Notice to Representative.
(a) Whenever a distribution is to be made or a notice given to
holders of Senior Debt, the distribution may be made and the notice given
to their representative.
(b) Upon any payment or distribution of assets of the Company
referred to in this Article X, the Trustee and the Holders shall be
entitled to rely upon any order or decree made by any court of competent
jurisdiction in which bankruptcy, dissolution, winding-up, liquidation or
reorganization proceedings are pending or upon any certificate of any
representative of any holder of Senior Debt or of the liquidating trustee
or agent or other Person making any distribution, delivered to the Trustee
or to the Holders, for the purpose of ascertaining the Persons entitled to
participate in such distribution, the holders of the Senior Debt and other
indebtedness of the Company, the amount thereof or payable thereon, the
amount or amounts paid or distributed thereon and all other facts
pertinent thereto or to this Article X.
Section 10.10 Rights of Trustee and Paying Agent.
(a) Notwithstanding the provisions of this Article X or any other
provision of this Indenture, the Trustee shall not be charged with
knowledge of the existence of any facts which would prohibit the making of
any payment or distribution by the Trustee, or the taking of any action by
the Trustee, and the Trustee or Paying Agent may continue to make payments
on the Securities unless it shall have received at its Corporate Trust
Office at least five (5) Business Days prior to the date of such payment
written notice of facts that would cause the payment of any Obligations
with respect to the Securities to violate this Article, which notice,
unless specified by a holder of Senior Debt as such, shall not be deemed
to be a Payment Notice. The Trustee may conclusively rely on such notice.
Only the Company or a holder of Senior Debt may give the notice. Nothing
in this Article X shall apply to amounts due to, or impair the claims of,
or payments to, the Trustee under or pursuant to Section 7.7 hereof.
(b) The Trustee in its individual or any other capacity may hold
Senior Debt with the same rights it would have if it were not Trustee. Any
Agent may do the same with like rights.
INDENTURE - Page 42
Section 10.11 Authorization to Effect Subordination.
Each Holder of a Security by his acceptance thereof authorizes and directs
the Trustee on his behalf to take such action as may be necessary or appropriate
to effectuate, as between the holders of Senior Debt and the Holders, the
subordination as provided in this Article X, and appoints the Trustee his
attorney-in-fact for any and all such purposes.
Section 10.12 Article Applicable to Paying Agent.
In case at any time any Paying Agent (other than the Trustee or the
Company) shall have been appointed by the Company and be then acting hereunder,
the term "Trustee" as used in this Article X shall in such case (unless the
context otherwise requires) be construed as extending to and including such
Paying Agent within its meaning as fully for all intents and purposes as if such
Paying Agent were named in this Article X in addition to or in place of the
Trustee.
Section 10.13 Miscellaneous.
(a) The agreements contained in this Article X shall continue to be
effective or be reinstated, as the case may be, if at any time any payment
of any of the Senior Debt is rescinded or must otherwise be returned by
any holder of Senior Debt upon the insolvency, bankruptcy or
reorganization of the Company or otherwise, all as though such payment had
not been made.
(b) The Trustee shall notify all holders of Senior Debt (of whose
identity the Trustee has received reasonable advance written notice) of
the existence of any Default or Event of Default under Section 6.1
promptly after a Responsible Officer of the Trustee actually becomes aware
thereof; provided, however, that at least five (5) Business Days prior to
the notification of any holder of Senior Debt under this Section 10.13,
the Trustee shall provide the Company with notice of its intent to provide
such notification, provided further, however, that no defect in the form
or delivery of the Trustee's notice to the Company shall preclude the
timely notice by the Trustee to the holders of Senior Debt.
ARTICLE XI
MISCELLANEOUS
Section 11.1 Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies or conflicts with the
duties imposed by TIA ss. 318(c), the imposed duties shall control.
Section 11.2 Notices.
(a) Any notice, instruction, direction, request or other
communication by the Company, the Trustee or any other holder of Senior
Debt to the others is duly given if in writing and delivered in person or
mailed by first-class mail (registered or certified, return receipt
requested), telex, telecopier or overnight air courier guaranteeing next
day delivery, to the other's address:
INDENTURE - Page 43
If to the Company:
ONYX ACCEPTANCE CORPORATION
00000 Xxxxx Xxxxxx Xxxxx
Xxxxx 000
Xxxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxx X. Xxxxx, Chief Financial Officer and
Xxxxxxx X. Krahelski, Esq., General Counsel
Telecopier: (000) 000-0000
With a copy to:
XXXXXXX & XXXXX, L.L.P.
0000 Xxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxx X. Xxxxxxxxxx, Esq.
Telecopier: (000) 000-0000
If to the Trustee:
U.S. BANK NATIONAL ASSOCIATION
000 Xxxx 0xx Xxxxxx
Xxxxx Xxxx, Xxxxxxxxx 00000
Attention: Xxxxxxx Xxxxxxxx, Corporate Finance
Telecopier: (000) 000-0000
If to a holder of Senior Debt, such address as such holder of Senior Debt
shall have provided in writing to the Company and the Trustee.
(b) The Company, the Trustee or a holder of Senior Debt by notice to
the Company and the Trustee may designate additional or different
addresses for subsequent notices or communications.
(c) All notices and communications (other than those sent to
Holders) shall be deemed to have been duly given: at the time delivered by
hand, if personally delivered; five (5) Business Days after being
deposited in the mail, postage prepaid, if mailed; when answered back, if
telexed; when receipt acknowledged, if telecopied; and the next Business
Day after timely delivery to the courier, if sent by overnight air courier
guaranteeing next day delivery.
(d) Any notice or communication to a Holder shall be mailed by
first-class mail to his address shown on the register kept by the
Registrar. Failure to mail a notice or communication to a Holder or any
defect in it shall not affect its sufficiency with respect to other
Holders.
INDENTURE - Page 44
(e) If a notice or communication is mailed in the manner provided
above within the time prescribed, it is duly given, whether or not the
addressee receives it.
(f) If the Company mails a notice or communication to Holders, it
shall mail a copy to the Trustee and each Agent at the same time.
Section 11.3 Communication by Holders with Other Holders.
Holders may communicate pursuant to TIA ss. 312(b) with other Holders with
respect to their rights under this Indenture or the Securities. The Trustee is
subject to ss. 312(b). The Company, the Trustee, the Registrar and anyone else
shall have the protection of TIA ss. 312(c).
Section 11.4 Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company to the Trustee to take any
action under this Indenture, the Company shall furnish to the Trustee:
(a) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth
in Section 11.5) stating that, in the opinion of the signers, all
conditions precedent and covenants, if any, provided for in this Indenture
relating to the proposed action have been complied with; and
(b) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth
in Section 11.5) stating that, in the opinion of such counsel, all such
conditions precedent and covenants have been complied with.
Section 11.5 Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture (other than a certificate provided
pursuant to TIA ss. 314(a)(4)) shall include:
(a) a statement that the Person making such certificate or opinion
has read such covenant or condition;
(b) 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;
(c) a statement that, in the opinion of such Person, he has made
such examination or investigation as is necessary to enable him to express
an informed opinion whether such covenant or condition has been complied
with; and
(d) a statement whether, in the opinion of such Person, such
condition or covenant has been complied with.
INDENTURE - Page 45
Section 11.6 Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by or at a meeting of
Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
Section 11.7 Legal Holidays.
A "Legal Holiday" is a Saturday, a Sunday or a day on which banking
institutions in the State of Minnesota or at a place of payment are authorized
or obligated by law, regulation or executive order to remain closed. If a
payment date is a Legal Holiday at a place of payment, payment may be made at
that place on the next succeeding day that is not a Legal Holiday, and no
interest shall accrue for the intervening period.
Section 11.8 No Recourse Against Others.
No director, officer, employee, agent, manager or stockholder of the
Company as such, shall have any liability for any Obligations of the Company
under the Securities or this Indenture or for any claim based on, in respect of
or by reason of such Obligations or their creation. Each Holder by accepting a
Security waives and releases all such liability.
Section 11.9 Duplicate Originals.
The parties may sign any number of copies of this Indenture. One signed
copy is enough to prove this Indenture.
Section 11.10 Governing Law.
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN THIS INDENTURE AND
THE SECURITIES, WITHOUT REGARD TO THE CONFLICT OF LAWS PROVISIONS THEREOF.
Section 11.11 No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture, loan or
debt agreement of the Company. Any such indenture, loan or debt agreement may
not be used to interpret this Indenture.
Section 11.12 Successors.
All agreements of the Company in this Indenture and the Securities shall
bind its successors. All agreements of the Trustee in this Indenture shall bind
its successors.
Section 11.13 Severability.
In case any provision in this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
INDENTURE - Page 46
Section 11.14 Counterpart Originals.
The parties may sign any number of copies of this Indenture. Each signed
copy shall be an original, but all of them together represent the same
agreement.
Section 11.15 Table of Contents, Headings, etc.
The Table of Contents, Cross-Reference Table and Headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part hereof and shall in no way
modify or restrict any of the terms or provisions thereof.
INDENTURE - Page 47
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused to be duly executed,
and their respective corporate seals to be affixed and attested unto, as of the
day and year first written above, this Indenture.
ONYX ACCEPTANCE CORPORATION
By:________________________________
Name:______________________________
Title:_____________________________
Attest:____________________________
U.S. BANK NATIONAL
ASSOCIATION, a national banking association,
as Trustee
By:________________________________
Name:______________________________
Title:_____________________________
