SSL DRAFT
OCTOBER 17, 2000
DELTA FINANCIAL CORPORATION, as Issuer
AND
THE SUBSIDIARY GUARANTORS NAMED HEREIN
AND
U.S. BANK TRUST NATIONAL ASSOCIATION, as Trustee
------------------
INDENTURE
Dated as of November [--], 2000
$150,000,000
9 1/2% Senior Secured Notes Due 2004
CROSS-REFERENCE TABLE
TIA SECTION INDENTURE SECTION
310 (a) (1)..............................................................7.10
(a) (2)..................................................................7.10
(a) (3)..................................................................N.A.
(a) (4)..................................................................N.A.
(a) (5)..................................................................7.10
(b).........................................................7.08; 7.10; 13.02
(c)......................................................................N.A.
311 (a)..................................................................7.11
(b)......................................................................7.11
(c)......................................................................N.A.
312 (a)..................................................................2.05
(b).....................................................................13.03
(c).....................................................................13.03
313 (a)..................................................................7.06
(b) (1).................................................................12.03
(b) (2)..................................................................7.06
(c)...............................................................7.06; 13.02
(d)......................................................................7.06
314 (a).................................................................13.02
(b).....................................................................12.02
(c) (1)...........................................................7.02; 13.04
(c) (2)...........................................................7.02; 13.04
(c) (3)..................................................................N.A.
(d).......................................................12.03, 12.04, 12.05
(e)......................................................................N.A.
(f)......................................................................N.A.
315 (a)...............................................................7.01(b)
(b)..............................................................7.05; 12.02
(c)......................................................... .........7.01(a)
(d)...................................................................7.01(c)
(e).....................................................................6.11
316(a) (last sentence)..................................................2.09
(a) (1) (A).............................................................6.05
(a) (1) (B).............................................................6.04
(a) (2).................................................................N.A.
(b).....................................................................6.07
317 (a) (1).............................................................6.08
(a) (2).................................................................6.09
(b).....................................................................2.04
318 (a)................................................................13.01
(c)....................................................................13.01
.........
N.A. means Not Applicable
NOTE: This Cross-Reference Table shall not, for any purpose, be deemed to be
a part of the Indenture.
TABLE OF CONTENTS
PAGE
ARTICLE ONE - DEFINITIONS AND INCORPORATION BY REFERENCE...................1
SECTION 1.01. Definitions............................................1
SECTION 1.02. Incorporation by Reference of TIA.....................19
SECTION 1.03. Rules of Construction.................................20
ARTICLE TWO - THE SENIOR NOTES............................................20
SECTION 2.01. Form and Dating.......................................20
SECTION 2.02. Execution and Authentication..........................21
SECTION 2.03. Registrar and Paying Agent............................21
SECTION 2.04. Trustee To Include Paying Agent.......................22
SECTION 2.05. Paying Agent to Hold Assets in Trust..................22
SECTION 2.06. Holder Lists..........................................23
SECTION 2.07. Transfer and Exchange.................................23
SECTION 2.08. Replacement Senior Notes..............................23
SECTION 2.09. Outstanding Senior Notes..............................24
SECTION 2.10. Treasury Senior Notes.................................24
SECTION 2.11. Temporary Senior Notes................................24
SECTION 2.12. Cancellation..........................................25
SECTION 2.13. Defaulted Interest....................................25
SECTION 2.14. CUSIP Number..........................................25
ARTICLE THREE - REDEMPTION................................................26
SECTION 3.01. Notices to Trustee....................................26
SECTION 3.02. Selection of Senior Notes to Be Redeemed..............26
SECTION 3.03. Notice of Redemption..................................26
SECTION 3.04. Effect of Notice of Redemption........................27
SECTION 3.05. Deposit of Redemption Price...........................27
SECTION 3.06. Senior Notes Redeemed in Part.........................28
SECTION 3.07. Optional Redemption...................................28
SECTION 3.08. Mandatory Redemption..................................28
ARTICLE FOUR - COVENANTS..................................................28
SECTION 4.01. Payment Of Senior Notes...............................28
SECTION 4.02. Maintenance Of Office Or Agency.......................29
SECTION 4.03. Reports...............................................29
SECTION 4.04. Compliance Certificate................................30
SECTION 4.05. Taxes.................................................31
SECTION 4.06. Stay, Extension And Usury Laws........................31
SECTION 4.07. Restricted Payments...................................32
SECTION 4.08. Dividend And Other Payment Restrictions Affecting
Subsidiaries..........................................34
SECTION 4.09. Incurrence Of Indebtedness And Issuance Of
Preferred Stock.......................................35
SECTION 4.10 Transactions With Affiliates..........................37
SECTION 4.11. Liens.................................................38
SECTION 4.12. Business Activities...................................38
SECTION 4.13. Payments For Consent..................................38
SECTION 4.14. Corporate Existence...................................38
SECTION 4.15. Offer To Repurchase Upon Change Of Control............38
SECTION 4.16. Additional Subsidiary Guarantees......................39
SECTION 4.17. Residual Receivable Coverage Ratio....................40
SECTION 4.18. Liquidity Maintenance.................................40
SECTION 4.19. Back-up Servicing Agreement...........................41
SECTION 4.20. Registration Rights...................................41
SECTION 4.21. Leverage Ratio (Total Liabilities)....................41
SECTION 4.22. Leverage Ratio........................................41
SECTION 4.23. Net Worth.............................................41
SECTION 4.24. Cash Escrow Account...................................41
SECTION 4.25. No pledge or Sale of Residual Receivables or Other
Assets after Default or Event of Default..............42
SECTION 4.26. Limitations on Asset Sales............................42
SECTION 4.27. Flow of Residual Receivables..........................43
SECTION 4.28. Notice of Default.....................................43
ARTICLE FIVE - SUCCESSOR CORPORATION......................................43
SECTION 5.01. Limitation on Merger, Etc.............................43
SECTION 5.02. Successor Corporation Substituted.....................44
ARTICLE SIX - DEFAULTS AND REMEDIES.......................................44
SECTION 6.01. Events Of Default.....................................44
SECTION 6.02. Acceleration..........................................47
SECTION 6.03 Other Remedies........................................47
SECTION 6.04. Waiver Of Past Defaults...............................48
SECTION 6.05. Control By Majority...................................48
SECTION 6.06. Limitation On Suits...................................48
SECTION 6.07. Rights Of Holders To Receive Payment..................49
SECTION 6.08. Collection Suit By Trustee............................49
SECTION 6.09. Trustee May File Proofs Of Claim......................49
SECTION 6.10. Priorities............................................50
SECTION 6.11. Undertaking For Costs.................................50
ARTICLE SEVEN - TRUSTEE...................................................51
SECTION 7.01. Duties of Trustee.....................................51
SECTION 7.02. Rights of Trustee.....................................52
SECTION 7.03. Individual Rights of Trustee..........................53
SECTION 7.04. Trustee's Disclaimer..................................53
SECTION 7.05 Notice of Default.....................................53
SECTION 7.06. Reports by Trustee to Holders.........................54
SECTION 7.07. Compensation and Indemnity............................54
SECTION 7.08. Replacement of Trustee................................55
SECTION 7.09. Successor Trustee by Xxxxxx, Etc......................56
SECTION 7.10. Eligibility; Disqualification.........................56
SECTION 7.11. Preferential Collection of Claims Against
the Company...........................................56
ARTICLE EIGHT - LEGAL DEFEASANCE AND COVENANT DEFEASANCE..................56
SECTION 8.01. Option to Effect Legal Defeasance or
Covenant Defeasance...................................56
SECTION 8.02. Legal Defeasance and Discharge........................57
SECTION 8.03. Covenant Defeasance...................................57
SECTION 8.04. Conditions to Legal or Covenant Defeasance............58
SECTION 8.05. Deposited U.S. Legal Tender and U.S. Government
Obligations to be Held in Trust; Other
Miscellaneous Provisions..............................59
SECTION 8.06. Repayment to the Company..............................60
SECTION 8.07. Reinstatement.........................................60
ARTICLE NINE - AMENDMENTS, SUPPLEMENTS AND WAIVER.........................60
SECTION 9.01. Without Consent of Holders............................60
SECTION 9.02. With Consent of Holders...............................62
SECTION 9.03. Compliance with TIA...................................63
SECTION 9.04. Revocation and Effect of Consents.....................64
SECTION 9.05. Notation on or Exchange of Senior Notes...............64
SECTION 9.06. Trustee to Sign Amendments, Etc.......................64
ARTICLE TEN - MEETINGS OF HOLDERS.........................................65
SECTION 10.01. Purposes for Which Meetings May Be Called.............65
SECTION 10.02. Manner of Calling Meetings............................65
SECTION 10.03. Call of Meetings by the Company or Holders............66
SECTION 10.04. Who May Attend and Vote at Meetings...................66
SECTION 10.05. Regulations May Be Made by Trustee; Conduct of
the Meeting; Voting Rights; Adjournment...............66
SECTION 10.06. Voting at the Meeting and Record to Be Kept...........67
SECTION 10.07. Exercise of Rights of Trustee or Holders May Not
Be Hindered or Delayed by Call of Meeting.............67
ARTICLE ELEVEN - GUARANTEE OF SENIOR NOTES................................68
SECTION 11.01. Subsidiary Guarantee..................................68
SECTION 11.02. Execution And Delivery Of Subsidiary Guarantee........69
SECTION 11.03 Subsidiary Guarantors May Consolidate, Etc., On
Certain Terms.........................................70
SECTION 11.04. Representations and Warranties on
Subsidiary Guarantees.................................71
ARTICLE TWELVE - COLLATERAL AND SECURITY..................................73
SECTION 12.01. Collateral Agreements.................................73
SECTION 12.02. Recording and Opinions................................73
SECTION 12.03. Release of Collateral.................................74
SECTION 12.04. Certificates of the Company...........................75
SECTION 12.05. Certificates of the Trustee...........................75
SECTION 12.06. Authorization of Receipt of Funds by the Trustee
Under the Collateral Agreements.......................75
SECTION 12.07. Termination of Security Interest......................75
ARTICLE THIRTEEN - MISCELLANEOUS..........................................75
SECTION 13.01. TIA Controls..........................................75
SECTION 13.02. Notices...............................................76
SECTION 13.03. Communications by Holders with Other Holders..........76
SECTION 13.04. Certificate and Opinion as to Conditions Precedent....77
SECTION 13.05. Statements Required in Certificate or Opinion.........77
SECTION 13.06. Rules by Trustee, Paying Agent, Registrar.............77
SECTION 13.07. Governing Law.........................................78
SECTION 13.08. No Adverse Interpretation of Other Agreements.........78
SECTION 13.09. No Recourse Against Others............................78
SECTION 13.10. Successors............................................78
SECTION 13.11. Duplicate Originals...................................78
SECTION 13.12. Severability..........................................78
SECTION 13.13. Table of Contents, Headings, Etc......................79
SECTION 13.14. Legal Holidays........................................79
SIGNATURES................................................................80
Exhibit A - Form of Senior Note...........................................A-1
Exhibit B - Form of Subsidiary Guarantee..................................B-1
Exhibit C - Form of Pledge Agreement (Pledged Collateral: stock, etc.)...C-1
Exhibit D - Form of Pledge Agreement (Pledged Collateral: Owner Trust
Certificates, etc.) ........................................D-1
Exhibit E - Form of Security Agreement....................................E-1
Exhibit F - Form of Back-Up Servicing Agreement (omitted).................F-1
Exhibit G - Form of Administration Agreement..............................G-1
Exhibit H - Form of Residual Collateral Trust Agreement...................H-1
Exhibit I - Form of Warrant Agreement.....................................I-1
Exhibit J - Form of Registration Rights Agreement.........................J-1
Exhibit K - Form of Escrow Agreement......................................K-1
Note: This Table of Contents shall not, for any purpose, be deemed to be
part of the Indenture.
INDENTURE dated as of November __, 2000 among Delta Financial
Corporation, a Delaware corporation (the "Company"), as issuer, each of Delta
Funding Corporation, a New York corporation ("Delta Funding"), DF Special
Holdings Corporation, a Delaware corporation ("DF Special Holdings"), Fidelity
Mortgage, Inc., a Delaware corporation, DFC Financial Corporation, a Delaware
corporation, DFC Financial of Canada Limited, an Ontario, Canada corporation,
DFC Funding of Canada Limited, an Ontario, Canada corporation, Continental
Property Management Corp., a New York corporation, Delta Funding Residual
Holding Trust 2000-1, Delta Funding Residual Holding Trust 2000-2 (collectively,
the "Subsidiary Guarantors") and U.S. Bank Trust National Association, a
national banking association incorporated under the laws of the United States,
as trustee.
The Company has duly authorized the creation of an issue of the Senior
Notes (as defined) and the Subsidiary Guarantees (as defined), and, to provide
therefor, the Company has duly authorized the execution and delivery of this
Indenture. The Senior Notes and certain of the Subsidiary Guarantees will be
secured by a lien and security interest in the Collateral (as defined)
maintained with the Collateral Agent (as defined) pursuant to the terms of the
Collateral Agreements (as defined). The Senior Notes will be jointly and
severally guaranteed, on an unconditional senior secured basis, by the
Subsidiary Guarantors (as defined). All things necessary to make the Senior
Notes, when duly issued and executed by the Company, and authenticated and
delivered hereunder, the valid obligations of the Company and the Subsidiary
Guarantors and to make this Indenture a valid and binding agreement of the
Company and the Subsidiary Guarantors, have been done.
Each party hereto agrees as follows for the benefit of each other
party and for the equal and ratable benefit of the Holders of the Company's 9
1/2% Senior Secured Notes due 2004:
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions.
"ACQUIRED DEBT" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person, including,
without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien
encumbering any asset acquired by such specified Person.
"ADJUSTED SENIOR INDEBTEDNESS" means Senior Indebtedness minus the sum
of (i) Unencumbered Liquid Assets, (ii) 80% of the accounts receivable of the
Company and its Subsidiaries (determined on a consolidated basis in accordance
with GAAP) and (iii) 80% of accrued interest receivable of the Company and its
Subsidiaries (determined on a consolidated basis in accordance with GAAP).
"ADJUSTED TANGIBLE NET WORTH" means Tangible Net Worth plus all
Subordinated Indebtedness.
"ADMINISTRATION AGREEMENTS" means those certain Administration
Agreements, dated the date of this Indenture and substantially in the form of
Exhibit G hereto, between the Residual Collateral Trusts, Delta Funding and the
Trustee, as administrator, as such agreements may be amended, modified or
supplemented from time to time.
"ADMINISTRATOR" means the administrator under the Administration
Agreements. As of the Issue Date, the Trustee and Delta Funding are the
Administrators.
"AFFILIATE" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; provided, that, for
purposes of Section 4.10, beneficial ownership of more than 10% of the voting
securities of a Person shall be deemed to be control.
"AFFILIATE TRANSACTION" shall have the meaning set forth in Section
4.10.
"AGENT" means any Registrar, Paying Agent or co-Registrar.
"ASSET-BACKED SECURITY" means a security that is primarily serviced by
the cash flow of a discrete pool of Receivables or other financial assets,
either fixed or revolving, that by their terms convert into cash within a finite
time period plus any rights or other assets designed to assure the servicing or
timely distribution of proceeds to the securityholders.
"ASSET SALE" means the sale, lease, conveyance or other disposition of
any assets that have a Fair Market Value in excess of $1.0 million or for net
proceeds in excess of $1.0 million.
"BACK-UP SERVICING AGREEMENT" shall mean the _____ to be entered into
between the Company and the Back-Up Servicer, substantially in the form of
Exhibit F hereto, as such agreement may be amended, modified or supplemented
from time to time.
"BACK-UP SERVICER" means the back-up servicer (initially,
[Countrywide]) under the Back-Up Servicing Agreement or a nationally recognized
servicer in substitution therefor under the Back-Up Servicing Agreement.
"BANKRUPTCY LAW" means Title 11, U.S. Code or any similar federal,
state or foreign law for the relief of debtors.
"BENEFICIAL HOLDER" means the beneficial owner of a Senior Note.
"BOARD OF DIRECTORS" means, with respect to any Person, the Board of
Directors of such Person or any authorized committee thereof.
"BOARD RESOLUTION" means, with respect to any Person, a duly adopted
resolution of the Board of Directors of such Person.
"BUSINESS DAY" means any day other than a Legal Holiday.
"CAPITAL LEASE" means, at the time any determination thereof is to be
made, any lease of property, real or personal, in respect of which the present
value of the minimum rental commitment would be capitalized on a balance sheet
of the lessee in accordance with GAAP.
"CAPITAL LEASE OBLIGATION" means, at the time any determination
thereof is to be made, the amount of the liability in respect of a Capital Lease
that would at such time be required to be capitalized on a balance sheet in
accordance with GAAP.
"CAPITAL STOCK" means (i) in the case of a corporation, corporate
stock (including, without limitation, common stock and preferred stock), (ii) in
the case of an association or business entity, any and all shares, interests,
participations, rights or other equivalents (however designated) of corporate
stock, (iii) in the case of a partnership or limited liability company,
partnership (whether general or limited) or membership interests and (iv) any
other interest or participation that confers on a Person the right to receive a
share of the profits and losses of, or distributions of assets of, the issuing
Person.
"CASH ESCROW ACCOUNT" means the cash escrow account established by an
escrow agreement of even date herewith into which the Company shall deposit
funds to pay accrued interest on the Senior Notes in accordance with Section
4.24.
"CASH EQUIVALENTS" means (i) United States dollars, (ii) securities
issued or directly and fully guaranteed or insured by the United States
government or any agency or instrumentality thereof having maturities of not
more than one year from the date of acquisition, (iii) certificates of deposit
and Eurodollar time deposits with maturities of one year or less from the date
of acquisition, bankers' acceptances with maturities not exceeding one year and
overnight bank deposits, in each case with any domestic commercial bank having
capital and surplus in excess of $500.0 million and a Xxxxx Bank Watch Rating of
"B" or better, (iv) repurchase obligations with a term of not more than seven
days for underlying securities of the types described in clauses (ii) and (iii)
above entered into with any financial institution meeting the qualifications
specified in clause (iii) above, (v) commercial paper having one of the two
highest ratings obtainable from Xxxxx'x Investors Service, Inc. or Standard &
Poor's Ratings Group and in each case maturing within nine months after the date
of acquisition, and (vi) money market funds, the portfolios of which are limited
to investments described in clauses (i) through (v) above.
"CHANGE OF CONTROL" means the occurrence of any of the following: (i)
the sale, lease, transfer, conveyance or other disposition (other than by way of
merger or consolidation and excluding sales, leases, transfers, conveyances or
other dispositions pursuant to Securitizations, Warehouse Facilities or Residual
Receivables financing arrangements otherwise permitted by this Indenture entered
into in the ordinary course of business), in one or a series of related
transactions, of all or substantially all of the assets of the Company and its
Restricted Subsidiaries taken as a whole to any "person" (as such term is used
in Section 13(d)(3) of the Exchange Act) other than a Permitted Holder, (i) the
adoption of a plan relating to the liquidation or dissolution of the Company,
(iii) the consummation of any transaction (including, without limitation, any
merger or consolidation) the result of which is that any "person" (as defined
above) other than a Permitted Holder becomes the "beneficial owner" (as such
term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly
or indirectly, of more than 50% of the Voting Stock of the Company (measured by
general voting power rather than number of shares), (iv) the first day on which
a majority of the members of the Board of Directors of the Company are not
Continuing Directors or (v) the Company consolidates with, or merges with or
into, any Person, or any Person consolidates with, or merges with or into, the
Company, in any such event pursuant to a transaction in which any of the
outstanding Voting Stock of the Company is converted into or exchanged for cash,
securities or other property, other than any such transaction where the Voting
Stock of the Company outstanding immediately prior to such transaction is
converted into or exchanged for Voting Stock (other than Disqualified Stock) of
the surviving or transferee Person constituting a majority of the outstanding
shares of such Voting Stock of such surviving or transferee Person (immediately
after giving effect to such issuance). For purposes of this definition, any
transfer of an equity interest of an entity that was formed for the purpose of
acquiring Voting Stock of the Company will be deemed to be a transfer of such
portion of such Voting Stock as corresponds to the portion of the equity of such
entity that has been so transferred.
"CHANGE OF CONTROL OFFER" shall have the meaning provided in Section
4.15.
"CHANGE OF CONTROL PAYMENT" shall have the meaning provided in Section
4.15.
"CHANGE OF CONTROL PAYMENT DATE" shall have the meaning provided in
Section 4.15.
"COLLATERAL" shall mean inclusively, all rights, title and interest of
the Company or any Subsidiary Guarantor in the respective Pledged Collateral or
Collateral (including the Pledged Servicing Rights) (as defined in any of the
respective Pledge Agreements and the Security Agreements, respectively) and the
Escrow Account and other Collateral Security (as defined in and under the Escrow
Agreement), and the proceeds thereof.
"COLLATERAL AGENT" shall mean the each of the Agents under the
respective Pledge Agreements, the Escrow Agent under the Escrow Agreement and
the Agent under the Security Agreement, including in each case the Trustee when
serving in any such capacity.
"COLLATERAL AGREEMENTS" means, collectively the Pledge Agreements, the
Security Agreements, the Escrow Agreement and any other document or instrument
executed or delivered in connection with any of the foregoing, in each case, as
the same may be in force from time to time.
"CONSOLIDATED LEVERAGE RATIO" as of any date of determination means
the ratio of (i) the aggregate amount of all consolidated Indebtedness of the
Company and its Restricted Subsidiaries excluding (A) Permitted Warehouse Debt,
and (B) Hedging Obligations permitted to be incurred pursuant to Section
4.09(b)(vii) to (ii) the Consolidated Net Worth of the Company.
"CONSOLIDATED NET INCOME" means, with respect to any Person for any
period, the aggregate of the Net Income of such Person and its Restricted
Subsidiaries (for such period, on a consolidated basis, determined in accordance
with GAAP); provided, that (i) the Net Income (but not loss) of any Person that
is not a Restricted Subsidiary or that is accounted for by the equity method of
accounting shall be included only to the extent of the amount of dividends or
distributions paid in cash to the referent Person or a Wholly-Owned Restricted
Subsidiary thereof, (ii) the Net Income of any Restricted Subsidiary shall be
excluded to the extent that the declaration or payment of dividends or similar
distributions by that Restricted Subsidiary of that Net Income is not at the
date of determination permitted without any prior governmental approval (that
has not been obtained) or, directly or indirectly, by operation of the terms of
its charter or any agreement, instrument, judgment, decree, order, statute, rule
or governmental regulation applicable to that Restricted Subsidiary or its
stockholders, (iii) the Net Income of any Person acquired in a pooling of
interests transaction for any period prior to the date of such acquisition shall
be excluded, and (iv) the cumulative effect of a change in accounting principles
shall be excluded.
"CONSOLIDATED NET WORTH" means, with respect to any Person as of any
date, the sum of (i) the consolidated equity of the common stockholders of such
Person and its consolidated Restricted Subsidiaries as of such date plus (ii)
the respective amounts reported on such Person's balance sheet as of such date
with respect to any series of preferred stock (other than Disqualified Stock)
that by its terms is not entitled to the payment of dividends unless such
dividends may be declared and paid only out of net earnings in respect of the
year of such declaration and payment, but only to the extent of any cash
received by such Person upon issuance of such preferred stock, less (x) all
write-ups (other than write-ups resulting from foreign currency translations and
write-ups of tangible assets of a going concern made within 12 months after the
acquisition of such business) subsequent to the date of this Indenture in the
book value of any asset owned by such Person or a consolidated Restricted
Subsidiary of such Person, (y) all Investments as of such date in unconsolidated
Restricted Subsidiaries and in Persons that are not Restricted Subsidiaries and
(z) all unamortized debt discount and expense and unamortized deferred charges
as of such date, all of the foregoing determined in accordance with GAAP.
"CONTINUING DIRECTOR" means, as of any date of determination, any
member of the Board of Directors of the Company who (i) was a member of such
Board of Directors on the Original Issue Date or (ii) was nominated for election
or elected to such Board of Directors with the approval of a majority of the
Directors constituting Continuing Directors who were members of such Board at
the time of such nomination or election.
"COVENANT DEFEASANCE" shall have the meaning provided in Section 8.03.
"CORPORATE TRUST OFFICE OF THE TRUSTEE" shall be at the address of the
Trustee specified in Section 13.02 or such other address as the Trustee may give
notice to the Company.
"CREDIT ENHANCEMENT AGREEMENTS" means, collectively, any documents,
instruments or agreements entered into by the Company or, any of its Restricted
Subsidiaries with any Person exclusively for the purpose of providing credit
support for Asset-Backed Securities issued in connection with Securitizations.
"CUSTODIAN" means any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any Bankruptcy Law.
"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.
"DISQUALIFIED STOCK" means any Capital Stock that either (A) by its
terms (or by the terms of any security into which it is convertible or for which
it is exchangeable), or upon the happening of any event, (i) matures or is
mandatorily redeemable, in whole or in part, pursuant to a sinking fund
obligation or otherwise or, (ii) is convertible into or exchangeable for
Indebtedness or Disqualified Stock, in whole or in part, or (iii) is redeemable,
in whole or in part, at the option of the Holder thereof at any time, in any
such case, on or prior to the date that is 91 days after the date on which the
Senior Notes mature, or (B) is designated by the Company (in a resolution of the
Board of Directors delivered to the Trustee) as Disqualified Stock.
"ELIGIBLE RECEIVABLES" means, at the time of determination,
Receivables meeting the sale or loan eligibility criteria set forth in one or
more of the Warehouse Facilities to which the Company or any of its Restricted
Subsidiaries is a party at such time and is eligible for sale in a
Securitization.
"EQUITY INTERESTS" means Capital Stock and all warrants, options or
other rights to acquire such Capital Stock (but excluding any debt security that
is convertible into, or exchangeable for, such Capital Stock).
"ESCROW AGENT" means the Person designated as such in the Escrow
Agreement. As of the Issue Date, the Trustee is the Escrow Agent.
"ESCROW AGREEMENT" means that certain Escrow Agreement, dated the date
of this Indenture and substantially in the form of Exhibit K hereto, between the
Company and the Trustee, as such agreement may be amended, modified or
supplemented from time to time.
"EVENT OF DEFAULT" shall have the meaning provided in Section 6.01.
"EXCESS SPREAD" means, over the life of a pool of Receivables that
have been sold by the Company or a Restricted Subsidiary in a Securitization,
the rights, other than servicing rights, retained by the Company or such
Restricted Subsidiary at or subsequent to the closing of such Securitization or
sale with respect to such pool, to receive cash flows attributable to such pool.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated by the SEC thereunder.
"FAIR MARKET VALUE" means, with respect to any asset or property, the
price which could be negotiated in an arm's-length, free market transaction, for
cash, between an informed and willing seller and an informed and willing and
able buyer, neither of whom is under undue pressure or compulsion to complete
the transaction.
"GAAP" means 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 have been 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. Notwithstanding the foregoing, the term "Guarantee" does not
include obligations pursuant to representations, warranties, covenants and
indemnities in connection with a Securitization or Warehouse Facility.
"GUARANTED OBLIGATIONS" shall mean all of the following obligations,
whether now existing or hereafter incurred: (i) the due and punctual payment of
the principal and premium, if any, of, and interest on, the Senior Notes when
and as the same shall be due and payable, by acceleration, repurchase,
redemption or otherwise, interest on the overdue principal of and interest (to
the extent permitted by law), if any, on the Senior Notes and under the
Indenture (including, without limitation, all interest that accrues after the
commencement of any case, proceeding or other action relating to the bankruptcy,
insolvency or reorganization of the Company or any Subsidiary Guarantor); (ii)
the due performance and observance by the Company and of each Subsidiary
Guarantor of all if its other obligations from time to time existing in respect
of the Indenture, the Senior Notes, the Subsidiary Guarantees, the Collateral
Agreements and the Related Agreements; and (iii) all fees, costs, charges and
expenses paid or incurred by the Trustee or any Holder or Beneficial Holder in
connection with the creation, protection and preservation or enforcement of its
or their rights under any of the Indenture, the Senior Notes, the Subsidiary
Guarantees, the Collateral Agreements and the Related Agreements, on a full
indemnity basis.
"HEDGING OBLIGATIONS" means, with respect to any Person, the Net
obligations of such Person under (i) interest rate or currency swap agreements,
cap agreements, collar agreements and related agreements and (ii) other
agreements or arrangements designed to protect such Person against fluctuations
in value of assets owned, financed or sold, or of liabilities incurred or
assumed, or of pre-funding arrangements, in any case in the ordinary course of
business of such Person and not for speculative purposes.
"HOLDER" means a person in whose name a Senior Note is
registered.
"INDEBTEDNESS" means, with respect to any Person, any indebtedness of
such Person, whether or not contingent, in respect of (i) borrowed money or
evidenced by bonds, notes, debentures or similar instruments or letters of
credit (or reimbursement agreements in respect thereof) or banker's acceptances
or representing Capital Lease Obligations or the unpaid deferred balance of the
purchase price of any property or representing any Hedging Obligations, except
any such balance that constitutes an accrued expense 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, (ii) all indebtedness of others secured
by a Lien on any asset of such Person (whether or not such indebtedness is
assumed by such Person), (iii) without duplication, all Warehouse Debt, (iv) all
obligations of such Person with respect to the redemption, repayment or other
repurchase of any Disqualified Stock and, in the case of any Subsidiary
Guarantor, preferred stock (but excluding in each case any accrued dividends
thereon), and (v) to the extent not otherwise included, the Guarantee by such
Person of any indebtedness of any other Person to the extent of any Guarantee of
such indebtedness provided by such Person. Except in the case of Warehouse Debt
(the amount of which shall be determined in accordance with the definition
thereof) and except in the case of Hedging Obligations (the amount of which
shall be determined on a net basis after rights of set-off and related
positions), the amount of Indebtedness of any Person at any date shall be the
outstanding balance at such date of all unconditional obligations as described
above and the maximum liability, upon the occurrence of the contingency giving
rise to the obligation, of any contingent obligations at such date.
Notwithstanding the foregoing, the term "Indebtedness" does not include
obligations pursuant to representations, warranties, covenants and indemnities
in connection with a Securitization or Warehouse Facility.
"INDENTURE" means this Indenture, as amended or supplemented from time
to time in accordance with the terms hereof.
"INTEREST PAYMENT DATE" means the stated maturity of an installment of
interest on the Senior Notes on February 1 and August 1 of each year.
"INVESTMENTS" means, with respect to any Person, all investments by
such Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including Guarantees of Indebtedness), advances or capital
contributions (excluding commission, travel and similar advances to officers and
employees made in the ordinary course of business), purchases or other
acquisitions for consideration of Indebtedness, Equity Interests or other
securities, together with all items that are or would be classified as
investments on a balance sheet prepared in accordance with GAAP; provided that
an acquisition of Equity Interests or other securities by the Company for
consideration consisting of common equity securities of the Company (other than
Disqualified Stock) shall not be deemed to be an Investment.
"ISSUE DATE" means the date of first issuance of the Senior Notes
under this Indenture.
"LEGAL DEFEASANCE" shall have the meaning provided in Section 8.02.
"LEGAL HOLIDAY" means a Saturday, a Sunday or a day on which banking
institutions in the City of New York or at a place of payment are authorized 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.
"LIEN" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of such
asset, whether or not filed, recorded or otherwise perfected under applicable
law (including any conditional sale or other title retention agreement, any
lease in the nature thereof, any option or other agreement to sell or give a
security interest in and any filing of or agreement to give any financing
statement under the Uniform Commercial Code (or equivalent statutes) of any
jurisdiction).
"MATURITY DATE" means August 1, 2004.
"XXXXXX STOCKHOLDERS" means (i) any of Xxxx Xxxxxx, Xxx Xxxxxx, Xxxx
X. Xxxxxx and Xxxxxx Xxxxxx; (ii) any spouse or lineal descendent of any Person
named in clause (i); and (iii) any trust of which the beneficial interests in
such are held by any of the Persons named in clauses (i) and (ii).
"MINIMUM RESIDUAL AMOUNT" shall have the meaning provided in Section
4.17.
"MINIMUM SENIOR RESIDUAL AMOUNT" shall have the meaning provided in
Section 4.17.
"NET INCOME" means, with respect to any Person, the net income (loss)
of such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however, (i) any gain (but not
loss), together with any related provision for taxes on such gain (but not
loss), realized in connection with (a) any asset sale (including, without
limitation, dispositions pursuant to sale and leaseback transactions) or (b) the
disposition of any securities by such Person or any of its Restricted
Subsidiaries or the extinguishment of any Indebtedness of such Person or any of
its Restricted Subsidiaries and (ii) any extraordinary or nonrecurring gain (but
not loss), together with any related provision for taxes on such extraordinary
or nonrecurring gain (but not loss).
"NET PROCEEDS" means the aggregate Cash Equivalent proceeds received
by the Company or any of its Restricted Subsidiaries in respect of any Asset
Sale (including, without limitation, any Cash Equivalent received upon the sale
or other disposition of any non-cash consideration received in any Asset Sale),
net of the direct costs relating to such Asset Sale (including, without
limitation, legal, accounting and investment banking fees, and sales
commissions) and any relocation expenses incurred as a result thereof, taxes
paid or payable as a result thereof (after taking into account any available tax
credits or deductions and any tax sharing arrangements), amounts required to be
applied to the repayment of Indebtedness secured by a Lien on the asset or
assets that were the subject of such Asset Sale and any reserve for adjustment
in respect to the sale price of such asset or assets established in accordance
with GAAP.
"NET WORTH" as of any date of determination, means the net worth of
the Company, the Subsidiary Guarantors and their Subsidiaries on a consolidated
basis as determined in accordance with GAAP.
"NIMS" shall have the meaning provided in Section 4.17.
"NON-RECOURSE DEBT" means Indebtedness (i) as to which neither the
Company nor any of its Restricted Subsidiaries (a) provides credit support of
any kind (including any undertaking, agreement or instrument that would
constitute Indebtedness), or (b) is directly or indirectly liable (as a
guarantor or otherwise); and (ii) as to which the lenders have been notified in
writing that they will not have any recourse to the stock or assets of the
Company or any of its Restricted Subsidiaries.
"OBLIGATIONS" means any principal, interest, penalties, fees and other
liabilities payable under the documentation governing any Indebtedness.
"OFFICER" means, with respect to any Person, the Chairman of the
Board, the Chief Executive Officer, the President, the Chief Financial Officer,
the Treasurer, any Assistant Treasurer, the Controller, the Secretary or any
Vice President of such Person.
"OFFICERS' CERTIFICATE" means a certificate signed on behalf of the
Company by two Officers of the Company, one of whom must be the principal
executive officer, the principal financial officer, the treasurer or the
principal accounting officer of the Company, that meets the requirements of
Section 13.05 hereof.
"OPINION OF COUNSEL" means an opinion from legal counsel who is
acceptable to the Trustee. The counsel may be an employee of or counsel to the
Company or the Trustee.
"ORIGINAL INDENTURE" has the meaning set forth in Section 11.04.
"ORIGINAL ISSUE DATE" means July 23, 1997.
"ORIGINAL NOTES" has the meaning set forth in Section 11.04.
"OWNER TRUSTEE" means the Owner Trustees under the Residual Collateral
Trust Agreements. As of the Issue Date, Wilmington Trust Company is the Owner
Trustee.
"PAYING AGENT" means the office or agency maintained by the Company
where Senior Notes may be presented or surrendered for payment, except that, for
the purposes of Articles Three and Eight of this Indenture relating to
redemption of the Senior Notes and satisfaction and discharge of this Indenture,
respectively, and Section 4.15 hereof, the Paying Agent shall not be the
Company, any Subsidiary or Affiliate (including, without limitation, any Xxxxxx
Stockholder).
"PERMITTED BUSINESSES" means any consumer or commercial finance
business or any financial service business.
"PERMITTED HOLDER" means any of Messrs. Xxxxxx X. Xxxxxx, Xxxx Xxxxxx,
Xxxx X. Xxxxxx and Xxx Xxxxxx, any spouse or lineal descendant thereof or any
trust all of the beneficiaries of which are any of the foregoing.
"PERMITTED INVESTMENTS" means (a) any Investment in the Company or in
a Restricted Subsidiary that is a Subsidiary Guarantor; (b) any Investment in
Cash Equivalents; (c) any Investment by the Company or any Restricted Subsidiary
in a Person if, as a result of such Investment, (i) such Person becomes (x) a
Wholly-Owned Restricted Subsidiary and (y) a Subsidiary Guarantor that is
engaged in a Permitted Business or (ii) such Person is merged, consolidated or
amalgamated with or into, or transfers or conveys substantially all of its
assets to, or is liquidated into, the Company or a Wholly-Owned Restricted
Subsidiary that is a Subsidiary Guarantor and that is engaged in a Permitted
Business; (d) any Investment in Receivables, Residual Receivables or Servicing
Receivables (without giving effect to the proviso contained in the definition
thereof) or in the Capital Stock of an entity substantially all of the assets of
which are Residual Receivables or Servicing Receivables made in the ordinary
course of business, provided that after giving effect to such Investment, the
Company remains in compliance with Section 4.17; (e) any investment in a
Securitization Trust established by the Company or any Subsidiary thereof made
in the ordinary course of business; and (f) other Investments in any Person
(other than an Affiliate of the Company that is not also a Subsidiary of the
Company) that do not exceed $10.0 million in the aggregate since the Original
Issue Date.
"PERMITTED LIENS" means (i) Liens on Receivables or other assets
securing Warehouse Debt or Hedging Obligations (or Guarantees of Warehouse Debt
or Hedging Obligations); (ii) Liens in favor of the Company or any Restricted
Subsidiary; (iii) Liens on property of a Person existing at the time such Person
is merged into or consolidated with the Company or any Restricted Subsidiary of
the Company; provided that such Liens were in existence prior to the
contemplation of such merger or consolidation and do not extend to any assets
other than those of the Person merged into or consolidated with the Company or
such Restricted Subsidiary; (iv) Liens on property existing at the time of
acquisition thereof by the Company or any Restricted Subsidiary of the Company,
provided that such Liens were in existence prior to the contemplation of such
acquisition; (v) Liens to secure the performance of statutory obligations,
surety or appeal bonds, performance bonds or other Obligations of a like nature
incurred in the ordinary course of business; (vi) Liens to secure Indebtedness
(including Capital Lease Obligations) permitted by Section 4.09(b)(i) hereof
covering only the assets acquired with such Indebtedness; (vii) Liens existing
on the Original Issue Date; (viii) Liens for taxes, assessments or governmental
charges or claims that are not yet delinquent or that are being contested in
good faith by appropriate proceedings, provided that any reserve or other
appropriate provision as shall be required in conformity with GAAP shall have
been made therefor; (ix) Liens (including, without limitation, Liens on Residual
Receivables) in favor of a monoline insurance company or other provider of
credit enhancement pursuant to a Credit Enhancement Agreement; (x) Liens
incurred in the ordinary course of business of the Company or any Restricted
Subsidiary of the Company with respect to Obligations that do not exceed $1.0
million at any one time outstanding and that (a) are not incurred in connection
with the borrowing of money or the obtaining of advances or credit (other than
trade credit in the ordinary course of business) and (b) do not in the aggregate
materially detract from the value of the property or materially impair the use
thereof in the operation of business by the Company or such Restricted
Subsidiary; (xi) Liens imposed by law, including but not limited to carriers',
warehousemen's and mechanics' Liens, in each case for sums not yet due or being
contested in good faith by appropriate proceedings or, other Liens arising out
of judgments or awards against the Company or any of its Restricted Subsidiaries
with respect to which the Company or such Restricted Subsidiary shall then be
proceeding with an appeal or other proceedings for review; (xii) survey
exceptions, easements and other restrictions on the use of property; (xiii)
Liens securing Indebtedness the proceeds of which were utilized by the Company
or a Restricted Subsidiary solely to fund or reimburse any advances to
Securitization Trusts permitted by clause (v) of the second paragraph of Section
4.07 hereof, provided that such Liens encumber no assets other than the
contractual right of the Company or such Restricted Subsidiary, as the case may
be, to be reimbursed in respect of any such advances; (xiv) Liens on assets of
Unrestricted Subsidiaries of the Company that secure Non-Recourse Debt of
Unrestricted Subsidiaries of the Company; (xv) Liens to secure any Refinancing
(or successive Refinancings), in whole or in part, of any Indebtedness (or
commitment for Indebtedness) existing on the Original Issue Date, provided,
however, that (A) any such new Lien shall be a Lien on the same asset class or
interest securing the original Lien and (B) the Indebtedness secured by such
Lien is not, solely by virtue of the Refinancing (unless otherwise permitted by
this Indenture), increased to an amount greater than the greater of (1) the
outstanding principal amount of the Indebtedness existing on the Original Issue
Date secured by such Lien, or (2) if such Lien secures Indebtedness under a line
of credit, the commitment amount of such line of credit existing on the Original
Issue Date; (xvi) Liens on (A) Servicing Receivables, (B) Residual Receivables
not utilized in the determination of the Minimum Residual Amount and/or (C) the
Capital Stock of Restricted Subsidiaries of the Company (other than the Residual
Collateral Trusts) substantially all of the assets of which are Residual
Receivables and/or Servicing Receivables; (xvii) any Liens arising under this
Indenture or the Collateral Agreements; (xviii) with respect to the Collateral,
Liens with respect to which the Holders of a majority of the principal amount of
the Senior Notes have consented. Any determination of Senior Residual
Receivables shall be based on the consolidated balance sheet of the Company and
its Restricted Subsidiaries for the most recently ended fiscal quarter for which
financial statements are available, after giving pro forma effect to the Lien
for which such determination is being made and to any other sale of or Lien on
or reduction of Residual Receivable since the date of such balance sheet.
Notwithstanding anything herein to the contrary, Permitted Liens shall not
include Liens on Collateral other than the Liens created by the Collateral
Agreements.
"PERMITTED REFINANCING INDEBTEDNESS" means any Indebtedness or
Disqualified Stock of the Company or any of its Restricted Subsidiaries issued
in exchange for, or the net proceeds of which are used to extend, refinance,
renew, replace, defease or refund other Indebtedness or Disqualified Stock of
the Company or any of its Restricted Subsidiaries (other than Indebtedness
incurred pursuant to Sections 4.09(b)(ii), (iii), (vii), (ix), (x), (xi) and
(xii)); provided that: (i) the principal amount (or accreted value, if
applicable) or mandatory redemption amount of such Permitted Refinancing
Indebtedness does not exceed the principal amount of (or accreted value, if
applicable) or mandatory redemption amount, plus accrued interest or dividends
on, the Indebtedness or Disqualified Stock so extended, refinanced, renewed,
replaced, defeased or refunded (plus the amount of contractual prepayment
charges and reasonable expenses incurred in connection therewith); (ii) such
Permitted Refinancing Indebtedness has a final maturity or final redemption date
later than the final maturity or final redemption date of, and has a Weighted
Average Life to Maturity equal to or greater than the Weighted Average Life to
Maturity of, the Indebtedness or Disqualified Stock being extended, refinanced,
renewed, replaced, defeased or refunded; (iii) if the Indebtedness or
Disqualified Stock being extended, refinanced, renewed, replaced, defeased or
refunded is subordinated in right of payment to the Senior Notes, such Permitted
Refinancing Indebtedness is subordinated in right of payment to, the Senior
Notes on terms at least as favorable to the Holders of the Senior Notes as those
contained in the documentation governing the Indebtedness or Disqualified Stock
being extended, refinanced, renewed, replaced, defeased or refunded; and (iv)
such Indebtedness is incurred or such Disqualified Stock is issued either by the
Company or by the Restricted Subsidiary who is the obligor on the Indebtedness
or Disqualified Stock being extended, refinanced, renewed, replaced, defeased or
refunded.
"PERMITTED WAREHOUSE DEBT" means Warehouse Debt of the Company or a
Restricted Subsidiary outstanding under one or more Warehouse Facilities
(excluding any Guarantees issued by the Company or a Restricted Subsidiary in
connection therewith); provided, however, that (i) the assets purchased with
proceeds of such Warehouse Debt are or, prior to any funding under the Warehouse
Facility with respect to such assets, were eligible to be recorded as held for
sale on the consolidated balance sheet of the Company and its Restricted
Subsidiaries in accordance with GAAP, (ii) such Warehouse Debt will be deemed
Permitted Warehouse Debt (a) in the case of a Purchase Facility, only to the
extent the holder of such Warehouse Debt has no contractual recourse to the
Company or any of its Restricted Subsidiaries to satisfy claims in respect of
such Warehouse Debt in excess of the realizable value of the Eligible
Receivables financed thereby, and (b) in the case of any other Warehouse
Facility, at the time such Warehouse Debt is incurred, only to the extent of the
lesser of (A) the amount advanced by the lender with respect to the Eligible
Receivables financed under such Warehouse Facility, and (B) 100% of the
aggregate principal amount of such Eligible Receivables and (iii) any such
Indebtedness incurred under such Warehouse Facility has not been outstanding in
excess of 364 days.
"PERSON" means any individual, corporation, partnership, joint
venture, association, joint stock company, limited liability company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.
"PLEDGE AGREEMENT" means any of those certain Pledge Agreements dated
as of the date of this Indenture and substantially in the form attached as
Exhibits C and D hereto, as such agreements may be amended, modified or
supplemented from time to time.
"PRINCIPAL" of a debt security means the principal of the security
plus the premium, if any, on the security.
"PURCHASE FACILITY" means any Warehouse Facility in the form of a
purchase and sale facility pursuant to which the Company or a Restricted
Subsidiary sells Receivables to a financial institution, commercial paper
facility or conduit and retains a right of first refusal or other repurchase
arrangement upon the subsequent resale of such Receivables by such financial
institution, commercial paper facility or conduit.
"RECEIVABLES" means consumer and commercial loans, leases and
receivables purchased or originated by the Company or any Restricted Subsidiary;
provided, however, that for purposes of determining the amount of a Receivable
at any time, such amount shall be determined in accordance with GAAP,
consistently applied, as of the most recent practicable date.
"REDEMPTION DATE," when used with respect to any Senior Note to be
redeemed, means the date fixed for such redemption pursuant to this Indenture
and the Senior Notes.
"REDEMPTION PRICE," when used with respect to any Senior Note to be
redeemed, means the price fixed for such redemption pursuant to this Indenture
and the Senior Notes.
"REFINANCE" means, in respect of any Indebtedness, to extend,
refinance, renew, replace, defease, refund, repay, prepay, redeem, or retire, or
to issue other Indebtedness in exchange or replacement for, such Indebtedness.
"Refinanced" and "Refinancing" shall have correlative meanings.
"REGISTRAR" shall have the meaning provided in Section 2.03.
"REGISTRATION RIGHTS AGREEMENT" means that certain Registration Rights
Agreement, dated the date of this Indenture and substantially in the form of
Exhibit J hereto, between the Company and Xxxxx Xxxxxx Shareholder Services,
L.L.C., as warrant agent, as such agreement may be amended, modified or
supplemented from time to time.
"RELATED AGREEMENTS" means Warrant Agreement, Registration Rights
Agreement, Escrow Agreement, the Residual Collateral Trust Agreements,
Administration Agreements and the Back-up Servicing Agreement.
"REMAINING EARNINGS" has the meaning set forth in the Escrow
Agreement.
"RESIDUAL COLLATERAL TRUST AGREEMENTS" means those certain Deposit
Trust Agreements, dated as of the date of the Indenture and substantially in the
form of Exhibit H hereto, as such agreements may be amended, modified or
supplemented from time to time.
"RESIDUAL COLLATERAL TRUSTS" means Delta Funding Residual Holding
Trust 2000-1 ("Trust 2000-1") and Delta Funding Residual Holding Trust 2000-2
("Trust 2000-2") formed by DF Special Holdings and Delta Funding, respectively,
to hold Residual Receivables in accordance with Sections 4.17 and 4.27. The
Residual Collateral Trusts shall be deemed Restricted Subsidiaries and Trust
2000-1 and Trust 2000-2 will be wholly-owned subsidiaries of DF Special Holdings
and Delta Funding, respectively.
"RESIDUAL RECEIVABLES" of the Company means at any time, the
capitalized asset value of Excess Spread of the Company and its Restricted
Subsidiaries (including, without limitation, subordinated, interest-only and
residual certificates of a Securitization Trust), with respect to any Receivable
pool of any Securitization Trust, calculated in accordance with GAAP.
"RESPONSIBLE OFFICER," when used with respect to the Trustee, means
any officer within the Corporate Trust Administration of the Trustee (or any
successor group of the Trustee) or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his knowledge of
and familiarity with the particular subject.
"RESTRICTED INVESTMENT" means an Investment other than a Permitted
Investment.
"RESTRICTED PAYMENTS" shall have the meaning provided in Section 4.07.
"RESTRICTED SUBSIDIARY" means any Subsidiary other than an
Unrestricted Subsidiary. As of the date hereof, the Restricted Subsidiaries are
Delta Funding Corporation, DF Special Holdings Corporation, Fidelity Mortgage
Inc., DFC Financial Corporation, DFC Financial of Canada Limited, DFC Funding of
Canada Limited, Continental Property Management Corp. and the Residual
Collateral Trusts.
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and the
rules and regulations of the SEC promulgated thereunder.
"SECURITIZATION" means either (i) a NIMS or (ii) a public or private
transfer of Receivables or Servicing Receivables in the ordinary course of
business and by which the Company or a Restricted Subsidiary directly or
indirectly securitizes a pool of specialized Receivables or Servicing
Receivables, including any such transaction involving the sale of specialized
Receivables or Servicing Receivables to a Securitization Trust.
"SECURITIZATION TRUST" means any Person that is not a Restricted
Subsidiary established exclusively for the purpose of (x) issuing securities in
connection with any Securitization, the obligations of which are either (i)
without recourse to the Company or any of its Subsidiaries (other than
obligations constituting Indebtedness incurred in accordance with Section 4.9(a)
hereof) or (ii) treated as a sale in accordance with GAAP or (y) a special
purpose vehicle formed to facilitate a Securitization. Without limiting the
foregoing, the Residual Collateral Trusts are not Securitization Trusts.
"SECURITY AGREEMENTS" means any of those certain Security Agreements
dated as of the date of this Indenture and substantially in the form attached as
Exhibit E hereto, as such agreements may be amended, modified or supplemented
from time to time.
"SENIOR INDEBTEDNESS" means all Indebtedness of any Person that is not
subordinated in right of payment to any other Indebtedness or other obligations
of such Person, excluding Permitted Warehouse Debt and Hedging Obligations
permitted to be incurred under this Indenture and, in the case of Indebtedness
secured by Senior Residual Receivables, the lesser of (x) the amount of such
Indebtedness and (y) the amount of the Senior Residual Receivables securing such
Indebtedness.
"SENIOR NOTES" means the Company's 9 1/2% Senior Secured Notes due
August 1, 2004, as amended or supplemented from time to time in accordance with
the terms hereof, that are issued pursuant to this Indenture.
"SENIOR RESIDUAL RECEIVABLES" means Residual Receivables which have
not been created as the result of or in connection with the sale, securitization
or other disposition of other Residual Receivables.
"SERVICING RECEIVABLES" means all rights arising by virtue of being
the servicer of Receivables including without limitation, the right to receive
servicing fees, ancillary income, reinvestment income, prepayment premiums,
reimbursements for advances, or any interest in such rights, whether or not such
rights or interests are certificated; provided, however, that Servicing
Receivables excludes the right to be or to replace the servicer except for the
servicer in connection with the Securitization, whole loan sale, or pledge of
Receivables under Warehouse Lines.
"SIGNIFICANT SUBSIDIARY" means any subsidiary that would be a
"significant subsidiary" as defined in Rule 1-02 of Regulation S-X under the
Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as
amended.
"SUBORDINATED INDEBTEDNESS" means any Indebtedness of the Company, the
Subsidiary Guarantors and their Subsidiaries on a consolidated basis in
accordance with GAAP, the payment of which is subordinated to payment of
Obligations to the Holders and which has a maturity date later than the Maturity
Date.
"SUBSIDIARY" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
Person or one or more of the other Subsidiaries of that Person (or a combination
thereof) and (ii) any partnership or limited liability company (a) the sole
general partner or the managing general partner or managing member of which is
such Person or a Subsidiary of such Person or (b) the only general partners or
managing members of which are such Person or one or more Subsidiaries of such
Person (or any combination thereof).
"SUBSIDIARY GUARANTEE" means the Guarantees, substantially in the form
attached as Exhibit B hereto, of (i) the Subsidiary Guarantors and (ii) any
other Person that executes such a Guarantee in accordance with the provisions of
the Indenture, and their respective successors and assigns.
"SUBSIDIARY GUARANTOR" means any Subsidiary of the Company that is
required to execute a Subsidiary Guarantee in accordance with the provisions of
this Indenture and their respective successors and assigns. As of the date
hereof, the Subsidiary Guarantors are Delta Funding Corporation, DF Special
Holdings Corporation, Fidelity Mortgage Inc., DFC Financial of Canada Limited,
DFC Funding of Canada Limited, Continental Property Management Corp. and the
Residual Collateral Trusts.
"TANGIBLE NET WORTH" means Net Worth, less the sum of the following
(without duplication): (a) any other assets of the Company, the Subsidiary
Guarantors and their consolidated Subsidiaries which would be treated as
intangibles under GAAP including, without limitation, any write-up of assets
(other than adjustments to market value to the extent required under GAAP with
respect to excess servicing, residual interests in offerings of Asset-Backed
Securities and Asset-Backed Securities which are interest-only securities),
good-will, research and development costs, trade-marks, trade names, copyrights,
patents and unamortized debt discount and expenses and (b) loans or other
extensions of credit to officers of the Company or of any of their consolidated
Subsidiaries other than Mortgage Loans made to such Persons in the ordinary
course of business.
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code Sections
77aaa-77bbbb), as amended, as in effect on the date of the execution of this
Indenture.
"TOTAL ADJUSTED LIABILITIES" means total liabilities minus deferred
taxes of the Company, the Subsidiary Guarantors and their Subsidiaries, all as
determined on a consolidated basis, in accordance with GAAP.
"TRUSTEE" means the party named as such in this Indenture until a
successor replaces it in accordance with the provisions of this Indenture and
thereafter means such successor.
"TRUST OFFICER" means any officer of the Trustee assigned by the
Trustee to administer its corporate trust matters.
"2000-1 TRUST AGREEMENT" means the Residual Collateral Trust Agreement
relating to the Delta Funding Residual Holding Trust 2000-1.
"2000-2 TRUST AGREEMENT" means the Residual Collateral Trust Agreement
relating to the Delta Funding Residual Holding Trust 2000-2.
"UNENCUMBERED LIQUID ASSETS" means the aggregate of (x) cash owned by
the Company and its Subsidiaries on a consolidated basis not subject to pledge
or lien in favor of any third party, (y) the cash in the Cash Escrow Account and
(z) the Fair Market Value of all mortgage loans owned by the Company or any of
its Subsidiaries not subject to a pledge or lien in favor of any third party.
"UNRESTRICTED SUBSIDIARY" means either (i) a Securitization Trust or
(ii) any Subsidiary that is not, under the definition of "Subsidiary Guarantor",
listed as a Subsidiary Guarantor as of the date hereof and is designated by the
Board of Directors as an Unrestricted Subsidiary pursuant to a Board Resolution;
but only to the extent that such Subsidiary: (a) is not party to any agreement,
contract, arrangement or understanding with the Company or any Restricted
Subsidiary unless the terms of any such agreement, contract, arrangement or
understanding are no less favorable to the Company or such Restricted Subsidiary
that those that might be obtained at the time from Persons who are not
Affiliates of the Company; (b) is a Person with respect to which neither the
Company nor any of its Restricted Subsidiaries has any direct or indirect
obligation (other than obligations constituting Indebtedness incurred in
accordance with Section 4.09 hereof) (x) to subscribe for additional Equity
Interests or (y) to maintain or preserve such Person's financial condition or to
cause such Person to achieve any specified levels of operating results; and (c)
has not guaranteed or otherwise directly or indirectly provided credit support
for any Indebtedness of the Company or any of its Restricted Subsidiaries. Any
such designation by the Board of Directors shall be evidenced to the Trustee by
filing with the Trustee a certified copy of the Board Resolution giving effect
to such designation and an Officers' Certificate certifying that such
designation complied with the foregoing conditions and was permitted by Section
4.07 hereof. If, at any time, any Unrestricted Subsidiary would fail to meet the
foregoing requirements as an Unrestricted Subsidiary, it shall thereafter cease
to be an Unrestricted Subsidiary for purposes of this Indenture and any
Indebtedness of such Subsidiary shall be deemed to be incurred by a Restricted
Subsidiary of the Company as of such date (and, if such Indebtedness is not
permitted to be incurred as of such date under the covenant in Section 4.09
hereof, the Company shall be in default of such covenant). The Board of
Directors of the Company may at any time designate any Unrestricted Subsidiary
to be a Restricted Subsidiary; provided that such designation shall be deemed to
be an incurrence of Indebtedness and issuance of preferred stock by a Restricted
Subsidiary of the Company of any outstanding Indebtedness of such Unrestricted
Subsidiary and such designation shall only be permitted if (i) such Indebtedness
and preferred stock is permitted under Section 4.09 hereof (ii) such Subsidiary
becomes a Subsidiary Guarantor, and (iii) no Default or Event of Default would
exist following such designation.
"U.S. GOVERNMENT OBLIGATIONS" means direct non-callable obligations
of, or non-callable obligations guaranteed by, the United States of America for
the payment of which obligation or guarantee the full faith and credit of the
United States of America is pledged.
"U.S. LEGAL TENDER" means such coin or currency of the United States
of America as at the time of payment shall be legal tender for the payment of
public and private debts.
"VOTING STOCK" of any Person as of any date means the Capital Stock of
such Person that is at the time entitled to vote generally in the election of
the Board of Directors of such Person.
"WAREHOUSE DEBT" means Indebtedness of the Company or a Restricted
Subsidiary equal to the greater of (x) the consideration received by the Company
or its Restricted Subsidiaries under a Warehouse Facility and (y) in the case of
a Purchase Facility, the book value of the Eligible Receivables financed under
such Warehouse Facility, until such time as such Eligible Receivables are (i)
securitized, (ii) repurchased by the Company or its Restricted Subsidiaries or
(iii) sold by the counterparty under the Warehouse Facility to a Person who is
not an Affiliate of the Company, including any Guarantees issued by the Company
or a Restricted Subsidiary in connection therewith.
"WARRANT AGENT" means the Person designated as such in the Warrant
Agreement and the Registration Rights Agreement, respectively. As of the Issue
Date, the Warrant Agent is ChaseMellon Shareholder Services, L.L.C.
"WARRANT AGREEMENT" means that certain Warrant Agreement, dated the
date of this Indenture and substantially in the form attached as Exhibit I
hereto, between the Company and ChaseMellon Shareholder Services, L.L.C., as
warrant agent, as such agreement may be amended, modified or supplemented from
time to time.
"WAREHOUSE FACILITY" means any funding arrangement, including Purchase
Facilities, with a financial institution or other lender or purchaser or any
conduit or special purpose vehicle used in connection with such funding
arrangement, to the extent (and only to the extent) that the Company or any of
its Restricted Subsidiaries incurs Warehouse Debt thereunder exclusively to
finance or refinance the purchase or origination of Receivables by the Company
or a Restricted Subsidiary prior to securitization, as such arrangements may be
amended, modified, waived or supplemented from time to time.
"WEIGHTED AVERAGE LIFE TO MATURITY" means, when applied to any
Indebtedness or Disqualified Stock at any date, the number of years obtained by
dividing (i) the sum of the products obtained by multiplying (a) the amount of
each then remaining installment, sinking fund, serial maturity or other required
payments of principal, including payment at final maturity (or final redemption,
in the case of Disqualified Stock), in respect thereof, by (b) the number of
years (calculated to the nearest one-twelfth) that will elapse between such date
and the making of such payment, by (ii) the then outstanding principal amount of
such Indebtedness or mandatory redemption amount of Disqualified Stock.
"WHOLLY-OWNED RESTRICTED SUBSIDIARY" of any Person means a Restricted
Subsidiary of such Person all of the outstanding Capital Stock or other
ownership interests of which (other than directors' qualifying shares) shall at
the time be owned by such Person or by one or more Wholly-Owned Restricted
Subsidiaries of such Person.
SECTION 1.02 Incorporation by Reference of TIA.
Whenever this Indenture refers to a provision of the TIA, such
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 Senior Notes.
"obligor" on the indenture securities means the Company, any
Subsidiary Guarantor, or any other obligor on the Senior Notes or the Subsidiary
Guarantees.
All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule and not
otherwise defined herein have the meanings assigned to them therein.
SECTION 1.03 Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning assigned
to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and words in the plural
include the singular;
(5) provisions apply to successive events and transactions;
(6) "herein", "hereof" and other words of similar import refer to this
Indenture as a whole and not to any particular Article, Section or
other subdivision; and
(7) "including" is not intended to be a limiting term.
ARTICLE TWO
THE SENIOR NOTES
SECTION 2.01. Form and Dating.
The Senior Notes, the notations thereon relating to the Subsidiary
Guarantees and the Trustee's certificate of authentication shall be
substantially in the form of Exhibit A. The Senior Notes may have notations,
legends or endorsements required by law, stock exchange rule or usage. The
Company and the Trustee shall approve the form of the Senior Notes and any
notation, legend or endorsement on them. Each Senior Note shall be dated the
date of its authentication.
The terms and provisions contained in the Senior Notes and the
Subsidiary Guarantees shall constitute, and are hereby expressly made, a part of
this Indenture and, to the extent applicable, the Company, the Subsidiary
Guarantors and the Trustee, by their execution and delivery of this Indenture,
expressly agree to such terms and provisions and to be bound thereby.
However, to the extent any provision of any Senior Note or Subsidiary
Guarantee conflicts with the express provisions of this Indenture, the
provisions of this Indenture shall govern and be controlling.
SECTION 2.02. Execution and Authentication.
Two Officers, or an Officer and a Secretary or an Assistant Secretary,
shall sign, or one Officer shall sign and one Officer or a Secretary or an
Assistant Secretary (each of whom shall, in each case, have been duly authorized
by all requisite corporate actions) shall attest to, the Senior Notes for the
Company by manual or facsimile signature. Each Subsidiary Guarantor shall
execute a Subsidiary Guarantee in the manner set forth in Section 11.02.
If an Officer whose signature is on a Senior Note was an Officer at
the time of such execution but no longer holds that office at the time the
Trustee authenticates the Senior Note, the Senior Note shall be valid
nevertheless.
A Senior Note shall not be valid until an authorized signatory of the
Trustee manually signs the certificate of authentication on the Senior Note. The
signature shall be conclusive evidence that the Senior Note has been
authenticated under this Indenture.
The Trustee shall authenticate Senior Notes for original issue in the
aggregate principal amount of up to $150,000,000 upon a written order of the
Company in the form of an Officers' Certificate. The Officers' Certificate shall
specify the amount of Senior Notes to be authenticated and the date on which the
Senior Notes are to be authenticated. The aggregate principal amount of Senior
Notes outstanding at any time may not exceed $150,000,000, except as provided in
Section 2.07. Upon the written order of the Company in the form of an Officers'
Certificate, the Trustee shall authenticate Senior Notes in substitution of
Senior Notes originally issued to reflect any name change of the Company.
The Trustee may appoint an authenticating agent reasonably acceptable
to the Company to authenticate Senior Notes. Unless otherwise provided in the
appointment, an authenticating agent may authenticate Senior Notes whenever the
Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such agent. An authenticating agent has the
same rights as an Agent to deal with the Company and Affiliates of the Company.
The Senior Notes shall be issuable only in registered form without
coupons in denominations of $1,000 and any integral multiple thereof.
SECTION 2.03. Registrar and Paying Agent.
The Company shall maintain an office or agency in New York, New York
where (a) Senior Notes may be presented or surrendered for registration of
transfer or for exchange ("Registrar"), (b) Senior Notes may be presented or
surrendered for payment and (c) notices and demands to or upon the Company in
respect of the Senior Notes and this Indenture may be served. The Company may
also from time to time designate one or more other offices or agencies where the
Senior Notes may be presented or surrendered for any or all such purposes and
may from time to time rescind such designations; provided, however, that no such
designation or rescission shall in any manner relieve the Company of its
obligation to maintain an office or agency in New York, New York for such
purposes. The Company may act as its own Registrar or Paying Agent except that
for the purposes of Articles Three and Eight and Section 4.15, neither the
Company nor any of its Subsidiaries or Affiliates (including, without
limitation, any Xxxxxx Stockholder) shall act as Paying Agent. The Registrar
shall keep a register of the Senior Notes and of their transfer and exchange.
The Company upon notice to the Trustee, may have one or more co-Registrars and
one or more additional paying agents reasonably acceptable to the Trustee. The
Company initially appoints the Trustee as Registrar and Paying Agent until such
time as the Trustee has resigned or a successor has been appointed.
The Company shall enter into an appropriate agency agreement with any
Agent not a party to this Indenture, which agreement shall incorporate
provisions of the TIA and implement the provisions of this Indenture that relate
to such Agent. The Company shall notify the Trustee, in advance, of the name and
address of any such Agent. If the Company fails to maintain a Registrar or
Paying Agent, the Trustee shall act as such.
SECTION 2.04. "Trustee" To Include Paying Agent.
In case at any time any Paying Agent other than the Trustee shall have
been appointed by the Company and be then acting hereunder, the term "Trustee"
as used in this Article 2 shall in such case (unless the context shall otherwise
require) be construed as extending to and including such Paying Agent within its
meaning as fully and for all intents and purposes as if such Paying Agent were
named in this Article 2 in place of the Trustee.
SECTION 2.05. Paying Agent to Hold Assets in Trust.
The Company shall require each Paying Agent other than the Trustee to
agree in writing that each Paying Agent shall hold in trust for the benefit of
Holders or the Trustee all assets held by the Paying Agent for the payment of
principal of, or interest on, the Senior Notes (whether such assets have been
distributed to it by the Company or any other obligor on the Senior Notes), and
shall notify the Trustee of any Default by the Company (or any other obligor on
the Senior Notes) in making any such payment. If the Company or its Subsidiary
or Affiliate acts as Paying Agent, it shall segregate such assets and hold them
as a separate trust fund. The Company at any time may require a Paying Agent to
distribute all assets held by it to the Trustee and account for any assets
disbursed and the Trustee may at any time during the continuance of any payment
Default, upon written request to a Paying Agent, require such Paying Agent to
distribute all assets held by it to the Trustee and to account for any assets
distributed. Upon distribution to the Trustee of all assets that shall have been
delivered by the Company (or other obligor or guarantor on the Senior Notes) to
the Paying Agent, the Paying Agent shall have no further liability for such
assets.
SECTION 2.06. Holder Lists.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
Holders. If the Trustee is not the Registrar, the Company shall furnish to the
Trustee on or before each Interest Payment Date and at such other times as the
Trustee may request in writing a list in such form and as of such date as the
Trustee may reasonably require of the names and addresses of Holders, which list
may be conclusively relied upon by the Trustee.
SECTION 2.07. Transfer and Exchange.
When Senior Notes are presented to the Registrar or a co-Registrar
with a request to register the transfer of such Senior Notes or to exchange such
Senior Notes for an equal principal amount of Senior Notes of other authorized
denominations, the Registrar or co-Registrar shall register the transfer or make
the exchange as requested if its requirements for such transaction are met;
provided, however, that the Senior Notes surrendered for transfer or exchange
shall be duly endorsed or accompanied by a written instrument of transfer in
form satisfactory to the Company and the Registrar or co-Registrar, duly
executed by the Holder thereof or his attorney duly authorized in writing. To
permit registrations of transfers and exchanges, the Company shall execute and
the Trustee shall authenticate Senior Notes at the Registrar's or co-Registrar's
request. No service charge shall be made for any registration of transfer or
exchange, but 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
exchanges or transfers pursuant to Sections 2.02, 2.07, 2.10, 3.03, 3.06 or 9.05
which shall be paid by the Company). The Registrar or co-Registrar shall not be
required to register the transfer of or exchange of any Senior Note (i) during a
period beginning at the opening of business 15 days before the day of any
selection of Senior Notes for redemption under Section 3.02 and ending at the
close of business on such day of selection and (ii) selected for redemption in
whole or in part pursuant to Article Three, except the unredeemed portion of any
Senior Note being redeemed in part.
SECTION 2.08. Replacement Senior Notes.
If a mutilated Senior Note is surrendered to the Trustee or if the
Holder of a Senior Note claims that the Senior Note has been lost, destroyed or
wrongfully taken, the Company shall issue and the Trustee shall authenticate a
replacement Senior Note if the Trustee's requirements are met. If required by
the Trustee or the Company, such Holder must provide an indemnity bond or other
indemnity, sufficient in the judgment of both the Company and the Trustee, to
protect the Company, the Trustee or any Agent from any loss which any of them
may suffer if a Senior Note is replaced. The Company may charge such Holder for
its reasonable, out-of-pocket expenses in replacing a Senior Note, including
reasonable fees and expenses of counsel.
Every replacement Senior Note is an additional obligation of the
Company and is guaranteed by each Subsidiary Guarantor in the same manner as
other Senior Notes duly issued hereunder.
SECTION 2.09. Outstanding Senior Notes.
Senior Notes outstanding at any time are all the Senior Notes that
have been authenticated by the Trustee except those canceled by it, those
delivered to it for cancellation and those described in this Section as not
outstanding. A Senior Note does not cease to be outstanding because the Company,
the Subsidiary Guarantors or any of their respective Affiliates holds the Senior
Note.
If a Senior Note is replaced pursuant to Section 2.07 (other than a
mutilated Senior Note surrendered for replacement), it ceases to be outstanding
unless the Trustee receives proof satisfactory to it that the replaced Senior
Note is held by a bona fide purchaser. A mutilated Senior Note ceases to be
outstanding upon surrender of such Senior Note and replacement thereof pursuant
to Section 2.07.
If on a Redemption Date or the Maturity Date the Paying Agent (other
than the Company or its Subsidiary or Affiliate) holds U.S. Legal Tender or U.S.
Government Obligations sufficient to pay all of the principal and interest due
on the Senior Notes payable on that date, then on and after that date such
Senior Notes (to the extent of the principal amount redeemed, in the case of a
partial redemption) cease to be outstanding and interest on them ceases to
accrue.
SECTION 2.10. Treasury Senior Notes.
In determining whether the Holders of the required principal amount of
Senior Notes have concurred in any direction, waiver or consent, Senior Notes
owned by the Company, the Subsidiary Guarantors or any of their respective
Affiliates shall be disregarded, except that, for the purposes of determining
whether the Trustee shall be protected in relying on any such direction, waiver
or consent, only Senior Notes that the Trustee knows or has reason to know are
so owned shall be disregarded.
The Company shall notify the Trustee, in writing (which notice shall
constitute actual notice for purposes of the foregoing sentence), when it, the
Subsidiary Guarantors or any of their respective Affiliates repurchases or
otherwise acquires Senior Notes, of the aggregate principal amount of such
Senior Notes so repurchased or otherwise acquired and such other information as
the Trustee may reasonably request and the Trustee shall be entitled to rely
thereon.
SECTION 2.11. Temporary Senior Notes.
Until definitive Senior Notes are ready for delivery, the Company may
prepare and the Trustee shall authenticate temporary Senior Notes. Temporary
Senior Notes shall be substantially in the form of definitive Senior Notes but
may have variations that the Company considers appropriate for temporary Senior
Notes. Without unreasonable delay, the Company shall prepare and the Trustee
shall authenticate definitive Senior Notes in exchange for temporary Senior
Notes, without charge to the Holder. Until so exchanged, the temporary Senior
Notes shall be entitled to the same benefits under this Indenture as definitive
Senior Notes.
SECTION 2.12. Cancellation.
The Company at any time may deliver Senior Notes to the Trustee for
cancellation. The Registrar and the Paying Agent shall forward to the Trustee
any Senior Notes surrendered to them for transfer, exchange or payment. The
Trustee, or at the direction of the Trustee, the Registrar or the Paying Agent
(other than the Company or its Subsidiary or Affiliate), and no one else, shall
cancel and, at the written direction of the Company, shall dispose of all Senior
Notes surrendered for transfer, exchange, payment or cancellation in accordance
with its customary practice. Subject to Section 2.07, the Company may not issue
new Senior Notes to replace Senior Notes that it has paid or delivered to the
Trustee for cancellation. If the Company or any of its Subsidiaries shall
acquire any of the Senior Notes, such acquisition shall not operate as a
redemption or satisfaction of the Indebtedness represented by such Senior Notes
unless and until the same are surrendered to the Trustee for cancellation
pursuant to this Section 2.11.
SECTION 2.13. Defaulted Interest.
If the Company defaults in a payment of interest on the Senior Notes,
it shall pay the defaulted interest in any lawful manner plus, to the extent
lawful, interest payable on the defaulted interest, to the Persons who are
Holders on a subsequent special record date, in each case at the rate provided
in the Senior Notes and in Section 4.01 hereof. The Company shall notify the
Trustee in writing of the amount of defaulted interest proposed to be paid on
each Senior Note and the date of the proposed payment. The Company shall fix or
cause to be fixed each such special record date and payment date, provided that
no such special record date shall be less than 10 days prior to the related
payment date for such defaulted interest. At least 15 days before the special
record date, the Company (or, upon the written request of the Company, the
Trustee in the name and at the expense of the Company) shall mail or cause to be
mailed to Holders a notice that states the special record date, the related
payment date and the amount of such interest to be paid.
SECTION 2.14. CUSIP Number.
The Company in issuing the Senior Notes shall use a "CUSIP" number and
the Trustee shall use the CUSIP number in notices of redemption or exchange as a
convenience to Holders; provided that any such notice may state that no
representation is made as to the correctness or accuracy of the CUSIP number
printed in the notice or on the Senior Notes, and that reliance may be placed
only on the other identification numbers printed on the Senior Notes. The
Company will promptly notify the Trustee of any change in the "CUSIP" number.
ARTICLE THREE
REDEMPTION
SECTION 3.01. Notices to Trustee.
If the Company elects to redeem Senior Notes pursuant to Section 3.07
hereof, it shall notify the Trustee of the Redemption Date and the principal
amount of Senior Notes to be redeemed and whether it wants the Trustee to give
notice of redemption to the Holders at least 30 days (unless shorter notice
shall be satisfactory to the Trustee, as evidenced in a writing signed on behalf
of the Trustee) but not more than 60 days before the Redemption Date. Any such
notice may be canceled at any time prior to notice of such redemption being
mailed to any Holder and shall thereby be void and of no effect.
The Company shall give each notice provided for in this Section 3.01,
at its expense, at least 30 days before the applicable Redemption Date (unless a
shorter notice period shall be satisfactory to the Trustee, as evidenced in a
writing signed on behalf of the Trustee), together with an Officers' Certificate
and an Opinion of Counsel stating that such redemption shall comply with the
conditions contained herein and in the Senior Notes.
SECTION 3.02. Selection of Senior Notes to Be Redeemed.
If fewer than all of the Senior Notes are to be redeemed, the Trustee
shall select the Senior Notes to be redeemed by lot or by such other method as
the Trustee shall determine to be fair and appropriate and in such manner as
complies with applicable legal and other requirements, if any.
The Trustee shall make the selection from the Senior Notes outstanding
and not previously called for redemption and shall promptly notify the Company
in writing of the Senior Notes selected for redemption and, in the case of any
Senior Note selected for partial redemption, the principal amount thereof to be
redeemed. Senior Notes in denominations of $1,000 may be redeemed only in whole.
The Trustee may select for redemption portions (equal to $1,000 or any integral
multiple thereof) of the principal of Senior Notes that have denominations
larger than $1,000. Provisions of this Indenture that apply to Senior Notes
called for redemption also apply to portions of Senior Notes called for
redemption.
SECTION 3.03. Notice of Redemption.
At least 30 days (unless shorter notice shall be satisfactory to the
Trustee, as evidenced in a writing signed on behalf of the Trustee) but not more
than 60 days before a Redemption Date, the Company shall mail a notice of
redemption by first class mail to each Holder whose Senior Notes are to be
redeemed at its registered address. At the Company's request, the Trustee shall
give the notice of redemption in the Company's name and at the Company's
expense. Each notice for redemption shall identify the Senior Notes to be
redeemed and shall state:
(1) the Redemption Date;
(2) the Redemption Price;
(3) the name and address of the Paying Agent;
(4) that Senior Notes called for redemption must be surrendered to the
Paying Agent to collect the Redemption Price and accrued interest,
if any;
(5) that, unless the Company defaults in making the redemption
payment, interest on Senior Notes called for redemption ceases to
accrue on and after the Redemption Date, and the only remaining
right of the Holders of such Senior Notes is to receive payment of
the Redemption Price upon surrender to the Paying Agent of the
Senior Notes redeemed;
(6) if any Senior Note is being redeemed in part, the portion of the
principal amount of such Senior Note to be redeemed and that,
after the Redemption Date, and upon surrender of such Senior Note,
a new Senior Note or Senior Notes in aggregate principal amount
equal to the unredeemed portion thereof will be issued;
(7) if fewer than all the Senior Notes are to be redeemed, the
identification of the particular Senior Notes (or portion thereof)
to be redeemed, as well as the aggregate principal amount of
Senior Notes to be redeemed and the aggregate principal amount of
Senior Notes to be outstanding after such partial redemption;
(8) the paragraph of the Senior Notes pursuant to which the Senior
Notes are to be redeemed;
(9) that no representation is made as to the correctness or accuracy
of the CUSIP number, if any, listed in such notice or printed on
the Notes; and
(10) the CUSIP number of the Note.
SECTION 3.04. Effect of Notice of Redemption.
Once notice of redemption is mailed in accordance with Section 3.03,
Senior Notes called for redemption become due and payable on the Redemption Date
and at the Redemption Price. Upon surrender to the Trustee or Paying Agent, such
Senior Notes called for redemption shall be paid at the Redemption Price.
SECTION 3.05. Deposit of Redemption Price.
On or before 10:00 A.M. New York City time on the Redemption Date, the
Company shall deposit with the Paying Agent U.S. Legal Tender sufficient to pay
the Redemption Price of all Senior Notes to be redeemed on that date (other than
Senior Notes or portions thereof called for redemption on that date which have
been delivered by the Company to the Trustee for cancellation). The Paying Agent
shall promptly return to the Company any U.S. Legal Tender so deposited which is
not required for that purpose upon the written request of the Company, except
with respect to monies owed as Obligations to the Trustee pursuant to Article
Seven.
If the Company complies with the preceding paragraph, then, unless the
Company defaults in the payment of such Redemption Price and accrued interest,
if any, interest on the Senior Notes to be redeemed will cease to accrue on and
after the applicable Redemption Date, whether or not such Senior Notes are
presented for payment.
SECTION 3.06. Senior Notes Redeemed in Part.
Upon surrender of a Senior Note that is to be redeemed in part, the
Trustee shall authenticate for the Holder a new Senior Note or Senior Notes
equal in principal amount to the unredeemed portion of the Senior Note
surrendered.
SECTION 3.07. Optional Redemption.
After August 1, 2001, the Senior Notes will be redeemable, at the
option of the Company, in whole at any time or in part from time to time, at the
following Redemption Prices (expressed as percentages of the principal amount),
if redeemed during the twelve-month period commencing on August 1 of the year
set forth below, plus, in each case, accrued interest thereon to the Redemption
Date:
YEAR PERCENTAGE
2001........................................ 104.750%
2002........................................ 102.375%
2003 and thereafter......................... 100.000%
SECTION 3.08. Mandatory Redemption.
The Company shall not be required to make mandatory redemption or
sinking fund payments with respect to the Senior Notes.
ARTICLE FOUR
COVENANTS
SECTION 4.01. Payment Of Senior Notes.
The Company shall pay or cause to be paid the principal of, premium,
if any, and interest on the Senior Notes on the dates and in the manner provided
in the Senior Notes. Principal, premium, if any, and interest shall be
considered paid on the date due if the Paying Agent, if other than the Company
or a Subsidiary thereof, holds, as of 10:00 a.m. New York City Time on the due
date, money deposited by the Company in immediately available funds and
designated for and sufficient to pay all principal, premium, if any, and
interest then due. 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.
The Company shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue principal at the then
applicable interest rate on the Senior Notes to the extent lawful; it shall pay
interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue installments of interests (without regard to any
applicable grace period) at the same rate to the extent lawful.
SECTION 4.02. Maintenance Of Office Or Agency.
The Company shall maintain in the Borough of Manhattan, The City of
New York, an office or agency (which may be an office of the Trustee, Registrar
or co-Registrar) where Senior Notes may be surrendered for registration of
transfer or exchange and where notices and demands to or upon the Company in
respect of the Senior Notes and this Indenture may be served. The Company shall
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.
The Company may also from time to time designate one or more other
offices or agencies where the Senior Notes may be presented or surrendered for
any or all such purposes and may from time to time rescind such designations;
provided, however, that no such designation or rescission shall in any manner
relieve the Company of its obligation to maintain an office or agency in the
Borough of Manhattan, The City of New York for such purposes. The Company shall
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.
The Company hereby designates the Corporate Trust Office of the
Trustee as one such office or agency of the Company in accordance with Section
2.03.
SECTION 4.03. Reports.
Whether or not required by the rules and regulations of the SEC, so
long as any of the Senior Notes are outstanding, the Company will furnish to the
Holders of the Senior Notes (i) all quarterly and annual financial information
that would be required to be contained in a filing with the SEC on Forms 10-Q
and 10-K if the Company were required to file such Forms, including a
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" that describes the financial condition and results of operations of
the Company and the consolidated Subsidiaries of the Company (showing in
reasonable detail, either on the face of the financial statements or in the
notes thereto and in Management's Discussion and Analysis of Financial Condition
and Results of Operations, if applicable, the financial condition and results of
operations of the Company and its Restricted Subsidiaries separately from the
financial condition and results of operations of the Unrestricted Subsidiaries
of the Company) and, with respect to the annual information only, a report
thereon by the Company's certified independent accountants and (ii) all current
reports that would be required to be filed with the SEC on Form 8-K if the
Company were required to file such reports. In addition, whether or not required
by the rules and regulations of the SEC, the Company will file a copy of all
such information and reports with the SEC for public availability (unless the
SEC will not accept such a filing) and make such information available to
securities analysts and prospective investors upon request. Delivery of
quarterly information shall be made within 45 days of the end of each quarter.
Delivery of annual information shall be made within 90 days of the end of each
fiscal year.
[With respect to the delivery of the annual information only and
within 90 days of the end of each fiscal year, the Company shall cause KPMG LLP
(or such other firm of internationally recognized accountants as is then
retained by the Company as its independent auditors) as part of its annual audit
to confirm that the methodology and assumptions utilized by the Company and its
Subsidiaries in determining the book value of the Residual Receivables owned by
the Company or any of its Subsidiaries were in accordance with GAAP (using the
applicable discount rates set forth in Section 4.17) during the audit period.]
[KPMG Reviewing]
Delivery of such reports, information and documents to the Trustee is
for informational purposes only and the Trustee's receipt of such shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
SECTION 4.04. Compliance Certificate.
(a)The Company shall deliver to the Trustee, within 90 days after the
end of each fiscal year of the Company (which ends on December 31 of each year),
commencing December 31, 2000, an Officers' Certificate stating that a review of
the activities of the Company and its Subsidiaries during the preceding fiscal
year has been made under the supervision of the signing Officers with a view to
determining whether the Company and its Subsidiaries have kept, observed,
performed and fulfilled their obligations under this Indenture, and further
stating, as to each such Officer signing such certificate, that to the best of
his or her knowledge the Company and each of its Subsidiaries 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 may have knowledge and what action the Company is taking or proposes to take
with respect thereto) and that, to the best of his 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 Senior Notes 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, and so long as the Company's
independent public accountants agree, the year-end financial statements
delivered pursuant to Section 4.03 above shall be accompanied by a written
statement of the Company's independent public accountants (who shall be a firm
of established national reputation) that in making the examination necessary for
certification of such financial statements nothing has come to their attention
that would lead them to believe that the Company has violated any provisions of
Article 4 or Article 5 of this Indenture or, if any such violation has occurred,
specifying the nature and period of existence thereof, it being understood that
such accountants shall not be liable directly or indirectly to any person for
any failure to obtain knowledge of any such violation.
(c)The Company shall, so long as any of the Senior Notes are
outstanding, deliver to the Trustee, as soon as possible and in any event within
five days after any Officer of the Company becoming aware of any Default or
Event of Default an Officers' Certificate specifying such Default or Event of
Default what action the Company is taking or proposes to take with respect
thereto.
SECTION 4.05. Taxes.
The Company shall pay, and shall cause each of its Subsidiaries to
pay, prior to delinquency, all material taxes, assessments, and governmental
levies, except such as are contested in good faith and by appropriate
proceedings or where the failure to effect such payment is not reasonably
expected to be adverse in any material respect to the Holders of the Senior
Notes.
SECTION 4.06. Stay, Extension And Usury Laws.
The Company and each of the Subsidiary Guarantors covenants (to the
extent that they may lawfully do so) that it shall 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, that may affect the covenants or the performance of this Indenture;
and the Company and each of the Subsidiary Guarantors (to the extent that they
may lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it shall not, by resort to any such law, hinder, delay
or impede the execution of any power herein granted to the Trustee, but shall
suffer and permit the execution of every such power as though no such law has
been enacted. The Company and each of the Subsidiary Guarantors hereby agree
that this Indenture contains the terms and provisions of a workout agreement.
The Company and each of the Subsidiary Guarantors also agrees that the
Collateral, consisting primarily of the pledge to the Collateral Agent of the
ownership interest in the Residual Collateral Trusts, the principal assets of
which are Residual Receivables, will rapidly and materially diminish in value in
the event of a bankruptcy filing unless servicing of such Residual Receivables
previously has been or is implemented immediately by the Back-Up Servicer under
the Back-Up Servicing Agreement. As a material incentive for the Holders and
Beneficial Holders, the Company and each of the Subsidiary Guarantors hereby
agree that they consent to and will not contest or seek to delay the grant of
relief (including the request for immediate relief on an emergency basis)
requested in any motion for relief from stay, filed by the Holders, the
Beneficial Holders, the Collateral Agent or the Trustee, in a bankruptcy case
(whether under Chapters 7 or 11 of the Bankruptcy Code and whether a voluntary
or involuntary case) of any of The Company or the Subsidiary Guarantors, seeking
relief from the automatic stays under Section 362(a) of the Bankruptcy Code to
the extent necessary to foreclose upon and sell the ownership interest in the
Residual Collateral Trusts or either of them or to put in place a new servicer,
whether under the Back-Up Servicing Agreement or otherwise, and for any related
relief, or any similar request for relief in any other insolvency proceeding.
The Holders, the Beneficial Holders, the Collateral Agent and the Trustee shall
have the right to specific performance of this provision from the bankruptcy
court or other court supervising such an insolvency proceeding.
SECTION 4.07. Restricted Payments.
The Company and each Restricted Subsidiary shall not, and the Company
shall not permit any of its Restricted Subsidiaries to, directly or indirectly:
(i) declare or pay any dividend or make any other payment or distribution on
account of the Company's or any of its Restricted Subsidiaries' Equity Interests
(including, without limitation, any payment in connection with any merger or
consolidation involving the Company) other than dividends or other payments or
distributions payable in Equity Interests (other than Disqualified Stock) of the
Company or dividends or other payments or distributions payable to the Company
or any Wholly-Owned Restricted Subsidiary of the Company; (ii) purchase, redeem
or otherwise acquire or retire for value (including, without limitation, any
payment in connection with any merger or consolidation involving the Company)
any Equity Interests of the Company (other than any such Equity Interests owned
by any Wholly-Owned Restricted Subsidiary of the Company) or any direct or
indirect parent of the Company; (iii) make any principal payment on or with
respect to, purchase, redeem, defease or otherwise acquire or retire for value
any Indebtedness that is subordinated to the Senior Notes or any Subsidiary
Guarantee (other than intercompany Indebtedness payable to the Company or a
Restricted Subsidiary by any Restricted Subsidiary), except at its stated
maturity; or (iv) make any Restricted Investment (all such payments and other
actions set forth in clauses (i) through (iv) above being collectively referred
to as "Restricted Payments"), unless, at the time of and after giving effect to
such Restricted Payment:
(a) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof;
(b) the Company would, at the time of such Restricted Payment and
after giving pro forma effect thereto, have been permitted to incur at least
$1.00 of additional Indebtedness pursuant to the test set forth in Section
4.09(a) hereof; and
(c) such Restricted Payment, together with the aggregate amount of all
other Restricted Payments made by the Company and its Restricted Subsidiaries
after the Issue Date is less than the sum of (i) 100% of the aggregate net cash
proceeds received by the Company from the issue or sale since the Issue Date of
Equity Interests of the Company (other than Disqualified Stock) or of
Disqualified Stock or Indebtedness represented by securities of the Company that
have been converted into such Equity Interests (other than Equity Interests (or
Disqualified Stock or convertible debt securities) sold to a Subsidiary of the
Company and other than Disqualified Stock or other Indebtedness represented by
securities that have been converted into Disqualified Stock); plus (ii) to the
extent that any Restricted Investment that was made after the Issue Date is sold
for cash or otherwise liquidated or repaid for cash, the lesser of (A) the cash
return of capital with respect to such Restricted Investment (less the cost of
disposition, if any) and (B) the initial amount of such Restricted Investment.
Notwithstanding the foregoing, the Company and each Restricted
Subsidiary shall not, and the Company shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, (i) declare or pay any dividend or make
any other payment or distribution on account of the Company's or any of its
Restricted Subsidiaries' Equity Interests that are issued and outstanding as of
the Issue Date (including, without limitation, any payment in connection with
any merger or consolidation involving the Company or any of its Restricted
Subsidiaries) other than dividends or other payments or distributions payable in
Equity Interests (other than Disqualified Stock) of the Company or dividends or
other payments or distributions payable to the Company or any Wholly-Owned
Restricted Subsidiary of the Company; (ii) purchase, redeem or otherwise acquire
or retire for value (including, without limitation, any payment in connection
with any merger or consolidation involving the Company) any Equity Interests of
the Company that are issued and outstanding as of the Issue Date (other than any
such Equity Interests owned by any Wholly-Owned Restricted Subsidiary of the
Company) or any direct or indirect parent of the Company issued and outstanding
as of the date of this Indenture and (iii) take any of the actions specified in
clauses (i) or (ii) of this paragraph with respect to Equity Interests issued
after the Issue Date and owned by the Xxxxxx Stockholders, unless the issuance
and terms of such Equity Interests and such action have been approved by a
majority of the independent members of the Board of Directors, whose resolution
shall be delivered to the Trustee.
The provisions of this Section 4.07 shall not prohibit the following
Restricted Payments:
(i) the payment of any dividend not prohibited by the
immediately preceding paragraph, within 60 days after the date of
declaration thereof, if at said date of declaration such payment would
have complied with the provisions of this Indenture (including this
Section 4.07);
(ii) the payment of principal on, or purchase, redemption,
defeasance or other acquisition or retirement for value of
Indebtedness with the net cash proceeds from an incurrence of,
Permitted Refinancing Indebtedness or the substantially concurrent
sale (other than to a Subsidiary of the Company) of Equity Interests
of the Company (other than Disqualified Stock); provided, that the
amount of any such net cash proceeds from any such sale of Equity
Interests that are utilized for such redemption, repurchase,
retirement or other acquisition shall be excluded from clause (c)(ii)
of the preceding paragraph;
(iii) advances to a Securitization Trust required to be made
by the Company or any Restricted Subsidiary (in its capacity as the
holder of the residual interest in such trust) if such advances rank
senior in right of payment to all other interests in, and Indebtedness
of, such trust; and
(iv) the making and consummation of any offer to repurchase
any Indebtedness upon the occurrence of a change of control under and
as defined in the documents governing such Indebtedness; provided,
that in connection with Indebtedness incurred after the Original Issue
Date, the definition of "change of control" is the same in all
material respects as the definition of "Change of Control" set forth
in this Indenture and payments pursuant thereto are not required to be
made prior to the date on which the Change of Control Payment is
required to be made under this Indenture and, with respect to any
Indebtedness subordinated in right of payment to the Senior Notes, no
sooner than 30 days after the date such Change of Control Offer is
required to be made.
The Board of Directors may designate any Restricted Subsidiary not in
existence on the Issue Date to be an Unrestricted Subsidiary if such designation
would not cause a Default. For purposes of making such determination, all
outstanding Investments by the Company and its Restricted Subsidiaries (except
to the extent repaid in cash) in the Subsidiary so designated will be deemed to
be Restricted Payments at the time of such designation and will reduce the
amount available for Restricted Payments under the first paragraph of this
Section 4.07. All such outstanding Investments will be deemed to constitute
Investments in an amount equal to the Fair Market Value of such Investments at
the time of such designation. Such designation will only be permitted if such
Restricted Payment would be permitted at such time and if such Restricted
Subsidiary otherwise meets the definition of an Unrestricted Subsidiary.
The amount of all Restricted Payments other than cash shall be the
Fair Market Value (evidenced by an Officers' Certificate on the date of the
Restricted Payment) of the asset(s) or securities proposed to be transferred or
issued by the Company or such Restricted Subsidiary, as the case may be,
pursuant to the Restricted Payment. The Fair Market Value of any non-cash
Restricted Payment in excess of $1.0 million shall be determined by the Board of
Directors in good faith whose resolution with respect thereto shall be delivered
to the Trustee, such determination to be based upon an opinion or appraisal
issued by an accounting, appraisal or investment banking firm of national
standing if such Fair Market Value exceeds $10.0 million. In addition, in the
case of any non-cash Restricted Payment which will be received in whole or in
part by the Xxxxxx Stockholders, the Board Resolution determining the Fair
Market Value thereof shall require the approval of a majority of the independent
members of the Board of Directors, whose Resolution shall be delivered to the
Trustee. Not later than the date of making any Restricted Payment, the Company
shall deliver to the Trustee an Officers' Certificate stating that such
Restricted Payment is permitted and setting forth the basis upon which the
calculations required by this Section 4.07 were computed.
SECTION 4.08. Dividend And Other Payment Restrictions Affecting Subsidiaries.
The Company and each Restricted Subsidiary shall not, and the Company
shall not permit any of its Restricted Subsidiaries to, directly or indirectly,
create or otherwise cause or suffer to exist or become effective any encumbrance
or restriction on the ability of any Restricted Subsidiary to (i)(A) pay
dividends or make any other distributions to the Company or any of its
Restricted Subsidiaries (1) on its Capital Stock or (2) with respect to any
other interest or participation in, or measured by, its profits, or (B) pay any
indebtedness owed to the Company or any of its Restricted Subsidiaries, (ii)
make loans or advances to the Company or any of its Restricted Subsidiaries or
(iii) transfer any of its properties or assets to the Company or any of its
Restricted Subsidiaries, except for such encumbrances or restrictions existing
under or by reason of (a) agreements relating to Indebtedness as in effect as of
the Original Issue Date, and any amendments, modifications, restatements,
renewals, increases, supplements, refundings, additions (including additional
Warehouse Facilities), replacements or refinancings thereof, provided that such
amendments, modifications, restatements, renewals, increases, supplements,
refundings, additions, replacements or refinancings are no more restrictive with
respect to such dividend and other payment restrictions than those contained in
the agreements relating to Indebtedness as in effect on the Original Issue Date,
(b) applicable law, (c) any instrument governing Acquired Debt or Capital Stock
of a Person acquired by the Company or any of its Restricted Subsidiaries as in
effect at the time of such acquisition (except to the extent such Acquired Debt
was incurred or such Capital Stock was issued or its terms amended in connection
with or in contemplation of such acquisition), which encumbrance or restriction
is not applicable to any Person, or the property or assets of any Person, other
than the Person or the property or assets of the Person, so acquired, provided
that such Person is not taken into account in determining on a pro forma basis
whether such acquisition subject to such Acquired Debt was permitted by the
terms of this Indenture, (d) customary non-assignment provisions in leases
entered into in the ordinary course of business and consistent with past
practices, (e) purchase money obligations for property acquired in the ordinary
course of business that impose restrictions of the nature described in clause
(iii) above on the property so acquired, (f) Permitted Refinancing Indebtedness;
provided that the restrictions contained in the agreements governing such
Permitted Refinancing Indebtedness are no more restrictive than those contained
in the agreements governing the Indebtedness being refinanced, and (g) the
Indenture, the Subsidiary Guarantees, or the Collateral Agreements and the
Related Agreements.
SECTION 4.09. Incurrence Of Indebtedness And Issuance Of Preferred Stock.
(a) The Company and each Restricted Subsidiary shall not, and the
Company shall not permit any of its Subsidiaries to, directly or indirectly,
create, incur, issue, assume, guaranty or otherwise become directly or
indirectly liable, contingently or otherwise, with respect to (collectively,
"incur") any Indebtedness (including Acquired Debt) or issue Disqualified Stock,
and the Company shall not permit any of its Restricted Subsidiaries to issue any
shares of preferred stock except for preferred stock issued to and held by the
Company or any Wholly-Owned Restricted Subsidiary of the Company; provided,
however, that the Company or any Subsidiary Guarantor may incur Indebtedness
(including Acquired Debt) or issue Disqualified Stock and any Subsidiary
Guarantor may issue preferred stock if, on the date of such incurrence or
issuance and after giving effect thereto, the Consolidated Leverage Ratio does
not exceed 2.0 to 1.0.
(b) The foregoing provisions will not apply to:
(i) the incurrence by the Company or any Restricted
Subsidiary of Indebtedness represented by Capital Lease Obligations,
mortgage financings or purchase money obligations, in each case
incurred for the purpose of financing all or any part of the purchase
price or cost of construction or improvement of property used in the
business of the Company or such Restricted Subsidiary, in an aggregate
principal amount not to exceed $15.0 million in the aggregate since
the Original Issue Date;
(ii) the existence of Warehouse Facilities, regardless of
amount, and the incurrence of Permitted Warehouse Debt by the Company
or any of its Restricted Subsidiaries; provided, however, that to the
extent any such Indebtedness of the Company or a Restricted Subsidiary
of the Company ceases to constitute Permitted Warehouse Debt, to such
extent such Indebtedness shall be deemed to be incurred by the Company
or such Restricted Subsidiary of the Company, as the case may be, at
such time;
(iii) the incurrence by the Company or any of its Restricted
Subsidiaries of intercompany Indebtedness owing to the Company or any
of its Restricted Subsidiaries; provided, however, that any
Indebtedness of the Company to any Restricted Subsidiary is permitted
by Section 4.07 hereof;
(iv) the incurrence by the Company of Indebtedness
represented by the Senior Notes and the incurrence by the Subsidiary
Guarantors of the Subsidiary Guarantees;
(v) Indebtedness of the Company and its Restricted
Subsidiaries outstanding on the Original Issue Date;
(vi) the incurrence by the Company or any of its Restricted
Subsidiaries of Permitted Refinancing Indebtedness with respect to
Indebtedness that was permitted by this Indenture to be incurred or
that was outstanding at the Original Issue Date;
(vii) the incurrence by the Company or any of its Restricted
Subsidiaries of Hedging Obligations directly related to (w)
Indebtedness of the Company or a Restricted Subsidiary of the Company
that was permitted by this Indenture to be incurred, (x) Receivables
held by the Company or a Restricted Subsidiary pending sale in a
Securitization, (y) Receivables of the Company or a Restricted
Subsidiary that have been sold pursuant to a Warehouse Facility; or
(z) Receivables that the Company or a Restricted Subsidiary reasonably
expects to purchase or commit to purchase, finance or accept as
collateral; provided, however, that, in the case of each of the
foregoing clauses (w) through (z), such Hedging Obligations are
eligible to receive hedge accounting treatment in accordance with GAAP
as applied by the Company and its Restricted Subsidiaries on the
Original Issue Date;
(viii) the incurrence of Acquired Debt by the Company or any
Subsidiary Guarantor in a principal amount not to exceed $15.0 million
in the aggregate since the Original Issue Date that is without
recourse to the Company or any of its Restricted Subsidiaries or any
of their respective assets (other than the Subsidiary Guarantor
acquired subject to such Acquired Debt), and is not guaranteed by any
such Person;
(ix) the Guarantee by the Company or any of the Subsidiary
Guarantors of the Indebtedness of the Company or another Subsidiary
Guarantor that was permitted to be incurred by another provision of
this Section 4.09;
(x) the incurrence by the Company and the Subsidiary
Guarantors of Indebtedness secured by (A) Servicing Receivables (other
than those on deposit in the Residual Collateral Trusts), (B) Residual
Receivables (other than those on deposit in the Residual Collateral
Trusts) or (C) the Capital Stock of Subsidiaries (other than the
Residual Collateral Trusts) substantially all of the assets of which
are Residual Receivables and/or Servicing Receivables;
(xi) the incurrence by the Company and the Subsidiary
Guarantors of Indebtedness in an aggregate principal amount at any
time outstanding not to exceed $10.0 million; and
(xii) (A) the incurrence by an Unrestricted Subsidiary of
the Company of Non-Recourse Debt (including, without limitation,
Non-Recourse Debt that would constitute Permitted Warehouse Debt if
incurred by a Restricted Subsidiary of the Company); provided,
however, that if any such Indebtedness ceases to be Non-Recourse Debt
of the Unrestricted Subsidiary, such event shall be deemed to
constitute an incurrence of Indebtedness by a Restricted Subsidiary
and (B) the issuance by an Unrestricted Subsidiary of the Company of
preferred stock.
(c) The Company shall not, and shall not permit any Subsidiary
Guarantor to, incur any Indebtedness that is contractually subordinated to any
Indebtedness of the Company or any such Subsidiary Guarantor unless such
Indebtedness is also contractually subordinated to the Senior Notes, or the
Subsidiary Guarantee of such Subsidiary Guarantor (as applicable), on
substantially identical terms; provided, however, that no Indebtedness shall be
deemed to be contractually subordinated to any other Indebtedness solely by
virtue of being unsecured or of limited recourse.
(d) For purposes of determining compliance with this covenant, in the
event that an item of Indebtedness meets the criteria of more than one of the
categories of Indebtedness described in clauses (i) through (xii) of Section
4.09(b) above or is entitled to be incurred pursuant to Section 4.09(a), the
Company shall, in its sole discretion, classify such item of Indebtedness in any
manner than complies with this covenant and such item of Indebtedness will be
treated as having been incurred pursuant to only one of such clauses or pursuant
to Section 4.09(a).
SECTION 4.10. Transactions With Affiliates.
The Company and each Restricted Subsidiary shall not, and the Company
shall not permit any of its Restricted Subsidiaries to, sell, lease, transfer or
otherwise dispose of any of its properties or assets to, or purchase any
property or assets from, or enter into or make or amend any transaction,
contract, agreement, understanding, loan, advance or guarantee with, or for the
benefit of, any Affiliate (each of the foregoing an "Affiliate Transaction");
provided that Affiliate Transactions shall not include (A) any employment
agreement, stock option, employee benefit, indemnification, compensation
(including the payment of reasonable fees to Directors of the Company or its
Restricted Subsidiaries who are not employees of the Company or its Restricted
Subsidiaries), business expense reimbursement or other employment-related
agreement, arrangement or plan entered into by the Company or any of its
Restricted Subsidiaries in the ordinary course of business of the Company or
such Restricted Subsidiary and consistent with past practice, or if not
consistent with past practice, approved by a majority of the independent members
of the Board of Directors whose resolution shall be delivered to the Trustee,
(B) transactions between or among the Company and/or its Restricted Subsidiaries
not otherwise prohibited by this Indenture, (C) loans or advances to employees
in the ordinary course of business of the Company or its Restricted Subsidiaries
or for advance payment of employee benefits (including, without limitation,
prefunding of any severance obligations), but in any event not to exceed
$500,000 in aggregate principal amount outstanding to all such persons at any
one time, (D) Restricted Payments other than Restricted Investments that are
permitted by Section 4.07 hereof, (E) Securitizations and (F) sales, transfers
and other dispositions of Residual Receivables and Servicing Receivables,
provided that after the consummation thereof, the Company is in compliance with
Section 4.17.
SECTION 4.11. Liens.
The Company and each Restricted Subsidiary shall not, and the Company
shall not permit any of its Restricted Subsidiaries to, directly or indirectly,
create, incur, assume or suffer to exist any Lien on any asset now owned or
hereafter acquired, or any income or profits therefrom or assign or convey any
right to receive income therefrom, except Permitted Liens.
SECTION 4.12. Business Activities.
The Company and each Restricted Subsidiary shall not, and the Company
shall not permit any Restricted Subsidiary to, engage in any business other than
Permitted Businesses.
SECTION 4.13. Payments For Consent.
Neither the Company nor any of its Subsidiaries shall, directly or
indirectly, pay or cause to be paid any consideration, whether by way of
interest, fee or otherwise, to any Holder of any of the Senior Notes for or as
an inducement to any consent, waiver or amendment of any of the terms or
provisions of this Indenture, the Senior Notes or any Subsidiary Guarantee
unless such consideration is offered to be paid or is paid to all Holders of
Senior Notes that consent, waive or agree to amend in the time frame set forth
in the solicitation documents relating to such consent, waiver or agreement.
SECTION 4.14. Corporate Existence.
Subject to Article 5 hereof, the Company shall do or cause to be done
all things necessary to preserve and keep in full force and effect (i) its
corporate existence, and the corporate, partnership or other existence of each
of its Subsidiaries, in accordance with the respective organizational documents
(as the same may be amended from time to time) of the Company or any such
Subsidiary and (ii) the rights (charter and statutory), licenses and franchises
of the Company and its Subsidiaries; provided, however, that the Company shall
not be required to preserve any such right, license or franchise, or the
corporate, partnership or other existence of any of its Subsidiaries, if the
Board of Directors shall determine that the preservation thereof is no longer
desirable in the conduct of the business of the Company and its Subsidiaries,
taken as a whole, and that the loss thereof is not adverse in any material
respect to the Holders of the Senior Notes.
SECTION 4.15. Offer To Repurchase Upon Change Of Control.
(a) Upon the occurrence of a Change of Control, each Holder of the
Senior Notes will have the right to require the Company to repurchase all or any
part (equal to $1,000 or an integral multiple thereof) of such Holder's Senior
Notes pursuant to the offer described below (the "Change of Control Offer") at
an offer price in cash equal to 101% of the aggregate principal amount thereof
plus accrued and unpaid interest thereon, if any, to the date of purchase (the
"Change of Control Payment"). Within ten days following any Change of Control,
the Company shall mail a notice to each Holder describing the transaction or
transactions that constitute the Change of Control and offering to repurchase
the Senior Notes on the date specified in such notice, which date shall be no
earlier than the earliest date permitted under Rule 14e-1 and no later than 60
days from the date such notice is mailed (the "Change of Control Payment Date"),
pursuant to the procedures required by this Indenture and described in such
notice. The Company shall comply with the requirements of Rule 14e-1 and any
other securities laws and regulations thereunder to the extent such laws and
regulations are applicable in connection with the repurchase of the Senior Notes
as a result of a Change of Control. To the extent that the provisions of any
securities laws or regulations conflict with the provisions of this Section
4.15, the Company shall comply with the applicable securities laws and
regulations and shall not be deemed to have breached its obligations under this
Section 4.15 by virtue thereof.
(b) On the Change of Control Payment Date, the Company shall, to the
extent lawful, (1) accept for payment all the Senior Notes or portions thereof
properly tendered pursuant to the Change of Control Offer, (2) deposit with the
Paying Agent an amount equal to the Change of Control Payment in respect of all
the Senior Notes or portions thereof so tendered and (3) deliver or cause to be
delivered to the Trustee the Senior Notes so accepted together with an Officers'
Certificate stating the aggregate principal amount of the Senior Notes or
portions thereof being purchased by the Company. The Paying Agent shall promptly
mail to each Holder of the Senior Notes so tendered the Change of Control
Payment for such Senior Notes, and the Trustee shall promptly authenticate and
mail (or cause to be transferred by book entry) to each Holder a new Senior Note
equal in principal amount to any unpurchased portion of the Senior Notes
surrendered, if any; provided that each such new Senior Note will be in a
principal amount of $1,000 or an integral multiple thereof. The Company shall
publicly announce the results of the Change of Control Offer on or as soon as
practicable after the Change of Control Payment Date.
(c) The Company shall not be required to make a Change of Control
Offer upon a Change of Control if a third party makes the Change of Control
Offer in the manner, at the times and otherwise in compliance with the
requirements set forth in this Indenture applicable to a Change of Control Offer
and purchases all the Senior Notes validly tendered and not withdrawn under such
Change of Control Offer.
SECTION 4.16. Additional Subsidiary Guarantees.
If the Company or any of its Subsidiaries shall acquire or create
another Subsidiary after the date of this Indenture, then the Company shall
cause such newly acquired or created Subsidiary to execute a Subsidiary
Guarantee and deliver an Opinion of Counsel, in accordance with the terms of
this Indenture, except this Section 4.16 shall not apply to any Subsidiaries
that have properly been designated as Unrestricted Subsidiaries in accordance
with this Indenture and are prohibited by contract or by their organizational
documents from executing a Subsidiary Guaranty for so long as they continue to
constitute Unrestricted Subsidiaries and remain subject to such prohibitions. In
addition, the Company or its Subsidiary, as applicable, shall enter into a
Pledge Agreement with respect to all of the equity interests of any such newly
formed or acquired Subsidiary which is required to execute a Subsidiary
Guarantee in accordance with this Section. Without limiting the foregoing,
Securitization Trusts shall not be obligated to enter into a Subsidiary
Guaranty.
SECTION 4.17. Residual Receivable Coverage Ratio.
The aggregate book value of Residual Receivables free and clear of all
Liens and cash constituting the combined trust estates of the Residual
Collateral Trusts shall not be less than the minimum amounts set forth below
(the "Minimum Residual Amount") during the time periods specified below. The
Minimum Residual Amount shall be:
TIME PERIOD MINIMUM RESIDUAL AMOUNT
From the Issue Date to September 29, 2001 $165,000,000
From September 30, 2001 to September 29, 2002
$170,000,000
From September 30, 2002 to September 29, 2003
$175,000,000
From and after September 30, 2003 until the Senior Notes
are paid in full $200,000,000
Furthermore, subject to adjustment as set forth below, the aggregate
book value of Senior Residual Receivables free and clear of all Liens
constituting a portion of the trust estates of the Residual Collateral Trusts
shall not be less than $150,000,000 (the "Minimum Senior Residual Amount"),
provided, that prior to the third anniversary of the Issue Date, upon deposit in
the Cash Escrow Account of $7,125,000, the Minimum Senior Residual Amount shall
be $112,500,000 (which amount shall be raised to $150,000,000 upon the third
anniversary of the Issue Date.)
For the purposes of this Section 4.17, Residual Receivables arising
from net interest margin securities transactions ("NIMS") shall be deemed to be
Senior Residual Receivables when the outstanding principal amount of all other
securities issued in such NIMS is equal to or less than 20% of the aggregate
original principal amount of such securities when originally issued.
For the purposes of this Section 4.17, the Company shall value (i)
Senior Residual Receivables in accordance with GAAP using a discount rate of 12%
and (ii) all other Residual Receivables in accordance with GAAP using a discount
rate of 18%.
SECTION 4.18. Liquidity Maintenance.
The Company shall cause the amount of Unencumbered Liquid Assets to be
equal to or greater than $10,000,000 at all times.
SECTION 4.19. Back-up Servicing Agreement.
No later than March 15, 2001, Delta Funding will, at its own cost,
enter into and thereafter at all times maintain in full force and effect the
Back-Up Servicing Agreement with the Back-Up Servicer, which will provide for
mapping and monthly back-up of information relating to the mortgage loans
underlying Residual Receivables created after 1996; provided that Delta Funding
may cease such Servicing Agreement at any time that the value of Unencumbered
Liquid Assets equals or exceeds $40,000,000; provided, further, that if Delta
Funding has ceased such Servicing Agreement in accordance with the foregoing,
Delta Funding shall reinstate such Servicing Agreement if Unencumbered Liquid
Assets are less than $32,500,000.
SECTION 4.20. Registration Rights.
Upon the written request of the Holders holding a majority in interest
of the Senior Notes then outstanding, the Company shall use reasonable
commercial efforts to cause a registration statement covering the Senior Notes
to be filed under the Exchange Act and to have such registration statement
declared effective by the SEC.
SECTION 4.21. Leverage Ratio (Total Liabilities).
The Company and the Subsidiary Guarantors, on a consolidated basis,
will not permit the ratio of Total Adjusted Liabilities (excluding Subordinated
Indebtedness) to Adjusted Tangible Net Worth to exceed the greater of (A) 7.0 to
1.0 and (B) the ratio of Total Adjusted Liabilities to Adjusted Tangible Net
Worth (if any) set forth in the then-effective Warehouse Facilities, as of any
day.
SECTION 4.22. Leverage Ratio.
The Company and the Subsidiary Guarantors, on a consolidated basis,
will not permit the ratio of Adjusted Senior Indebtedness of the Company and the
Subsidiary Guarantors as of the end of any fiscal quarter, to Tangible Net Worth
as of the end of such fiscal quarter to exceed the greater of (A) 1.5 to 1.0 and
(B) the ratio of Adjusted Senior Indebtedness to Tangible Net Worth (if any) set
forth in the then-effective Warehouse Facilities.
SECTION 4.23. Net Worth.
The Company and the Subsidiary Guarantors, on a consolidated basis,
will not, at any time, permit their consolidated Tangible Net Worth to be less
than the greater of (A) $101,000,000 and (B) the Tangible Net Worth requirement
(if any) set forth in the then-effective Warehouse Facilities.
SECTION 4.24. Cash Escrow Account.
Not later than the 30th day prior to each Interest Payment Date, the
Company shall deposit funds into the Cash Escrow Account in an amount sufficient
to pay the aggregate interest on the Senior Notes due to be paid on the upcoming
Interest Payment Date and shall provide the Trustee with an Officers'
Certificate certifying that such deposit has been made. Notwithstanding the
foregoing, with respect to the Interest Payment Date falling on February 1,
2001, the Company shall make the deposit required by the preceding sentence on
the earlier of (i) the 30th day prior to such Interest Payment Date or (ii) the
day the Company consummates its first NIMS after September 1, 2000 and shall
provide the Trustee with an Officers' Certificate certifying that such deposit
has been made. The Company agrees to use its best efforts to consummate such
NIMS as soon as practicable, subject to market conditions, but in no event later
than January 1, 2001.
SECTION 4.25. No Pledge or Sale of Residual Receivables or Other Assets after
Default or Event of Default.
From the date a Default or Event of Default has occurred until the
date the Default or Event of Default is cured or waived, the Company shall not
and shall not permit any of its Restricted Subsidiaries to sell, lease,
securitize, transfer or assign or grant any new security interests or otherwise
permit any new Liens (collectively, a "Disposition") to be placed on any of its
Residual Receivables, Servicing Receivables, intellectual property, equipment,
leasehold interests, real property or capitalized mortgage servicing rights,
other than, following a Default and prior to the occurrence of an Event of
Default, a Disposition of Residual Receivables, Servicing Receivables or other
assets in the ordinary course of business which does not result in any
additional Defaults and provided that the proceeds of such Disposition are used
simultaneous with such Disposition to either cure the Default or for payment of
the Senior Notes or other Guaranteed Obligations arising under the Senior Notes,
this Indenture or the Collateral Agreements.
SECTION 4.26. Limitations on Asset Sales.
The Company and each Restricted Subsidiary shall not, and the Company
shall not permit any of its Restricted Subsidiaries to, consummate an Asset Sale
unless the Company (or the Restricted Subsidiary, as the case may be) receives
consideration at the time of such Asset Sale at least equal to the Fair Market
Value of the assets or Equity Interests issued or sold or otherwise disposed of.
The Company or the Restricted Subsidiary, as the case shall be, shall
apply an amount equal to 100% of such Net Proceeds in the Permitted Business of
the Company and the Restricted Subsidiaries or to payment of the Senior Notes or
other Guaranteed Obligations. Pending the final application of any such Net
Proceeds, the Company or such Restricted Subsidiary may temporarily invest such
Net Proceeds in items permitted under (a) or (b) in the definition of Permitted
Investments.
Notwithstanding the foregoing, the Company and each Restricted
Subsidiary shall not and the Company shall not permit its Restricted
Subsidiaries to consummate an Asset Sale which includes any Collateral.
SECTION 4.27. Flow of Residual Receivables.
(a) Delta Funding, the Company or any other Restricted Subsidiary
engaging in Securitizations on or after the Issue Date will, within three (3)
Business Days following receipt of Residual Receivables generated in any
Securitization, assign and transfer to DF Special Holdings all right, title and
interest in all such Residual Receivables. Upon completion of such assignment
and transfer, DF Special Holdings will thereupon deposit such Residual
Receivables in the Delta Funding Residual Holding Trust 2000-1 Residual
Collateral Trust.
(b) On the Issue Date, Delta Funding shall deposit all Residual
Receivables owned by it in the Delta Funding Residual Holding Trust 2000-2
Residual Collateral Trust.
(c) On the Issue Date, DF Special Holdings shall deposit all Residual
Receivables owned by it in the Delta Funding Residual Holding Trust 2000-1
Residual Collateral Trust.
SECTION 4.28. Notice of Default.
If a Default or an Event of Default occurs and is continuing and if it
is known to the Company or any Subsidiary Guarantor, the Company shall mail or
cause to be mailed to each Holder notice of the uncured Default or Event of
Default within five (5) Business Days after such Default or Event of Default
first becomes known to the Company or any Subsidiary Guarantor.
ARTICLE FIVE
SUCCESSOR CORPORATION
SECTION 5.01. Limitation on Merger, Etc.
(a) The Company shall 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 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 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
shall have been made assumes all the obligations of the Company under the Notes,
this Indenture, the Collateral Agreements and the Related Agreements pursuant to
a supplemental indenture and other agreements in forms reasonably satisfactory
to the Trustee; (iii) immediately after such transaction, no Default or Event of
Default exists; (iv) each of the Subsidiary Guarantors confirms its obligations
under the Subsidiary Guarantees, this Indenture, the Collateral Agreements and
the Related Agreements pursuant to a supplemental indenture and other agreements
in forms reasonably satisfactory to the Trustee; (v) the Trustee has received an
Opinion of Counsel to the effect that all actions required to perfect any
pledges or security interest on the Collateral have been taken and the
requirements of clauses (i), (ii) and (iv) have been satisfied (assuming the
Trustee's satisfaction); (vi) the Trustee has received an Officers' Certificate
to the effect that all requirements of the Section have been satisfied; and
(vii) except in the case of a merger of the Company with or into a Wholly Owned
Subsidiary of the Company, the Company or the entity or 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 (A) will have Consolidated Net Worth immediately after the
transaction equal to or greater than the Consolidated Net Worth of the Company
immediately preceding the transaction and (B) will, at the time of such
transaction and after giving pro forma effect thereto as if such transaction had
occurred at the beginning of the applicable four-quarter period, be permitted to
incur at least $1.00 of additional Indebtedness pursuant to the Consolidated
Leverage Ratio test set forth in the first paragraph of Section 4.09(a).
(b) Notwithstanding Section 5.01(a), but subject to compliance with
Section 5.01(a)(ii) (with respect to the Wholly-Owned Restricted Subsidiaries
obligations), (iii), (iv), (v) and (vi), a Wholly-Owned Restricted Subsidiary of
the Company may merge into the Company or another Wholly-Owned Restricted
Subsidiary of the Company that is a Subsidiary Guarantor, provided that the
Capital Stock of such surviving Person constitutes Collateral. Notwithstanding
the foregoing, no Residual Collateral Trust may be sold, merged or otherwise
consolidated with any other entity.
SECTION 5.02. Successor Corporation Substituted.
Upon any consolidation or merger, or any sale, assignment, transfer,
lease, conveyance or other disposition of all or substantially all of the assets
of the Company in accordance with Section 5.01 hereof, the successor corporation
formed by such consolidation or into or with which the Company is merged or to
which such sale, assignment, transfer, lease, conveyance or other disposition is
made shall succeed to, and be substituted for (so that from and after the date
of such consolidation, merger, sale, lease, conveyance or other disposition, the
provisions of this Indenture referring to the "Company" shall refer instead to
the successor corporation and not to the Company) and may exercise every right
and power of the Company under this Indenture with the same effect as if such
successor Person had been named as the Company herein; provided, however, that
the predecessor Company shall not be relieved from the obligation to pay the
principal of and interest on the Notes except in the case of a sale of all of
the Company's assets that meet the requirements of Section 5.01 hereof.
ARTICLE SIX
DEFAULTS AND REMEDIES
SECTION 6.01. Events Of Default.
An "Event of Default" occurs if:
(a) the Company defaults in the payment when due of interest on
the Senior Notes and such default continues for a period of 30 days;
(b) the Company defaults in the payment when due of principal of
or premium, if any, on the Senior Notes when the same becomes due and
payable at maturity, upon redemption (including in connection with an
offer to purchase) or otherwise;
(c) the Company on any Restricted Subsidiary defaults in the
payment of interest or principal under any of the Warehouse Facility
(whether due at maturity, by acceleration or otherwise) and such
default continues beyond the grace period (if any) provided in the
applicable Warehouse Facility;
(d) the Company fails to comply with any of the provisions of
Section 4.07, 4.09, 4.11, 4.15, 4.17, 4.18, 4.21, 4.22, 4.23, 4.24,
4.25, 4.26, 4.27 or 5.01 hereof;
(e) the Company fails to observe or perform any other covenant,
representation, warranty or other agreement in this Indenture or the
Senior Notes and such failure to observe or perform remains uncured
for 30 days (or, if the Company has failed to notify the Holders of a
Default or an Event of Default as required by Section 4.28, that
number of days equal to 30 days minus the number of days during which
the Company is in Default of its obligation under Section 4.28, but in
no event less than five (5) days) after notice to the Company by the
Trustee or the Holders or Beneficial Holders of at least 25% in
aggregate principal amount of the Senior Notes then outstanding;
(f) a default occurs under any mortgage, indenture or instrument
under which there may be issued or by which there may be secured or
evidenced any Indebtedness for money borrowed by the Company or any of
its Subsidiaries (or the payment of which is guaranteed by the Company
or any of its Subsidiaries), whether such Indebtedness or Guarantee
now exists, or is created after the date of this Indenture, which
default (a) is caused by a failure to pay principal of or premium, if
any, or interest on such Indebtedness prior to the expiration of the
grace period provided in such Indebtedness on the date of such default
(a "Payment Default") or (b) results in the acceleration of such
Indebtedness prior to its express maturity and, in each case, the
principal amount of any such Indebtedness under which there has been a
Payment Default or, together with the principal amount of any other
such Indebtedness the maturity of which has been so accelerated,
aggregates $5.0 million or more;
(g) a final judgment or final judgments for the payment of money
are entered by a court or courts of competent jurisdiction against the
Company, any of its Restricted Subsidiaries (other than Continental
Property Management Corp.), any Significant Subsidiary or any group of
Subsidiaries that, taken as a whole, would constitute a Significant
Subsidiary and such judgment or judgments remain undischarged for a
period (during which execution shall not be effectively stayed) of 60
days, provided that the aggregate of all such undischarged judgments
exceeds $5.0 million;
(h) the Company, any of its Restricted Subsidiaries (other than
Continental Property Management Corp.), any of its Significant
Subsidiaries or any group of Subsidiaries that, taken as a whole,
would constitute a Significant Subsidiary pursuant to or within the
meaning of 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, or
(iv) makes a general assignment for the benefit of its
creditors,
(i) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(1) grants relief in an involuntary case against the
Company, any of its Restricted Subsidiaries, any of its
Significant Subsidiaries or any group of Subsidiaries that, taken
as a whole, would constitute a Significant Subsidiary that
results in such entity or entities becoming a debtor or debtors
under the Bankruptcy Law;
(2) appoints a Custodian of the Company, any of its
Restricted Subsidiaries, any of its Significant Subsidiaries or
any group of Subsidiaries that, taken as a whole, would
constitute a Significant Subsidiary or for all or substantially
all of the property of the Company or any of its Significant
Subsidiaries or any group of Subsidiaries that, taken as a whole,
would constitute a Significant Subsidiary; or
(3) orders the liquidation of the Company, any of its
Restricted Subsidiaries, any of its Significant Subsidiaries or
any group of Subsidiaries that, taken as a whole, would
constitute a Significant Subsidiary;
(j) any Subsidiary Guarantee, Collateral Agreement or Related
Agreement shall be held in any judicial proceeding to be invalid or
unenforceable or shall cease for any reason to be in full force and
effect or the Company or any Subsidiary Guarantor or any Person acting
on behalf of the Company or any Subsidiary Guarantor shall deny or
disaffirm its obligations under its Subsidiary Guarantee, any
Collateral Agreement or Related Agreement; or
(k) the Company or any Restricted Subsidiary fails to observe or
perform any material covenant, representation, warranty or agreement
in any Collateral Agreement or any Related Agreement for 15 days after
notice to the Company by the Trustee, the Collateral Agent, the
Warrant Agent, the Owner Trustee, the Administrator, the Back-Up
Servicer, or Holders or Beneficial Holders of at least 25% in
aggregate principal amount of the Senior Notes then outstanding.
Any notice to the Company hereunder may be given to any or all of the
Collateral Agent, the Warrant Agent, the Owner Trustee, the Administrator and
the Back-Up Servicer, provided that such notice has been previously or
simultaneously given to the Company.
SECTION 6.02. Acceleration.
If any Event of Default (other than an Event of Default specified in
clause (h) or (i) of Section 6.01 hereof) occurs and is continuing, the Trustee
or the Holders of at least 25% in principal amount of the then outstanding
Senior Notes may declare all the Senior Notes to be due and payable immediately.
Upon any such declaration, the Senior Notes shall become due and payable
immediately. Notwithstanding the foregoing, if an Event of Default specified in
clause (h) or (i) of Section 6.01 hereof occurs, all outstanding Senior Notes
shall be due and payable immediately without further action or notice. The
Holders of a majority in aggregate principal amount of the then outstanding
Senior Notes by written notice to the Trustee may on behalf of all of the
Holders rescind an acceleration and its consequences if the rescission would not
conflict with any judgment or decree and if all existing Events of Default
(except nonpayment of principal, interest or premium that has become due solely
because of the acceleration) have been cured or waived.
If an Event of Default occurs on or after August 1, 2001, by reason of
any willful action (or inaction) taken (or not taken) by or on behalf of the
Company with the intention of avoiding payment of the premium that the Company
would have had to pay if the Company then had elected to redeem the Senior Notes
pursuant to Section 3.07 hereof, then, upon acceleration of the Senior Notes, an
equivalent premium shall also become and be immediately due and payable, to the
extent permitted by law, anything in this Indenture or in the Senior Notes to
the contrary notwithstanding. If an Event of Default occurs prior to August 1,
2001, by reason of any willful action (or inaction) taken (or not taken) by or
on behalf of the Company with the intention of avoiding the prohibition on
redemption of the Senior Notes prior to such date, then, upon acceleration of
the Senior Notes, an additional premium shall also become and be immediately due
and payable in an amount equal to 5.750% of the principal amount to the date of
payment that would otherwise be due but for the provisions of this sentence.
SECTION 6.03. Other Remedies.
If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy to collect the payment of principal or interest on
the Senior Notes, to enforce the performance of any provision of the Senior
Notes, this Indenture, the Subsidiary Guarantees and the Related Agreements and
the Collateral Agent may pursue any available remedy under the Collateral
Agreements.
The Trustee may maintain a proceeding even if it does not possess any
of the Senior Notes or does not produce any of them in the proceeding. A delay
or omission by the Trustee or any Holder of a Senior Note 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 6.04. Waiver Of Past Defaults.
Holders of not less than a majority in aggregate principal amount of
the then outstanding Senior Notes by notice to the Trustee may on behalf of the
Holders of all of the Senior Notes waive an existing Default or Event of Default
and its consequences hereunder, except a continuing Default or Event of Default
in the payment of the principal of, premium, if any, or interest on, the Senior
Notes (including in connection with an offer to purchase) (provided, however,
that the Holders of a majority in aggregate principal amount of the then
outstanding Senior Notes may rescind an acceleration and its consequences,
including any related payment default that resulted from such acceleration).
Upon any such waiver, such Default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured for every purpose
of this Indenture; but no such waiver shall extend to any subsequent or other
Default or impair any right consequent thereon.
SECTION 6.05. Control By Majority.
Holders of a majority in principal amount of the then outstanding
Senior Notes 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. 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 of Senior Notes, or that may involve
the Trustee in personal liability.
SECTION 6.06. Limitation On Suits.
A Holder may pursue a remedy with respect to this Indenture or the
Senior Notes only if:
(a) the Holder gives to the Trustee written notice of a
continuing Event of Default;
(b) the Holders of at least 25% in principal amount of the
then outstanding Senior Notes 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
(e) during such 60-day period the Holders of a majority in
principal amount of the then outstanding Senior Notes 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. Holders of the Senior
Notes may not enforce this Indenture or the Senior Notes except as provided in
this Indenture.
SECTION 6.07. Rights Of Holders To Receive Payment.
Notwithstanding any other provision of this Indenture, the right of
any Holder of a Senior Note to receive payment of principal, premium, if any,
and interest on the Senior Note, on or after the respective due dates expressed
in the Senior Note including in connection with an offer to purchase, or to
bring suit for the enforcement of any such payment on or after such respective
dates, shall not be impaired or affected without the consent of such Holder.
SECTION 6.08. Collection Suit By Trustee.
If an Event of Default specified in Section 6.01(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 of, premium, if any, and interest remaining unpaid on the Senior Notes
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 6.09. Trustee May File Proofs Of Claim.
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 of the Senior Notes allowed in any judicial proceedings relative to the
Company (or any other obligor upon the Senior Notes), 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 7.07 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 7.07 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 that the Holders 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 behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Senior
Notes or the rights of any Holder, or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding.
SECTION 6.10. Priorities.
If the Trustee collects any money pursuant to this Article, it shall
pay out the money in the following order:
First: to the Trustee, its agents and attorneys for amounts
due under Section 7.07 hereof, including payment of all compensation,
expense and liabilities incurred, and all advances made, by the
Trustee and the costs and expenses of collection;
Second: to Holders of Senior Notes for amounts due and
unpaid on the Senior Notes for principal, premium, if any, and
interest, ratably, without preference or priority of any kind,
according to the amounts due and payable on the Senior Notes for
principal, premium, if any and interest, respectively; and
Third: 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 of Senior Notes pursuant to this Section 6.10.
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 of a
Senior Note pursuant to Section 6.07 hereof, or a suit by Holders of more than
10% in principal amount of the then outstanding Senior Notes. Without limiting
the foregoing, following an Event of Default, the Company agrees to pay the
reasonable fees and expenses incurred by one law firm representing the Holders
or Beneficial Holders of a majority in principal amount of the outstanding
Senior Notes.
ARTICLE SEVEN
TRUSTEE
The Trustee hereby accepts the trust imposed upon it by this Indenture
and covenants and agrees to perform the same, as herein expressed.
SECTION 7.01. Duties of Trustee.
(a) If a Default or 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 its exercise
thereof as a prudent person would exercise or use under the circumstances in the
conduct of such person's own affairs.
(b) Except during the continuance of a Default or an Event of Default:
(i) The Trustee need perform only those duties as are
specifically set forth in this Indenture and no covenants or
obligations shall be implied in this Indenture that are adverse to the
Trustee.
(ii) In the absence of bad faith on its part, the Trustee
may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements
of this Indenture. In the case of any such certificates or opinions
which by any provision hereof are specifically required to be
furnished to the Trustee, the Trustee shall be under a duty to examine
the same to determine whether or not they conform to the requirements
of this Indenture (but need not confirm or investigate the accuracy of
mathematical calculations or other facts stated therein).
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) This paragraph does not limit the effect of paragraph
(b) of this Section 7.01.
(ii) The Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer, unless it is
proved that the Trustee was negligent in ascertaining the pertinent
facts.
(iii) the Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 6.5 hereof.
(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 7.01.
(e) No provision of this Indenture shall require the Trustee to expend
or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it.
(f) Except for proceeds from the sale or disposition of Collateral
which shall be deposited into a segregated account containing only proceeds of
Collateral, Assets held in trust by the Trustee need not be segregated from
other assets except to the extent required by law. The Trustee shall be under no
liability for interest on any money received by it hereunder except as otherwise
agreed in writing with the Company.
SECTION 7.02. Rights of Trustee.
Subject to Section 7.01:
(a) The Trustee may conclusively rely on any document believed by it
to be genuine and to have been signed or presented by the proper Person. The
Trustee need not investigate any fact or matter stated in the document;
(b) Before the Trustee acts or refrains from acting, it may consult
with counsel of its selection and may require an Officers' Certificate and/or an
Opinion of Counsel, which shall conform to Sections 13.04 and 13.05. The Trustee
shall not be liable for any action it takes or omits to take in good faith in
reliance on such certificate or opinion;
(c) The Trustee may act through its attorneys and agents and shall not
be responsible for the misconduct or negligence of any agent appointed with due
care;
(d) The Trustee shall not be liable for any action that it takes or
omits to take in good faith which it believes to be authorized or within its
rights or powers;
(e) The Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, notice, request, direction, consent, order, bond, debenture, or other
paper or document, but the Trustee, in its discretion, may make such further
inquiry or investigation into such facts or matters as it may see fit and, if
the Trustee shall determine to make such further inquiry or investigation, it
shall be entitled to examine the books, records and premises of the Company,
personally or by agent or attorney at the sole cost of the Company and shall
incur no liability or additional liability of any kind by reason of such inquiry
or investigation;
(f) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request, order or
direction of any of the Holders pursuant to the provisions of this Indenture,
unless such Holders shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which may be incurred
therein or thereby;
(g) Any permissive right or power available to the Trustee under this
Indenture shall not be construed to be a mandatory duty or obligation.
(h) The Trustee shall not be deemed to have notice of any Default or
Event of Default, [other than a payment default], unless a Responsible Officer
of the Trustee has actual knowledge thereof or unless written notice of any
event which is in fact such a default is received by the Trustee at the
Corporate Trust Office of the Trustee, and such notice references the Notes and
this Indenture.
(i) the rights, privileges, protections, immunities and benefits given
to the Trustee, including, without limitation, its right to be indemnified, are
extended to, and shall be enforceable by, the Trustee in each of its capacities
hereunder, and to each agent, custodian and other Person employed to act
hereunder; and
(j) the Trustee may request that the Company deliver an Officers'
Certificate setting forth the names of individuals and/or titles of officers
authorized at such time to take specified actions pursuant to this Indenture,
which Officers' Certificate may be signed by any person authorized to sign an
Officers' Certificate, including any person specified as so authorized in any
such certificate previously delivered and not superseded.
SECTION 7.03. Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Senior Notes and may otherwise deal with the Company or any
Subsidiary Guarantor, or their respective Affiliates with the same rights it
would have if it were not Trustee. Any Agent may do the same with like rights.
However, the Trustee must comply with Sections 7.10 and 7.11.
SECTION 7.04. Trustee's Disclaimer.
The Trustee makes no representation as to the validity or adequacy of
this Indenture or the Senior Notes, it shall not be accountable for the
Company's use of the proceeds from the Senior Notes, and it shall not be
responsible for any statement in the Senior Notes other than the Trustee's
certificate of authentication.
SECTION 7.05. Notice of Default.
If a Default or an Event of Default occurs and is continuing and if it
is known to the Trustee, the Trustee shall mail to each Holder notice of the
uncured Default or Event of Default within 90 days after such Default or Event
of Default occurs. Except in the case of a Default or an Event of Default in
payment of principal of, or interest on, any Senior Note, the failure to make
payment on the Change of Control Payment Date pursuant to a Change of Control
Offer, and the failure to make payment upon a mandatory redemption, the Trustee
may withhold the notice if and so long as its Board of Directors, the executive
committee of its Board of Directors or a committee of its directors and/or
Responsible Officers in good faith determines that withholding the notice is in
the interest of the Holders.
SECTION 7.06. Reports by Trustee to Holders.
Within 60 days after each May 15 beginning with the May 15, 2000
following the date of this Indenture, the Trustee shall, to the extent that any
of the events described in TIA Section 313(a) occurred within the previous
twelve months, but not otherwise, mail to each Holder a brief report dated as of
such May 15 that complies with TIA Section 313(a). The Trustee also shall comply
with TIA Sections 313(b) and 313(c).
A copy of each report at the time of its mailing to Holders shall be
mailed to the Company and filed with the SEC and each stock exchange, if any, on
which the Senior Notes are listed. The Company shall notify the Trustee if the
Senior Notes become listed on any stock exchange, and any delisting thereof.
SECTION 7.07. Compensation and Indemnity.
The Company shall pay to the Trustee from time to time such
compensation as shall from time to time be agreed to in writing for its
acceptance of this Indenture and services 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 upon request for all reasonable
disbursements, expenses and advances incurred or made by it. Such expenses shall
include the reasonable compensation, disbursements and expenses of the Trustee's
agents and counsel.
The Company shall indemnify the Trustee against any and all losses,
liabilities or expenses, including taxes (other than taxes based upon, measured
by or determined by the income of the Trustee) incurred by the Trustee arising
out of or in connection with the acceptance or administration of its duties
under this Indenture, including the costs and expenses of enforcing this
Indenture against the Company (including this Section 7.07) and defending itself
against any claim (whether asserted by the Company or any Holder or any other
person) or liability in connection with the exercise or performance of any of
its powers or duties hereunder, except to the extent any such loss, liability or
expense may be attributable to the Trustee's negligence, bad faith or willful
misconduct. The Trustee shall notify the Company promptly of any claim asserted
against the Trustee for which it may seek indemnity. Failure by the Trustee to
so notify the Company shall not relieve the Company of its obligations
hereunder. The Company shall defend the claim and the Trustee shall cooperate in
the defense. The Trustee may have separate counsel and the Company shall pay the
reasonable fees and expenses of such counsel. The Company need not pay for any
settlement made without its written consent. The Company need not reimburse any
expense or indemnify against any loss or liability to the extent incurred by the
Trustee through its negligence, bad faith or willful misconduct.
To secure the Company's payment obligations in this Section 7.07, the
Trustee shall have a lien prior to the Senior Notes on all assets held or
collected by the Trustee, in its capacity as Trustee, except assets held in
trust to pay principal of or interest on particular Senior Notes.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(h) or (i) occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.
The obligations of the Company under this Section 7.07 shall survive
the satisfaction and discharge of this Indenture and the resignation or removal
of the Trustee.
SECTION 7.08. Replacement of Trustee.
The Trustee may resign by so notifying the Company. The Holders of a
majority in principal amount of the outstanding Senior Notes may at any time
remove the Trustee by so notifying the Company and the Trustee and may appoint a
successor trustee with the Company's consent, provided that after the occurrence
of an Event of Default, the Company's consent shall not be required. 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;
(3) a receiver or other public officer takes charge of the
Trustee or its property; or
(4) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall notify each Holder of such
event and shall promptly appoint a successor Trustee. The Holders of a majority
in principal amount of the Senior Notes may with the consent of the Company
(which consent shall not be required after the occurrence of an Event of
Default) appoint a successor Trustee to replace the successor Trustee appointed
by the Company.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Immediately after that,
the retiring Trustee shall transfer all property held by it as Trustee to the
successor Trustee, subject to the lien provided in Section 7.07, 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. A successor Trustee shall mail notice of its succession to each
Holder.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Holders of at least 10% in principal amount of the outstanding Senior Notes may
petition any court of competent jurisdiction, at the expense of the Company, for
the appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any Holder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.
Notwithstanding replacement of the Trustee pursuant to this Section
7.08, the Company's obligations under Section 7.07 shall continue for the
benefit of the retiring Trustee.
SECTION 7.09. Successor Trustee by Xxxxxx, Etc.
If the Trustee consolidates with, merges or converts into, or
transfers all or substantially all of its corporate trust business to, another
corporation, the resulting, surviving or transferee corporation without any
further act shall, if such resulting, surviving or transferee corporation is
otherwise eligible hereunder, be the successor Trustee.
SECTION 7.10. Eligibility; Disqualification.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA Section 310(a). The Trustee shall have a combined capital
and surplus of at least $50 million (or be a member or subsidiary of a bank
holding system with aggregate combined capital and surplus of at least $50
million) as set forth in its most recent published annual report of condition.
The Trustee shall comply with TIA Section 310(b).
SECTION 7.11. Preferential Collection of Claims Against the Company.
The Trustee shall comply with TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311(b). A Trustee who has resigned
or been removed shall be subject to TIA Section 311(a) to the extent indicated.
ARTICLE EIGHT
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.01. Option to Effect Legal Defeasance or Covenant Defeasance.
The Company may, at the option of its Board of Directors evidenced by
a resolution set forth in an Officers' Certificate, at any time, elect to have
either Section 8.02 or 8.03 hereof be applied to all outstanding Senior Notes
upon compliance with the conditions set forth below in this Article Eight.
SECTION 8.02. Legal Defeasance and Discharge.
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.02, the Company shall, subject to the satisfaction
of the conditions set forth in Section 8.04 hereof, be deemed to have been
discharged from its obligations with respect to all outstanding Senior Notes on
the date the conditions set forth below are satisfied (hereinafter, "Legal
Defeasance"). For this purpose, Legal Defeasance means that the Company shall be
deemed to have paid and discharged the entire indebtedness represented by the
outstanding Senior Notes, which shall thereafter be deemed to be "outstanding"
only for the purposes of Section 8.05 and the other Sections of this Indenture
referred to in (i) through (iv) below, and to have satisfied all its other
obligations under such Senior Notes and this Indenture (and the Trustee, on
demand of and at the expense of the Company, shall execute proper instruments
acknowledging the same), except for the following provisions which shall survive
until otherwise terminated or discharged hereunder: (i) the rights of Holders of
such outstanding Senior Notes to receive, solely from the trust fund described
in Section 8.05, payments in respect of the principal of, premium, if any, and
interest on such Senior Notes when such payments are due, (ii) the Company's
obligations with respect to the Senior Notes under Article Two and Section 4.02
hereof, (iii) the rights, powers, trust, duties and immunities of the Trustee,
and the Company's obligations in connection therewith and (iv) this Article
Eight. Subject to compliance with this Article Eight, the Company may exercise
its option under this Section 8.02 notwithstanding the prior exercise of its
option under Section 8.03 hereof.
SECTION 8.03. Covenant Defeasance.
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.03, the Company shall, subject to the satisfaction
of the conditions set forth in Section 8.04 hereof, be released from its
obligations under the covenants contained in Sections 4.07, 4.08, 4.09, 4.10,
4.11, 4.12, 4.13, 4.14, 4.15, 4.17, 4.18, 4.19, 4.20, 4.21, 4.22, 4.23, 4.24,
4.25, 4.26, 4.27, 4.28 and Article Five hereof with respect to the outstanding
Senior Notes on and after the date the conditions set forth below are satisfied
(hereinafter, "Covenant Defeasance"), and the Senior Notes shall thereafter be
deemed not "outstanding" for the purposes of any direction, waiver, consent or
declaration or act of Holders (and the consequences of any thereof) in
connection with such covenants, but shall continue to be deemed "outstanding"
for all other purposes hereunder (it being understood that such Senior Notes
shall not be deemed outstanding for accounting purposes). For this purpose, such
Covenant Defeasance means that, with respect to the outstanding Senior Notes,
the Company may omit to comply with and shall have no liability in respect of
any term, condition or limitation set forth in any such covenant, whether
directly or indirectly, by reason of any reference elsewhere herein to any such
covenant or by reason of any reference in any such covenant to any other
provision herein or in any other document and such omission to comply shall not
constitute a Default or an Event of Default under Section 6.01 hereof, but,
except as specified above, the remainder of this Indenture and such Senior Notes
shall be unaffected thereby. In addition, upon the Company's exercise under
Section 8.01 hereof of the option applicable to this Section 8.03, subject to
the satisfaction of the conditions set forth in Section 8.04 hereof, Sections
6.01(f) and 6.01(g) shall not constitute Events of Default.
SECTION 8.04. Conditions to Legal or Covenant Defeasance.
The following shall be the conditions to the application of either
Section 8.02 or 8.03 hereof to the outstanding Senior Notes:
In order to exercise either Legal Defeasance or Covenant Defeasance:
(a) the Company must irrevocably deposit with the Trustee or
Paying Agent, in trust, for the benefit of the Holders, U.S. Legal
Tender, U.S. Government Obligations, or a combination thereof, in such
amounts as will be sufficient, in the opinion of a nationally
recognized firm of independent public accountants, to pay the
principal of, premium, if any, and interest on the Senior Notes on the
stated date for payment thereof or on the applicable Redemption Date,
as the case may be, of such principal or installment of principal of,
premium, if any, or interest on the Senior Notes;
(b) in the case of an election under Section 8.02 hereof,
the Company shall have delivered to the Trustee an Opinion of Counsel
who shall be a nationally-recognized tax counsel reasonably acceptable
to the Trustee confirming that (A) the Company has received from, or
there has been published by, the Internal Revenue Service a ruling or
(B) since the date of this Indenture, there has been a change in the
applicable federal income tax law, in either case to the effect that,
and based thereon such Opinion of Counsel shall confirm that, the
Holders of the Senior Notes will not recognize income, gain or loss
for federal income tax purposes as a result of such Legal Defeasance
and will be subject to federal income tax on the same amounts, in the
same manner and at the same times as would have been the case if such
Legal Defeasance had not occurred;
(c) in the case of an election under Section 8.03 hereof,
the Company shall have delivered to the Trustee an Opinion of Counsel
who shall be a nationally-recognized tax counsel reasonably acceptable
to the Trustee confirming that the Holders of the Senior Notes will
not recognize income, gain or loss for federal income tax purposes as
a result of such Covenant Defeasance and will be subject to federal
income tax on the same amounts, in the same manner and at the same
times as would have been the case if such Covenant Defeasance had not
occurred;
(d) no Default or Event of Default shall have occurred and
be continuing on the date of such deposit (other than a Default or
Event of Default resulting from the incurrence of Indebtedness all or
a portion of the proceeds of which will be used to defease the Senior
Notes pursuant to this Article Eight concurrently with such
incurrence) or insofar as Sections 6.01(h) hereof are concerned, at
any time in the period ending on the 91st day after the date of such
deposit;
(e) such Legal Defeasance or Covenant Defeasance shall not
result in a breach or violation of, or constitute a Default under,
this Indenture or a default under any other material agreement or
instrument to which the Company or any of its Subsidiaries is a party
or by which the Company or any of its Subsidiaries is bound;
(f) the Company shall have delivered to the Trustee an
Opinion of Counsel who shall be a nationally-recognized bankruptcy
counsel to the effect that after the 91st day following the deposit,
the trust funds will not be subject to avoidance under Section 547 of
the Bankruptcy Code, shall not be property of the estate under Section
541 of the Bankruptcy Code and shall not be subject to avoidance under
any Bankruptcy Law or any proceeding applicable to the Company or to
any Subsidiary Guarantor;
(g) the Company shall have delivered to the Trustee an
Officers' Certificate stating that the deposit was not made by the
Company with the intent of preferring the Holders over any other
creditors of the Company or with the intent of defeating, hindering,
delaying or defrauding any other creditors of the Company; and
(h) the Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that all
conditions precedent provided for or relating to the Legal Defeasance
or the Covenant Defeasance have been complied with.
SECTION 8.05. Deposited U.S. Legal Tender and U.S. Government Obligations to
be Held in Trust; Other Miscellaneous Provisions.
(a) Subject to Section 8.06 hereof, all U.S. Legal Tender and U.S.
Government Obligations (including the proceeds thereof) deposited with the
Trustee (or other qualifying trustee, collectively for purposes of this Section
8.05, the "Trustee") pursuant to Section 8.04 hereof in respect of the
outstanding Senior Notes shall be segregated, held in trust and applied by the
Trustee, in accordance with the provisions of such Senior Notes and this
Indenture, to the payment, either directly or through any Paying Agent, as the
Trustee may determine, to the Holders of such Senior Notes of all sums due and
to become due thereon in respect of principal, premium, if any, and interest.
(b) The Company shall pay and indemnify the Trustee against any tax,
fee or other charge imposed on or assessed against the U.S. Legal Tender or U.S.
Government Obligations deposited pursuant to Section 8.04 hereof or the
principal and interest received in respect thereof other than any such tax, fee
or other charge which by law is for the account of the Holders of the
outstanding Senior Notes.
(c) Anything in this Article Eight to the contrary notwithstanding,
the Trustee shall deliver or pay to the Company from time to time upon the
Company's request any U.S. Legal Tender or U.S. Government Obligations held by
it as provided in Section 8.04 hereof which, in the opinion of a nationally
recognized firm of independent public accountants expressed in a written
certification thereof delivered to the Trustee (which may be the opinion
delivered under Section 8.04(a) hereof), are in excess of the amount thereof
that would then be required to be deposited to effect an equivalent Legal
Defeasance or Covenant Defeasance in accordance with Section 8.04.
SECTION 8.06. Repayment to the Company.
Any U.S. Legal Tender or U.S. Government Obligations deposited with
the Trustee or any Paying Agent, in trust for the payment of the principal of,
premium, if any, or interest on any Senior Note and remaining unclaimed for two
years after such principal, and premium, if any, or interest has become due and
payable shall be paid to the Company on its request or shall be discharged from
such trust; and the Holder of such Senior Note shall thereafter, as an unsecured
general creditor, look only to the Company for payment thereof, and all
liability of the Trustee or such Paying Agent with respect to such trust money,
and all liability of the Company as trustee thereof, shall thereupon cease;
provided, however, that the Trustee or such Paying Agent, before being required
to make any such repayment, may at the expense of the Company cause to be
published once, in The New York Times and The Wall Street Journal (national
edition), notice that such money remains unclaimed and that, after a date
specified therein, which shall not be less than 30 days from the date of such
notification or publication, any unclaimed balance of such money then remaining
will be repaid to the Company.
SECTION 8.07. Reinstatement.
If the Trustee or Paying Agent is unable to apply any U.S. Legal
Tender or U.S. Government Obligations in accordance with Section 8.04(a) or
8.05(a) hereof, as the case may be, by reason of any order or judgment of any
court or governmental authority enjoining, restraining or otherwise prohibiting
such application, then the Company's obligations under this Indenture and the
Senior Notes shall be revived and reinstated as though no deposit had occurred
pursuant to Section 8.04(a) or 8.05(a) hereof until such time as the Trustee or
Paying Agent is permitted to apply all such U.S. Legal Tender and U.S.
Government Obligations in accordance with Section 8.04(a) or 8.05(a) hereof, as
the case may be; provided, however, that, if the Company makes any payment of
principal of, premium, if any, or interest on any Senior Note following the
reinstatement of its obligations, the Company shall be subrogated to the rights
of the Holders of such Senior Notes to receive such payment from the U.S. Legal
Tender and U.S. Government Obligations held by the Trustee or Paying Agent.
ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVER
SECTION 9.01. Without Consent of Holders.
Notwithstanding Section 9.02 hereof and except as otherwise provided
in this Indenture or the respective Senior Notes, Subsidiary Guarantees or the
Collateral Agreements, the Company and the Subsidiary Guarantors, when
authorized by Board Resolutions of the Company, and the Trustee, together, may
amend or supplement this Indenture, the Senior Notes, the Subsidiary Guarantees
or the Collateral Agreements without notice to or consent of any Holder:
(1) to cure any ambiguity, defect or inconsistency; provided
that such amendment or supplement does not adversely affect the legal
rights of any Holder;
(2) to comply with Article Five and Section 11.03;
(3) to provide for uncertificated Senior Notes in addition
to or in place of certificated Senior Notes (provided that the
uncertificated Notes are issued in registered form for purposes of
Section 163(f) of the Code, or in a manner such that the
uncertificated Notes are described in Section 163(f)(2)(B) of the
Code);
(4) to make any other change that would provide any
additional rights and benefits to the Holders of the Senior Notes and
that does not adversely affect the legal rights under this Indenture
of any such Holder;
(5) to provide for the assumption of the Company's and the
Subsidiary Guarantors' obligations to the Holders in the case of a
merger or consolidation not prohibited by this Indenture;
(6) to comply with any requirements of the SEC in order to
effect or maintain the qualification of this Indenture and the
Collateral Agreements under the TIA;
(7) to provide for additional Subsidiary Guarantors pursuant
to Section 4.16 or otherwise;
(8) to provide for the appointment of a successor Trustee,
as provided in Section 7.08 hereof or a successor collateral agent, as
provided in the Collateral Agreements.
provided that the Company has delivered to the Trustee an Opinion of Counsel and
Officers' Certificate stating that such amendment or supplement complies with
the provisions of this Section 9.01.
Upon the request of the Company accompanied by a resolution of its
Board of Directors authorizing the execution of any such amended or supplemental
Indenture, and upon receipt by the Trustee of the documents described in Section
7.02 hereof, the Trustee shall join with the Company in the execution of any
amended or supplemental Indenture authorized or permitted by the terms of this
Indenture and to make any further appropriate agreements and stipulations that
may be therein contained, but the Trustee shall not be obligated to enter into
such amended or supplemental Indenture that adversely affects its own rights,
duties or immunities under this Indenture or otherwise.
After an amendment or supplement under this Section becomes effective,
the Company shall mail to the Holders affected thereby a notice briefly
describing the amendment or supplement. Any failure of the Company to mail such
notice, or a defect in such notice, shall not, however, in any way impair or
affect the validity of any such amendment or supplement.
SECTION 9.02. With Consent of Holders.
Subject to Section 6.07, the Company and each Subsidiary Guarantor,
when authorized by Board Resolutions of the Company, and the Trustee, together,
with the written consent of the Holder or Holders of at least a majority in
aggregate principal amount of the outstanding Senior Notes may amend or
supplement this Indenture, the Subsidiary Guarantees, the Senior Notes or the
Collateral Agreements, without notice to any other Holders (including consents
obtained in connection with a tender offer or exchange offer for the Notes).
Subject to Section 6.07, the Holder or Holders of a majority in aggregate
principal amount of the outstanding Senior Notes may waive compliance by the
Company and its Subsidiaries with any provision of this Indenture, the
Subsidiary Guarantees, the Senior Notes or the Collateral Agreements without
notice to any other Holder. Without the consent of each Holder affected,
however, no amendment, supplement or waiver, including a waiver pursuant to
Section 6.04, may (with respect to any Senior Notes held by a non-consenting
Holder of Senior Notes):
(1) reduce the principal amount of Senior Notes whose
Holders must consent to an amendment, supplement or waiver of any
provision of this Indenture or the Senior Notes or otherwise amend
this Section 9.02;
(2) reduce the principal of, premium (if any) or change the
fixed maturity of any Senior Note or alter the provisions with respect
to the redemption of Senior Notes pursuant to Article Three of this
Indenture or alter the provisions, including the purchase price
payable, with respect to repurchases or redemptions of the Senior
Notes pursuant to Section 3.07 or 4.15 hereof;
(3) reduce the rate of or change the time for payment of
interest, including default interest, on any Senior Note;
(4) waive a Default or Event of Default in the payment of
principal of or premium, if any, or interest on the Senior Notes or
that resulted from a failure to comply with Section 3.07 or 4.15
hereof (except a rescission of acceleration of the Senior Notes by the
Holders of at least a majority in aggregate principal amount of the
Senior Notes and a waiver of the payment default that resulted from
such acceleration);
(5) make the principal of, or the interest on, any Senior
Note payable in any manner other than that stated in this Indenture
and the Senior Notes on the Issue Date;
(6) make any change in the provisions of this Indenture
relating to waivers of past Defaults or the rights of Holders of
Senior Notes to receive payments of principal of, premium (if any) or
interest on the Senior Notes;
(7) waive a redemption payment with respect to any Senior
Note; (other than a payment required by Section 4.15 hereof);
(8) alter the ranking of the Senior Notes relative to other
Indebtedness of the Company or the Subsidiary Guarantors;
(9) make any change in the foregoing amendment and waiver
provisions;
(10) impair the right of any Holder to receive payment of
principal of and interest on such Xxxxxx's Senior Notes on or after
the due dates therefor or to institute suit for the enforcement of any
payment on or with respect to such Xxxxxx's Senior Notes;
(11) release any Collateral from the Lien of the Collateral
Agreements except in accordance with terms thereof, or the terms of
this Indenture (including, without limitation, Section 12.03), or
amend the terms thereof or the terms of the Indenture relating to such
release; or
(12) release any Subsidiary Guarantor from its Subsidiary
Guarantee.
It shall not be necessary for the consent of the Holders under this
Section to approve the particular form of any proposed amendment, supplement or
waiver, but it shall be sufficient if such consent approves the substance
thereof.
Upon the request of the Company and each Subsidiary Guarantor
accompanied by a resolution of its Board of Directors authorizing the execution
of any such amended or supplemental Indenture, and upon the filing with the
Trustee of evidence satisfactory to the Trustee of the consent of the Holders of
Notes as aforesaid, and upon receipt by the Trustee of the documents described
in Section 7.2 hereof, the Trustee shall join with the Company and the
Subsidiary Guarantors in the execution of such amended or supplemental Indenture
unless such amended or supplemental Indenture affects the Trustee's own rights,
duties or immunities under this Indenture or otherwise, in which case the
Trustee may in its discretion, but shall not be obligated to, enter into such
amended or supplemental Indenture.
After an amendment, supplement or waiver under this Section becomes
effective, the Company shall mail to the Holders affected thereby a notice
briefly describing the amendment, supplement or waiver. Any failure of the
Company to mail such notice, or any defect in such notice, shall not, however,
in any way impair or affect the validity of any such supplemental indenture.
SECTION 9.03. Compliance with TIA.
Every amendment, waiver or supplement of this Indenture or the Senior
Notes shall comply with the TIA.
SECTION 9.04. Revocation and Effect of Consents.
Until an amendment, waiver or supplement becomes effective, a consent
to it by a Holder is a continuing consent by the Holder and every subsequent
Holder of a Senior Note or portion of a Senior Note that evidences the same debt
as the consenting Xxxxxx's Senior Note, even if notation of the consent is not
made on any Senior Note. However, any such Holder or subsequent Holder may
revoke the consent as to his Senior Note or portion of his Senior Note by notice
to the Trustee or the Company received before the date on which the Trustee
receives an Officers' Certificate certifying that the Holders of the requisite
principal amount of Senior Notes have consented (and not theretofore revoked
such consent) to the amendment, supplement or waiver.
The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Holders entitled to consent to any amendment,
supplement or waiver, which record date shall be at least 30 days prior to the
first solicitation of such consent. If a record date is fixed, then
notwithstanding the last sentence of the immediately preceding paragraph, those
Persons who were Holders at such record date (or their duly designated proxies),
and only those Persons, shall be entitled to revoke any consent previously
given, whether or not such Persons continue to be Holders after such record
date. No such consent shall be valid or effective for more than 90 days after
such record date.
After an amendment, supplement or waiver becomes effective, it shall
bind every Holder, unless it makes a change described in any of clauses (1)
through (12) of Section 9.02, in which case, the amendment, supplement or waiver
shall bind only each Holder of a Senior Note who has consented to it and every
subsequent Holder of a Senior Note or portion of a Senior Note that evidences
the same debt as the consenting Holder's Senior Note; provided that any such
waiver shall not impair or affect the right of any Holder to receive payment of
principal of and interest on a Senior Note, on or after the respective due dates
expressed in such Senior Note, or to bring suit for the enforcement of any such
payment on or after such respective dates without the consent of such Holder.
SECTION 9.05. Notation on or Exchange of Senior Notes.
If an amendment, supplement or waiver changes the terms of a Senior
Note, the Trustee may require the Holder of the Senior Note to deliver it to the
Trustee. The Trustee may place an appropriate notation on the Senior Note about
the changed terms and return it to the Holder. Alternatively, if the Company or
the Trustee so determines, the Company in exchange for the Senior Note shall
issue and the Trustee shall authenticate a new Senior Note that reflects the
changed terms. Any such notation or exchange shall be made at the sole cost and
expense of the Company.
SECTION 9.06. Trustee to Sign Amendments, Etc.
The Trustee shall execute any amendment, supplement or waiver
authorized pursuant to this Article Nine; provided that the Trustee may, but
shall not be obligated to, execute any such amendment, supplement or waiver
which affects the Trustee's own rights, duties or immunities under this
Indenture. The Trustee shall receive, and shall be fully protected in relying
upon, an Opinion of Counsel stating that the execution of any amendment,
supplement or waiver authorized pursuant to this Article Nine is authorized or
permitted by this Indenture.
ARTICLE TEN
MEETINGS OF HOLDERS
SECTION 10.01. Purposes for Which Meetings May Be Called.
A meeting of Holders may be called at any time and from time to time
pursuant to the provisions of this Article Ten for any of the following
purposes:
(a) to give any notice to the Company or to the Trustee, or
to give any directions to the Trustee, or to waive or to consent to
the waiving of any Default or Event of Default hereunder and its
consequences, or to take any other action authorized to be taken by
Holders pursuant to any of the provisions of Article Six;
(b) to remove the Trustee or appoint a successor Trustee
pursuant to the provisions of Article Seven;
(c) to consent to an amendment, supplement or waiver
pursuant to the provisions of Section 9.02; or
(d) to take any other action (i) authorized to be taken by
or on behalf of the Holders of any specified aggregate principal
amount of the Senior Notes under any other provision of this
Indenture, or authorized or permitted by law or (ii) which the Trustee
deems necessary or appropriate in connection with the administration
of this Indenture.
SECTION 10.02. Manner of Calling Meetings.
The Trustee may at any time call a meeting of Holders to take any
action specified in Section 10.01, to be held at such time and at such place in
The City of New York, New York or elsewhere as the Trustee shall determine.
Notice of every meeting of Holders, setting forth the time and place of such
meeting and in general terms the action proposed to be taken at such meeting,
shall be mailed by the Trustee, first-class postage prepaid, to the Company and
to the Holders at their last addresses as they shall appear on the registration
books of the Registrar not less than 10 nor more than 60 days prior to the date
fixed for a meeting.
Any meeting of Holders shall be valid without notice if the Holders of
all Senior Notes then outstanding are present in Person or by proxy, or if
notice is waived before or after the meeting by the Holders of all Senior Notes
outstanding, and if the Company, the Subsidiary Guarantors and the Trustee are
either present by duly authorized representatives or have, before or after the
meeting, waived notice.
SECTION 10.03. Call of Meetings by the Company or Holders.
In case at any time the Company, pursuant to a Board Resolution or the
Holders of not less than 10% in aggregate principal amount of the Senior Notes
then outstanding shall have requested the Trustee to call a meeting of Holders
to take any action specified in Section 10.01, by written request setting forth
in reasonable detail the action proposed to be taken at the meeting, and the
Trustee shall not have mailed the notice of such meeting within 20 days after
receipt of such request, then the Company or the Holders of Senior Notes in the
amount above specified may determine the time and place in The City of New York,
New York or elsewhere for such meeting and may call such meeting for the purpose
of taking such action, by mailing or causing to be mailed notice thereof as
provided in Section 10.02.
SECTION 10.04. Who May Attend and Vote at Meetings.
To be entitled to vote at any meeting of Holders, a Person shall (a)
be a registered Holder of one or more Senior Notes, or (b) be a Person appointed
by an instrument in writing as proxy for the registered Holder or Holders of
Senior Notes. The only Persons who shall be entitled to be present or to speak
at any meeting of Holders shall be the Persons entitled to vote at such meeting
and their counsel and any representatives of the Trustee and its counsel and any
representatives of the Company, the Subsidiary Guarantors and their respective
counsel.
SECTION 10.05. Regulations May Be Made by Trustee; Conduct of the Meeting;
Voting Rights; Adjournment.
Notwithstanding any other provision of this Indenture, the Trustee may
make such reasonable regulations as it may deem advisable for any action by or
any meeting of Holders, in regard to proof of the holding of Senior Notes and of
the appointment of proxies, and in regard to the appointment and duties of
inspectors of votes, and submission and examination of proxies, certificates and
other evidence of the right to vote, and such other matters concerning the
conduct of the meeting as it shall think appropriate. Such regulations may fix a
record date and time for determining the Holders of record of Senior Notes
entitled to vote at such meeting, in which case those and only those Persons who
are Holders of Senior Notes at the record date and time so fixed, or their
proxies, shall be entitled to vote at such meeting whether or not they shall be
such Holders at the time of the meeting.
The Trustee shall, by an instrument in writing, appoint a temporary
chairman of the meeting, unless the meeting shall have been called by Holders as
provided in Section 10.03, in which case the Holders calling the meeting, as the
case may be, shall in like manner appoint a temporary chairman. A permanent
chairman and a permanent secretary of the meeting shall be elected by vote of
the Holders of a majority in principal amount of the Senior Notes represented at
the meeting and entitled to vote.
At any meeting each Holder or proxy shall be entitled to one vote for
each $1,000 principal amount of Senior Notes held or represented by him;
provided, however, that no vote shall be cast or counted at any meeting in
respect of any Senior Notes challenged as not outstanding and ruled by the
Trustee to be not outstanding. The chairman may adjourn any such meeting if he
is unable to determine whether any Holder or proxy shall be entitled to vote at
such meeting. The chairman of the meeting shall have no right to vote other than
by virtue of Senior Notes held by him or instruments in writing as aforesaid
duly designating him as the proxy to vote on behalf of other Holders. Any
meeting of Holders duly called pursuant to the provisions of Section 10.02 or
Section 10.03 may be adjourned from time to time by vote of the Holders of a
majority in aggregate principal amount of the Senior Notes represented at the
meeting and entitled to vote, and the meeting may be held as so adjourned
without further notice.
SECTION 10.06. Voting at the Meeting and Record to Be Kept.
The vote upon any resolution submitted to any meeting of Holders shall
be by written ballots on which shall be subscribed the signatures of the Holders
of Senior Notes or of their representatives by proxy and the principal amount of
the Senior Notes voted by the ballot. The permanent chairman of the meeting
shall appoint two inspectors of votes, who cast proxies at the meeting for or
against any resolution and who shall make and file with the secretary of the
meeting their verified written reports in duplicate of all votes cast at the
meeting. A record in duplicate of the proceedings of each meeting of the Holders
shall be prepared by the secretary of the meeting and there shall be attached to
such record the original reports of the inspectors of votes on any vote by
ballot taken thereat and affidavits by one or more Persons having knowledge of
the facts, setting forth a copy of the notice of the meeting and showing that
such notice was mailed as provided in Section 10.02 or Section 10.03. The record
shall be signed and verified by the affidavits of the permanent chairman and the
secretary of the meeting and one of the duplicates shall be delivered to the
Company and the other to the Trustee to be preserved by the Trustee, the latter
to have attached thereto the ballots voted at the meeting.
Any record so signed and verified shall be conclusive evidence of the
matters therein stated.
SECTION 10.07. Exercise of Rights of Trustee or Holders May Not Be Hindered or
Delayed by Call of Meeting.
Nothing contained in this Article Ten shall be deemed or construed to
authorize or permit, by reason of any call of a meeting of Holders or any rights
expressly or impliedly conferred hereunder to make such call, any hindrance or
delay in the exercise of any right or rights conferred upon or reserved to the
Trustee or to the Holders under any of the provisions of this Indenture or of
the Senior Notes.
ARTICLE ELEVEN
GUARANTEE OF SENIOR NOTES
SECTION 11.01. Subsidiary Guarantee.
Each of the Subsidiary Guarantors hereby, jointly and severally, fully
and unconditionally guarantees to each Holder of a Senior Note authenticated and
delivered by the Trustee and to the Trustee and its successors and assigns,
irrespective of the validity and enforceability of this Indenture, the Senior
Notes or the obligations of the Company hereunder or thereunder, that: (a) the
principal of and interest on the Senior Notes will be promptly paid in full when
due, whether at maturity, by acceleration, redemption or otherwise, and interest
on the overdue principal of and interest on the Senior Notes, if any, if lawful,
and all other Guaranteed Obligations of the Company and each Subsidiary
Guarantor to the Holders or the Trustee hereunder or thereunder or under the
Collateral Agreements or the Related Agreements will be promptly paid in full or
performed, all in accordance with the terms hereof and thereof; and (b) in case
of any extension of time of payment or renewal of any Senior Notes or any of
such other Guaranteed Obligations, the same will be promptly paid in full when
due or performed in accordance with the terms of the extension or renewal,
whether at stated maturity, by acceleration or otherwise. Failing payment when
due of any amount so guaranteed or any performance so guaranteed for whatever
reason, the Subsidiary Guarantors will be jointly and severally obligated to pay
and to perform the same immediately. The Subsidiary Guarantors hereby agree that
their obligations hereunder shall be unconditional, irrespective of the
validity, regularity or enforceability of the Senior Notes, this Indenture, the
Collateral Agreements or the Related Agreements, the absence of any action to
enforce the same, any waiver or consent by any Holder of the Senior Notes with
respect to any provisions hereof or thereof, the recovery of any judgment
against the Company or other Subsidiary Guarantor, any action to enforce the
same or any other circumstance which might otherwise constitute a legal or
equitable discharge or defense of a Subsidiary Guarantor. Each Subsidiary
Guarantor hereby waives diligence, presentment, demand of payment, filing of
claims with a court in the event of insolvency or bankruptcy of the Company, any
right to require a proceeding first against the Company or other Subsidiary
Guarantor, protest, notice and all demands whatsoever and covenant that the
Subsidiary Guarantee will not be discharged except by complete payment and
performance of the obligations contained in the Senior Notes, this Indenture,
the Collateral Agreements and the Related Agreements. If any Holder, Beneficial
Holder or the Trustee is required by any court or otherwise to return to the
Company or Subsidiary Guarantors, or any Custodian, Trustee, liquidator or other
similar official acting in relation to either the Company or Subsidiary
Guarantors, any amount paid by any such entity to the Trustee or such Holder or
Beneficial Holder, this Subsidiary Guarantee, to the extent theretofore
discharged, shall be reinstated in full force and effect. Each Subsidiary
Guarantor agrees that it shall not be entitled to any right of subrogation in
relation to the Holders in respect of any obligations guaranteed hereby until
payment in full to the Holders and performance of all obligations guaranteed
hereby. Each Subsidiary Guarantor further agrees that, as between the Subsidiary
Guarantors, on the one hand, and the Holders and the Trustee, on the other hand,
(x) the maturity of the obligations guaranteed hereby may be accelerated as
provided in Article 6 for the purposes of the Subsidiary Guarantee,
notwithstanding any stay, injunction or other prohibition preventing such
acceleration in respect of the obligations guaranteed hereby, and (y) in the
event of any declaration of acceleration of such obligations as provided in
Article 6, such obligations (whether or not due and payable) shall forthwith
become due and payable by the Subsidiary Guarantors for the purpose of this
Subsidiary Guarantee. The Subsidiary Guarantors shall have the right to seek
contribution from the Company and from any non-paying Subsidiary Guarantor so
long as the exercise of such right does not impair the rights of the Holders
under the Subsidiary Guarantee.
For the purposes hereof, each Subsidiary Guarantor's liability will be
that amount from time to time equal to the aggregate liability of such
Subsidiary Guarantor hereunder, but shall be limited to the lesser of (i) or
(ii) below: (i) the aggregate amount of the Guaranteed Obligations, which
includes all obligations of the Company and of each Subsidiary Guarantor under
the Senior Notes, the Indenture, the Collateral Agreements and the Related
Agreements and (ii) the greater of the following (x) and (y): (x) the amount of
the reasonably equivalent value (as such term is used or defined in Section 548
of the United States Bankruptcy Code) or fair consideration (as such term is
used or defined in the Debtor and Creditor Law of the State of New York in the
case of Subsidiary Guarantors other than the Residual Collateral Trusts, and in
the Commerce and Trade Law of the State of Delaware) in the case of the Residual
Collateral Trusts, whichever statute is determined to be applicable, received by
such Subsidiary Guarantor in connection with the loans and the proceeds of loans
represented by the Original Notes or the exchange of the Original Notes for the
Senior Notes, and (y) the amount, if any, which would not have (A) rendered such
Subsidiary Guarantor "insolvent" (as such term is defined in the United States
Bankruptcy Code, and as such term is defined in the Debtor and Creditor Law of
the State of New York, in the case of Subsidiary Guarantors other than the
Residual Collateral Trusts, and in the Commerce and Trade Law of the State of
Delaware in the case of the Residual Collateral Trusts, whichever statute is
determined to be applicable) or (B) left it with unreasonably small capital, in
each case, at the time when it entered into its Subsidiary Guarantee of the
Original Notes or of its Subsidiary Guarantee of the Senior Notes whichever
first occurred, and, after giving effect to the incurrence of existing
Indebtedness immediately prior to such time; PROVIDED THAT, it shall be a
presumption in any lawsuit or other proceeding in which such Subsidiary
Guarantor is a party that the amount guaranteed pursuant to its Subsidiary
Guarantee hereunder is the amount set forth in clause (i) above unless any
creditor, or representative of creditors of such Subsidiary Guarantor, or debtor
in possession or trustee in bankruptcy of such Subsidiary Guarantor, otherwise
proves in such a lawsuit that the aggregate liability of such Subsidiary
Guarantor is limited to the amount set forth in clause (ii). In making any
determination as to the solvency or sufficiency of capital of a Subsidiary
Guarantor in accordance with the previous sentence, the right of such Subsidiary
Guarantor to contribution from the Company and from other Subsidiary Guarantors
and any other rights such Subsidiary Guarantor may have, contractual or
otherwise, shall be taken into account.
SECTION 11.02. Execution And Delivery Of Subsidiary Guarantee.
To evidence its Subsidiary Guarantee set forth in Section 11.01, each
Subsidiary Guarantor hereby agrees that a notation on such Subsidiary Guarantee
substantially in the form of Exhibit B, which is part of this Indenture, shall
be endorsed by an Officer of such Subsidiary Guarantor on each Senior Note
authenticated and delivered by the Trustee and that this Indenture shall be
executed on behalf of such Subsidiary Guarantor by its President or one of its
Vice Presidents.
Each Subsidiary Guarantor hereby agrees that its Subsidiary Guarantee
set forth in Section 11.01 shall remain in full force and effect notwithstanding
any failure to endorse on each Senior Note a notation of such Subsidiary
Guarantee.
If an Officer whose signature is on this Indenture or on the
Subsidiary Guarantee no longer holds that office at the time the Trustee
authenticates the Senior Note on which a Subsidiary Guarantee is endorsed, the
Subsidiary Guarantee shall be valid nevertheless.
The delivery of any Senior Note by the Trustee, after the
authentication thereof hereunder, shall constitute due delivery of the
Subsidiary Guarantee set forth in this Indenture on behalf of the Subsidiary
Guarantors.
SECTION 11.03. Subsidiary Guarantors May Consolidate, Etc., On Certain Terms.
(a) Except as set forth in Articles 4 and 5, nothing contained in this
Indenture or in any of the Senior Notes shall prevent any consolidation or
merger of a Subsidiary Guarantor (other than the Residual Collateral Trusts)
with or into the Company or another Subsidiary Guarantor, or shall prevent any
sale or conveyance of the property of a Subsidiary Guarantor (other than the
Residual Collateral Trusts) as an entirety, or substantially as an entirety, to
the Company, unless immediately after giving effect to such transaction, a
Default or Event of Default exists.
(b) Except as set forth in Articles 4 and 5, nothing contained in this
Indenture or in any of the Senior Notes shall prevent any consolidation or
merger of a Subsidiary Guarantor (other than the Residual Collateral Trusts)
with or into (whether or not such Subsidiary Guarantor is the surviving Person)
another corporation, Person or entity, whether or not affiliated with such
Subsidiary Guarantor, or successive consolidations or mergers in which a
Subsidiary Guarantor or its successor or successors shall be a party or parties,
or shall prevent any sale or conveyance of the property of a Subsidiary
Guarantor (other than the Residual Collateral Trusts) as an entirety or
substantially as an entirety, to a corporation other than the Company (whether
or not affiliated with the Subsidiary Guarantor) authorized to acquire and
operate the same if immediately after giving effect to such transaction, no
Default or Event of Default exists; provided, however, that each Subsidiary
Guarantor hereby covenants and agrees that, upon any such consolidation, merger,
sale or conveyance, the Subsidiary Guarantee endorsed on the Senior Notes, and
the due and punctual performance and observance of all of the covenants and
conditions of this Indenture, the Collateral Agreements and the Related
Agreements to be performed by such Subsidiary Guarantor, shall be expressly
assumed (in the event that the Subsidiary Guarantor is not the surviving
corporation in the merger), by supplemental indenture satisfactory in form and
substance to the Trustee, executed and delivered to the Trustee, by the
corporation formed by such consolidation or into which the Subsidiary Guarantor
shall have been merged, or by the corporation which shall have acquired such
property. In addition, the requirements of Section 5.01(a)(ii) (with respect to
the Subsidiary Guarantor's obligations), (iii), (iv), (v) and (vi) shall be
satisfied with respect to any such consolidation or merger. In case of any such
consolidation, merger, sale or conveyance and upon the assumption by the
successor corporation, by supplemental indenture, executed and delivered to the
Trustee and satisfactory in form and substance to the Trustee, of the Subsidiary
Guarantee endorsed upon the Senior Notes and the due and punctual performance of
all of the covenants and conditions of this Indenture, the Collateral Agreements
and the Related Agreements to be performed by the Subsidiary Guarantor, such
successor corporation shall succeed to and be substituted for the Subsidiary
Guarantor with the same effect as if it had been named herein as a Subsidiary
Guarantor. Such successor corporation thereupon may cause to be signed any or
all of the Subsidiary Guarantees to be endorsed upon all of the Senior Notes
issuable hereunder which theretofore shall not have been signed by the Company
and delivered to the Trustee. All the Subsidiary Guarantees so issued shall in
all respects have the same legal rank and benefit under this Indenture as the
Subsidiary Guarantees theretofore and thereafter issued in accordance with the
terms of this Indenture as though all of such Subsidiary Guarantees had been
issued at the date of the execution hereof. Notwithstanding the foregoing, the
Residual Collateral Trusts shall not merge or consolidate into any other Person,
and no Person shall merge or consolidate into the Residual Collateral Trusts.
SECTION 11.04. Representations and Warranties on Subsidiary Guarantees.
The Company, Delta Funding, DF Special Holdings and the Residual
Collateral Trusts hereby jointly and severally represent and warrant to the
Trustee and to the Holders and Beneficial Holders as follows:
a. As of the Issue Date and as of the date of the Original
Subsidiary Guarantee (as that term is defined below) issued
by DF Special Holdings and at all times between such dates,
DF Special Holdings has been a wholly owned subsidiary of
Delta Funding, Delta Funding has been a wholly owned
subsidiary of the Company, and each of the Company, Delta
Funding and DF Special Holding has had assets in excess of
liabilities and was solvent calculated in accordance with
GAAP.
b. Delta Funding and DF Special Holding each entered into a
Subsidiary Guarantee (the "Original Subsidiary Guarantee")
in connection with (and as that term is defined in) and
substantially contemporaneous with the execution of the
Indenture dated July 23, 1997 (the "Original Indenture")
relating to the Company's $150,000,000 9 1/2% Senior Notes
Due 2004 (the "Original Notes"). At the time of entering
into of the Original Subsidiary Guarantee, and after giving
effect to the transactions contemplated thereby and the
rights to contribution from the Company (and from each other
party executing an Original Subsidiary Guarantee) for any
payments made by it on the Original Subsidiary Guarantee,
each of Delta Funding and DF Special Holding were not
insolvent or rendered "insolvent" (as such term is defined
in the United States Bankruptcy Code and in the Debtor and
Creditor Law of the State of New York) and were not left
with unreasonably small working capital. The Original
Subsidiary Guarantees entered into by each of Delta Funding
and DF Special Holdings remained continuously in full force
and effect from the date each entered into the Original
Subsidiary Guarantee through the Issue Date.
c. Following the issuance of the Original Notes, the Company
contributed approximately $144 million of the net proceeds
(the "Proceeds") received therefrom to Delta Funding. Delta
Funding, in turn, has used such Proceeds to fund its
operations in the ordinary course of its business,
including, without limitation, to originate and purchase
mortgage loans (the "Loans") aggregating more than $4
billion since the issuance of the Original Notes. Delta
Funding regularly sold the Loans through its ongoing
securitization program, receiving back a par dollar price in
consideration of such sale in connection with the sale of
the senior certificates to asset-backed investors and
contributing the Residual Receivables it retained to its
wholly owned subsidiary DF Special Holdings. At the time of
the issuance of the Original Notes, DF Special Holdings
owned approximately $44 million of Residuals Receivables.
Since that time, Delta Funding has contributed to DF Special
Holdings Residual Receivables having a current aggregate
book value of at least $180 million. As of the Issue Date
and immediately prior to the transactions contemplated by
Section 4.27(c), DF Special Holdings owned Residual
Receivables with an aggregate value of at least $201.5
million.
d. DF Special Holdings is the Depositor and Original
Certificate holder under (and as those terms are defined in)
the 2000-1 Trust Agreement. All Residual Receivables
deposited as of the date hereof or hereafter by DF Special
Holdings into Delta Funding Residual Holding Trust 2000-1
Residual Collateral Trust pursuant to Section 4.27 of the
Indenture were and will at all times be Residual Receivables
which prior to such deposit had been retained by Delta
Funding as part of its securitization program referenced in
subsection (c), above, and contributed to DF Special
Holdings by Delta Funding, and were and will be property
solely of DF Special Holdings, free and clear of all Liens,
in each case immediately prior to the deposit thereof into
Delta Funding Residual Holding Trust 2000-1.
e. Delta Funding is the Depositor and Original Certificate
holder under (as those terms are defined in) the 2000-2
Trust Agreement. All Residual Receivables deposited by Delta
Funding into Delta Funding Residual Holding Trust 2000-2
Residual Collateral Trust pursuant to Section 4.27 of the
Indenture were and will at all times be Residual Receivables
which had been retained by Delta Funding as part of its
securitization program referenced in subsection (c), above,
and were and will be the property solely of Delta Funding,
free and clear of all Liens, in each case immediately prior
to the deposit thereof into Delta Funding Residual Holding
Trust 2000-2.
f. Neither of Delta Funding Residual Holding Trust 2000-1 or
Delta Funding Residual Holding Trust 2000-2 has any
creditors or liabilities, or will engage in any business,
other than liability for the Subsidiary Guarantees and
liabilities to the respective Owner Trustee for costs of
administration arising under the respective Residual
Collateral Trust Agreements. All liabilities to the
respective Owner Trustee arising under the respective
Residual Collateral Trust Agreements are secured by a lien
on the Trust Estate (as that term is defined in the
respective Residual Collateral Trust Agreements).
ARTICLE TWELVE
COLLATERAL AND SECURITY
SECTION 12.01. Collateral Agreements.
The due and punctual payment of the principal of and interest on the
Senior Notes when and as the same shall be due and payable, whether on an
Interest Payment Date, at maturity, by acceleration, repurchase, redemption or
otherwise, and interest on the overdue principal of and interest (to the extent
permitted by law), if any, on the Senior Notes and performance of all other
obligations of the Company and the Subsidiary Guarantors to the Holders of
Senior Notes or the Trustee under this Indenture, the Senior Notes, the
Subsidiary Guarantees and the Related Agreements, according to the terms
hereunder or thereunder, shall be secured as provided in the Collateral
Agreements which the Company and certain Subsidiaries have entered into
simultaneously with the execution of this Indenture. Each Holder of Senior
Notes, by its acceptance thereof, consents and agrees to the terms of the
Collateral Agreements as the same may be in effect or may be amended from time
to time in accordance with its terms and authorizes and directs the Collateral
Agent to enter into the Collateral Agreements and to perform its obligations and
exercise its rights thereunder in accordance therewith. The Collateral Agent
agrees that it will not consent to any action or proposed action under any of
the Related Agreements (except with respect to the release of the Remaining
Interest as provided in Section 12.03) without obtaining the prior consent of
the Holders or Beneficial Holders of a majority of the principal amount of the
then outstanding Senior Notes. The Company shall deliver to the Trustee copies
of all documents delivered to the Collateral Agent pursuant to the Collateral
Agreements, and shall do or cause to be done all such acts and things as may be
necessary or proper, or as may be required by the provisions of the Collateral
Agreements, to assure and confirm to the Trustee and the Collateral Agent the
security interest in the Collateral, by the Collateral Agreements or any part
thereof, as from time to time constituted, so as to render the same available
for the security and benefit of this Indenture and of the Senior Notes secured
hereby, according to the intent and purposes herein expressed. The Company and
the Subsidiary Guarantors shall take, and the Company shall cause its
Subsidiaries to take, upon request of the Trustee or Collateral Agent, any and
all actions reasonably required to cause the Collateral Agreements to create and
maintain, as security for the Guaranteed Obligations of the Company and the
Subsidiary Guarantors hereunder, a valid and enforceable perfected first
priority Lien in and on all the Collateral, in favor of the Collateral Agent for
the benefit of the Holders of Senior Notes, superior to and prior to the rights
of all third Persons and subject to no other Liens.
SECTION 12.02. Recording and Opinions.
(a) The Company shall furnish to the Trustee simultaneously with the
execution and delivery of this Indenture an Opinion of Counsel either (i)
stating that in the opinion of such counsel all action has been taken with
respect to the recording, registering, filing and perfection of this Indenture,
financing statements or other instruments necessary to make effective the Liens
intended to be created by the Collateral Agreements, or (ii) stating that, in
the opinion of such counsel, no such action is necessary to make such Liens
effective and (iii) the due execution and enforceability (subject to customary
exceptions) of the Indenture, the Senior Notes, the Subsidiary Guarantees, the
Collateral Agreements and the Related Agreements.
(b) The Company shall furnish to the Collateral Agent and the Trustee
on September 30 in each year beginning with 2001, an Opinion of Counsel, dated
as of such date, either (i) (A) stating that, in the opinion of such counsel,
action has been taken with respect to the recording, registering, filing,
perfecting, re-recording, re-registering and refiling of all supplemental
indentures, financing statements, continuation statements or other instruments
of further assurance as is necessary to maintain the Liens of the Collateral
Agreements, and (B) stating that, based on relevant laws as in effect on the
date of such Opinion of Counsel, all financing statements and continuation
statements have been executed and filed that are necessary as of such date and
during the succeeding 12 months fully to preserve and protect, to the extent
such protection and preservation are possible by filing, the rights of the
Holders of Senior Notes and the Collateral Agent and the Trustee hereunder and
under the Collateral Agreements with respect to the security interests in the
Collateral, or (ii) stating that, in the opinion of such counsel, no such action
is necessary to maintain such Lien and assignment.
(c) The Subsidiary Guarantors shall otherwise comply with the
provisions of TIA Section 314(b).
SECTION 12.03. Release of Collateral.
(a) Subject to subsections (b) and (c) of this Section 12.03, with the
consent of the holders of a majority in aggregate principal amount of
outstanding Senior Notes, Collateral may be released from the Lien and security
interest created by the Collateral Agreements. Such consent shall not be
required with respect to the release of the Remaining Earnings in accordance
with the terms of the Escrow Agreement.
(b) At any time when a Default or Event of Default shall have occurred
and be continuing and the maturity of the Senior Notes shall have been
accelerated (whether by declaration or otherwise) and the Trustee shall have
delivered a notice of acceleration to the Collateral Agent, no release of
Collateral pursuant to the provisions of the Collateral Agreement shall be
effective as against the Holders of Senior Notes.
(c) The release of the Remaining Earnings under the Escrow Agreement
shall not be deemed to impair the security under this Indenture in contravention
of the provisions hereof if and to the extent the Remaining Earnings are
released pursuant to the terms of the Escrow Agreement. To the extent
applicable, the Company shall cause TIA Section 314(d) relating to the release
of property or securities from the Liens and security interest of the Collateral
Agreements and relating to the substitution therefor of any property or
securities to be subjected to the Liens and security interest of the Collateral
Agreements to be complied with. Any certificate or opinion required by TIA
Section 314(d) may be made by an Officer of the Company except in cases where
TIA Section 314(d) requires that such certificate or opinion be made by an
independent Person, which Person shall be an independent engineer, appraiser or
other expert selected or approved by the Trustee and the Collateral Agent in the
exercise of reasonable care.
SECTION 12.04. Certificates of the Company.
The Company shall furnish to the Trustee and the Collateral Agent,
prior to each proposed release of Collateral in accordance with the terms
hereof, [and, in the case of the Remaining Earnings, the Escrow Agreement] (i)
all documents required by TIA Section 314(d) and (ii) an Opinion of Counsel,
which may be rendered by internal counsel to the Company, to the effect that
such accompanying documents constitute all documents required by TIA Section
314(d). The Trustee may, to the extent permitted by Sections 7.01 and 7.02
hereof, accept as conclusive evidence of compliance with the foregoing
provisions the appropriate statements contained in such documents and such
Opinion of Counsel.
SECTION 12.05. Certificates of the Trustee.
In the event that the Company wishes to release Collateral and has
obtained the consent of the Holders of a majority in aggregate principal amount
of the outstanding Senior Notes [(other than the Remaining Earnings in
accordance with the Escrow Agreement as to which no consent is required)] and
has delivered the certificates and documents required by such Collateral
Agreements and Sections 12.03 and 12.04 hereof, the Trustee shall determine
whether it has received all documentation required by TIA Section 314(d) in
connection with such release and, based on such determination and the Opinion of
Counsel delivered pursuant to Section 12.04(ii), shall deliver a certificate to
the Collateral Agent setting forth such determination.
SECTION 12.06. Authorization of Receipt of Funds by the Trustee Under the
Collateral Agreements.
The Trustee is authorized to receive any funds for the benefit of the
Holders of Senior Notes distributed under the Collateral Agreements, and to make
further distributions of such funds to the Holders of Senior Notes according to
the provisions of this Indenture.
SECTION 12.07. Termination of Security Interest.
Upon the payment in full of all Obligations of the Company under this
Indenture and the Senior Notes, or upon Legal Defeasance in accordance with
Section 8.02, the Trustee shall, at the request of the Company, deliver a
certificate to the Collateral Agent stating that such Obligations have been paid
in full, and instruct the Collateral Agent to release the Liens pursuant to this
Indenture and the Collateral Agreements.
ARTICLE THIRTEEN
MISCELLANEOUS
SECTION 13.01. TIA Controls.
If any provision of this Indenture limits, qualifies, or conflicts
with the duties imposed by operation of Section 318(c) of the TIA, the imposed
duties shall control.
SECTION 13.02. Notices.
Except as otherwise expressly provided herein, all notices, requests
and demands to or upon the respective parties hereto to be effective shall be in
writing (including by telecopy or telex), and shall be deemed to have been duly
given or made when delivered by hand, or five days after being deposited in the
United States mail, postage prepaid, or, in the case of telex notice, when sent,
answer-back received, or in the case of telecopy notice, when sent, or in the
case of a nationally recognized overnight courier service, one Business Day
after deposit with such nationally recognized overnight courier service, to the
address set forth below or to such other address as may be designated by any
party in a written notice to the other party hereto:
IF TO THE COMPANY OR SUBSIDIARY GUARANTORS:
Delta Financial Corporation, Inc.
0000 Xxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxx, Xxx Xxxx 00000-9003
Attention: Xxxx Xxxxxx, Esq., General Counsel
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
WITH A COPY TO:
Stroock & Stroock & Xxxxx LLP
000 Xxxxxx Xxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
IF TO TRUSTEE:
U.S. Bank Trust National Association
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: [ Xxxx Xxxxxx]
Telephone: ____________
Facsimile: 000-000-0000
SECTION 13.03. Communications by Holders with Other Holders.
Holders may communicate pursuant to TIA Section 312(b) with other
Holders with respect to their rights under this Indenture or the Senior Notes.
The Company, the Subsidiary Guarantors, the Trustee, the Registrar and any other
Person shall have the protection of TIA Section 312(c).
SECTION 13.04. 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:
(1) an Officer's Certificate stating that, in the opinion of
the signers, all conditions precedent, if any, provided for in this
Indenture relating to the proposed action have been complied with; and
(2) an Opinion of Counsel stating that, in the opinion of
such counsel, all such conditions precedent have been complied with.
SECTION 13.05. 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 the Officers'
Certificate required by Section 4.04, shall include:
(1) a statement that the Person making such certificate or
opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such Person, he has
made such examination or investigation as is necessary to enable him
to express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(4) a statement as to whether or not, in the opinion of each
such Person, such condition or covenant has been complied with;
provided, however, that with respect to matters of fact an Opinion of
Counsel may rely on an Officers' Certificate or certificates of public
officials.
SECTION 13.06. Rules by Trustee, Paying Agent, Registrar.
The Trustee may make reasonable rules for action by or at a meeting of
Holders. The Paying Agent or Registrar may make reasonable rules for its
functions.
SECTION 13.07. Governing Law.
THIS INDENTURE AND THE SENIOR NOTES SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS
MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW. Each of the parties hereto agrees to submit to the
jurisdiction of the courts of the State of New York located in The City of New
York in any action or proceeding arising out of or relating to this Indenture.
SECTION 13.08. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture, loan or
debt agreement of any of the Company or any of its Subsidiaries. Any such
indenture, loan or debt agreement may not be used to interpret this Indenture.
SECTION 13.09. No Recourse Against Others.
A director, officer, employee, stockholder or incorporator, as such,
of the Company, or any Subsidiary Guarantor shall not have any liability under
this Indenture, the Senior Notes, the Subsidiary Guaranties, the Collateral
Agreements or the Related Agreements for any obligations of the Company or any
Subsidiary Guarantor under this Indenture, the Senior Notes, the Subsidiary
Guarantees, the Collateral Agreements or the Related Agreements or for any claim
based on, in respect of or by reason of such obligations or their creations.
Each Holder by accepting a Senior Note waives and releases all such liability.
Such waiver and release are part of the consideration for the issuance of the
Senior Notes.
SECTION 13.10. Successors.
All agreements of the Company and each Subsidiary Guarantor in this
Indenture and the Senior Notes shall bind their respective successors. All
agreements of the Trustee in this Indenture shall bind its successor.
SECTION 13.11. Duplicate Originals.
All parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together shall represent the
same agreement.
SECTION 13.12. Severability.
In case any one or more of the provisions in this Indenture or in the
Senior Notes shall be held invalid, illegal or unenforceable, in any respect for
any reason, the validity, legality and enforceability of any such provision in
every other respect and of the remaining provisions shall not in any way be
affected or impaired thereby, it being intended that all of the provisions
hereof shall be enforceable to the full extent permitted by law.
SECTION 13.13. 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 of this Indenture and shall in
no way modify or restrict any of the terms or provisions hereof.
SECTION 13.14. Legal Holidays.
In any case where any Interest Payment Date, Redemption Date or
Maturity Date of any Senior Note shall not be a Business Day, then
(notwithstanding any other provision of this Indenture or the Senior Notes)
payment of interest or principal and premium, if any, need not be made on such
date, but may be made on the next succeeding Business Day with the same force
and effect as if made on the Interest Payment Date, Redemption Date or Maturity
Date, provided that no interest shall accrue for the period from and after such
Interest Payment Date, Redemption Date or Maturity Date, as the case may be.
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed, and their respective corporate seals to be hereunto affixed
and attested, all as of the date first written above.
Dated: ____________, 2000
DELTA FINANCIAL CORPORATION
By:
----------------------------
Name:
Title:
Attest:
-----------------------------
U.S. BANK TRUST NATIONAL ASSOCIATION
as Trustee
By:
--------------------------------
Name:
Title:
Attest:
------------------------------
DELTA FUNDING CORPORATION
By:
----------------------------------
Name:
Title:
Attest:
------------------------------
DF SPECIAL HOLDINGS CORPORATION
By:
-----------------------------------
Name:
Title:
Attest:
-------------------------------
FIDELITY MORTGAGE INC.
By:
----------------------------------
Name:
Title:
Attest:
--------------------------------
DFC FINANCIAL CORPORATION
By:
----------------------------------
Name:
Title:
Attest:
--------------------------------
DFC FINANCIAL OF CANADA LIMITED
By:
---------------------------------
Name:
Title:
Attest:
--------------------------------
DFC FUNDING OF CANADA LIMITED
By:
--------------------------------
Name:
Title:
Attest:
---------------------------------
CONTINENTAL PROPERTY MANAGEMENT CORP.
By:
--------------------------------
Name:
Title:
Attest:
--------------------------------
DELTA FUNDING RESIDUAL HOLDING TRUST
2000-1
By:
---------------------------------
Name:
Title:
Attest:
-------------------------------
DELTA FUNDING RESIDUAL HOLDING TRUST
2000-2
By:
----------------------------------
Name:
Title:
Attest:
------------------------------
Exhibit A to Indenture
(Face of Senior Note)
==============================================================================
CUSIP/CINS ____________
9 1/2% Senior Secured Notes due 2004
REGISTERED REGISTERED
No. R-___ $___________
DELTA FINANCIAL CORPORATION
promises to pay to ________________________________________or registered
assigns,
the principal sum of $__________________ (_________________DOLLARS)
on August 1, 2004.
Interest Payment Dates: August 1 and February 1
Record Dates: January 15 and July 15
DATED:
DELTA FINANCIAL CORPORATION
By:_________________ By:__________________
Name: Name:
Title: Title:
This is one of the Senior Notes referred to in the within-mentioned Indenture:
DATED:
U.S. BANK TRUST NATIONAL ASSOCIATION,
as Trustee
By:
--------------------------------
==============================================================================
(Back of Senior Note)
DELTA FINANCIAL CORPORATION
9 1/2% Senior Secured Notes due 2004
Capitalized terms used herein shall have the meanings assigned to them
in the Indenture referred to below unless otherwise indicated.
1. INTEREST. Delta Financial Corporation, a Delaware corporation (the
"Company"), promises to pay interest on the principal amount of this Senior Note
at 9 1/2% per annum from _____, 2000 until maturity. The Company will pay
interest semi-annually on February 1 and August 1 of each year, or if any such
day is not a Business Day, on the next succeeding Business Day (each an
"Interest Payment Date"). Interest on the Senior Notes will accrue from the most
recent date to which interest has been paid or, if no interest has been paid,
from August 1, 2000; provided that if there is no existing Default in the
payment of interest, and if this Senior Note is authenticated between a record
date referred to on the face hereof and the next succeeding Interest Payment
Date, interest shall accrue from such next succeeding Interest Payment Date;
provided, further, that the first Interest Payment Date shall be February 1,
2001. The Company shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue principal at the then applicable
interest rate on the Senior Notes to the extent lawful; it shall pay interest
(including post-petition interest in any proceeding under any Bankruptcy Law) on
overdue installments of interests (without regard to any applicable grace
period) at the same rate to the extent lawful. Interest will be computed on the
basis of a 360-day year of twelve 30-day months.
2. METHOD OF PAYMENT. The Company will pay interest on the Senior
Notes (except defaulted interest) to the Persons who are registered Holders of
Senior Notes at the close of business on the January 15th or July 15th next
preceding the Interest Payment Date, even if such Senior Notes are cancelled
after such record date and on or before such Interest Payment Date, except as
provided in Section 2.12 of the Indenture with respect to defaulted interest.
The Senior Notes will be payable as to principal, premium, if any, and interest
at the office or agency of the Company maintained for such purpose within or
without The City and State of New York, or, at the option of the Company,
payment of interest may be made by check mailed to the Holders at their
addresses set forth in the register of Holders, and provided that payment by
wire transfer of immediately available funds will be required with respect to
principal of and interest, premium on, all Senior Notes and all other Senior
Notes the Holders of which shall have provided wire transfer instructions to the
Company or the Paying Agent. Such payment shall be in such coin or currency of
the United States of America as at the time of payment is legal tender for
payment of public and private debts.
3. PAYING AGENT AND REGISTRAR. Initially, U.S. Bank Trust National
Association, the Trustee under the Indenture, will act as Paying Agent and
Registrar. The Company may change any Paying Agent or Registrar without notice
to any Holder. Except for the purposes of Articles Three and Eight and Section
4.15 of the Indenture, the Company or any of its Subsidiaries may act as its own
Paying Agent or Registrar.
4. INDENTURE, SUBSIDIARY GUARANTEES AND COLLATERAL. The Company issued
the Senior Notes under an Indenture dated _______, 2000 ("Indenture") between
the Company, the Subsidiary Guarantors and the Trustee. The terms of the Senior
Notes include those stated in the Indenture and those made part of the Indenture
by reference to the Trust Indenture Act of 1939, as amended (15 U.S. Code
Sections 77aaa-77bbbb). The Senior Notes are subject to all such terms, and
Holders are referred to the Indenture and such Act for a statement of such
terms. To the extent any provision of this Senior Note conflicts with the
express provisions of the Indenture, the provisions of the indenture shall
govern and be controlling. The Senior Notes are obligations of the Company
limited to $150,000,000.00 in aggregate principal amount. Payment on the Senior
Notes is guaranteed, jointly and severally, by the Subsidiary Guarantors
pursuant to Article Eleven of the Indenture. The Senior Notes and certain of the
Subsidiary Guarantees are secured by a first priority lien on the Collateral or
as provided in the Collateral Agreements.
5. OPTIONAL REDEMPTION. The Company shall not have the option to
redeem the Senior Notes pursuant to Section 3.07 of the Indenture prior to
August 1, 2001. Thereafter, the Company shall have the option to redeem the
Senior Notes, in whole or in part, at any time or from time to time, upon not
less than 30 nor more than 60 days' prior notice to each Holder, at the
following redemption prices (expressed as percentages of principal amount) plus
accrued and unpaid interest thereon to the applicable redemption date, if
redeemed during the twelve-month period beginning on August 1 of the years
indicated below:
Year Percentage
2001.................................................. 104.750%
2002.................................................. 102.375%
2003 and thereafter................................... 100.000%
Any redemption pursuant to Section 3.07 of the Indenture shall be made
pursuant to the provisions of Sections 3.01 through 3.06 thereof.
6. MANDATORY REDEMPTION. The Company shall not be required to make
mandatory redemption or sinking fund payments with respect to the Senior Notes.
7. REPURCHASE AT OPTION OF HOLDER.
Upon the occurrence of a Change of Control, each Holder of the Senior
Notes will have the right to require the Company to repurchase all or any part
(equal to $1,000 or an integral multiple thereof) of such Xxxxxx's Senior Notes
(the "Change of Control Offer") at an offer price in cash equal to 101% of the
aggregate principal amount thereof plus accrued and unpaid interest thereon, if
any, to the date of purchase. Within ten days following any Change of Control,
the Company shall mail a notice to each Holder setting forth the procedures
governing the Change of Control Offer as required by the Indenture.
8. NOTICE OF REDEMPTION. Notice of redemption will be mailed at least
30 days but not more than 60 days before the redemption date to each Holder
whose Senior Notes are to be redeemed at its registered address. Senior Notes in
denominations larger than $1,000 may be redeemed in part but only in whole
multiples of $1,000, unless all of the Senior Notes held by a Holder are to be
redeemed. On and after the redemption date interest ceases to accrue on Senior
Notes or portions thereof called for redemption.
9. DENOMINATIONS, TRANSFER, EXCHANGE. The Senior Notes are in
registered form without coupons in denominations of $1,000 and integral
multiples of $1,000. The transfer of Senior Notes may be registered and Senior
Notes may be exchanged as provided in the Indenture. The Registrar and the
Trustee may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and the Company may require a Holder to pay
any taxes and fees required by law or permitted by the Indenture. The Company
need not exchange or register the transfer of any Senior Note or portion of a
Senior Note selected for redemption, except for the unredeemed portion of any
Senior Note being redeemed in part. Also, it need not exchange or register the
transfer of any Senior Notes for a period of 15 days before a selection of
Senior Notes to be redeemed or during the period between a record date and the
corresponding Interest Payment Date.
10. PERSONS DEEMED OWNERS. The registered Holder of a Senior Note may
be treated as its owner for all purposes.
11. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions,
the Indenture or the Senior Notes may be amended or supplemented with the
consent of the Holders of at least a majority in principal amount of the then
outstanding Senior Notes, and any existing default or compliance with any
provision of the Indenture or the Senior Notes may be waived with the consent of
the Holders of a majority in principal amount of the then outstanding Senior
Notes. Without the consent of any Holder of a Senior Note, the Indenture, the
Collateral Agreements or the Senior Notes may be amended or supplemented to cure
any ambiguity, defect or inconsistency, to provide for uncertificated Senior
Notes in addition to or in place of certificated Senior Notes, to provide for
the assumption of the Company's obligations to Holders of the Senior Notes in
case of a merger or consolidation, to make any change that would provide any
additional rights and benefits to the Holders of the Senior Notes or that does
not adversely affect the legal rights under the Indenture of any such Holder, or
to comply with the requirements of the SEC in order to effect or maintain the
qualification of the Indenture under the Trust Indenture Act.
12. DEFAULTS AND REMEDIES. Events of Default include, without
limitation: (i) default for 30 days in the payment when due of interest on the
Senior Notes; (ii) default in payment when due of principal of or premium, if
any, on the Senior Notes when the same becomes due and payable at maturity, upon
redemption (including in connection with an offer to purchase) or otherwise;
(iii) the Company or any Restricted Subsidiary defaults in payment of interest
or principal under any of the Warehouse Facilities (whether due at maturity, by
acceleration or otherwise) and such default continues beyond the grace period
(if any) provided in the applicable Warehouse Facility; (iv) failure by the
Company to comply with Section 4.07, 4.09, 4.11, 4.15, 4.17, 4.18, 4.21, 4.22,
4.23, 4.24, 4.25, 4.26, 4.27 or 5.01 of the Indenture; (v) failure by the
Company to observe or perform any other covenant, representation, warranty or
other agreement in the Indenture or the Senior Notes and such failure to observe
or perform remains uncured for 30 days (or, if the Company has failed to notify
the Holders of a Default or an Event of Default as required by Section 4.28 of
the Indenture, that number of days equal to 30 days minus the number of days
during which the Company is in Default of its obligation under such Section
4.28, but in no event less than five (5) days) after notice to the Company by
the Trustee or the Holders or Beneficial Holders of at least 25% in aggregate
principal amount of the Senior Notes then outstanding; (vi) default under
certain other agreements relating to Indebtedness of the Company which default
constitutes a Payment Default or results in the acceleration of such
Indebtedness prior to its express maturity; (vii) certain final judgments for
the payment of money that remain undischarged for a period of 60 days; (viii)
certain events of bankruptcy or insolvency with respect to the Company, any of
its Restricted Subsidiaries (other than Continental Property Management Corp.)
or any of its Significant Subsidiaries; (ix) certain events relating to the
invalidity or unenforceability of any Subsidiary Guarantee, Collateral
Agreements or Related Agreements and (x) failure by the Company or any
Restricted Subsidiary for 15 days after notice to the Company by the Trustee,
other parties to such agreements or the Holders or Beneficial Holders of at
least 25% in principal amount of the Senior Notes outstanding to comply with any
material provision of the Collateral Agreements or Related Agreements. If any
Event of Default occurs and is continuing, the Trustee or the Holders of at
least 25% in principal amount of the then outstanding Senior Notes may declare
all the Senior Notes to be due and payable. Notwithstanding the foregoing, in
the case of an Event of Default arising from certain events of bankruptcy or
insolvency, all outstanding Senior Notes will become due and payable without
further action or notice. Holders may not enforce the Indenture or the Senior
Notes except as provided in the Indenture. Subject to certain limitations,
Holders of a majority in principal amount of the then outstanding Senior Notes
may direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Holders of the Senior Notes notice of any continuing Default or
Event of Default (except a Default or Event of Default relating to the payment
of principal or interest) if it determines that withholding notice is in their
interest. The Holders of a majority in aggregate principal amount of the Senior
Notes then outstanding by notice to the Trustee may on behalf of the Holders of
all of the Senior Notes waive any existing Default or Event of Default and its
consequences under the Indenture except a continuing Default or Event of Default
in the payment of interest on, or the principal of, the Senior Notes. The
Company is required to deliver to the Trustee annually a statement regarding
compliance with the Indenture, and the Company is required upon becoming aware
of any Default or Event of Default, to deliver to the Trustee a statement
specifying such Default or Event of Default.
13. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its individual or
any other capacity, may make loans to, accept deposits from, and perform
services for the Company or its Affiliates, and may otherwise deal with the
Company or its Affiliates, as if it were not the Trustee.
14. NO RECOURSE AGAINST OTHERS. A director, officer, employee,
incorporator or stockholder, of the Company, as such, shall not have any
liability for any obligations of the Company under the Senior Notes or the
Indenture or for any claim based on, in respect of, or by reason of, such
obligations or their creation. Each Holder by accepting a Senior Note waives and
releases all such liability. The waiver and release are part of the
consideration for the issuance of the Senior Notes.
15. AUTHENTICATION. This Senior Note shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating agent.
16. ABBREVIATIONS. Customary abbreviations may be used in the name of
a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
17. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Senior Notes and the Trustee may use CUSIP
numbers in notices of redemption as a convenience to Holders. No representation
is made as to the accuracy of such numbers either as printed on the Senior Notes
or as contained in any notice of redemption and reliance may be placed only on
the other identification numbers placed thereon.
18. GOVERNING LAW. THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL
GOVERN AND BE USED TO CONSTRUE THIS INDENTURE, THE SENIOR NOTES AND THE
SUBSIDIARY GUARANTEES, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.
The Company will furnish to any Holder upon written request and
without charge a copy of the Indenture. Requests may be made to:
DELTA FINANCIAL CORPORATION
0000 XXXXXXXX XXXX, XXXXX 000
XXXXXXXX, XXX XXXX 00000-0000
ATTENTION: XXXX XXXXXX
ASSIGNMENT FORM
To assign this Senior Note, fill in the form below: (I) or
(we) assign and transfer this Senior Note, for value
received, to
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(Insert assignee's soc. sec. or tax I.D. no.)
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(Print or type assignee's name, address and zip code)
and irrevocably appoint________________________________________________________
attorney to transfer this Senior Note on the books of the Company. The agent
may substitute another to act for him.
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Date:______________________________________________________________
Your Signature________________________________________
(Sign exactly as your name appears on the face of this
Senior Note)
Signature Guarantee:*
*NOTICE: The signature on this assignment must correspond with the name as it
appears upon the face of the within Senior Note in every particular, without
alteration or enlargement or any change whatever and must be guaranteed. The
signature(s) should be guaranteed by an eligible guarantor institution (banks,
stockholders, savings and loan associations and credit unions with membership in
an approved signature guarantee medallion program), pursuant to Rule 17Ad-15 of
the Securities Exchange Act of 1934, as amended.
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Senior Note purchased by the Company
pursuant to Section 4.15 of the Indenture, check the box below:
/ / Section 4.15
If you want to elect to have only part of the Senior Note purchased by
the Company pursuant to Section 4.15 of the Indenture, state the amount you
elect to have purchased:
$_______________
Date:______________________ Your Signature: _____________________
(Sign exactly as your name appears on
the Senior Note)
Tax Identification No.:______________
Signature Guarantee:*
*NOTICE: The signature on this assignment must correspond with the name as it
appears upon the face of the within Senior Note in every particular, without
alteration or enlargement or any change whatever and must be guaranteed. The
signature(s) should be guaranteed by an eligible guarantor institution (banks,
stockholders, savings and loan associations and credit unions with membership in
an approved signature guarantee medallion program), pursuant to Rule 17Ad-15 of
the Securities Exchange Act of 1934, as amended.
Exhibit B to Indenture
(Form of Subsidiary Guarantee)
SUBSIDIARY GUARANTEE
For value received, each Subsidiary Guarantor, hereby, jointly and
severally with the other Subsidiary Guarantors, fully and unconditionally
guarantees to each Holder of Senior Notes authenticated and delivered by the
Trustee and to the Trustee and its successors and assigns, irrespective of the
validity and enforceability of the Indenture, the Senior Notes or the
obligations of the Company to the Holders or the Trustee under the Senior Notes
or under the Indenture, that: (a) the principal of, and premium, if any, and
interest on the Senior Notes shall be promptly paid in full when due, whether at
maturity, by acceleration, redemption or otherwise, and interest on overdue
principal of interest on the Senior Note, if any, if lawful and all other
Guaranteed Obligations of the Company and each Subsidiary Guarantor to the
Holders or the Trustee under the Indenture, under the Senior Notes, under the
Collateral Agreements or under the Related Agreements shall be promptly paid in
full or performed, all in accordance with the terms hereof and thereof; and (b)
in case of any extension of time of payment or renewal of any Senior Notes or
any of such other Guaranteed Obligations, the same will be promptly paid in full
when due or performed in accordance with the terms of the extension or renewal,
whether at stated maturity, by acceleration or otherwise. Failing payment when
due of any amount so guaranteed or any performance so guaranteed, for whatever
reason, the Subsidiary Guarantors will be jointly and severally obligated to pay
and perform the same immediately. In the Indenture, each Subsidiary Guarantor
waives legal and equitable defenses, including suretyship defenses, to its
Subsidiary Guarantee.
The Obligations of the Subsidiary Guarantors to the Holders and to the
Trustee pursuant to this Subsidiary Guarantee and the Indenture are expressly
set forth in Article 11 of the Indenture, and reference is hereby made to such
Indenture for the precise terms of this Subsidiary Guarantee. The terms of
Article 11 of the Indenture are incorporated herein by reference.
No director, officer, employee, incorporator or stockholder, as such,
past, present or future, of the Subsidiary Guarantor shall have any personal
liability under this Subsidiary Guarantee by reason of his or its status as such
director, officer, employee, incorporator or stockholder.
This is a continuing Subsidiary Guarantee and shall remain in full
force and effect and shall be binding upon each Subsidiary Guarantor and its
respective successors and assigns to the extent set forth in the Indenture until
full and final payment and performance of all of the Company's obligations under
the Senior Notes, the Indenture, the Collateral Agreements and the Related
Agreements and shall inure to the benefit of the successors and assigns of the
Trustee and the Holders and, in the event of any transfer or assignment of
rights by any Holder of or the Trustee, the rights and privileges herein
conferred upon that party shall automatically extend to and be vested in such
transferee or assignee, all subject to the terms and conditions hereof. This a
Subsidiary Guarantee of payment and not a guarantee of collection.
For purposes hereof, each Subsidiary Guarantor's liability will be
that amount from time to time equal to the aggregate liability of such
Subsidiary Guarantor hereunder, but shall be limited to the lesser of (i) or
(ii) below: (i) the aggregate amount of the Guaranteed Obligations, which
includes all obligations of the Company and of each Subsidiary Guarantor under
the Senior Notes, the Indenture, the Collateral Agreements and the Related
Agreements and (ii) the greater of the following (x) and (y): (x) the amount of
the reasonably equivalent value (as such term is defined in Section 548 of the
United States Bankruptcy Code) or fair consideration (as such term is used or
defined in the Debtor and Creditor Law of the State of New York, in the case of
the Subsidiary Guarantors other than the Residual Collateral Trusts, and in the
Commerce and Trade Law of the State of Delaware in the case of the Residual
Collateral Trusts), whichever statute is determined to be applicable, received
by such Subsidiary Guarantor in connection with the loans and the proceeds of
loans represented by the Original Senior Notes or the exchange of the Original
Senior Notes for the Senior Senior Notes, and (y) the amount, if any, which
would not have (A) rendered such Subsidiary Guarantor "insolvent" (as such term
is defined in the United States Bankruptcy Code, and as such term is defined in
the Debtor and Creditor Law of the State of New York, in the case of Subsidiary
Guarantors other than the Residual Collateral Trusts, and in the Commerce and
Trade Law of the State of Delaware in the case of the Residual Collateral
Trusts, whichever statute is determined to be applicable) or (B) left it with
unreasonably small capital, in each case, at the time when it entered into its
Subsidiary Guarantee of the Original Senior Notes or of its Subsidiary Guarantee
of the Senior Senior Notes whichever first occurred, and, after giving effect to
the incurrence of existing Indebtedness immediately prior to such time; PROVIDED
THAT, it shall be a presumption in any lawsuit or other proceeding in which such
Subsidiary Guarantor is a party that the amount guaranteed pursuant to its
Subsidiary Guarantee is the amount set forth in clause (i) above unless any
creditor, or representative of creditors of such Subsidiary Guarantor, or debtor
in possession or trustee in bankruptcy of such Subsidiary Guarantor, otherwise
proves in such a lawsuit that the aggregate liability of such Subsidiary
Guarantor is limited to the amount set forth in clause (ii). In making any
determination as to the solvency or sufficiency of capital of a Subsidiary
Guarantor in accordance with the previous sentence, the right of such Subsidiary
Guarantor to contribution from the Company and from other Subsidiary Guarantors
and any other rights such Subsidiary Guarantor may have, contractual or
otherwise, shall be taken into account.
This Subsidiary Guarantee shall remain in full force and effect and
continue to be effective should any petition be filed by or against the Company
for liquidation or reorganization, should the Company become insolvent or make
an assignment for the benefit of creditors or should a receiver or trustee be
appointed for all or any part of the Company's assets, and shall, to the fullest
extent permitted by law, continue to be effective or be reinstated, as the case
may be, if at any time payment and performance of the Senior Notes is, pursuant
to applicable law, rescinded or reduced in amount, or must otherwise be restored
or returned by any Holder of the Senior Notes, whether as a "voidable
preference," "fraudulent transfer," or otherwise, all as though such payment or
performance had not been made. In the event that any payment, or any part
thereof, is rescinded, reduced, restored or returned, the Senior Notes shall, to
the fullest extent permitted by law, be reinstated and deemed reduced only by
such amount paid and not so rescinded, reduced, restored or returned.
By delivery of a supplemental indenture to the Trustee in accordance
with the terms of the Indenture, each Person that becomes a Subsidiary Guarantor
after the date of the Indenture will be deemed to have executed and delivered
this Subsidiary Guarantee for the benefit of the Holder of the Senior Notes upon
which this Subsidiary Guarantee is endorsed with the same effect as if such
Subsidiary Guarantor was named below and has executed and delivered this
Subsidiary Guarantee.
Subject to the next following paragraph, each Subsidiary Guarantor
hereby certifies and warrants that all acts, conditions and things required to
be done and performed and to have happened precedent to the creation and
issuance of this Subsidiary Guarantee and to constitute the same valid
obligation of the Subsidiary Guarantor have been done and performed and have
happened in due compliance with all applicable laws.
This Subsidiary Guarantee shall not be valid or obligatory for any
purpose until the certificate of authentication on the Senior Note upon which
this Subsidiary Guarantee is endorsed shall have been executed by the Trustee
under the Indenture.
Reference is made to the Indenture for further provisions with respect
to this Subsidiary Guarantee.
THIS SUBSIDIARY GUARANTEE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
CONFLICTS OF LAWS PRINCIPLES THEREOF.
Capitalized terms used herein have the same meanings given in the
Indenture unless otherwise indicated.
SIGNATURES
DATED: DELTA FUNDING CORPORATION
BY:
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NAME:
TITLE:
DATED: DF SPECIAL HOLDINGS CORPORATION
BY:
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NAME:
TITLE:
DATED: DFC FINANCIAL CORPORATION
BY:
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NAME:
TITLE:
DATED: FIDELITY MORTGAGE, INC.
BY:
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NAME:
TITLE:
DATED: DFC FINANCIAL OF CANADA LIMITED
BY:
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NAME:
TITLE:
DATED: DFC FUNDING OF CANADA LIMITED
BY:
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NAME:
TITLE:
DATED: CONTINENTAL PROPERTY MANAGEMENT CORP.
BY:
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NAME:
TITLE:
DATED: DELTA FUNDING RESIDUAL HOLDING TRUST 2000-1
BY:
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NAME:
TITLE:
DATED: DELTA FUNDING RESIDUAL HOLDING TRUST 2000-2
BY:
----------------------------------
NAME:
TITLE:
Exhibit C to Indenture
PLEDGE AGREEMENT
PLEDGE AND SECURITY AGREEMENT dated as of November ___, 2000, made by
DELTA FINANCIAL CORPORATION, a Delaware corporation, (the "PLEDGOR"), in favor
of U.S. BANK TRUST NATIONAL ASSOCIATION, as trustee and collateral agent (the
"AGENT") under that certain Indenture dated as of the date hereof (the
"INDENTURE") among Pledgor, the parties whose names and signatures appear on the
signature pages thereto under the heading "Subsidiary Guarantors" and the Agent.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, it is a condition precedent to the effectiveness of the
Indenture that the Pledgor shall have executed and delivered to the Agent a
pledge and security agreement providing for the pledge to the Agent of, and the
grant to the Agent of a security interest in (i) one hundred percent (100%) by
number all of the issued and outstanding shares of capital stock of the Domestic
Pledged Subsidiaries (as defined herein) from time to time owned by the Pledgor,
and (ii) sixty six percent (66.00%) by number all of the issued and outstanding
shares of capital stock of the Foreign Pledged Subsidiaries (as defined herein)
from time to time owned by the Pledgor;
WHEREAS, the Pledgor have determined that the execution, delivery and
performance of this Agreement directly benefits, and is in the best interest of
the Pledgor;
NOW, THEREFORE, in consideration of the premises and the agreements
herein and of other good and valuable consideration, the Pledgor hereby agrees
with the Agent as follows:
SECTION 1. DEFINITIONS. As used in this Agreement, capitalized terms
used herein without definition have the meanings specified in the Indenture or
if not defined in the Indenture, then in Article 8 or Article 9 of the Uniform
Commercial Code (the "CODE") currently in effect in the State of New York, and
the following terms shall have the following meanings:
"GOVERNMENTAL AUTHORITY" shall mean any nation or government, any
federal, state, city, town, municipality, county, local or other political
subdivision thereof or thereto and any department, commission, board, bureau,
instrumentality, agency or other entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.
SECTION 2. PLEDGE AND GRANT OF SECURITY INTEREST. As collateral
security for all of the Obligations (as defined in Section 3 hereof), the
Pledgor hereby pledges and collaterally assigns to the Agent, and grants to the
Agent a continuing security interest in, the following (collectively, the
"PLEDGED COLLATERAL"):
(a) the shares of stock, partnership interests, membership interests
and all other equity interests now or hereafter owned that are issued by any
corporation, partnership, limited liability company, trust or any other Person
formed in the United States, whether or not evidenced or represented by any
stock certificate, certificated security or any other instrument, including,
without limitation, the shares of stock, partnership interests and membership
interests set forth in Schedule I hereto (individually, a "DOMESTIC PLEDGED
SECURITY" and collectively, the "DOMESTIC PLEDGED SECURITIES") issued by Delta
Funding Corporation, a New York corporation, Fidelity Mortgage, Inc., a Delaware
corporation, and DFC Financial Corporation, a Delaware corporation, (each a
"DOMESTIC PLEDGED SUBSIDIARY" and collectively, the "DOMESTIC PLEDGED
SUBSIDIARIES"), the certificates representing the Domestic Pledged Securities,
all warrants, options and other rights, contractual or otherwise, in respect
thereof, and all dividends, interest, cash, instruments and other property
(including but not limited to, any stock dividend and any distribution in
connection with a stock split) from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of the
Domestic Pledged Securities, including, without limitation, by way of
redemption, bonus, preference, option rights or otherwise;
(b) (i) all additional shares of stock, partnership interests,
membership interests and all other equity interests from time to time acquired
of any Domestic Pledged Subsidiary, (ii) the certificates representing such
additional shares, partnership interests, membership interests or other equity
interests, as the case may be, and (iii) all options and other rights,
contractual or otherwise, in respect thereof and all dividends, distributions,
cash, instruments and other property from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of such
additional shares;
(c) the shares of stock, partnership interests, membership interests
and all other equity interests ("FOREIGN PLEDGED SECURITIES") now or hereafter
owned that are issued by any corporation, partnership, limited liability
company, trust or any other Person formed in any jurisdiction other than within
the United States (each, a "FOREIGN PLEDGED SUBSIDIARY" and collectively, the
"FOREIGN PLEDGED SUBSIDIARIES"), to the extent such securities and interests
would not cause the total securities pledged to exceed sixty six percent
(66.00%) of the aggregate securities or interests owned by the Pledgor, whether
or not evidenced or represented by any stock certificate, certificated security
or any other instrument, the certificates representing the Foreign Pledged
Securities, all warrants, options and other rights, contractual or otherwise, in
respect thereof, and all dividends, interest, cash, instruments and other
property (including but not limited to, any stock dividend and any distribution
in connection with a stock split) from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of the Foreign
Pledged Securities, including, without limitation, by way of redemption, bonus,
preference, option rights or otherwise; and
(d) all proceeds of any and all of the foregoing;
in each case, whether now owned or hereafter acquired by the Pledgor and
howsoever its respective interest therein may arise or appear (whether by
ownership, security interest, claim or otherwise).
SECTION 3. SECURITY FOR OBLIGATIONS. The security interest created
hereby in the Pledged Collateral constitutes continuing collateral security for
all of the following obligations whether now existing or hereafter incurred
(collectively, the "OBLIGATIONS"):
(a) the due and punctual payment of the principal and premium, if any,
of, and interest on, the Senior Notes when and as the same shall be due and
payable, by acceleration, repurchase, redemption or otherwise, interest on the
overdue principal of and interest (to the extent permitted by law), if any, on
the Senior Notes and under the Indenture (including, without limitation, all
interest that accrues after the commencement of any case, proceeding or other
action relating to the bankruptcy, insolvency or reorganization of the Pledgor);
(b) the due performance and observance by the Pledgor of all of its
other obligations from time to time existing in respect of the Indenture, the
Senior Notes, the Collateral Agreements and the Related Agreements; and
(c) all fees, costs, charges and expenses paid or incurred by the
Agent in connection with the creation, protection and preservation or
enforcement of its rights under any of the Indenture, the Senior Notes, the
Subsidiary Guarantees, the Collateral Agreements and the Related Agreements, on
a full indemnity basis.
SECTION 4. DELIVERY OF THE PLEDGED COLLATERAL.
(a) All certificates evidencing shares of stock (except for certain
Foreign Pledged Subsidiaries where interests in such entities are not
certificated), partnership interests, member interests and all other equity
interests currently representing Domestic Pledged Securities or the Foreign
Pledged Securities (collectively, the "PLEDGED SECURITIES") shall be delivered
to the Agent, together with any necessary endorsement and/or appropriate stock
transfer form duly executed in blank with respect to such Pledged Securities, on
or prior to the execution and delivery of this Agreement. All certificates
evidencing shares of stock, partnership interests, member interests and all
other equity interests constituting the Pledged Securities hereafter owned by
the Pledgor from time to time are hereby pledged to the Agent pursuant to the
terms of this Agreement (the "ADDITIONAL COLLATERAL") shall be delivered to the
Agent within ten (10) Business Days of receipt thereof by or on behalf of the
Pledgor. All such certificated shares of stock, partnership interests, member
interests and all other equity interest evidencing the Pledged Securities held
by or on behalf of the Agent pursuant hereto shall be delivered in suitable form
for transfer by delivery or shall be accompanied by duly executed instruments of
transfer or assignment in blank, all in form and substance reasonably
satisfactory to the Agent. Within ten (10) Business Days of the receipt by the
Pledgor of any Additional Collateral, a Pledge Amendment, duly executed by the
Pledgor, in substantially the form of Schedule II hereto (a "PLEDGE AMENDMENT")
shall be delivered to the Agent, in respect of the Additional Collateral which
are to be pledged pursuant to this Agreement. Each Pledge Amendment shall be
deemed (i) to amend Schedule I to this Agreement in case the Additional
Collateral consists of Domestic Pledged Securities and (ii) to constitute a
separate schedule to this Agreement in case the Additional Collateral consists
of Foreign Pledged Securities; in either case the absence of any Pledge
Amendment shall not in any way effect the validity of the pledge of the Pledged
Collateral made pursuant to this Agreement. The Pledgor hereby authorizes the
Agent to attach each Pledge Amendment to this Agreement and agree that all
certificates or instruments listed on any Pledge Amendment delivered to the
Agent shall for all purposes hereunder constitute Pledged Collateral and the
Pledgor shall be deemed upon delivery thereof to have made the representations
and warranties set forth in Section 5 with respect to such Additional
Collateral.
(b) If the Pledgor shall receive, by virtue of its being or having
been an owner of any Pledged Collateral, any (i) stock certificate (including,
without limitation, any certificate representing a stock dividend or
distribution in connection with any increase or reduction of capital,
reclassification, merger, consolidation, sale of assets, combination of shares,
stock split, spin-off or split-off) or other instrument, (ii) option or right,
whether as an addition to, substitution for, or in exchange for, any Pledged
Collateral, or otherwise, (iii) dividends payable in cash (except such dividends
permitted to be retained by the Pledgor pursuant to Section 7 hereof) or in
securities or other property, or (iv) dividends or other distributions in
connection with a partial or total liquidation or dissolution or in connection
with a reduction of capital, capital surplus or paid-in surplus, the Pledgor
shall receive such stock certificate, promissory note, instrument, option,
right, payment or distribution in trust for the benefit of the Agent, shall
segregate it from the Pledgor's other property and shall deliver it forthwith to
the Agent in the exact form received, with any necessary endorsement and/or
appropriate stock powers or stock transfer forms duly executed in blank, to be
held by the Agent as Pledged Collateral and as further collateral security for
the Obligations.
SECTION 5. REPRESENTATIONS AND WARRANTIES. The Pledgor represents and
warrants as follows:
(a) The Pledged Securities have been duly authorized and validly
issued, are fully paid and nonassessable and constitute the percentage by number
of the capital stock of each Pledged Subsidiary as set forth in Schedule I as of
the date hereof. The Pledgor is the beneficial and record owner of the
percentage by number of the Pledged Securities as set forth in Schedule I hereto
as of the date hereof. Except for the Pledged Securities set forth on Schedule I
hereto, the Pledgor does not own, beneficially or of record, any equity
securities of any Subsidiary that the Pledgor is permitted to pledge under the
terms of such Subsidiary's organizational documents or other contracts. All
other shares of stock constituting Pledged Collateral will be, when issued, duly
authorized and validly issued, fully paid and nonassessable. As of the date
hereof, the Pledgor does not own, beneficially or of record, any Foreign Pledged
Securities.
(b) It is and will be at all times the legal and beneficial owner of
the Pledged Collateral free and clear of any Lien, security interest, option or
other charge or encumbrance except for the security interest created by this
Agreement.
(c) The exercise by the Agent of any of its rights and remedies
hereunder will not contravene any law or any material contractual restriction
binding on or affecting it or any of its properties, and will not result in or
require the creation of any Lien, security interest or other charge or
encumbrance upon or with respect to any of its properties other than pursuant to
this Agreement or other Collateral Agreements.
(d) No authorization or approval or other action by, and no notice to
or filing with, any Governmental Authority is required to be obtained or made by
it for (i) the due execution, delivery and performance of this Agreement, (ii)
the grant, or the perfection, of the security interest purported to be created
hereby in the Pledged Collateral, or (iii) the exercise by the Agent of its
rights and remedies hereunder, except as may be required in connection with any
sale of any Pledged Collateral by laws affecting the offering and sale of
securities generally.
(e) This Agreement creates a valid security interest in favor of the
Agent in the Pledged Collateral, as security for the Obligations; PROVIDED,
HOWEVER, that the Agent has not required perfection to the extent that
perfection would be required under the laws of a country or jurisdiction other
than the United States of America. The possession by the Agent (or its
custodian, nominee or other designee) of the certificates evidencing shares of
stock, partnership interests, member interests and all other equity interests
constituting the Pledged Securities, and all other certificates evidencing
shares of stock, partnership interests, member interests and all other equity
interests constituting the Pledged Securities from time to time, and the filing
under the Code of the financing statement(s) in the offices described in
Schedule [ ] to the Security Agreement results in the perfection of such
security interest in any instruments and certificated securities constituting
Pledged Collateral. If any Pledged Collateral consists of uncertificated
securities, unless the immediately succeeding sentence is applicable thereto,
the Agent's security interest therein will be perfected when the Agent (or its
custodian, nominee or other designee ) becomes the registered holder thereof, or
upon the agreement of each issuer that it will comply with instructions
originated by the Agent with respect to such securities without further consent
by the Pledgor. If any Pledged Collateral consists of security entitlements, the
Agent's security interest therein will be perfected upon the filing of
appropriate UCC-1 Financing Statements, signed by the Pledgor, or upon the
agreement of any applicable securities intermediary to comply with entitlement
orders by the Agent without further consent by the Pledgor. Such security
interest is, or in the case of Pledged Collateral in which the Pledgor obtains
rights after the date hereof, will be, a perfected, first priority security
interest. All action necessary to perfect and protect such security interest has
been duly taken, except for the Agent's (or the Agent's custodian, nominee or
other designee ) having possession of the certificated shares of stock,
partnership interests, member interests and all other equity interests
constituting the Additional Collateral, after the date hereof and obtaining
control of uncertificated securities and securities entitlements constituting
Additional Collateral after the date hereof.
(f) There is no pending or, to the best of its knowledge, threatened
action, suit, proceeding or claim before any court or other Governmental
Authority or any arbitrator, or any order, judgment or award by any court or
other Governmental Authority or arbitrator, that may adversely affect the grant
or the perfection of the security interest purported to be created hereby in the
Pledged Collateral, or the exercise by the Agent of any of its rights or
remedies hereunder.
SECTION 6. COVENANTS AS TO THE PLEDGED COLLATERAL. So long as any
Obligations shall remain outstanding, the Pledgor will, unless the Agent shall
otherwise consent in writing:
(a) keep adequate records concerning the Pledged Collateral and permit
the Agent or any agents or representatives thereof at any time or from time to
time to examine and make copies of and abstracts from such records;
(b) at its expense, upon the request of the Agent, promptly deliver to
the Agent a copy of each material notice or other communication received by it
in respect of the Pledged Collateral;
(c) at its expense, defend the Agent's right, title and security
interest in and to the Pledged Collateral against the claims of any Person;
(d) at its expense, at any time and from time to time, promptly
execute and deliver all further instruments and documents and take all further
action that may be necessary or that the Agent may reasonably request in order
to (i) perfect and protect the security interest purported to be created hereby,
(ii) enable the Agent to exercise and enforce its rights and remedies hereunder
in respect of the Pledged Collateral, or (iii) otherwise effect the purposes of
this Agreement, including, without limitation, delivering to the Agent, after
the occurrence and during the continuation of an Event of Default irrevocable
proxies in respect of the Pledged Collateral;
(e) not sell, assign (by operation of law or otherwise), exchange or
otherwise dispose of any Pledged Collateral or any interest therein except as
permitted by Section 7(a)(i) hereof;
(f) not create or suffer to exist any Lien, security interest or other
charge or encumbrance upon or with respect to any Pledged Collateral except for
the security interest created hereby;
(g) not make or consent to any amendment or other modification or
waiver with respect to any Pledged Collateral or enter into any agreement or
permit to exist any restriction with respect to any Pledged Collateral other
than pursuant to the Collateral Agreements and applicable securities laws;
(h) not permit the issuance of (i) any additional shares of any class
of capital stock of a Pledged Subsidiary, (ii) any securities convertible
voluntarily by the holder thereof or automatically upon the occurrence or
non-occurrence of any event or condition into, or exchangeable for, any such
shares of capital stock, or (iii) any warrants, options, contracts or other
commitments entitling any Person to purchase or otherwise acquire any such
shares of capital stock; and
(i) not take or fail to take any action which would in any manner
impair the enforceability of the Agent's security interest in any Pledged
Collateral.
SECTION 7. VOTING RIGHTS, DIVIDENDS, ETC. IN RESPECT OF THE PLEDGED
COLLATERAL.
(a) So long as no Event of Default shall have occurred and be
continuing:
(i) the Pledgor may exercise any and all voting and other
consensual rights pertaining to any Pledged Collateral for any purpose not
inconsistent with the terms of this Agreement, the Indenture, the Senior Notes
or the other Collateral Agreements;
(ii) the Pledgor may receive and retain any and all dividends,
interest or other amounts paid in respect of the Pledged Collateral; PROVIDED,
HOWEVER, that any and all (A) dividends and interest paid or payable other than
in cash in respect of, and instruments and other property received, receivable
or otherwise distributed in respect of or in exchange for, any Pledged
Collateral, (B) dividends and other distributions paid or payable in cash in
respect of any Pledged Collateral in connection with a partial or total
liquidation or dissolution or in connection with a reduction of capital, capital
surplus or paid-in surplus, and (C) cash paid, payable or otherwise distributed
in redemption of, or in exchange for, any Pledged Collateral, shall be, and
shall forthwith be delivered to the Agent to hold as, Pledged Collateral or be
applied to the Obligations at the direction of the Pledgor, and shall, if
received by the Pledgor, be received in trust for the benefit of the Agent,
shall be segregated from the other property or funds of the Pledgor, and shall
be forthwith delivered to the Agent in the exact form received with any
necessary endorsement and/or appropriate stock powers duly executed in blank, to
be held by the Agent as Pledged Collateral and as further collateral security
for the Obligations; and
(iii) the Agent will execute and deliver (or cause to be executed
and delivered) to the Pledgor all such proxies and other instruments as the
Pledgor may reasonably request in writing for the purpose of enabling the
Pledgor to exercise the voting and other rights which it is entitled to exercise
pursuant to paragraph (i) of this Section 7(a) and to receive the dividends
which it is authorized to receive and retain pursuant to paragraph (ii) of this
Section 7(a).
(b) Upon the occurrence and during the continuance of an Event of
Default:
(i) all rights of the Pledgor to exercise the voting and other
consensual rights which it would otherwise be entitled to exercise pursuant to
paragraph (i) of subsection (a) of this Section 7, and to receive the dividends
and interest payments which it would otherwise be authorized to receive and
retain pursuant to paragraph (ii) of subsection (a) of this Section 7, shall
cease, and all such rights shall thereupon become vested in the Agent which
shall thereupon have the sole right to exercise such voting and other consensual
rights and to receive and hold as Pledged Collateral such dividends and interest
payments;
(ii) without limiting the generality of the foregoing, the Agent
may at its option exercise any and all rights of conversion, exchange,
subscription or any other rights, privileges or options pertaining to any of the
Pledged Collateral as if it were the absolute owner thereof, including, without
limitation, the right to exchange, in its discretion, any and all of the Pledged
Collateral upon the merger, consolidation, reorganization, recapitalization or
other adjustment of a Pledged Subsidiary, or upon the exercise by a Pledged
Subsidiary of any right, privilege or option pertaining to any Pledged
Collateral, and, in connection therewith, to deposit and deliver any and all of
the Pledged Collateral with any committee, depository, transfer agent, registrar
or other designated agent upon such terms and conditions as it may determine;
and
(iii) all dividends and interest payments which are received by
the Pledgor contrary to the provisions of paragraph (i) of this Section 7(b)
shall be received in trust for the benefit of the Agent, shall be segregated
from other funds of the Pledgor, and shall be forthwith paid over to the Agent
as Pledged Collateral in the exact form received with any necessary endorsement
and/or appropriate stock powers duly executed in blank, to be held by the Agent
as Pledged Collateral and as further collateral security for the Obligations.
SECTION 8. ADDITIONAL PROVISIONS CONCERNING THE PLEDGED COLLATERAL.
(a) The Pledgor hereby authorizes the Agent to file, without the
signature of the Pledgor where permitted by law, one or more financing or
continuation statements, and amendments thereto, relating to the Pledged
Collateral.
(b) The Pledgor hereby irrevocably appoints the Agent the Pledgor's
attorney-in-fact and proxy, with full authority in the place and stead of the
Pledgor and in the name of the Pledgor or otherwise, from time to time in the
Agent's discretion exercised reasonably and during the continuance of an Event
of Default, to take any action and to execute any instrument which the Agent may
deem necessary or reasonably advisable to accomplish the purposes of this
Agreement (subject to the rights of the Pledgor under Section 7(a) hereof),
including, without limitation, to receive, indorse and collect all instruments
made payable to the Pledgor representing any dividend, interest payment or other
distribution in respect of any Pledged Collateral and to give full discharge for
the same.
(c) During the occurrence and continuance of an Event of Default, if
the Pledgor fails to perform any agreement or obligation contained herein, the
Agent itself may perform, or cause performance of, such agreement or obligation,
and the expenses of the Agent incurred in connection therewith shall be payable
by the Pledgor (such obligation being joint and several in nature) pursuant to
Section 10 hereof.
(d) Other than the exercise of reasonable care to assure the safe
custody of the Pledged Collateral while held hereunder, the Agent shall have no
duty or liability to preserve rights pertaining thereto and shall be relieved of
all responsibility for the Pledged Collateral upon surrendering it or tendering
surrender of it to the Pledgor. The Agent shall be deemed to have exercised
reasonable care in the custody and preservation of the Pledged Collateral in its
possession if the Pledged Collateral is accorded treatment substantially equal
to that which the Agent accords its own property, it being understood that the
Agent shall not have responsibility for (i) ascertaining or taking action with
respect to calls, conversions, exchanges, maturities, tenders, or other matters
relating to any Pledged Collateral, whether or not the Agent has or is deemed to
have knowledge of such matters, or (ii) taking any necessary steps to preserve
rights against any parties with respect to any Pledged Collateral.
(e) The Agent may at any time after the occurrence and during the
continuation of an Event of Default in its discretion (i) without notice to the
Pledgor, transfer or register in the name of the Agent or any of its nominees
any or all of the Pledged Collateral, subject only to the revocable rights of
the Pledgor under Section 7(a) hereof, and (ii) exchange certificates or
instruments constituting Pledged Collateral for certificates or instruments of
smaller or larger denominations.
SECTION 9. REMEDIES UPON EVENT OF DEFAULT. If any Event of Default
shall have occurred and be continuing:
(a) The Agent may exercise in respect of the Pledged Collateral, in
addition to other rights and remedies provided for herein or otherwise available
to it, all of the rights and remedies of a secured party on default under the
Code then in effect in the State of New York; and without limiting the
generality of the foregoing and without notice except as specified below, sell
the Pledged Collateral or any part thereof in one or more parcels at public or
private sale, at any exchange or broker's board or elsewhere, at such price or
prices and on such other terms as the Agent may deem commercially reasonable.
The Pledgor agrees that, to the extent notice of sale shall be required by law,
at least ten (10) Business Days' notice to the Pledgor of the time and place of
any public sale or the time after which any private sale is to be made shall
constitute reasonable notification. The Agent shall not be obligated to make any
sale of Pledged Collateral regardless of notice of sale having been given. The
Agent may adjourn any public or private sale from time to time by announcement
at the time and place fixed therefor, and such sale may, without further notice,
be made at the time and place to which it was so adjourned.
(b) The Pledgor recognizes that it is impracticable to effect a public
sale of all or any part of the Pledged Securities or any other securities
constituting Pledged Collateral and that the Agent may, therefore, determine to
make one or more private sales of any such securities to a restricted group of
purchasers who will be obligated to agree, among other things, to acquire such
securities for their own account, for investment and not with a view to the
distribution or resale thereof. The Pledgor acknowledges that any such private
sale may be at prices and on terms less favorable to the seller than the prices
and other terms which might have been obtained at a public sale and,
notwithstanding the foregoing, agrees that such private sales shall be deemed to
have been made in a commercially reasonable manner and that the Agent shall have
no obligation to delay sale of any such securities for the period of time
necessary to permit the issuer of such securities to register such securities
for public sale under the Securities Act of 1933, as amended (the "SECURITIES
ACT"). The Pledgor further acknowledges and agrees that any offer to sell such
securities which has been (i) publicly advertised on a BONA FIDE basis in a
newspaper or other publication of general circulation in the financial community
of New York, New York (to the extent that such an offer may be so advertised
without prior registration under the Securities Act), or (ii) made privately in
the manner described above to not less than fifteen (15) BONA FIDE offerees
shall be deemed to involve a "public sale" for the purposes of Section 9-504(3)
of the Code (or any successor or similar, applicable statutory provision) as
then in effect in the State of New York, notwithstanding that such sale may not
constitute a "public offering" under the Securities Act, and that the Agent may,
in such event, bid for the purchase of such securities.
(c) Any cash held by the Agent as Pledged Collateral and all cash
proceeds received by the Agent in respect of any sale of, collection from, or
other realization upon, all or any part of the Pledged Collateral shall be held
by the Agent as collateral for, and/or then or at any time thereafter applied
(after payment of any amounts payable to the Agent pursuant to Section 10
hereof) in whole or in part by the Agent against, all or any part of the
Obligations as directed by the Pledgor consistent with the provisions of the
Indenture. Any surplus of such cash or cash proceeds held by the Agent and
remaining after payment in full of all of the Obligations shall be paid over to
the Pledgor or to such person as may be lawfully entitled to receive such
surplus.
(d) In the event that the proceeds of any such sale, collection or
realization are insufficient to pay all amounts to which the Agent is legally
entitled, the Pledgor shall be liable for the deficiency, together with interest
thereon at the highest rate specified in the Senior Notes for interest on
overdue principal thereof or such other rate as shall be fixed by applicable
law, together with the costs of collection and the reasonable fees and expenses
of any attorneys employed by the Agent to collect such deficiency.
SECTION 10. INDEMNITY AND EXPENSES.
(a) The Pledgor agrees to indemnify the Agent from and against any and
all claims, losses and liabilities growing out of or resulting from this
Agreement (including, without limitation, enforcement of this Agreement), except
claims, losses or liabilities resulting from the Agent's gross negligence or
willful misconduct as determined by a final judgment of a court of competent
jurisdiction.
(b) The Pledgor shall be obligated for, and will promptly pay to the
Agent, the amount of any and all reasonable costs and expenses, including the
reasonable fees and disbursements of the Agent's counsel and of any experts and
agents, which the Agent may incur in connection with (i) the administration of
this Agreement, (ii) the custody, preservation, use or operation of, or the sale
of, collection from, or other realization upon, any Pledged Collateral, (iii)
the exercise or enforcement of any of the rights of the Agent hereunder, or (iv)
the failure by any of the Pledgor to perform or observe any of the provisions
hereof.
SECTION 11. NOTICES, ETC. All notices and other communications
provided for hereunder shall be in writing and shall be mailed (by certified
mail, postage prepaid and return receipt requested), telecopied or delivered, if
to the Pledgor, to the address for the Pledgor specified in the Indenture, and
if to the Agent, to it at its address specified in the Indenture, or as to
either such Person at such other address as shall be designated by such Person
in a written notice to such other Person complying as to delivery with the terms
of this Section 11. All such notices and other communications shall be effective
(i) if sent by certified mail, return receipt requested, when received or three
(3) Business Days after mailing, whichever first occurs, (ii) if telecopied,
when transmitted and confirmation is received, provided same is on a Business
Day and, if not, on the next Business Day, or (iii) if delivered, upon delivery,
provided same is on a Business Day and, if not, on the next Business Day.
SECTION 12. CONSENT TO JURISDICTION, ETC.
(a) Any legal action or proceeding with respect to this Agreement or
any document related thereto may be brought in the courts of the State of New
York located in the borough of Manhattan or of the United States of America for
the Southern District of New York, and, by execution and delivery of this
Agreement, the Pledgor hereby accepts unconditionally the jurisdiction of the
aforesaid courts. The Pledgor hereby irrevocably waives any objection,
including, without limitation, any objection to the laying of venue or based on
the grounds of FORUM NON CONVENIENS, which the Pledgor may now or hereafter have
to the bringing of any such action or proceeding in such respective
jurisdictions.
(b) The Pledgor irrevocably consents to the service of process of any
of the aforementioned courts in any such action or proceeding by the mailing of
copies thereof by registered or certified mail, postage prepaid, to the Pledgor
at its address referred to in Section 11 hereof.
(c) Nothing contained in this Section 12 shall affect the right of the
Agent to serve legal process in any other manner permitted by law or to commence
legal proceedings or otherwise proceed against the Pledgor in any other
jurisdiction.
SECTION 13. WAIVER OF JURY TRIAL. THE PLEDGOR AND THE AGENT (BY
ACCEPTING THIS AGREEMENT) WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM CONCERNING ANY RIGHTS UNDER THIS AGREEMENT OR ANY
OTHER COLLATERAL AGREEMENTS OR ARISING FROM ANY OTHER COLLATERAL AGREEMENT AND
AGREE THAT ANY SUCH ACTION, PROCEEDING OR COUNTERCLAIM SHALL BE TRIED BEFORE A
COURT AND NOT BEFORE A JURY.
SECTION 14. MISCELLANEOUS.
(a) No amendment of any provision of this Agreement shall be effective
unless it is in writing and signed by the Pledgor, the Agent and the holders of
more than 50% of the outstanding principal amount of the Senior Notes, and no
waiver of any provision of this Agreement, and no consent to any departure by
the Pledgor therefrom, shall be effective unless it is in writing and signed by
the Agent and the holders of more than 50% of the outstanding principal amount
of the Senior Notes, and then such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given.
(b) No failure on the part of the Agent to exercise, and no delay in
exercising, any right hereunder or under any other document shall operate as a
waiver thereof; nor shall any single or partial exercise of any such right
preclude any other or further exercise thereof or the exercise of any other
right. The rights and remedies of the Agent provided herein are cumulative and
are in addition to, and not exclusive of, any rights or remedies provided by
law. The rights of the Agent under any document against any party thereto are
not conditional or contingent on any attempt by the Agent to exercise any of its
rights under any other document against such party or against any other person.
(c) Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining portions hereof or thereof or affecting the validity or enforceability
of such provision in any other jurisdiction.
(d) This Agreement shall create a continuing security interest in the
Pledged Collateral and shall (i) remain in full force and effect until the
payment and performance in full or release of the Obligations and the
termination of the Indenture, and (ii) be binding on the Pledgor and by its
acceptance hereof, the Agent, and their respective successors and assigns and
shall inure, together with all rights and remedies of the Agent hereunder, to
the benefit of the Pledgor, the Agent and its successors, transferees and
assigns. The Agent may resign at any time upon giving the Pledgor and the
Trustee thirty (30) days' prior written notice. The Agent shall continue to
serve until its successor, appointed by notice of the Pledgor, accepts
appointment as successor collateral agent and receives all property held by the
Agent under this Agreement. The holders of a majority in principal amount of the
outstanding Senior Notes may at any time remove the Agent by so notifying the
Pledgor and the Agent and may appoint a successor agent with the Pledgor's
consent, provided that after the occurrence of an Event of Default, the
Pledgor's consent shall not be required. The Pledgor may remove the Agent if:
(1) the Agent fails to fulfill its obligations hereunder;
(2) the Agent is adjudged a bankrupt or an insolvent;
(3) a receiver or other public officer takes charge of the
Agent or its property; or
(4) the Agent becomes incapable of acting.
If the Agent resigns or is removed or if a vacancy exists in the
office of Agent for any reason, the Company shall notify each Holder of such
event and the Holders of a majority in principal amount of the Senior Notes
shall promptly appoint a successor Agent. A successor Agent shall deliver a
written acceptance of its appointment to the retiring Agent, the Trustee and the
Pledgor. Immediately after that, the retiring Agent shall transfer all property
held by the retiring Agent under this Agreement to the successor, the
resignation or removal of the retiring Agent shall become effective, and the
successor Agent shall have all the rights, powers and duties of the Agent under
this Agreement. If a successor Agent does not take office within 60 days after
the retiring Agent resigns or is removed, the retiring Agent, the Company or the
Holders of at least 10% in principal amount of the outstanding Senior Notes may
petition any court of competent jurisdiction, at the expense of the Company, for
the appointment of a successor collateral agent. The terms and conditions of
this Agreement will remain unimpaired by resignation of the Agent or the
appointment of a successor collateral agent. Following the appointment of a
successor collateral agent, such person shall for all intents and purposes of
this Agreement be the "Agent" hereunder. None of the rights or obligations of
the Pledgor hereunder may be assigned or otherwise transferred without the prior
written consent of the Agent.
(e) Upon the satisfaction in full of Obligations and the termination
of the Indenture, (i) this Agreement and the security interest created hereby
shall terminate and all rights to the Pledged Collateral shall revert to the
Pledgor, and (ii) the Agent will, upon the Pledgor's request, and at the
Pledgor's expense, promptly (A) return to the Pledgor such of the Pledged
Collateral as shall not have been sold or otherwise disposed of or applied
pursuant to the terms hereof, and (B) execute and deliver to the Pledgor,
without recourse, representation or warranty, such documents as the Pledgor
shall reasonably request to evidence such termination.
(f) This Agreement shall be governed by and construed in accordance
with the law of the State of New York, except as required by mandatory
provisions of law and except to the extent that the validity and perfection or
the perfection and the effect of perfection or non-perfection of the security
interest created hereby, or remedies hereunder, in respect of any particular
Pledged Collateral are governed by the law of a jurisdiction other than the
State of New York.
(g) This Agreement may be executed in any number of counterparts and
by the different parties hereto on separate counterparts each of which, when so
executed, shall be deemed an original, but all such counterparts shall
constitute but one and the same instrument.
IN WITNESS WHEREOF, the Pledgor has caused this Agreement to be
executed and delivered by its officer thereunto duly authorized, as of the date
first above written.
PLEDGOR:
DELTA FINANCIAL CORPORATION
By:
--------------------------
Name:
Title:
ACCEPTED AND AGREED:
U.S. BANK TRUST NATIONAL ASSOCIATION,
as Agent
By:
-------------------
Name:
Title:
SCHEDULE I
TO
PLEDGE AGREEMENT
PLEDGED SECURITIES
NUMBER OF CERTIFICATE
NAME OF ISSUER SHARES/PERCENTAGE OF CLASS NO.(S)
OUTSTANDING SECURITY
Delta Funding
Corporation 100%
Fidelity Mortgage, Inc. 100%
DFC Financial
Corporation 100%
SCHEDULE II
TO
PLEDGE AGREEMENT
PLEDGE AMENDMENT
This Pledge Amendment, dated ___________________, is delivered
pursuant to Section 4 of the Pledge Agreement referred to below. The undersigned
hereby agrees that this Pledge Amendment may be attached to the Pledge
Agreement, dated November __, 2000, as it may heretofore have been or hereafter
may be amended or otherwise modified or supplemented from time to time and that
the shares listed on this Pledge Amendment shall be and become part of the
Pledged Collateral referred to in said Pledge Agreement and shall secure all of
the Obligations referred to in said Pledge Agreement.
DOMESTIC PLEDGED SECURITIES
NAME OF ISSUER NUMBER OF SHARES CLASS CERTIFICATE NO.(S)
-------------- ---------------- ----- ------------------
FOREIGN PLEDGED SECURITIES
NAME OF ISSUER NUMBER OF SHARES CLASS CERTIFICATE NO.(S)
-------------- ---------------- ----- ------------------
--------------------------------------
By:
---------------------------
Name:
----------------------
Title:
Exhibit C to Indenture
PLEDGE AGREEMENT
PLEDGE AND SECURITY AGREEMENT dated as of November ___, 2000, made by
DELTA FUNDING CORPORATION, a New York corporation, (the "PLEDGOR"), in favor of
U.S. BANK TRUST NATIONAL ASSOCIATION, as trustee and collateral agent (the
"AGENT") under that certain Indenture dated as of the date hereof (the
"INDENTURE") among DELTA FINANCIAL CORPORATION, as issuer, the parties whose
names and signatures appear on the signature pages thereto under the heading
"Subsidiary Guarantors" and the Agent.
W I T N E S S E T H:
WHEREAS, it is a condition precedent to the effectiveness of the
Indenture that the Pledgor shall have executed and delivered to the Agent a
pledge and security agreement providing for the pledge to the Agent of, and the
grant to the Agent of a security interest in (i) one hundred percent (100%) by
number all of the issued and outstanding shares of capital stock of the Domestic
Pledged Subsidiaries (as defined herein) from time to time owned by the Pledgor,
and (ii) sixty six percent (66.00%) by number all of the issued and outstanding
shares of capital stock of the Foreign Pledged Subsidiary (as defined herein)
from time to time owned by the Pledgor;
WHEREAS, the Pledgor have determined that the execution, delivery and
performance of this Agreement directly benefits, and is in the best interest of
the Pledgor;
NOW, THEREFORE, in consideration of the premises and the agreements
herein and of other good and valuable consideration, the Pledgor hereby agrees
with the Agent as follows:
SECTION 1. DEFINITIONS. As used in this Agreement, capitalized terms
used herein without definition have the meanings specified in the Indenture or
if not defined in the Indenture, then in Article 8 or Article 9 of the Uniform
Commercial Code (the "CODE") currently in effect in the State of New York, and
the following terms shall have the following meanings:
"GOVERNMENTAL AUTHORITY" shall mean any nation or government, any
federal, state, city, town, municipality, county, local or other political
subdivision thereof or thereto and any department, commission, board, bureau,
instrumentality, agency or other entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.
SECTION 2. PLEDGE AND GRANT OF SECURITY INTEREST. As collateral
security for all of the Obligations (as defined in Section 3 hereof), the
Pledgor hereby pledges and collaterally assigns to the Agent, and grants to the
Agent a continuing security interest in, the following (collectively, the
"PLEDGED COLLATERAL"):
(a) the shares of stock, partnership interests, membership interests
and all other equity interests now or hereafter owned that are issued by any
corporation, partnership, limited liability company, trust or any other Person
formed in the United States, whether or not evidenced or represented by any
stock certificate, certificated security or any other instrument, including,
without limitation, the shares of stock, partnership interests and membership
interests set forth in Schedule I hereto (individually, a "DOMESTIC PLEDGED
SECURITY" and collectively, the "DOMESTIC PLEDGED SECURITIES") issued by DF
Special Holdings Corporation, a Delaware corporation, and Continental Property
Management Corp., a New York corporation (each a "DOMESTIC PLEDGED SUBSIDIARY"
and collectively, the "DOMESTIC PLEDGED SUBSIDIARIES"), the certificates
representing the Domestic Pledged Securities, all warrants, options and other
rights, contractual or otherwise, in respect thereof, and all dividends,
interest, cash, instruments and other property (including but not limited to,
any stock dividend and any distribution in connection with a stock split) from
time to time received, receivable or otherwise distributed in respect of or in
exchange for any or all of the Domestic Pledged Securities, including, without
limitation, by way of redemption, bonus, preference, option rights or otherwise;
(b) (i) all additional shares of stock, partnership interests,
membership interests and all other equity interests from time to time acquired
of any Domestic Pledged Subsidiary, (ii) the certificates representing such
additional shares, partnership interests, membership interests or other equity
interests, as the case may be, and (iii) all options and other rights,
contractual or otherwise, in respect thereof and all dividends, distributions,
cash, instruments and other property from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of such
additional shares;
(c) the shares of stock, partnership interests, membership interests
and all other equity interests now or hereafter owned that are issued by any
corporation, partnership, limited liability company, trust or any other Person
formed in any jurisdiction other than within the United States, whether or not
evidenced or represented by any stock certificate, certificated security or any
other instrument to the extent such securities would not cause the total
securities pledged to exceed sixty six percent (66.00%) of the aggregate
securities or interests owned by the Pledgor, including, without limitation, the
shares of stock, partnership interests and membership interests set forth in
Schedule II hereto (individually, a "FOREIGN PLEDGED SECURITY" and collectively,
the "FOREIGN PLEDGED SECURITIES") issued by DFC Financial of Canada Limited, an
Ontario, Canada corporation (the "FOREIGN PLEDGED SUBSIDIARY"), the certificates
representing the Foreign Pledged Securities, all warrants, options and other
rights, contractual or otherwise, in respect thereof, and all dividends,
interest, cash, instruments and other property (including but not limited to,
any stock dividend and any distribution in connection with a stock split) from
time to time received, receivable or otherwise distributed in respect of or in
exchange for any or all of the Foreign Pledged Securities, including, without
limitation, by way of redemption, bonus, preference, option rights or otherwise;
(d) (i) all additional shares of stock, partnership interests,
membership interests and all other equity interests from time to time acquired
of the Foreign Pledged Subsidiary to the extent such additional shares and
interests would not cause the total shares pledged to exceed sixty six percent
(66.00%) of the aggregate shares or interests owned by the Pledgor, (ii) the
certificates representing such additional shares, partnership interests,
membership interests or other equity interests, as the case may be, and (iii)
all options and other rights, contractual or otherwise, in respect thereof and
all dividends, distributions, cash, instruments and other property from time to
time received, receivable or otherwise distributed in respect of or in exchange
for any or all of such additional shares; and
(e) all proceeds of any and all of the foregoing;
in each case, whether now owned or hereafter acquired by the Pledgor and
howsoever its respective interest therein may arise or appear (whether by
ownership, security interest, claim or otherwise).
SECTION 3. SECURITY FOR OBLIGATIONS. The security interest created
hereby in the Pledged Collateral constitutes continuing collateral security for
all of the following obligations whether now existing or hereafter incurred
(collectively, the "OBLIGATIONS"):
(a) the due and punctual payment of any and all amounts due and owing
by the Pledgor under the Subsidiary Guaranty;
(b) the due performance and observance by the Pledgor of all of its
other obligations from time to time existing in respect of the Indenture, the
Senior Notes, the Collateral Agreements and the Related Agreements; and
(c) all fees, costs, charges and expenses paid or incurred by the
Agent in connection with the creation, protection and preservation or
enforcement of its rights under any of the Indenture, the Senior Notes, the
Subsidiary Guarantees, the Collateral Agreements and the Related Agreements, on
a full indemnity basis.
SECTION 4. DELIVERY OF THE PLEDGED COLLATERAL.
(a) All certificates evidencing shares of stock ([except for certain
Foreign Pledged Subsidiaries where interests in such entities are not
certificated]), partnership interests, member interests and all other equity
interests currently representing the Domestic Pledged Securities or the Foreign
Pledged Securities (collectively, the "Pledged Securities") shall be delivered
to the Agent, together with any necessary endorsement and/or appropriate stock
transfer form duly executed in blank with respect to such Pledged Securities, on
or prior to the execution and delivery of this Agreement. All certificates
evidencing shares of stock, partnership interests, member interests and all
other equity interests constituting the Pledged Securities hereafter owned by
the Pledgor from time to time are hereby pledged to the Agent pursuant to the
terms of this Agreement (the "ADDITIONAL COLLATERAL") shall be delivered to the
Agent within ten (10) Business Days of receipt thereof by or on behalf of the
Pledgor. All such certificated shares of stock, partnership interests, member
interests and all other equity interest evidencing the Pledged Securities held
by or on behalf of the Agent pursuant hereto shall be delivered in suitable form
for transfer by delivery or shall be accompanied by duly executed instruments of
transfer or assignment in blank, all in form and substance reasonably
satisfactory to the Agent. Within ten (10) Business Days of the receipt by the
Pledgor of any Additional Collateral, a Pledge Amendment, duly executed by the
Pledgor, in substantially the form of Schedule III hereto (a "PLEDGE AMENDMENT")
shall be delivered to the Agent, in respect of the Additional Collateral which
are to be pledged pursuant to this Agreement, which Pledge Amendment shall from
and after delivery thereof constitute part of Schedules I and II hereto. Each
Pledge Amendment shall be deemed to amend only the Schedules I and II to this
Agreement, and the absence of any Pledge Amendment shall not in any way effect
the validity of the pledge of the Pledged Collateral made pursuant to this
Agreement. The Pledgor hereby authorizes the Agent to attach each Pledge
Amendment to this Agreement and agrees that all certificates or instruments
listed on any Pledge Amendment delivered to the Agent shall for all purposes
hereunder constitute Pledged Collateral and the Pledgor shall be deemed upon
delivery thereof to have made the representations and warranties set forth in
Section 5 with respect to such Additional Collateral.
(b) If the Pledgor shall receive, by virtue of its being or having
been an owner of any Pledged Collateral, any (i) stock certificate (including,
without limitation, any certificate representing a stock dividend or
distribution in connection with any increase or reduction of capital,
reclassification, merger, consolidation, sale of assets, combination of shares,
stock split, spin-off or split-off) or other instrument, (ii) option or right,
whether as an addition to, substitution for, or in exchange for, any Pledged
Collateral, or otherwise, (iii) dividends payable in cash (except such dividends
permitted to be retained by the Pledgor pursuant to Section 7 hereof) or in
securities or other property, or (iv) dividends or other distributions in
connection with a partial or total liquidation or dissolution or in connection
with a reduction of capital, capital surplus or paid-in surplus, the Pledgor
shall receive such stock certificate, promissory note, instrument, option,
right, payment or distribution in trust for the benefit of the Agent, shall
segregate it from the Pledgor's other property and shall deliver it forthwith to
the Agent in the exact form received, with any necessary endorsement and/or
appropriate stock powers or stock transfer forms duly executed in blank, to be
held by the Agent as Pledged Collateral and as further collateral security for
the Obligations.
SECTION 5. REPRESENTATIONS AND WARRANTIES. The Pledgor represents and
warrants as follows:
(a) The Pledged Securities have been duly authorized and validly
issued, are fully paid and nonassessable and constitute the percentage by number
of the capital stock of each Pledged Subsidiary as set forth in Schedules I and
II hereto as of the date hereof. The Pledgor is the beneficial and record owner
of the percentage by number of the Pledged Securities as set forth in Schedules
I and II hereto as of the date hereof. Except for the Pledged Securities set
forth on Schedules I and II hereto, the Pledgor does not own, beneficially or of
record, any equity securities of any Subsidiary that the Pledgor is permitted to
pledge under the terms of such Subsidiary's organizational documents or other
contracts. All other shares of stock constituting Pledged Collateral will be,
when issued, duly authorized and validly issued, fully paid and nonassessable.
(b) It is and will be at all times the legal and beneficial owner of
the Pledged Collateral free and clear of any Lien, security interest, option or
other charge or encumbrance except for the security interest created by this
Agreement.
(c) The exercise by the Agent of any of its rights and remedies
hereunder will not contravene any law or any material contractual restriction
binding on or affecting it or any of its properties, and will not result in or
require the creation of any Lien, security interest or other charge or
encumbrance upon or with respect to any of its properties other than pursuant to
this Agreement or other Collateral Agreements.
(d) No authorization or approval or other action by, and no notice to
or filing with, any Governmental Authority is required to be obtained or made by
it for (i) the due execution, delivery and performance of this Agreement, (ii)
the grant, or the perfection, of the security interest purported to be created
hereby in the Pledged Collateral, or (iii) the exercise by the Agent of its
rights and remedies hereunder, except as may be required in connection with any
sale of any Pledged Collateral by laws affecting the offering and sale of
securities generally.
(e) This Agreement creates a valid security interest in favor of the
Agent in the Pledged Collateral, as security for the Obligations; PROVIDED,
HOWEVER, that the Agent has not required perfection to the extent that
perfection would be required under the laws of a country or jurisdiction other
than the United States of America. The possession by the Agent (or its
custodian, nominee or other designee) of the certificates evidencing shares of
stock, partnership interests, member interests and all other equity interests
constituting the Pledged Securities, and all other certificates evidencing
shares of stock, partnership interests, member interests and all other equity
interests constituting the Pledged Securities from time to time, and the filing
under the Code of the financing statement(s) in the offices described in
Schedule VIII to the Security Agreement results in the perfection of such
security interest in any instruments and certificated securities constituting
Pledged Collateral. If any Pledged Collateral consists of uncertificated
securities, unless the immediately succeeding sentence is applicable thereto,
the Agent's security interest therein will be perfected when the Agent (or its
custodian, nominee or other designee ) becomes the registered holder thereof, or
upon the agreement of each issuer that it will comply with instructions
originated by the Agent with respect to such securities without further consent
by the Pledgor. If any Pledged Collateral consists of security entitlements, the
Agent's security interest therein will be perfected upon the filing of
appropriate UCC-1 Financing Statements, signed by the Pledgor, or upon the
agreement of any applicable securities intermediary to comply with entitlement
orders by the Agent without further consent by the Pledgor. Such security
interest is, or in the case of Pledged Collateral in which the Pledgor obtains
rights after the date hereof, will be, a perfected, first priority security
interest. All action necessary to perfect and protect such security interest has
been duly taken, except for the Agent's (or the Agent's custodian, nominee or
other designee ) having possession of the certificated shares of stock,
partnership interests, member interests and all other equity interests
constituting the Additional Collateral, after the date hereof and obtaining
control of uncertificated securities and securities entitlements constituting
Additional Collateral after the date hereof.
(f) There is no pending or, to the best of its knowledge, threatened
action, suit, proceeding or claim before any court or other Governmental
Authority or any arbitrator, or any order, judgment or award by any court or
other Governmental Authority or arbitrator, that may adversely affect the grant
or the perfection of the security interest purported to be created hereby in the
Pledged Collateral, or the exercise by the Agent of any of its rights or
remedies hereunder.
SECTION 6. COVENANTS AS TO THE PLEDGED COLLATERAL. So long as any
Obligations shall remain outstanding, the Pledgor will, unless the Agent shall
otherwise consent in writing:
(a) keep adequate records concerning the Pledged Collateral and permit
the Agent or any agents or representatives thereof at any time or from time to
time to examine and make copies of and abstracts from such records;
(b) at its expense, upon the request of the Agent, promptly deliver to
the Agent a copy of each material notice or other communication received by it
in respect of the Pledged Collateral;
(c) at its expense, defend the Agent's right, title and security
interest in and to the Pledged Collateral against the claims of any Person;
(d) at its expense, at any time and from time to time, promptly
execute and deliver all further instruments and documents and take all further
action that may be necessary or that the Agent may reasonably request in order
to (i) perfect and protect the security interest purported to be created hereby,
(ii) enable the Agent to exercise and enforce its rights and remedies hereunder
in respect of the Pledged Collateral, or (iii) otherwise effect the purposes of
this Agreement, including, without limitation, delivering to the Agent, after
the occurrence and during the continuation of an Event of Default, irrevocable
proxies in respect of the Pledged Collateral;
(e) not sell, assign (by operation of law or otherwise), exchange or
otherwise dispose of any Pledged Collateral or any interest therein except as
permitted by Section 7(a)(i) hereof;
(f) not create or suffer to exist any Lien, security interest or other
charge or encumbrance upon or with respect to any Pledged Collateral except for
the security interest created hereby;
(g) not make or consent to any amendment or other modification or
waiver with respect to any Pledged Collateral or enter into any agreement or
permit to exist any restriction with respect to any Pledged Collateral other
than pursuant to the Collateral Agreements and applicable securities laws;
(h) not permit the issuance of (i) any additional shares of any class
of capital stock of a Pledged Subsidiary, (ii) any securities convertible
voluntarily by the holder thereof or automatically upon the occurrence or
non-occurrence of any event or condition into, or exchangeable for, any such
shares of capital stock, or (iii) any warrants, options, contracts or other
commitments entitling any Person to purchase or otherwise acquire any such
shares of capital stock; and
(i) not take or fail to take any action which would in any manner
impair the enforceability of the Agent's security interest in any Pledged
Collateral.
SECTION 7. VOTING RIGHTS, DIVIDENDS, ETC. IN RESPECT OF THE PLEDGED
COLLATERAL.
(a) So long as no Event of Default shall have occurred and be
continuing:
(i) the Pledgor may exercise any and all voting and other
consensual rights pertaining to any Pledged Collateral for any purpose not
inconsistent with the terms of this Agreement, the Indenture, the Senior Notes
or the other Collateral Agreements;
(ii) the Pledgor may receive and retain any and all
dividends, interest or other amounts paid in respect of the Pledged Collateral;
PROVIDED, HOWEVER, that any and all (A) dividends and interest paid or payable
other than in cash in respect of, and instruments and other property received,
receivable or otherwise distributed in respect of or in exchange for, any
Pledged Collateral, (B) dividends and other distributions paid or payable in
cash in respect of any Pledged Collateral in connection with a partial or total
liquidation or dissolution or in connection with a reduction of capital, capital
surplus or paid-in surplus, and (C) cash paid, payable or otherwise distributed
in redemption of, or in exchange for, any Pledged Collateral, shall be, and
shall forthwith be delivered to the Agent to hold as, Pledged Collateral or be
applied to the Obligations at the direction of the Pledgor, and shall, if
received by the Pledgor, be received in trust for the benefit of the Agent,
shall be segregated from the other property or funds of the Pledgor, and shall
be forthwith delivered to the Agent in the exact form received with any
necessary endorsement and/or appropriate stock powers duly executed in blank, to
be held by the Agent as Pledged Collateral and as further collateral security
for the Obligations; and
(iii) the Agent will execute and deliver (or cause to be
executed and delivered) to the Pledgor all such proxies and other instruments as
the Pledgor may reasonably request in writing for the purpose of enabling the
Pledgor to exercise the voting and other rights which it is entitled to exercise
pursuant to paragraph (i) of this Section 7(a) and to receive the dividends
which it is authorized to receive and retain pursuant to paragraph (ii) of this
Section 7(a).
(b) Upon the occurrence and during the continuance of an Event of
Default:
(i) all rights of the Pledgor to exercise the voting and
other consensual rights which it would otherwise be entitled to exercise
pursuant to paragraph (i) of subsection (a) of this Section 7, and to receive
the dividends and interest payments which it would otherwise be authorized to
receive and retain pursuant to paragraph (ii) of subsection (a) of this Section
7, shall cease, and all such rights shall thereupon become vested in the Agent
which shall thereupon have the sole right to exercise such voting and other
consensual rights and to receive and hold as Pledged Collateral such dividends
and interest payments;
(ii) without limiting the generality of the foregoing, the
Agent may at its option exercise any and all rights of conversion, exchange,
subscription or any other rights, privileges or options pertaining to any of the
Pledged Collateral as if it were the absolute owner thereof, including, without
limitation, the right to exchange, in its discretion, any and all of the Pledged
Collateral upon the merger, consolidation, reorganization, recapitalization or
other adjustment of a Pledged Subsidiary, or upon the exercise by a Pledged
Subsidiary of any right, privilege or option pertaining to any Pledged
Collateral, and, in connection therewith, to deposit and deliver any and all of
the Pledged Collateral with any committee, depository, transfer agent, registrar
or other designated agent upon such terms and conditions as it may determine;
and
(iii) all dividends and interest payments which are received
by the Pledgor contrary to the provisions of paragraph (i) of this Section 7(b)
shall be received in trust for the benefit of the Agent, shall be segregated
from other funds of the Pledgor, and shall be forthwith paid over to the Agent
as Pledged Collateral in the exact form received with any necessary endorsement
and/or appropriate stock powers duly executed in blank, to be held by the Agent
as Pledged Collateral and as further collateral security for the Obligations.
SECTION 8. ADDITIONAL PROVISIONS CONCERNING THE PLEDGED COLLATERAL.
(a) The Pledgor hereby authorizes the Agent to file, without the
signature of the Pledgor where permitted by law, one or more financing or
continuation statements, and amendments thereto, relating to the Pledged
Collateral.
(b) The Pledgor hereby irrevocably appoints the Agent the Pledgor's
attorney-in-fact and proxy, with full authority in the place and stead of the
Pledgor and in the name of the Pledgor or otherwise, from time to time in the
Agent's discretion exercised reasonably and during the continuance of an Event
of Default, to take any action and to execute any instrument which the Agent may
deem necessary or reasonably advisable to accomplish the purposes of this
Agreement (subject to the rights of the Pledgor under Section 7(a) hereof),
including, without limitation, to receive, indorse and collect all instruments
made payable to the Pledgor representing any dividend, interest payment or other
distribution in respect of any Pledged Collateral and to give full discharge for
the same.
(c) During the occurrence and continuance of an Event of Default, if
the Pledgor fails to perform any agreement or obligation contained herein, the
Agent itself may perform, or cause performance of, such agreement or obligation,
and the expenses of the Agent incurred in connection therewith shall be payable
by the Pledgor (such obligation being joint and several in nature) pursuant to
Section 10 hereof.
(d) Other than the exercise of reasonable care to assure the safe
custody of the Pledged Collateral while held hereunder, the Agent shall have no
duty or liability to preserve rights pertaining thereto and shall be relieved of
all responsibility for the Pledged Collateral upon surrendering it or tendering
surrender of it to the Pledgor. The Agent shall be deemed to have exercised
reasonable care in the custody and preservation of the Pledged Collateral in its
possession if the Pledged Collateral is accorded treatment substantially equal
to that which the Agent accords its own property, it being understood that the
Agent shall not have responsibility for (i) ascertaining or taking action with
respect to calls, conversions, exchanges, maturities, tenders, or other matters
relating to any Pledged Collateral, whether or not the Agent has or is deemed to
have knowledge of such matters, or (ii) taking any necessary steps to preserve
rights against any parties with respect to any Pledged Collateral.
(e) The Agent may at any time after the occurrence and during the
continuation of an Event of Default in its discretion (i) without notice to the
Pledgor, transfer or register in the name of the Agent or any of its nominees
any or all of the Pledged Collateral, subject only to the revocable rights of
the Pledgor under Section 7(a) hereof, and (ii) exchange certificates or
instruments constituting Pledged Collateral for certificates or instruments of
smaller or larger denominations.
SECTION 9. REMEDIES UPON EVENT OF DEFAULT. If any Event of Default
shall have occurred and be continuing:
(a) The Agent may exercise in respect of the Pledged Collateral, in
addition to other rights and remedies provided for herein or otherwise available
to it, all of the rights and remedies of a secured party on default under the
Code then in effect in the State of New York; and without limiting the
generality of the foregoing and without notice except as specified below, sell
the Pledged Collateral or any part thereof in one or more parcels at public or
private sale, at any exchange or broker's board or elsewhere, at such price or
prices and on such other terms as the Agent may deem commercially reasonable.
The Pledgor agrees that, to the extent notice of sale shall be required by law,
at least ten (10) Business Days' notice to the Pledgor of the time and place of
any public sale or the time after which any private sale is to be made shall
constitute reasonable notification. The Agent shall not be obligated to make any
sale of Pledged Collateral regardless of notice of sale having been given. The
Agent may adjourn any public or private sale from time to time by announcement
at the time and place fixed therefor, and such sale may, without further notice,
be made at the time and place to which it was so adjourned.
(b) The Pledgor recognizes that it is impracticable to effect a public
sale of all or any part of the Pledged Securities or any other securities
constituting Pledged Collateral and that the Agent may, therefore, determine to
make one or more private sales of any such securities to a restricted group of
purchasers who will be obligated to agree, among other things, to acquire such
securities for their own account, for investment and not with a view to the
distribution or resale thereof. The Pledgor acknowledges that any such private
sale may be at prices and on terms less favorable to the seller than the prices
and other terms which might have been obtained at a public sale and,
notwithstanding the foregoing, agrees that such private sales shall be deemed to
have been made in a commercially reasonable manner and that the Agent shall have
no obligation to delay sale of any such securities for the period of time
necessary to permit the issuer of such securities to register such securities
for public sale under the Securities Act of 1933, as amended (the "SECURITIES
ACT"). The Pledgor further acknowledges and agrees that any offer to sell such
securities which has been (i) publicly advertised on a BONA FIDE basis in a
newspaper or other publication of general circulation in the financial community
of New York, New York (to the extent that such an offer may be so advertised
without prior registration under the Securities Act), or (ii) made privately in
the manner described above to not less than fifteen (15) BONA FIDE offerees
shall be deemed to involve a "public sale" for the purposes of Section 9-504(3)
of the Code (or any successor or similar, applicable statutory provision) as
then in effect in the State of New York, notwithstanding that such sale may not
constitute a "public offering" under the Securities Act, and that the Agent may,
in such event, bid for the purchase of such securities.
(c) Any cash held by the Agent as Pledged Collateral and all cash
proceeds received by the Agent in respect of any sale of, collection from, or
other realization upon, all or any part of the Pledged Collateral shall be held
by the Agent as collateral for, and/or then or at any time thereafter applied
(after payment of any amounts payable to the Agent pursuant to Section 10
hereof) in whole or in part by the Agent against, all or any part of the
Obligations as directed by the Pledgor consistent with the provisions of the
Indenture. Any surplus of such cash or cash proceeds held by the Agent and
remaining after payment in full of all of the Obligations shall be paid over to
the Pledgor or to such person as may be lawfully entitled to receive such
surplus.
(d) In the event that the proceeds of any such sale, collection or
realization are insufficient to pay all amounts to which the Agent is legally
entitled, the Pledgor shall be liable for the deficiency, together with interest
thereon at the highest rate specified in the Senior Notes for interest on
overdue principal thereof or such other rate as shall be fixed by applicable
law, together with the costs of collection and the reasonable fees and expenses
of any attorneys employed by the Agent to collect such deficiency.
SECTION 10. INDEMNITY AND EXPENSES.
(a) The Pledgor agrees to indemnify the Agent from and against any and
all claims, losses and liabilities growing out of or resulting from this
Agreement (including, without limitation, enforcement of this Agreement), except
claims, losses or liabilities resulting from the Agent's gross negligence or
willful misconduct as determined by a final judgment of a court of competent
jurisdiction.
(b) The Pledgor shall be obligated for, and will promptly pay to the
Agent, the amount of any and all reasonable costs and expenses, including the
reasonable fees and disbursements of the Agent's counsel and of any experts and
agents, which the Agent may incur in connection with (i) the administration of
this Agreement, (ii) the custody, preservation, use or operation of, or the sale
of, collection from, or other realization upon, any Pledged Collateral, (iii)
the exercise or enforcement of any of the rights of the Agent hereunder, or (iv)
the failure by any of the Pledgor to perform or observe any of the provisions
hereof.
SECTION 11. NOTICES, ETC. All notices and other communications
provided for hereunder shall be in writing and shall be mailed (by certified
mail, postage prepaid and return receipt requested), telecopied or delivered, if
to the Pledgor, to the address for the Pledgor specified in the Indenture, and
if to the Agent, to it at its address specified in the Indenture, or as to
either such Person at such other address as shall be designated by such Person
in a written notice to such other Person complying as to delivery with the terms
of this Section 11. All such notices and other communications shall be effective
(i) if sent by certified mail, return receipt requested, when received or three
(3) Business Days after mailing, whichever first occurs, (ii) if telecopied,
when transmitted and confirmation is received, provided same is on a Business
Day and, if not, on the next Business Day, or (iii) if delivered, upon delivery,
provided same is on a Business Day and, if not, on the next Business Day.
SECTION 12. CONSENT TO JURISDICTION, ETC.
(a) Any legal action or proceeding with respect to this Agreement or
any document related thereto may be brought in the courts of the State of New
York located in the borough of Manhattan or of the United States of America for
the Southern District of New York, and, by execution and delivery of this
Agreement, the Pledgor hereby accepts unconditionally the jurisdiction of the
aforesaid courts. The Pledgor hereby irrevocably waives any objection,
including, without limitation, any objection to the laying of venue or based on
the grounds of FORUM NON CONVENIENS, which the Pledgor may now or hereafter have
to the bringing of any such action or proceeding in such respective
jurisdictions.
(b) The Pledgor irrevocably consents to the service of process of any
of the aforementioned courts in any such action or proceeding by the mailing of
copies thereof by registered or certified mail, postage prepaid, to the Pledgor
at its address referred to in Section 11 hereof.
(c) Nothing contained in this Section 12 shall affect the right of the
Agent to serve legal process in any other manner permitted by law or to commence
legal proceedings or otherwise proceed against the Pledgor in any other
jurisdiction.
SECTION 13. WAIVER OF JURY TRIAL. THE PLEDGOR AND THE AGENT (BY
ACCEPTING THIS AGREEMENT) WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM CONCERNING ANY RIGHTS UNDER THIS AGREEMENT OR ANY
OTHER COLLATERAL AGREEMENTS OR ARISING FROM ANY OTHER COLLATERAL AGREEMENT AND
AGREE THAT ANY SUCH ACTION, PROCEEDING OR COUNTERCLAIM SHALL BE TRIED BEFORE A
COURT AND NOT BEFORE A JURY.
SECTION 14. MISCELLANEOUS.
(a) No amendment of any provision of this Agreement shall be effective
unless it is in writing and signed by the Pledgor, the Agent and the holders of
more than 50% of the outstanding principal amount of the Senior Notes, and no
waiver of any provision of this Agreement, and no consent to any departure by
the Pledgor therefrom, shall be effective unless it is in writing and signed by
the Agent and the holders of more than 50% of the outstanding principal amount
of the Senior Notes, and then such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given.
(b) No failure on the part of the Agent to exercise, and no delay in
exercising, any right hereunder or under any other document shall operate as a
waiver thereof; nor shall any single or partial exercise of any such right
preclude any other or further exercise thereof or the exercise of any other
right. The rights and remedies of the Agent provided herein are cumulative and
are in addition to, and not exclusive of, any rights or remedies provided by
law. The rights of the Agent under any document against any party thereto are
not conditional or contingent on any attempt by the Agent to exercise any of its
rights under any other document against such party or against any other person.
(c) Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining portions hereof or thereof or affecting the validity or enforceability
of such provision in any other jurisdiction.
(d) This Agreement shall create a continuing security interest in the
Pledged Collateral and shall (i) remain in full force and effect until the
payment and performance in full or release of the Obligations and the
termination of the Indenture, and (ii) be binding on the Pledgor and by its
acceptance hereof, the Agent, and their respective successors and assigns and
shall inure, together with all rights and remedies of the Agent hereunder, to
the benefit of the Pledgor, the Agent and its successors, transferees and
assigns. The Agent may resign at any time upon giving the Pledgor and the
Trustee thirty (30) days' prior written notice. The Agent shall continue to
serve until its successor, appointed by notice of the Pledgor, accepts
appointment as successor collateral agent and receives all property held by the
Agent under this Agreement. The holders of a majority in principal amount of the
outstanding Senior Notes may at any time remove the Agent by so notifying the
Pledgor and the Agent and may appoint a successor agent with the Pledgor's
consent, provided that after the occurrence of an Event of Default, the
Pledgor's consent shall not be required. The Pledgor may remove the Agent if:
(1) the Agent fails to fulfill its obligations hereunder;
(2) the Agent is adjudged a bankrupt or an insolvent;
(3) a receiver or other public officer takes charge of the
Agent or its property; or
(4) the Agent becomes incapable of acting.
If the Agent resigns or is removed or if a vacancy exists in the
office of Agent for any reason, the Company shall notify each Holder of such
event and the Holders of a majority in principal amount of the Senior Notes
shall promptly appoint a successor Agent. A successor Agent shall deliver a
written acceptance of its appointment to the retiring Agent, the Trustee and the
Pledgor. Immediately after that, the retiring Agent shall transfer all property
held by the retiring Agent under this Agreement to the successor, the
resignation or removal of the retiring Agent shall become effective, and the
successor Agent shall have all the rights, powers and duties of the Agent under
this Agreement. If a successor Agent does not take office within 60 days after
the retiring Agent resigns or is removed, the retiring Agent, the Company or the
Holders of at least 10% in principal amount of the outstanding Senior Notes may
petition any court of competent jurisdiction, at the expense of the Company, for
the appointment of a successor collateral agent. The terms and conditions of
this Agreement will remain unimpaired by resignation of the Agent or the
appointment of a successor collateral agent. Following the appointment of a
successor collateral agent, such person shall for all intents and purposes of
this Agreement be the "Agent" hereunder. None of the rights or obligations of
the Pledgor hereunder may be assigned or otherwise transferred without the prior
written consent of the Agent.
(e) Upon the satisfaction in full of Obligations and the termination
of the Indenture, (i) this Agreement and the security interest created hereby
shall terminate and all rights to the Pledged Collateral shall revert to the
Pledgor, and (ii) the Agent will, upon the Pledgor's request, and at the
Pledgor's expense, promptly (A) return to the Pledgor such of the Pledged
Collateral as shall not have been sold or otherwise disposed of or applied
pursuant to the terms hereof, and (B) execute and deliver to the Pledgor,
without recourse, representation or warranty, such documents as the Pledgor
shall reasonably request to evidence such termination.
(f) This Agreement shall be governed by and construed in accordance
with the law of the State of New York, except as required by mandatory
provisions of law and except to the extent that the validity and perfection or
the perfection and the effect of perfection or non-perfection of the security
interest created hereby, or remedies hereunder, in respect of any particular
Pledged Collateral are governed by the law of a jurisdiction other than the
State of New York.
(g) This Agreement may be executed in any number of counterparts and
by the different parties hereto on separate counterparts each of which, when so
executed, shall be deemed an original, but all such counterparts shall
constitute but one and the same instrument.
IN WITNESS WHEREOF, the Pledgor has caused this Agreement to be
executed and delivered by its officer thereunto duly authorized, as of the date
first above written.
PLEDGOR:
DELTA FUNDING CORPORATION
By:
--------------------------
Name:
Title:
ACCEPTED AND AGREED:
U.S. BANK TRUST NATIONAL ASSOCIATION,
as Agent
By:
-------------------
Name:
Title:
SCHEDULE I TO PLEDGE AGREEMENT
DOMESTIC PLEDGED SECURITIES
NUMBER OF CERTIFICATE
NAME OF ISSUER SHARES/PERCENTAGE OF CLASS NO.(S)
OUTSTANDING SECURITY
DF Special Holdings
Corporation 100%
Continental Property
Management Corp. 100%
SCHEDULE II TO PLEDGE AGREEMENT
FOREIGN PLEDGED SECURITIES
NUMBER OF CERTIFICATE
NAME OF ISSUER SHARES/PERCENTAGE OF CLASS NO.(S)
OUTSTANDING SECURITY
DFC Financial of
Canada Limited 66%
SCHEDULE III
TO
PLEDGE AGREEMENT
PLEDGE AMENDMENT
This Pledge Amendment, dated ___________________, is delivered
pursuant to Section 4 of the Pledge Agreement referred to below. The undersigned
hereby agrees that this Pledge Amendment may be attached to the Pledge
Agreement, dated November __, 2000, as it may heretofore have been or hereafter
may be amended or otherwise modified or supplemented from time to time and that
the shares listed on this Pledge Amendment shall be and become part of the
Pledged Collateral referred to in said Pledge Agreement and shall secure all of
the Obligations referred to in said Pledge Agreement.
DOMESTIC PLEDGED SECURITIES
NAME OF ISSUER NUMBER OF SHARES CLASS CERTIFICATE NO.(S)
FOREIGN PLEDGED SECURITIES
NAME OF ISSUER NUMBER OF SHARES CLASS CERTIFICATE NO.(S)
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By:
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Name:
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Title:
Exhibit C to Indenture
PLEDGE AGREEMENT
PLEDGE AND SECURITY AGREEMENT dated as of November ___, 2000, made by
DFC FINANCIAL OF CANADA LIMITED, an Ontario, Canada corporation (the "PLEDGOR"),
in favor of U.S. BANK TRUST NATIONAL ASSOCIATION, as trustee and collateral
agent (the "AGENT") under that certain Indenture dated as of the date hereof
(the "INDENTURE") among DELTA FINANCIAL CORPORATION, a Delaware corporation, as
issuer, the parties whose names and signatures appear on the signature pages
thereto under the heading "Subsidiary Guarantors" and the Agent.
W I T N E S S E T H:
WHEREAS, it is a condition precedent to the effectiveness of the
Indenture that the Pledgor shall have executed and delivered to the Agent a
pledge and security agreement providing for the pledge to the Agent of, and the
grant to the Agent of a security interest in (i) one hundred percent (100%) by
number all of the issued and outstanding shares of capital stock of the Domestic
Pledged Subsidiaries (as defined herein) from time to time owned by the Pledgor,
and (ii) sixty six percent (66.00%) by number all of the issued and outstanding
shares of capital stock of the Foreign Pledged Subsidiary (as defined herein)
from time to time owned by the Pledgor;
WHEREAS, the Pledgor have determined that the execution, delivery and
performance of this Agreement directly benefits, and is in the best interest of
the Pledgor;
NOW, THEREFORE, in consideration of the premises and the agreements
herein and of other good and valuable consideration, the Pledgor hereby agrees
with the Agent as follows:
SECTION 1. DEFINITIONS. As used in this Agreement, capitalized terms
used herein without definition have the meanings specified in the Indenture or
if not defined in the Indenture, then in Article 8 or Article 9 of the Uniform
Commercial Code (the "CODE") currently in effect in the State of New York, and
the following terms shall have the following meanings:
"GOVERNMENTAL AUTHORITY" shall mean any nation or government, any
federal, state, city, town, municipality, county, local or other political
subdivision thereof or thereto and any department, commission, board, bureau,
instrumentality, agency or other entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.
SECTION 2. PLEDGE AND GRANT OF SECURITY INTEREST. As collateral
security for all of the Obligations (as defined in Section 3 hereof), the
Pledgor hereby pledges and collaterally assigns to the Agent, and grants to the
Agent a continuing security interest in, the following (collectively, the
"PLEDGED COLLATERAL"):
(a) the shares of stock, partnership interests, membership interests
and all other equity interests now or hereafter owned (the "DOMESTIC PLEDGED
SECURITIES") that are issued by any corporation, partnership, limited liability
company, trust or any other Person formed in the United States (each a "DOMESTIC
PLEDGED SUBSIDIARY"), whether or not evidenced or represented by any stock
certificate, certificated security or any other instrument the certificates
representing the Domestic Pledged Securities, all warrants, options and other
rights, contractual or otherwise, in respect thereof, and all dividends,
interest, cash, instruments and other property (including but not limited to,
any stock dividend and any distribution in connection with a stock split) from
time to time received, receivable or otherwise distributed in respect of or in
exchange for any or all of the Domestic Pledged Securities, including, without
limitation, by way of redemption, bonus, preference, option rights or otherwise;
(b) the shares of stock, partnership interests, membership interests
and all other equity interests now or hereafter owned that are issued by any
corporation, partnership, limited liability company, trust or any other Person
formed in any jurisdiction other than within the United States, whether or not
evidenced or represented by any stock certificate, certificated security or any
other instrument to the extent such securities and interests would not cause the
total securities pledged to exceed sixty six percent (66.00%) of the aggregate
securities or interests owned by the Pledgor, including, without limitation, the
shares of stock, partnership interests and membership interests set forth in
Schedule I hereto (individually, a "FOREIGN PLEDGED SECURITY" and collectively,
the "FOREIGN PLEDGED SECURITIES" and together with the Domestic Pledged
Securities, the "FOREIGN PLEDGED SECURITIES") issued by DFC Funding of Canada
Limited, an Ontario, Canada corporation (the "FOREIGN PLEDGED SUBSIDIARY"); the
Domestic Pledged Subsidiaries and the Foreign Pledged Subsidiary shall be
referred to herein collectively as the "FOREIGN PLEDGED SUBSIDIARIES"), the
certificates representing the Foreign Pledged Securities, all warrants, options
and other rights, contractual or otherwise, in respect thereof, and all
dividends, interest, cash, instruments and other property (including but not
limited to, any stock dividend and any distribution in connection with a stock
split) from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of the Foreign Pledged Securities,
including, without limitation, by way of redemption, bonus, preference, option
rights or otherwise;
(c) (i) all additional shares of stock, partnership interests,
membership interests and all other equity interests from time to time acquired
of the Foreign Pledged Subsidiary to the extent such additional shares and
interests would not cause the total shares pledged to exceed sixty six percent
(66.00%) of the aggregate shares or interests owned by the Pledgor, (ii) the
certificates representing such additional shares, partnership interests,
membership interests or other equity interests, as the case may be, and (iii)
all options and other rights, contractual or otherwise, in respect thereof and
all dividends, distributions, cash, instruments and other property from time to
time received, receivable or otherwise distributed in respect of or in exchange
for any or all of such additional shares; and
(d) all proceeds of any and all of the foregoing;
in each case, whether now owned or hereafter acquired by the Pledgor and
howsoever its respective interest therein may arise or appear (whether by
ownership, security interest, claim or otherwise).
SECTION 3. SECURITY FOR OBLIGATIONS. The security interest created
hereby in the Pledged Collateral constitutes continuing collateral security for
all of the following obligations whether now existing or hereafter incurred
(collectively, the "OBLIGATIONS"):
(a) the due and punctual payment of any and all amounts due and owing
by the Pledgor under the Subsidiary Guaranty to which the Pledgor is a party;
(b) the due performance and observance by the Pledgor of all of its
other obligations from time to time existing in respect of the Indenture, the
Senior Notes, the Collateral Agreements and the Related Agreements; and
(c) all fees, costs, charges and expenses paid or incurred by the
Agent in connection with the creation, protection and preservation or
enforcement of its rights under any of the Indenture, the Senior Notes, the
Subsidiary Guarantees, the Collateral Agreements and the Related Agreements, on
a full indemnity basis.
SECTION 4. DELIVERY OF THE PLEDGED COLLATERAL.
(a) All certificates evidencing shares of stock [(except for certain
Foreign Pledged Subsidiaries where interests in such entities are not
certificated)], partnership interests, member interests and all other equity
interests currently representing the Domestic Pledged Securities or the Foreign
Pledged Securities (collectively, the "Pledged Securities") shall be delivered
to the Agent, together with any necessary endorsement and/or appropriate stock
transfer form duly executed in blank with respect to such Pledged Securities, on
or prior to the execution and delivery of this Agreement. All certificates
evidencing shares of stock, partnership interests, member interests and all
other equity interests constituting the Pledged Securities hereafter owned by
the Pledgor from time to time are hereby pledged to the Agent pursuant to the
terms of this Agreement (the "ADDITIONAL COLLATERAL") shall be delivered to the
Agent within ten (10) Business Days of receipt thereof by or on behalf of the
Pledgor. All such certificated shares of stock, partnership interests, member
interests and all other equity interest evidencing the Pledged Securities held
by or on behalf of the Agent pursuant hereto shall be delivered in suitable form
for transfer by delivery or shall be accompanied by duly executed instruments of
transfer or assignment in blank, all in form and substance reasonably
satisfactory to the Agent. Within ten (10) Business Days of the receipt by the
Pledgor of any Additional Collateral, a Pledge Amendment, duly executed by the
Pledgor, in substantially the form of Schedule II hereto (a "PLEDGE AMENDMENT")
shall be delivered to the Agent, in respect of the Additional Collateral which
are to be pledged pursuant to this Agreement. Each Pledge Amendment shall be
deemed (i) to amend Schedule I to this Agreement in case the Additional
Collateral consists of Foreign Pledged Securities and (ii) to constitute a
separate schedule to this Agreement in case the Additional Collateral consists
of Domestic Pledged Securities; in either case the absence of any Pledge
Amendment shall not in any way effect the validity of the pledge of the Pledged
Collateral made pursuant to this Agreement. The Pledgor hereby authorizes the
Agent to attach each Pledge Amendment to this Agreement and agrees that all
certificates or instruments listed on any Pledge Amendment delivered to the
Agent shall for all purposes hereunder constitute Pledged Collateral and the
Pledgor shall be deemed upon delivery thereof to have made the representations
and warranties set forth in Section 5 with respect to such Additional
Collateral.
(b) If the Pledgor shall receive, by virtue of its being or having
been an owner of any Pledged Collateral, any (i) stock certificate (including,
without limitation, any certificate representing a stock dividend or
distribution in connection with any increase or reduction of capital,
reclassification, merger, consolidation, sale of assets, combination of shares,
stock split, spin-off or split-off) or other instrument, (ii) option or right,
whether as an addition to, substitution for, or in exchange for, any Pledged
Collateral, or otherwise, (iii) dividends payable in cash (except such dividends
permitted to be retained by the Pledgor pursuant to Section 7 hereof) or in
securities or other property, or (iv) dividends or other distributions in
connection with a partial or total liquidation or dissolution or in connection
with a reduction of capital, capital surplus or paid-in surplus, the Pledgor
shall receive such stock certificate, promissory note, instrument, option,
right, payment or distribution in trust for the benefit of the Agent, shall
segregate it from the Pledgor's other property and shall deliver it forthwith to
the Agent in the exact form received, with any necessary endorsement and/or
appropriate stock powers or stock transfer forms duly executed in blank, to be
held by the Agent as Pledged Collateral and as further collateral security for
the Obligations.
SECTION 5. REPRESENTATIONS AND WARRANTIES. The Pledgor represents and
warrants as follows:
(a) The Pledged Securities have been duly authorized and validly
issued, are fully paid and nonassessable and constitute the percentage by number
of the capital stock of each Pledged Subsidiary as set forth in Schedule I
hereto as of the date hereof. The Pledgor is the beneficial and record owner of
the percentage by number of the Pledged Securities as set forth in Schedule I
hereto as of the date hereof. Except for the Pledged Securities set forth on
Schedule I hereto, the Pledgor does not own, beneficially or of record, any
equity securities of any Subsidiary that the Pledgor is permitted to pledge
under the terms of such Subsidiary's organizational documents or other
contracts. All other shares of stock constituting Pledged Collateral will be,
when issued, duly authorized and validly issued, fully paid and nonassessable.
As of the date hereof, the Pledgor does not own, beneficially or of record, any
Domestic Pledged Securities.
(b) It is and will be at all times the legal and beneficial owner of
the Pledged Collateral free and clear of any Lien, security interest, option or
other charge or encumbrance except for the security interest created by this
Agreement.
(c) The exercise by the Agent of any of its rights and remedies
hereunder will not contravene any law or any material contractual restriction
binding on or affecting it or any of its properties, and will not result in or
require the creation of any Lien, security interest or other charge or
encumbrance upon or with respect to any of its properties other than pursuant to
this Agreement or other Collateral Agreements.
(d) No authorization or approval or other action by, and no notice to
or filing with, any Governmental Authority is required to be obtained or made by
it for (i) the due execution, delivery and performance of this Agreement, (ii)
the grant, or the perfection, of the security interest purported to be created
hereby in the Pledged Collateral, or (iii) the exercise by the Agent of its
rights and remedies hereunder, except as may be required in connection with any
sale of any Pledged Collateral by laws affecting the offering and sale of
securities generally.
(e) This Agreement creates a valid security interest in favor of the
Agent in the Pledged Collateral, as security for the Obligations; PROVIDED,
HOWEVER, that the Agent has not required perfection to the extent that
perfection would be required under the laws of a country or jurisdiction other
than the United States of America. The possession by the Agent (or its
custodian, nominee or other designee) of the certificates evidencing shares of
stock, partnership interests, member interests and all other equity interests
constituting the Pledged Securities, and all other certificates evidencing
shares of stock, partnership interests, member interests and all other equity
interests constituting the Pledged Securities from time to time, and the filing
under the Code of the financing statement(s) in the offices described in
Schedule [ ] to the Security Agreement results in the perfection of such
security interest in any instruments and certificated securities constituting
Pledged Collateral. If any Pledged Collateral consists of uncertificated
securities, unless the immediately succeeding sentence is applicable thereto,
the Agent's security interest therein will be perfected when the Agent (or its
custodian, nominee or other designee ) becomes the registered holder thereof, or
upon the agreement of each issuer that it will comply with instructions
originated by the Agent with respect to such securities without further consent
by the Pledgor. If any Pledged Collateral consists of security entitlements, the
Agent's security interest therein will be perfected upon the filing of
appropriate UCC-1 Financing Statements, signed by the Pledgor, or upon the
agreement of any applicable securities intermediary to comply with entitlement
orders by the Agent without further consent by the Pledgor. Such security
interest is, or in the case of Pledged Collateral in which the Pledgor obtains
rights after the date hereof, will be, a perfected, first priority security
interest. All action necessary to perfect and protect such security interest has
been duly taken, except for the Agent's (or the Agent's custodian, nominee or
other designee ) having possession of the certificated shares of stock,
partnership interests, member interests and all other equity interests
constituting the Additional Collateral, after the date hereof and obtaining
control of uncertificated securities and securities entitlements constituting
Additional Collateral after the date hereof.
(f) There is no pending or, to the best of its knowledge, threatened
action, suit, proceeding or claim before any court or other Governmental
Authority or any arbitrator, or any order, judgment or award by any court or
other Governmental Authority or arbitrator, that may adversely affect the grant
or the perfection of the security interest purported to be created hereby in the
Pledged Collateral, or the exercise by the Agent of any of its rights or
remedies hereunder.
SECTION 6. COVENANTS AS TO THE PLEDGED COLLATERAL. So long as any
Obligations shall remain outstanding, the Pledgor will, unless the Agent shall
otherwise consent in writing:
(a) keep adequate records concerning the Pledged Collateral and permit
the Agent or any agents or representatives thereof at any time or from time to
time to examine and make copies of and abstracts from such records;
(b) at its expense, upon the request of the Agent, promptly deliver to
the Agent a copy of each material notice or other communication received by it
in respect of the Pledged Collateral;
(c) at its expense, defend the Agent's right, title and security
interest in and to the Pledged Collateral against the claims of any Person;
(d) at its expense, at any time and from time to time, promptly
execute and deliver all further instruments and documents and take all further
action that may be necessary or that the Agent may reasonably request in order
to (i) perfect and protect the security interest purported to be created hereby,
(ii) enable the Agent to exercise and enforce its rights and remedies hereunder
in respect of the Pledged Collateral, or (iii) otherwise effect the purposes of
this Agreement, including, without limitation, delivering to the Agent, after
the occurrence and during the continuation of an Event of Default, irrevocable
proxies in respect of the Pledged Collateral;
(e) not sell, assign (by operation of law or otherwise), exchange or
otherwise dispose of any Pledged Collateral or any interest therein except as
permitted by Section 7(a)(i) hereof;
(f) not create or suffer to exist any Lien, security interest or other
charge or encumbrance upon or with respect to any Pledged Collateral except for
the security interest created hereby;
(g) not make or consent to any amendment or other modification or
waiver with respect to any Pledged Collateral or enter into any agreement or
permit to exist any restriction with respect to any Pledged Collateral other
than pursuant to the Collateral Agreements and applicable securities laws;
(h) not permit the issuance of (i) any additional shares of any class
of capital stock of a Pledged Subsidiary, (ii) any securities convertible
voluntarily by the holder thereof or automatically upon the occurrence or
non-occurrence of any event or condition into, or exchangeable for, any such
shares of capital stock, or (iii) any warrants, options, contracts or other
commitments entitling any Person to purchase or otherwise acquire any such
shares of capital stock; and
(i) not take or fail to take any action which would in any manner
impair the enforceability of the Agent's security interest in any Pledged
Collateral.
SECTION 7. VOTING RIGHTS, DIVIDENDS, ETC. IN RESPECT OF THE PLEDGED
COLLATERAL.
(a) So long as no Event of Default shall have occurred and be
continuing:
(i) the Pledgor may exercise any and all voting and other
consensual rights pertaining to any Pledged Collateral for any purpose not
inconsistent with the terms of this Agreement, the Indenture, the Senior Notes
or the other Collateral Agreements;
(ii) the Pledgor may receive and retain any and all
dividends, interest or other amounts paid in respect of the Pledged Collateral;
PROVIDED, HOWEVER, that any and all (A) dividends and interest paid or payable
other than in cash in respect of, and instruments and other property received,
receivable or otherwise distributed in respect of or in exchange for, any
Pledged Collateral, (B) dividends and other distributions paid or payable in
cash in respect of any Pledged Collateral in connection with a partial or total
liquidation or dissolution or in connection with a reduction of capital, capital
surplus or paid-in surplus, and (C) cash paid, payable or otherwise distributed
in redemption of, or in exchange for, any Pledged Collateral, shall be, and
shall forthwith be delivered to the Agent to hold as, Pledged Collateral or be
applied to the Obligations at the direction of the Pledgor, and shall, if
received by the Pledgor, be received in trust for the benefit of the Agent,
shall be segregated from the other property or funds of the Pledgor, and shall
be forthwith delivered to the Agent in the exact form received with any
necessary endorsement and/or appropriate stock powers duly executed in blank, to
be held by the Agent as Pledged Collateral and as further collateral security
for the Obligations; and
(iii) the Agent will execute and deliver (or cause to be
executed and delivered) to the Pledgor all such proxies and other instruments as
the Pledgor may reasonably request in writing for the purpose of enabling the
Pledgor to exercise the voting and other rights which it is entitled to exercise
pursuant to paragraph (i) of this Section 7(a) and to receive the dividends
which it is authorized to receive and retain pursuant to paragraph (ii) of this
Section 7(a).
(b) Upon the occurrence and during the continuance of an Event of
Default:
(i) all rights of the Pledgor to exercise the voting and
other consensual rights which it would otherwise be entitled to exercise
pursuant to paragraph (i) of subsection (a) of this Section 7, and to receive
the dividends and interest payments which it would otherwise be authorized to
receive and retain pursuant to paragraph (ii) of subsection (a) of this Section
7, shall cease, and all such rights shall thereupon become vested in the Agent
which shall thereupon have the sole right to exercise such voting and other
consensual rights and to receive and hold as Pledged Collateral such dividends
and interest payments;
(ii) without limiting the generality of the foregoing, the
Agent may at its option exercise any and all rights of conversion, exchange,
subscription or any other rights, privileges or options pertaining to any of the
Pledged Collateral as if it were the absolute owner thereof, including, without
limitation, the right to exchange, in its discretion, any and all of the Pledged
Collateral upon the merger, consolidation, reorganization, recapitalization or
other adjustment of a Pledged Subsidiary, or upon the exercise by a Pledged
Subsidiary of any right, privilege or option pertaining to any Pledged
Collateral, and, in connection therewith, to deposit and deliver any and all of
the Pledged Collateral with any committee, depository, transfer agent, registrar
or other designated agent upon such terms and conditions as it may determine;
and
(iii) all dividends and interest payments which are received
by the Pledgor contrary to the provisions of paragraph (i) of this Section 7(b)
shall be received in trust for the benefit of the Agent, shall be segregated
from other funds of the Pledgor, and shall be forthwith paid over to the Agent
as Pledged Collateral in the exact form received with any necessary endorsement
and/or appropriate stock powers duly executed in blank, to be held by the Agent
as Pledged Collateral and as further collateral security for the Obligations.
SECTION 8. ADDITIONAL PROVISIONS CONCERNING THE PLEDGED COLLATERAL.
(a) The Pledgor hereby authorizes the Agent to file, without the
signature of the Pledgor where permitted by law, one or more financing or
continuation statements, and amendments thereto, relating to the Pledged
Collateral.
(b) The Pledgor hereby irrevocably appoints the Agent the Pledgor's
attorney-in-fact and proxy, with full authority in the place and stead of the
Pledgor and in the name of the Pledgor or otherwise, from time to time in the
Agent's discretion exercised reasonably and during the continuance of an Event
of Default, to take any action and to execute any instrument which the Agent may
deem necessary or reasonably advisable to accomplish the purposes of this
Agreement (subject to the rights of the Pledgor under Section 7(a) hereof),
including, without limitation, to receive, indorse and collect all instruments
made payable to the Pledgor representing any dividend, interest payment or other
distribution in respect of any Pledged Collateral and to give full discharge for
the same.
(c) During the occurrence and continuance of an Event of Default, if
the Pledgor fails to perform any agreement or obligation contained herein, the
Agent itself may perform, or cause performance of, such agreement or obligation,
and the expenses of the Agent incurred in connection therewith shall be payable
by the Pledgor (such obligation being joint and several in nature) pursuant to
Section 10 hereof.
(d) Other than the exercise of reasonable care to assure the safe
custody of the Pledged Collateral while held hereunder, the Agent shall have no
duty or liability to preserve rights pertaining thereto and shall be relieved of
all responsibility for the Pledged Collateral upon surrendering it or tendering
surrender of it to the Pledgor. The Agent shall be deemed to have exercised
reasonable care in the custody and preservation of the Pledged Collateral in its
possession if the Pledged Collateral is accorded treatment substantially equal
to that which the Agent accords its own property, it being understood that the
Agent shall not have responsibility for (i) ascertaining or taking action with
respect to calls, conversions, exchanges, maturities, tenders, or other matters
relating to any Pledged Collateral, whether or not the Agent has or is deemed to
have knowledge of such matters, or (ii) taking any necessary steps to preserve
rights against any parties with respect to any Pledged Collateral.
(e) The Agent may at any time after the occurrence and during the
continuation of an Event of Default in its discretion (i) without notice to the
Pledgor, transfer or register in the name of the Agent or any of its nominees
any or all of the Pledged Collateral, subject only to the revocable rights of
the Pledgor under Section 7(a) hereof, and (ii) exchange certificates or
instruments constituting Pledged Collateral for certificates or instruments of
smaller or larger denominations.
SECTION 9. REMEDIES UPON EVENT OF DEFAULT. If any Event of Default
shall have occurred and be continuing:
(a) The Agent may exercise in respect of the Pledged Collateral, in
addition to other rights and remedies provided for herein or otherwise available
to it, all of the rights and remedies of a secured party on default under the
Code then in effect in the State of New York; and without limiting the
generality of the foregoing and without notice except as specified below, sell
the Pledged Collateral or any part thereof in one or more parcels at public or
private sale, at any exchange or broker's board or elsewhere, at such price or
prices and on such other terms as the Agent may deem commercially reasonable.
The Pledgor agrees that, to the extent notice of sale shall be required by law,
at least ten (10) Business Days' notice to the Pledgor of the time and place of
any public sale or the time after which any private sale is to be made shall
constitute reasonable notification. The Agent shall not be obligated to make any
sale of Pledged Collateral regardless of notice of sale having been given. The
Agent may adjourn any public or private sale from time to time by announcement
at the time and place fixed therefor, and such sale may, without further notice,
be made at the time and place to which it was so adjourned.
(b) The Pledgor recognizes that it is impracticable to effect a public
sale of all or any part of the Pledged Securities or any other securities
constituting Pledged Collateral and that the Agent may, therefore, determine to
make one or more private sales of any such securities to a restricted group of
purchasers who will be obligated to agree, among other things, to acquire such
securities for their own account, for investment and not with a view to the
distribution or resale thereof. The Pledgor acknowledges that any such private
sale may be at prices and on terms less favorable to the seller than the prices
and other terms which might have been obtained at a public sale and,
notwithstanding the foregoing, agrees that such private sales shall be deemed to
have been made in a commercially reasonable manner and that the Agent shall have
no obligation to delay sale of any such securities for the period of time
necessary to permit the issuer of such securities to register such securities
for public sale under the Securities Act of 1933, as amended (the "SECURITIES
ACT"). The Pledgor further acknowledges and agrees that any offer to sell such
securities which has been (i) publicly advertised on a BONA FIDE basis in a
newspaper or other publication of general circulation in the financial community
of New York, New York (to the extent that such an offer may be so advertised
without prior registration under the Securities Act), or (ii) made privately in
the manner described above to not less than fifteen (15) BONA FIDE offerees
shall be deemed to involve a "public sale" for the purposes of Section 9-504(3)
of the Code (or any successor or similar, applicable statutory provision) as
then in effect in the State of New York, notwithstanding that such sale may not
constitute a "public offering" under the Securities Act, and that the Agent may,
in such event, bid for the purchase of such securities.
(c) Any cash held by the Agent as Pledged Collateral and all cash
proceeds received by the Agent in respect of any sale of, collection from, or
other realization upon, all or any part of the Pledged Collateral shall be held
by the Agent as collateral for, and/or then or at any time thereafter applied
(after payment of any amounts payable to the Agent pursuant to Section 10
hereof) in whole or in part by the Agent against, all or any part of the
Obligations as directed by the Pledgor consistent with the provisions of the
Indenture. Any surplus of such cash or cash proceeds held by the Agent and
remaining after payment in full of all of the Obligations shall be paid over to
the Pledgor or to such person as may be lawfully entitled to receive such
surplus.
(d) In the event that the proceeds of any such sale, collection or
realization are insufficient to pay all amounts to which the Agent is legally
entitled, the Pledgor shall be liable for the deficiency, together with interest
thereon at the highest rate specified in the Senior Notes for interest on
overdue principal thereof or such other rate as shall be fixed by applicable
law, together with the costs of collection and the reasonable fees and expenses
of any attorneys employed by the Agent to collect such deficiency.
SECTION 10. INDEMNITY AND EXPENSES.
(a) The Pledgor agrees to indemnify the Agent from and against any and
all claims, losses and liabilities growing out of or resulting from this
Agreement (including, without limitation, enforcement of this Agreement), except
claims, losses or liabilities resulting from the Agent's gross negligence or
willful misconduct as determined by a final judgment of a court of competent
jurisdiction.
(b) The Pledgor shall be obligated for, and will promptly pay to the
Agent, the amount of any and all reasonable costs and expenses, including the
reasonable fees and disbursements of the Agent's counsel and of any experts and
agents, which the Agent may incur in connection with (i) the administration of
this Agreement, (ii) the custody, preservation, use or operation of, or the sale
of, collection from, or other realization upon, any Pledged Collateral, (iii)
the exercise or enforcement of any of the rights of the Agent hereunder, or (iv)
the failure by any of the Pledgor to perform or observe any of the provisions
hereof.
SECTION 11. NOTICES, ETC. All notices and other communications
provided for hereunder shall be in writing and shall be mailed (by certified
mail, postage prepaid and return receipt requested), telecopied or delivered, if
to the Pledgor, to the address for the Pledgor specified in the Indenture, and
if to the Agent, to it at its address specified in the Indenture, or as to
either such Person at such other address as shall be designated by such Person
in a written notice to such other Person complying as to delivery with the terms
of this Section 11. All such notices and other communications shall be effective
(i) if sent by certified mail, return receipt requested, when received or three
(3) Business Days after mailing, whichever first occurs, (ii) if telecopied,
when transmitted and confirmation is received, provided same is on a Business
Day and, if not, on the next Business Day, or (iii) if delivered, upon delivery,
provided same is on a Business Day and, if not, on the next Business Day.
SECTION 12. CONSENT TO JURISDICTION, ETC.
(a) Any legal action or proceeding with respect to this Agreement or
any document related thereto may be brought in the courts of the State of New
York located in the borough of Manhattan or of the United States of America for
the Southern District of New York, and, by execution and delivery of this
Agreement, the Pledgor hereby accepts unconditionally the jurisdiction of the
aforesaid courts. The Pledgor hereby irrevocably waives any objection,
including, without limitation, any objection to the laying of venue or based on
the grounds of FORUM NON CONVENIENS, which the Pledgor may now or hereafter have
to the bringing of any such action or proceeding in such respective
jurisdictions.
(b) The Pledgor irrevocably consents to the service of process of any
of the aforementioned courts in any such action or proceeding by the mailing of
copies thereof by registered or certified mail, postage prepaid, to the Pledgor
at its address referred to in Section 11 hereof.
(c) Nothing contained in this Section 12 shall affect the right of the
Agent to serve legal process in any other manner permitted by law or to commence
legal proceedings or otherwise proceed against the Pledgor in any other
jurisdiction.
SECTION 13. WAIVER OF JURY TRIAL. THE PLEDGOR AND THE AGENT (BY
ACCEPTING THIS AGREEMENT) WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM CONCERNING ANY RIGHTS UNDER THIS AGREEMENT OR ANY
OTHER COLLATERAL AGREEMENTS OR ARISING FROM ANY OTHER COLLATERAL AGREEMENT AND
AGREE THAT ANY SUCH ACTION, PROCEEDING OR COUNTERCLAIM SHALL BE TRIED BEFORE A
COURT AND NOT BEFORE A JURY.
SECTION 14. MISCELLANEOUS.
(a) No amendment of any provision of this Agreement shall be effective
unless it is in writing and signed by the Pledgor, the Agent and the holders of
more than 50% of the outstanding principal amount of the Senior Notes, and no
waiver of any provision of this Agreement, and no consent to any departure by
the Pledgor therefrom, shall be effective unless it is in writing and signed by
the Agent and the holders of more than 50% of the outstanding principal amount
of the Senior Notes, and then such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given.
(b) No failure on the part of the Agent to exercise, and no delay in
exercising, any right hereunder or under any other document shall operate as a
waiver thereof; nor shall any single or partial exercise of any such right
preclude any other or further exercise thereof or the exercise of any other
right. The rights and remedies of the Agent provided herein are cumulative and
are in addition to, and not exclusive of, any rights or remedies provided by
law. The rights of the Agent under any document against any party thereto are
not conditional or contingent on any attempt by the Agent to exercise any of its
rights under any other document against such party or against any other person.
(c) Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining portions hereof or thereof or affecting the validity or enforceability
of such provision in any other jurisdiction.
(d) This Agreement shall create a continuing security interest in the
Pledged Collateral and shall (i) remain in full force and effect until the
payment and performance in full or release of the Obligations and the
termination of the Indenture, and (ii) be binding on the Pledgor and by its
acceptance hereof, the Agent, and their respective successors and assigns and
shall inure, together with all rights and remedies of the Agent hereunder, to
the benefit of the Pledgor, the Agent and its successors, transferees and
assigns. The Agent may resign at any time upon giving the Pledgor and the
Trustee thirty (30) days' prior written notice. The Agent shall continue to
serve until its successor, appointed by notice of the Pledgor, accepts
appointment as successor collateral agent and receives all property held by the
Agent under this Agreement. The holders of a majority in principal amount of the
outstanding Senior Notes may at any time remove the Agent by so notifying the
Pledgor and the Agent and may appoint a successor agent with the Pledgor's
consent, provided that after the occurrence of an Event of Default the Pledgor's
consent shall not be required. The Pledgor may remove the Agent if:
(1) the Agent fails to fulfill its obligations hereunder;
(2) the Agent is adjudged a bankrupt or an insolvent;
(3) a receiver or other public officer takes charge of the
Agent or its property; or
(4) the Agent becomes incapable of acting.
If the Agent resigns or is removed or if a vacancy exists in the
office of Agent for any reason, the Company shall notify each Holder of such
event and the Holders of a majority in principal amount of the Senior Notes
shall promptly appoint a successor Agent. A successor Agent shall deliver a
written acceptance of its appointment to the retiring Agent, the Trustee and the
Pledgor. Immediately after that, the retiring Agent shall transfer all property
held by the retiring Agent under this Agreement to the successor, the
resignation or removal of the retiring Agent shall become effective, and the
successor Agent shall have all the rights, powers and duties of the Agent under
this Agreement. If a successor Agent does not take office within 60 days after
the retiring Agent resigns or is removed, the retiring Agent, the Company or the
Holders of at least 10% in principal amount of the outstanding Senior Notes may
petition any court of competent jurisdiction, at the expense of the Company, for
the appointment of a successor collateral agent. The terms and conditions of
this Agreement will remain unimpaired by resignation of the Agent or the
appointment of a successor collateral agent. Following the appointment of a
successor collateral agent, such person shall for all intents and purposes of
this Agreement be the "Agent" hereunder. None of the rights or obligations of
the Pledgor hereunder may be assigned or otherwise transferred without the prior
written consent of the Agent.
(e) Upon the satisfaction in full of Obligations and the termination
of the Indenture, (i) this Agreement and the security interest created hereby
shall terminate and all rights to the Pledged Collateral shall revert to the
Pledgor, and (ii) the Agent will, upon the Pledgor's request, and at the
Pledgor's expense, promptly (A) return to the Pledgor such of the Pledged
Collateral as shall not have been sold or otherwise disposed of or applied
pursuant to the terms hereof, and (B) execute and deliver to the Pledgor,
without recourse, representation or warranty, such documents as the Pledgor
shall reasonably request to evidence such termination.
(f) This Agreement shall be governed by and construed in accordance
with the law of the State of New York, except as required by mandatory
provisions of law and except to the extent that the validity and perfection or
the perfection and the effect of perfection or non-perfection of the security
interest created hereby, or remedies hereunder, in respect of any particular
Pledged Collateral are governed by the law of a jurisdiction other than the
State of New York.
(g) This Agreement may be executed in any number of counterparts and
by the different parties hereto on separate counterparts each of which, when so
executed, shall be deemed an original, but all such counterparts shall
constitute but one and the same instrument.
IN WITNESS WHEREOF, the Pledgor has caused this Agreement to be
executed and delivered by its officer thereunto duly authorized, as of the date
first above written.
PLEDGOR:
DFC FINANCIAL OF CANADA LIMITED
By:
----------------------------
Name:
Title:
ACCEPTED AND AGREED:
U.S. BANK TRUST NATIONAL ASSOCIATION,
as Agent
By:
---------------------------
Name:
Title:
SCHEDULE I TO PLEDGE AGREEMENT
FOREIGN PLEDGED SECURITIES
CERTIFICATE
NAME OF ISSUER NUMBER OF CLASS NO.(S)
SHARES/PERCENTAGE OF
OUTSTANDING SECURITY
DFC Funding of
Canada Limited 66%
SCHEDULE II
TO
PLEDGE AGREEMENT
PLEDGE AMENDMENT
This Pledge Amendment, dated ___________________, is delivered
pursuant to Section 4 of the Pledge Agreement referred to below. The undersigned
hereby agrees that this Pledge Amendment may be attached to the Pledge
Agreement, dated November __, 2000, as it may heretofore have been or hereafter
may be amended or otherwise modified or supplemented from time to time and that
the shares listed on this Pledge Amendment shall be and become part of the
Pledged Collateral referred to in said Pledge Agreement and shall secure all of
the Obligations referred to in said Pledge Agreement.
DOMESTIC PLEDGED SECURITIES
NAME OF ISSUER NUMBER OF SHARES CLASS CERTIFICATE NO.(S)
FOREIGN PLEDGED SECURITIES
NAME OF ISSUER NUMBER OF SHARES CLASS CERTIFICATE NO.(S)
--------------------------------------
By:
-----------------------------
Name:
------------------------
Title:
Exhibit D to Indenture
PLEDGE AGREEMENT
PLEDGE AND SECURITY AGREEMENT dated as of November ___, 2000, made by
DELTA FUNDING CORPORATION, a New York corporation, (the "PLEDGOR"), in favor of
U.S. BANK TRUST NATIONAL ASSOCIATION, as trustee and collateral agent (the
"AGENT") under that certain Indenture dated as of the date hereof (the
"INDENTURE") among DELTA FINANCIAL CORPORATION, as issuer, the parties whose
names and signatures appear on the signature pages thereto under the heading
"Subsidiary Guarantors" and the Agent.
W I T N E S S E T H:
WHEREAS, it is a condition precedent to the effectiveness of the
Indenture that the Pledgor shall have executed and delivered to the Agent a
pledge and security agreement providing for the pledge to the Agent of, and the
grant to the Agent of a security interest in one hundred percent (100%) by
number all of the issued and outstanding Owner Trust Certificates (as defined
herein) from time to time owned by the Pledgor;
WHEREAS, the Pledgor has determined that the execution, delivery and
performance of this Agreement directly benefits, and is in the best interest of
the Pledgor;
NOW, THEREFORE, in consideration of the premises and the agreements
herein and of other good and valuable consideration, the Pledgor hereby agrees
with the Agent as follows:
SECTION 1. DEFINITIONS. As used in this Agreement, capitalized terms
used herein without definition have the meanings specified in the Indenture or
if not defined in the Indenture, then in Article 8 or Article 9 of the Uniform
Commercial Code (the "CODE") currently in effect in the State of New York, and
the following terms shall have the following meanings:
"DEPOSIT TRUST AGREEMENT" shall mean that Deposit Trust Agreement
dated as of _______, 2000 by and between the Pledgor, as depositor and
Wilmington Trust Company, a Delaware banking corporation, as owner trustee.
"GOVERNMENTAL AUTHORITY" shall mean any nation or government, any
federal, state, city, town, municipality, county, local or other political
subdivision thereof or thereto and any department, commission, board, bureau,
instrumentality, agency or other entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.
"OWNER TRUST CERTIFICATES" shall mean the certificates issued under
the Deposit Trust Agreement evidencing beneficial ownership interests in the
Trust described in Schedule I hereto.
"TRUST" shall mean the Delta Funding Residual Holding Trust 2000-2
established under the Deposit Trust Agreement.
SECTION 2. PLEDGE AND GRANT OF SECURITY INTEREST. As collateral
security for all of the Obligations (as defined in Section 3 hereof), the
Pledgor hereby pledges and collaterally assigns to the Agent, and grants to the
Agent a continuing security interest in all of the Pledgor's right, title and
interest in and to the Owner Trust Certificates, whether now owned or hereafter
acquired by the Pledgor and howsoever its respective interest therein may arise
or appear (whether by ownership, security interest, claim or otherwise) and all
proceeds of any and all of the foregoing (collectively, the "PLEDGED
COLLATERAL").
SECTION 3. SECURITY FOR OBLIGATIONS. The security interest created
hereby in the Pledged Collateral constitutes continuing collateral security for
all of the following obligations whether now existing or hereafter incurred
(collectively, the "OBLIGATIONS"):
(a) the due and punctual payment of any and all amounts due and owing
by the Pledgor under the Subsidiary Guaranty;
(b) the due performance and observance by the Pledgor of all of its
other obligations from time to time existing in respect of the Indenture, the
Senior Notes, the Collateral Agreements and the Related Agreements; and
(c) all fees, costs, charges and expenses paid or incurred by the
Agent in connection with the creation, protection and preservation or
enforcement of its rights under any of the Indenture, the Senior Notes, the
Subsidiary Guarantees, the Collateral Agreements and the Related Agreements, on
a full indemnity basis.
SECTION 4. DELIVERY OF THE OWNER TRUST CERTIFICATES.
(a) All certificates evidencing the Pledged Collateral shall be
delivered to the Agent, together with any necessary endorsement and/or
appropriate transfer form duly executed in blank with respect to such Pledged
Collateral, on or prior to the execution and delivery of this Agreement. All
certificates evidencing Pledged Collateral hereafter owned by the Pledgor from
time to time are hereby pledged to the Agent pursuant to the terms of this
Agreement (the "ADDITIONAL COLLATERAL") shall be delivered to the Agent within
ten (10) Business Days of receipt thereof by or on behalf of the Pledgor. All
such certificates evidencing the Pledged Collateral held by or on behalf of the
Agent pursuant hereto shall be delivered in suitable form for transfer by
delivery or shall be accompanied by duly executed instruments of transfer or
assignment in blank, all in form and substance reasonably satisfactory to the
Agent. Within ten (10) Business Days of the receipt by the Pledgor of any
Additional Collateral, a Pledge Amendment, duly executed by the Pledgor, in
substantially the form of Schedule II hereto (a "PLEDGE AMENDMENT") shall be
delivered to the Agent, in respect of the Additional Collateral which are to be
pledged pursuant to this Agreement. The absence of any Pledge Amendment shall
not in any way effect the validity of the pledge of the Pledged Collateral made
pursuant to this Agreement. The Pledgor hereby authorizes the Agent to attach
each Pledge Amendment to this Agreement and agrees that all certificates or
instruments listed on any Pledge Amendment delivered to the Agent shall for all
purposes hereunder constitute Pledged Collateral and the Pledgor shall be deemed
upon delivery thereof to have made the representations and warranties set forth
in Section 5 with respect to such Additional Collateral.
(b) If the Pledgor shall receive, by virtue of its being or having
been an owner of any Pledged Collateral, any (i) stock certificate (including,
without limitation, any certificate representing a stock dividend or
distribution in connection with any increase or reduction of capital,
reclassification, merger, consolidation, sale of assets, combination of shares,
stock split, spin-off or split-off) or other instrument, (ii) option or right,
whether as an addition to, substitution for, or in exchange for, any Pledged
Collateral, or otherwise, (iii) dividends payable in cash (except such dividends
permitted to be retained by the Pledgor pursuant to Section 7 hereof) or in
securities or other property, or (iv) dividends or other distributions in
connection with a partial or total liquidation or dissolution or in connection
with a reduction of capital, capital surplus or paid in surplus, the Pledgor
shall receive such certificate, promissory note, instrument, option, right,
payment or distribution in trust for the benefit of the Agent, shall segregate
it from the Pledgor's other property and shall deliver it forthwith to the Agent
in the exact form received, with any necessary endorsement and/or appropriate
transfer forms duly executed in blank, to be held by the Agent as Pledged
Collateral and as further collateral security for the Obligations.
SECTION 5. REPRESENTATIONS AND WARRANTIES. The Pledgor represents and
warrants as follows:
(a) The Owner Trust Certificates pledged hereunder have been duly
[authorized and validly issued, are fully paid and nonassessable] and evidence
100% of the beneficial ownership interests in the Trust. The Pledgor is the
beneficial and record owner of the Owner Trust Certificates pledged hereunder.
All other certificates evidencing beneficial ownership interests in the Trust
will be, when issued, duly authorized and validly issued, fully paid [and
nonassessable].
(b) It is and will be at all times the legal and beneficial owner of
the Pledged Collateral free and clear of any Lien, security interest, option or
other charge or encumbrance except for the security interest created by this
Agreement.
(c) The exercise by the Agent of any of its rights and remedies
hereunder will not contravene any law or any material contractual restriction
binding on or affecting it or any of its properties, and will not result in or
require the creation of any Lien, security interest or other charge or
encumbrance upon or with respect to any of its properties other than pursuant to
this Agreement or other Collateral Agreements.
(d) No authorization or approval or other action by, and no notice to
or filing with, any Governmental Authority is required to be obtained or made by
it for (i) the due execution, delivery and performance of this Agreement, (ii)
the grant, or the perfection, of the security interest purported to be created
hereby in the Pledged Collateral, or (iii) the exercise by the Agent of its
rights and remedies hereunder, except as may be required in connection with any
sale of any Pledged Collateral by laws affecting the offering and sale of
securities generally.
(e) This Agreement creates a valid security interest in favor of the
Agent in the Pledged Collateral, as security for the Obligations; PROVIDED,
HOWEVER, that the Agent has not required perfection to the extent that
perfection would be required under the laws of a country or jurisdiction other
than the United States of America. The possession by the Agent (or its
custodian, nominee or other designee) of the certificates constituting the
Pledged Collateral, and all other certificates constituting the Pledged
Securities from time to time, and the filing under the Code of the financing
statement(s) in the offices described in Schedule [ ] to the Security Agreement
results in the perfection of such security interest in any instruments and
certificated securities constituting Pledged Collateral. If any Pledged
Collateral consists of uncertificated securities, unless the immediately
succeeding sentence is applicable thereto, the Agent's security interest therein
will be perfected when the Agent (or its custodian, nominee or other designee )
becomes the registered holder thereof, or upon the agreement of each issuer that
it will comply with instructions originated by the Agent with respect to such
securities without further consent by the Pledgor. If any Pledged Collateral
consists of security entitlements, the Agent's security interest therein will be
perfected upon the filing of appropriate UCC-1 Financing Statements, signed by
the Pledgor, or upon the agreement of any applicable securities intermediary to
comply with entitlement orders by the Agent without further consent by the
Pledgor. Such security interest is, or in the case of Pledged Collateral in
which the Pledgor obtains rights after the date hereof, will be, a perfected,
first priority security interest. All action necessary to perfect and protect
such security interest has been duly taken, except for the Agent's (or the
Agent's custodian, nominee or other designee ) having possession of the
certificated Owner Trust Certificates constituting the Additional Collateral,
after the date hereof and obtaining control of uncertificated securities and
securities entitlements constituting Additional Collateral after the date
hereof.
(f) There is no pending or, to the best of its knowledge, threatened
action, suit, proceeding or claim before any court or other Governmental
Authority or any arbitrator, or any order, judgment or award by any court or
other Governmental Authority or arbitrator, that may adversely affect the grant
or the perfection of the security interest purported to be created hereby in the
Pledged Collateral, or the exercise by the Agent of any of its rights or
remedies hereunder.
SECTION 6. COVENANTS AS TO THE PLEDGED COLLATERAL. So long as any
Obligations shall remain outstanding, the Pledgor will, unless the Agent shall
otherwise consent in writing:
(a) keep adequate records concerning the Pledged Collateral and permit
the Agent or any agents or representatives thereof at any time or from time to
time to examine and make copies of and abstracts from such records;
(b) at its expense, upon the request of the Agent, promptly deliver to
the Agent a copy of each material notice or other communication received by it
in respect of the Pledged Collateral;
(c) at its expense, defend the Agent's right, title and security
interest in and to the Pledged Collateral against the claims of any Person;
(d) at its expense, at any time and from time to time, promptly
execute and deliver all further instruments and documents and take all further
action that may be necessary or that the Agent may reasonably request in order
to (i) perfect and protect the security interest purported to be created hereby,
(ii) enable the Agent to exercise and enforce its rights and remedies hereunder
in respect of the Pledged Collateral, or (iii) otherwise effect the purposes of
this Agreement, including, without limitation, delivering to the Agent, after
the occurrence and during the continuation of an Event of Default, irrevocable
proxies in respect of the Pledged Collateral;
(e) not sell, assign (by operation of law or otherwise), exchange or
otherwise dispose of any Pledged Collateral or any interest therein except as
permitted by Section 7(a)(i) hereof;
(f) not create or suffer to exist any Lien, security interest or other
charge or encumbrance upon or with respect to any Pledged Collateral except for
the security interest created hereby;
(g) not make or consent to any amendment or other modification or
waiver with respect to any Pledged Collateral or enter into any agreement or
permit to exist any restriction with respect to any Pledged Collateral other
than pursuant to the Collateral Agreements and applicable securities laws;
(h) not permit the issuance of (i) any additional beneficial ownership
interests in the Trust or (ii) any securities convertible voluntarily by the
holder thereof or automatically upon the occurrence or non-occurrence of any
event or condition into, or exchangeable for, any beneficial ownership interests
in the Trust; and
(i) not take or fail to take any action which would in any manner
impair the enforceability of the Agent's security interest in any Pledged
Collateral.
SECTION 7. VOTING RIGHTS, DISTRIBUTIONS, AGENT'S CONSENTS, ETC. IN
RESPECT OF THE PLEDGED COLLATERAL.
(a) So long as no Event of Default shall have occurred and be
continuing:
(i) except where the Deposit Trust Agreement requires the
consent of the Collateral Agent (the same being the Agent hereunder), in which
case the consent of the Agent shall be required, the Pledgor may exercise any
and all voting and other consensual rights pertaining to any Pledged Collateral
for any purpose not inconsistent with the terms of this Agreement, the
Depositary Trust Agreement, the Indenture, the Senior Notes or the other
Collateral Agreements;
(ii) the Pledgor may receive and retain any and all
distributions, interest or other amounts paid in respect of the Pledged
Collateral; PROVIDED, HOWEVER, that any and all (A) distributions and interest
paid or payable other than in cash in respect of, and instruments and other
property received, receivable or otherwise distributed in respect of or in
exchange for, any Pledged Collateral, (B) distributions paid or payable in cash
in respect of any Pledged Collateral in connection with a partial or total
liquidation or dissolution or in connection with a reduction of capital, capital
surplus or paid-in surplus, (C) cash paid, payable or otherwise distributed in
redemption of, or in exchange for, any Pledged Collateral, and (D) any
distribution and interest paid or payable when Section 4.15 of the Indenture is
not complied with, shall be, and shall forthwith be delivered to the Agent to
hold as, Pledged Collateral or be applied to the Obligations at the direction of
the Pledgor, and shall, if received by the Pledgor, be received in trust for the
benefit of the Agent, shall be segregated from the other property or funds of
the Pledgor, and shall be forthwith delivered to the Agent in the exact form
received with any necessary endorsement and/or appropriate transfer forms duly
executed in blank, to be held by the Agent as Pledged Collateral and as further
collateral security for the Obligations; and
(iii) the Agent will execute and deliver (or cause to be
executed and delivered) to the Pledgor all such proxies and other instruments as
the Pledgor may reasonably request in writing for the purpose of enabling the
Pledgor to exercise the voting and other rights which it is entitled to exercise
pursuant to paragraph (i) of this Section 7(a) and to receive the dividends
which it is authorized to receive and retain pursuant to paragraph (ii) of this
Section 7(a);
(iv) the Agent will not consent to any action or proposed
action under the Deposit Trust Agreement or any of the Related Agreements
without obtaining the prior consent of the Holders or Beneficial Holders of a
majority of the principal amount of the then outstanding Senior Notes; and
(v) the Agent shall promptly deliver to each Holder or
Beneficial Holder who requests the Agent to do so a copy of each Compliance
Certification, Release Certification, Certificate Schedule and any notices,
communications or reports received by the Agent with respect to the Trust or the
administration thereof or the Pledged Collateral.
(b) Upon the occurrence and during the continuance of an Event of
Default:
(i) all rights of the Pledgor to exercise the voting and
other consensual rights which it would otherwise be entitled to exercise
pursuant to paragraph (i) of subsection (a) of this Section 7, and to receive
the distributions and interest payments which it would otherwise be authorized
to receive and retain pursuant to paragraph (ii) of subsection (a) of this
Section 7, shall cease, and all such rights shall thereupon become vested in the
Agent which shall thereupon have the sole right to exercise such voting and
other consensual rights and to receive and hold as Pledged Collateral such
dividends and interest payments;
(ii) without limiting the generality of the foregoing, the
Agent may at its option exercise any and all rights of conversion, exchange,
subscription or any other rights, privileges or options pertaining to any of the
Pledged Collateral as if it were the absolute owner thereof, including, without
limitation, the right to exchange, in its discretion, any and all of the Pledged
Collateral upon the merger, consolidation, reorganization, recapitalization or
other adjustment of the Trust, or upon the exercise by the Trust of any right,
privilege or option pertaining to any Pledged Collateral, and, in connection
therewith, to deposit and deliver any and all of the Pledged Collateral with any
committee, depository, transfer agent, registrar or other designated agent upon
such terms and conditions as it may determine; and
(iii) all distributions and interest payments which are
received by the Pledgor contrary to the provisions of paragraph (i) of this
Section 7(b) shall be received in trust for the benefit of the Agent, shall be
segregated from other funds of the Pledgor, and shall be forthwith paid over to
the Agent as Pledged Collateral in the exact form received with any necessary
endorsement and/or appropriate transfer forms duly executed in blank, to be held
by the Agent as Pledged Collateral and as further collateral security for the
Obligations.
SECTION 8. ADDITIONAL PROVISIONS CONCERNING THE PLEDGED COLLATERAL.
(a) The Pledgor hereby authorizes the Agent to file, without the
signature of the Pledgor where permitted by law, one or more financing or
continuation statements, and amendments thereto, relating to the Pledged
Collateral.
(b) The Pledgor hereby irrevocably appoints the Agent the Pledgor's
attorney-in-fact and proxy, with full authority in the place and stead of the
Pledgor and in the name of the Pledgor or otherwise, from time to time in the
Agent's discretion exercised reasonably and during the continuance of an Event
of Default, to take any action and to execute any instrument which the Agent may
deem necessary or reasonably advisable to accomplish the purposes of this
Agreement (subject to the rights of the Pledgor under Section 7(a) hereof),
including, without limitation, to receive, endorse and collect all instruments
made payable to the Pledgor representing any dividend, interest payment or other
distribution in respect of any Pledged Collateral and to give full discharge for
the same.
(c) During the occurrence and continuance of an Event of Default, if
the Pledgor fails to perform any agreement or obligation contained herein, the
Agent itself may perform, or cause performance of, such agreement or obligation,
and the expenses of the Agent incurred in connection therewith shall be payable
by the Pledgor (such obligation being joint and several in nature) pursuant to
Section 10 hereof.
(d) Except as provided in Section 7(a)(iv) hereof, other than the
exercise of reasonable care to assure the safe custody of the Pledged Collateral
while held hereunder, the Agent shall have no duty or liability to preserve
rights pertaining thereto and shall be relieved of all responsibility for the
Pledged Collateral upon surrendering it or tendering surrender of it to the
Pledgor. The Agent shall be deemed to have exercised reasonable care in the
custody and preservation of the Pledged Collateral in its possession if the
Pledged Collateral is accorded treatment substantially equal to that which the
Agent accords its own property, it being understood that the Agent shall not
have responsibility for (i) ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, tenders, or other matters relating to any
Pledged Collateral, whether or not the Agent has or is deemed to have knowledge
of such matters, or (ii) except as provided in Section 7(a)(iv) hereof, taking
any necessary steps to preserve rights against any parties with respect to any
Pledged Collateral.
(e) The Agent may at any time after the occurrence and during the
continuation of an Event of Default in its discretion (i) without notice to the
Pledgor, transfer or register in the name of the Agent or any of its nominees
any or all of the Pledged Collateral, subject only to the revocable rights of
the Pledgor under Section 7(a) hereof, and (ii) exchange certificates or
instruments constituting Pledged Collateral for certificates or instruments of
smaller or larger denominations.
SECTION 9. REMEDIES UPON EVENT OF DEFAULT. If any Event of Default
shall have occurred and be continuing:
(a) The Agent may exercise in respect of the Pledged Collateral, in
addition to other rights and remedies provided for herein or otherwise available
to it, all of the rights and remedies of a secured party on default under the
Code then in effect in the State of New York; and without limiting the
generality of the foregoing and without notice except as specified below, sell
the Pledged Collateral or any part thereof in one or more parcels at public or
private sale, at any exchange or broker's board or elsewhere, at such price or
prices and on such other terms as the Agent may deem commercially reasonable.
The Pledgor agrees that, to the extent notice of sale shall be required by law,
at least ten (10) Business Days' notice to the Pledgor of the time and place of
any public sale or the time after which any private sale is to be made shall
constitute reasonable notification. The Agent shall not be obligated to make any
sale of Pledged Collateral regardless of notice of sale having been given. The
Agent may adjourn any public or private sale from time to time by announcement
at the time and place fixed therefor, and such sale may, without further notice,
be made at the time and place to which it was so adjourned.
(b) The Pledgor recognizes that it is impracticable to effect a public
sale of all or any part of the Pledged Securities or any other securities
constituting Pledged Collateral and that the Agent may, therefore, determine to
make one or more private sales of any such securities to a restricted group of
purchasers who will be obligated to agree, among other things, to acquire such
securities for their own account, for investment and not with a view to the
distribution or resale thereof. The Pledgor acknowledges that any such private
sale may be at prices and on terms less favorable to the seller than the prices
and other terms which might have been obtained at a public sale and,
notwithstanding the foregoing, agrees that such private sales shall be deemed to
have been made in a commercially reasonable manner and that the Agent shall have
no obligation to delay sale of any such securities for the period of time
necessary to permit the issuer of such securities to register such securities
for public sale under the Securities Act of 1933, as amended (the "SECURITIES
ACT"). The Pledgor further acknowledges and agrees that any offer to sell such
securities which has been (i) publicly advertised on a BONA FIDE basis in a
newspaper or other publication of general circulation in the financial community
of New York, New York (to the extent that such an offer may be so advertised
without prior registration under the Securities Act), or (ii) made privately in
the manner described above to not less than fifteen (15) BONA FIDE offerees
shall be deemed to involve a "public sale" for the purposes of Section 9-504(3)
of the Code (or any successor or similar, applicable statutory provision) as
then in effect in the State of New York, notwithstanding that such sale may not
constitute a "public offering" under the Securities Act, and that the Agent may,
in such event, bid for the purchase of such securities.
(c) Any cash held by the Agent as Pledged Collateral and all cash
proceeds received by the Agent in respect of any sale of, collection from, or
other realization upon, all or any part of the Pledged Collateral shall be held
by the Agent as collateral for, and/or then or at any time thereafter applied
(after payment of any amounts payable to the Agent pursuant to Section 10
hereof) in whole or in part by the Agent against, all or any part of the
Obligations as directed by the Pledgor consistent with the provisions of the
Indenture. Any surplus of such cash or cash proceeds held by the Agent and
remaining after payment in full of all of the Obligations shall be paid over to
the Pledgor or to such person as may be lawfully entitled to receive such
surplus.
(d) In the event that the proceeds of any such sale, collection or
realization are insufficient to pay all amounts to which the Agent is legally
entitled, the Pledgor shall be liable for the deficiency, together with interest
thereon at the highest rate specified in the Senior Notes for interest on
overdue principal thereof or such other rate as shall be fixed by applicable
law, together with the costs of collection and the reasonable fees and expenses
of any attorneys employed by the Agent to collect such deficiency.
SECTION 10. INDEMNITY AND EXPENSES.
(a) The Pledgor agrees to indemnify the Agent from and against any and
all claims, losses and liabilities growing out of or resulting from this
Agreement (including, without limitation, enforcement of this Agreement), except
claims, losses or liabilities resulting from the Agent's gross negligence or
willful misconduct as determined by a final judgment of a court of competent
jurisdiction.
(b) The Pledgor shall be obligated for, and will promptly pay to the
Agent, the amount of any and all reasonable costs and expenses, including the
reasonable fees and disbursements of the Agent's counsel and of any experts and
agents, which the Agent may incur in connection with (i) the administration of
this Agreement, (ii) the custody, preservation, use or operation of, or the sale
of, collection from, or other realization upon, any Pledged Collateral, (iii)
the exercise or enforcement of any of the rights of the Agent hereunder, or (iv)
the failure by any of the Pledgor to perform or observe any of the provisions
hereof.
SECTION 11. NOTICES, ETC. All notices and other communications
provided for hereunder shall be in writing and shall be mailed (by certified
mail, postage prepaid and return receipt requested), telecopied or delivered, if
to the Pledgor, to the address for the Pledgor specified in the Indenture, and
if to the Agent, to it at its address specified in the Indenture, or as to
either such Person at such other address as shall be designated by such Person
in a written notice to such other Person complying as to delivery with the terms
of this Section 11. All such notices and other communications shall be effective
(i) if sent by certified mail, return receipt requested, when received or three
(3) Business Days after mailing, whichever first occurs, (ii) if telecopied,
when transmitted and confirmation is received, provided same is on a Business
Day and, if not, on the next Business Day, or (iii) if delivered, upon delivery,
provided same is on a Business Day and, if not, on the next Business Day.
SECTION 12. CONSENT TO JURISDICTION, ETC.
(a) Any legal action or proceeding with respect to this Agreement or
any document related thereto may be brought in the courts of the State of New
York located in the borough of Manhattan or of the United States of America for
the Southern District of New York, and, by execution and delivery of this
Agreement, the Pledgor hereby accepts unconditionally the jurisdiction of the
aforesaid courts. The Pledgor hereby irrevocably waives any objection,
including, without limitation, any objection to the laying of venue or based on
the grounds of FORUM NON CONVENIENS, which the Pledgor may now or hereafter have
to the bringing of any such action or proceeding in such respective
jurisdictions.
(b) The Pledgor irrevocably consents to the service of process of any
of the aforementioned courts in any such action or proceeding by the mailing of
copies thereof by registered or certified mail, postage prepaid, to the Pledgor
at its address referred to in Section 11 hereof.
(c) Nothing contained in this Section 12 shall affect the right of the
Agent to serve legal process in any other manner permitted by law or to commence
legal proceedings or otherwise proceed against the Pledgor in any other
jurisdiction.
SECTION 13. WAIVER OF JURY TRIAL. THE PLEDGOR AND THE AGENT (BY
ACCEPTING THIS AGREEMENT) WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM CONCERNING ANY RIGHTS UNDER THIS AGREEMENT OR ANY
OTHER COLLATERAL AGREEMENTS OR ARISING FROM ANY OTHER COLLATERAL AGREEMENT AND
AGREE THAT ANY SUCH ACTION, PROCEEDING OR COUNTERCLAIM SHALL BE TRIED BEFORE A
COURT AND NOT BEFORE A JURY.
SECTION 14. MISCELLANEOUS.
(a) No amendment of any provision of this Agreement shall be effective
unless it is in writing and signed by the Pledgor, the Agent and the holders of
more than 50% of the outstanding principal amount of the Senior Notes, and no
waiver of any provision of this Agreement, and no consent to any departure by
the Pledgor therefrom, shall be effective unless it is in writing and signed by
the Agent and the holders of more than 50% of the outstanding principal amount
of the Senior Notes, and then such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given.
(b) No failure on the part of the Agent to exercise, and no delay in
exercising, any right hereunder or under any other document shall operate as a
waiver thereof; nor shall any single or partial exercise of any such right
preclude any other or further exercise thereof or the exercise of any other
right. The rights and remedies of the Agent provided herein are cumulative and
are in addition to, and not exclusive of, any rights or remedies provided by
law. The rights of the Agent under any document against any party thereto are
not conditional or contingent on any attempt by the Agent to exercise any of its
rights under any other document against such party or against any other person.
(c) Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining portions hereof or thereof or affecting the validity or enforceability
of such provision in any other jurisdiction.
(d) This Agreement shall create a continuing security interest in the
Pledged Collateral and shall (i) remain in full force and effect until the
payment and performance in full or release of the Obligations and the
termination of the Indenture, and (ii) be binding on the Pledgor and by its
acceptance hereof, the Agent, and their respective successors and assigns and
shall inure, together with all rights and remedies of the Agent hereunder, to
the benefit of the Pledgor, the Agent and its successors, transferees and
assigns. The Agent may resign at any time upon giving the Pledgor and the
Trustee thirty (30) days' prior written notice. The Agent shall continue to
serve until its successor, appointed by notice of the Pledgor, accepts
appointment as successor collateral agent and receives all property held by the
Agent under this Agreement. The holders of a majority in principal amount of the
outstanding Senior Notes may at any time remove the Agent by so notifying the
Pledgor and the Agent and may appoint a successor agent with the Pledgor's
consent, provided that after the occurrence of an Event of Default, the
Pledgor's consent shall not be required. The Pledgor may remove the Agent if:
(1) the Agent fails to fulfill its obligations hereunder;
(2) the Agent is adjudged a bankrupt or an insolvent;
(3) a receiver or other public officer takes charge of the
Agent or its property; or
(4) the Agent becomes incapable of acting.
If the Agent resigns or is removed or if a vacancy exists in the
office of Agent for any reason, the Company shall notify each Holder of such
event and the Holders of a majority in principal amount of the Senior Notes
shall promptly appoint a successor Agent. A successor Agent shall deliver a
written acceptance of its appointment to the retiring Agent, the Trustee and the
Pledgor. Immediately after that, the retiring Agent shall transfer all property
held by the retiring Agent under this Agreement to the successor, the
resignation or removal of the retiring Agent shall become effective, and the
successor Agent shall have all the rights, powers and duties of the Agent under
this Agreement. If a successor Agent does not take office within 60 days after
the retiring Agent resigns or is removed, the retiring Agent, the Company or the
Holders of at least 10% in principal amount of the outstanding Senior Notes may
petition any court of competent jurisdiction, at the expense of the Company, for
the appointment of a successor collateral agent. The terms and conditions of
this Agreement will remain unimpaired by resignation of the Agent or the
appointment of a successor collateral agent. Following the appointment of a
successor collateral agent, such person shall for all intents and purposes of
this Agreement be the "Agent" hereunder. None of the rights or obligations of
the Pledgor hereunder may be assigned or otherwise transferred without the prior
written consent of the Agent.
(e) Upon the satisfaction in full of Obligations and the termination
of the Indenture, (i) this Agreement and the security interest created hereby
shall terminate and all rights to the Pledged Collateral shall revert to the
Pledgor, and (ii) the Agent will, upon the Pledgor's request, and at the
Pledgor's expense, promptly (A) return to the Pledgor such of the Pledged
Collateral as shall not have been sold or otherwise disposed of or applied
pursuant to the terms hereof, and (B) execute and deliver to the Pledgor,
without recourse, representation or warranty, such documents as the Pledgor
shall reasonably request to evidence such termination.
(f) This Agreement shall be governed by and construed in accordance
with the law of the State of New York, except as required by mandatory
provisions of law and except to the extent that the validity and perfection or
the perfection and the effect of perfection or non-perfection of the security
interest created hereby, or remedies hereunder, in respect of any particular
Pledged Collateral are governed by the law of a jurisdiction other than the
State of New York.
(g) This Agreement may be executed in any number of counterparts and
by the different parties hereto on separate counterparts each of which, when so
executed, shall be deemed an original, but all such counterparts shall
constitute but one and the same instrument.
IN WITNESS WHEREOF, the Pledgor has caused this Agreement to be
executed and delivered by its officer thereunto duly authorized, as of the date
first above written.
PLEDGOR:
DELTA FUNDING CORPORATION
By:
-------------------------
Name:
Title:
ACCEPTED AND AGREED:
U.S. BANK TRUST NATIONAL ASSOCIATION,
as Agent
By:
-----------------------
Name:
Title:
SCHEDULE I
TO
PLEDGE AGREEMENT
------------------------------
OWNER TRUST CERTIFICATES
PERCENTAGE OF CERTIFICATE
NAME OF ISSUER OUTSTANDING SECURITY CLASS NO.(S)
-------------- -------------------- ----- -----------
Delta Funding
Residual Holding
Trust 2000-2 100%
SCHEDULE II
TO
PLEDGE AGREEMENT
PLEDGE AMENDMENT
This Pledge Amendment, dated ___________________, is delivered
pursuant to Section 4 of the Pledge Agreement referred to below. The undersigned
hereby agrees that this Pledge Amendment may be attached to the Pledge
Agreement, dated November __, 2000, as it may heretofore have been or hereafter
may be amended or otherwise modified or supplemented from time to time and that
the Owner Trust Certificates listed on this Pledge Amendment shall be and become
part of the Pledged Collateral referred to in said Pledge Agreement and shall
secure all of the Obligations referred to in said Pledge Agreement.
OWNER TRUST CERTIFICATES
--------------------------------------
By:
---------------------------
Name:
----------------------
Title:
Exhibit D to Indenture
PLEDGE AGREEMENT
PLEDGE AND SECURITY AGREEMENT dated as of November ___, 2000, made by
DF SPECIAL HOLDINGS CORPORATION, a Delaware corporation, (the "PLEDGOR"), in
favor of U.S. BANK TRUST NATIONAL ASSOCIATION, as trustee and collateral agent
(the "AGENT") under that certain Indenture dated as of the date hereof (the
"INDENTURE") among DELTA FINANCIAL CORPORATION, as issuer, the parties whose
names and signatures appear on the signature pages thereto under the heading
"Subsidiary Guarantors" and the Agent.
W I T N E S S E T H:
WHEREAS, it is a condition precedent to the effectiveness of the
Indenture that the Pledgor shall have executed and delivered to the Agent a
pledge and security agreement providing for the pledge to the Agent of, and the
grant to the Agent of a security interest in one hundred percent (100%) by
number all of the issued and outstanding Owner Trust Certificates (as defined
herein) from time to time owned by the Pledgor;
WHEREAS, the Pledgor has determined that the execution, delivery and
performance of this Agreement directly benefits, and is in the best interest of
the Pledgor;
NOW, THEREFORE, in consideration of the premises and the agreements
herein and of other good and valuable consideration, the Pledgor hereby agrees
with the Agent as follows:
SECTION 1. DEFINITIONS. As used in this Agreement, capitalized terms
used herein without definition have the meanings specified in the Indenture or
if not defined in the Indenture, then in Article 8 or Article 9 of the Uniform
Commercial Code (the "CODE") currently in effect in the State of New York, and
the following terms shall have the following meanings:
"DEPOSIT TRUST AGREEMENT" shall mean that Deposit Trust Agreement
dated as of _______, 2000 by and between the Pledgor, as depositor and
Wilmington Trust Company, a Delaware banking corporation, as owner trustee.
"GOVERNMENTAL AUTHORITY" shall mean any nation or government, any
federal, state, city, town, municipality, county, local or other political
subdivision thereof or thereto and any department, commission, board, bureau,
instrumentality, agency or other entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.
"OWNER TRUST CERTIFICATES" shall mean the certificates issued under
the Deposit Trust Agreement evidencing beneficial ownership interests in the
Trust described in Schedule I hereto.
"TRUST" shall mean Delta Funding Residual Holding Trust 2000-1
established under the Deposit Trust Agreement.
SECTION 2. PLEDGE AND GRANT OF SECURITY INTEREST. As collateral
security for all of the Obligations (as defined in Section 3 hereof), the
Pledgor hereby pledges and collaterally assigns to the Agent, and grants to the
Agent a continuing security interest in all of the Pledgor's right, title and
interest in and to the Owner Trust Certificates, whether now owned or hereafter
acquired by the Pledgor and howsoever its respective interest therein may arise
or appear (whether by ownership, security interest, claim or otherwise) and all
proceeds of any and all of the foregoing (collectively, the "PLEDGED
COLLATERAL").
SECTION 3. SECURITY FOR OBLIGATIONS. The security interest created
hereby in the Pledged Collateral constitutes continuing collateral security for
all of the following obligations whether now existing or hereafter incurred
(collectively, the "OBLIGATIONS"):
(a) the due and punctual payment of any and all amounts due and owing
by the Pledgor under the Subsidiary Guaranty;
(b) the due performance and observance by the Pledgor of all of its
other obligations from time to time existing in respect of the Indenture, the
Senior Notes, the Collateral Agreements and the Related Agreements; and
(c) all fees, costs, charges and expenses paid or incurred by the
Agent in connection with the creation, protection and preservation or
enforcement of its rights under any of the Indenture, the Senior Notes, the
Subsidiary Guarantees, the Collateral Agreements and the Related Agreements, on
a full indemnity basis.
SECTION 4. DELIVERY OF THE OWNER TRUST CERTIFICATES.
(a) All certificates evidencing the Pledged Collateral shall be
delivered to the Agent, together with any necessary endorsement and/or
appropriate transfer form duly executed in blank with respect to such Pledged
Collateral, on or prior to the execution and delivery of this Agreement. All
certificates evidencing Pledged Collateral hereafter owned by the Pledgor from
time to time are hereby pledged to the Agent pursuant to the terms of this
Agreement (the "ADDITIONAL COLLATERAL") shall be delivered to the Agent within
ten (10) Business Days of receipt thereof by or on behalf of the Pledgor. All
such certificates evidencing the Pledged Collateral held by or on behalf of the
Agent pursuant hereto shall be delivered in suitable form for transfer by
delivery or shall be accompanied by duly executed instruments of transfer or
assignment in blank, all in form and substance reasonably satisfactory to the
Agent. Within ten (10) Business Days of the receipt by the Pledgor of any
Additional Collateral, a Pledge Amendment, duly executed by the Pledgor, in
substantially the form of Schedule II hereto (a "PLEDGE AMENDMENT") shall be
delivered to the Agent, in respect of the Additional Collateral which are to be
pledged pursuant to this Agreement. The absence of any Pledge Amendment shall
not in any way effect the validity of the pledge of the Pledged Collateral made
pursuant to this Agreement. The Pledgor hereby authorizes the Agent to attach
each Pledge Amendment to this Agreement and agrees that all certificates or
instruments listed on any Pledge Amendment delivered to the Agent shall for all
purposes hereunder constitute Pledged Collateral and the Pledgor shall be deemed
upon delivery thereof to have made the representations and warranties set forth
in Section 5 with respect to such Additional Collateral.
(b) If the Pledgor shall receive, by virtue of its being or having
been an owner of any Pledged Collateral, any (i) stock certificate (including,
without limitation, any certificate representing a stock dividend or
distribution in connection with any increase or reduction of capital,
reclassification, merger, consolidation, sale of assets, combination of shares,
stock split, spin-off or split-off) or other instrument, (ii) option or right,
whether as an addition to, substitution for, or in exchange for, any Pledged
Collateral, or otherwise, (iii) dividends payable in cash (except such dividends
permitted to be retained by the Pledgor pursuant to Section 7 hereof) or in
securities or other property, or (iv) dividends or other distributions in
connection with a partial or total liquidation or dissolution or in connection
with a reduction of capital, capital surplus or paid in surplus, the Pledgor
shall receive such certificate, promissory note, instrument, option, right,
payment or distribution in trust for the benefit of the Agent, shall segregate
it from the Pledgor's other property and shall deliver it forthwith to the Agent
in the exact form received, with any necessary endorsement and/or appropriate
transfer forms duly executed in blank, to be held by the Agent as Pledged
Collateral and as further collateral security for the Obligations.
SECTION 5. REPRESENTATIONS AND WARRANTIES. The Pledgor represents and
warrants as follows:
(a) The Owner Trust Certificates pledged hereunder have been duly
[authorized and validly issued, are fully paid and nonassessable] and evidence
100% of the beneficial ownership interests in the Trust. The Pledgor is the
beneficial and record owner of the Owner Trust Certificates pledged hereunder.
All other certificates evidencing beneficial ownership interests in the Trust
will be, when issued, duly authorized and validly issued, fully paid [and
nonassessable].
(b) It is and will be at all times the legal and beneficial owner of
the Pledged Collateral free and clear of any Lien, security interest, option or
other charge or encumbrance except for the security interest created by this
Agreement.
(c) The exercise by the Agent of any of its rights and remedies
hereunder will not contravene any law or any material contractual restriction
binding on or affecting it or any of its properties, and will not result in or
require the creation of any Lien, security interest or other charge or
encumbrance upon or with respect to any of its properties other than pursuant to
this Agreement or other Collateral Agreements.
(d) No authorization or approval or other action by, and no notice to
or filing with, any Governmental Authority is required to be obtained or made by
it for (i) the due execution, delivery and performance of this Agreement, (ii)
the grant, or the perfection, of the security interest purported to be created
hereby in the Pledged Collateral, or (iii) the exercise by the Agent of its
rights and remedies hereunder, except as may be required in connection with any
sale of any Pledged Collateral by laws affecting the offering and sale of
securities generally.
(e) This Agreement creates a valid security interest in favor of the
Agent in the Pledged Collateral, as security for the Obligations; PROVIDED,
HOWEVER, that the Agent has not required perfection to the extent that
perfection would be required under the laws of a country or jurisdiction other
than the United States of America. The possession by the Agent (or its
custodian, nominee or other designee) of the certificates constituting the
Pledged Collateral, and all other certificates constituting the Pledged
Securities from time to time, and the filing under the Code of the financing
statement(s) in the offices described in Schedule [ ] to the Security Agreement
results in the perfection of such security interest in any instruments and
certificated securities constituting Pledged Collateral. If any Pledged
Collateral consists of uncertificated securities, unless the immediately
succeeding sentence is applicable thereto, the Agent's security interest therein
will be perfected when the Agent (or its custodian, nominee or other designee )
becomes the registered holder thereof, or upon the agreement of each issuer that
it will comply with instructions originated by the Agent with respect to such
securities without further consent by the Pledgor. If any Pledged Collateral
consists of security entitlements, the Agent's security interest therein will be
perfected upon the filing of appropriate UCC-1 Financing Statements, signed by
the Pledgor, or upon the agreement of any applicable securities intermediary to
comply with entitlement orders by the Agent without further consent by the
Pledgor. Such security interest is, or in the case of Pledged Collateral in
which the Pledgor obtains rights after the date hereof, will be, a perfected,
first priority security interest. All action necessary to perfect and protect
such security interest has been duly taken, except for the Agent's (or the
Agent's custodian, nominee or other designee ) having possession of the
certificated Owner Trust Certificates constituting the Additional Collateral,
after the date hereof and obtaining control of uncertificated securities and
securities entitlements constituting Additional Collateral after the date
hereof.
(f) There is no pending or, to the best of its knowledge, threatened
action, suit, proceeding or claim before any court or other Governmental
Authority or any arbitrator, or any order, judgment or award by any court or
other Governmental Authority or arbitrator, that may adversely affect the grant
or the perfection of the security interest purported to be created hereby in the
Pledged Collateral, or the exercise by the Agent of any of its rights or
remedies hereunder.
SECTION 6. COVENANTS AS TO THE PLEDGED COLLATERAL. So long as any
Obligations shall remain outstanding, the Pledgor will, unless the Agent shall
otherwise consent in writing:
(a) keep adequate records concerning the Pledged Collateral and permit
the Agent or any agents or representatives thereof at any time or from time to
time to examine and make copies of and abstracts from such records;
(b) at its expense, upon the request of the Agent, promptly deliver to
the Agent a copy of each material notice or other communication received by it
in respect of the Pledged Collateral;
(c) at its expense, defend the Agent's right, title and security
interest in and to the Pledged Collateral against the claims of any Person;
(d) at its expense, at any time and from time to time, promptly
execute and deliver all further instruments and documents and take all further
action that may be necessary or that the Agent may reasonably request in order
to (i) perfect and protect the security interest purported to be created hereby,
(ii) enable the Agent to exercise and enforce its rights and remedies hereunder
in respect of the Pledged Collateral, or (iii) otherwise effect the purposes of
this Agreement, including, without limitation, delivering to the Agent, after
the occurrence and during the continuation of an Event of Default, irrevocable
proxies in respect of the Pledged Collateral;
(e) not sell, assign (by operation of law or otherwise), exchange or
otherwise dispose of any Pledged Collateral or any interest therein except as
permitted by Section 7(a)(i) hereof;
(f) not create or suffer to exist any Lien, security interest or other
charge or encumbrance upon or with respect to any Pledged Collateral except for
the security interest created hereby;
(g) not make or consent to any amendment or other modification or
waiver with respect to any Pledged Collateral or enter into any agreement or
permit to exist any restriction with respect to any Pledged Collateral other
than pursuant to the Collateral Agreements and applicable securities laws;
(h) not permit the issuance of (i) any additional beneficial ownership
interests in the Trust or (ii) any securities convertible voluntarily by the
holder thereof or automatically upon the occurrence or non-occurrence of any
event or condition into, or exchangeable for, any beneficial ownership interests
in the Trust; and
(i) not take or fail to take any action which would in any manner
impair the enforceability of the Agent's security interest in any Pledged
Collateral.
SECTION 7. VOTING RIGHTS, DISTRIBUTIONS, AGENT'S CONSENT, ETC. IN
RESPECT OF THE PLEDGED COLLATERAL.
(a) So long as no Event of Default shall have occurred and be
continuing:
(i) except where the Deposit Trust Agreement requires the
consent of the Collateral Agent (the same being the Agent hereunder), in which
case the consent of the Agent shall be required, the Pledgor may exercise any
and all voting and other consensual rights pertaining to any Pledged Collateral
for any purpose not inconsistent with the terms of this Agreement, the Deposit
Trust Agreement, the Indenture, the Senior Notes or the other Collateral
Agreements;
(ii) the Pledgor may receive and retain any and all
distributions, interest or other amounts paid in respect of the Pledged
Collateral; PROVIDED, HOWEVER, that any and all (A) distributions and interest
paid or payable other than in cash in respect of, and instruments and other
property received, receivable or otherwise distributed in respect of or in
exchange for, any Pledged Collateral, (B) distributions paid or payable in cash
in respect of any Pledged Collateral in connection with a partial or total
liquidation or dissolution or in connection with a reduction of capital, capital
surplus or paid-in surplus, (C) cash paid, payable or otherwise distributed in
redemption of, or in exchange for, any Pledged Collateral, and (D) any
distribution and interest paid or payable when Section 4.17 of the Indenture is
not complied with, shall be, and shall forthwith be delivered to the Agent to
hold as, Pledged Collateral or be applied to the Obligations at the direction of
the Pledgor, and shall, if received by the Pledgor, be received in trust for the
benefit of the Agent, shall be segregated from the other property or funds of
the Pledgor, and shall be forthwith delivered to the Agent in the exact form
received with any necessary endorsement and/or appropriate transfer forms duly
executed in blank, to be held by the Agent as Pledged Collateral and as further
collateral security for the Obligations; and
(iii) the Agent will execute and deliver (or cause to be
executed and delivered) to the Pledgor all such proxies and other instruments as
the Pledgor may reasonably request in writing for the purpose of enabling the
Pledgor to exercise the voting and other rights which it is entitled to exercise
pursuant to paragraph (i) of this Section 7(a) and to receive the dividends
which it is authorized to receive and retain pursuant to paragraph (ii) of this
Section 7(a);
(iv) the Agent will not consent to any action or proposed
action under the Deposit Trust Agreement or any of the Related Agreements
without obtaining the prior consent of the Holders or Beneficial Holders of a
majority of the principal amount of the then outstanding Senior Notes; and
(v) the Agent shall promptly deliver to each Holder or
Beneficial Holder who requests the Agent to do so a copy of each Compliance
Certification, Release Certification, Certificate Schedule and any notices,
communications or reports received by the Agent with respect to the Trust or the
administration thereof or the Pledged Collateral.
(b) Upon the occurrence and during the continuance of an Event of
Default:
(i) all rights of the Pledgor to exercise the voting and
other consensual rights which it would otherwise be entitled to exercise
pursuant to paragraph (i) of subsection (a) of this Section 7, and to receive
the distributions and interest payments which it would otherwise be authorized
to receive and retain pursuant to paragraph (ii) of subsection (a) of this
Section 7, shall cease, and all such rights shall thereupon become vested in the
Agent which shall thereupon have the sole right to exercise such voting and
other consensual rights and to receive and hold as Pledged Collateral such
dividends and interest payments;
(ii) without limiting the generality of the foregoing, the
Agent may at its option exercise any and all rights of conversion, exchange,
subscription or any other rights, privileges or options pertaining to any of the
Pledged Collateral as if it were the absolute owner thereof, including, without
limitation, the right to exchange, in its discretion, any and all of the Pledged
Collateral upon the merger, consolidation, reorganization, recapitalization or
other adjustment of the Trust, or upon the exercise by the Trust of any right,
privilege or option pertaining to any Pledged Collateral, and, in connection
therewith, to deposit and deliver any and all of the Pledged Collateral with any
committee, depository, transfer agent, registrar or other designated agent upon
such terms and conditions as it may determine; and
(iii) all distributions and interest payments which are
received by the Pledgor contrary to the provisions of paragraph (i) of this
Section 7(b) shall be received in trust for the benefit of the Agent, shall be
segregated from other funds of the Pledgor, and shall be forthwith paid over to
the Agent as Pledged Collateral in the exact form received with any necessary
endorsement and/or appropriate transfer forms duly executed in blank, to be held
by the Agent as Pledged Collateral and as further collateral security for the
Obligations.
SECTION 8. ADDITIONAL PROVISIONS CONCERNING THE PLEDGED COLLATERAL.
(a) The Pledgor hereby authorizes the Agent to file, without
the signature of the Pledgor where permitted by law, one or more financing or
continuation statements, and amendments thereto, relating to the Pledged
Collateral.
(b) The Pledgor hereby irrevocably appoints the Agent the Pledgor's
attorney-in-fact and proxy, with full authority in the place and stead of the
Pledgor and in the name of the Pledgor or otherwise, from time to time in the
Agent's discretion exercised reasonably and during the continuance of an Event
of Default, to take any action and to execute any instrument which the Agent may
deem necessary or reasonably advisable to accomplish the purposes of this
Agreement (subject to the rights of the Pledgor under Section 7(a) hereof),
including, without limitation, to receive, endorse and collect all instruments
made payable to the Pledgor representing any dividend, interest payment or other
distribution in respect of any Pledged Collateral and to give full discharge for
the same.
(c) During the occurrence and continuance of an Event of Default, if
the Pledgor fails to perform any agreement or obligation contained herein, the
Agent itself may perform, or cause performance of, such agreement or obligation,
and the expenses of the Agent incurred in connection therewith shall be payable
by the Pledgor (such obligation being joint and several in nature) pursuant to
Section 10 hereof.
(d) Except as provided in Section 7(a)(iv), other than the exercise of
reasonable care to assure the safe custody of the Pledged Collateral while held
hereunder, the Agent shall have no duty or liability to preserve rights
pertaining thereto and shall be relieved of all responsibility for the Pledged
Collateral upon surrendering it or tendering surrender of it to the Pledgor. The
Agent shall be deemed to have exercised reasonable care in the custody and
preservation of the Pledged Collateral in its possession if the Pledged
Collateral is accorded treatment substantially equal to that which the Agent
accords its own property, it being understood that the Agent shall not have
responsibility for (i) ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, tenders, or other matters relating to any
Pledged Collateral, whether or not the Agent has or is deemed to have knowledge
of such matters, or (ii) except as provided in Section 7(a)(iv), taking
any necessary steps to preserve rights against any parties with respect to any
Pledged Collateral.
(e) The Agent may at any time after the occurrence and during the
continuation of an Event of Default in its discretion (i) without notice to the
Pledgor, transfer or register in the name of the Agent or any of its nominees
any or all of the Pledged Collateral, subject only to the revocable rights of
the Pledgor under Section 7(a) hereof, and (ii) exchange certificates or
instruments constituting Pledged Collateral for certificates or instruments of
smaller or larger denominations.
SECTION 9. REMEDIES UPON EVENT OF DEFAULT. If any Event of Default
shall have occurred and be continuing:
(a) The Agent may exercise in respect of the Pledged Collateral, in
addition to other rights and remedies provided for herein or otherwise available
to it, all of the rights and remedies of a secured party on default under the
Code then in effect in the State of New York; and without limiting the
generality of the foregoing and without notice except as specified below, sell
the Pledged Collateral or any part thereof in one or more parcels at public or
private sale, at any exchange or broker's board or elsewhere, at such price or
prices and on such other terms as the Agent may deem commercially reasonable.
The Pledgor agrees that, to the extent notice of sale shall be required by law,
at least ten (10) Business Days' notice to the Pledgor of the time and place of
any public sale or the time after which any private sale is to be made shall
constitute reasonable notification. The Agent shall not be obligated to make any
sale of Pledged Collateral regardless of notice of sale having been given. The
Agent may adjourn any public or private sale from time to time by announcement
at the time and place fixed therefor, and such sale may, without further notice,
be made at the time and place to which it was so adjourned.
(b) The Pledgor recognizes that it is impracticable to effect a public
sale of all or any part of the Pledged Securities or any other securities
constituting Pledged Collateral and that the Agent may, therefore, determine to
make one or more private sales of any such securities to a restricted group of
purchasers who will be obligated to agree, among other things, to acquire such
securities for their own account, for investment and not with a view to the
distribution or resale thereof. The Pledgor acknowledges that any such private
sale may be at prices and on terms less favorable to the seller than the prices
and other terms which might have been obtained at a public sale and,
notwithstanding the foregoing, agrees that such private sales shall be deemed to
have been made in a commercially reasonable manner and that the Agent shall have
no obligation to delay sale of any such securities for the period of time
necessary to permit the issuer of such securities to register such securities
for public sale under the Securities Act of 1933, as amended (the "SECURITIES
ACT"). The Pledgor further acknowledges and agrees that any offer to sell such
securities which has been (i) publicly advertised on a BONA FIDE basis in a
newspaper or other publication of general circulation in the financial community
of New York, New York (to the extent that such an offer may be so advertised
without prior registration under the Securities Act), or (ii) made privately in
the manner described above to not less than fifteen (15) BONA FIDE offerees
shall be deemed to involve a "public sale" for the purposes of Section 9-504(3)
of the Code (or any successor or similar, applicable statutory provision) as
then in effect in the State of New York, notwithstanding that such sale may not
constitute a "public offering" under the Securities Act, and that the Agent may,
in such event, bid for the purchase of such securities.
(c) Any cash held by the Agent as Pledged Collateral and all cash
proceeds received by the Agent in respect of any sale of, collection from, or
other realization upon, all or any part of the Pledged Collateral shall be held
by the Agent as collateral for, and/or then or at any time thereafter applied
(after payment of any amounts payable to the Agent pursuant to Section 10
hereof) in whole or in part by the Agent against, all or any part of the
Obligations as directed by the Pledgor consistent with the provisions of the
Indenture. Any surplus of such cash or cash proceeds held by the Agent and
remaining after payment in full of all of the Obligations shall be paid over to
the Pledgor or to such person as may be lawfully entitled to receive such
surplus.
(d) In the event that the proceeds of any such sale, collection or
realization are insufficient to pay all amounts to which the Agent is legally
entitled, the Pledgor shall be liable for the deficiency, together with interest
thereon at the highest rate specified in the Senior Notes for interest on
overdue principal thereof or such other rate as shall be fixed by applicable
law, together with the costs of collection and the reasonable fees and expenses
of any attorneys employed by the Agent to collect such deficiency.
SECTION 10. INDEMNITY AND EXPENSES.
(a) The Pledgor agrees to indemnify the Agent from and against any and
all claims, losses and liabilities growing out of or resulting from this
Agreement (including, without limitation, enforcement of this Agreement), except
claims, losses or liabilities resulting from the Agent's gross negligence or
willful misconduct as determined by a final judgment of a court of competent
jurisdiction.
(b) The Pledgor shall be obligated for, and will promptly pay to the
Agent, the amount of any and all reasonable costs and expenses, including the
reasonable fees and disbursements of the Agent's counsel and of any experts and
agents, which the Agent may incur in connection with (i) the administration of
this Agreement, (ii) the custody, preservation, use or operation of, or the sale
of, collection from, or other realization upon, any Pledged Collateral, (iii)
the exercise or enforcement of any of the rights of the Agent hereunder, or (iv)
the failure by any of the Pledgor to perform or observe any of the provisions
hereof.
SECTION 11. NOTICES, ETC. All notices and other communications
provided for hereunder shall be in writing and shall be mailed (by certified
mail, postage prepaid and return receipt requested), telecopied or delivered, if
to the Pledgor, to the address for the Pledgor specified in the Indenture, and
if to the Agent, to it at its address specified in the Indenture, or as to
either such Person at such other address as shall be designated by such Person
in a written notice to such other Person complying as to delivery with the terms
of this Section 11. All such notices and other communications shall be effective
(i) if sent by certified mail, return receipt requested, when received or three
(3) Business Days after mailing, whichever first occurs, (ii) if telecopied,
when transmitted and confirmation is received, provided same is on a Business
Day and, if not, on the next Business Day, or (iii) if delivered, upon delivery,
provided same is on a Business Day and, if not, on the next Business Day.
SECTION 12. CONSENT TO JURISDICTION, ETC.
(a) Any legal action or proceeding with respect to this Agreement or
any document related thereto may be brought in the courts of the State of New
York located in the borough of Manhattan or of the United States of America for
the Southern District of New York, and, by execution and delivery of this
Agreement, the Pledgor hereby accepts unconditionally the jurisdiction of the
aforesaid courts. The Pledgor hereby irrevocably waives any objection,
including, without limitation, any objection to the laying of venue or based on
the grounds of FORUM NON CONVENIENS, which the Pledgor may now or hereafter have
to the bringing of any such action or proceeding in such respective
jurisdictions.
(b) The Pledgor irrevocably consents to the service of process of any
of the aforementioned courts in any such action or proceeding by the mailing of
copies thereof by registered or certified mail, postage prepaid, to the Pledgor
at its address referred to in Section 11 hereof.
(c) Nothing contained in this Section 12 shall affect the right of the
Agent to serve legal process in any other manner permitted by law or to commence
legal proceedings or otherwise proceed against the Pledgor in any other
jurisdiction.
SECTION 13. WAIVER OF JURY TRIAL. THE PLEDGOR AND THE AGENT (BY
ACCEPTING THIS AGREEMENT) WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM CONCERNING ANY RIGHTS UNDER THIS AGREEMENT OR ANY
OTHER COLLATERAL AGREEMENTS OR ARISING FROM ANY OTHER COLLATERAL AGREEMENT AND
AGREE THAT ANY SUCH ACTION, PROCEEDING OR COUNTERCLAIM SHALL BE TRIED BEFORE A
COURT AND NOT BEFORE A JURY.
SECTION 14. MISCELLANEOUS.
(a) No amendment of any provision of this Agreement shall be effective
unless it is in writing and signed by the Pledgor, the Agent and the holders of
more than 50% of the outstanding principal amount of the Senior Notes, and no
waiver of any provision of this Agreement, and no consent to any departure by
the Pledgor therefrom, shall be effective unless it is in writing and signed by
the Agent and the holders of more than 50% of the outstanding principal amount
of the Senior Notes, and then such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given.
(b) No failure on the part of the Agent to exercise, and no delay in
exercising, any right hereunder or under any other document shall operate as a
waiver thereof; nor shall any single or partial exercise of any such right
preclude any other or further exercise thereof or the exercise of any other
right. The rights and remedies of the Agent provided herein are cumulative and
are in addition to, and not exclusive of, any rights or remedies provided by
law. The rights of the Agent under any document against any party thereto are
not conditional or contingent on any attempt by the Agent to exercise any of its
rights under any other document against such party or against any other person.
(c) Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining portions hereof or thereof or affecting the validity or enforceability
of such provision in any other jurisdiction.
(d) This Agreement shall create a continuing security interest in the
Pledged Collateral and shall (i) remain in full force and effect until the
payment and performance in full or release of the Obligations and the
termination of the Indenture, and (ii) be binding on the Pledgor and by its
acceptance hereof, the Agent, and their respective successors and assigns and
shall inure, together with all rights and remedies of the Agent hereunder, to
the benefit of the Pledgor, the Agent and its successors, transferees and
assigns. The Agent may resign at any time upon giving the Pledgor and the
Trustee thirty (30) days' prior written notice. The Agent shall continue to
serve until its successor, appointed by notice of the Pledgor, accepts
appointment as successor collateral agent and receives all property held by the
Agent under this Agreement. The holders of a majority in principal amount of the
outstanding Senior Notes may at any time remove the Agent by so notifying the
Pledgor and the Agent and may appoint a successor agent with the Pledgor's
consent, provided that after the occurrence of an Event of Default, the
Pledgor's consent shall not be required. The Pledgor may remove the Agent if:
(1) the Agent fails to fulfill its obligations hereunder;
(2) the Agent is adjudged a bankrupt or an insolvent;
(3) a receiver or other public officer takes charge of the
Agent or its property; or
(4) the Agent becomes incapable of acting.
If the Agent resigns or is removed or if a vacancy exists in the
office of Agent for any reason, the Company shall notify each Holder of such
event and the Holders of a majority in principal amount of the Senior Notes
shall promptly appoint a successor Agent. A successor Agent shall deliver a
written acceptance of its appointment to the retiring Agent, the Trustee and the
Pledgor. Immediately after that, the retiring Agent shall transfer all property
held by the retiring Agent under this Agreement to the successor, the
resignation or removal of the retiring Agent shall become effective, and the
successor Agent shall have all the rights, powers and duties of the Agent under
this Agreement. If a successor Agent does not take office within 60 days after
the retiring Agent resigns or is removed, the retiring Agent, the Company or the
Holders of at least 10% in principal amount of the outstanding Senior Notes may
petition any court of competent jurisdiction, at the expense of the Company, for
the appointment of a successor collateral agent. The terms and conditions of
this Agreement will remain unimpaired by resignation of the Agent or the
appointment of a successor collateral agent. Following the appointment of a
successor collateral agent, such person shall for all intents and purposes of
this Agreement be the "Agent" hereunder. None of the rights or obligations of
the Pledgor hereunder may be assigned or otherwise transferred without the prior
written consent of the Agent.
(e) Upon the satisfaction in full of Obligations and the termination
of the Indenture, (i) this Agreement and the security interest created hereby
shall terminate and all rights to the Pledged Collateral shall revert to the
Pledgor, and (ii) the Agent will, upon the Pledgor's request, and at the
Pledgor's expense, promptly (A) return to the Pledgor such of the Pledged
Collateral as shall not have been sold or otherwise disposed of or applied
pursuant to the terms hereof, and (B) execute and deliver to the Pledgor,
without recourse, representation or warranty, such documents as the Pledgor
shall reasonably request to evidence such termination.
(f) This Agreement shall be governed by and construed in accordance
with the law of the State of New York, except as required by mandatory
provisions of law and except to the extent that the validity and perfection or
the perfection and the effect of perfection or non-perfection of the security
interest created hereby, or remedies hereunder, in respect of any particular
Pledged Collateral are governed by the law of a jurisdiction other than the
State of New York.
(g) This Agreement may be executed in any number of counterparts and
by the different parties hereto on separate counterparts each of which, when so
executed, shall be deemed an original, but all such counterparts shall
constitute but one and the same instrument.
IN WITNESS WHEREOF, the Pledgor has caused this Agreement to be
executed and delivered by its officer thereunto duly authorized, as of the date
first above written.
PLEDGOR:
DF SPECIAL HOLDINGS CORPORATION
By:
-------------------------
Name:
Title:
ACCEPTED AND AGREED:
U.S. BANK TRUST NATIONAL ASSOCIATION,
as Agent
By:
-----------------------
Name:
Title:
SCHEDULE I
TO
PLEDGE AGREEMENT
------------------------------
OWNER TRUST CERTIFICATES
PERCENTAGE OF CERTIFICATE
NAME OF ISSUER OUTSTANDING SECURITY CLASS NO.(S)
-------------- ------------------- ----- ------
Delta Funding
Residual Holding
Trust 2000-2 100%
SCHEDULE II
TO
PLEDGE AGREEMENT
PLEDGE AMENDMENT
This Pledge Amendment, dated ___________________, is delivered
pursuant to Section 4 of the Pledge Agreement referred to below. The undersigned
hereby agrees that this Pledge Amendment may be attached to the Pledge
Agreement, dated November __, 2000, as it may heretofore have been or hereafter
may be amended or otherwise modified or supplemented from time to time and that
the Owner Trust Certificates listed on this Pledge Amendment shall be and become
part of the Pledged Collateral referred to in said Pledge Agreement and shall
secure all of the Obligations referred to in said Pledge Agreement.
OWNER TRUST CERTIFICATES
--------------------------------------
By:
-----------------------------------
Name:
-------------------------------
Title:
Exhibit E to Indenture
SECURITY AGREEMENT
SECURITY AGREEMENT dated as of October __, 2000 (this "AGREEMENT")
made by [DELTA FINANCIAL CORPORATION, a Delaware corporation], [LIST ALL
RESTRICTED SUBSIDIARIES OTHER THAN THE RESIDUAL COLLATERAL TRUSTS] (individually
a "Grantor" and collectively the "Grantor" or "Grantors"), in favor of U.S. BANK
TRUST NATIONAL ASSOCIATION, as trustee (the "AGENT") under that certain
Indenture dated as of the date hereof (the "INDENTURE") among the Grantor, as
issuer, the parties whose names and signatures appear on the signature pages
thereto under the heading "Subsidiary Guarantors" and the Agent.
W I T N E S S E T H:
WHEREAS, it is a condition precedent to the effectiveness of the
Indenture that the Grantor shall have executed and delivered to the Agent a
security agreement providing for the grant to the Agent of a lien on and
security interest in certain personal property of the Grantor as set forth
herein.
NOW, THEREFORE, in consideration of the premises and the agreements
herein and of other good and valuable consideration, the Grantor hereby agrees
with the Agent as follows:
SECTION 1. DEFINED TERMS. As used in this Agreement, capitalized terms
used herein without definition have the meanings specified in the Indenture or
if not defined in the Indenture, then in Article 9 of the Uniform Commercial
Code (the "CODE") currently in effect in the State of New York, and the
following terms have the following meanings:
"POOLING AGREEMENTS" means the Pooling Agreements [list all Pooling
and Servicing Agreements relating to public securitizations starting with Series
1997-1 and all subsequent Pooling and Servicing Agreements relating to public
securitizations] set forth on Schedule I hereto and all now existing or future
pooling and serving agreements relating to public securitizations in which one
or more Grantors is both the sponsor and the servicer or otherwise holds or has
retained the right to be or to select the servicer.
"PLEDGED SERVICING RIGHTS" means all Servicing Rights relating to
Residual Receivables (and to the underlying Receivable pool of any
Securitization Trust for Residual Receivables) for all Residual Receivables
(whether or not such are Senior Residual Receivables) now or hereafter on
deposit in any of the Residual Collateral Trusts.
"SERVICING RIGHTS". The contractual right, now existing or hereafter
arising, of a Grantor to be or to select the servicer, whether arising under any
Pooling Agreement or any other agreement.
"PROCEEDS" has the meaning assigned to it under the Code and, in any
event, shall include, but not be limited to, any and all other monies or other
property from time to time paid or payable or distributed or distributable under
or in connection with any of the Collateral.
SECTION 2. GRANT OF SECURITY INTEREST. As collateral security for the
payment and performance of all of the Obligations (as defined in Section 3
hereof), each Grantor hereby pledges and assigns to the Agent, and grants to the
Agent a continuing security interest of first priority in and to all Pledged
Servicing Rights, now existing or hereafter arising, and in and to the
[SERVICING CONTRACT WITH THE "WARM" BACK-UP SERVICER] and in all Proceeds
thereof (collectively, the "COLLATERAL").
Notwithstanding anything herein to the contrary, in no event shall the
Collateral include, and the Grantor shall not be deemed to have granted a
security interest in (x) any rights arising by virtue of a Grantor being the
servicer including, without limitation, Servicing Receivables owed to a Grantor
(or the rights to which have been assigned by a Grantor), compensation payable
to the servicer and optional purchase or repurchase rights owned by a Grantor
(or the rights to which have been assigned by a Grantor and (y) any rights or
interests in any license, contract or agreement to which the Grantor is a party
or any of its rights or interests thereunder to the extent that such a grant
would, under the express terms of such license, contract or agreement or
otherwise, result in a breach of the terms of, or constitute a default under
such license, contract or agreement (other than to the extent that any such term
would be rendered ineffective pursuant to Section 9-318(4) of the Code of any
relevant jurisdiction or any other applicable law (including the Bankruptcy
Code) or principles of equity); PROVIDED, HOWEVER, that the Collateral shall
include (x) any and all Proceeds to the extent that the assignment or
encumbering of Proceeds is not so restricted, and (y) upon any such licensor or
other applicable party's consent with respect to any such otherwise excluded
item of Collateral being obtained, thereafter such item of Collateral as well as
any Proceeds thereof that might theretofore have been excluded from such grant,
assignment, transfer, and conveyance of a security interest and the term
Collateral.
SECTION 3. SECURITY FOR OBLIGATIONS. The security interests created
hereby in the Collateral constitute continuing collateral security for all of
the following obligations, whether now existing or hereafter incurred (the
"OBLIGATIONS"):
(a) the due and punctual payment of the principal and premium, if any,
of, and interest on, the Senior Notes when and as the same shall be due and
payable, by acceleration, repurchase, redemption or otherwise, interest on the
overdue principal of and interest (to the extent permitted by law), if any, on
the Senior Notes and under the Indenture (including, without limitation, all
interest that accrues after the commencement of any case, proceeding or other
action relating to the bankruptcy, insolvency or reorganization of the Grantor);
(b) the due performance and observance by the Grantor of all of its
other obligations from time to time existing in respect of the Indenture, the
Senior Notes and the Collateral Agreements; and
(c) all fees, costs, charges and expenses paid or incurred by the
Agent in connection with the creation, protection and preservation or
enforcement of its rights under the Indenture, the Senior Notes, the Subsidiary
Guarantees or the Collateral Agreements, on a full indemnity basis.
SECTION 4. REPRESENTATIONS AND WARRANTIES. Each Grantor jointly and
severally represents and warrants as follows:
(a) It is and will be at all times the sole and exclusive owner of the
Collateral now or hereafter owned by it free and clear of any Lien, except for
Xxxxx created hereby. No effective financing statement or other instrument
similar in effect covering all or any part of the Collateral is on file in any
recording or filing office except such as may have been filed in favor of the
Agent relating to this Agreement.
(b) No authorization or approval or other action by, and no notice to
or filing with, any Governmental Authority or other regulatory body, or any
other Person, is required for (i) the grant by it, or the perfection, of the
security interest purported to be created hereby in the Collateral or (ii) the
exercise by the Agent of any of its rights and remedies hereunder.
(c) This Agreement creates valid security interests of first priority
in favor of the Agent in the Collateral, as security for the Obligations. The
Agent's filing of the financing statements described in Schedule II hereto will
result in the perfection of such security interests. Upon such filings, such
security interests are, or in the case of Collateral in which it obtains rights
after the date hereof, will be perfected first priority security interests. Such
filings and all other action necessary or desirable to perfect and protect such
security interest have been duly taken.
SECTION 5. COVENANTS AS TO THE COLLATERAL. So long as any of the
Obligations shall remain outstanding, unless the Agent shall otherwise consent
in writing:
(a) FURTHER ASSURANCES. Each Grantor will at its expense, at any time
and from time to time, promptly execute and deliver all further instruments and
documents and take all further action that may be reasonably necessary or
reasonably desirable or that the Agent may reasonably request in order (i) to
perfect and protect the security interest purported to be created hereby, (ii)
to enable the Agent to exercise and enforce its rights and remedies hereunder in
respect of the Collateral, or (iii) otherwise to effect the purposes of this
Agreement, including, without limitation (A) executing and filing such financing
or continuation statements, or amendments thereto, as may be necessary or
desirable or that the Agent may request in order to perfect and preserve the
security interest purported to be created hereby, and (B) furnishing to the
Agent from time to time statements and schedules further identifying and
describing the Collateral and such other reports in connection with the
Collateral as the Agent may reasonably request, all in reasonable detail.
(b) PROVISIONS CONCERNING CORPORATE MATTERS.
Each Grantor will (A) give the Agent at least thirty (30) days'
prior written notice of any change in its name, identity or organizational
structure and, in the event of any such change, shall take all actions
necessary to preserve the Agent's rights in the Collateral, including,
without limitation, the existence, perfection and priority of the security
interest created hereby in such Collateral and (B) keep its chief place of
business and chief executive office at the location(s) specified therefor
in Schedule III hereof or at such other locations of which it has given the
Agent thirty (30) days' prior written notice; PROVIDED, HOWEVER, in the
event of any such change, shall take all actions necessary to preserve the
Agent's rights in the Collateral, including, without limitation, the
existence, perfection and priority of the security interest created hereby
in such Collateral.
(c) TRANSFERS AND OTHER LIENS.
(i) Each Grantor will not sell, assign (by operation of law or
otherwise), lease, exchange or otherwise transfer or dispose of any of the
Collateral.
(ii) Each Grantor will not create or suffer to exist any Lien
upon or with respect to any Collateral except for Liens created hereby.
SECTION 6. ADDITIONAL PROVISIONS CONCERNING THE COLLATERAL.
(a) Each Grantor hereby authorizes the Agent to file, without its
signature where permitted by law, one or more financing or continuation
statements, and amendments thereto, relating to the Collateral.
(b) Each Grantor hereby irrevocably appoints the Agent its
attorney-in-fact and proxy, with full authority in its place and stead and in
its name or otherwise, from time to time in the Agent's discretion, to take any
action and to execute any instrument which the Agent may deem reasonably
necessary or reasonably advisable to accomplish the purposes of this Agreement,
including, without limitation, (i) upon the occurrence and during the
continuance of an Event of Default, to ask, demand, collect, sue for, recover,
compound, receive and give acquittance and receipts for moneys due and to become
due under or in respect of any Collateral, (ii) upon the occurrence and during
the continuance of an Event of Default, to receive, endorse, and collect any
drafts or other instruments, documents and chattel paper in connection with
clause (i) above, and (iii) upon the occurrence of an Event of Default, to file
any claims or take any action or institute any proceedings which the Agent may
deem reasonably necessary or reasonably desirable for the collection of any
Collateral or otherwise to enforce the rights of the Agent with respect to any
Collateral.
(c) If any Grantor fails to perform any agreement contained herein,
the Agent may itself perform, or cause performance of, such agreement or
obligation, in the name of the Grantor or the Agent, and the expenses of the
Agent incurred in connection therewith shall be payable by the Grantor pursuant
to Section 8 hereof.
(d) The powers conferred on the Agent hereunder are solely to protect
its interest in the Collateral and shall not impose any duty upon it to exercise
any such powers. Except for the safe custody of any Collateral in its possession
and the accounting for moneys actually received by it hereunder, the Agent shall
have no duty as to any Collateral or as to the taking of any necessary steps to
preserve rights against prior parties or any other rights pertaining to any
Collateral.
SECTION 7. REMEDIES UPON EVENT OF DEFAULT. If any Event of Default
shall have occurred and be continuing:
(a) The Agent may exercise in respect of the Collateral, in addition
to other rights and remedies provided for herein or otherwise available to it,
all of the rights and remedies of a secured party upon default under the Code
(whether or not the Code applies to the affected Collateral), and also may (i)
require the Grantor to, and the Grantor hereby agrees that it will at its
expense and upon request of the Agent forthwith, assemble all or part of the
Collateral as directed by the Agent and make it available to the Agent at a
place or places to be designated by the Agent which is reasonably convenient to
both parties, and (ii) without notice except as specified below, sell the
Collateral or any part thereof in one or more parcels at public or private sale,
at any of the Agent's offices or elsewhere, for cash, on credit or for future
delivery, and at such price or prices and upon such other terms as the Agent may
deem commercially reasonable. Each Grantor agrees that, to the extent notice of
sale shall be required by law, at least ten (10) days' notice to it of the time
and place of any public sale or the time after which any private sale is to be
made shall constitute reasonable notification. The Agent shall not be obligated
to make any sale of Collateral regardless of notice of sale having been given.
The Agent may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such sale may, without
further notice, be made at the time and place to which it was so adjourned. Each
Grantor hereby waives any claims against the Agent and the Holders arising by
reason of the fact that the price at which the Collateral may have been sold at
a private sale was less than the price which might have been obtained at a
public sale or was less than the aggregate amount of the Obligations, even if
the Agent accepts the first offer received and does not offer the Collateral to
more than one offeree and waives all rights which it may have to require that
all or any part of the Collateral be marshalled upon any sale (public or
private) thereof.
(b) All Proceeds received by the Agent in respect of any sale or
collection from, or other realization upon, all or any part the Collateral,
shall be promptly applied by the Agent against all or any part of the
Obligations as follows:
(i) first, to the payment of the reasonable costs and expenses of
such sale, collection or other realization, including the reasonable
out-of-pocket costs and expenses of the Agent and the reasonable fees,
costs, expenses and other client charges of counsel employed in connection
therewith, to the payment of all advances made by the Agent for the account
of the Grantor hereunder and to the payment of all costs and expenses
incurred by the Agent in connection with the administration and enforcement
of this Agreement;
(ii) second, at the option of the Agent, to the payment or other
satisfaction of any Liens and other encumbrances upon any of the
Collateral;
(iii) third, to the payment of all other Obligations then due and
payable under the Indenture, the Subsidiary Guarantee and the Senior Notes;
(iv) fourth, to the payment of any other amounts required by
applicable law; and
(v) fifth, to the respective Grantor or to whomsoever shall be
lawfully entitled to receive the same or as a court of competent
jurisdiction shall direct.
(c) In the event that the Proceeds of any such sale, collection or
realization are insufficient to pay all amounts to which the Agent is legally
entitled, the Grantors, jointly and severally, shall be liable for the
deficiency, together with interest thereon at the rate specified in the Senior
Notes for interest on overdue principal thereof or such other rate as shall be
fixed by applicable law, together with the costs of collection and the
reasonable fees, costs, expenses and other client charges of any attorneys
employed by the Agent to collect such deficiency.
SECTION 8. INDEMNITY AND EXPENSES.
(a) Each Grantor, jointly and severally, agrees to indemnify and hold
the Agent harmless from and against any and all claims, damages, losses,
liabilities, obligations, penalties, costs or expenses (including, without
limitation, legal fees, costs, expenses and other client charges) to the extent
that they arise out of or otherwise result from this Agreement (including,
without limitation, enforcement of this Agreement), except claims, losses or
liabilities resulting solely and directly from the Agent's gross negligence or
willful misconduct.
(b) The Grantors, jointly and severally, will promptly pay to the
Agent and each Holder (i) the amount of any and all reasonable costs and
expenses, including the reasonable fees, costs, expenses and other client
charges of counsel for the Agent and each Holder and of any experts and agents
(including, without limitation, any Person which may act as agent of the Agent
or any Holder), which the Agent or any Holder may incur in connection with (A)
the preparation, negotiation, execution, delivery, recordation, administration,
amendment, waiver or other modification or termination of this Agreement, or (B)
the custody, preservation, use or operation of, the Collateral, and (ii) the
amount of any and all costs and expenses, including the fees, costs, expenses
and other client charges of counsel for the Agent and each Holder and of any
experts and agents (including, without limitation, any Person which may act as
agent of the Agent or any Holder), which the Agent or any Holder may incur in
connection with (A) the sale of, collection from, or other realization upon, any
Collateral, (B) the exercise or enforcement of any of the rights of the Agent
and each Holder hereunder, or (C) the failure by a Grantor to perform or observe
any of the provisions hereof. In connection with any demand for payment under
this Section 8(b), the Agent shall deliver to the Grantor a certificate setting
forth in reasonable detail any amount or amounts that the Agent or any Holder is
entitled to receive pursuant to this Section 8(b) and shall be conclusive and
binding absent manifest error.
SECTION 9. NOTICES, ETC. Any notices hereunder shall be given and
shall be effective in the manner set forth in the Indenture.
SECTION 10. MISCELLANEOUS.
(a) No amendment of any provision of this Agreement shall be effective
unless it is in writing and signed by the Grantors, the Agent and the holders of
more than 50% of the outstanding principal amount of the Senior Notes, and no
waiver of any provision of this Agreement, and no consent to any departure by
the Grantor therefrom, shall be effective unless it is in writing and signed by
the Agent and the holders of more than 50% of the outstanding principal amount
of the Senior Notes, and then such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given.
(b) No failure on the part of the Agent to exercise, and no delay in
exercising, any right hereunder or under the Indenture or any Collateral
Agreement shall operate as a waiver thereof; nor shall any single or partial
exercise of any such right preclude any other or further exercise thereof or the
exercise of any other right. The rights and remedies of the Agent provided
herein and in the Indenture or any Collateral Agreement are cumulative and are
in addition to, and not exclusive of, any rights or remedies provided by law.
The rights of the Agent under the Indenture or any Collateral Agreement against
any party thereto are not conditional or contingent on any attempt by the Agent
to exercise any of its rights under the Indenture or any Collateral Agreement
against such party or against any other Person.
(c) Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining portions hereof or thereof or affecting the validity or enforceability
of such provision in any other jurisdiction.
(d) This Agreement shall create a continuing security interest in the
Collateral and shall (i) remain in full force and effect until the payment in
full or release of the Obligations and (ii) be binding on each Grantor and each
of its successors and assigns and shall inure, together with all rights and
remedies of the Agent hereunder, to the benefit of the Agent and its respective
permitted successors, transferees and assigns. Without limiting the generality
of clause (ii) of the immediately preceding sentence and subject to Sections
7.08 and 7.09 of the Indenture, the Agent may assign or otherwise transfer its
rights under this Agreement to any other Person who is the Trustee or successor
Trustee under the Indenture and such other Person shall thereupon become vested
with all of the benefits in respect thereof granted to the Agent herein or
otherwise. None of the rights or obligations of the Grantor hereunder may be
assigned or otherwise transferred without the prior written consent of the Agent
and the Holders of more than 50% of the outstanding amount of the Senior Notes,
and any such assignment or transfer without such consents shall be null and
void.
(e) Upon the satisfaction in full of the Obligations, (i) this
Agreement and the security interests created hereby shall terminate and all
rights to the Collateral shall revert to the respective Grantors, and (ii) the
Agent will, upon the respective Grantor's request and at the Grantor's expense,
(A) return to the Grantor such of the Collateral as shall not have been sold or
otherwise disposed of or applied pursuant to the terms hereof, and (B) execute
and deliver to the Grantor such documents as the Grantor shall reasonably
request to evidence such termination, all without any representation, warranty
or recourse whatsoever.
(f) This Agreement shall be governed by and construed in accordance
with the law of the State of New York, except as required by mandatory
provisions of law and except to the extent that the validity and perfection or
the perfection and the effect of perfection or non-perfection of the security
interest created hereby, or remedies hereunder, in respect of any particular
Collateral are governed by the law of a jurisdiction other than the State of New
York.
(g) The Grantor hereby expressly and irrevocably submits to the
jurisdiction of the courts of the State of New York located in the borough of
Manhattan and of the United States District Court for the Southern District of
New York for the purpose of any litigation arising out of, under or in
connection with, this Agreement, or any course of conduct, course of dealing,
statement (whether verbal or written) or action of it or of the Agent, and the
Grantor irrevocably agrees to be bound by any judgment rendered thereby in
connection with such litigation; PROVIDED, HOWEVER, any suit seeking enforcement
against any Collateral may be brought, at the Agent's option, in the courts of
any jurisdiction where such Collateral or other property may be found. To the
extent that the Grantor has or hereafter may acquire any immunity from
jurisdiction of any court or from any legal process (whether through service or
notice, attachment prior to judgment, attachment in aid of execution or
otherwise) with respect to itself or its property, the Grantor hereby
irrevocably waives such immunity in respect of its obligations under this
Agreement and any other Collateral Agreement.
(h) The Grantor hereby expressly and irrevocably waives, to the
fullest extent permitted by law, any objection which it may now or hereafter
have to the laying of venue of any such litigation brought in any such court
referred to above and any claim that any such litigation has been brought in an
inconvenient forum.
(i) The Grantor further irrevocably consents to the service of process
(i) by registered or certified mail, postage prepaid, to its address for notices
contained in the Indenture, such service to become effective five (5) days after
such mailing, or (ii) by personal service within or without the State of New
York. Nothing contained herein shall affect the right of the Agent to serve
process in any other manner permitted by law.
(j) BY ITS EXECUTION AND DELIVERY OF THIS AGREEMENT THE GRANTOR AND
THE AGENT KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS EACH MAY
HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING
OUT OF, UNDER OR IN CONNECTION WITH, THIS AGREEMENT OR ANY OTHER COLLATERAL
AGREEMENT, ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY OR ANY COURSE
OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS
OF IT OR THE AGENT IN CONNECTION HEREWITH OR THEREWITH. THIS PROVISION IS A
MATERIAL INDUCEMENT FOR THE AGENT AND THE GRANTOR TO ENTER INTO THIS AGREEMENT.
(k) This Agreement may be executed in any number of counterparts and
by the different parties hereto on separate counterparts each of which, when so
executed, shall be deemed an original, but all such counterparts shall
constitute but one and the same instrument.
IN WITNESS WHEREOF, each of the signatories hereto have caused this
Agreement to be executed and delivered by its officer thereunto duly authorized
as of the date first above written.
GRANTORS
DELTA FINANCIAL CORPORATION
By:
------------------------
Name:
Title:
[LIST ALL RESTRICTED SUBS OTHER THAN
THE RESIDUAL COLLATERAL TRUSTS]
ACCEPTED AND AGREED:
U.S. BANK TRUST NATIONAL ASSOCIATION,
as Agent
By:
--------------------------------
Name:
Title:
SCHEDULE I
Pooling Agreements
SCHEDULE II
Financing Statements
SCHEDULE III
Chief Place of Business and Chief Executive Offices
Exhibit G to Indenture
ADMINISTRATION AGREEMENT
THIS ADMINISTRATION AGREEMENT, dated as of __________, 2000 (this
"Agreement"), by and among DELTA FUNDING RESIDUAL HOLDINGS TRUST 2000-1, a
Delaware business trust (the "Trust"), DELTA FUNDING CORPORATION, a New York
corporation ("Delta Funding"), as administrator of the Trust under this
Agreement (in such capacity, an "Administrator") and U.S. BANK TRUST NATIONAL
ASSOCIATION, a national banking association incorporated under the laws of the
United States, ("U.S. Bank") (the "Bank"), as administrator of the Trust under
this Agreement (in such capacity, an "Administrator" and together with Delta
Funding, the "Administrators").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Trust is a business trust under the Delaware Business
Trust Act (12 Del.C. ss. 3801 ET SEQ.) created pursuant to a Deposit Trust
Agreement, dated as of ______, 2000 (the "Trust Agreement"), between DF Special
Holdings Corporation, a Delaware corporation, as depositor (in such capacity,
the "Depositor"), and Wilmington Trust Company, as owner trustee (the "Owner
Trustee");
WHEREAS, the Owner Trust Certificates are being issued pursuant to the
Trust Agreement and will represent the ownership of the beneficial interests in
the Trust;
WHEREAS, the Trust desires to have each Administrator perform certain
duties of the Trust and the Owner Trustee under the Trust Agreement; and
WHEREAS, each Administrator has the capacity to provide the services
required hereby and is willing to perform such services for the Trust and the
Owner Trustee on the terms set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, and other good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the parties agree as follows:
Section 1. DEFINITIONS. Capitalized terms used but not otherwise
defined herein shall have the respective meanings assigned thereto in the Trust
Agreement as in effect on the date hereof.
Section 2. DUTIES OF THE ADMINISTRATORS.
(a) DUTIES WITH RESPECT TO THE TRUST AGREEMENT.
(i) The Administrator shall perform such calculations and
shall prepare for execution by the Trust, the Owner Trustee or the
Certificateholders or shall cause the preparation by other appropriate
Persons of all such documents, reports, filings, instruments,
certificates and opinions as it shall be the duty of the Trust or the
Owner Trustee to prepare, file or deliver pursuant to the Trust
Agreement, including, without limitation, pursuant to the following
sections of the Trust Agreement: Sections 4.2 (with respect to the
final payment on the Owner Trust Certificates), 4.3 (with respect to
statements to Certificateholders), and 12.1 (with respect to transfers
of Owner Trust Certificates). In accordance with the directions of the
Trust or the Owner Trustee, the Administrator shall administer,
perform or supervise the performance of such other activities in
connection with the Trust Agreement as are not covered by any of the
foregoing provisions and as are expressly requested by the Trust or
the Owner Trustee in writing and are reasonably within the capability
of the Administrator. In addition, the Owner Trustee on behalf of the
Trust retains the right to give instructions and directions to the
Administrators with respect to all of the foregoing provisions and the
Administrators shall follow any such directions or instructions of the
Owner Trustee. The Owner Trustee agrees to provide promptly to the
Administrator any information in its possession requested by the
Administrator or necessary for the Administrator to perform its duties
hereunder.
(ii) The Administrator shall be responsible for promptly
notifying the Owner Trustee in the event that any withholding tax is
imposed on the Trust's payments (or allocations of income) to a
Certificateholder. Any such notice shall be in writing and specify the
amount of any withholding tax required to be withheld by the Owner
Trustee pursuant to such provision.
(iii) So long as Delta Funding is an Administrator, Delta
Funding shall perform the obligations in this subsection (a), provided
however that the Owner Trustee only, and not Delta Funding, shall at
all times have custody of all Trust Account Property and of the Trust
Estate, and that Delta Funding shall not administer any of the Trust
Accounts or any payments or transfers out of the Trust Accounts or the
Trust Estate.
(b) PERFORMANCE OF DUTIES.
(i) In carrying out its duties hereunder each Administrator
may enter into transactions or otherwise deal with any of its
Affiliates; PROVIDED, HOWEVER, that the terms of any such transactions
or dealings shall be in accordance with any written directions
received from the Owner Trustee and shall be, in the applicable
Administrator's opinion, no less favorable to the Trust than would be
available from unaffiliated parties.
(ii) In carrying out any of its obligations under this
Agreement, each Administrator may act either directly or through
agents, attorneys, accountants, independent contractors and auditors
and enter into agreements with any of them. Neither Administrator
shall be responsible for the actions of any such Persons appointed
with due care.
(c) NON-MINISTERIAL MATTERS.
(i) Notwithstanding anything to the contrary herein, with
respect to matters that in the reasonable judgment of the applicable
Administrator are non-ministerial, such Administrator shall not be
under any obligation to take any action, and in any event shall not
take any action.
(ii) Notwithstanding anything to the contrary in this
Agreement, neither Administrator shall be obligated to, and shall not,
take any action that the Owner Trustee directs in writing that such
Administrator not to take on its behalf or on behalf of the Trust.
(d) ADDITIONAL INFORMATION TO BE FURNISHED TO THE OWNER TRUSTEE.
Each Administrator shall furnish to the Owner Trustee from time to time such
additional information in such Administrator's possession regarding the Trust or
the Trust Agreement as the Owner Trustee shall reasonably request.
Section 3. RECORDS. Each Administrator shall maintain appropriate
books of account and records relating to the Trust and the services performed
hereunder, which books of account and records shall be accessible for inspection
by the Trust and the Depositor at any time during normal business hours.
Section 4. COMPENSATION. [TBD]
Section 5. INDEPENDENCE OF THE ADMINISTRATORS. For all purposes of
this Agreement, each Administrator shall be an independent contractor and shall
not be subject to the supervision of the Trust or the Owner Trustee with respect
to the manner in which it accomplishes the performance of its obligations
hereunder. Unless expressly set forth herein or otherwise authorized by the
Trust, neither Administrator shall have any authority to act for or represent
the Trust or the Owner Trustee in any way and shall not otherwise be deemed an
agent of the Trust or the Owner Trustee.
Section 6. NO JOINT VENTURE. Nothing contained in this Agreement (i)
shall constitute either Administrator and the Trust, the Owner Trustee or the
Depositor as members of any partnership, joint venture, association, syndicate,
unincorporated business or other separate entity, (ii) shall be construed to
impose any liability as such on any of them or (iii) shall be deemed to confer
on any of them any express, implied or apparent authority to incur any
obligation or liability on behalf of the others.
Section 7. OTHER ACTIVITIES OF THE ADMINISTRATORS. Nothing herein
shall prevent either Administrator or its Affiliates from engaging in other
businesses or, in its sole discretion, from acting in a similar capacity as an
administrator for any other Person even though such Person may engage in
business activities similar to those of the Trust or the Owner Trustee.
Section 8. TERM OF AGREEMENT; RESIGNATION AND REMOVAL OF
ADMINISTRATORS.
(a) This Agreement shall continue in force until the termination
of the Trust, upon which event this Agreement shall automatically terminate.
(b) U.S. Bank shall not be permitted to resign from the
obligations and duties hereby imposed on it, except either:
(i) upon the determination that such obligations and duties
hereunder are no longer permissible under applicable law or are in material
conflict by reason of applicable law with any other activities carried on by it;
or
(ii) at any time it ceases for any reason whatsoever to
perform its obligations as Trustee under the Indenture, in which case U.S. Bank
must resign as Administrator hereunder.
Any determination permitting the resignation of U.S. Bank under clause
(i) above shall be evidenced by an opinion of counsel to such effect delivered
to the Trust; PROVIDED, HOWEVER, that U.S. Bank may resign from its obligations
as an Administrator hereunder at any time that it determines in its sole
discretion that events have occurred which create a conflict between its duties
hereunder and its duties as Trustee under the Indenture, any such determination
to be evidenced by an officers' certificate of U.S. Bank to such effect.
(c) Delta Funding shall not resign from the obligations and
duties hereby imposed on it except upon the determination that its duties
hereunder are no longer permissible under applicable law. Any such determination
pursuant to the preceding sentence permitting the resignation of Delta Funding
shall be evidenced by an opinion of counsel to such effect obtained at the
expense of Delta Funding and delivered to the Trust and the Collateral Agent.
(d) Subject to Section 8(f) of this Agreement, the Trust may
remove either Administrator without cause by providing such Administrator with
at least 30 days' prior written notice.
(e) Subject to Section 8(f) of this Agreement, at the sole option
of the Trust, either Administrator may be removed immediately upon written
notice of termination from the Trust to such Administrator if any of the
following events shall occur:
(i) the Administrator shall default in the performance of
any of its duties under this Agreement and, after notice of such
default, shall not cure such default within ten days (or, if such
default cannot be cured in such time, shall not give within ten days
such assurance of cure as shall be reasonably satisfactory to the
Trust);
(ii) a court having jurisdiction in the premises shall (x)
enter a decree or order for relief, and such decree or order shall not
have been vacated within 60 days, in respect of the Administrator in
any involuntary case under any applicable bankruptcy, insolvency or
other similar law now or hereafter in effect or (y) appoint a
receiver, liquidator, assignee, custodian, trustee, sequestrator or
similar official for the Administrator or any substantial part of its
property or (z) order the winding-up or liquidation of the
Administrator's affairs; or
(iii) the Administrator shall commence a voluntary case
under any applicable bankruptcy, insolvency or other similar law now
or hereafter in effect, shall consent to the entry of an order for
relief in an involuntary case under any such law, or shall consent to
the appointment of a receiver, liquidator, assignee, trustee,
custodian, sequestrator or similar official for the Administrator or
any substantial part of its property, shall consent to the taking of
possession by any such official of any substantial part of its
property, shall make any general assignment for the benefit of
creditors or shall fail generally to pay its debts as they become due.
Each Administrator agrees that if any of the events specified in
clauses (ii) or (iii) of this Section shall occur, it shall give written notice
thereof to the Trust, the Owner Trustee, and the other Administrator within one
day after the happening of such event.
(f) No resignation or removal of U.S. Bank pursuant to this
Section shall be effective until (i) a successor Administrator shall have been
appointed by Delta Funding (with the consent of the Owner Trustee which consent
shall not be unreasonably withheld and, so long as the Notes are outstanding,
the consent of the Collateral Agent) and (ii) such successor Administrator shall
have agreed in writing to be bound by the terms of this Agreement in the same
manner as the Administrator is bound hereunder.
No resignation or removal of Delta Funding pursuant to this Section
shall be effective until U.S. Bank (or any successor to U.S. Bank as an
Administrator hereunder) has assumed Delta Funding's duties as a successor
Administrator pursuant to the terms of this Agreement as set forth below. In
furtherance of the foregoing, on and after the time Delta Funding resigns or
receives notice of removal under this Agreement, U.S. Bank (or any successor to
U.S. Bank as an Administrator hereunder) shall be the successor in all respects
to Delta Funding in its capacity as an Administrator under this Agreement and
shall be subject to all the responsibilities and duties relating thereto and
arising thereafter by the terms and provisions hereof.
Section 9. ACTION UPON TERMINATION, RESIGNATION OR REMOVAL. Promptly
upon the effective date of termination of this Agreement pursuant to Section
8(a) of this Agreement or the resignation or removal of either Administrator
pursuant to Section 8(b), 8(c), 8(d) or 8(e) of this Agreement, respectively,
the Administrators, in the case of termination of this Agreement pursuant to
Section 8(a), or the related Administrator, in the case of resignation or
removal of such Administrator pursuant to Section 8(b), 8(c), 8(d) or 8(e) shall
be entitled to be paid all reimbursable expenses accruing to it to the date of
such termination, resignation or removal. Each Administrator shall forthwith
upon such termination pursuant to Section 8(a) of this Agreement deliver to the
Trust all property and documents of or relating to the Owner Trust Certificates
or the Trust Estate then in the custody of the Administrator. In the event of
the resignation or removal of either Administrator pursuant to Section 8(b),
8(c), 8(d) or 8(e) of this Agreement, such Administrator shall cooperate with
the Trust and take all reasonable steps requested to assist the Trust in making
an orderly transfer of the duties of such Administrator.
Section 10. NOTICES. Any notice, report or other communication given
hereunder shall be in writing and addressed as follows: (a) in the case of the
Trust or the Owner Trustee, Wilmington Trust Company, Xxxxxx Square North, 0000
Xxxxx Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000, Attention: Corporate Trust
Administration, (b) in the case of Delta Funding, 0000 Xxxxxxxx Xxxx, Xxxxxxxx,
Xxx Xxxx 00000 Attention: Xxxx Xxxxxx, General Counsel; and (c) in the case of
U.S. Bank 000 Xxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, XX 00000, Attention:
____________________; or as to each such Person such other address as any such
party shall have provided to the other parties in writing. Any notice required
to be in writing hereunder shall be deemed given if such notice is mailed by
certified mail, postage prepaid, or hand-delivered to the address of such party
as provided above.
Section 11. AMENDMENTS.
This Agreement may be amended from time to time by the parties hereto.
Section 12. SUCCESSORS AND ASSIGNS. This Agreement may not be assigned
by either Administrator unless such assignment is previously consented to in
writing by the Trust and, so long as the Notes are outstanding, the consent of
the Collateral Agent. An assignment with such consent, if accepted by the
assignee, shall bind the assignee hereunder in the same manner as the applicable
Administrator is bound hereunder. Notwithstanding the foregoing, this Agreement
may be assigned by either Administrator without the consent of the Trust or the
Owner Trustee to a corporation or other organization that is a successor (by
merger, consolidation or purchase of assets) to the business of the
Administrator; PROVIDED, HOWEVER, that such successor organization executes and
delivers to the Trust and the Owner Trustee an agreement in which such
corporation or other organization agrees to be bound hereunder by the terms of
said assignment in the same manner as such Administrator is bound hereunder.
Subject to the foregoing, this Agreement shall bind any successors or assigns of
such parties hereto.
Section 13. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 14. HEADINGS. The section headings hereof have been inserted
for convenience of reference only and shall not be construed to affect the
meaning, construction or effect of this Agreement.
Section 15. COUNTERPARTS. This Agreement may be executed in
counterparts, each of which when so executed shall together constitute but one
and the same agreement.
Section 16. SEVERABILITY. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall be ineffective to the
extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
Section 17. LIMITATION OF LIABILITY.
Notwithstanding anything contained herein to the contrary, this
instrument has been executed by Wilmington Trust Company not in its individual
capacity but solely in its capacity as Owner Trustee of the Trust and in no
event shall Wilmington Trust Company in its individual capacity have any
liability for the representations, warranties, covenants, agreements or other
obligations of the Trust hereunder, as to all of which recourse shall be had
solely to the assets of the Trust.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the day and year first above written.
DELTA FUNDING RESIDUAL HOLDINGS
TRUST 2000-1,
By: WILMINGTON TRUST COMPANY,
not in its individual capacity
but solely as Owner Trustee
By: ____________________________________
Name:
Title:
U.S. BANK TRUST NATIONAL ASSOCIATION,
as Administrator
By: ____________________________________
Name:
Title:
DELTA FUNDING CORPORATION,
as Administrator
By: ____________________________________
Name:
Title:
Exhibit H to Indenture
===============================================================================
DEPOSIT TRUST AGREEMENT
dated as of ______, 2000
between
DF SPECIAL HOLDINGS CORPORATION
as Depositor,
and
WILMINGTON TRUST COMPANY,
as Owner Trustee
DELTA FUNDING RESIDUAL HOLDING TRUST 2000-1
===============================================================================
TABLE OF CONTENTS
PAGE
----
ARTICLE I
DEFINITIONS
ARTICLE II
AUTHORITY TO EXECUTE AND PERFORM VARIOUS DOCUMENTS; DECLARATION OF BUSINESS
TRUST BY THE BANK
SECTION 2.1 Declaration of Business Trust by the Bank....................11
SECTION 2.2 Transfer of Trust Estate to Owner Trustee....................11
SECTION 2.3 Authority to Execute and Perform Various Documents...........13
SECTION 2.4 Execution and Delivery of Owner Trust Certificates...........13
SECTION 2.5 Activities of the Trust......................................14
ARTICLE III
ESTABLISHMENT OF TRUST ACCOUNTS
SECTION 3.1 Establishment of Certificate Account.........................16
SECTION 3.2 Permitted Withdrawals From the Trust Accounts................16
SECTION 3.3 Transfer to and from the Cash Collateral Account.............17
SECTION 3.4 Investment of Cash Collateral Account........................17
ARTICLE IV
RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME FROM THE TRUST ESTATE
SECTION 4.1 Released Certificates........................................18
SECTION 4.2 Payments.....................................................18
SECTION 4.3 Statements to Certificateholders.............................20
SECTION 4.4 Access to Certain Documentation and Information..............20
SECTION 4.5 Compliance with Withholding Requirements.....................20
ARTICLE V
DUTIES OF THE OWNER TRUSTEE
SECTION 5.1 Notice of Certain Events; Action by the Owner Trustee....... 21
SECTION 5.2 Distribution of Reports.................................... .21
SECTION 5.3 Action Required Only if Owner Trustee is Indemnified.........21
SECTION 5.4 No Duties Except as Specified in Agreement or Instructions...22
ARTICLE VI
THE OWNER TRUSTEE
SECTION 6.1 Acceptance of Trust and Duties..... .........................22
SECTION 6.2 Limited Representations or Warranties of the Owner Trustee...23
SECTION 6.3 Certain Duties and Responsibilities..........................24
SECTION 6.4 Reliance; Advice of Counsel..................................25
SECTION 6.5 Books and Records; Tax Election..............................25
ARTICLE VII
COMPENSATION, REIMBURSEMENT AND INDEMNIFICATION OF THE OWNER TRUSTEE
SECTION 7.1 Compensation of the Owner Trustee............................26
SECTION 7.2 Reimbursement and Indemnification of the Owner Trustee.......26
SECTION 7.3 Not Obligations of the Trust.................................27
ARTICLE VIII
TERMINATION OF AGREEMENT
SECTION 8.1 Termination..................................................27
SECTION 8.2 Further Assurances by the Owner Trustee upon Termination.....27
SECTION 8.3 Insolvency of a Certificateholder............................28
ARTICLE IX
SUCCESSOR OWNER TRUSTEES, CO-OWNER TRUSTEES AND SEPARATE OWNER TRUSTEES
SECTION 9.1 Resignation of the Owner Trustee; Appointment of Successor...28
SECTION 9.2 Co-Trustees and Separate Trustees............................29
ARTICLE X
SUPPLEMENTS AND AMENDMENTS
SECTION 10.1 Supplements and Amendments...................................30
SECTION 10.2 Additional Amendment Provisions..............................30
ARTICLE XI
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE DEPOSITOR
SECTION 11.1 Representations and Warranties of the Depositor.............31
SECTION 11.2 Accrued Interest, Etc...................................... 32
SECTION 11.3 Additional Covenants of the Depositor.......................32
ARTICLE XII
TRANSFER OF OWNER TRUST CERTIFICATES
SECTION 12.1 Registration of Transfer and Exchange of Owner Trust
Certificates................................................33
SECTION 12.2 Mutilated, Destroyed, Lost or Stolen Owner Trust
Certificates................................................35
SECTION 12.3 Persons Deemed Owners.......................................35
SECTION 12.4 Access to Names and Addresses...............................36
SECTION 12.5 Actions of Certificateholders and Others....................36
ARTICLE XIII
MISCELLANEOUS
SECTION 13.1 No Legal Title to Trust Estate in the Certificateholders....37
SECTION 13.2 Reserved....................................................37
SECTION 13.3 Action by the Owner Trustee is Binding......................37
SECTION 13.4 Limitation on Rights of Others..............................37
SECTION 13.5 Notices.....................................................37
SECTION 13.6 Severability................................................37
SECTION 13.7 Limitation on the Depositor's and the Certificateholder's
Respective Liability........................................38
SECTION 13.8 Separate Counterparts.......................................38
SECTION 13.9 Successors and Assigns......................................38
SECTION 13.10 Headings....................................................38
SECTION 13.11 Governing Law...............................................38
SECTION 13.12 Administration of Trust.....................................38
SECTION 13.13 Performance by the Depositor or the Administrators..........39
SECTION 13.14 No Implied Waiver............................................9
SECTION 13.16 References...................................................9
SECTION 13.17 Tax Matters..................................................9
Schedule I - Schedule of Underlying Certificates
Exhibit A - Form of Owner Trust Certificate
Exhibit B-1 - Form of Transferor Certificate
Exhibit B-2 - Form of Transferee Certificate
Exhibit C - Form of Certificate of Trust
Exhibit D - Compliance Certification
Exhibit E - Release Certification
DEPOSIT TRUST AGREEMENT
THIS DEPOSIT TRUST AGREEMENT, dated as of _______, 2000 (the
"Agreement"), by and between DF SPECIAL HOLDINGS CORPORATION, a Delaware
corporation, as depositor (in such capacity, the "Depositor") and WILMINGTON
TRUST COMPANY, a Delaware banking corporation, as owner trustee (the "Owner
Trustee").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Depositor desires to form the trust to be created hereby
(the "Trust") for the purpose of (i) accepting from or on behalf of the
Depositor from time to time the Underlying Certificates (as defined herein), and
holding for the benefit of the holders of the Owner Trust Certificates (the
"Holders" or "Certificateholders") the Trust Estate (as defined herein), (ii)
issuing certificates evidencing the entire beneficial ownership interest in the
Trust (such certificates, the "Owner Trust Certificates"), (iii) releasing from
time to time certain of the Underlying Certificates or other assets in the Trust
Estate and (iv) engaging in certain activities incidental to the foregoing; and
WHEREAS, Wilmington Trust Company, a Delaware banking corporation, is
willing to act as owner trustee hereunder (in its individual capacity, the
"Bank", and solely in its capacity as owner trustee hereunder, with its
successors in interest in such capacity and its permitted assigns, the "Owner
Trustee") and to accept the Trust created hereby.
NOW THEREFORE, in consideration of the premises and of the mutual
agreements herein contained and of other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I
DEFINITIONS
All capitalized terms used herein and not otherwise defined, unless
the context otherwise requires, shall have the meanings set forth below.
"Administration Agreement" shall mean the administration agreement,
dated as of ______, 2000, between the Trust and the Administrators, pursuant to
which the Administrators shall perform various obligations of the Trust and the
Owner Trustee under this Agreement.
"Administrators" shall mean the Persons acting as an "Administrator"
from time to time under the Administration Agreement, which initially shall be
Delta Funding and The Bank of New York.
"Affiliate" shall mean, with respect to any specified Person, any
other Person that, directly or indirectly through one or more intermediaries,
controls or is controlled by, or is under common control with, such specified
Person. For the purposes of this definition, "control" when used with respect to
any specified Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities or other beneficial interest, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the meaning of
"control".
"Agent" shall mean any agent or attorney of the Owner Trustee or the
Trust appointed to execute one or more of the trust or powers hereunder, and
shall include the Administrators.
"Agreement" shall mean this Deposit Trust Agreement, as the same may
be amended or supplemented from time to time.
"Applicant" shall have the meaning specified in Section 12.4(a) of
this Agreement. "Back-Up Servicing Agreement" shall mean the agreement to be
entered into, pursuant to the Indenture, between the Company and a nationally
recognized back-up servicer, as such agreement may be amended, modified or
supplemented from time to time.
"Bank" shall have the meaning assigned to that term in the preamble
above.
"Business Day" shall mean any day other than a Saturday, a Sunday or a
day on which banking institutions in New York, New York or Wilmington, Delaware
are authorized or obligated by law or executive order to be closed.
"Business Trust Statute" shall mean Chapter 38 of Title 12 of the
Delaware Code, 12 Del. C.ss.3801 ET SEQ. as the same may be amended or
supplemented from time to time
"Cash Collateral Account" shall mean the Eligible Account established
pursuant to Section 3.1(b) of this Agreement.
"Cash Escrow Account" shall mean the cash escrow account established
by an escrow agreement of even date with the Indenture into which Delta
Financial Corporation shall deposit funds to pay accrued interest on the Notes
pursuant to Section 4.24 of the Indenture.
"Certificate Account" shall mean the segregated trust account
established in the name of the Owner Trustee pursuant to Section 3.1(a) of this
Agreement.
"Certificateholder" or "Holder" shall mean, with respect to any Owner
Trust Certificate, the Person in whose name such Owner Trust Certificate is
registered on the Certificate Register. Initially, the Depositor shall be the
sole Holder of all the Owner Trust Certificates.
"Certificateholder Funds" shall mean, with respect to any Payment
Date, an amount equal to all amounts on deposit in the Certificate Account as of
the commencement of business on such Payment Date, net of (i) any amounts
payable or reimbursable to the Owner Trustee from the Certificate Account
pursuant to Section 7.2 hereunder and (ii) any amounts deposited in the
Certificate Account in error.
"Certificate of Trust" shall mean the Certificate of Trust in the form
of Exhibit C to be filed for the Trust pursuant to Section 3810(a) of the
Business Trust Statute.
"Certificate Register" and "Certificate Registrar" shall mean the
register of Owner Trust Certificates maintained, and the registrar appointed,
respectively, pursuant to Section 12.1.
"Certificate Schedule" shall mean the schedule of Underlying
Certificates which shall include the following information with respect to each
Underlying Certificate:
1. the series, class and percentage interest;
2. the identity of the related Underlying Agreement; and
3. the Value as of the Closing Date or the related Transfer Date, as
applicable.
"Closing Date" shall mean [ ___, 2000].
"Collateral Agent" shall mean the Person acting in the role of agent
under the Pledge Agreement which, as of the date hereof is U.S. Bank Trust
National Association.
"Collateral Agreements" means, collectively the Pledge Agreements, the
Security Agreements, the Escrow Agreement and any other document or instrument
executed or delivered in connection with any of the foregoing, in each case, as
the same may be in force from time to time.
"Collateral Test" shall mean (i) the aggregate Value of the Underlying
Certificates and the amount of the Trust Account Property held in the Trust and
in Delta Funding Residual Holding Trust 2000-2 at least equals the applicable
amount:
TIME PERIOD MINIMUM APPLICABLE AMOUNT
----------- --------------------------
From the Issue Date of the Notes to September 29, 2001 $165,000,000
From September 30, 2001 to September 29, 2002 $170,000,000
From September 30, 2002 to September 29, 2003 $175,000,000
From and after September 30, 2003 until the Notes are paid in full. $200,000,000
and (ii) the aggregate Value of Senior Residuals constituting a portion of the
trust estates of the Collateral Trusts shall not be less than the Minimum Senior
Residual Amount.
For the purposes of the Collateral Test, residual receivables arising
from net interest margin securities transactions ("NIMS") shall be deemed to be
Senior Residuals when the outstanding principal amount of all other securities
issued in such NIMS is equal to or less than 20% of the aggregate original
principal amount of such securities when originally issued.
"Collateral Trusts" shall mean the Trust and Delta Funding Residual
Holding Trust 2002, a Delaware business trust formed pursuant to the Deposit
Trust Agreement, dated as of _________________, 2000, between Delta Funding, as
depositor, and Wilmington Trust Company, as owner trustee.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Compliance Certificate" shall mean a certificate by the Depositor as
to compliance with the Collateral Test in the form of Exhibit D attached hereto.
"Corporate Trust Office" shall mean the principal corporate trust
office of the Owner Trustee at which, at any particular time, its corporate
trust business with respect to this Agreement is administered, which office at
the date hereof is located at the address of the Owner Trustee set forth in
Section 13.5.
"Default" shall have the meaning specified in Section 4.2(d)
"Delta Funding" shall mean Delta Funding Corporation, a New York
corporation, and its successors in interest.
"Depositor" shall mean DF Special Holdings Corporation, a Delaware
corporation, and its successors in interest.
"Eligible Account" shall mean a segregated account that is (i)
maintained with a depository institution whose debt obligations at the time of
any deposit therein have the highest short-term debt rating by a Rating Agency
and whose accounts are insured to the maximum extent provided by either the
Savings Association Insurance Fund ("SAIF") or the Bank Insurance Fund ("BIF")
of the Federal Deposit Insurance Corporation established by such fund with a
minimum long-term unsecured debt rating of A or equivalent by a Rating Agency,
and which is any of (A) a federal savings and loan association duly organized,
validly existing and in good standing under the federal banking laws, (B) an
institution duly organized, validly existing and in good standing under the
applicable banking laws of any state, (C) a national banking association duly
organized, validly existing and in good standing under the federal banking laws,
(D) a principal subsidiary of a bank holding company; or (ii) a segregated trust
account maintained with the corporate trust department of a federal or state
chartered depository institution or trust company, having capital and surplus of
not less than $50,000,000, acting in its fiduciary capacity.
"Eligible Investments" shall mean or more of the following (excluding
any callable investments purchased at a premium):
(i) direct obligations of, or obligations fully guaranteed as to
timely payment of principal and interest by, the United States or any
agency or instrumentality thereof, PROVIDED that such obligations are
backed by the full faith and credit of the United States;
(ii) repurchase agreements on obligations specified in clause (i)
maturing not more than three months from the date of acquisition
thereof, PROVIDED that the short-term unsecured debt obligations of
the party agreeing to repurchase such obligations are at the time
rated by a Rating Agency in its highest short-term rating category
(which is "A-1+" for S&P, "P-1" for Moody's, and "F-1+" for Fitch);
(iii) certificates of deposit, time deposits and bankers'
acceptances (which, if Xxxxx'x is the relevant Rating Agency, shall
each have an original maturity of not more than 90 days) of any U.S.
depository institution or trust company incorporated under the laws of
the United States or any state thereof and subject to supervision and
examination by federal and/or state banking authorities, PROVIDED that
the unsecured short-term debt obligations of such depository
institution or trust company at the date of acquisition thereof have
been rated by a Rating Agency in its highest unsecured short-term debt
rating category;
(iv) commercial paper (having original maturities of not more
than 90 days) of any corporation incorporated under the laws of the
United States or any state thereof which on the date of acquisition
has been rated by a Rating Agency in its highest short-term rating
categories;
(v) short term investment funds ("STIFS") sponsored by any trust
company or national banking association incorporated under the laws of
the United States or any state thereof which on the date of
acquisition has been rated by a Rating Agency in its highest rating
category of long term unsecured debt; and
(vi) interests in any money market fund which at the date of
acquisition of the interests in such fund and throughout the time as
the interest is held in such fund has a rating of either "AAA" by S&P,
"AAA" by Fitch, or "Aaa" by Moody's;
PROVIDED that no instrument described hereunder shall evidence either the right
to receive (a) only interest with respect to the obligations underlying such
instrument or (b) both principal and interest payments derived from obligations
underlying such instrument and the interest and principal payments with respect
to such instrument provided a yield to maturity at par greater than 120% of the
yield to maturity at par of the underlying obligations; PROVIDED, FURTHER, that
no instrument described hereunder may be purchased at a price greater than par
if such instrument may be prepaid or called at a price less than its purchase
price prior to its stated maturity.
"Eligible Trustee" shall mean a bank (within the meaning of Section
2(a)(5) of the Investment Company Act) that meets the requirements of Section
26(a)(1) of the Investment Company Act, that is not an Affiliate of the
Depositor or an Affiliate of any Person involved in the organization or
operation of the Depositor, that is organized and doing business under the laws
of the United States of America, any state thereof or the District of Columbia,
that is authorized under such laws to exercise corporate trust powers and to
accept the trust conferred under this Agreement, that has a combined capital and
surplus and undivided profits of at least $100,000,000 and that is subject to
supervision or examination by federal or state authority. If such bank publishes
reports of condition at least annually, pursuant to law or to the requirements
of the aforesaid supervising or examining authority, then for the purposes of
this definition the combined capital, surplus and undivided profits of such
corporation shall be deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"Escrow Agreement" means that certain Escrow Agreement, dated the date
of the Indenture, between Delta Financial Corporation and the Indenture Trustee,
as such agreement may be amended, modified or supplemented from time to time.
"Fitch" shall mean Fitch Inc. and its successors in interest.
"Governmental Authority" shall mean any government, or any commission,
authority, board, agency, division, subdivision or any court or tribunal of the
government, of the United States of America or of any state, territory, city,
municipality, county or town thereof or of the District of Columbia, or of any
foreign jurisdiction, including the employees or agents thereof.
"Indenture" shall mean that certain indenture, dated as of ____, 2000,
by and among Delta Financial Corporation, as issuer, and each of Delta Funding
Corporation, a New York Corporation, DF Special Holdings Corporation, a Delaware
corporation, DFC Financial Corporation, a Delaware corporation, Fidelity
Mortgage, Inc., a Delaware Corporation, DFC Financial of Canada Limited, an
Ontario, Canada corporation, DFC Funding of Canada Limited, an Ontario, Canada
corporation, Continental Property Management Corp., a New York corporation, and
the Collateral Trusts, as subsidiary guarantors, and the Indenture Trustee,
pursuant to which the Notes are being issued, as the same may be from time to
time supplemented or amended.
"Indenture Trustee" shall mean U.S. Bank Trust National Association,
[a New York banking corporation], in its capacity as trustee under the
Indenture, or its successor in interest, or any successor trustee appointed as
provided in the Indenture.
"Investment Company Act" shall mean the Investment Company Act of
1940, as amended, and the rules, regulations and published interpretations of
the SEC promulgated thereunder from time to time.
"IRS" shall mean the Internal Revenue Service.
"Issue Date" shall mean __________, 2000, which is the date of first
issuance of the Notes under the Indenture.
"Liabilities" shall have the meaning specified in Section 7.2(b) of
this Agreement.
"Lien" shall mean any lien, pledge, encumbrance or security interest
on or in any particular asset or property.
"Minimum Senior Residual Amount" shall mean $150,000,000; provided,
however, that if $7,125,000 is deposited in the Cash Escrow Account prior to the
third anniversary of the Issue Date, the Minimum Senior Residual Amount shall be
$112,500,000 until the third anniversary of the Issue Date.
"Moody's" shall mean Xxxxx'x Investor Service, Inc. and its successors
in interest.
"Noteholder" or "Holder" shall mean those Persons holding the Notes
from time to time as shown on the Note Register maintained under the Indenture.
"Notes" shall mean the 9 1/2% Senior Secured Notes of Delta Financial
Corporation due August 1, 2004.
"Officer's Certificate" shall mean a certificate signed on behalf of
the applicable entity by the Chairman of the Board, the Vice Chairman of the
Board, the President, any Vice President or Managing Director, an Assistant Vice
President or any other authorized officer (however denominated), the Treasurer,
the Secretary, one of the Assistant Treasurers or Assistant Secretaries, or,
another officer customarily performing functions similar to those performed by
any of the above designated officers or, with respect to a particular matter,
any other officer to whom such matter is referred because of such officer's
knowledge of and familiarity with the particular subject.
"Operative Agreements" shall mean, collectively, this Agreement, the
Owner Trust Certificates, the Administration Agreement, the Underlying
Agreements and the Underlying Certificates, as each of them may, from time to
time, be amended or supplemented.
"Opinion of Counsel" shall mean a written opinion of counsel, who may,
without limitation, be employees or other counsel for the Depositor which are
reasonably acceptable to the Owner Trustee. The cost of such opinion shall be
born by the Certificateholders.
"Owner Trust Certificates" shall mean the certificates issued
hereunder evidencing beneficial ownership interests in the Trust.
"Owner Trustee" shall have the meaning assigned to that term in the
preamble above.
"Owner Trustee Fee" shall mean _______________.
"Ownership Interest" shall mean as to any Owner Trust Certificate, any
ownership or security interest in such Owner Trust Certificate, including any
interest in such Owner Trust Certificate as the Holder thereof and any other
interest therein, whether direct or indirect, legal or beneficial, as owner or
as pledgee.
"Payment Date" shall mean the [first] Business Day following any
Underlying Distribution Date of each month, commencing in __________ 2000.
"Percentage Interest" shall mean, with respect to any Owner Trust
Certificate, the percentage interest of beneficial ownership in the Trust
evidenced by such Owner Trust Certificate as specified on the face thereof.
"Person" shall mean any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, estate,
trust, unincorporated organization or government or any agency or political
subdivision thereof.
"Plan" shall have the meaning specified in Section 12.1(c) of this
Agreement.
"Pledge Agreement" shall mean any of those certain Pledge Agreements
dated as of the date of the Indenture, as such agreements may be amended,
modified or supplemented from time to time.
"QIB" shall mean a "qualified institutional buyer" within the meaning
Rule 144A under the Securities Act.
"Rating Agency" shall mean any of Fitch, Moody's or S&P.
"Record Date" shall mean, with respect to the Owner Trust Certificates
for any Payment Date, the last Business Day of the month immediately preceding
such Payment Date. For the first Payment Date, the Record Date shall be the
Closing Date.
"Registration Rights Agreement" means that certain Registration Rights
Agreement, dated the date of the Indenture, between Delta Financial Corporation
and ChaseMellon Shareholder Services, L.L.C., as warrant agent, as such
agreement may be amended, modified or supplemented from time to time.
"Related Agreements" means this Agreement, that certain Deposit Trust
Agreement, dated as of the date hereof, by and between Delta Funding Corporation
and Wilmington Trust Company, the Warrant Agreement, the Registration Rights
Agreement, the Escrow Agreement, the Administration Agreements and the Back-up
Servicing Agreement.
"Release Certification" shall mean the certification by the Depositor
in connection with the release of (i) any Underlying Certificates or (ii)
amounts in the Cash Collateral Account pursuant to Section 4.1 or 3.3,
respectively, in the form attached as Exhibit F hereto.
"Released Certificates" shall mean the Underlying Certificates that
are the subject of a Release Certification.
"Responsible Officer" shall mean any officer of the Owner Trustee
customarily performing functions with respect to corporate trust matters and
having direct responsibility for the administration of this Agreement and, with
respect to a particular corporate trust matter under this Agreement, any other
officer to whom such matter is referred because of such officer's knowledge of
and familiarity with the particular subject.
"S&P" shall mean Standard & Poor's Rating Service and its successors
in interest.
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended,
and the rules, regulations and published interpretations of the SEC promulgated
thereunder from time to time.
"Security Agreement" means that certain Security Agreement, by and
among _________, dated as of the date of the Indenture, as such agreement may be
amended, modified or supplemented from time to time.
"Senior Residual" shall mean (i) an asset-backed certificate the
cashflow on which is not subordinated except as provided in the related pooling
and servicing agreement and (ii) an owner trust certificate from and after the
time the principal amount of securities issued by the trust the ownership of
which is evidenced by such owner trust certificate is reduced to 20% or less of
the principal amount of such securities on the date of issuance thereof.
"Subsidiary Guarantee" shall have the meaning assigned to such term in
the Indenture.
"Tax Return" shall have the meaning specified in Section 6.5 of this
Agreement.
"Transfer" shall mean any direct or indirect transfer or other form of
assignment of any Owner Trust Certificate.
"Transfer Date" shall mean each date after the Closing Date on which
Underlying Certificates become part of the Trust Estate.
"Trust" shall mean the trust established under this Agreement.
"Trust Account" or "Trust Accounts" shall mean either or both of the
Cash Collateral Account or the Certificate Account, as the context requires.
"Trust Account Property" shall mean the Trust Accounts, all amounts
held from time to time in the Trust Accounts, and all proceeds of the foregoing.
"Trust Estate" shall mean the corpus of the trust created as of the
Closing Date and to be administered hereunder, consisting of (i) all the right,
title and interest of the Depositor in and to the Underlying Certificates and
all distributions thereon after the Closing Date or Transfer Date, as
applicable, and in and to the Underlying Agreements, (ii) the Trust Account
Property, (iii) the rights of the Trust to enforce remedies against the
Administrators under the Administration Agreement, and against the Depositor
under this Agreement, (iv) all present and future claims, demands, causes and
chooses in action in respect of the foregoing, including the rights of the Trust
under the Underlying Certificates and the Underlying Agreements, and (v) all
proceeds of the foregoing of every kind and nature whatsoever, including,
without limitation, all proceeds of the conversion thereof, voluntary or
involuntary, into cash or other liquid property, all cash proceeds, accounts
receivable, notes, drafts, acceptances, chattel paper, checks, deposit accounts,
rights to payment of any and every kind and other forms of obligations and
receivables, instruments and other property that at any time constitute all or
part of or are included in the proceeds of the foregoing.
"Underlying Agreements" shall mean as of any date of determination any
or all of the pooling and servicing agreements and/or trust agreements pursuant
to which the Underlying Certificates, other than any Released Certificates, were
issued.
"Underlying Certificates" shall mean as of any date of determination,
any or all of the asset-backed certificates and/or owner trust certificates at
the time held as part of the Trust Estate as set forth in the Certificate
Schedule maintained with the Owner Trustee.
"Underlying Distribution Date" shall mean, with respect to each
Underlying Certificate, the monthly date on which payments are made to the
registered holder of such Underlying Certificate in accordance with the
applicable Underlying Agreement.
"Uniform Commercial Code" shall mean the Uniform Commercial Code as in
effect in any applicable jurisdiction.
"Warrant Agreement" means that certain Warrant Agreement, dated the
date of the Indenture, between Delta Financial Corporation and ChaseMellon
Shareholder Services, L.L.C., as warrant agent, as such agreement may be
amended, modified or supplemented from time to time.
"Value" shall mean with respect to any Underlying Certificate the book
value thereof determined in accordance with generally accepted accounting
principles but using a discount rate of 12% in the case of an Underlying
Certificate that is a Senior Residual and 18% in the case of any other
Underlying Certificate.
ARTICLE II
AUTHORITY TO EXECUTE AND PERFORM VARIOUS DOCUMENTS;
DECLARATION OF BUSINESS TRUST BY THE BANK
SECTION 2.1 DECLARATION OF BUSINESS TRUST BY THE BANK.
The Trust will be known as "Delta Funding Residual Holding Trust
2000-1," in which name the Owner Trustee may conduct the affairs of the Trust.
The Bank is hereby appointed to hold and agrees to hold the Trust Estate as
Owner Trustee in trust upon the terms and conditions and for the use and benefit
of the Certificateholders as herein set forth.
It is the intention of the parties hereto that the trust created by
this Agreement constitute a "business trust" under the Business Trust Statute
and that this Agreement constitute the governing instrument of such business
trust. This Declaration of Business Trust is not intended to create a
partnership, a joint-stock association, a "taxable mortgage pool" or any
association taxable as a corporation for federal income tax purposes. Prior to
or as of the date hereof, the Owner Trustee shall file the Certificate of Trust
in the office of the Secretary of State of the State of Delaware. Effective as
of the date hereof, the Owner Trustee shall have all the rights, powers and
duties set forth herein and in the Business Trust Statute with respect to
accomplishing the purposes of the Trust.
SECTION 2.2 TRANSFER OF TRUST ESTATE TO OWNER TRUSTEE.
(a) Effective as of the date hereof, the Depositor does hereby assign,
transfer, and otherwise convey to, and deposit with, the Trust, the initial
Underlying Certificates identified on the Certificate Schedule, such conveyance
to be made in exchange for the Owner Trust Certificates. Such assignment
includes, without limitation, all amounts payable to, and all rights of, the
holder of the Underlying Certificates after the Closing Date pursuant to the
Underlying Agreements. The Depositor also shall deliver on such date to the
Owner Trustee a copy of the Indenture, the Pledge Agreement and any documents
the Trust signs or is bound by (e.g. the Collateral Agreements, the Subsidiary
Guarantees).
(b) From time to time during the term of this Agreement the Depositor
may assign, or cause to be assigned, to the Trust additional Underlying
Certificates. Any such conveyance shall be either a contribution by the
Depositor to the capital of the Trust or a sale. Each such assignment shall
include, without limitation, all amounts payable to, and all rights of, the
holder of the related Underlying Certificates after the applicable Transfer Date
pursuant to the related Underlying Agreements. On each Transfer Date, the
Depositor shall revise the Certificate Schedule to reflect the additional
Underlying Certificates and deliver such revised schedule to the Owner Trustee,
with a copy to the Collateral Agent.
(c) In connection with each transfer and assignment, the Depositor
shall deliver or cause to be delivered to, and deposit or cause to be deposited
with, the Trust each of the following documents or instruments relating to each
Underlying Certificate:
(i) such Underlying Certificate, duly endorsed in the name of
"Delta Funding Residual Holding Trust 2000-1," together with all
documentation and opinions required under the related Underlying
Agreement to obtain a duly issued and authenticated physical
certificate registered in such name;
(ii) a copy (which may be on electronic media) of the Underlying
Agreement; and
(iii) all other items relating to the foregoing as reasonably
requested by the Owner Trustee.
(d) The conveyance of the Trust Estate as contemplated hereby is
absolute and is intended by the parties to constitute a sale or contribution of
the Underlying Certificates and all other assets constituting the Trust Estate
by the Depositor to the Trust. It is, further, not intended that any such
conveyance be deemed a pledge of security for a loan. If any such conveyance is
deemed to be a pledge of security for a loan, however, the Depositor intends
that the rights and obligations of the parties to such loan shall be established
pursuant to the terms of this Agreement. The Depositor also intends and agrees
that, in such event, (i) this Agreement shall constitute a security agreement
under applicable law, (ii) the Depositor shall be deemed to have granted to the
Trust a first priority perfected security interest in the Depositor's entire
right, title and interest in and to the assets constituting the Trust Estate,
including, without limitation, the Underlying Certificates and all payments
thereon from and after the Closing Date or Transfer Date, as applicable, (iii)
the possession by the Owner Trustee on behalf of the Trust or its agent of the
Underlying Certificates and such other items of property as constitute
instruments, money, negotiable documents or chattel paper, shall be deemed to be
"possession by the secured party" or possession by a purchaser or person
designated by such secured party for the purpose of perfecting such security
interest under applicable law, and (iv) notifications to, and acknowledgments,
receipts or confirmations from, Persons holding such property, shall be deemed
to be notifications to, or acknowledgments, receipts or confirmations from,
financial intermediaries, bailees or agents (as applicable) of the Owner Trustee
on behalf of the Trust for the purpose of perfecting such security interest
under applicable law. The Depositor shall, to the extent consistent with this
Agreement, take such reasonable actions as may be necessary to ensure that, if
this Agreement were deemed to create a security interest in the Underlying
Certificates and the other assets of the Trust Estate, such security interest
would be a perfected security interest of first priority under applicable law
and will be maintained as such throughout the life of this Agreement. In
connection therewith, the Depositor shall file or cause to be filed financing
statements under the Uniform Commercial Code with respect to the Trust Estate.
(e) The Owner Trustee hereby acknowledges the receipt by it of the
Trust Estate, and declares that it holds and will hold the Trust Estate and that
it holds and will hold all other assets and documents to be included in the
Trust Estate, in trust for the exclusive use and benefit of all present and
future Certificateholders.
(f) Except as expressly provided in Section 8.1, neither the Depositor
nor any Certificateholder shall be able to revoke the Trust established
hereunder.
SECTION 2.3 AUTHORITY TO EXECUTE AND PERFORM VARIOUS DOCUMENTS.
The Trust shall have the power and authority, and the Owner Trustee on
behalf of the Trust or, in the case of tax administration matters, its Agent, is
hereby authorized: (i) to execute and deliver the Operative Agreements to which
the Trust is a party, all other agreements, documents, instruments and
certificates contemplated to be executed and delivered by the Trust pursuant to
any of the Operative Agreements, the Collateral Agreements, the Related
Agreements and the Subsidiary Guarantees or the Indenture; (ii) to execute,
authenticate and deliver the Owner Trust Certificates to the Depositor; (iii) to
take whatever action shall be required to be taken by the Trust by the terms of,
and exercise its rights and perform its duties under, each of the documents,
agreements, instruments and certificates referred to in clauses (i) and (ii)
above as set forth in such documents, agreements, instruments and certificates;
and (iv) subject to the terms of this Agreement, to take such other action in
connection with the foregoing as the Certificateholders may from time to time
direct; PROVIDED, HOWEVER, that the Owner Trustee shall have no duty to perform
the obligations of the Trust except as expressly set forth in this Agreement.
SECTION 2.4 EXECUTION AND DELIVERY OF OWNER TRUST CERTIFICATES.
(a) The Owner Trustee shall, on the date hereof, execute and cause to
be authenticated and delivered to and upon the order of the Depositor, the Owner
Trust Certificates in authorized denominations evidencing the entire beneficial
ownership of the Trust. The rights of the Certificateholders to receive
distributions from the proceeds of the Trust in respect of the Owner Trust
Certificates shall be as set forth in this Agreement.
(b) The Owner Trust Certificates will be substantially in the form
attached hereto as EXHIBIT A; PROVIDED, HOWEVER, that any of the Owner Trust
Certificates may at the request of the Depositor be issued with appropriate
insertions, omissions, substitutions and variations, and may have imprinted or
otherwise reproduced thereon such legend or legends, not inconsistent with the
provisions of this Agreement, as may be required to comply with any law or with
rules or regulations pursuant thereto, or with the rules of any securities
market in which the Owner Trust Certificates are admitted to trading, or to
conform to general usage.
(c) Each Owner Trust Certificate may be printed or in typewritten or
similar form, and each Owner Trust Certificate shall, upon original issue and at
the direction of the Depositor, be executed by the Trust and authenticated by
the Certificate Registrar and delivered to or upon the order of the Depositor.
All Owner Trust Certificates shall be executed by manual or facsimile signature
on behalf of the Trust by an authorized officer of the Owner Trustee, not
individually, but solely as Owner Trustee hereunder. Owner Trust Certificates
bearing the signatures of individuals who were at any time the proper officers
of the Owner Trustee shall bind the Owner Trustee, notwithstanding that such
individuals or any of them have ceased to hold such offices prior to the
delivery of such Owner Trust Certificates or did not hold such offices at the
date of such Owner Trust Certificates. No Owner Trust Certificates shall be
entitled to any benefit under this Agreement, or be valid for any purpose,
unless there appears on such Owner Trust Certificate a certificate of
authentication in the form set forth on the signature page of the form of Owner
Trust Certificates attached as EXHIBIT A, executed by the Certificate Registrar
by manual signature, and such certificate of authentication upon any Owner Trust
Certificate shall be conclusive evidence, and the only evidence, that such Owner
Trust Certificate has been duly authenticated and delivered hereunder. All Owner
Trust Certificates shall be dated the date of their authentication.
SECTION 2.5 ACTIVITIES OF THE TRUST.
It is the intention of the parties hereto that the Trust shall not
engage in any business or activities other than in connection with, or relating
to, the purposes specified in Section 2.3. The operations of the Trust will be
conducted in accordance with the following standards (and the Depositor hereby
agrees to use its best efforts to cause the operations of the Trust to be
conducted in accordance herewith):
(i) The Trust will observe all procedures required by this
Agreement.
(ii) Except as otherwise provided in Sections 5.1 and 5.4, the
business and affairs of the Trust will be managed by or under the
direction of the Owner Trustee. Except as otherwise expressly provided
in this Agreement, the Depositor will have no authority to act for, or
to assume any obligation or responsibility on behalf of, the Trust.
The Administrators may act on behalf of the Owner Trustee solely as
provided in the Administration Agreement (which Administration
Agreement may not be amended except with consent of the Collateral
Agent.)
(iii) Any books and records of accounts and minutes of the
meetings and other proceedings of the trustees of the Trust shall be
kept by the Owner Trustee or the Administrators, as the case may be,
separate from those of the Depositor or any subsidiary, Affiliate or
separate account of the Depositor. Any such resolutions, agreements
and other instruments will be continuously maintained by the
Administrators as official records of the Trust.
(iv) Each of the Depositor and the Trust will provide for its own
operating expenses and liabilities from its own funds. General
overhead and administrative expenses of the Trust will not be charged
or otherwise allocated to the Depositor (except indirectly, insofar as
the Depositor owns the Owner Trust Certificates) and such expenses of
the Depositor will not be charged or otherwise allocated to the Trust.
(v) The Trust will conduct its business under names or tradenames
so as not to mislead others as to the identity of the Trust. Without
limiting the generality of the foregoing, all oral and written
communications, including letters, invoices, contracts, statements and
applications will be made solely in the name of the Trust if related
to the Trust. The Depositor and the Trust each will have separate
stationery and other business forms.
(vi) Other than the Subsidiary Guarantees, there will be no
guarantees made by the Trust, and there shall be no liens on the Trust
Estate (other than as provided in Section 7.2(d)), with respect to
obligations of the Depositor. There will not be any indebtedness
relating to borrowings or loans between the Trust and the Depositor or
its Affiliates.
(vii) The Trust will act solely in its name and through its or
the Owner Trustee's duly authorized officers or agents in the conduct
of its business. The Trust will not: (A) operate or purport to operate
as an integrated, single economic unit with respect to the Depositor
or any other affiliated or unaffiliated entity; (B) seek or obtain
credit or incur any obligation to any third party based upon the
assets of the Depositor; or (C) induce any such third party to
reasonably rely on the creditworthiness of the Depositor or any other
affiliated or unaffiliated entity.
(viii) The Trust will maintain its principal place of business in
the State of Delaware.
(ix) The Trust and the Depositor shall keep separate their
respective funds and other assets and shall not commingle such funds
and other assets with those of any other Affiliates thereof.
(x) If and to the extent applicable, the Trust will prepare
financial statements of the Trust that are separate from those of the
Depositor and any other Affiliates (although it may be presented as
part of the consolidated financial statements of an Affiliate).
(xi) The Trust will not engage in any transaction with an
Affiliate on any terms other than would be obtained in an arm's-length
transaction with a non-Affiliate.
ARTICLE III
ESTABLISHMENT OF TRUST ACCOUNTS
SECTION 3.1 ESTABLISHMENT OF TRUST ACCOUNTS.
(a) The Owner Trustee, for the benefit of the Certificateholders,
shall establish with the Owner Trustee and maintain a non-interest bearing trust
account (the "Certificate Account"), entitled "Delta Funding Residual Holding
Trust 2000-1 Owner Trust Certificate Account" and held in trust by the Owner
Trustee for the benefit of the Certificateholders. The foregoing requirements
for the establishment of the Certificate Account shall be exclusive.
(b) The Depositor shall establish and maintain a separate trust
account (the "Cash Collateral Account") entitled "Delta Funding Residual Holding
Trust 2000-1 Cash Collateral Account." The Cash Collateral Account shall be an
Eligible Account with respect to which the Owner Trustee or its Agent, other
than the Depositor or any Affiliate thereof, shall have the sole right of
withdrawal.
SECTION 3.2 PERMITTED WITHDRAWALS FROM THE TRUST ACCOUNTS.
The Owner Trustee may from time to time withdraw or cause the
withdrawal of funds from the Trust Accounts for the following purposes:
(i) to reimburse or indemnify the Owner Trustee for expenses and
other liabilities incurred by and reimbursable to the Owner
Trustee, pursuant to Section 7.2 hereunder, except as otherwise
provided in such section and to pay or make reasonable provision
for the payment of all other liabilities of the Trust;
(ii) to make payments on the Owner Trust Certificates in the
amounts and in the manner provided for in Section 4.2 hereunder;
(iii) to transfer amounts from the Certificate Account to the
Cash Collateral Account as provided in Section 4.2(a);
(iv) to make payments from the Cash Collateral Account as
provided in Section 3.3(b);
(v) to clear and terminate the Trust Accounts upon the
termination of this Agreement;
(vi) to return to the appropriate Person any amounts remitted by
such Person to the Owner Trustee in error; and
(vii) to make payments to the Indenture Trustee as provided in
Section 4.2(d).
SECTION 3.3 TRANSFERS TO AND FROM THE CASH COLLATERAL ACCOUNT.
(a) From time to time the Depositor may deposit, or cause to be
deposited, amounts into the Cash Collateral Account. Amounts so deposited shall
be invested in Eligible Investments as provided in Section 3.4 and shall be
retained therein until released as provided in Section 3.3(b).
(b) Upon satisfaction of the conditions to a release from the Cash
Collateral Account as set forth in the Release Certification, and subject to the
provisions of Section 4.2(d), the Depositor may from time to time deliver to the
Owner Trustee, with a copy to the Collateral Agent, a Release Certification and,
upon receipt thereof, the Owner Trustee shall cause the institution maintaining
the Cash Collateral Account to withdraw the amount specified therein and to pay
such amount to or to the order of the Depositor. Upon such payment, such amount
shall no longer be part of the Trust Estate.
SECTION 3.4 INVESTMENT OF CASH COLLATERAL ACCOUNT.
(a) All or a portion of the Cash Collateral Account shall be invested
and reinvested, as directed in writing by the Depositor, in one or more Eligible
Investments bearing interest or sold at a discount. If the Depositor does not
provide investment directions, the Owner Trustee shall cause the investment in
Eligible Investments described in paragraph (vi) of the definition of Eligible
Investments. [No such investment shall mature later than the Business Day
immediately preceding the next Payment Date.]
(b) If any amounts are needed for disbursement from the Cash
Collateral Account and sufficient uninvested funds are not available to make
such disbursement, the Owner Trustee shall cause to be sold or otherwise
converted to cash a sufficient amount of the investments in such Account. The
Owner Trustee shall not be liable for any investment loss or other charge
resulting therefrom.
(c) All net income and gain realized from investment of, and all
earning on, funds deposited in the Cash Collateral Account shall remain on
deposit therein until released as provided in Section 3.3(b). Any loss incurred
in respect of any Eligible Investment shall be charged to the Cash Collateral
Account.
ARTICLE IV
RECEIPT, DISTRIBUTION AND APPLICATION
OF INCOME FROM THE TRUST ESTATE
SECTION 4.1 RELEASED CERTIFICATES.
Upon satisfaction of the conditions to release as set forth in the
Release Certification, from time to time, the Depositor may deliver to the Owner
Trustee and the Administrators, with a copy to the Collateral Agent, a Release
Certification with respect to specified Underlying Certificates, together with
such documentation as is required under the related Underlying Agreements to be
provided by the transferor. Upon receipt of such certification and documents,
the specified Underlying Certificates shall become Released Certificates which
are not part of the Trust Estate and the Owner Trustee shall endorse the
applicable Released Certificates on behalf of the Trust, execute the transfer
documentation provided by the Depositor and deliver such certificates and
documentation to or to the order of the Depositor. At such time, the Depositor
also shall amend the Certificate Schedule and deliver it to the Owner Trustee.
SECTION 4.2 PAYMENTS.
(a) On each Underlying Distribution Date on which amounts are
distributed to the Trust, the Owner Trustee shall deposit such amounts into the
Certificate Account. On each Payment Date, the Owner Trustee (or its Agent other
than the Depositor or any Affiliate) shall withdraw from the Certificate Account
all Certificateholder Funds then on deposit therein, and the Owner Trustee (or
its Agent) shall, subject to Section 4.2(d), either (i) pay such
Certificateholder Funds to the Certificateholders if, as shown on the most
recent Compliance Certification or Release Certification, the Collateral Test
was satisfied or (ii) otherwise transfer such funds to the Cash Collateral
Account.
(b) All distributions of the Certificateholder Funds on any Payment
Date shall be allocated PRO RATA among the Owner Trust Certificates based upon
their respective Percentage Interests. Payments to the Certificateholders on
each Payment Date will be made to the Certificateholders of record on the
related Record Date. Payments to any Certificateholder on any Payment Date shall
be made by wire transfer of immediately available funds to the account of such
Certificateholder at a bank or other entity having appropriate facilities
therefor, if such Certificateholder shall have so notified the Owner Trustee in
writing at least five Business Days prior to the related Record Date, or
otherwise by check mailed by first class mail to the address of such
Certificateholder appearing in the Certificate Register. Final payment on each
Owner Trust Certificate will be made in like manner, but only upon presentment
and surrender of such Owner Trust Certificate at the Corporate Trust Office or
such other location specified in the notice to Certificateholders of such final
payment.
(c) Whenever the Owner Trustee is notified that the final payment with
respect to the Owner Trust Certificates will be made on the next Payment Date,
whether in connection with the final distribution on the Underlying Certificates
remaining outstanding or upon a termination of the Trust in accordance with
Section 8.1, the Owner Trustee (or its Agent) shall mail to each Holder, with a
copy to the Collateral Agent, on such date a notice to the effect that the Owner
Trustee expects that the final payment with respect to the Owner Trust
Certificates will be made on such Payment Date but only upon presentation and
surrender of the Owner Trust Certificates at the office of the Owner Trustee
therein specified. Upon presentation and surrender of the Owner Trust
Certificates by the Certificateholders on the final Payment Date in respect of
the Owner Trust Certificates, the Owner Trustee shall distribute to the
Certificateholders the amounts otherwise distributable on such Payment Date. Any
funds not distributed on such Payment Date because of the failure of any
Certificateholders to tender their Owner Trust Certificates shall be set aside
and held in trust for the account of the appropriate non-tendering
Certificateholders. If any Owner Trust Certificate, as to which notice has been
given pursuant to this Section 4.2(c) shall not have been surrendered for
cancellation within six months after the time specified in such notice, the
Owner Trustee shall mail a second notice to the related Certificateholders, at
their last addresses shown in the Certificate Register, to surrender such Owner
Trust Certificates for cancellation in order to receive, from the funds held,
the final payment with respect thereto. If within one year after the second
notice any Owner Trust Certificate shall not have been surrendered for
cancellation, the Owner Trustee shall pay such funds to the Depositor who,
subject to escheat laws, shall thereafter hold such amounts uninvested for the
benefit of such Holders. The costs and expenses of maintaining such funds and of
contacting Certificateholders shall be paid out of the assets which remain held.
No interest shall accrue or be payable to any Certificateholder on any amount
held as a result of such Certificateholder's failure to surrender its Owner
Trust Certificate for final payment thereof in accordance with this Section
4.2(c).
(d) Notwithstanding any provision in this Agreement to the contrary,
upon receipt by the Owner Trustee of a notice from any of the Indenture Trustee,
the Collateral Agent, the Warrant Agent, the Owner Trustee, or Administrators
that an Event of Default, or an event which with the giving of notice and
passage of time would constitute an Event of Default (a "Default"), has
occurred, then the Owner Trustee shall not remit funds on deposit in the Cash
Collateral Account, or Certificateholder Funds, or other funds in the possession
of the Owner Trustee, to either of the Depositor or the Certificateholders
unless and until (i) the [Escrow Agent]receives written notice from the
Indenture Trustee that all such Defaults or Events of Default as the case may be
have been cured or waived and (ii) the Depositor provides to the Owner Trustee
an Officers' Certificate that there is then no Default or Event of Default that
has occurred and that is then continuing which has not been waived.
Notwithstanding any provision in this Agreement to the contrary, upon receipt by
the Owner Trustee of a notice from the Indenture Trustee that the Notes have
been or thereby are declared to be due and payable immediately, the Owner
Trustee shall forthwith remit all funds then or which thereafter come into its
possession, including all funds on deposit in the Cash Collateral Account, all
Certificateholder Funds, and all other funds then or thereafter in the
possession of the Owner Trustee, to the Indenture Trustee for application in
accordance with Section 6.10 of the Indenture.
SECTION 4.3 STATEMENTS TO CERTIFICATEHOLDERS.
(a) On each Payment Date, upon request the Owner Trustee (or its
Agent) shall prepare, and shall make available, a statement to each
Certificateholder, the Collateral Agent and to the Depositor stating the
Certificateholder Funds for such Payment Date.
(b) Within 60 days after the end of each calendar year, the Owner
Trustee (or its Agent) shall furnish to the Collateral Agent and to each Person
(upon the written request of such Person), who at any time during the previous
calendar year was a Certificateholder, a statement containing information
regarding payments of amounts on such Person's Owner Trust Certificates,
aggregated for such calendar year or the applicable portion thereof during which
such Person was a Certificateholder. Such obligation shall be deemed to have
been satisfied to the extent that substantially comparable information shall be
provided pursuant to any requirements of the Code and regulations thereunder as
from time to time are in force.
SECTION 4.4 ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION.
The Owner Trustee shall provide to the Certificateholders and the
Collateral Agent access to all the reports, documents and records maintained by
the Owner Trustee in respect of its duties hereunder, such access being afforded
without charge but only upon reasonable written request and during normal
business hours at offices designated by the Owner Trustee.
SECTION 4.5 COMPLIANCE WITH WITHHOLDING REQUIREMENTS.
In the event that the Owner Trustee is required (whether on
liquidation of the Trust or otherwise) to make payments to the Depositor or the
Certificateholders, notwithstanding any other provisions of this Agreement, the
Owner Trustee (or its Agent) shall comply with all federal withholding
requirements with respect to payments to the Depositor or the Certificateholders
that the Owner Trustee reasonably believes are applicable under the Code. The
consent of the Depositor or the Certificateholders, as the case may be, shall
not be required for any such withholding. The parties hereto understand and
agree that the Owner Trustee shall not be required to gross up any such payments
for the amount of such withholding (or any other amounts).
The Owner Trustee agrees, to the extent required by the Internal
Revenue Code of 1986, as amended (the "Code"), and applicable federal
regulations thereunder, to withhold from each payment due hereunder or under any
Certificate, United States withholding taxes at the appropriate rate. In the
event that any withholding tax is imposed on the payment to a Certificate
Holder, such tax shall reduce the amount otherwise distributable to the
Certificate Holder in accordance with this Section. Any Certificate Holder which
is organized under the laws of a jurisdiction outside the United States shall,
on or prior to the date such Certificate Holder becomes a Certificate Holder,
(a) so notify the Owner Trustee, (b) (i) provide the Owner Trustee with Internal
Revenue Service form 1001, 4224, 8709 or W-8, as appropriate, or (ii) notify the
Owner Trustee that it is not entitled to an exemption from United States
withholding tax or a reduction in the rate thereof on payments of interest. Any
such Certificate Holder agrees by its acceptance of a Certificate, on an ongoing
basis, to provide like certification for each taxable year and to notify the
Owner Trustee should subsequent circumstances arise affecting the information
provided the Owner Trustee in clauses (a) and (b) above. The Owner Trustee shall
be fully protected in relying upon, and each Certificate Holder by its
acceptance of a Certificate hereunder agrees to indemnify and hold the Owner
Trustee harmless against all claims or liability of any kind arising in
connection with or related to the Owner Trustee's reliance upon any documents,
forms or information provided by any Certificate Holder to the Owner Trustee.
ARTICLE V
DUTIES OF THE OWNER TRUSTEE
SECTION 5.1 NOTICE OF CERTAIN EVENTS; ACTION BY THE OWNER TRUSTEE.
(a) Whenever the Owner Trustee, on behalf of the Trust as holder of
the Underlying Certificates, is requested or, as to any particular matter,
notified of its authority, by any Person, to take any action or to give any
consent, approval or waiver that it is entitled to take or give on behalf of the
Trust in such capacity, the Owner Trustee shall promptly notify all the
Certificateholders and the Collateral Agent of such request or notice in such
detail as is made available to it.
(b) Subject to the Owner Trustee's rights in this Agreement to be
indemnified for its acts and omissions with respect to matters concerning the
Operative Agreements, the Trust Estate or the Underlying Certificates, the Owner
Trustee shall take or refrain from taking such action as the Certificateholders
owning a majority of the Percentage Interests shall so direct, with the written
consent of the Collateral Agent. The Owner Trustee may, from time to time,
request in writing instructions from the Certificateholders and shall request in
writing instructions from the Certificateholders if the Owner Trustee receives
notice that a default shall have occurred and is continuing under the
Administration Agreement.
SECTION 5.2 DISTRIBUTION OF REPORTS.
Upon receipt of a written request, the Owner Trustee shall promptly
(but no later than five Business Days following receipt thereof) distribute to
the Depositor, the Collateral Agent and the Certificateholders such reports,
notices, statements and written materials relating to the Trust (other than such
documents which have been delivered pursuant to Section 4.3 of this Agreement).
SECTION 5.3 ACTION REQUIRED ONLY IF OWNER TRUSTEE IS INDEMNIFIED.
The Owner Trustee shall not be required to take any action under
Section 5.1(b) if the Owner Trustee shall reasonably determine, or shall have
been advised in writing by counsel, that such action is likely to result in
personal liability for which the Owner Trustee has not been and will not be
adequately indemnified or is contrary to the terms hereof or of any Operative
Agreement or is otherwise contrary to law.
SECTION 5.4 NO DUTIES EXCEPT AS SPECIFIED IN AGREEMENT OR
INSTRUCTIONS.
(a) The Owner Trustee shall not have any duty or obligation to manage,
control, use, make any payment in respect of, register, record, insure, inspect,
sell, dispose of or otherwise deal with the Underlying Certificates or any other
part of the Trust Estate, or to otherwise take or refrain from taking any action
under or in connection with any Operative Agreement to which the Owner Trustee
is a party, except as expressly provided by the terms of this Agreement or in
written instructions from the Certificateholders, provided such instructions are
consented to by the Collateral Agent, received pursuant to Section 5.1(b); and
no implied duties or obligations shall be read into this Agreement against the
Owner Trustee. The Bank in its individual capacity, nevertheless agrees that it
will, at its own cost and expense, promptly take all action as may be necessary
to discharge any Liens on the Trust Estate arising by, through or under the Bank
which are unrelated to the transactions contemplated hereby. Any successor
trustee, in its individual capacity, agrees that it will, at its own cost and
expense, promptly take all action as may be necessary to discharge any Liens on
the Trust Estate arising by, through or under the successor trustee which are
unrelated to the transactions contemplated hereby. Any co-trustee, in its
individual capacity, agrees that it will, at its own cost and expense, promptly
take all action as may be necessary to discharge any Liens on the Trust Estate
arising by, through or under the co-trustee which are unrelated to the
transactions contemplated hereby.
(b) Without limiting the generality of the foregoing subsection (a),
except as otherwise explicitly provided in this Agreement, the Owner Trustee
shall not have any duty to (i) file or record any Operative Agreement or any
other document (including financing or continuation statements), or to maintain
or continue any such filing or recording or to refile or rerecord any such
document, (ii) pay or discharge any tax or any Lien owing with respect to or
assessed or levied against any part of the Trust Estate, other than to forward
notice of such tax or Lien received by the Owner Trustee to the
Certificateholders, (iii) confirm, verify, investigate or inquire into the
failure of any Person to receive any payments, notices, reports or financial
statements in connection with the Underlying Certificates, (iv) ascertain or
inquire as to the performance or observance of any Person under or of any of the
Operative Agreements, (v) manage, control, sell, dispose of or otherwise deal
with the Underlying Certificates or any part thereof or any other part of the
Trust Estate or (vi) to prepare or file any document under state or federal tax
or securities laws.
ARTICLE VI
THE OWNER TRUSTEE
SECTION 6.1 ACCEPTANCE OF TRUST AND DUTIES.
The Bank accepts the trust hereby created and agrees to perform the
same, but only upon the terms of this Agreement. The Bank agrees to receive,
manage and disburse all moneys constituting part of the Trust Estate actually
received by it as Owner Trustee in accordance with the terms of this Agreement.
Neither the Bank nor the Owner Trustee shall be answerable or accountable under
any circumstances, except for (i) its own willful misconduct, bad faith or gross
negligence, (ii) the inaccuracy of any of its representations or warranties
contained in Section 6.2 of this Agreement, (iii) taxes based on or measured by
any fees, commissions or compensation received by it for acting as Owner Trustee
in connection with any of the transactions contemplated by this Agreement or any
other Operative Agreements and (iv) its failure to use reasonable care to
receive, manage and disburse moneys actually received by it in accordance with
the terms hereof.
SECTION 6.2 LIMITED REPRESENTATIONS OR WARRANTIES OF THE OWNER
TRUSTEE.
Neither the Bank nor the Owner Trustee makes (i) any representation or
warranty, either express or implied, as to the title to or value of the
Underlying Certificates, and (ii) any representation or warranty as to the
validity or enforceability of any Operative Agreement except as set forth below
or as to the correctness of any statement made by a Person other than the Bank
or the Owner Trustee contained in any Operative Agreement. The Bank represents,
warrants and covenants to and for the benefit of the Depositor and the
Certificateholders that:
(a) The Bank is a banking corporation, duly organized, validly
existing and in good standing under the laws of the state of Delaware;
(b) The execution and delivery by the Bank, and the performance and
compliance by the Bank with the terms of, this Agreement and any and all
documents to be executed or delivered by the Bank in its individual
capacity in connection with this Agreement and to fulfill its obligations
under, and to consummate the transactions contemplated by, this Agreement
and such other documents executed in connection herewith to which the Bank
is a party, will not violate any provisions of the Bank's charter or
bylaws;
(c) The Bank, in its individual capacity, has full power and authority
and has taken all action necessary to execute and deliver this Agreement
and any and all documents to be executed or delivered by it in its
individual capacity in connection with this Agreement and to fulfill its
obligations under, and to consummate the transactions contemplated by, this
Agreement and such other documents executed in connection herewith to which
it is a party, and this Agreement is the legal, valid and binding
obligation of the Bank, in its individual capacity, enforceable against the
Bank in accordance with its terms, except as such terms may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the rights of creditors generally and by general principles of
equity;
(d) The consummation of the transactions hereby contemplated do not
conflict with, violate or contravene any law, rule, regulation or judicial,
governmental or administrative order of the State of Delaware or of the
United States governing the banking and trust powers of the Bank or
conflict with, result in a breach of or constitute a default under any of
the terms, conditions or provisions of any agreement or instrument to which
the Bank is a party or by which it is bound, or any order or decree
applicable to the Bank, which would materially and adversely affect the
ability of the Bank to carry out the transactions contemplated by this
Agreement; and
(e) There is no action, suit or proceeding pending against the Bank in
any court or by or before any other governmental agency or instrumentality
of the State of Delaware or of the United States governing the banking and
trust powers of the Bank which would materially and adversely affect the
ability of the Bank to carry out the transactions contemplated by this
Agreement.
SECTION 6.3 CERTAIN DUTIES AND RESPONSIBILITIES.
(a) The Owner Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer, unless it shall be proved that
the Owner Trustee was grossly negligent in ascertaining the pertinent
facts.
(b) The Owner Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in good faith in accordance with the
direction of the Certificateholders and, where required by this Agreement,
with the written consent of the Collateral Agent.
(c) The Owner Trustee shall not be liable for interest on any money
received by it except as the Owner Trustee may otherwise agree with the
Certificateholders.
(d) No provision of this Agreement shall require the Owner Trustee to
expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder, or in the exercise of any
of its rights or powers, if it shall have reasonable grounds for believing
that repayment of such funds or adequate indemnity against such risk or
liability is not reasonably assured to it.
(e) The permissive right of the Owner Trustee to take actions
enumerated in this Agreement shall not be construed as a duty and the Owner
Trustee shall not be answerable for other than its own willful misconduct,
bad faith or gross negligence.
(f) The Owner Trustee shall be under no obligation to institute any
suit, or to take any remedial proceeding under this Agreement, or to enter
any appearance or in any way defend in any suit in which it may be made a
defendant, or in the enforcement of any rights and powers hereunder, if the
Owner Trustee reasonably believes that it will not be adequately
indemnified against any and all costs and expenses, outlays, and counsel
fees and other reasonable disbursements and against all liability.
(g) Under no circumstances shall the Owner Trustee be personally
liable for any indebtedness or obligation of the Trust.
(h) The Owner Trustee shall not be liable for the default or
misconduct of the Depositor, the Administrators or any other Person and
shall not be responsible for performing any duties or obligations of the
Trust or the Owner Trustee that are the responsibility of the Depositor,
the Administrators or any other Person.
(i) Every provision of this Agreement relating to the Owner Trustee
shall be subject to the provisions of this Section 6.3.
SECTION 6.4 RELIANCE; ADVICE OF COUNSEL.
Neither the Bank nor the Owner Trustee shall incur any liability to
any Person in acting upon any signature, instrument, notice, resolution,
request, consent, order, certificate, report, opinion, bond or other document or
paper believed by it to be genuine and believed by it in good faith to be signed
by the proper party or parties. The Owner Trustee may accept and rely upon a
certified copy of a resolution of the board of directors or other governing body
of any corporate party as conclusive evidence that such resolution has been duly
adopted by such body and that the same is in full force and effect. As to any
fact or matter the manner of ascertainment of which is not specifically
prescribed herein, the Owner Trustee may for all purposes hereof rely on an
Officers' Certificate of the relevant party, as to such fact or matter, and such
Officers' Certificate shall constitute full protection to the Owner Trustee for
any action taken or omitted to be taken by it in good faith in reliance thereon.
In the administration of the Trust hereunder, the Owner Trustee may execute any
of the trusts or powers hereof and perform its powers and duties hereunder
directly or through Agents and the Owner Trustee shall not be liable for the
acts or omissions of any Agent selected by it in good faith. The Owner Trustee
may consult with counsel, accountants and other skilled Persons to be selected
and employed by it, and the Owner Trustee shall not be liable for anything done,
suffered or omitted in good faith by it in accordance with the written advice or
opinion of counsel, accountant or other skilled Persons, so long as the Owner
Trustee exercised due care in the selection of such Persons, and had no actual
knowledge that it could not reasonably rely on such advice or opinion or by any
such Persons appointed in good faith.
SECTION 6.5 BOOKS AND RECORDS; TAX ELECTION.
The Owner Trustee shall be responsible for the keeping of all
appropriate books and records relating to the receipt and disbursement of all
moneys that the Owner Trustee actually receives hereunder or under any other
Operative Agreement. In the event that the Owner Trust Certificates are held by
more than one Holder, the Administrator shall file an application with the IRS
for a taxpayer identification number with respect to the Trust and prepare or
cause to be prepared and filed a tax return in connection with the transactions
contemplated hereby (the "Tax Return"); PROVIDED, HOWEVER, that the
Administrator shall send or cause to be sent a copy of the completed Tax Return
to the Owner Trustee (which shall sign such return), the Depositor and the
Certificateholders not more than 60 nor less than 30 days prior to the due date
of the Tax Return. The Depositor and any Certificateholders shall each, upon
request by the Administrator furnish the Administrator with all such information
as may be reasonably required from the Depositor or the Certificateholders in
connection with the preparation of such Tax Return. The Owner Trustee shall keep
copies of the Tax Returns delivered to the Owner Trustee by the Administrator.
ARTICLE VII
COMPENSATION, REIMBURSEMENT AND INDEMNIFICATION
OF THE OWNER TRUSTEE
SECTION 7.1 COMPENSATION OF THE OWNER TRUSTEE.
The Owner Trustee shall be entitled to receive the Owner Trustee Fee
[how paid] as compensation for its services. The Owner Trustee shall also be
entitled to receive such additional fees as are set forth in a separate Fee
Agreement with the Depositor.
SECTION 7.2 REIMBURSEMENT AND INDEMNIFICATION OF THE OWNER TRUSTEE.
(a) The Owner Trustee shall be entitled to be reimbursed for its
reasonable expenses (including reasonable attorneys' fees) incurred in the
performance of its duties as Owner Trustee hereunder, and to be compensated
reasonably for any extraordinary services rendered under Section 5.1(b), except
to the extent that such expenses arise out of or result from (i) the Owner
Trustee's own willful misconduct, bad faith or gross negligence, (ii) the
inaccuracy of any of the Bank's representations or warranties contained in
Section 6.2 of this Agreement, (iii) taxes based on or measured by any fees,
commissions or compensation received by the Owner Trustee for acting as such in
connection with any of the transactions contemplated by this Agreement or any
other Operative Agreements, and (iv) the Owner Trustee's failure to use
reasonable care to receive, manage and disburse moneys actually received by it
in accordance with the terms hereof.
(b) Subject to Section 7.2(c) hereof, the Bank is hereby indemnified
and held harmless by the [Certificateholders] from and against any and all
liabilities, obligations, indemnity obligations, losses (excluding loss of
anticipated profits), damages, claims, actions, suits, judgments, out-of-pocket
costs, expenses and disbursements (including legal and consultants' fees and
expenses) and taxes of any kind and nature whatsoever (collectively, the
"Liabilities") which may be imposed on, incurred by or asserted at any time
against the Bank or the Owner Trustee in any way relating to or arising out of
the Trust Estate, any of the properties included therein, the administration of
the Trust Estate or any action or inaction of the Owner Trustee hereunder or
under the Operative Agreements, except to the extent that such Liabilities arise
out of or result from (i) the Owner Trustee's own willful misconduct, bad faith
or gross negligence, (ii) the inaccuracy of any of the Bank's representations or
warranties contained in Section 6.2 of this Agreement, (iii) taxes based on or
measured by any fees, commissions or compensation received by the Owner Trustee
for acting as such in connection with any of the transactions contemplated by
this Agreement or any other Operative Agreement, and (iv) the Owner Trustee's
failure to use reasonable care to receive, manage and disburse moneys actually
received by it in accordance with the terms hereof. The indemnities contained in
this Section 7.2(b) shall survive the termination of this Agreement and the
removal or resignation of the Owner Trustee hereunder.
(c) Any reimbursements and indemnities to the Owner Trustee pursuant
to this Section 7.2 shall be payable solely: first, out of amounts on deposit in
the Certificate Account; second, out of amounts, if any, on deposit in the Cash
Collateral Account; and, third, to the extent not paid pursuant to clause first
or second within 60 days of first being incurred, by the Certificateholders, on
a joint and several basis.
(d) The Owner Trustee shall have a lien on the Trust Accounts for
payment of amounts due under this Article VII.
SECTION 7.3 NOT OBLIGATIONS OF THE TRUST.
None of the fees, expenses and other liabilities referred to in
Sections 7.1 and 7.2 shall be obligations of the Trust or otherwise chargeable
to the Trust Estate, provided that the Owner Trustee is authorized to pay such
amounts from the Trust Accounts in accordance with Sections 3.2 and 7.2(c). The
Owner Trustee hereby agrees not to cause or participate in the filing of a
petition in bankruptcy against the Trust for the non-payment to the Owner
Trustee of any amounts provided by this Agreement until 91 days after the
payment in full of all the Notes issued under the Indenture.
ARTICLE VIII
TERMINATION OF AGREEMENT
SECTION 8.1 TERMINATION.
The Trust may not be dissolved until the termination of the security
interests under Section 12.07 of the Indenture. After the termination of the
security interests under Section 12.07 of the Indenture, the Trust may be
dissolved by the Certificateholders holding 100% of the Percentage Interests in
the Trust at any time, provided, however, that prior to termination of the
Indenture, the prior written consent of the Collateral Agent shall be required.
After payment of all amounts in the order set forth in Section 3.2, all right,
title and interest in the Trust Estate still held by the Owner Trustee at the
time of such dissolution shall be transferred, assigned and paid over to the
Certificateholders or their designee in proportion to their Percentage Interests
in accordance with Section 8.2, and thereafter the Owner Trustee shall file a
certificate of cancellation under Section 3810 of the Business Trust Statute and
the Trust shall terminate.
SECTION 8.2 FURTHER ASSURANCES BY THE OWNER TRUSTEE UPON TERMINATION.
Upon dissolution of this Trust as provided in Section 8.1, the Owner
Trustee shall take such action as may be requested by, and at the expense of,
the Certificateholders owning a majority of the Percentage Interests to transfer
the remaining assets of the Trust to the Certificateholders or the
Certificateholders' designee, including the execution of instruments of transfer
or assignment with respect to the Underlying Certificates and any of the
Operative Agreements to which the Owner Trustee is a party.
SECTION 8.3 INSOLVENCY OF A CERTIFICATEHOLDER.
The insolvency or other similar incapacity of a Certificateholder
shall not (i) operate to terminate this Agreement and the Trust, (ii) entitle
the Certificateholder's legal representatives to claim an accounting or to take
any action in any court for a partition or winding up of the Trust Estate or
(iii) otherwise affect the rights, obligations and liabilities of the parties
hereto.
ARTICLE IX
SUCCESSOR OWNER TRUSTEES, CO-OWNER TRUSTEES
AND SEPARATE OWNER TRUSTEES
SECTION 9.1 RESIGNATION OF THE OWNER TRUSTEE; APPOINTMENT OF
SUCCESSOR.
(a) The Owner Xxxxxxx may resign at any time (and shall immediately
resign if it ceases to be an Eligible Trustee) by giving at least [60] [30] days
written notice to the Certificateholders, the Depositor, the Collateral Agent
and the Administrators, such resignation to be effective on the acceptance of
appointment by a successor Owner Trustee under Section 9.1(b) hereof. The
Depositor shall remove the Owner Trustee by written notice, a copy of which
shall be concurrently delivered by the Depositor to the Certificateholders, the
Collateral Agent and the Administrators, if the Owner Trustee ceases to be an
Eligible Trustee and fails to resign immediately. The Owner Trustee otherwise
may be removed with or without cause at any time by the Certificateholders with
60 days' prior written notice, a copy of which shall be concurrently delivered
by the Certificateholders to the Depositor, the Collateral Agent and the
Administrators. Any such removal shall be effective upon the acceptance of
appointment by a successor Owner Trustee under Section 9.1(b) hereof. In case of
the resignation or removal of the Owner Trustee, the Certificateholders may
appoint a successor Owner Trustee by an instrument signed by the
Certificateholders. If a successor Owner Trustee shall not have been appointed
within [60] [30] days after the giving of written notice of such resignation or
the delivery of the written instrument with respect to such removal, the Owner
Trustee, the Depositor, the Administrators or the Certificateholders may apply
to any court of competent jurisdiction to appoint a successor Owner Trustee to
act until such time, if any, as a successor shall have been appointed and shall
have accepted its appointment as above provided. Any successor Owner Trustee so
appointed by such court shall immediately and without further act be superseded
by any successor Owner Trustee appointed as above provided within one year from
the date of the appointment by such court.
(b) Any successor Owner Trustee, however appointed, shall execute and
deliver to the predecessor Owner Trustee and the Depositor an instrument
accepting such appointment and shall furnish a photocopy of such instrument to
the Certificateholders and the Collateral Agent, and thereupon such successor
Owner Trustee, without further act, shall become vested with all the estates,
properties, rights, powers, duties and trusts of the predecessor Owner Trustee
herein; but nevertheless, upon the written request of such successor Owner
Trustee such predecessor Owner Trustee shall execute and deliver an instrument
transferring to such successor Owner Trustee, upon the trusts herein expressed,
all the estates, properties, rights, powers, duties and trusts of such
predecessor Owner Trustee and such predecessor Owner Trustee shall duly assign,
transfer, deliver and pay over to such successor Owner Trustee all moneys or
other property then held by such predecessor Owner Trustee upon the trusts
herein expressed.
(c) Any successor Owner Trustee shall promptly file a certificate of
amendment to the Certificate of Trust, identifying the name and principal place
of business of such successor Owner Trustee in the State of Delaware.
(d) Any successor Owner Trustee shall be an Eligible Trustee, willing,
able and legally qualified to perform the duties of the Owner Trustee hereunder.
(e) Any corporation into which the Owner Trustee may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Owner Trustee shall be
a party, or any corporation to which substantially all the corporate trust
business of the Owner Trustee may be transferred, shall, subject to the terms of
Section 9.1(c) hereof, be the Owner Trustee under this Agreement without any
further act.
SECTION 9.2 CO-TRUSTEES AND SEPARATE TRUSTEES.
Whenever the Owner Trustee shall deem it necessary or prudent in order
to conform to any law of any jurisdiction in which all or any part of the Trust
Estate shall be situated or to make any claim or be a party to any suit with
respect to the Trust Estate, the Owner Trust Certificates or any Operative
Agreement, or the Owner Trustee shall be advised in writing by counsel
reasonably satisfactory to it that it is so necessary or prudent, the Owner
Trustee and the Certificateholders shall execute and deliver an agreement
supplemental hereto and all other instruments and agreements, and shall take all
other action, necessary or proper to constitute one or more Persons, who need
not meet the requirements of Section 9.1(c) hereof (and the Owner Trustee may
appoint one or more of its officers), either as co-trustees or co-trustees
jointly with the Owner Trustee of all or any part of the Trust Estate, or as
separate trustee or separate trustees of all or any part of the Trust Estate,
and to vest in such Persons, in such capacity, such title to the Trust Estate or
any part thereof and such rights or duties as may be necessary or desirable, all
for such period and under such terms and conditions as are reasonably
satisfactory to the Owner Trustee and the Certificateholders. In case any
co-trustee or separate trustee shall die, become incapable of acting, resign or
be removed, the title to the Trust Estate and all rights and duties of such
co-trustee or separate trustee shall, so far as permitted by law, vest in and be
exercised by the Owner Trustee, without the appointment of a successor to such
co-trustee or separate trustee.
ARTICLE X
SUPPLEMENTS AND AMENDMENTS
SECTION 10.1 SUPPLEMENTS AND AMENDMENTS.
Subject to Section 10.2 of this Agreement, at the written request of
the Certificateholders and, prior to the termination of the Indenture, with the
prior written consent of the Collateral Agent, this Agreement may be amended by
a written instrument signed by the Owner Trustee and the Certificateholders
(and, if its rights hereunder are adversely affected, the Depositor), but if any
instrument required to be so executed materially and adversely affects any
right, duty or liability of, or immunity or indemnity in favor of the Bank or
the Owner Trustee under this Agreement or any of the other Operative Agreements
to which the Owner Trustee is a party, or would cause or result in any conflict
with or breach of any terms, conditions or provisions of, or default under, the
Bank's charter documents or by-laws or any document contemplated hereby to which
the Owner Trustee is a party, the Owner Trustee may in its sole discretion
decline to execute such instrument.
In the event that there is more than one Certificateholder (as shown
on the Certificate Register), the consent to an amendment by Certificateholders
owning a majority of the Percentage Interests shall be sufficient to bind all of
such Holders; PROVIDED, HOWEVER, that no such amendment shall: (i) reduce in any
manner the amount of, or delay the timing of, payments received on any Owner
Trust Certificate without the consent of the affected Holder; or (ii) amend this
Section 10.1, without the consent of all of the Holders then outstanding.
SECTION 10.2 ADDITIONAL AMENDMENT PROVISIONS.
(a) It shall not be necessary for the consent of the
Certificateholders under this Article X to approve the particular form of any
proposed amendment, but it shall be sufficient if such consent shall approve the
substance thereof. The manner of obtaining such consents and of evidencing the
authorization of the execution thereof shall be subject to such reasonable
regulations as the Owner Trustee may prescribe.
(b) The Owner Trustee, at any time from time to time, upon the request
of either Administrator but without the consent of the Certificateholders, may
amend this Agreement to modify, eliminate or add to any of its provisions, to
such extent as shall be necessary to prevent or reduce the imposition on the
Trust of any material federal, state or local taxes, at all time prior to the
liquidation of the Trust; PROVIDED, HOWEVER, that such action, as evidenced by
an Opinion of Counsel acceptable to the Owner Trustee, is necessary or helpful
to prevent the imposition on the Trust of any such taxes.
(c) Prior to the execution of any amendment to this Agreement, the
Owner Trustee shall be entitled to receive and rely upon an Opinion of Counsel,
at the expense of the party requesting such amendment (or, if such amendment is
requested by the Owner Trustee, then at the expense of the Certificateholders)
stating that the execution of such amendment is authorized or permitted by this
Agreement.
ARTICLE XI
REPRESENTATIONS, WARRANTIES AND
COVENANTS OF THE DEPOSITOR
SECTION 11.1 REPRESENTATIONS AND WARRANTIES OF THE DEPOSITOR.
(a) The Depositor represents and warrants as follows for the benefit
of the Owner Trustee and any Certificateholder:
(i) the Depositor is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware, has full
power and authority, and has taken all action necessary, to execute and
deliver this Agreement, and any and all other documents to be executed or
delivered by it in connection with this Agreement, and to fulfill its
obligations under, and to consummate the transactions contemplated by, this
Agreement, and this Agreement and such other documents executed in
connection herewith are the legal, valid and binding obligations of the
Depositor, enforceable against it in accordance with their respective
terms, except as such terms may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the rights of
creditors generally and by general principles of equity;
(ii) the execution and delivery of this Agreement and each other
document to be executed or delivered by it in connection with this
Agreement, and the performance of its obligations hereunder and thereunder
by the Depositor will not violate the provisions of its organizational
documents, conflict with any provision of any law or regulation to which it
is subject, or conflict with, result in a breach of, or constitute a
default under any of the terms, conditions or provisions of, any agreement
or instrument to which the Depositor is a party or by which it is bound, or
any order or decree applicable to the Depositor, or result in the creation
or imposition of any Lien on any of the Depositor's assets or property,
which would materially and adversely affect the ability of the Depositor to
carry out the transactions contemplated by this Agreement or such other
documents executed in connection herewith; no consent, approval,
authorization or order of or filing with or notice to any court or
governmental agency or body is required for the execution, delivery and
performance by the Depositor of this Agreement or such other documents;
(iii) there is no action, suit or proceeding pending against the
Depositor in any court or by or before any other governmental agency or
instrumentality which would materially and adversely affect the validity of
the Underlying Certificates or the ability of the Depositor or the
Certificateholders to carry out the transactions contemplated by this
Agreement; and
(iv) as of the Closing Date or the applicable Transfer Date, that
immediately prior to the conveyance of the Underlying Certificates to the
Trust, the Depositor had good title to, and was the sole owner of, the
related Underlying Certificates, free and clear of any pledge, lien,
encumbrance or security interest and such assignment validly transfers all
right, title and interest of such Underlying Certificates to the Trust,
free and clear of any pledge, lien, encumbrance or security interest. After
giving effect to such assignment, the Trust has all right, title and
interest in the related Underlying Certificates free and clear any pledge,
lien, encumbrance or security interest.
(b) It is understood and agreed that each of the foregoing
representations and warranties of the Depositor shall survive delivery of the
Underlying Certificates to the Trust. Upon discovery or receipt of notice by the
Depositor or a Responsible Officer of the Owner Trustee of a breach of any of
the foregoing representations and warranties that materially and adversely
affects the interests of the Owner Trustee for the benefit of the
Certificateholders in the Underlying Certificates, the party discovering such
breach shall give prompt written notice to the other party hereto.
SECTION 11.2 ACCRUED INTEREST, ETC.
The Depositor agrees that any income, interest, fees and other
payments that it may receive in respect of the Underlying Certificates
applicable to a period on or after the Closing Date or Transfer Date, as
applicable, shall inure to the benefit of the Trust, and the Depositor shall pay
such amounts to the Trust promptly upon receipt (but in no event later than one
Business Day thereafter).
SECTION 11.3 ADDITIONAL COVENANTS OF THE DEPOSITOR.
The Depositor hereby covenants and agrees for the benefit of the Owner
Trustee and the Certificateholders that:
(a) The business and affairs of the Depositor will be managed by or
under the direction of its board of directors in accordance with its
certificate of incorporation and by-laws. The Depositor will keep correct
and complete books and records of accounts and minutes of the meetings and
other proceedings of the board of directors. Any such resolutions,
agreements and other instruments will be continuously maintained as
official records by the Depositor.
(b) The Depositor will at all times ensure that its capitalization is
adequate in light of its business and purposes. The Depositor will pay from
its own funds and assets (and not the Trust's) all obligations and
indebtedness incurred by it.
(c) The Depositor will not conduct its business in the name of the
Trust.
(d) The Depositor will not guarantee any obligations of the Trust
(including the Owner Trust Certificates). The Depositor will not operate or
purport to operate as an integrated, single economic unit with respect to
the Trust or seek or obtain credit or incur any obligation to any third
party (other than the Notes) based on the assets of the Trust or induce any
such third party to reasonably rely on the creditworthiness of the Trust in
connection therewith.
(e) The accounting records of the Depositor will disclose the effect
of the transactions in accordance with generally accepted accounting
principles and relevant pronouncements.
ARTICLE XII
TRANSFER OF OWNER TRUST CERTIFICATES
SECTION 12.1 REGISTRATION OF TRANSFER AND EXCHANGE OF OWNER TRUST
CERTIFICATES.
(a) At all times during the term of this Agreement, there shall be
maintained at the office of a registrar appointed by the Depositor (the
"Certificate Registrar") a register (the "Certificate Register") in which,
subject to such reasonable regulations as the Certificate Registrar may
prescribe, the Certificate Registrar shall provide for the registration of Owner
Trust Certificates and of transfers and exchanges of Owner Trust Certificates as
herein provided. The Owner Trustee is hereby initially appointed (and xxxxxx
agrees to act in accordance with the terms hereof) as Certificate Registrar for
the purpose of registering Owner Trust Certificates and transfers and exchanges
of Owner Trust Certificates as herein provided. The Owner Trustee may appoint,
by a written instrument delivered to the Depositor, any other bank or trust
company to act as Certificate Registrar under such conditions as the Owner
Trustee may prescribe, provided that the Owner Trustee shall not be relieved of
any of its duties or responsibilities hereunder as Certificate Registrar by
reason of such appointment. If the Owner Trustee resigns or is removed in
accordance with the terms hereof, the successor trustee shall immediately
succeed to its predecessor's duties as Certificate Registrar. The Depositor, the
Administrators and the Owner Trustee shall have the right to inspect the
Certificate Register or to obtain a copy thereof at all reasonable times, and to
rely conclusively upon a certificate of the Certificate Registrar as to the
information set forth in the Certificate Register.
(b) No transfer, sale, pledge or other disposition of any Owner Trust
Certificate or interest therein shall be made unless that transfer, sale, pledge
or other disposition is exempt from the registration and/or qualification
requirements of the Securities Act and any applicable state securities laws, or
is otherwise made in accordance with the Securities Act and such state
securities laws. Neither the Trust nor any trust fund in which an Underlying
Certificate evidences a beneficial ownership interest has been registered as an
investment company under the Investment Company Act, and no transfer of an Owner
Trust Certificate may be made (i) to any Person other than a QIB, the Collateral
Agent or an Affiliate of the Depositor or (ii) to any Person that would require
the Trust or any such trust fund to be registered as an investment company under
the Investment Company Act. If such transfer is to be made to any Person who, to
the knowledge of the Certificate Registrar, is not the Collateral Agent or an
Affiliate of the Depositor, then the Certificate Registrar shall refuse to
register such transfer unless it receives (and upon receipt, may conclusively
rely upon) either (x) a certificate from the Certificateholder desiring to
effect such transfer substantially in the form attached as Exhibit B-1 hereto
and a certificate from such Certificateholder's prospective transferee
substantially in the form attached as Exhibit B-2 hereto or (y) an Opinion of
Counsel to the effect that such transfer is not required to be registered under
the Securities Act. None of the Trust, the Depositor, the Owner Trustee or the
Certificate Registrar is obligated to register or qualify any Owner Trust
Certificate under the Securities Act or any other securities laws or to take any
action not otherwise required under this Agreement to permit the transfer of any
Owner Trust Certificate or interest therein without registration or
qualification. Any Certificateholder desiring to effect a transfer of an Owner
Trust Certificate or an interest therein shall, and does hereby agree to,
indemnify the Trust, the Depositor, the Administrators, the Owner Trustee and
the Certificate Registrar against any liability that may result if the transfer
is not so exempt or is not made in accordance with such federal and state laws.
(c) No transfer of any Owner Trust Certificate or any interest therein
shall be made (A) to any employee benefit plan or other retirement arrangement,
including individual retirement accounts and annuities, Xxxxx plans and
collective investment funds and separate accounts in which such plans, accounts
or arrangements are invested, including, without limitation, insurance company
general accounts, that is subject to ERISA or the Code (each, a "Plan"), or (B)
to any Person who is directly or indirectly purchasing such Owner Trust
Certificate or interest therein on behalf of, or with assets of, a Plan.
(d) No transfer of any Owner Trust Certificate shall be made to any
Person that is not a "United States person" as defined in Section 7701(a)(30) of
the Code if such Person is exempt from taxation under Section 501(a) of the
Code.
(e) The Owner Trust Certificates shall bear a legend describing or
referencing the restrictions on transferability set forth in Sections 12.1(b),
(c) and (d).
(f) Subject to compliance with Sections 12.1(b), (c) and (d), upon
surrender for registration of transfer of the Owner Trust Certificates at the
office of the Certificate Registrar or at the office of its Agent in Wilmington,
Delaware, the Owner Trustee shall execute, and the Certificate Registrar shall
deliver and authenticate, in the name of the designated transferee or
transferees, one or more new Owner Trust Certificates, in authorized
denominations, evidencing in the aggregate a like aggregate Percentage Interest
and dated the date of authentication by the Certificate Registrar.
(g) At the option of any Certificateholder, Owner Trust Certificates
may be exchanged for other Owner Trust Certificates, in authorized
denominations, evidencing in the aggregate a like aggregate Percentage Interest
upon surrender of the Owner Trust Certificates to be exchanged at the office of
the Certificate Registrar, or the office of its Agent in Wilmington, Delaware.
Whenever any Owner Trust Certificates are so surrendered for exchange, the Owner
Trustee shall execute and the Certificate Registrar shall authenticate and
deliver, the Owner Trust Certificates which the Certificateholder is entitled to
receive.
(h) If the Owner Trustee or the Certificate Registrar so requires,
every Owner Trust Certificate presented or surrendered for registration of
transfer or exchange shall be duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Owner Trustee and the
Certificate Registrar duly executed by, the Certificateholder thereof or such
person's attorney duly authorized in writing.
(i) No service charge shall be made to the requesting
Certificateholder for any registration of transfer or exchange of Owner Trust
Certificates, but the Certificate Registrar may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed or any
reasonable expenses in connection with any registration of transfer or exchange
of Owner Trust Certificates.
(j) The Certificate Registrar shall cancel and retain or destroy, in
accordance with the Owner Trustee's retention policy then in effect, all Owner
Trust Certificates surrendered for registration of transfer or exchange.
SECTION 12.2 MUTILATED, DESTROYED, LOST OR STOLEN OWNER TRUST
CERTIFICATES.
If (i) any mutilated Owner Trust Certificate is surrendered to the
Owner Trustee or the Certificate Registrar, or the Owner Trustee and the
Certificate Registrar receive evidence to their satisfaction of the destruction,
loss or theft of any Owner Trust Certificate, and (ii) there is delivered to the
Owner Trustee and the Certificate Registrar such security or indemnity as may be
required by them to save each of them harmless, then, in the absence of actual
knowledge by a Responsible Officer of the Owner Trustee or the Certificate
Registrar that such Owner Trust Certificate has been acquired by a bona fide
purchaser, the Owner Trustee shall execute and the Certificate Registrar shall
authenticate and deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Owner Trust Certificate, a new Owner Trust Certificate
of like tenor. Upon the issuance of any new Owner Trust Certificate under this
Section 12.2, the Owner Trustee may require the payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation
thereto and any other expenses (including the fees and expenses of the
Certificate Registrar) connected therewith. Any replacement Owner Trust
Certificate issued pursuant to this Section shall constitute complete and
indefeasible evidence of ownership of the corresponding interest in the Trust,
as if originally issued, whether or not the lost, stolen or destroyed Owner
Trust Certificate shall be found at any time and such original Owner Trust
Certificate shall thereby be deemed canceled.
SECTION 12.3 PERSONS DEEMED OWNERS.
Prior to due presentation of an Owner Trust Certificate for
registration of transfer, the Owner Trustee, the Certificate Registrar and any
agent of any of them may treat the Person in whose name any Owner Trust
Certificate is registered as the owner of such Owner Trust Certificate for the
purpose of receiving distributions to Certificateholders pursuant to Section 4.2
hereof and for all other purposes whatsoever, and neither the Owner Trustee, the
Certificate Registrar nor any agent of any of them shall be affected by notice
to the contrary.
SECTION 12.4 ACCESS TO NAMES AND ADDRESSES.
(a) If any Certificateholder, the Depositor or an Administrator (each,
in such capacity, an "Applicant") applies in writing to the Owner Trustee, and
such application states that the Applicant desires to communicate with
Certificateholders with respect to their rights under this Agreement or the
Owner Trust Certificates and is accompanied by a copy of the communication which
such Applicant proposes to transmit, then the Owner Trustee shall, at the
expense of such Applicant, within ten Business Days after the receipt of such
application, furnish or cause to be furnished to such Applicant a list of the
names and addresses of the Certificateholders as set forth in the Certificate
Register.
(b) Every Certificateholder consents to the disclosure to any
Applicant of its identity and status as a Certificateholder and agrees with the
Owner Trustee that the Owner Trustee and the Certificate Registrar shall not be
held accountable in any way by reason of the disclosure of any information as to
the names and addresses of the Certificateholders hereunder, regardless of the
source from which such information was derived.
SECTION 12.5 ACTIONS OF CERTIFICATEHOLDERS AND OTHERS.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Agreement to be given or taken by
Certificateholders or the Collateral Agent may be embodied in and evidenced by
one or more instruments of substantially similar tenor signed by such
Certificateholders or the Collateral Agent in person or by agent duly appointed
in writing; and except as herein otherwise expressly provided, such action shall
become effective when such instrument or instruments are delivered to the Owner
Trustee. Proof of execution of any such instrument or of a writing appointing
any such agent shall be sufficient for any purpose of this Agreement and
conclusive in favor of the Owner Trustee, if made in the manner provided in this
Section 12.5.
(b) The fact and date of the execution by any Certificateholder or the
Collateral Agent of any such instrument or writing may be proved in any
reasonable manner which the Owner Trustee deems sufficient.
(c) Any request, demand, authorization, direction, notice, consent,
waiver or other action by a Certificateholder shall bind every transferee of
every Owner Trust Certificate issued upon the registration of transfer of such
Certificateholder's Owner Trust Certificate or in exchange therefor or in lieu
thereof, in respect of anything done, or omitted to be done, by the Owner
Trustee, in reliance thereon, whether or not notation of such action is made
upon such Owner Trust Certificate.
(d) The Owner Trustee may require such additional proof of any matter
referred to in this Section 12.5 as it shall deem reasonably necessary.
ARTICLE XIII
MISCELLANEOUS
SECTION 13.1 NO LEGAL TITLE TO TRUST ESTATE IN THE CERTIFICATEHOLDERS.
The Certificateholders shall not have legal title to any part of the
Trust Estate; PROVIDED, HOWEVER, that the Certificateholders have a beneficial
interest in the Trust Estate (and initially shall have all right, title and
interest in and to the Owner Trust Certificates). No transfer by operation of
law or otherwise of any right, title or interest of the Certificateholders in
and to the Trust Estate or hereunder shall operate to terminate this Agreement
or the Trust or the trusts hereunder or entitle any successor or transferee to
an accounting or to the transfer to it of legal title to any part of the Trust
Estate.
SECTION 13.2 RESERVED.
SECTION 13.3 ACTION BY THE OWNER TRUSTEE IS BINDING.
Any actions, directions, approvals or consents by the Owner Trustee so
long as such actions, directions, consents or approvals are made pursuant to the
terms of this Agreement shall bind the Certificateholders and shall be effective
to consent to action taken by the parties. No such party shall be required to
inquire as to the authorization, necessity, expediency or regularity of such
consent by the Owner Trustee.
SECTION 13.4 LIMITATION ON RIGHTS OF OTHERS.
Nothing in this Agreement, whether express or implied, shall be
construed to give to any Person, other than the Bank, the Owner Trustee, the
Depositor and the Certificateholders, any legal or equitable right, remedy or
claim under or in respect of this Agreement; provided, however, that the
Collateral Agent shall be a third-party beneficiary of this Agreement.
SECTION 13.5 NOTICES. All demands, notices and communications
hereunder shall be in writing, may be given by facsimile transmission, shall be
deemed to have been given upon receipt (except that notices being sent by first
class mail, postage prepaid, shall be deemed to be received five Business Days
following the mailing thereof) as follows: (i) in the case of the Owner Trustee,
Xxxxxx Square North, 0000 Xxxxx Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000,
Attention: Corporate Trust Administration; (ii) in the case of the Depositor,
0000 Xxxxxxxx Xxxx, Xxxxxxxx, Xxx Xxxx 00000, Attention: General Counsel, Tel.
(000) 000-0000, Fax: (000) 000-0000; (iii) in the case of the Collateral Agent,
____________________________________; and (iv) in the case of a
Certificateholder, to that Person's name and address as set forth from time to
time in the Certificate Register; or as to each such Person such other address
and/or facsimile number as any of them shall specify by written notice to the
other parties.
SECTION 13.6 SEVERABILITY.
To the extent permitted by law, any provision of this Agreement that
may be determined by competent authority to be prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
SECTION 13.7 LIMITATION ON THE DEPOSITOR'S AND THE CERTIFICATEHOLDER'S
RESPECTIVE LIABILITY.
Neither the Depositor nor any Certificateholder shall have any
liability for the performance of this Agreement except as expressly set forth
herein.
SECTION 13.8 SEPARATE COUNTERPARTS.
This Agreement may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be an original,
but all such counterparts shall together constitute but one and the same
instrument.
SECTION 13.9 SUCCESSORS AND ASSIGNS.
All covenants and agreements contained herein shall be binding upon,
and inure to the benefit of, the Bank, the Owner Trustee and its successors and
assigns, the Certificateholders and the Depositor and its or their respective
successors and assigns, and the Collateral Agent, as third-party beneficiary,
and its successors all as herein provided. Any request, notice, direction,
consent, waiver or other instrument or action by the Depositor shall bind the
successors and assigns of the Depositor and any request, notice, direction,
consent, waiver or other instrument or action by a Certificateholder shall bind
the successors and assigns of such Certificateholder.
SECTION 13.10 HEADINGS.
The headings of the various articles and sections herein are for
convenience of reference only and shall not define or limit any of the terms or
provision hereof.
SECTION 13.11 GOVERNING LAW.
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF DELAWARE, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS.
SECTION 13.12 ADMINISTRATION OF TRUST.
The principal place of administration of the Trust shall be in the
State of Delaware.
SECTION 13.13 PERFORMANCE BY THE DEPOSITOR OR THE ADMINISTRATORS.
Any obligation of the Owner Trustee hereunder or under any Operative
Agreement or other document contemplated herein may be performed by the
Depositor or either Administrator and any such performance shall not be
construed as a revocation of the trusts created hereby.
SECTION 13.14 NO IMPLIED WAIVER.
No term or provision of this Agreement may be changed, waived,
discharged or terminated orally, but only by an instrument in writing entered
into as provided in Section 10.1 hereof; and any such waiver of the terms hereof
shall be effective only in the specific instance and for the specific purpose
given.
SECTION 13.15 REFERENCES.
The definitions in Article I shall apply equally to both the singular
and plural forms of the terms defined. "Include", "included", "includes" and
"including" shall be deemed to be followed by "without limitation". "Writing",
"written" and comparable terms refer to printing, typing, lithography or other
means of reproducing words in a visible form. Any agreement or instrument or any
law, rule or regulation of any Governmental Authority defined or referred to in
Article I means such agreement or instrument or such law, rule or regulation as
from time to time amended, modified or supplemented in accordance with the terms
thereof, including (in the case of agreements or instruments) by waiver or
consent and (in the case of such law, rule or regulation) by succession of any
comparable successor law, rule or regulation and includes (in the case of
agreements or instruments) references to all attachments thereto and instruments
incorporated therein. References to a Person are also to its successors and
permitted assigns. Any term defined above by reference to any agreement or
instrument or any law, rule or regulation of any Governmental Authority has such
meaning whether or not such agreement, instrument or law, rule or regulation is
in effect. "Agreement", "hereof", "herein", "hereto", "hereunder" and comparable
terms refer to this Agreement (including all exhibits and schedules hereto) and
not to any particular article, section, clause or other subdivision hereof or
attachment hereto. References to any gender include, unless the context
otherwise requires, references to all genders, and references to the singular
include, unless the context other requires, references to the plural and vice
versa. References in this Agreement to "Article", "Section", "Clause" or another
subdivision or to an attachment are, unless the context otherwise requires, to
an article, clause or subdivision of or attachment to this Agreement.
SECTION 13.16 TAX MATTERS.
(a) It is the intention of the parties hereto that, solely for income
and franchise tax purposes, the Trust, shall be treated as a partnership if, for
federal income tax purposes, the Trust is considered to have more than one
Certificateholder, or as a division of the Certificateholder that is ignored as
an entity separate from the Certificateholder if, for federal income tax
purposes, there is a single Certificateholder. The parties agree that, unless
otherwise required by appropriate tax authorities, the Trust will file or cause
to be filed annual or other necessary returns, reports and other forms
consistent with the characterization of the Trust, as it relates to the assets
in the Trust and the Owner Trust Certificates, as a partnership or division of
the Certificateholder, as just described, for such tax purposes.
(b) Net income of the Trust for any month as determined for federal
income tax purposes (and each item of income, gain, loss, credit and deduction
entering into the computation thereof) shall be allocated to the
Certificateholders, and apportioned among the Certificateholders pro rata based
upon their respective Percentage Interests.
(c) In the Administration Agreement, the Administrators have agreed
that they shall (i) deliver (or cause to be delivered) to each
Certificateholder, as may be required by the Code and applicable Treasury
Regulations, such information as may be required (including Schedule K-1 to IRS
Form 1065), if the Trust is treated as a partnership for federal income tax
purposes, to enable each Certificateholder to prepare its federal and state
income tax returns, (ii) prepare or cause to be prepared, and file or cause to
be filed, all tax returns relating to the Trust (including a partnership
information return, IRS Form 1065), if the Trust is treated as a partnership for
federal income tax purposes, and make such elections as may from time to time be
required or appropriate under any applicable state or federal statute or rule or
regulation thereunder so as to maintain the characterization of the Trust as a
partnership or division of a single Certificateholder, as the case may be, for
federal income tax purposes and (iii) prepare or cause to be prepared, and file
or cause to be filed, deliver or cause to be delivered any annual or other
necessary returns, reports or forms relating to the Owner Trust Certificates
(including information returns on IRS Form 1099). The Trust shall make all
elections pursuant to this Section as directed in writing by the Depositor or
Administrators. The Owner Trustee shall sign all tax information returns
relating to the Owner Trust Certificates, if any, furnished to it in execution
form by the Depositor or Administrators and any other returns as may be required
by law and so furnished to it by and at the direction of the Depositor or the
Administrators, and in doing so shall be entitled to, and shall be fully
protected if it shall, rely entirely upon, and shall have no liability for,
information or calculations provided by the Depositor or the Administrators. All
tax returns shall be signed by the Depositor, and if the Depositor shall no
longer hold any Owner Trust Certificates, the Certificateholder holding of the
greatest amount of Percentage Interest, unless some other party is required by
law to sign such return (in which case such other party shall sign). If the
Trust is characterized as a partnership for federal income tax purposes the
Depositor, and if the Depositor shall no longer hold any Owner Trust
Certificates, the Certificateholder holding of the greatest amount of Percentage
Interest, shall be the "tax matters partner" of the Trust pursuant to the Code.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective officers hereunto duly authorized, as of
the date hereof.
DF SPECIAL HOLDINGS CORPORATION,
as Depositor
By: ____________________________________
Name:
Title:
WILMINGTON TRUST COMPANY,
in its individual capacity and as
Owner Trustee
By: ____________________________________
Name:
Title:
SCHEDULE I
CERTIFICATE SCHEDULE OF UNDERLYING CERTIFICATES
UNDERLYING CERTIFICATE PERCENTAGE INTEREST
---------------------- -------------------
EXHIBIT A TO DEPOSIT TRUST AGREEMENT
[FORM OF OWNER TRUST CERTIFICATE]
DELTA FUNDING RESIDUAL HOLDING TRUST 2000-1
OWNER TRUST CERTIFICATE
Date of Deposit Trust Agreement: Percentage Interest in Trust Evidenced
_____, 2000 by this Owner Trust Certificate: 100%
Depositor: DF Special Holdings Closing Date:______, 2000
Corporation
Owner Trust Certificate No. 1 Owner Trustee: Wilmington Trust Company
THIS OWNER TRUST CERTIFICATE DOES NOT REPRESENT AN INTEREST IN, OR
OBLIGATION OF, THE DEPOSITOR, THE OWNER TRUSTEE, ANY OF THEIR RESPECTIVE
AFFILIATES, OR ANY OTHER PERSON. NEITHER THIS OWNER TRUST CERTIFICATE NOR THE
UNDERLYING CERTIFICATES ARE INSURED OR GUARANTEED, IN WHOLE OR IN PART, BY ANY
GOVERNMENTAL ENTITY OR INSTRUMENTALITY OR ANY PRIVATE INSURER OR GUARANTOR.
THIS OWNER TRUST CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY
STATE AND MAY NOT BE RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED PURSUANT TO
SUCH ACT AND LAWS OR IS SOLD OR TRANSFERRED IN TRANSACTIONS THAT ARE EXEMPT FROM
REGISTRATION UNDER SUCH ACT AND UNDER APPLICABLE STATE LAW AND IS TRANSFERRED IN
ACCORDANCE WITH THE PROVISIONS OF SECTION 12.1 OF THE TRUST AGREEMENT (AS
DEFINED HEREIN).
NO TRANSFER OF THIS OWNER TRUST CERTIFICATE TO (A) AN EMPLOYEE BENEFIT
PLAN OR OTHER RETIREMENT ARRANGEMENT (EACH, A "PLAN") SUBJECT TO THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), AND/OR THE
INTERNAL REVENUE CODE OF 1986 (THE "CODE"), OR (B) TO ANY PERSON WHO IS DIRECTLY
OR INDIRECTLY PURCHASING THIS OWNER TRUST CERTIFICATE OR INTEREST HEREIN ON
BEHALF OF, OR WITH ASSETS OF, A PLAN WILL BE REGISTERED.
THIS OWNER TRUST CERTIFICATE WILL NOT BE TRANSFERABLE TO ANY PERSON
THAT IS NOT A "UNITED STATES PERSON" AS DEFINED IN SECTION 7701(A)(30) OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), IF SUCH PERSON IS EXEMPT
FROM TAXATION UNDER SECTION 501(A) OF THE CODE.
This Owner Trust Certificate is issued pursuant to, and in accordance
with, the terms of a Deposit Trust Agreement, dated as of ______, 2000 (the
"Trust Agreement"; terms not otherwise defined herein shall have the meanings
assigned to those terms in the Trust Agreement), between DF Special Holdings
Corporation, as depositor (the "Depositor"), and Wilmington Trust Company, not
in its individual capacity but solely as owner trustee (the "Owner Trustee"), a
summary of certain of the pertinent provisions of which are set forth herein.
This Owner Trust Certificate is issued under and is subject to the terms,
provisions and conditions of the Trust Agreement, to which Trust Agreement the
holder of this Owner Trust Certificate by virtue of the acceptance hereof
assents and by which such Certificateholder is bound. In the event of a conflict
between the provisions of this Owner Trust Certificate and those of the Trust
Agreement, the provisions of the Trust Agreement shall control.
This certifies that _____________ (the "Certificateholder") is the
registered owner of the Percentage Interest evidenced by this Owner Trust
Certificate in the trust established pursuant to the Trust Agreement and
designated as Delta Funding Residual Holdings Trust 2000-1 (the "Trust"). The
assets of the Trust include the Underlying Certificates and the proceeds
thereof.
Except to the extent of their execution and authentication,
respectively, of the Owner Trust Certificates, the Owner Trustee and the
Certificate Registrar make no representation or warranty as to any of the
statements contained herein or the validity or sufficiency of this Owner Trust
Certificate, the Underlying Certificates or the assets in which the Underlying
Certificates evidence an interest. The Owner Trustee has executed this Owner
Trust Certificate in its limited capacity as Owner Trustee under the Trust
Agreement, and the Certificate Registrar has authenticated this Owner Trust
Certificate in its limited capacity as Certificate Registrar under the Trust
Agreement.
Distributions on the Owner Trust Certificates will be made with
respect to the Underlying Certificates on the payment date for each such
Underlying Certificate. As more fully described in the Trust Agreement,
distributions allocable to the Owner Trust Certificates may be made on each
Payment Date up to the amount of Certificateholder Funds for the related Payment
Date and, to the extent not previously paid, for all prior Payment Dates. As and
to the extent described in the Trust Agreement, distributions of
Certificateholder Funds will be limited to the amount available for such purpose
in the Certificate Account.
Pursuant to the Trust Agreement, all payments made with respect to the
Owner Trust Certificates on any Payment Date shall be allocated PRO RATA among
the Certificateholders based upon their respective Percentage Interests.
Payments to the Certificateholders on each Payment Date will be made to the
Certificateholders of record on the related Record Date. Payments to any
Certificateholder on any Payment Date shall be made by wire transfer of
immediately available funds to the account of such Certificateholder at a bank
or other entity having appropriate facilities therefor, if such
Certificateholder shall have so notified the Owner Trustee in writing at least
five Business Days prior to the related Record Date, or otherwise by check
mailed by first class mail to the address of such Certificateholder appearing in
the Certificate Register. Final payment on each Owner Trust Certificate will be
made in like manner, but only upon presentment and surrender of such Owner Trust
Certificate at the Corporate Trust Office or such other location specified in
the notice to Certificateholders of such final payment.
This Owner Trust Certificate does not purport to summarize the Trust
Agreement and reference is made to the Trust Agreement for the interests, rights
and limitations of rights, benefits, obligations and duties evidenced hereby and
the rights, duties and immunities of the Owner Trustee.
No transfer, sale, pledge or other disposition of this Owner Trust
Certificate or interest herein shall be made unless that transfer, sale, pledge
or the disposition is exempt from the registration and/or qualification
requirements of the Securities Act and any applicable state securities laws, or
is otherwise made in accordance with the Securities Act and such state
securities laws. Neither the Trust nor any trust fund in which an Underlying
Certificate evidences a beneficial ownership interest has been registered as an
investment company under the Investment Company Act, and no transfer of an Owner
Trust Certificate may be made (i) to any Person other than a QIB, the Collateral
Agent or an Affiliate of the Depositor or (ii) to any Person that would require
the Trust or any such trust fund to be registered as an investment company under
the Investment Company Act. If such transfer is to be made to any Person who to
the knowledge of the Certificate Registrar, is not the Collateral Agent or an
Affiliate of the Depositor, then the Certificate Registrar shall refuse to
register such transfer unless it receives (and upon receipt, may conclusively
rely upon) either (x) a certificate from the Certificateholder desiring to
effect such transfer substantially in the form attached as Exhibit B-1 to the
Trust Agreement and a certificate from such Certificateholder's prospective
transferee substantially in the form attached as Exhibit B-2 to the Trust
Agreement or (y) an Opinion of Counsel to the effect that such transfer is not
required to be registered under the Securities Act. None of the Trust, the
Depositor, the Owner Trustee or the Certificate Registrar is obligated to
register or qualify this Owner Trust Certificate under the Securities Act or any
other securities laws or to take any action not otherwise required under the
Trust Agreement to permit the transfer of this Owner Trust Certificate or
interest herein without registration or qualification. Any Certificateholder
desiring to effect a transfer of this Owner Trust Certificate or an interest
herein shall, and does hereby agree to, indemnify the Issuer, the Depositor, the
Administrator, the Owner Trustee, the Indenture Trustee and the Certificate
Registrar against any liability that may result if the transfer is not so exempt
or is not made in accordance with such federal and state laws.
No transfer of this Owner Trust Certificate or any interest herein
shall be made (A) to any employee benefit plan or other retirement arrangement,
including individual retirement accounts and annuities, Xxxxx plans and
collective investment funds and separate accounts in which such plans, accounts
or arrangements are invested, including, without limitation, insurance company
general accounts, that is subject to ERISA or the Code (each, a "Plan"), or (B)
to any Person who is directly or indirectly purchasing this Owner Trust
Certificate or interest herein on behalf of, or with assets of, a Plan.
No transfer of this Owner Trust Certificate shall be made to any
Person that is not a "United States person" as defined in Section 7701(a)(30) of
the Code if such Person is exempt from taxation under Section 501(a) of the
Code.
Prior to transfer of this Owner Trust Certificate in accordance with
the foregoing and the Trust Agreement, the Owner Trustee and the Certificate
Registrar and any agent of any of them may treat the Person in whose name this
Owner Trust Certificate is registered as the owner hereof for the purpose of
receiving distributions to Certificateholders pursuant to the Trust Agreement
and for all other purposes whatsoever, and neither the Owner Trustee, the
Certificate Registrar nor any agent of any of them shall be affected by notice
to the contrary.
As provided in the Trust Agreement and subject to certain limitations
herein and therein set forth, this Owner Trust Certificate is exchangeable for
other Owner Trust Certificates in authorized denominations representing a like
aggregate Percentage Interest, as requested by the Certificateholder
surrendering the same.
No service charge will be made to a Certificateholder for any such
registration of transfer or exchange, but the Certificate Registrar may require
payment of a sum sufficient to cover any tax or other governmental charge or
reasonable expenses payable in connection therewith.
The Trust Agreement permits, with certain exceptions therein provided,
the amendment of the Trust Agreement and the modification of the rights of the
Certificateholders at any time by the Owner Trustee with the consent of the
Collateral Agent and Certificateholders owning a majority of the Percentage
Interests (except as provided in the Trust Agreement). Any consent by the
Certificateholder of this Owner Trust Certificate shall be conclusive and
binding on such Certificateholder and upon all future Certificateholders issued
upon the transfer hereof or in exchange herefor or in lieu hereof whether or not
notation of such consent is made upon this Owner Trust Certificate.
Unless the Certificate of Authentication on this Owner Trust
Certificate has been executed by or on behalf of the Certificate Registrar, by
manual signature, this Owner Trust Certificate shall not be entitled to any
benefit under the Trust Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Owner Trustee has caused this Owner Trust
Certificate to be duly executed.
DELTA FUNDING RESIDUAL HOLDING TRUST
2000-1
By: WILMINGTON TRUST COMPANY,
not in its individual capacity
but solely as Owner Trustee
By: ____________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Owner Trust Certificates referred to in the
within-referenced Trust Agreement.
Dated: ___________
WILMINGTON TRUST COMPANY,
not in its individual capacity
but solely as Certificate Registrar
By:_________________________________
Authorized Officer
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned ("Assignor(s)") hereby sell(s), assign(s)
and transfer(s) unto ________________________________________________________
______________________________________________________________________________
__________________________ [Please print or typewrite name(s) and address(es),
including postal zip code of assignee(s)] ("Assignee(s)") that portion of the
interest in the Trust represented by the within Owner Trust Certificate set
forth below and hereby authorize(s) the transfer and registration of transfer of
such interest to Assignee(s) on the Certificate Register of the Trust.
I (we) further direct the Certificate Registrar to issue a new Owner Trust
Certificate for that portion of the interest in the Trust represented by the
within Owner Trust Certificate set forth below to the above-named Assignee(s)
and deliver such Owner Trust Certificate to the following address:____________
______________________________________________________________________________
______________________________________; to issue a new Owner Trust Certificate
for the remainder of the interest in the Trust represented by the within Owner
Trust Certificate to the Assignor(s) and deliver such Owner Trust Certificate to
the following address: ; and to cancel the within Owner Trust Certificate.
Date:
-------------------------- -----------------------------------------
Signature by or on behalf of Assignor(s)
Percentage Interest
Transferred:
------------------ ----------------------------------------
Taxpayer Identification Number
EXHIBIT B-1 TO DEPOSIT TRUST AGREEMENT
FORM OF TRANSFEROR CERTIFICATE
FOR TRANSFERS OF THE OWNER TRUST CERTIFICATES
[Date]
Wilmington Trust Company
Xxxxxx Square North
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Corporate Trust Administration
Re: Delta Funding Residual Holding Trust 2000-1, Owner Trust Certificates
(THE "OWNER TRUST CERTIFICATES")
Ladies and Gentlemen:
This letter is delivered to you in connection with the sale by
____________________ (the "Transferor") to ________________ (the "Transferee")
of the Owner Trust Certificates representing a ____% Percentage Interest (the
"Transferred Owner Trust Certificates"). The Owner Trust Certificates, including
the Transferred Owner Trust Certificates, were issued pursuant to the Deposit
Trust Agreement, dated as of ______, 2000 (the "Agreement"), between DF Special
Holdings Corporation, as depositor (the "Depositor"), and Wilmington Trust
Company, as owner trustee (the "Owner Trustee"). All capitalized terms used but
not otherwise defined herein shall have the respective meanings set forth in the
Agreement. The Transferor hereby certifies, represents and warrants to you, as
Certificate Registrar, and for the benefit of the Depositor, the Owner Trustee
and the Transferee, that:
1. The Transferor is the lawful owner of the Transferred Owner
Trust Certificates with the full right to transfer such Owner Trust
Certificates free from any and all claims and encumbrances whatsoever.
2. Neither the Transferor nor anyone acting on its behalf has (a)
offered, transferred, pledged, sold or otherwise disposed of any Owner
Trust Certificate, any interest in any Owner Trust Certificate or any
other similar security to any person in any manner, (b) solicited any
offer to buy or accept a transfer, pledge or other disposition of any
Owner Trust Certificate, any interest in any Owner Trust Certificate
or any other similar security from any person in any manner, (c)
otherwise approached or negotiated with respect to any Owner Trust
Certificate, any interest in any Owner Trust Certificate or any other
similar security with any person in any manner, (d) made any general
solicitation by means of general advertising or in any other manner,
or (e) taken any other action, which (in the case of any of the acts
described in clauses (a) through (e) hereof) would constitute a
distribution of any Owner Trust Certificate under the Securities Act
of 1933, as amended (the "Securities Act"), or would render the
disposition of any Owner Trust Certificate a violation of Section 5 of
the Securities Act or any state securities laws, or would require
registration or qualification of any Owner Trust Certificate pursuant
to the Securities Act or any state securities laws.
3. The Transferor and any person acting on behalf of the
Transferor in this matter reasonably believe that the Transferee is a
"qualified institutional buyer" as that term is defined in Rule 144A
("Rule 144A") under the Securities Act (a "Qualified Institutional
Buyer") purchasing for its own account or for the account of a
Qualified Institutional Buyer. In determining whether the Transferee
is a Qualified Institutional Buyer, the Transferor and any person
acting on behalf of the Transferor in this matter have relied upon the
following method(s) of establishing the Transferee's ownership and
discretionary investments of securities (check one or more):
___ (a) The Transferee's most recent publicly available
financial statements, which statements present the
information as of a date within 16 months preceding
the date of sale of the Transferred Owner Trust
Certificate in the case of a U.S. purchaser and
within 18 months preceding such date of sale for a
foreign purchaser; or
___ (b) The most recent publicly available information
appearing in documents filed by the Transferee with
the Securities and Exchange Commission or another
United States federal, state, or local governmental
agency or self-regulatory organization, or with a
foreign governmental agency or self-regulatory
organization, which information is as of a date
within 16 months preceding the date of sale of the
Transferred Owner Trust Certificate in the case of a
U.S. purchaser and within 18 months preceding such
date of sale for a foreign purchaser; or
___ (c) The most recent publicly available information
appearing in a recognized securities manual, which
information is as of a date within 16 months
preceding the date of sale of the Transferred Owner
Trust Certificate in the case of a U.S. purchaser and
within 18 months preceding such date of sale for a
foreign purchaser; or
___ (d) A certification by the chief financial officer, a
person fulfilling an equivalent function, or other
executive officer of the Transferee, specifying the
amount of securities owned and invested on a
discretionary basis by the Transferee as of a
specific date on or since the close of the
Transferee's most recent fiscal year, or, in the case
of a Transferee that is a member of a "family of
investment companies", as that term is defined in
Rule 144A, a certification by an executive officer of
the investment adviser specifying the amount of
securities owned by the "family of investment
companies" as of a specific date on or since the
close of the Transferee's most recent fiscal year.
4. The Transferor and any person acting on behalf of the
Transferor understand that in determining the aggregate amount of
securities owned and invested on a discretionary basis by an entity
for purposes of establishing whether such entity is a Qualified
Institutional Buyer:
(a) the following instruments and interests shall be
excluded: securities of issuers that are affiliated with the
Transferee; securities that are part of an unsold allotment
to or subscription by the Transferee, if the Transferee is a
dealer; securities of issuers that are part of the
Transferee's "family of investment companies", if the
Transferee is a registered investment company; bank deposit
notes and certificates of deposit; loan participations;
repurchase agreements; securities owned but subject to a
repurchase agreement; and currency, interest rate and
commodity swaps;
(b) the aggregate value of the securities shall be the cost
of such securities, except where the entity reports its
securities holdings in its financial statements on the basis
of their market value, and no current information with
respect to the cost of those securities has been published,
in which case the securities may be valued at market;
(c) securities owned by subsidiaries of the entity that are
consolidated with the entity in its financial statements
prepared in accordance with generally accepted accounting
principles may be included if the investments of such
subsidiaries are managed under the direction of the entity,
except that, unless the entity is a reporting company under
Section 13 or 15(d) of the Securities Exchange Act of 1934,
as amended, securities owned by such subsidiaries may not be
included if the entity itself is a majority-owned subsidiary
that would be included in the consolidated financial
statements of another enterprise.
5. The Transferor or a person acting on its behalf has taken
reasonable steps to ensure that the Transferee is aware that the
Transferor is relying on the exemption from the provisions of Section
5 of the Securities Act provided by Rule 144A.
6. The Transferor or a person acting on its behalf has furnished,
or caused to be furnished, to the Transferee all information regarding
(a) the Transferred Owner Trust Certificates and payments thereon, (b)
the Notes and payments thereon, (c) the nature and performance of the
Underlying Certificates and (d) the Indenture, the Agreement and the
Trust Estate, that the Transferee has requested.
Very truly yours,
--------------------------------
(Transferor)
By:
----------------------------
Name:
--------------------------
Title:
-------------------------
EXHIBIT B-2 TO DEPOSIT TRUST AGREEMENT
FORM OF TRANSFEREE CERTIFICATE
FOR TRANSFERS OF THE OWNER TRUST CERTIFICATES
[Date]
Wilmington Trust Company
Xxxxxx Square North
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Corporate Trust Administration
Re: Delta Funding Residual Holding Trust 2000-1, Owner Trust Certificates
(THE "OWNER TRUST CERTIFICATES")
Ladies and Gentlemen:
____________________ (the "Transferee") intends to purchase from
___________________ (the "Transferor") the Owner Trust Certificates representing
a ____% Percentage Interest (the "Transferred Owner Trust Certificates"). The
Owner Trust Certificates, including the Transferred Owner Trust Certificates,
were issued pursuant to the Deposit Trust Agreement, dated as of _______, 2000
(the "Agreement"), between DF Special Holdings Corporation, as depositor (the
"Depositor"), and Wilmington Trust Company as owner trustee (the "Owner
Trustee"). All capitalized terms used herein and not otherwise defined shall
have the meanings set forth in the Agreement. The Transferee hereby certifies,
represents and warrants to you, as Certificate Registrar, and for the benefit of
the Depositor, the Owner Trustee and the Transferor, that:
1. The Transferee is a "qualified institutional buyer" (a "Qualified
Institutional Buyer") as that term is defined in Rule 144A ("Rule 144A") under
the Securities Act of 1933, as amended (the "Securities Act"), and has completed
one of the forms of certification to that effect attached hereto as Annex 1 and
Annex 2. The Transferee is aware that the sale to it of the Transferred Owner
Trust Certificates is being made in reliance on Rule 144A. The Transferee is
acquiring the Transferred Owner Trust Certificates for its own account or for
the account of a Qualified Institutional Buyer, and understands that such
Transferred Owner Trust Certificates may be resold, pledged or transferred only
(i) to a person reasonably believed to be a Qualified Institutional Buyer that
purchases for its own account or for the account of a Qualified Institutional
Buyer to whom notice is given that the resale, pledge or transfer is being made
in reliance on Rule 144A, or (ii) pursuant to another exemption from
registration under the Securities Act.
2. The Transferee has been furnished with all information regarding
(a) the Transferred Owner Trust Certificates and payments thereon, (b) the
nature and performance of the Underlying Certificates and the Home Equity Loans,
(c) the Indenture, (d) the Agreement and (e) any credit enhancement mechanism
associated with the Transferred Owner Trust Certificates, that it has requested.
3. The Transferee represents that it is not any employee benefit plan
(a "Plan") subject to the Employee Retirement Income Security Act of 1974, as
amended, or the Internal Revenue Code of 1986, as amended (the "Code"), or a
Person acting, directly or indirectly, on behalf of, or with the assets of, a
Plan.
4. The Transferee represents that it not a "United States person" as
defined in Section 7701(a)(30) of the Code which is exempt from taxation under
Section 501(a) of the Code.
5. The Transferee agrees to be bound by the terms of the Agreement.
Very truly yours,
--------------------------------------------
(Transferee)
By:
---------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
ANNEX 1 TO EXHIBIT B-2 TO DEPOSIT TRUST AGREEMENT
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Transferees Other Than Registered Investment Companies]
The undersigned hereby certifies as follows to [name of Transferor]
(the "Transferor") and [name of Certificate Registrar], as Certificate
Registrar, with respect to the Owner Trust Certificates being transferred (the
"Transferred Owner Trust Certificates") as described in the Transferee
Certificate to which this certification relates and to which this certification
is an Annex:
1. As indicated below, the undersigned is the chief financial officer,
a person fulfilling an equivalent function, or other executive officer of the
entity purchasing the Transferred Owner Trust Certificates (the "Transferee").
2. The Transferee is a "qualified institutional buyer" as that term is
defined in Rule 144A under the Securities Act of 1933, as amended ("Rule 144A"),
because (i) the Transferee owned and/or invested on a discretionary basis
$______________________ in securities (other than the excluded securities
referred to below) as of the end of the Transferee's most recent fiscal year
(such amount being calculated in accordance with Rule 144A) and (ii) the
Transferee satisfies the criteria in the category marked below.
a. amount owned and/or invested on a discretionary basis in
securities is greater than $100 million and the undersigned is
one of the following entities:
(1) ___ an insurance company as defined in Section
2(13) of the Act; or
(2) ___ an investment company registered under the
Investment Company Act or any business
development company as defined in Section
2(a)(48) of the Investment Company Act of
1940; or
(3) ___ a Small Business Investment Company licensed
by the U.S. Small Business Administration
under Section 301(c) or (d) of the Small
Business Investment Act of 1958; or
(4) ___ a plan (i) established and maintained by a
state, its political subdivisions, or any
agency or instrumentality of a state or its
political subdivisions, the laws of which
permit the purchase of securities of this
type, for the benefit of its employees and
(ii) the governing investment guidelines of
which permit the purchase of securities of
this type; or
(5) ___ a business development company as defined in
Section 202(a)(22) of the Investment Advisers
Act of 1940;
(6) ___ a corporation (other than a U.S. bank, savings
and loan association or equivalent foreign
institution), partnership, Massachusetts or
similar business trust, or an organization
described in Section 501(c)(3) of the Internal
Revenue Code; or
(7) ___ a U.S. bank, savings and loan association or
equivalent foreign institution, which has an
audited net worth of at least $25 million as
demonstrated in its latest annual financial
statements; or
(8) ___ an investment adviser registered under the
Investment Advisers Act; or
b. ___ amount owned and/or invested on a discretionary basis
in securities is greater than $10 million, and the
undersigned is a broker-dealer registered with the SEC;
or
c. ___ amount owned and/or invested on a discretionary basis
in securities is less than $10 million, and the
undersigned is a broker-dealer registered with the SEC
and will only purchase Rule 144A securities in
transactions in which it acts as a riskless principal
(as defined in Rule 144A); or
d. ___ amount owned and/or invested on a discretionary
basis in securities is less than $100 million, and the
undersigned is an investment company registered under
the Investment Company Act of 1940, which, together
with one or more registered investment companies having
the same or an affiliated investment adviser, owns at
least $100 million of securities; or
e. ___ amount owned and/or invested on a discretionary basis
in securities is less than $100 million, and the
undersigned is an entity, all the equity owners of
which are qualified institutional buyers.
3. The term "SECURITIES" as used herein DOES NOT INCLUDE (i)
securities of issuers that are affiliated with the Transferee, (ii) securities
that are part of an unsold allotment to or subscription by the Transferee, if
the Transferee is a dealer, (iii) bank deposit notes and certificates of
deposit, (iv) loan participations, (v) repurchase agreements, (vi) securities
owned but subject to a repurchase agreement and (vii) currency, interest rate
and commodity swaps. For purposes of determining the aggregate amount of
securities owned and/or invested on a discretionary basis by the Transferee, the
Transferee did not include any of the securities referred to in this paragraph.
4. For purposes of determining the aggregate amount of securities
owned and/or invested on a discretionary basis by the Transferee, the Transferee
used the cost of such securities to the Transferee, unless the Transferee
reports its securities holdings in its financial statements on the basis of
their market value, and no current information with respect to the cost of those
securities has been published, in which case the securities were valued at
market. Further, in determining such aggregate amount, the Transferee may have
included securities owned by subsidiaries of the Transferee, but only if such
subsidiaries are consolidated with the Transferee in its financial statements
prepared in accordance with generally accepted accounting principles and if the
investments of such subsidiaries are managed under the Transferee's direction.
However, such securities were not included if the Transferee is a
majority-owned, consolidated subsidiary of another enterprise and the Transferee
is not itself a reporting company under the Securities Exchange Act of 1934, as
amended.
5. The Transferee acknowledges that it is familiar with Rule 144A and
understands that the Transferor and other parties related to the Transferred
Owner Trust Certificates are relying and will continue to rely on the statements
made herein because one or more sales to the Transferee may be in reliance on
Rule 144A.
___ ___ Will the Transferee be purchasing the Transferred
Yes No Owner Trust Certificates only for the Transferee's
own account?
6. If the answer to the foregoing question is "no", then in each case
where the Transferee is purchasing for an account other than its own, such
account belongs to a third party that is itself a "qualified institutional
buyer" within the meaning of Rule 144A, and the "qualified institutional buyer"
status of such third party has been established by the Transferee through one or
more of the appropriate methods contemplated by Rule 144A.
7. The Transferee will notify each of the parties to which this
certification is made of any changes in the information and conclusions herein.
Until such notice is given, the Transferee's purchase of the Transferred Owner
Trust Certificates will constitute a reaffirmation of this certification as of
the date of such purchase. In addition, if the Transferee is a bank or savings
and loan as provided above, the Transferee agrees that it will furnish to such
parties any updated annual financial statements that become available on or
before the date of such purchase, promptly after they become available.
----------------------------------
Print Name of Transferee
By:
----------------------------
Name:
Title:
Date:
ANNEX 2 TO EXHIBIT B-2 TO DEPOSIT TRUST AGREEMENT
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[FOR TRANSFEREES THAT ARE REGISTERED INVESTMENT COMPANIES]
The undersigned hereby certifies as follows to [name of Transferor]
(the "Transferor") and [name of Certificate Registrar], as Certificate
Registrar, with respect to the Owner Trust Certificates being transferred (the
"Transferred Owner Trust Certificates") as described in the Transferee
Certificate to which this certification relates and to which this certification
is an Annex:
1. As indicated below, the undersigned is the chief financial officer,
a person fulfilling an equivalent function, or other executive officer of the
entity purchasing the Transferred Certificates (the "Transferee") or, if the
Transferee is a "qualified institutional buyer" as that term is defined in Rule
144A under the Securities Act of 1933, as amended ("Rule 144A"), because the
Transferee is part of a Family of Investment Companies (as defined below), is an
executive officer of the investment adviser (the "Adviser").
2. The Transferee is a "qualified institutional buyer" as defined in
Rule 144A because (i) the Transferee is an investment company registered under
the Investment Company Act of 1940, as amended, and (ii) as marked below, the
Transferee alone owned and/or invested on a discretionary basis, or the
Transferee's Family of Investment Companies owned, at least $100,000,000 in
securities (other than the excluded securities referred to below) as of the end
of the Transferee's most recent fiscal year. For purposes of determining the
amount of securities owned by the Transferee or the Transferee's Family of
Investment Companies, the cost of such securities was used, unless the
Transferee or any member of the Transferee's Family of Investment Companies, as
the case may be, reports its securities holdings in its financial statements on
the basis of their market value, and no current information with respect to the
cost of those securities has been published, in which case the securities of
such entity were valued at market.
____ The Transferee owned and/or invested on a discretionary
basis $___________________ in securities (other than the excluded
securities referred to below) as of the end of the Transferee's most
recent fiscal year (such amount being calculated in accordance with
Rule 144A).
____ The Transferee is part of a Family of Investment Companies
which owned in the aggregate $______________ in securities (other than
the excluded securities referred to below) as of the end of the
Transferee's most recent fiscal year (such amount being calculated in
accordance with Rule 144A).
3. The term "FAMILY OF INVESTMENT COMPANIES" as used herein means two
or more registered investment companies (or series thereof) that have the same
investment adviser or investment advisers that are affiliated (by virtue of
being majority owned subsidiaries of the same parent or because one investment
adviser is a majority owned subsidiary of the other).
4. The term "SECURITIES" as used herein does not include (i)
securities of issuers that are affiliated with the Transferee or are part of the
Transferee's Family of Investment Companies, (ii) bank deposit notes and
certificates of deposit, (iii) loan participations, (iv) repurchase agreements,
(v) securities owned but subject to a repurchase agreement and (vi) currency,
interest rate and commodity swaps. For purposes of determining the aggregate
amount of securities owned and/or invested on a discretionary basis by the
Transferee, or owned by the Transferee's Family of Investment Companies, the
securities referred to in this paragraph were excluded.
5. The Transferee is familiar with Rule 144A and understands that the
parties to which this certification is being made are relying and will continue
to rely on the statements made herein because one or more sales to the
Transferee will be in reliance on Rule 144A.
____ ____ Will the Transferee be purchasing
Yes No the Transferred Owner Trust Certificates
only for the Transferee's own account?
6. If the answer to the foregoing question is "no", then in each case
where the Transferee is purchasing for an account other than its own, such
account belongs to a third party that is itself a "qualified institutional
buyer" within the meaning of Rule 144A, and the "qualified institutional buyer"
status of such third party has been established by the Transferee through one or
more of the appropriate methods contemplated by Rule 144A.
7. The undersigned will notify the parties to which this certification
is made of any changes in the information and conclusions herein. Until such
notice, the Transferee's purchase of the Transferred Owner Trust Certificates
will constitute a reaffirmation of this certification by the undersigned as of
the date of such purchase.
-------------------------------------
Print Name of Transferee or Adviser
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
IF AN ADVISER:
Print Name of Transferee
Date:
------------------------------
EXHIBIT C TO DEPOSIT TRUST AGREEMENT
[FORM OF CERTIFICATE OF TRUST]
CERTIFICATE OF TRUST OF
DELTA FUNDING RESIDUAL HOLDING TRUST 2000-1
This Certificate of Trust of Delta Funding Residual Holding Trust
2000-1 (the "Trust") is being duly executed and filed by Wilmington Trust
Company, a Delaware banking corporation, as trustee, to form a business trust
under the Delaware Business Trust Act (12 Del. Code, ss. 3801 ET SEQ.) (the
"Act").
1. NAME. The name of the business trust formed hereby is Delta Funding
Residual Holding Trust 2000-1.
2. DELAWARE TRUSTEE. The name and business address of the trustee of
the Trust in the State of Delaware is Wilmington Trust Company, Xxxxxx Square
North, 0000 Xxxxx Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000, Attention:
Corporate Trust Administration.
3. EFFECTIVE DATE. This Certificate of Trust shall be effective on
___________, 2000.
IN WITNESS WHEREOF, the undersigned has executed this Certificate of
Trust in accordance with Section 3811(a)(1) of the Act.
WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as Owner
Trustee of the Trust.
By: _________________________________
Name:
Title:
EXHIBIT D TO DEPOSIT TRUST AGREEMENT
COMPLIANCE CERTIFICATE
DF Special Holdings Corporation, as depositor under the Deposit Trust
Agreement, dated as of __________, 2000 (the "Trust Agreement") relating to
Delta Funding Residual Holding Trust 2000-1 (the "Trust"), hereby certifies,
represents and warrants to [Wilmington Trust Company, as Owner Trustee,] that as
of ________, 200_:
1. The Collateral Test is satisfied, as is evidenced more fully by
the summary of valuation of the Trust Account Property on deposit
in the Trust Account for each of the Trust and Delta Funding
Residual Holding Trust 2000-2, as set forth more fully on the
valuation reports attached hereto as Exhibits D-1 and D-2.
2. No Default or Event of Default under the Indenture has occurred
and is continuing.
3. A true copy of this Compliance Certificate has been delivered to
the Collateral Agent.
Capitalized terms used but not defined herein shall have the meaning ascribed to
such terms in the Trust Agreement.
IN WITNESS WHEREOF, the undersigned has duly executed this
Certificate on the ____ day of __________, 200_.
DF SPECIAL HOLDINGS CORPORATION.
By:
------------------------------------
Name:
Title:
EXHIBIT E TO DEPOSIT TRUST AGREEMENT
RELEASE CERTIFICATION
DF Special Holdings Corporation, as depositor under the Deposit Trust
Agreement, dated as of __________, 2000 (the "Trust Agreement") relating to
Delta Funding Residual Holding Trust 2000-1 (the "Trust") hereby certifies,
represents and warrants to [Wilmington Trust Company, as Owner Trustee,] as
follows:
1. The Depositor hereby requests the release of the following
(complete one):
(a) $_________ from the Cash Collateral Account
(b) the _________ Underlying Certificates identified on the
attached Schedule 1.
2. Simultaneously with the requested release, the Depositor is
delivering the cash and/or Underlying Certificates, if any, identified on
schedule 2 together with, if applicable, all documents required of a transferor
to obtain a new Underlying Certificate registered in the name of the Trust.
3. If the release relates to Underlying Certificates, delivered
herewith are all documents required to be furnished by the Trust under the
related Underlying Agreement.
4. Upon and after giving effect to the release specified in Paragraph
1 and the delivery, if any, specified in schedule 2.
(a) The Collateral Test is satisfied, as is evidenced more fully
by the summary of valuation of the Trust Account Property on
deposit in the Trust Account for each of the Trust and Delta
Funding Residual Holding Trust 2000-2, as set forth more fully on
the valuation reports attached hereto as Exhibits D-1 and D-2.
(b) No Default or Event of Default under the Indenture has
occurred or is continuing.
(c) A true copy of this Release Certification has been delivered
to the Collateral Agent.
Capitalized terms used but not defined herein shall have the meanings ascribed
to such terms in the Trust Agreement.
IN WITNESS WHEREOF, the undersigned has duly executed this
certification as of __________, 200_.
DF SPECIAL HOLDINGS, INC.
By:
------------------------------
Name:
Title:
SCHEDULE 1
RELEASED CERTIFICATES
ISSUER SERIES CLASS PERCENTAGE INTEREST
------ ------ ----- -------------------
SCHEDULE 2
DEPOSITS
(COMPLETE AS APPLICABLE)
1. $_____________________________________ for deposit in the Cash
Collateral Account.
2. Underlying Certificates
ISSUER SERIES CLASS PERCENTAGE INTEREST
------ ------ ----- -------------------
Exhibit I to Indenture
WARRANT AGREEMENT
THIS WARRANT AGREEMENT (this "Agreement") dated as of November __,
2000, is made by and between DELTA FINANCIAL CORPORATION, a Delaware corporation
(the "Company"), and CHASEMELLON SHAREHOLDER SERVICES, L.L.C., a New Jersey
limited liability company (the "Warrant Agent").
WHEREAS, contemporaneously with the execution of this Agreement, the
Company is entering into that certain Indenture dated as of the date hereof (the
"Indenture") among the Company, as issuer, each of Delta Funding Corporation, a
New York Corporation, DF Special Holdings Corporation, a Delaware corporation,
Fidelity Mortgage, Inc., a Delaware Corporation, DFC Financial of Canada
Limited, an Ontario, Canada corporation, DFC Funding of Canada Limited, an
Ontario, Canada corporation, Continental Property Management Corp., a New York
corporation (collectively, the "Subsidiary Guarantors") and U.S. Bank Trust
National Association, as trustee;
WHEREAS, pursuant to the terms and conditions of the Indenture, the
Company is issuing its 9 1/2% Senior Secured Notes due 2004 (the "Senior
Notes"), which notes will be exchanged (the "Exchange") for the Company's
outstanding 9 1/2% Senior Notes due 2004 (the "Old Notes");
WHEREAS, the Company is issuing to the holders of the Senior Notes
warrants (the "Warrants") to subscribe in the aggregate for up to 10% of the
Common Stock (as defined in Section 5 hereof) issued and outstanding on the date
of this Agreement;
WHEREAS, as of the date of this Agreement, there are [15,920,869]
shares of Common Stock issued and outstanding;
WHEREAS, the Company will issue to each holder of Senior Notes 10.6
Warrants for each $1,000 principal amount of Senior Notes issued in connection
with the Exchange;
WHEREAS, the Warrant Agent, at the request of the Company, has agreed
to act as the agent of the Company in connection with the issuance,
registration, transfer, exchange and exercise of the Warrants.
NOW THEREFORE, in consideration of the premises and mutual agreements
herein set forth:
SECTION 1. APPOINTMENT OF WARRANT AGENT. The Company hereby appoints
the Warrant Agent to act as agent for the Company in accordance with the
instructions hereinafter set forth, and the Warrant Agent xxxxxx accepts such
appointment.
SECTION 2. FORM OF WARRANT CERTIFICATES. The certificates evidencing
the Warrants (the "Warrant Certificates") (and the form of election to purchase
shares of Common Stock and the form of assignment printed on the reverse
thereof) shall be substantially as set forth in EXHIBIT A hereto and may have
such letters, numbers or other marks of identification or designation or such
legends, summaries or endorsements printed, lithographed or engraved thereon as
the Company may deem appropriate (but which do not affect the rights, duties and
obligations of the Warrant Agent) and as are not inconsistent with the
provisions of this Agreement or as may be required to comply with any law or
with any rule or regulation made pursuant thereto or with any rule or regulation
of any stock exchange on which the Warrants may from time to time be listed, or
to conform to usage. Each Warrant Certificate shall be dated as of the date of
issuance thereof by the Warrant Agent, whether upon initial issuance or upon
transfer or exchange, and each Warrant initially shall entitle the holder
thereof to purchase an aggregate of one share of Common Stock, but the number of
such shares and the Exercise Price (as defined in Section 6) shall be subject to
adjustments as provided herein.
SECTION 3. COUNTERSIGNATURE AND REGISTRATION.
(a) The Warrant Agent, upon receipt of written instructions provided
by the Chairman of the Board of Directors, the Chief Executive Officer, the
President, any Vice President, the Treasurer or the Secretary of the Company
("Company Instructions") and Warrant Certificates executed on behalf of the
Company, shall countersign and deliver such Warrant Certificates to holders of
the Old Notes in accordance with such written instructions (which shall include
names, addresses and delivery instructions).
(b) The Warrant Certificates shall be executed on behalf of the
Company by the Chairman of the Board, the Chief Executive Officer, the President
or any Vice President, by facsimile signature, and have affixed thereto a
facsimile of the Company's seal which shall be attested by the Secretary or an
Assistant Secretary of the Company by facsimile signature. The Warrant
Certificates shall be manually countersigned by the Warrant Agent and shall not
be valid for any purpose unless so countersigned. In the event that any officer
of the Company who shall have signed any of the Warrant Certificates shall cease
to be such officer of the Company before countersignature by the Warrant Agent
and issuance and delivery by the Company, such Warrant Certificates,
nevertheless, may be countersigned by the Warrant Agent, issued and delivered
with the same force and effect as though the person who signed such Warrant
Certificates had not ceased to be such officer of the Company; and any Warrant
Certificates may be signed on behalf of the Company by any person who, at the
actual date of the execution of such Warrant Certificates, shall be a proper
officer of the Company to sign such Warrant Certificates, although at the date
of the execution of this Warrant Agreement any such person was not such an
officer.
(c) The Warrant Agent will keep or cause to be kept, at its office in
New York, New York, books for registration and transfer of the Warrant
Certificates issued hereunder. Such books shall show the names and addresses of
the respective holders of the Warrant Certificates, the number of Warrants
evidenced on its face by each of the Warrant Certificates and the date of each
of the Warrant Certificates.
(d) Prior to due presentment for registration of transfer of the
Warrant Certificates, the Company and the Warrant Agent may deem and treat the
registered holder thereof as the absolute owner of the Warrant Certificates
(notwithstanding any notation of ownership or other writing thereon made by
anyone other than the Company (provided the Company has provided the Warrant
Agent with a copy of such notice or writing) or the Warrant Agent) for the
purpose of any exercise thereof and of any distribution to the holder thereof
and for all other purposes.
(e) The Warrant Agent shall countersign a Warrant Certificate only (i)
upon initial issuance of the Warrants in accordance with written instructions as
provided in subsection (a) hereof or (ii) upon exchange, transfer or
substitution for one or more previously countersigned Warrant Certificates as
hereinafter provided.
SECTION 4. TRANSFER AND EXCHANGE. Subject to Section 6 hereof, the
Warrant Agent shall, from time to time, register the transfer of any outstanding
Warrant Certificate upon the books to be maintained by the Warrant Agent for
that purpose, upon surrender thereof for transfer properly endorsed or
accompanied by appropriate instruments of transfer and written instructions for
transfer, duly signed by the registered holder or holders thereof or by the duly
appointed legal representative thereof or by a duly authorized attorney, such
signature to be guaranteed by a commercial bank or trust company having an
office in the United States, by a broker or dealer that is a member of the
National Association of Securities Dealers, Inc., or by a member of a national
securities exchange. Upon any such registration of transfer, a new Warrant
Certificate shall be issued to the transferee and the surrendered Warrant
Certificate shall be canceled by the Warrant Agent. After the date of this
Agreement, any Warrant Certificate may be exchanged at the option of the holder
thereof, upon surrender at the office or agency of the Warrant Agent maintained
for that purpose in New York, New York (the "Warrant Agent Office"), for another
Warrant Certificate, or other Warrant Certificates of different denominations,
representing in the aggregate the right to purchase a like number of shares of
Common Stock, and the surrendered Warrant Certificate shall be canceled by the
Warrant Agent. No fractional Warrant Certificates will be issued. The Company
may require from the transferor payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer or
exchange of Warrant Certificates and shall notify the Warrant Agent of any
applicable amounts payable hereunder. The Warrant Agent shall have no duty or
obligation to take any action under any section of this Agreement which requires
the payment by a holder of a Warrant of applicable taxes and governmental
charges unless and until the Warrant Agent is satisfied that all such taxes
and/or charges have been paid. No service charge shall be required of a
transferor or transferee in connection with any transfer or exchange of a
Warrant.
SECTION 5. COMMON STOCK AND WARRANT COMMON STOCK. As hereinafter used
in this Agreement, "Common Stock" shall mean the Common Stock, par value $.01
per share, of the Company as authorized at the date hereof and stock of any
other class into which such presently authorized Common Stock may hereafter be
changed, and "Warrant Common Stock" shall mean the Common Stock issuable upon
exercise of Warrants. In case, by reason of the operation of Section 7, the
Warrants shall entitle the registered holders thereof to purchase any other
shares of stock or other securities or property of the Company or of any other
corporation, any reference in this Agreement to the exercise of Warrants shall
be deemed to refer to and include the purchase of such other shares of stock or
other securities or property upon such exercise.
SECTION 6. EXERCISE PRICE OF WARRANTS.
(a) The registered holder of any Warrant Certificate may exercise the
Warrants evidenced thereby, in whole or in part and in accordance with the
provisions of Section 9, at any time after the date of this Agreement, upon
surrender of the Warrant Certificate with the form of election to purchase on
the reverse side thereof duly executed, to the Warrant Agent at the Warrant
Agent Office, together with payment of the purchase price for each share of
Common Stock as to which the Warrants are exercised, at or prior to 5:00 p.m.
(New York City time) on the earlier to occur of (i) the tenth anniversary date
of the date of this Agreement or (ii) the date on which all obligations of the
Company and the Subsidiary Guarantors under the Indenture and the Senior Notes
are satisfied in full (such earlier date, the "Expiration Date"), at which time
all rights evidenced by the Warrant Certificates shall cease and the Warrants
shall become void.
(b) The purchase price for each share of Common Stock pursuant to the
exercise of a Warrant (the "Exercise Price") shall initially be $9.10 and shall
be subject to adjustment as provided in the following sub-clauses (c) and (d)
and in Section 7 hereof and shall be payable in lawful money of the United
States of America.
(c) Each time prior to the second anniversary of the date of this
Agreement that one or more persons or entities purchases Common Stock or Common
Stock Equivalents in the Company in a single transaction or in a series of
related transactions (the "Equity Buy-In") for a purchase price equal to or
greater than $15 million in the aggregate, the Exercise Price shall be adjusted
to a price equal to the product of (i) (A) in cases where the security issued in
connection with the Equity Buy-In is Common Stock, the per share consideration
paid in connection the Equity Buy-In or (B) in cases where the security issued
in connection with the Equity Buy-In is a Common Stock Equivalent (as defined
below), the per share consideration for which additional shares of Common Stock
may be issuable thereafter pursuant to such Common Stock Equivalent and (ii)
1.10. The purchase price per share of Common Stock issued or issuable in
connection with an Equity Buy-In shall not be more than 300% of the Average
Market Price immediately prior to such Equity Buy-In. In the event that the
consideration delivered to the Company in connection with an Equity Buy-In is
other than cash, the Company shall engage an investment banking firm or an
accounting firm of national reputation to determine the value of such non-cash
consideration. If one or more Equity Buy-Ins are consummated, the Exercise Price
as adjusted pursuant to this Section 6(c) shall not be subject to further
adjustment as provided in the following sub-clause (d), but shall be subject to
further adjustment from time to time as provided in Section 7. For purposes of
this Agreement, the term "Common Stock Equivalent" shall mean any security which
is or may be at any time convertible into or exchangeable for shares of Common
Stock.
(d) Except as set forth in sub-clause (c) above, from and after the
second anniversary of the date of this Agreement, the Exercise Price shall be
$0.01. and shall be subject to further adjustment from time to time as provided
in Section 7.
SECTION 7. WARRANT ADJUSTMENTS. The Exercise Price and the number of
shares purchasable upon exercise of a Warrant shall be subject to adjustment as
follows:
(a) STOCK DIVIDENDS, SUBDIVISIONS, COMBINATIONS AND RECLASSIFICATIONS.
In case the Company shall at any time after the date of this Agreement (i)
declare a dividend on the Common Stock payable in shares of Common Stock, (ii)
subdivide or reclassify the outstanding Common Stock or (iii) combine or
reclassify the outstanding Common Stock into a smaller number of shares, the
Exercise Price in effect on the record date for such dividend or on the
effective date of such subdivision, combination or reclassification shall be
adjusted by multiplying such Exercise Price by a fraction, the numerator of
which is the number of shares of Common Stock outstanding immediately prior to
such event and the denominator of which is the number of shares of Common Stock
outstanding immediately after such event. Such adjustment shall be made
successively immediately after the record date, in the case of a dividend or
distribution, or on the effective date, in the case of a subdivision,
combination or reclassification. In connection with any such adjustment, the
number of shares of Common Stock issuable upon exercise of the Warrants also
shall be simultaneously adjusted by multiplying the Exercise Price in effect
immediately prior to such adjustment by the number of shares of Common Stock
issuable upon the exercise of each Warrant immediately prior to the adjustment
required by the first sentence of this paragraph, and dividing the product so
obtained by the adjusted Exercise Price after giving effect to the adjustment
required by the first sentence of this paragraph.
(b) SALES OF COMMON STOCK. If at any time after the date of this
Agreement the Company shall issue Common Stock (other than a Permitted Issuance
as defined below) at a price per share less than the lesser of the Average
Market Price per share of Common Stock (as determined in the manner prescribed
in Section 8 hereof) or, if the Exercise Price has been adjusted pursuant to
Section 6(c), 91% of such adjusted Exercise Price, the Exercise Price shall be
decreased to an amount determined by multiplying such Exercise Price in effect
immediately prior to the date on which such issuance occurred by a fraction, the
numerator of which is the sum of (x) the total number of shares of Common Stock
outstanding on such issue date and (y) the number of shares of Common Stock
which the aggregate consideration received by the Company for shares of Common
Stock so issued would purchase at the greater of such Average Market Price or,
if the Exercise Price has been adjusted pursuant to Section 6(c), 91% of such
Adjusted Exercise Price, as the case may be, and the denominator of which shall
be the sum of (a) the number of shares of Common Stock outstanding on such
record date and (b) the number of additional shares of Common Stock issued. In
the event such purchase price was paid, in whole or in part, with consideration
other than cash, the value of such consideration shall be as determined in good
faith by the Board of Directors of the Company, whose determination shall be
conclusive and described in a statement filed with the Warrant Agent. The number
of shares purchasable upon the exercise of each Warrant on such record date
shall be increased to a number of shares equal to (i) the number of shares
purchasable on such record date multiplied by the Exercise Price in effect
immediately prior to the adjustment required by the preceding sentence, divided
by (ii) the adjusted Exercise Price computed pursuant to the preceding sentence.
Such adjustment shall be made successively whenever such issuances are
consummated.
For purposes of this Agreement, "Permitted Issuances" shall mean (i)
the issuance during each annual period described below of up to a designated
number of rights, stock options or shares of Common Stock to the Company's
employees and regularly engaged consultants pursuant to the Company's existing
stock option plans or any stock option plans hereafter adopted by the Company or
pursuant to any restricted share agreement adopted by the Company: (A) during
the period beginning on the date of this Agreement and ending on the first
anniversary of the date of this Agreement, up to 1,592,087 of such rights, stock
options or shares; and (B) during each subsequent annual period beginning on the
day following an anniversary of this Agreement and ending on the next succeeding
anniversary of this Agreement, up to additional 796,044 of such rights, stock
options or shares; PROVIDED, HOWEVER, that the number of rights, stock options
or shares covered by this clause (i) shall not exceed 3,184,175; (ii) issuance
of shares of capital stock upon exercise of the rights and stock options
referred to in clause (i), and (iii) the issuance of the Warrants and capital
stock issuable upon exercise thereof upon the occurrence of any adjustment
required by Section 7 hereof.
(c) ISSUANCES TO HOLDERS OF COMMON STOCK. If at any time after the
date of this Agreement the Company shall fix a record date for the issuance of
rights or warrants to all holders of its Common Stock entitling them (for a
period expiring within 45 days after such record date) to subscribe for or to
purchase shares of Common Stock (or securities convertible into shares of Common
Stock) at a price per share, or having a conversion price per share of Common
Stock (if a security is convertible into Common Stock), less than the lesser of
the Average Market Price per share of Common Stock on such record date (as
determined in the manner prescribed in Section 8 hereof) or, if the Exercise
Price has been adjusted pursuant to Section 6(c), 91% of such adjusted Exercise
Price, the Exercise Price shall be decreased to an amount determined by
multiplying such Exercise Price in effect immediately prior to such record date
by a fraction, the numerator of which is the sum of (x) the total number of
shares of Common Stock outstanding on such record date and (y) the number of
shares of Common Stock which the aggregate offering price of the total number of
shares of Common Stock to be so offered (or the aggregate subscription or
purchase price for such convertible securities plus the aggregate amount of
additional consideration, if any, payable upon the conversion thereof) would
purchase at the greater of such Average Market Price or, if the Exercise Price
has been adjusted pursuant to Section 6(c), 91% of such Adjusted Exercise Price,
as the case may be, as the case may be) and the denominator of which shall be
the sum of (a) the number of shares of Common Stock outstanding on such record
date and (b) the number of additional shares of Common Stock to be offered for
subscription or purchase (or into which the convertible securities to be so
offered are initially convertible). In the event such subscription or purchase
price is paid, in whole or in part, with consideration other than cash, the
value of such consideration shall be as determined in good faith by the Board of
Directors of the Company, whose determination shall be conclusive and described
in a statement filed with the Warrant Agent. The number of shares purchasable
upon the exercise of each Warrant on such record date shall be increased to a
number of shares equal to (i) the number of shares purchasable on such record
date multiplied by the Exercise Price in effect immediately prior to the
adjustment required by the preceding sentence, divided by (ii) the adjusted
Exercise Price computed pursuant to the preceding sentence. Such adjustment
shall be made successively whenever such a record date is fixed and, in the
event that such rights or warrants are not issued, the Exercise Price and the
number of shares of Common Stock purchasable upon exercise of the Warrants shall
be readjusted to the price and the number of shares which were in effect prior
to such record date.
(d) COMMON STOCK EQUIVALENTS. If at any time after the date of this
Agreement the Company shall issue Common Stock Equivalents (other than Permitted
Issuances) entitling the holders thereof to subscribe for or to purchase shares
of Common Stock at a price per share, or having a conversion price per share of
Common Stock (if a security is convertible into Common Stock), less than the
lesser of the Average Market Price per share of Common Stock or, if the Exercise
Price has been adjusted pursuant to Section 6(c), less than 91% of such adjusted
Exercise Price, the Exercise Price shall be decreased to an amount determined by
multiplying such Exercise Price in effect immediately prior to such record date
by a fraction, the numerator of which is the sum of (x) the total number of
shares of Common Stock outstanding on the issuance date of such Common Stock
Equivalent and (y) the number of shares of Common Stock which the aggregate
subscription or purchase price for such Common Stock Equivalents (plus the
aggregate amount of additional consideration, if any, payable upon the exercise
or conversion thereof) would purchase at the greater of such Average Market
Price or, if the Exercise Price has been adjusted pursuant to Section 6(c), 91%
of such Adjusted Exercise Price, as the case may be, and the denominator of
which shall be the sum of (a) the number of shares of Common Stock outstanding
date of issuance of such Common Stock Equivalents and (b) the number of
additional shares of Common Stock to be offered for subscription or purchase (or
into which the convertible securities to be so offered are initially
convertible). In the event such subscription or purchase price is paid, in whole
or in part, with consideration other than cash, the value of such consideration
shall be as determined in good faith by the Board of Directors of the Company,
whose determination shall be conclusive and described in a statement filed with
the Warrant Agent. The number of shares purchasable upon the exercise of each
Warrant outstanding on the issuance date of such Common Stock Equivalents shall
be increased to a number of shares equal to (i) the number of shares purchasable
on such date multiplied by the Exercise Price in effect immediately prior to the
adjustment required by the preceding sentence, divided by (ii) the adjusted
Exercise Price computed pursuant to the preceding sentence. Such adjustment
shall be made successively whenever Common Stock Equivalents are issued and, in
the event that such rights or warrants are not issued, the Exercise Price and
the number of shares of Common Stock purchasable upon exercise of the Warrants
shall be readjusted to the price and the number of shares which were in effect
prior to issuance of such Common Stock Equivalents.
(e) CONSOLIDATION, MERGER OR SALE OF ASSETS. In case the Company shall
be a party to any transaction (including, without limitation, a merger,
consolidation, sale of all or substantially all of the Company's assets or
recapitalization of the Common Stock but excluding any transaction to which
Section 7(a) applies) in which the previously outstanding Common Stock shall be
changed into or, pursuant to the operation of law or the terms of the
transaction to which the Company is a party, exchanged for different securities
of the Company or common stock or other securities of another corporation or
interests in a noncorporate entity or other property (including cash) or any
combination of any of the foregoing, then, as a condition of the consummation of
such transaction, lawful and adequate provision shall be made so that the
holders of Warrants shall be entitled, upon the exercise thereof, to an amount
per share equal to (A) the aggregate amount of stock, securities, cash and/or
any other property (payable in kind), as the case may be, into which or for
which each share of Common Stock is changed or exchanged times (B) the number of
shares of Common Stock for which each Warrant is exercisable immediately prior
to the consummation of such transaction. In case the Company shall be a party to
a transaction described in this Section 7(e), effective provision shall be made
by way of a supplemental agreement to this Agreement so that the provisions set
forth herein for the protection of the exercise rights of the Warrants shall
thereafter be applicable, as nearly as reasonably may be, to any such other
shares of stock and other securities and property deliverable upon exercise of
the Warrants; and the resulting or surviving corporation or other corporation or
noncorporate entity issuing or delivering such shares, other securities or
property shall expressly assume the obligation to deliver, upon the exercise of
the Warrants, such shares, securities or property as the holders of the Warrants
shall be entitled to receive, pursuant to the provisions hereof, and to make
provision for the protection of the exercise right as above provided. In case
shares, securities or property other than Common Stock shall be issuable or
deliverable upon exercise as aforesaid, then all references to Common Stock in
this Section 7 shall be deemed to apply, so far as provided and as nearly as is
reasonable, to any such shares, other securities or property. Such adjustment
shall be made successively in the case of any transaction to which this Section
7(e) applies.
(f) CALCULATIONS TO THE NEAREST CENT AND ONE-HUNDREDTH OF A SHARE. No
adjustment in the Exercise Price shall be required unless such adjustment would
require an increase or decrease of at least 1% in such price; PROVIDED, HOWEVER,
that any adjustments which by reason of this Section 7(f) are not required to be
made shall be carried forward and taken into account in any subsequent
adjustment. All calculations under this Section 7 shall be made to the nearest
cent and to the nearest one-hundredth of a share, as the case may be.
(g) NOTICE OF WARRANT ADJUSTMENT. Whenever the Exercise Price or the
number of shares purchasable upon exercise of a Warrant shall be adjusted as
provided in this Section 7, the Company shall forthwith file with the Warrant
Agent a certificate, signed by a firm of independent public accountants, showing
in detail the facts and computations requiring such adjustment and the Exercise
Price and number of shares so purchasable that will be effective after such
adjustment. Such certificate shall be conclusive evidence of the correctness of
such adjustment. The Company shall also cause a notice setting forth any
adjustments to be sent by mailing first-class, postage prepaid, to each
registered holder of a Warrant Certificate or Warrant Certificates at its
address appearing on the Warrant register, provided, that the failure to give
such notice or any defect therein shall not affect the legality or validity of
such adjustment or the action giving rise thereof. The Warrant Agent shall have
no duty with respect to any certificate filed with it except to keep the same on
file and available for inspection by registered holders of Warrant Certificates
during reasonable business hours and shall not be deemed to have knowledge of
any adjustment unless and until it shall have received such certificate. The
Warrant Agent shall not at any time be under any duty or responsibility to any
holder of a Warrant certificate to determine whether any facts exist which may
require any adjustment of the Exercise Price, or with respect to the nature of
any adjustment of the Exercise Price when made, or with respect to the method
employed in making such adjustment.
(h) OTHER NOTICES. In case the Company after the date hereof shall
propose to take any action of the type described in subsection (a), (b), (c),
(d) or (e) of this Section 7, the Company shall file with the Warrant Agent a
certificate, signed (i) by the Chairman of the Board, the Chief Executive
Officer, the President or any Vice President of the Company and (ii) by its
Treasurer or Assistant Treasurer or Secretary or Assistant Secretary specifying
the date on which such action shall take place and shall also set forth such
facts with respect thereto as shall be reasonably necessary to indicate the
effect of such action (to the extent such fact may be known on the date of such
notice) on the Exercise Price and the number, or kind, or class of shares or
other securities or property which shall be purchasable upon exercise of
Warrants. Such certificate shall be given at least 10 days prior to the record
date with respect thereto. The Company shall cause the Warrant Agent to promptly
mail by first class mail, postage prepaid, to each Warrant holder a copy of the
certificate described in the first sentence of this sub-paragraph (h). Failure
to give such certificate or any defect therein shall not affect the legality or
validity of such action.
(i) NO CHANGE IN WARRANT TERMS ON ADJUSTMENT. Irrespective of any of
the adjustments in the Exercise Price or the number of shares of Warrant Common
Stock, Warrant Certificates theretofore or thereafter issued may continue to
express the same prices and number of shares as are stated in a similar Warrant
Certificate issuable initially, or at some subsequent time, pursuant to this
Agreement and such number of shares specified therein shall be deemed to have
been so adjusted.
(j) OPTIONAL REDUCTION IN EXERCISE PRICE. The Company may, at its
option, at any time until the Expiration Date, reduce the then current Exercise
Price to any amount deemed appropriate by the Board of Directors of the Company
for any period of at least 20 consecutive days (as evidenced in a resolution
adopted by such Board of Directors), but only upon giving the notice required by
Section 7(h) at least 20 days prior to taking such action.
(k) ADJUSTMENTS UPON EXPIRATION OF CERTAIN UNEXERCISED SECURITIES.
Upon the expiration of any rights, options, warrants or convertible securities
the issuance of which resulted in an adjustment of the Exercise Price and the
number of shares of Common Stock purchasable upon the exercise of a Warrant
pursuant to this Section 7, if any thereof shall not have been exercised or
converted, the Exercise Price and the number of shares of Common Stock
purchasable upon the exercise of a Warrant shall, upon such expiration, be
readjusted and shall thereafter be such as it would have been had it been
originally adjusted (or had the original adjustment not been required, as the
case may be) on the basis of (i) the only shares of Common Stock so issued were
the shares of Common Stock, if any, actually issued or sold upon the exercise of
such rights, options, warrants or the conversion of such convertible securities
and (ii) such shares of Common Stock, if any, were issued or sold for the
consideration actually received by the Company upon such exercise or conversion
plus the consideration, if any, actually received by the Company for the
issuance, sale or grant of all such rights, warrants or convertible securities
whether or not exercised; PROVIDED, HOWEVER, that no such readjustment shall
have the effect of increasing the Exercise Price by an amount in excess of the
amount of the adjustment initially made in respect of the issuance, sale or
grant or such rights, options, warrants or convertible securities.
(l) NOTICE OF DIVIDENDS. In addition to any other notice requirements
prescribed by this Agreement, the Company shall cause the Warrant Agent promptly
to mail by first class mail, postage prepaid, to each Warrant holder a notice of
the record date of each dividend to be paid (whether or not in cash) by the
Company on its capital stock.
(m) TAG ALONG RIGHTS. Other than transfers to his or their respective
Permitted Transferees, if one or more Xxxxxx Stockholders (as defined below)
desires to transfer beneficial ownership of shares of Common Stock or any other
security into which any such Common Stock may have been converted or for which
it may have been exchanged in a single transaction or series of related
transactions (a "Transfer"), then such Transfer may be made only when in
compliance with the provisions of this Section 7(m).
Whenever one or more Xxxxxx Stockholders desires to effect such a
Transfer, such Xxxxxx Stockholders will provide written notice to the Company's
Board of Directors. Upon receipt of such notice the Company will send a notice
("Transfer Notice") to the Warrant Agent. The Transfer Notice shall set forth
the consideration for the Common Stock being transferred by the Xxxxxx
Stockholders, the identity of the third party acquiring such shares and the
other terms and conditions of the proposed transaction ("Tag Offer"). The
Warrant Agent shall disseminate the Tag Notice to each registered holder of
Warrants in the manner proscribed in this Agreement. Any registered holder of a
Warrant Certificate, may, within 30 days of the receipt of the Transfer Notice,
give written notice ("Tag Notice") to the Company and the Warrant Agent (which
shall be irrevocable after delivery thereof) stating that such registered holder
wishes to participate in such sale by exercising his, her or its Warrants in
sufficient number so that such holder can sell a number of shares of Common
Stock not to exceed such holder's pro rata portion of the total amount of Common
Stock to be eventually included in the sale to the third party described in such
Tag Offer, on terms and conditions not less favorable to such registered holders
of Warrant Certificates than those set forth in the Transfer Notice. If the
third party transferee is unwilling to purchase all of the Common Stock which
have been identified for sale, then the amount of Common Stock which the third
party transferee is willing to acquire shall be allocated pro rata among the
Xxxxxx Stockholders and those registered holders of Warrant Certificates who
have given timely Tag Notices. Each registered holder of Warrant Certificates
electing to participate in such sale (a "Tagging Warrantholder") will deliver to
an Escrow Agent (the cost of which Escrow Agent will be borne by the Company),
not less than five Business Days before the proposed date of consummation of the
Tag Offer, the duly endorsed Warrant Certificates and proscribed instructions
for exercise representing all Warrant Common Stock being sold by such Tagging
Warrantholder. The Warrants shall not be deemed exercised until immediately
prior to the consummation of the Tag Offer. If such Tagging Warrantholder fails
to deliver such certificates to the Escrow Agent, the Company will cause the
books and records of the Company to show that such Warrants are subject to the
provisions of this Section 7(m) of this Agreement and may be transferred only to
the third party purchaser upon payment of the cash purchase price without
interest and upon surrender for transfer by such Tagging Warrantholder to the
Escrow Agent. The Xxxxxx Stockholders will have six months from the date on
which the Transfer Notice is given to sell to the third party purchaser, at the
price set forth in the Transfer Notice, all of the Common Stock subject to the
Tag Offer. Immediately after completion of any such sale pursuant to this
Section 7(m), the Escrow Agent will notify each Tagging Warrantholder and will
remit to such Tagging Warrantholder the total sales price attributable to the
Warrant Common Stock of such Tagging Warrantholder sold pursuant thereto less a
pro rata portion of the reasonable expenses and taxes among all stockholders of
the Company selling in the transaction, if any, incurred in connection with such
sale; PROVIDED, HOWEVER, that if such Tagging Warrantholder failed to deliver
the Warrant Certificates to the Escrow Agent in accordance with the terms
hereof, the third party purchaser will hold such proceeds in escrow (with no
interest) until such Tagging Warrantholder so delivers such certificates. If any
sale to the third party purchaser is not completed on substantially the same
terms as set forth in the Tag Offer by the expiration of the six month period
referred to herein, then, the Company will cause the Escrow Agent to return to
each Tagging Warrantholder all Warrant Certificates of such Tagging
Warrantholder. Notwithstanding anything in this Section 7(m) to the contrary,
there will be no liability on the part of the Xxxxxx Stockholders to the Tagging
Warrantholders if any sale of Common Stock pursuant to this Section 7(m) is not
consummated for whatever reason. The tag-along rights granted pursuant to this
Section 7(m) shall apply only to the first transaction or series of related
transactions that does not constitute a transfer to a Permitted Transferee.
For the purposes of this Agreement, "Permitted Transferee" means with
respect to any Xxxxxx Stockholder (i) any spouse or lineal descendant of such
Xxxxxx Stockholder, (ii) any trust all of the beneficial interests in which are
held by such Xxxxxx Stockholder and/or such Xxxxxx Stockholder's spouse and/or
lineal descendants and (iii) any person or entity if, after giving effect to the
Transfer to such person or entity, the Xxxxxx Stockholders in the aggregate
would continue to be the record and beneficial owners of at least a majority of
the outstanding shares of Common Stock (or other equity interests) of the
Company or of any corporation or other entity which is the surviving entity in
any merger or consolidation to which the Company is a party; PROVIDED, HOWEVER,
that each such transferee described in clauses (i) and (ii) will be a Permitted
Transferee for purposes of this Section 7(m) only if such transferee shall have
executed and delivered to the Company an instrument reasonably satisfactory to
the Board of Directors pursuant to which the transferee shall have agreed to be
bound by the terms of this Section 7(m) as a "Xxxxxx Stockholder." For the
purposes of this Agreement, "Xxxxxx Stockholder" means each of Xxxx Xxxxxx, Xxx
Xxxxxx, Xxxx X. Xxxxxx and Xxxxxx Xxxxxx and their respective Permitted
Transferees.
SECTION 8. AVERAGE MARKET PRICE. For all purposes of this Agreement,
the Average Market Price per share of Common Stock on any date shall be deemed
to be the average of the Market Prices (as defined below) for the 20 consecutive
Business Days (as defined below) before such date. The "Market Price" for each
day shall be the last reported sale price or, in case no such sale takes place
on such day, the average of the closing bid and asked prices of the Common
Stock, in either case as reported in the principal consolidated transaction
reporting system with respect to securities listed or admitted to trading on the
principal national securities exchange on which the Common Stock is listed or
admitted to trading or, if the Common Stock is not listed or admitted to trading
on any national securities exchange, the last quoted sale price or, if not so
quoted, the average of the high bid and low asked prices in the over-the-counter
market, as reported by the National Association of Securities Dealers, Inc.
Automated Quotations System or such other system then in use, or, if on any such
date the Common Stock is not quoted by any such organization, the average of the
closing bid and asked prices as furnished by a professional market maker making
a market in the Common Stock selected by the Board of Directors of the Company.
If the Common Stock is not publicly held or so listed or publicly traded, the
"Market Price" shall be the fair market value per share as determined in good
faith by the Board of Directors of the Company. For the purposes of this
Agreement, "Business Day" shall mean any day other than a Saturday, Sunday or
legal holiday in the State of New York or any other day on which securities are
not traded in the system or on the exchange that is the principal market for the
Common Stock.
SECTION 9. EXERCISE OF WARRANTS AND STOCK CERTIFICATES
(a) Subject to the provisions of this Agreement, each registered
holder of a Warrant Certificate shall have the right, which may be exercised as
provided in such Warrant Certificate, to purchase from the Company (and the
Company shall issue and sell to such registered holder) all or part of the
number of fully paid and nonassessable shares of Warrant Common Stock specified
in such Warrant Certificate (subject to the adjustments as herein provided),
upon surrender to the Company at the Warrant Agent Office, of such Warrant
Certificate with the exercise form on the reverse thereof duly and properly
filled in and signed (with any required signature guarantee), and upon payment
to the Warrant Agent to the account of the Company of the Exercise Price for the
number of shares of Warrant Common Stock in respect of which such Warrants are
then exercised. Upon surrender of such Warrant Certificate, it shall be canceled
by the Warrant Agent. The date of exercise of any Warrant shall be deemed to be
the date of its receipt by the Warrant Agent duly and properly filled in and
signed and accompanied by proper funds as hereinafter provided. Payment of the
Exercise Price may be made in cash or by certified or official bank check. No
adjustment shall be made for any cash dividends declared or paid on shares of
Common Stock prior to the exercise of a Warrant. Upon such surrender of
Warrants, and payment of the Exercise Price as aforesaid, the Company shall
issue and cause to be delivered with all reasonable dispatch to or upon the
written order of the registered holder of such Warrants, and in such name or
names as such registered holder may designate, a certificate or certificates for
the number of full shares of Warrant Common Stock so purchased upon the exercise
of such Warrants together with cash in respect of any fraction of a share of
such stock issuable upon such surrender, as provided in Section 10 of this
Agreement.
(b) Each certificate evidencing shares of Common Stock issued upon the
exercise of Warrants shall have such letters, numbers or other marks of
identification or designation or such legends (including restrictive legends),
summaries or endorsements printed, lithographed or engraved thereon as the
Company may deem appropriate or as may be required to comply with any law or
with any rule or regulation made pursuant thereto or with any rule or regulation
of any stock exchange on which the Common Stock may from time to time be listed,
or to conform to usage.
(c) Each person in whose name any certificate for shares of Common
Stock is issued upon the exercise of Warrants shall for all purposes be deemed
to have become the holder of record of the Common Stock represented thereby on,
and such certificate shall be dated, the date upon which the Warrant Certificate
evidencing such Warrants was duly surrendered and payment of the Exercise Price
(and any applicable taxes and governmental charges) was made; PROVIDED, HOWEVER,
that if the date of such surrender and payment is a date upon which the Common
Stock transfer books of the Company are closed, such person shall be deemed to
have become the record holder of such shares on, and such certificate shall be
dated, the next succeeding day on which the Common Stock transfer books of the
Company are open.
SECTION 10. ELIMINATION OF FRACTIONS. The Company shall not be
required to issue fractional shares of Common Stock upon any exercise of
Warrants. As to any final fraction of a share which the same registered holder
of one or more Warrant Certificates, the rights under which are exercised in the
same transaction or series of related transactions, would otherwise be entitled
to purchase upon such exercise, the Company shall pay a cash adjustment in
respect of such final fraction in an amount equal to the same fraction of the
Market Price on the Business Day which next precedes the day of exercise. The
Warrant Agent shall have no duty or obligation with respect to this Section or
any other section hereof regarding fractional shares unless and until it has
received specific instructions (and sufficient cash, if required) from the
Company with respect to its duties and obligations under such sections.
SECTION 11. ISSUE TAXES. The Company will pay all documentary stamp
taxes attributable to the initial issuance of shares of Warrant Common Stock
upon the exercise of any Warrant; PROVIDED, HOWEVER, that neither the Company
nor the Warrant Agent shall be required to pay any tax or taxes which may be
payable in respect of any transfer involved in the issue or delivery of any
certificates for shares of Warrant Common Stock in a name other than that of the
registered holder of the Warrant Certificate representing the Warrant in respect
of which such shares are initially issued.
SECTION 12. RESERVATION OF SHARES. The Company shall, from the date
hereof through the date on which all Warrants shall have been exercised or shall
have expired, reserve and keep available out of its authorized but unissued
stock, for the purpose of effecting the issuance of stock upon exercise or
conversion of Warrants, such number of shares of its duly authorized Common
Stock as shall from time to time be sufficient to effect the issuance of shares
of Warrant Common Stock upon exercise of all Warrants at the time outstanding.
SECTION 13. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF WARRANT
AGENT.
(a) Any entity into which the Warrant Agent may be merged or with
which it may be consolidated, or any entity resulting from any merger or
consolidation to which the Warrant Agent shall be a party, or any entity
succeeding to the business of the Warrant Agent, shall be the successor to the
Warrant Agent hereunder without the execution or filing of any paper or any
further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding. In the case of Warrant Certificates which have been
countersigned by the Warrant Agent, but not delivered at the time any such
successor to the Warrant Agent succeeds to the agency created by this Agreement,
any such successor may adopt the countersignature of the original Warrant Agent
and deliver such Warrant Certificates so countersigned; and in case at that time
any of the Warrant Certificates shall not have been countersigned, any successor
to the Warrant Agent may countersign such Warrant Certificates either in the
name of the predecessor Warrant Agent or in the name of such successor Warrant
Agent; and in all such cases such Warrant Certificates shall have the full force
and effect provided in the Warrant Certificates and in this Agreement.
(b) In case at any time the name of the Warrant Agent shall be changed
and at such time any of the Warrant Certificates shall have been countersigned
but not delivered, the Warrant Agent may adopt the countersignature under its
prior name and deliver Warrant Certificates so countersigned; and in case at
that time any of the Warrant Certificates shall not have been countersigned, the
Warrant Agent may countersign such Warrant Certificates either in its prior name
or in its changed name; and in all such cases such Warrant Certificates shall
have the full force and effect provided in the Warrant Certificates and in this
Agreement.
SECTION 14. DISPOSITION OF PROCEEDS ON EXERCISE OF WARRANTS, ETC.
(a) The Warrant Agent shall account promptly to the Company with
respect to Warrants exercised and concurrently pay to the Company all moneys
received by the Warrant Agent for the purchase of shares of Common Stock through
the exercise of such Warrants.
(b) The Warrant Agent shall keep copies of this Agreement available
for inspection by holders of Warrant Certificates during normal business hours
at the Warrant Agent Office.
SECTION 15. SUPPLEMENTS AND AMENDMENTS. The parties hereto may from
time to time make supplements or amendments to this Agreement without the
approval of any holders of Warrant Certificates which they have been advised by
counsel are necessary to cure any ambiguity or to correct or supplement any
provision contained in this Agreement which may be defective or inconsistent
with any other provision contained herein which, in any case, shall not
adversely affect the interests of the registered holders of the Warrant
Certificates. All other supplements and/or amendments may be made only with the
prior written consent of the holders of not less than a majority of the
Warrants.
SECTION 16. MUTILATED OR MISSING WARRANT CERTIFICATES. If any Warrant
Certificate shall be mutilated, lost, stolen or destroyed, the Warrant Agent
shall deliver a new Warrant Certificate of like tenor and denomination in
exchange and substitution therefor upon surrender and cancellation of the
mutilated Warrant Certificate or, in the case of a lost, stolen or destroyed
Warrant Certificate, upon receipt of evidence satisfactory to the Company and
the Warrant Agent of the loss, theft or destruction of such Warrant Certificate
and, in either case, upon receipt of such indemnity as the Company or the
Warrant Agent may require. Applicants for substitute Warrant Certificates shall
also comply with such other reasonable regulations and pay such other reasonable
charges as the Warrant Agent or the Company may prescribe. Any such new Warrant
Certificate shall constitute an original contractual obligation of the Company,
whether or not the allegedly lost, stolen, mutilated or destroyed Warrant
Certificate shall be at any time enforceable by anyone.
SECTION 17. DUTIES OF THE WARRANT AGENT. The Warrant Agent undertakes
only the duties and obligations expressly imposed by this Warrant Agreement upon
the following terms and conditions, by all of which the Company and the holders
of Warrant Certificates, by their acceptance thereof, shall be bound:
(a) The Warrant Agent shall not be liable for or by reason of any of
the statements of fact or recitals contained in this Agreement or in the Warrant
Certificates (except its countersignature thereof and except such as describes
the Warrant Agent or action taken by it) or be required to verify the same, but
all such statements and recitals are and shall be deemed to have been made by
the Company only. The Warrant Agent shall not be under any responsibility in
respect of the validity or execution of any Warrant Certificate (except its
countersignature thereof); nor shall it be responsible for any breach by the
Company of any covenant or condition contained in this Agreement or in any
Warrant Certificate to be complied with by the Company; nor shall it be
responsible for the making of any adjustment in the Exercise Price or the number
of shares issuable upon the exercise of a Warrant required under the provisions
of Section 7 or responsible for the manner, method or amount of any such change
or the ascertaining of the existence of facts that would require any such
change; nor shall it by any act hereunder be deemed to make any representation
or warranty as to the authorization or reservation of any shares to be issued
pursuant to this Agreement or any Warrant or as to whether any shares will, when
issued, be validly issued and fully paid and nonassessable.
(b) The Warrant Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys, agents or employees.
(c) The Warrant Agent may consult at any time with legal counsel
satisfactory to it (who may be legal counsel for the Company) and the advice of
such counsel shall be full and complete authorization and protection to the
Warrant Agent as to any action taken, suffered or omitted by it to be taken in
accordance with such advice. Whenever in the performance of its duties
hereunder, the Warrant Agent is unsure of the current Exercise Price or how many
shares of Common Stock are purchasable upon the exercise of a Warrant, the
Warrant Agent may seek clarification thereof from the Company, and the Warrant
Agent shall be fully protected and shall incur no liability in not taking any
action under this Agreement prior to receiving a written response from the
Company.
(d) The Warrant Agent shall incur no liability or responsibility to
the Company or to any holder of a Warrant Certificate for any action taken in
reliance on any notice, resolution, waiver, consent, order, certificate or other
paper, document or instrument believed by it to be genuine and to have been
signed, sent or presented by the proper party or parties.
(e) The Company agrees to pay to the Warrant Agent the fees set forth
in Schedule I hereto for all services rendered by the Warrant Agent in the
execution and administration of this Warrant Agreement, to reimburse the Warrant
Agent for all expenses (including reasonable counsel fees), disbursements, taxes
and governmental charges and other charges of any kind and nature incurred by
the Warrant Agent in the preparation, execution, delivery, amendment and
administration of this Warrant Agreement and to indemnify the Warrant Agent and
save it harmless against any and all liabilities, including judgments, costs,
losses, damages, fines, penalties, claims, demands, settlements and reasonable
counsel fees, for any action taken, suffered or omitted to be taken by the
Warrant Agent in connection with the execution and administration of this
Warrant Agreement except as a result of the Warrant Agent's gross negligence,
wilful misconduct or bad faith (each as finally determined by a court of
competent jurisdiction). The foregoing indemnities in this paragraph shall
survive termination or removal of the Warrant Agent or termination of this
Agreement. The cost and expenses incurred in enforcing this right of
indemnification shall be paid by the Company. Any liability of the Warrant Agent
under this Agreement will be limited to the amount of fees paid by the Company
to the Warrant Agent.
(f) The Warrant Agent and any stockholder, affiliate, director,
officer or employee of the Warrant Agent may buy, sell or deal in any of the
Warrants or other securities of the Company or become pecuniarily interested in
any transaction in which the Company may be interested, or contract with or lend
money to the Company or otherwise act as fully and freely as though it were not
Warrant Agent under this Warrant Agreement. Nothing herein shall preclude the
Warrant Agent from acting in any other capacity for the Company or for any other
legal entity.
(g) The Warrant Agent shall act hereunder solely as agent for the
Company and in a ministerial capacity, and its duties shall be determined solely
by the provisions hereof. The Warrant Agent shall not be liable for any action
taken, suffered or omitted to be taken in connection with this Agreement except
for its own gross negligence, wilful misconduct or bad faith (each as may be
finally determined by a court of competent jurisdiction). Notwithstanding
anything herein to the contrary, in no event shall the Warrant Agent be liable
for special, indirect, punitive, incidental or consequential loss or damage of
any kind whatsoever (including, but not limited to, lost profits) even if the
Warrant Agent has been advised of the likelihood of such loss or damage.
SECTION 18. CHANGE OF WARRANT AGENT. The Warrant Agent may resign and
be effectively discharged from its duties under this Agreement upon 30 days'
prior notice in writing mailed to the Company by registered or certified mail,
and to the holders of the Warrant Certificates by first-class mail. The Company
may remove the Warrant Agent or any successor Warrant Agent upon 30 days' prior
notice in writing, mailed to the Warrant Agent or successor Warrant Agent, as
the case may be, and to each transfer agent of the Common Stock by registered or
certified mail, and to the holders of the Warrant Certificates by first-class
mail. If the Warrant Agent shall resign or be removed or shall otherwise become
incapable of acting, the Company shall appoint a successor to the Warrant Agent.
If the Company shall fail to make such appointment within a period of 30 days
after such removal or after it has been notified in writing of such resignation
or incapacity by the resigning or incapacitated Warrant Agent or by the holder
of a Warrant Certificate (who shall, with such notice, submit his Warrant
Certificate for inspection by the Company), then the registered holder of any
Warrant Certificate may apply to any court of competent jurisdiction for the
appointment of a new Warrant Agent. The holders of a majority of the Warrants
may with the consent of the Company appoint a successor Warrant Agent to replace
the successor Warrant Agent appointed by the Company. Any successor Warrant
Agent, whether appointed by the Company, the holders of a majority of the
Warrants or by such a court, shall be an entity organized and doing business
under the laws of the United States or of any state thereof, in good standing,
which is authorized under such laws to exercise stock transfer powers and is
subject to supervision or examination by federal or state authority and which
has at the time of its appointment as Warrant Agent a combined capital and
surplus of at least $10,000,000. After appointment, the successor Warrant Agent
shall be vested with the same powers, rights, duties and responsibilities as if
it had been originally named as Warrant Agent without further act or deed; and,
upon payment in full of amounts owed to the predecessor Warrant Agent, the
predecessor Warrant Agent shall deliver and transfer to the successor Warrant
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Not later
than the effective date of such appointment the Company shall file notice
thereof in writing with the predecessor Warrant Agent and each transfer agent of
the Common Stock, and mail a notice thereof in writing to the registered holders
of the Warrant Certificates. Failure to give any notice provided for in this
Section 18, however, or any defect therein, shall not affect the legality or
validity of the resignation or removal of the Warrant Agent or the appointment
of the successor Warrant Agent, as the case may be.
SECTION 19. IDENTITY OF TRANSFER AGENT. Forthwith upon the appointment
of any subsequent transfer agent for shares of the Common Stock, the Company
will file with the Warrant Agent a statement setting forth the name and address
of such transfer agent.
SECTION 20. NOTICES. Any and all notices or other communications or
deliveries required or permitted to be provided hereunder shall be in writing
and shall be deemed given and effective on the earlier (i) the date of
transmission, if such notice or such communication is delivered via facsimile at
the facsimile telephone number specified for notice prior to 5:00 p.m., New York
City time, on a Business Day, (ii) the Business Day after the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile telephone number specified for notice later than 5:00 p.m., New York
City time, on any date and earlier than 11:59 p.m., New York City time, on such
date, (iii) the Business Day following the date of mailing, if sent by
nationally recognized overnight courier service or (iv) actual receipt by the
party to whom such notice or communication is required to be given. The
addresses and facsimile numbers for all such notices, communication and/or
deliveries shall be as follows:
if to the Company,
Delta Financing Corporation
0000 Xxxxxxxx Xxxx
Xxxxxxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxx
Fax: (000) 000-0000
with a copy to:
Stroock & Stroock & Xxxxx, LLP
000 Xxxxxx Xxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attn: Xxxxxxx Xxxxxx, Esq.
Fax: (000) 000-0000
if to the Warrant Agent,
ChaseMellon Shareholder Services, L.L.C.
00 Xxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Ms. Xxxxxxx Xxxxxxxx
Fax: (000) 000-0000
or to such other addresses or facsimile numbers as any party may most
recently have designated in writing to the other parties hereto by such notice.
The Company shall cause the Warrant Agent to promptly mail by first class mail,
postage prepaid, to each Warrant holder any and all notices or other
communications or deliveries required or permitted to be provided hereunder to
the Warrant holders.
SECTION 21. SUCCESSORS. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Warrant Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
SECTION 22. GOVERNING LAW. This Agreement and each Warrant issued
hereunder shall be deemed to be a contract made under the laws of the State of
New York and for all purposes shall be construed in accordance with the laws of
the State of New York without regard to the conflicts of laws principles
thereof.
SECTION 23. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement
shall be construed to give to any person or corporation other than the Company,
the Warrant Agent and the registered holders of the Warrant Certificates any
legal or equitable right, remedy or claim under this Agreement.
SECTION 24. COUNTERPARTS. This Agreement may be executed in any number
of counterparts, and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute but one
and the same instrument.
SECTION 25. REGISTRATION RIGHTS. Holders of the Warrants are entitled
to the rights and benefits of that certain Registration Rights Agreement of even
date herewith.
SECTION 26. REMEDIES. In addition to any other rights and remedies the
Holders may have hereunder, one or more of the Holders of at least 20% of the
Warrants shall be entitled to obtain immediate preliminary and permanent
injunctive relief (including a any ex parte temporary restraining order) without
having to post a bond in connection with any judicial action taken by any such
Holders to vindicate their rights hereunder.
[THE REMAINDER OF THIS PAGE IS LEFT BLANK INTENTIONALLY.]
IN WITNESS WHEREOF, the parties hereto have caused this Warrant
Agreement to be executed and delivered as of the day and year first above
written.
COMPANY:
DELTA FINANCIAL CORPORATION, a
Delaware corporation
By:
-----------------------------
Name:
Title:
WARRANT AGENT:
CHASEMELLON SHAREHOLDER SERVICES,
L.L.C., a New Jersey limited
liability company
By:
-----------------------------
Name:
Title:
XXXXXX STOCKHOLDERS
(signing with respect to Section 7(m)
only)
-----------------------------
Xxxx Xxxxxx
-----------------------------
Xxx Xxxxxx
-----------------------------
Xxxx X. Xxxxxx
-----------------------------
Xxxxxx X. Xxxxxx
SCHEDULE I
WARRANT AGENT FEES
For as long as [_____________________] ("____") serves as Warrant Agent under
this Agreement, ____ shall be entitled to receive from the Company a fee for
such services equal to _________________ Dollars ($_____.__) per month, or any
portion thereof prorated on a daily basis. Such payment shall be made by the
Company at the address specified in this Agreement, on or before the tenth
Business Day of each month, for the fees due ____ from services provided during
the immediately preceding month.
EXHIBIT A OF WARRANT AGREEMENT
FORM OF WARRANT CERTIFICATE
EXERCISABLE ONLY ON OR AFTER OCTOBER __, 2000
(AS PROVIDED IN THE WARRANT AGREEMENT
REFERRED TO BELOW)
NUMBER WARRANTS
W _________ ________________
DELTA FINANCIAL CORPORATION
This Warrant Certificate Certifies that
or registered assigns is the registered holder of
Warrants (the "Warrants") expiring on the Expiration Date (as defined in Section
6 of the Warrant Agreement and described on the reverse hereof) to purchase
shares of the common stock (the "Common Stock"), par value $0.01 per share, of
Delta Financial Corporation, a Delaware corporation (the "Company"). Each
Warrant entitles the holder thereof to purchase from Company one fully paid and
nonassesable share of Common Stock at the Exercise Price (as defined in the
Warrant Agreement) at the time in effect under the Warrant Agreement ($9.10 per
share, at the time of the initial issuance of the Warrants), payable in lawful
money of the United States of America by certified or official bank check
payable to the order of the Company, upon surrender of this Warrant Certificate
and payment of such Exercise Price to the Company at the designated office of
the Warrant Agent in New York or at another office or agency to be maintained by
the Company, but only subject to the conditions set forth herein and in the
Warrant Agreement, provided, HOWEVER, that no fractional shares shall be issued
on exercise of the Warrant and that the number of kind of shares (or in certain
events other property) purchasable upon exercise of the Warrants and the
Exercise Price referred to on the reverse hereof may as of the date of this
Warrant Certificate have been, or may after such date be, adjusted as a result
of the occurrence of certain events, as more fully provided in the Warrant
Agreement.
No Warrant may be exercised after 5:00 p.m. on the Expiration Date.
Reference is hereby made to the further provisions of this Warrant
Certificate set forth on the reverse hereof and such further provisions shall
for all purposes have the same effect as though fully set forth at this place.
This Warrant Certificate shall not be valid unless countersigned by
the Warrant Agent (or an authenticating agent of the Warrant Agent appointed
pursuant to Section 1 of the Warrant Agreement) by the manual signature of one
of its authorized officers.
IN WITNESS WHEREOF, DELTA FINANCIAL CORPORATION has caused this
instrument to be signed manually or in facsimile by its Chief Executive Officer,
President or a Vice President and by its Secretary of an Assistant Secretary.
Dated: DELTA FINANCIAL CORPORATION
By:
-----------------------------
Name:
Title:
By:
-----------------------------
Name:
Title:
DELTA FINANCIAL CORPORATION
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants issued pursuant to a Warrant Agreement dated as of
October __, 2000 (the "Warrant Agreement"), duly executed and delivered by the
Company to ChaseMellon Shareholder Services, L.L.C., as warrant agent (the
"Warrant Agent"), which Warrant Agreement is hereby incorporated by reference in
and made a part of this instrument and is hereby referred to for a description
of the rights, imitation of rights, obligations, duties and immunities
thereunder of the Warrant Agent, the Company and the holders (the words
"holders" or "holder" meaning the registered holders or registered holder) of
the Warrants and a copy of which Warrant Agreement will be available at the
office of the Secretary of the Company for inspection by holders of Warrants
during normal business hours.
The holder of Warrants evidenced by this Warrant Certificate may
exercise them by surrendering the Warrant Certificate, with the Form of Exercise
set forth hereon properly completed and executed, together with payment of the
Exercise Price at the time in effect, to the Company at the designated office of
the Warrant Agent in New York. In the event that upon any exercise of Warrants
evidenced hereby the number of Warrants exercised shall be less than the total
number of Warrants evidenced hereby, there shall be issued to the holder hereof
or his assignee a new Warrant Certificate evidencing the number of Warrants not
exercised.
The Expiration Date may be extended by the Company in its sole
discretion from time to time by a notice given to the Warrant Agent and mailed
to the registered holders of the Warrant Certificates.
The Warrant Agreement provides that upon the occurrence of certain
events the Exercise Price may, subject to certain conditions, be adjusted and
under certain circumstances the Warrant may become exercisable for securities or
other assets other than the shares referred to on the face hereof. If the
Exercise Price is adjusted, the Warrant Agreement provides that the number of
Common Shares purchasable upon the exercise of each Warrant shall be adjusted in
certain circumstances.
This Warrant Certificate is transferable, in whole or in part, on the
register maintained by the Company at the designated office of the Warrant Agent
for such purpose, upon surrender of this Warrant Certificate at the office of
the Warrant Agent, or at another office or agency to be maintained by the
Company, together with a written assignment of the Warrant Certificate, on the
Form of Assignment set forth hereon or in other form satisfactory to the Warrant
Agent, duly executed by the holder or his duly appointed legal representative,
and together with funds to pay any applicable taxes or governmental charges
payable in connection with such transfer. Upon such surrender and payment, a new
Warrant Certificate shall be issued and delivered, in the name of the assignee
and in the denomination or denominations specified in such instrument of
assignment. If less than all of this Warrant Certificate is being transferred, a
new Warrant Certificate or Certificates shall be issued of the portion of this
Warrant Certificate not being transferred.
This Warrant Certificate may be divided or combined with other Warrant
Certificates upon surrender hereof to the Company at the designated office of
the Warrant Agent, or at another office or agency to be maintained by the
Company, together with a written notice specifying the names and denominations
in which new Warrant Certifications are to be issued, signed by the holder
hereof or his duly appointed legal representative, and together with the funds
to pay any applicable taxes or governmental charges payable in connection with
such transfer. Upon such surrender and payment, a new Warrant Certificate or
Certificates shall be issued and delivered in accordance with such notice.
The Company shall make no service or other charge in connection with
any such transfer or exchange of this Warrant Certificate, except for any
applicable taxes or governmental charges payable in connection therewith.
The Company and the Warrant Agent may deem and treat the registered
holder hereof as the absolute owner of this Warrant Certificate (notwithstanding
any notation of ownership or other writing hereon made by anyone), for the
purpose of any exercise or conversion hereof, any distribution to the holder
hereof, and for all other purposes, and neither the Company nor the Warrant
Agent shall be affected by an notice to the contrary.
ELECTION TO EXERCISE
To be executed upon exercise of Warrant
The undersigned hereby irrevocable elects to exercise the right,
represented by this Warrant Certificate, to purchase __ shares of Common Stock
and herewith tenders payment for such Common Stock to the order of Delta
Financial Corporation in the amount of $______ in accordance with the terms
hereof. The undersigned requests that a certificate for such Common Stock be
registered in the name of
------------------------------------------------------------------------
Name (Please Print)
Whose address is
------------------------------------------------------------------------
Address (Please Print)
------------------------------------------------------------------------
Delivery Address (if different)(Please Print)
If said number of shares of Common Stock is less than all of the
Common Stock purchasable hereunder, the undersigned requests that a new Warrant
Certificate representing the remaining balance of the shares of Common Stock be
registered in the name of
------------------------------------------------------------------------
Name (Please Print)
Whose address is
------------------------------------------------------------------------------
Address (Please Print)
and that such Warrant Certificate be delivered to
------------------------------------------------------------------------
Delivery Address (if different)(Please Print)
Dated:_________________________ Signature:________________________
(Signature must conform in all respects
to name of holder as specified on the
face of the Warrant Certificate.)
----------------------------------------------------------------------
(Insert Social Security or Taxpayer Identification Number of Holder)
Signature Guaranteed:
-----------------------------------------------------------------------
ASSIGNMENT
To be executed to transfer the Warrant Certificate
FOR VALUE RECEIVED ___________ hereby sells, assigns and transfer unto
-----------------------------------------
Whose address is ______________________________________________________________
this Warrant Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint ____________________________
__________________________________________________________________attorney to
transfer the within Warrant Certificate on the books of the within-named
Corporation, with full power of substitution.
Dated:_________________________ Signature:________________________
(Signature must conform in all respects
to name of holder as specified on the
face of the Warrant Certificate.)
--------------------------------------------------------------------
(Insert Social Security or Taxpayer Identification Number of Holder)
Exhibit J to Indenture
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of November
__, 2000, by and among Delta Financial Corporation, a Delaware corporation (the
"Company"), and ChaseMellon Shareholder Services, L.L.C., a New Jersey limited
liability company, as warrant agent (the "Warrant Agent").
W I T N E S S E T H:
WHEREAS, this Agreement is being entered into in connection with the
execution and delivery of that certain Indenture dated as of the date hereof
(the "Indenture") among the Company, as issuer, each of Delta Funding
Corporation, a New York corporation, DF Special Holdings Corporation, a Delaware
corporation, Fidelity Mortgage, Inc., a Delaware corporation, DFC Financial of
Canada Limited, an Ontario, Canada corporation, DFC Funding of Canada Limited,
an Ontario, Canada corporation, Continental Property Management Corp., a New
York corporation, DFC Financial Corporation, a Delaware corporation, Delta
Funding Residual Holding Trust 2000-1, Delta Funding Residual Holding Trust
2000-2 and U.S. Bank Trust National Association;
WHEREAS, pursuant to the terms and conditions of the Indenture, the
Company will issue its 9 1/2% Senior Secured Notes due 2004 (the "New Notes"),
which notes will be exchanged (such exchange, the "Exchange") for the Company's
9 1/2% Senior Notes due 2004 (the "Old Notes");
WHEREAS, subject to the terms and conditions of the Warrant Agreement
(as defined below), the Company is issuing to the holders of the New Notes
warrants (the "Warrants") to subscribe in the aggregate for up to 10% of the
Common Stock (as defined below) issued and outstanding on the date hereof;
WHEREAS, to induce the holders of the Old Notes to accept the issuance
of the New Notes and the Warrants by the Company as part of the Exchange, the
Company shall undertake (i) to register the resale of the Registrable Securities
(as hereinafter defined) under the Securities Act (as hereinafter defined) by
those holders of Registrable Securities who acquire Warrants in connection with
the Exchange, and (ii) to take certain other actions with respect to the
Registrable Securities as provided herein.
NOW THEREFORE, in consideration of the premises and the mutual
agreements contained herein, the parties hereby agree as follows:
1. DEFINITIONS
Unless otherwise defined herein, capitalized terms used herein and in
the recitals above shall have the following meanings:
"Advice" shall have the meaning assigned to that term in Section
5 hereof.
"Affiliates" of a Person shall mean any Person that controls, is
under common control with, or is controlled by, such other Person. For purposes
of this definition, "control" means the ability of one Person to direct the
management and policies of another Person.
"Agents" shall mean any Person authorized to act and who acts on
behalf of the Holders with respect to the transactions contemplated by this
Agreement.
"Commission" shall mean the United States Securities and Exchange
Commission.
"Common Stock" shall mean the common stock, par value $0.01 per
share, of the Company, as adjusted to reflect any merger, consolidation,
recapitalization, reclassification, split-up, stock dividend, rights offering or
reverse stock split made, declared or effected with respect to such Common
Stock.
"Company Notice" shall have the meaning set forth in Section 4
hereof.
"Demand Registration" shall have the meaning assigned to that
term in Section 3(a) hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder, or any similar or successor
statute.
"Holders" shall mean the Persons who are deemed to be the
original parties to this Agreement pursuant to Section 2(a) (other than the
Company and the Warrant Agent) and Persons who acquire Warrants or Registrable
Securities, directly or indirectly, from any of such original parties.
"Initiating Holders" shall have the meaning assigned to that term
in Section 3(a) hereof.
"Person" shall mean an individual, corporation, partnership,
limited liability company, firm, joint venture, association, joint stock
company, trust, unincorporated organization, governmental or regulatory body or
subdivision thereof or other entity.
"Piggyback Registration Statement" shall have the meaning set
forth in Section 4 hereof.
"Prospectus" shall mean the prospectus included in any
Registration Statement, as amended or supplemented by any prospectus supplement
with respect to the terms of the offering of any portion of the Registrable
Securities covered by the Registration Statement and all other amendments and
supplements to the Prospectus, including post-effective amendments and all
material incorporated by reference in such Prospectus.
"Registrable Securities" shall mean (i) any issued and
outstanding Warrant Shares and any Warrant Shares which may be acquired by the
Holders upon exercise of the Warrants and (ii) any other securities of the
Company (or any successor or assign of the Company, whether by merger,
consolidation, sale of assets or otherwise) which may be issued or issuable to
the Holders with respect to, in exchange for, or in substitution of, the
Warrants and/or the Registrable Securities referenced in clause (i) above by
reason of any dividend or stock split, combination of shares, merger,
consolidation, recapitalization, reclassification, reorganization, sale of
assets or similar transaction. As to any particular Registrable Securities, such
securities shall cease to be Registrable Securities for so long as (A) a
registration statement with respect to the sale of such securities shall have
been declared effective under the Securities Act and such securities shall have
been disposed of in accordance with such registration statement, (B) such
securities are sold to the public pursuant to Rule 144 (or any similar
provisions then in force) under the Securities Act, (C) in the reasonable
judgment of the Holder of such securities, such securities may be sold by the
Holder thereof pursuant to Rule 144(k) (or any similar provisions then in force)
under the Securities Act, (D) such securities have been otherwise transferred, a
new certificate or other evidence of ownership for them not bearing the legend
restricting further transfer shall have been delivered by the Company and in the
reasonable judgment of the Holder of such securities subsequent public
distribution of them shall not require registration under the Securities Act, or
(E) such securities shall have ceased to be outstanding.
"Registration Expenses" shall mean all expenses incident to the
Company's performance of or compliance with this Agreement, including without
limitation all registration and filing fees, including with respect to filings
required to be made with any stock exchange on which the Company's securities
are then listed, fees and expenses of compliance with securities or blue sky
laws (including reasonable fees and disbursements of counsel for the
underwriters in connection with blue sky qualifications of the Registrable
Securities and determination of their eligibility for investment under the laws
of such jurisdictions as the managing underwriters or holders of a majority of
the Registrable Securities being sold may designate), printing expenses,
messenger, telephone and delivery expenses, the fees, disbursements and other
charges of counsel for the Company and of its independent public accountants,
including the expenses incurred in connection with "cold comfort" letters
required by or incident to such performance and compliance, any expenses of
underwriters customarily paid by issuers or sellers of securities and the
reasonable fees, disbursements and other charges of one firm of counsel (per
registration prepared) to all Holders of Registrable Securities being sold
(selected by the Holders holding a majority of the shares of Registrable
Securities covered by such registration), but excluding underwriting discounts,
commissions, underwriting or advisory fees, brokers' fees or fees of other
similar securities industry professionals relating to the distribution of
Registrable Securities and applicable transfer taxes, if any, which discounts,
commissions, fees and transfer taxes shall be borne by the seller or sellers of
Registrable Securities in all cases.
"Registration Statement" shall mean any registration statement of
the Company which covers Registrable Securities pursuant to the provisions of
this Agreement, including (i) the Prospectus, (ii) amendments and supplements to
such Registration Statement, (iii) post-effective amendments, (iv) all exhibits
and all material incorporated by reference in such Registration Statement, (v)
any registration statement pursuant to a Demand Registration and (vi) any
Piggyback Registration Statement.
"Requesting Holders" shall have the meaning assigned to that term
in Section 5 hereof.
"Securities Act" shall mean the Securities Act of 1933, as
amended, and the rules and regulations thereunder, or any similar or successor
statute.
"Underwriters' Maximum Number" shall have the meaning assigned to
that term in Section 3(d) hereof.
"Underwritten Offering" shall mean the offering and sale of
securities of the Company covered by any Registration Statement pursuant to a
firm commitment underwriting to an underwriter at a fixed price for reoffering
or pursuant to agency or best efforts arrangements with an underwriter.
"Warrant Shares" shall mean the shares of Common Stock issuable
upon exercise of the Warrants.
"Warrant Agreement" shall mean that certain Warrant Agreement
dated as of the date hereof by and between the Company and the Warrant Agent.
"Warrants" shall having the meaning set forth in the recitals
above.
2. PARTIES TO THIS AGREEMENT; SECURITIES SUBJECT TO THIS AGREEMENT. (a) The
Company and the other parties hereto agree that any Person acquiring Warrants in
connection with the Exchange pursuant to the Warrant Agreement shall be deemed
to be parties to this Agreement and they (and their permitted transferees (as
more fully set forth in Section 13(d)) shall be entitled to the rights and
subject to the obligations set forth herein.
(b) The Holders of Registrable Securities shall be entitled to the
benefits of this Agreement only for so long as such securities continue to be
Registrable Securities.
3. DEMAND REGISTRATION.
(a) REQUESTS FOR REGISTRATION. At any time after the date hereof, the
Holders owning 25% or more of the Registrable Securities then outstanding (the
"Initiating Holders") may deliver to the Company a written request for
registration with the Commission under and in accordance with the provisions of
the Securities Act of all or part of their Registrable Securities (a "Demand
Registration"). Any request made pursuant to this Section 3(a) shall specify the
number of Registrable Securities to be registered and the intended methods of
disposition thereof. Any such request shall be delivered to the Company and the
other Holders, in accordance with the provisions of Section 13(c) of this
Agreement. Upon the receipt of such notice from the Initiating Holders that they
have requested a Demand Registration, each of such other Holders shall be
entitled for a period of 15 days from the date of receipt of such notice to
deliver a written request to the Company specifying the number of such Holders
Registrable Securities to be included in such Demand Registration and the
intended methods of disposition thereof.
(b) LIMITATIONS ON REGISTRATIONS. The Company will not be obligated to
register any Registrable Securities pursuant to such a Demand Registration (i)
unless there is requested to be included in such registration at least 25% of
the Registrable Securities then outstanding or (ii) if a prior Demand
Registration was declared effective within a period commencing 6 months prior to
the date of the written request for such Demand Registration and such prior
Demand Registration was maintained effective for a period of not less than 180
days, or such shorter period during which all Registrable Securities covered by
such prior Demand Registration were sold or withdrawn. Notwithstanding the
foregoing, in no event shall the Company be required to effect more than a total
of four Demand Registrations pursuant to this Agreement.
(c) EFFECTIVE REGISTRATION - EXPENSES. In any registration initiated
as a Demand Registration, the Company shall pay all Registration Expenses.
(d) PRIORITY ON DEMAND REGISTRATIONS. If any Demand Registration is an
Underwritten Offering, and the managing underwriters shall give written advice
to the Company and the Holders requesting such Demand Registration that, in the
reasonable opinion of such managing underwriters, marketing factors require a
limitation on the total number of securities to be underwritten (the
"Underwriters' Maximum Number"), the Company shall be obligated and required to
include in such registration that number of Registrable Securities requested by
the Holders thereof to be included in such registration which does not exceed
the Underwriters' Maximum Number, and such number of Registrable Securities
shall be allocated PRO RATA among such Holders requesting such Demand
Registration on the basis of the number of Registrable Securities requested to
be included therein by each Holder.
(e) SELECTION OF UNDERWRITERS. If any of the Registrable Securities
covered by a Demand Registration are to be sold in an Underwritten Offering, or
in a best efforts Underwritten Offering, the investment banker or investment
bankers and manager or managers that will administer the offering will be
selected by the Holders requesting such registration subject to the approval of
the Company, which approval shall not be unreasonably withheld.
4. PIGGYBACK REGISTRATION RIGHTS
(a) REQUESTS FOR PIGGYBACK REGISTRATION. The Company covenants and
agrees with each Holder that in the event the Company proposes to file at any
time and from time to time after the date hereof a registration statement on any
form, including any Demand Registration, for the registration of securities
under the Securities Act (whether or not pursuant to registration rights granted
to other holders of its securities and whether or not for sale for its own
account) of any class of security other than in connection with an offering
solely to the Company's employees pursuant to a registration statement on Form
S-8 under the Securities Act or an offering pursuant to a registration statement
on Form S-4 under the Securities Act, or any successor forms thereto (a
"Piggyback Registration Statement"), then the Company shall in each such case
give written notice (a "Company Notice") of such proposed filing to each Holder
so that the Company Notice is received by each Holder at least twenty (20)
calendar days before the anticipated filing date, and such notice shall offer to
each Holder the opportunity to include in such Piggyback Registration Statement
such number of Registrable Securities as each may request. The Company shall be
obligated and required to include in such Piggyback Registration Statement all
Registrable Securities with respect to which the Company shall receive from
Holders thereof, within twenty (20) days after the date on which the Company
shall have given Company Notices to the Holders, the written requests of such
Holders for inclusion in such Piggyback Registration Statement. Any Holder shall
be permitted to withdraw all or part of the Registrable Securities of such
Holder from any Piggyback Registration Statement at any time prior to the
effective date of such Piggyback Registration Statement.
In the event a registration pursuant to a Piggyback Registration
Statement is an Underwritten Offering, the Company shall use its best efforts to
cause the underwriter of such offering to permit the Holders to include their
Registrable Securities in the proposed offering on terms and conditions at least
as favorable to the Holders as those offered with respect to the other
securities of the Company included therein. Notwithstanding the foregoing, if
any underwriter shall advise the Company in writing that, in its opinion, the
distribution of the Registrable Securities requested to be included in the
Piggyback Registration Statement concurrently with the securities being
registered by the Company would adversely affect the distribution of such
securities by the Company, then the Company shall include in such registration,
to the extent of the number and type of securities which the Company is so
advised can be sold in such offering, (i) first, securities, if any, that the
Company proposes to issue and sell for its own account, (ii) second, securities
held by persons who do not have contractual registration rights and (iii) third,
securities requested to be registered by persons who have contractual
registration rights including pursuant to this Section 4, PRO RATA among the
holders so requesting registration on the basis of the number of shares of
Registrable Securities requested to be registered by all such holders; PROVIDED,
HOWEVER, that if the Company undertakes such registration on behalf of holders
of equity securities of the Company other than Holders or the Xxxxxx
Stockholders (as defined in the Warrant Agreement) (the "Other Equityholders")
pursuant to contractual demand registration rights granting such Other
Equityholders priority in the registration of their securities over those held
by other securityholders, then the Company shall include in such registration,
to the extent of the number and type of securities which the Company is so
advised can be sold in such offering, (i) first, the number of equity securities
requested to be included therein by the Other Equityholders and (ii) second,
Registrable Securities requested to be registered by the Holders pursuant to
this Section 4, PRO RATA among the Holders so requesting registration on the
basis of the number of shares of Registrable Securities requested to be
registered by all such Holders.
(b) ADDITIONAL OBLIGATIONS OF THE COMPANY. In connection with the
registration of Registrable Securities in accordance with Section 4(a) above,
the Company agrees to pay all Registration Expenses in connection with the
registration of the Registrable Securities under the Securities Act, other than
the registration and filing fees and any underwriters' discounts and commissions
with respect to the Registrable Securities and the fees and expenses of counsel
for the Requesting Holders which shall be borne PRO RATA by the Requesting
Holders.
(c) UNDERWRITING AGREEMENTS. In connection with any underwritten
offering pursuant to a registration statement filed pursuant to this Section 4,
the Holders participating in such offering shall enter into an underwriting
agreement in customary form containing such representations, warranties and
indemnification and contribution provisions as shall be reasonably requested by
the underwriters.
5. REGISTRATION PROCEDURES
Whenever one or more Holders (the "Requesting Holders") have made a
request that any Registrable Securities be registered pursuant to this
Agreement, the Company shall use its best efforts to effect the registration
under the Securities Act of all Registrable Securities which the Company has
been so requested to register to the extent required to permit the intended
disposition thereof, and pursuant thereto the Company shall as expeditiously as
possible:
(a) with respect to a request to file a Registration Statement
covering Registrable Securities made pursuant to Section 3 hereof, use its best
efforts to prepare and file with the Commission, not later than 60 days after
receipt of such request (which 60-day period may be extended by the Company for
up to one additional period of 60 days if at the time of such request the board
of directors of the Company determines in good faith that such registration is
likely to have an adverse effect on a material merger, acquisition or other form
of material business combination) a Registration Statement on a form for which
the Company then qualifies which is satisfactory to the Company and the
Requesting Holders (unless the offering is made on an underwritten basis,
including on a best efforts underwriting basis, in which event the managing
underwriter or underwriters shall determine the form to be used) and which form
shall be available for the sale of the Registrable Securities in accordance with
the intended method or methods of distribution thereof, and use its best efforts
to cause such Registration Statement to become effective. The Company hereby
covenants that the Registration Statement shall be declared effective by the
Commission no later than 120 days after the date on which it is filed. The
Company shall not file any Registration Statement pursuant to Section 3 hereof
or any amendment thereto or any Prospectus or any supplement thereto (including
such documents incorporated by reference) to which the Requesting Holders or the
underwriters, if any, shall reasonably object in light of the requirements of
the Securities Act or any other applicable laws or regulations;
(b) in connection with the preparation and filing of each Registration
Statement under the Securities Act, give each Requesting Holder, the
underwriters, if any, and their respective counsel and accountants the
opportunity to participate in the preparation of such Registration Statement,
each Prospectus included therein or filed with the Commission, and each
amendment thereof or supplement thereto, and shall give each Requesting Holder
and each underwriter such reasonable access to its books and records and such
reasonable opportunities to discuss the business of the Company with its
officers and the independent public accountants who have certified its financial
statements as shall be necessary, in the reasonable opinion of any such
Requesting Holder's and such underwriter's respective counsel, to conduct a
reasonable investigation within the meaning of the Securities Act;
(c) subject to paragraph (b) above, prepare and file with the
Commission such amendments and post-effective amendments to the Registration
Statement as may be necessary to keep the Registration Statement continuously
effective for a period of not less than 180 days or, in the case of a
registration statement for sale of Registrable Securities on a delayed or
continuous basis pursuant to Rule 415 promulgated under the Securities Act, such
longer period not to exceed two years from the effective date thereof as is
required for the intended method of distribution, or such shorter period which
will terminate when all Registrable Securities covered by such Registration
Statement have been sold or withdrawn; cause the Prospectus to be supplemented
by any required Prospectus supplement, and as so supplemented to be filed
pursuant to Rule 424 under the Securities Act; and comply with the provisions of
the Securities Act with respect to the disposition of all securities covered by
such Registration Statement during the applicable period in accordance with the
intended methods of disposition by the Requesting Holders thereof set forth in
such Registration Statement or supplement to the Prospectus;
(d) notify the Requesting Holders and the managing underwriters, if
any, promptly, and (if requested by any such Person) confirm such advice in
writing, (1) when the Prospectus or any Prospectus supplement or post-effective
amendment has been filed, and, with respect to the Registration Statement or any
post-effective amendment, when the same has become effective, (2) of any request
by the Commission for amendments or supplements to the Registration Statement or
the Prospectus or for additional information, (3) of the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement or the initiation of any proceedings for that purpose, (4) if at any
time the representations and warranties of the Company contemplated by paragraph
(o) below cease to be true and correct, (5) of the receipt by the Company of any
notification with respect to the suspension of the qualification of the
Registrable Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose, and (6) of the happening of any
event which makes any statement made in the Registration Statement, the
Prospectus or any document incorporated therein by reference untrue or which
requires the making of any changes in the Registration Statement, the Prospectus
or any document incorporated therein by reference in order to make the
statements therein not misleading;
(e) make every reasonable effort to obtain the withdrawal of any order
suspending the effectiveness of the Registration Statement at the earliest
possible moment;
(f) as promptly as practicable after filing with the Commission of any
document which is incorporated by reference into the Registration Statement or
the Prospectus (after initial filing of the Registration Statement) provide
copies of such document to counsel to the Requesting Holders and to the managing
underwriters;
(g) furnish to the Requesting Holders and each managing underwriter,
without charge, at least one signed copy of the Registration Statement and any
post-effective amendment thereto, including financial statements and schedules,
all documents incorporated therein by reference and all exhibits (including
those incorporated by reference) and a reasonable number of conformed copies of
all such documents;
(h) deliver to the Requesting Holders and the underwriters, if any, as
many copies of the Prospectus (including each preliminary prospectus) and any
amendment or supplement thereto as such Persons may request at such Requesting
Holder's or underwriter's expense; the Company consents to the use of the
Prospectus or any amendment or supplement thereto by the Requesting Holders and
the underwriters, if any, in connection with the offering and sale of the
Registrable Securities covered by the Prospectus or any amendment or supplement
thereto;
(i) prior to the date on which the Registration Statement is declared
effective, use its best efforts to register or qualify or cooperate with the
Requesting Holders and the underwriters, if any, and their respective counsel in
connection with the registration or qualification of such Registrable Securities
for offer and sale under the securities or blue sky laws of such jurisdictions
as any seller or underwriter reasonably requests in writing and do any and all
other acts or things necessary or advisable to enable the disposition in such
jurisdictions of the Registrable Securities covered by the Registration
Statement; provided that the Company will not be required to qualify generally
to do business in any jurisdiction where it is not then so qualified or to take
any action which would subject it to general service of process in any such
jurisdiction where it is not then so subject;
(j) cooperate with the Requesting Holders and the managing
underwriters, if any, to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be sold and not bearing any
restrictive legends; and enable such Registrable Securities to be in such
denominations and registered in such names as the managing underwriters may
request at least two business days prior to any sale of Registrable Securities
to the underwriters;
(k) use its best efforts to cause the Registrable Securities covered
by the Registration Statement to be registered with or approved by such other
governmental agencies or authorities within the United States as may be
necessary to enable the seller or sellers thereof or the underwriters, if any,
to consummate the disposition of such Registrable Securities;
(l) upon the occurrence of any event contemplated by paragraph (d)(6)
above, prepare a supplement or post-effective amendment to the Registration
Statement or the Prospectus or any document incorporated therein by reference or
file any other required document so that, as thereafter delivered to the
purchasers of the Registrable Securities, the Prospectus will not contain an
untrue statement of a material fact or omit to state any material fact necessary
to make the statements therein not misleading;
(m) use its best efforts to cause all Registrable Securities covered
by the Registration Statement to be listed on each securities exchange (or
qualified for inclusion on the Nasdaq Stock Market, as applicable) on which
similar securities issued by the Company are then listed (or qualified) or, if
not so listed (or qualified), then on each securities exchange (or the Nasdaq
Stock Market) as the Requesting Holders or the managing underwriters, if any,
may request, provided that the Company is qualified to list (or to qualify) its
securities on each such exchange (or stock market);
(n) provide a transfer agent and registrar for all Registrable
Securities;
(o) enter into such agreements (including an underwriting agreement)
and take all such other actions in connection therewith as the Requesting
Holders or the managing underwriters, if any, reasonably request in order to
expedite or facilitate the disposition of such Registrable Securities and in
such connection, whether or not an underwriting agreement is entered into and
whether or not the registration is an underwritten registration (1) make such
representations and warranties to the Requesting Holders and the underwriters,
if any, in form, substance and scope as are customarily made by issuers to
underwriters in primary underwritten offerings and confirm the accuracy of the
same if and when requested, and matters relating to the compliance of the
Registration Statement and the Prospectus with the Securities Act; (2) obtain
opinions of counsel to the Company and updates thereof (which counsel and
opinions (in form, scope and substance) shall be reasonably satisfactory to the
managing underwriters) addressed to the Requesting Holders and the underwriters,
if any, covering the matters customary in underwritten primary offerings and
such other matters as may be reasonably requested by the Requesting Holders and
underwriters, if any; (3) obtain "cold comfort" letters and updates thereof from
the Company's independent certified public accountants addressed to the
Requesting Holders and the underwriters, if any, such letters to be in customary
form and covering matters of the type customarily covered in "cold comfort"
letters by underwriters in connection with primary underwritten offerings; (4)
if an underwriting agreement is entered into, the same shall set forth in full
the indemnification provisions and procedures of Section 7 hereof with respect
to all parties to be indemnified pursuant to said Section; and (5) the Company
shall deliver such documents and certificates as may be requested by the
Requesting Holders and the managing underwriters, if any, to evidence compliance
with clause (1) above and with any customary conditions contained in the
underwriting agreement or other agreement entered into by the Company. The above
shall be done at each closing under such underwriting or similar agreement or as
and to the extent required thereunder;
(p) make available for inspection during normal business hours by the
Requesting Holders, any underwriter participating in any disposition pursuant to
such registration statement, and any attorney, accountant or other agent
retained by any such seller or underwriter, all financial and other records,
pertinent corporate documents and properties of the Company, and cause the
Company's officers, directors and employees to supply all information reasonably
requested by any such seller, underwriter, attorney, accountant or agent in
connection with such registration statement; PROVIDED, that any records,
information or documents that are designated by the Company in writing as
confidential shall be kept confidential by such Persons;
(q) otherwise use its best efforts to comply with all applicable rules
and regulations of the Commission, and make generally available to its security
holders, earnings statements satisfying the provisions of Section 11(a) of the
Securities Act, no later than 45 days after the end of any 12-month period (1)
commencing at the end of any fiscal quarter in which Registrable Securities are
sold to underwriters in a firm or best efforts underwriting offering, and (2)
beginning with the first month of the Company's first fiscal quarter commencing
after the effective date of the Registration Statement, which statements shall
cover said 12-month periods.
The Company may require the Requesting Holders to furnish to the
Company such information and documents regarding the distribution of such
securities and the seller as the Company may from time to time reasonably
request in writing.
The Requesting Holders each agree by acquisition of such Registrable
Securities that, upon receipt of any notice from the Company of the happening of
any event of the kind described in Section 5(d)(6) hereof, such Requesting
Holder will forthwith discontinue disposition of Registrable Securities until
such Requesting Holder's receipt of the copies of the supplemented or amended
Prospectus contemplated by Section 5(l) hereof, or until it is advised in
writing (the "Advice") by the Company that the use of the Prospectus may be
resumed, and has received copies of any additional or supplemental filings which
are incorporated by reference in the Prospectus, and, if so directed by the
Company, each Requesting Holder will, or will request the underwriters to,
deliver to the Company (at the Company's expense) all copies, other than
permanent file copies then in such Requesting Xxxxxx's possession, of the
Prospectus covering such Registrable Securities current at the time of receipt
of such notice. If the Company shall give such notice, the time periods
mentioned in Section 5(c) hereof shall be extended by the number of days during
the period from and including the date of the giving of such notice pursuant to
Section 5(d)(6) to and including the date when the Requesting Holders shall have
received the copies of the supplemented or amended prospectus contemplated by
Section 5(l) hereof or the Advice.
6. REGISTRATION EXPENSES The Company shall pay all Registration Expenses in
connection with any registration initiated pursuant to Section 3 hereof, whether
or not such registration shall become effective and whether or not all or any
portion of the Registrable Securities originally requested to be included in
such registration are ultimately included in such registration.
7. INDEMNIFICATION (a) INDEMNIFICATION BY COMPANY. The Company will indemnify
and hold harmless, to the full extent permitted by law, each Requesting Holder
and each other Person, if any, who controls such Requesting Holder (within the
meaning of the Securities Act), and their respective directors, officers,
partners, Agents and Affiliates against all losses, claims, damages, liabilities
(or actions in respect thereto) and expenses, including, without limitation, the
reasonable fees, disbursements and other charges of legal counsel and reasonable
costs of investigation (collectively, a "Loss" or "Losses"), to which any such
Person may be subject, under the Securities Act or otherwise, and reimburse all
such Persons for any other expenses incurred with investigating or defending
against any Losses, insofar as such Losses arise out of or are based upon any
untrue or alleged untrue statement of a material fact contained or incorporated
by reference in a Registration Statement, Prospectus or preliminary prospectus
or any omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
except insofar as the same arise out of or are based upon an untrue statement of
a material fact or omission of a material fact required to be stated therein or
necessary to make the statements therein not misleading, which statement or
omission is made therein in reliance upon and in conformity with information
furnished in writing to the Company by such Requesting Holder expressly for use
therein. The Company will also indemnify underwriters, selling brokers, dealer
managers and similar securities industry professionals participating in the
distribution, their officers and directors and each Person who controls such
Persons (within the meaning of the Securities Act) to the same extent as
provided above with respect to the indemnification of each Requesting Holder of
Registrable Securities.
(b) INDEMNIFICATION BY REQUESTING HOLDERS. Each Requesting Holder
will, severally and not jointly, indemnify and hold harmless, to the full extent
permitted by law, the Company and each directors, officers, employees and
Agents, each other Person, if any, who controls the Company (within the meaning
of the Securities Act) against any Losses to which any such Person may be
subject, under the Securities Act or otherwise, insofar as such Losses arise out
of or are based upon any untrue or alleged untrue statement of a material fact
contained in a Registration Statement or Prospectus or preliminary prospectus or
any omission or alleged omission of a material fact required to be stated
therein or necessary to make the statements therein not misleading, to the
extent, but only if and to the extent, that such untrue or alleged untrue
statement or omission or alleged omission is made therein in reliance upon and
in conformity with the information furnished in writing by such Requesting
Holder specifically for inclusion therein. In no event shall the liability of a
Requesting Holder hereunder be greater in amount than the dollar amount of the
proceeds received by such Requesting Holder upon the sale of the Registrable
Securities giving rise to such indemnification obligation. The Company shall be
entitled to receive indemnities from underwriters, selling brokers, dealer
managers and similar securities industry professionals participating in the
distribution, to the same extent as provided above with respect to information
so furnished in writing by such Persons.
(c) CONDUCT OF INDEMNIFICATION PROCEEDINGS. Promptly after receipt by
an indemnified party of notice of the commencement of any action or proceeding
involving a Loss referred to in the preceding subsections of this Section 7,
such indemnified party will, if a claim in respect thereof is to be made against
an indemnifying party, give written notice to the latter of the commencement of
such action; provided, however, that the failure of any indemnified party to
give notice as provided herein shall not relieve the indemnifying party of its
obligations under the preceding subsections of this Section 7, except to the
extent that the indemnifying party is actually materially prejudiced by such
failure to give notice. In case any such action is brought against an
indemnified party, the indemnifying party shall be entitled to participate in
and, unless in such indemnified party's reasonable judgment a conflict of
interest between such indemnified and indemnifying parties may exist in respect
of such Loss, to assume and control the defense thereof, in each case at its own
expense, jointly with any other indemnifying party similarly notified, to the
extent that it may wish, with counsel reasonably satisfactory to such
indemnified party, and after its assumption of the defense thereof, the
indemnifying party shall not be liable to such indemnified party for any legal
or other expenses subsequently incurred by the latter in connection with the
defense thereof other than reasonable costs of investigation. No indemnifying
party shall be liable for any settlement of any such action or proceeding
effected without its written consent, which shall not be unreasonably withheld.
No indemnifying party shall, without the consent of the indemnified party,
consent to entry of any judgment or enter into any settlement which does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such indemnified party of a release from all liability in respect of such
Loss or which provides any relief other than money damages.
(d) If the indemnification provided for in this Section 7 shall for
any reason be unavailable to an indemnified party under subsection (a) or (b) of
this Section 6 in respect of any Losses, then, in lieu of the amount paid or
payable under subsection (a) or (b) of this Section 7, the indemnified party and
the indemnifying party under subsection (a) or (b) of this Section 7 shall
contribute to the aggregate Losses (including legal or other expenses reasonably
incurred in connection with investigating the same) in such proportion as is
appropriate to reflect the relative fault of the Company and the prospective
sellers of Registrable Securities covered by the registration statement which
resulted in such Loss or action in respect thereof, with respect to the
statements, omissions or action which resulted in such Loss or action in respect
thereof. No Person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from any
Person who was not guilty of such fraudulent misrepresentation. In no event
shall the liability of a Requesting Holder hereunder be greater in amount than
the dollar amount of the proceeds received by such Requesting Holder upon the
sale of the Registrable Securities giving rise to such indemnification
obligation. No Person shall be obligated to contribute hereunder any amounts in
payment for any settlement of any action or Loss effected without such Person's
consent, which shall not be unreasonably withheld.
8. REGISTRATION RIGHTS TO OTHERS. If the Company shall at any time hereafter
provide to any holder of any securities of the Company rights with respect to
the registration of such securities under the Securities Act or the Exchange
Act, such rights shall not be in conflict with or adversely affect any of the
rights provided in this Agreement to the Holders.
9. ADJUSTMENTS AFFECTING REGISTRABLE SECURITIES. The Company shall not effect or
permit to occur any combination, subdivision or reclassification of Registrable
Securities that would materially adversely affect the ability of the Holders to
include Registrable Securities in any registration of its securities under the
Securities Act contemplated by this Agreement.
10. RULE 144 AND RULE 144A. The Company shall take all actions reasonably
necessary (including, without limitation, all actions necessary to cause the
Company to be eligible to register its securities on Form S-3 if they are
otherwise eligible to be so registered) to enable Holders to sell Registrable
Securities without registration under the Securities Act within the limitations
of the exemptions provided by (a) Rule 144 under the Securities Act, as such
Rule may be amended from time to time, (b) Rule 144A under the Securities Act,
as such Rule may be amended from time to time, or (c) any similar rules or
regulations hereafter adopted by the Commission, including, without limitation,
filing on a timely basis all reports required to be filed under the Exchange
Act. Upon the request of any Holder, the Company shall deliver to such Holder a
written statement as to whether it has complied with such requirements.
11. AMENDMENTS AND WAIVERS. Any provision of this Agreement may be amended,
modified or waived if, but only if, the written consent to such amendment,
modification or waiver has been obtained from the Company and the Holder or
Holders of at least 50% of the of Registrable Securities affected by such
amendment, modification or waiver.
12. NOMINEES FOR BENEFICIAL OWNERS. In the event that any Registrable Security
is held by a nominee for the beneficial owner thereof, the beneficial owner
thereof may, at its election in writing delivered to the Company and, if
requested by the Company, become a party to this Agreement, be treated as the
Holder of such Registrable Security for purposes of any request or other action
by any Holder or Holders pursuant to this Agreement or any determination of the
number or percentage of shares of Registrable Securities held by any Holder or
Holders contemplated by this Agreement. If the beneficial owner of any
Registrable Securities so elects, the Company may require assurances reasonably
satisfactory to it of such owner's beneficial ownership of such Registrable
Securities.
13. MISCELLANEOUS
(a) REMEDIES. Without limiting the rights of the Holders to pursue all
other legal and equitable remedies available for any breach of the provisions of
this Agreement, including recovery of damages, each Holder will be entitled to
specific performance of their rights under this Agreement. The Company expressly
agrees that monetary damages would not be adequate compensation for any loss
incurred by the Holders by reason of a breach by it of the provisions of this
Agreement and that the Holders would sustain irreparable harm, and therefore
further agrees that they shall be entitled to specific performance to prevent
any such breach or any continuing breach hereof and to waive the defense in any
action for specific performance that a remedy at law would be adequate.
(b) NO INCONSISTENT AGREEMENTS. The Company will not on or after the
date of this Agreement enter into any agreement with respect to its securities
which is inconsistent with the rights granted to Holders in this Agreement or
otherwise conflicts with the provisions hereof. The Company has not previously
entered into any agreement with respect to its securities granting any
registration rights to any Person.
(c) NOTICES. All notices, requests, demands and other communications
provided for by this Agreement shall be in writing (including telecopier or
similar writing) and shall be deemed to have been given three business days
after mailed in any general or branch office of the United States Postal
Service, enclosed in a registered or certified postpaid envelope, or one
business day after being sent by Federal Express or other similar overnight
courier service, addressed to the address of the parties stated below or to such
changed address as such party may have fixed by notice or, if given by
telecopier, when such telecopy is transmitted and the appropriate confirmation
is received.
(i) If to the Company:
Delta Financial Corporation.
0000 Xxxxxxxx Xxxx
Xxxxxxxx, Xxx Xxxx 00000
Attention: Mr. Xxxx Xxxxxx
Fax: (000) 000-0000
with a copy to:
Stroock & Stroock & Xxxxx LLP
000 Xxxxxx Xxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxxxx Xxxxxx, Esq.
Telecopier: (000) 000-0000
(ii) If to the Warrant Agent:
ChaseMellon Shareholder Services, L.L.C.
00 Xxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Ms. Xxxxxxx Xxxxxxxx
Fax: (000) 000-0000
(iii) All notices, requests, demands and other communications required
or permitted to be sent to the Holders shall be deemed given when sent to
the Warrant Agent as set forth above. Upon written request of the Company
(which the Company agrees it shall give), the Warrant Agent shall
distribute promptly to the Holders all such notices, requests, demands and
other communications to the addresses of the Holders on record with the
Company. The Warrant Agent shall have no other duties or responsibilities
under or pursuant to this Agreement except as set forth in this Section
13(c)(iii).
(d) SUCCESSORS AND ASSIGNS. This Agreement is solely for the benefit
of the parties, the Holders and their respective successors and assigns. Any
Holder may assign to any permitted transferee (as permitted under applicable
law) of its Registrable Securities where such securities continue to be
Registrable Securities in the hands of such transferee, such Holder's rights and
obligations under this Agreement, provided that such transferee shall agree in
writing with the parties hereto prior to the assignment to be bound by this
Agreement as if it were an original party hereto, whereupon such assignee shall
for all purposes be deemed to be a Holder under this Agreement. Except as
provided above or otherwise permitted by this Agreement, neither this Agreement
nor any right, remedy, obligation or liability arising hereunder or by reason
hereof shall be assignable by any Holder without the prior written consent of
the other parties hereto. The Company may not assign this Agreement or any
right, remedy, obligation or liability arising hereunder or by reason hereof.
Nothing herein shall be construed to provide any rights to any other entity or
individual.
(e) COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same document.
(f) HEADINGS. Section headings are for convenience only and do not
control or affect the meaning or interpretation of any terms or provisions of
this Agreement.
(g) GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of New York governing contracts to be made and
performed therein without giving effect to principles of conflicts of law, and,
with respect to any dispute arising out of this Agreement, each party hereby
consents to the exclusive jurisdiction of the courts sitting in such State.
(h) SEVERABILITY. Should any part, term, condition or provision hereof
or the application thereof be declared illegal, invalid or otherwise
unenforceable or in conflict with any other law by a court of competent
jurisdiction, the validity of the remaining parts, terms, conditions or
provisions of this Agreement shall not be affected thereby, and the illegal,
invalid or unenforceable portions of this Agreement shall be and hereby are
redrafted to conform with applicable law, while leaving the remaining portions
of this Agreement intact, except to the extent necessary to conform to the
redrafted portions hereof.
(i) ENTIRE AGREEMENT. This Agreement sets forth the entire agreement
and understanding between the parties and supersedes all proposals, commitments,
writings, negotiations, discussions, agreements and understandings, oral or
written, of every kind and nature between them concerning the subject matter
hereof. This Agreement may not be amended or otherwise modified except in a
writing signed by both parties hereto and by the holders of a majority in
principal amount of the outstanding New Notes. No discharge of the terms hereof
shall be deemed valid unless by full performance by the parties or by a writing
signed by the parties. A waiver by any party of any breach or violation of any
this Agreement shall not be deemed or construed as a waiver of any other breach
or violation hereof.
(j) FURTHER ASSURANCES. Each of the parties hereto shall execute such
documents and other papers and perform such further acts as may be reasonably
required or desirable to carry out the provisions of this Agreement and the
transactions contemplated hereby.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
DELTA FINANCIAL CORPORATION
By:
-------------------------------------
Name:
Title:
XXXXX XXXXXX SHAREHOLDER SERVICES, L.L.C.,
a New Jersey limited liability company,
as Warrant Agent
By:
-------------------------------------
Name:
Title:
Exhibit K to Indenture
ESCROW AGREEMENT
ESCROW AGREEMENT, dated as of November __, 2000 (this "Escrow
Agreement"), by and among Delta Financial Corporation, a Delaware corporation
(the "Company"), U.S. Bank Trust National Association, a national banking
association under the laws of the United States, as trustee under the Indenture
(as defined below) (the "Trustee"), and U.S. Bank Trust National Association, a
national banking association incorporated under the laws of the United States,
as escrow agent (the "Escrow Agent").
W I T N E S S E T H:
WHEREAS, contemporaneously with the execution of this Escrow
Agreement, the Company is entering into that certain Indenture dated as of the
date hereof (the "Indenture") among the Company, as issuer, each of Delta
Funding Corporation, a New York corporation, DF Special Holdings Corporation, a
Delaware corporation, Fidelity Mortgage, Inc., a Delaware corporation, DFC
Financial of Canada Limited, an Ontario, Canada corporation, DFC Funding of
Canada Limited, an Ontario, Canada corporation, Continental Property Management
Corp., a New York corporation, DFC Financial Corporation, a Delaware
corporation, Delta Funding Residual Holding Trust 2000-1, Delta Funding Residual
Holding Trust 2000-2 and the Trustee;
WHEREAS, pursuant to the terms and conditions of the Indenture, the
Company is issuing its 9 1/2% Senior Secured Notes due 2004 (the "Senior
Notes"), which notes will be exchanged (the "Exchange") for the Company's
outstanding 9 1/2% Senior Notes due 2004 (the "Old Notes");
WHEREAS, the Company is obligated under Section 4.24 of the Indenture
to deposit from time to time in escrow with the Escrow Agent funds (such funds,
including interest or dividends thereon, the "Escrow Amount") sufficient to meet
the Company's obligation to make payments of interest on the Senior Notes;
WHEREAS, the parties hereto desire to set forth the terms and
conditions under which the Escrow Amount shall be held by the Escrow Agent and
released by the Escrow Agent to the Trustee; and
WHEREAS, the parties desire that the Escrow Agent be appointed as
escrow agent to act in accordance with the terms hereof.
NOW, THEREFORE, in consideration of the foregoing and of the promises
contained herein, the parties, intending legally to be bound, agree as follows:
1. DEFINITIONS. Capitalized terms used herein and not otherwise
defined shall have the meanings ascribed thereto in the Indenture.
2. APPOINTMENT AND AGREEMENT OF ESCROW AGENT. The Company and the
Trustee hereby appoint the Escrow Agent to serve hereunder and the Escrow Agent
xxxxxx accepts such appointment and agrees to perform all duties which are
expressly set forth in this Escrow Agreement to be performed by it.
3. DEPOSIT OF THE ESCROW AMOUNT; PLEDGE. The Escrow Agent agrees to
establish a separate account (the "Escrow Account") in accordance with the terms
hereof. As required by Section 4.24 of the Indenture, the Company shall deposit
funds into the Escrow Account in an amount sufficient to pay the interest on the
Senior Notes due to be paid on the immediately upcoming Interest Payment Date.
All funds deposited into the Escrow Account shall be held by the Escrow Agent in
trust as agent for and for the benefit of the Trustee in accordance with the
terms and conditions hereof. As collateral security for all of the Guaranteed
Obligations (as that term is defined in the Indenture), the Company hereby
grants to the Trustee a lien and security interest in and to all funds, U.S.
Governmental Obligations, certificates of deposit, and other investments and
securities from time to time on deposit in (or which are proceeds of funds
deposited in) the Escrow Account, the earnings thereon, and the proceeds
thereof.
4. RECEIPT. The Escrow Agent agrees to hold and disburse the Escrow
Amount and all earnings it receives thereon in accordance with the terms
and conditions of this Escrow Agreement.
5. INVESTMENT. The Escrow Agent shall, pending the disbursement of the
Escrow Amount pursuant to this Escrow Agreement, invest such amounts in
accordance with the specific written instructions of the Company in (a) direct
obligations of, or obligations fully guaranteed by, the United States of America
or any agency thereof ("U.S. Government Obligations") having a maturity of not
longer than the period of time remaining prior to the next Interest Payment Date
which are rated "Aaa" by Xxxxx'x Investors Service, Inc. or a similar grade by
another nationally recognized statistical rating service, (b) certificates of
deposit having a maturity of not longer than the period of time remaining prior
to the next Interest Payment Date issued by commercial banks (which may include
the Escrow Agent) having a combined capital surplus and undivided profits of not
less than One Billion Dollars ($1,000,000,000), (c) money market funds investing
solely in any of the above or (d) other debt securities having a maturity of not
longer than the period of time remaining prior to the next Interest Payment Date
which are rated "Aaa" by Xxxxx'x Investors Service, Inc. or a similar grade by
another nationally recognized statistical rating service. Absent such written
instructions, the Escrow Agent shall have no obligation to invest (or otherwise
pay any interest on) the Escrow Account. The Escrow Agent shall have no
liability for any loss, tax, fee or other charge on any investment or
reinvestment, including any loss incurred upon liquidation of any investment
prior to maturity when necessary to make a disbursement pursuant to this Escrow
Agreement. All earnings received from (or losses incurred on) any such
investment shall be credited to (or debited from, as the case may be) the Escrow
Account (and earnings so received may be reinvested and treated in the same
manner).
6. EARNINGS ON THE ESCROW AMOUNT. All interest, dividends,
distributions, gains or other income in respect of the Escrow Amount
(collectively, "Interest") shall constitute part of the Escrow Amount and shall
be deposited in the Escrow Account (and, as provided above, may from time to
time be reinvested) until disbursed in accordance with the terms hereof.
7. DISBURSEMENT OF THE ESCROW AMOUNT. Subject to Section 8 of this
Escrow Agreement, on each Interest Payment Date the Escrow Agent shall (i)
disburse to the Trustee the entire Escrow Amount held in the Escrow Account
sufficient to pay the aggregate accrued interest on the Senior Notes due to be
paid on such Interest Payment Date, (ii) provided no Default or Event of Default
has occurred and is continuing, all as set forth in an Officers' Certificate to
the Escrow Agent dated as of the Interest Payment Date, remit to the Company all
remaining interest or other earnings (after payment to the Trustee pursuant to
subsection (i) above), if any, remaining on deposit (the "Remaining Earnings")
in the Escrow Account.
8. DEFAULT UNDER THE INDENTURE. Notwithstanding any provisions in this
Escrow Agreement to the contrary, upon receipt by the Escrow Agent of a notice
from any of the Trustee, the Collateral Trustee, the Warrant Agent, the Owner
Trustee, the Administrator or Holders or Beneficial Holders of at least 25% in
aggregate principal amount of the Senior Notes then outstanding that a Default
or an Event of Default has occurred, then the Escrow Agent shall not remit the
Remaining Earnings to the Company unless and until (i) the Escrow Agent receives
written notice from the Trustee that such Default or Event of Default has been
cured or waived and (ii) the Company provides to the Escrow Agent an Officers'
Certificate certifying that there is then no Default or Event of Default that
has occurred and that is then continuing which has not been cured or waived.
Notwithstanding any provision in this Escrow Agreement to the contrary, upon
receipt of a notice from any of the Trustee or the Holders or Beneficial Holders
of at least 25% of the then outstanding Senior Notes that the Senior Notes have
been or thereby are declared to be due and payable immediately, the Escrow Agent
shall forthwith remit all Remaining Earnings to the Trustee for application in
accordance with Section 6.10 of the Indenture.
9. DISPUTE RESOLUTION. In the event of any disagreement between any of
the parties to this Escrow Agreement, or between them or any of them and any
other party, resulting in adverse claims or demands being made in connection
with the subject matter of the escrow, or in the event that the Escrow Agent,
reasonably and in good faith, shall be in doubt as to what action it should take
hereunder, the Escrow Agent may, at its option, refuse to comply with any claims
or demands on it, or refuse to take any action hereunder so long as such
disagreement continues or such doubt exists, and in any such event, the Escrow
Agent shall not be liable in any way or to any Person for its failure or refusal
to act, and the Escrow Agent shall be entitled to continue so to refrain from
acting until (a) the rights of all parties shall have been fully and finally
adjudicated by a court of competent jurisdiction, or (b) all differences and all
doubt shall have been resolved by agreement among all of the interested Persons,
and the Escrow Agent shall have been notified thereof in writing signed by all
such Persons; PROVIDED, HOWEVER, that the Escrow Agent shall be under no
obligation to commence or defend such proceedings. The rights of the Escrow
Agent under this Section are cumulative of all other rights it may have by law
or otherwise.
10. COMPENSATION. The Escrow Agent shall be entitled to compensation
for its services hereunder in accordance with Schedule 1 annexed hereto, which
schedule may be subject to change (upon written notice to the Company) on an
annual basis. In addition, the Escrow Agent shall be entitled to prompt
reimbursement upon demand for all expenses incurred in connection with the
acceptance, administration or enforcement of this Escrow Agreement, including,
without limitation, payment of any legal fees and expenses incurred in
connection with the resolution of any claim by any party hereunder or the
execution of this Escrow Agreement. The Company agrees to pay the Escrow Agent
for any such compensation and expenses that may be due and payable from time to
time.
11. LIABILITY OF ESCROW AGENT. The Escrow Agent assumes no
responsibility or liability to the Company, the Trustee, the holder of the
Senior Notes or any other Persons, other than to deal with the Escrow Amount
held and received by it pursuant to the terms of this Escrow Agreement. The
Escrow Agent shall not be held liable for anything which it may do or refrain
from doing in connection herewith, except for actions or omissions to act that
constitute gross negligence or willful misconduct. The Company hereby covenants
and agrees to indemnify and hold harmless the Escrow Agent for and from any and
all liabilities, claims, losses, judgments or costs (including reasonable
attorneys' fees and expenses) regardless of their nature, arising out of or
because of this Escrow Agreement, except for actions or omissions to act that
constitute gross negligence or willful misconduct on the part of the Escrow
Agent. The foregoing indemnification shall survive the termination of this
Escrow Agreement and the resignation or removal of the Escrow Agent.
12. RESIGNATION OF ESCROW AGENT. The Escrow Agent may resign at any
time upon giving the parties hereto thirty (30) days' prior written notice. The
Escrow Agent shall continue to serve until its successor, appointed by notice of
the Company, accepts appointment as successor escrow agent and receives all
funds held in the Escrow Account. The holders of a majority in principal amount
of the outstanding Senior Notes may at any time remove the Escrow Agent by so
notifying the Company and the Trustee and may appoint a successor escrow agent
with the Company's consent, provided that after the occurrence of an Event of
Default, the Company's consent shall not be required. The Company may remove the
Escrow Agent if:
(1) the Escrow Agent fails to fulfill its obligations
hereunder;
(2) the Escrow Agent is adjudged a bankrupt or an insolvent;
(3) a receiver or other public officer takes charge of the
Escrow Agent or its property; or
(4) the Escrow Agent becomes incapable of acting.
If the Escrow Agent resigns or is removed or if a vacancy exists in
the office of Escrow Agent for any reason, each of the Company and the Escrow
Agent shall notify each Holder of such event and the holders of a majority in
principal amount of the Senior Notes shall promptly appoint a successor Xxxxxx
Agent. A successor Xxxxxx Agent shall deliver a written acceptance of its
appointment to the retiring Escrow Agent, the Trustee and the Company.
Immediately after that, the retiring Escrow Agent shall transfer all funds held
in the Escrow Account to the successor Escrow Agent, the resignation or removal
of the retiring Escrow Agent shall become effective, and the successor Escrow
Agent shall have all the rights, powers and duties of the Escrow Agent under
this Escrow Agreement. If a successor Xxxxxx Agent does not take office within
60 days after the retiring Escrow Agent resigns or is removed, the retiring
Escrow Agent, the Company or the Holders of at least 10% in principal amount of
the outstanding Senior Notes may petition any court of competent jurisdiction,
at the expense of the Company, for the appointment of a successor escrow agent.
The terms and conditions of this Escrow Agreement will remain unimpaired by
resignation of the Escrow Agent or the appointment of a successor escrow agent.
Following the appointment of a successor escrow agent, such person shall for all
intents and purposes of this Escrow Agreement be the "Escrow Agent" hereunder.
In the event that the Escrow Agent submits a notice of resignation, its only
duty, until a successor escrow agent shall have been appointed and shall have
accepted such appointment, shall be to hold, invest and dispose of the Escrow
Amount in accordance with this Escrow Agreement, but without regard to any
notices, requests, instructions, demands or the like received by it from the
other parties hereto after such notice shall have been given, unless the same is
a direction that the Escrow Amount be paid or delivered in its entirety out of
the Escrow Account.
13. RESPONSIBILITIES AND RIGHTS OF THE ESCROW AGENT. (a) The Escrow
Agent undertakes to perform only such duties as are expressly set forth herein.
No implied duties or obligations shall be read into this Escrow Agreement
against the Escrow Agent.
(b) The Escrow Agent shall not incur any liability with respect to (i)
any action taken or omitted in good faith upon the advice of its legal counsel
given with respect to any question relating to the duties and responsibilities
of the Escrow Agent under this Escrow Agreement, or (ii) any action taken or
omitted in reliance upon any instrument which the Escrow Agent shall in good
faith believe to be genuine (including the execution of such instrument, the
identity or authority of any person executing such instrument, its validity and
effectiveness, and the truth and accuracy of any information contained therein),
to have been signed by a proper person or persons and to conform to the
provisions of this Escrow Agreement.
(c) The Escrow Agent (i) shall in no instance be obligated to take any
legal or other action which in its reasonable judgment might involve any expense
or liability unless it shall have been furnished with acceptable security or
indemnification, and (ii) may consult with counsel satisfactory to it, including
in-house counsel, with respect to matters arising under this Escrow Agreement
and the opinion or advice of such counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or omitted
by it in good faith and in accordance with such opinion or advice.
14. TERMINATION. This Escrow Agreement shall terminate (a) upon
receipt by the Escrow Agent of written notice from the Trustee that all of the
Company's obligations under the Indenture and the Senior Notes have been
satisfied in full or (b) by written mutual consent signed by all parties hereto.
The parties hereto, other than the Escrow Agent, may terminate the appointment
of the Escrow Agent hereunder upon notice specifying the date upon which such
termination shall take effect. In the event of such termination, the other
parties hereto shall within thirty (30) days of such notice jointly appoint a
successor escrow agent and the Escrow Agent shall turn over to such successor
escrow agent the Escrow Account and any other amounts held by it pursuant to
this Escrow Agreement. Following the appointment of a successor escrow agent,
such person shall for all intents and purposes of this Escrow Agreement be the
"Escrow Agent" hereunder. Upon receipt of the Escrow Account and other amounts,
the successor escrow agent shall thereupon be bound by all of the provisions
hereof. This Escrow Agreement shall not be otherwise terminated.
15. NOTICES. Unless otherwise provided herein, any notice, request,
instruction or other document or communication to be given hereunder by any
party to any other party shall be in writing and shall be deemed to have been
given (a) if mailed, on the date received if mailed by registered or certified
mail (return receipt requested), (b) if sent by facsimile transmission, when so
sent and receipt acknowledged by an appropriate telephone or facsimile receipt
or (c) if sent by other means, when actually received by the party to which such
notice has been directed, in each case at the respective addresses or numbers
set forth below or such other address or number as such party may have fixed by
notice:
To the Company:
Delta Financial Corporation
0000 Xxxxxxxx Xxxx
Xxxxxxxx, Xxx Xxxx 00000
Attention: Mr. Xxxx Xxxxxx
Fax: (000) 000-0000
With a copy to:
Stroock & Stroock & Xxxxx LLP
000 Xxxxxx Xxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxxxx Xxxxxx, Esq.
Facsimile (000) 000-0000
To the Trustee and/or the Escrow Agent:
U.S. Bank Trust National Association
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Mr. Xxxx Xxxxxx
Fax: (000) 000-0000
With copies to:
Xxxxx, Xxxxxx & Xxxxxx, LLP
000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxx, Esq.
Fax: (000) 000-0000
16. BENEFIT AND ASSIGNMENT. This Escrow Agreement shall be binding
upon and inure to the benefit of the parties hereto, the Holders and their
respective successors and permitted assigns. This Escrow Agreement may not be
assigned or delegated by any party hereto without the prior written consent of
the other parties hereto.
17. ENTIRE AGREEMENT; AMENDMENT. This Escrow Agreement and the
Indenture contain all the terms agreed upon by the parties with respect to the
subject matter hereof and supersede any prior agreements with respect to the
subject matter hereof. This Escrow Agreement may be amended, waived, modified,
extended or discharged only by a written instrument signed by the parties
against which enforcement of any waiver, change, modification, extension or
discharge is sought. Notwithstanding the foregoing, no amendment to this Escrow
Agreement may be made without the prior written consent of the holders of a
majority in principal amount of the outstanding Senior Notes. No course of
conduct shall constitute a waiver of any terms and conditions (unless, and then
only to the extent, such waiver is in writing, in accordance with the preceding
sentence), and any waiver on any occasion shall not constitute a waiver with
respect to any other occasion (unless its terms expressly so provide).
18. HEADINGS. The headings of the sections and subsections of this
Escrow Agreement are for ease of reference only and do not evidence the
intentions of the parties.
19. GOVERNING LAW. This Escrow Agreement shall be governed by, and
interpreted in accordance with, the laws of the State of New York, regardless of
the laws that might otherwise govern under principles of conflicts of laws
applicable thereto.
20. COUNTERPARTS. This Escrow Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
21. TAX REPORTING. The parties hereto agree that, for tax reporting
purposes, interest or other income earned from the investment of the amounts in
the Escrow Account from time to time shall be allocable to the Company.
22. CERTIFICATION OF TAX IDENTIFICATION NUMBER. The parties hereto
agree to provide the Escrow Agent with a certified tax identification number by
signing and returning a Form W-9 (or Form W-8, in case of non-U.S. persons) to
the Escrow Agent prior to the date on which any income earned on the investment
of the Escrow Account is credited to such account. The parties hereto understand
that, in the event their tax identification numbers are not certified to the
Escrow Agent, the Internal Revenue Code, as amended from time to time, may
require withholding of a portion of any interest or other income earned on the
investment of the Escrow Account amounts.
23. TAX-RELATED COVENANTS. The Company agrees to assume any and all
obligations imposed now or hereafter by any applicable tax law with respect to
the payment of amounts held under this Escrow Agreement, and to indemnify and
hold the Escrow Agent harmless from and against any taxes, additions for late
payment, interest, penalties and other expenses, that may be assessed against
the Escrow Agent in any such payment or other activities under this Escrow
Agreement. The Company undertakes to instruct the Escrow Agent in writing with
respect to the Escrow Agent's responsibility for withholding and other taxes,
assessments or other governmental charges, certifications and governmental
reporting in connection with its acting as Escrow Agent under this Escrow
Agreement. The Company agrees to indemnify and hold the Escrow Agent harmless
from any liability on account of taxes, assessments or other governmental
charges, including, without limitation, the withholding or deduction or the
failure to withhold or deduct the same, and any liability for failure to obtain
proper certifications or to properly report to governmental authorities, to
which the Escrow Agent may be or become subject in connection with or which
arises out of this Escrow Agreement, including costs and expenses (including
reasonable legal fees and expenses), interest and penalties. The foregoing
indemnification shall survive the termination of this Escrow Agreement and the
resignation or removal of the Escrow Agent.
24. INTERMEDIARIES. The Escrow Agent shall have no more or less
responsibility or liability on account of any action or omission of any
book-entry depository or securities intermediary employed by the Escrow Agent
than any such book-entry depository or securities intermediary has to the Escrow
Agent, except to the extent that such action or omission of any book-entry
depository or agent was caused by the Escrow Agent's own gross negligence, bad
faith or willful misconduct.
25. REPRODUCTION OF DOCUMENTS. This Escrow Agreement and all documents
relating thereto, including, without limitation, (a) consents, waivers and
modifications which may hereafter be executed, and (b) certificates and other
information previously or hereafter furnished, may be reproduced by any
photographic, photostatic, microfilm, optical disk, micro-card, miniature
photographic or other similar process. The parties agree that any such
reproduction shall be admissible in evidence as the original itself in any
judicial or administrative proceeding, whether or not the original is in
existence and whether or not such reproduction was made by a party in the
regular course of business, and that any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence.
IN WITNESS WHEREOF, the parties have caused this Escrow Agreement to
be executed and delivered as of the day and year first written above.
DELTA FINANCIAL CORPORATION
By:
-----------------------------
Name:
Title:
U.S. BANK TRUST NATIONAL ASSOCIATION,
as Trustee
By:
-------------------------------
Name:
Title:
U.S. BANK TRUST NATIONAL ASSOCIATION,
as Escrow Agent
By:
--------------------------------
Name:
Title:
SCHEDULE 1
ESCROW AGENT'S FEE
