INDENTURE
AMERICAN BUSINESS FINANCIAL SERVICES, INC., as Obligor
$125,000,000.00
Unsecured, Subordinated Investment Notes
and
Unsecured, Adjustable Rate Subordinated Money Market Notes
-----------------------
-----------------------
FIRST TRUST, NATIONAL ASSOCIATION, a national banking association
as Trustee
Dated as of _______________, 1997
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TABLE OF CONTENTS
ARTICLE I. DEFINITIONS AND INCORPORATION BY REFERENCE............................................................1
Section 1.1 Definitions............................................................................1
Section 1.2 Other Definitions......................................................................5
Section 1.3 Incorporation by Reference of Trust Indenture Act......................................5
Section 1.4 Rules of Construction..................................................................5
ARTICLE II. THE SECURITIES.......................................................................................6
Section 2.1 Form and Dating........................................................................6
Section 2.2 Execution and Authentication...........................................................8
Section 2.3 Registrar and Paying Agent.............................................................8
Section 2.4 Paying Agent to Hold Money in Trust....................................................9
Section 2.5 Securityholder Lists...................................................................9
Section 2.6 Transfer and Exchange.................................................................10
Section 2.7 Payment of Principal and Interest; Principal and Interest Rights
Preserved...........................................................................11
Section 2.8 Replacement Securities................................................................13
Section 2.9 Outstanding Securities................................................................13
Section 2.10 Treasury Securities...................................................................13
Section 2.11 Temporary Securities.................................................................14
Section 2.12 Cancellation..........................................................................14
Section 2.13 Defaulted Interest....................................................................14
Section 2.14 Book Entry Registration...............................................................14
Section 2.15 Initial and Monthly Statements........................................................15
ARTICLE III. REDEMPTION.........................................................................................16
Section 3.1 Redemption of Investment Notes........................................................16
Section 3.2 Redemption of Money Market Notes......................................................16
ARTICLE IV. COVENANTS...........................................................................................17
Section 4.1 Payment of Securities.................................................................17
Section 4.2 Maintenance of Office or Agency.......................................................17
Section 4.3 SEC Reports and Other Reports.........................................................18
Section 4.4 Compliance Certificate................................................................19
Section 4.5 Stay, Extension and Usury Laws........................................................19
Section 4.6 Liquidation...........................................................................20
ARTICLE V. SUCCESSORS...........................................................................................20
Section 5.1 When the Company May Merge. etc.......................................................20
Section 5.2 Successor Corporation Substituted.....................................................20
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ARTICLE VI. DEFAULTS AND REMEDIES...............................................................................21
Section 6.1 Events of Default.....................................................................21
Section 6.2 Acceleration..........................................................................22
Section 6.3 Other Remedies........................................................................22
Section 6.4 Waiver of Past Defaults...............................................................22
Section 6.5 Control by Majority...................................................................23
Section 6.6 Limitation on Suits...................................................................23
Section 6.7 Rights of Holders to Receive Payment..................................................23
Section 6.8 Collection Suit by Trustee............................................................24
Section 6.9 Trustee May File Proofs of Claim......................................................24
Section 6.10 Priorities............................................................................25
Section 6.11 Undertaking for Costs.................................................................25
ARTICLE VII. TRUSTEE............................................................................................25
Section 7.1 Duties of Trustee.....................................................................25
Section 7.2 Rights of Trustee.....................................................................26
Section 7.3 Individual Rights of Trustee..........................................................27
Section 7.4 Trustee's Disclaimer..................................................................27
Section 7.5 Notice of Defaults....................................................................27
Section 7.6 Reports by Trustee to Holders.........................................................28
Section 7.7 Compensation and Indemnity............................................................28
Section 7.8 Replacement of Trustee................................................................29
Section 7.9 Successor Trustee by Merger, etc......................................................30
Section 7.10 Eligibility; Disqualification.........................................................30
Section 7.11 Preferential Collection of Claims Against Company.....................................30
ARTICLE VIII. DISCHARGE OF INDENTURE............................................................................30
Section 8.1 Termination of Company's Obligations..................................................30
Section 8.2 Application of Trust Money............................................................32
Section 8.3 Repayment to Company..................................................................32
Section 8.4 Reinstatement.........................................................................32
ARTICLE IX. AMENDMENTS..........................................................................................32
Section 9.1 Without Consent of Holders............................................................32
Section 9.2 With Consent of Holders...............................................................33
Section 9.3 Compliance with Trust Indenture Act...................................................35
Section 9.4 Revocation and Effect of Consents.....................................................35
Section 9.5 Notation on or Exchange of Investment Notes...........................................35
Section 9.6 Trustee to Sign Amendments, etc.......................................................36
ARTICLE X. SUBORDINATION........................................................................................36
Section 10.1 Agreement to Subordinate..............................................................36
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Section 10.2 Liquidation: Dissolution: Bankruptcy..................................................36
Section 10.3 Default of Designed Senior Debt.......................................................37
Section 10.4 When Distribution Must Be Paid Over...................................................38
Section 10.5 Notice by Company.....................................................................38
Section 10.6 Subrogation...........................................................................39
Section 10.7 Relative Rights.......................................................................39
Section 10.8 Subordination May Not Be Impaired by the Company or Holders of
Senior Debt.........................................................................39
Section 10.9 Distribution or Notice to Representative..............................................40
Section 10.10 Rights of Trustee and Paying Agent....................................................41
Section 10.11 Authorization to Effect Subordination.................................................41
Section 10.12 Article Applicable to Paying Agent....................................................41
Section 10.13 Miscellaneous.........................................................................41
ARTICLE XI. MISCELLANEOUS.......................................................................................42
Section 11.1 Trust Indenture Act Controls..........................................................42
Section 11.2 Notices...............................................................................42
Section 11.3 Communication by Holders with Other Holders...........................................43
Section 11.4 Certificate and Opinion as to Conditions Precedent....................................43
Section 11.5 Statements Required in Certificate or Opinion.........................................44
Section 11.6 Rules by Trustee and Agents...........................................................44
Section 11.7 Legal Holidays........................................................................44
Section 11.8 No Recourse Against Others............................................................44
Section 11.9 Duplicate Originals...................................................................45
Section 11.10 Governing Law.........................................................................45
Section 11.11 No Adverse Interpretation of Other Agreements.........................................45
Section 11.12 Successors............................................................................45
Section 11.13 Severability..........................................................................45
Section 11.14 Counterpart Originals.................................................................45
Section 11.15 Table of Contents, Headings, etc......................................................45
iii
CROSS-REFERENCE TABLE*
----------------------
Trust Indenture
Act Section Indenture Section
----------- -----------------
310(a)(1)............................................................7.10
(a)(2)...............................................................7.10
(a)(3)...............................................................N.A.
(a)(4)...............................................................N.A.
(a)(5)...............................................................N.A.
(b).............................................................7.8; 7.10
(c)..................................................................N.A.
311(a)...............................................................7.11
(b)..................................................................7.11
(c)..................................................................N.A.
312(a)................................................................2.5
(b)..................................................................11.3
(c)..................................................................11.3
313(a)................................................................7.6
(b)(1)...............................................................N.A.
(b)(2)................................................................7.6
(c).............................................................7.6; 11.2
(d)...................................................................7.6
314(a).....................................................4.3; 4.4; 11.2
(b)..................................................................N.A.
(c)(1)...............................................................11.4
(c)(2)...............................................................11.4
(c)(3)...............................................................N.A.
(d)..................................................................N.A.
(e)..................................................................11.5
(f)..................................................................N.A.
315(a).............................................................7.1(b)
(b).............................................................7.5; 11.2
(c)................................................................7.1(a)
(d)................................................................7.1(c)
(e)..................................................................6.11
316(a)(last sentence)................................................2.10
(a)(1)(A).............................................................6.5
(a)(1)(B).............................................................6.4
(a)(2)...............................................................N.A.
(b)...................................................................6.7
(c)..................................................................N.A.
317(a)(1).............................................................6.8
(a)(2)................................................................6.9
(b)...................................................................2.4
318(a)...............................................................11.1
N.A. means not applicable
* This Cross Reference Table is not part of the Indenture
iv
INDENTURE dated as of ___________, 1997, by American Business Financial
Services, Inc., a Delaware corporation (the "Company"), and First Trust,
National Association, a national banking association, a member of the First Bank
System and a Minnesota Trust Company, as trustee (the "Trustee").
The Company and the Trustee agree as follows for the benefit of each
other and for the equal and ratable benefit of the Holders of the Unsecured,
Subordinated Investment Notes and the Unsecured Adjustable Rate Subordinated
Money Market Notes of the Company issued pursuant to the Company's registration
statement on Form SB-2 declared effective by the Securities and Exchange
Commission on or about ____________, 1997 (collectively, the "Notes"):
ARTICLE I.
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.1 Definitions.
"Account" means the record of beneficial ownership of a Money Market
Note maintained by the Company.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" (including, with correlative meanings, the terms "controlling,"
"controlled by" and "under common control with"), as used with respect to any
Person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of such Person,
whether through the ownership of voting securities, by agreement or otherwise.
"Agent" means any Registrar, Paying Agent or co-registrar of the Notes.
"Board of Directors" means the Board of Directors of the Company or any
authorized committee of the Board of Directors.
"Business Day" means any day other than a Legal Holiday.
"Company" means American Business Financial Services, Inc., unless and
until replaced by a successor in accordance with Article V hereof and thereafter
means such successor.
"Corporate Trust Office" means the office of the Trustee at which the
corporate trust business of the Trustee shall, at any particular time, be
principally administered, which office is, at the date as of which this
Indenture is originally dated, located at 000 Xxxx 0xx Xxxxxx, Xxxxx Xxxx,
Xxxxxxxxx 00000, Attention: Xx. Xxxxxxx Xxxxxxxx, Corporate Finance.
"Default" means any event that is or with the passage of time or the
giving of notice or both would be an Event of Default.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"GAAP" means, as of any date, generally accepted accounting principles
set forth in the opinions and pronouncements of the Accounting Principles Board
of the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as approved by a significant segment of the
accounting profession, which are in effect from time to time.
"Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness.
"Holder" or "Securityholder" means a Person in whose name a Security is
registered.
"Indebtedness" means, with respect to any Person, any indebtedness of
such Person, whether or not contingent, in respect of borrowed money or
evidenced by bonds, notes, debentures or similar instruments or letters of
credit (or reimbursement agreements in respect thereof) or representing the
balance deferred and unpaid of the purchase price of any property (including
capital Lease obligations) or representing any hedging obligations, except any
such balance that constitutes an accrued expense or a trade payable, if and to
the extent any of the foregoing indebtedness (other than letters of credit and
hedging obligations) would appear as a liability upon a balance sheet of such
Person prepared in accordance with GAAP, and also includes, to the extent not
otherwise included, (a) the Guarantee of items that would be included within
this definition, and (b) liability for items that would arise by operation of a
Person's status as a general partner of a partnership.
"Indenture" means, this Indenture as amended or supplemented from time
to time.
"Interest Accrual Date" means with respect to any Security, the date
the Company accepts funds for the purchase of the Security if such funds are
received by 3:00 p.m. (EDT) on a Business Day, or if such funds are not so
received, on the next Business Day.
"Interest Accrual Period" means, as to each Security, the period from
the later of the Issue Accrual Date of such Security or the day after the last
Payment Date upon which an interest payment was made until the following Payment
Date during which interest accrues on each Security with respect to any Payment
Date.
"Investment Notes" or "Investment Note" means the Company's Unsecured
Subordinated Investment Note(s) issued under this Indenture.
"Issue Date" means, with respect to an Investment Note, the date on
which such Investment Note is first executed, authenticated and delivered and,
with respect to a Money Market Note, the date on which such Money Market Note is
initially registered on the books and records of the Registrar.
2
"Maturity Date" means, with respect to any Security, the date on which
the principal of such Security becomes due and payable as therein provided.
"Maturity Record Date" means, with respect to any Security, as of 11:59
p.m. of the date fifteen days prior to the Maturity Date or Redemption Date
applicable to such Security.
"Money Market Notes" or "Money Market Note" means the Company's
Unsecured Adjustable Rate, Subordinated Money Market Note(s) issued pursuant to
this Indenture.
"Notes" means the Company's Unsecured, Subordinated Investment Notes
and the Unsecured, Adjustable Rate, Subordinated Money Market Notes issued under
this Indenture.
"Obligations" means any principal, interest (including Post-Petition
Interest), penalties, fees, indemnifications, reimbursements, damages and other
liabilities payable under the documentation governing any Indebtedness.
"Officer" means the Chairman of the Board or principal executive
officer of the Company, the President or operating officer of the Company, the
Chief Financial Officer or principal financial officer of the Company, the
Treasurer, any Assistant Treasurer, Controller or principal officer of the
Company, Secretary or any Vice-President of the Company.
"Officers' Certificate" means a certificate signed by two Officers, one
of whom must be the principal executive officer, principal operating officer,
principal financial officer or principal accounting officer of the Company.
"Opinion of Counsel" means an opinion from legal counsel who is
reasonably acceptable to the Trustee. The counsel may be an employee of or
counsel to the Company or the Trustee.
"Payment Date" means the last day of each calendar month or such other
date as determined by the Holder and the Company as set forth in the Investment
Note or if such day is not a Business Day, the Business Day immediately
following such day and, with respect to a specific Security, the Maturity Date
or Redemption Date of such Security.
"Person" means any individual, corporation, partnership, joint venture,
association, joint stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Post-Petition Interest" means interest accruing after the commencement
of any bankruptcy or insolvency case or proceeding with respect to the Company
or any receivership, liquidation, reorganization or other similar case or
proceeding in connection therewith, at the rate applicable to such Indebtedness,
whether or not such interest is an allowable claim in any such proceeding.
"Redemption Date" has the meaning given in Article III hereof.
3
"Redemption Price" means, with respect to any Security to be redeemed,
the principal amount of such Security plus the interest accrued but unpaid
during the Interest Accrual Period up to the Redemption Date for such security.
"Regular Record Date" means, with respect to a particular Payment Date,
as of 11:59 p.m. of the date fifteen days prior to such Payment Date.
"Responsible Officer" when used with respect to the Trustee, means any
officer in its Corporate Trust Office, or any other assistant officer of the
Trustee in its Corporate Trust Office customarily performing functions similar
to those performed by the Persons who at the time shall be such officers,
respectively, or to whom any corporate trust matter is referred because of his
or her knowledge of and familiarity with the particular subject.
"SEC" means the Securities and Exchange Commission.
"Securities" means, the Notes issued pursuant to this Indenture.
"Senior Debt" means any Indebtedness (whether outstanding on the date
hereof or thereafter created) incurred by the Company in connection with
borrowings by the Company (including its subsidiaries) from a bank, trust
company, insurance company, any other institutional lender or other entity which
lends funds in connection with its primary business activities whether such
Indebtedness is or is not specifically designated by the Company as being
"Senior Debt" in its defining instruments.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. Sections
77aaa-77bbbb) as in effect on the date on which this Indenture is qualified
under the TIA.
"Total Permanent Disability" means a determination by a physician
chosen by the Company that the Holder of a Security, who was gainfully employed
on a full time basis at the Issue Date of such security is unable to work on a
full time basis during the succeeding twenty-four months. For purposes of this
definition, "working on a full time basis" shall mean working at least forty
hours per week.
"Trustee" means First Trust, National Association, a national banking
association, until a successor replaces it in accordance with the applicable
provisions of this Indenture and thereafter means the successor serving
hereunder.
"U.S. Government Obligations" means direct obligations of the United
States of America, or any agency or instrumentality thereof for the payment of
which the full faith and credit of the United States of America is pledged.
4
Section 1.2 Other Definitions.
Defined in
Term Section
---- -------
"Bankruptcy Law"................................................6.1
"Custodian".....................................................6.1
"Event of Default"..............................................6.1
"Legal Holiday"................................................11.7
"Paying Agent"..................................................2.3
"Payment Blockage Period"......................................10.3
"Payment Notice"...............................................10.3
"Registrar".....................................................2.3
Section 1.3 Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision
is incorporated by reference in and made a part of this Indenture. The following
TIA terms used in this Indenture have the following meanings:
"indenture securities" means the Securities;
"indenture security holder" means a Securityholder;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the
Trustee;
"obligor" on the Securities means the Company or any successor
obligor upon the Securities.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule under the TIA
have the meanings so assigned to them.
Section 1.4 Rules of Construction.
Unless the context otherwise requires:
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;
5
3. references to GAAP, as of any date, shall mean GAAP in
effect in the United States as of such date;
4. "or" is not exclusive,
5. words in the singular include the plural, and in the plural
include the singular; and
6. provisions apply to successive events and transactions.
ARTICLE II.
THE SECURITIES
Section 2.1 Form and Dating.
The Investment Notes and the Trustee's certificate of authentication
shall be substantially in the form of Exhibit A hereto, the terms of which are
incorporated in and made a part of this Indenture. The outstanding aggregate
principal amount of Securities outstanding at any time is limited to $125.0
million, provided, however, that the Company and the Trustee may, without the
consent of any Holder, increase such aggregate principal amount of Securities
which may be outstanding at any time. The Securities may have notations, legends
or endorsements required by law, stock exchange rule, agreements to which the
Company is subject or usage. Each Investment Note shall be dated the date of its
authentication. Each Investment Note shall be in such denomination as may be
designated from time to time by the Company but in no event in a denomination
less than $1,000. Each Investment Note shall have a term of not less than three
months and not greater than ten years as shall be designated by the Company from
time to time.
Except as provided in Section 2.14 hereof, each Money Market Note shall
not be evidenced by a promissory note. The record of beneficial ownership of the
Money Market Notes shall be maintained and updated by the Company through the
establishment and maintenance of Accounts. Each Money Market Note shall be in
such denominations as may be designated from time to time by the Company but in
no event in an original denomination less than $2,500. Each Money Market Note
shall have no stated term to maturity and shall be redeemable in increments of
$500 (except in the case of the redemption of the entire account) at the option
of the Holder upon not less than 10 Business Days written notice to the Company
as provided in Article III of this Indenture. Each Money Market Note shall also
be redeemable by the Company upon 30 days written notice to the Holder thereof.
Each Security shall bear interest from and commencing on its Interest
Accrual Date at such rate of interest as the Company shall determine from time
to time; provided, however, that the interest rate will be fixed for the term of
the Investment Notes upon issuance, subject to change upon extension and the
interest rate on the Money Market Notes shall adjust on the first and fifteenth
day of each calendar month provided that such interest rate shall not be less
than the average yield of the 91 day U.S. Treasury Bill for the preceding
eight-week period as published by the Federal Reserve Board.
6
Interest on an Investment Note with a term of six (6) months or less
will compound daily and be payable at maturity. Interest on an Investment Note
of longer duration will compound daily and the Holder thereof may elect to have
interest paid monthly, on the fifteenth day of each calendar month, quarterly,
on January 15, April 15, July 15 and October 15, semi-annually, on January 15
and July 15, annually, on January 15, or upon maturity. A Holder may change this
election once during the term of the Investment Note.
Interest on a Money Market Note shall compound daily and will be
payable in the form of additional notes. Interest shall be payable on a monthly
basis at the end of each calendar month on any Account with a balance of $1,000
or more. No interest will be paid on any Account for any day during which the
principal balance of such account is less than $1,000.
The Company will give each Holder of an Investment Note (existing as of
the applicable Maturity Record Date) a written notice at least seven days prior
to the Maturity Date of the Investment Note held by such Holder reminding such
Holder of the pending maturity of the Investment Note and noticing the Holder of
the Company's intention to repay, or if the Company does not intend to repay the
Investment Note, reminding the Holder that the automatic extension provision
described in the next paragraph will take effect unless the Holder requests
payment. Such notice shall also state that payment of principal of an Investment
Note be made upon presentation and surrender of such Investment Note and shall
specify the place where such Investment Note may be presented and surrendered
for the making of such payment. If the Company gives notice to a Holder of the
Company's intention to repay an Investment Note at maturity, no interest will
accrue after the Maturity Date for such Investment Note. Otherwise, if a Holder
requests repayment within seven days after the Maturity Date, the Company will
pay interest on the Investment Note during the period after the Investment
Note's Maturity Date and prior to redemption at the lower of (i) the lowest
interest rate then being paid on Investment Notes being offered by the Company
to the general public or (ii) the rate being paid on such Investment Note
immediately prior to its maturity.
If, within seven days after the Maturity Date of an Investment Note, a
Holder of such Investment Note has not demanded repayment of the Investment
Note, and the Company has not noticed its intention to repay such Security at
least seven days prior to maturity, such Investment Note shall be extended
automatically for the same term, and shall be deemed to have been renewed by the
Holder thereof as of the Maturity Date. An Investment Note will continue to
renew as described herein absent some permitted action be either the Holder or
the Company. Interest shall continue to accrue from the first day of such
renewed term. Such Investment Note, as renewed, will continue in all its
provisions, including provisions relating to payment, except that the interest
rate payable during any renewed term shall be the interest rate which is being
offered by the Company on similar Investment Notes as of the renewal date. If
similar Investment Notes are not then being issued, the interest rate upon
renewal will be the rate specified by the Company on or before the Maturity Date
of such Investment Note, or the Investment Note's current rate if no such rate
is specified.
Investment Notes with a duration of greater than six (6) months are
subject to early repayment at the election (a) of the Holder only upon the
occurrence cf a Total Permanent Disability of such Holder (or if such Investment
Note is held jointly by a husband and wife, upon the Total Permanent
7
Disability of one of such spouses), (b) of a Xxxxxx's estate after a Xxxxxx's
death or (c) if such Investment Note is held jointly by a husband and wife, of a
Holder upon the death of such Xxxxxx's spouse. Otherwise, Holders will have no
right to demand early repayment.
The terms and provisions contained in the Investment Notes shall
constitute, and are hereby expressly made, a part of this Indenture and to the
extent applicable, the Company and the Trustee, by their execution and delivery
of this Indenture, and the Holders by accepting the Investment Notes, expressly
agree to such terms and provisions and to be bound thereby. In case of a
conflict, the provisions of this Indenture shall control.
Section 2.2 Execution and Authentication.
Two Officers of the Company shall sign the Investment Notes for the
Company by manual or facsimile signature. The Company's seal shall be reproduced
on the Investment Notes.
If an Officer whose signature is on an Investment Note no longer holds
that office at the time the Security is authenticated by the Trustee, the
Investment Note shall nevertheless be valid.
An Investment Note shall not be valid until authenticated by the
authorized manual signature of the Trustee. The signature of the Trustee shall
be conclusive evidence that the Investment Note has been authenticated under
this Indenture.
The Trustee shall, upon a written order of the Company signed by two
Officers of the Company, authenticate Investment Notes for original issue. The
aggregate principal amount of Investment Notes outstanding at any time may not
exceed the amount set forth in Section 2.1 hereof. Such order shall specify the
amount of the Investment Notes to be authenticated and the date(s) upon which
the original issue thereof is to be authenticated.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Investment Notes. Unless limited by the terms of such
appointment, an authenticating agent may authenticate an Investment Note
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.
A Money Market Note shall not be validly issued until a transaction
statement executed by a duly authorized officer of the Company is sent to the
purchaser or transferee thereof and an Account is established by the Company in
the name of such purchaser or transferee.
Section 2.3 Registrar and Paying Agent.
The Company shall maintain (i) an office or agency where Securities may
be presented for registration of transfer or for exchange ("Registrar") and (ii)
an office or agency where Securities may be presented for payment ("Paying
Agent"). The Registrar shall keep a register of the Securities and of their
transfer and exchange. The Company may appoint one or more co-registrars and one
or more
8
additional paying agents. The term "Registrar" includes any co-registrar, and
the term "Paying Agent" includes any additional paying agent. The Company may
change any Paying Agent or Registrar without prior notice to any Securityholder;
provided that the Company shall promptly notify the Securityholders of the name
and address of any Agent not a party to this Indenture. The Company may act as
Paying Agent and/or Registrar. In the event the Company utilizes any Agent other
than the Company or the Trustee, the Company shall enter into an appropriate
agency agreement with such Agent, which agreement shall incorporate the
provisions of the TIA. The agreement shall implement the provisions of this
Indenture that relate to such Agent. The Company shall notify the Trustee of the
name and address of any such Agent. If the Company fails to maintain a Registrar
or Paying Agent, or fails to give the foregoing notice, the Trustee shall act as
such, and shall be entitled to appropriate compensation in accordance with
Section 7.7 hereof.
The Company shall be the initial Registrar and Paying Agent. The
Company initially appoints Trustee as agent for service of notices and demands
in connection with the Securities. The Company shall act as Registrar and Paying
Agent until such time as the Company gives the Trustee written notice to the
contrary.
Section 2.4 Paying Agent to Hold Money in Trust.
Prior to each due date of the principal or interest on any Security,
the Company shall deposit with the Paying Agent sufficient funds to pay
principal, premium, if any, and interest then so becoming due and payable in
cash. The Company shall require each Paying Agent other than the Trustee to
agree in writing that the Paying Agent will hold in trust for the benefit of
Securityholders or the Trustee all money held by the Paying Agent for the
payment of principal or interest on the Securities, and will notify the Trustee
promptly in writing of any default by the Company in making any such payment.
While any such default continues, the Trustee shall require a Paying Agent (if
other than the Company) to pay all money held by it to the Trustee. The Company
at any time may require a Paying Agent to pay all money held by it to the
Trustee. Upon payment over to the Trustee, the Paying Agent (if other than the
Company) shall have no further liability for the money delivered to the Trustee.
If the Company acts as Paying Agent, it shall segregate and hold in a separate
trust fund for the benefit of the Securityholders all money held by it as Paying
Agent. The Company shall notify the Trustee in writing at least 5 days before
the Payment Date of the name and address of the Paying Agent if a person other
than the Company is named Paying Agent at any time or from time to time.
Section 2.5 Securityholder Lists.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
Securityholders and shall otherwise comply with TIA Section 312(a). If the
Trustee is not the Registrar, the Company shall furnish to the Trustee each
quarter during the term of this Indenture and at such other times as the Trustee
may request in writing, a list in such form and as of such date as the Trustee
may reasonably require of the names and addresses of Securityholders, and the
aggregate principal amount outstanding and the Company shall otherwise comply
with TIA Section 312(a).
9
Section 2.6 Transfer and Exchange.
1. Transfer and Exchange of Investment Notes. The Investment Notes are
not negotiable instruments and cannot be transferred by mere endorsement and
delivery. No rights of record ownership to a Security may be transferred without
the prior written consent of the Company (which consent shall not be
unreasonably withheld). When Investment Notes are presented to the Registrar
with the request:
(x) to register the transfer of the Investment Notes, or
(y) to exchange the Investment Notes for an equal
principal amount of Securities of other authorized
denominations, the Registrar shall register the
transfer or make the exchange as requested if its
requirements for such transactions are met; provided,
however, that the Investment Notes presented or
surrendered for register of transfer or exchange:
(i) shall be duly endorsed or accompanied by a
written instruction of transfer in form
satisfactory to the Registrar duly executed
by the Holder thereof or by his attorney,
duly authorized in writing;
(ii) shall be accompanied by the written consent
of the Company to such transfer or exchange;
and
(iii) if requested by the Company, an opinion of
Xxxxxx's counsel (which counsel shall be
reasonably acceptable to the Company) that
the transfer does not violate any applicable
securities laws and\or signature guarantee.
2. Transfer and Exchange of Money Market Notes. The Money Market Notes
are not negotiable instruments and cannot be transferred without the prior
written consent of the Company (which consent shall not be unreasonably
withheld). Requests to Registrar for the transfer of the Accounts maintained for
the benefit of the Holders of the Money Market Notes shall be:
(i) made to the Registrar in writing on a form supplied
by the Company;
(ii) duly executed by the current holder of the Account,
as reflected on the Company's records as of the date
of receipt of such transfer request, or his attorney
duly authorized in writing;
(iii) accompanied by the written consent of the Company to
the transfer; and
(iv) if requested by the Company, an opinion of Xxxxxx's
counsel (which counsel shall be reasonably acceptable
to the Company) that the transfer does not violate
any applicable securities laws and/or a signature
guarantee.
10
Upon transfer of a Money Market Note, the Company will provide the new
registered owner of the Money Market Note with an initial transaction statement
which will evidence the transfer of the account on the Company's records. Such
initial transaction statement shall meet the applicable requirements of Section
8-408 of the Delaware Uniform Commercial Code or any successor provision.
(b) Obligations with respect to Transfers and Exchanges of Securities.
(i) To permit registrations of transfers and
exchanges, the Company shall execute and the
Trustee shall authenticate Investment Notes
at the Registrar's written request.
(ii) The Company may assess service charges to a
Holder for any registration or transfer or
exchange, and the Company may require
payment of a sum sufficient to cover any
transfer tax or similar governmental charge
payable in connection therewith (other than
any such transfer taxes or similar
governmental charge payable upon exchange
pursuant to Section 9.5 hereof).
(iii) All Investment Notes issued upon any
registration of transfer or exchange of
Investment Notes shall be the valid
obligations of the Company, evidencing the
same debt, and entitled to the same benefits
under the Indenture, as the Investment Notes
surrendered upon such registration of
transfer or exchange.
(iv) Prior to due presentment for registration of
transfer of any Investment Note, the
Trustee, any Agent and the Company may deem
and treat the person in whose name any
Investment Note is registered as the
absolute owner of such Investment Note for
the purpose of receiving payment of
principal of and interest on such Investment
Note and for all other purposes whatsoever,
whether such Investment Note is overdue, and
neither the Trustee, any Agent nor the
Company shall be affected by notice to the
contrary.
(v) The Company shall treat the individual or
entity listed on each Account maintained by
the Company as the absolute owner of the
Money Market Note represented thereby for
purposes of receiving payments thereon and
for all other purposes whatsoever.
Section 2.7 Payment of Principal and Interest; Principal and Interest
Rights Preserved.
(a) Each Security shall accrue interest at the rate specified for such
Security and such interest shall be payable on each Payment Date following the
Issue Date for such Security, until the principal thereof becomes due and
payable. Any installment of interest payable on a Security that is caused to be
punctually paid or duly provided for by the Company on the applicable Payment
Date
11
shall be paid to the Holder in whose name such Security is registered in the
Security Register on the applicable Regular Record Date: (i) with respect to the
Investment Notes outstanding, by check mailed to such Holder's address as it
appears in the Security Register on such Regular Record Date, and (ii) with
respect to the Money Market Notes outstanding, by crediting the Account of each
Holder of a Money Market Note as of the last day of each calendar date month
following the Issue Date with additional Money Market Notes in an amount equal
to the interest due on the balance maintained in the Account during the
preceding calendar month provided that no interest shall accrue for any day in
which the balance in an Account is less than $1,000. The payment of any interest
payable in connection with the payment of any principal payable with respect to
such Security on a Maturity Date or Redemption Date shall be payable as provided
below. Any funds with respect to which such checks were issued which remain
uncollected shall be held in accordance with Section 8.3 hereof. Any installment
of interest not punctually paid or duly provided for shall be payable in the
manner and to the Holders specified in Section 2.13 hereof.
(b) Each of the Investment Notes shall have stated maturities of
principal as shall be indicated in each such Security. The principal of each
Investment Note shall be paid in full no later than the Maturity Date thereof
unless the term of such Security is extended pursuant to Section 2.1 hereof or
such Investment Note becomes due and payable at an earlier date by acceleration,
redemption or otherwise. Interest rates on the Money Market Notes shall be
adjusted by the Company on the first and fifteenth day of each calendar month
and shall not be less than the average yield of the 91 Day U.S. Treasury Bill
over the preceding eight weeks as published by the Federal Reserve Board.
Interest on each Security shall be due and payable on each Payment Date
at the interest rate applicable to such Security for the Interest Accrual Period
related to such Security and such Payment Date.
Notwithstanding any of the foregoing provisions with respect to
payments of principal of and interest on the Securities, if the Securities have
become or been declared due and payable following an Event of Default, then
payments of principal of and interest on the Securities shall be made in
accordance with Article 6 hereof.
The principal payment made on any Investment Note on any Maturity Date
(or the Redemption Price of any Security required to be redeemed), and any
accrued interest thereon, shall be payable only upon presentation and surrender
of such Investment Note on or after the Maturity Date or Redemption Date
therefor at the office or agency of the Company maintained by it for such
purpose pursuant to Section 2.3 hereof or at the office of any Paying Agent for
such Investment Note.
The principal payment made on any Money Market Note on any Redemption
Date and any accrued interest thereon, shall be payable upon no more than 10
Business Days written notice to the Company executed by the Holder or his duly
authorized representative on a form acceptable to the Company at the office or
agency of the Company maintained by it for such purpose pursuant to Section 2.3
hereof or at the office of any Paying Agent for such Money Market Notes. All
such payments made upon redemption of the Money Market Notes shall be made in
U.S. dollars.
12
(c) All computations of interest due with respect to any Security shall
be made, unless otherwise specified in the Security, based upon the actual
number of days (e.g., 365 or 366) in the applicable year.
Section 2.8 Replacement Securities.
If any mutilated Investment Note is surrendered to the Company, or the
Company and the Trustee receive evidence to their satisfaction of the
destruction, loss or theft of any Investment Note, the Company shall issue and
the Trustee, upon the written order of the Company signed by two Officers of the
Company if required by the Trustee, shall authenticate a replacement Security if
the Trustee's requirements for replacements of Investment Notes are met. If
required by the Trustee or the Company, an unsecured indemnity agreement must be
supplied by the Holder that is sufficient in the judgment of the Trustee and the
Company to protect the Company, the Trustee, any Agent or any authenticating
agent from any loss which any of them may suffer if an Investment Note is
replaced. The Company and the Trustee may charge for their expenses in replacing
an Investment Note.
Every replacement security is an additional obligation of the Company
and shall be entitled to all benefits of this Indenture equally and
proportionately with all other Investment Notes duly issued hereunder.
Section 2.9 Outstanding Securities.
The Securities outstanding at any time are (i) all the Investment Notes
authenticated by the Trustee except for those canceled by it, those delivered to
it for cancellation, and those described in this Section as not outstanding, and
(ii) the outstanding balances of all of the Accounts representing the Money
Market Notes maintained by the Company or such other entity as the Company
designates as Registrar, and those described in this Section as not outstanding.
If an Investment Note is replaced pursuant to Section 2.8 hereof, it
ceases to be outstanding unless the Trustee receives proof satisfactory to it
that the replaced Investment Note is held by a bona fide purchaser.
If the principal amount of any Security is considered paid under
Section 4.1 hereof, it ceases to be outstanding and interest on it ceases to
accrue.
Subject to Section 2.10 hereof, a Security does not cease to be
outstanding because the Company or an Affiliate of the Company holds the
Security.
Section 2.10 Treasury Securities.
In determining whether the holders of the required principal amount of
Securities have concurred in any direction, waiver or consent, Securities owned
by the Company or any Affiliate of the Company shall be considered as though not
outstanding, except that for purposes of determining whether the Trustee shall
be protected in relying on any such direction, waiver or consent, only
13
Securities that a Responsible Officer of the Trustee actually knows to be so
owned shall be so disregarded.
Section 2.11 Temporary Securities.
Until the Investment Notes are ready for delivery, the Company may
prepare and the Trustee shall authenticate temporary Investment Notes. Temporary
Investment Notes shall be substantially in the form of Investment Notes but may
have variations that the Company and the Trustee consider appropriate for
temporary Investment Notes. Without unreasonable delay, the Company shall
prepare and the Trustee, upon receipt of the written order of the Company signed
by two Officers of the Company, shall authenticate the Investment Notes in
exchange for temporary Investment Notes. Until such exchange, temporary
Investment Notes shall be entitled to the same rights, benefits and privileges
as Investment Notes.
Section 2.12 Cancellation.
The Company at any time may deliver Investment Notes to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Investment Notes surrendered to them for registration of transfer, exchange or
payment. The Trustee shall cancel all Investment Notes surrendered for
registration of transfer, exchange, payment, replacement or cancellation and
shall destroy cancelled Investment Notes (subject to the record retention
requirement of the Exchange Act) unless the Company directs them to be returned
to it. All cancelled Investment Notes held by the Trustee shall be destroyed and
certification of their destruction delivered to the Company unless by a written
order, signed by one Officer of the Company, the Company shall direct that
cancelled Investment Notes be returned to it.
Section 2.13 Defaulted Interest.
If the Company defaults in a payment of interest on any Security, it
shall pay the defaulted interest plus, to the extent lawful, any interest
payable on the defaulted interest, to the Holder of such Security on a
subsequent special record date, which date shall be at the earliest practicable
date but in all events at least 5 Business Days prior to the payment date, in
each case at the rate provided in the Security. The Company shall, with written
notification to the Trustee, fix or cause to be fixed each such special record
date and payment date. At least 15 days before any such special record date, the
Company (or the Trustee, in the name of and at the expense of the Company) shall
mail to Securityholder(s) a notice that states the special record date, the
related payment date and the amount of such interest to be paid.
Section 2.14 Book Entry Registration.
The Registrar shall maintain a book entry registration and transfer
system through the establishment of Accounts for the benefit of Holders of Money
Market Notes as the sole method of recording the ownership and transfer of
ownership interests in such Money Market Notes. The registered owners of the
Accounts established by the Company in connection with the purchase or
14
transfer of the Money Market Notes shall be deemed to be the Holders of the
Money Market Notes outstanding for all purposes under this Indenture. The
Company shall promptly notify the Registrar of the acceptance of a subscriber's
order to purchase a Money Market Note and the Registrar shall credit its
book-entry registration and transfer system to the Account of each Money Market
Note purchaser, the principal amount of such Money Market Note owned of record
by the purchaser. The total amount of any principal and/or interest (which shall
be paid in the form of additional notes) due and payable to book entry owners of
the Accounts maintained by the Company as provided in this Indenture shall be
credited to such Accounts by the Company within the time frames provided in this
Indenture.
The Company shall notify the Trustee no less frequently than bi-weekly
of the establishment of new accounts and the transfer of existing accounts.
Book-entry accounts representing interests in the Money Market Notes
shall not be exchangeable for Money Market Notes in denominations of $2,500 and
any amount in excess thereof and fully registered in the names as the Company
directs unless (a) the Company at its option advises the Trustee in writing of
its election to terminate the book-entry system, or (b) after the occurrence of
any Event of Default, Holders of a majority of the Money Market Notes then
outstanding (as determined based upon the latest quarterly statement provided to
the Trustee pursuant to Section 4.3(d) hereof) advise the Trustee in writing
that the continuation of the book-entry system is no longer in the best
interests of such holders and the Trustee notifies all Holders of the Money
Market Notes of such event and the availability of definitive notes to the
Holders of Money Market Notes requesting such notes in definitive form.
Section 2.15 Initial and Monthly Statements.
(1) The Company shall provide initial transaction statements which meet
the applicable requirements of Section 8-408 of Article 8 of the Delaware
Uniform Commercial Code or any successor section to initial purchasers,
registered owners, registered pledgees, former registered owners and former
pledgees, as required by Section 8-408, within two business days of the
occurrence of the events specified in such section.
(2) The Company shall send each Holder of a Money Market Note (and each
registered pledgee) via U.S. mail not later than ten business days after each
month end in which such Holder had an outstanding balance in such holder's
Account, a statement which indicates as of the calendar month end preceding the
mailing: (a) the balance of such Account; (b) interest credited; (c) withdrawals
made, if any; and (d) the interest rate paid on such Account during the
preceding calendar month. Such monthly statements shall also include, among
other things, the information required by the applicable provisions of Section
8-408 of Article 8 of the Delaware Uniform Commercial Code or any successor
section. The Company shall provide additional statements as the holders or
registered pledgees of the Money Market Notes may reasonably request from time
to time. The Company may charge such holders or pledgees requesting such
statements a fee to cover the charges incurred by the Company in providing such
additional statements.
15
ARTICLE III.
REDEMPTION
Section 3.1 Redemption of Investment Notes.
The Company may not redeem, in whole or in part, any Investment Note
prior to the scheduled Maturity Date of the Security. In addition, except as
provided in this Article III, the Company shall have no mandatory redemption or
sinking fund obligations with respect to any of the Investment Notes.
Upon the death or Total Permanent Disability of a Holder of an
Investment Note, the estate of such Holder (in the event of death) or such
Holder (in the event of Total Permanent Disability) may require the Company to
redeem, in whole and not in part, the Investment Note held by such Holder by
delivering to the Company an irrevocable election (a "Redemption Election")
requiring the Company to make such redemption. In the event an Investment Note
is held jointly by two or more Persons, the Company shall not be required to
redeem such Investment Note until each joint holder of such Investment Note has
either died or suffered a Total Permanent Disability. Notwithstanding the
foregoing sentence, if an Investment Note is held jointly by a husband and wife,
such Investment Note shall be subject to the elective redemption provisions of
this Article III upon the death or Total Permanent Disability of either spouse.
Upon receipt of a Redemption Election, the Company shall designate the
Redemption Date for such Investment Note, which Redemption Date shall be no more
than fifteen days after the Company's receipt of the Redemption Election, and
shall pay the Redemption Price to the estate of the Holder or the Holder, as the
case may be, in accordance with the provisions set forth in Section 2.7 hereof.
No interest shall accrue on an Investment Note to be redeemed under this Article
III for any period of time after the Redemption Date for such Investment Note
and after the Company has tendered the Redemption Price to the Estate of the
Holder or to the Holder, as the case may be.
Section 3.2 Redemption of Money Market Notes.
The Company may not redeem, in whole or in part, any Money Market Note
except upon 30 days prior written notice to the Holder thereof listed on the
records maintained by the Company. In addition, except as provided in this
Article III, the Company shall have no mandatory redemption or sinking fund
obligations with respect to any of the Money Market Notes.
Any Holder of a Money Market Note may require the Company to redeem, in
whole and or in part, in increments of $500 (except in the case of redemption of
an entire account), the Money Market Note held by such Holder by delivering to
the Company an irrevocable election (a "Redemption Election") requiring the
Company to make such redemption. Upon receipt of a Redemption Election, the
Company shall designate the Redemption Date for such Money Market Note, which
Redemption Date shall be no more than 10 Business Days after the Company's
receipt of the Redemption Election, and shall pay the Redemption Price to the
Holder or his duly authorized attorney in fact, as the case may be, in
accordance with the provisions set forth in Section 2.7 hereof. No interest
shall accrue on a Money Market Note to be redeemed under this Section 3.2 of
Article III
16
for any period of time after the Redemption Date for such Money Market Note and
after the Company has tendered the Redemption Price to the Holder of the Money
Market Note or his duly authorized attorney in fact.
ARTICLE IV.
COVENANTS
Section 4.1 Payment of Securities.
The Company shall duly pay the principal of and interest on each
Security on the dates and in the manner provided in the note evidencing the
Investment Notes, or in the case of the Money Market Notes, as described in the
Prospectus related to such securities. Principal and interest (to the extent
such interest is paid in cash) shall be considered paid on the date due if the
Paying Agent, if other than the Company, holds at least one Business Day before
that date money deposited by the Company in immediately available funds and
designated for and sufficient to pay all principal and interest then due;
provided, however, that principal and interest shall not be considered paid
within the meaning of this Section 4.1 if money is held by the Paying Agent for
the benefit of holders of Senior Debt pursuant to the provisions of Article 10
hereof. The payment of interest on the Money Market Notes shall be paid in the
form of additional notes as provided for in Section 2.1 hereof. Such Paying
Agent shall return to the Company, no later than 5 days following the date of
payment, any money (including accrued interest) that exceeds such amount of
principal and interest paid on the Securities in accordance with this
Section 4.1.
To the extent lawful, the Company shall pay interest (including
Post-Petition Interest in any proceeding under any Bankruptcy Law) on overdue
principal at the rate borne by the Securities, compounded semi-annually; it
shall pay interest (including Post-Petition Interest in any proceeding under any
Bankruptcy Law) on overdue installments of interest (without regard to any
applicable grace period) at the same rate, compounded semi-annually.
Section 4.2 Maintenance of Office or Agency.
The Company will maintain an office or agency (which may be an office
of the Trustee, Registrar or coregistrar) where Securities may be surrendered
for registration of transfer or exchange and where notices and demands to or
upon the Company in respect of the Securities and this Indenture may be served.
The Company will give prompt written notice to the Trustee of the location, and
any change in the location, of such office or agency. If at any time the Company
shall fail to maintain any such required office or agency or shall fail to
furnish the Trustee with the address thereof, such presentations, surrenders,
notices and demands may be made or served at the Corporate Trust Office of the
Trustee.
The Company may also from time to time designate one or more other
offices or agencies where the Securities may be presented or surrendered for any
or all such purposes and may from time to time rescind such designations. The
Company will give prompt written notice to the Trustee of any such designation
or rescission and of any change in the location of any such other office or
agency.
17
The Company hereby designates its office at Balapointe Office Centre,
000 Xxxxxxxxxxxx Xxxxxxxxx, Xxxx Xxxxxx, Xxxxxxxxxxxx as one such office or
agency of the Company in accordance with Section 2.3.
Section 4.3 SEC Reports and Other Reports.
(a) The Company shall file with the Trustee, within 15 days after
filing with the SEC, copies of the annual reports and of the information,
documents, and other reports (or copies of such portions of any of the foregoing
as the SEC may by rules and regulations prescribe) that the Company is required
to file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act. If the
Company is not subject to the requirements of such Section 13 or 15(d) of the
Exchange Act, the Company shall continue to file with the SEC and the Trustee on
the same timely basis such reports, information and other documents as it would
file if it were subject to the requirements of Section 13 or 15(d) of the
Exchange Act. The Company shall also comply with the provisions of TIA Section
314(a). Notwithstanding anything contrary herein the Trustee shall have no duty
to review such documents for purposes of determining compliance with any
provisions of the Indenture.
(b) So long as any of the Securities remain outstanding, the Company
shall cause an annual report to stockholders and each quarterly or other
financial report furnished by it generally to stockholders to be filed with the
Trustee at the time of such mailing or furnishing to stockholders. If the
Company is not required to furnish annual or quarterly reports to its
stockholders pursuant to the Exchange Act, the Company shall cause its financial
statements, including any notes thereto (and, with respect to annual reports, an
auditors' report by the Company's certified independent accountants) and a
"Management's Discussion and Analysis of Financial Condition or Plan of
Operations," comparable to that which would have been required to appear in
annual or quarterly reports filed under Section 13 or 15(d) of the Exchange Act
to be so filed with the Trustee within 120 days after the end of each of the
Company's fiscal years and within 60 days after the end of each of the first
three quarters of each such fiscal year.
(c) Whether or not required by the rules and regulations of the SEC,
the Company shall file a copy of all such information with the SEC for public
availability and make such information available to investors who request it in
writing.
(d) The Company, or such other entity as the Company shall designate as
Registrar for the Money Market Notes as provided in Section 7.3 hereof, shall
provide the Trustee with quarterly management reports which provide the Trustee
with such information regarding the Accounts maintained by the Company for the
benefit of the Holders of the Money Market Notes as the Trustee may reasonably
request which information shall include at least the following: (1) the
outstanding balance of each Account; (2) interest credited or withdrawals made
for the period; (3) the amount of interest paid in the form of additional notes
at each month end and (3) the interest rate paid on each Account maintained by
the Company during the preceding quarterly period.
18
Section 4.4 Compliance Certificate.
(a) The Company shall deliver to the Trustee, within 120 days after the
end of each fiscal year (October 28 if the Company has a June 30 year end), an
Officers' Certificate stating that a review of the activities of the Company
during the preceding fiscal year has been made under the supervision of the
signing Officers with a view to determining whether each has kept, observed,
performed and fulfilled its obligations under this Indenture, and further
stating, as to each such Officer signing such certificate, that to the best of
his knowledge each 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 each 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 Securities are
prohibited or if such event has occurred, a description of the event and what
action each is taking or proposes to take with respect thereto.
(b) So long as not contrary to the then current recommendations of the
American Institute of Certified Public Accountants, the annual financial
statements delivered pursuant to Section 4.3 above shall be accompanied by a
written statement of the Company's independent public accountants that in making
the examination necessary for certification of such financial statements nothing
has come to their attention which would lead them to believe that the Company
has violated the provisions of Section 4. 1 of this Indenture or, if any such
violation has occurred, specifying the nature and period of existence thereof,
it being understood that such accountants shall not be liable directly or
indirectly to any Person for any failure to obtain knowledge of any such
violation.
(c) The Company will, so long as any of the Securities are outstanding,
deliver to the Trustee, forthwith upon any Officer becoming aware of any Default
or Event of Default, an Officers' Certificate specifying such Default or Event
of Default and what action the Company is taking or proposes to take with
respect thereto.
Section 4.5 Stay, Extension and Usury Laws.
The Company covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay, extension or usury law wherever
enacted, now or at any time hereafter in force, which may affect the covenants
or the performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all beneficial advantage of any such
law, and covenants that it will not, by resort to any such law, hinder, delay or
impede the execution of any power herein granted to the Trustee, but will suffer
and permit the execution of every such power as though no such law has been
enacted.
19
Section 4.6 Liquidation.
The Board of Directors or the stockholders of the Company may not adopt
a plan of liquidation that provides for, contemplates or the effectuation of
which is preceded by (a) the sale, lease, conveyance or other disposition of all
or substantially all of the assets of the Company otherwise than substantially
as an entirety (Section 5.1 of this Indenture being the Section hereof which
governs any such sale, lease, conveyance or other disposition substantially as
an entirety) and (b) the distribution of all or substantially all of the
proceeds of such sale, lease, conveyance or other disposition and of the
remaining assets of the Company to the holders of capital stock of the Company,
unless the Company, prior to making any liquidating distribution pursuant to
such plan, makes provision for the satisfaction of the Company's Obligations
hereunder and under the Securities as to the payment of principal and interest.
ARTICLE V.
SUCCESSORS
Section 5.1 When the Company May Merge, etc.
The Company may not consolidate or merge with or into (whether or not
the Company is the surviving corporation), or sell, assign, transfer, lease,
convey or otherwise dispose of all or substantially all of its properties or
assets in one or more related transactions to another corporation, Person or
entity unless (a) 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; (b) the entity or Person formed by or surviving any such consolidation
or merger (if other than the Company) or the entity or Person to which such
sale, assignment, transfer, lease, conveyance or other disposition will have
been made assumes all the obligations of the Company pursuant to a supplemental
indenture in a form reasonably satisfactory to the Trustee, under the Securities
and this Indenture; and (c) immediately after such transaction no Default or
Event of Default exists.
The Company shall deliver to the Trustee prior to the consummation of
the proposed transaction an Officers' Certificate to the foregoing effect and an
Opinion of Counsel stating that the proposed transaction and such supplemental
indenture comply with this Indenture. The Trustee shall be entitled to
conclusively rely upon such Officers' Certificate and Opinion of Counsel.
Section 5.2 Successor Corporation Substituted.
Upon any consolidation or merger, or any sale, lease, conveyance or
other disposition of all or substantially all of the assets of the Company in
accordance with Section 5.1, the successor corporation formed by such
consolidation or into or with which the Company, is merged or to which such
sale, lease, conveyance or other disposition is made shall succeed to, and be
substituted for, and may exercise every right and power of, the Company under
this Indenture with the same effect as if such successor Person has been named
as the Company herein; provided, however, that the Company
20
shall not be released or discharged from the obligation to pay the principal of
or interest on the Securities.
ARTICLE VI.
DEFAULTS AND REMEDIES
Section 6.1 Events of Default.
An "Event of Default" occurs if:
(1) the Company defaults in the payment of interest
on a Security when the same becomes due and payable and the
Default continues for a period of 30 days, whether or not such
payment is prohibited by the provisions of Article 10 hereof;
(2) the Company defaults in the payment of the
principal of any Security when the same becomes due and
payable at maturity, upon a required redemption or otherwise,
and the Default continues for a period of 30 days, whether or
not prohibited by the provisions of Article 10 hereof;
(3) the Company fails to observe or perform any
covenant, condition or agreement on the part of the Company to
be observed or performed pursuant to Section 4.6 or 5.1
hereof;
(4) the Company fails to comply with any of its other
agreements or covenants in, or provisions of, the Securities
or this Indenture and the Default continues for the period and
after the notice specified below;
(5) the Company pursuant to or within the meaning of
any Bankruptcy Law (a) commences a voluntary case; (b)
consents to the entry of an order for relief against it in an
involuntary case; (c) consents to the appointment of a
Custodian of it or for all or substantially all of its
property; (d) makes a general assignment for the benefit of
its creditors; or (e) admits in writing its inability to pay
debts as the same become due; or
(6) a court of competent jurisdiction enters an order
or decree under any Bankruptcy Law that (a) is for relief
against the Company in an involuntary case; (b) appoints a
Custodian of the Company or for all or substantially all of
its property; (c) orders the liquidation of the Company, and
the order or decree remains unstayed and in effect for 120
consecutive days; and
The term "Bankruptcy Law" means title II, U.S. Code or any similar
Federal or state law for the relief of debtors. The term "Custodian" means any
receiver, trustee, assignee, liquidator or similar official under any Bankruptcy
Law.
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A Default under clause (3) or (4) of Section 6.1 is not an Event of
Default until the Trustee or the Holders of at least a majority in principal
amount of the then outstanding Securities notify the Company of the Default and
the Company does not cure the Default or such Default is not waived within 60
days after receipt of the notice. The notice must specify the Default, demand
that it be remedied and state that the notice is a "Notice of Default."
Section 6.2 Acceleration.
If an Event of Default (other than an Event of Default specified in
clauses (5) or (6) of Section 6.1) occurs and is continuing, the Trustee by
notice to the Company or the Holders of at least a majority in principal amount
of the then outstanding Securities by written notice to the Company and the
Trustee may declare the unpaid principal of and any accrued interest on all the
Securities to be due and payable. Upon such declaration the principal and
interest shall be due and payable immediately; provided, however, that if any
Indebtedness or Obligation is outstanding pursuant to the Senior Debt, upon a
declaration of acceleration by the Holders, all principal and interest under
this Indenture shall be due and payable upon the earlier of (x) the day which is
5 Business Days after the receipt by each of the Company and the holders of
Senior Debt of such written notice of acceleration or (y) the date of
acceleration of any Indebtedness under any Senior Debt. If an Event of Default
specified in clause (5) or (6) of Section 6.1 occurs, such an amount shall ipso
facto become and be immediately due and payable without any declaration or other
act on the part of the Trustee or any Holder. The Holders of a majority in
principal amount of the then outstanding Securities by written notice to the
Trustee may rescind an acceleration and its consequences if the rescission would
not conflict with any judgment or decree and if all existing Events of Default
(except nonpayment of principal or interest that has become due solely because
of the acceleration) have been cured or waived.
Section 6.3 Other Remedies.
If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy to collect the payment of principal or interest on
the Securities or to enforce the performance of any provision of the Securities
or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any
of the Securities or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Securityholder in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All remedies are
cumulative to the extent permitted by law.
Section 6.4 Waiver of Past Defaults.
Holders of a majority in principal amount of the then outstanding
Securities by notice to the Trustee may waive an existing Default or Event of
Default and its consequences except a continuing Default or Event of Default in
the payment of the principal of or interest on any Security held by a
non-consenting Holder. Upon actual receipt of any such notice of waiver by a
Responsible Officer of the Trustee, such Default shall cease to exist, and any
Event of Default arising therefrom shall be
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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 6.5 Control by Majority.
The Holders of a majority in principal amount of the then outstanding
Securities may direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee or exercising any trust or power
conferred on it, provided, that indemnification for the Trustee's fees and
expenses, in a form reasonably satisfactory to the Trustee, shall have been
provided. However, the Trustee may refuse to follow any direction that conflicts
with law or this Indenture, that the Trustee determines may be unduly
prejudicial to the rights of other Securityholders, or that may involve the
Trustee in personal liability.
Section 6.6 Limitation on Suits.
A Securityholder may pursue a remedy with respect to this Indenture or
the Securities only if:
(1) the Holder gives to the Trustee written notice of a
continuing Event of Default;
(2) the Holders of at least a majority in principal amount of
the then outstanding Securities make a written request to the Trustee
to pursue the remedy;
(3) such Holder or Holders offer and, if requested, provide to
the Trustee indemnity satisfactory to the Trustee against any loss,
liability or expense;
(4) the Trustee does not comply with the request within 60
days after receipt of the request and the offer and, if requested, the
provision of indemnity; and
(5) during such 60 day period the Holders of a majority in
principal amount of the then outstanding Securities do not give the
Trustee a direction inconsistent with the request.
A Securityholder may not use this Indenture to prejudice the rights of another
Securityholder or to obtain a preference or priority over another
Securityholder.
Section 6.7 Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Indenture, but subject to
Article 10 hereof, the right of any Holder of a Security to receive payment of
principal and interest on the Security, on or after the respective due dates
expressed in the Security, or to bring suit for the enforcement of any such
payment on or after such respective dates, shall not be impaired or affected
without the consent of the Holder.
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Section 6.8 Collection Suit by Trustee.
If an Event of Default specified in Section 6.1 (1) or (2) occurs and
is continuing, the Trustee is authorized to recover judgment in its own name and
as trustee of an express trust against the Company for the whole amount of
principal and interest remaining unpaid on the Securities and interest on
overdue principal and, to the extent lawful, interest and such further amount as
shall be sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel.
Section 6.9 Trustee May File Proofs of Claim.
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
Securityholders allowed in any judicial proceedings relative to the Company (or
any other obligor upon the Securities), its creditors or its property and shall
be entitled and empowered to collect, receive and distribute any money or other
property payable or deliverable on any such claims and any custodian in any such
judicial proceeding is hereby authorized by each Securityholder 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 Securityholders, to pay to the Trustee
any amount due to it for the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel, and any other amounts due
the Trustee under Section 7.7 hereof. To the extent that the payment of any such
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section 7.7 hereof out
of the estate in any such proceeding, shall be denied for any reason, payment of
the same shall be secured by a lien on, and shall be paid out of, any and all
distributions, dividends, money, securities and other properties which the
Holders of the Securities may be entitled to receive in such proceeding whether
in liquidation or under any plan of reorganization or arrangement or otherwise.
Nothing herein contained shall be deemed to authorize the Trustee to authorize
or consent to or accept or adopt on behalf of any Securityholder any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
or the rights of any Holder thereof, or to authorize the Trustee to vote in
respect of the claim of any Securityholder in any such proceeding.
If the Trustee does not file a proper claim or proof of debt in the
form required in any such proceeding prior to 30 days before the expiration of
the time to file such claims or proofs, then any holder of Senior Debt shall
have the right to demand, sue for, collect and receive the payments and
distributions in respect of the Securities which are required to be paid or
delivered to the holders of Senior Debt as provided in Article 10 hereof and to
file and prove all claims therefor and to take all such other action in the name
of the Holders or otherwise, as such holder of Senior Debt may determine to be
necessary or appropriate for the enforcement of the provisions of Article 10.
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Section 6.10 Priorities.
If the Trustee collects any money pursuant to this Article, it shall,
subject to the provisions of Article 10 hereof, pay out the money in the
following order:
First: to the Trustee, its agents and attorneys for amounts due under
Section 7.7, including payment of all compensation, expenses and liabilities
incurred, and all advances made, if any, by the Trustee and the costs and
expenses of collection;
Second: to holders of Senior Debt to the extent required by Article 10
hereof;
Third: to Securityholders for amounts due and unpaid on the Securities
for principal and interest, ratably, without preference or priority of any kind,
according to the amounts due and payable on the Securities for principal and
interest, respectively; and
Fourth: to the Company or to such party as a court of competent
jurisdiction shall direct.
The Trustee may fix a record date and payment date for any payment to
Securityholders.
Section 6.11 Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as a Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section does not apply to a suit by the Trustee, a suit by a Holder
pursuant to Section 6.7, or a suit by Holders of more than 10% in principal
amount of the then outstanding Securities.
ARTICLE VII.
TRUSTEE
Section 7.1 Duties of Trustee.
(a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture, and
use the same degree of care and skill in their exercise, as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs.
(b) Except during the continuance of an Event of Default:
(1) The duties of the Trustee shall be determined solely by
the express provisions of this Indenture and the Trustee need perform
only those duties that are specifically set forth
25
in this Indenture and no others, and no implied covenants or
obligations shall be read into this Indenture against the Trustee.
(2) In the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon resolutions,
statements, reports, documents, orders, certificates, opinions or other
instruments furnished to the Trustee and conforming to the requirements
of this Indenture. However, in the case of any of the above that are
specifically required to be furnished to the Trustee pursuant to this
Indenture, the Trustee shall examine them to determine whether they
substantially conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liabilities for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(1) This paragraph does not limit the effect of paragraph (2)
of this Section.
(2) The Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer, unless it is proved that
the Trustee was negligent in ascertaining the pertinent facts.
(3) The Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.5.
(d) Whether or not therein expressly so provided, every provision of
this Indenture that in any way relates to the Trustee is subject to paragraphs
(a), (b) and (c) of this Section.
(e) No provision of this Indenture shall require the Trustee to expend
or risk its own funds or incur any liability. The Trustee may refuse to perform
any duty or exercise any right or power unless it receives indemnity
satisfactory to it against any loss, liability or expense.
(f) The Trustee shall not be liable for interest on any money received
by it except as the Trustee may agree in writing with the Company. Money held in
trust by the Trustee need not be segregated from other funds except to the
extent required by law.
Section 7.2 Rights of Trustee.
(a) The Trustee may conclusively rely upon any document believed by it
to be genuine and to have been signed or presented to it by the proper Person.
The Trustee need not investigate any fact or matter stated in the document. The
Trustee shall have no duty to inquire as to the performance of the Issuers'
covenants in Article 4. In addition, the Trustee shall not be deemed to have
knowledge of any Default or any Event of Default except any Default or Event of
Default of which the Trustee shall have received written notification or
obtained actual knowledge.
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(b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel or both. The Trustee shall not be
liable for any action it takes or omits to take in good faith in reliance on
such officers' Certificate or Opinion of Counsel. The Trustee may consult with
counsel and the written advice of such counsel or any Opinion of Counsel shall
be full and complete authorization and protection from liability in respect of
any action taken, suffered or omitted by it hereunder in good faith and in
reliance thereon.
(c) The Trustee may act through agents, attorneys, custodians or
nominees and shall not be responsible for the misconduct or negligence or the
supervision of any agents, attorneys, custodians or nominees appointed by it
with due care.
(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith which it believes to be authorized or within the rights or
powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this Indenture, any
demand, request, direction or notice from the Company shall be sufficient if
signed by an Officer of the Company.
(f) The Trustee shall not be deemed to have notice of an Event of
Default for any purpose under this Indenture unless notified of such Event of
Default by the Company, the Paying Agent (if other than the Company) or a Holder
of the Securities.
Section 7.3 Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Securities and may otherwise deal with the Company or an
Affiliate of the Company with the same rights it would have if it were not
Trustee. Any Agent may do the same with like rights. However, the Trustee is
subject to Sections 7.10 and 7.11.
Section 7.4 Trustee's Disclaimer.
The Trustee shall not be responsible for and makes no representation as
to the validity or adequacy of this Indenture or the Securities, it shall not be
accountable for the Company's use of the proceeds from the Securities or any
money paid to the Company or upon the Company's direction under any provision
hereof, it shall not be responsible for the use or application of any money
received by any Paying Agent other than the Trustee and it shall not be
responsible for any statement or recital herein or any statement in the
Securities or any other document in connection with the sale of the Securities
or pursuant to this Indenture other than its certificate of authentication.
Section 7.5 Notice of Defaults.
If a Default or Event of Default occurs and is continuing and if it is
known to a Responsible Officer of the Trustee, the Trustee shall mail to
Securityholders a notice of the Default or Event of Default within 90 days after
it occurs. At least 5 Business Days prior to the mailing of any notice to
Securityholders under this Section 7.5, the Company shall provide the Company
with notice of its
27
intent to mail such notice. Except in the case of a Default or Event of Default
in payment on any Security, the Trustee may withhold the notice if and so long
as the Responsible Officers of the Trustee in good faith determines that
withholding the notice would have no material adverse effect on the
Securityholders.
Section 7.6 Reports by Trustee to Holders.
Within 60 days after the end of each fiscal year beginning with the
June 30, 1997 fiscal year, the Trustee shall mail to Securityholders a brief
report dated as of such reporting date that complies with TIA Section 313(a)
(but if no event described in TIA Section 313(a) has occurred within the 12
months preceding the reporting date, no report need be prepared or transmitted).
The Trustee also shall comply with TIA Section 313(b). The Trustee shall also
transmit by mail all reports as required by TIA Section 313(c).
Commencing at the time this Indenture is qualified under the TIA, a
copy of each report mailed to Securityholders under this Section 7.6 (at the
time of its mailing to Securityholders) shall be filed with the SEC and each
stock exchange, if any, on which the Securities are listed. The Company shall
promptly notify the Trustee when the Securities are listed on any stock
exchange.
Section 7.7 Compensation and Indemnity.
The Company shall pay to the Trustee from time to time reasonable
compensation for its acceptance of this Indenture and its performance of the
duties and services required hereunder. The Trustee's compensation shall not be
limited by any law on compensation of a trustee of an express trust. The Company
shall reimburse the Trustee promptly upon request for all reasonable
disbursements, advances and expenses incurred or made by it in addition to the
compensation for its services. Such expenses shall include the reasonable
compensation, disbursements and expenses of the Trustee's agents and counsel.
The Company shall indemnify the Trustee against any and all losses,
liabilities or expenses incurred by it arising out of or in connection with the
acceptance or administration of its duties under this Indenture, except as set
forth in the second next paragraph. The Trustee shall notify the Company
promptly of any claim for which it may seek indemnity. Failure by the Trustee to
so notify the Company shall not relieve the Company of its obligations
hereunder, except to the extent the Company is prejudiced thereby. The Company
shall defend the claim and the Trustee shall reasonably cooperate in such
defense. The Trustee may have separate counsel and the Company shall pay the
reasonable fees and expenses of such one counsel. The Company need not pay for
any settlement made without its consent, which consent shall not be unreasonably
withheld.
The obligations of the Company under this Section 7.7 shall survive the
satisfaction and discharge of this Indenture.
The Company need not reimburse any expense or indemnify against any
loss or liability incurred by the Trustee through its own negligence or bad
faith.
28
To secure the Company's payment obligations in this Section, the
Trustee shall have a lien prior to the Securities on all money or property held
or collected by the Trustee, except that held in trust to pay principal and
interest on the Securities. Such lien shall survive the satisfaction and
discharge of this Indenture.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.1(5) or (6) occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.
Section 7.8 Replacement of Trustee.
A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section 7.8.
The Trustee may resign at any time and be discharged from the trust
hereby created by so notifying the Company. The Holders of a majority in
principal amount of the then outstanding Securities may remove the Trustee by so
notifying the Trustee and the Company in writing. The Company may remove the
Trustee if.
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged a bankrupt or an insolvent or an
order for relief is entered with respect to the Trustee under any
Bankruptcy Law;
(3) a Custodian or public officer takes charge of the Trustee
or its property;
(4) the Trustee becomes incapable of acting as Trustee under
this Indenture, or
(5) the Company so elects, provided such replacement Trustee
is qualified and reasonably acceptable.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the then outstanding Securities may appoint
a different successor Trustee to replace the successor Trustee appointed by the
Company.
If a successor Trustee does not take office within 30 days after notice
that the Trustee has resigned or has been removed, the Company or the Trustee or
the Holders of at least a majority in principal amount of the then outstanding
Securities may petition any court of competent jurisdiction for the appointment
of a successor Trustee.
If the Trustee after written request by any Securityholder who has been
a Securityholder for at least 6 months fails to comply with Section 7.10, such
Securityholder may petition any court of competent jurisdiction for the removal
of the Trustee and the appointment of a successor Trustee.
29
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to all Securityholders. The retiring Trustee shall promptly transfer
all property held by it as Trustee to the successor Trustee, provided all sums
owing to the Trustee hereunder have been paid and subject to the lien provided
for in Section 7.7. Notwithstanding replacement of the Trustee pursuant to this
Section 7.8, the Company's obligations under Section 7.7 hereof shall continue
for the benefit of the retiring Trustee.
Section 7.9 Successor Trustee by Xxxxxx, etc.
If the Trustee consolidates, merges or converts into, or transfers all
or substantially all of its corporate trust business to, another corporation,
the successor corporation without any further act shall be the successor
Trustee.
Section 7.10 Eligibility; Disqualification.
There shall at all times be a Trustee hereunder which shall be a
corporation organized and doing business under the laws of the United States of
America or of any state or territory thereof or of the District of Columbia
authorized under such laws to exercise corporate trustee power, shall be subject
to supervision or examination by Federal, state, territorial or District of
Columbia authority and shall have a combined capital and surplus of at least
$500,000 as set forth in its most recent published annual report of condition.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA Section 310(a)(1). The Trustee is subject to TIA Section
310(b).
Section 7.11 Preferential Collection of Claims Against Company.
The Trustee is subject to 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 therein.
ARTICLE VIII.
DISCHARGE OF INDENTURE
Section 8.1 Termination of Company's Obligations.
This Indenture shall cease to be of further effect (except that the
Company's obligations under Section 7.7 and 8.4, and the Company's, Trustee's
and Paying Agent's obligations under Section 8.3 shall survive) when all
outstanding Investment Notes theretofore authenticated and issued have been
delivered (other than destroyed, lost or stolen Investment Notes which have been
replaced or paid) to the Trustee for cancellation and all outstanding Money
Market Notes redeemed and the Company has
30
paid all sums payable by the Company hereunder. In addition, the Company may
terminate all of their obligations under this Indenture if:
(1) the Company irrevocably deposits in trust with the Trustee
or at the option of the Trustee, with a trustee reasonably satisfactory
to the Trustee and the Company under the terms of an irrevocable trust
agreement in form and substance satisfactory to the Trustee, money or
U.S. Government Obligations sufficient (as certified by an independent
public accountant designated by the Company) to pay principal and
interest on the Securities to maturity or redemption, as the case may
be, and to pay all other sums payable by it hereunder, provided that
(i) the trustee of the irrevocable trust shall have been irrevocably
instructed to pay such money or the proceeds of such U.S. Government
Obligations to the Trustee and (ii) the Trustee shall have been
irrevocably instructed to apply such money or the proceeds of such U.S.
Government Obligations to the payment of said principal and interest
with respect to the Securities;
(2) the Company delivers to the Trustee an Officers'
Certificate stating that all conditions precedent to satisfaction and
discharge of this Indenture have been complied with; and
(3) no Event of Default or event (including such deposit)
which, with notice or lapse of time, or both, would become an Event of
Default with respect to the Securities shall have occurred and be
continuing on the date of such deposit.
Then, this Indenture shall cease to be of further effect (except as provided in
this paragraph), and the Trustee, on demand of the Company, shall execute proper
instruments acknowledging confirmation of and discharge under this Indenture.
The Company may make the deposit only if Article X hereof does not prohibit such
payment. However, the Company's obligations in Sections 2.3, 2.4, 2.5, 2.6, 2.7,
2.8, 4.1, 4.2, 4.3, 7.7, 7.8, 8.3 and 8.4 and the Trustee's and Paying Agent's
obligations in Section 8.3 shall survive until the Securities are no longer
outstanding. Thereafter, only the Company's obligations in Section 7.7 and 8.4
and the Company's, Trustee's and Paying Agent's obligations in Section 8.3 shall
survive.
After such irrevocable deposit made pursuant to this Section 8.1 and
satisfaction of the other conditions set forth herein, the Trustee upon written
request shall acknowledge in writing the discharge of the Company's obligations
under this Indenture except for those surviving obligations specified above.
In order to have money available on a payment date to pay principal or
interest on the Securities, the U.S. Government Obligations shall be payable as
to principal or interest at least one Business Day before such payment date in
such amounts as will provide the necessary money. U.S. Government Obligations
shall not be callable at the issuer's option.
31
Section 8.2 Application of Trust Money.
The Trustee or a trustee satisfactory to the Trustee and the Company
shall hold in trust money or U.S. Government Obligations deposited with it
pursuant to Section 8. 1. It shall apply the deposited money and the money from
U.S. Government Obligations through the Paying Agent and in accordance with this
Indenture to the payment of principal and interest on the Securities.
Section 8.3 Repayment to Company.
The Trustee and the Paying Agent shall promptly pay to the Company upon
written request any excess money or securities held by them at any time.
The Trustee and the Paying Agent shall pay to the Company upon written
request any money held by them for the payment of principal or interest that
remains unclaimed for two years after the date upon which such payment shall
have become due; provided, however, that the Company shall have either caused
notice of such payment to be mailed to each Securityholder entitled thereto no
less than 30 days prior to such repayment or within such period shall have
published such notice in a newspaper of widespread circulation published in the
City of Philadelphia. After payment to the Company, Securityholders entitled to
the money must look to the Company for payment as general creditors unless an
applicable abandoned property law designates another Person, and all liability
of the Trustee and such Paying Agent with respect to such money shall cease.
Section 8.4 Reinstatement.
If the Trustee or Paying Agent is unable to apply any money or U.S.
Government Obligations in accordance with Section 8.2 by reason of any legal
proceeding or by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application, the
Company's obligations under this Indenture and the Securities shall be revived
and reinstated as though no deposit had occurred pursuant to Section 8.1 until
such time as the Trustee or Paying Agent is permitted to apply all such money or
U.S. Government Obligations in accordance with Section 8.2; provided, however,
that if the Company has made any payment of interest on or principal of any
Securities because of the reinstatement of its obligations, the Company shall be
subrogated to the rights of the Holders of such Securities to receive such
payment, as long as no money is owed to the Trustee by the Company, from the
money or U.S. Government Obligations held by the Trustee or Paying Agent.
ARTICLE IX.
AMENDMENTS
Section 9.1 Without Consent of Holders.
The Company and the Trustee may amend this Indenture or the Securities
without the consent of any Securityholder:
32
(1) to cure any ambiguity, defect or inconsistency;
(2) to comply with Section 5.1;
(3) to provide for additional uncertificated Securities or
certificated Securities;
(4) to make any change that does not adversely affect the
legal rights hereunder of any Securityholder, including but not limited
to an increase in the aggregate dollar amount of Securities which may
be outstanding under this Indenture;
(5) make any change in the second paragraph of Article 3;
provided, however, that no such change shall adversely affect the
rights of any outstanding Security; or
(6) to comply with any requirements of the SEC in connection
with the qualification of this Indenture under the TIA.
Section 9.2 With Consent of Holders.
The Company and the Trustee may amend this Indenture or the Securities
with the written consent of the Holders of at least a majority in principal
amount of the then outstanding Securities. The Holders of a majority in
principal of the then outstanding Securities may also waive any existing default
or compliance with any provision of this Indenture or the Securities. However,
without the consent of the Holder of each Investment Note affected, an amendment
or waiver under this Section may not (with respect to any Investment Note held
by a nonconsenting Holder):
(1) reduce the principal amount of Investment Notes whose
Holders must consent to an amendment, supplement or waiver;
(2) reduce the rate of or change the time for payment of
interest, including default interest, on any Investment Note;
(3) reduce the principal of or change the fixed maturity of
any Investment Note or alter the redemption provisions or the price at
which the Company shall offer to purchase such Investment Note pursuant
to Section 3.1 of Article III hereof;
(4) make any Investment Note payable in money other than that
stated in the Investment Note;
(5) Modify or eliminate the right of the estate of a Holder or
a Holder to cause the Company to redeem an Investment Note upon the
death or Total Permanent Disability of a Holder pursuant to Article
III; provided, however, that the Company may not modify or eliminate
such right, as it may be in effect on the Issue Date, of any Investment
Note which was issued with such right. After an amendment under this
subsection 9.1(5) becomes
33
effective, the Company shall mail to the Holders of each Investment
Note then outstanding a notice briefly describing the amendment.
(6) make any change in Section 6.4 or 6.7 hereof or in this
sentence of this Section 9.2;
(7) make any change in Article X that adversely affects the
rights of any Securityholders; or
(8) waive a Default or Event of Default in the payment of
principal of, or premium, if any, or interest on, or redemption payment
with respect to, any Security (except a rescission of acceleration of
the Investment Notes by the Holders of at least a majority in aggregate
principal amount of the Investment Notes and a waiver of the payment
default that resulted from such acceleration).
Without the consent of each Holder of Money Market Notes affected, an amendment
or waiver under this Section may not (with respect to any Money Market Note held
by a nonconsenting Holder):
(1) reduce the principal amount (other than as a result of
withdrawals made by the Holder) of a Money Market Note whose Holder
must consent to an amendment, supplement or waiver;
(2) reduce the rate of interest paid on the Money Market
Notes, other than interest rate adjustments as provided for in Article
II hereof, or change the time for payment of interest, including
default interest, on any Security;
(3) reduce the principal of (other than as a result of
withdrawals made by the Holder) or alter the redemption provisions or
the price at which the Company shall offer to purchase such Money
Market Note pursuant to Section 3.2 of Article III hereof;
(4) make any Money Market Note payable in money other than
that stated in this Indenture;
(5) make any change in Section 6.4 or 6.7 hereof or in this
sentence of this Section 9.2;
(6) make any change in Article 10 that adversely affects the
rights of any Securityholders; or
(7) waive a Default or Event of Default in the payment of
principal of, or premium, if any, or interest on, or redemption payment
with respect to, any Money Market Note (except a rescission of
acceleration of the Money Market Notes by the Holders of at least a
majority in aggregate principal amount of the Money Market Notes and a
waiver of the payment default that resulted from such acceleration).
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It shall not be necessary for the consent of the Holders under this
Section to approve the particular form of any proposed amendment or waiver, but
it shall be sufficient if such consent approves the substance thereof.
After an amendment or waiver under this Section becomes effective, the
Company shall mail to the Holders of each Security affected thereby a notice
briefly describing the amendment or waiver. Any failure of the Company to mail
such notice, or any defect therein, shall not, however, in any way impair or
affect the validity of any such supplemental indenture or waiver. Subject to
Sections 6.4 and 6.7 hereof, the Holders of a majority in principal amount of
the Securities then outstanding may waive compliance in a particular instance by
the Company with any provision of this Indenture or the Securities.
Section 9.3 Compliance with Trust Indenture Act.
If at the time this Indenture shall be qualified under the TIA, every
amendment to this Indenture or the Securities shall be set forth in a
supplemental indenture that complies with the TIA as then in effect.
Section 9.4 Revocation and Effect of Consents.
Until an amendment or waiver becomes effective, a consent to it by a
Holder of a Security is a continuing consent by the Holder and every subsequent
Holder of a Security or portion of a Security that evidences the same debt as
the consenting Xxxxxx's Security, even if notation of the consent is not made on
any Security. An amendment or waiver becomes effective in accordance with its
terms and thereafter binds every Securityholder.
The Company may fix a record date for determining which Holders must
consent to such amendment or waivers. If the Company fixes a record date, the
record date shall be fixed at (i) the later of 30 days prior to the first
solicitation of such consent or the date of the most recent list of Holders
furnished to the Trustee prior to such solicitation pursuant to Section 2.5, or
(iii) such other date as the Company shall designate.
Section 9.5 Notation on or Exchange of Investment Notes.
The Trustee may place an appropriate notation about an amendment or
waiver on any Investment Note thereafter authenticated. The Company in exchange
for all Investment Notes may issue and the Trustee shall authenticate new
Investment Notes that reflect the amendment or waiver.
Failure to make the appropriate notation or issue a new Investment Note
shall not affect the validity and effect of such amendment or waiver.
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Section 9.6 Trustee to Sign Amendments, etc.
The Trustee shall sign any amendment or supplemental indenture
authorized pursuant to this Article 9 if, in the Trustee's reasonable
discretion, the amendment does not adversely affect the rights, duties,
liabilities or immunities of the Trustee. If it does, the Trustee may, but need
not, sign it. In signing or refusing to sign such amendment or supplemental
indenture, the Trustee shall be entitled to receive, if requested, an indemnity
reasonably satisfactory to it and to receive and, subject to Section 7.1, shall
be fully protected in relying upon, an Officers' Certificate and an Opinion of
Counsel (or written advice of counsel) as conclusive evidence that such
amendment or supplemental indenture is authorized or permitted by this
Indenture, that it is not inconsistent herewith, and that it will be valid and
binding upon the Company in accordance with its terms. The Company may not sign
an amendment or supplemental indenture until its Board of Directors approves it.
ARTICLE X.
SUBORDINATION
Section 10.1 Agreement to Subordinate.
The Company agrees, and each Securityholder by accepting a Security
consents and agrees, that the Indebtedness evidenced by the Securities and the
payment of the principal of and interest on the Securities is subordinated in
right of payment, to the extent and in the manner provided in this Article, to
the prior payment in full, in cash, cash equivalents or otherwise in a manner
satisfactory to the holders of Senior Debt, of all Obligations due in respect of
Senior Debt of the Company whether outstanding on the date hereof or hereafter
incurred, and that the subordination is for the benefit of the holders of Senior
Debt.
For purposes of the Article 10, a payment or distribution on account of
the Securities may consist of cash, property or securities, by set-off or
otherwise, and a payment or distribution on account of any of the Securities
shall include, without limitation, any redemption, purchase or other acquisition
of the Securities.
Section 10.2 Liquidation: Dissolution: Bankruptcy.
(a) Upon any payment or distribution of assets of the Company of any
kind or character, whether in cash, property or securities, to creditors upon
(i) any dissolution or winding-up or total or partial liquidation or
reorganization of the Company whether voluntary or involuntary and whether or
not involving insolvency or bankruptcy or (ii) any bankruptcy or insolvency case
or proceeding or any receivership, liquidation, reorganization or other similar
case or proceeding in connection therewith, relative to the Company or to its
assets, (iii) any assignment for the benefit of creditors or any other
marshaling of assets of the Company, all obligations due, or to become due, in
respect of Senior Debt (including interest after the commencement of any such
proceeding at the rate specified in the applicable Senior Debt) shall first
interfeasibly be paid in full, or provision shall have been made for such
payment, in cash, cash equivalents or otherwise in a manner satisfactory to the
holders of Senior Debt, before any payment is made on account of the principal
of, premium, if any, or interest
36
on the Securities, except that Securityholders may receive securities that are
subordinated to at least the same extent as the Securities are to (x) Senior
Debt and (y) any securities issued in exchange for Senior Debt. Upon any such
dissolution winding-up, liquidation or reorganization, any payment or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities, to which the Holders of the Securities or the Trustee
under this Indenture would be entitled, except for the provisions hereof, shall
be paid by the Company or by any receiver, trustee in bankruptcy, liquidating
trustee, agent or other Person making such payment or distribution, or by the
Holders of the Securities or by the Trustee under this Indenture if received by
them, directly to the holders of Senior Debt (pro rata to such holders on the
basis of the amounts of Senior Debt held by such holders) or their
Representative or Representatives, or to the trustee or trustees under any
indenture pursuant to which any of such Senior Debt may have been issued, as
their interests may appear, for application to the payment of Senior Debt
remaining unpaid until all such Senior Debt has been indefeasibly paid in full,
or provisions shall have been made for such payment, in cash, cash equivalents
or otherwise in a manner satisfactory to the holders of Senior Debt, after
giving effect to any concurrent payment, distribution or provision therefor to
or for the holders of Senior Debt.
(b) For purposes of this Article X, the words "cash, property or
securities" shall not be deemed to include securities of the Company or any
other corporation provided for by a plan of reorganization or readjustment which
are subordinated, to at least the same extent as the Securities, to the payment
of all Senior Debt then outstanding or to the payment of all securities issued
in exchange therefor to the holders of Senior Debt at the time outstanding. The
consolidation of the Company with, or the merger of the Company with or into,
another corporation or the liquidation or dissolution of the Company following
the conveyance or transfer of its property as an entirety, or substantially as
an entirety, to another corporation upon the terms and conditions provided in
Article 5 shall not be deemed a dissolution, winding-up, liquidation or
reorganization for the purposes of this Section if such other corporation shall,
as part of such consolidation, merger, conveyance or transfer, comply with the
conditions stated in Article V.
Section 10.3 Default of Designed Senior Debt.
(a) In the event and during the continuation of any default in the
payment of principal of (or premium, if any) or interest on any Senior Debt, or
any amount owing from time to time under or in respect of Senior Debt or in the
event that any nonpayment event of default with respect to any Senior Debt shall
have occurred and be continuing and shall have resulted in such Senior Debt
becoming or being declared due and payable prior to the date on which it would
otherwise have become due and payable, or (b) in the event that any other
nonpayment event of default with respect to any Senior Debt shall have occurred
and be continuing permitting the holders of such Senior Debt (or a trustee on
behalf of the holders thereof) to declare such Senior Debt due and payable prior
to the date on which it would otherwise have become due and payable, then the
Company shall make no payment, direct or indirect (including any payment which
may be payable by reason of the payment of any other Indebtedness of the Company
being subordinated to the payment of the Securities) (other than securities that
are subordinated to at least the same extent as the Securities are to (x) Senior
Debt and (y) any securities issued in exchange for Senior Debt) unless and until
(i) such event of default shall have been cured or waived or shall have ceased
to exist or such acceleration shall have been
37
rescinded or annulled, or (ii) in case of any nonpayment event of default
specified in (b), during the period (a "Payment Blockage Period") commencing on
the date the Company and the Trustee receive written notice (a "Payment Notice")
of such event of default (which notice shall be binding on the Trustee and the
Securityholders as to the occurrence of such an event of default) from a holder
of the Senior Debt to which such default relates and ending on the earliest of
(A) 179 days after such date, (B) the date, if any, on which such Senior Debt to
which such default relates is discharged or such default is waived by the
holders of such Senior Debt or otherwise cured and (C) the date on which the
Trustee receives written notice from the holder of such Senior Debt to which
such default relates terminating the Payment Blockage Period. No new Payment
Blockage Period may be commenced within 360 days after the receipt by the
Trustee of any prior Payment Blockage Notice. For all purposes of this Section
10.3, no Event of Default which existed or was commencing with respect to the
Senior Debt to which a Payment Blockage Period relates on the date such Payment
Blockage Period commenced shall be or be made the basis for the commencement or
any subsequent Payment Blockage Period unless such event of default is cured or
waived for a period of not less than 180 consecutive days.
Section 10.4 When Distribution Must Be Paid Over.
If the Trustee or any Securityholder receives any payment with respect
to the Securities, whether in cash property or securities (other than securities
that are subordinated to at least the same extent of the Securities are to (x)
Senior Debt and (y) any securities issued in exchange for Senior Debt at a time
when such payment is prohibited by Article X hereof), such payment shall be held
by the Trustee or such Securityholder, in trust for the benefit of, and shall be
paid forthwith over and delivered to, the holders of Senior Debt (pro rata to
such holders on the basis of the amount of Senior Debt held by such holders) for
application to the payment of all Obligations with respect to Senior Debt
remaining unpaid to the extent necessary to pay such Obligations in full, in
cash, cash equivalents or otherwise in a manner satisfactory to the holders of
Senior Debt, in accordance with the terms of such Senior Debt, after giving
effect to any concurrent payment or distribution to or for the holders of Senior
Debt.
With respect to the holders of Senior Debt, the Trustee undertakes to
perform only such obligations on the part of the Trustee as are specifically set
forth in this Article 10, and no implied covenants or obligations with respect
to the holders of Senior Debt shall be read into this Indenture against the
Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Debt, and shall not be liable to any such holders if the
Trustee shall pay over or distribute to or on behalf of Securityholders or the
Company or any other Person money or assets to which any holders of Senior Debt
shall be entitled by virtue of this Article X, except if such payment is made as
a result of the willful misconduct or gross negligence of the Trustee.
Section 10.5 Notice by Company.
The Company shall promptly notify the Trustee and the Paying Agent in
writing of any facts known to the Company that would cause a payment of any
Obligations with respect to the Company
38
to violate this Article, but failure to give such notice shall not affect the
subordination of the Securities to the Senior Debt provided in this Article.
Section 10.6 Subrogation.
After all Senior Debt is paid in full, in cash, cash equivalents or
otherwise in a manner satisfactory to the holders of such Senior Debt, and until
the Securities are paid in full, Securityholders shall be subrogated (equally
and ratably with all other Indebtedness pari passu with the Securities) to the
rights of holders of Senior Debt to receive distributions applicable to Senior
Debt to the extent that distributions otherwise payable to the Securityholders
have been applied to the payment of Senior Debt. A distribution made under this
Article to holders of Senior Debt which otherwise would have been made to
Securityholders is not, as between the Company and Securityholders, a payment by
the Company on the Senior Debt.
Section 10.7 Relative Rights.
This Article defines the relative rights of Securityholders and holders
of Senior Debt. Nothing in this Indenture shall:
(1) impair, as between the Company and Securityholders, the
obligations of the Company, which are absolute and unconditional, to
pay principal of and interest on the Securities in accordance with
their terms;
(2) affect the relative rights of Securityholders and
creditors of the Company other than their rights in relation to holders
of Senior Debt; or
(3) prevent the Trustee or any Securityholder from exercising
its available remedies upon a Default or Event of Default, subject to
the rights of holders and owners of Senior Debt to receive
distributions and payments otherwise payable to Securityholders.
If the Company fails because of this Article to pay principal of or
interest on a Security on the due date, the failure is still a Default or Event
of Default.
Section 10.8 Subordination May Not Be Impaired by the Company or Holders
of Senior Debt.
No right of any present or future holder of Senior Debt to enforce the
subordination of the Indebtedness evidenced by the Securities and the
Obligations related thereto shall be prejudiced or impaired by any act or
failure to act by any such holder or by the Company, the Trustee or any Agent or
by the failure of the Company to comply with this Indenture, regardless of any
knowledge thereof which any such holder may have or otherwise be charged with.
Without limiting the effect of the preceding paragraph, any holder of
Senior Debt may at any time and from time to time without the consent of or
notice to any other holder or to the Trustee,
39
without impairing or releasing any of the rights of any holder of Senior Debt
under this Indenture, upon or without any terms or conditions and in whole or in
part:
(a) change the manner, place or term of payment, or change or extend
the time of payment of, renew or alter any Senior Debt or any other liability of
the Company to such holder, any security therefor, or any liability incurred
directly or indirectly in respect thereof, and the provisions of this Article X
shall apply to the Securities as so changed, extended, renewed or altered;
(b) notwithstanding the provisions of Section 5.1 hereof, sell,
exchange, release, surrender, realize upon or otherwise deal with in any manner
and in any order any property by whomsoever at any time pledged or mortgaged to
secure, or howsoever securing, any Senior Debt or any other liability of the
Company to such holder or any other liabilities incurred directly or indirectly
in respect thereof or hereof or any offset thereagainst;
(c) exercise or refrain from exercising any rights or remedies against
the Company or others or otherwise act or refrain from acting or, for any
reason, fail to file, record or otherwise perfect any security interest in or
lien on any property of the Company or any other Person; and
(d) settle or compromise any Senior Debt or any other liability of the
Company to such holder, or any security therefor, or any liability incurred
directly or indirectly in respect thereof.
All rights and interests under this Indenture of any holder of Senior
Debt and all agreements and obligations of the Trustee, the Holders, and the
Company under Article 6 and under this Article 10 shall remain in full force and
effect irrespective of (i) any lack of validity or enforceability of any
agreement or instrument relating to any Senior Debt or (ii) any other
circumstance that might otherwise constitute a defense available to, or a
discharge of, the Trustee, any Holder, or the Company.
Any holder of Senior Debt hereby authorized to demand specific
performance of the provisions of this Article 10, whether or not the Company
shall have complied with any of the provisions of this Article 10 applicable to
it, at any time when the Trustee or any Holder shall have failed to comply with
any of these provisions. The Trustee and the Holders irrevocably waive any
defense based on the adequacy of a remedy at law that might be asserted as a bar
to such remedy of specific performance.
Section 10.9 Distribution or Notice to Representative.
Whenever a distribution is to be made or a notice given to holders of
Senior Debt, the distribution may be made and the notice given to their
representative.
Upon any payment or distribution of assets of the Company referred to
in this Article X, the Trustee and the Securityholders shall be entitled to rely
upon any order or decree made by any court of competent jurisdiction in which
bankruptcy, dissolution, winding-up, liquidation or reorganization proceedings
are pending or upon any certificate of any representative of any holder of
Senior Debt or
40
of the liquidating trustee or agent or other Person making any distribution,
delivered to the Trustee or to the Securityholders, for the purpose of
ascertaining the Persons entitled to participate in such distribution, the
holders of the Senior Debt and other indebtedness of the Company, the amount
thereof or payable thereon, the amount or amounts paid or distributed thereon
and all other facts pertinent thereto or to this Article X.
Section 10.10 Rights of Trustee and Paying Agent.
Notwithstanding the provisions of this Article X or any other provision
of this Indenture, the Trustee shall not be charged with knowledge of the
existence of any facts which would prohibit the making of any payment or
distribution by the Trustee, or the taking of any action by the Trustee, and the
Trustee or Paying Agent may continue to make payments on the Securities unless
it shall have received at its Corporate Trust Division at least 5 Business Days
prior to the date of such payment written notice of facts that would cause the
payment of any Obligations with respect to the Securities to violate this
Article, which notice, unless specified by a holder of Senior Debt as such,
shall not be deemed to be a Payment Notice. The Trustee may conclusively rely on
such notice. Only the Company or a holder of Senior Debt may give the notice.
Nothing in this Article X shall apply to amounts due to, or impair the claims
of, or payments to, the Trustee under or pursuant to Section 7.7 hereof.
The Trustee in its individual or any other capacity may hold Senior
Debt with the same rights it would have if it were not Trustee. Any Agent may do
the same with like rights.
Section 10.11 Authorization to Effect Subordination.
Each Holder of a Security by his acceptance thereof authorizes and
directs the Trustee on his behalf to take such action as may be necessary or
appropriate to effectuate, as between the holders of Senior Debt and the
Securityholders, the subordination as provided in this Article X, and appoints
the Trustee his attorney-in-fact for any and all such purposes.
Section 10.12 Article Applicable to Paying Agent.
In case at any time any Paying Agent (other than the Trustee or the
Company) shall have been appointed by the Company and be then acting hereunder,
the term "Trustee" as used in this Article X shall in such case (unless the
context otherwise requires) be construed as extending to and including such
Paying Agent within its meaning as fully for all intents and purposes as if such
Paying Agent were named in this Article X in addition to or in place of the
Trustee.
Section 10.13 Miscellaneous.
(a) The agreements contained in this Article 10 shall continue to be
effective or be reinstated, as the case may be, if at any time any payment of
any of the Senior Debt is rescinded or must otherwise be returned by any holder
of Senior Debt upon the insolvency, bankruptcy or reorganization of the Company
or otherwise, all as though such payment had not been made.
41
(b) The Trustee shall notify all holders of Senior Debt (of whose
identity the Trustee has received reasonable advance written notice) of the
existence of any Default or Event of Default under Section 6.1 promptly after a
Responsible Officer of the Trustee actually becomes aware thereof; provided,
however, that at least 5 Business Days prior to the notification of any holder
of Senior Debt under this Section 7.5, the Company shall provide the Company
with notice of its intent to provide such notification.
ARTICLE XI.
MISCELLANEOUS
Section 11.1 Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies or conflicts with
the duties imposed by TIA Section 318(c), the imposed duties shall control.
Section 11.2 Notices.
Any notice, instruction, direction, request or other communication by
the Company, the Trustee or any other holder of Senior Debt to the others is
duly given if in writing and delivered in person or mailed by first-class mail
(registered or certified, return receipt requested), telex, telecopier or
overnight air courier guaranteeing next day delivery, to the other's address:
If to the Company:
AMERICAN BUSINESS FINANCIAL SERVICES, INC.
Balapointe Office Centre
000 Xxxxxxxxxxxx Xxxxxxxxx
Xxxx Xxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxx, Xx.
Chairman, President and Chief Executive Officer
Telecopier: (000) 000-0000
With a copy to:
BLANK ROME XXXXXXX & XxXXXXXX
0 Xxxx Xxxxxx Xxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000-2599
Attention: Xxxx X. Xxxxxxx, Esquire
Telecopier: (000) 000-0000
42
If to the Trustee:
FIRST TRUST, NATIONAL ASSOCIATION, a national banking association
000 Xxxx 0xx Xxxxxx
Xxxxx Xxxx, Xxxxxxxxx 00000
Attention: Xx. Xxxxxxx Xxxxxxxx, Corporate Finance
Telecopier: (000) 000-0000
If to a holder of Senior Debt, such address as such holder of Senior
Debt shall have provided in writing to the Company and the Trustee.
The Company, the Trustee or a holder of Senior Debt by notice to the
Company and the Trustee may designate additional or different addresses for
subsequent notices or communications.
All notices and communications (other than those sent to
Securityholders) shall be deemed to have been duly given: at the time delivered
by hand, if personally delivered; 5 Business Days after being deposited in the
mail, postage prepaid, if mailed; when answered back, if telexed; when receipt
acknowledged, if telecopied; and the next Business Day after timely delivery to
the courier, if sent by overnight air courier guaranteeing next day delivery.
Any notice or communication to a Securityholder shall be mailed by
first-class mail, certified or registered, return receipt requested, to his
address shown on the register kept by the Registrar. Failure to mail a notice or
communication to a Securityholder or any defect in it shall not affect its
sufficiency with respect to other Securityholders.
If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it.
If the Company mails a notice or communication to Securityholders, it
shall mail a copy to the Trustee and each Agent at the same time.
Section 11.3 Communication by Holders with Other Holders.
Securityholders may communicate pursuant to TIA Section 312(b) with
other Securityholders with respect to their rights under this Indenture or the
Securities. The Trustee is subject to Section 312(b). The Company, the Trustee,
the Registrar and anyone else shall have the protection of TIA Section 312(c).
Section 11.4 Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company to the Trustee to take
any action under this Indenture, the Company shall furnish to the Trustee:
(1) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set
forth in Section 11.5) stating that, in the
43
opinion of the signers, all conditions precedent and covenants, if any,
provided for in this Indenture relating to the proposed action have
been complied with; and
(2) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set
forth in Section 11.5) stating that, in the opinion of such counsel,
all such conditions precedent and covenants have been complied with.
Section 11.5 Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture (other than a certificate provided
pursuant to TIA Section 314(a)(4)) 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 whether such covenant or condition has been
complied with; and
(4) a statement whether, in the opinion of such Person, such
condition or covenant has been complied with.
Section 11.6 Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by or at a meeting of
Securityholders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
Section 11.7 Legal Holidays.
A "Legal Holiday" is a Saturday, a Sunday or a day on which banking
institutions in the City of Wilmington or at a place of payment are authorized
or obligated by law, regulation or executive order to remain closed. If a
payment date is a Legal Holiday at a place of payment, payment may be made at
that place on the next succeeding day that is not a Legal Holiday, and no
interest shall accrue for the intervening period.
Section 11.8 No Recourse Against Others.
No director, officer, employee, agent, manager or stockholder of the
Company as such, shall have any liability for any obligations of the Company
under the Securities or this Indenture or for any
44
claim based on, in respect of or by reason of such obligations or their
creation. Each Securityholder by accepting a Security waives and releases all
such liability.
Section 11.9 Duplicate Originals.
The parties may sign any number of copies of this Indenture. One signed
copy is enough to prove this Indenture.
Section 11.10 Governing Law.
THE INTERNAL LAW OF THE STATE OF DELAWARE SHALL GOVERN THIS
INDENTURE AND THE SECURITIES, WITHOUT REGARD TO THE CONFLICT OF LAWS
PROVISIONS THEREOF.
Section 11.11 No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture, loan or
debt agreement of the Company. Any such indenture, loan or debt agreement may
not be used to interpret this Indenture.
Section 11.12 Successors.
All agreements of the Company in this Indenture and the Securities
shall bind its successors. All agreements of the Trustee in this Indenture shall
bind its successor.
Section 11.13 Severability.
In case any provision in this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
Section 11.14 Counterpart Originals.
The parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together represent the same
agreement.
Section 11.15 Table of Contents, Headings, etc.
The Table of Contents, Cross-Reference Table and Headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part hereof and shall in no way
modify or restrict any of the terms or provisions thereof.
45
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, as of the day and year first written above.
AMERICAN BUSINESS FINANCIAL
SERVICES, INC.
(SEAL) By: ____________________________
Name:
Title:
Attest:
-------------------------
FIRST TRUST, NATIONAL ASSOCIATION,
a national banking association, as Trustee
(SEAL) By: ____________________________
Name:
Title:
Attest:
-------------------------
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