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As Filed with the Securities and Exchange Commission on September 19, 1996
Registration No. 333-3580
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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CAPITAL ONE FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 54-1719854
(State or other jurisdiction (I.R.S. employer identification no.)
of incorporation or organization)
2980 Fairview Park Drive
Falls Church, Virginia 22042-4525
(703) 205-1000
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
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John G. Finneran, Jr.
Senior Vice President,
General Counsel and Corporate Secretary
CAPITAL ONE FINANCIAL CORPORATION
2980 Fairview Park Drive
Falls Church, Virginia 22042-4525
(703) 205-1000
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
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Approximate date of commencement of proposed sale to public:
From time to time after the effective date of this Registration
Statement, as determined in light of market conditions.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, please check the following box. /X/
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. / /
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CALCULATION OF REGISTRATION FEE
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Proposed Proposed maximum
maximum aggregate Amount of
Title of each class of Amount to be offering price offering price registration
securities to be registered registered (1) per unit (2) (2) fee
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Debt
Securities....................
Preferred Stock............... $200,000,000(3) 100% $200,000,000 $68,965
Depositary Shares representing
Preferred Stock(4)...........
Common Stock..................
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(1) In U.S. dollars or equivalent thereof in other currencies, including
composite currencies, on the basis of exchange rates on the date an
agreement to issue and sell the applicable Debt Securities is entered
into.
(2) Estimated solely for the purpose of computing the registration fee.
(3) Such amount represents the principal amount of any Debt Securities
issued at their principal amount, the issue price, rather than the
principal amount, of any Debt Securities issued at an original issue
discount and the liquidation preference of any Preferred Stock.
(4) Such indeterminate number of Depositary Shares to be evidenced by
Depositary Receipts issued pursuant to a Deposit Agreement. In the
event the Registrant elects to offer to the public fractional
interests in shares of the Preferred Stock registered hereunder,
Depositary Receipts will be distributed to those persons purchasing
such fractional interests and the shares of Preferred Stock will be
issued to the Depositary under the Deposit Agreement. No separate
consideration will be received for the Depositary Shares.
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
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SUBJECT TO COMPLETION, DATED SEPTEMBER __, 1996
$200,000,000
CAPITAL ONE FINANCIAL CORPORATION
Debt Securities, Preferred Stock and Common Stock
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Capital One Financial Corporation (the "Company") from time to time
may offer and sell (i) debt securities, consisting of debentures, notes and/or
other unsecured evidences (the "Debt Securities"), which may be either
unsecured senior Debt Securities (the "Senior Debt Securities") or unsecured
subordinated Debt Securities (the "Subordinated Debt Securities"), (ii)
preferred stock, par value $.01 per share (the "Preferred Stock"), which may be
issued in the form of depositary shares evidenced by depositary receipts (the
"Depositary Shares") and (iii) common stock, par value $.01 per share ("Common
Stock"). The Debt Securities, Preferred Stock, including the Depositary
Shares, and Common Stock are collectively referred to herein as the
"Securities."
The Securities offered pursuant to this Prospectus may be issued in
one or more series or issuances, together or separately, and will be limited to
$200,000,000 aggregate public offering price (or its equivalent (based on the
applicable exchange rate at the time of sale) in one or more foreign
currencies, currency units or composite currencies as shall be designated by
the Company). The specific terms of the particular Securities in respect of
which this Prospectus is being delivered will be set forth in an accompanying
Prospectus Supplement, including, where applicable: (i) in the case of Debt
Securities, the specific title, aggregate principal amount, the denominations
(which may be in U.S. dollars, in any other currency or in composite
currencies), maturity, premium, if any, the interest rate (which may be fixed,
floating or adjustable), the time and method of calculating payment of
interest, if any, the place or places where the principal of (and premium, if
any) and interest, if any, on such Debt Securities will be payable, the
currency in which principal of (and premium, if any) and interest, if any, on
such Debt Securities will be payable, any terms of redemption at the option of
the Company or the Holder, the terms of conversion or exchange into Common
Stock or other Securities, any sinking fund provisions, the form of the Debt
Securities (which may be in registered form or book-entry form), the initial
public offering price and any other terms of such Debt Securities; (ii) in the
case of Preferred Stock, the specific title, the aggregate amount, any
dividends (including the method of calculating payment of dividends),
liquidation, redemption, voting and other rights, the initial public offering
price, the terms of conversion or exchange into Common Stock or other
Securities and any other terms of such Preferred Stock; and (iii) in the case
of Common Stock, the aggregate number of shares offered, the initial public
offering price and any other terms thereof.
The Senior Debt Securities, when issued, will rank on a parity with
all other unsecured and unsubordinated indebtedness of the Company, and the
Subordinated Debt Securities, when issued, will be subordinated as described
under "Description of Debt Securities - Subordination of Subordinated Debt
Securities" herein.
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The Securities will be sold directly by the Company, through agents,
underwriters or dealers as designated from time to time, or through a
combination of such methods. If agents of the Company or any dealers or
underwriters are involved in the sale of the Securities in respect of which
this Prospectus is being delivered, the names of such agents, dealers or
underwriters and any applicable commissions or discounts will be set forth in
or may be calculated from the Prospectus Supplement with respect to such
Securities. THIS PROSPECTUS MAY NOT BE USED TO CONSUMMATE SALES OF SECURITIES
UNLESS ACCOMPANIED BY A PROSPECTUS SUPPLEMENT.
THE SECURITIES WILL NOT BE DEPOSITS OR OTHER OBLIGATIONS OF ANY BANK
OR NON-BANK SUBSIDIARY OF THE COMPANY AND WILL NOT BE INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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The date of this Prospectus is September __, 1996
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No person has been authorized to give any information or to make any
representation other than those contained in this Prospectus and any
accompanying Prospectus Supplement in connection with the offering described
herein and therein, and, if given or made, such other information or
representation must not be relied upon as having been authorized by the Company
or by any underwriter, dealer or agent. Neither this Prospectus nor any
Prospectus Supplement shall constitute an offer to sell or a solicitation of an
offer to buy any securities offered hereunder in any jurisdiction to any person
to whom it is unlawful to make such offer or solicitation or sale in such
jurisdiction. Neither the delivery of this Prospectus or any Prospectus
Supplement nor any sale made hereunder implies that there has been no change in
the affairs of the Company at any time subsequent to the date hereof or that
the information herein is correct as of any time subsequent to its date.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
and information statements and other information, including the documents
incorporated by reference herein, can be inspected and copied at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549; and at the Commission's regional offices at 7 World
Trade Center, 13th Floor, New York, New York 10048 and Citicorp Center, Suite
1400, 500 West Madison Street, Chicago, Illinois 60661. Copies of such
material can be obtained from the Public Reference Section of the Commission,
450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. Such
material also can be inspected at the office of the New York Stock Exchange, 20
Broad Street, New York, New York 10005. In addition, on May 7, 1996, the
Company began filing its reports, proxy statements and other information
electronically with the Commission. The Commission maintains a Web site at
(http://www.sec.gov) that contains such reports, proxy and information
statements and other information electronically filed with the Commission.
The Company has filed a registration statement on Form S-3 (herein,
together with all amendments and exhibits, referred to as the "Registration
Statement") under the Securities Act of 1933, as amended (the "Securities
Act"), with respect to the securities offered hereby. This Prospectus does not
contain all of the information set forth in the Registration Statement, certain
parts of which are omitted in accordance with the rules and regulations of the
Commission.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
There are hereby incorporated by reference in this Prospectus the
following documents and information heretofore filed with the Commission:
1. The Company's Annual Report on Form 10-K for the year ended December 31,
1995 provided, however, that the information referred to in Item 402(a)(8) of
Regulation S-K promulgated by the Commission shall not be deemed to be
specifically incorporated by reference herein;
2. The Company's Current Reports on Form 8-K dated January 24, 1996 and July
2, 1996;
3. The Company's Quarterly Report on Form 10-Q for the quarter ended June 30,
1996; and
4. The descriptions of the Company's Common Stock which are contained in the
registration statements on Form 8-A filed on August 24, 1994 and November 16,
1995 by the Company to register such securities under Section 12 of the
Exchange Act, including any amendment or report filed for the purpose of
updating such descriptions.
All documents filed by the Company pursuant to Sections 13(a), 13(c),
14 or 15(d) of the Exchange Act, after the date of this Prospectus and prior to
the termination of the offering of the Securities
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hereby shall be deemed to be incorporated herein by reference. Any statement
contained in a document incorporated or deemed to be incorporated by reference
herein shall be deemed to be modified or superseded for purposes of this
Prospectus and the Registration Statement of which it is a part to the extent
that a statement contained herein or in any other subsequently filed document
which is also incorporated or deemed to be incorporated by reference herein
modifies or supersedes such statement. Any statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a part
of this Prospectus or such Registration Statement.
The Company undertakes to provide without charge to each person,
including any beneficial owner, to whom a copy of this Prospectus has been
delivered, upon written or oral request of such person, a copy of any or all of
the documents which have been or may be incorporated herein by reference, other
than exhibits to such documents (unless such exhibits are specifically
incorporated by reference to such documents). Requests for such copies should
be directed to Capital One Financial Corporation, Suite 1300, 2980 Fairview
Park Drive, Falls Church, Virginia 22042-4525, Attention: Corporate Secretary,
telephone number (703) 205-1000.
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THE COMPANY
Capital One Financial Corporation (the "Company") is a financial
services company, incorporated in Delaware on July 21, 1994, whose subsidiaries
provide a variety of products to consumers. The Company's principal
subsidiary, Capital One Bank (the "Bank"), a limited purpose Virginia state
chartered credit card bank, offers credit card products. Capital One, F.S.B.
(the "Savings Bank"), a federally chartered savings bank established in June
1996, provides certain lending and deposit services.
As of June 30, 1996, the Company had total assets of $5.7 billion,
total liabilities of $5.0 billion and total equity of $664 million. The
principal asset of the Company is its equity interest in the Bank. As of June
30, 1996, the assets of the Bank constituted approximately 96% of the
consolidated assets of the Company.
The Company is listed on the New York Stock Exchange under the symbol
COF. The Company's principal executive office is located at 2980 Fairview Park
Drive, Suite 1300, Falls Church, Virginia 22042-4525, (telephone number (703)
205-1000).
Capital One Bank
Prior to November 22, 1994, the Bank conducted its operations as a
division of Signet Bank/Virginia, a wholly owned subsidiary of Signet Banking
Corporation ("Signet"). The Bank, which includes Signet's credit card division
for periods prior to November 22, 1994, is one of the oldest continually
operating bank card issuers in the U.S., having commenced operations in 1953,
the same year as the formation of what is now MasterCard International. It is
among the ten largest issuers of Visa(R)* and MasterCard(R)* credit cards in
the United States based on managed loans outstanding of $ 11.2 billion at June
30, 1996. As of June 30, 1996, the Bank had approximately 7.8 million credit
card accounts. The growth in managed loans and credit card accounts achieved
by the Bank in recent years was due largely to credit card industry dynamics
and the success of the Company's proprietary information-based strategy ("IBS")
initiated in 1988. IBS is designed to allow the Bank to differentiate among
customers based on credit risk, usage and other characteristics and to match
customer characteristics with appropriate product offerings. See "--
Information-Based Strategy" herein.
The Bank offers two brands of credit cards, Visa(R) and MasterCard(R),
and within each brand premium ("gold" cards) and standard credit card products,
both unsecured and secured. Premium credit cards generally have higher lines
of credit and additional ancillary benefits. Periodically, qualified standard
accounts are offered the option to upgrade to premium accounts. Additionally,
among the major bank card issuers, the Bank was one of the first to issue
secured credit cards.
The Bank issues its products nationwide with different Annual
Percentage Rate ("APR"), finance charge and fee combinations or other special
features, such as a balance transfer option, depending on the risk profile and
other characteristics of the targeted customer segment. Using information
derived from proprietary statistical models, the Bank targets customers with a
carefully matched combination of pricing, credit analysis and packaging. In
setting terms for new solicitations, the Bank's pricing philosophy reflects a
risk-based approach where customers with better credit qualifications generally
merit more favorable pricing. Pricing parameters include a combination of APR,
annual membership fees, past-due, overlimit, returned check, cash advance and
other fees, corresponding credit limits and ancillary services. The Bank
continues to test new pricing combinations targeted to different customer
segments.
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* MasterCard and Visa are registered trademarks of MasterCard International
Incorporated and VISA USA, Inc., respectively.
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Cardholders use the credit cards for three principal types of
transactions: purchases, cash advances and check access to the credit line.
Purchases with the card are the most frequent form of usage. Cash advances may
be obtained at financial institutions or automated teller machines.
Cardholders may also use special credit line checks issued by the Company to
draw against their Visa or MasterCard credit lines for cash or purchases, or
under balance transfer programs, to pay down other card balances. Currently,
cardholders must generally make a monthly minimum payment as well as pay
past-due amounts, overlimit amounts, any insurance payments and other fees.
Capital One, F.S.B.
In June 1996, the Company established the Savings Bank to provide
certain consumer lending and deposit services. The Savings Bank issues secured
and unsecured Visa(R) and MasterCard(R) credit cards, secured and unsecured
installment loans and various home equity lending products in the United
States. The Savings Bank uses the Company's IBS to test market various product
offerings to different customer segments. As of June 30, 1996, the assets of
the Savings Bank constituted less than 5% of the consolidated assets of the
Company.
Information-Based Strategy
The Company's IBS is designed to allow the Company to differentiate
among customers based on credit risk, usage and other characteristics and to
match customer characteristics with appropriate product offerings. IBS
involves developing sophisticated models, information systems, well-trained
personnel and a flexible culture to create credit card or other products that
address the demands of changing consumer and competitive markets. By using
sophisticated statistical modeling techniques, the Company is able to segment
its potential customer lists based upon the integrated use of credit scores,
demographics, customer behavioral characteristics and other criteria. By
actively testing a wide variety of product features, marketing channels and
other aspects of its offerings, the Company can design and target customized
solicitations at various customer segments, thereby enhancing customer response
levels and maximizing returns on investment within given underwriting
parameters. Continued integrated testing and model development builds on
information gained from earlier phases and is intended to improve the quality,
performance and profitability of the Company's solicitation and account
management initiatives. The Company applies IBS to all areas of its business,
including solicitations, account management, credit line management, pricing
strategies, usage stimulation, collections, recoveries, and account and balance
retention.
Historically, the Company has concentrated its efforts on, and applied
IBS to, credit card opportunities at the Bank. However, the Company's strategy
for future growth is to continue to apply its IBS to the Bank's credit card
business, as well as to other businesses, both financial and non-financial, to
identify new product opportunities. The Company has established the Savings
Bank [and several non-bank operating subsidiaries] in which it will engage in
non-card product businesses. The Company has conducted a number of test
solicitations with respect to non-card products, including but not limited to
home equity products, installment loans and auto loans. To date, only a
relatively small dollar volume of assets have been generated as a result of
such solicitations.
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USE OF PROCEEDS
Except as otherwise described in the applicable Prospectus Supplement,
the net proceeds from the sale of the Securities hereby offered will be applied
to the Company's general funds to be utilized for general corporate purposes,
including the reduction of short-term debt, possible acquisitions, investments
in, or extension of credit to, the Company's subsidiaries, investments in
securities and the possible acquisition of real property for use in the
Company's business.
CERTAIN RATIOS
The following table sets forth the ratio of earnings to fixed charges
of the Company for the periods indicated:
Six Months Ended June 30, Year Ended December 31,
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1996 1995 1994 1993 1992 1991
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Earnings to Fixed
Charges .............. 1.95 1.78 2.55 3.46 2.58 2.22
The ratio of earnings to fixed charges is computed by dividing (i)
income before income taxes and fixed charges less interest capitalized during
such period, net of amortization of previously capitalized interest, by (ii)
fixed charges. Fixed charges consist of interest expense on borrowings,
including capitalized interest and the portion of rental expense which is
deemed representative of interest.
SUPERVISION, REGULATION AND OTHER MATTERS
The Bank is a banking corporation chartered under Virginia law and a
member of the Federal Reserve System, the deposits of which are insured by the
Bank Insurance Fund (the "BIF") of the Federal Deposit Insurance Corporation
(the "FDIC"). The Bank is subject to comprehensive regulation and periodic
examination by the Bureau of Financial Institutions of the Virginia State
Corporation Commission (the "Bureau of Financial Institutions"), the Federal
Reserve Board and the FDIC. The Company is not a bank holding company under
the Bank Holding Company Act of 1956, as amended (the "BHCA"), as a result of
the Company's ownership of the Bank because the Bank is not a "bank" as defined
under the BHCA. The Bank is not a "bank" under the BHCA because it (i) engages
only in credit card operations, (ii) does not accept demand deposits or
deposits that the depositor may withdraw by check or similar means for payment
to third parties or others, (iii) does not accept any savings or time deposit
of less than $100,000, (iv) maintains only one office that accepts deposits,
and (v) does not engage in the business of making commercial loans. If the
Bank failed to meet the credit card bank exemption criteria described above,
the Bank's status as an insured depository institution would make the Company
subject to the provisions of the BHCA, including certain restrictions as to the
types of business activities in which a bank holding company and its affiliates
may engage. Becoming a bank holding company under the BHCA would affect the
Company's ability to enter into certain non-card product businesses.
Due to the Bank's status as a limited purpose credit card bank, any
non-credit card operations which may be conducted by the Company must be
conducted in other operating subsidiaries of the Company. In addition, for
purposes of the BHCA, if the Bank failed to qualify for the credit card bank
exemption, any entity that acquired direct or indirect control of the Company
and also engaged in activities not permitted for bank holding companies could
be required either to discontinue the impermissible activities or to divest
itself of control of the Company.
The Savings Bank is a federal savings bank chartered by the Office of
Thrift Supervision (the "OTS") and is a member of the Federal Home Loan Bank
System. Its deposits are insured by the Savings Association Insurance Fund of
the FDIC; however, by virtue of an initial deposit assumption transaction
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engaged in by the Savings Bank in June 1996 when it was established, virtually
all of its deposits will be assessed at rates applicable to BIF members. The
Savings Bank is subject to comprehensive regulation and periodic examination by
the OTS and the FDIC. As a result of its ownership of the Savings Bank, the
Company is a unitary savings and loan holding company subject to regulation by
the OTS and the provisions of the Savings and Loan Holding Company Act. As a
unitary savings and loan holding company, the Company generally is not
restricted under existing laws as to the types of business activities in which
it may engage so long as the Savings Bank continues to meet the Qualified
Thrift Lender Test. See "-- Investment Limitations and Qualified Thrift Lender
Test" below.
The Company is also registered as a financial institution holding
company under Virginia law and as such is subject to periodic examination by
the Bureau of Financial Institutions.
The earnings of the Company, are affected by general economic
conditions, management policies and the legislative and governmental actions of
various regulatory agencies, including the Bureau of Financial Institutions,
the Federal Reserve Board, the FDIC and the OTS. In addition, there are
numerous governmental requirements and regulations which affect the activities
of the Company.
Dividends and Transfers of Funds
There are various federal and Virginia law limitations on the extent
to which the Bank and the Savings Bank can finance or otherwise supply funds to
the Company and its affiliates through dividends, loans or otherwise. These
limitations include minimum regulatory capital requirements, Federal Reserve
Board, OTS and Virginia law requirements concerning the payment of dividends
out of net profits or surplus, Sections 23A and 23B of the Federal Reserve Act
governing transactions between an insured depository institution and its
affiliates and general federal and Virginia regulatory oversight to prevent
unsafe or unsound practices. In general, federal banking laws prohibit an
insured depository institution such as the Bank and the Savings Bank from
making dividend distributions if such distributions are not paid out of
available earnings or would cause the institution to fail to meet applicable
capital adequacy standards, including, in the case of the Savings Bank, minimum
requirements set forth in the Order of the OTS approving its organization. In
addition, under Virginia law, the Bureau of Financial Institutions may limit
the payment of dividends by the Bank if the Bureau of Financial Institutions
determines that such a limitation would be in the public interest and necessary
for the Bank's safety and soundness.
Exportation of Interest Rates and Fees
Under current judicial interpretations of the Depository Institutions
Deregulation and Monetary Control Act of 1980 (ODIDMCAO), state-chartered
institutions such as the Bank and federally chartered savings banks such as the
Savings Bank may charge interest at the rate allowed by the laws of the state
where the institution is located notwithstanding any state constitution or
statute to the contrary. In 1978, a statute similar to DIDMCA applicable to
national banks was interpreted by the United States Supreme Court to permit a
national bank to "export" interest rates by charging the interest rate allowed
by the laws of the state where the bank is located on loans to borrowers in
other states, notwithstanding the laws of such other states. Similarly, in
1996, the United States Supreme Court in upholding a California Supreme Court
decision, ruled that national banks, under a statute similar to DIDMCA, may
export charges other than the numerical interest rate, such as late fees,
annual fees, cash advance fees, overlimit fees and returned check fees. In
addition, the United States Supreme Court reversed and remanded a New Jersey
Supreme Court decision respecting a state-chartered bank for treatment
consistent with its decision in the California case. As a result, it is
believed that state-chartered institutions such as the Bank and federally
chartered savings banks such as the Savings Bank are permitted to export
interest rates and other charges pursuant to DIDMCA.
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Capital Adequacy
The Bank and the Savings Bank are currently subject to capital
adequacy guidelines adopted by the Federal Reserve Board and the OTS,
respectively. In the case of the Bank these include a minimum ratio of Tier 1
capital to risk-weighted assets of 4%, a minimum ratio of Tier 1 capital plus
Tier 2 capital to risk-weighted assets of 8% and a minimum "leverage ratio" of
Tier 1 capital to average total tangible assets of 4%. Bank regulators,
however, have broad discretion in applying higher capital requirements. Bank
regulators consider a range of factors when determining capital adequacy, such
as the organization's size, quality and stability of earnings, interest rate
risk exposure, risk diversification, management expertise, asset quality,
liquidity and internal controls. At June 30, 1996, the Bank's risk-based Tier 1
capital ratio was 10.97%, its risk-based total capital ratio was 12.23% and its
Tier 1 leverage ratio was 9.91%.
The Savings Bank is currently subject to capital adequacy guidelines
adopted by the OTS, including a minimum ratio of "leverage or core" capital to
adjusted total assets of 3%, a minimum ratio of "tangible" capital (core
capital less certain intangible assets) to adjusted total assets of 1.5% and a
minimum ratio of "total" capital to risk-weighted assets of 8%. In addition,
the Savings Bank is subject for the first three years of its operations to
additional capital requirements, including the requirement to maintain a
minimum core capital ratio of 8% and a risk-based capital ratio of at least
12%. As described above, the OTS has broad discretion to apply higher capital
requirements. At June 30, 1996, the Savings Bank's tangible capital ratio was
9.51%, its risk-based capital ratio was 483.15% and its core capital ratio was
9.51%, which reflects the start-up nature of its operations. Failure to meet
applicable capital guidelines could subject the Bank and the Savings Bank to a
variety of enforcement remedies available to federal regulatory authorities.
In addition, in connection with the Bank's establishment of a branch
office in the United Kingdom, the Company committed to the Federal Reserve
Board that, for so long as the Bank maintains such branch in the United
Kingdom, the Company will maintain a minimum Tier 1 leverage ratio of 3.0%. At
June 30, 1996, the Company's Tier 1 leverage ratio was 13.54%.
FDICIA and FIRREA
Among other things, the Federal Deposit Insurance Corporation
Improvement Act of 1991 ("FDICIA") requires federal bank regulatory
authorities to take "prompt corrective action" in respect of insured depository
institutions that do not meet minimum capital requirements. FDICIA establishes
five capital ratio levels: well capitalized, adequately capitalized,
undercapitalized, significantly undercapitalized, and critically
undercapitalized. Under applicable regulations, an insured depository
institution is considered to be well capitalized if it maintains a Tier 1
risk-based capital ratio (or core capital to risk-adjusted assets in the case
of the Savings Bank) of at least 6%, a total risk-based capital ratio of at
least 10% and a Tier 1 leverage capital ratio (or core capital ratio in the
case of the Savings Bank) of at least 5%, and is not otherwise in a "troubled
condition" as specified by its appropriate federal regulatory agency. An
insured depository institution is considered to be adequately capitalized if it
maintains a Tier 1 risk-based capital ratio (or core capital to risk-adjusted
assets in the case of the Savings Bank) of at least 4%, total risk-based
capital ratio of at least 8%, and a Tier 1 leverage capital ratio (or core
capital ratio in the case of the Savings Bank) of at least 4% (3% for certain
highly rated institutions), and does not otherwise meet the well capitalized
definition. The three undercapitalized categories are based upon the amount by
which the insured depository institution falls below the ratios applicable to
adequately capitalized institutions. The capital categories are determined
solely for the purposes of applying FDICIA's prompt corrective action ("PCA")
provisions, as discussed below, and such capital categories may not constitute
an accurate representation of the overall financial condition or prospects of
the Bank or the Savings Bank.
At June 30, 1996 the Bank and the Savings Bank met the requirements
for a "well capitalized" institution. A "well capitalized" classification
should not necessarily be viewed as describing the condition or future
prospects of a depository institution, including the Bank and the Savings Bank.
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Under FDICIA's PCA system, an insured depository institution in the
undercapitalized category must submit a capital restoration plan guaranteed by
its parent company. The liability of the parent company under any such
guarantee is limited to the lesser of 5% of the insured depository
institution's assets at the time it became undercapitalized, or the amount
needed to comply with the plan. An insured depository institution in the
undercapitalized category also is subject to limitations in numerous areas
including, but not limited to, asset growth, acquisitions, branching, new
business lines, acceptance of brokered deposits and borrowings from the Federal
Reserve. Progressively more burdensome restrictions are applied to insured
depository institutions in the undercapitalized category that fail to submit or
implement a capital plan and to insured depository institutions that are in the
significantly undercapitalized or critically undercapitalized categories. In
addition, an insured depository institution's primary federal banking agency is
authorized to downgrade the institution's capital category to the next lower
category upon a determination that the institution is in an unsafe or unsound
condition or is engaged in an unsafe or unsound practice. An unsafe or unsound
practice can include receipt by the institution of a less than satisfactory
rating on its most recent examination with respect to its asset quality,
management, earnings or liquidity.
"Critically undercapitalized" insured depository institutions (which
are defined to include institutions that still have a positive net worth) may
not, beginning 60 days after becoming "critically undercapitalized" make any
payment of principal or interest on their subordinated debt (subject to certain
limited exceptions). Thus, in the event an institution became "critically
undercapitalized," it would generally be prohibited from making payments on its
subordinated debt securities. In addition, "critically undercapitalized"
institutions are subject to appointment of a receiver or conservator.
FDICIA requires the federal banking agencies to review the risk-based
capital standards to ensure that they adequately address interest-rate risk,
concentration of credit risk and risks from non-traditional activities. The
OTS amended its risk-based capital rules to incorporate interest-rate risk
requirements under which a savings bank must hold additional capital if it
projects an excessive decline in "net portfolio value" in the event interest
rates increase or decrease by two percentage points. These standards are not
yet in effect.
FDICIA also requires the FDIC to implement a system of risk-based
premiums for deposit insurance pursuant to which the premiums paid by a
depository institution will be based on the probability that the FDIC will
incur a loss in respect of such institution. The FDIC has since adopted a
system that imposes insurance premiums based upon a matrix that takes into
account an institution's capital level and supervisory rating.
The Bank and the Savings Bank may accept brokered deposits as part of
their funding. Under FDICIA, only "well capitalized" and "adequately
capitalized" institutions may accept brokered deposits. "Adequately
capitalized" institutions, however, must first obtain a waiver from the FDIC
before accepting brokered deposits and such deposits may not pay rates that
significantly exceed the rates paid on deposits of similar maturity from the
institution's normal market area or the national rate on deposits of comparable
maturity, as determined by the FDIC, for deposits from outside the
institution's normal market area.
Under the "cross-guarantee" provision of the Financial Institutions
Reform, Recovery and Enforcement Act of 1989 ("FIRREA"), insured depository
institutions such as the Bank and the Savings Bank may be liable to the FDIC in
respect of any loss or anticipated loss incurred by the FDIC resulting from the
default of, or FDIC assistance to, any commonly controlled insured depository
institution. The Bank and the Savings Bank are commonly controlled within the
meaning of the FIRREA cross guarantee provision.
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Investment Limitations and Qualified Thrift Lender Test
Federally-chartered savings banks such as the Savings Bank are subject
to certain investment limitations. For example, federal savings banks are
permitted to make consumer loans (i.e., open-end or closed-end loans for
personal, family or household purposes, such as installment loans) of up to 35
percent of the savings bank's assets. Federal savings banks are also required
to meet the qualified thrift lender test (the "QTL Test"), which generally
requires a savings bank to maintain at least 65 percent "portfolio assets"
(total assets less (i) specified liquid assets up to 20% of total assets, (ii)
intangibles, including goodwill, and (iii) property used to conduct business)
in certain "qualified thrift investments" (primarily residential mortgages and
related investments, including certain mortgage-backed and mortgage-related
investments) on a monthly basis in 9 out of every 12 months. Failure to
qualify under the QTL Test could subject the Savings Bank to substantial
restrictions on its activities and to certain other penalties, and could
subject the Company to the provisions of the BHCA, including the activity
restrictions that apply generally to bank holding companies and their
affiliates. The Savings Bank has been granted a two-year exception from the
QTL Test, but must be in full compliance with the test by June 30, 1998.
Appointment of New Directors
Pursuant to federal regulations, for a period of two years following
the later of its organization or a subsequent "change in control" or in the
event that it becomes undercapitalized or otherwise in a troubled condition, an
insured depository institution is required to give its federal bank regulator
written notice at least 30 days prior to the effective date of any new director
(as well as the employment or change in responsibilities of any individual to a
position as a senior executive officer). A proposed director (or senior
executive officer) may begin service upon the expiration of the 30-day period
following acceptance of a complete notice, unless the federal bank regulator
issues a notice of disapproval before the end of the 30-day period.
Lending Activities
The activities of the Bank and the Savings Bank as consumer lenders
are also subject to regulation under various federal laws including the
Truth-in-Lending Act, the Equal Credit Opportunity Act, the Fair Credit
Reporting Act, the Community Reinvestment Act and the Soldiers' and Sailors'
Civil Relief Act, as well as to various state laws. Regulators are authorized
to impose penalties for violations of these statutes and, in certain cases, to
order the Bank to pay restitution to injured borrowers. Borrowers may also
bring actions for certain violations. Federal and state bankruptcy and debtor
relief laws also affect the ability of the Bank and the Savings Bank to collect
outstanding balances owed by borrowers who seek relief under these statutes.
Legislation
From time to time legislation has been proposed in Congress to limit
interest rates that could be charged on credit card accounts; however, the
Company does not anticipate any serious effort by Congress to enact such a
limitation in the current session of Congress. Legislation has also been
proposed in Congress to limit the circumstances under which consumer reporting
agencies could disclose customer information to direct marketers, including
direct marketers of credit card and other lending products. Congress may in
the future consider other legislation that would affect the banking or credit
card industries. Various bills have also been introduced that would merge the
Bank Insurance Fund and the Savings Association Insurance Fund of the FDIC, and
eliminate a separate savings bank charter possibly requiring that existing
savings banks become banks and repeal in some respects the provisions of the
Glass-Steagall Act prohibiting certain banking organizations from engaging in
certain securities activities and the provisions of the BHCA prohibiting
affiliations between banking organizations and nonbanking organizations. It is
unclear at this time whether and in what form any such legislation will be
adopted or, if adopted, what its impact on the Bank, the Savings Bank or the
Company would be.
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Investment in the Company
Certain acquisitions of capital stock may be subject to regulatory
approval or notice under federal or Virginia law. Investors are responsible
for insuring that they do not directly or indirectly, acquire shares of capital
stock of the Company in excess of the amount which can be acquired without
regulatory approval.
Although the Bank qualifies for the credit card bank exemption under
the BHCA, it is still an "insured depository institution" within the meaning of
the Change in Bank Control Act. The Savings Bank is also an "insured
depository institution" within the meaning of that Act. Consequently, federal
law and regulations will prohibit any person or company from acquiring control
of the Company without, in most cases, prior written approval of the Federal
Reserve Board and the OTS. Control is conclusively presumed if, among other
things, a person or company acquires more than 25% of any class of voting stock
of the Company. A rebuttable presumption of control arises if a person or
company acquires more than 10% of any class of voting stock and is subject to
any of a number of specified "control factors" as set forth in the applicable
regulations.
Interstate Banking and Branching
Although the Bank is not a "bank" within the meaning of Virginia's
reciprocal interstate banking legislation (Chapter 15 of Title 6.1 of the Code
of Virginia), it is a "bank" within the meaning of Chapter 13 of Title 6.1 of
the Code of Virginia governing the acquisition of interests in Virginia
financial institutions (the "Financial Institution Holding Company Act"). The
Financial Institution Holding Company Act prohibits any person or entity from
acquiring or making any public offer to acquire control of a Virginia financial
institution or its holding company without making application to and receiving
the prior approval of the Bureau of Financial Institutions.
On September 29, 1994, the Riegle-Neal Interstate Banking and
Branching Efficiency Act of 1994 (the "Riegle Act") became law. Under the
Riegle Act, the Federal Reserve Board may approve bank holding company
acquisitions of banks in other states, subject to certain aging and deposit
concentration limits. Commencing June 1, 1997 (or earlier if a particular
state chooses), banks in one state may merge with banks in another state,
unless the other state has chosen not to implement this section of the Riegle
Act. These mergers are also subject to similar aging and deposit concentration
limits.
Virginia has "opted-in" early to the provisions of the Riegle Act.
Effective July 1, 1995, an out-of-state bank that does not already maintain a
branch in Virginia may establish and maintain a de novo branch in Virginia, or
through the acquisition of a branch, if the laws of the home state of the
out-of-state bank permit Virginia banks to engage in the same activities in
that state under substantially the same terms as permitted by Virginia. Also,
Virginia banks may merge with out-of-state banks, and an out-of-state bank
resulting from such an interstate merger transaction may maintain and operate
the branches in Virginia of a merged Virginia bank, if the laws of the home
state of the out-of-state bank involved in the interstate merger transaction
permit interstate merger. An out-of-state bank desiring to engage in such
activities must file an application with the State Corporation Commission. It
is unclear at this time whether other states will enact the requisite
legislation to permit such activities in Virginia, and, if adopted, how the
legislation would impact the Bank or the Company.
Federal savings banks, such as the Savings Bank, may establish,
subject to the approval of the OTS, branches outside of the state in which it
has its home office provided that such savings bank qualifies as a domestic
building and loan association under the Internal Revenue Code and meets certain
other legal and regulatory requirements, including with respect to capital
adequacy.
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Interstate Taxation
Several states have passed legislation which attempts to tax the
income from interstate financial activities, including credit cards, derived
from accounts held by local state residents. Based on the volume of its
business in these states and the nature of the legislation passed to date, the
Company currently believes that this development will not materially affect the
financial condition of the Company.
DESCRIPTION OF DEBT SECURITIES
The Senior Debt Securities are to be issued under an Indenture (the
"Senior Indenture") between the Company and [_______________], as trustee (the
"Senior Trustee"). The Subordinated Debt Securities are to be issued under an
Indenture (the "Subordinated Indenture") between the Company and
[_________________], as trustee (the "Subordinated Trustee"). Copies of the
Senior Indenture and the Subordinated Indenture have been filed with the
Commission as exhibits to the Registration Statement. The Senior Indenture and
the Subordinated Indenture are sometimes referred to collectively as the
"Indentures" and the Senior Trustee and the Subordinated Trustee are sometimes
referred to collectively as the "Trustees." The following summaries of the
provisions of the Debt Securities and the Indentures do not purport to be
complete and are subject to, and are qualified in their entirety by reference
to, all the provisions of the Indenture applicable to a particular series of
Debt Securities (the "Applicable Indenture"), including the definitions therein
of certain terms. Article and Section references used herein are references to
the Applicable Indenture. Capitalized terms not otherwise defined herein shall
have the meaning given to them in the Applicable Indenture.
The following sets forth certain general terms and provisions of the
Debt Securities offered hereby. The particular terms of the Debt Securities
offered by any Prospectus Supplement (the "Offered Debt Securities") will be
described in the Prospectus Supplement relating to such Offered Debt Securities
(the "Applicable Prospectus Supplement").
The Company's right to participate as a stockholder in any
distribution of assets of any subsidiary upon its liquidation or reorganization
or winding-up (and thus the ability of Holders of the Debt Securities to
benefit, as creditors of the Company, from such distribution) is subject to the
prior claims of creditors of any such subsidiary. The Bank and the Savings
Bank are subject to claims by creditors for long-term and short-term debt,
obligations, including deposit liabilities, obligations for federal funds
purchased and securities sold under repurchase agreements. There are also
various legal limitations on the extent to which the Bank and the Savings Bank
may pay dividends or otherwise supply funds to the Company or its affiliates.
See "Supervision, Regulation and Other Matters -- Dividends and Transfer of
Funds" herein.
General
The Indentures do not limit the amount of Debt Securities that may be
issued thereunder and provide that Debt Securities may be issued thereunder
from time to time in one or more series. The Debt Securities will be unsecured
obligations of the Company.
Neither the Indentures nor the Debt Securities will limit or otherwise
restrict the amount of indebtedness which may be incurred or other securities
which may be issued by the Company. The Debt Securities issued under the Senior
Indenture will rank on parity with all other unsecured unsubordinated
indebtedness of the Company. The Debt Securities issued under the Subordinated
Indenture will be subordinate and junior in right of payment to all Senior
Indebtedness of the Company to the extent and in the manner set forth in the
Subordinated Indenture. See "-- Subordination of Subordinated Debt Securities"
herein. Reference is made to the Applicable Prospectus Supplement for
information with respect to any deletions from, modifications of or additions
to the Events of Default or covenants of the Company described below that are
applicable to the Debt Securities, including any addition of covenants or other
provisions providing event risk or similar protection.
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The Applicable Prospectus Supplement will describe the following terms
of the Offered Debt Securities: (1) the title and series of the Offered Debt
Securities; (2) whether the Offered Debt Securities are Senior Debt Securities
or Subordinated Debt Securities; (3) any limit upon the aggregate principal
amount of the Offered Debt Securities; (4) the price or prices (expressed as a
percentage of the aggregate principal amount thereof) at which such Debt
Securities will be issued; (5) the date or dates on which the principal of the
Offered Debt Securities will mature, or the method or methods, of any, by which
such date or dates shall be determined; (6) the rate or rates (which may be
fixed or variable) at which the Offered Debt Securities will bear interest, if
any, and the date or dates from which any such interest, if any, will accrue;
(7) the dates on which such interest, if any, on the Offered Debt Securities
will be payable and the Regular Record Dates for such Interest Payment Dates;
(8) the place or places where the principal of and any premium and interest on
the Offered Debt Securities shall be payable; (9) any mandatory or optional
sinking funds or analogous provisions; (10) the date, if any, after which and
the price or prices at which the Offered Debt Securities may, pursuant to any
optional or mandatory redemption provisions, be redeemed and the other detailed
terms and provisions of any such optional or mandatory redemption provision;
(11) the obligation of the Company, if any, to redeem or repurchase the Offered
Debt Securities at the option of the Holder; (12) if other than denominations
of $1,000 and any integral multiple thereof, the denominations in which the
Offered Debt Securities shall be issuable; (13) if other than the principal
amount thereof, the portion of the principal amount of the Offered Debt
Securities that will be payable upon the declaration of acceleration of the
Maturity thereof; (14) the currency of payment of principal of and any premium
and interest on the Offered Debt Securities; (15) any index used to determine
the amount of payment of principal of and any premium and interest on the
Offered Debt Securities; (16) if the Offered Debt Securities will be issuable
only in temporary or permanent global form, the Depositary or its nominee with
respect to the Offered Debt Securities and the circumstances under which the
global Debt Security may be registered for transfer or exchange in the name of
a Person other than the Depositary or its nominee; (17) whether any of the Debt
Securities will be issued in bearer form and, if so, any limitations on
issuance of such bearer Debt Securities (including exchange for registered Debt
Securities of the same series); (18) the applicability, if any, of the
provisions described under "Defeasance and Covenant Defeasance" herein; (19)
any additional Event of Default, and in the case of any Offered Subordinated
Debt Securities, any additional Event of Default that would result in the
acceleration of the maturity thereof; (20) whether such Debt Securities shall
be convertible into or exchangeable for Common Stock or other Securities and,
if so, the terms of such conversion or exchange and the terms of such other
Securities; and (21) any other terms of the Offered Debt Securities. (Section
301 of each Indenture).
Debt Securities may be issued as Original Issue Discount Securities to
be offered and sold at a substantial discount below their stated principal
amount. Federal income tax consequences and other special considerations
applicable to any such Original Issue Discount Securities will be described in
the Applicable Prospectus Supplement. "Original Issue Discount Security" means
any Debt Security which provides for declaration of an amount less than the
principal face amount thereof to be due and payable upon acceleration of the
Maturity thereof upon the occurrence of an Event of Default and the
continuation thereof.
Registration, Transfer, Payment and Paying Agent
Unless otherwise indicated in the Applicable Prospectus Statement,
each series of Debt Securities will be issued in registered form only, without
coupons. The Indentures, however, provide that the Company may also issue Debt
Securities in bearer form only, or in both registered and bearer form. Debt
Securities issued in bearer form shall have interest coupons attached, unless
issued as Original Issue Discount Securities. Debt Securities in bearer form
shall not be offered, sold, resold or delivered in connection with their
original issuance in the United States or to any United States person (as
defined below) other than through offices located outside the United States of
certain United States financial institutions. As used herein, "United States
person" means any citizen or resident of the United States, any corporation,
partnership, or other entity created or organized in or under the laws of the
United States, or any estate or trust, the income of which is subject to United
States federal income taxation regardless of its source, and "United States"
means the United States of America (including the States and the District of
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Columbia), its territories, its possessions and other areas subject to its
jurisdiction. Purchasers of Debt Securities in bearer form will be subject to
certification procedures and may be affected by certain limitations under
United States tax laws. Such procedures and limitations will be described in
the Applicable Prospectus Supplement.
Unless otherwise indicated in the Applicable Prospectus Supplement,
Debt Securities will be issued in denominations of $1,000 or any integral
multiple thereof. No service charge will be made for any transfer, exchange or
conversion of the Debt Securities but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.
Unless otherwise described in the Applicable Prospectus Supplement,
the principal, premium, if any, and interest, if any, of or on the Debt
Securities will be payable and transfer of the Debt Securities will be
registrable at the office or agency of the Company maintained for that purpose,
as the Company may designate from time to time in the City of New York, New
York, provided that payments of interest may be made at the option of the
Company by check mailed to the address appearing in the Security Register of
the person in whose name such registered Debt Security is registered at the
close of business on the Regular Record Date (Sections 305 and 307 of each
Indenture).
Unless otherwise indicated in the Applicable Prospectus Supplement,
payment of principal of, premium, if any, and interest, if any, on Debt
Securities in bearer form will be made payable, subject to any applicable laws
and regulations, at such office outside the United States as specified in the
Applicable Prospectus Supplement and as the Company may designate from time to
time, at the option of the Holder, by check or by transfer to an account
maintained by the payee with a bank located outside the United States. Unless
otherwise indicated in the Applicable Prospectus Supplement, payment of
interest and certain additional amounts on Debt Securities in bearer form will
be made only against surrender of the coupon relating to such Interest Payment
Date. No payment with respect to any Debt Security in bearer form will be made
at any office or agency of the Company in the United States or by check mailed
to any address in the United States or by transfer to an account maintained
with a bank located in the United States.
Global Debt Securities
The Debt Securities of a series may be issued in whole or in part in
the form of one or more global securities ("Global Debt Securities") that will
be deposited with, or on behalf of, a depositary (the "Depositary") identified
in the Applicable Prospectus Supplement. In such case, one or more Global Debt
Securities will be issued in a denomination or aggregate denominations equal to
the portion of the aggregate principal amount of Outstanding Debt Securities of
the series to be represented by such Global Debt Security or Securities.
Global Debt Securities may be issued in either registered or bearer form and in
either temporary or permanent form. Unless and until it is exchanged in whole
or in part for individual certificates evidencing Debt Securities in definitive
form represented thereby, a Global Debt Security may not be transferred except
as a whole by the Depositary for such Global Debt Security to a nominee of such
Depositary or by a nominee of such Depositary to such Depositary or another
nominee of such Depositary or by such Depositary or any such nominee to a
successor of such Depositary or a nominee of such successor.
The specific terms of the depositary agreement with respect to a
series of Global Debt Securities and certain limitations and restrictions
relating to a series of bearer Global Debt Securities will be described in the
Applicable Prospectus Supplement.
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Subordination of Subordinated Debt Securities
Unless otherwise indicated in the Applicable Prospectus Supplement,
the following provisions shall apply to the Subordinated Debt Securities. The
following Section references are to Sections of the Subordinated Indenture.
Upon any distribution of assets of the Company resulting from any
dissolution, winding up, liquidation or reorganization, payments on
Subordinated Debt Securities are to be subordinated, to the extent provided in
the Subordinated Indenture, in right of payment to the prior payment in full of
all Senior Indebtedness, but the obligation of the Company to make payments on
the Subordinated Debt Securities will not otherwise be affected. No payment on
Subordinated Debt Securities may be made at any time when there is a default in
the payment of any principal, premium, interest, Additional Amounts or any
sinking fund on any Senior Indebtedness. Holders of Subordinated Debt
Securities will be subrogated to the rights of Holders of Senior Indebtedness
to the extent of payments made on Senior Indebtedness upon any distribution of
assets in any such proceedings out of the distributive shares of Subordinated
Debt Securities.
By reason of such subordination, in the event of the insolvency of the
Company, certain creditors of the Company may recover more, ratably, than
Holders of Subordinated Debt Securities.
"Senior Indebtedness" means the principal of and premium if any, and
interest on the following, whether outstanding at the date hereof or thereafter
incurred or created: (a) indebtedness of the Company for money borrowed
(including any indebtedness secured by a mortgage or other lien which is (i)
given to secure all or part of the purchase price of property subject thereto,
whether given to the vendor of such property or to another or (ii) existing on
property at the time of acquisition thereof) evidenced by notes or other
written obligations, except such indebtedness as is by its terms expressly
stated to be not superior in right of payment to the Securities or to rank pari
passu or is identified in a Board Resolution or any indenture supplemental
hereto as not superior in right of payment or to rank pari passu with the
Securities; (b) indebtedness of the Company evidenced by notes, debentures,
bonds or other securities sold by the Company for money; (c) indebtedness of
others of the kinds described in either of the preceding clauses (a) or (b)
assumed by or guaranteed in any manner by the Company or in effect guaranteed
by the Company through an agreement to purchase, contingent or otherwise; and
(d) renewals, extensions or refundings of indebtedness of the kinds described
in any of the preceding clauses (a), (b) and (c) unless, in the case of any
particular indebtedness, renewal, extension or refunding, the instrument
creating or evidencing the same or the assumption or guarantee of the same
expressly provides that such indebtedness, renewal, extension or refunding is
not superior in right of payment to the Securities. (Section 101 of the
Subordinated Indenture).
Conversion and Exchangeability
The holders of Debt Securities of a specified series that are
convertible into Common Stock or other Securities ("Convertible Debt
Securities") will be entitled at certain times specified in the Applicable
Prospectus Supplement relating to such Convertible Debt Securities, subject to
prior redemption, exchange, repayment or repurchase, to convert any Convertible
Debt Securities of such series into Common Stock or other Securities, at the
conversion price set forth in the Applicable Prospectus Supplement, subject to
adjustment and to such other terms as are set forth in such Applicable
Prospectus Supplement.
The holders of Debt Securities of any series may be obligated at any
time or at maturity to exchange them for Common Stock or other Securities of
the Company. The terms of any such exchange and any such Common Stock or other
Securities will be described in the Applicable Prospectus Supplement relating
to such series of Debt Securities.
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Certain Covenants
CORPORATE EXISTENCE. Except as permitted under "Consolidation, Merger
and Sale of Assets," the Company will do or cause to be done all things
necessary to preserve and keep in full force and effect its corporate existence
and the corporate existences of each Significant Subsidiary and its rights
(charter or statutory) and franchises and those of each Significant Subsidiary;
provided, however, that neither the Company nor any Significant Subsidiary will
be required to preserve any right or franchise if the Company or such
Significant Subsidiary determines that the preservation thereof is no longer
desirable in the conduct of its business and that the loss thereof is not
disadvantageous in any material respect to the Holders. (Section 1007 of each
Indenture).
LIMITATION ON DISPOSITION OF SIGNIFICANT SUBSIDIARIES. Each of the
Indentures contains a covenant by the Company limiting its ability to dispose
of the Voting Stock of a Significant Subsidiary. A "Significant Subsidiary" is
defined to mean any Subsidiary of the Company the Consolidated Assets of which
constitute 20% or more of the Company's Consolidated Assets. Such covenant
provides that, subject to certain exceptions, so long as any of the Debt
Securities are outstanding, the Company: (a) will not, nor will it permit any
Subsidiary to, sell, assign, transfer or otherwise dispose of any shares of,
securities convertible into or options, warrants or rights to subscribe for or
purchase shares of, Voting Stock of a Significant Subsidiary, nor will the
Company permit a Significant Subsidiary to issue any shares of, or securities
convertible into or options, warrants or rights to subscribe for or purchase
shares of Voting Stock of a Significant Subsidiary (other than sales of
directors qualifying shares) unless the Company will own, directly or
indirectly, at least 80% of the issued and outstanding Voting Stock of such
Subsidiary after giving effect to such transaction, or (b) will not permit a
Significant Subsidiary to either (i) merge or consolidate with or into any
corporation (other than the Company), unless at least 80% of the surviving
corporation's Voting Stock is, or upon consummation of the merger or
consolidation will be, owned, directly or indirectly, by the Company, or (ii)
lease, sell or transfer all or substantially all of its properties and assets
to any corporation or other person (other than the Company), unless 80% of the
Voting Stock of such corporation or other person is owned, or will be owned,
upon such lease, sale or transfer, directly or indirectly, by the Company;
provided, however, that nothing in the Indenture covenants shall prohibit the
Company or a Significant Subsidiary from the sale or transfer of assets
pursuant to any securitization transaction. (Section 1005 of each Indenture).
LIMITATION ON CREATION OF LIENS. So long as any of the Debt
Securities shall be outstanding, the Company will not, nor will it permit any
Subsidiary to, create, assume, incur or suffer to be created, assumed or
incurred or to exist any pledge, encumbrance or lien, as security for
indebtedness for borrowed money, upon any shares of, or securities convertible
into or options, warrants or rights to subscribe for or purchase shares of,
Voting Stock of a Significant Subsidiary, directly or indirectly, without
making effective provision whereby the Debt Securities of all series shall be
equally and ratably secured with any and all such indebtedness if, treating
such pledge, encumbrance or lien as a transfer of the shares of, or securities
convertible into or options, warrants or rights to subscribe for or purchase
shares of, Voting Stock subject thereto to the secured party and to the
issuance of the maximum number of shares of Voting Stock of such Significant
Subsidiary issuable upon the exercise of all such convertible securities,
options, warrants or rights, such Significant Subsidiary would not continue to
be a Controlled Subsidiary. (Section 1006 of each Indenture).
ADDITIONAL COVENANTS. Any additional covenants of the Company with
respect to any series of Debt Securities will be set forth in the Prospectus
Supplement.
Events of Default
The Senior Indenture (with respect to any series of Senior Debt
Securities) and, unless otherwise provided in the Applicable Prospectus
Supplement, the Subordinated Indenture (with respect to any series of
Subordinated Debt Securities) define an Event of Default as any of the
following events: (a) default in the payment of any interest or any Additional
Amounts payable in respect of any Debt Security when it
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becomes due and payable, and continuance of such default for a period of 30
days (in the case of the Subordinated Indenture, whether or not payment is
prohibited by the subordination provisions); (b) default in the payment of the
principal of (or premium, if any, on) any Debt Security at its Maturity (in the
case of the Subordinated Indenture, whether or not payment is prohibited by the
subordinated provisions); (c) default in the deposit of any sinking fund
payment when due (in the case of the Subordinated Indenture, whether or not
payment is prohibited by the subordinated provisions); (d) default in the
performance of any other covenants or warranties of the Company in the
Applicable Indenture (other than a covenant or warranty included in the
Applicable Indenture solely for the benefit of a series of Debt Securities
thereunder other than that series) continued for a period of 60 days after the
Holders of at least 25% in principal amount of the Outstanding Debt Securities
shall have given written notice as provided in the Applicable Indenture; (e)
any event of default under any mortgage, indenture or other instrument under
which any indebtedness for borrowed money in an aggregate principal amount
exceeding $10,000,000 of the Company or any Significant Subsidiary shall become
due and payable, if such acceleration is not rescinded or annulled within 30
days after written notice as provided in the Applicable Indenture; (f) certain
events of bankruptcy, insolvency or reorganization of the Company or any
Significant Subsidiary, and (g) any other Event of Default provided with
respect to Debt Securities of that series. If an Event of Default occurs with
respect to Debt Securities of any series, the Trustee under the Applicable
Indenture shall give the Holders of Debt Securities of such series notice of
such default, provided however, that in the case of a default described in (d)
above, no such notice to Holders shall be given until at least 30 days after
the occurrence thereof. (Section 501 of each Indenture).
If an Event of Default with respect to the Senior Debt Securities of
any series at the time Outstanding occurs and is continuing, either the Senior
Trustee or the Holders of not less than 25% in aggregate principal amount of
the Outstanding Debt Securities of that series may declare the principal amount
(or, if the Debt Securities of that series are Original Issue Discount Debt
Securities, such portion of the principal amount as may be specified in the
terms thereof) of all the Senior Debt Securities of that series to be due and
payable immediately. Payment of the principal of the Subordinated Debt
Securities may be accelerated only in the case of certain events of bankruptcy,
insolvency or reorganization of the Company. The Subordinated Trustee and the
Holders will not be entitled to accelerate the maturity of the Subordinated
Debt Securities upon the occurrence of any of the Events of Default described
above except for those described in subparagraph (f) above the previous
paragraph (i.e., the bankruptcy, insolvency or reorganization of the Company).
Accordingly, there is no right of acceleration in the case of a default in the
performance of any covenant with respect to the Subordinated Debt Securities,
including the payment of interest or principal. At any time after a
declaration of acceleration with respect to Debt Securities of any series has
been made, but before a judgment or decree based on acceleration has been
obtained, the Holders of not less than a majority in aggregate principal amount
of Outstanding Debt Securities of that series may, under certain circumstances,
rescind and annul such declaration. (Section 502 of each Indenture).
The Indentures provide that, subject to the duty of the Trustee during
default to act with the required standard of care, the Trustee will be under no
obligation to exercise any of its rights or powers under the Indenture at the
request or direction of any of the Holders, unless such Holders shall have
offered to the Trustee reasonable indemnity. (Section 601 of each Indenture).
Subject to such provisions for the indemnification of the Trustee and to
certain other conditions, the Holders of a majority in aggregate principal
amount of the Outstanding Debt Securities of any series will have the right to
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 the
Trustee, with respect to the Debt Securities of that series. (Section 512 of
each Indenture).
No Holder of any series of Debt Securities will have any right to
institute any proceeding with respect to the Applicable Indenture or for the
appointment of a receiver or a trustee, or for any remedy thereunder, unless
such Holder shall have previously given to the Trustee under the Applicable
Indenture written notice of a continuing Event of Default and unless the
Holders of not less than 25% in aggregate principal amount of the Outstanding
Debt Securities of that series shall have made written request, and
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offered reasonable indemnity, to the Trustee to institute such proceeding as
trustee, and the Trustee shall not have received from the Holders of a majority
in aggregate principal amount of the Outstanding Debt Securities of that series
a direction inconsistent with such request and shall have failed to institute
such proceeding within 60 days. (Section 507 of each Indenture). However,
such limitations do not apply to a suit instituted on such Debt Security on or
after the respective due dates expressed in such Debt Security and to convert
any Debt Security which is a Convertible Debt Security (as defined herein), and
to institute suit for the enforcement of any such rights to payment or
conversion. (Section 508 of each Indenture).
The Company is required under each Indenture to furnish to the Trustee
annually a statement as to the performance by the Company of certain of its
obligations under such indenture and as to any default in such performance.
(Section 1004 of each Indenture).
Defeasance and Covenant Defeasance
The Indentures provide, if such provision is made applicable to the
Debt Securities of any series pursuant to Section 301 of the Applicable
Indenture (which will be indicated in the Applicable Prospectus Supplement),
that the Company may elect to pay and discharge from any and all obligations in
respect of such Debt Securities then outstanding (including, in the case of
Subordinated Debt Securities, the provisions described under "-- Subordination
of Subordinated Debt Securities") and except for certain obligations to
register the transfer of or exchange of such Debt Securities, replace stolen,
lost or mutilated Debt Securities, maintain paying agencies and hold monies for
payment in trust ("defeasance"), upon satisfaction of certain conditions. The
Company may elect such satisfaction and discharge when (i) no Event of Default
has occurred and is continuing, or would occur upon the giving of notice or
lapse of time at the time of such satisfaction and discharge and (ii) the
Company deposits, in trust, with the Trustee under the Applicable Indenture
money or Government Obligations, which through the payment of interest thereon
and principal thereof in accordance with their terms will provide money, in an
amount sufficient, without reinvestment, to pay all the principal of (and
premium, if any) and interest on, and Additional Amounts with respect to, such
Debt Securities on the dates such payments are due and payable, or fulfills
such obligations by such other means of satisfaction and discharge as provided
in the Applicable Indenture; (iii) the Company has paid or caused to be paid
all other sums payable with respect to the Outstanding Securities of such
series; (iv) the Company shall have delivered an Opinion of Counsel to the
effect that the Holders shall have no Federal income tax consequences as a
result of such deposit or defeasance; and (v) the Company has delivered a
certificate of its Independent Public Accountants as required by the Applicable
Indenture. (Section 402 of each Indenture).
If the Company exercises its defeasance option, payment of such Debt
Securities may not be accelerated because of an Event of Default. (Section 402
of each Indenture).
Outstanding Debt Securities
In determining whether the Holders of the requisite principal amount
of Outstanding Debt Securities have given any request, demand, authorization,
direction, notice, consent or waiver under the Indenture, (i) the portion of
the principal amount of an Original Issue Discount Security that shall be
deemed to be outstanding for such purposes shall be that portion of the
principal amount thereof that would be declared to be due and payable pursuant
to the terms of such Original Issue Discount Security as of the date of such
determination, (ii) the principal amount of any Indexed Security shall be the
principal face amount of such Indexed Security determined on the date of its
original issuance, (iii) the principal amount of a Debt Security denominated in
one or more foreign currency units shall be the U.S. dollar equivalent based on
the applicable exchange rate or rates at the time of sale, and (iv) any Debt
Security owned by the Company or any obligor on such Debt Security or any
affiliate of the Company or such other obligor, shall be deemed not to be
outstanding (Section 101 of each Indenture).
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Modifications and Waiver
Modifications and amendments of each of the Indentures may be made by
the Company and the Trustee under the Applicable Indenture for any purpose with
the consent of the Holders of not less than 66-2/3% in aggregate principal
amount of the Outstanding Debt Securities of each series issued under such
indenture and affected by the modification or amendments; provided, however,
that no such modification or amendment may, without the consent of the Holders
of all Outstanding Debt Securities affected thereby, (i) change the Stated
Maturity of the principal of, or any premium or installment of principal of or
interest on, any Debt Security; (ii) reduce the principal amount of, or the
premium, if any, or (except as otherwise provided in the Applicable Prospectus
Supplement) interest on, any Debt Security (including in the case of an
Original Issue Discount Debt Security the amount payable upon acceleration of
the maturity thereof or the amount provable in bankruptcy); (iii) change the
place or currency of payment of principal of, premium, if any, or interest on
any Debt Security, (iv) impair the right to institute suit for the enforcement
of any payment on any Debt Security on or at the Stated Maturity thereof (or in
the case of redemption, on or after the Redemption Date); (v) in the case of
the Subordinated Indenture, modify the subordination provisions in a manner
adverse to the Holders of the Subordinated Debt Securities; (vi) reduce the
percentage in principal amount of Outstanding Debt Securities of any series; or
(vii) in the case of Convertible Debt Securities, adversely affect the right to
convert such Debt Securities. (Section 902 of each Indenture).
The Holders of at least a majority in aggregate principal amount of
the Outstanding Debt Securities of each series may, on behalf of all Holders of
that series, waive insofar as that series is concerned, compliance by the
Company with certain restrictive provisions of the Applicable Indenture,
including the provisions in "-- Certain Covenants" herein. (Section 1008 of
each Indenture). The Holders of not less than a majority in aggregate
principal amount of the Outstanding Debt Securities may, on behalf of all
Holders of the Debt Securities of that series, waive any past default under the
Applicable Indenture with respect to Debt Securities of that series, except a
default in the payment of principal, premium or interest or in the performance
of certain covenants. (Section 513 of each Indenture).
Modification and amendment of each of the Indentures may be made by
the Company and the applicable Trustee without the consent of any Holder for
any of the following purposes: (i) to evidence the succession of another
Person to the Company; (ii) to add to the covenants of the Company for the
benefit of the Holders of all of any series of Debt Securities; (iii) to add
Events of Default; (iv) to add or change any provisions of the Indenture to
facilitate the issuance of bearer Debt Securities; (v) to add to, delete from
or revise the conditions, limitations and restrictions on the authorized
amount, terms or purposes of issue, authentication and delivery of Debt
Securities; (vi) to establish the form or terms of Debt Securities of any
series and any related coupons; (vii) to evidence and provide for the
acceptance of appointment by a successor Trustee; (viii) to cure any ambiguity,
defect or inconsistency in the Indenture, provided such action does not
adversely affect the interests of Holders of Debt Securities of any series or
any related coupons in any material respect; (ix) to supplement any of the
provisions of the Indenture to such extent as shall be necessary to permit or
facilitate the defeasance and discharge of any series of Debt Securities,
provided such action does not adversely affect the interests of Holders of Debt
Securities of such series or related coupons in any material respect; (x) to
secure the Debt Securities; and (xi) to amend or supplement any provision
contained in the Indenture or in any supplemental indenture, provided that such
amendment or supplement does not materially adversely affect the interests of
the Holders of any Debt Securities then outstanding (Section 901 of each
Indenture).
Consolidation, Merger and Sale of Assets
The Company may consolidate with or merge into any other Person or
Persons or convey, transfer or lease its properties and assets substantially as
an entirety to any Person without the consent of the Holders of any of the
Outstanding Debt Securities provided that (i) any successor or purchaser is a
corporation organized under the laws of the United States of America, any State
or the District of Columbia, and any such successor or purchaser expressly
assumes the Company's obligations on the Debt
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Securities under each of the Indentures, (ii) immediately after giving effect
to the transaction no Event of Default, and no event which, after notice or
lapse of time or both, would become an Event of Default, shall have occurred
and be continuing, and (iii) the Company has delivered to the Trustee under the
Applicable Indenture an Officers' Certificate and an Opinion of Counsel stating
compliance with these provisions. (Section 801)
Concerning the Trustees
[ ] and [ ] are Trustees under the
Senior Indenture and the Subordinated Indenture, respectively. In the normal
course of business, the Company and its subsidiaries conduct banking
transactions with the Trustees, and the Trustees conduct banking transactions
with the Company and its subsidiaries.
DESCRIPTION OF PREFERRED STOCK
The following summary contains a description of the general terms of
the Preferred Stock to which any Prospectus Supplement may relate. Certain
terms of any series of the Preferred Stock offered by any Prospectus Supplement
will be described in the Prospectus Supplement relating to such series of the
Preferred Stock. If so indicated in the Prospectus Supplement, the terms of
any such series, including any Depositary Shares (as defined below) issued in
respect thereof, may differ from the terms set forth below. The description of
certain provisions of the Preferred Stock set forth below and in any Prospectus
Supplement does not purport to be complete and is subject to, and qualified in
its entirety by reference to, the Company's Restated Certificate of
Incorporation and the certificates supplementary to the Company's Restated
Certificate of Incorporation which will be filed with the Commission in
connection with the offering of such series of Preferred Stock.
General
Under the Company's Restated Certificate of Incorporation, the Board
of Directors of the Company is authorized, without further stockholder action,
to provide for the issuance of shares of Preferred Stock, par value $.01 per
share, in one or more series, with such terms, including preferences,
conversion and other rights, voting power, restrictions, limitations as to
dividends, qualifications and terms and conditions of redemption, as shall be
established in or pursuant to the resolution or resolutions providing for the
issue thereof to be adopted by the Board of Directors. Currently, under the
Company's Restated Certificate of Incorporation, 50,000,000 shares are
classified as Preferred Stock. The Company has designated 1,000,000 shares of
such Preferred Stock as Cumulative Participating Junior Preferred Stock, which
may be issued upon the exercise and conversion of certain Rights attached to
each share of the Company's common stock. See "Description of Common Stock --
Rights to Purchase Certain Preferred Shares" herein. Prior to the issuance of
each series of Preferred Stock, the Board of Directors (as used herein the term
"Board of Directors" includes any duly authorized committee thereof) will adopt
resolutions creating and designating such series to a series of Preferred
Stock. The description of certain provisions of the Preferred Stock set forth
below and in any Prospectus Supplements does not purport to be complete and is
subject to and qualified in its entirety by reference to the Certificate of
Designation of the Company relating to the particular series of Preferred
Stock, which will be filed with the Commission at or prior to the time of sale
of such Preferred Stock. As of the date of this Prospectus, no shares of
Preferred Stock are outstanding.
The Preferred Stock shall have the dividend, liquidation, and voting
rights set forth below, unless otherwise provided in the Prospectus Supplement
relating to a particular series of the Preferred Stock. Reference is made to
the Prospectus Supplement relating to the particular series of the Preferred
Stock offered thereby for specific terms, including: (i) the designation of
such Preferred Stock and the number of shares offered; (ii) the amount of
liquidation preference per share; (iii) the price at which such Preferred Stock
will be issued; (iv) the dividend rate (or method of calculation), the dates on
which dividends shall be payable, whether such dividends shall be cumulative or
noncumulative, and, if cumulative, the dates
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from which dividends shall commence to cumulate; (v) any redemption or sinking
fund provisions of such Preferred Stock; (vi) whether the Company has elected
to offer Depositary Shares (as defined below); (vii) the terms and conditions,
if applicable, upon which such Preferred Stock will be convertible into Common
Stock or other Securities, including the conversion price (or manner of
calculation thereof); and (viii) any additional voting, dividend, liquidation,
redemption, sinking fund and other rights, preferences, privileges, limitations
and restrictions of such Preferred Stock.
The Preferred Stock will, when issued, be fully paid and nonassessable
and have no preemptive rights. Unless otherwise specified in the Prospectus
Supplement relating to a particular series of the Preferred Stock, each series
of the Preferred Stock will rank on parity as to dividends and liquidation
rights in all respects with each other series of the Preferred Stock.
Dividend Rights
Holders of the Preferred Stock of each series will be entitled to
receive, when, as and if declared by the Board of Directors of the Company, out
of funds of the Company legally available therefor, cash dividends at such
rates and on such dates as are set forth in the Prospectus Supplement relating
to such series of the Preferred Stock . Such rates may be fixed or variable or
both. Each such dividend will be payable to the holders of record as they
appear on the stock record books of the Company (or, if applicable, the records
of the Depositary referred to below under "Depositary Shares") on such record
dates as will be fixed by the Board of Directors of the Company or a duly
authorized committee thereof. Dividends on any series of the Preferred Stock
may be cumulative or noncumulative, as provided in the Prospectus Supplement
relating thereto. The ability of the Company to pay dividends with respect to
its Preferred Stock or other capital stock may be affected by the ability of
the Bank to pay dividends. The ability of the Bank, as well as the Company, to
pay dividends in the future is, and could be further influenced by bank
regulatory requirements and capital guidelines and policies established by the
Federal Reserve Board. See "Supervision, Regulation and Other Matters" herein.
No full dividends may be declared or paid or funds set apart for the
payment of dividends on any securities which rank on parity with the Preferred
Stock unless dividends shall have been paid or set apart for such payment on
the Preferred Stock. If full dividends are not so paid, the Preferred Stock
shall share dividends pro rata with such Securities.
Each series of Preferred Stock will be entitled to dividends as
described in the Prospectus Supplement relating to such series, which may be
based upon one or more methods of determination. Different series of the
Preferred Stock may be entitled to dividends at different rates or based upon
different methods of determination.
Voting Rights
Except as indicated in the Prospectus Supplement relating to a
particular series of Preferred Stock, or except as expressly required by
applicable law, the holders of the Preferred Stock will not be entitled to any
voting rights.
Rights Upon Liquidation
In the event of any voluntary or involuntary liquidation, dissolution
or winding up of the Company, the holders of each series of Preferred Stock
will be entitled to receive out of assets of the Company available for
distribution to stockholders, after distribution of assets is made to holders
of any series or class of capital stock as may be set forth in the related
Prospectus Supplement, liquidating distributions in the amount set forth in the
Prospectus Supplement relating to such series of the Preferred Stock plus an
amount equal to accrued and unpaid dividends for the then-current dividend
period and, if such series of the Preferred Stock is cumulative, for all
dividend periods prior thereto, all as set forth in the Prospectus Supplement
with respect to such shares. If upon any voluntary or involuntary
liquidation,
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dissolution or winding up of the Company, the amounts payable with respect to
the holders of Preferred Stock of any series are not paid in full, the holders
of the Preferred Stock of such series will share ratably in any such
distribution of assets of the Company in proportion to the full liquidation
preferences to which each is entitled. After payment of the full amount of the
liquidation preference to which they are entitled, the holders of such series
of Preferred Stock will not be entitled to any further participation in any
distribution of assets of the Company.
Because the Company is a holding company, its rights, the rights of
its creditors and of its stockholders, including the holders of the shares of
the Preferred Stock offered hereby, to participate in the assets of any
Subsidiary, including the Bank, upon the latter's liquidation of
recapitalization may be subject to the prior claims of the Subsidiary's
creditors, except to the extent that the Company may itself be a creditor with
reorganized claims against the Subsidiary.
Redemption
A series of the Preferred Stock may be redeemable, in whole or in
part, at the option of the Company or the holder thereof, and may be subject to
mandatory redemption pursuant to a sinking fund, in each case upon terms, at
the times and at the redemption prices set forth in the Prospectus Supplement
relating to such series.
In the event of partial redemptions of Preferred Stock, whether by
mandatory or optional redemption, the shares to be redeemed will be determined
by lot or pro rata, as may be determined by the Board of Directors of the
Company, a committee thereof or by any other method determined to be equitable
by the Board of Directors.
On or after a redemption date, unless the Company defaults in the
payment of the redemption price, dividends will cease to accrue on shares of
Preferred Stock called for redemption and all rights of Holders of such shares
will terminate except for the right to receive the redemption price.
Conversion
The Prospectus Supplement for any series of the Preferred Stock will
state the terms and conditions, if any, on which shares of that series are
convertible into Common Stock or other Securities of the Company. Such terms
will include the number of shares of Common Stock or the number of shares or
aggregate amount of other Securities into which the shares of Preferred Stock
are convertible, the conversion price (or manner of calculation thereof), the
conversion period, provisions as to whether conversion will be at the option of
the holders of the Preferred Stock or the Company, if applicable, the events
requiring an adjustment of the conversion price and provisions affecting
conversion in the event of the redemption of such series of Preferred Stock.
Depositary Shares
The Company may, at its sole option, elect to offer receipts for
fractional interests ("Depositary Shares") in Preferred Stock, rather than full
shares of Preferred Stock. In such event, receipts ("Depositary Receipts") for
Depositary Shares, each of which will represent a fraction (to be set forth in
the Prospectus Supplement relating to a particular series of Preferred Stock)
of a share of a particular series of Preferred Stock, will be issued as
described below.
The shares of any series of Preferred Stock represented by Depositary
Shares will be deposited under a Deposit Agreement (the "Depositary Agreement")
between the Company and the depositary named in the Prospectus Supplement (the
"Depositary"). Subject to the terms of the Deposit Agreement, each owner of a
Depositary Share will be entitled, in proportion to the applicable fraction of
a share of Preferred Stock represented thereby (including dividend, voting,
redemption, subscription and liquidation rights). The above summary of the
Deposit Shares does not purport to be complete and is subject to, and is
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qualified in its entirety by reference to, the description in the applicable
Prospectus Supplement and all the provisions of the Deposit Agreement (which
contain the form of Depositary Receipt), which will be filed as an exhibit to
the Registration Statement of which this Prospectus is a part.
DESCRIPTION OF COMMON STOCK
The Company is authorized to issue 300,000,000 shares of Common Stock,
par value $.01 per share, of which 66,249,466 were issued and outstanding at
June 30, 1996. The Common Stock is traded on the New York Stock Exchange under
the symbol "COF". All outstanding shares of Common Stock are, and any shares
of Common Stock offered, will be validly issued, fully paid and nonassessable.
Voting and Other Rights
Holders of Common Stock are entitled to one vote for each share held
on all matters submitted to a vote of stockholders and except as described
below, a majority vote is required for all action to be taken by stockholders.
Directors are elected by a plurality of the votes cast, and stockholders do not
have cumulative voting rights in the election of directors. Shares of Common
Stock do not have any preemptive, subscription, redemption, sinking fund or
conversion rights.
Distributions
Subject to preferences that may be applicable to holders of any
outstanding shares of Preferred Stock, holders of Common Stock are entitled to
such dividends as may be declared by the Board of Directors out of funds
legally available therefor. Upon liquidation, dissolution or winding-up of the
Company, the assets legally available for distribution to stockholders are
distributable ratably among the holders of Common Stock at that time
outstanding, subject to prior distribution rights of creditors of the Company
and to the preferential rights of any outstanding shares of Preferred Stock.
ANTITAKEOVER LEGISLATION
Section 203 of the General Corporation Law of the State of Delaware
(the "Delaware Law") provides that, subject to certain exceptions specified
therein, a corporation shall not engage in any business combination with any
"interested stockholder" for a three-year period following the time that such
stockholder becomes an interested stockholder unless (i) prior to such time,
the board of directors of the corporation approved either the business
combination or the transaction which resulted in the stockholder becoming an
interested stockholder; (ii) upon consummation of the transaction which
resulted in the stockholder becoming an interested stockholder, the interested
stockholder owned at least 85% of the voting stock of the corporation
outstanding at the time the transaction commenced (excluding certain shares);
or (iii) at or subsequent to such time, the business combination is approved by
the board of directors of the corporation and by the affirmative vote of at
least 66 2/3% of the outstanding voting stock which is not owned by the
interested stockholder. Except as otherwise specified in Section 203 of the
Delaware Law, an interested stockholder is defined to include (x) any person
that is the owner of 15% or more of the outstanding voting stock of the
corporation, or is an affiliate or associate of the corporation and was the
owner of 15% or more of the outstanding voting stock of the corporation, at any
time within three years immediately prior to the relevant date and (y) the
affiliates and associates of any such person.
Under certain circumstances, Section 203 of the Delaware Law makes it
more difficult for a person who would be an "interested stockholder" to effect
various business combinations with a corporation for a three-year period,
although the stockholders may elect to exclude a corporation from the
restrictions imposed thereunder. Neither the Restated Certificate of
Incorporation nor the By-laws of the Company exclude the Company from the
restrictions imposed under Section 203 of the Delaware Law. It is anticipated
that the provisions of Section 203 of the Delaware Law may encourage companies
interested in acquiring the Company to negotiate in advance with the Board of
Directors, since the stockholder approval requirement would be avoided if a
majority of the directors then in office approves either the
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business combination or the transaction which results in the stockholder
becoming an interested stockholder.
Certificate of Incorporation and By-Law Provisions
Certain of the provisions of the Restated Certificate of Incorporation
and By-laws discussed below may have the effect, either alone or in combination
with the provisions of Section 203 discussed above, the Rights discussed
below, and certain banking laws and regulations (see "Regulation -- Investment
in the Company"), of making more difficult or discouraging a tender offer,
proxy contest or other takeover attempt that is opposed by the Board of
Directors but that a stockholder might consider to be in such stockholder's
best interest. Those provisions include (i) restrictions on the rights of
stockholders to remove directors, (ii) prohibitions against stockholders
calling a special meeting of stockholders or acting by unanimous written
consent in lieu of a meeting, (iii) a "fair price" provision for business
combinations and (iv) requirements for advance notice of actions proposed by
stockholders for consideration at meetings of the stockholders.
The summary set forth below describes certain provisions of the
Restated Certificate of Incorporation and By-laws and is qualified in its
entirety by reference to the provisions of the Restated Certificate of
Incorporation and By-laws, copies of which have been filed as exhibits to the
Registration Statement of which this Prospectus forms a part.
CLASSIFIED BOARD OF DIRECTORS. The Restated Certificate of
Incorporation and By-laws of the Company provide that the Board of Directors,
other than those elected by any series of Preferred Stock, will be divided into
three classes of directors, with the classes to be as nearly equal in number as
possible. The term of office of the first and second class of directors
expired at the 1995 and 1996 annual meeting of stockholders, respectively, and
an election of directors was held at each such annual meeting. The term office
of the third class of directors expires at the 1997 annual meeting of
stockholders. The class of directors elected at each annual meeting are
elected for a term expiring at the annual meeting of stockholders held in the
third year following their election and until their successors are elected and
qualified.
The classification of directors will have the effect of making it more
difficult for stockholders to change the composition of the Board of Directors.
At least two annual meetings of stockholders, instead of one, will generally be
required to effect a change in a majority of the Board of Directors. Such a
delay may held ensure that Company's directors, if confronted by a holder
attempting to force a proxy contest, a tender or exchange offer, or an
extraordinary corporate transaction, would have sufficient time to review the
proposal as well as any available alternatives to the proposal and to act in
what they believe to be the best interest of the stockholders. The
classification provisions will apply to every election of directors, however,
regardless of whether a change in the composition of the Board of Directors
would be beneficial to the Company and its stockholders and whether or not a
majority of the Company's stockholders believe that such a change would be
desirable.
The classification provisions could also have the effect of
discouraging a third party from initiating a proxy contest, making a tender
offer or otherwise attempting to obtain control of the Company, even though
such an attempt might be beneficial to the Company and its stockholders. The
classification of the Board of Directors could thus increase the likelihood
that incumbent directors will retain their positions. In addition, because the
classification provisions may discourage accumulations of large blocks of the
Company's stock by purchasers whose objective is to take control of the Company
and remove a majority of the Board of Directors, the classification of the
Board could tend to reduce the likelihood of fluctuations in the market price
of the Common Stock that might result from accumulations of large blocks.
Accordingly, stockholders could be deprived of certain opportunities to sell
their shares of Common Stock at a higher market price than might otherwise be
the case.
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NUMBER OF DIRECTORS; REMOVAL; FILLING VACANCIES. The Restated
Certificate of Incorporation provides that, subject to any rights of holders of
Preferred Stock to elect additional directors under specified circumstances,
the number of directors will be fixed in the manner provided in the By-laws.
The By-laws provide that, subject to any rights of holders of Preferred Stock
to elect directors under specified circumstances, the number of directors will
be fixed from time to time exclusively pursuant to a resolution adopted by
directors constituting a majority of the total number of directors that the
Company would have if there were no vacancies on the Board of Directors (the
"Whole Board"), but must consist of not more than seventeen nor less than three
directors. In addition, the By-laws provide that, subject to any rights of
holders of Preferred Stock, and unless the Board of Directors otherwise
determines, any vacancies will be filled only by the affirmative vote of a
majority of the remaining directors, though less than a quorum. Accordingly,
absent an amendment to the By-laws, the Board of Directors could prevent any
stockholder from enlarging the Board of Directors and filling the new
directorships with such stockholder's own nominees.
In order to be qualified to serve as a director, a person must (a) not
have attained the age of seventy years and (b) either (i) be an officer or
employee of the Company and not (A) have voluntarily resigned from the position
or office he held at the time of his election as a director, (B) have retired
or been retired pursuant to the requirements of a pension, profit sharing, or
similar plan or (C) have, at the time of his election as a director, held a
position or office in the Company which has been changed, other than by an
upward or expanded promotion or (ii) in the case of any person who is not an
officer or employee of the Company, not (A) have retired from or severed his
connection with the organization with which he was affiliated at the time of
his election as a director or (B) have held a position or office with an
organization with which he was affiliated at the time of his election as a
director which has been changed, other than by an upward or expanded promotion,
and (C) not have a material conflict of interest with the Company (1) as
defined by applicable laws and regulations and (2) the existence and
materiality of which may be determined by a majority of the remaining
directors. Whenever any director shall cease to be qualified to serve as a
director his term shall expire, but such director shall continue to serve until
his successor is elected and qualified; provided, however, that no director's
term shall so expire if the Board of Directors shall have waived such
qualification.
Under the Delaware Law, unless otherwise provided in the certificate
of incorporation, directors serving on a classified board may only be removed
by the stockholders for cause. The Restated Certificate of Incorporation and
By-laws of the Company provide that, subject to the rights of holders of
Preferred Stock to elect directors under specified circumstances, directors may
be removed only for cause and only upon the affirmative vote of holders of at
least 80% of the voting power of all the then outstanding shares of stock
entitled to vote generally in the election of directors ("Voting Stock"),
voting together as a single class.
NO STOCKHOLDER ACTION BY WRITTEN CONSENT; SPECIAL MEETINGS. The
Restated Certificate of Incorporation and By-laws of the Company provide that,
subject to the rights of any holders of Preferred Stock to elect additional
directors under specified circumstances, stockholder action can be taken only
at an annual or special meeting of stockholders and prohibit stockholder action
by written consent in lieu of a meeting. The By-laws provide that, subject to
the rights of holders of any series of Preferred Stock to elect additional
directors under specified circumstances, special meetings of stockholders can
be called only by the Chairman of the Board of Directors or by the Board of
Directors pursuant to a resolution adopted by a majority of the Whole Board.
Stockholders are not permitted to call a special meeting or to require that the
Board of Directors call a special meeting of stockholders. Moreover, the
business permitted to be conducted at any special meeting of stockholders is
limited to the business brought before the meeting pursuant to the notice of
meeting given by the Company.
The provisions of the Restated Certificate of Incorporation and
By-laws of the Company prohibiting stockholder action by written consent may
have the effect of delaying consideration of a stockholder proposal until the
next annual meeting unless a special meeting is called by the Chairman or at
the request of a majority of the Whole Board. The provisions would also
prevent the holders of a majority
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of the voting power of the Voting Stock from unilaterally using the written
consent procedure to take stockholder action and from taking action by consent.
Moreover, a stockholder could not force stockholder consideration of a proposal
over the opposition of the Chairman and the Board of Directors by calling a
special meeting of stockholders prior to the time the Chairman or a majority of
the Whole Board believes such consideration to be appropriate.
ADVANCE NOTICE PROVISIONS FOR STOCKHOLDER NOMINATIONS AND STOCKHOLDER
PROPOSALS. The By-laws establish an advance notice procedure for stockholders
to make nominations of candidates for election as directors, or bring other
business before an annual meeting of stockholders of the Company (the
"Stockholder Notice Procedure").
The Stockholder Notice Procedure provides that only persons who are
nominated by, or at the direction of, the Board of Directors, or by a
stockholder who has given timely written notice to the Secretary of the Company
prior to the meeting at which directors are to be elected, will be eligible for
election as directors of the Company. The Stockholder Notice Procedure
provides that at an annual meeting only such business may be conducted as has
been brought before the meeting by, or at the direction of, the Chairman or the
Board of Directors or by a stockholder who has given timely written notice to
the Secretary of the Company of such stockholder's intention to bring such
business before such meeting. Under the Stockholder Notice Procedure, for
notice of stockholder nominations or proposals to be made at an annual meeting
to be timely, such notice must be received by the Company not less than 70 days
nor more than 90 days prior to the first anniversary of the previous year's
annual meeting (or in the event that the date of the annual meeting is advanced
by more than 30 days, or delayed by more than 70 days, from such anniversary
date, not earlier than the 90th day prior to such meeting and not later than
the later of (x) the 70th day prior to such meeting and (y) the 10th day after
public announcement of the date of such meeting is first made).
Notwithstanding the foregoing, in the event that the number of directors to be
elected is increased and there is no public announcement naming all of the
nominees for director or specifying the size of the increased Board of
Directors made by the Company at least 80 days prior to the first anniversary
of the preceding year's annual meeting, a stockholder's notice will be timely,
but only with respect to nominees for any new positions created by such
increase, if it is received by the Company not later than the 10th day after
such public announcement is first made by the Company. Under the Stockholder
Notice Procedure, for notice of a stockholder nomination to be made at a
special meeting at which directors are to be elected to be timely, such notice
must be received by the Company not earlier than the 90th day before such
meeting and not later than the later of (x) the 70th day prior to such meeting
and (y) the 10th day after public announcement of the date of such meeting is
first made.
Under the Stockholder Notice Procedure, a stockholder's notice to the
Company proposing to nominate a person for election as a director must contain
certain information, including, without limitation, the identity and address of
the nominating stockholder, the class and number of shares of stock of the
Company which are owned by such stockholder, and all information regarding the
proposed nominee that would be required to be included in a proxy statement
soliciting proxies for the proposed nominee. Under the Stockholder Notice
Procedure, a stockholder's notice relating to the conduct of business other
than the nomination of directors must contain certain information about such
business and about the proposing stockholder, including, without limitation, a
brief description of the business the stockholder proposes to bring before the
meeting, the reasons for conducting such business at such meeting, the name and
address of such stockholder, the class and number of shares of stock of the
Company beneficially owned by such stockholder, and any material interest of
such stockholder in the business so proposed. If the Chairman of the Board or
other officer presiding at a meeting determines that a person was not
nominated, or other business was not brought before the meeting, in accordance
with the Stockholder Notice Procedure, such person will not be eligible for
election as a director, or such business will not be conducted at such meeting,
as the case may be.
By requiring advance notice of nominations by stockholders, the
Stockholder Notice Procedure will afford the Board of Directors an opportunity
to consider the qualifications of the proposed nominees and, to the extent
deemed necessary or desirable by the Board of Directors, to inform stockholders
about
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such qualifications. By requiring advance notice of the proposed business, the
Stockholder Notice Procedure will also provide a more orderly procedure for
conducting annual meetings of stockholders and, to the extent deemed necessary
or desirable by the Board of Directors, will provide the Board of Directors
with an opportunity to inform stockholders, prior to such meetings, if any
business proposed to be conducted at such meetings, together with any
recommendations as to the Board's position regarding action to be taken with
respect to such business, so that stockholders can better decide whether to
attend such a meeting or to grant a proxy regarding the disposition of any such
business.
Although the By-laws do not give the Board of Directors any power to
approve or disapprove stockholder nominations for the election of directors or
proposals for action, they may have the effect of precluding a contest for the
election of directors or the consideration of stockholder proposals if the
proper procedures are not followed, and of discouraging or deterring a third
party from conducting a solicitation of proxies to elect its own slate of
directors or to approve its own proposal, without regard to whether
consideration of such nominees or proposals might be harmful or beneficial to
the Company and its stockholders.
BUSINESS COMBINATIONS. The Restated Certificate of Incorporation
requires certain Business Combinations (as defined therein) with Interested
Stockholders (as defined below) or affiliates thereof be approved by the
affirmative vote of the holders of at least 75% of the Voting Stock of the
Company, voting together as a single class. Such affirmative vote is required
notwithstanding the fact that no vote may be required, or that a lesser
percentage may be specified, by law or in any agreement with any national
securities exchange or otherwise. The requirement that a Business Combination
with an Interested Stockholder be approved by the affirmative vote of 75% of
the voting power of the outstanding Voting Stock does not apply if either (i)
the Business Combination has been approved by a majority of the Continuing
Directors (as defined below), or (ii) certain price and procedure requirements
designated to ensure that the Company's stockholders receive a "fair price" for
their Common Stock are satisfied. An "Interested Stockholder" is any person
(other than the Company or any subsidiary of the Company) who or which: (i) is
the beneficial owner, directly or indirectly, of 5% or more of the voting power
of the outstanding Voting Stock; or (ii) is an affiliate of the Company and at
any time within the two-year period immediately prior to the date in question
was the beneficial owner, directly or indirectly, of 5% or more of the voting
power of the then outstanding Voting Stock; or (iii) is an assignee of or has
otherwise succeeded to any shares of Voting Stock which were at any time within
the two-year period immediately prior to the date in question beneficially
owned by any Interested Stockholder, if such assignment or succession shall
have occurred in the course of a transaction or series of transactions not
involving a public offering within the meaning of the Securities Act. A
"Continuing Director" means any member of the Board of Directors who was
unaffiliated with the Interested Stockholder and was a member of the Board of
Directors prior to the time that the Interested Stockholder became an
Interested Stockholder, and any successor director who is unaffiliated with the
Interested Stockholder and is recommended or elected to succeed a Continuing
Director by a majority of Continuing Directors then on the Board of Directors.
LIABILITY OF DIRECTORS; INDEMNIFICATION. The Restated Certificate of
Incorporation provides that a director will not be personally liable for
monetary damages to the Company or its stockholders for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the Company or its stockholders, (ii) for acts or omissions
not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) for paying a dividend or approving a stock repurchase
in violation of Section 174 of the Delaware Law or (iv) for any transaction
from which the director derived an improper personal benefit. The Restated
Certificate of Incorporation also provides that each person who is or was or
had agreed to become a director or officer of the Company, or each such person
who is or was serving or had agreed to serve at the request of the Board of
Directors of the Company as an employee or agent of the Company or as director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise (including the heirs, executors, administrators or
estate of such person), will be indemnified by the Company, in accordance with
the By-laws, to the full extent permitted by the Delaware Law, as the same
exists or may in the future be amended (but, in the case of any such amendment,
only to the extent that such amendment permits the Company to provide broader
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30
indemnification rights than said law permitted the Company to provide prior to
such amendment) . The Restated Certificate of Incorporation also specifically
authorizes the Company to enter into agreements with any person providing for
indemnification greater or different than that provided by the Certificate of
Incorporation.
AMENDMENTS. The Restated Certificate of Incorporation and By-laws
state that any amendment to certain provisions, including those provisions
discussed above, be approved by the holders of at least 80% of the Voting
Stock. This requirement will prevent a stockholder with only a majority of the
Common Stock from avoiding the requirements of the provisions discussed above
by simply repealing such provisions. The Restated Certificate of Incorporation
further provides that the By-laws may be amended by the Company's Board of
Directors.
Rights to Purchase Certain Preferred Shares
Each share of Common Stock issued and outstanding, or to be issued and
outstanding, includes, or upon issuance will include, an attached "Right."
Each Right entitles the registered holder to purchase from the Company one
one-hundredth of a share of the Company's Cumulative Participating Junior
Preferred Stock, par value $0.01 per share (the "Junior Preferred Shares") at a
price of $150 per one one-hundredth of a share (the "Purchase Price"), subject
to adjustment. The Company has initially authorized and reserved 1,000,000
shares of Junior Preferred Shares for issuance upon exercise of the Rights.
Because of the nature of the Junior Preferred Shares' dividend and liquidation
rights, the value of the one one-hundredth interest in a Junior Preferred Share
purchasable upon exercise of each Right should approximate the value of one
share of Common Stock. Initially, the Rights are not exercisable and trade
automatically with the Common Stock. The Rights generally become exercisable,
however, and separate certificates representing the Rights will be distributed,
if any person or group acquires 15 percent or more of the Company's outstanding
Common Stock or a tender offer or exchange offer is announced for the Company's
Common Stock. The Rights expire on November 29, 2005, unless earlier redeemed
by the Company at $0.01 per Right prior to the time any person or group
acquires 15 percent of the outstanding Common Stock. Until the Rights become
exercisable, the Rights have no dilutive effective on earnings per share.
Prior to exercise, a Right will not create any rights in the holder thereof as
a stockholder of the Company, including, without limitation, the right to vote
or receive dividends.
The Rights will have certain antitakeover effects. The Rights will
cause substantial dilution to a person or group that attempts to acquire the
Company on terms not approved by the Board of Directors, except pursuant to an
offer conditioned on a substantial number of Rights being acquired. The Rights
should not interfere with any merger or other business combination approved by
the Board of Directors, since the Rights may be redeemed by the Company for
$.01 per Right prior to the time that a person or group acquires 15 percent of
the outstanding Common Stock.
The foregoing summary description of the Rights does not purport to be
complete and is qualified in its entirety by reference to the Form 8-A of the
Company filed on November 16, 1995, which is incorporated herein by reference,
and the Certificate of Designations, a copy of which has been filed as an
exhibit to the Registration Statement of which this Prospectus forms a part.
Dividend Reinvestment Plan
In January 1996, the Company implemented a dividend reinvestment and
stock purchase plan (the "DRIP"). The DRIP provides stockholders with the
opportunity to purchase additional shares of the Company's Common Stock by
reinvesting all or a portion of their dividends on shares of Common Stock. The
DRIP also provides existing stockholders with the option to make cash
investments monthly (subject to a minimum monthly limit of $50 and a maximum
monthly limit of $5,000). Optional cash investments in excess of $5,000 may be
made with the permission of the Company at a discount which will be from 0% to
3%. The Company uses proceeds from the DRIP for general corporate purposes.
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Transfer Agent
The transfer agent and registrar for the Common Stock is ChaseMellon
Shareholder Services, L.L.C.
PLAN OF DISTRIBUTION
The Company may sell Securities to or through underwriters or dealers,
and also may sell Securities directly to other purchasers or through agents.
Each Prospectus Supplement will describe the method of distribution of the
Securities being offered thereby.
The distribution of the Securities may be effected from time to time
in one or more transactions at a fixed price or prices, which may be changed,
or at market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices.
In connection with the sale of Securities, underwriters may receive
compensation from the Company or from purchasers of Securities for whom they
may act as agents in the form of discounts, concessions or commissions.
Underwriters may sell Securities to or through dealers, and such dealers may
receive compensation in the form of discounts, concessions or commissions from
the underwriters and/or commissions from the purchasers for whom they may act
as agents. Underwriters, dealers and agents that participate in the
distribution of Securities may be deemed to be underwriters, and any discounts
or commissions received by them from the Company and any profit on the resale
of Securities by them may be deemed to be underwriting discounts and
commissions, under the Securities Act of 1933, as amended (the "Securities
Act"). Any such underwriter or agent will be identified, and any such
compensation received from the Company will be described, in the Prospectus
Supplement.
If so indicated in the Applicable Prospectus Supplement, the Company
will authorize underwriters or other persons acting as the Company's agents to
solicit offers by certain institutions to purchase Offered Debt Securities from
the Company pursuant to contracts providing for payment and delivery on a
future date. Institutions with which such contracts may be made include but
are not limited to commercial and savings banks, insurance companies, pension
funds, investment companies, educational and charitable institutions and
others, but in all cases such institutions must be approved by the Company.
The obligations of any purchaser under any such contract will be subject to the
condition that the purchase of the Offered Debt Securities shall not at the
time of delivery be prohibited under the laws of the jurisdiction to which such
purchaser is subject. The underwriters and such other agents will not have any
responsibility in respect to the validity or performance of such contracts.
Underwriters and agents who participate in the distribution of
Securities may be entitled under agreements which may be entered into by the
Company to indemnification by the Company against certain liabilities,
including liabilities under the Securities Act.
VALIDITY OF SECURITIES
The validity of the Securities will be passed upon for the Company by
John G. Finneran, Jr., Senior Vice President, General Counsel and Corporate
Secretary of the Company. Mr. Finneran owns beneficially 40,874 shares of
common stock of the Company, including options exercisable within sixty days
under the Company's 1994 Stock Incentive Plan.
EXPERTS
The consolidated financial statements of Capital One Financial
Corporation incorporated by reference in Capital One Financial Corporation's
Annual Report (Form 10-K) for the year ended December 31, 1995, have been
audited by Ernst & Young LLP, independent auditors, as set forth in their
report thereon, incorporated by reference therein and incorporated herein by
reference. Such consolidated
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financial statements are incorporated herein by reference in reliance upon such
report given upon the authority of such firm as experts in accounting and
auditing.
30
33
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 14. Other Expenses of Insurance and Distribution.
The Company estimates that expenses, other than underwriting
compensation, in connection with the offering described in this Registration
Statement will be as follows:
Registration fee . . . . . . . . . . . . . . . . . . . . $ 68,965
Trustee's fees and expenses . . . . . . . . . . . . . . 15,000
Printing and engraving expenses . . . . . . . . . . . . 75,000
Legal fees and expenses . . . . . . . . . . . . . . . . 30,000
Accountants' fees and expenses . . . . . . . . . . . . . 30,000
Rating agency fees . . . . . . . . . . . . . . . . . . . 75,000
Blue Sky fees and expenses . . . . . . . . . . . . . . . 15,000
NASD Filing Fees . . . . . . . . . . . . . . . . . . . . 20,500
NYSE Filing Fees . . . . . . . . . . . . . . . . . . . . 15,000
Miscellaneous . . . . . . . . . . . . . . . . . . . . . 5,535
-------
Total . . . . . . . . . . . . . . . . . . . . . . . . $350,000
========
- -------------------
Item 15. Indemnification of Directors and Officers.
Section 145 of the General Corporation Law of the State of Delaware
provides, in general, for indemnification by a corporation of any person
threatened with or made a party to any action, suit or proceeding by reason of
the fact that he or she is, or was, a director, officer, employee or agent of
such corporation. Indemnification is also authorized with respect to a
criminal action or proceeding where the person had no reasonable cause to
believe that his conduct was unlawful.
Article XI of the Company's Restated Certificate of Incorporation and
Section 6.7 of the Company's Restated bylaws provides, in general, for
mandatory indemnification of directors and officers to the extent permitted by
law, against liability incurred by them in proceedings instituted or threatened
against them by third parties, or by or on behalf of the Company itself,
relating to the manner in which they performed their duties unless they have
been guilty of willful misconduct or of a knowing violation of the criminal
law.
Item 16. Exhibits.
1.1 -- Form of Debt Underwriting Agreement**
1.2 -- Form of Preferred Stock Purchase Agreement**
3.1 -- Restated Certificate of Incorporation of Capital One Financial Corporation*
3.2 -- Restated Bylaws of Capital One Financial Corporation (as amended January 24, 1995)*
4.1 -- Revised Form of Senior Indenture, dated as of [___________], between the Company and
[_____________], as trustee*
4.2 -- Revised Form of Subordinated Indenture, dated as of [___________], between the Company and
[____________], as trustee*
4.3 -- Certificate of Designations of Cumulative Participating Junior Preferred Stock*
4.4 -- Form of Certificate of Designations relating to each series of Preferred Stock**
4.5 -- Form of Deposit Agreement**
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34
5 -- Opinion of John G. Finneran, Jr., Senior Vice President, General Counsel and Corporate Secretary
of Company*
12 -- Statement re: Computation of Ratios of Earnings to Fixed Charges*
13 -- Portions of the Company's 1995 Annual Report incorporated by reference into the Company's
Form 10-K for the year ended December 31, 1996*
23.1 -- Consent of Ernst & Young LLP*
23.2 -- Consent of John G. Finneran, Jr. (included in Exhibit 5)
24 -- Powers of Attorney (set forth on signature page)***
25.1 -- Statement of Eligibility on Form T-1 under the Trust Indenture Act of 1939, as amended, of
[_____________] (separately bound and filed)**
25.2 -- Statement of Eligibility on Form T-1 under the Trust Indenture Act of 1939, as amended, of
[______________] (separately bound and filed)**
- ---------------------
* Filed herewith.
** To be filed by amendment or incorporated by reference. The Company
will file as an Exhibit to a Current Report on Form 8-K any related
form utilized in the future and not previously filed by means of an
amendment.
*** Previously filed.
Item 17. Undertakings.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made of the securities registered hereby, a post-effective amendment to this
registration statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the Registration Statement (or the
most recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the information
set forth in the Registration Statement. Notwithstanding the
foregoing, any increase or decrease in volume of securities offered
(if the total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high and of
the estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more than
a 20 percent change in the maximum aggregate offering price set forth
in the "Calculation of Registration Fee" table in the effective
Registration Statement;
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the Registration
Statement or any material change to such information in the
registration statement;
provided, however, that paragraphs (1)(i) and (1) (ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant pursuant to
Section 13 or Section 15(d) of the Exchange Act that are incorporated by
reference in this Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
Registration Statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
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(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes, that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act that is incorporated by reference in this registration statement
shall be deemed to be a new registration statement relating to the securities
offered herein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(c) - (g) [Intentionally omitted].
(h) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the registrant pursuant to the provisions described under Item 15, or
otherwise, the registrant has been advised that in the opinion of the
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
(i) (1) For purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon rule 430A and contained in a form of
prospectus filed by the Registrant pursuant to Rule 434(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the
Securities Act, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new Registration Statement relating to the
Securities offered therein, and the offering of such Securities at that time
shall be deemed to be the initial bona fide offering thereof.
(j) The undersigned Registrants hereby undertake to file an application
for the purpose of determining the eligibility of the trustee to act under
subsection (a) of section 310 of the Trust Indenture Act in accordance with the
rules and regulations prescribed by the Commission under section 305(b)(2) of
the Trust Indenture Act.
INDEX TO EXHIBITS
Exhibit Sequentially
Number Exhibits Numbered Page
------ -------- -------------
1.1 Form of Debt Underwriting Agreement**
1.2 Form of Preferred Stock Purchase Agreement**
3.1 Restated Certificate of Incorporation of Capital One Financial
Corporation*
3.2 Restated Bylaws of Capital One Financial Corporation (as amended
January 24, 1995)*
4.1 Revised Form of Senior Indenture, dated as of [___________],
between the Company and [_____________], as trustee*
4.2 Revised Form of Subordinated Indenture, dated as of
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36
[___________], between the Company and [____________], as
trustee*
4.3 Certificate of Designations of Cumulative Participating Junior
Preferred Stock*
4.4 Form of Certificate of Designations relating to each series of
Preferred Stock**
4.5 Form of Deposit Agreement**
5 Opinion of John G. Finneran, Jr., Senior Vice President, General
Counsel and Corporate Secretary of Company*
12 Statement re: Computation of Ratios of Earnings to Fixed
Charges*
13 Portions of the Company's 1995 Annual Report incorporated by
reference into the Company's Form 10-K for the year ended
December 31, 1996*
23.1 Consent of Ernst & Young LLP*
23.2 Consent of John G. Finneran, Jr. (included in Exhibit 5)
24 Powers of Attorney (set forth on signature page)***
25.1 Statement of Eligibility on Form T-1 under the Trust Indenture
Act of 1939, as amended, of [_____________] (separately bound
and filed)**
25.2 Statement of Eligibility on Form T-1 under the Trust Indenture
Act of 1939, as amended, of [______________] (separately bound
and filed)**
- ----------------------
* Filed herewith.
** To be filed by amendment or incorporated by reference. The Company
will file as an Exhibit to a Current Report on Form 8-K any related form
utilized in the future and not previously filed by means of an amendment.
*** Previously filed.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Amendment No. 1 to
Form S-3 to be signed on its behalf by the undersigned, thereunto duly
authorized, in the Commonwealth of Virginia, on the 19th day of September, 1996.
CAPITAL ONE FINANCIAL CORPORATION
By: /s/ JAMES M. ZINN
----------------------------------
James M. Zinn
Senior Vice President and Chief Financial Officer
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38
Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 1 to the Registration Statement on Form S-3 has been signed below
by the following persons in the capacities and on the 19th day of September,
1996.
SIGNATURE TITLE
/s/ Richard D. Fairbank* Director, Chairman and Chief Executive Officer
- ----------------------------------- (Principal Executive Officer)
Richard D. Fairbank
/s/ Nigel W. Morris* Director, President and Chief Operating Officer
- -----------------------------------
Nigel W. Morris
/s/ James M. Zinn Senior Vice President and Chief Financial Officer
- ----------------------------------- (Principal Accounting and Financial Officer)
James M. Zinn
/s/ W. Ronald Dietz* Director
- -----------------------------------
W. Ronald Dietz
/s/ James A. Flick, Jr.* Director
- -----------------------------------
James A. Flick, Jr.
/s/ Patrick W. Gross* Director
- -----------------------------------
Patrick W. Gross
/s/ James V. Kimsey* Director
- -----------------------------------
James V. Kimsey
/s/ Stanley I. Westreich* Director
- -----------------------------------
Stanley I. Westreich
* By: /s/ James M. Zinn
------------------------------
James M. Zinn
Attorney-in-Fact
36
1
EXHIBIT 3.1
RESTATED CERTIFICATE OF INCORPORATION
OF
CAPITAL ONE FINANCIAL CORPORATION
1. The name of the corporation (which is hereafter
referred to as the Corporation) is "Capital One Financial Corporation".
2. The original Certificate of Incorporation was filed
with the Secretary of State of Delaware on July 21, 1994, under the name BCD
Holdings Corporation.
3. This Restate Certificate of Incorporation has been
duly proposed by resolutions adopted and declared advisable by the Board of
Directors of the Corporation (the "Board of Directors"), and duly executed and
acknowledged by the proper officers of the Corporation in accordance with the
provisions of Sections 103, 241 and 245 of the General Corporation Law of the
State of Delaware (the "GCL") and, upon filing with the Secretary of State in
accordance with Section 103 shall henceforth supercede the original Certificate
of Incorporation and shall, as it may thereafter be amended in accordance with
its terms and applicable law, be the Certificate of Incorporation of the
Corporation.
4. The text of the Certificate of Incorporation of the
Corporation is hereby amended and restated to read in its entirety as follows:
ARTICLE 1
The name of the corporation (which is hereinafter referred
to as the "Corporation ") is:
Capital One Financial Corporation
ARTICLE 11
The address of the Corporation's registered office in the
State of Delaware is Corporation Service Company, 1013 Centre Road in the City
of Wilmington, County of New Castle. The name of the Corporation's registered
agent at such address is Corporation Service Company.
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ARTICLE III
The purpose of the Corporation shall be to engage in any
lawful act or activity for which corporations may be organized and incorporated
under The GCL.
ARTICLE IV
(A) Authorized Stock. The Corporation shall be
authorized to issue 350,000,000 shares of capital stock, of which 300,000,000
shares shall be shares of Common Stock, $.01 par value ("Common Stock"), and
50,000,000 shall be shares of Preferred Stock, $.01 per value ("Preferred
Stock").
(B) Preferred Stock. Shares of Preferred Stock may be
issued from time to time in one or more series. The Board of Directors is
hereby authorized to create and provide for the issuance of shares of Preferred
Stock in series and, by filing a certificate pursuant to the applicable law of
the State of Delaware (hereinafter referred to as a "Preferred Stock
Designation"), to establish from time to time the number of shares to be
included in each such series, and to fix the designations, powers, preferences
and rights of the shares of each such series and the qualifications,
limitations or restrictions thereof.
The authority of the Board of Directors with respect to each
series shall include, but not be limited to, determination of the following:
(i) The designation of the series, which may be by
distinguishing number, letter or title.
(ii) The number of shares of the series, which number the
Board of Directors may thereafter (except where otherwise provided in
the Preferred Stock Designation) increase or decrease (but not below
the number of shares thereof then outstanding).
(iii) Whether dividends, if any, shall be cumulative or
noncumulative and dividend rate of the series.
(iv) Dates at which dividends, if any, shall be payable.
(v) The redemption rights and price or prices, if any,
for shares of the series.
(vi) The terms and amount of any sinking fund provided for
the purchase or redemption of shares of the series.
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(vii) The amounts payable on, and the preferences, if any,
of shares of the series in the event of any voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the
Corporation.
(viii) Whether the shares of the series shall be convertible
into shares of any other class or series, or any other security, of
the Corporation or any other corporation, and, if so, the
specification of such other class or series of such other security,
the conversion price or prices or rate or rates, any adjustments
thereof, the date or dates at which such shares shall be convertible
and all other terms and conditions upon which such conversion may be
made.
(ix) Restrictions on the issuance of shares of the same
series or of any other class or series.
(x) The voting rights, if any, of the holders of shares
of the series.
(xi) Such other powers, preferences and relative,
participating, optional and other special rights, and the
qualifications, limitations and restrictions thereof as the Board of
Directors shall determine.
(C) Common Stock. The Common Stock shall be subject to
the express terms of the Preferred Stock and any series thereof. Each share of
Common Stock shall have the right to cast one vote for each share for the
election of Directors and on all other matters upon which stockholders are
entitled to vote.
(D) Vote. Except as otherwise provided in this
Certificate of Incorporation or in a Preferred Stock Designation, or as may be
required by applicable law, the Common Stock shall have the exclusive right to
vote for the election of directors and for all other purposes and holders of
shares of Preferred Stock shall not be entitled to receive notice of any
meeting of shareholders at which they are not entitled to vote. Each share of
Common Stock shall have one vote, and the Common Stock shall vote together as a
single class.
(E) Record Holders. The Corporation shall be entitled to
treat the person in whose name any share of its stock is registered as the
owner thereof for all purposes and shall not be bound to recognize any
equitable or other claim to, or interest in, such share on the part of any
other person, whether or not the Corporation shall have notice thereof, except
as expressly provided by applicable law.
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ARTICLE V
The Board of Directors is hereby authorized to create and
issue, whether or not in connection with the issuance and sale of any of its
stock or other securities or property, rights entitling the holders thereof to
purchase from the Corporation shares of stock or other securities of the
Corporation or any other corporation, recognizing that, under certain
circumstances, the creation and issuance of such rights could have the effect
of discouraging third parties from seeking, or impairing their ability to seek,
to acquire a significant portion of the outstanding securities of the
Corporation, to engage in any transaction which might result in a change of
control of the Corporation or to enter into any agreement, arrangement or
understanding with another party to accomplish the foregoing or for the purpose
of acquiring, holding, voting or disposing of any securities of the
Corporation. The times at which and the terms upon which such rights are to be
issued will be determined by the Board of Directors and set forth in the
contracts or instruments that evidence such rights. The authority of the Board
of Directors with respect to such rights shall include, but not be limited to,
determination of the following:
(A) The initial purchase price per share or other unit of
the stock or other securities or property to be purchased upon
exercise of such rights.
(B) Provisions relating to the times at which and the
circumstances under which such rights be exercised or sold or
otherwise transferred, either together with or separately from, any
other stock or other securities of the Corporation.
(C) Provisions which adjust the number or exercise price
of such rights or amount or nature of the stock or other securities
or property receivable upon exercise of such rights in the event of a
combination, split or recapitalization of any stock of the
Corporation, a change in ownership of the Corporation's stock or other
securities or a reorganization, merger, consolidation, sale of assets
or other occurrence relating to the Corporation or any stock of the
Corporation, and provisions restricting the ability of the Corporation
to enter into any such transaction absent an assumption by the other
party or parties thereto of the obligations of the Corporation under
such rights.
(D) Provisions which deny the holder of a specified
percentage of the outstanding stock or other securities of the
Corporation the right to exercise such rights and/or cause the rights
held by such holder to become void.
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(E) Provisions which permit the Corporation to redeem or
exchange such rights, which redemption or exchange may be within the
sole discretion of the Board of Directors, if the Board of Directors
reserves such right to itself.
(F) The appointment of a rights agent with respect to
such rights.
Notwithstanding anything contained in this Certificate of
Incorporation to the contrary, the affirmative vote of at least 80 percent of
the voting power of the then outstanding Voting Stock (as defined below),
voting together as a single class, shall be required to amend or repeal, or
adopt any provisions inconsistent, with this Article V. For the purposes of
this Certificate of Incorporation, "Voting Stock" shall mean the outstanding
shares of capital stock of the Corporation entitled to vote generally in the
election of Directors.
ARTICLE VI
(A) In furtherance and not in limitation of the powers
conferred by law, the Board of Directors is expressly authorized and empowered:
(i) to adopt, amend or repeal the Bylaws of the
Corporation, provided, however, that the Bylaws adopted by the Board
of Directors under the powers hereby conferred may be altered, amended
or repealed by the Board of Directors or by the stockholders having
voting power with respect thereto, provided further that in the case
of amendments by stockholders, the affirmative vote of the holders of
at least 80 percent of the voting power of the then outstanding Voting
Stock, voting together as a single class, shall be required to alter,
amend or repeal, the Bylaws; and
(ii) from time to time to determine whether and to what
extent, and at what times and places, and under what conditions and
regulations, the accounts and books of the Corporation, or any of
them, shall be open to inspection of stockholders; and, except as so
determined, or as expressly provided in this Certificate of
Incorporation or in any Preferred Stock Designation, no stockholder
shall have any right to inspect any account, book or document of the
Corporation other than such rights as may be conferred by law.
(B) The Corporation may in its Bylaws confer powers upon
the Board of Directors in addition to the foregoing and in addition to the
powers and authorities expressly conferred upon the Board of Directors by law.
Notwithstanding anything contained in this Certificate of Incorporation to the
contrary, the affirmative vote of the holders of at least 80 percent of the
voting power of the then outstanding Voting Stock, voting together as a single
class, shall be required to amend or repeal, or adopt any provision
inconsistent with, subparagraph (i) of paragraph (A) of this Article VI.
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ARTICLE VII
Subject to the rights of the holders of any series of
Preferred Stock to elect additional directors under specific circumstances or
to consent to specific actions taken by the Corporation, any action required or
permitted to be taken by the stockholders of the Corporation must be effected
at a duly called annual or special meeting of stockholders of the Corporation
and may not be effected by any consent in writing in lieu of a meeting of such
stockholders. Notwithstanding anything contained in this Certificate of
Incorporation to the contrary, the affirmative vote of at least 80 percent of
the voting power of the then outstanding Voting Stock, voting together as a
single class, shall be required to amend or repeal, or adopt any provision
inconsistent with, this Article VII.
ARTICLE VIII
(A) Subject to the rights of the holders of any series of
Preferred Stock to elect additional directors under specific circumstances, the
number of directors of the Corporation shall be fixed by the Bylaws of the
Corporation and may be increased or decreased from time to time in such a
manner as may be prescribed by the Bylaws.
(B) Unless and except to the extent that the Bylaws of
the Corporation shall so require, the election of directors of the Corporation
need not be by written ballot.
(C) The directors, other than those who may be elected
by the holders of any series of Preferred Stock, shall be divided into three
classes as nearly equal in number as possible, and designated as Class I, Class
II and Class III. Class I directors shall be initially elected for a term
expiring at the 1995 annual meeting of stockholders, Class II directors shall
be initially elected for a term expiring at the 1996 annual meeting of
stockholders, and Class III directors shall be initially elected for a term
expiring at the 1997 annual meeting of stockholders. Members of each class
shall hold office until their successors are elected and qualified. At each
succeeding annual meeting of the stockholders of the Corporation, the
successors of the class of directors whose term expires at that meeting shall
be elected by a plurality vote of all votes cast at such meeting to hold office
for a term expiring at the annual meeting of stockholders held in the third
year following the year of their election, and until their successors are
elected and qualified.
(D) Subject to the rights of the holders of any series of
Preferred Stock to elect additional directors under specific circumstances, any
director may be removed from office at any time, but only for cause and only by
the affirmative vote of the holders of at least 80 percent of the voting power
of the then outstanding Voting Stock, voting together as a single class.
(E) Notwithstanding anything contained in this
Certificate of Incorporation to the contrary, the affirmative vote of the
holders of at least 80 percent of
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the voting power of the then outstanding Voting Stock, voting together as a
single class, shall be required to amend or repeal, or adopt any provision
inconsistent with, this Article VIII.
ARTICLE IX
Section 1. Vote Required for Certain Business Combinations.
(A) Higher Vote for Certain Business Combinations. In
addition to any affirmative vote required by law or this Certificate of
Incorporation and except as otherwise expressly provided in Section 2 of this
Article IX:
(i) any merger or consolidation of the Corporation or any
Subsidiary (as hereinafter defined) with (a) any Interested
Stockholder (as hereinafter defined) or (b) any other corporation
(whether or not itself an Interested Stockholder) which is, or after
such merger or consolidation would be, an Affiliate (as hereinafter
defined) of an Interested Stockholder; or
(ii) any sale, lease, exchange, mortgage, pledge, transfer
or other disposition (in one transaction or a series of transactions)
to or with any Interested Stockholder, including all Affiliates of the
Interested Stockholder, of any assets of the Corporation or any
Subsidiary having an aggregate Fair Market Value (as hereinafter
defined) of $10,000,000 or more; or
(iii) the issuance or transfer by the Corporation or any
Subsidiary (in one transaction or a series of transactions) of any
securities of the Corporation or any Subsidiary to any Interested
Stockholder, including all Affiliates of the Interested Stockholder,
in exchange for cash, securities or other property (or a combination
thereof) having an aggregate Fair Market Value of $10,000,000 or more;
or
(iv) the adoption of any plan or proposal for the
liquidation or dissolution of the Corporation proposed by or on behalf
of an Interested Stockholder or any Affiliates of an Interested
Stockholder; or
(v) any reclassification of securities (including any
reverse stock split), or recapitalization of the Corporation, or any
merger or consolidation of the Corporation with any of its
Subsidiaries or any other transaction (whether or not an Interested
Stockholder is a party thereto) which has the effect, directly or
indirectly, of increasing the proportionate share of the outstanding
shares of any class of equity or convertible securities of the
Corporation or any Subsidiary which are directly or indirectly owned
by any Interested Stockholder or one or more Affiliates of the
Interested Stockholder;
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shall require the affirmative vote of the holders of at least 75% of the voting
power of the then outstanding Voting Stock, voting together as a single class,
including the affirmative vote of the holders of at least 75% of the voting
power of the then outstanding Voting Stock not owned directly or indirectly by
any Interested Stockholder or any Affiliate of any Interested Stockholder.
Such affirmative vote shall be required notwithstanding the fact that no vote
may be required, or that a lesser percentage may be permitted by law or in any
agreement with any national securities exchange or otherwise.
(B) Definition of "Business Combination." The term
"Business Combination" as used in this Article IX shall mean any transaction
described in any one or more of clauses (i) through (v) of paragraph (A) of
this Section 1.
Section 2. When Higher Vote is Not Required. The provision
of Section 1 of this Article IX shall not be applicable to any particular
Business Combination, and such Business Combination shall require only such
affirmative vote as is required by law or any other provision of this Restated
Certificate of Incorporation, if the conditions specified in either of the
following paragraphs (A) or (B) are met:
(A) Approval by Continuing Directors. The Business
Combination shall have been approved by a majority of the Continuing Directors
(as hereinafter defined).
(B) Price and Procedure Requirements. All of the
following conditions shall have been met:
(i) The aggregate amount of the cash and the Fair Market
Value as hereinafter defined as of the date of the consummation of the
Business Combination of consideration other than cash, to be received
per share by holders of Common Stock in such Business Combination,
shall be at least equal to the highest of the following:
(a) (if applicable) the highest per
share price (including any brokerage commissions,
transfer taxes and soliciting dealers' fees) paid by
the Interested Stockholder for any shares of Common
Stock acquired by it (1) within the two-year period
immediately prior to the first public announcement of
the proposal of such Business Combination (the
"Announcement Date"), or (2) in the transaction in
which it became an Interested Stockholder, whichever
is higher.
(b) the Fair Market Value per share of
Common Stock on the Announcement Date or on the date
on which the Interested Stockholder became an
Interested Stockholder (the "Determination Date"),
whichever is higher, and
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(c) (if applicable) the price per share
equal to the Fair Market Value per share of Common
Stock determined pursuant to paragraph (B) (i) (b)
above, multiplied by the ratio of (1) the highest per
share price (including any brokerage commissions,
transfer taxes and soliciting dealers' fees) paid by
the Interested Stockholder for any shares of Common
Stock acquired by it within the two-year period
immediately prior to the Announcement Date to (2) the
Fair Market Value per share of Common Stock on the
first day in such two-year period upon which the
Interested Stockholder acquired any shares of Common
Stock.
(ii) The aggregate amount of the cash and the Fair Market
Value as of the date of the consummation of the Business Combination
of consideration other than cash to be received per share by holders
of shares of any other class, other than Common Stock or Excluded
Preferred Stock (as hereinafter defined), of outstanding Voting Stock
shall be at least equal to the highest of the following (it being
intended that the requirements of this paragraph (B) (ii) shall be
required to be met with respect to every such class of outstanding
Voting Stock whether or not the Interested Stockholder has previously
acquired any share of a particular class of Voting Stock):
(a) (if applicable) the highest per
share price (including any brokerage commissions,
transfer taxes and soliciting dealers' fees) paid by
the Interested Stockholder for any shares of such
class of Voting Stock acquired by it (1) within the
two-year period immediately prior to the Announcement
Date, or (2) in the transaction in which it became an
Interested Stockholder, whichever is higher.
(b) (if applicable) the highest
preferential amount per share to which the holders of
shares of such class of Voting Stock are entitled in
the event of any voluntary or involuntary
liquidation, dissolution or winding up of the
Corporation.
(c) the Fair Market per share of such
class of Voting Stock on the Announcement Date or on
the Determination Date, whichever is higher, and
(d) (if applicable) the price per share
equal to the Fair Market Value per share of such
class of Voting Stock determined pursuant to
paragraph (b) (ii) (c) above, multiplied by the ratio
of (1) the highest per share price (including any
brokerage commissions, transfer taxes and soliciting
dealers' fees) paid by the Interested Stockholder for
any shares of such class of Voting Stock acquired by
it within the two-year period immediately prior
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to the Announcement Date to (2) the Fair Market Value
per share of such class of Voting Stock on the first
date in such two-year period upon which the
Interested Stockholder acquired any shares of such
class of Voting Stock.
(iii) The consideration to be received by holders of a
particular class of outstanding Voting Stock (including Common Stock
and other than Excluded Preferred Stock) shall be in cash or in the
same form as the Interested Stockholder has previously paid for shares
of such class of Voting Stock. If the Interested Stockholder has paid
for shares of any class of Voting Stock with varying forms of
consideration, the form of consideration for which class of Voting
Stock shall either be cash or the form used to acquire the largest
number of shares of such class of Voting Stock previously acquired by
it.
(iv) After such Interested Stockholder has become an
Interested Stockholder and prior to the consummation of such Business
Combination: (a) there shall have been no failure to declare and pay
at the regular date therefor any full quarterly dividends (whether or
not cumulative) on any outstanding preferred stock, except as approved
by a majority of the Continuing Directors; (b) there shall have been
no reduction in the annual rate of dividends paid on the Common Stock
(except as necessary to reflect any subdivision of the Common Stock),
except as approved by a majority of the Continuing Directors; (c)
there shall have been an increase in the annual rate of dividends is
necessary fully to reflect any recapitalization (including any reverse
stock split), reorganization or any similar reorganization which has
the effect of reducing the number of outstanding shares of the Common
Stock, unless the failure so to increase such annual rate is approved
by a majority of the Continuing Directors; and (d) such Interested
Stockholder shall not have become the Beneficial Owner of any
additional Voting Stock except as part of the transaction which
results in such Interested Stockholder becoming an Interested
Stockholder.
(v) After such Interested Stockholder has become an
Interested Stockholder, such Interested Stockholder shall not have
received the benefit, directly or indirectly (except proportionately
as a shareholder), of any loans, advances, guarantees, pledges or
other financial assistance or any tax credits or other tax advantages
provided by the Corporation, whether in anticipation of or in
connection with such Business Combination or otherwise.
(vi) A proxy or information statement describing the
proposed Business Combination and complying with the requirement of
the Securities Exchange Act of 1934 and the rules and regulations
thereunder (or any subsequent provisions replacing such Act, rules or
regulations) shall be mailed to stockholders of the Corporation at
least thirty (30) days prior to the consummation of such Business
Combination (whether or not such proxy or information statement is
required to be mailed pursuant to such Act or subsequent provisions).
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Section 3. Certain Definitions. For purposes of this Article
IX.
(A) "Person" shall mean any individual, firm, corporation
or other entity.
(B) "Interested Stockholder" shall mean any Person (other
than the Corporation or any Subsidiary) who or which:
(i) itself, or along with its Affiliates, is the
Beneficial Owner directly or indirectly, of more than 5% of the then
outstanding Voting Stock; or
(ii) is an Affiliate of the Corporation and at any time
within the two-year period immediately prior to the date in question
was itself, or along with Affiliates, the Beneficial Owner, directly
or indirectly, of 5% or more of the then outstanding Voting Stock; or
(iii) is an assignee of or has otherwise succeeded to any
Voting Stock which was at any time within the two-year period
immediately prior to the date in question beneficially owned by any
Interested Stockholder, if such assignment or succession shall have
occurred in the course of a transaction or series of transactions not
involving a public offering within the meaning of the Securities Act
of 1933.
provided, however, that Signet Banking Corporation and its Affiliates shall not
be deemed an Interested Stockholder as long as they continue to control more
than a majority of the outstanding Voting Stock.
(C) "Beneficial Owner" shall have the meaning ascribed to
such term in Rule 13d-3 of the General Rules and Regulations of the Securities
Exchange Act of 1934, as in effect July 1, 1994. In addition, a Person shall
be the "Beneficial Owner" of any Voting Stock which such Person or any of its
Affiliates or Associates has (a) the right to acquire (whether such right is
exercisable immediately or only after the passage of time), pursuant to any
agreement, arrangement or understanding or upon the exercise of conversion
rights, exchange rights, warrants or options, or otherwise, or (b) the right to
vote pursuant to any agreement, arrangement or understanding (but neither such
Person nor any such Affiliate or Associate shall be deemed to be the Beneficial
Owner of any shares of Voting Stock solely by reason of a revocable proxy
granted for a particular meeting of stockholders, pursuant to a public
solicitation of proxies for such meeting, and with respect to which shares
neither such Person nor any such Affiliate or Associate is otherwise deemed the
Beneficial Owner.).
(D) For the purpose of determining whether a Person is an
Interested Stockholder pursuant to paragraph (B) of this Section 3, the number
of shares of Voting Stock deemed to be outstanding shall include shares deemed
owned through application
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of paragraph (C) of this Section 3 but shall not include any other shares of
Voting Stock which may be issuable pursuant to any agreement, arrangement or
understanding or upon exercise of conversion rights, warrants or options or
otherwise.
(E) "Affiliate" and "Associate" shall have the respective
meaning ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as in effect on July 1,
1994.
(F) "Subsidiary" shall mean any corporation of which a
majority of any share of equity security is owned, directly or indirectly, by
the Corporation, provided, however, that for the purposes of the definition of
Interested Stockholder set forth in paragraph (B) of this Section 3, the term
"Subsidiary" shall mean only a corporation of which a majority of each share of
equity security is owned, directly or indirectly, by the Corporation.
(G) "Continuing Director" shall mean any member of the
Board of Directors who is unaffiliated with the Interested Stockholder and was
a member of the Board of Directors prior to the time that the Interested
Stockholder became an Interested Stockholder, and any director who is
thereafter chosen to fill any vacancy on the Board of Directors or who is
elected and who, in either event, is unaffiliated with the Interested
Stockholder and in connection with his or her initial assumption of office is
recommended for appointment or election by a majority of Continuing Directors
then on the Board.
(H) "Fair Market Value" shall mean (i) in the case of
stock, the highest closing sale price during the 30-day period immediately
preceding the date in question of a share of such stock on the Composite Tape
for New York Stock Exchange listed stocks, or, if such stock is not quoted on
the Composite Tape, on the New York Stock Exchange or, if such stock is not
listed on such exchange, on the principal United States securities exchange
registered under the Securities Exchange Act of 1934 on which such is listed,
or, if such stock is not listed on any such exchange, the highest closing bid
quotation with respect to a share of such stock during the 60-day period
preceding the date in question on the National Association of Securities
Dealers, Inc. Automated Quotations System or any system then in use in its
stead, or if no such quotations are available, the fair market value on the
date in question of a share of such stock as determined by the Board of
Directors in accordance with Section 4 of this Article IX, and (ii) in the case
of property other than cash or stock, the fair market value of such property on
the date in question as determined by the Board of Directors in accordance with
Section 4 of this Article IX.
(I) In the event of any Business Combination in which the
Corporation survives, the phase "other consideration to be received" as used in
paragraphs (B) (i) and (ii) of Section 2 of this Article IX shall include the
shares of Common Stock and/or the shares of any other class of outstanding
Voting Stock retained by the holders of such shares.
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(J) "Excluded Preferred Stock" means any series of
Preferred Stock with respect to which a majority of the Continuing Directors
have approved a Preferred Stock Designation creating such series that expressly
provides that the provisions of this Article IX shall not apply.
Section 4. The Continuing Directors of the Corporation shall
have the power and duty to determine for the purposes of this Article IX on the
basis of information known to them after reasonable inquiry, all facts
necessary to determine compliance with this Article IX, including, without
limitation, (i) whether a Person is an Interested Stockholder, (ii) the number
of shares of Voting Stock beneficially owned by any Person, (iii) whether a
Person is an Affiliate or Associate of another, (iv) whether the applicable
conditions set forth in paragraph (B) of Section 2 of this Article IX have been
met with respect to any Business Combination, (v) the Fair Market Value of
stock or other property in accordance with paragraph (H) of Section 3 of this
Article IX and (vi) whether the assets which are the subject of any Business
Combination have, or the consideration to be received for the issuance or
transfer of Securities by the Corporation or any Subsidiary in any Business
Combination has, an aggregate Fair Market Value of $10,000,000 or more.
Section 5. No Effect on Fiduciary Obligations of Interested
Stockholders. Nothing contained in this Article IX shall be construed to
relieve any Interested Stockholder from any fiduciary obligation imposed by
law.
Section 6. Amendment, Repeal, etc. Notwithstanding any other
provisions of this Certificate of Incorporation or the Bylaws of the
Corporation (and notwithstanding the fact that a lesser percentage may be
permitted by law, this Certificate of Incorporation or the bylaws of the
Corporation), but in addition to any affirmative vote of the holders of any
particular class of Voting Stock required by law or this Certificate of
Incorporation, the affirmative vote of the holders of 80% of the voting power
of the shares of the then outstanding Voting Stock voting together as a single
class, including the affirmative vote of the holders of 80% of the voting power
of the then outstanding Voting Stock not owned directly or indirectly by an
interested Stockholder or any Affiliate of any Interested Stockholder, shall
be required to amend or repeal, or adopt any provisions inconsistent with, this
Article IX of this Certificate of Incorporation.
ARTICLE X
A director of the Corporation shall not be personally liable
to the Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability (i) for any breach of the
director's duty of loyalty to the Corporation or its stockholders, (ii) for
acts of omissions not in good faith or which involve intentional misconduct or
a knowing violation of law, (iii) under Section 174 of the GCL, or (iv) for any
transaction from which the director derived an improper personal benefit.
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ARTICLE XI
Each person who is or was or had agreed to become a director
or officer of the Corporation, or each such person who is or was serving or who
has agreed to serve at the request of the Board of Directors or an officer of
the Corporation as an employee or agent of the Corporation or as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise (including the heirs, executor, administrators or
estate of such person), shall be indemnified by the Corporation, in accordance
with the Bylaws of the Corporation, to the fullest extent permitted from time
to time by the GCL as the same exists or may hereafter be amended (but, in the
case of any such amendment, only to the extent that such amendment permits the
Corporation to provide broader indemnification rights than said law permitted
the Corporation to provide prior to such amendment) or any other applicable
laws as presently or hereafter in effect. Without limiting the generality or
the effect of the foregoing, the Corporation may enter into one or more
agreements with any person which provide for indemnification greater or
different than that provided in this Article XI. Any amendment or repeal of
this Article XI shall not adversely affect any right or protection existing
hereunder in respect of any act or omission occurring prior to such amendment
or repeal.
ARTICLE XII
Except as may be expressly provided in this Certificate of
Incorporation, the Corporation reserves the right at any time from time to time
to amend, alter, change or repeal any provision contained in this Certificate
of Incorporation, or a Preferred Stock Designation, and any other provisions
authorized by the laws of the State of Delaware at the time in force may be
added or inserted, in the manner now or hereafter prescribed herein or by law;
and all rights, preferences and privileges of whatsoever nature conferred upon
stockholders, directors or any other persons whomsoever by and pursuant to this
Certificate of Incorporation in its present form or as hereafter amended are
granted subject to the right reserved in this Article XII; provided, however,
that any amendment or repeal of Article X or Article XI of this Certificate of
Incorporation shall not adversely affect any right or protection existing
hereunder in respect of any act or omission occurring prior to such amendment
or repeal; and provided further that no Preferred Stock Designation shall be
amended after the issuance of any shares of the series of Preferred Stock
created thereby, except in accordance with the terms of such Preferred Stock
Designation and the requirements of Applicable law.
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IN WITNESS WHEREOF, said Capital One Financial Corporation has
caused this Certificate of Incorporation to be signed by its President and
attested by its Secretary and has caused its corporate seal to be hereunto
affixed, this 9th day of November, 1994.
CAPITAL ONE FINANCIAL CORPORATION
By: /s/ NIGEL W. MORRIS
-------------------------
Name: Nigel W. Morris
Title: President and Chief
Operating Officer
Attest: /s/ ANDREW T. MOORE, JR.
---------------------------
Corporate Secretary
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EXHIBIT 3.2
RESTATED BYLAWS
OF
CAPITAL ONE FINANCIAL CORPORATION
Incorporated under the Laws of the State of Delaware
ARTICLE I
OFFICES AND RECORDS
Section 1.1. Delaware Office. The principal office of Capital One
Financial Corporation (the "Corporation") in the State of Delaware shall be
located in the City of Wilmington, County of New Castle, and the name and
address of its registered agent is Corporation Service Company, 1013 Centre
Road, Wilmington, Delaware.
Section 1.2. Other Offices. The Corporation may have such other
offices, either within or without the State of Delaware, as the Board of
Directors may from time to time designate or as the business of the Corporation
may from time to time require.
Section 1.3. Books and Records. The books and records of the
Corporation may be kept at the Corporation's headquarters in Falls Church,
Virginia or at such other locations outside the State of Delaware as may from
time to time be designated by the Board of Directors.
ARTICLE II
STOCKHOLDERS
Section 2.1. Annual Meeting. The annual meetings of stockholders of
the Corporation shall be held at such place, either within or without the State
of Delaware, and at such time and date as the Board of Directors, by
resolution, shall determine and as set forth in the notice of the meeting. If
the Board of Directors fails so to determine the time, date and place of
meeting, the annual meeting of stockholders shall be held at the registered
office of the Corporation on the first Tuesday in May. If the date of the
annual meeting shall fall upon a legal holiday, the meeting shall be held on
the next succeeding business day. At each annual meeting, the stockholders
entitled to vote shall elect a Board of Directors and they may transact such
other corporate business as shall be stated in the notice of the meeting.
Section 2.2. Special Meeting. Subject to the rights of the holders
of any series of preferred stock, par value $.01 per share, of the Corporation
(the "Preferred Stock") to elect additional directors under specified
circumstances, special meetings of the stockholders may be called only by the
Chairman of the Board or by the Board of Directors pursuant to a resolution
adopted by a majority of the total number of directors which the Corporation
would have if there were no vacancies (the "Whole Board").
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Section 2.3. Place of Meeting. The Board of Directors may designate
the place of meeting for any meeting of the stockholders. If no designation is
made by the Board of Directors, the place of meeting shall be the principal
office of the Corporation.
Section 2.4. Notice of Meeting. Written or printed notice, stating
the place, day and hour of the meeting and the purpose or purposes for which
the meeting is called, shall be prepared and delivered by the Corporation not
less than ten days nor more than sixty days before the date of the meeting,
either personally, or by mail, to each stockholder of record entitled to vote
at such meeting. If mailed, such notice shall be deemed to be delivered when
deposited in the United States mail with postage thereon prepaid, addressed to
the stockholder at his address as it appears on the stock transfer books of the
Corporation. Such further notice shall be given as may be required by law.
Meetings may be held without notice if all stockholders entitled to vote are
present, or if notice is waived by those not present. Any previously scheduled
meeting of the stockholders may be postponed by resolution of the Board of
Directors upon public notice given prior to the time previously scheduled for
such meeting of stockholders.
Section 2.5. Quorum and Adjournment. Except as otherwise provided by
law or by the Certificate of Incorporation, the holders of a majority of the
voting power of the outstanding shares of the Corporation entitled to vote
generally in the election of directors (the "Voting Stock"), represented in
person or by proxy, shall constitute a quorum at a meeting of stockholders,
except that when specified business is to be voted on by a class or series
voting as a class, the holders of a majority of the voting power of the shares
of such class or series shall constitute a quorum for the transaction of such
business. The chairman of the meeting or a majority of the shares of Voting
Stock so represented may adjourn the meeting from time to time, whether or not
there is such a quorum (or, in the case of specified business to be voted on by
a class or series, the chairman or a majority of the shares of such class or
series so represented may adjourn the meeting with respect to such specified
business). No notice of the time and place of adjourned meetings need be given
except as required by law. The stockholders present at a duly organized
meeting may continue to transact business until adjournment, notwithstanding
the withdrawal of enough stockholders to leave less than a quorum.
Section 2.6. Proxies. At all meetings of stockholders, a stockholder
may vote by proxy executed in writing by the stockholder or as may be permitted
by law, or by his duly authorized attorney-in-fact. Such proxy must be filed
with the Secretary of the Corporation or his representative at or before the
time of the meeting.
Section 2.7. Notice of Stockholder Business and Nominations.
(A). Annual Meetings of Stockholders. (1) Nominations of persons
for election to the Board of Directors of the Corporation and the proposal of
business to be considered by the stockholders may be made at an annual meeting
of stockholders (a) pursuant to the Corporation's notice of meeting delivered
pursuant to Section 2.4 of these Bylaws, (b) by or at the direction of the
Chairman of the Board of Directors or (c) by any stockholder of the Corporation
who is entitled to vote at the meeting, who complied with the notice procedures
set forth in clauses (2)
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and (3) of this paragraph (A) and this Bylaw and who was a stockholder of
record at the time such notice is delivered to the Secretary of the
Corporation.
(2) For nominations or other business to be properly brought before
an annual meeting by a stockholder pursuant to clause (c) of paragraph (A) (1)
of this Bylaw, the stockholder must have given timely notice thereof in writing
to the Secretary of the Corporation. To be timely, a stockholder's notice
shall be delivered to the Secretary at the principal executive offices of the
Corporation not less than seventy days nor more than ninety days prior to the
first anniversary of the preceding year's annual meeting; provided, however,
that (i) in the case of the Corporation's first annual meeting in 1995 or (ii)
in the event that the date of an annual meeting is advanced by more than thirty
days, or delayed by more than seventy days, from the first anniversary date of
the previous year's annual meeting, notice by the stockholder to be timely must
be so delivered not earlier than the ninetieth day prior to such annual meeting
and not later than the close of business on the later of the seventieth day
prior to such annual meeting or the tenth day following the day on which public
announcement of the date of such meeting is first made. Such stockholder's
notice shall set forth (a) as to each person whom the stockholder proposes to
nominate for election or reelection as a director all information relating to
such person that is required to be disclosed in solicitations of proxies for
election of directors, or is otherwise required, in each case pursuant to
Regulation 14A under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), including such person's written consent to being named in the
proxy statement as a nominee and to serving as a director if elected; (b) as to
any other business that the stockholder proposes to bring before the meeting, a
brief description of the business desired to be brought before the meeting, the
reasons for conducting such business at the meeting and any material interest
in such business of such stockholder and the beneficial owner, if any, on whose
behalf the proposal is made; and (c) as to the stockholder giving the notice
and the beneficial owner, if any, on whose behalf the nomination or proposal is
made (i) the name and address of such stockholder, as they appear on the
Corporation's books, and of such beneficial owner and (ii) the class and number
of shares of the Corporation which are owned beneficially and of record by such
stockholder and such beneficial owner.
(3) Notwithstanding anything in the second sentence of paragraph (A)
(2) of this Bylaw to the contrary, in the event that the number of directors to
be elected to the Board of Directors of the Corporation is increased and there
is no public announcement naming all of the nominees for director or specifying
the size of the increased Board of Directors made by the Corporation at least
eighty days prior to the first anniversary of the preceding year's annual
meeting (or, in the event of the Corporation's first annual meeting in 1995,
not later than the close of business on the tenth day following the day on
which public announcement is made of the meeting and of the nominees proposed
to be nominated), a stockholder's notice required by this Bylaw shall also be
considered timely, but only with respect to nominees for any new positions
created by such increase, if it shall be delivered to the Secretary at the
principal executive offices of the Corporation not later than the close of
business on the tenth day following the day on which such public announcement
is first made by the Corporation.
(B) Special Meeting of Stockholders. Only such business shall be
conducted at a special meeting of stockholders as shall have been brought
before the meeting pursuant to the
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Corporation's notice of meeting pursuant to Section 2.4 of these Bylaws.
Nominations of persons for election to the Board of Directors may be made at a
special meeting of stockholders at which directors are to be elected pursuant
to the Corporation's notice of meeting (a) by or at the direction of the Board
of Directors or (b) by any stockholder of the Corporation who is entitled to
vote at the meeting, who complies with the notice procedures set forth in this
Bylaw and who is a stockholder of record at the time such notice is delivered
to the Secretary of the Corporation. Nominations by stockholders of persons
for election to the Board of Directors may be made at such a special meeting of
stockholders if the stockholder's notice as required by paragraph (A) (2) of
this Bylaw shall be delivered to the Secretary at the principal executive
offices of the Corporation not earlier than the ninetieth day prior to such
special meeting and not later than the close of business on the later of the
seventieth day prior to such special meeting or the tenth day following the day
on which public announcement is first made of the date of the special meeting
and of the nominees proposed by the Board of Directors to be elected at such
meeting.
(C) General. (1) Only persons who are nominated in accordance with
the procedures set forth in this Bylaw shall be eligible to serve as director
and only such business shall be conducted at a meeting of stockholders as shall
have been brought before the meeting in accordance with the procedures set
forth in this Bylaw. Except as otherwise provided by law, the Certificate of
Incorporation or these Bylaws, the chairman of the meeting shall have the power
and duty to determine whether a nomination or any business proposed to be
brought before the meeting was made in accordance with the procedures set forth
in this Bylaw and, if any proposed nomination or business is not in compliance
with this Bylaw, to declare that such defective proposal or nomination shall be
disregarded.
(2) For purposes of this Bylaw, "public announcement" shall mean
disclosure in a press release reported by the Dow Jones News Service,
Associated Press or comparable national news service or in a document publicly
filed by the Corporation with the Securities and Exchange Commission pursuant
to Section 13, 14 or 15(d) of the Exchange Act.
(3) Notwithstanding the foregoing provisions of this Bylaw, a
stockholder shall also comply with all applicable requirements of the Exchange
Act and the rules and regulations thereunder with respect to the matters set
forth in this Bylaw. Nothing in this Bylaw shall be deemed to affect any
rights of stockholders to request inclusion of proposals in the Corporation's
proxy statement pursuant to Rule 14a-8 under the Exchange Act.
Section 2.8. Procedure for Election of Directors. Election of
directors at all meetings of the stockholders at which directors are to be
elected shall be by written ballot, and, except as otherwise set forth in the
Certificate of Incorporation with respect to the right of the holders of any
series of Preferred Stock to elect additional directors under specified
circumstances, a plurality of the votes cast thereat shall elect. Except as
otherwise provided by law, the Certificate of Incorporation or these Bylaws,
all matters other than the election of directors submitted to the stockholders
at any meeting shall be decided by a majority of the votes cast with respect
thereto.
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Section 2.9. Inspectors of Elections; Opening and Closing the Polls.
(A) The Board of Directors by resolution shall appoint one or more inspectors,
which inspector or inspectors may include individuals who serve the Corporation
in other capacities, including, without limitation, as officers, employees,
agents or representatives of the Corporation, to act at the meeting and make a
written report thereof. One or more persons may be designated as alternate
inspectors to replace any inspector who fails to act. If no inspector or
alternate has been appointed to act, or if all inspectors or alternates who
have been appointed are unable to act at a meeting of stockholders, the
chairman of the meeting shall appoint one or more inspectors to act at the
meeting. Each inspector, before discharging his or her duties, shall take and
sign an oath faithfully to execute the duties of inspector with strict
impartiality and according to the best of his or her ability. The inspectors
shall have the duties prescribed by the General Corporation Law of the State of
Delaware.
(B) The chairman of the meeting shall fix and announce at the meeting
the date and time of the opening and the closing of the polls for each matter
upon which the stockholders will vote at a meeting.
Section 2.10. No Stockholder Action by Written Consent. Subject to
the rights of the holders of any series of Preferred Stock to elect additional
directors under specific circumstances, any action required or permitted to be
taken by the stockholders of the Corporation must be effected at an annual or
special meeting of stockholders of the Corporation and may not be affected by
any consent in writing by such stockholders.
ARTICLE III
BOARD OF DIRECTORS
Section 3.1. General Powers. The business and affairs of the
Corporation shall be managed by or under the direction of its Board of
Directors. In addition to the powers and authorities by these Bylaws expressly
conferred upon them, the Board of Directors may exercise all such powers of the
Corporation and do all such lawful acts and things as are not by law or by the
Certificate of Incorporation or by these Bylaws required to be exercised or
done by the stockholders.
Section 3.2. Number, Tenure and Qualifications. Subject to the
rights of the holders of any series of Preferred Stock to elect directors under
specified circumstances, the number of directors shall be fixed from time to
time exclusively pursuant to a resolution adopted by a majority of the Whole
Board but shall consist of not more than seventeen nor less than three
directors. The directors, other than those who may be elected by the holders
of any series of Preferred Stock, shall be divided, with respect to the time
for which they severally hold office, into three classes, as nearly equal in
number as possible, with the term of office of the first class to expire at the
1995 annual meeting of stockholders, the term of office of the second class to
expire at the 1996 annual meeting of stockholders and the term of office of the
third class to expire at the 1997 annual meeting of stockholders. Each
director shall hold office until his or her successor shall have been duly
elected and qualified. At each annual meeting of stockholders,
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commencing with the 1996 annual meeting, (i) directors elected to succeed those
directors whose terms then expire shall be elected for a term of office to
expire at the third succeeding annual meeting of stockholders after their
election, with each director to hold office until his or her successor shall
have been duly elected and qualified, and (ii) if authorized by a resolution of
the Board of Directors, directors may be elected to fill any vacancy on the
Board of Directors, regardless of how such vacancy shall have been created. In
order to be qualified to serve as a director, a person must (a) not have
attained the age of seventy (70) years and (b) either (i) be an officer or
employee of the Corporation and not (A) have voluntarily resigned from the
position or office he held at the time of his election as a director, (B) have
retired or been retired pursuant to the requirements of a pension, profit
sharing, or similar plan or (C) have, at the time of his election as a
director, held a position or office in the Corporation which has been changed,
other than by an upward or expanded promotion or (ii) in the case of any person
who is not an officer or employee of the Corporation, not (A) have retired from
or severed his connection with the organization with which he was affiliated at
the time of his election as a director or (B) have held a position or office
with an organization with which he was affiliated at the time of his election
as a director which has been changed, other than by an upward or expanded
promotion and (C) not have a material conflict of interest with the Corporation
(i) as defined by applicable laws and regulations and (ii) the existence and
materiality of which as may be determined by a majority of the remaining
directors. Whenever any director shall cease to be qualified to serve as a
director his term shall expire, but such director shall continue to serve until
his successor is elected and qualified; provided, however, that no director's
term shall so expire if the Board of Directors shall have waived such
qualification.
Section 3.3 Regular Meetings. A regular meeting of the Board of
Directors shall be held without other notice than this Bylaw immediately after,
and at the same place as, each annual meeting of stockholders. The Board of
Directors may, by resolution, provide the time and place for the holding of
additional regular meetings without other notice than such resolution.
Section 3.4. Special Meetings. Special meetings of the Board of
Directors shall be called at the request of the Chairman of the Board, the
President or a majority of the Board of Directors. The person or persons
authorized to call special meetings of the Board of Directors may fix the place
and time of the meetings.
Section 3.5. Notice. Notice of any special meeting shall be given to
each director at his business or residence in writing or by telegram or by
telephone communication. If mailed, such notice shall be deemed adequately
delivered when deposited in the United States mails so addressed, with postage
thereon prepaid, at least five days before such meeting. If by telegram, such
notice shall be deemed adequately delivered when the telegram is delivered to
the telegraph company at least twenty-four hours before such meeting. If by
facsimile transmission, such notice shall be transmitted at least twenty-four
hours before such meeting. If by telephone, the notice shall be given at least
twelve hours prior to the time set for the meeting. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the Board
of Directors need be specified in the notice of such meeting, except for
amendments to these Bylaws as provided under Section 7.1 of Article VII hereof.
A meeting may be held at any time
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without notice if all the directors are present or if those not present waive
notice of the meeting in writing, either before or after such meeting.
Section 3.6. Quorum. A whole number of directors equal to at least a
majority of the Whole Board shall constitute a quorum for the transaction of
business, but if at any meeting of the Board of Directors there shall be less
than a quorum present, a majority of the directors present may adjourn the
meeting from time to time without further notice. The act of the majority of
the directors present at a meeting at which a quorum is present shall be the
act of the Board of Directors. The directors present at a duly organized
meeting may continue to transact business until adjournment, notwithstanding
the withdrawal of enough directors to leave less than a quorum.
Section 3.7. Vacancies. Subject to the rights of the holders of any
series of Preferred Stock to elect additional directors under specified
circumstances, and unless the Board of Directors otherwise determines,
vacancies resulting from death, resignation, retirement, disqualification,
removal from office or other cause, and newly created directorships resulting
from any increase in the authorized number of directors, may be filled only be
the affirmative vote of a majority of the remaining directors, though less than
a quorum of the Board of Directors, and directors so chosen shall hold office
for a term expiring at the annual meeting of stockholders at which the term of
office of the class to which they have been elected expires and until such
director's successor shall have been duly elected and qualified. No decrease
in the number of authorized directors constituting the Whole Board shall
shorten the term of any incumbent director.
Section 3.8. Committees. The Board of Directors may from time to
time, by resolution passed by a majority of the Whole Board, designate one or
more committees, each committee to consist of one or more Directors of the
Corporation. The Board of Directors may designate one or more directors as
alternative members of any committee, who may replace any absent or
disqualified member at any meeting of the committee. Any such committee, to
the extent provided in the resolution of the Board of Directors, shall have and
may exercise all the powers and authority of the Board of Directors in the
management of the business and affairs of the Corporation, and may authorize
the seal of the Corporation to be affixed to all papers which may require it,
except as otherwise provided by law. Unless the resolution of the Board of
Directors expressly so provides, no such committee shall have the power or
authority to declare a dividend or to authorize the issuance of stock. Any
such committee may adopt rules governing the method of calling and time and
place of holding its meetings. Unless otherwise provided by the Board of
Directors, a majority of any such committee may adopt rules governing the
method of calling and time and place of holding its meetings. Unless otherwise
provided by the Board of Directors, a majority of any such committee (or the
member thereof, if only one) shall constitute a quorum for the transaction of
business, and the vote of a majority of the members of such committee present
at a meeting at which a quorum is present shall be the act of such committee.
Each such committee shall keep a record of its acts and proceedings and shall
report thereon to the Board of Directors whenever requested so to do. Any or
all members of any such committee may be removed, with or without cause, by
resolution of the Board of Directors, passed by a majority of the Whole Board.
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Section 3.9. Removal. Subject to the rights of the holders of any
series of Preferred Stock to elect additional directors under specified
circumstances, any director, or the entire Board of Directors, may be removed
from office at any time, but only for cause and only by the affirmative vote of
the holders of at least 80 percent of the voting power of the then outstanding
Voting Stock, voting together as a single class.
ARTICLE IV
OFFICERS
Section 4.1. Elected Officers. The elected officers of the
Corporation shall be a Chairman of the Board, a President, a Secretary, a
Treasurer, and such other officers as the Board of Directors from time to time
may deem proper. The Chairman of the Board shall be chosen from the directors.
All officers chosen by the Board of Directors shall each have such powers and
duties as generally pertain to their respective offices, subject to the
specific provisions of this Article IV. Such officers shall also have powers
and duties as from time to time may be conferred by the Board of Directors or
by any committee thereof.
Section 4.2. Election and Term of Office. The elected officers of
the Corporation shall be elected annually by the Board of Directors at the
regular meeting of the Board of Directors held after each annual meeting of the
stockholders. If the election of officers shall not be held at such meeting,
such election shall be held as soon thereafter as convenient. Subject to
Section 4.7 of these Bylaws, each officer shall hold office until his successor
shall have been duly elected and shall have qualified or until his death or
until he shall resign.
Section 4.3. Chairman of the Board. The Chairman of the Board shall
preside at all meetings of the stockholders and of the Board of Directors. The
Chairman of the Board shall be responsible for the general management of the
affairs of the Corporation and shall perform all duties incidental to his
office which may be required by law and all such other duties as are properly
required of him by the Board of Directors. Except where by law the signature
of the President is required, the Chairman of the Board shall possess the same
power as the President to sign all certificates, contracts, and other
instruments of the Corporation which may be authorized by the Board of
Directors. He shall make reports to the Board of Directors and the
stockholders, and shall perform all such other duties as are properly required
of him by the Board of Directors. He shall see that all orders and resolutions
of the Board of Directors and of any committee thereof are carried into effect.
Section 4.4. President. The President shall act in a general
executive capacity and shall assist the Chairman of the Board in the
administration and operation of the Corporation's business and general
supervision of its policies and affairs. The President shall, in the absence
of or because of the inability to act of the Chairman of the Board, perform all
duties of the Chairman of the Board and preside at all meetings of stockholders
and of the Board of Directors. The President may sign, alone or with the
Secretary, or an Assistant Secretary, or any other
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proper officer of the Corporation authorized by the Board of Directors,
certificates, contracts, and other instruments of the Corporation as authorized
by the Board of Directors.
Section 4.5. Secretary. The Secretary shall give, or cause to be
given, notice of all meetings of stockholders and Directors and all other
notices required by law or by these Bylaws, and in case of his absence or
refusal or neglect so to do, any such notice may be given by any person
thereunto directed by the Chairman of the Board or the President, or by the
Board of Directors, upon whose request the meeting is called as provided in
these Bylaws. The Secretary shall record all the proceedings of the meetings
of the Board of Directors, any committees thereof and the stockholders of the
Corporation in a book to be kept for that purpose, and shall perform such other
duties as may be assigned to him by the Board of Directors, the Chairman of the
Board or the President. The Secretary shall have the custody of the seal of
the Corporation and shall affix the same to all instruments requiring it, when
authorized by the Board of Directors, the Chairman of the Board or the
President, and attest to the same.
Section 4.6. Treasurer. The Treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate account of
receipts and disbursements in books belonging to the Corporation. The
Treasurer shall deposit all moneys and other valuables in the name and to the
credit of the Corporation in such depositaries as may be designated by the
Board of Directors. The Treasurer shall disburse the funds of the Corporation
as may be ordered by the Board of Directors, the Chairman of the Board, or the
President, taking proper vouchers for such disbursements. The Treasurer shall
render to the Chairman of the Board, the President and the Board of Directors,
whenever requested, an account of all his transactions as Treasurer and of the
financial condition of the Corporation. If required by the Board of Directors,
the Treasurer shall give the Corporation a bond for the faithful discharge of
his duties in such amount and with such surety as the Board of Directors shall
prescribe.
Section 4.7. Removal. Any officer elected by the Board of Directors
may be removed by a majority of the members of the Whole Board whenever, in
their judgment, the best interests of the Corporation would be served thereby.
No elected officer shall have any contractual rights against the Corporation
for compensation by virtue of such election beyond the date of the election of
his successor, his death, his resignation or his removal, whichever event shall
first occur, except as otherwise provided in an employment contract or an
employee plan.
Section 4.8. Vacancies. A newly created office and a vacancy in any
office because of death, resignation, or removal may be filled by the Board of
Directors for the unexpired portion of the term at any meeting of the Board of
Directors.
ARTICLE V
STOCK CERTIFICATES AND TRANSFERS
Section 5.1. Stock Certificates and Transfers.
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(A) The interest of each stockholder of the Corporation shall be
evidenced by certificates for shares of stock in such form as the appropriate
officers of the Corporation may from time to time prescribe. The shares of the
stock of the Corporation shall be transferred on the books of the Corporation
by the holder thereof in person or by his attorney, upon surrender for
cancellation of certificates for the same number of shares, with an assignment
and power of transfer endorsed thereon or attached thereto, duly executed, with
such proof of the authenticity of the signature as the Corporation or its
agents may reasonably require.
(B) The certificates of stock shall be signed, countersigned and
registered in such manner as the Board of Directors may by resolution
prescribe, which resolution may permit all or any of the signatures on such
certificates to be in facsimile. In case any officer, transfer agent or
registrar who has signed or whose facsimile signature has been placed upon a
certificate has ceased to be such officer, transfer agent or registrar before
such certificate is issued, it may be issued by the Corporation with the same
effect as if he were such officer, transfer agent or registrar at the date of
issue.
ARTICLE VI
MISCELLANEOUS PROVISIONS
Section 6.1. Fiscal Year. The fiscal year of the Corporation shall
be determined by resolution of the Board of Directors.
Section 6.2. Dividends. The Board of Directors may from time to time
declare, and the Corporation may pay, dividends on its outstanding shares in
the manner and upon the terms and conditions provided by law and its
Certificate of Incorporation.
Section 6.3. Seal. The corporate seal of the Corporation shall be
determined by resolution of the Board of Directors. Said seal may be used by
causing it or a facsimile thereof to be impressed or affixed or reproduced or
otherwise imprinted upon the subject document or paper.
Section 6.4. Waiver of Notice. Whenever any notice is required to be
given to any stockholder or director of the Corporation under the provisions of
the General Corporation Law of the State of Delaware, a waiver thereof in
writing, signed by the person or persons entitled to such notice, whether
before or after the time stated therein, shall be deemed equivalent to the
giving of such notice. Neither the business to be transacted at, nor the
purpose of, any annual or special meeting of the stockholders or of the Board
of Directors need be specified in any waiver of notice of such meeting.
Section 6.5. Audits. The accounts, books and records of the
Corporation shall be audited upon the conclusion of each fiscal year by an
independent certified public accountant selected by the Board of Directors, and
it shall be the duty of the Board of Directors to cause such audit to be made
annually.
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11
Section 6.6. Resignations. Any director or any officer, whether
elected or appointed, may resign at any time by serving written notice of such
resignation on the Chairman of the Board, the President or the Secretary, and
such resignation shall be deemed to be effective as of the close of business on
the date said notice is received by the Chairman of the Board, the President,
or the Secretary or at such later date as is stated therein. No formal action
shall be required of the Board of Directors or the stockholders to make any
such resignation effective.
Section 6.7. Indemnification and Insurance. (A) Each person who was
or is made a party or is threatened to be made a party to or is involved in any
action, suit, or proceeding, whether civil, criminal, administrative or
investigative (hereinafter a "proceeding"), by reason of the fact that he or
she or a person of whom he or she is the legal representative is or was a
director, officer or employee of the Corporation or is or was serving at the
request of the Corporation as a director, officer, employee or agent of any
other corporation or of a partnership, joint venture, trust or other
enterprise, including service with respect to employee benefit plans, whether
the basis of such proceeding is alleged action in an official capacity as a
director, officer, employee or agent or in any other capacity while serving as
a director, officer, employee or agent, shall be indemnified and held harmless
by the Corporation to the fullest extent authorized by the General Corporation
Law of the State of Delaware as the same exists or may hereafter be amended
(but, in the case of any such amendment, only to the extent that such amendment
permits the Corporation to provide broader indemnification rights than said law
permitted the Corporation to provide prior to such amendment), against all
expense, liability and loss (including, without limitation, attorneys' fees,
judgments, fines, ERISA excise taxes or penalties and amounts paid or to be
paid in settlement) reasonably incurred by such person in connection therewith
and such indemnification shall continue as to a person who has ceased to be a
director , officer, employee or agent and shall inure to the benefit of his or
her heirs, executors and administrators; provided, however, that except as
provided in paragraph (B) of Section 6.7 of this Bylaw with respect to
proceedings seeking to enforce rights to indemnification, the Corporation shall
indemnify any such person seeking indemnification in connection with a
proceeding (or part thereof) initiated by such person only if such proceeding
(or part thereof) initiated by such person was authorized by the Board of
Directors of the Corporation.
(B) If a claim under paragraph (A) of this Bylaw is not paid in full
by the Corporation within thirty days after a written claim has been received
by the Corporation, the claimant may at any time thereafter bring suit against
the Corporation to recover the unpaid amount of the claim and, if successful in
whole or in part, the claimant shall be entitled to be paid also the expense of
prosecuting such claim. It shall be a defense to any such action (other than
an action brought to enforce a claim for expenses incurred in defending any
proceeding in advance of its final disposition where the required undertaking,
if any is required, has been tendered to the Corporation) that the claimant has
not met the standards of conduct which make it permissible under the General
Corporation Law of the State of Delaware for the Corporation to indemnify the
claimant for the amount claimed, but the burden of proving such defense shall
be on the Corporation. Neither the failure of the Corporation (including its
Board of Directors, independent legal counsel or stockholders) to have made a
determination prior to the commencement of such action that indemnification of
the claimant is proper in the circumstances because he or she has met the
applicable standard of conduct set forth in the General Corporation
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Law of the State of Delaware, nor an actual determination by the Corporation
(including its Board of Directors, independent legal counsel or stockholders)
that the claimant has not met such applicable standard of conduct, shall be a
defense to the action or create a presumption that the claimant has not met the
applicable standard of conduct.
(C) Following any "change in control" of the Corporation of the type
required to be reported under Item 1 of Form 8-K promulgated under the Exchange
Act, any determination as to entitlement to indemnification shall be made by
independent legal counsel selected by the claimant which independent legal
counsel shall be retained by the Board of Directors on behalf of the
Corporation.
(D) The right to indemnification and the payment of expenses incurred
in defending a proceeding in advance of its final disposition conferred in this
Bylaw shall not be exclusive of any other right which any person may have or
hereafter acquire under any statute, provision of the Certificate of
Incorporation, Bylaws, agreement, vote of stockholders or disinterested
directors or otherwise.
(E) The Corporation may maintain insurance, at its expense, to
protect itself and any director, officer, employee or agent of the Corporation
or another corporation, partnership, joint venture, trust or other enterprise
against any expense, liability or loss, whether or not the Corporation would
have the power to indemnify such person against such expense, liability or loss
under the General Corporation Law of the State of Delaware.
(F) The Corporation may, to the extent authorized from time to time
by the Board of Directors, grant rights to indemnification, and rights to be
paid by the Corporation the expenses incurred in defending any proceeding in
advance of its final disposition, to any agent of the Corporation to the
fullest extent of the provisions of this Bylaw with respect to the
indemnification and advancement of expenses of directors, officers and
employees of the Corporation.
(G) The right to indemnification conferred in this Bylaw shall be a
contract right and shall include the right to be paid by the Corporation the
expenses incurred in defending any such proceeding in advance of its final
disposition; provided, however, that if the General Corporation Law of the
State of Delaware requires, the payment of such expenses incurred by a director
or officer in his or her capacity as a director or officer (and not in any
other capacity in which service was or is rendered by such person while a
director or officer, including, with limitation, service to an employee benefit
plan) in advance of the final disposition of a proceeding, shall be made only
upon delivery to the Corporation of an undertaking by or on behalf of such
director or officer, to repay all amounts so advanced if it shall ultimately be
determined that such director or officer is not entitled to be indemnified
under this Bylaw or otherwise.
(H) Any amendment or repeal of this Article VI shall not adversely
affect any right or protection existing hereunder in respect of any act or
omission occurring prior to such amendment or repeal.
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ARTICLE VII
AMENDMENTS
Section 7.1. Amendments. These Bylaws may be amended, added to,
rescinded or repealed at any meeting of the Board of Directors or of the
stockholders, provided notice of the proposed change was given in the notice of
the meeting and, in the case of a meeting of the Board of Directors, in a
notice given no less than twenty-four hours prior to the meeting; provided,
however, that, in the case of amendments by stockholders, notwithstanding any
other provisions of these Bylaws or any provision of law which might otherwise
permit a lesser vote or no vote, but in addition to any affirmative vote of the
holders of any particular class or series of the stock required by law, the
Certificate of Incorporation or these Bylaws, the affirmative vote of the
holders of at least 80 percent of the voting power of the then outstanding
Voting Stock, voting together as a single class, shall be required to alter,
amend or repeal any provision of these Bylaws.
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1
EXHIBIT 4.1
================================================================================
Capital One Financial Corporation,
Issuer
to
Trustee
--------------------
SENIOR INDENTURE
--------------------
Dated as of , 1996
Senior Debt Securities
================================================================================
2
Reconciliation and tie between
Trust Indenture Act of 1939 (the "Trust Indenture Act")
and Indenture
Trust Indenture
Act Section Indenture Section
Section 310(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 606
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 606
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 607
Section 312(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 701
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 702
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 702
Section 313(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 703
(b)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 703
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 703
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 703
Section 314(a)(1)-(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 704
(a)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101, 1009
(c)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
(c)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
Section 315(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 601
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 501
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 601
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 601
Section 316(a)(last sentence) . . . . . . . . . . . . . . . . . . . . . . . . . 101
(a)(1)(A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 502, 512
(a)(1)(B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 513
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 508
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
Section 317(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 503
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 504
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1003
Section 318(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
- -----------------
Note: This reconciliation and tie shall not, for any purpose, be deemed to
be part of the Indenture.
Attention should also be directed to Section 318(c) of the Trust
Indenture Act, which provides that the provisions of Sections 310 to
and including 317 are a part of and govern every qualified indenture,
whether or not physically contained herein.
3
TABLE OF CONTENTS
Recitals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 101. Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Additional Amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Authenticating Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Authorized Newspaper . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Bearer Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Board Resolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Business Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Company Request and Company Order . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Consolidated Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Controlled Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Conversion Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Convertible Security or Convertible Securities . . . . . . . . . . . . . . . . . . . . . . 4
Corporate Trust Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Coupon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Currency or Money . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Currency Indexed Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Date of Conversion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Defaulted Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Depository or U.S. Depository . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Dollars or $ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Government Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Holder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Independent Public Accountants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
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4
Indexed Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Interest Payment Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Legal Holiday . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Maturity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Office or Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Officers' Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Original Issue Discount Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Place of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Predecessor Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Redemption Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Redemption Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Registered Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Regular Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Responsible Officer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Security or Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Security Register and Security Registrar . . . . . . . . . . . . . . . . . . . . . . . . 10
Significant Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Special Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Stated Maturity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
United States Alien . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Vice President . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Voting Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 102. Compliance Certificates and Opinions. . . . . . . . . . . . . . . . . . . . . . 12
Section 103. Form of Documents Delivered to Trustee. . . . . . . . . . . . . . . . . . . . . 12
Section 104. Acts of Holders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 105. Notices, etc. to Trustee and Company. . . . . . . . . . . . . . . . . . . . . . 15
Section 106. Notice to Holders of Securities; Waiver. . . . . . . . . . . . . . . . . . . . 15
Section 107. Language of Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 108. Conflict with Trust Indenture Act. . . . . . . . . . . . . . . . . . . . . . . 17
Section 109. Effect of Headings and Table of Contents. . . . . . . . . . . . . . . . . . . . 17
Section 110. Successors and Assigns. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 111. Separability Clause. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ii
5
Section 112. Benefits of Indenture. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 113. Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 114. Legal Holidays . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE TWO
SECURITIES FORMS
Section 201. Forms Generally. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 202. Form of Trustee's Certificate of Authentication. . . . . . . . . . . . . . . . 19
Section 203. Securities in Global Form. . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE THREE
THE SECURITIES
Section 301. Amount Unlimited; Issuable in Series. . . . . . . . . . . . . . . . . . . . . . 20
Section 302. Currency; Denominations. . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 303. Execution, Authentication, Delivery and Dating. . . . . . . . . . . . . . . . . 24
Section 304. Temporary Securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 305. Registration, Transfer and Exchange. . . . . . . . . . . . . . . . . . . . . . 27
Section 306. Mutilated, Destroyed, Lost and Stolen Securities. . . . . . . . . . . . . . . . 31
Section 307. Payment of Interest and Certain Additional Amounts; Rights to Preserved
Interest and Certain Additional Amounts. . . . . . . . . . . . . . . . . . . . 33
Section 308. Persons Deemed Owners. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 309. Cancellation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 310. Computation of Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE FOUR
SATISFACTION AND DISCHARGE
Section 401. Satisfaction and Discharge of Indenture. . . . . . . . . . . . . . . . . . . . 36
Section 402. Satisfaction, Discharge and Defeasance of Securities of any Series. . . . . . . 38
Section 403. Application of Trust Money. . . . . . . . . . . . . . . . . . . . . . . . . . . 41
ARTICLE FIVE
REMEDIES
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Section 501. Events of Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 502. Acceleration of Maturity; Rescission and Annulment. . . . . . . . . . . . . . . 44
Section 503. Collection of Indebtedness and Suits for Enforcement by Trustee. . . . . . . . 45
Section 504. Trustee May File Proofs of Claim. . . . . . . . . . . . . . . . . . . . . . . . 46
Section 505. Trustee May Enforce Claims without Possession of Securities or Coupons. . . . . 47
Section 506. Application of Money Collected. . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 507. Limitations on Suits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 508. Unconditional Right of Holders to Receive Principal and any Premium,
Interest and Additional Amounts and to Convert any Convertible Security . . . . 49
Section 509. Restoration of Rights and Remedies. . . . . . . . . . . . . . . . . . . . . . . 49
Section 510. Rights and Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 511. Delay or Omission Not Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 512. Control by Holders of Securities. . . . . . . . . . . . . . . . . . . . . . . . 50
Section 513. Waiver of Past Defaults. . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 514. Waiver of Stay or Extension Laws. . . . . . . . . . . . . . . . . . . . . . . . 51
ARTICLE SIX
THE TRUSTEE
Section 601. Certain Rights of Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 602. Not Responsible for Recitals or Issuance of Securities. . . . . . . . . . . . . 53
Section 603. May Hold Securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 604. Money Held in Trust. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 605. Compensation and Reimbursement. . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 606. Corporate Trustee Required; Eligibility. . . . . . . . . . . . . . . . . . . . 54
Section 607. Resignation and Removal; Appointment of Successor. . . . . . . . . . . . . . . 55
Section 608. Acceptance of Appointment by Successor. . . . . . . . . . . . . . . . . . . . . 57
Section 609. Merger, Conversion, Consolidation or Succession to Business. . . . . . . . . . 58
Section 610. Appointment of Authenticating Agent. . . . . . . . . . . . . . . . . . . . . . 59
ARTICLE SEVEN
HOLDER'S LISTS AND REPORTS BY TRUSTEE AND COMPANY
Section 701. Company to Furnish Trustee Names and Addresses of Holders. . . . . . . . . . . 61
Section 702. Preservation of Information; Communications to Holders. . . . . . . . . . . . . 62
Section 703. Reports by Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
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Section 704. Reports by Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
ARTICLE EIGHT
CONSOLIDATION, MERGER AND SALES
Section 801. Company May Consolidate, Etc., Only on Certain Terms. . . . . . . . . . . . . . 64
Section 802. Successor Person Substituted for Company. . . . . . . . . . . . . . . . . . . . 64
ARTICLE NINE
SUPPLEMENTAL INDENTURES
Section 901. Supplemental Indentures without Consent of Holders. . . . . . . . . . . . . . . 65
Section 902. Supplemental Indentures with Consent of Holders. . . . . . . . . . . . . . . . 67
Section 903. Execution of Supplemental Indentures. . . . . . . . . . . . . . . . . . . . . . 68
Section 904. Effect of Supplemental Indentures. . . . . . . . . . . . . . . . . . . . . . . 68
Section 905. Reference in Securities to Supplemental Indentures. . . . . . . . . . . . . . . 68
Section 906. Conformity with Trust Indenture Act. . . . . . . . . . . . . . . . . . . . . . 69
ARTICLE TEN
COVENANTS
Section 1001. Payment of Principal and any Premium, Interest and Additional Amounts. . . . . 69
Section 1002. Maintenance of Office or Agency. . . . . . . . . . . . . . . . . . . . . . . . 69
Section 1003. Money for Securities Payments to Be Held in Trust. . . . . . . . . . . . . . . 71
Section 1004. Additional Amounts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Section 1005. Limitation Upon Disposition of Voting Stock of Significant Subsidiaries. . . . 73
Section 1006. Limitation on Creation of Liens. . . . . . . . . . . . . . . . . . . . . . . . 74
Section 1007. Corporate Existence. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
Section 1008. Waiver of Certain Covenants. . . . . . . . . . . . . . . . . . . . . . . . . . 75
Section 1009. Company Statement as to Compliance; Notice of Certain Defaults. . . . . . . . . 75
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
Section 1101. Applicability of Article. . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Section 1102. Election to Redeem; Notice to Trustee. . . . . . . . . . . . . . . . . . . . . 76
Section 1103. Selection by Trustee of Securities to be Redeemed. . . . . . . . . . . . . . . 76
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Section 1104. Notice of Redemption. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Section 1105. Deposit of Redemption Price. . . . . . . . . . . . . . . . . . . . . . . . . . 79
Section 1106. Securities Payable on Redemption Date. . . . . . . . . . . . . . . . . . . . . 79
Section 1107. Securities Redeemed in Part. . . . . . . . . . . . . . . . . . . . . . . . . . 80
Section 1108. Conversion Arrangements on Call for Redemption. . . . . . . . . . . . . . . . . 81
ARTICLE TWELVE
SINKING FUNDS
Section 1201. Applicability of Article. . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
Section 1202. Satisfaction of Sinking Fund Payments with Securities. . . . . . . . . . . . . 82
Section 1203. Redemption of Securities for Sinking Fund. . . . . . . . . . . . . . . . . . . 83
ARTICLE THIRTEEN
REPAYMENT AT THE OPTION OF HOLDERS
Section 1301. Applicability of Article. . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
ARTICLE FOURTEEN
SECURITIES IN FOREIGN CURRENCIES
Section 1401. Applicability of Article. . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
ARTICLE FIFTEEN
MEETINGS OF HOLDERS OF SECURITIES
Section 1501. Purposes for Which Meetings May Be Called. . . . . . . . . . . . . . . . . . . 85
Section 1502. Call, Notice and Place of Meetings. . . . . . . . . . . . . . . . . . . . . . . 85
Section 1503. Persons Entitled to Vote at Meetings. . . . . . . . . . . . . . . . . . . . . . 85
Section 1504. Quorum; Action. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
Section 1505. Determination of Voting Rights; Conduct and Adjournment of Meetings. . . . . . 87
Section 1506. Counting Votes and Recording Action of Meetings. . . . . . . . . . . . . . . . 88
ARTICLE SIXTEEN
CONVERSION
Section 1601. Conversion Privilege . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
Section 1602. Manner of Exercise of Conversion Privilege . . . . . . . . . . . . . . . . . . 89
Section 1603. Cash Adjustment Upon Conversion . . . . . . . . . . . . . . . . . . . . . . . . 90
Section 1604. Conversion Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
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Section 1605. Adjustment of Conversion Price . . . . . . . . . . . . . . . . . . . . . . . . 91
Section 1606. Effect of Reclassifications . . . . . . . . . . . . . . . . . . . . . . . . . . 94
Section 1607. Taxes on Conversions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
Section 1608. Company to Reserve Common Stock . . . . . . . . . . . . . . . . . . . . . . . . 95
Section 1609. Disclaimer by Trustee of Responsibility for Certain Matters . . . . . . . . . . 96
Section 1610. Company to Give Notice of Certain Events . . . . . . . . . . . . . . . . . . . 96
ARTICLE SEVENTEEN
IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS
Section 1701. Indenture and Securities Solely Corporate Obligations. . . . . . . . . . . . . 97
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SENIOR INDENTURE, dated as of _______________ (the
"Indenture"), between Capital One Financial Corporation, a corporation duly
organized and existing under the laws of the State of Delaware (hereinafter
called the "Company"), having its corporate office located at 2980 Fairview
Park Drive, Falls Church, Virginia 22042, and _______________, a national
banking association duly organized and existing under the laws of the United
States (hereinafter called the "Trustee"), having its Corporate Trust Office
located at ________________________.
RECITALS
The Company has duly authorized the execution and delivery of
this Indenture to provide for the issuance from time to time of its unsecured
senior debentures, notes or other evidences of indebtedness (hereinafter called
the "Securities"), unlimited as to principal amount, to bear such rates of
interest, to mature at such time or times, to be issued in one or more series
and to have such other provisions as shall be fixed as hereinafter provided.
The Company has duly authorized the execution and delivery of
this Indenture. All things necessary to make this Indenture a valid agreement
of the Company, in accordance with its terms, have been done.
This Indenture is subject to the provisions of the Trust
Indenture Act of 1939, as amended, and the rules and regulations of the
Securities and Exchange Commission promulgated thereunder that are required to
be part of this Indenture and, to the extent applicable, shall be governed by
such provisions.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of
the Securities by the Holders thereof, it is mutually covenanted and agreed,
for the equal and proportionate benefit of all Holders of the Securities and
any Coupons (as hereinafter defined) as follows:
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ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 101. Definitions.
Except as otherwise expressly provided in or pursuant to this
Indenture or unless the context otherwise requires, for all purposes of this
Indenture:
(1) the terms defined in this Article have the
meanings assigned to them in this Article, and include the plural as
well as the singular;
(2) all other terms used herein which are defined in
the Trust Indenture Act, either directly or by reference therein, have
the meanings assigned to them therein;
(3) all accounting terms not otherwise defined
herein have the meanings assigned to them in accordance with generally
accepted accounting principles and, except as otherwise herein
expressly provided, the term "generally accepted accounting
principles" with respect to any computation required or permitted
hereunder shall mean such accounting principles as are generally
accepted at the date of such computation; and
(4) the words "herein", "hereof", "hereto" and
"hereunder" and other words of similar import refer to this Indenture
as a whole and not to any particular Article, Section or other
subdivision.
Certain terms used principally in certain Articles hereof are
defined in those Articles.
"Act", when used with respect to any Holders, has the meaning
specified in Section 104.
"Additional Amounts" means any additional amounts which are
required hereby or by any Security, under circumstances specified herein or
therein, to be paid by the Company in respect of certain taxes imposed on
Holders specified therein and which are owing to such Holders.
"Affiliate" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with
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such specified Person. For the purposes of this definition, "control", when
used with respect to any specified Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have the meanings correlative to the foregoing.
"Authenticating Agent" means any Person authorized by the
Trustee pursuant to Section 610 to act on behalf of the Trustee to authenticate
Securities of one or more series.
"Authorized Newspaper" means a newspaper, in an official
language of the place of publication or in the English language, customarily
published on each day that is a Business Day in the place of publication,
whether or not published on days that are Legal Holidays in the place of
publication, and of general circulation in each place in connection with which
the term is used or in the financial community of each such place. Where
successive publications are required to be made in Authorized Newspapers, the
successive publications may be made in the same or in different newspapers in
the same city meeting the foregoing requirements and in each case on any day
that is a Business Day in the place of publication.
"Bearer Security" means any Security in the form established
pursuant to Section 201 which is payable to bearer.
"Board of Directors" means the board of directors of the
Company or any committee of that board duly authorized to act generally or in
any particular respect for the Company hereunder.
"Board Resolution" means a copy of one or more resolutions,
certified by the Secretary or an Assistant Secretary of the Company to have
been duly adopted by the Board of Directors or any duly authorized committee
thereof and to be in full force and effect on the date of such certification,
delivered to the Trustee.
"Business Day", with respect to any Place of Payment or other
location, means each Monday, Tuesday, Wednesday, Thursday and Friday that is
not a Legal Holiday in such Place of Payment or other location.
"Commission" means the Securities and Exchange Commission, as
from time to time constituted, created under the Securities Exchange Act of
1934 or, if at any time after the execution of this Indenture such Commission
is not existing and performing the duties now assigned to it under the Trust
Indenture Act, then the body performing such duties at such time.
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"Common Stock" means all shares now or hereafter authorized of
any class of common stock of the Company presently authorized and stock of any
other class into which such shares may hereafter have been changed.
"Company" means the Person named as the "Company" in the first
paragraph of this instrument until a successor Person shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor Person, and any other obligor upon the
Securities.
"Company Request" and "Company Order" mean, respectively, a
written request or order, as the case may be, signed in the name of the Company
by the Chairman of the Board of Directors and Chief Executive Officer, a Vice
Chairman, the President and Chief Operating Officer, a Senior Vice President,
the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary,
of the Company, and delivered to the Trustee.
"Consolidated Assets" means all assets owned directly by the
Company or indirectly by the Company through any Subsidiary and reflected on
the Company's consolidated balance sheet prepared in accordance with generally
accepted accounting principles.
"Controlled Subsidiary" means each Significant Subsidiary if
at least 80% of the outstanding shares of its Voting Stock is at the time owned
by the Company or by one or more Controlled Subsidiaries of the Company or by
the Company and one or more Controlled Subsidiaries.
"Conversion Price" means the price per share of Common Stock
from time to time in effect at which any Convertible Security may be converted
into Common Stock as determined by or pursuant to the terms of this Indenture.
"Convertible Security" or "Convertible Securities" means any
Security or Securities, as the case may be, which are by their terms
convertible into Common Stock.
"Corporate Trust Office" means the principal office of the
Trustee at which at any particular time its corporate trust business shall be
administered, which office at the date of original execution of this Indenture
is located at the address specified in the first paragraph of this instrument.
"Corporation" includes corporations and, except for purposes
of Article Eight, associations, companies and business trusts.
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"Coupon" means any interest coupon appertaining to a Bearer
Security.
"Currency" or "Money", with respect to any payment, deposit or
other transfer in respect of the principal of or any premium or interest on or
any Additional Amounts with respect to any Security, means the unit or units of
legal tender for the payment of public and private debts (or any composite
thereof) in which such payment, deposit or other transfer is required to be
made by or pursuant to the terms hereof and, with respect to any other payment,
deposit or transfer pursuant to or contemplated by the terms hereof, means
Dollars.
"Currency Indexed Note" means any Security with the amount of
principal payments determined by reference to an index Currency.
"Date of Conversion" with respect to any Convertible Security
or portion thereof to be converted, means the date on which such Convertible
Security shall be surrendered for conversion and notice given in accordance
with the provisions of Article Sixteen.
"Defaulted Interest" has the meaning specified in Section 307.
"Depository" or "U.S. Depository" means, with respect to any
Security issuable or issued in the form of one or more global Securities, the
Person designated as Depository or U.S. Depository by the Company in or
pursuant to this Indenture, which Person must be, to the extent required by
applicable law or regulation, a clearing agency registered under the Securities
Exchange Act of 1934, as amended, and, if so provided with respect to any
Security, any successor to such Person. If at any time there is more than one
such Person, "Depository" or "U.S. Depository" shall mean, with respect to any
Securities, the qualifying entity which has been appointed with respect to such
Securities.
"Dollars" or "$" means a dollar or other equivalent unit of
legal tender for payment of public or private debts in the United States of
America.
"Event of Default" has the meaning specified in Section 501.
"Government Obligations", with respect to any Security, means
(i) direct obligations of the government or governments which issued the
Currency in which the principal of or any premium or interest on such Security
or any Additional Amounts in respect thereof shall be payable, in each case
where the payment or payments thereunder are supported by the full faith and
credit of such government or governments or (ii) obligations of a Person
controlled or supervised by and acting as an
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agency or instrumentality of such government or governments, in each case where
the payment or payments thereunder are unconditionally guaranteed as a full
faith and credit obligation by such government or governments, and which, in
the case of (i) or (ii), are not callable or redeemable at the option of the
issuer or issuers thereof, and shall also include a depository receipt issued
by a bank or trust company as custodian with respect to any such Government
Obligation or a specific payment of interest on or principal of or other amount
with respect to any such Government Obligation held by such custodian for the
account of the holder of a depository receipt, provided that (except as
required by law) such custodian is not authorized to make any deduction from
the amount payable to the holder of such depository receipt from any amount
received by the custodian in respect of the Government Obligation or the
specific payment of interest on or principal of or other amount with respect to
the Government Obligation evidenced by such depository receipt.
"Holder", in the case of any Registered Security, means the
Person in whose name such Security is registered in the Security Register and,
in the case of any Bearer Security, means the bearer thereof and, in the case
of any Coupon, means the bearer thereof.
"Indenture" means this instrument as it may from time to time
be supplemented or amended by one or more indentures supplemental hereto
entered into pursuant to the applicable provisions hereof and, with respect to
any Security, by the terms and provisions of such Security and any Coupon
appertaining thereto established pursuant to Section 301 (as such terms and
provisions may be amended pursuant to the applicable provisions hereof).
"Independent Public Accountants" means accountants or a firm
of accountants that, with respect to the Company and any other obligor under
the Securities or the Coupons, are independent public accountants within the
meaning of the Securities Act of 1933, as amended, and the rules and
regulations promulgated by the Commission thereunder, who may be the
independent public accountants regularly retained by the Company or who may be
other independent public accountants. Such accountants or firm shall be
entitled to rely upon any Opinion of Counsel as to the interpretation of any
legal matters relating to the Indenture or certificates required to be provided
hereunder.
"Indexed Security" means a Security the terms of which provide
that the principal amount thereof payable at Stated Maturity and/or interest to
be paid thereon may be determined by reference to the exchange rate of one or
more specified currencies relative to an index or one or more equity or other
indices and/or formulae or the price of one or more specified commodities or by
such other methods or formulae
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as may be determined in accordance with this Indenture.
"Interest", with respect to any Original Issue Discount
Security which by its terms bears interest only after Maturity, means interest
payable after Maturity, and, when used with respect to a Security which
provides for payment of Additional Amounts pursuant to Section 1004, includes
such Additional Amounts.
"Interest Payment Date", with respect to any Security, means
the Stated Maturity of an installment of interest on such Security.
"Legal Holiday", with respect to any Place of Payment or other
location, means a Saturday, a Sunday or a day on which banking institutions or
trust companies in such Place of Payment or other location are not authorized
or obligated to be open.
"Maturity", with respect to any Security, means the date on
which the principal of such Security or an installment of principal becomes due
and payable as provided in or pursuant to this Indenture, whether at the Stated
Maturity or by declaration of acceleration, notice of redemption, notice of
option to elect repayment or otherwise, and includes Redemption Date.
"Office or Agency", with respect to any Securities, means an
office or agency of the Company maintained or designated in a Place of Payment
for such Securities pursuant to Section 1002 or any other office or agency of
the Company maintained or designated for such Securities pursuant to Section
1002 or, to the extent designated or required by Section 1002 in lieu of such
office or agency, the Corporate Trust Office of the Trustee.
"Officers' Certificate" means a certificate signed by the
Chairman of the Board and Chief Executive Officer, a Vice Chairman, the
President and Chief Operating Officer, any Senior Vice President, the
Treasurer, any Assistant Treasurer, the Secretary or an Assistant Secretary of
the Company, that complies with the requirements of Section 314(e) of the Trust
Indenture Act and is delivered to the Trustee.
"Opinion of Counsel" means a written opinion of counsel, who
may be an employee of or counsel for the Company or other counsel who shall be
reasonably acceptable to the Trustee, that complies with the requirements of
Section 314(e) of the Trust Indenture Act.
"Original Issue Discount Security" means a Security issued
pursuant to this Indenture which provides for declaration of an amount less
than the principal face
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amount thereof to be due and payable upon acceleration pursuant to Section 502.
"Outstanding", when used with respect to any Securities,
means, as of the date of determination, all such Securities theretofore
authenticated and delivered under this Indenture, except:
(i) any such Security theretofore cancelled by the Trustee or the
Security Registrar or delivered to the Trustee or the Security
Registrar for cancellation;
(ii) any such Security or portions thereof for whose payment at the
Maturity thereof money in the necessary amount has been
theretofore deposited pursuant hereto with the Trustee or any
Paying Agent (other than the Company) in trust or set aside
and segregated in trust by the Company (if the Company shall
act as its own Paying Agent) for the Holders of such
Securities and any Coupons appertaining thereto, provided
that, if such Securities are to be redeemed, notice of such
redemption has been duly given pursuant to this Indenture or
provision therefor satisfactory to the Trustee has been made;
(iii) any such Security with respect to which the Company has
effected defeasance pursuant to Section 402 hereof;
(iv) any such Security which has been paid pursuant to Section 306
or in exchange for or in lieu of which other Securities have
been authenticated and delivered pursuant to this Indenture,
unless there shall have been presented to the Trustee proof
satisfactory to it that such Security is held by a bona fide
purchaser in whose hands such Security is a valid obligation
of the Company; and
(v) Convertible Securities converted into Common Stock in
accordance with Article Sixteen hereof;
provided, however, that in determining whether the Holders of the requisite
principal amount of Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder or are present at
a meeting of Holders of Securities for quorum purposes, (i) the principal
amount of an Original Issue Discount Security that may be counted in making
such determination and that shall be deemed to be Outstanding for such purposes
shall be equal to the amount of the principal thereof that pursuant to the
terms of such Original Issue Discount Security would be declared (or shall have
been declared to be) due and payable upon a declaration of
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acceleration thereof pursuant to Section 502 at the time of such determination,
(ii) the principal amount of any Indexed Security that may be counted in making
such determination and that shall be deemed outstanding for such purpose shall
be equal to the principal face amount of such Indexed Security at original
issuance, unless otherwise provided in or pursuant to this Indenture, (iii) the
principal amount of a Security denominated in one or more foreign currencies or
currency units shall be the U.S. dollar equivalent based on the applicable
exchange rate or rates at the time of sale (or in the case of an Original Issue
Discount Security, the U.S. dollar equivalent on the date of original issuance
of such Security of the amount determined in (ii); and (iv) Securities owned by
the Company or any other obligor upon the Securities or any Affiliate of the
Company or such other obligor, shall be disregarded and deemed not to be
Outstanding, except that, in determining whether the Trustee shall be protected
in making any such determination or relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Securities which a
Responsible Officer of the Trustee actually knows to be so owned shall be so
disregarded. Securities so owned which shall have been pledged in good faith
may be regarded as Outstanding if the pledgee establishes to the satisfaction
of the Trustee (A) the pledgee's right so to act with respect to such
Securities and (B) that the pledgee is not the Company or any other obligor
upon the Securities or any Coupons appertaining thereto or any Affiliate of the
Company or such other obligor.
"Paying Agent" means any Person authorized by the Company to
pay the principal of, or any premium or interest on, or any Additional Amounts
with respect to any Security or any Coupon on behalf of the Company.
"Person" means any individual, Corporation, partnership, joint
venture, joint-stock company, trust, unincorporated organization or government
or any agency or political subdivision thereof.
"Place of Payment", with respect to any Security, means the
place or places where the principal of, or any premium or interest on, or any
Additional Amounts with respect to such Security is payable as provided in or
pursuant to this Indenture.
"Predecessor Security" of any particular Security means every
previous Security evidencing all or a portion of the same debt as that
evidenced by such particular Security; and, for the purposes of this
definition, any Security authenticated and delivered under Section 306 in
exchange for or in lieu of a lost, destroyed, mutilated or stolen Security or
any Security to which a mutilated, destroyed, lost or stolen Coupon appertains
shall be deemed to evidence the same debt as the lost, destroyed, mutilated or
stolen Security or the Security to which a mutilated, destroyed, lost or stolen
Coupon appertains.
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"Redemption Date", with respect to any Security or portion
thereof to be redeemed, means the date fixed for such redemption by or pursuant
to this Indenture.
"Redemption Price", with respect to any Security or portion
thereof to be redeemed, means the price at which it is to be redeemed as
determined by or pursuant to this Indenture.
"Registered Security" means any Security established pursuant
to Section 201 which is registered in the Security Register.
"Regular Record Date" for the interest payable on any
Registered Security on any Interest Payment Date therefor means the date, if
any, specified in or pursuant to this Indenture as the "Regular Record Date".
"Responsible Officer" means an officer of the Trustee assigned
to the Corporate Trust Office, including any Vice President, any trust officer
or any other officer performing functions similar to those performed by the
persons who at the time shall be such officers, and any other officer of the
Trustee to whom a matter is referred because of his knowledge of and
familiarity with the particular subject.
"Security" or "Securities" means any Security or Securities,
as the case may be, authenticated and delivered under this Indenture; provided,
however, that, if at any time there is more than one Person acting as Trustee
under this Indenture, "Securities", with respect to any such Person, shall mean
Securities authenticated and delivered under this Indenture, exclusive,
however, of Securities of any series as to which such Person is not Trustee.
"Security Register" and "Security Registrar" have the
respective meanings specified in Section 305.
"Significant Subsidiary" means any Subsidiary of the Company
the Consolidated Assets of which constitute 20% or more of the Company's
Consolidated Assets.
"Special Record Date" for the payment of any Defaulted
Interest on any Registered Security means a date fixed by the Trustee pursuant
to Section 307.
"Stated Maturity", with respect to any Security or any
installment of principal thereof or interest thereon or any Additional Amounts
with respect thereto, means the date established by or pursuant to this
Indenture as the fixed date on which the principal of such Security or such
installment of principal or interest is or such
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Additional Amounts are due and payable.
"Subsidiary" means any Corporation of which at the time of
determination the Company or one or more Subsidiaries owns or controls directly
or indirectly more than 50% of the shares of Voting Stock.
"Trust Indenture Act" means the Trust Indenture Act of 1939,
as amended, and any reference herein to the Trust Indenture Act or a particular
provision thereof shall mean such Act or provision, as the case may be, as
amended or replaced from time to time or as supplemented from time to time by
rules or regulations adopted by the Commission under or in furtherance of the
purposes of such Act or provision, as the case may be.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this instrument until a successor Trustee shall have become such
with respect to one or more series of Securities pursuant to the applicable
provisions of this Indenture, and thereafter "Trustee" shall mean each Person
who is then a Trustee hereunder; provided, however, that if at any time there
is more than one such Person, "Trustee" shall mean each such Person and as used
with respect to the Securities of any series shall mean the Trustee with
respect to the Securities of such series.
"United States", except as otherwise provided herein or in any
Security, means the United States of America (including the states thereof and
the District of Columbia), its territories and possessions and other areas
subject to its jurisdiction.
"United States Alien", except as otherwise provided in or
pursuant to this Indenture, means any Person who, for United States Federal
income tax purposes, is a foreign corporation, a non-resident alien individual,
a non-resident alien fiduciary of a foreign estate or trust, or a foreign
partnership one or more of the members of which is, for United States Federal
income tax purposes, a foreign corporation, a non-resident alien individual or
a non-resident alien fiduciary of a foreign estate or trust.
"Vice President", when used with respect to the Company or the
Trustee, means any vice president, whether or not designated by a number or a
word or words added before or after the title "Vice President".
"Voting Stock" means stock of a Corporation of the class or
classes having general voting power under ordinary circumstances to elect at
least a majority of the board of directors, managers or trustees of such
Corporation provided that, for the purposes hereof, stock which carries only
the right to vote conditionally on the happening of an event shall not be
considered voting stock whether or not such event
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shall have happened.
Section 102. Compliance Certificates and Opinions.
Upon any application or request by the Company to the Trustee
to take any action under any provision of this Indenture, the Company shall
furnish to the Trustee an Officers' Certificate stating that all conditions
precedent, if any, provided for in this Indenture relating to the proposed
action have been complied with and an Opinion of Counsel stating that, in the
opinion of such counsel, all such conditions precedent, if any, have been
complied with, except that in the case of any such application or request as to
which the furnishing of such documents or any of them is specifically required
by any provision of this Indenture relating to such particular application or
request, no additional certificate or opinion need be furnished.
Section 103. Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified
by, or covered by an opinion of, any specified Person, it is not necessary that
all such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be
based, insofar as it relates to legal matters, upon a certificate or opinion
of, or representations by, counsel, unless such officer knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which his certificate or
opinion is based are erroneous. Any such certificate or Opinion of Counsel may
be based, insofar as it relates to factual matters, upon a certificate or
opinion of, or representations by, an officer or officers of the Company
stating that the information with respect to such factual matters is in the
possession of the Company unless such counsel knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or
more applications, requests, consents, certificates, statements, opinions or
other instruments under this Indenture or any Security, they may, but need not,
be consolidated and form one instrument.
Section 104. Acts of Holders.
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(a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by or pursuant to this Indenture to be
given or taken by Holders may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such Holders in person or
by an agent duly appointed in writing. If, but only if, Securities of a series
are issuable as Bearer Securities, any request, demand, authorization,
direction, notice, consent, waiver or other action provided in or pursuant to
this Indenture to be given or taken by Holders of Securities of such series
may, alternatively, be embodied in and evidenced by the record of Holders of
Securities of such series voting in favor thereof, either in person or by
proxies duly appointed in writing, at any meeting of Holders of Securities of
such series duly called and held in accordance with the provisions of Article
Fifteen, or a combination of such instruments and any such record. Except as
herein otherwise expressly provided, such action shall become effective when
such instrument or instruments or record or both are delivered to the Trustee
and, where it is hereby expressly required, to the Company. Such instrument or
instruments and any such record (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Holders signing
such instrument or instruments or so voting at any such meeting. Proof of
execution of any such instrument or of a writing appointing any such agent, or
of the holding by any Person of a Security, shall be sufficient for any purpose
of this Indenture and (subject to Section 315 of the Trust Indenture Act)
conclusive in favor of the Trustee and the Company and any agent of the Trustee
or the Company, if made in the manner provided in this Section. The record of
any meeting of Holders of Securities shall be proved in the manner provided in
Section 1506.
Without limiting the generality of this Section 104, unless
otherwise provided in or pursuant to this Indenture, a Holder, including a U.S.
Depository that is a Holder of a global Security, may make, give or take, by a
proxy, or proxies, duly appointed in writing, any request, demand,
authorization, direction, notice, consent, waiver or other action provided in
or pursuant to this Indenture to be made, given or taken by Holders, and a U.S.
Depository that is a Holder of a global Security may provide its proxy or
proxies to the beneficial owners of interests in any such global Security
through such U.S. Depository's standing instructions and customary practices.
The Trustee shall fix a record date for the purpose of
determining the Persons who are beneficial owners of interest in any permanent
global Security held by a U.S. Depository entitled under the procedures of such
U.S. Depository to make, give or take, by a proxy or proxies duly appointed in
writing, any request, demand, authorization, direction, notice, consent, waiver
or other action provided in or pursuant to this Indenture to be made, given or
taken by Holders. If such a record date is fixed, the Holders on such record
date or their duly appointed proxy or proxies, and only such Persons, shall be
entitled to make, give or take such request, demand, authorization,
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direction, notice, consent, waiver or other action, whether or not such Holders
remain Holders after such record date. No such request, demand, authorization,
direction, notice, consent, waiver or other action shall be valid or effective
if made, given or taken more than 90 days after such record date.
(b) The fact and date of the execution by any Person of any
such instrument or writing may be proved in any reasonable manner which the
Trustee deems sufficient and in accordance with such reasonable rules as the
Trustee may determine; and the Trustee may in any instance require further
proof with respect to any of the matters referred to in this Section 104.
(c) The ownership, principal amount and serial numbers of
Registered Securities held by any Person, and the date of the commencement and
the date of the termination of holding the same, shall be proved by the
Security Register.
(d) The ownership, principal amount and serial numbers of
Bearer Securities held by any Person, and the date of the commencement and the
date of the termination of holding the same, may be proved by the production of
such Bearer Securities or by a certificate executed, as depositary, by any
trust company, bank, banker or other depositary reasonably acceptable to the
Company, wherever situated, if such certificate shall be deemed by the Company
and the Trustee to be satisfactory, showing that at the date therein mentioned
such Person had on deposit with such depositary, or exhibited to it, the Bearer
Securities therein described; or such facts may be proved by the certificate or
affidavit of the Person holding such Bearer Securities, if such certificate or
affidavit is deemed by the Trustee to be satisfactory. The Trustee and the
Company may assume that such ownership of any Bearer Security continues until
(1) another certificate or affidavit bearing a later date issued in respect of
the same Bearer Security is produced, or (2) such Bearer Security is produced
to the Trustee by some other Person, or (3) such Bearer Security is surrendered
in exchange for a Registered Security, or (4) such Bearer Security is no longer
Outstanding. The ownership, principal amount and serial numbers of Bearer
Securities held by the Person so executing such instrument or writing and the
date of the commencement and the date of the termination of holding the same
may also be proved in any other manner which the Company and the Trustee deems
sufficient.
(e) If the Company shall solicit from the Holders of any
Registered Securities any request, demand, authorization, direction, notice,
consent, waiver or other Act, the Company may at its option (but is not
obligated to), by Board Resolutions, fix in advance a record date for the
determination of Holders of Registered Securities entitled to give such
request, demand, authorization, direction, notice, consent, waiver or other
Act. If such a record date is fixed, such request, demand,
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authorization, direction, notice, consent, waiver or other Act may be given
before or after such record date, but only the Holders of Registered Securities
of record at the close of business on such record date shall be deemed to be
Holders for the purpose of determining whether Holders of the requisite
proportion of Outstanding Securities have authorized or agreed or consented to
such request, demand, authorization, direction, notice, consent, waiver or
other Act, and for that purpose the Outstanding Securities shall be computed as
of such record date; provided that no such authorization, agreement or consent
by the Holders of Registered Securities shall be deemed effective unless it
shall become effective pursuant to the provisions of this Indenture not later
than six months after the record date.
(f) Any request, demand, authorization, direction, notice,
consent, waiver or other action by the Holder of any Security shall bind every
future Holder of the same Security and the Holder of every Security issued upon
the registration of transfer thereof or in exchange therefor or in lieu thereof
in respect of anything done or suffered to be done by the Trustee, any Security
Registrar, any Paying Agent or the Company in reliance thereon, whether or not
notation of such action is made upon such Security.
Section 105. Notices, etc. to Trustee and Company.
Any request, demand, authorization, direction, notice,
consent, waiver or Act of Holders or other document provided or permitted by
this Indenture to be made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder or the Company shall
be sufficient for every purpose hereunder if made, given, furnished or
filed in writing to or with the Trustee at its Corporate Trust Office,
or
(2) the Company by the Trustee or any Holder shall
be sufficient for every purpose hereunder (unless otherwise herein
expressly provided) if in writing and mailed, first-class postage
prepaid, to the Company addressed to the attention of its Treasurer at
the address of its principal office specified in the first paragraph
of this instrument (with a copy to its Corporate Secretary at the same
address) or at any other address previously furnished in writing to
the Trustee by the Company.
Section 106. Notice to Holders of Securities; Waiver.
Except as otherwise expressly provided in or pursuant to this
Indenture, where this Indenture provides for notice to Holders of Securities of
any event,
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(1) such notice shall be sufficiently given to
Holders of Registered Securities if in writing and mailed,
first-class postage prepaid, to each Holder of a Registered
Security affected by such event, at his address as it appears
in the Security Register, not later than the latest date, and
not earlier than the earliest date, prescribed for the giving
of such Notice; and
(2) such notice shall be sufficiently given to
Holders of Bearer Securities, if any, if published in an
Authorized Newspaper in The City of New York and, if such
Securities are then listed on any stock exchange outside the
United States, in an Authorized Newspaper in such city as the
Company shall advise the Trustee that such stock exchange so
requires, on a Business Day at least twice, the first such
publication to be not earlier than the earliest date and not
later than the latest date prescribed for the giving of such
notice.
In any case where notice to Holders of Registered Securities
is given by mail, neither the failure to mail such notice, nor any defect in
any notice so mailed, to any particular Holder of a Registered Security shall
affect the sufficiency of such notice with respect to other Holders of
Registered Securities or the sufficiency of any notice to Holders of Bearer
Securities given as provided herein. Any notice which is mailed in the manner
herein provided shall be conclusively presumed to have been duly given or
provided. In the case by reason of the suspension of regular mail service or
by reason of any other cause it shall be impracticable to give such notice by
mail, then such notification as shall be made with the approval of the Trustee
shall constitute a sufficient notification for every purpose hereunder.
In case by reason of the suspension of publication of any
Authorized Newspaper or Authorized Newspapers or by reason of any other cause
it shall be impracticable to publish any notice to Holders of Bearer Securities
as provided above, then such notification to Holders of Bearer Securities as
shall be given with the approval of the Trustee shall constitute sufficient
notice to such Holders for every purpose hereunder. Neither failure to give
notice by publication to Holders of Bearer Securities as provided above, nor
any defect in any notice so published, shall affect the sufficiency of any
notice mailed to Holders of Registered Securities as provided above.
Where this Indenture provides for notice in any manner, such
notice may be waived in writing by the Person entitled to receive such notice,
either before or after the event, and such waiver shall be the equivalent of
such notice. Waivers of notice by Holders of Securities shall be filed with
the Trustee, but such filing shall not be a condition precedent to the validity
of any action taken in reliance upon such waiver.
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Section 107. Language of Notices.
Any request, demand, authorization, direction, notice,
consent, election or waiver required or permitted under this Indenture shall be
in the English language, except that, if the Company so elects, any published
notice may be in an official language of the country of publication.
Section 108. Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with
any duties under any required provision of the Trust Indenture Act imposed
hereon by Section 318(c) thereof, such required provision shall control.
Section 109. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of
Contents are for convenience only and shall not affect the construction hereof.
Section 110. Successors and Assigns.
All covenants and agreements in this Indenture by the Company
shall bind its successors and assigns, whether so expressed or not.
Section 111. Separability Clause.
In case any provision in this Indenture, any Security or any
Coupon 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 112. Benefits of Indenture.
Nothing in this Indenture, any Security or any Coupon, express
or implied, shall give to any Person, other than the parties hereto, any
Security Registrar, any Paying Agent and their successors hereunder and the
Holders of Securities or Coupons, any benefit or any legal or equitable right,
remedy or claim under this Indenture.
Section 113. Governing Law.
This Indenture, the Securities and any Coupons shall be
governed by and construed in accordance with the laws of the State of New York
applicable to
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agreements made or instruments entered into and, in each case, performed in
said state.
Section 114. Legal Holidays
In any case where any Interest Payment Date, Stated Maturity
or Maturity of any Security, or the last date on which a Holder has the right
to convert his Securities shall be a Legal Holiday at any Place of Payment,
then (notwithstanding any other provision of this Indenture, any Security or
any Coupon other than a provision in any Security or Coupon that specifically
states that such provision shall apply in lieu of this Section 114) or
conversion payment of the Securities need not be made at such Place of Payment
on such date, but may be made on the next succeeding day that is a Business Day
at such Place of Payment with the same force and effect as if made on the
Interest Payment Date or at the Stated Maturity or Maturity, or on the last
such date for conversion, and no interest shall accrue on the amount payable on
such date or at such time for the period from and after such Interest Payment
Date or Stated Maturity or Maturity, or last such date for conversion, as the
case may be.
ARTICLE TWO
SECURITIES FORMS
Section 201. Forms Generally.
Each Registered Security, Bearer Security, Coupon and
temporary global Security issued pursuant to this Indenture shall be in the
form established by or pursuant to a Board Resolution or in one or more
indentures supplemental hereto, shall have such appropriate insertions,
omissions, substitutions and other variations as are required or permitted by
or pursuant to this Indenture or any indenture supplemental hereto and may have
such letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may, consistently herewith, be determined by the
officers executing such Security or Coupon as evidenced by their execution of
such Security or Coupon.
Unless otherwise provided in or pursuant to this Indenture,
the Securities shall be issuable in registered form without Coupons.
Definitive Securities and definitive Coupons shall be printed,
lithographed or engraved or produced by any combination of these methods on a
steel engraved
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border or steel engraved borders or may be produced in any other manner, all as
determined by the officers of the Company executing such Securities or Coupons,
as evidenced by their execution of such Securities or Coupons.
Section 202. Form of Trustee's Certificate of
Authentication.
Subject to Section 610, the Trustee's certificate of
authentication shall be in substantially the following form:
This is one of the Securities of the series
designated herein referred to in the within-mentioned Indenture.
, as Trustee
-----------------
By
-------------------------- Authorized Officer
Section 203. Securities in Global Form.
If Securities of a series shall be issuable in global form,
any such Security may provide that it or any number of such Securities shall
represent the aggregate amount of all Outstanding Securities of such series (or
such lesser amount as is permitted by the terms thereof) from time to time
endorsed thereon and may also provide that the aggregate amount of Outstanding
Securities represented thereby may from time to time be increased or reduced to
reflect exchanges. Any endorsement of any Security in global form to reflect
the amount, or any increase or decrease in the amount, or changes in the rights
of Holders, of Outstanding Securities represented thereby shall be made in such
manner and by such Person or Persons as shall be specified therein or in the
Company Order to be delivered pursuant to Section 303 or 304 with respect
thereto. Subject to the provisions of Section 303 and, if applicable, Section
304, the Trustee shall deliver and redeliver any Security in permanent global
form in the manner and upon instructions given by the Person or Persons
specified therein or in the applicable Company Order. If a Company Order
pursuant to Section 303 or 304 has been, or simultaneously is, delivered, any
instructions by the Company with respect to a Security in global form shall be
in writing but need not be accompanied by or contained in an Officers'
Certificate and need not be accompanied by an Opinion of Counsel.
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ARTICLE THREE
THE SECURITIES
Section 301. Amount Unlimited; Issuable in Series.
The aggregate principal amount of Securities which may be
authenticated and delivered under this Indenture is unlimited. The Securities
may be issued in one or more series.
With respect to any Securities to be authenticated and
delivered hereunder, there shall be established in or pursuant to a Board
Resolution and set forth in an Officers' Certificate, or established in one or
more indentures supplemental hereto,
(1) the title of such Securities and the series in
which such Securities shall be included;
(2) any limit upon the aggregate principal amount of
the Securities of such title or the Securities of such series which
may be authenticated and delivered under this Indenture (except for
Securities authenticated and delivered upon registration or transfer
of, or in exchange for, or in lieu of, other Securities of such series
pursuant to Section 304, 305, 306, 905, 1107 or 1602 or the terms of
such Securities);
(3) whether such Securities are to be issuable as
Registered Securities, as Bearer Securities or alternatively as Bearer
Securities and Registered Securities, and whether the Bearer
Securities are to be issuable with Coupons, without Coupons or both,
and any restrictions applicable to the offer, sale or delivery of the
Bearer Securities and the terms, if any, upon which Bearer Securities
may be exchanged for Registered Securities and vice versa;
(4) if any of such Securities are to be issuable in
global form, when any of such Securities are to be issuable in global
form and (i) whether beneficial owners of interests in any such global
Security may exchange such interest for Securities of the same series
and of like tenor and of any authorized form and denomination, and the
circumstances under which any such exchanges may occur, if other than
in the manner specified in Section 305, and (ii) the name of the
Depository or the U.S. Depository, as the case may be, with respect to
any
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global Security;
(5) if any of such Securities are to be issuable as
Bearer Securities or in global form, the date as of which any such
Bearer Security or global Security shall be dated (if other than the
date of original issuance of the first of such Securities to be
issued);
(6) if any of such Securities are to be issuable as
Bearer Securities, whether interest in respect of any portion of a
temporary Bearer Security in global form payable in respect of an
Interest Payment Date therefor prior to the exchange, if any, of such
temporary Bearer Security for definitive Securities shall be paid to
any clearing organization with respect to the portion of such
temporary Bearer Security held for its account and, in such event, the
terms and conditions (including any certification requirements) upon
which any such interest payment received by a clearing organization
will be credited to the Persons entitled to interest payable on such
Interest Payment Date;
(7) the date or dates, or the method or methods, if
any, by which such date or dates shall be determined, on which the
principal of such Securities is payable;
(8) the rate or rates at which such Securities shall
bear interest, if any, or the method or methods, if any, by which such
rate or rates are to be determined, the date or dates, if any, from
which such interest shall accrue or the method or methods, if any, by
which such date or dates are to be determined, the Interest Payment
Dates, if any, on which such interest shall be payable and the Regular
Record Date, if any, for the interest payable on Registered Securities
on any Interest Payment Date, whether and under what circumstances
Additional Amounts on such Securities or any of them shall be payable,
and the basis upon which interest shall be calculated;
(9) if in addition to or other than The City of New
York, the place or places where the principal of, any premium and
interest on or any Additional Amounts with respect to such Securities
shall be payable, any of such Securities that are Registered
Securities may be surrendered for registration of transfer, any of
such Securities may be surrendered for exchange or conversion and
notices or demands to or upon the Company in respect of such
Securities and this Indenture may be served;
(10) whether any of such Securities are to be
redeemable at the option of the Company and, if so, the period or
periods within which, the price or
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prices at which and the other terms and conditions upon which such
Securities may be redeemed, in whole or in part, at the option of the
Company;
(11) whether the Company is obligated to redeem or
purchase any of such Securities pursuant to any sinking fund or at the
option of any Holder thereof and, if so, the period or periods within
which, the price or prices at which and the other terms and conditions
upon which such Securities shall be redeemed or purchased, in whole or
in part, pursuant to such obligation, and any provisions for the
remarketing of such Securities so redeemed or purchased;
(12) the denominations in which any of such
Securities that are Registered Securities shall be issuable if other
than denominations of $1,000 and any integral multiple thereof, and
the denominations in which any of such Securities that are Bearer
Securities shall be issuable if other than the denomination of $5,000;
(13) if other than the principal amount thereof, the
portion of the principal amount of any of such Securities that shall
be payable upon declaration of acceleration of the Maturity thereof
pursuant to Section 501 or the method by which such portion is to be
determined;
(14) if other than Dollars, the Currency in which
payment of the principal of, any premium or interest on or any
Additional Amounts with respect to any of such Securities shall be
payable;
(15) the Currency in which payment of principal of,
any premium or interest on or any Additional Amounts with respect to
any Securities shall be payable if other than the currency of the
United States, and the time and manner of determining the exchange
rate between the Currency in which such Securities are payable and the
Currency in which such Securities or any of them are so payable;
(16) whether the amount of payments of principal of,
any premium or interest on or any Additional Amounts with respect to
such Securities may be determined with reference to an index, formula
or other method (which index, formula or method or methods may be
based, without limitation, on one or more Currencies, commodities,
equity indices or other indices), and, if so, the terms and conditions
upon which and the manner in which such amounts shall be determined
and paid or payable;
(17) any deletions from, modifications of or
additions to the Events
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of Default or covenants of the Company with respect to any of such
Securities, whether or not such Events of Default or covenants are
consistent with the Events of Default or covenants set forth herein;
(18) the applicability, if any, of Section 402 to any
of such Securities and any provisions in modification of, in addition
to or in lieu of any of the provisions of Section 402;
(19) whether the principal of (and premium, if any)
or interest (including Additional Amounts), if any, on the Securities
of the series are to be payable, at the election of the Company or any
Holder thereof or otherwise, in a currency or currencies, currency
unit or units or composite currency or currencies other than that in
which such Securities or any of them are denominated or stated to be
payable, the period or periods within which, and the other terms and
conditions upon which, such election, if any, may be made, and the
time and manner of determining the exchange rate between the currency
or currencies, currency unit or units or composite currency or
currencies in which such Securities or any of them are denominated or
stated to be payable and the currency or currencies, currency unit or
units or composite currency or currencies in which such Securities or
any of them are to be so payable;
(20) if any of such Securities are to be issuable in
global form and are to be issuable in definitive form (whether upon
original issue or upon exchange of a temporary Security) only upon
receipt of certain certificates or other documents or satisfaction of
other conditions, then the form and terms of such certificates,
documents or conditions;
(21) if there is more than one Trustee, the identity
of the Trustee and, if not the Trustee, the identity of each Security
Registrar, Paying Agent or Authenticating Agent with respect to such
Securities; and
(22) whether Securities of the series are to be
Convertible Securities and, if so, the initial Conversion Price
applicable thereto, the period or periods within which the conversion
privilege may be exercised, the class of Common Stock into which such
Convertible Securities may be converted and any additions, deletions,
modifications or variations to the provisions of Article Sixteen
hereof applicable thereto;
(23) any other terms of such Securities (which terms
shall not be inconsistent with the provisions of this Indenture).
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All Securities of any one series and all Coupons, if
any, appertaining to Bearer Securities of such series shall be
substantially identical except as to Currency of payments due
thereunder, denomination and the rate or rates of interest, if any,
and Maturity, the date from which interest, if any, shall accrue and
except as may otherwise be provided by the Company in or pursuant to
the Board Resolution and set forth in the Officers' Certificate or in
any indenture or indentures supplemental hereto pertaining to such
series of Securities. All Securities of any one series need not be
issued at the same time and, unless otherwise so provided by the
Company, a series may be reopened for issuances of additional
Securities of such series or to establish additional terms of such
series of Securities.
If any of the terms of the Securities of any series shall be
established by action taken by or pursuant to a Board Resolution, the Board
Resolution shall be delivered to the Trustee at or prior to the delivery of the
Officers' Certificate setting forth the terms of such series.
Section 302. Currency; Denominations.
Unless otherwise provided in or pursuant to this Indenture,
the principal of, any premium and interest on and any Additional Amounts with
respect to the Securities shall be payable in Dollars. Unless otherwise
provided in or pursuant to this Indenture, Registered Securities denominated in
Dollars shall be issuable in registered form without Coupons in denominations
of $1,000 and any integral multiple thereof, and the Bearer Securities
denominated in Dollars shall be issuable in the denomination of $5,000.
Securities not denominated in Dollars shall be issuable in such denominations
as are established with respect to such Securities in or pursuant to this
Indenture.
Section 303. Execution, Authentication, Delivery and
Dating.
Securities shall be executed on behalf of the Company by its
Chairman of the Board and Chief Executive Officer, its President and Chief
Operating Officer, the Chief Financial Officer, the Treasurer and any Assistant
Treasurer or one of its Senior Vice Presidents under its corporate seal
reproduced thereon and attested by its Corporate Secretary or one of its
Assistant Secretaries. Coupons shall be executed on behalf of the Company by
the Chief Financial Officer, the Treasurer or any Assistant Treasurer of the
Company. The signature of any of these officers on the Securities or any
Coupons appertaining thereto may be manual or facsimile.
Securities and any Coupons appertaining thereto bearing the
manual or facsimile signatures of individuals who were at any time the proper
officers of the Company shall bind the Company, notwithstanding that such
individuals or any of them
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have ceased to hold such offices prior to the authentication and delivery of
such Securities or did not hold such offices at the date of such Securities.
At any time and from time to time after the execution and
delivery of this Indenture, the Company may deliver Securities, together with
any Coupons appertaining thereto, executed by the Company, to the Trustee for
authentication, together with the Board Resolution and Officers' Certificate or
supplemental indenture with respect to such Securities referred to in Section
301 and a Company Order for the authentication and delivery of such Securities,
and the Trustee in accordance with the Company Order and subject to the
provisions hereof shall authenticate and deliver such Securities. In
authenticating such Securities, and accepting the additional responsibilities
under this Indenture in relation to such Securities and any Coupons
appertaining thereto, the Trustee shall be entitled to receive, and (subject to
Article Six hereof) shall be fully protected in relying upon an Opinion of
Counsel substantially to the effect that:
(a) the form or forms and terms of such
Securities and Coupons, if any, have been established in conformity
with the provisions of this Indenture;
(b) that such Securities, and Coupons, when
completed by appropriate insertion and executed and delivered by the
Company to the Trustee for authentication pursuant to this Indenture,
and authenticated and delivered by the Trustee and issued by the
Company in the manner and subject to any conditions specified in such
Opinion of Counsel, will constitute legally valid and binding
obligations of the Company, enforceable against the Company in
accordance with their terms, subject to bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or other similar laws
affecting the enforcement of creditors' rights generally, and subject
to general principles of equity (regardless of whether enforcement is
sought in a proceeding in equity or at law) and except further as
enforcement thereof may be limited by (A) requirements that a claim
with respect to any securities denominated other than in Dollars (or a
foreign currency or foreign currency unit judgment in respect of such
claim) be converted into Dollars at a rate of exchange prevailing on a
date determined pursuant to applicable law or (B) governmental
authority to limit, delay or prohibit the making of payments in
foreign currency or currency units or payments outside the United
States; and will entitle the Holders thereof to the benefits of this
Indenture; such Opinion of Counsel need express no opinion as to the
availability of equitable remedies;
(c) all legal requirements in respect of the execution and
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delivery by the Company of such Securities and Coupons, if any, have
been complied with; and
(d) as to such other matters as the Trustee may
reasonably request.
If all the Securities of any series are not to be issued at
one time, it shall not be necessary to deliver an Opinion of Counsel and an
Officers' Certificate at the time of issuance of each Security, but such
opinion and certificate, with appropriate modifications, shall be delivered at
or before the time of issuance of the first Security of such series. After any
such first delivery, any separate request by the Company that the Trustee
authenticate Securities of such series for original issue will be deemed to be
a certification by the Company that all conditions precedent provided for in
this Indenture relating to authentication and delivery of such Securities
continue to have been complied with.
The Trustee shall not be required to authenticate or to cause
an Authenticating Agent to authenticate any Securities if the issue of such
Securities pursuant to this Indenture will affect the Trustee's own rights,
duties or immunities under the Securities and this Indenture or otherwise in a
manner which is not reasonably acceptable to the Trustee or if the Trustee,
being advised by counsel, determines that such action may not lawfully be
taken.
Each Registered Security shall be dated the date of its
authentication. Each Bearer Security and any temporary Bearer Security in
global form shall be dated as of the date specified in or pursuant to this
Indenture.
No Security or Coupon appertaining thereto shall be entitled
to any benefit under this Indenture or be valid or obligatory for any purpose,
unless there appears on such Security a certificate of authentication
substantially in the form provided for in Section 202 or 610 executed by or on
behalf of the Trustee by the manual signature of one of its authorized officers
or by an Authenticating Agent. Such certificate upon any Security shall be
conclusive evidence, and the only evidence, that such Security has been duly
authenticated and delivered hereunder. Except as permitted by Section 306 or
307, the Trustee shall not authenticate and deliver any Bearer Security unless
all Coupons appertaining thereto then matured have been detached and cancelled.
Section 304. Temporary Securities.
Pending the preparation of definitive Securities, the Company
may execute and deliver to the Trustee and, upon Company Order, the Trustee
shall
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authenticate and deliver, in the manner provided in Section 303, temporary
Securities in lieu thereof which are printed, lithographed, typewritten,
mimeographed or otherwise produced, in any authorized denomination,
substantially of the tenor of the definitive Securities in lieu of which they
are issued, in registered form or, if authorized in or pursuant to this
Indenture, in bearer form with one or more Coupons or without Coupons and with
such appropriate insertions, omissions, substitutions and other variations as
the officers of the Company executing such Securities may determine, as
conclusively evidenced by their execution of such Securities. Such temporary
Securities may be in global form.
Except in the case of temporary Securities in global form,
which shall be exchanged in accordance with the provisions thereof, if
temporary Securities are issued, the Company shall cause definitive Securities
to be prepared without unreasonable delay. After the preparation of definitive
Securities of the same series and containing terms and provisions that are
identical to those of any temporary Securities, such temporary Securities shall
be exchangeable for such definitive Securities upon surrender of such temporary
Securities at an Office or Agency for such Securities, without charge to any
Holder thereof. Upon surrender for cancellation of any one or more temporary
Securities (accompanied by any unmatured Coupons appertaining thereto), the
Company shall execute and the Trustee shall authenticate and deliver in
exchange therefor a like principal amount of definitive Securities of
authorized denominations of the same series and containing identical terms and
provisions; provided, however, that no definitive Bearer Security, except as
provided in or pursuant to this Indenture, shall be delivered in exchange for a
temporary Registered Security; and provided, further, that a definitive Bearer
Security shall be delivered in exchange for a temporary Bearer Security only in
compliance with the conditions set forth in or pursuant to this Indenture.
Unless otherwise provided in or pursuant to this Indenture with respect to a
temporary global Security, until so exchanged the temporary Securities of any
series shall in all respects be entitled to the same benefits under this
Indenture as definitive Securities of such series.
Section 305. Registration, Transfer and Exchange.
With respect to the Registered Securities of each series, if
any, the Company shall cause to be kept a register (each such register being
herein sometimes referred to as the "Security Register") at an Office or Agency
for such series in which, subject to such reasonable regulations as it may
prescribe, the Company shall provide for the registration of the Registered
Securities of such series and of transfers of the Registered Securities of such
series. In the event that the Trustee shall not be the Security Registrar, it
shall have the right to examine the Security Register at all reasonable times.
The Trustee is hereby initially appointed as Security Registrar for
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each series of Securities. In the event that the Trustee shall cease to be
Security Registrar with respect to a series of Securities, it shall have the
right to examine the Security Register for such series at all reasonable times.
Upon surrender for registration of transfer of any Registered
Security of any series at any Office or Agency for such series, the Company
shall execute, and the Trustee shall authenticate and deliver, in the name of
the designated transferee or transferees, one or more new Registered Securities
of the same series denominated as authorized in or pursuant to this Indenture,
of a like aggregate principal amount bearing a number not contemporaneously
outstanding and containing identical terms and provisions.
At the option of the Holder, Registered Securities of any
series may be exchanged for other Registered Securities of the same series
containing identical terms and provisions, in any authorized denominations, and
of a like aggregate principal amount, upon surrender of the Securities to be
exchanged at any Office or Agency for such series. Whenever any Registered
Securities are so surrendered for exchange, the Company shall execute, and the
Trustee shall authenticate and deliver, the Registered Securities which the
Holder making the exchange is entitled to receive.
If provided in or pursuant to this Indenture, with respect to
Securities of any series, at the option of the Holder, Bearer Securities of
such series may be exchanged for Registered Securities of such series
containing identical terms, denominated as authorized in or pursuant to this
Indenture and in the same aggregate principal amount, upon surrender of the
Bearer Securities to be exchanged at any Office or Agency for such series, with
all unmatured Coupons and all matured Coupons in default thereto appertaining.
If the Holder of a Bearer Security is unable to produce any such unmatured
Coupon or Coupons or matured Coupon or Coupons in default, such exchange may be
effected if the Bearer Securities are accompanied by payment in funds
acceptable to the Company and the Trustee in an amount equal to the face amount
of such missing Coupon or Coupons, or the surrender of such missing Coupon or
Coupons may be waived by the Company and the Trustee if there is furnished to
them such security or indemnity as they may require to save each of them and
any Paying Agent harmless. If thereafter the Holder of such Bearer Security
shall surrender to any Paying Agent any such missing Coupon in respect of which
such a payment shall have been made, such Holder shall be entitled to receive
the amount of such payment; provided, however, that, except as otherwise
provided in Section 1002, interest represented by Coupons shall be payable only
upon presentation and surrender of those Coupons at an Office or Agency for
such series located outside the United States. Notwithstanding the foregoing,
in case a Bearer Security of any series is surrendered at any such Office or
Agency for such series in exchange for a Registered
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Security of such series and like tenor after the close of business at such
Office or Agency on (i) any Regular Record Date and before the opening of
business at such Office or Agency on the relevant Interest Payment Date, or
(ii) any Special Record Date and before the opening of business at such Office
or Agency on the related date for payment of Defaulted Interest, such Bearer
Security shall be surrendered without the Coupon relating to such Interest
Payment Date or proposed date of payment, as the case may be (or, if such
Coupon is so surrendered with such Bearer Security, such Coupon shall be
returned to the Person so surrendering the Bearer Security), and interest or
Defaulted Interest, as the case may be, shall not be payable on such Interest
Payment Date or proposed date for payment, as the case may be, in respect of
the Registered Security issued in exchange for such Bearer Security, but shall
be payable only to the Holder of such Coupon when due in accordance with the
provisions of this Indenture.
If expressly provided with respect to Securities of any
series, at the option of the Holder, Registered Securities of such series may
be exchanged for Bearer Securities upon such terms and conditions as may be
provided with respect to such series.
Whenever any Securities are surrendered for exchange as
contemplated by the immediately preceding two paragraphs, the Company shall
execute, and the Trustee shall authenticate and deliver, the Securities which
the Holder making the exchange is entitled to receive.
Notwithstanding the foregoing, except as otherwise provided in
or pursuant to this Indenture, any global Security shall be exchangeable for
definitive Securities only if (i) the Depository notifies the Company that it
is at any time unwilling, unable or ineligible to continue as Depository and a
successor depository is not appointed by the Company within 60 days of the date
the Company is so informed in writing, (ii) the Company executes and delivers
to the Trustee a Company Order to the effect that such global Security shall be
so exchangeable, or (iii) an Event of Default has occurred and is continuing
with respect to the Securities. If the beneficial owners of interests in a
global Security are entitled to exchange such interests for definitive
Securities, then without unnecessary delay but in any event not later than the
earliest date on which such interests may be so exchanged, the Company shall
deliver to the Trustee definitive Securities in such form and denominations, as
directed by the Depositary, as are required by or pursuant to this Indenture
and of the same series, containing identical terms and in aggregate principal
amount equal to the principal amount of, such global Security, executed by the
Company. On or after the earliest date on which such interests may be so
exchanged, such global Security shall be surrendered from time to time by the
U.S. Depository or such other Depository as shall
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be specified in the Company Order with respect thereto, and in accordance with
instructions given to the Trustee and the U.S. Depository or such other
Depository, as the case may be (which instructions shall be in writing but need
not be contained in or accompanied by an Officers' Certificate or be
accompanied by an Opinion of Counsel), as shall be specified in the Company
Order with respect thereto to the Trustee, as the Company's agent for such
purpose, to be exchanged, in whole or in part, for definitive Securities as
described above without charge. The Trustee shall authenticate and make
available for delivery, in exchange for each portion of such surrendered global
Security, a like aggregate principal amount of definitive Securities of the
same series of authorized denominations and of like tenor as the portion of
such global Security to be exchanged, which (unless such Securities are not
issuable both as Bearer Securities and as Registered Securities, in which case
the definitive Securities exchanged for the global Security shall be issuable
only in the form in which the Securities are issuable, as provided in or
pursuant to this Indenture) shall be in the form of Bearer Securities or
Registered Securities, or any combination thereof, as shall be specified by the
beneficial owner thereof; provided, however, that no such exchanges may occur
during a period beginning at the opening of business 15 days before any
selection of Securities of the same series and continuing identical terms to be
redeemed and ending on the relevant Redemption Date; and provided, further,
that (unless otherwise provided in or pursuant to this Indenture) no Bearer
Security delivered in exchange for a portion of a global Security shall be
mailed or otherwise delivered to any location in the United States. Promptly
following any such exchange in part, such global Security shall be returned by
the Trustee to such Depository or the U.S. Depository, as the case may be, or
such other Depository or U.S. Depository referred to above in accordance with
the instructions of the Company referred to above. If a Registered Security is
issued in exchange for any portion of a global Security after the close of
business at the Office or Agency for such Security where such exchange occurs
on or after (i) any Regular Record Date for such Security and before the
opening of business at such Office or Agency on the next Interest Payment Date,
or (ii) any Special Record Date for such Security and before the opening of
business at such Office or Agency on the related proposed date for payment of
interest or Defaulted Interest, as the case may be, interest shall not be
payable on such Interest Payment Date or proposed date for payment, as the case
may be, in respect of such Registered Security, but shall be payable on such
Interest Payment Date or proposed date for payment, as the case may be, only to
the Person to whom interest in respect of such portion of such global Security
shall be payable in accordance with the provisions of this Indenture.
All Securities issued upon any registration of transfer or
exchange of Securities shall be the valid obligations of the Company evidencing
the same debt and entitling the Holders thereof to the same benefits under this
Indenture as the Securities surrendered upon such registration of transfer or
exchange.
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Every Registered Security presented or surrendered for
registration of transfer or for exchange or redemption shall (if so required by
the Company or the Security Registrar for such Security) be duly endorsed, or
be accompanied by a written instrument of transfer in form satisfactory to the
Company and the Security Registrar for such Security duly executed by the
Holder thereof or his attorney duly authorized in writing.
No service charge shall be made for any registration of
transfer or exchange, redemption or conversion of Securities, but the Company
may require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any registration of transfer or
exchange of Securities, other than exchanges pursuant to Section 304, 905 or
1107 not involving any transfer.
Except as otherwise provided in or pursuant to this Indenture,
the Company shall not be required (i) to issue, register the transfer of or
exchange any Securities during a period beginning at the opening of business 15
days before the day of the selection for redemption of Securities of like tenor
and the same series under Section 1103 and ending at the close of business (A)
if Securities of the series are issuable only as Registered Securities, on the
day of the mailing of the relevant notice of redemption, and (B) if Securities
of the series are issuable as Bearer Securities, on the day of the first
publication of the relevant notice of redemption or, if Securities of the
series are also issuable as Registered Securities and there is no publication,
the mailing of the relevant notice of redemption, or (ii) to register the
transfer of or exchange any Registered Security so selected for redemption in
whole or in part, except in the case of any Security to be redeemed in part,
the portion thereof not to be redeemed, or (iii) to exchange any Bearer
Security so selected for redemption except, to the extent provided with respect
to such Bearer Security, that such Bearer Security may be exchanged for a
Registered Security of like tenor and the same series, provided that such
Registered Security shall be immediately surrendered for redemption with
written instruction for payment consistent with the provisions of this
Indenture or (iv) to issue, register the transfer of or exchange any Security
which, in accordance with its terms, has been surrendered for repayment at the
option of the Holder, except the portion, if any, of such Security not to be so
repaid.
Section 306. Mutilated, Destroyed, Lost and Stolen
Securities.
If any mutilated Security or a Security with a mutilated
Coupon appertaining to it is surrendered to the Trustee, subject to the
provisions of this Section 306, the Company shall execute and the Trustee shall
authenticate and deliver in exchange therefor a new Security of the same series
containing identical terms and of like principal amount and bearing a number
not contemporaneously outstanding, with
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Coupons appertaining thereto corresponding to the Coupons, if any, appertaining
to the surrendered Security.
If there be delivered to the Company and to the Trustee (i)
evidence to their satisfaction of the destruction, loss or theft of any
Security or Coupon, and (ii) such security or indemnity as may be required by
them to save each of them and any agent of either of them harmless, then, in
the absence of notice to the Company or the Trustee that such Security or
Coupon has been acquired by a bona fide purchaser, the Company shall execute
and, upon the Company's request the Trustee shall authenticate and deliver, in
exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Security or in exchange for the Security to which a destroyed, lost or stolen
Coupon appertains with all appurtenant Coupons not destroyed, lost or stolen, a
new Security of the same series containing identical terms and of like
principal amount and bearing a number not contemporaneously outstanding, with
Coupons corresponding to the Coupons, if any, appertaining to such destroyed,
lost or stolen Security or to the Security to which such destroyed, lost or
stolen Coupon appertains.
Notwithstanding the foregoing provisions of this Section 306,
in case any mutilated, destroyed, lost or stolen Security or Coupon has become
or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Security, pay such Security or Coupon; provided,
however, that payment of principal of, any premium or interest on or any
Additional Amounts with respect to any Bearer Securities shall, except as
otherwise provided in Section 1002, be payable only at an Office or Agency for
such Securities located outside the United States and, unless otherwise
provided in or pursuant to this Indenture, any interest on Bearer Securities
and any Additional Amounts with respect to such interest shall be payable only
upon presentation and surrender of the Coupons appertaining thereto.
Upon the issuance of any new Security under this Section 306,
the Company may require the payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Security, with any Coupons appertaining thereto
issued pursuant to this Section in lieu of any destroyed, lost or stolen
Security, or in exchange for a Security to which a destroyed, lost or stolen
Coupon appertains shall constitute a separate obligation of the Company,
whether or not the destroyed, lost or stolen Security and Coupons appertaining
thereto or the destroyed, lost or stolen Coupon shall be at any time
enforceable by anyone, and shall be entitled to all the benefits of this
Indenture equally and proportionately with any and all other Securities of such
series and any Coupons, if any, duly issued hereunder.
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The provisions of this Section are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement or payment of mutilated, destroyed, lost or stolen Securities
or Coupons.
Section 307. Payment of Interest and Certain Additional
Amounts; Rights to Interest and Certain
Additional Amounts Preserved.
Unless otherwise provided in or pursuant to this Indenture,
any interest on and any Additional Amounts with respect to any Registered
Security which shall be payable, and are punctually paid or duly provided for,
on any Interest Payment Date shall be paid to the Person in whose name such
Security (or one or more Predecessor Securities) is registered as of the close
of business on the Regular Record Date for such interest. Unless otherwise
provided in or pursuant to this Indenture, in case a Bearer Security is
surrendered in exchange for a Registered Security after the close of business
at an Office or Agency for such Security on any Regular Record Date therefor
and before the opening of business at such Office or Agency on the next
succeeding Interest Payment Date therefor, such Bearer Security shall be
surrendered without the Coupon relating to such Interest Payment Date and
interest shall not be payable on such Interest Payment Date in respect of the
Registered Security issued in exchange for such Bearer Security, but shall be
payable only to the Holder of such Coupon when due in accordance with the
provisions of this Indenture.
Unless otherwise provided in or pursuant to this Indenture,
any interest on and any Additional Amounts with respect to any Registered
Security which shall be payable, but shall not be punctually paid or duly
provided for, on any Interest Payment Date for such Registered Security (herein
called "Defaulted Interest") shall forthwith cease to be payable to the Holder
thereof on the relevant Regular Record Date by virtue of having been such
Holder; and such Defaulted Interest may be paid by the Company, at its election
in each case, as provided in Clause (1) or (2) below:
(1) The Company may elect to make payment of any
Defaulted Interest to the Person in whose name such Registered
Security (or a Predecessor Security thereof) shall be registered at
the close of business on a Special Record Date for the payment of such
Defaulted Interest, which shall be fixed in the following manner. The
Company shall notify the Trustee in writing of the amount of Defaulted
Interest proposed to be paid on such Registered Security and the date
of the proposed payment, and at the same time the Company shall
deposit with the Trustee an amount of money equal to the aggregate
amount proposed to be paid in respect of such Defaulted Interest or
shall make arrangements satisfactory to the Trustee for such deposit
on or prior to the date of the proposed payment, such money when so
deposited to be held
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in trust for the benefit of the Person entitled to such Defaulted
Interest as in this Clause provided. Thereupon, the Trustee shall fix
a Special Record Date for the payment of such Defaulted Interest which
shall be not more than 15 days and not less than 10 days prior to the
date of the proposed payment and not less than 10 days after the
receipt by the Trustee of the notice of the proposed payment. The
Trustee shall promptly notify the Company of such Special Record Date
and, in the name and at the expense of the Company shall cause notice
of the proposed payment of such Defaulted Interest and the Special
Record Date therefor to be mailed, first-class postage prepaid, to the
Holder of such Registered Security (or a Predecessor Security thereof)
at his address as it appears in the Security Register not less than 10
days prior to such Special Record Date. The Trustee may, in its
discretion, in the name and at the expense of the Company cause a
similar notice to be published at least once in an Authorized
Newspaper of general circulation in the Borough of Manhattan, The City
of New York, but such publication shall not be a condition precedent
to the establishment of such Special Record Date. Notice of the
proposed payment of such Defaulted Interest and the Special Record
Date therefor having been mailed as aforesaid, such Defaulted Interest
shall be paid to the Person in whose name such Registered Security (or
a Predecessor Security thereof) shall be registered at the close of
business on such Special Record Date and shall no longer be payable
pursuant to the following Clause (2). In case a Bearer Security is
surrendered at the Office or Agency for such Security in exchange for
a Registered Security after the close of business at such Office or
Agency on any Special Record Date and before the opening of business
at such Office or Agency on the related proposed date for payment of
Defaulted Interest, such Bearer Security shall be surrendered without
the Coupon relating to such proposed date of payment and Defaulted
Interest shall not be payable on such proposed date of payment in
respect of the Registered Security issued in exchange for such Bearer
Security, but shall be payable only to the Holder of such Coupon when
due in accordance with the provisions of this Indenture.
(2) The Company may make payment of any Defaulted
Interest in any other lawful manner not inconsistent with the
requirements of any securities exchange on which such Security may be
listed, and upon such notice as may be required by such exchange, if,
after notice given by the Company to the Trustee of the proposed
payment pursuant to this Clause, such payment shall be deemed
practicable by the Trustee.
At the option of the Company, interest on Registered
Securities that bear interest may be paid by mailing a check to the address of
the Person entitled thereto as such address shall appear in the Security
Register.
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Subject to the foregoing provisions of this Section 307 and
Section 305, each Security delivered under this Indenture upon registration of
transfer of or in exchange for or in lieu of any other Security shall carry the
rights to interest accrued and unpaid, and to accrue, which were carried by
such other Security.
Section 308. Persons Deemed Owners.
Prior to due presentment of a Registered Security for
registration of transfer, the Company, the Trustee and any agent of the Company
or the Trustee may treat the Person in whose name such Registered Security is
registered in the Security Register as the owner of such Registered Security
for the purpose of receiving payment of principal of, any premium and (subject
to Sections 305 and 307) interest on and any Additional Amounts with respect to
such Registered Security and for all other purposes whatsoever, whether or not
any payment with respect to such Registered Security shall be overdue, and
neither the Company, nor the Trustee or any agent of the Company or the Trustee
shall be affected by notice to the contrary.
The Company, the Trustee and any agent of the Company or the
Trustee may treat the bearer of any Bearer Security or the bearer of any Coupon
as the absolute owner of such Security or Coupon for the purpose of receiving
payment thereof or on account thereof, for the purpose of conversion and for
all other purposes whatsoever, whether or not any payment with respect to such
Security or Coupon shall be overdue, and neither the Company, nor the Trustee
or any agent of the Company or the Trustee shall be affected by notice to the
contrary.
No holder of any beneficial interest in any global Security
held on its behalf by a Depository shall have any rights under this Indenture
with respect to such global Security, and such Depository may be treated by the
Company, the Trustee, and any agent of the Company or the Trustee as the owner
of such global Security for all purposes whatsoever. None of the Company, the
Trustee, any Paying Agent or the Security Registrar will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests of a global Security
or for maintaining, supervising or reviewing any records relating to such
beneficial ownership interests.
Section 309. Cancellation.
All Securities and Coupons surrendered for payment,
redemption, registration of transfer, exchange or conversion or for credit
against any sinking fund payment shall, if surrendered to any Person other than
the Trustee, be delivered to the Trustee, and any such Securities and Coupons,
as well as Securities and Coupons
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surrendered directly to the Trustee for any such purpose, shall be cancelled
promptly by the Trustee. The Company may at any time deliver to the Trustee
for cancellation any Securities previously authenticated and delivered
hereunder which the Company may have acquired in any manner whatsoever, and all
Securities so delivered shall be cancelled promptly by the Trustee. No
Securities shall be authenticated in lieu of or in exchange for any Securities
cancelled as provided in this Section, except as expressly permitted by or
pursuant to this Indenture. All cancelled Securities and Coupons held by the
Trustee shall be destroyed by the Trustee, unless by a Company Order the
Company directs their return to it in a timely manner.
Section 310. Computation of Interest.
Except as otherwise provided in or pursuant to this Indenture,
interest on the Securities shall be computed on the basis of a 360-day year of
twelve 30-day months.
ARTICLE FOUR
SATISFACTION AND DISCHARGE
Section 401. Satisfaction and Discharge of Indenture.
Upon the direction of the Company by a Company Order, this
Indenture shall cease to be of further effect (except as to any surviving
rights of registration of transfer or exchange of Securities herein expressly
provided for and any right to receive Additional Amounts), and the Trustee, on
receipt of a Company Order, at the expense of the Company, shall execute proper
instruments acknowledging satisfaction and discharge of this Indenture, when
(1) either
(A) all Securities theretofore
authenticated and delivered and all Coupons appertaining
thereto (other than (i) Coupons appertaining to Bearer
Securities surrendered in exchange for Registered Securities
and maturing after such exchange whose surrender is not
required or has been waived as provided in Section 305, (ii)
Securities and Coupons which have been destroyed, lost or
stolen and which have been replaced or paid as provided in
Section 306, (iii) Coupons appertaining to Securities called
for redemption and maturing after the relevant Redemption Date
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whose surrender has been waived as provided in Section 1107,
and (iv) Securities and Coupons for whose payment money has
theretofore been deposited in trust or segregated and held in
trust by the Company and thereafter repaid to the Company or
discharged from such trust, as provided in Section 1003) have
been delivered to the Trustee for cancellation; or
(B) all Securities and, in the case of
(i) or (ii) below, any Coupons appertaining thereto not
theretofore delivered to the Trustee for cancellation
(i) have become due and payable, or
(ii) will become due and payable
at their Stated Maturity within one year, or
(iii) if redeemable at the option of
the Company, are to be called for redemption within
one year under arrangements satisfactory to the
Trustee for the giving of notice of redemption by the
Trustee in the name, and at the expense, of the
Company,
and the Company, in the case of (i), (ii) or (iii) above, has
deposited or caused to be deposited with the Trustee as trust
funds in trust for such purpose, money and/or Government
Obligations which through the payment of interest and
principal in respect thereof in accordance with their terms,
without consideration of any reinstatement thereof, will
provide not later than the opening of business on the due
dates of any payment of principal and any premium, interest
and Additional Amounts with respect thereto, or a combination
thereof, money in an amount sufficient to pay and discharge
the entire indebtedness on such Securities and Coupons not
theretofore delivered to the Trustee for cancellation,
including the principal of, any premium and interest on, and
any Additional Amounts with respect to such Securities and any
Coupons appertaining thereto, to the date of such deposit (in
the case of Securities which have become due and payable) or
to the Maturity thereof, as the case may be;
(2) the Company has paid or caused to be paid all
other sums payable hereunder by the Company; and
(3) the Company has delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that all
conditions precedent
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herein provided for relating to the satisfaction and discharge of this
Indenture have been complied with.
In the event there are Securities of two or more series
hereunder, the Trustee shall be required to execute an instrument acknowledging
satisfaction and discharge of this Indenture only if requested to do so with
respect to Securities of all series as to which it is Trustee and if the other
conditions thereto are met. In the event there are two or more Trustees
hereunder, then the effectiveness of any such instrument shall be conditioned
upon receipt of each such instrument from all Trustees hereunder.
Notwithstanding the satisfaction and discharge of this
Indenture, the obligations of the Company to the Trustee under Section 605, the
obligations of the Trustee to any Authenticating Agent under Section 610 and,
if money and/or Government Obligations shall have been deposited with the
Trustee pursuant to subclause (B) of Clause (1) of this Section, the
obligations of the Trustee under Section 403 and the last paragraph of Section
1003 shall survive.
In the event that, subsequent to the date a discharge is
effected pursuant to this Section 401, Additional Amounts in excess of those
established as of the date such discharge is effected become payable in respect
of any Securities, in order to preserve the benefits of the discharge
established hereunder, the Company shall deposit or cause to be deposited in
accordance with provisions of this Section 401, within ten business days prior
to the earlier to occur of (i) one year after the existence of such excess
Additional Amounts is established and (ii) the date the first payment in
respect of any portion of such excess Additional Amounts becomes due, such
additional funds as are necessary to satisfy the provisions of this Section 401
as if a discharge were being effected as of the date of such subsequent
deposit. For purposes of this paragraph, the existence of excess Additional
Amounts shall be deemed to have been established as of the date the
governmental authority imposing the tax, assessment or other governmental
charge resulting in the Additional Amounts first publishes the legislation,
regulation or other enactment adopting such tax, assessment or other
governmental charge. Failure to comply with the requirements of this paragraph
shall result in the termination of the benefits of the discharge established by
this Section 401.
Section 402. Satisfaction, Discharge and Defeasance of
Securities of any Series.
If provision is made in or pursuant to this Indenture for
defeasance of Securities of any series and any Coupons appertaining thereto
pursuant to this Section
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402, the Company may at any time elect to have this Section 402 be applied to
the outstanding Securities and the Company shall be deemed to have paid and
discharged the entire indebtedness on all the Outstanding Securities of such
series and the Trustee, at the expense of the Company, shall execute proper
instruments acknowledging satisfaction and discharge of such indebtedness, when
(1) no Event of Default has occurred and is
continuing, or would occur upon the giving of notice or the lapse of
time at the time such satisfaction and discharge is being effected and
either
(A) with respect to all Outstanding
Securities of such series and any Coupons appertaining
thereto, the Company has irrevocably deposited or caused to be
deposited with the Trustee, as trust funds and/or obligations
in trust for such purpose, money and/or Government Obligations
which through the payment of interest and principal in respect
thereof in accordance with their terms, without consideration
of any reinvestment thereof, will provide not later than the
opening of business on the due dates of any payment of
principal and any premium, interest and Additional Amounts
with respect thereto, or a combination thereof, money in an
amount sufficient to pay and discharge the entire indebtedness
on all Outstanding Securities of such series and any Coupons
appertaining thereto not theretofore delivered to the Trustee
for cancellation, including the principal of, any premium and
interest on, and any Additional Amounts with respect to such
Securities and any Coupons appertaining thereto to the date of
such deposit (in the case of Securities which have become due
and payable) or to the Maturity thereof, as the case may be,
as contemplated by the penultimate paragraph of this Section
402; or
(B) the Company has properly fulfilled
such other means of satisfaction and discharge as is provided
in or pursuant to this Indenture for the Securities of such
series; and
(2) the Company has paid or caused to be paid all
other sums payable hereunder with respect to the Outstanding
Securities of such series and any Coupons appertaining thereto; and
(3) the Company has delivered to the Trustee a
certificate signed by Independent Public Accountants certifying as to
the sufficiency of the amounts deposited pursuant to subsections
(A)(i) or (ii) of this Section for payment of the principal of, any
premium and interest on and any Additional
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Amounts with respect to such Securities and any Coupons appertaining
thereto on the dates such payments are due, an Officers' Certificate
and an Opinion of Counsel, each such Certificate and Opinion stating
that no Event of Default or event which with notice or lapse of time
or both would become an Event of Default with respect to such
Securities shall have occurred and all conditions precedent herein
provided for relating to the satisfaction and discharge of the entire
indebtedness on all Outstanding Securities of any such series and any
Coupons appertaining thereto shall have been complied with; and
(4) the Company has delivered to the Trustee
(A) an opinion of independent counsel
that the Holders of the Securities of such series and any
Coupons appertaining thereto shall have no federal income tax
consequences as a result of such deposit and termination; and
(B) if the Securities of such series are
then listed on the New York Stock Exchange, an opinion of
independent counsel that the Securities of such series shall
not be delisted as a result of the exercise of this option.
Any deposits with the Trustee referred to in subsection (1)(A)
of this Section shall be irrevocable and shall be made under the terms of an
escrow trust agreement in form and substance satisfactory to the Trustee. If
any Outstanding Securities of such series are to be redeemed prior to their
Stated Maturity, whether pursuant to any optional redemption provisions or in
accordance with any mandatory sinking fund requirement or otherwise, the
Company shall make such arrangements as are satisfactory to the Trustee for the
giving of notice of redemption by the Trustee in the name, and at the expense,
of the Company.
Upon the satisfaction of the conditions set forth in this
Section 402 with respect to all the Outstanding Securities of any series and
any Coupons appertaining thereto, the terms and conditions of such series
(including the terms and conditions with respect thereto set forth in this
Indenture, other than the provisions of Sections 305, 306, and 1002 and other
than the right of Holders of Securities of such series and any Coupons
appertaining thereto to receive, from the trust fund described in this Section,
payment of the principal of, any premium or the interest on, or any Additional
Amounts with respect to such Securities and any Coupons appertaining thereto
when such payments shall be due) and the rights, powers, duties and immunities
of the Trustee hereunder with respect to the Securities of such series shall no
longer be binding upon, or applicable to, the Company; provided that the
Company shall not be discharged from
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any payment obligations in respect of Securities of such series or any Coupons
appertaining thereto which are deemed not to be Outstanding under clause (iii)
of the definition of Outstanding if such obligations continue to be valid
obligations of the Company under applicable law.
In the event that, subsequent to the date a defeasance is
effected pursuant to this Section 402 with respect to Securities of any series,
Additional Amounts in excess of those established as of the date such
defeasance is effected become payable in respect of such Securities, in order
to preserve the benefits of the defeasance established hereunder with respect
to such series, the Company shall deposit or cause to be deposited in
accordance with the provisions of this Section 402, within ten business days
prior to the earlier to occur of (i) one year after the existence of such
excess Additional Amounts is established and (ii) the date the first payment in
respect of any portion of such excess Additional Amounts becomes due, such
additional funds as are necessary to satisfy the provisions of this Section 402
as if a defeasance were being effected as of the date of such subsequent
deposit. For purposes of this paragraph, the existence of excess Additional
Amounts shall be deemed to have been established as of the date the
governmental authority imposing the tax, assessment or other governmental
charge resulting in the Additional Amounts first publishes the legislation,
regulation or other enactment adopting such tax, assessment or other
governmental charge. Failure to comply with the requirements of this paragraph
shall result in the termination of the benefits of the defeasance established
by this Section 402 with respect to the Securities of such series.
Section 403. Application of Trust Money.
Subject to the provisions of the last paragraph of Section
1003, all money and Government Obligations deposited with the Trustee pursuant
to Section 401 or 402 shall be held in trust and applied by it, in accordance
with the provisions of the Securities, the Coupons and this Indenture, to the
payment, either directly or through any Paying Agent (including the Company
acting as its own Paying Agent) as the Trustee may determine, to the Persons
entitled thereto, of the principal, premium, interest and Additional Amounts
for whose payment such money has or Government Obligations have been deposited
with or received by the Trustee; but such money and Government Obligations need
not be segregated from other funds except to the extent required by law.
ARTICLE FIVE
REMEDIES
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Section 501. Events of Default.
"Event of Default", wherever used herein with respect to
Securities of any series, means any one of the following events (whatever the
reason for such Event of Default and whether it shall be voluntary or be
effected by operation of law pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental
body):
(1) default in the payment of any interest on or
any Additional Amounts payable in respect of any Security of such
series when such interest becomes or such Additional Amounts become
due and payable, and continuance of such default for a period of 30
days; or
(2) default in the payment of the principal of
and any premium on any Security of such series when it becomes due and
payable at its Maturity; or
(3) default in the deposit of any sinking fund
payment, when and as due by the terms of a Security of such series; or
(4) default in the performance, or breach, of any
covenant or warranty of the Company in this Indenture or the
Securities (other than a covenant or warranty a default in the
performance or the breach of which is elsewhere in this Section
specifically dealt with or which has been expressly included in this
Indenture solely for the benefit of a series of Securities other than
such series), and continuance of such default or breach for a period
of 60 days after there has been given, by registered or certified
mail, to the Company by the Trustee or to the Company and the Trustee
by the Holders of at least 25% in principal amount of the Outstanding
Securities of such series a written notice specifying such default or
breach and requiring it to be remedied and stating that such notice is
a "Notice of Default" hereunder; or
(5) if any event of default as defined in any
mortgage, indenture or instrument under which there may be issued, or
by which there may be secured or evidenced, any indebtedness of the
Company or any Significant Subsidiary for money borrowed, whether such
indebtedness now exists or shall hereafter be created, shall happen
and shall result in such indebtedness in principal amount in excess of
$10,000,000 becoming or being declared due and payable prior to the
date on which it would otherwise become due and payable, and such
acceleration shall not be rescinded or annulled within a period of 30
days after there shall have been given, by registered or certified
mail, to the
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Company by the Trustee or to the Company and the Trustee by the
Holders of at least 25% in principal amount of the Outstanding
Securities of such series, a written notice specifying such event of
default and requiring the Company to cause such acceleration to be
rescinded or annulled and stating that such notice is a "Notice of
Default" hereunder; or
(6) the entry by a court having competent
jurisdiction of:
(a) a decree or order for relief in
respect of the Company or any Significant Subsidiary in an
involuntary proceeding under any applicable bankruptcy,
insolvency, reorganization or other similar law and such
decree or order shall remain unstayed and in effect for a
period of 60 consecutive days; or
(b) a decree or order adjudging the
Company or any Significant Subsidiary to be insolvent, or
approving a petition seeking reorganization, arrangement,
adjustment or composition of the Company or any Significant
Subsidiary and such decree or order shall remain unstayed and
in effect for a period of 60 consecutive days; or
(c) a final and non-appealable order
appointing a custodian, receiver, liquidator, assignee,
trustee or other similar official of the Company or any
Significant Subsidiary or of any substantial part of the
property of the Company or any Significant Subsidiary, as the
case may be, or ordering the winding up or liquidation of the
affairs of the Company or any Significant Subsidiary; or
(7) the commencement by the Company or any
Significant Subsidiary of a voluntary proceeding under any applicable
bankruptcy, insolvency, reorganization or other similar law or of a
voluntary proceeding seeking to be adjudicated insolvent or the
consent by the Company or any Significant Subsidiary to the entry of a
decree or order for relief in an involuntary proceeding under any
applicable bankruptcy, insolvency, reorganization or other similar law
or to the commencement of any insolvency proceedings against it, or
the filing by the Company or any Significant Subsidiary of a petition
or answer or consent seeking reorganization or relief under any
applicable law, or the consent by the Company or any Significant
Subsidiary to the filing of such petition or to the appointment of or
taking possession by a custodian, receiver, liquidator, assignee,
trustee or similar official of the Company or any Significant
Subsidiary or any substantial part of the property of the Company or
any Significant Subsidiary or the making by the Company or any
Significant Subsidiary of an
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assignment for the benefit of creditors, or the taking of corporate
action by the Company or any Significant Subsidiary in furtherance of
any such action; or
(8) any other Event of Default provided in or
pursuant to this Indenture with respect to Securities of such series.
If a default occurs hereunder with respect to Securities of
any series, the Trustee shall give the Holders of Securities of such series
notice of such default as and to the extent provided by the Trust Indenture
Act; provided, however, that in the case of any default of the character
specified in Section 501(4) with respect to Securities of such series, no such
notice to Holders shall be given until at least 30 days after the occurrence
thereof. For the purpose of this Section, the term "default" means any event
which is, or after notice or lapse of time or both would become, an Event of
Default with respect to Securities of such series.
Section 502. Acceleration of Maturity; Rescission and
Annulment.
If an Event of Default with respect to Securities of any
series at the time Outstanding occurs and is continuing, then the Trustee or
the Holders of not less than 25% in principal amount of the Outstanding
Securities of such series may declare the principal of all the Securities of
such series, or such lesser amount as may be provided for in the Securities of
such series, to be due and payable immediately, by a notice in writing to the
Company (and to the Trustee if given by the Holders), and upon any such
declaration such principal or such lesser amount shall become immediately due
and payable.
At any time after such a declaration of acceleration with
respect to Securities of any series has been made and before a judgment or
decree for payment of the money due has been obtained by the Trustee as
hereinafter in this Article provided, the Holders of not less than a majority
in principal amount of the Outstanding Securities of such series, by written
notice to the Company and the Trustee, may rescind and annul such declaration
and its consequences if:
(1) the Company has paid or deposited with the
Trustee a sum of money sufficient to pay
(A) all overdue installments of any
interest on and any Additional Amounts with respect to all
Securities of such series and any Coupon appertaining thereto,
(B) the principal of and any premium on
any Securities of
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such series which have become due otherwise than by such
declaration of acceleration and interest thereon at the rate
or rates borne by or provided for in such Securities,
(C) to the extent that payment of such
interest is lawful, interest upon overdue installments of any
interest and Additional Amounts at the rate or rates borne by
or provided for in such Securities, and
(D) all sums paid or advanced by the
Trustee hereunder and the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and
counsel; and
(2) all Events of Default with respect to
Securities of such series, other than the non-payment of the principal
of, any premium and interest on, and any Additional Amounts with
respect to Securities of such series which shall have become due
solely by such declaration of acceleration, shall have been cured or
waived as provided in Section 513.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
Section 503. Collection of Indebtedness and Suits for
Enforcement by Trustee.
The Company covenants that if
(1) default is made in the payment of any
installment of interest on or any Additional Amounts with respect to
any Security or any Coupon appertaining thereto when such interest or
Additional Amounts shall have become due and payable and such default
continues for a period of 30 days, or
(2) default is made in the payment of the
principal of or any premium on any Security at its Maturity,
the Company shall, upon demand of the Trustee, pay to the Trustee, for the
benefit of the Holders of such Securities and any Coupons appertaining thereto,
the whole amount of money then due and payable with respect to such Securities
and any Coupons appertaining thereto, with interest upon the overdue principal,
any premium and, to the extent that payment of such interest shall be legally
enforceable, upon any overdue installments of interest and Additional Amounts
at the rate or rates borne by or provided for in such Securities, and, in
addition thereto, such further amount of money
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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.
If the Company fails to pay the money it is required to pay
the Trustee pursuant to the preceding paragraph forthwith upon the demand of
the Trustee, the Trustee, in its own name and as trustee of an express trust,
may institute a judicial proceeding for the collection of the money so due and
unpaid, and may prosecute such proceeding to judgment or final decree, and may
enforce the same against the Company or any other obligor upon such Securities
and any Coupons appertaining thereto and collect the moneys adjudged or decreed
to be payable in the manner provided by law out of the property of the Company
or any other obligor upon such Securities and any Coupons appertaining thereto,
wherever situated.
If an Event of Default with respect to Securities of any
series occurs and is continuing, the Trustee may in its discretion proceed to
protect and enforce its rights and the rights of the Holders of Securities of
such series and any Coupons appertaining thereto by such appropriate judicial
proceedings as the Trustee shall deem most effectual to protect and enforce any
such rights, whether for the specific enforcement of any covenant or agreement
in this Indenture or such Securities or in aid of the exercise of any power
granted herein or therein, or to enforce any other proper remedy.
Section 504. Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment, composition
or other judicial proceeding relative to the Company or any other obligor upon
the Securities or the property of the Company or such other obligor or their
creditors, the Trustee (irrespective of whether the principal of the Securities
shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have made any demand on
the Company for the payment of any overdue principal, premium, interest or
Additional Amounts) shall be entitled and empowered, by intervention in such
proceeding or otherwise,
(i) to file and prove a claim for the
whole amount, or such lesser amount as may be provided for in
the Securities of such series, of the principal and any
premium, interest and Additional Amounts owing and unpaid in
respect of the Securities and any Coupons appertaining thereto
and to file such 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,
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disbursements and advances of the Trustee, its agents or
counsel) and of the Holders of Securities or any Coupons
allowed in such judicial proceeding, and
(ii) to collect and receive any monies or
other property payable or deliverable on any such claims and
to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Holder of Securities or any Coupons to make such payments to the Trustee
and, in the event that the Trustee shall consent to the making of such payments
directly to the Holders of Securities or any Coupons, 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 605.
Nothing herein contained shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any Holder
of a Security or any Coupon any plan of reorganization, arrangement, adjustment
or composition affecting the Securities or Coupons or the rights of any Holder
thereof, or to authorize the Trustee to vote in respect of the claim of any
Holder of a Security or any Coupon in any such proceeding.
Section 505. Trustee May Enforce Claims without
Possession of Securities or Coupons.
All rights of action and claims under this Indenture or any of
the Securities or Coupons may be prosecuted and enforced by the Trustee without
the possession of any of the Securities or Coupons or the production thereof in
any proceeding relating thereto, and any such proceeding instituted by the
Trustee shall be brought in its own name as trustee of an express trust, and
any recovery or judgment, after provision for the payment of the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, shall be for the ratable benefit of each and every Holder of a
Security or Coupon in respect of which such judgment has been recovered.
Section 506. Application of Money Collected.
Any money collected by the Trustee pursuant to this Article
shall be applied in the following order, at the date or dates fixed by the
Trustee and, in case of the distribution of such money on account of principal,
or any premium, interest or Additional Amounts, upon presentation of the
Securities or Coupons, or both, as the case may be, and the notation thereon of
the payment if only partially paid and upon
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surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee
and any predecessor Trustee under Section 605;
SECOND: To the payment of the amounts then due and
unpaid upon the Securities and any Coupons for principal and any
premium, interest and Additional Amounts in respect of which or for
the benefit of which such money has been collected, ratably, without
preference or priority of any kind, according to the aggregate amounts
due and payable on such Securities and Coupons for principal and any
premium, interest and Additional Amounts, respectively;
THIRD: The balance, if any, to the Person or
Persons entitled thereto.
Section 507. Limitations on Suits.
No Holder of any Security of any series or any Coupons
appertaining thereto shall have any right to institute any proceeding, judicial
or otherwise, with respect to this Indenture, or for the appointment of a
receiver or trustee, or for any other remedy hereunder, unless
(1) such Holder has previously given written
notice to the Trustee of a continuing Event of Default with respect to
the Securities of such series;
(2) the Holders of not less than 25% in principal
amount of the Outstanding Securities of such series shall have made
written request to the Trustee to institute proceedings in respect of
such Event of Default in its own name as Trustee hereunder;
(3) such Holder or Holders have offered to the
Trustee reasonable indemnity against the costs, expenses and
liabilities to be incurred in compliance with such request;
(4) the Trustee for 60 days after its receipt of
such notice, request and offer of indemnity has failed to institute
any such proceeding; and
(5) no direction inconsistent with such written
request has been given to the Trustee during such 60-day period by the
Holders of a majority in
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principal amount of the Outstanding Securities of such series;
it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture or any Security to affect, disturb or prejudice the rights of
any other such Holders or Holders of Securities of any other series, or to
obtain or to seek to obtain priority or preference over any other Holders or to
enforce any right under this Indenture, except in the manner herein provided
and for the equal and ratable benefit of all such Holders.
Section 508. Unconditional Right of Holders to Receive
Principal and any Premium, Interest and
Additional Amounts and to Convert any
Convertible Security
Notwithstanding any other provision in this Indenture, the
Holder of any Security or Coupon shall have the right, which is absolute and
unconditional, to receive payment of the principal of, any premium and (subject
to Sections 305 and 307) interest on, and any Additional Amounts with respect
to such Security or payment of such Coupon, as the case may be, on the
respective Stated Maturity or Maturities therefor specified in such Security or
Coupon (or, in the case of redemption, on the Redemption Date or, in the case
of repayment at the option of such Holder if provided in or pursuant to this
Indenture, on the date such repayment is due) and to institute suit for the
enforcement of any such payment, and shall have the right to convert any such
Security which is a Convertible Security in accordance with the terms hereof
and thereof and to institute suit for enforcement of such right; and such
rights shall not be impaired without the consent of such Holder.
Section 509. Restoration of Rights and Remedies.
If the Trustee or any Holder of a Security or a Coupon has
instituted any proceeding to enforce any right or remedy under this Indenture
and such proceeding has been discontinued or abandoned for any reason, or has
been determined adversely to the Trustee or to such Holder, then and in every
such case the Company, the Trustee and each such Holder shall, subject to any
determination in such proceeding, be restored severally and respectively to
their former positions hereunder, and thereafter all rights and remedies of the
Trustee and each such Holder shall continue as though no such proceeding had
been instituted.
Section 510. Rights and Remedies.
Except as otherwise provided with respect to the replacement
or payment
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of mutilated, destroyed, lost or stolen Securities or Coupons in the last
paragraph of Section 306, no right or remedy herein conferred upon or reserved
to the Trustee or to each and every Holder of a Security or a Coupon is
intended to be exclusive of any other right or remedy, and every right and
remedy, to the extent permitted by law, shall be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at
law or in equity or otherwise. The assertion or employment of any right or
remedy hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
Section 511. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any
Security or Coupon to exercise any right or remedy accruing upon any Event of
Default shall impair any such right or remedy or constitute a waiver of any
such Event of Default or an acquiescence therein. Every right and remedy given
by this Article or by law to the Trustee or to any Holder of a Security or a
Coupon may be exercised from time to time, and as often as may be deemed
expedient, by the Trustee or by such Holder, as the case may be.
Section 512. Control by Holders of Securities.
The Holders of a majority in principal amount of the
Outstanding Securities of any series shall have the right to 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 the Trustee, with
respect to the Securities of such series and any Coupons appertaining thereto,
provided that
(1) such direction shall not be in conflict with
any rule of law or with this Indenture or with the Securities of any
series,
(2) the Trustee may take any other action deemed
proper by the Trustee which is not inconsistent with such direction,
and
(3) such direction is not unduly prejudicial to
the rights of the other Holders of Securities of such series not
joining in such action.
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Section 513. Waiver of Past Defaults.
The Holders of not less than a majority in principal amount of
the Outstanding Securities of any series on behalf of the Holders of all the
Securities of such series and any Coupons appertaining thereto may waive any
past default hereunder with respect to such series and its consequences, except
a default
(1) in the payment of the principal of, any
premium or interest on, or any Additional Amounts with respect to any
Security of such series or any Coupons appertaining thereto, or
(2) in respect of a covenant or provision hereof
which under Article Nine cannot be modified or amended without the
consent of the Holder of each Outstanding Security of such series
affected.
Upon any such waiver, such default shall cease to exist, and
any Event of Default arising therefrom shall be deemed to have been cured, for
every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other default or impair any right consequent thereon.
Section 514. Waiver of Stay or Extension Laws.
The Company covenants that (to the extent that it may lawfully
do so) it will not at any time insist upon, or plead, or in any manner
whatsoever claim or take the benefit or advantage of, any stay or extension law
wherever enacted, now or at any time hereafter in force, which may affect the
covenants or the performance of this Indenture; and the Company expressly
waives (to the extent that it may lawfully do so) all benefit or advantage of
any such law and covenant that it will not 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 had been
enacted.
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ARTICLE SIX
THE TRUSTEE
Section 601. Certain Rights of Trustee.
Subject to Sections 315(a) through 315(d) of the Trust
Indenture Act:
(a) the Trustee may rely and shall be protected
in acting or refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, coupon or other paper or
document reasonably believed by it to be genuine and to have been
signed or presented by the proper party or parties;
(b) any request or direction of the Company
mentioned herein shall be sufficiently evidenced by a Company Request
or a Company Order (in each case, other than delivery of any Security,
together with any Coupons appertaining thereto, to the Trustee for
authentication and delivery pursuant to Section 303 which shall be
sufficiently evidenced as provided therein) and any resolution of the
Board of Directors may be sufficiently evidenced by a Board
Resolution;
(c) whenever in the administration of this
Indenture the Trustee shall deem it desirable that a matter be proved
or established prior to taking, suffering or omitting any action
hereunder, the Trustee (unless other evidence shall be herein
specifically prescribed) may, in the absence of bad faith on its part,
rely upon an Officers' Certificate;
(d) the Trustee may consult with counsel and the
advice of such counsel or any Opinion of Counsel shall be full and
complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in reliance
thereon;
(e) the Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by or pursuant to
this Indenture at the request or direction of any of the Holders of
Securities of any series or any Coupons appertaining thereto pursuant
to this Indenture, unless such Holders shall have offered to the
Trustee reasonable security or indemnity against the costs, expenses
and liabilities which might be incurred by it in compliance with such
request or direction;
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(f) the Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, coupon or other paper or
document, but the Trustee, in its discretion, may make such further
inquiry or investigation into such facts or matters as it may see fit,
and, if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled to examine, during business hours
and upon reasonable notice, the books, records and premises of the
Company, personally or by agent or attorney; and
(g) the Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by
or through agents or attorneys and the Trustee shall not be
responsible for any misconduct or negligence on the part of any agent
or attorney appointed with due care by it hereunder.
Section 602. Not Responsible for Recitals or Issuance of
Securities.
The recitals contained herein and in the Securities, except
the Trustee's certificate of authentication, and in any Coupons shall be taken
as the statements of the Company and neither the Trustee nor any Authenticating
Agent assumes any responsibility for their correctness. The Trustee makes no
representations as to the validity or sufficiency of this Indenture or of the
Securities or the Coupons, except that the Trustee represents that it is duly
authorized to execute and deliver this Indenture, authenticate the Securities
and perform its obligations hereunder and that the statements made by it in a
Statement of Eligibility and Qualification on Form T-1 supplied to the Company
are true and accurate, subject to the qualifications set forth therein. Neither
the Trustee nor any Authenticating Agent shall be accountable for the use or
application by the Company of the Securities or the proceeds thereof.
Section 603. May Hold Securities.
The Trustee, any Authenticating Agent, any Paying Agent, any
Security Registrar or any other Person that may be an agent of the Trustee or
the Company, in its individual or any other capacity, may become the owner or
pledgee of Securities or Coupons and, subject to Sections 310(b) and 311 of the
Trust Indenture Act, may otherwise deal with the Company with the same rights
it would have if it were not Trustee, Authenticating Agent, Paying Agent,
Security Registrar or such other Person.
Section 604. Money Held in Trust.
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Except as provided in Section 403 and Section 1003, money held
by the Trustee in trust hereunder need not be segregated from other funds
except to the extent required by law and shall be held uninvested. The Trustee
shall be under no liability for interest on any money received by it hereunder
except as otherwise agreed with the Company.
Section 605. Compensation and Reimbursement.
The Company agrees:
(1) to pay to the Trustee from time to time
reasonable compensation for all services rendered by the Trustee
hereunder (which compensation shall not be limited by any provision of
law in regard to the compensation of a trustee of an express trust);
(2) except as otherwise expressly provided
herein, to reimburse the Trustee upon its request for all reasonable
expenses, disbursements and advances incurred or made by the Trustee
in accordance with any provision of this Indenture (including the
reasonable compensation and the expenses and disbursements of its
agents and counsel), except any such expense, disbursement or advance
as may be attributable to the Trustee's negligence or bad faith; and
(3) to indemnify the Trustee and its agents for,
and to hold them harmless against, any loss, liability or expense
incurred without negligence or bad faith on their part, arising out of
or in connection with the acceptance or administration of the trust or
trusts hereunder, including the costs and expenses of defending
themselves against any claim or liability in connection with the
exercise or performance of any of their powers or duties hereunder.
As security for the performance of the obligations of the
Company under this Section 605, the Trustee shall have a lien prior to the
Securities of any series upon all property and funds held or collected by the
Trustee as such, except funds held in trust for the payment of principal of,
and premium or interest on or any Additional Amounts with respect to Securities
or any Coupons appertaining thereto.
Section 606. Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder that
is a Corporation permitted by the Trust Indenture Act to act as trustee under
an indenture qualified under the Trust Indenture Act and that has a combined
capital and surplus
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(computed in accordance with Section 310(a)(2) of the Trust Indenture Act) of
at least $50,000,000. If at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section 606, it shall resign immediately
in the manner and with the effect hereinafter specified in this Article.
Section 607. Resignation and Removal; Appointment of
Successor.
(a) No resignation or removal of the Trustee and
no appointment of a successor Trustee pursuant to this Article shall
become effective until the acceptance of appointment by the successor
Trustee pursuant to Section 608.
(b) The Trustee may resign at any time with
respect to the Securities of one or more series by giving written
notice thereof to the Company. If the instrument of acceptance by a
successor Trustee required by Section 608 shall not have been
delivered to the Trustee within 30 days after the giving of such
notice of resignation, the resigning Trustee may petition any court of
competent jurisdiction for the appointment of a successor Trustee with
respect to such series.
(c) The Trustee may be removed at any time with
respect to the Securities of any series by Act of the Holders of a
majority in principal amount of the Outstanding Securities of such
series, delivered to the Trustee and the Company.
(d) If at any time:
(1) the Trustee shall fail to comply
with the obligations imposed upon it under Section 310(b) of
the Trust Indenture Act with respect to Securities of any
series after written request therefor by the Company or any
Holder of a Security of such series who has been a bona fide
Holder of a Security of such series for at least six months,
or
(2) the Trustee shall cease to be
eligible under Section 606 and shall fail to resign after
written request therefor by the Company or any such Holder, or
(3) the Trustee shall become incapable
of acting or shall be adjudged a bankrupt or insolvent or a
receiver of the Trustee or of its property shall be appointed
or any public officer shall take charge or control of the
Trustee or of its property or affairs for the purpose of
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rehabilitation, conservation or liquidation,
then, in any such case, (i) the Company, by or pursuant to a Board
Resolution, may remove the Trustee with respect to all Securities or
the Securities of such series, or (ii) subject to Section 315(e) of
the Trust Indenture Act, any Holder of a Security who has been a bona
fide Holder of a Security of such series for at least six months may,
on behalf of himself and all others similarly situated, petition any
court of competent jurisdiction for the removal of the Trustee with
respect to all Securities of such series and the appointment of a
successor Trustee or Trustees.
(e) If the Trustee shall resign, be removed or
become incapable of acting, or if a vacancy shall occur in the office
of Trustee for any cause, with respect to the Securities of one or
more series, the Company, by or pursuant to a Board Resolution, shall
promptly appoint a successor Trustee or Trustees with respect to the
Securities of that or those series (it being understood that any such
successor Trustee may be appointed with respect to the Securities of
one or more or all of such series and that at any time there shall be
only one Trustee with respect to the Securities of any particular
series) and shall comply with the applicable requirements of Section
608. If, within one year after such resignation, removal or
incapability, or the occurrence of such vacancy, a successor Trustee
with respect to the Securities of any series shall be appointed by Act
of the Holders of a majority in principal amount of the Outstanding
Securities of such series delivered to the Company and the retiring
Trustee, the successor Trustee so appointed shall, forthwith upon its
acceptance of such appointment in accordance with the applicable
requirements of Section 608, become the successor Trustee with respect
to the Securities of such series and to that extent supersede the
successor Trustee appointed by the Company. If no successor Trustee
with respect to the Securities of any series shall have been so
appointed by the Company or the Holders of Securities and accepted
appointment in the manner required by Section 608, any Holder of a
Security who has been a bona fide Holder of a Security of such series
for at least six months may, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction for
the appointment of a successor Trustee with respect to the Securities
of such series.
(f) The Company shall give notice of each
resignation and each removal of the Trustee with respect to the
Securities of any series and each appointment of a successor Trustee
with respect to the Securities of any series by mailing written notice
of such event by first-class mail, postage prepaid, to the Holders of
Registered Securities, if any, of such series as their names and
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addresses appear in the Security Register and, if Securities of such
series are issued as Bearer Securities, by publishing notice of such
event once in an Authorized Newspaper in each Place of Payment located
outside the United States. Each notice shall include the name of the
successor Trustee with respect to the Securities of such series and
the address of its Corporate Trust Office.
Section 608. Acceptance of Appointment by Successor.
(a) Upon the appointment hereunder of any
successor Trustee with respect to all Securities, such successor
Trustee so appointed shall execute, acknowledge and deliver to the
Company and the retiring Trustee an instrument accepting such
appointment, and thereupon the resignation or removal of the retiring
Trustee shall become effective and such successor Trustee, without any
further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties hereunder of the retiring Trustee;
but, on the request of the Company or such successor Trustee, such
retiring Trustee, upon payment of its charges, shall execute and
deliver an instrument transferring to such successor Trustee all the
rights, powers and trusts of the retiring Trustee and, subject to
Section 1003, shall duly assign, transfer and deliver to such
successor Trustee all property and money held by such retiring Trustee
hereunder, subject nevertheless to its claim, if any, provided for in
Section 605.
(b) Upon the appointment hereunder of any
successor Trustee with respect to the Securities of one or more (but
not all) series, the Company, the retiring Trustee and such successor
Trustee shall execute and deliver an indenture supplemental hereto
wherein each successor Trustee shall accept such appointment and which
(1) shall contain such provisions as shall be necessary or desirable
to transfer and confirm to, and to vest in, such successor Trustee all
the rights, powers, trusts and duties of the retiring Trustee with
respect to the Securities of that or those series to which the
appointment of such successor Trustee relates, (2) if the retiring
Trustee is not retiring with respect to all Securities, shall contain
such provisions as shall be deemed necessary or desirable to confirm
that all the rights, powers, trusts and duties of the retiring Trustee
with respect to the Securities of that or those series as to which the
retiring Trustee is not retiring shall continue to be vested in the
retiring Trustee, and (3) shall add to or change any of the provisions
of this Indenture as shall be necessary to provide for or facilitate
the administration of the trusts hereunder by more than one Trustee,
it being understood that nothing herein or in such supplemental
indenture shall constitute such Trustees co-trustees of the same
trust, that each such Trustee shall be trustee of a trust or trusts
hereunder
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separate and apart from any trust or trusts hereunder administered by
any other such Trustee and that no Trustee shall be responsible for
any notice given to, or received by, or any act or failure to act on
the part of any other Trustee hereunder, and, upon the execution and
delivery of such supplemental indenture, the resignation or removal of
the retiring Trustee shall become effective to the extent provided
therein, such retiring Trustee shall have no further responsibility
for the exercise of rights and powers or for the performance of the
duties and obligations vested in the Trustee under this Indenture with
respect to the Securities of that or those series to which the
appointment of such successor Trustee relates other than as
hereinafter expressly set forth, and such successor Trustee, without
any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Trustee with respect
to the Securities of that or those series to which the appointment of
such successor Trustee relates; but, on request of the Company or such
successor Trustee, such retiring Trustee, upon payment of its charges
with respect to the Securities of that or those series to which the
appointment of such successor relates and subject to Section 1003
shall duly assign, transfer and deliver to such successor Trustee, to
the extent contemplated by such supplemental indenture, the property
and money held by such retiring Trustee hereunder with respect to the
Securities of that or those series to which the appointment of such
successor Trustee relates.
(c) Upon request of any Person appointed
hereunder as a successor Trustee, the Company shall execute any and
all instruments for more fully and certainly vesting in and confirming
to such successor Trustee all such rights, powers and trusts referred
to in paragraph (a) or (b) of this Section 608, as the case may be.
(d) No Person shall accept its appointment
hereunder as a successor Trustee unless at the time of such acceptance
such successor Person shall be qualified and eligible under this
Article.
Section 609. Merger, Conversion, Consolidation or
Succession to Business.
Any Corporation into which the Trustee may be merged or
converted or with which it may be consolidated, or any Corporation resulting
from any merger, conversion or consolidation to which the Trustee shall be a
party, or any Corporation succeeding to all or substantially all of the
corporate trust business of the Trustee, shall be the successor of the Trustee
hereunder, without the execution or filing of any paper or any further act on
the part of any of the parties hereto. In case any Securities shall
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have been authenticated but not delivered by the Trustee then in office, any
successor by merger, conversion or consolidation to such authenticating Trustee
may adopt such authentication and deliver the Securities so authenticated with
the same effect as if such successor Trustee had itself authenticated such
Securities.
Section 610. Appointment of Authenticating Agent.
The Trustee may appoint one or more Authenticating Agents
acceptable to the Company with respect to one or more series of Securities
which shall be authorized to act on behalf of the Trustee to authenticate
Securities of that or those series issued upon original issue, exchange,
registration of transfer or partial redemption or conversion thereof or
pursuant to Section 306, and Securities so authenticated shall be entitled to
the benefits of this Indenture and shall be valid and obligatory for all
purposes as if authenticated by the Trustee hereunder. Wherever reference is
made in this Indenture to the authentication and delivery of Securities by the
Trustee or the Trustee's certificate of authentication, such reference shall be
deemed to include authentication and delivery on behalf of the Trustee by an
Authenticating Agent and a certificate of authentication executed on behalf of
the Trustee by an Authenticating Agent.
Each Authenticating Agent shall be acceptable to the Company
and, except as provided in or pursuant to this Indenture, shall at all times be
a corporation that would be permitted by the Trust Indenture Act to act as
trustee under an indenture qualified under the Trust Indenture Act, is
authorized under applicable law and by its charter to act as an Authenticating
Agent and has a combined capital and surplus (computed in accordance with
Section 310(a)(2) of the Trust Indenture Act) of at least $50,000,000. If at
any time an Authenticating Agent shall cease to be eligible in accordance with
the provisions of this Section 610, it shall resign immediately in the manner
and with the effect specified in this Section 610.
Any Corporation into which an Authenticating Agent may be
merged or converted or with which it may be consolidated, or any Corporation
resulting from any merger, conversion or consolidation to which such
Authenticating Agent shall be a party, or any Corporation succeeding to the
corporate agency or corporate trust business of an Authenticating Agent, shall
be the successor of such Authenticating Agent hereunder, provided such
Corporation shall be otherwise eligible under this Section 610, without the
execution or filing of any paper or any further act on the part of the Trustee
or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving
written notice thereof to the Trustee and the Company. The Trustee may at any
time terminate the
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agency of an Authenticating Agent by giving written notice thereof to such
Authenticating Agent and the Company. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent which shall be acceptable to the Company and shall (I) mail written
notice of such appointment by first-class mail, postage prepaid, to all Holders
of Registered Securities, if any, of the series with respect to which such
Authenticating Agent shall serve, as their names and addresses appear in the
Security Register, and (ii) if Securities of the series are issued as Bearer
Securities, publish notice of such appointment at least once in an Authorized
Newspaper in the place where such successor Authenticating Agent has its
principal office if such office is located outside the United States. Any
successor Authenticating Agent, upon acceptance of its appointment hereunder,
shall become vested with all the rights, powers and duties of its predecessor
hereunder, with like effect as if originally named as an Authenticating Agent.
No successor Authenticating Agent shall be appointed unless eligible under the
provisions of this Section 610.
The Trustee agrees to pay each Authenticating Agent from time
to time reasonable compensation for its services under this Section 610 and the
Trustee shall be entitled to be reimbursed for such payments, subject to the
provisions of Section 605.
The provisions of Sections 308, 602 and 603 shall be
applicable to each Authenticating Agent.
If an Authenticating Agent is appointed with respect to one or
more series of Securities pursuant to this Section 610, the Securities of such
series may have endorsed thereon, in addition to or in lieu of the Trustee's
certificate of authentication, an alternate certificate of authentication in
the following form:
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This is one of the Securities of the series designated herein
referred to in the within-mentioned Indenture.
, As Trustee
-----------------
By
--------------------------- As Authenticating Agent
By
--------------------------- Authorized Signatory
If all of the Securities of any series may not be originally
issued at one time, and if the Trustee does not have an office capable of
authenticating Securities upon original issuance located in a Place of Payment
where the Company wishes to have Securities of such series authenticated upon
original issuance, the Trustee, if so requested in writing (which writing need
not be accompanied by or contained in an Officers' Certificate by the Company),
shall appoint in accordance with this Section 610 an Authenticating Agent
having an office in a Place of Payment designated by the Company with respect
to such series of Securities.
ARTICLE SEVEN
HOLDER'S LISTS AND REPORTS BY TRUSTEE AND COMPANY
Section 701. Company to Furnish Trustee Names and
Addresses of Holders.
In accordance with Section 312(a) of the Trust Indenture Act,
the Company shall furnish or cause to be furnished to the Trustee
(a) semi-annually with respect to Securities of
each series on
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June 30 and December 31 of each year or upon such other dates as are
set forth in or pursuant to the Board Resolution or indenture
supplemental hereto authorizing such series, a list, in each case in
such form as the Trustee may reasonably require, of the names and
addresses of Holders as of the applicable date, and
(b) at such other times as the Trustee may
request in writing, within 30 days after the receipt by the Company of
any such request, a list of similar form and content as of a date not
more than 15 days prior to the time such list is furnished,
provided, however, that so long as the Trustee is the Security Registrar no
such list shall be required to be furnished.
Section 702. Preservation of Information; Communications
to Holders.
The Trustee shall comply with the obligations imposed upon it
pursuant to Section 312 of the Trust Indenture Act.
Every Holder of Securities or Coupons, by receiving and
holding the same, agrees with the Company and the Trustee that neither the
Company, the Trustee, any Paying Agent or any Security Registrar shall be held
accountable by reason of the disclosure of any such information as to the names
and addresses of the Holders of Securities in accordance with Section 312 of
the Trust Indenture Act, regardless of the source from which such information
was derived, and that the Trustee shall not be held accountable by reason of
mailing any material pursuant to a request made under Section 312(b) of the
Trust Indenture Act.
Section 703. Reports by Trustee.
(a) Within 60 days after September 15 of each year
commencing with the first September 15 following the first issuance of
Securities pursuant to Section 301, if required by Section 313(a) of the Trust
Indenture Act, the Trustee shall transmit, pursuant to Section 313(c) of the
Trust Indenture Act, a brief report dated as of such September 15 with respect
to any of the events specified in said Section 313(a) which may have occurred
since the later of the immediately preceding September 15 and the date of this
Indenture.
(b) The Trustee shall transmit the reports required by
Section 313(b) of the Trust Indenture Act at the times specified therein.
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(c) Reports pursuant to this Section shall be transmitted
in the manner and to the Persons required by Sections 313(c) and 313(d) of the
Trust Indenture Act.
Section 704. Reports by Company.
The Company, pursuant to Section 314(a) of the Trust Indenture
Act, shall:
(1) file with the Trustee, within 15 days after
the Company is required to file the same with the Commission, 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
Commission may from time to time by rules and regulations prescribe)
which the Company may be required to file with the Commission pursuant
to Section 13 or Section 15(d) of the Securities Exchange Act of 1934;
or, if the Company is not required to file information, documents or
reports pursuant to either of said Sections, then it shall file with
the Trustee and the Commission, in accordance with rules and
regulations prescribed from time to time by the Commission, such of
the supplementary and periodic information, documents and reports
which may be required pursuant to Section 13 of the Securities
Exchange Act of 1934 in respect of a security listed and registered on
a national securities exchange as may be prescribed from time to time
in such rules and regulations;
(2) file with the Trustee and the Commission, in
accordance with rules and regulations prescribed from time to time by
the Commission, such additional information, documents and reports
with respect to compliance by the Company, as the case may be, with
the conditions and covenants of this Indenture as may be required from
time to time by such rules and regulations; and
(3) transmit within 30 days after the filing
thereof with the Trustee, in the manner and to the extent provided in
Section 313(c) of the Trust Indenture Act, such summaries of any
information, documents and reports required to be filed by the Company
pursuant to paragraphs (1) and (2) of this Section 704 as may be
required by rules and regulations prescribed from time to time by the
Commission.
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ARTICLE EIGHT
CONSOLIDATION, MERGER AND SALES
Section 801. Company May Consolidate, Etc., Only on
Certain Terms.
Nothing contained in this Indenture or in any of the
Securities shall prevent any consolidation or merger of the Company with or
into any other Person or Persons (whether or not affiliated with the Company),
or successive consolidations or mergers in which the Company or its successor
or successors shall be a party or parties, or shall prevent any conveyance,
transfer or lease of the property of the Company as an entirety or
substantially as an entirety, to any other Person (whether or not affiliated
with the Company); provided, however, that:
(1) in case the Company shall consolidate with or
merge into another Person or convey, transfer or lease its properties
and assets substantially as an entirety to any Person, the entity
formed by such consolidation or into which the Company is merged or
the Person which acquires by conveyance or transfer, or which leases,
the properties and assets of the Company substantially as an entirety
shall be a Corporation organized and existing under the laws of the
United States of America, any state thereof or the District of
Columbia and shall expressly assume, by an indenture (or indentures,
if at such time there is more than one Trustee) supplemental hereto,
executed by the successor Person and delivered to the Trustee, in form
satisfactory to the Trustee, the due and punctual payment of the
principal of, any premium and interest on and any Additional Amounts
with respect to all the Securities and the performance of every other
covenant of this Indenture on the part of the Company to be performed
or observed;
(2) immediately after giving effect to such
transaction, no event which, after notice or lapse of time, would
become an Event of Default, shall have occurred and be continuing;
(3) either the Company or the successor Person shall
have delivered to the Trustee an Officers' Certificate and an Opinion
of Counsel, stating that such consolidation, merger, conveyance,
transfer or lease and such supplemental indenture comply with this
Article and that all conditions precedent herein provided for relating
to such transaction have been complied with.
Section 802. Successor Person Substituted for Company.
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Upon any consolidation or merger or any conveyance, transfer
or lease of the properties and assets of the Company substantially as an
entirety to any Person in accordance with Section 801, the successor Person
formed by such consolidation or into which the Company is merged or to which
such conveyance, transfer or lease 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 had been named as
the Company herein; and thereafter, except in the case of a lease to another
Person, the predecessor Person shall be released from all obligations and
covenants under this Indenture, the Securities and the Coupons.
ARTICLE NINE
SUPPLEMENTAL INDENTURES
Section 901. Supplemental Indentures without Consent of
Holders.
Without the consent of any Holders of Securities or Coupons,
the Company (when authorized by or pursuant to a Board Resolution) and the
Trustee, at any time and from time to time, may enter into one or more
indentures supplemental hereto, in form satisfactory to the Trustee, for any of
the following purposes:
(1) to evidence the succession of another Person
to the Company, and the assumption by any such successor of the
covenants of the Company herein and in the Securities; or
(2) to add to the covenants of the Company for
the benefit of the Holders of all or any series of Securities (as
shall be specified in such supplemental indenture or indentures) or to
surrender any right or power herein conferred upon the Company; or
(3) to add to or change any of the provisions of
this Indenture to provide that Bearer Securities may be registrable as
to principal, to change or eliminate any restrictions on the payment
of principal of, any premium or interest on or any Additional Amounts
with respect to Securities, to permit Registered Securities to be
exchanged for Bearer Securities, to permit Bearer Securities to be
exchanged for Bearer Securities of other authorized denominations or
to permit or facilitate the issuance of Securities in uncertificated
form, provided any such action shall not adversely affect the
interests of the Holders of Securities of any series or any Coupons
appertaining thereto in any material respect; or
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(4) to establish the form or terms of Securities
of any series and any Coupons appertaining thereto as permitted by
Sections 201 and 301; or
(5) to evidence and provide for the acceptance of
appointment hereunder by a successor Trustee with respect to the
Securities of one or more series and to add to or change any of the
provisions of this Indenture as shall be necessary to provide for or
facilitate the administration of the trusts hereunder by more than one
Trustee, pursuant to the requirements of Section 608; or
(6) to cure any ambiguity or to correct or
supplement any provision herein which may be defective or inconsistent
with any other provision herein, or to make any other provisions with
respect to matters or questions arising under this Indenture which
shall not adversely affect the interests of the Holders of Securities
of any series or any Coupons appertaining thereto in any material
respect; or
(7) to add to, delete from or revise the
conditions, limitations and restrictions on the authorized amount,
terms or purposes of issue, authentication and delivery of Securities,
as herein set forth; or
(8) to add any additional Events of Default with
respect to all or any series of Securities (as shall be specified in
such supplemental indenture); or
(9) to supplement any of the provisions of this
Indenture to such extent as shall be necessary to permit or facilitate
the defeasance and discharge of any series of Securities pursuant to
Article Four; provided that any such action shall not adversely affect
the interests of any Holder of a Security of such series and any
Coupons appertaining thereto or any other Security or Coupon in any
material respect; or
(10) to secure the Securities pursuant to Section
1006 or otherwise;
(11) to amend or supplement any provision contained
herein or in any supplemental indenture, provided that no such
amendment or supplement shall materially adversely affect the
interests of the Holders of any Securities then Outstanding; or
(12) to make provision with respect to the
conversion rights of Holders of Convertible Securities pursuant to the
requirements of Section 1606.
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Section 902. Supplemental Indentures with Consent of
Holders.
With the consent of the Holders of not less than 66-2/3% in
principal amount of the Outstanding Securities of each series affected by such
supplemental indenture, by Act of said Holders delivered to the Company and the
Trustee, the Company (when authorized by or pursuant to a Company's Board
Resolution), and the Trustee may enter into an Indenture or indentures
supplemental hereto for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this indenture or of
modifying in any manner the rights of the Holders of Securities of such series
under this Indenture; provided, however, that no such supplemental indenture,
without the consent of the Holder of each Outstanding Security affected
thereby, shall
(1) change the Stated Maturity of the principal of,
or any premium or installment of interest on or any Additional Amounts
with respect to, any Security, or reduce the principal amount thereof
or the rate of interest thereon or any Additional Amounts with respect
thereto, or any premium payable upon the redemption thereof or
otherwise, or change the obligation of the Company to pay Additional
Amounts pursuant to Section 1004 (except as contemplated by Section
801(1) and permitted by Section 901(1)), or reduce the amount of the
principal of an Original Issue Discount Security that would be due and
payable upon a declaration of acceleration of the Maturity thereof
pursuant to Section 502 or the amount thereof provable in bankruptcy
pursuant to Section 504, or adversely affect the right of repayment at
the option of any Holder as contemplated by Article Thirteen, or
change the Place of Payment, Currency in which the principal of, any
premium or interest on, or any Additional Amounts with respect to any
Security is payable, or impair the right to institute suit for the
enforcement of any such payment on or after the Stated Maturity
thereof (or, in the case of redemption, on or after the Redemption
Date or, in the case of repayment at the option of the Holder, on or
after the date for repayment), or
(2) reduce the percentage in principal amount of the
Outstanding Securities of any series, the consent of whose Holders is
required for any such supplemental indenture, or the consent of whose
Holders is required for any waiver (of compliance with certain
provisions of this Indenture or certain defaults hereunder and their
consequences) provided for in this Indenture, or reduce the
requirements of Section 1504 for quorum or voting,
(3) modify any of the provisions of this Section
902, or Section 513 or Section 1008, except to increase any such
percentage or to provide that certain other provisions of this
Indenture cannot be modified or waived without
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the consent of the Holder of each Outstanding Security affected
thereby, or
(4) adversely affect the right to convert any
Convertible Security.
A supplemental indenture which changes or eliminates any
covenant or other provision of this Indenture which shall have been included
expressly and solely for the benefit of one or more particular series of
Securities, or which modifies the rights of the Holders of Securities of such
series with respect to such covenant or other provision, shall be deemed not to
affect the rights under this Indenture of the Holders of Securities of any
other series.
It shall not be necessary for any Act of Holders of Securities
under this Section 902 to approve the particular form of any proposed
supplemental indenture, but it shall be sufficient if such Act shall approve
the substance thereof.
Section 903. Execution of Supplemental Indentures.
As a condition to executing, or accepting the additional
trusts created by, any supplemental indenture permitted by this Article or the
modifications thereby of the trust created by this Indenture, the Trustee shall
be entitled to receive, and (subject to Article Six hereof) shall be fully
protected in relying upon, an Opinion of Counsel stating that the execution of
such supplemental indenture is authorized or permitted by this Indenture. The
Trustee may, but shall not be obligated to, enter into any such supplemental
indenture which affects the Trustee's own rights, duties or immunities under
this Indenture or otherwise.
Section 904. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this
Article, this Indenture shall be modified in accordance therewith, and such
supplemental indenture shall form a part of this Indenture for all purposes;
and every Holder of a Security theretofore or thereafter authenticated and
delivered hereunder and of any Coupon appertaining thereto shall be bound
thereby.
Section 905. Reference in Securities to Supplemental
Indentures.
Securities of any series authenticated and delivered after the
execution of any supplemental indenture pursuant to this Article may, and shall
if required by the Trustee, bear a notation in form approved by the Trustee as
to any matter provided for in such supplemental indenture. If the Company
shall so determine, new Securities of
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any series so modified as to conform, in the opinion of the Trustee and the
Company, to any such supplemental indenture may be prepared and executed by the
Company and authenticated and delivered by the Trustee in exchange for
Outstanding Securities of such series.
Section 906. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article
Nine shall conform to the requirements of the Trust Indenture Act.
ARTICLE TEN
COVENANTS
Section 1001. Payment of Principal and any Premium,
Interest and Additional Amounts.
The Company covenants and agrees for the benefit of the
Holders of the Securities of each series that it will duly and punctually pay
the principal of, any premium and interest on and any Additional Amounts with
respect to the Securities of such series in accordance with the terms thereof,
any Coupons appertaining thereto and this Indenture. Any interest due on any
Bearer Security on or before the Maturity thereof, and any Additional Amounts
payable with respect to such interest, shall be payable only upon presentation
and surrender of the Coupons appertaining thereto for such interest as they
severally mature.
Section 1002. Maintenance of Office or Agency.
The Company shall maintain in each Place of Payment for any
series of Securities an Office or Agency where Securities of such series (but
not Bearer Securities, except as otherwise provided below, unless such Place of
Payment is located outside the United States) may be presented or surrendered
for payment, where Securities of such series may be surrendered for
registration of transfer or exchange or, if applicable, conversion and where
notices and demands to or upon the Company in respect of the Securities of such
series relating thereto and this Indenture may be served. If Securities of a
series are issuable as Bearer Securities, the Company shall maintain, subject
to any laws or regulations applicable thereto, an Office or Agency in a Place
of Payment for such series which is located outside the United States where
Securities of such series and any Coupons appertaining thereto may be presented
and surrendered for payment; provided, however, that if the Securities of
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such series are listed on any stock exchange located outside the United States
and such stock exchange shall so require, the Company shall maintain a Paying
Agent in the required city located outside the United States, as the case may
be, so long as the Securities of such series are listed on such exchange. 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, except that Bearer Securities of such series and any Coupons
appertaining thereto may be presented and surrendered for payment at the place
specified for the purpose with respect to such Securities as provided in or
pursuant to this Indenture, and the Company hereby appoints the Trustee as its
agent to receive all such presentations, surrenders, notices and demands.
Except as otherwise provided in or pursuant to this Indenture,
no payment of principal, premium, interest or Additional Amounts with respect
to Bearer Securities shall be made at any Office or Agency in the United States
or by check mailed to any address in the United States or by transfer to an
account maintained with a bank located in the United States; provided, however,
if amounts owing with respect to any Bearer Securities shall be payable in
Dollars, payment of principal of, any premium or interest on and any Additional
Amounts with respect to any such Security may be made at the Corporate Trust
Office of the Trustee or any Office or Agency designated by the Company in The
City of New York, if (but only if) payment of the full amount of such
principal, premium, interest or Additional Amounts at all offices outside the
United States maintained for such purpose by the Company in accordance with
this Indenture is illegal or effectively precluded by exchange controls or
other similar restrictions.
The Company may also from time to time designate one or more
other Offices or Agencies where the Securities of one or more series may be
presented or surrendered for any or all such purposes and may from time to time
rescind such designations; provided, however, that no such designation or
rescission shall in any manner relieve the Company of its obligation to
maintain an Office or Agency in each Place of Payment for Securities of any
series for such purposes. The Company shall give prompt written notice to the
Trustee of any such designation or rescission and of any change in the location
of any such other Office or Agency. Unless otherwise provided in or pursuant
to this Indenture, the Company hereby designates as the Place of Payment for
each series The City of New York, and initially appoints the Office or Agency
of the Corporate Trust Office of the Trustee for such purpose. Pursuant to
Section 301(9) of this Indenture, the Company may subsequently appoint a place
or places in The City of New York where such Securities may be payable.
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Section 1003. Money for Securities Payments to Be Held in
Trust.
If the Company shall at any time act as its own Paying Agent
with respect to any series of Securities, it shall, on or before each due date
of the principal of, any premium or interest on or Additional Amounts with
respect to any of the Securities of such series, segregate and hold in trust
for the benefit of the Persons entitled thereto a sum of money sufficient to
pay the principal or any premium, interest or Additional Amounts so becoming
due until such sums shall be paid to such Persons or otherwise disposed of as
herein provided, and shall promptly notify the Trustee of its action or failure
so to act.
Whenever the Company shall have one or more Paying Agents for
any series of Securities, it shall, on or prior to each due date of the
principal of, any premium or interest on or any Additional Amounts with respect
to any Securities of such series, deposit with any Paying Agent a sum of money
sufficient to pay the principal or any premium, interest or Additional Amounts
so becoming due, such sum to be held in trust for the benefit of the Persons
entitled thereto, and (unless such Paying Agent is the Trustee) the Company
will promptly notify the Trustee of its action or failure so to act.
The Company shall cause each Paying Agent for any series of
Securities other than the Trustee to execute and deliver to the Trustee an
instrument in which such Paying Agent shall agree with the Trustee, subject to
the provisions of this Section, that such Paying Agent shall:
(1) hold all sums held by it for the payment of
the principal of, any premium or interest on or any Additional Amounts
with respect to Securities of such series in trust for the benefit of
the Persons entitled thereto until such sums shall be paid to such
Persons or otherwise disposed of as provided in or pursuant to this
Indenture;
(2) give the Trustee notice of any default by the
Company (or any other obligor upon the Securities of such series) in
the making of any payment of principal, any premium or interest on or
any Additional Amounts with respect to the Securities of such series;
(3) at any time during the continuance of any
such default, upon the written request of the Trustee, forthwith pay
to the Trustee all sums so held in trust by such Paying Agent; and
(4) comply with the provisions of the Trust
Indenture Act
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applicable to it as Paying Agent.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held
in trust by the Company or such Paying Agent, such sums to be held by the
Trustee upon the same terms as those upon which such sums were held by the
Company or such Paying Agent; and, upon such payment by any Paying Agent to the
Trustee, such Paying Agent shall be released from all further liability with
respect to such money.
Except as otherwise provided herein or pursuant hereto, any
money deposited with the Trustee or any Paying Agent, or then held by the
Company, in trust for the payment of the principal of, any premium or interest
on or any Additional Amounts with respect to any Security of any series and
remaining unclaimed for two years after such principal or any such premium or
interest or any such Additional Amounts shall have become due and payable shall
be paid to the Company on Company Request, or (if then held by the Company)
shall be discharged from such trust; and the Holder of such Security or any
Coupon appertaining thereto shall thereafter, as an unsecured general creditor,
look only to the Company for payment thereof, and all liability of the Trustee
or such Paying Agent with respect to such trust money, and all liability of the
Company as trustee thereof, shall thereupon cease; provided, however, that the
Trustee or such Paying Agent, before being required to make any such repayment,
may at the expense of the Company cause to be published once, in an Authorized
Newspaper in each Place of Payment for such series or to be mailed to Holders
of Registered Securities of such series, or both, notice that such money
remains unclaimed and that, after a date specified therein, which shall not be
less than 30 days from the date of such publication or mailing nor shall it be
later than two years after such principal and any premium or interest or
Additional Amounts shall have become due and payable, any unclaimed balance of
such money then remaining will be repaid to the Company.
Section 1004. Additional Amounts.
If any Securities of a series provide for the payment of
Additional Amounts, the Company agrees to pay to the Holder of any such
Security or any Coupon appertaining thereto Additional Amounts as provided
therein. Whenever in this Indenture there is mentioned, in any context, the
payment of the principal of or any premium or interest on, or in respect of,
any Security of any series or any Coupon or the net proceeds received on the
sale or exchange of any Security of any series, such mention shall be deemed to
include mention of the payment of Additional Amounts provided by the terms of
such series established hereby or pursuant hereto to the
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extent that, in such context, Additional Amounts are, were or would be payable
in respect thereof pursuant to such terms, and express mention of the payment
of Additional Amounts (if applicable) in any provision hereof shall not be
construed as excluding Additional Amounts in those provisions hereof where such
express mention is not made.
Except as otherwise provided in or pursuant to this Indenture,
if the Securities of a series provide for the payment of Additional Amounts, at
least 10 days prior to the first Interest Payment Date with respect to such
series of Securities (or if the Securities of such series shall not bear
interest prior to Maturity, the first day on which a payment of principal is
made), and at least 10 days prior to each date of payment of principal or
interest if there has been any change with respect to the matters set forth in
the below-mentioned Officers' Certificate, the Company shall furnish to the
Trustee and the principal Paying Agent or Paying Agents, if other than the
Trustee, an Officers' Certificate instructing the Trustee and such Paying Agent
or Paying Agents whether such payment of principal of or interest on the
Securities of such series shall be made to Holders of Securities of such series
or the Coupons appertaining thereto who are United States Aliens without
withholding for or on account of any tax, assessment or other governmental
charge described in the Securities of such series. If any such withholding
shall be required, then such Officers' Certificate shall specify by country the
amount, if any, required to be withheld on such payments to such Holders of
Securities or Coupons, and the Company agrees to pay to the Trustee or such
Paying Agent the Additional Amounts required by the terms of such Securities.
The Company covenants to indemnify the Trustee and any Paying Agent for, and to
hold them harmless against, any loss, liability or expense (including
reasonable fees and expenses) reasonably incurred without negligence or bad
faith on their part arising out of or in connection with actions taken or
omitted by any of them in reliance on any Officers' Certificate furnished
pursuant to this Section 1004.
Section 1005. Limitation Upon Disposition of Voting Stock
of Significant Subsidiaries.
So long as any of the Securities shall be Outstanding but
subject to the provisions of Article Eight, the Company:
(a) will not, nor will it permit any Subsidiary to,
sell, assign, transfer or otherwise dispose of any shares of,
securities convertible into or options, warrants or rights to
subscribe for or purchase shares of, Voting Stock of a Significant
Subsidiary (other than sales of directors qualifying shares), and will
not permit a Significant Subsidiary to issue any shares of, or
securities convertible into or options, warrants or rights to
subscribe for or purchase shares
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of, such Voting Stock (other than sales of directors qualifying
shares) if, in each case, after giving effect to any such transaction
and to the issuance of the maximum number of shares of Voting Stock of
such Significant Subsidiary issuable upon the exercise of all such
convertible securities, options, warrants or rights, such Significant
Subsidiary would cease to be a Controlled Subsidiary, or
(b) will not permit a Significant Subsidiary to
(i) merge or consolidate with or into any
other corporation, unless the surviving corporation is the
Company or is, or upon consummation of the merger or
consolidation will become, a Controlled Subsidiary; or
(ii) lease, sell or transfer all or
substantially all of its properties and assets to any
corporation or other Person, except to the Company or to a
Controlled Subsidiary or a Person that, upon such lease, sale
or transfer, will become a Controlled Subsidiary.
Notwithstanding the foregoing, any such sale, assignment or
transfer of securities, any such merger or consolidation or any such lease,
sale or transfer of properties and assets shall not be prohibited if required
(i) by any law or any rule, regulation or order of any governmental agency or
authority or (ii) as a condition imposed by any law or any rule, regulation or
order of any governmental agency or authority to the acquisition by the
Company, directly or indirectly, through purchase of stock or assets, merger,
consolidation or otherwise, of any Person, provided that, after giving effect
to such disposition and acquisition, (A) such Person will be a Controlled
Subsidiary, and (B) the Consolidated Assets of the Company will be at least
equal to the Consolidated Assets of the Company prior thereto; and nothing in
this section shall prohibit the Company from the sale or transfer of assets
pursuant to any securitization transaction.
Section 1006. Limitation on Creation of Liens.
So long as any of the Securities shall be outstanding, the
Company will not, nor will it permit any Subsidiary to, create, assume, incur
or suffer to be created, assumed or incurred or to exist any pledge,
encumbrance or lien, as security for indebtedness for borrowed money, upon any
shares of, or securities convertible into or options, warrants or rights to
subscribe for or purchase shares of, Voting Stock of a Significant Subsidiary,
directly or indirectly, without making effective provision whereby the
Securities of all series shall be equally and ratably secured with any and all
such indebtedness if, treating such pledge, encumbrance or lien as a transfer
of the shares
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of, or securities convertible into or options, warrants or rights to subscribe
for or purchase shares of, Voting Stock subject thereto to the secured party
and to the issuance of the maximum number of shares of Voting Stock of such
Significant Subsidiary issuable upon the exercise of all such convertible
securities, options, warrants or rights, such Significant Subsidiary would not
continue to be a Controlled Subsidiary.
Section 1007. Corporate Existence.
Subject to Article Eight, the Company will do or cause to be
done all things necessary to preserve and keep in full force and effect its
corporate existence and the corporate existence of each Significant Subsidiary
and its rights (charter and statutory) and franchises and those of each such
Significant Subsidiary; provided, however, that neither the Company nor any
Significant Subsidiary shall be required to preserve any such right or
franchise if the Company or such Significant Subsidiary, as the case may be,
shall determine that the preservation thereof is no longer desirable in the
conduct of its business and that the loss thereof is not disadvantageous in any
material respect to the Holders.
Section 1008. Waiver of Certain Covenants.
The Company may omit in any particular instance to comply with
any term, provision or condition set forth in Section 1005, 1006 or 1007 with
respect to the Securities of any series if before the time for such compliance
the Holders of at least a majority in principal amount of the Outstanding
Securities of such series, by Act of such Holders, either shall waive such
compliance in such instance or generally shall have waived compliance with such
term, provision or condition, but no such waiver shall extend to or affect such
term, provision or condition except to the extent so expressly waived, and,
until such waiver shall become effective, the obligations of the Company and
the duties of the Trustee in respect of any such term, provision or condition
shall remain in full force and effect.
Section 1009. Company Statement as to Compliance; Notice of
Certain Defaults.
(a) The Company shall deliver to the Trustee, within 120
days after the end of each fiscal year, a written statement (which need not be
contained in or accompanied by an Officers' Certificate) signed by the
principal executive officer, the principal financial officer or the principal
accounting officer of the Company, stating that
(1) a review of the activities of the Company
during such year
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and of its performance under this Indenture has been made under his
or her supervision, and
(2) to the best of his or her knowledge, based on
such review, (a) the Company has complied with all the conditions and
covenants imposed on it under this Indenture throughout such year, or,
if there has been a default in the fulfillment of any such condition
or covenant, specifying each such default known to him or her and the
nature and status thereof, and (b) no event has occurred and is
continuing which is, or after notice or lapse of time or both would
become, an Event of Default, or, if such an event has occurred and is
continuing, specifying each such event known to him and the nature and
status thereof.
[(b) The Company shall deliver to the Trustee, within five
days after the occurrence thereof, written notice of any event which after
notice or lapse of time or both would become an Event of Default pursuant to
clause (4) of Section 501.]
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
Section 1101. Applicability of Article.
Redemption of Securities of any series at the option of the
Company as permitted or required by the terms of such Securities shall be made
in accordance with the terms of such Securities and (except as otherwise
provided herein or pursuant hereto) this Article.
Section 1102. Election to Redeem; Notice to Trustee.
The election of the Company to redeem any Securities shall be
evidenced by or pursuant to a Board Resolution. In case of any redemption at
the election of the Company of the Securities of any series, with the same
issue date, interest rate, Stated Maturity and other terms, the Company shall,
at least 60 days prior to the Redemption Date fixed by the Company (unless a
shorter notice shall be satisfactory to the Trustee), notify the Trustee of
such Redemption Date and of the principal amount of Securities of such series
to be redeemed.
Section 1103. Selection by Trustee of Securities to be
Redeemed.
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If less than all the Securities of any series with the same
issue date, interest rate, Stated Maturity and other terms are to be redeemed,
the particular Securities to be redeemed shall be selected not more than 60
days prior to the Redemption Date by the Trustee from the Outstanding
Securities of such series not previously called for redemption, by such method
as the Trustee shall deem fair and appropriate and which may provide for the
selection for redemption of portions of the principal amount of Registered
Securities of such series; provided, however, that no such partial redemption
shall reduce the portion of the principal amount of a Registered Security of
such series not redeemed to less than the minimum denomination for a Security
of such series established herein or pursuant hereto.
If any Convertible Security selected for partial redemption is
converted in part before termination of the conversion right with respect to
the portion of the Security so selected, the converted portion of such Security
shall be deemed (so far as may be) to be the portion selected for redemption.
Securities which have been converted during a selection of Securities to be
redeemed shall be treated by the Trustee as Outstanding for the purpose of such
selection.
The Trustee shall promptly notify the Company and the Security
Registrar (if other than itself) in writing of the Securities selected for
redemption and, in the case of any Securities selected for partial redemption,
the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context
otherwise requires, all provisions relating to the redemption of Securities
shall relate, in the case of any Securities redeemed or to be redeemed only in
part, to the portion of the principal of such Securities which has been or is
to be redeemed.
Section 1104. Notice of Redemption.
Notice of redemption shall be given in the manner provided in
Section 106, not less than 30 nor more than 60 days prior to the Redemption
Date, unless a shorter period is specified in the Securities to be redeemed, to
the Holders of Securities to be redeemed. Failure to give notice by mailing in
the manner herein provided to the Holder of any Registered Securities
designated for redemption as a whole or in part, or any defect in the notice to
any such Holder, shall not affect the validity of the proceedings for the
redemption of any other Securities or portion thereof.
Any notice that is mailed to the Holder of any Registered
Securities in the manner herein provided shall be conclusively presumed to have
been duly given, whether or not such Holder receives the notice.
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All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price,
(3) if less than all Outstanding Securities of
any series are to be redeemed, the identification (and, in the case of
partial redemption, the principal amount) of the particular Security
or Securities to be redeemed,
(4) in case any Security is to be redeemed in
part only, the notice which relates to such Security shall state that
on and after the Redemption Date, upon surrender of such Security, the
Holder of such Security will receive, without charge, a new Security
or Securities of authorized denominations for the principal amount
thereof remaining unredeemed,
(5) that, on the Redemption Date, the Redemption
Price shall become due and payable upon each such Security or portion
thereof to be redeemed, and, if applicable, that interest thereon
shall cease to accrue on and after said date,
(6) the place or places where such Securities,
together (in the case of Bearer Securities) with all Coupons
appertaining thereto, if any, maturing after the Redemption Date, are
to be surrendered for payment of the Redemption Price and any accrued
interest and Additional Amounts pertaining thereto,
(7) that the redemption is for a sinking fund, if
such is the case,
(8) that, unless otherwise specified in such
notice, Bearer Securities of any series, if any, surrendered for
redemption must be accompanied by all Coupons maturing subsequent to
the date fixed for redemption or the amount of any such missing Coupon
or Coupons will be deducted from the Redemption Price, unless security
or indemnity satisfactory to the Company, the Trustee and any Paying
Agent is furnished,
(9) if Bearer Securities of any series are to be
redeemed and any Registered Securities of such series are not to be
redeemed, and if such Bearer Securities may be exchanged for
Registered Securities not subject to redemption on the Redemption Date
pursuant to Section 305 or otherwise, the last date, as determined by
the Company, on which such exchanges may be
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made,
(10) the CUSIP number or the Euro-clear or the CEDEL
reference numbers of such Securities, if any (or any other numbers
used by a Depository to identify such Securities), and
(11) in the case of Convertible Securities, the
Conversion Price then in effect, the date on which the right to
convert the principal amount of the Securities or the portions thereof
to be redeemed will terminate and the place or places where such
Securities may be surrendered for conversion,
A notice of redemption published in an Authorized Newspaper as
contemplated by Section 106 need not identify particular Registered Securities
to be redeemed.
Notice of redemption of Securities to be redeemed at the
election of the Company shall be given by the Company or, at the Company's
request, by the Trustee in the name and at the expense of the Company.
Section 1105. Deposit of Redemption Price.
On or prior to any Redemption Date, the Company shall deposit
with the Trustee or with a Paying Agent (or, if the Company is acting as its
own Paying Agent, segregate and hold in trust as provided in Section 1003) an
amount of money sufficient to pay the Redemption Price of, and (except if the
Redemption Date shall be an Interest Payment Date) any accrued interest on and
Additional Amounts with respect thereto, all the Securities or portions thereof
which are to be redeemed on that date.
If any Convertible Security or portion thereof called for
redemption is converted pursuant to Article Sixteen, any money deposited with
the Trustee or so segregated and held in trust for the redemption of such
Security or portion thereof shall (subject to any right of the Holder of the
Security on a Regular Record Date preceding such conversion to receive
interest) be paid to the Company upon Company Request or, if then held by the
Company, shall be discharged from such trust.
Section 1106. Securities Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the
Securities so to be redeemed shall, on the Redemption Date, become due and
payable at the Redemption Price therein specified, and from and after such date
(unless the Company shall default in the payment of the Redemption Price and
accrued interest) such
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Securities shall cease to bear interest and the Coupons for such interest
appertaining to any Bearer Securities so to be redeemed, except to the extent
provided below, shall be void. Upon surrender of any such Security for
redemption in accordance with said notice, together with all Coupons, if any,
appertaining thereto maturing after the Redemption Date, such Security shall be
paid by the Company at the Redemption Price, together with any accrued interest
and Additional Amounts to the Redemption Date; provided, however, that
installments of interest on Bearer Securities whose Stated Maturity is on or
prior to the Redemption Date shall be payable only upon presentation and
surrender of Coupons for such interest (at an Office or Agency located outside
the United States except as otherwise provided in Section 1002), and provided,
further, that installments of interest on Registered Securities whose Stated
Maturity is on or prior to the Redemption Date shall be payable to the Holders
of such Securities, or one or more Predecessor Securities, registered as such
at the close of business on the Regular Record Dates therefor according to
their terms and the provisions of Section 307.
If any Bearer Security surrendered for redemption shall not be
accompanied by all appurtenant Coupons maturing after the Redemption Date, such
Security may be paid after deducting from the Redemption Price an amount equal
to the face amount of all such missing Coupons, or the surrender of such
missing Coupon or Coupons may be waived by the Company and the Trustee if there
be furnished to them such security or indemnity as they may require to save
each of them and any Paying Agent harmless. If thereafter the Holder of such
Security shall surrender to the Trustee or any Paying Agent any such missing
Coupon in respect of which a deduction shall have been made from the Redemption
Price, such Holder shall be entitled to receive the amount so deducted;
provided, however, that any interest or Additional Amounts represented by
Coupons shall be payable only upon presentation and surrender of those Coupons
at an Office or Agency for such Security located outside of the United States
except as otherwise provided in Section 1002.
If any Security called for redemption shall not be so paid
upon surrender thereof for redemption, the principal and any premium, until
paid, shall bear interest from the Redemption Date at the rate prescribed
therefor in the Security.
Section 1107. Securities Redeemed in Part.
Any Registered Security which is to be redeemed only in part
shall be surrendered at any Office or Agency for such Security (with, if the
Company or the Trustee so requires, due endorsement by, or a written instrument
of transfer in form satisfactory to the Company and the Trustee duly executed
by, the Holder thereof or his attorney duly authorized in writing) and the
Company shall execute and the Trustee
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shall authenticate and deliver to the Holder of such Security without service
charge, a new Registered Security or Securities of the same series, containing
identical terms and provisions, of any authorized denomination as requested by
such Holder in aggregate principal amount equal to and in exchange for the
unredeemed portion of the principal of the Security so surrendered. If a
Security in global form is so surrendered, the Company shall execute, and the
Trustee shall authenticate and deliver to the U.S. Depository or other
Depository for such Security in global form as shall be specified in the
Company Order with respect thereto to the Trustee, without service charge, a
new Security in global form in a denomination equal to and in exchange for the
unredeemed portion of the principal of the Security in global form so
surrendered.
Section 1108. Conversion Arrangements on Call for
Redemption.
Notwithstanding anything to the contrary contained in this
Indenture, in connection with any redemption of Convertible Securities of any
series, the Company, by an agreement with one or more investment bankers or
other purchasers, may arrange for such purchasers to purchase all such
Convertible Securities called for redemption (the "Called Securities") which
are either (i) surrendered for redemption or (ii) not duly surrendered for
redemption or conversion prior to the close of business on the Redemption Date,
and to convert the same into shares of Common Stock, by the purchasers'
depositing with the Trustee (acting as Paying Agent with respect to the deposit
of such amount and as conversion agent with respect to the conversion of such
Called Securities), in trust for the Holders of the Called Securities, on or
prior to the Redemption Date in the manner agreed to by the Company and such
purchasers, an amount sufficient to pay the Redemption Price, payable by the
Company on redemption of such Called Securities. In connection with any such
arrangement for purchase and conversion, the Trustee as Paying Agent shall pay
on or after the Redemption Date such amounts so deposited by the purchasers in
exchange for Called Securities surrendered for redemption prior to the close of
business on the Redemption Date and for all Called Securities surrendered after
such Redemption Date. Notwithstanding anything to the contrary contained in
this Article Eleven, the obligation of the Company to pay the Redemption Price
of such Called Securities shall be satisfied and discharged to the extent such
amount is so paid by such purchasers, provided, however, that nothing in this
Section 1108 shall in any way relieve the Company of the obligation to pay such
Redemption Price on all Called Securities to the extent such amount is not so
paid by said purchasers. For all purposes of this Indenture, any Called
Securities surrendered by the Holders for redemption, and any Called Securities
not duly surrendered for redemption or conversion prior to the close of
business on the Redemption Date, shall be deemed acquired by such purchasers
from such Holders and surrendered by such purchasers for conversion and shall
in all respects be deemed to have been converted, all as of immediately prior
to the close of business on the
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Redemption Date, subject to the deposit by the purchasers of the above amount
as aforesaid. Nothing in this Section 1108 shall in any way limit the right of
any Holder of a Security to convert his Security pursuant to the terms of this
Indenture and of such Security at any time prior to the close of business on
the Redemption Date applicable thereto.
ARTICLE TWELVE
SINKING FUNDS
Section 1201. Applicability of Article.
The provisions of this Article shall be applicable to any
sinking fund for the retirement of Securities of a series, except as otherwise
permitted or required by any form of Security of such series issued pursuant to
this Indenture.
The minimum amount of any sinking fund payment provided for by
the terms of Securities of any series is herein referred to as a "mandatory
sinking fund payment", and any payment in excess of such minimum amount
provided for by the terms of Securities of such series is herein referred to as
an "optional sinking fund payment". If provided for by the terms of Securities
of any series, the cash amount of any sinking fund payment may be subject to
reduction as provided in Section 1202. Each sinking fund payment shall be
applied to the redemption of Securities of any series as provided for by the
terms of Securities of such series.
Section 1202. Satisfaction of Sinking Fund Payments with
Securities.
The Company may, in satisfaction of all or any part of any
sinking fund payment with respect to the Securities of any series to be made
pursuant to the terms of such Securities (1) deliver Outstanding Securities of
such series (other than any of such Securities previously called for redemption
or any of such Securities in respect of which cash shall have been released to
the Company), together in the case of any Bearer Securities of such series with
all unmatured Coupons appertaining thereto, and (2) apply as a credit
Securities of such series which have been redeemed either at the election of
the Company pursuant to the terms of such series of Securities or through the
application of permitted optional sinking fund payments pursuant to the terms
of such Securities or which have been surrendered for conversion pursuant to
Article Sixteen, provided that such series of Securities have not been
previously so credited. Such Securities shall be received and credited for
such purpose by the Trustee at the
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Redemption Price specified in such Securities for redemption through operation
of the sinking fund and the amount of such sinking fund payment shall be
reduced accordingly. If as a result of the delivery or credit of Securities of
any series in lieu of cash payments pursuant to this Section 1202, the
principal amount of Securities of such series to be redeemed in order to
exhaust the aforesaid cash payment shall be less than $100,000, the Trustee
need not call Securities of such series for redemption, except upon Company
Request, and such cash payment shall be held by the Trustee or a Paying Agent
and applied to the next succeeding sinking fund payment, provided, however,
that the Trustee or such Paying Agent shall at the request of the Company from
time to time pay over and deliver to the Company any cash payment so being held
by the Trustee or such Paying Agent upon delivery by the Company to the Trustee
of Securities of that series purchased by the Company having an unpaid
principal amount equal to the cash payment requested to be released to the
Company.
Section 1203. Redemption of Securities for Sinking Fund.
Not less than 45 days prior to each sinking fund payment date
for any series of Securities (unless a shorter notice shall be satisfactory to
the Trustee), the Company shall deliver to the Trustee an Officers' Certificate
specifying the amount of the next ensuing mandatory sinking fund payment for
that series pursuant to the terms of that series, the portion thereof, if any,
which is to be satisfied by payment of cash and the portion thereof, if any,
which is to be satisfied by delivering and crediting of Securities of that
series pursuant to Section 1202, and the optional amount, if any, to be added
in cash to the next ensuing mandatory sinking fund payment, and will also
deliver to the Trustee any Securities to be so credited and not theretofore
delivered. If such Officers' Certificate shall specify an optional amount to
be added in cash to the next ensuing mandatory sinking fund payment, the
Company shall thereupon be obligated to pay the amount therein specified. Not
less than 40 days before each such sinking fund payment date the Trustee shall
select the Securities to be redeemed upon such sinking fund payment date in the
manner specified in Section 1103 and cause notice of the redemption thereof to
be given not less than 30 nor more than 40 days prior to the sinking fund
payment date in the name of and at the expense of the Company in the manner
provided in Section 1104. Such notice having been duly given, the redemption
of such Securities shall be made upon the terms and in the manner stated in
Sections 1106 and 1107.
ARTICLE THIRTEEN
REPAYMENT AT THE OPTION OF HOLDERS
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Section 1301. Applicability of Article.
Securities of any series which are repayable at the option of
the Holders thereof before their Stated Maturity shall be repaid in accordance
with the terms of the Securities of such series. The repayment of any principal
amount of Securities pursuant to such option of the Holder to require repayment
of Securities before their Stated Maturity, for purposes of Section 309, shall
not operate as a payment, redemption or satisfaction of the indebtedness
represented by such Securities unless and until the Company, at its option,
shall deliver or surrender the same to the Trustee with a directive that such
Securities be cancelled. Notwithstanding anything to the contrary contained in
this Section 1301, in connection with any repayment of Securities, the Company
may arrange for the purchase of any Securities by an agreement with one or more
investment bankers or other purchasers to purchase such Securities by paying to
the Holders of such Securities on or before the close of business on the
repayment date an amount not less than the repayment price payable by the
Company on repayment of such Securities, and the obligation of the Company to
pay the repayment price of such Securities shall be satisfied and discharged to
the extent such payment is so paid by such purchasers.
ARTICLE FOURTEEN
SECURITIES IN FOREIGN CURRENCIES
Section 1401. Applicability of Article.
Whenever this Indenture provides for (i) any action by, or the
determination of any of the rights of, Holders of Securities of any series in
which not all of such Securities are denominated in the same Currency, or (ii)
any distribution to Holders of Securities, in the absence of any provision to
the contrary in the form of Security of any particular series, any amount in
respect of any Security denominated in a Currency other than Dollars shall be
treated for any such action or distribution as that amount of Dollars that
could be obtained for such amount on such reasonable basis of exchange and as
of the record date with respect to Registered Securities of such series (if
any) for such action, determination of rights or distribution (or, if there
shall be no applicable record date, such other date reasonably proximate to the
date of such action, determination of rights or distribution) as the Company
may specify in a written notice to the Trustee or, in the absence of such
written notice, as the Trustee may determine.
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ARTICLE FIFTEEN
MEETINGS OF HOLDERS OF SECURITIES
Section 1501. Purposes for Which Meetings May Be Called.
A meeting of Holders of Securities of any series may be called
at any time and from time to time pursuant to this Article to make, give or
take any request, demand, authorization, direction, notice, consent, waiver or
other action provided by this Indenture to be made, given or taken by Holders
of Securities of such series.
Section 1502. Call, Notice and Place of Meetings.
(a) The Trustee may at any time call a meeting of Holders
of Securities of any series for any purpose specified in Section 1501, to be
held at such time and at such place in The City of New York, or, if Securities
of such series have been issued in whole or in part as Bearer Securities, in
London or in such place outside the United States as the Trustee shall
determine. Notice of every meeting of Holders of Securities of any series,
setting forth the time and the place of such meeting and in general terms the
action proposed to be taken at such meeting, shall be given, in the manner
provided in Section 106, not less than 21 nor more than 180 days prior to the
date fixed for the meeting.
(b) In case at any time the Company (by or pursuant to a
Board Resolution) or the Holders of at least 10% in principal amount of the
Outstanding Securities of any series shall have requested the Trustee to call a
meeting of the Holders of Securities of such series for any purpose specified
in Section 1501, by written request setting forth in reasonable detail the
action proposed to be taken at the meeting, and the Trustee shall not have made
the first publication of the notice of such meeting within 21 days after
receipt of such request or shall not thereafter proceed to cause the meeting to
be held as provided herein, then the Company or the Holders of Securities of
such series in the amount above specified, as the case may be, may determine
the time and the place in The City of New York, or, if Securities of such
series are to be issued as Bearer Securities, in London for such meeting and
may call such meeting for such purposes by giving notice thereof as provided in
subsection (a) of this Section 1502.
Section 1503. Persons Entitled to Vote at Meetings.
To be entitled to vote at any meeting of Holders of Securities
of any series, a Person shall be (1) a Holder of one or more Outstanding
Securities of such
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series, or (2) a Person appointed by an instrument in writing as proxy for a
Holder or Holders of one or more Outstanding Securities of such series by such
Holder or Holders. The only Persons who shall be entitled to be present or to
speak at any meeting of Holders of Securities of any series shall be the
Persons entitled to vote at such meeting and their counsel, any representatives
of the Trustee and its counsel and any representatives of the Company and its
counsel.
Section 1504. Quorum; Action.
The Persons entitled to vote a majority in principal amount of
the Outstanding Securities of a series shall constitute a quorum for a meeting
of Holders of Securities of such series; provided, however, that if any action
is to be taken at such meeting with respect to a consent or waiver which this
Indenture expressly provides may be given by the Holders of not less than
66-2/3% in principal amount of the Outstanding Securities of a series, the
Persons entitled to vote 66-2/3% in principal amount of the Outstanding
Securities of such series shall constitute a quorum. In the absence of a
quorum within 30 minutes after the time appointed for any such meeting, the
meeting shall, if convened at the request of Holders of Securities of such
series, be dissolved. In any other case the meeting may be adjourned for a
period of not less than 10 days as determined by the chairman of the meeting
prior to the adjournment of such meeting. In the absence of a quorum at any
such adjourned meeting, such adjourned meeting may be further adjourned for a
period of not less than 10 days as determined by the chairman of the meeting
prior to the adjournment of such adjourned meeting. Notice of the reconvening
of any adjourned meeting shall be given as provided in Section 1502(a), except
that such notice need be given only once not less than five days prior to the
date on which the meeting is scheduled to be reconvened. Notice of the
reconvening of an adjourned meeting shall state expressly the percentage, as
provided above, of the principal amount of the Outstanding Securities of such
series which shall constitute a quorum.
Except as limited by the proviso to Section 902, any
resolution presented to a meeting or adjourned meeting duly reconvened at which
a quorum is present as aforesaid may be adopted only by the affirmative vote of
the Holders of a majority in principal amount of the Outstanding Securities of
that series; provided, however, that, except as limited by the proviso to
Section 902, any resolution with respect to any consent or waiver which this
Indenture expressly provides may be given by the Holders of not less than
66-2/3% in principal amount of the Outstanding Securities of a series may be
adopted at a meeting or an adjourned meeting duly convened and at which a
quorum is present as aforesaid only by the affirmative vote of the Holders of
66-2/3% in principal amount of the Outstanding Securities of that series; and
provided, further, that, except as limited by the proviso to Section 902, any
resolution with respect to any
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request, demand, authorization, direction, notice, consent, waiver or other
action which this Indenture expressly provides may be made, given or taken by
the Holders of a specified percentage, which is less than a majority, in
principal amount of the Outstanding Securities of a series may be adopted at a
meeting or an adjourned meeting duly reconvened and at which a quorum is
present as aforesaid by the affirmative vote of the Holders of such specified
percentage in principal amount of the Outstanding Securities of such series.
Any resolution passed or decision taken at any meeting of
Holders of Securities of any series duly held in accordance with this Section
1504 shall be binding on all the Holders of Securities of such series and the
Coupons appertaining thereto, whether or not such Holders were present or
represented at the meeting.
Section 1505. Determination of Voting Rights; Conduct and
Adjournment of Meetings.
(a) Notwithstanding any other provisions of this
Indenture, the Trustee may make such reasonable regulations as it may deem
advisable for any meeting of Holders of Securities of such series in regard to
proof of the holding of Securities of such series and of the appointment of
proxies and in regard to the appointment and duties of inspectors of votes, the
submission and examination of proxies, certificates and other evidence of the
right to vote, and such other matters concerning the conduct of the meeting as
it shall deem appropriate. Except as otherwise permitted or required by any
such regulations, the holding of Securities shall be proved in the manner
specified in Section 104 and the appointment of any proxy shall be proved in
the manner specified in Section 104 or by having the signature of the person
executing the proxy witnessed or guaranteed by any trust company, bank or
banker authorized by Section 104 to certify to the holding of Bearer
Securities. Such regulations may provide that written instruments appointing
proxies, regular on their face, may be presumed valid and genuine without the
proof specified in Section 104 or other proof.
(b) The Trustee shall, by an instrument in writing,
appoint a temporary chairman of the meeting, unless the meeting shall have been
called by the Company or by Holders of Securities as provided in Section
1502(b), in which case the Company or the Holders of Securities of the series
calling the meeting, as the case may be, shall in like manner appoint a
temporary chairman. A permanent chairman and a permanent secretary of the
meeting shall be elected by vote of the Persons entitled to vote a majority in
principal amount of the Outstanding Securities of such series represented at
the meeting.
(c) At any meeting, each Holder of a Security of such
series or proxy
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shall be entitled to one vote for each $1,000 principal amount of Securities of
such series held or represented by him; provided, however, that no vote shall
be cast or counted at any meeting in respect of any Security challenged as not
Outstanding and ruled by the chairman of the meeting to be not Outstanding. The
chairman of the meeting shall have no right to vote, except as a Holder of a
Security of such series or proxy.
(d) Any meeting of Holders of Securities of any series
duly called pursuant to Section 1502 at which a quorum is present may be
adjourned from time to time by Persons entitled to vote a majority in principal
amount of the Outstanding Securities of such series represented at the meeting;
and the meeting may be held as so adjourned without further notice.
Section 1506. Counting Votes and Recording Action of
Meetings.
The vote upon any resolution submitted to any meeting of
Holders of Securities of any series shall be by written ballots on which shall
be subscribed the signatures of the Holders of Securities of such series or of
their representatives by proxy and the principal amounts and serial numbers of
the Outstanding Securities of such series held or represented by them. The
permanent chairman of the meeting shall appoint two inspectors of votes who
shall count all votes cast at the meeting for or against any resolution and who
shall make and file with the secretary of the meeting their verified written
reports in triplicate of all votes cast at the meeting. A record, at least in
triplicate, of the proceedings of each meeting of Holders of Securities of any
series shall be prepared by the secretary of the meeting and there shall be
attached to said record the original reports of the inspectors of votes on any
vote by ballot taken thereat and affidavits by one or more persons having
knowledge of the facts setting forth a copy of the notice of the meeting and
showing that said notice was given as provided in Section 1502 and, if
applicable, Section 1504. Each copy shall be signed and verified by the
affidavits of the permanent chairman and secretary of the meeting and one such
copy shall be delivered to the Company, and another to the Trustee to be
preserved by the Trustee, the latter to have attached thereto the ballots voted
at the meeting. Any record so signed and verified shall be conclusive evidence
of the matters therein stated.
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ARTICLE SIXTEEN
CONVERSION
Section 1601. Conversion Privilege.
Subject to and upon compliance with the provisions of this
Article Sixteen and the terms of the Convertible Securities of the series
proposed to be converted, at the option of the Holder, any Convertible Security
or any portion of the principal amount thereof which is $1,000 or an integral
multiple thereof, may be converted into shares of Common Stock, as said shares
shall be constituted at the Date of Conversion, at the Conversion Price for
such Convertible Securities of such series in effect at the Date of Conversion.
Section 1602. Manner of Exercise of Conversion Privilege.
In order to exercise the conversion privilege, the Holder of
any Convertible Security to be converted shall surrender such Convertible
Security to the Company at its office or agency in The City of New York,
together with the conversion notice in the form provided on the Securities (or
separate written notice) duly executed, and, if so required by the Company,
accompanied by instruments of transfer, in form satisfactory to the Company and
to the Trustee, duly executed by the Holder or by his duly authorized attorney
in writing. Any Registered Convertible Security so surrendered during the
period from the close of business on the Regular Record Date preceding an
Interest Payment Date for such Registered Convertible Security to the opening
of business on such Interest Payment Date shall (unless any such Registered
Convertible Security or the portion thereof being converted shall have been
called for redemption on a Redemption Date during such period, in which event
no interest shall be payable with respect to such Registered Convertible
Security or portion thereof, as the case may be, following such Redemption
Date) also be accompanied by payment in New York Clearing House funds or other
funds acceptable to the Company of an amount equal to the interest payable on
such Interest Payment Date on the principal amount of such Registered
Convertible Security then being converted; provided, however, that no such
payment need be made if there shall exist, at the time of conversion, a default
in the payment of interest on the Convertible Securities of such series.
Except as provided in the immediately preceding sentence, no adjustment shall
be made for interest accrued on any Convertible Security that shall be
converted or for dividends on any shares of Common Stock that shall be
delivered upon the conversion of such Convertible Securities. The funds so
delivered to such office or agency shall be paid to the Company on or after
such Interest Payment Date, unless the Company shall default in the payment of
the interest due on such Interest Payment Date, in which event such
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funds shall be repaid to the Person who delivered the same. As promptly as
practicable after the surrender of any Convertible Security for conversion as
aforesaid, the Company shall deliver at said office or agency to such Holder,
or on his written order, a certificate or certificates for the number of full
shares deliverable upon the conversion of such Convertible Security or portion
thereof and a check or cash in respect of any fraction of a share of Common
Stock otherwise deliverable upon such conversion, all as provided in this
Article Sixteen, together with a Convertible Security or Convertible Securities
of the same series in principal amount equal to the unconverted and unredeemed
portion, if any, of the Convertible Security so converted in accordance with
Section 305 hereof. Such conversion shall be deemed to have been effected on
the date on which such notice shall have been received at said office or agency
and such Convertible Security shall have been surrendered as aforesaid, and the
Person or Persons in whose name or names any certificate or certificates, for
shares of Common Stock shall be deliverable upon such conversion shall be
deemed to have become on said date the Holder or Holders of record of the
shares represented thereby, provided, however, that any such surrender on any
date when the stock transfer books of the Company shall be closed shall
constitute the Person or Persons in whose name or names the certificates are to
be delivered as the record Holder or Holders thereof for all purposes on the
next succeeding day on which such stock transfer books are open, but such
conversion shall be at the Conversion Price in effect on the date of such
surrender.
Section 1603. Cash Adjustment Upon Conversion.
The Company shall not be required to deliver fractions of
shares of Common Stock upon conversions of Convertible Securities. If more
than one Convertible Security shall be surrendered for conversion at one time
by the same Holder, the number of full shares which shall be deliverable upon
conversion thereof shall be computed on the basis of the aggregate principal
amount of the Securities so surrendered. If any fractional interest in a share
of Common Stock would be deliverable upon the conversion of any Convertible
Security or Securities, the Company shall make an adjustment therefor in cash
equal to the current market value of such fractional interest computed to the
nearest cent either on the basis of the last reported sale price regular way of
the Common Stock on the New York Exchange (or, if not listed on the New York
Exchange, then on such other exchange on which the shares of Common Stock are
listed as the Company may designate) on the last Business Day prior to the Date
of Conversion or, if there shall not have been a sale on such last Business
Day, on the basis of the average of the bid and asked quotations therefor on
such exchange on such last Business Day or, if the Common Stock shall not then
be listed on any exchange, at the highest bid quotation in the over-the-counter
market on such last Business Day as reported by the National Association of
Securities Dealers through
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NASDAQ, its automated system for reporting quotes, or its successor or such
other generally accepted source of publicly reported bid and asked quotations
as the Company may reasonably designate.
Section 1604. Conversion Price.
The Conversion Price applicable to any series of Convertible
Securities shall be the initial Conversion Price set forth on the Officers'
Certificate or supplemental indenture establishing such series adjusted as
provided in this Article Sixteen.
Section 1605. Adjustment of Conversion Price.
The Conversion Price applicable to any series of Convertible
Securities shall be adjusted from time to time as follows:
(a) In case the Company shall, at any time or
from time to time while the Securities of any series are Outstanding,
(i) pay a dividend on its Common Stock in shares of Common Stock, (ii)
subdivide its outstanding shares of Common Stock into a larger number
of shares, or (iii) combine its outstanding Common Stock into a
smaller number of shares, the Conversion Price for such series in
effect immediately prior thereto shall be adjusted so that the Holder
of any Security of such series thereafter surrendered for conversion
shall be entitled to receive the number of shares of Common Stock or
other securities of the Company which he would have owned or have been
entitled to receive after the happening of any of the events described
above, had such Convertible Security of such series been converted
immediately prior to the happening of such event. An adjustment made
pursuant to this subdivision (a) shall become effective, in the case
of a dividend, on the payment date retroactively to immediately after
the opening of business on the day following the record date for the
determination of stockholders entitled to receive such dividend,
subject to the provisions of paragraph (g) of this Section 1605, and
shall become effective in the case of a subdivision or combination
immediately after the opening of business on the day following the day
when such subdivision or combination, as the case may be, becomes
effective.
(b) In case the Company shall, at any time or
from time to time while the Convertible Securities of any series are
Outstanding, issue rights or warrants to all holders of its shares of
Common Stock entitling them (for a period expiring within 45 days of
the record date mentioned below) to subscribe for or purchase shares
of Common Stock at a price per share less than the current market
price per share of Common Stock (as defined in paragraph (d) below) at
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such record date, the Conversion Price of any series of Convertible
Securities in effect immediately prior to the issuance of such rights
or warrants shall be adjusted as follows: the number of shares of
Common Stock into which $1,000 principal amount of Convertible
Securities of such series was theretofore convertible shall be
multiplied by a fraction, of which the numerator shall be the number
of shares of Common Stock outstanding immediately prior to such record
date plus the number of additional shares of Common Stock offered for
subscription or purchase, and of which the denominator shall be the
number of shares of Common Stock outstanding immediately prior to such
record date plus the number of shares which the aggregate offering
price of the total number of shares so offered would purchase at such
current market price; and the Conversion Price for such series of
Convertible Securities shall be adjusted by dividing $1,000 by the new
number of shares into which $1,000 principal amount of Securities of
such series shall be convertible as aforesaid. Such adjustment shall
become effective on the date of such issuance retroactively to
immediately after the opening of business on the day following the
record date for the determination of shareholders entitled to receive
such rights or warrants, subject to the provisions of paragraph (g) of
this Section 1605. In determining whether any rights or warrants
entitle the holders to subscribe for or purchase shares of Common
Stock at less than such current market price, and in determining the
aggregate offering price of such shares, there shall be taken into
account any consideration received by the Company for such rights or
warrants, the value of such consideration, if other than cash, to be
determined by the Board of Directors.
(c) In case the Company shall, at any time from
time to time while the Convertible Securities of any series are
Outstanding, distribute to all holders of shares of its Common Stock
evidences of its indebtedness or securities or assets (excluding cash
dividends or cash distributions payable out of consolidated net
earnings or retained earnings) or rights or warrants to subscribe for
shares of Common Stock at a price per share less than the current
market price per share of Common Stock, determined in the manner set
forth in paragraph (d) below, but excluding rights or warrants
referred to in paragraph (b) above, the Conversion Price for such
series of Convertible Securities in effect immediately prior to such
distribution shall be adjusted by multiplying the number of shares of
Common Stock into which $1,000 principal amount of Convertible
Securities of such series of Convertible Securities was theretofore
convertible by a fraction, of which the numerator shall be the current
market price per share of Common Stock (as defined in paragraph (d)
below) on the record date for such distribution, and of which the
denominator shall be such current market price per share of the Common
Stock, less the then fair market value (as determined by
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the Board of Directors of the Company, whose determination shall be
conclusive) of the portion of such evidences of indebtedness,
securities or assets or of such subscription rights or warrants so
distributed applicable to one share of Common Stock; and the
Conversion Price for such series of Convertible Securities shall be
adjusted by dividing $1,000 by the new number of shares into which
$1,000 principal amount of Convertible Securities of such series shall
be convertible as aforesaid. Such adjustment shall become effective
on the date of such distribution retroactively to immediately after
the opening of business on the day following the record date for the
determination of shareholders entitled to receive such distribution,
subject to the provisions of paragraph (g) of this Section 1605. For
the purposes of this paragraph (c) consolidated net earnings or
retained earnings shall be computed by adding thereto all charges
against retained earnings on account of dividends paid in shares of
Common Stock in respect of which the Conversion Price has been
adjusted, all as determined by Independent Public Accountants, whose
determination shall be conclusive.
(d) For the purpose of any computation under
paragraphs (b) and (c) above, the current market price per share of
Common Stock at any date shall be deemed to be the average of the
market values of the shares of Common Stock for the ten consecutive
Business Days immediately preceding the day in question. The market
value of the Common Stock for each day shall be determined as provided
in Section 1603 hereof.
(e) The Company may make such reductions in the
Conversion Price for any series of Convertible Securities, in addition
to those required by paragraphs (a), (b) and (c) of this Section as it
considers to be advisable in order that any event treated for Federal
income tax purposes as a dividend of stock or stock rights shall not
be taxable to the recipients.
(f) Except as herein otherwise provided, no
adjustment in the Conversion Price for any series of Convertible
Securities shall be made by reason of the issuance, in exchange for
cash, property or services, of shares of Common Stock or any
securities convertible into or exchangeable for shares of Common Stock
or carrying the right to purchase any of the foregoing.
(g) If the Company shall take a record of the
holders of its shares of Common Stock for the purpose of entitling
them to receive any dividend or any subscription or purchase rights or
any distribution and shall, thereafter and before the distribution to
shareholders of any such dividend, subscription or purchase rights or
distribution, legally abandon its plan to pay or deliver such
dividend, subscription or purchase rights or distribution, then no
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adjustment of the Conversion Price for any series of Convertible
Securities shall be required by reason of the taking of such record.
(h) No adjustment in the Conversion Price for any
series of Convertible Securities shall be required unless such
adjustment would require an increase or decrease of at least 1% in
such price; provided, however, that any adjustments which by reason of
this paragraph (h) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. All
calculations under this Article Seventeen shall be made to the nearest
cent or to the nearest one-hundredth of a share, as the case may be.
(i) Whenever the Conversion Price for any series
of Convertible Securities is adjusted as herein provided, the Company
shall (i) forthwith place on file at the Principal Office of the
Trustee an Officers' Certificate showing in detail the facts requiring
such adjustment and the Conversion Price after such adjustment and
shall exhibit the same from time to time to any Holder of Convertible
Securities of such series desiring an inspection thereof, and (ii)
cause a notice stating that such adjustment has been effected and the
adjusted Conversion Price to be mailed to the Holders of Registered
Convertible Securities of such series at their last addresses as they
shall appear on the Security Register.
(j) The Company may delete, modify or vary any of
the provisions applicable to conversion of the Convertible Securities
of any series, or may add new provisions applicable thereto, all as
may be contained in the Board Resolutions and Officers' Certificate or
supplemental indenture establishing such series.
Section 1606. Effect of Reclassifications,Consolidations,
Mergers or Sales on Conversion Privilege.
In case of any reclassification or change of outstanding
shares of the class of Common Stock issuable upon conversion of the Convertible
Securities (other than a change in par value, or from par value to no par
value, or from no par value to par value, or as a result of a subdivision or
combination), or in case of any merger or consolidation of the Company with one
or more other corporations (other than a merger or consolidation in which the
Company is the continuing corporation and which does not result in any
reclassification or change of outstanding shares of Common Stock issuable upon
conversion of the Securities), or in case of the merger of the Company into
another corporation, or in case of any sale or conveyance to another
corporation of the property of the Company as an entirety or substantially as
an entirety, the Holders
94
104
of Convertible Securities of each series then Outstanding shall have the right
to convert such Convertible Securities into the kind and amount of shares of
capital stock or other securities and property, including cash, receivable upon
such reclassifications change, consolidation, merger, sale or conveyance by a
holder of the number of shares of Common Stock into which such Convertible
Securities might have been converted immediately prior to such
reclassification, change, consolidation, merger, sale or conveyance. In any
such case the Company, or such successor or purchasing corporation, as the case
may be, shall execute with the Trustee one or more supplemental indentures
(which shall conform to the Trust Indenture Act of 1939 as in force at the date
of the execution of such supplemental indenture) containing provisions to the
effect set forth above in this Section 1606 and providing further for
adjustments which shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Article Sixteen; and any such adjustment which
shall be approved by the Board of Directors and set forth in such supplemental
indenture or supplemental indentures shall be conclusive for all purposes of
this Section, and the Trustee shall not be under any responsibility to
determine the correctness of any provision contained in such supplemental
indenture or supplemental indentures relating to either the kind or amount of
shares of stock or securities or property receivable by Holders of Securities
of any series upon the conversion of their Convertible Securities after any
such reclassification, change, consolidation, merger, sale or conveyance.
The above provisions of this Section 1606 shall similarly
apply to successive reclassifications, changes, consolidations, mergers, sales
and conveyances.
Section 1607. Taxes on Conversions.
The issue of stock certificates on conversions of Convertible
Securities shall be made without charge to the converting Holder of Convertible
Securities for any tax in respect of the issue thereof. The Company shall not,
however, be required to pay any tax which may be payable in respect of any
transfer involved in the issue and delivery of shares in any name other than
that of the Holder of any Registered Convertible Security converted, and the
Company shall not be required to issue or deliver any such stock certificate
unless and until the Person or Persons requesting the issue thereof shall have
paid to the Company the amount of such tax or shall have established to the
satisfaction of the Company that such tax has been paid.
Section 1608. Company to Reserve Common Stock.
The Company shall at all times reserve and keep available out
of the aggregate of its authorized but unissued shares or its issued shares
held in its treasury,
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105
or both, for the purpose of effecting the conversion of the Securities, such
number of its duly authorized shares of Common Stock as shall from time to time
be sufficient to effect the conversion of all Outstanding Securities.
If any shares of Common Stock reserved or to be reserved for
the purpose of conversion of Securities hereunder require registration with or
approval of any governmental authority under any Federal or State law before
such shares may be validly delivered upon conversion, then the Company
covenants that it will in good faith and as expeditiously as possible endeavor
to secure registration or approval, as the case may be.
The Company covenants that all shares of Common Stock which
may be delivered upon conversion of Convertible Securities shall upon delivery
be fully paid and nonassessable by the Company and free from all taxes, liens
and charges with respect to the issue or delivery thereof.
Section 1609. Disclaimer by Trustee of Responsibility for
Certain Matters.
Neither the Trustee nor any conversion agent shall at any time
be under any duty or responsibility to any Holder of Convertible Securities of
any series to determine whether any facts exist which may require any
adjustment of the Conversion Price for such series, or with respect to the
nature or extent of any such adjustment when made, or with respect to the
method employed, or herein or in any supplemental indenture provided to be
employed, in making the same, subject, however, to the provisions of Sections
315(a) through 315(b) of the Trust Indenture Act. Neither the Trustee nor any
conversion agent shall be accountable with respect to the validity or value (or
the kind or amount) of any shares of Common Stock, or of any securities or
property which may at any time be issued or delivered upon the conversion of
any Convertible Security; and neither of them makes any representation with
respect thereto. Neither the Trustee nor any conversion agent shall be
responsible for any failure of the Company to make any cash payment or to
issue, transfer or deliver any shares of Common Stock or stock certificates or
other securities or property upon the surrender of any Security for the purpose
of conversion or, subject to Sections 315(a) through 315(b) of the Trust
Indenture Act, to comply with any of the covenants of the Company contained in
this Article Sixteen.
Section 1610. Company to Give Notice of Certain Events.
In the event
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(A) that the Company shall pay any dividend or
make any distribution to the holders of shares of Common Stock
otherwise than in cash charged against consolidated net
earnings or retained earnings of the Company and its
consolidated subsidiaries or in Common Stock; or
(B) that the Company shall offer for subscription
or purchase, pro rata, to the holders of shares of Common
Stock any additional shares of stock of any class or any
securities convertible into or exchangeable for stock of any
class; or
(C) of any reclassification or change of
outstanding shares of the class of Common Stock issuable upon
the conversion of the Securities (other than a change in par
value, or from par value to no par value, or from no par value
to par value, or as a result of a subdivision or combination),
or of any merger or consolidation of the Company with, or
merger of the Company into, another corporation (other than a
merger or consolidation in which the Company is the continuing
corporation and which does not result in reclassification or
change of outstanding shares of Common Stock issuable upon
conversion of the Securities), or of any sale or conveyance to
another corporation of the property of the Company as an
entirety or substantially as an entirety;
then, and in any one or more of such events, the Company will give to the
Trustee and each conversion agent written notice thereof at least fifteen days
prior to (i) the record date fixed with respect to any of the events specified
in (A) and (B) above, and (ii) the effective date of any of the events
specified in (C) above; and shall mail in the case of Registered Securities,
promptly a copy of such notice to the Holders thereof at their last addresses
as they shall appear upon the Security Register or, in the case of Bearer
Securities, cause such notice to be published in an Authorized Newspaper.
Failure to give such notice, or any defect therein, shall not affect the
legality or validity of such dividend, distribution, reclassification,
consolidation, merger, sale, transfer, dissolution, liquidation or winding up.
ARTICLE SEVENTEEN
IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS
Section 1701. Indenture and Securities Solely Corporate
Obligations.
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107
No recourse for the payment of the principal of or premium, if
any, or interest or Additional Amounts on any Security, or for any claim based
thereon or otherwise in respect thereof, and no recourse under or upon any
obligation, covenant or agreement of the Company in this Indenture or in any
supplemental indenture or, in any Security, or because of the creation of any
indebtedness represented thereby, shall be had against any incorporator,
stockholder, officer or director, as such, past, present or future, of the
Company or of any successor corporation, either directly or through the Company
or any successor corporation, whether by virtue of any constitution, statute or
rule of law, or by the enforcement of any assessment or penalty or otherwise;
it being expressly understood that all such liability is hereby expressly
waived and released as a condition of, and as a consideration for, the
execution of this Indenture and the issuance of the Securities.
* * * * *
This instrument may be executed in any number of counterparts,
each of which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed, and their respective corporate seals to be
hereunto affixed, all as of the day and year first above written.
[SEAL] Capital One Financial Corporation
Attest:
-------------------------------
By
--------------------------
Name:
Title:
[SEAL] , as
-----------------------------
Trustee
Attest:
-------------------------------
By
--------------------------
Name:
Title:
99
109
STATE OF __________ )
SS.:
COUNTY OF __________ )
On the _____ day of ________________, 1996, before me
personally came _______________, to me known, who, being by me duly sworn, did
depose and say that he is a _____________ of Capital One Financial Corporation,
a Delaware corporation, one of the persons described in and who executed the
foregoing instrument; that he knows the seal of said Corporation; that the seal
affixed to said instrument is such Corporation's seal; that it was so affixed
by authority of the Board of Directors of said Corporation; and that he signed
his name thereto by like authority.
--------------------------------
Notary Public
[NOTARIAL SEAL]
100
110
STATE OF ____________ )
SS.:
COUNTY OF __________ )
On the _____ day of ________________, 199, before me
personally came _______________, to me known, who, being by me duly sworn, did
depose and say that he is a _____________ of
____________________________________, a national banking association organized
and existing under the laws of the United States, one of the persons described
in and who executed the foregoing instrument; that he knows the seal of said
Corporation; that the seal affixed to said instrument is such Corporation's
seal; that it was so affixed by authority of the Board of Directors of said
Corporation; and that he signed his name thereto by like authority.
-----------------------------------
Notary Public
[NOTARIAL SEAL]
101
1
EXHIBIT 4.2
================================================================================
Capital One Financial Corporation,
Issuer
to
Trustee
-----------------------------
SUBORDINATED INDENTURE
Dated as of , 1996
Subordinated Debt Securities
================================================================================
2
Reconciliation and tie between
Trust Indenture Act of 1939 (the "Trust Indenture Act")
and Indenture
Trust Indenture
Act Section Indenture Section
Section 310(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 606
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 606
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 607
Section 312(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 701
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 702
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 702
Section 313(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 703
(b)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 703
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 703
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 703
Section 314(a)(1)-(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 704
(a)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101, 1009
(c)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
(c)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
Section 315(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 601
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 501
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 601
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 601
Section 316(a)(last sentence) . . . . . . . . . . . . . . . . . . . . . . . . . 101
(a)(1)(A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 502, 512
(a)(1)(B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 513
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 508
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
Section 317(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 503
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 504
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1003
Section 318(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
- -----------------
Note: This reconciliation and tie shall not, for any purpose, be deemed to
be part of the Indenture.
Attention should also be directed to Section 318(c) of the Trust
Indenture Act, which provides that the provisions of Sections 310 to
and including 317 are a part of and govern every qualified indenture,
whether or not physically contained herein.
3
TABLE OF CONTENTS
Recitals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 101. Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Additional Amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Authenticating Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Authorized Newspaper . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Bearer Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Board Resolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Business Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Company Request and Company Order . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Consolidated Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Controlled Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Conversion Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Convertible Security or Convertible Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Corporate Trust Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Coupon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Currency or Money . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Currency Indexed Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Date of Conversion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Defaulted Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Depository or U.S. Depository . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Dollars or $ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Government Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Holder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Independent Public Accountants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
i
4
Indexed Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Interest Payment Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Legal Holiday . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Maturity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Office or Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Officers' Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Original Issue Discount Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Place of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Predecessor Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Redemption Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Redemption Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Registered Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Regular Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Responsible Officer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Security or Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Security Register and Security Registrar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Senior Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Special Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Stated Maturity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
United States Alien . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Voting Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 102. Compliance Certificates and Opinions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 103. Form of Documents Delivered to Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 104. Acts of Holders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 105. Notices, etc. to Trustee and Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 106. Notice to Holders of Securities; Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 107. Language of Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 108. Conflict with Trust Indenture Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 109. Effect of Headings and Table of Contents. . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 110. Successors and Assigns. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 111. Separability Clause. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 112. Benefits of Indenture. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ii
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Section 113. Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 114. Legal Holidays . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE TWO
SECURITIES FORMS
Section 201. Forms Generally. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 202. Form of Trustee's Certificate of Authentication. . . . . . . . . . . . . . . . . . . . . . . 19
Section 203. Securities in Global Form. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE THREE
THE SECURITIES
Section 301. Amount Unlimited; Issuable in Series. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 302. Currency; Denominations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 303. Execution, Authentication, Delivery and Dating. . . . . . . . . . . . . . . . . . . . . . . . 25
Section 304. Temporary Securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 305. Registration, Transfer and Exchange. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 306. Mutilated, Destroyed, Lost and Stolen Securities. . . . . . . . . . . . . . . . . . . . . . . 32
Section 307. Payment of Interest and Certain Additional Amounts; Rights to Interest and Certain Additional
Amounts Preserved. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 308. Persons Deemed Owners. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 309. Cancellation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 310. Computation of Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE FOUR
SATISFACTION AND DISCHARGE
Section 401. Satisfaction and Discharge of Indenture. . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 402. Satisfaction, Discharge and Defeasance of Securities of any Series. . . . . . . . . . . . . . 39
Section 403. Application of Trust Money. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
ARTICLE FIVE
REMEDIES
Section 501. Events of Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
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Section 502. Acceleration of Maturity; Rescission and Annulment. . . . . . . . . . . . . . . . . . . . . . 45
Section 503. Collection of Indebtedness and Suits for Enforcement by Trustee. . . . . . . . . . . . . . . 46
Section 504. Trustee May File Proofs of Claim. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 505. Trustee May Enforce Claims without Possession of Securities or Coupons. . . . . . . . . . . . 48
Section 506. Application of Money Collected. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 507. Limitations on Suits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 508. Unconditional Right of Holders to Receive Principal and any Premium, Interest and Additional
amounts and to Convert any Convertible Security. . . . . . . . . . . . . . . . . . . . . . . 50
Section 509. Restoration of Rights and Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 510. Rights and Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 511. Delay or Omission Not Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 512. Control by Holders of Securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 513. Waiver of Past Defaults. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 514. Waiver of Stay or Extension Laws. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
ARTICLE SIX
THE TRUSTEE
Section 601. Certain Rights of Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 602. Not Responsible for Recitals or Issuance of Securities. . . . . . . . . . . . . . . . . . . . 53
Section 603. May Hold Securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 604. Money Held in Trust. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 605. Compensation and Reimbursement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 606. Corporate Trustee Required; Eligibility. . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 607. Resignation and Removal; Appointment of Successor. . . . . . . . . . . . . . . . . . . . . . 55
Section 608. Acceptance of Appointment by Successor. . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 609. Merger, Conversion, Consolidation or Succession to Business. . . . . . . . . . . . . . . . . 59
Section 610. Appointment of Authenticating Agent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
ARTICLE SEVEN
HOLDER'S LISTS AND REPORTS BY TRUSTEE, AND COMPANY
Section 701. Company to Furnish Trustee Names and Addresses of Holders. . . . . . . . . . . . . . . . . . 61
Section 702. Preservation of Information; Communications to Holders. . . . . . . . . . . . . . . . . . . . 62
Section 703. Reports by Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
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Section 704. Reports by Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .63
ARTICLE EIGHT
CONSOLIDATION, MERGER AND SALES
Section 801. Company May Consolidate, Etc., Only on Certain Terms. . . . . . . . . . . . . . . . . . . . .64
Section 802. Successor Person Substituted for Company. . . . . . . . . . . . . . . . . . . . . . . . . . .65
ARTICLE NINE
SUPPLEMENTAL INDENTURES
Section 901. Supplemental Indentures without Consent of Holders. . . . . . . . . . . . . . . . . . . . . .65
Section 902. Supplemental Indentures with Consent of Holders. . . . . . . . . . . . . . . . . . . . . . .67
Section 903. Execution of Supplemental Indentures. . . . . . . . . . . . . . . . . . . . . . . . . . . . .68
Section 904. Effect of Supplemental Indentures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .68
Section 905. Reference in Securities to Supplemental Indentures. . . . . . . . . . . . . . . . . . . . . .69
Section 906. Subordination Unimpaired. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .69
Section 907. Conformity with Trust Indenture Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . .69
ARTICLE TEN
COVENANTS
Section 1001. Payment of Principal and any Premium, Interest and Additional Amounts. . . . . . . . . . . .69
Section 1002. Maintenance of Office or Agency. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .70
Section 1003. Money for Securities Payments to Be Held in Trust. . . . . . . . . . . . . . . . . . . . . .71
Section 1004. Additional Amounts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .73
Section 1005. Limitation Upon Disposition of Voting Stock of Significant Subsidiaries. . . . . . . . . . .74
Section 1006. Limitation on Creation of Liens. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .75
Section 1007. Corporate Existence. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .75
Section 1008. Waiver of Certain Covenants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .75
Section 1009. Company Statement as to Compliance; Notice of Certain Defaults. . . . . . . . . . . . . . . .76
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ARTICLE ELEVEN
REDEMPTION OF SECURITIES
Section 1101. Applicability of Article. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .76
Section 1102. Election to Redeem; Notice to Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . .77
Section 1103. Selection by Trustee of Securities to be Redeemed. . . . . . . . . . . . . . . . . . . . . .77
Section 1104. Notice of Redemption. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .78
Section 1105. Deposit of Redemption Price. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .79
Section 1106. Securities Payable on Redemption Date. . . . . . . . . . . . . . . . . . . . . . . . . . . .80
Section 1107. Securities Redeemed in Part. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .81
Section 1108. Conversion Arrangements on Call for Redemption. . . . . . . . . . . . . . . . . . . . . . . .81
ARTICLE TWELVE
SINKING FUNDS
Section 1201. Applicability of Article. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .82
Section 1202. Satisfaction of Sinking Fund Payments with Securities. . . . . . . . . . . . . . . . . . . .82
Section 1203. Redemption of Securities for Sinking Fund. . . . . . . . . . . . . . . . . . . . . . . . . .83
ARTICLE THIRTEEN
REPAYMENT AT THE OPTION OF HOLDERS
Section 1301. Applicability of Article. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .84
ARTICLE FOURTEEN
SECURITIES IN FOREIGN CURRENCIES
Section 1401. Applicability of Article. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .84
ARTICLE FIFTEEN
MEETINGS OF HOLDERS OF SECURITIES
Section 1501. Purposes for Which Meetings May Be Called. . . . . . . . . . . . . . . . . . . . . . . . . .85
Section 1502. Call, Notice and Place of Meetings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .85
Section 1503. Persons Entitled to Vote at Meetings. . . . . . . . . . . . . . . . . . . . . . . . . . . . .86
Section 1504. Quorum; Action. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .86
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Section 1505. Determination of Voting Rights; Conduct and Adjournment of Meetings. . . . . . . . . . . . . 87
Section 1506. Counting Votes and Recording Action of Meetings. . . . . . . . . . . . . . . . . . . . . . . 88
ARTICLE SIXTEEN
SUBORDINATION
Section 1601. Securities Subordinated to Senior Indebtedness . . . . . . . . . . . . . . . . . . . . . . . 89
Section 1602. Subrogation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
Section 1603. Provisions Solely to Define Relative Rights. . . . . . . . . . . . . . . . . . . . . . . . . 92
Section 1604. Payments on Securities Permitted if No Default. . . . . . . . . . . . . . . . . . . . . . . . 93
Section 1605. Effectuation of Subordination By Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . 93
Section 1606. Knowledge of Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
Section 1607. Trustee's Relation to Senior Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . . . 94
Section 1608. Rights of Holders of Senior Indebtedness Not Impaired. . . . . . . . . . . . . . . . . . . . 94
ARTICLE SEVENTEEN
CONVERSION
Section 1701. Conversion Privilege . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
Section 1702. Manner of Exercise of Conversion Privilege . . . . . . . . . . . . . . . . . . . . . . . . . 95
Section 1703. Cash Adjustment Upon Conversion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
Section 1704. Conversion Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
Section 1705. Adjustment of Conversion Price. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
Section 1706. Effect of Reclassifications, Consolidations, Mergers or Sales on Conversion Privilege. . . .100
Section 1707. Taxes on Conversions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .101
Section 1708. Company to Reserve Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .102
Section 1709. Disclaimer by Trustee of Responsibility for Certain Matters. . . . . . . . . . . . . . . . .102
ARTICLE EIGHTEEN
IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS
Section 1801. Indenture and Securities Solely Corporate Obligations. . . . . . . . . . . . . . . . . . . .104
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SUBORDINATED INDENTURE, dated as of _______________ (the
"Indenture"), between Capital One Financial Corporation, a corporation duly
organized and existing under the laws of the State of Delaware (hereinafter
called the "Company"), having its corporate office located at 2980 Fairview
Park Drive, Falls Church, Virginia 22042, and _______________, a national
banking association duly organized and existing under the laws of the United
States (hereinafter called the "Trustee"), having its Corporate Trust Office
located at ________________________.
RECITALS
The Company has duly authorized the execution and delivery of
this Indenture to provide for the issuance from time to time of its unsecured
subordinated debentures, notes or other evidences of indebtedness (hereinafter
called the "Securities"), unlimited as to principal amount, to bear such rates
of interest, to mature at such time or times, to be issued in one or more
series and to have such other provisions as shall be fixed as hereinafter
provided.
The Company has duly authorized the execution and delivery of
this Indenture. All things necessary to make this Indenture a valid agreement
of the Company, in accordance with its terms, have been done.
This Indenture is subject to the provisions of the Trust
Indenture Act of 1939, as amended, and the rules and regulations of the
Securities and Exchange Commission promulgated thereunder that are required to
be part of this Indenture and, to the extent applicable, shall be governed by
such provisions.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of
the Securities by the Holders thereof, it is mutually covenanted and agreed,
for the equal and proportionate benefit of all Holders of the Securities and
any Coupons (as hereinafter defined) as follows:
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ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 101. Definitions.
Except as otherwise expressly provided in or pursuant to this
Indenture or unless the context otherwise requires, for all purposes of this
Indenture:
(1) the terms defined in this Article have the
meanings assigned to them in this Article, and include the plural as
well as the singular;
(2) all other terms used herein which are defined in
the Trust Indenture Act, either directly or by reference therein, have
the meanings assigned to them therein;
(3) all accounting terms not otherwise defined
herein have the meanings assigned to them in accordance with generally
accepted accounting principles and, except as otherwise herein
expressly provided, the term "generally accepted accounting
principles" with respect to any computation required or permitted
hereunder shall mean such accounting principles as are generally
accepted at the date of such computation; and
(4) the words "herein", "hereof", "hereto" and
"hereunder" and other words of similar import refer to this Indenture
as a whole and not to any particular Article, Section or other
subdivision.
Certain terms used principally in certain Articles hereof are
defined in those Articles.
"Act", when used with respect to any Holders, has the meaning
specified in Section 104.
"Additional Amounts" means any additional amounts which are
required hereby or by any Security, under circumstances specified herein or
therein, to be paid by the Company in respect of certain taxes imposed on
Holders specified therein and which are owing to such Holders.
"Affiliate" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with
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such specified Person. For the purposes of this definition, "control", when
used with respect to any specified Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have the meanings correlative to the foregoing.
"Authenticating Agent" means any Person authorized by the
Trustee pursuant to Section 610 to act on behalf of the Trustee to authenticate
Securities of one or more series.
"Authorized Newspaper" means a newspaper, in an official
language of the place of publication or in the English language, customarily
published on each day that is a Business Day in the place of publication,
whether or not published on days that are Legal Holidays in the place of
publication, and of general circulation in each place in connection with which
the term is used or in the financial community of each such place. Where
successive publications are required to be made in Authorized Newspapers, the
successive publications may be made in the same or in different newspapers in
the same city meeting the foregoing requirements and in each case on any day
that is a Business Day in the place of publication.
"Bearer Security" means any Security in the form established
pursuant to Section 201 which is payable to bearer.
"Board of Directors" means the board of directors of the
Company or any committee of that board duly authorized to act generally or in
any particular respect for the Company hereunder.
"Board Resolution" means a copy of one or more resolutions,
certified by the Secretary or an Assistant Secretary of the Company to have
been duly adopted by the Board of Directors or any duly authorized committee
thereof and to be in full force and effect on the date of such certification,
delivered to the Trustee.
"Business Day", with respect to any Place of Payment or other
location, means each Monday, Tuesday, Wednesday, Thursday and Friday that is
not a Legal Holiday in such Place of Payment or other location.
"Commission" means the Securities and Exchange Commission, as
from time to time constituted, created under the Securities Exchange Act of
1934 or, if at any time after the execution of this Indenture such Commission
is not existing and performing the duties now assigned to it under the Trust
Indenture Act, then the body performing such duties at such time.
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"Common Stock" means all shares now or hereafter authorized of
any class of common stock of the Company presently authorized and stock of any
other class into which such shares may hereafter have been changed.
"Company" means the Person named as the "Company" in the first
paragraph of this instrument until a successor Person shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor Person, and any other obligor upon the
Securities.
"Company Request" and "Company Order" mean, respectively, a
written request or order, as the case may be, signed in the name of the Company
by the Chairman of the Board of Directors and Chief Executive Officer, a Vice
Chairman, the President and Chief Operating Officer, a Senior Vice President,
the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary,
of the Company, and delivered to the Trustee.
"Consolidated Assets" means all assets owned directly by the
Company or indirectly by the Company through any Subsidiary and reflected on
the Company's consolidated balance sheet prepared in accordance with generally
accepted accounting principles.
"Controlled Subsidiary" means each Significant Subsidiary if
at least 80% of the outstanding shares of its Voting Stock is at the time owned
by the Company or by one or more Controlled Subsidiaries of the Company or by
the Company and one or more Controlled Subsidiaries.
"Conversion Price" means the price per share of Common Stock
from time to time in effect at which any Convertible Security may be converted
into Common Stock as determined by or pursuant to the terms of this Indenture.
"Convertible Security" or "Convertible Securities" means any
Security or Securities, as the case may be, which are by their terms
convertible into Common Stock.
"Corporate Trust Office" means the principal office of the
Trustee at which at any particular time its corporate trust business shall be
administered, which office at the date of original execution of this Indenture
is located at the address specified in the first paragraph of this instrument.
"Corporation" includes corporations and, except for purposes
of Article Eight, associations, companies and business trusts.
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"Coupon" means any interest coupon appertaining to a Bearer
Security.
"Currency" or "Money", with respect to any payment, deposit or
other transfer in respect of the principal of or any premium or interest on or
any Additional Amounts with respect to any Security, means the unit or units of
legal tender for the payment of public and private debts (or any composite
thereof) in which such payment, deposit or other transfer is required to be
made by or pursuant to the terms hereof and, with respect to any other payment,
deposit or transfer pursuant to or contemplated by the terms hereof, means
Dollars.
"Currency Indexed Note" means any Security with the amount of
principal payments determined by reference to an index Currency.
"Date of Conversion" with respect to any Convertible Security
or portion thereof to be converted, means the date on which such Convertible
Security shall be surrendered for conversion and notice given in accordance
with the provisions of Article Seventeen.
"Defaulted Interest" has the meaning specified in Section 307.
"Depository" or "U.S. Depository" means, with respect to any
Security issuable or issued in the form of one or more global Securities, the
Person designated as Depository or US. Depository by the Company in or pursuant
to this Indenture, which Person must be, to the extent required by applicable
law or regulation, a clearing agency registered under the Securities Exchange
Act of 1934, as amended, and, if so provided with respect to any Security, any
successor to such Person. If at any time there is more than one such Person,
"Depository" or "U.S. Depository" shall mean, with respect to any Securities,
the qualifying entity which has been appointed with respect to such Securities.
"Dollars" or "$" means a dollar or other equivalent unit of
legal tender for payment of public or private debts in the United States of
America.
"Event of Default" has the meaning specified in Section 501.
"Government Obligations", with respect to any Security, means
(i) direct obligations of the government or governments which issued the
Currency in which the principal of or any premium or interest on such Security
or any Additional Amounts in respect thereof shall be payable, in each case
where the payment or payments thereunder are supported by the full faith and
credit of such government or governments or (ii) obligations of a Person
controlled or supervised by and acting as an
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agency or instrumentality of such government or governments, in each case where
the payment or payments thereunder are unconditionally guaranteed as a full
faith and credit obligation by such government or governments, and which, in
the case of (i) or (ii), are not callable or redeemable at the option of the
issuer or issuers thereof, and shall also include a depository receipt issued
by a bank or trust company as custodian with respect to any such Government
Obligation or a specific payment of interest on or principal of or other amount
with respect to any such Government Obligation held by such custodian for the
account of the holder of a depository receipt, provided that (except as
required by law) such custodian is not authorized to make any deduction from
the amount payable to the holder of such depository receipt from any amount
received by the custodian in respect of the Government Obligation or the
specific payment of interest on or principal of or other amount with respect to
the Government Obligation evidenced by such depository receipt.
"Holder", in the case of any Registered Security, means the
Person in whose name such Security is registered in the Security Register and,
in the case of any Bearer Security, means the bearer thereof and, in the case
of any Coupon, means the bearer thereof.
"Indenture" means this instrument as it may from time to time
be supplemented or amended by one or more indentures supplemental hereto
entered into pursuant to the applicable provisions hereof and, with respect to
any Security, by the terms and provisions of such Security and any Coupon
appertaining thereto established pursuant to Section 301 (as such terms and
provisions may be amended pursuant to the applicable provisions hereof).
"Independent Public Accountants" means accountants or a firm
of accountants that, with respect to the Company and any other obligor under
the Securities or the Coupons, are independent public accountants within the
meaning of the Securities Act of 1933, as amended, and the rules and
regulations promulgated by the Commission thereunder, who may be the
independent public accountants regularly retained by the Company or who may be
other independent public accountants. Such accountants or firm shall be
entitled to rely upon any Opinion of Counsel as to the interpretation of any
legal matters relating to the Indenture or certificates required to be provided
hereunder.
"Indexed Security" means a Security the terms of which provide
that the principal amount thereof payable at Stated Maturity and/or interest to
be paid thereon may be determined by reference to the exchange rate of one or
more specified currencies relative to an index or one or more equity or other
indices and/or formulae or the price of one or more specified commodities or by
such other methods or formulae
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as may be determined in accordance with this Indenture.
"Interest", with respect to any Original Issue Discount
Security which by its terms bears interest only after Maturity, means interest
payable after Maturity, and, when used with respect to a Security which
provides for payment of Additional Amounts pursuant to Section 1004, includes
such Additional Amounts.
"Interest Payment Date", with respect to any Security, means
the Stated Maturity of an installment of interest on such Security.
"Legal Holiday", with respect to any Place of Payment or other
location, means a Saturday, a Sunday or a day on which banking institutions or
trust companies in such Place of Payment or other location are not authorized
or obligated to be open.
"Maturity", with respect to any Security, means the date on
which the principal of such Security or an installment of principal becomes due
and payable as provided in or pursuant to this Indenture, whether at the Stated
Maturity or by declaration of acceleration, notice of redemption, notice of
option to elect repayment or otherwise, and includes Redemption Date.
"Office or Agency", with respect to any Securities, means an
office or agency of the Company maintained or designated in a Place of Payment
for such Securities pursuant to Section 1002 or any other office or agency of
the Company maintained or designated for such Securities pursuant to Section
1002 or, to the extent designated or required by Section 1002 in lieu of such
office or agency, the Corporate Trust Office of the Trustee.
"Officers' Certificate" means a certificate signed by the
Chairman of the Board and Chief Executive Officer, a Vice Chairman, the
President and Chief Operating Officer, any Senior Vice President, the
Treasurer, any Assistant Treasurer, the Secretary or an Assistant Secretary of
the Company, that complies with the requirements of Section 314(e) of the Trust
Indenture Act and is delivered to the Trustee.
"Opinion of Counsel" means a written opinion of counsel, who
may be an employee of or counsel for the Company or other counsel who shall be
reasonably acceptable to the Trustee, that complies with the requirements of
Section 314(e) of the Trust Indenture Act.
"Original Issue Discount Security" means a Security issued
pursuant to this Indenture which provides for declaration of an amount less
than the principal face
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amount thereof to be due and payable upon acceleration pursuant to Section 502.
"Outstanding", when used with respect to any Securities,
means, as of the date of determination, all such Securities theretofore
authenticated and delivered under this Indenture, except:
(i) any such Security theretofore cancelled by the Trustee or the
Security Registrar or delivered to the Trustee or the Security
Registrar for cancellation;
(ii) any such Security or portions thereof for whose payment at the
Maturity thereof money in the necessary amount has been
theretofore deposited pursuant hereto with the Trustee or any
Paying Agent (other than the Company) in trust or set aside
and segregated in trust by the Company (if the Company shall
act as its own Paying Agent) for the Holders of such
Securities and any Coupons appertaining thereto, provided
that, if such Securities are to be redeemed, notice of such
redemption has been duly given pursuant to this Indenture or
provision therefor satisfactory to the Trustee has been made;
(iii) any such Security with respect to which the Company has
effected defeasance pursuant to Section 402 hereof;
(iv) any such Security which has been paid pursuant to Section 306
or in exchange for or in lieu of which other Securities have
been authenticated and delivered pursuant to this Indenture,
unless there shall have been presented to the Trustee proof
satisfactory to it that such Security is held by a bona fide
purchaser in whose hands such Security is a valid obligation
of the Company; AND
(v) Convertible Securities converted into Common Stock in
accordance with Article Seventeen hereof;
provided, however, that in determining whether the Holders of the requisite
principal amount of Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder or are present at
a meeting of Holders of Securities for quorum purposes, (i) the principal
amount of an Original Issue Discount Security that may be counted in making
such determination and that shall be deemed to be Outstanding for such purposes
shall be equal to the amount of the principal thereof that pursuant to the
terms of such Original Issue Discount Security would be declared (or shall have
been declared to be) due and payable upon a declaration of
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acceleration thereof pursuant to Section 502 at the time of such determination,
(ii) the principal amount of any Indexed Security that may be counted in making
such determination and that shall be deemed outstanding for such purpose shall
be equal to the principal face amount of such Indexed Security at original
issuance, unless otherwise provided in or pursuant to this Indenture, (iii) the
principal amount of a Security denominated in one or more foreign currencies or
currency units shall be the U.S. dollar equivalent based on the applicable
exchange rate or rates at the time of sale (or in the case of an Original Issue
Discount Security, the U.S. dollar equivalent on the date of original issuance
of such Security of the amount determined in (ii); and (iv) Securities owned by
the Company or any other obligor upon the Securities or any Affiliate of the
Company or such other obligor, shall be disregarded and deemed not to be
Outstanding, except that, in determining whether the Trustee shall be protected
in making any such determination or relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Securities which a
Responsible Officer of the Trustee actually knows to be so owned shall be so
disregarded. Securities so owned which shall have been pledged in good faith
may be regarded as Outstanding if the pledgee establishes to the satisfaction
of the Trustee (A) the pledgee's right so to act with respect to such
Securities and (B) that the pledgee is not the Company or any other obligor
upon the Securities or any Coupons appertaining thereto or any Affiliate of the
Company or such other obligor.
"Paying Agent" means any Person authorized by the Company to
pay the principal of, or any premium or interest on, or any Additional Amounts
with respect to any Security or any Coupon on behalf of the Company.
"Person" means any individual, Corporation, partnership, joint
venture, joint-stock company, trust, unincorporated organization or government
or any agency or political subdivision thereof.
"Place of Payment", with respect to any Security, means the
place or places where the principal of, or any premium or interest on, or any
Additional Amounts with respect to such Security is payable as provided in or
pursuant to this Indenture.
"Predecessor Security" of any particular Security means every
previous Security evidencing all or a portion of the same debt as that
evidenced by such particular Security; and, for the purposes of this
definition, any Security authenticated and delivered under Section 306 in
exchange for or in lieu of a lost, destroyed, mutilated or stolen Security or
any Security to which a mutilated, destroyed, lost or stolen Coupon appertains
shall be deemed to evidence the same debt as the lost, destroyed, mutilated or
stolen Security or the Security to which a mutilated, destroyed, lost or stolen
Coupon appertains.
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"Redemption Date", with respect to any Security or portion
thereof to be redeemed, means the date fixed for such redemption by or pursuant
to this Indenture.
"Redemption Price", with respect to any Security or portion
thereof to be redeemed, means the price at which it is to be redeemed as
determined by or pursuant to this Indenture.
"Registered Security" means any Security established pursuant
to Section 201 which is registered in the Security Register.
"Regular Record Date" for the interest payable on any
Registered Security on any Interest Payment Date therefor means the date, if
any, specified in or pursuant to this Indenture as the "Regular Record Date".
"Responsible Officer" means an officer of the Trustee assigned
to the Corporate Trust Office, including any Vice President, any trust officer
or any other officer performing functions similar to those performed by the
persons who at the time shall be such officers, and any other officer of the
Trustee to whom a matter is referred because of his knowledge of and
familiarity with the particular subject.
"Security" or "Securities" means any Security or Securities,
as the case may be, authenticated and delivered under this Indenture; provided,
however, that, if at any time there is more than one Person acting as Trustee
under this Indenture, "Securities", with respect to any such Person, shall mean
Securities authenticated and delivered under this Indenture, exclusive,
however, of Securities of any series as to which such Person is not Trustee.
"Security Register" and "Security Registrar" have the
respective meanings specified in Section 305.
"Senior Indebtedness" means the principal of and premium if
any, and interest on the following, whether outstanding at the date hereof or
thereafter incurred or created:
(a) indebtedness of the Company for money borrowed
(including any indebtedness secured by a mortgage or other lien which
is (i) given to secure all or part of the purchase price of property
subject thereto, whether given to the vendor of such property or to
another or (ii) existing on property at the time of acquisition
thereof) evidenced by notes or other written obligations, except such
indebtedness as is by its terms expressly stated to be not superior in
right of payment to the Securities or to rank pari passu or is
identified in a Board
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Resolution or any indenture supplemental hereto as not superior in
right of payment or to rank pari passu with the Securities;
(b) indebtedness of the Company evidenced by notes,
debentures, bonds or other securities sold by the Company for money;
(c) indebtedness of others of the kinds described in
either of the preceding clauses (a) or (b) assumed by or guaranteed in
any manner by the Company or in effect guaranteed by the Company
through an agreement to purchase, contingent or otherwise; and
(d) renewals, extensions or refundings of indebtedness of
the kinds described in any of the preceding clauses (a), (b) and (c)
unless, in the case of any particular indebtedness, renewal, extension or
refunding, the instrument creating or evidencing the same or the assumption or
guarantee of the same expressly provides that such indebtedness, renewal,
extension or refunding is not superior in right of payment to the Securities.
"Significant Subsidiary" means any Subsidiary of the Company
the Consolidated Assets of which constitute 20% or more of the Company's
Consolidated Assets.
"Special Record Date" for the payment of any Defaulted
Interest on any Registered Security means a date fixed by the Trustee pursuant
to Section 307.
"Stated Maturity", with respect to any Security or any
installment of principal thereof or interest thereon or any Additional Amounts
with respect thereto, means the date established by or pursuant to this
Indenture as the fixed date on which the principal of such Security or such
installment of principal or interest is or such Additional Amounts are due and
payable.
"Subsidiary" means any Corporation of which at the time of
determination the Company or one or more Subsidiaries owns or controls directly
or indirectly more than 50% of the shares of Voting Stock.
"Trust Indenture Act" means the Trust Indenture Act of 1939,
as amended, and any reference herein to the Trust Indenture Act or a particular
provision thereof shall mean such Act or provision, as the case may be, as
amended or replaced from time to time or as supplemented from time to time by
rules or regulations adopted by the Commission under or in furtherance of the
purposes of such Act or provision, as
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the case may be.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this instrument until a successor Trustee shall have become such
with respect to one or more series of Securities pursuant to the applicable
provisions of this Indenture, and thereafter "Trustee" shall mean each Person
who is then a Trustee hereunder; provided, however, that if at any time there
is more than one such Person, "Trustee" shall mean each such Person and as used
with respect to the Securities of any series shall mean the Trustee with
respect to the Securities of such series.
"United States", except as otherwise provided herein or in any
Security, means the United States of America (including the states thereof and
the District of Columbia), its territories and possessions and other areas
subject to its jurisdiction.
"United States Alien", except as otherwise provided in or
pursuant to this Indenture, means any Person who, for United States Federal
income tax purposes, is a foreign corporation, a non-resident alien individual,
a non-resident alien fiduciary of a foreign estate or trust, or a foreign
partnership one or more of the members of which is, for United States Federal
income tax purposes, a foreign corporation, a non-resident alien individual or
a non-resident alien fiduciary of a foreign estate or trust.
"Vice President", when used with respect to the Company or the
Trustee, means any vice president, whether or not designated by a number or a
word or words added before or after the title "Vice President".
"Voting Stock" means stock of a Corporation of the class or
classes having general voting power under ordinary circumstances to elect at
least a majority of the board of directors, managers or trustees of such
Corporation provided that, for the purposes hereof, stock which carries only
the right to vote conditionally on the happening of an event shall not be
considered voting stock whether or not such event shall have happened.
Section 102. Compliance Certificates and Opinions.
Upon any application or request by the Company to the Trustee
to take any action under any provision of this Indenture, the Company shall
furnish to the Trustee an Officers' Certificate stating that all conditions
precedent, if any, provided for in this Indenture relating to the proposed
action have been complied with and an Opinion of Counsel stating that, in the
opinion of such counsel, all such conditions precedent, if any, have been
complied with, except that in the case of any such application or request as to
which the furnishing of such documents or any of them is
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specifically required by any provision of this Indenture relating to such
particular application or request, no additional certificate or opinion need be
furnished.
Section 103. Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified
by, or covered by an opinion of, any specified Person, it is not necessary that
all such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be
based, insofar as it relates to legal matters, upon a certificate or opinion
of, or representations by, counsel, unless such officer knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which his certificate or
opinion is based are erroneous. Any such certificate or Opinion of Counsel may
be based, insofar as it relates to factual matters, upon a certificate or
opinion of, or representations by, an officer or officers of the Company
stating that the information with respect to such factual matters is in the
possession of the Company unless such counsel knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or
more applications, requests, consents, certificates, statements, opinions or
other instruments under this Indenture or any Security, they may, but need not,
be consolidated and form one instrument.
Section 104. Acts of Holders.
(a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by or pursuant to this Indenture to be
given or taken by Holders may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such Holders in person or
by an agent duly appointed in writing. If, but only if, Securities of a series
are issuable as Bearer Securities, any request, demand, authorization,
direction, notice, consent, waiver or other action provided in or pursuant to
this Indenture to be given or taken by Holders of Securities of such series
may, alternatively, be embodied in and evidenced by the record of Holders of
Securities of such series voting in favor thereof, either in person or by
proxies duly appointed in writing, at any meeting of Holders of Securities of
such series duly called and held in
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accordance with the provisions of Article Fifteen, or a combination of such
instruments and any such record. Except as herein otherwise expressly
provided, such action shall become effective when such instrument or
instruments or record or both are delivered to the Trustee and, where it is
hereby expressly required, to the Company. Such instrument or instruments and
any such record (and the action embodied therein and evidenced thereby) are
herein sometimes referred to as the "Act" of the Holders signing such
instrument or instruments or so voting at any such meeting. Proof of execution
of any such instrument or of a writing appointing any such agent, or of the
holding by any Person of a Security, shall be sufficient for any purpose of
this Indenture and (subject to Section 315 of the Trust Indenture Act)
conclusive in favor of the Trustee and the Company and any agent of the Trustee
or the Company, if made in the manner provided in this Section. The record of
any meeting of Holders of Securities shall be proved in the manner provided in
Section 1506.
Without limiting the generality of this Section 104, unless
otherwise provided in or pursuant to this Indenture, a Holder, including a U.S.
Depository that is a Holder of a global Security, may make, give or take, by a
proxy, or proxies, duly appointed in writing, any request, demand,
authorization, direction, notice, consent, waiver or other action provided in
or pursuant to this Indenture to be made, given or taken by Holders, and a U.S.
Depository that is a Holder of a global Security may provide its proxy or
proxies to the beneficial owners of interests in any such global Security
through such U.S. Depository's standing instructions and customary practices.
The Trustee shall fix a record date for the purpose of
determining the Persons who are beneficial owners of interest in any permanent
global Security held by a U.S. Depository entitled under the procedures of such
U.S. Depository to make, give or take, by a proxy or proxies duly appointed in
writing, any request, demand, authorization, direction, notice, consent, waiver
or other action provided in or pursuant to this Indenture to be made, given or
taken by Holders. If such a record date is fixed, the Holders on such record
date or their duly appointed proxy or proxies, and only such Persons, shall be
entitled to make, give or take such request, demand, authorization, direction,
notice, consent, waiver or other action, whether or not such Holders remain
Holders after such record date. No such request, demand, authorization,
direction, notice, consent, waiver or other action shall be valid or effective
if made, given or taken more than 90 days after such record date.
(b) The fact and date of the execution by any Person of any
such instrument or writing may be proved in any reasonable manner which the
Trustee deems sufficient and in accordance with such reasonable rules as the
Trustee may determine; and the Trustee may in any instance require further
proof with respect to any of the matters referred to in this Section 104.
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(c) The ownership, principal amount and serial numbers of
Registered Securities held by any Person, and the date of the commencement and
the date of the termination of holding the same, shall be proved by the
Security Register.
(d) The ownership, principal amount and serial numbers of
Bearer Securities held by any Person, and the date of the commencement and the
date of the termination of holding the same, may be proved by the production of
such Bearer Securities or by a certificate executed, as depositary, by any
trust company, bank, banker or other depositary reasonably acceptable to the
Company, wherever situated, if such certificate shall be deemed by the Company
and the Trustee to be satisfactory, showing that at the date therein mentioned
such Person had on deposit with such depositary, or exhibited to it, the Bearer
Securities therein described; or such facts may be proved by the certificate or
affidavit of the Person holding such Bearer Securities, if such certificate or
affidavit is deemed by the Trustee to be satisfactory. The Trustee and the
Company may assume that such ownership of any Bearer Security continues until
(1) another certificate or affidavit bearing a later date issued in respect of
the same Bearer Security is produced, or (2) such Bearer Security is produced
to the Trustee by some other Person, or (3) such Bearer Security is surrendered
in exchange for a Registered Security, or (4) such Bearer Security is no longer
Outstanding. The ownership, principal amount and serial numbers of Bearer
Securities held by the Person so executing such instrument or writing and the
date of the commencement and the date of the termination of holding the same
may also be proved in any other manner which the Company and the Trustee deems
sufficient.
(e) If the Company shall solicit from the Holders of any
Registered Securities any request, demand, authorization, direction, notice,
consent, waiver or other Act, the Company may at its option (but is not
obligated to), by Board Resolutions, fix in advance a record date for the
determination of Holders of Registered Securities entitled to give such
request, demand, authorization, direction, notice, consent, waiver or other
Act. If such a record date is fixed, such request, demand, authorization,
direction, notice, consent, waiver or other Act may be given before or after
such record date, but only the Holders of Registered Securities of record at
the close of business on such record date shall be deemed to be Holders for the
purpose of determining whether Holders of the requisite proportion of
Outstanding Securities have authorized or agreed or consented to such request,
demand, authorization, direction, notice, consent, waiver or other Act, and for
that purpose the Outstanding Securities shall be computed as of such record
date; provided that no such authorization, agreement or consent by the Holders
of Registered Securities shall be deemed effective unless it shall become
effective pursuant to the provisions of this Indenture not later than six
months after the record date.
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(f) Any request, demand, authorization, direction, notice,
consent, waiver or other action by the Holder of any Security shall bind every
future Holder of the same Security and the Holder of every Security issued upon
the registration of transfer thereof or in exchange therefor or in lieu thereof
in respect of anything done or suffered to be done by the Trustee, any Security
Registrar, any Paying Agent or the Company in reliance thereon, whether or not
notation of such action is made upon such Security.
Section 105. Notices, etc. to Trustee and Company.
Any request, demand, authorization, direction, notice,
consent, waiver or Act of Holders or other document provided or permitted by
this Indenture to be made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder or the Company shall
be sufficient for every purpose hereunder if made, given, furnished or
filed in writing to or with the Trustee at its Corporate Trust Office,
or
(2) the Company by the Trustee or any Holder shall
be sufficient for every purpose hereunder (unless otherwise herein
expressly provided) if in writing and mailed, first-class postage
prepaid, to the Company addressed to the attention of its Treasurer at
the address of its principal office specified in the first paragraph
of this instrument (with a copy to its Corporate Secretary at the same
address) or at any other address previously furnished in writing to
the Trustee by the Company.
Section 106. Notice to Holders of Securities; Waiver.
Except as otherwise expressly provided in or pursuant to this
Indenture, where this Indenture provides for notice to Holders of Securities of
any event,
(1) such notice shall be sufficiently given to
Holders of Registered Securities if in writing and mailed,
first-class postage prepaid, to each Holder of a Registered
Security affected by such event, at his address as it appears
in the Security Register, not later than the latest date, and
not earlier than the earliest date, prescribed for the giving
of such Notice; and
(2) such notice shall be sufficiently given to
Holders of Bearer Securities, if any, if published in an
Authorized Newspaper in The City of New York and, if such
Securities are then listed on any stock exchange outside the
United States, in an Authorized Newspaper in such city as the
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Company shall advise the Trustee that such stock exchange so
requires, on a Business Day at least twice, the first such
publication to be not earlier than the earliest date and not
later than the latest date prescribed for the giving of such
notice.
In any case where notice to Holders of Registered Securities
is given by mail, neither the failure to mail such notice, nor any defect in
any notice so mailed, to any particular Holder of a Registered Security shall
affect the sufficiency of such notice with respect to other Holders of
Registered Securities or the sufficiency of any notice to Holders of Bearer
Securities given as provided herein. Any notice which is mailed in the manner
herein provided shall be conclusively presumed to have been duly given or
provided. In the case by reason of the suspension of regular mail service or
by reason of any other cause it shall be impracticable to give such notice by
mail, then such notification as shall be made with the approval of the Trustee
shall constitute a sufficient notification for every purpose hereunder.
In case by reason of the suspension of publication of any
Authorized Newspaper or Authorized Newspapers or by reason of any other cause
it shall be impracticable to publish any notice to Holders of Bearer Securities
as provided above, then such notification to Holders of Bearer Securities as
shall be given with the approval of the Trustee shall constitute sufficient
notice to such Holders for every purpose hereunder. Neither failure to give
notice by publication to Holders of Bearer Securities as provided above, nor
any defect in any notice so published, shall affect the sufficiency of any
notice mailed to Holders of Registered Securities as provided above.
Where this Indenture provides for notice in any manner, such
notice may be waived in writing by the Person entitled to receive such notice,
either before or after the event, and such waiver shall be the equivalent of
such notice. Waivers of notice by Holders of Securities shall be filed with
the Trustee, but such filing shall not be a condition precedent to the validity
of any action taken in reliance upon such waiver.
Section 107. Language of Notices.
Any request, demand, authorization, direction, notice,
consent, election or waiver required or permitted under this Indenture shall be
in the English language, except that, if the Company so elects, any published
notice may be in an official language of the country of publication.
Section 108. Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with any
duties under
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any required provision of the Trust Indenture Act imposed hereon by Section
318(c) thereof, such required provision shall control.
Section 109. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of
Contents are for convenience only and shall not affect the construction hereof.
Section 110. Successors and Assigns.
All covenants and agreements in this Indenture by the Company
shall bind its successors and assigns, whether so expressed or not.
Section 111. Separability Clause.
In case any provision in this Indenture, any Security or any
Coupon 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 112. Benefits of Indenture.
Nothing in this Indenture, any Security or any Coupon, express
or implied, shall give to any Person, other than the parties hereto, any
Security Registrar, any Paying Agent and their successors hereunder and the
Holders of Securities or Coupons, any benefit or any legal or equitable right,
remedy or claim under this Indenture.
Section 113. Governing Law.
This Indenture, the Securities and any Coupons shall be
governed by and construed in accordance with the laws of the State of New York
applicable to agreements made or instruments entered into and, in each case,
performed in said state.
Section 114. Legal Holidays
In any case where any Interest Payment Date, Stated Maturity
or Maturity of any Security, or the last date on which a Holder has the right
to convert his Securities shall be a Legal Holiday at any Place of Payment,
then (notwithstanding any other provision of this Indenture, any Security or
any Coupon other than a provision in any Security or Coupon that specifically
states that such provision shall apply in lieu of this
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Section 114) payment or conversion of the Securities need not be made at such
Place of Payment on such date, but may be made on the next succeeding day that
is a Business Day at such Place of Payment with the same force and effect as if
made on the Interest Payment Date or at the Stated Maturity or Maturity, or on
the last such date for conversion, and no interest shall accrue on the amount
payable on such date or at such time for the period from and after such
Interest Payment Date or Stated Maturity or Maturity, or the last such date for
conversion, as the case may be.
ARTICLE TWO
SECURITIES FORMS
Section 201. Forms Generally.
Each Registered Security, Bearer Security, Coupon and
temporary global Security issued pursuant to this Indenture shall be in the
form established by or pursuant to a Board Resolution or in one or more
indentures supplemental hereto, shall have such appropriate insertions,
omissions, substitutions and other variations as are required or permitted by
or pursuant to this Indenture or any indenture supplemental hereto and may have
such letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may, consistently herewith, be determined by the
officers executing such Security or Coupon as evidenced by their execution of
such Security or Coupon.
Unless otherwise provided in or pursuant to this Indenture,
the Securities shall be issuable in registered form without Coupons.
Definitive Securities and definitive Coupons shall be printed,
lithographed or engraved or produced by any combination of these methods on a
steel engraved border or steel engraved borders or may be produced in any other
manner, all as determined by the officers of the Company executing such
Securities or Coupons, as evidenced by their execution of such Securities or
Coupons.
Section 202. Form of Trustee's Certificate of
Authentication.
Subject to Section 610, the Trustee's certificate of
authentication shall be in substantially the following form:
This is one of the Securities of the series
designated herein referred to in the within-mentioned Indenture.
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, as Trustee
-----------------
By
-------------------------- Authorized Officer
Section 203. Securities in Global Form.
If Securities of a series shall be issuable in global form,
any such Security may provide that it or any number of such Securities shall
represent the aggregate amount of all Outstanding Securities of such series (or
such lesser amount as is permitted by the terms thereof) from time to time
endorsed thereon and may also provide that the aggregate amount of Outstanding
Securities represented thereby may from time to time be increased or reduced to
reflect exchanges. Any endorsement of any Security in global form to reflect
the amount, or any increase or decrease in the amount, or changes in the rights
of Holders, of Outstanding Securities represented thereby shall be made in such
manner and by such Person or Persons as shall be specified therein or in the
Company Order to be delivered pursuant to Section 303 or 304 with respect
thereto. Subject to the provisions of Section 303 and, if applicable, Section
304, the Trustee shall deliver and redeliver any Security in permanent global
form in the manner and upon instructions given by the Person or Persons
specified therein or in the applicable Company Order. If a Company Order
pursuant to Section 303 or 304 has been, or simultaneously is, delivered, any
instructions by the Company with respect to a Security in global form shall be
in writing but need not be accompanied by or contained in an Officers'
Certificate and need not be accompanied by an Opinion of Counsel.
ARTICLE THREE
THE SECURITIES
Section 301. Amount Unlimited; Issuable in Series.
The aggregate principal amount of Securities which may be
authenticated and delivered under this Indenture is unlimited. The Securities
may be issued in one or more series. The Securities shall be subordinated in
right of payment to Senior Indebtedness as provided in Article Sixteen.
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With respect to any Securities to be authenticated and
delivered hereunder, there shall be established in or pursuant to a Board
Resolution and set forth in an Officers' Certificate, or established in one or
more indentures supplemental hereto,
(1) the title of such Securities and the series in
which such Securities shall be included;
(2) any limit upon the aggregate principal amount of
the Securities of such title or the Securities of such series which
may be authenticated and delivered under this Indenture (except for
Securities authenticated and delivered upon registration or transfer
of, or in exchange for, or in lieu of, other Securities of such series
pursuant to Section 304, 305, 306, 905, 1107 or 1702 or the terms of
such Securities);
(3) whether such Securities are to be issuable as
Registered Securities, as Bearer Securities or alternatively as Bearer
Securities and Registered Securities, and whether the Bearer
Securities are to be issuable with Coupons, without Coupons or both,
and any restrictions applicable to the offer, sale, delivery or
conversion of the Bearer Securities and the terms, if any, upon which
Bearer Securities may be exchanged for Registered Securities and vice
versa;
(4) if any of such Securities are to be issuable in
global form, when any of such Securities are to be issuable in global
form and (i) whether beneficial owners of interests in any such global
Security may exchange such interest for Securities of the same series
and of like tenor and of any authorized form and denomination, and the
circumstances under which any such exchanges may occur, if other than
in the manner specified in Section 305, and (ii) the name of the
Depository or the U.S. Depository, as the case may be, with respect to
any global Security;
(5) if any of such Securities are to be issuable as
Bearer Securities or in global form, the date as of which any such
Bearer Security or global Security shall be dated (if other than the
date of original issuance of the first of such Securities to be
issued);
(6) if any of such Securities are to be issuable as
Bearer Securities, whether interest in respect of any portion of a
temporary Bearer Security in global form payable in respect of an
Interest Payment Date therefor prior to the exchange, if any, of such
temporary Bearer Security for definitive
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Securities shall be paid to any clearing organization with respect to
the portion of such temporary Bearer Security held for its account
and, in such event, the terms and conditions (including any
certification requirements) upon which any such interest payment
received by a clearing organization will be credited to the Persons
entitled to interest payable on such Interest Payment Date;
(7) the date or dates, or the method or methods, if
any, by which such date or dates shall be determined, on which the
principal of such Securities is payable;
(8) the rate or rates at which such Securities shall
bear interest, if any, or the method or methods, if any, by which such
rate or rates are to be determined, the date or dates, if any, from
which such interest shall accrue or the method or methods, if any, by
which such date or dates are to be determined, the Interest Payment
Dates, if any, on which such interest shall be payable and the Regular
Record Date, if any, for the interest payable on Registered Securities
on any Interest Payment Date, whether and under what circumstances
Additional Amounts on such Securities or any of them shall be payable,
and the basis upon which interest shall be calculated;
(9) if in addition to or other than The City of New
York, the place or places where the principal of, any premium and
interest on or any Additional Amounts with respect to such Securities
shall be payable, any of such Securities that are Registered
Securities may be surrendered for registration of transfer, any of
such Securities may be surrendered for exchange or conversion and
notices or demands to or upon the Company in respect of such
Securities and this Indenture may be served;
(10) whether any of such Securities are to be
redeemable at the option of the Company and, if so, the period or
periods within which, the price or prices at which and the other terms
and conditions upon which such Securities may be redeemed, in whole or
in part, at the option of the Company;
(11) whether the Company is obligated to redeem or
purchase any of such Securities pursuant to any sinking fund or at the
option of any Holder thereof and, if so, the period or periods within
which, the price or prices at which and the other terms and conditions
upon which such Securities shall be redeemed or purchased, in whole or
in part, pursuant to such obligation, and any provisions for the
remarketing of such Securities so redeemed or purchased;
(12) the denominations in which any of such
Securities that are
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Registered Securities shall be issuable if other than denominations of
$1,000 and any integral multiple thereof, and the denominations in
which any of such Securities that are Bearer Securities shall be
issuable if other than the denomination of $5,000;
(13) if other than the principal amount thereof, the
portion of the principal amount of any of such Securities that shall
be payable upon declaration of acceleration of the Maturity thereof
pursuant to Section 501 or the method by which such portion is to be
determined;
(14) if other than Dollars, the Currency in which
payment of the principal of, any premium or interest on or any
Additional Amounts with respect to any of such Securities shall be
payable;
(15) the Currency in which payment of the principal
of, any premium or interest on or any Additional Amounts with respect
to any Securities shall be payable, if other than the currency of the
United States and the time and manner of determining the exchange rate
between the Currency in which such Securities are payable and the
Currency in which such Securities or any of them are so payable;
(16) whether the amount of payments of principal of,
any premium or interest on or any Additional Amounts with respect to
such Securities may be determined with reference to an index, formula
or other method (which index, formula or method or methods may be
based, without limitation, on one or more Currencies, commodities,
equity indices or other indices), and, if so, the terms and conditions
upon which and the manner in which such amounts shall be determined
and paid or payable;
(17) any deletions from, modifications of or
additions to the Events of Default or covenants of the Company with
respect to any of such Securities, whether or not such Events of
Default or covenants are consistent with the Events of Default or
covenants set forth herein;
(18) the applicability, if any, of Section 402 to any
of such Securities and any provisions in modification of, in addition
to or in lieu of any of the provisions of Section 402;
(19) whether the principal of (and premium, if any)
or interest (including Additional Amounts), if any, on the Securities
of the series are to be payable, at the election of the Company or any
Holder thereof or otherwise, in a
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currency or currencies, currency unit or units or composite currency
or currencies other than that in which such Securities or any of them
are denominated or stated to be payable, the period or periods within
which, and the other terms and conditions upon which, such election,
if any, may be made, and the time and manner of determining the
exchange rate between the currency or currencies, currency unit or
units or composite currency or currencies in which such Securities or
any of them are denominated or stated to be payable and the currency
or currencies, currency unit or units or composite currency or
currencies in which such Securities or any of them are to be so
payable;
(20) if any of such Securities are to be issuable in
global form and are to be issuable in definitive form (whether upon
original issue or upon exchange of a temporary Security) only upon
receipt of certain certificates or other documents or satisfaction of
other conditions, then the form and terms of such certificates,
documents or conditions;
(21) if there is more than one Trustee, the identity
of the Trustee and, if not the Trustee, the identity of each Security
Registrar, Paying Agent or Authenticating Agent with respect to such
Securities;
(22) whether Securities of the series are to be
Convertible Securities and, if so, the initial Conversion Price
applicable thereto, the period or periods within which the conversion
privilege may be exercised, the class of Common Stock into which such
Convertible Securities may be converted and any additions, deletions,
modifications or variations to the provisions of Article Seventeen
hereof applicable thereto;
(23) any other terms of such Securities (which terms
shall not be inconsistent with the provisions of this Indenture).
All Securities of any one series and all Coupons, if any,
appertaining to Bearer Securities of such series shall be substantially
identical except as to Currency of payments due thereunder, denomination and
the rate or rates of interest, if any, and Maturity, the date from which
interest, if any, shall accrue and except as may otherwise be provided by the
Company in or pursuant to the Board Resolution and set forth in the Officers'
Certificate or in any indenture or indentures supplemental hereto pertaining to
such series of Securities. All Securities of any one series need not be issued
at the same time and, unless otherwise so provided by the Company, a series may
be reopened for issuances of additional Securities of such series or to
establish additional terms of such series of Securities.
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If any of the terms of the Securities of any series shall be
established by action taken by or pursuant to a Board Resolution, the Board
Resolution shall be delivered to the Trustee at or prior to the delivery of the
Officers' Certificate setting forth the terms of such series.
Section 302. Currency; Denominations.
Unless otherwise provided in or pursuant to this Indenture,
the principal of, any premium and interest on and any Additional Amounts with
respect to the Securities shall be payable in Dollars. Unless otherwise
provided in or pursuant to this Indenture, Registered Securities denominated in
Dollars shall be issuable in registered form without Coupons in denominations
of $1,000 and any integral multiple thereof, and the Bearer Securities
denominated in Dollars shall be issuable in the denomination of $5,000.
Securities not denominated in Dollars shall be issuable in such denominations
as are established with respect to such Securities in or pursuant to this
Indenture.
Section 303. Execution, Authentication, Delivery and
Dating.
Securities shall be executed on behalf of the Company by its
Chairman of the Board and Chief Executive Officer, its President and Chief
Operating Officer, the Chief Financial Officer, the Treasurer and any Assistant
Treasurer or one of its Senior Vice Presidents under its corporate seal
reproduced thereon and attested by its Corporate Secretary or one of its
Assistant Secretaries. Coupons shall be executed on behalf of the Company by
the Chief Financial Officer, the Treasurer or any Assistant Treasurer of the
Company. The signature of any of these officers on the Securities or any
Coupons appertaining thereto may be manual or facsimile.
Securities and any Coupons appertaining thereto bearing the
manual or facsimile signatures of individuals who were at any time the proper
officers of the Company shall bind the Company, notwithstanding that such
individuals or any of them have ceased to hold such offices prior to the
authentication and delivery of such Securities or did not hold such offices at
the date of such Securities.
At any time and from time to time after the execution and
delivery of this Indenture, the Company may deliver Securities, together with
any Coupons appertaining thereto, executed by the Company, to the Trustee for
authentication, together with the Board Resolution and Officers' Certificate or
supplemental indenture with respect to such Securities referred to in Section
301 and a Company Order for the authentication and delivery of such Securities,
and the Trustee in accordance with the Company Order and subject to the
provisions hereof shall authenticate and deliver such Securities. In
authenticating such Securities, and accepting the additional
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responsibilities under this Indenture in relation to such Securities and any
Coupons appertaining thereto, the Trustee shall be entitled to receive, and
(subject to Article Six hereof) shall be fully protected in relying upon an
Opinion of Counsel substantially to the effect that:
(a) the form or forms and terms of such
Securities and Coupons, if any, have been established in conformity
with the provisions of this Indenture;
(b) that such Securities, and Coupons, when
completed by appropriate insertion and executed and delivered by the
Company to the Trustee for authentication pursuant to this Indenture,
and authenticated and delivered by the Trustee and issued by the
Company in the manner and subject to any conditions specified in such
Opinion of Counsel, will constitute legally valid and binding
obligations of the Company, enforceable against the Company in
accordance with their terms, subject to bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or other similar laws
affecting the enforcement of creditors' rights generally, and subject
to general principles of equity (regardless of whether enforcement is
sought in a proceeding in equity or at law) and except further as
enforcement thereof may be limited by (A) requirements that a claim
with respect to any securities denominated other than in Dollars (or a
foreign currency or foreign currency unit judgment in respect of such
claim) be converted into Dollars at a rate of exchange prevailing on a
date determined pursuant to applicable law or (B) governmental
authority to limit, delay or prohibit the making of payments in
foreign currency or currency units or payments outside the United
States; and will entitle the Holders thereof to the benefits of this
Indenture; such Opinion of Counsel need express no opinion as to the
availability of equitable remedies;
(c) all legal requirements in respect of the
execution and delivery by the Company of such Securities and Coupons,
if any, have been complied with; and
(d) as to such other matters as the Trustee may
reasonably request.
If all the Securities of any series are not to be issued at
one time, it shall not be necessary to deliver an Opinion of Counsel and an
Officers' Certificate at the time of issuance of each Security, but such
opinion and certificate, with appropriate modifications, shall be delivered at
or before the time of issuance of the first Security of such series. After any
such first delivery, any separate request by the Company that
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the Trustee authenticate Securities of such series for original issue will be
deemed to be a certification by the Company that all conditions precedent
provided for in this Indenture relating to authentication and delivery of such
Securities continue to have been complied with.
The Trustee shall not be required to authenticate or to cause
an Authenticating Agent to authenticate any Securities if the issue of such
Securities pursuant to this Indenture will affect the Trustee's own rights,
duties or immunities under the Securities and this Indenture or otherwise in a
manner which is not reasonably acceptable to the Trustee or if the Trustee,
being advised by counsel, determines that such action may not lawfully be
taken.
Each Registered Security shall be dated the date of its
authentication. Each Bearer Security and any temporary Bearer Security in
global form shall be dated as of the date specified in or pursuant to this
Indenture.
No Security or Coupon appertaining thereto shall be entitled
to any benefit under this Indenture or be valid or obligatory for any purpose,
unless there appears on such Security a certificate of authentication
substantially in the form provided for in Section 202 or 610 executed by or on
behalf of the Trustee by the manual signature of one of its authorized officers
or by an Authenticating Agent. Such certificate upon any Security shall be
conclusive evidence, and the only evidence, that such Security has been duly
authenticated and delivered hereunder. Except as permitted by Section 306 or
307, the Trustee shall not authenticate and deliver any Bearer Security unless
all Coupons appertaining thereto then matured have been detached and cancelled.
Section 304. Temporary Securities.
Pending the preparation of definitive Securities, the Company
may execute and deliver to the Trustee and, upon Company Order, the Trustee
shall authenticate and deliver, in the manner provided in Section 303,
temporary Securities in lieu thereof which are printed, lithographed,
typewritten, mimeographed or otherwise produced, in any authorized
denomination, substantially of the tenor of the definitive Securities in lieu
of which they are issued, in registered form or, if authorized in or pursuant
to this Indenture, in bearer form with one or more Coupons or without Coupons
and with such appropriate insertions, omissions, substitutions and other
variations as the officers of the Company executing such Securities may
determine, as conclusively evidenced by their execution of such Securities.
Such temporary Securities may be in global form.
Except in the case of temporary Securities in global form,
which shall be
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exchanged in accordance with the provisions thereof, if temporary Securities
are issued, the Company shall cause definitive Securities to be prepared
without unreasonable delay. After the preparation of definitive Securities of
the same series and containing terms and provisions that are identical to those
of any temporary Securities, such temporary Securities shall be exchangeable
for such definitive Securities upon surrender of such temporary Securities at
an Office or Agency for such Securities, without charge to any Holder thereof.
Upon surrender for cancellation of any one or more temporary Securities
(accompanied by any unmatured Coupons appertaining thereto), the Company shall
execute and the Trustee shall authenticate and deliver in exchange therefor a
like principal amount of definitive Securities of authorized denominations of
the same series and containing identical terms and provisions; provided,
however, that no definitive Bearer Security, except as provided in or pursuant
to this Indenture, shall be delivered in exchange for a temporary Registered
Security; and provided, further, that a definitive Bearer Security shall be
delivered in exchange for a temporary Bearer Security only in compliance with
the conditions set forth in or pursuant to this Indenture. Unless otherwise
provided in or pursuant to this Indenture with respect to a temporary global
Security, until so exchanged the temporary Securities of any series shall in
all respects be entitled to the same benefits under this Indenture as
definitive Securities of such series.
Section 305. Registration, Transfer and Exchange.
With respect to the Registered Securities of each series, if
any, the Company shall cause to be kept a register (each such register being
herein sometimes referred to as the "Security Register") at an Office or Agency
for such series in which, subject to such reasonable regulations as it may
prescribe, the Company shall provide for the registration of the Registered
Securities of such series and of transfers of the Registered Securities of such
series. In the event that the Trustee shall not be the Security Registrar, it
shall have the right to examine the Security Register at all reasonable times.
The Trustee is hereby initially appointed as Security Registrar for each series
of Securities. In the event that the Trustee shall cease to be Security
Registrar with respect to a series of Securities, it shall have the right to
examine the Security Register for such series at all reasonable times.
Upon surrender for registration of transfer of any Registered
Security of any series at any Office or Agency for such series, the Company
shall execute, and the Trustee shall authenticate and deliver, in the name of
the designated transferee or transferees, one or more new Registered Securities
of the same series denominated as authorized in or pursuant to this Indenture,
of a like aggregate principal amount bearing a number not contemporaneously
outstanding and containing identical terms and provisions.
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At the option of the Holder, Registered Securities of any
series may be exchanged for other Registered Securities of the same series
containing identical terms and provisions, in any authorized denominations, and
of a like aggregate principal amount, upon surrender of the Securities to be
exchanged at any Office or Agency for such series. Whenever any Registered
Securities are so surrendered for exchange, the Company shall execute, and the
Trustee shall authenticate and deliver, the Registered Securities which the
Holder making the exchange is entitled to receive.
If provided in or pursuant to this Indenture, with respect to
Securities of any series, at the option of the Holder, Bearer Securities of
such series may be exchanged for Registered Securities of such series
containing identical terms, denominated as authorized in or pursuant to this
Indenture and in the same aggregate principal amount, upon surrender of the
Bearer Securities to be exchanged at any Office or Agency for such series, with
all unmatured Coupons and all matured Coupons in default thereto appertaining.
If the Holder of a Bearer Security is unable to produce any such unmatured
Coupon or Coupons or matured Coupon or Coupons in default, such exchange may be
effected if the Bearer Securities are accompanied by payment in funds
acceptable to the Company and the Trustee in an amount equal to the face amount
of such missing Coupon or Coupons, or the surrender of such missing Coupon or
Coupons may be waived by the Company and the Trustee if there is furnished to
them such security or indemnity as they may require to save each of them and
any Paying Agent harmless. If thereafter the Holder of such Bearer Security
shall surrender to any Paying Agent any such missing Coupon in respect of which
such a payment shall have been made, such Holder shall be entitled to receive
the amount of such payment; provided, however, that, except as otherwise
provided in Section 1002, interest represented by Coupons shall be payable only
upon presentation and surrender of those Coupons at an Office or Agency for
such series located outside the United States. Notwithstanding the foregoing,
in case a Bearer Security of any series is surrendered at any such Office or
Agency for such series in exchange for a Registered Security of such series and
like tenor after the close of business at such Office or Agency on (i) any
Regular Record Date and before the opening of business at such Office or Agency
on the relevant Interest Payment Date, or (ii) any Special Record Date and
before the opening of business at such Office or Agency on the related date for
payment of Defaulted Interest, such Bearer Security shall be surrendered
without the Coupon relating to such Interest Payment Date or proposed date of
payment, as the case may be (or, if such Coupon is so surrendered with such
Bearer Security, such Coupon shall be returned to the Person so surrendering
the Bearer Security), and interest or Defaulted Interest, as the case may be,
shall not be payable on such Interest Payment Date or proposed date for
payment, as the case may be, in respect of the Registered Security issued in
exchange for such Bearer Security, but shall be payable only to the Holder of
such Coupon when due in accordance with the provisions of this
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Indenture.
If expressly provided with respect to Securities of any
series, at the option of the Holder, Registered Securities of such series may
be exchanged for Bearer Securities upon such terms and conditions as may be
provided with respect to such series.
Whenever any Securities are surrendered for exchange as
contemplated by the immediately preceding two paragraphs, the Company shall
execute, and the Trustee shall authenticate and deliver, the Securities which
the Holder making the exchange is entitled to receive.
Notwithstanding the foregoing, except as otherwise provided in
or pursuant to this Indenture, any global Security shall be exchangeable for
definitive Securities only if (i) the Depository notifies the Company that it
is at any time unwilling, unable or ineligible to continue as Depository and a
successor depository is not appointed by the Company within 60 days of the date
the Company is so informed in writing, (ii) the Company executes and delivers
to the Trustee a Company Order to the effect that such global Security shall be
so exchangeable, or (iii) an Event of Default has occurred and is continuing
with respect to the Securities. If the beneficial owners of interests in a
global Security are entitled to exchange such interests for definitive
Securities, then without unnecessary delay but in any event not later than the
earliest date on which such interests may be so exchanged, the Company shall
deliver to the Trustee definitive Securities in such form and denominations as
are required by or pursuant to this Indenture, as directed by the Depositary,
and of the same series, containing identical terms and in aggregate principal
amount equal to the principal amount of, such global Security, executed by the
Company. On or after the earliest date on which such interests may be so
exchanged, such global Security shall be surrendered from time to time by the
U.S. Depository or such other Depository as shall be specified in the Company
Order with respect thereto, and in accordance with instructions given to the
Trustee and the U.S. Depository or such other Depository, as the case may be
(which instructions shall be in writing but need not be contained in or
accompanied by an Officers' Certificate or be accompanied by an Opinion of
Counsel), as shall be specified in the Company Order with respect thereto to
the Trustee, as the Company's agent for such purpose, to be exchanged, in whole
or in part, for definitive Securities as described above without charge. The
Trustee shall authenticate and make available for delivery, in exchange for
each portion of such surrendered global Security, a like aggregate principal
amount of definitive Securities of the same series of authorized denominations
and of like tenor as the portion of such global Security to be exchanged, which
(unless such Securities are not issuable both as Bearer Securities and as
Registered Securities, in which case the definitive Securities exchanged for
the
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global Security shall be issuable only in the form in which the Securities are
issuable, as provided in or pursuant to this Indenture) shall be in the form of
Bearer Securities or Registered Securities, or any combination thereof, as
shall be specified by the beneficial owner thereof; provided, however, that no
such exchanges may occur during a period beginning at the opening of business
15 days before any selection of Securities of the same series and continuing
identical terms to be redeemed and ending on the relevant Redemption Date; and
provided, further, that (unless otherwise provided in or pursuant to this
Indenture) no Bearer Security delivered in exchange for a portion of a global
Security shall be mailed or otherwise delivered to any location in the United
States. Promptly following any such exchange in part, such global Security
shall be returned by the Trustee to such Depository or the U.S. Depository, as
the case may be, or such other Depository or U.S. Depository referred to above
in accordance with the instructions of the Company referred to above. If a
Registered Security is issued in exchange for any portion of a global Security
after the close of business at the Office or Agency for such Security where
such exchange occurs on or after (i) any Regular Record Date for such Security
and before the opening of business at such Office or Agency on the next
Interest Payment Date, or (ii) any Special Record Date for such Security and
before the opening of business at such Office or Agency on the related proposed
date for payment of interest or Defaulted Interest, as the case may be,
interest shall not be payable on such Interest Payment Date or proposed date
for payment, as the case may be, in respect of such Registered Security, but
shall be payable on such Interest Payment Date or proposed date for payment, as
the case may be, only to the Person to whom interest in respect of such portion
of such global Security shall be payable in accordance with the provisions of
this Indenture.
All Securities issued upon any registration of transfer or
exchange of Securities shall be the valid obligations of the Company evidencing
the same debt and entitling the Holders thereof to the same benefits under this
Indenture as the Securities surrendered upon such registration of transfer or
exchange.
Every Registered Security presented or surrendered for
registration of transfer or for exchange, redemption or conversion shall (if so
required by the Company or the Security Registrar for such Security) be duly
endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Company and the Security Registrar for such Security duly
executed by the Holder thereof or his attorney duly authorized in writing.
No service charge shall be made for any registration of
transfer or exchange or redemption of Securities, but the Company may require
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection with any registration of transfer or exchange of
Securities, other than
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exchanges pursuant to Section 304, 905 or 1107 not involving any transfer.
Except as otherwise provided in or pursuant to this Indenture,
the Company shall not be required (i) to issue, register the transfer of or
exchange any Securities during a period beginning at the opening of business 15
days before the day of the selection for redemption of Securities of like tenor
and the same series under Section 1103 and ending at the close of business (A)
if Securities of the series are issuable only as Registered Securities, on the
day of the mailing of the relevant notice of redemption, and (B) if Securities
of the series are issuable as Bearer Securities, on the day of the first
publication of the relevant notice of redemption or, if Securities of the
series are also issuable as Registered Securities and there is no publication,
the mailing of the relevant notice of redemption, or (ii) to register the
transfer of or exchange any Registered Security so selected for redemption in
whole or in part, except in the case of any Security to be redeemed in part,
the portion thereof not to be redeemed, or (iii) to exchange any Bearer
Security so selected for redemption except, to the extent provided with respect
to such Bearer Security, that such Bearer Security may be exchanged for a
Registered Security of like tenor and the same series, provided that such
Registered Security shall be immediately surrendered for redemption with
written instruction for payment consistent with the provisions of this
Indenture or (iv) to issue, register the transfer of or exchange any Security
which, in accordance with its terms, has been surrendered for repayment at the
option of the Holder, except the portion, if any, of such Security not to be so
repaid.
Section 306. Mutilated, Destroyed, Lost and Stolen
Securities.
If any mutilated Security or a Security with a mutilated
Coupon appertaining to it is surrendered to the Trustee, subject to the
provisions of this Section 306, the Company shall execute and the Trustee shall
authenticate and deliver in exchange therefor a new Security of the same series
containing identical terms and of like principal amount and bearing a number
not contemporaneously outstanding, with Coupons appertaining thereto
corresponding to the Coupons, if any, appertaining to the surrendered Security.
If there be delivered to the Company and to the Trustee (i)
evidence to their satisfaction of the destruction, loss or theft of any
Security or Coupon, and (ii) such security or indemnity as may be required by
them to save each of them and any agent of either of them harmless, then, in
the absence of notice to the Company or the Trustee that such Security or
Coupon has been acquired by a bona fide purchaser, the Company shall execute
and, upon the Company's request the Trustee shall authenticate and deliver, in
exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Security or in exchange for the Security to which a destroyed, lost or
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stolen Coupon appertains with all appurtenant Coupons not destroyed, lost or
stolen, a new Security of the same series containing identical terms and of
like principal amount and bearing a number not contemporaneously outstanding,
with Coupons corresponding to the Coupons, if any, appertaining to such
destroyed, lost or stolen Security or to the Security to which such destroyed,
lost or stolen Coupon appertains.
Notwithstanding the foregoing provisions of this Section 306,
in case any mutilated, destroyed, lost or stolen Security or Coupon has become
or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Security, pay such Security or Coupon; provided,
however, that payment of principal of, any premium or interest on or any
Additional Amounts with respect to any Bearer Securities shall, except as
otherwise provided in Section 1002, be payable only at an Office or Agency for
such Securities located outside the United States and, unless otherwise
provided in or pursuant to this Indenture, any interest on Bearer Securities
and any Additional Amounts with respect to such interest shall be payable only
upon presentation and surrender of the Coupons appertaining thereto.
Upon the issuance of any new Security under this Section 306,
the Company may require the payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Security, with any Coupons appertaining thereto
issued pursuant to this Section in lieu of any destroyed, lost or stolen
Security, or in exchange for a Security to which a destroyed, lost or stolen
Coupon appertains shall constitute a separate obligation of the Company,
whether or not the destroyed, lost or stolen Security and Coupons appertaining
thereto or the destroyed, lost or stolen Coupon shall be at any time
enforceable by anyone, and shall be entitled to all the benefits of this
Indenture equally and proportionately with any and all other Securities of such
series and any Coupons, if any, duly issued hereunder.
The provisions of this Section are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement or payment of mutilated, destroyed, lost or stolen Securities
or Coupons.
Section 307. Payment of Interest and Certain Additional
Amounts; Rights to Interest and Certain
Additional Amounts Preserved.
Unless otherwise provided in or pursuant to this Indenture,
any interest on and any Additional Amounts with respect to any Registered
Security which shall be payable, and are punctually paid or duly provided for,
on any Interest Payment Date
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shall be paid to the Person in whose name such Security (or one or more
Predecessor Securities) is registered as of the close of business on the
Regular Record Date for such interest. Unless otherwise provided in or
pursuant to this Indenture, in case a Bearer Security is surrendered in
exchange for a Registered Security after the close of business at an Office or
Agency for such Security on any Regular Record Date therefor and before the
opening of business at such Office or Agency on the next succeeding Interest
Payment Date therefor, such Bearer Security shall be surrendered without the
Coupon relating to such Interest Payment Date and interest shall not be payable
on such Interest Payment Date in respect of the Registered Security issued in
exchange for such Bearer Security, but shall be payable only to the Holder of
such Coupon when due in accordance with the provisions of this Indenture.
Unless otherwise provided in or pursuant to this Indenture,
any interest on and any Additional Amounts with respect to any Registered
Security which shall be payable, but shall not be punctually paid or duly
provided for, on any Interest Payment Date for such Registered Security (herein
called "Defaulted Interest") shall forthwith cease to be payable to the Holder
thereof on the relevant Regular Record Date by virtue of having been such
Holder; and such Defaulted Interest may be paid by the Company, at its election
in each case, as provided in Clause (1) or (2) below:
(1) The Company may elect to make payment of any
Defaulted Interest to the Person in whose name such Registered
Security (or a Predecessor Security thereof) shall be registered at
the close of business on a Special Record Date for the payment of such
Defaulted Interest, which shall be fixed in the following manner. The
Company shall notify the Trustee in writing of the amount of Defaulted
Interest proposed to be paid on such Registered Security and the date
of the proposed payment, and at the same time the Company shall
deposit with the Trustee an amount of money equal to the aggregate
amount proposed to be paid in respect of such Defaulted Interest or
shall make arrangements satisfactory to the Trustee for such deposit
on or prior to the date of the proposed payment, such money when so
deposited to be held in trust for the benefit of the Person entitled
to such Defaulted Interest as in this Clause provided. Thereupon, the
Trustee shall fix a Special Record Date for the payment of such
Defaulted Interest which shall be not more than 15 days and not less
than 10 days prior to the date of the proposed payment and not less
than 10 days after the receipt by the Trustee of the notice of the
proposed payment. The Trustee shall promptly notify the Company of
such Special Record Date and, in the name and at the expense of the
Company shall cause notice of the proposed payment of such Defaulted
Interest and the Special Record Date therefor to be mailed,
first-class postage prepaid, to the Holder of such Registered Security
(or a Predecessor Security thereof) at his address as it
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appears in the Security Register not less than 10 days prior to such
Special Record Date. The Trustee may, in its discretion, in the name
and at the expense of the Company cause a similar notice to be
published at least once in an Authorized Newspaper of general
circulation in the Borough of Manhattan, The City of New York, but
such publication shall not be a condition precedent to the
establishment of such Special Record Date. Notice of the proposed
payment of such Defaulted Interest and the Special Record Date
therefor having been mailed as aforesaid, such Defaulted Interest
shall be paid to the Person in whose name such Registered Security (or
a Predecessor Security thereof) shall be registered at the close of
business on such Special Record Date and shall no longer be payable
pursuant to the following Clause (2). In case a Bearer Security is
surrendered at the Office or Agency for such Security in exchange for
a Registered Security after the close of business at such Office or
Agency on any Special Record Date and before the opening of business
at such Office or Agency on the related proposed date for payment of
Defaulted Interest, such Bearer Security shall be surrendered without
the Coupon relating to such proposed date of payment and Defaulted
Interest shall not be payable on such proposed date of payment in
respect of the Registered Security issued in exchange for such Bearer
Security, but shall be payable only to the Holder of such Coupon when
due in accordance with the provisions of this Indenture.
(2) The Company may make payment of any Defaulted
Interest in any other lawful manner not inconsistent with the
requirements of any securities exchange on which such Security may be
listed, and upon such notice as may be required by such exchange, if,
after notice given by the Company to the Trustee of the proposed
payment pursuant to this Clause, such payment shall be deemed
practicable by the Trustee.
At the option of the Company, interest on Registered
Securities that bear interest may be paid by mailing a check to the address of
the Person entitled thereto as such address shall appear in the Security
Register.
Subject to the foregoing provisions of this Section 307 and
Section 305, each Security delivered under this Indenture upon registration of
transfer of or in exchange for or in lieu of any other Security shall carry the
rights to interest accrued and unpaid, and to accrue, which were carried by
such other Security.
Section 308. Persons Deemed Owners.
Prior to due presentment of a Registered Security for
registration of transfer, the Company, the Trustee and any agent of the Company
or the Trustee may
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treat the Person in whose name such Registered Security is registered in the
Security Register as the owner of such Registered Security for the purpose of
receiving payment of principal of, any premium and (subject to Sections 305 and
307) interest on and any Additional Amounts with respect to such Registered
Security and for all other purposes whatsoever, whether or not any payment with
respect to such Registered Security shall be overdue, and neither the Company,
nor the Trustee or any agent of the Company or the Trustee shall be affected by
notice to the contrary.
The Company, the Trustee and any agent of the Company or the
Trustee may treat the bearer of any Bearer Security or the bearer of any Coupon
as the absolute owner of such Security or Coupon for the purpose of receiving
payment thereof or on account thereof, for the purpose of conversion and for
all other purposes whatsoever, whether or not any payment with respect to such
Security or Coupon shall be overdue, and neither the Company, nor the Trustee
or any agent of the Company or the Trustee shall be affected by notice to the
contrary.
No holder of any beneficial interest in any global Security
held on its behalf by a Depository shall have any rights under this Indenture
with respect to such global Security, and such Depository may be treated by the
Company, the Trustee, and any agent of the Company or the Trustee as the owner
of such global Security for all purposes whatsoever. None of the Company, the
Trustee, any Paying Agent or the Security Registrar will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests of a global Security
or for maintaining, supervising or reviewing any records relating to such
beneficial ownership interests.
Section 309. Cancellation.
All Securities and Coupons surrendered for payment,
redemption, registration of transfer, exchange or conversion or for credit
against any sinking fund payment shall, if surrendered to any Person other than
the Trustee, be delivered to the Trustee, and any such Securities and Coupons,
as well as Securities and Coupons surrendered directly to the Trustee for any
such purpose, shall be cancelled promptly by the Trustee. The Company may at
any time deliver to the Trustee for cancellation any Securities previously
authenticated and delivered hereunder which the Company may have acquired in
any manner whatsoever, and all Securities so delivered shall be cancelled
promptly by the Trustee. No Securities shall be authenticated in lieu of or in
exchange for any Securities cancelled as provided in this Section, except as
expressly permitted by or pursuant to this Indenture. All cancelled Securities
and Coupons held by the Trustee shall be destroyed by the Trustee, unless by a
Company Order the Company directs their return to it in a timely manner.
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Section 310. Computation of Interest.
Except as otherwise provided in or pursuant to this Indenture,
interest on the Securities shall be computed on the basis of a 360-day year of
twelve 30-day months.
ARTICLE FOUR
SATISFACTION AND DISCHARGE
Section 401. Satisfaction and Discharge of Indenture.
Upon the direction of the Company by a Company Order, this
Indenture shall cease to be of further effect (except as to any surviving
rights of conversion, registration of transfer or exchange of Securities herein
expressly provided for and any right to receive Additional Amounts), and the
Trustee, on receipt of a Company Order, at the expense of the Company, shall
execute proper instruments acknowledging satisfaction and discharge of this
Indenture, when
(1) either
(A) all Securities theretofore
authenticated and delivered and all Coupons appertaining
thereto (other than (i) Coupons appertaining to Bearer
Securities surrendered in exchange for Registered Securities
and maturing after such exchange whose surrender is not
required or has been waived as provided in Section 305, (ii)
Securities and Coupons which have been destroyed, lost or
stolen and which have been replaced or paid as provided in
Section 306, (iii) Coupons appertaining to Securities called
for redemption and maturing after the relevant Redemption Date
whose surrender has been waived as provided in Section 1107,
and (iv) Securities and Coupons for whose payment money has
theretofore been deposited in trust or segregated and held in
trust by the Company and thereafter repaid to the Company or
discharged from such trust, as provided in Section 1003) have
been delivered to the Trustee for cancellation; or
(B) all Securities and, in the case of
(i) or (ii) below, any Coupons appertaining thereto not
theretofore delivered to the Trustee for cancellation
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(i) have become due and payable, or
(ii) will become due and payable at
their Stated Maturity within one year, or
(iii) if redeemable at the option of
the Company, are to be called for redemption within
one year under arrangements satisfactory to the
Trustee for the giving of notice of redemption by the
Trustee in the name, and at the expense, of the
Company,
and the Company, in the case of (i), (ii) or (iii) above, has
deposited or caused to be deposited with the Trustee as trust
funds in trust for such purpose, money and/or Government
Obligations which through the payment of interest and
principal in respect thereof in accordance with their terms,
without consideration of any reinstatement thereof, will
provide not later than the opening of business on the due
dates of any payment of principal and any premium, interest
and Additional Amounts with respect thereto, or a combination
thereof, money in an amount sufficient to pay and discharge
the entire indebtedness on such Securities and Coupons not
theretofore delivered to the Trustee for cancellation,
including the principal of, any premium and interest on, and
any Additional Amounts with respect to such Securities and any
Coupons appertaining thereto, to the date of such deposit (in
the case of Securities which have become due and payable) or
to the Maturity thereof, as the case may be;
(2) the Company has paid or caused to be paid all
other sums payable hereunder by the Company; and
(3) the Company has delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that all
conditions precedent herein provided for relating to the satisfaction
and discharge of this Indenture have been complied with.
In the event there are Securities of two or more series
hereunder, the Trustee shall be required to execute an instrument acknowledging
satisfaction and discharge of this Indenture only if requested to do so with
respect to Securities of all series as to which it is Trustee and if the other
conditions thereto are met. In the event there are two or more Trustees
hereunder, then the effectiveness of any such instrument shall be conditioned
upon receipt of each such instrument from all Trustees hereunder.
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Notwithstanding the satisfaction and discharge of this
Indenture, the obligations of the Company to the Trustee under Section 605, the
obligations of the Trustee to any Authenticating Agent under Section 610 and,
if money and/or Government Obligations shall have been deposited with the
Trustee pursuant to subclause (B) of Clause (1) of this Section, the
obligations of the Trustee under Section 403 and the last paragraph of Section
1003 shall survive.
In the event that, subsequent to the date a discharge is
effected pursuant to this Section 401, Additional Amounts in excess of those
established as of the date such discharge is effected become payable in respect
of any Securities, in order to preserve the benefits of the discharge
established hereunder, the Company shall deposit or cause to be deposited in
accordance with provisions of this Section 401, within ten business days prior
to the earlier to occur of (i) one year after the existence of such excess
Additional Amounts is established and (ii) the date the first payment in
respect of any portion of such excess Additional Amounts becomes due, such
additional funds as are necessary to satisfy the provisions of this Section 401
as if a discharge were being effected as of the date of such subsequent
deposit. For purposes of this paragraph, the existence of excess Additional
Amounts shall be deemed to have been established as of the date the
governmental authority imposing the tax, assessment or other governmental
charge resulting in the Additional Amounts first publishes the legislation,
regulation or other enactment adopting such tax, assessment or other
governmental charge. Failure to comply with the requirements of this paragraph
shall result in the termination of the benefits of the discharge established by
this Section 401.
Section 402. Satisfaction, Discharge and Defeasance of
Securities of any Series.
If provision is made in or pursuant to this Indenture for
defeasance of Securities of any series and any Coupons appertaining thereto
pursuant to this Section 402, the Company may at any time elect to have this
Section 402 be applied to the outstanding Securities and the Company shall be
deemed to have paid and discharged the entire indebtedness on all the
Outstanding Securities of such series and the Trustee, at the expense of the
Company, shall execute proper instruments acknowledging satisfaction and
discharge of such indebtedness, when
(1) no Event of Default has occurred and is
continuing, or would occur upon the giving of notice or the lapse of
time at the time such satisfaction and discharge is being effected and
either
(A) with respect to all Outstanding
Securities of such
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series and any Coupons appertaining thereto, the Company has
irrevocably deposited or caused to be deposited with the
Trustee, as trust funds and/or obligations in trust for such
purpose, money and/or Government Obligations which through the
payment of interest and principal in respect thereof in
accordance with their terms, without consideration of any
reinvestment thereof, will provide not later than the opening
of business on the due dates of any payment of principal and
any premium, interest and Additional Amounts with respect
thereto, or a combination thereof, money in an amount
sufficient to pay and discharge the entire indebtedness on all
Outstanding Securities of such series and any Coupons
appertaining thereto not theretofore delivered to the Trustee
for cancellation, including the principal of, any premium and
interest on, and any Additional Amounts with respect to such
Securities and any Coupons appertaining thereto to the date of
such deposit (in the case of Securities which have become due
and payable) or to the Maturity thereof, as the case may be,
as contemplated by the penultimate paragraph of this Section
402; or
(B) the Company has properly fulfilled
such other means of satisfaction and discharge as is provided
in or pursuant to this Indenture for the Securities of such
series; and
(2) the Company has paid or caused to be paid all
other sums payable hereunder with respect to the Outstanding
Securities of such series and any Coupons appertaining thereto; and
(3) the Company has delivered to the Trustee a
certificate signed by Independent Public Accountants certifying as to
the sufficiency of the amounts deposited pursuant to subsections
(A)(i) or (ii) of this Section for payment of the principal of, any
premium and interest on and any Additional Amounts with respect to
such Securities and any Coupons appertaining thereto on the dates such
payments are due, an Officers' Certificate and an Opinion of Counsel,
each such Certificate and Opinion stating that no Event of Default or
event which with notice or lapse of time or both would become an Event
of Default with respect to such Securities shall have occurred and all
conditions precedent herein provided for relating to the satisfaction
and discharge of the entire indebtedness on all Outstanding Securities
of any such series and any Coupons appertaining thereto shall have
been complied with; and
(4) the Company has delivered to the Trustee
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(A) an opinion of independent counsel
that the Holders of the Securities of such series and any
Coupons appertaining thereto shall have no federal income tax
consequences as a result of such deposit and termination; and
(B) if the Securities of such series are
then listed on the New York Stock Exchange, an opinion of
independent counsel that the Securities of such series shall
not be delisted as a result of the exercise of this option.
Any deposits with the Trustee referred to in subsection (1)(A)
of this Section shall be irrevocable and shall be made under the terms of an
escrow trust agreement in form and substance satisfactory to the Trustee. If
any Outstanding Securities of such series are to be redeemed prior to their
Stated Maturity, whether pursuant to any optional redemption provisions or in
accordance with any mandatory sinking fund requirement or otherwise, the
Company shall make such arrangements as are satisfactory to the Trustee for the
giving of notice of redemption by the Trustee in the name, and at the expense,
of the Company.
Upon the satisfaction of the conditions set forth in this
Section 402 with respect to all the Outstanding Securities of any series and
any Coupons appertaining thereto, the terms and conditions of such series
(including the terms and conditions with respect thereto set forth in this
Indenture, other than the provisions of Sections 305, 306, and 1002 and other
than the right of Holders of Securities of such series and any Coupons
appertaining thereto to receive, from the trust fund described in this Section,
payment of the principal of, any premium or the interest on, or any Additional
Amounts with respect to such Securities and any Coupons appertaining thereto
when such payments shall be due) and the rights, powers, duties and immunities
of the Trustee hereunder with respect to the Securities of such series shall no
longer be binding upon, or applicable to, the Company; provided that the
Company shall not be discharged from any payment obligations in respect of
Securities of such series or any Coupons appertaining thereto which are deemed
not to be Outstanding under clause (iii) of the definition of Outstanding if
such obligations continue to be valid obligations of the Company under
applicable law.
In the event that, subsequent to the date a defeasance is
effected pursuant to this Section 402 with respect to Securities of any series,
Additional Amounts in excess of those established as of the date such
defeasance is effected become payable in respect of such Securities, in order
to preserve the benefits of the defeasance established hereunder with respect
to such series, the Company shall deposit or cause to be deposited in
accordance with the provisions of this Section 402,
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within ten business days prior to the earlier to occur of (i) one year after
the existence of such excess Additional Amounts is established and (ii) the
date the first payment in respect of any portion of such excess Additional
Amounts becomes due, such additional funds as are necessary to satisfy the
provisions of this Section 402 as if a defeasance were being effected as of the
date of such subsequent deposit. For purposes of this paragraph, the existence
of excess Additional Amounts shall be deemed to have been established as of the
date the governmental authority imposing the tax, assessment or other
governmental charge resulting in the Additional Amounts first publishes the
legislation, regulation or other enactment adopting such tax, assessment or
other governmental charge. Failure to comply with the requirements of this
paragraph shall result in the termination of the benefits of the defeasance
established by this Section 402 with respect to the Securities of such series.
Section 403. Application of Trust Money.
Subject to the provisions of the last paragraph of Section
1003, all money and Government Obligations deposited with the Trustee pursuant
to Section 401 or 402 shall be held in trust and applied by it, in accordance
with the provisions of the Securities, the Coupons and this Indenture, to the
payment, either directly or through any Paying Agent (including the Company
acting as its own Paying Agent) as the Trustee may determine, to the Persons
entitled thereto, of the principal, premium, interest and Additional Amounts
for whose payment such money has or Government Obligations have been deposited
with or received by the Trustee; but such money and Government Obligations need
not be segregated from other funds except to the extent required by law.
ARTICLE FIVE
REMEDIES
Section 501. Events of Default.
"Event of Default", wherever used herein with respect to
Securities of any series, means any one of the following events (whatever the
reason for such Event of Default and whether it shall be voluntary or be
effected by operation of law pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental
body):
(1) default in the payment of any interest on or any
Additional
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Amounts payable in respect of any Security of such series when such
interest becomes or such Additional Amounts become due and payable,
and continuance of such default for a period of 30 days; or
(2) default in the payment of the principal of
and any premium on any Security of such series when it becomes due and
payable at its Maturity; or
(3) default in the deposit of any sinking fund
payment, when and as due by the terms of a Security of such series; or
(4) default in the performance, or breach, of any
covenant or warranty of the Company in this Indenture or the
Securities (other than a covenant or warranty a default in the
performance or the breach of which is elsewhere in this Section
specifically dealt with or which has been expressly included in this
Indenture solely for the benefit of a series of Securities other than
such series), and continuance of such default or breach for a period
of 60 days after there has been given, by registered or certified
mail, to the Company by the Trustee or to the Company and the Trustee
by the Holders of at least 25% in principal amount of the Outstanding
Securities of such series a written notice specifying such default or
breach and requiring it to be remedied and stating that such notice is
a "Notice of Default" hereunder; or
(5) if any event of default as defined in any
mortgage, indenture or instrument under which there may be issued, or
by which there may be secured or evidenced, any indebtedness of the
Company or any Significant Subsidiary for money borrowed, whether such
indebtedness now exists or shall hereafter be created, shall happen
and shall result in such indebtedness in principal amount in excess of
$10,000,000 becoming or being declared due and payable prior to the
date on which it would otherwise become due and payable, and such
acceleration shall not be rescinded or annulled within a period of 30
days after there shall have been given, by registered or certified
mail, to the Company by the Trustee or to the Company and the Trustee
by the Holders of at least 25% in principal amount of the Outstanding
Securities of such series, a written notice specifying such event of
default and requiring the Company to cause such acceleration to be
rescinded or annulled and stating that such notice is a "Notice of
Default" hereunder; or
(6) the entry by a court having competent
jurisdiction of:
(a) a decree or order for relief in
respect of the Company
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or any Significant Subsidiary in an involuntary proceeding
under any applicable bankruptcy, insolvency, reorganization or
other similar law and such decree or order shall remain
unstayed and in effect for a period of 60 consecutive days; or
(b) a decree or order adjudging the
Company or any Significant Subsidiary to be insolvent, or
approving a petition seeking reorganization, arrangement,
adjustment or composition of the Company or any Significant
Subsidiary and such decree or order shall remain unstayed and
in effect for a period of 60 consecutive days; or
(c) a final and non-appealable order
appointing a custodian, receiver, liquidator, assignee,
trustee or other similar official of the Company or any
Significant Subsidiary or of any substantial part of the
property of the Company or any Significant Subsidiary, as the
case may be, or ordering the winding up or liquidation of the
affairs of the Company or any Significant Subsidiary; or
(7) the commencement by the Company or any
Significant Subsidiary of a voluntary proceeding under any applicable
bankruptcy, insolvency, reorganization or other similar law or of a
voluntary proceeding seeking to be adjudicated insolvent or the
consent by the Company or any Significant Subsidiary to the entry of a
decree or order for relief in an involuntary proceeding under any
applicable bankruptcy, insolvency, reorganization or other similar law
or to the commencement of any insolvency proceedings against it, or
the filing by the Company or any Significant Subsidiary of a petition
or answer or consent seeking reorganization or relief under any
applicable law, or the consent by the Company or any Significant
Subsidiary to the filing of such petition or to the appointment of or
taking possession by a custodian, receiver, liquidator, assignee,
trustee or similar official of the Company or any Significant
Subsidiary or any substantial part of the property of the Company or
any Significant Subsidiary or the making by the Company or any
Significant Subsidiary of an assignment for the benefit of creditors,
or the taking of corporate action by the Company or any Significant
Subsidiary in furtherance of any such action; or
(8) any other Event of Default provided in or
pursuant to this Indenture with respect to Securities of such series.
If a default occurs hereunder with respect to Securities of
any series, the Trustee shall give the Holders of Securities of such series
notice of such default as and to the extent provided by the Trust Indenture
Act; provided, however, that in the case of
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any default of the character specified in Section 501(4) with respect to
Securities of such series, no such notice to Holders shall be given until at
least 30 days after the occurrence thereof. For the purpose of this Section,
the term "default" means any event which is, or after notice or lapse of time
or both would become, an Event of Default with respect to Securities of such
series.
Section 502. Acceleration of Maturity; Rescission and
Annulment.
If an Event of Default specified in Section 501(6) or 501(7)
with respect to Securities of any series at the time Outstanding occurs and is
continuing, then the Trustee or the Holders of not less than 25% in principal
amount of the Outstanding Securities of such series may declare the principal
of all the Securities of such series, or such lesser amount as may be provided
for in the Securities of such series, to be due and payable immediately, by a
notice in writing to the Company (and to the Trustee if given by the Holders),
and upon any such declaration such principal or such lesser amount shall become
immediately due and payable.
At any time after such a declaration of acceleration with
respect to Securities of any series has been made and before a judgment or
decree for payment of the money due has been obtained by the Trustee as
hereinafter in this Article provided, the Holders of not less than a majority
in principal amount of the Outstanding Securities of such series, by written
notice to the Company and the Trustee, may rescind and annul such declaration
and its consequences if:
(1) the Company has paid or deposited with the
Trustee a sum of money sufficient to pay
(A) all overdue installments of any
interest on and any Additional Amounts with respect to all
Securities of such series and any Coupon appertaining thereto,
(B) the principal of and any premium on
any Securities of such series which have become due otherwise
than by such declaration of acceleration and interest thereon
at the rate or rates borne by or provided for in such
Securities,
(C) to the extent that payment of such
interest is lawful, interest upon overdue installments of any
interest and Additional Amounts at the rate or rates borne by
or provided for in such Securities, and
(D) all sums paid or advanced by the
Trustee hereunder
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and the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel; and
(2) all Events of Default with respect to
Securities of such series, other than the non-payment of the principal
of, any premium and interest on, and any Additional Amounts with
respect to Securities of such series which shall have become due
solely by such declaration of acceleration, shall have been cured or
waived as provided in Section 513.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
Section 503. Collection of Indebtedness and Suits for
Enforcement by Trustee.
The Company covenants that if
(1) default is made in the payment of any
installment of interest on or any Additional Amounts with respect to
any Security or any Coupon appertaining thereto when such interest or
Additional Amounts shall have become due and payable and such default
continues for a period of 30 days, or
(2) default is made in the payment of the
principal of or any premium on any Security at its Maturity,
the Company shall, upon demand of the Trustee, pay to the Trustee, for the
benefit of the Holders of such Securities and any Coupons appertaining thereto,
the whole amount of money then due and payable with respect to such Securities
and any Coupons appertaining thereto, with interest upon the overdue principal,
any premium and, to the extent that payment of such interest shall be legally
enforceable, upon any overdue installments of interest and Additional Amounts
at the rate or rates borne by or provided for in such Securities, and, in
addition thereto, such further amount of money 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.
If the Company fails to pay the money it is required to pay
the Trustee pursuant to the preceding paragraph forthwith upon the demand of
the Trustee, the Trustee, in its own name and as trustee of an express trust,
may institute a judicial proceeding for the collection of the money so due and
unpaid, and may prosecute such proceeding to judgment or final decree, and may
enforce the same against the
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Company or any other obligor upon such Securities and any Coupons appertaining
thereto and collect the moneys adjudged or decreed to be payable in the manner
provided by law out of the property of the Company or any other obligor upon
such Securities and any Coupons appertaining thereto, wherever situated.
If an Event of Default with respect to Securities of any
series occurs and is continuing, the Trustee may in its discretion proceed to
protect and enforce its rights and the rights of the Holders of Securities of
such series and any Coupons appertaining thereto by such appropriate judicial
proceedings as the Trustee shall deem most effectual to protect and enforce any
such rights, whether for the specific enforcement of any covenant or agreement
in this Indenture or such Securities or in aid of the exercise of any power
granted herein or therein, or to enforce any other proper remedy.
Section 504. Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment, composition
or other judicial proceeding relative to the Company or any other obligor upon
the Securities or the property of the Company or such other obligor or their
creditors, the Trustee (irrespective of whether the principal of the Securities
shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have made any demand on
the Company for the payment of any overdue principal, premium, interest or
Additional Amounts) shall be entitled and empowered, by intervention in such
proceeding or otherwise,
(i) to file and prove a claim for the
whole amount, or such lesser amount as may be provided for in
the Securities of such series, of the principal and any
premium, interest and Additional Amounts owing and unpaid in
respect of the Securities and any Coupons appertaining thereto
and to file such 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 or counsel) and of the Holders of Securities or any
Coupons allowed in such judicial proceeding, and
(ii) to collect and receive any monies or
other property payable or deliverable on any such claims and
to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Holder of Securities
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or any Coupons to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the Holders of
Securities or any Coupons, 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 605.
Nothing herein contained shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any Holder
of a Security or any Coupon any plan of reorganization, arrangement, adjustment
or composition affecting the Securities or Coupons or the rights of any Holder
thereof, or to authorize the Trustee to vote in respect of the claim of any
Holder of a Security or any Coupon in any such proceeding.
Section 505. Trustee May Enforce Claims without Possession
of Securities or Coupons.
All rights of action and claims under this Indenture or any of
the Securities or Coupons may be prosecuted and enforced by the Trustee without
the possession of any of the Securities or Coupons or the production thereof in
any proceeding relating thereto, and any such proceeding instituted by the
Trustee shall be brought in its own name as trustee of an express trust, and
any recovery or judgment, after provision for the payment of the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, shall be for the ratable benefit of each and every Holder of a
Security or Coupon in respect of which such judgment has been recovered.
Section 506. Application of Money Collected.
Subject to the provisions of Article Sixteen, any money
collected by the Trustee pursuant to this Article shall be applied in the
following order, at the date or dates fixed by the Trustee and, in case of the
distribution of such money on account of principal, or any premium, interest or
Additional Amounts, upon presentation of the Securities or Coupons, or both, as
the case may be, and the notation thereon of the payment if only partially paid
and upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee
and any predecessor Trustee under Section 605;
SECOND: To the payment of the amounts then due and
unpaid upon the Securities and any Coupons for principal and any
premium, interest and Additional Amounts in respect of which or for
the benefit of which such money has been collected, ratably, without
preference or priority of any kind,
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according to the aggregate amounts due and payable on such Securities
and Coupons for principal and any premium, interest and Additional
Amounts, respectively;
THIRD: The balance, if any, to the Person or Persons
entitled thereto.
Section 507. Limitations on Suits.
No Holder of any Security of any series or any Coupons
appertaining thereto shall have any right to institute any proceeding, judicial
or otherwise, with respect to this Indenture, or for the appointment of a
receiver or trustee, or for any other remedy hereunder, unless
(1) such Holder has previously given written
notice to the Trustee of a continuing Event of Default with respect to
the Securities of such series;
(2) the Holders of not less than 25% in principal
amount of the Outstanding Securities of such series shall have made
written request to the Trustee to institute proceedings in respect of
such Event of Default in its own name as Trustee hereunder;
(3) such Holder or Holders have offered to the
Trustee reasonable indemnity against the costs, expenses and
liabilities to be incurred in compliance with such request;
(4) the Trustee for 60 days after its receipt of
such notice, request and offer of indemnity has failed to institute
any such proceeding; and
(5) no direction inconsistent with such written
request has been given to the Trustee during such 60-day period by the
Holders of a majority in principal amount of the Outstanding
Securities of such series;
it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture or any Security to affect, disturb or prejudice the rights of
any other such Holders or Holders of Securities of any other series, or to
obtain or to seek to obtain priority or preference over any other Holders or to
enforce any right under this Indenture, except in the manner herein provided
and for the equal and ratable benefit of all such Holders.
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Section 508. Unconditional Right of Holders to Receive
Principal and any Premium, Interest and
Additional Amounts and to Convert any
Convertible Security.
Notwithstanding any other provision in this Indenture, the
Holder of any Security or Coupon shall have the right, which is absolute and
unconditional, to receive payment of the principal of, any premium and (subject
to Sections 305 and 307) interest on, and any Additional Amounts with respect
to such Security or payment of such Coupon, as the case may be, on the
respective Stated Maturity or Maturities therefor specified in such Security or
Coupon (or, in the case of redemption, on the Redemption Date or, in the case
of repayment at the option of such Holder if provided in or pursuant to this
Indenture, on the date such repayment is due) and to institute suit for the
enforcement of any such payment, and shall have the right to convert any such
Security which is a Convertible Security in accordance with the terms hereof
and thereof and to institute suit for enforcement of such right; and such
rights shall not be impaired without the consent of such Holder.
Section 509. Restoration of Rights and Remedies.
If the Trustee or any Holder of a Security or a Coupon has
instituted any proceeding to enforce any right or remedy under this Indenture
and such proceeding has been discontinued or abandoned for any reason, or has
been determined adversely to the Trustee or to such Holder, then and in every
such case the Company, the Trustee and each such Holder shall, subject to any
determination in such proceeding, be restored severally and respectively to
their former positions hereunder, and thereafter all rights and remedies of the
Trustee and each such Holder shall continue as though no such proceeding had
been instituted.
Section 510. Rights and Remedies.
Except as otherwise provided with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Securities or Coupons in the
last paragraph of Section 306, no right or remedy herein conferred upon or
reserved to the Trustee or to each and every Holder of a Security or a Coupon
is intended to be exclusive of any other right or remedy, and every right and
remedy, to the extent permitted by law, shall be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at
law or in equity or otherwise. The assertion or employment of any right or
remedy hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
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Section 511. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any
Security or Coupon to exercise any right or remedy accruing upon any Event of
Default shall impair any such right or remedy or constitute a waiver of any
such Event of Default or an acquiescence therein. Every right and remedy given
by this Article or by law to the Trustee or to any Holder of a Security or a
Coupon may be exercised from time to time, and as often as may be deemed
expedient, by the Trustee or by such Holder, as the case may be.
Section 512. Control by Holders of Securities.
The Holders of a majority in principal amount of the
Outstanding Securities of any series shall have the right to 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 the Trustee, with
respect to the Securities of such series and any Coupons appertaining thereto,
provided that
(1) such direction shall not be in conflict with
any rule of law or with this Indenture or with the Securities of any
series,
(2) the Trustee may take any other action deemed
proper by the Trustee which is not inconsistent with such direction,
and
(3) such direction is not unduly prejudicial to
the rights of the other Holders of Securities of such series not
joining in such action.
Section 513. Waiver of Past Defaults.
The Holders of not less than a majority in principal amount of
the Outstanding Securities of any series on behalf of the Holders of all the
Securities of such series and any Coupons appertaining thereto may waive any
past default hereunder with respect to such series and its consequences, except
a default
(1) in the payment of the principal of, any
premium or interest on, or any Additional Amounts with respect to any
Security of such series or any Coupons appertaining thereto, or
(2) in respect of a covenant or provision hereof
which under Article Nine cannot be modified or amended without the
consent of the Holder of each Outstanding Security of such series
affected.
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Upon any such waiver, such default shall cease to exist, and
any Event of Default arising therefrom shall be deemed to have been cured, for
every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other default or impair any right consequent thereon.
Section 514. Waiver of Stay or Extension Laws.
The Company covenants that (to the extent that it may lawfully
do so) it will not at any time insist upon, or plead, or in any manner
whatsoever claim or take the benefit or advantage of, any stay or extension law
wherever enacted, now or at any time hereafter in force, which may affect the
covenants or the performance of this Indenture; and the Company expressly
waives (to the extent that it may lawfully do so) all benefit or advantage of
any such law and covenant that it will not 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 had been
enacted.
ARTICLE SIX
THE TRUSTEE
Section 601. Certain Rights of Trustee.
Subject to Sections 315(a) through 315(d) of the Trust
Indenture Act:
(a) the Trustee may rely and shall be protected
in acting or refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, coupon or other paper or
document reasonably believed by it to be genuine and to have been
signed or presented by the proper party or parties;
(b) any request or direction of the Company
mentioned herein shall be sufficiently evidenced by a Company Request
or a Company Order (in each case, other than delivery of any Security,
together with any Coupons appertaining thereto, to the Trustee for
authentication and delivery pursuant to Section 303 which shall be
sufficiently evidenced as provided therein) and any resolution of the
Board of Directors may be sufficiently evidenced by a Board
Resolution;
(c) whenever in the administration of this
Indenture the Trustee shall deem it desirable that a matter be proved
or established prior to taking, suffering or omitting any action
hereunder, the Trustee (unless other evidence
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shall be herein specifically prescribed) may, in the absence of bad
faith on its part, rely upon an Officers' Certificate;
(d) the Trustee may consult with counsel and the
advice of such counsel or any Opinion of Counsel shall be full and
complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in reliance
thereon;
(e) the Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by or pursuant to
this Indenture at the request or direction of any of the Holders of
Securities of any series or any Coupons appertaining thereto pursuant
to this Indenture, unless such Holders shall have offered to the
Trustee reasonable security or indemnity against the costs, expenses
and liabilities which might be incurred by it in compliance with such
request or direction;
(f) the Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, coupon or other paper or
document, but the Trustee, in its discretion, may make such further
inquiry or investigation into such facts or matters as it may see fit,
and, if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled to examine, during business hours
and upon reasonable notice, the books, records and premises of the
Company, personally or by agent or attorney; and
(g) the Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by
or through agents or attorneys and the Trustee shall not be
responsible for any misconduct or negligence on the part of any agent
or attorney appointed with due care by it hereunder.
Section 602. Not Responsible for Recitals or Issuance of
Securities.
The recitals contained herein and in the Securities, except
the Trustee's certificate of authentication, and in any Coupons shall be taken
as the statements of the Company and neither the Trustee nor any Authenticating
Agent assumes any responsibility for their correctness. The Trustee makes no
representations as to the validity or sufficiency of this Indenture or of the
Securities or the Coupons, except that the Trustee represents that it is duly
authorized to execute and deliver this Indenture, authenticate the Securities
and perform its obligations hereunder and that the
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statements made by it in a Statement of Eligibility and Qualification on Form
T-1 supplied to the Company are true and accurate, subject to the
qualifications set forth therein. Neither the Trustee nor any Authenticating
Agent shall be accountable for the use or application by the Company of the
Securities or the proceeds thereof.
Section 603. May Hold Securities.
The Trustee, any Authenticating Agent, any Paying Agent, any
Security Registrar or any other Person that may be an agent of the Trustee or
the Company, in its individual or any other capacity, may become the owner or
pledgee of Securities or Coupons and, subject to Sections 310(b) and 311 of the
Trust Indenture Act, may otherwise deal with the Company with the same rights
it would have if it were not Trustee, Authenticating Agent, Paying Agent,
Security Registrar or such other Person.
Section 604. Money Held in Trust.
Except as provided in Section 403 and Section 1003, money held
by the Trustee in trust hereunder need not be segregated from other funds
except to the extent required by law and shall be held uninvested. The Trustee
shall be under no liability for interest on any money received by it hereunder
except as otherwise agreed with the Company.
Section 605. Compensation and Reimbursement.
The Company agrees:
(1) to pay to the Trustee from time to time
reasonable compensation for all services rendered by the Trustee
hereunder (which compensation shall not be limited by any provision of
law in regard to the compensation of a trustee of an express trust);
(2) except as otherwise expressly provided
herein, to reimburse the Trustee upon its request for all reasonable
expenses, disbursements and advances incurred or made by the Trustee
in accordance with any provision of this Indenture (including the
reasonable compensation and the expenses and disbursements of its
agents and counsel), except any such expense, disbursement or advance
as may be attributable to the Trustee's negligence or bad faith; and
(3) to indemnify the Trustee and its agents for,
and to hold them harmless against, any loss, liability or expense
incurred without negligence or
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bad faith on their part, arising out of or in connection with the
acceptance or administration of the trust or trusts hereunder,
including the costs and expenses of defending themselves against any
claim or liability in connection with the exercise or performance of
any of their powers or duties hereunder.
As security for the performance of the obligations of the
Company under this Section 605, the Trustee shall have a lien prior to the
Securities of any series upon all property and funds held or collected by the
Trustee as such (and not subordinated in right of payment to the prior payment
in full of the Senior Indebtedness), except funds held in trust for the payment
of principal of, and premium or interest on or any Additional Amounts with
respect to Securities or any Coupons appertaining thereto.
Section 606. Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder that
is a Corporation permitted by the Trust Indenture Act to act as trustee under
an indenture qualified under the Trust Indenture Act and that has a combined
capital and surplus (computed in accordance with Section 310(a)(2) of the Trust
Indenture Act) of at least $50,000,000. If at any time the Trustee shall cease
to be eligible in accordance with the provisions of this Section 606, it shall
resign immediately in the manner and with the effect hereinafter specified in
this Article.
Section 607. Resignation and Removal; Appointment of
Successor.
(a) No resignation or removal of the Trustee and
no appointment of a successor Trustee pursuant to this Article shall
become effective until the acceptance of appointment by the successor
Trustee pursuant to Section 608.
(b) The Trustee may resign at any time with
respect to the Securities of one or more series by giving written
notice thereof to the Company. If the instrument of acceptance by a
successor Trustee required by Section 608 shall not have been
delivered to the Trustee within 30 days after the giving of such
notice of resignation, the resigning Trustee may petition any court of
competent jurisdiction for the appointment of a successor Trustee with
respect to such series.
(c) The Trustee may be removed at any time with
respect to the Securities of any series by Act of the Holders of a
majority in principal amount of the Outstanding Securities of such
series, delivered to the Trustee and the Company.
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(d) If at any time:
(1) the Trustee shall fail to comply
with the obligations imposed upon it under Section 310(b) of
the Trust Indenture Act with respect to Securities of any
series after written request therefor by the Company or any
Holder of a Security of such series who has been a bona fide
Holder of a Security of such series for at least six months,
or
(2) the Trustee shall cease to be
eligible under Section 606 and shall fail to resign after
written request therefor by the Company or any such Holder, or
(3) the Trustee shall become incapable
of acting or shall be adjudged a bankrupt or insolvent or a
receiver of the Trustee or of its property shall be appointed
or any public officer shall take charge or control of the
Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
then, in any such case, (i) the Company, by or pursuant to a Board
Resolution, may remove the Trustee with respect to all Securities or
the Securities of such series, or (ii) subject to Section 315(e) of
the Trust Indenture Act, any Holder of a Security who has been a bona
fide Holder of a Security of such series for at least six months may,
on behalf of himself and all others similarly situated, petition any
court of competent jurisdiction for the removal of the Trustee with
respect to all Securities of such series and the appointment of a
successor Trustee or Trustees.
(e) If the Trustee shall resign, be removed or
become incapable of acting, or if a vacancy shall occur in the office
of Trustee for any cause, with respect to the Securities of one or
more series, the Company, by or pursuant to a Board Resolution, shall
promptly appoint a successor Trustee or Trustees with respect to the
Securities of that or those series (it being understood that any such
successor Trustee may be appointed with respect to the Securities of
one or more or all of such series and that at any time there shall be
only one Trustee with respect to the Securities of any particular
series) and shall comply with the applicable requirements of Section
608. If, within one year after such resignation, removal or
incapability, or the occurrence of such vacancy, a successor Trustee
with respect to the Securities of any series shall be appointed by Act
of the Holders of a majority in principal amount of the Outstanding
Securities of such series delivered to the Company and the retiring
Trustee, the successor Trustee so appointed shall, forthwith upon its
acceptance of such
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appointment in accordance with the applicable requirements of Section
608, become the successor Trustee with respect to the Securities of
such series and to that extent supersede the successor Trustee
appointed by the Company. If no successor Trustee with respect to the
Securities of any series shall have been so appointed by the Company
or the Holders of Securities and accepted appointment in the manner
required by Section 608, any Holder of a Security who has been a bona
fide Holder of a Security of such series for at least six months may,
on behalf of himself and all others similarly situated, petition any
court of competent jurisdiction for the appointment of a successor
Trustee with respect to the Securities of such series.
(f) The Company shall give notice of each
resignation and each removal of the Trustee with respect to the
Securities of any series and each appointment of a successor Trustee
with respect to the Securities of any series by mailing written notice
of such event by first-class mail, postage prepaid, to the Holders of
Registered Securities, if any, of such series as their names and
addresses appear in the Security Register and, if Securities of such
series are issued as Bearer Securities, by publishing notice of such
event once in an Authorized Newspaper in each Place of Payment located
outside the United States. Each notice shall include the name of the
successor Trustee with respect to the Securities of such series and
the address of its Corporate Trust Office.
Section 608. Acceptance of Appointment by Successor.
(a) Upon the appointment hereunder of any
successor Trustee with respect to all Securities, such successor
Trustee so appointed shall execute, acknowledge and deliver to the
Company and the retiring Trustee an instrument accepting such
appointment, and thereupon the resignation or removal of the retiring
Trustee shall become effective and such successor Trustee, without any
further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties hereunder of the retiring Trustee;
but, on the request of the Company or such successor Trustee, such
retiring Trustee, upon payment of its charges, shall execute and
deliver an instrument transferring to such successor Trustee all the
rights, powers and trusts of the retiring Trustee and, subject to
Section 1003, shall duly assign, transfer and deliver to such
successor Trustee all property and money held by such retiring Trustee
hereunder, subject nevertheless to its claim, if any, provided for in
Section 605.
(b) Upon the appointment hereunder of any
successor Trustee with respect to the Securities of one or more (but
not all) series, the Company,
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the retiring Trustee and such successor Trustee shall execute and
deliver an indenture supplemental hereto wherein each successor
Trustee shall accept such appointment and which (1) shall contain such
provisions as shall be necessary or desirable to transfer and confirm
to, and to vest in, such successor Trustee all the rights, powers,
trusts and duties of the retiring Trustee with respect to the
Securities of that or those series to which the appointment of such
successor Trustee relates, (2) if the retiring Trustee is not retiring
with respect to all Securities, shall contain such provisions as shall
be deemed necessary or desirable to confirm that all the rights,
powers, trusts and duties of the retiring Trustee with respect to the
Securities of that or those series as to which the retiring Trustee is
not retiring shall continue to be vested in the retiring Trustee, and
(3) shall add to or change any of the provisions of this Indenture as
shall be necessary to provide for or facilitate the administration of
the trusts hereunder by more than one Trustee, it being understood
that nothing herein or in such supplemental indenture shall constitute
such Trustees co-trustees of the same trust, that each such Trustee
shall be trustee of a trust or trusts hereunder separate and apart
from any trust or trusts hereunder administered by any other such
Trustee and that no Trustee shall be responsible for any notice given
to, or received by, or any act or failure to act on the part of any
other Trustee hereunder, and, upon the execution and delivery of such
supplemental indenture, the resignation or removal of the retiring
Trustee shall become effective to the extent provided therein, such
retiring Trustee shall have no further responsibility for the exercise
of rights and powers or for the performance of the duties and
obligations vested in the Trustee under this Indenture with respect to
the Securities of that or those series to which the appointment of
such successor Trustee relates other than as hereinafter expressly set
forth, and such successor Trustee, without any further act, deed or
conveyance, shall become vested with all the rights, powers, trusts
and duties of the retiring Trustee with respect to the Securities of
that or those series to which the appointment of such successor
Trustee relates; but, on request of the Company or such successor
Trustee, such retiring Trustee, upon payment of its charges with
respect to the Securities of that or those series to which the
appointment of such successor relates and subject to Section 1003
shall duly assign, transfer and deliver to such successor Trustee, to
the extent contemplated by such supplemental indenture, the property
and money held by such retiring Trustee hereunder with respect to the
Securities of that or those series to which the appointment of such
successor Trustee relates.
(c) Upon request of any Person appointed
hereunder as a successor Trustee, the Company shall execute any and
all instruments for more fully and certainly vesting in and confirming
to such successor Trustee all such
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rights, powers and trusts referred to in paragraph (a) or (b) of this
Section 608, as the case may be.
(d) No Person shall accept its appointment
hereunder as a successor Trustee unless at the time of such acceptance
such successor Person shall be qualified and eligible under this
Article.
Section 609. Merger, Conversion, Consolidation or
Succession to Business.
Any Corporation into which the Trustee may be merged or
converted or with which it may be consolidated, or any Corporation resulting
from any merger, conversion or consolidation to which the Trustee shall be a
party, or any Corporation succeeding to all or substantially all of the
corporate trust business of the Trustee, shall be the successor of the Trustee
hereunder, without the execution or filing of any paper or any further act on
the part of any of the parties hereto. In case any Securities shall have been
authenticated but not delivered by the Trustee then in office, any successor by
merger, conversion or consolidation to such authenticating Trustee may adopt
such authentication and deliver the Securities so authenticated with the same
effect as if such successor Trustee had itself authenticated such Securities.
Section 610. Appointment of Authenticating Agent.
The Trustee may appoint one or more Authenticating Agents
acceptable to the Company with respect to one or more series of Securities
which shall be authorized to act on behalf of the Trustee to authenticate
Securities of that or those series issued upon original issue, exchange,
registration of transfer or partial redemption or conversion thereof or
pursuant to Section 306, and Securities so authenticated shall be entitled to
the benefits of this Indenture and shall be valid and obligatory for all
purposes as if authenticated by the Trustee hereunder. Wherever reference is
made in this Indenture to the authentication and delivery of Securities by the
Trustee or the Trustee's certificate of authentication, such reference shall be
deemed to include authentication and delivery on behalf of the Trustee by an
Authenticating Agent and a certificate of authentication executed on behalf of
the Trustee by an Authenticating Agent.
Each Authenticating Agent shall be acceptable to the Company
and, except as provided in or pursuant to this Indenture, shall at all times be
a corporation that would be permitted by the Trust Indenture Act to act as
trustee under an indenture qualified under the Trust Indenture Act, is
authorized under applicable law and by its charter to act as an Authenticating
Agent and has a combined capital and surplus
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(computed in accordance with Section 310(a)(2) of the Trust Indenture Act) of
at least $50,000,000. If at any time an Authenticating Agent shall cease to be
eligible in accordance with the provisions of this Section 610, it shall resign
immediately in the manner and with the effect specified in this Section 610.
Any Corporation into which an Authenticating Agent may be
merged or converted or with which it may be consolidated, or any Corporation
resulting from any merger, conversion or consolidation to which such
Authenticating Agent shall be a party, or any Corporation succeeding to the
corporate agency or corporate trust business of an Authenticating Agent, shall
be the successor of such Authenticating Agent hereunder, provided such
Corporation shall be otherwise eligible under this Section 610, without the
execution or filing of any paper or any further act on the part of the Trustee
or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving
written notice thereof to the Trustee and the Company. The Trustee may at any
time terminate the agency of an Authenticating Agent by giving written notice
thereof to such Authenticating Agent and the Company. Upon receiving such a
notice of resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent which shall be acceptable to the Company and shall (i) mail written
notice of such appointment by first-class mail, postage prepaid, to all Holders
of Registered Securities, if any, of the series with respect to which such
Authenticating Agent shall serve, as their names and addresses appear in the
Security Register, and (ii) if Securities of the series are issued as Bearer
Securities, publish notice of such appointment at least once in an Authorized
Newspaper in the place where such successor Authenticating Agent has its
principal office if such office is located outside the United States. Any
successor Authenticating Agent, upon acceptance of its appointment hereunder,
shall become vested with all the rights, powers and duties of its predecessor
hereunder, with like effect as if originally named as an Authenticating Agent.
No successor Authenticating Agent shall be appointed unless eligible under the
provisions of this Section 610.
The Trustee agrees to pay each Authenticating Agent from time
to time reasonable compensation for its services under this Section 610 and the
Trustee shall be entitled to be reimbursed for such payments, subject to the
provisions of Section 605.
The provisions of Sections 308, 602 and 603 shall be
applicable to each Authenticating Agent.
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If an Authenticating Agent is appointed with respect to one or
more series of Securities pursuant to this Section 610, the Securities of such
series may have endorsed thereon, in addition to or in lieu of the Trustee's
certificate of authentication, an alternate certificate of authentication in
the following form:
This is one of the Securities of the series
designated herein referred to in the within-mentioned Indenture.
, As Trustee
-----------------
By
------------------------------ As Authenticating Agent
By
------------------------------ Authorized Signatory
If all of the Securities of any series may not be originally
issued at one time, and if the Trustee does not have an office capable of
authenticating Securities upon original issuance located in a Place of Payment
where the Company wishes to have Securities of such series authenticated upon
original issuance, the Trustee, if so requested in writing (which writing need
not be accompanied by or contained in an Officers' Certificate by the Company),
shall appoint in accordance with this Section 610 an Authenticating Agent
having an office in a Place of Payment designated by the Company with respect
to such series of Securities.
ARTICLE SEVEN
HOLDER'S LISTS AND REPORTS BY TRUSTEE, AND COMPANY
Section 70.1 Company to Furnish Trustee Names and
Addresses of Holders.
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In accordance with Section 312(a) of the Trust Indenture Act,
the Company shall furnish or cause to be furnished to the Trustee
(a) semi-annually with respect to Securities of
each series on June 30 and December 31 of each year or upon such other
dates as are set forth in or pursuant to the Board Resolution or
indenture supplemental hereto authorizing such series, a list, in each
case in such form as the Trustee may reasonably require, of the names
and addresses of Holders as of the applicable date, and
(b) at such other times as the Trustee may
request in writing, within 30 days after the receipt by the Company of
any such request, a list of similar form and content as of a date not
more than 15 days prior to the time such list is furnished,
provided, however, that so long as the Trustee is the Security Registrar no
such list shall be required to be furnished.
Section 702. Preservation of Information; Communications
to Holders.
The Trustee shall comply with the obligations imposed upon it
pursuant to Section 312 of the Trust Indenture Act.
Every Holder of Securities or Coupons, by receiving and
holding the same, agrees with the Company and the Trustee that neither the
Company, the Trustee, any Paying Agent or any Security Registrar shall be held
accountable by reason of the disclosure of any such information as to the names
and addresses of the Holders of Securities in accordance with Section 312 of
the Trust Indenture Act, regardless of the source from which such information
was derived, and that the Trustee shall not be held accountable by reason of
mailing any material pursuant to a request made under Section 312(b) of the
Trust Indenture Act.
Section 703. Reports by Trustee.
(a) Within 60 days after September 15 of each year
commencing with the first September 15 following the first issuance of
Securities pursuant to Section 301, if required by Section 313(a) of the Trust
Indenture Act, the Trustee shall transmit, pursuant to Section 313(c) of the
Trust Indenture Act, a brief report dated as of such September 15 with respect
to any of the events specified in said Section 313(a) which may have occurred
since the later of the immediately preceding September 15 and the date of this
Indenture.
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(b) The Trustee shall transmit the reports required by
Section 313(b) of the Trust Indenture Act at the times specified therein.
(c) Reports pursuant to this Section shall be transmitted
in the manner and to the Persons required by Sections 313(c) and 313(d) of the
Trust Indenture Act.
Section 704. Reports by Company.
The Company, pursuant to Section 314(a) of the Trust Indenture
Act, shall:
(1) file with the Trustee, within 15 days after
the Company is required to file the same with the Commission, 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
Commission may from time to time by rules and regulations prescribe)
which the Company may be required to file with the Commission pursuant
to Section 13 or Section 15(d) of the Securities Exchange Act of 1934;
or, if the Company is not required to file information, documents or
reports pursuant to either of said Sections, then it shall file with
the Trustee and the Commission, in accordance with rules and
regulations prescribed from time to time by the Commission, such of
the supplementary and periodic information, documents and reports
which may be required pursuant to Section 13 of the Securities
Exchange Act of 1934 in respect of a security listed and registered on
a national securities exchange as may be prescribed from time to time
in such rules and regulations;
(2) file with the Trustee and the Commission, in
accordance with rules and regulations prescribed from time to time by
the Commission, such additional information, documents and reports
with respect to compliance by the Company, as the case may be, with
the conditions and covenants of this Indenture as may be required from
time to time by such rules and regulations; and
(3) transmit within 30 days after the filing
thereof with the Trustee, in the manner and to the extent provided in
Section 313(c) of the Trust Indenture Act, such summaries of any
information, documents and reports required to be filed by the Company
pursuant to paragraphs (1) and (2) of this Section 704 as may be
required by rules and regulations prescribed from time to time by the
Commission.
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ARTICLE EIGHT
CONSOLIDATION, MERGER AND SALES
Section 801. Company May Consolidate, Etc., Only on
Certain Terms.
Nothing contained in this Indenture or in any of the
Securities shall prevent any consolidation or merger of the Company with or
into any other Person or Persons (whether or not affiliated with the Company),
or successive consolidations or mergers in which the Company or its successor
or successors shall be a party or parties, or shall prevent any conveyance,
transfer or lease of the property of the Company as an entirety or
substantially as an entirety, to any other Person (whether or not affiliated
with the Company); provided, however, that:
(1) in case the Company shall consolidate with or
merge into another Person or convey, transfer or lease its properties
and assets substantially as an entirety to any Person, the entity
formed by such consolidation or into which the Company is merged or
the Person which acquires by conveyance or transfer, or which leases,
the properties and assets of the Company substantially as an entirety
shall be a Corporation organized and existing under the laws of the
United States of America, any state thereof or the District of
Columbia and shall expressly assume, by an indenture (or indentures,
if at such time there is more than one Trustee) supplemental hereto,
executed by the successor Person and delivered to the Trustee, in form
satisfactory to the Trustee, the due and punctual payment of the
principal of, any premium and interest on and any Additional Amounts
with respect to all the Securities and the performance of every other
covenant of this Indenture on the part of the Company to be performed
or observed;
(2) immediately after giving effect to such
transaction, no event which, after notice or lapse of time, would
become an Event of Default, shall have occurred and be continuing;
(3) either the Company or the successor Person shall
have delivered to the Trustee an Officers' Certificate and an Opinion
of Counsel, stating that such consolidation, merger, conveyance,
transfer or lease and such supplemental indenture comply with this
Article and that all conditions precedent herein provided for relating
to such transaction have been complied with.
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Section 802. Successor Person Substituted for Company.
Upon any consolidation or merger or any conveyance, transfer
or lease of the properties and assets of the Company substantially as an
entirety to any Person in accordance with Section 801, the successor Person
formed by such consolidation or into which the Company is merged or to which
such conveyance, transfer or lease 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 had been named as
the Company herein; and thereafter, except in the case of a lease to another
Person, the predecessor Person shall be released from all obligations and
covenants under this Indenture, the Securities and the Coupons.
ARTICLE NINE
SUPPLEMENTAL INDENTURES
Section 901. Supplemental Indentures without Consent of
Holders.
Without the consent of any Holders of Securities or Coupons,
the Company (when authorized by or pursuant to a Board Resolution) and the
Trustee, at any time and from time to time, may enter into one or more
indentures supplemental hereto, in form satisfactory to the Trustee, for any of
the following purposes:
(1) to evidence the succession of another Person
to the Company, and the assumption by any such successor of the
covenants of the Company herein and in the Securities; or
(2) to add to the covenants of the Company for
the benefit of the Holders of all or any series of Securities (as
shall be specified in such supplemental indenture or indentures) or to
surrender any right or power herein conferred upon the Company; or
(3) to add to or change any of the provisions of
this Indenture to provide that Bearer Securities may be registrable as
to principal, to change or eliminate any restrictions on the payment
of principal of, any premium or interest on or any Additional Amounts
with respect to Securities, to permit Registered Securities to be
exchanged for Bearer Securities, to permit Bearer Securities to be
exchanged for Bearer Securities of other authorized denominations or
to permit or facilitate the issuance of Securities in uncertificated
form, provided any
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such action shall not adversely affect the interests of the Holders of
Securities of any series or any Coupons appertaining thereto in any
material respect; or
(4) to establish the form or terms of Securities
of any series and any Coupons appertaining thereto as permitted by
Sections 201 and 301; or
(5) to evidence and provide for the acceptance of
appointment hereunder by a successor Trustee with respect to the
Securities of one or more series and to add to or change any of the
provisions of this Indenture as shall be necessary to provide for or
facilitate the administration of the trusts hereunder by more than one
Trustee, pursuant to the requirements of Section 608; or
(6) to cure any ambiguity or to correct or
supplement any provision herein which may be defective or inconsistent
with any other provision herein, or to make any other provisions with
respect to matters or questions arising under this Indenture which
shall not adversely affect the interests of the Holders of Securities
of any series or any Coupons appertaining thereto in any material
respect; or
(7) to add to, delete from or revise the
conditions, limitations and restrictions on the authorized amount,
terms or purposes of issue, authentication and delivery of Securities,
as herein set forth; or
(8) to add any additional Events of Default with
respect to all or any series of Securities (as shall be specified in
such supplemental indenture); or
(9) to supplement any of the provisions of this
Indenture to such extent as shall be necessary to permit or facilitate
the defeasance and discharge of any series of Securities pursuant to
Article Four; provided that any such action shall not adversely affect
the interests of any Holder of a Security of such series and any
Coupons appertaining thereto or any other Security or Coupon in any
material respect; or
(10) to secure the Securities pursuant to Section
1006 or otherwise;
(11) to make provision with respect to the
conversion rights of Holders of Convertible Securities pursuant to the
requirements of Section 1706; or
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(12) to amend or supplement any provision contained
herein or in any supplemental indenture, provided that no such
amendment or supplement shall materially adversely affect the
interests of the Holders of any Securities then Outstanding.
Section 902. Supplemental Indentures with Consent of
Holders.
With the consent of the Holders of not less than 66-2/3% in
principal amount of the Outstanding Securities of each series affected by such
supplemental indenture, by Act of said Holders delivered to the Company and the
Trustee, the Company (when authorized by or pursuant to a Company's Board
Resolution), and the Trustee may enter into an Indenture or indentures
supplemental hereto for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this indenture or of
modifying in any manner the rights of the Holders of Securities of such series
under this Indenture; provided, however, that no such supplemental indenture,
without the consent of the Holder of each Outstanding Security affected
thereby, shall
(1) change the Stated Maturity of the principal of,
or any premium or installment of interest on or any Additional Amounts
with respect to, any Security, or reduce the principal amount thereof
or the rate of interest thereon or any Additional Amounts with respect
thereto, or any premium payable upon the redemption thereof or
otherwise, or change the obligation of the Company to pay Additional
Amounts pursuant to Section 1004 (except as contemplated by Section
801(1) and permitted by Section 901(1)), or reduce the amount of the
principal of an Original Issue Discount Security that would be due and
payable upon a declaration of acceleration of the Maturity thereof
pursuant to Section 502 or the amount thereof provable in bankruptcy
pursuant to Section 504, or adversely affect the right of repayment at
the option of any Holder as contemplated by Article Thirteen, or
change the Place of Payment, Currency in which the principal of, any
premium or interest on, or any Additional Amounts with respect to any
Security is payable, or impair the right to institute suit for the
enforcement of any such payment on or after the Stated Maturity
thereof (or, in the case of redemption, on or after the Redemption
Date or, in the case of repayment at the option of the Holder, on or
after the date for repayment), or
(2) reduce the percentage in principal amount of the
Outstanding Securities of any series, the consent of whose Holders is
required for any such supplemental indenture, or the consent of whose
Holders is required for any waiver (of compliance with certain
provisions of this Indenture or certain defaults hereunder and their
consequences) provided for in this Indenture, or reduce the
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requirements of Section 1504 for quorum or voting,
(3) modify the provisions of this Indenture with
respect to the subordination of the Securities in a manner adverse to
the Holders,
(4) modify any of the provisions of this Section
902, or Section 513 or Section 1008, except to increase any such
percentage or to provide that certain other provisions of this
Indenture cannot be modified or waived without the consent of the
Holder of each Outstanding Security affected thereby, or
(5) adversely affect the right to convert any
Convertible Security.
A supplemental indenture which changes or eliminates any
covenant or other provision of this Indenture which shall have been included
expressly and solely for the benefit of one or more particular series of
Securities, or which modifies the rights of the Holders of Securities of such
series with respect to such covenant or other provision, shall be deemed not to
affect the rights under this Indenture of the Holders of Securities of any
other series.
It shall not be necessary for any Act of Holders of Securities
under this Section 902 to approve the particular form of any proposed
supplemental indenture, but it shall be sufficient if such Act shall approve
the substance thereof.
Section 903. Execution of Supplemental Indentures.
As a condition to executing, or accepting the additional
trusts created by, any supplemental indenture permitted by this Article or the
modifications thereby of the trust created by this Indenture, the Trustee shall
be entitled to receive, and (subject to Article Six hereof) shall be fully
protected in relying upon, an Opinion of Counsel stating that the execution of
such supplemental indenture is authorized or permitted by this Indenture. The
Trustee may, but shall not be obligated to, enter into any such supplemental
indenture which affects the Trustee's own rights, duties or immunities under
this Indenture or otherwise.
Section 904. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this
Article, this Indenture shall be modified in accordance therewith, and such
supplemental indenture shall form a part of this Indenture for all purposes;
and every Holder of a Security theretofore or thereafter authenticated and
delivered hereunder and of any Coupon appertaining thereto shall be bound
thereby.
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Section 905. Reference in Securities to Supplemental
Indentures.
Securities of any series authenticated and delivered after the
execution of any supplemental indenture pursuant to this Article may, and shall
if required by the Trustee, bear a notation in form approved by the Trustee as
to any matter provided for in such supplemental indenture. If the Company
shall so determine, new Securities of any series so modified as to conform, in
the opinion of the Trustee and the Company, to any such supplemental indenture
may be prepared and executed by the Company and authenticated and delivered by
the Trustee in exchange for Outstanding Securities of such series.
Section 906. Subordination Unimpaired.
No supplemental indenture entered into under this Article
shall modify, directly or indirectly, the provisions of Article Sixteen or the
definition of Senior Indebtedness in Section 101 in any manner that might alter
or impair the subordination of the Securities with respect to Senior
Indebtedness then outstanding, unless each holder of such Senior Indebtedness
has consented thereto in writing.
Section 907. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article
Nine shall conform to the requirements of the Trust Indenture Act.
ARTICLE TEN
COVENANTS
Section 1001. Payment of Principal and any Premium,
Interest and Additional Amounts.
The Company covenants and agrees for the benefit of the
Holders of the Securities of each series that it will duly and punctually pay
the principal of, any premium and interest on and any Additional Amounts with
respect to the Securities of such series in accordance with the terms thereof,
any Coupons appertaining thereto and this Indenture. Any interest due on any
Bearer Security on or before the Maturity thereof, and any Additional Amounts
payable with respect to such interest, shall be payable only upon presentation
and surrender of the Coupons appertaining thereto for such interest as they
severally mature.
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Section 1002. Maintenance of Office or Agency.
The Company shall maintain in each Place of Payment for any
series of Securities an Office or Agency where Securities of such series (but
not Bearer Securities, except as otherwise provided below, unless such Place of
Payment is located outside the United States) may be presented or surrendered
for payment, where Securities of such series may be surrendered for
registration of transfer or exchange and where notices and demands to or upon
the Company in respect of the Securities of such series relating thereto and
this Indenture may be served. If Securities of a series are issuable as Bearer
Securities, the Company shall maintain, subject to any laws or regulations
applicable thereto, an Office or Agency in a Place of Payment for such series
which is located outside the United States where Securities of such series and
any Coupons appertaining thereto may be presented and surrendered for payment;
provided, however, that if the Securities of such series are listed on any
stock exchange located outside the United States and such stock exchange shall
so require, the Company shall maintain a Paying Agent in the required city
located outside the United States, as the case may be, so long as the
Securities of such series are listed on such exchange. 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,
except that Bearer Securities of such series and any Coupons appertaining
thereto may be presented and surrendered for payment at the place specified for
the purpose with respect to such Securities as provided in or pursuant to this
Indenture, and the Company hereby appoints the Trustee as its agent to receive
all such presentations, surrenders, notices and demands.
Except as otherwise provided in or pursuant to this Indenture,
no payment of principal, premium, interest or Additional Amounts with respect
to Bearer Securities shall be made at any Office or Agency in the United States
or by check mailed to any address in the United States or by transfer to an
account maintained with a bank located in the United States; provided, however,
if amounts owing with respect to any Bearer Securities shall be payable in
Dollars, payment of principal of, any premium or interest on and any Additional
Amounts with respect to any such Security may be made at the Corporate Trust
Office of the Trustee or any Office or Agency designated by the Company in The
City of New York, if (but only if) payment of the full amount of such
principal, premium, interest or Additional Amounts at all offices outside the
United States maintained for such purpose by the Company in accordance with
this Indenture is illegal or effectively precluded by exchange controls or
other similar restrictions.
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The Company may also from time to time designate one or more
other Offices or Agencies where the Securities of one or more series may be
presented or surrendered for any or all such purposes and may from time to time
rescind such designations; provided, however, that no such designation or
rescission shall in any manner relieve the Company of its obligation to
maintain an Office or Agency in each Place of Payment for Securities of any
series for such purposes. The Company shall give prompt written notice to the
Trustee of any such designation or rescission and of any change in the location
of any such other Office or Agency. Unless otherwise provided in or pursuant
to this Indenture, the Company hereby designates as the Place of Payment for
each series The City of New York, and initially appoints the Office or Agency
of the Corporate Trust Office of the Trustee for such purpose. Pursuant to
Section 301(9) of this Indenture, the Company may subsequently appoint a place
or places in The City of New York where such Securities may be payable.
Section 1003. Money for Securities Payments to Be Held in
Trust.
If the Company shall at any time act as its own Paying Agent
with respect to any series of Securities, it shall, on or before each due date
of the principal of, any premium or interest on or Additional Amounts with
respect to any of the Securities of such series, segregate and hold in trust
for the benefit of the Persons entitled thereto a sum of money sufficient to
pay the principal or any premium, interest or Additional Amounts so becoming
due until such sums shall be paid to such Persons or otherwise disposed of as
herein provided, and shall promptly notify the Trustee of its action or failure
so to act.
Whenever the Company shall have one or more Paying Agents for
any series of Securities, it shall, on or prior to each due date of the
principal of, any premium or interest on or any Additional Amounts with respect
to any Securities of such series, deposit with any Paying Agent a sum of money
sufficient to pay the principal or any premium, interest or Additional Amounts
so becoming due, such sum to be held in trust for the benefit of the Persons
entitled thereto, and (unless such Paying Agent is the Trustee) the Company
will promptly notify the Trustee of its action or failure so to act.
The Company shall cause each Paying Agent for any series of
Securities other than the Trustee to execute and deliver to the Trustee an
instrument in which such Paying Agent shall agree with the Trustee, subject to
the provisions of this Section, that such Paying Agent shall:
(1) hold all sums held by it for the payment of
the principal of, any premium or interest on or any Additional Amounts
with respect to Securities
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of such series in trust for the benefit of the Persons entitled
thereto until such sums shall be paid to such Persons or otherwise
disposed of as provided in or pursuant to this Indenture;
(2) give the Trustee notice of any default by the
Company (or any other obligor upon the Securities of such series) in
the making of any payment of principal, any premium or interest on or
any Additional Amounts with respect to the Securities of such series;
(3) at any time during the continuance of any
such default, upon the written request of the Trustee, forthwith pay
to the Trustee all sums so held in trust by such Paying Agent; and
(4) comply with the provisions of the Trust
Indenture Act applicable to it as Paying Agent.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held
in trust by the Company or such Paying Agent, such sums to be held by the
Trustee upon the same terms as those upon which such sums were held by the
Company or such Paying Agent; and, upon such payment by any Paying Agent to the
Trustee, such Paying Agent shall be released from all further liability with
respect to such money.
Except as otherwise provided herein or pursuant hereto, any
money deposited with the Trustee or any Paying Agent, or then held by the
Company, in trust for the payment of the principal of, any premium or interest
on or any Additional Amounts with respect to any Security of any series and
remaining unclaimed for two years after such principal or any such premium or
interest or any such Additional Amounts shall have become due and payable shall
be paid to the Company on Company Request, or (if then held by the Company)
shall be discharged from such trust; and the Holder of such Security or any
Coupon appertaining thereto shall thereafter, as an unsecured general creditor,
look only to the Company for payment thereof, and all liability of the Trustee
or such Paying Agent with respect to such trust money, and all liability of the
Company as trustee thereof, shall thereupon cease; provided, however, that the
Trustee or such Paying Agent, before being required to make any such repayment,
may at the expense of the Company cause to be published once, in an Authorized
Newspaper in each Place of Payment for such series or to be mailed to Holders
of Registered Securities of such series, or both, notice that such money
remains unclaimed and that, after a date specified therein, which shall not be
less than 30 days from the date of such publication or mailing nor shall it be
later than
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two years after such principal and any premium or interest or Additional
Amounts shall have become due and payable, any unclaimed balance of such money
then remaining will be repaid to the Company.
Section 1004. Additional Amounts.
If any Securities of a series provide for the payment of
Additional Amounts, the Company agrees to pay to the Holder of any such
Security or any Coupon appertaining thereto Additional Amounts as provided
therein. Whenever in this Indenture there is mentioned, in any context, the
payment of the principal of or any premium or interest on, or in respect of,
any Security of any series or any Coupon or the net proceeds received on the
sale or exchange of any Security of any series, such mention shall be deemed to
include mention of the payment of Additional Amounts provided by the terms of
such series established hereby or pursuant hereto to the extent that, in such
context, Additional Amounts are, were or would be payable in respect thereof
pursuant to such terms, and express mention of the payment of Additional
Amounts (if applicable) in any provision hereof shall not be construed as
excluding Additional Amounts in those provisions hereof where such express
mention is not made.
Except as otherwise provided in or pursuant to this Indenture,
if the Securities of a series provide for the payment of Additional Amounts, at
least 10 days prior to the first Interest Payment Date with respect to such
series of Securities (or if the Securities of such series shall not bear
interest prior to Maturity, the first day on which a payment of principal is
made), and at least 10 days prior to each date of payment of principal or
interest if there has been any change with respect to the matters set forth in
the below-mentioned Officers' Certificate, the Company shall furnish to the
Trustee and the principal Paying Agent or Paying Agents, if other than the
Trustee, an Officers' Certificate instructing the Trustee and such Paying Agent
or Paying Agents whether such payment of principal of or interest on the
Securities of such series shall be made to Holders of Securities of such series
or the Coupons appertaining thereto who are United States Aliens without
withholding for or on account of any tax, assessment or other governmental
charge described in the Securities of such series. If any such withholding
shall be required, then such Officers' Certificate shall specify by country the
amount, if any, required to be withheld on such payments to such Holders of
Securities or Coupons, and the Company agrees to pay to the Trustee or such
Paying Agent the Additional Amounts required by the terms of such Securities.
The Company covenants to indemnify the Trustee and any Paying Agent for, and to
hold them harmless against, any loss, liability or expense (including
reasonable fees and expenses) reasonably incurred without negligence or bad
faith on their part arising out of or in connection with actions taken or
omitted by any of them in reliance on any Officers' Certificate furnished
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pursuant to this Section 1004.
Section 1005. Limitation Upon Disposition of Voting Stock
of Significant Subsidiaries.
So long as any of the Securities shall be Outstanding but
subject to the provisions of Article Eight, the Company:
(a) will not, nor will it permit any Subsidiary to,
sell, assign, transfer or otherwise dispose of any shares of,
securities convertible into or options, warrants or rights to
subscribe for or purchase shares of, Voting Stock of a Significant
Subsidiary (other than sales of directors qualifying shares), and will
not permit a Significant Subsidiary to issue any shares of, or
securities convertible into or options, warrants or rights to
subscribe for or purchase shares of, such Voting Stock (other than
sales of directors qualifying shares) if, in each case, after giving
effect to any such transaction and to the issuance of the maximum
number of shares of Voting Stock of such Significant Subsidiary
issuable upon the exercise of all such convertible securities,
options, warrants or rights, such Significant Subsidiary would cease
to be a Controlled Subsidiary, or
(b) will not permit a Significant Subsidiary to
(i) merge or consolidate with or into any
other corporation, unless the surviving corporation is the
Company or is, or upon consummation of the merger or
consolidation will become, a Controlled Subsidiary; or
(ii) lease, sell or transfer all or
substantially all of its properties and assets to any
corporation or other Person, except to the Company or to a
Controlled Subsidiary or a Person that, upon such lease, sale
or transfer, will become a Controlled Subsidiary.
Notwithstanding the foregoing, any such sale, assignment or
transfer of securities, any such merger or consolidation or any such lease,
sale or transfer of properties and assets shall not be prohibited if required
(i) by any law or any rule, regulation or order of any governmental agency or
authority or (ii) as a condition imposed by any law or any rule, regulation or
order of any governmental agency or authority to the acquisition by the
Company, directly or indirectly, through purchase of stock or assets, merger,
consolidation or otherwise, of any Person, provided that, after giving effect
to such disposition and acquisition, (A) such Person will be a Controlled
Subsidiary, and (B) the Consolidated Assets of the Company will be at least
equal to
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the Consolidated Assets of the Company prior thereto; and nothing in this
section shall prohibit the Company from the sale or transfer of assets in
connection with any securitization transaction.
Section 1006. Limitation on Creation of Liens.
So long as any of the Securities shall be outstanding, the
Company will not, nor will it permit any Subsidiary to, create, assume, incur
or suffer to be created, assumed or incurred or to exist any pledge,
encumbrance or lien, as security for indebtedness for borrowed money, upon any
shares of, or securities convertible into or options, warrants or rights to
subscribe for or purchase shares of, Voting Stock of a Significant Subsidiary,
directly or indirectly, without making effective provision whereby the
Securities of all series shall be equally and ratably secured with any and all
such indebtedness if, treating such pledge, encumbrance or lien as a transfer
of the shares of, or securities convertible into or options, warrants or rights
to subscribe for or purchase shares of, Voting Stock subject thereto to the
secured party and to the issuance of the maximum number of shares of Voting
Stock of such Significant Subsidiary issuable upon the exercise of all such
convertible securities, options, warrants or rights, such Significant
Subsidiary would not continue to be a Controlled Subsidiary.
Section 1007. Corporate Existence.
Subject to Article Eight, the Company will do or cause to be
done all things necessary to preserve and keep in full force and effect its
corporate existence and the corporate existence of each Significant Subsidiary
and its rights (charter and statutory) and franchises and those of each such
Significant Subsidiary; provided, however, that neither the Company nor any
Significant Subsidiary shall be required to preserve any such right or
franchise if the Company or such Significant Subsidiary, as the case may be,
shall determine that the preservation thereof is no longer desirable in the
conduct of its business and that the loss thereof is not disadvantageous in any
material respect to the Holders.
Section 1008. Waiver of Certain Covenants.
The Company may omit in any particular instance to comply with
any term, provision or condition set forth in Section 1005, 1006 or 1007 with
respect to the Securities of any series if before the time for such compliance
the Holders of at least a majority in principal amount of the Outstanding
Securities of such series, by Act of such Holders, either shall waive such
compliance in such instance or generally shall have waived compliance with such
term, provision or condition, but no such waiver shall
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extend to or affect such term, provision or condition except to the extent so
expressly waived, and, until such waiver shall become effective, the
obligations of the Company and the duties of the Trustee in respect of any such
term, provision or condition shall remain in full force and effect.
Section 1009. Company Statement as to Compliance; Notice of
Certain Defaults.
(a) The Company shall deliver to the Trustee, within 120
days after the end of each fiscal year, a written statement (which need not be
contained in or accompanied by an Officers' Certificate) signed by the
principal executive officer, the principal financial officer or the principal
accounting officer of the Company, stating that
(1) a review of the activities of the Company
during such year and of its performance under this Indenture has been
made under his or her supervision, and
(2) to the best of his or her knowledge, based on
such review, (a) the Company has complied with all the conditions and
covenants imposed on it under this Indenture throughout such year, or,
if there has been a default in the fulfillment of any such condition
or covenant, specifying each such default known to him or her and the
nature and status thereof, and (b) no event has occurred and is
continuing which is, or after notice or lapse of time or both would
become, an Event of Default, or, if such an event has occurred and is
continuing, specifying each such event known to him and the nature and
status thereof.
[(b) The Company shall deliver to the Trustee, within five
days after the occurrence thereof, written notice of any event which after
notice or lapse of time or both would become an Event of Default pursuant to
clause (4) of Section 501.]
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
Section 1101. Applicability of Article.
Redemption of Securities of any series at the option of the
Company as permitted or required by the terms of such Securities shall be made
in accordance with the terms of such Securities and (except as otherwise
provided herein or pursuant
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hereto) this Article.
Section 1102. Election to Redeem; Notice to Trustee.
The election of the Company to redeem any Securities shall be
evidenced by or pursuant to a Board Resolution. In case of any redemption at
the election of the Company of the Securities of any series, with the same
issue date, interest rate, Stated Maturity and other terms, the Company shall,
at least 60 days prior to the Redemption Date fixed by the Company (unless a
shorter notice shall be satisfactory to the Trustee), notify the Trustee of
such Redemption Date and of the principal amount of Securities of such series
to be redeemed.
Section 1103. Selection by Trustee of Securities to be
Redeemed.
If less than all the Securities of any series with the same
issue date, interest rate, Stated Maturity and other terms are to be redeemed,
the particular Securities to be redeemed shall be selected not more than 60
days prior to the Redemption Date by the Trustee from the Outstanding
Securities of such series not previously called for redemption, by such method
as the Trustee shall deem fair and appropriate and which may provide for the
selection for redemption of portions of the principal amount of Registered
Securities of such series; provided, however, that no such partial redemption
shall reduce the portion of the principal amount of a Registered Security of
such series not redeemed to less than the minimum denomination for a Security
of such series established herein or pursuant hereto.
If any Convertible Security selected for partial redemption is
converted in part before termination of the conversion right with respect to
the portion of the Security so selected, the converted portion of such Security
shall be deemed (so far as may be) to be the portion selected for redemption.
Securities which have been converted during a selection of Securities to be
redeemed shall be treated by the Trustee as Outstanding for the purpose of such
selection.
The Trustee shall promptly notify the Company and the Security
Registrar (if other than itself) in writing of the Securities selected for
redemption and, in the case of any Securities selected for partial redemption,
the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context
otherwise requires, all provisions relating to the redemption of Securities
shall relate, in the case of any Securities redeemed or to be redeemed only in
part, to the portion of the principal of such Securities which has been or is
to be redeemed.
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Section 1104. Notice of Redemption.
Notice of redemption shall be given in the manner provided in
Section 106, not less than 30 nor more than 60 days prior to the Redemption
Date, unless a shorter period is specified in the Securities to be redeemed, to
the Holders of Securities to be redeemed. Failure to give notice by mailing in
the manner herein provided to the Holder of any Registered Securities
designated for redemption as a whole or in part, or any defect in the notice to
any such Holder, shall not affect the validity of the proceedings for the
redemption of any other Securities or portion thereof.
Any notice that is mailed to the Holder of any Registered
Securities in the manner herein provided shall be conclusively presumed to have
been duly given, whether or not such Holder receives the notice.
All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price,
(3) if less than all Outstanding Securities of
any series are to be redeemed, the identification (and, in the case of
partial redemption, the principal amount) of the particular Security
or Securities to be redeemed,
(4) in case any Security is to be redeemed in
part only, the notice which relates to such Security shall state that
on and after the Redemption Date, upon surrender of such Security, the
Holder of such Security will receive, without charge, a new Security
or Securities of authorized denominations for the principal amount
thereof remaining unredeemed,
(5) that, on the Redemption Date, the Redemption
Price shall become due and payable upon each such Security or portion
thereof to be redeemed, and, if applicable, that interest thereon
shall cease to accrue on and after said date,
(6) the place or places where such Securities,
together (in the case of Bearer Securities) with all Coupons
appertaining thereto, if any, maturing after the Redemption Date, are
to be surrendered for payment of the Redemption Price and any accrued
interest and Additional Amounts pertaining thereto,
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(7) that the redemption is for a sinking fund, if
such is the case,
(8) that, unless otherwise specified in such
notice, Bearer Securities of any series, if any, surrendered for
redemption must be accompanied by all Coupons maturing subsequent to
the date fixed for redemption or the amount of any such missing Coupon
or Coupons will be deducted from the Redemption Price, unless security
or indemnity satisfactory to the Company, the Trustee and any Paying
Agent is furnished,
(9) if Bearer Securities of any series are to be
redeemed and any Registered Securities of such series are not to be
redeemed, and if such Bearer Securities may be exchanged for
Registered Securities not subject to redemption on the Redemption Date
pursuant to Section 305 or otherwise, the last date, as determined by
the Company, on which such exchanges may be made,
(10) the CUSIP number or the Euro-clear or the CEDEL
reference numbers of such Securities, if any (or any other numbers
used by a Depository to identify such Securities), and
(11) in the case of Convertible Securities, the
Conversion Price then in effect, the date on which the right to
convert the principal amount of the Securities or the portions thereof
to be redeemed will terminate and the place or places where such
Securities may be surrendered for conversion.
A notice of redemption published in an Authorized Newspaper as
contemplated by Section 106 need not identify particular Registered Securities
to be redeemed.
Notice of redemption of Securities to be redeemed at the
election of the Company shall be given by the Company or, at the Company's
request, by the Trustee in the name and at the expense of the Company.
Section 1105. Deposit of Redemption Price.
On or prior to any Redemption Date, the Company shall deposit
with the Trustee or with a Paying Agent (or, if the Company is acting as its
own Paying Agent, segregate and hold in trust as provided in Section 1003) an
amount of money sufficient to pay the Redemption Price of, and (except if the
Redemption Date shall be an Interest Payment Date) any accrued interest on and
Additional Amounts with respect thereto, all the Securities or portions thereof
which are to be redeemed on that date.
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If any Convertible Security or portion thereof called for
redemption is converted pursuant to Article Seventeen, any money deposited with
the Trustee or so segregated and held in trust for the redemption of such
Security or portion thereof shall (subject to any right of the Holder of the
Security on a Regular Record Date preceding such conversion to receive
interest) be paid to the Company upon Company Request or, if then held by the
Company, shall be discharged from such trust.
Section 1106. Securities Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the
Securities so to be redeemed shall, on the Redemption Date, become due and
payable at the Redemption Price therein specified, and from and after such date
(unless the Company shall default in the payment of the Redemption Price and
accrued interest) such Securities shall cease to bear interest and the Coupons
for such interest appertaining to any Bearer Securities so to be redeemed,
except to the extent provided below, shall be void. Upon surrender of any such
Security for redemption in accordance with said notice, together with all
Coupons, if any, appertaining thereto maturing after the Redemption Date, such
Security shall be paid by the Company at the Redemption Price, together with
any accrued interest and Additional Amounts to the Redemption Date; provided,
however, that installments of interest on Bearer Securities whose Stated
Maturity is on or prior to the Redemption Date shall be payable only upon
presentation and surrender of Coupons for such interest (at an Office or Agency
located outside the United States except as otherwise provided in Section
1002), and provided, further, that installments of interest on Registered
Securities whose Stated Maturity is on or prior to the Redemption Date shall be
payable to the Holders of such Securities, or one or more Predecessor
Securities, registered as such at the close of business on the Regular Record
Dates therefor according to their terms and the provisions of Section 307.
If any Bearer Security surrendered for redemption shall not be
accompanied by all appurtenant Coupons maturing after the Redemption Date, such
Security may be paid after deducting from the Redemption Price an amount equal
to the face amount of all such missing Coupons, or the surrender of such
missing Coupon or Coupons may be waived by the Company and the Trustee if there
be furnished to them such security or indemnity as they may require to save
each of them and any Paying Agent harmless. If thereafter the Holder of such
Security shall surrender to the Trustee or any Paying Agent any such missing
Coupon in respect of which a deduction shall have been made from the Redemption
Price, such Holder shall be entitled to receive the amount so deducted;
provided, however, that any interest or Additional Amounts represented by
Coupons shall be payable only upon presentation and surrender of those Coupons
at an Office or Agency for such Security located outside of
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the United States except as otherwise provided in Section 1002.
If any Security called for redemption shall not be so paid
upon surrender thereof for redemption, the principal and any premium, until
paid, shall bear interest from the Redemption Date at the rate prescribed
therefor in the Security.
Section 1107. Securities Redeemed in Part.
Any Registered Security which is to be redeemed only in part
shall be surrendered at any Office or Agency for such Security (with, if the
Company or the Trustee so requires, due endorsement by, or a written instrument
of transfer in form satisfactory to the Company and the Trustee duly executed
by, the Holder thereof or his attorney duly authorized in writing) and the
Company shall execute and the Trustee shall authenticate and deliver to the
Holder of such Security without service charge, a new Registered Security or
Securities of the same series, containing identical terms and provisions, of
any authorized denomination as requested by such Holder in aggregate principal
amount equal to and in exchange for the unredeemed portion of the principal of
the Security so surrendered. If a Security in global form is so surrendered,
the Company shall execute, and the Trustee shall authenticate and deliver to
the U.S. Depository or other Depository for such Security in global form as
shall be specified in the Company Order with respect thereto to the Trustee,
without service charge, a new Security in global form in a denomination equal
to and in exchange for the unredeemed portion of the principal of the Security
in global form so surrendered.
Section 1108. Conversion Arrangements on Call for
Redemption.
Notwithstanding anything to the contrary contained in this
Indenture, in connection with any redemption of Convertible Securities of any
series, the Company, by an agreement with one or more investment bankers or
other purchasers, may arrange for such purchasers to purchase all such
Convertible Securities called for redemption (the "Called Securities") which
are either (i) surrendered for redemption or (ii) not duly surrendered for
redemption or conversion prior to the close of business on the Redemption Date,
and to convert the same into shares of Common Stock, by the purchasers'
depositing with the Trustee (acting as Paying Agent with respect to the deposit
of such amount and as conversion agent with respect to the conversion of such
Called Securities), in trust for the Holders of the Called Securities, on or
prior to the Redemption Date in the manner agreed to by the Company and such
purchasers, an amount sufficient to pay the Redemption Price, payable by the
Company on redemption of such Called Securities. In connection with any such
arrangement for purchase and conversion, the Trustee as Paying Agent shall pay
on or after the Redemption Date such amounts so deposited by the purchasers in
exchange for Called Securities
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surrendered for redemption prior to the close of business on the Redemption
Date and for all Called Securities surrendered after such Redemption Date.
Notwithstanding anything to the contrary contained in this Article Eleven, the
obligation of the Company to pay the Redemption Price of such Called Securities
shall be satisfied and discharged to the extent such amount is so paid by such
purchasers, provided, however, that nothing in this Section 1108 shall in any
way relieve the Company of the obligation to pay such Redemption Price on all
Called Securities to the extent such amount is not so paid by said purchasers.
For all purposes of this Indenture, any Called Securities surrendered by the
Holders for redemption, and any Called Securities not duly surrendered for
redemption or conversion prior to the close of business on the Redemption Date,
shall be deemed acquired by such purchasers from such Holders and surrendered
by such purchasers for conversion and shall in all respects be deemed to have
been converted, all as of immediately prior to the close of business on the
Redemption Date, subject to the deposit by the purchasers of the above amount
as aforesaid. Nothing in this Section 1108 shall in any way limit the right of
any Holder of a Security to convert his Security pursuant to the terms of this
Indenture and of such Security at any time prior to the close of business on
the Redemption Date applicable thereto.
ARTICLE TWELVE
SINKING FUNDS
Section 1201. Applicability of Article.
The provisions of this Article shall be applicable to any
sinking fund for the retirement of Securities of a series, except as otherwise
permitted or required by any form of Security of such series issued pursuant to
this Indenture.
The minimum amount of any sinking fund payment provided for by
the terms of Securities of any series is herein referred to as a "mandatory
sinking fund payment", and any payment in excess of such minimum amount
provided for by the terms of Securities of such series is herein referred to as
an "optional sinking fund payment". If provided for by the terms of Securities
of any series, the cash amount of any sinking fund payment may be subject to
reduction as provided in Section 1202. Each sinking fund payment shall be
applied to the redemption of Securities of any series as provided for by the
terms of Securities of such series.
Section 1202. Satisfaction of Sinking Fund Payments with
Securities.
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The Company may, in satisfaction of all or any part of any
sinking fund payment with respect to the Securities of any series to be made
pursuant to the terms of such Securities (1) deliver Outstanding Securities of
such series (other than any of such Securities previously called for redemption
or any of such Securities in respect of which cash shall have been released to
the Company), together in the case of any Bearer Securities of such series with
all unmatured Coupons appertaining thereto, and (2) apply as a credit
Securities of such series which have been redeemed either at the election of
the Company pursuant to the terms of such series of Securities or through the
application of permitted optional sinking fund payments pursuant to the terms
of such Securities or which have been surrendered for conversion pursuant to
Article Seventeen, provided that such series of Securities have not been
previously so credited. Such Securities shall be received and credited for
such purpose by the Trustee at the Redemption Price specified in such
Securities for redemption through operation of the sinking fund and the amount
of such sinking fund payment shall be reduced accordingly. If as a result of
the delivery or credit of Securities of any series in lieu of cash payments
pursuant to this Section 1202, the principal amount of Securities of such
series to be redeemed in order to exhaust the aforesaid cash payment shall be
less than $100,000, the Trustee need not call Securities of such series for
redemption, except upon Company Request, and such cash payment shall be held by
the Trustee or a Paying Agent and applied to the next succeeding sinking fund
payment, provided, however, that the Trustee or such Paying Agent shall at the
request of the Company from time to time pay over and deliver to the Company
any cash payment so being held by the Trustee or such Paying Agent upon
delivery by the Company to the Trustee of Securities of that series purchased
by the Company having an unpaid principal amount equal to the cash payment
requested to be released to the Company.
Section 1203. Redemption of Securities for Sinking Fund.
Not less than 45 days prior to each sinking fund payment date
for any series of Securities (unless a shorter notice shall be satisfactory to
the Trustee), the Company shall deliver to the Trustee an Officers' Certificate
specifying the amount of the next ensuing mandatory sinking fund payment for
that series pursuant to the terms of that series, the portion thereof, if any,
which is to be satisfied by payment of cash and the portion thereof, if any,
which is to be satisfied by delivering and crediting of Securities of that
series pursuant to Section 1202, and the optional amount, if any, to be added
in cash to the next ensuing mandatory sinking fund payment, and will also
deliver to the Trustee any Securities to be so credited and not theretofore
delivered. If such Officers' Certificate shall specify an optional amount to
be added in cash to the next ensuing mandatory sinking fund payment, the
Company shall thereupon be obligated to pay the amount therein specified. Not
less than 40 days before each such sinking fund payment date the Trustee shall
select the Securities to be redeemed upon
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such sinking fund payment date in the manner specified in Section 1103 and
cause notice of the redemption thereof to be given not less than 30 nor more
than 40 days prior to the sinking fund payment date in the name of and at the
expense of the Company in the manner provided in Section 1104. Such notice
having been duly given, the redemption of such Securities shall be made upon
the terms and in the manner stated in Sections 1106 and 1107.
ARTICLE THIRTEEN
REPAYMENT AT THE OPTION OF HOLDERS
Section 1301. Applicability of Article.
Securities of any series which are repayable at the option of
the Holders thereof before their Stated Maturity shall be repaid in accordance
with the terms of the Securities of such series. The repayment of any principal
amount of Securities pursuant to such option of the Holder to require repayment
of Securities before their Stated Maturity, for purposes of Section 309, shall
not operate as a payment, redemption or satisfaction of the indebtedness
represented by such Securities unless and until the Company, at its option,
shall deliver or surrender the same to the Trustee with a directive that such
Securities be cancelled. Notwithstanding anything to the contrary contained in
this Section 1301, in connection with any repayment of Securities, the Company
may arrange for the purchase of any Securities by an agreement with one or more
investment bankers or other purchasers to purchase such Securities by paying to
the Holders of such Securities on or before the close of business on the
repayment date an amount not less than the repayment price payable by the
Company on repayment of such Securities, and the obligation of the Company to
pay the repayment price of such Securities shall be satisfied and discharged to
the extent such payment is so paid by such purchasers.
ARTICLE FOURTEEN
SECURITIES IN FOREIGN CURRENCIES
Section 1401. Applicability of Article.
Whenever this Indenture provides for (i) any action by, or the
determination of any of the rights of, Holders of Securities of any series in
which not all of such Securities are denominated in the same Currency, or (ii)
any distribution to Holders of Securities, in the absence of any provision to
the contrary in the form of Security of any particular series, any amount in
respect of any Security denominated in
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a Currency other than Dollars shall be treated for any such action or
distribution as that amount of Dollars that could be obtained for such amount
on such reasonable basis of exchange and as of the record date with respect to
Registered Securities of such series (if any) for such action, determination of
rights or distribution (or, if there shall be no applicable record date, such
other date reasonably proximate to the date of such action, determination of
rights or distribution) as the Company may specify in a written notice to the
Trustee or, in the absence of such written notice, as the Trustee may
determine.
ARTICLE FIFTEEN
MEETINGS OF HOLDERS OF SECURITIES
Section 1501. Purposes for Which Meetings May Be Called.
A meeting of Holders of Securities of any series may be called
at any time and from time to time pursuant to this Article to make, give or
take any request, demand, authorization, direction, notice, consent, waiver or
other action provided by this Indenture to be made, given or taken by Holders
of Securities of such series.
Section 1502. Call, Notice and Place of Meetings.
(a) The Trustee may at any time call a meeting of Holders
of Securities of any series for any purpose specified in Section 1501, to be
held at such time and at such place in The City of New York, or, if Securities
of such series have been issued in whole or in part as Bearer Securities, in
London or in such place outside the United States as the Trustee shall
determine. Notice of every meeting of Holders of Securities of any series,
setting forth the time and the place of such meeting and in general terms the
action proposed to be taken at such meeting, shall be given, in the manner
provided in Section 106, not less than 21 nor more than 180 days prior to the
date fixed for the meeting.
(b) In case at any time the Company (by or pursuant to a
Board Resolution) or the Holders of at least 10% in principal amount of the
Outstanding Securities of any series shall have requested the Trustee to call a
meeting of the Holders of Securities of such series for any purpose specified
in Section 1501, by written request setting forth in reasonable detail the
action proposed to be taken at the meeting, and the Trustee shall not have made
the first publication of the notice of such meeting within 21 days after
receipt of such request or shall not thereafter proceed to cause the meeting to
be held as provided herein, then the Company or the Holders of Securities of
such series in the amount above specified, as the case may be, may
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determine the time and the place in The City of New York, or, if Securities of
such series are to be issued as Bearer Securities, in London for such meeting
and may call such meeting for such purposes by giving notice thereof as
provided in subsection (a) of this Section 1502.
Section 1503. Persons Entitled to Vote at Meetings.
To be entitled to vote at any meeting of Holders of Securities
of any series, a Person shall be (1) a Holder of one or more Outstanding
Securities of such series, or (2) a Person appointed by an instrument in
writing as proxy for a Holder or Holders of one or more Outstanding Securities
of such series by such Holder or Holders. The only Persons who shall be
entitled to be present or to speak at any meeting of Holders of Securities of
any series shall be the Persons entitled to vote at such meeting and their
counsel, any representatives of the Trustee and its counsel and any
representatives of the Company and its counsel.
Section 1504. Quorum; Action.
The Persons entitled to vote a majority in principal amount of
the Outstanding Securities of a series shall constitute a quorum for a meeting
of Holders of Securities of such series; provided, however, that if any action
is to be taken at such meeting with respect to a consent or waiver which this
Indenture expressly provides may be given by the Holders of not less than
66-2/3% in principal amount of the Outstanding Securities of a series, the
Persons entitled to vote 66-2/3% in principal amount of the Outstanding
Securities of such series shall constitute a quorum. In the absence of a
quorum within 30 minutes after the time appointed for any such meeting, the
meeting shall, if convened at the request of Holders of Securities of such
series, be dissolved. In any other case the meeting may be adjourned for a
period of not less than 10 days as determined by the chairman of the meeting
prior to the adjournment of such meeting. In the absence of a quorum at any
such adjourned meeting, such adjourned meeting may be further adjourned for a
period of not less than 10 days as determined by the chairman of the meeting
prior to the adjournment of such adjourned meeting. Notice of the reconvening
of any adjourned meeting shall be given as provided in Section 1502(a), except
that such notice need be given only once not less than five days prior to the
date on which the meeting is scheduled to be reconvened. Notice of the
reconvening of an adjourned meeting shall state expressly the percentage, as
provided above, of the principal amount of the Outstanding Securities of such
series which shall constitute a quorum.
Except as limited by the proviso to Section 902, any
resolution presented to a meeting or adjourned meeting duly reconvened at which
a quorum is present as
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aforesaid may be adopted only by the affirmative vote of the Holders of a
majority in principal amount of the Outstanding Securities of that series;
provided, however, that, except as limited by the proviso to Section 902, any
resolution with respect to any consent or waiver which this Indenture expressly
provides may be given by the Holders of not less than 66-2/3% in principal
amount of the Outstanding Securities of a series may be adopted at a meeting or
an adjourned meeting duly convened and at which a quorum is present as
aforesaid only by the affirmative vote of the Holders of 66-2/3% in principal
amount of the Outstanding Securities of that series; and provided, further,
that, except as limited by the proviso to Section 902, any resolution with
respect to any request, demand, authorization, direction, notice, consent,
waiver or other action which this Indenture expressly provides may be made,
given or taken by the Holders of a specified percentage, which is less than a
majority, in principal amount of the Outstanding Securities of a series may be
adopted at a meeting or an adjourned meeting duly reconvened and at which a
quorum is present as aforesaid by the affirmative vote of the Holders of such
specified percentage in principal amount of the Outstanding Securities of such
series.
Any resolution passed or decision taken at any meeting of
Holders of Securities of any series duly held in accordance with this Section
1504 shall be binding on all the Holders of Securities of such series and the
Coupons appertaining thereto, whether or not such Holders were present or
represented at the meeting.
Section 1505. Determination of Voting Rights; Conduct and
Adjournment of Meetings.
(a) Notwithstanding any other provisions of this
Indenture, the Trustee may make such reasonable regulations as it may deem
advisable for any meeting of Holders of Securities of such series in regard to
proof of the holding of Securities of such series and of the appointment of
proxies and in regard to the appointment and duties of inspectors of votes, the
submission and examination of proxies, certificates and other evidence of the
right to vote, and such other matters concerning the conduct of the meeting as
it shall deem appropriate. Except as otherwise permitted or required by any
such regulations, the holding of Securities shall be proved in the manner
specified in Section 104 and the appointment of any proxy shall be proved in
the manner specified in Section 104 or by having the signature of the person
executing the proxy witnessed or guaranteed by any trust company, bank or
banker authorized by Section 104 to certify to the holding of Bearer
Securities. Such regulations may provide that written instruments appointing
proxies, regular on their face, may be presumed valid and genuine without the
proof specified in Section 104 or other proof.
(b) The Trustee shall, by an instrument in writing,
appoint a temporary
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chairman of the meeting, unless the meeting shall have been called by the
Company or by Holders of Securities as provided in Section 1502(b), in which
case the Company or the Holders of Securities of the series calling the
meeting, as the case may be, shall in like manner appoint a temporary chairman.
A permanent chairman and a permanent secretary of the meeting shall be elected
by vote of the Persons entitled to vote a majority in principal amount of the
Outstanding Securities of such series represented at the meeting.
(c) At any meeting, each Holder of a Security of such
series or proxy shall be entitled to one vote for each $1,000 principal amount
of Securities of such series held or represented by him; provided, however,
that no vote shall be cast or counted at any meeting in respect of any Security
challenged as not Outstanding and ruled by the chairman of the meeting to be
not Outstanding. The chairman of the meeting shall have no right to vote,
except as a Holder of a Security of such series or proxy.
(d) Any meeting of Holders of Securities of any series
duly called pursuant to Section 1502 at which a quorum is present may be
adjourned from time to time by Persons entitled to vote a majority in principal
amount of the Outstanding Securities of such series represented at the meeting;
and the meeting may be held as so adjourned without further notice.
Section 1506. Counting Votes and Recording Action of
Meetings.
The vote upon any resolution submitted to any meeting of
Holders of Securities of any series shall be by written ballots on which shall
be subscribed the signatures of the Holders of Securities of such series or of
their representatives by proxy and the principal amounts and serial numbers of
the Outstanding Securities of such series held or represented by them. The
permanent chairman of the meeting shall appoint two inspectors of votes who
shall count all votes cast at the meeting for or against any resolution and who
shall make and file with the secretary of the meeting their verified written
reports in triplicate of all votes cast at the meeting. A record, at least in
triplicate, of the proceedings of each meeting of Holders of Securities of any
series shall be prepared by the secretary of the meeting and there shall be
attached to said record the original reports of the inspectors of votes on any
vote by ballot taken thereat and affidavits by one or more persons having
knowledge of the facts setting forth a copy of the notice of the meeting and
showing that said notice was given as provided in Section 1502 and, if
applicable, Section 1504. Each copy shall be signed and verified by the
affidavits of the permanent chairman and secretary of the meeting and one such
copy shall be delivered to the Company, and another to the Trustee to be
preserved by the Trustee, the latter to have attached thereto the ballots voted
at the
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meeting. Any record so signed and verified shall be conclusive evidence of the
matters therein stated.
ARTICLE SIXTEEN
SUBORDINATION
Section 1601. Securities Subordinated to Senior Indebtedness
The Company covenants and agrees, and each Holder of
Securities, by his acceptance thereof, likewise covenants and agrees, that the
indebtedness evidenced by the Securities and the payment of the principal of
(and premium, if any) and interest on and any Additional Amounts payable in
respect thereof is hereby expressly subordinated, to the extent and in the
manner hereinafter set forth, in right of payment to the prior payment in full
of Senior Indebtedness.
Anything in this Indenture or in the Securities of any series
to the contrary notwithstanding, the indebtedness evidenced by the Securities
shall be subordinate and junior in right of payment, to the extent and in the
manner hereinafter set forth, to all Senior Indebtedness:
(a) In the event of any insolvency or bankruptcy
proceedings, and any receivership, liquidation,
reorganization, arrangement or other similar proceedings in
connection therewith, relative to the Company or to its
property, and in the event of any proceedings for voluntary
liquidation, dissolution or other winding-up of the Company,
whether or not involving insolvency or bankruptcy, then the
holders of Senior Indebtedness shall be entitled to receive
payment in full of all principal, premium and interest on all
Senior Indebtedness before the Holders of the Securities or
any Coupons are entitled to receive any payment on account of
principal, premium, if any, interest or Additional Amounts
upon the Securities, and to that end (but subject to the power
of a court of competent jurisdiction to make other equitable
provisions reflecting the rights conferred in the Securities
upon Senior Indebtedness and the Holders thereof with respect
to the subordinated indebtedness represented by the Securities
and the Holders hereof by a lawful plan of reorganization
under applicable bankruptcy law) the holders of Senior
Indebtedness shall be entitled to receive for application in
payment thereof any payment or distribution of
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any kind or character, whether in cash or property or
securities, which may be payable or deliverable in any such
proceedings in respect of the Securities after giving effect
to any concurrent payment or distribution in respect of such
Senior Indebtedness. For purposes of this Article only, the
words "cash, property or securities" shall not be deemed to
include shares of stock of the Company as reorganized or
readjusted, or securities of the Company or any other
corporation provided for by a plan of reorganization or
readjustment which are subordinated in right of payment to all
Senior Indebtedness which may at the time be outstanding to
the same extent as, or to a greater extent than, the
Securities are so subordinated as provided in this Article.
The consolidation of the Company with, or the merger of the
Company into, another Person or the liquidation or dissolution
of the Company following the conveyance, transfer or lease of
its properties and assets substantially as an entirety to
another Person upon the terms and conditions set forth in
Article Eight shall not be deemed a dissolution, winding up,
liquidation, reorganization, assignment for the benefit of
creditors or marshalling of assets and liabilities of the
Company for the purposes of this Section if the Person formed
by such consolidation or into which the Company is merged or
the Person which acquires by conveyance, transfer or lease
such properties and assets substantially as an entirety, as
the case may be, shall, as a part of such consolidation,
merger, conveyance, transfer or lease, comply with the
conditions set forth in Article Eight.
(b) In the event that any Security of any series
is declared or otherwise becomes due and payable before its
expressed maturity because of the occurrence of an Event of
Default hereunder (under circumstances when the provisions of
the foregoing clause (a) or the following clause (c) shall not
be applicable), the holders of Senior Indebtedness outstanding
at the time such Security so becomes due and payable because
of such occurrence of an Event of Default hereunder shall, so
long as such declaration has not been rescinded and annulled
pursuant to Section 502, be entitled to receive payment in
full of all principal of, and premium and interest on, all
such Senior Indebtedness before the Holders of the Securities
of such series are entitled to receive any payment on account
of principal of, premium, if any, or interest and Additional
Amounts on the Securities of such series; provided, that
nothing herein shall prevent the Holders of Securities from
seeking any remedy allowed at law or in equity so long as any
judgment or decree obtained thereby makes provision for
enforcing this clause; and
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(c) (1) 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 Indebtedness beyond any
applicable grace period with respect thereto, or in the event
that any event of default with respect to any Senior
Indebtedness shall have occurred and be continuing permitting
the holders of such Senior Indebtedness (or a trustee on
behalf of the holders thereof) to declare such Senior
Indebtedness due and payable prior to the date on which it
would otherwise have become due and payable, unless and until
such event of default shall have been cured or waived or shall
have ceased to exist and such acceleration shall have been
rescinded or annulled, or (2) in the event any judicial
proceeding shall be pending with respect to any such default
in payment, or event of default, then no payment shall be made
by the Company on account of principal of (or premium, if any)
or interest on the Securities of any series or on account of
the purchase or other acquisition of Securities of any series.
In case despite the foregoing provisions, any payment or
distribution shall, in any such event, be paid or delivered to any Holder of
the Securities or to the Trustee for their benefit before all Senior
Indebtedness shall have been paid in full, such payment or distribution shall
be held in trust for and so paid and delivered to the holders of Senior
Indebtedness (or their duly authorized representatives) until all Senior
Indebtedness shall have been paid in full.
The Company shall give written notice to the Trustee within
five days after the occurrence of any insolvency, bankruptcy, receivership,
liquidation, reorganization, arrangement or similar proceeding of the Company
within the meaning of this Section 1601. Upon any payment or distribution of
assets of the Company referred to in this Article Sixteen, the Trustee, subject
to the provisions of Section 315(a) through 315(b) of the Trust Indenture Act,
and the Holders of the Securities shall be entitled to rely upon a certificate
of the trustee in bankruptcy, receiver, assignee for the benefit of creditors
or other liquidating agent making such payment or distribution, delivered to
the Trustee or to the Holders of Securities, for the purpose of ascertaining
the Persons entitled to participate in such distribution, the holders of the
Senior Indebtedness 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 Sixteen.
In the event that the Trustee determines, in good faith, that
further evidence is required with respect to the right of any Person as a
holder of Senior Indebtedness to participate in any payment or distribution
pursuant to this Section 1601, the Trustee may request such Person to furnish
evidence to the reasonable
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satisfaction of the Trustee as to the amount of Senior Indebtedness held by
such Person, as to the extent to which such Person is entitled to participate
in such payment or distribution, and as to other facts pertinent to the rights
of such Person under this Section 1601, and if such evidence is not furnished,
the Trustee may defer any payment to such Person pending judicial determination
as to the right of such Person to receive such payment.
Section 1602. Subrogation.
Subject to the payment in full of all Senior Indebtedness to
which the indebtedness evidenced by the Securities is in the circumstances
subordinated as provided in Section 1601, the Holders of the Securities shall
be subrogated to the rights of the holders of such Senior Indebtedness to
receive payments or distributions of cash, property or securities of the
Company applicable to such Senior Indebtedness until all amounts owing on the
Securities shall be paid in full, and, as between the Company, its creditors
other than holders of such Senior Indebtedness, and the Holders of the
Securities, no such payment or distribution made to the holders of such Senior
Indebtedness by virtue of this Article which otherwise would have been made to
the Holders of the Securities shall be deemed to be a payment by the Company on
account of such Senior Indebtedness, it being understood that the provisions of
this Article Sixteen are and are intended solely for the purpose of defining
the relative rights of the Holders of the Securities on the one hand, and the
holders of the Senior Indebtedness, on the other hand.
Section 1603. Provisions Solely to Define Relative Rights.
The provisions of this Article Sixteen are, and are intended
solely for the purpose of defining the relative rights of the holders of the
Securities of a series on the one hand and the holders of Senior Indebtedness
on the other hand. Nothing contained in this Article Sixteen or elsewhere in
this Indenture or in the Securities is intended to or shall (a) impair, as
among the Company and its creditors other than the holders of Senior
Indebtedness and the Holders of the Securities, the obligation of the Company
which is absolute and unconditional, to pay to the Holders of the Securities
the principal of (and premium, if any), interest on, or any Additional Amounts
with respect to, the Securities and Coupons as and when the same shall become
due and payable in accordance with their terms, or (b) affect the relative
rights of the Holders of the Securities and creditors of the Company other than
the holders of Senior Indebtedness; or (c) prevent the Trustee or the Holder of
any Security from exercising all remedies otherwise permitted by applicable law
upon default under this Indenture, subject to the rights, if any, under this
Article Sixteen of the holders of Senior Indebtedness to receive cash, property
or securities of the Company otherwise payable
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or deliverable to the Trustee or such Holder.
Upon any payment or distribution of assets of the Company
referred to in this Article Sixteen, the Trustee and the Holders of the
Securities shall be entitled to rely upon any order or decree made by any court
of competent jurisdiction in which any such dissolution, winding up,
liquidation or reorganization proceeding affecting the affairs of the Company
is pending or upon a certificate of the trustee in bankruptcy, receiver,
assignee for the benefit of creditors, liquidating trustee or agent or other
Person making any payment or distribution, delivered to the Trustee or to the
Holders of the Securities, for the purpose of ascertaining the Persons entitled
to participate in such payment or distribution, the holders of the Senior
Indebtedness and other indebtedness of the Company the amount thereof or
payable thereon, the amount paid or distributed thereon and all other facts
pertinent thereto or to this Article Sixteen.
Section 1604. Payments on Securities Permitted if No
Default.
Nothing contained in this Article Sixteen or elsewhere in this
Indenture, or in any of the Securities, shall affect the obligation of the
Company to make, or prevent the Company from making payment of the principal of
(or premium, if any), interest or any Additional Amounts on the Securities in
accordance with the provisions hereof and thereof, except as otherwise provided
in this Article Sixteen.
Section 1605. Effectuation of Subordination By Trustee.
Each Holder of Securities, by his acceptance thereof,
authorizes and directs the Trustee in his behalf to take such action as may be
necessary or appropriate to effectuate the subordination provided in this
Article Sixteen and appoints the Trustee his attorney-in-fact for any and all
such purposes.
Section 1606. Knowledge of Trustee.
Notwithstanding the provisions of this Article Sixteen or any
other provisions of this Indenture, the Trustee shall not be charged with
knowledge of the existence of any Senior Indebtedness, or any default in the
payment of the principal of or the premium, if any, or interest or Additional
Amounts on any Senior Indebtedness, except any Senior Indebtedness issued
pursuant to an instrument to which the Trustee hereunder is a party or pursuant
to an indenture under which the Trustee hereunder is Trustee, or of any facts
which would prohibit the making of any payment of monies to or by the Trustee,
or the taking of any other action by the Trustee, unless and until the Trustee
shall have received written notice thereof, before 12:00 noon on the last
Business Day prior to the date on which such payment is due, from the Company,
any
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Holder of the Securities, any paying or conversion agent of the Company or the
holder or representative of any class of Senior Indebtedness who shall have
been certified by the Company or otherwise established to the reasonable
satisfaction of the Trustee to be such a holder.
Section 1607. Trustee's Relation to Senior Indebtedness.
Except as otherwise provided in the Trust Indenture Act, the
Trustee shall be entitled to all the rights set forth in this Article with
respect to any Senior Indebtedness at the time held by it, to the same extent
as any other holder of Senior Indebtedness, and nothing in this Indenture shall
deprive the Trustee of any of its rights as such holder. Notwithstanding
anything in this Indenture or in the Securities of any series, nothing in this
Article Sixteen shall apply to claims of or payment to the Trustee under or
pursuant to Sections 506 and 605.
With respect to holders of Senior Indebtedness, the Trustee
undertakes to perform or to observe only such of its covenants and obligations
as are specifically set forth in this Article Sixteen, and no implied covenants
or obligations with respect to the holders of Senior Indebtedness 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 Indebtedness and the Trustee
shall not be liable to any holder of Senior Indebtedness if it shall pay over
or deliver to Holders, the Company or any other Person monies or assets to
which any holder of Senior Indebtedness shall be entitled by virtue of this
Article Sixteen or otherwise.
Section 1608. Rights of Holders of Senior Indebtedness Not
Impaired.
No right of any present or future holder of any Senior
Indebtedness to enforce the subordination herein shall at any time or in any
way be prejudiced or impaired by any act or failure to act on the part of the
Company or by any non-compliance by the Company with the terms, provisions or
covenants of this Indenture, regardless of any knowledge thereof any such
holder may have or be otherwise charged with.
Without in any way limiting the generality of the foregoing
paragraph, the holders of Senior Indebtedness may, at any time and from time to
time, without the consent of or notice to the Trustee or the Holders of the
Securities of any series, without incurring responsibility to the Holders of
the Securities of any series and without impairing or releasing the
subordination provided in this Article or the obligations hereunder of the
Holders of the Securities to the holders of Senior Indebtedness, do
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any one or more of the following: (i) change the manner, place or terms of
payment or extend the time of payment of, or renew or alter, Senior
Indebtedness, or otherwise amend or supplement in any manner Senior
Indebtedness or any instrument evidencing the same or any agreement under which
Senior Indebtedness is outstanding; (ii) sell, exchange, release or otherwise
deal with any property pledged, mortgaged or otherwise securing Senior
Indebtedness; (iii) release any Person liable in any manner for the collection
of Senior Indebtedness; and (iv) exercise or refrain from exercising any rights
against the Company and any other Person.
ARTICLE SEVENTEEN
CONVERSION
Section 1701. Conversion Privilege.
Subject to and upon compliance with the provisions of this
Article Seventeen and the terms of the Convertible Securities of the series
proposed to be converted, at the option of the Holder, any Convertible Security
or any portion of the principal amount thereof which is $1,000 or an integral
multiple thereof, may be converted into shares of Common Stock, as said shares
shall be constituted at the Date of Conversion, at the Conversion Price for
such Convertible Securities of such series in effect at the Date of Conversion.
Section 1702. Manner of Exercise of Conversion Privilege.
In order to exercise the conversion privilege, the Holder of
any Convertible Security to be converted shall surrender such Convertible
Security to the Company at its office or agency in The City of New York,
together with the conversion notice in the form provided on the Securities (or
separate written notice) duly executed, and, if so required by the Company,
accompanied by instruments of transfer, in form satisfactory to the Company and
to the Trustee, duly executed by the Holder or by his duly authorized attorney
in writing. Any Registered Convertible Security so surrendered during the
period from the close of business on the Regular Record Date preceding an
Interest Payment Date for such Registered Convertible Security to the opening
of business on such Interest Payment Date shall (unless any such Registered
Convertible Security or the portion thereof being converted shall have been
called for redemption on a Redemption Date during such period, in which event
no interest shall be payable with respect to such Registered Convertible
Security or portion thereof, as the case may be, following such Redemption
Date) also be accompanied by payment in New York Clearing House funds or other
funds acceptable to the Company of an amount
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equal to the interest payable on such Interest Payment Date on the principal
amount of such Registered Convertible Security then being converted; provided,
however, that no such payment need be made if there shall exist, at the time of
conversion, a default in the payment of interest on the Convertible Securities
of such series. Except as provided in the immediately preceding sentence, no
adjustment shall be made for interest accrued on any Convertible Security that
shall be converted or for dividends on any shares of Common Stock that shall be
delivered upon the conversion of such Convertible Securities. The funds so
delivered to such office or agency shall be paid to the Company on or after
such Interest Payment Date, unless the Company shall default in the payment of
the interest due on such Interest Payment Date, in which event such funds shall
be repaid to the Person who delivered the same. As promptly as practicable
after the surrender of any Convertible Security for conversion as aforesaid,
the Company shall deliver at said office or agency to such Holder, or on his
written order, a certificate or certificates for the number of full shares
deliverable upon the conversion of such Convertible Security or portion thereof
and a check or cash in respect of any fraction of a share of Common Stock
otherwise deliverable upon such conversion, all as provided in this Article
Seventeen, together with a Convertible Security or Convertible Securities of
the same series in principal amount equal to the unconverted and unredeemed
portion, if any, of the Convertible Security so converted in accordance with
Section 305 hereof. Such conversion shall be deemed to have been effected on
the date on which such notice shall have been received at said office or agency
and such Convertible Security shall have been surrendered as aforesaid, and the
Person or Persons in whose name or names any certificate or certificates, for
shares of Common Stock shall be deliverable upon such conversion shall be
deemed to have become on said date the Holder or Holders of record of the
shares represented thereby, provided, however, that any such surrender on any
date when the stock transfer books of the Company shall be closed shall
constitute the Person or Persons in whose name or names the certificates are to
be delivered as the record Holder or Holders thereof for all purposes on the
next succeeding day on which such stock transfer books are open, but such
conversion shall be at the Conversion Price in effect on the date of such
surrender.
Section 1703. Cash Adjustment Upon Conversion.
The Company shall not be required to deliver fractions of
shares of Common Stock upon conversions of Convertible Securities. If more
than one Convertible Security shall be surrendered for conversion at one time
by the same Holder, the number of full shares which shall be deliverable upon
conversion thereof shall be computed on the basis of the aggregate principal
amount of the Securities so surrendered. If any fractional interest in a share
of Common Stock would be deliverable upon the conversion of any Convertible
Security or Securities, the Company shall make
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an adjustment therefor in cash equal to the current market value of such
fractional interest computed to the nearest cent either on the basis of the
last reported sale price regular way of the Common Stock on the New York
Exchange (or, if not listed on the New York Exchange, then on such other
exchange on which the shares of Common Stock are listed as the Company may
designate) on the last Business Day prior to the Date of Conversion or, if
there shall not have been a sale on such last Business Day, on the basis of the
average of the bid and asked quotations therefor on such exchange on such last
Business Day or, if the Common Stock shall not then be listed on any exchange,
at the highest bid quotation in the over-the-counter market on such last
Business Day as reported by the National Association of Securities Dealers
through NASDAQ, its automated system for reporting quotes, or its successor or
such other generally accepted source of publicly reported bid and asked
quotations as the Company may reasonably designate.
Section 1704. Conversion Price.
The Conversion Price applicable to any series of Convertible
Securities shall be the initial Conversion Price set forth on the Officers'
Certificate or supplemental indenture establishing such series adjusted as
provided in this Article Seventeen.
Section 1705. Adjustment of Conversion Price.
The Conversion Price applicable to any series of Convertible
Securities shall be adjusted from time to time as follows:
(a) In case the Company shall, at any time or
from time to time while the Securities of any series are Outstanding,
(i) pay a dividend on its Common Stock in shares of Common Stock, (ii)
subdivide its outstanding shares of Common Stock into a larger number
of shares, or (iii) combine its outstanding Common Stock into a
smaller number of shares, the Conversion Price for such series in
effect immediately prior thereto shall be adjusted so that the Holder
of any Security of such series thereafter surrendered for conversion
shall be entitled to receive the number of shares of Common Stock or
other securities of the Company which he would have owned or have been
entitled to receive after the happening of any of the events described
above, had such Convertible Security of such series been converted
immediately prior to the happening of such event. An adjustment made
pursuant to this subdivision (a) shall become effective, in the case
of a dividend, on the payment date retroactively to immediately after
the opening of business on the day following the record date for the
determination of stockholders entitled to receive such dividend,
subject to the provisions of paragraph (g) of this Section 1705, and
shall become effective
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in the case of a subdivision or combination immediately after the
opening of business on the day following the day when such subdivision
or combination, as the case may be, becomes effective.
(b) In case the Company shall, at any time or
from time to time while the Convertible Securities of any series are
Outstanding, issue rights or warrants to all holders of its shares of
Common Stock entitling them (for a period expiring within 45 days of
the record date mentioned below) to subscribe for or purchase shares
of Common Stock at a price per share less than the current market
price per share of Common Stock (as defined in paragraph (d) below) at
such record date, the Conversion Price of any series of Convertible
Securities in effect immediately prior to the issuance of such rights
or warrants shall be adjusted as follows: the number of shares of
Common Stock into which $1,000 principal amount of Convertible
Securities of such series was theretofore convertible shall be
multiplied by a fraction, of which the numerator shall be the number
of shares of Common Stock outstanding immediately prior to such record
date plus the number of additional shares of Common Stock offered for
subscription or purchase, and of which the denominator shall be the
number of shares of Common Stock outstanding immediately prior to such
record date plus the number of shares which the aggregate offering
price of the total number of shares so offered would purchase at such
current market price; and the Conversion Price for such series of
Convertible Securities shall be adjusted by dividing $1,000 by the new
number of shares into which $1,000 principal amount of Securities of
such series shall be convertible as aforesaid. Such adjustment shall
become effective on the date of such issuance retroactively to
immediately after the opening of business on the day following the
record date for the determination of shareholders entitled to receive
such rights or warrants, subject to the provisions of paragraph (g) of
this Section 1705. In determining whether any rights or warrants
entitle the holders to subscribe for or purchase shares of Common
Stock at less than such current market price, and in determining the
aggregate offering price of such shares, there shall be taken into
account any consideration received by the Company for such rights or
warrants, the value of such consideration, if other than cash, to be
determined by the Board of Directors.
(c) In case the Company shall, at any time from
time to time while the Convertible Securities of any series are
Outstanding, distribute to all holders of shares of its Common Stock
evidences of its indebtedness or securities or assets (excluding cash
dividends or cash distributions payable out of consolidated net
earnings or retained earnings) or rights or warrants to subscribe for
shares of Common Stock at a price per share less than the current
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market price per share of Common Stock, determined in the manner set
forth in paragraph (d) below, but excluding rights or warrants
referred to in paragraph (b) above, the Conversion Price for such
series of Convertible Securities in effect immediately prior to such
distribution shall be adjusted by multiplying the number of shares of
Common Stock into which $1,000 principal amount of Convertible
Securities of such series of Convertible Securities was theretofore
convertible by a fraction, of which the numerator shall be the current
market price per share of Common Stock (as defined in paragraph (d)
below) on the record date for such distribution, and of which the
denominator shall be such current market price per share of the Common
Stock, less the then fair market value (as determined by the Board of
Directors of the Company, whose determination shall be conclusive) of
the portion of such evidences of indebtedness, securities or assets or
of such subscription rights or warrants so distributed applicable to
one share of Common Stock; and the Conversion Price for such series of
Convertible Securities shall be adjusted by dividing $1,000 by the new
number of shares into which $1,000 principal amount of Convertible
Securities of such series shall be convertible as aforesaid. Such
adjustment shall become effective on the date of such distribution
retroactively to immediately after the opening of business on the day
following the record date for the determination of shareholders
entitled to receive such distribution, subject to the provisions of
paragraph (g) of this Section 1705. For the purposes of this
paragraph (c) consolidated net earnings or retained earnings shall be
computed by adding thereto all charges against retained earnings on
account of dividends paid in shares of Common Stock in respect of
which the Conversion Price has been adjusted, all as determined by
Independent Public Accountants, whose determination shall be
conclusive.
(d) For the purpose of any computation under
paragraphs (b) and (c) above, the current market price per share of
Common Stock at any date shall be deemed to be the average of the
market values of the shares of Common Stock for the ten consecutive
Business Days immediately preceding the day in question. The market
value of the Common Stock for each day shall be determined as provided
in Section 1703 hereof.
(e) The Company may make such reductions in the
Conversion Price for any series of Convertible Securities, in addition
to those required by paragraphs (a), (b) and (c) of this Section as it
considers to be advisable in order that any event treated for Federal
income tax purposes as a dividend of stock or stock rights shall not
be taxable to the recipients.
(f) Except as herein otherwise provided, no
adjustment in the Conversion Price for any series of Convertible
Securities shall be made by
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reason of the issuance, in exchange for cash, property or services, of
shares of Common Stock or any securities convertible into or
exchangeable for shares of Common Stock or carrying the right to
purchase any of the foregoing.
(g) If the Company shall take a record of the
holders of its shares of Common Stock for the purpose of entitling
them to receive any dividend or any subscription or purchase rights or
any distribution and shall, thereafter and before the distribution to
shareholders of any such dividend, subscription or purchase rights or
distribution, legally abandon its plan to pay or deliver such
dividend, subscription or purchase rights or distribution, then no
adjustment of the Conversion Price for any series of Convertible
Securities shall be required by reason of the taking of such record.
(h) No adjustment in the Conversion Price for any
series of Convertible Securities shall be required unless such
adjustment would require an increase or decrease of at least 1% in
such price; provided, however, that any adjustments which by reason of
this paragraph (h) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. All
calculations under this Article Seventeen shall be made to the nearest
cent or to the nearest one-hundredth of a share, as the case may be.
(i) Whenever the Conversion Price for any series
of Convertible Securities is adjusted as herein provided, the Company
shall (i) forthwith place on file at the Principal Office of the
Trustee an Officers' Certificate showing in detail the facts requiring
such adjustment and the Conversion Price after such adjustment and
shall exhibit the same from time to time to any Holder of Convertible
Securities of such series desiring an inspection thereof, and (ii)
cause a notice stating that such adjustment has been effected and the
adjusted Conversion Price to be mailed to the Holders of Registered
Convertible Securities of such series at their last addresses as they
shall appear on the Security Register.
(j) The Company may delete, modify or vary any of
the provisions applicable to conversion of the Convertible Securities
of any series, or may add new provisions applicable thereto, all as
may be contained in the Board Resolutions and Officers' Certificate or
supplemental indenture establishing such series.
Section 1706. Effect of Reclassifications, Consolidations,
Mergers or Sales on Conversion Privilege.
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In case of any reclassification or change of outstanding
shares of the class of Common Stock issuable upon conversion of the Convertible
Securities (other than a change in par value, or from par value to no par
value, or from no par value to par value, or as a result of a subdivision or
combination), or in case of any merger or consolidation of the Company with one
or more other corporations (other than a merger or consolidation in which the
Company is the continuing corporation and which does not result in any
reclassification or change of outstanding shares of Common Stock issuable upon
conversion of the Securities), or in case of the merger of the Company into
another corporation, or in case of any sale or conveyance to another
corporation of the property of the Company as an entirety or substantially as
an entirety, the Holders of Convertible Securities of each series then
Outstanding shall have the right to convert such Convertible Securities into
the kind and amount of shares of capital stock or other securities and
property, including cash, receivable upon such reclassifications change,
consolidation, merger, sale or conveyance by a holder of the number of shares
of Common Stock into which such Convertible Securities might have been
converted immediately prior to such reclassification, change, consolidation,
merger, sale or conveyance. In any such case the Company, or such successor or
purchasing corporation, as the case may be, shall execute with the Trustee one
or more supplemental indentures (which shall conform to the Trust Indenture Act
of 1939 as in force at the date of the execution of such supplemental
indenture) containing provisions to the effect set forth above in this Section
1707 and providing further for adjustments which shall be as nearly equivalent
as may be practicable to the adjustments provided for in this Article
Seventeen; and any such adjustment which shall be approved by the Board of
Directors and set forth in such supplemental indenture or supplemental
indentures shall be conclusive for all purposes of this Section, and the
Trustee shall not be under any responsibility to determine the correctness of
any provision contained in such supplemental indenture or supplemental
indentures relating to either the kind or amount of shares of stock or
securities or property receivable by Holders of Securities of any series upon
the conversion of their Convertible Securities after any such reclassification,
change, consolidation, merger, sale or conveyance.
The above provisions of this Section 1707 shall similarly
apply to successive reclassifications, changes, consolidations, mergers, sales
and conveyances.
Section 1707. Taxes on Conversions.
The issue of stock certificates on conversions of Convertible
Securities shall be made without charge to the converting Holder of Convertible
Securities for any tax in respect of the issue thereof. The Company shall not,
however, be required to pay any tax which may be payable in respect of any
transfer involved in the issue and
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delivery of shares in any name other than that of the Holder of any Registered
Convertible Security converted, and the Company shall not be required to issue
or deliver any such stock certificate unless and until the Person or Persons
requesting the issue thereof shall have paid to the Company the amount of such
tax or shall have established to the satisfaction of the Company that such tax
has been paid.
Section 1708. Company to Reserve Common Stock.
The Company shall at all times reserve and keep available out
of the aggregate of its authorized but unissued shares or its issued shares
held in its treasury, or both, for the purpose of effecting the conversion of
the Securities, such number of its duly authorized shares of Common Stock as
shall from time to time be sufficient to effect the conversion of all
Outstanding Securities.
If any shares of Common Stock reserved or to be reserved for
the purpose of conversion of Securities hereunder require registration with or
approval of any governmental authority under any Federal or State law before
such shares may be validly delivered upon conversion, then the Company
covenants that it will in good faith and as expeditiously as possible endeavor
to secure registration or approval, as the case may be.
The Company covenants that all shares of Common Stock which
may be delivered upon conversion of Convertible Securities shall upon delivery
be fully paid and nonassessable by the Company and free from all taxes, liens
and charges with respect to the issue or delivery thereof.
Section 1709. Disclaimer by Trustee of Responsibility for
Certain Matters.
Neither the Trustee nor any conversion agent shall at any time
be under any duty or responsibility to any Holder of Convertible Securities of
any series to determine whether any facts exist which may require any
adjustment of the Conversion Price for such series, or with respect to the
nature or extent of any such adjustment when made, or with respect to the
method employed, or herein or in any supplemental indenture provided to be
employed, in making the same, subject, however, to the provisions of Sections
315(a) through 315(b) of the Trust Indenture Act. Neither the Trustee nor any
conversion agent shall be accountable with respect to the validity or value (or
the kind or amount) of any shares of Common Stock, or of any securities or
property which may at any time be issued or delivered upon the conversion of
any Convertible Security; and neither of them makes any representation with
respect thereto. Neither the Trustee nor any conversion agent shall be
responsible for any
102
112
failure of the Company to make any cash payment or to issue, transfer or
deliver any shares of Common Stock or stock certificates or other securities or
property upon the surrender of any Security for the purpose of conversion or,
subject to Sections 315(a) through 315(b) of the Trust Indenture Act, to comply
with any of the covenants of the Company contained in this Article Seventeen.
Section 1710. Company to Give Notice of Certain Events.
In the event
(A) that the Company shall pay any dividend or
make any distribution to the holders of shares of Common Stock
otherwise than in cash charged against consolidated net
earnings or retained earnings of the Company and its
consolidated subsidiaries or in Common Stock; or
(B) that the Company shall offer for subscription
or purchase, pro rata, to the holders of shares of Common
Stock any additional shares of stock of any class or any
securities convertible into or exchangeable for stock of any
class; or
(C) of any reclassification or change of
outstanding shares of the class of Common Stock issuable upon
the conversion of the Securities (other than a change in par
value, or from par value to no par value, or from no par value
to par value, or as a result of a subdivision or combination),
or of any merger or consolidation of the Company with, or
merger of the Company into, another corporation (other than a
merger or consolidation in which the Company is the continuing
corporation and which does not result in reclassification or
change of outstanding shares of Common Stock issuable upon
conversion of the Securities), or of any sale or conveyance to
another corporation of the property of the Company as an
entirety or substantially as an entirety;
then, and in any one or more of such events, the Company will give to the
Trustee and each conversion agent written notice thereof at least fifteen days
prior to (i) the record date fixed with respect to any of the events specified
in (A) and (B) above, and (ii) the effective date of any of the events
specified in (C) above; and shall mail in the case of Registered Securities,
promptly a copy of such notice to the Holders thereof at their last addresses
as they shall appear upon the Security Register or, in the case of Bearer
Securities, cause such notice to be published in an Authorized Newspaper.
Failure to give such notice, or any defect therein, shall not affect the
legality or validity of such dividend, distribution, reclassification,
consolidation, merger, sale, transfer, dissolution,
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113
liquidation or winding up.
ARTICLE EIGHTEEN
IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS
Section 1801. Indenture and Securities Solely Corporate
Obligations.
No recourse for the payment of the principal of or premium, if
any, or interest or Additional Amounts on any Security, or for any claim based
thereon or otherwise in respect thereof, and no recourse under or upon any
obligation, covenant or agreement of the Company in this Indenture or in any
supplemental indenture or, in any Security, or because of the creation of any
indebtedness represented thereby, shall be had against any incorporator,
stockholder, officer or director, as such, past, present or future, of the
Company or of any successor corporation, either directly or through the Company
or any successor corporation, whether by virtue of any constitution, statute or
rule of law, or by the enforcement of any assessment or penalty or otherwise;
it being expressly understood that all such liability is hereby expressly
waived and released as a condition of, and as a consideration for, the
execution of this Indenture and the issuance of the Securities.
* * * * *
This instrument may be executed in any number of counterparts,
each of which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed, and their respective corporate seals to be
hereunto affixed, all as of the day and year first above written.
[SEAL] Capital One Financial Corporation
Attest:
----------------------------
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114
By
----------------------------
Name:
Title:
[SEAL] ,
-----------------------------
as Trustee
Attest:
------------------------------
By
----------------------------
Name:
Title:
105
115
STATE OF ____________ )
SS.:
COUNTY OF ____________ )
On the _____ day of ________________,
1996, before me personally came _______________, to me known, who, being by me
duly sworn, did depose and say that he is a _____________ of Capital One
Financial Corporation, a Delaware corporation, one of the persons described in
and who executed the foregoing instrument; that he knows the seal of said
Corporation; that the seal affixed to said instrument is such Corporation's
seal; that it was so affixed by authority of the Board of Directors of said
Corporation; and that he signed his name thereto by like authority.
---------------------------
Notary Public
[NOTARIAL SEAL]
106
116
STATE OF ____________ )
SS.:
COUNTY OF ____________ )
On the _____ day of ________________,
1996, before me personally came _______________, to me known, who, being by me
duly sworn, did depose and say that he is a _____________ of
____________________________________, a national banking association organized
and existing under the laws of the United States, one of the persons described
in and who executed the foregoing instrument; that he knows the seal of said
Corporation; that the seal affixed to said instrument is such Corporation's
seal; that it was so affixed by authority of the Board of Directors of said
Corporation; and that he signed his name thereto by like authority.
-----------------------
Notary Public
[NOTARIAL SEAL]
107
1
EXHIBIT 4.3
CERTIFICATE OF DESIGNATIONS
of
CUMULATIVE PARTICIPATING JUNIOR PREFERRED STOCK
of
CAPITAL ONE FINANCIAL CORPORATION
(Pursuant to Section 151 of the
Delaware General Corporation Law)
____________________
Capital One Financial Corporation, a corporation organized and
existing under the Delaware General Corporation Law (hereinafter called the
"Corporation"), hereby certifies that the following resolution was adopted by
the Board of Directors of the Corporation as required by Section 151 of the
Delaware General Corporation Law at a meeting duly called and held on November
16, 1995:
RESOLVED, that pursuant to the authority granted to and vested
in the Board of Directors of this Corporation (hereinafter called the "Board of
Directors" or the "Board") in accordance with the provisions of the Restated
Certificate of Incorporation, the Board of Directors hereby creates a series of
Cumulative Preferred Stock, par value $0.01 per share, of the Corporation and
hereby states the designation and number of shares, and fixes the relative
rights, preferences, and limitations thereof as follows:
CUMULATIVE PARTICIPATING JUNIOR PREFERRED STOCK
Section 1. Designation and Amount. The shares of such series
shall be designated as "Cumulative Participating Junior Preferred Stock" (the
"Junior Preferred Stock") and the number of shares constituting the Junior
Preferred Stock shall be 1,000,000. Such number of shares may be increased or
decreased by resolution of the Board of Directors; provided, that no decrease
shall reduce the number of shares
2
of Junior Preferred Stock to a number less than the number of shares then
outstanding plus the number of shares reserved for issuance upon the exercise
of outstanding options, rights or warrants or upon the conversion of any
outstanding securities issued by the Corporation convertible into Junior
Preferred Stock. The Corporation's stated capital with respect to each issued
and outstanding share of Junior Preferred Stock shall be $100.
Section 2. Dividends and Distributions.
(A) The holders of shares of Junior Preferred Stock, in
preference to the holders of Common Stock, par value $0.01 per share (the
"Common Stock"), of the Corporation, and of any other junior stock, but subject
to the rights of holders of any senior stock, shall be entitled to receive,
when, as and if declared by the Board of Directors out of funds legally
available for the purpose, quarterly dividends payable in cash on the first
days of January, April, July and October in each year (each such date being
referred to herein as a "Quarterly Dividend Payment Date"), commencing on the
first Quarterly Dividend Payment Date after the first issuance of a share or
fraction of a share of Junior Preferred Stock, in an amount per share (rounded
to the nearest cent) equal to the greater of (a) $1 and (b) subject to the
provision for adjustment hereinafter set forth, 100 times the aggregate per
share amount of all cash dividends, and 100 times the aggregate per share
amount (payable in kind) of all non-cash dividends or other distributions,
other than a dividend payable in shares of Common Stock or a subdivision of the
outstanding shares of Common Stock (by reclassification or otherwise), declared
on the Common Stock since the immediately preceding Quarterly Dividend Payment
Date or, with respect to the first Quarterly Dividend Payment Date, since the
first issuance of any share or fraction of a share of Junior Preferred Stock.
In the event the Corporation shall at any time after November 29, 1995 declare
or pay any dividend on the Common Stock payable in shares of Common Stock, or
effect a subdivision or combination or consolidation of the outstanding shares
of Common Stock (by reclassification or otherwise), then in each such case the
amount to which holders of shares of Junior Preferred Stock were entitled
immediately prior to such event under clause (b) of the preceding sentence
shall be adjusted by multiplying such
- 2 -
3
amount by a fraction, the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding immediately prior to
such event.
(B) The Corporation shall declare a dividend or distribution
on the Junior Preferred Stock as provided in paragraph (A) of this Section
immediately after it declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock); provided that, in
the event no dividend or distribution shall have been declared on the Common
Stock during the period between any Quarterly Dividend Payment Date and the
next subsequent Quarterly Dividend Payment Date, a dividend of $1.00 per share
on the Junior Preferred Stock shall nevertheless be payable on such subsequent
Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Junior Preferred Stock from the Quarterly Dividend
Payment Date next preceding the date of issue of such shares, unless the date
of issue of such shares is prior to the record date for the first Quarterly
Dividend Payment Date, in which case dividends on such shares shall begin to
accrue from the date of issue of such shares, or unless the date of issue is a
Quarterly Dividend Payment Date or is a date after the record date for the
determination of holders of shares of Junior Preferred Stock entitled to
receive a quarterly dividend and before such Quarterly Dividend Payment Date,
in either of which events such dividends shall begin to accrue and be
cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid
dividends shall not bear interest. Dividends paid on the shares of Junior
Preferred Stock in an amount less than the total amount of such dividends at
the time accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding. The Board
of Directors may fix a record date for the determination of holders of shares
of Junior Preferred Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be not more than 50 days
prior to the date fixed for the payment thereof.
- 3 -
4
Section 3. Voting Rights. The holders of shares of Junior
Preferred Stock shall have the following voting rights:
(A) Each share of Junior Preferred Stock shall entitle the
holder thereof to one hundred votes (subject to adjustment as set forth below)
on all matters submitted to a vote of the stockholders of the Corporation
(including, without limitation, the election of directors). In the event the
Corporation shall at any time after November 29, 1995, declare or pay any
dividend on the Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares of Common
Stock (by reclassification or otherwise), then in each such case the number of
votes to which holders of shares of Junior Preferred Stock were entitled to
immediately prior to such event shall be adjusted by multiplying such amount by
a fraction, the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to
such event.
(B) Except as otherwise provided herein, in the Restated
Certificate of Incorporation, in any other Certificate of Designations creating
a series of Preferred Stock or any similar stock or by law, the holders of
shares of Junior Preferred Stock, the holders of shares of Common Stock and the
holders of any other capital stock of the Corporation having general voting
rights shall vote together as one class on all matters submitted to a vote of
stockholders of the Corporation.
(C) (i) If at any time dividends on any Junior Preferred
Stock shall be in arrears in an amount equal to the full accrued dividends for
six (6) or more quarterly dividend periods, whether or not consecutive, shall
not have been paid or declared and a sum sufficient for the payment thereof
irrevocably set aside in trust for the holders of all of such shares, the Board
of Directors of the Corporation shall promptly take all necessary actions to
increase the authorized number of directors of the Corporation by one (1) and
the holders of the shares of the Junior Preferred Stock then outstanding shall
be entitled (by series, voting as a single class) to elect one (1)
- 4 -
5
person director to the Board of Directors of the Corporation (such right to
elect one (1) director being hereinafter sometimes referred to as the "special
voting rights"), each outstanding share having such right being entitled for
such purpose to one vote; provided, however, that at such time as the arrearage
in payment of dividends which gave rise to the exercise of the special voting
rights has been cured with regard to the Junior Preferred Stock by waiver or
payment of all accrued dividends, the right of the holders of such shares so to
vote as provided in this paragraph (C)(i) of this Section 3 shall cease
(subject to renewal from time to time upon the same terms and conditions) and
the term of office of the person who is at that time a director elected by such
holders shall terminate and the number of directors of the Corporation shall be
automatically reduced by one (1).
(ii) At any time after the special voting rights shall have
become vested in the holders of the shares of the Junior Preferred Stock as
provided in paragraph (C)(i) of this Section 3, the Secretary of the
Corporation, as promptly as possible but in any event within twenty (20) days
after receipt of the written request of the holders of 10% of the shares of the
Junior Preferred Stock then outstanding, addressed to the Corporation at its
principal office, shall call a special meeting of the holders of the shares of
the Junior Preferred Stock for the purpose of electing such additional
director, such meeting to be held at any place as provided by the Bylaws of the
Corporation for meetings of the Corporation's stockholders, and upon not less
than ten (10) nor more than twenty (20) days notice. If such meeting shall not
be so called within twenty (20) days after receipt of the request by the
Secretary of the Corporation, then the holders of 10% of the shares of the
Junior Preferred Stock then outstanding may, by written notice to the Secretary
of the Corporation, designate any person to call such meeting, and the person
so designated may call such meeting, at any such place as provided above and
upon not less than ten (10) nor more than twenty (20) days notice and for that
purpose shall have access to the stockholder record books of the Corporation.
No such special meeting of the holders of the shares of the Junior Preferred
Stock and no adjournment thereof shall be held on a date later than thirty (30)
days before the annual meeting of stockholders of the Corporation. At any
meeting so
- 5 -
6
called or at any annual meeting held at any time when the special voting rights
are in effect, the holders of a majority of the shares of the Junior Preferred
Stock then outstanding, present in person or by proxy, shall be sufficient to
constitute a quorum for the election of such additional director, and such
additional director, together with any and all other directors who are then
members of the Board of Directors, shall constitute the duly elected directors
of the Corporation.
(iii) With respect to a vacancy arising in the directorship
referred to in paragraph (C)(i) of this Section 3 at any time when the special
voting rights are in effect pursuant to paragraph (C)(i) of this Section 3,
upon the written request of the holders of 10% of the shares of the Junior
Preferred Stock then outstanding, addressed to the Corporation at its principal
office, the Secretary of the Corporation shall give notice of a special meeting
of holders of the shares of the Junior Preferred Stock of the election of a
director to fill such vacancy caused by the death, resignation or other
inability to serve as a director elected by such holders, to be held not less
than ten (10) nor more than twenty (20) days following receipt by the Secretary
of the Corporation of such written request. So long as special voting rights
are in effect pursuant to paragraph (i) of this Section 3(c), any director who
shall have been so elected by the holders of the Junior Preferred Stock may be
removed at any time, either with or without cause, only by the affirmative vote
of the holders of the shares at the time entitled to cast a majority of the
votes entitled to be cast for the election of such director at a special
meeting of such holders called for that purpose, and any vacancy thereby
created may be filled by the vote of such holders.
(D) Except as set forth herein, or as otherwise provided by
the Restated Certificate of Incorporation or by law, holders of Junior
Preferred Stock shall have no special voting rights and their consent shall not
be required (except to the extent they are entitled to vote with holders of
Common Stock as set forth herein) for taking any corporate action.
- 6 -
7
(E) Holders of Junior Preferred Stock shall be entitled to
such notice of each meeting of stockholders as is furnished to the holders of
Common Stock with respect to such meeting.
Section 4. Certain Restrictions.
(A) Subject to the provisions of the Restated Certificate of
Incorporation, whenever quarterly dividends or other dividends or distributions
payable on the Junior Preferred Stock as provided in Section 2 are in arrears
as of any Quarterly Dividend Payment Date, thereafter and until all accrued and
unpaid dividends and distributions, whether or not declared, on shares of
Junior Preferred Stock outstanding shall have been paid in full, the
Corporation shall not:
(i) declare or pay dividends, or make any other
distributions, on any shares of stock ranking junior (either as to dividends or
upon liquidation, dissolution or winding up) to the Junior Preferred Stock;
(ii) declare or pay dividends, or make any other
distributions, on any shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Junior
Preferred Stock, except dividends paid ratably on the Junior Preferred Stock
and all such parity stock on which dividends are payable or in arrears in
proportion to the total amounts to which the holders of all such shares are
then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking junior (either as to dividends or
upon liquidation, dissolution or winding up) to the Junior Preferred Stock,
provided that the Corporation may at any time redeem, purchase or otherwise
acquire shares of any such junior stock in exchange for shares of any stock of
the Corporation ranking junior (either as to dividends and upon dissolution,
liquidation or winding up) to the Junior Preferred Stock; or
(iv) redeem or purchase or otherwise acquire for
consideration any shares of Junior Preferred Stock, or any shares of stock
ranking on a parity with the Junior Preferred Stock, except in accordance with
the terms of the
- 7 -
8
Restated Certificate of Incorporation and with a purchase offer made in writing
or by publication (as determined by the Board of Directors) to all holders of
such shares upon such terms as the Board of Directors, after consideration of
the respective annual dividend rates and other relative rights and preferences
of the respective series and classes, shall determine in good faith will result
in fair and equitable treatment among the respective series or classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Corporation unless the Corporation could, under paragraph (A) of
this Section 4, purchase or otherwise acquire such shares at such time and in
such manner.
Section 5. Reacquired Shares. Any shares of Junior Preferred
Stock purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and cancelled promptly after the acquisition
thereof. All such shares shall upon their cancellation become authorized but
unissued shares of Preferred Stock and may be reissued as part of a new series
of Preferred Stock subject to the conditions and restrictions on issuance set
forth herein, in the Restated Certificate of Incorporation, or in any other
Certificate of Designations creating a series of Preferred Stock or any similar
stock or as otherwise required by law.
Section 6. Liquidation, Dissolution or Winding Up. (A) Upon
any liquidation (voluntary or otherwise), dissolution or winding up of the
Corporation, no distribution shall be made to the holders of shares of stock
ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Junior Preferred Stock unless, prior thereto, the holders of
shares of Junior Preferred Stock shall have received $100 per share, plus an
amount equal to accrued and unpaid dividends and distributions thereon, whether
or not declared, to the date of such payment (the "Junior Preferred Liquidation
Preference"). Following the payment of the full amount of the Junior Preferred
Liquidation Preference, no additional distributions shall be made to the
holders of shares of Junior Preferred Stock unless, prior thereto, the holders
of shares of Common Stock shall have received an amount per share (the "Common
Adjustment") equal to the quotient
- 8 -
9
obtained by dividing (i) the Junior Preferred Liquidation Preference by (ii)
100 (as appropriately adjusted as set forth in subparagraph (C) below to
reflect such events as stock splits, stock dividends and recapitalizations with
respect to the Common Stock) (such number in clause (ii) immediately above
being referred to as the "Adjustment Number"). Following the payment of the
full amount of the Junior Preferred Liquidation Preference and the Common
Adjustment in respect of all outstanding shares of Junior Preferred Stock and
Common Stock, respectively, holders of Junior Preferred Stock and holders of
shares of Common Stock shall receive their ratable and proportionate share of
the remaining assets to be distributed in the ratio of the Adjustment Number to
one (1) with respect to such Junior Preferred Stock and Common Stock, on a per
share basis, respectively.
(B) In the event, however, that there are not sufficient
assets available to permit payment in full of the Junior Preferred Liquidation
Preference and the liquidation preferences of all other series of preferred
stock, if any, which rank on a parity with the Junior Preferred Stock, then
such remaining assets shall be distributed ratably to the holders of such
parity shares in proportion to their respective liquidation preferences. In
the event, however, that there are not sufficient assets available to permit
payment in full of the Common Adjustment, then such remaining assets shall be
distributed ratably to the holders of Common Stock.
(C) In the event the Corporation shall at any time after
November 29, 1995, (i) declare any dividend on Common Stock payable in shares
of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine
the outstanding Common Stock into a smaller number of shares, then in each such
case the Adjustment Number in effect immediately prior to such event shall be
adjusted by multiplying such Adjustment Number by a fraction the numerator of
which is the number of shares of Common Stock outstanding immediately after
such event and the denominator of which is the number of shares of Common Stock
that were outstanding immediately prior to such event.
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10
Section 7. Consolidation, Merger, etc. In case the
Corporation should enter into any consolidation, merger, combination or other
transaction in which the shares of Common Stock are exchanged for or changed
into other stock or securities, cash and/or any other property, then in any
such case each share of Junior Preferred Stock shall at the same time be
similarly exchanged or changed into an amount per share, subject to the
provision for adjustment hereinafter set forth, equal to 100 times the
aggregate amount of stock, securities, cash and/or any other property (payable
in kind), as the case may be, into which or for which each share of Common
Stock is changed or exchanged. In the event the Corporation shall at any time
after November 29, 1995 declare or pay any dividend on the Common Stock payable
in shares of Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in each such case the
amount set forth in the preceding sentence with respect to the exchange or
change of shares of Junior Preferred Stock shall be adjusted by multiplying
such amount by a fraction, the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding immediately
prior to such event.
Section 8. Ranking. The Junior Preferred Stock shall rank
senior, as to dividends and upon liquidation, dissolution or winding up, to the
Common Stock, and junior, as to dividends and upon liquidation, dissolution or
winding up, to (a) any other class of capital stock of the Corporation unless
the terms of such class shall expressly provide otherwise, and (b), to the
extent permitted by the Restated Certificate of Incorporation, all other series
of Preferred Stock issued by the Corporation (and, if not so permitted, on a
parity with all such other series).
Section 9. No Redemption. The shares of Junior Preferred
Stock shall not be redeemable.
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Section 10. Fractional Shares. The Junior Preferred Stock
may be issued in fractions of a share which shall entitle the holder, in
proportion to such holder's fractional shares, to exercise voting rights,
receive dividends, participate in distributions and to have the benefit of all
other rights of holders of shares of Junior Preferred Stock.
IN WITNESS WHEREOF, this Certificate of Designations is
executed on behalf of the Corporation by its Chief Executive Officer and
attested by its Secretary as of the 16th day of November, 1995.
-------------------------------
Chief Executive Officer
Attest:
- -----------------
Secretary
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1
Exhibit 5
CAPITAL ONE FINANCIAL CORPORATION
2980 Fairview Park Drive
Suite 1300
Falls Church, VA 22042
September 19, 1996
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Ladies and Gentlemen:
I am General Counsel of Capital One Financial Corporation, a
Delaware corporation (the "Company"), and am delivering this opinion in
connection with the Company's Amendment No. 1 to the Registration Statement on
Form S-3 (the "Registration Statement") filed with the Securities Exchange
Commission pursuant to the Securities Act of 1933, as amended (the "Act"). The
Registration Statement relates to $200,000,000 in maximum aggregate offering
price of (i) debt securities ("Debt Securities"), which may be either senior
unsecured debt securities ("Senior Debt Securities") or subordinated unsecured
debt securities ("Subordinated Debt Securities"), (ii) shares of preferred
stock, par value $.01 per share ("Preferred Stock"), which may be issued in the
form of depositary shares evidenced by depositary receipts ("Depositary
Shares"), and (iii) shares of common stock, par value $0.01 per share (the
"Common Stock").
In arriving at the opinions expressed below, I have reviewed
the originals or copies, certified or otherwise identified to my satisfaction,
of such corporate records, agreements, documents and other instruments, and of
certificates of public officials, officers and representatives of the Company
and have made such inquiries of such officers and representatives, and I have
made such investigations of law, as I have deemed appropriate as the basis for
the opinions hereinafter set forth.
Based upon the foregoing and subject to the qualifications
stated herein, I am of the opinion that:
2
Securities and Exchange Commission
September 19, 1996
Page 2
(1) The Company has authority pursuant to its Restated
Certificate of Incorporation to issue the shares of Common Stock to be
registered under the Registration Statement and (a) upon the adoption by the
Board of Directors of a resolution in form and content required by applicable
law, (b) upon compliance with the applicable provisions of the Act and such
state "blue sky" or securities laws as may be applicable and (c) upon issuance
and delivery of and payment for such shares in the manner contemplated by the
Registration Statement and/or the applicable prospectus supplement, such shares
of Common Stock will be legally issued, fully paid and nonassessable.
(2) The Company has authority pursuant to its Restated
Certificate of Incorporation to issue the shares of Preferred Stock to be
registered under the Registration Statement and (a) upon the adoption by the
Board of Directors of a resolution in form and content required by applicable
law, (b) upon compliance with the applicable provisions of the Act and such
state "blue sky" or securities laws as may be applicable, (c) upon the adoption
by the Company's Board of Directors and the due execution and filing by the
Company with the Delaware Secretary of State of the Certificate of Designations
establishing the preferences, limitations, and relative voting and other rights
of each series of Preferred Stock prior to issuance thereof and (d) upon
issuance and delivery of and payment for such shares in the manner contemplated
by the Registration Statement and/or the applicable prospectus supplement, such
shares of Preferred Stock will be legally issued, fully paid and nonassessable.
(3) The Company has authority pursuant to its Restated
Certificate of Incorporation to issue Depositary Shares to be registered under
the Registration Statement and when (a) a deposit agreement substantially as
described in the Registration Statement has been duly executed and delivered by
the Company and a depositary, (b) the depositary receipts representing the
Depositary Shares in the form contemplated and authorized by such deposit
agreement have been duly executed and delivered by such depositary and
delivered to and paid for by the purchasers thereof in the manner contemplated
by the Registration Statement and/or the applicable prospectus supplement, (c)
all corporate action necessary for the issuance of such Depositary Shares and
the underlying Preferred Stock has been taken (including but not limited to
action establishing the preferences, limitations, and relative voting and other
rights of such Preferred Stock prior to issuance thereof) and (d) the
applicable provisions of the Act and such state "blue sky" or securities laws
as may be applicable have been complied with, such Depositary Shares will be
legally issued and will entitle the holders thereof to the rights specified in
the deposit agreement relating to such Depositary Shares.
(4) The Company has authority to issue the Debt
Securities to be registered under the Registration Statement and when (a) the
applicable provisions of the
3
Securities and Exchange Commission
September 19, 1996
Page 3
Act and such state "blue sky" or securities laws as may be applicable have been
complied with and (b) the Debt Securities have been issued and delivered for
value as contemplated by the Registration Statement and/or the applicable
prospectus supplement, such Debt Securities will be legally issued and will be
binding obligations of the Company.
To the extent that the obligations of the Company under the
deposit agreement or the obligations of the Company as obligor under an
indenture may be dependent upon such matters, I have assumed for purposes of
this opinion (i) that the applicable depositary or trustee, as the case may be,
is duly organized, validly existing and in good standing under the laws of its
jurisdiction of organization and is duly qualified to engage in the activities
contemplated by the applicable deposit agreement or indenture, as the case may
be, (ii) that such deposit agreement or indenture, as the case may be, has been
duly authorized, executed and delivered by and constitutes the legal, valid and
binding obligation of such depositary or trustee, as the case may be,
enforceable in accordance with its respective terms, (iii) that such depositary
or trustee, as the case may be, is in compliance, generally and with respect to
acting as a depositary or trustee, respectively, under the applicable deposit
agreement or indenture, with all applicable laws and regulations and (iv) that
such depositary or trustee, as the case may be, has the requisite
organizational and legal power and authority to perform its obligations under
the applicable deposit agreement or indenture, as the case may be.
The opinions set forth above are subject to the following
exceptions, limitations and qualifications: (i) the effect of bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium or other similar
laws now or hereafter in effect relating to or affecting the rights and
remedies of creditors; (ii) the effect of general principles of equity, whether
enforcement is considered in a proceeding in equity or law, in the discretion
of the court before which any proceeding therefor may be brought; (iii) the
unenforceability under certain circumstances under law or court decisions of
provisions providing for the indemnification of or contribution to a party with
respect to a liability where such indemnification or contribution is contrary
to public policy; (iv) I express no opinion concerning the enforceability of
the waiver of rights or defenses contained in Section 514 of the Indenture; and
(v) I express no opinion with respect to whether acceleration of Debt
Securities may affect the collectibility of any portion of the stated principal
amount thereof which might be determined to constitute unearned interest
thereon.
4
Securities and Exchange Commission
September 19, 1996
Page 4
I am furnishing this opinion letter in connection with the
Company's registration of the Debt Securities, the Preferred Stock, including
the Depositary Shares, and the Common Stock under the Registration Statement.
This opinion is not to be used, circulated, quoted or otherwise referred to for
any other purpose.
Very truly yours,
/s/ JOHN G. FINNERAN, JR.
-------------------------
John G. Finneran, Jr.
1
EXHIBIT 12
CAPITAL ONE FINANCIAL CORPORATION
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND THE
YEARS ENDED DECEMBER 31, 1995, 1994, 1993, 1992, AND 1991
(dollars in thousands)
SIX MONTHS
ENDED
JUNE 30 YEAR ENDED DECEMBER 31, 1996
- ----------------------------------------------------------------------------------------------------------
1996 1995 1994 1993 1992 1991
- ----------------------------------------------------------------------------------------------------------
Earnings $ 120,946 $ 197,731 $ 146,827 $ 170,854 $ 48,864 $ 53,482
Fixed charges 127,069 253,446 94,816 69,511 30,938 43,739
- ----------------------------------------------------------------------------------------------------------
248,015 451,177 241,643 240,365 79,802 97,221
Fixed charges 127,069 253,446 94,816 69,511 30,938 43,739
- ----------------------------------------------------------------------------------------------------------
Ratio 1.95 1.78 2.55 3.46 2.58 2.22
==========================================================================================================
1
EXHIBIT 13
SELECTED FINANCIAL AND OPERATING DATA
Year Ended December 31
........................................................................................
Five-Year
(dollars in thousands, Compound
except per share data) 1995 1994(1) 1993(1) 1992(1) 1991(1) 1990(1) Growth Rate
....................................................................................................................................
INCOME STATEMENT DATA:
Interest income $ 457,409 $ 258,672 $ 259,857 $ 120,630 $ 111,195 $ 169,943 21.90%
Interest expense 249,396 93,695 67,994 29,888 41,797 76,347 26.71
---------------------------------------------------------------------------------------
Net interest income 208,013 164,977 191,863 90,742 69,398 93,596 17.32
Provision for loan losses 65,895 30,727 34,030 55,012 40,891 22,483 23.99
---------------------------------------------------------------------------------------
Net interest income after
provision for loan losses 142,118 134,250 157,833 35,730 28,507 71,113 14.85
Non-interest income 553,043 396,902 194,825 121,642 111,017 71,673 50.48
Non-interest expense(2) 497,430 384,325 181,804 108,508 86,042 90,648 40.56
---------------------------------------------------------------------------------------
Income before income taxes 197,731 146,827 170,854 48,864 53,482 52,138 30.55
Income taxes 71,220 51,564 60,369 16,614 18,184 17,727 32.07
---------------------------------------------------------------------------------------
Net income $ 126,511 $ 95,263 $ 110,485 $ 32,250 $ 35,298 $ 34,411 29.74
=======================================================================================
Dividend payout ratio 12.55%
PER COMMON SHARE:
Net income(3) $ 1.90 $ 1.44 $ 1.67 $ .49 $ .53 $ .52
Book value at year-end 9.05 7.18
Average common and common equivalent
shares outstanding(3) 66,592,750 66,067,250
=======================================================================================
SELECTED AVERAGE BALANCES:
Credit card loans held for securitization $ 402,602 $ 432,581 $ 393,835 $ 92,055 $ 1,096 225.85
Credit card loans 2,537,606 1,854,103 1,819,543 $ 772,742 581,432 1,023,518 19.91
Allowance for loan losses (69,939) (66,434) (59,754) (43,767) (23,154) (30,042) 18.41
Securities 949,923 62,626
Total assets 4,436,055 2,629,920 2,289,043 827,093 731,881 1,045,272 33.52
Deposits 769,688 36,248
Other borrowings 2,952,162 2,287,474 2,148,155 762,762 675,732 990,743 24.40
Stockholders'/Division equity(4) 543,364 239,616 113,815 51,454 46,807 40,550 68.04
=======================================================================================
SELECTED YEAR-END BALANCES:
Credit card loans held for securitization $ 400,000 $ 400,000
Credit card loans 2,521,679 $ 2,228,445 $1,862,744 $1,304,560 $ 767,448 372,601
Allowance for loan losses (72,000) (68,516) (63,516) (55,993) (31,541) (20,301)
Securities 1,233,796 412,070
Total assets 4,759,321 3,091,980 1,991,207 1,351,802 837,240 818,586
Deposits 696,037 452,201
Other borrowings 3,301,672 2,062,688 1,791,464 1,266,507 778,082 763,997
Stockholders'/Division equity(4) 599,191 474,557 168,879 69,294 51,586 45,045
=======================================================================================
MANAGED LOAN DATA:
Reported loans (average) $ 2,940,208 $ 2,286,684 $2,213,378 $ 772,742 $ 673,487 $1,024,614 23.47
Securitized loans (average) 6,149,070 3,910,739 1,052,187 680,000 638,531 141,097 112.74
---------------------------------------------------------------------------------------
Total loans (average) 9,089,278 6,197,423 3,265,565 1,452,742 1,312,018 1,165,711 50.80
Loan interest income 1,192,100 733,659 432,521 249,082 227,165 190,693 45.69
Year-end loans 10,445,480 7,378,455 4,832,400 1,984,560 1,447,448 1,272,601 52.35
Year-end total accounts (000's) 6,149 5,049 3,118 1,672 1,261 1,019 43.26
Loan yield 13.12% 11.84% 13.24% 17.15% 17.31% 16.36%
Loan delinquency rate(5) 4.20 2.95 2.39 5.30 8.18 3.30
Loan net charge-off rate(6) 2.25 1.48 2.09 5.18 5.61 3.83
=======================================================================================
OPERATING RATIOS:
Net income to average assets 2.85% 3.62% 4.83% 3.90% 4.82% 3.29%
Net income to average equity 23.28 39.76 97.07 62.68 75.41 84.86
Equity to assets (average) 12.25 9.11 4.97 6.22 6.40 3.88
Net interest margin -- managed 6.28 6.90 9.55 12.63 10.70 8.71
Allowance for loan losses to loans
at year-end(7) 2.85 3.07 3.41 4.29 4.11 5.45
=======================================================================================
(1) The Company's results prior to November 22, 1994, reflect operations as a
division of Signet Bank/Virginia.
(2) Non-interest expense includes a $49.0 million ($31.9 million after tax)
nonrecurring charge for computer services contract termination expense in
1994.
(3) Assumes 66,067,250 shares outstanding prior to November 22, 1994.
(4) Division equity reflects an allocation of capital to Capital One Bank as a
division for purposes of preparation of the financial statements of the
Company. Such allocation is not subject to regulatory minimums.
(5) Delinquencies, except for 1990, represent credit card loans which were 30
days or more past-due at year-end. Delinquencies for 1990 represent credit
card loans which were 60 days or more past-due at year-end.
(6) Net charge-offs reflect actual principal amounts charged off less
recoveries.
(7) Excludes credit card loans held for securitization.
Capital One 17
2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
INTRODUCTION
Capital One Financial Corporation (the "Company") is a financial services
company that offers credit card products as its primary business through its
wholly owned subsidiary, Capital One Bank (the "Bank"). The Company is one of
the oldest continually operating bank card issuers in the United States, having
commenced operations in 1953, the same year as the formation of what is now
MasterCard International. At December 31, 1995, the Bank has 6.1 million credit
card customers and $10.4 billion in managed loans outstanding and is one of the
largest providers of MasterCard and Visa credit cards in the United States.
Prior to 1988, the Company's credit card operations were regionally
oriented, focused primarily in the area served by Signet Banking Corporation's
("Signet") bank branches in Virginia, Maryland and Washington, D.C. In 1988,
the Company began developing its information-based strategy, enabling it to
target profitable and creditworthy segments of the bank card market and to
expand nationally.
Prior to November 1994, the Company operated as the credit card
division of Signet Bank/Virginia ("Signet/ Virginia"), a wholly owned
subsidiary of Signet. On November 22, 1994, Signet/Virginia contributed
designated assets and liabilities of its credit card division and approximately
$358 million of equity capital into a newly chartered, limited purpose Virginia
state Federal Reserve member credit card bank, Capital One Bank, then a wholly
owned subsidiary of Signet/Virginia (the "Separation"). Following the
contribution of assets and the assumption of liabilities, Signet/Virginia
immediately distributed the capital stock of Capital One Bank to Signet which,
in turn, contributed such stock to the Company, a newly formed subsidiary of
Signet.
On the same day, the Company issued 7,125,000 shares of its common
stock in an initial public offering (the "IPO"), the net proceeds of which were
approximately $102 million, and 464,400 shares of restricted stock (together
representing approximately 11.5% of the Company). Signet held the remaining
58,477,850, or approximately 88.5%, of the shares of the Company's common
stock. On January 24, 1995, the Board of Directors of Signet approved the
distribution of its shares, and on the close of business on February 28, 1995,
transferred its remaining interest in the Company directly to Signet
stockholders of record as of February 10, 1995 (the "Distribution").
The historic financial statements for the Company for the periods
prior to November 22, 1994, have been prepared based upon the transfer of
assets and assumption of liabilities contemplated by an agreement entered into
among the Company, Signet and Signet/Virginia at the time of the Separation
(the "Separation Agreement"). Prior to the Separation, the operations of the
Company were conducted as a division within Signet/Virginia, to which Signet
and its various subsidiaries had provided significant financial and operational
support.
At the time of the IPO, the Company entered into several interim
services agreements with Signet. These agreements provide, at estimated market
rates, certain ongoing operational support in areas such as general ledger,
investments and human resources. At December 31, 1995, many of these services
are now performed by the Company.
The Company's profitability is affected by the interest margin on
interest-earning assets, cardholder usage patterns, credit quality, the level
of solicitation (marketing) expenses and operating efficiency. The Company's
revenues consist primarily of interest income on revolving credit card loans,
securities and non-interest income consisting of credit card servicing income
and credit card fees, which include annual membership, interchange, cash
advance, over limit, past-due and other credit card fee income. The Company's
primary expenses are the costs of funding assets, credit losses and operating
expenses, including salaries and associate benefits, solicitation expenses,
processing expenses and income taxes.
Significant marketing expenses to implement the Company's new product
strategies (e.g., printing, credit bureau costs and postage) are incurred prior
to the acquisition of new accounts while the resulting revenues are recognized
over the life of the acquired accounts. Revenues recognized are a function of
the response rate of the initial marketing program, card usage and attrition
patterns, credit quality of accounts, product pricing, effectiveness of account
management programs and operating costs.
PRO FORMA
Due to the significance of changes in funding and other operating
issues, the following discussion and Table 1 present the Company as if it had
been an independently funded stand-alone organization for the full year in
1994. The pro forma presentation is the baseline from which management compares
performance to the year ended December 31, 1995. Following this discussion of
pro forma results is a more complete analysis of the historic financial
statements contained elsewhere in this report.
As a division of Signet/Virginia, the Company was subject to many
decisions made by Signet on a consolidated level. Most notably its
asset/liability management was established at the corporate rather than
divisional level. As a result, the Company's historic operating results reflect
a certain level of unhedged interest rate exposure prior to November 22, 1994.
The Separation and subsequent Distribution also resulted in a
significant reorganization of the equity and funding of the Company.
Accordingly, certain costs of operating as a public stand-alone entity rather
than as a division of a larger organization resulted in incrementally higher
expenses than are reflected on a historic basis. An estimate of these effects
was taken into consideration in preparing pro forma statements of income for
1994 in Table 1.
18 Capital One
3
TABLE 1 -- COMPARISON OF 1995 ACTUAL TO 1994 PRO FORMA NET INCOME
Year Ended December 31
.............................
(dollars in thousands) 1995 1994
...........................................................................................................................
(ACTUAL) (Pro Forma)
Interest income:
Credit card loans, including fees $351,786 $214,100
Credit card loans held for securitization 45,868 41,015
Federal funds sold 26,832 2,483
Other 32,923 28,495
-----------------------------
Total interest income 457,409 286,093
Interest expense:
Deposits 49,547 2,364
Federal funds purchased 45,878 2,927
Bank facility 20,173 152,269
Bank notes 133,635 53
Affiliate borrowings 163 476
-----------------------------
Total interest expense 249,396 158,089
-----------------------------
Net interest income 208,013 128,004
Provision for loan losses 65,895 30,727
-----------------------------
Net interest income after provision for loan losses 142,118 97,277
Non-interest income 553,043 399,357
Non-interest expense(1) 497,430 391,140
-----------------------------
Income before income taxes 197,731 105,494
Income taxes 71,220 37,097
-----------------------------
Net income $126,511 $ 68,397
=============================
(1) Non-interest expense includes a $49.0 million ($31.9 million after-tax)
nonrecurring charge for computer services contract termination expense in
1994.
The pro forma information does not purport to represent what the
results of 1994 operations would actually have been if the adjustments
described below had occurred in 1994 or to be indicative of the future results
of operations or financial position of the Company. The adjustments described
below are based upon available information and on assumptions that the Company
believes are reasonable.
Pro forma interest income includes, for the period prior to the
Separation, interest income earned on a hypothetical portfolio of high-quality
liquid securities that the Company would have purchased in order to provide
adequate liquidity and to meet its ongoing cash needs. The interest expense
associated with funding the liquid securities also includes and is based on the
Company's 1994 bank facility (see discussion under "Funding") and is assumed to
have a modestly negative impact on net interest income for the periods
presented. Additionally, pro forma results reflect the replacement of the
affiliate borrowing liability solely with the 1994 bank facility. The bank
facility is assumed to bear interest at the one-month London Interbank Offered
Rate ("LIBOR") plus 85 basis points (including the amortization of debt
issuance costs). The assumed average rate was 5.22% for the period from January
1 through November 22, 1994.
Pro forma results also include an increase in interest expense,
non-interest (rental) income and non-interest (depreciation) expense associated
with the Company's ownership of additional office buildings. Pursuant to the
Separation Agreement, these buildings were transferred to the Company at net
book value upon consummation of the Separation, portions of which were leased
back to Signet/Virginia, until the Company assumes full occupancy.
Pro forma results also reflect the estimated additional administrative
expenses (executive salaries, professional services, business taxes and other
expenses) incurred by the Company as a publicly-held, stand-alone entity. Pro
forma results reflect the net tax effect, at the statutory Federal income tax
rate of 35%.
Actual net income for the year ended December 31, 1995, of $126.5
million increased $58.1 million, or 85%, over pro forma net income of $68.4
million in 1994. The increase in net income was partially attributable to $31.9
million (after-tax) expense in 1994 for settlement costs to terminate a
long-term data processing services contract. Net interest income also increased
$80.0 million, or 63%, to $208.0 million in 1995 from $128.0 million in 1994.
This rise in net interest income was due to a 31% increase in interest-earning
assets and an increase in net interest margin to 5.35% in 1995 from 4.30% in
1994. These increases were partially offset by increases in non-interest
expenses as a result of balance and account growth discussed further below.
Remaining income and expense fluctuations are consistent with those noted on a
historic basis below.
Capital One 19
4
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (CONTINUED)
SUMMARY OF HISTORIC RESULTS OF OPERATIONS
The following discussion provides a summary of 1995 results compared to the
historic results of the Company which, prior to November 22, 1994, are as a
division of Signet. Each component is discussed in further detail in subsequent
sections of this analysis.
YEAR ENDED DECEMBER 31, 1995
COMPARED TO YEAR ENDED DECEMBER 31, 1994
Net income for the year ended December 31, 1995, of $126.5 million increased
$31.2 million, or 33%, over net income of $95.3 million in 1994. The increase
in net income was partially attributable to the $31.9 million (after-tax)
nonrecurring charge for 1994 settlement costs to terminate a long-term data
processing services contract.
Other factors affecting net income include the increase in net
interest income of $43.0 million, or 26%, the result of a 66% increase in
average interest-earning assets offset by a decrease in the net interest margin
to 5.35% from 7.02%. The decrease in net interest margin reflects overall
increases in average short-term market interest rates plus the absence of a
stand-alone hedging program prior to the IPO. The provision for loan losses
increased $35.2 million, or 114%, as average reported loans increased 37% and
the net charge-off rate increased to 2.03% in 1995 from 1.13% in 1994 as the
average age of the accounts increased (generally referred to as "seasoning").
Non-interest income increased $156.1 million, or 39%, primarily due to the
increase in average managed loans including those securitized. Increases in
solicitation costs of $45.9 million, or 46%, and other non-interest expenses
(excluding the contract termination expense of $49.0 million) of $116.2
million, or 50%, reflect the increase in marketing investment in existing and
new product opportunities and the cost of operations to manage the growth in
credit card accounts. Average managed loans grew 47%, to $9.1 billion from
$6.2 billion, as a result of the success of the Company's solicitation and
account management strategies.
YEAR ENDED DECEMBER 31, 1994
COMPARED TO YEAR ENDED DECEMBER 31, 1993
Net income for the year ended December 31, 1994, of $95.3 million decreased
$15.2 million, or 14%, over net income of $110.5 million in 1993. The decrease
in net income was partially attributable to the $31.9 million (after-tax) in
contract termination costs previously mentioned.
Other factors reducing net income include the increase in funding
costs associated with reported assets as the average interest rate on
borrowings increased to 4.03% in 1994 from 3.17% in 1993. Increases in credit
card solicitation costs of $45.1 million, or 81%, and other non-interest
expenses (excluding the contract termination expense of $49.0 million) of
$108.4 million, or 86%, reflect the increase in marketing investment in
existing and new product opportunities and the cost of operations to manage the
growth in credit card accounts.
Increased funding costs and non-interest expenses were offset in part
by the growth in non-interest income related to increased securitizations and
the increase in the loan portfolio. Additionally, lower loss provisions,
decreasing to $30.7 million from $34.0 million, or 10%, reflect the results of
more recent solicitation programs.
MANAGED LOAN PORTFOLIO
The Company analyzes its financial performance on a managed loan portfolio
basis. Managed loan data adjusts the income statement and balance sheet to add
back the effect of securitizing loans. The Company also evaluates its interest
rate exposure on a managed portfolio basis.
In originating its loan portfolio in recent years, the Company has
pursued a low introductory interest rate strategy with accounts repricing to
higher rates after 6 to 16 months from the date of origination. The amount of
repricing is actively managed in an effort to maximize return on investment at
the customer level reflecting the risk and expected performance of the account.
Accounts also may be repriced upwards or downwards based on customer
performance. Industry competitors have continuously solicited the Company's
customers with similar low rate introductory strategies. Management believes
that these competitive pressures have and will continue to put additional
pressure on low introductory rate strategies.
Partially in response to competitive pressures in 1995, the Company
began to shift a significant amount of its solicitation expense to other
product opportunities. These products do not have the immediate impact on
managed loan balances of the introductory rate product but typically consist of
lower credit limit accounts which build balances over time. As was experienced
in the fourth quarter of 1995, management expects aggregate loan balance growth
to continue to slow or even decline as a result of this shift. However, net
new account growth is expected to continue. Actual growth may vary and is
subject to such factors as competition, market interest rates, consumer credit
quality and other external and internal circumstances.
The Company's managed loan portfolio is comprised of credit card
loans, credit card loans held for securitization and securitized credit card
loans. Securitized loans are not assets of the Company and, therefore, are not
shown on the balance sheet. Reported loans consist of credit card loans and
credit card loans held for securitization and excludes securitized loans. Table
2 summarizes the Company's managed loan portfolio.
20 Capital One
5
TABLE 2 -- MANAGED LOAN PORTFOLIO
Year Ended December 31
......................................................................
(dollars in thousands) 1995 1994 1993 1992 1991
.............................................................................................................................
YEAR-END BALANCES:
On-balance sheet loans held for securitization $ 400,000
On-balance sheet credit card loans 2,521,679 $2,228,455 $1,862,744 $1,304,560 $ 767,448
Securitized credit card loans 7,523,801 5,150,000 2,969,656 680,000 680,000
----------------------------------------------------------------------
Total year-end managed loan portfolio $10,445,480 $7,378,455 $4,832,400 $1,984,560 $1,447,448
======================================================================
AVERAGE BALANCES:
On-balance sheet loans held for securitization $ 402,602 $ 432,581 $ 393,835 $ 92,055
On-balance sheet credit card loans 2,537,606 1,854,103 1,819,543 $ 772,742 581,432
Securitized credit card loans 6,149,070 3,910,739 1,052,187 680,000 638,531
----------------------------------------------------------------------
Total average managed loan portfolio $ 9,089,278 $6,197,423 $3,265,565 $1,452,742 $1,312,018
======================================================================
The Company's reported loan portfolio at December 31, 1995, consists
of 41% fixed and 59% variable interest rate loans. At December 31, 1995, the
managed loan portfolio consists of 36% fixed and 64% variable interest rate
loans.
Since 1990, the Company has actively engaged in credit card loan
securitization transactions which are treated as sales under generally accepted
accounting principles. For securitized loans, amounts that would previously
have been reported as interest income, interest expense, credit card service
charges and provision for loan losses are instead included in non-interest
income as credit card servicing income. Because credit losses are absorbed
against credit card servicing income over the life of these transactions, such
income may vary depending upon the credit performance of the securitized loans.
However, exposure to credit losses on the securitized loans is contractually
limited to the servicing income cash flows.
A securitization generally involves the transfer by the Company of the
receivables generated by a pool of credit card accounts to an entity created
for the securitization, generally a trust. Certificates issued ($7.5 billion at
December 31, 1995) by the trust represent undivided ownership interests in
those receivables transferred into the trust. The credit quality of the
receivables is supported by credit enhancement, which may be in the form of a
letter of credit, a cash collateral account, or a subordinated interest in the
receivables in the pool. The securitization results in the removal of the
receivables from the Company's balance sheet for financial and regulatory
accounting purposes.
The receivables transferred to a securitization pool include those
outstanding in the selected accounts at the time the trust is formed and those
arising under the accounts from time to time until termination of the trust.
The Company also transfers to the trust the cash collected in payment of the
receivables, interest and fees. All proceeds of the receivables, the annual
fees, cash advance fees, past-due fees, and similar fees received or to be
received for each account are similarly transferred to the trust.
Certificates representing participation interests in the pool are sold
to the public through an underwritten offering or to private investors in
private placement transactions. The Company receives the proceeds of the sale.
The amount of receivables transferred to the trust exceeds the initial
principal amount of the certificates issued by the trust to investors. The
Company retains an interest in the trust in an amount equal to the amount of
the receivables in excess of the principal balance of the certificates. The
Company's interest in the trust varies as the amount of the excess receivables
in the trust fluctuates as the credit cards accountholders make principal
payments and incur new charges on the selected accounts.
The Company acts as servicing agent and receives loan servicing fees
generally equal to two percent per annum of the securitized receivables. As
servicing agent, the Company continues to provide customer service, to collect
past-due accounts and to provide all other services typically performed for its
customers. Accordingly, its relationship with its credit card customer is not
affected by the securitization.
The certificateholders are entitled to receive periodic interest
payments at a fixed rate or a floating rate. The fixed interest rate is
generally substantially below the yield on the pool of receivables. Generally,
the Company's floating rate issuances are based on LIBOR. Amounts collected in
excess of that needed to pay the rate of interest are used to pay the credit
enhancement fee and servicing fee and are available to absorb the investors'
share of credit losses.
Certificateholders in the Company's securitization program are
generally entitled to receive principal payments
Capital One 21
6
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (CONTINUED)
either through monthly payments during an amortization period or in one lump
sum after an accumulation period. Amortization may begin sooner in certain
circumstances, including if the annualized portfolio yield (consisting,
generally, of interest, annual fees and other credit card fees) for a three
month period drops below the sum of the certificate rate payable to investors,
loan servicing fees and net credit losses during the period or certain other
events occur.
Prior to the commencement of the amortization or accumulation period,
all principal payments received on the trust receivables are reinvested in new
receivables of the selected accounts for the benefit of the trust. During the
amortization period, the investors' share of principal payments are paid to the
certificateholders until they are paid in full. During the accumulation period,
the investors' share of principal payments are paid into a principal funding
account designed to accumulate amounts so that the certificate can be paid in
full on the expected final payment date. The trust continues in existence until
all certificateholders of all series are repaid the principal amounts of their
certificates, at which time all remaining receivables and funds held in the
trust are reassigned to the Company.
MANAGED REVENUES*
(in millions)
'93 '94 '95
$429 $628 $906
*Net interest income and non-interest income on a managed basis.
Table 3 indicates the impact of the credit card securitizations on the
income statement, average assets, return on assets, yield and net interest
margin for the periods presented. The Company intends to continue to securitize
credit card loans.
TABLE 3 -- IMPACT OF CREDIT CARD SECURITIZATIONS
Year Ended December 31
.............................................
(dollars in thousands) 1995 1994 1993
...........................................................................................................................
STATEMENT OF INCOME (AS REPORTED):
Net interest income $ 208,013 $ 164,977 $ 191,863
Provision for loan losses 65,895 30,727 34,030
Non-interest income 553,043 396,902 194,825
Non-interest expense 497,430 384,325 181,804
---------------------------------------------
Income before income taxes $ 197,731 $ 146,827 $ 170,854
=============================================
ADJUSTMENTS FOR SECURITIZATIONS:
Net interest income $ 421,983 $ 267,201 $ 119,995
Provision for loan losses 145,209 65,921 42,025
Non-interest income (276,774) (201,280) (77,970)
Non-interest expense
---------------------------------------------
Income before income taxes $ -- $ -- $ --
=============================================
MANAGED STATEMENT OF INCOME (AS ADJUSTED):
Net interest income $ 629,996 $ 432,178 $ 311,858
Provision for loan losses 211,104 96,648 76,055
Non-interest income 276,269 195,622 116,855
Non-interest expense 497,430 384,325 181,804
---------------------------------------------
Income before income taxes $ 197,731 $ 146,827 $ 170,854
=============================================
OPERATING DATA AND RATIOS:
As reported:
Average interest-earning assets $ 3,890,131 $2,349,310 $2,213,378
Return on average assets 2.85% 3.62% 4.83%
Net interest margin(1) 5.35 7.02 8.67
Including securitized credit cards:
Average interest-earning assets $10,039,201 $6,260,049 $3,265,565
Return on average assets 1.20% 1.46% 3.31%
Net interest margin(1) 6.28 6.90 9.55
Yield on managed portfolio 13.12 11.84 13.24
=============================================
(1) Net interest margin is equal to net interest income divided by average
interest-earning assets.
22 Capital One
7
NET INTEREST INCOME
Net interest income is interest earned from the Company's loans and securities
less interest expense on borrowings, including certificates of deposit in
denominations of $100,000 or greater ("large denomination CD's"), federal funds
purchased, bank facility borrowings and bank notes. Prior to the Separation,
interest expense represented amounts allocated to the Company by Signet to fund
loans and other assets. The interest expense paid on the allocated borrowings
by the Company was based on average historic rates paid by Signet. See
"Funding" for a detailed description of the funding allocations.
Net interest income for the year ended December 31, 1995, increased
$43.0 million, or 26%, to $208.0 million from $165.0 million in 1994. This
increase is the result of a 66% increase in the average balance of, and a 75
basis point increase in yield on, interest-earning assets offset by significant
increases in the cost of funds. Net interest margin decreased 167 basis points
to 5.35% in 1995 from 7.02% in 1994 as the yield increase on interest-earning
assets to 11.76% from 11.01% was more than offset by a cost of funds increase
of 267 basis points to 6.70% from 4.03%.
The average yield on loans increased 236 basis points to 13.52% in
1995 from 11.16% in 1994. This increase primarily reflects the repricing of
introductory rate loans to higher rates in accordance with their respective
term and the repricing of variable rate loans to higher rates based on the
increase in average short-term market interest rates. The net interest margin
was also impacted by an increased percentage of lower yielding securities (24%
of average interest-earning assets in 1995 versus 3% in 1994). The increase in
the cost of funds reflects the increase in average short-term market interest
rates and incrementally higher market cost of funds paid by the Company on a
stand-alone basis after the Separation versus the amounts allocated by Signet
in 1994.
Net interest income for the year ended December 31, 1994, decreased
$26.9 million, or 14%, from the prior year. Net interest income decreased as a
result of the decline in the yield on interest-earning assets and the higher
cost of funds. The overall yield on interest-earning assets decreased during
the year by 73 basis points to 11.01% from 11.74% primarily due to the low
introductory rates on newly originated accounts. Loan yields decreased to
11.16% from 11.74% for the same period. Additionally, the Company had net
additions of $412.1 million in temporary investments and securities after the
Separation. These instruments yielded 5.68% on an annualized basis.
Average rates paid on borrowed funds rose 86 basis points during 1994
versus 1993 due to overall interest rate increases and the incrementally higher
cost of funds paid by the Company on a stand-alone basis after the Separation.
Table 4 provides average balance sheet data, an analysis of net
interest income, net interest spread (the difference between the yield on
interest-earning assets and the cost of interest-bearing liabilities) and net
interest margin for each of the years ended December 31, 1995, 1994 and 1993.
Capital One 23
8
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (CONTINUED)
TABLE 4 -- STATEMENT OF AVERAGE BALANCES, INCOME AND EXPENSE, YIELDS AND RATES
Year Ended December 31
.......................................................................................
1995 1994 1993
.......................................................................................
AVERAGE INCOME/ YIELD/ Average Income/ Yield/ Average Income/ Yield/
(dollars in thousands) BALANCE EXPENSE RATE Balance Expense Rate Balance Expense Rate
............................................................................................................................
ASSETS:
Interest-earning assets
Credit card loans
held for securitization(1) $ 402,602 $ 45,868 11.39% $ 432,581 $ 41,015 9.48% $ 393,835 $ 36,263 9.21%
Credit card loans(1) 2,537,606 351,786 13.86 1,854,103 214,100 11.55 1,819,543 223,594 12.29
Federal funds sold 453,797 26,832 5.91 49,709 2,483 5.00
Other interest-earning assets 496,126 32,923 6.64 12,917 1,074 8.31
--------------------------------------------------------------------------------------
Total interest-earning assets 3,890,131 $457,409 11.76% 2,349,310 $258,672 11.01% 2,213,378 $259,857 11.74%
--------------------------------------------------------------------------------------
Cash and due from banks 9,309 8,331 450
Allowance for loan losses (69,939) (66,434) (59,754)
Premises and equipment, net 123,472 53,039 28,062
Other assets 483,082 285,674 106,907
--------------------------------------------------------------------------------------
Total assets $4,436,055 $2,629,920 $2,289,043
======================================================================================
LIABILITIES AND EQUITY:
Interest-bearing liabilities
Interest-bearing deposits $ 769,688 $ 49,547 6.44% $ 36,248 $ 2,364 6.52%
Federal funds purchased 747,350 45,878 6.14 47,332 2,927 6.18
Bank facility 277,945 20,173 7.26 175,342 12,086 6.89
Bank notes 1,924,087 133,635 6.95 695 53 7.63
Affiliate borrowings 2,780 163 5.86 2,064,105 76,265 3.69 $2,148,155 $ 67,994 3.17%
--------------------------------------------------------------------------------------
Total interest-bearing liabilities 3,721,850 $249,396 6.70% 2,323,722 $ 93,695 4.03% 2,148,155 $ 67,994 3.17%
Other liabilities 170,841 66,582 27,073
--------------------------------------------------------------------------------------
Total liabilities 3,892,691 2,390,304 2,175,228
Equity 543,364 239,616 113,815
--------------------------------------------------------------------------------------
Total liabilities and equity $4,436,055 $2,629,920 $2,289,043
======================================================================================
Net interest spread 5.06% 6.98% 8.57%
--------------------------------------------------------------------------------------
Interest income to average
interest-earning assets 11.76% 11.01% 11.74%
Interest expense to average
interest-earning assets 6.41 3.99 3.07
--------------------------------------------------------------------------------------
Net interest margin 5.35% 7.02% 8.67%
======================================================================================
(1) Interest income includes past-due fees on loans of approximately $50,384,
$16,478 and $9,785 for the years 1995, 1994 and 1993, respectively.
INTEREST VARIANCE ANALYSIS
Net interest income is affected by changes in the average interest rate earned
on interest-earning assets and the average interest rate paid on
interest-bearing liabilities. In addition, net interest income is affected by
changes in the volume of interest-earning assets and interest-bearing
liabilities. Table 5 sets forth the dollar amount of the increase (decrease) in
interest income and interest expense resulting from changes in the volume of
interest-earning assets and interest-bearing liabilities and from changes in
yields and rates.
24 Capital One
9
TABLE 5 -- INTEREST VARIANCE ANALYSIS
Year Ended December 31
.................................................................
1995 VS 1994 1994 vs 1993
.................................................................
INCREASE CHANGE DUE TO* Increase Change due to*
(dollars in thousands) (DECREASE) VOLUME RATE (Decrease) Volume Rate
............................................................................................................................
INTEREST INCOME:
Credit card loans held
for securitization $ 4,853 $ (2,989) $ 7,842 $ 4,752 $ 3,649 $ 1,103
Credit card loans
including fees 137,686 89,177 48,509 (9,494) 4,186 (13,680)
Federal funds sold 24,349 23,811 538 2,483 2,483
Other interest-earning assets 31,849 32,109 (260) 1,074 1,074
----------------------------------------------------------------
Total interest income 198,737 180,092 18,645 (1,185) 15,466 (16,651)
----------------------------------------------------------------
INTEREST EXPENSE:
Deposits 47,183 47,213 (30) 2,417 2,417
Federal funds purchased 42,951 42,973 (22) 2,927 2,927
Bank facility 8,087 7,416 671 12,086 12,086
Bank notes 133,582 133,586 (4)
Affiliate borrowings (76,102) (104,316) 28,214 8,271 (2,745) 11,016
----------------------------------------------------------------
Total interest expense 155,701 74,141 81,560 25,701 5,907 19,794
----------------------------------------------------------------
Net interest income* $ 43,036 $ 89,275 $(46,239) $(26,886) $11,236 $(38,122)
================================================================
* The change in interest due to both volume and rates has been allocated in
proportion to the relationship of the absolute dollar amounts of the change
in each. The changes in income and expense are calculated independently for
each line in the schedule. The totals for the volume and rate columns are
not the sum of the individual lines.
PROVISION AND ALLOWANCE FOR LOAN LOSSES
The provision for loan losses is the periodic expense of maintaining an
adequate allowance at the amount estimated to be sufficient to absorb possible
future losses, net of recoveries (including recovery of collateral), inherent
in the existing on-balance sheet loan portfolio. In evaluating the adequacy of
the allowance for loan losses, the Company takes into consideration several
factors including economic trends and conditions, overall asset quality, loan
seasoning and trends in delinquencies and expected charge-offs. The Company's
primary guideline is a calculation which uses current delinquency levels, loan
seasoning and other measures of asset quality to estimate net charge-offs.
Credit card loans are typically charged off when they are six months past-due
unless the customer is determined to be bankrupt, in which case the account is
generally charged off within 30 days of verification. Once a loan is charged
off, it is the Company's policy to continue to pursue the recovery of principal
and interest.
Management believes that the allowance for loan losses is adequate to
cover anticipated losses in the on-balance sheet loan portfolio under current
conditions. There can be no assurance as to the future credit losses that may
be incurred in connection with the Company's loan portfolio, nor can there be
any assurance that the loan loss allowance that has been established by the
Company will be sufficient to absorb such future credit losses. The allowance
is a general allowance applicable to on-balance sheet credit card loans. Table
6 sets forth the activity in the allowance for loan losses for the periods
indicated. See "Asset Quality," "Delinquencies" and "Net Charge-Offs" for a
more complete analysis of asset quality.
TABLE 6 -- SUMMARY OF ALLOWANCE FOR LOAN LOSSES
Year Ended December 31
......................................................................
(dollars in thousands) 1995 1994 1993 1992 1991
...........................................................................................................................
Balance at beginning of year $ 68,516 $ 63,516 $ 55,993 $ 31,541 $ 20,301
Provision for loan losses 65,895 30,727 34,030 55,012 40,891
Net addition (deduction) arising in
securitization transactions (11,504) (4,869) (2,902) 1,503
Loans charged off (64,260) (31,948) (39,625) (44,666) (40,755)
Recoveries of loans previously charged off 13,353 11,090 16,020 14,106 9,601
----------------------------------------------------------------------
Net loans charged off* (50,907) (20,858) (23,605) (30,560) (31,154)
----------------------------------------------------------------------
Balance at end of year $ 72,000 $ 68,516 $ 63,516 $ 55,993 $ 31,541
======================================================================
Allowance for loan losses to loans at year-end* 2.85% 3.07% 3.41% 4.29% 4.11%
======================================================================
* Excludes credit card loans held for securitization.
Capital One 25
10
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (CONTINUED)
For the year ended December 31, 1995, the increase in the provision
for loan losses resulted from increases in average reported loans of 37%,
continued loan seasoning, a shift in the composition of reported loans and a
softening in U.S. consumer credit quality. Net charge-offs as a percentage of
average reported loans increased to 2.03% for the year ended December 31, 1995,
from 1.13% in the prior year. The increase in the provision and charge-off rate
reflects an 87% increase in the seller's interest in securitization trusts to
$1.4 billion, or 48%, of the reported average balance for 1995 from $.7
billion, or 33% of the reported average balance for 1994. This seller's
interest represents an undivided interest in the trust receivables in excess of
investor certificates outstanding in the trust, which receivables are generally
more seasoned than the other newer on-balance sheet loans. Additionally,
growth in non-balance transfer products (i.e., secured card, cosigned,
students), which have modestly higher charge-off rates than balance transfer
products, increased the amount of provision necessary to absorb credit losses.
In consideration of these factors, the Company increased the allowance for loan
losses by $3.5 million during 1995.
These factors notwithstanding, the Company believes that the credit
quality of the portfolio has improved as a result of the application of the
Company's information-based strategy. The Company, nevertheless, anticipates
higher 1996 percentage losses in both reported and securitized credit card
loans as these portfolios continue to season, growth in balance transfer
products slows and as the consumer credit sector of the economy continues to
soften. Management's estimates are subject to the products the Company offers
and external factors beyond its control, which may cause actual charge-off
rates to vary from current expectations.
For the year ended December 31, 1994, lower charge-off experience
resulted in a 10% decrease in the provision for loan losses compared to the
year ended December 31, 1993. During the year ended December 31, 1994, the
Company increased the allowance for loan losses by $5.0 million to accommodate
an anticipated increase in losses as newer loans season. Net charge-offs as a
percentage of average loans declined to 1.13% in the year ended December 31,
1994 from 1.19% in the year ended December 31, 1993. The 1994 low net
charge-off rates were also influenced by the substantial growth in new
accounts, many of which had not aged sufficiently to experience significant
charge-offs.
CREDIT CARD SERVICING INCOME
Credit card servicing income represents servicing income from securitizations.
This income reflects the excess of interest and fee income earned on
securitized loans over loan losses and interest paid on investor certificates
as well as other interest and fees earned and paid associated with credit
enhancement.
Credit card servicing income increased $97.8 million, or 31%, to
$409.9 million in 1995 from $312.1 million in 1994. Average securitized loans
increased 57% for the year ended December 31, 1995, compared to the prior year.
Net interest income on securitized loans increased $154.8 million, or 58%, to
$422.0 million in 1995 from $267.2 million in 1994, primarily as a result of
the 57% increase in average securitized loans. Net interest margin on these
loans was principally flat at 6.86% in 1995 versus 6.83% in 1994. Charge-offs
on these loans increased $79.3 million, or 120%, to $145.2 million in 1995 from
$65.9 million in 1994, due to the increase in average securitized loans, loan
seasoning and the downturn in consumer credit. Non-interest income relating to
securitized loans increased $22.4 million, or 20%, to $133.2 million in 1995
from $110.8 million in 1994, primarily due to the increase in average managed
account growth of 39% in 1995 compared to 1994.
Credit card servicing income increased $189.7 million, or 155%, to
$312.1 million in 1994 from $122.4 million in 1993. Average securitized loans
increased 272% for 1994 compared to the prior year. Net interest income on
securitized loans increased $147.2 million, or 123%, primarily as a result of
the increase in average securitized loans offset by a decrease in net interest
margin on these loans to 6.83% in 1994 from 11.40% in 1993. Charge-offs on
these loans increased $23.9 million, or 57%, due to the increase in average
securitized loans, offset by the significant decrease in the average age of
securitized loans. Non-interest income relating to securitized loans increased
$66.4 million, or 150%, primarily due to the increase in average managed
account growth of 73% and the significant increase in average securitized
loans.
OTHER NON-INTEREST INCOME
Other reported non-interest income increased 69% to $143.1 million for the year
ended December 31, 1995, compared to $84.8 million for the year ended December
31, 1994. The increase in non-interest income was driven by increased credit
card service fees, which include annual membership, interchange, cash advance
and overlimit fees. This increase is attributable to a rise in the number of
accounts and charge volume, as well as a shift to products that generate higher
amounts of fee income.
Other reported non-interest income increased 17% to $84.8 million for
1994, from $72.5 million in 1993. This increase is primarily attributable to
the increase in accounts and related charge volume.
NON-INTEREST EXPENSE
Non-interest expense for the year ended December 31, 1995, increased $113.1
million, or 29%, to $497.4 million from $384.3 million in the year ended
December 31, 1994. The increase would have been higher if not for the $49.0
million expense in 1994 for settlement costs to terminate a long-term data
processing services contract.
26 Capital One
11
Solicitation expense increased $45.9 million, or 46%, to $146.8
million in 1995 from $100.9 million in 1994. Solicitation expense represents
the cost to select, print and mail the Company's product offerings to potential
and existing customers utilizing its information-based strategy and account
management techniques.
Excluding the contract termination charge and the solicitation expense
increase, other non-interest expenses increased 50%, primarily as a result of
the increase in average managed accounts of 39% and increased costs associated
with operations as a stand-alone company. Additionally, the increase reflects
certain systems enhancements costs made since the Separation to support the
information-based strategy. The Company anticipates that costs, excluding
marketing, will continue to increase principally in line with account growth
and product mix.
MARKETING INVESTMENT
(in millions)
'93 '94 '95
$56 $101 $147
The Company expects that solicitation expenses will increase during
1996 over the 1995 level as marketing opportunities develop. These
opportunities, however, are subject to a variety of external and internal
factors such as competition, market interest rates and consumer credit
quality, which may affect the ultimate amount of solicitation expense.
For all periods prior to the Separation, non-interest expense includes
an allocation of expenses for data processing, accounting, audit, human
resources, corporate secretary, treasury, legal and other administrative
support provided by Signet. Management believes the allocation methods are
reasonable.
Non-interest expense for 1994 was $384.3 million, an increase of 111%
over the $181.8 million expensed in 1993. The increase was in part the result
of $49.0 million in settlement costs to terminate a long-term data processing
services contract. Signet and Electronic Data Systems ("EDS") were parties to
a long-term data processing and related services agreement pursuant to which,
among other things, EDS provided certain processing and administrative services
to the Company. In 1992, the Company began to reduce its reliance on EDS
services and in 1994 agreed through Signet to substantially terminate all EDS
services over a transition period ending June 30, 1995. The cost of the
contract termination, $49.0 million, was included as a one-time charge in the
Company's financial results for the year ended December 31, 1994.
Contributing to the increase in non-interest expense in 1994 were
solicitation expenses which rose $45.1 million, or 81%, to $100.9 million in
the year ended December 31, 1994. All other non-interest expense increased
$108.4 million, or 86%, primarily as a result of the 73% increase in average
managed accounts.
INCOME TAXES
For all periods prior to the Distribution, the Company was included in Signet's
consolidated tax return and income tax expense was determined on a separate
return basis at the federal statutory rate of 35%. See Note I to consolidated
financial statements related to Income Taxes.
ASSET QUALITY
The asset quality of a portfolio is generally a function of the initial
underwriting criteria used, seasoning of the accounts, account management
activities and geographic, demographic, or other forms of concentration, as
well as general economic conditions. Seasoning is an important indicator of
the stability of delinquency and loss levels; a portfolio consisting of older
accounts generally behaves more predictably than a newly originated portfolio.
The Company believes, based on its own analysis of the behavior of newly booked
accounts, that, absent adverse changes in the economy or interest rates, the
delinquency and credit loss performance of a group of new accounts is generally
predictable based on testing and historical performance of accounts booked
under similar criteria. Usually, these groups of new accounts initially exhibit
a rising trend of delinquency and credit losses which peaks and then declines
to a more steady state of delinquency and net losses. This steady state is
generally reached within three years. At December 31, 1995, 51% of managed
accounts, representing 50% of the total managed loan balance, were less than 18
months old. Accordingly, it is likely that the Company's managed loan portfolio
will experience increased levels of delinquency and loan losses as the average
age of the Company's accounts increases.
For the year ended December 31, 1995, the Company's net charge-offs as
a percentage of average managed loans was 2.25%. With the implementation of
the Company's information-based strategy, the Company's credit quality for the
three years ended December 31, 1995 exceeded industry averages. Extensive
testing of credit experience with past and present cardholders has enabled the
Company to continually refine its credit policies and develop an array of
proprietary statistical models and approaches to the account generation,
management and collection processes. The Company's policy is to optimize the
profitability of each account within acceptable risk characteristics. The
Company takes measures as necessary, including requiring collateral on certain
accounts and other solicitation and account management techniques, to maintain
the Company's credit quality standards and to manage the risk of loss on
existing accounts.
Capital One 27
12
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (CONTINUED)
TABLE 7 -- DELINQUENCIES*
December 31
.....................................................................................................
1995 1994 1993 1992 1991
.....................................................................................................
% OF % of % of % of % of
TOTAL Total Total Total Total
(dollars in thousands) LOANS LOANS Loans Loans Loans Loans Loans Loans Loans Loans
............................................................................................................................
REPORTED:
Loans outstanding $ 2,921,679 100.00% $2,228,455 100.00% $1,862,744 100.00% $1,304,560 100.00% $ 767,448 100.00%
Loans delinquent:
30-59 days 65,711 2.25 29,032 1.30 19,186 1.03 21,525 1.65 24,175 3.15
60-89 days 38,311 1.31 14,741 .66 10,618 .57 11,089 .85 13,737 1.79
90 or more days 79,694 2.73 24,445 1.10 18,255 .98 23,352 1.79 25,633 3.34
-----------------------------------------------------------------------------------------------------
Total $ 183,716 6.29% $ 68,218 3.06% $ 48,059 2.58% $ 55,966 4.29% $ 63,545 8.28%
=====================================================================================================
MANAGED:
Loans outstanding $10,445,480 100.00% $7,378,455 100.00% $4,832,400 100.00% $1,984,560 100.00% $1,447,448 100.00%
Loans delinquent:
30-59 days 165,306 1.58 90,733 1.23 46,391 .96 40,088 2.02 44,871 3.10
60-89 days 92,665 .89 45,277 .61 25,128 .52 21,433 1.08 25,475 1.76
90 or more days 181,243 1.73 81,720 1.11 43,975 .91 43,661 2.20 48,055 3.32
-----------------------------------------------------------------------------------------------------
Total $ 439,214 4.20% $ 217,730 2.95% $ 115,494 2.39% $ 105,182 5.30% $ 118,401 8.18%
=====================================================================================================
* Includes credit card loans held for securitization.
For the year ended December 31, 1994, the Company's net charge-offs as
a percentage of managed loans was 1.48%. Management believes this is the result
of the significant growth in outstanding balances (90%), the average age of
accounts (65% of accounts, representing 69% of the total managed loan balance,
were less than 18 months old), prudent solicitation and underwriting processes
enhanced by the application of the information-based strategy.
Delinquencies not only have the potential to impact earnings in the
form of net charge-offs, they also are costly in terms of the personnel and
other resources dedicated to resolving them.
DELINQUENCIES
Table 7 shows Capital One's loan delinquency trends for the periods presented
as reported for financial statement purposes and for managed loans. The entire
balance of an account is contractually delinquent if the minimum payment is not
received by the billing date. However, the Company generally continues to
accrue interest until the loan is charged off.
The 30-plus day delinquency rate for the reported loan portfolio
increased to 6.29% at December 31, 1995, from 3.06% at the end of 1994. The
reported delinquency rate reflects seasoning interests in the seller's interest
in securitization trusts and the fact that a significant portion of the
non-balance transfer product portfolio (i.e., secured card, cosigned, students)
is included in reported loans. The Company's non-balance transfer products
historically have higher delinquency rates than the typical balance transfer
loans but not proportionally higher charge-offs. In the case of secured card
loans, collateral, in the form of cash deposits, reduces any ultimate
charge-offs. The costs associated with higher delinquency and charge-off rates
are considered in the pricing of individual products.
The delinquency rate for the total managed loan portfolio was 4.20% of
related loans at December 31, 1995, up from 2.95% at December 31, 1994; while
the dollar amount of delinquent managed loans increased approximately $221.5
million. The managed portfolio's delinquency rate at December 31, 1995,
principally reflects the continued seasoning of accounts and loan balances, the
increased presence of non-balance transfer products and a softening in the
consumer credit sector. The Company expects this trend in delinquencies to
continue into 1996, dependent on the factors noted above. The managed
portfolio's delinquency rate at December 31, 1994, reflects the seasoning of
the accounts and loan balances.
MANAGED CHARGE-OFF AND 30+ DAY DELINQUENCY RATE
(in percent)
'93 '94 '95
Net Charge-off Rate 2.09% 2.95% 4.20%
Delinquency Rate 2.39% 1.48% 2.25%
28 Capital One
13
TABLE 8 -- NET CHARGE-OFFS*
Year Ended December 31
........................................................................
(dollars in thousands) 1995 1994 1993 1992 1991
...........................................................................................................................
REPORTED:
Average loans outstanding $2,940,208 $2,286,684 $2,213,378 $ 772,742 $ 673,487
Net charge-offs 59,618 25,727 26,307 30,560 34,879
Net charge-offs as a percentage of average
loans outstanding 2.03% 1.13% 1.19% 3.95% 5.18%
========================================================================
MANAGED:
Average loans outstanding $9,089,278 $6,197,423 $3,265,565 $1,452,742 $1,312,018
Net charge-offs 204,828 91,648 68,332 75,291 73,645
Net charge-offs as a percentage of average
loans outstanding 2.25% 1.48% 2.09% 5.18% 5.61%
========================================================================
* Includes credit card loans held for securitization.
NET CHARGE-OFFS
Net charge-offs include the principal amount of losses (excluding accrued and
unpaid finance charges, fees and fraud losses), less current period recoveries.
Credit card loans are typically charged off when they are six months past-due.
For the year ended December 31, 1995, net charge-offs of managed loans
increased 123% while average managed loans grew 47% over the same period. The
Company anticipates further increases in reported and managed net charge-offs
to the extent that trends in loan seasoning, product mix shift and the economy
continue. During the year ended December 31, 1994, net charge-offs of managed
loans increased 34% over the year ended December 31, 1993; however, the average
managed loan portfolio increased 90% over the same period. Table 8 presents the
Company's net charge-offs for the periods presented on a reported and managed
basis.
FUNDING
As the chart to the right indicates, the Company's interest-bearing liabilities
have switched from primarily transitional funding with the 1994 bank facility
at December 31, 1994, to permanent financing through issuance of bank notes,
large denomination CD's and other funding during 1995. Additionally, the
Company's primary source of funding is the securitization of credit card loans,
which increased to $7.5 billion outstanding at December 31, 1995, compared to
$5.2 billion at December 31, 1994.
In December 1994, the Company established a $3.5 billion bank note
program under which it can issue bank notes of maturities from 30 days to 30
years. Although only $22.0 million of bank notes were issued at December 31,
1994, the Company has expanded its usage of this vehicle for funding in 1995 to
$2.5 billion at December 31, 1995. Bank notes issued to date totaling $1.8
billion have fixed interest rates and mature from one to five years. The
Company has entered into interest rate swaps with a notional amount totaling
$1.0 billion to effectively convert these fixed rate terms to variable rates
which match the variable rates earned on credit card loans (see "Interest Rate
Sensitivity").
On November 17, 1995, the Company entered into a three-year, $1.7
billion unsecured revolving credit arrangement, with three tranches (A, B and
C) of committed borrowings. Under tranches A and B, the Bank may borrow up to
$1.3 billion and $200 million, respectively, subject to an unused commitment
fee of .17%. Tranche B allows the Bank to borrow in major foreign currencies.
Under tranche C, the Company or the Bank may borrow up to $215 million, subject
to an unused commitment fee of .225%. Any borrowings under this bank facility
will mature on November 17, 1998; however, the final maturity of each tranche
may be extended for three additional one-year periods.
Table 9 reflects the costs of short-term borrowings of the Company for
each of the years ended December 31, 1995, 1994 and 1993.
INTEREST-BEARING LIABILITIES
(in millions)
December 31, 1995 - $3,998
Bank Notes $2,492
Federal Funds Purchased 710
Interest-Bearing Deposits 696
Bank Facility 100
December 31, 1994 - $2,515
Bank Facility $1,300
Federal Funds Purchased 687
Interest-Bearing Deposits 452
Affiliate Borrowings 54
Bank Notes 22
Capital One 29
14
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (CONTINUED)
TABLE 9 -- SHORT-TERM BORROWINGS
Following is a summary of short-term borrowings for each of the years ended
December 31, 1995, 1994 and 1993:
Maximum
Outstanding at Outstanding Average Average Year-End
(dollars in thousands) Any Month-End at Year-End Outstanding Interest Rate Interest Rate
..............................................................................................................................
1995
Interest-bearing deposits $ 997,547 $ 696,037 $ 769,688 6.44% 6.07%
Federal funds purchased 1,146,678 709,803 747,350 6.14 5.76
Bank facility 1,000,000 100,000 277,945 7.26 6.03
Bank notes 2,491,869 2,491,869 1,924,087 6.95 7.35
Affiliate borrowings 2,780 5.86
---------------------------------------------------------------------
Total $3,997,709 $3,721,850 6.70% 6.81%
---------------------------------------------------------------------
1994
Federal funds purchased $ 686,688 $ 686,688 $ 47,332 6.18% 6.29%
Bank facility 1,700,000 1,300,000 175,342 6.89 6.74
Affiliate borrowings 3,261,506 54,000 2,064,105 3.69 6.00
---------------------------------------------------------------------
Total $2,040,688 $2,286,779 4.00% 6.57%
---------------------------------------------------------------------
1993
Affiliate borrowings $2,936,075 $1,791,464 $2,148,155 3.17% 2.95%
---------------------------------------------------------------------
Table 10 shows the maturation of large denomination CD's at December
31, 1995.
TABLE 10 -- MATURITIES OF DOMESTIC LARGE DENOMINATION CERTIFICATES -- $100,000
OR MORE
At December 31, 1995
.......................
(dollars in thousands) Balance Percent
............................................................
3 months or less $369,663 53.11%
Over 3 through 6 months 283,230 40.69
Over 6 through 12 months 9,259 1.33
Over 1 through 5 years 33,885 4.87
----------------------
Total $696,037 100.00
======================
For the periods prior to the Separation, the Company operated as a
division of Signet/Virginia and, therefore, had no direct, independent funding.
For the financial statements for these periods, the Company's reported interest
expense was determined by taking into account the nature of the Company's
assets and their interest rate repricing characteristics and by using an
allocation of Signet's funding cost for the respective period.
The Company's assets were categorized into three repricing pools with
different funding rates. Assets that reprice with a change in short-term
interest rates, such as prime-based or LIBOR-based credit card loans, were
assumed to be funded at Signet's average rate paid on federal funds and
repurchase agreements for the respective period. The Company's introductory
rate and fixed rate credit card portfolio were assumed to be funded at Signet's
average rate paid on total interest-bearing time deposits (adjusted to reflect
an origination and servicing fee) and other short-term borrowings for the
respective period. Long-term assets, such as the Company's premises and
equipment, were assumed to be funded at Signet's average rate paid on long-term
borrowings for the respective period.
The external funding of the Company's assets is significantly
different than funding as a division of Signet/Virginia. Concurrent with the
Separation, the Company established the 1994 bank facility and affiliate
borrowings. These obligations were paid down during 1995 through a number of
sources, including large denomination CD's, federal funds purchased from banks,
a new bank facility, bank notes and credit card securitizations.
30 Capital One
15
The initial amount of borrowings at Separation under the 1994 bank
facility was approximately $1.7 billion and the initial amount of affiliate
borrowings was $500 million. These balances had been reduced to $1.3 billion
and $54.0 million, respectively, by December 31, 1994.
CAPITAL ADEQUACY
Capital is maintained to facilitate asset growth and as a cushion for
unexpected losses. Capital One Bank is subject to capital adequacy guidelines
adopted by the Board of Governors of the Federal Reserve System. Banking
regulators consider a range of factors when determining capital adequacy, such
as the organization's size, quality and stability of earnings, interest rate
risk exposure, risk diversification, management expertise, asset quality,
liquidity and internal controls.
At December 31, 1995, Capital One Bank's risk-based Tier I capital
ratio was 11.52%, its risk-based total capital ratio was 12.77% and its Tier I
leverage ratio was 8.52%. Capital One Bank's ratio of common equity to managed
assets was 4.78%. These capital levels make the Company among the highest
capitalized institutions in the credit card sector.
In 1994, the risk-based capital standards were revised to incorporate
interest rate risk as required by the Federal Deposit Insurance Corporation
Improvement Act of 1991 ("FDICIA"). FDICIA also requires the federal banking
agencies to take prompt corrective action in respect to depository institutions
that do not meet minimum capital requirements. FDICIA established five capital
tiers: well-capitalized, adequately capitalized, undercapitalized,
significantly undercapitalized and critically undercapitalized. A depository
institution's capital tier depends on its capital levels in relation to
relevant capital measures, which include a risk-based capital measure, a
leverage ratio capital measure and certain other factors. At December 31, 1995,
the Bank exceeded the well-capitalized criteria and expects to maintain this
threshold.
OFF-BALANCE SHEET RISK
The Company is subject to off-balance sheet risk in the normal course of
business including commitments to extend credit, excess servicing income from
securitization and interest rate swaps. In order to reduce the sensitivity to
fluctuations in interest rates and to match asset and liability repricings, the
Company has entered into interest rate swap agreements ("swaps") which involve
elements of credit or interest rate risk in excess of the amount recognized on
the balance sheet. Swaps present the Company with certain credit, market, legal
and operational risks. The Company uses the same credit policies for
off-balance sheet items as it does for on-balance sheet instruments.
INTEREST RATE SENSITIVITY
Interest rate sensitivity refers to the change in earnings that may result from
changes in the level of interest rates. To the extent that interest income and
interest expense do not respond equally to changes in interest rates, or that
all rates do not change uniformly, earnings will be affected. Prior to the
Separation, the Company's interest rate sensitivity was managed by Signet, as
part of Signet's overall asset and liability management process, at the
corporate level, not at the divisional level.
In determining interest rate sensitivity, the Company uses simulation
models to identify changes in net interest income based on different interest
rate scenarios. The Company manages its interest rate sensitivity through
several techniques which include changing the maturity and distribution of
assets and liabilities, the impact of securitizations, interest rate swaps,
repricing of credit card loans and other methods.
The Company's asset/liability policy is to manage interest rate risk
to limit the impact of an immediate and sustained 100 basis point change in
interest rates to no more than a 5% change in managed net interest income over
a twelve month period. At December 31, 1995, the Company's interest rate
sensitivity to this change in rates was 1.6%, substantially within Company
guidelines. Management may reprice interest rates on outstanding credit card
loans subject to the right of the customer to reject such repricing by giving
timely written notice to the Company and thereby relinquishing charging
privileges. However, the repricing of credit card loans may be limited by
competitive factors, as well as certain legal bounds.
Interest rate sensitivity at a point in time can be analyzed by
measuring the mismatch in balances of interest-earning assets and
interest-bearing liabilities that are subject to repricing in future periods.
Table 11 reflects the interest rate repricing schedule for interest-earning
assets and interest-bearing liabilities at December 31, 1995.
Capital One 31
16
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (CONTINUED)
TABLE 11 -- INTEREST RATE SENSITIVITY
At December 31, 1995
Subject to repricing
................................................................
Within greater than 180 Days- greater than 1 Year- Over
(dollars in millions) 180 Days 1 Year 5 Years 5 Years
.................................................................................................................................
Interest-earning assets
Federal funds sold $ 465
Interest-bearing deposits at other banks 356
Securities available for sale $ 413
Loans 1,909 $ 100 913
Other 336
----------------------------------------------------------------
Total interest-earning assets 3,066 100 1,326
Interest-bearing liabilities
Interest-bearing deposits 653 9 34
Federal funds purchased 634 76
Bank facility 100
Bank notes 799 65 1,628
----------------------------------------------------------------
Total interest-bearing liabilities 2,186 150 1,662
Non-rate related net assets $ (494)
----------------------------------------------------------------
Interest sensitivity gap 880 (50) (336) (494)
Impact of interest rate swaps (2,104) 2,104
Impact of credit card securitizations (119) 131 (12)
----------------------------------------------------------------
Interest sensitivity gap adjusted for impact of securitization
and interest rate swaps $(1,343) $ 81 $1,756 $ (494)
----------------------------------------------------------------
Adjusted interest sensitivity gap as a percentage
of managed assets (10.93)% .66% 14.30% (4.02)%
----------------------------------------------------------------
Cumulative interest sensitivity gap $(1,343) $(1,262) $ 494
Adjusted cumulative interest sensitivity gap as a percentage
of managed assets (10.93)% (10.27)% 4.02%
----------------------------------------------------------------
The Company enters into swaps for purposes of managing its interest
rate sensitivity. The Company designates swaps to on-balance sheet instruments
to alter the interest rate characteristics of such instruments and to modify
interest rate sensitivity. The Company also designates swaps to off-balance
sheet items to reduce the interest rate sensitivity. Table 12 reflects the type
and terms of outstanding interest rate swaps at December 31, 1995 and 1994.
In 1995, the Company entered into swaps to effectively convert certain
of the fixed rate bank notes into variable interest rates. These swaps have a
notional amount totaling $1 billion and mature in 1996 through 2000 to coincide
with maturities of fixed bank notes. These swaps pay three-month LIBOR and
receive a fixed interest rate. Additionally, in 1995, the Company entered into
three basis swaps maturing in 1996 with notional amounts totaling $260 million
to effectively convert bank notes maturing in 1996 with a variable interest
rate based on six-month LIBOR to three-month LIBOR.
In 1995, the Company entered into two swaps with notional amounts
totaling $591 million which are scheduled to mature in 1998 and 1999 to
coincide with the maturity of 1993 securitizations. These swaps pay floating
rates of three-month LIBOR and receive fixed interest rates.
Other swaps transferred to Capital One Bank in connection with the
Separation consist of one swap with a notional amount of $500 million whereby
the Company pays three-month LIBOR and receives 6.74% from September 1, 1994,
through August 15, 1997, and another swap for a notional principal amount of
$39 million whereby the Company pays three-month LIBOR and receives 6.78% from
September 1, 1994, through October 15, 1997. The terms of these swaps were
arranged to coincide with the terms of 1994 fixed interest rate
securitizations.
For the period immediately after the Separation, the Company entered
into a forward swap with Signet/Virginia for a notional amount of $4.0 billion
whereby the Company effectively received one-month LIBOR and paid a fixed rate
of 5.50% from the Separation date to December 31, 1994. In addition, the
Company entered into a forward swap for a variable notional amount ranging from
$0.6 to $4.8 billion whereby the Company pays a fixed rate of 5.875% and
receives one-month LIBOR from January 3, 1995, through April 13, 1995.
32 Capital One
17
TABLE 12 -- MATURITY OF INTEREST RATE SWAPS*
Within Over One Average
One to Five Life
(dollars in millions) Year Years Total (Years)
............................................................................................................................
Receive fixed/pay floating:
December 31, 1995
Notional amount $ 40 $2,104 $2,144 2.03
Weighted average rates received 7.07% 7.45% 7.45%
Weighted average rates paid 5.88 5.73 5.73
December 31, 1994
Notional amount $ 539 $ 539 2.70
Weighted average rates received 6.74% 6.74%
Weighted average rates paid 5.80 5.80
Received floating/pay floating:
December 31, 1995
Notional amount $260 $ 260 0.56
Weighted average rates received 5.84% 5.84%
Weighted average rates paid 5.94 5.94
* Weighted average rates received and paid are based on the contractual rates
in effect at December 31, 1995 and 1994, respectively.
Floating rates under the interest rate swap contracts are based on varying
terms of LIBOR.
As a result of these transactions, the Company mitigated the interest
rate risk associated with funding credit card assets that reprice on a
timetable different from the monthly variable rate funding associated with the
bank facility and affiliate borrowings and securitizations. The notional
amounts and terms of the forward rate agreements effectively match the period
of exposure to changes in interest rates. Table 13 reflects a roll forward of
activity by notional amount for the Company's swaps.
TABLE 13 -- SUMMARY OF INTEREST RATE SWAPS
Notional
(dollars in millions) Amount
.............................................
Receive floating/pay fixed:
December 31, 1993
Additions $4,000
Maturities 4,000
------
December 31, 1994
Additions 4,800
Maturities 4,800
------
December 31, 1995 $ --
======
Receive fixed/pay floating:
December 31, 1993
Additions $ 539
------
December 31, 1994 539
Additions 1,605
------
December 31, 1995 $2,144
======
Receive floating/pay floating:
December 31, 1994
Additions 260
------
December 31, 1995 $ 260
======
Capital One 33
18
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (CONTINUED)
Swaps designated to on-balance sheet assets and liabilities had the
effect of increasing net interest income $15.9 million and $0.4 million for the
years ended December 31, 1995 and 1994, respectively, from that which would
have been recorded had the Company not entered into these transactions. Swaps
designated to off-balance sheet items had the effect of increasing credit card
servicing income $12.7 million and $1.0 million in 1995 and 1994, respectively.
LIQUIDITY
Liquidity refers to the Company's ability to meet its cash needs. The Company
meets its cash requirements by securitizing assets and by debt funding. As
discussed in "Managed Loan Portfolio," a significant source of liquidity for
the Company has been the securitization of credit card loans. Maturity terms of
the existing securitizations vary from 1996 to 2000, and typically have
accumulation periods during which principal payments are aggregated to make
payments to investors. As payments on the loans are accumulated for the
participants in the securitization and are no longer reinvested in new loans,
the Company's funding requirements for such new loans increase accordingly. The
occurrence of certain events may cause the securitization transactions to
amortize earlier than scheduled which would accelerate the need for funding.
Table 14 shows the amounts of investor principal of securitized credit
card loans that will amortize or be otherwise paid off over the periods
indicated based on outstanding securitized credit card loans at January 1,
1996. At December 31, 1995 and 1994, 72% and 70%, respectively, of the
Company's total managed loans were securitized.
The Company believes that it can securitize credit card loans,
purchase federal funds and establish other funding sources to fund the
amortization or other payment of the securitizations in the future, although no
assurance can be given to that effect. Additionally, the Company maintains a
portfolio of high-quality securities such as U.S. Government, interest-bearing
deposits with other banks and overnight federal funds in order to provide
adequate liquidity and to meet its ongoing cash needs. At December 31, 1995,
the Company had $872 million of cash and cash equivalents with maturities of 90
days or less.
LIQUID ASSETS
(in millions)
December 31, 1995 - $1,286
Federal Funds Sold $465
U.S. Treasury Securities 413
Cash and Interest-Bearing Deposits 408
December 31, 1994 - $506
Federal Funds Sold $300
Cash and Interest-Bearing Deposits 107
U.S. Treasury Securities 99
Liability liquidity is measured by the Company's ability to obtain
borrowed funds in the financial markets in adequate amounts and at favorable
rates. At December 31, 1995, the Company and the Bank, collectively, had $1.6
billion in unused commitments under its bank facility available for liquidity
needs.
TABLE 14 -- SECURITIZATIONS - SCHEDULED AMORTIZATION TABLE
(dollars in thousands) 1996 1997 1998 1999 2000
...........................................................................................................................
Beginning balance, January 1 $7,523,801 $6,765,067 $4,727,531 $2,493,531 $1,950,000
Less repayment amounts 758,734 2,037,536 2,234,000 543,531 1,950,000
------------------------------------------------------------------------
Ending balance, December 31 $6,765,067 $4,727,531 $2,493,531 $1,950,000 $ -
========================================================================
34 Capital One
19
SELECTED QUARTERLY FINANCIAL DATA
1995 1994
..................................................................................
FOURTH THIRD SECOND FIRST FOURTH THIRD SECOND FIRST
(unaudited) QUARTER QUARTER QUARTER QUARTER QUARTER QUARTER QUARTER QUARTER
......................................................................................................................
SUMMARY OF OPERATIONS
(in thousands)
Interest income $134,997 $128,913 $104,432 $ 89,067 $ 63,320 $ 61,905 $72,875 $60,572
Interest expense 69,941 69,252 59,210 50,993 30,718 21,350 21,194 17,433
-------------------------------------------------------------------------------
Net interest income 65,056 59,661 45,222 38,074 32,602 40,555 48,681 43,139
Provision for loan losses 21,347 18,652 17,260 8,636 6,133 8,162 8,450 7,982
-------------------------------------------------------------------------------
Net interest income after
provision for loan losses 43,709 41,009 27,962 29,438 26,469 32,393 40,231 35,157
Non-interest income 151,234 136,860 134,789 130,160 112,050 104,528 92,660 87,664
Non-interest expense(1) 135,834 124,808 116,432 120,356 97,443 138,450 79,658 68,774
-------------------------------------------------------------------------------
Income (loss) before income
taxes 59,109 53,061 46,319 39,242 41,076 (1,529) 53,233 54,047
Income taxes (benefit) 21,301 19,113 16,673 14,133 14,551 (535) 18,631 18,917
-------------------------------------------------------------------------------
Net income (loss) $ 37,808 $ 33,948 $ 29,646 $ 25,109 $ 26,525 $ (994) $34,602 $35,130
===============================================================================
AVERAGE BALANCE SHEET DATA
(in millions)
Loans $ 3,166 $ 3,333 $ 2,883 $ 2,365 $ 2,041 $ 2,133 $ 2,749 $ 2,223
Allowance for loan losses (74) (70) (68) (67) (68) (68) (65) (64)
Securities 1,248 926 853 805 251
Other assets 704 775 494 473 460 390 300 238
-------------------------------------------------------------------------------
Total average assets $ 5,044 $ 4,964 $ 4,162 $ 3,576 $ 2,684 $ 2,455 $ 2,984 $ 2,397
===============================================================================
Interest-bearing deposits $ 843 $ 899 $ 741 $ 591 $ 145
Bank facility 30 100 157 836 701
Bank notes 2,492 2,322 1,854 1,008 3
Other borrowings 905 856 686 548 1,399 $ 2,153 $ 2,718 $ 2,175
Other liabilities 183 232 196 95 107 68 53 39
Stockholders'/Division equity 591 555 528 498 329 234 213 183
-------------------------------------------------------------------------------
Total average liabilities and
equity $ 5,044 $ 4,964 $ 4,162 $ 3,576 $ 2,684 $ 2,455 $ 2,984 $ 2,397
===============================================================================
PER COMMON SHARE
Net income(2) $ .57 $ .51 $ .45 $ .38 $ .40 $ (.02) $ .52 $ .53
Dividends .08 .08 .08
Market prices
High 29 1/4 29 5/8 22 1/2 20 16 5/8
Low 22 3/4 19 1/2 18 1/4 15 3/8 13 7/8
===============================================================================
Average common and
common equivalent shares
(in thousands)(2) 66,710 66,727 66,466 66,251 66,067
===============================================================================
The above schedule is a tabulation of the Company's unaudited quarterly results
of operations for the years ended December 31, 1995 and 1994. The Company's
common shares are traded on the New York Stock Exchange under the symbol COF. In
addition, shares may be traded in the over-the-counter stock market. There were
13,247 common stockholders of record at December 31, 1995.
(1) Non-interest expense includes a $49.0 million ($31.9 million after-tax)
nonrecurring charge for computer services contract termination expense in
the third quarter of 1994.
(2) Assumes 66,067 shares outstanding prior to November 22, 1994.
Capital One 35
20
MANAGEMENT'S REPORT ON CONSOLIDATED FINANCIAL STATEMENTS AND INTERNAL CONTROL
The accompanying consolidated financial statements, related financial data and
other information in this annual report were prepared by the management of
Capital One Financial Corporation. Management is responsible for the integrity
and objectivity of the data presented, including amounts that must necessarily
be based on judgments and estimates. The consolidated financial statements were
prepared in conformity with generally accepted accounting principles and are
free of material misstatement. In situations where acceptable alternative
accounting principles exist, management selected the method that was
appropriate in the circumstance.
Management of Capital One Financial Corporation depends on its
accounting systems and internal control structures in meeting its
responsibilities for reliable consolidated financial statements. In
management's opinion, these systems and structures provide reasonable assurance
that assets are safeguarded and that transactions are properly recorded and
executed in accordance with management's authorizations. As an integral part of
these systems and structures, the Company maintains a professional staff of
internal auditors that conducts operational and special audits and coordinate
audit coverage with the independent auditors.
The consolidated financial statements have been audited by the
Company's independent auditors, Ernst & Young LLP, whose independent
professional opinion appears separately. Their audit provides an objective
assessment of the degree to which the Company's management meets its
responsibility for financial reporting. Their opinion on the financial
statements is based on auditing procedures which include reviewing accounting
systems and internal control structures and performing selected tests of
transactions and records as they deem appropriate. These auditing procedures
are designed to provide reasonable assurance that the financial statements are
free of material misstatement.
The Audit Committee of the Board of Directors, composed solely of
outside directors, meets periodically with the internal auditors, the
independent auditors and management to review the work of each and ensure that
each is properly discharging its responsibilities. The independent auditors
have free access to the Committee to discuss the results of their audit work
and their evaluations of the adequacy of accounting systems and internal
control structure and the quality of financial reporting.
/s/ RICHARD D. FAIRBANK
RICHARD D. FAIRBANK
Chairman and Chief Executive Officer
/s/ NIGEL W. MORRIS
NIGEL W. MORRIS
President and Chief Operating Officer
/s/ JAMES M. ZINN
JAMES M. ZINN
Senior Vice President and Chief Financial Officer
36 Capital One
21
REPORT OF INDEPENDENT AUDITORS
BOARD OF DIRECTORS AND STOCKHOLDERS
CAPITAL ONE FINANCIAL CORPORATION
We have audited the accompanying consolidated balance sheets of Capital One
Financial Corporation as of December 31, 1995 and 1994, and the related
consolidated statements of income, changes in stockholders' equity, and cash
flows for each of the three years in the period ended December 31, 1995. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Capital One Financial Corporation at December 31, 1995 and 1994, and the
consolidated results of its operations and its cash flows for each of the three
years in the period ended December 31, 1995, in conformity with generally
accepted accounting principles.
/s/ ERNST & YOUNG LLP
Washington, D.C.
January 23, 1996
Capital One 37
22
CONSOLIDATED BALANCE SHEETS
December 31
................................
(dollars in thousands, except per share data) 1994 1995
..........................................................................................................
ASSETS:
Cash and due from banks $ 51,680 $ 93,880
Federal funds sold 465,000 300,000
Interest-bearing deposits at other banks 355,780 13,000
-------------------------------
Cash and cash equivalents 872,460 406,880
Securities available for sale 413,016 99,070
Credit card loans held for securitization 400,000
Credit card loans 2,521,679 2,228,455
Less: Allowance for loan losses (72,000) (68,516)
-------------------------------
Net loans 2,449,679 2,159,939
Premises and equipment, net 139,074 99,684
Interest receivable 55,573 14,615
Accounts receivable from securitizations 359,379 237,015
Other assets 70,140 74,777
-------------------------------
Total assets $4,759,321 $3,091,980
===============================
LIABILITIES:
Interest-bearing deposits $ 696,037 $ 452,201
Federal funds purchased 709,803 686,688
Bank facility 100,000 1,300,000
Bank notes 2,491,869 22,000
Affiliate borrowings 54,000
Interest payable 73,931 9,264
Other liabilities 88,490 93,270
-------------------------------
Total liabilities 4,160,130 2,617,423
-------------------------------
STOCKHOLDERS' EQUITY:
Preferred stock, par value $.01 per share; authorized
50,000,000 shares, none issued or outstanding
Common stock, par value $.01 per share; authorized
300,000,000 shares, 66,174,567 and 66,067,250
issued and outstanding at December 31, 1995 and
1994, respectively 662 661
Paid-in capital, net 469,830 462,844
Retained earnings 128,699 11,052
-------------------------------
Total stockholders' equity 599,191 474,557
-------------------------------
Total liabilities and stockholders' equity $4,759,321 $3,091,980
===============================
See notes to consolidated financial statements.
38 Capital One
23
CONSOLIDATED STATEMENTS OF INCOME
Year Ended December 31
...............................................
(in thousands, except per share data) 1995 1994 1993
........................................................................................................
INTEREST INCOME:
Credit card loans, including fees $351,786 $214,100 $223,594
Credit card loans held for securitization 45,868 41,015 36,263
Federal funds sold 26,832 2,483
Other 32,923 1,074
-------------------------------------------
Total interest income 457,409 258,672 259,857
-------------------------------------------
INTEREST EXPENSE:
Deposits 49,547 2,364
Federal funds purchased 45,878 2,927
Bank facility 20, 173 12,086
Bank notes 133,635 53
Affiliate borrowings 163 76,265 67,994
-------------------------------------------
Total interest expense 249,396 93,695 67,994
-------------------------------------------
NET INTEREST income 208,013 164,977 191,863
Provision for loan losses 65,895 30,727 34,030
-------------------------------------------
Net interest income after provision for loan losses 142,118 134,250 157,833
-------------------------------------------
Non-Interest INCOME:
Credit card servicing 409,927 312,108 122,362
Credit card service charges 86,029 46,083 38,587
Interchange 33,457 25,580 24,635
Other 23,630 13,131 9,241
-------------------------------------------
Total non-interest income 553,043 396,902 194,825
-------------------------------------------
NON-INTEREST EXPENSE:
Salaries and associate benefits 135,833 94,739 55,284
Solicitation 146,810 100,886 55,815
Communications and data processing 61,508 70,084 41,013
Supplies and equipment 42,081 21,794 8,778
Occupancy 13,655 6,746 2,647
Contract termination 49,000
Other 97,543 41,076 18,267
-------------------------------------------
Total non-interest expense 497,430 384,325 181,804
-------------------------------------------
Income before income taxes 197,731 146,827 170,854
Income taxes 71,220 51,564 60,369
-------------------------------------------
Net income $126,511 $ 95,263 $110,485
===========================================
Earnings per share $ 1.90 $ 1.44 $ 1.67
===========================================
Weighted average common and common equivalent
shares outstanding 66,593 66,067 66,067
===========================================
See notes to consolidated financial statements.
Capital One 39
24
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
Common Stock
.......................... Retained Total
(dollars in thousands, Paid-in Deferred Earnings/ Stockholders'/
except per share data) Shares Amount Capital Compensation Division Equity Division Equity
....................................................................................................................................
Balance, December 31, 1992 $ 69,294 $ 69,294
Net income 110,485 110,485
Transfer to Signet (10,900) (10,900)
----------------------------------------------------------------------------------------
Balance, December 31, 1993 168,879 168,879
Net income 95,263 95,263
Recapitalization and capital
contribution from Signet $357,875 (253,069) 104,806
Issuance of common stock
Initial public offering 65,602,850 $656 101,259 101,915
Restricted stock grants 464,400 5 7,425 $(7,430)
Amortization of deferred compensation 3,715 3,715
Change in unrealized losses on
securities available for sale,
net of income taxes of $12 (21) (21)
----------------------------------------------------------------------------------------
Balance, December 31, 1994 66,067,250 661 466,559 (3,715) 11,052 474,557
Net income 126,511 126,511
Cash dividends - $ .24 per share (15,883) (15,883)
Issuance of common stock 65,645 1 1,256 1,257
Exercise of stock options 6,582 132 132
Tax benefit from vesting of 464,400
restricted shares of common stock 1,578 1,578
Restricted stock grants,
net of cancellations 35,090 637 (637)
Amortization of deferred compensation 4,020 4,020
Change in unrealized gains on
securities available for sale,
net of income taxes of $3,780 7,019 7,019
----------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1995 66,174,567 $662 $470,162 $ (332) $128,699 $599,191
========================================================================================
See notes to consolidated financial statements.
40 Capital One
25
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended December 31
......................................................
(in thousands) 1995 1994 1993
......................................................................................................................
OPERATING ACTIVITIES:
Net income $ 126,511 $ 95,263 $ 110,485
Adjustments to reconcile net income to cash
provided by operating activities:
Provision for loan losses 65,895 30,727 34,030
Depreciation and amortization 33,424 16,173 4,431
Amortization of deferred compensation 4,020 3,715
Increase in interest receivable (40,958) (6,322) (1,962)
Increase in accounts receivable from securitizations (122,364) (129,967) (58,945)
Increase in other assets (8,685) (35,645) (15,767)
Increase in interest payable 64,667 9,264
(Decrease) increase in other liabilities (4,780) 62,406 14,863
----------------------------------------------------
Net cash provided by operating activities 117,730 45,614 87,135
----------------------------------------------------
INVESTING ACTIVITIES:
Purchases of securities available for sale (403,218) (98,519)
Proceeds from maturities of securities available for sale 100,000
Proceeds from securitization of credit card loans 3,525,000 2,393,937 2,283,329
Net increase in loans (4,293,988) (2,796,465) (2,884,040)
Recoveries of loans previously charged off 13,353 11,090 16,020
Additions of premises and equipment, net (61,623) (58,078) (16,069)
----------------------------------------------------
Net cash used for investing activities (1,120,476) (548,035) (600,760)
----------------------------------------------------
FINANCING ACTIVITIES:
Net increase in interest-bearing deposits 243,836 452,201
Net (decrease) increase in other borrowings (1,176,885) 1,986,688
Issuance of bank notes 2,469,869 22,000
Net (decrease) increase in affiliate borrowings (54,000) (1,737,464) 524,957
Proceeds from exercise of stock options 132
Net proceeds from issuance of common stock 1,257 101,915
Dividends paid (15,883)
Capital contributed from (transferred to) Signet 83,006 (10,900)
----------------------------------------------------
Net cash provided by financing activities 1,468,326 908,346 514,057
----------------------------------------------------
Increase in cash and cash equivalents 465,580 405,925 432
Cash and cash equivalents at beginning of year 406,880 955 523
----------------------------------------------------
Cash and cash equivalents at end of year $ 872,460 $ 406,880 $ 955
====================================================
See notes to consolidated financial statements.
Capital One 41
26
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except per share data)
................................................................................
NOTE A
SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION AND BASIS OF PRESENTATION: The consolidated financial statements
include the accounts of Capital One Financial Corporation (the "Parent") and
its subsidiaries (collectively, the "Company"). The Company is a financial
services company that offers credit card products as its primary business.
The Company became a stand-alone company on November 22, 1994, when
net assets aggregating $357,875 of the credit card operations of Signet
Bank/Virginia, a wholly owned subsidiary of Signet Banking Corporation
("Signet"), were contributed to Capital One Bank (the "Bank"). On the same day,
the Company issued 7,125,000 shares of its common stock in an initial public
offering (the "IPO") and 464,400 shares of restricted stock (together
representing approximately 11.5% of the Company). On February 28, 1995, Signet
distributed to its stockholders its remaining interest in the Company. The
accompanying financial statements reflect the operations of the Company as a
division of Signet Bank/Virginia (the "Division") for the period prior to
November 22, 1994. Retained earnings at December 31, 1995, represent the
earnings of the Company subsequent to November 22, 1994. All significant
intercompany balances and transactions have been eliminated. Certain prior
years' amounts have been reclassified to conform to the 1995 presentation.
For the periods prior to November 22, 1994, the financial statements
include an allocation of Signet expenses for interest expense, data processing,
accounting, audit, human resources, corporate secretary, legal and other
administrative support. Such expenses were based on actual usage or using other
allocation methods that, in the opinion of management, are reasonable and
approximate actual usage. The interest expense allocation is based on
borrowings from a wholly owned subsidiary of Signet, assuming three funding
pools (short-term, medium-term and long-term), each with costs based on the
average relevant historical rates paid by Signet. Additionally, Signet
Bank/Virginia retained a credit card portfolio of approximately $350,000 at
November 22, 1994, that is associated with its regional customer base. The
financial statements assume the Company assessed a normal servicing fee for
servicing this retained portfolio prior to November 22, 1994.
Signet and the Company have entered into a variety of interim service
agreements that expire in 1996, effective as of the IPO, to replace the
services provided by Signet and previously allocated to the Company. These
costs are included at the rates established in the related agreements, which
approximate market rates.
The following is a summary of the significant accounting policies used
in preparing the accompanying financial statements.
CASH AND CASH EQUIVALENTS: Cash and cash equivalents includes cash and due from
banks, federal funds sold and interest-bearing deposits at other banks. Cash
paid during the years ended December 31, 1995, 1994 and 1993, for interest was
$184,729, $84,431 and $67,994, respectively. Cash paid for income taxes for the
years ended December 31, 1995, 1994 and 1993, was $82,561, $46,094 and $61,458,
respectively.
SECURITIES AVAILABLE FOR SALE: Debt securities for which the Company does not
have the positive intent and ability to hold to maturity are classified as
securities available for sale. These securities are stated at fair value, with
the unrealized gains and losses, net of tax, reported as a component of
retained earnings. The amortized cost of debt securities is adjusted for
amortization of premiums and accretion of discounts to maturity. Such
amortization is included in other interest income.
CREDIT CARD LOANS HELD FOR SECURITIZATION: Credit card loans held for
securitization are loans management intends to securitize, generally within
three to six months, and are carried at the lower of aggregate cost or market
value.
CREDIT CARD LOANS: Interest income is generally recognized until the loan is
charged off. Credit card loans typically are charged off (net of any
collateral) when the loan is six months past-due unless the customer is
determined to be bankrupt. Bankrupt accounts are generally charged off within
thirty days of verification. The accrued interest portion of a charged-off loan
balance is deducted from current period interest income with the remaining
principal balance charged off against the allowance for loan losses.
CreditEcard annual membership fees and direct loan origination costs are
deferred and amortized over one year on a straight-line basis. Deferred fees
(net of deferred costs) were $33,438 and $29,949 at December 31, 1995 and 1994,
respectively.
ALLOWANCE FOR LOAN LOSSES: The allowance for loan losses is maintained at the
amount estimated to be sufficient to absorb possible future losses, net of
recoveries (including recovery of collateral), inherent in the existing
on-balance sheet loan portfolio. The provision for loan losses is the periodic
cost of maintaining an adequate allowance. In evaluating the adequacy of the
allowance for loan losses, management takes into consideration several of the
following factors: historical charge-off and recovery activity (noting any
particular trend changes over recent periods); trends in delinquencies; trends
in loan volume and size of credit risks; the degree of risk inherent in the
composition of the loan portfolio; current and anticipated economic conditions;
credit evaluations; and underwriting policies.
42 Capital One
27
SECURITIZATIONS: The Company securitizes credit card loans and records such
securitizations as sales in accordance with Statement of Financial Accounting
Standards ("SFAS") No.77, "Reporting by Transferors for Transfers of
Receivables with Recourse." Due to the relatively short average life of credit
card loans securitized (approximately 7 to 10 months), no gains are recorded at
the time of sale. Rather, excess servicing fees related to the securitizations
are recorded over the life of each sale transaction. The excess servicing fee
is based upon the difference between finance charges received from the
cardholders less the yield paid to investors, credit losses and a normal
servicing fee, which is also retained by the Company. In accordance with the
sale agreements, a fixed amount of excess servicing fees is set aside to absorb
potential credit losses. Accounts receivable from securitization principally
represents excess servicing fees earned and due to the Company. Transaction
expenses are deferred and amortized over the reinvestment period of the
transaction as a reduction of loan servicing fees. The monthly pattern of
recording loan servicing fees is similar to the revenue recognition that the
Company would have experienced if the loans had not been securitized.
PREMISES AND EQUIPMENT: Premises and equipment are stated at cost less
accumulated depreciation and amortization ($61,452 at December 31, 1995;
$37,162 at December 31, 1994). Depreciation and amortization expense is
computed generally by the straight-line method.
SOLICITATION: The Company expenses the costs related to the solicitation of new
accounts and balances as incurred.
CREDIT CARD FRAUD LOSSES: The Company experiences fraud losses from the
unauthorized use of credit cards. Transactions suspected of being fraudulent
are charged to non-interest expense after a 60-day investigation period.
INCOME TAXES: Deferred tax assets and liabilities are determined based on
differences between the financial reporting and tax bases of assets and
liabilities and are measured using the enacted tax rates and laws that will be
in effect when the differences are expected to reverse.
EARNINGS PER SHARE: Earnings per share are based on the weighted average number
of common and common equivalent shares, including dilutive stock options and
restricted stock outstanding during the three years ended December 31, 1995,
after giving retroactive effect to the initial capitalization of the Company as
if the issuance of all shares had occurred on January 1, 1993. Income that
would have been generated from the proceeds of the IPO was not considered in
the calculation of earnings per share.
INTEREST RATE SWAP AGREEMENTS: The Company enters into interest rate swap
agreements ("swaps") for purposes of managing its interest rate sensitivity.
The Company designates swaps to on-balance sheet instruments to alter the
interest rate characteristics of such instruments and to modify interest rate
sensitivity. The Company also designates swaps to off-balance sheet items to
reduce the interest rate sensitivity associated with off-balance sheet cash
flows (i.e., securitizations).
Swaps involve the periodic exchange of payments over the life of the
agreements. Amounts received or paid on swaps that are used to manage interest
rate sensitivity and alter the interest rate characteristics of on-balance
sheet instruments or reduce interest rate sensitivity associated with
off-balance sheet items are recorded on an accrual basis as an adjustment to
the related income or expense of the item to which the agreements are
designated. The related amount receivable from counterparties of $26,652 and
$4,209 at December 31, 1995 and 1994, respectively, is included in other
assets. Changes in the fair value of swaps are not reflected in the
accompanying financial statements.
The Company's credit exposure on swaps is limited to the value of the
swaps that have become favorable to the Company in the event of nonperformance
by the counterparties. The Company does not require collateral from
counterparties on its existing agreements. The Company actively monitors the
credit ratings of counterparties and does not anticipate nonperformance by the
counterparties with which it transacts its swaps.
USE OF ESTIMATES: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements
and accompanying notes. Actual results could differ from those estimates.
................................................................................
NOTE B
SECURITIES AVAILABLE FOR SALE
Securities available for sale at December 31, 1995, consist of U.S. Government
obligations maturing in 1997 and 1998, which have an amortized cost of $402,251
and a market value of $413,016.
Securities available for sale at December 31, 1994, consist of a U.S.
Government obligation that matured in March 1995 and had an amortized cost of
$99,103 and a market value of $99,070.
Capital One 43
28
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
.........................................................................
NOTE C
ALLOWANCE FOR LOAN LOSSES
The following is a summary of changes in the allowance for loan losses:
Year Ended December 31
.................................
1995 1994 1993
..................................................................
Balance at beginning of year $ 68,516 $ 63,516 $ 55,993
Provision for loan losses 65,895 30,727 34,030
Transfer to loans held for
securitization (11,504) (4,869) (2,902)
Charge-offs (64,260) (31,948) (39,625)
Recoveries 13,353 11,090 16,020
---------------------------------
Net charge-offs (50,907) (20,858) (23,605)
----------------------------------
Balance at end of year $ 72,000 $ 68,516 $ 63,516
==================================
..................................................................
NOTE D
BORROWINGS
Interest-bearing deposits of $696,037 and $452,201 at December 31, 1995 and
1994, represent certificates of deposit greater than $100 with weighted average
interest rates of approximately 6.07% and 6.43%, respectively.
At December 31, 1995 and 1994, federal funds purchased with overnight
maturities consist of $137,500 and $203,000, with weighted average interest
rates of approximately 5.41% and 5.94%, respectively, and $572,303 and $483,688
with average maturities of less than three months and weighted average interest
rates of approximately 5.84% and 6.43%, respectively.
On November 17, 1995, the Company entered into a three-year, $1,715,000
unsecured revolving credit arrangement (the "Credit Facility"). The Credit
Facility, which replaces the 1994 syndicated bank facility discussed below,
consists of three tranches. Tranches A and B are for $1,300,000 and $200,000,
respectively, are available to the Bank, and are subject to an unused
commitment fee of .17%. In addition, Tranche B allows the Bank to borrow in
major foreign currencies. Tranche C is for $215,000 and is available to the
Parent and the Bank and is subject to an unused commitment fee of .225%.
Borrowings under the Credit Facility bear interest at varying terms of the
London Interbank Offered Rate ("LIBOR") and mature on November 17, 1998;
however, the final maturity may be extended for three additional one-year
periods. As of December 31, 1995, $100,000 was outstanding under Tranche A of
the Credit Facility at a rate of 6.03%.
In 1994, the Company obtained a syndicated bank facility, which matured
in 1995, of $1,700,000, including a $500,000 revolving line of credit and
subject to an unused commitment fee of 0.1875%. At December 31, 1994,
$1,300,000 was outstanding on this facility at a variable interest rate based
on LIBOR of 6.74%.
Bank notes of $2,491,869 and $22,000 at December 31, 1995 and 1994, have
weighted average interest rates of approximately 7.35% and 8.10%, respectively.
Bank notes consist of $1,804,869 and $17,000 of fixed interest rate notes and
$687,000 and $5,000 of variable interest rate notes based on LIBOR, at December
31, 1995 and 1994, respectively.
In 1995, the Company entered into swaps to effectively convert certain of
the interest rates on bank notes from fixed to variable. The swaps have a
notional amount totaling $1,014,000 and mature in 1996 through 2000 to coincide
with maturities of fixed bank notes. These swaps pay three-month LIBOR at a
weighted average contractual rate at December 31, 1995, of 5.69% and receive a
weighted average fixed rate of 7.68%. Additionally in 1995, the Company entered
into basis swaps maturing in 1996 with notional amounts totaling $260,000 to
effectively convert bank notes maturing in 1996 with a variable rate based on
six-month LIBOR to a variable rate based on three-month LIBOR.
Affiliate borrowings at December 31, 1994, of $54,000 consisted of
overnight federal funds purchased from Signet at a fixed rate of 6.00%.
In 1994, the Company entered into a forward interest rate swap agreement
that provides that the Company pay interest at a rate of 5.875% and receive
one-month LIBOR (contractual rate of 6.07% at January 3, 1995) on a variable
notional amount from January 3, 1995 to April 13, 1995. The swap had a variable
notional amount up to $4,800,000 and was designated to reduce the interest rate
sensitivity associated with funding credit card loans repricing on a timetable
other than the monthly variable funding associated with the bank facility and
securitizations. The notional amount and term of this agreement effectively
matched the period of sensitivity to changes in interest rates.
Borrowings at December 31, 1995, mature as follows:
Interest-
Bearing Bank
Deposits Notes Total
...........................................................
1996 $662,152 $ 603,500 $1,265,652
1997 23,885 862,437 886,322
1998 611,166 611,166
1999 10,000 115,000 125,000
2000 299,766 299,766
------------------------------------
$696,037 $2,491,869 $3,187,906
====================================
44 Capital One
29
................................................................................
NOTE E
ASSOCIATES BENEFIT PLANS
Through December 31, 1995, the Company provided eligible associates with
pension benefits through its Cash Balance Pension Plan. The benefits of the
Cash Balance Pension Plan were based on years of service and the associate's
career average earnings. The Company's funding policy was to contribute amounts
to the plan sufficient to meet the minimum funding requirements set forth in
the Employee Retirement Income Security Act of 1974, plus such additional
amounts as the Company determined to be appropriate from time to time. Plan
assets at December 31, 1995, consisted of cash and investments in mutual funds
which hold primarily listed stocks and bonds.
Effective December 31, 1995, the Company amended the Cash Balance
Pension Plan so that no future pay-based credits will accrue. Future pay
credits will accrue to the Employee Savings Plan as discussed further below.
Such an event constitutes a "curtailment" under SFAS No. 88, "Employers'
Accounting for Settlements and Curtailments of Defined Benefit Pension Plans
and Termination Benefits." The curtailment had no material effect on the
Company's results of operations or financial condition.
The following sets forth the plan's funded status and amounts recognized
in the Company's balance sheet:
December 31
......................
1995 1994
................................................................
Actuarial present value of
benefit obligations:
Vested benefit obligations $(4,611) $(4,608)
======================
Accumulated benefit obligation $(6,690) $(4,985)
======================
Projected benefit obligation $(6,690) $(4,985)
Plan assets, at fair value 6,823 4,985
---------------------
Plan assets in excess of projected
benefit obligation 133
Unrecognized net asset (247) (288)
Unrecognized net loss 917 1,225
---------------------
Net pension asset $ 803 $ 937
---------------------
Net periodic pension cost includes the following components:
Year Ended December 31
............................
1995 1994 1993
................................................................
Service cost-benefits earned
during the year $ 1,338 $ 874 $ 665
Interest cost on projected
benefit obligation 424 279 266
Actual return on plan assets (1,055) 213 (149)
Net amortization and deferral 577 (580) (187)
---------------------------
Net periodic pension cost $ 1,284 $ 786 $ 595
---------------------------
Assumptions used were as follows:
1995 1994 1993
.................................................................
Discount rates 7.00% 8.50% 7.25%
Rates of increase in compensation
levels of associates 5.00% 5.00% 5.00%
Expected long-term rate of
return on plan assets 8.75% 8.75% 8.75%
==========================
The Company also sponsors a contributory Employee Savings Plan for which
substantially all full-time and certain part-time associates are eligible to
participate. The Company matches a portion of associate contributions, plus
makes discretionary contributions based upon the Company's earnings per common
share. Effective January 1, 1996, the Company will be required to make
additional contributions relating to pay-based credits to eligible associates
which were previously provided under the Cash Balance Pension Plan. The
Company's contributions to this plan were $2,701, $3,980 and $2,615 in 1995,
1994 and 1993, respectively.
In addition, the Company offers continued medical coverage and life
insurance benefits for its retirees through its Employee Welfare Benefits Plan.
The following table sets forth the plan's combined funded status with regard to
postretirement benefits reconciled with the amount shown in the Company's
balance sheet:
Year Ended December 31
.........................
1995 1994
Accumulated postretirement benefit
obligation:
Fully eligible active plan participants $ (62) $ (51)
Other active plan participants (1,937) (1,397)
-------------------
(1,999) (1,448)
Plan assets at fair value
Accumulated postretirement benefit
obligation in excess of plan assets (1,999) (1,448)
Unrecognized transition obligation 936 996
Unrecognized net loss (152) (321)
-------------------
Accrued postretirement benefit cost $(1,215) $ (773)
===================
Net periodic postretirement benefit cost includes the following
components:
Year Ended December 31
.............................
1995 1994 1993
..................................................................
Service cost-benefits earned
during the year $264 $162 $120
Interest cost on projected
benefit obligation 123 87 85
Amortization of transition
obligation over 20 years 55 55 52
----------------------------
Net periodic postretirement
benefit cost $442 $304 $257
============================
Capital One 45
30
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For measurement purposes, a 9.50% annual rate of increase in the per
capita cost of covered health care benefits was assumed for 1995 for
participants under 65 years of age; the rate was assumed to decrease gradually
to 5.0% in 2005 and remain at that level thereafter. Increasing the assumed
health care cost trend rates by one percentage point in each year would
increase the accumulated postretirement benefit obligation for the medical
plans, as of December 31, 1995, by $290, and the aggregate of the service and
interest cost components of net periodic postretirement benefit cost for 1995
by $70.
Effective January 1, 1996, the features of the postretirement benefits
plan have changed. The contributions required for participation are now based
on attained age, with higher contributions for pre-65 coverage than for post-65
coverage. Life insurance benefits are now offered only to currently active
associates who attained age 50 before December 31, 1995.
The weighted average discount rate used in determining the accumulated
postretirement benefit obligation was 7.00%, 8.50% and 7.25% for 1995, 1994 and
1993, respectively.
The Employee Welfare Benefits Plan also contains a Flexible Benefits
Program. The program allows associates to select their benefit options,
including medical coverage, disability insurance and paid leave. The program
enables the Company to better manage its rising health care costs, as well as
to provide associates more choice in the selection of their benefits package.
................................................................................
NOTE F
STOCK PLANS
Effective January 1, 1995, the Company adopted the Capital One Financial
Corporation Employee Stock Purchase Plan ("the Purchase Plan") whereby
associates of the Company and its subsidiaries are eligible to purchase common
stock through monthly salary deductions of a maximum of 15% and a minimum of 2%
of monthly base pay. The amounts deducted are applied to the purchase of
unissued common stock of the Company at 85% of the current market price. An
aggregate of 1,000,000 common shares have been authorized for issuance under
the plan, 934,355 shares of which were available for issuance at December 31,
1995.
Under the 1994 Stock Incentive Plan, the Company has reserved 5,370,880
common shares for issuance in the form of incentive stock options, nonstatutory
stock options, stock appreciation rights, restricted stock and incentive stock.
The number of shares available for future grant were 2,061,640 and 3,334,473 at
December 31, 1995 and 1994, respectively. Options vest annually over three to
five years and expire beginning November 2004. The restrictions on restricted
stock (of which 23,215 shares were issued in 1995) expire annually over three
years.
Additionally, pursuant to a Marketing and Management Services Agreement
between Signet Bank/Virginia and Fairbank Morris, Inc. ("FMI"), a corporation
controlled by members of the Company's executive management, 464,400 shares of
restricted stock were awarded to FMI for services rendered for the period from
January 1, 1994 to December 31, 1995. In connection with this award, $3,715 in
compensation was expensed in both 1995 and 1994.
On April 26, 1995, the Company adopted the 1995 Non-Associates Directors
Stock Incentive Plan (the "1995 Directors Plan"). The 1995 Directors Plan
authorizes an aggregate maximum of 500,000 shares of the Company's common
shares for the automatic grant of restricted stock and stock options to
eligible members of the Company's Board of Directors. At December 31, 1995,
452,500 shares were available for grant under this plan. The restrictions on
the restricted stock (of which 12,500 shares were issued in 1995) expire in
1996.
On September 15, 1995, the Company granted, subject to stockholder
approval of an increase of 2,000,000 in shares reserved for issuance under the
1994 Stock Incentive Plan, to its Chief Executive Officer and its President and
Chief Operating Officer performance-based options to purchase 2,500,000 common
shares at the then market price of $29.19 per share. Fifty percent of the
options vest if the Company's stock reaches $37.50 per share, 25% vest if the
stock reaches $43.25 per share and the remaining 25% vest if the stock reaches
$50.00 per share. If these price levels are not achieved within five years from
the date of grant, the portion of the options not previously vested will
expire. Upon stockholder approval, the difference between the exercise price
and the performance vesting price will be recognized as compensation cost over
the estimated vesting period.
46 Capital One
31
A summary of changes in shares of Common Stock under option for the
years of 1995 and 1994 is as follows:
Number Option Price
of Shares per Share
................................................................
Outstanding December 31, 1993
Granted 2,036,407 $ 16.00
Exercised
Canceled
----------------------------
Outstanding December 31, 1994 2,036,407 16.00
Granted 1,361,343 12.93 - 29.19
Exercised (6,582) 18.88
Canceled (76,100) 16.00 - 19.31
---------------------------
Outstanding December 31, 1995 3,315,068 $12.93 - 29.19
===========================
On November 16, 1995, the Board of Directors of the Company declared a
dividend distribution of one Right for each outstanding share of common stock.
Each Right entitles a registered holder to purchase from the Company one
onehundredth of a share of the Company's authorized Cumulative Participating
Junior Preferred Stock (the "Junior Preferred Shares") at a price of $150 (the
"Purchase Price"), subject to adjustment. The Company has reserved 1,000,000
shares of its authorized preferred stock for the Junior Preferred Shares.
Because of the nature of the Junior Preferred Shares' dividend and liquidation
rights, the value of the one one-hundredth interest in a Junior Preferred Share
purchasable upon exercise of each Right should approximate the value of one
share of common stock. Initially, the Rights are not exercisable and trade
automatically with the common stock. The Rights generally become exercisable,
however, and separate certificates representing the Rights will be distributed,
if any person or group acquires 15 percent or more of the Company's outstanding
common stock or a tender offer or exchange offer is announced for the Company's
common stock. The Rights expire on November 29, 2005, unless earlier redeemed
by the Company at $.01 per Right prior to the time any person or group acquires
15 percent of the outstanding common stock. Until the Rights become
exercisable, the Rights have no dilutive effect on earnings per share.
The Company accounts for associate stock-based compensation awards under
Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees" ("APB No. 25"). During 1995, the Financial Accounting Standards
Board issued SFAS No. 123, "Accounting for Stock-Based Compensation," which is
effective for awards issued after December 31, 1995. SFASNo. 123 provides,
based upon the fair value of the award, for associate stock-based compensation
to be recognized in the statement of income or, should the Company elect to
continue to account for associate stock-based compensation under the intrinsic
value method under APB No. 25, disclosure in the financial statements of the
effects of SFASNo. 123 as if the recognition provisions were adopted. The
Company continues to evaluate its alternatives available under the provisions
of SFASNo. 123 and has not determined whether it will adopt the statement for
expense recognition purposes.
................................................................................
NOTE G
OTHER NON-INTEREST EXPENSE
Other non-interest expense consists of the following:
Year Ended December 31
.............................
1995 1994 1993
................................................................
Credit card fraud losses $27,721 $10,852 $6,424
Professional services 28,787 9,203 2,063
Bankcard association assessments 13,116 8,344 4,772
Other 27,919 12,677 5,008
-----------------------------
Total $97,543 $41,076 $18,267
=============================
................................................................
NOTE H
REGULATORY MATTERS
The Bank is subject to capital adequacy guidelines adopted by the Federal
Reserve Board, including minimum capital and leverage ratios. At December 31,
1995, the Bank's risk-based Tier 1 capital ratio, risk-based total capital
ratio and Tier 1 leverage ratio were 11.52%, 12.77% and 8.52%, respectively.
Additionally, certain regulatory restrictions exist which limit the ability of
the Bank to transfer funds to its Parent. Bank regulators consider a range of
factors in determining capital adequacy and restrictions on dividends, such as
the bank's size, quality and stability of earnings, interest rate risk
exposure, risk diversification, management expertise, asset quality, liquidity
and internal controls. At December 31, 1995, retained earnings of the Bank of
$68,733 were available for payment of dividends to the Parent, without prior
approval by regulatory authorities.
Capital One 47
32
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
................................................................................
NOTE I
INCOME TAXES
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components
of the Company's deferred tax assets and liabilities as of December 31, 1995
and 1994, are as follows:
December 31
......................
1995 1994
......................................................
Deferred tax assets:
Allowance for loan losses $26,177 $23,981
Other 2,590 2,981
Valuation allowance
----------------------
Total deferred tax assets 28,767 26,962
Deferred tax liabilities:
Finance charge accrual 9,794 5,958
Unrealized gains on
securitiesavailable for
sale 3,768
Other 6,302 864
----------------------
Total deferred tax liabilities 19,864 6,822
----------------------
Net deferred tax assets $8,903 $20,140
======================
The components of income tax expense (benefit) are as follows:
Year Ended December 31
................................
1995 1994 1993
..........................................................
Federal taxes $63,162 $51,942 $61,458
State taxes 600
Deferred income taxes 7,458 (378) (1,089)
--------------------------------
Income taxes $71,220 $51,564 $60,369
================================
A reconciliation of the statutory income tax expense included in the
consolidated statements of income is as follows:
Year Ended December 31
................................
1995 1994 1993
............................................................
Income tax at statutory
federal tax rate of 35% $69,206 $51,389 $59,799
State taxes, net of
federal benefit 390
Other 1,624 175 570
---------------------------------
Income taxes $71,220 $51,564 $60,369
=================================
................................................................................
NOTE J
COMMITMENTS AND CONTINGENCIES
At December 31, 1995, the Company has outstanding lines of credit of
approximately $23,700,000 committed to its customers. Of that total commitment,
approximately $13,250,000 is unused. While this amount represents the total
available lines of credit to customers, the Company has not experienced and
does not anticipate that all of its customers will exercise their entire
available line at any given point in time. The Company has the right to
increase, reduce, cancel, alter or amend the terms of these available lines of
credit at any time.
Certain premises and equipment are leased under agreements that expire at
various dates through 2004, without taking into consideration available renewal
options. Many of these leases provide for payment by the lessee of property
taxes, insurance premiums, cost of maintenance and other costs. In some cases,
rentals are subject to increase in relation to a cost of living index. Total
rental expense amounted to approximately $5,394, $3,700 and $3,503 for the
years ended, December 31, 1995, 1994 and 1993, respectively. Total rental
income from subleases amounted to approximately $1,487 in 1995.
Future minimum rental commitments as of December 31, 1995, for all
non-cancelable operating leases with initial or remaining terms of one year or
more are as follows:
...............................................
1996 $ 4,571
1997 4,469
1998 4,381
1999 2,317
2000 1,373
Thereafter 2,756
-------
$19,867
=======
During 1995, the Company and the Bank became involved in three purported
class action suits relating to certain collection practices engaged in by
Signet Bank/Virginia and, subsequently, by the Bank. The complaints in these
three cases allege that Signet Bank/Virginia and/or the Company violated a
variety of federal and state statutes and constitutional and common law duties
by filing collection lawsuits, obtaining judgments and pursuing garnishment
proceedings in the Virginia state courts against defaulted credit card
customers who were not residents of Virginia. These cases have been filed in
the Superior Court of California in the County of Alameda, Southern Division,
on behalf of a class of California residents, in the United States District
Court for the District of Connecticut on behalf of a nationwide class, and in
the United States District Court for the Middle District of Florida on behalf
of a nationwide class (except for California). The complaints in these three
cases
48 Capital One
33
seek unspecified statutory damages, compensatory damages, punitive damages,
restitution, attorneys' fees and costs, a permanent injunction and other
equitable relief.
In connection with the transfer of substantially all of Signet
Bank/Virginia's credit card business to the Bank in November 1994, the Company
and the Bank agreed to indemnify Signet Bank/Virginia for certain liabilities
incurred in litigation arising from that business, which may include
liabilities, if any, incurred in the three purported class action cases
described above. Because no specific measure of damages is demanded in any of
the complaints and each of these cases is in early stages of litigation, an
informed assessment of the ultimate outcome of these cases cannot be made at
this time. Management believes, however, that there are meritorious defenses to
these lawsuits and intends to defend them vigorously.
The Company is commonly subject to various other pending and threatened
legal actions arising from the conduct of its normal business activities. In
the opinion of the management of the Company, the ultimate aggregate liability,
if any, arising out of any pending or threatened action will not have a
material adverse effect on the consolidated financial condition of the Company.
At the present time, however, management is not in a position to determine
whether the resolution of pending or threatened litigation will have a material
effect on the Company's results of operations in any future reporting period.
................................................................................
NOTE K
RELATED PARTY TRANSACTIONS
In the ordinary course of business, executive officers and directors of the
Company may have credit card loans issued by the Company. Pursuant to the
Company's policy, such loans are issued on the same terms as those prevailing
at the time for comparable loans with unrelated persons and do not involve more
than the normal risk of collectability.
Prior to November 22, 1994, and on a declining basis thereafter, Signet
and its various subsidiaries provided significant financial and operational
support to the Company, the estimated costs of which have been allocated to the
Company. Since the Company operated as a division of Signet Bank/Virginia for
all periods prior to November 22, 1994, these allocations do not necessarily
represent expenses that would have been incurred directly by the Company had it
operated on a stand-alone basis historically. The following table summarizes
the effects of these allocations (including interest expense) and servicing
income related to the retained credit card portfolio reflected in the financial
statements. Revenues and expenses generated in 1995 from agreements with Signet
through February 28, 1995, were immaterial.
Year Ended December 31
......................
1994 1993
............................................................
Revenues:
Loan servicing income pertaining to
retained credit card portfolio $11,046 $12,544
Expenses:
Interest expense 67,161 67,994
Salaries and associate benefits 7,509 7,630
Data processing services 16,524 16,080
Contract termination 49,000
Other 6,303 6,263
Incremental expenses, other than interest expense, that the Company would
have incurred directly had it operated on a stand-alone basis are estimated to
be $6,000 (unaudited) annually for each of the years in the two year period
ended December 31, 1994.
Premises and equipment with a net book value of $21,800 were transferred
from Signet on November 22, 1994.
Effective November 22, 1994, the Company entered into a Separation
Agreement, Interim Service Agreements and long-term Intercompany Servicing
Agreements, a Tax Sharing Agreement and an Employee Benefits Agreement
("Service Agreements"), which provide for certain ongoing operational and
financial relationships between the Company and Signet that expire in 1996.
................................................................................
NOTE L
SECURITIZATIONS
The Company securitized $3,525,000 and $2,393,937 of credit card receivables in
1995 and 1994, respectively, and currently has $7,523,801 of investors'
undivided interests in the receivables under securitizations outstanding at
December 31, 1995, with expected maturities from 1996 to 2000. The income from
all series is included in credit card servicing income.
The Company has entered into swaps to reduce the interest rate
sensitivity associated with these securitizations. In 1995, the Company entered
into swaps with notional amounts totaling $591,000 which are scheduled to
mature in 1998 and 1999 to coincide with the final payment date of a 1995
securitization. In 1994, the Company entered into swaps with notional amounts
totaling $539,000 which are scheduled to mature in 1997 to coincide with the
final payment date of the remaining term of a 1993 securitization. These swaps
pay floating rates of three-month LIBOR (weighted average contractual rate of
5.78% and 5.80% at December 31, 1995 and 1994, respectively) and receive
weighted average fixed rates of 7.23% and 6.74% at December 31, 1995 and 1994,
respectively.
Capital One 49
34
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The terms of securitizations require the Company to maintain a certain
level of assets, retained by the trust, to absorb potential credit losses. The
amount available to absorb potential credit losses is included in accounts
receivable from securitizations and is $235,188 and $129,410 at December 31,
1995 and 1994, respectively.
..............................................................................
NOTE M
SIGNIFICANT CONCENTRATION OF CREDIT RISK
The Company is active in originating credit card loans throughout the United
States. The Company reviews each potential customer's credit application and
evaluates the applicant's financial history and ability and willingness to
repay. Loans are made primarily on an unsecured basis; however, certain loans
require collateral in the form of cash deposits.
The geographic distribution of the Company's credit card loans was as
follows:
Year Ended December 31
..............................................
1995 1991
...........................................................................
LOANS % Loans %
..............................................
GEOGRAPHIC REGION:
Northeast $2,310,138 22.12% $ 1,702,015 23.07%
Southeast 2,281,553 21.84 1,712,940 23.21
Central 2,926,157 28.01 1,929,068 26.14
Midwest 219,236 2.10 150,371 2.04
West 2,698,613 25.84 1,883,406 25.53
Other 9,783 .09 655 .01
----------------------------------------------
10,445,480 100.00% 7,378,455 100.00%
Less securitized balances (7,523,801) (5,150,000)
---------------------------------------------
Total loans $2,921,679 $ 2,228,455
---------------------------------------------
...........................................................................
NOTE N
DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
The following discloses the fair value of financial instruments at December 31,
1995 and 1994, whether or not recognized in the balance sheets, for which it is
practical to estimate fair value. In cases where quoted market prices are not
available, fair values are based on estimates using present value or other
valuation techniques. Those techniques are significantly affected by the
assumptions used, including the discount rate and estimates of future cash
flows. In that regard, the derived fair value estimates cannot be substantiated
by comparison to independent markets and, in many cases, could not be realized
in immediate settlement of the instrument. As required under generally accepted
accounting principles, these disclosures exclude certain financial instruments
and all nonfinancial instruments from its disclosure requirements. Accordingly,
the aggregate fair value amounts presented do not represent the underlying
value of the Company.
The following methods and assumptions were used by the Company in
estimating the fair value at December 31, 1995 and 1994, for its financial
instruments:
CASH AND DUE FROM BANKS: The carrying amount approximates fair value.
CASH EQUIVALENTS: The carrying amount of federal funds sold and
interest-bearing deposits at other banks approximates fair value.
SECURITIES AVAILABLE FOR SALE: See Note B.
LOANS: The net carrying amount approximates fair value due to the relatively
short average life and principally variable interest rates on these loans. This
amount excludes any value related to account relationships.
INTEREST RECEIVABLE: The carrying amount approximates fair value.
INTEREST-BEARING DEPOSITS AND FEDERAL FUNDS PURCHASED: The carrying amount
approximates fair value.
BORROWINGS: The carrying amount of the bank facility approximates fair value.
The fair value of bank notes is $2,553,000 and $22,000, at December 31, 1995
and 1994, respectively.
INTEREST PAYABLE: The carrying amount approximates fair value.
INTEREST RATE SWAP AGREEMENTS: The fair value of these instruments of $85,200
at December 31, 1995, is the estimated amount that the Company would have
received, and $12,800 at December 31, 1994, is the estimated amount that the
Company would have paid to terminate the swap agreements at the respective
dates, taking into account the forward yield curve and the creditworthiness of
the swap counterparties.
50 Capital One
35
................................................................................
NOTE O
CAPITAL ONE FINANCIAL CORPORATION
(PARENT COMPANY ONLY)
CONDENSED FINANCIAL INFORMATION
December 31
.......................
Balance Sheets 1995 1994
............................................................
Assets
Cash and cash equivalents $ 7,792 $ 13,884
Investment in subsidiaries 587,518 461,007
Other 3,881 720
---------------------
Total assets $599,191 $475,611
=====================
Liabilities $ 1,054
Stockholders' equity $599,191 474,557
---------------------
Total liabilities and stockholders'
equity $599,191 $475,611
=====================
YEAR ENDED Period from Inception
DECEMBER 31 (November 22, 1994)
Statements of Income 1995 to December 31, 1994
........................................................................
Interest from temporary investments $ 560 $ 79
Dividends from subsidiaries 11,000
Non-interest expense 456 7
-----------------------------------
Income before income taxes and
equity in undistributed earnings
of subsidiaries 11,104 72
Income taxes 37 28
-----------------------------------
11,067 44
Equity in undistributed earnings
of subsidiaries 115,444 11,029
-----------------------------------
Net income $ 126,511 $11,073
===================================
Operating Activities:
Net income $ 126,511 $11,073
Adjustments to reconcile net
income to net cash provided
by operating activities:
Equity in undistributed
earnings of subsidiaries (115,444) (11,029)
Amortization of deferred
compensation 4,020 3,715
Increase in other assets (3,161) (720)
(Decrease) increase in other
liabilities (1,054) 1,054
-----------------------------------
Net cash provided by
operating activities 10,872 4,093
Investing Activities:
Increase in investment in
subsidiaries (2,470) (92,124)
------------------------------------
Financing Activities:
Proceeds from issuance of
common stock 1,257 101,915
Proceeds from exercise of
stock options 132
Dividends paid (15,883)
-----------------------------------
Net cash (used for) provided
by financing activities (14,494) 101,915
-----------------------------------
(Decrease) increase in cash and
cash equivalents (6,092) 13,884
Cash and cash equivalents at
beginning of period 13,884
-----------------------------------
Cash and cash equivalents at
end of period $ 7,792 $13,884
=================================
Capital One 51
1
Exhibit 23.1
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Experts" in
Amendment No. 1 to the Registration Statement (Form S-3 No. 333-3580) and
related Prospectus of Capital One Financial Corporation pertaining to the
registration of Debt Securities, Preferred Stock (including Depositary Shares)
and Common Stock of Capital One Financial Corporation and to the incorporation
by reference therein of our report dated January 23, 1996, with respect to the
consolidated financial statements of Capital One Financial Corporation
incorporated by reference in its Annual Report (Form 10-K) for the year ended
December 31, 1995, filed with the Securities and Exchange Commission.
/s/ Ernst & Young LLP
----------------------------------
ERNST & YOUNG LLP
Washington, D.C.
September 13, 1996
