UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report: April 6, 2001
DYNEX CAPITAL, INC.
(Exact Name of Registrant as Specified in Charter)
Virginia 1-9819 2-1549373
(State or Other (Commission File (IRS Employer
Jurisdiction of Identification No.)
Incorporation)
4551 Cox Road, Suite 300, Glen Allen, Virginia 23060
(Address of Principal Executive Offices) (Zip Code)
(804) 217-5800
(Registrant's telephone number, including area code)
Item 5. OTHER EVENTS.
On March 30, 2001, the Company entered into a Purchase Agreement by and
among the Company and the holders of a majority of the outstanding principal
amount of its 7.875% Senior Notes due July 15, 2002 ("Purchase Agreement"). The
Purchase Agreement, required, among other things, the purchase by the Company of
a net $29.5 million of its senior notes from such holders, and additional
purchases out of available cash (as defined in the Purchase Agreement) of all or
a portion of such holders' remaining notes, as more fully described in the
Purchase Agreement.
Additionally, the holders of a majority of the outstanding principal
amount of the senior notes approved an amendment to the related indenture of
senior notes ("Supplement"). The Supplement permits the Company to make
distributions with respect to its capital stock in an amount not to exceed the
sum of (a) $26 million, (b) the cash proceeds of any "permitted subordinated
indebtedness", (c) the cash proceeds of the issuance of any "qualified capital
stock", and (d) any distributions required in order for the Company to maintain
its REIT status. Distributions on capital stock as defined in the Supplement
include dividends, redemptions, repurchases, retirement, defeasance or other
acquisition. Under the terms of the Supplement and as evidenced by the Pledge
Agreements, the Company, including a wholly-owned subsidiary of the Company,
have both pledged substantially all of its assets (subject to any existing
security interests) to the trustee for the senior notes.
The foregoing is qualified in its entirety by reference to the
complete text of the Purchase Agreement, Supplemental Trust Indenture, Pledge
and Security Agreement, and Indemnity Pledge Agreement which are filed as
Exhibits hereto.
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) Exhibits
99.1 Dynex Capital, Inc. Press Release, dated April 2, 2001.
99.2 Purchase Agreement, dated as of March 30, 2001, by and among Dynex
Capital, Inc. and the Holders of a majority of the outstanding principal amount
of 7.875% Senior Notes due July 15, 2002.
99.3 Supplemental Trust Indenture, dated as of March 30, 2001, by and
between Dynex Capital, Inc. and HSBC Bank USA, as Trustee.
99.4 Pledge and Security Agreement, dated as of March 30, 2001, by and
between Dynex Capital, Inc. and HSBC Bank USA, as Trustee.
99.5 Indemnity Pledge Agreement, dated as of March 30, 2001, by and between
Issuer Holding Corp. and HSBC Bank USA, as Trustee.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: April 6, 2001 DYNEX CAPITAL, INC.
By: /s/Thomas H. Potts
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Thomas H. Potts
President
EXHIBIT INDEX
Number Description Method of Filing
99.1 Dynex Capital, Inc. Press Release, Filed herewith
dated April 2, 2001.
99.2 Purchase Agreement, dated as of March 30, 2001, Filed herewith
by and among Dynex Capital, Inc. and the Holders
of a majority of the outstanding principal amount of
7.875% Senior Notes due July 15, 2002.
99.3 Supplemental Trust Indenture, dated as of March 30, Filed herewith
2001, by and between Dynex Capital, Inc. and HSBC
Bank USA, as Trustee.
99.4 Pledge and Security Agreement, dated as of March 30, Filed herewith
2001, by and between Dynex Capital, Inc. and HSBC
Bank USA, as Trustee.
99.5 Indemnity Pledge Agreement, dated as of March 30, Filed herewith
2001, by and between Issuer Holding Corp. and
HSBC Bank USA, as Trustee.
[ Company Logo ]
PRESS RELEASE
FOR IMMEDIATE RELEASE CONTACT: Kathy Fern
April 2, 2001 804-217-5800
DYNEX CAPITAL, INC. REPORTS 2000 RESULTS AND
REPURCHASE OF SENIOR NOTES
Dynex Capital, Inc. (NYSE: DX) reported today a net loss for 2000 of $91.9
million or $9.15 per common share, versus a net loss of $75.1 million or $7.67
per common share for 1999.
In commenting on the 2000 results, Thomas H. Potts, President, stated
"While the loss for 2000 was significant, it contained a number of non-recurring
items. As stated in prior releases, our primary focus throughout 2000 was the
sale or resolution of assets to pay down associated debt, letters of credit or
similar obligations. During 2000, Dynex reduced on-balance sheet recourse
borrowings by $403 million and was released from approximately $180 million of
letters of credit obligations. The Company incurred non-recurring losses of
$67.5 million related to the sale or resolution of assets to reduce such
obligations. Other significant non-recurring items during 2000 included
additional charges of $11.0 million relating to the divesting of the Company's
remaining investment in auto loans." Mr. Potts continued, "While the 2000
results were impacted by several non-recurring charges, net interest margin on
the Company's investment portfolio was negatively impacted by the almost 20%
decline in our base of interest earning assets, increases in short-term interest
rates, as well as a higher provision for credit losses. The higher credit losses
were primarily due to the deteriorating market conditions in the manufactured
housing market during the fourth quarter, which negatively impacted the recovery
rate on the sale of repossessed manufactured housing units relating to the
Company's portfolio of manufactured housing loans."
During the first quarter of 2001, the Company paid off all remaining
amounts due under its syndicated bank credit facility and repurchased a net
$29.5 million of its senior notes due July 15, 2002, leaving $67.8 million of
such notes outstanding. As of the end of the first quarter of 2001, the only
other remaining recourse debt outstanding was $29.2 million under a reverse
repurchase facility. Since the third quarter of 1998, the Company has reduced
its recourse debt outstanding in excess of $1.5 billion. Mr. Potts stated, "As
the Company is now in compliance with its outstanding credit facilities, this,
among other things, has enabled our auditors to issue an unqualified opinion on
our year 2000 financial statements. In addition, as of March 30, 2001, the
Company had unrestricted cash of approximately $21 million."
The Company reported that the holders of a majority of the outstanding
principal amount of such notes approved an amendment to the related indenture
that specifically provided for the Company to make distributions with respect to
its capital stock in an amount not to exceed the sum of (a) $26 million, (b) the
cash proceeds of any "permitted subordinated indebtedness", (c) the cash
proceeds of the issuance of any "qualified capital stock", and (d) any
distributions required in order for the Company to maintain its REIT status.
Distributions on capital stock as defined in the amended indenture include
dividends, redemptions, repurchases, retirement, defeasance or other
acquisition. In exchange, the Company pledged substantially all of its assets
(subject to any existing security interests) to the trustee for the July 2002
senior notes. The Company indicated that it will file the amended indenture and
related security agreements with the Securities and Exchange Commission in a
Current Report on Form 8-K within five business days.
Mr. Potts commented, "With the bank credit facility repaid and the
amendment to the senior notes completed, the Board can better evaluate various
courses of action to improve shareholder value and to provide liquidity to the
Company's stock. The Board continues to consider three alternatives: (i) the
outright sale of the Company to a third party; (ii) the sale to a third party of
either "permitted subordinated indebtedness" or "qualified capital stock", or
(iii) one or more distributions with respect to its capital stock as permitted
by the amendment to the indenture to the July 2002 senior notes. The Company may
use proceeds raised from the sale of "permitted subordinated indebtedness" or
"qualified capital stock" to increase distributions to shareholders. The Company
anticipates that it will inform shareholders of its contemplated course of
action by May 31, 2001."
Mr. Potts further commented, "The Company expects its first quarter results
to be favorably impacted by the recent declines in short-term interest rates,
the discount realized by the Company on the purchase of the $29 million of the
July 2002 Notes, and the resolution of a matter related to the Company's prior
relationship with AutoBond Acceptance Corporation. While the overall impact on
earnings of these items is expected to be approximately $10 million, the Company
at this time does not know whether this may be offset by additional provisions
for credit losses or other items. During the first quarter, the Company
completed the sale of substantially all of the remaining assets it was holding
for sale, and did not incur any material losses from such sales."
The Company has scheduled a conference call for Wednesday, April 4, 2001,
at 9:00 AM EDT. Investors may participate in a listen only mode by calling the
following number 888-489-9491.
Dynex Capital, Inc. is a financial services company that elects to be
treated as a real estate investment trust (REIT) for federal income tax
purposes.
Note: This document contains "forward-looking statements"(within the meaning of
the Private Securities Litigation Act of 1995) that inherently involve risks and
uncertainties. The Company's actual results could differ materially from those
anticipated in these forward-looking statements as a result of unforeseen
external factors. As discussed in the Company's filings with the SEC, these
factors may include, but are not limited to, changes in general economic
conditions, disruptions in the capital markets, the availability of funds from
the Company's lenders to finance future loans, fluctuations in interest rates,
increases in costs and other general competitive factors.
PURCHASE AGREEMENT
This PURCHASE AGREEMENT (together with the schedules and exhibits attached
hereto, collectively, this "Agreement") is dated as of March 30, 2001 by and
among DYNEX CAPITAL, INC., a Virginia corporation (the "Company"), and the
holders listed on Schedule I hereto (the "Holders").
Preliminary Statement
A. The Company has issued and sold $100,000,000 in aggregate principal
amount of its 7.875% Senior Debt Securities due July 15, 2002 (the
"Securities"), pursuant to the terms and conditions of that certain Indenture
dated July 14, 1997, as amended from time to time, by and between the Company
and HSBC Bank USA, a banking corporation and trust company organized under the
laws of the State of New York (the "Trustee") and that certain Officers'
Certificate (the "Officers' Certificate") of the Company dated July 14, 1997
(collectively, the "Indenture").
B. The Holders own Securities in the principal amount set forth opposite
the name of each Holder on Schedule I hereto (the "Individual Holder Amount"),
with an aggregate principal amount of $49,568,000 (the "Aggregate Holder
Amount").
C. The Holders desire to sell to the Company, and the Company desires to
purchase, on the Initial Closing Date (as defined herein), Securities of the
Holders (the "Initial Purchase Securities") with an aggregate principal amount
of $31,129,000 (the "Initial Purchase Amount") in accordance with the terms and
conditions set forth herein.
D. Subsequent to the Initial Closing Date, the Holders desire to sell to
the Company, and the Company desires to purchase, Securities of the Holders up
to the aggregate remaining principal amount of such Securities (the "Remaining
Amount") in accordance with the terms and conditions set forth herein. The
Remaining Amount held by each Holder is set forth on Schedule 2.3 hereof.
In consideration of the mutual covenants and agreements set forth herein,
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties agree as follows:
1. Definitions.
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The following terms, when used herein, shall have the following meanings:
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" 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 meaning correlative to the
foregoing.
"Aggregate Holder Amount" shall have the meaning given in Paragraph B of
the Preliminary Statement hereto.
"Agreement" shall have the meaning given in the preamble hereto.
"Auditor" shall have the meaning given in Section 3.2.1 hereof.
"Available Amount" means on any Mandatory Purchase Notice Date, the cash
and cash equivalents of the Company and its Subsidiaries on a consolidated
basis, less (i) amounts necessary to service accrued and unpaid interest on the
Securities, (ii) amounts in existence as of such Mandatory Purchase Notice Date
and designated by the Company for or relating to Permitted Payments, (iii) an
amount not to exceed $3,000,000, and (iv) Restricted Cash/Cash Equivalents.
"Bankruptcy Code" shall have the meaning given in Section 8.4 hereof.
"Change of Control" means any event or series of events described under the
definition of "Change of Control" in Section 10 of the Officers' Certificate.
"Company" shall have the meaning given in the preamble hereto.
"Custodian" shall mean a Person designated by a Holder to hold such
Holder's Securities in trust or in escrow; provided that no Person shall be
deemed to be a Custodian for purposes of this Agreement unless the designating
Holder provides the Company with prior written notice of such Person's
appointment as Custodian and the address and other contact information for such
Person.
"Damages" shall mean any and all direct or indirect demands, claims,
payments, obligations, recoveries, deficiencies, fines, penalties, interest,
assessments, actions, causes of action, suits, losses, damages, liabilities,
costs, expenses (including, without limitation, (i) interest, penalties, and
reasonable attorneys' fees and expenses, (ii) reasonable attorneys' fees and
expenses necessary to enforce rights to indemnification hereunder, and (iii)
reasonable consultant's fees and other costs of defense or investigation), and
interest on any amount payable to a third party as a result of the foregoing,
whether accrued, absolute, contingent, known or unknown.
"Default Notice" shall have the meaning given in Section 3.3 hereof.
"Dispute Notice" shall have the meaning given in Section 3.2.1 hereof.
"Disputed Available Amount" shall have the meaning given in Section 3.2.1
hereof.
"Dissenting Holders" shall have the meaning given in Section 3.2.1 hereof.
"Dissenting Holder Representative" shall have the meaning given in Section
3.2.1 hereof.
"Eligible Investments" means (i) marketable direct obligations issued by,
or unconditionally guaranteed by, the United States Government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within two years from the date of acquisition thereof; (ii)
marketable direct obligations issued by any state of the United States or any
political subdivision of any such state or any public instrumentality thereof
maturing within two years form the date of acquisition thereof and, at the time
of acquisition, having one of the two highest ratings obtainable from either
Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies,
Inc. ("S&P"), or Moody's Investors Service, Inc. ("Moody's"); (iii) commercial
paper maturing no more than two years from the date of creation thereof and, at
the time of acquisition, having a rating of at least A-1 from S&P or at least
P-1 from Moody's; (iv) certificates of deposit or bankers' acceptances maturing
within two years from the date of acquisition thereof issued by any commercial
bank organized under the laws of the United States or any state thereof or the
District of Columbia or any U.S. branch of a foreign bank having at the date of
acquisition thereof combined capital and surplus of not less than $500,000,000;
(v) repurchase obligations with a term of not more than 30 days for underlying
securities of the types described in clause (i) above entered into with any bank
meeting the qualifications specified in clause (iv) above; and (vi) investments
in money market funds which invest substantially all their assets in securities
of the types described in clauses (i) through (v) above.
"Excess Revised Available Amount" shall have the meaning given in Section
3.2.2 hereof.
"Financial Statements" means the consolidated financial statements,
including any related notes thereto, contained in the Company's Quarterly Report
on Form 10-Q for the quarter ended September 30, 2000 and Annual Report on Form
10-K for the year ended December 31, 1999, in each case as filed with the
Securities and Exchange Commission pursuant to the Securities Exchange Act of
1934, as amended, and the regulations promulgated thereunder.
"Holder/Holders" shall have the meaning given in the preamble hereto.
"Indemnitee" shall have the meaning given in Section 9.1 and Section 9.2
hereof.
"Indemnitor" shall have the meaning given in Section 9.3 hereof.
"Indenture" shall have the meaning given in Paragraph A of the Preliminary
Statement hereto.
"Indenture Supplement" means that certain Supplemental Trust Indenture of
even date herewith by and between the Company and the Trustee, as the same may
be amended, amended and restated, supplemented or otherwise modified from time
to time in accordance with its terms.
"Individual Holder Amount" shall have the meaning given in Paragraph B of
the Preliminary Statement hereto.
"Initial Closing" shall have the meaning given in Section 4.1 hereof.
"Initial Closing Date" shall have the meaning given in Section 4.1 hereof.
"Initial Purchase Amount" shall have the meaning given in Paragraph C of
the Preliminary Statement hereto.
"Initial Purchase Amount Price" shall have the meaning given in Section 2.2
hereof.
"Initial Purchase Securities" shall have the meaning given in Paragraph C
of the Preliminary Statement hereto.
"Lien" means (i) any lien, mortgage, deed of trust, pledge, security
interest, charge or encumbrance of any kind including, without limitation, any
conditional sale or other title retention agreement, any lease in the nature
thereof, any option or other agreement to sell, any setoff, recoupment or
repurchase arrangement and any filing of or agreement to file a financing
statement as debtor under the Uniform Commercial Code or any similar statute and
(ii) any agreement to enter into any of the foregoing.
"Mandatory Purchase" shall have the meaning given in Section 3.1 hereof.
"Mandatory Purchase Date" shall have the meaning given in Section 3.1
hereof.
"Mandatory Purchase Notice" shall have the meaning given in Section 3.1
hereof.
"Mandatory Purchase Notice Date" shall have the meaning given in Section
3.1 hereof.
"New Remaining Amount" shall have the meaning given in Section 3.4 hereof.
"New Remaining Amount Securities" shall have the meaning given in Section
3.4 hereof.
"Officers' Certificate" shall have the meaning given in Paragraph A of the
Preliminary Statement hereto.
"Partial Mandatory Purchase" shall have the meaning given in Section 3.4
hereof.
"Permitted Payments" means any payments or distributions permitted in
accordance with subparagraph (iii)(3) of Section 10 of the Officers' Certificate
as amended by Section 2.6 of the Indenture Supplement.
"Permitted Transferee" shall have the meaning given in Section 8.3 hereof.
"Person" means any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization or government or any agency or political subdivision thereof.
"Pledge Agreement" means the Pledge Agreement of even date herewith, by
Issuer Holding Corp., a wholly-owned subsidiary of the Company, in favor of the
Trustee, as the same may be amended, amended and restated, supplemented or
otherwise modified from time to time in accordance with its terms.
"Purchase Calculation" shall mean the amount of Securities to be purchased
from each Holder on each Mandatory Purchase Date and calculated for each Holder
by dividing A by B, where A is the product of the Available Amount multiplied by
the Individual Holder Amount, and B is the product of the Purchase Price for the
applicable Mandatory Purchase Date multiplied by the Aggregate Holder Amount.
Such amount of Securities is then rounded up for each Holder to the nearest
$1,000 increment.
"Purchase Price" shall mean, with respect to each Mandatory Purchase, the
price (expressed as a percentage of the principal amount of the Securities being
purchased) as set forth in Section 3.1, or in the case of the Initial Closing
Date, ninety percent (90%).
"Registered Securities" means any senior debt securities evidencing the
Company's secured indebtedness that are authenticated and delivered under the
Indenture and registered in the Security Register.
"Remaining Amount" shall have the meaning given in Paragraph D of the
Preliminary Statement hereto.
"Remaining Amount Purchase Price" shall have the meaning given in the
Section 3.1 hereof.
"Remaining Amount Securities" shall have the meaning given in Section 2.3
hereof.
"Restricted Cash/Cash Equivalents" means cash and cash equivalents of the
Company and its Subsidiaries required to be held (a) by trustees under
indentures or trust agreements related to securitizations issued by a Subsidiary
or an Affiliate of the Company, or (b) under escrow agreements as set forth on
Schedule 1.1 hereto; provided, that any such cash or cash equivalents shall no
longer be deemed Restricted Cash/Cash Equivalents at such time as it is released
from the applicable indenture, trust agreement or escrow agreement.
"Revised Available Amount" shall have the meaning given Section 3.2.1
hereof.
"Revised Available Amount Notice" shall have the meaning given in Section
3.2.2 hereof.
"Securities" shall have the meaning given in Paragraph A of the Preliminary
Statement hereto.
"Security Agreement" means the Pledge and Security Agreement of even date
herewith, by the Company in favor of the Trustee, as the same may be amended,
amended and restated, supplemented or otherwise modified from time to time in
accordance with its terms.
"Security Interests" shall have the meaning given in Section 8.4 hereof.
"Security Register" means the register for the Securities required under
Section 305 of the Indenture.
"Subsequent Closing" shall have the meaning given in Section 4.2 hereof.
"Subsequent Closing Date" shall have the meaning given in Section 4.2
hereof.
"Subsidiary" means a corporation, partnership or limited liability company
a majority of the outstanding voting stock or voting interests of which is
owned, directly or indirectly, by the Company or by one or more other
Subsidiaries of the Company. For purposes of this definition, "voting stock"
means, with respect to a corporation, stock having voting power for the election
of directors, whether at all times or only so long as no senior class of stock
has such voting power by reason of any contingency. For purposes of this
definition, "voting interests" means, with respect to a partnership or limited
liability company, partnership or membership interests having power to direct
the management of the partnership or limited liability company.
"Transaction Documents" shall have the meaning given in Section 5.2 hereof.
"Transfer" shall have the meaning given in Section 8.3 hereof.
"Trustee" shall have the meaning given in Paragraph A of the Preliminary
Statement hereto.
2. Purchase and Sale of Initial Purchase Amount.
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2.1 Purchase and Sale. Subject to the terms and conditions hereof, at the
Initial Closing, the Company shall purchase, and the Holders shall sell, the
Initial Purchase Securities.
2.2 Purchase Price. Subject to the terms and conditions hereof, at the
Initial Closing, the Company shall pay to the Holders the aggregate amount of
Twenty Eight Million Sixteen Thousand One Hundred Dollars ($28,016,100), plus
accrued and unpaid interest on the Initial Purchase Securities as of the Initial
Closing Date (the "Initial Purchase Amount Price") to acquire the Initial
Purchase Securities. The portion of the Initial Purchase Amount Price to be paid
to each Holder is set forth opposite the name of each Holder on Schedule 2.2
hereto.
2.3 Delivery of Initial Purchase Securities and Issuance of Remaining
Amount Securities. Subject to the terms and conditions hereof, at the Initial
Closing, the Holders shall cause to be delivered to the Company the Initial
Purchase Securities for transfer and shall upon consummation of the Initial
Closing hold Registered Securities in the aggregate principal amounts set forth
opposite the name of each Holder on Schedule 2.3 hereto (the "Remaining Amount
Securities"), which Remaining Amount Securities contain identical terms and
provisions, except for principal amount and except for the legend described in
Section 8.3 hereof, as the Initial Purchase Securities. Notwithstanding the
foregoing, if the principal amount of the Remaining Amount Securities held by
any Holder as set forth on Schedule 2.3 hereto is equal to or less than $10,000,
then upon the request of the Company made prior to the Initial Closing, which
request may be given at the Company's sole discretion, such Holder shall deliver
such Remaining Amount Securities to the Company at the Initial Closing for
transfer and the Company shall pay to such Holder the amount equal to ninety
percent (90%) of the principal amount of such Remaining Amount Securities, plus
any accrued and unpaid interest on such Remaining Amount Securities, by delivery
of a wire transfer of immediately available funds to the account designated by
such Holder on Schedule I hereto. Upon delivery of the Initial Purchase
Securities and the Remaining Amount Securities pursuant to this Section 2.3 to
the Company, each Holder shall be deemed to have assigned and transferred all
such Initial Purchase Securities and Remaining Amount Securities to the Company
and such Initial Purchase Securities and Remaining Amount Securities shall be
cancelled by the Trustee.
3. Purchase of Remaining Amount Securities.
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3.1 Purchase Right; Mandatory Purchases. For so long as any portion of the
Remaining Amount is outstanding, the Company shall have the right and shall be
required to purchase (a "Mandatory Purchase") on April 15, 2001; June 1, 2001;
July 15, 2001; September 1, 2001; October 15, 2001; December 1, 2001; January
15, 2002; March 1, 2002; and April 15, 2002, or the next business day if such
date is not a business day (each a "Mandatory Purchase Date") that amount of the
Remaining Amount Securities from each Holder determined pursuant to the Purchase
Calculation, using the applicable Purchase Price set forth below, and the
Available Amount as determined in good faith by the President or Treasurer of
the Company not less than two (2) business days prior to such Mandatory Purchase
Date. The aggregate purchase price paid to the Holders on each Mandatory
Purchase Date (the "Remaining Amount Purchase Price") shall equal such Available
Amount, plus accrued and unpaid interest on such Remaining Amount Securities as
of such Mandatory Purchase Date, and each Holder shall receive its pro-rata
share (taking account of the rounding up used in determining the Purchase
Calculation) of such Remaining Amount Purchase Price, pursuant to the Purchase
Calculation. The Company shall not utilize any of the Available Amount to
purchase, redeem or otherwise acquire or retire Securities until it has
purchased all of the Remaining Amount Securities. Further, until the Company has
purchased all of the Securities, the Company shall utilize any cash and cash
equivalents (other than Restricted Cash/Cash Equivalents) solely to purchase the
Remaining Amount Securities or to invest in Eligible Investments, provided,
however, that the foregoing shall not prohibit the Company from using cash and
cash equivalents for the purposes otherwise permitted under the Indenture and
the Indenture Supplement.
Mandatory
Purchase Date Purchase Price
April 15, 2001 90.00%
June 1, 2001 92.00%
July 15, 2001 92.00%
September 1, 2001 94.00%
October 15, 2001 94.00%
December 1, 2001 96.00%
January 15, 2002 96.00%
March 1, 2002 98.00%
April 15, 2002 100.00%
For so long as any portion of the Remaining Amount is outstanding, the
Company shall deliver to each Holder by facsimile transmission no later than two
business days prior to each Mandatory Purchase Date (the "Mandatory Purchase
Notice Date") a certificate signed by the President or Treasurer of the Company
(a "Mandatory Purchase Notice") setting forth the Available Amount as of such
date, a reasonably detailed calculation of the components of the Available
Amount as of such date, the Purchase Calculation relating to such Holder, and
such Holder's pro-rata share (taking account of the rounding up used in
determining the Purchase Calculation) of the Remaining Amount Purchase Price.
Notwithstanding the above, if the Available Amount is less than the lesser of
the outstanding Remaining Amount or One Million Dollars ($1,000,000) on the
Mandatory Purchase Notice Date, then the Company shall be permitted to invest
such Available Amount in Eligible Investments in lieu of making a Mandatory
Purchase on such Mandatory Purchase Date. Upon delivery of the Remaining Amount
Securities pursuant to this Section 3 to the Company, each Holder shall be
deemed to have assigned and transferred such Remaining Amount Securities to the
Company and such Remaining Amount Securities shall be cancelled by the Trustee.
3.2 Disputes Regarding Available Amount.
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3.2.1 Disputed Available Amount. The Company shall promptly deliver to the
Holders such additional information regarding the calculation of the Available
Amount as of a Mandatory Purchase Notice Date that any Holder shall reasonably
request. If the Holders of at least a majority of the then outstanding New
Remaining Amount (the "Dissenting Holders") deliver to the Company a written
notice (a "Dispute Notice") disputing the Available Amount set forth in the
Mandatory Purchase Notice delivered on a Mandatory Purchase Notice Date (the
"Disputed Available Amount"), then the Company and each of the Holders shall
effect the Mandatory Purchase to be consummated pursuant to such Mandatory
Purchase Notice in accordance with the terms of this Agreement using the
Disputed Available Amount and the Dissenting Holders' claim with respect to the
Disputed Available Amount shall be resolved in accordance with the terms of this
Section 3.2; provided, however, that the Dissenting Holders deliver the Dispute
Notice to the Company within ninety (90) days after the Mandatory Purchase
Notice Date relating to such Disputed Available Amount. In the event a Dispute
Notice is timely delivered to the Company, the Company and one of the Dissenting
Holders that is appointed by a majority of the Dissenting Holders (the
"Dissenting Holder Representative") shall negotiate in good faith to determine
the Available Amount in lieu of such Disputed Available Amount (the "Revised
Available Amount") that is mutually acceptable to the Company and the Dissenting
Holder Representative. If the Company and the Dissenting Holder Representative
reach agreement on the Revised Available Amount, then the Company and the
Dissenting Holder Representative shall deliver a Revised Available Amount Notice
(as defined in Section 3.2.2 below) in accordance with Section 3.2.2 hereof. If
the Company and the Dissenting Holder Representative are not able to reach
agreement on the Revised Available Amount within ten (10) business days after
the date the Dispute Notice is delivered to the Company, then within ten (10)
business days after the date the Dispute Notice is delivered to the Company, the
Company shall retain Deloitte & Touche LLP (or if the Company is unable to
retain Deloitte & Touche LLP, such other nationally-recognized accounting firm
or other firm providing similar services that is satisfactory to each of the
Company and the Dissenting Holder Representative) (the "Auditor"), and the
Auditor shall deliver to the Company and the Dissenting Holder Representative as
promptly as practicable a written determination as to the Revised Available
Amount as of the applicable Mandatory Purchase Notice Date. In either case, the
agreement of the Company and the Dissenting Holder Representative or the
determination by the Auditor as to the Revised Available Amount shall be
conclusive and binding on the Company and each of the Holders; provided, that if
the Auditor determines that the Revised Available Amount is less than the
Disputed Available Amount, then the Disputed Available Amount shall be deemed to
have been the proper Available Amount for the Mandatory Purchase at issue.
Notwithstanding the foregoing, if the Company determines at any time after the
delivery of a Mandatory Purchase Notice that the Available Amount set forth in
such Mandatory Purchase Notice was less than the actual Available Amount as of
the Mandatory Purchase Notice Date for such Mandatory Purchase Notice, then the
Company shall, regardless of whether it has received a Dispute Notice, add the
difference between the Available Amount that was set forth in such Mandatory
Purchase Notice and the actual Available Amount as of such Mandatory Purchase
Notice Date to the Available Amount set forth in the first Mandatory Purchase
Notice delivered by the Company subsequent to the date it becomes aware of such
error and shall disclose such error in the same Mandatory Purchase Notice.
3.2.2 Notice of Revised Available Amount. Within two (2) business days
after either (i) the date the Company and the Dissenting Holder Representative
mutually agree on the Revised Available Amount, or (ii) the date the Auditor
delivers its written determination setting forth the Revised Available Amount,
then the Company and the Dissenting Holder Representative shall deliver a
written certificate (the "Revised Available Amount Notice") to each of the other
Holders setting forth the Revised Available Amount, the Excess Revised Available
Amount, if any, the Purchase Calculation relating to such Holder based on such
Revised Available Amount, and such Holder's pro-rata share (taking account of
the rounding up used in determining the Purchase Calculation) of the Remaining
Amount Purchase Price based on such Revised Available Amount. To the extent the
Revised Available Amount exceeds the Disputed Available Amount, then the Company
shall add an amount equal to the difference between the Revised Available Amount
and the Disputed Available Amount (the "Excess Revised Available Amount") to the
Available Amount set forth in the first Mandatory Purchase Notice delivered by
the Company subsequent to the date the Revised Available Amount Notice is
delivered. To illustrate the foregoing, if the Company and the Dissenting Holder
Representative deliver a Revised Available Amount Notice on August 15, 2001 that
sets forth an Excess Revised Available Amount of $1,000,000 and the Available
Amount determined as of the Mandatory Purchase Notice Date for the Mandatory
Purchase on September 1, 2001 is $2,000,000, then the Available Amount to be set
forth in the Mandatory Purchase Notice for the Mandatory Purchase on September
1, 2001 shall be $3,000,000.
3.2.3 Fees and Expenses of Auditor. If the Auditor determines that the
Revised Available Amount exceeds the Disputed Available Amount, then the Company
shall pay all of the fees and expenses incurred by the Auditor in connection
with rendering such determination. If the Auditor determines that the Revised
Available Amount is equal to or less than the Disputed Available Amount, then
the Dissenting Holders shall pay all of the fees and expenses incurred by the
Auditor in connection with rendering such determination.
3.3 Intentional Breach. If the Company (a) does not effect all or any
portion of a Mandatory Purchase that (i) is required under Section 3.1 based
upon the Available Amount set forth in a Mandatory Purchase Notice, or (ii)
would have been required under Section 3.1 had the Available Amount set forth in
any Mandatory Purchase Notice been correct and the Company had knowledge of such
error at the time such Mandatory Purchase Notice was delivered, or (b) so long
as any portion of the Remaining Amount is outstanding, breaches any of its
covenants, representations and warranties or other obligations arising under or
in connection with the Indenture, then the Holders, in addition to all other
remedies available under this Agreement, shall no longer be obligated to sell
any Remaining Amount Securities to the Company hereunder, and upon receipt of a
written notice signed by the Holders of at least a majority of the then
outstanding Remaining Amount (a "Default Notice"), the Company shall be
obligated to purchase, at a Subsequent Closing to be held no later than fifteen
(15) business days after the date such Default Notice is delivered, all of the
Remaining Amount Securities outstanding as of the date such Default Notice is
delivered at an aggregate purchase price equal to 100% of the principal amount
of such Remaining Amount Securities plus accrued and unpaid interest on such
Remaining Amount Securities as of the date such Default Notice is delivered. For
purposes of this Section 3.3, the Company shall be deemed to have had knowledge
that the Available Amount set forth in any Mandatory Purchase Notice was
incorrect if any of its executive officers had actual knowledge that such
Available Amount was incorrect at the time such Mandatory Purchase Notice was
delivered or would have had such knowledge at such time but for his or her gross
negligence.
3.4 Delivery of Remaining Amount Securities; Purchase in Part. Subject to
the terms and conditions hereof, at the Subsequent Closing(s), the Holders shall
deliver the Remaining Amount Securities being purchased to the Company for
transfer. If the Company purchases less than all of the Remaining Amount
Securities pursuant to a Mandatory Purchase (such purchase, a "Partial Mandatory
Purchase"), then each Holder shall sell, and the Company shall purchase, such
portion of such Holder's Remaining Amount Securities as determined pursuant to
the Purchase Calculation. Upon a Subsequent Closing for a Partial Mandatory
Purchase, the Remaining Amount shall be reduced by the amount of the Remaining
Amount Securities purchased in the Partial Mandatory Purchase (the amount
resulting from such reduction, the "New Remaining Amount") and the Company
shall, subject to and in accordance with the applicable provisions of the
Indenture, execute, and shall instruct the Trustee to authenticate and deliver,
new Registered Securities (the "New Remaining Amount Securities") to each
Holder, or to the Custodian on behalf of a Holder if so instructed by such
Holder, in the principal amount equal to such Holder's portion of the New
Remaining Amount. Notwithstanding the foregoing, if the principal amount of the
New Remaining Amount Securities to be issued to any Holder subsequent to any
Partial Mandatory Purchase pursuant to this Section 3.4 is equal to or less than
$10,000, then the Company, in its sole discretion, may, in lieu of instructing
the Trustee to authenticate and deliver such New Remaining Amount Securities to
such Holder, pay to such Holder the amount equal to the product of (i) the
Purchase Price utilized for such Partial Mandatory Purchase and (ii) the
principal amount of such Remaining Amount Securities, plus any accrued and
unpaid interest on such Remaining Amount Securities, by delivery of a wire
transfer of immediately available funds to the account designated by such Holder
on Schedule I hereto. If there is a Partial Mandatory Purchase, the New
Remaining Amount shall be deemed to be the Remaining Amount for purposes of this
Agreement. The New Remaining Amount Securities shall contain identical terms and
provisions, except for principal amount, as the Remaining Amount Securities
(including the legend as set forth in Section 8.3 hereof) and shall remain
subject to the Mandatory Purchase and the other terms and conditions of this
Agreement and be deemed to be Remaining Amount Securities under this Agreement.
4. Closings.
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4.1 Initial Closing. The closing of the sale and purchase of the Initial
Purchase Securities (the "Initial Closing") shall take place at the offices of
Venable, Baetjer and Howard, LLP, 2010 Corporate Ridge, Suite 400, McLean,
Virginia on the date hereof, or such other date (such date, the "Initial Closing
Date") and in such other manner as may be mutually agreed to by the parties in
writing. At the Initial Closing, subject to the terms and conditions herein
contained:
(i) Each Holder shall deliver to the Company the certificates for the
Initial Purchase Securities in accordance with Section 2.3 hereof.
(ii) The Company shall deliver to each Holder such Holder's share of the
Initial Purchase Amount Price in accordance with Section 2.2 hereof by wire
transfers of immediately available funds to the respective accounts designated
by each of the Holders.
(iii) The Company shall execute and deliver the Indenture Supplement, the
Pledge Agreement, the Security Agreement and all other documents and instruments
contemplated herein and in the Indenture Supplement, the Security Agreement and
the Pledge Agreement to be executed and delivered by the Company at such time.
4.2 Subsequent Closings. The closing(s) of the sale and purchase of the
Remaining Amount Securities upon a Mandatory Purchase
pursuant to Section 3 hereof (each, a "Subsequent Closing" and collectively, the
"Subsequent Closings") shall take place at the offices of Venable, Baetjer and
Howard, LLP, 2010 Corporate Ridge, Suite 400, McLean, Virginia on the applicable
Mandatory Purchase Date or such other date (each such date, a "Subsequent
Closing Date") and in such other manner as may be mutually agreed to by the
parties in writing. At the Subsequent Closing(s), subject to the terms and
conditions herein contained:
(i) Each Holder shall deliver, or shall instruct the Custodian to deliver,
to the Company such Holder's Remaining Amount Securities in accordance with
Section 3.4 hereof. If a Holder fails to surrender its Remaining Amount
Securities to be sold to the Company hereto, all rights of such Holder with
respect to such Remaining Amount Securities, except its right to receive its
share of the Remaining Amount Purchase Price in accordance with Sections 3.1
and, if applicable, 10.5 hereof, nonetheless shall cease and terminate.
(ii) The Company shall deliver to each Holder such Holder's share of the
Remaining Amount Purchase Price in accordance with Section 3.1 hereof by wire
transfers of immediately available funds to the respective accounts designated
by each of the Holders.
5. Representations and Warranties of Holders. To induce the Company to
enter into this Agreement and to consummate the transactions contemplated
hereby, each of the Holders, severally but not jointly, hereby makes the
following representations and warranties to the Company as of the Initial
Closing Date or the Subsequent Closing Date(s), as applicable.
5.1 Ownership of Securities. Such Holder is the sole owner, beneficially
and of record, of the Initial Purchase Securities, and is the sole owner,
beneficially, of the Remaining Amount Securities, as applicable, being conveyed,
transferred or assigned and delivered to the Company pursuant to the terms and
conditions of this Agreement, free and clear of any liens, security interests,
pledges, options, claims or other encumbrances of any kind. Such Initial
Purchase Securities or Remaining Amount Securities, as applicable, are not
subject to any restrictions on the transfer thereof, except for restrictions on
transfer imposed by applicable federal and state securities laws.
5.2 Authorization; Execution and Delivery; Enforceability. Holder has the
corporate power, authority and legal right to execute, deliver and perform this
Agreement, and any other document executed in connection herewith, including
without limitation, such Holder's consent referred to in Section 7.1.2
(collectively the "Transaction Documents"). The Transaction Documents have been
duly authorized, validly executed and delivered by the Holder or by an
authorized officer of Holder and constitute the legal, valid and binding
obligations of such Holder, enforceable against it in accordance with their
respective terms.
5.3 Consents. Except as set forth on Schedule 5.3 attached hereto, no
consent, approval or other authorization of or filing with any individual,
corporation, partnership, trust or unincorporated organization or any government
or any agency or political subdivision thereof, or any other person or entity is
required for the valid execution, delivery and performance of this Agreement by
such Holder and the consummation by such Holder of the transactions contemplated
hereby.
5.4 Litigation and Claims. There are no suits, actions, claims, or
judicial, administrative, or governmental proceedings, or investigations
existing, pending, or, to such Holder's best knowledge threatened, against such
Holder that, if adversely determined against such Holder, would have a material
adverse effect on the ability of such Holder to consummate the transactions
contemplated hereby.
6. Representations and Warranties of Company. To induce the Holders to
enter into this Agreement and to consummate the transactions contemplated
hereby, the Company hereby makes the following representations and warranties to
the Holders as of the Initial Closing Date or the Subsequent Closing Date(s), as
applicable.
6.1 Organization and Authorization; Enforceability. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the Commonwealth of Virginia. The Company has the corporate power, authority
and legal right to execute, deliver and perform the Transaction Documents. The
Transaction Documents have been duly authorized, validly executed and delivered
by an authorized officer of the Company and constitute the legal, valid and
binding obligations of the Company, enforceable against it in accordance with
their respective terms.
6.2 Consents. Except as set forth on Schedule 6.2 attached hereto, no
consent, approval or other authorization of or filing with any individual,
corporation, partnership, trust or unincorporated organization or any government
or any agency or political subdivision thereof, or any other person or entity is
required for the valid execution, delivery and performance of this Agreement by
the Company and the consummation by the Company of the transactions contemplated
hereby.
6.3 Litigation and Claims. Except as described in Schedule 6.3 hereof,
there are no suits, actions, claims, or judicial, administrative, or
governmental proceedings, or investigations existing, pending, or, to the
Company's best knowledge threatened, against the Company that, if adversely
determined against the Company, would have a material adverse effect on the
ability of the Company to consummate the transactions contemplated hereby.
6.4 No Conflict. Neither the execution and delivery of this Agreement by
the Company, nor the consummation by the Company of the transactions
contemplated hereby, nor compliance by the Company with any of the provisions
hereof, will (i) conflict with or result in a breach of any provision of the
Company's Articles of Incorporation, as amended, or Bylaws, as amended, (ii)
constitute or result in a default under, or require any consent pursuant to, or
result in the creation of any Lien on any asset of the Company or any of its
Subsidiaries under any contract, indenture or agreement to which the Company or
any of its Subsidiaries is a party or by which their assets are bound or (iii)
violate any law or regulation applicable to the Company or any of its
Subsidiaries or any of their respective assets.
5.40 6.5 Subsidiaries. The Company has set forth on Schedule 6.5 of this
Agreement all of its direct and indirect Subsidiaries as of the date of this
Agreement. The Company or one of its Subsidiaries owns all of the issued and
outstanding shares of capital stock of each Subsidiary.
5.50 6.6 Financial Statements. The Financial Statements (as of the dates thereof
and for the periods covered thereby) (i) are in accordance with the books and
records of the Company and its Subsidiaries, which books and records accurately
and fairly represent the business of the Company and its Subsidiaries and its
results of operations and have been maintained in accordance with good business
practices, and (ii) fairly present in all material respects the consolidated
financial position of the Company as of the dates indicated and the consolidated
results of operations, changes in stockholders' equity, and cash flows of the
Company and its Subsidiaries for the periods indicated, in accordance with
generally accepted accounting principles, except as disclosed therein; provided,
however, that the unaudited Financial Statements are subject to normal recurring
year-end adjustments and do not contain all footnotes required under generally
accepted accounting principles.
5.60 6.7 Absence of Undisclosed Liabilities. As of the date of this
Agreement, neither the Company nor any of its Subsidiaries has any liabilities
that are reasonably likely to have, individually or in the aggregate, a material
adverse effect on the Company and its Subsidiaries taken as a whole, except for
liabilities that are fully accrued or reserved against in the consolidated
balance sheet of the Company as of September 30, 2000 included in the Financial
Statements or reflected in the notes thereto and liabilities disclosed in
Schedule 6.7 hereto.
6.8 Absence of Certain Changes or Events. Except as disclosed on Schedule
6.8 hereto, since September 30, 2000, there have been no events, changes, or
occurrences which have had, or are reasonably likely to have, individually or in
the aggregate, a material adverse effect on the Company and its Subsidiaries
taken as a whole.
6.9 5.80 Tax Matters.
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6.9.1 Adequate provision for any taxes due or to become due for the Company
and its Subsidiaries for the period or periods through and including the date of
the respective Financial Statements has been made and is reflected on the
Financial Statements.
6.9.2 There are no Liens with respect to taxes upon any of the assets of
the Company or its Subsidiaries.
7. Conditions Precedent to Initial Closing and Subsequent Closing(s).
7.1 Conditions to Obligations of Holders and Company. The obligations of
all of the parties hereto to consummate the transactions contemplated hereby are
subject to satisfaction of the following conditions at or prior to the Initial
Closing or the Subsequent Closing(s), as applicable:
7.1.1 No Restrictions. No action or proceeding shall have been instituted
or threatened before any court or governmental agency to restrain, prohibit or
invalidate the transactions contemplated by this Agreement.
7.1.2 Consents to Supplemental Indenture. The Company shall have received
written consents from holders of at least a majority of the aggregate principal
amount of the Securities outstanding consenting to and approving the
Supplemental Indenture.
7.2 Conditions to Obligations of Company. The obligations of the Company to
purchase the Initial Purchase Securities from the Holders at the Initial Closing
and to pay the Initial Purchase Amount Price therefor, to purchase the Remaining
Amount Securities from the Holders at the Subsequent Closing(s) and to pay the
Remaining Amount Purchase Price therefor, and otherwise to consummate the
transactions contemplated hereby are subject to the satisfaction by the Holders
(jointly with respect to the Initial Closing and severally with respect to each
Subsequent Closing) and/or the waiver by the Company of each of the following
conditions at or prior to the Initial Closing or the Subsequent Closing(s), as
applicable:
7.2.1 Compliance with this Agreement. Each Holder shall have performed and
complied in all material respects with all of the terms, obligations, covenants
and conditions of this Agreement which are applicable to the Holders; the
representations and warranties of the Holders contained herein shall be true and
correct in all material respects as of the Initial Closing Date and the
Subsequent Closing Date, as applicable, as if such representations and
warranties were made as of the Initial Closing Date or the Subsequent Closing
Date, as applicable.
7.2.2 Delivery of Securities. Each Holder shall have taken or caused to be
taken all actions required under Section 4 hereof to effect the sale and
transfer of the Initial Purchase Securities or Remaining Amount Securities, as
applicable, to the Company, including the delivery of the Initial Purchase
Securities or Remaining Amount Securities, as applicable, to the Company for
transfer.
7.3 Conditions to Obligations of Holders. The obligations of the Holders to
sell the Initial Purchase Securities and the Remaining Amount Securities to the
Company and otherwise to consummate the transactions contemplated hereby are
subject to the satisfaction by the Company and/or the waiver by the Holders of
each of the following conditions at or prior to the Initial Closing and the
Subsequent Closing(s), as applicable:
7.3.1 Compliance with this Agreement. The Company shall have performed and
complied in all material respects with all of the terms, obligations, covenants
and conditions of this Agreement; the representations and warranties of the
Company contained herein shall be true and correct in all material respects as
of the Initial Closing Date and the Subsequent Closing Date, as applicable, as
if such representations and warranties were made as of the Initial Closing Date
or Subsequent Closing Date, as applicable.
7.3.2 Payment of Purchase Price. With respect to the Initial Closing, the
Company shall have paid to each Holder its share of the Initial Purchase Amount
Price set forth on Schedule 2.2 hereto, in accordance with Section 4.1 hereof,
and with respect to each Subsequent Closing, the Company shall have paid to each
Holder its pro-rata share (taking account of the rounding up used in determining
the Purchase Calculation) of the Remaining Amount Purchase Price, in accordance
with Section 4.2 hereof.
7.3.3 Legal Opinion. With respect to the Initial Closing, the Holders shall
have received an opinion from Venable, Baetjer and Howard, LLP addressed to the
Holders, dated as of the Initial Closing Date and in form and substance
acceptable to the Holders, and an opinion from Simpson Thacher & Bartlett
addressed to the Holders, dated as of the Initial Closing Date and in form and
substance acceptable to the Holders.
7.3.4 Execution and Delivery of Other Agreements. The Company shall have
executed and delivered the Indenture Supplement, the Pledge Agreement, the
Security Agreement and all other documents and instruments contemplated herein
and in the Indenture Supplement, the Security Agreement and the Pledge Agreement
to be executed and delivered by the Company on or prior to the Initial Closing
Date.
8. Agreements.
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8.1 Consents and Approvals. Each Holder hereby agrees to use its best
efforts to cause all of conditions set forth in Sections 7.1 and 7.2 hereof to
be satisfied on or prior to the Initial Closing and the Subsequent Closing(s),
as applicable. The Company hereby agrees to use its best efforts to cause all of
the conditions set forth in Sections 7.1 and 7.3 hereof to be satisfied on or
prior to the Initial Closing and the Subsequent Closing(s), as applicable.
8.2 Further Assurances. Each Holder hereby agrees, at any time and from
time to time after the Initial Closing Date, upon the reasonable request by the
Company and without further consideration, to take such further actions or
execute such further documents or agreements as may be reasonably necessary in
the Company's discretion effectively to convey, transfer or assign and deliver
to the Company the Initial Purchase Securities and any Remaining Amount
Securities purchased hereunder.
8.3 Transfer; Legend. Each Holder hereby agrees that, for so long as any
portion of the Remaining Amount remains outstanding, it shall not sell, assign,
transfer, pledge, hypothecate or otherwise dispose of, by operation of law or
otherwise (collectively, a "Transfer") any Remaining Amount Securities, or any
interest therein, except that a Holder may Transfer its Remaining Amount
Securities, or any interest therein, if the transferee, as a condition to such
Transfer, delivers to the Company a written instrument confirming that such
transferee shall be bound by all of the terms and conditions of this Agreement
(a "Permitted Transferee"). The Remaining Amount Securities now or hereafter
issued to a Holder or a Permitted Transferee shall be endorsed with the
following legend:
"THE SALE, PLEDGE, HYPOTHECATION OR TRANSFER OF THE SECURITIES
REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO THE TERMS AND
CONDITIONS OF A PURCHASE AGREEMENT (THE "PURCHASE AGREEMENT")
BY AND BETWEEN DYNEX CAPITAL, INC. (THE "COMPANY") AND CERTAIN
HOLDERS OF THE COMPANY'S 7.875% SENIOR DEBT SECURITIES DUE
JULY 15, 2002, WHICH PURCHASE AGREEMENT PROVIDES, AMONG OTHER
THINGS, THAT THE COMPANY SHALL PURCHASE, AND THE HOLDER HEREOF
SHALL SELL, ALL OR A PORTION OF THE SECURITIES REPRESENTED BY
THIS CERTIFICATE AT A DISCOUNTED PURCHASE PRICE ON CERTAIN
DATES SET FORTH IN THE PURCHASE AGREEMENT. A COPY OF THE
PURCHASE AGREEMENT MAY BE OBTAINED UPON WRITTEN REQUEST TO THE
SECRETARY OF THE COMPANY."
8.4 Claim of Holders in Event of Bankruptcy. Notwithstanding any provision
contained herein to the contrary, the amount by which a Holder's share of the
Initial Purchase Securities exceeds the Holder's share (taking account of the
rounding up used in determining the Purchase Calculation) of the Initial
Purchase Amount Price therefor, and the amount by which a Holder's share of the
Remaining Amount Securities sold hereunder exceeds the Holder's pro-rata share
(taking account of the rounding up used in determining the Purchase Calculation)
of the Remaining Amount Purchase Price therefor, shall remain an obligation of
the Company, and shall be secured by the Liens of the Security Agreement and the
Pledge Agreement (the "Security Interests"); provided that such remaining
obligations of the Company shall automatically be released, without the need for
further action by any party, on the 91st day after the date on which the
Security Interests have been perfected if on that date the Company shall not
have filed any voluntary proceeding seeking an order for relief or other
protection under the United States Bankruptcy Code, as amended (the "Bankruptcy
Code"), and no such involuntary proceeding shall have been instituted against
the Company and in which an order for relief is thereafter entered.
8.5 Waiver of Certain Rights. Each Holder hereby agrees and acknowledges
that the Company's obligation to repurchase Securities held by such Holder upon
the occurrence of any of the transactions or events constituting a Change of
Control pursuant to the terms and conditions of the Indenture and the Indenture
Supplement shall not be applicable, and shall be deemed waived, if either
Blackrock Management, Trust Company of the West, Fortress Investment Group,
Mariner Investment Group, Hanover Capital Mortgage Holdings, or any of their
respective Affiliates, is the Person that is entering into such transaction, or
is a party to such event, with the Company. In no event shall this Section 8.5
in any way limit or restrict the Company's obligation to purchase the Initial
Purchase Securities and the Remaining Amount Securities pursuant to the terms
and conditions of this Agreement.
9. Indemnification.
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9.1 Indemnification by Holder. Each Holder hereby agrees, severally but not
jointly, to indemnify and hold harmless the Company, its Subsidiaries and their
respective officers, directors, employees, agents, professionals, successors and
assigns (each, an "Indemnitee") from and against any and all Damages incurred by
such Indemnitees resulting or arising from any breach or nonfulfillment of the
covenants or agreements of such Holder contained herein, including without
limitation Section 8.3 hereof.
9.2 Indemnification by Company. The Company hereby agrees to indemnify and
hold harmless the Holders and their respective officers, directors, employees,
agents, professionals, successors and assigns (each, an "Indemnitee") from and
against any and all Damages incurred by such Indemnitees resulting or arising
(i) from any breach or nonfulfillment of the covenants or agreements of the
Company contained herein, (ii) from any breach of any representation or warranty
of the Company contained herein, or (iii) in connection with or related to the
Indenture and this Agreement or duties arising thereunder or hereunder from the
execution and delivery of this Agreement, the Indenture Supplement, the Security
Agreement and the Pledge Agreement by each of the parties hereto and thereto and
the performance of their respective obligations hereunder and thereunder in
accordance with each of the terms and conditions hereto and thereto; provided,
however, that the Company shall have no liability under this Section 9.2 to the
extent any such Damages result or arise from any breach of any representation,
warranty or covenant of any of the Holders contained herein or from any breach
of any representation, warranty or covenant of the Company under the Indenture
Supplement, the Security Agreement or the Pledge Agreement; and provided,
further, that the Company shall have no liability under this Section 9.2 to the
extent any such Damages result or arise solely from an agreement between a
Holder and any party other than the Company.
9.3 Claims and Litigation. If any person or entity not a party to this
Agreement shall make any demand or claim, or file or threaten to file a lawsuit,
which demand, claim or lawsuit may result in any liability, damage or loss to an
Indemnitee for which such Indemnitee may be entitled to seek relief from a party
hereto (such party, an "Indemnitor") pursuant to Section 9.1 or 9.2 hereof, the
Indemnitee shall promptly provide written notice to such Indemnitor of such
demand, claim or lawsuit, and the Indemnitor shall then have the option at the
cost and expense of the Indemnitor, to assume and control the defense of any
such demand, claim, or lawsuit. Thereafter, the Indemnitee shall be permitted to
participate in such defense at its own expense. If the Indemnitor shall fail to
respond within thirty (30) days after receipt of such notice, or shall notify
the Indemnitee that it does not intend to defend against such demand, claim or
lawsuit, the Indemnitee may conduct a defense against such demand, claim or
lawsuit as it in its discretion may deem proper. If the Indemnitor elects to
assume and control the defense of a third party claim, the Indemnitee agrees to
cooperate in all reasonable respects with the Indemnitor in connection with such
defense, including retaining and delivering to the Indemnitor records and
information which are reasonably relevant to such third party claim. Whether or
not the Indemnitor shall have assumed and controlled the defense of a third
party claim, no party shall admit any liability with respect to, or settle,
compromise or discharge any such third party claim, without the prior written
consent of the other party, which consent shall not be unreasonably withheld,
conditioned or delayed if the proposed settlement is, in fact, reasonable under
the prevailing facts and circumstances. Nothing in this Section 9.3 shall
prevent an Indemnitee from taking such action as may be necessary prior to the
end of the thirty-day period provided for above to prevent a default judgment
from being entered.
9.4 Making of Claims. A claim for indemnity pursuant to this Section 9 may
be made by an Indemnitee by written notice to the Indemnitor, which notice shall
be given within thirty (30) days after the Indemnitee becomes aware of the
claim. Such written notice shall set forth in reasonable detail the basis upon
which such claim for indemnity is made.
9.5 Attorneys' Fees, Costs and Expenses. The rights of an Indemnitee to
seek indemnification hereunder shall include the right to recover interest,
penalties, cost and expenses, including reasonable attorneys' fees (subject to
Section 9.3 hereof), incident to any claim for indemnification made in
accordance with the provisions of this Section 9.
10. Miscellaneous.
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10.1 Governing Law; Jurisdiction. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Virginia, without
regard to principles of conflict of laws. Each party agrees that any action or
proceeding with respect to this Agreement shall be brought in any federal or
state court situated in the Commonwealth of Virginia, and by execution and
delivery of this Agreement, such party irrevocably consents to the exclusive
jurisdiction of, and venue in, each such court.
10.2 Notices. Unless otherwise expressly provided for herein, all notices,
requests, demands, and other communications between the parties under this
Agreement shall be deemed to have been duly given (i) when delivered by hand,
(ii) one (1) business day after deposited with a courier service that provides
evidence of delivery, (iii) two (2) business days after mailed by certified or
registered mail, with postage pre-paid, or (iv) when sent by confirmed facsimile
if sent before 5:00 p.m. Eastern Time, or if not then on the next business day
to:
If to the Company:
Dynex Capital, Inc.
4551 Cox Road, Suite 300
Glen Allen, Virginia 23060
Facsimile: (804) 217-5860
Attn: Thomas H. Potts
With a copy to:
Venable, Baetjer and Howard, LLP
2010 Corporate Ridge, Suite 400
McLean, Virginia 22102
Attn: Joseph C. Schmelter, Esq.
If to a Holder, at the address (and/or to the
facsimile number) listed below the name of such
Holder on Schedule I hereto
With a copy to:
Arnold & Porter
555 Twelfth Street, N.W.
Washington, D.C., 20004
Attn: Daniel M. Lewis, Esq.
or to such other address and/or facsimile number as
any party provides to the other parties from time to
time.
10.3 Entire Agreement; Amendment; Waiver. This Agreement, the exhibits and
schedules hereto, and all documents delivered pursuant to this Agreement,
constitute the entire Agreement between the parties pertaining to the subject
matter hereof, and supersede any and all prior and contemporaneous agreements,
understandings, negotiations, and discussions of the parties, whether oral or
written. No amendment, modification, waiver or termination of this Agreement
shall be binding unless executed in writing by the parties hereto, or in the
case of a waiver, by the party for whom such benefit was intended. No waiver of
any of the provisions of this Agreement shall be deemed or shall constitute a
waiver of any other provision of this Agreement, whether or not similar, nor
shall such waiver constitute a continuing waiver unless otherwise expressly so
provided in writing.
10.4 Remedies; Specific Performance. The parties hereto agree that the
Initial Purchase Securities and the Remaining Amount Securities are unique, that
failure to perform the obligations provided by this Agreement shall result in
irreparable damage, that remedies at law for any breach of this Agreement will
be inadequate and that specific performance of these obligations may be obtained
by suit in equity.
10.5 Remedy for Failure to Deliver Remaining Amount Securities. If a Holder
shall be required to deliver all or any portion of its Remaining Amount
Securities for transfer pursuant to any provision of this Agreement, and if such
Holder is unable to, or for any reason does not, deliver, or instruct the
Custodian to deliver, the certificate representing the Remaining Amount
Securities to the Company in accordance with the applicable provisions of this
Agreement and a Custodian has been appointed by such Holder, then the Company
may deposit such Holder's share of the Remaining Amount Purchase Price for such
Remaining Amount Securities with the Custodian as trustee for such Holder, to be
held by the Custodian until withdrawn by such Holder. Upon deposit by the
Company of such Holder's share of the Remaining Amount Purchase Price with the
Custodian, such Holder's Remaining Amount Securities, or portion thereof, to be
sold pursuant to the applicable provisions of this Agreement shall at such time
be deemed to have been sold, assigned, transferred, and conveyed to the Company
and such Holder shall have no further right in such Remaining Amount Securities.
10.6 Expenses. Subject to Section 9 hereof, each party shall pay the fees
of its legal counsel, accountants, advisors and any other expenses incurred by
it in connection with the negotiation and preparation of this Agreement and the
consummation of the transactions contemplated by this Agreement; provided,
however, that in connection with the negotiation and preparation of this
Agreement, the Indenture Supplement, the Security Agreement, the Pledge
Agreement and all other instruments and documents relating thereto, as well as
all discussions and negotiations between the Company and one or more of the
Holders occurring prior to the execution hereof, the Company shall pay, upon the
Initial Closing, the reasonable fees and expenses incurred by the Holders to the
parties listed in Schedule 10.6 hereto, such amounts not to exceed $550,000.
10.7 Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective heirs, personal
representatives, successors and assigns.
10.8 Severability. If any provision or clause of this Agreement is
determined by a court of competent jurisdiction to be invalid or unenforceable,
the validity of the rest of the Agreement shall not be affected and the rights
and obligations of the parties shall be construed and enforced as if this
Agreement did not contain the particular part held to be invalid or
unenforceable.
10.9 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same Agreement. Execution and delivery of
this Agreement by facsimile signature shall be sufficient for all purposes and
shall be binding upon any party who executes this Agreement in such manner.
10.10 No Third Party Beneficiaries. Nothing contained in this Agreement
shall be deemed to confer any rights or benefits upon any third parties.
10.11 Survival. The obligations of the Company and the Holders to indemnify
any Indemnitee pursuant to Section 9 of this Agreement shall survive the
repurchase by the Company of all of the Securities owned by the Holders.
Exhibit 99.3
SUPPLEMENTAL TRUST INDENTURE
THIS SUPPLEMENTAL TRUST INDENTURE (this "Supplement") is dated as of
March 30, 2001, and is made by and between DYNEX CAPITAL, INC., a corporation
organized under the laws of Virginia (the "Company"), having its principal
office at 4551 Cox Road, Suite 300, Glen Allen, Virginia 23060, and HSBC BANK
USA, a banking corporation and trust company organized and existing under the
laws of the State of New York (the "Trustee"), having its principal office at
140 Broadway, New York, New York 10005.
RECITALS
A. The Company issued and sold $100,000,000 in aggregate principal
amount of its unsecured 7.875% Senior Notes Due July 15, 2002 (the "Unsecured
Securities") under an Indenture, dated as of July 14, 1997 (the "Original
Indenture") by and between the Company and Texas Commerce Bank National
Association ("Texas Commerce Bank").
B. The Original Indenture was supplemented and amended by the Officers'
Certificate dated July 14, 1997 (the "Original Officers' Certificate," and
together with the Original Indenture, the "Indenture").
C. Pursuant to that certain Instrument of Resignation, Appointment and
Acceptance, dated as of June 12, 2000, by and among the Company, Chase Bank of
Texas, National Association ("Chase Bank") and HSBC Bank USA, Chase Bank,
successor to Texas Commerce Bank, was replaced as Trustee under the Indenture by
HSBC Bank USA.
D. The Unsecured Securities were issued in global form and all of
the outstanding Unsecured Securities are represented by one permanent
global security identified as Dynex Capital, Inc. 7.875% Senior Note due
July 15, 2002, No. 1, CUSIP No. 26817Q AA 8, registered in the name of CEDE &
CO., as nominee of The Depository Trust Company ("DTC") (the "Global Security").
E. Pursuant to Section 305 of the Indenture, and Paragraph 8 on the
reverse of the Global Security, a global Security shall be exchangeable for
definitive Securities if the Company, in its sole discretion, notifies DTC that
all Outstanding Securities issued in the form of such global Security shall no
longer be represented by such global Security.
F. The Company notified DTC that the Unsecured Securities shall no
longer be represented by a Global Security as of March 28, 2001, and has
instructed the Trustee to issue certificated securities registered in the names
of the persons directed by DTC. Such certificated securities represent
securities of the same series, having the same terms as the Global Security, and
in the aggregate having the same principal amount of the Global Security.
G. Pursuant to Section 902 of the Original Indenture, with the consent
of Holders of not less than a majority in principal amount of all Outstanding
Securities affected by a supplemental indenture, the Company and the Trustee may
enter into such supplemental indenture for the purpose of adding any provisions
to or changing in any manner or eliminating any of the provisions of the
Indenture or of modifying in any manner the rights of the Holders of Securities,
subject to the limitation and restrictions described therein.
H. The Company desires to make certain changes to the Indenture and to
the Unsecured Securities for the purposes of, among other things, securing the
Unsecured Securities and eliminating, changing, and adding to certain provisions
of the Indenture.
I. Pursuant to a Written Consent to Supplemental Trust Indenture of
even date herewith, Holders of not less than a majority in principal amount of
all Outstanding Unsecured Securities have consented to this Supplement and the
modifications to the Indenture described herein.
J. All things necessary to make this Supplement a valid, binding and
legal instrument have been performed by the Company.
AGREEMENTS
NOW, THEREFORE, for consideration, the adequacy and sufficiency of
which are hereby acknowledged by the parties hereto, each party agrees for the
benefit of the other party and for the equal and proportionate benefit of all
Holders of the Unsecured Securities, as follows:
ARTICLE I
AUTHORITY AND DEFINITIONS
SECTION 1.1. Authority and Effect. This Supplement is entered into
pursuant to Section 902 of the Original Indenture and this Supplement shall
become effective at the close of business on the date first set forth above,
upon its execution and delivery by all parties hereto. This Supplement modifies
certain provisions of both the Original Indenture and the Original Officers'
Certificate, and except as expressly modified in this Supplement, the provisions
of the Original Indenture and the Original Officers' Certificate shall continue
in full force and effect.
SECTION 1.2. Terms From the Original Indenture. Capitalized terms used
in this Supplement which are defined in the Original Indenture have the meanings
given to them in the Original Indenture, unless the context clearly indicates
otherwise.
SECTION 1.3. Certain Defined Terms. As used in this Supplement, the
following defined terms shall have the respective meanings specified below:
"Chase Bank" has the meaning specified in Recital C of this Supplement.
"DTC" has the meaning specified in Recital D of this Supplement.
"Global Security" has the meaning specified in Recital D of this
Supplement.
"Original Indenture" has the meaning specified in Recital A of this
Supplement.
"Original Officers' Certificate" has the meaning specified in Recital B of
this Supplement.
"Texas Commerce Bank" has the meaning specified in Recital A of this
Supplement.
"Unsecured Securities" has the meaning specified in Recital A of this
Supplement.
ARTICLE II
THE SENIOR NOTES
SECTION 2.1. Exchange. Promptly upon the execution and delivery of this
Supplement, the Company shall issue, and shall deliver to the Trustee in
accordance with the Indenture, new Senior Notes to reflect this Supplement.
SECTION 2.2. Form of Senior Notes. The Senior Notes shall be in
substantially the form set forth in Exhibit A, in each case with such
appropriate insertions, omissions, substitutions and other variations as are
required or permitted by the Indenture and this Supplement (but which shall not
affect the rights, duties or obligations of the Trustee), and may have such
letters, numbers or other marks of identification or designation and such
legends or endorsements placed thereon as the Company may deem appropriate and
as are not inconsistent with the provisions of the Indenture or this Supplement,
or as may be required to comply with any law or with any rule or regulation made
pursuant thereto or with any rule or regulation of any stock exchange on which
the Senior Notes may be listed, or to conform to usage (but which shall not
affect the rights, duties or obligations of the Trustee).
ARTICLE III
AMENDMENTS TO THE ORIGINAL OFFICERS' CERTIFICATE
SECTION 3.1. Section 7 of the Original Officers' Certificate. Section 7
of the Original Officers' Certificate is hereby deleted in its entirety and the
following is hereby inserted as Section 7 of the Original Officers' Certificate:
"Except as provided in Section 14 hereof and except as may be agreed by
the Company and any particular Holder(s) of the Senior Notes, the Securities are
not redeemable at the option of the Holder thereof and the Company is not
obligated to redeem, repay or purchase the Securities pursuant to any sinking
fund or analogous provision."
SECTION 3.2. Section 8 of the Original Officers' Certificate. Clause
(i) of Section 8 of the Original Officers' Certificate is hereby deleted in its
entirety and the following is hereby inserted as clause (i) of Section 8 of the
Original Officers' Certificate:
"(i) failure by the Company for 30 days after notice to comply with any
of its other agreements in the Indenture, the Senior Notes, or the Security
Documents (as defined below);"
SECTION 3.3. Section 10 of the Original Officers' Certificate. Each of
Section 10 (i) - Limitations on Incurrence of Indebtedness and Issuance of
Disqualified Stock, Section 10(ii) - Limitation on Restricted Payments, Section
10(iii) - Limitation on Transactions with Affiliates and Section 10(iv) -
Provision of Financial Information of the Original Officers' Certificate is
hereby deleted in its entirety and the following is hereby inserted in Section
10 of the Original Officers' Certificate as new Sections 10(i), (ii), (iii),
(iv), (v), (vi), (vii) and (viii), respectively:
"(i) Reports.
(A) Regardless of whether the Company is subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act, the Company shall
deliver to the Trustee within 15 days after it is or would have been required to
file such with the Commission, annual and quarterly consolidated financial
statements substantially equivalent to financial statements that would have been
included in reports filed with the Commission if the Company were subject to the
requirements of Section 13 or 15(d) of the Exchange Act, including, with respect
to annual information only, a report thereon by the Company's certified
independent public accountants as such would be required in such reports to the
Commission and, in each case, together with a management's discussion and
analysis of financial condition and results of operations which would be so
required.
(B) Delivery of such reports, information and documents to the Trustee is
for informational purposes only and the Trustee's receipt of such shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
(ii) Limitation on Transactions with Affiliates.
The Company will not, and will not permit any of its Subsidiaries or
Affiliates to, directly or indirectly, enter into or suffer to exist any
transaction or series of related transactions (including, without limitation,
the sale, purchase, exchange or lease of assets, property or services) with any
Related Person (other than a Subsidiary or an Affiliate) unless (a) such
transaction or series of transactions is on terms that are no less favorable to
the Company or such Subsidiary or Affiliate, as the case may be, than would be
available in a comparable transaction with an unrelated third party and (b)(1)
where such transaction or series of transactions involves aggregate
consideration in excess of $5 million, such transaction or series of
transactions is approved by a majority of the Board of Directors of the Company,
including the approval of a majority of the independent, disinterested
directors, as evidenced by a resolution relating thereto of the Board of
Directors filed with the Trustee and (2) where such transaction or series of
transactions involves aggregate consideration in excess of $15 million, the
Company also delivers to the Trustee an opinion from a nationally recognized
investment banking firm as to the fairness of such transaction or series of
transactions to the Company or such Subsidiary from a financial point of view.
Notwithstanding the foregoing, this provision will not apply to (A) compensation
or employee benefit arrangements with any officer or director of the Company;
and (B) any transaction entered into in the ordinary course of business by the
Company, Subsidiary or Affiliate with a Subsidiary or an Affiliate.
(iii) Limitation on Restricted Payments. Unless expressly permitted
below, the Company will not and will not permit its Subsidiaries or Affiliates
to (a) declare or pay any dividend or make any other distribution on the
Company's or any Subsidiary's or Affiliate's Capital Stock (other than dividends
or distributions payable in Qualified Capital Stock of the Company, and other
than dividends or distributions from any Subsidiary or Affiliate to the Company
); (b) purchase, redeem, defease or otherwise acquire or retire for value, any
Capital Stock of the Company or any warrants, rights or options to purchase or
acquire shares of any class of such Capital Stock; (c) make any principal
payment on or with respect to, or purchase, redeem, defease or otherwise acquire
or retire for value any Indebtedness that is unsecured or subordinated to the
Senior Notes; (d) pay any judgments (in cash or other property, including the
issuance of any promissory note in satisfaction of such judgment); or (e)
purchase any assets (each of the foregoing actions set forth in clauses (a),
(b), (c), (d) and (e) and not excluded in the next paragraph below, being
referred to as a "Restricted Payment").
The foregoing provisions shall not prohibit any of the following:
(1) [Intentionally Omitted];
(2) The purchase or redemption of the Senior Notes;
(3) Cash distributions, which may be in the form of either dividends,
redemptions, repurchases, retirement, defeasance or other acquisition, on or
account of the Company's Capital Stock, provided that such distributions do not
exceed the sum of the following:
(a) distributions required in order to maintain the status of the Company
and its Subsidiaries as a Real Estate Investment Trust under the Code;
(b) cash proceeds from the sale of Permitted Subordinated Indebtedness;
(c) cash proceeds from the sale of Qualified Capital Stock; and
(d) $26 million;
(4) The purchase of permitted assets in accordance with Section 10(vii)
below;
(5) Payments made in respect of Ordinary Course Trade Debt; and
(6) (a) Payments of settlements or judgments up to $3 million, or (b)
payments resulting from settlement of any claims (provided such settlement
payments are structured as Permitted Subordinated Indebtedness).
The Company will not, and will not permit any of its Subsidiaries or
Affiliates, to directly or indirectly, make any Restricted Payments unless at
the time of such Restricted Payments after giving pro forma effect to such
Restricted Payments, no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof under any Indebtedness of the
Company.
(iv) Limitation on Incurrence of Additional Indebtedness. (1) The
Company will not, and will not permit any Subsidiary or Affiliate to, create,
incur, assume, guarantee, become liable, contingently or otherwise, with respect
to, or otherwise become responsible for the payment of any Indebtedness, other
than the Indebtedness described in clauses (a) through (j) below, provided
however, immediately after giving effect to the incurrence of such Indebtedness
(and other than Indebtedness described in clauses (a), (b), (f) and (g) below),
the Company's Adjusted Consolidated Indebtedness must not exceed 150% of the
Company's Adjusted Consolidated Tangible Net Worth.
(a) Indebtedness existing on March 30. 2001, as set forth in an Officers'
Certificate delivered to the Trustee on March 30, 2001;
(b) Indebtedness represented by the Senior Notes;
(c) [Intentionally Omitted];
(d) Ordinary Course Trade Debt;
(e) Up to $5 million of Indebtedness secured by Tax Liens owned by the
Company or for which the Company has
a commitment to purchase as of the Exchange Date;
(f) Indebtedness issued in exchange for, or the net proceeds of which are
used to, refinance any Indebtedness that has a maturity date prior to the
Maturity Date; provided however, that (1) the principal amount of the new
Indebtedness does not exceed the principal amount of the Indebtedness being so
redeemed, repurchased, retired or acquired, (2) such new Indebtedness is not
more senior to the Indebtedness to be redeemed, repurchased, retired or
acquired, (3) such new Indebtedness has a final scheduled maturity date equal to
or later than the Indebtedness being redeemed, repurchased, acquired or retired,
and (4) such Indebtedness has a Weighted Average Life to Maturity equal or
greater than the remaining Weighted Average Life to Maturity of the Indebtedness
being redeemed, repurchased, acquired or retired;
(g) Permitted Subordinated Indebtedness;
(h) Collateralized bond obligations that are non-recourse to the Company or
any Subsidiary;
(i) Indebtedness incurred in connection with the redemption or repurchase
of collateralized securities previously issued by the Company, its Subsidiaries
or its Affiliates under a plan to re-securitize or sell the collateral or assets
underlying such securities within 120 days from the date of such redemption or
repurchase; provided however, that the incurrence of such indebtedness must
occur substantially simultaneously with such redemption or repurchase of
collateralized securities only to the extent the Company believes in good faith
that immediately following the re-securitization or sale of the collateral or
assets underlying such securities that the Company will be in a net cash
positive position relative to no such redemption or repurchase of collateralized
securities having taken place; and
(j) Indebtedness incurred in connection with the payment of judgments up to
an aggregate amount of $3 million.
(2) The Company may not and will not permit any of its Subsidiaries or
Affiliates to incur any Unsecured Indebtedness (other than Permitted
Subordinated Indebtedness) if the ratio of Income Available for Interest
Payments to Interest Expense for the four consecutive fiscal quarters most
recently ended prior to the date such additional Indebtedness is to be incurred
shall have been less than 2 to 1 on a pro forma basis, after giving effect
thereto and the application of proceeds therefrom.
(v) Limitation on Disqualified Capital Stock. The Company will not issue or
cause any Subsidiary to issue any Disqualified Stock.
(vi) Limitation on Liens. The Company will not, and will not permit any
Subsidiary or Affiliate to, create, incur, assume or suffer to exist any Lien
(as defined below) on any of its assets or properties of any character or any
share of Capital Stock or Indebtedness of any Subsidiary. The foregoing
limitation does not apply to:
(a) Liens existing on March 30, 2001 as set forth in an Officers'
Certificate delivered to the Trustee on March 30, 2001;
(b) Liens securing the Senior Notes;
(c) Liens with respect to the assets of a Subsidiary granted by such
Subsidiary to the Company or a Subsidiary to secure Indebtedness owing to the
Company or such other Subsidiary, provided that such Liens are subordinate to
the Liens securing the Senior Notes;
(d) Liens securing Indebtedness which is incurred to refinance secured
Indebtedness which is permitted to be incurred under Section 10(iv)(f) above;
provided however, that such Liens do not extend to or cover any property or
assets of the Company or any Subsidiary other than the property or assets
securing the Indebtedness being refinanced;
(e) (i) Liens incurred in connection with the redemption or repurchase of
collateralized securities previously issued by the Company, its Subsidiaries or
its Affiliates under a plan to re-securitize or sell the collateral or assets
underlying such securities within 120 days from the date of such redemption or
repurchase pursuant to Section 10(iv)(i), provided however, that such Liens do
not extend to or cover any property or assets of the Company or any Subsidiary
other than the property or assets securing the Indebtedness being refinanced;
(f) Liens on Tax Liens in connection with the borrowing by the Company of
up to $5 million as permitted by Section 10(iv) above; and
(g) Permitted Liens.
(vii) Limitations on Asset Purchases. The Company will not, and will not
permit its Subsidiaries or Affiliates to, purchase assets in excess of $1
million in any calendar quarter other than (i) in connection with Permitted Tax
Lien Purchases, and (ii) in connection with the redemption or repurchase of
collateralized securities previously issued by the Company or its Subsidiaries
or Affiliates as part of a plan to resecuritize or sell the underlying
collateral, provided however, that the Company believes in good faith that
immediately following the re-securitization or sale of the collateral or assets
underlying such securities that the Company will be in a net cash positive
position relative to no such redemption or repurchase of collateralized
securities having taken place.
(viii) Eligible Investments. The Company covenants and agrees for the
benefit of the Holders of the Senior Notes that until such time as the Senior
Notes are no longer outstanding, all cash and cash equivalents of the Company
and its Subsidiaries (other than Restricted Cash/Cash Equivalents) shall be
invested only in Eligible Investments, provided, however, that the foregoing
shall not prohibit the Company from using cash and cash equivalents for the
purposes otherwise permitted under the Indenture.
SECTION 3.4. Certain Definitions in the Original Officers' Certificate.
Section 10 of the Original Officers' Certificate is hereby amended by adding the
following definitions:
"Available Amount" means, on April 15, 2001, June 1, 2001, July 15,
2001, September 1, 2001, October 15, 2001, December 1, 2001, January 15, 2002,
March 1, 2002, April 15, 2002 and June 1, 2001, the cash and cash equivalents of
the Company and its Subsidiaries, on a consolidated basis, less (i) amounts
necessary to service accrued and unpaid interest on the Senior Notes, (ii)
amounts in existence as of April 15, 2001, June 1, 2001, July 15, 2001,
September 1, 2001, October 15, 2001, December 1, 2001, January 15, 2002, March
1, 2002, April 15, 2002 and June 1, 2001 and designated by the Company for or
relating to payments and/or distributions permitted by Section 10(iii)(3) above,
(iii) an amount not to exceed $3,000,000, and (iv) Restricted Cash/Cash
Equivalents.
"Capitalized Lease Obligations" means, as to any Person, the
obligations of such Person under a lease of any property by such Person as
lessee which, in conformity with GAAP, is required to be accounted for as a
capital lease on the balance sheet of such Person. For purposes of this
Indenture, the amount of such obligations at any date shall be the capitalized
amount of such obligations at such date, determined in accordance with GAAP.
"Eligible Investments" means (i) marketable direct obligations issued
by, or unconditionally guaranteed by, the United States Government or issued by
any agency thereof and backed by the full faith and credit of the United States,
in each case maturing within two years from the date of acquisition thereof;
(ii) marketable direct obligations issued by any state of the United States or
any political subdivision of any such state or any public instrumentality
thereof maturing within two years form the date of acquisition thereof and, at
the time of acquisition, having one of the two highest ratings obtainable from
either Standard & Poor's Ratings Services, a division of The McGraw-Hill
Companies, Inc. ("S&P"), or Moody's Investors Service, Inc. ("Moody's"); (iii)
commercial paper maturing no more than two years from the date of creation
thereof and, at the time of acquisition, having a rating of at least A-1 from
S&P or at least P-1 from Moody's; (iv) certificates of deposit or bankers'
acceptances maturing within two years from the date of acquisition thereof
issued by any commercial bank, having at the date of acquisition thereof
combined capital and surplus of not less than $500,000,000, organized under the
laws of the United States or any state thereof or the District of Columbia or
any U.S. branch of a foreign bank; (v) repurchase obligations with a term of not
more than 30 days for underlying securities of the types described in clause (i)
above entered into with any bank meeting the qualifications specified in clause
(iv) above; and (vi) investments in money market funds which invest
substantially all their assets in securities of the types described in clauses
(i) through (v) above.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Maturity Date" means July 15, 2002.
"Ordinary Course Trade Debt" means accounts payables incurred in the
ordinary course of business, including the deferred purchase price of property
or services, provided however, that such amount shall not exceed $3 million.
"Permitted Liens" means (i) Liens for taxes not yet subject to penalties
for non-payment or which are being contested in good faith and by appropriate
proceedings, if adequate reserve, as may be required by GAAP, shall have been
made therefor, (ii) survey exceptions, encumbrances, easements or reservations
of, or rights of others for, rights of way, sewers, electric lines, telegraph
and telephone lines and other similar purposes, or zoning or other restrictions
on the use of real property, and (iii) Liens arising from judgments, decrees or
attachments expressly permitted under the terms of the Indenture in
circumstances not constituting an Event of Default.
"Permitted Subordinated Indebtedness" means subordinated Indebtedness of
the Company that: (i) is unsecured and subordinate to the Senior Notes; (ii)
prohibits any payments thereon until the Senior Notes are paid in full; and
(iii) provides for a complete "stand-still" of all acceleration rights or other
remedies while any Senior Notes are outstanding.
"Permitted Tax Lien Purchases" means the purchase of Tax Liens secured by
real property in Allegheny County, Pennsylvania or Cuyahoga County, Ohio in an
amount not to exceed $10 million after the date hereof.
"Qualified Capital Stock" means, with respect to any Person, any Capital
Stock of such Person that is not Disqualified Stock or convertible into or
exchangeable or exercisable for Disqualified Stock.
"Restricted Cash/Cash Equivalents" means cash and cash equivalents of the
Company and its Subsidiaries required to be held (a) by trustees under
indentures or trust agreements related to the securitizations issued by the
Company's Subsidiaries or Affiliates, or (b) under escrow agreements as set
forth on Schedule 1.1 attached hereto; provided, that any such cash or cash
equivalents shall no longer be deemed Restricted Cash/Cash Equivalents at such
time as it is released from the applicable indenture, trust agreement or escrow
agreement.
"Tax Liens" means liens on real property securing unpaid real estate taxes,
accrued interest thereon, and related penalties, costs, fees and charges for the
failure of the property owner to pay such taxes on time. Tax Liens will also
include any property owned as a result of the realization of the Tax Lien
through foreclosure.
SECTION 3.5. Certain Definitions in the Original Officers' Certificate.
Section 10 of the Original Officers' Certificate is hereby amended by deleting
the definitions of "Acquired Indebtedness," "Cash Equivalents," "Coverage
Ratio," "Default," "Equity Interests," "Hedging Obligations," "Investments,"
"Permitted Investments," "Restricted Investment," "Restricted Payments,"
"Subordinated Indebtedness" and "Wholly Owned Subsidiary."
SECTION 3.6. Certain Definitions in the Original Officers' Certificate.
Section 10 of the Original Officers' Certificate is hereby amended by deleting
the definitions of "Adjusted Consolidated Indebtedness," "Disqualified Stock,"
and "Indebtedness" substituting the following definitions in lieu thereof:
"Adjusted Consolidated Indebtedness" of the Company means the sum of the
aggregate principal amount of all Indebtedness of the Company, on a consolidated
basis, minus the aggregate principal amount of the following Indebtedness: (i)
Indebtedness under any loan repurchase agreements or repurchase facilities
entered into in the ordinary course of business with an original maturity not to
exceed 180 days, (ii) Indebtedness under any warehouse line of credit, letter of
credit or similar facility secured primarily by loans held for sale or
securitization or tax-exempt bonds, (iii) collateralized bond obligations that
are non-recourse to the Company or its Subsidiaries or Affiliates, and (iv)
Permitted Subordinated Indebtedness.
"Disqualified Stock" means, with respect to any Person, any capital stock
or partnership interest of such Person which by the terms of such capital stock
or partnership interest (or by the terms of any security into which it is
convertible or for which it is exchangeable or exercisable), upon the occurrence
of any event or otherwise: (i) matures or is mandatory redeemable, pursuant to a
sinking fund obligation or otherwise; (ii) is convertible into or exchangeable
or exercisable for Indebtedness (other than Permitted Subordinated Indebtedness)
or Disqualified Stock described by clause (i) or (iii) of this definition; or
(iii) is redeemable at the option of the holder thereof, in whole or in part, in
each case on or prior to the maturity of the Senior Notes.
"Indebtedness" means with respect to any Person, without duplication, (i)
all obligations of such Person for borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments, (iii)
all Capitalized Lease Obligations of such Person, (iv) all obligations of such
Person issued or assumed as the deferred purchase price of property or services,
(v) all conditional sale obligations and all obligations under any title
retention agreement (but excluding trade accounts payable, accrued expenses and
deferred taxes arising in the ordinary course of business), (vi) all obligations
of any other Person of the type referred to in clauses (i) through (v) which are
secured by any Lien on any property or asset of such first Person and the amount
of such obligation shall be the lesser of the value of such property or asset or
the amount of the obligation so secured, (vii) all guarantees of Indebtedness by
such Person, (viii) Disqualified Stock valued at the greater of its voluntary or
involuntary maximum fixed repurchase price plus accrued and unpaid dividends,
and (ix) any amendment, supplement, modification, deferral, renewal, extension
or refunding of any liability of the types referred to in clauses (i) through
(viii) above. For purposes hereof, the "maximum fixed repurchase price" of any
Disqualified Stock which, by its terms, does not have a fixed repurchase price
shall be calculated in accordance with the terms of such Disqualified Stock as
if such Disqualified Stock were purchased on any date on which Indebtedness
shall be required to be determined pursuant to the Indenture.
SECTION 3.7. Section 11 of the Original Officers' Certificate. Section 11
of the Original Officers' Certificate is hereby deleted in its entirety and the
following is hereby inserted as Section 11 of the Officers' Certificate:
"The Senior Notes shall be exchangeable only as provided in Section 305 of
the Indenture. The form of the Senior Notes is attached hereto."
SECTION 3.8. Section 15 of the Original Officers' Certificate. The
following shall be added as Section 15 of the Original Officers' Certificate:
"15. The Senior Notes shall be subject to the following additional
covenants and other terms:
"(i) Pledge Of Collateral. To secure the Secured Obligations, and in
consideration of the promises and of the covenants herein contained and for
other good and valuable consideration, the receipt and sufficiency whereof is
hereby acknowledged, upon receipt by the Trustee of the Collateral, the Trustee
does hereby declare that it holds as security trustee in trust under the
Indenture all of the right, title and interest of the Trustee to and under the
Collateral, to hold the Collateral as security for, and as additional sources of
payment of, the Secured Obligations, and for the uses and purposes and subject
to the terms and provisions set forth in the Indenture. The Collateral shall be
held in trust under and subject to the terms and conditions herein set forth for
the sole benefit of the Holders of the Senior Notes and for the enforcement of
the prompt and complete payment when due of the Secured Obligations held by them
and for the performance by the Company of its obligations under the Security
Documents. Any opinions required by TIA Sections 314(b)(1) and (2) shall be
delivered to the Trustee, if, and at such time(s), as required by TIA Sections
314(b)(1) and (2).
As among the Holders of the Senior Notes, the Collateral as now or
hereafter constituted shall be held for the equal and ratable benefit of the
Holders of the Senior Notes without preference, priority or distinction of any
thereof over any other by reason of difference in time of issuance, sale or
otherwise, as security for the Senior Notes.
(ii) Satisfaction And Discharge; Defeasance. The Company and Issuer
Holding Corp. shall be entitled to obtain a full release of all of the
Collateral from the Lien in respect of the Security Documents upon compliance
with all of the conditions precedent for satisfaction and discharge of the
Indenture set forth in Section 401 of the Indenture or for defeasance pursuant
to Section 1402 of the Indenture, with respect to the Senior Notes. Upon
delivery by the Company to the Trustee of Board Resolutions authorizing such
actions and an Officers' Certificate and an Opinion of Counsel, each to the
effect that all of the conditions precedent have been complied with (which may
be the same Officers' Certificate and Opinion of Counsel required by Article
Fourteen of the Indenture), the Trustee shall take all necessary action, at the
written request and expense of the Company, to release and reconvey to the
Company and Issuer Holding Corp. (as the case may be) all of the Collateral, and
shall deliver such Collateral in its possession to the Company and Issuer
Holding Corp. (as the case may be).
(iii) Trust Indenture Act Requirements. The release of any Collateral
from the Lien in respect of the Security Documents will not be deemed to impair
such Lien in contravention of the provisions hereof if and to the extent the
Collateral is released pursuant to the Pledge Agreement, the Security Agreement,
and pursuant to the terms hereof. Each of the Holders of Senior Notes
acknowledge that a release of Collateral strictly in accordance with the terms
of the Pledge Agreement, the Security Agreement, and the terms hereof will not
be deemed for any purpose to be an impairment of the Lien in respect of the
Security Documents in contravention of the terms of the Indenture. Without
limitation, the Company and each other obligor on the Senior Notes shall cause
TIA Section 314(d) relating to the release of property or securities from the
Lien in respect of the Security Documents to be complied with. Any certificate
or opinion required by TIA Section 314(d) may be made by an officer of the
Company, except in cases which TIA Section 314(d) requires that such certificate
or opinion be made by an independent Person.
(iv) Purchaser Protected. In no event shall any purchaser in good faith
of any Collateral purported to be released hereunder be bound to ascertain the
authority of the Trustee to execute the release or to inquire as to the
satisfaction of any conditions required by the provisions hereof for the
exercise of such authority or to see to the application of any consideration
given by such purchaser or other transferee; nor shall any purchaser or other
transferee of any Collateral permitted by this Section Fifteen to be released
under obligation to ascertain or inquire into the authority of the Company to
make any such or other transfer.
(v) Determinations Relating To Collateral. In the event (A) the Trustee
shall receive any written request from the Company and/or Issuer Holding Corp.
under any of the Security Documents for consent or approval with respect to any
matter or thing relating to any Collateral or the Company's or Issuer Holding
Corp.'s obligations with respect thereto (including, without limitation, the
determination as to whether any portion of the Collateral constitutes released
Collateral) or (B) there shall be due to or from the Trustee under the
provisions of any of the Security Documents any performance or the delivery of
any instrument or (C) the Trustee shall be notified in writing of any
nonperformance by the Company and/or Issuer Holding Corp. of any covenant or any
breach of any representation or warranty of the Company and/or Issuer Holding
Corp. set forth in any of the Security Documents, then, in each such event, the
Trustee may consult with any expert, consultant, agent or attorney for advice
with respect thereto. The Trustee shall be fully protected in the taking of any
action recommended or approved by any such expert, consultant, agent or attorney
or agreed to by a majority of Holders of Senior Notes pursuant to Section 602 of
the Indenture.
(vi) Form and Sufficiency of Release. In the event that the Company
and/or Issuer Holding Corp. has sold, exchanged, or otherwise disposed of or
proposes to sell, exchange or otherwise dispose of any portion of the Collateral
which under the provisions of the Security Documents may be sold, exchanged or
otherwise disposed of by the Company and/or Issuer Holding Corp., and the
Company, upon delivery of an Officers' Certificate, Board Resolutions and an
Opinion of Counsel, requests in writing the Trustee to furnish a written
disclaimer, release or quitclaim of any interest in such Collateral under any of
the Security Documents, the Trustee, subject to Section 15(ii) above, shall
promptly execute such an instrument promptly after satisfaction of the
conditions set forth in Section 15(ii) for delivery of such release.
Notwithstanding the preceding sentence, all purchasers and grantees of any
Collateral purported to be released herefrom shall be entitled to rely upon any
release executed by the Trustee hereunder as sufficient for the purposes of the
Indenture and as constituting a good and valid release of the property therein
described from the Lien in respect of the Security Documents.
(vii) Release Upon Termination of the Company's Obligations. In the
event that the Company delivers an Officers' Certificate and an Opinion of
Counsel certifying that the provisions of Section 401 or 1402 of the Indenture
with respect to the Senior Notes have been complied with, the Trustee shall (a)
execute and deliver such releases, termination statements and other instruments
as the Company may reasonably request in writing evidencing the termination of
the Lien in respect of the Security Documents and (b) not be deemed to hold such
Liens for the benefit of the Holders.
(viii) Acceleration of Maturity; Remedies; Rescission and Annulment.
(1) Notwithstanding any other provision in the Indenture, if an Event of
Default with respect to Senior Notes occurs and is continuing, then and in every
such case the Trustee or the Holders of not less than 25% in aggregate principal
amount of the Outstanding Senior Notes may declare the principal of all the
Senior Notes 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 and the accrued interest thereon, if any, or
specified portion thereof shall become immediately due and payable.
(A) At any time after such a declaration of acceleration with respect to
the Senior Notes 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 Section
provided, the Holders of a majority in aggregate principal amount of the
Outstanding Senior Notes, by written notice to the Company and the Trustee, may
rescind and annul such declaration and its consequences if:
(i) the Company has paid or deposited with the Trustee a sum sufficient to
pay in the currency or currency unit or composite currency in which the Senior
Notes are payable:
(a) the principal of (and premium, if any, on) any Outstanding Senior Notes
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 Senior
Notes,
(b) to the extent that payment of such interest is lawful, interest upon
overdue installments of interest at the Overdue Rate, and
(c) all sums paid or advanced by the Trustee under the Indenture, and the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel, and any other amounts due to the Trustee under Section
606 of the Indenture; and
(ii) All Events of Default with respect to the Senior Notes, other than the
nonpayment of the principal of (or premium, if any) or interest on the Senior
Notes which have become due solely by such declaration of acceleration, have
been cured or waived as provided in Section 513 of the Indenture.
(B) No such rescission shall affect any subsequent default or impair any
right consequent thereon.
(2) Notwithstanding any other provision in the Indenture, if an Event of
Default with respect to the Senior Notes occurs and is continuing, then and in
every such case the Trustee, subject to the rights and immunities set forth in
Article Six of the Indenture, may:
(A) exercise all of the rights and remedies in respect of the Collateral
under applicable law and all of the rights and remedies conferred in the
Indenture and in the other Security Documents, and
(B) exercise all of the rights and remedies of a secured party under the
Uniform Commercial Code of any applicable jurisdiction, and may (but shall not
be obligated to) proceed to protect and enforce the Indenture and any of the
other Security Documents by suit or suits or proceedings at law, in equity, in
bankruptcy or otherwise, and whether for the specific performance of any
covenant or agreement herein or therein contained or in execution or aid of any
power therein or therein granted, or for foreclosure hereunder or thereunder, or
for the appointment of a receiver or receivers for the Collateral or any part
thereof or for the enforcement of any legal, equitable or other remedy available
under applicable law, and
(C) protect and enforce the Indenture or any one or more of the other
Security Documents by suit or suits or proceedings at law, in equity, in
bankruptcy or otherwise, and whether for the specific performance of any
covenant or agreement herein or therein contained or in the execution or aid of
any power herein or therein granted, or for the enforcement of any legal,
equitable or other remedy available under applicable law.
(3) Notwithstanding any other provision in the Indenture, the Trustee may
(but shall not be obligated to) act, if any Event of Default exists with respect
to the Senior Notes, where action is reasonably required before any necessary
instructions may be received in accordance with the Indenture, to the extent it
deems necessary and without instruction from the Holders of the Senior Notes, in
order to
(A) protect the Collateral,
(B) instruct or give any notice to the Company, or
(C) otherwise promote and protect the interests of the Holders.
(ix) Application of Money Collected. Notwithstanding any other provision in
the Indenture, the proceeds of any exercise of rights pursuant to this Section,
including, but not limited to, the proceeds of any exercise of rights with
respect to the Collateral, or any part thereof, shall be paid to and applied as
follows:
(1) First -- to the payment of all amounts due the Trustee and any
predecessor Trustee under Section 606 of the Indenture;
(2) Second -- to the payment of
(A) costs and expenses of foreclosure or suit, if any, and of any permitted
sale, and of all proper expenses, liabilities and advances, including, without
limitation, fees and expenses of attorneys, agents and experts, incurred or made
hereunder or under the other Security Documents by the Trustee with respect to
the Collateral, and
(B) all taxes, assessments or Liens superior to the Lien in respect of the
Security Documents, except any taxes, assessments or other superior Liens
subject to which such sale may have been made;
(3) Third -- to the payment of the amounts then due and unpaid upon the
Senior Notes and coupons for principal (and premium, if any) and interest
payable, 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 Senior Notes and coupons for principal
(and premium, if any), and interest, respectively; and
(4) Fourth -- to the payment of the remainder, if any, to the Company.
(x) Unconditional Right of Holders to Receive Principal, Premium, if
any, Interest and Additional Amounts. Notwithstanding any other provision in the
Indenture, the Holder of any Senior Note or coupon shall have the right, which
is absolute and unconditional, to receive payment of the principal of (and
premium, if any) and (subject to Sections 305 and 307 of the Indenture) interest
on, such Security or payment of such coupon on the respective due dates
expressed in such Senior Note or coupon (or, in the case of redemption, on the
Redemption Date) and to institute suit for the enforcement of any such payment,
and such rights shall not be impaired without the consent of such Holder, except
to the extent that the institution or prosecution of such suit or the entry of
judgment therein would, under applicable law, result in the surrender,
impairment, waiver or loss of the Lien in respect of the Security Documents upon
the Collateral.
(xi) Maintenance of Liens. So long as the Indenture shall not have been
satisfied and discharged as set forth in Section 401 of the Indenture in respect
to the Senior Notes, or until the defeasance of the Indenture pursuant to
Section 1402 of the Indenture in respect to the Senior Notes, the Trustee will,
solely for the benefit of the Holders of the Senior Notes,
(A) execute continuation statements under the Uniform Commercial Code of
the specified jurisdictions with respect to those UCC-1 financing statements
listed in the Opinion of Counsel from the Company, and deliver such continuation
statements to the Company for filing, provided, that at least six (6) months
prior to the expiration of such UCC-1 financing statements, the Company has
delivered to the Trustee an Opinion of Counsel and written notice setting forth
the requirement to file such continuation statements; and
(B) upon receipt of written instruction by the Holders of not less than 25%
in aggregate principal amount of the Outstanding Senior Notes, and at the
expense of the Company, execute, procure, acknowledge, deliver and record, or
cause to be executed, procured, acknowledged, delivered or recorded, all such
further instruments, deeds, conveyances, mortgages, transfers, financing
statements, continuation statements and assurances as reasonably deemed
necessary by such Holders subject to the Lien in respect of the Security
Documents, and to preserve, continue and protect the Lien in respect of the
Security Documents on, all or any portion of the Collateral.
Definitions. As used herein,
"Collateral" means, collectively, all of the property and assets that are
from time to time subject to the Pledge Agreement and the Security Agreement and
all other property and assets that are from time to time made subject, or
required to be made subject, to Liens for the benefit of the Trustee and of the
Holders pursuant to the Pledge Agreement, the Security Agreement or the
Indenture.
"Fair Market Value" means, with respect to any asset, the price which could
be negotiated in an arm's length free market transaction, for cash, between a
willing seller and a willing buyer, neither of whom is under undue pressure or
compulsion to complete the transaction. Unless otherwise specified herein, Fair
Market Value of any asset of the Company and its Subsidiaries shall be
determined by the Board of Directors of the Company acting in good faith and
shall be evidenced by a Board Resolution thereof delivered to the Trustee.
"Lien" means (x) any lien, mortgage, deed of trust, pledge, security
interest, charge or encumbrance of any kind including, without limitation, any
conditional sale or other title retention agreement, any lease in the nature
thereof, any option or other agreement to sell, any setoff, recoupment or
repurchase arrangement and any filing of or agreement to file a financing
statement as debtor under the Uniform Commercial Code or any similar statute and
(y) any agreement to enter into any of the foregoing.
"Pledge Agreement" means the Indemnity Pledge Agreement, of even date
herewith, by Issuer Holding Corp., a wholly-owned subsidiary of the Company, in
favor of the Trustee, as the same may be amended, amended and restated,
supplemented or otherwise modified from time to time in accordance with its
terms.
"Security Agreement" means the Pledge and Security Agreement, of even date
herewith, by the Company in favor of the Trustee, as the same may be amended,
amended and restated, supplemented or otherwise modified from time to time in
accordance with its terms.
"Security Documents" means the Indenture, the Pledge Agreement, the
Security Agreement, the Senior Notes and each other security agreement,
financing statement or other instrument pursuant to which any of the Secured
Obligations shall be secured from time to time.
"Secured Obligations" means, at any time, all obligations and undertakings
of the Company in respect of the principal of, and interest, on the Senior Notes
at such time and the payment of all other amounts payable, and all other
indebtedness owing, by the Company thereunder and under the Indenture, including
without limitation all amounts due to the Trustee under Section 606 of the
Indenture."
SECTION 3.9. Section 16 of the Original Officers' Certificate. The
following shall be added as Section 16 of the Original Officers' Certificate:
"16. Any legal action or proceeding arising out of or relating to the
Senior Notes, other than in connection with suits for the enforcement of any
payment on the Senior Notes on or after the Stated Maturity thereof, shall be
brought in the state or federal courts of Virginia, and the Holder of any Senior
Note hereby expressly submits to the exclusive personal jurisdiction and venue
of such courts for the purposes thereof and expressly waives any claim of
improper venue and any claim that such courts are an inconvenient forum."
ARTICLE IV
MISCELLANEOUS
SECTION 4.1. Execution of Counterparts. This Supplement may be executed in
several counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.
SECTION 4.2. Governing Law. This Supplement shall be governed by and
construed in accordance with the laws of the jurisdiction which govern the
Indenture and its construction.
SECTION 4.3. Binding Effect. This Supplement shall inure to the benefit of
and shall be binding upon the Trustee and its successors and assigns, and the
Company and its successors and assigns.
SECTION 4.4. Trustee. The recitals contained herein and in the Senior Notes
shall be taken as statements of the Company and the Trustee assumes no
responsibility for their correctness. The Trustee makes no representations as to
the validity or sufficiency of this Supplement, the Senior Notes or the security
afforded hereby or thereby.
Exhibit 99.4
PLEDGE AND SECURITY AGREEMENT
THIS PLEDGE AND SECURITY AGREEMENT (this "Agreement") is dated as of the
30th day of March, 2001, by and between DYNEX CAPITAL, INC., a Virginia
corporation ("Dynex"), and HSBC Bank USA, a banking corporation and trust
company duly organized and existing under the laws of the State of New York (the
"Trustee"), as Trustee on behalf of the holders (the "Holders") of Dynex's
7.875% Senior Notes Due July 15, 2002 (the "Securities") under an Indenture
dated July 14, 1997, as amended by, among things, that certain Officers'
Certificate dated July 14, 1997 (the "Original Officers' Certificate") and the
"Supplemental Indenture" described below (such Indenture, as amended, the
"Indenture") between Dynex and the Trustee.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, in order to induce a sufficient number of Holders to consent to an
amendment to the Indenture effected by a Supplemental Trust Indenture of even
date herewith (the "Supplemental Indenture"), Dynex has agreed to enter into
this Agreement and in so doing to grant a security interest to the Trustee, on
behalf of all Holders, in certain assets of Dynex to secure repayment of all
obligations of Dynex relating to the Securities, all as more particularly set
forth below; and
WHEREAS, unless otherwise defined herein or the context otherwise requires,
the capitalized terms used herein shall have the same meanings assigned to them
in the Indenture.
NOW, THEREFORE, in consideration of the foregoing and in order to induce
certain of the Holders to consent to an amendment to the Indenture effected by
the Supplemental Indenture, Dynex hereby agrees with the Trustee as follows:
1. Pledge. In order to secure the payment in full of (i) all principal of
and interest on the Securities as and when the same become due and payable under
the Indenture (whether by lapse of time, acceleration or otherwise), (ii) all
other fees and charges payable by Dynex and/or Issuer Holding Corp., a Virginia
corporation and a wholly-owned subsidiary of Dynex ("IHC"), under the terms of
this Agreement, an Indemnity Pledge Agreement of even date herewith between IHC
and the Trustee, the Securities and the Indenture (collectively, the "Senior
Note Documents"), (iii) all other indebtedness, obligations and liabilities of
Dynex and/or IHC arising under, and the observance and performance of all
covenants and agreements contained in, the Senior Note Documents, including
without limitation all amounts due to the Trustee pursuant to Section 606 of the
Indenture, and (iv) all expenses and charges, legal or otherwise, including
reasonable attorneys' fees, suffered or incurred by the Trustee in collecting or
enforcing payment of any of the Securities or in realizing upon, protecting or
preserving any collateral security for any such indebtedness (all of such
indebtedness, obligations and liabilities referred to in the immediately
foregoing clauses (i) through (iv) being hereinafter collectively referred to as
the "Obligations"), Dynex hereby grants to the Trustee, its successors and
permitted assigns, a continuing security interest in, and pledges to the
Trustee, the following property, whether now owned or hereafter acquired and
wherever held (collectively, the "Collateral"):
(a) all shares of the outstanding equity securities held by Dynex in the
subsidiaries listed on Schedule 1(a) attached hereto and made a part hereof (the
"Subsidiaries");
(b) any and all additional shares of any class of stock or other equity
securities of any of the Subsidiaries, or any other subsidiaries of Dynex, which
Dynex may from time to time acquire, directly or indirectly, between the date
hereof and the date of the satisfaction and discharge of the Indenture with
respect to the Securities in accordance with Section 401 thereof or defeasance
pursuant to Section 1402 thereof;
(c) the assets described on Schedule 1(c) attached hereto and made a part
hereof;
(d) the "Collateral Account" described in Section 9(a) hereof, together
with (i) all cash, credit balances, securities, financial assets, instruments,
investment property, accounts, contract rights, general intangibles and other
property of whatever kind or description now or hereafter in or credited to the
Collateral Account, (ii) all proceeds thereof or income therefrom, and (iii) all
security entitlements in respect thereof;
(e) the "Collection Account" described in Section 9(b) hereof, together
with (i) all amounts deposited therein and all certificates and instruments, if
any, from time to time representing or evidencing such Collateral, (ii) all
interest, cash and monies, instruments and other property or proceeds from time
to time received, receivable or otherwise distributed in respect of or in
exchange for any or all of the foregoing Collateral, and (iii) all rights and
privileges of Dynex with respect to the foregoing Collateral;
(f) all supporting evidence and documents relating to any of the above
described property, including without limitation the books and records relating
thereto;
(g) all accessions and additions to and substitutions and replacements of
any and all of the foregoing, whether now existing or hereafter arising or
attaching; and
(h) all cash and non-cash proceeds of the foregoing (subject
to Section 3 hereof), including (without limitation) all dividends and other
distributions.
In order to continuously perfect the security interest in the Collateral
granted under Section 1(a) above, Dynex has, simultaneously with the execution
hereof, physically delivered to the Trustee the stock certificates representing
said shares of stock in the subsidiary corporations listed on Schedule 1(a)
(which stock certificates are accompanied by appropriate undated stock powers
duly executed by Dynex in blank).
2. Conditional Pledge. In order to further secure the Obligations, Dynex
hereby grants to the Trustee, its successors and permitted assigns, a continuing
security interest in, and pledges to the Trustee, the property described on
Schedule 2 attached hereto and made a part hereof; provided, however, that such
grant shall not become effective until the repurchase of such property by Dynex
pursuant to that certain Master Repurchase Agreement dated as of April 7, 2000
between Dynex and Lehman Brothers, Inc. and Lehman Commercial Paper, Inc., as
amended and supplemented by those certain Addendum Agreements dated as of April
7, 2000 and April 18, 2000 (such agreement, as so amended and supplemented, the
"Lehman Repurchase Agreement"), in a transaction in which Dynex does not, on or
about the date of such transaction, enter into any similar repurchase or similar
arrangement that effectively refinances its obligations under the Lehman
Repurchase Agreement. Upon the effectiveness of the foregoing grant such
property shall be deemed "Collateral" hereunder for all purposes, and Dynex
shall promptly (i) notify the Trustee in writing of such effectiveness and (ii)
execute and deliver all further instruments and documents, and take all further
action, that may be necessary or desirable, in order to perfect and protect the
security interest granted pursuant to this Section 2.
3. Sale of Certain Collateral. Notwithstanding any provision hereof or of
the Indenture to the contrary, unless and until an "Event of Default" (as
hereinafter defined) has occurred and is continuing, Dynex may, without further
consent or approval of the Trustee, sell, assign, transfer, lease or otherwise
dispose of (each, a "Permitted Disposition") all or any portion of the
Collateral, including without limitation the Collateral described on Schedule 3
attached hereto and made a part hereof; provided, however, that Dynex shall be
permitted to use the proceeds of any such Permitted Disposition (net of any
expenses incurred in connection with any such Permitted Disposition) only in a
manner permitted by the Original Officers' Certificate, as amended by the
Supplemental Indenture; and provided, further, that until any such permitted use
of net proceeds, such net proceeds shall be deposited in the Collection Account
and shall remain cash Collateral subject to the security interest created
hereunder. Promptly upon written notice from Dynex of any such Permitted
Disposition, the Trustee shall execute and deliver to Dynex such releases,
termination statements and estoppel certificates as Dynex may reasonably direct
in writing; provided that all such documents shall be prepared, reviewed and
filed or recorded at Dynex's sole cost and expense.
4. Event of Default; Remedies. Each and every "Event of Default" as
defined in the Indenture, including without limitation any failure by Dynex for
30 days after notice to comply with any of its agreements herein, and any breach
by Dynex of its obligations under Section 9(a) or Section 9(b) hereof within the
time periods therein specified (without regard to any grace or cure periods),
shall constitute an "Event of Default" hereunder. Upon the occurrence and during
the continuation of any such Event of Default, the Trustee shall be entitled
(but shall not be obligated) to exercise any one or more of the following
remedies:
(a) The Trustee may from time to time take whatever action at law or in
equity is necessary or desirable in order to collect the moneys payable
hereunder or secured hereby or to enforce performance and observance of any
obligation, agreement or covenant hereunder.
(b) The Trustee may foreclose its security interest in any of the
Collateral in any way permitted by applicable law; and the Trustee may
thereupon, or at any time thereafter, without notice or demand (except such
notice as may be specifically required by applicable law) and with or without
having the Collateral at the time or place of sale, sell, assign, give option or
options to purchase or otherwise dispose of and deliver the Collateral or any
part thereof (or contract to do any of the foregoing), in one or more parcels at
any public or private sale or sales, in the over-the-counter market, at any
exchange, broker's board or office of the Trustee or elsewhere upon such terms
and conditions as it may determine and at such prices as it may determine, for
cash or on credit or for future delivery without assumption of any credit risk.
In the exercise of such remedy, the Trustee may sell all of the Collateral as a
unit even though the sales price thereof may be in excess of the amounts
remaining unpaid on the Obligations. At any such public sale the Trustee may bid
for and become the purchaser of all or any part of the Collateral, and such sale
or sales may be held without demand of performance, notice of intention to sell,
the time or place of sale or any other matter, except for such notice as may be
specifically required by law; and the purchaser at any such sale or other
disposition shall thereafter hold the Collateral sold absolutely free from any
claim or right of Dynex of whatsoever kind, including any right of redemption of
Dynex, all such rights being hereby expressly waived and released by Dynex to
the extent permitted by law.
(c) The Trustee may apply for a receiver for the Collateral and may sell
the Collateral pursuant to a judicial sale, and Dynex hereby assents to the
passage of a decree for the sale of any of the Collateral by any court having
jurisdiction. Dynex hereby authorizes and empowers the Trustee to sell its
interest in the Collateral in accordance with any applicable law. Such
Collateral or any interest therein may be sold upon such terms and in as many
lots as the Person conducting the sale may, in its sole discretion, elect. No
readvertisements of any sale shall be required if the sale is adjourned by
announcement, at the time or place set therefor, of the date, time or place to
which the same is to be adjourned.
(d) The Trustee may exercise any and all rights of conversion, exchange or
subscription and any other rights, privileges or options pertaining to any of
the Collateral, as if the Trustee were the absolute owner thereof, including
(without limitation) the right to exchange any and all of the Collateral upon
the merger, consolidation, reorganization, recapitalization or other
readjustment of any Subsidiary or upon the exercise by or on behalf of any
Subsidiary or the Trustee of any right, privilege or option pertaining to any of
the Collateral.
(e) The Trustee may take any or all of the following actions: (i) take
possession of the Collateral pursuant hereto without legal process and without
incurring liability to Dynex therefor for the purpose of exercising its rights
hereunder; (ii) deliver a "Notice of Exclusive Control" in accordance with the
account control agreement referred to in Section 9(a) hereof; and (iii) deliver
a "Notice of Effectiveness" in accordance with the "Blocked Account Agreement"
(as hereinafter defined).
(f) The Trustee may exercise any other right or remedy with respect to any
of the Collateral given to secured parties under the applicable Uniform
Commercial Code in effect in the State of New York from time to time and,
without limitation of the generality of the foregoing, as the same may be
amended by Revised Article 9 (the "UCC"). "Revised Article 9" means the
provisions of New York S7484, introduced April 17, 2000, containing proposed
revisions to Article 9 of the UCC which would become effective July 1, 2001, as
such provisions may be modified from time to time.
(g) Any notification required by Section 9-504 (or any successor provision)
of the UCC shall be deemed reasonably and properly given if deposited in the
mail, certified or registered mail, postage prepaid, to Dynex, at least ten (10)
days before any sale or disposition of any of the Collateral which is subject to
the UCC.
(h) Any proceeds received from the exercise of any remedy hereunder, after
deducting therefrom any and all costs and expenses incurred in securing
possession of any Collateral, in shipping and storing the Collateral, in
preparing the Collateral for sale or otherwise dealing with Collateral prior to
any sale or other disposition thereof and in connection with the sale or other
disposition thereof (including, without limitation, reasonable attorneys' and
accountants' fees and expenses and brokers' commissions), shall be applied
toward the payment of any and all amounts due under or with respect to the
Obligations, including interest thereon, and all other costs and expenses
incurred by the Trustee in connection with this Agreement or the Indenture which
are then due and payable, in such order and amounts as the Trustee may elect. If
such net proceeds should be insufficient to pay the same and a deficiency shall
result, Dynex shall nevertheless remain liable for such deficiency; and if such
proceeds should be more than sufficient to pay the same, then in case of a
surplus, such surplus shall be accounted for and, if any amounts due under the
Obligations remain outstanding, retained by the Trustee, who shall hold the same
as security for the payment of the Obligations; otherwise, such surplus shall be
paid over to Dynex or to whomsoever a court of competent jurisdiction shall
determine to be entitled thereto.
(i) Dynex recognizes that the Trustee may be unable to effect
a public sale of any or all of the Collateral, by reason of certain prohibitions
contained in the Securities Act of 1933, as amended (the "Securities Act"), and
applicable state securities laws or otherwise, and may be compelled to resort to
one or more private sales thereof to a restricted group of purchasers which will
be obliged to agree, among other things, to acquire such securities for their
own account for investment and not with a view to the distribution or resale
thereof. Dynex acknowledges and agrees that any such private sale may result in
prices and other terms less favorable to the Trustee than if such sale were a
public sale and agrees that no such private sale shall be deemed not to have
been made in a commercially reasonable manner solely by virtue of such
circumstances. The Trustee shall be under no obligation to delay a sale of any
of the Collateral for the period of time necessary to permit the issuers of the
securities constituting any portion of the Collateral to register such
Collateral for public sale under the Securities Act (and Dynex and the issuers
shall have no obligation to do so), or under applicable state securities laws,
even if the issuers would agree to do so.
5. Representations, Warranties and Covenants. Dynex hereby represents,
warrants and covenants to the Trustee as follows:
(a) Dynex is a corporation duly organized, validly existing and in good
standing under the laws of the Commonwealth of Virginia. Dynex has the corporate
power, authority and legal right to execute, deliver and perform this Agreement.
This Agreement has been duly authorized and validly executed and delivered by an
authorized officer of Dynex and constitutes the legal, valid and binding
obligations of Dynex, enforceable against it in accordance with this Agreement's
terms.
(b) Set forth on Schedule 5(b) hereto is a description of all of the assets
and property used exclusively in the business of Dynex as presently operated
that are not included as Collateral hereunder or otherwise subject to Section 2
hereof (the "Excluded Assets"). The Collateral, the property described on
Schedule 2 hereto and the Excluded Assets constitute, directly or indirectly,
all of the assets or property used in the business of Dynex and its subsidiaries
as presently operated.
(c) Dynex is and will remain the true and lawful owner of all the
Collateral and, except for the security interest created hereunder and except
for "Permitted Liens" (defined below), it has and will continue to have good and
marketable title thereto, free and clear of all liens, charges and encumbrances
whatsoever.
(d) Except for liens or security interests permitted under Section
10(vi)(a) through (g) of the Original Officers' Certificate, as amended by the
Supplemental Indenture ("Permitted Liens"), and except as expressly permitted by
Section 3 hereof, Dynex will not, without the Trustee's prior written consent
(upon written instructions from the Holders of a majority in aggregate principal
amount outstanding of the Securities) sell, assign, factor, mortgage, pledge,
encumber, transfer, lease or otherwise dispose of or otherwise grant or suffer
to exist any Lien with respect to, the Collateral or any part thereof.
(e) This Agreement creates a valid security interest in the Collateral and,
as of the date hereof, the security interest of the Trustee in the Collateral
has been duly perfected under the UCC or other applicable law in every
appropriate jurisdiction and, except for Permitted Liens, constitutes a first
priority lien upon the Collateral and every part thereof; and Dynex covenants
that the Trustee's security interest shall, except for Permitted Liens, remain a
first priority lien upon the Collateral so long as any of the Obligations shall
remain outstanding.
(f) Dynex has and will continue to have full legal power and right to
pledge and grant the security interest conveyed hereby in the Collateral and
every part thereof; the making of such pledge and the granting of such security
interest do not and will not violate the provisions of any law, regulation,
contract, agreement, restrictive covenant or legend, order of court, corporate
charter or bylaw, stockholders agreement or other instrument binding upon it or
any part of the Collateral; and no consent or approval of any governmental body
or regulatory authority, or any securities exchange, was or is necessary to the
validity or effectiveness thereof.
(g) Dynex is and shall at all times remain the sole registered and
beneficial owner of all shares of capital stock or other equity interests now or
hereafter issued by any Subsidiary; it will not sell, transfer, assign or
encumber any such shares of capital stock or other equity interests to or for
the benefit of any person or entity other than the Trustee; and neither Dynex
nor any Subsidiary has made or shall make any commitments for the issuance or
transfer of any such capital stock or other equity interests under any options,
warrants or other similar rights.
(h) Dynex's chief executive office and principal place of business is
located at 4551 Cox Road, Suite 300, Glen Allen, Virginia 23060, and Dynex has
no other offices or places of business in Virginia.
6. Dividends/Distributions. Upon the occurrence and during the continuation
of any Event of Default, Dynex shall deliver to the Trustee, and the Trustee
shall be entitled to receive, all dividends or similar distributions paid upon
or in respect of the Collateral and the Trustee shall, in the case of cash,
apply such dividends and distributions to the payment of the Obligations (in
whatever order and priority it may elect) and shall, in the case of all other
property, hold such property pursuant hereto as part of the Collateral pledged
under and subject to the terms of this Agreement. So long as no Event of Default
or shall have occurred and be continuing, Dynex shall have the right to receive
and retain all dividends or similar distributions paid upon or in respect of the
Collateral.
7. Voting Rights. Upon the occurrence and during the continuation of any
Event of Default, the Trustee may (but shall not be obligated to) exercise all
voting rights and all other rights conferred on the owner of any shares of
capital stock or other equity interests included among the Collateral. So long
as no Event of Default or shall have occurred and be continuing, Dynex shall
have the right to vote its shares of capital stock or other equity interests in
the Subsidiaries on all corporate matters arising in the ordinary course of
business; provided, however, that Dynex will not exercise or refrain from
exercising any such right if such action would have a material adverse effect on
the value of the Collateral or any part thereof. Under any circumstances and as
to any matters not governed by the foregoing provisions of this Section 7, Dynex
may only exercise its voting rights with respect to the Collateral with the
prior written consent of the Trustee (upon written instructions from the Holders
of a majority in aggregate principal amount outstanding of the Securities).
8. Further Assurances. (a) Dynex will from time to time, at its sole
expense, promptly execute and deliver all further instruments and documents, and
take all further action, that may be necessary or desirable, in order to perfect
and protect any security interest granted or purported to be granted by Dynex
hereunder or to enable the Trustee to exercise and enforce its rights and
remedies hereunder with respect to any Collateral. Without limiting the
generality of the foregoing, Dynex will: (i) execute and file such financing or
continuation statements, or amendments thereto, and such other instruments or
notices, as may be necessary or desirable, in order to perfect and preserve the
security interest granted or purported to be granted hereby, (ii) deliver to and
pledge to the Trustee for its benefit and the benefit of the Holders
certificates representing securities included in the Collateral accompanied by
undated stock powers executed in blank.
(b) A photocopy or other reproduction of this Agreement or any financing
statement covering the Collateral or any part thereof shall be sufficient as a
financing statement where permitted by law.
(c) Dynex will furnish to the Trustee and the Holders from time to time,
and upon any additions to or deletions from the Collateral, statements and
schedules further identifying and describing the Collateral and such other
reports in connection with the Collateral as any Holder may reasonably request,
all in reasonable detail.
9. Covenants. Dynex covenants and agrees with the Trustee that, from and
after the date of this Agreement:
(a) Establishment of Collateral Account. Within three (3) Business Days
after the date of this Agreement, Dynex shall establish with HSBC Bank USA, as a
"securities intermediary" within the meaning of Section 8-102(a)(14) the UCC, a
securities account (the "Collateral Account") to hold all Collateral hereunder,
with the intent of the parties that the Collateral Account be treated as a
"securities account" within the meaning of Section 8-501(a) of the UCC and that
all Collateral in the Collateral Account be treated as "securities" within the
meaning of Section 8-102(a)(15) of the UCC or "security entitlements" within the
meaning of Section 8-501(b) of the UCC (as the case may be), and in all cases as
"financial assets" within the meaning of Section 8-102(a)(9) of the UCC. Within
thirty (30) days after the date of this Agreement, Dynex shall cause Chase Bank
of Texas, National Association to transfer substantially all Collateral not
already in possession of HSBC Bank USA on the date hereof into such Collateral
Account. Within three (3) Business Days after the date of this Agreement, Dynex
and HSBC Bank USA, in its capacity as Trustee hereunder and also in its capacity
as a "securities intermediary" within the meaning of Section 8-102(a)(14) the
UCC, shall also enter in an "account control agreement" substantially in the
form of Annex A attached hereto, such that the Trustee, on behalf of the
Holders, shall obtain "control" over the Collateral within the meaning of
Section 8-106 of the UCC.
(b) Establishment of Collection Account. Within three (3) Business Days
after the date of this Agreement, Dynex shall establish and maintain with HSBC
Bank USA a deposit account (the "Collection Account"). Within three (3) Business
Days after the date of this Agreement, Dynex and HSBC Bank USA, in its capacity
as Trustee hereunder and also in its capacity as a depositary with respect to
the Collection Account, shall also enter into a "blocked account agreement"
substantially in the form of Annex B attached hereto (the "Blocked Account
Agreement") such that the Trustee, on behalf of the Holders, shall obtain
exclusive dominion and control over the funds in the Collection Account upon the
occurrence and during the continuation of an Event of Default. Dynex shall not
be permitted to transfer the Collection Account to another depository without
the prior written consent of the Trustee (upon written instructions from the
Holders of a majority in aggregate principal amount outstanding of the
Securities). .
(c) Place of Perfection; Records. Dynex will keep (i) its jurisdiction of
incorporation, and (ii) its chief executive office and principal place of
business and the office where it keeps its records concerning the Collateral at
its current address in the Commonwealth of Virginia or, upon 30 days' prior
written notice to the Trustee, at such other locations in a jurisdiction where
all actions required to perfect the security interest granted hereby shall have
been taken with respect to the Collateral.
(d) Payments Collection. Subject to Section 3 hereof, (i) Dynex will (A)
continue to collect and will direct its respective subsidiaries and affiliates,
as appropriate, to collect, at its or their own expense, and (B) take all
corporate and other action necessary to direct such subsidiaries and affiliates
to dividend to Dynex, all payments on account of or arising from the Collateral
(the "Collateral Payments"), including without limitation all payments of
interest, penalties, distributions, fees, compensation, reimbursements, net cash
flow, return of principal, proceeds of sale or other disposition and all other
amounts due or to become due to Dynex, either directly or indirectly through one
or more of its subsidiaries or affiliates, or to any such subsidiary or
affiliate, which have been assigned and pledged and as to which a security
interest has been granted hereunder, and (ii) Dynex will remit and will cause
its respective subsidiaries and affiliates to remit, directly and forthwith, all
such Collateral Payments directly to the Collection Account to be held and
applied in accordance with the Blocked Account Agreement. In connection with
such collections, Dynex will take such action as may be necessary or advisable
to enforce collection in order to perfect and preserve the security interest
granted or purported to be granted hereby.
(e) Dynex shall not take any action in connection with the Collateral that
would impair the value of the interest or rights of Dynex thereunder or the
interest or rights of the Trustee.
10. Trustee Appointed Attorney-in-Fact; Performance. (a) Dynex irrevocably
appoints the Trustee its attorney-in-fact, with full authority in the place and
stead of Dynex and in the name of Dynex or otherwise, from time to time but only
upon the occurrence and during the continuation of an Event of Default, to take
any action and to execute any instrument which may be necessary or advisable to
accomplish the purposes of this Agreement, including without limitation:
(i) to ask for, demand, collect, sue for, recover, compromise, receive and
give acquittance and receipts for moneys due and to become due under or in
connection with the Collateral;
(ii) to receive, endorse, and collect any drafts or other instruments,
documents and chattel paper, in connection therewith; and
(iii) to file any claims or take any action or institute any proceedings
that may be necessary or desirable for the collection of any of the Collateral
or otherwise to enforce the rights of the Trustee with respect to any of the
Collateral.
(b) If Dynex fails to perform any agreement contained herein, the Trustee
may (but shall not be obligated to) cause performance of such agreement, and the
expenses of the Trustee incurred in connection therewith shall be payable by
Dynex.
11. Limitation on Duties Regarding Collateral. The powers conferred on the
Trustee hereunder are solely to protect its interest in the Collateral as
Trustee and shall not impose any duty upon it to exercise any such powers.
Except for the custody of any Collateral in its possession and the accounting
for moneys actually received by it hereunder, the Trustee shall have no duty as
to any Collateral or as to the taking of any action to preserve rights against
prior parties or any other rights pertaining to any Collateral. The Trustee
shall be deemed to have exercised reasonable care in the custody and
preservation of any Collateral in its possession if such Collateral is accorded
treatment substantially equal to that which the Trustee accords its own
property.
12. Term. This Agreement shall terminate on the date of the satisfaction
and discharge of the Indenture with respect to the Securities in accordance with
Section 401 thereof or defeasance pursuant to Section 1402 thereof.
13. Perfection. Dynex will execute and deliver to the Trustee such
financing statements, amendments to financing statements, continuation
statements and other documents, certificates, instruments and agreements as may
be necessary or advisable to accomplish or facilitate the transactions
contemplated hereby and will pay all filing, recordation and registration fees
and taxes incurred in connection therewith.
14. Exercise of Rights. Any delay on the part of any party hereto in
exercising any power, option, privilege or right hereunder shall not operate as
a waiver thereof, and no single or partial exercise of any power, option,
privilege or right hereunder shall preclude other or future exercise thereof, or
the exercise of any other power, option, privilege or right. The waiver by the
Trustee of any Event of Default (upon written instructions from the Holders of a
majority in aggregate principal amount outstanding of the Securities) shall not
constitute a waiver of any subsequent default, but shall be restricted to the
default so waived. If any part of this Agreement should be contrary to any law,
or be otherwise defective, the other provisions of this Agreement shall not be
affected thereby, but shall continue in full force and effect. All rights,
remedies and powers of the Trustee hereunder are irrevocable and cumulative, and
not alternative or exclusive, and shall be in addition to all other rights,
remedies and powers given hereunder or in or by any other instrument or any law
now existing or hereafter made or enacted. Dynex shall reimburse the Trustee for
all expenses incurred by it in connection with the exercise of any remedies
granted hereunder, which sums shall be secured by the security interest granted
hereunder.
15. Binding Nature. This Agreement, and all of the terms and conditions
hereof, shall be binding upon and shall inure to the benefit of the parties
hereto and their successors and permitted assigns, but shall not inure to the
benefit of any other person.
16. Construction. When used herein, the singular may also refer to the
plural, and vice versa; and the use of any gender shall be applicable to all
genders. All representations, warranties, covenants, undertakings, obligations,
waivers and other agreements of Dynex herein shall survive the effective date
hereof and shall continue in effect throughout the term of this Agreement.
17. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York.
18. Subject to Indenture. Any and all rights granted to the Trustee under
this Agreement are to be held and exercised by the Trustee as trustee for the
benefit of the Holders, pursuant to the provisions of the Indenture. To the
extent set forth in the Senior Note Documents, each of the Holders shall be a
beneficiary of the terms of this Agreement. Any and all obligations hereunder of
the parties to this Agreement, and the rights granted to the Trustee hereunder,
are created and granted subject to the terms of the Indenture.
19. Release. Subject to Section 3 hereof, promptly upon the satisfaction
and discharge of the Indenture with respect to the Securities in accordance with
Section 401 thereof or defeasance pursuant to Section 1402 thereof (and the
delivery by Dynex to the Trustee of an Officers' Certificate and an Opinion of
Counsel certifying that such provisions of the Indenture with respect to the
Securities have been complied with), the Trustee shall execute and deliver to
Dynex such releases, termination statements and estoppel certificates as Dynex
may reasonably direct in writing; provided that all such documents shall be
prepared, reviewed and filed or recorded at Dynex's sole cost and expense.
20. Recitals. The recitals contained herein shall be taken as statements of
Dynex and the Trustee assumes no responsibility for their correctness. The
Trustee makes no representations as the validity or sufficiency of this
Agreement or the security afforded hereby.
Exhibit 99.5
INDEMNITY PLEDGE AGREEMENT
THIS INDEMNITY PLEDGE AGREEMENT (this "Agreement") is dated as
of the 30th day of March, 2001, by and between ISSUER HOLDING CORP. ("IHC"), a
Virginia corporation and a wholly-owned subsidiary of Dynex Capital, Inc.
("Dynex"), and HSBC Bank USA, a banking corporation and trust company duly
organized and existing under the laws of the State of New York (the "Trustee"),
as Trustee on behalf of the holders (the "Holders") of the 7.875% Senior Notes
Due July 15, 2002 (the "Securities") of Dynex under an Indenture dated July 14,
1997, as amended by, among things, that certain Officers' Certificate dated July
14, 1997 (the "Original Officers' Certificate") and the "Supplemental Indenture"
described below (such Indenture, as amended, the "Indenture") between Dynex and
the Trustee.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, simultaneously with the execution hereof, Dynex and the Trustee
have entered into a Supplemental Trust Indenture of even date herewith (the
"Supplemental Indenture"), and in so doing Dynex has agreed, among other things,
to grant a security interest to the Trustee, on behalf of all Holders, in
certain assets of Dynex to secure repayment of all obligations of Dynex relating
to the Securities, all as more particularly set forth in the Indenture and a
Pledge and Security Agreement of even date herewith between Dynex and the
Trustee (the "Dynex Security Agreement"); and
WHEREAS, in order to induce a sufficient number of Holders to consent to an
amendment to the Indenture effected by the Supplemental Indenture, IHC has
agreed to enter into this Agreement; and
WHEREAS, unless otherwise defined herein or the context
otherwise requires, the capitalized terms used herein shall have the same
meanings assigned to them in the Indenture.
NOW, THEREFORE, in consideration of the foregoing and in order to induce
certain of the Holders to consent to an amendment to the Indenture effected by
the Supplemental Indenture, IHC hereby agrees with the Trustee as follows:
1. Pledge. In order to secure the payment in full of (i) all principal
of and interest on the Securities as and when the same become due and payable
under the Indenture (whether by lapse of time, acceleration or otherwise),
(ii)
all other fees and charges payable by IHC and/or Dynex under the terms of this
Agreement, the Dynex Security Agreement, the Securities and the Indenture
(collectively, the "Senior Note Documents"), (iii) all other indebtedness,
obligations and liabilities of IHC and/or Dynex arising under, and the
observance and performance of all covenants and agreements contained in, the
Senior Note Documents, including without limitation all amounts due to the
Trustee pursuant to Section 606 of the Indenture, and (iv) all expenses and
charges, legal or otherwise, including reasonable attorneys' fees, suffered or
incurred by the Trustee in collecting or enforcing payment of any of the
Securities or in realizing upon, protecting or preserving any collateral
security for any such indebtedness (all of such indebtedness, obligations and
liabilities referred to in the immediately foregoing clauses (i) through (iv)
being hereinafter collectively referred to as the "Obligations"), IHC hereby
grants to the Trustee, its successors and permitted assigns, a continuing
security interest in, and pledges to the Trustee, the following property,
whether now owned or hereafter acquired and wherever held (collectively, the
"Collateral"):
(a) all shares of the outstanding equity securities held by IHC in the
wholly-owned subsidiaries listed on Schedule 1(a) attached hereto and made a
part hereof (the "Subsidiaries");
(b) any and all additional shares of any class of stock or other equity
securities of any of the Subsidiaries which IHC may from time to time acquire,
directly or indirectly, between the date hereof and the date of the satisfaction
and discharge of the Indenture with respect to the Securities in accordance with
Section 401 thereof or defeasance pursuant to Section 1402 thereof;
(c) all supporting evidence and documents relating to any of the above
described property, including without limitation the books and records relating
thereto;
(d) all accessions and additions to and substitutions and replacements of
any and all of the foregoing, whether now existing or hereafter arising or
attaching; and
(e) all cash and non-cash proceeds of the foregoing, including (without
limitation) all dividends and other distributions.
In order to continuously perfect the security interest in the Collateral
granted hereby, IHC has, simultaneously with the execution hereof, physically
delivered to the Trustee the stock certificates representing said shares of
stock in the Subsidiaries (which stock certificates are accompanied by
appropriate undated stock powers duly executed by IHC in blank).
2. Sale of Certain Collateral. Notwithstanding any provision hereof or of
the Indenture to the contrary, unless and until an "Event of Default" (as
hereinafter defined) has occurred and is continuing, IHC may, without further
consent or approval of the Trustee, sell, assign, transfer, lease or otherwise
dispose of (each, a "Permitted Disposition") all or any portion of the
Collateral; provided, however, that IHC shall be permitted to use the proceeds
of any such Permitted Disposition (net of any expenses incurred in connection
with any such Permitted Disposition) only in a manner permitted by the Original
Officers' Certificate, as amended by the Supplemental Indenture; and provided,
further, that until any such permitted use of net proceeds, such net proceeds
shall remain cash Collateral subject to the security interest created hereunder.
Promptly upon written notice from IHC of any such Permitted Disposition, the
Trustee shall execute and deliver to IHC such releases, termination statements
and estoppel certificates as IHC may reasonably direct in writing; provided that
all such documents shall be prepared, reviewed and filed or recorded at IHC's
sole cost and expense.
3. Event of Default; Remedies. Each and every "Event of Default" (as
defined in the Indenture) shall constitute an "Event of Default" hereunder. Upon
the occurrence and during the continuation of any such Event of Default, the
Trustee shall be entitled (but shall not be obligated) to exercise any one or
more of the following remedies:
(a) The Trustee may from time to time take whatever action at law or in
equity is necessary or desirable in order to collect the moneys payable
hereunder or secured hereby or to enforce performance and observance of any
obligation, agreement or covenant hereunder.
(b) The Trustee may foreclose its security interest in any of the
Collateral in any way permitted by applicable law; and the Trustee may
thereupon, or at any time thereafter, without notice or demand (except such
notice as may be specifically required by applicable law) and with or without
having the Collateral at the time or place of sale, sell, assign, give option or
options to purchase or otherwise dispose of and deliver the Collateral or any
part thereof (or contract to do any of the foregoing), in one or more parcels at
any public or private sale or sales, in the over-the-counter market, at any
exchange, broker's board or office of the Trustee or elsewhere upon such terms
and conditions as it may determine and at such prices as it may determine, for
cash or on credit or for future delivery without assumption of any credit risk.
In the exercise of such remedy, the Trustee may sell all of the Collateral as a
unit even though the sales price thereof may be in excess of the amounts
remaining unpaid on the Obligations. At any such public sale the Trustee may bid
for and become the purchaser of all or any part of the Collateral, and such sale
or sales may be held without demand of performance, notice of intention to sell,
the time or place of sale or any other matter, except for such notice as may be
specifically required by law; and the purchaser at any such sale or other
disposition shall thereafter hold the Collateral sold absolutely free from any
claim or right of IHC of whatsoever kind, including any right of redemption of
IHC, all such rights being hereby expressly waived and released by IHC to the
extent permitted by law.
(c) The Trustee may apply for a receiver for the Collateral and may sell
the Collateral pursuant to a judicial sale, and IHC hereby assents to the
passage of a decree for the sale of any of the Collateral by any court having
jurisdiction. IHC hereby authorizes and empowers the Trustee to sell its
interest in the Collateral in accordance with any applicable law. Such
Collateral or any interest therein may be sold upon such terms and in as many
lots as the Person conducting the sale may, in its sole discretion, elect. No
readvertisements of any sale shall be required if the sale is adjourned by
announcement, at the time or place set therefor, of the date, time or place to
which the same is to be adjourned.
(d) The Trustee may exercise any and all rights of conversion, exchange or
subscription and any other rights, privileges or options pertaining to any of
the Collateral, as if the Trustee were the absolute owner thereof, including
(without limitation) the right to exchange any and all of the Collateral upon
the merger, consolidation, reorganization, recapitalization or other
readjustment of any Subsidiary or upon the exercise by or on behalf of any
Subsidiary or the Trustee of any right, privilege or option pertaining to any of
the Collateral.
(e) The Trustee may take possession of the Collateral pursuant hereto
without legal process and without incurring liability to IHC therefor for the
purpose of exercising its rights hereunder.
(f) The Trustee may exercise any other right or remedy with respect to any
of the Collateral given to secured parties under the applicable Uniform
Commercial Code in effect in the State of New York from time to time and,
without limitation of the generality of the foregoing, as the same may be
amended by Revised Article 9 (the "UCC"). "Revised Article 9" means the
provisions of New York S7484, introduced April 17, 2000, containing proposed
revisions to Article 9 of the UCC which would become effective July 1, 2001, as
such provisions may be modified from time to time.
(g) Any notification required by Section 9-504 (or any successor provision)
of the UCC shall be deemed reasonably and properly given if deposited in the
mail, certified or registered mail, postage prepaid, to IHC, at least ten (10)
days before any sale or disposition of any of the Collateral which is subject to
the UCC.
(h) Any proceeds received from the exercise of any remedy hereunder, after
deducting therefrom any and all costs and expenses incurred in securing
possession of any Collateral, in shipping and storing the Collateral, in
preparing the Collateral for sale or otherwise dealing with Collateral prior to
any sale or other disposition thereof and in connection with the sale or other
disposition thereof (including, without limitation, reasonable attorneys' and
accountants' fees and expenses and brokers' commissions), shall be applied
toward the payment of any and all amounts due under or with respect to the
Obligations, including interest thereon, and all other costs and expenses
incurred by the Trustee in connection with this Agreement or the Indenture which
are then due and payable, in such order and amounts as the Trustee may elect. If
such net proceeds should be insufficient to pay the same and a deficiency shall
result, IHC shall nevertheless remain liable for such deficiency; and if such
proceeds should be more than sufficient to pay the same, then in case of a
surplus, such surplus shall be accounted for and, if any amounts due under the
Obligations remain outstanding, retained by the Trustee, who shall hold the same
as security for the payment of the Obligations; otherwise, such surplus shall be
paid over to IHC or to whomsoever a court of competent jurisdiction shall
determine to be entitled thereto.
(i) IHC recognizes that the Trustee may be unable to effect a public sale
of any or all of the Collateral, by reason of certain prohibitions contained in
the Securities Act of 1933, as amended (the "Securities Act"), and applicable
state securities laws or otherwise, and may be compelled to resort to one or
more private sales thereof to a restricted group of purchasers which will be
obliged to agree, among other things, to acquire such securities for their own
account for investment and not with a view to the distribution or resale
thereof. IHC acknowledges and agrees that any such private sale may result in
prices and other terms less favorable to the Trustee than if such sale were a
public sale and agrees that no such private sale shall be deemed not to have
been made in a commercially reasonable manner solely by virtue of such
circumstances. The Trustee shall be under no obligation to delay a sale of any
of the Collateral for the period of time necessary to permit the issuers of the
securities constituting any portion of the Collateral to register such
Collateral for public sale under the Securities Act (and IHC and the issuers
shall have no obligation to do so), or under applicable state securities laws,
even if the issuers would agree to do so.
(j) Notwithstanding any provision of this Agreement to the contrary, the
parties agree in no event shall the Collateral be sold or otherwise transferred,
upon the occurrence and during the continuation of any Event of Default, to a
party or parties that do not qualify as a "real estate investment trust" within
the meaning of the Internal Revenue Code of 1986, as amended.
4. Representations, Warranties and Covenants. IHC hereby represents,
warrants and covenants to the Trustee as follows:
(a) IHC is a corporation duly organized, validly existing and in good
standing under the laws of the Commonwealth of Virginia. IHC has the corporate
power, authority and legal right to execute, deliver and perform this Agreement.
This Agreement has been duly authorized and validly executed and delivered by an
authorized officer of IHC and constitutes the legal, valid and binding
obligations of IHC, enforceable against it in accordance with this Agreement's
terms. (b) IHC is a wholly-owned subsidiary of Dynex and the assumption of the
obligations and liabilities hereunder will result in direct financial benefits
to IHC.
(d) IHC is and will remain the true and lawful owner of all the Collateral
and, except for "Permitted Liens" (defined below), it has and will continue to
have good and marketable title thereto, free and clear of all liens, charges and
encumbrances whatsoever.
(e) Except for liens or security interests permitted under Section
10(vi)(a) through (g) of the Original Officers' Certificate, as amended by the
Supplemental Indenture ("Permitted Liens"), IHC will not, without the Trustee's
prior written consent (upon written instructions from the Holders of a majority
in aggregate principal amount outstanding of the Securities), sell, assign,
factor, mortgage, pledge, encumber, transfer, lease or otherwise dispose of or
otherwise grant or suffer to exist any Lien with respect to, the Collateral or
any part thereof.
(f) This Agreement creates a valid security interest in the Collateral and,
as of the date hereof, the security interest of the Trustee in the Collateral
has been duly perfected under the UCC or other applicable law in every
appropriate jurisdiction and, except for Permitted Liens, constitutes a first
priority lien upon the Collateral and every part thereof; and IHC covenants that
the Trustee's security interest shall, except for Permitted Liens, remain a
first priority lien upon the Collateral so long as any of the Obligations shall
remain outstanding.
(g) IHC has and will continue to have full legal power and right to pledge
and grant the security interest conveyed hereby in the Collateral and every part
thereof; the making of such pledge and the granting of such security interest do
not and will not violate the provisions of any law, regulation, contract,
agreement, restrictive covenant or legend, order of court, corporate charter or
bylaw, stockholders agreement or other instrument binding upon it or any part of
the Collateral; and no consent or approval of any governmental body or
regulatory authority, or any securities exchange, was or is necessary to the
validity or effectiveness thereof.
(h) IHC is and shall at all times remain the sole registered and beneficial
owner of all shares of capital stock now or hereafter issued by any Subsidiary;
it will not sell, transfer, assign or encumber any such shares of capital stock
to or for the benefit of any person or entity other than the Trustee; and
neither IHC nor any such Subsidiary has made or shall make any commitments for
the issuance or transfer of any such capital stock under any options, warrants
or other similar rights.
(i) IHC's chief executive office and principal place of business is located
at 4551 Cox Road, Suite 300, Glen Allen, Virginia 23060, and IHC has no other
offices or places of business in Virginia.
5. Dividends/Distributions. Upon the occurrence and during the continuation
of any Event of Default, IHC shall deliver to the Trustee, and the Trustee shall
be entitled to receive, all dividends or similar distributions paid upon or in
respect of the Collateral and the Trustee shall, in the case of cash, apply such
dividends and distributions to the payment of the Obligations (in whatever order
and priority it may elect) and shall, in the case of all other property, hold
such property pursuant hereto as part of the Collateral pledged under and
subject to the terms of this Agreement. So long as no Event of Default or shall
have occurred and be continuing, IHC shall have the right to receive and retain
all dividends or similar distributions paid upon or in respect of the
Collateral.
6. Voting Rights. Upon the occurrence and during the continuation of any
Event of Default, the Trustee may (but shall not be obligated to) exercise all
voting rights and all other rights conferred on the owner of any shares of
capital stock or other equity interests included among the Collateral. So long
as no Event of Default or shall have occurred and be continuing, IHC shall have
the right to vote its shares of capital stock in the Subsidiaries on all
corporate matters arising in the ordinary course of business; provided, however,
that IHC will not exercise or refrain from exercising any such right if such
action would have a material adverse effect on the value of the Collateral or
any part thereof. Under any circumstances and as to any matters not governed by
the foregoing provisions of this Section 6, IHC may only exercise its voting
rights with respect to the Collateral with the prior written consent of the
Trustee (upon written instructions from the Holders of a majority in aggregate
principal amount outstanding of the Securities).
7. Further Assurances. (a) IHC will from time to time, at its sole expense,
promptly execute and deliver all further instruments and documents, and take all
further action, that may be necessary or desirable, in order to perfect and
protect any security interest granted or purported to be granted by IHC
hereunder or to enable the Trustee to exercise and enforce its rights and
remedies hereunder with respect to any Collateral. Without limiting the
generality of the foregoing, IHC will: (i) execute and file such financing or
continuation statements, or amendments thereto, and such other instruments or
notices, as may be necessary or desirable in order to perfect and preserve the
security interest granted or purported to be granted hereby, (ii) deliver to and
pledge to the Trustee for its benefit and the benefit of the Holders
certificates representing securities included in the Collateral accompanied by
undated stock powers executed in blank.
(b) A photocopy or other reproduction of this Agreement or any financing
statement covering the Collateral or any part thereof shall be sufficient as a
financing statement where permitted by law.
(c) IHC will furnish to the Trustee and the Holders from time to time, and
upon any additions to or deletions from the Collateral, statements and schedules
further identifying and describing the Collateral and such other reports in
connection with the Collateral as any Holder may reasonably request, all in
reasonable detail.
8. Trustee Appointed Attorney-in-Fact; Performance. (a) IHC irrevocably
appoints the Trustee its attorney-in-fact, with full authority in the place and
stead of IHC and in the name of IHC or otherwise, from time to time but only
upon the occurrence and during the continuation of an Event of Default, to take
any action and to execute any instrument which may be necessary or advisable to
accomplish the purposes of this Agreement, including without limitation:
(i) to ask for, demand, collect, sue for, recover, compromise, receive and
give acquittance and receipts for moneys due and to become due under or in
connection with the Collateral;
(ii) to receive, endorse, and collect any drafts or other instruments,
documents and chattel paper, in connection therewith; and
(iii) to file any claims or take any action or institute any proceedings
that may be necessary or desirable for the collection of any of the Collateral
or otherwise to enforce the rights of the Trustee with respect to any of the
Collateral.
(b) If IHC fails to perform any agreement contained herein, the Trustee may
(but shall not be obligated to) cause performance of such agreement, and the
expenses of the Trustee incurred in connection therewith shall be payable by
IHC.
9. Limitation on Duties Regarding Collateral. The powers conferred on the
Trustee hereunder are solely to protect its interest in the Collateral as
Trustee and shall not impose any duty upon it to exercise any such powers.
Except for the custody of any Collateral in its possession and the accounting
for moneys actually received by it hereunder, the Trustee shall have no duty as
to any Collateral or as to the taking of any action to preserve rights against
prior parties or any other rights pertaining to any Collateral. The Trustee
shall be deemed to have exercised reasonable care in the custody and
preservation of any Collateral in its possession if such Collateral is accorded
treatment substantially equal to that which the Trustee accords its own
property.
10. Term. This Agreement shall terminate on the date of the satisfaction
and discharge of the Indenture with respect to the Securities in accordance with
Section 401 thereof or defeasance pursuant to Section 1402 thereof.
11. Perfection. IHC will execute and deliver to the Trustee such financing
statements, amendments to financing statements, continuation statements and
other documents, certificates, instruments and agreements as may be necessary or
advisable to accomplish or facilitate the transactions contemplated hereby and
will pay all filing, recordation and registration fees and taxes incurred in
connection therewith.
12. Exercise of Rights. Any delay on the part of any party hereto in
exercising any power, option, privilege or right hereunder shall not operate as
a waiver thereof, and no single or partial exercise of any power, option,
privilege or right hereunder shall preclude other or future exercise thereof, or
the exercise of any other power, option, privilege or right. The waiver by the
Trustee of any Event of Default (upon written instructions from the Holders of a
majority in aggregate principal amount outstanding of the Securities) shall not
constitute a waiver of any subsequent default, but shall be restricted to the
default so waived. If any part of this Agreement should be contrary to any law,
or be otherwise defective, the other provisions of this Agreement shall not be
affected thereby, but shall continue in full force and effect. All rights,
remedies and powers of the Trustee hereunder are irrevocable and cumulative, and
not alternative or exclusive, and shall be in addition to all other rights,
remedies and powers given hereunder or in or by any other instrument or any law
now existing or hereafter made or enacted. IHC shall reimburse the Trustee for
all expenses reasonably incurred by it in connection with the exercise of any
remedies granted hereunder, which sums shall be secured by the security interest
granted hereunder.
13. Binding Nature. This Agreement, and all of the terms and conditions
hereof, shall be binding upon and shall inure to the benefit of the parties
hereto and their successors and permitted assigns, but shall not inure to the
benefit of any other person.
14. Construction. When used herein, the singular may also refer to the
plural, and vice versa; and the use of any gender shall be applicable to all
genders. All representations, warranties, covenants, undertakings, obligations,
waivers and other agreements of IHC herein shall survive the effective date
hereof and shall continue in effect throughout the term of this Agreement.
15. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York.
16. Subject to Indenture. Any and all rights granted to the Trustee under
this Agreement are to be held and exercised by the Trustee as trustee for the
benefit of the Holders, pursuant to the provisions of the Indenture. To the
extent set forth in the Senior Note Documents, each of the Holders shall be a
beneficiary of the terms of this Agreement. Any and all obligations hereunder of
the parties to this Agreement, and the rights granted to the Trustee hereunder,
are created and granted subject to the terms of the Indenture.
17. Release. Subject to Section 2 hereof, promptly upon the satisfaction
and discharge of the Indenture with respect to the Securities in accordance with
Section 401 thereof or defeasance pursuant to Section 1402 thereof (and the
delivery by Dynex to the Trustee of an Officers' Certificate and an Opinion of
Counsel certifying that such provisions of the Indenture with respect to the
Securities have been complied with), the Trustee shall execute and deliver to
IHC such releases, termination statements and estoppel certificates as IHC may
reasonably direct in writing; provided that all such documents shall be
prepared, reviewed and filed or recorded at IHC's sole cost and expense.
18. Recitals. The recitals contained herein shall be taken as statements of
IHC and the Trustee assumes no responsibility for their correctness. The Trustee
makes no representations as the validity or sufficiency of this Agreement or the
security afforded hereby.