-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Ogdq/OELKX3Vsx7HJwlq4T1QRsydlLI+0qB3SPJDvuHr96qBl9wQxHnxF4tdg2nL zQ5ySNJYxGE2Zp4Qq86VWQ== 0000950168-99-001588.txt : 19990518 0000950168-99-001588.hdr.sgml : 19990518 ACCESSION NUMBER: 0000950168-99-001588 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990517 FILER: COMPANY DATA: COMPANY CONFORMED NAME: OAKWOOD HOMES CORP CENTRAL INDEX KEY: 0000073609 STANDARD INDUSTRIAL CLASSIFICATION: MOBILE HOMES [2451] IRS NUMBER: 560985879 STATE OF INCORPORATION: NC FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-07444 FILM NUMBER: 99628642 BUSINESS ADDRESS: STREET 1: 7800 MCCLOUD RD CITY: GREENSBORO STATE: NC ZIP: 27409-9634 BUSINESS PHONE: 9198552400 MAIL ADDRESS: STREET 1: 7800 MCCLOUD RD CITY: GREENSBORO STATE: NC ZIP: 27409-9634 10-Q 1 OAKWOOD HOMES CORPORATION 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-Q (X) Quarterly report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended March 31, 1999 or ( ) Transition report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from _______ to _______ Commission File Number 1-7444 OAKWOOD HOMES CORPORATION --------------------------- (Exact name of registrant as specified in its charter) North Carolina 56-0985879 -------------- ---------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 7800 McCloud Road, Greensboro, North Carolina 27409-9634 -------------------------------------------------------- (Address of principal executive offices) Post Office Box 27081, Greensboro, North Carolina 27425-7081 ------------------------------------------------------------ (Mailing address of principal executive offices) (336) 664-2400 -------------- (Registrant's telephone number, including area code) N/A --- (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Indicate the number of shares outstanding of each of the issuer's classes of Common Stock as of April 30, 1999. Common Stock, Par Value $.50 Per Share . . . . . . . . . 47,063,892 1 PART I. FINANCIAL INFORMATION Item 1. Financial Statements QUARTERLY REPORT ON FORM 10-Q CONDENSED CONSOLIDATED FINANCIAL STATEMENTS For the Quarter Ended March 31, 1999 OAKWOOD HOMES CORPORATION AND SUBSIDIARIES Greensboro, North Carolina The consolidated financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures contained herein are adequate to make the information presented not misleading. These consolidated financial statements should be read in conjunction with the financial statements and the notes thereto included in the Company's latest annual report on Form 10-K. 2 OAKWOOD HOMES CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF INCOME (UNAUDITED) (in thousands except per share data) Three months ended March 31, --------- 1999 1998 ---- ---- Revenues Net sales $ 367,095 $ 250,352 Financial services revenues Consumer finance 14,504 20,825 Special charges - (16,300) Insurance 11,949 8,045 ----------- ----------- 26,453 12,570 Other income 2,800 1,971 ----------- ----------- Total revenues 396,348 264,893 ----------- ----------- Costs and expenses Cost of sales 260,004 170,261 Selling, general and administrative expenses 93,660 64,964 Financial services operating expenses Consumer finance 9,117 5,929 Insurance 7,212 6,488 ----------- ----------- 16,329 12,417 Provision for losses on credit sales 1,311 - Interest expense Non-financial services 2,532 678 Financial services 6,654 4,238 ----------- ----------- Total costs and expenses 380,490 252,558 ----------- ----------- Income before income taxes 15,858 12,335 Provision for income taxes 6,185 4,687 ----------- ----------- Net income $ 9,673 $ 7,648 =========== =========== Earnings per share Basic $ .21 $ .17 Diluted $ .21 $ .16 Dividends per share $ .01 $ .01 Weighted average number of common shares outstanding Basic 46,434 46,214 Diluted 47,172 47,803 See accompanying notes to the consolidated financial statements. 3 OAKWOOD HOMES CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF INCOME (UNAUDITED) (in thousands except per share data) Six months ended March 31, --------- 1999 1998 ---- ---- Revenues Net sales $ 726,909 $ 472,245 Financial services revenues Consumer finance 30,410 44,385 Special charges - (16,300) Insurance 23,553 14,964 ----------- ----------- 53,963 43,049 Other income 4,860 4,262 ----------- ----------- Total revenues 785,732 519,556 ----------- ----------- Costs and expenses Cost of sales 515,185 322,087 Selling, general and administrative expenses 184,353 123,425 Financial services operating expenses Consumer finance 16,685 11,383 Insurance 15,590 12,071 ----------- ----------- 32,275 23,454 Provision for losses on credit sales 1,961 - Interest expense Non-financial services 4,829 1,385 Financial services 12,486 8,157 ----------- ----------- Total costs and expenses 751,089 478,508 ----------- ----------- Income before income taxes 34,643 41,048 Provision for income taxes 13,511 15,598 ----------- ----------- Net income $ 21,132 $ 25,450 =========== =========== Earnings per share Basic $ .46 $ .55 Diluted $ .45 $ .54 Dividends per share $ .02 $ .02 Weighted average number of common shares outstanding Basic 46,423 46,132 Diluted 47,055 47,567 See accompanying notes to the consolidated financial statements. 4 OAKWOOD HOMES CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET (UNAUDITED) (in thousands except share and per share data)
March 31, September 30, ASSETS 1999 1998 ---- ---- Cash and cash equivalents $ 22,997 $ 28,971 Loans and investments 603,018 502,583 Other receivables 66,423 58,774 Inventories Manufactured homes 363,112 242,867 Work-in-process, materials and supplies 48,717 42,068 Land/homes under development 9,789 6,417 ------------- ------------- 421,618 291,352 Properties and facilities 250,257 237,726 Deferred income taxes 13,640 14,850 Other assets 146,292 149,120 ------------- ------------- $ 1,524,245 $ 1,283,376 ============= ============= LIABILITIES AND SHAREHOLDERS' EQUITY Short-term borrowings $ 286,447 $ 375,023 Notes and bonds payable 363,091 61,875 Accounts payable and accrued liabilities 222,720 226,867 Insurance reserves and unearned premiums 66,152 57,419 Other long-term obligations 14,171 14,517 Shareholders' equity Common stock, $.50 par value; 100,000,000 shares authorized; 47,063,000 and 46,660,000 shares issued and outstanding 23,532 23,330 Additional paid-in capital 172,496 167,592 Retained earnings 380,220 360,025 ------------- ------------- 576,248 550,947 Less: Unearned compensation (4,584) (3,272) ------------- ------------- 571,664 547,675 ------------- ------------- $ 1,524,245 $ 1,283,376 ============= =============
See accompanying notes to the consolidated financial statements. 5 OAKWOOD HOMES CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) (in thousands)
Six months ended March 31, --------- 1999 1998 ---- ---- Operating activities Net income $ 21,132 $ 25,450 Adjustments to reconcile net income to cash provided (used) by operating activities Depreciation and amortization 21,068 9,391 Deferred income taxes 1,210 (811) Provision for losses on credit sales 1,961 - (Gain) loss on sale of loans 1,565 (10,971) Special charges - 16,300 Excess of cash receipts over REMIC residual income recognized 12,102 7,245 Other 4,186 3,262 Changes in assets and liabilities Other receivables (9,335) (411) Inventories (130,266) (77,017) Deferred insurance policy acquisition costs (1,602) (717) Other assets (11,202) (1,864) Accounts payable and accrued liabilities (4,555) 5,313 Insurance reserves and unearned premiums 8,733 8,121 Other long-term obligations (61) (98) ---------- --------- Cash (used) by operations (85,064) (16,807) Loans originated (671,594) (443,567) Purchase of loans and securities (108,297) (5,045) Sale of loans 641,723 459,033 Principal receipts on loans 17,652 21,823 ---------- --------- Cash provided (used) by operating activities (205,580) 15,437 ---------- --------- Investing activities Acquisition of properties and facilities (26,170) (20,739) Investment in and advances to joint venture 22,150 (10,454) Other (8,470) (12,852) ---------- --------- Cash (used) by investing activities (12,490) (44,045) ---------- --------- 6 Financing activities Net borrowings (repayments) on short-term credit facilities (88,576) 29,084 Issuance of notes and bonds payable 307,878 - Payments on notes and bonds (6,432) (11,293) Cash dividends (937) (928) Proceeds from exercise of stock options 163 2,112 ---------- ---------- Cash provided by financing activities 212,096 18,975 ---------- ---------- Net decrease in cash and cash equivalents (5,974) (9,633) Cash and cash equivalents Beginning of period 28,971 28,717 ---------- ---------- End of period $ 22,997 $ 19,084 ========== ==========
See accompanying notes to the consolidated financial statements. 7 OAKWOOD HOMES CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements (Unaudited) 1. The consolidated financial statements reflect all adjustments, which are, in the opinion of management, necessary to present fairly the results of operations for the periods presented. Except for a special charge in the amount of $16.3 million recorded for the three months ended March 31, 1998 relating to the carrying value of retained interests in certain REMIC securitizations, such adjustments include only normal recurring adjustments. Results of operations for any interim period are not necessarily indicative of results to be expected for a full year. 2. On April 1, 1998 the Company acquired Schult Homes Corporation ("Schult"), a producer of manufactured and modular housing headquartered in Middlebury, Indiana. The acquisition was accounted for using the purchase method of accounting. Schult's results of operations are included with those of the Company from the April 1, 1998 acquisition date. 3. Certain of the Company's significant accounting policies are outlined below. REVENUE RECOGNITION - MANUFACTURED HOUSING Passage of title and risk of loss in a retail sale occurs upon the closing of the sale, which includes, for the great majority of retail sales, execution of loan documents and related paperwork and receipt of the customer's down payment. For those sales in which the home remains personal property, rather than being converted to real property (i.e., sales under retail installment contracts), the closing generally takes place before the home is delivered to and installed on the customer's site. For such sales, delivery and installation typically are straightforward and involve minimal preparation of the customer's site, and typically occur shortly after closing. Sales transactions in which the home is converted from personal property to real property are financed as traditional mortgages rather than under retail installment contracts. Such sales typically involve significant preparation of the customer's site, which may include installation of utilities, wells, extensive foundations, etc., and also require completion of mortgage financing documentation, including title searches and appraisals. As a consequence, the closing of these transactions occurs after the home has been delivered and installed. WARRANTY OBLIGATIONS The Company provides a warranty against manufacturing defects from the date of the retail sale. Estimated future warranty obligations are accrued at the time of sale. 8 4. The components of loans and investments are as follows: March 31, September 30, 1999 1998 --------- ------------- (in thousands) Loans held for sale $ 457,804 $ 365,126 Loans held for investment 58,940 62,669 Less: reserve for uncollectible receivables (3,745) (1,653) ---------- ---------- Total loans 512,999 426,142 ---------- ---------- Retained interests in REMIC securitizations (exclusive of loan servicing assets included in other assets) Regular interests, at amortized cost which approximates fair value 43,724 22,822 Residual interests, at amortized cost which approximates fair value 46,295 53,619 ---------- ---------- Total retained REMIC interests 90,019 76,441 ---------- ---------- $ 603,018 $ 502,583 ========== ========== 5. The following table sets forth the computation of basic and diluted earnings per share ("EPS"):
Three months ended Six months ended March 31, March 31, ---------- --------- 1999 1998 1999 1998 ---- ---- ---- ---- (in thousands, except per share data) Numerator for basic and diluted EPS - Net income $ 9,673 $ 7,648 $ 21,132 $ 25,450 Denominator: Weighted average number of common shares outstanding 46,480 46,300 46,474 46,223 Unearned shares (46) (86) (51) (91) --------- --------- ---------- ---------- Denominator for basic EPS 46,434 46,214 46,423 46,132 Dilutive effect of stock options and restricted shares computed using the treasury stock method 738 1,589 632 1,435 --------- --------- ---------- ---------- Denominator for diluted EPS 47,172 47,803 47,055 47,567 ========= ========= ========== ========== Earnings per common share - basic $ .21 $ .17 $ .46 $ .55 ========= ========= ========== ========== Earnings per common share - diluted $ .21 $ .16 $ .45 $ .54 ========= ========= ========== ==========
9 Options to purchase 2,839,486 and 1,642,826 shares of common stock were not included in the computation of diluted EPS for the first and second quarters of fiscal 1999, respectively, because the options' exercise prices were greater than the average market price of the Company's common stock for that period and their inclusion would have been antidilutive. 6. In November 1998 the Company and certain of its present and former officers and directors were named as defendants in lawsuits filed on behalf of purchasers of the Company's common stock for various periods between April 11, 1997 and July 21, 1998 (the "Class Period"). These complaints, which seek class action certification, allege violations of federal securities law based on alleged false and misleading financial statements, reports filed by the Company and other representations during the Class Period. The Company intends to defend such lawsuits vigorously. The Company is also subject to legal proceedings and claims which have arisen in the ordinary course of its business and have not been finally adjudicated. These actions, when ultimately concluded and determined will not, in the opinion of management, have a material effect on the results of operations or financial condition of the Company. The Company is contingently liable as guarantor on installment sale contracts sold to third parties on a full or limited recourse basis. The amount of this contingent liability was approximately $29 million at March 31, 1999. The Company is also contingently liable as guarantor on subordinated securities issued by REMIC trusts in the aggregate principal amount of $80 million at March 31, 1999. The Company is also contingently liable under terms of repurchase agreements with financial institutions providing inventory financing for retailers of homes produced by Destiny Industries, Inc. ("Destiny"), Golden West Homes ("Golden West") and Schult, manufacturing subsidiaries of the Company doing business with independent dealers. The Company estimates that its potential obligation under repurchase agreements approximated $176 million at March 31, 1999. 10 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations RESULTS OF OPERATIONS Three months ended March 31, 1999 compared to three months ended March 31, 1998 The following table summarizes certain statistics for the quarters ended March 31, 1999 and 1998 : 1999 1998 ---- ---- Retail sales (in millions) $ 267.7 $ 233.9 Other sales (in millions) $ 99.4 $ 16.5 Total sales (in millions) $ 367.1 $ 250.4 Gross profit % 29.2% 32.0% New single-section homes sold - retail 2,999 3,384 New multi-section homes sold - retail 2,986 2,363 Used homes sold - retail 662 696 New single-section homes sold - wholesale 688 65 New multi-section homes sold - wholesale 2,247 451 Average new single-section sales price - retail $32,000 $30,700 Average new multi-section sales price - retail $55,500 $52,100 Average new single-section sales price - wholesale $21,900 $16,400 Average new multi-section sales price - wholesale $37,300 $32,800 Weighted average retail sales centers open during the period 373 317 NET SALES Retail sales dollar volume increased 14%, reflecting a 4% increase in new unit volume, increases of 4% and 7% in the average new unit sales prices of single-section and multi-section homes, respectively, and a shift in product mix toward multi-section homes which have higher average selling prices than single-section homes. Average retail sales prices rose due to price increases and a shift in product mix toward higher price points. Multi-section homes accounted for 50% of retail new unit sales compared to 41% in the second quarter of fiscal 1998. The Company believes the multi-section performance reflects the addition of new homes to the Company's product line in response to continuing consumer preference for multi-section homes. During the second quarter of fiscal 1999, the Company opened or acquired 27 new sales centers compared to 15 sales centers during the second quarter of fiscal 1998. The Company also closed two underperforming sales centers during the quarter ended March 31, 1999. Total new retail sales dollars at sales centers open more than one year increased 3% during the second quarter of fiscal 1999. Other sales dollar volume, which consists principally of wholesale sales to independent dealers by the Company's Destiny, Golden West and Schult subsidiaries, increased due to wholesale unit 11 volume related to the acquisition of Schult on April 1, 1998 in a transaction accounted for as a purchase. Schult sold 2,285 units, representing $78.5 million of sales, to independent dealers during the quarter ended March 31, 1999. Excluding the effects of the Schult acquisition, wholesale sales dollars increased 27% from the second quarter of fiscal 1998. This increase reflects the Company's efforts to add to its independent retailer network. During the second quarter of fiscal 1999, 75% of Golden West's and Destiny's shipments were to Company-owned sales centers, compared to 78% in the three months ended March 31, 1998; these shipments are not included in the dollar and unit sales in the table above. Schult's higher average price points caused the overall average wholesale selling prices of single-section and multi-section homes to rise 34% and 14%, respectively. GROSS PROFIT Gross profit margin decreased to 29.2% in the second quarter of fiscal 1999 from 32.0% in fiscal 1998, reflecting the increased significance of relatively lower margin wholesale sales as a result of the acquisition of Schult. Excluding the effects of the Schult acquisition, gross profit margin increased to 33.1% related to both improved efficiencies at manufacturing plants and higher retail margins. Approximately 97% of new homes sold at retail were produced in Company-owned manufacturing plants in the second quarter of fiscal 1999 compared to 96% in the three months ended March 31, 1998. FINANCIAL SERVICES REVENUES Consumer finance revenues for the second quarter of fiscal 1999 increased to $14.5 million from $4.5 million in fiscal 1998. The second quarter of fiscal 1998 includes a special charge of $16.3 million (approximately $10.1 million after tax, or $.21 per share), relating to valuation of certain retained interests in REMICs. Excluding the effects of the prior year quarter special charge, consumer finance revenues for the three months ended March 31, 1999 declined $6.3 million compared to the three months ended March 31, 1998, primarily as a result of a loss on the sale of asset-backed securities of $118,000 compared to a gain in the prior year quarter of $5.0 million (approximately $3.1 million after tax, or $.06 per share) and, to a lesser extent, market value adjustments to the carrying value of residual interests during the second quarter of fiscal 1999. An increase in the spread over treasurys required by institutional purchasers of the Company's asset-backed securities increased the Company's permanent financing costs and reduced the estimated residual cash flow on the current quarter's securitization. REMIC interests retained by the Company include servicing assets and REMIC residual and regular interests. The Company estimates the fair value of retained REMIC residual interests based, in part, upon default and prepayment assumptions which management believes market participants would use for similar instruments. The actual rate of voluntary prepayments and the amount and timing of credit losses affect the Company's yield on retained REMIC residual interests and the fair value of such interests in periods subsequent to the securitization; the actual rate of voluntary prepayments and credit losses typically varies over the life of each transaction and from transaction to transaction. If over time the Company's actual experience is more favorable than that assumed, the Company's yield on its REMIC residual interests will be enhanced. Similarly, if over time the Company's actual experience is less favorable than that assumed, such yield will be reduced or impairment of the residuals may result. 12 For the quarter ended March 31, 1999, total credit losses on loans originated by the Company, including losses relating to assets securitized by the Company, loans held for investment, loans held for sale and loans sold with full or partial recourse, amounted to approximately 2.43% on an annualized basis of the average principal balance of the related loans, compared to approximately 1.71% one year ago. Because losses on repossessions are reflected in the loss ratio principally in the period during which the repossessed property is disposed of, fluctuations in the number of repossessed properties disposed of from period to period may cause variations in the charge-off ratio. During the quarter ended March 31,1999 the Company experienced higher rates of repossession and reduced its inventory of repossessed homes from 1,453 units at December 31, 1998 to 964 units at March 31, 1999. During the second quarter of fiscal 1999 the Company sold 2,253 repossessed homes compared to 1,342 in the second quarter of fiscal 1998. At March 31, 1999 the delinquency rate on Company originated loans, excluding loans originated on behalf of Deutsche Financial Capital ("DFC"), the Company's former consumer finance joint venture, was 3.0%, compared to 3.9% at September 30, 1998 and 3.0% at March 31, 1998. REMIC residual income decreased from $3.2 million in the quarter ended March 31, 1998 to $1.9 million in second quarter of fiscal 1999, primarily reflecting a decline in the average balance of residual interests. Interest income earned on loans held for investment and on loans held for sale prior to securitization increased from $7.0 million during the second quarter of fiscal 1998 to $9.0 million in fiscal 1999. The increase reflects higher average outstanding balances of loans held for sale prior to securitization due to increased origination volume offset slightly by lower average interest rates on the loans. The increase also reflects incremental interest income on retained regular REMIC interests from the Company's August and November 1998 securitizations. This increase was partially offset by lower interest income on loans held for investment, the principal balance of which is declining as these loans are liquidated. Loan servicing fees decreased from $6.9 million during the second quarter of fiscal 1998 to $5.0 million this year. Servicing fees did not increase commensurately with the growth of the Company's securitized loan portfolio because certain securitizations did not generate sufficient cash flows to enable the Company to receive its full servicing fee. The Company has not recorded revenues or receivables for these shortfalls, as the Company's right to receive servicing fees is subordinate to the holders of regular REMIC interests. Loan servicing fees are reflected net of servicing asset amortization which has increased over the prior year primarily due to the addition of servicing assets from securitizations subsequent to March 31, 1998. Insurance revenues from the Company's captive reinsurance business increased 49% to $11.9 million for the three months ended March 31, 1999 from $8.0 million for the three months ended March 31, 1998. This increase is primarily due to the increased size of the Company's portfolio, related to an increase in premiums written resulting from retail sales growth and improved penetration, renewal and cancellation rates. Because reinsurance claims costs are recorded as insured events occur, reinsurance underwriting risk may increase the volatility of the Company's earnings, particularly with respect to property and casualty reinsurance. The Company has purchased catastrophe reinsurance to reduce its underwriting exposure to natural disasters. 13 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES Selling, general and administrative expenses decreased to 25.5% of net sales for the three months ended March 31, 1999 from 25.9% of net sales last year. Higher retail selling expenses were offset by lower selling, general and administrative expenses as a percentage of sales at Schult. Excluding the effects of the Schult acquisition, selling, general and administrative expenses for the second quarter of fiscal 1999 were 28.9% of net sales compared to 25.9% of net sales last year, primarily reflecting higher retail selling expenses. FINANCIAL SERVICES OPERATING EXPENSES Consumer finance operating expenses rose 54% during the second quarter of fiscal 1999 due principally to increased headcount and other compensation cost increases, as well as increased servicing costs associated with higher repossession volume. In the second quarter, the average number of loans serviced increased 18% and total credit application volume increased 37% over last year. Insurance operating costs increased 11% during the second quarter of fiscal 1999 principally due to higher claims costs associated with the increased size of the business. PROVISION FOR LOSSES The provision for losses increased $1.3 million largely related to the increased repossession activity during the quarter and the high balance of loans carried on the Company's balance sheet prior to securitization. INTEREST EXPENSE Non-financial services interest expense rose from $678,000 for the second quarter of fiscal 1998 to $2.5 million in 1999, due principally to interest costs related to the financing of the Schult acquisition. Financial services interest expense includes interest expense associated with long-term debt secured by loans, interest expense associated with all short-term line of credit borrowings, and interest expense on $200 million of the $300 million senior notes issued in a debt offering in March 1999 as discussed in the Liquidity and Capital Resources section. Financial services interest expense increased 57% for the second quarter of fiscal 1999 which reflects the higher level of borrowings required to support the higher level of loans not yet securitized and the higher interest rate on the fixed rate debt. This increase was partially offset by lower interest expense on declining and retired long-term debt balances. INCOME TAXES The Company's effective income tax rate was 39.0% for the second quarter of fiscal 1999 compared to 38.0% in fiscal 1998 due to higher state income taxes arising from the Schult acquisition. 14 Six months ended March 31, 1999 compared to six months ended March 31, 1998 The following table summarizes certain statistics for the six months ended March 31, 1999 and 1998 : 1999 1998 ---- ---- Retail sales (in millions) $ 509.3 $ 435.5 Other sales (in millions) $ 217.6 $ 36.7 Total sales (in millions) $ 726.9 $ 472.2 Gross profit % 29.1% 31.8% New single-section homes sold - retail 4,895 5,520 New multi-section homes sold - retail 6,059 4,958 Used homes sold - retail 1,255 1,245 New single-section homes sold - wholesale 1,420 140 New multi-section homes sold - wholesale 4,855 969 Average new single-section sales price - retail $32,400 $30,500 Average new multi-section sales price - retail $55,900 $51,600 Average new single-section sales price - wholesale $21,800 $16,600 Average new multi-section sales price - wholesale $38,200 $34,300 Weighted average retail sales centers open during the period 368 312 NET SALES Retail sales dollar volume increased 17%, reflecting a 5% increase in new unit volume, increases of 6% and 8% in the average new unit sales prices of single-section and multi-section homes, respectively, and a shift in product mix toward multi-section homes which have higher average selling prices than single-section homes. Average retail sales prices rose due to price increases and a shift in product mix toward higher price points. Multi-section homes accounted for 55% of retail new unit sales compared to 47% in the six months ended March 31, 1998. The Company believes the multi-section performance reflects the addition of new homes to the Company's product line in response to continuing consumer preference for multi-section homes. During the first six months of fiscal 1999, the Company opened or acquired 31 new sales centers compared to 26 sales centers during the six months ended March 31, 1998. The Company also closed three underperforming sales centers during the six months ended March 31, 1999 compared to two during the six months ended March 31, 1998. Total new retail sales dollars at sales centers open more than one year increased 3% during the six months ended March 31, 1999. Other sales dollar volume increased due to wholesale unit volume related to the acquisition of Schult. Schult sold 5,028 units, representing $176.1 million of sales, to independent dealers during the six months ended March 31, 1999. Excluding the effects of the Schult acquisition, wholesale sales dollars increased 13% from the six months ended March 31, 1998. This increase is primarily due to a 12% increase in units sold to independent dealers. During the first six months of fiscal 1999, 76% of Golden West's and Destiny's shipments were to Company-owned 15 sales centers, compared to 75% in the six months ended March 31, 1998; these shipments are not included in the dollar and unit sales in the table above. Schult's higher average price points caused the overall average wholesale selling prices of single-section and multi-section homes to rise 31% and 11%, respectively. GROSS PROFIT Gross profit margin decreased to 29.1% in the six months ended March 31, 1999 from 31.8% in fiscal 1998, reflecting the increased significance of relatively lower margin wholesale sales as a result of the acquisition of Schult. Excluding the effect of the Schult acquisition, gross profit margin increased to 33.2% due to both improved efficiencies at manufacturing and higher retail margins. Approximately 97% of new homes sold at retail were produced in Company-owned manufacturing plants in the six months ended March 31, 1999 compared to 95% in the six months ended March 31, 1998. FINANCIAL SERVICES REVENUES Consumer finance revenues for the six months ended March 31, 1999 increased to $30.4 million from $28.1 million in fiscal 1998. The second quarter of fiscal 1998 includes a special charge of $16.3 million (approximately $10.1 million after tax, or $.21 per share), relating to valuation of certain retained interests in REMICs. Excluding the effects of the prior year second quarter special charge, consumer finance revenues for the six months ended March 31, 1999 declined $14.0 million primarily as a result of losses on the sale of asset-backed securities of $1.6 million (approximately $955,000 after tax, or $.02 per share) compared to a gains in the prior year of $11.0 million (approximately $6.8 million after tax, or $.14 per share) and, to a lesser extent, market value adjustments to the carrying value of residual interests in fiscal 1999. An increase in the spread over treasurys required by institutional purchasers of the Company's asset-backed securities increased the Company's permanent financing costs and reduced the estimated residual cash flow on the current year's securitizations. For the six months ended March 31, 1999, total credit losses on loans originated by the Company, including losses relating to assets securitized by the Company, loans held for investment, loans held for sale and loans sold with full or partial recourse, amounted to approximately 2.02% on an annualized basis of the average principal balance of the related loans, compared to approximately 1.48% one year ago. REMIC residual income decreased from $6.3 million in the six months ended March 31, 1998 to $3.8 million in first six months of fiscal 1999, primarily reflecting a decline in the average balance of residual interests. Interest income earned on loans held for investment and on loans held for sale prior to securitization increased from $14.2 million during the first six months of fiscal 1998 to $19.7 million in fiscal 1999. The increase reflects higher average outstanding balances of loans held for sale prior to securitization due to increased origination volume offset slightly by lower average interest rates on the loans. The increase also reflects incremental interest income on retained regular REMIC interests from the Company's August and November 1998 securitizations. This increase was partially offset by lower interest income on loans held for investment, the principal balance of which is declining as these loans are liquidated. Loan servicing fees decreased from $13.4 million during the six months ended March 31, 1998 to $11.4 million this year. Servicing 16 fees did not increase commensurately with the growth of the Company's securitized loan portfolio because certain securitizations did not generate sufficient cash flows to enable the Company to receive its full servicing fee. The Company has not recorded revenues or receivables for these shortfalls, as the Company's right to receive servicing fees is subordinate to the holders of regular REMIC interests. Loan servicing fees are reflected net of servicing asset amortization which has increased over the prior year primarily due to the addition of servicing assets from securitizations subsequent to March 31, 1998. Insurance revenues from the Company's captive reinsurance business increased 57% to $23.6 million for the six months ended March 31, 1999 from $15.0 million for the six months ended March 31, 1998. This increase is primarily due to the increased size of the portfolio, relating to an increase in premiums written resulting from retail sales growth and improved penetration, renewal and cancellation rates. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES Selling, general and administrative expenses decreased to 25.4% of net sales for the six months ended March 31, 1999 from 26.1% of net sales last year. Higher retail selling expenses were offset by lower selling, general and administrative expenses as a percentage of sales at Schult. Excluding the effects of the Schult acquisition, selling, general and administrative expenses for the first six months of fiscal 1999 were 29.2% of net sales compared to 26.1% of net sales last year, primarily reflecting higher retail selling expenses caused by compensation plan changes implemented in the second quarter of fiscal 1998 and an increase in commissions paid for sales of repossessed homes. FINANCIAL SERVICES OPERATING EXPENSES Consumer finance operating expenses rose 47% during the six months ended March 31, 1999 due principally to increased headcount and other compensation cost increases. In the first six months of fiscal 1999, the average number of loans serviced increased 19% and total credit application volume increased 42% over last year. Insurance operating costs increased 29% during the six months ended March 31, 1999 principally due to higher claims costs associated with the increased size of the business. PROVISION FOR LOSSES The provision for losses increased $2.0 million largely related to the increase in repossession activity during the first six months of fiscal 1999 and the high balance of loans carried on the Company's balance sheet prior to securitization. INTEREST EXPENSE Non-financial services interest expense rose from $1.4 million for the six months ended March 31, 1998 to $4.8 million in 1999, due principally to interest costs related to the financing of the Schult acquisition. Financial services interest expense includes interest expense associated with long-term debt secured by loans, interest expense associated with all short-term line of credit borrowings, and interest expense on $200 million of the $300 million senior notes issued in a debt offering in 17 March 1999 as discussed in the Liquidity and Capital Resources section. Financial services interest expense increased 53% for the first six months of fiscal 1999 primarily due to a higher average overall interest rate due to the fixed rate term debt and higher average borrowings This increase was partially offset by lower interest expense on declining and retired long-term debt balances. INCOME TAXES The Company's effective income tax rate was 39.0% for the six months ended March 31, 1999 compared to 38.0% in fiscal 1998 due to higher state income taxes arising from the Schult acquisition. YEAR 2000 ISSUES During 1997 the Company formed an ongoing project team to address the Year 2000 issue. The Year 2000 issue relates to the way computer hardware and software process calendar dates. With the turn of the century at midnight, January 1, 2000, it is possible that some systems may interpret a year stored as '00 as 1900 instead of 2000. Calculations involving these dates would then be adversely affected. The Company's Year 2000 conversion project has several phases, including assessment of the hardware and software affected by the Year 2000 issue; identification of critical suppliers and assessment of their state of readiness; conversion of existing processes, hardware and software as required; testing of modified, existing and new processes; implementation of Year 2000 compliant systems; and development and implementation of contingency and business continuation plans as considered necessary. The Company is also conducting ongoing awareness campaigns with employees and key vendors. Assessment of hardware and software has been conducted with internal resources that researched all of the Company's internal systems and hardware platforms. As a result of the assessment effort, a plan was developed to convert and test all hardware and software deemed to be non-compliant. Based upon the status of remediation undertaken to date, the Company believes that substantially all significant internal system issues associated with Year 2000 compliance have been resolved. The Company intends to continue testing throughout the year as well as resolving any remaining system issues. Separately all of the Company's significant external suppliers and business partners were included in the project to determine their state of readiness for the Year 2000 issue. General surveys were sent to all significant external suppliers and business partners upon which the Company relies for services. The intention of these surveys was to assess the organization's overall readiness. Additionally, specific inquiry letters were sent to external suppliers and business partners upon which the Company relies for a specific product. Recently the Company has begun to focus attention to mission critical suppliers. The Company believes that its most likely worst case scenario would result from an external supplier's inability to provide raw materials for use in the Company's manufacturing processes. In order to alleviate the worst case scenario, the Company is exploring plans to stockpile raw materials inventory. In 18 addition, the Company is planning on stockpiling finished goods inventory and evaluating a modified holiday vacation schedule around the first of the year. The other mission critical suppliers upon which the Company is dependent supply services including insurance and loan servicing. No contingency plans have been developed at this point in time should these suppliers prove to be non-compliant. However, the Company is working with these organizations in order to obtain further assurances regarding their compliance. The costs incurred by the Company for the assessment and conversion of systems related to Year 2000 readiness, which have been charged to expense, have not been material. Recently the Company has begun to incur additional costs for independent review and testing of compliance. The Company has acquired and is in the process of developing computing platforms specifically for allowing a qualified third party review of all internal systems. While the costs associated with this effort are not expected to be material, they do represent a commitment on the part of the executive management team to ensure the Company's position related to the Year 2000 issue. While the Company believes its efforts will provide reasonable assurance that material disruptions will not occur, there can be no assurance that interruption will not occur. LIQUIDITY AND CAPITAL RESOURCES The increase in inventories since September 30, 1998 reflects primarily the manufacture of inventory in preparation for the summer selling season, the increase in the number of retail sales centers since September 30, 1998, and an increase in the percentage of inventories represented by multi-section homes, which have higher average unit costs than single-section homes. The increase in loans and investments since September 30, 1998 principally reflects an increase in loans held for sale from $365 million at September 30, 1998 to $458 million at March 31, 1999. The Company originates loans and warehouses them until sufficient receivables have been accumulated for a securitization. In addition, during the quarter ended December 31, 1998 the Company purchased, at par, from a financial institution loans having an aggregate principal balance of approximately $7 million. Such purchase was financed by a term loan from the financial institution. Retail financing of sales of the Company's products is an integral part of the Company's vertical integration strategy. Such financing consumes substantial amounts of capital, which the Company has obtained principally by securitizing such loans, primarily using REMICs. Since 1994, the Company generally has sold to investors securities having a principal balance approximately equal to the principal balance of the loans securitized, and accordingly has not been required to seek the permanent capital required to fund its finance business outside of the asset-backed securities market. Late in 1998, global economic conditions significantly reduced the liquidity in the asset-backed securities market, and credit spreads over treasurys demanded by purchasers of the Company's asset-backed securities rose significantly. In addition, demand for the most deeply subordinated asset-backed securities offered for sale by the Company has decreased significantly. Widening credit spreads adversely affect the Company's permanent funding costs, and adversely affect the Company's profitability if the Company is unable to increase rates charged to customers to compensate for these higher costs. Moreover, decreased demand for asset-backed securities 19 could require the Company to seek alternative sources of financing for the loans originated by the consumer finance business. At March 31, 1999 the Company owned subordinated asset-backed securities having a principal balance of approximately $39 million associated with the Company's August and November 1998 securitizations. Such securities are regular REMIC interests and are included in the related caption in the table appearing in Note 4. During April 1999 the Company sold its interest from the November 1998 securitization which had a principal balance of approximately $26 million. The Company intends to sell the remaining security from the August 1998 securitization if an offer acceptable to the Company can be obtained. On May 13, 1999 the Company securitized approximately $255 million of loans, and sold all the securities created in such transaction, except for the residual interest which has been retained by the Company consistent with past practice. In recent years, the Company has financed internal growth of its retail and manufacturing business principally using internally generated funds and short-term lines of credit. On March 2, 1999, the Company closed a $300 million debt offering comprised of $175 million of senior notes at 8.125% due on March 1, 2009 and $125 million of senior notes at 7.875% due on March 1, 2004. The proceeds of this offering were used to pay outstanding indebtedness, including $100 million borrowed from a commercial bank to finance the Schult acquisition. The Company has several credit facilities in place to provide for its short-term liquidity needs. The Company has a $325 million credit facility with a conduit commercial paper issuer to provide warehouse financing for loans prior to securitization. The Company also has a $175 million revolving credit facility with a group of banks which is available to fund additional working capital needs, a $20 million cash management line of credit and $10 million of uncommitted lines of credit. 20 PART II. OTHER INFORMATION Item 1. Legal Proceedings In November 1998 four shareholder suits were filed against the Company and certain of its directors and officers, three in the United States District Court for the Middle District of North Carolina and one in the United States District Court in Little Rock, Arkansas. These lawsuits generally allege that certain of the Company's financial statements were false and misleading and that certain other disclosures were inaccurate. One of the lawsuits also alleges that certain officers of the Company traded in the Company's common stock with knowledge of the allegedly misleading financial statements and disclosures. Responsive pleadings are not yet due in any of these lawsuits. The Company intends to defend these lawsuits vigorously. The Company is a defendant in a number of lawsuits that are incidental to the conduct of its business. Item 4. Submission of Matters to a Vote of Security Holders Information required by this item was provided in the Form 10-Q filed for the quarter ended December 31, 1998. Item 6. Exhibits and Reports on Form 8-K a) Exhibits
(1.1) Underwriting Agreement dated as of February 25, 1999 by and among Oakwood Homes Corporation, NationsBanc Montgomery Securities LLC, First Union Capital Markets Corp. and Merrill Lynch, Pierce, Fenner & Smith, Incorporated (1.2) Terms Agreement dated as of February 25, 1999 by and among Oakwood Homes Corporation, NationsBanc Montgomery Securities LLC, First Union Capital Markets Corp. and Merrill Lynch, Pierce, Fenner & Smith, Incorporated (4.1) Indenture dated as of March 2, 1999 between Oakwood Homes Corporation and The First National Bank of Chicago, as Trustee (4.2) First Supplemental Indenture dated as of March 2, 1999 between Oakwood Homes Corporation and The First National Bank of Chicago, as Trustee (4.3) Agreement to Furnish Copies of Instruments with Respect to Long-term Debt (27) Financial Data Schedule
21 b) Reports on Form 8-K On April 9, 1999 the Company filed a report on Form 8-K in which the Company announced the issuance of a press release concerning its anticipated results of operations for the quarter ended March 31, 1999. Items 2, 3 and 5 are inapplicable and are omitted. 22 OAKWOOD HOMES CORPORATION AND SUBSIDIARIES SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Date: May 17, 1999 OAKWOOD HOMES CORPORATION BY: s/ Robert A. Smith ------------------------ Robert A. Smith Executive Vice President (Chief Financial Officer) (Duly Authorized Officer) 23 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 EXHIBITS ITEM 6(a) FORM 10-Q QUARTERLY REPORT For the quarter ended Commission File Number March 31, 1999 1-7444 OAKWOOD HOMES CORPORATION EXHIBIT INDEX Exhibit No. Exhibit Description ----------- -------------------
1.1 Underwriting Agreement dated as of February 25, 1999 by and among Oakwood Homes Corporation, NationsBanc Montgomery Securities LLC, First Union Capital Markets Corp. and Merrill Lynch, Pierce, Fenner & Smith, Incorporated 1.2 Terms Agreement dated as of February 25, 1999 by and among Oakwood Homes Corporation, NationsBanc Montgomery Securities LLC, First Union Capital Markets Corp. and Merrill Lynch, Pierce, Fenner & Smith, Incorporated 4.1 Indenture dated as of March 2, 1999 between Oakwood Homes Corporation and The First National Bank of Chicago, as Trustee 4.2 First Supplemental Indenture dated as of March 2, 1999 between Oakwood Homes Corporation and The First National Bank of Chicago, as Trustee 4.3 Agreement to Furnish Copies of Instruments with Respect to Long-term Debt 27 Financial Data Schedule
24 25 EX-1 2 EXHIBIT 1.1 Exhibit 1.1 ================================================================================ OAKWOOD HOMES CORPORATION (a North Carolina corporation) UNDERWRITING AGREEMENT February 25, 1999 ================================================================================ TABLE OF CONTENTS Page Representations and Warranties................................................3 (a) REPRESENTATIONS AND WARRANTIES BY THE COMPANY.........................3 (b) OFFICER'S CERTIFICATES...............................................14 SECTION 2. SALE AND DELIVERY TO UNDERWRITERS; CLOSING........................14 (a) UNDERWRITTEN SECURITIES..............................................14 (b) OPTION UNDERWRITTEN SECURITIES.......................................14 (c) PAYMENT..............................................................15 (d) DENOMINATIONS; REGISTRATION..........................................16 SECTION 3. COVENANTS OF THE COMPANY..........................................16 (a) COMPLIANCE WITH SECURITIES REGULATIONS AND COMMISSION REQUESTS.......16 (b) FILING OF AMENDMENTS.................................................16 (c) DELIVERY OF REGISTRATION STATEMENTS..................................17 (d) DELIVERY OF PROSPECTUSES.............................................17 (e) CONTINUED COMPLIANCE WITH SECURITIES LAWS............................18 (f) BLUE SKY QUALIFICATIONS..............................................18 (g) EARNINGS STATEMENT...................................................18 (h) REPORTS TO SECURITYHOLDERS...........................................18 (j) LISTING..............................................................19 (k) RESTRICTION ON SALE OF SECURITIES....................................19 (l) REPORTING REQUIREMENTS...............................................19 SECTION 4. PAYMENT OF EXPENSES...............................................19 (a) EXPENSES.............................................................19 (b) TERMINATION OF AGREEMENT.............................................20 SECTION 5. CONDITIONS OF UNDERWRITERS' OBLIGATIONS...........................20 (a) EFFECTIVENESS OF REGISTRATION STATEMENT..............................20 (b) OPINION OF COUNSEL FOR COMPANY.......................................20 (c) OPINION OF COUNSEL FOR UNDERWRITERS..................................21 (d) OFFICERS' CERTIFICATE................................................21 (e) ACCOUNTANT'S COMFORT LETTER..........................................21 (f) BRING-DOWN COMFORT LETTER............................................22 (g) RATINGS..............................................................22 (h) APPROVAL OF LISTING..................................................22 (i) NO OBJECTION.........................................................22 (j) LOCK-UP ARRANGEMENTS.................................................22 (k) OVER-ALLOTMENT OPTION................................................22 (l) ADDITIONAL DOCUMENTS.................................................23 (m) TERMINATION OF TERMS AGREEMENT.......................................23 i SECTION 6. INDEMNIFICATION...................................................24 (a) INDEMNIFICATION OF UNDERWRITERS......................................24 (b) INDEMNIFICATION OF COMPANY, DIRECTORS AND OFFICERS...................25 (c) ACTIONS AGAINST PARTIES; NOTIFICATION................................25 (d) SETTLEMENT WITHOUT CONSENT IF FAILURE TO REIMBURSE...................26 SECTION 7. CONTRIBUTION......................................................27 SECTION 8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE DELIVERY....28 SECTION 9. TERMINATION.......................................................28 (a) UNDERWRITING AGREEMENT...............................................28 (b) TERMINATION; GENERAL.................................................29 (c) LIABILITIES..........................................................29 SECTION 10. DEFAULT BY ONE OR MORE OF THE UNDERWRITERS.......................29 SECTION 11. NOTICES..........................................................30 SECTION 12. PARTIES..........................................................31 SECTION 13. GOVERNING LAW AND TIME...........................................31 SECTION 14. EFFECT OF HEADINGS...............................................31 ii OAKWOOD HOMES CORPORATION (a North Carolina corporation) Debt Securities UNDERWRITING AGREEMENT February 25, 1999 To the Representative of the Underwriters named in the Terms Agreement hereinafter described Ladies and Gentlemen: Oakwood Homes Corporation, a North Carolina corporation (the "Company"), proposes to issue and sell up to $400,000,000 aggregate initial public offering price of its senior or subordinated debt securities (the "Debt Securities"), or any combination thereof, from time to time, in or pursuant to one or more offerings on terms to be determined at the time of sale. The Debt Securities will be issued in one or more series as senior indebtedness (the "Senior Debt Securities") or as senior subordinated or subordinated indebtedness (the "Subordinated Debt Securities") under an indenture relating to the Debt Securities (the "Indenture"), between the Company and The First National Bank of Chicago, as trustee (the "Trustee"), substantially in the form filed as an exhibit to the Registration Statement (as defined below). Each series of Debt Securities may vary, as applicable, as to title, aggregate principal amount, rank, interest rate or formula and timing of payments thereof, stated maturity date, redemption and/or payment provisions, sinking fund requirements, guarantors and any other variable terms established by or pursuant to the Indenture. As used herein, "Securities" shall mean the Senior Debt Securities or Subordinated Debt Securities, or any combination thereof, initially issuable by the Company. Whenever the Company determines to make an offering of Securities, the Company will enter into an agreement (each, a "Terms Agreement") providing for the sale of such Securities to, and the purchase and offering thereof by, the underwriters named in the applicable Terms Agreement (the "Underwriters," which term shall include any Underwriter substituted pursuant to Section 10 hereof), for whom the firm designated as representative of the Underwriters of such Underwritten Securities in the Terms Agreement relating thereto will act as representative (the 1 "Representative"). The Terms Agreement relating to the offering of Securities shall specify the aggregate principal amount, as the case may be, of Securities to be initially issued (the "Initial Underwritten Securities"), the name of each Underwriter participating in such offering (subject to substitution as provided in Section 10 hereof) and the name of any Underwriter(s) acting as co-manager in connection with such offering, the aggregate principal amount, as the case may be, of Initial Underwritten Securities which each such Underwriter severally agrees to purchase, whether such offering is on a fixed or variable price basis and, if on a fixed price basis, the initial offering price, the price at which the Initial Underwritten Securities are to be purchased by the Underwriters, the form, time, date and place of delivery and payment of the Initial Underwritten Securities and any other material variable terms of the Initial Underwritten Securities. In addition, if applicable, such Terms Agreement shall specify whether the Company has agreed to grant to the Underwriters an option to purchase additional Securities to cover over-allotments, if any, and the number or aggregate principal amount, as the case may be, of Securities subject to such option (the "Option Underwritten Securities"). As used herein, the term "Underwritten Securities" shall include the Initial Underwritten Securities and all or any portion of any Option Underwritten Securities. The Terms Agreement, which shall be substantially in the form of EXHIBIT A hereto, may take the form of an exchange of any standard form of written telecommunication between the Company and the Representative, acting for itself and, if applicable, as representative of any other Underwriters. Each offering of Underwritten Securities will be governed by this Underwriting Agreement, as supplemented by the applicable Terms Agreement. The Company has filed with the Securities and Exchange Commission (the "Commission") a registration statement on Form S-3 (No. 333-47053) for the registration of the Securities under the Securities Act of 1933, as amended (the "1933 Act"), and the offering thereof from time to time in accordance with Rule 415 of the rules and regulations of the Commission under the 1933 Act (the "1933 Act Regulations"), and the Company has filed such post-effective amendments thereto as may be required prior to the execution of the applicable Terms Agreement. Such registration statement (as so amended, if applicable) has been declared effective by the Commission and each Indenture has been duly qualified under the Trust Indenture Act of 1939, as amended (the "1939 Act"). Such registration statement (as so amended, if applicable), including the information, if any, deemed to be a part thereof pursuant to Rule 430A(b) of the 1933 Act regulations (the "Rule 430A Information") or Rule 434(d) of the 1933 Act Regulations (the "Rule 434 Information"), is referred to herein as the "Registration Statement;" and the final prospectus and the final prospectus supplement relating to the offering of the Underwritten Securities, in the form first furnished to the Underwriters by the Company for use in connection with the offering of the Underwritten Securities, are collectively referred to herein as the "Prospectus;" PROVIDED, HOWEVER, that all references to the "Registration Statement" and the "Prospectus" shall also be deemed to include all documents incorporated therein by reference pursuant to the Securities Exchange Act of 1934, as amended (the "1934 Act"), prior to the execution of the applicable Terms Agreement; PROVIDED FURTHER, that if 2 the Company files a registration statement with the Commission pursuant to Rule 462(b) of the 1933 Act Regulations (the "Rule 462(b) Registration Statement"), then, after such filing, all references to "Registration Statement" shall also be deemed to include the Rule 462(b) Registration Statement; and PROVIDED FURTHER, that if the Company elects to rely upon Rule 434 of the 1933 Act Regulations, then all references to "Prospectus" shall also be deemed to include the final or preliminary prospectus and the applicable term sheet or abbreviated term sheet (the "Term Sheet"), as the case may be, in the form first furnished to the Underwriters by the Company in reliance upon Rule 434 of the 1933 Act Regulations, and all references in this Underwriting Agreement to the date of the Prospectus shall mean the date of the Term Sheet. A "preliminary prospectus" shall be deemed to refer to any prospectus used before the registration statement became effective and any prospectus that omitted, as applicable, the Rule 430A Information, the Rule 434 Information or other information to be included upon pricing in a form of prospectus filed with the Commission pursuant to Rule 424(b) of the 1933 Act Regulations, that was used after such effectiveness and prior to the execution and delivery of the applicable Terms Agreement. For purposes of this Underwriting Agreement, all references to (i) the Registration Statement, Prospectus, Term Sheet or preliminary prospectus or to any amendment or supplement to any of the foregoing shall be deemed to include any copy filed with the Commission pursuant to its Electronic Data Gathering, Analysis and Retrieval system ("EDGAR"), (ii) the Indenture shall be deemed to include, as applicable, any indenture supplemental thereto, and (iii) the Representative shall be deemed to include, as applicable, all such Representatives if there shall be more than one Representative . All references in this Underwriting Agreement to financial statements and schedules and other information which is "contained," "included" or "stated" (or other references of like import) in the Registration Statement, Prospectus or preliminary prospectus shall be deemed to mean and include all such financial statements and schedules and other information which is incorporated by reference in the Registration Statement, Prospectus or preliminary prospectus, as the case may be; and all references in this Underwriting Agreement to amendments or supplements to the Registration Statement, Prospectus or preliminary prospectus shall be deemed to mean and include the filing of any document under the 1934 Act which is incorporated by reference in the Registration Statement, Prospectus or preliminary prospectus, as the case may be. SECTION 1. Representations and Warranties (a) REPRESENTATIONS AND WARRANTIES BY THE COMPANY. The Company represents and warrants to the Representative, as of the date hereof, and to each Underwriter named in the applicable Terms Agreement, as of the date thereof, as of the Closing Time (as defined below) and, if applicable, as of each Date of Delivery (as defined below) (in each case, a "Representation Date"), as follows: 3 (i) COMPLIANCE WITH REGISTRATION REQUIREMENTS. The Company meets the requirements for use of Form S-3 under the 1933 Act. Each of the Registration Statement and any Rule 462(b) Registration Statement has become effective under the 1933 Act and no stop order suspending the effectiveness of the Registration Statement or any Rule 462(b) Registration Statement has been issued under the 1933 Act and no proceedings for that purpose have been instituted or are pending or, to the knowledge of the Company, are contemplated by the Commission, and any request on the part of the Commission for additional information has been complied with. In addition, the Indenture has been duly qualified under the 1939 Act. At the respective times the Registration Statement, any Rule 462(b) Registration Statement and any post-effective amendments thereto became effective and at each Representation Date, the Registration Statement, the Rule 462(b) Registration Statement and any amendments and supplements thereto complied and will comply in all material respects with the requirements of the 1933 Act and the 1933 Act Regulations and the 1939 Act and the rules and regulations of the Commission under the 1939 Act (the "1939 Act Regulations") and did not and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading. At the date of the Prospectus, at the Closing Time and at each Date of Delivery, if any, the Prospectus and any amendments and supplements thereto did not and will not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. If the Company elects to rely upon Rule 434 of the 1933 Act Regulations, the Company will comply with the requirements of Rule 434. Notwithstanding the foregoing, the representations and warranties in this subsection shall not apply to statements in or omissions from the Registration Statement or the Prospectus made in reliance upon and in conformity with information furnished to the Company in writing by any Underwriter through the Representative expressly for use in the Registration Statement or Prospectus. Each preliminary prospectus and the prospectus filed as part of the Registration Statement as originally filed or as part of any amendment thereto, or filed pursuant to Rule 424 under the 1933 Act, complied when so filed in all material respects with the 1933 Act Regulations and each preliminary prospectus and the Prospectus delivered to the Underwriters for use in connection with the offering of Underwritten Securities will, at the time of such delivery, be identical to any electronically transmitted copies thereof filed with the Commission pursuant to EDGAR, except to the extent permitted by Regulation S-T. (ii) INCORPORATED DOCUMENTS. The documents incorporated or deemed to be incorporated by reference in the Registration Statement and the Prospectus (including the filing of the Company's most recent Annual Report on Form 10-K with the Commission (the "Annual Report on Form 10-K")), at the time they were or hereafter are filed with the Commission, complied and will comply in all material respects with the requirements of the 1934 Act and the rules and regulations of the Commission thereunder (the "1934 Act Regulations") and, when read together with the other information in the Prospectus, at the date of the Prospectus, at the Closing Time and at each Date of Delivery, if any, did not and will not include an untrue statement of a 4 material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. (iii) INDEPENDENT ACCOUNTANTS. The accountants who certified the financial statements and supporting schedules thereto included in the Registration Statement and the Prospectus are independent public accountants as required by the 1933 Act and the 1933 Act Regulations. (iv) FINANCIAL STATEMENTS. The financial statements of the Company included in the Registration Statement and the Prospectus, together with the related schedules and notes, as well as those financial statements, schedules and notes of any other entity included therein, present fairly the financial position of the Company and its consolidated subsidiaries, or such other entity, as the case may be, at the dates indicated and the statement of operations, stockholders' equity and cash flows of the Company and its consolidated subsidiaries, or such other entity, as the case may be, for the periods specified. Such financial statements have been prepared in conformity with generally accepted accounting principles ("GAAP") applied on a consistent basis throughout the periods involved. The supporting schedules, if any, included in the Registration Statement and the Prospectus present fairly in accordance with GAAP the information required to be stated therein. The selected financial data and the summary financial information included in the Prospectus, if any, present fairly the information shown therein and have been compiled on a basis consistent with that of the audited financial statements included in the Registration Statement and the Prospectus. In addition, any pro forma financial statements of the Company and its subsidiaries and the related notes thereto included in the Registration Statement and the Prospectus present fairly the information shown therein, have been prepared in accordance with the Commission's rules and guidelines with respect to pro forma financial statements and have been properly compiled on the bases described therein, and the assumptions used in the preparation thereof are reasonable and the adjustments used therein are appropriate to give effect to the transactions and circumstances referred to therein. (v) NO MATERIAL ADVERSE CHANGE IN BUSINESS. Since the respective dates as of which information is given in the Registration Statement and the Prospectus, except as otherwise stated therein, (A) there has been no material adverse change in the condition (financial or otherwise), earnings, assets, properties, operations, business affairs or business prospects of the Company and its subsidiaries considered as one enterprise, whether or not arising in the ordinary course of business (a "Material Adverse Effect"), (B) there have been no transactions entered into by the Company or any of its subsidiaries, other than those in the ordinary course of business, which are material with respect to the Company and its subsidiaries considered as one enterprise, and (C) except for regular dividends on the Company's common stock or preferred stock, in amounts per share that are consistent with past practice, there has been no dividend or distribution of any kind declared, paid or made by the Company on any class of its capital stock. 5 (vi) GOOD STANDING OF THE COMPANY. The Company has been duly organized and is validly existing as a corporation in good standing under the laws of the state of North Carolina and has corporate power and authority to own, lease and operate its properties and to conduct its business as described in the Prospectus and to enter into and perform its obligations under, or as contemplated under, this Underwriting Agreement and the applicable Terms Agreement. The Company is duly qualified as a foreign corporation to transact business and is in good standing in each other jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except where the failure to so qualify or be in good standing would not result in a Material Adverse Effect. (vii) GOOD STANDING OF SUBSIDIARIES. Each subsidiary of the Company (each, a "Subsidiary" and, collectively, the "Subsidiaries") has been duly organized and is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation, has corporate power and authority to own, lease and operate its properties and to conduct its business as described in the Prospectus and is duly qualified as a foreign corporation to transact business and is in good standing in each jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except where the failure to so qualify or be in good standing would not result in a Material Adverse Effect. Except as otherwise stated in the Registration Statement and the Prospectus, all of the issued and outstanding capital stock of each such Subsidiary has been duly authorized and is validly issued, fully paid and non-assessable and, except as set forth on Schedule A hereto, is owned by the Company, directly or through subsidiaries, free and clear of any security interest, mortgage, pledge, lien, encumbrance, claim or equity (except for the capital stock of Tarheel Insurance Company, Ltd., all of which capital stock is pledged in connection with the Company's $175.0 million revolving credit facility with First Union National Bank, as agent). None of the outstanding shares of capital stock of any Subsidiary was issued in violation of preemptive or other similar rights of any securityholder of such Subsidiary. (viii) CAPITALIZATION. If the Prospectus contains a "Capitalization" section, the authorized, issued and outstanding shares of capital stock of the Company is, to the extent set forth in such section, as set forth in the column entitled "Actual" under such section (except for subsequent issuances thereof, if any, contemplated under this Underwriting Agreement, pursuant to reservations, agreements or employee benefit plans referred to in the Prospectus or pursuant to the exercise of convertible securities or options referred to in the Prospectus). Such shares of capital stock have been duly authorized and validly issued by the Company and are fully paid and non-assessable; and none of such shares of capital stock was issued in violation of preemptive or other similar rights of any securityholder of the Company. (ix) AUTHORIZATION OF THIS UNDERWRITING AGREEMENT AND TERMS AGREEMENT. This Underwriting Agreement has been, and the applicable Terms Agreement as 6 of the date thereof will have been, duly authorized, executed and delivered by the Company. (x) AUTHORIZATION OF SENIOR DEBT SECURITIES AND/OR SUBORDINATED DEBT SECURITIES. The Underwritten Securities have been, or as of the date of such Terms Agreement will have been, duly authorized by the Company for issuance and sale pursuant to this Underwriting Agreement and such Terms Agreement. Such Underwritten Securities, when issued and authenticated in the manner provided for in the applicable Indenture and delivered against payment of the consideration therefor specified in such Terms Agreement, will constitute valid and legally binding obligations of the Company, enforceable against the Company in accordance with their terms, except as the enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting creditors' rights generally or by general equitable principles. Such Underwritten Securities will be in the form contemplated by, and each registered holder thereof is entitled to the benefits of, the applicable Indenture. (xi) AUTHORIZATION OF THE INDENTURE. The Indenture has been, or prior to the issuance of the Debt Securities thereunder will have been, duly authorized, executed and delivered by the Company and, upon such authorization, execution and delivery, will constitute a valid and legally binding agreement of the Company, enforceable against the Company in accordance with its terms, except as the enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting enforcement of creditors' rights generally or by general equitable principles. (xii) EMPLOYEE BENEFITS MATTERS. Each employee benefit plan of the Company intended to be qualified under Section 401(a) of the Internal Revenue Code of 1986, as amended (or any successor code or statute) (the "Internal Revenue Code") has heretofore been determined by the Internal Revenue Service to so qualify, and each trust created thereunder has heretofore been determined by the Internal Revenue Service to so qualify, and each trust created thereunder has heretofore been determined by the Internal Revenue Service to be exempt from tax under the provisions of Section 501(a) of the Internal Revenue Code, and nothing has occurred since the date of the most recent determination (including the merger of the Company's Employee Stock Ownership Plan into the Oakwood Savings Plan) that would cause any such employee plan or trust to fail to qualify under Section 401(a) or 501(a) of the Internal Revenue Code. Both before and after giving effect to the offering of the Debt Securities, no ERISA Events have occurred or are reasonably expected to occur which, individually or in the aggregate, resulted in or might reasonably be expected to result in a liability of the Company or any of its subsidiaries or any of their respective ERISA Affiliates which would have a Material Adverse Effect. The Company, its subsidiaries and their respective ERISA Affiliates do not sponsor, and have not at any time within the five calendar years immediately preceding the date hereof sponsored, a defined benefit plan subject to Title IV of ERISA. 7 As used herein, the following terms shall have the respective meaning ascribed to each below: "Employee Pension Benefit Plan" means any "employee pension benefit plan" as defined in Section 3(2) of ERISA (i) which is, or, at any time within the five calendar years immediately preceding the date hereof, was at any time, sponsored, maintained or contributed to by the Company or its subsidiaries or any of their respective ERISA Affiliates or (ii) with respect to which any of the Company or its subsidiaries retains any liability, including any potential joint and several liability as a result of an affiliation with an ERISA Affiliate or a party that would be an ERISA Affiliate except for the fact the affiliation ceased more than five calendar years prior to the date hereof. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated and rulings issued thereunder and any successor statute, regulations and rulings. "ERISA Affiliate" of any person, means (i) any corporation which is, or was at any time within the five calendar years immediately preceding the date hereof, a member of a controlled group of corporations within the meaning of Section 414(b) of the Internal Revenue Code of which that person is, or was at any time within the five calendar years immediately preceding the date hereof, a member; (ii) any trade or business (whether or not incorporated) which is, or was at any time within the five calendar years immediately preceding the date hereof, a member of a group of trades or businesses under common control within the meaning of Section 414(c) of the Internal Revenue Code of which that person is, or was at any time within the five calendar years immediately preceding the date hereof, a member; and (iii) any member of an affiliated service group within the meaning of Section 414(m) or (o) of the Internal Revenue Code of which that person, any corporation described in clause (i) above, or any trade business described in clause (ii) above is, or was at any time within the five calendar years immediately preceding the date hereof, a member. "ERISA Event" means (i) the withdrawal by the Company or any of its subsidiaries or any of their respective ERISA Affiliates in a complete or partial withdrawal (within the meaning of Sections 4203 and 4205 of ERISA) from any Multiemployer Plan if there is any potential liability therefor, or the receipt by the Company or any of its subsidiaries or any of their respective ERISA Affiliates of notice from any Multiemployer Plan that it is in reorganization or insolvency pursuant to Section 4241 or 4245 of ERISA, or that it intends to terminate or has terminated under Section 4041A or 4042 of ERISA; (ii) the occurrence of an act or omission which could reasonably be expected to give rise to the imposition on the Company or any of its subsidiaries or any of their respective ERISA Affiliates of fines, penalties, taxes or 8 related charges under Chapter 43 of the Internal Revenue Code or under Section 406, 409, 502(i) or 502(l) of ERISA in respect of any Employee Pension Benefit Plan; or (iii) receipt from the Internal Revenue Service of notice of the failure of any Employee Pension Benefit Plan intended to be qualified under Section 401(a) of the Internal Revenue Code to qualify under Section 401(a) of the Internal Revenue Code, or the failure of any trust forming part of any Employee Pension Benefit Plan to qualify for exemption from taxation under Section 501(a) of the Internal Revenue Code. "Multiemployer Plan" means a "multiemployer plan" as defined in Section 4001(a)(3) of ERISA to which any of the Company, its subsidiaries or any of their respective ERISA Affiliates is making or accruing an obligation to make contributions, or has within any of the preceding five years made or accrued an obligation to make contributions. (xiii) DESCRIPTION OF THE UNDERWRITTEN SECURITIES AND INDENTURE. The Underwritten Securities being sold pursuant to the applicable Terms Agreement and the Indenture, as of the date of the Prospectus, will conform in all material respects to the statements relating thereto contained in the Prospectus and will be in substantially the form filed or incorporated by reference, as the case may be, as an exhibit to the Registration Statement. (xiv) ABSENCE OF DEFAULTS AND CONFLICTS. Neither the Company nor any of its subsidiaries is in violation of its charter or by-laws or in default in the performance or observance of any obligation, agreement, covenant or condition contained in any contract, indenture, mortgage, deed of trust, loan or credit agreement, note, lease or other agreement or instrument to which the Company or any of its subsidiaries is a party or by which it or any of them may be bound, or to which any of the property or assets of the Company or any subsidiary is subject (collectively, "Agreements and Instruments"), except for such defaults that would not result in a Material Adverse Effect. The execution, delivery and performance of this Underwriting Agreement, the applicable Terms Agreement and the Indenture, and any other agreement or instrument entered into or issued or to be entered into or issued by the Company in connection with the transactions contemplated hereby or thereby or in the Registration Statement and the Prospectus and the consummation of the transactions contemplated herein and in the Registration Statement and the Prospectus (including the issuance and sale of the Underwritten Securities and the use of the proceeds from the sale of the Underwritten Securities as described under the caption "Use of Proceeds") and compliance by the Company with its obligations hereunder and thereunder have been duly authorized by all necessary corporate action and do not and will not, whether with or without the giving of notice or passage of time or both, conflict with or constitute a breach of, or default or Repayment Event (as defined below) under, or result in the creation or imposition of any lien, charge or encumbrance upon any assets, property or operations of the Company or any of its subsidiaries pursuant to, any Agreements and Instruments nor will such action result in any violation of the provisions of the charter or by-laws of the Company or any of its subsidiaries or any applicable law, statute, rule, regulation, 9 judgment, order, writ or decree of any government, government instrumentality or court, domestic or foreign, having jurisdiction over the Company or any of its subsidiaries or any of their assets, properties or operations. As used herein, a "Repayment Event" means any event or condition which gives the holder of any note, debenture or other evidence of indebtedness (or any person acting on such holder's behalf) the right to require the repurchase, redemption or repayment of all or a portion of such indebtedness by the Company or any of its subsidiaries. (xv) ABSENCE OF LABOR DISPUTE. No labor dispute with the employees of the Company or any of its subsidiaries exists or, to the knowledge of the Company, is imminent, and the Company is not aware of any existing or imminent labor disturbance by the employees of any of its or any subsidiary's principal suppliers, manufacturers, customers or contractors, which, in either case, may reasonably be expected to result in a Material Adverse Effect. (xvi) ABSENCE OF PROCEEDINGS. There is not pending or threatened any action, suit, proceeding, inquiry or investigation before or brought by any court or governmental agency or body, domestic or foreign, now pending, or, to the knowledge of the Company threatened, against or affecting the Company or any of its subsidiaries which is required to be disclosed in the Registration Statement and the Prospectus (other than as stated therein), or which might reasonably be expected to result in a Material Adverse Effect, or which might reasonably be expected to materially and adversely affect the consummation of the transactions contemplated under this Underwriting Agreement, the applicable Terms Agreement or the Indenture or the performance by the Company of its obligations hereunder and thereunder. The aggregate of all pending legal or governmental proceedings to which the Company or any of its subsidiaries is a party or of which any of their respective assets, properties or operations is the subject which are not described in the Registration Statement and the Prospectus, including ordinary routine litigation incidental to the business, could not reasonably be expected to result in a Material Adverse Effect. (xvii) ACCURACY OF EXHIBITS. There are no contracts or documents which are required to be described in the Registration Statement, the Prospectus or the documents incorporated by reference therein or to be filed as exhibits thereto which have not been so described and filed as required. (xviii)ABSENCE OF FURTHER REQUIREMENTS. No filing with, or authorization, approval, consent, license, order, registration, qualification or decree of, any court or governmental authority or agency, domestic or foreign, is necessary or required for the performance by the Company of its obligations under this Underwriting Agreement or the applicable Terms Agreement or in connection with the transactions contemplated under this Underwriting Agreement, such Terms Agreement or any applicable Indenture, except such as have been already obtained, or except such as may be required under state securities laws (as to which the Company makes no representation). 10 (xix) POSSESSION OF INTELLECTUAL PROPERTY. The Company and its subsidiaries own or possess, or can acquire on reasonable terms, adequate patents, patent rights, licenses, inventions, copyrights, know-how (including trade secrets and other unpatented and/or unpatentable proprietary or confidential information, systems or procedures), trademarks, service marks, trade names or other intellectual property (collectively, "Intellectual Property") necessary to carry on the business now operated by them, and neither the Company nor any of its subsidiaries has received any notice or is otherwise aware of any infringement of or conflict with asserted rights of others with respect to any Intellectual Property or of any facts or circumstances which would render any Intellectual Property invalid or inadequate to protect the interest of the Company or any of its subsidiaries therein, and which infringement or conflict (if the subject of any unfavorable decision, ruling or finding) or invalidity or inadequacy, singly or in the aggregate, would result in a Material Adverse Effect. (xx) POSSESSION OF LICENSES AND PERMITS. The Company and its subsidiaries possess such material permits, licenses, approvals, consents and other authorizations (collectively, "Governmental Licenses") issued by the appropriate federal, state, local or foreign regulatory agencies or bodies (including without limitation all such regulatory agencies or bodies relating to financing and insurance activities) ("Governmental Authorities") necessary to conduct the business now operated by them. The Company and its subsidiaries are in compliance with the terms and conditions of all such Governmental Licenses, except where the failure so to comply would not, singly or in the aggregate, result in a Material Adverse Effect. All of the Governmental Licenses are valid and in full force and effect, except when the invalidity of such Governmental Licenses or the failure of such Governmental Licenses to be in full force and effect would not result in a Material Adverse Effect. Neither the Company nor any of its subsidiaries has received any notice of proceedings relating to the revocation or modification of any such Governmental Licenses which, singly or in the aggregate, if the subject of an unfavorable decision, ruling or finding, would result in a Material Adverse Effect. (xxi) TITLE TO PROPERTY. The Company and its subsidiaries have good and marketable title to all material real property owned by the Company and its subsidiaries and good title to all other material properties owned by them, in each case, free and clear of all mortgages, pledges, liens, security interests, claims, restrictions or encumbrances of any kind, except (A) as otherwise stated in the Registration Statement and the Prospectus or (B) those which do not, singly or in the aggregate, materially affect the value of such property and do not interfere with the use made and proposed to be made of such property by the Company or any of its subsidiaries. All of the leases and subleases material to the business of the Company and its subsidiaries considered as one enterprise, and under which the Company or any of its subsidiaries holds properties described in the Prospectus, are in full force and effect, and neither the Company nor any of its subsidiaries has received any notice of any material claim of any sort that has been asserted by anyone adverse to the rights of the Company or any of its subsidiaries 11 under any of the leases or subleases mentioned above, or affecting or questioning the rights of the Company or such subsidiary to the continued possession of the leased or subleased premises under any such lease or sublease. (xxii) COMMODITY EXCHANGE ACT. The Debt Securities, upon issuance, will be excluded or exempted under, or beyond the purview of, the Commodity Exchange Act, as amended (the "Commodity Exchange Act"), and the rules and regulations of the Commodity Futures Trading Commission under the Commodity Exchange Act. (xxiii) INVESTMENT COMPANY ACT. Neither the Company nor any of its subsidiaries is, and upon the issuance and sale of the Underwritten Securities as herein contemplated and the application of the net proceeds therefrom as described in the Prospectus will not be, an "investment company" or a company "controlled" by an "investment company" within the meaning of the Investment Company Act of 1940, as amended. (xxiv) ENVIRONMENTAL LAWS. Except as otherwise stated in the Registration Statement and the Prospectus and except as would not, singly or in the aggregate, result in a Material Adverse Effect, (A) neither the Company nor any of its subsidiaries is in violation of any federal, state, local or foreign statute, law, rule, regulation, ordinance, code, policy or rule of common law or any judicial or administrative interpretation thereof including any judicial or administrative order, consent, decree or judgment, relating to pollution or protection of human health, the environment (including, without limitation, ambient air, surface water, groundwater, land surface or subsurface strata) or wildlife, including, without limitation, laws and regulations relating to the release or threatened release of chemicals, pollutants, contaminants, wastes, toxic substances, hazardous substances, petroleum or petroleum products (collectively, "Hazardous Materials") or to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials (collectively, "Environmental Laws"), (B) the Company and its subsidiaries have all permits, authorizations and approvals required under any applicable Environmental Laws and are each in compliance with their requirements, (C) there are no pending or threatened administrative, regulatory or judicial actions, suits, demands, demand letters, claims, liens, notices of noncompliance or violation, investigation or proceedings relating to any Environmental Law against the Company or any of its subsidiaries and (D) there are no events or circumstances that might reasonably be expected to form the basis of an order for clean-up or remediation, or an action, suit or proceeding by any private party or governmental body or agency, against or affecting the Company or any of its subsidiaries relating to Hazardous Materials or any Environmental Laws. (xxv) REGISTRATION RIGHTS. There are no holders of securities (debt or equity) of the Company or holders of rights (including, without limitation, preemptive rights), warrants or options to obtain securities of the Company, who have the right to request the Company to register securities held by them under the 1933 Act, other than holders who have waived or will 12 not have such rights for a specified period to be agreed upon among the Company and the Underwriters, and have waived their rights with respect to the inclusion of their securities in the Registration Statement. (xxvi) ACCOUNTING CONTROLS. The Company maintains a system of internal accounting controls sufficient to provide reasonable assurances that (A) transactions are executed in accordance with management's general or specific authorization; (B) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain accountability for assets; (C) access to assets is permitted only in accordance with management's general or specific authorization; and (D) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. (xxvii) COMPLIANCE WITH APPLICABLE LAW. The Company has complied in all material respects with all material federal, state, local, foreign and similar statutes, laws, ordinances, rules, regulations, orders, writs, injunctions, judgements, and decrees applicable to the Company or any of its subsidiaries or to any of the Company's or its subsidiary's properties or assets, or with respect to any of the Company's or its subsidiary's officers, directors, employees or agents in their capacity as such ("Applicable Laws"). None of the Company or any of its subsidiaries has received any written notice or other written communication from any Governmental Authority or arbitrator regarding any violation by the Company of, or a failure on the part of the Company to comply with any Applicable Laws, other than any such violation or failure to comply which would not, individually or in the aggregate, be reasonably likely to have a Material Adverse Effect. (xxviii) TAX RETURNS. All material Tax Returns required to be filed by the Company and each of its subsidiaries in any jurisdiction have been filed, and all material Taxes (whether or not actually shown on such Tax Returns) for which any of them is directly or indirectly liable or to which any of their respective properties or assets are subject have been paid other than Taxes being contested in good faith and for which adequate reserves have been established in accordance with GAAP. All such Tax Returns are true, correct and complete in all material respects and accurately set forth all items to the extent required to be reflected or included in such Tax Returns by applicable federal, state, local or foreign Tax Laws, regulations or rules. There is no material proposed Tax assessment against the Company or any of its subsidiaries, and, to the best knowledge of the Company, there is no basis for such assessment, except for contested claims. As used herein, the following terms shall have the respective meanings given to them below: "Tax Return" means a report, return or other information (including any amendments) required to be supplied to a governmental entity with respect to Taxes 13 including, where permitted or required, combined or consolidated returns for any group of entities that includes the Company or any of its subsidiaries. "Taxes" means all taxes however denominated, including any interest or penalties that may become payable in respect thereof, imposed by any federal, state, local or foreign government or any agency or political subdivision of any such government, which taxes shall include all income taxes (including, but not limited to, United States federal income taxes and state income taxes), payroll and employee withholding taxes, unemployment insurance, social security, sales and use taxes, excise taxes, environmental, franchise taxes, gross receipts taxes, occupation taxes, real and personal property taxes, stamp taxes, transfer taxes, withholding taxes, workers' compensation, and other obligations of the same or similar nature. (xxix) INSURANCE. Each of the Company and its subsidiaries is insured (including in each case self-insurance and reinsurance) by insurers of recognized financial responsibility against such losses and risks and in such amounts and covering such risks as management reasonably believes are prudent and customary in the businesses in which it is engaged and all such insurance is in full force and effect; neither the Company nor any of its subsidiaries has been refused any insurance coverage sought or applied for; and neither the Company nor any of its subsidiaries has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business; except in the case of each of the foregoing as would not have a Material Adverse Effect. (b) OFFICER'S CERTIFICATES. Any certificate signed by any officer of the Company or any of its subsidiaries and delivered to any Underwriter or to counsel for the Underwriters in connection with the offering of the Underwritten Securities shall be deemed a representation and warranty by the Company to each Underwriter as to the matters covered thereby on the date of such certificate and, unless subsequently amended or supplemented, at each Representation Date subsequent thereto. SECTION 2. SALE AND DELIVERY TO UNDERWRITERS; CLOSING. (a) UNDERWRITTEN SECURITIES. The several commitments of the Underwriters to purchase the Underwritten Securities pursuant to the applicable Terms Agreement shall be deemed to have been made on the basis of the representations and warranties herein contained and shall be subject to the terms and conditions herein set forth. (b) OPTION UNDERWRITTEN SECURITIES. In addition, subject to the terms and conditions herein set forth, the Company may grant, if so provided in the applicable Terms Agreement, an option to the Underwriters, severally and not jointly, to purchase up to the number 14 or aggregate principal amount, as the case may be, of the Option Underwritten Securities set forth therein at a price per Option Underwritten Security equal to the price per Initial Underwritten Security. Such option, if granted, will expire 30 days after the date of such Terms Agreement, and may be exercised in whole or in part from time to time only for the purpose of covering over-allotments which may be made in connection with the offering and distribution of the Initial Underwritten Securities upon notice by the Representative to the Company setting forth the aggregate principal amount, as the case may be, of Option Underwritten Securities as to which the several Underwriters are then exercising the option and the time, date and place of payment and delivery for such Option Underwritten Securities. Any such time and date of payment and delivery (each, a "Date of Delivery") shall be determined by the Representative, but shall not be later than seven full business days after the exercise of said option, nor in any event prior to the Closing Time, unless otherwise agreed upon by the Representative and the Company. If the option is exercised as to all or any portion of the Option Underwritten Securities, each of the Underwriters, severally and not jointly, will purchase that proportion of the total number or aggregate principal amount, as the case may be, of Option Underwritten Securities then being purchased which the number or aggregate principal amount, as the case may be, of Initial Underwritten Securities each such Underwriter has severally agreed to purchase as set forth in such Terms Agreement bears to the aggregate principal amount, as the case may be, of Initial Underwritten Securities, subject to such adjustments as the Representative in its discretion shall make to eliminate any sales or purchases of a fractional number or aggregate principal amount, as the case may be, of Option Underwritten Securities. (c) PAYMENT. Payment of the purchase price for, and delivery of certificates for, the Initial Underwritten Securities shall be made at the offices of Kennedy Covington Lobdell & Hickman, L.L.P. or at such other place as shall be agreed upon by the Representative and the Company, at 9:00 A.M. (Eastern time) on the third (fourth, if the pricing occurs after 4:30 P.M. (Eastern time) on any given day) business day after the date of the applicable Terms Agreement (unless postponed in accordance with the provisions of Section 10 hereof), or such other time not later than ten business days after such date as shall be agreed upon by the Representative and the Company (such time and date of payment and delivery being herein called "Closing Time"). In addition, in the event that the Underwriters have exercised their option, if any, to purchase any or all of the Option Underwritten Securities, payment of the purchase price for, and delivery of such Option Underwritten Securities, shall be made at the above-mentioned offices, or at such other place as shall be agreed upon by the Representative and the Company, on the relevant Date of Delivery as specified in the notice from the Representative to the Company. Payment shall be made to the Company by wire transfer of immediately available funds to a bank account designated by the Company, against delivery to the Representative for the respective accounts of the Underwriters of the Underwritten Securities to be purchased by them. It is understood that each Underwriter has authorized the Representative, for its account, to accept delivery of, receipt for, and make payment of the purchase price for, the Underwritten 15 Securities which it has severally agreed to purchase. The Representative, individually and not as representative of the Underwriters, may (but shall not be obligated to) make payment of the purchase price for the Underwritten Securities to be purchased by any Underwriter whose funds have not been received by the Closing Time or the relevant Date of Delivery, as the case may be, but such payment shall not relieve such Underwriter from its obligations hereunder. (d) DENOMINATIONS; REGISTRATION. The Underwritten Securities shall be in such denominations and registered in such names as the Representative may request in writing at least one full business day before the Closing Time or the relevant Date of Delivery, as the case may be. The Underwritten Securities will be made available for examination and packaging by the Representative in Charlotte, North Carolina not later than 9:00 A.M. (Eastern time) on the business day prior to the Closing Time or the relevant Date of Delivery, as the case may be. SECTION 3. COVENANTS OF THE COMPANY. The Company covenants with the Representative and with each Underwriter participating in the offering of Underwritten Securities, as follows: (a) COMPLIANCE WITH SECURITIES REGULATIONS AND COMMISSION REQUESTS. The Company, subject to Section 3(b), will comply with the requirements of Rule 430A of the 1933 Act Regulations and/or Rule 434 of the 1933 Act Regulations, if and as applicable, and will notify the Representative immediately, and confirm the notice in writing, of (i) the effectiveness of any post-effective amendment to the Registration Statement or the filing of any supplement or amendment to the Prospectus, (ii) the receipt of any comments from the Commission, (iii) any request by the Commission for any amendment to the Registration Statement or any amendment or supplement to the Prospectus or for additional information, and (iv) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or of any order preventing or suspending the use of any preliminary prospectus, or of the suspension of the qualification of the Underwritten Securities for offering or sale in any jurisdiction, or of the initiation or threatening of any proceedings for any of such purposes. The Company will promptly effect the filings necessary pursuant to Rule 424 and will take such steps as it deems necessary to ascertain promptly whether Prospectus transmitted for filing under Rule 424 was received for filing by the Commission and, in the event that it was not, it will promptly file the Prospectus. The Company will make every reasonable effort to prevent the issuance of any stop order and, if any stop order is issued, to obtain the lifting thereof at the earliest possible moment. (b) FILING OF AMENDMENTS. During the period when the Prospectus is required to be delivered under the 1933 Act or the 1934 Act, the Company will give the Representative notice of its intention to file or prepare any amendment to the Registration Statement (including any filing under Rule 462(b) of the 1933 Act Regulations), any Term Sheet or any amendment, 16 supplement or revision to either the prospectus included in the Registration Statement at the time it became effective or to the Prospectus, whether pursuant to the 1933 Act, the 1934 Act or otherwise, will furnish the Representative with copies of any such documents a reasonable amount of time prior to such proposed filing or use, as the case may be, and will not file or use any such document to which the Representative or counsel for the Underwriters shall object. (c) DELIVERY OF REGISTRATION STATEMENTS. The Company has furnished or will deliver to the Representative and counsel for the Underwriters, without charge, signed copies of the Registration Statement as originally filed and of each amendment thereto (including exhibits filed therewith or incorporated by reference therein and documents incorporated or deemed to be incorporated by reference therein) and signed copies of all consents and certificates of experts, and will also deliver to the Representative, without charge, a conformed copy of the Registration Statement as originally filed and of each amendment thereto (without exhibits) for each of the Underwriters. Copies of the Registration Statement and each amendment thereto furnished to the Underwriters will be identical to the electronically transmitted copies thereof filed with the Commission pursuant to EDGAR, except to the extent permitted by Regulation S-T. (d) DELIVERY OF PROSPECTUSES. The Company will deliver to each Underwriter, without charge, as many copies of each preliminary prospectus as such Underwriter may reasonably request, and the Company hereby consents to the use of such copies for purposes permitted by the 1933 Act. The Company will furnish to each Underwriter, without charge, during the period when the Prospectus is required to be delivered under the 1933 Act or the 1934 Act, such number of copies of the Prospectus as such Underwriter may reasonably request. The Prospectus and any amendments or supplements thereto furnished to the Underwriters will be identical to the electronically transmitted copies thereof filed with the Commission pursuant to EDGAR, except to the extent permitted by Regulation S-T. 17 (e) CONTINUED COMPLIANCE WITH SECURITIES LAWS. The Company will comply with the 1933 Act and the 1933 Act Regulations and the 1934 Act and the 1934 Act Regulations so as to permit the completion of the distribution of the Underwritten Securities as contemplated in this Underwriting Agreement and the applicable Terms Agreement and in the Registration Statement and the Prospectus. If at any time when the Prospectus is required by the 1933 Act or the 1934 Act to be delivered in connection with sales of the Securities, any event shall occur or condition shall exist as a result of which it is necessary, in the opinion of counsel for the Underwriters or for the Company, to amend the Registration Statement in order that the Registration Statement will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading or to amend or supplement the Prospectus in order that the Prospectus will not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein not misleading in the light of the circumstances existing at the time it is delivered to a purchaser, or if it shall be necessary, in the opinion of such counsel, at any such time to amend the Registration Statement or amend or supplement the Prospectus in order to comply with the requirements of the 1933 Act or the 1933 Act Regulations, the Company will promptly prepare and file with the Commission, subject to Section 3(b), such amendment or supplement as may be necessary to correct such statement or omission or to make the Registration Statement or the Prospectus comply with such requirements, and the Company will furnish to the Underwriters, without charge, such number of copies of such amendment or supplement as the Underwriters may reasonably request. (f) BLUE SKY QUALIFICATIONS. The Company will use its best efforts, in cooperation with the Underwriters, to qualify the Underwritten Securities for offering and sale under the applicable securities laws of such states and other jurisdictions (domestic or foreign) as the Representative may designate and to maintain such qualifications in effect for a period of not less than one year from the date of the applicable Terms Agreement; PROVIDED, HOWEVER, that the Company shall not be obligated to file any general consent to service of process or to qualify as a foreign corporation or as a dealer in securities in any jurisdiction in which it is not so qualified or to subject itself to taxation in respect of doing business in any jurisdiction in which it is not otherwise so subject. In each jurisdiction in which the Underwritten Securities have been so qualified, the Company will file such statements and reports as may be required by the laws of such jurisdiction to continue such qualification in effect for a period of not less than one year from the date of such Terms Agreement. (g) EARNINGS STATEMENT. The Company will timely file such reports pursuant to the 1934 Act as are necessary in order to make generally available to its securityholders as soon as practicable an earnings statement for the purposes of, and to provide the benefits contemplated by, the last paragraph of Section 11(a) of the 1933 Act. (h) REPORTS TO SECURITYHOLDERS. Through its fiscal year ending in 1999, 18 the Company will deliver to the Representative copies of all reports or other communications (financial or otherwise) made to securityholders of the Company. (i) USE OF PROCEEDS. The Company will use the net proceeds received by it from the sale of the Underwritten Securities in the manner specified in the Prospectus under "Use of Proceeds." (j) LISTING. The Company will use its best efforts to effect the listing of the Underwritten Securities, prior to the Closing Time, on any national securities exchange or quotation system if and as specified in the applicable Terms Agreement. (k) RESTRICTION ON SALE OF SECURITIES. Between the date of the applicable Terms Agreement and the Closing Time or such other date specified in such Terms Agreement, the Company will not, without the prior written consent of the Representative, directly or indirectly, issue, sell, offer to sell, grant any option for the sale of, or otherwise dispose of, the securities specified in such Terms Agreement. (l) REPORTING REQUIREMENTS. The Company, during the period when the Prospectus is required to be delivered under the 1933 Act or the 1934 Act, will file all documents required to be filed with the Commission pursuant to the 1934 Act within the time periods required by the 1934 Act and the 1934 Act Regulations. SECTION 4. PAYMENT OF EXPENSES. (a) EXPENSES. The Company will pay all expenses incident to the performance of its obligations under this Underwriting Agreement or the applicable Terms Agreement, including (i) the preparation, printing and filing of the Registration Statement (including financial statements and exhibits) as originally filed and of each amendment thereto, (ii) the preparation, printing and delivery to the Underwriters of this Underwriting Agreement, any Terms Agreement, any agreement among underwriters, the Indenture and such other documents as may be required in connection with the offering, purchase, sale, issuance or delivery of the Underwritten Securities, (iii) the preparation, issuance and delivery of the Underwritten Securities to the Underwriters, including any transfer taxes and any stamp or other duties payable upon the sale, issuance or delivery of the Underwritten Securities to the Underwriters, (iv) the fees and disbursements of the Company's counsel, accountants and other advisors or agents (including transfer agents and registrars), as well as the fees and disbursements of any Trustees and their respective counsel, (v) the qualification of the Underwritten Securities under state securities laws in accordance with the provisions of Section 3(f) hereof, including filing fees and the reasonable fees and disbursements of counsel for the Underwriters in connection therewith and in connection with the preparation, printing and delivery of the Blue Sky Survey and any Legal Investment Survey, and any amendment thereto, (vi) the printing and delivery to the 19 Underwriters of copies of each preliminary prospectus, any Term Sheet, and the Prospectus and any amendments or supplements thereto, (vii) the fees charged by nationally recognized statistical rating organizations for the rating of the Underwritten Securities, if applicable, (viii) the fees and expenses incurred with respect to the listing of the Underwritten Securities, if applicable, (ix) the filing fees incident to, and the reasonable fees and disbursements of counsel to the Underwriters in connection with, the review, if any, by the National Association of Securities Dealers, Inc. (the "NASD") of the terms of the sale of the Underwritten Securities, (x) the fees and expenses of any Underwriter acting in the capacity of a "qualified independent underwriter" (as defined in the bylaws of the NASD), if applicable and (xi) the expenses of the Company and the Underwriters incurred in connection with the "road show" relating to the offering of the Securities. (b) TERMINATION OF AGREEMENT. If the applicable Terms Agreement is terminated by the Representative in accordance with the provisions of Section 5 or Section 9(b)(i) hereof, the Company shall reimburse the Underwriters for all of their out-of-pocket expenses, including the reasonable fees and disbursements of counsel for the Underwriters. SECTION 5. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The obligations of the Underwriters to purchase and pay for the Underwritten Securities pursuant to the applicable Terms Agreement are subject to the accuracy of the representations and warranties of the Company contained in Section 1 hereof or in certificates of any officer of the Company or any of its subsidiaries delivered pursuant to the provisions hereof, to the performance by the Company of its covenants and other obligations hereunder, and to the following further conditions: (a) EFFECTIVENESS OF REGISTRATION STATEMENT. The Registration Statement, including any Rule 462(b) Registration Statement, has become effective under the 1933 Act and no stop order suspending the effectiveness of the Registration Statement shall have been issued under the 1933 Act and no proceedings for that purpose shall have been initiated or be pending or threatened by the Commission, and any request on the part of the Commission for additional information shall have been complied with to the reasonable satisfaction of counsel to the Underwriters. A prospectus containing information relating to the description of the Underwritten Securities, the specific method of distribution and similar matters shall have been filed with the Commission in accordance with Rule 424(b)(1), (2), (3), (4) or (5), as applicable (or any required post-effective amendment providing such information shall have been filed and declared effective in accordance with the requirements of Rule 430A), or, if the Company has elected to rely upon Rule 434 of the 1933 Act Regulations, a Term Sheet including the Rule 434 Information shall have been filed with the Commission in accordance with Rule 424(b)(7). (b) OPINION OF COUNSEL FOR COMPANY. At Closing Time, the Representative shall have received the favorable opinion, dated as of Closing Time, of Kennedy 20 Covington Lobdell & Hickman, L.L.P., counsel for the Company, in form and substance satisfactory to counsel for the Underwriters, together with signed or reproduced copies of such letter for each of the other Underwriters, to the effect set forth in EXHIBIT B hereto and to such further effect as counsel to the Underwriters may reasonably request. (c) OPINION OF COUNSEL FOR UNDERWRITERS. At Closing Time, the Representative shall have received the favorable opinion, dated as of Closing Time, of McGuire Woods Battle & Boothe, LLP, counsel for the Underwriters, together with signed or reproduced copies of such letter for each of the other Underwriters, with respect to the matters set forth in clauses (1), (6), (7), (8), (10), (11) (solely as to the information in the Prospectus under "Description of Notes" and "Description of Capital Stock," if any, or any caption purporting to describe any such Securities), (17), (18) and the penultimate paragraph of EXHIBIT B hereto. In giving such opinion, such counsel may rely, as to all matters governed by the laws of jurisdictions other than the laws of the State of New York and the federal laws of the United States, upon the opinions of counsel satisfactory to the Representative. Such counsel may also state that, insofar as such opinion involves factual matters, they have relied, to the extent they deem proper, upon certificates of officers of the Company and its subsidiaries and certificates of public officials. (d) OFFICERS' CERTIFICATE. At Closing Time, there shall not have been, since the date of the applicable Terms Agreement or since the respective dates as of which information is given in the Prospectus, any material adverse change in the condition, financial or otherwise, or in the earnings, business affairs or business prospects of the Company and its subsidiaries considered as one enterprise, whether or not arising in the ordinary course of business, and the Representative shall have received a certificate of the President or a Vice President of the Company and of the chief financial or chief accounting officer of the Company, dated as of Closing Time, to the effect that (i) there has been no such material adverse change, (ii) the representations and warranties in Section 1 are true and correct with the same force and effect as though expressly made at and as of the Closing Time, (iii) the Company has complied with all agreements and satisfied all conditions on its part to be performed or satisfied at or prior to the Closing Time, and (iv) no stop order suspending the effectiveness of the Registration Statement has been issued and no proceedings for that purpose have been instituted or threatened by the Commission. (e) ACCOUNTANT'S COMFORT LETTER. At the time of the execution of the applicable Terms Agreement, the Representative shall have received from PricewaterhouseCoopers LLP (and, if necessary, any other independent certified public accountants of any subsidiary of the Company or of any business acquired by the Company for which financial statements are, or are required to be, included in the Registration Statement) a letter dated such date, in form and substance satisfactory to the Representative, together with signed or reproduced copies of such letter for each of the other Underwriters, including matters 21 such as those set forth in Annex I hereto and containing statements and information of the type ordinarily included in accountants' "comfort letters" to underwriters with respect to the financial statements and certain financial information contained in the Registration Statement and the Prospectus. (f) BRING-DOWN COMFORT LETTER. At the Closing Time, the Representative shall have received from PricewaterhouseCoopers LLP (and, if necessary, any other independent certified public accountants of any subsidiary of the Company or of any business acquired by the Company for which financial statements are, or are required to be, included in the Registration Statement) a letter, dated as of Closing Time, to the effect that they reaffirm the statements made in the letter furnished pursuant to subsection (e) of this Section 5, except that the specified date referred to shall be a date not more than three business days prior to the Closing Time. (g) RATINGS. At Closing Time and at any relevant Date of Delivery, the Underwritten Securities shall have the ratings accorded by any "nationally recognized statistical rating organization," as defined by the Commission for purposes of Rule 436(g)(2) of the 1933 Act Regulations, if and as specified in the applicable Terms Agreement, and the Company shall have delivered to the Representative a letter, dated as of such date, from each such rating organization, or other evidence satisfactory to the Representative, confirming that the Underwritten Securities have such rating. Since the time of execution of such Terms Agreement, there shall not have occurred a downgrading in the rating assigned to the Underwritten Securities or any of the Company's other securities by any such rating organization, and no such rating organization shall have publicly announced that it has under surveillance or review its rating of the Underwritten Securities or any of the Company's other securities. (h) APPROVAL OF LISTING. At Closing Time, the Underwritten Securities shall have been approved for listing, subject only to official notice of issuance, if any, as specified in the applicable Terms Agreement. (i) NO OBJECTION. If the Registration Statement or an offering of Underwritten Securities has been filed with the NASD for review, the NASD shall not have raised any objection with respect to the fairness and reasonableness of the underwriting terms and arrangements. (j) LOCK-UP ARRANGEMENTS. On the date of the applicable Terms Agreement, the Representative shall have received, in form and substance satisfactory to it, each lock-up agreement, if any, specified in such Terms Agreement as being required to be delivered by the persons listed therein. (k) OVER-ALLOTMENT OPTION. In the event that the Underwriters are granted an over-allotment option by the Company in the applicable Terms Agreement and the Underwriters 22 exercise their option to purchase all or any portion of the Option Underwritten Securities, the representations and warranties of the Company contained herein and the statements in any certificates furnished by the Company or any of its subsidiaries hereunder shall be true and correct as of each Date of Delivery, and, at the relevant Date of Delivery, the Representative shall have received: (i) A certificate, dated such Date of Delivery, of the President or a Vice President of the Company and the chief financial officer or chief accounting officer of the Company, confirming that the certificate delivered at the Closing Time pursuant to Section 5(d) hereof remains true and correct as of such Date of Delivery. (ii) The favorable opinion of Kennedy Covington Lobdell & Hickman, L.L.P., counsel for the Company, in form and substance satisfactory to counsel for the Underwriters, dated such Date of Delivery, relating to the Option Underwritten Securities and otherwise to the same effect as the opinion required by Section 5(b) hereof. (iii) The favorable opinion of McGuire, Woods, Battle & Boothe, LLP, counsel for the Underwriters, dated such Date of Delivery, relating to the Option Underwritten Securities and otherwise to the same effect as the opinion required by Section 5(c) hereof. (iv) A letter from PricewaterhouseCoopers LLP (and such other accountants) in form and substance satisfactory to the Representative and dated such Date of Delivery, substantially in the same form and substance as the letter furnished to the Representative pursuant to Section 5(f) hereof, except that the "specified date" on the letter furnished pursuant to this paragraph shall be a date not more than three business days prior to such Date of Delivery. (l) ADDITIONAL DOCUMENTS. At Closing Time and at each Date of Delivery, counsel for the Underwriters shall have been furnished with such documents and opinions as they may require for the purpose of enabling them to pass upon the issuance and sale of the Underwritten Securities as herein contemplated, or in order to evidence the accuracy of any of the representations or warranties, or the fulfillment of any of the conditions, herein contained; and all proceedings taken by the Company in connection with the issuance and sale of the Underwritten Securities as herein contemplated shall be satisfactory in form and substance to the Representative and counsel for the Underwriters. (m) TERMINATION OF TERMS AGREEMENT. If any condition specified in this Section 5 shall not have been fulfilled when and as required to be fulfilled, the applicable Terms Agreement (or, with respect to the Underwriters' exercise of any applicable over-allotment option for the purchase of Option Underwritten Securities on a Date of Delivery after the Closing Time, the obligations of the Underwriters to purchase the Option Underwritten Securities on such Date 23 of Delivery) may be terminated by the Representative by notice to the Company at any time at or prior to the Closing Time (or such Date of Delivery, as applicable), and such termination shall be without liability of any party to any other party except as provided in Section 4 and except that Sections 1, 6, 7 and 8 shall survive any such termination and remain in full force and effect. SECTION 6. INDEMNIFICATION. (a) INDEMNIFICATION OF UNDERWRITERS. The Company agrees to indemnify and hold harmless each Underwriter and each person, if any, who controls any Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act as follows: (i) against any and all loss, liability, claim, damage and expense whatsoever, as incurred, arising out of any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement (or any amendment thereto), including the Rule 430A Information and the Rule 434 Information deemed to be a part thereof, if applicable, or the omission or alleged omission therefrom of a material fact required to be stated therein or necessary to make the statements therein not misleading or arising out of any untrue statement or alleged untrue statement of a material fact included in any preliminary prospectus or the Prospectus (or any amendment or supplement thereto), or the omission or alleged omission therefrom of a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; (ii) against any and all loss, liability, claim, damage and expense whatsoever, as incurred, to the extent of the aggregate amount paid in settlement of any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or of any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission; PROVIDED that (subject to Section 6(d) below) any such settlement is effected with the written consent of the Company; and (iii) against any and all expense whatsoever, as incurred (including the fees and disbursements of counsel chosen by the Representative), reasonably incurred in investigating, preparing or defending against any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission, to the extent that any such expense is not paid under (i) or (ii) above; PROVIDED, HOWEVER, that (A) this indemnity agreement shall not apply to any loss, liability, claim, damage or expense to the extent arising out of any untrue statement or omission 24 or alleged untrue statement or omission made in reliance upon and in conformity with written information furnished to the Company by any Underwriter through the Representative expressly for use in the Registration Statement (or any amendment thereto), including the Rule 430A Information and the Rule 434 Information deemed to be a part thereof, if applicable, or any preliminary prospectus or the Prospectus (or any amendment or supplement thereto); and (B) the foregoing indemnity with respect to any untrue statement contained in or any omission from the preliminary prospectus shall not inure to the benefit of any Underwriter (or any person controlling such Underwriter) from whom the person asserting any such loss, liability, claim, damage or expense purchased any of the Debt Securities that are the subject thereof if, and to the extent that the Company is materially prejudiced thereby, the Company shall sustain the burden of proving, and a determination shall have been made by a court of competent jurisdiction by final and nonappealable judgment, that (i) the untrue statement or omission contained in the preliminary prospectus was corrected in the Prospectus; (ii) such person was not sent or given a copy of the Prospectus (excluding documents incorporated by reference) which corrected the untrue statement or omission at or prior to the written confirmation of the sale of such Debt Securities to such person if required by applicable law; and (iii) the Company had previously satisfied its obligation pursuant to Section 3(d) of this Agreement to provide a sufficient number of copies of the Prospectus to the Underwriters.. (b) INDEMNIFICATION OF COMPANY, DIRECTORS AND OFFICERS. Each Underwriter severally agrees to indemnify and hold harmless the Company, its directors, each of its officers who signed the Registration Statement, and each person, if any, who controls the Company within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act against any and all loss, liability, claim, damage and expense described in the indemnity contained in subsection (a) of this Section, as incurred, but only with respect to untrue statements or omissions, or alleged untrue statements or omissions, made in the Registration Statement (or any amendment thereto), including the Rule 430A Information and the Rule 434 Information deemed to be a part thereof, if applicable, or any preliminary prospectus or the Prospectus (or any amendment or supplement thereto) in reliance upon and in conformity with written information furnished to the Company by such Underwriter through the Representative expressly for use in the Registration Statement (or any amendment thereto) or such preliminary prospectus or the Prospectus (or any amendment or supplement thereto). (c) ACTIONS AGAINST PARTIES; NOTIFICATION. Each indemnified party shall give notice as promptly as reasonably practicable to each indemnifying party of any action commenced against it in respect of which indemnity may be sought hereunder, but failure to so notify an indemnifying party shall not relieve such indemnifying party from any liability hereunder to the extent it is not materially prejudiced as a result thereof and in any event shall not relieve it from any liability which it may have otherwise than on account of this indemnity agreement. An indemnifying party may participate at its own expense in the defense of any such action; PROVIDED, HOWEVER, that counsel to the indemnifying party shall not (except with 25 the consent of the indemnified party) also be counsel to the indemnified party. The indemnifying party shall be entitled to appoint counsel of the indemnifying party's choice at the indemnifying party's expense to represent the indemnified party in any action for which indemnification is sought (in which case the indemnifying party shall not thereafter be responsible for the fees and expenses of any separate counsel retained by the indemnified party or parties except as set forth below); provided, however, that such counsel shall be reasonably satisfactory to the indemnified party. Notwithstanding the indemnifying party's election to appoint counsel to represent the indemnified party in an action, the indemnified party shall have the right to employ separate counsel (including local counsel), and the indemnifying party shall bear the reasonable fees, costs and expenses of such separate counsel (and local counsel) if (i) the use of counsel chosen by the indemnifying party to represent the indemnified party would present such counsel with a conflict of interest in the reasonable judgment of the indemnified party, (ii) the defendants in any such action include both the indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded that there may be legal defenses available to it and/or other indemnified parties which are different from or additional to those available to the indemnifying party, (iii) the indemnifying party shall not have employed counsel reasonably satisfactory to the indemnified party to represent the indemnified party within a reasonable time after notice of the institution of such action or (iv) the indemnifying party shall have authorized the indemnified party to employ separate counsel at the expense of the indemnifying party. Except as set forth above, the indemnifying parties shall not be liable for fees and expenses of more than one counsel (in addition to any local counsel) separate from their own counsel for all indemnified parties in connection with any one action or separate but similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances. No indemnifying party shall, without the prior written consent of the indemnified parties, settle or compromise or consent to the entry of any judgment with respect to any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever in respect of which indemnification or contribution could be sought under this Section 6 or Section 7 hereof (whether or not the indemnified parties are actual or potential parties thereto), unless such settlement, compromise or consent (i) includes an unconditional release of each indemnified party from all liability arising out of such litigation, investigation, proceeding or claim and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of any indemnified party. (d) SETTLEMENT WITHOUT CONSENT IF FAILURE TO REIMBURSE. If at any time an indemnified party shall have requested an indemnifying party to reimburse the indemnified party for fees and expenses of counsel, such indemnifying party agrees that it shall be liable for any settlement of the nature contemplated by Section 6(a)(ii) effected without its written consent if (i) such settlement is entered into more than 45 days after receipt by such indemnifying party of the aforesaid request, (ii) such indemnifying party shall have received notice of the terms of such settlement at least 30 days prior to such settlement being entered into and (iii) such indemnifying party shall not have reimbursed such indemnified party in accordance 26 with such request prior to the date of such settlement. Notwithstanding the immediately preceding sentence, if at any time an indemnified party shall have requested an indemnifying party to reimburse the indemnified party for fees and expenses of counsel, an indemnifying party shall not be liable for any settlement of the nature contemplated by Section 6(a)(ii) effected without its consent if such indemnifying party (i) reimburses such indemnified party in accordance with such request to the extent it considers such request to be reasonable and (ii) provides written notice to the indemnified party substantiating the unpaid balance as unreasonable, in each case prior to the date of such settlement. SECTION 7. CONTRIBUTION. If the indemnification provided for in Section 6 hereof is for any reason unavailable to or insufficient to hold harmless an indemnified party in respect of any losses, liabilities, claims, damages or expenses referred to therein, then each indemnifying party shall contribute to the aggregate amount of such losses, liabilities, claims, damages and expenses incurred by such indemnified party, as incurred, (i) in such proportion as is appropriate to reflect the relative benefits received by the Company, on the one hand, and the Underwriters, on the other hand, from the offering of the Underwritten Securities pursuant to the applicable Terms Agreement or (ii) if the allocation provided by clause (i) is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company, on the one hand, and of the Underwriters, on the other hand, in connection with the statements or omissions which resulted in such losses, liabilities, claims, damages or expenses, as well as any other relevant equitable considerations. The relative benefits received by the Company, on the one hand, and the Underwriters, on the other hand, in connection with the offering of the Underwritten Securities pursuant to the applicable Terms Agreement shall be deemed to be in the same respective proportions as the total net proceeds from the offering of such Underwritten Securities (before deducting expenses) received by the Company and the total underwriting discount received by the Underwriters, in each case as set forth on the cover of the Prospectus, or, if Rule 434 is used, the corresponding location on the Term Sheet bear to the aggregate initial public offering price of such Securities as set forth on such cover. The relative fault of the Company, on the one hand, and the Underwriters, on the other hand, shall be determined by reference to, among other things, whether any such untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by the Company or by the Underwriters and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company and the Underwriters agree that it would not be just and equitable if contribution pursuant to this Section 7 were determined by pro rata allocation (even if the 27 Underwriters were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to above in this Section 7. The aggregate amount of losses, liabilities, claims, damages and expenses incurred by an indemnified party and referred to above in this Section 7 shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in investigating, preparing or defending against any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever based upon any such untrue or alleged untrue statement or omission or alleged omission. Notwithstanding the provisions of this Section 7, no Underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the Underwritten Securities underwritten by it and distributed to the public were offered to the public exceeds the amount of any damages which such Underwriter has otherwise been required to pay by reason of any such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this Section 7, each person, if any, who controls an Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall have the same rights to contribution as such Underwriter, and each director of the Company, each officer of the Company who signed the Registration Statement, and each person, if any, who controls the Company within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall have the same rights to contribution as the Company. The Underwriters' respective obligations to contribute pursuant to this Section 7 are several in proportion to the number or aggregate principal amount, as the case may be, of Initial Underwritten Securities set forth opposite their respective names in the applicable Terms Agreement and not joint. SECTION 8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE DELIVERY. All representations, warranties and agreements contained in this Underwriting Agreement or the applicable Terms Agreement or in certificates of officers of the Company submitted pursuant hereto or thereto, shall remain operative and in full force and effect, regardless of any investigation made by or on behalf of any Underwriter or controlling person, or by or on behalf of the Company, and shall survive delivery of and payment for the Underwritten Securities. SECTION 9. TERMINATION. (a) UNDERWRITING AGREEMENT. This Underwriting Agreement (excluding the applicable Terms Agreement) may be terminated for any reason at any time by the Company or 28 by the Representative upon the giving of 30 days' prior written notice of such termination to the other party hereto. (b) TERMINATION; GENERAL. The Representative may terminate the applicable Terms Agreement, by notice to the Company, at any time at or prior to the Closing Time or any relevant Date of Delivery, if (i) there has been, since the time of execution of this Agreement or since the respective dates as of which information is given in the Prospectus, any material adverse change in the condition (financial or otherwise), earnings, business affairs or business prospects of the Company and its subsidiaries considered as one enterprise, whether or not arising in the ordinary course of business, or (ii) there has occurred any material adverse change in the financial markets in the United States or in the international financial markets, any outbreak of hostilities or escalation thereof or other calamity or crisis or any change or development involving a prospective change in national or international political, financial or economic conditions, in each case the effect of which is such as to make it, in the judgment of the Representative, impracticable to market the Underwritten Securities or to enforce contracts for the sale of the Underwritten Securities, or (iii) trading in any securities of the Company has been suspended or limited by the Commission or any national securities exchange or quotation system on which the Company's common stock is listed or quoted, or if trading generally on the New York Stock Exchange or the American Stock Exchange or in the Nasdaq National Market has been suspended or limited, or minimum or maximum prices for trading have been fixed, or maximum ranges for prices have been required, by any of said exchanges or by such system or by order of the Commission, the NASD or any other governmental authority, or (iv) a banking moratorium has been declared by either Federal, New York, or North Carolina authorities or, if the Underwritten Securities include Debt Securities denominated or payable in, or indexed to, one or more foreign or composite currencies, by the relevant authorities in the related foreign country or countries, or (v) there is any downgrading in the rating accorded the Underwritten Securities by any "nationally recognized statistical rating organization" as that term is defined by the Commission for purposes of Rule 436(g)(2) under the 1933 Act or if any such rating organization shall have publicly announced that it has placed any of such Underwritten Securities on what is commonly termed a "watch list" for possible downgrading. (c) LIABILITIES. If this Underwriting Agreement or the applicable Terms Agreement is terminated pursuant to this Section 9, such termination shall be without liability of any party to any other party except as provided in Section 4 hereof, and provided further that Sections 1, 6, 7 and 8 shall survive such termination and remain in full force and effect. SECTION 10. DEFAULT BY ONE OR MORE OF THE UNDERWRITERS. If one or more of the Underwriters shall fail at the Closing Time or the relevant Date of Delivery, as the case may be, to purchase the Underwritten Securities which it or they are obligated to purchase under the applicable Terms Agreement (the "Defaulted Securities"), then 29 the Representative shall have the right, within 24 hours thereafter, to make arrangements for one or more of the non-defaulting Underwriters, or any other underwriters, to purchase all, but not less than all, of the Defaulted Securities in such amounts as may be agreed upon and upon the terms herein set forth; if, however, the Representative shall not have completed such arrangements within such 24-hour period, then: (a) if the number or aggregate principal amount, as the case may be, of Defaulted Securities does not exceed 10% of the number or aggregate principal amount, as the case may be, of Underwritten Securities to be purchased on such date pursuant to such Terms Agreement, the non-defaulting Underwriters shall be obligated, severally and not jointly, to purchase the full amount thereof in the proportions that their respective underwriting obligations under such Terms Agreement bear to the underwriting obligations of all non-defaulting Underwriters, or (b) if the number or aggregate principal amount, as the case may be, of Defaulted Securities exceeds 10% of the number or aggregate principal amount, as the case may be, of Underwritten Securities to be purchased on such date pursuant to such Terms Agreement, such Terms Agreement (or, with respect to the Underwriters' exercise of any applicable over-allotment option for the purchase of Option Underwritten Securities on a Date of Delivery after the Closing Time, the obligations of the Underwriters to purchase, and the Company to sell, such Option Underwritten Securities on such Date of Delivery) shall terminate without liability on the part of any non-defaulting Underwriter. No action taken pursuant to this Section 10 shall relieve any defaulting Underwriter from liability in respect of its default. In the event of any such default which does not result in (i) a termination of the applicable Terms Agreement or (ii) in the case of a Date of Delivery after the Closing Time, a termination of the obligations of the Underwriters and the Company with respect to the related Option Underwritten Securities, as the case may be, either the Representative or the Company shall have the right to postpone the Closing Time or the relevant Date of Delivery, as the case may be, for a period not exceeding seven days in order to effect any required changes in the Registration Statement or the Prospectus or in any other documents or arrangements. SECTION 11. NOTICES. All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given if mailed or transmitted by any standard form of telecommunication. Notices to the Underwriters shall be directed to the address of the Representative as set forth in the Terms Agreement; notices to the Company shall be directed to the Company at 7800 McCloud Road, Greensboro, North Carolina 27409-9634, attention of General Counsel. 30 SECTION 12. PARTIES. This Underwriting Agreement and the applicable Terms Agreement shall each inure to the benefit of and be binding upon the Company, the Representative and, upon execution of such Terms Agreement, any other Underwriters and their respective successors. Nothing expressed or mentioned in this Underwriting Agreement or such Terms Agreement is intended or shall be construed to give any person, firm or corporation, other than the Underwriters and the Company and their respective successors and the controlling persons and officers and directors referred to in Sections 6 and 7 and their heirs and legal representatives, any legal or equitable right, remedy or claim under or in respect of this Underwriting Agreement or such Terms Agreement or any provision herein or therein contained. This Underwriting Agreement and such Terms Agreement and all conditions and provisions hereof and thereof are intended to be for the sole and exclusive benefit of the parties hereto and thereto and their respective successors, and said controlling persons and officers and directors and their heirs and legal representatives, and for the benefit of no other person, firm or corporation. No purchaser of Underwritten Securities from any Underwriter shall be deemed to be a successor by reason merely of such purchase. SECTION 13. GOVERNING LAW AND TIME. THIS UNDERWRITING AGREEMENT AND ANY APPLICABLE TERMS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS. SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME. SECTION 14. EFFECT OF HEADINGS. The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof. 31 If the foregoing is in accordance with your understanding of our agreement, please sign and return to the Company a counterpart hereof, whereupon this Underwriting Agreement, along with all counterparts, will become a binding agreement between the Representative and the Company in accordance with its terms. Very truly yours, OAKWOOD HOMES CORPORATION By: /s/ Douglas R. Muir ------------------------------------ Name: Douglas R. Muir Title: Senior Vice President CONFIRMED AND ACCEPTED, as of the date first above written: NATIONSBANC MONTGOMERY SECURITIES LLC FIRST UNION CAPITAL MARKETS CORP. MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED By: NATIONSBANC MONTGOMERY SECURITIES LLC By: /s/ Lynn T. McConnell ----------------------------- Authorized Signatory 32 EXHIBIT A OAKWOOD HOMES CORPORATION (a North Carolina corporation) Debt Securities TERMS AGREEMENT _________ ___, 1999 To: Oakwood Homes Corporation 7800 McCloud Road Greensboro, North Carolina 27409-9634 Ladies and Gentlemen: We understand that Oakwood Homes Corporation, a North Carolina corporation (the "Company"), proposes to issue and sell $[__________] aggregate principal amount of its [senior] [subordinated] debt securities (the "Debt Securities") (such securities also being hereinafter referred to as the "[Initial] Underwritten Securities"). Subject to the terms and conditions set forth or incorporated by reference herein, we [the underwriters named below (the "Underwriters")] offer to purchase [, severally and not jointly,] the principal amount of Underwritten Securities [opposite their names set forth below] at the purchase price set forth below [, and a proportionate share of Option Underwritten Securities set forth below, to the extent any are purchased]. Principal Amount Underwriter of [Initial] Underwritten Securities - --------------- --------------------------------------------- Total _____________________ [$] ===================== 33 The Underwritten Securities shall have the following terms: Title: Rank: Ratings: Aggregate principal amount: Denominations: Currency of payment: Interest rate or formula: Interest payment dates: Regular record dates: Stated maturity date: Redemption provisions: Sinking fund requirements: Defeasance provisions: Listing requirements: Black-out provisions: Fixed or Variable Price Offering: [Fixed] [Variable] Price Offering If Fixed Price Offering: initial public offering price: [__]% of the principal amount, plus accrued interest, if any, or amortized original issue discount, if any, from ________________. Purchase price: ___% of principal amount, plus accrued interest, if any, or amortized original issue discount, if any, from ____________. Form: Other terms and conditions: Closing date and location: Additional co-managers, if any: All of the provisions contained in the document attached as Annex I hereto entitled "Oakwood Homes Corporation--Debt Securities--Underwriting Agreement" are hereby incorporated by reference in their entirety herein and shall be deemed to be a part of this Terms Agreement to the same extent as if such provisions had been set forth in full herein. Terms defined in such document are used herein as therein defined. 34 Please accept this offer no later than ____ o'clock P.M. (New York City time) on ________________ by signing a copy of this Terms Agreement in the space set forth below and returning the signed copy to us. Very truly yours, [NAME OF REPRESENTATIVE] By: _____________________________ Authorized Signatory [Acting on behalf of itself and the other named Underwriters.] Accepted: OAKWOOD HOMES CORPORATION By: ____________________________ Name: Title: 35 EXHIBIT B FORM OF OPINION OF COMPANY'S COUNSEL TO BE DELIVERED PURSUANT TO SECTION 5(b) (1) The Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the state of North Carolina. (2) The Company has corporate power and authority to own, lease and operate its properties and to conduct its business as described in the Prospectus and to enter into and perform its obligations under, or as contemplated under, the Underwriting Agreement and the applicable Terms Agreement. (3) The Company is duly qualified as a foreign corporation to transact business and is in good standing in each jurisdiction set forth on Schedule I attached hereto. (4) Each Subsidiary has been duly incorporated and is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation, has corporate power and authority to own, lease and operate its properties and to conduct its business as described in the Prospectus and is duly qualified as a foreign corporation to transact business and is in good standing in each jurisdiction set forth on Schedule I attached hereto. Except as otherwise stated in the Registration Statement and the Prospectus, all of the issued and outstanding capital stock of each Subsidiary has been duly authorized and is validly issued, fully paid and non-assessable and, except as set forth on Schedule II attached hereto is owned of record by the Company, directly or through subsidiaries, and to the best of our knowledge, is free and clear of any security interest, mortgage, pledge, lien, encumbrance, claim or equity (except for the capital stock of Tarheel Insurance Company, Ltd. all which capital stock is pledged in connection with the Company's $175.0 million revolving credit facility with First Union National Bank, as agent). To the best of our knowledge, none of the outstanding shares of capital stock of any Subsidiary was issued in violation of the preemptive or similar rights of any securityholder of such Subsidiary. (5) [Include if the Prospectus contains a "Capitalization" section, to the extent set forth in such section.] The authorized, issued and outstanding shares of capital stock of the Company is as set forth in the column entitled "Actual" under the caption "Capitalization" (except for subsequent issuances thereof, if any, contemplated under the Underwriting Agreement, pursuant to reservations, agreements or employee benefit plans referred to in the Prospectus or pursuant to the exercise of convertible securities or options referred to in the Prospectus). Such shares of capital stock have been duly authorized and validly issued by the Company and are fully paid and non-assessable, and none of such shares of capital stock was issued in violation of preemptive or other similar rights of any securityholder of the Company. 1 (6) The Underwriting Agreement and the applicable Terms Agreement have been duly authorized, executed and delivered by the Company. (7) The Underwritten Securities have been duly authorized by the Company for issuance and sale pursuant to the Underwriting Agreement and the applicable Terms Agreement. The Underwritten Securities, when issued and authenticated in the manner provided for in the Indenture and delivered against payment of the consideration therefor specified in such Terms Agreement, will constitute valid and legally binding obligations of the Company, enforceable against the Company in accordance with their terms, except as the enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting creditors' rights generally or by general equitable principles. Such Underwritten Securities will be in the form contemplated by, and each registered holder thereof is entitled to the benefits of, the Indenture. (8) The Indenture has been duly authorized, executed and delivered by the Company and (assuming due authorization, execution and delivery thereof by the Trustee) constitutes a valid and legally binding agreement of the Company, enforceable against the Company in accordance with its terms, except as the enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting creditors' rights generally or by general equitable principles. (9) [Reserved] (10) The Underwritten Securities being sold pursuant to the applicable Terms Agreement conform in all material respects to the statements relating thereto contained in the Prospectus. (11) The information in the Prospectus under "Description of Debt Securities, "Description of Notes" and "Description of Capital Stock," if any, or any caption purporting to describe any such Securities, and "Certain Federal Income Tax Considerations," if any, and in the Registration Statement under Item 15, to the extent that it constitutes matters of law, summaries of legal matters, the Company's charter and bylaws or legal proceedings, or legal conclusions, has been reviewed by us and is correct in all material respects. (12) To the best of our knowledge, neither the Company nor any of its subsidiaries is in violation of its charter or by-laws and no default by the Company or any of its subsidiaries exists in the due performance or observance of any material obligation, agreement, covenant or condition contained in any contract, indenture, mortgage, loan agreement, note, lease or other agreement or instrument that is described or referred to in the Registration Statement or the Prospectus or filed or incorporated by reference as an exhibit to the Registration Statement. 2 (13) The execution, delivery and performance of the Underwriting Agreement, the applicable Terms Agreement and the Indenture and any other agreement or instrument entered into or issued or to be entered into or issued by the Company in connection with the transactions contemplated in the Registration Statement and the Prospectus and the consummation of the transactions contemplated in the Underwriting Agreement and such Terms Agreement and in the Registration Statement and the Prospectus (including the issuance and sale of the Underwritten Securities and the use of the proceeds from the sale of the Underwritten Securities as described under the caption "Use Of Proceeds") and compliance by the Company with its obligations thereunder do not and will not, whether with or without the giving of notice or passage of time or both, conflict with or constitute a breach of, or default or Repayment Event under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Company or any of its subsidiaries pursuant to, any contract, indenture, mortgage, deed of trust, loan or credit agreement, note, lease or any other agreement or instrument, to which the Company or any of its subsidiaries is a party or by which it or any of them may be bound, or to which any of the assets, properties or operations of the Company or any of its subsidiaries is subject, and which has been filed by the Company as an exhibit to the Registration Statement or pursuant to the 1933 Act, the 1934 Act, the 1933 Act Regulations or the 1934 Act Regulations, or which is set forth in Schedule III attached hereto, except for such conflicts, breaches, defaults, events or liens, charges or encumbrances that would not result in a Material Adverse Effect, nor will such action result in any violation of the provisions of the charter or by-laws of the Company or any of its subsidiaries or, to the best of our knowledge any applicable law, statute, rule, regulation, judgment, order, writ or decree, of any government, government instrumentality or court, domestic or foreign, having jurisdiction over the Company or any of its subsidiaries or any of their assets, properties or operations. (14) To the best of our knowledge, there is not pending or threatened any action, suit, proceeding, inquiry or investigation to which the Company or any of its subsidiaries thereof is a party or to which the assets, properties or operations of the Company or any of its subsidiaries thereof is subject, before or by any court or governmental agency or body, domestic or foreign, which might reasonably be expected to result in a Material Adverse Effect or which might reasonably be expected to materially and adversely affect the assets, properties or operations thereof or the consummation of the transactions contemplated under the Underwriting Agreement, the applicable Terms Agreement or the Indenture or the performance by the Company of its obligations thereunder. [Certain aspects of the foregoing opinion may be given by in-house counsel.] (15) All descriptions in the Registration Statement of contracts and other documents to which the Company or its subsidiaries are a party are accurate in all material respects. To the best of our knowledge, there are no franchises, contracts, indentures, mortgages, loan agreements, notes, leases or other instruments required to be described or referred to in the Registration 3 Statement or to be filed as exhibits thereto other than those described or referred to therein or filed or incorporated by reference as exhibits thereto, and the descriptions thereof or references thereto are correct in all material respects. (16) The Registration Statement has been declared effective under the 1933 Act. Any required filing of the Prospectus pursuant to Rule 424(b) has been made in the manner and within the time period required by Rule 424(b). To the best of our knowledge, no stop order suspending the effectiveness of the Registration Statement has been issued under the 1933 Act and no proceedings for that purpose have been instituted or are pending or threatened by the Commission. (17) The Registration Statement and the Prospectus, excluding the documents incorporated by reference therein, and each amendment or supplement to the Registration Statement and Prospectus, excluding the documents incorporated by reference therein, as of their respective effective or issue dates (other than the financial statements and supporting schedules included therein or omitted therefrom, and each Trustee's Statement of Eligibility on Form T-1 (the "Form T-1s"), as to which we express no opinion) complied as to form in all material respects with the requirements of the 1933 Act and the 1933 Act Regulations. (18) The documents incorporated by reference in the Prospectus (other than the financial statements and supporting schedules therein or omitted therefrom, as to which we express no opinion), when they were filed with the Commission complied as to form in all material respects with the requirements of the 1934 Act and the rules and regulations of the Commission thereunder. (19) No filing with, or authorization, approval, consent, license, order, registration, qualification or decree of, any court or governmental authority or agency, domestic or foreign, is necessary or required for the performance by the Company of its obligations under the Underwriting Agreement or the applicable Terms Agreement or in connection with the transactions contemplated under the Underwriting Agreement, such Terms Agreement or the Indenture other than under the 1933 Act, the 1933 Act Regulations, the 1939 Act and the 1939 Act Regulations, which have been obtained, or as may be required under state securities or blue sky laws (as to which we express no opinion). (20) The Underwritten Securities, upon issuance, will be excluded or exempted under, or beyond the purview of, the Commodity Exchange Act, as amended (the "Commodity Exchange Act"), and the rules and regulations of the Commodity Futures Trading Commission under the Commodity Exchange Act. (21) Neither the Company nor any of its subsidiaries is an "investment company" or a company "controlled" by an "investment company" within the meaning of the Investment 4 Company Act of 1940, as amended. As counsel to the Company, we have examined various documents and records and have participated in the preparation of and reviewed the Registration Statement and the Prospectus, participated in discussions with representatives of the Company and its counsel and accountants, and representatives of the Underwriters and their counsel, and advised the Company as to the requirements of the 1933 Act and the 1934 Act and the 1933 Act Regulations and the 1934 Act Regulations. Nothing has come to our attention that would lead us to believe that the Registration Statement or any post-effective amendment thereto, including the Rule 430A Information and Rule 434 Information (if applicable) (including the filing of the Company's Annual Report on Form 10-K with the Commission) (except for financial statements and schedules and other financial data included therein or omitted therefrom and for the Form T-1s, as to which we make no statement), at the time such Registration Statement or any post-effective amendment thereto became effective or at the date of the applicable Terms Agreement, contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading or that the Prospectus or any amendment or supplement thereto (except for financial statements and schedules and other financial data included therein or omitted therefrom, as to which we make no statement), at the time the Prospectus was issued, at the time any such amended or supplemented prospectus was issued or at the Closing Time, included or includes an untrue statement of a material fact or omitted or omits to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. In rendering such opinion, such counsel may rely as to matters of fact (but not as to legal conclusions), to the extent they deem proper, on certificates of responsible officers of the Company and public officials. Such opinion shall not state that it is to be governed or qualified by, or that it is otherwise subject to, any treatise, written policy or other document relating to legal opinions, including, without limitation, the Legal Opinion Accord of the ABA Section of Business Law (1991). 5 SCHEDULE I Foreign Jurisdictions [Intentionally Left Blank] 6 SCHEDULE II Non-Wholly-Owned Subsidiaries of Oakwood Homes Corporation 1. DEUTSCHE FINANCIAL CAPITAL LIMITED LIABILITY COMPANY. 50% owned directly or indirectly through its subsidiaries by Oakwood Homes Corporation ("OHC") and 50% owned by Deutsche Financial Services Corporation, an entity in which OHC has no direct or indirect ownership interest. 2. DEUTSCHE FINANCIAL CAPITAL I CORP. 50% owned directly or indirectly through its subsidiaries by OHC and 50% owned by Deutsche Financial Services Corporation. 3. DEUTSCHE FINANCIAL CAPITAL SECURITIZATION LLC. 99% owned by Deutsche Financial Capital Limited Liability Company and 1% owned by Deutsche Financial Capital I Corp. Accordingly, Deutsche Financial Capital Securitization LLC is 50% owned directly or indirectly by OHC and 50% owned directly or indirectly by Deutsche Financial Services Corporation. 4. CONCEPT ENTERPRISES, INC. 50% owned directly or indirectly through its subsidiaries by OHC and 50% owned by James Craig. 5. BUSH PARK ASSOCIATES. 50% owned directly or indirectly through its subsidiaries by OHC and 50% owned by J.K. Partnership, an entity in which OHC has no direct or indirect ownership interest. 6. NEW DIMENSION OF MONTROSE, LLC. 57.5% owned directly or indirectly through its subsidiaries by OHC and 42.5% owned by Trident-Montrose, LLC, an entity in which OHC has no direct or indirect ownership interest. 7. NEW DIMENSION OF LONG NECK, LLC. 75% owned directly or indirectly through its subsidiaries by OHC and 25% owned by Tunnell Properties, LP, an entity in which OHC has no direct or indirect ownership interest. 8. NEW DIMENSION OF IOWA, LLC. 50% owned directly or indirectly through its subsidiaries by OHC, 25% owned by James R. Miller and 25% owned by Steven S. Bright. 9. NEW DIMENSION OF MISSOURI, LLC. 57.5% owned directly or indirectly through its subsidiaries by OHC and 42.5% owned by Hackley Farms, LLC, an entity in which OHC has no direct or indirect ownership interest. 7 SCHEDULE III Material Debt Instruments of Oakwood Homes Corporation 1. $325,000,000 Transfer and Administration Agreement dated as of March 28, 1998 by Oakwood Acceptance Corporation, Oakwood Homes Corporation, NationsBank, N.A., and Enterprise Funding Corporation. 2. $175,000,000 Amended and Restated Credit Agreement dated as of February 27, 1998 among Oakwood Homes Corporation and First Union National Bank. 3. $100,000,000 Credit Agreement dated as of March 31, 1998 by and between Oakwood Homes Corporation and NationsBank, N.A. 4. $50,000,000 Credit Agreement dated as of January 14, 1999 by and between Oakwood Homes Corporation and First Union National Bank. 5. 1991 Prudential Senior Debt Series C in aggregate principal amount of $[29,381,815]. 6. Oakwood Homes Corporation Series B Reset Debentures due 2007 in aggregate principal amount of $23,000,000. 7. $20,000,000 Swingline Credit Agreement dated as of November 8, 1998 by and between Oakwood Homes Corporation and First Union National Bank. 8. Oakwood Homes Corporation Series A Reset Debentures due 2007 in aggregate principal amount of $17,000,000. 9. $14,400,000 Term Loan Agreement dated as of July 16, 1993 by and between Oakwood Acceptance Corporation and First Union National Bank. 10. $12,953,689 subordinate series note issued to Massachusetts Mutual Life Insurance Company pursuant to the 1991 Prudential Debt Series A, B, and C. 11. $10,800,000 Credit Agreement dated as of December 31, 1998 by and among Oakwood Acceptance Corporation and First Union National Bank. 12. $10,000,000 short term uncommitted revolving line of credit extended to Oakwood Homes 8 Corporation by The Sakura Bank, Limited. 13. $10,000,000 short term uncommitted revolving line of credit extended to Oakwood Homes Corporation by The Sumitomo Bank, Limited. 14. $8,350,000 subordinate series note issued to Westinghouse Credit Corporation pursuant to the 1989 Prudential Debt Series A, B and C. 15. $6,900,000 aircraft lease dated as of March 29, 1995 by and between PNC Leasing Corporation and Oakwood Homes Corporation. 16. $6,200,000 aggregate principal amount of Economic Development Bonds Series 1998 issued by Kosciusko County, Indiana to Schult Operating Company, as Borrower. 17. $6,000,000 Credit Agreement dated as of July 15, 1996 by and between Oakwood Acceptance Corporation and NationsBank, N.A. 18. $3,000,000 aggregate principal amount of economic development bonds issued by The Moore County Industrial Facilities and Pollution Control Financing Authority to Homes by Oakwood, Inc., as Borrower. 19. $2,397,565.38 loan made by NBD Bank to the ESOP Trust under the Employee Stock Ownership and Profit Sharing Plan. 20. $1,500,000 aggregate principal amount of economic development bonds issued by Elkhart County, Indiana to Schult Operating Company, as Borrower. 21. $1,456,852 aggregate principal amount of economic development bonds governed by a loan agreement dated as of September 3, 1987 by and between Milton Area Industrial Development Association, the Pennsylvania Industrial Development Authority and Midwest Commerce Banking Company. 9 ANNEX I FORM OF ACCOUNTANTS' COMFORT LETTER PURSUANT TO SECTION 5(e) (i) We are independent public accountants with respect to the Company within the meaning of the 1933 Act and the applicable published 1933 Act Regulations. (ii) In our opinion, the audited financial statements and the related financial statement schedules included or incorporated by reference in the Registration Statement and the Prospectus comply as to form in all material respects with the applicable accounting requirements of the 1933 Act and the published rules and regulations thereunder. (iii) On the basis of procedures (but not an examination in accordance with generally accepted auditing standards) consisting of a reading of the unaudited interim consolidated financial statements of the Company for the _____-month periods ended _________, 19___ and _________, 19___, included in the Registration Statement and the Prospectus (the "____-month financials"), [a reading of the latest available unaudited interim consolidated financial statements of the Company], a reading of the minutes of all meetings of the stockholders and directors of the Company and its subsidiaries and the and Committees of the Company's Board of Directors and any subsidiary committees since _________________, inquiries of certain officials of the Company and its subsidiaries responsible for financial and accounting matters, a review of interim financial information in accordance with standards established by the American Institute of Certified Public Accountants in Statement on Auditing Standards No. 71, Interim Financial Information ("SAS 71"), with respect to the _____-month financials, and such other inquiries and procedures as may be specified in such letter, nothing came to our attention that caused us to believe that: (A) the _____-month financials included in the Registration Statement and the Prospectus do not comply as to form in all material respects with the applicable accounting requirements of the 1933 Act and the 1933 Act Regulations applicable to unaudited interim financial statements included in registration statements or any material modifications should be made to the _____-month financials included in the Registration Statement and the Prospectus for them to be in conformity with generally accepted accounting principles; (B) at _________, 19___ and at a specified date not more than five days(1) prior to the date of the applicable Terms Agreement, there was any change in the capital stock of the Company and its subsidiaries or any decrease in the total assets or stockholders investment of the Company and its subsidiaries or any increase in the notes and bonds payable and total liabilities of the Company and its subsidiaries, in each case as compared with amounts shown in the latest balance sheet included in the Registration Statement and the Prospectus, except in each case for changes, decreases or increases that the Registration Statement and the Prospectus disclose have occurred or may occur; or 1 (C) for the period from _________, 19___ to _________, 19___ and for the period from _________, 19___ to a specified date not more than five days prior to the date of the applicable Terms Agreement, there was any decrease in consolidated total revenues, operating income, or net income, in each case as compared with the comparable period in the preceding year, except in each case for any decreases that the Registration Statement and the Prospectus discloses have occurred or may occur. (iv) Based upon the procedures set forth in clause (iii) above and a reading of the Selected Financial Data included in the Registration Statement and the Prospectus and a reading of the financial statements from which such data were derived, nothing came to our attention that caused us to believe that the Selected Financial Data included in the Registration Statement and the Prospectus do not comply as to form in all material respects with the disclosure requirements of Item 301 of Regulation S-K of the 1933 Act, that the amounts included in the Selected Financial Data are not in agreement with the corresponding amounts in the audited consolidated financial statements for the respective periods or that the financial statements not included in the Registration Statement and the Prospectus from which certain of such data were derived are not in conformity with generally accepted accounting principles. (v) We have compared the information in the Registration Statement and the Prospectus under selected captions with the disclosure requirements of Regulation S-K of the 1933 Act and on the basis of limited procedures specified herein, nothing came to our attention that caused us to believe that this information does not comply as to form in all material respects with the disclosure requirements of Items 302, 402 and 503(d), respectively, of Regulation S-K. - ------------------------------ (1) According to Example A of SAS No. 72, the specified date should be five calendar days prior to the date of the applicable Terms Agreement. However, in unusual circumstances, five business days may be used. - ------------------------------ (vi) We are unable to and do not express any opinion on the Pro Forma Financial Information (the "Pro Forma Statement") included in the Registration Statement and the Prospectus or on the pro forma adjustments applied to the historical amounts included in the Pro Forma Statement; however, for purposes of this letter we have: (A) read the Pro Forma Statement; (B) performed an audit of the financial statements to which the pro forma adjustments were applied; (C) made inquiries of certain officials of the Company who have responsibility for 2 financial and accounting matters about the basis for their determination of the pro forma adjustments and whether the Pro Forma Statement complies as to form in all material respects with the applicable accounting requirements of Rule 11-02 of Regulation S-X; and (D) proved the arithmetic accuracy of the application of the pro forma adjustments to the historical amounts in the Pro Forma Statement; and on the basis of such procedures and such other inquiries and procedures as specified herein, nothing came to our attention that caused us to believe that the Pro Forma Statement included in the Registration Statement does not comply as to form in all material respects with the applicable requirements of Rule 11-02 of Regulation S-X or that the pro forma adjustments have not been properly applied to the historical amounts in the compilation of those statements. (vii) In addition to the procedures referred to in clause (ii) above, we have performed other procedures, not constituting an audit, with respect to certain amounts, percentages, numerical data and financial information appearing in the Registration Statement and the Prospectus, which are specified herein, and have compared certain of such items with, and have found such items to be in agreement with, the accounting and financial records of the Company. 3 EX-1 3 EXHIBIT 1.2 Exhibit 1.2 OAKWOOD HOMES CORPORATION (a North Carolina corporation) $125,000,000 7.875% Senior Notes Due 2004 $175,000,000 8.125% Senior Notes Due 2009 TERMS AGREEMENT February 25, 1999 To: Oakwood Homes Corporation 7800 McCloud Road Greensboro, North Carolina 27409-9634 Ladies and Gentlemen: We understand that Oakwood Homes Corporation, a North Carolina corporation (the "Company"), proposes to issue and sell $125,000,000 aggregate principal amount of its 7.875% Senior Notes Due 2004 and $175,000,000 aggregate principal amount of its 8.125% Senior Notes Due 2009 (collectively, the "Notes") (such securities also being hereinafter referred to as the "Underwritten Securities"). Subject to the terms and conditions set forth or incorporated by reference herein, we the underwriters named below (the "Underwriters") offer to purchase, severally and not jointly, the principal amount of Underwritten Securities opposite their names set forth below at the purchase price set forth below. Capitalized terms used herein and not otherwise defined shall have the respective meanings given to such terms under the form of Indenture (the "Indenture") filed as an Exhibit to Amendment No. 2 to the Registration Statement on Form S-3 (No. 333-47053) and under the First Supplemental Indenture (the "Supplemental Indenture") between the Company and the Trustee (as defined therein) relating to the Notes, which is attached hereto as Annex I, including in the case of certain terms the respective meanings given to such terms under the form of the Notes included in the Supplemental Indenture. This Terms Agreement supplements the terms and conditions of the Underwriting Agreement attached hereto as Annex II, dated the date hereof between the Company and the Underwriters, which shall govern the offering of the Underwritten Securities.
Principal Amount Principal Amount Underwriters of Notes Due 2004 of Notes Due 2009 - ------------ ----------------- ----------------- NationsBanc Montgomery Securities LLC $75,000,000 $105,000,000 First Union Capital Markets Corp. $25,000,000 $ 35,000,000 Merrill Lynch, Pierce, Fenner & Smith Incorporated $25,000,000 $ 35,000,000 ----------------- ----------------- Total $125,000,000 $175,000,000 ================= ================= Price to the Company: 99.128% 98.785% Company Proceeds: $123,910,000 $172,873,750
The Underwritten Securities shall have the following terms: Title: $125,000,000 7.875% Senior Notes Due 2004 $175,000,000 8.125% Senior Notes Due 2009 Rank: Pari passu with all of the Company's other unsecured and unsubordinated indebtedness. Ratings: Baa3/BBB- Aggregate principal amount: $125,000,000 5 year Notes $175,000,000 10 year Notes ------------ $300,000,000 Total Denominations: $1,000.00 Currency of payment: U.S. Dollars Interest rate or formula: 7.875% per annum (5 year Notes) 8.125% per annum (10 year Notes) Interest payment dates: Semi-annually on March 1 and September 1, beginning September 1, 1999 Regular record dates: February 15 and August 15 of each year Stated maturity dates: March 1, 2004 (5 year Notes) March 1, 2009 (10 year Notes) Redemption provisions: Redeemable, in whole or in part, at the Company's option at any time on not less than 30 nor more than 60 days' notice at the greater of (i) 100% of principal amount of the Notes being redeemed or (ii) as determined by the Quotation Agent, the sum of the present values of the remaining scheduled payments of principal and interest on the Notes (not including any portion of those payments of interest accrued as of the Redemption Date) discounted to the Redemption Date on a semi-annual basis at the Adjusted Treasury Rate plus 25 basis points plus, in each case, accrued and unpaid interest to the Redemption Date. Redeemable by the Company, at the option of each Holder of the Notes, in whole or in part upon the occurrence of a Change in Control Triggering Event, for cash equal to 101% of the principal amount of the Notes tendered for 2 redemption plus any interest accrued and unpaid through the Purchase Date. The terms and conditions relating to any such redemption shall be as set forth under the Supplemental Indenture (including the form of the Notes contained therein). Sinking fund requirements: None. Defeasance provisions: The Notes are subject to defeasance and the Company will be discharged from its obligations with respect to the Notes upon compliance with certain conditions. The Company may omit to comply with certain restrictive covenants applicable to the Notes upon compliance with certain conditions. The terms and conditions relating to any such defeasance and covenant defeasance shall be as set forth under the Supplemental Indenture. Listing requirements: The Notes will not be listed on any securities exchange or included in any automated quotation system. Black-out provisions: None. Fixed or Variable Price Offering: Fixed price offering with an initial public offering price of 99.728% of the principal amount of the Notes Due 2004, and 99.435% of the principal amount of the Notes Due 2009, plus in each case accrued interest, if any, from March 2, 1999 or from the most recent date to which interest has been paid or provided for. Form: The form of the Notes shall be as set forth in the Supplemental Indenture. OTHER TERMS AND CONDITIONS: The terms and conditions of the Notes shall be as set forth in the Supplemental Indenture and under the Indenture, as provided for in the Supplemental Indenture. Closing date and location: March 2, 1999 at 9:00 A.M. (Eastern time) at the offices of Kennedy Covington Lobdell & Hickman, L.L.P., 100 North Tryon Street, 42nd Floor, Charlotte, North Carolina 28202-4006 or at such other time and place as shall be agreed upon by the Representatives of the Underwriters and the Company. 3 Co-managers: First Union Capital Markets Corp. Merrill Lynch, Pierce, Fenner & Smith Incorporated. ALL OF THE PROVISIONS CONTAINED IN THE SUPPLEMENTAL INDENTURE ATTACHED AS ANNEX I HERETO AND IN THE UNDERWRITING AGREEMENT ATTACHED AS ANNEX II HERETO ARE HEREBY INCORPORATED BY REFERENCE IN THEIR ENTIRETY HEREIN AND SHALL BE DEEMED TO BE A PART OF THIS TERMS AGREEMENT TO THE SAME EXTENT AS IF SUCH PROVISIONS HAD BEEN SET FORTH IN FULL HEREIN. Please accept this offer no later than 5:00 P.M. (Eastern time) on February 25, 1999 by signing a copy of this Terms Agreement in the space set forth below and returning the signed copy to us. 4 Very truly yours, NationsBanc Montgomery Securities LLC First Union Capital Markets Corp. Merrill Lynch, Pierce, Fenner & Smith Incorporated By: NationsBanc Montgomery Securities LLC By: /s/ Lynn T. McConnell ----------------------------------- Authorized Signatory Acting on behalf of itself and the other named Underwriters Accepted: OAKWOOD HOMES CORPORATION By: /s/ Douglas R. Muir ---------------------------------- Name: Douglas R. Muir Title: Senior Vice President 5 Annex I Form of Supplemental Indenture [Omitted] 6 Annex II Underwriting Agreement [Omitted] 7 EX-4 4 EXHIBIT 4.1 Exhibit 4.1 ================================================================================ OAKWOOD HOMES CORPORATION, as Issuer, and THE FIRST NATIONAL BANK OF CHICAGO, as Trustee INDENTURE Dated as of March 2, 1999 ================================================================================ OAKWOOD HOMES CORPORATION Certain Sections of this Indenture relating to Sections 310 through 318, inclusive, of the Trust Indenture Act of 1939: Trust Indenture Act Section Indenture Section - --------------------------- ----------------- ss. 310 (a)(1)............................................609 (a)(2)............................................609 (a)(3)............................................Not Applicable (a)(4)............................................Not Applicable (a)(5)............................................609 (b)...............................................608, 610 ss. 311 (a)...............................................610, 613 (b)...............................................613 (c)...............................................Not Applicable ss. 312 (a)...............................................701, 702(a) (b)...............................................702(b) (c)...............................................702(c) ss. 313 (a)...............................................703(a) (b)...............................................703(a) (c)...............................................703(a), 602 (d)...............................................703(b) ss. 314 (a)...............................................704 (a)(4)............................................101,1009 (b)...............................................Not Applicable (c)(1)............................................102 (c)(2)............................................102 (c)(3)............................................Not Applicable (d)...............................................Not Applicable (e)...............................................102 ss. 315 (a)...............................................601 (b)...............................................602 (c)...............................................601 (d)...............................................601, 603 (e)...............................................514 ss. 316 (a)(last sentence)................................101 (a)(1)(A).........................................502, 512 Note: This reconciliation and tie shall not, for any purpose, be deemed to be a part of the Indenture. Trust Indenture Act Section Indenture Section - --------------------------- ----------------- (a)(1)(B).........................................513 (a)(2)............................................Not Applicable (b)...............................................508 (c)...............................................104(c) ss. 317 (a)(1)............................................503 (a)(2)............................................504 (b)...............................................1003 ss. 318 (a)...............................................107 Note: This reconciliation and tie shall not, for any purpose, be deemed to be a part of the Indenture. ii TABLE OF CONTENTS -----------------
ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION..........................1 Section 101. Definitions..................................................................1 Section 102. Compliance Certificates and Opinions.........................................8 Section 103. Form of Documents Delivered to Trustee.......................................9 Section 104. Acts of Holders; Record Dates................................................9 Section 105. Notices, Etc., to Trustee and Company.......................................11 Section 106. Notice to Holders; Waiver...................................................12 Section 107. Conflict with Trust Indenture Act...........................................12 Section 108. Effect of Headings and Table of Contents....................................12 Section 109. Successors and Assigns......................................................12 Section 110. Separability Clause.........................................................12 Section 111. Benefits of Indenture.......................................................12 Section 112. Governing Law...............................................................13 Section 113. Legal Holidays..............................................................13 Section 114. Independence of Covenants...................................................13 ARTICLE TWO SECURITY FORMS..................................................................13 Section 201. Forms of Securities.........................................................13 Section 202. Form of Legend for Book-Entry Securities....................................14 Section 203. Form of Trustee's Certificate of Authentication.............................14 ARTICLE THREE THE SECURITIES................................................................15 Section 301. Amount Unlimited; Issuable in Series........................................15 Section 302. Denominations...............................................................18 Section 303. Execution, Authentication, Delivery and Dating..............................18 Section 304. Temporary Securities........................................................19 Section 305. Registration, Registration of Transfer and Exchange.........................20 Section 306. Mutilated, Destroyed, Lost and Stolen Securities............................22 Section 307. Payment of Interest; Interest Rights Preserved..............................23 Section 308. Persons Deemed Owners.......................................................24 Section 309. Cancellation................................................................24 Section 310. Computation of Interest; Default Rate......................................24 Section 311. CUSIP Numbers...............................................................25 ARTICLE FOUR SATISFACTION AND DISCHARGE.....................................................25 Section 401. Satisfaction and Discharge of Indenture.....................................25 Section 402. Application of Trust Money..................................................26 Section 403. Defeasance and Discharge of Securities of Any Series........................27 ARTICLE FIVE................................................................................29 REMEDIES....................................................................................29 Section 501. Events of Default...........................................................29 Section 502. Acceleration of Maturity; Rescission and Annulment..........................30 iii Section 503. Collection of Indebtedness and Suits for Enforcement by Trustee.............31 Section 504. Trustee May File Proofs of Claim............................................32 Section 505. Trustee May Enforce Claims Without Possession of Securities.................33 Section 506. Application of Money Collected..............................................33 Section 507. Limitation on Suits.........................................................33 Section 508. Unconditional Right of Holders to Receive Principal, Premium and Interest....34 Section 509. Restoration of Rights and Remedies..........................................34 Section 510. Rights and Remedies Cumulative..............................................34 Section 511. Delay or Omission Not Waiver................................................34 Section 512. Control by Holders..........................................................35 Section 513. Waiver of Past Defaults.....................................................35 Section 514. Undertaking for Costs.......................................................36 Section 515. Waiver of Stay or Extension Laws............................................36 ARTICLE SIX THE TRUSTEE.....................................................................36 Section 601. Certain Duties and Responsibilities.........................................36 Section 602. Notice of Defaults..........................................................37 Section 603. Certain Rights of Trustee...................................................37 Section 604. Not Responsible for Recitals or Issuance of Securities......................39 Section 605. May Hold Securities.........................................................39 Section 606. Money Held in Trust.........................................................39 Section 607. Compensation and Reimbursement..............................................39 Section 608. Disqualification; Conflicting Interests.....................................40 Section 609. Corporate Trustee Required; Eligibility.....................................40 Section 610. Resignation and Removal; Appointment of Successor...........................41 Section 611. Acceptance of Appointment by Successor......................................42 Section 612. Merger, Conversion, Consolidation or Succession to Business.................43 Section 613. Preferential Collection of Claims Against Company...........................43 Section 614. Appointment of Authenticating Agent.........................................44 ARTICLE SEVEN HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY.............................45 Section 701. Company to Furnish Trustee Names and Addresses of Holders...................45 Section 702. Preservation of Information; Communications to Holders......................45 Section 703. Reports by Trustee..........................................................46 Section 704. Reports by Company..........................................................47 ARTICLE EIGHT CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE..........................47 Section 801. Restrictions on Mergers, Consolidations and Transfers of Assets.............47 Section 802. Repayment of Securities......................................................48 Section 803. Exercise of Option...........................................................48 Section 804. When Securities Presented for Purchase Become Due and Payable................49 Section 805. Securities Purchased in Part.................................................49 ARTICLE NINE SUPPLEMENTAL INDENTURES........................................................49 Section 901. Supplemental Indentures Without Consent of Holders..........................49 Section 902. Supplemental Indentures with Consent of Holders.............................51 Section 903. Execution of Supplemental Indentures........................................52 iv Section 904. Effect of Supplemental Indentures...........................................52 Section 905. Conformity with Trust Indenture Act.........................................52 Section 906. Reference in Securities to Supplemental Indentures..........................52 Section 907. Notice of Supplemental Indentures...........................................53 ARTICLE TEN COVENANTS.......................................................................53 Section 1001. Payment of Principal, Premium and Interest.................................53 Section 1002. Maintenance of Office or Agency............................................53 Section 1003. Money for Securities Payments to Be Held in Trust..........................53 Section 1004. Corporate Existence........................................................55 Section 1005. Payment of Taxes and Other Claims..........................................55 Section 1006. Maintenance of Properties..................................................55 Section 1007. Maintenance of Insurance...................................................56 Section 1008. Defeasance of Certain Obligations..........................................56 Section 1009. Statement as to Compliance.................................................57 Section 1010. Waiver of Certain Covenants................................................57 Section 1011. Restrictions on Secured Debt................................................58 Section 1012. Restrictions on Debt of Subsidiaries........................................59 Section 1013. Restrictions on Sale and Leaseback Transactions.............................60 ARTICLE ELEVEN REDEMPTION OF SECURITIES.....................................................61 Section 1101. Applicability of Article...................................................61 Section 1102. Election to Redeem; Notice to Trustee......................................61 Section 1103. Selection by Trustee of Securities to Be Redeemed..........................61 Section 1104. Notice of Redemption.......................................................62 Section 1105. Deposit of Redemption Price................................................62 Section 1106. Securities Payable on Redemption Date......................................63 Section 1107. Securities Redeemed in Part................................................63 ARTICLE TWELVE SINKING FUNDS................................................................63 Section 1201. Applicability of Article...................................................63 Section 1202. Satisfaction of Sinking Fund Payments with Securities......................64 Section 1203. Redemption of Securities for Sinking Fund..................................64 ARTICLE THIRTEEN REPAYMENT AT THE OPTION OF THE HOLDERS.....................................64 Section 1301. Applicability of Article....................................................64 Section 1302. Repayment of Securities.....................................................64 Section 1303. Exercise of Option..........................................................65 Section 1304. When Securities Presented for Repayment Become Due and Payable..............65 Section 1305. Securities Repaid in Part...................................................66 ARTICLE FOURTEEN SUBORDINATION OF SECURITIES................................................66 Section 1401. Securities Subordinate to Senior Indebtedness..............................66
v INDENTURE INDENTURE, dated as of March 2, 1999, between OAKWOOD HOMES CORPORATION, a North Carolina corporation (the "Company"), having its principal office at 7800 McCloud Road, Greensboro, North Carolina 27425, and THE FIRST NATIONAL BANK OF CHICAGO, as Trustee hereunder (the "Trustee"), having its Corporate Trust Office at One North State Street, 9th Floor, Chicago, Illinois 60602. RECITALS OF THE COMPANY The Company deems it advisable to issue from time to time for its lawful purposes its unsecured debentures, notes or other evidences of indebtedness (hereinafter called the "Securities") in one or more series as in this Indenture provided, and has duly authorized the execution and delivery of this Indenture to provide for the issuance from time to time of the Securities, unlimited as to principal amount, to bear interest at the rates or formulas, to mature at such times and to have such other provisions as shall be fixed as hereinafter provided. This Indenture is subject to, and shall be governed by, the provisions of the Trust Indenture Act that are required to be part of and to govern indentures qualified under the Trust Indenture Act. All things necessary to make this Indenture a valid agreement of the Company, in accordance with its terms, have been done. NOW, THEREFORE, THIS INDENTURE WITNESSETH: For and in consideration of the premises and the purchase of the Securities by the Holders thereof, it is mutually covenanted and agreed, for the equal and proportionate benefit of all Holders of the Securities or of series thereof, as follows: ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION Section 101. Definitions. For all purposes of this Indenture, except as otherwise expressly provided or unless the context otherwise requires: (a) the terms defined in this Article have, when capitalized, the meanings assigned to them in this Article, and include the plural as well as the singular; (b) all other terms used herein that are defined in the Trust Indenture Act, either directly or by reference therein, have the meanings assigned to them therein; (c) all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles, and except as otherwise herein expressly provided, the term "generally accepted accounting principles" with respect to any computation required or permitted hereunder shall mean such accounting principles as are generally accepted at the date of the Indenture; (d) the words "herein", "hereof" and "hereunder" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision; (e) all references to "dollars", "$", "U.S. dollars", "United States dollars" or "cash" shall refer to the lawful currency of the United States of America; and (f) the definitions included herein may be modified, expanded, deleted or otherwise amended in a supplemental indenture after the date hereof. "Act", when used with respect to any Holder, has the meaning specified in Section 104. "Affiliate" means, with respect to any specified Person, any other Person which, directly or indirectly, is in control of, is controlled by or is under common control with such specified Person. For the purposes of this definition, "control" when used with respect to any specified Person means the power, direct or indirect, to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. "Attributable Debt from a Sale and Leaseback" means, as of any particular time, the aggregate present values (discounted at the weighted average effective interest cost of Outstanding Securities determined on a weighted average basis and compounded semi-annually) of all remaining rental payments for which the Company or any Subsidiary is obligated under all leases relating to a Sale and Leaseback due through the date through which such leases have been or may, at the option of the lessor, be extended or, if earlier, through the earliest date on which the lessee may terminate such leases upon payment of a penalty (which penalties will be considered in calculating the present value), after excluding all amounts required to be paid on account of maintenance and repairs, insurance, taxes, assessments, water and utility rates and similar charges. "Authenticating Agent" means any authenticating agent appointed by the Trustee pursuant to Section 614. "Board of Directors" means either the board of directors of the Company or any duly authorized committee of that board. "Board Resolution" means a copy of a resolution certified by the Secretary or an Assistant Secretary of the Company to have been duly adopted or consented to by the Board of Directors or any committee thereof and to be in full force and effect on the date of such certification, and delivered to the Trustee. 2 "Book-Entry Security" means a Security bearing the legend specified in Section 202 evidencing all or part of a series of Securities, authenticated and delivered to the Depositary for such series or its nominee, and registered in the name of such Depositary or nominee. "Business Day" when used with respect to any Place of Payment means each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which banking institutions in the Place of Payment are authorized or obligated by law or executive order to close. "Commission" means the Securities and Exchange Commission, as from time to time constituted, created under the Exchange Act, or if at any time after the execution of the Indenture such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties at such time. "Company" means the Person named as the "Company" in the first paragraph of this Indenture until a successor Person shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Company" shall mean such successor Person. "Company Request" or "Company Order" means a written request or order signed in the name of the Company by any one of its Chairman of the Board, its Vice Chairman, its Chief Executive Officer, its President or a Vice President (regardless of Vice Presidential designation), and by any one of its Treasurer, Assistant Treasurer, Secretary or Assistant Secretary and delivered to the Trustee. "Consolidated Net Tangible Assets" means, at any date, the total assets appearing on the Company's and Subsidiaries' most recently prepared consolidated balance sheet at the end of a fiscal quarter of the Company, prepared in accordance with generally accepted accounting principals at the time of calculation, less (a) all current liabilities as shown on such balance sheet and (b) Intangible Assets. "Corporate Trust Office" means the office of the Trustee at which, at any particular time, its corporate trust business shall be administered, which office as of the date of this Indenture is the address of the Trustee set forth in Section 105. "Defaulted Interest" has the meaning specified in Section 307. "Depositary" means, with respect to the Securities of any series issuable or issued in whole or in part in the form of one or more Book-Entry Securities, The Depository Trust Company, its nominees and successors, or another Person designated as Depositary by the Company pursuant to Section 301, which must be a clearing agency registered under the Exchange Act, and if at any time there is more than one such Person, "Depositary" shall mean the Depositary with respect to the Securities of that series. "Event of Default" has the meaning specified in Section 501. "Exchange Act" means the Securities Exchange Act of 1934, as amended from time to time, and any statute successor thereto. 3 "Expiration Date" has the meaning specified in Section 104. "Holder" means a Person in whose name a Security is registered in the Security Register. "Indebtedness" means (i) all obligations for borrowed money, (ii) all obligations evidenced by bonds, debentures, notes or other similar instruments, (iii) all obligations in respect of letters of credit or bankers acceptances or similar instruments (or reimbursement obligations with respect thereto), (iv) all obligations to pay the deferred purchase price of property or services, except trade accounts payable arising in the ordinary course of business, (v) all obligations as lessee which are capitalized in accordance with generally accepted accounting principles, and (vi) all Indebtedness of others guaranteed by the Company or any of its subsidiaries or for which the Company or any of its subsidiaries is otherwise responsible or liable (whether by agreement to purchase indebtedness of, or to supply funds or to invest in, others). "Indemnified Party or Parties" has the meaning specified in Section 607. "Indenture" means this instrument as originally executed or as it may from time to time be supplemented or amended by one or more indentures supplemental hereto entered into pursuant to the applicable provisions hereof, and shall include the terms of particular series of Securities established as contemplated by Section 301; provided, however, that, if at any time more than one Person is acting as Trustee under this instrument, "Indenture" shall mean, with respect to any one or more series of Securities for which such Person is Trustee, this instrument as originally executed or as it may from time to time be supplemented or amended by one or more indentures supplemental hereto entered into pursuant to the applicable provisions hereof and shall include the terms of those particular series of Securities for which such Person is Trustee established as contemplated by Section 301, exclusive, however, of any provisions or terms which relate solely to other series of Securities for which such Person is Trustee, regardless of when such terms or provisions were adopted, and exclusive of any provisions or terms adopted by means of one or more indentures supplemental hereto executed and delivered after such Person had become such Trustee but to which such Person, as such Trustee, was not a party. "Indexed Security" means a Security the terms of which provide that the principal amount thereof payable at Stated Maturity may be more or less than the principal face amount thereof at original issuance. "Intangible Assets" means the value (net of applicable reserves), as shown on or reflected in the Company's and Subsidiaries' most recently prepared consolidated balance sheet at the end of a fiscal quarter of the Company, of (a) all trade names, trademarks, licenses, patents, copyrights, and goodwill; (b) organizational costs; and (c) deferred charges (other than prepaid items such as insurance, taxes, interest, commissions, rents and similar items and intangible assets being amortized). In no event, however, will the term "Intangible Assets" include product development costs. "Interest", when used with respect to an Original Issue Discount Security which by its 4 terms bears interest only after Maturity, shall mean interest payable after Maturity. "Interest Payment Date", when used with respect to any Security, means the Stated Maturity of an installment of interest on such Securities. "Liens" means any mortgage, pledge, security interest, lien or encumbrance. "Maturity", when used with respect to any Security, means the date on which the principal of such Security or an installment of principal becomes due and payable as therein or herein provided, whether at the Stated Maturity or by declaration of acceleration, notice of redemption or otherwise. "Officers' Certificate" means a certificate signed by the Chairman of the Board, Vice Chairman, the Chief Executive Officer, the President or a Vice President (regardless of Vice Presidential designation), and by the Treasurer, Assistant Treasurer, Secretary or Assistant Secretary of the Company, and delivered to the Trustee. "Opinion of Counsel" means a written opinion of counsel, who may be an employee of or counsel for the Company or the Trustee unless an independent opinion of counsel is required pursuant to the terms of this Indenture. "Opinion of Independent Counsel" means a written opinion of counsel, who may be regular outside counsel for the Company, which is issued by a Person who is not an employee or consultant of the Company and who shall be reasonably acceptable to the Trustee. "Original Issue Discount Security" means any Security which provides for an amount less than the principal amount thereof to be due and payable upon a declaration of acceleration of the Maturity thereof pursuant to Section 502. "Outstanding", when used with respect to Securities means, as of the date of determination, all Securities theretofore authenticated and delivered under this Indenture, except: (i) Securities theretofore canceled by the Trustee or delivered to the Trustee for cancellation; (ii) Securities, or portions thereof, for whose payment or redemption money in the necessary amount has been theretofore deposited with the Trustee or any Paying Agent (other than the Company) in trust or set aside and segregated in trust by the Company (if the Company shall act as its own Paying Agent) for the Holders of such Securities; provided, that if such Securities are to be redeemed, notice of such redemption has been duly given pursuant to this Indenture or provision therefor satisfactory to the Trustee has been made; and Securities, except to the extent provided in Section 403, with respect to which the Company has effected defeasance as provided in Section 403; and (iii) Securities which have been returned pursuant to Section 306 or in exchange for or in lieu of which other Securities have been authenticated and delivered pursuant to this 5 Indenture, other than any such Securities in respect of which there shall have been presented to the Trustee proof reasonably satisfactory to it that such Securities are held by a bona fide purchaser in whose hands such Securities are valid obligations of the Company; provided, however, that in determining whether the Holders of the requisite principal amount of the Outstanding Securities have given any request, demand, authorization, direction, notice, consent or waiver hereunder, (i) the principal amount of an Original Issue Discount Security that shall be deemed to be Outstanding shall be the amount of the principal thereof that would be due and payable as of the date of such determination upon acceleration of the Maturity thereof pursuant to Section 502, (ii) the principal amount of any Indexed Security of any series that may be counted in making such determination or calculation and that shall be deemed outstanding for such purpose shall be equal to the principal face amount of such Indexed Security at original issuance, unless otherwise established as contemplated by Section 301 with respect to such Security, and (iii) Securities owned by the Company or any other obligor upon the Securities or any Affiliate of the Company or of such other obligor shall be disregarded and deemed not to be Outstanding, except that, in determining whether the Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Securities which the Trustee knows to be so owned shall be so disregarded. Securities so owned which have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee's right so to act with respect to such Securities and that the pledgee is not the Company or any other obligor upon the Securities or any Affiliate of the Company or of such other obligor. "Paying Agent" means any Person authorized by the Company to pay the principal of or any premium or interest on any Securities on behalf of the Company. "Person" means any individual, corporation, limited liability company, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof. "Place of Payment", when used with respect to the Securities of any series, means the place or places where the principal of and any premium and interest on the Securities of that series are payable as established as contemplated by Section 301. "Predecessor Security" of any particular Security means every previous Security evidencing all or a portion of the same debt as that evidenced by such particular Security; and, for the purposes of this definition, any Security authenticated and delivered under Section 306 in exchange for or in lieu of a mutilated, destroyed, lost or stolen Security shall be deemed to evidence the same debt as the mutilated, destroyed, lost or stolen Security. "Redemption Date", when used with respect to any Security to be redeemed, in whole or in part, means the date fixed for such redemption by or pursuant to this Indenture. "Redemption Price", when used with respect to any Security to be redeemed, means the price at which it is to be redeemed pursuant to this Indenture. 6 "Regular Record Date" for the interest payable on any Interest Payment Date on the Securities of any series means the date for that purpose established as contemplated by Section 301. "Responsible Officer", when used with respect to the Trustee, means any officer assigned by the Trustee to administer corporate trust matters and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of such officer's knowledge of and familiarity with the particular subject. "Sale and Leaseback" shall have the meaning specified in Section 1013. "Security" has the meaning stated in the first recital of this Indenture and, more particularly, means any Security or Securities authenticated and delivered under this Indenture; provided, however, that, if at any time there is more than one Person acting as Trustee under this Indenture, "Securities" with respect to the Indenture as to which such Person is Trustee shall have the meaning stated in the first recital of this Indenture and shall more particularly mean Securities authenticated and delivered under this Indenture, exclusive, however, of Securities of any series as to which such Person is not Trustee. "Security Register" and "Security Registrar" have the respective meanings specified in Section 305. "Senior Indebtedness" has the meaning determined pursuant to Section 301(17). "Special Record Date" for the payment of any Defaulted Interest on the Securities of any series means a date fixed by the Trustee pursuant to Section 307. "Stated Maturity", when used with respect to any Security or any installment of principal thereof or interest thereon, means the date specified in such Security as the fixed date on which the principal of such Security or such installment of principal or interest is due and payable. "Subsidiary" means (i) any corporation at least a majority of the outstanding voting stock of which is owned, directly or indirectly, by the Company or by one or more other Subsidiaries of the Company, or by the Company and one or more other Subsidiaries of the Company, (ii) any partnership or limited liability company in which the Company or a Subsidiary of the Company holds a majority interest in the equity capital or profits of such partnership or limited liability company, or (iii) any other Person in which the Company, a Subsidiary of the Company or the Company and one or more other Subsidiaries of the Company, directly or indirectly, at the date of determination has (x) at least a majority ownership interest or (y) the power to elect or direct the election of a majority of the directors or other governing body of such Person. For the purposes of this definition, "voting stock" means stock which ordinarily has 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. "Trustee" means the Person named as the "Trustee" in the first paragraph of this 7 instrument until a successor Trustee shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Trustee" shall mean or include each Person who is then a Trustee hereunder, and if at any time there is more than one such Person, "Trustee" as used with respect to the Securities of any series shall mean the Trustee with respect to Securities of that series. "Trust Indenture Act" means the Trust Indenture Act of 1939 as in force at the date as of which this instrument was executed; provided, however, that in the event the Trust Indenture Act of 1939 is amended after such date, "Trust Indenture Act" means, to the extent required by any such amendment, the Trust Indenture Act of 1939 as so amended. "U.S. Government Obligations" means securities which are (i) direct obligations of the United States of America for the payment of which its full faith and credit is pledged or (ii) obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America the payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States of America, which, in either case, are not callable or redeemable at the option of the issuer thereof, and shall also include a depository receipt issued by a bank or trust company as custodian with respect to any such U.S. Government Obligation or a specific payment of interest on or principal of any such U.S. Government Obligation held by such custodian for the account of the holder of a depository receipt; provided that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depository receipt from any amount received by the custodian in respect of the U.S. Government Obligation or the specific payment of interest on or principal of the U.S. Government Obligation evidenced by such depository receipt. "Yield to Maturity" means the yield to maturity, computed at the time of issuance of a Security (or, if applicable, at the most recent redetermination of interest on such Security) and as set forth in such Security in accordance with generally accepted United States bond yield computation principles. Section 102. Compliance Certificates and Opinions. Upon any application or request by the Company to the Trustee to take any action under any provision of this Indenture, the Company shall furnish to the Trustee such certificates and opinions as may be required under the Trust Indenture Act. Each such certificate or opinion shall be given in the form of an Officers' Certificate, if to be given by an officer of the Company, or an Opinion of Counsel, if to be given by counsel, and shall comply with the requirements of the Trust Indenture Act and any other requirements set forth in this Indenture. Every certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture shall include: (1) a statement that each individual signing such certificate or opinion has read such covenant or condition and the definitions herein relating thereto; (2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; 8 (3) a statement that, in the opinion of each such individual, the individual has made such examination or investigation as is necessary to enable such individual to express an informed opinion as to whether or not such covenant or condition has been complied with; and (4) a statement as to whether, in the opinion of each such individual, such condition or covenant has been complied with. Section 103. Form of Documents Delivered to Trustee. In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents. Any certificate or opinion of an officer of the Company may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such officer knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to the matters upon which such officer's certificate or opinion is based are erroneous. Any such certificate or opinion of counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an officer or officers of the Company stating that the information with respect to such factual matters is in the possession of the Company, unless such counsel knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to such matters are erroneous. Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument. Section 104. Acts of Holders; Record Dates. (a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Holders of the Outstanding Securities of all series or one or more series, as the case may be, may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by agent duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee and, where it is hereby expressly required, to the Company. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "Act" of the Holders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and (subject to Section 601) conclusive in favor of the Trustee and the Company, if made in the manner provided in this Section. (b) The fact and date of the execution by any Person of any such instrument or 9 writing may be proved by the affidavit of a witness of such execution or by a certificate of a notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to him the execution thereof. Where such execution is by a signer acting in a capacity other than his individual capacity, such certificate or affidavit shall also constitute sufficient proof of his authority. The fact and date of the execution of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other manner which the Trustee deems sufficient. (c) The Company may, in the circumstances permitted by the Trust Indenture Act, fix any date not more than 60 days nor less than 10 days prior to the date of any of the following actions as the record date for the purpose of determining the Holders of Securities of any series entitled to give or take any request, demand, authorization, direction, notice, consent, waiver or other action, or to vote on any action, authorized or permitted to be given or taken by Holders of Securities of such series. If not set by the Company prior to the first solicitation of a Holder of Securities of such series made by any Person in respect of any such action, or, in the case of any such vote, prior to such vote, the record date for any such action or vote shall be the 30th day (or, if later, the date of the most recent list of Holders required to be provided pursuant to Section 701) prior to such first solicitation or vote, as the case may be. Notwithstanding the foregoing, the Company may not set a record date for, and the provisions of this paragraph shall not apply with respect to, the giving or making of any notice, declaration, request or direction referred to in the next paragraph. If any record date is set pursuant to this paragraph, the Holders of Outstanding Securities of the relevant series on such record date, and no other Holders, shall be entitled to take the relevant action, whether or not such Holders remain Holders after such record date; provided that no such action shall be effective hereunder unless taken on or prior to the applicable Expiration Date by Holders of the requisite principal amount of Outstanding Securities of such series on such record date. Promptly after any record date is set pursuant to this paragraph, the Company, at its own expense, shall cause notice of such record date, the proposed action by Holders and the applicable Expiration Date to be given to each Holder of Securities of the relevant series in the manner set forth in Section 106. (d) The Trustee may set any day as a record date for the purpose of determining the Holders of Outstanding Securities of any series entitled to join in the giving or making of (i) any Notice of Default, (ii) any declaration of acceleration referred to in Section 502, (iii) any request to institute proceedings referred to in Section 507(2) or (iv) any direction referred to in Section 512, in each case with respect to Securities of such series. If any record date is set pursuant to this paragraph, the Holders of Outstanding Securities of such series on such record date, and no other Holders, shall be entitled to join in such notice, declaration, request or direction, whether or not such Holders remain Holders after such record date; provided that no such action shall be effective hereunder unless taken on or prior to the applicable Expiration Date by Holders of the requisite principal amount of Outstanding Securities of such series on such record date. Promptly after any record date is set pursuant to this paragraph, the Trustee, at the Company's expense, shall cause notice of such record date, the proposed action by Holders and the applicable Expiration Date to be given to the Company in writing and to each Holder of Securities of the relevant series in the manner set forth in Section 106. (e) With respect to any record date set pursuant to this Section, the party hereto 10 which sets such record dates may designate any day as the "Expiration Date" and from time to time may change the Expiration Date to any earlier or later day; provided that no such change shall be effective unless notice of the proposed new Expiration date is given to the other party hereto in writing, and to each Holder of Securities of the relevant series in the manner set forth in Section 106, on or prior to the existing Expiration Date. If an Expiration Date is not designated with respect to any record date set pursuant to this Section, the party hereto which set such record date shall be deemed to have initially designated the 180th day after such record date as the Expiration Date with respect thereto, subject to its right to change the Expiration Date as provided in this paragraph. Notwithstanding the foregoing, no Expiration Date shall be later than the 180th day after the applicable record date. (f) Without limiting the foregoing, a Holder entitled hereunder to take any action hereunder with regard to any particular Security may do so with regard to all or any part of the principal amount of such Security or by one or more duly appointed agents each of which may do so pursuant to such appointment with regard to all or any part of such principal amount. (g) The ownership of Securities shall be proved by the Security Register. (h) Any request, demand, authorization, direction, notice, consent, waiver or other Act of the Holder of any Security shall bind every future Holder of the same Security and the Holder of every Security issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof in respect of anything done, omitted or suffered to be done by the Trustee or the Company in reliance thereon, whether or not notation of such action is made upon such Security. (i) For purposes of this Indenture, any action by the Holders which may be taken in writing may be taken by electronic means or as otherwise reasonably acceptable to the Trustee. Section 105. Notices, Etc., to Trustee and Company. Any request, demand, authorization, direction, notice, consent, waiver or Act of Holders or other document provided or permitted by this Indenture to be made upon, given or furnished to, or filed with, (1) the Trustee by any Holder or by the Company shall be sufficient for every purpose hereunder if made, given, furnished or filed in writing to or with the Trustee at its Corporate Trust Office, One North State Street, 9th Floor, Chicago, Illinois 60602, Attention: Corporate Trust Department, or at any other address previously furnished in writing by the Trustee to the Holders or the Company or any other obligor on the Securities, or (2) the Company by the Trustee or by any Holder shall be sufficient for every purpose hereunder (unless otherwise herein expressly provided) if made, given, furnished or filed in writing to or with the Company addressed to it at the address of its principal office specified in the first paragraph of this instrument to the "Attention of the Treasurer" with a copy to the Company's General Counsel or at any other address previously furnished in writing to the Trustee by the Company. Any such communication shall be effective upon receipt. 11 Section 106. Notice to Holders; Waiver. Where this Indenture provides for notice to Holders of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to each Holder affected by such event, at his address as it appears in the Security Register, not later than the latest date (if any), and not earlier than the earliest date (if any), prescribed for the giving of such notice. In any case where notice to Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder shall affect the sufficiency of such notice with respect to other Holders. Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. In case by reason of the suspension of regular mail service or by reason of any other cause it shall be impracticable to give such notice by mail, then such notification as shall be made with the approval of the Trustee shall constitute a sufficient notification for every purpose hereunder. Section 107. Conflict with Trust Indenture Act. If any provision hereof limits, qualifies or conflicts with a provision of the Trust Indenture Act that is required under such Act to be a part of and govern this Indenture, the Trust Indenture Act provision shall control. If any provision of this Indenture modifies or excludes any provision of the Trust Indenture Act that may be so modified or excluded, the latter provision shall be deemed to apply to this Indenture as so modified or excluded, as the case may be. Section 108. Effect of Headings and Table of Contents. The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof. Section 109. Successors and Assigns. All covenants and agreements in this Indenture by the Company shall bind its successors and assigns, whether so expressed or not. Section 110. Separability Clause. In case any provision in this Indenture or in the Securities shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. Section 111. Benefits of Indenture. 12 Nothing in this Indenture or in the Securities, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder and the Holders, any benefit or any legal or equitable right, remedy or claim under this Indenture. Section 112. Governing Law. This Indenture and the Securities shall be deemed to be a contract under the laws of the State of New York, and for all purposes shall be construed in accordance with the laws of such state, without regard to principles of conflicts of laws. Section 113. Legal Holidays. In any case where any Interest Payment Date, Redemption Date or Stated Maturity of any Security shall not be a Business Day at any Place of Payment for such Security, then notwithstanding any other provision of this Indenture or of the Security (other than a provision of the Security established as contemplated by Section 301 and which specifically states that such provision shall apply in lieu of this Section 113), payment of interest or principal (and premium, if any) need not be made at such Place of Payment on such date, but may be made on the next succeeding Business Day at such Place of Payment with the same force and effect as if made on the Interest Payment Date or Redemption Date, or at the Stated Maturity, and no interest shall accrue on such payment for the period from and after such Interest Payment Date, Redemption Date or Stated Maturity, as the case may be, to the next succeeding Business Day. Section 114. Independence of Covenants. All covenants and agreements in this Indenture shall be given independent effect so that if a particular action or condition is not permitted by any such covenants or agreements, the fact that it would be permitted by an exception to, or be otherwise within the limitations of, another covenant shall not avoid the occurrence of a default or an Event of Default if such action is taken or condition exists. ARTICLE TWO SECURITY FORMS Section 201. Forms of Securities. The Securities of each series shall be in substantially the forms as shall be established by or pursuant to one or more Board Resolutions (as set forth in a Board Resolution or, to the extent established pursuant to rather than as set forth in a Board Resolution, an Officer's Certificate detailing such establishment) or in one or more indentures supplemental hereto, shall have such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture or any indenture supplemental hereto, 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 this Indenture, 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 Securities 13 may be listed or of the Depositary therefore, or to conform to usage. The definitive Securities shall be typewritten, printed, lithographed or engraved or produced by any combination of these methods on steel engraved borders or may be produced in any other manner permitted by the rules of any securities exchange or automated quotation system on which the Securities of such series may be listed or traded, all as determined by the officers executing such Securities, as evidenced by their execution of such Securities. Section 202. Form of Legend for Book-Entry Securities. Any Book-Entry Security authenticated and delivered hereunder shall bear a legend in substantially the following form: "UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN." Section 203. Form of Trustee's Certificate of Authentication. The Trustee's certificates of authentication shall be in substantially the following form: "TRUSTEE'S CERTIFICATE OF AUTHENTICATION Dated: This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture. The First National Bank of Chicago, as Trustee By: _________________________________ Authorized Signatory" If at any time there shall be an Authenticating Agent appointed with respect to one or more series of Securities, then in lieu of the Trustee's certificate of authentication, an alternative certificate of authentication shall be borne by such Securities substantially in the following form: 14 "TRUSTEE'S CERTIFICATE OF AUTHENTICATION Dated: This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture. By:[____________________], as Authenticating Agent By: ___________________________ Authorized Signatory" ARTICLE THREE THE SECURITIES Section 301. Amount Unlimited; Issuable in Series. The aggregate principal amount of Securities which may be authenticated and delivered under this Indenture is unlimited. All Securities of one series need not be issued at the same time and, unless otherwise provided, a series may be reopened, without the consent of any Holder, for issuances of additional Securities of such series. The Securities may be issued in one or more series. With respect to any series of Securities which may be designated and authenticated and delivered under this Indenture, there shall be established in or pursuant to one or more Board Resolutions (and to the extent established pursuant to rather than as set forth in a Board Resolution, in an Officers' Certificate detailing such establishment) or established in one or more indentures supplemental hereto, prior to the issuance of Securities of any series (except as provided in the last paragraph of this Section 301), the following: (1) the title of the Securities of the series (which shall distinguish the Securities of the series from Securities of any other series); (2) the aggregate principal amount of the Securities and any limit upon the aggregate principal amount of the Securities of the series which may be authenticated and delivered under this Indenture (except for Securities authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Securities of the series pursuant to Section 304, 305, 306, 906 or 1107 and except for any Securities which, pursuant to Section 303, are deemed never to have been authenticated and delivered hereunder), which limit, unless otherwise expressly established, may be changed from time to time by or pursuant to Board Resolution, Officers' Certificate or indentures supplemental hereto without the consent of any Holders; 15 (3) the Person to whom any interest on a Security of the series shall be payable, if other than the Person in whose name that Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest; (4) the date or dates, or the method by which such date or dates will be determined, on which the principal and premium, if any, of the Securities of the series is payable; (5) the rate or rates (which may be fixed, floating, or adjustable) at which the Securities of the series shall bear interest, if any, or the method or methods by which such rate or rates shall be determined, the date or dates from which such interest shall accrue or method by which such date or dates shall be determined, the Interest Payment Dates on which any such interest shall be payable and the Regular Record Date, if any, for any interest payable on any Interest Payment Date, or the method by which such date shall be determined, and the basis upon which interest shall be calculated if other than that of a 360-day year of twelve 30-day months; (6) the place or places where the principal of and any premium and interest on Securities of the series shall be payable and the place or places where the Securities of such series may be presented for requisition of exchange; (7) the period or periods within which, the price or prices at which, the currencies, currency units or composite currencies in which, and the other terms and conditions upon which Securities of the series may be redeemed, in whole or in part, at the option of the Company and if other than by a Board Resolution, the manner in which any election by the Company to redeem the Securities shall be evidenced; (8) the obligation, if any, of the Company to redeem, repay or purchase Securities of the series pursuant to any sinking fund or analogous provisions or at the option of a Holder thereof and the period or periods within which, the price or prices at which, and the other terms and conditions upon which Securities of the series shall be redeemed, repaid or purchased, in whole or in part, pursuant to such obligation; (9) if other than denominations of $1,000 and any integral multiple thereof, the denominations in which Securities of the series shall be issuable; (10) the application, if any, of Section 403 to the Securities of the series; (11) the application, if any, of Section 1008 to the Securities of the series; (12) if the amount of payments of principal of or any premium or interest on any Securities of the series may be determined with reference to an index, formula or other method (which index, formula or method may be based, without limitation, on one or more currencies, currency units, composite currencies, commodities, equity indices or other indices), the manner in which such amounts shall be determined; (13) whether the Securities of the series shall be issued in whole or in part in the form 16 of one or more Book-Entry Securities and, in such case, the Depositary with respect to such Book-Entry Security or Securities and the circumstances under which any such Book-Entry Security may be registered for transfer or exchange, or authenticated and delivered, in the name of a Person other than such Depositary or its nominee, if other than as set forth in Section 305; (14) if other than the entire principal amount thereof, the portion of the principal amount of Securities of the series which shall be payable upon declaration of acceleration of the Maturity thereof pursuant to Section 502; (15) provisions, if any, granting special rights to the Holders of Securities of the series upon the occurrence of such events as may be specified; (16) any deletions from, modifications of or additions to the Events of Default or covenants of the Company with respect to Securities of the series, whether or not such Events of Default or covenants are consistent with the Events of Default or covenants set forth herein; (17) the terms pursuant to which the Securities of the series will be made subordinate and subject in right of payment to the prior payment in full of all Senior Indebtedness of the Company, and the definition of any such Senior Indebtedness; (18) whether the payment of principal, premium and interest and other amounts due hereunder, and performance of the Company's other obligations hereunder, will be guaranteed by one or more guarantors, including subsidiaries of the Company; (19) whether the Securities of such series are registered securities, bearer securities or, alternatively, bearer and registered securities, and whether any bearer securities will be issued with coupons, without coupons or both, and any restrictions applicable to the offer, sale or delivery of bearer securities and the terms, if any, upon which bearer securities of the series may be exchanged for registered securities of the series and vice versa; and (20) any other terms of the series (which terms shall not be inconsistent with the provisions of this Indenture, except as permitted by Section 901(5)). All Securities of any one series shall be substantially identical except as to denomination and except as may otherwise be provided by or pursuant to the Board Resolution or Officer's Certificate referred to above or as set forth in any indenture supplemental hereto. The Securities of any series need not be issued at the same time but may be issued from time to time and the terms of any Security may be established prior to the issuance thereof but after the issuance of other Securities of the same series. If any of the terms of the Securities of such series are established by action taken pursuant to a Board Resolution, a copy of an appropriate record of such action shall be certified by the Secretary or an Assistant Secretary of the Company and delivered to the Trustee at or prior to the delivery of the Officers' Certificate or Company Order setting forth the terms of the series. 17 Section 302. Denominations. The Securities of each series shall be issuable in registered form without coupons in such denominations as shall be established as contemplated by Section 301. In the absence of any such provisions with respect to the Securities of any series, the Securities of such series shall be issuable in denominations of $1,000 and any integral multiple thereof. Section 303. Execution, Authentication, Delivery and Dating. The Securities shall be executed on behalf of the Company by its Chairman of the Board, its Vice Chairman of the Board, its Chief Executive Officer, its President or one of its Vice Presidents, under its corporate seal which may, but need not, be attested by its Treasurer, one of its Assistant Treasurers, its Secretary or one of its Assistant Secretaries. The signature of any of these officers on the Securities may be manual or facsimile. Securities bearing the manual or facsimile signatures of individuals who were at any time the proper officers of the Company shall bind the Company, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Securities or did not hold such offices at the date of such Securities. At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Securities of any series executed by the Company to the Trustee for authentication, together with a Company Order for the authentication and delivery of such Securities, and the Trustee in accordance with the Company Order shall authenticate and deliver such Securities to or upon the order of the Company or pursuant to such procedures acceptable to the Trustee and to such recipients as the case may be as specified from time to time by a Company Order. If all the Securities of any series are not to be issued at one time and if the terms of such Securities established as contemplated by Section 301 so permit, such Company Order may set forth procedures acceptable to the Trustee for the completion and authentication of such Securities from time to time. In authenticating Securities of any series, and accepting the additional responsibilities under this Indenture in relation to such Securities, the Trustee shall be entitled to receive, and (subject to Section 601) shall be fully protected in relying upon, (i) any Board Resolution, Officers' Certificate and/or indenture supplemental hereto by or pursuant to which the forms and terms of such Securities are established as contemplated by Sections 201 and 301; (ii) an Officers' Certificate setting forth the forms and terms of such Securities and stating that the forms and terms of such Securities have been established pursuant to Sections 201 and 301 and comply with this Indenture, and covering such other matters as the Trustee may reasonably request; and (iii) an Opinion of Independent Counsel substantially to the effect that: (a) the forms and the terms of such Securities have been duly authorized and 18 established in conformity with the provisions of this Indenture, (b) all conditions precedent provided for in this Indenture relating to the Trustee's authentication of such Securities have been complied with, and (c) such Securities, when authenticated and delivered by the Trustee and issued by the Company in the manner and subject to any conditions specified in such Opinion of Independent Counsel, will constitute valid and legally binding obligations of the Company enforceable in accordance with their terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles and to such other matters as such counsel may specify. The Trustee shall not be required to authenticate such Securities if the issue of such Securities pursuant to this Indenture will affect the Trustee's own rights, duties or immunities under the Securities and this Indenture or otherwise in a manner which is not reasonably acceptable to the Trustee. Notwithstanding the provisions of Section 301 and of the preceding paragraph, if all Securities of a series are not to be originally issued at one time, it shall not be necessary to deliver the Company Order, Board Resolution, indentures supplemental hereto, Officers' Certificate and Opinion of Independent Counsel otherwise required pursuant to such preceding paragraph at or prior to the time of authentication of each Security of such series if such documents (with such modifications as may be appropriate) are delivered at or prior to the authentication upon original issuance of the first Security of such series to be issued and reasonably contemplate such authentication of each such Security. Each Security shall be dated the date of its authentication, unless otherwise established therefor as contemplated by Section 301. No Security shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose unless there appears on such Security a certificate of authentication substantially in the form provided for herein executed by the Trustee by manual signature, and such certificate upon any Security shall be conclusive evidence, and the only evidence, that such Security has been duly authenticated and delivered hereunder and is entitled to the benefits of this Indenture. Notwithstanding the foregoing, if any Security shall have been authenticated and delivered hereunder but never issued and sold by the Company, and the Company shall deliver such Security to the Trustee for cancellation as provided in Section 309, for all purposes of this Indenture such Security shall be deemed never to have been authenticated and delivered hereunder and shall never be entitled to the benefits of this Indenture. Section 304. Temporary Securities. Pending the preparation of definitive Securities of any series, the Company may execute, and upon Company Order the Trustee shall authenticate and deliver, temporary Securities of such Series which are printed, lithographed, typewritten, mimeographed or otherwise produced, 19 in any authorized denomination, substantially of the tenor of the definitive Securities in lieu of which they are issued and with such appropriate insertions, omissions, substitutions and other variations as the officers executing such Securities may determine, as evidenced by their execution of such Securities. In the case of Securities of any series, such temporary Securities may be in global form. If temporary Securities of any series are issued, the Company will cause definitive Securities of that series to be prepared without unreasonable delay. After the preparation of definitive Securities of such series, the temporary Securities of such series shall be exchangeable for definitive Securities of such series upon surrender of the temporary Securities of such series at the office or agency of the Company in a Place of Payment for that series, without charge to the Holder. Upon surrender for cancellation of any one or more temporary Securities of any series, the Company shall execute, and the Trustee shall authenticate and deliver in exchange therefor, one or more definitive Securities of the same series, of any authorized denominations and of a like aggregate principal amount and tenor. Until so exchanged, the temporary Securities of any series shall in all respects be entitled to the same benefits under this Indenture as definitive Securities of such series and tenor. Section 305. Registration, Registration of Transfer and Exchange. The Company shall cause to be kept at the Corporate Trust Office of the Trustee a register (the register maintained in such office and in any other office or agency of the Company in a Place of Payment being herein sometimes collectively referred to as the "Security Register") in which, subject to such reasonable regulations as it may prescribe, the Company shall provide for the registration of Securities and of transfers of Securities. The Trustee is hereby appointed "Security Registrar" for the purpose of registering Securities and transfers of Securities as herein provided. If any indenture supplemental hereto refers to any transfer agents (in addition to the Security Registrar) initially designated by the Company with respect to any series of Securities, the Company may at any time rescind the designation of any such transfer agent or approve a change in the location through which any such transfer agent in each Place of Payment for such series. The Company may at any time designate additional transfer agents with respect to any series of Securities. Upon surrender for registration of transfer of any Security of any series at the office or agency in a Place of Payment for Securities of that series, the Company shall execute, and the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Securities of the same series, of any authorized denominations and of a like aggregate principal amount and tenor. At the option of the Holder, Securities of any series may be exchanged for other Securities of the same series, of any authorized denominations and of a like aggregate principal amount and tenor, upon surrender of the Securities to be exchanged at such office or agency. Whenever any Securities are so surrendered for exchange, the Company shall execute, and the Trustee shall authenticate and deliver, the Securities which the Holder making the exchange is entitled to receive. 20 All Securities issued upon any registration of transfer or exchange of Securities shall be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Securities surrendered upon such registration of transfer or exchange. Every Security presented or surrendered for registration of transfer or for exchange or redemption shall (if so required by the Company or the Trustee) be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed, by the Holder thereof or his attorney duly authorized in writing. No service charge shall be made for any registration of transfer or exchange of Securities, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Securities, other than exchanges pursuant to Section 304, 906 or 1107 not involving any transfer. Neither the Company nor the Trustee shall be required (i) to issue, register the transfer of or exchange Securities of any series, if such Security may be among those selected for redemption, during a period beginning at the opening of business 15 days before the day of the mailing of a notice of redemption of Securities of that series selected for redemption under Section 1103 and ending at the close of business on the day of such mailing, or (ii) to register the transfer of or exchange any Security so selected for redemption in whole or in part, except the unredeemed portion of any Security being redeemed in part. Notwithstanding the foregoing, no Book-Entry Security shall be registered for transfer or exchange, or authenticated and delivered, whether pursuant to this Section, Sections 304, 306, 906 or 1107 or otherwise, in the name of a Person other than the Depositary for such Book-Entry Security or its nominee until (i) the Depositary with respect to a Book-Entry Security notifies the Company that it is unwilling or unable to continue as Depositary for such Book-Entry Security or the Depositary ceases to be a clearing agency registered under the Exchange Act, (ii) the Company executes and delivers to the Trustee a Company Order that such Book-Entry Security shall be so transferable and exchangeable or (iii) there shall have occurred and be continuing an Event of Default with respect to the Securities of such series. Upon the occurrence in respect of any Book-Entry Security of any series of any one or more of the conditions specified in clauses (i), (ii) or (iii) of the preceding sentence or such other conditions as may be established as contemplated by Section 301 for Securities of such series, such Book-Entry Security may be registered for transfer or exchange for Securities registered in the names of, or authenticated and delivered to, such Persons as the Depositary with respect to such series shall direct. Except as provided in the preceding paragraph, any Security authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, any Book-Entry Security, whether pursuant to this Section, Section 304, 306, 906 or 1107 or otherwise, shall also be a Book-Entry Security and bear the legend specified in Section 202. If the Securities are Book-Entry Securities, the Depositary or its nominee, as registered owner of a Book-Entry Security, shall be the Holder of such Book-Entry Security for all 21 purposes under the Indenture and each series of the Securities, and owners of beneficial interests in a Book-Entry Security shall hold such interests pursuant to the applicable procedures of the Depositary. Accordingly, any such owner's beneficial interest in a Book-Entry Security will be shown only on, and the transfer of such interest shall be effected only through, records maintained by the Depositary or its nominee. Section 306. Mutilated, Destroyed, Lost and Stolen Securities. If any mutilated Security is surrendered to the Trustee, together with such security or indemnity as may be requested by the Company or the Trustee to save each of them harmless the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a new Security of the same series and of like tenor and principal amount and bearing a number not contemporaneously outstanding. If there shall be delivered to the Company and the Trustee (i) evidence to their satisfaction of the destruction, loss or theft of any Security and (ii) such security or indemnity as may be required by them to save each of them and any agent of either of them harmless, then, in the absence of notice to the Company or the Trustee that such Security has been acquired by a bona fide purchaser, the Company shall execute and the Trustee shall authenticate and deliver, in lieu of any such destroyed, lost or stolen Security, a new Security of the same series and of like tenor and principal amount and bearing a number not contemporaneously outstanding. If, after the delivery of such new Security, a bona fide purchaser of the original Security in lieu of which such new Security was issued presents for payment or registration such original Security, the Trustee shall be entitled to recover such new Security from the party to whom it was delivered or any party taking therefrom, except a bona fide purchaser, and shall be entitled to recover upon the security or indemnity provided therefor to the extent of any loss, damage, cost or expense incurred by the Company and the Trustee in connection therewith. In case any such mutilated, destroyed, lost or stolen Security has become or is about to become due and payable, the Company in its discretion may, instead of issuing a new Security, pay such Security. Upon the issuance of any new Security under this Section, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith. Every new Security of any series issued pursuant to this Section in lieu of any destroyed, lost or stolen Security shall constitute an original additional contractual obligation of the Company, whether or not the destroyed, lost or stolen Security shall be at any time enforceable by anyone, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Securities of that series duly issued hereunder. The provisions of this Section are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities. 22 Section 307. Payment of Interest; Interest Rights Preserved. Except as otherwise established as contemplated by Section 301 with respect to Securities of any series, interest on any Security which is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the Person in whose name that Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest at the office or agency of the Company maintained for such purpose pursuant to Section 1002; provided, however, that, except in the case of a Book-Entry Security, each installment of interest on any Security may at the Company's option be paid by (i) mailing a check for such interest, payable to or upon the written order of the Person entitled thereto pursuant to Section 308, to the address of such Person as it appears on the Security Register or (ii) wire transfer to an account maintained by the payee located inside the United States. Any Paying Agents will be identified in a supplemental indenture hereto. The Company may at any time designate additional Paying Agents or rescind the designation of any Paying Agent; however, the Company at all times will be required to maintain a Paying Agent in each Place of Payment for each series of Securities. Except as otherwise established as contemplated by Section 301 with respect to Securities of any series, any interest on any Security which is payable, but is not punctually paid or duly provided for, on any Interest Payment Date (herein called "Defaulted Interest") shall forthwith cease to be payable to the Holder on the relevant Regular Record Date by virtue of having been such Holder, and such Defaulted Interest may be paid by the Company, at its election in each case, as provided in paragraph (1) or (2) below: (1) The Company may elect to make payment of any Defaulted Interest to the Persons in whose names the Securities (or their respective Predecessor Securities) are registered at the close of business on a Special Record Date for the payment of such Defaulted Interest, which shall be fixed in the following manner. The Company shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Security and the date of the proposed payment, and at the same time the Company shall deposit with the Trustee an amount of money in cash equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as provided in this clause. Thereupon the Trustee shall fix a Special Record Date for the payment of such Defaulted Interest which shall not be more than 15 days and not less than 10 days prior to the date of the proposed payment and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment. The Trustee shall promptly notify the Company of such Special Record Date and, in the name and at the expense of the Company, shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, first-class postage prepaid, to each Holder of such Securities at his address as it appears in the Security Register, not less than 10 days prior to such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date 23 therefor having been so mailed, such Defaulted Interest shall be paid to the Persons in whose names such Securities (or their respective Predecessor Securities) are registered at the close of business on such Special Record Date and shall no longer be payable pursuant to the following Clause (2). (2) The Company may pay any Defaulted Interest on the Securities of any series in any other lawful manner not inconsistent with the requirements of any securities exchange or automated quotation system on which such Securities may be listed or traded, and upon such notice as may be required by such exchange or automated quotation system, if, after notice given by the Company to the Trustee of the proposed payment pursuant to this clause, such manner of payment shall be deemed practicable by the Trustee. Subject to the foregoing provisions of this Section, each Security delivered under this Indenture upon registration of transfer of or in exchange for or in lieu of any other Security shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Security. Section 308. Persons Deemed Owners. Prior to due presentment of a Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name such Security is registered as the owner of such Security for the purpose of receiving payment of principal of and any premium and (subject to Section 307) any interest on such Security and for all other purposes whatsoever, whether or not such Security be overdue, and neither the Company, the Trustee nor any agent of the Company or the Trustee shall be affected by notice to the contrary. Section 309. Cancellation. All Securities surrendered for payment, redemption, repayment at the option of the Holder, registration of transfer or exchange or for credit against any sinking fund payment shall, if surrendered to any Person other than the Trustee, be delivered to the Trustee and shall be promptly canceled by it. The Company may at any time deliver to the Trustee for cancellation any Securities previously authenticated and delivered hereunder which the Company may have acquired in any manner whatsoever, and may deliver to the Trustee (or to any other Person for delivery to the Trustee) for cancellation any Securities previously authenticated hereunder which the Company has not issued and sold, and all Securities so delivered shall be promptly canceled by the Trustee. No Securities shall be authenticated in lieu of or in exchange for any Securities canceled as provided in this Section, except as expressly permitted by this Indenture. All canceled Securities held by the Trustee shall be disposed of as directed by a Company Order. Section 310. Computation of Interest; Default Rate. Except as otherwise established as contemplated by Section 301 in respect of Securities of any series, interest on the Securities of each series shall be computed on the basis of a 360-day year of twelve 30-day months and interest on the Securities of each series for any partial period 24 shall be computed on the basis of a 360-day year of twelve 30-day months and the number of days elapsed in any partial month. Unless otherwise specified, interest on any overdue amounts of any series of Securities, whether for interest or principal, shall bear interest at the rate of interest for the underlying Securities. Section 311. CUSIP Numbers. The Company in issuing the Securities may use "CUSIP" numbers (if then generally in use), and, if so, the Trustee shall use "CUSIP" numbers in notices of redemption as a convenience to Holders; provided that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Securities or as contained in any notice of a redemption and that reliance may be placed only on the other identification numbers printed on the Securities, and any such redemption shall not be affected by any defect in or omission of such numbers. The Company shall promptly notify the Trustee in writing of any change in "CUSIP" numbers. ARTICLE FOUR SATISFACTION AND DISCHARGE Section 401. Satisfaction and Discharge of Indenture. This Indenture shall upon Company Order cease to be of further effect with respect to Securities of any series specified in such Company Order (except as to any surviving rights of registration of transfer or exchange of Securities herein expressly provided for), and the Trustee, upon receipt of Company Order, and at the expense of the Company, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture as to such series, when (1) either (A) all Securities of such series theretofore authenticated and delivered (other than (i) Securities of such series which have been destroyed, lost or stolen and which have been replaced or paid as provided in Section 306 and (ii) Securities of such series for whose payment money has theretofore been deposited in trust or segregated and held in trust by the Company and thereafter repaid to the Company or discharged from such trust, as provided in Section 1003) have been delivered to the Trustee for cancellation; or (B) all Securities of such series not theretofore delivered to the Trustee for cancellation (i) have become due and payable, or (ii) will become due and payable at their Stated Maturity within one year, or (iii) if redeemable at the option of the Company, are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Company, 25 and the Company, in the case of (i), (ii) or (iii) above, has irrevocably deposited or caused to be deposited with the Trustee as trust funds in trust for the purpose cash or U.S. Government Obligations which through the payment of interest and principal in respect thereof in accordance with their terms will provide not later than the opening of business on the due date of any payment referred to in clause (i), (ii) or (iii) of subparagraph (B) money in an amount sufficient, without consideration of any reinvestment of such principal and interest, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, to pay and discharge (i) the principal of (and premium, if any) and each installment of principal (and premium, if any) and interest on such Outstanding Securities of that series on each applicable Stated Maturity of such principal or installment of principal or interest and (ii) any mandatory sinking fund payments or analogous payments applicable to Securities of such series on the day on which such payments are due and payable in accordance with the terms of this Indenture and of such Securities; (2) the Company has paid or caused to be paid all other sums payable hereunder by the Company in respect of such Securities; and (3) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture with respect to such Securities have been complied with and that such satisfaction and discharge will not result in a breach of violation of, or constitute a default under, this Indenture or any other material agreement or instrument to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries is bound. Notwithstanding the satisfaction and discharge of this Indenture with respect to Securities of any series pursuant to this Section 401, the obligations of the Company to the Trustee under Section 607, the obligations of the Company to any Authenticating Agent under Section 614 and, if money shall have been deposited with the Trustee pursuant to subclause (B) of clause (1) of this Section, the obligations of the Trustee under Section 402 and the last paragraph of Section 1003, in each case with respect to such Securities, shall survive. Section 402. Application of Trust Money. (a) Subject to the provisions of the last paragraph of Section 1003, all cash and U.S. Government Obligations deposited with the Trustee pursuant to Section 401, 403 or 1008 and all money received by the Trustee in respect of U.S. Government Obligations deposited with the Trustee pursuant to Section 401, 403 or 1008, shall be held in trust and applied by it, in accordance with the provisions of the Securities and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as its own Paying Agent) as the Trustee may determine, to the Persons entitled thereto, of the principal (and premium, if any) and interest for whose payment such money has been deposited with or received by the Trustee or to make mandatory sinking fund payments or analogous payments as contemplated by Section 403 or 1008. 26 (b) The Company shall pay and shall indemnify the Trustee against any tax, fee or other charge imposed on or assessed against U.S. Government Obligations deposited pursuant to Section 401, 403 or 1008 or the interest and principal received in respect of such obligations other than any payable by or on behalf of Holders. (c) The Trustee shall deliver or pay to the Company from time to time upon Company Request any money or U.S. Government Obligations held by it as provided in Section 401, 403 or 1008 which, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, are then in excess of the amount thereof which then would have been required to be deposited for the purpose for which such money or U.S. Government Obligations were deposited or received. (d) If the Trustee for any series or Paying Agent is unable to apply any money or U.S. Government Obligations in accordance with Section 401, 403 or 1008, as the case may be, by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, then the Company's obligations under this Indenture and the series of Securities shall be revived and reinstated with respect to such series, with present and prospective effect, as though no deposit had occurred pursuant to Section 401, 403 or 1008, as the case may be, until such time as the Trustee or Paying Agent is permitted to apply all such cash or U.S. Government Obligations in accordance with Section 401, 403 or 1008, as the case may be; provided, however, that if the Company makes any payment to the Trustee or Paying Agent of principal of, premium, if any, or interest on any Security following the reinstatement of its obligations, the Trustee or Paying Agent shall promptly pay any such amount to the Holders of the Securities and the Company shall be subrogated to the rights of the Holders of such series of Securities to receive such payment from the cash and U.S. Government Obligations held by the Trustee or Paying Agent. Section 403. Defeasance and Discharge of Securities of Any Series. If this Section 403 is established, as contemplated by Section 301, to be applicable to Securities of any series, then notwithstanding Section 401, (a) the Company shall be deemed to have paid and discharged the entire indebtedness on all the Outstanding Securities of that series, (b) the provisions of this Indenture as it relates to such Outstanding Securities (except as to the rights of Holders of Securities to receive, from the trust funds described in subparagraph (1) below, payment of the principal of (and premium, if any) and any installment of principal of (and premium, if any) or interest on such Securities on each Stated Maturity of such principal or installment of principal or interest or any mandatory sinking fund payments or analogous payments applicable to the Securities of that series on the day on which such payments are due and payable in accordance with the terms of the Indenture and of such Securities, the Company's obligations with respect to such Securities under Sections 304, 305, 306, 403, 1002 and 1003 and the rights, powers, trusts, duties and immunities of the Trustee hereunder) shall no longer be in effect, and (c) the Trustee, at the expense of the Company, shall upon Company Request, execute proper instruments acknowledging the same, provided that the following conditions shall have been satisfied: 27 (1) the Company shall have deposited or caused to be deposited with the Trustee (or another trustee satisfying the requirements of Section 609), irrevocably (irrespective of whether the conditions in subparagraphs (2), (3), (4) and (5) below have been satisfied, but subject to the provisions of Section 402(c) and the last paragraph of Section 1003), as trust funds in trust, specifically pledged as security for, and dedicated solely to, the benefit of the Holders of the Securities of that series, with reference to this Section 403, cash or U.S. Government Obligations, or a combination thereof, which through the payment of interest and principal in respect thereof in accordance with their terms will provide not later than the opening of business on the due date of any payment referred to in clause (i) or (ii) of this subparagraph (1) money in an amount sufficient, without consideration of any reinvestment of such principal and interest, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, to pay and discharge (i) the principal of (and premium, if any) and each installment of principal (and premium, if any) and interest on such Outstanding Securities of that series on each applicable Stated Maturity of such principal or installment of principal or interest and (ii) any mandatory sinking fund payments or analogous payments applicable to Securities of such series on the day on which such payments are due and payable in accordance with the terms of this Indenture and of such Securities; (2) such deposit will not result in a breach or violation of, or constitute a default under, this Indenture or any other material agreement or instrument to which the Company is a party or by which it is bound; (3) no Event of Default or event which with the giving of notice or lapse of time, or both, would become an Event of Default with respect to the Securities of that series shall have occurred and be continuing on the date of such deposit and no Event of Default under Section 501(5) or Section 501(6) or event which with the giving of notice or lapse of time or both, would become an Event of Default under Section 501(5) or Section 501(6) shall have occurred and be continuing on the 91st day after such date; (4) the Company has delivered to the Trustee an Opinion of Independent Counsel to the effect that (A) the Company has received from, or there has been published by, the Internal Revenue Service a ruling or (B) since the date first set forth herein above, there has been a change in the applicable United States federal income tax law or the judicial interpretation thereof, in either case (A) or (B) to the effect that, and based thereon such opinion shall confirm that, Holders of the Securities of that series will not recognize income, gain or loss for federal income tax purposes as a result of such deposit, defeasance and discharge and will be subject to United States federal income tax on the same amount and in the same manner and at the same times, as would have been the case if such deposit, defeasance and discharge had not occurred; (5) such defeasance or covenant defeasance shall not result in the trust arising from such deposit constituting an investment company within the meaning of the Investment Company Act of 1940, as amended, unless such trust shall be registered under such Act or exempt from registration thereunder; (6) the Company shall have delivered to the Trustee an Opinion of Independent Counsel in the United States to the effect that after the 91st day following the deposit, the trust 28 funds will not be subject to the effect of any applicable bankruptcy, insolvency, reorganization or similar laws affecting creditors' rights generally; and (7) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent provided for relating to the defeasance and discharge of the entire indebtedness on all Outstanding Securities of any such series as contemplated by this Section have been complied with. Notwithstanding any other provisions of this Section, such defeasance shall be effected in compliance with any additional or substitute terms, conditions or limitations which may be established as contemplated by Section 301 in respect of the Securities of that series. Opinions required to be delivered under this Section may have qualifications customary for opinions of the type required. ARTICLE FIVE REMEDIES Section 501. Events of Default. "Event of Default", wherever used herein with respect to Securities of any series, means any one of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body): (1) default in the payment of any interest upon any Security of that series as and when the same shall become due and payable, and continuance of such default for a period of 30 days; or (2) default in the payment of the principal of (or premium, if any, on) any Security of that series at its Maturity; or (3) default in the deposit of any sinking fund payment, when and as due by the terms of a Security of that series; or (4) default in the performance or breach of any covenant or warranty of the Company in this Indenture (other than any such default or breach which is elsewhere in this Section specifically dealt with or which is expressly not applicable to Securities of that series), and continuance of such default or breach for a period of 45 days after there has been given, by registered or certified mail, to the Company by the Trustee or to the Company and the Trustee by the Holders of at least 25% in principal amount of the Outstanding Securities of that series a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a "Notice of Default" hereunder; or (5) the entry by a court having jurisdiction in the premises of (A) a decree or order for relief in respect of the Company in an involuntary case or proceeding under any applicable 29 bankruptcy, insolvency, reorganization or other similar law or (B) a decree or order adjudging the Company a bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in respect of the Company under any applicable law, or appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or of any substantial part of its property, or ordering the winding up or liquidation of its affairs, and the continuance of any such decree or order for relief or any such other decree or order unstayed and in effect for a period of 60 consecutive days; or (6) the commencement by the Company of a voluntary case or proceeding under any applicable bankruptcy, insolvency, reorganization or other similar law or of any other case or proceeding to be adjudicated a bankrupt or insolvent, or the written consent by it to the entry of a decree or order for relief in respect of the Company in an involuntary case or proceeding under any applicable bankruptcy, insolvency, reorganization or other similar law or to the commencement of any bankruptcy or insolvency case or proceeding against it, or the filing by it of a petition or answer or consent seeking reorganization or relief under any applicable law, or the written consent by it to the filing of such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or of any substantial part of its property, or the making by it of an assignment for the benefit of creditors, or the admission by it in writing of its inability to pay its debts generally as they become due, or the taking of corporate action by the Company in furtherance of any such action; or (7) any other Event of Default established as contemplated by Section 301 with respect to Securities of that series. Upon receipt by the Trustee of any Notice of Default pursuant to this Section 501 with respect to Securities of a series all or part of which is represented by a Book-Entry Security, the Trustee shall establish a record date for determining Holders of Outstanding Securities of such series entitled to join in such Notice of Default, which record date shall be at the close of business on the day the Trustee receives such Notice of Default. The Holders on such record date, or their duly designated proxies, and only such Persons, shall be entitled to join in such Notice of Default, whether or not such Holders remain Holders after such record date; provided, that, except with respect to an Event of Default arising under Section 501(4), unless Holders of at least 25% in principal amount of the Outstanding Securities of such series, or their proxies, shall have joined in such Notice of Default prior to the applicable Expiration Date, such Notice of Default shall automatically and without further action by any Holder be cancelled and of no further effect. Nothing in this paragraph shall prevent a Holder, or a proxy of a Holder, from giving, after expiration of such applicable Expiration Date, a new Notice of Default identical to a Notice of Default which has been cancelled pursuant to the proviso to the sentence in which event a new record date shall be established pursuant to the provisions of this Section 501. Section 502. Acceleration of Maturity; Rescission and Annulment. If an Event of Default with respect to Securities of any series at the time Outstanding occurs and is continuing, the Trustee or the Holders of not less than 25% in principal amount of the Outstanding Securities of that series may declare the principal amount (or, if any of the 30 Securities of that series are Original Issue Discount Securities or Indexed Securities, such portion of the principal amount of such Securities as may be specified in the terms thereof) of all of the Securities of that series to be immediately due and payable by a notice in writing to the Company (and to the Trustee if given by Holders), and upon any such declaration such principal amount (or specified amount) shall become immediately due and payable. At any time after such a declaration of acceleration with respect to Securities of any series has been made and before a judgment or decree for payment of the money due has been obtained by the Trustee as hereinafter in this Article provided, the Holders of a majority in principal amount of the Outstanding Securities of that series, by written notice to the Company and the Trustee, may rescind and annul such declaration and its consequences if (1) the Company has paid or deposited with the Trustee a sum sufficient in cash to pay: (A) all overdue interest on all Securities of that series, (B) the principal of (and premium, if any, on) any Securities of that series which have become due otherwise than by such declaration of acceleration and any interest thereon at the rate or rates prescribed therefor in such Securities, (C) to the extent that payment of such interest is lawful, interest upon overdue interest at the rate or rates prescribed therefor in such Securities, and (D) all amounts owing the Trustee pursuant to Section 607 in respect of Securities of that series; and (2) all Events of Default with respect to Securities of that series, other than the non-payment of the principal and premium, if any, of Securities of that series which have become due solely by such declaration of acceleration, have been cured or waived as provided in Section 513. No such rescission shall affect any subsequent default or impair any right consequent thereon. Section 503. Collection of Indebtedness and Suits for Enforcement by Trustee. The Company covenants that if: (1) default is made in the payment of any interest on any Security when such interest becomes due and payable and such default continues for a period of 30 days, or (2) default is made in the payment of the principal of (or premium, if any, on) any Security at the Maturity thereof, the Company will, upon demand of the Trustee, pay to the Trustee, for the benefit of the Holders of such Securities, all principal, and any premium, and interest due and payable on such Securities and, to the extent that payment of such interest shall be legally enforceable, interest on any overdue principal and premium and on any overdue interest, at the rate or rates prescribed therefor in such Securities, and, in addition thereto, such further amount as shall be sufficient to 31 cover the amounts due the Trustee pursuant to Section 607 in respect of such Securities. If the Company fails to pay such amounts forthwith upon such demand, the Trustee, in its own name and as trustee of an express trust, may institute a judicial proceeding for the collection of the sums so due and unpaid, may prosecute such proceeding to judgment or final decree and may enforce the same against the Company or any other obligor upon such Securities and collect the moneys adjudged or decreed to be payable in the manner provided by law out of the property of the Company or any other obligor upon such Securities, wherever situated. If an Event of Default with respect to Securities of any series occurs and is continuing, the Trustee may in its discretion proceed to protect and enforce its rights and the rights of the Holders of Securities of such series by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy. Section 504. Trustee May File Proofs of Claim. In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to the Company or any other obligor upon the Securities or the property of the Company or of such other obligor or their creditors, the Trustee (irrespective of whether the principal of any Securities shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand on the Company for the payment of overdue principal or interest) shall be entitled and empowered, by intervention in such proceeding or otherwise, (1) to file and prove a claim for the whole amount, or such lesser amount as may be provided for in the Securities of any series, of principal, and premium, if any, and interest owing and unpaid in respect of such Securities and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Trustee pursuant to Section 607 and of the Holders allowed in such judicial proceeding, and (2) to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator (or other similar official), in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay the Trustee any amount due it pursuant to Section 607. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Securities or the rights of any Holder thereof, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding. 32 Section 505. Trustee May Enforce Claims Without Possession of Securities. All rights of action and claims under this Indenture or the Securities may be prosecuted and enforced by the Trustee without the possession of any of the Securities or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, after provision for the payment of the amounts due the Trustee pursuant to Section 607, be for the ratable benefit of the Holders of the Securities in respect of which such judgment has been recovered. Section 506. Application of Money Collected. Any money collected by the Trustee pursuant to this Article or otherwise on behalf of the Holders or the Trustee pursuant to this Article or through any proceeding or any arrangement or restructuring in anticipation or in lieu of any proceeding contemplated by this Article shall be applied, subject to applicable law, in the following order, at the date or dates fixed by the Trustee and, in case of the distribution of such money on account of principal or any premium or interest, upon presentation of the Securities and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid: FIRST: To the payment of all amounts due the Trustee under Section 607; and SECOND: To the payment of the amounts then due and unpaid for principal of and any premium and interest payable on the Securities 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 amounts due and payable on such Securities for principal and any premium and interest, respectively. Section 507. Limitation on Suits. No Holder of any Security of any series shall have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture, or for the appointment of a receiver, assignee, trustee, liquidator or sequestrator (or other similar official), or for any other remedy hereunder, unless (1) such Holder has previously given written notice to the Trustee of a continuing Event of Default with respect to the Securities of that series; (2) the Holders of not less than 25% in principal amount of the Outstanding Securities of that series shall have made written request to the Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee hereunder; (3) such Holder or Holders have offered to the Trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in compliance with such request; (4) the Trustee for 60 days after its receipt of such notice, request and offer of 33 indemnity has failed to institute any such proceeding; and (5) no direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Holders of a majority in principal amount of the Outstanding Securities of that series; it being understood and intended that no one or more of such Holders shall have any right in any manner whatever by virtue of, or by availing of, any provision of this Indenture to affect, disturb or prejudice the rights of any other of such Holders, or to obtain or to seek to obtain priority or preference over any other of such Holders or to enforce any right under this Indenture, except in the manner herein provided and for the equal and ratable benefit of all of such Holders. Section 508. Unconditional Right of Holders to Receive Principal, Premium and Interest. Notwithstanding any other provision in this Indenture, the Holder of any Security shall have the right, which is absolute and unconditional, to receive payment of the principal of and any premium and (subject to Section 307) any interest on such Security on the Stated Maturity or Maturities expressed in such Security (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. Section 509. Restoration of Rights and Remedies. If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then and in every such case, subject to any determination in such proceeding, the Company, the Trustee and the Holders shall be restored severally and respectively to their former positions hereunder and thereafter all rights and remedies of the Trustee and the Holders shall continue as though no such proceeding had been instituted. Section 510. Rights and Remedies Cumulative. Except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities in the last paragraph of Section 306, no right or remedy herein conferred upon or reserved to the Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy. Section 511. Delay or Omission Not Waiver. No delay or omission of the Trustee or of any Holder of any Securities to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and 34 remedy given by this Article or by law to the Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Holders, as the case may be. Section 512. Control by Holders. The Holders of a majority in principal amount of the Outstanding Securities of any series shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee, with respect to the Securities of such series, provided that (1) such direction shall not be in conflict with any rule of law or with this Indenture or be unduly prejudicial to Holders not joining therein, and (2) the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction. Upon receipt by the Trustee of any such direction with respect to Securities of a series all or part of which is represented by a Book-Entry Security, the Trustee shall establish a record date for determining Holders of Outstanding Securities of such series entitled to join in such direction, which record date shall be at the close of business on the day the Trustee receives such direction. The Holders on such record date, or their duly designated proxies, and only such Persons, shall be entitled to join in such direction, whether or not such Holders remain Holders after such record date; provided, that unless such majority in principal amount shall have been obtained prior to the applicable Expiration Date, such direction shall automatically and without further action by any Holder be cancelled and of no further effect. Nothing in this paragraph shall prevent a Holder, or a proxy of a Holder, from giving, after expiration of such applicable Expiration Date, a new direction identical to a direction which has been cancelled pursuant to the provisions to the preceding sentence, in which event a new record date shall be established pursuant to the provisions of this Section 512. Section 513. Waiver of Past Defaults. The Holders of not less than a majority in principal amount of the Outstanding Securities of any series may on behalf of the Holders of all the Securities of such series waive any past default hereunder with respect to such series and its consequences, except a default (1) in the payment of the principal of or any premium or interest on any Security of such series, or (2) in respect of a covenant or provision hereof which under Article Nine cannot be modified or amended without the consent of the Holder of each Outstanding Security of such series affected. Upon any such waiver, such default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Indenture; but no such 35 waiver shall extend to any subsequent or other default or impair any right consequent thereon. Section 514. Undertaking for Costs. All parties to this Indenture agree, and each Holder of any Security of any series by his acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken, suffered or omitted by it as Trustee in respect of the Securities of such series, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys' fees, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section shall not apply to any suit instituted by the Company or the Trustee, to any suit instituted by any Holder, or group of Holders, holding in the aggregate more than 10% in principal amount of the Outstanding Securities of such series, or to any suit instituted by any Holder for the enforcement of the payment of the principal of, premium, if any, or interest on any Security on or after the respective Stated Maturities expressed in such Security (or, in the case of redemption, on or after the Redemption Date). Section 515. Waiver of Stay or Extension Laws. The Company covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law or any usury or other law wherever enacted, now or at any time hereafter in force, which would prohibit or forgive the Company from paying all or any portion of the principal of, premium, if any, or interest on the Securities contemplated herein or in the Securities or which may affect the covenants or the performance of this Indenture; and the Company (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted. ARTICLE SIX THE TRUSTEE Section 601. Certain Duties and Responsibilities. The duties and responsibilities of the Trustee shall be as provided by the Trust Indenture Act and this Indenture. Notwithstanding the foregoing, no provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. Whether or not therein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section. 36 Section 602. Notice of Defaults. Within 45 days after the occurrence of any default hereunder with respect to the Securities of any series, the Trustee shall transmit to all Holders of Securities of such series, in the manner and to the extent provided in Trust Indenture Act Section 313(c), notice of such default hereunder, unless such default shall have been cured or waived; provided, however, that, except in the case of a default in the payment of the principal of (or premium, if any) or interest on any Security of such series, or in the payment of any sinking fund installment with respect to the Securities of such series, the Trustee shall be protected in withholding such notice if and so long as the board of directors, the executive committee or a committee of Responsible Officers of the Trustee in good faith determine that the withholding of such notice is in the interests of the Holders of the Securities of such series. For the purpose of this Section, the term "default" means any event which is, or after notice or lapse of time or both would become, an Event of Default with respect to the Securities of such series. Subject to Trust Indenture Act Section 315(b), the Trustee shall not be deemed to have, or be required to take, notice of any default or Event of Default (other than a default described in paragraph (1), (2), or (3) of Section 501) except upon (A) written notification from the Company or (B) written notification from a Holder and, in the absence of such notice, the Trustee may conclusively presume that there is no default or Event of Default except as aforesaid. Subject to Section 601 of this Indenture, such notification shall not be deemed to include receipt of information obtained in any report or other documents furnished under Section 704 of this Indenture, which reports and documents the Trustee shall have no duty to examine. Section 603. Certain Rights of Trustee. Subject to the provisions of Section 601: (a) the Trustee may rely and shall be protected in acting or refraining from acting upon receipt by it of any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (b) any request or direction of the Company mentioned herein shall be sufficiently evidenced by a Company Request or Company Order and any resolution of the Board of Directors may be sufficiently evidenced by a Board Resolution; (c) whenever in the administration of this Indenture the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officers' Certificate; 37 (d) the Trustee may consult with counsel and the advice of such counsel or any Opinion of Independent Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon; (e) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders pursuant to this Indenture, unless such Holders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction; (f) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Company, personally or by agent or attorney; (g) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder; (h) the Trustee shall not be liable for any action taken or omitted by it in good faith and believed by it to be authorized or within the discretion, rights or powers conferred upon it by this Indenture other than any liabilities arising out of the negligence of the Trustee; (i) no provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers; (j) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and certificates of opinions furnished to it and conforming to the requirements of this Indenture; but in the case of any such certificates or opinions which by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Indenture; (k) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts; (l) the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of a majority in principal amount of the Outstanding Securities of any series, relating to the time, method and place of 38 conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Indenture with respect to the Securities of such series; and (m) no provision of this Indenture shall require the Trustee to determine the maximum interest rate permissible under applicable law. Section 604. Not Responsible for Recitals or Issuance of Securities. The recitals contained herein and in the Securities, except the Trustee's certificates of authentication, shall be taken as the statements of the Company, and neither the Trustee nor any Authenticating Agent assumes any responsibility for their correctness. The Trustee makes no representations as to the validity or sufficiency of this Indenture or of the Securities or any prospectus prepared in connection with the offering of the Securities, except that the Trustee represents that it is duly authorized to execute and deliver this Indenture, authenticate the Securities and perform its obligations hereunder and that the statements made by it in a Statement of Eligibility and Qualification on Form T-1 supplied to the Company are true and accurate subject to the qualifications set forth therein. The Trustee or any Authenticating Agent shall not be accountable for the use or application by the Company of Securities or the proceeds thereof. Section 605. May Hold Securities. The Trustee, any Authenticating Agent, any Paying Agent, any Security Registrar or any other agent of the Company, in its individual or any other capacity, may become the owner or pledgee of Securities and, subject to Sections 608 and 613, may otherwise deal with the Company with the same rights it would have if it were not Trustee, Authenticating Agent, Paying Agent, Security Registrar or such other agent. Section 606. Money Held in Trust. Money held by the Trustee in trust hereunder need not be segregated from other funds except to the extent required by law. The Trustee shall be under no liability for interest on any money received by it hereunder except as otherwise agreed with the Company. Section 607. Compensation and Reimbursement. The Company agrees (1) to pay to the Trustee from time to time reasonable compensation for all services rendered by it hereunder (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust); (2) except as otherwise expressly provided herein, to reimburse the Trustee and each predecessor Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by or on behalf of it in accordance with any provision of this Indenture 39 (including the reasonable compensation and the expenses and disbursements of its agents and counsel and the reasonable fees of in-house counsel in the regular employ of the Trustee which are allocable to this trust and the expenses and disbursements of such counsel), except any such expense, disbursement or advance as may be attributable to its negligence or bad faith; and (3) to indemnify the Trustee and each predecessor Trustee and the officers, directors, employees and agents of the Trustee or any such predecessor Trustee (the Trustee, each predecessor Trustee and such officers, directors, employees and agents being hereinafter referred to in this Section collectively as the "Indemnified Parties" and individually as an "Indemnified Party") for, and to hold each Indemnified Party harmless against, any loss, liability or expense incurred without negligence or bad faith on its part, arising out of or in connection with the acceptance or administration of the trust or trusts hereunder, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder; provided that any Indemnified Party shall promptly notify the Company of the commencement of any action, or proceeding for which it intends to seek indemnity hereunder, will permit the Company to conduct the defense thereof on its behalf and will not compromise or settle any such action, suit or proceeding without the prior approval of the Company. The Company's payment obligations pursuant to this Section 607 shall survive the discharge of this Indenture. When the Trustee incurs expenses after the occurrence of an Event of Default specified in Section 501(5) or (6), the expenses are intended to constitute expenses of administration under any bankruptcy law. Section 608. Disqualification; Conflicting Interests. If the Trustee has or shall acquire a conflicting interest within the meaning of the Trust Indenture Act, the Trustee shall either eliminate such interest or resign, to the extent and in the manner provided by, and subject to the provisions of, the Trust Indenture Act and this Indenture. Section 609. Corporate Trustee Required; Eligibility. There shall at all times be a Trustee hereunder which shall be a Person that is eligible pursuant to the Trust Indenture Act to act as such and has a combined capital and surplus of at least $250,000,000. If such Person publishes reports of condition at least annually, pursuant to law or to the requirements of federal, state, territorial or District of Columbia supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such Person shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner and with the effect hereinafter specified in this Article. 40 Section 610. Resignation and Removal; Appointment of Successor. (a) No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article shall become effective until the acceptance of appointment by the successor Trustee in accordance with the applicable requirements of Section 611. (b) The Trustee may resign at any time with respect to the Securities of one or more series by giving written notice thereof to the Company. If the instrument of acceptance by a successor Trustee required by Section 611 shall not have been delivered to the Trustee within 30 days after the giving of such notice of resignation, the resigning Trustee may, or any Holder who has been a bona fide Holder of a Security of the applicable series for at least one month may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Trustee with respect to the Securities of such series. (c) The Trustee may be removed at any time with respect to the Securities of any series by Act of the Holders of a majority in principal amount of the Outstanding Securities of such series, delivered to the Trustee and to the Company. (d) If at any time: (1) the Trustee shall fail to comply with Section 608 after written request therefor by the Company or by any Holder of a Security who has been a bona fide Holder of a Security for at least six months, or (2) the Trustee shall cease to be eligible under Section 609 and shall fail to resign after written request therefor by the Company or by any Holder of a Security who has been a bona fide Holder of a Security for at least six months, or (3) the Trustee shall become incapable of acting or shall be adjudged a bankrupt or insolvent or a receiver of the Trustee or of its property shall be appointed or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, then, in any such case, (i) the Company by or pursuant to Board Resolution may remove the Trustee with respect to all Securities or the Securities of any series, or (ii) subject to Section 514, any Holder who has been a bona fide Holder of a Security of any series for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee with respect to all Securities of such series and the appointment of a successor Trustee or Trustees with respect thereto. (e) If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Trustee for any cause, with respect to the Securities of one or more series, the Company, by or pursuant to a Company Request or Company Order, shall promptly appoint a successor Trustee or Trustees with respect to the Securities of that or those series (it being understood that any such successor Trustee may be appointed with respect to the Securities of one or more or all of such series and that at any time there shall be only one Trustee with respect to the Securities of any particular series) and shall comply with the applicable 41 requirements of Section 611. If, within six months after such resignation, removal or incapability, or the occurrence of such vacancy, a successor Trustee with respect to the Securities of any series shall be appointed by Act of the Holders of a majority in principal amount of the Outstanding Securities of such series delivered to the Company and the retiring Trustee, the successor Trustee so appointed shall, forthwith upon its acceptance of such appointment in accordance with the applicable requirements of Section 611, become the successor Trustee with respect to the Securities of such series and to that extent supersede the successor Trustee appointed by the Company. If no successor Trustee with respect to the Securities of any series shall have been so appointed by the Company or the Holders and accepted appointment in the manner required by Section 611, any Holder who has been a bona fide Holder of a Security of such series for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Trustee with respect to the Securities of such series. (f) The Company shall give notice of each resignation and each removal of the Trustee with respect to the Securities of any series and each appointment of a successor Trustee with respect to the Securities of any series to all Holders of Securities of such series in the manner provided in Section 106. Each notice of such appointment shall include the name of the successor Trustee with respect to the Securities of such series and the address of its Corporate Trust Office. Notices of resignation, removal and appointment may be combined into a single notice. Section 611. Acceptance of Appointment by Successor. (a) In case of the appointment hereunder of a successor Trustee with respect to all Securities, every such successor Trustee so appointed shall execute, acknowledge and deliver to the Company and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee; but, on the request of the Company or the successor Trustee, such retiring Trustee shall, upon payment of its charges, execute and deliver an instrument transferring to such successor Trustee all the rights, powers and trusts of the retiring Trustee and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder. (b) In case of the appointment hereunder of a successor Trustee with respect to the Securities of one or more (but not all) series, the Company, the retiring Trustee and each successor Trustee with respect to the Securities of one or more series shall execute and deliver an indenture supplemental hereto wherein each successor Trustee shall accept such appointment and which (1) shall contain such provisions as shall be necessary or desirable to transfer and confirm to, and to vest in, each successor Trustee all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series to which the appointment of such successor Trustee relates, (2) if the retiring Trustee is not retiring with respect to all Securities, shall contain such provisions as shall be deemed necessary or desirable to confirm that all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series as to which the retiring Trustee is not retiring shall continue to be vested in the 42 retiring Trustee, and (3) shall add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee, it being understood that nothing herein or in such supplemental indenture shall constitute such Trustees co-trustees of the same trust and that each such Trustee shall be trustee of a trust or trusts hereunder separate and apart from any trust or trusts hereunder administered by any other such Trustee; and upon the execution and delivery of such supplemental indenture the resignation or removal of the retiring Trustee shall become effective to the extent provided therein and each such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series to which the appointment of such successor Trustee relates; but, on request of the Company or any successor Trustee, such retiring Trustee shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder with respect to the Securities of that or those series to which the appointment of such successor Trustee relates. (c) Upon request of any such successor Trustee, the Company shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Trustee all such rights, powers and trusts referred to in paragraphs (a) and (b) of this Section, as the case may be. (d) No successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be qualified and eligible under this Article. Section 612. Merger, Conversion, Consolidation or Succession to Business. Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to all or substantially all the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, provided such corporation shall be otherwise qualified and eligible under this Article, without the execution or filing of any paper or any further act on the part of any of the parties hereto. In case any Securities shall have been authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion or consolidation to such authenticating Trustee may adopt such authentication and deliver the Securities so authenticated with the same effect as if such successor Trustee had itself authenticated such Securities. Section 613. Preferential Collection of Claims Against Company. If and when the Trustee shall be or become a creditor of the Company (or any other obligor upon the Securities), the Trustee shall be subject to the provisions of the Trust Indenture Act regarding the collection of claims against the Company (or any such other obligor). 43 Section 614. Appointment of Authenticating Agent. The Trustee may appoint an Authenticating Agent or Agents with respect to one or more series of Securities which shall be authorized to act on behalf of the Trustee to authenticate Securities of such series issued upon original issue and upon exchange, registration of transfer or partial redemption thereof or pursuant to Section 306, and Securities so authenticated shall be entitled to the benefits of this Indenture and shall be valid and obligatory for all purposes as if authenticated by the Trustee hereunder. Wherever reference is made in this Indenture to the authentication and delivery of Securities by the Trustee or the Trustee's certificate of authentication, such reference shall be deemed to include authentication and delivery on behalf of the Trustee by an Authenticating Agent and a certificate of authentication executed on behalf of the Trustee by an Authenticating Agent. Each Authenticating Agent shall be acceptable to the Company and shall at all times be a corporation organized and doing business under the laws of the United States of America, any State thereof or the District of Columbia, authorized under such laws to act as Authenticating Agent, having a combined capital and surplus of not less than $50,000,000 and subject to supervision or examination by federal or state authority. If such Authenticating Agent publishes reports of condition at least annually, pursuant to law or to the requirements of said supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such Authenticating Agent shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time an Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section, such Authenticating Agent shall resign immediately in the manner and with the effect specified in this Section. Any corporation into which an Authenticating Agent may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which such Authenticating Agent shall be a party, or any corporation succeeding to the corporate agency or corporate trust business of an Authenticating Agent, shall continue to be an Authenticating Agent, provided such corporation shall be otherwise eligible under this Section, without the execution or filing of any paper or any further act on the part of the Trustee or the Authenticating Agent. An Authenticating Agent may resign at any time by giving written notice thereof to the Trustee for such series and to the Company. The Trustee for any series of Securities may at any time terminate the agency of an Authenticating Agent by giving written notice thereof to such Authenticating Agent and to the Company. Upon receiving such a notice of resignation or upon such a termination, or in case at any time such Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section, the Trustee for such series may appoint a successor Authenticating Agent which shall be acceptable to the Company and shall mail written notice of such appointment by first-class mail, postage prepaid, to all Holders of Securities of the series with respect to which such Authenticating Agent will serve, as their names and addresses appear in the Security Register. Any successor Authenticating Agent upon acceptance of its appointment hereunder shall become vested with all the rights, powers and duties of its predecessor hereunder, with like effect as if originally named as an Authenticating Agent. No successor Authenticating Agent shall be appointed unless eligible under the provisions of this Section. 44 The Company agrees to pay to each Authenticating Agent from time to time reasonable compensation for its services under this Section. ARTICLE SEVEN HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY Section 701. Company to Furnish Trustee Names and Addresses of Holders. The Company will furnish or cause to be furnished to the Trustee (a) semi-annually, not later than 15 days after each Regular Record Date for Securities of each series at the time Outstanding, a list, in such form as the Trustee may reasonably require, of the names and addresses of the Holders as of such Regular Record Date (or a date to be established as contemplated by Section 301 for Original Issue Discount Securities) and (b) at such other times as the Trustee may request in writing, within 30 days after the receipt by the Company of any such request, a list of similar form and content as of a date not more than 15 days prior to the time such list is furnished; excluding from any such list names and addresses received by the Trustee in its capacity as Security Registrar. Section 702. Preservation of Information; Communications to Holders. (a) The Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of Holders contained in the most recent list furnished to the Trustee as provided in Section 701 and the names and addresses of Holders received by the Trustee in its capacity as Security Registrar. The Trustee may destroy any list furnished to it as provided in Section 701 upon receipt of a new list so furnished. (b) The rights of the Holders to communicate with other Holders with respect to their rights under this Indenture or under the Securities, and the corresponding rights and privileges of the Trustee, shall be as provided by the Trust Indenture Act. (c) Every Holder of Securities, by receiving and holding the same, agrees with the Company and the Trustee that neither the Company nor the Trustee nor any agent of either of them shall be held accountable by reason of any disclosure of information as to names and addresses of Holders made pursuant to the Trust Indenture Act, regardless of the source from which such information was derived, and that the Trustee shall not be held accountable by reason of mailing any material pursuant to a request made under the Trust Indenture Act. (d) If three or more Holders (herein referred to as "applicants") apply in writing to the Trustee, and furnish to the Trustee reasonable proof that each such applicant has owned a Security for a period of at least six months preceding the date of such application, and such application states that the applicants desire to communicate with other Holders with respect to their rights under this Indenture or under the Securities and is accompanied by a copy of the form 45 of proxy or other communication which such applicants propose to transmit, then the Trustee shall, within five business days after the receipt of such application, at its election, either (i) afford such applicants access to the information preserved at the time by the Trustee in accordance with Section 702(a), or (ii) inform such applicants as to the approximate number of Holders whose names and addresses appear in the information preserved at the time by the Trustee in accordance with Section 702(a), and as to the approximate cost of mailing to such Holders the form of proxy or other communication, if any, specified in such application. If the Trustee shall elect not to afford such applicants access to such information, the Trustee shall, upon the written request of such applicants, mail to each Holder whose name and address appear in the information preserved at the time by the Trustee in accordance with Section 702(a) a copy of the form of proxy or other communication which is specified in such request, with reasonable promptness after a tender to the Trustee of the material to be mailed and of payment, or provision for the payment, of the reasonable promptness after a tender to the Trustee of the material to be mailed and of payment, or provision for the payment, of the reasonable expenses of mailing, unless within five days after such tender the Trustee shall mail to such applicants and file with the Commission, together with a copy of the material to be mailed, a written statement to the effect that, in the opinion of the Trustee, such mailing would be contrary to the best interest of the Holders or would be in violation of applicable law. Such written statement shall specify the basis of such opinion. If the Commission, after opportunity for a hearing upon the objections specified in the written statement so filed, shall enter an order refusing to sustain any of such objections or if, after the entry of an order sustaining one or more of such objections, the Commission shall find, after notice and opportunity for hearing, that all the objections so sustained have been met and shall enter an order so declaring, the Trustee shall mail copies of such material to all such Holders with reasonable promptness after the entry of such order and the renewal of such tender; otherwise the Trustee shall be relieved of any obligation or duty to such applicants respecting their application. Section 703. Reports by Trustee. (a) Within 60 days after each May 15, beginning with May 15, 2000, the Trustee shall transmit to the Holders such reports concerning the Trustee and its actions under this Indenture as may be required pursuant to Trust Indenture Act Section 313(a) in the manner provided pursuant thereto, and such other reports as may be required under the Trust Indenture Act in the manner and at the times provided pursuant thereto. (b) A copy of each such report shall, at the time of such transmission to the Holders, be filed by the Trustee with the Company and, to the extent required, with each stock exchange upon which any Securities are listed and with the Commission. The Company will notify the Trustee when any Securities are listed on any stock exchange. 46 Section 704. Reports by Company. The Company shall file with the Trustee and the Commission, and transmit to Holders, such information, documents and other reports, and such summaries thereof, as may be required pursuant to the Trust Indenture Act at the times and in the manner provided pursuant to such Act; provided that any such information, documents or reports required to be filed with the Commission pursuant to Section 13 or 15(d) of the Exchange Act shall be filed with the Trustee within 15 days after the same is so required to be filed with the Commission. ARTICLE EIGHT CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE Section 801 Restrictions on Mergers, Consolidations and Transfers of Assets. The Company will not, and the Company will not permit any Subsidiary to, consolidate or merge into or sell, assign, transfer, lease or otherwise dispose of all or substantially all of its assets other than in the ordinary course of its business or any of the capital stock or other equity interests of any Subsidiary held by the Company or a Subsidiary to another person unless: (a) (i) the person is a corporation, trust or partnership organized under the laws of the United States of America or any state thereof or the District of Columbia; (ii) the person assumes by supplemental indenture all of the Company's obligations or the obligations of the Subsidiary, as the case may be, relating to the Securities or arising under this Indenture; and (iii) immediately after the transaction no Event of Default, and no event which, after notice or lapse of time or both, would become an Event of Default, exists; provided that this clause (iii) will not restrict or be applicable to a merger, consolidation or liquidation of a Subsidiary with or into the Company or with or into another Subsidiary that is wholly-owned, directly or indirectly, by the Company; or (b) in the case of the sale, assignment, transfer, lease or other disposition of all or substantially all of the assets or any capital stock or other equity interests of any Subsidiary, the Company or a Subsidiary (A) receives, upon the occurrence of such an event, cash consideration at least equal to the fair market value of the assets, stock or equity interests sold, as determined in good faith by the Board of Directors of the Company, and (B) applies within 180 days of such an action the proceeds received to (1) permanently repay Indebtedness of the Company or of a Subsidiary ranking pari passu with the Securities, (2) the purchase of property or assets (including the origination of consumer loans) of a business related to any business that the Company or any Subsidiary conducts at that time, (3) redemption of the Securities, or (4) any combination of clauses 1, 2 and 3. The procedures to be followed by the Company in making an offer to purchase Securities from the holders pursuant to clause (b)(B)(3) above, and for the acceptance of the offer by the Holders, shall be in accordance with the terms of such Securities and (except as otherwise 47 specified as contemplated by Section 301 for Securities of any series) in accordance with Sections 802 through 805. Except as set forth in clause (b) of this Section 801, upon any such consolidation, merger, sale, assignment, transfer, lease or other disposition, the successor corporation will be substituted for the Company or the Subsidiary, as the case may be, under this Indenture. The successor corporation may then exercise every power and right of the Company or of the Subsidiary under the Indenture, and the Company or the Subsidiary, as the case may be, will be released from all of the Company's or the Subsidiary's liabilities and obligations relating to the Securities or arising under the Indenture. If the Company or any Subsidiary leases all or substantially all of the Company's or the Subsidiary's assets, the lessee corporation will be the successor to the Company or the Subsidiary and may exercise every power and right of the Company or of the Subsidiary, as the case may be, under the Indenture, but the Company or the Subsidiary, as the case may be, will not be released from the Company's or the Subsidiary's obligations to pay the principal of and premium, if any, and interest, if any, on the Securities. Section 802. Repayment of Securities. Securities of any series subject to purchase pursuant to Section 801(b)(B)(3) in whole or in part at the option of the Holders thereof will, unless otherwise provided in the terms of such Securities, be repaid at a price equal to the principal amount thereof, together with interest and/or premium, if any, thereon accrued to the Repayment Date specified in or pursuant to the terms of such Securities. The Company covenants that on or before the Repayment Date it will deposit with the Trustee or with a Paying Agent (or, if the Company is acting as its own Paying Agent, segregate and hold in trust as provided in Section 1003) an amount of money sufficient to pay the principal (or, if so provided by the terms of the Securities of any series, a percentage of the principal) of, the premium, if any, and (except if the Repayment Date shall be an Interest Payment Date) accrued interest on, all the Securities or portions thereof, as the case may be, to be repaid on such date. Section 803. Exercise of Option. Securities of any series subject to purchase pursuant to Section 801(b)(B)(3) will contain an "Option to Elect Repayment" form on the reverse of such Securities. Except as otherwise may be provided by the terms of any Security providing for purchase pursuant to Section 801(b)(B)(3), any Security so providing for such purchase with the "Option to Elect Repayment" form on the reverse of such Security duly completed by the Holder (or by the Holder's attorney duly authorized in writing) must be received by the Company at the Place of Payment therefor specified in the terms of such Security (or at such other place or places of which the Company shall from time to time notify the Holders of such Securities) not earlier than 45 days nor later than 30 days prior to the Repayment Date. If less than the entire principal amount of such Security is to be repaid in accordance with the terms of such Security, the principal amount of such Security to be repaid, in increments of the minimum denomination for Securities of such series, the premium, if any, to be paid, and the denomination or denominations of the Security or Securities to be issued to the Holder for the portion of the principal amount of such Security surrendered that is not to be repaid, must be specified. The principal amount of any Security 48 providing for such purchase may not be repaid in part if, following such purchase, the unpaid principal amount of such Security would be less than the minimum authorized denomination of Securities of the series of which such Security to be repaid is a part. Except as otherwise may be provided by the terms of any Security providing for such purchase and as provided in Section 308, exercise of the option by the Holder to accept the offer of the Company to purchase Securities shall be irrevocable unless waived by the Company. Section 804. When Securities Presented for Purchase Become Due and Payable. If Securities of any series providing for such purchase shall have been surrendered as provided in this Article and as provided by or pursuant to the terms of such Securities, such Securities or the portions thereof, as the case may be, to be purchased shall become due and payable and shall be paid by the Company on the Repayment Date therein specified, and on and after such Repayment Date (unless the Company shall default in the payment of such Securities on such Repayment Date) such Securities shall, if the same were interest-bearing, cease to bear interest. Upon surrender of any such Security for purchase in accordance with such provisions, the principal amount of such Security so to be purchased (or, if so provided by the terms of the Securities of any series, a percentage of the principal) shall be paid by the Company, together with accrued interest and/or premium, if any, to the Repayment Date; provided, however, that installments of interest, if any, whose Stated Maturity is on or prior to the Repayment Date shall be payable (but without interest thereon, unless the Company shall default in the payment thereof) to the Holders of such Securities, or one or more Predecessor Securities, registered as such at the close of business on the relevant Record Dates according to their terms and the provisions of Section 307. If the principal amount of any Security surrendered for purchase shall not be so repaid upon surrender thereof, such principal amount (together with interest, if any, thereon accrued to such Repayment Date) shall, until paid, bear interest from the Repayment Date at the rate of interest or Yield to Maturity (in the case of Original Issue Discount Securities) set forth in such Security. Section 805. Securities Purchased in Part. Upon surrender of any Security which is to be purchased in part only, the Company shall execute and the Trustee shall authenticate and deliver to the Holder of such Security, without service charge and at the expense of the Company, a new Security or Securities of the same series, of any authorized denomination specified by the Holder, in an aggregate principal amount equal to and in exchange for the portion of the principal of such Security so surrendered which is not to be purchased. . ARTICLE NINE SUPPLEMENTAL INDENTURES Section 901. Supplemental Indentures Without Consent of Holders. 49 Without the consent of any Holders, the Company, when authorized by a Board Resolution (which Board Resolution may provide general terms or parameters for such action and may provide that the specific terms of such action may be determined in accordance with or pursuant to a Company Order), and the Trustee, at any time and from time to time, may enter into one or more indentures supplemental hereto, in form satisfactory to the Trustee, for any of the following purposes: (1) to evidence the succession of another Person to the Company and the assumption by any such successor of the covenants, agreements and obligations of the Company herein and in the Securities; or (2) to add to the covenants of the Company for the benefit of the Holders of the Securities of all or any series (and if such covenants are to be for the benefit of the Securities of less than all series, stating that such covenants are expressly being included solely for the benefit of the Securities of such series) or to surrender any right or power herein conferred upon the Company; or (3) to add any additional Events of Default; or (4) to add to or change any of the provisions of this Indenture to such extent as shall be necessary to permit or facilitate the issuance of Securities in bearer form, registrable or not registrable as to principal, and with or without interest coupons, or to permit or facilitate the issuance of Securities in uncertificated form; or (5) to add to, change or eliminate any of the provisions of this Indenture in respect of one or more series of Securities, provided that any such addition, change or elimination (i) shall neither (A) apply to any Security of any series created prior to the execution of such supplemental indenture and entitled to the benefit of such provision nor (B) modify the rights of the Holder of any such Security with respect to such provision or (ii) shall become effective only when there is no such Security Outstanding; or (6) to establish the forms or terms of Securities of any series as contemplated by Sections 201 and 301; or (7) to evidence and provide for the acceptance of appointment hereunder by a successor Trustee with respect to the Securities of one or more series and to add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee; or (8) to secure the Securities; or (9) to supplement any of the provisions of this Indenture to such extent as shall be necessary to permit or facilitate the defeasance, covenant defeasance or satisfaction and discharge of the Securities of any series pursuant to this Indenture; provided that any such action shall not adversely affect the interests of the Holders of Securities of such series or any other series of Securities; or 50 (10) to cure any ambiguity, to correct or supplement any provision herein which may be inconsistent with any other provision herein, or to make any other provisions with respect to matters or questions arising under this Indenture, provided that such action pursuant to this clause (10) shall not adversely affect the interests of the Holders of Securities of any series; (11) to add a guarantor or guarantors for any series or all series of the Securities; or (12) to comply with the requirements of the Commission in order to effect or maintain the qualification of this Indenture under the Trust Indenture Act. Section 902. Supplemental Indentures with Consent of Holders. With the consent of the Holders of not less than a majority in principal amount of the Outstanding Securities of each series affected by such supplemental indenture, by Act of said Holders delivered to the Company and the Trustee, the Company, when authorized by Board Resolution (which Board Resolution may provide general terms or parameters for such action and may provide that the specific terms of such action may be determined in accordance with or pursuant to an Issuer Order), and the Trustee may enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of modifying in any manner the rights of the Holders of Securities of such series under this Indenture; provided, however, that no such supplemental indenture shall, without the consent of the Holder of each Outstanding Security affected thereby, (1) change the Stated Maturity of or waive a default in the payment of the principal of, or any installment of principal of or interest on, any Security, or reduce the principal amount thereof or the rate of interest thereon or any premium payable upon the redemption thereof, or reduce the amount of the principal of an Original Issue Discount Security that would be due and payable upon a declaration of acceleration of the Maturity thereof pursuant to Section 502, or change any Place of Payment where any Security or any premium or interest thereon is payable, change the currency in which any Security or any premium or interest thereon is payable, or impair the right to institute suit for the enforcement of any such payment on or after the Stated Maturity thereof (or, in the case of redemption, on or after the Redemption Date, or, in the case of repayment at the option of the Holder, on or after the date fixed for repayment), or (2) reduce the percentage in principal amount of the Outstanding Securities of any series, the consent of whose Holders is required for any such supplemental indenture, or the consent of whose Holders is required for any waiver (of compliance with certain provisions of this Indenture or certain defaults hereunder and their consequences) provided for in this Indenture, or (3) modify any of the provisions of this Section, Section 513 or Section 1010, except to increase any such percentage or to provide that certain other provisions of this Indenture cannot be modified or waived without the consent of the Holder of each Outstanding Security affected thereby, or 51 (4) in the case of any series of subordinated Securities, modify any provisions hereof that relate to subordination or to the definition of "Senior Indebtedness" applicable to such series in a manner adverse to the Holders of such subordinated Securities. A supplemental indenture which changes or eliminates any covenant or other provision of this Indenture which has expressly been included solely for the benefit of the Securities of one or more particular series, or which modifies the rights of the Holders of Securities of such series with respect to such covenant or other provision, shall be deemed not to affect the rights under this Indenture of the Holders of Securities of any other series. It shall not be necessary for any Act of Holders under this Section to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such Act shall approve the substance thereof. Section 903. Execution of Supplemental Indentures. In executing, or accepting the additional trusts created by, any supplemental indenture permitted by this Article or the modifications thereby of the trusts created by this Indenture, the Trustee shall be entitled to receive, and (subject to Section 601) shall be fully protected in relying upon, an Opinion of Counsel stating that the execution of such supplemental indenture is authorized or permitted by this Indenture. The Trustee may, but shall not be obligated to, enter into any such supplemental indenture which affects the Trustee's own rights, duties or immunities under this Indenture or otherwise. Section 904. Effect of Supplemental Indentures. Upon the execution of any supplemental indenture under this Article, this Indenture shall be modified in accordance therewith, and such supplemental indenture shall form a part of this Indenture for all purposes; and every Holder of Securities theretofore or thereafter authenticated and delivered hereunder shall be bound thereby. Section 905. Conformity with Trust Indenture Act. Every supplemental indenture executed pursuant to this Article shall conform to the requirements of the Trust Indenture Act, as then in effect at the time of execution thereof. Section 906. Reference in Securities to Supplemental Indentures. Securities of any series authenticated and delivered after the execution of any supplemental indenture pursuant to this Article may, and shall if required by the Trustee, bear a notation in form approved by the Trustee as to any matter provided for in such supplemental indenture. If the Company shall so determine, new Securities of any series so modified as to conform, in the opinion of the Trustee and the Company, to any such supplemental indenture may be prepared and executed by the Company and authenticated and delivered by the Trustee in exchange for Outstanding Securities of such series. 52 Section 907. Notice of Supplemental Indentures. Promptly after the execution by the Company and the Trustee of any supplemental indenture pursuant to the provisions of Section 902, the Company shall give notice thereof to the Holders of each Outstanding Security affected, in the manner provided for in Section 106, setting forth in general terms the substance of such supplemental indenture. Any failure of the Company to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of such supplemental indenture. ARTICLE TEN COVENANTS Section 1001. Payment of Principal, Premium and Interest. The Company covenants and agrees for the benefit of the Securities of each series that it will duly and punctually pay the principal of and any premium and interest on the Securities of that series in accordance with the terms of the Securities of that series and this Indenture. Section 1002. Maintenance of Office or Agency. The Company will maintain in each Place of Payment for the Securities of any series of Securities an office or agency where Securities of that series may be presented or surrendered for payment, where Securities of that series may be surrendered for registration of transfer or exchange and where notices and demands to or upon the Company in respect of the Securities of that series and this Indenture may be served. The Company will give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee, and the Company hereby appoints the Trustee as its agent to receive all such presentations, surrenders, notices and demands. The Company may also from time to time designate one or more other offices or agencies where the Securities of one or more series may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided, however, that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency in each Place of Payment for Securities of any series for such purposes. The Company will give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency. Section 1003. Money for Securities Payments to Be Held in Trust. If the Company shall at any time act as its own Paying Agent with respect to the Securities of any series, it will, on or before each due date of the principal of or any premium or interest on any of the Securities of that series, segregate and hold in trust for the benefit of the Persons entitled thereto a sum in cash sufficient to pay the principal and any premium and 53 interest so becoming due until such sums shall be paid to such Persons or otherwise disposed of as herein provided and will promptly notify the Trustee of its action or failure so to act. Whenever the Company shall have one or more Paying Agents for the Securities of any series, it will, prior to each due date of the principal of or any premium or interest on any Securities of that series, deposit with a Paying Agent a sum in cash sufficient to pay such amount, such sum to be held as provided by the Trust Indenture Act, and (unless such Paying Agent is the Trustee) the Company will promptly notify the Trustee of its action or failure so to act. The Company will cause each Paying Agent for the Securities of any series, other than the Trustee, to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the Trustee, subject to the provisions of this Section, that such Paying Agent will (i) hold all sums held by it for the payment of the principal of or any premium or interest on Securities of that series in trust for the benefit of the Persons entitled thereto until such sums shall be paid to such Persons or otherwise disposed of as herein provided; (ii) give the Trustee notice of any default by the Company (or any other obligor upon the Securities of that series) in the making of any payment of principal or any premium or interest on the Securities of that series; (iii) during the continuance of any default by the Company (or any other obligor upon the Securities of that series) in the making of any payment in respect of the Securities of that series, and upon the written request of the Trustee, forthwith pay to the Trustee all sums held in trust by such Paying Agent for payment in respect of the Securities of that series; and (iv) comply with the provisions of the Trust Indenture Act applicable to it as a Paying Agent. The Company may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, pay, or by Company Order direct any Paying Agent to pay, to the Trustee all sums held in trust by the Company or such Paying Agent, such sums to be held by the Trustee upon the same trusts as those upon which such sums were held by the Company or such Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such money. Any money deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal of or any premium or interest on any Security of any series and remaining unclaimed for two years after such principal, premium or interest has become due and payable shall be paid to the Company on Company Request, or (if then held by the Company) shall be discharged from such trust; and the Holder of such Security shall thereafter, as an unsecured general creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, shall thereupon cease; provided, however, that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Company cause to be published once in a newspaper of general circulation in The City of New York or mailed to each Holder entitled to such money notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such publication, any unclaimed balance of such money then remaining will be repaid to the Company. 54 Section 1004. Corporate Existence. Subject to Article Eight, the Company shall do or cause to be done all things necessary to preserve and keep in full force and effect the corporate existence and related rights and franchises (charter and statutory) of the Company and each Subsidiary; provided, however, that the Company shall not be required to preserve any such right or franchise or the corporate existence of any such Subsidiary if the Board of Directors of the Company shall determine that the preservation thereof is no longer necessary or desirable in the conduct of the business of the Company and its Subsidiaries as a whole; and provided, further, however, that the foregoing shall not prohibit a sale, transfer or conveyance of a Subsidiary or any of its assets in compliance with the terms of this Indenture. Section 1005. Payment of Taxes and Other Claims. The Company shall pay or discharge or cause to be paid or discharged, on or before the date the same shall become due and payable, (a) all taxes, assessments and governmental charges levied or imposed upon the Company or any of its Subsidiaries shown to be due on any return of the Company or any of its Subsidiaries or otherwise assessed or upon the income, profits or property of the Company or any of its Subsidiaries if failure to pay or discharge the same could reasonably be expected to have a material adverse effect on the ability of the Company to perform its obligations hereunder and (b) all lawful claims for labor, materials and supplies, which, if unpaid, would by law become a lien upon the property of the Company or any of its Subsidiaries, if failure to pay or discharge the same could reasonably be expected to have a material adverse effect on the ability of the Company to perform its obligations hereunder; provided, however, that the Company shall not be required to pay or discharge or cause to be paid or discharged any such tax, assessment, charge or claim whose amount, applicability or validity is being contested in good faith by appropriate proceedings properly instituted and diligently conducted and in respect of which appropriate reserves (in the good faith judgment of management of the Company) are being maintained in accordance with GAAP. Section 1006. Maintenance of Properties. The Company shall cause all material properties owned by the Company or any of its Subsidiaries or used or held for use in the conduct of its business or the business of any of its Subsidiaries to be maintained and kept in good condition, repair and working order (ordinary wear and tear excepted) and supplied with all necessary equipment and will cause to be made all necessary repairs, renewals, replacements, betterments and improvements thereof, all as in the reasonable judgment of the Company may be consistent with sound business practice and necessary so that the business carried on in connection therewith may be properly conducted at all times; provided, however, that nothing in this Section shall prevent the Company from discontinuing the maintenance of any of such properties if such discontinuance is, in the reasonable judgment of the Company, desirable in the conduct of its business or the business of any of its Subsidiaries; and provided, further, however, that the foregoing shall not prohibit a sale, transfer or conveyance of a Subsidiary or any of its properties or assets in compliance with the terms of this Indenture. 55 Section 1007. Maintenance of Insurance. The Company shall at all times keep all of its and its Subsidiaries' properties which are of an insurable nature insured with insurers, believed by the Company in good faith to be financially sound and responsible, against loss or damage to the extent that property of similar character is usually so insured by corporations similarly situated and owning like properties in the same general geographic areas in which the Company and its Subsidiaries operate, except where the failure to do so could not reasonably be expected to have a material adverse effect on the condition (financial or otherwise), earnings, business affairs or prospects of the Company and its Subsidiaries, taken as a whole. Section 1008. Defeasance of Certain Obligations. To the extent that this Section 1008 is established as contemplated by Section 301 to be applicable to Securities of any series or any covenant applicable thereto, (i) the Company may omit to comply with any term, provision or condition of the covenants contained in Sections 1005 through 1007 and 1011 through 1013 hereof and any covenants established as contemplated by Section 301 and to which this Section 1008 is so established as applicable, and (ii) such omission shall be deemed not to be an Event of Default pursuant to Section 501(4), in each case with respect to the Securities of that series, provided that the following conditions have been satisfied: (1) the Company has deposited or caused to be deposited with the Trustee (or another trustee satisfying the requirements of Section 609) irrevocably (irrespective of whether the conditions in subparagraphs (2), (3), (4) and (5) below have been satisfied, but subject to the provisions of Section 402(c) and the last paragraph of Section 1003), as trust funds in trust, specifically pledged as security for, and dedicated solely to, the benefit of the Holders of the Securities of that series, with reference to this Section 1008, cash or U.S. Government Obligations which through the payment of interest and principal in respect thereof in accordance with their terms will provide not later than the opening of business on the due date of any payment referred to in clause (i) or (ii) of this subparagraph (1) money in an amount sufficient, without consideration of any reinvestment of such principal and interest, in the opinion of a nationally recognized firm of independent certified public accountants expressed in a written certification thereof delivered to the Trustee, to pay and discharge (i) the principal (and premium, if any) and each installment of principal (and premium, if any) and interest on such Outstanding Securities on the Stated Maturity of such principal or installment of principal or interest and (ii) any mandatory sinking fund payments or analogous payments applicable to Securities of such series on the day on which such payments are due and payable in accordance with the terms of this Indenture and of such Securities; (2) such deposit will not result in a breach or violation of, or constitute a default under, this Indenture or any other material agreement or instrument to which the Company is a party or by which it is bound; (3) no Event of Default or event which with the giving of notice or lapse of time, or 56 both, would become an Event of Default with respect to the Securities of that series shall have occurred and be continuing on the date of such deposit and no Event of Default under Section 501(5) or Section 501(6) or event which with the giving of notice or lapse of time, or both, would become an Event of Default under Section 501(5) or Section 501(6) shall have occurred and be continuing on the 91st day after such date; (4) the Company has delivered to the Trustee an Opinion of Independent Counsel to the effect that Holders of the Securities of such series will not recognize income, gain or loss for United States federal income tax purposes as a result of such deposit and defeasance of certain obligations and will be subject to United States federal income tax on the same amount and in the same manner and at the same times, as would have been the case if such deposit and defeasance had not occurred; (5) such defeasance or covenant defeasance shall not result in the trust arising from such deposit constituting an investment company within the meaning of the Investment Company Act of 1940, as amended, unless such trust shall be registered under such Act or exempt from registration thereunder; (6) the Company shall have delivered to the Trustee an Opinion of Independent Counsel in the United States to the effect that after the 91st day following the deposit, the trust funds will not be subject to the effect of any applicable bankruptcy, insolvency, reorganization or similar laws affecting creditors' rights generally; and (7) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent provided for relating to the defeasance as contemplated by this Section have been complied with. Opinions required to be delivered under this Section may have qualifications customary for opinions of the types required. Section 1009. Statement as to Compliance. The Company will deliver to the Trustee, within 120 days after the end of each fiscal year of the Company ending after the date hereof, an Officers' Certificate, stating whether or not to the best knowledge of the signers thereof the Company is in compliance with all conditions and covenants of this Indenture (without regard to any period of grace or requirement of notice provided hereunder); and if the Company shall not be in compliance, specifying such non-compliance and the nature and the status thereof as to which such signer may have knowledge. Such certificate shall contain a certification from the principal executive officer, principal financial officer or principal accounting officer of the Company as to his or her knowledge of the Company's compliance with all conditions and covenants under this Indenture (without regard to any period of grace or requirement of notice provided hereunder). Section 1010. Waiver of Certain Covenants. The Company may omit in any particular instance to comply with any term, provision or 57 condition of the covenants established as contemplated by Section 301 with respect to the Securities of any series, except to the extent the terms of such Securities established as contemplated by Section 301 make this Section 1010 inapplicable to any such term, provision or condition of any such covenant if before the time for such compliance the Holders of at least a majority in principal amount of the Outstanding Securities of such series shall, by Act of such Holders, either waive such compliance in such instance or generally waive compliance with such term, provision or condition, but no such waiver shall extend to or affect such term, provision or condition except to the extent so expressly waived, and, until such waiver shall become effective, the obligations of the Company and the duties of the Trustee in respect of any such term, provision or condition shall remain in full force and effect. Section 1011. Restrictions on Secured Debt. So long as any Securities remain Outstanding, the Company will not issue, assume or guarantee, and will not permit any Subsidiary to issue, assume or guarantee, any Indebtedness secured by a Lien on any of the Company's or any Subsidiary's property, or on the shares of stock or debt of any Subsidiary now owned by the Company or acquired after the date hereof. This restriction will not apply if the Securities are secured by a Lien ranking ratably with and equal to (or at the Company's option, prior to) the secured Indebtedness. In any event, the foregoing restriction will not apply to the following: (i) Liens relating to Indebtedness outstanding or available to the Company or any Subsidiary under facilities existing on the date of original issuance of the Securities; (ii) Liens relating to Indebtedness secured by the stock of a Subsidiary and Indebtedness of a Subsidiary existing when the Subsidiary becomes a Subsidiary, other than Indebtedness created in connection with the transaction by which the Subsidiary becomes a Subsidiary; (iii) Liens relating to Indebtedness of the Company or any Subsidiary having a term of less than 365 days arising from any funding arrangement with one or more financial institutions or other lenders or purchasers exclusively to finance the purchase, origination or production of loans held or to be held for sale by the Company or by any Subsidiaries for the purpose of pooling those loans prior to securitization or sale of those loans in the ordinary course of the Company's or any Subsidiary's business; (iv) Liens on property at the time of its acquisition by the Company or a Subsidiary that secure obligations assumed by the Company or a Subsidiary, or on the property of an entity at the time it is merged into the Company or a Subsidiary (other than Indebtedness created in contemplation of the acquisition of the property or the consummation of such a merger); (v) Liens to secure the payment of some or all of the purchase price of property or loan portfolios upon the acquisition of that property or those loan portfolios by the 58 Company or a Subsidiary; (vi) Liens relating to Indebtedness arising from conditional sales agreements or title retention agreements relating to property acquired by the Company or a Subsidiary; (vii) Liens relating to Indebtedness owed by a Subsidiary to the Company or to another Subsidiary that is wholly-owned (directly or indirectly) by the Company; (viii) mechanics', materialmen's, carriers' or similar Liens arising in the ordinary course of business (including in the construction of facilities) relating to obligations not due or which are being contested; (ix) Liens for taxes not due or being contested, landlords' Liens, tenants' rights under leases, and similar Liens not impairing the use or value of the property involved; (x) Liens on any property to secure all or part of the cost of improvements or construction on the property or Indebtedness incurred to provide funds for that purpose in a principal amount not exceeding the cost of the improvements or construction; (xi) Liens incurred in connection with any amendment, restatement, supplement, renewal, replacement, extension, refinancing or refunding in whole or in part, of Indebtedness, provided that the principal amount of the Indebtedness secured by a Lien will not exceed the principal amount of Indebtedness secured at the time any such action is taken (other than with respect to the Company's $175.0 million revolving credit facility with First Union National Bank, as to which the principal amount of Indebtedness may be increased) and that any such action will be limited to the portion of assets that secured the Lien at the time any such action was taken. In addition, the Company and any Subsidiary may issue, assume or guarantee Indebtedness that would be subject to the foregoing restrictions without equally and ratably securing the Securities if immediately thereafter the sum of (i) the aggregate principal amount of all Indebtedness outstanding that would be subject to the foregoing restrictions (excluding Indebtedness permitted under the exceptions to the restriction set forth above), and (ii) all Attributable Debt from a Sale and Leaseback (excluding any Sale and Leaseback as to which the net proceeds of the property sold or transferred are applied to retire Indebtedness or to the purchase of property as described in Section 1013) as of the date of determination would not exceed 15% of Consolidated Net Tangible Assets. Section 1012..Restrictions on Debt of Subsidiaries. So long as any Securities remain Outstanding, the Company will not permit any Subsidiary to issue, assume or guarantee any Indebtedness. The foregoing restriction will not apply to the following: 59 (i) any Indebtedness of any Subsidiary permitted under Section 1011 above; (ii) Indebtedness existing on the date of original issuance of the Securities; (iii) Indebtedness of a Subsidiary existing when the Subsidiary becomes a Subsidiary, other than Indebtedness created in connection with the transaction by which the Subsidiary becomes a Subsidiary; (iv) Indebtedness owed by a Subsidiary to the Company or to another Subsidiary that is wholly-owned (directly or indirectly) by the Company; and (v) any amendment, restatement, supplement, renewal, replacement, extension or refunding in whole or in part, of Indebtedness permitted at the time of its original incurrence. In addition, any Subsidiary may issue, assume or guarantee Indebtedness if immediately thereafter the sum of (i) the aggregate principal amount of all Indebtedness outstanding (excluding Indebtedness permitted under this Section 1012 and under Section 1011), and (ii) all Attributable Debt from a Sale and Leaseback (excluding any Sale and Leaseback as to which the net proceeds of the property sold or transferred are applied to retire Indebtedness or to the purchase of property as described in Section 1013) as of the date of determination would not exceed 15% of Consolidated Net Tangible Assets. Section 1013..Restrictions on Sale and Leaseback Transactions. The Company will not, and the Company will not permit any Subsidiary to, sell or transfer, except to one another, any property if such a sale or transfer is made with the agreement, commitment or intention of leasing that property back to the Company or to a Subsidiary for a period of more than three years (a "Sale and Leaseback"), unless: (i) notice is promptly given to the Trustee of the Sale and Leaseback; (ii) the Company or the Subsidiary receives fair value for the property sold (as promptly determined in good faith by the Board of Directors of the Company and a copy of the resolution setting forth that determination is delivered to the Trustee); and (iii) the Company or a Subsidiary, within 180 days after completion of the Sale and Leaseback, applies an amount equal to the net proceeds from the Sale and Leaseback to either (A) the redemption or retirement of the Securities or the repayment of other Indebtedness ranking pari passu with the Securities, or (B) the purchase by the Company or the Subsidiary of property substantially similar to the property sold or transferred. In lieu of applying any or all of the net proceeds from a Sale or Leaseback to the redemption or retirement of Indebtedness, the Company may deliver Securities to the Trustee for cancellation and reduce the amount to be applied to the redemption of Securities by an amount equal to the aggregate principal amount of Securities delivered. 60 In addition, the Company and any Subsidiary may enter into a Sale and Leaseback if immediately afterward the sum of (i) the aggregate amount of all Indebtedness outstanding (excluding Indebtedness permitted under Section 1011) and (ii) all Attributable Debt from a Sale and Leaseback (excluding any Sale and Leaseback as to which the net proceeds of the property sold or transferred are applied to retire Indebtedness or to the purchase of property as described in clause (B) of the immediately preceding paragraph) as of the date of determination would not exceed 15% of Consolidated Net Tangible Assets. ARTICLE ELEVEN REDEMPTION OF SECURITIES Section 1101. Applicability of Article. Securities of any series which are redeemable before their Stated Maturity shall be redeemable in accordance with their terms established as contemplated by Section 301 and (except as otherwise expressly established as contemplated by Section 301 in respect of Securities of such series) in accordance with this Article. Section 1102. Election to Redeem; Notice to Trustee. The election of the Company to redeem any Securities shall be evidenced by a Board Resolution or by action taken pursuant to a Board Resolution. In case of any redemption at the election of the Company of less than all the Securities of any series, the Company shall, at least 35 days prior to the Redemption Date fixed by the Company (unless a shorter notice shall be satisfactory to the Trustee), notify the Trustee of such Redemption Date, of the principal amount of Securities of such series to be redeemed and, if applicable, of the tenor of the Securities to be redeemed. In the case of any redemption of Securities prior to the expiration of any restriction on such redemption provided in the terms of such Securities or elsewhere in this Indenture, the Company shall furnish the Trustee with an Officers' Certificate evidencing compliance with such restriction. Section 1103. Selection by Trustee of Securities to Be Redeemed. If less than all the Securities of any series are to be redeemed (unless all of the Securities of such series and of a specified tenor are to be redeemed), the particular Securities to be redeemed shall be selected not less than 30 nor more than 60 days prior to the Redemption Date by the Trustee, from the Outstanding Securities of such series not previously called for redemption, by such method as the Trustee shall deem fair and appropriate and which may provide for the selection for redemption of portions (equal to the minimum authorized denomination for Securities of that series or any integral multiple thereof) of the principal amount of Securities of such series of a denomination larger than the minimum authorized denomination for Securities of that series. If less than all of the Securities of such series and of a specified tenor are to be redeemed, the particular Securities to be redeemed shall be selected not less than 30 nor more than 60 days prior to the Redemption Date by the Trustee, from the Outstanding Securities of such series and specified tenor not previously called for redemption in accordance with the preceding sentence. 61 The Trustee shall promptly notify the Company in writing of the Securities selected for redemption and, in the case of any Securities selected for partial redemption, the principal amount thereof to be redeemed. For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the redemption of Securities shall relate, in the case of any Securities redeemed or to be redeemed only in part, to the portion of the principal amount of such Securities which has been or is to be redeemed. Section 1104. Notice of Redemption. Notice of redemption shall be given by first-class mail, postage prepaid, mailed not less than 30 nor more than 60 days prior to the Redemption Date, to each Holder of Securities to be redeemed, at his address appearing in the Security Register. All notices of redemption shall state: (1) the Redemption Date, (2) the Redemption Price, (3) if less than all the Outstanding Securities of any series are to be redeemed, the identification (and, in the case of partial redemption of any Securities, the principal amounts) of the particular Securities to be redeemed, (4) in the case of a Security to be redeemed in part, the principal amount of such Security to be redeemed and that after the Redemption Date upon surrender of such Security, new Security or Securities in the aggregate principal amount equal to the unredeemed portion thereof will be issued, (5) that on the Redemption Date the Redemption Price will become due and payable upon each such Security to be redeemed and, if applicable, that interest thereon will cease to accrue on and after said date, (6) the place or places where such Securities are to be surrendered for payment of the Redemption Price, (7) that the redemption is for a sinking fund, if such is the case, and (8) the CUSIP number, if any, relating to the Securities. Notice of redemption of Securities to be redeemed at the election of the Company shall be given by the Company or, at the Company's request, by the Trustee in the name and at the expense of the Company. Section 1105. Deposit of Redemption Price. On or prior to any Redemption Date, the Company shall deposit with the Trustee or with a Paying Agent (or, if the Company is acting as its own Paying Agent, segregate and hold in trust as provided in Section 1003) an amount in cash sufficient to pay the Redemption Price of, and (except if the Redemption Date shall be an Interest Payment Date) accrued interest on, all the Securities which are to be redeemed on that date. 62 Section 1106. Securities Payable on Redemption Date. Notice of redemption having been given as aforesaid, the Securities so to be redeemed shall, on the Redemption Date, become due and payable at the Redemption Price therein specified, and from and after such date (unless the Company shall default in the payment of the Redemption Price and accrued interest) such Securities shall cease to bear interest. Upon surrender of any such Security for redemption in accordance with said notice, such Security shall be paid by the Company at the Redemption Price, together with accrued interest to the Redemption Date; provided, however, that, unless otherwise specified as contemplated by Section 301, installments of interest whose Stated Maturity is on or prior to the Redemption Date shall be payable to the Holders of such Securities, or one or more Predecessor Securities, registered as such at the close of business on the relevant Record Dates according to their terms and the provisions of Section 307. If any Security called for redemption shall not be so paid upon surrender thereof for redemption, the principal and any premium shall, until paid, bear interest from the Redemption Date at the rate prescribed therefor in the Security. Section 1107. Securities Redeemed in Part. Any Security which is to be redeemed only in part shall be surrendered at a Place of Payment therefor (with, if the Company or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Trustee duly executed by, the Holder thereof or his attorney duly authorized in writing), and the Company shall execute, and the Trustee shall authenticate and deliver to the Holder of such Security without service charge, a new Security or Securities of the same series and of like tenor, of any authorized denomination as requested by such Holder, in aggregate principal amount equal to and in exchange for the unredeemed portion of the principal of the Security so surrendered. ARTICLE TWELVE SINKING FUNDS Section 1201. Applicability of Article. The provisions of this Article shall be applicable to any sinking fund for the retirement of Securities of a series except as otherwise specified as contemplated by Section 301 for Securities of such series. The minimum amount of any sinking fund payment provided for by the terms of Securities of any series is herein referred to as a "mandatory sinking fund payment", and any payment in excess of such minimum amount provided for by the terms of Securities of any series is herein referred to as an "optional sinking fund payment". If provided for by the terms of Securities of any series, the cash amount of any sinking fund payment may be subject to reduction as provided in Section 1202. Each sinking fund payment shall be applied to the 63 redemption of Securities of any series as provided for by the terms of Securities of such series. Section 1202. Satisfaction of Sinking Fund Payments with Securities. The Company (1) may deliver Outstanding Securities of a series (other than any previously called for redemption) and (2) may apply as a credit Securities of a series which have been redeemed either at the election of the Company pursuant to the terms of such Securities or through the application of permitted optional sinking fund payments pursuant to the terms of such Securities, in each case in satisfaction of all or any part of any sinking fund payment with respect to the Securities of such series required to be made pursuant to the terms of such Securities as provided for by the terms of such series; provided that such Securities have not been previously so credited. Such Securities shall be received and credited for such purpose by the Trustee at the Redemption Price specified in such Securities for redemption through operation of the sinking fund and the amount of such sinking fund payment shall be reduced accordingly. Section 1203. Redemption of Securities for Sinking Fund. Not less than 60 days prior to each sinking fund payment date for any series of Securities, the Company will deliver to the Trustee an Officers' Certificate specifying the amount of the next ensuing sinking fund payment for that series pursuant to the terms of that series, the portion thereof, if any, which is to be satisfied by payment of cash in the currency or currencies, currency unit or units or composite currency or currencies in which the Securities of such series are payable (except as otherwise specified pursuant to Section 301 for the Securities of such series) and the portion thereof, if any, which is to be satisfied by delivering and crediting Securities of that series pursuant to Section 1202 and will also deliver to the Trustee any Securities to be so delivered. Not less than 30 and not more than 60 days before each such sinking fund payment date the Trustee shall select the Securities to be redeemed upon such sinking fund payment date in the manner specified in Section 1103 and cause notice of the redemption thereof to be given in the name of and at the expense of the Company in the manner provided in Section 1104. Such notice having been duly given, the redemption of such Securities shall be made upon the terms and in the manner stated in Sections 1106 and 1107. ARTICLE THIRTEEN REPAYMENT AT THE OPTION OF THE HOLDERS Section 1301. Applicability of Article. Repayment of securities of any series before their Stated Maturity at the option of Holders thereof shall be made in accordance with the terms of such Securities and (except as otherwise specified as contemplated by Section 301 for Securities of any series) in accordance with this Article. Section 1302. Repayment of Securities. Securities of any series subject to repayment in whole or in part at the option of the 64 Holders thereof will, unless otherwise provided in the terms of such Securities, be repaid at a price equal to the principal amount thereof, together with interest and/or premium, if any, thereon accrued to the Repayment Date specified in or pursuant to the terms of such Securities. The Company covenants that on or before the Repayment Date it will deposit with the Trustee or with a Paying Agent (or, if the Company is acting as its own Paying Agent, segregate and hold in trust as provided in Section 1003) an amount of money sufficient to pay the principal (or, if so provided by the terms of the Securities of any series, a percentage of the principal) of, the premium, if any, and (except if the Repayment Date shall be an Interest Payment Date) accrued interest on, all the Securities or portions thereof, as the case may be, to be repaid on such date. Section 1303. Exercise of Option. Securities of any series subject to repayment at the option of the Holders thereof will contain an "Option to Elect Repayment" form on the reverse of such Securities. Except as otherwise may be provided by the terms of any Security providing for repayment at the option of the Holder thereof, any Security so providing for such repayment with the "Option to Elect Repayment" form on the reverse of such Security duly completed by the Holder (or by the Holder's attorney duly authorized in writing) must be received by the Company at the Place of Payment therefor specified in the terms of such Security (or at such other place or places of which the Company shall from time to time notify the Holders of such Securities) not earlier than 45 days nor later than 30 days prior to the Repayment Date. If less than the entire principal amount of such Security is to be repaid in accordance with the terms of such Security, the principal amount of such Security to be repaid, in increments of the minimum denomination for Securities of such series, the premium, if any, to be paid, and the denomination or denominations of the Security or Securities to be issued to the Holder for the portion of the principal amount of such Security surrendered that is not to be repaid, must be specified. The principal amount of any Security providing for repayment at the option of the Holder thereof may not be repaid in part if, following such repayment, the unpaid principal amount of such Security would be less than the minimum authorized denomination of Securities of the series of which such Security to be repaid is a part. Except as otherwise may be provided by the terms of any Security providing for repayment at the option of the Holder thereof and as provided in Sections 308, exercise of the repayment option by the Holder shall be irrevocable unless waived by the Company. Section 1304. When Securities Presented for Repayment Become Due and Payable. If Securities of any series providing for repayment at the option of the Holders thereof shall have been surrendered as provided in this Article and as provided by or pursuant to the terms of such Securities, such Securities or the portions thereof, as the case may be, to be repaid shall become due and payable and shall be paid by the Company on the Repayment Date therein specified, and on and after such Repayment Date (unless the Company shall default in the payment of such Securities on such Repayment Date) such Securities shall, if the same were interest-bearing, cease to bear interest. Upon surrender of any such Security for repayment in accordance with such provisions, the principal amount of such Security so to be repaid (or, if so provided by the terms of the Securities of any series, a percentage of the principal) shall be paid by the Company, together with accrued interest and/or premium, if any, to the Repayment Date; provided, however, that installments of interest, if any, whose Stated Maturity is on or prior to 65 the Repayment Date shall be payable (but without interest thereon, unless the Company shall default in the payment thereof) to the Holders of such Securities, or one or more Predecessor Securities, registered as such at the close of business on the relevant Record Dates according to their terms and the provisions of Section 307. If the principal amount of any Security surrendered for repayment shall not be so repaid upon surrender thereof, such principal amount (together with interest, if any, thereon accrued to such Repayment Date) shall, until paid, bear interest from the Repayment Date at the rate of interest or Yield to Maturity (in the case of Original Issue Discount Securities) set forth in such Security. Section 1305. Securities Repaid in Part. Upon surrender of any Security which is to be repaid in part only, the Company shall execute and the Trustee shall authenticate and deliver to the Holder of such Security, without service charge and at the expense of the Company, a new Security or Securities of the same series, of any authorized denomination specified by the Holder, in an aggregate principal amount equal to and in exchange for the portion of the principal of such Security so surrendered which is not to be repaid. ARTICLE FOURTEEN SUBORDINATION OF SECURITIES Section 1401. Securities Subordinate to Senior Indebtedness. The Company covenants and agrees, and each Holder of a Security of any series, by his acceptance thereof, likewise covenants and agrees, that to the extent and in the manner set forth pursuant to Section 301(17) hereof, the indebtedness represented by the Securities of such series and the payment of principal of (and premium, if any) and interest on each or all of the Securities of such series are hereby expressly made subordinate and subject in right of payment to the prior payment in full of all Senior Indebtedness. ---------- This instrument may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. [Signature page follows] 66 IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed, and their respective corporate seals to be hereunto affixed and attested, all as of the day and year first above written. OAKWOOD HOMES CORPORATION By: /s/ Robert A. Smith ---------------------------------- Name: Robert A. Smith Title: Executive Vice President [CORPORATE SEAL] Attest: By: /s/ Douglas R. Muir ------------------------- Name: Douglas R. Muir Title: Secretary THE FIRST NATIONAL BANK OF CHICAGO, Trustee By: /s/ Jeffrey L. Kinney ---------------------------------- Name: /s/ Jeffrey L. Kinney Title: Vice President [CORPORATE SEAL] STATE OF NORTH CAROLINA ) ) ss.: COUNTY OF GUILFORD ) On the 1st day of March, 1999, before me personally came Robert A. Smith, to me known, who, being by me duly sworn, did depose and say that he is Executive Vice President of OAKWOOD HOMES CORPORATION, one of the corporations described in and which executed the foregoing instrument; that he knows the seal of said corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed by authority of the Board of Directors of said corporation; and that he signed his name thereto by like authority. /s/ Dena B. Cardwell ---------------------------------------- Name: Dena B. Cardwell Notary Public State of My Commission expires on 11/30/2000 EX-4 5 EXHIBIT 4.2 Exhibit 4.2 ================================================================================ OAKWOOD HOMES CORPORATION, as Issuer, and THE FIRST NATIONAL BANK OF CHICAGO, as Trustee FIRST SUPPLEMENTAL INDENTURE Dated as of March 2, 1999 $125,000,000 7.875% SENIOR NOTES DUE 2004 $175,000,000 8.125% SENIOR NOTES DUE 2009 ================================================================================ FIRST SUPPLEMENTAL INDENTURE FIRST SUPPLEMENTAL INDENTURE, dated as of March 2, 1999, between OAKWOOD HOMES CORPORATION, a North Carolina corporation (the "Company"), having its principal office at 7800 McCloud Road, Greensboro, North Carolina 27425, and THE FIRST NATIONAL BANK OF CHICAGO, as Trustee hereunder (the "Trustee"), having its Corporate Trust Office at One North State Street, 9th Floor, Chicago, Illinois 60602. Terms used herein which are defined in the Indenture (as defined below) shall have the respective meanings assigned to them in the Indenture. RECITALS OF THE COMPANY The Company and the Trustee have entered into an Indenture (the "Indenture") dated as of the date hereof, providing for the issuance of debt securities in series. For its lawful corporate purposes, the Company desires to create and authorize the series of 7.875% Senior Notes Due 2004 in an aggregate principal amount of $125,000,000 (the "2004 Notes") and the series of 8.125% Senior Notes Due 2009 in an aggregate principal amount of $175,000,000 (the "2009 Notes" and, together with the 2004 Notes, the "Notes") and, to provide the terms and conditions upon which the Notes are to be executed, registered, authenticated, issued and delivered, the Company has duly authorized the execution and delivery of this First Supplemental Indenture. The 2004 Notes and the 2009 Notes are each a series of Securities (as that term is defined in the Indenture) and are being issued under the Indenture, as supplemented by this First Supplemental Indenture, and are subject to the terms contained therein and herein. WHEREAS, the 2004 Notes are to be substantially in the following form: OAKWOOD HOMES CORPORATION 7 7/8 % Senior Note Due 2004 No.___ $125,000,000 CUSIP NO.______ UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. Oakwood Homes Corporation, a corporation duly organized and existing under the laws of the State of North Carolina (herein called the "Company", which term includes any successor Person under the Indenture hereinafter referred to), for value received, hereby promises to pay to Cede & Co., or registered assigns, the principal sum of One Hundred Twenty Five Million Dollars ($125,000,000) on March 1, 2004 and to pay interest thereon from March 2, 1999 or from the most recent Interest Payment Date to which interest has been paid or duly provided for, semi-annually on March 1 and September 1 in each year, commencing September 1, 1999, at the rate of 7 7/8% per annum, until the principal hereof is paid or made available for payment, and (to the extent that the payment of such interest shall be legally enforceable) at the rate of 7 7/8% per annum on any overdue principal and premium and on any overdue installment of interest, provided that any principal and premium, and any such installment of interest, which is overdue shall bear interest at the rate of 7 7/8% per annum (to the extent permitted by applicable law), from the dates such amounts are due until they are paid or made available for payment, and such interest shall be payable on demand. The amount of interest payable for any period shall be computed on the basis of twelve 30-day months and a 360-day year. The amount of interest payable for any partial period shall be computed on the basis of a 360-day year of twelve 30-day months and the days elapsed in any partial month. In the event that any date on which interest is payable on this Security is not a Business Day, then a payment of the interest payable on such date will be made on the next succeeding day which is a Business Day (and without any interest or other payment in respect of any such delay) with the same force and effect as if made on the date the payment was originally payable. A "Business Day" shall mean, when used with respect to any Place of Payment, each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which banking institutions in that Place of Payment are authorized or obligated by law or executive order to close. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in such Indenture, be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest, which shall be the February 15 or August 15 (whether or not a Business Day), as the case may be, next preceding such Interest Payment Date. Any such interest not so punctually paid or duly provided for shall forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of Securities of this series not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange or automated quotation 2 system on which the Securities of this series may be listed or traded, and upon such notice as may be required by such exchange or automated quotation system, all as more fully provided in said Indenture). Payment of the principal of (and premium, if any) and any such interest on this Security will be made at the office or agency of the Company maintained for that purpose in either Chicago, Illinois or New York, New York, in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts. Reference is hereby made to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place. Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed under its corporate seal. OAKWOOD HOMES CORPORATION By:________________________ Attest: - -------------------------- [Reverse of Note] This Security is one of a duly authorized issue of securities of the Company (herein called the "Securities"), issued and to be issued in one or more series under an Indenture, dated as of March 2, 1999, (herein called the "Indenture", which term shall have the meaning assigned to it in such instrument), between the Company and The First National Bank of Chicago, as Trustee (herein called the "Trustee", which term includes any successor trustee under the Indenture), to which Indenture, the First Supplemental Indenture, dated as of March 2, 1999 (herein called the "First Supplemental Indenture", which term shall have the meaning assigned to it in such instrument) between the Company and the Trustee and all other indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the 3 Trustee and the Holders of the Securities and of the terms upon which the Securities are, and are to be, authenticated and delivered. This Security is one of the series designated on the face hereof. The Securities of this series are subject, at the election of the Company, to redemption as a whole or in part at any time upon not less than 30 nor more than 60 days' notice by mail at the greater of (i) 100% of the principal amount of the Securities being redeemed or (ii) as determined by the Quotation Agent, the sum of the present values of the remaining scheduled payments of principal and interest on the Securities (not including any portion of those payments of interest accrued as of the Redemption Date) discounted to the Redemption Date on a semi-annual basis assuming a 360 day year consisting of twelve 30 day months at the Adjusted Treasury Rate plus 25 basis points plus, in each case, accrued and unpaid interest on the Securities to the Redemption Date, but interest installments whose Stated Maturity is on or prior to such Redemption Date will be payable to the Holders of such Securities, or one or more Predecessor Securities, of record at the close of business on the relevant Record Dates referred to on the face hereof, all as provided in the Indenture. For purposes of determining the amount at which the Securities may be redeemed, the following terms shall have the meanings set forth next to each of them below: "Adjusted Treasury Rate" means, with respect to any redemption date, the rate per annum equal to the semi-annual equivalent yield to maturity of the Comparable Treasury Issue, assuming a price of the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for that redemption date. "Comparable Treasury Issue" means the United States Treasury security selected by the Quotation Agent as having a maturity comparable to the remaining term of the Securities to be redeemed that would be utilized, at the time of a selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of the Securities. "Comparable Treasury Price" means, with respect to any redemption date, (i) the average of the Reference Treasury Dealer Quotations for such redemption date, after excluding the highest and lowest Reference Treasury Dealer Quotation, or (ii) if the Trustee obtains fewer than three Reference Treasury Dealer Quotations, the average of the quotations. "Quotation Agent" means the Reference Treasury Dealer appointed by the Company. 4 "Reference Treasury Dealer" means (i) each of NationsBanc Montgomery Securities LLC, First Union Capital Markets Corp. and Merrill Lynch & Co. and their respective successors; however, if any of the foregoing shall cease to be a primary U.S. Government securities dealer in New York City (a "Primary Treasury Dealer"), the Company will substitute another Primary Treasury Dealer; and (ii) any other Primary Treasury Dealer selected by the Company. "Reference Treasury Dealer Quotations" means, with respect to each Reference Treasury Dealer and any redemption date, the average, as determined by the Company, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the trustee by the Reference Treasury Dealer at 5:00 p.m., New York City time, on the third Business Day preceding the redemption date. In the event of redemption of this Security in part only, a new Security or Securities of this series and of like tenor for the unredeemed portion hereof will be issued in the name of the Holder hereof upon the cancellation hereof. If a Change in Control Triggering Event occurs, the Holder of this Security will have the right, at the Holder's option, subject to the terms and conditions of the Indenture, to require the Company to purchase all or any part of this Security (so long as the principal amount is $1,000 or an integral multiple of $1,000) on the date that is 30 Business Days after the occurrence of the Change in Control Triggering Event (the "Purchase Date"). If a Holder exercises this option, the Company will purchase this Security for cash equal to 101% of the principal amount of this Security plus any interest accrued and unpaid on this Security through the Purchase Date (the "Purchase Price"). Within 15 Business Days after a Change in Control Triggering Event, the Company is obligated to mail to the Trustee and to the Holder of this Security at such Holder's address as shown in the Securities Register (and to beneficial owners as required by applicable law) a notice regarding the Change in Control Triggering Event. The notice shall state, among other things, (i) the date by which the Holder must give the Purchase Notice (defined below); (ii) the Purchase Price; (iii) the Purchase Date; (iv) the name and address of the Trustee and of any other office or agency maintained for the purpose of the surrender of this Security for purchase; (v) the procedures for withdrawing a Purchase Notice; and (vi) the procedures that the Holder of this Security must follow to exercise these rights. The Company will publish the notice in a daily newspaper of national circulation. To exercise the right to have the Company purchase this Security, the Holder of this Security must execute and deliver an "Option to Elect Repayment" substantially in the form set forth below (the "Purchase Notice") to the Trustee or to any other office or agency maintained for that purpose of the Holder's exercise of that right before the close of business on the Business Day immediately prior to the 5 Purchase Date. The Holder of this Security may withdraw any Purchase Notice by written notice of withdrawal delivered to the Trustee or to any other office or agency maintained for such purpose no later than the Business Day immediately prior to the Purchase Date. The notice of withdrawal must state the principal amount and the certificate number of this Security and the principal amount, if any, of this Security which remains subject to the original Purchase Notice. The Option to Elect Repayment form shall be as follows: OPTION TO ELECT REPAYMENT (1) Pursuant to Article Thirteen of the Indenture, the undersigned hereby elects to have this Security repurchased by the Company. (2) The undersigned hereby directs the Trustee or the Company to pay it or ___________________________ an amount in cash equal to 101% of the principal amount to be repurchased (as set forth below), plus interest accrued to the Repurchase Date, as provided in the Indenture. Dated: ________________ ------------------------------ ------------------------------ Signature(s) Signature(s) must be guaranteed by an Eligible Guarantor Institution with membership in an approved signature guarantee program pursuant to Rule 17Ad-15 under the Securities Exchange Act of 1934. ------------------------------ Signature Guaranteed Certificate No.__________________ Principal amount to be repurchased (must be an integral multiple of $1,000): $------------------ Remaining principal amount following such 6 repurchase: $------------------ NOTICE: The signature to the foregoing Election must correspond to the Name as written upon the face of this Security in every particular, without alteration or any change whatsoever. Payment of the Purchase Price for this Security for which a Purchase Notice has been delivered and not withdrawn is conditioned on delivery of this Security (together with any endorsements) to the Trustee or to any other office or agency maintained for that purpose, at any time (whether prior to, on or after the Purchase Date) after delivery of the Purchase Notice. Payment of the Purchase Price for this Security will be made promptly following the later of the Purchase Date or the time of delivery of this Security. If the Company deposits with the Trustee, in accordance with the Indenture, money sufficient to pay the Purchase Price of this Security on the Purchase Date, then, on and after the Purchase Date, this Security will cease to be outstanding and interest on this Security will cease to accrue, whether or not this Security is delivered to the trustee or to any other office or agency maintained for that purpose, and all other rights of the Holder will terminate (other than the right to receive the Purchase Price on delivery of this Security). In accordance with the Indenture, this Security may not be purchased pursuant to a Change in Control Triggering Event if there has occurred and is continuing an Event of Default other than a default in the payment of the Purchase Price relating to this Security. For purposes of determining the right of the Holder to require the Company to purchase all or any part of this Security as set forth above, the following terms shall have the meanings set forth next to each of them below: "Change in Control" means, with regard to the Company, the occurrence of: (i) any consolidation, share exchange or merger regarding the Company in which the Company is not the continuing or surviving corporation or where the Company's voting stock would be converted into cash, securities or other property, other than a merger in which the holders of the Company's voting stock immediately prior to the merger have the same or greater direct or indirect proportionate ownership of the surviving corporation's voting stock immediately after the merger as they had of the Company's voting stock immediately before the merger, or (ii) any Person, including Affiliates of the Company (but not including the Company, any Subsidiary, employee stock ownership plans or employee benefit plans of the Company or any of the Subsidiaries), filing a Schedule 13D or 14D-1 (or any successor schedule, form or report under the Exchange 7 Act) disclosing that such a Person has become the beneficial owner of 50% or more of the Company's voting stock. "Change in Control Triggering Event" means the occurrence of both a Change in Control and a Rating Decline. "Investment Grade" means a rating of BBB- or higher by Standard & Poor's Corporation ("S&P") and Baa3 or higher by Moody's Investors Service ("Moody's") or the equivalent of those ratings by either of those Rating Agencies. "Rating Agency" means (i) S&P, (ii) Moody's, or (iii) if S&P or Moody's or both shall not make a rating of the Securities publicly available, a nationally recognized securities rating agency or agencies selected by the Company. "Rating Category" means (i) regarding S&P, any of the following categories: BB, B, CCC, CC, C and D (or equivalent successor categories), (ii) regarding Moody's, any of the following categories: Ba, B, Caa, Ca and C (or equivalent successor categories), and (iii) the equivalent of any such category of S&P or Moody's used by another Rating Agency. Gradations within Rating Categories (+ and - for S&P; 1, 2 and 3 for Moody's; or the equivalent gradations for another Rating Agency) will be taken into account in determining whether the rating of the Securities has decreased by one or more gradations. For example, regarding S&P, a decline in rating from BB+ to BB will constitute a decrease of one gradation. "Rating Date" means the date that is 30 days prior to the earliest of (i) a Change in Control, (ii) public notice of a Change in Control and (iii) public notice of the intention by the Company to effect a Change in Control. "Rating Decline" means the occurrence on or within 30 days after the earlier of the date of public notice of the occurrence of a Change in Control or the public announcement of the Company's intention to effect a Change in Control (which period will be extended so long as the rating of the Securities is under publicly announced consideration for possible downgrade by any of the Rating Agencies) of: (i) If the Securities are rated by either Moody's or S&P on the Rating Date as Investment Grade, the rating of the Securities by both Moody's and S&P below Investment Grade, or (ii) If the Securities are rated below Investment Grade by both Moody's and S&P on the Rating Date, the rating of the Securities is decreased by either Moody's or S&P by one or more gradations (including gradations within Rating Categories as well as between Rating Categories). If the Company or any Subsidiary sells, assigns, transfers, leases or otherwise disposes of all or substantially all of its assets other than in the ordinary course of its 8 business or any capital stock or other equity interests of any Subsidiary held by the Company or any Subsidiary (a "Subsidiary Sale"), and the Company applies the proceeds therefrom to the redemption of the Securities in accordance with Section 801(b)(B)(3) of the Indenture (a "Redemption Determination") the Holder of this Security will have the right, at the Holder's option, subject to the terms and conditions of the Indenture, to require the Company to purchase all or any part of this Security (so long as the principal amount is $1,000 or an integral multiple of $1,000) on the date that is 30 Business Days after the Company's determination to offer to redeem Securities (the "Redemption Date"). If a Holder exercises this option, the Company will purchase this Security for cash equal to 100% of the principal amount of this Security plus any interest accrued and unpaid on this Security through the Redemption Date (the "Redemption Purchase Price"). Within 15 Business Days after a Redemption Determination, the Company is obligated to mail to the Trustee and to the Holder of this Security at such Holder's address as shown in the Securities Register (and to beneficial owners as required by applicable law) a notice regarding the Subsidiary Sale. The notice shall state, among other things, (i) the date by which the Holder must give the Redemption Purchase Notice (defined below); (ii) the Redemption Purchase Price; (iii) the Redemption Date; (iv) the name and address of the Trustee and of any other office or agency maintained for the purpose of the surrender of this Security for purchase; (v) the procedures for withdrawing a Redemption Purchase Notice; and (vi) the procedures that the Holder of this Security must follow to exercise these rights. The Company will publish the notice in a daily newspaper of national circulation. To exercise the right to have the Company purchase this Security, the Holder of this Security must execute and deliver an "Option to Elect Repayment" substantially in the form set forth below (the "Redemption Purchase Notice") to the Trustee or to any other office or agency maintained for that purpose of the Holder's exercise of that right before the close of business on the Business Day immediately prior to the Redemption Date. The Holder of this Security may withdraw any Redemption Purchase Notice by written notice of withdrawal delivered to the Trustee or to any other office or agency maintained for such purpose no later than the Business Day immediately prior to the Redemption Date. The notice of withdrawal must state the principal amount and the certificate number of this Security and the principal amount, if any, of this Security which remains subject to the original Redemption Purchase Notice. The Option to Elect Repayment form shall be as follows: OPTION TO ELECT REPAYMENT (1) Pursuant to Article Eight of the Indenture, the undersigned hereby elects to have this Security repurchased by the Company. 9 (2) The undersigned hereby directs the Trustee or the Company to pay it or ___________________________ an amount in cash equal to 100% of the principal amount to be repurchased (as set forth below), plus interest accrued to the Redemption Date, as provided in the Indenture. Dated: ________________ ------------------------------ ------------------------------ Signature(s) Signature(s) must be guaranteed by an Eligible Guarantor Institution with membership in an approved signature guarantee program pursuant to Rule 17Ad-15 under the Securities Exchange Act of 1934. ------------------------------ Signature Guaranteed Certificate No.__________________ Principal amount to be repurchased (must be an integral multiple of $1,000): $------------------ Remaining principal amount following such repurchase: $------------------ NOTICE: The signature to the foregoing Election must correspond to the Name as written upon the face of this Security in every particular, without alteration or any change whatsoever. If the aggregate principal amount of Securities surrendered for redemption by the Holders thereof in connection with a redemption following a Subsidiary Sale exceeds the amount of net proceeds received by the Company or any of its Subsidiaries in connection with such Subsidiary Sale, the Trustee shall select the Securities or portions thereof to be purchased on a pro rata basis, based on the principal amount of the Securities tendered, with such adjustments as may be deemed 10 appropriate by the Trustee, so that only Securities (or portions thereof) in denominations of $1,000 or integral multiples thereof shall be purchased. Payment of the Redemption Purchase Price for this Security for which a Redemption Purchase Notice has been delivered and not withdrawn is conditioned on delivery of this Security (together with any endorsements) to the Trustee or to any other office or agency maintained for that purpose, at any time (whether prior to, on or after the Redemption Purchase Date) after delivery of the Redemption Purchase Notice. Payment of the Redemption Purchase Price for this Security will be made promptly following the later of the Redemption Date or the time of delivery of this Security. If the Company deposits with the Trustee, in accordance with the Indenture, money sufficient to pay the Redemption Price of this Security on the Redemption Date, then, on and after the Redemption Date, this Security will cease to be outstanding and interest on this Security will cease to accrue, whether or not this Security is delivered to the trustee or to any other office or agency maintained for that purpose, and all other rights of the Holder will terminate (other than the right to receive the Redemption Purchase Price on delivery of this Security). In accordance with the Indenture, this Security may not be purchased pursuant to a Subsidiary Sale if there has occurred and is continuing an Event of Default other than a default in the payment of the Redemption Purchase Price relating to this Security. If an Event of Default with respect to Securities of this series shall occur and be continuing, the principal of the Securities of this series may be declared due and payable in the manner and with the effect provided in the Indenture. The Indenture contains provisions for Defeasance at any time of the entire indebtedness of this Security or certain restrictive covenants and Events of Default with respect to this Security, in each case upon compliance with certain conditions set forth in the Indenture. The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Securities of each series to be affected under the Indenture at any time by the Company and the Trustee with the consent of the Holders of a majority in principal amount of the Securities at the time Outstanding of each series to be affected. The Indenture also contains provisions permitting the Holders of specified percentages in principal amount of the Securities of each series at the time Outstanding, on behalf of the Holders of all Securities of such series, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future Holders of this Security and of any Security 11 issued upon the registration of transfer hereof or in exchange hereof or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security. As provided in and subject to the provisions of the Indenture, the Holder of this Security shall not have the right to institute any proceeding with respect to the Indenture or for the appointment of a receiver or trustee or for any other remedy thereunder, unless such Holder shall have previously given the Trustee written notice of a continuing Event of Default with respect to the Securities of this series, the Holders of not less than 25% in principal amount of the Securities of this series at the time Outstanding shall have made written request to the Trustee to institute proceedings in respect of such Event of Default as Trustee and offered the Trustee indemnity satisfactory to the Trustee in its reasonable judgment, and the Trustee shall not have received from the Holders of a majority in principal amount of Securities of this series at the time Outstanding a direction inconsistent with such request, and shall have failed to institute any such proceeding, for 60 days after receipt of such notice, request and offer of indemnity. The foregoing shall not apply to any suit instituted by the Holder of this Security for the enforcement of any payment of principal hereof or any premium or interest hereon on or after the respective due dates expressed herein. No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and any premium and interest on this Security at the times, place and rate, and in the coin or currency, herein prescribed. As provided in the Indenture and subject to certain limitations therein set forth and set forth herein, the transfer of this Security is registerable in the Security Register, upon surrender of this Security for registration of transfer at the office or agency of the Company in any place where the principal of and any premium and interest on this Security are payable, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Securities of this series and of like tenor, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees. The Securities of this series are issuable only in registered form without coupons in denominations of $1,000.00 and any integral multiple thereof. As provided in the Indenture and subject to certain limitations therein set forth, Securities of this series are exchangeable for a like aggregate principal amount of Securities of this series and of like tenor of a different authorized denomination, as requested by the Holder surrendering the same. 12 No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. Prior to due presentment of this Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary. All terms used in this Security which are defined in the Indenture or the First Supplemental Indenture shall have the meanings assigned to them in the Indenture or the First Supplemental Indenture, as the case may be. THE INDENTURE, THE FIRST SUPPLEMENTAL INDENTURE AND THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS. This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture. Dated: March 2, 1999 THE FIRST NATIONAL BANK OF CHICAGO, As Trustee By:_________________________________ Authorized Signatory WHEREAS, the 2009 Notes are to be substantially in the following form: OAKWOOD HOMES CORPORATION 8 1/8 % Senior Note Due 2009 No.___ $175,000,000 CUSIP NO.______ UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE 13 OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. Oakwood Homes Corporation, a corporation duly organized and existing under the laws of the State of North Carolina (herein called the "Company", which term includes any successor Person under the Indenture hereinafter referred to), for value received, hereby promises to pay to Cede & Co., or registered assigns, the principal sum of One Hundred Seventy Five Million Dollars ($175,000,000) on March 1, 2009 and to pay interest thereon from March 2, 1999 or from the most recent Interest Payment Date to which interest has been paid or duly provided for, semi-annually on March 1 and September 1 in each year, commencing September 1, 1999, at the rate of 8 1/8 % per annum, until the principal hereof is paid or made available for payment, and (to the extent that the payment of such interest shall be legally enforceable) at the rate of 8 1/8 % per annum on any overdue principal and premium and on any overdue installment of interest, provided that any principal and premium, and any such installment of interest, which is overdue shall bear interest at the rate of 8 1/8 % per annum (to the extent permitted by applicable law), from the dates such amounts are due until they are paid or made available for payment, and such interest shall be payable on demand. The amount of interest payable for any period shall be computed on the basis of twelve 30-day months and a 360-day year. The amount of interest payable for any partial period shall be computed on the basis of a 360-day year of twelve 30-day months and the days elapsed in any partial month. In the event that any date on which interest is payable on this Security is not a Business Day, then a payment of the interest payable on such date will be made on the next succeeding day which is a Business Day (and without any interest or other payment in respect of any such delay) with the same force and effect as if made on the date the payment was originally payable. A "Business Day" shall mean, when used with respect to any Place of Payment, each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which banking institutions in that Place of Payment are authorized or obligated by law or executive order to close. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in such Indenture, be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest, which shall be the February 15 or August 15 (whether or not a Business Day), as the case may be, next preceding such Interest Payment Date. Any such interest not so punctually paid or duly provided for shall forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of Securities of this series not less than 10 days prior to such 14 Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange or automated quotation system on which the Securities of this series may be listed or traded, and upon such notice as may be required by such exchange or automated quotation system, all as more fully provided in said Indenture). Payment of the principal of (and premium, if any) and any such interest on this Security will be made at the office or agency of the Company maintained for that purpose in either Chicago, Illinois or New York, New York, in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts. Reference is hereby made to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place. Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed under its corporate seal. OAKWOOD HOMES CORPORATION By: ______________________________ Attest: - -------------------------- [Reverse of Note] This Security is one of a duly authorized issue of securities of the Company (herein called the "Securities"), issued and to be issued in one or more series under an Indenture, dated as of March 2, 1999, (herein called the "Indenture", which term shall have the meaning assigned to it in such instrument), between the Company and The First National Bank of Chicago, as Trustee (herein called the "Trustee", which term includes any successor trustee under the Indenture), to which Indenture, the First Supplemental Indenture, dated as of March 2, 1999 (herein called the "First Supplemental Indenture", which term shall have the meaning assigned to it in such instrument) between the Company and the Trustee and all other indentures supplemental thereto reference is hereby made for a statement of the respective 15 rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee and the Holders of the Securities and of the terms upon which the Securities are, and are to be, authenticated and delivered. This Security is one of the series designated on the face hereof. The Securities of this series are subject, at the election of the Company, to redemption as a whole or in part at any time upon not less than 30 nor more than 60 days' notice by mail at the greater of (i) 100% of the principal amount of the Securities being redeemed or (ii) as determined by the Quotation Agent, the sum of the present values of the remaining scheduled payments of principal and interest on the Securities (not including any portion of those payments of interest accrued as of the Redemption Date) discounted to the Redemption Date on a semi-annual basis assuming a 360 day year consisting of twelve 30 day months at the Adjusted Treasury Rate plus 25 basis points plus, in each case, accrued and unpaid interest on the Securities to the Redemption Date, but interest installments whose Stated Maturity is on or prior to such Redemption Date will be payable to the Holders of such Securities, or one or more Predecessor Securities, of record at the close of business on the relevant Record Dates referred to on the face hereof, all as provided in the Indenture. For purposes of determining the amount at which the Securities may be redeemed, the following terms shall have the meanings set forth next to each of them below: "Adjusted Treasury Rate" means, with respect to any redemption date, the rate per annum equal to the semi-annual equivalent yield to maturity of the Comparable Treasury Issue, assuming a price of the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for that redemption date. "Comparable Treasury Issue" means the United States Treasury security selected by the Quotation Agent as having a maturity comparable to the remaining term of the Securities to be redeemed that would be utilized, at the time of a selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of the Securities. "Comparable Treasury Price" means, with respect to any redemption date, (i) the average of the Reference Treasury Dealer Quotations for such redemption date, after excluding the highest and lowest Reference Treasury Dealer Quotation, or (ii) if the Trustee obtains fewer than three Reference Treasury Dealer Quotations, the average of the quotations. "Quotation Agent" means the Reference Treasury Dealer appointed by the Company. 16 "Reference Treasury Dealer" means (i) each of NationsBanc Montgomery Securities LLC, First Union Capital Markets Corp. and Merrill Lynch & Co. and their respective successors; however, if any of the foregoing shall cease to be a primary U.S. Government securities dealer in New York City (a "Primary Treasury Dealer"), the Company will substitute another Primary Treasury Dealer; and (ii) any other Primary Treasury Dealer selected by the Company. "Reference Treasury Dealer Quotations" means, with respect to each Reference Treasury Dealer and any redemption date, the average, as determined by the Company, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the trustee by the Reference Treasury Dealer at 5:00 p.m., New York City time, on the third Business Day preceding the redemption date. In the event of redemption of this Security in part only, a new Security or Securities of this series and of like tenor for the unredeemed portion hereof will be issued in the name of the Holder hereof upon the cancellation hereof. If a Change in Control Triggering Event occurs, the Holder of this Security will have the right, at the Holder's option, subject to the terms and conditions of the Indenture, to require the Company to purchase all or any part of this Security (so long as the principal amount is $1,000 or an integral multiple of $1,000) on the date that is 30 Business Days after the occurrence of the Change in Control Triggering Event (the "Purchase Date"). If a Holder exercises this option, the Company will purchase this Security for cash equal to 101% of the principal amount of this Security plus any interest accrued and unpaid on this Security through the Purchase Date (the "Purchase Price"). Within 15 Business Days after a Change in Control Triggering Event, the Company is obligated to mail to the Trustee and to the Holder of this Security at such Holder's address as shown in the Securities Register (and to beneficial owners as required by applicable law) a notice regarding the Change in Control Triggering Event. The notice shall state, among other things, (i) the date by which the Holder must give the Purchase Notice (defined below); (ii) the Purchase Price; (iii) the Purchase Date; (iv) the name and address of the Trustee and of any other office or agency maintained for the purpose of the surrender of this Security for purchase; (v) the procedures for withdrawing a Purchase Notice; and (vi) the procedures that the Holder of this Security must follow to exercise these rights. The Company will publish the notice in a daily newspaper of national circulation. To exercise the right to have the Company purchase this Security, the Holder of this Security must execute and deliver an "Option to Elect Repayment" substantially in the form set forth below (the "Purchase Notice") to the Trustee or to any other office or agency maintained for that purpose of the Holder's exercise of 17 that right before the close of business on the Business Day immediately prior to the Purchase Date. The Holder of this Security may withdraw any Purchase Notice by written notice of withdrawal delivered to the Trustee or to any other office or agency maintained for such purpose no later than the Business Day immediately prior to the Purchase Date. The notice of withdrawal must state the principal amount and the certificate number of this Security and the principal amount, if any, of this Security which remains subject to the original Purchase Notice. The Option to Elect Repayment form shall be as follows: OPTION TO ELECT REPAYMENT (1) Pursuant to Article Thirteen of the Indenture, the undersigned hereby elects to have this Security repurchased by the Company. (2) The undersigned hereby directs the Trustee or the Company to pay it or ___________________________ an amount in cash equal to 101% of the principal amount to be repurchased (as set forth below), plus interest accrued to the Repurchase Date, as provided in the Indenture. Dated: ________________ ------------------------------ ------------------------------ Signature(s) Signature(s) must be guaranteed by an Eligible Guarantor Institution with membership in an approved signature guarantee program pursuant to Rule 17Ad-15 under the Securities Exchange Act of 1934. ------------------------------ Signature Guaranteed Certificate No.__________________ Principal amount to be repurchased (must be an integral multiple of $1,000): $------------------ 18 Remaining principal amount following such repurchase: $------------------ NOTICE: The signature to the foregoing Election must correspond to the Name as written upon the face of this Security in every particular, without alteration or any change whatsoever. Payment of the Purchase Price for this Security for which a Purchase Notice has been delivered and not withdrawn is conditioned on delivery of this Security (together with any endorsements) to the Trustee or to any other office or agency maintained for that purpose, at any time (whether prior to, on or after the Purchase Date) after delivery of the Purchase Notice. Payment of the Purchase Price for this Security will be made promptly following the later of the Purchase Date or the time of delivery of this Security. If the Company deposits with the Trustee, in accordance with the Indenture, money sufficient to pay the Purchase Price of this Security on the Purchase Date, then, on and after the Purchase Date, this Security will cease to be outstanding and interest on this Security will cease to accrue, whether or not this Security is delivered to the trustee or to any other office or agency maintained for that purpose, and all other rights of the Holder will terminate (other than the right to receive the Purchase Price on delivery of this Security). In accordance with the Indenture, this Security may not be purchased pursuant to a Change in Control Triggering Event if there has occurred and is continuing an Event of Default other than a default in the payment of the Purchase Price relating to this Security. For purposes of determining the right of the Holder to require the Company to purchase all or any part of this Security as set forth above, the following terms shall have the meanings set forth next to each of them below: "Change in Control" means, with regard to the Company, the occurrence of: (i) any consolidation, share exchange or merger regarding the Company in which the Company is not the continuing or surviving corporation or where the Company's voting stock would be converted into cash, securities or other property, other than a merger in which the holders of the Company's voting stock immediately prior to the merger have the same or greater direct or indirect proportionate ownership of the surviving corporation's voting stock immediately after the merger as they had of the Company's voting stock immediately before the merger, or (ii) any Person, including Affiliates of the Company (but not including the Company, any Subsidiary, employee stock ownership plans or employee benefit plans of the Company or any of the Subsidiaries), filing a Schedule 13D or 14D-1 (or any successor schedule, form or report under the Exchange Act) disclosing that such 19 a Person has become the beneficial owner of 50% or more of the Company's voting stock. "Change in Control Triggering Event" means the occurrence of both a Change in Control and a Rating Decline. "Investment Grade" means a rating of BBB- or higher by Standard & Poor's Corporation ("S&P") and Baa3 or higher by Moody's Investors Service ("Moody's") or the equivalent of those ratings by either of those Rating Agencies. "Rating Agency" means (i) S&P, (ii) Moody's, or (iii) if S&P or Moody's or both shall not make a rating of the Securities publicly available, a nationally recognized securities rating agency or agencies selected by the Company. "Rating Category" means (i) regarding S&P, any of the following categories: BB, B, CCC, CC, C and D (or equivalent successor categories), (ii) regarding Moody's, any of the following categories: Ba, B, Caa, Ca and C (or equivalent successor categories), and (iii) the equivalent of any such category of S&P or Moody's used by another Rating Agency. Gradations within Rating Categories (+ and - for S&P; 1, 2 and 3 for Moody's; or the equivalent gradations for another Rating Agency) will be taken into account in determining whether the rating of the Securities has decreased by one or more gradations. For example, regarding S&P, a decline in rating from BB+ to BB will constitute a decrease of one gradation. "Rating Date" means the date that is 30 days prior to the earliest of (i) a Change in Control, (ii) public notice of a Change in Control and (iii) public notice of the intention by the Company to effect a Change in Control. "Rating Decline" means the occurrence on or within 30 days after the earlier of the date of public notice of the occurrence of a Change in Control or the public announcement of the Company's intention to effect a Change in Control (which period will be extended so long as the rating of the Securities is under publicly announced consideration for possible downgrade by any of the Rating Agencies) of: (i) If the Securities are rated by either Moody's or S&P on the Rating Date as Investment Grade, the rating of the Securities by both Moody's and S&P below Investment Grade, or (ii) If the Securities are rated below Investment Grade by both Moody's and S&P on the Rating Date, the rating of the Securities is decreased by either Moody's or S&P by one or more gradations (including gradations within Rating Categories as well as between Rating Categories). If the Company or any Subsidiary sells, assigns, transfers, leases or otherwise disposes of all or substantially all of its assets other than in the ordinary course of its 20 business or any capital stock or other equity interests of any Subsidiary held by the Company or any Subsidiary (a "Subsidiary Sale"), and the Company applies the proceeds therefrom to the redemption of the Securities in accordance with Section 801(b)(B)(3) of the Indenture (a "Redemption Determination") the Holder of this Security will have the right, at the Holder's option, subject to the terms and conditions of the Indenture, to require the Company to purchase all or any part of this Security (so long as the principal amount is $1,000 or an integral multiple of $1,000) on the date that is 30 Business Days after the Company's determination to offer to redeem Securities (the "Redemption Date"). If a Holder exercises this option, the Company will purchase this Security for cash equal to 100% of the principal amount of this Security plus any interest accrued and unpaid on this Security through the Redemption Date (the "Redemption Purchase Price"). Within 15 Business Days after a Redemption Determination, the Company is obligated to mail to the Trustee and to the Holder of this Security at such Holder's address as shown in the Securities Register (and to beneficial owners as required by applicable law) a notice regarding the Subsidiary Sale. The notice shall state, among other things, (i) the date by which the Holder must give the Redemption Purchase Notice (defined below); (ii) the Redemption Purchase Price; (iii) the Redemption Date; (iv) the name and address of the Trustee and of any other office or agency maintained for the purpose of the surrender of this Security for purchase; (v) the procedures for withdrawing a Redemption Purchase Notice; and (vi) the procedures that the Holder of this Security must follow to exercise these rights. The Company will publish the notice in a daily newspaper of national circulation. To exercise the right to have the Company purchase this Security, the Holder of this Security must execute and deliver an "Option to Elect Repayment" substantially in the form set forth below (the "Redemption Purchase Notice") to the Trustee or to any other office or agency maintained for that purpose of the Holder's exercise of that right before the close of business on the Business Day immediately prior to the Redemption Date. The Holder of this Security may withdraw any Redemption Purchase Notice by written notice of withdrawal delivered to the Trustee or to any other office or agency maintained for such purpose no later than the Business Day immediately prior to the Redemption Date. The notice of withdrawal must state the principal amount and the certificate number of this Security and the principal amount, if any, of this Security which remains subject to the original Redemption Purchase Notice. The Option to Elect Repayment form shall be as follows: OPTION TO ELECT REPAYMENT (1) Pursuant to Article Eight of the Indenture, the undersigned hereby elects to have this Security repurchased by the Company. 21 (2) The undersigned hereby directs the Trustee or the Company to pay it or ___________________________ an amount in cash equal to 100% of the principal amount to be repurchased (as set forth below), plus interest accrued to the Redemption Date, as provided in the Indenture. Dated: ________________ ------------------------------ ------------------------------ Signature(s) Signature(s) must be guaranteed by an Eligible Guarantor Institution with membership in an approved signature guarantee program pursuant to Rule 17Ad-15 under the Securities Exchange Act of 1934. ------------------------------ Signature Guaranteed Certificate No.__________________ Principal amount to be repurchased (must be an integral multiple of $1,000): $------------------ Remaining principal amount following such repurchase: $------------------ NOTICE: The signature to the foregoing Election must correspond to the Name as written upon the face of this Security in every particular, without alteration or any change whatsoever. If the aggregate principal amount of Securities surrendered for redemption by the Holders thereof in connection with a redemption following a Subsidiary Sale exceeds the amount of net proceeds received by the Company or any of its Subsidiaries in connection with such Subsidiary Sale, the Trustee shall select the Securities or portions thereof to be purchased on a pro rata basis, based on the principal amount of the Securities tendered, with such adjustments as may be deemed 22 appropriate by the Trustee, so that only Securities (or portions thereof) in denominations of $1,000 or integral multiples thereof shall be purchased. Payment of the Redemption Purchase Price for this Security for which a Redemption Purchase Notice has been delivered and not withdrawn is conditioned on delivery of this Security (together with any endorsements) to the Trustee or to any other office or agency maintained for that purpose, at any time (whether prior to, on or after the Redemption Purchase Date) after delivery of the Redemption Purchase Notice. Payment of the Redemption Purchase Price for this Security will be made promptly following the later of the Redemption Date or the time of delivery of this Security. If the Company deposits with the Trustee, in accordance with the Indenture, money sufficient to pay the Redemption Price of this Security on the Redemption Date, then, on and after the Redemption Date, this Security will cease to be outstanding and interest on this Security will cease to accrue, whether or not this Security is delivered to the trustee or to any other office or agency maintained for that purpose, and all other rights of the Holder will terminate (other than the right to receive the Redemption Purchase Price on delivery of this Security). In accordance with the Indenture, this Security may not be purchased pursuant to a Subsidiary Sale if there has occurred and is continuing an Event of Default other than a default in the payment of the Redemption Purchase Price relating to this Security. If an Event of Default with respect to Securities of this series shall occur and be continuing, the principal of the Securities of this series may be declared due and payable in the manner and with the effect provided in the Indenture. The Indenture contains provisions for Defeasance at any time of the entire indebtedness of this Security or certain restrictive covenants and Events of Default with respect to this Security, in each case upon compliance with certain conditions set forth in the Indenture. The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Securities of each series to be affected under the Indenture at any time by the Company and the Trustee with the consent of the Holders of a majority in principal amount of the Securities at the time Outstanding of each series to be affected. The Indenture also contains provisions permitting the Holders of specified percentages in principal amount of the Securities of each series at the time Outstanding, on behalf of the Holders of all Securities of such series, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future Holders of this Security and of any Security 23 issued upon the registration of transfer hereof or in exchange hereof or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security. As provided in and subject to the provisions of the Indenture, the Holder of this Security shall not have the right to institute any proceeding with respect to the Indenture or for the appointment of a receiver or trustee or for any other remedy thereunder, unless such Holder shall have previously given the Trustee written notice of a continuing Event of Default with respect to the Securities of this series, the Holders of not less than 25% in principal amount of the Securities of this series at the time Outstanding shall have made written request to the Trustee to institute proceedings in respect of such Event of Default as Trustee and offered the Trustee indemnity satisfactory to the Trustee in its reasonable judgment, and the Trustee shall not have received from the Holders of a majority in principal amount of Securities of this series at the time Outstanding a direction inconsistent with such request, and shall have failed to institute any such proceeding, for 60 days after receipt of such notice, request and offer of indemnity. The foregoing shall not apply to any suit instituted by the Holder of this Security for the enforcement of any payment of principal hereof or any premium or interest hereon on or after the respective due dates expressed herein. No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and any premium and interest on this Security at the times, place and rate, and in the coin or currency, herein prescribed. As provided in the Indenture and subject to certain limitations therein set forth and set forth herein, the transfer of this Security is registerable in the Security Register, upon surrender of this Security for registration of transfer at the office or agency of the Company in any place where the principal of and any premium and interest on this Security are payable, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Securities of this series and of like tenor, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees. The Securities of this series are issuable only in registered form without coupons in denominations of $1,000.00 and any integral multiple thereof. As provided in the Indenture and subject to certain limitations therein set forth, Securities of this series are exchangeable for a like aggregate principal amount of Securities of this series and of like tenor of a different authorized denomination, as requested by the Holder surrendering the same. 24 No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. Prior to due presentment of this Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary. All terms used in this Security which are defined in the Indenture or the First Supplemental Indenture shall have the meanings assigned to them in the Indenture or the First Supplemental Indenture, as the case may be. THE INDENTURE, THE FIRST SUPPLEMENTAL INDENTURE AND THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS. This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture. Dated: March 2, 1999 THE FIRST NATIONAL BANK OF CHICAGO, As Trustee By:__________________________________ Authorized Signatory ............................ All acts and things necessary to make the Notes of each such series, when executed by the Company and authenticated and delivered by or on behalf of the Trustee as provided in this Supplemental Indenture, the valid, binding and legal obligations of the Company, and to constitute these presents a valid indenture and agreement according to its terms, have been done and performed; NOW, THEREFORE, in order to declare the terms and conditions upon which the Notes of each such series are executed, registered, authenticated, issued and delivered, and in consideration of the premises, of the purchase of such Notes by the Holders thereof and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, it 25 is mutually covenanted and agreed, for the equal and proportionate benefit of all Holders from time to time of such Notes, as follows: ARTICLE I CREATION AND AUTHORIZATION OF SERIES There is hereby created and authorized (i) the series of Notes entitled the "7.875% Senior Notes Due 2004," which shall be a series in an aggregate principal amount of $125,000,000, and (ii) the series of Notes entitled the "8.125% Senior Notes Due 2009," which shall be a series in an aggregate principal amount of $175,000,000. ARTICLE II SPECIAL PROVISIONS APPLICABLE TO SUCH SERIES (a) Except as otherwise set forth herein and in the Notes, the terms of the Notes shall be as set forth in the Indenture, including those made part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S. Code 77aaa-77bbbb), as amended, as in effect on the date of the Indenture (the "Act"). Holders are referred to the Indenture and the Act for a statement of such terms. (b) The 2004 Notes shall include all of the terms in the form of the 2004 Notes contained in the Recitals to this First Supplemental Indenture. The 2009 Notes shall include all of the terms in the form of the 2009 Notes contained in the Recitals to this First Supplemental Indenture. (c) The aggregate principal amount of the Notes may be changed from time to time pursuant to Section 301(2) of the Indenture. All the Notes need not be issued at the same time and this series of the Notes may be reopened at any time, without the consent of any Holder, for issuances of additional Notes. (d) The provisions of Section 403 of the Indenture entitled "Defeasance and Discharge of Securities of Any Series" shall be applicable to the Notes. (e) The provisions of Section 1008 of the Indenture entitled "Defeasance of Certain Obligations" shall be applicable to the Notes. (f) The provisions of Article Twelve of the Indenture entitled "Sinking Funds" shall not be applicable to the Notes. (g) The paying agent for the Notes issued pursuant hereto shall be The First National Bank of Chicago at its principal corporate trust office located at One First National Plaza, Suite 26 0126, Chicago, Illinois 60670-0126 or at its offices located at 14 Wall Street, 8th Floor, New York, New York 10005. [Signature page follows] 27 IN WITNESS WHEREOF, the parties hereto have caused this First Supplemental Indenture to be duly executed, and their respective corporate seals to be hereunto affixed and attested, all as of the day and year first above written. OAKWOOD HOMES CORPORATION By: /s/ Robert A. Smith ---------------------------- Name: Robert A. Smith Title: Executive Vice President [CORPORATE SEAL] Attest: By: /s/ Douglas R. Muir ------------------------------ Name: Douglas R. Muir Title: Secretary THE FIRST NATIONAL BANK OF CHICAGO, Trustee By: /s/ Jeffrey L. Kinney ---------------------------- Name: Jeffrey L. Kinney Title: Vice President [CORPORATE SEAL] EX-4 6 EXHIBIT 4.3 EXHIBIT 4.3 AGREEMENT TO FURNISH COPIES OF INSTRUMENTS WITH RESPECT TO LONG-TERM DEBT The Registrant has entered into certain agreements with respect to long-term indebtedness which do not exceed ten percent of the total assets of the Registrant and its subsidiaries on a consolidated basis. The Registrant hereby agrees to furnish a copy of such agreements to the Commission upon request of the Commission. OAKWOOD HOMES CORPORATION By: s/ Robert A. Smith ------------------------ Robert A. Smith Executive Vice President 26 EX-27 7 FDS -- OAKWOOD 2ND QUARTER 10-Q WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE. Exhibit 27
5 This schedule contains summary financial information extracted from (A) the Registrant's consolidated financial statements for the quarter ended March 31, 1999 filed as part of the Registrants Form 10-Q for the quarter ended March 31, 1999 and is qualified in its entirety by reference to such (b) financial statements. 1,000 U.S. Dollars 6-MOS SEP-30-1999 OCT-01-1998 MAR-31-1999 1.000 22,997 0 673,186 3,745 421,618 0 329,770 79,513 1,524,245 509,167 363,091 0 0 23,532 548,132 1,524,245 726,909 785,732 515,185 731,813 0 1,961 17,315 34,643 13,511 0 0 0 0 21,132 0.46 0.45
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