iv
INDENTURE
AMERICAN CHURCH MORTGAGE COMPANY, as obligor
Series B Secured Investor Certificates
$23,000,000
THE HERRING NATIONAL BANK,
a national banking association, as trustee
Dated as of September 28, 2004
TABLE OF CONTENTS
CROSS-REFERENCE TABLE....................................................................................IV
ARTICLE I. DEFINITIONS AND INCORPORATION BY REFERENCE................................................1
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SECTION 1.1 DEFINITIONS...............................................................................1
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SECTION 1.2 OTHER DEFINITIONS.........................................................................4
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SECTION 1.3 INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.........................................5
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SECTION 1.4 RULES OF CONSTRUCTION.....................................................................5
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ARTICLE II. THE SECURITIES............................................................................5
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SECTION 2.1 UNLIMITED AMOUNT; ACCOUNTS; INTEREST; MATURITY............................................5
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SECTION 2.2 TRANSACTION STATEMENT; RESCISSION.........................................................6
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SECTION 2.3 REGISTRAR AND PAYING AGENT................................................................7
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SECTION 2.4 DEPOSIT OF PRINCIPAL AND INTEREST WITH PAYING AGENT.......................................7
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SECTION 2.5 LIST OF HOLDERS...........................................................................7
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SECTION 2.6 TRANSFER AND EXCHANGE.....................................................................7
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SECTION 2.7 PAYMENT OF PRINCIPAL AND INTEREST; PRINCIPAL AND INTEREST RIGHTS PRESERVED................8
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SECTION 2.8 RESERVED..................................................................................9
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SECTION 2.9 OUTSTANDING SECURITIES....................................................................9
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SECTION 2.10 TREASURY SECURITIES.......................................................................9
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SECTION 2.11 RESERVED..................................................................................9
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SECTION 2.12 RESERVED.................................................................................10
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SECTION 2.13 DEFAULTED INTEREST.......................................................................10
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SECTION 2.14 BOOK-ENTRY REGISTRATION..................................................................10
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SECTION 2.15 INITIAL AND PERIODIC STATEMENTS..........................................................11
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ARTICLE III. REDEMPTION...............................................................................11
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SECTION 3.1 REDEMPTION OF SECURITIES AT THE COMPANY'S ELECTION.......................................11
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SECTION 3.2 REDEMPTION OF SECURITIES AT THE HOLDER'S ELECTION........................................12
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SECTION 3.3 OFFER TO REDEEM SECURITIES UPON CHANGE OF THE COMPANY'S ADVISOR..........................13
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ARTICLE IV. COVENANTS................................................................................13
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SECTION 4.1 PAYMENT OF SECURITIES....................................................................13
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SECTION 4.2 MAINTENANCE OF OFFICE OR AGENCY..........................................................13
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SECTION 4.3 SEC REPORTS AND OTHER REPORTS............................................................14
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SECTION 4.4 COMPLIANCE CERTIFICATE...................................................................14
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SECTION 4.5 STAY, EXTENSION AND USURY LAWS...........................................................15
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SECTION 4.6 LIQUIDATION..............................................................................15
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SECTION 4.7 FINANCIAL COVENANTS......................................................................15
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SECTION 4.8 RESTRICTIONS ON DIVIDENDS AND CERTAIN TRANSACTIONS WITH AFFILIATES.......................16
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SECTION 4.9 COLLATERAL...............................................................................16
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SECTION 4.10 APPOINTMENT AS ATTORNEY-IN-FACT..........................................................18
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ARTICLE V. SUCCESSORS...............................................................................19
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SECTION 5.1 WHEN THE COMPANY MAY MERGE, ETC..........................................................19
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SECTION 5.2 SUCCESSOR CORPORATION SUBSTITUTED........................................................20
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ARTICLE VI. DEFAULTS AND REMEDIES....................................................................20
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SECTION 6.1 EVENTS OF DEFAULT........................................................................20
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SECTION 6.2 ACCELERATION.............................................................................21
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SECTION 6.3 OTHER REMEDIES...........................................................................22
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SECTION 6.4 WAIVER OF PAST DEFAULTS..................................................................22
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SECTION 6.5 CONTROL BY MAJORITY......................................................................23
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SECTION 6.6 LIMITATION ON SUITS......................................................................23
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SECTION 6.7 RIGHTS OF HOLDERS TO RECEIVE PAYMENT.....................................................23
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SECTION 6.8 COLLECTION SUIT BY TRUSTEE...............................................................23
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SECTION 6.9 TRUSTEE MAY FILE PROOFS OF CLAIM.........................................................24
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SECTION 6.10 PRIORITIES...............................................................................24
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SECTION 6.11 UNDERTAKING FOR COSTS....................................................................25
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ARTICLE VII. TRUSTEE..................................................................................25
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SECTION 7.1 DUTIES OF TRUSTEE........................................................................25
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SECTION 7.2 RIGHTS OF TRUSTEE........................................................................26
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SECTION 7.3 INDIVIDUAL RIGHTS OF TRUSTEE.............................................................27
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SECTION 7.4 TRUSTEE'S DISCLAIMER.....................................................................27
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SECTION 7.5 NOTICE OF DEFAULTS.......................................................................27
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SECTION 7.6 REPORTS BY TRUSTEE TO HOLDERS............................................................27
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SECTION 7.7 COMPENSATION AND INDEMNITY...............................................................28
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SECTION 7.8 REPLACEMENT OF TRUSTEE...................................................................29
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SECTION 7.9 SUCCESSOR TRUSTEE BY MERGER, ETC.........................................................30
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SECTION 7.10 ELIGIBILITY; DISQUALIFICATION............................................................30
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SECTION 7.11 PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY........................................30
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ARTICLE VIII. DISCHARGE OF INDENTURE...................................................................30
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SECTION 8.1 TERMINATION OF COMPANY'S OBLIGATIONS.....................................................30
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SECTION 8.2 APPLICATION OF TRUST MONEY...............................................................31
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SECTION 8.3 REPAYMENT TO COMPANY.....................................................................31
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SECTION 8.4 REINSTATEMENT............................................................................32
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ARTICLE IX. AMENDMENTS...............................................................................32
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SECTION 9.1 WITHOUT CONSENT OF HOLDERS...............................................................32
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SECTION 9.2 WITH CONSENT OF HOLDERS..................................................................33
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SECTION 9.3 COMPLIANCE WITH TRUST INDENTURE ACT......................................................34
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SECTION 9.4 REVOCATION AND EFFECT OF CONSENTS........................................................34
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SECTION 9.5 NOTATION ON OR EXCHANGE OF SECURITIES....................................................34
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SECTION 9.6 TRUSTEE TO SIGN AMENDMENTS, ETC..........................................................34
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ARTICLE X. MISCELLANEOUS............................................................................35
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SECTION 10.1 TRUST INDENTURE ACT CONTROLS.............................................................35
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SECTION 10.2 NOTICES..................................................................................35
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SECTION 10.3 COMMUNICATION BY HOLDERS WITH OTHER HOLDERS..............................................36
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ii
SECTION 10.4 CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.......................................36
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SECTION 10.5 STATEMENTS REQUIRED IN CERTIFICATE OR OPINION............................................36
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SECTION 10.6 RULES BY TRUSTEE AND AGENTS..............................................................37
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SECTION 10.7 LEGAL HOLIDAYS...........................................................................37
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SECTION 10.8 NO RECOURSE AGAINST OTHERS...............................................................37
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SECTION 10.9 DUPLICATE ORIGINALS......................................................................37
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SECTION 10.10 GOVERNING LAW............................................................................37
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SECTION 10.11 NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS............................................37
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SECTION 10.12 SUCCESSORS...............................................................................37
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SECTION 10.13 SEVERABILITY.............................................................................38
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SECTION 10.14 COUNTERPART ORIGINALS....................................................................38
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SECTION 10.15 TABLE OF CONTENTS, HEADINGS, ETC.........................................................38
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SIGNATURES .........................................................................................39
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iii
CROSS-REFERENCE TABLE
*Trust Indenture Act Section Indenture Section
310(a)(1)......................................................................................................7.10
(a)(2).........................................................................................................7.10
(a)(3).........................................................................................................N.A.
(a)(4).........................................................................................................N.A.
(a)(5).........................................................................................................N.A.
(b).......................................................................................................7.8; 7.10
(c)............................................................................................................N.A.
311(a).........................................................................................................7.11
(b)............................................................................................................7.11
(c)............................................................................................................N.A.
312(a)..........................................................................................................2.5
(b)............................................................................................................11.3
(c)............................................................................................................11.3
313(a)..........................................................................................................7.6
(b)(1).........................................................................................................N.A.
(b)(2)..........................................................................................................7.6
(c).......................................................................................................7.6; 11.2
(d).............................................................................................................7.6
314(a)...............................................................................................4.3; 4.4; 11.2
(b)..........................................................................................................4.9(c)
(c)(1).........................................................................................................11.4
(c)(2).........................................................................................................11.4
(c)(3).........................................................................................................N.A.
(d)............................................................................................................N.A.
(e)............................................................................................................11.5
(f)............................................................................................................N.A.
315(a).......................................................................................................7.1(b)
(b).......................................................................................................7.5; 11.2
(c)..........................................................................................................7.1(a)
(d)..........................................................................................................7.1(c)
(e)............................................................................................................6.11
316(a)(last sentence)..........................................................................................2.10
(a)(1)(A).......................................................................................................6.5
(a)(1)(B).......................................................................................................6.4
(a)(2).........................................................................................................N.A.
(b).............................................................................................................6.7
(c)............................................................................................................N.A.
317(a)(1).......................................................................................................6.8
(a)(2)..........................................................................................................6.9
(b).............................................................................................................2.4
318(a).........................................................................................................11.1
N.A. means not applicable
* This Cross Reference Table is not part of the Indenture
iv
INDENTURE
THIS INDENTURE is hereby entered into as of September 28, 2004, by and
between American Church Mortgage Company, a Minnesota corporation (the
"Company"), and The Herring National Bank, a national banking association, as
trustee (the "Trustee").
The Company and the Trustee agree as follows for the benefit of each other
and for the equal and ratable benefit of the Holders of the Series B Secured
Investor Certificates of the Company issued pursuant to the Company's
registration statement on Form S-11 (Reg. No. 333-116919) declared effective by
the Securities and Exchange Commission on or about September 28, 2004 (the
"Registration Statement"), with a certain amount of such Series B Investor
Certificates reserved for previously registered Series A Investor Certificates
which will be eligible for rollover renewal (the "Renewable Securities"):
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.1 Definitions.
"Account" means the record of beneficial ownership of a Security maintained
by the Registrar.
"Advisor" means Church Loan Advisors, Inc., the Company's advisor.
"Advisory Agreement" means the Company's advisory agreement with the
Advisor pursuant to which the Advisor manages the business and affairs of the
Company, as the same has been or may be amended from time to time.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" (including, with correlative meanings, the terms "controlling,"
"controlled by" and "under common control with"), as used with respect to any
Person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of such Person,
whether through the ownership of voting securities, by agreement or otherwise.
"Agent" means any Registrar, Paying Agent or co-registrar of the
Securities.
"Board of Directors" means the Board of Directors of the Company or any
authorized committee of the Board of Directors.
"Business Day" means any day other than a Legal Holiday.
"Change of Control" means such time as any Person is or becomes the
beneficial owner, as defined in Rule 13d-3 of the Exchange Act of shares of the
Company's capital stock entitling such Person to exercise 50% or more of the
total voting power of all shares of the Company's
2
capital stock entitled to vote in elections of directors (or the capital stock
of any successor of the Company in the case of a merger or transfer of all or
substantially all of the Company's assets).
"Company" means American Church Mortgage Company, unless and until replaced
by a successor in accordance with Article V hereof and thereafter means such
successor.
"Corporate Trust Office" means the office of the Trustee at which the
corporate trust business of the Trustee shall, at any particular time, be
principally administered, which office is, at the date as of which this
Indenture is originally dated, located at 1001 South Harrison Street, Amarillo,
Texas 79101, Attention: Mozelle Hedrick, Senior Vice President.
"Default" means any event that is or with the passage of time or the giving
of notice or both would be an Event of Default.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Fiscal Year" means initially a December 31 year end.
"GAAP" means, as of any date, generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as approved by a significant segment of the
accounting profession, which are in effect from time to time.
"Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness.
"Holder" means a Person in whose name a Security is registered.
"Indebtedness" means, with respect to any Person, any indebtedness of such
Person, whether or not contingent, in respect of borrowed money or evidenced by
bonds, notes, debentures or similar instruments or letters of credit (or
reimbursement agreements in respect thereof) or representing the balance
deferred and unpaid of the purchase price of any property (including capital
Lease obligations) or representing any hedging obligations, except any such
balance that constitutes an accrued expense or a trade payable, if and to the
extent any of the foregoing indebtedness (other than letters of credit and
hedging obligations) would appear as a liability upon a balance sheet of such
Person prepared in accordance with GAAP, and also includes, to the extent not
otherwise included, (a) the Guarantee of items that would be included within
this definition, and (b) liability for items that would arise by operation of a
Person's status as a general partner of a partnership.
"Indenture" means, this Indenture as amended or supplemented from time to
time.
"Interest Accrual Period" means, as to each Security, the period from the
later of the Issue Date of such Security or the day after the last Payment Date
upon which an interest
3
payment was made until the following Payment Date during which interest accrues
on each Security with respect to any Payment Date.
"Issue Date" means, with respect to any Security, the date on which such
Security is deemed registered on the books and records of the Registrar, which
shall be the date the Company accepts funds for the purchase of the Security if
such funds are received prior to 12:01 p.m. (Central Time) on a Business Day, or
if such funds are received after such time, on the next Business Day.
"Maturity Date" means, with respect to any Security, the date on which
the principal of such Security becomes due and payable as therein provided.
"Maturity Record Date" means, with respect to any Security, as of 11:59
p.m. on the date fifteen (15) days prior to the Maturity Date or Redemption Date
applicable to such Security.
"Obligations" means any principal, interest (including Post-Petition
Interest), penalties, fees, indemnifications, reimbursements, damages and other
liabilities payable under the documentation governing any Indebtedness.
"Officer" means the Chairman of the Board or principal executive officer of
the Company, the President or operating officer of the Company, the Chief
Financial Officer or principal financial officer of the Company, the Treasurer,
any Assistant Treasurer, Controller or principal officer of the Company,
Secretary or any Vice-President of the Company.
"Officer's Certificate" means a certificate signed by an Officer.
"Opinion of Counsel" means an opinion from legal counsel who is reasonably
acceptable to the Trustee. The counsel may be an employee of or counsel to the
Company or the Trustee.
"Payment Date" means the last day of each calendar quarter, or if such day
is not a Business Day, the Business Day immediately following such day and, with
respect to a specific Security, the Maturity Date or Redemption Date of such
Security.
"Person" means any individual, corporation, partnership, joint venture,
association, joint stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Post-Petition Interest" means interest accruing after the commencement of
any bankruptcy or insolvency case or proceeding with respect to the Company or
any receivership, liquidation, reorganization or other similar case or
proceeding in connection therewith, at the rate applicable to such Indebtedness,
whether or not such interest is an allowable claim in any such proceeding.
"Prospectus" means the prospectus relating to the Securities, including any
prospectus supplement, forming part of the Registration Statement.
"Redemption Date" has the meaning given in Article III hereof.
3
"Redemption Price" means, with respect to any Security to be redeemed, the
principal amount of such Security plus the interest accrued but unpaid during
the Interest Accrual Period up to the Redemption Date for such security.
"Regular Record Date" means, with respect to each Payment Date, as of 11:59
p.m. on the date fifteen (15) days prior to such Payment Date.
"Responsible Officer" when used with respect to the Trustee, means any
officer in its Corporate Trust Office, or any other assistant officer of the
Trustee in its Corporate Trust Office customarily performing functions similar
to those performed by the Persons who at the time shall be such officers,
respectively, or to whom any corporate trust matter is referred because of his
or her knowledge of and familiarity with the particular subject.
"SEC" means the U.S. Securities and Exchange Commission.
"Security" or "Securities" means, the Company's Series B Secured Investor
Certificates issued under this Indenture pursuant to the Registration Statement.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. ss.ss. 77aaa-77bbbb)
as in effect on the date on which this Indenture is qualified under the TIA.
"Trustee" means The Herring National Bank, a national banking association,
until a successor replaces it in accordance with the applicable provisions of
this Indenture and thereafter means the successor serving hereunder.
"U.S. Government Obligations" means direct obligations of the United States
of America, or any agency or instrumentality thereof for the payment of which
the full faith and credit of the United States of America is pledged.
Section 1.2 Other Definitions.
Term Defined in Section
"Bankruptcy Law"..................................6.1
"Collateral"...................................4.7(b)
"Custodian".......................................6.1
"Event of Default"................................6.1
"Legal Holiday"..................................10.7
"Paying Agent"....................................2.3
"Registrar".......................................2.3
"Registration Statement".................Introduction
"Securities Register".............................2.3
"Transfer".....................................4.9(h)
4
Section 1.3 Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture. The following
TIA terms used in this Indenture have the following meanings:
"indenture securities" means the Securities;
"indenture security holder" means any Holder of the Securities;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee;
"obligor" on the Securities means the Company or any successor obligor
upon the Securities.
All other terms used in this Indenture that are defined by the TIA, defined
by TIA reference to another statute or defined by SEC rule under the TIA have
the meanings so assigned to them. Section 1.4 Rules of Construction.
Unless the context otherwise requires: (a) a term has the meaning assigned
to it; (b) an accounting term not otherwise defined has the meaning assigned to
it in accordance with GAAP; (c) references to GAAP, as of any date, shall mean
GAAP in effect in the United States as of such date and consistently applied;
(d) "or" is not exclusive; (e) words in the singular include the plural, and in
the plural include the singular; and (f) provisions apply to successive events
and transactions.
ARTICLE II.
THE SECURITIES
Section 2.1 Unlimited Amount; Accounts; Interest; Maturity.
(a) The outstanding aggregate principal amount of Securities outstanding
at any time is limited to $23,000,000, with up to $3 million of such
amount to be reserved for rollover renewals of the Renewable
Securities, provided, however, that the Company and the Trustee may,
without the consent of any Holder, increase such aggregate principal
amount of Securities which may be outstanding at any time. The
Securities may be subject to notations, legends or endorsements
required by law, stock exchange rule, agreements to which the Company
is subject or usage.
(b) Except as provided in Section 2.14 hereof, each Security shall not be
evidenced by a promissory note. The record of beneficial ownership of
the Securities shall be maintained and updated by the Registrar
through the establishment and maintenance of Accounts. Each Security
shall be in such denominations as may
5
be designated from time to time by the Company. Each Security, except
for the Renewable Securities, shall have a term of not less than eight
(8) years and not greater than fifteen (15) years as shall be
designated by the Holder at the time of purchase, subject to the
Company's acceptance thereof.
(c) Each Security shall bear interest from and commencing on its Issue
Date at such rate of interest as the Company shall determine from time
to time, as set forth in the Prospectus. The interest rate of each
Security will be fixed for the term of such Security upon issuance,
subject to change upon the renewal of the Security at maturity.
Interest on the Securities will not compound. The Company shall pay
the Holders interest on the Securities quarterly on the last day of
each quarter during which each such Security is outstanding. To the
extent any applicable interest payment date is not a Business Day,
then interest shall be paid instead on the next succeeding Business
Day.
(d) The Company will give each Holder of a Security a written notice
approximately thirty (30) but not less than ten (10) days prior to the
Maturity Date of the Security held by such Holder reminding such
Holder of the Maturity Date of the Security. If the Company is
offering renewal of Securities, the Company will provide such Holder
with a schedule of interest rates then in effect and a form for the
Holder to use to notify the Company whether the Holder wishes to renew
the Security. To be effective, a notice of renewal must be returned to
the Company (or its agent) not later than the Maturity Date of the
maturing Security. Unless a Security is properly renewed, no interest
will accrue after the Maturity Date for such Security. If a Security
is not renewed, the Company shall pay the Holder the principal amount
on the maturing Security, together with accrued but unpaid interest
thereon, within ten (10) days after the Maturity Date.
e) If the Company is offering renewal of Securities separate from the
Renewable Securities, and a Holder renews a Security, then interest
shall continue to accrue from the first day of such renewal term at
the applicable rate then in effect. Such Security, as renewed, will
continue in all its provisions, including provisions relating to
payment.
(f) The terms and provisions contained in the Securities shall constitute,
and are hereby expressly made, a part of this Indenture and to the
extent applicable, the Company and the Trustee, by their execution and
delivery of this Indenture, and the Holders by accepting the
Securities, expressly agree to such terms and provisions and to be
bound thereby. In case of a conflict, the provisions of this Indenture
shall control.
Section 2.2 Transaction Statement; Rescission.
(a) A Security shall not be validly issued until a written confirmation of
the acceptance of a Subscription in the form of a transaction
statement executed by a duly authorized officer or agent of the
Company is sent to the purchaser thereof
6
and an Account is established by the Registrar in the name of such
purchaser or transferee.
(b) For a period of five (5) days following delivery of a Prospectus to a
Holder in regard to issuance of a Security at the time of original
purchase, but not upon transfer, the Holder shall have the right to
rescind the Security and receive payment of the principal by
presenting a written request to the Company. Payment of the principal
shall be made within ten (10) days of the Company's receipt of such
request from the Holder. No interest shall be paid on any such
rescinded Security.
Section 2.3 Registrar and Paying Agent.
The Trustee shall maintain (i) an office or agency where Securities may be
presented for registration of transfer or for exchange ("Registrar") and (ii) an
office or agency where Securities may be presented for payment ("Paying Agent").
The Registrar shall keep a register of the Securities and of their transfer and
exchange, which shall include the name, address for notices and payment of
principal and interest to the Holder, principal amount and interest rate for
each Security, and such other information as the Company shall request that the
Registrar maintain with regard to Holders or the Securities (the "Securities
Register"). The Registrar shall not be required to maintain any records beyond
those (i) specifically required by the terms of this Indenture, (ii) reasonably
requested in writing by the Company and (iii) and as are or become required to
be maintained by applicable law.
Section 2.4 Deposit of Principal and Interest With Paying Agent.
Prior to each Payment Date, the Company shall deposit with the Paying Agent
sufficient funds to pay principal and interest then becoming due and payable in
cash.
Section 2.5 List of Holders.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
Holders and shall otherwise comply with TIA ss. 312(a). If the Trustee is not
the Registrar, the Registrar shall furnish to the Trustee each quarter during
the term of this Indenture and at such other times as the Trustee may request in
writing, a list in such form and as of such date as the Trustee may reasonably
require of the names, addresses and Account balances of Holders, and the
aggregate principal amount outstanding and the Company shall otherwise comply
with TIA ss. 312(a).
Section 2.6 Transfer and Exchange.
(a) The Securities are not negotiable instruments and cannot be
transferred without the prior written consent of the Company. Requests
to the Registrar for the transfer of any Account maintained for the
benefit of a Holder shall be:
(1) made to the Company in writing on a form supplied by the Company;
7
(2) duly executed by the current holder of the Account, as reflected
on the Registrar's records as of the date of receipt of such
transfer request, or his attorney duly authorized in writing;
(3) accompanied by the written consent of the Company to the
transfer; and
(4) if requested by the Company, an opinion of Holder's counsel
(which counsel shall be reasonably acceptable to the Company)
that the transfer does not violate any applicable securities laws
and/or a signature guarantee.
(b) Upon transfer of a Security, the Company will provide the new
registered owner of the Security with a transaction statement which
will evidence the transfer of the Account in the Securities Register.
(c) The Company or the Trustee may assess service charges to a Holder for
any registration or transfer or exchange, and the Company may require
payment of a sum sufficient to cover any transfer tax or similar
governmental charge payable in connection therewith (other than any
such transfer taxes or similar governmental charge payable upon
exchange pursuant to Section 9.5 hereof).
(d) The Company shall treat the individual or entity listed on each
Account maintained by the Registrar as the absolute owner of the
Security represented thereby for purposes of receiving payments
thereon and for all other purposes whatsoever.
Section 2.7 Payment of Principal and Interest; Principal and Interest
Rights Preserved.
(a) Each Security shall accrue interest at the rate specified for such
Security in the Securities Register and such interest shall be payable
on each Payment Date following the Issue Date for such Security, until
the principal thereof has been paid. Any installment of interest
payable on a Security that is caused to be punctually paid or duly
provided for by the Company on the applicable Payment Date shall be
paid by the Paying Agent to the Holder in whose name such Security is
registered in the Securities Register on the applicable Regular Record
Date with respect to the Securities outstanding, by the Paying Agent
mailing a check for the amount of such interest payment to the
Holder's address as it appears in the Securities Register on such
Regular Record Date. The Paying Agent shall not be required to make
any payment or partial payment of principal if the Paying Agent does
not have funds on deposit and received from the Company in an amount
sufficient to pay Holders amounts due to them on a Payment Date, but
shall make full payments of interest to the extent that sufficient
funds are on deposit to make such payments. Any installment of
interest not punctually paid or duly provided for shall be payable in
the manner and to the Holders as specified in Section 2.13 hereof.
(b) Each of the Securities shall have stated maturities of principal as
shall be indicated on such Securities and as set forth in the
Securities Register. The
8
principal of each Security and any accrued but unpaid interest thereon
shall be paid in full no later than five (5) days following the
Maturity Date thereof unless the term of such Security is extended
pursuant to Section 2.1 hereof or such Security becomes due and
payable at an earlier date by acceleration, redemption or otherwise.
Notwithstanding any of the foregoing provisions with respect to
payments of principal of and interest on the Securities, if the
Securities have become or been declared due and payable following an
Event of Default, then payments of principal of and interest on the
Securities shall be made in accordance with Article 6 hereof.
(c) All computations of interest due with respect to any Security shall be
made, unless otherwise specified in the Security, based upon a 365 day
year.
(d) In the event that any check mailed to a Holder for the purpose of
payment of principal or interest is returned to the Paying Agent for
want of an accurate address or is not presented for payment, the funds
represented thereby shall be held and disbursed as provided in Section
8.3 hereof.
(e) The Company or the Trustee may withhold from any payment of interest
amounts required by the Internal Revenue Service or other taxing
authority to be so withheld, including, without limitation, upon the
failure of any Holder to provide the Company or the Trustee with his
or her tax identification number.
Section 2.8 Reserved.
Section 2.9 Outstanding Securities.
(a) The Securities outstanding at any time are the outstanding balances of
all Accounts representing the Securities maintained by the Company or
such other entity as the Company designated as Registrar.
(b) If the principal amount of any Security is considered paid under
Section 4.1 hereof, it ceases to be outstanding and interest on it
ceases to accrue.
(c) Subject to Section 2.10 hereof, a Security does not cease to be
outstanding because the Company or an Affiliate of the Company holds
the Security.
Section 2.10 Treasury Securities.
In determining whether the holders of the required principal amount of
Securities have concurred in any direction, waiver or consent, Securities owned
by the Company or any Affiliate of the Company shall be considered as though not
outstanding, except that for purposes of determining whether the Trustee shall
be protected in relying on any such direction, waiver or consent, only
Securities that a Responsible Officer of the Trustee actually knows to be so
owned shall be so disregarded.
Section 2.11 Reserved.
9
Section 2.12 Reserved.
Section 2.13 Defaulted Interest.
If the Company defaults in a payment of interest or principal on any
Security, it shall pay the defaulted interest or principal plus, to the extent
lawful, any interest payable thereon at the rate provided in the Security, to
the Holder of such Security as of a subsequent special record date, which date
shall be at the earliest practicable date, but in all events within fifteen (15)
days following the scheduled Payment Date of the defaulted interest. The Company
shall, with written notification to the Trustee, fix or cause to be fixed each
such special record date and payment date. Prior to any such special record
date, the Company (or the Trustee, in the name of and at the expense of the
Company) shall mail to Holder(s) a notice that states the special record date,
the related payment date and the amount of principal, interest and additional
accrued interest to be paid. Section 2.14 Book-Entry Registration.
(a) The Registrar shall maintain a book-entry registration and transfer
system through the establishment of Accounts for the benefit of
Holders of Securities as the sole method of recording the ownership
and transfer of ownership interests in such Securities. The registered
owners of the Accounts established by the Registrar in connection with
the purchase or transfer of the Securities shall be deemed to be the
Holders of the Securities outstanding for all purposes under this
Indenture. The Company shall promptly notify (or cause an agent to
notify) the Registrar of the acceptance of a subscriber's order to
purchase a Security and the Registrar shall credit its book-entry
registration and transfer system to the Account of each Security
purchaser, the principal amount of such Security owned of record by
the purchaser.
(b) Book-entry accounts representing interests in the Securities shall not
be exchangeable for Securities fully registered in the names of the
Holders thereof unless (a) the Company at its option advises the
Trustee in writing of its election to terminate the book-entry system,
or (b) after the occurrence of any Event of Default, Holders of a
majority of the Securities then outstanding (as determined based upon
the latest statement provided to the Trustee pursuant to Section
4.3(d) hereof) advise the Trustee in writing that the continuation of
the book-entry system is no longer in the best interests of such
Holders and the Trustee notifies all Holders of the Securities, as the
case may be, of such event and the availability of definitive notes to
the Holders of Securities, as the case may be, requesting such notes
in definitive form.
(c) The Registrar shall issue fully registered Securities if required by
the administrator of an Individual Retirement Account or similar tax
deferred account in which the Holder has acquired Securities. The
Registrar may charge a Holder a $10 fee per Securities issuance.
10
Section 2.15 Initial and Periodic Statements.
(a) The Trustee shall provide an initial book entry acknowledgement to
initial purchasers and registered owners, within thirty (30) business
days of the purchase, transfer or pledge of a Security.
(b) The Trustee shall send each Holder of a Security (and each registered
pledgee) via U.S. mail not later than ninety (90) Business Days after
each year end in which such Holder had an outstanding balance in such
holder's Account, a statement which indicates as of the year end
preceding the mailing: (i) the balance of such Account; (ii) interest
credited; (iii) withdrawals made, if any; (iv) the interest rate
payable on such Security; and (v) any other information required on
IRS Form 1099. The Trustee or the Company shall provide additional
statements as the Holders of the Securities may reasonably request
from time to time. The Company or the Trustee may charge such Holders
requesting such statements a fee to cover the charges incurred by the
Company or the Trustee in providing such additional statements.
ARTICLE III.
REDEMPTION
Section 3.1 Redemption of Securities at the Company's Election.
(a) The Company may redeem all, but not less than all, of the Securities
upon the occurrence of a Change of Control by providing thirty (30)
days written notice to the Holders thereof. Each such notice shall
include the Redemption Date and amount of interest and principal to be
paid to the Holder on the Redemption Date. No interest shall accrue on
a Security to be redeemed under this Section 3.1 for any period of
time after the Redemption Date for such Security, provided that the
Company has timely tendered the Redemption Price to the Holder.
(b) The Company may at any time and from time to time redeem a sufficient
amount of Securities as is necessary to bring the Company into
compliance with the provision of its Bylaws that limit the aggregate
amount of debt that the Company may have outstanding at any time. The
Company may redeem any of the Securities pursuant to this paragraph
and need not redeem the Securities on a pro rata or other basis. The
Company shall provide the Holders of any Securities to be redeemed
pursuant to the paragraph with notice thereof, which notice shall set
the Redemption Date and set forth the Redemption Price for the
Securities to be redeemed.
(c) The Company shall have no mandatory redemption or sinking fund
obligations with respect to any of the Securities.
(d) In its sole discretion, the Company may offer certain Holders the
ability to extend the maturity of an existing Security
11
through the redemption of the current Security and the issuance of a
new Security. This redemption option shall not be subject to the
thirty (30) day notice of redemption described in this section.
Section 3.2 Redemption of Securities at the Holder's Election.
(a) Subject to paragraph (b) below, within forty-five (45) days of the
death of a Holder who is a natural person, the personal representative
of the estate of such Holder may require the Company to redeem, in
whole and not in part, without penalty, the Security held by such
Holder, by delivering to the Company a certified copy of the Holder's
death certificate and an irrevocable written election (a "Redemption
Election") requiring the Company to make such redemption. In the event
a Security is held jointly by two or more natural persons (including
without limitation joint owners that are not legally married), the
Company shall redeem such Security upon proper notice if either of
joint Holders of such Security has died. If the Security is held by a
Holder who is not a natural person, such as a trust, partnership,
corporation or other similar entity, the right of redemption upon
death does not apply, except in the case of the death of a natural
person who is the beneficial owner of Securities held of record in an
individual retirement account.
(b) The Company will not be required to redeem Securities pursuant to
Redemption Elections received pursuant to paragraph (a) above to the
extent that such redemptions exceed $25,000 in the aggregate in any
calendar quarter. For the purposes of such limit on aggregate
Redemption Elections, Redemption Elections will be honored in the
order received, and any Redemption Election not paid in the quarter
received due to this limitation will be honored in the subsequent
quarter, to the extent possible, as such limit on aggregate Redemption
Elections will also apply to the subsequent quarter.
(c) Subject to Section 3.2(b), upon receipt of a Redemption Election
pursuant to Section 3.2(a), the Company shall designate the Redemption
Date for the Security to be redeemed, which Redemption Date shall be
no more than ten (10) days after the Company's receipt of the
Redemption Election, and shall pay the Redemption Price to the estate
of the Holder in accordance with the provisions set forth in Section
2.7 hereof. No interest shall accrue on a Security to be redeemed
under this Section 3.2 for any period of time after the Redemption
Date for such Security, provided that the Company has timely tendered
the Redemption Price to the estate of the Holder. Securities for which
redemption is delayed pursuant to Section 3.2(b) will continue to
accrue interest until the Company establishes a Redemption Date
therefor and the Security is redeemed.
(d) The Company may at its option and in its sole discretion and from time
to time accept for redemption Securities tendered to it by Holders and
may impose such conditions thereon as it deems appropriate, including
an early redemption penalty with regard thereto.
12
Section 3.3 Offer to Redeem Securities Upon Change of the Company's Advisor.
(a) If the Company terminates the Advisory Agreement for any reason, the
Company shall provide all Holders with a notice thereof within ten
(10) days of such termination, pursuant to which the Company shall
offer to redeem all of the Securities outstanding as of the date of
the termination of the Advisory Agreement. Each Holder shall have
thirty (30) days from the date of such notice to provide the Company
with a Redemption Election with regard to the Securities owned by such
Holder, upon timely receipt of which the Company shall become bound to
redeem the electing Holder's Securities. This Section 3.3 shall not
apply in the case that the Advisor terminates or elects not to renew
the Advisory Agreement.
(b) Upon receipt of a Redemption Election pursuant to Section 3.3(a), the
Company shall designate the Redemption Date for each Security to be
redeemed, which Redemption Date shall be no more than ten (10) days
after the Company's receipt of the Redemption Election, and shall pay
the Redemption Price to the Holder in accordance with the provisions
set forth in Section 2.7 hereof. No interest shall accrue on a
Security to be redeemed under this Section 3.3 for any period of time
after the Redemption Date for such Security, provided that the Company
has timely tendered the Redemption Price to the Holder.
ARTICLE IV.
COVENANTS
Section 4.1 Payment of Securities.
(a) Principal and interest (to the extent such interest is paid in cash)
shall be considered paid on the date due if the Paying Agent, if other
than the Company, holds at least one Business Day before that date
money deposited by the Company in immediately available funds and
designated for and sufficient to pay all principal and interest then
due. Such Paying Agent shall return to the Company, no later than five
(5) days following the date of payment, any money (including accrued
interest) that exceeds such amount of principal and interest paid on
the Securities in accordance with this Section 4. 1.
(b) To the extent lawful, the Company shall pay interest (including
Post-Petition Interest in any proceeding under any Bankruptcy Law) on
overdue principal at the rate borne by the Securities; it shall pay
interest (including Post-Petition Interest in any proceeding under any
Bankruptcy Law) on overdue installments of interest (without regard to
any applicable grace period) at the same rate.
Section 4.2 Maintenance of Office or Agency.
(a) The Company will maintain an office or agency (which may be an office
of the Trustee) where Securities may be surrendered for registration
of transfer or exchange and where notices and demands to or upon the
Company in respect of
13
the Securities and this Indenture may be served. The Company will give
prompt written notice to the Trustee of the location, and any change
in the location, of such office or agency. If at any time the Company
shall fail to maintain any such required office or agency or shall
fail to furnish the Trustee with the address thereof, such
presentations, surrenders, notices and demands may be made or served
at the Corporate Trust Office of the Trustee.
(b) The Company may also from time to time designate one or more other
offices or agencies where the Securities may be presented or
surrendered for any or all such purposes and may from time to time
rescind such designations. The Company will give prompt written notice
to the Trustee of any such designation or rescission and of any change
in the location of any such other office or agency.
(c) The Company hereby designates its office as one such office of the
Company.
Section 4.3 SEC Reports and Other Reports.
(a) The Company shall file with the Trustee, within fifteen (15) days
after filing with the SEC, copies of the annual reports and of the
information, documents, and other reports (or copies of such portions
of any of the foregoing as the SEC may by rules and regulations
prescribe) that the Company is required to file with the SEC pursuant
to Sections 13 or 15(d) of the Exchange Act. If the Company is not
subject to the requirements of such Sections 13 or 15(d) of the
Exchange Act, the Company shall continue to file with the SEC and the
Trustee on the same timely basis such reports, information and other
documents as it would file if it were subject to the requirements of
Sections 13 or 15(d) of the Exchange Act. The Company shall also
comply with the provisions of TIAss. 314(a). Notwithstanding anything
contrary herein the Trustee shall have no duty to review such
documents for purposes of determining compliance with any provisions
of the Indenture.
(b) Upon the request of any Holder, the Company shall provide such Holder
with a copy of the Company's annual report on Form 10-K or quarterly
reports on Form 10-Q without charge. The Company will not be required
to provide Holders with any other reports or financial information or
to provide reports to Holders absent a specific request therefor.
Section 4.4 Compliance Certificate.
(a) The Company shall deliver to the Trustee, within one hundred twenty
(120) days after the end of each Fiscal Year, an Officer's Certificate
stating that a review of the activities of the Company during the
preceding fiscal year has been made under the supervision of the
signing Officer(s) with a view to determining whether the Company has
kept, observed, performed and fulfilled its obligations under this
Indenture, and further stating that to the best of his or her
knowledge the Company has kept, observed, performed and fulfilled each
and every covenant contained in this Indenture and is not in default
in the performance or observance
14
of any of the terms, provisions and conditions hereof (or, if a
Default or Event of Default shall have occurred, describing all such
Defaults or Events of Default of which he may have knowledge and what
action each is taking or proposes to take with respect thereto) and
that to the best of his or her knowledge no event has occurred and
remains in existence by reason of which payments on account of the
principal of or interest, if any, on the Securities are prohibited or
if such event has occurred, a description of the event and what action
each is taking or proposes to take with respect thereto. The foregoing
Officer's Certificate shall state whether the promissory notes
constituting part of the Colleratal are valid and binding obligations
of the obligor thereof and whether any such promissory note has
experienced an event of default thereon during the period covered by
the Officer's Certificate.
(b) The Company will, so long as any of the Securities are outstanding,
deliver to the Trustee, forthwith upon any Officer becoming aware of
any Default or Event of Default, an Officer's Certificate specifying
such Default or Event of Default and what action the Company is taking
or proposes to take with respect thereto.
Section 4.5 Stay, Extension and Usury Laws.
The Company covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay, extension or usury law wherever
enacted, now or at any time hereafter in force, which may affect the covenants
or the performance of this Indenture. The Company (to the extent that it may
lawfully do so) hereby expressly waives all beneficial advantage of any such
law, and covenants that it will not, by resort to any such law, hinder, delay or
impede the execution of any power herein granted to the Trustee, but will suffer
and permit the execution of every such power as though no such law has been
enacted.
Section 4.6 Liquidation.
Neither the Board of Directors nor the shareholders of the Company shall
adopt a plan of liquidation that provides for, contemplates or the effectuation
of which is preceded by (a) the sale, lease, conveyance or other disposition of
all or substantially all of the assets of the Company otherwise than
substantially as an entirety (Section 5.1 of this Indenture being the Section
hereof which governs any such sale, lease, conveyance or other disposition
substantially as an entirety) and (b) the distribution of all or substantially
all of the proceeds of such sale, lease, conveyance or other disposition and of
the remaining assets of the Company to the holders of capital stock of the
Company, unless the Company, prior to making any liquidating distribution
pursuant to such plan, makes provision for the satisfaction of the Company's
Obligations hereunder and under the Securities as to the payment of principal
and interest.
Section 4.7 Financial Covenants
The Company covenants that, so long as any of the Securities are
outstanding: (i) the Company will maintain a positive net worth, which includes
all equity held by the Company's common and preferred stockholders and the
Company's subordinated debt, and (ii) the
15
Company's long term liabilities will not exceed the Company's shareholders'
equity at the end of any fiscal year.
Section 4.8 Restrictions on Dividends and Certain Transactions with
Affiliates
(a) The Company covenants that, so long as any of the Securities are
outstanding, it shall not declare or pay any dividends or other
payments of cash or other property to its common or preferred
stockholders unless no Default or Event of Default with respect to the
Securities then exists or would exist immediately following the
declaration or payment of such dividend or other payment.
(b) The Company covenants that, so long as any of the Securities are
outstanding, it shall not guarantee, endorse or otherwise become
liable for any obligations of any of the Company's Affiliates.
Section 4.9 Collateral
(a) The Company shall from time to time assign, deliver and pledge to the
Trustee, as security for the payment of principal and interest on the
Securities, mortgage-secured promissory notes or debt securities
(including, but not limited to, church bonds) issued by churches and
other nonprofit religious organizations evidencing loans or
investments made by the Company which at all times shall have an
aggregate unpaid principal balance of at least 100% of the outstanding
principal amount of the Securities (the "Collateral"). Except as
described in Section 4.9(g), the Company will not be obligated to
assign the mortgages securing the Collateral to the Trustee. If any of
the promissory notes or debt securities constituting part of the
Collateral shall be in default for in excess of ninety (90) days, the
Company shall provide replacement Collateral for such promissory note
or debt security sufficient to maintain such 100% coverage without
regard to such defaulted promissory note or debt security. The Company
shall deliver to the Trustee such documents as the Trustee deems
necessary to create a perfected first lien security interest in the
Collateral under the applicable provisions of the Uniform Commercial
Code. If an Event of Default has occurred, the Company shall deliver
to the Trustee such documents as the Trustee deems necessary to enable
the Trustee to exercise its remedies with regard to the Collateral,
including those necessary for the Trustee to obtain direct payments
under the pledged promissory notes and church bonds or to sell or
transfer such promissory notes and church bonds to third parties.
(b) At any time and from time to time, upon the written request of the
Trustee, and at the sole expense of the Company, the Company will
promptly and duly execute and deliver, or will promptly cause to
executed or delivered, such further instruments and documents and take
such further action as the Trustee may reasonably request for the
purpose of obtaining or preserving the full benefits of Collateral,
including, without limitation, the filing of any financing or
continuation statements under the Uniform Commercial Code in effect in
any jurisdiction. The Company also hereby authorizes the Trustee to
file any such
16
financing or continuation statement without the signature of the
Company to the extent permitted by applicable law.
(c) The Company shall furnish the following to the Trustee in connection
with its pledge of the Collateral to the Trustee:
(1) Upon delivery of Collateral, an Opinion of Counsel to the effect
that all necessary action has been taken to create and perfect a
first lien and security interest in favor of the Trustee in the
pledged promissory notes.
(2) A UCC-1 financing statement or equivalent recordable form.
(3) At least annually, an Opinion of Counsel to the effect that all
necessary action has been taken to maintain a first lien and
security interest in favor of the Trustee in the pledged
promissory notes or stating that no such action is necessary.
(d) In connection with any release or substitution of Collateral assigned
to the Trustee under Section 4.9(a), the Company will, subject to
Section 4.9(e), deliver to the Trustee the certificate or opinion, if
any, required by Section 314(d) of the Trust Indenture Act as to the
fair value of any Collateral to be released, dated as of a date not
more than sixty (60) calendar days prior to the date of release.
(e) Notwithstanding anything contained in this Indenture to the contrary,
the provisions of 4.9(d) will not be applicable to any release or
substitution of Collateral provided that the release and substitution
was performed in or a result of changes in the Company's properties
arising in the ordinary course of the Company's business and the
aggregate unpaid principal balance of the Collateral after the release
or substitution and giving effect to additional Collateral assigned to
the Trustee contemporaneously therewith was at least 100% of the
outstanding principal amount of the Securities. The Company will
deliver to the Trustee semi-annually an Officer's Certificate
certifying that all releases and substitutions of Collateral pursuant
to this provision during the immediately proceeding six months were in
compliance with this subsection.
(f) The Company shall not change its name or corporate structure or change
the jurisdiction under which it is incorporated or organized without
first giving the Trustee at least thirty (30) days prior written
notice thereof and shall have delivered to the Trustee all Uniform
Commercial Code financing statements and amendments thereto as the
Trustee shall request and taken all other actions deemed necessary by
the Trustee to continue its perfected status in the Collateral with
same or better priority.
(g) Upon the request of the Trustee where there is a continuing Event of
Default, the Company shall assign to the Trustee such mortgages
securing the promissory notes constituting part of Collateral as are
identified by the Trustee, in its discretion.
17
(h) The Company covenants that, so long as any of the Securities are
outstanding, the Company will not Transfer any part of the Collateral.
For purposes of this subsection, the term "Transfer" means a sale,
assignment, transfer or other disposition (whether voluntary or by
operation of law) of, or the granting or creating of a lien,
encumbrance or security interest in, any of the Collateral; provided,
that the term "Transfer" does not include (i) a sale or disposition of
any of the Collateral which is contemporaneously replaced by other
promissory notes or debt securities that are otherwise eligible to
constitute part of the Collateral and where the 100% Collateral
coverage requirement is at all times met; or (ii) the creation of an
involuntary lien against the Collateral that is released or discharged
of record or otherwise remedied within sixty (60) days of creation.
Section 4.10 Appointment as Attorney-in-Fact.
(a) The Company hereby irrevocably constitutes and appoints the Trustee
and any officer or agent thereof, with full power of substitution, as
its true and lawful attorney-in-fact with full irrevocable power and
authority in the place and stead of the Company and in the name of the
Company or in its own name, from time to time in the Trustee's
discretion, for the purpose of carrying out the terms of this
Indenture relating to the Collateral, to take any and all appropriate
action and to execute any and all documents and instruments which may
be necessary or desirable to accomplish the purposes of this Indenture
as they relate to the Collateral and the Trustee's rights and powers
with regard thereto; provided that Trustee hereby agrees that it shall
not exercise its rights as attorney-in-fact unless an Event of Default
shall have occurred. Without limiting the generality of the foregoing,
the Company hereby gives the Trustee the power and right, on behalf of
the Company, without assent by, but with notice to, the Company, if an
Event of Default shall have occurred and be continuing, to do the
following:
(1) in the name of the Company or its own name, or otherwise, to take
possession of and endorse and collect any checks, drafts, notes,
acceptances or other instruments for the payment of moneys due
under any mortgage insurance or church bond or with respect to
any other Collateral and to file any claim or to take any other
action or proceeding in any court of law or equity or otherwise
deemed appropriate by the Trustee for the purpose of collecting
any and all such moneys due under any such mortgage insurance or
church bond or with respect to any other Collateral whenever
payable;
(2) to pay or discharge taxes and liens levied or placed on or
threatened against the Collateral;
(3) (A) to direct any party liable for any payment under any
Collateral to make payment of any and all moneys due or to become
due thereunder directly to the Trustee or as the Trustee shall
direct; (B) to ask or demand for, collect, receive payment of and
receipt for, any and all moneys, claims and other amounts due or
to become due at any time in respect of or
18
arising out of any Collateral; (C) to sign and endorse any
invoices, assignments, verifications, notices and other documents
in connection with any of the Collateral; (D) to commence and
prosecute any suits, actions or proceedings at law or in equity
in any court of competent jurisdiction to collect the Collateral
or any thereof and to enforce any other right in respect of any
Collateral; (E) to defend any suit, action or proceeding brought
against the Company with respect to any Collateral; (F) to
settle, compromise or adjust any suit, action or proceeding
described in clause (E) above and, in connection therewith, to
give such discharges or releases as the Trustee may deem
appropriate; and (G) generally, to sell, transfer, pledge and
make any agreement with respect to or otherwise deal with any of
the Collateral as fully and completely as though the Trustee were
the absolute owner thereof for all purposes, and to do, at the
Trustee's option and the Company's expense, at any time, and from
time to time, all acts and things which the Trustee deems
necessary to protect, preserve or realize upon the Collateral and
the Trustee's liens thereon and to effect the intent of this Loan
Agreement, all as fully and effectively as the Company might do;
and
(4) to execute in the name and file on behalf of the Company
assignments of mortgages securing the promissory notes
constituting part of Collateral where there is a continuing Event
of Default.
The Company hereby ratifies all that said attorneys shall lawfully do or
cause to be done by virtue hereof. This power of attorney is a power coupled
with an interest and shall be irrevocable. (b) The Company also authorizes the
Trustee, at any time and from time to time, to execute any endorsements,
assignments or other instruments of conveyance or transfer with respect to the
Collateral.
(c) The powers conferred on the Trustee are solely to protect the
Trustee's interests in the Collateral and shall not impose any
duty upon the Trustee to exercise any such powers. The Trustee
shall be accountable only for amounts that it actually receives
as a result of the exercise of such powers, and neither the
Trustee nor any of its officers, directors, or employees shall be
responsible to the Company for any act or failure to act
hereunder, except for its own gross negligence or willful
misconduct.
ARTICLE V.
SUCCESSORS
Section 5.1 When the Company May Merge, etc.
(a) The Company may not consolidate or merge with or into (whether or
not the Company is the surviving corporation), or sell, assign,
transfer, lease, convey or otherwise dispose of all or
substantially all of its properties or assets in one or
19
more related transactions to another corporation, Person or
entity unless (i) the Company is the surviving corporation or the
entity or the Person formed by or surviving any such
consolidation or merger (if other than the Company) or to which
such sale, assignment, transfer, lease, conveyance or other
disposition shall have been made is a corporation organized or
existing under the laws of the United States, any state thereof
or the District of Columbia; (ii) the entity or Person formed by
or surviving any such consolidation or merger (if other than the
Company) or the entity or Person to which such sale, assignment,
transfer, lease, conveyance or other disposition will have been
made assumes all the obligations of the Company by execution and
deliver of a supplemental indenture in a form reasonably
satisfactory to the Trustee; and (iii) immediately after such
transaction no Default or Event of Default exists.
(b) The Company shall deliver to the Trustee prior to the
consummation of the proposed transaction an Officer's Certificate
to the foregoing effect and an Opinion of Counsel stating that
the proposed transaction and such supplemental indenture comply
with this Indenture. The Trustee shall be entitled to
conclusively rely upon such Officer's Certificate and Opinion of
Counsel.
Section 5.2 Successor Corporation Substituted.
Upon any consolidation or merger, or any sale, lease, conveyance or other
disposition of all or substantially all of the assets of the Company in
accordance with Section 5.1, the successor corporation formed by such
consolidation or into or with which the Company, is merged or to which such
sale, lease, conveyance or other disposition is made shall succeed to, and be
substituted for, and may exercise every right and power of, the Company under
this Indenture with the same effect as if such successor Person has been named
as the Company herein; provided, however, that the Company shall not be released
or discharged from the obligation to pay the principal of or interest on the
Securities.
ARTICLE VI.
DEFAULTS AND REMEDIES
Section 6.1 Events of Default.
An "Event of Default" occurs if:
(a) the Company defaults in the payment of interest on a Security
when the same becomes due and payable and the Default continues
for a period of thirty (30) days;
(b) the Company defaults in the payment of the principal of any
Security when the same becomes due and payable at maturity, upon
a required redemption or otherwise, and the Default continues for
a period of thirty (30) days;
20
(c) the Company fails to observe or perform any covenant, condition
or agreement on the part of the Company to be observed or
performed pursuant to Section 4.6 or 5.1 hereof;
(d) the Company defaults in its obligations described in clause (b)
or (c) of Section 4.9 and such default continues for a period of
sixty (60) days;
(e) the Company fails to comply with any of its other agreements or
covenants in, or provisions of, the Securities or this Indenture
and the Default continues for the period and after the notice
specified below;
(f) the Company pursuant to or within the meaning of any Bankruptcy
Law (i) commences a voluntary case; (ii) consents to the entry of
an order for relief against it in an involuntary case; (iii)
consents to the appointment of a Custodian of it or for all or
substantially all of its property; (iv) makes a general
assignment for the benefit of its creditors; or (v) admits in
writing its inability to pay debts as the same become due; or
(g) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that (i) is for relief against the Company in
an involuntary case; (ii) appoints a Custodian of the Company or
for all or substantially all of its property; (iii) orders the
liquidation of the Company, and the order or decree remains
unstayed and in effect for one hundred twenty (120) consecutive
days.
The term "Bankruptcy Law" means Title 11, U.S. Code or any similar Federal
or state law for the relief of debtors. The term "Custodian" means any receiver,
trustee, assignee, liquidator or similar official under any Bankruptcy Law.
A Default under clause (e) of this Section 6.1 is not an Event of Default
until the Trustee or the Holders of at least 25% in principal amount of the then
outstanding Securities notify the Company of the Default and the Company does
not cure the Default or such Default is not waived within thirty (30) days after
receipt of the notice. The notice must specify the Default, demand that it be
remedied and state that the notice is a "Notice of Default."
Section 6.2 Acceleration.
If an Event of Default (other than an Event of Default specified in clauses
(f) or (g) of Section 6.1) occurs and is continuing, the Trustee by notice to
the Company or the Holders of at least 25% in principal amount of the then
outstanding Securities by written notice to the Company and the Trustee may
declare the unpaid principal of and any accrued interest on all the Securities
to be due and payable. Upon such declaration the principal and interest shall be
due and payable immediately. If an Event of Default specified in clause (f) or
(g) of Section 6.1 occurs, such an amount shall ipso facto become and be
immediately due and payable without any declaration or other act on the part of
the Trustee or any Holder. The Trustee, or the Holders of a majority in
principal amount of the then outstanding Securities by written notice to the
Trustee, may rescind an acceleration and its consequences if the rescission
would not conflict with any judgment or decree and if all existing Events of
Default (except nonpayment of principal or interest that has become due solely
because of the acceleration) have been cured or waived.
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Section 6.3 Other Remedies.
(a) If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy to collect the payment of principal
or interest on the Securities or to enforce the performance of
any provision of the Securities or this Indenture, including,
without limitations, all rights and remedies available to a
secured party under the Uniform Commercial Code. The Trustee may
maintain a proceeding even if it does not possess any of the
Securities or does not produce any of them in the proceeding.
Without limiting the generality of the foregoing, the Trustee
without demand of performance or other demand, presentment,
protest, advertisement or notice of any kind (except any notice
required by law referred to below) to or upon the Company or any
other Person (each and all of which demands, presentments,
protests, advertisements and notices are hereby waived), may in
such circumstances forthwith collect, receive, appropriate and
realize upon the Collateral, or any part thereof, and/or may
forthwith sell, lease, assign, give option or options to
purchase, or otherwise dispose of and deliver the Collateral or
any part thereof (or contract to do any of the foregoing), in one
or more parcels or as an entirety at public or private sale or
sales, at any exchange, broker's board or office of the Trustee
or elsewhere upon such terms and conditions as it may deem
advisable and at such prices as it may deem best, for cash or on
credit or for future delivery without assumption of any credit
risk. The Trustee shall have the right upon any such public sale
or sales, and, to the extent permitted by law, upon any such
private sale or sales, to purchase the whole or any part of the
Collateral so sold, free of any right or equity of redemption in
the Company, which right or equity is hereby waived or released.
The Company further agrees, at the Trustee's request, to assemble
the Collateral and make it available to the Trustee at places
which the Trustee shall reasonably select, whether at the
Company's premises or elsewhere. If any notice of a proposed sale
or other disposition of Collateral shall be required by law, such
notice shall be deemed reasonable and proper if given at least
ten (10) days before such sale or other disposition.
(b) A delay or omission by the Trustee or any Holder in exercising
any right or remedy accruing upon an Event of Default shall not
impair the right or remedy or constitute a waiver of or
acquiescence in the Event of Default. All remedies are cumulative
to the extent permitted by law.
Section 6.4 Waiver of Past Defaults.
The Trustee may waive any past Default or Event of Default without the
consent of the Holders, provided that such Default is wholly cured. Holders of a
majority in principal amount of the then outstanding Securities by notice to the
Trustee may waive an existing Default or Event of Default and its consequences,
except a continuing Default or Event of Default in the payment of the principal
of or interest on any Security held by a non-consenting Holder may be waived
only upon the consent of the Holders of at least 80% of the principal amount of
the then outstanding Securities. Upon actual receipt of any such notice of
waiver by a Responsible Officer of the Trustee, such Default shall cease to
exist, and any Event of Default arising
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therefrom shall be deemed to have been cured for every purpose of this
Indenture; but no such waiver shall extend to any subsequent or other Default or
impair any right consequent thereon.
Section 6.5 Control by Majority.
The Holders of a majority in principal amount of the then outstanding
Securities may direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee or exercising any trust or power
conferred on it, provided, that indemnification for the Trustee's fees and
expenses, in a form reasonably satisfactory to the Trustee, shall have been
provided. However, the Trustee may refuse to follow any direction that conflicts
with law or this Indenture, that the Trustee determines may be unduly
prejudicial to the rights of other Holders, or that may involve the Trustee in
personal liability.
Section 6.6 Limitation on Suits.
A Holder may pursue a remedy with respect to this Indenture or the
Securities only if:
(a) the Holder gives to the Trustee written notice of a continuing
Event of Default;
(b) the Holders of at least a majority in principal amount of the
then outstanding Securities make a written request to the Trustee
to pursue the remedy;
(c) such Holder or Holders offer and, if requested, provide to the
Trustee indemnity satisfactory to the Trustee against any loss,
liability or expense;
(d) the Trustee does not comply with the request within sixty (60)
days after receipt of the request and the offer and, if
requested, the provision of indemnity; and
(e) during such sixty (60) day period the Holders of a majority in
principal amount of the then outstanding Securities do not give
the Trustee a direction inconsistent with the request.
A Holder may not use this Indenture to prejudice the rights of another
Holder or to obtain a preference or priority over another Holder. Section 6.7
Rights of Holders to Receive Payment.
Except as provided in this Indenture, the right of any Holder of a Security
to receive payment of principal and interest on the Security, on or after the
respective due dates expressed in the Security, or to bring suit for the
enforcement of any such payment on or after such respective dates, shall not be
impaired or affected without the consent of the Holder.
Section 6.8 Collection Suit by Trustee.
If an Event of Default specified in Section 6.1 (a) or (b) occurs and is
continuing, the Trustee is authorized to recover judgment in its own name and as
trustee of an express trust against the Company for the whole amount of
principal and interest remaining unpaid on the Securities and interest on
overdue principal and, to the extent lawful, interest and such further
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amount as shall be sufficient to cover the costs and expenses of collection,
including the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel.
Section 6.9 Trustee May File Proofs of Claim.
The Trustee is authorized to file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders allowed in any judicial proceedings relative to the Company (or any
other obligor upon the Securities), its creditors or its property and shall be
entitled and empowered to collect, receive and distribute any money or other
property payable or deliverable on any such claims and any custodian in any such
judicial proceeding is hereby authorized by each Holder to make such payments to
the Trustee, and in the event that the Trustee shall consent to the making of
such payments directly to the Holders, to pay to the Trustee any amount due to
it for the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.7 hereof. To the extent that the payment of any such compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, and
any other amounts due the Trustee under Section 7.7 hereof out of the estate in
any such proceeding, shall be denied for any reason, payment of the same shall
be secured by a lien on, and shall be paid out of, any and all distributions,
dividends, money, securities and other properties which the Holders of the
Securities may be entitled to receive in such proceeding whether in liquidation
or under any plan of reorganization or arrangement or otherwise. Nothing herein
contained shall be deemed to authorize the Trustee to authorize or consent to or
accept or adopt on behalf of any 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.
Section 6.10 Priorities.
If the Trustee collects any money pursuant to this Article, it shall,
subject to the provisions of Article 10 hereof, pay out the money in the
following order:
(a) First: to the Trustee, its agents and attorneys for amounts due
under Section 7.7, including payment of all compensation,
expenses and liabilities incurred, and all advances made, if any,
by the Trustee and the costs and expenses of collection;
(b) Second: to Holders for amounts due and unpaid on the Securities
for principal, ratably, without preference or priority of any
kind, according to the amounts due and payable on the Securities
for principal;
(c) Third: to Holders for amounts due and unpaid on the Securities
interest, ratably, without preference or priority of any kind,
according to the amounts due and payable on the Securities for
interest; and
(d) Fourth: to the Company or to such party as a court of competent
jurisdiction shall direct.
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The Trustee may fix a record date and payment date for any payment to
Holders.
Section 6.11 Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as a Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section does not apply to a suit by the Trustee, a suit by a Holder
pursuant to Section 6.7, or a suit by Holders of more than 10% in principal
amount of the then outstanding Securities.
ARTICLE VII.
TRUSTEE
Section 7.1 Duties of Trustee.
(a) If an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in
it by this Indenture, and use the same degree of care and
skill in their exercise, as a reasonably prudent person would
exercise or use under the circumstances in the conduct of his
or her own affairs.
(b) Except during the continuance of an Event of Default:
(1) The duties of the Trustee shall be determined solely by the
express provisions of this Indenture and the Trustee need perform
only those duties that are specifically set forth in this
Indenture and no others, and no implied covenants or obligations
shall be read into this Indenture against the Trustee.
(2) In the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon resolutions,
statements, reports, documents, orders, certificates, opinions or
other instruments furnished to the Trustee and conforming to the
requirements of this Indenture. However, in the case of any of
the above that are specifically required to be furnished to the
Trustee pursuant to this Indenture, the Trustee shall examine
them to determine whether they substantially conform to the
requirements of this Indenture.
(c) The Trustee may not be relieved from liabilities for its own negligent
action, its own negligent failure to act, or its own willful
misconduct, except that:
(1) This paragraph does not limit the effect of paragraph (2) of this
Section.
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(2) The Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer, unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts.
(3) The Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 6.5.
(d) Whether or not therein expressly so provided, every provision of this
Indenture that in any way relates to the Trustee is subject to
paragraphs (a), (b) and (c) of this Section.
(e) No provision of this Indenture shall require the Trustee to expend or
risk its own funds or incur any liability. The Trustee may refuse to
perform any duty or exercise any right or power unless it receives
indemnity satisfactory to it against any loss, liability or expense.
(f) The Trustee shall not be liable for interest on any money received by
it except as the Trustee may agree in writing with the Company. Money
held in trust by the Trustee need not be segregated from other funds
except to the extent required by law.
Section 7.2 Rights of Trustee.
(a) The Trustee may conclusively rely upon any document believed by it to
be genuine and to have been signed or presented to it by the proper
Person. The Trustee need not investigate any fact or matter stated in
the document. The Trustee shall have no duty to inquire as to the
performance of the Issuers' covenants in Article 4. In addition, the
Trustee shall not be deemed to have knowledge of any Default or any
Event of Default except any Default or Event of Default of which the
Trustee shall have received written notification or obtained actual
knowledge.
(b) Before the Trustee acts or refrains from acting, it may require an
Officer's Certificate or an Opinion of Counsel or both. The Trustee
shall not be liable for any action it takes or omits to take in good
faith in reliance on such Officer's Certificate or Opinion of Counsel.
The Trustee may consult with counsel and the written advice of such
counsel or any Opinion of Counsel shall be full and complete
authorization and protection from liability in respect of any action
taken, suffered or omitted by it hereunder in good faith and in
reliance thereon.
(c) The Trustee may act through agents, attorneys, custodians or nominees
and shall not be responsible for the misconduct or negligence or the
supervision of any agents, attorneys, custodians or nominees appointed
by it with due care.
(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith which it believes to be authorized or within the
rights or powers conferred upon it by this Indenture.
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(e) Unless otherwise specifically provided in this Indenture, any demand,
request, direction or notice from the Company shall be sufficient if
signed by an Officer of the Company.
(f) The Trustee shall not be deemed to have notice of an Event of Default
for any purpose under this Indenture unless notified of such Event of
Default by the Company or a Holder of the Securities.
Section 7.3 Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become the owner or
pledgee of Securities and may otherwise deal with the Company or an Affiliate of
the Company with the same rights it would have if it were not Trustee. Any Agent
may do the same with like rights. However, the Trustee is subject to Sections
7.10 and 7.11.
Section 7.4 Trustee's Disclaimer.
The Trustee shall not be responsible for and makes no representation as to
the validity or adequacy of this Indenture or the Securities. It shall not be
accountable for the Company's use of the proceeds from the Securities or any
money paid to the Company or upon the Company's direction under any provision
hereof. It shall not be responsible for any statement or recital herein or any
statement in the Securities or any other document in connection with the sale of
the Securities or pursuant to this Indenture other than its certificate of
authentication.
Section 7.5 Notice of Defaults.
If a Default or Event of Default occurs and is continuing and if it is
known to a Responsible Officer of the Trustee, the Trustee shall mail to Holders
at their addresses as they appear in the Securities Register a notice of the
Default or Event of Default within ninety (90) days after it occurs or first
becomes known to the Trustee. At least five (5) Business Days prior to the
mailing of any notice to Holders under this Section 7.5, the Trustee shall
provide the Company with notice of its intent to mail such notice. Except in the
case of a Default or Event of Default in payment on any Security, the Trustee
may withhold the notice if and so long as the Responsible Officer of the Trustee
in good faith determines that withholding the notice would have no material
adverse effect on the Holders.
Section 7.6 Reports by Trustee to Holders.
(a) Within sixty (60) days after December 31 of each calendar year,
commencing December 31, 2004, the Trustee shall mail to Holders a
brief report dated as of such reporting date that complies with TIA
ss. 313(a) (but if no event described in TIA ss. 313(a) has occurred
within the 12 months preceding the reporting date, no report need be
prepared or transmitted). The Trustee also shall comply with TIA ss.
313(b). The Trustee shall also transmit by mail all reports as
required by TIA ss. 313(c).
(b) Commencing at the time this Indenture is qualified under the TIA, a
copy of each report mailed to Holders under this Section 7.6 (at the
time of its mailing to
27
Holders) shall be filed with the SEC and each stock exchange, if any,
on which the Securities are listed. The Company shall promptly notify
the Trustee if and when the Securities are listed on any stock
exchange.
Section 7.7 Compensation and Indemnity.
(a) The Company shall pay to the Trustee from time to time reasonable
compensation for its acceptance of this Indenture and its performance
of the duties and services required hereunder. The Trustee's
compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Company shall reimburse the Trustee
promptly upon request for all reasonable disbursements, advances and
expenses incurred or made by it in addition to the compensation for
its services. Such expenses shall include the reasonable compensation,
disbursements and expenses of the Trustee's agents and counsel.
(b) The Company shall indemnify the Trustee against any and all losses,
liabilities or expenses incurred by it arising out of or in connection
with the acceptance or administration of its duties under this
Indenture, except as set forth in paragraph 7.7(d) hereof. The Trustee
shall notify the Company promptly of any claim for which it may seek
indemnity. Failure by the Trustee to so notify the Company shall not
relieve the Company of its obligations hereunder, except to the extent
the Company is prejudiced thereby. The Company shall defend the claim
and the Trustee shall reasonably cooperate in such defense. The
Trustee may have separate counsel and the Company shall pay the
reasonable fees and expenses of such counsel. The Company need not pay
for any settlement made without its consent, which consent shall not
be unreasonably withheld.
(c) The obligations of the Company under this Section 7.7 shall survive
the satisfaction and discharge of this Indenture.
(d) The Company need not reimburse any expense or indemnify against any
loss or liability incurred by the Trustee through its own negligence
or bad faith.
(e) To secure the Company's payment obligations in this Section, the
Trustee shall have a lien prior to the Securities on all money or
property held or collected by the Trustee, except that held in trust
to pay principal and interest on a Payment Date scheduled to occur
within ten (10) days of the Trustee's intended exercise of such lien.
Such lien shall survive the satisfaction and discharge of this
Indenture. The Trustee shall provide the Company with notice of its
exercise of the lien provided for herein concurrently with its
exercise of such lien.
(f) When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.1(e) or (f) occurs, the expenses and
the compensation for the services are intended to constitute expenses
of administration under any Bankruptcy Law.
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Section 7.8 Replacement of Trustee.
(a) A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's
acceptance of appointment as provided in this Section 7.8.
(b) Upon appointment of a successor Trustee, the Trustee may resign and be
discharged from the trust hereby created by so notifying the Company.
The Holders of a majority in principal amount of the then outstanding
Securities may remove the Trustee by so notifying the Trustee and the
Company in writing. The Company may remove the Trustee if.
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged a bankrupt or an insolvent or an order
for relief is entered with respect to the Trustee under any
Bankruptcy Law;
(3) a Custodian or public officer takes charge of the Trustee or its
property;
(4) the Trustee becomes incapable of acting as Trustee under this
Indenture; or
(5) the Company so elects, provided such replacement Trustee is
qualified and reasonably acceptable.
(c) If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a
successor Trustee.
(d) If a successor Trustee does not take office within thirty (30) days
after notice that the Trustee has been removed, the Company may
appoint a successor Trustee.
(e) If the Trustee after written request by any Holder fails to comply
with Section 7.10, such Holder may petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a
successor Trustee.
(f) A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon the
resignation or removal of the retiring Trustee shall become effective,
and the successor Trustee shall have all the rights, powers and duties
of the Trustee under this Indenture. The successor Trustee shall mail
a notice of its succession to all Holders. The retiring Trustee shall
promptly transfer all property held by it as Trustee to the successor
Trustee, provided all sums owing to the Trustee hereunder have been
paid and subject to the lien provided for in Section 7.7.
Notwithstanding replacement of the Trustee pursuant to this Section
7.8, the Company's obligations under Section 7.7 hereof shall continue
for the benefit of the retiring Trustee.
29
Section 7.9 Successor Trustee by Merger, etc.
If the Trustee consolidates, merges or converts into, or transfers all or
substantially all of its corporate trust business to, another corporation, the
successor corporation without any further act shall be the successor Trustee.
The Trustee shall provide notice of any event described in this Section to the
Company prior to or as soon as practical after the occurrence thereof.
Section 7.10 Eligibility; Disqualification.
(a) There shall at all times be a Trustee hereunder which shall be a
corporation or association organized and doing business under the laws
of the United States of America or of any state or territory thereof
or of the District of Columbia authorized under such laws to exercise
corporate trustee power, shall be subject to supervision or
examination by Federal, state, territorial or District of Columbia
authority and shall have a combined capital and surplus of at least
$5,000,000 as set forth in its most recent published annual report of
condition.
(b) This Indenture shall always have a Trustee who satisfies the
requirements of TIAss. 310(a)(1) and (2). The Trustee is subject to
TIAss. 310(b).
Section 7.11 Preferential Collection of Claims Against Company.
The Trustee is subject to TIA ss. 311(a), excluding any creditor
relationship listed in TIA ss. 311(b). A Trustee who has resigned or been
removed shall be subject to TIA ss. 311(a) to the extent indicated therein.
ARTICLE VIII.
DISCHARGE OF INDENTURE
Section 8.1 Termination of Company's Obligations.
(a) This Indenture shall cease to be of further effect (except that the
Company's obligations under Sections 7.7 and 8.4, and the Company's,
Trustee's and Paying Agent's obligations under Section 8.3 shall
survive) when all outstanding Securities have been paid in full and
the Company has paid all sums payable by the Company hereunder. In
addition, the Company may terminate all of its obligations under this
Indenture if:
(1) the Company irrevocably deposits in trust with the Trustee or at
the option of the Trustee, with a trustee reasonably satisfactory
to the Trustee and the Company under the terms of an irrevocable
trust agreement in form and substance satisfactory to the
Trustee, money or U.S. Government Obligations sufficient to pay
principal and interest on the Securities to maturity or
redemption, as the case may be, and to pay all other sums payable
by it hereunder, provided that (i) the trustee of the irrevocable
trust shall have been irrevocably instructed to pay such money or
the proceeds of such U.S. Government Obligations to the Trustee
and (ii)
30
the Trustee shall have been irrevocably instructed to apply such
money or the proceeds of such U.S. Government Obligations to the
payment of said principal and interest with respect to the
Securities;
(2) the Company delivers to the Trustee an Officer's Certificate
stating that all conditions precedent to satisfaction and
discharge of this Indenture have been complied with; and
(3) no Event of Default or event (including such deposit) which, with
notice or lapse of time, or both, would become an Event of
Default with respect to the Securities shall have occurred and be
continuing on the date of such deposit.
Then, this Indenture shall cease to be of further effect (except as
provided in this paragraph), and the Trustee, on demand of the Company, shall
execute proper instruments acknowledging confirmation of and discharge under
this Indenture. The Company may make the deposit only if Article X hereof does
not prohibit such payment. However, the party's obligations in Sections 2.3,
2.4, 2.5, 2.6, 2.7, 4.1, 4.2, 4.3, 7.7, 7.8, 8.3 and 8.4 shall survive until the
Securities are no longer outstanding. Thereafter, only the Company's obligations
in Sections 7.7 and 8.4 and the Company's, Trustee's and Paying Agent's
obligations in Section 8.3 shall survive.
(b) After such irrevocable deposit made pursuant to this Section 8.1 and
satisfaction of the other conditions set forth herein, the Trustee
upon written request shall acknowledge in writing the discharge of the
Company's obligations under this Indenture except for those surviving
obligations specified above.
(c) In order to have money available on a payment date to pay principal or
interest on the Securities, the U.S. Government Obligations shall be
payable as to principal or interest at least one Business Day before
such payment date in such amounts as will provide the necessary money.
U.S. Government Obligations shall not be callable at the issuer's
option.
Section 8.2 Application of Trust Money.
The Trustee or a trustee satisfactory to the Trustee and the Company shall
hold in trust money or U.S. Government Obligations deposited with it pursuant to
Section 8.1. It shall apply the deposited money and the money from U.S.
Government Obligations through the Paying Agent and in accordance with this
Indenture to the payment of principal and interest on the Securities.
Section 8.3 Repayment to Company.
(a) The Trustee and the Paying Agent shall promptly pay to the Company
upon written request any excess money or securities held by them at
any time. All money deposited with the Trustee pursuant to Section 8.1
(and held by it or the Paying Agent) for the payment of Securities
subsequently converted shall be returned to the Company upon request.
31
(b) The Trustee and the Paying Agent shall pay to the Company upon written
request any money held by them for the payment of principal or
interest that remains unclaimed for two years after the right to such
money has matured; provided, however, that the Company shall cause
notice of such payment to be mailed to each Holder entitled thereto no
less than thirty (30) days prior to such repayment. After payment to
the Company, Holders entitled to the money must look to the Company
for payment as unsecured general creditors unless an abandoned
property law designates another Person. If money is delivered to the
Company pursuant to this Section 8.3(b), all liability of the Trustee
and the Paying Agent with respect to such money shall cease.
Section 8.4 Reinstatement.
If the Trustee or Paying Agent is unable to apply any money or U.S.
Government Obligations in accordance with Section 8.2 by reason of any legal
proceeding or by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application, the
Company's obligations under this Indenture and the Securities shall be revived
and reinstated as though no deposit had occurred pursuant to Section 8.1 until
such time as the Trustee or Paying Agent is permitted to apply all such money or
U.S. Government Obligations in accordance with Section 8.2; provided, however,
that if the Company has made any payment of interest on or principal of any
Securities because of the reinstatement of its obligations, the Company shall be
subrogated to the rights of the Holders of such Securities to receive such
payment, as long as no money is owed to the Trustee by the Company, from the
money or U.S. Government Obligations held by the Trustee or Paying Agent.
ARTICLE IX.
AMENDMENTS
Section 9.1 Without Consent of Holders.
The Company and the Trustee may amend this Indenture or the Securities
without the consent of any Holder:
(a) to cure any ambiguity, defect or inconsistency;
(b) to comply with Section 5.1;
(c) to make any change that would provide any additional rights or
benefits to Holders of Securities or that does not adversely affect
the legal rights hereunder of any Holder;
(d) to increase the aggregate dollar amount of Securities which may be
outstanding under this Indenture;
(e) make any change in Section 3.2; provided, however, that no such change
shall adversely affect the rights of any outstanding Security;
32
(f) to comply with any requirements of the SEC in connection with the
qualification of this Indenture under the TIA or any requirements of
state securities regulators imposed in connection with the
qualification of the Indenture or the Securities under state law; or
(g) to make any change necessary to maintain the Company's status as a
real estate investment trust.
Section 9.2 With Consent of Holders.
(a) The Company and the Trustee may amend this Indenture or the Securities
with the written consent of the Holders of at least a majority in
principal amount of the then outstanding Securities. The Holders of a
majority in principal of the then outstanding Securities may also
waive any existing default or compliance with any provision of this
Indenture or the Securities. However, without the consent of at least
80% of the principal amount of the then outstanding Securities, an
amendment or waiver under this Section may not (with respect to any
Security held by a nonconsenting Holder):
(1) reduce the principal amount or change the fixed maturity of
Securities or alter the redemption provisions on the price at
which the Company may redeem Securities;
(2) reduce the rate of or change the time for payment of interest,
including default interest, on any Security (other than upon
renewal of a Security);
(3) make any Security payable in money other than that stated in the
Prospectus;
(4) modify or eliminate the right of the estate of a Holder or a
Holder to cause the Company to redeem a Security upon the death
of a Holder pursuant to Article III; provided, however, that the
Company may not modify or eliminate such right, as it may be in
effect on the Issue Date, of any Security which was issued with
such right;
(5) make any change in Sections 6.4 or 6.7 hereof or in this sentence
of this Section 9.2;
(6) unless cured, waive a Default or Event of Default in the payment
of principal of, or premium, if any, or interest on, or
redemption payment with respect to, any Security (except a
rescission of acceleration of the Securities by the Holders of at
least a majority in aggregate principal amount of the Securities
and a waiver of the payment default that resulted from such
acceleration).
(b) It shall not be necessary for the consent of the Holders under this
Section to approve the particular form of any proposed amendment or
waiver, but it shall be sufficient if such consent approves the
substance thereof.
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Section 9.3 Compliance with Trust Indenture Act.
If at the time this Indenture shall be qualified under the TIA, every
amendment to this Indenture or the Securities shall be set forth in a
supplemental indenture that complies with the TIA as then in effect.
Section 9.4 Revocation and Effect of Consents.
(a) Until an amendment or waiver becomes effective, a consent to it by a
Holder of a Security is a continuing consent by the Holder and every
subsequent Holder of a Security or portion of a Security that
evidences the same debt as the consenting Holder's Security, even if
notation of the consent is not made on any Security. An amendment or
waiver becomes effective in accordance with its terms and thereafter
binds every Holder.
(b) The Company may fix a record date for determining which Holders must
consent to such amendment or waivers. If the Company fixes a record
date, the record date shall be fixed at (i) the later of thirty (30)
days prior to the first solicitation of such consent or the date of
the most recent list of Holders furnished to the Trustee prior to such
solicitation pursuant to Section 2.5, or (ii) such other date as the
Company shall designate.
Section 9.5 Notation on or Exchange of Securities.
The Trustee may place an appropriate notation about an amendment or waiver
on any Security, if certificated, or any Account statement. Failure to make any
notation or issue a new Security shall not affect the validity and effect of
such amendment or waiver.
Section 9.6 Trustee to Sign Amendments, etc.
The Trustee shall sign any amendment or supplemental indenture authorized
pursuant to this Article 9 if, in the Trustee's reasonable discretion, the
amendment does not adversely affect the rights, duties, liabilities or
immunities of the Trustee. If it does, the Trustee may, but need not, sign it.
In signing or refusing to sign such amendment or supplemental indenture, the
Trustee shall be entitled to receive, if requested, an indemnity reasonably
satisfactory to it and to receive and, subject to Section 7.1, shall be fully
protected in relying upon, an Officer's Certificate and an Opinion of Counsel
(or written advice of counsel) as conclusive evidence that such amendment or
supplemental indenture is authorized or permitted by this Indenture, that it is
not inconsistent herewith, and that it will be valid and binding upon the
Company in accordance with its terms.
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ARTICLE X.
MISCELLANEOUS
Section 10.1 Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies or conflicts with
the duties imposed by TIA ss. 318(c), the imposed duties shall control. Section
10.2 Notices.
(a) Any notice, instruction, direction, request or other communication by
the Company, the Trustee or any Holder to the others is duly given if
in writing and delivered in person or mailed by first-class mail
(registered or certified, return receipt requested), telex, telecopier
or overnight air courier guaranteeing next day delivery, to the
other's address:
If to the Company:
AMERICAN CHURCH MORTGAGE COMPANY
10237 Yellow Circle Drive
Minnetonka, MN 55343
Attention: President
Fax: (952) 945-9433
If to the Trustee:
THE HERRING NATIONAL BANK
1001 South Harrison Street
Amarillo, TX 79101
Attention: Corporate Trust Department
Fax: (806) 378-6655
(b) The Company or the Trustee by notice to the Company and the Trustee
may designate additional or different addresses for subsequent notices
or communications.
(c) All notices and communications (other than those sent to Holders)
shall be deemed to have been duly given: at the time delivered by
hand, if personally delivered; five (5) Business Days after being
deposited in the mail, postage prepaid, if mailed; when answered back,
if telexed; when receipt acknowledged, if telecopied; and the next
Business Day after timely delivery to the courier, if sent by
overnight air courier guaranteeing next day delivery.
(d) Any notice or communication to a Holder shall be mailed by first-class
mail, certified or registered, return receipt requested, to his
address shown on the register kept by the Registrar. Failure to mail a
notice or communication to a
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Holder or any defect in it shall not affect its sufficiency with
respect to other Holders.
(e) If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the
addressee receives it.
(f) If the Company mails a notice or communication to Holders, it shall
mail a copy to the Trustee and each Agent at the same time.
Section 10.3 Communication by Holders with Other Holders.
Holders may communicate pursuant to TIA ss. 312(b) with other Holders
with respect to their rights under this Indenture or the Securities. The Trustee
shall provide information regarding other Holders to any Holder only as required
by TIA ss. 312(b). The Company, the Trustee, the Registrar and anyone else shall
have the protection of TIA ss. 312(c).
Section 10.4 Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company to the Trustee to take any
action under this Indenture, the Company shall furnish to the Trustee:
(a) an Officer's Certificate in form and substance reasonably satisfactory
to the Trustee (which shall include the statements set forth in
Section 10.5) stating that, in the opinion of the signers, all
conditions precedent and covenants, if any, provided for in this
Indenture relating to the proposed action have been complied with; and
(b) an Opinion of Counsel in form and substance reasonably satisfactory to
the Trustee (which shall include the statements set forth in Section
10.5) stating that, in the opinion of such counsel, all such
conditions precedent and covenants have been complied with.
Section 10.5 Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture (other than a certificate provided
pursuant to TIA ss. 314(a)(4)) shall include:
(a) a statement that the Person making such certificate or opinion has
read such covenant or condition;
(b) 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;
(c) a statement that, in the opinion of such Person, he has made such
examination or investigation as is necessary to enable him to express
an informed opinion whether such covenant or condition has been
complied with; and
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(d) a statement whether, in the opinion of such Person, such condition or
covenant has been complied with.
Section 10.6 Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by or at a meeting of
Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
Section 10.7 Legal Holidays.
A "Legal Holiday" is a Saturday, a Sunday or a day on which banking
institutions in the State of Minnesota or at a place of payment are authorized
or obligated by law, regulation or executive order to remain closed. If a
payment date is a Legal Holiday at a place of payment, payment may be made at
that place on the next succeeding day that is not a Legal Holiday, and no
interest shall accrue for the intervening period.
Section 10.8 No Recourse Against Others.
No director, officer, employee, agent, manager or stockholder of the
Company as such, shall have any liability for any obligations of the Company
under the Securities or this Indenture or for any claim based on, in respect of
or by reason of such obligations or their creation. Each Holder by accepting a
Security waives and releases all such liability.
Section 10.9 Duplicate Originals.
The parties may sign any number of copies of this Indenture. One signed
copy is enough to prove this Indenture.
Section 10.10 Governing Law.
THE INTERNAL LAW OF THE STATE OF MINNESOTA SHALL GOVERN THIS INDENTURE AND
THE SECURITIES, WITHOUT REGARD TO THE CONFLICT OF LAWS PROVISIONS THEREOF.
Section 10.11 No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture, loan or debt
agreement of the Company. Any such indenture, loan or debt agreement may not be
used to interpret this Indenture.
Section 10.12 Successors.
All agreements of the Company in this Indenture and the Securities shall
bind its successors. All agreements of the Trustee in this Indenture shall bind
its successor.
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Section 10.13 Severability.
In case any provision in this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
Section 10.14 Counterpart Originals.
The parties may sign any number of copies of this Indenture. Each signed
copy shall be an original, but all of them together represent the same
agreement.
Section 10.15 Table of Contents, Headings, etc.
The Table of Contents, Cross-Reference Table and Headings of the Articles
and Sections of this Indenture have been inserted for convenience of reference
only, are not to be considered a part hereof and shall in no way modify or
restrict any of the terms or provisions thereof.
[Remainder of page intentionally left blank.]
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SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed and their respective corporate seals to be hereunto affixed and
attested, as of the day and year first written above.
AMERICAN CHURCH MORTGAGE COMPANY
By: /s/ Philip J. Myers
-----------------------------
Philip J. Myers, President
STATE OF MINNESOTA )
) ss.
COUNTY OF HENNEPIN )
The foregoing was acknowledged before me this 28th day of September, 2004, by
Philip J. Myers, in his capacity as President of American Church Mortgage
Company, a Minnesota corporation.
/s/ Kristen Carlone
- ----------------------- Notary Public
THE HERRING NATIONAL BANK, a
national banking association,
as Trustee
By: /s/ Catana Gray
-----------------------------
Name: Catana Gray
Title: Vice President
and Manager
STATE OF TEXAS )
) ss.
COUNTY OF POTTER )
The foregoing was acknowledged before me this 28th day of September, 2004, by
Catana Gray, in her capacity as Vice President and Manager of The Herring
National Bank, a national banking association.
/s/ Shana Hulin
- ------------------------ Notary Public
{SIGNATURE PAGE TO INDENTURE}
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