<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 27, 1998
REGISTRATION NO. 333-47469
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------
BRE PROPERTIES, INC.
(Exact name of registrant as specified in its charter)
MARYLAND 94-1722214
(I.R.S. Employer
(State of registrant's Identification No.)
incorporation)
44 MONTGOMERY STREET, 36TH FLOOR
SAN FRANCISCO, CALIFORNIA 94104-4809
(415) 445-6530
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
------------
LEROY E. CARLSON
CHIEF FINANCIAL OFFICER
BRE PROPERTIES, INC.
44 MONTGOMERY STREET, 36TH FLOOR
SAN FRANCISCO, CALIFORNIA 94104-4809
(415) 445-6530
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
------------
Copy to:
MORGAN P. GUENTHER, ESQ. ERIC S. HAUETER, ESQ.
PAUL, HASTINGS, JANOFSKY & WALKER BROWN & WOOD LLP
LLP 555 CALIFORNIA STREET
345 CALIFORNIA STREET SAN FRANCISCO, CALIFORNIA 94104-1715
SAN FRANCISCO, CALIFORNIA 94104-
2635
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of this Registration Statement as determined
by market conditions.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [_]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended (the "Securities Act"), other than securities offered only in
connection with dividend or interest reinvestment plans, check the following
box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434
under the Securities Act, please check the following box. [X]
(Continued on following page)
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
CALCULATION OF REGISTRATION FEE
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PROPOSED
PROPOSED MAXIMUM
AMOUNT MAXIMUM AGGREGATE AMOUNT OF
TITLE OF EACH CLASS OF TO BE OFFERING PRICE OFFERING REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED(1) PER UNIT(1) PRICE(1)(2) FEE(1)
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Debt Securities(3)(4).. --
- -----------------------------------------------------------------------------------
Preferred Stock(5)..... --
- -----------------------------------------------------------------------------------
Depositary
Shares(5)(6).......... $750,000,000 -- $750,000,000 $219,037.88
- -----------------------------------------------------------------------------------
Common Stock
Warrants(7)........... --
- -----------------------------------------------------------------------------------
Common Stock(5)(8)(9).. --
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(1) Not specified as to each class of securities to be registered, pursuant to
General Instruction II.D of Form S-3. Securities registered hereby may be
offered for U.S. dollars or the equivalent thereof in foreign currencies,
currency units or composite currencies. Securities registered hereby may
be sold separately, together or in units with other securities registered
hereby. As described elsewhere on the cover page of this Registration
Statement, $7,300,000 proposed maximum aggregate offering price of
securities or, if any such securities are issued at an original issue
discount, such greater amount as may be sold for an aggregate initial
offering price of up to $7,300,000 (or the equivalent thereof in foreign
currencies, currency units or composite currencies), is being carried
forward from Registration Statement No. 333-24915 previously filed by the
Registrant under the Securities Act; a filing fee of $2,212.12 was
previously paid to register such securities under such prior Registration
Statement. The remaining amount of the filing fee was previously paid with
the initial filing of this Registration Statement.
(2) Estimated solely for the purpose of computing the registration fee
pursuant to Rule 457(o) of the Securities Act. The proposed maximum
offering price will be determined from time to time by the Registrant in
connection with the issuance by the Registrant of the securities
registered hereunder.
(3) If any Debt Securities are issued at an original issue discount, then such
greater amount as may be sold for an aggregate initial offering price of
up to the proposed maximum aggregate offering price set forth above.
(4) In addition to any Debt Securities that may be issued directly under this
Registration Statement, there is being registered hereunder such
indeterminate amount of Debt Securities as may be issued upon conversion
or exchange of other Debt Securities, Preferred Stock or Depositary
Shares, for which no consideration will be received by the Registrant.
(5) Such indeterminate number of shares of Preferred Stock and Common Stock,
and such indeterminate number of Depositary Shares, as may be issued from
time to time at indeterminate prices. In addition to any Preferred Stock,
Depositary Shares and Common Stock that may be issued directly under this
Registration Statement, there are being registered hereunder such
indeterminate number of shares of Preferred Stock and Common Stock, and
such indeterminate number of Depositary Shares, as may be issued upon
conversion or exchange of Debt Securities, Preferred Stock or Depositary
Shares, as the case may be, for which no separate consideration will be
received by the Registrant.
(6) Depositary Shares will represent fractional interests in shares of
Preferred Stock registered hereby.
(7) Common Stock Warrants will represent rights to purchase Common Stock
registered hereby.
(8) The shares of Common Stock being registered hereunder, if issued prior to
the termination by the Company of its Shareholder Rights Plan, shall
include Common Stock Purchase Rights. Prior to the occurrence of certain
events, the Common Stock Purchase Rights will not be exercisable or
evidenced separately from the Common Stock.
(9) The aggregate amount of Common Stock registered hereunder is limited,
solely for purposes of any at the market offerings, to that which is
permissible under Rule 415(a)(4) of the Securities Act.
Pursuant to Rule 429 under the Securities Act, the prospectus included in
this Registration Statement is a combined prospectus relating also to
Registration Statement No. 333-24915 previously filed by the Registrant under
the Securities Act. This Registration Statement also constitutes post-
effective amendment No. 2 to such Registration Statement No. 333-24915 and
such post-effective amendment No. 2 shall hereafter become effective
concurrently with the effectiveness of this Registration Statement and in
accordance with Section 8(c) of the Securities Act.
------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OR UNTIL THE REGISTRATION STATEMENT SHALL
BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION
PROSPECTUS PRELIMINARY PROSPECTUS DATED MARCH 27, 1998
$750,000,000
BRE PROPERTIES, INC.
DEBT SECURITIES, PREFERRED SHARES, DEPOSITARY SHARES,
COMMON STOCK WARRANTS AND COMMON STOCK
BRE Properties, Inc. (the "Company") may from time to time offer in one or
more series (i) its unsecured debt securities (the "Debt Securities"), which
may be senior debt securities ("Senior Debt Securities") or subordinated debt
securities ("Subordinated Debt Securities"), (ii) shares of its Preferred
Stock, $0.01 par value per share ("Preferred Shares"), (iii) depositary shares
("Depositary Shares") representing fractional interests in Preferred Shares,
(iv) warrants ("Common Stock Warrants") to purchase shares of its Common Stock,
$0.01 par value per share ("Common Shares"), or (v) Common Shares, with an
aggregate public offering price of up to $750,000,000, on terms to be
determined at the time or times of offering. The Debt Securities, Preferred
Shares, Depositary Shares, Common Stock Warrants and Common Shares
(collectively, the "Offered Securities") may be offered, separately or
together, in separate classes or series, in amounts, at prices and on terms to
be set forth in a supplement to this Prospectus (a "Prospectus Supplement").
The specific terms of the Offered Securities in respect of which this
Prospectus is being delivered will be set forth in the applicable Prospectus
Supplement and will include, when applicable: (i) in the case of Debt
Securities, the specific title, aggregate principal amount, currency, form
(which may be registered or bearer, or certificated or global), authorized
denominations, maturity, rate (or manner of calculation thereof) and time of
payment of interest, terms for redemption at the option of the Company or
repayment at the option of the holder thereof, terms for sinking fund payments,
terms for conversion into Preferred Shares or Common Shares, and the public
offering price; (ii) in the case of Preferred Shares, the specific series,
title and stated value, any dividend, liquidation, redemption, conversion,
voting and other rights, and the public offering price; (iii) in the case of
Depositary Shares, the whole or fractional Preferred Shares represented by each
such Depositary Share and the public offering price; (iv) in the case of Common
Stock Warrants, the duration, public offering price, exercise price and
detachability features, if applicable; and (v) in the case of Common Shares,
the public offering price. In addition, such specific terms may include
limitations on direct or beneficial ownership and restrictions on transfer of
the Offered Securities, in each case as may be appropriate to preserve the
status of the Company as a real estate investment trust ("REIT") for federal
income tax purposes.
The applicable Prospectus Supplement will also contain information, when
applicable, about certain United States federal income tax considerations
relating to, and any listing on a securities exchange of, the Offered
Securities covered by that Prospectus Supplement.
The Offered Securities may be offered directly, through agents designated
from time to time by the Company, or to or through underwriters or dealers. If
any agents or underwriters are involved in the sale of any of the Offered
Securities, their names and any applicable purchase price, fee, commission or
discount arrangement will be set forth in or will be calculable from the
information set forth in the applicable Prospectus Supplement. No Offered
Securities may be sold without delivery of the applicable Prospectus Supplement
describing the method and terms of the offering of those Offered Securities.
See "Plan of Distribution" for possible indemnification arrangements with
underwriters, dealers and agents.
-----------
PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THE MATTERS SET FORTH UNDER
"RISK FACTORS" BEGINNING ON PAGE 4 OF THIS PROSPECTUS.
-----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
-----------
The date of this Prospectus is , 1998
<PAGE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS OR AN APPLICABLE PROSPECTUS
SUPPLEMENT AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER,
DEALER OR AGENT. THIS PROSPECTUS AND ANY APPLICABLE PROSPECTUS SUPPLEMENT DO
NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY
SECURITIES OFFERED HEREBY OR THEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM
IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION.
NEITHER THE DELIVERY OF THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT NOR ANY
SALE MADE HEREUNDER OR THEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE
THE DATE HEREOF OR THEREOF.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by the Company with the Commission in
accordance with the Exchange Act can be inspected and copied at the
Commission's Public Reference Section, 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the following regional offices of the Commission: Seven
World Trade Center, 13th Floor, New York, New York 10048 and 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661. Copies of such material can be
obtained from the Public Reference Section of the Commission, 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. In addition, the
Commission maintains a home page on the Internet that contains such
information with respect to registrants that file electronically such as the
Company at http://www.sec.gov. The Company's Common Shares are listed on the
New York Stock Exchange and similar information concerning the Company can be
inspected and copied at the offices of the New York Stock Exchange, Inc., 20
Broad Street, New York, New York 10005.
The Company has filed with the Commission a registration statement (as the
same may be amended from time to time, the "Registration Statement") (of which
this Prospectus is a part) under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to the Offered Securities. This Prospectus
does not contain all of the information set forth in the Registration
Statement, certain portions of which have been omitted as permitted by the
rules and regulations of the Commission. Statements contained in this
Prospectus as to the contents of any contract or other document do not purport
to be complete, and in each instance reference is made to the copy of such
contract or other document filed or incorporated by reference as an exhibit to
the Registration Statement, each such statement being qualified in all
respects by such reference and the exhibits and schedules thereto. For further
information regarding the Company and the Offered Securities, reference is
hereby made to the Registration Statement and such exhibits and schedules,
which may be obtained from the Commission at its principal office in
Washington, D.C. upon payment of the fees prescribed by the Commission.
2
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The documents listed below have been filed by the Company with the
Commission and are incorporated herein by reference:
a. Report on Form 10-K for the fiscal year ended December 31, 1997.
b. Current Report on Form 8-K filed on February 24, 1998.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior
to the termination of the offering of the Offered Securities shall be deemed
to be incorporated by reference in this Prospectus and to be part hereof from
the date of filing of such documents.
Any statement contained herein or in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained
herein (or in the applicable Prospectus Supplement) or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Prospectus.
The Company hereby undertakes to provide without charge to each person to
whom this Prospectus has been delivered, upon the written or oral request of
such person, a copy of any and all documents incorporated by reference in this
Prospectus (other than exhibits to such documents unless such exhibits are
specifically incorporated by reference in such documents). Requests for such
copies should be directed to BRE Properties, Inc., 44 Montgomery Street, 36th
Floor, California 94104-4809, Attn: Charles Wingard, Director of Financial
Reporting, telephone number (415) 445-6530.
3
<PAGE>
THE COMPANY
BRE Properties, Inc., a Maryland corporation (the "Company" or "BRE"), is a
self-administered and self-managed real estate investment trust which owns,
acquires, develops, rehabilitates and manages apartment communities and other
income producing properties in the western United States. At December 31,
1997, BRE's portfolio included 74 completed apartment communities aggregating
18,569 units, and five commercial and retail properties. Of these properties,
41 were located in California, 21 in Arizona, six in Washington, four in
Nevada, three in Utah, two in Oregon and two in New Mexico. As of that date,
BRE's portfolio also included eight apartment communities under development
aggregating approximately 2,445 units in Arizona, Colorado, New Mexico, Nevada
and Utah. As of December 31, 1997, these properties (excluding properties
under development) contained, in the aggregate, approximately 16.3 million net
rentable square feet of improvements owned by the Company. In addition, at
December 31, 1997, the Company held limited partnership interests in two
shopping centers located in Arizona and one apartment community located in
California. In November 1997, the Company completed the acquisition (the "TCR-
West Transaction") of certain properties (the "TCR-West Properties") and
operations of Trammell Crow Residential located in the western United States
("TCR-West"). A substantial portion of the properties acquired in the TCR-West
Transaction are held by BRE Property Investors LLC (the "Operating Company"),
a Delaware limited liability company, of which the Company is the sole
managing member. BRE's principal executive offices are located at 44
Montgomery Street, 36th Floor, San Francisco, California 94104-4809, and its
telephone number is (415) 445-6530.
RISK FACTORS
Prospective investors should carefully consider, among other factors, the
matters described below before purchasing any of the Offered Securities. The
Company cautions the reader that this list of factors does not purport to be
exhaustive.
All references in this Prospectus to shareholders of the Company include
holders of Common Shares and holders of any Preferred Shares and Depositary
Shares which may be issued by the Company, and all references to distributions
to shareholders include dividends and other distributions payable to holders
of Common Shares and any such Preferred Shares and Depositary Shares.
REAL ESTATE INVESTMENT RISKS
General
Real property investments are subject to varying degrees of risk. The yields
available from equity investments in real estate depend upon the amount of
revenues generated and expenses incurred. If properties do not generate
revenues sufficient to meet operating expenses, including debt service and
capital expenditures, the Company's results of operations and ability to make
distributions to its shareholders and to pay amounts due on its Debt
Securities will be adversely affected. The performance of the economy in each
of the areas in which the properties are located affects occupancy, market
rental rates and expenses and, consequently, has an impact on the revenues
from the properties and their underlying values. The financial results of
major local employers also may have an impact on the revenues and value of
certain properties.
Revenues from properties may be further adversely affected by a variety of
factors, including the general economic climate, local conditions in the areas
in which properties are located, such as oversupply of space or a reduction in
the demand for rental space, the attractiveness of the properties to residents
or users, competition from other available space, the ability of the Company
to provide adequate facilities maintenance, services and amenities, and
insurance premiums and real estate taxes. The Company's revenues would also be
adversely affected if residents or users were unable to pay rent or the
Company was unable to rent apartments or commercial properties on favorable
terms. If the Company were unable to promptly relet or renew the leases for a
significant number of apartment units or commercial properties, or if the
rental rates upon such renewal or reletting were significantly lower than
expected rates, then the Company's funds from operations would, and ability to
make expected distributions to shareholders
4
<PAGE>
and to pay amounts due on its Debt Securities may, be adversely affected.
There is also a risk that as leases on the properties expire, residents or
users will vacate or enter into new leases on terms that are less favorable to
the Company. Operating costs, including real estate taxes, insurance and
maintenance costs, and mortgage payments, if any, do not, in general, decline
when circumstances cause a reduction in income from a property. If a property
is mortgaged to secure payment of indebtedness, and the Company is unable to
meet its mortgage payments, a loss could be sustained as a result of
foreclosure on the property. In addition, revenues from properties and real
estate values are also affected by such factors as applicable laws, including
tax laws, interest rate levels and the availability of financing.
In the normal course of business, the Company typically evaluates potential
acquisitions, enters into non-binding letters of intent, and may, at any time,
enter into contracts to acquire and may acquire additional properties.
However, no assurance can be given that the Company will have the financial
resources to make suitable acquisitions or that properties that satisfy the
Company's investment policies will be available for acquisition. Acquisitions
of properties entail risks that investments will fail to perform in accordance
with expectations. Such risks may include that construction costs may exceed
original estimates, possibly making a project uneconomical, financing may not
be available on favorable terms or at all and construction and lease-up may
not be completed on schedule. Estimates of the costs of improvements to bring
an acquired property up to standards established for the market position
intended for that property may prove inaccurate. In addition, there are
general real estate investment risks associated with any new real estate
investment. Although the Company undertakes an evaluation of the physical
condition of each new investment before it is acquired, certain defects or
necessary repairs may not be detected until after the investment is acquired,
which could significantly increase the Company's total acquisition costs and
which could have a material adverse effect on the Company and its ability to
make distributions to shareholders and to pay amounts due on its Debt
Securities. Any statements included in or incorporated by reference in this
Prospectus or any Prospectus Supplement pertaining to anticipated growth rates
in target markets, anticipated growth in the Company's funds from operations
and anticipated market conditions, demographics or results of operations
constitute forward-looking statements within the meaning of Section 27A of the
Securities Act and Section 21E of the Exchange Act and there can be no
assurance that such anticipated events or circumstances will be achieved or
will occur due to, among other things, the factors described under "Risk
Factors."
Illiquidity of Real Estate and Reinvestment Risk
Real estate investments are relatively illiquid and, therefore, tend to
limit the ability of the Company to adjust its portfolio in response to
changes in economic or other conditions. Additionally, the Internal Revenue
Code of 1986, as amended (the "Code") places certain limits on the number of
properties a REIT may sell without adverse tax consequences. To effect its
current operating strategy, the Company has in the past raised, and will seek
to continue to raise additional acquisition funds, both through outside
financing and through the orderly disposition of commercial and retail
properties, and, depending upon interest rates, current acquisition
opportunities and other factors, generally to reinvest the proceeds in
multifamily properties. In this respect, in the markets the Company has
targeted for future acquisition of multifamily properties, there is
considerable buying competition from other real estate companies, many of whom
may have greater resources, experience or expertise than the Company. In many
cases, this competition for acquisition properties has resulted in an increase
in property prices and a decrease in property yields. Due to the relatively
low capitalization rates currently prevailing in the pricing of potential
acquisitions of multifamily properties which meet the Company's investment
criteria, no assurance can be given that the proceeds realized from the
disposition of commercial and retail properties can be reinvested to produce
economic returns comparable to those being realized from the properties
disposed of, or that the Company will be able to acquire properties meeting
its investment criteria. To the extent that the Company is unable to reinvest
proceeds from the disposition of commercial and retail properties, or if
properties acquired with such proceeds produce a lower rate of return than the
properties disposed of, such results may have a material adverse effect on the
Company and its ability to make distributions to shareholders and to pay
amounts due on its Debt Securities. In addition, a delay in reinvestment of
such proceeds may have a material adverse effect on the Company and its
ability to make distributions to shareholders and to pay amounts due on its
Debt Securities.
5
<PAGE>
The Company may seek to structure future dispositions as tax-free exchanges,
where appropriate, utilizing the nonrecognition provisions of Section 1031 of
the Code to defer income taxation on the disposition of the exchanged
property. For an exchange of such properties to qualify for tax-free treatment
under Section 1031 of the Code, certain technical requirements must be met.
For example, both the property exchanged and the property acquired must be
held for use in a trade or business or for investment, and the property
acquired must be identified within 45 days, and must be acquired within 180
days, after the transfer of the exchanged property. If the technical
requirements of Section 1031 of the Code are not met, then the exchanged
property will be treated as sold in a taxable transaction for a sales price
equal to the fair market value of the property received, in which event a
distribution of cash to the shareholders may be required to avoid a corporate-
level income tax on the resulting capital gain. Given the competition for
properties meeting the Company's investment criteria, it may be difficult for
the Company to identify suitable properties within the foregoing time frames
in order to meet the requirements of Section 1031. Even if a suitable tax-
deferred exchange can be structured, as noted above, no assurance can be given
that the proceeds of any of these dispositions will be reinvested to produce
economic returns comparable to those currently being realized from the
properties which were disposed of.
Competition
All of the properties currently owned by the Company are located in
developed areas. There are numerous other multifamily properties and real
estate companies, many of which have greater financial and other resources
than the Company, within the market area of each of the properties which will
compete with the Company for tenants and development and acquisition
opportunities. The number of competitive multifamily properties and real
estate companies in such areas could have a material effect on (i) the
Company's ability to rent the apartments and the rents charged and (ii)
development and acquisition opportunities. The activities of these competitors
could cause the Company to pay a higher price for a new property than it
otherwise would have paid or may prevent the Company from purchasing a desired
property at all, which could have a material adverse effect on the Company and
its ability to make distributions to shareholders and to pay amounts due on
its Debt Securities.
Geographic Concentration; Dependence on Western United States Regions
The Company's portfolio is principally located in the San Francisco Bay
Area, the Denver area, San Diego, Tucson, Phoenix, Seattle, Portland, Los
Angeles/Orange County, Sacramento, Las Vegas, Albuquerque and Salt Lake City.
The Company's performance could be adversely affected by economic conditions
in, and other factors relating to, these geographic areas, including supply
and demand for apartments in these areas, zoning and other regulatory
conditions and competition from other properties and alternative forms of
housing. In that regard, certain of these areas (particularly the
Los Angeles/Orange County and San Diego metropolitan areas) have in the recent
past experienced economic recessions and depressed conditions in the local
real estate markets. To the extent general economic or social conditions in
any of these areas deteriorate or any of these areas experiences natural
disasters, the value of the portfolio, the Company's results of operations and
its ability to make distributions to shareholders and to pay amounts due on
its Debt Securities could be materially adversely affected.
Risks of Development, Construction and Acquisition Activities
Pursuant to the TCR-West Transaction, the Company acquired eight apartment
properties in various stages of development (the "Development Properties").
Prior to the acquisition, the Company was not engaged in the development and
construction of real estate properties.
The Company intends to actively pursue development and construction of
multifamily apartment communities, including the Development Properties. There
can be no assurance that the Company will complete development of the
Development Properties or any other development project which may be
undertaken by the Company. As a general matter, property development and
construction projects typically have a higher, and sometimes substantially
higher, level of risk than the acquisition of existing properties. Risks
associated with the Company's development and construction activities may
include the following: development opportunities may be abandoned;
construction costs of multifamily apartment communities may exceed original
estimates, possibly
6
<PAGE>
making the communities uneconomical; occupancy rates and rents at newly
completed communities may not be sufficient to make the communities
profitable; financing for the construction and development of projects may not
be available on favorable terms or at all; construction and lease-up may not
be completed on schedule; and expenses of operating a completed community may
be higher than anticipated. In addition, development and construction
activities, regardless of whether or not they are ultimately successful,
typically require a substantial portion of management's time and attention.
Development and construction activities are also subject to risks relating to
the inability to obtain, or delays in obtaining, all necessary zoning, land-
use, building, occupancy, and other required governmental permits and
authorizations.
The Company also intends to continue actively to acquire multifamily
apartment communities. Acquisitions of multifamily apartment communities
entail risks that investments will fail to perform in accordance with
expectations. Estimates of the costs of improvements to bring an acquired
property up to standards established for the market position intended for that
property may prove inaccurate. In addition, there are general investment risks
associated with any new real estate investment. In that regard, the properties
acquired in the TCR-West Transaction were acquired on an "as is" basis,
meaning that the properties were acquired without warranty by the sellers.
Likewise, due to the competitive nature of the bidding process for the TCR-
West Properties, the Company was able to perform only a limited investigation
with respect to the TCR-West Properties prior to acquiring them. Both of these
factors increased the risks associated with acquiring the TCR-West Properties.
The Company anticipates that future developments and acquisitions will be
financed, in whole or in part, under various construction loans, lines of
credit, other forms of secured or unsecured financing or through the issuance
of additional equity by the Company. The Company expects periodically to
review its financing options regarding the appropriate mix of debt and equity
financing. Equity, rather than debt, financing of future developments or
acquisitions could have a dilutive effect on the interests of existing
shareholders of the Company. Similarly, financing future developments and
acquisitions with debt entails certain risks, including those described below
under "--Real Estate Financing Risks." In addition, if new development
properties are financed through construction loans, there is a risk that, upon
completion of construction, permanent financing for such properties may not be
available or may be available only on disadvantageous terms or that the cash
flow from new properties will be insufficient to cover debt service. If a
newly developed or acquired property is unsuccessful, the Company's losses may
exceed its investment in the property. Any of the foregoing could have a
material adverse effect on the Company and its ability to make distributions
to shareholders and to pay amounts due on its Debt Securities.
Risks Relating to Growth Strategy
Pursuant to the TCR-West Transaction, the Company acquired 17 completed
apartment communities aggregating 4,786 units and eight Development Properties
aggregating approximately 2,445 units. This significant increase in the size
of the Company's operations after the acquisition has substantially increased
the demands placed upon the Company's management, including demands resulting
from the need to integrate the accounting systems, management information
systems and other operations acquired from TCR with those of the Company.
Likewise, the Company added approximately 600 persons previously employed by
TCR and its affiliates, which has also significantly increased the demands
upon the Company's management. Failure to effectively integrate the operations
of the acquired properties, operations and employees with those of the Company
could have a material adverse effect on the Company and its ability to make
distributions to shareholders and to pay amounts due on its Debt Securities.
A substantial portion of the Company's growth over the last several years
has been attributable to acquisitions. Further, a principal component of the
Company's strategy is to continue to grow in a controlled manner in both
existing and new markets by acquiring and developing new properties. The
Company's future growth will be dependent upon a number of factors, including
the Company's ability to identify acceptable properties for acquisition and
development, complete acquisitions and developments on favorable terms,
successfully integrate acquired and newly developed properties, and obtain
financing to support expansion. There can be no assurance that the Company
will be successful in implementing its growth strategy, that growth will
continue at historical
7
<PAGE>
levels or at all, or that any expansion will improve operating results. The
failure to identify, acquire, develop, and integrate new properties
effectively could have a material adverse effect on the Company and its
ability to make distributions to shareholders and to pay amounts due on its
Debt Securities.
Restrictions in the Operations of the Operating Company
A substantial portion of the properties acquired in the TCR-West Transaction
are held by the Operating Company, a limited liability company. BRE is the
sole managing member of the Operating Company and, as of December 31, 1997,
held approximately a 70% equity interest therein. The remaining equity
interests in the Operating Company are held by third parties as non-managing
members.
Under the terms of the limited liability company agreement governing the
operations of the Operating Company (the "LLC Agreement"), the Operating
Company is required to maintain certain debt service coverage, debt-to-asset
and other financial ratios intended to protect the members' rights to receive
distributions. In addition, with respect to certain tax-exempt financing for
certain completed properties, the Operating Company is restricted from
prepaying its debt or taking certain other specified actions which could have
adverse tax consequences for the members. Further, the Company, as the
managing member, is restricted from taking certain other specified actions --
either absolutely or without the consent of a majority in interest of the non-
managing members (or of the non-managing members affected thereby) --
including, but not limited to, any actions that would make it impossible to
carry out the business of the Operating Company, or that would subject a non-
managing member to liability as a managing member, or that would cause the
Operating Company to institute bankruptcy proceedings or confess a judgment,
or that would prohibit or restrict a member from exercising its rights to
exchange units in the Operating Company for Common Shares. Any such
requirement to maintain financial ratios and any such restrictions on the
actions of the Operating Company and its managing member could have a material
adverse effect on the Company and its ability to make distributions to
shareholders and to pay amounts due on its Debt Securities.
Further, under the terms of the LLC Agreement, the Operating Company may
not, without the consent of a majority in interest of the non-managing
members, (i) dispose of any of the properties held by the Operating Company in
a taxable sale or exchange prior to respective dates which are specified in
the LLC Agreement for each of the properties, ranging from one to ten years
from November 18, 1997, or (ii) dissolve the Operating Company other than in
certain limited circumstances specified in the LLC Agreement, such as a sale
of all or substantially all of the Company's assets, or any merger,
consolidation or other combination by the Company with or into another person,
or reclassification, recapitalization or change of the Company's outstanding
equity interests. These restrictions on the Company's ability to dispose of a
significant portion of its properties and to dissolve the Operating Company,
even when such a disposition or dissolution of the Operating Company would be
in the best interest of the Company, could have a material adverse effect on
the Company and its ability to make distributions to shareholders and to pay
amounts due on its Debt Securities.
The Operating Company also must distribute all Available Cash (as defined in
the LLC Agreement) on a quarterly basis: first, to members (other than BRE)
until each member has received, cumulatively on a per Operating Company unit
basis, distributions equal to the cumulative dividends declared with respect
to one Common Share over the corresponding period (subject to adjustment from
time to time as applicable to account for stock dividends, stock splits and
similar transactions affecting the Common Shares) (the "Priority
Distribution"); and second, the balance to BRE.
If the Operating Company's Available Cash in any quarterly period is
insufficient to permit distribution of the full amount of the Priority
Distribution for that quarter, BRE is required to make a capital contribution
to the Operating Company in an amount equal to the lesser of (i) the amount
necessary to permit the full Priority Distribution or (ii) an amount equal to
the sum of any capital expenditures made by the Operating Company plus the sum
of any payments made by the Operating Company on account of any loans to or
investments in, or any guarantees of the obligations of, BRE or its affiliates
for that quarterly period. The Operating Company's
8
<PAGE>
obligation to make Priority Distributions and BRE's obligation to make
additional capital contributions to the Operating Company under such
circumstances could have a material adverse effect on the Company and its
ability to make distributions to shareholders and to pay amounts due on its
Debt Securities.
In addition, BRE may not be removed as the managing member of the Operating
Company by the non-managing members, with or without cause, other than with
its consent. BRE may not voluntarily withdraw from the Operating Company or
transfer all or any portion of its interest in the Operating Company without
the consent of all of the non-managing members, except in certain limited
circumstances, such as a sale of all or substantially all of BRE's assets, or
any merger, consolidation or other combination by BRE with or into another
person, or any reclassification, recapitalization or change of BRE's
outstanding equity interests. Such restrictions on the withdrawal of BRE as
the managing member of the Operating Company, and on BRE's ability to transfer
its interest in the Operating Company, could have a material adverse effect on
the Company and its ability to make distributions to shareholders and to pay
amounts due on its Debt Securities.
Uninsured Loss; Limited Coverage
The Company carries comprehensive liability, fire, extended coverage and
rental loss insurance with respect to its properties with certain policy
specifications, limits and deductibles. While the Company currently carries
flood and earthquake insurance for its properties with an aggregate annual
limit of $100 million, subject to substantial deductibles, no assurance can be
given that such coverage will continue to be available on acceptable terms or
at an acceptable cost, or at all, in the future, or if obtained, that the
limits of those policies will cover the full cost of repair or replacement of
covered properties. In addition, there may be certain extraordinary losses
(such as those resulting from civil unrest) that are not generally insured (or
fully insured against) because they are either uninsurable or not economically
insurable. Should an uninsured or underinsured loss occur to a property, the
Company could be required to use its own funds for restoration or lose all or
part of its investment in, and anticipated revenues from, the property and
would continue to be obligated on any mortgage indebtedness on the property.
Any such loss could have a material adverse effect on the Company and its
ability to make distributions to shareholders and to pay amounts due on its
Debt Securities.
Risks Associated with Survey Exceptions to Certain Title Insurance Policies
Although the Company believes that prior owners of the TCR-West Properties
in the past obtained surveys of those properties, the Company did not obtain
updated surveys when it acquired the TCR-West Properties. Because updated
surveys of the TCR-West Properties were not obtained, the title insurance
policies obtained by the Company for those properties contain exceptions for
matters which an updated survey might have disclosed. Such matters might
include such things as boundary encroachments, unrecorded easements or similar
matters which would have been reflected on a survey. Moreover, because no
updated surveys were prepared for those properties, there can be no assurance
that the title insurance policies in fact cover the entirety of the real
property, buildings, fixtures, and improvements which the Company believes
they cover, any of which could have a material adverse effect on the Company
and its ability to make distributions to shareholders and to pay amounts due
on its Debt Securities.
Change in Laws
Increases in real estate taxes and income, service and transfer taxes cannot
always be passed through to residents or users in the form of higher rents,
and may adversely affect the Company's cash available for distribution and its
ability to make distributions to shareholders and to pay amounts due on its
Debt Securities. Similarly, changes in laws increasing the potential liability
for environmental conditions existing on properties or increasing the
restrictions on discharges or other conditions, as well as changes in laws
affecting development, construction and safety requirements, may result in
significant unanticipated expenditures, which could have a material adverse
effect on the Company and its ability to make distributions to shareholders
and to pay amounts due on its Debt Securities. In addition, future enactment
of rent control or rent stabilization laws or other laws regulating
multifamily housing may reduce rental revenues or increase operating costs.
9
<PAGE>
Laws Benefiting Disabled Persons
A number of federal, state and local laws (including the Americans with
Disabilities Act) and regulations exist that may require modifications to
existing buildings or restrict certain renovations by requiring improved
access to such buildings by disabled persons and may require other structural
features which add to the cost of buildings under construction. Legislation or
regulations adopted in the future may impose further burdens or restrictions
on the Company with respect to improved access by disabled persons. The costs
of compliance with these laws and regulations may be substantial, and limits
or restrictions on construction or completion of certain renovations may limit
implementation of the Company's investment strategy in certain instances or
reduce overall returns on its investments, which could have a material adverse
effect on the Company and its ability to make distributions to shareholders
and to pay amounts due on its Debt Securities. The Company reviews its
properties periodically to determine the level of compliance and, if
necessary, takes appropriate action to bring such properties into compliance.
The Company's management believes, based on property reviews to date, that the
costs of such compliance should not have a material adverse effect on the
Company. Such conclusions are based upon currently available information and
data, and no assurance can be given that further review and analysis of the
Company's properties, or future legal interpretations or legislative changes,
will not significantly increase the costs of compliance.
Risks of Assumed Liabilities
In the TCR-West Transaction, pursuant to a contribution agreement (the
"Contribution Agreement") the Company (i) acquired the TCR-West Properties
either by acquiring title to the properties and related assets (plus
assumption of certain associated contractual obligations, warranties and
guarantees) or, as to certain TCR-West Properties, by acquiring all of the
ownership interests in the partnerships or limited liability companies which
held such properties, and (ii) assumed certain loans secured by the TCR-West
Properties. Under the terms of the transaction, the Company has not expressly
agreed to assume any liabilities other than the assumed loans and the
contractual obligations, warranties and guarantees referenced above. However,
as a matter of law, the Company automatically assumed all of the liabilities
(known, unknown or contingent) of the partnerships and limited liability
companies whose ownership interests were acquired by the Company, potentially
including liabilities unrelated to the properties conveyed pursuant to such
transfer. Moreover, even in cases where title to the properties and related
assets (rather than ownership interests therein) was acquired by the Company,
the legal doctrine of successor liability may give creditors of and claimants
against the prior owners the right to hold the Company responsible for
liabilities which arose with respect to such properties prior to their
acquisition by the Company, whether or not such liabilities were expressly
assumed by the Company under the terms of the transaction.
As a result of the foregoing, there can be no assurance that the Company
will not be subject to liabilities and claims relating to the TCR-West
Properties arising from events which occurred or circumstances which existed
prior to the acquisition of those properties by the Company, which could have
a material adverse effect on the Company and its ability to make distributions
to shareholders and to pay amounts due on its Debt Securities. In that regard,
the terms of the TCR-West Transaction do not provide for the Company to be
indemnified against any such liabilities and claims. See "--Limited
Indemnification" below.
Limited Indemnification
The Company acquired the TCR-West Properties on an "as is" basis, meaning
that the properties were acquired without warranty from the sellers. As a
result, the Company has no recourse against the sellers for matters relating
to the properties or the transaction, except to the limited extent described
below.
The terms of the TCR-West Transaction provide the Company with only limited
indemnification with respect to claims or liabilities that might arise out of
the transaction or actions taken by the sellers before the closing.
Specifically, certain Trammell Crow Residential entities and related parties
who are signatories to the Contribution Agreement (the "TCR Parties") have
agreed to indemnify the Company and its affiliates only against claims arising
out of (i) any inaccuracy in the investment representations of any TCR Party
or certain
10
<PAGE>
representations about employment matters, or any failure of a TCR Party to
comply with any agreement with respect thereto, (ii) any breach by a TCR Party
of its fiduciary duties (including duties of disclosure) to any other person
in connection with the transaction, or (iii) any document filed by or on
behalf of a TCR Party or any affiliate with a governmental agency or prepared
or distributed in connection with the transaction (including any document
distributed in connection with the solicitation of consents by the TCR Parties
for the TCR-West Transaction) (provided, however, that the foregoing does not
apply to the information supplied by the Company or the Operating Company in
writing specifically for inclusion or incorporation by reference in any such
document or to any document prepared or filed by the Company or the Operating
Company). The Company has no recourse against the TCR Parties with respect to
any claims which are not within the specific coverage of the indemnity
provisions.
In addition, in the event that the Company is entitled to indemnification,
the terms of the TCR-West Transaction significantly limit the amount which the
Company would be entitled to recover. Specifically, the Company's sole
recourse under a claim for indemnity is the right to reduce the number of
Development OC Units (as defined below) which the Company might otherwise be
required to deliver in connection with the TCR-West Transaction. A maximum of
up to 627,594 Development OC Units are issuable, each of which will be
exchangeable, commencing November 18, 1998, at the option of the holders
thereof for Common Shares (at the rate of one Common Share per Development OC
Unit, subject to adjustment under certain circumstances) or, at the Company's
election, into an equivalent amount of cash based on the value of the Common
Shares at the time of exchange. For purposes of determining the reduction in
the number of Development OC Units in the event of a claim for indemnity, the
Development OC Units will be deemed to have a value equal to the average of
the closing prices of a Common Share on the New York Stock Exchange for the
fifteen consecutive trading days concluding on the fifth trading day preceding
the day of the reduction. The TCR Parties' indemnification obligations (and
such obligations of the Company and the Operating Company, as described below)
are limited, in the aggregate, to an amount which, as of any date, is obtained
by multiplying the number of Development OC Units which have not been
distributed by the lower of (i) $26.93 or (ii) the average of the closing
prices of a Common Share on the New York Stock Exchange for the fifteen
consecutive trading days concluding on the fifth trading day preceding such
date.
The "Development OC Units" are equity interests in the Operating Company
which will be issued to the TCR Parties if certain completion schedule and
budget objectives are met for the Development Properties. The Company
currently anticipates that all of the Development OC Units will either be
awarded or will become ineligible for award by the end of 1999. Accordingly,
there can be no assurance that the amount of any claim for indemnity will be
made at a time when a sufficient amount or any of the Development OC Units
remain available for set-off or that, even if the full number of Development
OC Units is available, that the value of those units will be sufficient to
fully cover the claim for indemnity.
There can be no assurance that the Company will not be confronted in the
future with claims by third parties relating to the TCR-West Transaction or to
the activities of the TCR Parties or the operations of the TCR-West Properties
and matters related thereto prior to the closing of the transaction. Likewise,
there can be no assurance that the properties acquired in the TCR-West
Transaction will meet the Company's expectations. Accordingly, the limited
scope of the indemnification could have a material adverse effect on the
Company and its ability to make distributions to shareholders and to pay
amounts due on its Debt Securities. See "--Risks of Assumed Liabilities,"
above.
The Company and the Operating Company have also provided a limited indemnity
to the TCR Parties. Under the terms of the Contribution Agreement, the Company
and the Operating Company have agreed to indemnify the TCR Parties and their
affiliates against claims arising out of (i) any inaccuracy in certain
representations made by the Company about the registration rights it agreed to
provide to the TCR Parties who become shareholders of the Company or
unitholders of the Operating Company, or any failure by the Company to fulfill
its obligations under terms of the transaction, or (ii) any material
misstatement or omission in the information statement provided to the TCR
Parties with respect to the Company, the Operating Company, the Common Shares
or units of the Operating Company. The Company's indemnification obligations
are limited to
11
<PAGE>
an amount equal to the value of the remaining Development OC Units outstanding
from time to time, calculated in the same manner as the limit on the
indemnification obligations of the TCR Parties, as described above.
Notwithstanding the limit upon the Company's indemnification obligations, if
claims within the coverage of the indemnity provisions were brought against
the Company, it could be required to incur costs in defending against or
satisfying the claims, which could have a material adverse effect on the
Company and its ability to make distributions to shareholders and to pay
amounts due on its Debt Securities.
Potential Litigation Related to the TCR-West Transaction
Over the last several years, business reorganizations involving the
conversion of partnerships into REITs, the combination of several partnerships
into a single entity and the combination of multiple REITs into a single REIT
have given rise to investor lawsuits. If any lawsuits were filed in connection
with the TCR-West Transaction, whether by any of the TCR Parties or other
persons, such lawsuits could require the Company to incur costs in defending
such lawsuits or to pay any judgment awards or make settlement payments, any
of which could have a material adverse effect on the Company and its ability
to make distributions to shareholders and to pay amounts due on its Debt
Securities.
REAL ESTATE FINANCING RISKS
Debt Financing and Maturities
The Company is subject to the normal risks associated with debt financing,
including the risk that the Company's cash flow will be insufficient to meet
required payments of principal and interest, the risk that indebtedness on its
properties, or unsecured indebtedness, will not be able to be renewed, repaid
or refinanced when due or that the terms of any renewal or refinancing will
not be as favorable as the terms of such indebtedness. If the Company were
unable to refinance its indebtedness on acceptable terms, or at all, the
Company might be forced to dispose of one or more of the properties on
disadvantageous terms, which might result in losses to the Company, which
losses could have a material adverse effect on the Company and its ability to
make distributions to shareholders and to pay amounts due on its Debt
Securities. Furthermore, if a property is mortgaged to secure payment of
indebtedness and the Company is unable to meet mortgage payments, the
mortgagee could foreclose upon the property, appoint a receiver and receive an
assignment of rents and leases or pursue other remedies, all with a consequent
loss of revenues and asset value to the Company. Foreclosures could also
create taxable income without accompanying cash proceeds, thereby hindering
the Company's ability to meet the REIT distribution requirements of the Code.
Risk of Rising Interest Rates
The Company has incurred and expects in the future to incur indebtedness
which bears interest at a variable rate. Accordingly, increases in interest
rates would increase the Company's interest costs (to the extent that the
related indebtedness was not protected by interest rate protection
arrangements), which could have a material adverse effect on the Company and
its ability to make distributions to shareholders and to pay amounts due on
its Debt Securities or cause the Company to be in default under certain debt
instruments (including its Debt Securities). In addition, an increase in
market interest rates may lead holders of the Company's Common Shares to
demand a higher yield on their shares from distributions by the Company, which
could adversely affect the market price for the Common Shares.
Additional Debt
The Company currently funds acquisition opportunities partially through
borrowings (including its lines of credit) as well as from other sources such
as sales of non-core properties. The organizational documents of the Company
do not contain any limitation on the amount of indebtedness that the Company
may incur. Accordingly, the Company could become more highly leveraged,
resulting in an increase in debt service, which could have a material adverse
effect on the Company and its ability to make distributions to shareholders
and to pay amounts due on its Debt Securities and in an increased risk of
default on its obligations.
12
<PAGE>
Terms of Certain Indebtedness
At December 31, 1997, the Company had outstanding borrowings of $73 million
under two loan agreements which, among other things, (i) contain a covenant
which requires the Company to maintain an investment grade rating for its
long-term unsecured debt and (ii) define "events of default" to include the
acquisition by any person of either (x) 20% or more of the Company's
outstanding shares or securities (or other securities convertible into such
securities) or (y) 10% or more of the Company's outstanding shares or
securities (or other securities convertible into such securities) if such
acquisition results in any change of the board of directors of the Company or
any change in the management of the Company or any of its assets. In the event
that the Company fails to maintain an investment grade rating for its long-
term unsecured debt or if such an event of default occurs, the lender may
declare all borrowings under such loan agreements to be due and payable
immediately, which could have a material adverse effect on the Company and its
ability to make distributions to shareholders and to pay amounts due on its
Debt Securities.
ENVIRONMENTAL RISKS
Under various federal, state and local laws, ordinances and regulations, a
current or previous owner or operator of real estate may be liable for the
costs of removal or remediation of certain hazardous or toxic substances in,
on, around or under such property. Such laws often impose such liability
without regard to whether the owner or operator knew of, or was responsible
for, the presence of such hazardous or toxic substances. The presence of, or
failure to remediate properly, such substances may adversely affect the
owner's or operator's ability to sell or rent the affected property or to
borrow using such property as collateral. Persons who arrange for the disposal
or treatment of hazardous or toxic substances may also be liable for the costs
of removal or remediation of such substances at a disposal or treatment
facility, whether or not such facility is owned or operated by such person.
Certain environmental laws impose liability for release of asbestos-containing
materials into the air, and third parties may also seek recovery from owners
or operators of real properties for personal injury associated with asbestos-
containing materials and other hazardous or toxic substances. The operation
and subsequent removal of certain underground storage tanks are also regulated
by federal and state laws. In connection with the current or former ownership
(direct or indirect), operation, management, development and/or control of
real properties, the Company may be considered an owner or operator of such
properties or as having arranged for the disposal or treatment of hazardous or
toxic substances and, therefore, may be potentially liable for removal or
remediation costs, as well as certain other costs, including governmental
fines, and claims for injuries to persons and property.
The Company's current policy is to obtain a Phase I environmental study on
each property it seeks to acquire and to proceed accordingly. No assurance can
be given, however, that the Phase I environmental studies or other
environmental studies undertaken with respect to any of the Company's current
or future properties will reveal all or the full extent of potential
environmental liabilities, that any prior owner or operator of a property did
not create any material environmental condition unknown to the Company, that a
material environmental condition does not otherwise exist as to any one or
more of such properties or that environmental matters will not have a material
adverse effect on the Company and its ability to make distributions to
shareholders and to pay amounts due on its Debt Securities. The Company
currently carries no insurance for environmental liabilities.
Certain environmental laws impose liability on a previous owner of property
to the extent that hazardous or toxic substances were present during the prior
ownership period. A transfer of the property does not relieve an owner of such
liability. Thus, the Company may have liability with respect to properties
previously sold by its predecessors.
RISKS OF THIRD PARTY MANAGEMENT BUSINESS
Possible Termination of Management Contracts
As part of the TCR-West Transaction, the Company also acquired TCR-West's
third party management contracts. This business is conducted by two
subsidiaries of the Company (collectively, the "Management Company").
13
<PAGE>
Risks associated with the management of properties owned by third parties
include the risk that the management contracts (which are generally cancelable
upon a sale of the property or, in many cases, upon 30 days' notice) will be
terminated by the property owner or will be lost in connection with a sale of
such property, that contracts may not be renewed upon expiration or may not be
renewed on terms consistent with current terms, and that the rental revenues
upon which management fees are based will decline as a result of general real
estate market conditions or market factors affecting specific properties,
resulting in decreased management fee income. As a result, there can be no
assurance that the Management Company will perform in accordance with the
Company's expectations.
Possible Adverse Consequences of REIT Status on the Business of the
Management Company
Certain requirements for REIT qualifications may in the future limit the
Company's ability to increase third party management operations conducted and
related services offered by the Management Company without jeopardizing the
Company's qualifications as a REIT. See "Federal Income Tax Considerations--
Third Party Management Income."
RANKING OF SECURITIES
All of the Common Shares, Preferred Shares and Debt Securities offered
hereby will be obligations exclusively of the Company. Because a significant
portion of the operations of the Company is conducted through its
subsidiaries, including the Operating Company, the cash flow of the Company
and the consequent ability to make distributions and other payments on its
equity securities, including Common Shares and any Preferred Shares, and to
service its debt, including the Debt Securities, will be partially dependent
upon the earnings of such subsidiaries and the distribution of those earnings
to the Company, or upon loans or other payments of funds made by such
subsidiaries to the Company. In addition, debt or other agreements of the
Company's subsidiaries may impose restrictions that affect, among other
things, the ability of the Company's subsidiaries to pay dividends or make
other distributions or loans to the Company.
Likewise, a substantial portion of the Company's consolidated assets are
owned by its subsidiaries, effectively subordinating the Debt Securities to
all existing and future liabilities, including indebtedness, trade payables,
lease obligations and guarantees, of the Company's subsidiaries. The Operating
Company has guaranteed amounts due under the Company's $265 million unsecured
bank credit facility (the "Credit Facility") with Bank of America National
Trust and Savings Association and the Company's $35 million unsecured line of
credit with Sanwa Bank California (the "Sanwa Line of Credit"), and it is
anticipated that Blue Ravine Investors LLC ("Blue Ravine"), a Delaware limited
liability company which is a subsidiary of the Company, also will guarantee
amounts due under the Credit Facility. Likewise, any other subsidiary of the
Company with assets or net income which, when multiplied by the Company's
effective percentage ownership interest in such subsidiary, exceeds $30
million or 5% of the Company's consolidated net income, respectively, is
required to guarantee the repayment of borrowings under the Credit Facility
and the Sanwa Line of Credit. The Operating Company, Blue Ravine and other
subsidiaries of the Company may also from time to time guarantee other
indebtedness of the Company. Therefore, the Company's rights and the rights of
its creditors, including the holders of Debt Securities, to participate in the
assets of any subsidiary upon the latter's liquidation or reorganization will
be subject to the prior claims of such subsidiary's creditors, except to the
extent that the Company may itself be a creditor with recognized claims
against the subsidiary, in which case the claims of the Company would still be
effectively subordinate to any security interests in or mortgages or other
liens on the assets of such subsidiary and would be subordinate to any
indebtedness of such subsidiary senior to that held by the Company.
PROVISIONS WHICH COULD LIMIT A CHANGE IN CONTROL OR DETER A TAKEOVER
In order to maintain its qualification as a REIT, not more than 50% in value
of the outstanding capital stock of the Company may be owned, actually or
constructively, by five or fewer individuals (as defined in the Code to
include certain entities). In order to protect the Company against risk of
losing its status as a REIT due to a
14
<PAGE>
concentration of ownership among its shareholders, the articles of
incorporation of the Company provide, among other things, that if the Board of
Directors determines, in good faith, that direct or indirect ownership of the
Company's Common Shares have or may become concentrated to an extent that
would prevent the Company from qualifying as a REIT, the Board of Directors
may prevent the transfer of the Common Shares or call for redemption (by lot
or other means affecting one or more shareholders selected in the sole
discretion of the Board of Directors) of a number of Common Shares sufficient
in the opinion of the Board of Directors to maintain or bring the direct or
indirect ownership of the Common Shares into conformity with the requirements
for maintaining REIT status. These limitations may have the effect of
precluding acquisition of control of the Company by a third party without
consent of the Board of Directors.
In addition, certain other provisions contained in the Company's articles of
incorporation and bylaws, as well as its shareholder rights plan, may have the
effect of discouraging a third party from making an acquisition proposal for
the Company and may thereby inhibit a change in control of the Company. For
example, such provisions may (i) deter tender offers for Common Shares which
offers may be attractive to the shareholders, or (ii) deter purchases of large
blocks of Common Shares, thereby limiting the opportunity for shareholders to
receive a premium for their Common Shares over then-prevailing market prices.
TAX RISKS
Tax Liabilities as a Consequence of Failure to Qualify as a REIT
Although management believes that the Company is organized and is operating
so as to qualify as a REIT under the Code, no assurance can be given that the
Company has in fact operated or will be able to continue to operate in a
manner so as to qualify or remain so qualified. Qualification as a REIT
involves the application of highly technical and complex Code provisions for
which there are only limited judicial or administrative interpretations and
the determination of various factual matters and circumstances not entirely
within the Company's control. For example, in order to qualify as a REIT, at
least 95% of the Company's taxable gross income in any year must be derived
from qualifying sources and the Company must make distributions to
shareholders aggregating annually at least 95% of its REIT taxable income
(excluding net capital gains). Thus, to the extent Third Party Management
Income (as defined in "Federal Income Tax Considerations--Third Party
Management Income") represents 5% or more of the Company's gross income in any
taxable year, the Company will not satisfy the 95% income test and may fail to
qualify as a REIT, unless certain relief provisions apply, and, even if those
relief provisions apply, a tax would be imposed with respect to excess net
income, any of which could have a material adverse effect on the Company and
its ability to make distributions to shareholders and to pay amounts due on
its Debt Securities. See "Federal Income Tax Considerations--Third Party
Management Income" and "Federal Income Tax Considerations--Income Tests."
Additionally, to the extent the Operating Company or any of the Subsidiary
Entities (as defined in "Federal Income Tax Considerations--Requirements for
Qualification") are determined to be taxable as a corporation, the Company
would not qualify as a REIT, which could have a material adverse effect on the
Company and its ability to make distributions to shareholders and to pay
amounts due on its Debt Securities. See "Federal Income Tax Considerations--
Federal Income Tax Aspects of the Operating Company and the Subsidiary
Entities." Finally, no assurance can be given that new legislation, new
regulations, administrative interpretations or court decisions will not change
the tax laws with respect to qualification as a REIT or the federal income tax
consequences of such qualification.
If the Company fails to qualify as a REIT, the Company will be subject to
federal income tax (including any applicable alternative minimum tax) on its
taxable income at corporate rates, which would likely have a material adverse
effect on the Company and its ability to make distributions to shareholders
and to pay amounts due on its Debt Securities. In addition, unless entitled to
relief under certain statutory provisions, the Company would also be
disqualified from treatment as a REIT for the four taxable years following the
year during which qualification is lost. This treatment would reduce funds
available for investment or distributions to security holders because of the
additional tax liability to the Company for the year or years involved. In
addition, distributions to shareholders would no longer be required to be
made. To the extent that distributions to
15
<PAGE>
shareholders would have been made in anticipation of qualifying as a REIT, the
Company might be required to borrow funds or to liquidate certain of its
investments to pay the applicable tax.
RATIO OF EARNINGS TO FIXED CHARGES
The Company's ratio of earnings to fixed charges for the years ended
December 31, 1997, 1996, 1995, 1994, and 1993 was 3.0x, 3.2x, 4.0x, 5.0x, and
4.4x, respectively. For the purposes of computing these ratios, earnings have
been calculated by adding fixed charges to income before net gains (losses) on
sales of investments. Fixed charges consist of interest costs (including
capitalized interest), amortization of debt expense and one-third of the
rental expense, which is deemed to be the interest component of such rental
expense.
USE OF PROCEEDS
Unless otherwise described in the applicable Prospectus Supplement for any
offering of securities, the Company intends to use the net proceeds from the
sale of the Offered Securities for general corporate purposes, which may
include the acquisition and development of properties or interests therein
(including using the net proceeds for possible portfolio or asset acquisitions
or in business combinations) as suitable opportunities arise, the expansion
and improvement of certain properties in the Company's portfolio and the
repayment of indebtedness.
DESCRIPTION OF DEBT SECURITIES
The Debt Securities will be direct unsecured obligations of the Company and
may be either senior Debt Securities ("Senior Debt Securities") or
subordinated Debt Securities ("Subordinated Debt Securities"). The Debt
Securities will be issued under one or more indentures. Senior Debt Securities
and Subordinated Debt Securities will be issued pursuant to separate
indentures (respectively, a "Senior Indenture" and a "Subordinated
Indenture"), in each case between the Company and a trustee (a "Trustee"),
which may be the same trustee. The Senior Indentures and the Subordinated
Indentures, as amended or supplemented from time to time, are sometimes
referred to collectively as the "Indentures." The Indentures will be subject
to and governed by the Trust Indenture Act of 1939, as amended (the "TIA").
The statements made under this heading relating to the Debt Securities and the
Indentures are summaries of certain anticipated provisions thereof, do not
purport to be complete and are qualified in their entirety by reference to the
forms of Indentures and such Debt Securities, which have been or will be
included or incorporated by reference to exhibits to the Registration
Statement of which this Prospectus is a part and are or will be available as
described above under "Available Information."
The following description of Debt Securities sets forth certain general
terms and provisions of the series of Debt Securities to which any Prospectus
Supplement may relate. Certain other specific terms of any particular series
of Debt Securities will be described in the applicable Prospectus Supplement.
The terms of the Debt Securities offered by any Prospectus Supplement may
differ from the terms set forth below, in which case the terms set forth below
shall be deemed to have been superseded to the extent of any different terms
set forth in such Prospectus Supplement.
Capitalized terms used herein and not defined shall have the meanings
assigned to them in the applicable form of Indenture. As used in this
"Description of Debt Securities," all references to the "Company" shall mean
BRE Properties, Inc., excluding, unless otherwise expressly stated or the
context shall otherwise require, its subsidiaries.
16
<PAGE>
GENERAL
The Debt Securities will be direct, unsecured obligations of the Company.
Each Indenture will provide that the Debt Securities issued thereunder may be
issued without limit as to aggregate principal amount, in one or more series,
in each case as established from time to time in or pursuant to authority
granted by a resolution of the Board of Directors of the Company or as
established in one or more indentures supplemental to the applicable
Indenture. The terms of any Debt Securities within any series may differ from
the terms of any other Debt Securities in such series. All Debt Securities of
one series need not be issued at the same time and, unless otherwise provided,
a series may be reopened, without the consent of the Holders of the Debt
Securities of such series, for issuances of additional Debt Securities of such
series. (See Section 301 of the forms of Indenture.) Any Trustee under either
Indenture may resign or be removed with respect to one or more series of Debt
Securities issued under such Indenture, and a successor Trustee may be
appointed to act with respect to such series.
Reference is made to each Prospectus Supplement for the specific terms of
the series of Debt Securities being offered thereby, including:
(1) The title of such Debt Securities and whether such Debt Securities
will be Senior Debt Securities or Subordinated Debt Securities;
(2) The aggregate principal amount of such Debt Securities and any limit
on such aggregate principal amount;
(3) If other than 100% of the principal amount thereof, the portion of
the principal amount of such Debt Securities payable upon declaration of
acceleration of the maturity thereof or (if applicable) the portion of the
principal amount of such Debt Securities which is convertible into Common
Shares or other equity securities of the Company, or the method by which
any such portion shall be determined;
(4) If such Debt Securities are convertible, any limitation on the
ownership or transferability of the Common Shares or other equity
securities of the Company into which such Debt Securities are convertible
in connection with the preservation of the Company's status as a REIT;
(5) The date or dates, or the method for determining the date or dates,
on which the principal of such Debt Securities will be payable;
(6) The rate or rates (which may be fixed or variable), or the method by
which such rate or rates shall be determined, at which such Debt Securities
will bear interest, if any;
(7) The date or dates, or the method for determining the date or dates,
from which any such interest will accrue, the Interest Payment Dates on
which any such interest will be payable, the Regular Record Dates for such
Interest Payment Dates, or the method by which such Regular Record Dates
shall be determined, the Person to whom such interest shall be payable, and
the basis upon which interest, shall be calculated if other than that of a
360-day year of twelve 30-day months;
(8) The place or places where (i) the principal of (and premium, if any)
or interest, if any, on such Debt Securities will be payable, (ii) such
Debt Securities may be surrendered for conversion (if applicable) or
registration of transfer or exchange, and (iii) notices or demands to or
upon the Company in respect of such Debt Securities and the applicable
Indenture may be served;
(9) The period or periods within which, the price or prices at which, and
the terms and conditions upon which, such Debt Securities may be redeemed,
as a whole or in part, at the option of the Company, if the Company is to
have such an option;
(10) The obligation, if any, of the Company to redeem, repay or purchase
such Debt Securities pursuant to any sinking fund or analogous provision or
at the option of a Holder thereof, and the period or periods within which,
or the date or dates on which, the price or prices at which and the terms
and conditions upon which such Debt Securities will be redeemed, repaid or
purchased, as a whole or in part, pursuant to such obligation;
17
<PAGE>
(11) If other than U.S. dollars, the currency or currencies in which such
Debt Securities are denominated and payable, which may be a foreign
currency or units of two or more foreign currencies or a composite currency
or currencies, and the terms and conditions relating thereto;
(12) Whether the amount of payments of principal of (and premium, if any)
or interest, if any, on such Debt Securities may be determined with
reference to an index, formula or other method (which index, formula or
method may, but need not, be based on a currency, currencies, currency unit
or units or composite currency or currencies) and the manner in which such
amounts shall be determined;
(13) Any additions to, modifications of or deletions from the terms of
such Debt Securities with respect to the Events of Default or covenants set
forth in the applicable Indenture;
(14) Whether such Debt Securities will be issued in certificated or book-
entry form;
(15) Whether such Debt Securities will be in registered or bearer form or
both and, if and to the extent in registered form, the denominations
thereof if other than $1,000 and any integral multiple thereof and, if and
to the extent in bearer form, the denominations thereof if other than
$5,000 and terms and conditions relating thereto;
(16) The applicability, if any, of the defeasance and covenant defeasance
provisions of the applicable Indenture;
(17) The terms, if any, upon which such Debt Securities may be
convertible into Common Shares or other equity securities of the Company
(and the class thereof) and the terms and conditions upon which such
conversion will be effected, including, without limitation, the initial
conversion price or rate and the conversion period;
(18) The circumstances, if any, under which the Company will pay
Additional Amounts on such Debt Securities in respect of any tax,
assessment or governmental charge and, if so, whether the Company will have
the option to redeem such Debt Securities in lieu of making such payment;
and
(19) Any other terms of such Debt Securities.
The Debt Securities may provide for less than the entire principal amount
thereof to be payable upon declaration of acceleration of the maturity thereof
("Original Issue Discount Securities"). Any material U.S. federal income tax,
accounting and other considerations applicable to Original Issue Discount
Securities will be described in the applicable Prospectus Supplement.
Except as hereinafter set forth under the captions "Certain Covenants--
Aggregate Debt Test," "--Maintenance of Total Unencumbered Assets," "--Debt
Service Test" and "--Secured Debt Test," which relate solely to the Senior
Indenture and the Senior Debt Securities issued thereunder, neither Indenture
will contain any provision that would limit the ability of the Company to
incur indebtedness or that will afford Holders of Debt Securities protection
in a highly leveraged or similar action involving the Company or in the event
of a change of control of the Company. However, certain restrictions on
ownership and transfers of the Company's Common Shares and the Company's other
equity securities designed to preserve its status as a REIT may act to prevent
or hinder a change of control. See "Description of Common Shares."
DENOMINATIONS, INTEREST, REGISTRATION AND TRANSFER
Unless otherwise described in the applicable Prospectus Supplement, the
registered Debt Securities of any series will be issuable in denominations of
$1,000 and integral multiples of $1,000. (See Section 302 of the forms of
Indenture.)
Unless otherwise specified in the applicable Prospectus Supplement, the
principal of (and premium, if any) and interest, if any, on any series of Debt
Securities will be payable at the office or agency maintained by the Company
for such purpose; provided that, at the option of the Company, payment of
interest may be made by
18
<PAGE>
check mailed to the address of the Person entitled thereto as it appears in
the Security Register or by transfer of funds to such Person at an account
maintained within the United States. (See Sections 301, 305, 306, 307 and 1002
of the forms of Indenture.)
Any interest not punctually paid or duly provided for on any Interest
Payment Date with respect to a Debt Security ("Defaulted Interest") will
forthwith cease to be payable to the Holder on the applicable Regular Record
Date and may either be paid to the person in whose name such Debt Security is
registered at the close of business on a special record date (the "Special
Record Date") for the payment of such Defaulted Interest to be fixed by the
applicable Trustee, notice of which shall be given to the Holder of such Debt
Security not less than 10 days prior to such Special Record Date, or may be
paid at any time in any other lawful manner, all as more completely described
in the applicable Indenture. (See Section 307 of the forms of Indenture.)
Subject to certain limitations applicable to Debt Securities issued in book-
entry form, the Debt Securities of any series will be exchangeable for other
Debt Securities of the same series and of a like aggregate principal amount
and tenor of different authorized denominations upon surrender of such Debt
Securities at the office or agency maintained by the Company for such purpose.
In addition, subject to certain limitations applicable to Debt Securities
issued in book-entry form, the Debt Securities of any series may be
surrendered for conversion (if applicable) or registration of transfer thereof
at the office or agency maintained by the Company for such purpose. Every Debt
Security surrendered for conversion (if applicable), registration of transfer
or exchange must be duly endorsed or accompanied by a written instrument of
transfer. No service charge will be made for any registration of transfer or
exchange of any Debt Securities, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith. (See Section 305 of the forms of Indenture.) If the applicable
Prospectus Supplement refers to any transfer agent initially designated by the
Company with respect to any series of Debt Securities, the Company may at any
time rescind the designation of any such transfer agent or approve a change in
the location at which any such transfer agent acts, except that the Company
will be required to maintain a transfer agent in each Place of Payment for
such series. The Company may at any time designate additional transfer agents
with respect to any series of Debt Securities. (See Section 1002 of the forms
of Indenture.)
Neither the Company nor any Trustee will be required (i) to issue, register
the transfer of or exchange Debt Securities of any series if such Debt
Securities may be among those selected for redemption during a period
beginning at the opening of business 15 days before selection of Debt
Securities of that series to be redeemed and ending at the close of business
on (A) if such Debt Securities are issuable only in registered form, the day
of the mailing of the relevant notice of redemption or (B) if such Debt
Securities are issuable in bearer form, the day of the first publication of
the relevant notice of redemption or, if such Debt Securities are also
issuable in registered form and there is no publication, the day of the
mailing of the relevant notice of redemption; (ii) to register the transfer of
or exchange any Debt Security in registered form, or portion thereof, called
for redemption, except the unredeemed portion of any Debt Security being
redeemed in part; (iii) to exchange any Debt Security in bearer form so
selected for redemption except in exchange for a Debt Security in registered
form which is simultaneously surrendered for redemption; or (iv) to issue,
register the transfer of or exchange any Debt Security which has been
surrendered for repayment at the option of the Holder, except the portion, if
any, of such Debt Security not to be so repaid. (See Section 305 of the forms
of Indenture.)
MERGER, CONSOLIDATION OR SALE
Each Indenture will provide that the Company will not, in any transaction or
series of related transactions, consolidate with, or sell, lease, assign,
transfer or otherwise convey all or substantially all of its assets to, or
merge with or into, any other Person unless (i) either the Company shall be
the continuing corporation, or the successor Person (if other than the
Company) formed by or resulting from any such consolidation or merger or which
shall have received the transfer of such assets is a corporation organized and
existing under the laws of the United States of America, any state thereof or
the District of Columbia and shall expressly assume, by supplemental indenture
delivered to the Trustee, the due and punctual payment of the principal of
(and premium,
19
<PAGE>
if any) and interest, if any, on all of the outstanding Debt Securities issued
under such Indenture and the due and punctual performance and observance of
all of the other covenants and conditions contained in such outstanding Debt
Securities and such Indenture; (ii) immediately after giving effect to such
transaction and treating any Debt (including Acquired Debt) which becomes an
obligation of the Company or any of its Subsidiaries as a result thereof as
having been incurred by the Company or such Subsidiary at the time of such
transaction, no Event of Default under the applicable Indenture, and no event
which, after notice or the lapse of time or both, would become such an Event
of Default, shall have occurred and be continuing; and (iii) an officers'
certificate and legal opinion concerning such conditions shall be delivered to
the relevant Trustee. In the event that the Company is not the continuing
corporation, then, for purposes of clause (ii) of the preceding sentence, the
successor corporation shall be deemed to be the "Company" referred to in such
clause (ii). (See Sections 801 and 803 of the forms of Indenture).
Upon any such merger, consolidation, sale, assignment, transfer, lease or
conveyance in which the Company is not the continuing corporation, the
successor corporation formed by such consolidation or into which the Company
is merged or to which such sale, assignment, transfer, lease or other
conveyance is made shall succeed to, and be substituted for, and may exercise
every right and power of, the Company under the relevant Indenture with the
same effect as if such successor corporation had been named as the Company
therein and thereafter (except in the case of a lease) the Company shall be
released from its obligations under such Indenture and the Debt Securities.
CERTAIN COVENANTS
The Senior Indenture will contain the following covenants:
Aggregate Debt Test. The Company will not, and will not cause or permit any
of its Subsidiaries to, incur any Debt (including, without limitation,
Acquired Debt) if, immediately after giving effect to the incurrence of such
Debt and the application of the proceeds therefrom on a pro forma basis, the
aggregate principal amount of all outstanding Debt of the Company and its
Subsidiaries (determined on a consolidated basis in accordance with generally
accepted accounting principles) is greater than 60% of the sum of (without
duplication) (i) the Total Assets of the Company and its Subsidiaries as of
the last day of the then most recently ended fiscal quarter and (ii) the
aggregate purchase price of any real estate assets or mortgages receivable
acquired, and the aggregate amount of any securities offering proceeds
received (to the extent such proceeds were not used to acquire real estate
assets or mortgages receivable or used to reduce Debt), by the Company or any
of its Subsidiaries since the end of such fiscal quarter, including the
proceeds obtained from the incurrence of such additional Debt, determined on a
consolidated basis in accordance with generally accepted accounting
principles.
Debt Service Test. The Company will not, and will not cause or permit any of
its Subsidiaries to, incur any Debt (including, without limitation, Acquired
Debt) if the ratio of Consolidated Income Available for Debt Service to the
Annual Debt Service Charge for the period consisting of the four consecutive
fiscal quarters most recently ended prior to the date on which such additional
Debt is to be incurred shall have been less than 1.5:1 on a pro forma basis
after giving effect to the incurrence of such Debt and the application of the
proceeds therefrom, and calculated on the assumption that (i) such Debt and
any other Debt (including, without limitation, Acquired Debt) incurred by the
Company or any of its Subsidiaries since the first day of such four-quarter
period had been incurred, and the application of the proceeds therefrom
(including to repay or retire other Debt) had occurred, on the first day of
such period, (ii) the repayment or retirement of any other Debt of the Company
or any of its Subsidiaries since the first day of such four-quarter period had
occurred on the first day of such period (except that, in making such
computation, the amount of Debt under any revolving credit facility, line of
credit or similar facility shall be computed based upon the average daily
balance of such Debt during such period) and (iii) in the case of any
acquisition or disposition by the Company or any of its Subsidiaries of any
asset or group of assets, in any such case with a fair market value
(determined in good faith by the Company's Board of Directors) in excess of $1
million, since the first day of such four-quarter period, whether by merger,
stock purchase or sale or asset purchase or sale or otherwise, such
acquisition or disposition had occurred as of the first day of such period
with the appropriate adjustments with respect to such acquisition or
disposition being
20
<PAGE>
included in such pro forma calculation. If the Debt giving rise to the need to
make the foregoing calculation or any other Debt incurred after the first day
of the relevant four-quarter period bears interest at a floating rate then,
for purposes of calculating the Annual Debt Service Charge, the interest rate
on such Debt shall be computed on a pro forma basis as if the average rate
which would have been in effect during the entire such four-quarter period had
been the applicable rate for the entire such period.
Secured Debt Test. The Company will not, and will not cause or permit any of
its Subsidiaries to, incur any Debt (including, without limitation, Acquired
Debt) secured by any Lien on any property or assets of the Company or any of
its Subsidiaries, whether owned on the date of the Indenture or thereafter
acquired, if, immediately after giving effect to the incurrence of such Debt
and the application of the proceeds therefrom on a pro forma basis, the
aggregate principal amount (determined on a consolidated basis in accordance
with generally accepted accounting principles) of all outstanding Debt of the
Company and its Subsidiaries which is secured by any Lien on any property or
assets of the Company or any of its Subsidiaries is greater than 40% of the
sum of (without duplication) (i) the Total Assets of the Company and its
Subsidiaries as of the last day of the then most recently ended fiscal quarter
and (ii) the aggregate purchase price of any real estate assets or mortgages
receivable acquired, and the aggregate amount of any securities offering
proceeds received (to the extent such proceeds were not used to acquire real
estate assets or mortgages receivable or used to reduce Debt), by the Company
or any of its Subsidiaries since the end of such fiscal quarter, including the
proceeds obtained from the incurrence of such additional Debt, determined on a
consolidated basis in accordance with generally accepted accounting
principles.
Maintenance of Total Unencumbered Assets. The Company will, and will cause
its Subsidiaries to, have at all times Total Unencumbered Assets of not less
than 150% of the aggregate principal amount of all outstanding Unsecured Debt
of the Company and its Subsidiaries, determined on a consolidated basis in
accordance with generally accepted accounting principles.
The Subordinated Indenture will not contain any of the covenants described
above and will not contain any other limitation on the amount of Debt of any
kind which the Company or its Subsidiaries may incur. Neither Indenture will
limit the amount of dividends or other distributions which the Company may pay
to its shareholders.
Each Indenture will contain the following covenants:
Existence. Except as permitted under the provisions of such Indenture
described in "Merger, Consolidation or Sale" the Company will do or cause to
be done all things necessary to preserve and keep in full force and effect its
corporate existence, rights (charter and statutory) and franchises; provided,
however, that the Company will not be required to preserve any right or
franchise if its Board of Directors determines that the preservation thereof
is no longer desirable in the conduct of its business and that the loss
thereof is not disadvantageous in any material respect to the Holders of the
Debt Securities outstanding under the relevant Indenture.
Maintenance of Properties. The Company will cause all of its properties used
or useful in the conduct of its business or the business of any Subsidiary to
be maintained and kept in good condition, repair and working order and
supplied with all necessary equipment and will cause to be made all necessary
repairs, renewals, replacements, betterments and improvements thereof, all as
in the judgment of the Company may be necessary so that the business carried
on in connection therewith may be properly and advantageously conducted at all
times; provided, however, that the Company and its Subsidiaries will not be
prevented from selling or otherwise disposing of for value their respective
properties in the ordinary course of business.
Insurance. Each Indenture will require the Company to, and to cause each of
its Subsidiaries to, keep in force upon all of its properties and operations
policies of insurance carried with responsible companies in such amounts and
covering all such risks as shall be customary in the industry in accordance
with prevailing market conditions and availability.
21
<PAGE>
Payment of Taxes and Other Claims. The Company will pay or discharge or
cause to be paid or discharged, before the same shall become delinquent, (i)
all taxes, assessments and governmental charges levied or imposed upon it or
any Subsidiary or upon the income, profits or property of the Company or any
Subsidiary, and (ii) all lawful claims for labor, materials and supplies
which, if unpaid, might by law become a lien upon the property of the Company
or any Subsidiary, provided, however, that the Company will not be required to
pay or discharge or cause to be paid or discharged any such tax, assessment,
charge or claim whose amount, applicability or validity is being contested in
good faith by appropriate proceedings.
Provision of Financial Information. Whether or not the Company is subject to
Section 13 or 15(d) of the Exchange Act, for so long as any Debt Securities
are outstanding, the Company will, to the extent permitted under the Exchange
Act, file with the Commission the annual reports, quarterly reports and other
documents which the Company would have been required to file with the
Commission pursuant to such Section 13 or 15(d) if the Company were so
subject, on or prior to the respective dates (the "Required Filing Dates") by
which the Company would have been so required so to file such documents. The
Company will also in any event (x) within 15 days after each Required Filing
Date (i) transmit by mail to all Holders of Debt Securities, as their names
and addresses appear in the relevant Security Register, without cost to such
Holders, copies of the annual reports, quarterly reports and other documents
which the Company would have been required to file with the Commission
pursuant to Section 13 or 15(d) of the Exchange Act if the Company were
subject to such Sections and (ii) file with the applicable Trustee copies of
the annual reports, quarterly reports and other documents which the Company
would have been required to file with the Commission pursuant to Section 13 or
15(d) of the Exchange Act if the Company were subject to such Sections and (y)
if filing such documents by the Company with the Commission is not permitted
under the Exchange Act, promptly upon written request and payment of the
reasonable cost of duplication and delivery, supply copies of such documents
to any prospective Holder of Debt Securities under the relevant Indenture.
Definitions. As used herein,
"Acquired Debt" means Debt of a Person (i) existing at the time such Person
is merged or consolidated with or into, or becomes a Subsidiary of, the
Company or (ii) assumed by the Company or any of its Subsidiaries in
connection with the acquisition of assets from such Person. Acquired Debt
shall be deemed to be incurred on the date the acquired Person is merged or
consolidated with or into, or becomes a Subsidiary of, the Company or the date
of the related acquisition, as the case may be.
"Annual Debt Service Charge" means, for any period, the interest expense of
the Company and its Subsidiaries for such period (including, without
duplication, (i) all amortization of debt discount, (ii) all accrued interest,
(iii) all capitalized interest, and (iv) the interest component of capitalized
lease obligations), determined on a consolidated basis in accordance with
generally accepted accounting principles.
"Consolidated Income Available for Debt Service" for any period means
Consolidated Net Income of the Company and its Subsidiaries for such period,
plus amounts which have been deducted and minus amounts which have been added
for (without duplication) (i) interest expense on Debt, (ii) provision for
taxes based on income, (iii) amortization of debt discount and deferred
financing costs, (iv) provisions for gains and losses on sales or other
dispositions of properties and other investments, (v) property depreciation
and amortization, (vi) the effect of any non-cash items resulting from a
change in accounting principles in determining Consolidated Net Income, and
(vii) amortization of deferred charges, all determined on a consolidated basis
in accordance with generally accepted accounting principles.
"Consolidated Net Income" for any period means the amount of net income (or
loss) of the Company and its Subsidiaries for such period, excluding (without
duplication) (i) extraordinary items and (ii) the portion of net income (but
not losses) of the Company and its Subsidiaries allocable to minority
interests in unconsolidated Persons to the extent that cash dividends or
distributions have not actually been received by the Company or one of its
Subsidiaries, all determined on a consolidated basis in accordance with
generally accepted accounting principles.
22
<PAGE>
"Debt" means, with respect to any Person, any indebtedness of such Person,
whether or not contingent, in respect of (i) borrowed money or evidenced by
bonds, notes, debentures or similar instruments, (ii) indebtedness secured by
any Lien on any property or asset owned by such Person, but only to the extent
of the lesser of (x) the amount of indebtedness so secured and (y) the fair
market value (determined in good faith by the board of directors of such
Person or, in the case of the Company or a Subsidiary, by the Company's Board
of Directors) of the property subject to such Lien, (iii) reimbursement
obligations, contingent or otherwise, in connection with any letters of credit
actually issued or amounts representing the balance deferred and unpaid of the
purchase price of any property except any such balance that constitutes an
accrued expense or trade payable, or (iv) any lease of property by such Person
as lessee which is required to be reflected on such Person's balance sheet as
a capitalized lease in accordance with generally accepted accounting
principles, and also includes, to the extent not otherwise included, any
obligation of such Person to be liable for, or to pay, as obligor, guarantor
or otherwise (other than for purposes of collection in the ordinary course of
business), Debt of the types referred to above of another Person (it being
understood that Debt shall be deemed to be incurred by such Person whenever
such person shall create, assume, guarantee or otherwise become liable in
respect thereof).
"Executive Group" means, collectively, those individuals holding the offices
of Chairman, Vice Chairman, President, Chief Executive Officer, Chief
Operating Officer or any Vice President of the Company.
"Lien" means any mortgage, deed of trust, lien, charge, pledge, security
interest, security agreement, or other encumbrance of any kind.
"Subsidiary" means (i) a corporation, partnership, joint venture, limited
liability company or other Person the majority of the shares, if any, of the
non-voting capital stock or other equivalent ownership interests of which
(except directors' qualifying shares) are at the time directly or indirectly
owned by the Company and/or any other Subsidiary or Subsidiaries, and the
majority of the shares of the voting capital stock or other equivalent
ownership interests of which (except directors' qualifying shares) are at the
time directly or indirectly owned by the Company, any other Subsidiary or
Subsidiaries, and/or one or more individuals of the Executive Group (or, in
the event of death or disability of any of such individuals, his/her
respective legal representatives(s), or such individuals' successors in office
as an officer of the Company), and (ii) any Person the accounts of which are
consolidated with the accounts of the Company.
"Total Assets" means the sum of (without duplication) (i) Undepreciated Real
Estate Assets and (ii) all other assets (excluding accounts receivable and
intangibles) of the Company and its Subsidiaries, all determined on a
consolidated basis in accordance with generally accepted accounting
principles.
"Total Unencumbered Assets" means the sum of (without duplication) (i) those
Undepreciated Real Estate Assets which are not subject to a Lien securing Debt
and (ii) all other assets (excluding accounts receivable and intangibles) of
the Company and its Subsidiaries not subject to a Lien securing Debt, all
determined on a consolidated basis in accordance with generally accepted
accounting principles.
"Undepreciated Real Estate Assets" means, as of any date, the cost (original
cost plus capital improvements) of real estate assets of the Company and its
Subsidiaries on such date, before depreciation and amortization, all
determined on a consolidated basis in accordance with generally accepted
accounting principles.
"Unsecured Debt" means Debt of the Company or any of its Subsidiaries which
is not secured by a Lien on any property or assets of the Company or any of
its Subsidiaries.
EVENTS OF DEFAULT, NOTICE AND WAIVER
Unless otherwise provided in the applicable Prospectus Supplement, each
Indenture will provide that the following events are "Events of Default" with
respect to any series of Debt Securities issued thereunder: (i) default for 30
days in the payment of any interest on or any Additional Amounts payable in
respect of any Debt Security of such series; (ii) default in the payment of
any principal of (or premium, if any, on) any Debt
23
<PAGE>
Security of such series at its Maturity; (iii) default in making any sinking
fund payment as required for any Debt Security of such series; (iv) default in
the performance of any other covenant or warranty of the Company contained in
the applicable Indenture (other than a covenant or warranty included in such
Indenture solely for the benefit of a series of Debt Securities other than
such series), continued for 60 days after written notice as provided in such
Indenture; (v) default under any bond, note, debenture or other evidence of
indebtedness of the Company or any of its Subsidiaries or under any mortgage,
indenture or other instrument under which there may be issued or by which
there may be secured or evidenced any indebtedness of the Company or any of
its Subsidiaries which results in the acceleration of such indebtedness in an
aggregate principal amount exceeding $20,000,000 or which constitutes a
failure to pay at maturity or other scheduled payment date (after expiration
of any applicable grace period) such indebtedness in an aggregate principal
amount exceeding $20,000,000, but only if such indebtedness is not discharged
or such acceleration is not rescinded or annulled within 10 days after notice
to the Company by the Trustee or to the Company and the Trustee by the Holders
of at least 10% in aggregate principal amount of the Outstanding Debt
Securities of such series; (vi) certain events of bankruptcy, insolvency or
reorganization with respect to the Company or of any Significant Subsidiary;
and (vii) any other Event of Default provided with respect to that series of
Debt Securities. (See Section 501 of the forms of Indenture.) The term
"Significant Subsidiary" means any Subsidiary which is a significant
subsidiary (as defined in Regulation S-X promulgated under the Securities Act
as in effect on January 1, 1996) of the Company.
If an Event of Default under any Indenture with respect to Debt Securities
of any series issued thereunder at the time outstanding occurs and is
continuing, then in every such case the applicable Trustee or the Holders of
not less than 25% in principal amount of the Outstanding Debt Securities of
that series may declare the principal amount (or, if the Debt Securities of
that series are Original Issue Discount Securities or Indexed Securities, such
portion of the principal amount as may be specified in the terms thereof) of
all of the Debt Securities of that series to be due and payable immediately by
written notice thereof to the Company (and to the applicable Trustee if given
by the Holders). However, at any time after such a declaration of acceleration
with respect to Debt Securities of such series has been made, the Holders of
not less than a majority in principal amount of outstanding Debt Securities of
such series may rescind and annul such declaration and its consequences if (i)
the Company shall have deposited with the applicable Trustee all required
payments of the principal of (and premium, if any) and interest, if any, on
the Debt Securities of such series (other than amounts which have become due
and payable as a result of such acceleration), plus certain fees, expenses,
disbursements and advances of such Trustee and (ii) all Events of Default
(other than the nonpayment of accelerated principal (or specified portion
thereof), premium, if any, and interest) with respect to Debt Securities of
such series have been cured or waived as provided in such Indenture. (See
Section 502 of the forms of Indenture.) The Indentures will also provide that
the Holders of not less than a majority in principal amount of the outstanding
Debt Securities of any series may waive any past default with respect to such
series and its consequences, except a default (x) in the payment of the
principal of (or premium, if any) or interest, if any, on any Debt Security of
such series or (y) in respect of a covenant or provision contained in the
applicable Indenture that cannot be modified or amended without the consent of
the Holder of each Outstanding Debt Security of such series affected thereby.
(See Section 513 of the forms of Indenture.)
The Indentures will require each Trustee to give notice to the Holders of
Debt Securities issued thereunder within 90 days of a default under the
applicable Indenture known to such Trustee, unless such default shall have
been cured or waived; provided, however, that such Trustee may withhold notice
to the Holders of any such series of Debt Securities of any default with
respect to such series (except a default in the payment of the principal of
(or premium, if any) or interest, if any, on any Debt Security of such series
or in the payment of any sinking fund installment in respect of any Debt
Security of such series) if a Responsible Officer of such Trustee determines
such withholding to be in the interest of such Holders. (See Section 601 of
the forms of Indenture.)
The Indentures will provide that no Holder of Debt Securities of any series
issued thereunder may institute any proceeding, judicial or otherwise, with
respect to such Indenture or for any remedy thereunder, except in the case of
the failure of the applicable Trustee, for 60 days, to act after it has
received a written request to institute proceedings in respect of an Event of
Default from the Holders of not less than 25% in principal amount of the
Outstanding Debt Securities of such series, as well as an offer of reasonable
indemnity. (See Section 507 of the
24
<PAGE>
forms of Indenture.) This provision will not prevent, however, any Holder of
Debt Securities from instituting suit for the enforcement of payment of the
principal of (and premium, if any) and interest, if any, on such Debt
Securities held by that Holder at the respective due dates thereof. (See
Section 508 of the forms of Indenture.)
The Indentures will provide that, subject to provisions to each Indenture
relating to its duties in case of default, a Trustee thereunder is under no
obligation to exercise any of its rights or powers under an Indenture at the
request or direction of any Holders of any series of Debt Securities then
Outstanding under such Indenture, unless such Holders shall have offered to
the Trustee thereunder reasonable security or indemnity. (See Section 602 of
the forms of Indenture.) The Holders of not less than a majority in principal
amount of the Outstanding Debt Securities of any series shall have the right
to direct the time, method and place of conducting any proceeding for any
remedy available to such Trustee, or of exercising any trust or power
conferred upon such Trustee. However, a Trustee may refuse to follow any
direction which is in conflict with any law or the applicable Indenture, which
may involve such Trustee in personal liability or which may be unduly
prejudicial to the Holders of Debt Securities of such series not joining
therein. (See Section 512 of the forms of Indenture.)
Within 120 days after the close of each fiscal year, the Company must
deliver to the relevant Trustee a certificate, signed by one of several
specified officers of the Company, stating whether or not such officer has
knowledge of any noncompliance under the applicable Indenture and, if so,
specifying such noncompliance and the nature and status thereof. (See Section
1014 of the form of Senior Indenture and Section 1011 of the form of
Subordinated Indenture.)
MODIFICATION OF THE FORMS OF INDENTURE
Modifications and amendments of an Indenture may be made only with the
consent of the Holders of not less than a majority in principal amount of all
Outstanding Debt Securities of each series issued thereunder which are
affected by such modification or amendment; provided, however, that no such
modification or amendment may, without the consent of the Holder of each such
Debt Security affected thereby, (i) change the Stated Maturity of the
principal of, or any installment of interest, if any, (or premium, if any) on,
any such Debt Security, (ii) reduce the principal amount of, or the rate or
amount of interest on, or any amount of premium payable on any such Debt
Security, or reduce the amount of principal of an Original Issue Discount
Security that would be due and payable upon declaration of acceleration of the
maturity thereof or would be provable in bankruptcy, or adversely affect any
right of the Holder of any such Debt Security to repayment of such Debt
Security at such Holder's option, (iii) change the Place of Payment, or the
coin or currency, for payment of principal of (or premium, if any) or
interest, if any, on any such Debt Security, (iv) impair the right to
institute suit for the enforcement of any payment on or with respect to any
such Debt Security, (v) reduce the percentage in principal amount of
Outstanding Debt Securities of any series necessary to modify or amend the
applicable Indenture with respect to such Debt Securities, to waive compliance
with certain provisions thereof or certain defaults and consequences
thereunder or to reduce the quorum or voting requirements set forth in the
applicable Indenture, (vi) modify any of the foregoing provisions or any of
the provisions relating to the waiver of certain past defaults or certain
covenants, except to increase the required percentage to effect such action or
to provide that certain other provisions may not be modified or waived without
the consent of the Holder of such Debt Security, or (vii) make any change that
adversely affects the right, if any, to convert or exchange any Debt Security
for equity securities of the Company or other securities or property in
accordance with the terms of any such Debt Security. (See Section 902 of the
forms of Indenture.)
Each Indenture provides that the Holders of not less than a majority in
principal amount of Outstanding Debt Securities of any series issued
thereunder have the right to waive compliance by the Company with certain
covenants in the Indenture applicable to such series, including those
described in the section of this Prospectus captioned "Description of Debt
Securities--Certain Covenants." (See Section 1013 of the form of Senior
Indenture and Section 1011 of the form of Subordinated Indenture.)
25
<PAGE>
Modifications and amendments of an Indenture may be made by the Company and
the applicable Trustee without the consent of any Holder of Debt Securities
issued thereunder for any of the following purposes: (i) to evidence the
succession of another Person to the Company as obligor under such Indenture;
(ii) to add to the covenants of the Company for the benefit of the Holders of
all or any series of Debt Securities issued thereunder or to surrender any
right or power conferred upon the Company in such Indenture; (iii) to add
Events of Default for the benefit of the Holders of all or any series of Debt
Securities issued thereunder; (iv) to add or change any provisions of such
Indenture to facilitate the issuance of Debt Securities issued thereunder in
bearer form, or to permit or facilitate the issuance of such Debt Securities
in uncertificated form, provided that such action shall not adversely affect
the interests of the Holders of such Debt Securities of any series in any
material respect; (v) to change or eliminate any provision of such Indenture,
provided that no such change or elimination shall become effective with
respect to the Outstanding Debt Securities of any series issued thereunder
which were first issued prior to the date of such change or elimination and
which are entitled to the benefit of such provision; (vi) to secure the Debt
Securities issued thereunder; (vii) to establish the form or terms of Debt
Securities of any series issued thereunder, including the provisions and
procedures, if applicable, for the conversion of such Debt Securities into
Common Shares or Preferred Shares of the Company; (viii) to provide for the
acceptance of appointment by a successor Trustee or to facilitate the
administration of the trusts under such Indenture by more than one Trustee;
(ix) to cure any ambiguity, defect or inconsistency in such Indenture or to
make any other provisions with respect to matters or questions arising
thereunder, provided that such action shall not adversely affect the interests
of Holders of Outstanding Debt Securities of any series issued thereunder in
any material respect; or (x) to supplement any of the provisions of such
Indenture to the extent necessary to permit or facilitate defeasance, covenant
defeasance and discharge of any series of Debt Securities issued thereunder,
provided that such action shall not adversely affect the interests of the
Holders of the Debt Securities of any series issued thereunder in any material
respect. (See Section 901 of the forms of Indenture.)
The Indentures will provide that in determining whether the Holders of the
requisite principal amount of Outstanding Debt Securities of a series issued
thereunder have given any request, demand, authorization, direction, notice,
consent or waiver thereunder or whether a quorum is present at a meeting of
Holders of such Debt Securities, (i) the principal amount of an Original Issue
Discount Security that shall be deemed to be Outstanding shall be the amount
of the principal thereof that would be due and payable as of the date of such
determination upon declaration of acceleration of the maturity thereof, (ii)
the principal amount of a Debt Security denominated in a Foreign Currency that
shall be deemed outstanding shall be the U.S. dollar equivalent, determined on
the issue date for such Debt Security, of the principal amount (or, in the
case of an Original Issue Discount Security, the U.S. dollar equivalent on the
issue date of such Debt Security of the amount determined as provided in (i)
above), (iii) the principal amount of an Indexed Security that shall be deemed
Outstanding shall be the principal face amount of such Indexed Security at
original issuance, unless otherwise provided with respect to such Indexed
Security pursuant to such Indenture, and (iv) Debt Securities owned by the
Company or any other obligor upon the Debt Securities or any Affiliate of the
Company or of such other obligor shall be disregarded. (See Section 101 of the
forms of Indenture.)
The Indentures will contain provisions for convening meetings of the Holders
of Debt Securities of a series issued thereunder. (See Section 1501 of the
forms of Indenture.) A meeting may be called at any time by the applicable
Trustee and also, upon request, by the Company or the Holders of at least 10%
in principal amount of the Outstanding Debt Securities of such series, in any
such case upon notice given as provided in the applicable Indenture. (See
Section 1502 of the forms of Indenture.) Except for any consent that must be
given by the Holder of each Debt Security affected by certain modifications
and amendments of such Indenture, any resolution presented at a meeting or
adjourned meeting duly reconvened at which a quorum is present may be adopted
by the affirmative vote of the Holders of a majority in principal amount of
the Outstanding Debt Securities of that series; provided, however, that,
except as referred to above, any resolution with respect to any request,
demand, authorization, direction, notice, consent, waiver or other action that
may be made, given or taken by the Holders of a specified percentage, which is
less or more than a majority, in principal amount of the Outstanding Debt
Securities of a series may be adopted at a meeting or adjourned meeting duly
reconvened at which a quorum is present by the affirmative vote of the Holders
of such specified percentage in principal amount of the Outstanding
26
<PAGE>
Debt Securities of that series. Any resolution passed or decision taken at any
meeting of Holders of Debt Securities of any series duly held in accordance
with the applicable Indenture will be binding on all Holders of Debt
Securities of that series. The quorum at any meeting called to adopt a
resolution, and at any reconvened meeting, will be Persons holding or
representing a majority in principal amount of the Outstanding Debt Securities
of a series; provided, however, that if any action is to be taken at such
meeting with respect to a consent or waiver which may be given by the Holders
of not less than a specified percentage, which is less or more than a
majority, in principal amount of the Outstanding Debt Securities of a series,
the Persons holding or representing such specified percentage in principal
amount of the Outstanding Debt Securities of such series will constitute a
quorum. (See Section 1504 of the forms of Indenture.)
Notwithstanding the provisions described above, the Indentures will provide
that if any action is to be taken at a meeting of Holders of Debt Securities
of any series with respect to any request, demand, authorization, direction,
notice, consent, waiver or other action that the applicable Indenture
expressly provides may be made, given or taken by the Holders of a specified
percentage in principal amount of all Outstanding Debt Securities affected
thereby, or by the Holders of a specified percentage in principal amount of
the Outstanding Debt Securities of such series and one or more additional
series: (i) there shall be no minimum quorum requirement for such meeting and
(ii) the principal amount of the Outstanding Debt Securities of such series
that are entitled to vote in favor of such request, demand, authorization,
direction, notice, consent, waiver or other action shall be taken into account
in determining whether such request, demand, authorization, direction, notice,
consent, waiver or other action has been made, given or taken under such
Indenture. (See Section 1504 of the forms of Indenture.)
DISCHARGE, DEFEASANCE AND COVENANT DEFEASANCE
Unless otherwise indicated in the applicable Prospectus Supplement, upon
request of the Company any Indenture shall cease to be of further effect with
respect to any series of Debt Securities issued thereunder specified in such
Company request (except as to certain limited provisions of such Indenture
which shall survive) when either (i) all Debt Securities of such series have
been delivered to the Trustee for cancellation (subject to certain exceptions)
or (ii) all Debt Securities of such series have become due and payable or will
become due and payable within one year (or, if redeemable, are scheduled for
redemption within one year) and the Company has irrevocably deposited with the
applicable Trustee, in trust, funds in such currency or currencies, currency
unit or units or composite currency or currencies in which such Debt
Securities are payable in an amount sufficient to pay the entire indebtedness
on such Debt Securities in respect of principal (and premium, if any) and
interest to the date of such deposit (if such Debt Securities have become due
and payable) or to the stated maturity or redemption date, as the case may be.
Each Indenture provides that, unless otherwise provided in the applicable
Prospectus Supplement, the Company may elect with respect to any series of
Debt Securities issued thereunder either (i) to defease and be discharged from
any and all obligations with respect to such Debt Securities (except, among
other things, for the obligation to pay Additional Amounts, if any, upon the
occurrence of certain events of tax, assessment or governmental charge with
respect to payments on such Debt Securities and the obligations to register
the transfer or exchange of such Debt Securities, to replace temporary or
mutilated, destroyed, lost or stolen Debt Securities, to maintain an office or
agency in respect of such Debt Securities and to hold moneys for payment in
trust) ("defeasance") (see Section 1402 of the forms of Indenture) or (ii) to
be released from its obligations with respect to such Debt Securities under
the applicable covenants described above under the caption "Certain Covenants"
(except that the Company shall remain subject to the covenant to preserve and
keep in full force and effect its corporate existence, except as permitted
under the provisions described under "Merger, Consolidation or Sale") and, if
provided pursuant to Section 301 of such Indenture, its obligations with
respect to any other covenants applicable to the Debt Securities of such
series, and any omission to comply with such obligations shall not constitute
a default or an Event of Default with respect to such Debt Securities
("covenant defeasance") (see Section 1403 of the forms of Indenture), in
either case upon the irrevocable deposit by the Company with the applicable
Trustee, in trust, of an amount, in such currency or currencies, currency unit
or units or composite currency or currencies in which such Debt Securities are
payable at Stated Maturity or, if
27
<PAGE>
applicable, upon redemption, or Government Obligations (as defined below), or
both, applicable to such Debt Securities which through the scheduled payment
of principal and interest in accordance with their terms will provide money in
an amount sufficient to pay the principal of (and premium, if any) and
interest, if any, on such Debt Securities, and any mandatory sinking fund or
analogous payments thereon, on the scheduled due dates therefor or the
applicable redemption date, as the case may be.
Such a trust may only be established if, among other things, (i) the Company
has delivered to the applicable Trustee an Opinion of Counsel (as specified in
the applicable Indenture) to the effect that the Holders of such Debt
Securities will not recognize income, gain or loss for U.S. federal income tax
purposes as a result of such defeasance or covenant defeasance and will be
subject to U.S. federal income tax on the same amounts, in the same manner and
at the same times as would have been the case if such defeasance or covenant
defeasance had not occurred, and such Opinion of Counsel, in the case of
defeasance, must refer to and be based upon a ruling of the Internal Revenue
Service or a change in applicable United States federal income tax law
occurring after the date of such Indenture; (ii) if the cash and Government
Obligations deposited are sufficient to pay the outstanding Debt Securities of
such series provided such Debt Securities are redeemed on a particular
redemption date, the Company shall have given the applicable Trustee
irrevocable instructions to redeem such Debt Securities on such date; and
(iii) no Event of Default or event which with notice or lapse of time or both
would become an Event of Default with respect to Debt Securities of such
series shall have occurred and shall be continuing on the date of, or, solely
in the case of Events of Default described in clause (vi) of the first
paragraph under "--Events of Default, Notice and Waiver" above, during the
period ending on the 91st day after the date of, such deposit into trust. (See
Section 1404 of the forms of Indenture.)
"Government Obligations" means securities which are (i) direct obligations
of the United States of America or the government which issued the Foreign
Currency in which the Debt Securities of a particular series are payable, for
the payment of which its full faith and credit is pledged, or (ii) obligations
of a Person controlled or supervised by and acting as an agency or
instrumentality of the United States of America or such government which
issued the Foreign Currency in which the Debt Securities of such series are
payable, the payment of which is unconditionally guaranteed as a full faith
and credit obligation by the United States of America or such other
government, which, in either case, are not callable or redeemable at the
option of the issuer thereof, and shall also include a depository receipt
issued by a bank or trust company as custodian with respect to any such
Government Obligation or a specific payment of interest on or principal of any
such Government Obligation held by such custodian for the account of the
holder of a depository receipt, provided that (except as required by law) such
custodian is not authorized to make any deduction from the amount payable to
the holder of such depository receipt from any amount received by the
custodian in respect of the Government Obligation or the specific payment of
interest on or principal of the Government Obligation evidenced by such
depository receipt. (See Section 101 of the forms of Indenture.)
Unless otherwise provided in the applicable Prospectus Supplement, if after
the Company has deposited funds and/or Government Obligations to effect
defeasance or covenant defeasance with respect to Debt Securities of any
series, (i) the Holder of a Debt Security of such series is entitled to, and
does, elect to receive payment in a currency, currency unit or composite
currency other than that in which such deposit has been made in respect of
such Debt Security, or (ii) a Conversion Event (as defined below) occurs in
respect of the currency, currency unit or composite currency in which such
deposit has been made, the indebtedness represented by such Debt Security
shall be deemed to have been, and will be, fully discharged and satisfied
through the payment of the principal of (and premium, if any) and interest, if
any, on such Debt Security as it becomes due out of the proceeds yielded by
converting the amount so deposited in respect of such Debt Security into the
currency, currency unit or composite currency in which such Debt Security
becomes payable as a result of such election or such Conversion Event. (See
Section 1405 of the forms of Indenture.) "Conversion Event" means the
cessation of use of (a) a currency, currency unit or composite currency both
by the government of the country which issued such currency and for the
settlement of transactions by a central bank or other public institution of or
within the international banking community, (b) the ECU both within the
European Monetary System and for the settlement of transactions by public
institutions of or within the European Community or (c) any currency unit or
composite
28
<PAGE>
currency other than the ECU for the purposes for which it was established.
Unless otherwise described in the applicable Prospectus Supplement, all
payments of principal of (and premium, if any) and interest, if any, on any
Debt Security that are payable in a Foreign Currency that ceases to be used by
its government of issuance shall be made in U.S. dollars.
In the event the Company effects covenant defeasance with respect to the
Debt Securities of any series and such Debt Securities are declared due and
payable because of the occurrence of any Event of Default (other than an Event
of Default with respect to any covenant as to which there has been covenant
defeasance), the amount of monies and Government Obligations deposited with
the applicable Trustee to effect such covenant defeasance may not be
sufficient to pay amounts due on such Debt Securities at the time of their
Stated Maturity or at the time of the acceleration resulting from such Event
of Default. In any such event, the Company would remain liable to make payment
of such amounts due at the time of acceleration.
The applicable Prospectus Supplement may further describe the provisions, if
any, permitting such defeasance or covenant defeasance, including any
modifications to the provisions described above, with respect to the Debt
Securities of or within a particular series.
RANKING OF DEBT SECURITIES
The Senior Debt Securities will be unsecured unsubordinated obligations of
the Company and will rank on a parity in right of payment with all other
unsecured and unsubordinated indebtedness of the Company. The Subordinated
Debt Securities will be unsecured obligations of the Company and will be
subordinated in right of payment to all existing and future Senior
Indebtedness (as defined below) of the Company. See "Subordination of
Subordinated Securities."
The Debt Securities are obligations exclusively of the Company. Because a
significant portion of the operations of the Company is conducted through its
subsidiaries, including the Operating Company, the cash flow of the Company
and the consequent ability to service its debt, including the Debt Securities,
are partially dependent on the earnings of such subsidiaries and the Debt
Securities will be effectively subordinated to all existing and future
indebtedness, guarantees and other liabilities of such subsidiaries. See "Risk
Factors--Ranking of Securities." Although the Senior Indentures will, if any
Senior Securities are issued, impose limitations on the incurrence of
additional indebtedness, both the Company and its subsidiaries will retain the
ability to incur substantial additional indebtedness.
SUBORDINATION OF SUBORDINATED SECURITIES
The payment of the principal of (and premium, if any) and interest, if any,
on the Subordinated Debt Securities will be subordinated as set forth in the
Subordinated Indenture in right of payment to the prior payment of all Senior
Indebtedness of the Company whether outstanding on the date of the
Subordinated Indenture or thereafter incurred. (See Section 1701 of the
Subordinated Indenture.)
"Senior Indebtedness" is defined in the Subordinated Indenture to mean (i)
the principal of (and premium, if any) and unpaid interest, if any, on
indebtedness for money borrowed or evidenced by a bond, note, debenture or
similar instrument, (ii) purchase money and similar obligations, (iii)
obligations under capital leases, (iv) guarantees, assumptions or purchase
commitments relating to, or other transactions as a result of which the
Company is responsible for the payment of, indebtedness and obligations of
others of the types referred to in clauses (i) through (iii) above, (v)
renewals, extensions and refunding of any such indebtedness or obligations,
(vi) interest in respect of any such indebtedness or obligations accruing
after the commencement of any insolvency or bankruptcy proceedings and (vii)
obligations associated with derivative products such as interest rate and
currency exchange contracts, foreign exchange contracts, commodity contracts,
and similar arrangements, unless, in each case, the instrument by which the
Company incurred, assumed or guaranteed the indebtedness or obligations
described in clauses (i) through (vii) expressly provides that such
indebtedness or obligation is subordinate or junior in right of payment to all
other indebtedness of the Company or is not senior
29
<PAGE>
in right of payment to the Subordinated Debt Securities or ranks pari passu
with or subordinate to the Subordinated Debt Securities in right of payment.
At December 31, 1997, the Company had approximately $309,000,000 of Senior
Debt outstanding. There are no restrictions in the Subordinated Indenture upon
the incurrence of additional Senior Indebtedness.
The Subordinated Indenture will provide that, in the event (i) of any
distribution of assets of the Company upon any dissolution, winding up,
liquidation or reorganization of the Company, whether in bankruptcy,
insolvency, reorganization or receivership proceeding or upon an assignment
for the benefit of creditors or any other marshaling of the assets and
liabilities of the Company or otherwise, except a distribution in connection
with a merger or consolidation or a conveyance or transfer of all or
substantially all of the properties of the Company which complies with the
requirements of Article Eight of the Subordinated Indenture (described above
under "Merger, Consolidation or Sale") or (ii) that a default shall have
occurred and be continuing with respect to the payment of principal of (or
premium, if any) or interest on any Senior Indebtedness, or (iii) that the
principal of the Subordinated Debt Securities of any series issued under the
Subordinated Indenture (or in the case of Original Issue Discount Securities,
the portion of the principal amount thereof referred to in Section 502 of the
form of Subordinated Indenture) shall have been declared due and payable
pursuant to Section 502 of the form of Subordinated Indenture, and such
declaration shall not have been rescinded and annulled as provided in said
Section 502, then:
(1) in a circumstance described in the foregoing clause (i) or (ii), the
holders of all Senior Indebtedness, and in the circumstance described in
the foregoing clause (iii), the holders of all Senior Indebtedness
outstanding at the time the principal of such Subordinated Debt Securities
issued under the Subordinated Indenture (or in the case of Original Issue
Discount Securities, such portion of the principal amount) shall have been
so declared due and payable, shall first be entitled to receive payment of
the full amount due thereon in respect of principal (premium, if any),
interest and Additional Amounts, or provision shall be made for such
payment in money or money's worth, before the Holders of any of the
Subordinated Debt Securities are entitled to receive any payment on account
of the principal of (or premium, if any) or interest, if any, on or any
Additional Amount in respect of the indebtedness evidenced by the
Subordinated Debt Securities;
(2) any payment by, or distribution of assets of, the Company of any kind
or character, whether in cash, property or securities (other than certain
subordinated debt securities of the Company issued in a reorganization or
readjustment), to which the Holder of any of the Subordinated Debt
Securities would be entitled except for the subordination provisions of
Article Seventeen of the Subordinated Indenture shall be paid or delivered
by the person making such payment or distribution directly to the holders
of Senior Indebtedness (as provided in clause (1) above), or on their
behalf, ratably according to the aggregate amount remaining unpaid on
account of such Senior Indebtedness, to the extent necessary to make
payment in full of all Senior Indebtedness (as provided in clause (1)
above) remaining unpaid after giving effect to any concurrent payment or
distribution (or provisions therefor) to the holders of such Senior
Indebtedness, before any payment or distribution is made to or in respect
of the Holders of the Subordinated Debt Securities; and
(3) in the event that, notwithstanding the foregoing, any payment by, or
distribution of assets of, the Company of any kind or character is received
by the Holders of any of the Subordinated Debt Securities issued under the
Subordinated Indenture before all Senior Indebtedness is paid in full such
payment or distribution shall be paid over to the holders of such Senior
Indebtedness or on their behalf, ratably as aforesaid, for application to
the payment of all such Senior Indebtedness remaining unpaid until all such
Senior Indebtedness shall have been paid in full, after giving effect to
any concurrent payment or distribution (or provisions therefor) to the
holders of such Senior Indebtedness.
By reason of such subordination in favor of the holders of Senior
Indebtedness in the event of insolvency, certain general creditors of the
Company, including holders of Senior Indebtedness, may recover more, ratably,
than the Holders of the Subordinated Debt Securities.
30
<PAGE>
CONVERTIBLE DEBT SECURITIES
If set forth in the applicable Prospectus Supplement, Debt Securities of any
series may be convertible into Common Shares or other securities of the
Company ("Convertible Debt Securities") on the terms and subject to the
conditions set forth in such Prospectus Supplement.
The applicable Prospectus Supplement may set forth limitations on the
ownership or conversion of Convertible Debt Securities intended to protect the
Company's status as a REIT for federal income tax purposes.
Reference is made to the sections captioned "Description of Common Shares,"
"Description of Preferred Shares" and "Description of Depositary Shares" for a
general description of securities which may be issued upon the conversion of
Convertible Debt Securities, including a description of certain restrictions
on the ownership of the Common Shares and the Preferred Shares.
GLOBAL SECURITIES
The Debt Securities of a series may be issued in whole or in part in the
form of one or more global securities (each, a "Global Security") that will be
deposited with, or on behalf of, The Depository Trust Company, New York, New
York ("DTC"), or such other depository as may be identified in the applicable
Prospectus Supplement. Global Securities may be issued in either registered or
bearer form and in either temporary or permanent form. Unless otherwise
provided in such Prospectus Supplement, Debt Securities that are represented
by a Global Security will be issued in any authorized denomination and will be
issued in registered or bearer form.
The Company anticipates that any Global Securities will be deposited with,
or on behalf of DTC, and that such Global Securities will be registered in the
name of Cede & Co., DTC's nominee. The Company further anticipates that the
following provisions will apply to the depository arrangements with respect to
any such Global Securities. Any additional or differing terms of the
depository arrangements will be described in the Prospectus Supplement
relating to a particular series of Debt Securities issued in the form of
Global Securities.
So long as DTC or its nominee is the registered owner of a Global Security,
DTC or its nominee, as the case may be, will be considered the sole Holder of
the Debt Securities represented by such Global Security for all purposes under
the applicable Indenture. Except as described below, owners of beneficial
interests in a Global Security will not be entitled to have Debt Securities
represented by such Global Security registered in their names, will not
receive or be entitled to receive physical delivery of Debt Securities in
certificated form and will not be considered the owners or Holders thereof
under the applicable Indenture. The laws of some states require that certain
purchasers of securities take physical delivery of such securities in
certificated form; accordingly, such laws may limit the transferability of
beneficial interests in a Global Security.
Unless otherwise specified in the applicable Prospectus Supplement, each
Global Security of any series will be exchangeable for certificated Debt
Securities of the same series only if (i) DTC notifies the Company that it is
unwilling or unable to continue as depository or DTC ceases to be a clearing
agency registered under the Exchange Act (if so required by applicable law or
regulation) and, in either case, a successor depository is not appointed by
the Company within 90 days after the Company receives such notice or becomes
aware of such ineligibility, (ii) the Company in its sole discretion
determines that the Global Securities shall be exchangeable for certificated
Debt Securities or (iii) there shall have occurred and be continuing an Event
of Default under the Indenture with respect to the Debt Securities of such
series and beneficial owners representing a majority in aggregate principal
amount of such Debt Securities represented by Global Securities advise DTC to
cease acting as depository. Upon any such exchange, owners of a beneficial
interest in the Global Security or Securities will be entitled to physical
delivery of individual Debt Securities in certificated form of like tenor,
terms and rank, equal in principal amount to such beneficial interest, and to
have such Debt Securities in certificated form registered in the names of the
beneficial owners, which names are expected to be provided by DTC's relevant
Participants (as identified by DTC) to the applicable Trustee. Unless
otherwise described in the applicable
31
<PAGE>
Prospectus Supplement, Debt Securities so issued in certificated form will be
issued in denominations of $1,000 or any integral multiple thereof, and will
be issued in registered form only, without coupons.
The following is based on information furnished to the Company:
DTC will act as securities depository for the Debt Securities. The Debt
Securities will be issued as fully registered securities registered in the
name of Cede & Co. (DTC's partnership nominee). One fully registered Debt
Security certificate will be issued with respect to each $200 million (or such
other amount as shall be permitted by DTC from time to time) of principal
amount of the Debt Securities of a series, and an additional certificate will
be issued with respect to any remaining principal amount of such series.
DTC is a limited purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law,
a member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. DTC
holds securities that its participants ("Participants") deposit with DTC. DTC
also facilitates the settlement among Participants of securities transactions,
such as transfers and pledges, in deposited securities through electronic
computerized book-entry changes in Participants' accounts, thereby eliminating
the need for physical movement of securities certificates. Direct Participants
include securities brokers and dealers, banks, trust companies, clearing
corporations and certain other organizations ("Direct Participants"). DTC is
owned by a number of its Direct Participants and by the New York Stock
Exchange, Inc., the American Stock Exchange, Inc. and the National Association
of Securities Dealers, Inc. Access to the DTC system is also available to
others, such as securities brokers and dealers, and banks and trust companies
that clear through or maintain a custodial relationship with a Direct
Participant, either directly or indirectly ("Indirect Participants"). The
rules applicable to DTC and its Participants are on file with the Commission.
Purchases of Debt Securities under the DTC system must be made by or through
Direct Participants, which will receive a credit for the Debt Securities on
DTC's records. The ownership interest of each actual purchaser of each Debt
Security ("Beneficial Owner") is in turn recorded on the Direct and Indirect
Participants' records. A Beneficial Owner does not receive written
confirmation from DTC of its purchase, but is expected to receive a written
confirmation providing details of the transaction, as well as periodic
statements of its holdings, from the Direct or Indirect Participant through
which such Beneficial Owner entered into the transaction. Transfers of
ownership interests in Debt Securities are accomplished by entries made on the
books of Direct and Indirect Participants acting on behalf of Beneficial
Owners. Beneficial Owners do not receive certificates representing their
ownership interests in Debt Securities, except under the circumstances
described above.
To facilitate subsequent transfers, the Debt Securities are registered in
the name of DTC's nominee, Cede & Co. The deposit of the Debt Securities with
DTC and their registration in the name of Cede & Co. will effect no change in
beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of
the Debt Securities; DTC records reflect only the identity of the Direct
Participants to whose accounts Debt Securities are credited, which may or may
not be the Beneficial Owners. The Participants remain responsible for keeping
account of their holdings on behalf of their customers.
Delivery of notices and other communications by DTC to Direct Participants,
by Direct Participants to Indirect Participants, and by Direct Participants
and Indirect Participants to Beneficial Owners are governed by arrangements
among them, subject to any statutory or regulatory requirements as may be in
effect from time to time.
Neither DTC nor Cede & Co. consents or votes with respect to the Debt
Securities. Under its usual procedures, DTC mails a proxy (an "Omnibus Proxy")
to the issuer as soon as possible after the record date. The Omnibus Proxy
assigns Cede & Co.'s consenting or voting rights to those Direct Participants
to whose accounts the Debt Securities are credited on the record date
(identified on a list attached to the Omnibus Proxy).
32
<PAGE>
Principal payments, premium payments, if any, and interest payments, if any,
on the Debt Securities will be made to DTC. DTC's practice is to credit Direct
Participants' accounts on the payment date in accordance with their respective
holdings as shown on DTC's records unless DTC has reason to believe that it
will not receive payment on the payment date. Payments by Direct and Indirect
Participants to Beneficial Owners are governed by standing instructions and
customary practices, as is the case with securities held for the accounts of
customers in bearer form or registered in "street name" and are the
responsibility of such Direct and Indirect Participants and not of DTC, the
applicable Trustee or the Company, subject to any statutory or regulatory
requirements as may be in effect from time to time. Payment of principal (and
premium, if any) and interest, if any, to DTC is the responsibility of the
Company or the applicable Trustee, disbursement of such payments to Direct
Participants is the responsibility of DTC, and disbursement of such payments
to the Beneficial Owners is the responsibility of Direct and Indirect
Participants.
If applicable, redemption notices shall be sent to Cede & Co. If less than
all of the Debt Securities of a series represented by Global Securities are
being redeemed, DTC's practice is to determine by lot the amount of the
interest of each Direct Participant in such issue to be redeemed.
To the extent that any Debt Securities provide for repayment or repurchase
at the option of the Holders thereof, a Beneficial Owner shall give notice of
any option to elect to have its interest in the Global Security repaid by the
Company, through its Participant, to the applicable Trustee, and shall effect
delivery of such interest in a Global Security by causing the Direct
Participant to transfer the Participant's interest in the Global Security or
Securities representing such interest, on DTC's records, to such Trustee. The
requirement for physical delivery of Debt Securities in connection with a
demand for repayment will be deemed satisfied when the ownership rights in the
Global Security or Securities representing such Debt Securities are
transferred by Direct Participants on DTC's records.
DTC may discontinue providing its services as securities depository with
respect to the Debt Securities at any time by giving reasonable notice to the
Company or the applicable Trustee. Under such circumstances, in the event that
a successor securities depository is not appointed, Debt Security certificates
are required to be printed and delivered as described above.
The Company may decide to discontinue use of the system of book-entry
transfers through DTC (or a successor securities depository). In that event,
Debt Security certificates will be printed and delivered as described above.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that the Company believes to be reliable, but
the Company takes no responsibility for the accuracy thereof.
None of the Company, the applicable Trustee or any applicable paying agent
will have any responsibility or liability for any aspect of the records
relating to or payments made on account of beneficial interests in a Global
Security, or for maintaining, supervising or reviewing any records relating to
such beneficial interest.
DESCRIPTION OF PREFERRED SHARES
The following description of Preferred Shares sets forth certain general
terms and provisions of the Preferred Shares to which any Prospectus
Supplement may relate, does not purport to be complete and is qualified in its
entirety by reference to the Company's Amended and Restated Articles of
Incorporation (the "Articles") and by the provisions of the form of articles
supplementary pursuant to which the terms of the Preferred Shares of any
series will be established, which have been or will be included or
incorporated by reference as exhibits to the Registration Statement of which
this Prospectus is a part and are or will be available as described above
under "Available Information." Certain other specific terms will be described
in the applicable Prospectus Supplement. The terms of the Preferred Shares
offered in any Prospectus Supplement may differ from the terms set forth
33
<PAGE>
below, in which case the terms set forth below shall be deemed to have been
superseded to the extent of any different terms set forth in such Prospectus
Supplement.
GENERAL
Under the Articles, the Board of Directors has the authority to issue up to
10,000,000 Preferred Shares, $0.01 par value per share. No Preferred Shares
were outstanding as of the date of this Prospectus. Preferred Shares may be
issued from time to time in one or more series, as authorized by the Board of
Directors of the Company and without any action or approval of shareholders of
the Company. Prior to the issuance of shares of such series, the Board of
Directors is required by the Maryland General Corporation Law and the Articles
to fix for each series, subject to the provisions of the Articles, the terms,
rights, restrictions and qualifications, including any preferences, conversion
or other rights, voting powers, restrictions, limitations as to dividends,
qualifications and terms or conditions of redemption, as are permitted by
Maryland law. The Preferred Shares offered in any Prospectus Supplement will,
when issued, be fully paid and nonassessable and will have no preemptive
rights.
The issuance of Preferred Shares, while providing flexibility in connection
with possible financings, acquisitions and other corporate purposes, could,
among other things, adversely affect the voting powers and other rights and
interests of holders of Common Shares and, under certain circumstances, could
make it more difficult for a third party to gain control of the Company and
could have the effect of delaying or preventing an attempted takeover of the
Company.
TERMS
Reference is made to the Prospectus Supplement relating to the Preferred
Shares offered thereby for specific terms, including:
(1) The class, series and title of such Preferred Shares;
(2) The number of shares of such Preferred Shares offered, the
liquidation preference per share and the offering price of such Preferred
Shares;
(3) The dividend rate or rates, period or periods and payment date or
dates or method of calculation thereof applicable to such Preferred Shares,
and whether dividends will be cumulative or non-cumulative;
(4) The date from which dividends on such Preferred Shares shall accrue,
if applicable;
(5) The procedures for any auction or remarketing of such Preferred
Shares;
(6) The provision for any sinking fund for such Preferred Shares;
(7) The provision for redemption, if applicable, of such Preferred
Shares;
(8) Any listing of such Preferred Shares on any securities exchange;
(9) Any terms and conditions upon which such Preferred Shares will be
convertible into Common Shares of the Company, including the conversion
price (or manner of calculation thereof);
(10) Whether interests in such Preferred Shares will be represented by
Depositary Shares;
(11) Any other specific terms, preferences, rights, limitations or
restrictions of or on such Preferred Shares;
(12) A discussion of federal income tax considerations applicable to such
Preferred Shares;
(13) The relative ranking and preferences of such Preferred Shares as to
dividend rights and rights upon liquidation, dissolution or winding up of
the affairs of the Company; and
(14) Any limitations on direct or beneficial ownership and restrictions
on transfer, in each case as may be appropriate to preserve the status of
the Company as a REIT.
34
<PAGE>
RANK
Unless otherwise specified in the Prospectus Supplement, the Preferred
Shares of any series will, with respect to dividend rights and rights upon
liquidation, dissolution or winding up of the Company, rank (i) senior to all
classes or series of Common Stock of the Company, and to all equity securities
ranking junior to such Preferred Shares with respect to dividend rights or
rights upon liquidation, dissolution or winding up of the Company; (ii) on a
parity with all equity securities issued by the Company the terms of which
specifically provide that such equity securities rank on a parity with the
Preferred Shares with respect to dividend rights or rights upon liquidation,
dissolution or winding up of the Company; and (iii) junior to all equity
securities issued by the Company which the terms of such Preferred Shares
specifically provide rank senior to the Preferred Shares with respect to
dividend rights or rights upon liquidation, dissolution or winding up of the
Company. The term "equity securities" does not include convertible debt
securities.
DIVIDENDS
Holders of the Preferred Shares of each series will be entitled to receive,
when, as and if declared by the Board of Directors of the Company, out of
assets of the Company legally available for payment, cash dividends at such
rates and on such dates as will be set forth in the applicable Prospectus
Supplement. Each such dividend shall be payable to holders of record as they
appear on the share transfer books of the Company on such record dates as
shall be fixed by the Board of Directors of the Company.
Dividends on any series of the Preferred Shares may be cumulative or non-
cumulative, as provided in the applicable Prospectus Supplement. Dividends, if
cumulative, will be cumulative from and after the date set forth in the
applicable Prospectus Supplement. If the Board of Directors of the Company
fails to declare a dividend payable on a dividend payment date on any series
of the Preferred Shares for which dividends are non-cumulative, then the
holders of such series of the Preferred Shares will have no right to receive a
dividend in respect of the dividend period ending on such dividend payment
date, and the Company will have no obligation to pay the dividend accrued for
such period, whether or not dividends on such series are declared payable on
any future dividend payment date.
If Preferred Shares of any series are outstanding, no full dividends will be
declared or paid or set apart for payment on any capital stock of the Company
of any other series ranking, as to dividends, on a parity with or junior to
the Preferred Shares of such series for any period unless (i) if such series
of Preferred Shares has a cumulative dividend, full cumulative dividends have
been or contemporaneously are declared and paid or declared and a sum
sufficient for the payment thereof is set apart for such payment on the
Preferred Shares of such series for all past dividend periods and the then
current dividend period or (ii) if such series of Preferred Shares does not
have a cumulative dividend, full dividends for the then current dividend
period have been or contemporaneously are declared and paid or declared and a
sum sufficient for the payment thereof is set apart for such payment on the
Preferred Shares of such series. When dividends are not paid in full (or a sum
sufficient for such full payment is not so set apart) upon Preferred Shares of
any series and the shares of any other series of Preferred Shares ranking on a
parity as to dividends with the Preferred Shares of such series, all dividends
declared upon Preferred Shares of such series and any other series of
Preferred Shares ranking on a parity as to dividends with such Preferred
Shares shall be declared pro rata so that the amount of dividends declared per
share of Preferred Shares of such series and such other series of Preferred
Shares shall in all cases bear to each other the same ratio that accrued
dividends per share on the Preferred Shares of such series (which shall not
include any accumulation in respect of unpaid dividends for prior dividend
periods if such Preferred Shares does not have a cumulative dividend) and such
other series of Preferred Shares bear to each other. No interest, or sum of
money in lieu of interest, shall be payable in respect of any dividend payment
or payments on Preferred Shares of such series which may be in arrears.
Except as provided in the immediately preceding paragraph, unless (i) if
such series of Preferred Shares has a cumulative dividend, full cumulative
dividends on the Preferred Shares of such series have been or
contemporaneously are declared and paid or declared and a sum sufficient for
the payment thereof is set apart
35
<PAGE>
for payment for all past dividend periods and the then current dividend
period, and (ii) if such series of Preferred Shares does not have a cumulative
dividend, full dividends on the Preferred Shares of such series have been or
contemporaneously are declared and paid or declared and a sum sufficient for
the payment thereof is set apart for payment for the then current dividend
period, no dividends (other than in Common Shares or other shares of capital
stock ranking junior to the Preferred Shares of such series as to dividends
and upon liquidation, dissolution and winding up) shall be declared or paid or
set aside for payment nor shall any other distribution be declared or made
upon the Common Shares, or any other capital stock of the Company ranking
junior to or on a parity with the Preferred Shares of such series as to
dividends or upon liquidation, dissolution or winding up, nor shall any Common
Shares, or any other shares of capital stock of the Company ranking junior to
or on a parity with the Preferred Shares of such series as to dividends or
upon liquidation, dissolution or winding up be redeemed, purchased or
otherwise acquired for any consideration (or any moneys be paid to or made
available for a sinking fund for the redemption of any such shares) by the
Company (except by conversion into or exchange for other capital stock of the
Company ranking junior to the Preferred Shares of such series as to dividends
and upon liquidation, dissolution and winding up).
Any dividend payment made on shares of a series of Preferred Shares shall
first be credited against the earliest accrued but unpaid dividend due with
respect to shares of such series which remains payable.
REDEMPTION
If so provided in the applicable Prospectus Supplement, the Preferred Shares
will be subject to mandatory redemption or redemption at the option of the
Company, as a whole or in part, in each case upon the terms, at the times and
at the redemption prices set forth in such Prospectus Supplement.
The Prospectus Supplement relating to a series of Preferred Shares that is
subject to mandatory redemption will specify the number of shares of such
Preferred Shares that shall be redeemed by the Company in each year commencing
after a date to be specified, at a redemption price per share to be specified,
together with an amount equal to all accrued and unpaid dividends thereon
(which shall not, if such Preferred Shares do not have a cumulative dividend,
include any accumulation in respect of unpaid dividends for prior dividend
periods) to the date of redemption. The redemption price may be payable in
cash or other property, as specified in the applicable Prospectus Supplement.
If the redemption price for Preferred Shares of any series is payable only
from the net proceeds of the issuance of shares of capital stock of the
Company, the terms of such Preferred Shares may provide that, if no such
shares of capital stock shall have been issued or to the extent the net
proceeds from any issuance are insufficient to pay in full the aggregate
redemption price then due, such Preferred Shares shall automatically and
mandatorily be converted into the applicable shares of capital stock of the
Company pursuant to conversion provisions specified in the applicable
Prospectus Supplement.
Notwithstanding the foregoing, unless (i) if a series of Preferred Shares
has a cumulative dividend, full cumulative dividends on all shares of such
series of Preferred Shares shall have been or contemporaneously are declared
and paid or declared and a sum sufficient for the payment thereof set apart
for payment for all past dividend periods and the then current dividend
period, and (ii) if a series of Preferred Shares does not have a cumulative
dividend, full dividends on all shares of the Preferred Shares of such series
have been or contemporaneously are declared and paid or declared and a sum
sufficient for the payment thereof set apart for payment for the then current
dividend period, no shares of such series of Preferred Shares shall be
redeemed unless all outstanding shares of Preferred Shares of such series are
simultaneously redeemed; provided, however, that the foregoing shall not
prevent the purchase or acquisition of Preferred Shares of such series to
preserve the REIT status of the Company or pursuant to a purchase or exchange
offer made on the same terms to holders of all outstanding shares of Preferred
Shares of such series. In addition, unless (i) if such series of Preferred
Shares has a cumulative dividend, full cumulative dividends on all outstanding
shares of such series of Preferred Shares have been or contemporaneously are
declared and paid or declared and a sum sufficient for the payment thereof set
apart for payment for all past dividend periods and the then current dividend
period, and (ii) if such series of Preferred Shares does not have a cumulative
dividend, full dividends on the Preferred Shares of such series have
36
<PAGE>
been or contemporaneously are declared and paid or declared and a sum
sufficient for the payment thereof set apart for payment for the then current
dividend period, the Company shall not purchase or otherwise acquire directly
or indirectly any Preferred Shares of such series (except by conversion into
or exchange for capital shares of the Company ranking junior to the Preferred
Shares of such series as to dividends and upon liquidation, dissolution and
winding up); provided, however, that the foregoing shall not prevent the
purchase or acquisition of shares of Preferred Shares of such series to
preserve the REIT status of the Company or pursuant to a purchase or exchange
offer made on the same terms to holders of all outstanding shares of Preferred
Shares of such series.
If fewer than all of the outstanding shares of Preferred Shares of any
series are to be redeemed, the number of shares to be redeemed will be
determined by the Company and such shares may be redeemed pro rata from the
holders of record of such shares in proportion to the number of such shares
held or for which redemption is requested by such holder (with adjustments to
avoid redemption of fractional shares), or by any other equitable manner
determined by the Company.
Notice of redemption will be mailed at least 30 days but not more than 60
days before the redemption date to each holder of record of Preferred Shares
of any series to be redeemed at the address shown on the stock transfer books
of the Company. Each notice shall state: (i) the redemption date; (ii) the
number of shares and series of the Preferred Shares to be redeemed; (iii) the
redemption price; (iv) the place or places where certificates for such
Preferred Shares are to be surrendered for payment of the redemption price;
(v) that dividends on the shares to be redeemed will cease to accrue on such
redemption date; and (vi) the date upon which the holder's conversion rights,
if any, as to such shares shall terminate. If fewer than all the shares of
Preferred Shares of any series are to be redeemed, the notice mailed to each
such holder thereof shall also specify the number of Preferred Shares to be
redeemed from each such holder. If notice of redemption of any Preferred
Shares has been given and if the funds necessary for such redemption have been
set aside by the Company in trust for the benefit of the holders of any
Preferred Shares so called for redemption, then from and after the redemption
date dividends will cease to accrue on such Preferred Shares, and all rights
of the holders of such shares will terminate, except the right to receive the
redemption price.
LIQUIDATION PREFERENCE
Upon any voluntary or involuntary liquidation, dissolution or winding up of
the affairs of the Company, then, before any distribution or payment shall be
made to the holders of any Common Shares or any other class or series of
capital stock of the Company ranking junior to the Preferred Shares of any
series in the distribution of assets upon any liquidation, dissolution or
winding up of the Company, the holders of such series of Preferred Shares
shall be entitled to receive out of assets of the Company legally available
for distribution to shareholders, liquidating distributions in the amount of
the liquidation preference per share, if any, set forth in the applicable
Prospectus Supplement, plus an amount equal to all dividends accrued and
unpaid thereon (which, in the case of Preferred Shares for which dividends are
noncumulative, shall not include any accumulation in respect of unpaid
dividends for prior dividend periods). After payment of the full amount of the
liquidating distributions to which they are entitled, the holders of Preferred
Shares will have no right or claim to any of the remaining assets of the
Company. In the event that, upon any such voluntary or involuntary
liquidation, dissolution or winding up, the available assets of the Company
are insufficient to pay the amount of the liquidating distributions on all
outstanding shares of Preferred Shares of any series and the corresponding
amounts payable on all shares of other classes or series of capital stock of
the Company ranking on a parity with such Preferred Shares in the distribution
of assets, then the holders of such Preferred Shares and all other such
classes or series of capital stock shall share ratably in any such
distribution of assets in proportion to the full liquidating distributions to
which they would otherwise be respectively entitled.
If liquidating distributions shall have been made in full to all holders of
Preferred Shares of any series, the remaining assets of the Company shall be
distributed among the holders of any other classes or series of capital stock
ranking junior to such Preferred Shares upon liquidation, dissolution or
winding up, according to their respective rights and preferences. For such
purposes, the consolidation or merger of the Company with or into
37
<PAGE>
any other corporation, trust or entity, or the sale, lease or conveyance of
all or substantially all of the property or business of the Company, shall not
be deemed to constitute a liquidation, dissolution or winding up of the
Company.
VOTING RIGHTS
Holders of the Preferred Shares will not have any voting rights, except as
set forth below or as otherwise from time to time required by law or as
indicated in the applicable Prospectus Supplement.
Unless provided otherwise for any series of Preferred Shares, so long as any
shares of Preferred Shares of such series remain outstanding, the Company will
not, without the affirmative vote or consent of the holders of at least two-
thirds of the shares of such series of Preferred Shares outstanding at the
time, given in person or by proxy, either in writing or at a meeting (such
series voting separately as a class), (i) authorize or create, or increase the
authorized or issued amount of, any class or series of capital stock ranking
prior to such series of Preferred Shares with respect to payment of dividends
or the distribution of assets upon liquidation, dissolution or winding up or
reclassify any authorized capital stock of the Company into such shares, or
create, authorize or issue any obligation or security convertible into or
evidencing the right to purchase any such shares; or (ii) amend, alter or
repeal the provisions of the Articles or the designating amendment for such
series of Preferred Shares, whether by merger, consolidation or otherwise (an
"Event"), so as to materially and adversely affect any right, preference,
privilege or voting power of such series of Preferred Shares or the holders
thereof, provided, however, that (x) any increase in the amount of the
authorized Preferred Shares or the creation or issuance of any other series of
Preferred Shares, or (y) any increase in the amount of authorized shares of
such series or any other series of Preferred Shares, in each case ranking on a
parity with or junior to the Preferred Shares of such series with respect to
payment of dividends and the distribution of assets upon liquidation,
dissolution and winding up, shall not be deemed to materially and adversely
affect such rights, preferences, privileges or voting powers.
The foregoing voting provisions will not apply if, at or prior to the time
when the act with respect to which such vote would otherwise be required shall
be effected, all outstanding shares of such series of Preferred Shares shall
have been redeemed or called for redemption and sufficient funds shall have
been deposited in trust to effect such redemption.
CONVERSION RIGHTS
The terms and conditions, if any, upon which any series of Preferred Shares
is convertible into Common Shares or any other class or series of capital
stock of the Company will be set forth in the applicable Prospectus Supplement
relating thereto. Such terms will include the number of Common Shares or any
other class or series of capital stock of the Company into which the shares of
Preferred Shares are convertible, the conversion price (or manner of
calculation thereof), the conversion period, provisions as to whether
conversion will be at the option of the holders of the Preferred Shares or the
Company, the events requiring an adjustment of the conversion price and
provisions affecting conversion in the event of the redemption of such series
of Preferred Shares.
RESTRICTIONS ON OWNERSHIP
The Preferred Shares are subject to certain restrictions on transfer, and
are subject to redemption (at redemption prices to be specified in the
applicable Prospectus Supplement) at the option of the Company, to the extent
the Board of Directors deems necessary to permit the Company to comply with
the REIT provisions of the Code. See "Restrictions on Transfers of Capital
Stock; Redemption." In addition, the applicable Prospectus Supplement may set
forth additional restrictions on transfer and related provisions applicable to
the Preferred Shares offered thereby intended to permit the Company to comply
with such provisions.
38
<PAGE>
TRANSFER AGENT
The transfer agent and registrar for the Preferred Shares will be set forth
in the applicable Prospectus Supplement.
DESCRIPTION OF DEPOSITARY SHARES
GENERAL
The Company may issue receipts ("Depositary Receipts") for Depositary
Shares, each of which will represent a fractional interest of a share of a
particular series of Preferred Shares, as specified in the applicable
Prospectus Supplement. Preferred Shares represented by Depositary Shares will
be deposited under a separate Deposit Agreement (each, a "Deposit Agreement")
among the Company, the depositary named therein (such depositary or its
successor, the "Preferred Shares Depositary") and the holders from time to
time of the Depositary Receipts. Subject to the terms of the Deposit
Agreement, each owner of a Depositary Receipt will be entitled, in proportion
to the fractional interest of a share of the particular series of Preferred
Shares represented by the Depositary Shares evidenced by such Depositary
Receipt, to all the rights and preferences of the Preferred Shares represented
by such Depositary Shares (including dividend, voting, conversion, redemption
and liquidation rights).
The Depositary Shares will be evidenced by Depositary Receipts issued
pursuant to the applicable Deposit Agreement. Immediately following the
issuance and delivery of the Preferred Shares by the Company to the Preferred
Shares Depositary, the Company will cause the Preferred Shares Depositary to
issue, on behalf of the Company, the Depositary Receipts. The following
description of certain terms of any Deposit Agreement and the related
Depositary Shares and Depositary Receipts does not purport to be complete, and
is qualified in its entirety by reference to the form of Deposit Agreement
(including the form of Depositary Receipt) which has been or will be filed or
incorporated by reference as an exhibit to the Registration Statement of which
this Prospectus is a part and is or will be available as described below under
"Available Information."
The terms of the Depositary Shares offered in any Prospectus Supplement may
differ from the terms set forth below, in which case the terms set forth below
shall be deemed to have been superseded to the extent of any different terms
set forth in such Prospectus Supplement.
DIVIDENDS AND OTHER DISTRIBUTIONS
The Preferred Shares Depositary will distribute all cash dividends or other
cash distributions received with respect to the Preferred Shares to the record
holders of the Depositary Receipts evidencing the related Depositary Shares in
proportion to the number of such Depositary Receipts owned by such holders,
subject to certain obligations of holders to file proofs, certificates and
other information and to pay certain charges and expenses to the Preferred
Shares Depositary.
In the event of a distribution other than in cash, the Preferred Shares
Depositary will distribute property received by it to the record holders of
Depositary Receipts entitled thereto, subject to certain obligations of
holders to file proofs, certificates and other information and to pay certain
charges and expenses to the Preferred Shares Depositary, unless the Preferred
Shares Depositary determines that it is not feasible to make such
distribution, in which case the Preferred Shares Depositary may, with the
approval of the Company, sell such property and distribute the net proceeds
from such sale to such holders.
WITHDRAWAL OF SHARES
Upon surrender of the Depositary Receipts at the corporate trust office of
the Preferred Shares Depositary (unless the related Depositary Shares have
previously been called for redemption), the holder thereof will be entitled to
delivery at such office, to or upon such holder's order, of the number of
whole or fractional Preferred
39
<PAGE>
Shares and any money or other property represented by the Depositary Shares
evidenced by such Depositary Receipts. Holders of Depositary Receipts will be
entitled to receive whole or fractional shares of the related Preferred Shares
on the basis of the proportion of Preferred Shares represented by each
Depositary Share as specified in the applicable Prospectus Supplement, but
holders of such Preferred Shares will not thereafter be entitled to receive
Depositary Shares therefor. If the Depositary Receipts delivered by the holder
evidence a number of Depositary Shares in excess of the number of Depositary
Shares representing the number of Preferred Shares to be withdrawn, the
Preferred Shares Depositary will deliver to such holder at the same time a new
Depositary Receipt evidencing such excess number of Depositary Shares.
REDEMPTION OF DEPOSITARY SHARES
Whenever the Company redeems Preferred Shares held by the Preferred Shares
Depositary, the Preferred Shares Depositary will redeem as of the same
redemption date the number of Depositary Shares representing the Preferred
Shares so redeemed, provided the Company shall have paid in full to the
Preferred Shares Depositary the redemption price of the Preferred Shares to be
redeemed plus an amount equal to any accrued and unpaid dividends (or, with
respect to Preferred Shares as to which dividends are non-cumulative,
dividends for the current dividend period only) thereon to the date fixed for
redemption. The redemption price per Depositary Share will be equal to the
applicable fraction of the redemption price and any other amounts per share
payable with respect to the Preferred Shares. If less than all the Depositary
Shares are to be redeemed, the Depositary Shares to be redeemed will be
selected by the Preferred Shares Depositary by lot or in such other manner as
the Preferred Share Depositary deems equitable.
After the date fixed for redemption, the Depositary Shares so called for
redemption will no longer be deemed to be outstanding and all rights of the
holders of the Depositary Receipts evidencing the Depositary Shares so called
for redemption will cease, except the right to receive any moneys payable upon
such redemption and any money or other property to which the holders of such
Depositary Receipts were entitled upon such redemption upon surrender thereof
to the Preferred Shares Depositary.
VOTING OF THE UNDERLYING PREFERRED SHARES
Upon receipt of notice of any meeting at which the holders of the Preferred
Shares are entitled to vote, the Preferred Shares Depositary will mail the
information contained in such notice of meeting to the record holders of the
Depositary Receipts evidencing the Depositary Shares which represent such
Preferred Shares. Each record holder of Depositary Receipts evidencing
Depositary Shares on the record date (which will be the same date as the
record date for the Preferred Shares) will be entitled to instruct the
Preferred Shares Depositary as to the exercise of the voting rights pertaining
to the amount of Preferred Shares represented by such holder's Depositary
Shares. The Preferred Shares Depositary will vote the amount of Preferred
Shares represented by such Depositary Shares in accordance with such
instructions, and the Company will agree to take all reasonable action which
may be deemed necessary by the Preferred Shares Depositary in order to enable
the Preferred Shares Depositary to do so. The Preferred Shares Depositary will
abstain from voting the amount of Preferred Shares represented by such
Depositary Shares to the extent it does not receive specific instructions from
the holders of Depositary Receipts evidencing such Depositary Shares.
LIQUIDATION PREFERENCE
In the event of liquidation, dissolution or winding up of the Company,
whether voluntary or involuntary, each holder of a Depositary Receipt will be
entitled to the applicable fraction of the liquidation preference accorded
each Preferred Share represented by the Depositary Share evidenced by such
Depositary Receipt, as set forth in the applicable Prospectus Supplement.
40
<PAGE>
CONVERSION OF PREFERRED SHARES
The Depositary Shares, as such, are not convertible into Common Shares or
any other securities or property of the Company. Nevertheless, if so specified
in the applicable Prospectus Supplement relating to an offering of Depositary
Shares, the Depositary Receipts may be surrendered by holders thereof to the
Preferred Shares Depositary with written instructions to the Preferred Shares
Depositary to instruct the Company to cause conversion of the Preferred Shares
represented by the Depositary Shares evidenced by such Depositary Receipts
into whole Common Shares, other Preferred Shares of the Company or other
shares of capital stock, and the Company has agreed that upon receipt of such
instructions and any amounts payable in respect thereof, it will cause the
conversion thereof utilizing the same procedures as those provided for
delivery of Preferred Shares to effect such conversion. If the Depositary
Shares evidenced by a Depositary Receipt are to be converted in part only, one
or more new Depositary Receipts will be issued for any Depositary Shares not
to be converted. No fractional Common Shares will be issued upon conversion,
and if such conversion will result in a fractional share being issued, an
amount will be paid in cash by the Company equal to the value of the
fractional interest based upon the closing price of the Common Shares on the
last business day prior to the conversion.
AMENDMENT AND TERMINATION OF THE DEPOSIT AGREEMENT
The form of Depositary Receipt evidencing the Depositary Shares which
represent the Preferred Shares and any provision of the Deposit Agreement may
at any time be amended by agreement between the Company and the Preferred
Shares Depositary. However, any amendment that materially and adversely alters
the rights of the holders of Depositary Receipts will not be effective unless
such amendment has been approved by the existing holders of at least a
majority of the Depositary Shares evidenced by the Depositary Receipts then
outstanding.
The Deposit Agreement may be terminated by the Company upon not less than 30
days' prior written notice to the Preferred Shares Depositary if (i) such
termination is to preserve the Company's status as a REIT or (ii) holders of a
majority of the outstanding Depositary Receipts issued thereunder consent to
such termination, whereupon the Preferred Shares Depositary shall deliver or
make available to each holder of Depositary Receipts, upon surrender of the
Depositary Receipts held by such holder, such number of whole or fractional
Preferred Shares as are represented by the Depositary Shares evidenced by such
Depositary Receipts. In addition, the Deposit Agreement will automatically
terminate if (i) all outstanding Depositary Shares shall have been redeemed,
(ii) there shall have been a final distribution in respect of the related
Preferred Shares in connection with any liquidation, dissolution or winding up
of the Company and such distribution shall have been distributed to the
holders of Depositary Receipts evidencing the Depositary Shares representing
such Preferred Shares or (iii) each related Preferred Share shall have been
converted into capital stock of the Company not so represented by Depositary
Shares.
CHARGES OF PREFERRED SHARES DEPOSITARY
The Company will pay all transfer and other taxes and governmental charges
arising solely from the existence of the Deposit Agreement. In addition, the
Company will pay the fees and expenses of the Preferred Shares Depositary in
connection with the performance of its duties under the Deposit Agreement.
However, holders of Depositary Receipts will pay the fees and expenses of the
Preferred Shares Depositary for any duties requested by such holders to be
performed which are outside of those expressly provided for in the Deposit
Agreement.
RESIGNATION AND REMOVAL OF DEPOSITARY
The Preferred Shares Depositary may resign at any time by delivering to the
Company notice of its election to do so, and the Company may at any time
remove the Preferred Shares Depositary, any such resignation or removal to
take effect upon the appointment of a successor Preferred Shares Depositary. A
successor Preferred Shares Depositary must be appointed within 60 days after
delivery of the notice of resignation or removal and must be a bank or trust
company having its principal office in the United States and having a combined
capital and surplus of at least $50,000,000.
41
<PAGE>
MISCELLANEOUS
The Preferred Shares Depositary will forward to holders of Depositary
Receipts any reports and communications from the Company which are received by
the Preferred Shares Depositary with respect to the related Preferred Shares.
Neither the Preferred Shares Depositary nor the Company will be liable if,
by law or any circumstances beyond its control, it is prevented from or
delayed in performing its obligations under the Deposit Agreement. The
obligations of the Company and the Preferred Shares Depositary under the
Deposit Agreement will be limited to performing their duties thereunder in
good faith and without gross negligence or willful misconduct, and the Company
and the Preferred Shares Depositary will not be obligated to prosecute or
defend any legal proceeding in respect of any Depositary Receipts, Depositary
Shares or Preferred Shares represented thereby unless reasonably satisfactory
indemnity is furnished. The Company and the Preferred Shares Depositary may
rely on written advice of counsel or accountants, or information provided by
persons presenting Preferred Shares represented thereby for deposit, holders
of Depositary Receipts or other persons believed to be competent to give such
information, and on documents believed to be genuine and signed by a proper
party.
If the Preferred Shares Depositary shall receive conflicting claims,
requests or instructions from any holders of Depositary Receipts, on the one
hand, and the Company, on the other hand, the Preferred Shares Depositary
shall be entitled to act on such claims, requests or instructions received
from the Company.
DESCRIPTION OF COMMON STOCK WARRANTS
The Company may issue Common Stock Warrants for the purchase of Common
Shares. Common Stock Warrants may be issued independently or together with any
other Offered Securities offered by any Prospectus Supplement and may be
attached to or separate from such Offered Securities. Each series of Common
Stock Warrants will be issued under a separate warrant agreement (each, a
"Warrant Agreement") to be entered into between the Company and a warrant
agent specified in the applicable Prospectus Supplement (the "Warrant Agent").
The Warrant Agent will act solely as an agent of the Company in connection
with the Common Stock Warrants of such series and will not assume any
obligation or relationship of agency or trust for or with any holders or
beneficial owners of Common Stock Warrants. The following sets forth certain
general terms and provisions of the Common Stock Warrants offered hereby.
Further terms of the Common Stock Warrants and the applicable Warrant
Agreements will be set forth in the applicable Prospectus Supplement.
The following description of certain terms of any Common Stock Warrants and
the related Warrant Agreement does not purport to be complete and is qualified
in its entirety by reference to the form of Warrant Agreement (including the
form of Common Stock Warrant) which has been or will be filed or incorporated
by reference as an exhibit to the Registration Statement of which this
Prospectus is a part and which is or will be available as described under
"Available Information."
The terms of the Common Stock Warrants offered in any Prospectus Supplement
may differ from the terms set forth below, in which case the terms set forth
below shall be deemed to have been superseded to the extent of any different
terms set forth in such Prospectus Supplement.
The applicable Prospectus Supplement will describe the terms of the Common
Stock Warrants in respect of which such Prospectus Supplement is being
delivered, including, where applicable, the following: (i) the title of such
Common Stock Warrants; (ii) the aggregate number of such Common Stock
Warrants; (iii) the price or prices at which such Common Stock Warrants will
be issued; (iv) the number of Common Shares purchasable upon exercise of such
Common Stock Warrants; (v) the designation and terms of the other Offered
Securities with which such Common Stock Warrants are issued and the number of
such Common Stock Warrants issued with each such Company Offered Security;
(vi) whether such Common Stock Warrants will be attached to any other Offered
Securities and the date, if any, on and after which such Common Stock Warrants
and the related
42
<PAGE>
Offered Securities will be separately transferable; (vii) the price at which
each Common Share purchasable upon exercise of such Common Stock Warrants may
be purchased; (viii) the date on which the right to exercise such Common Stock
Warrants shall commence and the date on which such right shall expire; (ix) if
applicable, the minimum or maximum amount of such Common Stock Warrants which
may be exercised at any one time; (x) information with respect to book-entry
procedures, if any; and (xi) any other terms of such Common Stock Warrants,
including terms, procedures and limitations relating to the exchange and
exercise of such Common Stock Warrants.
Reference is made to the section captioned "Description of Common Shares"
for a general description of the Common Shares to be acquired upon the
exercise of the Common Stock Warrants, including a description of certain
restrictions on the ownership of Common Shares. Common Shares that may be
acquired upon the exercise of Common Stock Warrants directly or constructively
held by an investor will be deemed by the Company to be outstanding (i) at the
time of acquisition of the Common Stock Warrants, and (ii) prior to the
exercise of the Common Stock Warrants, for purposes of determining the
percentage ownership of Common Shares held by such investor.
DESCRIPTION OF COMMON SHARES
GENERAL
The following description of the Common Shares sets forth certain general
terms and provisions of the Common Shares to which any Prospectus Supplement
may relate, including a Prospectus Supplement providing that Common Shares
will be issuable upon conversion of Debt Securities or Preferred Shares of the
Company or upon the exercise of Common Stock Warrants issued by the Company.
The statements below describing the Common Shares, the Rights (as defined
below) and the Rights Agreement (as defined below) do not purport to be
complete and are in all respects subject to and qualified in their entirety by
reference to the applicable provisions of the Articles, the Bylaws and the
Rights Agreement dated as of August 14, 1989 (the "Rights Agreement") between
the Company and Chase Mellon Shareholder Services L.L.C. ("Chase Mellon")
(formerly Chemical Trust Company of California), as successor rights agent, as
supplemented, copies of which have been filed or incorporated by reference as
exhibits to the Registration Statement of which this Prospectus is a part and
are available as described above under "Available Information."
The Articles authorize the issuance of up to 100,000,000 Common Shares,
$0.01 par value. As of December 31, 1997, there were 41,738,704 Common Shares
issued and outstanding. In addition, as of December 31, 1997, there were
2,800,900 Common Shares reserved for issuance upon the exercise of options
under the Company's stock option plans and 1,383,801 Common Shares were
reserved for issuance under the Company's Dividend Reinvestment Plan. As of
December 31, 1997, there were 3,452,181 shares of Common Shares reserved for
issuance upon exchange of the units in the Operating Company and the units of
a certain other subsidiary of the Company which were issued or may be issued
in connection with the TCR-West Transaction. The Common Shares are listed on
the New York Stock Exchange under the symbol "BRE." Chase Mellon is the
transfer agent and registrar of the Common Shares.
Holders of Common Shares are entitled to receive dividends ratably, when, as
and if declared by the Board of Directors of the Company, out of assets of the
Company legally available for payment, subject to any preferential rights of
any outstanding Preferred Shares. In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Company, the holders of Common
Shares are entitled to share ratably in any assets of the Company available
for distribution to shareholders after payment of or provision for all
liabilities of the Company and any amounts owing in respect of any outstanding
Preferred Shares. The Common Shares offered in any Prospectus Supplement will
not have preemptive or conversion rights.
Holders of Common Shares are entitled to one vote for each share held on all
matters submitted to a vote of the holders of Common Shares and, except as
otherwise required by law or as provided by the express provisions
43
<PAGE>
of any series of Preferred Shares, the holders of the Common Shares will
exclusively possess all voting power of the shareholders of the Company.
Holders of Common Shares do not have cumulative voting rights in the election
of directors.
As described above under "Description of Preferred Shares," the Board of
Directors may, without the approval of the shareholders of the Company, from
time to time authorize the issuance of one or more series of Preferred Shares
with such rights, restrictions and other terms as may be determined by the
Board of Directors. The issuance of Preferred Shares, while providing
flexibility in connection with possible financings, acquisitions and other
corporate purposes, could, among other things, adversely affect the voting
powers and other rights and interests of holders of Common Shares and, under
certain circumstances, could make it more difficult for a third party to gain
control of the Company and could have the effect of delaying or preventing an
attempted takeover of the Company.
CERTAIN PROVISIONS OF THE ARTICLES OF INCORPORATION AND BYLAWS
Several provisions of the Articles and Bylaws may have the effect of
deterring a takeover of the Company. These provisions include (i) the
requirement that 70% of the outstanding shares of voting stock approve certain
mergers, sales of assets or other business combinations with shareholders
owning 10% or more of then outstanding voting shares, unless the transaction
is recommended by a majority of the disinterested directors or meets certain
fair price criteria, (ii) a requirement that directors of the Company may be
removed by the shareholders only for "cause" and that vacancies in the Board
of Directors may be filled only by action of the remaining directors, (iii)
the requirement that 70% of the outstanding shares of voting stock approve
amendments to certain provisions of the Articles, (iv) the classification of
the Company's Board of Directors into three classes serving staggered three-
year terms, (v) a prohibition on certain stock repurchases by the Company from
a holder of 5% or more of the outstanding voting shares for a price exceeding
fair market value unless certain conditions are met, and (vi) a requirement
that shareholder action without a meeting be taken by unanimous written
consent.
Maryland law imposes certain restrictions on business combinations with a
greater than ten percent shareholder unless a company's charter states that it
has elected not to be governed by such provisions. The Company has made such
an election in the Articles and therefore is not subject to such provisions.
Maryland law eliminates the voting rights of any shares of voting stock held
by a person to the extent such shares exceed 20% of the outstanding voting
stock of the company, and permits a company to redeem any such shares at the
fair value of the stock, unless a company's charter states that it has elected
not to be governed by such provisions. The Company has made such an election
in the Articles and therefore is not subject to such provisions.
SHAREHOLDER RIGHTS PLAN
On August 14, 1989, the Company's Board of Directors declared a dividend
distribution to shareholders of record on September 7, 1989 of one common
share purchase right (a "Right") for each outstanding Common Share. Each Right
entitled the holder to purchase from the Company one Common Share at a cash
purchase price of $90.00 per share, subject to adjustment. Following the
Company's stock dividend of one Common Share for each Common Share outstanding
in June 1996, such cash purchase price was adjusted to $45.00 per share,
subject to adjustment. The terms of the Rights are set forth in the Rights
Agreement. The Rights are not exercisable until the Distribution Date referred
to below and will expire at the close of business on September 7, 1999, unless
earlier redeemed by the Company as described below (the "Final Expiration
Date").
Until the Distribution Date (or earlier redemption or expiration of the
Rights), (i) the Rights will be issued with newly issued Common Shares and
(ii) the Rights will be evidenced by the Common Share certificates and the
transfer of Common Share certificates will also constitute the transfer of the
Rights associated with such Common Shares. As soon as practicable after the
Distribution Date, Rights certificates will be mailed to holders of record of
the Common Shares as of the close of business on the Distribution Date.
44
<PAGE>
The Rights will separate from the Common Shares and a Distribution Date (as
defined in the Rights Agreement) will occur, in general, upon the earlier of
(i) 10 days following a public announcement that a person (an "Acquiring
Person") has acquired 32% or more of the outstanding Common Shares (the "Stock
Acquisition Date"), (ii) 10 business days following the commencement of a
tender or exchange offer for 40% or more of the outstanding Common Shares or
(iii) 10 business days after the Board of Directors determines that a person
has become an "Adverse Person" (as defined in the Rights Agreement).
In the event that, among other things, (i) the Company survives a merger or
business combination with an Acquiring Person or an Adverse Person without any
exchange of its outstanding Common Shares for other securities, cash or
property, (ii) any person becomes the owner of 40% or more of the then
outstanding Common Shares, (iii) an Acquiring Person or an Adverse Person
engages in one of a number of self-dealing transactions set forth in the
Rights Agreement, or (iv) during such time as there is an Acquiring Person or
an Adverse Person, an event occurs which results in such person's ownership
interest being increased by more than 1%, each Right will entitle the holder
to receive, upon exercise, Common Shares having a value equal to two times the
exercise price of the Right. In the event that, at any time following the
Stock Acquisition Date or the date on which the Board of Directors determines
that a person is an Adverse Person, (i) the Company is acquired in a merger or
other business combination, (ii) the Company survives a merger or business
combination in which Common Shares are exchanged for other securities, cash or
property or (iii) 50% or more of the Company's assets or earning power is sold
or transferred, each Right will entitle the holder to receive, upon exercise,
common shares of the acquiring person having a value equal to two times the
exercise price of the Right.
In general, the Company may redeem the Rights in whole, but not in part, at
a price of $.01 per Right, at any time until ten days following the earlier of
the Stock Acquisition Date, the date on which a person is determined to be an
Adverse Person or the Final Expiration Date.
The Rights have certain anti-takeover effects. The Rights will cause
substantial dilution to a person or group that attempts to acquire the Company
without conditioning the offer on redemption of the Rights by the Board of
Directors or on the acquisition by such person or group of a substantial
number of Rights.
RESTRICTIONS ON TRANSFERS OF CAPITAL STOCK; REDEMPTION
The Articles provide that any shareholder must, upon demand, disclose to the
Board of Directors of the Company in writing such information with respect to
its direct and indirect ownership of the shares of the Company's stock as the
Board of Directors deems necessary to permit the Company to comply (or to
verify compliance) with the REIT provisions of the Code, and the regulations
promulgated thereunder or the requirements of any other taxing authority. The
Articles further provide that, if the Board of Directors in good faith
determines that direct or indirect ownership of shares of the Company's stock
has or may become concentrated to an extent that would prevent the Company
from qualifying as a REIT (See "Federal Income Tax Considerations"), the Board
of Directors is authorized to prevent the transfer of stock or to call for
redemption (by lot or by other means affecting one or more shareholders
selected in the sole discretion of the Board of Directors) of a number of
shares of stock sufficient in the opinion of the Board of Directors to
maintain or bring the direct or indirect ownership of the Company's stock into
conformity with the requirements for maintaining REIT status. If Common Shares
are called for redemption, the redemption price shall be (i) the last reported
sale price of the shares on the last business day prior to the redemption date
on the principal national securities exchange on which the shares are listed
or admitted to trading, (ii) if the shares are not so listed or admitted to
trading but are reported in the Nasdaq system, the last sale price on the last
business day prior to the redemption date, or if there is no sale on such day
then at the last bid price on such day as reported in the Nasdaq National
Market, (iii) if the shares are not so reported or listed or admitted to
trading, the mean between the highest bid and lowest asked prices on such last
business day as reported by the National Quotation Bureau Incorporated or a
similar organization selected by the Board of Directors for such purpose, or
(iv) if not determined by the foregoing methods, as determined in good faith
by the Board of Directors. From and after the
45
<PAGE>
date fixed for redemption by the Board of Directors, the holder of any shares
of stock so called for redemption will cease to be entitled to dividends,
distributions, voting rights and other benefits with respect to such shares,
excepting only the right to payment of the redemption price without interest.
The Bylaws provide that, whenever it is determined by the Board of Directors
to be reasonably necessary to protect the REIT tax status of the Company, the
Board of Directors may require a statement or affidavit from each holder or
proposed transferee of shares of stock setting forth the number of shares
already owned by such holder or transferee or any related person. The Bylaws
further provide that if, in the opinion of the Board of Directors, which will
be conclusive upon any proposed transferor or transferee of shares, any
proposed transfer would jeopardize the status of the Company as a REIT under
the Code, the Board of Directors may refuse to permit such transfer; that any
attempt to transfer as to which the Board of Directors has refused its
permission will be void and of no effect to transfer any legal or beneficial
interest in the shares; and that all contracts for the sale or other transfer
of shares are subject to these restrictions.
These provisions may have the effect of preventing acquisition of control of
the Company unless the Board of Directors determines that maintenance of REIT
status is no longer in the best interests of the Company.
FEDERAL INCOME TAX CONSIDERATIONS
The following is a discussion of the material federal income tax
considerations to the Company and its security holders relating to the Offered
Securities and the treatment of the Company as a REIT. It is not intended to
represent a detailed description of the federal income tax consequences
applicable to a particular security holder of the Company in view of a
security holder's particular circumstances, or to certain types of security
holders (including insurance companies, tax-exempt organizations, financial
institutions or broker-dealers, foreign corporations and persons who are not
citizens or residents of the United States) subject to special treatment under
the federal income tax laws. The discussion in this section is based on
current provisions of the Code, current and proposed Treasury Regulations,
court decisions and other administrative rulings and interpretations, all of
which are subject to change either prospectively or retroactively. There can
be no assurance that any such change, future Code provision or other legal
authority will not alter significantly the tax considerations described
herein.
EACH PROSPECTIVE PURCHASER IS URGED TO CONSULT HIS OWN TAX ADVISOR,
REGARDING THE SPECIFIC TAX CONSEQUENCES, IN VIEW OF SUCH PROSPECTIVE
PURCHASER'S INDIVIDUAL CIRCUMSTANCES, OF THE PURCHASE, OWNERSHIP AND SALE OF
THE OFFERED SECURITIES, INCLUDING THE FEDERAL, STATE, LOCAL, FOREIGN AND OTHER
TAX CONSEQUENCES OF SUCH PURCHASE, OWNERSHIP AND SALE AND OF POTENTIAL CHANGES
IN APPLICABLE TAX LAWS.
GENERAL
Effective as of its formation on May 22, 1970, the Company elected to be
taxed as a real estate investment trust under Code Sections 856 through 860.
The Company believes that it is organized and is operating in such a manner as
to qualify for taxation as a REIT under the Code. The Company intends to
continue to operate in such a manner, but no assurance can be given that it
will operate in a manner so as to qualify or remain qualified as a REIT.
In the opinion of Paul, Hastings, Janofsky & Walker llp, based on certain
assumptions and representations, the Company was reorganized in Delaware in
1987 in conformity with the requirements for qualification as a "real estate
investment trust" under the Code, the Company has qualified as a REIT for its
fiscal year ended July 31, 1995, its short taxable year ended December 31,
1995 and its taxable year ended December 31, 1996 (the years, to the best
knowledge of counsel, that are still subject to audit by the Internal Revenue
Service), it is anticipated that the Company will qualify as a REIT for its
taxable year ended December 31, 1997, and the
46
<PAGE>
Company is organized and operates in a manner that will enable it to qualify
to be taxed as a REIT under the Code for its taxable year ending December 31,
1998 and thereafter provided the Company continues to meet the asset
composition, source of income, shareholder diversification, distributions,
record keeping, and other requirements of the Code necessary for the Company
to qualify as a REIT. It must be emphasized that this opinion is based on
various assumptions and is conditioned upon certain representations made by
the Company as to factual matters including, but not limited to, those set
forth below in this discussion of "Federal Income Tax Considerations" and
those concerning the Company's business and properties as set forth and
incorporated by reference in this Prospectus. Moreover, such qualification and
taxation as a REIT depends upon the Company's ability to meet, through actual
annual operating results, distribution levels and diversity of stock
ownership, and the various qualification tests imposed under the Code
discussed below the results of which will not be reviewed by Paul, Hastings,
Janofsky & Walker llp. Accordingly, no assurance can be given that the actual
results of the Company's operations for any particular taxable year will
satisfy such requirements. See "Failure to Qualify."
TAXATION OF THE COMPANY
A REIT, such as the Company, generally will not be subject to federal
corporate income tax on its taxable income that is currently distributed to
its shareholders. This treatment substantially eliminates the "double
taxation" (at the corporate and shareholder levels) that generally results
from an investment in a corporation. However, the Company will be subject to
federal income tax in several ways, including the following: First, the
Company will be taxed at regular corporate rates on any undistributed REIT
taxable income, including undistributed net capital gains. Second, under
certain circumstances, the Company may be subject to the "alternative minimum
tax." Third, if the Company has: (i) net income from the sale or other
disposition of "foreclosure property" which is held primarily for sale to
customers in the ordinary course of business or (ii) other non-qualifying
income from foreclosure property, it will be subject to tax on such income at
the highest corporate rate. Fourth, if the Company has net income from
"prohibited transactions" (which are, in general, certain sales or other
dispositions of property held primarily for sale to customers in the ordinary
course of business other than foreclosure property), such income will be
subject to a 100% corporate level tax. Fifth, if the Company should fail to
satisfy the 75% gross income test or the 95% gross income test (each discussed
below) but has nonetheless maintained its qualification as a REIT by
satisfying certain other requirements, it will be subject to a 100% tax on an
amount equal to the gross income attributable to the greater of the amount by
which the Company fails the 75% or 95% test, multiplied by a fraction intended
to reflect the Company's profitability. Sixth, if the Company should fail to
distribute during each calendar year at least the sum of: (i) 85% of its REIT
ordinary income for such year, (ii) 95% of its REIT capital gain net income
for such year and (iii) any undistributed taxable income from prior periods,
it will be subject to a 4% excise tax on the excess of such required
distribution over the amounts actually distributed. Seventh, if the Company
acquires any asset from a C corporation (i.e., generally a corporation subject
to full corporate-level tax) in a transaction in which the basis of the asset
in the Company's hands is determined by reference to the basis of the asset
(or any other property) in the hands of the C corporation, and the Company
recognizes gain on the disposition of such asset during the ten-year period
beginning on the date the asset was acquired by the Company, then the excess
of (i) the fair market value of such asset as of the beginning of such period
over (ii) the Company's adjusted basis in such asset as of the beginning of
such period will be subject to tax at the highest regular corporate tax rate.
REQUIREMENTS FOR QUALIFICATION
A REIT is defined in the Code as a corporation, trust or association: (i)
which is managed by one or more trustees or directors; (ii) the beneficial
ownership of which is evidenced by transferable shares or by transferable
certificates of beneficial interest; (iii) which would be taxable as a
domestic corporation, but for Code Sections 856 through 859; (iv) which is
neither a financial institution nor an insurance company subject to certain
provisions of the Code; (v) the beneficial ownership of which is held by 100
or more persons; (vi) not more than 50% in value of the outstanding stock of
which is owned during the last half of each taxable year, directly or
indirectly, by or for five or fewer individuals (as defined in the Code to
include certain entities); and (vii) which
47
<PAGE>
meets certain income and asset tests described below. Conditions (i) through
(iv) above must be met during the entire taxable year and condition (v) must
be met during at least 335 days of a taxable year of 12 months, or during a
proportionate part of a taxable year of less than 12 months. However,
conditions (v) and (vi) do not apply until after the first taxable year for
which an election is made to be taxed as a REIT.
With respect to its taxable years ending before January 1, 1998, in order to
maintain its election to be taxed as a REIT, the Company must also maintain
certain records and request certain information from its shareholders designed
to disclose the actual ownership of its stock. The Company believes that it
has complied and will comply with these requirements.
In the case of a REIT that is a partner in a partnership or a member in a
limited liability company ("LLC"), the REIT Provisions provide that the REIT
is deemed to own its proportionate share of the assets of the partnership or
LLC based on the REIT's capital interest in the partnership or LLC and is
deemed to be entitled to the income of the partnership or LLC attributable to
such proportionate share (unless specifically stated otherwise or the context
otherwise requires, the discussion under this section "Federal Income Tax
Considerations" relating to partnerships and the partners thereof also applies
to LLCs and the members thereof). In addition, the character of the assets and
gross income of the partnership shall retain the same character in the hands
of the REIT for purposes of satisfying the gross income tests and the asset
tests, described below. Similar treatment applies with respect to lower-tier
partnerships which the REIT indirectly owns through its interests in higher-
tier partnerships. Thus, the Company's proportionate share of the assets,
liabilities and items of income of the Operating Company and the other
partnerships and limited liability companies in which the Company owns a
direct or indirect interest (collectively, the "Subsidiary Entities"), will be
treated as assets, liabilities and items of income of the Company for purposes
of applying the gross income tests and the asset tests described below,
provided that the Operating Company and the Subsidiary Entities are treated as
partnerships for federal income tax purposes. See "Federal Income Tax Aspects
of the Operating Company and the Subsidiary Entities" below.
INCOME TESTS
In order to maintain qualification as a REIT, the Company annually must
satisfy three gross income requirements. First, at least 75% of the Company's
gross income (excluding gross income from prohibited transactions) for each
taxable year must be derived directly or indirectly from investments relating
to real property or mortgages on real property (including "rents from real
property" and, in certain circumstances, interest) or from certain types of
temporary investments. Second, at least 95% of the Company's gross income
(excluding gross income from prohibited transactions) for each taxable year
must be derived from such real property investments, dividends, interest and
gain from sale or disposition of stock or securities (or from any combination
of the foregoing). Third, for the Company's taxable years beginning prior to
January 1, 1998, short-term gain from the sale or other disposition of stock
or securities, gain from prohibited transactions and gain on the sale or other
disposition of real property held for less than four years (apart from
involuntary conversions and sales of foreclosure property) must represent less
than 30% of the Company's gross income (including gross income from prohibited
transactions) for each taxable year.
Rents received by the Company will qualify as "rents from real property" in
satisfying the gross income requirements for a REIT described above only if
several conditions are met. First, the amount of rent must not be based in
whole or in part on the income or profits of any person. However, an amount
received or accrued generally will not be excluded from the term "rents from
real property" solely by reason of being based on a fixed percentage or
percentages of receipts or sales. Second, the Code provides that rents
received from a tenant will not qualify as "rents from real property" in
satisfying the gross income tests if the REIT, or an owner of 10% or more of
the REIT, directly or constructively owns 10% or more of such tenant (a
"Related Party Tenant"). Third, if rent attributable to personal property
leased in connection with a lease of real property is greater than 15% of the
total rent received under the lease, then the portion of rent attributable to
such personal property will not qualify as "rents from real property."
Finally, a REIT may provide services to its tenants and
48
<PAGE>
the income will qualify as "rents from real property" only if the services are
of a type that a tax-exempt organization can provide to its tenants without
causing its rental income to be unrelated business taxable income under the
Code. Services that would give rise to unrelated business taxable income if
provided by a tax-exempt organization ("Prohibited Services") must be provided
by an "independent contractor" who is adequately compensated and from whom the
REIT does not derive any income. Payments received by a REIT for services
furnished (whether or not rendered by an independent contractor) that are not
customarily provided to tenants in properties of a similar class in the
geographic market in which the REIT's property is 1ocated will not qualify as
"rents from real property." For the Company's taxable years beginning on or
after January 1, 1998, the provision of Prohibited Services by the Company in
connection with a lease of real property will not cause the rent to fail to
qualify as "rents from real property" unless the amount treated as received
for the Prohibited Services exceeds l% of all amounts received or accrued
during the taxable year directly or indirectly by the Company with respect to
such property. The Company does not and will not charge rent for any property
that is based in whole or in part on the income or profits of any person
(except by reason of being based on a percentage of receipts or sales, as
described above), and the Company does not and will not rent any personal
property (other than personal property leased in connection with the lease of
real property, the amount of which is less than 15% of the total rent received
under the lease). The Company directly performs services under certain of its
leases, but such services should not be considered Prohibited Services.
To the extent that the performance of any services provided by the Company
would cause amounts received from its tenants to be excluded from "rents from
real property," the Company intends to hire independent contractors from whom
the Company will derive no revenue in connection with such services.
The term "interest" generally does not include any amount received or
accrued (directly or indirectly) if the determination of such amount depends
in whole or in part on the income or profits of any person. However, an amount
received or accrued generally will not be excluded from the term "interest"
solely by reason of being based on a fixed percentage or percentages of
receipts or sales.
For the Company's taxable years beginning prior to January 1, 1998, any
gross income derived from a prohibited transaction will be taken into account
in applying the 30% income test necessary to qualify as a REIT. The net income
from a prohibited transaction is subject to a 100% tax. The Company believes
that no asset directly or indirectly owned by it is held for sale to customers
and that the sale of any such property will not be in the ordinary course of
business of the Company, the Operating Company or the Subsidiary Entities.
If the Company fails to satisfy one or both of the 75% or 95% gross income
tests for any taxable year, it may nevertheless qualify as a REIT for such
year if it is entitled to relief under certain provisions of the Code. These
relief provisions generally will be available if the Company's failure to meet
such tests was attributable to reasonable cause and not to willful neglect,
the Company attaches a schedule of the sources of its income to its return,
and any incorrect information on the schedule was not attributable to fraud
with intent to evade tax. It is not possible, however, to determine whether,
in all circumstances, the Company would be entitled to the benefit of those
relief provisions. As discussed above in "--General," even if those relief
provisions apply, a tax would be imposed with respect to excess net income.
THIRD PARTY MANAGEMENT INCOME
In connection with the TCR-West Transaction, the Company acquired certain
management contracts (which were immediately contributed to the Management
Company, a newly created "qualified REIT subsidiary," as defined in the Code)
whereby, in return for various fees, the Company is obligated to provide
management services related to properties that are not owned directly or
indirectly by the Company ("Third Party Management Income"). The Third Party
Management Income will not qualify under either 75% or 95% gross income test
described above. However, the Company does not believe that the receipt of
this income will cause the Company to fail to satisfy one or both of the 75%
or 95% gross income tests for the current or any future taxable year as this
income, along with other non-qualifying income, is expected to represent less
than 5% of the Company's gross income in any taxable year.
49
<PAGE>
Inadvertent failure to satisfy the 75% and 95% gross income tests may not
disqualify the Company as a REIT if, as discussed above, certain relief
provisions apply. See "--Income Tests."
ASSET TESTS
At the close of each quarter of its taxable year, the Company must also
satisfy three tests relating to the nature of its assets. First, at least 75%
of the value of the Company's total assets must be represented by interests in
real property, interests in mortgages on real property to the extent the
mortgage balance does not exceed the value of the associated real property,
shares in other REITs, cash, cash items, government securities and certain
securities attributable to temporary investment of new capital. Second, not
more than 25% of the Company's total assets may be represented by securities
other than those in the 75% asset class. Third, of the investments included in
the 25% asset class, the value of any one issuer's securities owned by the
Company may not exceed 5% of the value of the Company's total assets and the
Company may not own more than 10% of any one issuer's outstanding voting
securities.
As set forth above, the ownership of more than 10% of the voting securities
of any one issuer by a REIT is prohibited by the asset tests. However, the
Company owns stock in certain subsidiaries that are, in the opinion of Paul,
Hastings, Janofsky & Walker llp (based on certain representations by the
Company), "qualified REIT subsidiaries" as defined in the Code, and as
"qualified REIT subsidiaries," such subsidiaries are not treated as separate
corporations for federal income tax purposes. Thus, the Company's ownership of
stock of a "qualified REIT subsidiary" will not cause the Company to fail the
asset tests.
ANNUAL DISTRIBUTION REQUIREMENTS
In order to qualify as a REIT, the Company is required to distribute
dividends (other than capital gain dividends) to its shareholders each year in
an amount at least equal to: (i) the sum of (a) 95% of the Company's "REIT
taxable income" (computed without regard to the dividends paid deduction and
the Company's net capital gain) and (b) 95% of the net income (after tax), if
any, from foreclosure property, minus (ii) the sum of certain items of non-
cash income. To the extent that the Company does not distribute all of its net
capital gain or distributes at least 95%, but less than 100%, of its "REIT
taxable income," as adjusted, it will be subject to tax thereon at regular
ordinary and capital gains corporate tax rates. Furthermore, if the Company
fails to distribute during each calendar year at least the sum of: (i) 85% of
its REIT ordinary income for such year, (ii) 95% of its REIT capital gain
income for such year and (iii) any undistributed taxable income from prior
periods, the Company will be subject to a 4% excise tax on the excess of such
required distribution over the amounts actually distributed (including for
this purpose as amounts distributed, amounts taxed at regular ordinary and
capital gains corporate tax rates). The Company intends to make timely
distributions sufficient to satisfy these annual distribution requirements.
It is possible that the Company, from time to time, may not have sufficient
cash or other liquid assets to meet the 95% distribution requirement because
of timing differences between (i) the actual receipt of income and the actual
payment of deductible expenses and (ii) the inclusion of such income and
deduction of such expenses in arriving at the taxable income of the Company.
In the event that such timing differences occur, in order to meet the 95%
distribution requirement the Company may find it necessary to arrange for
short-term, or possibly long-term, borrowings or to pay dividends in the form
of taxable stock dividends.
Under certain circumstances, the Company may be able to rectify a failure to
meet the distribution requirement for a certain year by paying "deficiency
dividends" to shareholders in a later year, which may be included in the
Company's deduction for dividends paid for the earlier year. Thus, the Company
may be able to avoid being taxed on amounts distributed as deficiency
dividends. However, the Company will be required to pay interest based upon
the amount of any deduction taken for deficiency dividends.
50
<PAGE>
FAILURE TO QUALIFY
If the Company fails to qualify for taxation as a REIT in any taxable year,
and the relief provisions do not apply, the Company will be subject to tax
(including any applicable corporate alternative minimum tax) on its taxable
income at regular corporate rates. Distributions to shareholders in any year
in which the Company fails to qualify will not be deductible by the Company
nor will they be required to be made by the Company. In such event, to the
extent of current and accumulated earnings and profits, all distributions to
shareholders will be taxable as ordinary income, and, subject to certain
limitations, a corporate distributee may be eligible for the dividends
received deduction. Unless entitled to relief under specific statutory
provisions, the Company will also be disqualified from taxation as a REIT for
the four taxable years following the year during which qualification was lost.
Whether the Company would be entitled to such statutory relief cannot be
foreseen.
TAXATION OF TAXABLE DOMESTIC SHAREHOLDERS
As long as the Company qualifies as a REIT, distributions made to its
taxable domestic shareholders out of current or accumulated earnings and
profits (and not designated as capital gain dividends) will result in ordinary
income to such shareholders. Corporate shareholders will not be entitled to
the "dividends received" deduction. Distributions that are designated as
capital gain dividends will be taxed as long-term capital gains (to the extent
they do not exceed the Company's actual net capital gain for the taxable year)
without regard to the period for which the shareholder has held its shares.
However, corporate shareholders may be required to treat up to 20% of certain
capital gain dividends as ordinary income. Distributions by the Company in
excess of its current and accumulated earnings and profits will not be taxable
to a shareholder to the extent that such distributions do not exceed the
adjusted basis of the shareholder's shares, but rather, will be a non-taxable
reduction in a shareholder's adjusted basis in such shares to the extent
thereof and thereafter will be taxed as capital gain.
Any dividend declared by the Company in October, November or December of any
year payable to a shareholder of record on a specified date in any such month
will be treated as both paid by the Company and received by the shareholder on
or before December 31 of such year, provided that the dividend is actually
paid by the Company by January 31 of the following calendar year.
Shareholders may not include any net operating losses or capital losses of
the Company in their individual income tax returns. In general, any loss upon
the sale or exchange of shares by a shareholder who has held such shares for
six months or less (after applying certain holding period rules) will be
treated as a long-term capital loss to the extent distributions from the
Company are required to be treated by such shareholder as long-term capital
gain.
If the Company elects to retain, rather than distribute as a capital gain
dividend, its net long-term capital gains, the Company would pay tax on such
retained net long-term capital gains. In addition, for taxable years of the
Company beginning on or after January 1, 1998, to the extent designated by the
Company, a taxable domestic shareholder generally would (i) include its
proportionate share of such undistributed long-term capital gains in computing
its long-term capital gains in its return for its taxable year in which the
last day of the Company's taxable year falls (subject to certain limitations
as to the amount so includible), (ii) be deemed to have paid the capital gains
tax imposed on the Company on the designated amounts included in such taxable
domestic shareholder's long-term capital gains, (iii) receive a credit or
refund for such amount of tax deemed paid by it, (iv) increase the adjusted
basis of its shares by the difference between the amount of such includible
gains and the tax deemed to have been paid by it, and (v) in the case of a
taxable corporate shareholder, appropriately adjust its earnings and profits
for the retained capital gains in accordance with Treasury Regulations to be
prescribed by the IRS.
BACKUP WITHHOLDING
The Company will report to its domestic shareholders and to the IRS the
amount of dividends paid during each calendar year, and the amount of tax
withheld, if any. Under the backup withholding rules, a shareholder
51
<PAGE>
may be subject to backup withholding at the rate of 31% with respect to
dividends paid unless such holder: (i) is a corporation or comes within
certain other exempt categories and, when required, demonstrates this fact, or
(ii) provides a taxpayer identification number, certifies to no loss of
exemption from backup withholding, and otherwise complies with applicable
requirements of the backup withholding rules. A shareholder that does not
provide the Company with a correct taxpayer identification number may also be
subject to penalties imposed by the IRS. Any amount paid as backup withholding
will be creditable against the shareholder's income tax liability. In
addition, the Company may be required to withhold a portion of capital gain
distributions to any shareholders who fail to certify their non-foreign status
to the Company. See "Taxation of Foreign Shareholders."
TAXATION OF PENSION TRUSTS
For purposes of the "five or fewer" test described above, beneficiaries of a
domestic pension trust that owns shares in the Company generally will be
treated as owning such shares in proportion to their actuarial interests in
the trust. Generally, a tax-exempt investor that holds Common Shares as an
investment and is exempt from tax on its investment income will not be subject
to tax on distributions paid by the Company. However, if such tax-exempt
investor is treated as having purchased Common Shares with borrowed funds,
some or all of its distributions from the Common Shares will be subject to
tax. Amounts distributed by the Company to a tax-exempt pension trust
generally do not constitute "unrelated business taxable income" ("UBTI") to
such trust unless the trust owns more than ten percent of the Company's Common
Shares, in which case a portion of such amounts distributed may be treated as
UBTI.
TAXATION OF FOREIGN SHAREHOLDERS
The rules governing United States federal income taxation of nonresident
alien individuals or foreign corporations, foreign partnerships and other
foreign shareholders (collectively, "Non-U.S. Shareholders") are complex and
no attempt is made herein to provide more than a summary of such rules. In
addition, this discussion is based on current law, which is subject to change,
and assumes that the Company qualifies for taxation as a REIT. Prospective
Non-U.S. Shareholders should consult with their own tax advisors to determine
the impact of federal, state and local income tax laws with regard to an
investment in the Common Shares, including any reporting requirements.
It is currently anticipated that the Company will qualify as a "domestically
controlled REIT" (i.e., a REIT in which at all times during a specified
testing period less than 50% of the value of the capital stock of which is
owned directly or indirectly by Non-U.S. Shareholders) and therefore gain from
the sale of Common Shares by a Non-U.S. Shareholder generally will not be
subject to United States taxation unless such gain is treated as "effectively
connected" with the Non-U.S. Shareholder's United States trade or business. As
the Common Shares are publicly traded, there can be no assurance that the
Company will always qualify as a "domestically controlled REIT."
If the Company ceases to be a "domestically controlled REIT," gain arising
from the sale or exchange by a Non-U.S. Shareholder of Common Shares would be
subject to United States taxation under the Foreign Investment in Real
Property Tax Act of 1980 ("FIRPTA") as a sale of a "United States real
property interest" unless the Common Shares are "regularly traded" (as defined
by applicable Treasury regulations) on an established securities market (e.g.,
the New York Stock Exchange) and the selling Non-U.S. Shareholder held no more
than 5% (after applying certain constructive ownership rules) of the Common
Shares during the shorter of (i) the period during which the taxpayer held
such shares or (ii) the 5-year period ending on the date of the disposition of
such shares. If gain on the sale or exchange of Common Shares were subject to
taxation under FIRPTA, the Non-U.S. Shareholder would be subject to regular
United States income tax with respect to such gain in the same manner as a
domestic shareholder (subject to any applicable alternative minimum tax, a
special alternative minimum tax in the case of nonresident alien individuals
and the possible application of the 30% branch profits tax in the case of
foreign corporation), and the purchaser of the stock would be required to
withhold and remit to the IRS 10% of the purchase price. The 10% withholding
tax will not apply if the Common Shares are "regularly traded" in an
established securities market.
52
<PAGE>
Notwithstanding the foregoing, gain from the sale or exchange of Common
Shares not otherwise subject to United States taxation will be taxable to a
Non-U.S. Shareholder if (i) investment in the Common Shares is effectively
connected with the Non-U.S. Shareholder's United States trade or business (or,
if an income tax treaty applies, is attributable to a United States permanent
establishment of the Non-U.S. Shareholder), in which case the Non-U.S.
Shareholder will be subject to the same treatment as domestic shareholders
with respect to such gain (except that a shareholder that is a foreign
corporation may also be subject to the 30% branch profits tax, as discussed
below), or (ii) the Non-U.S. Shareholder is a resident alien individual who is
present in the United States for 183 days or more during the taxable year and
has a "tax home" in the United States, in which case the nonresident alien
individual will be subject to a 30% tax on the individual's capital gains.
Distributions that are not attributable to gain from the sale or exchange by
the Company of United States real property interests (and are not designated
as capital gain dividends) ("Non-Capital Distributions") will be treated as
dividends of ordinary income to the extent that they are made out of current
or accumulated earnings and profits of the Company. Such distributions
generally will be subject to a United States withholding tax equal to 30% of
the gross amount of the distribution, subject to reduction or elimination
under an applicable income tax treaty. However, if dividends from the
investment in the Common Shares are treated as "effectively connected" with
the Non-U.S. Shareholder's conduct of a United States trade or business, such
dividends will be subject to regular U.S. income taxation (foreign
corporations may also be subject to the 30% branch profits tax). The Company
will withhold United States income tax at the rate of 30% on the gross amount
of any Non-Capital Distributions paid to a Non-U.S. Shareholder unless: (i) a
lower treaty rate applies and the Non-U.S. Shareholder files certain
information evidencing its entitlement to such lower treaty rate, or (ii) the
Non-U.S. Shareholder files an IRS Form 4224 with the Company claiming that the
distribution is "effectively connected" income. Distributions which exceed
current and accumulated earnings and profits of the Company will not be
taxable to the extent that they do not exceed the adjusted basis of shares,
but rather will reduce (but not below zero) the adjusted basis of such shares.
To the extent that such distributions exceed the adjusted basis of a Non-U.S.
Shareholder's Common Shares, they generally will give rise to United States
tax liability if the Non-U.S. Shareholder would otherwise be subject to tax on
gain from the sale or disposition of his shares in the Company, as described
above. Because the Company will withhold 30% (or lower treaty rate) of all
Non-Capital Distributions, to the extent the Company makes distributions in
excess of its earnings and profits, generally the amount withheld will exceed
a Non-U.S. Shareholder's U.S. tax liability on such distributions and such
shareholder can seek a refund from the IRS to the extent the amount withheld
on its distributions exceeds its U.S. tax liability.
Distributions by the Company to a Non-U.S. Shareholder that are attributable
to gain from sales or exchanges by the Company of a United States real
property interest are subject to income and withholding tax under the
provisions of FIRPTA. Under FIRPTA, those distributions, if any, which are
treated as gain recognized from the sale of a United States real property
interest, are taxed as income "effectively connected" with a United States
business. Non-U.S. Shareholders would thus be taxed at the normal capital gain
rates applicable to U.S. shareholders (subject to the applicable alternative
minimum tax and a special alternative minimum tax for nonresident alien
individuals). Also, distributions subject to FIRPTA may be subject to a 30%
branch profits tax in the hands of a foreign corporate shareholder not
entitled to treaty exemption. The Company will withhold 35% of any
distribution to a Non-U.S. Shareholder that could be designated by the Company
as a capital gain dividend. This amount is creditable against the Non-U.S.
Shareholder's FIRPTA tax liability. A refund may be available if the amount
withheld exceeds the Non-U.S. Shareholder's federal tax liability.
Distributions that are designated by the Company at the time of distribution
as capital gains dividends (other than those arising from the disposition of a
United States real property interest) generally will not be subject to United
States federal income taxation, unless (i) investment in the Common Shares is
effectively connected with the Non-U.S. Shareholder's United States trade or
business (or, if an income tax treaty applies, is attributable to a United
States permanent establishment of the Non-U.S. Shareholder), in which case the
Non-U.S. Shareholder will be subject to the same treatment as domestic
shareholders with respect to such gain (except that a shareholder that is a
foreign corporation may also be subject to the 30% branch profits tax, as
discussed above),
53
<PAGE>
or (ii) the Non-U.S. Shareholder is a resident alien individual who is present
in the United States for 183 days or more during the taxable year and has a
"tax home" in the United States, in which case the nonresident alien
individual will be subject to a 30% tax on the individual's capital gains.
On October 6, 1997, the IRS issued final Treasury Regulations concerning the
withholding of tax and information reporting for certain amounts paid to non-
resident individuals and foreign corporations. These new withholding rules
significantly change the current withholding regime. However, in general,
these new rules apply only to payments made after December 31, 1998.
Prospective purchasers should consult their tax advisors concerning the
impact, if any, of these new Treasury Regulations.
FEDERAL INCOME TAX ASPECTS OF THE OPERATING COMPANY AND THE SUBSIDIARY
ENTITIES
As a result of the TCR-West Transaction, a portion of the Company's assets
are held indirectly through the Operating Company and the Subsidiary Entities.
The Operating Company and the Subsidiary Entities involve special tax
considerations, including the possibility of a challenge by the IRS of the
status of any of such partnerships or LLCs as a partnership (as opposed to an
association taxable as a corporation) for federal income tax purposes. Under
recently finalized Treasury Regulations pertaining to entity classification,
the Company believes that the Operating Company and Subsidiary Entities will
be classified as partnerships for federal income tax purposes. Nevertheless,
if any of such partnerships or LLCs were to be treated as a corporation, such
entity would be subject to an entity level tax on its income. Such an entity
level tax is likely to substantially reduce the amount of cash available for
distribution to the Company's shareholders and to holders of Debt Securities.
In addition, if the Operating Company or any of the Subsidiary Entities were
to be taxable as a corporation, the Company would not qualify as a REIT, which
could have a material adverse effect on the Company and its ability to make
distributions to shareholders and to pay amounts due on its Debt Securities.
TAX ALLOCATIONS WITH RESPECT TO CONTRIBUTED PROPERTIES
Pursuant to Section 704(c) of the Code, income, gain, loss and deduction
attributable to appreciated or depreciated property that is contributed to a
partnership in exchange for an interest in the partnership, must be allocated
in a manner such that the contributing partner is charged with, or benefits
from, respectively, the unrealized gain or unrealized loss associated with the
property at the time of the contribution. The amount of such unrealized gain
or unrealized loss is generally equal to the difference between the fair
market value of the contributed property at the time of contribution and the
adjusted tax-basis of such property at the time of contribution (a "Book-Tax
Difference"). Such allocations are solely for federal income tax purposes and
do not affect the book capital accounts or other economic or legal
arrangements among the partners. The Operating Company was formed by way of
contributions of property by TCR-West. Consequently, allocations with respect
to such contributed property must be made in a manner consistent with Code
Section 704(c).
In general, the Company will be allocated higher amounts of depreciation
deductions for tax purposes than such deductions would be if determined on a
pro rata basis. In addition, in the event of the disposition of any of the
contributed assets which have a Book-Tax Difference, all income attributable
to such Book-Tax Difference will generally be allocated to the property-
contributing members and the Company will generally be allocated only its
share of capital gains attributable to appreciation, if any, occurring after
the contribution of such assets to the Operating Company. This will tend to
eliminate the Book-Tax Difference over the life of the Operating Company.
However, the special allocation rules of Section 704(c) do not always entirely
eliminate the Book-Tax Difference on an annual basis or with respect to a
specific taxable transaction such as a sale. Thus, the carryover basis of the
contributed assets in the hands of the Operating Company will cause the
Company to be allocated lower depreciation and other deductions, and possible
amounts of taxable income in the event of a sale of such contributed assets in
excess of the economic or book income allocated to it as a result of such
sale. This may cause the Company to recognize taxable income in excess of cash
proceeds, which might adversely affect the Company's ability to comply with
the REIT distribution requirements. See "Annual Distribution Requirements."
54
<PAGE>
The Treasury Regulations under Code Section 704(c) allow partnerships to use
any reasonable method of accounting for Book-Tax Differences so that the
contributing partner receives the tax benefits and burdens of any built-in
gain or loss associated with the contributed property. Book-Tax Differences
associated with the Operating Company will be allocated pursuant to the
"traditional method" as described in the applicable Treasury Regulations. Use
of the "traditional method" may result in distributions to Company
shareholders being comprised of a greater portion of taxable income rather
than a return of capital.
PARTNERSHIP ANTI-ABUSE RULE
The IRS has published regulations that provide an anti-abuse rule (the
"Anti-Abuse Rule") under the partnership provisions of the Code (the
"Partnership Provisions"). Under the Anti-Abuse Rule, if a partnership is
formed or availed of in connection with a transaction a principal purpose of
which is to reduce substantially the present value of the partners, aggregate
federal tax liability in a manner that is inconsistent with the intent of the
Partnership Provisions, the IRS can recast the transaction for federal tax
purposes to achieve tax results that are consistent with the intent of the
Partnership Provisions. This analysis is to be made based on all facts and
circumstances. The Anti-Abuse Rule states that the intent of the Partnership
Provisions incorporates the following requirements: (i) the partnership must
be bona fide and each partnership transaction or series of related
transactions must be entered into for a substantial business purpose; (ii) the
form of each partnership transaction must be respected under substance over
form principles; and (iii) with certain exceptions, the tax consequences under
the Partnership Provisions to each partner of partnership operations and the
transactions between the partner and the partnership must accurately reflect
the partner's economic agreement and clearly reflect the partner's income.
The Company believes that its indirect ownership of certain assets through
its interest in the Operating Company and the Subsidiary Entities is not
inconsistent with the intent of the Partnership Provisions and that,
therefore, the IRS should not be able to invoke the Anti-Abuse Rule to recast
the structure of the Company for federal income tax purposes. However, no
assurance can be given that the IRS or a court will concur with such opinion.
The Anti-Abuse Rule also provides that, unless a provision of the Code or
the Treasury Regulations prescribes the treatment of a partnership as an
entity, in whole or in part, and that treatment and the ultimate tax results,
taking into account all the relevant facts and circumstances, are clearly
contemplated by that provision, the IRS can treat a partnership as an
aggregate of its partners, in whole or in part, as appropriate to carry out
the purpose of any provision of the Code or the Treasury Regulations.
Treatment of the Operating Company or any of the Subsidiary Entities, in whole
or in part, as an aggregate rather than an entity is unlikely to materially
change the federal tax consequences to any partner. In addition, the REIT
Provisions generally treat a partnership as an aggregate rather than an entity
for purposes of applying the REIT Requirements. Therefore, the Anti-Abuse Rule
should not have a material adverse effect on the federal income tax
consequences to any partner or on the ability of the Company to qualify as a
REIT.
OTHER TAX CONSEQUENCES
The Company and its shareholders may be subject to state or local taxation
in various jurisdictions, including those in which it or they transact
business or reside. The state and local tax treatment of the Company and its
shareholders may not conform to the federal income tax consequences discussed
above. Prospective shareholders should consult their own tax advisors
regarding the effect of state and local tax laws on an investment in the
Company.
PLAN OF DISTRIBUTION
The Company may sell the Offered Securities to one or more underwriters for
public offering and sale by them or may sell the Offered Securities to
investors directly or through agents or through dealers or through a
55
<PAGE>
combination of any such methods of sale. Any such underwriter or agent
involved in the offer and sale of the Offered Securities will be named in the
applicable Prospectus Supplement.
Underwriters may offer and sell the Offered Securities at a fixed price or
prices, which may be changed, or from time to time at market prices prevailing
at the time of sale or at prices related to the prevailing market prices at
the time of sale, or at negotiated prices. The Company also may, from time to
time, authorize agents to offer and sell the Offered Securities upon the terms
and conditions set forth in an applicable Prospectus Supplement. In connection
with the sale of Offered Securities, underwriters and agents may be deemed to
have received compensation from the Company in the form of discounts or
commissions and may also receive commissions from purchasers of Offered
Securities for whom they may act as agents. Underwriters may sell Offered
Securities to or through dealers, and such dealers may receive compensation in
the form of discounts, concessions from the underwriters or commissions from
the purchasers for whom they may act as agent.
Any compensation paid by the Company to underwriters or agents in connection
with the offering of Offered Securities and any discounts, concessions or
commissions allowed by underwriters to participating dealers will be set forth
in the applicable Prospectus Supplement. Underwriters, dealers and agents
participating in the distribution of the Offered Securities may be deemed to
be underwriters, and any discounts and commissions received by them and any
profit realized by them on resale of the Offered Securities may be deemed to
be underwriting discounts and commissions under the Securities Act.
Underwriters, dealers and agents may be entitled, under agreements entered
into with the Company, to indemnification against and contribution toward
certain civil liabilities, including liabilities under the Securities Act.
If so indicated in the applicable Prospectus Supplement, the Company may
authorize underwriters or other persons acting as the Company's agents to
solicit offers by certain institutions to purchase Offered Securities from the
Company pursuant to delayed delivery contracts ("Contracts") providing for
payment and delivery on such future date or dates stated in such Prospectus
Supplement. Each Contract will be for an amount not less than, and the
aggregate amount of the Offered Securities sold pursuant to Contracts shall be
not less or more than, the respective amounts stated in the applicable
Prospectus Supplement. Institutions with whom Contracts, when authorized, may
be made include commercial and savings banks, insurance companies, pension
funds, investment companies, educational and charitable institutions, and
other institutions, but will in all cases be subject to the approval of the
Company. Contracts will not be subject to any conditions except (i) the
purchase by an institution of the Offered Securities covered by its Contracts
shall not at the time of delivery be prohibited under the laws of any
jurisdiction in the United States to which such institution is subject and
(ii) if the Offered Securities are being sold to underwriters, the Company
shall have sold to such underwriters the total amount of the Offered
Securities less the amount thereof covered by Contracts.
Certain of the underwriters, dealers and agents and their affiliates may
engage in transactions with and perform services for the Company and its
subsidiaries in the ordinary course of business.
EXPERTS
The financial statements and related financial schedule of BRE Properties,
Inc. appearing in BRE Properties, Inc.'s Annual Report on Form 10-K for the
year ended December 31, 1997, have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report thereon included therein
and incorporated herein by reference. Such financial statements and schedule
referred to above are incorporated herein by reference in reliance upon such
report given upon the authority of such firm as experts in accounting and
auditing.
LEGAL MATTERS
The validity of the Offered Securities as well as certain legal matters
described under "Federal Income Tax Considerations" will be passed upon for
the Company by Paul, Hastings, Janofsky & Walker llp, San Francisco,
California. Brown & Wood llp, San Francisco, California, will act as counsel
for any underwriters or agents.
56
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table is an itemized listing of expenses to be incurred by BRE
Properties, Inc. (the "Company") in connection with the issuance of the
Offered Securities being registered hereby, other than commissions (all
amounts, other than the SEC Registration Fee, are estimates):
<TABLE>
<S> <C>
SEC Registration Fee.......................................... $ 219,038
NYSE Listing Fee.............................................. 75,000
Printing and Engraving Costs.................................. 250,000
Legal Fees and Expenses....................................... 375,000
Blue Sky Fees and Expenses.................................... 15,000
Rating Agency Fees............................................ 100,000
Accounting Fees and Expenses.................................. 250,000
Miscellaneous................................................. 10,962
----------
Total....................................................... $1,295,000
==========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
As authorized by Section 2-418 of the General Corporation Law of the State
of Maryland (the "Maryland Corporation Law"), Article VI of the Company's
Bylaws provides that the Company shall indemnify any officer or director who
was or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit, proceeding or investigation, whether civil,
criminal or administrative, and whether external or internal to the Company
(other than an action brought by or in the right of the Company) by reason of
the fact that he or she is or was an officer or director, against all
expenses, liability and loss (including attorneys' fees, judgments, fines,
ERISA excise taxes or penalties and amounts paid or to be paid in settlement)
actually and reasonably incurred by the officer or director in connection with
such action, suit, proceeding or investigation, or any appeal therein.
However, there will be no such indemnification if it is established by
adjudication that (i) the act or omission of the director was material to the
matter giving rise to the proceeding and (A) was committed in bad faith or (B)
was the result of active and deliberate dishonesty; (ii) the officer or
director actually received an improper personal benefit in money, property or
services; or (iii) with respect to any criminal action or proceeding, the
officer or director had no reasonable cause to believe that his or her conduct
was unlawful. Notwithstanding the foregoing, an officer or director may
receive indemnification where a court of appropriate jurisdiction determines
that such person is fairly and reasonably entitled to indemnity for any
expense, liability or loss which the court shall deem proper; provided,
however, that no indemnification for any liability or loss (other than
expenses) shall in any event be made to the extent that such person has been
adjudged to have actually received an improper personal benefit. Article VI of
the Articles provides that, to the fullest extent permitted by law, no
director or officer of the Company shall be personally liable to the Company,
any subsidiary thereof or any of its shareholders for money damages.
In addition, Article VI of the Company's Bylaws also provides that the
Company shall indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed judicial action or
suit brought by or in the right of the Company to procure a judgment in its
favor by reason of the fact that such person is or was an officer or director,
against expenses (including attorneys' fees) and amounts paid in settlement
actually and reasonably incurred by such person in connection with the
defense, settlement or appeal of such action or suit, except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the Company unless
and only to the extent that a court of appropriate jurisdiction shall
determine upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which the court shall deem
proper.
II-1
<PAGE>
The Company maintains a directors' and officers' insurance policy which
insures the directors and officers of the Company from claims arising out of
an alleged wrongful act by such persons in their respective capacities as
directors and officers of the Company, subject to certain exceptions.
The Company has entered into indemnification agreements with its directors
and officers.
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- ----------------------------------------------------------------------
<C> <S>
1.1* Form of Underwriting Agreement (common stock)
1.2* Form of Underwriting Agreement (debt securities)
4.1 Amended and Restated Articles of Incorporation (1)
4.2 Articles of Amendment (2)
4.3 Bylaws (3)
4.4 Rights Agreement between the Registrant and Bank of America, N.T. &
S.A., dated as of August 14, 1989 (4)
4.5 Supplement to Rights Agreement between the Registrant and Chemical
Trust Company of California dated as of July 30, 1992 (5)
4.6 Indenture between the Registrant and Chase Manhattan Bank and Trust
Company, National Association, as successor trustee, dated as of June
23, 1997 (6)
4.7 Form of Senior Indenture
4.8 Form of Subordinated Indenture
4.9 Form of Senior Debt Security (7)
4.10 Form of Subordinated Debt Security (7)
4.11 Form of Common Stock Warrant Agreement and Form of Warrant (7)
4.12 Specimen Certificate for Common Shares (8)
4.13 Form of Certificate for Preferred Shares (7)
4.14 Form of Articles Supplementary for Preferred Shares (7)
4.15 Form of Deposit Agreement and Depositary Receipt (7)
5* Opinion of Paul, Hastings, Janofsky & Walker LLP regarding the
validity of the securities being registered
8* Opinion of Paul, Hastings, Janofsky & Walker LLP regarding tax matters
12 Computation of Ratio of Earnings to Fixed Charges
23.1* Consent of Paul, Hastings, Janofsky & Walker LLP (included as part of
Exhibits 5 and 8)
23.2 Consent of Ernst & Young LLP
24* Power of Attorney
25.1 Statement of Eligibility on Form T-1, dated as of March 26, 1998, of
Chase Manhattan Bank and Trust Company, National Association, as
trustee under the Indenture between the Registrant and Chase Manhattan
Bank and Trust Company, National Association, as successor trustee,
dated as of June 23, 1997
25.2 Statement of Eligibility of any other Senior Trustee on Form T-1 (9)
25.3 Statement of Eligibility of the Subordinated Trustee on Form T-1 (10)
</TABLE>
- --------
* Previously filed.
(1) Incorporated by reference to Exhibit 3.1 of the Registrant's Current
Report on Form 8-K dated March 15, 1996.
(2) Incorporated by reference to Exhibit 4.2 of the Registrant's Registration
Statement on Form S-3 (No. 333-24915), filed with the Securities and
Exchange Commission on April 10, 1997, as amended.
II-2
<PAGE>
(3) Incorporated by reference to Exhibit 4.5 of the Registrant's Registration
Statement on Form S-4 (No. 33-65365), filed with the Securities and
Exchange Commission on December 22, 1995, as amended.
(4) Incorporated by reference to Exhibit 4.1 of the Registrant's Current
Report on Form 8-K dated August 14, 1989.
(5) Incorporated by reference to Exhibit 4.5 of the Registrant's Registration
Statement on Form S-3 (No. 333-24915), filed with the Securities and
Exchange Commission on April 10, 1997, as amended.
(6) Incorporated by reference to Exhibit 4.1 of the Registrant's Current
Report on Form 8-K dated June 18, 1997.
(7) To be filed by amendment or as an exhibit to a document to be incorporated
by reference herein in connection with an offering of specific Offered
Securities.
(8) Incorporated by reference to Exhibit 4.11 of the Registrant's Registration
Statement on Form S-3 (No. 333-24915), filed with the Securities and
Exchange Commission on April 10, 1997, as amended.
(9) To be filed in accordance with Section 305(b)(2) of the Trust Indenture
Act of 1939, if a trustee other than Chase Manhattan Bank and Trust
Company, National Association, is appointed for the Senior Debt
Securities.
(10) To be filed in accordance with Section 305(b)(2) of the Trust Indenture
Act of 1939.
ITEM 17. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes:
(1) to file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933, as amended (the "Securities Act");
(ii) to reflect in the prospectus any facts or events arising after
the effective date of this Registration Statement (or the most recent
post-effective amendment hereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in this Registration Statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the dollar
value of securities offered would not exceed that which was registered)
and any deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of prospectus filed with
the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20 percent change
in the maximum aggregate offering price set forth in the "Calculation
of Registration Fee" table in the effective Registration Statement; and
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in this Registration Statement or
any material change to such information in this Registration Statement;
PROVIDED, HOWEVER, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if
the information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the Company pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") that are
incorporated by reference in this Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
II-3
<PAGE>
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Company's Annual Report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act that is incorporated by reference into this Registration
Statement shall be deemed to be a new registration statement relating to the
securities offered herein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Company pursuant to the foregoing provisions, or otherwise, the Company has
been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Company of expenses incurred or paid by a director, officer or controlling
person of the Company in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Company will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
(d) The undersigned registrant hereby undertakes to file an application for
the purpose of determining the eligibility of the trustee (other than Chase
Manhattan Bank and Trust Company, National Association) to act under
Subsection (a) of Section 310 of the Trust Indenture Act (the "Act") in
accordance with the rules and regulations prescribed by the Commission under
Section 305(b)(2) of the Act.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this amendment to the
Registration Statement (this "Amendment") to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of San Francisco, State of
California on the 27th day of March, 1998.
BRE Properties, Inc.
By: /s/ LeRoy E. Carlson
----------------------------------
LEROY E. CARLSON
Executive Vice President,
Chief Financial Officer and
Secretary
Pursuant to the requirements of the Securities Act of 1933, this Amendment
has been signed by the following persons in the capacities indicated on the
27th day of March, 1998.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/s/ John McMahan* Director, Chairman of the Board
- ------------------------------------
JOHN MCMAHAN
/s/ Frank C. McDowell* President, Chief Executive Officer
- ------------------------------------ and Director (Principal Executive
FRANK C. MCDOWELL Officer)
/s/ LeRoy E. Carlson Executive Vice President, Chief
- ------------------------------------ Financial Officer and Secretary
LEROY E. CARLSON (Principal Financial Officer and
Principal Accounting Officer)
/s/ William E. Borsari* Director
- ------------------------------------
WILLIAM E. BORSARI
/s/ C. Preston Butcher* Director
- ------------------------------------
C. PRESTON BUTCHER
/s/ L. Michael Foley* Director
- ------------------------------------
L. MICHAEL FOLEY
/s/ Roger P. Kuppinger* Director
- ------------------------------------
ROGER P. KUPPINGER
/s/ Gregory M. Simon* Director
- ------------------------------------
GREGORY M. SIMON
/s/ Arthur G. von Thaden* Director
- ------------------------------------
ARTHUR G. VON THADEN
</TABLE>
* By: /s/ LeRoy E. Carlson
--------------------------------
LEROY E. CARLSON
Attorney-in-Fact
II-5
<PAGE>
BRE PROPERTIES, INC.
EXHIBIT INDEX
TO AMENDMENT NO. 1 TO REGISTRATION STATEMENT ON FORM S-3
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT LOCATION
------- --------------------------------------------------- ----------------
<C> <S> <C>
4.7 Form of Senior Indenture Contained herein
4.8 Form of Subordinated Indenture Contained herein
12 Computation of Ratio of Earnings to Fixed Charges Contained herein
23.2 Consent of Ernst & Young LLP Contained herein
25.1 Statement of Eligibility on Form T-1, dated as of Contained herein
March 26, 1998, of Chase Manhattan Bank and Trust
Company, National Association, as trustee under the
Indenture between the Registrant and Chase
Manhattan Bank and Trust Company, National
Association, as successor trustee, dated as of June
23, 1997
</TABLE>
II-6
<PAGE>
Exhibit 4.7
BRE PROPERTIES, INC.
TO
_________________________________
Trustee
Indenture
Dated as of _____________
Senior Debt Securities
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE 1 - DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION.........................1
SECTION 101. DEFINITIONS..................................................................1
SECTION 102. COMPLIANCE CERTIFICATES AND OPINIONS........................................11
SECTION 103. FORM OF DOCUMENTS DELIVERED TO TRUSTEE......................................12
SECTION 104. ACTS OF HOLDERS.............................................................12
SECTION 105. NOTICES, ETC., TO TRUSTEE AND COMPANY.......................................14
SECTION 106. NOTICE TO HOLDERS; WAIVER...................................................14
SECTION 107. EFFECT OF HEADINGS AND TABLE OF CONTENTS....................................15
SECTION 108. SUCCESSORS AND ASSIGNS......................................................15
SECTION 109. SEPARABILITY CLAUSE.........................................................15
SECTION 110. BENEFITS OF INDENTURE.......................................................15
SECTION 111. GOVERNING LAW...............................................................16
SECTION 112. LEGAL HOLIDAYS..............................................................16
ARTICLE 2 - SECURITIES FORMS...............................................................16
SECTION 201. FORMS OF DEBT SECURITIES....................................................16
SECTION 202. FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION.............................17
SECTION 203. DEBT SECURITIES ISSUABLE IN GLOBAL FORM.....................................17
ARTICLE 3 - THE SECURITIES.................................................................18
SECTION 301. AMOUNT UNLIMITED; ISSUABLE IN SERIES........................................18
SECTION 302. DENOMINATIONS...............................................................22
SECTION 303. EXECUTION, AUTHENTICATION, DELIVERY AND DATING..............................22
SECTION 304. TEMPORARY DEBT SECURITIES...................................................24
SECTION 305. REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE.........................27
SECTION 306. MUTILATED, DESTROYED, LOST AND STOLEN DEBT SECURITIES.......................30
SECTION 307. PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED..............................31
SECTION 308. PERSONS DEEMED OWNERS.......................................................33
SECTION 309. CANCELLATION................................................................34
SECTION 310. COMPUTATION OF INTEREST.....................................................34
ARTICLE 4 - SATISFACTION AND DISCHARGE.....................................................34
SECTION 401. SATISFACTION AND DISCHARGE OF INDENTURE.....................................34
SECTION 402. APPLICATION OF TRUST FUNDS..................................................36
ARTICLE 5 - REMEDIES.......................................................................36
SECTION 501. EVENTS OF DEFAULT...........................................................36
SECTION 502. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT..........................38
SECTION 503. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
BY TRUSTEE.............................................................................39
SECTION 504. TRUSTEE MAY FILE PROOFS OF CLAIM............................................40
SECTION 505. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF DEBT
SECURITIES OR COUPONS...................................................................41
SECTION 506. APPLICATION OF MONEY COLLECTED..............................................41
SECTION 507. LIMITATION ON SUITS.........................................................41
SECTION 508. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL, PREMIUM,
IF ANY, INTEREST AND ADDITIONAL AMOUNTS.................................................42
SECTION 509. RESTORATION OF RIGHTS AND REMEDIES..........................................42
SECTION 510. RIGHTS AND REMEDIES CUMULATIVE..............................................42
SECTION 511. DELAY OR OMISSION NOT WAIVER................................................43
SECTION 512. CONTROL BY HOLDERS OF DEBT SECURITIES.......................................43
SECTION 513. WAIVER OF PAST DEFAULTS.....................................................43
SECTION 514. WAIVER OF USURY, STAY OR EXTENSION LAWS.....................................43
SECTION 515. UNDERTAKING FOR COSTS.......................................................44
ARTICLE 6 - THE TRUSTEE....................................................................44
SECTION 601. NOTICE OF DEFAULTS..........................................................44
SECTION 602. CERTAIN RIGHTS OF TRUSTEE...................................................45
SECTION 603. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF DEBT SECURITIES.................46
SECTION 604. MAY HOLD DEBT SECURITIES....................................................46
SECTION 605. MONEY HELD IN TRUST.........................................................46
SECTION 606. COMPENSATION AND REIMBURSEMENT..............................................46
SECTION 607. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY; CONFLICTING INTERESTS..............47
SECTION 608. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR...........................47
SECTION 609. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR......................................49
SECTION 610. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS.................50
SECTION 611. APPOINTMENT OF AUTHENTICATING AGENT.........................................50
ARTICLE 7 - HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY..............................52
SECTION 701. DISCLOSURE OF NAMES AND ADDRESSES OF HOLDERS................................52
SECTION 702. REPORTS BY TRUSTEE..........................................................52
SECTION 703. REPORTS BY COMPANY..........................................................52
SECTION 704. COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES OF HOLDERS...................53
ARTICLE 8 -CONSOLIDATION, MERGER, SALE, LEASE OR CONVEYANCE................................53
SECTION 801. CONSOLIDATIONS AND MERGERS OF COMPANY AND SALES, LEASES AND
CONVEYANCES PERMITTED SUBJECT TO CERTAIN CONDITIONS.....................................53
SECTION 802. RIGHTS AND DUTIES OF SUCCESSOR CORPORATION..................................54
SECTION 803. OFFICERS' CERTIFICATE AND OPINION OF COUNSEL................................54
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
ARTICLE 9 - SUPPLEMENTAL INDENTURES........................................................54
SECTION 901. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS..........................54
SECTION 902. SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS.............................56
SECTION 903. EXECUTION OF SUPPLEMENTAL INDENTURES........................................57
SECTION 904. EFFECT OF SUPPLEMENTAL INDENTURES...........................................57
SECTION 905. CONFORMITY WITH TRUST INDENTURE ACT.........................................58
SECTION 906. REFERENCE IN DEBT SECURITIES TO SUPPLEMENTAL INDENTURES.....................58
ARTICLE 10 - COVENANTS.....................................................................58
SECTION 1001. PAYMENT OF PRINCIPAL, PREMIUM, IF ANY, INTEREST AND ADDITIONAL AMOUNTS.....58
SECTION 1002. MAINTENANCE OF OFFICE OR AGENCY............................................58
SECTION 1003. MONEY FOR DEBT SECURITIES PAYMENTS TO BE HELD IN TRUST.....................60
SECTION 1004. AGGREGATE DEBT TEST........................................................61
SECTION 1005. DEBT SERVICE TEST..........................................................62
SECTION 1006. SECURED DEBT TEST..........................................................62
SECTION 1007. MAINTENANCE OF TOTAL UNENCUMBERED ASSETS...................................63
SECTION 1008. EXISTENCE..................................................................63
SECTION 1009. MAINTENANCE OF PROPERTIES..................................................63
SECTION 1010. INSURANCE..................................................................63
SECTION 1011. PAYMENT OF TAXES AND OTHER CLAIMS..........................................63
SECTION 1012. PROVISION OF FINANCIAL INFORMATION.........................................63
SECTION 1013. WAIVER OF CERTAIN COVENANTS................................................64
SECTION 1014. STATEMENT AS TO COMPLIANCE.................................................64
SECTION 1015. ADDITIONAL AMOUNTS.........................................................64
ARTICLE 11 - REDEMPTION OF SECURITIES......................................................65
SECTION 1101. APPLICABILITY OF ARTICLE...................................................65
SECTION 1102. ELECTION TO REDEEM; NOTICE TO TRUSTEE......................................66
SECTION 1103. SELECTION BY TRUSTEE OF DEBT SECURITIES TO BE REDEEMED.....................66
SECTION 1104. NOTICE OF REDEMPTION.......................................................66
SECTION 1105. DEPOSIT OF REDEMPTION PRICE................................................68
SECTION 1106. DEBT SECURITIES PAYABLE ON REDEMPTION DATE.................................68
SECTION 1107. DEBT SECURITIES REDEEMED IN PART...........................................69
SECTION 1108. CONVERSION ARRANGEMENT ON CALL FOR REDEMPTION..............................69
ARTICLE 12 - SINKING FUNDS.................................................................70
SECTION 1201. APPLICABILITY OF ARTICLE...................................................70
SECTION 1202. SATISFACTION OF SINKING FUND PAYMENTS WITH DEBT SECURITIES.................70
SECTION 1203. REDEMPTION OF DEBT SECURITIES FOR SINKING FUND.............................71
</TABLE>
iii
<PAGE>
<TABLE>
<S> <C>
ARTICLE 13 - REPAYMENT AT THE OPTION OF HOLDERS............................................71
SECTION 1301. APPLICABILITY OF ARTICLE...................................................71
ARTICLE 14 - DEFEASANCE AND COVENANT DEFEASANCE............................................72
SECTION 1401. APPLICABILITY OF ARTICLE; COMPANY'S OPTION TO EFFECT
DEFEASANCE OR COVENANT DEFEASANCE.........................................................72
SECTION 1402. DEFEASANCE AND DISCHARGE...................................................72
SECTION 1403. COVENANT DEFEASANCE........................................................73
SECTION 1404. CONDITIONS TO DEFEASANCE OR COVENANT DEFEASANCE............................73
SECTION 1405. DEPOSITED MONEY AND GOVERNMENT OBLIGATIONS TO BE HELD IN TRUST;
OTHER MISCELLANEOUS PROVISIONS............................................................75
SECTION 1406. REINSTATEMENT..............................................................76
ARTICLE 15 - MEETINGS OF HOLDERS OF SECURITIES.............................................76
SECTION 1501. PURPOSES FOR WHICH MEETINGS MAY BE CALLED..................................76
SECTION 1502. CALL, NOTICE AND PLACE OF MEETINGS.........................................77
SECTION 1503. PERSONS ENTITLED TO VOTE AT MEETINGS.......................................77
SECTION 1504. QUORUM; ACTION.............................................................77
SECTION 1505. DETERMINATION OF VOTING RIGHTS; CONDUCT AND ADJOURNMENT OF MEETINGS........78
SECTION 1506. COUNTING VOTES AND RECORDING ACTION OF MEETINGS............................79
</TABLE>
iv
<PAGE>
BRE PROPERTIES, INC.
--------------------
Reconciliation and tie between Trust Indenture Act of 1939
(the "1939 Act") and Indenture, dated as of __________
----
<TABLE>
<CAPTION>
1939 Act Section Indenture section
- ---------------- -----------------
<S> <C>
Section 310(a)(1)............................................ 607
(a)(2)............................................ 607
(b)............................................... 604, 607, 608
Section 312(b)............................................... 701
(c)............................................... 701
Section 313.................................................. 101 ("Outstanding")
(a)............................................... 702
(c)............................................... 601, 702, 703
Section 314(a)............................................... 703, 1012
(a)(4)............................................ 102
(c)(1)............................................ 102
(c)(2)............................................ 102
(e)............................................... 102
Section 315(a)-(d)........................................... 303, 602
(e)............................................... 515
Section 316(a)(last sentence)................................ 101 ("Outstanding")
(c)............................................... 104
Section 317(a)(1)............................................ 503
(a)(2)............................................ 504
Section 318(a)............................................... 111
(c)............................................... 111
</TABLE>
NOTE: This reconciliation and tie shall not, for any purpose, be deemed to
be a part of the Indenture.
Attention should also be directed to Section 318(c) of the 1939 Act, which
provides that the provisions of Sections 310 to and including 317 of the 1939
Act are a part of and govern every qualified indenture, whether or not
physically contained therein.
v
<PAGE>
INDENTURE, dated as of __________, between BRE PROPERTIES, INC., a Maryland
corporation (hereinafter called the "Company"), having its principal office at
One Montgomery Street, Telesis Tower, Suite 2500, San Francisco, California
94104-5525, and __________ of __________, a trust company organized and existing
under the laws of the State of California, as Trustee hereunder (hereinafter
called the "Trustee"), having its Corporate Trust ________________________
____________________________________________.
RECITALS OF THE COMPANY
-----------------------
The Company deems it necessary to issue from time to time for its lawful
purposes senior debt securities (hereinafter called the "Debt Securities")
evidencing its unsecured and unsubordinated indebtedness, and has duly
authorized the execution and delivery of this Indenture to provide for the
issuance from time to time of the Debt Securities, unlimited as to principal
amount, to bear interest at the rates or formulas, to mature at such times and
to have such other provisions as shall be fixed as hereinafter provided.
This Indenture is subject to the provisions of the Trust Indenture Act of
1939, as amended, that are deemed to be incorporated into this Indenture and
shall, to the extent applicable, be governed by such provisions.
All things necessary to make this Indenture a valid agreement of the
Company, in accordance with its terms, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the Debt
Securities by the Holders thereof, it is mutually covenanted and agreed, for the
equal and proportionate benefit of all Holders of the Debt Securities, as
follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
-------------------------------------------------------
SECTION 101. DEFINITIONS. For all purposes of this Indenture, except as
-----------
otherwise expressly provided or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned to
them in this Article, and include the plural as well as the singular;
(2) all other terms used herein which are defined in the TIA, either
directly or by reference therein, have the meanings assigned to them
therein, and the terms "cash transaction" and "self-liquidating paper," as
used in TIA Section 311, shall have the meanings assigned to them in the
rules of the Commission adopted under the TIA;
(3) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with GAAP; and
1
<PAGE>
(4) the words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision.
Certain terms used principally in Article Three, Article Five, Article Six
and Article Ten are defined in those Articles.
"Acquired Debt" means Debt of a Person (i) existing at the time such Person
is merged or consolidated with or into, or becomes a Subsidiary of, the Company
or (ii) assumed by the Company or any of its Subsidiaries in connection with the
acquisition of assets from such Person. Acquired Debt shall be deemed to be
incurred on the date the acquired Person is merged or consolidated with or into,
or becomes a Subsidiary of, the Company or the date of the related acquisition,
as the case may be.
"Act" when used with respect to any Holder, has the meaning specified in
Section 104.
"Additional Amounts" means any additional amounts which are required by a
Debt Security or by or pursuant to a Board Resolution, under circumstances
specified therein, to be paid by the Company in respect of certain taxes imposed
on certain Holders and which are owing to such Holders.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Annual Debt Service Charge" means, for any period, the interest expense of
the Company and its Subsidiaries for such period (including, without
duplication, (i) all amortization of debt discount, (ii) all accrued interest,
(iii) all capitalized interest and (iv) the interest component of capitalized
lease obligations), determined on a consolidated basis in accordance with
generally accepted accounting principles.
"Authenticating Agent" means any authenticating agent appointed by the
Trustee pursuant to Section 611.
"Authorized Newspaper" means a newspaper, printed in the English language
or in an official language of the country of publication, customarily published
on each Business Day, whether or not published on Saturdays, Sundays or
holidays, and of general circulation in each place in connection with which the
term is used or in the financial community of each such place. Whenever
successive publications are required to be made in Authorized Newspapers, the
successive publications may be made in the same or in different Authorized
Newspapers in the same city meeting the foregoing requirements and in each case
on any Business Day.
"Bankruptcy Law" has the meaning specified in Section 501.
2
<PAGE>
"Bearer Debt Security" means any Debt Security established pursuant to
Section 201 which is payable to bearer.
"Board of Directors" means the board of directors of the Company or any
committee of that board duly authorized to act generally or in any particular
respect for the Company hereunder.
"Board Resolution" means a copy of a resolution certified by the Secretary
or an Assistant Secretary of the Company to have been duly adopted by the Board
of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"Business Day" when used with respect to any Place of Payment or any other
particular location referred to in this Indenture or in the Debt Securities,
means, unless otherwise specified with respect to any securities pursuant to
Section 301, any day, other than a Saturday or Sunday, that is neither a legal
holiday nor a day on which banking institutions in that Place of Payment or
particular location are authorized or required by law, regulation or executive
order to close.
"CEDEL" means Centrale de Livraison de Valeurs Mobilieres, S.A., or its
successor.
"Commission" means the Securities and Exchange Commission, as from time to
time constituted, created under the Securities Exchange Act of 1934, as amended,
or, if at any time after execution of this instrument such Commission is not
existing and performing the duties now assigned to it under the Trust Indenture
Act, then the body performing such duties on such date.
"Common Depository" has the meaning set forth in Section 304.
"Common Shares" means, with respect to any Person, capital stock issued by
such Person other than Preferred Shares.
"Company" means the Person named as the "Company" in the first paragraph of
this Indenture until a successor corporation shall have become such pursuant to
the applicable provisions of this Indenture, and thereafter "Company" shall mean
such successor corporation.
"Company Request" and "Company Order" mean, respectively, a written request
or order signed in the name of the Company by the Chairman, any Vice Chairman,
the President or a Vice President, and by the Treasurer, an Assistant Treasurer,
the Secretary or an Assistant Secretary, of the Company, and delivered to the
Trustee.
"Consolidated Income Available For Debt Service" for any period means
Consolidated Net Income of the Company and its Subsidiaries for such period,
plus amounts which have been deducted and minus amounts which have been added
for (without duplication) (i) interest expense on Debt, (ii) provision for taxes
based on income, (iii) amortization of debt discount and deferred financing
costs, (iv) provisions for gains and losses on sales or other dispositions of
properties and other investments, (v) property depreciation and amortization,
(vi) the effect of any non-cash items resulting from a change in accounting
principles in determining Consolidated
3
<PAGE>
Net Income, and (vii) amortization of deferred charges, all determined on a
consolidated basis in accordance with generally accepted accounting principles.
"Consolidated Net Income" for any period means the amount of net income (or
loss) of the Company and its Subsidiaries for such period, excluding (without
duplication) (i) extraordinary items and (ii) the portion of net income (but not
losses) of the Company and its Subsidiaries allocable to minority interests in
unconsolidated Persons to the extent that cash dividends or distributions have
not actually been received by the Company or one of its Subsidiaries, all
determined on a consolidated basis in accordance with generally accepted
accounting principles.
"Conversion Event" means the cessation of use of (i) a Foreign Currency
both by the government of the country which issued such currency and for the
settlement of transactions by a central bank or other public institutions of or
within the international banking community (ii) the ECU both within the European
Monetary System and for the settlement of transactions by public institutions of
or within the European Communities or (iii) any currency unit (or composite
currency) other than the ECU for the purposes for which it was established.
"Corporate Trust Office" means the office of the Trustee at which, at any
particular time, its corporate trust business shall be principally administered,
which office at the date hereof is located at __________________________________
_______________________________.
"Corporation" or "corporation" includes corporations, associations,
companies and business trusts; provided, however, that for purposes of the
definition of the term "Company" in this Section 101 and for purposes of Article
Eight, the term "corporation" shall not include associations, companies or
business trusts.
"Coupon" or "coupon" means any interest coupon appertaining to a Bearer
security.
"Custodian" has the meaning specified in section 501.
"Debt" means, with respect to any Person, any indebtedness of such Person,
whether or not contingent, in respect of (i) borrowed money or evidenced by
bonds, notes, debentures or similar instruments, (ii) indebtedness secured by
any Lien on any property or asset owned by such Person, but only to the extent
of the lesser of (x) the amount of indebtedness so secured and (y) the fair
market value (determined in good faith by the board of directors of such Person
or, in the case of the Company or a Subsidiary, by the Company's Board of
Directors) of the property subject to such Lien, (iii) reimbursement
obligations, contingent or otherwise, in connection with any letters of credit
actually issued or amounts representing the balance deferred and unpaid of the
purchase price of any property except any such balance that constitutes an
accrued expense or trade payable, or (iv) any lease of property by such Person
as lessee which is required to be reflected on such Person's balance sheet as a
capitalized lease in accordance with GAAP, and also includes, to the extent not
otherwise included, any obligation of such Person to be liable for, or to pay,
as obligor, guarantor or otherwise (other than for purposes of collection in the
ordinary course of business), Debt of the types referred to above of another
Person (it being understood
4
<PAGE>
that Debt shall be deemed to be incurred by such Person whenever such Person
shall create, assume, guarantee or otherwise become liable in respect thereof).
"Debt Security" has the meaning stated in the first recital of this
Indenture and, more particularly, means any Debt Security or Debt Securities
authenticated and delivered under this Indenture; provided, however, that, if at
any time there is more than one Person acting as Trustee under this Indenture,
"Debt Securities" with respect to the Indenture as to which such Person is
Trustee shall have the meaning stated in the first recital of this Indenture and
shall more particularly mean Debt Securities authenticated and delivered under
this Indenture, exclusive, however, of Debt Securities of any series as to which
such Person is not Trustee.
"Debt Security Register" and "Debt Security Registrar" have the same
meanings as the terms "Security Register" and "Security Registrar,"
respectively.
"Defaulted Interest" has the meaning set forth in Section 307.
"Dollar" or "$" means a dollar or other equivalent unit in such coin or
currency of the United States of America as at the time shall be legal tender
for the payment of public and private debts.
"DTC" means The Depository Trust Company and any successor to DTC in its
capacity as depository for any Debt Securities.
"ECU" means the European Currency Unit as defined and revised from time to
time by the Council of the European communities.
"Euroclear" means Morgan Guaranty Trust Company of New York, Brussels
Office, or its successor as operator of the Euroclear System.
"European Communities" means the European Economic community, the European
Coal and Steel Community and the European Atomic Energy Community.
"European Monetary System" means the European Monetary system established
by the Resolution of December 5, 1978 of the Council of the European
Communities.
"Event of Default" has the meaning specified in Section 501.
"Exchange Date" has the meaning set forth in Section 304.
"Executive Group" means, collectively, those individuals holding the
offices of Chairman, Vice Chairman, President, Chief Executive Officer, Chief
Operating Officer or any Vice President of the Company.
"Foreign Currency" means any currency, currency unit or composite currency,
including, without limitation, the ECU, issued by the government of one or more
countries other than the United States of America or by any recognized
confederation or association of such
5
<PAGE>
governments.
"GAAP" and "generally accepted accounting principles" mean generally
accepted accounting principles, as in effect from time to time, as used in the
United States of America applied on a consistent basis.
"Government Obligations" means securities which are (i) direct obligations
of the United States of America or the government which issued the Foreign
Currency in which the Debt Securities of a particular series are payable, for
the payment of which its full faith and credit is pledged or (ii) obligations of
a Person controlled or supervised by and acting as an agency or instrumentality
of the United States of America or such government which issued the Foreign
Currency in which the Debt Securities of such series are payable, the payment of
which is unconditionally guaranteed as a full faith and credit obligation by the
United States of America or such other government, which, in either case, are
not callable or redeemable at the option of the issuer thereof, and shall also
include a depository receipt issued by a bank or trust company as custodian with
respect to any such Government Obligation or a specific payment of interest on
or principal of any such Government Obligation held by such custodian for the
account of the holder of a depository receipt, provided that (except as required
by law) such custodian is not authorized to make any deduction from the amount
payable to the holder of such depository receipt from any amount received by the
custodian in respect of the Government Obligation or the specific payment of
interest on or principal of the Government Obligation evidenced by such
depository receipt.
"Holder" means, in the case of a Registered Debt Security, the Person in
whose name a Debt Security is registered in the Security Register and, in the
case of a Bearer Debt Security, the bearer thereof and, when used with respect
to any coupon, shall mean the bearer thereof.
"Indenture" means this instrument as originally executed or as it may from
time to time be supplemented or amended by one or more indentures supplemental
hereto entered into pursuant to the applicable provisions hereof, and shall
include the terms and provisions of any series of Debt Securities and any
coupons appertaining thereto established pursuant to Section 301 (as such terms
and provisions may be amended pursuant to the applicable provisions hereof).
"Indexed Debt Security" means a Debt Security the terms of which provide
that the principal amount thereof payable at Stated Maturity may be more or less
than the principal face amount thereof at original issuance.
"Interest" when used with respect to an Original Issue Discount Debt
Security which by its terms bears interest only after Maturity, shall mean
interest payable after Maturity, and, when used with respect to a Debt Security
which provides for the payment of Additional Amounts pursuant to Section 1015,
includes such Additional Amounts.
"Interest Payment Date" when used with respect to any Debt Security, means
the Stated Maturity of an installment of interest on such Debt Security.
"Lien" means any mortgage, deed of trust, lien, charge, pledge, security
interest, security
6
<PAGE>
agreement or other encumbrance of any kind.
"Maturity" when used with respect to any Debt Security, means the date on
which the principal of such Debt Security or an installment of principal becomes
due and payable as therein or herein provided, whether at the Stated Maturity or
by declaration of acceleration, notice of redemption, notice of option to elect
repayment or otherwise.
"Officers' Certificate" means a certificate signed by the Chairman, any
Vice Chairman, the President or a Vice President and by the Treasurer, an
Assistant Treasurer, the Secretary or an Assistant Secretary of the Company, and
delivered to the Trustee.
"Opinion of Counsel" means a written opinion of counsel, who may be counsel
for the Company or who may be an employee of or other counsel for the Company
and who shall be reasonably satisfactory to the Trustee.
"Original Issue Discount Debt Security" means any Debt Security which
provides for an amount less than the principal amount thereof to be due and
payable upon a declaration of acceleration of the Maturity thereof pursuant to
Section 502.
"Outstanding" when used with respect to Debt Securities, means, as of the
date of determination, all Debt Securities theretofore authenticated and
delivered under this Indenture, except:
(i) Debt Securities theretofore canceled by the Trustee or delivered
to the Trustee for cancellation;
(ii) Debt Securities, or portions thereof, for whose payment at the
Maturity thereof money in the necessary amount has been theretofore
deposited (other than pursuant to Article Fourteen hereof) with the Trustee
or any Paying Agent (other than the Company) in trust or set aside and
segregated in trust by the Company (if the Company shall act as its own
Paying Agent) for the Holders of such Debt Securities and any coupons
appertaining thereto, provided that, if such Debt Securities are to be
redeemed, notice of such redemption has been duly given pursuant to this
Indenture or provision therefor satisfactory to the Trustee has been made;
(iii) Debt Securities, except to the extent provided in Sections 1402
and 1403, with respect to which the Company has effected defeasance and/or
covenant defeasance as provided in Article Fourteen;
(iv) Debt Securities which have been paid pursuant to Section 306 or
in exchange for or in lieu of which other Debt Securities have been
authenticated and delivered pursuant to this Indenture, other than any such
Debt Securities in respect of which there shall have been presented to the
Trustee proof satisfactory to it that such Debt Securities are held by a
bona fide purchaser in whose hands such Debt Securities are valid
obligations of the Company; and
7
<PAGE>
(v) Debt Securities converted into Common Shares or Preferred Shares
pursuant to or in accordance with this Indenture if the terms of such Debt
Securities provide for convertibility pursuant to Section 301;
Provided, however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Debt Securities have given any request,
demand, authorization, direction, notice, consent or waiver hereunder or are
present at a meeting of Holders for quorum purposes, and for the purpose of
making the calculations required by TIA Section 313, (i) the principal amount of
an Original Issue Discount Debt Security that may be counted in making such
determination or calculation and that shall be deemed to be Outstanding for such
purpose shall be equal to the amount of principal thereof that would be (or
shall have been declared to be) due and payable, at the time of such
determination, upon a declaration of acceleration of the maturity thereof
pursuant to Section 502, (ii) the principal amount of any Debt Security
denominated in a Foreign Currency that may be counted in making such
determination or calculation and that shall be deemed Outstanding for such
purpose shall be equal to the Dollar equivalent, determined pursuant to Section
301 as of the date such Debt Security is originally issued by the Company, of
the principal amount (or, in the case of an Original Issue Discount Debt
Security, the Dollar equivalent as of such date of original issuance of the
amount determined as provided in clause (i) above) of such Debt Security, (iii)
the principal amount of any Indexed Debt Security that may be counted in making
such determination or calculation and that shall be deemed Outstanding for such
purpose shall be equal to the principal face amount of such Indexed Debt
Security at original issuance, unless otherwise provided with respect to such
Debt Security pursuant to Section 301, and (iv) Debt Securities owned by the
Company or any other obligor upon the Debt Securities or any Affiliate of the
Company or of such other obligor shall be disregarded and deemed not to be
Outstanding, except that, in determining whether the Trustee shall be protected
in making such calculation or in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Debt Securities which
the Trustee knows to be so owned shall be so disregarded. Debt Securities so
owned which have been pledged in good faith may be regarded as Outstanding if
the pledgee establishes to the satisfaction of the Trustee the pledgee's right
so to act with respect to such Debt Securities and that the pledgee is not the
Company or any other obligor upon the Debt Securities or any Affiliate of the
Company or of such other obligor.
"Paying Agent" means any Person authorized by the Company to pay the
principal of (and premium, if any) or interest on any Debt Securities or coupons
on behalf of the Company.
"Person" means any individual, corporation, business trust, partnership,
joint venture, limited liability company, association, joint-stock company,
trust, unincorporated organization or government or any agency or political
subdivision thereof.
"Place of Payment," when used with respect to the Debt Securities of or
within any series, means the place or places where the principal of (and
premium, if any) and interest on such Debt Securities are payable as specified
as contemplated by Sections 301 and 1002.
"Predecessor Debt Security" of any particular Debt Security means every
previous
8
<PAGE>
security evidencing all or a portion of the same debt as that evidenced by such
particular Debt Security; and, for the purposes of this definition, any Debt
Security authenticated and delivered under Section 306 in exchange for or in
lieu of a mutilated, destroyed, lost or stolen Debt Security or a Debt Security
to which a mutilated, destroyed, lost or stolen coupon appertains shall be
deemed to evidence the same debt as the mutilated, destroyed, lost or stolen
Debt Security or the Debt Security to which the mutilated, destroyed, lost or
stolen coupon appertains.
"Preferred Shares" means, with respect to any Person, capital stock issued
by such Person that is entitled to a preference or priority over any other
capital stock issued by such Person upon any distribution of such Person's
assets, whether by dividend or upon liquidation.
"Redemption Date" when used with respect to any Debt Security to be
redeemed, in whole or in part, means the date fixed for such redemption by or
pursuant to this Indenture.
"Redemption Price" when used with respect to any Debt Security to be
redeemed, means the price at which it is to be redeemed pursuant to this
Indenture.
"Registered Debt Security" shall mean any Debt Security which is registered
in the Security Register.
"Regular Record Date" for the interest payable on any Interest Payment Date
on the Registered Debt Securities of or within any series means the date
specified for that purpose as contemplated by Section 301, whether or not a
Business Day.
"Repayment Date" means, when used with respect to any Debt Security to be
repaid at the option of the Holder, the date fixed for such repayment by or
pursuant to this Indenture.
"Repayment Price" means, when used with respect to any Debt Security to be
repaid at the option of the Holder, the price at which it is to be repaid by or
pursuant to this Indenture.
"Responsible Officer" when used with respect to the Trustee, means the
chairman or vice-chairman of the board of directors, the chairman or vice-
chairman of the executive committee of the board of directors, the president,
any vice president, the secretary, any assistant secretary, the treasurer, any
assistant treasurer, the cashier, any assistant cashier, any trust officer or
assistant trust officer, the controller or any other officer of the Trustee
customarily performing functions similar to those performed by any of the above
designated officers.
"Securities Exchange Act of 1934" means the Securities Exchange Act of
1934, as amended, and any reference herein to such Act or a particular provision
or section thereof shall mean, unless otherwise expressly stated or the context
otherwise requires, such Act, provision or section, as the case may be, as
amended or replaced from time to time or as supplemented from time to time.
"Security Register" and "Security Registrar" have the respective meanings
specified in Section 305.
9
<PAGE>
"Significant Subsidiary" means any Subsidiary which is a "significant
subsidiary" (as defined in Rule 1-02 of Regulation S-X promulgated under the
Securities Act of 1933, as in effect on January 1, 1996) of the Company.
"Special Record Date" for the payment of any Defaulted Interest on the
Registered Debt Securities of or within any series means a date fixed by the
Trustee pursuant to Section 307.
"Stated Maturity," when used with respect to any Debt Security or any
installment of principal thereof or interest thereon, means the date specified
in such Debt Security or a coupon representing such installment of interest or
in or pursuant to this Indenture as the fixed date on which the principal of
such Debt Security or such installment of principal or interest is due and
payable.
"Subsidiary" means (i) a corporation, partnership, joint venture, limited
liability company or other Person the majority of the shares, if any, of the
non-voting capital stock or other equivalent ownership interests of which
(except directors' qualifying shares) are at the time directly or indirectly
owned by the Company and/or any other Subsidiary or Subsidiaries, and the
majority of the shares of the voting capital stock or other equivalent ownership
interests of which (except directors' qualifying shares) are at the time
directly or indirectly owned by the Company, any other Subsidiary or
Subsidiaries, and/or one or more individuals of the Executive Group (or, in the
event of death or disability of any of such individuals, his/her respective
legal representative(s), or such individuals' successors in office as an
officer of the Company), and (ii) any Person the accounts of which are
consolidated with the accounts of the Company.
"Total Assets" means the sum of (without duplication) (i) Undepreciated
Real Estate Assets and (ii) all other assets (excluding accounts receivable and
intangibles) of the Company and its Subsidiaries, all determined on a
consolidated basis in accordance with generally accepted accounting principles.
"Total Unencumbered Assets" means the sum of (without duplication) (i)
those Undepreciated Real Estate Assets which are not subject to a Lien securing
Debt and (ii) all other assets (excluding accounts receivable and intangibles)
of the Company and its Subsidiaries not subject to a Lien securing Debt, all
determined on a consolidated basis in accordance with generally accepted
accounting principles.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939, as
amended, and any reference herein to the Trust Indenture Act or the TIA or a
particular provision thereof shall mean such Act or provision, as the case may
be, as amended or replaced from time to time or as supplemented from time to
time by rules or regulations adopted by the Commission under or in furtherance
of the purposes of such Act or provision, as the case may be.
"Trustee" means the Person named as the "Trustee" in the first paragraph of
this Indenture until a successor Trustee shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Trustee" shall mean or
include each Person who is then a Trustee hereunder; provided, however, that if
at any time there is more than one such Person,
10
<PAGE>
"Trustee" as used with respect to the Debt Securities of any series shall mean
only the Trustee with respect to Debt Securities of that series.
"Undepreciated Real Estate Assets" means, as of any date, the cost
(original cost plus capital improvements) of real estate assets of the Company
and its Subsidiaries on such date, before depreciation and amortization, all
determined on a consolidated basis in accordance with generally accepted
accounting principles.
"United States" means, unless otherwise specified with respect to any Debt
Securities pursuant to Section 301, the United States of America (including the
states and the District of Columbia), its territories, its possessions and other
areas subject to its jurisdiction.
"United States of America" means the United States of America (including
the states and the District of Columbia), but excluding its territories, its
possessions and other areas subject to its jurisdiction.
"United States Person" means, unless otherwise specified with respect to
any Debt Securities pursuant to Section 301, any citizen or resident of the
United States, any corporation, partnership or other entity created or organized
in or under the laws of the United States, any estate the income of which is
subject to United States federal income taxation regardless of its source, or
any trust whose administration is subject to the primary supervision of a United
States court and which has one or more United States fiduciaries who have the
authority to control all substantial decisions of the trust.
"Unsecured Debt" means Debt of the Company or any of its Subsidiaries which
is not secured by a Lien on any property or assets of the Company or any of its
Subsidiaries.
SECTION 102. COMPLIANCE CERTIFICATES AND OPINIONS. Upon any application
------------------------------------
or request by the Company to the Trustee to take any action under any provision
of this Indenture, the Company shall furnish to the Trustee an Officers'
Certificate stating that all conditions precedent, if any, provided for in this
Indenture relating to the proposed action have been complied with and an Opinion
of Counsel stating that in the opinion of such counsel all such conditions
precedent, if any, have been complied with, except that in the case of any such
application or request as to which the furnishing of such documents is
specifically required by any provision of this Indenture relating to such
particular application or request, no additional certificate or opinion need be
furnished.
Every certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture shall include:
(1) a statement that each individual signing such certificate or
opinion has read such condition or covenant and the definitions herein
relating thereto;
(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
11
<PAGE>
(3) a statement that, in the opinion of each such individual, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such condition or covenant
has been satisfied or complied with; and
(4) a statement as to whether, in the opinion of each such individual,
such condition or covenant has been satisfied or complied with.
SECTION 103. FORM OF DOCUMENTS DELIVERED TO TRUSTEE. In any case where
--------------------------------------
several matters are required to be certified by, or covered by an opinion of,
any specified Person, it is not necessary that all such matters be certified by,
or covered by the opinion of, only one such Person, or that they be so certified
or covered by only one document, but one such Person may certify or give an
opinion as to some matters and one or more other such Persons as to other
matters, and any such Person may certify or give an opinion as to such matters
in one or several documents.
Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon an Opinion of Counsel, or a
certificate or representations by counsel, unless such officer knows, or in the
exercise of reasonable care should know, that the opinion, certificate or
representations with respect to the matters upon which his certificate or
opinion is based are erroneous. Any such Opinion of Counsel or certificate or
representations may be based, insofar as it relates to factual matters, upon a
certificate or opinion of, or representations by, an officer or officers of the
Company stating that the information as to such factual matters is in the
possession of the Company, unless such counsel knows that the certificate or
opinion or representations as to such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
SECTION 104. ACTS OF HOLDERS. (a) Any request, demand, authorization,
---------------
direction, notice, consent, waiver or other action provided by this Indenture to
be given or taken by Holders of the outstanding Debt Securities of all series or
one or more series, as the case may be, may be embodied in and evidenced by one
or more instruments of substantially similar tenor signed by such Holders in
person or by agents duly appointed in writing. If Debt Securities of a series
are issuable as Bearer Debt Securities, any request, demand, authorization,
direction, notice, consent, waiver or other action provided by this Indenture to
be given or taken by Holders of Debt Securities of such series may,
alternatively, be embodied in and evidenced by the record of Holders of Debt
Securities of such series voting in favor thereof, either in person or by
proxies duly appointed in writing, at any meeting of Holders of Debt Securities
of such series duly called and held in accordance with the provisions of Article
Fifteen, or a combination of such instruments and any such record. Except as
herein otherwise expressly provided, such action shall become effective when
such instrument or instruments or record or both are delivered to the Trustee
and, where it is hereby expressly required, to the Company. Such instrument or
instruments and any such record (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Holders signing
such instrument or instruments
12
<PAGE>
or so voting at any such meeting. Proof of execution of any such instrument or
of a writing appointing any such agent, or of the holding by any Person of a
Debt Security, shall be sufficient for any purpose of this Indenture and
conclusive in favor of the Trustee and the Company and any agent of the Trustee
or the Company, if made in the manner provided in this Section. The record of
any meeting of Holders of Debt Securities shall be proved in the manner provided
in Section 1506.
(b) The fact and date of the execution by any Person of any such instrument
or writing may be proved by the affidavit of a witness of such execution or by a
certificate of a notary public or other officer authorized by law to take
acknowledgments of deeds, certifying that the individual signing such instrument
or writing acknowledged to him the execution thereof. Where such execution is
by a signer acting in a capacity other than his individual capacity, such
certificate or affidavit shall also constitute sufficient proof of his
authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other reasonable manner which the Trustee deems sufficient.
(c) The ownership of Registered Debt Securities shall be proved by the
Security Register.
(d) The ownership of Bearer Debt Securities may be proved by the production
of such Bearer Debt Securities or by a certificate executed, as depository, by
any trust company, bank, banker or other depository, wherever situated, if such
certificate shall be deemed by the Trustee to be satisfactory, showing that at
the date therein mentioned such Person had on deposit with such depository, or
exhibited to it, the Bearer Debt Securities therein described; or such facts may
be proved by the certificate or affidavit of the Person holding such Bearer Debt
Securities, if such certificate or affidavit is deemed by the Trustee to be
satisfactory. The Trustee and the Company may assume that such ownership of any
Bearer Debt Security continues until (1) another certificate or affidavit
bearing a later date issued in respect of the same Bearer Debt Security is
produced, or (2) such Bearer Debt Security is produced to the Trustee by some
other Person, or (3) such Bearer Debt Security is surrendered in exchange for a
Registered Debt Security, or (4) such Bearer Debt Security is no longer
outstanding. The ownership of Bearer Debt Securities may also be proved in any
other manner which the Trustee deems sufficient.
(e) If the Company shall solicit from the Holders of Registered Securities
any request, demand, authorization, direction, notice, consent, waiver or other
Act, the Company may, at its option, in or pursuant to a Board Resolution, fix
in advance a record date for the determination of Holders entitled to give such
request, demand, authorization, direction, notice, consent, waiver or other Act,
but the Company shall have no obligation to do so. Notwithstanding TIA Section
316(c), such record date shall be the record date specified in or pursuant to
such Board Resolution, which shall be a date not earlier than the date 30 days
prior to the first solicitation of Holders generally in connection therewith and
not later than the date such solicitation is completed. If such a record date
is fixed, such request, demand, authorization, direction, notice, consent,
waiver or other Act may be given before or after such record date, but only the
Holders of record at the close of business on such record date shall be deemed
to be
13
<PAGE>
Holders for the purposes of determining whether Holders of the requisite
proportion of outstanding Debt Securities have authorized or agreed or consented
to such request, demand, authorization, direction, notice, consent, waiver or
other Act, and for that purpose the Outstanding Debt Securities shall be
computed as of such record date; provided that no such authorization, agreement
or consent by the Holders on such record date shall be deemed effective unless
it shall become effective pursuant to the provisions of this Indenture not later
than eleven months after the record date.
(f) Any request, demand, authorization, direction, notice, consent, waiver
or other Act of the Holder of any Debt Security shall bind every future Holder
of the same Debt Security and the Holder of every Debt Security issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof in
respect of anything done, omitted or suffered to be done by the Trustee, any
Debt Security Registrar, any Paying Agent, any Authenticating Agent or the
Company in reliance thereon, whether or not notation of such action is made upon
such Debt Security.
SECTION 105. NOTICES, ETC., TO TRUSTEE AND COMPANY. Any request, demand,
-------------------------------------
authorization, direction, notice, consent, waiver or Act of Holders or other
document provided or permitted by this Indenture to be made upon, given or
furnished to, or filed with,
(1) the Trustee by any Holder or by the Company shall be sufficient
for every purpose hereunder if made, given, furnished or filed in writing
to or with the Trustee at its Corporate Trust Office, Attention: Corporate
Trust Administration, or
(2) the Company by the Trustee or by any Holder shall be sufficient
for every purpose hereunder (unless otherwise herein expressly provided) if
in writing and mailed, first class postage prepaid, to the Company
addressed to it at the address of its principal office specified in the
first paragraph of this Indenture or at any other address previously
furnished in writing to the Trustee by the Company.
SECTION 106. NOTICE TO HOLDERS; WAIVER. Where this Indenture provides for
-------------------------
notice of any event to Holders of Registered Debt Securities by the Company or
the Trustee, such notice shall be sufficiently given (unless otherwise herein
expressly provided) if in writing and mailed, first-class postage prepaid, to
each such Holder affected by such event, at his address as it appears in the
Security Register, not later than the latest date, and not earlier than the
earliest date, prescribed for the giving of such notice. In any case where
notice to Holders of Registered Debt Securities is given by mail, neither the
failure to mail such notice, nor any defect in any notice so mailed, to any
particular Holder shall affect the sufficiency of such notice with respect to
other Holders of Registered Debt Securities or the sufficiency of any notice to
Holders of Bearer Debt Securities given as provided herein. Any notice mailed
to a Holder in the manner herein prescribed shall be conclusively deemed to have
been received by such Holder, whether or not such Holder actually receives such
notice.
If by reason of the suspension of or irregularities in regular mail service
or by reason of any other cause it shall be impracticable to give such notice by
mail, then such notification to
14
<PAGE>
Holders of Registered Debt Securities as shall be made with the approval of the
Trustee shall constitute a sufficient notification to such Holders for every
purpose hereunder.
Except as otherwise expressly provided herein or otherwise specified with
respect to any Debt Securities pursuant to Section 301, where this Indenture
provides for notice to Holders of Bearer Debt Securities of any event, such
notice shall be sufficiently given if published in an Authorized Newspaper in
[The City of New York] and in such other city or cities as may be specified in
such Debt Securities on a Business Day, such publication to be not later than
the latest date, and not earlier than the earliest date, prescribed for the
giving of such notice. Any such notice shall be deemed to have been given on
the date of such publication or, if published more than once, on the date of the
first such publication.
If by reason of the suspension of publication of any Authorized Newspaper
or Authorized Newspapers or by reason of any other cause it shall be
impracticable to publish any notice to Holders of Bearer Debt Securities as
provided above, then such notification to Holders of Bearer Debt Securities as
shall be given with the approval of the Trustee shall constitute sufficient
notice to such Holders for every purpose hereunder. Neither the failure to give
notice by publication to any particular Holder of Bearer Debt Securities as
provided above, nor any defect in any notice so published, shall affect the
sufficiency of such notice with respect to other Holders of Bearer Debt
Securities or the sufficiency of any notice to Holders of Registered securities
given as provided herein.
Any request, demand, authorization, direction, notice, consent or waiver
required or permitted under this Indenture shall be in the English language,
except that any published notice may be in an official language of the country
of publication.
Where this Indenture provides for notice in any manner, such notice may be
waived in writing by the Person entitled to receive such notice, either before
or after the event, and such waiver shall be the equivalent of such notice.
Waivers of notice by Holders shall be filed with the Trustee, but such filing
shall not be a condition precedent to the validity of any action taken in
reliance upon such waiver.
SECTION 107. EFFECT OF HEADINGS AND TABLE OF CONTENTS. The Article and
----------------------------------------
Section headings herein and the Table of Contents are for convenience only and
shall not affect the construction hereof.
SECTION 108. SUCCESSORS AND ASSIGNS. All covenants and agreements in this
----------------------
Indenture by the Company shall bind its successors and assigns, whether so
expressed or not.
SECTION 109. SEPARABILITY CLAUSE. In case any provision in this Indenture
-------------------
or in any Debt Security or coupon shall be invalid, illegal or unenforceable,
the validity, legality and enforceability of the remaining provisions shall not
in any way be affected or impaired thereby.
SECTION 110. BENEFITS OF INDENTURE. Nothing in this Indenture or in the
---------------------
Debt Securities or coupons, express or implied, shall give to any Person, other
than the parties hereto,
15
<PAGE>
any Debt Security Registrar, any Paying Agent, any Authenticating Agent and
their successors hereunder and the Holders, any benefit or any legal or
equitable right, remedy or claim under this Indenture.
SECTION 111. GOVERNING LAW. This Indenture and the Debt Securities and
-------------
coupons shall be governed by and construed in accordance with the law of the
State of New York. This Indenture is subject to the provisions of the TIA that
are required to be part of this Indenture and shall, to the extent applicable,
be governed by such provisions.
SECTION 112. LEGAL HOLIDAYS. In any case where any Interest Payment Date,
--------------
Redemption Date, Repayment Date, sinking fund payment date, Stated Maturity or
Maturity of any Debt Security shall not be a Business Day at any Place of
Payment, then (notwithstanding any other provision of this Indenture or any Debt
Security or coupon other than a provision in the Debt Securities of any series
which specifically states that such provision shall apply in lieu hereof),
payment of interest or any Additional Amounts or principal (and premium, if any)
need not be made at such Place of Payment on such date, but may be made on the
next succeeding Business Day at such Place of Payment with the same force and
effect as if made on the Interest Payment Date, Redemption Date, Repayment Date
or sinking fund payment date, or at the Stated Maturity or Maturity, as the case
may be, provided that no interest shall accrue on the amount so payable for the
period from and after such Interest Payment Date, Redemption Date, Repayment
Date, sinking fund payment date, Stated Maturity or Maturity, as the case may
be.
ARTICLE TWO
SECURITIES FORMS
----------------
SECTION 201. FORMS OF DEBT SECURITIES. The Registered Debt Securities, if
------------------------
any, of each series and the Bearer Debt Securities, if any, of each series and
related coupons shall be in substantially the forms as shall be established in
or pursuant to one or more indentures supplemental hereto or by or pursuant to a
Board Resolution, shall have such appropriate insertions, omissions,
substitutions and other variations as are required or permitted by this
Indenture or any indenture supplemental hereto, and may have such letters,
numbers or other marks of identification or designation and such legends or
endorsements placed thereon as the Company may deem appropriate and as are not
inconsistent with the provisions of this Indenture, or as may be required to
comply with any law or with any rule or regulation made pursuant thereto or with
any rule or regulation of any stock exchange on which the Debt Securities may be
listed, or to conform to usage.
Unless otherwise specified as contemplated by Section 301, Bearer Debt
Securities shall have interest coupons attached.
The definitive Debt Securities and coupons shall be printed, lithographed
or engraved or produced by any combination of these methods on a steel engraved
border or steel engraved borders or may be produced in any other manner, all as
determined by the officer executing such Debt Securities or coupons, as
evidenced by his or her execution of such Debt Securities or
16
<PAGE>
coupons.
SECTION 202. FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION. Subject to
-----------------------------------------------
Section 611, the Trustee's certificate of authentication shall be in
substantially the following form:
This is one of the Debt Securities of the series designated therein
referred to in the within-mentioned Indenture.
_________________________________, as Trustee
By:
Authorized Signatory
SECTION 203. DEBT SECURITIES ISSUABLE IN GLOBAL FORM. If Debt Securities
---------------------------------------
of or within a series are issuable in global form, as specified as contemplated
by Section 301, then, notwithstanding clause (8) of Section 301 and the
provisions of Section 302, any such Debt Security shall represent such of the
Outstanding Debt Securities of such series as shall be specified therein and may
provide that it shall represent the aggregate amount of Outstanding Debt
Securities of such series from time to time endorsed thereon and that the
aggregate amount of Outstanding Debt Securities of such series represented
thereby may from time to time be increased or decreased to reflect exchanges.
Any endorsement of a Debt Security in global form to reflect the amount, or any
increase or decrease in the amount, of Outstanding Debt Securities represented
thereby shall be made by or at the direction of the Trustee in such manner and
upon instructions given by such Person or Persons as shall be specified therein
or pursuant to Section 301 or in the Company Order to be delivered to the
Trustee pursuant to Section 303 or 304. Subject to the provisions of Section
303 and, if applicable, Section 304, the Trustee shall deliver and redeliver any
Debt Security in permanent global form in the manner and upon instructions given
by the Person or Persons specified therein or pursuant to Section 301 or in the
applicable Company Order. If a Company Order pursuant to Section 303 or 304 has
been or is delivered, any instructions by the Company with respect to
endorsement or delivery or redelivery of a Debt Security in global form shall be
in writing but need not comply with Section 102 and need not be accompanied by
an Opinion of Counsel.
The provisions of the last sentence of Section 303 shall apply to any Debt
Security represented by a Debt Security in global form if such Debt Security was
never issued and sold by the Company and the Company delivers to the Trustee the
Debt Security in global form together with written instructions (which need not
comply with Section 102 and need not be accompanied by an Opinion of Counsel)
with regard to the reduction in the principal amount of Debt Securities
represented thereby, together with the written statement contemplated by the
last sentence of Section 303.
Notwithstanding the provisions of Section 307, unless otherwise specified
as contemplated by Section 301, payment of principal of and any premium and
interest on any Debt
17
<PAGE>
Security in permanent global form shall be made to the Person or Persons
specified therein.
Notwithstanding the provisions of Section 308 and except as provided in the
preceding paragraph, the Company, the Trustee and any agent of the Company and
the Trustee shall treat as the Holder of such principal amount of Outstanding
Debt Securities represented by a global Debt Security (i) in the case of a
global Debt Security in registered form, the Holder of such global Debt Security
in registered form, or (ii) in the case of a global Debt Security in bearer
form, Euroclear or CEDEL.
ARTICLE THREE
THE SECURITIES
--------------
SECTION 301. AMOUNT UNLIMITED; ISSUABLE IN SERIES. The aggregate
------------------------------------
principal amount of Debt Securities which may be authenticated and delivered
under this Indenture is unlimited.
The Debt Securities may be issued in one or more series. There shall be
established in one or more Board Resolutions or pursuant to authority granted by
one or more Board Resolutions and set forth, or determined in the manner
provided, in an Officers' Certificate, or established in or pursuant to one or
more indentures supplemental hereto, prior to the issuance of Debt Securities of
any series, any or all of the following, as applicable (each of which (except
for the matters set forth in clauses (1) and (2) below), if so provided, may be
determined from time to time by the Company with respect to unissued Debt
Securities of the series when issued from time to time):
(1) the title of the Debt Securities of the series (which shall
distinguish the Debt Securities of such series from all other series of
Debt Securities);
(2) any limit upon the aggregate principal amount of the Debt
Securities of the series that may be authenticated and delivered under this
Indenture (except for Debt Securities authenticated and delivered upon
registration of transfer of, or in exchange for, or in lieu of, other Debt
Securities of the series pursuant to Section 304, 305, 306, 906 or 1107 or
upon surrender of other Debt Securities of the series for conversion in
part or repayment in part at the option of the Holders);
(3) the date or dates, or the method by which such date or dates will
be determined, on which the principal of the Debt Securities of the series
shall be payable;
(4) the rate or rates at which the Debt Securities of the series shall
bear interest, if any, or the method by which such rate or rates shall be
determined, the date or dates from which such interest shall accrue or the
method by which such date or dates shall be determined, the Interest
Payment Dates on which such interest will be payable and the Regular Record
Date, if any, for the interest payable on any Registered Debt Security on
any Interest Payment Date, or the method by which such date shall be
determined, and the basis upon which interest shall be calculated if other
than that of a
18
<PAGE>
360-day year of twelve 30-day months;
(5) the place or places, if any, other than or in addition to [The
Borough of Manhattan, The City of New York], where the principal of (and
premium, if any), interest, if any, on, and Additional Amounts, if any,
payable in respect of, Debt Securities of the series shall be payable, any
Registered Debt Securities of the series may be surrendered for
registration of transfer, exchange or (if applicable) conversion and
notices or demands to or upon the Company in respect of the Debt Securities
of the series and this Indenture may be served;
(6) the period or periods within which, the price or prices at which,
the currency or currencies, currency unit or units or composite currency or
currencies in which, and other terms and conditions upon which Debt
Securities of the series may be redeemed, in whole or in part, at the
option of the Company, if the Company is to have the option;
(7) the obligation, if any, of the Company to redeem, repay or
purchase Debt Securities of the series pursuant to any sinking fund or
analogous provision or at the option of a Holder thereof, and the period or
periods within which or the date or dates on which, the price or prices at
which, the currency or currencies, currency unit or units or composite
currency or currencies in which, and other terms and conditions upon which
Debt Securities of the series shall be redeemed, repaid or purchased, in
whole or in part, pursuant to such obligation;
(8) if other than denominations of $1,000 and any integral multiple
thereof, the denominations in which any Registered Debt Securities of the
series shall be issuable and, if other than the denomination of $5,000, the
denomination or denominations in which any Bearer Debt Securities of the
series shall be issuable;
(9) if other than the Trustee, the identity of each Security Registrar
and/or Paying Agent;
(10) if other than 100% of the principal amount thereof, the portion
of the principal amount of Debt Securities of the series that shall be
payable upon declaration of acceleration of the Maturity thereof pursuant
to Section 502 or, if applicable, the portion of the principal amount of
Debt Securities of the series that is convertible in accordance with the
provisions of this Indenture, or the method by which such portion shall be
determined;
(11) if other than Dollars, the Foreign Currency or Foreign Currencies
in which payment of the principal of (and premium if any) or interest or
Additional Amounts, if any, on the Debt Securities of the series shall be
payable or in which the Debt Securities of the series shall be denominated;
(12) whether the amount of payments of principal of (and premium, if
any) or interest, if any, on the Debt Securities of the series may be
determined with reference to
19
<PAGE>
an index, formula or other method (which index, formula or method may be
based, without limitation, or one or more currencies, currency units,
composite currencies, commodities, equity indices or other indices), and
the manner in which such amounts shall be determined;
(13) whether the principal of (and premium, if any) or interest or
Additional Amounts, if any, on the Debt Securities of the series are to be
payable, at the election of the Company or a Holder thereof, in a currency
or currencies, currency unit or units or composite currency or currencies
other than that in which such Debt Securities are denominated or stated to
be payable, the period or periods within which, and the terms and
conditions upon which, such election may be made, and the time and manner
of, and identity of the exchange rate agent with responsibility for,
determining the exchange rate between the currency or currencies, currency
unit or units or composite currency or currencies in which such Debt
Securities are denominated or stated to be payable and the currency or
currencies, currency unit or units or composite currency or currencies in
which such Debt Securities are to be so payable;
(14) provisions, if any, granting special rights to the Holders of
Debt Securities of the series upon the occurrence of such events as may be
specified;
(15) any deletions from, modifications of, or additions to the Events
of Default or covenants of the Company with respect to Debt Securities of
the series, whether or not such Events of Default or covenants are
consistent with the Events of Default or covenants set forth herein;
(16) whether Debt Securities of the series are to be issuable as
Registered Debt Securities, Bearer Debt Securities (with or without
coupons) or both, any restrictions applicable to the offer, sale or
delivery of Bearer Debt Securities and the terms upon which Bearer Debt
Securities of the series may be exchanged for Registered Debt Securities of
the series and vice versa (if permitted by applicable laws and
regulations), whether any Debt Securities of the series are to be issuable
initially in temporary global form and whether any Debt Securities of the
series are to be issuable in permanent global form with or without coupons
and, if so, whether beneficial owners of interests in any such permanent
global Debt Security may exchange such interests for definitive Debt
Securities of such series and of like tenor of any authorized form and
denomination and the circumstances under which any such exchanges may
occur, if other than in the manner provided in Section 305, and, if
Registered Debt Securities of the series are to be issuable as a global
Debt Security, the identity of the initial depository for such series;
(17) the date as of which any Bearer Debt Securities of the series and
any temporary global Debt Security representing Outstanding Debt Securities
of the series shall be dated if other than the date of original issuance of
the first Debt Security of the series to be issued;
(18) the Person to whom any interest on any Registered Debt Security
of the
20
<PAGE>
series shall be payable, if other than the Person in whose name that Debt
Security (or one or more Predecessor Debt Securities) is registered at the
close of business on the Regular Record Date for such interest, the manner
in which, or the Person to whom, any interest on any Bearer Debt Security
of the series shall be payable, if otherwise than upon presentation and
surrender of the coupons appertaining thereto as they severally mature, and
the extent to which, or the manner in which, any interest payable on a
temporary global Debt Security on an Interest Payment Date will be paid if
other than in the manner provided in Section 304;
(19) the applicability, if any, of Sections 1402 and/or 1403 to the
Debt Securities of the series and any provisions in modification of, in
addition to or in lieu of any of the provisions of Article Fourteen;
(20) if the Debt Securities of such series are to be issuable in
definitive form (whether upon original issue or upon exchange of a
temporary Debt Security of such series) only upon receipt of certain
certificates or other documents or satisfaction of other conditions, then
the form and/or terms of such certificates, documents or conditions;
(21) if the Debt Securities of the series are to be issued upon the
exercise of warrants, the time, manner and place for such Debt Securities
to be authenticated and delivered;
(22) whether and under what circumstances the Company will pay
Additional Amounts as contemplated by Section 1015 on the Debt Securities
of the series to any Holder who is not a United States Person (including
any modification to the definition of such term) in respect of any tax,
assessment or governmental charge and, if so, whether the Company will have
the option to redeem such Debt Securities rather than pay such Additional
Amounts (and the terms of any such option);
(23) the obligation, if any, of the Company to permit the conversion
of the Debt Securities of such series into the Company's Common Shares or
Preferred Shares or into other securities or property, as the case may be,
and the terms and conditions upon which such conversion shall be effected
(which may include, without limitation, the initial conversion price or
rate, the conversion period, any adjustment of the applicable conversion
price and any requirements relative to the reservation of such shares for
purposes of conversion); and
(24) any other terms of the series and any deletions from or
modifications or additions to this Indenture in respect of such Debt
Securities (whether or not consistent with the other provisions of this
Indenture).
All Debt Securities of any one series and all coupons, if any, appertaining
to Bearer Debt Securities of such series shall be substantially identical except
as to currency or currency unit of payments due thereunder, denomination, rate
of interest or method of determining the rate of interest, if any, Maturity,
and the date from which interest, if any, shall accrue and except as may
21
<PAGE>
otherwise be provided by the Company in the Board Resolution, or pursuant to the
Board Resolution and set forth in the Officers' Certificate, or in any indenture
or indentures supplemental hereto, as the case may be, pertaining to such series
of Debt Securities. The terms of the Debt Securities of any series may provide,
without limitation, that the Debt Securities shall be authenticated and
delivered by the Trustee on original issue from time to time upon telephonic or
written order of persons designated in or pursuant to the relevant Board
Resolution, Officers' Certificate or supplemental indenture, as the case may be
(telephonic instructions to be promptly confirmed in writing by such person) and
that such persons are authorized to determine, consistent with such Board
Resolution, Officers' Certificate or supplemental indenture, as the case may be,
such terms and conditions of the Securities of such series as are specified in
such Board Resolution, Officers' Certificate or supplemental indenture, as the
case may be. All Debt Securities of any one series need not be issued at the
same time and, unless otherwise provided, a series may be reopened, without the
consent of the Holders, for issuances of additional Debt Securities of such
series.
If the form or any of the terms of the Debt Securities of any series are
established by action taken pursuant to one or more Board Resolutions, a copy of
an appropriate record of such action(s) shall be certified by the Secretary or
an Assistant Secretary of the Company and delivered to the Trustee at or prior
to the delivery of the Officers' Certificate setting forth the terms of the Debt
Securities of such series.
SECTION 302. DENOMINATIONS. The Debt Securities of each series shall be
-------------
issuable in such denominations as shall be specified as contemplated by Section
301. With respect to Debt Securities of any series denominated in Dollars, in
the absence of any such provisions with respect to the Debt Securities of any
series, the Registered Debt Securities of such series, other than Registered
Debt Securities issued in global form (which may be of any denomination), shall
be issuable in denominations of $1,000 and any integral multiple thereof and the
Bearer Debt Securities of such series, other than Bearer Debt Securities issued
in global form (which may be of any denomination), shall be issuable in
denominations of $5,000.
SECTION 303. EXECUTION, AUTHENTICATION, DELIVERY AND DATING. The Debt
----------------------------------------------
Securities and any coupons appertaining thereto shall be executed on behalf of
the Company by its Chairman, any Vice Chairman, its President or one of its Vice
Presidents and attested by its Treasurer, one of its Assistant Treasurers, its
Secretary or one of its Assistant Secretaries. The signature of any of these
officers on the Debt Securities and coupons may be manual or facsimile
signatures of the present or any future such authorized officer and may be
imprinted or otherwise reproduced on the Debt Securities.
Debt Securities or coupons bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Company shall bind
the Company, notwithstanding that such individuals or any of them have ceased to
hold such offices prior to the authentication and delivery of such Debt
Securities or did not hold such offices at the date of such Debt Securities or
coupons.
At any time and from time to time after the execution and delivery of this
Indenture, the
22
<PAGE>
Company may deliver Debt Securities of any series, together with any coupon
appertaining thereto, executed by the Company to the Trustee for authentication,
together with a Company Order for the authentication and delivery of such Debt
Securities, and the Trustee in accordance with the Company Order shall
authenticate and deliver such Debt Securities; provided, however, that, in
connection with its original issuance, no Bearer Debt Security shall be mailed
or otherwise delivered to any location in the United States; and provided
further that, unless otherwise specified with respect to any series of Debt
Securities pursuant to Section 301, a Bearer Debt Security may be delivered in
connection with its original issuance only if the Person entitled to receive
such Bearer Debt Security shall have furnished a certificate to Euroclear or
CEDEL, as the case may be, in the form set forth in Exhibit A-1 to this
Indenture or such other certificate as may be specified with respect to any
series of Debt Securities pursuant to Section 301, dated no earlier than 15 days
prior to the earlier of the date on which such Bearer Debt Security is delivered
and the date on which any temporary Debt Security first becomes exchangeable for
such Bearer Debt Security in accordance with the terms of such temporary Debt
Security and this Indenture. If any Debt Security shall be represented by a
permanent global Bearer Debt Security, then, for purposes of this Section 303
and Section 304, the notation of a beneficial owner's interest therein upon
original issuance of such Debt Security or upon exchange of a portion of a
temporary global Debt Security shall be deemed to be delivery in connection with
its original issuance of such beneficial owner's interest in such permanent
global Debt Security. Except as permitted by Section 306, the Trustee shall not
authenticate and deliver any Bearer Debt Security unless all appurtenant coupons
for interest then matured have been detached and canceled. In authenticating
such Debt Securities, and accepting the additional responsibilities under this
Indenture in relation to such Debt Securities, the Trustee shall be entitled to
receive, and (subject to TIA Section 315(a) through 315(d)) shall be fully
protected in relying upon,
(i) an Opinion of Counsel stating that
(a) the form or forms of such Debt Securities and any coupons
have been established in conformity with the provisions of this
Indenture;
(b) the terms of such Debt Securities and any coupons have been
established in conformity with the provisions of this Indenture; and
(c) such Debt Securities, together with any coupons appertaining
thereto, when completed by appropriate insertions and executed and
delivered by the Company to the Trustee for authentication in
accordance with this Indenture, authenticated and delivered by the
Trustee in accordance with this Indenture and issued by the Company in
the manner and subject to any conditions specified in such Opinion of
Counsel, will constitute legal, valid and binding obligations of the
Company, enforceable in accordance with their terms, except as limited
by any applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws relating to or affecting the enforcement of creditors'
rights generally and general equitable principles; and
23
<PAGE>
(ii) an Officers' Certificate stating that all conditions precedent
provided for in this Indenture relating to the issuance of the Debt
Securities have been complied with and that, to the best of the knowledge
of the signers of such certificate, no Event of Default with respect to any
of the Debt Securities shall have occurred and be continuing.
If such form or terms have been so established, the Trustee shall not be
required to authenticate such Debt Securities if the issue of such Debt
Securities pursuant to this Indenture will affect the Trustee's own rights,
duties, obligations or immunities under the Debt Securities and this Indenture
or otherwise in a manner which is not reasonably acceptable to the Trustee.
Notwithstanding anything herein to the contrary, if all the Debt Securities
of any series are not to be issued at one time, it shall not be necessary to
deliver an Officers' Certificate otherwise required pursuant to Section 301 or a
Company Order, an Opinion of Counsel or an Officers' Certificate otherwise
required pursuant to this Section 303 at the time of issuance of each Debt
Security of such series, but such order, opinion and certificates, with
appropriate modifications to cover such future issuances, shall be delivered at
or before the time of issuance of the first Debt Security of such series.
Each Registered Debt Security shall be dated the date of its authentication
and each Bearer Debt Security shall be dated as of the date specified as
contemplated by Section 301.
No Debt Security or coupon shall be entitled to any benefit under this
Indenture or be valid or obligatory for any purpose unless there appears on such
Debt Security or Debt Security to which such coupon appertains a certificate of
authentication substantially in the form provided for herein duly executed by
the Trustee by manual signature of an authorized signatory, and such certificate
upon any Debt Security shall be conclusive evidence, and the only evidence, that
such Debt Security has been duly authenticated and delivered hereunder and is
entitled to the benefits of this Indenture. Notwithstanding the foregoing, if
any Debt Security shall have been authenticated and delivered hereunder but
never issued and sold by the Company, and the Company shall deliver such Debt
Security to the Trustee for cancellation as provided in Section 309 together
with a written statement (which need not comply with Section 102 and need not be
accompanied by an Opinion of Counsel) stating that such Debt Security has never
been issued and sold by the Company, for all purposes of this Indenture such
Debt Security shall be deemed never to have been authenticated and delivered
hereunder and shall never be entitled to the benefits of this Indenture.
SECTION 304. TEMPORARY DEBT SECURITIES. (a) Pending the preparation of
-------------------------
definitive Debt Securities of any series, the Company may execute, and upon
Company Order the Trustee shall authenticate and deliver, temporary Debt
Securities which are printed, lithographed, typewritten, mimeographed or
otherwise produced, in any authorized denomination, substantially of the tenor
of the definitive Debt Securities in lieu of which they are issued, in
registered form, or, if authorized, in bearer form with one or more coupons or
without coupons, and with such appropriate insertions, omissions, substitutions
and other variations as the officers executing such Debt Securities may
determine, as conclusively evidenced by their execution of such Debt Securities.
In the case of Debt Securities of any series, such temporary Debt Securities may
be in
24
<PAGE>
global form.
Except in the case of temporary Debt Securities in global form (which shall
be exchanged in accordance with Section 304(b) or as otherwise provided in or
pursuant to a Board Resolution), if temporary Debt Securities of any series are
issued, the Company will cause definitive Debt Securities of that series to be
prepared without unreasonable delay. After the preparation of definitive Debt
Securities of such series, the temporary Debt Securities of such series shall be
exchangeable for definitive Debt Securities of such series upon surrender of the
temporary Debt Securities of such series at the office or agency of the Company
in a Place of Payment for that series, without charge to the Holder. Upon
surrender for cancellation of any one or more temporary Debt Securities of any
series (accompanied by any non-matured coupons appertaining thereto), the
Company shall execute and the Trustee shall authenticate and deliver in exchange
therefor a like principal amount of definitive Debt Securities of the same
series of authorized denominations; provided, however, that no definitive Bearer
Debt Security shall be delivered in exchange for a temporary Registered Debt
Security; and provided further that a definitive Bearer Debt Security shall be
delivered in exchange for a temporary Bearer Debt Security only in compliance
with the conditions set forth in Section 303. Until so exchanged, the temporary
Debt Securities of any series shall in all respects be entitled to the same
benefits under this Indenture as definitive Debt Securities of such series.
(b) Unless otherwise provided in or pursuant to a Board Resolution, this
Section 304(b) shall govern the exchange of temporary Debt Securities issued in
global form other than through the facilities of DTC. If any such temporary
Debt Security is issued in global form, then such temporary global Debt Security
shall, unless otherwise provided therein or pursuant to Section 301, be
delivered to the London office of a depository or common depository (the "Common
Depository"), for the benefit of Euroclear and CEDEL, for credit to the
respective accounts of the beneficial owners of such Debt Securities (or to such
other accounts as they may direct).
Without unnecessary delay but in any event not later than the date
specified in, or determined pursuant to the terms of, any such temporary global
Debt Security (the "Exchange Date"), the Company shall deliver to the Trustee
definitive Debt Securities, in aggregate principal amount equal to the principal
amount of such temporary global Debt Security, executed by the Company. On or
after the Exchange Date, such temporary global Debt Security shall be
surrendered by the Common Depository to the Trustee, as the Company's agent for
such purpose, to be exchanged, in whole or from time to time in part, for
definitive Debt Securities without charge to the Holders, and the Trustee shall
authenticate and deliver, in exchange for each portion of such temporary global
Debt Security, an equal aggregate principal amount of definitive Debt Securities
of the same series of authorized denominations and of like tenor as the portion
of such temporary global Debt Security to be exchanged. The definitive Debt
Securities to be delivered in exchange for any such temporary global Debt
Security shall be in bearer form, registered form, permanent global bearer form
or permanent global registered form, or any combination thereof, as specified as
contemplated by Section 301, and, if any combination thereof is so specified, as
requested by the beneficial owner thereof; provided, however, that, unless
otherwise specified in such temporary global Debt Security, upon such
presentation by the
25
<PAGE>
Common Depository, such temporary global Debt Security is accompanied by a
certificate dated the Exchange Date or a subsequent date and signed by Euroclear
as to the portion of such temporary global Debt Security held for its account
then to be exchanged and a certificate dated the Exchange Date or a subsequent
date and signed by CEDEL as to the portion of such temporary global Debt
Security held for its account then to be exchanged, each in the form set forth
in Exhibit A-2 to this Indenture or in such other form as may be established
pursuant to Section 301; and provided further that definitive Bearer Debt
Securities shall be delivered in exchange for a portion of a temporary global
Debt Security only in compliance with the requirements of Section 303.
Unless otherwise specified in such temporary global Debt Security, the
interest of a beneficial owner of Debt Securities of a series in a temporary
global Debt Security shall be exchanged for definitive Debt Securities of the
same series and of like tenor following the Exchange Date when the account
holder instructs Euroclear or CEDEL, as the case may be, to request such
exchange on his behalf and delivers to Euroclear or CEDEL, as the case may be, a
certificate in the form set forth in Exhibit A-1 to this Indenture (or in such
other form as may be established pursuant to Section 301), dated no earlier than
15 days prior to the Exchange Date, copies of which certificate shall be
available from the offices of Euroclear and CEDEL, the Trustee, any
Authenticating Agent appointed for such series of Debt Securities and each
Paying Agent. Unless otherwise specified in such temporary global Debt
Security, any such exchange shall be made free of charge to the beneficial
owners of such temporary global Debt Security, except that a Person receiving
definitive Debt Securities must bear the cost of insurance, postage,
transportation and the like unless such Person takes delivery of such definitive
Debt Securities in person at the offices of Euroclear or CEDEL. Definitive Debt
Securities in bearer form to be delivered in exchange for any portion of a
temporary global Debt Security shall be delivered only outside the United
States.
Until exchanged in full as hereinabove provided, the temporary Debt
Securities of any series shall in all respects be entitled to the same benefits
under this Indenture as definitive Debt Securities of the same series and of
like tenor authenticated and delivered hereunder, except that, unless otherwise
specified as contemplated by Section 301, interest payable on a temporary global
Debt Security on an Interest Payment Date for Debt Securities of such series
occurring prior to the applicable Exchange Date shall be payable to Euroclear
and CEDEL on such Interest Payment Date upon delivery by Euroclear and CEDEL to
the Trustee of a certificate or certificates in the form set forth in Exhibit A-
2 to this Indenture (or in such other forms as may be established pursuant to
Section 301), for credit without further interest on or after such Interest
Payment Date to the respective accounts of Persons who are the beneficial owners
of such temporary global Debt Security on such Interest Payment Date and who
have each delivered to Euroclear or CEDEL, as the case may be, a certificate
dated no earlier than 15 days prior to the Interest Payment Date occurring prior
to such Exchange Date in the form set forth as Exhibit A-1 to this Indenture (or
in such other forms as may be established pursuant to Section 301).
Notwithstanding anything to the contrary herein contained, the certifications
made pursuant to this paragraph shall satisfy the certification requirements of
the preceding two paragraphs of this Section 304(b) and of the third paragraph
of Section 303 of this Indenture and the interests of the Persons who are the
beneficial owners of the temporary global Debt Security with respect to
26
<PAGE>
which such certification was made will be exchanged for definitive Debt
Securities of the same series and of like tenor on the Exchange Date or the date
of certification if such date occurs after the Exchange Date, without further
act or deed by such beneficial owners. Except as otherwise provided in this
paragraph, no payments of principal or interest owing with respect to a
beneficial interest in a temporary global Debt Security will be made unless and
until such interest in such temporary global Debt Security shall have been
exchanged for an interest in a definitive Debt Security.
SECTION 305. REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE. The
---------------------------------------------------
Company shall cause to be kept at the Corporate Trust Office of the Trustee or
in any office or agency of the Company in a Place of Payment a register for each
series of Debt Securities (the registers maintained in such office or in any
such office or agency of the Company in a Place of Payment being herein
sometimes referred to collectively as the "Security Register") in which, subject
to such reasonable regulations as it may prescribe, the Company shall provide
for the registration of Registered Debt Securities and of transfers and
exchanges of Registered Debt Securities. The Security Register shall be in
written form or any other form capable of being converted into written form
within a reasonable time. The Trustee, at its Corporate Trust Office and at its
office in the [Borough of Manhattan, The City of New York] at the address set
forth in Section 1002 (or at such other address at which the Trustee's New York
office may subsequently be located), is hereby initially appointed "Security
Registrar" for the purpose of registering Registered Debt Securities and
transfers and exchanges of Registered Debt Securities on such Security Register
as herein provided. In the event that the Trustee shall cease to be Debt
Security Registrar, it shall have the right to examine the Security Register at
all reasonable times.
Subject to the provisions of this Section 305, upon surrender for
registration of transfer of any Registered Debt Security of any series at any
office or agency of the Company in a Place of Payment for that series, the
Company shall execute, and the Trustee shall authenticate and deliver, in the
name of the designated transferee or transferees, one or more new Registered
Debt Securities of the same series, of any authorized denominations and of a
like aggregate principal amount, bearing a number not contemporaneously
outstanding, and containing identical terms and provisions. Subject to the
provisions of this Section 305, at the option of the Holder, Registered Debt
Securities of any series may be exchanged for other Registered Debt Securities
of the same series, of any authorized denomination or denominations and of a
like aggregate principal amount, containing identical terms and provisions, upon
surrender of the Registered Debt Securities to be exchanged at any such office
or agency. Whenever any such Registered Debt Securities are so surrendered for
exchange, the Company shall execute, and the Trustee shall authenticate and
deliver, the Registered Debt Securities which the Holder making the exchange is
entitled to receive. Unless otherwise specified with respect to any series of
Debt Securities as contemplated by Section 301, Bearer Debt Securities may not
be issued in exchange for Registered Debt Securities.
If (but only if) permitted by the applicable Board Resolution and (subject
to Section 303) set forth in the applicable Officers' Certificate, or in any
indenture supplemental hereto, delivered as contemplated by Section 301, at the
option of the Holder, Bearer Debt Securities of
27
<PAGE>
any series may be exchanged for Registered Debt Securities of the same series of
any authorized denominations and of a like aggregate principal amount and tenor,
upon surrender of the Bearer Debt Securities to be exchanged at any such office
or agency, with all unmatured coupons and all matured coupons in default thereto
appertaining. If the Holder of a Bearer Debt Security is unable to produce any
such unmatured coupon or coupons or matured coupon or coupons in default, any
such permitted exchange may be effected if the Bearer Debt Securities are
accompanied by payment in funds acceptable to the Company in an amount equal to
the face amount of such missing coupon or coupons, or the surrender of such
missing coupon or coupons may be waived by the Company and the Trustee if there
is furnished to them such security or indemnity as they may require to save each
of them and any Paying Agent harmless. If thereafter the Holder of such Debt
Security shall surrender to any Paying Agent any such missing coupon in respect
of which such a payment shall have been made, such Holder shall be entitled to
receive the portion of such payment equal to the face amount of such surrendered
coupon, provided, however, that, except as otherwise provided in Section 1002,
interest represented by coupons shall be payable only upon presentation and
surrender of those coupons at an office or agency located outside the United
States. Notwithstanding the foregoing, in case a Bearer Debt Security of any
series is surrendered at any such office or agency in a permitted exchange for a
Registered Debt Security of the same series and like tenor after the close of
business at such office or agency on (i) any Regular Record Date and before the
opening of business at such office or agency on the relevant Interest Payment
Date, or (ii) any Special Record Date and before the opening of business at such
office or agency on the related proposed date for payment of Defaulted Interest,
such Bearer Debt Security shall be surrendered without the coupon relating to
such Interest Payment Date or proposed date for payment, as the case may be, and
interest or Defaulted Interest, as the case may be, will not be payable on such
Interest Payment Date or proposed date for payment, as the case may be, in
respect of the Registered Debt Security issued in exchange for such Bearer Debt
Security, but will be payable only to the Holder of such coupon when due in
accordance with the provisions of this Indenture. Whenever any Debt Securities
are so surrendered for exchange, the Company shall execute, and the Trustee
shall authenticate and deliver, the Debt Securities which the Holder making the
exchange is entitled to receive. Notwithstanding the foregoing, except as
otherwise specified as contemplated by Section 301, any permanent global Debt
Security shall be exchangeable only as provided in this paragraph. If the
depository for any permanent global Debt Security is DTC, then, unless the terms
of such global Debt Security expressly permit such global Debt Security to be
exchanged in whole or in part for definitive Debt Securities, a global Debt
Security may be transferred, in whole but not in part, only to a nominee of DTC,
or by a nominee of DTC to DTC, or to a successor to DTC for such global Debt
Security selected or approved by the Company or to a nominee of such successor
to DTC. If at any time (i) DTC notifies the Company that it is unwilling or
unable to continue as depository for the applicable global Debt Security or Debt
Securities or if at any time DTC ceases to be a clearing agency registered under
the Securities Exchange Act of 1934 if so required by applicable law or
regulation, and, in either case, a successor depository is not appointed by the
Company within 90 days after the Company receives such notice or becomes aware
of such ineligibility, (ii) the Company in its sole discretion determines that
such global Debt Securities shall be exchangeable for definitive Debt Securities
or (iii) there shall have occurred and be continuing an Event of Default under
this Indenture with respect to the Debt Securities of any series and beneficial
owners representing a majority in aggregate principal
28
<PAGE>
amount of the Outstanding Debt Securities represented by such global Debt
Securities advise DTC to cease acting as depository, then the Company shall
execute, and the Trustee shall authenticate and deliver, definitive Debt
Securities of like series, rank, tenor and terms in definitive form in an
aggregate principal amount equal to the principal amount of such global Debt
Security or Debt Securities. If any beneficial owner of an interest in a
permanent global Debt Security is otherwise entitled to exchange such interest
for Debt Securities of such series and of like tenor and principal amount of
another authorized form and denomination, as specified as contemplated by
Section 301 and provided that any applicable notice provided in the permanent
global Debt Security shall have been given, then without unnecessary delay but
in any event not later than the earliest date on which such interest may be so
exchanged, the Company shall execute, and the Trustee shall authenticate and
deliver, definitive Debt Securities in aggregate principal amount equal to the
principal amount of such beneficial owner's interest in such permanent global
Debt Security. On or after the earliest date on which such interests may be so
exchanged, such permanent global Debt Security shall be surrendered for exchange
by DTC or such other depository as shall be specified in the Company Order with
respect thereto to the Trustee, as the Company's agent for such purpose;
provided, however, that no Bearer Debt Security delivered in exchange for a
portion of a permanent global Debt Security shall be mailed or otherwise
delivered to any location in the United States. If a Registered Debt Security is
issued in exchange for any portion of a permanent global Debt Security after the
close of business at the office or agency where such exchange occurs on (i) any
Regular Record Date and before the opening of business at such office or agency
on the relevant Interest Payment Date, or (ii) any special Record Date and the
opening of business at such office or agency on the related proposed date for
payment of Defaulted Interest, Interest or Defaulted Interest, as the case may
be, will not be payable on such Interest Payment Date or proposed date for
payment, as the case may be, in respect of such Registered Debt Security, but
will be payable on such Interest Payment Date or proposed date for payment, as
the case may be, only to the Person to whom interest in respect of such portion
of such permanent global Debt Security is payable in accordance with the
provisions of this Indenture.
All Debt Securities issued upon any registration of transfer or exchange of
Debt Securities shall be the valid obligations of the Company, evidencing the
same Debt, and entitled to the same benefits under this Indenture, as the Debt
Securities surrendered upon such registration of transfer or exchange.
Every Registered Debt Security presented or surrendered for registration of
transfer or for exchange or redemption shall (if so required by the Company or
the Debt Security Registrar) be duly endorsed, or be accompanied by a written
instrument of transfer in form satisfactory to the Company and the Debt Security
Registrar duly executed by the Holder thereof or his attorney duly authorized in
writing.
No service charge shall be made to the Holder for any registration of
transfer or exchange of Debt Securities, but the Company may require payment of
a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any registration of transfer or exchange of Debt
Securities, other than exchanges pursuant to Section 304, 906 or 1107 or upon
surrender of a Debt Security for conversion in part or repayment in part at the
option of the
29
<PAGE>
Holder not involving any transfer.
The Company or the Trustee, as applicable, shall not be required (i) to
issue, register the transfer of or exchange any Debt Security if such Debt
Security may be among those selected for redemption during a period beginning at
the opening of business 15 days before selection of the Debt Securities to be
redeemed under Section 1103 and ending at the close of business on (A) if such
Debt Securities are issuable only as Registered Debt Securities, the day of the
mailing of the relevant notice of redemption or (B) if such Debt Securities are
issuable as Bearer Debt Securities, the day of the first publication of the
relevant notice of redemption or, if such Debt Securities are also issuable as
Registered Debt Securities and there is no publication, the day of mailing of
the relevant notice of redemption, or (ii) to register the transfer of or
exchange any Registered Debt Security so selected for redemption in whole or in
part, except, in the case of any Registered Debt Security to be redeemed in
part, the portion thereof not to be redeemed, or (iii) to exchange any Bearer
Debt Security so selected for redemption except that such a Bearer Debt Security
may be exchanged for a Registered Debt Security of that series and like tenor,
provided that such Registered Debt Security shall be simultaneously surrendered
for redemption, or (iv) to issue, register the transfer of or exchange any Debt
Security which has been surrendered for repayment at the option of the Holder,
except the portion, if any, of such Debt Security not to be so repaid.
SECTION 306. MUTILATED, DESTROYED, LOST AND STOLEN DEBT SECURITIES. If
-----------------------------------------------------
any mutilated Debt Security or a Debt Security with a mutilated coupon
appertaining to it is surrendered to the Trustee or the Company, together with,
in proper cases, such Debt Security or indemnity as may be required by the
Company or the Trustee to save each of them or any agent of either of them
harmless, the Company shall execute and the Trustee shall authenticate and
deliver in exchange therefor a new Debt Security of the same series and
principal amount, containing identical terms and provisions and bearing a number
not contemporaneously outstanding, with coupons corresponding to the coupons, if
any, appertaining to the surrendered Debt Security.
If there shall be delivered to the Company and to the Trustee (i) evidence
to their satisfaction of the destruction, loss or theft of any Debt Security or
coupon, and (ii) such Debt Security or indemnity as may be required by them to
save each of them and any agent of either of them harmless, then, in the absence
of notice to the Company or the Trustee that such Debt Security or coupon has
been acquired by a bona fide purchaser, the Company shall execute and upon its
request the Trustee shall authenticate and deliver, in lieu of any such
destroyed, lost or stolen Debt Security or in exchange for the Debt Security to
which a destroyed, lost or stolen coupon appertains (with all appurtenant
coupons not destroyed, lost or stolen), a new Debt Security of the same series
and principal amount, containing identical terms and provisions and bearing a
number not contemporaneously outstanding, with coupons corresponding to the
coupons, if any, appertaining to such destroyed, lost or stolen Debt Security or
to the Debt Security to which such destroyed, lost or stolen coupon appertains.
Notwithstanding the provisions of the previous two paragraphs, in case any
such mutilated, destroyed, lost or stolen Debt Security or coupon has become or
is about to become
30
<PAGE>
due and payable, the company in its discretion may, instead of issuing a new
Debt Security, with coupons corresponding to the coupons, if any, appertaining
to such destroyed, lost or stolen Debt Security or to the Debt Security to which
such destroyed, lost or stolen coupon appertains, pay such Debt Security or
coupon; provided, however, that payment of principal of (and premium, if any),
any interest on and any Additional Amounts with respect to, Bearer Debt
Securities shall, except as otherwise provided in Section 1002, be payable only
at an office or agency located outside the United States and, unless otherwise
specified as contemplated by Section 301, any interest on Bearer Debt Securities
shall be payable only upon presentation and surrender of the coupons
appertaining thereto.
Upon the issuance of any new Debt Security under this Section, the Company
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Debt Security of any series with its coupons, if any, issued
pursuant to this Section in lieu of any destroyed, lost or stolen Debt Security,
or in exchange for a Debt Security to which a destroyed, lost or stolen coupon
appertains, shall constitute an original additional contractual obligation of
the Company, whether or not the destroyed, lost or stolen Debt Security and its
coupons, if any, or the destroyed, lost or stolen coupon shall be at any time
enforceable by anyone, and shall be entitled to all the benefits of this
Indenture equally and proportionately with any and all other Debt Securities of
that series and their coupons, if any, duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Debt Securities or coupons.
SECTION 307. PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED. Except as
----------------------------------------------
otherwise specified with respect to a series of Debt Securities in accordance
with the provisions of Section 301, interest on any Registered Debt Security
that is payable, and is punctually paid or duly provided for, on any Interest
Payment Date shall be paid to the Person in whose name that Debt Security (or
one or more Predecessor Debt Securities) is registered at the close of business
on the Regular Record Date for such interest at the office or agency of the
Company maintained for such purpose pursuant to Section 1002; provided, however,
that each installment of interest on any Registered Debt Security may at the
Company's option be paid by (i) mailing a check for such interest, payable to or
upon the written order of the Person entitled thereto pursuant to Section 308,
to the address of such Person as it appears on the Security Register or (ii)
transfer to an account maintained by the payee located in the United States.
Unless otherwise provided as contemplated by Section 301 with respect to
the Debt Securities of any series, payment of interest may be made, in the case
of a Bearer Debt Security, by transfer to an account maintained by the payee
with a bank located outside the United States.
Unless otherwise provided as contemplated by Section 301, interest, if any,
payable on any permanent global Debt Security or any Interest Payment Date will
be paid to DTC, Euroclear
31
<PAGE>
and/or CEDEL, as the case may be, with respect to that portion of such permanent
global Debt Security held for its account by Cede & Co. (or by another nominee
of DTC or by DTC) or the Common Depository, as the case may be, for the purpose
of permitting such party to credit the interest received by it in respect of
such permanent global Debt Security to the accounts of the beneficial owners
thereof.
In case a Bearer Debt Security of any series is surrendered in exchange for
a Registered Debt Security of such series after the close of business (at an
office or agency in a Place of Payment for such series) on any Regular Record
Date and before the opening of business (at such office or agency) on the next
succeeding Interest Payment Date, such Bearer Debt Security shall be surrendered
without the coupon relating to such Interest Payment Date and interest will not
be payable on such Interest Payment Date in respect of the Registered Debt
Security issued in exchange for such Bearer Debt Security, but will be payable
only to the Holder of such coupon when due in accordance with the provisions of
this Indenture.
Except as otherwise specified with respect to a series of Debt Securities
in accordance with the provisions of Section 301, any interest on any Registered
Debt Security of any series that is payable, but is not punctually paid or duly
provided for, on any Interest Payment Date (herein called "Defaulted Interest")
shall forthwith cease to be payable to the registered Holder thereof on the
relevant Regular Record Date by virtue of having been such Holder, and such
Defaulted Interest may be paid by the Company, at its election in each case, as
provided in clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted Interest to
the Persons in whose names the Registered Debt Securities of such series
(or their respective Predecessor Debt Securities) are registered at the
close of business on a Special Record Date for the payment of such
Defaulted Interest, which shall be fixed in the following manner. The
Company shall notify the Trustee in writing of the amount of Defaulted
Interest proposed to be paid on each Registered Debt Security of such
series and the date of the proposed payment (which shall not be less than
20 days after such notice is received by the Trustee), and at the same time
the Company shall deposit with the Trustee an amount of money in the
currency or currencies, currency unit or units or composite currency or
currencies in which the Debt Securities of such series are payable (except
as otherwise specified pursuant to Section 301 for the Debt Securities of
such series) equal to the aggregate amount proposed to be paid in respect
of such Defaulted Interest or shall make arrangements satisfactory to the
Trustee for such deposit on or prior to the date of the proposed payment,
such money when deposited to be held in trust for the benefit of the
Persons entitled to such Defaulted Interest as in this clause provided.
Thereupon the Trustee shall fix a Special Record Date for the payment of
such Defaulted Interest which shall be not more than 15 days and not less
than 10 days prior to the date of the proposed payment and not less than 10
days after the receipt by the Trustee of the notice of the proposed
payment. The Trustee shall promptly notify the Company of such Special
Record Date and, in the name and at the expense of the Company, shall cause
notice of the proposed payment of such Defaulted Interest and the Special
Record Date therefor to be mailed, first-class postage prepaid, to each
Holder of Registered Debt Securities of
32
<PAGE>
such series at his address as it appears in the Security Register not less
than 10 days prior to such Special Record Date. The Trustee shall in the
name and at the expense of the Company, cause a similar notice to be
published at least once in an Authorized Newspaper in each Place of
Payment, but such publications shall not be a condition precedent to the
establishment of such Special Record Date. Notice of the proposed payment
of such Defaulted Interest and the Special Record Date therefor having been
mailed as aforesaid, such Defaulted Interest shall be paid to the Persons
in whose names the Registered Debt Securities of such series (or their
respective Predecessor Debt Securities) are registered at the close of
business on such Special Record Date and shall no longer be payable
pursuant to the following clause (2). In case a Bearer Debt Security of any
series is surrendered at the office or agency in a Place of Payment for
such series in exchange for a Registered Debt Security of such series after
the close of business at such office or agency on any Special Record Date
and before the opening of business at such office or agency on the related
proposed date for payment of Defaulted Interest, such Bearer Debt Security
shall be surrendered without the coupon relating to such proposed date of
payment and Defaulted Interest will not be payable on such proposed date of
payment in respect of the Registered Debt Security issued in exchange for
such Bearer Debt Security, but will be payable only to the Holder of such
coupon when due in accordance with the provisions of this Indenture.
(2) The Company may make payment of any Defaulted Interest on the
Registered Debt Securities of any series in any other lawful manner not
inconsistent with the requirements of any securities exchange on which such
Debt Securities may be listed, and upon such notice as may be required by
such exchange, if, after notice given by the Company to the Trustee of the
proposed payment pursuant to this clause, such manner of payment shall be
deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section and Section 305, each
Debt Security delivered under this Indenture upon registration of transfer of or
in exchange for or in lieu of any other Debt Security shall carry the rights to
interest accrued and unpaid, and to accrue, which were carried by such other
Debt Security.
SECTION 308. PERSONS DEEMED OWNERS. Prior to due presentment of a
---------------------
Registered Debt Security for registration of transfer, the Company, the Trustee
and any agent of the Company or the Trustee may treat the Person in whose name
such Registered Debt Security is registered as the owner of such Debt Security
for the purpose of receiving payment of principal of (and premium, if any), and
(subject to Sections 305 and 307) interest on, such Registered Debt Security and
for all other purposes whatsoever, whether or not such Registered Debt Security
be overdue, and neither the Company, the Trustee nor any agent of the Company or
the Trustee shall be affected by notice to the contrary.
Title to any Bearer Debt Security and any coupons appertaining thereto
shall pass by delivery. The Company, the Trustee and any agent of the Company
or the Trustee may treat the Holder of any Bearer Debt Security and the Holder
of any coupon as the absolute owner of such Debt Security or coupon for the
purpose of receiving payment thereof or on account thereof and
33
<PAGE>
for all other purposes whatsoever, whether or not such Debt Security or coupon
be overdue, and neither the Company, the Trustee nor any agent of the Company or
the Trustee shall be affected by notice to the contrary.
None of the Company, the Trustee, any Paying Agent or the Debt Security
Registrar will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interests of a Debt Security in global form or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests.
Notwithstanding the foregoing, with respect to any global Debt Security,
nothing herein shall prevent the Company, the Trustee, or any agent of the
Company or the Trustee from giving effect to any written certification, proxy or
other authorization furnished by any depository, as a Holder, with respect to
such global Debt Security or impair, as between such depository and owners of
beneficial interests in such global Debt Security, the operation of customary
practices governing the exercise of the rights of such depository (or its
nominee) as Holder of such global Debt Security.
SECTION 309. CANCELLATION. All Debt Securities and coupons surrendered
------------
for payment, redemption, repayment at the option of the Holder, registration of
transfer or exchange or for credit against any sinking fund payment shall, if
surrendered to any Person other than the Trustee, be delivered to the Trustee,
and any such Debt Securities and coupons surrendered directly to the Trustee for
any such purpose shall be promptly canceled by it. The Company may at any time
deliver to the Trustee for cancellation any Debt Securities previously
authenticated and delivered hereunder which the Company may have acquired in any
manner whatsoever, and may deliver to the Trustee (or to any other Person for
delivery to the Trustee) for cancellation any Debt Securities previously
authenticated hereunder which the Company has not issued and sold, and all Debt
Securities so delivered shall be promptly canceled by the Trustee. If the
Company shall so acquire any of the Debt Securities, however, such acquisition
shall not operate as a redemption or satisfaction of the indebtedness
represented by such Debt Securities unless and until the same are surrendered to
the Trustee for cancellation. No Debt Securities shall be authenticated in lieu
of or in exchange for any Debt Securities canceled as provided in this Section,
except as expressly permitted by or pursuant to this Indenture. Canceled Debt
Securities and coupons held by the Trustee shall be destroyed by the Trustee and
the Trustee shall deliver a certificate of such destruction to the Company,
unless by a Company Order the Company directs their return to it.
SECTION 310. COMPUTATION OF INTEREST. Except as otherwise specified as
-----------------------
contemplated by Section 301 with respect to Debt Securities of any series,
interest on the Debt Securities of each series shall be computed on the basis of
a 360-day year consisting of twelve 30-day months.
ARTICLE FOUR
SATISFACTION AND DISCHARGE
--------------------------
34
<PAGE>
SECTION 401. SATISFACTION AND DISCHARGE OF INDENTURE. This Indenture
---------------------------------------
shall upon Company Request cease to be of further effect with respect to any
series of Debt Securities specified in such Company Request (except as
hereinafter provided in this Section 401), the Trustee, upon receipt of a
Company Order, and at the expense of the Company, shall execute proper
instruments acknowledging satisfaction and discharge of this Indenture as to
such series when
(1) either
(A) all Debt Securities of such series theretofore authenticated and
delivered and all coupons, if any, appertaining thereto (other than (i)
coupons appertaining to Bearer Debt Securities surrendered for exchange for
Registered Debt Securities and maturing after such exchange, whose
surrender is not required or has been waived as provided in Section 305,
(ii) Debt Securities and coupons of such series which have been destroyed,
lost or stolen and which have been replaced or paid as provided in Section
306, (iii) coupons appertaining to Debt Securities called for redemption
and maturing after the relevant Redemption Date, whose surrender has been
waived as provided in Section 1106, and (iv) Debt Securities and coupons of
such series for whose payment money has theretofore been deposited in trust
or segregated and held in trust by the Company and thereafter repaid to the
Company or discharged from such trust, as provided in Section 1003) have
been delivered to the Trustee for cancellation; or
(B) all Debt Securities of such series and, in the case of (i) or (ii)
below, any coupons appertaining thereto not theretofore delivered to the
Trustee for cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated Maturity within
one year, or
(iii) if redeemable at the option of the Company, are to be
called for redemption within one year under arrangements satisfactory
to the Trustee for the giving of notice of redemption by the Trustee
in the name, and at the expense, of the Company, and the Company, in
the case of (i), (ii) or (iii) above, has irrevocably deposited or
caused to be deposited with the Trustee as trust funds in trust for
the purpose an amount in the currency or currencies, currency unit or
units or composite currency or currencies in which the Debt Securities
of such series are payable, sufficient to pay and discharge the entire
indebtedness on such Debt Securities and such coupons not theretofore
delivered to the Trustee for cancellation, for principal (and premium,
if any) and interest, and any Additional Amounts with respect thereto,
to the date of such deposit (in the case of Debt Securities which have
become due and payable) or to the Stated Maturity or Redemption Date,
as the case may be;
(2) the Company has paid or caused to be paid all other sums payable
35
<PAGE>
hereunder by the Company; and
(3) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that all conditions precedent
herein provided for relating to the satisfaction and discharge of this
Indenture as to such series have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee and any predecessor Trustee under
Section 606, the obligations of the Company to any Authenticating Agent under
Section 611 and, if money shall have been deposited with and held by the Trustee
pursuant to subclause (B) of clause (1) of this Section, and the obligations of
the Company and the Trustee with respect to the Securities of such series under
Sections 305, 306, 402, 1002 and 1003, with respect to the payment of Additional
Amounts, if any, with respect to such Securities as contemplated by Section 1015
and with respect to any rights to convert or exchange such Securities into
Common Shares or Preferred Shares or other securities or property, shall
survive.
SECTION 402. APPLICATION OF TRUST FUNDS. Subject to the provisions of the
--------------------------
last paragraph of Section 1003, all money deposited with the Trustee pursuant to
Section 401 shall be held in trust and applied by it, in accordance with the
provisions of the Debt Securities, the coupons and this Indenture, to the
payment, either directly or through any Paying Agent (other than the Company
acting as its own Paying Agent) as the Trustee may determine, to the Persons
entitled thereto, of the principal (and premium, if any), and interest, if any,
and Additional Amounts, if any, for whose payment such money has been deposited
with or received by the Trustee, but such money need not be segregated from
other funds except to the extent required by law.
ARTICLE FIVE
REMEDIES
--------
SECTION 501. EVENTS OF DEFAULT. "Event of Default," wherever used herein
-----------------
with respect to any particular series of Debt Securities, means any one of the
following events (whatever the reason for such Event of Default and whether or
not it shall be voluntary or involuntary or be effected by operation of law or
pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):
(1) default in the payment of any interest on, or any Additional
Amounts payable in respect of any interest on, any Debt Security of that
series or of any coupon appertaining thereto, when such interest,
Additional Amounts or coupon becomes due and payable, and continuance of
such default for a period of 30 days; or
(2) default in the payment of any principal of or premium, if any, on,
or any Additional Amounts payable in respect of any principal of or
premium, if any, on, any Debt Security of that series when it becomes due
and payable at its Maturity (whether at Stated Maturity, upon redemption,
notice of option to elect repayment or otherwise); or
36
<PAGE>
(3) default in the deposit of any sinking fund payment, when and as
due by the terms of any Debt Security of that series; or
(4) default in the performance, or breach, of any covenant or warranty
of the Company in this Indenture with respect to any Debt Security of that
series (other than a covenant or warranty a default in whose performance or
whose breach is elsewhere in this Section specifically dealt with or
included herein solely for the benefit of a series of Debt Securities other
than that series), and continuance of such default or breach for a period
of 60 days after there has been given, by registered or certified mail, to
the Company by the Trustee or to the Company and the Trustee by the Holders
of at least 25% in principal amount of the Outstanding Debt Securities of
that series a written notice specifying such default or breach and
requiring it to be remedied and stating that such notice is a "Notice of
Default" hereunder; or
(5) default under any bond, note, debenture or other evidence of
indebtedness of the Company or any of its Subsidiaries (including an event
of default with respect to any other series of Debt Securities), or under
any mortgage, indenture or other instrument under which there may be issued
or by which there may be secured or evidenced any indebtedness of the
Company or any of its Subsidiaries, whether such indebtedness exists on the
date of this Indenture or shall hereafter be created, which results in such
indebtedness in an aggregate principal amount exceeding $20,000,000
becoming or being declared due and payable prior to the date on which it
would otherwise have become due and payable, or which constitutes a failure
to pay at maturity or other scheduled payment date (after expiration of any
applicable grace period) such indebtedness in an aggregate principal amount
exceeding $20,000,000, but only if such indebtedness is not discharged or
such acceleration is not rescinded or annulled within 10 days after there
shall have been given, by registered or certified mail, to the Company by
the Trustee or to the Company and the Trustee by the Holders of at least
10% in aggregate principal amount of the Outstanding Debt Securities of
that series a written notice specifying such default and requiring the
Company to cause such indebtedness to be discharged or cause such
acceleration to be rescinded or annulled and stating that such notice is a
"Notice of Default" hereunder; or
(6) the Company or any Significant Subsidiary of the Company pursuant
to or within the meaning of any Bankruptcy Law:
(A) commences a voluntary case or proceeding,
(B) consents to the entry of an order or decree for relief
against it in an involuntary case or to the commencement of any
bankruptcy or insolvency case or proceeding against it,
(C) consents to the appointment of a Custodian of it or for any
substantial part of its property, or
37
<PAGE>
(D) makes a general assignment for the benefit of its creditors;
or
(7) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that:
(A) is for relief against the Company or any Significant
Subsidiary of the Company in an involuntary case,
(B) adjudges the Company or any Significant Subsidiary of the
Company a bankrupt or insolvent,
(C) approves as properly filed a petition seeking reorganization,
arrangement, adjustment or composition of or in respect of the Company
or any Significant Subsidiary of the Company,
(D) appoints a Custodian of the Company or any Significant
Subsidiary of the Company or for all or any substantial part of the
property of the Company or any Significant Subsidiary of the Company,
or
(E) orders the winding up or liquidation of the Company or any
Significant Subsidiary of the Company,
and the order or decree described in this clause (7) remains unstayed and
in effect for 60 days; or
(8) any other Event of Default provided with respect to Debt
Securities of that series.
As used in this Section 501, the term "Bankcruptcy Law" means Title 11 U.S. Code
or any similar Federal or State law for the relief of debtors and the term
"Custodian" means any receiver, trustee, assignee, liquidator, sequestrator or
other similar official under any Bankruptcy Law.
SECTION 502. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT. If an
--------------------------------------------------
Event of Default with respect to Debt Securities of any series at the time
outstanding occurs and is continuing, then and in every such case the Trustee or
the Holders of not less than 25% in principal amount of the Outstanding Debt
Securities of that series may declare the principal (or, if any Debt Securities
are Original Issue Discount Debt Securities or Indexed Debt Securities, such
portion of the principal as may be specified in the terms thereof) of all the
Debt Securities of that series to be due and payable immediately, by a notice in
writing to the Company (and to the Trustee if given by the Holders), and upon
any such declaration such principal or specified portion thereof shall become
immediately due and payable.
At any time after such a declaration of acceleration with respect to Debt
Securities of any series has been made and before a judgment or decree for
payment of the money due has been obtained by the Trustee as hereinafter in this
Article provided, the Holders of not less than a majority in principal amount of
the Outstanding Debt Securities of that series, by written notice
38
<PAGE>
to the Company and the Trustee, may rescind and annul such declaration and its
consequences if:
(1) the Company has paid or deposited with the Trustee a sum
sufficient to pay in the currency, currency unit or composite currency in
which the Debt Securities of such series are payable (except as may be
otherwise specified pursuant to Section 301 for the Debt Securities of such
series):
(A) all overdue installments of interest on and any Additional
Amounts payable in respect of all Outstanding Debt Securities of that
series and any related coupons,
(B) the principal of (and premium, if any, on) any Outstanding
Debt Securities of that series which have become due otherwise than by
such declaration of acceleration and interest thereon at the rate or
rates borne by or provided for in such Debt Securities,
(C) to the extent that payment of such interest is lawful,
interest upon overdue installments of interest and any Additional
Amounts at the rate or rates borne by or provided for in such Debt
Securities, and
(D) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel; and
(2) all Events of Default with respect to Debt Securities of that
series, other than the nonpayment of the principal of (or premium, if any)
or interest on Debt Securities of that series which have become due solely
by such declaration of acceleration, have been cured or waived as provided
in Section 513.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
SECTION 503. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY
-------------------------------------------------------
TRUSTEE. The Company covenants that if:
- -------
(1) default is made in the payment of any installment of interest or
Additional Amounts, if any, on any Debt Security of any series and any
related coupon when such interest or Additional Amount becomes due and
payable and such default continues for a period of 30 days, or
(2) default is made in the payment of the principal of (or premium, if
any, on) any Debt Security of any series at its Maturity,
then the Company will, upon demand of the Trustee, pay to the Trustee, for the
benefit of the Holders of such Debt Securities of such series and coupons, the
whole amount then due and payable on such Debt Securities and coupons for
principal (and premium, if any) and interest and Additional Amounts, with
interest upon any overdue principal (and premium, if any) and, to the
39
<PAGE>
extent that payment of such interest shall be legally enforceable, upon any
overdue installments of interest or Additional Amounts, if any, at the rate or
rates borne by or provided for in such Debt Securities, and, in addition
thereto, such further amount as shall be sufficient to cover the costs and
expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.
If the Company fails to pay such amounts forthwith upon such demand, the
Trustee, in its own name and as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, and may
prosecute such proceeding to judgment or final decree, and may enforce the same
against the Company or any other obligor upon such Debt Securities of such
series and collect the moneys adjudged or decreed to be payable in the manner
provided by law out of the property of the Company or any other obligor upon
such Debt Securities of such series, wherever situated.
If an Event of Default with respect to Debt Securities of any series occurs
and is continuing, the Trustee may in its discretion proceed to protect and
enforce its rights and the rights of the Holders of Debt Securities of such
series and any related coupons by such appropriate judicial proceedings as the
Trustee shall deem most effectual to protect and enforce any such rights,
whether for the specific enforcement of any covenant or agreement in this
Indenture or in aid of the exercise of any power granted herein, or to enforce
any other proper remedy.
SECTION 504. TRUSTEE MAY FILE PROOFS OF CLAIM. In case of the pendency of
--------------------------------
any receivership, insolvency, liquidation, bankruptcy, reorganization,
arrangement, adjustment, composition or other judicial proceeding relative to
the Company or any other obligor upon the Debt Securities or the property of the
Company or of such other obligor or their creditors, the Trustee (irrespective
of whether the principal of the Debt Securities of any series shall then be due
and payable as therein expressed or by declaration or otherwise and irrespective
of whether the Trustee shall have made any demand on the Company for the payment
of overdue principal, premium, if any, or interest) shall be entitled and
empowered, by intervention in such proceeding or otherwise:
(i) to file and prove a claim for the whole amount, or such lesser
amount as may be provided for in the Debt Securities of such series, of
principal (and premium, if any) and interest and Additional Amounts, if
any, owing and unpaid in respect of the Debt Securities and to file such
other papers or documents as may be necessary or advisable in order to have
the claims of the Trustee (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its
agents and counsel) and of the Holders allowed in such judicial proceeding,
and
(ii) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator (or
other similar official) in any such judicial proceeding is hereby authorized by
each Holder of Debt Securities of such
40
<PAGE>
series and coupons to make such payments to the Trustee, and in the event that
the Trustee shall consent to the making of such payments directly to the
Holders, to pay to the Trustee any amount due to it for the reasonable
compensation, expenses, disbursements and advances of the Trustee and any
predecessor Trustee, their agents and counsel, and any other amounts due the
Trustee or any predecessor Trustee under Section 606.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder of a Debt
Security or coupon any plan of reorganization, arrangement, adjustment or
composition affecting the Debt Securities or coupons or the rights of any Holder
thereof, or to authorize the Trustee to vote in respect of the claim of any
Holder of a Debt Security or coupon in any such proceeding.
SECTION 505. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF DEBT
-----------------------------------------------------
SECURITIES OR COUPONS. All rights of action and claims under this Indenture or
- ---------------------
any of the Debt Securities or coupons may be prosecuted and enforced by the
Trustee without the possession of any of the Debt Securities or coupons or the
production thereof in any proceeding relating thereto, and any such proceeding
instituted by the Trustee shall be brought in its own name as trustee of an
express trust, and any recovery of judgment shall, after provision for the
payment of the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel, be for the ratable benefit of the Holders
of the Debt Securities and coupons in respect of which such judgment has been
recovered.
SECTION 506. APPLICATION OF MONEY COLLECTED. Any money collected by the
------------------------------
Trustee pursuant to this Article shall be applied in the following order, at the
date or dates fixed by the Trustee and, in case of the distribution of such
money on account of principal (or premium, if any) or interest and any
Additional Amounts, upon presentation of the Debt Securities or coupons, or
both, as the case may be, and the notation thereon of the payment if only
partially paid and upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee and any
predecessor Trustee under Section 606;
SECOND: To the payment of the amounts then due and unpaid upon the
Debt Securities and coupons for principal (and premium, if any) and
interest and any Additional Amounts in respect of which or for the benefit
of which such money has been collected, ratably, without preference or
priority of any kind, according to the aggregate amounts due and payable on
such Debt Securities and coupons for principal (and premium, if any),
interest and Additional Amounts, respectively; and
THIRD: To the payment of the remainder, if any, to the Company.
SECTION 507. LIMITATION ON SUITS. No Holder of any Debt Security of any
-------------------
series or any related coupon shall have any right to institute any proceeding,
judicial or otherwise, with respect to this Indenture, or for the appointment of
a receiver or trustee, or for any other remedy hereunder, unless:
41
<PAGE>
(1) such Holder has previously given written notice to the Trustee of
a continuing Event of Default with respect to the Debt Securities of that
series;
(2) the Holders of not less than 25% in principal amount of the
Outstanding Debt Securities of that series shall have made written request
to the Trustee to institute proceedings in respect of such Event of Default
in its own name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee indemnity
reasonably satisfactory to the Trustee against the costs, expenses and
liabilities to be incurred in compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity has failed to institute any such proceeding; and
(5) no direction inconsistent with such written request has been given
to the Trustee during such 60-day period by the Holders of a majority in
principal amount of the Outstanding Debt Securities of that series;
it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other of
such Holders, or to obtain or to seek to obtain priority or preference over any
other of such Holders or to enforce any right under this Indenture, except in
the manner herein provided and for the equal and ratable benefit of all such
Holders.
SECTION 508. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL, PREMIUM,
-------------------------------------------------------------
IF ANY, INTEREST AND ADDITIONAL AMOUNTS. Notwithstanding any other provision in
- ---------------------------------------
this Indenture, the Holder of any Debt Security or coupon shall have the right
which is absolute and unconditional to receive payment of the principal of (and
premium, if any) and (subject to Sections 305 and 307) interest on, and any
Additional Amounts in respect of, such Debt Security or payment of such coupon
on the respective due dates expressed in such Debt Security or coupon (or, in
the case of redemption, on the Redemption Date or, in the case of repayment at
the option of the Holder, on the Repayment Date) and to institute suit for the
enforcement of any such payment, and such rights shall not be impaired without
the consent of such Holder.
SECTION 509. RESTORATION OF RIGHTS AND REMEDIES. If the Trustee or any
----------------------------------
Holder of a Debt Security or coupon has instituted any proceeding to enforce any
right or remedy under this Indenture and such proceeding has been discontinued
or abandoned for any reason, or has been determined adversely to the Trustee or
to such Holder, then and in every such case, the Company, the Trustee and the
Holders of Debt Securities and coupons shall, subject to any determination in
such proceeding, be restored severally and respectively to their former
positions hereunder and thereafter all rights and remedies of the Trustee and
the Holders shall continue as though no such proceeding had been instituted.
SECTION 510. RIGHTS AND REMEDIES CUMULATIVE. Except as otherwise provided
------------------------------
with respect to the replacement or payment of mutilated, destroyed, lost or
stolen Debt
42
<PAGE>
Securities or coupons in the last paragraph of Section 306, no right or remedy
herein conferred upon or reserved to the Trustee or to the Holders of Debt
Securities or coupons is intended to be exclusive of any other right or remedy,
and every right and remedy shall, to the extent permitted by law, be cumulative
and in addition to every other right and remedy given hereunder or now or
hereafter existing at law or in equity or otherwise. The assertion or employment
of any right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
SECTION 511. DELAY OR OMISSION NOT WAIVER. No delay or omission of the
----------------------------
Trustee or of any Holder of any Debt Security or coupon to exercise any right or
remedy accruing upon any Event of Default shall impair any such right or remedy
or constitute a waiver of any such Event of Default or an acquiescence therein.
Every right and remedy given by this Article Five or by law to the Trustee or to
the Holders may be exercised from time to time, and as often as may be deemed
expedient, by the Trustee or by the Holders of Debt Securities or coupons, as
the case may be.
SECTION 512. CONTROL BY HOLDERS OF DEBT SECURITIES. The Holders of not
-------------------------------------
less than a majority in principal amount of the Outstanding Debt Securities of
any series shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or exercising
any trust or power conferred on the Trustee with respect to the Debt Securities
of such series, provided that
(1) such direction shall not be in conflict with any rule of law or
with this Indenture,
(2) the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction, and
(3) the Trustee need not take any action which might involve it in
personal liability or be unduly prejudicial to the Holders of Debt
Securities of such series not joining therein.
SECTION 513. WAIVER OF PAST DEFAULTS. The Holders of not less than a
-----------------------
majority in principal amount of the Outstanding Debt Securities of any series
may on behalf of the Holders of all the Debt Securities of such series and any
related coupons waive any past default hereunder with respect to such series and
its consequences, except a default
(1) in the payment of the principal of (or premium, if any) or
interest on or Additional Amounts payable in respect of any Debt Security
of such series or any related coupons, or
(2) in respect of a covenant or provision hereof which under Article
Nine cannot be modified or amended without the consent of the Holder of
each Outstanding Debt Security of such series affected.
Upon any such waiver, such default shall cease to exist, and any Event of
Default arising
43
<PAGE>
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
Event of Default or impair any right consequent thereon.
SECTION 514. WAIVER OF USURY, STAY OR EXTENSION LAWS. The Company
---------------------------------------
covenants (to the extent that it may lawfully do so) that it will not at any
time insist upon, or plead, or in any manner whatsoever claim or take the
benefit or advantage of, any usury, stay or extension law wherever enacted, now
or at any time hereafter in force, which may affect the covenants or the
performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
SECTION 515. UNDERTAKING FOR COSTS. All parties to this Indenture agree,
---------------------
and each Holder of any Debt Security by his acceptance thereof shall be deemed
to have agreed, that any court may in its discretion require in any suit for the
enforcement of any right or remedy under this Indenture, or in any suit against
the Trustee for any action taken or omitted by it as Trustee, the filing by any
party litigant in such suit of any undertaking to pay the costs of such suit,
and that such court may in its discretion assess reasonable costs, including
reasonable attorneys' fees, against any party litigant in such suit having due
regard to the merits and good faith of the claims or defenses made by such party
litigant; but the provisions of this Section shall not apply to any suit
instituted by the Trustee, to any suit instituted by any Holder, or group of
Holders, holding in the aggregate more than 10% in principal amount of the
Outstanding Debt Securities of any series, or to any suit instituted by any
Holder for the enforcement of the payment of the principal of (or premium, if
any) or interest on any Debt Security on or after the respective Stated
Maturities expressed in such Debt Security (or, in the case of redemption, on or
after the Redemption Date or, in the case of repayment at the option of the
Holder, on or after the Repayment Date) or for the enforcement of the right, if
any, to convert or exchange any Debt Security into Common Shares, Preferred
Shares or other securities or property in accordance with its terms.
ARTICLE SIX
THE TRUSTEE
-----------
SECTION 601. NOTICE OF DEFAULTS. Within 90 days after the occurrence of
------------------
any default hereunder with respect to the Debt Securities of any series, the
Trustee shall transmit, in the manner and to the extent provided in TIA Section
313(c), notice of such default hereunder known to the Trustee, unless such
default shall have been cured or waived; provided, however, that, except in the
case of a default in the payment of the principal of (or premium, if any) or
interest on or any Additional Amounts with respect to any Debt Security of such
series, or in the payment of any sinking fund installment with respect to the
Debt Securities of such series, the Trustee shall be protected in withholding
such notice if and so long as a Responsible Officer of the Trustee in good faith
determines, that the withholding of such notice is in the interests of the
44
<PAGE>
Holders of the Debt Securities and coupons of such series; and provided further
that in the case of any default or breach of the character specified in Section
501(4) with respect to the Debt Securities and coupons of such series, no such
notice to Holders shall be given until at least 60 days after the occurrence
thereof. For the purpose of this Section, the term "Default" means any event
which is, or after notice or lapse of time or both would become, an Event of
Default with respect to the Debt Securities of such series.
SECTION 602. CERTAIN RIGHTS OF TRUSTEE. Subject to the provisions of TIA
-------------------------
Section 315(a) through 315(d):
(1) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, coupon or other paper or document believed by it to
be genuine and to have been signed or presented by the proper party or
parties;
(2) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order (other than
delivery of any Debt Security, together with any coupons appertaining
thereto, to the Trustee for authentication and delivery pursuant to Section
303 which shall be sufficiently evidenced as provided therein) and any
resolution of the Board of Directors may be sufficiently evidenced by a
Board Resolution;
(3) whenever in the administration of this Indenture the Trustee shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other
evidence be herein specifically prescribed) may, in the absence of bad
faith on its part, rely upon an Officers' Certificate;
(4) the Trustee may consult with counsel and the advice of such
counsel or any Opinion of Counsel shall be full and complete authorization
and protection in respect of any action taken, suffered or omitted by it
hereunder in good faith and in reliance thereon;
(5) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction
of any of the Holders of Debt Securities of any series or any related
coupons pursuant to this Indenture, unless such Holders shall have offered
to the Trustee security or indemnity reasonably satisfactory to the Trustee
against the costs, expenses and liabilities which might be incurred by it
in compliance with such request or direction;
(6) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, coupon or other paper or document, but the Trustee,
in its discretion, may make such further inquiry or investigation into such
facts or matters as it may see fit, and, if the Trustee shall
45
<PAGE>
determine to make such further inquiry or investigation, it shall be
entitled to examine the books, records and premises of the Company,
personally or by agent or attorney;
(7) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by
it hereunder; and
(8) the Trustee shall not be liable for any action taken, suffered or
omitted by it in good faith and reasonably believed by it to be authorized
or within the discretion or rights or powers conferred upon it by this
Indenture.
The Trustee shall not be required to expend or risk its own funds or
otherwise incur any financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if it shall have
reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it.
Except during the continuance of an Event of Default, the Trustee
undertakes to perform only such duties as are specifically set forth in this
Indenture, and no implied covenants or obligations shall be read into this
Indenture against the Trustee.
SECTION 603. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF DEBT SECURITIES.
-----------------------------------------------------------
The recitals contained herein and in the Debt Securities, except the Trustee's
certificate of authentication, and in any coupons shall be taken as the
statements of the Company, and neither the Trustee nor any Authenticating Agent
assumes any responsibility for their correctness. The Trustee makes no
representations as to the validity or sufficiency of this Indenture or of the
Debt Securities or coupons, except that the Trustee represents that it is duly
authorized to execute and deliver this Indenture, authenticate the Debt
Securities and perform its obligations hereunder. Neither the Trustee nor any
Authenticating Agent shall be accountable for the use or application by the
Company of Debt Securities or the proceeds thereof.
SECTION 604. MAY HOLD DEBT SECURITIES. The Trustee, any Paying Agent,
------------------------
Debt Security Registrar, Authenticating Agent or any other agent of the Company,
in its individual or any other capacity, may become the owner or pledgee of Debt
Securities and coupons and, subject to TIA Sections 310(b) and 311, may
otherwise deal with the Company with the same rights it would have if it were
not Trustee, Paying Agent, Debt Security Registrar, Authenticating Agent or such
other agent.
SECTION 605. MONEY HELD IN TRUST. Money held by the Trustee in trust
-------------------
hereunder need not be segregated from other funds except to the extent required
by law. The Trustee shall be under no liability for interest on any money
received by it hereunder except as otherwise agreed in writing with the Company.
SECTION 606. COMPENSATION AND REIMBURSEMENT. The Company agrees:
------------------------------
(1) to pay to the Trustee from time to time reasonable compensation
for all
46
<PAGE>
services rendered by it hereunder (which compensation shall not be limited
by any provision of law in regard to the compensation of a trustee of an
express trust);
(2) except as otherwise expressly provided herein, to reimburse each
of the Trustee and any predecessor Trustee upon its request for all
reasonable expenses, disbursements and advances incurred or made by the
Trustee in accordance with any provision of this Indenture (including the
reasonable compensation and the expenses and disbursements of its agents
and counsel), except any such expense, disbursement or advance as may be
attributable to its negligence or bad faith; and
(3) to indemnify each of the Trustee and any predecessor Trustee for,
and to hold it harmless against, any loss, liability or expense incurred
without negligence or bad faith on its own part, arising out of or in
connection with the acceptance or administration of the trust or trusts
hereunder, including the costs and expenses of defending itself against any
claim or liability in connection with the exercise or performance of any of
its powers or duties hereunder.
When the Trustee incurs expenses or renders services in connection with an
Event of Default specified in Section 501(6) or Section 501(7), the expenses
(including the reasonable charges and expenses of its counsel) and the
compensation for the services are intended to constitute expenses of
administration under any applicable Federal or state bankruptcy, insolvency or
other similar law.
As security for the performance of the obligations of the Company under
this Section, the Trustee shall have a lien for payment of the Trustee's fees
and expenses prior to the Debt Securities upon all property and funds held or
collected by the Trustee as such, except funds held in trust for the payment of
principal of (or premium, if any) or interest on or Additional Amounts with
respect to particular Debt Securities or any coupons.
The provisions of this Section shall survive the termination of this
Indenture.
SECTION 607. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY; CONFLICTING
----------------------------------------------------
INTERESTS. There shall at all times be a Trustee hereunder which shall be
- ---------
eligible to act as Trustee under TIA Section 310(a) (1) and shall have a
combined capital and surplus of at least $50,000,000 (or which trust company
shall have a combined capital and surplus of at least $10,000,000 and whose
ultimate parent holding company shall have a combined capital and surplus of at
least $50,000,000). If such corporation (or ultimate parent holding company, as
the case may be) publishes reports of condition at least annually, pursuant to
law or the requirements of Federal, State, Territorial or District of Columbia
supervising or examining authority, then for the purposes of this Section, the
combined capital and surplus of such corporation (or ultimate parent holding
company, as the case may be) shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. If at
any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section, it shall resign immediately in the manner and with
the effect hereinafter specified in this Article.
47
<PAGE>
SECTION 608. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR. (a) No
-------------------------------------------------
resignation or removal of the Trustee and no appointment of a successor Trustee
pursuant to this Article shall become effective until the acceptance of
appointment by the successor Trustee in accordance with the applicable
requirements of Section 609.
(b) The Trustee may resign at any time with respect to the Debt Securities
of one or more series by giving written notice thereof to the Company. If an
instrument of acceptance by a successor Trustee shall not have been delivered to
the Trustee within 30 days after the giving of such notice of resignation, the
resigning Trustee may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
(c) The Trustee may be removed at any time with respect to the Debt
Securities of any series by Act of the Holders of a majority in principal amount
of the Outstanding Debt Securities of such series delivered to the Trustee and
to the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with the provisions of TIA
Section 310(b) after written request therefor by the Company or by any
Holder of a Debt Security who has been a bona fide Holder of a Debt
Security for at least six months, or
(2) the Trustee shall cease to be eligible under Section 607 and shall
fail to resign after written request therefor by the Company or by any
Holder of a Debt Security who has been a bona fide Holder of a Debt
Security for at least six months, or
(3) the Trustee shall become incapable of acting or shall be adjudged
a bankrupt or insolvent or a receiver of the Trustee or of its property
shall be appointed or any public officer shall take charge or control of
the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
then, in any such case, (i) the Company by or pursuant to a Board Resolution may
remove the Trustee and appoint a successor Trustee with respect to all Debt
Securities, or (ii) subject to TIA Section 315(e), any Holder of a Debt Security
who has been a bona fide Holder of a Debt Security for at least six months may,
on behalf of himself and all others similarly situated, petition any court of
competent jurisdiction for the removal of the Trustee with respect to all Debt
Securities and the appointment of a successor Trustee or Trustees.
(e) If the Trustee shall resign, be removed or become incapable of acting,
or if a vacancy shall occur in the office of Trustee for any cause with respect
to the Debt Securities of one or more series, the Company, by or pursuant to a
Board Resolution, shall promptly appoint a successor Trustee or Trustees with
respect to the Debt Securities of that or those series (it being understood that
any such successor Trustee may be appointed with respect to the Debt Securities
of one or more or all of such series and that at any time there shall be only
one Trustee with respect to the Debt Securities of any particular series). If,
within one year after such resignation, removal or incapability, or the
occurrence of such vacancy, a successor Trustee with respect to the Debt
Securities of any series shall be appointed by Act of the Holders of a majority
in
48
<PAGE>
principal amount of the Outstanding Debt Securities of such series delivered to
the Company and the retiring Trustee, the successor Trustee so appointed shall,
forthwith upon its acceptance of such appointment, become the successor Trustee
with respect to the Debt Securities of such series and to that extent supersede
the successor Trustee appointed by the Company. If no successor Trustee with
respect to the Debt Securities of any series shall have been so appointed by the
Company or the Holders of Debt Securities and accepted appointment in the manner
hereinafter provided, any Holder of a Debt Security who has been a bona fide
Holder of a Debt Security of such series for at least six months may, on behalf
of himself and all others similarly situated, petition any court of competent
jurisdiction for the appointment of a successor Trustee with respect to Debt
Securities of such series.
(f) The Company shall give notice of each resignation and each removal of
the Trustee with respect to the Debt Securities of any series and each
appointment of a successor Trustee with respect to the Debt Securities of any
series in the manner provided for notices to the Holders of Debt Securities in
section 106. Each notice shall include the name of the successor Trustee with
respect to the Debt Securities of such series and the address of its Corporate
Trust Office.
SECTION 609. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR. (a) In case of the
--------------------------------------
appointment hereunder of a successor Trustee with respect to all Debt
Securities, every such successor Trustee shall execute, acknowledge and deliver
to the Company and to the retiring Trustee an instrument accepting such
appointment, and thereupon the resignation or removal of the retiring Trustee
shall become effective and such successor Trustee, without any further act, deed
or conveyance, shall become vested with all the rights, powers, trusts and
duties of the retiring Trustee; but, on request of the Company or the successor
Trustee, such retiring Trustee shall, upon payment of its charges, execute and
deliver an instrument transferring to such successor Trustee all the rights,
powers and trusts of the retiring Trustee, and shall duly assign, transfer and
deliver to such successor Trustee all property and money held by such retiring
Trustee hereunder, subject nevertheless to its lien and claim, if any, provided
for in Section 606.
(b) In case of the appointment hereunder of a successor Trustee with
respect to the Debt Securities of one or more (but not all) series, the Company,
the retiring Trustee and each successor Trustee with respect to the Debt
Securities of one or more series shall execute and deliver an indenture
supplemental hereto, pursuant to Article Nine hereof, wherein each successor
Trustee shall accept such appointment and which (1) shall contain such
provisions as shall be necessary or desirable to transfer and confirm to, and to
vest in, each successor Trustee all the rights, powers, trusts and duties of the
retiring Trustee with respect to the Debt Securities of that or those series to
which the appointment of such successor Trustee relates, (2) if the retiring
Trustee is not retiring with respect to all Debt Securities, shall contain such
provisions as shall be deemed necessary or desirable to confirm that all the
rights, powers, trusts and duties of the retiring Trustee with respect to the
Debt Securities of that or those series as to which the retiring Trustee is not
retiring shall continue to be vested in the retiring Trustee, and (3) shall add
to or change any of the provisions of this Indenture as shall be necessary to
provide for or facilitate the administration of the trusts hereunder by more
than one Trustee, it being understood that nothing herein or in such
supplemental indenture shall constitute such Trustees co-trustees of
49
<PAGE>
the same trust and that each such Trustee shall be trustee of a trust or trusts
hereunder separate and apart from any trust or trusts hereunder administered by
any other such Trustee; and upon the execution and delivery of such supplemental
indenture the resignation or removal of the retiring Trustee shall become
effective to the extent provided therein and each such successor Trustee,
without any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Trustee with respect to the
Debt Securities of that or those series to which the appointment of such
successor Trustee relates; but, on request of the Company or any successor
Trustee, such retiring Trustee shall duly assign, transfer and deliver to such
successor Trustee all property and money held by such retiring Trustee hereunder
with respect to the Debt Securities of that or those series to which the
appointment of such successor Trustee relates.
(c) Upon request of any such successor Trustee, the Company shall execute
any and all instruments for more fully and certainly vesting in and confirming
to such successor Trustee all such rights, powers and trusts referred to in
paragraph (a) or (b) of this Section, as the case may be.
(d) No successor Trustee shall accept its appointment unless at the time of
such acceptance such successor Trustee shall be qualified and eligible under
this Article Six.
SECTION 610. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS.
-----------------------------------------------------------
Any corporation into which the Trustee may be merged or converted or with which
it may be consolidated, or any corporation resulting from any merger, conversion
or consolidation to which the Trustee shall be a party, or any corporation
succeeding to all or substantially all of the corporate trust business of the
Trustee, shall be the successor of the Trustee hereunder, provided such
corporation shall be otherwise qualified and eligible under this Article,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. In case any Debt Securities or coupons shall have
been authenticated, but not delivered, by the Trustee then in office, any
successor by merger, conversion or consolidation to such authenticating Trustee
may adopt such authentication and deliver the Debt Securities or coupons so
authenticated with the same effect as if such successor Trustee had itself
authenticated such Debt Securities or coupons. In case any Debt Securities or
coupons shall not have been authenticated by such predecessor Trustee, any such
successor Trustee may authenticate and deliver such Debt Securities or coupons,
in either its own name or that of its predecessor Trustee, with the full force
and effect which this Indenture provides for the certificate of authentication
of the Trustee.
SECTION 611. APPOINTMENT OF AUTHENTICATING AGENT. At any time when any of
-----------------------------------
the Debt Securities remain Outstanding, the Trustee may appoint an
Authenticating Agent or Agents with respect to one or more series of Debt
Securities which shall be authorized to act on behalf of the Trustee to
authenticate Debt Securities of such series issued upon exchange, registration
of transfer or partial redemption or repayment thereof, and Debt Securities so
authenticated shall be entitled to the benefits of this Indenture and shall be
valid and obligatory for all purposes as if authenticated by the Trustee
hereunder. Any such appointment shall be evidenced by an instrument in writing
signed by a Responsible Officer of the Trustee, a copy of
50
<PAGE>
which instrument shall be promptly furnished to the Company. Wherever reference
is made in this Indenture to the authentication and delivery of Debt Securities
by the Trustee or the Trustee's certificate of authentication, such reference
shall be deemed to include authentication and delivery on behalf of the Trustee
by an Authenticating Agent and a certificate of authentication executed on
behalf of the Trustee by an Authenticating Agent. Each Authenticating Agent
shall be acceptable to the Company and shall at all times be a bank or trust
company or corporation organized and doing business and in good standing under
the laws of the United States of America or of any State or the District of
Columbia, authorized under such laws to act as Authenticating Agent, having a
combined capital and surplus of not less than $50,000,000 and subject to
supervision or examination by Federal or state authorities. If such
Authenticating Agent publishes reports of condition at least annually, pursuant
to law or the requirements of the aforesaid supervising or examining authority,
then for the purposes of this Section, the combined capital and surplus of such
Authenticating Agent shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. In case at any
time an Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, such Authenticating Agent shall resign immediately
in the manner and with the effect specified in this section.
Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency or
corporate trust business of an Authenticating Agent, shall continue to be an
Authenticating Agent, provided such corporation shall be otherwise eligible
under this Section, without the execution or filing of any paper or further act
on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent for any series of Debt Securities may at any time
resign by giving written notice of resignation to the Trustee for such series
and to the Company. The Trustee for any series of Debt Securities may at any
time terminate the agency of an Authenticating Agent by giving written notice of
termination to such Authenticating Agent and to the Company. Upon receiving
such a notice of resignation or upon such a termination, or in case at any time
such Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee for such series may appoint a successor
Authenticating Agent which shall be acceptable to the Company and shall give
notice of such appointment to all Holders of Debt Securities of the series with
respect to which such Authenticating Agent will serve in the manner set forth in
Section 106. Any successor Authenticating Agent upon acceptance of its
appointment hereunder shall become vested with all the rights, powers and duties
of its predecessor hereunder, with like effect as if originally named as an
Authenticating Agent herein. No successor Authenticating Agent shall be
appointed unless eligible under the provisions of this Section.
The Company agrees to pay to each Authenticating Agent from time to time
reasonable compensation including reimbursement of its reasonable expenses for
its services under this Section.
51
<PAGE>
If an appointment with respect to one or more series is made pursuant to
this Section, the Debt Securities of such series may have endorsed thereon, in
addition to or in lieu of the Trustee's certificate of authentication, an
alternate certificate of authentication substantially in the following form:
This is one of the Debt Securities of the series designated therein
referred to in the within-mentioned Indenture.
___________________________, as Trustee
By:
as Authenticating Agent
By:
Authorized Officer
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
-------------------------------------------------
SECTION 701. DISCLOSURE OF NAMES AND ADDRESSES OF HOLDERS. Every Holder
--------------------------------------------
of Debt Securities or coupons, by receiving and holding the same, agrees with
the Company and the Trustee that neither the Company nor the Trustee nor any
Authenticating Agent nor any Paying Agent nor any Debt Security Registrar shall
be held accountable by reason of the disclosure of any information as to the
names and addresses of the Holders of Debt Securities in accordance with TIA
Section 312, regardless of the source from which such information was derived,
and that the Trustee shall not be held accountable by reason of mailing any
material pursuant to a request made under TIA Section 312(b).
SECTION 702. REPORTS BY TRUSTEE. Within 60 days after May 15 of each year
------------------
commencing with the first May 15 after the first issuance of Debt Securities
pursuant to this Indenture, the Trustee shall transmit by mail to all Holders of
Debt Securities as provided in TIA Section 313 (c) a brief report dated as of
such May 15 if required by TIA Section 313(a).
SECTION 703. REPORTS BY COMPANY. The Company will:
------------------
(1) file with the Trustee, within 15 days after the Company is
required to file the same with the Commission, copies of the annual reports
and of the information, documents and other reports (or copies of such
portions of any of the foregoing as the Commission may from time to time by
rules and regulations prescribe) which the Company may be required to file
with the Commission pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934; or, if the Company is not required to file
52
<PAGE>
information, documents or reports pursuant to either of such Sections, then
it will file with the Trustee and the Commission, in accordance with rules
and regulations prescribed from time to time by the Commission, such of the
supplementary and periodic information, documents and reports which may be
required pursuant to Section 13 of the Securities Exchange Act of 1934 in
respect of a security listed and registered on a national securities
exchange as may be prescribed from time to time in such rules and
regulations;
(2) file with the Trustee and the Commission, in accordance with rules
and regulations prescribed from time to time by the Commission, such
additional information, documents and reports with respect to compliance by
the Company with the conditions and covenants of this Indenture as may be
required from time to time by such rules and regulations; and
(3) transmit by mail to the Holders of Debt Securities, within 30 days
after the filing thereof with the Trustee, in the manner and to the extent
provided in TIA Section 313(c), such summaries of any information,
documents and reports required to be filed by the Company pursuant to
paragraphs (1) and (2) of this Section as may be required by rules and
regulations prescribed from time to time by the Commission.
SECTION 704. COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES OF HOLDERS.
---------------------------------------------------------
The Company will furnish or cause to be furnished to the Trustee:
(a) semi-annually, not later than 15 days after the Regular Record Date for
interest for each series of Debt Securities, a list, in such form as the Trustee
may reasonably require, of the names and addresses of the Holders of Registered
Debt Securities of such series as of such Regular Record Date, or if there is no
Regular Record Date for interest for such series of Debt Securities,
semiannually, upon such dates as are set forth in the Board Resolution or
indenture supplemental hereto authorizing such series, and
(b) at such other times as the Trustee may request in writing, within 30
days after the receipt by the Company of any such request, a list of similar
form and content as of a date not more than 15 days prior to the time such list
is furnished, provided, however, that, so long as the Trustee is the Debt
Security Registrar, no such list shall be required to be furnished.
ARTICLE EIGHT
CONSOLIDATION, MERGER, SALE, LEASE OR CONVEYANCE
------------------------------------------------
SECTION 801. CONSOLIDATIONS AND MERGERS OF COMPANY AND SALES, LEASES AND
-----------------------------------------------------------
CONVEYANCES PERMITTED SUBJECT TO CERTAIN CONDITIONS. The Company will not, in
- ---------------------------------------------------
any transaction or series of related transactions, consolidate with, or sell,
lease, assign, transfer or otherwise convey all or substantially all of its
assets to, or merge with or into, any other Person unless (i) either the Company
shall be the continuing corporation, or the successor Person (if other than the
Company) formed by or resulting from any such consolidation or merger or which
shall have received the transfer of such assets is a corporation organized and
53
<PAGE>
existing under the laws of the United States of America or a State thereof or
the District of Columbia and shall expressly assume, by supplemental indenture
executed by such successor corporation and delivered by it to the Trustee (which
supplemental indenture shall comply with Article Nine hereof and shall be
reasonably satisfactory to the Trustee), the due and punctual payment of the
principal of (and premium, if any) and interest, if any, on and all Additional
Amounts, if any, payable in respect of, all of the Outstanding Debt Securities,
according to their tenor, and the due and punctual performance and observance of
all of the other covenants and conditions contained in this Indenture and the
Debt Securities to be performed or observed by the Company; (ii) immediately
after giving effect to such transaction and treating any Debt (including
Acquired Debt) which becomes an obligation of the Company or any of its
Subsidiaries as a result thereof as having been incurred by the Company or such
Subsidiary at the time of such transaction, no Event of Default, and no event
which, after notice or the lapse of time, or both, would become an Event of
Default, shall have occurred and shall be continuing; and (iii) the Company
shall have delivered to the Trustee the Officers' Certificate and Opinion of
Counsel required pursuant to Section 803 below. In the event that the Company
is not the continuing corporation, then, for purposes of clause (ii) of the
preceding sentence, the successor corporation shall be deemed to be the
"Company" referred to in such clause (ii).
SECTION 802. RIGHTS AND DUTIES OF SUCCESSOR CORPORATION. In case of any
------------------------------------------
such consolidation, merger, sale, lease, assignment, transfer or conveyance and
upon any such assumption by the successor corporation, such successor
corporation shall succeed to and be substituted for and may exercise every right
and power of the Company, with the same effect as if it had been named as the
"Company" herein; and the predecessor corporation, except in the case of a
lease, shall be released from any further obligation under this Indenture and
the Debt Securities. Such successor corporation thereupon may cause to be
signed, and may issue either in its own name or in the name of the Company, any
or all of the Debt Securities issuable hereunder which theretofore shall not
have been signed by the Company and delivered to the Trustee; and, upon the
order of such successor corporation, instead of the Company, and subject to all
the terms, conditions and limitations in this Indenture prescribed, the Trustee
shall authenticate and shall deliver any Debt Securities which previously shall
have been signed and delivered by the officers of the Company to the Trustee for
authentication, and any Debt Securities which such successor corporation
thereafter shall cause to be signed and delivered to the Trustee for that
purpose. All the Debt Securities so issued shall in all respects have the same
legal rank and benefit under this Indenture as the Debt Securities theretofore
or thereafter issued in accordance with the terms of this Indenture.
In case of any such consolidation, merger, sale, lease, assignment,
transfer or conveyance, such changes in phraseology and form (but not in
substance) may be made in the Debt Securities thereafter to be issued as may be
appropriate.
SECTION 803. OFFICERS' CERTIFICATE AND OPINION OF COUNSEL. Any
--------------------------------------------
consolidation, merger, sale, lease, assignment, transfer or conveyance permitted
under Section 801 is also subject to the condition precedent that the Trustee
receive an Officers' Certificate and an Opinion of Counsel to the effect that
any such consolidation, merger, sale, lease, assignment, transfer or conveyance,
and the assumption by any successor corporation, complies with the
54
<PAGE>
provisions of this Article and that all conditions precedent herein provided for
relating to such transaction have been complied with.
ARTICLE NINE
SUPPLEMENTAL INDENTURES
-----------------------
SECTION 901. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS. Without
--------------------------------------------------
the consent of any Holders of Debt Securities or coupons, the Company, when
authorized by or pursuant to a Board Resolution, and the Trustee, at any time
and from time to time, may enter into one or more indentures supplemental
hereto, in form satisfactory to the Trustee, for any of the following purposes:
(1) to evidence the succession of another Person to the Company and
the assumption by any such successor of the covenants of the Company herein
and in the Debt Securities contained; or
(2) to add to the covenants of the Company for the benefit of the
Holders of all or any series of Debt Securities (and if such covenants are
to be for the benefit of less than all series of Debt Securities, stating
that such covenants are expressly being included solely for the benefit of
such series) or to surrender any right or power herein conferred upon the
Company; or
(3) to add any additional Events of Default for the benefit of the
Holders of all or any series of Debt Securities (and if such Events of
Default are to be for the benefit of less than all series of Debt
Securities, stating that such Events of Default are expressly being
included solely for the benefit of such series); provided, however, that in
respect of any such additional Events of Default such supplemental
indenture may provide for a particular period of grace after default (which
period may be shorter or longer than that allowed in the case of other
defaults) or may provide for an immediate enforcement upon such default or
may limit the remedies available to the Trustee upon such default or may
limit the right of the Holders of a majority in aggregate principal amount
of that or those series of Debt Securities to which such additional Events
of Default apply to waive such default; or
(4) to add to or change any of the provisions of this Indenture to
provide that Bearer Debt Securities may be registrable as to principal, to
change or eliminate any restrictions on the payment of principal of or any
premium or interest on Bearer Debt Securities, to permit Bearer Debt
Securities to be issued in exchange for Registered Debt Securities, to
permit Bearer Debt Securities to be issued in exchange for Bearer Debt
Securities of other authorized denominations or to permit or facilitate the
issuance of Debt Securities in uncertificated form, provided that any such
action shall not adversely affect the interests of the Holders of Debt
Securities of any series or any related coupons in any material respect; or
(5) to change or eliminate any of the provisions of this Indenture,
provided
55
<PAGE>
that no such change or elimination shall become effective with respect to
the Outstanding Debt Securities of any series issued hereunder which were
first issued prior to the date of such change or elimination and which are
entitled to the benefit of such provision; or
(6) to secure the Debt Securities; or
(7) to establish the form or terms of Debt Securities of any series
and any related coupons as permitted by Sections 201 and 301, including the
provisions and procedures, if applicable, relating to Debt Securities
convertible into Common Shares or Preferred Shares or other securities or
property, as the case may be; or
(8) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Debt Securities of one
or more series and to add to or change any of the provisions of this
Indenture as shall be necessary to provide for or facilitate the
administration of the trusts hereunder by more than one Trustee; or
(9) to cure any ambiguity, to correct or supplement any provision
herein which may be defective or inconsistent with any other provision
herein or to make any other provisions with respect to matters or questions
arising under this Indenture which shall not be inconsistent with the
provisions of this Indenture, provided such action shall not adversely
affect the interests of the Holders of Debt Securities of any series or any
related coupons in any material respect; or
(10) to supplement any of the provisions of this Indenture to such
extent as shall be necessary to permit or facilitate the discharge,
defeasance or covenant defeasance, as the case may be, of any series of
Debt Securities pursuant to Sections 401, 1402 and 1403; provided that any
such action shall not adversely affect the interests of the Holders of Debt
Securities of such series and any related coupons or any other series of
Debt Securities in any material respect.
SECTION 902. SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS. With the
-----------------------------------------------
consent of the Holders of not less than a majority in principal amount of all
Outstanding Debt Securities of each series affected by such supplemental
indenture, by Act of said Holders delivered to the Company and the Trustee, the
Company, when authorized by or pursuant to a Board Resolution, and the Trustee
may enter into an indenture or indentures supplemental hereto for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Indenture or of the Debt Securities of such series or of
modifying in any manner the rights of the Holders of Debt Securities of such
series and any related coupons under this Indenture; provided, however, that no
such supplemental indenture shall, without the consent of the Holder of each
Outstanding Debt Security affected thereby:
(1) change the Stated Maturity of the principal of (or premium, if
any, on) or any installment of principal of, or premium, if any, or
interest, if any, on, or Additional Amounts, if any, with respect to, any
Debt Security; or reduce the principal amount thereof or the rate or amount
of interest thereon or any Additional Amounts payable in
56
<PAGE>
respect thereof, or any premium payable thereon, or change any obligation
of the Company to pay Additional Amounts pursuant to Section 1015 (except
as contemplated by Section 801 and permitted by Section 901(1)), or reduce
the amount of the principal of an Original Issue Discount Debt Security
that would be due and payable upon a declaration of acceleration of the
maturity thereof pursuant to Section 502 or the amount thereof provable in
bankruptcy pursuant to Section 504, or adversely affect any right of the
Holder of any Debt Security to repayment of such Debt Security at such
Holder's option, or change any Place of Payment where, or the currency or
currencies, currency unit or units or composite currency or currencies in
which, the principal of any Debt Security or any premium or interest
thereon or any Additional Amounts in respect thereof is payable, or impair
the right to institute suit for the enforcement of any such payment on or
after the Stated Maturity thereof (or, in the case of redemption, on or
after the Redemption Date or, in the case of repayment at the option of
Holder, on or after the Repayment Date, as the case may be), or
(2) reduce the percentage in principal amount of the Outstanding Debt
Securities of any series, the consent of whose Holders is required for any
such supplemental indenture, or the consent of whose Holders is required
for any waiver with respect to such series (of compliance with certain
provisions of this Indenture or certain defaults hereunder and their
consequences) provided for in this Indenture, or reduce the requirements of
Section 1504 for quorum or voting, or
(3) modify any of the provisions of this Section, Section 513 or
Section 1013, except to increase the percentage required to effect such
action or to provide that certain other provisions of this Indenture cannot
be modified or waived without the consent of the Holder of each Outstanding
Debt Security affected thereby, or
(4) make any change that adversely affects the right, if any, to
convert or exchange any Debt Security for Common Shares, Preferred Shares
or other securities or property in accordance with its terms.
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental indenture, but it shall
be sufficient if such Act shall approve the substance thereof.
A supplemental indenture which changes or eliminates any covenant or other
provision of this Indenture which has expressly been included solely for the
benefit of one or more particular series of Debt Securities, or which modifies
the rights of the Holders of Debt Securities of such series with respect to such
covenant or other provision, shall be deemed not to affect the rights under this
Indenture of the Holders of Debt Securities of any other series.
SECTION 903. EXECUTION OF SUPPLEMENTAL INDENTURES. In executing, or
------------------------------------
accepting the additional trusts created by, any supplemental indenture permitted
by this Article or the modification thereby of the trusts created by this
Indenture, the Trustee shall be entitled to receive, and shall be fully
protected in relying upon, an Opinion of Counsel stating that the
57
<PAGE>
execution of such supplemental indenture is authorized or permitted by this
Indenture. The Trustee may, but shall not be obligated to, enter into any such
supplemental indenture which affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise.
SECTION 904. EFFECT OF SUPPLEMENTAL INDENTURES. Upon the execution of any
---------------------------------
supplemental indenture under this Article Nine, this Indenture shall be modified
in accordance therewith, and such supplemental indenture shall form a part of
this Indenture for all purposes; and every Holder of Debt Securities theretofore
or thereafter authenticated and delivered hereunder and of any coupon
appertaining thereto shall be bound thereby.
SECTION 905. CONFORMITY WITH TRUST INDENTURE ACT. Every supplemental
-----------------------------------
indenture executed pursuant to this Article Nine shall conform to the
requirements of the Trust Indenture Act as then in effect.
SECTION 906. REFERENCE IN DEBT SECURITIES TO SUPPLEMENTAL INDENTURES.
-------------------------------------------------------
Debt Securities of any series authenticated and delivered after the execution of
any supplemental indenture pursuant to this Article Nine may, and shall, if
required by the Trustee, bear a notation in form approved by the Trustee as to
any matter provided for in such supplemental indenture. If the Company shall so
determine, new Debt Securities of any series so modified as to conform, in the
opinion of the Trustee and the Company, to any such supplemental indenture may
be prepared and executed by the Company and authenticated and delivered by the
Trustee in exchange for Outstanding Debt Securities of such series.
ARTICLE TEN
COVENANTS
---------
SECTION 1001. PAYMENT OF PRINCIPAL, PREMIUM, IF ANY, INTEREST AND
---------------------------------------------------
ADDITIONAL AMOUNTS. The Company covenants and agrees for the benefit of the
- ------------------
Holders of each series of Debt Securities that it will duly and punctually pay
the principal of (and premium, if any) and interest on and any Additional
Amounts payable in respect of the Debt Securities of that series in accordance
with the terms of such series of Debt Securities, any coupons appertaining
thereto and this Indenture. Unless otherwise specified as contemplated by
Section 301 with respect to any series of Debt Securities, any interest due on
and any Additional Amounts payable in respect of Bearer Debt Securities on or
before Maturity, other than Additional Amounts, if any, payable as provided in
Section 1015 in respect of principal of (or premium, if any, on) such a Debt
Security, shall be payable only upon presentation and surrender of the several
coupons for such interest installments as are evidenced thereby as they
severally mature.
SECTION 1002. MAINTENANCE OF OFFICE OR AGENCY. If Debt Securities of a
-------------------------------
series are issuable only as Registered Debt Securities, the Company shall
maintain in each Place of Payment for any series of Debt Securities an office or
agency where Debt Securities of that series may be presented or surrendered for
payment or conversion, where Debt Securities of that series may be surrendered
for registration of transfer or exchange and where notices and demands
58
<PAGE>
to or upon the Company in respect of the Debt Securities of that series and this
Indenture may be served. If Debt Securities of a series are issuable as Bearer
Debt Securities, the Company will maintain: (A) in the [Borough of Manhattan,
The City of New York], an office or agency where any Registered Debt Securities
of that series may be presented or surrendered for payment or conversion, where
any Registered Debt Securities of that series may be surrendered for
registration of transfer, where Debt Securities of that series may be
surrendered for exchange, where notices and demands to or upon the Company in
respect of the Debt Securities of that series and this Indenture may be served
and where Bearer Debt Securities of that series and related coupons may be
presented or surrendered for payment or conversion in the circumstances
described in the following paragraph (and not otherwise); (B) subject to any
laws or regulations applicable thereto, in a Place of Payment for that series
which is located outside the United States, an office or agency where Debt
Securities of that series and related coupons may be presented and surrendered
for payment (including payment of any Additional Amounts payable on Debt
Securities of that series pursuant to Section 1015) or conversion; provided,
however, that if the Debt Securities of that series are listed on the Luxembourg
Stock Exchange or any other stock exchange located outside the United States and
such stock exchange shall so require, the Company will maintain a Paying Agent
for the Debt Securities of that series in Luxembourg or any other required city
located outside the United States, as the case may be, so long as the Debt
Securities of that series are listed on such exchange; and (C) subject to any
laws or regulations applicable thereto, in a Place of Payment for that series
located outside the United States an office or agency where any Registered Debt
Securities of that series may be surrendered for registration of transfer, where
Debt Securities of that series may be surrendered for exchange and where notices
and demands to or upon the Company in respect of the Debt Securities of that
series and this Indenture may be served. The Company will give prompt written
notice to the Trustee of the location, and any change in the location, of each
such office or agency. If at any time the Company shall fail to maintain any
such required office or agency or shall fail to furnish the Trustee with the
address thereof, such presentations, surrenders, notices and demands may be made
or served at the Corporate Trust Office of the Trustee (and the Company hereby
appoints the Trustee its agent to receive all such presentations, surrenders,
notices and demands), except that Bearer Debt Securities of that series and the
related coupons may be presented and surrendered for payment (including payment
of any Additional Amounts payable on Bearer Debt Securities of that series
pursuant to Section 1015) or conversion at the offices specified in the Debt
Security or pursuant to Section 301 in London, England, and the Company hereby
appoints the same as its agent to receive such presentations, surrenders,
notices and demands.
Unless otherwise specified with respect to any Debt Securities pursuant to
Section 301, no payment of principal, premium or interest on or Additional
Amounts in respect of Bearer Debt Securities shall be made at any office or
agency of the Company in the United States or by check mailed to any address in
the United States or by transfer to an account maintained with a bank located in
the United States; provided, however, that, if the Debt Securities of a series
are payable in Dollars, payment of principal of and any premium and interest on
any Bearer Debt Security (including any Additional Amounts payable in respect of
Debt Securities of such series pursuant to Section 1015) shall be made at the
office or agency maintained by the Company for such purpose in the [Borough of
Manhattan, The City of New York] if (but only if) payment in Dollars of the full
amount of such principal, premium, interest or Additional Amounts, as the
59
<PAGE>
case may be, at all offices or agencies outside the United States maintained for
the purpose by the Company in accordance with this Indenture is illegal or
effectively precluded by exchange controls or other similar restrictions.
The Company may from time to time designate one or more other offices or
agencies where the Debt Securities of one or more series may be presented or
surrendered for any or all of such purposes, and may from time to time rescind
such designations; provided, however, that no such designation or rescission
shall in any manner relieve the Company of its obligation to maintain an office
or agency in accordance with the requirements set forth above for Debt
Securities of any series for such purposes. The Company will give prompt
written notice to the Trustee of any such designation or rescission and of any
change in the location of any such other office or agency. Unless otherwise
specified pursuant to Section 301 with respect to a series of Debt Securities,
the Company hereby designates as a Place of Payment for each series of Debt
Securities the office or agency of the Company in the [Borough of Manhattan, The
City of New York], and initially appoints the Trustee, at its offices which on
the date of this Indenture are located at c/o _________________________________
in such city and as its agent to receive all such presentations, surrenders,
notices and demands and appoints the Trustee, at its Corporate Trust Office and
at its offices in the [Borough of Manhattan, The City of New York], as Paying
Agent and Securities Registrar. The Company may subsequently appoint a different
office or agency in the [Borough of Manhattan, The City of New York] and a
different Paying Agent and Security Registrar for the Debt Securities of any
Series.
Unless otherwise specified with respect to any Debt Securities pursuant to
Section 301, if and so long as the Debt Securities of any series (i) are
denominated in a Foreign Currency or (ii) may be payable in a Foreign Currency,
or so long as it is required under any other provision of this Indenture, then
the Company will maintain with respect to each such series of Debt Securities,
or as so required, at least one exchange rate agent.
SECTION 1003. MONEY FOR DEBT SECURITIES PAYMENTS TO BE HELD IN TRUST. If
------------------------------------------------------
the Company shall at any time act as its own Paying Agent with respect to any
series of any Debt Securities and any related coupons, it will, on or before
each due date of the principal of (or premium, if any) or interest on or
Additional Amounts in respect of any of the Debt Securities of that series,
segregate and hold in trust for the benefit of the Persons entitled thereto a
sum in the currency or currencies, currency unit or units or composite currency
or currencies in which the Debt Securities of such series are payable (except as
otherwise specified pursuant to Section 301 for the Debt Securities of such
series) sufficient to pay the principal (and premium, if any) and interest and
Additional Amounts so becoming due until such sums shall be paid to such Persons
or otherwise disposed of as herein provided, and will promptly notify the
Trustee of its action or failure so to act.
Whenever the Company shall have one or more Paying Agents for any series of
Debt Securities and any related coupons, it will, on or before each due date of
the principal of (or premium, if any) or interest on or Additional Amounts in
respect of any Debt Securities of that series, deposit with a Paying Agent a sum
(in the currency or currencies, currency unit or units or composite currency or
currencies described in the preceding paragraph) sufficient to pay the
60
<PAGE>
the principal (and premium, if any) and interest and Additional Amounts so
becoming due, such sum to be held in trust for the benefit of the Persons
entitled to such principal, premium, interest and Additional Amounts and (unless
such Paying Agent is the Trustee) the Company will promptly notify the Trustee
of its action or failure so to act.
The Company will cause each Paying Agent other than the Trustee to execute
and deliver to the Trustee an instrument in which such Paying Agent shall agree
with the Trustee, subject to the provisions of this Section, that such Paying
Agent will
(1) hold all sums held by it for the payment of principal of (and
premium, if any) and interest on and any Additional Amounts with respect to
the Debt Securities in trust for the benefit of the Persons entitled
thereto until such sums shall be paid to such Persons or otherwise disposed
of as herein provided;
(2) give the Trustee notice of any default by the Company (or any
other obligor upon the Debt Securities) in the making of any such payment
of principal (or premium, if any) or interest or Additional Amounts; and
(3) at any time during the continuance of any such default upon the
written request of the Trustee, forthwith pay to the Trustee all sums so
held in trust by such Paying Agent.
The Company may at any time, for the purpose of obtaining the satisfaction
and discharge of this Indenture or for any other purpose, pay, or by Company
Order direct any Paying Agent to pay, to the Trustee all sums held in trust by
the Company or such Paying Agent, such sums to be held by the Trustee upon the
same trusts as those upon which such sums were held by the Company or such
Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such
Paying Agent shall be released from all further liability with respect to such
sums.
Except as otherwise provided with respect to the Debt Securities of any
series pursuant to Section 301, any money deposited with the Trustee or any
Paying Agent, or held by the Company, in trust for the payment of the principal
of (or premium, if any) or interest on, or any Additional Amounts in respect of,
any Debt Security of any series and remaining unclaimed for two years after such
principal (or premium, if any), or interest or Additional Amounts has become due
and payable shall be paid to the Company upon Company Request or (if then held
by the Company) shall be discharged from such trust; and the Holder of such Debt
Security shall thereafter, as an unsecured general creditor, look only to the
Company for payment of such principal of (or premium, if any) or interest on, or
any Additional Amounts in respect of, such Debt Security, and all liability of
the Trustee or such Paying Agent with respect to such trust money, and all
liability of the Company as trustee thereof, shall thereupon cease; provided,
however, that the Trustee or such Paying Agent, before being required to make
any such repayment, may at the expense of the Company cause to be published
once, in an Authorized Newspaper, notice that such money remains unclaimed and
that, after a date specified therein, which shall not be less than 30 days from
the date of such publication, any unclaimed balance of such money then remaining
will be repaid to the Company.
61
<PAGE>
SECTION 1004. AGGREGATE DEBT TEST. The Company will not, and will not
-------------------
cause or permit any of its Subsidiaries to, incur any Debt (including, without
limitation, Acquired Debt) if, immediately after giving effect to the incurrence
of such Debt and the application of the proceeds therefrom on a pro forma basis,
the aggregate principal amount of all outstanding Debt of the Company and its
Subsidiaries (determined on a consolidated basis in accordance with generally
accepted accounting principles) is greater than 60% of the sum of (without
duplication) (i) the Total Assets of the Company and its Subsidiaries as of the
last day of the then most recently ended fiscal quarter and (ii) the aggregate
purchase price of any real estate assets or mortgages receivable acquired, and
the aggregate amount of any securities offering proceeds received (to the extent
such proceeds were not used to acquire real estate assets or mortgages
receivable or used to reduce Debt), by the Company or any of its Subsidiaries
since the end of such fiscal quarter, including the proceeds obtained from the
incurrence of such additional Debt, determined on a consolidated basis in
accordance with generally accepted accounting principles.
SECTION 1005. DEBT SERVICE TEST. The Company will not, and will not cause
-----------------
or permit any of its Subsidiaries to, incur any Debt (including, without
limitation, Acquired Debt) if the ratio of Consolidated Income Available for
Debt Service to the Annual Debt Service Charge for the period consisting of the
four consecutive fiscal quarters most recently ended prior to the date on which
such additional Debt is to be incurred shall have been less than 1.5:1 on a pro
forma basis after giving effect to the incurrence of such Debt and the
application of the proceeds therefrom, and calculated on the assumption that (i)
such Debt and any other Debt (including, without limitation, Acquired Debt)
incurred by the Company or any of its Subsidiaries since the first day of such
four-quarter period had been incurred, and the application of the proceeds
therefrom (including to repay or retire other Debt) had occurred, on the first
day of such period, (ii) the repayment or retirement of any other Debt of the
Company or any of its Subsidiaries since the first day of such four-quarter
period had occurred on the first day of such period (except that, in making such
computation, the amount of Debt under any revolving credit facility, line of
credit or similar facility shall be computed based upon the average daily
balance of such Debt during such period) and (iii) in the case of any
acquisition or disposition by the Company or any of its Subsidiaries of any
asset or group of assets, in any such case with a fair market value (determined
in good faith by the Company's Board of Directors) in excess of $1 million,
since the first day of such four-quarter period, whether by merger, stock
purchase or sale or asset purchase or sale or otherwise, such acquisition or
disposition had occurred as of the first day of such period with the appropriate
adjustments with respect to such acquisition or disposition being included in
such pro forma calculation. If the Debt giving rise to the need to make the
foregoing calculation or any other Debt incurred after the first day of the
relevant four-quarter period bears interest at a floating rate then, for
purposes of calculating the Annual Debt Service Charge, the interest rate on
such Debt shall be computed on a pro forma basis as if the average rate which
would have been in effect during the entire such four-quarter period had been
the applicable rate for the entire such period.
SECTION 1006. SECURED DEBT TEST. The Company will not, and will not cause
-----------------
or permit any of its Subsidiaries to, incur any Debt (including, without
limitation, Acquired Debt) secured by any Lien on any property or assets of the
Company or any of its Subsidiaries, whether owned on the date of this Indenture
or thereafter acquired, if, immediately after giving effect to
62
<PAGE>
the incurrence of such Debt and the application of the proceeds therefrom on a
pro forma basis, the aggregate principal amount (determined on a consolidated
basis in accordance with generally accepted accounting principles) of all
outstanding Debt of the Company and its Subsidiaries which is secured by any
Lien on any property or assets of the Company or any of its Subsidiaries is
greater than 40% of the sum of (without duplication) (i) the Total Assets of the
Company and its Subsidiaries as of the last day of the then most recently ended
fiscal quarter and (ii) the aggregate purchase price of any real estate assets
or mortgages receivable acquired, and the aggregate amount of any securities
offering proceeds received (to the extent such proceeds were not used to acquire
real estate assets or mortgages receivable or used to reduce Debt), by the
Company or any of its Subsidiaries since the end of such fiscal quarter,
including the proceeds obtained from the incurrence of such additional Debt,
determined on a consolidated basis in accordance with generally accepted
accounting principles.
SECTION 1007. MAINTENANCE OF TOTAL UNENCUMBERED ASSETS. The Company will,
----------------------------------------
and will cause its Subsidiaries to, have at all times Total Unencumbered Assets
of not less than 150% of the aggregate principal amount of all outstanding
Unsecured Debt of the Company and its Subsidiaries, determined on a consolidated
basis in accordance with generally accepted accounting principles.
SECTION 1008. EXISTENCE. Subject to Article Eight, the Company will do or
---------
cause to be done all things necessary to preserve and keep in full force and
effect its corporate existence, rights (charter and statutory) and franchises;
provided, however, that the Company will not be required to preserve any right
or franchise if its Board of Directors determines that the preservation thereof
is no longer desirable in the conduct of its business and that the loss thereof
is not disadvantageous in any material respect to the Holders of the Debt
Securities Outstanding under this Indenture.
SECTION 1009. MAINTENANCE OF PROPERTIES. The Company will cause all of
-------------------------
its properties used or useful in the conduct of its business or the business of
any Subsidiary to be maintained and kept in good condition, repair and working
order and supplied with all necessary equipment and will cause to be made all
necessary repairs, renewals, replacements, betterments and improvements thereof,
all as in the judgment of the Company may be necessary so that the business
carried on in connection therewith may be properly and advantageously conducted
at all times; provided, however, that nothing in this Section shall prevent the
Company and its Subsidiaries from selling or otherwise disposing of for value
their respective properties in the ordinary course of business.
SECTION 1010. INSURANCE. The Company will, and will cause each of its
---------
Subsidiaries to, keep in force upon all of its properties and operations
policies of insurance carried with responsible companies in such amounts and
covering all such risks as shall be customary in the industry in accordance with
prevailing market conditions and availability.
SECTION 1011. PAYMENT OF TAXES AND OTHER CLAIMS. The Company will pay or
---------------------------------
discharge or cause to be paid or discharged, before the same shall become
delinquent, (1) all taxes, assessments and governmental charges levied or
imposed upon it or any Subsidiary
63
<PAGE>
or upon the income, profits or property of the Company or any Subsidiary, and
(2) all lawful claims for labor, materials and supplies which, if unpaid, might
by law become a lien upon the property of the Company or any Subsidiary;
provided, however, that the Company will not be required to pay or discharge or
cause to be paid or discharged any such tax, assessment, charge or claim whose
amount, applicability or validity is being contested in good faith by
appropriate proceedings.
SECTION 1012. PROVISION OF FINANCIAL INFORMATION. Whether or not the
----------------------------------
Company is subject to Section 13 or 15(d) of the Securities Exchange Act of
1934, for so long as any Debt Securities are Outstanding, the Company will, to
the extent permitted under the Securities Exchange Act of 1934, file with the
Commission the annual reports, quarterly reports and other documents which the
Company would have been required to file with the Commission pursuant to such
Section 13 or 15(d) if the Company were so subject, on or prior to the
respective dates (the "Required Filing Dates") by which the Company would have
been so required so to file such documents.
The Company will also in any event (x) within 15 days after each Required
Filing Date (i) transmit by mail to all Holders, as their names and addresses
appear in the Security Register, without cost to such Holders, copies of the
annual reports, quarterly reports and other documents which the Company would
have been required to file with the Commission pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934 if the Company were subject to such
Sections, and (ii) file with the Trustee copies of the annual reports, quarterly
reports and other documents which the Company would have been required to file
with the Commission pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 if the Company were subject to such Sections and (y) if filing such
documents by the Company with the Commission is not permitted under the
Securities Exchange Act of 1934, promptly upon written request and payment of
the reasonable cost of duplication and delivery, supply copies of such documents
to any prospective Holder.
SECTION 1013. WAIVER OF CERTAIN COVENANTS. The Company may omit in any
---------------------------
particular instance to comply with any term, provision or condition set forth in
Sections 1004 to 1012, inclusive, if before or after the time for such
compliance the Holders of at least a majority in principal amount of all
Outstanding Debt Securities of such series, by Act of such Holders, either waive
such compliance in such instance or generally waive compliance with such
covenant or condition, but no such waiver shall extend to or affect such
covenant or condition except to the extent so expressly waived, and, until such
waiver shall become effective, the obligations of the Company and the duties of
the Trustee in respect of any such term, provision or condition shall remain in
full force and effect.
SECTION 1014. STATEMENT AS TO COMPLIANCE. The Company will deliver to the
--------------------------
Trustee, within 120 days after the end of each fiscal year, a brief certificate
from its principal executive officer, principal financial officer or principal
accounting officer as to his or her knowledge of the Company's compliance with
all conditions and covenants under this Indenture and, in the event of any
noncompliance, specifying such noncompliance and the nature and status thereof.
For purposes of this Section 1014, such compliance shall be determined without
regard
64
<PAGE>
to any period of grace or requirement of notice under this Indenture.
SECTION 1015. ADDITIONAL AMOUNTS. If any Debt Securities of a series
------------------
provide for the payment of Additional Amounts, the Company will pay to the
Holder of any Debt Security of such series or any coupon appertaining thereto
Additional Amounts as may be specified as contemplated by Section 301. Whenever
in this Indenture there is mentioned, in any context, the payment of the
principal of or any premium or interest on, or in respect of, any Debt Security
of any series or payment of any related coupon or the net proceeds received on
the sale or exchange of any Debt Security of any series, such mention shall be
deemed to include mention of the payment of Additional Amounts provided by the
terms of such series established pursuant to Section 301 to the extent that, in
such context, Additional Amounts are, were or would be payable in respect
thereof pursuant to such terms and express mention of the payment of Additional
Amounts (if applicable) in any provisions hereof shall not be construed as
excluding Additional Amounts in those provisions hereof where such express
mention is not made.
Except as otherwise specified as contemplated by Section 301, if the Debt
Securities of a series provide for the payment of Additional Amounts, at least
10 days prior to the first Interest Payment Date with respect to that series of
Debt Securities (or if the Debt Securities of that series will not bear interest
prior to Maturity, the first day on which a payment of principal and any premium
is made), and at least 10 days prior to each date of payment of principal and
any premium or interest if there has been any change with respect to the matters
set forth in the below-mentioned Officers' Certificate, the Company will furnish
the Trustee and the Company's principal Paying Agent or Paying Agents, if other
than the Trustee, with an Officers' Certificate instructing the Trustee and such
Paying Agent or Paying Agents whether such payment of principal of and any
premium or interest on the Debt Securities of that series shall be made to
Holders of Debt Securities of that series or any related coupons who are not
United States Persons without withholding for or on account of any tax,
assessment or other governmental charge specified by the terms of the Debt
Securities of the series. If any such withholding shall be required, then such
Officers' Certificate shall specify by country the amount, if any, required to
be withheld on such payments to such Holders of Debt Securities of that series
or related coupons and the Company will pay to the Trustee or such Paying Agent
or Paying Agents the Additional Amounts required by the terms of such Debt
Securities. In the event that the Trustee or any Paying Agent, as the case may
be, shall not so receive the above-mentioned certificate, then the Trustee or
such Paying Agent shall be entitled (i) to assume that no such withholding or
deduction is required with respect to any payment of principal, premium, if any,
or interest with respect to any Debt Securities of a series or related coupons
until it shall have received an Officers' Certificate advising otherwise and
(ii) to make all payments of principal, premium, if any, and interest with
respect to the Debt Securities of a series or related coupons without
withholding or deductions until otherwise advised. The Company covenants to
indemnify the Trustee and any Paying Agent for, and to hold them harmless
against, any loss, liability or expense reasonably incurred without negligence
or bad faith on their part arising out of or in connection with actions taken or
omitted by any of them or in reliance on any Officers' Certificate furnished
pursuant to this Section or in reliance on the Company's not furnishing such an
Officers' Certificate.
65
<PAGE>
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
------------------------
SECTION 1101. APPLICABILITY OF ARTICLE. Debt Securities of any series
------------------------
which are redeemable before their Stated Maturity shall be redeemable in
accordance with their terms and (except as otherwise specified as contemplated
by Section 301 for Debt Securities of any series) in accordance with this
Article.
SECTION 1102. ELECTION TO REDEEM; NOTICE TO TRUSTEE. The election of the
-------------------------------------
Company to redeem any Debt Securities shall be evidenced by or pursuant to a
Board Resolution. In case of any redemption at the election of the Company of
less than all of the Debt Securities of any series, the Company shall, at least
45 days prior to the giving of the notice of redemption referred to in Section
1104 (unless a shorter notice shall be satisfactory to the Trustee), notify the
Trustee of such Redemption Date and of the principal amount of Debt Securities
of such series to be redeemed. In the case of any redemption of Debt Securities
prior to the expiration of any restriction on such redemption provided in the
terms of such Debt Securities or elsewhere in this Indenture, the Company shall
furnish the Trustee with an Officers' Certificate evidencing compliance with
such restriction.
SECTION 1103. SELECTION BY TRUSTEE OF DEBT SECURITIES TO BE REDEEMED. If
------------------------------------------------------
less than all the Debt Securities of any series issued on the same day with the
same terms are to be redeemed, the particular Debt Securities to be redeemed
shall be selected not more than 60 days prior to the Redemption Date by the
Trustee, from the Outstanding Debt Securities of such series issued on such date
with the same terms not previously called for redemption (excluding any such
Outstanding Debt Securities held by the Company or any of its Subsidiaries), by
such method as the Trustee shall deem fair and appropriate and which may provide
for the selection for redemption of portions (equal to the minimum authorized
denomination for Debt Securities of that series or any integral multiple
thereof) of the principal amount of Debt Securities of such series of a
denomination larger than the minimum authorized denomination for Debt Securities
of that series.
The Trustee shall promptly notify the Company and the Debt Security
Registrar (if other than itself) in writing of the Debt Securities selected for
redemption and, in the case of any Debt Securities selected for partial
redemption, the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise requires,
all provisions relating to the redemption of Debt Securities shall relate, in
the case of any Debt Security redeemed or to be redeemed only in part, to the
portion of the principal amount of such Debt Security which has been or is to be
redeemed.
SECTION 1104. NOTICE OF REDEMPTION. Notice of redemption shall be given
--------------------
in the manner provided in section 106, not less than 30 days nor more than 60
days prior to the Redemption Date, unless a shorter period is specified by the
terms of such series established pursuant to Section 301, to each Holder of Debt
Securities to be redeemed, but failure to give
66
<PAGE>
such notice in the manner herein provided to the Holder of any Debt Security
designated for redemption as a whole or in part, or any defect in the notice to
any such Holder, shall not affect the validity of the proceedings for the
redemption of any other such Debt Security or portion thereof.
Any notice that is mailed to the Holders of Registered Debt Securities in
the manner herein provided shall be conclusively presumed to have been duly
given, whether or not the Holder receives the notice.
All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price and the amount of accrued interest to the
Redemption Date payable as provided in Section 1106, if any, and Additional
Amounts, if any,
(3) if less than all Outstanding Debt Securities of any series are to
be redeemed, the identification (and, in the case of partial redemption,
the principal amount) of the particular Debt Security or Debt Securities to
be redeemed,
(4) in case any Debt Security is to be redeemed in part only, the
notice shall state that on and after the Redemption Date, upon surrender of
such Debt Security, the Holder will receive, without a charge, a new Debt
Security or Debt Securities of such series of authorized denominations for
the principal amount thereof remaining unredeemed,
(5) that on the Redemption Date the Redemption Price and accrued
interest to the Redemption Date and Additional Amounts, if any, payable as
provided in Section 1106, will become due and payable upon each such Debt
Security, or the portion thereof, to be redeemed and, if applicable, that
interest thereon shall cease to accrue on and after said date,
(6) the Place or Places of Payment where such Debt Securities,
together in the case of Bearer Debt Securities with all coupons
appertaining thereto, if any, maturing after the Redemption Date, are to be
surrendered for payment of the Redemption Price and accrued interest, if
any, and Additional Amounts, if any, or (if applicable) for conversion,
(7) that the redemption is for a sinking fund, if such is the case,
(8) that, unless otherwise specified in such notice, Bearer Debt
Securities of any series, if any, surrendered for redemption must be
accompanied by all coupons maturing subsequent to the date fixed for
redemption or the amount of any such missing coupon or coupons will be
deducted from the Redemption Price, unless security or indemnity
satisfactory to the Company, the Trustee for such series and any Paying
Agent
67
<PAGE>
is furnished,
(9) if Bearer Debt Securities of any series are to be redeemed and any
Registered Debt Securities of such series are not to be redeemed, and if
such Bearer Debt Securities may be exchanged for Registered Debt Securities
not subject to redemption on this Redemption Date pursuant to Section 305
or otherwise, the last date, as determined by the Company, on which such
exchanges may be made,
(10) the CUSIP number of such Debt Security, if any, and
(11) if applicable, that a Holder of Debt Securities who desires to
convert Debt Securities for redemption must satisfy the requirements for
conversion contained in such Debt Securities, the then existing conversion
price or rate, and the date and time when the option to convert shall
expire.
Notice of redemption of Debt Securities to be redeemed shall be given by
the Company or, at the Company's request, by the Trustee in the name and at the
expense of the Company.
SECTION 1105. DEPOSIT OF REDEMPTION PRICE. At or prior to 12:00 noon (New
---------------------------
York City time) on any Redemption Date, the Company shall deposit with the
Trustee or with a Paying Agent (or, if the Company is acting as its own Paying
Agent, which it may not do in the case of a sinking fund payment under Article
Twelve, segregate and hold in trust as provided in Section 1003) an amount of
money in the currency or currencies, currency unit or units or composite
currency or currencies in which the Debt Securities of such series are payable
(except as otherwise may be specified pursuant to Section 301 for the Debt
Securities of such series) sufficient to pay on the Redemption Date the
Redemption Price of, and (except if the Redemption Date shall be an Interest
Payment Date) accrued interest on, and Additional Amounts, if any, with respect
to, all the Debt Securities or portions thereof which are to be redeemed on that
date.
SECTION 1106. DEBT SECURITIES PAYABLE ON REDEMPTION DATE. Notice of
------------------------------------------
redemption having been given as aforesaid, the Debt Securities so to be redeemed
shall, on the Redemption Date, become due and payable at the Redemption Price
therein specified in the currency or currencies, currency unit or units or
composite currency or currencies in which the Debt Securities of such series are
payable (except as otherwise specified pursuant to Section 301 for the Debt
Securities of such series) (together with accrued interest, if any, and
Additional Amounts, if any, to the Redemption Date), and from and after such
date (unless the Company shall default in the payment of the Redemption Price or
accrued interest, if any, or Additional Amounts, if any) such Debt Securities
shall, if the same were interest-bearing, cease to bear interest and the coupons
for such interest appertaining to any Bearer Debt Securities so to be redeemed,
except to the extent provided below, shall be void. Upon surrender of any such
Debt Security for redemption in accordance with said notice, together with all
coupons, if any, appertaining thereto maturing after the Redemption Date, such
Debt Security shall be paid by the Company at the Redemption Price, together
with accrued interest, if any, and Additional Amounts, if any, to the Redemption
Date; provided, however, that installments of interest on
68
<PAGE>
Bearer Debt Securities whose Stated Maturity is on or prior to the Redemption
Date shall be payable only at an office or agency located outside the United
States (except as otherwise provided in Section 1002) and, unless otherwise
specified as contemplated by Section 301, only upon presentation and surrender
of coupons for such interest; and provided further that, except as otherwise
provided with respect to Debt Securities convertible into Common Shares or
Preferred Shares or other securities or property, installments of interest on
Registered Debt Securities whose Stated Maturity is on or prior to the
Redemption Date shall be payable to the Holders of such Debt Securities, or one
or more Predecessor Debt Securities, registered as such at the close of business
on the relevant Record Dates according to their terms and the provisions of
Section 307.
If any Bearer Debt Security surrendered for redemption shall not be
accompanied by all appurtenant coupons maturing after the Redemption Date, such
Debt Security may be paid after deducting from the Redemption Price an amount
equal to the face amount of all such missing coupons, or the surrender of such
missing coupon or coupons may be waived by the Company and the Trustee if there
be furnished to them such security or indemnity as they may require to save each
of them and any Paying Agent harmless. If thereafter the Holder of such Debt
Security shall surrender to the Trustee or any Paying Agent any such missing
coupon in respect of which a deduction shall have been made from the Redemption
Price, such Holder shall be entitled to receive the amount so deducted;
provided, however, that interest represented by coupons shall be payable only at
an office or agency located outside the United States (except as otherwise
provided in Section 1002) and, unless otherwise specified as contemplated by
Section 301, only upon presentation and surrender of those coupons.
If any Debt Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal (and premium, if any) shall,
until paid, bear interest from the Redemption Date at the rate borne by or
provided in the Debt Security.
SECTION 1107. DEBT SECURITIES REDEEMED IN PART. Any Registered Debt
--------------------------------
Security which is to be redeemed only in part (pursuant to the provisions of
this Article or of Article Twelve) shall be surrendered at a Place of Payment
therefor (with, if the Company or the Trustee so requires, due endorsement by,
or a written instrument of transfer in form satisfactory to the Company and the
Trustee duly executed by, the Holder thereof or his attorney duly authorized in
writing) and the Company shall execute and the Trustee shall authenticate and
deliver to the Holder of such Debt Security without service charge a new Debt
Security or Debt Securities of the same series, of any authorized denomination
as requested by such Holder in aggregate principal amount equal to and in
exchange for the unredeemed portion of the principal of the Debt Security so
surrendered.
SECTION 1108. CONVERSION ARRANGEMENT ON CALL FOR REDEMPTION. In
---------------------------------------------
connection with any redemption of Debt Securities, the Company may arrange for
the purchase and conversion of any Debt Securities called for redemption by an
agreement with one or more investment bankers or other purchasers to purchase
such Debt Securities (a copy of which shall be delivered to the Trustee by the
Company prior to the relevant Redemption Date) by paying to the Trustee or the
Paying Agent in trust for the Holders of Debt Securities, on or
69
<PAGE>
before 12:00 Noon (New York City time) on the Redemption Date, an amount not
less than the Redemption Price, together with interest, if any, accrued to the
Redemption Date of such Debt Securities and Additional Amounts, if any, in
immediately available funds. Notwithstanding anything to the contrary contained
in this Article Eleven, the obligation of the Company to pay the Redemption
Price of such Debt Securities, including all accrued interest, if any, and
Additional Amounts, if any, shall be deemed to be satisfied and discharged to
the extent such amount is so paid by such purchasers. If such an agreement is
entered into, any Debt Securities not duly surrendered for conversion by the
Holders thereof may, at the option of the Company, be deemed, to the fullest
extent permitted by law, acquired by such purchasers from such Holders and
surrendered by such purchasers for conversion, all as of immediately prior to
the close of business on the last day on which Debt Securities of such series
called for redemption may be converted in accordance with this Indenture and the
terms of such Debt Securities, subject to payment to the Trustee or Paying Agent
of the above-described amount. The Trustee or the Paying Agent shall hold and
pay to the Holders whose Debt Securities are selected for redemption any such
amount paid to it in the same manner as it would pay moneys deposited with it by
the Company for the redemption of Debt Securities. Without the Trustee's and the
Paying Agent's prior written consent, no arrangement between the Company and
such purchasers for the purchase and conversion of any Debt Securities shall
increase or otherwise affect any of the powers, duties, responsibilities or
obligations of the Trustee and the Paying Agent as set forth in this Indenture,
and the Company agrees to indemnify the Trustee and the Paying Agent from, and
hold them harmless against, any loss, liability or expense arising out of or in
connection with any such arrangement for the purpose and conversion of any Debt
Securities between the Company and such purchasers, including the costs and
expenses incurred by the Trustee and the Paying Agent (including the fees and
expenses of their agents and counsel) in the defense of any claim or liability
arising out of or in connection with the exercise or performance of any of their
powers, duties, responsibilities or obligations under this Indenture.
ARTICLE TWELVE
SINKING FUNDS
-------------
SECTION 1201. APPLICABILITY OF ARTICLE. The provisions of this Article
------------------------
shall be applicable to any sinking fund for the retirement of Debt Securities of
a series except as otherwise specified as contemplated by Section 301 for Debt
Securities of such series.
The minimum amount of any sinking fund payment provided for by the terms of
Debt Securities of any series is herein referred to as a "mandatory sinking fund
payment," and any payment in excess of such minimum amount provided for by the
terms of such Debt Securities of any series is herein referred to as an
"optional sinking fund payment". If provided for by the terms of any Debt
Securities of any series, the cash amount of any mandatory sinking fund payment
may be subject to reduction as provided in Section 1202. Each sinking fund
payment shall be applied to the redemption of Debt Securities of any series as
provided for by the terms of Debt Securities of such series.
SECTION 1202. SATISFACTION OF SINKING FUND PAYMENTS WITH DEBT
-----------------------------------------------
70
<PAGE>
SECURITIES. The Company may, in satisfaction of all or any part of any mandatory
- ----------
sinking fund payment with respect to the Debt Securities of a series, (1)
deliver Outstanding Debt Securities of such series (other than any previously
called for redemption) together in the case of any Bearer Debt Securities of
such series with all unmatured coupons appertaining thereto and (2) apply as a
credit Debt Securities of such series which have been redeemed either at the
election of the Company pursuant to the terms of such Debt Securities or through
the application of permitted optional sinking fund payments pursuant to the
terms of such Debt Securities, as provided for by the terms of such Debt
Securities, or which have otherwise been acquired by the Company; provided that
such Debt Securities so delivered or applied as a credit have not been
previously so credited. Such Debt Securities shall be received and credited for
such purpose by the Trustee at the applicable Redemption Price specified in such
Debt Securities for redemption through operation of the sinking fund and the
amount of such mandatory sinking fund payment shall be reduced accordingly.
SECTION 1203. REDEMPTION OF DEBT SECURITIES FOR SINKING FUND. Not less
----------------------------------------------
than 60 days prior to each sinking fund payment date for Debt Securities of any
series, the Company will deliver to the Trustee an Officers' Certificate
specifying the amount of the next ensuing mandatory sinking fund payment for
that series pursuant to the terms of that series, the portion thereof, if any,
which is to be satisfied by payment of cash in the currency or currencies,
currency unit or units or composite currency or currencies in which the Debt
Securities of such series are payable (except as otherwise specified pursuant to
Section 301 for the Debt Securities of such series) and the portion thereof, if
any, which is to be satisfied by delivering and crediting Debt Securities of
that series pursuant to Section 1202, and the optional amount, if any, to be
added in cash to the next ensuing mandatory sinking fund payment, and will also
deliver to the Trustee any Debt Securities to be so delivered and credited. If
such Officers' Certificate shall specify an optional amount to be added in cash
to the next ensuing mandatory sinking fund payment, the Company shall thereupon
be obligated to pay the amount therein specified. Not less than 30 days before
each such sinking fund payment date the Trustee shall select the Debt Securities
to be redeemed upon such sinking fund payment date in the manner specified in
Section 1103 and cause notice of the redemption thereof to be given in the name
of and at the expense of the Company in the manner provided in Section 1104.
Such notice having been duly given, the redemption of such Debt Securities shall
be made upon the terms and in the manner stated in Sections 1106 and 1107.
ARTICLE THIRTEEN
REPAYMENT AT THE OPTION OF HOLDERS
----------------------------------
SECTION 1301. APPLICABILITY OF ARTICLE. Debt Securities of any series
------------------------
which are repayable at the option of the Holders thereof before their Stated
Maturity shall be repaid in accordance with the terms of the Debt Securities of
such series. The repayment of any principal amount of Debt Securities pursuant
to such option of the Holder to require repayment of Debt Securities before
their Stated Maturity, for purposes of Section 309, shall not operate as a
payment, redemption or satisfaction of the indebtedness represented by such Debt
Securities unless and until the Company, at its option, shall deliver or
surrender the same to the Trustee
71
<PAGE>
with a directive that such Debt Securities be canceled. Notwithstanding anything
to the contrary contained in this Section 1301, in connection with any repayment
of Debt Securities, the Company may arrange for the purchase of any Debt
Securities by an agreement with one or more investment bankers or other
purchasers to purchase such Debt Securities by paying to the Holders of such
Debt Securities on or before the close of business on the Repayment Date an
amount not less than the Repayment Price payable by the Company on repayment of
such Debt Securities (together with interest, if any, and Additional Amounts, if
any, to the Redemption Date), and the obligation of the Company to pay the
Repayment Price of such Debt Securities (together with interest, if any, and
Additional Amounts, if any, to the Redemption Date), shall be satisfied and
discharged to the extent such payment is so paid by such purchasers.
ARTICLE FOURTEEN
DEFEASANCE AND COVENANT DEFEASANCE
----------------------------------
SECTION 1401. APPLICABILITY OF ARTICLE; COMPANY'S OPTION TO EFFECT
----------------------------------------------------
DEFEASANCE OR COVENANT DEFEASANCE. If, pursuant to Section 301, provision is
- ---------------------------------
made for either or both of (a) defeasance of the Debt Securities of or within a
series under Section 1402 or (b) covenant defeasance of the Debt Securities of
or within a series under Section 1403, then the provisions of such Section or
Sections, as the case may be, together with the other provisions of this Article
(with such modifications thereto as may be specified pursuant to Section 301
with respect to such Debt Securities), shall be applicable to such Debt
Securities and any coupons appertaining thereto, and the Company may at its
option by Board Resolution, at any time, with respect to such Debt Securities
and any coupons appertaining thereto, elect to have Section 1402 (if applicable)
or Section 1403 (if applicable) be applied to such Outstanding Debt Securities
and any coupons appertaining thereto upon compliance with the conditions set
forth below in this Article. Unless otherwise specified pursuant to Section
301, the Company's right, if any, to elect defeasance pursuant to Section 1402
or covenant defeasance pursuant to Section 1403 may only be exercised with
respect to all of the Outstanding Debt Securities of any series.
SECTION 1402. DEFEASANCE AND DISCHARGE. Upon the Company's exercise of
------------------------
the above option applicable to this Section with respect to any Debt Securities
of or within a series, the Company shall be deemed to have been discharged from
its obligations with respect to such Outstanding Debt Securities and any coupons
appertaining thereto on the date the conditions set forth in Section 1404 are
satisfied (hereinafter "defeasance"). For this purpose, such defeasance means
that the Company shall be deemed to have paid and discharged the entire
indebtedness represented by such Outstanding Debt Securities and any coupons
appertaining thereto, which shall thereafter be deemed to be "Outstanding" only
for the purposes of Section 1405 and the other Sections of this Indenture
referred to in clauses (A) through (D) below, and to have satisfied all of its
other obligations under such Debt Securities and any coupons appertaining
thereto and this Indenture insofar as such Debt Securities and any coupons
appertaining thereto are concerned (and the Trustee, at the expense of the
Company, shall execute proper instruments acknowledging the same), except for
the following which shall survive until otherwise terminated or discharged
hereunder: (A) the rights of Holders of such
72
<PAGE>
outstanding Debt Securities and any coupons appertaining thereto to receive,
solely from the trust fund described in Section 1404 and as more fully set forth
in such Section, payments in respect of the principal of (and premium, if any)
and interest, if any, on such Debt Securities and any coupons appertaining
thereto when such payments are due, (B) the Company's obligations with respect
to such Debt Securities under Sections 304, 305, 306, 1002 and 1003, with
respect to the payment of Additional Amounts, if any, on such Debt Securities as
contemplated by Section 1015, and with respect to any rights to convert or
exchange such Debt Securities into Common Shares, Preferred Shares or other
securities or property, (C) the rights, powers, trusts, duties and immunities of
the Trustee hereunder (including, without limitation, those in Section 606
hereof) and (D) this Article Fourteen. Subject to compliance with this Article
Fourteen, the Company may exercise its option under this Section notwithstanding
the prior exercise of its option under Section 1403 with respect to such Debt
Securities and any coupons appertaining thereto.
SECTION 1403. COVENANT DEFEASANCE. Upon the Company's exercise of the
-------------------
above option applicable to this Section with respect to any Debt Securities of
or within a series, the Company shall be released from its obligations under
Sections 1004 to 1012, inclusive, (except that the Company shall remain subject
to the covenant set forth in Section 1008 to preserve and keep in full force and
effect its corporate existence, except as permitted under Article Eight) and, if
specified pursuant to Section 301, its obligations under any other covenant,
with respect to such Outstanding Debt Securities and any coupons appertaining
thereto on and after the date the conditions set forth in Section 1404 are
satisfied (hereinafter, "covenant defeasance"), and such Debt Securities and any
coupons appertaining thereto shall thereafter be deemed to be not "Outstanding"
for the purposes of any direction, waiver, consent or declaration or Act of
Holders (and the consequences of any thereof) in connection with Sections 1004
to 1012, inclusive, or such other covenant, but shall continue to be deemed
"Outstanding" for all other purposes hereunder. For this purpose, such covenant
defeasance means that, with respect to such Outstanding Debt Securities and any
coupons appertaining thereto, the Company may omit to comply with and shall have
no liability in respect of any term, condition or limitation set forth in any
such Section or such other covenant, whether directly or indirectly, by reason
of any reference elsewhere herein to any such Section or such other covenant or
by reason of reference in any such Section or such other covenant to any other
provision herein or in any other document and such omission to comply shall not
constitute a default or an Event of Default under Section 501(4) or 501(8) or
otherwise, as the case may be, but, except as specified above, the remainder of
this Indenture and such Debt Securities and any coupons appertaining thereto
shall be unaffected thereby.
SECTION 1404. CONDITIONS TO DEFEASANCE OR COVENANT DEFEASANCE. The
-----------------------------------------------
following shall be the conditions to application of Section 1402 or Section 1403
to any Outstanding Debt Securities of or within a series and any coupons
appertaining thereto:
(a) The Company shall irrevocably have deposited or caused to be
deposited with the Trustee (or another trustee satisfying the requirements
of Section 607 who shall agree to comply with the provisions of this
Article Fourteen applicable to it) as trust funds in trust for the purpose
of making the following payments, specifically pledged as
73
<PAGE>
security for, and dedicated solely to, the benefit of the Holders of such
Debt Securities and any coupons appertaining thereto, (1) an amount in such
currency, currencies or currency unit in which such Debt Securities and any
coupons appertaining thereto are then specified as payable at Stated
Maturity or, if such defeasance or covenant defeasance is to be effected in
compliance with subsection (f) below, on the relevant Redemption Date, as
the case may be, or (2) Government Obligations applicable to such Debt
Securities and coupons appertaining thereto (determined on the basis of the
currency, currencies or currency unit in which such Debt Securities and
coupons appertaining thereto are then specified as payable at Stated
Maturity or the applicable Redemption Date, as the case may be) which
through the scheduled payment of principal and interest in respect thereof
in accordance with their terms will provide, not later than one day before
the due date of any payment of principal of (and premium, if any) and
interest, if any, on such Debt Securities and any coupons appertaining
thereto, money in an amount, or (3) a combination thereof, in any case, in
an amount sufficient, without consideration of any reinvestment of such
principal and interest, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee, to pay and discharge, and which shall be applied
by the Trustee (or other qualifying trustee) to pay and discharge, (i) the
principal of (and premium, if any) and interest, if any, on such
Outstanding Debt Securities and any coupons appertaining thereto on the
Stated Maturity of such principal or installment of principal or interest
or the applicable Redemption Date, as the case may be, and (ii) any
mandatory sinking fund payments or analogous payments applicable to such
Outstanding Debt Securities and any coupons appertaining thereto on the day
on which such payments are due and payable in accordance with the terms of
this Indenture and of such Debt Securities and any coupons appertaining
thereto.
(b) Such defeasance or covenant defeasance shall not result in a
breach or violation of, or constitute a default under, this Indenture or
any other material agreement or instrument to which the Company is a party
or by which it is bound.
(c) No Event of Default or event which with notice or lapse of time or
both would become an Event of Default with respect to such Debt Securities
and any coupons appertaining thereto shall have occurred and be continuing
on the date of such deposit or, insofar as Sections 501(6) and 501(7) are
concerned, at any time during the period ending on the 91st day after the
date of such deposit (it being understood that this condition shall not be
deemed satisfied until the expiration of such period).
(d) In the case of an election under Section 1402, the Company shall
have delivered to the Trustee an Opinion of Counsel stating that (i) the
Company has received from, or there has been published by, the Internal
Revenue Service a ruling, or (ii) since the date of this Indenture there
has been a change in the applicable Federal income tax law, in either case
to the effect that, and based thereon such opinion shall confirm that, the
Holders of such Outstanding Debt Securities and any coupons appertaining
thereto will not recognize income, gain or loss for Federal income tax
purposes as a result of such defeasance and will be subject to Federal
income tax on the same amounts, in the
74
<PAGE>
same manner and at the same times as would have been the case if such
defeasance had not occurred.
(e) In the case of an election under Section 1403, the Company shall
have delivered to the Trustee an Opinion of Counsel to the effect that the
Holders of such Outstanding Debt Securities and any coupons appertaining
thereto will not recognize income, gain or loss for Federal income tax
purposes as a result of such covenant defeasance and will be subject to
Federal income tax on the same amounts, in the same manner and at the same
times as would have been the case if such covenant defeasance had not
occurred.
(f) If the monies or Government Obligations or combination thereof, as
the case may be, deposited under subsection (a) above are sufficient to pay
the principal of, and premium, if any, and interest, if any, on such Debt
Securities provided such Debt Securities are redeemed on a particular
Redemption Date, the Company shall have given the Trustee irrevocable
instructions to redeem such Debt Securities on such date and to provide
notice of such redemption to Holders as provided in or pursuant to this
Indenture.
(g) The Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent to the defeasance under Section 1402 or the covenant defeasance
under Section 1403 (as the case may be) have been complied with and an
Opinion of Counsel to the effect that, as a result of a deposit pursuant to
subsection (a) above and the related exercise of the Company's option under
Section 1402 or Section 1403 (as the case may be), registration is not
required under the Investment Company Act of 1940, as amended, by the
Company, with respect to the trust funds representing such deposit or by
the Trustee for such trust funds.
(h) Notwithstanding any other provisions of this Section, such
defeasance or covenant defeasance shall be effected in compliance with any
additional or substitute terms, conditions or limitations which may be
imposed on the Company in connection therewith pursuant to Section 301.
SECTION 1405. DEPOSITED MONEY AND GOVERNMENT OBLIGATIONS TO BE HELD IN
--------------------------------------------------------
TRUST; OTHER MISCELLANEOUS PROVISIONS. Subject to the provisions of the last
- -------------------------------------
paragraph of Section 1003, all money and Government Obligations (or other
property as may be provided pursuant to Section 301) (including the proceeds
thereof) deposited with the Trustee (or other qualifying trustee, collectively
for purposes of this Section 1405, the "Trustee") pursuant to Section 1404 in
respect of any Outstanding Debt Securities of any series and any coupons
appertaining thereto shall be held in trust and applied by the Trustee, in
accordance with the provisions of such Debt Securities and any coupons
appertaining thereto and this Indenture, to the payment, either directly or
through any Paying Agent (other than the Company acting as its own Paying Agent)
as the Trustee may determine, to the Holders of such Debt Securities and any
coupons appertaining thereto of all sums due and to become due thereon in
respect of principal (and premium, if any) and interest, but such money need not
be segregated from other funds except to the extent required by law.
75
<PAGE>
Unless otherwise specified with respect to any Debt Security pursuant to
Section 301, if, after a deposit referred to in Section 1404(a) has been made,
(a) the Holder of a Debt Security in respect of which such deposit was made is
entitled to, and does, elect to receive payment in a currency or currency unit
other than that in which the deposit pursuant to Section 1404(a) has been made
in respect of such Debt Security, or (b) a Conversion Event occurs in respect of
the currency or currency unit in which the deposit pursuant to Section 1404(a)
has been made, the indebtedness represented by such Debt Security and any
coupons appertaining thereto shall be deemed to have been, and will be, fully
discharged and satisfied through the payment of the principal of (and premium,
if any), and interest, if any, on such Debt Security as it becomes due out of
the proceeds yielded by converting (from time to time as specified below in the
case of any such election) the amount or other property deposited in respect of
such Debt Security into the currency or currency unit in which such Debt
Security becomes payable as a result of such election or Conversion Event based
on the applicable market exchange rate on (x) in the case of payments made
pursuant to clause (a) above, the applicable market exchange rate for such
currency or currency unit in effect on the second Business Day prior to each
payment date, or (y) with respect to a Conversion Event, the applicable market
exchange rate for such currency or currency unit in effect (as nearly as
feasible) at the time of the Conversion Event.
The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the Government Obligations deposited
pursuant to Section 1404 or the principal and interest received in respect
thereof other than any such tax, fee or other charge which by law is for the
account of the Holders of such Outstanding Debt Securities and any coupons
appertaining thereto.
Anything in this Article to the contrary notwithstanding, subject to
Section 606, the Trustee shall deliver or pay to the Company from time to time
upon Company Request any money or Government Obligations (or other property and
any proceeds therefrom) held by it as provided in Section 1404 which, in the
opinion of a nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the Trustee, are in
excess of the amount thereof which would then be required to be deposited to
effect a defeasance or covenant defeasance, as applicable, in accordance with
this Article.
SECTION 1406. REINSTATEMENT. If the Trustee or Paying Agent is unable to
-------------
apply any cash or Government Obligations deposited pursuant to Section 1404 in
accordance with this Indenture or the Debt Securities of the applicable series
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, then the Company's obligations under this Indenture and the
Debt Securities of such series shall be revived and reinstated as though no
deposit had occurred pursuant to Section 1404 until such time as the Trustee or
Paying Agent is permitted to apply such money in accordance with this Indenture
and the Debt Securities of such series; provided, however, that if the Company
makes any payment of principal of, premium, if any, or interest on any Debt
Security of such series following the reinstatement of its obligations, the
Company shall be subrogated to the rights of the Holders of such Debt Securities
to receive such payment from the cash and Government Obligations held by the
Trustee or Paying Agent.
76
<PAGE>
ARTICLE FIFTEEN
---------------
MEETINGS OF HOLDERS OF SECURITIES
---------------------------------
SECTION 1501. PURPOSES FOR WHICH MEETINGS MAY BE CALLED. A meeting of
-----------------------------------------
Holders of Debt Securities of any series may be called at any time and from time
to time pursuant to this Article to make, give or take any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be made, given or taken by Holders of Debt Securities of such
series.
SECTION 1502. CALL, NOTICE AND PLACE OF MEETINGS. (a) The Trustee may at
----------------------------------
any time call a meeting of Holders of Debt Securities of any series for any
purpose specified in Section 1501, to be held at such time and at such place in
The City of New York or, if Debt Securities of such series have been issued in
whole or in part as Bearer Debt Securities, in London as the Trustee shall
determine. Notice of every meeting of Holders of Debt Securities of any series,
setting forth the time and the place of such meeting and in general terms the
action proposed to be taken at such meeting, shall be given, in the manner
provided in Section 106, not less than 21 nor more than 180 days prior to the
date fixed for the meeting.
(b) In case at any time the Company, pursuant to a Board Resolution, or the
Holders of at least 10% in principal amount of the Outstanding Debt Securities
of any series shall have requested the Trustee to call a meeting of the Holders
of Debt Securities of such series for any purpose specified in Section 1501, by
written request setting forth in reasonable detail the action proposed to be
taken at the meeting, and the Trustee shall not have made the first publication
of the notice of such meeting within 21 days after receipt of such request or
shall not thereafter proceed to cause the meeting to be held as provided herein,
then the Company or the Holders of Debt Securities of such series in the amount
above specified, as the case may be, may determine the time and the place in The
City of New York, or, if Debt Securities of such series have been issued in
whole or in part as Bearer Debt Securities, in London for such meeting and may
call such meeting for such purposes by giving notice thereof as provided in
subsection (a) of this Section.
SECTION 1503. PERSONS ENTITLED TO VOTE AT MEETINGS. To be entitled to
------------------------------------
vote at any meeting of Holders of Debt Securities of any series, a Person shall
be (1) a Holder of one or more Outstanding Debt Securities of such series, or
(2) a Person appointed by an instrument in writing as proxy for a Holder or
Holders of one or more Outstanding Debt Securities of such series by such Holder
or Holders. The only Persons who shall be entitled to be present or to speak at
any meeting of Holders of Debt Securities of any series shall be the Persons
entitled to vote at such meeting and their counsel, any representatives of the
Trustee and its counsel and any representatives of the Company and its counsel.
SECTION 1504. QUORUM; ACTION. The Persons entitled to vote a majority in
--------------
principal amount of the Outstanding Debt Securities of a series shall constitute
a quorum for a meeting of Holders of Debt Securities of such series; provided,
however, that if any action is to be taken at such meeting with respect to a
consent or waiver which this Indenture expressly
77
<PAGE>
provides may be given by the Holders of not less than a specified percentage in
principal amount of the Outstanding Debt Securities of a series, the Persons
entitled to vote such specified percentage which is less or more than a majority
in principal amount of the Outstanding Debt Securities of such series shall
constitute a quorum. In the absence of a quorum within 30 minutes after the time
appointed for any such meeting, the meeting shall, if convened at the request of
Holders of Debt Securities of such series, be dissolved. In any other case the
meeting may be adjourned for a period of not less than 10 days as determined by
the chairman of the meeting prior to the adjournment of such meeting. In the
absence of a quorum at any such adjourned meeting, such adjourned meeting may be
further adjourned for a period of not less than 10 days as determined by the
chairman of the meeting prior to the adjournment of such adjourned meeting.
Notice of the reconvening of any adjourned meeting shall be given as provided in
Section 1502(a), except that such notice need be given only once not less than
five days prior to the date on which the meeting is scheduled to be reconvened.
Notice of the reconvening of any adjourned meeting shall state expressly the
percentage, as provided above, of the principal amount of the Outstanding Debt
Securities of such series which shall constitute a quorum.
Except as limited by the proviso to Section 902, any resolution presented
to a meeting or adjourned meeting duly reconvened at which a quorum is present
as aforesaid may be adopted by the affirmative vote of the Holders of a majority
in principal amount of the Outstanding Debt Securities of that series; provided,
however, that, except as limited by the proviso to Section 902, any resolution
with respect to any request, demand, authorization, direction, notice, consent,
waiver or other action which this Indenture expressly provides may be made,
given or taken by the Holders of a specified percentage, which is less or more
than a majority, in principal amount of the Outstanding Debt Securities of a
series may be adopted at a meeting or an adjourned meeting duly reconvened and
at which a quorum is present as aforesaid by the affirmative vote of the Holders
of such specified percentage in principal amount of the Outstanding Debt
Securities of that series.
Any resolution passed or decision taken at any meeting of Holders of Debt
Securities of any series duly held in accordance with this Section shall be
binding on all the Holders of Debt Securities of such series and the related
coupons, whether or not present or represented at the meeting.
Notwithstanding the foregoing provisions of this Section 1504, if any
action is to be taken at a meeting of Holders of Debt Securities of any series
with respect to any request, demand, authorization, direction, notice, consent,
waiver or other action that this Indenture expressly provides may be made, given
or taken by the Holders of a specified percentage in principal amount of all
Outstanding Debt Securities affected thereby, or by the Holders of a specified
percentage in principal amount of the Outstanding Debt Securities of such series
and one or more additional series:
(i) there shall be no minimum quorum requirement for such meeting; and
(ii) the principal amount of the Outstanding Debt Securities of such
series that
78
<PAGE>
are entitled to vote in favor of such request, demand, authorization,
direction, notice, consent, waiver or other action shall be taken into
account in determining whether such request, demand, authorization,
direction, notice, consent, waiver or other action has been made, given or
taken under this Indenture.
SECTION 1505. DETERMINATION OF VOTING RIGHTS; CONDUCT AND ADJOURNMENT OF
----------------------------------------------------------
MEETINGS. (a) Notwithstanding any provisions of this Indenture, the Trustee may
- --------
make such reasonable regulations as it may deem advisable for any meeting of
Holders of Debt Securities of a series in regard to proof of the holding of Debt
Securities of such series and of the appointment of proxies and in regard to the
appointment and duties of inspectors of votes, the submission and examination of
proxies, certificates and other evidence of the right to vote, and such other
matters concerning the conduct of the meeting as it shall deem appropriate.
Except as otherwise permitted or required by any such regulations, the holding
of Debt Securities shall be proved in the manner specified in Section 104 and
the appointment of any proxy shall be proved in the manner specified in Section
104 or by having the signature of the Person executing the proxy witnessed or
guaranteed by any trust company, bank or banker authorized by Section 104 to
certify to the holding of Bearer Debt Securities. Such regulations may provide
that written instruments appointing proxies, regular on their face, may be
presumed valid and genuine without the proof specified in Section 104 or other
proof.
(b) The Trustee shall, by an instrument in writing appoint a temporary
chairman of the meeting, unless the meeting shall have been called by the
Company or by Holders of Debt Securities as provided in Section 1502(b), in
which case the Company or the Holders of Debt Securities of the series calling
the meeting, as the case may be, shall in like manner appoint a temporary
chairman. A permanent chairman and a permanent secretary of the meeting shall
be elected by vote of the Persons entitled to vote a majority in principal
amount of the Outstanding Debt Securities of such series represented at the
meeting.
(c) At any meeting each Holder of a Debt Security of such series or proxy
shall be entitled to one vote for each $1,000 principal amount of the
Outstanding Debt Securities of such series held or represented by him; provided,
however, that no vote shall be cast or counted at any meeting in respect of any
Debt Security challenged as not Outstanding and ruled by the chairman of the
meeting to be not Outstanding. The chairman of the meeting shall have no right
to vote, except as a Holder of a Debt Security of such series or proxy.
(d) Any meeting of Holders of Debt Securities of any series duly called
pursuant to Section 1502 at which a quorum is present may be adjourned from time
to time by Persons entitled to vote a majority in principal amount of the
Outstanding Debt Securities of such series represented at the meeting, and the
meeting may be held as so adjourned without further notice.
SECTION 1506. COUNTING VOTES AND RECORDING ACTION OF MEETINGS. The vote
-----------------------------------------------
upon any resolution submitted to any meeting of Holders of Debt Securities of
any series shall be by written ballots on which shall be subscribed the
signatures of the Holders of Debt Securities of such series or of their
representatives by proxy and the principal amounts and serial numbers of the
Outstanding Debt Securities of such series held or represented by them.
79
<PAGE>
The permanent chairman of the meeting shall appoint two inspectors of votes who
shall count all votes cast at the meeting for or against any resolution and who
shall make and file with the secretary of the meeting their verified written
reports in duplicate of all votes cast at the meeting. A record, at least in
duplicate, of the proceedings of each meeting of Holders of Debt Securities of
any series shall be prepared by the secretary of the meeting and there shall be
attached to said record the original reports of the inspectors of votes on any
vote by ballot taken thereat and affidavits by one or more persons having
knowledge of the fact, setting forth a copy of the notice of the meeting and
showing that said notice was given as provided in Section 1502 and, if
applicable, Section 1504. Each copy shall be signed and verified by the
affidavits of the permanent chairman and secretary of the meeting and one such
copy shall be delivered to the Company and another to the Trustee to be
preserved by the Trustee, the latter to have attached thereto the ballots voted
at the meeting. Any record so signed and verified shall be conclusive evidence
of the matters therein stated.
* * * *
This Indenture may be executed in any number of counterparts, each of which
so executed shall be deemed to be an original, but all such counterparts shall
together constitute but one and the same Indenture.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
BRE PROPERTIES, INC.
By:
Attest:
__________________________, as Trustee
By:
Print Name:
Title:
80
<PAGE>
Attest:
By:
Print Name:
Title:
81
<PAGE>
EXHIBIT A
---------
FORMS OF CERTIFICATION
1
<PAGE>
EXHIBIT A-1
-----------
FORM OF CERTIFICATE TO BE GIVEN BY PERSON ENTITLED
TO RECEIVE BEARER SECURITY OR TO OBTAIN INTEREST
PAYABLE PRIOR TO THE EXCHANGE DATE
CERTIFICATE
-----------
[insert title or sufficient description of Debt Securities to be delivered]
This is to certify that, as of the date hereof, and except as set forth
below, the above-captioned Debt Securities held by you for our account (i) are
owned by person(s) that are not citizens or residents of the United States,
domestic partnerships, domestic corporations or any estate or trust the income
of which is subject to United States federal income taxation regardless of its
source ("United States person(s)"), (ii) are owned by United States person(s)
that are (a) foreign branches of United States financial institutions (financial
institutions, as defined in United States Treasury Regulations Section 2.165-
12(c)(1)(v) are herein referred to as "financial institutions") purchasing for
their own account or for resale, or (b) United States person(s) who acquired the
Debt Securities through foreign branches of United States financial institutions
and who hold the Debt Securities through such United States financial
institutions on the date hereof (and in either case (a) or (b), each such United
States financial institution hereby agrees, on its own behalf or through its
agent, that you may advise BRE PROPERTIES, INC. or its agent that such financial
institution will comply with the requirements of Section 165(j)(3)(A), (B) or
(C) of the United States Internal Revenue Code of 1986, as amended, and the
regulations thereunder), or (iii) are owned by United States or foreign
financial institutions) for purposes of resale during the restricted period (as
defined in United States Treasury Regulations Section 1.163-5(c)(2)(i)(D)(7)),
and, in addition, if the owner is a United States or foreign financial
institution described in clause (iii) above (whether or not also described in
clause (i) or (ii)), this is to further certify that such financial institution
has not acquired the Debt Securities for purposes of resale directly or
indirectly to a United States person or to a person within the United States or
its possessions.
As used herein, "United States" means the United States of America
(including the States and the District of Columbia); and its "possessions"
include Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, Wake Island
and the Northern Mariana Islands.
We undertake to advise you promptly by tested telex on or prior to the date
on which you intend to submit your certification relating to the above-captioned
Debt Securities held by you for our account in accordance with your operating
procedures if any applicable statement herein is not correct on such date, and
in the absence of any such notification it may be assumed that this
certification applies as of such date.
This certificate excepts and does not relate to [U.S.$] ____________ of
such interest in the above-captioned securities in respect of which we are not
able to certify and as to which we understand an exchange for an interest in a
Permanent Global Debt Security or an exchange for
1
<PAGE>
and delivery of definitive Debt Securities (or, if relevant, collection of any
interest) cannot be made until we do so certify.
We understand that this certificate may be required in connection with
certain tax legislation in the United States. If administrative or legal
proceedings are commenced or threatened in connection with which this
certificate is or would be relevant, we irrevocably authorize you to produce
this certificate or a copy thereof to any interested party in such proceedings.
Dated:_______________, 19__
[To be dated no earlier than the 15th day prior
to (i) the Exchange Date or (ii) the relevant
Interest Payment Date occurring prior to the
Exchange Date, as applicable]
[Name of Person Making Certification]
(Authorized Signatory)
Name:
Title:
2
<PAGE>
EXHIBIT A-2
-----------
FORM OF CERTIFICATE TO BE GIVEN BY EUROCLEAR
AND CEDEL S.A. IN CONNECTION WITH THE EXCHANGE OF
A PORTION OF A TEMPORARY GLOBAL SECURITY OR TO
OBTAIN INTEREST PAYABLE PRIOR TO THE EXCHANGE DATE
CERTIFICATE
-----------
[Insert title or sufficient description of Debt Securities to be delivered]
This is to certify that, based solely on written certifications that we
have received in writing, by tested telex or by electronic transmission from
each of the persons appearing in our records as persons entitled to a portion of
the principal amount set forth below (our "Member Organizations") substantially
in the form attached hereto, as of the date hereof, [U.S.$] ___________________
principal amount of the above-captioned Debt Securities (i) is owned by
person(s) that are not citizens or residents of the United States, domestic
partnerships, domestic corporations or any estate or trust the income of which
is subject to United States Federal income taxation regardless of its source
("United States person(s)"), (ii) is owned by United States person(s) that are
(a) foreign branches of United States financial institutions (financial
institutions, as defined in U.S. Treasury Regulations Section 1.165-12(c)(1)(v)
are herein referred to as "financial institutions") purchasing for their own
account or for resale, or (b) United States person(s) who acquired the Debt
Securities through foreign branches of United States financial institutions and
who hold the Debt Securities through such United States financial institutions
on the date hereof (and in either case (a) or (b), each such financial
institution has agreed, on its own behalf or through its agent, that we may
advise BRE PROPERTIES, INC. or its agent that such financial institution will
comply with the requirements of Section 165(j)(3)(A), (B) or (C) of the Internal
Revenue Code of 1986, as amended, and the regulations thereunder), or (iii) is
owned by United States or foreign financial institutions) for purposes of resale
during the restricted period (as defined in United States Treasury Regulations
Section 1.163-5(c)(2)(i)(D)(7)), and, to the further effect, that financial
institutions described in clause (iii) above (whether or not also described in
clause (i) or (ii)) have certified that they have not acquired the Debt
Securities for purposes of resale directly or indirectly to a United States
person or to a person within the United States or its possessions.
As used herein, "United States" means the United States of America
(including the States and the District of Columbia) ; and its possessions
include Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, Wake Island
and the Northern Mariana Islands.
We further certify that (i) we are not making available herewith for
exchange (or, if relevant, collection of any interest) any portion of the
temporary global Debt Security representing the above-captioned Debt Securities
excepted in the above-referenced certificates of Member Organizations and (ii)
as of the date hereof we have not received any notification from any of our
Member Organizations to the effect that the statements made by such Member
1
<PAGE>
Organizations with respect to any portion of the part submitted herewith for
exchange (or, if relevant, collection of any interest) are no longer true and
cannot be relied upon as of the date hereof.
We understand that this certification is required in connection with
certain tax legislation in the United States. If administrative or legal
proceedings are commenced or threatened in connection with which this
certificate is or would be relevant, we irrevocably authorize you to produce
this certificate or a copy thereof to any interested party in such proceedings.
Dated: _______________, 19__
[To be dated no earlier than the Exchange Date
or the relevant Interest Payment Date occurring
prior to the Exchange Date, as applicable]
(Morgan Guaranty Trust Company of New York, Brussels
Office,] as Operator of the Euroclear System (Cedel
S.A.]
By:
2
<PAGE>
Exhibit 4.8
________________________________________________________
BRE PROPERTIES, INC.
TO
[__________________________]
Trustee
____________________
Indenture
Dated as of __________________
____________________
Subordinated Debt Securities
________________________________________________________
<PAGE>
TABLE OF CONTENTS
Page
----
RECITALS.......................................................1
ARTICLE ONE - DEFINITIONS AND OTHER PROVISIONS OF GENERAL
APPLICATION....................................................1
SECTION 101. Definitions.......................................1
<TABLE>
<CAPTION>
<S> <C>
Acquired Debt.............................................2
Act.......................................................2
Additional Amounts........................................2
Affiliate.................................................2
Authenticating Agent......................................2
Authorized Newspaper......................................3
Bankruptcy Law............................................3
Bearer Security...........................................3
Board of Directors........................................3
Board Resolution..........................................3
Business Day..............................................3
CEDEL.....................................................3
Commission................................................3
Common Depository.........................................3
Common Shares.............................................3
Company...................................................3
Company Request and Company Order.........................4
Consolidated Income Available for Debt Service............4
Consolidated Net Income...................................4
Conversion Event..........................................4
Corporate Trust Office....................................4
Corporation...............................................4
Coupon....................................................4
Custodian.................................................5
Debt......................................................5
Debt Security.............................................5
Defaulted Interest........................................5
Dollar or $...............................................5
DTC.......................................................5
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
ECU.......................................................5
Euroclear.................................................6
European Communities......................................6
European Monetary System..................................6
Event of Default..........................................6
Exchange Date.............................................6
Executive Group...........................................6
Foreign Currency..........................................6
GAAP......................................................6
Government Obligations....................................6
Holder....................................................7
Indenture.................................................7
Indexed Debt Security.....................................7
Interest..................................................7
Interest Payment Date.....................................7
Lien......................................................7
Maturity..................................................7
Officers' Certificate.....................................7
Opinion of Counsel........................................7
Original Issue Discount Security..........................7
Outstanding...............................................8
Paying Agent..............................................9
Person....................................................9
Place of Payment..........................................9
Predecessor Debt Security.................................9
Preferred Shares..........................................9
Redemption Date...........................................9
Redemption Price..........................................9
Registered Security......................................10
Regular Record Date......................................10
Repayment Date...........................................10
Repayment Price..........................................10
Responsible Officer......................................10
Securities Exchange Act of 1934..........................10
Security Register and Security Registrar.................10
Senior Indebtedness......................................10
Significant Subsidiary...................................11
Special Record Date......................................11
Stated Maturity..........................................11
Subsidiary...............................................11
Total Assets.............................................11
Total Unencumbered Assets................................11
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Trust Indenture Act or TIA...............................11
Trustee..................................................12
Undepreciated Real Estate Assets.........................12
United States............................................12
Untied States of America.................................12
United States Person.....................................12
Unsecured Debt...........................................12
</TABLE>
SECTION 102. Compliance Certificates and Opinions.............12
SECTION 103. Form of Documents Delivered to Trustee...........13
SECTION 104. Acts of Holders..................................13
SECTION 105. Notices, etc., to Trustee and Company............15
SECTION 106. Notice to Holders; Waiver........................16
SECTION 107. Effect of Headings and Table of Contents.........17
SECTION 108. Successors and Assigns...........................17
SECTION 109. Separability Clause..............................17
SECTION 110. Benefits of Indenture............................17
SECTION 111. Governing Law....................................17
SECTION 112. Legal Holidays...................................17
ARTICLE TWO - SECURITIES FORMS................................18
SECTION 201. Forms of Debt Securities.........................18
SECTION 202. Form of Trustee's Certificate of Authentication..18
SECTION 203. Debt Securities Issuable in Global Form..........18
ARTICLE THREE - THE SECURITIES................................19
iii
<PAGE>
SECTION 301. Amount Unlimited; Issuable in Series.............19
SECTION 302. Denominations....................................24
SECTION 303. Execution, Authentication, Delivery and Dating...24
SECTION 304. Temporary Debt Securities........................26
SECTION 305. Registration, Registration of Transfer and
Exchange.........................................28
SECTION 306. Mutilated, Destroyed, Lost and Stolen Debt
Securities.......................................32
SECTION 307. Payment of Interest; Interest Rights Preserved...33
SECTION 308. Persons Deemed Owners............................35
SECTION 309. Cancellation.....................................36
SECTION 310. Computation of Interest..........................36
ARTICLE FOUR - SATISFACTION AND DISCHARGE.....................36
SECTION 401. Satisfaction and Discharge of Indenture..........36
SECTION 402. Application of Trust Funds.......................38
ARTICLE FIVE - REMEDIES.......................................38
SECTION 501. Events of Default................................38
SECTION 502. Acceleration of Maturity; Rescission and
Annulment........................................40
SECTION 503. Collection of Indebtedness and Suits for
Enforcement by Trustee...........................41
SECTION 504. Trustee May File Proofs of Claim.................42
SECTION 505. Trustee May Enforce Claims Without Possession of
Debt Securities or Coupons.......................43
SECTION 506. Application of Money Collected...................43
iv
<PAGE>
SECTION 507. Limitation on Suits..............................44
SECTION 508. Unconditional Right of Holders to Receive
Principal, Premium, if any, and Interest and
Additional Amounts...............................44
SECTION 509. Restoration of Rights and Remedies...............45
SECTION 510. Rights and Remedies Cumulative...................45
SECTION 511. Delay or Omission Not Waiver.....................45
SECTION 512. Control by Holders of Debt Securities............45
SECTION 513. Waiver of Past Defaults..........................46
SECTION 514. Waiver of Usury, Stay or Extension Laws..........46
SECTION 515. Undertaking for Costs............................46
ARTICLE SIX - THE TRUSTEE.....................................47
SECTION 601. Notice of Defaults...............................47
SECTION 602. Certain Rights of Trustee........................47
SECTION 603. Not Responsible for Recitals or Issuance of Debt
Securities.......................................48
SECTION 604. May Hold Debt Securities.........................49
SECTION 605. Money Held in Trust..............................49
SECTION 606. Compensation and Reimbursement...................49
SECTION 607. Corporate Trustee Required; Eligibility;
Conflicting Interests............................50
SECTION 608. Resignation and Removal; Appointment of
Successor........................................50
SECTION 609. Acceptance of Appointment by Successor...........52
SECTION 610. Merger, Conversion, Consolidation or Succession
to Business......................................53
v
<PAGE>
SECTION 611. Appointment of Authenticating Agent..............53
ARTICLE SEVEN - HOLDERS' LISTS AND REPORTS BY TRUSTEE
AND COMPANY...................................................55
SECTION 701. Disclosure of Names and Addresses of Holders.....55
SECTION 702. Reports by Trustee...............................55
SECTION 703. Reports by Company...............................55
SECTION 704. Company to Furnish Trustee Names and Addresses
of Holders.......................................56
ARTICLE EIGHT - CONSOLIDATION, MERGER, SALE,
LEASE OR CONVEYANCE...........................................56
SECTION 801. Consolidations and Mergers of Company and
Sales, Leases and Conveyances Permitted Subject
to Certain Conditions............................56
SECTION 802. Rights and Duties of Successor Corporation.......57
SECTION 803. Officers' Certificate and Opinion of Counsel.....57
ARTICLE NINE - SUPPLEMENTAL INDENTURES........................58
SECTION 901. Supplemental Indentures Without Consent of
Holders..........................................58
SECTION 902. Supplemental Indentures with Consent of Holders..59
SECTION 903. Execution of Supplemental Indentures.............61
SECTION 904. Effect of Supplemental Indentures................61
SECTION 905. Conformity with Trust Indenture Act..............61
SECTION 906. Reference in Debt Securities to Supplemental
Indentures.......................................61
ARTICLE TEN - COVENANTS.......................................61
vi
<PAGE>
SECTION 1001.Payment of Principal, Premium, if any, Interest
and Additional Amounts...........................61
SECTION 1002.Maintenance of Office or Agency..................62
SECTION 1003.Money for Debt Securities Payments to Be Held in
Trust............................................63
SECTION 1004.Aggregate Debt Test..............................65
SECTION 1005.Debt Service Test................................65
SECTION 1006.Secured Debt Test................................66
SECTION 1007.Maintenance of Total Unencumbered Assets.........66
SECTION 1008.Existence........................................66
SECTION 1009.Maintenance of Properties........................67
SECTION 1010.Insurance........................................67
SECTION 1011.Payment of Taxes and Other Claims................67
SECTION 1012.Provision of Financial Information...............67
SECTION 1013.Waiver of Certain Covenants......................68
SECTION 1014.Statement as to Compliance.......................68
SECTION 1015.Additional Amounts...............................68
ARTICLE ELEVEN - REDEMPTION OF SECURITIES.....................69
SECTION 1101.Applicability of Article.........................69
SECTION 1102.Election to Redeem; Notice to Trustee............69
SECTION 1103.Selection by Trustee of Debt Securities to Be
Redeemed.........................................70
SECTION 1104.Notice of Redemption.............................70
vii
<PAGE>
SECTION 1105.Deposit of Redemption Price......................71
SECTION 1106.Debt Securities Payable on Redemption Date.......72
SECTION 1107.Debt Securities Redeemed in Part.................73
SECTION 1108.Conversion Arrangement on Call for Redemption....73
ARTICLE TWELVE - SINKING FUNDS................................74
SECTION 1201.Applicability of Article.........................74
SECTION 1202.Satisfaction of Sinking Fund Payments with Debt
Securities.......................................74
SECTION 1203.Redemption of Debt Securities for Sinking Fund...74
ARTICLE THIRTEEN - REPAYMENT AT THE OPTION OF HOLDERS.........75
SECTION 1301.Applicability of Article.........................75
ARTICLE FOURTEEN - DEFEASANCE AND COVENANT DEFEASANCE.........76
SECTION 1401.Applicability of Article; Company's Option to
Effect Defeasance or Covenant Defeasance.........76
SECTION 1402.Defeasance and Discharge.........................76
SECTION 1403.Covenant Defeasance..............................77
SECTION 1404.Conditions to Defeasance or Covenant Defeasance..77
SECTION 1405.Deposited Money and Government Obligations
To Be Held in Trust; Other Miscellaneous
Provisions.......................................79
SECTION 1406.Reinstatement....................................80
ARTICLE FIFTEEN - MEETINGS OF HOLDERS OF SECURITIES...........81
viii
<PAGE>
SECTION 1501.Purposes For Which Meetings May Be Called........81
SECTION 1502.Call, Notice and Place of Meetings...............81
SECTION 1503.Persons Entitled to Vote at Meetings.............81
SECTION 1504.Quorum: Action...................................81
SECTION 1505.Determination of Voting Rights; Conduct and
Adjournment of Meetings.........................83
SECTION 1506.Counting Votes and Recording Action of Meetings..84
ARTICLE SIXTEEN - SUBORDINATION OF SECURITIES.................84
SECTION 1601.Debt Securities Subordinated to Senior
Indebtedness.....................................84
SECTION 1602.Subrogation......................................86
SECTION 1603.Obligations of the Company Unconditional.........86
SECTION 1604.Payments on Debt Securities Permitted............86
SECTION 1605.Effectuation of Subordination by Trustee.........87
SECTION 1606.Knowledge of Trustee.............................87
SECTION 1607.Trustee May Hold Senior Indebtedness.............87
SECTION 1608.Rights of Holders of Senior Indebtedness not
Impaired.........................................87
TESTIMONIUM
SIGNATURES AND SEALS
EXHIBIT A-1 - FORMS OF CERTIFICATION
EXHIBIT A-2 - FORMS OF CERTIFICATION
ix
<PAGE>
BRE PROPERTIES, INC.
Reconciliation and tie between Trust Indenture Act of 1939 (the "1939
Act") and Indenture, dated as of _________________.
1939 ACT SECTION
Section 310(a)(1) 607
(a)(2).......................................................607
(b)................................................604, 607, 608
Section 312(b)...............................................701
(c)..........................................................701
Section 313..................................101 ("Outstanding")
(a)..........................................................702
(c)................................................601, 702, 703
Section 314(a).........................................703, 1012
(a)(4).......................................................102
(c)(1).......................................................102
(c)(2).......................................................102
(e)..........................................................102
Section 315(a)-(d)......................................303, 602
(e)..........................................................515
Section 316(a) (last sentence)...............101 ("Outstanding")
(c)..........................................................104
Section 317(a)(1)............................................503
(a)(2).......................................................504
Section 318(a)...............................................111
(c)..........................................................111
___________________________
NOTE: This reconciliation and tie shall not, for any purpose, be deemed
to be a part of the Indenture.
Attention should also be directed to Section 318(c) of the 1939 Act, which
provides that the provisions of Sections 310 to and including 317 of the 1939
Act are a part of and govern every qualified indenture, whether or not
physically contained therein.
<PAGE>
INDENTURE, dated as of _________________, between BRE PROPERTIES,
INC., a Maryland corporation (hereinafter called the "COMPANY"), having its
principal office at One Montgomery Street, Telesis Tower, Suite 2500, San
Francisco, California 94104-5525, and [___________________], a corporation duly
organized and existing under the laws of the State of ______________, as Trustee
hereunder (hereinafter called the "TRUSTEE"), having its Corporate Trust Office
at [______________________ ______________________].
RECITALS OF THE COMPANY
The Company deems it necessary to issue from time to time for its
lawful purposes subordinated debt securities (hereinafter called the "Debt
Securities") evidencing its unsecured and subordinated indebtedness, and has
duly authorized the execution and delivery of this Indenture to provide for the
issuance from time to time of the Debt Securities, unlimited as to principal
amount, to bear interest at the rates or formulas, to mature at such times and
to have such other provisions as shall be fixed as hereinafter provided.
This Indenture is subject to the provisions of the Trust Indenture Act
of 1939, as amended, that are deemed to be incorporated into this Indenture and
shall, to the extent applicable, be governed by such provisions.
All things necessary to make this Indenture a valid agreement of the
Company, in accordance with its terms, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the Debt
Securities by the Holders thereof, it is mutually covenanted and agreed, for the
equal and proportionate benefit of all Holders of the Debt Securities, as
follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 101. DEFINITIONS. For all purposes of this Indenture, except
as otherwise expressly provided or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned to
them in this Article, and include the plural as well as the singular;
(2) all other terms used herein which are defined in the TIA, either
directly or by reference therein, have the meanings assigned to them therein,
and the terms "cash transaction" and
1
<PAGE>
"self-liquidating paper," as used in TIA Section 311, shall have the meanings
assigned to them in the rules of the Commission adopted under the TIA;
(3) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with GAAP; and
(4) the words "herein," "hereof" and "hereunder" and other words
of similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision.
Certain terms used principally in Article Three, Article Five, Article
Six and Article Ten are defined in those Articles.
"Acquired Debt" means Debt of a Person (i) existing at the time such
Person is merged or consolidated with or into, or becomes a Subsidiary of, the
Company or (ii) assumed by the Company or any of its Subsidiaries in connection
with the acquisition of assets from such Person. Acquired Debt shall be deemed
to be incurred on the date the acquired Person is merged or consolidated with or
into, or becomes a Subsidiary of, the Company or the date of the related
acquisition, as the case may be.
"Act" when used with respect to any Holder, has the meaning specified
in Section 104.
"Additional Amounts" means any additional amounts which are required
by a Debt Security or by or pursuant to a Board Resolution, under circumstances
specified therein, to be paid by the Company in respect of certain taxes imposed
on certain Holders and which are owing to such Holders.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Annual Debt Service Charge" means, for any period, the interest
expense of the Company and its Subsidiaries for such period (including, without
duplication, (i) all amortization of debt discount, (ii) all accrued interest,
(iii) all capitalized interest and (iv) the interest component of capitalized
lease obligations), determined on a consolidated basis in accordance with
generally accepted accounting principles.
"Authenticating Agent" means any authenticating agent appointed by the
Trustee
2
<PAGE>
pursuant to Section 611.
"Authorized Newspaper" means a newspaper, printed in the English
language or in an official language of the country of publication, customarily
published on each Business Day, whether or not published on Saturdays, Sundays
or holidays, and of general circulation in each place in connection with which
the term is used or in the financial community of each such place. Whenever
successive publications are required to be made in Authorized Newspapers, the
successive publications may be made in the same or in different Authorized
Newspapers in the same city meeting the foregoing requirements and in each case
on any Business Day.
"Bankruptcy Law" has the meaning specified in Section 501.
"Bearer Debt Security" means any Debt Security established pursuant to
Section 201 which is payable to bearer.
"Board of Directors" means the board of directors of the Company or
any committee of that board duly authorized to act generally or in any
particular respect for the Company hereunder.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted by
the Board of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"Business Day" when used with respect to any Place of Payment or any
other particular location referred to in this Indenture or in the Debt
Securities, means, unless otherwise specified with respect to any securities
pursuant to Section 301, any day, other than a Saturday or Sunday, that is
neither a legal holiday nor a day on which banking institutions in that Place of
Payment or particular location are authorized or required by law, regulation or
executive order to close.
"CEDEL" means Centrale de Livraison de Valeurs Mobilieres, S.A., or
its successor.
"Commission" means the Securities and Exchange Commission, as from
time to time constituted, created under the Securities Exchange Act of 1934, as
amended, or, if at any time after execution of this instrument such Commission
is not existing and performing the duties now assigned to it under the Trust
Indenture Act, then the body performing such duties on such date.
"Common Depository" has the meaning set forth in Section 304.
"Common Shares" means, with respect to any Person, capital stock
issued by such Person other than Preferred Shares.
"Company" means the Person named as the "Company" in the first
paragraph of this
3
<PAGE>
Indenture until a successor corporation shall have become such pursuant
to the applicable provisions of this Indenture, and thereafter "Company"
shall mean such successor corporation.
"Company Request" and "Company Order" mean, respectively, a written
request or order signed in the name of the Company by the Chairman, any Vice
Chairman, the President or a Vice President, and by the Treasurer, an Assistant
Treasurer, the Secretary or an Assistant Secretary, of the Company, and
delivered to the Trustee.
"Consolidated Income Available For Debt Service" for any period means
Consolidated Net Income of the Company and its Subsidiaries for such period,
plus amounts which have been deducted and minus amounts which have been added
for (without duplication) (i) interest expense on Debt, (ii) provision for taxes
based on income, (iii) amortization of debt discount and deferred financing
costs, (iv) provisions for gains and losses on sales or other dispositions of
properties and other investments, (v) property depreciation and amortization,
(vi) the effect of any non-cash items resulting from a change in accounting
principles in determining Consolidated Net Income, and (vii) amortization of
deferred charges, all determined on a consolidated basis in accordance with
generally accepted accounting principles.
"Consolidated Net Income" for any period means the amount of net
income (or loss) of the Company and its Subsidiaries for such period, excluding
(without duplication) (i) extraordinary items and (ii) the portion of net income
(but not losses) of the Company and its Subsidiaries allocable to minority
interests in unconsolidated Persons to the extent that cash dividends or
distributions have not actually been received by the Company or one of its
Subsidiaries, all determined on a consolidated basis in accordance with
generally accepted accounting principles.
"Conversion Event" means the cessation of use of (i) a Foreign
Currency both by the government of the country which issued such currency and
for the settlement of transactions by a central bank or other public
institutions of or within the international banking community (ii) the ECU both
within the European Monetary System and for the settlement of transactions by
public institutions of or within the European Communities or (iii) any currency
unit (or composite currency) other than the ECU for the purposes for which it
was established.
"Corporate Trust Office" means the office of the Trustee at which, at
any particular time, its corporate trust business shall be principally
administered, which office at the date hereof is located at
_______________________________________________.
"Corporation" or "corporation" includes corporations, associations,
companies and business trusts; provided, however, that for purposes of the
definition of the term "Company" in this Section 101 and for purposes of Article
Eight, the term "corporation" shall not include associations, companies or
business trusts.
"Coupon" or "coupon" means any interest coupon appertaining to a
Bearer security.
4
<PAGE>
"Custodian" has the meaning specified in section 501.
"Debt" means, with respect to any Person, any indebtedness of such
Person, whether or not contingent, in respect of (i) borrowed money or evidenced
by bonds, notes, debentures or similar instruments, (ii) indebtedness secured by
any Lien on any property or asset owned by such Person, but only to the extent
of the lesser of (x) the amount of indebtedness so secured and (y) the fair
market value (determined in good faith by the board of directors of such Person
or, in the case of the Company or a Subsidiary, by the Company's Board of
Directors) of the property subject to such Lien, (iii) reimbursement
obligations, contingent or otherwise, in connection with any letters of credit
actually issued or amounts representing the balance deferred and unpaid of the
purchase price of any property except any such balance that constitutes an
accrued expense or trade payable or (iv) any lease of property by such Person as
lessee which is required to be reflected on such Person's balance sheet as a
capitalized lease in accordance with GAAP, and also includes, to the extent not
otherwise included, any obligation of such Person to be liable for, or to pay,
as obligor, guarantor or otherwise (other than for purposes of collection in the
ordinary course of business), Debt of the types referred to above of another
Person (it being understood that Debt shall be deemed to be incurred by such
Person whenever such Person shall create, assume, guarantee or otherwise become
liable in respect thereof).
"Debt Security" has the meaning stated in the first recital of this
Indenture and, more particularly, means any Debt Security or Debt Securities
authenticated and delivered under this Indenture; provided, however, that, if at
any time there is more than one Person acting as Trustee under this Indenture,
"Debt Securities" with respect to the Indenture as to which such Person is
Trustee shall have the meaning stated in the first recital of this Indenture and
shall more particularly mean Debt Securities authenticated and delivered under
this Indenture, exclusive, however, of Debt Securities of any series as to which
such Person is not Trustee.
"Debt Security Register" and "Debt Security Registrar" have the same
meanings as the terms "Security Register" and "Security Registrar,"
respectively.
"Defaulted Interest" has the meaning set forth in Section 307.
"Dollar" or "$" means a dollar or other equivalent unit in such coin
or currency of the United States of America as at the time shall be legal tender
for the payment of public and private debts.
"DTC" means The Depository Trust Company and any successor to DTC in
its capacity as depository for any Debt Securities.
"ECU" means the European Currency Unit as defined and revised from
time to time by the Council of the European communities.
5
<PAGE>
"Euroclear" means Morgan Guaranty Trust Company of New York, Brussels
Office, or its successor as operator of the Euroclear System.
"European Communities" means the European Economic community, the
European Coal and Steel Community and the European Atomic Energy Community.
"European Monetary System" means the European Monetary system
established by the Resolution of December 5, 1978 of the Council of the European
Communities.
"Event of Default" has the meaning specified in Section 501.
"Exchange Date" has the meaning set forth in Section 304.
"Executive Group" means, collectively, those individuals holding the
offices of Chairman, Vice Chairman, President, Chief Executive Officer, Chief
Operating Officer or any Vice President of the Company.
"Foreign Currency" means any currency, currency unit or composite
currency, including, without limitation, the ECU, issued by the government of
one or more countries other than the United States of America or by any
recognized confederation or association of such governments.
"GAAP" and "generally accepted accounting principles" mean generally
accepted accounting principles, as in effect from time to time, as used in the
United States of America applied on a consistent basis.
"Government Obligations" means securities which are (i) direct
obligations of the United States of America or the government which issued the
Foreign Currency in which the Debt Securities of a particular series are
payable, for the payment of which its full faith and credit is pledged or (ii)
obligations of a Person controlled or supervised by and acting as an agency or
instrumentality of the United States of America or such government which issued
the Foreign Currency in which the Debt Securities of such series are payable,
the payment of which is unconditionally guaranteed as a full faith and credit
obligation by the United States of America or such other government, which, in
either case, are not callable or redeemable at the option of the issuer thereof,
and shall also include a depository receipt issued by a bank or trust company as
custodian with respect to any such Government Obligation or a specific payment
of interest on or principal of any such Government Obligation held by such
custodian for the account of the holder of a depository receipt, provided that
(except as required by law) such custodian is not authorized to make any
deduction from the amount payable to the holder of such depository receipt from
any amount received by the custodian in respect of the Government Obligation or
the specific payment of interest on or principal of the Government Obligation
evidenced by such depository receipt.
6
<PAGE>
"Holder" means, in the case of a Registered Debt Security, the Person
in whose name a Debt Security is registered in the Security Register and, in the
case of a Bearer Debt Security, the bearer thereof and, when used with respect
to any coupon, shall mean the bearer thereof.
"Indenture" means this instrument as originally executed or as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof,
and shall include the terms and provisions of any series of Debt Securities and
any coupons appertaining thereto established pursuant to Section 301 (as such
terms and provisions may be amended pursuant to the applicable provisions
hereof).
"Indexed Debt Security" means a Debt Security the terms of which
provide that the principal amount thereof payable at Stated Maturity may be more
or less than the principal face amount thereof at original issuance.
"Interest" when used with respect to an Original Issue Discount Debt
Security which by its terms bears interest only after Maturity, shall mean
interest payable after Maturity, and, when used with respect to a Debt Security
which provides for the payment of Additional Amounts pursuant to Section 1015,
includes such Additional Amounts.
"Interest Payment Date" when used with respect to any Debt Security,
means the Stated Maturity of an installment of interest on such Debt Security.
"Lien" means any mortgage, deed of trust, lien, charge, pledge,
security interest, security agreement or other encumbrance of any kind.
"Maturity" when used with respect to any Debt Security, means the date
on which the principal of such Debt Security or an installment of principal
becomes due and payable as therein or herein provided, whether at the Stated
Maturity or by declaration of acceleration, notice of redemption, notice of
option to elect repayment or otherwise.
"Officers' Certificate" means a certificate signed by the Chairman,
any Vice Chairman, the President or a Vice President and by the Treasurer, an
Assistant Treasurer, the Secretary or an Assistant Secretary of the Company, and
delivered to the Trustee.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for the Company or who may be an employee of or other counsel for the
Company and who shall be reasonably satisfactory to the Trustee.
"Original Issue Discount Debt Security" means any Debt Security which
provides for an amount less than the principal amount thereof to be due and
payable upon a declaration of acceleration of the Maturity thereof pursuant to
Section 502.
7
<PAGE>
"Outstanding" when used with respect to Debt Securities, means, as of
the date of determination, all Debt Securities theretofore authenticated and
delivered under this Indenture, except:
(i) Debt Securities theretofore canceled by the Trustee or
delivered to the Trustee for cancellation;
(ii) Debt Securities, or portions thereof, for whose payment at the
Maturity thereof money in the necessary amount has been theretofore deposited
(other than pursuant to Article Fourteen hereof) with the Trustee or any Paying
Agent (other than the Company) in trust or set aside and segregated in trust by
the Company (if the Company shall act as its own Paying Agent) for the Holders
of such Debt Securities and any coupons appertaining thereto, provided that, if
such Debt Securities are to be redeemed, notice of such redemption has been duly
given pursuant to this Indenture or provision therefor satisfactory to the
Trustee has been made;
(iii) Debt Securities, except to the extent provided in Sections
1402 and 1403, with respect to which the Company has effected defeasance and/or
covenant defeasance as provided in Article Fourteen;
(iv) Debt Securities which have been paid pursuant to Section 306
or in exchange for or in lieu of which other Debt Securities have been
authenticated and delivered pursuant to this Indenture, other than any such
Debt Securities in respect of which there shall have been presented to the
Trustee proof satisfactory to it that such Debt Securities are held by a bona
fide purchaser in whose hands such Debt Securities are valid obligations of the
Company; and
(v) Debt Securities converted into Common Shares or Preferred
Shares pursuant to or in accordance with this Indenture if the terms of such
Debt Securities provide for convertibility pursuant to Section 301;
Provided, however, that in determining whether the Holders of the
requisite principal amount of the Outstanding Debt Securities have given any
request, demand, authorization, direction, notice, consent or waiver hereunder
or are present at a meeting of Holders for quorum purposes, and for the purpose
of making the calculations required by TIA Section 313, (i) the principal amount
of an Original Issue Discount Debt Security that may be counted in making such
determination or calculation and that shall be deemed to be Outstanding for such
purpose shall be equal to the amount of principal thereof that would be (or
shall have been declared to be) due and payable, at the time of such
determination, upon a declaration of acceleration of the maturity thereof
pursuant to Section 502, (ii) the principal amount of any Debt Security
denominated in a Foreign Currency that may be counted in making such
determination or calculation and that shall be deemed Outstanding for such
purpose shall be equal to the Dollar equivalent, determined pursuant to Section
301 as of the date such Debt Security is originally issued by the Company, of
the principal amount (or, in the case of an Original Issue Discount Debt
Security, the Dollar equivalent as of such date of original issuance
8
<PAGE>
of the amount determined as provided in clause (i) above) of such Debt
Security, (iii) the principal amount of any Indexed Debt Security that may be
counted in making such determination or calculation and that shall be deemed
Outstanding for such purpose shall be equal to the principal face amount of
such Indexed Debt Security at original issuance, unless otherwise provided
with respect to such Debt Security pursuant to Section 301, and (iv) Debt
Securities owned by the Company or any other obligor upon the Debt Securities
or any Affiliate of the Company or of such other obligor shall be disregarded
and deemed not to be Outstanding, except that, in determining whether the
Trustee shall be protected in making such calculation or in relying upon any
such request, demand, authorization, direction, notice, consent or waiver,
only Debt Securities which the Trustee knows to be so owned shall be so
disregarded. Debt Securities so owned which have been pledged in good faith
may be regarded as Outstanding if the pledgee establishes to the satisfaction
of the Trustee the pledgee's right so to act with respect to such Debt
Securities and that the pledgee is not the Company or any other obligor upon
the Debt Securities or any Affiliate of the Company or of such other obligor.
"Paying Agent" means any Person authorized by the Company to pay the
principal of (and premium, if any) or interest on any Debt Securities or coupons
on behalf of the Company.
"Person" means any individual, corporation, business trust,
partnership, joint venture, limited liability company, association, joint-stock
company, trust, unincorporated organization or government or any agency or
political subdivision thereof.
"Place of Payment" when used with respect to the Debt Securities of or
within any series, means the place or places where the principal of (and
premium, if any) and interest on such Debt Securities are payable as specified
as contemplated by Sections 301 and 1002.
"Predecessor Debt Security" of any particular Debt Security means
every previous security evidencing all or a portion of the same debt as that
evidenced by such particular Debt Security; and, for the purposes of this
definition, any Debt Security authenticated and delivered under Section 306 in
exchange for or in lieu of a mutilated, destroyed, lost or stolen Debt Security
or a Debt Security to which a mutilated, destroyed, lost or stolen coupon
appertains shall be deemed to evidence the same debt as the mutilated,
destroyed, lost or stolen Debt Security or the Debt Security to which the
mutilated, destroyed, lost or stolen coupon appertains.
"Preferred Shares" means, with respect to any Person, capital stock
issued by such Person that is entitled to a preference or priority over any
other capital stock issued by such Person upon any distribution of such Person's
assets, whether by dividend or upon liquidation.
"Redemption Date" when used with respect to any Debt Security to be
redeemed, in whole or in part, means the date fixed for such redemption by or
pursuant to this Indenture.
"Redemption Price" when used with respect to any Debt Security to be
redeemed,
9
<PAGE>
means the price at which it is to be redeemed pursuant to this Indenture.
"Registered Debt Security" shall mean any Debt Security which is
registered in the Security Register.
"Regular Record Date" for the interest payable on any Interest Payment
Date on the Registered Debt Securities of or within any series means the date
specified for that purpose as contemplated by Section 301, whether or not a
Business Day.
"Repayment Date" means, when used with respect to any Debt Security to
be repaid at the option of the Holder, the date fixed for such repayment by or
pursuant to this Indenture.
"Repayment Price" means, when used with respect to any Debt Security
to be repaid at the option of the Holder, the price at which it is to be repaid
by or pursuant to this Indenture.
"Responsible Officer" when used with respect to the Trustee, means the
chairman or vice-chairman of the board of directors, the chairman or vice-
chairman of the executive committee of the board of directors, the president,
any vice president, the secretary, any assistant secretary, the treasurer, any
assistant treasurer, the cashier, any assistant cashier, any trust officer or
assistant trust officer, the controller or any other officer of the Trustee
customarily performing functions similar to those performed by any of the above
designated officers.
"Securities Exchange Act of 1934" means the Securities Exchange Act of
1934, as amended, and any reference herein to such Act or a particular provision
or section thereof shall mean, unless otherwise expressly stated or the context
otherwise requires, such Act, provision or section, as the case may be, as
amended or replaced from time to time or as supplemented from time to time.
"Security Register" and "Security Registrar" have the respective
meanings specified in Section 305.
"Senior Indebtedness" means (i) the principal of and premium, if any,
and unpaid interest, if any, on indebtedness for money borrowed or evidenced by
a bond, note, debenture or similar instrument, (ii) purchase money and similar
obligations, (iii) obligations under capital leases, (iv) guarantees,
assumptions or purchase commitments relating to, or other transactions as a
result of which the Company is responsible for the payment of, indebtedness and
obligations of others of the types referred to in clauses (i) through (iii)
above, (v) renewals, extensions and refunding of any such indebtedness or
obligations, (vi) interest in respect of any such indebtedness or obligations
accruing after the commencement of any insolvency or bankruptcy proceedings and
(vii) obligations associated with derivative products such as interest rate and
currency exchange contracts, foreign exchange contracts, commodity contracts,
and similar arrangements, unless, in each case, the instrument by which the
Company incurred, assumed or guaranteed the indebtedness or obligations
10
<PAGE>
described in clauses (i) through (vii) expressly provides that such indebtedness
or obligation is subordinate or junior in right of payment to all other
indebtedness of the Company or is not senior in right of payment to the
Subordinated Debt Securities or ranks pari passu with or subordinate to the
Subordinated Debt Securities in right of payment.
"Significant Subsidiary" means any Subsidiary which is a "significant
subsidiary" (as defined in Rule 1-02 of Regulation S-X promulgated under the
Securities Act of 1933, as in effect on January 1, 1996) of the Company.
"Special Record Date" for the payment of any Defaulted Interest on the
Registered Debt Securities of or within any series means a date fixed by the
Trustee pursuant to Section 307.
"Stated Maturity," when used with respect to any Debt Security or any
installment of principal thereof or interest thereon, means the date specified
in such Debt Security or a coupon representing such installment of interest or
in or pursuant to this Indenture as the fixed date on which the principal of
such Debt Security or such installment of principal or interest is due and
payable.
"Subsidiary" means (i) a corporation, partnership, joint venture,
limited liability company or other Person the majority of the shares, if any, of
the non-voting capital stock or other equivalent ownership interests of which
(except directors' qualifying shares) are at the time directly or indirectly
owned by the Company and/or any other Subsidiary or Subsidiaries, and the
majority of the shares of the voting capital stock or other equivalent ownership
interests of which (except directors' qualifying shares) are at the time
directly or indirectly owned by the Company, any other Subsidiary or
Subsidiaries, and/or one or more individuals of the Executive Group (or, in the
event of death or disability of any of such individuals, his/her respective
legal representative(s), or such individuals' successors in office as an officer
of the Company), and (ii) any other Person the accounts of which are
consolidated with the accounts of the Company.
"Total Assets" means the sum of (without duplication) (i)
Undepreciated Real Estate Assets and (ii) all other assets (excluding accounts
receivable and intangibles) of the Company and its Subsidiaries, all determined
on a consolidated basis in accordance with generally accepted accounting
principles.
"Total Unencumbered Assets" means the sum of (without duplication) (i)
those Undepreciated Real Estate Assets which are not subject to a Lien securing
Debt and (ii) all other assets (excluding accounts receivable and intangibles)
of the Company and its Subsidiaries not subject to a Lien securing Debt, all
determined on a consolidated basis in accordance with generally accepted
accounting principles.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939,
as amended, and any reference herein to the Trust Indenture Act or the TIA or a
particular provision thereof shall mean such Act or provision, as the case may
be, as amended or replaced from time to time or as
11
<PAGE>
supplemented from time to time by rules or regulations adopted by the
Commission under or in furtherance of the purposes of such Act or provision,
as the case may be.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this Indenture until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean or include each Person who is then a Trustee hereunder;
provided, however, that if at any time there is more than one such Person,
"Trustee" as used with respect to the Debt Securities of any series shall mean
only the Trustee with respect to Debt Securities of that series.
"Undepreciated Real Estate Assets" means, as of any date, the cost
(original cost plus capital improvements) of real estate assets of the Company
and its Subsidiaries on such date, before depreciation and amortization, all
determined on a consolidated basis in accordance with generally accepted
accounting principles.
"United States" means, unless otherwise specified with respect to any
Debt Securities pursuant to Section 301, the United States of America (including
the states and the District of Columbia), its territories, its possessions and
other areas subject to its jurisdiction.
"United States of America" means the United States of America
(including the states and the District of Columbia), but excluding its
territories, its possessions and other areas subject to its jurisdiction.
"United States Person" means, unless otherwise specified with respect
to any Debt Securities pursuant to Section 301, any citizen or resident of the
United States, any corporation, partnership or other entity created or organized
in or under the laws of the United States any estate the income of which is
subject to United States federal income taxation regardless of its source, or
any trust whose administration is subject to the primary supervision of a United
States court and which has one or more United States fiduciaries who have the
authority to control all substantial decisions of the trust.
"Unsecured Debt" means Debt of the Company or any of its Subsidiaries
which is not secured by a Lien on any property or assets of the Company or any
of its Subsidiaries.
SECTION 102. COMPLIANCE CERTIFICATES AND OPINIONS. Upon any
application or request by the Company to the Trustee to take any action under
any provision of this Indenture, the Company shall furnish to the Trustee an
Officers' Certificate stating that all conditions precedent, if any, provided
for in this Indenture relating to the proposed action have been complied with
and an Opinion of Counsel stating that in the opinion of such counsel all such
conditions precedent, if any, have been complied with, except that in the case
of any such application or request as to which the furnishing of such documents
is specifically required by any provision of this Indenture relating to such
particular application or request, no additional certificate or opinion need
12
<PAGE>
be furnished. Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(1) a statement that each individual signing such certificate or
opinion has read such condition or covenant and the definitions herein relating
thereto;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of each such individual, he has
made such examination or investigation as is necessary to enable him to express
an informed opinion as to whether or not such condition or covenant has been
satisfied or complied with; and
(4) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been satisfied or complied with.
SECTION 103. FORM OF DOCUMENTS DELIVERED TO TRUSTEE. In any case
where several matters are required to be certified by, or covered by an opinion
of, any specified Person, it is not necessary that all such matters be certified
by, or covered by the opinion of, only one such Person, or that they be so
certified or covered by only one document, but one such Person may certify or
give an opinion as to some matters and one or more other such Persons as to
other matters, and any such Person may certify or give an opinion as to such
matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon an Opinion of Counsel, or a
certificate or representations by counsel, unless such officer knows, or in the
exercise of reasonable care should know, that the opinion, certificate or
representations with respect to the matters upon which his certificate or
opinion is based are erroneous. Any such Opinion of Counsel or certificate or
representations may be based, insofar as it relates to factual matters, upon a
certificate or opinion of, or representations by, an officer or officers of the
Company stating that the information as to such factual matters is in the
possession of the Company, unless such counsel knows that the certificate or
opinion or representations as to such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
SECTION 104. ACTS OF HOLDERS.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Holders of the outstanding Debt Securities of all series or one or more series,
as the case may be, may be embodied in and evidenced by one or
13
<PAGE>
more instruments of substantially similar tenor signed by such Holders in
person or by agents duly appointed in writing. If Debt Securities of a series
are issuable as Bearer Debt Securities, any request, demand, authorization,
direction, notice, consent, waiver or other action provided by this Indenture
to be given or taken by Holders of Debt Securities of such series may,
alternatively, be embodied in and evidenced by the record of Holders of Debt
Securities of such series voting in favor thereof, either in person or by
proxies duly appointed in writing, at any meeting of Holders of Debt
Securities of such series duly called and held in accordance with the
provisions of Article Fifteen, or a combination of such instruments and any
such record. Except as herein otherwise expressly provided, such action shall
become effective when such instrument or instruments or record or both are
delivered to the Trustee and, where it is hereby expressly required, to the
Company. Such instrument or instruments and any such record (and the action
embodied therein and evidenced thereby) are herein sometimes referred to as
the "Act" of the Holders signing such instrument or instruments or so voting
at any such meeting. Proof of execution of any such instrument or of a writing
appointing any such agent, or of the holding by any Person of a Debt Security,
shall be sufficient for any purpose of this Indenture and conclusive in favor
of the Trustee and the Company and any agent of the Trustee or the Company, if
made in the manner provided in this Section. The record of any meeting of
Holders of Debt Securities shall be proved in the manner provided in
Section 1506.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where
such execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other reasonable manner which the Trustee deems sufficient.
(c) The ownership of Registered Debt Securities shall be proved by
the Security Register.
(d) The ownership of Bearer Debt Securities may be proved by the
production of such Bearer Debt Securities or by a certificate executed, as
depository, by any trust company, bank, banker or other depository, wherever
situated, if such certificate shall be deemed by the Trustee to be satisfactory,
showing that at the date therein mentioned such Person had on deposit with such
depository, or exhibited to it, the Bearer Debt Securities therein described; or
such facts may be proved by the certificate or affidavit of the Person holding
such Bearer Debt Securities, if such certificate or affidavit is deemed by the
Trustee to be satisfactory. The Trustee and the Company may assume that such
ownership of any Bearer Debt Security continues until (1) another certificate or
affidavit bearing a later date issued in respect of the same Bearer Debt
Security is produced, or (2) such Bearer Debt Security is produced to the
Trustee by some other Person, or (3) such Bearer Debt Security is surrendered in
exchange for a Registered Debt Security, or (4) such
14
<PAGE>
Bearer Debt Security is no longer outstanding. The ownership of Bearer Debt
Securities may also be proved in any other manner which the Trustee deems
sufficient.
(e) If the Company shall solicit from the Holders of Registered
Securities any request, demand, authorization, direction, notice, consent,
waiver or other Act, the Company may, at its option, in or pursuant to a Board
Resolution, fix in advance a record date for the determination of Holders
entitled to give such request, demand, authorization, direction, notice,
consent, waiver or other Act, but the Company shall have no obligation to do so.
Notwithstanding TIA Section 316(c), such record date shall be the record date
specified in or pursuant to such Board Resolution, which shall be a date not
earlier than the date 30 days prior to the first solicitation of Holders
generally in connection therewith and not later than the date such solicitation
is completed. If such a record date is fixed, such request, demand,
authorization, direction, notice, consent, waiver or other Act may be given
before or after such record date, but only the Holders of record at the close of
business on such record date shall be deemed to be Holders for the purposes of
determining whether Holders of the requisite proportion of outstanding Debt
Securities have authorized or agreed or consented to such request, demand,
authorization, direction, notice, consent, waiver or other Act, and for that
purpose the Outstanding Debt Securities shall be computed as of such record
date; provided that no such authorization, agreement or consent by the Holders
on such record date shall be deemed effective unless it shall become effective
pursuant to the provisions of this Indenture not later than eleven months after
the record date.
(f) Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the Holder of any Debt Security shall bind every future
Holder of the same Debt Security and the Holder of every Debt Security issued
upon the registration of transfer thereof or in exchange therefor or in lieu
thereof in respect of anything done, omitted or suffered to be done by the
Trustee, any Debt Security Registrar, any Paying Agent, any Authenticating Agent
or the Company in reliance thereon, whether or not notation of such action is
made upon such Debt Security.
SECTION 105. NOTICES, ETC., TO TRUSTEE AND COMPANY. Any request,
demand, authorization, direction, notice, consent, waiver or Act of Holders or
other document provided or permitted by this Indenture to be made upon, given or
furnished to, or filed with,
(1) the Trustee by any Holder or by the Company shall be sufficient
for every purpose hereunder if made, given, furnished or filed in writing to or
with the Trustee at its Corporate Trust Office, Attention: Corporate Trust
Administration, or
(2) the Company by the Trustee or by any Holder shall be sufficient
for every purpose hereunder (unless otherwise herein expressly provided) if in
writing and mailed, first class postage prepaid, to the Company addressed to it
at the address of its principal office specified in the first paragraph of this
Indenture or at any other address previously furnished in writing to the Trustee
by the Company.
15
<PAGE>
SECTION 106. NOTICE TO HOLDERS; WAIVER. Where this Indenture
provides for notice of any event to Holders of Registered Debt Securities by the
Company or the Trustee, such notice shall be sufficiently given (unless
otherwise herein expressly provided) if in writing and mailed, first-class
postage prepaid, to each such Holder affected by such event, at his address as
it appears in the Security Register, not later than the latest date, and not
earlier than the earliest date, prescribed for the giving of such notice. In
any case where notice to Holders of Registered Debt Securities is given by mail,
neither the failure to mail such notice, nor any defect in any notice so mailed,
to any particular Holder shall affect the sufficiency of such notice with
respect to other Holders of Registered Debt Securities or the sufficiency of any
notice to Holders of Bearer Debt Securities given as provided herein. Any
notice mailed to a Holder in the manner herein prescribed shall be conclusively
deemed to have been received by such Holder, whether or not such Holder
actually receives such notice.
If by reason of the suspension of or irregularities in regular mail
service or by reason of any other cause it shall be impracticable to give such
notice by mail, then such notification to Holders of Registered Debt Securities
as shall be made with the approval of the Trustee shall constitute a sufficient
notification to such Holders for every purpose hereunder.
Except as otherwise expressly provided herein or otherwise specified
with respect to any Debt Securities pursuant to Section 301, where this
Indenture provides for notice to Holders of Bearer Debt Securities of any event,
such notice shall be sufficiently given if published in an Authorized Newspaper
in [The City of New York] and in such other city or cities as may be specified
in such Debt Securities on a Business Day, such publication to be not later than
the latest date, and not earlier than the earliest date, prescribed for the
giving of such notice. Any such notice shall be deemed to have been given on
the date of such publication or, if published more than once, on the date of the
first such publication.
If by reason of the suspension of publication of any Authorized
Newspaper or Authorized Newspapers or by reason of any other cause it shall be
impracticable to publish any notice to Holders of Bearer Debt Securities as
provided above, then such notification to Holders of Bearer Debt Securities as
shall be given with the approval of the Trustee shall constitute sufficient
notice to such Holders for every purpose hereunder. Neither the failure to give
notice by publication to any particular Holder of Bearer Debt Securities as
provided above, nor any defect in any notice so published, shall affect the
sufficiency of such notice with respect to other Holders of Bearer Debt
Securities or the sufficiency of any notice to Holders of Registered securities
given as provided herein.
Any request, demand, authorization, direction, notice, consent or
waiver required or permitted under this Indenture shall be in the English
language, except that any published notice may be in an official language of the
country of publication.
Where this Indenture provides for notice in any manner, such notice
may be waived
16
<PAGE>
in writing by the Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Holders shall be filed with the Trustee, but such
filing shall not be a condition precedent to the validity of any action taken in
reliance upon such waiver.
SECTION 107. EFFECT OF HEADINGS AND TABLE OF CONTENTS. The Article
and Section headings herein and the Table of Contents are for convenience only
and shall not affect the construction hereof.
SECTION 108. SUCCESSORS AND ASSIGNS. All covenants and agreements in
this Indenture by the Company shall bind its successors and assigns, whether so
expressed or not.
SECTION 109. SEPARABILITY CLAUSE. In case any provision in this
Indenture or in any Debt Security or coupon shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
SECTION 110. BENEFITS OF INDENTURE. Nothing in this Indenture or in
the Debt Securities or coupons, express or implied, shall give to any Person,
other than the parties hereto, any Debt Security Registrar, any Paying Agent,
any Authenticating Agent and their successors hereunder and the Holders any
benefit or any legal or equitable right, remedy or claim under this Indenture.
SECTION 111. GOVERNING LAW. This Indenture and the Debt Securities
and coupons shall be governed by and construed in accordance with the law of the
State of New York. This Indenture is subject to the provisions of the TIA that
are required to be part of this Indenture and shall, to the extent applicable,
be governed by such provisions.
SECTION 112. LEGAL HOLIDAYS. In any case where any Interest Payment
Date, Redemption Date, Repayment Date, sinking fund payment date, Stated
Maturity or Maturity of any Debt Security shall not be a Business Day at any
Place of Payment, then (notwithstanding any other provision of this Indenture or
any Debt Security or coupon other than a provision in the Debt Securities of any
series which specifically states that such provision shall apply in lieu
hereof), payment of interest or any Additional Amounts or principal (and
premium, if any) need not be made at such Place of Payment on such date, but may
be made on the next succeeding Business Day at such Place of Payment with the
same force and effect as if made on the Interest Payment Date, Redemption Date,
Repayment Date or sinking fund payment date, or at the Stated Maturity or
Maturity, as the case may be, provided that no interest shall accrue on the
amount so payable for the period from and after such Interest Payment Date,
Redemption Date, Repayment Date, sinking fund payment date, Stated Maturity or
Maturity, as the case may be.
17
<PAGE>
ARTICLE TWO
SECURITIES FORMS
SECTION 201. FORMS OF DEBT SECURITIES. The Registered Debt
Securities, if any, of each series and the Bearer Debt Securities, if any, of
each series and related coupons shall be in substantially the forms as shall be
established in or pursuant to one or more indentures supplemental hereto or by
or pursuant to a Board Resolution, shall have such appropriate insertions,
omissions, substitutions and other variations as are required or permitted by
this Indenture or any indenture supplemental hereto, and may have such letters,
numbers or other marks of identification or designation and such legends or
endorsements placed thereon as the Company may deem appropriate and as are not
inconsistent with the provisions of this Indenture, or as may be required to
comply with any law or with any rule or regulation made pursuant thereto or with
any rule or regulation of any stock exchange on which the Debt Securities may be
listed, or to conform to usage.
Unless otherwise specified as contemplated by Section 301, Bearer Debt
Securities shall have interest coupons attached.
The definitive Debt Securities and coupons shall be printed,
lithographed or engraved or produced by any combination of these methods on a
steel engraved border or steel engraved borders or may be produced in any other
manner, all as determined by the officer executing such Debt Securities or
coupons, as evidenced by his or her execution of such Debt Securities or
coupons.
SECTION 202. FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION.
Subject to Section 611, the Trustee's certificate of authentication shall be in
substantially the following form:
This is one of the Debt Securities of the series designated therein
referred to in the within-mentioned Indenture.
[________________] as Trustee
By_________________________________
Authorized Officer
SECTION 203. DEBT SECURITIES ISSUABLE IN GLOBAL FORM. If Debt
Securities of or within a series are issuable in global form, as specified as
contemplated by Section 301, then, notwithstanding clause (8) of Section 301 and
the provisions of Section 302, any such Debt Security shall represent such of
the Outstanding Debt Securities of such series as shall be specified therein and
may provide that it shall represent the aggregate amount of Outstanding Debt
Securities of such series from time to time endorsed thereon and that the
aggregate amount of Outstanding Debt Securities of such series represented
thereby may from time to time be increased
18
<PAGE>
or decreased to reflect exchanges. Any endorsement of a Debt Security in global
form to reflect the amount, or any increase or decrease in the amount, of
Outstanding Debt Securities represented thereby shall be made by or at the
direction of the Trustee in such manner and upon instructions given by such
Person or Persons as shall be specified therein or pursuant to Section 301 or
in the Company Order to be delivered to the Trustee pursuant to Section 303 or
304. Subject to the provisions of Section 303 and, if applicable, Section 304,
the Trustee shall deliver and redeliver any Debt Security in permanent global
form in the manner and upon instructions given by the Person or Persons
specified therein or pursuant to Section 301 or in the applicable Company
Order. If a Company Order pursuant to Section 303 or 304 has been or is
delivered, any instructions by the Company with respect to endorsement or
delivery or redelivery of a Debt Security in global form shall be in writing
but need not comply with Section 102 and need not be accompanied by an Opinion
of Counsel.
The provisions of the last sentence of Section 303 shall apply to any
Debt Security represented by a Debt Security in global form if such Debt
Security was never issued and sold by the Company and the Company delivers to
the Trustee the Debt Security in global form together with written instructions
(which need not comply with Section 102 and need not be accompanied by an
Opinion of Counsel) with regard to the reduction in the principal amount of Debt
Securities represented thereby, together with the written statement contemplated
by the last sentence of Section 303.
Notwithstanding the provisions of Section 307, unless otherwise
specified as contemplated by Section 301, payment of principal of and any
premium and interest on any Debt Security in permanent global form shall be made
to the Person or Persons specified therein.
Notwithstanding the provisions of Section 308 and except as provided
in the preceding paragraph, the Company, the Trustee and any agent of the
Company and the Trustee shall treat as the Holder of such principal amount of
Outstanding Debt Securities represented by a global Debt Security (i) in the
case of a global Debt Security in registered form, the Holder of such global
Debt Security in registered form, or (ii) in the case of a global Debt Security
in bearer form, Euroclear or CEDEL.
ARTICLE THREE
THE SECURITIES
SECTION 301. AMOUNT UNLIMITED; ISSUABLE IN SERIES. The aggregate
principal amount of Debt Securities which may be authenticated and delivered
under this Indenture is unlimited.
The Debt Securities may be issued in one or more series. There shall
be established in one or more Board Resolutions or pursuant to authority granted
by one or more Board Resolutions
19
<PAGE>
and set forth, or determined in the manner provided, in an Officers'
Certificate, or established in or pursuant to one or more indentures
supplemental hereto, prior to the issuance of Debt Securities of any series,
any or all of the following, as applicable (each of which (except for the
matters set forth in clauses (1) and (2) below), if so provided, may be
determined from time to time by the Company with respect to unissued Debt
Securities of the series when issued from time to time):
(1) the title of the Debt Securities of the series (which shall
distinguish the Debt Securities of such series from all other series of Debt
Securities);
(2) any limit upon the aggregate principal amount of the Debt
Securities of the series that may be authenticated and delivered under this
Indenture (except for Debt Securities authenticated and delivered upon
registration of transfer of, or in exchange for, or in lieu of, other Debt
Securities of the series pursuant to Section 304, 305, 306, 906 or 1107 or upon
surrender of other Debt Securities of the series for conversion in part or
repayment in part at the option of the Holders);
(3) the date or dates, or the method by which such date or dates
will be determined, on which the principal of the Debt Securities of the series
shall be payable;
(4) the rate or rates at which the Debt Securities of the series
shall bear interest, if any, or the method by which such rate or rates shall be
determined, the date or dates from which such interest shall accrue or the
method by which such date or dates shall be determined, the Interest Payment
Dates on which such interest will be payable and the Regular Record Date, if
any, for the interest payable on any Registered Debt Security on any Interest
Payment Date, or the method by which such date shall be determined, and the
basis upon which interest shall be calculated if other than that of a 360-day
year of twelve 30-day months;
(5) the place or places, if any, other than or in addition to the
[Borough of Manhattan, The City of New York], where the principal of (and
premium, if any), interest, if any, on, and Additional Amounts, if any, payable
in respect of, Debt Securities of the series shall be payable, any Registered
Debt Securities of the series may be surrendered for registration of transfer,
exchange or (if applicable) conversion and notices or demands to or upon the
Company in respect of the Debt Securities of the series and this Indenture may
be served;
(6) the period or periods within which, the price or prices at
which, the currency or currencies, currency unit or units or composite currency
or currencies in which, and other terms and conditions upon which Debt
Securities of the series may be redeemed, in whole or in part, at the option of
the Company, if the Company is to have the option;
(7) the obligation, if any, of the Company to redeem, repay or
purchase Debt Securities of the series pursuant to any sinking fund or analogous
provision or at the option of a Holder thereof, and the period or periods within
which or the date or dates on which, the price or
20
<PAGE>
prices at which, the currency or currencies, currency unit or units or
composite currency or currencies in which, and other terms and conditions upon
which Debt Securities of the series shall be redeemed, repaid or purchased, in
whole or in part, pursuant to such obligation;
(8) if other than denominations of $1,000 and any integral multiple
thereof, the denominations in which any Registered Debt Securities of the series
shall be issuable and, if other than the denomination of $5,000, the
denomination or denominations in which any Bearer Debt Securities of the series
shall be issuable;
(9) if other than the Trustee, the identity of each Security
Registrar and/or Paying Agent;
(10) if other than 100% of the principal amount thereof, the portion
of the principal amount of Debt Securities of the series that shall be payable
upon declaration of acceleration of the Maturity thereof pursuant to Section 502
or, if applicable, the portion of the principal amount of Debt Securities of the
series that is convertible in accordance with the provisions of this Indenture
or the method by which such portion shall be determined;
(11) if other than Dollars, the Foreign Currency or Foreign
Currencies in which payment of the principal of (and premium if any) or interest
or Additional Amounts, if any, on the Debt Securities of the series shall be
payable or in which the Debt Securities of the series shall be denominated;
(12) whether the amount of payments of principal of (and premium, if
any) or interest, if any, on the Debt Securities of the series may be determined
with reference to an index, formula or other method (which index, formula or
method may be based, without limitation, or one or more currencies, currency
units, composite currencies, commodities, equity indices or other indices), and
the manner in which such amounts shall be determined;
(13) whether the principal of (and premium, if any) or interest or
Additional Amounts, if any, on the Debt Securities of the series are to be
payable, at the election of the Company or a Holder thereof, in a currency or
currencies, currency unit or units or composite currency or currencies other
than that in which such Debt Securities are denominated or stated to be payable,
the period or periods within which, and the terms and conditions upon which,
such election may be made, and the time and manner of, and identity of the
exchange rate agent with responsibility for, determining the exchange rate
between the currency or currencies, currency unit or units or composite currency
or currencies in which such Debt Securities are denominated or stated to be
payable and the currency or currencies, currency unit or units or composite
currency or currencies in which such Debt Securities are to be so payable;
(14) provisions, if any, granting special rights to the Holders of
Debt Securities of the series upon the occurrence of such events as may be
specified;
21
<PAGE>
(15) any deletions from, modifications of, or additions to the Events
of Default or covenants of the Company with respect to Debt Securities of the
series, whether or not such Events of Default or covenants are consistent with
the Events of Default or covenants set forth herein;
(16) whether Debt Securities of the series are to be issuable as
Registered Debt Securities, Bearer Debt Securities (with or without coupons) or
both, any restrictions applicable to the offer, sale or delivery of Bearer Debt
Securities and the terms upon which Bearer Debt Securities of the series may be
exchanged for Registered Debt Securities of the series and vice versa (if
permitted by applicable laws and regulations), whether any Debt Securities of
the series are to be issuable initially in temporary global form and whether any
Debt Securities of the series are to be issuable in permanent global form with
or without coupons and, if so, whether beneficial owners of interests in any
such permanent global Debt Security may exchange such interests for definitive
Debt Securities of such series and of like tenor of any authorized form and
denomination and the circumstances under which any such exchanges may occur, if
other than in the manner provided in Section 305, and, if Registered Debt
Securities of the series are to be issuable as a global Debt Security, the
identity of the initial depository for such series;
(17) the date as of which any Bearer Debt Securities of the series
and any temporary global Debt Security representing Outstanding Debt
Securities of the series shall be dated if other than the date of original
issuance of the first Debt Security of the series to be issued;
(18) the Person to whom any interest on any Registered Debt Security
of the series shall be payable, if other than the Person in whose name that Debt
Security (or one or more Predecessor Debt Securities) is registered at the close
of business on the Regular Record Date for such interest, the manner in which,
or the Person to whom, any interest on any Bearer Debt Security of the series
shall be payable, if otherwise than upon presentation and surrender of the
coupons appertaining thereto as they severally mature, and the extent to which,
or the manner in which, any interest payable on a temporary global Debt Security
on an Interest Payment Date will be paid if other than in the manner provided in
Section 304;
(19) the applicability, if any, of Sections 1402 and/or 1403 to the
Debt Securities of the series and any provisions in modification of, in addition
to or in lieu of any of the provisions of Article Fourteen;
(20) if the Debt Securities of such series are to be issuable in
definitive form (whether upon original issue or upon exchange of a temporary
Debt Security of such series) only upon receipt of certain certificates or other
documents or satisfaction of other conditions, then the form and/or terms of
such certificates, documents or conditions;
(21) if the Debt Securities of the series are to be issued upon the
exercise of warrants, the time, manner and place for such Debt Securities to be
authenticated and delivered;
22
<PAGE>
(22) whether and under what circumstances the Company will pay
Additional Amounts as contemplated by Section 1015 on the Debt Securities of the
series to any Holder who is not a United States Person (including any
modification to the definition of such term) in respect of any tax, assessment
or governmental charge and, if so, whether the Company will have the option to
redeem such Debt Securities rather than pay such Additional Amounts (and the
terms of any such option);
(23) the obligation, if any, of the Company to permit the conversion
of the Debt Securities of such series into the Company's Common Shares or
Preferred Shares or into other securities or property, as the case may be, and
the terms and conditions upon which such conversion shall be effected (which may
include, without limitation, the initial conversion price or rate, the
conversion period, any adjustment of the applicable conversion price and any
requirements relative to the reservation of such shares for purposes of
conversion); and
(24) any other terms of the series and any deletions from or
modifications or additions to this Indenture in respect of such Debt Securities
(whether or not consistent with the other provisions of this Indenture).
All Debt Securities of any one series and all coupons, if any,
appertaining to Bearer Debt Securities of such series shall be substantially
identical except as to currency or currency unit of payments due thereunder,
denomination, rate of interest or method of determining the rate of interest, if
any, Maturity, and the date from which interest, if any, shall accrue and except
as may otherwise be provided by the Company in the Board Resolution, or pursuant
to the Board Resolution and set forth in the Officers' Certificate, or in any
indenture or indentures supplemental hereto, as the case may be, pertaining to
such series of Debt Securities. The terms of the Debt Securities of any series
may provide, without limitation, that the Debt Securities shall be authenticated
and delivered by the Trustee on original issue from time to time upon telephonic
or written order of persons designated in or pursuant to the relevant Board
Resolution, Officers' Certificate or supplemental indenture, as the case may be
(telephonic instructions to be promptly confirmed in writing by such person) and
that such persons are authorized to determine, consistent with such Board
Resolution, Officers' Certificate or supplemental indenture, as the case may be,
such terms and conditions of the Securities of such series as are specified in
such Board Resolution, Officers' Certificate or supplemental indenture, as the
case may be. All Debt Securities of any one series need not be issued at the
same time and, unless otherwise provided, a series may be reopened, without the
consent of the Holders, for issuances of additional Debt Securities of such
series.
If the form or any of the terms of the Debt Securities of any series
are established by action taken pursuant to one or more Board Resolutions, a
copy of an appropriate record of such action(s) shall be certified by the
Secretary or an Assistant Secretary of the Company and delivered to the Trustee
at or prior to the delivery of the Officers' Certificate setting forth the terms
of the Debt Securities of such series.
23
<PAGE>
SECTION 302. DENOMINATIONS. The Debt Securities of each series shall
be issuable in such denominations as shall be specified as contemplated by
Section 301. With respect to Debt Securities of any series denominated in
Dollars, in the absence of any such provisions with respect to the Debt
Securities of any series, the Registered Debt Securities of such series, other
than Registered Debt Securities issued in global form (which may be of any
denomination), shall be issuable in denominations of $1,000 and any integral
multiple thereof and the Bearer Debt Securities of such series, other than
Bearer Debt Securities issued in global form (which may be of any denomination),
shall be issuable in denominations of $5,000.
SECTION 303. EXECUTION, AUTHENTICATION, DELIVERY AND DATING. The
Debt Securities and any coupons appertaining thereto shall be executed on behalf
of the Company by its Chairman, any Vice Chairman, its President or one of its
Vice Presidents and attested by its Treasurer, one of its Assistant Treasurers,
its Secretary or one of its Assistant Secretaries. The signature of any of
these officers on the Debt Securities and coupons may be manual or facsimile
signatures of the present or any future such authorized officer and may be
imprinted or otherwise reproduced on the Debt Securities.
Debt Securities or coupons bearing the manual or facsimile signatures
of individuals who were at any time the proper officers of the Company shall
bind the Company, notwithstanding that such individuals or any of them have
ceased to hold such offices prior to the authentication and delivery of such
Debt Securities or did not hold such offices at the date of such Debt Securities
or coupons.
At any time and from time to time after the execution and delivery of
this Indenture, the Company may deliver Debt Securities of any series, together
with any coupon appertaining thereto, executed by the Company to the Trustee for
authentication, together with a Company Order for the authentication and
delivery of such Debt Securities, and the Trustee in accordance with the Company
Order shall authenticate and deliver such Debt Securities; provided, however,
that, in connection with its original issuance, no Bearer Debt Security shall be
mailed or otherwise delivered to any location in the United States; and provided
further that, unless otherwise specified with respect to any series of Debt
Securities pursuant to Section 301, a Bearer Debt Security may be delivered in
connection with its original issuance only if the Person entitled to receive
such Bearer Debt Security shall have furnished a certificate to Euroclear or
CEDEL, as the case may be, in the form set forth in Exhibit A-1 to this
Indenture or such other certificate as may be specified with respect to any
series of Debt Securities pursuant to Section 301, dated no earlier than 15 days
prior to the earlier of the date on which such Bearer Debt Security is delivered
and the date on which any temporary Debt Security first becomes exchangeable for
such Bearer Debt Security in accordance with the terms of such temporary Debt
Security and this Indenture. If any Debt Security shall be represented by a
permanent global Bearer Debt Security, then, for purposes of this Section 303
and Section 304, the notation of a beneficial owner's interest therein upon
original issuance of such Debt Security or upon exchange of a portion of a
temporary global Debt Security shall be deemed to be delivery in connection with
its original issuance of such beneficial owner's interest in such
24
<PAGE>
permanent global Debt Security. Except as permitted by Section 306, the
Trustee shall not authenticate and deliver any Bearer Debt Security unless all
appurtenant coupons for interest then matured have been detached and canceled.
In authenticating such Debt Securities, and accepting the additional
responsibilities under this Indenture in relation to such Debt Securities, the
Trustee shall be entitled to receive, and (subject to TIA Section 315(a)
through 315(d)) shall be fully protected in relying upon,
(i) an Opinion of Counsel stating that
(a) the form or forms of such Debt Securities and any coupons have
been established in conformity with the provisions of this Indenture;
(b) the terms of such Debt Securities and any coupons have been
established in conformity with the provisions of this Indenture; and
(c) such Debt Securities, together with any coupons appertaining
thereto, when completed by appropriate insertions and executed and delivered by
the Company to the Trustee for authentication in accordance with this Indenture,
authenticated and delivered by the Trustee in accordance with this Indenture and
issued by the Company in the manner and subject to any conditions specified in
such Opinion of Counsel, will constitute legal, valid and binding obligations of
the Company, enforceable in accordance with their terms, except as limited by
any applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws relating to or affecting the enforcement of creditors' rights generally and
general equitable principles; and
(ii) an Officers' Certificate stating that all conditions precedent
provided for in this Indenture relating to the issuance of the Debt Securities
have been complied with and that, to the best of the knowledge of the signers of
such certificate, no Event of Default with respect to any of the Debt Securities
shall have occurred and be continuing.
If such form or terms have been so established, the Trustee shall not
be required to authenticate such Debt Securities if the issue of such Debt
Securities pursuant to this Indenture will affect the Trustee's own rights,
duties, obligations or immunities under the Debt Securities and this Indenture
or otherwise in a manner which is not reasonably acceptable to the Trustee.
Notwithstanding anything herein to the contrary, if all the Debt
Securities of any series are not to be issued at one time, it shall not be
necessary to deliver an Officers' Certificate otherwise required pursuant to
Section 301 or a Company Order, an Opinion of Counsel or an Officers'
Certificate otherwise required pursuant to this Section 303 at the time of
issuance of each Debt Security of such series, but such order, opinion and
certificates, with appropriate modifications to cover such future issuances,
shall be delivered at or before the time of issuance of the first Debt Security
of such series.
25
<PAGE>
Each Registered Debt Security shall be dated the date of its
authentication and each Bearer Debt Security shall be dated as of the date
specified as contemplated by Section 301.
No Debt Security or coupon shall be entitled to any benefit under this
Indenture or be valid or obligatory for any purpose unless there appears on such
Debt Security or Debt Security to which such coupon appertains a certificate of
authentication substantially in the form provided for herein duly executed by
the Trustee by manual signature of an authorized signatory, and such certificate
upon any Debt Security shall be conclusive evidence, and the only evidence, that
such Debt Security has been duly authenticated and delivered hereunder and is
entitled to the benefits of this Indenture. Notwithstanding the foregoing, if
any Debt Security shall have been authenticated and delivered hereunder but
never issued and sold by the Company, and the Company shall deliver such Debt
Security to the Trustee for cancellation as provided in Section 309 together
with a written statement (which need not comply with Section 102 and need not be
accompanied by an Opinion of Counsel) stating that such Debt Security has never
been issued and sold by the Company, for all purposes of this Indenture such
Debt Security shall be deemed never to have been authenticated and delivered
hereunder and shall never be entitled to the benefits of this Indenture.
SECTION 304. TEMPORARY DEBT SECURITIES.
(a) Pending the preparation of definitive Debt Securities of any
series, the Company may execute, and upon Company Order the Trustee shall
authenticate and deliver, temporary Debt Securities which are printed,
lithographed, typewritten, mimeographed or otherwise produced, in any authorized
denomination, substantially of the tenor of the definitive Debt Securities in
lieu of which they are issued, in registered form, or, if authorized, in bearer
form with one or more coupons or without coupons, and with such appropriate
insertions, omissions, substitutions and other variations as the officers
executing such Debt Securities may determine, as conclusively evidenced by their
execution of such Debt Securities. In the case of Debt Securities of any series,
such temporary Debt Securities may be in global form. Except in the case of
temporary Debt Securities in global form (which shall be exchanged in accordance
with Section 304(b) or as otherwise provided in or pursuant to a Board
Resolution), if temporary Debt Securities of any series are issued, the Company
will cause definitive Debt Securities of that series to be prepared without
unreasonable delay. After the preparation of definitive Debt Securities of such
series, the temporary Debt Securities of such series shall be exchangeable for
definitive Debt Securities of such series upon surrender of the temporary Debt
Securities of such series at the office or agency of the Company in a Place of
Payment for that series, without charge to the Holder. Upon surrender for
cancellation of any one or more temporary Debt Securities of any series
(accompanied by any non-matured coupons appertaining thereto), the Company shall
execute and the Trustee shall authenticate and deliver in exchange therefor a
like principal amount of definitive Debt Securities of the same series of
authorized denominations; provided, however, that no definitive Bearer Debt
Security shall be delivered in exchange for a temporary Registered Debt
Security; and provided further that a definitive Bearer Debt Security shall be
delivered in exchange for a temporary Bearer Debt Security only in compliance
with the conditions set forth in Section 303. Until so exchanged, the temporary
27
<PAGE>
Debt Securities of any series shall in all respects be entitled to the same
benefits under this Indenture as definitive Debt Securities of such series.
(b) Unless otherwise provided in or pursuant to a Board Resolution,
this Section 304(b) shall govern the exchange of temporary Debt Securities
issued in global form other than through the facilities of DTC. If any such
temporary Debt Security is issued in global form, then such temporary global
Debt Security shall, unless otherwise provided therein or pursuant to Section
301, be delivered to the London office of a depository or common depository (the
"Common Depository"), for the benefit of Euroclear and CEDEL, for credit to the
respective accounts of the beneficial owners of such Debt Securities (or to such
other accounts as they may direct).
Without unnecessary delay but in any event not later than the date
specified in, or determined pursuant to the terms of, any such temporary global
Debt Security (the "Exchange Date"), the Company shall deliver to the Trustee
definitive Debt Securities, in aggregate principal amount equal to the principal
amount of such temporary global Debt Security, executed by the Company. On or
after the Exchange Date, such temporary global Debt Security shall be
surrendered by the Common Depository to the Trustee, as the Company's agent for
such purpose, to be exchanged, in whole or from time to time in part, for
definitive Debt Securities without charge to the Holders, and the Trustee shall
authenticate and deliver, in exchange for each portion of such temporary global
Debt Security, an equal aggregate principal amount of definitive Debt Securities
of the same series of authorized denominations and of like tenor as the portion
of such temporary global Debt Security to be exchanged. The definitive Debt
Securities to be delivered in exchange for any such temporary global Debt
Security shall be in bearer form, registered form, permanent global bearer form
or permanent global registered form, or any combination thereof, as specified as
contemplated by Section 301, and, if any combination thereof is so specified, as
requested by the beneficial owner thereof; provided, however, that, unless
otherwise specified in such temporary global Debt Security, upon such
presentation by the Common Depository, such temporary global Debt Security is
accompanied by a certificate dated the Exchange Date or a subsequent date and
signed by Euroclear as to the portion of such temporary global Debt Security
held for its account then to be exchanged and a certificate dated the Exchange
Date or a subsequent date and signed by CEDEL as to the portion of such
temporary global Debt Security held for its account then to be exchanged, each
in the form set forth in Exhibit A-2 to this Indenture or in such other form as
may be established pursuant to Section 301; and provided further that definitive
Bearer Debt Securities shall be delivered in exchange for a portion of a
temporary global Debt Security only in compliance with the requirements of
Section 303.
Unless otherwise specified in such temporary global Debt Security, the
interest of a beneficial owner of Debt Securities of a series in a temporary
global Debt Security shall be exchanged for definitive Debt Securities of the
same series and of like tenor following the Exchange Date when the account
holder instructs Euroclear or CEDEL, as the case may be, to request such
exchange on his behalf and delivers to Euroclear or CEDEL, as the case may be, a
certificate in the form set forth in Exhibit A-1 to this Indenture (or in such
other form as may be established pursuant
27
<PAGE>
to Section 301), dated no earlier than 15 days prior to the Exchange Date,
copies of which certificate shall be available from the offices of Euroclear
and CEDEL, the Trustee, any Authenticating Agent appointed for such series of
Debt Securities and each Paying Agent. Unless otherwise specified in such
temporary global Debt Security, any such exchange shall be made free of charge
to the beneficial owners of such temporary global Debt Security, except that a
Person receiving definitive Debt Securities must bear the cost of insurance,
postage, transportation and the like unless such Person takes delivery of such
definitive Debt Securities in person at the offices of Euroclear or CEDEL.
Definitive Debt Securities in bearer form to be delivered in exchange for any
portion of a temporary global Debt Security shall be delivered only outside the
United States.
Until exchanged in full as hereinabove provided, the temporary Debt
Securities of any series shall in all respects be entitled to the same benefits
under this Indenture as definitive Debt Securities of the same series and of
like tenor authenticated and delivered hereunder, except that, unless otherwise
specified as contemplated by Section 301, interest payable on a temporary global
Debt Security on an Interest Payment Date for Debt Securities of such series
occurring prior to the applicable Exchange Date shall be payable to Euroclear
and CEDEL on such Interest Payment Date upon delivery by Euroclear and CEDEL to
the Trustee of a certificate or certificates in the form set forth in Exhibit
A-2 to this Indenture (or in such other forms as may be established pursuant to
Section 301), for credit without further interest on or after such Interest
Payment Date to the respective accounts of Persons who are the beneficial owners
of such temporary global Debt Security on such Interest Payment Date and who
have each delivered to Euroclear or CEDEL, as the case may be, a certificate
dated no earlier than 15 days prior to the Interest Payment Date occurring prior
to such Exchange Date in the form set forth as Exhibit A-1 to this Indenture (or
in such other forms as may be established pursuant to Section 301).
Notwithstanding anything to the contrary herein contained, the certifications
made pursuant to this paragraph shall satisfy the certification requirements of
the preceding two paragraphs of this Section 304(b) and of the third paragraph
of Section 303 of this Indenture and the interests of the Persons who are the
beneficial owners of the temporary global Debt Security with respect to which
such certification was made will be exchanged for definitive Debt Securities of
the same series and of like tenor on the Exchange Date or the date of
certification if such date occurs after the Exchange Date, without further act
or deed by such beneficial owners. Except as otherwise provided in this
paragraph, no payments of principal or interest owing with respect to a
beneficial interest in a temporary global Debt Security will be made unless and
until such interest in such temporary global Debt Security shall have been
exchanged for an interest in a definitive Debt Security.
SECTION 305. REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE.
The Company shall cause to be kept at the Corporate Trust Office of the Trustee
or in any office or agency of the Company in a Place of Payment a register for
each series of Debt Securities (the registers maintained in such office or in
any such office or agency of the Company in a Place of Payment being herein
sometimes referred to collectively as the "Security Register") in which, subject
to such reasonable regulations as it may prescribe, the Company shall provide
for the registration of Registered Debt Securities and of transfers and
exchanges of Registered Debt
28
<PAGE>
Securities. The Security Register shall be in written form or any other form
capable of being converted into written form within a reasonable time. The
Trustee, at its Corporate Trust Office and at its office in the [Borough of
Manhattan, The City of New York] at the address set forth in Section 1002 (or
at such other address at which the Trustee's New York office may subsequently
be located), is hereby initially appointed "Security Registrar" for the
purpose of registering Registered Debt Securities and transfers and exchanges
of Registered Debt Securities on such Security Register as herein provided. In
the event that the Trustee shall cease to be Debt Security Registrar, it shall
have the right to examine the Security Register at all reasonable times.
Subject to the provisions of this Section 305, upon surrender for
registration of transfer of any Registered Debt Security of any series at any
office or agency of the Company in a Place of Payment for that series, the
Company shall execute, and the Trustee shall authenticate and deliver, in the
name of the designated transferee or transferees, one or more new Registered
Debt Securities of the same series, of any authorized denominations and of a
like aggregate principal amount, bearing a number not contemporaneously
outstanding, and containing identical terms and provisions.
Subject to the provisions of this Section 305, at the option of the
Holder, Registered Debt Securities of any series may be exchanged for other
Registered Debt Securities of the same series, of any authorized denomination or
denominations and of a like aggregate principal amount, containing identical
terms and provisions, upon surrender of the Registered Debt Securities to be
exchanged at any such office or agency. Whenever any such Registered Debt
Securities are so surrendered for exchange, the Company shall execute, and the
Trustee shall authenticate and deliver, the Registered Debt Securities which the
Holder making the exchange is entitled to receive. Unless otherwise specified
with respect to any series of Debt Securities as contemplated by Section 301,
Bearer Debt Securities may not be issued in exchange for Registered Debt
Securities.
If (but only if) permitted by the applicable Board Resolution and
(subject to Section 303) set forth in the applicable Officers" Certificate, or
in any indenture supplemental hereto, delivered as contemplated by Section 301,
at the option of the Holder, Bearer Debt Securities of any series may be
exchanged for Registered Debt Securities of the same series of any authorized
denominations and of a like aggregate principal amount and tenor, upon surrender
of the Bearer Debt Securities to be exchanged at any such office or agency, with
all unmatured coupons and all matured coupons in default thereto appertaining.
If the Holder of a Bearer Debt Security is unable to produce any such unmatured
coupon or coupons or matured coupon or coupons in default, any such permitted
exchange may be effected if the Bearer Debt Securities are accompanied by
payment in funds acceptable to the Company in an amount equal to the face amount
of such missing coupon or coupons, or the surrender of such missing coupon or
coupons may be waived by the Company and the Trustee if there is furnished to
them such security or indemnity as they may require to save each of them and any
Paying Agent harmless. If thereafter the Holder of such Debt Security shall
surrender to any Paying Agent any such missing coupon in respect of which such a
payment shall have been made, such Holder shall be entitled to receive the
portion of such payment equal to the
29
<PAGE>
face amount of such surrendered coupon, provided, however, that, except as
otherwise provided in Section 1002, interest represented by coupons shall be
payable only upon presentation and surrender of those coupons at an office or
agency located outside the United States. Notwithstanding the foregoing, in
case a Bearer Debt Security of any series is surrendered at any such office or
agency in a permitted exchange for a Registered Debt Security of the same
series and like tenor after the close of business at such office or agency on
(i) any Regular Record Date and before the opening of business at such office
or agency on the relevant Interest Payment Date, or (ii) any Special Record
Date and before the opening of business at such office or agency on the related
proposed date for payment of Defaulted Interest, such Bearer Debt Security
shall be surrendered without the coupon relating to such Interest Payment Date
or proposed date for payment, as the case may be, and interest or Defaulted
Interest, as the case may be, will not be payable on such Interest Payment
Date or proposed date for payment, as the case may be, in respect of the
Registered Debt Security issued in exchange for such Bearer Debt Security, but
will be payable only to the Holder of such coupon when due in accordance with
the provisions of this Indenture. Whenever any Debt Securities are so
surrendered for exchange, the Company shall execute, and the Trustee
shall authenticate and deliver, the Debt Securities which the Holder making the
exchange is entitled to receive. Notwithstanding the foregoing, except as
otherwise specified as contemplated by Section 301, any permanent global Debt
Security shall be exchangeable only as provided in this paragraph. If the
depository for any permanent global Debt Security is DTC, then, unless the terms
of such global Debt Security expressly permit such global Debt Security to be
exchanged in whole or in part for definitive Debt Securities, a global Debt
Security may be transferred, in whole but not in part, only to a nominee of DTC,
or by a nominee of DTC to DTC, or to a successor to DTC for such global Debt
Security selected or approved by the Company or to a nominee of such successor
to DTC. If at any time (i) DTC notifies the Company that it is unwilling or
unable to continue as depository for the applicable global Debt Security or Debt
Securities or if at any time DTC ceases to be a clearing agency registered under
the Securities Exchange Act of 1934 if so required by applicable law or
regulation, and, in either case, a successor depository is not appointed by the
Company within 90 days after the Company receives such notice or becomes aware
of such ineligibility, (ii) the Company in its sole discretion determines that
such global Debt Securities shall be exchangeable for definitive Debt Securities
or (iii) there shall have occurred and be continuing an Event of Default under
this Indenture with respect to the Debt Securities of any series and beneficial
owners representing a majority in aggregate principal amount of the Outstanding
Debt Securities represented by such global Debt Securities advise DTC to cease
acting as depository, then the Company shall execute, and the Trustee shall
authenticate and deliver, definitive Debt Securities of like series, rank, tenor
and terms in definitive form in an aggregate principal amount equal to the
principal amount of such global Debt Security or Debt Securities. If any
beneficial owner of an interest in a permanent global Debt Security is otherwise
entitled to exchange such interest for Debt Securities of such series and of
like tenor and principal amount of another authorized form and denomination, as
specified as contemplated by Section 301 and provided that any applicable notice
provided in the permanent global Debt Security shall have been given, then
without unnecessary delay but in any event not later than the earliest date on
which such interest may be so exchanged, the Company shall execute, and the
Trustee shall authenticate and deliver, definitive Debt Securities in aggregate
principal amount
30
<PAGE>
equal to the principal amount of such beneficial owner's interest in such
permanent global Debt Security. On or after the earliest date on which such
interests may be so exchanged, such permanent global Debt Security shall be
surrendered for exchange by DTC or such other depository as shall be specified
in the Company Order with respect thereto to the Trustee, as the Company's
agent for such purpose; provided, however, that no Bearer Debt Security
delivered in exchange for a portion of a permanent global Debt Security shall
be mailed or otherwise delivered to any location in the United States. If a
Registered Debt Security is issued in exchange for any portion of a permanent
global Debt Security after the close of business at the office or agency where
such exchange occurs on (i) any Regular Record Date and before the opening of
business at such office or agency on the relevant Interest Payment Date, or
(ii) any special Record Date and the opening of business at such office or
agency on the related proposed date for payment of Defaulted Interest,
Interest or Defaulted Interest, as the case may be, will not be payable on
such Interest Payment Date or proposed date for payment, as the case may be,
in respect of such Registered Debt Security, but will be payable on such
Interest Payment Date or proposed date for payment, as the case may be,
only to the Person to whom interest in respect of such portion of such
permanent global Debt Security is payable in accordance with the provisions of
this Indenture.
All Debt Securities issued upon any registration of transfer or
exchange of Debt Securities shall be the valid obligations of the Company,
evidencing the same Debt, and entitled to the same benefits under this
Indenture, as the Debt Securities surrendered upon such registration of transfer
or exchange.
Every Registered Debt Security presented or surrendered for
registration of transfer or for exchange or redemption shall (if so required by
the Company or the Debt Security Registrar) be duly endorsed, or be accompanied
by a written instrument of transfer in form satisfactory to the Company and the
Debt Security Registrar duly executed by the Holder thereof or his attorney duly
authorized in writing.
No service charge shall be made to the Holder for any registration of
transfer or exchange of Debt Securities, but the Company may require payment of
a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any registration of transfer or exchange of Debt
Securities, other than exchanges pursuant to Section 304, 906 or 1107 or upon
surrender of a Debt Security for conversion in part or repayment in part at the
option of the Holder not involving any transfer.
The Company or the Trustee, as applicable, shall not be required (i)
to issue, register the transfer of or exchange any Debt Security if such Debt
Security may be among those selected for redemption during a period beginning at
the opening of business 15 days before selection of the Debt Securities to be
redeemed under Section 1103 and ending at the close of business on (A) if such
Debt Securities are issuable only as Registered Debt Securities, the day of the
mailing of the relevant notice of redemption or (B) if such Debt Securities are
issuable as Bearer Debt Securities, the day of the first publication of the
relevant notice of redemption or, if such Debt Securities are also
31
<PAGE>
issuable as Registered Debt Securities and there is no publication, the day of
mailing of the relevant notice of redemption, or (ii) to register the transfer
of or exchange any Registered Debt Security so selected for redemption in
whole or in part, except, in the case of any Registered Debt Security to be
redeemed in part, the portion thereof not to be redeemed, or (iii) to exchange
any Bearer Debt Security so selected for redemption except that such a Bearer
Debt Security may be exchanged for a Registered Debt Security of that series
and like tenor, provided that such Registered Debt Security shall be
simultaneously surrendered for redemption, or (iv) to issue, register the
transfer of or exchange any Debt Security which has been surrendered for
repayment at the option of the Holder, except the portion, if any, of such
Debt Security not to be so repaid.
SECTION 306. MUTILATED, DESTROYED, LOST AND STOLEN DEBT SECURITIES.
If any mutilated Debt Security or a Debt Security with a mutilated coupon
appertaining to it is surrendered to the Trustee or the Company, together with,
in proper cases, such Debt Security or indemnity as may be required by the
Company or the Trustee to save each of them or any agent of either of them
harmless, the Company shall execute and the Trustee shall authenticate and
deliver in exchange therefor a new Debt Security of the same series and
principal amount, containing identical terms and provisions and bearing a number
not contemporaneously outstanding, with coupons corresponding to the coupons, if
any, appertaining to the surrendered Debt Security.
If there shall be delivered to the Company and to the Trustee (i)
evidence to their satisfaction of the destruction, loss or theft of any Debt
Security or coupon, and (ii) such Debt Security or indemnity as may be required
by them to save each of them and any agent of either of them harmless, then, in
the absence of notice to the Company or the Trustee that such Debt Security or
coupon has been acquired by a bona fide purchaser, the Company shall execute and
upon its request the Trustee shall authenticate and deliver, in lieu of any such
destroyed, lost or stolen Debt Security or in exchange for the Debt Security to
which a destroyed, lost or stolen coupon appertains (with all appurtenant
coupons not destroyed, lost or stolen), a new Debt Security of the same series
and principal amount, containing identical terms and provisions and bearing a
number not contemporaneously outstanding, with coupons corresponding to the
coupons, if any, appertaining to such destroyed, lost or stolen Debt Security or
to the Debt Security to which such destroyed, lost or stolen coupon appertains.
Notwithstanding the provisions of the previous two paragraphs, in case
any such mutilated, destroyed, lost or stolen Debt Security or coupon has become
or is about to become due and payable, the company in its discretion may,
instead of issuing a new Debt Security, with coupons corresponding to the
coupons, if any, appertaining to such destroyed, lost or stolen Debt Security or
to the Debt Security to which such destroyed, lost or stolen coupon appertains,
pay such Debt Security or coupon; provided, however, that payment of principal
of (and premium, if any), any interest on and any Additional Amounts with
respect to, Bearer Debt Securities shall, except as otherwise provided in
Section 1002, be payable only at an office or agency located outside the United
States and, unless otherwise specified as contemplated by Section 301, any
interest on Bearer
32
<PAGE>
Debt Securities shall be payable only upon presentation and surrender of the
coupons appertaining thereto.
Upon the issuance of any new Debt Security under this Section, the
Company may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Debt Security of any series with its coupons, if any, issued
pursuant to this Section in lieu of any destroyed, lost or stolen Debt Security,
or in exchange for a Debt Security to which a destroyed, lost or stolen coupon
appertains, shall constitute an original additional contractual obligation of
the Company, whether or not the destroyed, lost or stolen Debt Security and its
coupons, if any, or the destroyed, lost or stolen coupon shall be at any time
enforceable by anyone, and shall be entitled to all the benefits of this
Indenture equally and proportionately with any and all other Debt Securities of
that series and their coupons, if any, duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Debt Securities or coupons.
SECTION 307. PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED. Except
as otherwise specified with respect to a series of Debt Securities in accordance
with the provisions of Section 301, interest on any Registered Debt Security
that is payable, and is punctually paid or duly provided for, on any Interest
Payment Date shall be paid to the Person in whose name that Debt Security (or
one or more Predecessor Debt Securities) is registered at the close of business
on the Regular Record Date for such interest at the office or agency of the
Company maintained for such purpose pursuant to Section 1002; provided, however,
that each installment of interest on any Registered Debt Security may at the
Company's option be paid by (i) mailing a check for such interest, payable to or
upon the written order of the Person entitled thereto pursuant to Section 308,
to the address of such Person as it appears on the Security Register or (ii)
transfer to an account maintained by the payee located in the United States.
Unless otherwise provided as contemplated by Section 301 with respect
to the Debt Securities of any series, payment of interest may be made, in the
case of a Bearer Debt Security, by transfer to an account maintained by the
payee with a bank located outside the United States.
Unless otherwise provided as contemplated by Section 301, interest, if
any, payable on any permanent global Debt Security or any Interest Payment Date
will be paid to DTC, Euroclear and/or CEDEL, as the case may be, with respect to
that portion of such permanent global Debt Security held for its account by Cede
& Co. (or by another nominee of DTC or by DTC) or the Common Depository, as the
case may be, for the purpose of permitting such party to credit the interest
received by it in respect of such permanent global Debt Security to the accounts
of the
33
<PAGE>
beneficial owners thereof.
In case a Bearer Debt Security of any series is surrendered in
exchange for a Registered Debt Security of such series after the close of
business (at an office or agency in a Place of Payment for such series) on any
Regular Record Date and before the opening of business (at such office or
agency) on the next succeeding Interest Payment Date, such Bearer Debt Security
shall be surrendered without the coupon relating to such Interest Payment Date
and interest will not be payable on such Interest Payment Date in respect of the
Registered Debt Security issued in exchange for such Bearer Debt Security, but
will be payable only to the Holder of such coupon when due in accordance with
the provisions of this Indenture.
Except as otherwise specified with respect to a series of Debt
Securities in accordance with the provisions of Section 301, any interest on any
Registered Debt Security of any series that is payable, but is not punctually
paid or duly provided for, on any Interest Payment Date (herein called
ADefaulted Interest@) shall forthwith cease to be payable to the registered
Holder thereof on the relevant Regular Record Date by virtue of having been such
Holder, and such Defaulted Interest may be paid by the Company, at its election
in each case, as provided in clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted Interest
to the Persons in whose names the Registered Debt Securities of such series (or
their respective Predecessor Debt Securities) are registered at the close of
business on a Special Record Date for the payment of such Defaulted Interest,
which shall be fixed in the following manner. The Company shall notify the
Trustee in writing of the amount of Defaulted Interest proposed to be paid on
each Registered Debt Security of such series and the date of the proposed
payment (which shall not be less than 20 days after such notice is received by
the Trustee), and at the same time the Company shall deposit with the Trustee
an amount of money in the currency or currencies, currency unit or units or
composite currency or currencies in which the Debt Securities of such series
are payable (except as otherwise specified pursuant to Section 301 for the Debt
Securities of such series) equal to the aggregate amount proposed to be paid in
respect of such Defaulted Interest or shall make arrangements satisfactory to
the Trustee for such deposit on or prior to the date of the proposed payment,
such money when deposited to be held in trust for the benefit of the Persons
entitled to such Defaulted Interest as in this clause provided. Thereupon the
Trustee shall fix a Special Record Date for the payment of such Defaulted
Interest which shall be not more than 15 days and not less than 10 days prior
to the date of the proposed payment and not less than 10 days after the receipt
by the Trustee of the notice of the proposed payment. The Trustee shall
promptly notify the Company of such Special Record Date and, in the name and at
the expense of the Company, shall cause notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor to be mailed, first-
class postage prepaid, to each Holder of Registered Debt Securities of such
series at his address as it appears in the Security Register not less than 10
days prior to such Special Record Date. The Trustee shall in the name and at
the expense of the Company, cause a similar notice to be published at least
once in an Authorized Newspaper in each Place of Payment, but such publications
shall not be a condition precedent to the establishment of such Special Record
34
<PAGE>
Date. Notice of the proposed payment of such Defaulted Interest and the
Special Record Date therefor having been mailed as aforesaid, such Defaulted
Interest shall be paid to the Persons in whose names the Registered Debt
Securities of such series (or their respective Predecessor Debt Securities) are
registered at the close of business on such Special Record Date and shall no
longer be payable pursuant to the following clause (2). In case a Bearer Debt
Security of any series is surrendered at the office or agency in a Place of
Payment for such series in exchange for a Registered Debt Security of such
series after the close of business at such office or agency on any Special
Record Date and before the opening of business at such office or agency on the
related proposed date for payment of Defaulted Interest, such Bearer Debt
Security shall be surrendered without the coupon relating to such proposed date
of payment and Defaulted Interest will not be payable on such proposed date of
payment in respect of the Registered Debt Security issued in exchange for such
Bearer Debt Security, but will be payable only to the Holder of such coupon
when due in accordance with the provisions of this Indenture.
(2) The Company may make payment of any Defaulted Interest on the
Registered Debt Securities of any series in any other lawful manner not
inconsistent with the requirements of any securities exchange on which such Debt
Securities may be listed, and upon such notice as may be required by such
exchange, if, after notice given by the Company to the Trustee of the proposed
payment pursuant to this clause, such manner of payment shall be deemed
practicable by the Trustee.
Subject to the foregoing provisions of this Section and Section 305,
each Debt Security delivered under this Indenture upon registration of transfer
of or in exchange for or in lieu of any other Debt Security shall carry the
rights to interest accrued and unpaid, and to accrue, which were carried by such
other Debt Security.
SECTION 308. PERSONS DEEMED OWNERS. Prior to due presentment of a
Registered Debt Security for registration of transfer, the Company, the Trustee
and any agent of the Company or the Trustee may treat the Person in whose name
such Registered Debt Security is registered as the owner of such Debt Security
for the purpose of receiving payment of principal of (and premium, if any), and
(subject to Sections 305 and 307) interest on, such Registered Debt Security and
for all other purposes whatsoever, whether or not such Registered Debt Security
be overdue, and neither the Company, the Trustee nor any agent of the Company or
the Trustee shall be affected by notice to the contrary.
Title to any Bearer Debt Security and any coupons appertaining thereto
shall pass by delivery. The Company, the Trustee and any agent of the Company
or the Trustee may treat the Holder of any Bearer Debt Security and the Holder
of any coupon as the absolute owner of such Debt Security or coupon for the
purpose of receiving payment thereof or on account thereof and for all other
purposes whatsoever, whether or not such Debt Security or coupon be overdue, and
neither the Company, the Trustee nor any agent of the Company or the Trustee
shall be affected by notice to the contrary.
35
<PAGE>
None of the Company, the Trustee, any Paying Agent or the Debt
Security Registrar will have any responsibility or liability for any aspect of
the records relating to or payments made on account of beneficial ownership
interests of a Debt Security in global form or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests.
Notwithstanding the foregoing, with respect to any global Debt
Security, nothing herein shall prevent the Company, the Trustee, or any agent of
the Company or the Trustee from giving effect to any written certification,
proxy or other authorization furnished by any depository, as a Holder, with
respect to such global Debt Security or impair, as between such depository and
owners of beneficial interests in such global Debt Security, the operation of
customary practices governing the exercise of the rights of such depository (or
its nominee) as Holder of such global Debt Security.
SECTION 309. CANCELLATION. All Debt Securities and coupons
surrendered for payment, redemption, repayment at the option of the Holder,
registration of transfer or exchange or for credit against any sinking fund
payment shall, if surrendered to any Person other than the Trustee, be delivered
to the Trustee, and any such Debt Securities and coupons surrendered directly to
the Trustee for any such purpose shall be promptly canceled by it. The Company
may at any time deliver to the Trustee for cancellation any Debt Securities
previously authenticated and delivered hereunder which the Company may have
acquired in any manner whatsoever, and may deliver to the Trustee (or to any
other Person for delivery to the Trustee) for cancellation any Debt Securities
previously authenticated hereunder which the Company has not issued and sold,
and all Debt Securities so delivered shall be promptly canceled by the Trustee.
If the Company shall so acquire any of the Debt Securities, however, such
acquisition shall not operate as a redemption or satisfaction of the
indebtedness represented by such Debt Securities unless and until the same are
surrendered to the Trustee for cancellation. No Debt Securities shall be
authenticated in lieu of or in exchange for any Debt Securities canceled as
provided in this Section, except as expressly permitted by or pursuant to this
Indenture. Canceled Debt Securities and coupons held by the Trustee shall be
destroyed by the Trustee and the Trustee shall deliver a certificate of such
destruction to the Company, unless by a Company Order the Company directs their
return to it.
SECTION 310. COMPUTATION OF INTEREST. Except as otherwise specified
as contemplated by Section 301 with respect to Debt Securities of any series,
interest on the Debt Securities of each series shall be computed on the basis of
a 360-day year consisting of twelve 30-day months.
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. SATISFACTION AND DISCHARGE OF INDENTURE. This Indenture
shall upon Company Request cease to be of further effect with respect to any
series of
36
<PAGE>
Debt Securities specified in such Company Request (except as hereinafter
provided in this Section 401), the Trustee, upon receipt of a Company Order,
and at the expense of the Company, shall execute proper instruments
acknowledging satisfaction and discharge of this Indenture as to such series
when
(1) either
(A) all Debt Securities of such series theretofore
authenticated and delivered and all coupons, if any, appertaining thereto
(other than (i) coupons appertaining to Bearer Debt Securities surrendered for
exchange for Registered Debt Securities and maturing after such exchange,
whose surrender is not required or has been waived as provided in Section 305,
(ii) Debt Securities and coupons of such series which have been destroyed,
lost or stolen and which have been replaced or paid as provided in Section 306,
(iii) coupons appertaining to Debt Securities called for redemption and
maturing after the relevant Redemption Date, whose surrender has been waived
as provided in Section 1106, and (iv) Debt Securities and coupons of such
series for whose payment money has theretofore been deposited in trust or
segregated and held in trust by the Company and thereafter repaid to the
Company or discharged from such trust, as provided in Section 1003) have been
delivered to the Trustee for cancellation; or
(B) all Debt Securities of such series and, in the case of
(i) or (ii) below, any coupons appertaining thereto not theretofore delivered
to the Trustee for cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated
Maturity within one year, or
(iii) if redeemable at the option of the Company, are
to be called for redemption within one year under arrangements
satisfactory to the Trustee for the giving of notice of
redemption by the Trustee in the name, and at the expense, of
the Company, and the Company, in the case of (i), (ii) or
(iii) above, has irrevocably deposited or caused to be
deposited with the Trustee as trust funds in trust for the
purpose an amount in the currency or currencies, currency
unit or units or composite currency or currencies in which the
Debt Securities of such series are payable, sufficient to pay
and discharge the entire indebtedness on such Debt Securities
and such coupons not theretofore delivered to the Trustee for
cancellation, for principal (and premium, if any) and
interest, and any Additional Amounts with respect thereto,
to the date of such deposit (in the case of Debt Securities
which have become due and payable) or to the Stated Maturity
or Redemption Date, as the case may be;
(2) the Company has paid or caused to be paid all other sums
payable hereunder by the Company; and
37
<PAGE>
(3) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the satisfaction and discharge of
this Indenture as to such series have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee and any predecessor Trustee under
Section 606, the obligations of the Company to any Authenticating Agent under
Section 611 and, if money shall have been deposited with and held by the Trustee
pursuant to subclause (B) of clause (1) of this Section, and the obligations of
the Company and the Trustee with respect to the Securities of such series under
Sections 305, 306, 402, 1002 and 1003, with respect to the payment of Additional
Amounts, if any, with respect to such Securities as contemplated by Section 1015
and with respect to any rights to convert or exchange such Securities into
Common Shares or Preferred Shares or other securities or property, shall
survive.
SECTION 402. APPLICATION OF TRUST FUNDS. Subject to the provisions
of the last paragraph of Section 1003, all money deposited with the Trustee
pursuant to Section 401 shall be held in trust and applied by it, in accordance
with the provisions of the Debt Securities, the coupons and this Indenture, to
the payment, either directly or through any Paying Agent (other than the Company
acting as its own Paying Agent) as the Trustee may determine, to the Persons
entitled thereto, of the principal (and premium, if any), and interest, if any,
and Additional Amounts, if any, for whose payment such money has been deposited
with or received by the Trustee, but such money need not be segregated from
other funds except to the extent required by law.
ARTICLE FIVE
REMEDIES
SECTION 501. EVENTS OF DEFAULT. "Event of Default," wherever used
herein with respect to any particular series of Debt Securities, means any one
of the following events (whatever the reason for such Event of Default and
whether or not it shall be voluntary or involuntary or be effected by operation
of law or pursuant to any judgment, decree or order of any court or any order,
rule or regulation of any administrative or governmental body):
(1) default in the payment of any interest on, or any Additional
Amounts payable in respect of any interest on, any Debt Security of that series
or of any coupon appertaining thereto, when such interest, Additional Amounts or
coupon becomes due and payable, and continuance of such default for a period of
30 days; or
(2) default in the payment of any principal of or premium, if any,
on, or any Additional Amounts payable in respect of any principal of or premium,
if any, on, any Debt Security of that series when it becomes due and payable at
its Maturity (whether at Stated Maturity, upon redemption, notice of option to
elect repayment or otherwise); or
38
<PAGE>
(3) default in the deposit of any sinking fund payment, when and as
due by the terms of any Debt Security of that series; or
(4) default in the performance, or breach, of any covenant or
warranty of the Company in this Indenture with respect to any Debt Security of
that series (other than a covenant or warranty a default in whose performance or
whose breach is elsewhere in this Section specifically dealt with or included
herein solely for the benefit of a series of Debt Securities other than that
series), and continuance of such default or breach for a period of 60 days after
there has been given, by registered or certified mail, to the Company by the
Trustee or to the Company and the Trustee by the Holders of at least 25% in
principal amount of the Outstanding Debt Securities of that series a written
notice specifying such default or breach and requiring it to be remedied and
stating that such notice is a ANotice of Default@ hereunder; or
(5) default under any bond, note, debenture or other evidence of
indebtedness of the Company or any of its Subsidiaries (including an event of
default with respect to any other series of Debt Securities), or under any
mortgage, indenture or other instrument under which there may be issued or by
which there may be secured or evidenced any indebtedness of the Company or any
of its Subsidiaries, whether such indebtedness exists on the date of this
Indenture or shall hereafter be created, which results in such indebtedness in
an aggregate principal amount exceeding $20,000,000 becoming or being declared
due and payable prior to the date on which it would otherwise have become due
and payable, or which constitutes a failure to pay at maturity or other
scheduled payment date (after expiration of any applicable grace period) such
indebtedness in an aggregate principal amount exceeding $20,000,000, but only if
such indebtedness is not discharged or such acceleration is not rescinded or
annulled within 10 days after there shall have been given, by registered or
certified mail, to the Company by the Trustee or to the Company and the Trustee
by the Holders of at least 10% in aggregate principal amount of the Outstanding
Debt Securities of that series a written notice specifying such default and
requiring the Company to cause such indebtedness to be discharged or cause such
acceleration to be rescinded or annulled and stating that such notice is a
"Notice of Default" hereunder; or
(6) the Company or any Significant Subsidiary of the Company
pursuant to or within the meaning of any Bankruptcy Law:
(A) commences a voluntary case or proceeding,
(B) consents to the entry of an order or decree for relief
against it in an involuntary case or to the commencement of any
bankruptcy or insolvency case or proceeding against it,
(C) consents to the appointment of a Custodian of it or for any
substantial part of its property, or
39
<PAGE>
(D) makes a general assignment for the benefit of its
creditors; or
(7) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that:
(A) is for relief against the Company or any Significant
Subsidiary of the Company in an involuntary case,
(B) adjudges the Company or any Significant Subsidiary of the
Company a bankrupt or insolvent,
(C) approves as properly filed a petition seeking
reorganization, arrangement, adjustment or composition of or in
respect of the Company or any Significant Subsidiary of the Company,
(D) appoints a Custodian of the Company or any Significant
Subsidiary of the Company or for all or any substantial part of the
property of the Company or any Significant Subsidiary of the Company,
or
(E) orders the winding up or liquidation of the Company or any
Significant Subsidiary of the Company, and the order or decree
described in this clause (7) remains unstayed and in effect for 60
days; or
(8) any other Event of Default provided with respect to Debt
Securities of that series.
As used in this Section 501, the term "Bankruptcy Law" means Title 11
U.S. Code or any similar Federal or State law for the relief of debtors and the
term "Custodian" means any receiver, trustee, assignee, liquidator, sequestrator
or other similar official under any Bankruptcy Law.
SECTION 502. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT. If
an Event of Default with respect to Debt Securities of any series at the time
outstanding occurs and is continuing, then and in every such case the Trustee or
the Holders of not less than 25% in principal amount of the Outstanding Debt
Securities of that series may declare the principal (or, if any Debt Securities
are Original Issue Discount Debt Securities or Indexed Debt Securities, such
portion of the principal as may be specified in the terms thereof) of all the
Debt Securities of that series to be due and payable immediately, by a notice in
writing to the Company (and to the Trustee if given by the Holders), and upon
any such declaration such principal or specified portion thereof shall become
immediately due and payable.
At any time after such a declaration of acceleration with respect to
Debt Securities
40
<PAGE>
of any series has been made and before a judgment or decree for payment of
the money due has been obtained by the Trustee as hereinafter in this Article
provided, the Holders of not less than a majority in principal amount of the
Outstanding Debt Securities of that series, by written notice to the Company
and the Trustee, may rescind and annul such declaration and its consequences if:
(1) the Company has paid or deposited with the Trustee a sum
sufficient to pay in the currency, currency unit or composite currency in
which the Debt Securities of such series are payable (except as may be
otherwise specified pursuant to Section 301 for the Debt Securities of such
series):
(A) all overdue installments of interest on and any Additional
Amounts payable in respect of all Outstanding Debt Securities of that series and
any related coupons,
(B) the principal of (and premium, if any, on) any Outstanding Debt
Securities of that series which have become due otherwise than by such
declaration of acceleration and interest thereon at the rate or rates borne by
or provided for in such Debt Securities,
(C) to the extent that payment of such interest is lawful, interest
upon overdue installments of interest and any Additional Amounts at the rate or
rates borne by or provided for in such Debt Securities, and
(D) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel; and
(2) all Events of Default with respect to Debt Securities of that
series, other than the nonpayment of the principal of (or premium, if any) or
interest on Debt Securities of that series which have become due solely by such
declaration of acceleration, have been cured or waived as provided in Section
513.
No such rescission shall affect any subsequent default or impair any
right consequent thereon.
SECTION 503. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY
TRUSTEE. The Company covenants that if:
(1) default is made in the payment of any installment of interest or
Additional Amounts, if any, on any Debt Security of any series and any related
coupon when such interest or Additional Amount becomes due and payable and such
default continues for a period of 30 days, or
(2) default is made in the payment of the principal of (or premium,
if any, on) any Debt Security of any series at its Maturity, then the Company
will, upon demand of the Trustee, pay to the Trustee, for the benefit of the
Holders of such Debt Securities of such series and coupons, the
41
<PAGE>
whole amount then due and payable on such Debt Securities and coupons for
principal (and premium, if any) and interest and Additional Amounts, with
interest upon any overdue principal (and premium, if any) and, to the extent
that payment of such interest shall be legally enforceable, upon any overdue
installments of interest or Additional Amounts, if any, at the rate or rates
borne by or provided for in such Debt Securities, and, in addition thereto,
such further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel.
If the Company fails to pay such amounts forthwith upon such demand,
the Trustee, in its own name and as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, and may
prosecute such proceeding to judgment or final decree, and may enforce the same
against the Company or any other obligor upon such Debt Securities of such
series and collect the moneys adjudged or decreed to be payable in the manner
provided by law out of the property of the Company or any other obligor upon
such Debt Securities of such series, wherever situated.
If an Event of Default with respect to Debt Securities of any series
occurs and is continuing, the Trustee may in its discretion proceed to protect
and enforce its rights and the rights of the Holders of Debt Securities of such
series and any related coupons by such appropriate judicial proceedings as the
Trustee shall deem most effectual to protect and enforce any such rights,
whether for the specific enforcement of any covenant or agreement in this
Indenture or in aid of the exercise of any power granted herein, or to enforce
any other proper remedy.
SECTION 504. TRUSTEE MAY FILE PROOFS OF CLAIM. In case of the
pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial
proceeding relative to the Company or any other obligor upon the Debt Securities
or the property of the Company or of such other obligor or their creditors, the
Trustee (irrespective of whether the principal of the Debt Securities of any
series shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have made any demand on
the Company for the payment of overdue principal, premium, if any, or interest)
shall be entitled and empowered, by intervention in such proceeding or
otherwise:
(i) to file and prove a claim for the whole amount, or such lesser
amount as may be provided for in the Debt Securities of such series, of
principal (and premium, if any) and interest and Additional Amounts, if any,
owing and unpaid in respect of the Debt Securities and to file such other papers
or documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and of the
Holders allowed in such judicial proceeding, and
(ii) to collect and receive any moneys or other property payable or
deliverable on
42
<PAGE>
any such claims and to distribute the same; and any custodian, receiver,
assignee, trustee, liquidator, sequestrator (or other similar official) in any
such judicial proceeding is hereby authorized by each Holder of Debt
Securities of such series and coupons to make such payments to the Trustee,
and in the event that the Trustee shall consent to the making of such payments
directly to the Holders, to pay to the Trustee any amount due to it for the
reasonable compensation, expenses, disbursements and advances of the Trustee
and any predecessor Trustee, their agents and counsel, and any other amounts due
the Trustee or any predecessor Trustee under Section 606.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder of a Debt
Security or coupon any plan of reorganization, arrangement, adjustment or
composition affecting the Debt Securities or coupons or the rights of any Holder
thereof, or to authorize the Trustee to vote in respect of the claim of any
Holder of a Debt Security or coupon in any such proceeding.
SECTION 505. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF DEBT
SECURITIES OR COUPONS. All rights of action and claims under this Indenture or
any of the Debt Securities or coupons may be prosecuted and enforced by the
Trustee without the possession of any of the Debt Securities or coupons or the
production thereof in any proceeding relating thereto, and any such proceeding
instituted by the Trustee shall be brought in its own name as trustee of an
express trust, and any recovery of judgment shall, after provision for the
payment of the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel, be for the ratable benefit of the Holders
of the Debt Securities and coupons in respect of which such judgment has been
recovered.
SECTION 506. APPLICATION OF MONEY COLLECTED. Any money collected by
the Trustee pursuant to this Article shall be applied in the following order, at
the date or dates fixed by the Trustee and, in case of the distribution of such
money on account of principal (or premium, if any) or interest and any
Additional Amounts, upon presentation of the Debt Securities or coupons, or
both, as the case may be, and the notation thereon of the payment if only
partially paid and upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee and any
predecessor Trustee under Section 606;
SECOND: To the payment of amounts then due and unpaid to the holders
of the Senior Indebtedness, to the extent required by Article XVI;
THIRD: To the payment of the amounts then due and unpaid upon the
Debt Securities and coupons for principal (and premium, if any) and interest and
any Additional Amounts in respect of which or for the benefit of which such
money has been collected, ratably, without preference or priority of any kind,
according to the aggregate amounts due and payable on such Debt Securities and
coupons for principal (and premium, if any), interest and Additional Amounts,
43
<PAGE>
respectively; and
FOURTH: To the payment of the remainder, if any, to the Company.
SECTION 507. LIMITATION ON SUITS. No Holder of any Debt Security of any
series or any related coupon shall have any right to institute any proceeding,
judicial or otherwise, with respect to this Indenture, or for the appointment of
a receiver or trustee, or for any other remedy hereunder, unless:
(1) such Holder has previously given written notice to the Trustee
of a continuing Event of Default with respect to the Debt Securities of that
series;
(2) the Holders of not less than 25% in principal amount of the
Outstanding Debt Securities of that series shall have made written request to
the Trustee to institute proceedings in respect of such Event of Default in its
own name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee indemnity
reasonably satisfactory to the Trustee against the costs, expenses and
liabilities to be incurred in compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such proceeding; and
(5) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Holders of a majority in
principal amount of the Outstanding Debt Securities of that series; it being
understood and intended that no one or more of such Holders shall have any right
in any manner whatever by virtue of, or by availing of, any provision of this
Indenture to affect, disturb or prejudice the rights of any other of such
Holders, or to obtain or to seek to obtain priority or preference over any other
of such Holders or to enforce any right under this Indenture, except in the
manner herein provided and for the equal and ratable benefit of all such
Holders.
SECTION 508. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL,
PREMIUM, IF ANY, INTEREST AND ADDITIONAL AMOUNTS. Notwithstanding any other
provision in this Indenture, the Holder of any Debt Security or coupon shall
have the right which is absolute and unconditional to receive payment of the
principal of (and premium, if any) and (subject to Sections 305 and 307)
interest on, and any Additional Amounts in respect of, such Debt Security or
payment of such coupon on the respective due dates expressed in such Debt
Security or coupon (or, in the case of redemption, on the Redemption Date or, in
the case of repayment at the option of the Holder, on the Repayment Date) and to
institute suit for the enforcement of any such payment, and such rights shall
not be impaired without the consent of such Holder.
44
<PAGE>
SECTION 509. RESTORATION OF RIGHTS AND REMEDIES. If the Trustee or
any Holder of a Debt Security or coupon has instituted any proceeding to enforce
any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case the Company, the
Trustee and the Holders of Debt Securities and coupons shall, subject to any
determination in such proceeding, be restored severally and respectively to
their former positions hereunder and thereafter all rights and remedies of the
Trustee and the Holders shall continue as though no such proceeding had been
instituted.
SECTION 510. RIGHTS AND REMEDIES CUMULATIVE. Except as otherwise
provided with respect to the replacement or payment of mutilated, destroyed,
lost or stolen Debt Securities or coupons in the last paragraph of Section 306,
no right or remedy herein conferred upon or reserved to the Trustee or to the
Holders of Debt Securities or coupons is intended to be exclusive of any other
right or remedy, and every right and remedy shall, to the extent permitted by
law, be cumulative and in addition to every other right and remedy given
hereunder or now or hereafter existing at law or in equity or otherwise. The
assertion or employment of any right or remedy hereunder, or otherwise, shall
not prevent the concurrent assertion or employment of any other appropriate
right or remedy.
SECTION 511. DELAY OR OMISSION NOT WAIVER. No delay or omission of
the Trustee or of any Holder of any Debt Security or coupon to exercise any
right or remedy accruing upon any Event of Default shall impair any such right
or remedy or constitute a waiver of any such Event of Default or an acquiescence
therein. Every right and remedy given by this Article Five or by law to the
Trustee or to the Holders may be exercised from time to time, and as often as
may be deemed expedient, by the Trustee or by the Holders of Debt Securities or
coupons, as the case may be.
SECTION 512. CONTROL BY HOLDERS OF DEBT SECURITIES. The Holders of
not less than a majority in principal amount of the Outstanding Debt Securities
of any series shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or exercising
any trust or power conferred on the Trustee with respect to the Debt Securities
of such series, provided that
(1) such direction shall not be in conflict with any rule of law or
with this Indenture,
(2) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction, and
(3) the Trustee need not take any action which might involve it in
personal liability or be unduly prejudicial to the Holders of Debt Securities of
such series not joining therein.
45
<PAGE>
SECTION 513. WAIVER OF PAST DEFAULTS. The Holders of not less than a
majority in principal amount of the Outstanding Debt Securities of any series
may on behalf of the Holders of all the Debt Securities of such series and any
related coupons waive any past default hereunder with respect to such series and
its consequences, except a default
(1) in the payment of the principal of (or premium, if any) or
interest on or Additional Amounts payable in respect of any Debt Security of
such series or any related coupons, or
(2) in respect of a covenant or provision hereof which under Article
Nine cannot be modified or amended without the consent of the Holder of each
Outstanding Debt Security of such series affected.
Upon any such waiver, such default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other default or Event of Default or impair any right consequent thereon.
SECTION 514. WAIVER OF USURY, STAY OR EXTENSION LAWS. The Company
covenants (to the extent that it may lawfully do so) that it will not at any
time insist upon, or plead, or in any manner whatsoever claim or take the
benefit or advantage of, any usury, stay or extension law wherever enacted, now
or at any time hereafter in force, which may affect the covenants or the
performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
SECTION 515. UNDERTAKING FOR COSTS. All parties to this Indenture
agree, and each Holder of any Debt Security by his acceptance thereof shall be
deemed to have agreed, that any court may in its discretion require in any suit
for the enforcement of any right or remedy under this Indenture, or in any suit
against the Trustee for any action taken or omitted by it as Trustee, the filing
by any party litigant in such suit of any undertaking to pay the costs of such
suit, and that such court may in its discretion assess reasonable costs,
including reasonable attorneys' fees, against any party litigant in such suit
having due regard to the merits and good faith of the claims or defenses made by
such party litigant; but the provisions of this Section shall not apply to any
suit instituted by the Trustee, to any suit instituted by any Holder, or group
of Holders, holding in the aggregate more than 10% in principal amount of the
Outstanding Debt Securities of any series, or to any suit instituted by any
Holder for the enforcement of the payment of the principal of (or premium, if
any) or interest on any Debt Security on or after the respective Stated
Maturities expressed in such Debt Security (or, in the case of redemption, on or
after the Redemption Date or, in the case of repayment at the option of the
Holder, on or after the Repayment Date) or for the enforcement of the right, if
any, to convert or exchange any Debt Security into Common Shares, Preferred
Shares or other
46
<PAGE>
securities or property in accordance with its terms.
ARTICLE SIX
THE TRUSTEE
SECTION 601. NOTICE OF DEFAULTS. Within 90 days after the occurrence
of any default hereunder with respect to the Debt Securities of any series, the
Trustee shall transmit in the manner and to the extent provided in TIA Section
313(c), notice of such default hereunder known to the Trustee, unless such
default shall have been cured or waived; provided, however, that, except in the
case of a default in the payment of the principal of (or premium, if any) or
interest on or any Additional Amounts with respect to any Debt Security of such
series, or in the payment of any sinking fund installment with respect to the
Debt Securities of such series, the Trustee shall be protected in withholding
such notice if and so long as a Responsible Officer of the Trustee in good faith
determines, that the withholding of such notice is in the interests of the
Holders of the Debt Securities and coupons of such series; and provided further
that in the case of any default or breach of the character specified in Section
501(4) with respect to the Debt Securities and coupons of such series, no such
notice to Holders shall be given until at least 60 days after the occurrence
thereof. For the purpose of this Section, the term Adefault@ means any event
which is, or after notice or lapse of time or both would become, an Event of
Default with respect to the Debt Securities of such series.
SECTION 602. CERTAIN RIGHTS OF TRUSTEE. Subject to the provisions of
TIA Section 315(a) through 315(d):
(1) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture,
note, coupon or other paper or document believed by it to be genuine and to have
been signed or presented by the proper party or parties;
(2) any request or direction of the Company mentioned herein shall
be sufficiently evidenced by a Company Request or Company Order (other than
delivery of any Debt Security, together with any coupons appertaining thereto,
to the Trustee for authentication and delivery pursuant to Section 303 which
shall be sufficiently evidenced as provided therein) and any resolution of the
Board of Directors may be sufficiently evidenced by a Board Resolution;
(3) whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence
be herein specifically prescribed) may, in the absence of bad faith on its part,
rely upon an Officers' Certificate;
(4) the Trustee may consult with counsel and the advice of such
counsel or any
47
<PAGE>
Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it hereunder
in good faith and in reliance thereon;
(5) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Holders of Debt Securities of any series or any related coupons
pursuant to this Indenture, unless such Holders shall have offered to the
Trustee security or indemnity reasonably satisfactory to the Trustee against the
costs, expenses and liabilities which might be incurred by it in compliance with
such request or direction;
(6) the Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
debenture, note, coupon or other paper or document, but the Trustee, in its
discretion, may make such further inquiry or investigation into such facts or
matters as it may see fit, and, if the Trustee shall determine to make such
further inquiry or investigation, it shall be entitled to examine the books,
records and premises of the Company, personally or by agent or attorney;
(7) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by it
hereunder; and
(8) the Trustee shall not be liable for any action taken, suffered
or omitted by it in good faith and reasonably believed by it to be authorized or
within the discretion or rights or powers conferred upon it by this Indenture.
The Trustee shall not be required to expend or risk its own funds or
otherwise incur any financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if it shall have
reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it.
Except during the continuance of an Event of Default, the Trustee
undertakes to perform only such duties as are specifically set forth in this
Indenture, and no implied covenants or obligations shall be read into this
Indenture against the Trustee.
SECTION 603. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF DEBT
SECURITIES. The recitals contained herein and in the Debt Securities, except
the Trustee's certificate of authentication, and in any coupons shall be taken
as the statements of the Company, and neither the Trustee nor any Authenticating
Agent assumes any responsibility for their correctness. The Trustee makes no
representations as to the validity or sufficiency of this Indenture or of the
Debt Securities or coupons, except that the Trustee represents that it is duly
authorized to execute and deliver this Indenture, authenticate the Debt
Securities and perform its obligations
48
<PAGE>
hereunder. Neither the Trustee nor any Authenticating Agent shall be
accountable for the use or application by the Company of Debt Securities or
the proceeds thereof.
SECTION 604. MAY HOLD DEBT SECURITIES. The Trustee, any Paying
Agent, Debt Security Registrar, Authenticating Agent or any other agent of the
Company, in its individual or any other capacity, may become the owner or
pledgee of Debt Securities and coupons and, subject to TIA Sections 310(b) and
311, may otherwise deal with the Company with the same rights it would have if
it were not Trustee, Paying Agent, Debt Security Registrar, Authenticating Agent
or such other agent.
SECTION 605. MONEY HELD IN TRUST. Money held by the Trustee in trust
hereunder need not be segregated from other funds except to the extent required
by law. The Trustee shall be under no liability for interest on any money
received by it hereunder except as otherwise agreed in writing with the Company.
SECTION 606. COMPENSATION AND REIMBURSEMENT. The Company agrees:
(1) to pay to the Trustee from time to time reasonable compensation
for all services rendered by it hereunder (which compensation shall not be
limited by any provision of law in regard to the compensation of a trustee
of an express trust);
(2) except as otherwise expressly provided herein, to reimburse each
of the Trustee and any predecessor Trustee upon its request for all
reasonable expenses, disbursements and advances incurred or made by the
Trustee in accordance with any provision of this Indenture (including the
reasonable compensation and the expenses and disbursements of its agents
and counsel), except any such expense, disbursement or advance as may be
attributable to its negligence or bad faith; and
(3) to indemnify each of the Trustee and any predecessor Trustee
for, and to hold it harmless against, any loss, liability or expense
incurred without negligence or bad faith on its own part, arising out of or
in connection with the acceptance or administration of the trust or trusts
hereunder, including the costs and expenses of defending itself against any
claim or liability in connection with the exercise or performance of any of
its powers or duties hereunder.
When the Trustee incurs expenses or renders services in connection
with an Event of Default specified in Section 501(6) or Section 501(7), the
expenses (including the reasonable charges and expenses of its counsel) and the
compensation for the services are intended to constitute expenses of
administration under any applicable Federal or state bankruptcy, insolvency or
other similar law.
49
<PAGE>
As security for the performance of the obligations of the Company
under this Section, the Trustee shall have a lien for payment of the Trustee's
fees and expenses prior to the Debt Securities upon all property and funds held
or collected by the Trustee as such, except funds held in trust for the payment
of principal of (or premium, if any) or interest on or Additional Amounts with
respect to particular Debt Securities or any coupons.
The provisions of this Section shall survive the termination of this
Indenture.
SECTION 607. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY; CONFLICTING
INTERESTS. There shall at all times be a Trustee hereunder which shall be
eligible to act as Trustee under TIA Section 310(a) (1) and shall have a
combined capital and surplus of at least $50,000,000 (or which trust company
shall have a combined capital and surplus of at least $10,000,000 and whose
ultimate parent holding company shall have a combined capital and surplus of at
least $50,000,000). If such corporation (or ultimate parent holding company, as
the case may be) publishes reports of condition at least annually, pursuant to
law or the requirements of Federal, State, Territorial or District of Columbia
supervising or examining authority, then for the purposes of this Section, the
combined capital and surplus of such corporation (or ultimate parent holding
company, as the case may be) shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. If at
any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section, it shall resign immediately in the manner and with
the effect hereinafter specified in this Article.
SECTION 608. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of Section 609.
(b) The Trustee may resign at any time with respect to the Debt
Securities of one or more series by giving written notice thereof to the
Company. If an instrument of acceptance by a successor Trustee shall not have
been delivered to the Trustee within 30 days after the giving of such notice of
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
(c) The Trustee may be removed at any time with respect to the Debt
Securities of any series by Act of the Holders of a majority in principal amount
of the Outstanding Debt Securities of such series delivered to the Trustee and
to the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with the provisions of TIA
Section
50
<PAGE>
310(b) after written request therefor by the Company or by any
Holder of a Debt Security who has been a bona fide Holder of a Debt
Security for at least six months, or
(2) the Trustee shall cease to be eligible under Section 607
and shall fail to resign after written request therefor by the Company
or by any Holder of a Debt Security who has been a bona fide Holder of
a Debt Security for at least six months, or
(3) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Trustee or of
its property shall be appointed or any public officer shall take
charge or control of the Trustee or of its property or affairs for the
purpose of rehabilitation, conservation or liquidation, then, in any
such case, (i) the Company by or pursuant to a Board Resolution may
remove the Trustee and appoint a successor Trustee with respect to all
Debt Securities, or (ii) subject to TIA Section 315(e), any Holder of
a Debt Security who has been a bona fide Holder of a Debt Security for
at least six months may, on behalf of himself and all others similarly
situated, petition any court of competent jurisdiction for the removal
of the Trustee with respect to all Debt Securities and the appointment
of a successor Trustee or Trustees.
(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause with
respect to the Debt Securities of one or more series, the Company, by or
pursuant to a Board Resolution, shall promptly appoint a successor Trustee or
Trustees with respect to the Debt Securities of that or those series (it being
understood that any such successor Trustee may be appointed with respect to the
Debt Securities of one or more or all of such series and that at any time there
shall be only one Trustee with respect to the Debt Securities of any particular
series). If, within one year after such resignation, removal or incapability, or
the occurrence of such vacancy, a successor Trustee with respect to the Debt
Securities of any series shall be appointed by Act of the Holders of a majority
in principal amount of the Outstanding Debt Securities of such series delivered
to the Company and the retiring Trustee, the successor Trustee so appointed
shall, forthwith upon its acceptance of such appointment, become the successor
Trustee with respect to the Debt Securities of such series and to that extent
supersede the successor Trustee appointed by the Company. If no successor
Trustee with respect to the Debt Securities of any series shall have been so
appointed by the Company or the Holders of Debt Securities and accepted
appointment in the manner hereinafter provided, any Holder of a Debt Security
who has been a bona fide Holder of a Debt Security of such series for at least
six months may, on behalf of himself and all others similarly situated, petition
any court of competent jurisdiction for the appointment of a successor Trustee
with respect to Debt Securities of such series.
(f) The Company shall give notice of each resignation and each
removal of the Trustee with respect to the Debt Securities of any series and
each appointment of a successor Trustee
51
<PAGE>
with respect to the Debt Securities of any series in the manner provided for
notices to the Holders of Debt Securities in section 106. Each notice shall
include the name of the successor Trustee with respect to the Debt Securities of
such series and the address of its Corporate Trust Office.
SECTION 609. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.
(a) In case of the appointment hereunder of a successor Trustee with
respect to all Debt Securities, every such successor Trustee shall execute,
acknowledge and deliver to the Company and to the retiring Trustee an instrument
accepting such appointment, and thereupon the resignation or removal of the
retiring Trustee shall become effective and such successor Trustee, without any
further act, deed or conveyance, shall become vested with all the rights,
powers, trusts and duties of the retiring Trustee; but, on request of the
Company or the successor Trustee, such retiring Trustee shall, upon payment of
its charges, execute and deliver an instrument transferring to such successor
Trustee all the rights, powers and trusts of the retiring Trustee, and shall
duly assign, transfer and deliver to such successor Trustee all property and
money held by such retiring Trustee hereunder, subject nevertheless to its lien
and claim, if any, provided for in Section 606.
(b) In case of the appointment hereunder of a successor Trustee with
respect to the Debt Securities of one or more (but not all) series, the Company,
the retiring Trustee and each successor Trustee with respect to the Debt
Securities of one or more series shall execute and deliver an indenture
supplemental hereto, pursuant to Article Nine hereof, wherein each successor
Trustee shall accept such appointment and which (1) shall contain such
provisions as shall be necessary or desirable to transfer and confirm to, and to
vest in, each successor Trustee all the rights, powers, trusts and duties of the
retiring Trustee with respect to the Debt Securities of that or those series to
which the appointment of such successor Trustee relates, (2) if the retiring
Trustee is not retiring with respect to all Debt Securities, shall contain such
provisions as shall be deemed necessary or desirable to confirm that all the
rights, powers, trusts and duties of the retiring Trustee with respect to the
Debt Securities of that or those series as to which the retiring Trustee is not
retiring shall continue to be vested in the retiring Trustee, and (3) shall add
to or change any of the provisions of this Indenture as shall be necessary to
provide for or facilitate the administration of the trusts hereunder by more
than one Trustee, it being understood that nothing herein or in such
supplemental indenture shall constitute such Trustees co-trustees of the same
trust and that each such Trustee shall be trustee of a trust or trusts hereunder
separate and apart from any trust or trusts hereunder administered by any other
such Trustee; and upon the execution and delivery of such supplemental indenture
the resignation or removal of the retiring Trustee shall become effective to the
extent provided therein and each such successor Trustee, without any further
act, deed or conveyance, shall become vested with all the rights, powers, trusts
and duties of the retiring Trustee with respect to the Debt Securities of that
or those series to which the appointment of such successor Trustee relates; but,
on request of the Company or any successor Trustee, such retiring Trustee shall
duly assign, transfer and deliver to such successor Trustee all property and
money held by such retiring Trustee hereunder with respect to the Debt
Securities of that or those series to which the appointment of such successor
Trustee relates.
52
<PAGE>
(c) Upon request of any such successor Trustee, the Company shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor Trustee all such rights, powers and trusts referred
to in paragraph (a) or (b) of this Section, as the case may be.
(d) No successor Trustee shall accept its appointment unless at the
time of such acceptance such successor Trustee shall be qualified and eligible
under this Article Six.
SECTION 610. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO
BUSINESS. Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be otherwise qualified and eligible under this
Article, without the execution or filing of any paper or any further act on the
part of any of the parties hereto. In case any Debt Securities or coupons shall
have been authenticated, but not delivered, by the Trustee then in office, any
successor by merger, conversion or consolidation to such authenticating Trustee
may adopt such authentication and deliver the Debt Securities or coupons so
authenticated with the same effect as if such successor Trustee had itself
authenticated such Debt Securities or coupons. In case any Debt Securities or
coupons shall not have been authenticated by such predecessor Trustee, any such
successor Trustee may authenticate and deliver such Debt Securities or coupons,
in either its own name or that of its predecessor Trustee, with the full force
and effect which this Indenture provides for the certificate of authentication
of the Trustee.
SECTION 611. APPOINTMENT OF AUTHENTICATING AGENT. At any time when
any of the Debt Securities remain Outstanding, the Trustee may appoint an
Authenticating Agent or Agents with respect to one or more series of Debt
Securities which shall be authorized to act on behalf of the Trustee to
authenticate Debt Securities of such series issued upon exchange, registration
of transfer or partial redemption or repayment thereof, and Debt Securities so
authenticated shall be entitled to the benefits of this Indenture and shall be
valid and obligatory for all purposes as if authenticated by the Trustee
hereunder. Any such appointment shall be evidenced by an instrument in writing
signed by a Responsible Officer of the Trustee, a copy of which instrument shall
be promptly furnished to the Company. Wherever reference is made in this
Indenture to the authentication and delivery of Debt Securities by the Trustee
or the Trustee's certificate of authentication, such reference shall be deemed
to include authentication and delivery on behalf of the Trustee by an
Authenticating Agent and a certificate of authentication executed on behalf of
the Trustee by an Authenticating Agent. Each Authenticating Agent shall be
acceptable to the Company and shall at all times be a bank or trust company or
corporation organized and doing business and in good standing under the laws of
the United States of America or of any State or the District of Columbia,
authorized under such laws to act as Authenticating Agent, having a combined
capital and surplus of not less than $50,000,000 and subject to supervision or
examination by Federal or state authorities. If such Authenticating Agent
publishes reports of condition at least annually,
53
<PAGE>
pursuant to law or the requirements of the aforesaid supervising or examining
authority, then for the purposes of this Section, the combined capital and
surplus of such Authenticating Agent shall be deemed to be its combined capital
and surplus as set forth in its most recent report of condition so published. In
case at any time an Authenticating Agent shall cease to be eligible in
accordance with the provisions of this Section, such Authenticating Agent shall
resign immediately in the manner and with the effect specified in this section.
Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency or
corporate trust business of an Authenticating Agent, shall continue to be an
Authenticating Agent, provided such corporation shall be otherwise eligible
under this Section, without the execution or filing of any paper or further act
on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent for any series of Debt Securities may at any
time resign by giving written notice of resignation to the Trustee for such
series and to the Company. The Trustee for any series of Debt Securities may at
any time terminate the agency of an Authenticating Agent by giving written
notice of termination to such Authenticating Agent and to the Company. Upon
receiving such a notice of resignation or upon such a termination, or in case at
any time such Authenticating Agent shall cease to be eligible in accordance with
the provisions of this Section, the Trustee for such series may appoint a
successor Authenticating Agent which shall be acceptable to the Company and
shall give notice of such appointment to all Holders of Debt Securities of the
series with respect to which such Authenticating Agent will serve in the manner
set forth in Section 106. Any successor Authenticating Agent upon acceptance of
its appointment hereunder shall become vested with all the rights, powers and
duties of its predecessor hereunder, with like effect as if originally named as
an Authenticating Agent herein. No successor Authenticating Agent shall be
appointed unless eligible under the provisions of this Section.
The Company agrees to pay to each Authenticating Agent from time to
time reasonable compensation including reimbursement of its reasonable expenses
for its services under this Section.
If an appointment with respect to one or more series is made pursuant
to this Section, the Debt Securities of such series may have endorsed thereon,
in addition to or in lieu of the Trustee's certificate of authentication, an
alternate certificate of authentication substantially in the following form:
54
<PAGE>
This is one of the Debt Securities of the series designated therein
referred to in the within-mentioned Indenture.
[____________________], as Trustee
By ____________________________ as Authenticating Agent
By ____________________________ as Authorized Officer
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 701. DISCLOSURE OF NAMES AND ADDRESSES OF HOLDERS. Every
Holder of Debt Securities or coupons, by receiving and holding the same, agrees
with the Company and the Trustee that neither the Company nor the Trustee nor
any Authenticating Agent nor any Paying Agent nor any Debt Security Registrar
shall be held accountable by reason of the disclosure of any information as to
the names and addresses of the Holders of Debt Securities in accordance with TIA
Section 312, regardless of the source from which such information was derived,
and that the Trustee shall not be held accountable by reason of mailing any
material pursuant to a request made under TIA Section 312(b).
SECTION 702. REPORTS BY TRUSTEE. Within 60 days after May 15 of each
year commencing with the first May 15 after the first issuance of Debt
Securities pursuant to this Indenture, the Trustee shall transmit by mail to all
Holders of Debt Securities as provided in TIA Section 313(c) a brief report
dated as of such May 15 if required by TIA Section 313(a).
SECTION 703. REPORTS BY COMPANY. The Company will:
(1) file with the Trustee, within 15 days after the Company is
required to file the same with the Commission, copies of the annual reports and
of the information, documents and other reports (or copies of such portions of
any of the foregoing as the Commission may from time to time by rules and
regulations prescribe) which the Company may be required to file with the
Commission pursuant to Section 13 or Section 15(d) of the Securities Exchange
Act of 1934; or, if the Company is not required to file information, documents
or reports pursuant to either of such Sections, then it will file with the
Trustee and the Commission, in accordance with rules and regulations prescribed
from time to time by the Commission, such of the supplementary and periodic
information, documents and reports which may be required pursuant to Section 13
of the Securities Exchange Act of 1934 in respect of a security listed and
registered on a national securities exchange as may be prescribed from time to
time in such rules and regulations;
(2) file with the Trustee and the Commission, in accordance with
rules and
55
<PAGE>
regulations prescribed from time to time by the Commission, such additional
information, documents and reports with respect to compliance by the Company
with the conditions and covenants of this Indenture as may be required from time
to time by such rules and regulations; and
(3) transmit by mail to the Holders of Debt Securities, within 30
days after the filing thereof with the Trustee, in the manner and to the extent
provided in TIA Section 313(c), such summaries of any information, documents and
reports required to be filed by the Company pursuant to paragraphs (1) and (2)
of this Section as may be required by rules and regulations prescribed from time
to time by the Commission.
SECTION 704. COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES OF
HOLDERS. The Company will furnish or cause to be furnished to the Trustee:
(a) semi-annually, not later than 15 days after the Regular Record
Date for interest for each series of Debt Securities, a list, in such form as
the Trustee may reasonably require, of the names and addresses of the Holders of
Registered Debt Securities of such series as of such Regular Record Date, or if
there is no Regular Record Date for interest for such series of Debt Securities,
semiannually, upon such dates as are set forth in the Board Resolution or
indenture supplemental hereto authorizing such series, and
(b) at such other times as the Trustee may request in writing,
within 30 days after the receipt by the Company of any such request, a list of
similar form and content as of a date not more than 15 days prior to the time
such list is furnished, provided, however, that, so long as the Trustee is the
Debt Security Registrar, no such list shall be required to be furnished.
ARTICLE EIGHT
CONSOLIDATION, MERGER, SALE, LEASE OR CONVEYANCE
SECTION 801. CONSOLIDATIONS AND MERGERS OF COMPANY AND SALES, LEASES
AND CONVEYANCES PERMITTED SUBJECT TO CERTAIN CONDITIONS. The Company will not,
in any transaction or series of related transactions, consolidate with, or sell,
lease, assign, transfer or otherwise convey all or substantially all of its
assets to, or merge with or into any other Person unless (i) either the Company
shall be the continuing corporation, or the successor Person (if other than the
Company) formed by or resulting from any such consolidation or merger or which
shall have received the transfer of such assets is a corporation organized and
existing under the laws of the United States of America or a State thereof or
the District of Columbia and shall expressly assume, by supplemental indenture
executed by such successor corporation and delivered by it to the Trustee (which
supplemental indenture shall comply with Article Nine hereof and shall be
reasonably satisfactory to the Trustee), the due and punctual payment of the
principal of (and premium, if any) and interest, if any, on and all Additional
Amounts, if any, payable in respect of, all of the Outstanding Debt Securities,
according to their
56
<PAGE>
tenor, and the due and punctual performance and observance of all of the other
covenants and conditions contained in this Indenture and the Debt Securities to
be performed or observed by the Company; (ii) immediately after giving effect to
such transaction and treating any Debt (including Acquired Debt) which becomes
an obligation of the Company or any of its Subsidiaries as a result thereof as
having been incurred by the Company or such Subsidiary at the time of such
transaction, no Event of Default, and no event which, after notice or the lapse
of time, or both, would become an Event of Default, shall have occurred and
shall be continuing; and (iii) the Company shall have delivered to the Trustee
the Officers' Certificate and Opinion of Counsel required pursuant to Section
803 below. In the event that the Company is not the continuing corporation,
then, for purposes of clause (ii) of the preceding sentence, the successor
corporation shall be deemed to be the "Company" referred to in such clause (ii).
SECTION 802. RIGHTS AND DUTIES OF SUCCESSOR CORPORATION. In case of
any such consolidation, merger, sale, lease, assignment, transfer or conveyance
and upon any such assumption by the successor corporation, such successor
corporation shall succeed to and be substituted for and may exercise every right
and power of the Company, with the same effect as if it had been named as the
"Company" herein; and the predecessor corporation, except in the case of a
lease, shall be released from any further obligation under this Indenture and
the Debt Securities. Such successor corporation thereupon may cause to be
signed, and may issue either in its own name or in the name of the Company, any
or all of the Debt Securities issuable hereunder which theretofore shall not
have been signed by the Company and delivered to the Trustee; and, upon the
order of such successor corporation, instead of the Company, and subject to all
the terms, conditions and limitations in this Indenture prescribed, the Trustee
shall authenticate and shall deliver any Debt Securities which previously shall
have been signed and delivered by the officers of the Company to the Trustee for
authentication, and any Debt Securities which such successor corporation
thereafter shall cause to be signed and delivered to the Trustee for that
purpose. All the Debt Securities so issued shall in all respects have the same
legal rank and benefit under this Indenture as the Debt Securities theretofore
or thereafter issued in accordance with the terms of this Indenture.
In case of any such consolidation, merger, sale, lease, assignment,
transfer or conveyance, such changes in phraseology and form (but not in
substance) may be made in the Debt Securities thereafter to be issued as may be
appropriate.
SECTION 803. OFFICERS' CERTIFICATE AND OPINION OF COUNSEL. Any
consolidation, merger, sale, lease, assignment, transfer or conveyance permitted
under Section 801 is also subject to the condition precedent that the Trustee
receive an Officers' Certificate and an Opinion of Counsel to the effect that
any such consolidation, merger, sale, lease, assignment, transfer or conveyance,
and the assumption by any successor corporation, complies with the provisions of
this Article and that all conditions precedent herein provided for relating to
such transaction have been complied with.
57
<PAGE>
ARTICLE NINE
SUPPLEMENTAL INDENTURES
SECTION 901. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS.
Without the consent of any Holders of Debt Securities or coupons, the Company,
when authorized by or pursuant to a Board Resolution, and the Trustee, at any
time and from time to time, may enter into one or more indentures supplemental
hereto, in form satisfactory to the Trustee, for any of the following purposes:
(1) to evidence the succession of another Person to the Company and
the assumption by any such successor of the covenants of the Company herein
and in the Debt Securities contained; or
(2) to add to the covenants of the Company for the benefit of the
Holders of all or any series of Debt Securities (and if such covenants are
to be for the benefit of less than all series of Debt Securities, stating
that such covenants are expressly being included solely for the benefit of
such series) or to surrender any right or power herein conferred upon the
Company; or
(3) to add any additional Events of Default for the benefit of the
Holders of all or any series of Debt Securities (and if such Events of
Default are to be for the benefit of less than all series of Debt
Securities, stating that such Events of Default are expressly being
included solely for the benefit of such series); provided, however, that in
respect of any such additional Events of Default such supplemental
indenture may provide for a particular period of grace after default (which
period may be shorter or longer than that allowed in the case of other
defaults) or may provide for an immediate enforcement upon such default or
may limit the remedies available to the Trustee upon such default or may
limit the right of the Holders of a majority in aggregate principal amount
of that or those series of Debt Securities to which such additional Events
of Default apply to waive such default; or
(4) to add to or change any of the provisions of this Indenture to
provide that Bearer Debt Securities may be registrable as to principal, to
change or eliminate any restrictions on the payment of principal of or any
premium or interest on Bearer Debt Securities, to permit Bearer Debt
Securities to be issued in exchange for Registered Debt Securities, to
permit Bearer Debt Securities to be issued in exchange for Bearer Debt
Securities of other authorized denominations or to permit or facilitate the
issuance of Debt Securities in uncertificated form, provided that any such
action shall not adversely affect the interests of the Holders of Debt
Securities of any series or any related coupons in any material respect; or
(5) to change or eliminate any of the provisions of this Indenture,
provided that no such change or elimination shall become effective with
respect to the Outstanding Debt
58
<PAGE>
Securities of any series issued hereunder which were first issued prior to
the date of such change or elimination and which are entitled to the
benefit of such provision; or
(6) to secure the Debt Securities; or
(7) to establish the form or terms of Debt Securities of any series
and any related coupons as permitted by Sections 201 and 301, including the
provisions and procedures if applicable, relating to Debt Securities
convertible into Common Shares or Preferred Shares or other securities or
property, as the case may be; or
(8) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Debt Securities of one
or more series and to add to or change any of the provisions of this
Indenture as shall be necessary to provide for or facilitate the
administration of the trusts hereunder by more than one Trustee; or
(9) to cure any ambiguity, to correct or supplement any provision
herein which may be defective or inconsistent with any other provision
herein or to make any other provisions with respect to matters or questions
arising under this Indenture which shall not be inconsistent with the
provisions of this Indenture, provided such action shall not adversely
affect the interests of the Holders of Debt Securities of any series or any
related coupons in any material respect; or
(10) to supplement any of the provisions of this Indenture to such
extent as shall be necessary to permit or facilitate the discharge,
defeasance or covenant defeasance, as the case may be, of any series of
Debt Securities pursuant to Sections 401, 1402 and 1403; provided that any
such action shall not adversely affect the interests of the Holders of Debt
Securities of such series and any related coupons or any other series of
Debt Securities in any material respect.
SECTION 902. SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS. With the
consent of the Holders of not less than a majority in principal amount of all
Outstanding Debt Securities of each series affected by such supplemental
indenture, by Act of said Holders delivered to the Company and the Trustee, the
Company, when authorized by or pursuant to a Board Resolution, and the Trustee
may enter into an indenture or indentures supplemental hereto for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Indenture or of the Debt Securities of such series or of
modifying in any manner the rights of the Holders of Debt Securities of such
series and any related coupons under this Indenture; provided, however, that no
such supplemental indenture shall, without the consent of the Holder of each
Outstanding Debt Security affected thereby:
(1) change the Stated Maturity of the principal of (or premium, if
any, on) or any installment of principal of, or premium, if any, or
interest, if any, on, or Additional Amounts,
59
<PAGE>
if any, with respect to, any Debt Security; or reduce the principal amount
thereof or the rate or amount of interest thereon or any Additional Amounts
payable in respect thereof, or any premium payable thereon, or change any
obligation of the Company to pay Additional Amounts pursuant to Section
1015 (except as contemplated by Section 801 and permitted by Section
901(1)), or reduce the amount of the principal of an Original Issue
Discount Debt Security that would be due and payable upon a declaration of
acceleration of the maturity thereof pursuant to Section 502 or the amount
thereof provable in bankruptcy pursuant to Section 504, or adversely affect
any right of the Holder of any Debt Security to repayment of such Debt
Security at such Holder's option, or change any Place of Payment where, or
the currency or currencies, currency unit or units or composite currency or
currencies in which, the principal of any Debt Security or any premium or
interest thereon or any Additional Amounts in respect thereof is payable,
or impair the right to institute suit for the enforcement of any such
payment on or after the Stated Maturity thereof (or, in the case of
redemption, on or after the Redemption Date or, in the case of repayment at
the option of Holder, on or after the Repayment Date, as the case may be),
or
(2) reduce the percentage in principal amount of the Outstanding
Debt Securities of any series, the consent of whose Holders is required for
any such supplemental indenture, or the consent of whose Holders is
required for any waiver with respect to such series (of compliance with
certain provisions of this Indenture or certain defaults hereunder and
their consequences) provided for in this Indenture, or reduce the
requirements of Section 1504 for quorum or voting, or
(3) modify any of the provisions of this Section, Section 513 or
Section 1013 except to increase the percentage required to effect such
action or to provide that certain other provisions of this Indenture cannot
be modified or waived without the consent of the Holder of each Outstanding
Debt Security affected thereby, or
(4) make any change that adversely affects the right, if any, to
convert or exchange any Debt Security for Common Shares, Preferred Shares
or other securities or property in accordance with its terms.
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental indenture, but it shall
be sufficient if such Act shall approve the substance thereof.
A supplemental indenture which changes or eliminates any covenant or
other provision of this Indenture which has expressly been included solely for
the benefit of one or more particular series of Debt Securities, or which
modifies the rights of the Holders of Debt Securities of such series with
respect to such covenant or other provision, shall be deemed not to affect the
rights under this Indenture of the Holders of Debt Securities of any other
series.
60
<PAGE>
SECTION 903. EXECUTION OF SUPPLEMENTAL INDENTURES. In executing, or
accepting the additional trusts created by, any supplemental indenture permitted
by this Article or the modification thereby of the trusts created by this
Indenture, the Trustee shall be entitled to receive, and shall be fully
protected in relying upon, an Opinion of Counsel stating that the execution of
such supplemental indenture is authorized or permitted by this Indenture. The
Trustee may, but shall not be obligated to, enter into any such supplemental
indenture which affects the Trustee's own rights, duties or immunities under
this Indenture or otherwise.
SECTION 904. EFFECT OF SUPPLEMENTAL INDENTURES. Upon the execution
of any supplemental indenture under this Article Nine, this Indenture shall be
modified in accordance therewith, and such supplemental indenture shall form a
part of this Indenture for all purposes; and every Holder of Debt Securities
theretofore or thereafter authenticated and delivered hereunder and of any
coupon appertaining thereto shall be bound thereby.
SECTION 905. CONFORMITY WITH TRUST INDENTURE ACT. Every supplemental
indenture executed pursuant to this Article Nine shall conform to the
requirements of the Trust Indenture Act as then in effect.
SECTION 906. REFERENCE IN DEBT SECURITIES TO SUPPLEMENTAL INDENTURES.
Debt Securities of any series authenticated and delivered after the execution of
any supplemental indenture pursuant to this Article Nine may, and shall, if
required by the Trustee, bear a notation in form approved by the Trustee as to
any matter provided for in such supplemental indenture. If the Company shall so
determine, new Debt Securities of any series so modified as to conform, in the
opinion of the Trustee and the Company, to any such supplemental indenture may
be prepared and executed by the Company and authenticated and delivered by the
Trustee in exchange for Outstanding Debt Securities of such series.
ARTICLE TEN
COVENANTS
SECTION 1001. PAYMENT OF PRINCIPAL, PREMIUM, IF ANY, INTEREST AND
ADDITIONAL AMOUNTS. The Company covenants and agrees for the benefit of the
Holders of each series of Debt Securities that it will duly and punctually pay
the principal of (and premium, if any) and interest on and any Additional
Amounts payable in respect of the Debt Securities of that series in accordance
with the terms of such series of Debt Securities, any coupons appertaining
thereto and this Indenture. Unless otherwise specified as contemplated by
Section 301 with respect to any series of Debt Securities, any interest due on
and any Additional Amounts payable in respect of Bearer Debt Securities on or
before Maturity, other than Additional Amounts, if any, payable as provided in
Section 1015 in respect of principal of (or premium, if any, on) such a Debt
Security, shall be payable only upon presentation and surrender of the several
coupons for such interest installments as are evidenced thereby as they
severally mature.
61
<PAGE>
SECTION 1002. MAINTENANCE OF OFFICE OR AGENCY. If Debt Securities of
a series are issuable only as Registered Debt Securities, the Company shall
maintain in each Place of Payment for any series of Debt Securities an office or
agency where Debt Securities of that series may be presented or surrendered for
payment or conversion, where Debt Securities of that series may be surrendered
for registration of transfer or exchange and where notices and demands to or
upon the Company in respect of the Debt Securities of that series and this
Indenture may be served. If Debt Securities of a series are issuable as Bearer
Debt Securities, the Company will maintain: (A) in the [Borough of Manhattan,
The City of New York], an office or agency where any Registered Debt Securities
of that series may be presented or surrendered for payment or conversion, where
any Registered Debt Securities of that series may be surrendered for
registration of transfer, where Debt Securities of that series may be
surrendered for exchange, where notices and demands to or upon the Company in
respect of the Debt Securities of that series and this Indenture may be served
and where Bearer Debt Securities of that series and related coupons may be
presented or surrendered for payment or conversion in the circumstances
described in the following paragraph (and not otherwise); (B) subject to any
laws or regulations applicable thereto, in a Place of Payment for that series
which is located outside the United States, an office or agency where Debt
Securities of that series and related coupons may be presented and surrendered
for payment (including payment of any Additional Amounts payable on Debt
Securities of that series pursuant to Section 1015) or conversion; provided,
however, that if the Debt Securities of that series are listed on the Luxembourg
Stock Exchange or any other stock exchange located outside the United States and
such stock exchange shall so require, the Company will maintain a Paying Agent
for the Debt Securities of that series in Luxembourg or any other required city
located outside the United States, as the case may be, so long as the Debt
Securities of that series are listed on such exchange; and (C) subject to any
laws or regulations applicable thereto, in a Place of Payment for that series
located outside the United States an office or agency where any Registered Debt
Securities of that series may be surrendered for registration of transfer, where
Debt Securities of that series may be surrendered for exchange and where notices
and demands to or upon the Company in respect of the Debt Securities of that
series and this Indenture may be served. The Company will give prompt written
notice to the Trustee of the location, and any change in the location, of each
such office or agency. If at any time the Company shall fail to maintain any
such required office or agency or shall fail to furnish the Trustee with the
address thereof, such presentations, surrenders, notices and demands may be made
or served at the Corporate Trust Office of the Trustee (and the Company hereby
appoints the Trustee its agent to receive all such presentations, surrenders,
notices and demands), except that Bearer Debt Securities of that series and the
related coupons may be presented and surrendered for payment (including payment
of any Additional Amounts payable on Bearer Debt Securities of that series
pursuant to Section 1015) or conversion at the offices specified in the Debt
Security or pursuant to Section 301 in London, England, and the Company hereby
appoints the same as its agent to receive such presentations, surrenders,
notices and demands.
Unless otherwise specified with respect to any Debt Securities
pursuant to Section 301, no payment of principal, premium or interest on or
Additional Amounts in respect of Bearer Debt Securities shall be made at any
office or agency of the Company in the United States or by check mailed to any
address in the United States or by
62
<PAGE>
transfer to an account maintained with a bank located in the United States;
provided, however, that, if the Debt Securities of a series are payable in
Dollars, payment of principal of and any premium and interest on any Bearer Debt
Security (including any Additional Amounts payable in respect of Debt Securities
of such series pursuant to Section 1015) shall be made at the office or agency
maintained by the Company for such purpose in the [Borough of Manhattan, The
City of New York] if (but only if) payment in Dollars of the full amount of such
principal, premium, interest or Additional Amounts, as the case may be, at all
offices or agencies outside the United States maintained for the purpose by the
Company in accordance with this Indenture is illegal or effectively precluded by
exchange controls or other similar restrictions.
The Company may from time to time designate one or more other offices
or agencies where the Debt Securities of one or more series may be presented or
surrendered for any or all of such purposes, and may from time to time rescind
such designations; provided, however, that no such designation or rescission
shall in any manner relieve the Company of its obligation to maintain an office
or agency in accordance with the requirements set forth above for Debt
Securities of any series for such purposes. The Company will give prompt written
notice to the Trustee of any such designation or rescission and of any change in
the location of any such other office or agency. Unless otherwise specified
pursuant to Section 301 with respect to a series of Debt Securities, the Company
hereby designates as a Place of Payment for each series of Debt Securities the
office or agency of the Company in the [Borough of Manhattan, The City of New
York], and initially appoints the Trustee at its offices which on the date of
this Indenture are located at _______________________________ in such city as
its agent to receive all such presentations, surrenders, notices and demands and
appoints the Trustee, at its Corporate Trust Office and at its offices in the
[Borough of Manhattan, The City of New York], as Paying Agent and Securities
Registrar. The Company may subsequently appoint a different office or agency in
the [Borough of Manhattan, The City of New York] and a different Paying Agent
and Security Registrar for the Debt Securities of any Series.
Unless otherwise specified with respect to any Debt Securities
pursuant to Section 301, if and so long as the Debt Securities of any series (i)
are denominated in a Foreign Currency or (ii) may be payable in a Foreign
Currency, or so long as it is required under any other provision of this
Indenture, then the Company will maintain with respect to each such series of
Debt Securities, or as so required, at least one exchange rate agent.
SECTION 1003. MONEY FOR DEBT SECURITIES PAYMENTS TO BE HELD IN TRUST.
If the Company shall at any time act as its own Paying Agent with respect to any
series of any Debt Securities and any related coupons, it will, on or before
each due date of the principal of (or premium, if any) or interest on or
Additional Amounts in respect of any of the Debt Securities of that series,
segregate and hold in trust for the benefit of the Persons entitled thereto a
sum in the currency or currencies, currency unit or units or composite currency
or currencies in which the Debt Securities of such series are payable (except as
otherwise specified pursuant to Section 301 for the Debt Securities of such
series) sufficient to pay the principal (and premium, if any) and interest and
63
<PAGE>
Additional Amounts so becoming due until such sums shall be paid to such Persons
or otherwise disposed of as herein provided, and will promptly notify the
Trustee of its action or failure so to act.
Whenever the Company shall have one or more Paying Agents for any
series of Debt Securities and any related coupons, it will, on or before each
due date of the principal of (or premium, if any) or interest on or Additional
Amounts in respect of any Debt Securities of that series, deposit with a Paying
Agent a sum (in the currency or currencies, currency unit or units or composite
currency or currencies described in the preceding paragraph) sufficient to pay
the principal (and premium, if any) and interest and Additional Amounts so
becoming due, such sum to be held in trust for the benefit of the Persons
entitled to such principal, premium, interest and Additional Amounts and (unless
such Paying Agent is the Trustee) the Company will promptly notify the Trustee
of its action or failure so to act.
The Company will cause each Paying Agent other than the Trustee to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee, subject to the provisions of this Section, that
such Paying Agent will
(1) hold all sums held by it for the payment of principal of (and
premium, if any) and interest on and any Additional Amounts with respect to
the Debt Securities in trust for the benefit of the Persons entitled
thereto until such sums shall be paid to such Persons or otherwise disposed
of as herein provided;
(2) give the Trustee notice of any default by the Company (or any
other obligor upon the Debt Securities) in the making of any such payment
of principal (or premium, if any) or interest or Additional Amounts; and
(3) at any time during the continuance of any such default upon the
written request of the Trustee, forthwith pay to the Trustee all sums so
held in trust by such Paying Agent.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which such sums were held by the Company or
such Paying Agent; and, upon such payment by any Paying Agent to the Trustee,
such Paying Agent shall be released from all further liability with respect to
such sums.
Except as otherwise provided with respect to the Debt Securities of
any series pursuant to Section 301, any money deposited with the Trustee or any
Paying Agent, or held by the Company, in trust for the payment of the principal
of (or premium, if any) or interest on, or any Additional Amounts in respect of,
any Debt Security of any series and remaining unclaimed for two
64
<PAGE>
years after such principal (or premium, if any), or interest or Additional
Amounts has become due and payable shall be paid to the Company upon Company
Request or (if then held by the Company) shall be discharged from such trust;
and the Holder of such Debt Security shall thereafter, as an unsecured general
creditor, look only to the Company for payment of such principal of (or premium,
if any) or interest on, or any Additional Amounts in respect of, such Debt
Security, and all liability of the Trustee or such Paying Agent with respect to
such trust money, and all liability of the Company as trustee thereof, shall
thereupon cease; provided, however, that the Trustee or such Paying Agent,
before being required to make any such repayment, may at the expense of the
Company cause to be published once, in an Authorized Newspaper, notice that such
money remains unclaimed and that, after a date specified therein, which shall
not be less than 30 days from the date of such publication, any unclaimed
balance of such money then remaining will be repaid to the Company.
SECTION 1004. AGGREGATE DEBT TEST. The Company will not, and will
not cause or permit any of its Subsidiaries to, incur any Debt (including,
without limitation, Acquired Debt) if, immediately after giving effect to the
incurrence of such Debt and the application of the proceeds therefrom on a pro
forma basis, the aggregate principal amount of all outstanding Debt of the
Company and its Subsidiaries (determined on a consolidated basis in accordance
with generally accepted accounting principles) is greater than 60% of the sum of
(without duplication) (i) the Total Assets of the Company and its Subsidiaries
as of the last day of the then most recently ended fiscal quarter and (ii) the
aggregate purchase price of any real estate assets or mortgages receivable
acquired, and the aggregate amount of any securities offering proceeds received
(to the extent such proceeds were not used to acquire real estate assets or
mortgages receivable or used to reduce Debt), by the Company or any of its
Subsidiaries since the end of such fiscal quarter, including the proceeds
obtained from the incurrence of such additional Debt, determined on a
consolidated basis in accordance with generally accepted accounting principles.
SECTION 1005. DEBT SERVICE TEST. The Company will not, and will not
cause or permit any of its Subsidiaries to, incur any Debt (including, without
limitation, Acquired Debt) if the ratio of Consolidated Income Available for
Debt Service to the Annual Debt Service Charge for the period consisting of the
four consecutive fiscal quarters most recently ended prior to the date on which
such additional Debt is to be incurred shall have been less than 1.5:1 on a pro
forma basis after giving effect to the incurrence of such Debt and the
application of the proceeds therefrom, and calculated on the assumption that (i)
such Debt and any other Debt (including, without limitation, Acquired Debt)
incurred by the Company or any of its Subsidiaries since the first day of such
four-quarter period had been incurred, and the application of the proceeds
therefrom (including to repay or retire other Debt) had occurred, on the first
day of such period, (ii) the repayment or retirement of any other Debt of the
Company or any of its Subsidiaries since the first day of such four-quarter
period had occurred on the first day of such period (except that, in making such
computation, the amount of Debt under any revolving credit facility, line of
credit or similar facility shall be computed based upon the average daily
balance of such Debt during such period) and (iii) in the case of any
acquisition or disposition by the Company or any of its Subsidiaries of any
asset or group of assets,
65
<PAGE>
in any such case with a fair market value (determined in good faith by the
Company's Board of Directors) in excess of $1 million, since the first day of
such four-quarter period, whether by merger, stock purchase or sale or asset
purchase or sale or otherwise, such acquisition or disposition had occurred as
of the first day of such period with the appropriate adjustments with respect to
such acquisition or disposition being included in such pro forma calculation. If
the Debt giving rise to the need to make the foregoing calculation or any other
Debt incurred after the first day of the relevant four-quarter period bears
interest at a floating rate then, for purposes of calculating the Annual Debt
Service Charge, the interest rate on such Debt shall be computed on a pro forma
basis as if the average rate which would have been in effect during the entire
such four-quarter period had been the applicable rate for the entire such
period.
SECTION 1006. SECURED DEBT TEST. The Company will not, and will not
cause or permit any of its Subsidiaries to, incur any Debt (including, without
limitation, Acquired Debt) secured by any Lien on any property or assets of the
Company or any of its Subsidiaries, whether owned on the date of this Indenture
or thereafter acquired, if, immediately after giving effect to the incurrence of
such Debt and the application of the proceeds therefrom on a pro forma basis,
the aggregate principal amount (determined on a consolidated basis in accordance
with generally accepted accounting principles) of all outstanding Debt of the
Company and its Subsidiaries which is secured by any Lien on any property or
assets of the Company or any of its Subsidiaries is greater than 40% of the sum
of (without duplication) (i) the Total Assets of the Company and its
Subsidiaries as of the last day of the then most recently ended fiscal quarter
and (ii) the aggregate purchase price of any real estate assets or mortgages
receivable acquired, and the aggregate amount of any securities offering
proceeds received (to the extent such proceeds were not used to acquire real
estate assets or mortgages receivable or used to reduce Debt), by the Company or
any of its Subsidiaries since the end of such fiscal quarter, including the
proceeds obtained from the incurrence of such additional Debt, determined on a
consolidated basis in accordance with generally accepted accounting principles.
SECTION 1007. MAINTENANCE OF TOTAL UNENCUMBERED ASSETS. The Company
will, and will cause its Subsidiaries to, have at all times Total Unencumbered
Assets of not less than 150% of the aggregate principal amount of all
outstanding Unsecured Debt of the Company and its Subsidiaries, determined on a
consolidated basis in accordance with generally accepted accounting principles.
SECTION 1008. EXISTENCE. Subject to Article Eight, the Company will
do or cause to be done all things necessary to preserve and keep in full force
and effect its corporate existence, rights (charter and statutory) and
franchises; provided, however, that the Company will not be required to preserve
any right or franchise if its Board of Directors determines that the
preservation thereof is no longer desirable in the conduct of its business and
that the loss thereof is not disadvantageous in any material respect to the
Holders of the Debt Securities Outstanding under this Indenture.
66
<PAGE>
SECTION 1009. MAINTENANCE OF PROPERTIES. The Company will cause all
of its properties used or useful in the conduct of its business or the business
of any Subsidiary to be maintained and kept in good condition, repair and
working order and supplied with all necessary equipment and will cause to be
made all necessary repairs, renewals, replacements, betterments and improvements
thereof, all as in the judgment of the Company may be necessary so that the
business carried on in connection therewith may be properly and advantageously
conducted at all times; provided, however, that nothing in this Section shall
prevent the Company and its Subsidiaries from selling or otherwise disposing of
for value their respective properties in the ordinary course of business.
SECTION 1010. INSURANCE. The Company will, and will cause each of
its Subsidiaries to, keep in force upon all of its properties and operations
policies of insurance carried with responsible companies in such amounts and
covering all such risks as shall be customary in the industry in accordance with
prevailing market conditions and availability.
SECTION 1011. PAYMENT OF TAXES AND OTHER CLAIMS. The Company will
pay or discharge or cause to be paid or discharged, before the same shall become
delinquent, (1) all taxes, assessments and governmental charges levied or
imposed upon it or any Subsidiary or upon the income, profits or property of the
Company or any Subsidiary, and (2) all lawful claims for labor, materials and
supplies which, if unpaid, might by law become a lien upon the property of the
Company or any Subsidiary; provided, however, that the Company will not be
required to pay or discharge or cause to be paid or discharged any such tax,
assessment, charge or claim whose amount, applicability or validity is being
contested in good faith by appropriate proceedings.
SECTION 1012. PROVISION OF FINANCIAL INFORMATION. Whether or not the
Company is subject to Section 13 or 15(d) of the Securities Exchange Act of
1934, for so long as any Debt Securities are Outstanding, the Company will, to
the extent permitted under the Securities Exchange Act of 1934, file with the
Commission the annual reports, quarterly reports and other documents which the
Company would have been required to file with the Commission pursuant to such
Section 13 or 15(d) if the Company were so subject, on or prior to the
respective dates (the "Required Filing Dates") by which the Company would have
been so required so to file such documents.
The Company will also in any event (x) within 15 days after each
Required Filing Date (i) transmit by mail to all Holders, as their names and
addresses appear in the Security Register, without cost to such Holders, copies
of the annual reports, quarterly reports and other documents which the Company
would have been required to file with the Commission pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934 if the Company were subject to such
Sections, and (ii) file with the Trustee copies of the annual reports, quarterly
reports and other documents which the Company would have been required to file
with the Commission pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 if the Company were subject to such Sections and (y) if filing such
documents by the Company with the Commission is not permitted
67
<PAGE>
under the Securities Exchange Act of 1934, promptly upon written request and
payment of the reasonable cost of duplication and delivery, supply copies of
such documents to any prospective Holder.
SECTION 1013. WAIVER OF CERTAIN COVENANTS. The Company may omit in
any particular instance to comply with any term, provision or condition set
forth in Sections 1004 to 1012, inclusive, if before or after the time for such
compliance the Holders of at least a majority in principal amount of all
Outstanding Debt Securities of such series, by Act of such Holders, either waive
such compliance in such instance or generally waive compliance with such
covenant or condition, but no such waiver shall extend to or affect such
covenant or condition except to the extent so expressly waived, and, until such
waiver shall become effective, the obligations of the Company and the duties of
the Trustee in respect of any such term, provision or condition shall remain in
full force and effect.
SECTION 1014. STATEMENT AS TO COMPLIANCE. The Company will deliver
to the Trustee, within 120 days after the end of each fiscal year, a brief
certificate from its principal executive officer, principal financial officer or
principal accounting officer as to his or her knowledge of the Company's
compliance with all conditions and covenants under this Indenture and, in the
event of any noncompliance, specifying such noncompliance and the nature and
status thereof. For purposes of this Section 1014, such compliance shall be
determined without regard to any period of grace or requirement of notice under
this Indenture.
SECTION 1015. ADDITIONAL AMOUNTS. If any Debt Securities of a series
provide for the payment of Additional Amounts, the Company will pay to the
Holder of any Debt Security of such series or any coupon appertaining thereto
Additional Amounts as may be specified as contemplated by Section 301. Whenever
in this Indenture there is mentioned, in any context, the payment of the
principal of or any premium or interest on, or in respect of, any Debt Security
of any series or payment of any related coupon or the net proceeds received on
the sale or exchange of any Debt Security of any series, such mention shall be
deemed to include mention of the payment of Additional Amounts provided by the
terms of such series established pursuant to Section 301 to the extent that, in
such context, Additional Amounts are, were or would be payable in respect
thereof pursuant to such terms and express mention of the payment of Additional
Amounts (if applicable) in any provisions hereof shall not be construed as
excluding Additional Amounts in those provisions hereof where such express
mention is not made.
Except as otherwise specified as contemplated by Section 301, if the
Debt Securities of a series provide for the payment of Additional Amounts, at
least 10 days prior to the first Interest Payment Date with respect to that
series of Debt Securities (or if the Debt Securities of that series will not
bear interest prior to Maturity, the first day on which a payment of principal
and any premium is made), and at least 10 days prior to each date of payment of
principal and any premium or interest if there has been any change with respect
to the matters set forth in the below-mentioned Officers' Certificate, the
Company will furnish the Trustee and the Company's principal Paying
68
<PAGE>
Agent or Paying Agents, if other than the Trustee, with an Officers' Certificate
instructing the Trustee and such Paying Agent or Paying Agents whether such
payment of principal of and any premium or interest on the Debt Securities of
that series shall be made to Holders of Debt Securities of that series or any
related coupons who are not United States Persons without withholding for or on
account of any tax, assessment or other governmental charge specified by the
terms of the Debt Securities of the series. If any such withholding shall be
required, then such Officers' Certificate shall specify by country the amount,
if any, required to be withheld on such payments to such Holders of Debt
Securities of that series or related coupons and the Company will pay to the
Trustee or such Paying Agent or Paying Agents the Additional Amounts required by
the terms of such Debt Securities. In the event that the Trustee or any Paying
Agent, as the case may be, shall not so receive the above-mentioned certificate,
then the Trustee or such Paying Agent shall be entitled (i) to assume that no
such withholding or deduction is required with respect to any payment of
principal, premium, if any, or interest with respect to any Debt Securities of a
series or related coupons until it shall have received an Officers' Certificate
advising otherwise and (ii) to make all payments of principal, premium, if any,
and interest with respect to the Debt Securities of a series or related coupons
without withholding or deductions until otherwise advised. The Company covenants
to indemnify the Trustee and any Paying Agent for, and to hold them harmless
against, any loss, liability or expense reasonably incurred without negligence
or bad faith on their part arising out of or in connection with actions taken or
omitted by any of them or in reliance on any Officers' Certificate furnished
pursuant to this Section or in reliance on the Company's not furnishing such an
Officers' Certificate.
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
SECTION 1101. APPLICABILITY OF ARTICLE. Debt Securities of any
series which are redeemable before their Stated Maturity shall be redeemable in
accordance with their terms and (except as otherwise specified as contemplated
by Section 301 for Debt Securities of any series) in accordance with this
Article.
SECTION 1102. ELECTION TO REDEEM; NOTICE TO TRUSTEE. The election of
the Company to redeem any Debt Securities shall be evidenced by or pursuant to a
Board Resolution. In case of any redemption at the election of the Company of
less than all of the Debt Securities of any series, the Company shall, at least
45 days prior to the giving of the notice of redemption referred to in Section
1104 (unless a shorter notice shall be satisfactory to the Trustee), notify the
Trustee of such Redemption Date and of the principal amount of Debt Securities
of such series to be redeemed. In the case of any redemption of Debt Securities
prior to the expiration of any restriction on such redemption provided in the
terms of such Debt Securities or elsewhere in this Indenture, the Company shall
furnish the Trustee with an Officers' Certificate evidencing compliance with
such restriction.
69
<PAGE>
SECTION 1103. SELECTION BY TRUSTEE OF DEBT SECURITIES TO BE REDEEMED.
If less than all the Debt Securities of any series issued on the same day with
the same terms are to be redeemed, the particular Debt Securities to be redeemed
shall be selected not more than 60 days prior to the Redemption Date by the
Trustee, from the Outstanding Debt Securities of such series issued on such date
with the same terms not previously called for redemption (excluding any such
Outstanding Debt Securities held by the Company or any of its Subsidiaries), by
such method as the Trustee shall deem fair and appropriate and which may provide
for the selection for redemption of portions (equal to the minimum authorized
denomination for Debt Securities of that series or any integral multiple
thereof) of the principal amount of Debt Securities of such series of a
denomination larger than the minimum authorized denomination for Debt Securities
of that series.
The Trustee shall promptly notify the Company and the Debt Security
Registrar (if other than itself) in writing of the Debt Securities selected for
redemption and, in the case of any Debt Securities selected for partial
redemption, the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Debt Securities shall
relate, in the case of any Debt Security redeemed or to be redeemed only in
part, to the portion of the principal amount of such Debt Security which has
been or is to be redeemed.
SECTION 1104. NOTICE OF REDEMPTION. Notice of redemption shall be
given in the manner provided in section 106, not less than 30 days nor more than
60 days prior to the Redemption Date, unless a shorter period is specified by
the terms of such series established pursuant to Section 301, to each Holder of
Debt Securities to be redeemed, but failure to give such notice in the manner
herein provided to the Holder of any Debt Security designated for redemption as
a whole or in part, or any defect in the notice to any such Holder, shall not
affect the validity of the proceedings for the redemption of any other such Debt
Security or portion thereof.
Any notice that is mailed to the Holders of Registered Debt Securities
in the manner herein provided shall be conclusively presumed to have been duly
given, whether or not the Holder receives the notice.
All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price and the amount of accrued interest to the
Redemption Date payable as provided in Section 1106, if any, and Additional
Amounts, if any,
(3) if less than all Outstanding Debt Securities of any series are
to be redeemed, the identification (and, in the case of partial redemption, the
principal amount) of the particular Debt Security or Debt Securities to be
redeemed,
70
<PAGE>
(4) in case any Debt Security is to be redeemed in part only, the
notice shall state that on and after the Redemption Date, upon surrender of such
Debt Security, the Holder will receive, without a charge, a new Debt Security or
Debt Securities of such series of authorized denominations for the principal
amount thereof remaining unredeemed,
(5) that on the Redemption Date the Redemption Price and accrued
interest to the Redemption Date and Additional Amounts, if any, payable as
provided in Section 1106, will become due and payable upon each such Debt
Security, or the portion thereof, to be redeemed and, if applicable, that
interest thereon shall cease to accrue on and after said date,
(6) the Place or Places of Payment where such Debt Securities,
together in the case of Bearer Debt Securities with all coupons appertaining
thereto, if any, maturing after the Redemption Date, are to be surrendered for
payment of the Redemption Price and accrued interest, if any, and Additional
Amounts, if any, or (if applicable) for conversion,
(7) that the redemption is for a sinking fund, if such is the case,
(8) that, unless otherwise specified in such notice, Bearer Debt
Securities of any series, if any, surrendered for redemption must be accompanied
by all coupons maturing subsequent to the date fixed for redemption or the
amount of any such missing coupon or coupons will be deducted from the
Redemption Price, unless security or indemnity satisfactory to the Company, the
Trustee for such series and any Paying Agent is furnished,
(9) if Bearer Debt Securities of any series are to be redeemed and
any Registered Debt Securities of such series are not to be redeemed, and if
such Bearer Debt Securities may be exchanged for Registered Debt Securities not
subject to redemption on this Redemption Date pursuant to Section 305 or
otherwise, the last date, as determined by the Company, on which such exchanges
may be made,
(10) the CUSIP number of such Debt Security, if any, and
(11) if applicable, that a Holder of Debt Securities who desires to
convert Debt Securities for redemption must satisfy the requirements for
conversion contained in such Debt Securities the then existing conversion price
or rate, and the date and time when the option to convert shall expire.
Notice of redemption of Debt Securities to be redeemed shall be given
by the Company or, at the Company's request, by the Trustee in the name and at
the expense of the Company.
SECTION 1105. DEPOSIT OF REDEMPTION PRICE. At or prior to 12:00 noon
(New York City time) on any Redemption Date, the Company shall deposit with the
Trustee or with
71
<PAGE>
a Paying Agent (or, if the Company is acting as its own Paying Agent, which it
may not do in the case of a sinking fund payment under Article Twelve, segregate
and hold in trust as provided in Section 1003) an amount of money in the
currency or currencies, currency unit or units or composite currency or
currencies in which the Debt Securities of such series are payable (except as
otherwise may be specified pursuant to Section 301 for the Debt Securities of
such series) sufficient to pay on the Redemption Date the Redemption Price of,
and (except if the Redemption Date shall be an Interest Payment Date) accrued
interest on, and Additional Amounts, if any, with respect to, all the Debt
Securities or portions thereof which are to be redeemed on that date.
SECTION 1106. DEBT SECURITIES PAYABLE ON REDEMPTION DATE Notice of
redemption having been given as aforesaid, the Debt Securities so to be redeemed
shall, on the Redemption Date, become due and payable at the Redemption Price
therein specified in the currency or currencies, currency unit or units or
composite currency or currencies in which the Debt Securities of such series are
payable (except as otherwise specified pursuant to Section 301 for the Debt
Securities of such series) (together with accrued interest, if any, and
Additional Amounts, if any, to the Redemption Date), and from and after such
date (unless the Company shall default in the payment of the Redemption Price or
accrued interest, if any, or Additional Amounts, if any) such Debt Securities
shall, if the same were interest-bearing, cease to bear interest and the coupons
for such interest appertaining to any Bearer Debt Securities so to be redeemed,
except to the extent provided below, shall be void. Upon surrender of any such
Debt Security for redemption in accordance with said notice, together with all
coupons, if any, appertaining thereto maturing after the Redemption Date, such
Debt Security shall be paid by the Company at the Redemption Price, together
with accrued interest, if any, and Additional Amounts, if any, to the Redemption
Date; provided, however, that installments of interest on Bearer Debt Securities
whose Stated Maturity is on or prior to the Redemption Date shall be payable
only at an office or agency located outside the United States (except as
otherwise provided in Section 1002) and, unless otherwise specified as
contemplated by Section 301, only upon presentation and surrender of coupons for
such interest; and provided further that, except as otherwise provided with
respect to Debt Securities convertible into Common Shares or Preferred Shares or
other securities or property, installments of interest on Registered Debt
Securities whose Stated Maturity is on or prior to the Redemption Date shall be
payable to the Holders of such Debt Securities, or one or more Predecessor Debt
Securities, registered as such at the close of business on the relevant Record
Dates according to their terms and the provisions of Section 307.
If any Bearer Debt Security surrendered for redemption shall not be
accompanied by all appurtenant coupons maturing after the Redemption Date, such
Debt Security may be paid after deducting from the Redemption Price an amount
equal to the face amount of all such missing coupons, or the surrender of such
missing coupon or coupons may be waived by the Company and the Trustee if there
be furnished to them such security or indemnity as they may require to save each
of them and any Paying Agent harmless. If thereafter the Holder of such Debt
Security shall surrender to the Trustee or any Paying Agent any such missing
coupon in respect of which a deduction shall have been made from the Redemption
Price, such Holder shall be entitled to receive
72
<PAGE>
the amount so deducted; provided, however, that interest represented by coupons
shall be payable only at an office or agency located outside the United States
(except as otherwise provided in Section 1002) and, unless otherwise specified
as contemplated by Section 301, only upon presentation and surrender of those
coupons.
If any Debt Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal (and premium, if any) shall,
until paid, bear interest from the Redemption Date at the rate borne by or
provided in the Debt Security.
SECTION 1107. DEBT SECURITIES REDEEMED IN PART. Any Registered Debt
Security which is to be redeemed only in part (pursuant to the provisions of
this Article or of Article Twelve) shall be surrendered at a Place of Payment
therefor (with, if the Company or the Trustee so requires, due endorsement by,
or a written instrument of transfer in form satisfactory to the Company and the
Trustee duly executed by, the Holder thereof or his attorney duly authorized in
writing) and the Company shall execute and the Trustee shall authenticate and
deliver to the Holder of such Debt Security without service charge a new Debt
Security or Debt Securities of the same series, of any authorized denomination
as requested by such Holder in aggregate principal amount equal to and in
exchange for the unredeemed portion of the principal of the Debt Security so
surrendered.
SECTION 1108. CONVERSION ARRANGEMENT ON CALL FOR REDEMPTION. In
connection with any redemption of Debt Securities, the Company may arrange for
the purchase and conversion of any Debt Securities called for redemption by an
agreement with one or more investment bankers or other purchasers to purchase
such Debt Securities (a copy of which shall be delivered to the Trustee by the
Company prior to the relevant Redemption Date) by paying to the Trustee or the
Paying Agent in trust for the Holders of Debt Securities, on or before 12:00
Noon (New York City time) on the Redemption Date, an amount not less than the
Redemption Price, together with interest, if any, accrued to the Redemption Date
of such Debt Securities and Additional Amounts, if any, in immediately available
funds. Notwithstanding anything to the contrary contained in this Article
Eleven, the obligation of the Company to pay the Redemption Price of such Debt
Securities, including all accrued interest, if any, and Additional Amounts, if
any, shall be deemed to be satisfied and discharged to the extent such amount is
so paid by such purchasers. If such an agreement is entered into, any Debt
Securities not duly surrendered for conversion by the Holders thereof may, at
the option of the Company, be deemed, to the fullest extent permitted by law,
acquired by such purchasers from such Holders and surrendered by such purchasers
for conversion, all as of immediately prior to the close of business on the last
day on which Debt Securities of such series called for redemption may be
converted in accordance with this Indenture and the terms of such Debt
Securities, subject to payment to the Trustee or Paying Agent of the above-
described amount. The Trustee or the Paying Agent shall hold and pay to the
Holders whose Debt Securities are selected for redemption any such amount paid
to it in the same manner as it would pay moneys deposited with it by the Company
for the redemption of Debt Securities. Without the Trustee's and the Paying
Agent's prior written consent, no arrangement between the
73
<PAGE>
Company and such purchasers for the purchase and conversion of any Debt
Securities shall increase or otherwise affect any of the powers, duties,
responsibilities or obligations of the Trustee and the Paying Agent as set forth
in this Indenture, and the Company agrees to indemnify the Trustee and the
Paying Agent from, and hold them harmless against, any loss, liability or
expense arising out of or in connection with any such arrangement for the
purpose and conversion of any Debt Securities between the Company and such
purchasers, including the costs and expenses incurred by the Trustee and the
Paying Agent (including the fees and expenses of their agents and counsel) in
the defense of any claim or liability arising out of or in connection with the
exercise or performance of any of their powers, duties, responsibilities or
obligations under this Indenture.
ARTICLE TWELVE
SINKING FUNDS
SECTION 1201. APPLICABILITY OF ARTICLE. The provisions of this
Article shall be applicable to any sinking fund for the retirement of Debt
Securities of a series except as otherwise specified as contemplated by Section
301 for Debt Securities of such series.
The minimum amount of any sinking fund payment provided for by the
terms of Debt Securities of any series is herein referred to as a "mandatory
sinking fund payment," and any payment in excess of such minimum amount provided
for by the terms of such Debt Securities of any series is herein referred to as
an "optional sinking fund payment". If provided for by the terms of any Debt
Securities of any series, the cash amount of any mandatory sinking fund payment
may be subject to reduction as provided in Section 1202. Each sinking fund
payment shall be applied to the redemption of Debt Securities of any series as
provided for by the terms of Debt Securities of such series.
SECTION 1202. SATISFACTION OF SINKING FUND PAYMENTS WITH DEBT
SECURITIES. The Company may, in satisfaction of all or any part of any mandatory
sinking fund payment with respect to the Debt Securities of a series, (1)
deliver Outstanding Debt Securities of such series (other than any previously
called for redemption) together in the case of any Bearer Debt Securities of
such series with all unmatured coupons appertaining thereto and (2) apply as a
credit Debt Securities of such series which have been redeemed either at the
election of the Company pursuant to the terms of such Debt Securities or through
the application of permitted optional sinking fund payments pursuant to the
terms of such Debt Securities, as provided for by the terms of such Debt
Securities, or which have otherwise been acquired by the Company; provided that
such Debt Securities so delivered or applied as a credit have not been
previously so credited. Such Debt Securities shall be received and credited for
such purpose by the Trustee at the applicable Redemption Price specified in such
Debt Securities for redemption through operation of the sinking fund and the
amount of such mandatory sinking fund payment shall be reduced accordingly.
SECTION 1203. REDEMPTION OF DEBT SECURITIES FOR SINKING FUND.
74
<PAGE>
Not less than 60 days prior to each sinking fund payment date for Debt
Securities of any series, the Company will deliver to the Trustee an Officers'
Certificate specifying the amount of the next ensuing mandatory sinking fund
payment for that series pursuant to the terms of that series, the portion
thereof, if any, which is to be satisfied by payment of cash in the currency or
currencies, currency unit or units or composite currency or currencies in which
the Debt Securities of such series are payable (except as otherwise specified
pursuant to Section 301 for the Debt Securities of such series) and the portion
thereof, if any, which is to be satisfied by delivering and crediting Debt
Securities of that series pursuant to Section 1202, and the optional amount, if
any, to be added in cash to the next ensuing mandatory sinking fund payment, and
will also deliver to the Trustee any Debt Securities to be so delivered and
credited. If such Officers' Certificate shall specify an optional amount to be
added in cash to the next ensuing mandatory sinking fund payment, the Company
shall thereupon be obligated to pay the amount therein specified. Not less than
30 days before each such sinking fund payment date the Trustee shall select the
Debt Securities to be redeemed upon such sinking fund payment date in the manner
specified in Section 1103 and cause notice of the redemption thereof to be given
in the name of and at the expense of the Company in the manner provided in
Section 1104. Such notice having been duly given, the redemption of such Debt
Securities shall be made upon the terms and in the manner stated in Sections
1106 and 1107.
ARTICLE THIRTEEN
REPAYMENT AT THE OPTION OF HOLDERS
SECTION 1301. APPLICABILITY OF ARTICLE. Debt Securities of any series
which are repayable at the option of the Holders thereof before their Stated
Maturity shall be repaid in accordance with the terms of the Debt Securities of
such series. The repayment of any principal amount of Debt Securities pursuant
to such option of the Holder to require repayment of Debt Securities before
their Stated Maturity, for purposes of Section 309, shall not operate as a
payment, redemption or satisfaction of the indebtedness represented by such Debt
Securities unless and until the Company, at its option, shall deliver or
surrender the same to the Trustee with a directive that such Debt Securities be
canceled. Notwithstanding anything to the contrary contained in this Section
1301, in connection with any repayment of Debt Securities, the Company may
arrange for the purchase of any Debt Securities by an agreement with one or more
investment bankers or other purchasers to purchase such Debt Securities by
paying to the Holders of such Debt Securities on or before the close of business
on the Repayment Date an amount not less than the Repayment Price payable by the
Company on repayment of such Debt Securities (together with interest, if any,
and Additional Amounts, if any, to the Redemption Date), and the obligation of
the Company to pay the Repayment Price of such Debt Securities (together with
interest, if any, and Additional Amounts, if any, to the Redemption Date), shall
be satisfied and discharged to the extent such payment is so paid by such
purchasers.
75
<PAGE>
ARTICLE FOURTEEN
DEFEASANCE AND COVENANT DEFEASANCE
SECTION 1401. APPLICABILITY OF ARTICLE; COMPANY'S OPTION TO EFFECT
DEFEASANCE OR COVENANT DEFEASANCE. If, pursuant to Section 301, provision is
made for either or both of (a) defeasance of the Debt Securities of or within a
series under Section 1402 or (b) covenant defeasance of the Debt Securities of
or within a series under Section 1403, then the provisions of such Section or
Sections, as the case may be, together with the other provisions of this Article
(with such modifications thereto as may be specified pursuant to Section 301
with respect to such Debt Securities), shall be applicable to such Debt
Securities and any coupons appertaining thereto, and the Company may at its
option by Board Resolution, at any time, with respect to such Debt Securities
and any coupons appertaining thereto, elect to have Section 1402 (if applicable)
or Section 1403 (if applicable) be applied to such Outstanding Debt Securities
and any coupons appertaining thereto upon compliance with the conditions set
forth below in this Article. Unless otherwise specified pursuant to Section 301,
the Company's right, if any, to elect defeasance pursuant to Section 1402 or
covenant defeasance pursuant to Section 1403 may only be exercised with respect
to all of the Outstanding Debt Securities of any series.
SECTION 1402. DEFEASANCE AND DISCHARGE. Upon the Company's exercise
of the above option applicable to this Section with respect to any Debt
Securities of or within a series, the Company shall be deemed to have been
discharged from its obligations with respect to such Outstanding Debt Securities
and any coupons appertaining thereto on the date the conditions set forth in
Section 1404 are satisfied (hereinafter "defeasance"). For this purpose, such
defeasance means that the Company shall be deemed to have paid and discharged
the entire indebtedness represented by such Outstanding Debt Securities and any
coupons appertaining thereto, which shall thereafter be deemed to be
"Outstanding" only for the purposes of Section 1405 and the other Sections of
this Indenture referred to in clauses (A) through (D) below, and to have
satisfied all of its other obligations under such Debt Securities and any
coupons appertaining thereto and this Indenture insofar as such Debt Securities
and any coupons appertaining thereto are concerned (and the Trustee, at the
expense of the Company, shall execute proper instruments acknowledging the
same), except for the following which shall survive until otherwise terminated
or discharged hereunder: (A) the rights of Holders of such outstanding Debt
Securities and any coupons appertaining thereto to receive, solely from the
trust fund described in Section 1404 and as more fully set forth in such
Section, payments in respect of the principal of (and premium, if any) and
interest, if any, on such Debt Securities and any coupons appertaining thereto
when such payments are due, (B) the Company's obligations with respect to such
Debt Securities under Sections 304, 305, 306, 1002 and 1003, with respect to the
payment of Additional Amounts, if any, on such Debt Securities as contemplated
by Section 1015, and with respect to any rights to convert or exchange such Debt
Securities into Common Shares, Preferred Shares or other securities or property,
(C) the rights, powers, trusts, duties and immunities of the Trustee hereunder
(including, without limitation, those in Section 606 hereof) and (D) this
Article Fourteen. Subject to compliance with this Article Fourteen, the Company
may exercise its option under this Section notwithstanding the prior exercise
76
<PAGE>
of its option under Section 1403 with respect to such Debt Securities and any
coupons appertaining thereto.
SECTION 1403. COVENANT DEFEASANCE. Upon the Company's exercise of
the above option applicable to this Section with respect to any Debt Securities
of or within a series, the Company shall be released from its obligations under
Sections 1004 to 1012, inclusive, (except that the Company shall remain subject
to the covenant set forth in Section 1008 to preserve and keep in full force and
effect its corporate existence, except as permitted under Article Eight) and, if
specified pursuant to Section 301, its obligations under any other covenant,
with respect to such Outstanding Debt Securities and any coupons appertaining
thereto on and after the date the conditions set forth in Section 1404 are
satisfied (hereinafter, "covenant defeasance"), and such Debt Securities and any
coupons appertaining thereto shall thereafter be deemed to be not "Outstanding"
for the purposes of any direction, waiver, consent or declaration or Act of
Holders (and the consequences of any thereof) in connection with Sections 1004
to 1012, inclusive, or such other covenant, but shall continue to be deemed
"Outstanding" for all other purposes hereunder. For this purpose, such covenant
defeasance means that, with respect to such Outstanding Debt Securities and any
coupons appertaining thereto, the Company may omit to comply with and shall have
no liability in respect of any term, condition or limitation set forth in any
such Section or such other covenant, whether directly or indirectly, by reason
of any reference elsewhere herein to any such Section or such other covenant or
by reason of reference in any such Section or such other covenant to any other
provision herein or in any other document and such omission to comply shall not
constitute a default or an Event of Default under Section 501(4) or 501(8) or
otherwise, as the case may be, but, except as specified above, the remainder of
this Indenture and such Debt Securities and any coupons appertaining thereto
shall be unaffected thereby.
SECTION 1404. CONDITIONS TO DEFEASANCE OR COVENANT DEFEASANCE. The
following shall be the conditions to application of Section 1402 or Section 1403
to any Outstanding Debt Securities of or within a series and any coupons
appertaining thereto:
(a) The Company shall irrevocably have deposited or caused to be
deposited with the Trustee (or another trustee satisfying the requirements of
Section 607 who shall agree to comply with the provisions of this Article
Fourteen applicable to it) as trust funds in trust for the purpose of making the
following payments, specifically pledged as security for, and dedicated solely
to, the benefit of the Holders of such Debt Securities and any coupons
appertaining thereto, (1) an amount in such currency, currencies or currency
unit in which such Debt Securities and any coupons appertaining thereto are then
specified as payable at Stated Maturity or, if such defeasance or covenant
defeasance is to be effected in compliance with subsection (f) below, on the
relevant Redemption Date, as the case may be, or (2) Government Obligations
applicable to such Debt Securities and coupons appertaining thereto (determined
on the basis of the currency, currencies or currency unit in which such Debt
Securities and coupons appertaining thereto are then specified as payable at
Stated Maturity or the applicable Redemption Date, as the case may be) which
through the scheduled payment of principal and interest in respect thereof in
accordance with their terms will
77
<PAGE>
provide, not later than one day before the due date of any payment of principal
of (and premium, if any) and interest, if any, on such Debt Securities and any
coupons appertaining thereto, money in an amount, or (3) a combination thereof,
in any case, in an amount sufficient, without consideration of any reinvestment
of such principal and interest, in the opinion of a nationally recognized firm
of independent public accountants expressed in a written certification thereof
delivered to the Trustee, to pay and discharge, and which shall be applied by
the Trustee (or other qualifying trustee) to pay and discharge, (i) the
principal of (and premium, if any) and interest, if any, on such Outstanding
Debt Securities and any coupons appertaining thereto on the Stated Maturity of
such principal or installment of principal or interest or the applicable
Redemption Date, as the case may be, and (ii) any mandatory sinking fund
payments or analogous payments applicable to such Outstanding Debt Securities
and any coupons appertaining thereto on the day on which such payments are due
and payable in accordance with the terms of this Indenture and of such Debt
Securities and any coupons appertaining thereto.
(b) Such defeasance or covenant defeasance shall not result in a
breach or violation of, or constitute a default under, this Indenture or any
other material agreement or instrument to which the Company is a party or by
which it is bound.
(c) No Event of Default or event which with notice or lapse of time
or both would become an Event of Default with respect to such Debt Securities
and any coupons appertaining thereto shall have occurred and be continuing on
the date of such deposit or, insofar as Sections 501(6) and 501(7) are
concerned, at any time during the period ending on the 91st day after the date
of such deposit (it being understood that this condition shall not be deemed
satisfied until the expiration of such period).
(d) In the case of an election under Section 1402, the Company shall
have delivered to the Trustee an Opinion of Counsel stating that (i) the Company
has received from, or there has been published by, the Internal Revenue Service
a ruling, or (ii) since the date of this Indenture there has been a change in
the applicable Federal income tax law, in either case to the effect that, and
based thereon such opinion shall confirm that, the Holders of such Outstanding
Debt Securities and any coupons appertaining thereto will not recognize income,
gain or loss for Federal income tax purposes as a result of such defeasance and
will be subject to Federal income tax on the same amounts, in the same manner
and at the same times as would have been the case if such defeasance had not
occurred.
(e) In the case of an election under Section 1403, the Company shall
have delivered to the Trustee an Opinion of Counsel to the effect that the
Holders of such Outstanding Debt Securities and any coupons appertaining thereto
will not recognize income, gain or loss for Federal income tax purposes as a
result of such covenant defeasance and will be subject to Federal income tax on
the same amounts, in the same manner and at the same times as would have been
the case if such covenant defeasance had not occurred.
78
<PAGE>
(f) If the monies or Government Obligations or combination thereof,
as the case may be, deposited under subsection (a) above are sufficient to pay
the principal of, and premium, if any, and interest, if any, on such Debt
Securities provided such Debt Securities are redeemed on a particular Redemption
Date, the Company shall have given the Trustee irrevocable instructions to
redeem such Debt Securities on such date and to provide notice of such
redemption to Holders as provided in or pursuant to this Indenture.
(g) The Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent to the defeasance under Section 1402 or the covenant defeasance under
Section 1403 (as the case may be) have been complied with and an Opinion of
Counsel to the effect that, as a result of a deposit pursuant to subsection (a)
above and the related exercise of the Company's option under Section 1402 or
Section 1403 (as the case may be), registration is not required under the
Investment Company Act of 1940, as amended, by the Company, with respect to the
trust funds representing such deposit or by the Trustee for such trust funds.
(h) Notwithstanding any other provisions of this Section, such
defeasance or covenant defeasance shall be effected in compliance with any
additional or substitute terms, conditions or limitations which may be imposed
on the Company in connection therewith pursuant to Section 301.
SECTION 1405. DEPOSITED MONEY AND GOVERNMENT OBLIGATIONS TO BE HELD
IN TRUST; OTHER MISCELLANEOUS PROVISIONS. Subject to the provisions of the last
paragraph of Section 1003, all money and Government Obligations (or other
property as may be provided pursuant to Section 301) (including the proceeds
thereof) deposited with the Trustee (or other qualifying trustee, collectively
for purposes of this Section 1405, the "Trustee") pursuant to Section 1404 in
respect of any Outstanding Debt Securities of any series and any coupons
appertaining thereto shall be held in trust and applied by the Trustee, in
accordance with the provisions of such Debt Securities and any coupons
appertaining thereto and this Indenture, to the payment, either directly or
through any Paying Agent (other than the Company acting as its own Paying Agent)
as the Trustee may determine, to the Holders of such Debt Securities and any
coupons appertaining thereto of all sums due and to become due thereon in
respect of principal (and premium, if any) and interest, but such money need not
be segregated from other funds except to the extent required by law.
Unless otherwise specified with respect to any Debt Security pursuant
to Section 301, if, after a deposit referred to in Section 1404(a) has been
made, (a) the Holder of a Debt Security in respect of which such deposit was
made is entitled to, and does, elect to receive payment in a currency or
currency unit other than that in which the deposit pursuant to Section 1404(a)
has been made in respect of such Debt Security, or (b) a Conversion Event occurs
in respect of the currency or currency unit in which the deposit pursuant to
Section 1404(a) has been made, the indebtedness represented by such Debt
Security and any coupons appertaining thereto shall be deemed to have been, and
will be, fully discharged and satisfied through the payment of the principal of
(and
79
<PAGE>
premium, if any), and interest, if any, on such Debt Security as it becomes due
out of the proceeds yielded by converting (from time to time as specified below
in the case of any such election) the amount or other property deposited in
respect of such Debt Security into the currency or currency unit in which such
Debt Security becomes payable as a result of such election or Conversion Event
based on the applicable market exchange rate on (x) in the case of payments made
pursuant to clause (a) above, the applicable market exchange rate for such
currency or currency unit in effect on the second Business Day prior to each
payment date, or (y) with respect to a Conversion Event, the applicable market
exchange rate for such currency or currency unit in effect (as nearly as
feasible) at the time of the Conversion Event.
The Company shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the Government Obligations
deposited pursuant to Section 1404 or the principal and interest received in
respect thereof other than any such tax, fee or other charge which by law is for
the account of the Holders of such Outstanding Debt Securities and any coupons
appertaining thereto.
Anything in this Article to the contrary notwithstanding, subject to
Section 606, the Trustee shall deliver or pay to the Company from time to time
upon Company Request any money or Government Obligations (or other property and
any proceeds therefrom) held by it as provided in Section 1404 which, in the
opinion of a nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the Trustee, are in
excess of the amount thereof which would then be required to be deposited to
effect a defeasance or covenant defeasance, as applicable, in accordance with
this Article.
SECTION 1406. REINSTATEMENT. If the Trustee or Paying Agent is unable
to apply any cash or Government Obligations deposited pursuant to Section 1404
in accordance with this Indenture or the Debt Securities of the applicable
series 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, then the Company's obligations under this
Indenture and the Debt Securities of such series shall be revived and reinstated
as though no deposit had occurred pursuant to Section 1404 until such time as
the Trustee or Paying Agent is permitted to apply such money in accordance with
this Indenture and the Debt Securities of such series; provided, however, that
if the Company makes any payment of principal of, premium, if any, or interest
on any Debt Security of such series following the reinstatement of its
obligations, the Company shall be subrogated to the rights of the Holders of
such Debt Securities to receive such payment from the cash and Government
Obligations held by the Trustee or Paying Agent.
80
<PAGE>
ARTICLE FIFTEEN
MEETINGS OF HOLDERS OF SECURITIES
SECTION 1501. PURPOSES FOR WHICH MEETINGS MAY BE CALLED. A meeting
of Holders of Debt Securities of any series may be called at any time and from
time to time pursuant to this Article to make, give or take any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be made, given or taken by Holders of Debt Securities of such
series.
SECTION 1502. CALL, NOTICE AND PLACE OF MEETINGS.
(a) The Trustee may at any time call a meeting of Holders of Debt
Securities of any series for any purpose specified in Section 1501, to be held
at such time and at such place in The City of New York or, if Debt Securities of
such series have been issued in whole or in part as Bearer Debt Securities, in
London as the Trustee shall determine. Notice of every meeting of Holders of
Debt Securities of any series, setting forth the time and the place of such
meeting and in general terms the action proposed to be taken at such meeting,
shall be given, in the manner provided in Section 106, not less than 21 nor more
than 180 days prior to the date fixed for the meeting.
(b) In case at any time the Company, pursuant to a Board Resolution,
or the Holders of at least 10% in principal amount of the Outstanding Debt
Securities of any series shall have requested the Trustee to call a meeting of
the Holders of Debt Securities of such series for any purpose specified in
Section 1501, by written request setting forth in reasonable detail the action
proposed to be taken at the meeting, and the Trustee shall not have made the
first publication of the notice of such meeting within 21 days after receipt of
such request or shall not thereafter proceed to cause the meeting to be held as
provided herein, then the Company or the Holders of Debt Securities of such
series in the amount above specified, as the case may be, may determine the time
and the place in The City of New York, or, if Debt Securities of such series
have been issued in whole or in part as Bearer Debt Securities, in London for
such meeting and may call such meeting for such purposes by giving notice
thereof as provided in subsection (a) of this Section.
SECTION 1503. PERSONS ENTITLED TO VOTE AT MEETINGS. To be entitled
to vote at any meeting of Holders of Debt Securities of any series, a Person
shall be (1) a Holder of one or more Outstanding Debt Securities of such series,
or (2) a Person appointed by an instrument in writing as proxy for a Holder or
Holders of one or more Outstanding Debt Securities of such series by such Holder
or Holders. The only Persons who shall be entitled to be present or to speak at
any meeting of Holders of Debt Securities of any series shall be the Persons
entitled to vote at such meeting and their counsel, any representatives of the
Trustee and its counsel and any representatives of the Company and its counsel.
SECTION 1504. QUORUM; ACTION. The Persons entitled to vote a
majority in principal amount of the Outstanding Debt Securities of a series
shall constitute a quorum for a
81
<PAGE>
meeting of Holders of Debt Securities of such series; provided, however, that if
any action is to be taken at such meeting with respect to a consent or waiver
which this Indenture expressly provides may be given by the Holders of not less
than a specified percentage in principal amount of the Outstanding Debt
Securities of a series, the Persons entitled to vote such specified percentage
which is less or more than a majority in principal amount of the Outstanding
Debt Securities of such series shall constitute a quorum. In the absence of a
quorum within 30 minutes after the time appointed for any such meeting, the
meeting shall, if convened at the request of Holders of Debt Securities of such
series, be dissolved. In any other case the meeting may be adjourned for a
period of not less than 10 days as determined by the chairman of the meeting
prior to the adjournment of such meeting. In the absence of a quorum at any such
adjourned meeting, such adjourned meeting may be further adjourned for a period
of not less than 10 days as determined by the chairman of the meeting prior to
the adjournment of such adjourned meeting. Notice of the reconvening of any
adjourned meeting shall be given as provided in Section 1502(a), except that
such notice need be given only once not less than five days prior to the date on
which the meeting is scheduled to be reconvened. Notice of the reconvening of
any adjourned meeting shall state expressly the percentage, as provided above,
of the principal amount of the Outstanding Debt Securities of such series which
shall constitute a quorum.
Except as limited by the proviso to Section 902, any resolution
presented to a meeting or adjourned meeting duly reconvened at which a quorum is
present as aforesaid may be adopted by the affirmative vote of the Holders of a
majority in principal amount of the Outstanding Debt Securities of that series;
provided, however, that, except as limited by the proviso to Section 902, any
resolution with respect to any request, demand, authorization, direction,
notice, consent, waiver or other action which this Indenture expressly provides
may be made, given or taken by the Holders of a specified percentage, which is
less or more than a majority, in principal amount of the Outstanding Debt
Securities of a series may be adopted at a meeting or an adjourned meeting duly
reconvened and at which a quorum is present as aforesaid by the affirmative vote
of the Holders of such specified percentage in principal amount of the
Outstanding Debt Securities of that series. Any resolution passed or decision
taken at any meeting of Holders of Debt Securities of any series duly held in
accordance with this Section shall be binding on all the Holders of Debt
Securities of such series and the related coupons, whether or not present or
represented at the meeting.
Notwithstanding the foregoing provisions of this Section 1504, if any
action is to be taken at a meeting of Holders of Debt Securities of any series
with respect to any request, demand, authorization, direction, notice, consent,
waiver or other action that this Indenture expressly provides may be made, given
or taken by the Holders of a specified percentage in principal amount of all
Outstanding Debt Securities affected thereby, or by the Holders of a specified
percentage in principal amount of the Outstanding Debt Securities of such series
and one or more additional series:
(i) there shall be no minimum quorum requirement for such meeting;
and
(ii) the principal amount of the Outstanding Debt Securities of such
series that
82
<PAGE>
are entitled to vote in favor of such request, demand, authorization, direction,
notice, consent, waiver or other action shall be taken into account in
determining whether such request, demand, authorization, direction, notice,
consent, waiver or other action has been made, given or taken under this
Indenture.
SECTION 1505. DETERMINATION OF VOTING RIGHTS; CONDUCT AND ADJOURNMENT
OF MEETINGS.
(a) Notwithstanding any provisions of this Indenture, the Trustee
may make such reasonable regulations as it may deem advisable for any meeting of
Holders of Debt Securities of a series in regard to proof of the holding of Debt
Securities of such series and of the appointment of proxies and in regard to the
appointment and duties of inspectors of votes, the submission and examination of
proxies, certificates and other evidence of the right to vote, and such other
matters concerning the conduct of the meeting as it shall deem appropriate.
Except as otherwise permitted or required by any such regulations, the holding
of Debt Securities shall be proved in the manner specified in Section 104 and
the appointment of any proxy shall be proved in the manner specified in Section
104 or by having the signature of the Person executing the proxy witnessed or
guaranteed by any trust company, bank or banker authorized by Section 104 to
certify to the holding of Bearer Debt Securities. Such regulations may provide
that written instruments appointing proxies, regular on their face, may be
presumed valid and genuine without the proof specified in Section 104 or other
proof.
(b) The Trustee shall, by an instrument in writing appoint a
temporary chairman of the meeting, unless the meeting shall have been called by
the Company or by Holders of Debt Securities as provided in Section 1502(b), in
which case the Company or the Holders of Debt Securities of the series calling
the meeting, as the case may be, shall in like manner appoint a temporary
chairman. A permanent chairman and a permanent secretary of the meeting shall be
elected by vote of the Persons entitled to vote a majority in principal amount
of the Outstanding Debt Securities of such series represented at the meeting.
(c) At any meeting each Holder of a Debt Security of such series or
proxy shall be entitled to one vote for each $1,000 principal amount of the
Outstanding Debt Securities of such series held or represented by him; provided,
however, that no vote shall be cast or counted at any meeting in respect of any
Debt Security challenged as not Outstanding and ruled by the chairman of the
meeting to be not Outstanding. The chairman of the meeting shall have no right
to vote, except as a Holder of a Debt Security of such series or proxy.
(d) Any meeting of Holders of Debt Securities of any series duly
called pursuant to Section 1502 at which a quorum is present may be adjourned
from time to time by Persons entitled to vote a majority in principal amount of
the Outstanding Debt Securities of such series represented at the meeting, and
the meeting may be held as so adjourned without further notice.
83
<PAGE>
SECTION 1506. COUNTING VOTES AND RECORDING ACTION OF MEETINGS. The
vote upon any resolution submitted to any meeting of Holders of Debt Securities
of any series shall be by written ballots on which shall be subscribed the
signatures of the Holders of Debt Securities of such series or of their
representatives by proxy and the principal amounts and serial numbers of the
Outstanding Debt Securities of such series held or represented by them. The
permanent chairman of the meeting shall appoint two inspectors of votes who
shall count all votes cast at the meeting for or against any resolution and who
shall make and file with the secretary of the meeting their verified written
reports in duplicate of all votes cast at the meeting. A record, at least in
duplicate, of the proceedings of each meeting of Holders of Debt Securities of
any series shall be prepared by the secretary of the meeting and there shall be
attached to said record the original reports of the inspectors of votes on any
vote by ballot taken thereat and affidavits by one or more persons having
knowledge of the fact, setting forth a copy of the notice of the meeting and
showing that said notice was given as provided in Section 1502 and, if
applicable, Section 1504. Each copy shall be signed and verified by the
affidavits of the permanent chairman and secretary of the meeting and one such
copy shall be delivered to the Company and another to the Trustee to be
preserved by the Trustee, the latter to have attached thereto the ballots voted
at the meeting. Any record so signed and verified shall be conclusive evidence
of the matters therein stated.
ARTICLE SIXTEEN
SUBORDINATION OF SECURITIES
SECTION 1601. DEBT SECURITIES SUBORDINATED TO SENIOR INDEBTEDNESS.
The Company covenants and agrees, and each Holder of Debt Securities, by his
acceptance thereof, likewise covenants and agrees, that the indebtedness
represented by the Debt Securities and the payment of the principal of (and
premium, if any) and interest and any Additional Amounts payable in respect of
each and all of the Debt Securities is hereby expressly subordinated, to the
extent and in the manner hereinafter set forth, in right of payment to the prior
payment in full of Senior Indebtedness.
In the event (a) of any distribution of assets of the company upon any
dissolution, winding up, liquidation or reorganization of the Company whether in
bankruptcy, insolvency, reorganization or receivership proceeding or upon an
assignment for the benefit of creditors or any other marshaling of the assets
and liabilities of the Company or otherwise, except a distribution in connection
with a merger or consolidation or a conveyance or transfer of all or
substantially all of the properties of the Company which compiles with the
requirements of Article Eight, or (b) that a default shall have occurred and be
continuing with respect to the payment of principal of (or premium, if any) or
interest on or any Additional Amounts payable in of any Senior Indebtedness, or
(c) that the principal of the Debt Securities of any series (or in the case of
Original Issue Discount Debt Securities, the portion of the principal amount
thereof referred to in section 502) shall have been declared due and payable
pursuant to Section 502 and such declaration shall not have been rescinded and
annulled as provided in Section 502, then:
84
<PAGE>
(1) in a circumstance described in the foregoing clause (a) or (b)
the holders of all Senior Indebtedness, and in the circumstance described in the
foregoing clause (c) the holders of all Senior Indebtedness (other than Other
Obligations) outstanding at the time the principal of such Debt Securities (or
in the case of Original Issue Discount Debt Securities, such portion of the
principal amount) shall have been so declared due and payable, shall first be
entitled to receive payment of the full amount due thereon in respect of
principal, premium (if any), Interest and Additional Amounts, or provision shall
be made for such payment in money or money's worth, before the Holders of any of
the Debt Securities are entitled to receive any payment on account of the
principal of (or premium, if any) or interest on or any Additional Amounts in
respect of the indebtedness evidenced by the Debt Securities;
(2) any payment by, or distribution of assets of, the Company of any
kind or character, whether in cash, property or securities (other than
securities of the Company as reorganized or readjusted or securities of the
Company or any other corporation provided for by a plan of reorganization or
readjustment the payment of which is subordinate, at least to the extent
provided in this Article with respect to the securities, the payment of all
Senior Indebtedness, provided that the rights of the Holders of the Senior
Indebtedness are not altered by such reorganization or readjustment), to which
the Holders of any of the Debt Securities would be entitled except for the
subordination provisions of this Article shall be paid or delivered by the
person making such payment or distribution, whether a trustee in bankruptcy, a
receiver or liquidating trustee or otherwise, directly to the holders of such
Senior Indebtedness or their representative or representatives or to the trustee
or trustees under any indenture under which any instrument evidencing an of such
Senior Indebtedness held or represented by each, to the extent necessary to make
payment in full of all Senior Indebtedness remaining unpaid after giving effect
to any concurrent payment or distribution (or provision therefor) to the holders
of such Senior Indebtedness, before any payment or distribution is made to the
Holders of the indebtedness evidenced by the Debt Securities under this
Indenture; and
(3) in the event that, notwithstanding the foregoing, any payment
by, or distribution of assets of, the Company of any kind or character, whether
in cash, property or securities (other than securities of the Company as
reorganized or readjusted or securities of the Company or any other corporation
provided for by a plan of reorganization or readjustment the payment of which is
subordinate, at least to the extent provided in this Article with respect to the
Debt Securities, to the payment of all Senior Indebtedness, provided that the
rights of the holders of Senior Indebtedness are not altered by such
reorganization or readjustment), shall be received by the Holders of an of the
Debt Securities before all Senior Indebtedness is paid in full, such payment or
distribution shall be paid over to the holders of such Senior Indebtedness is
paid in full, such payment or distribution shall be paid over to the holders of
such Senior Indebtedness or their representative or representatives or to the
trustee or trustees under any indenture under which any instruments evidencing
any of such Senior Indebtedness may have been issued, ratably as aforesaid, for
application to the payment of all Senior Indebtedness remaining unpaid until all
such Senior Indebtedness shall have been paid in full, after giving effect to
any concurrent payment or
85
<PAGE>
distribution (or provision therefor) to the holders of such Senior Indebtedness.
SECTION 1602. SUBROGATION. Subject to the payment in full of all
Senior Indebtedness to which the indebtedness evidenced by the Debt Securities
is in the circumstances subordinated as provided in Section 1701, the Holders of
the Debt Securities shall be subrogated to the rights of the holders of such
Senior Indebtedness to receive payments or distributions of cash, property or
securities of the Company applicable to such Senior Indebtedness until all
amounts owing on the Debt Securities shall be paid in full, and, as between the
Company, its creditors other than holders of such Senior Indebtedness, and the
Holders of the Debt Securities, no such payment or distribution made to the
holders of such Senior Indebtedness by virtue of this Article which otherwise
would have been made to the Holders of the Debt Securities shall be deemed to be
a payment by the Company on account of such Senior Indebtedness, it being
understood that the provisions of this Article are and are intended solely for
the purpose of defining the relative rights of the Holders of the Debt
Securities, on the one hand, and the holders of Senior Indebtedness.
SECTION 1603. OBLIGATIONS OF THE COMPANY UNCONDITIONAL. Nothing
contained in this Article or elsewhere in its Indenture or in the Debt
Securities is intended to or shall impair, as between the Company, its creditors
other than the holders of Senior Indebtedness, and the Holders of the Debt
Securities, the obligation of the Company, which is absolute and unconditional,
to pay to the Holders of the Debt Securities the principal of (and premium, if
any) and interest on and any Additional Amounts in respect of the Debt
Securities as and when the same shall become due and payable in accordance with
their terms, or is intended to or shall affect the relative rights of the
Holders of the Debt Securities and creditors of the Company other than the
holders of Senior Indebtedness nor shall anything herein or therein prevent the
Trustee or the Holder of any Security from exercising all remedies otherwise
permitted by applicable law upon default under this Indenture, subject to the
rights, if any, under this Article of the holders of Senior Indebtedness in
respect of cash, property or securities of the Company received upon the
exercise of any such remedy.
Upon any payment or distribution of assets of the Company referred to
in this Article, the Trustee and the Holders of the Debt Securities shall be
entitled to rely upon any order or decree made by any court of competent
jurisdiction in which any such dissolution, winding up, liquidation or
reorganization proceeding affecting the affairs of the Company is pending or
upon a certificate of the trustee in bankruptcy, receiver, assignee for the
benefit of creditors, liquidating trustee or agent or other person making any
payment or distribution, delivered to the Trustee or to the Holders of the Debt
Securities, for the purpose of ascertaining the persons entitled to participate
in such payment or distribution, the holders of the Senior Indebtedness and
other indebtedness of the Company, the amount thereof or payable thereon, the
amount paid or distributed thereon and all other facts pertinent thereto or to
this Article.
SECTION 1604. PAYMENTS ON DEBT SECURITIES PERMITTED. Nothing
contained in this Article or elsewhere in this Indenture, or in any of the Debt
Securities, shall affect
86
<PAGE>
the obligation of the Company to make, or prevent the Company from making,
payment of the principal of (or premium, if any) or interest on or any
Additional Amounts in respect of the Debt Securities in accordance with the
provision hereof and thereof, except as otherwise provided in this Article.
SECTION 1605. EFFECTUATION OF SUBORDINATION BY TRUSTEE. Each Holder
of Debt Securities, by his acceptance thereof, authorizes and directs the
Trustee in his behalf to take such action as may be necessary or appropriate to
effectuate the subordination provided in this Article and appoints the Trustee
his attorney-in-fact for any all such purposes.
SECTION 1606. KNOWLEDGE OF TRUSTEE. Notwithstanding the provisions
of this Article or any other provision of this Indenture, the Trustee shall not
be deemed to owe any fiduciary duty to the holders of Senior Indebtedness and
shall not be charged with knowledge of the existence of any facts which would
prohibit the making of any payment of moneys to or by the Trustee, or the taking
of any other action by the Trustee, unless and until the Trustee shall have
received written notice thereof from the Company, and Holder of Debt Securities,
any paying or conversion agent of the Company or the holder or representative of
any class of Senior Indebtedness; provided, however, that if the Trustee shall
not have received the notice provided for in this Section at least 3 Business
Days prior to the date upon which, by the terms hereof, any money may become
payable for any purpose (including, without limitation, the payment of the
principal of (or premium, if any) or interest on, or Additional Amounts in
respect of, any Security) then, anything herein contained to the contrary
notwithstanding, the Trustee shall have all power and authority to receive such
money and to apply the same to the purpose for which such money was received and
shall not be affected by any notice to the contrary which may be received by it
during or after such 3 Business Day period.
SECTION 1607. TRUSTEE MAY HOLD SENIOR INDEBTEDNESS. The Trustee in
its individual capacity shall be entitled to all the rights set forth in this
Article with respect to any Senior Indebtedness at the time held by it, to the
same extent as any other holder of Senior Indebtedness, and nothing in Section
313 of the Trust Indenture Act or elsewhere in this Indenture shall deprive the
Trustee of any of its rights as such holder.
Nothing in this Article shall subordinate any claims of, or payments
to, the Trustee (under or pursuant to Section 606) to Senior Indebtedness.
SECTION 1608. RIGHTS OF HOLDERS OF SENIOR INDEBTEDNESS NOT IMPAIRED.
No right of any present or future holder of any Senior Indebtedness to enforce
the subordination herein shall at any time or in any way be prejudiced or
impaired by any act or failure to act on the part of the Company or by any non-
compliance by the Company with the terms, provisions and covenants of this
Indenture, regardless of any knowledge thereof any such holder may have or be
otherwise charged with.
87
<PAGE>
This Indenture may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same Indenture.
88
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed, and their respective corporate seals to be hereunto affixed
and attested, all as of the day and year first above written.
BRE PROPERTIES, INC.
By __________________________
Title: ______________________
_____________________________
As Trustee
[SEAL]
Attest:
Title: _______________________________
[SEAL]
Attest:
Title: _______________________________
<PAGE>
STATE OF CALIFORNIA ) ) ss:
COUNTY OF SAN FRANCISCO )
On the ____________ day of ___________, 1997, before me personally came
__________________, to me known, who, being be me duly sworn, did depose and say
that he/she resides at _______________, ______________, that he/she is the
___________ of BRE PROPERTIES, INC., one of the corporations described in and
which executed the foregoing instrument and that he/she signed his/her name
thereto by authority of the Board of Directors of said corporation.
[Notarial Seal]
Notary Public
COMMISSION EXPIRES
STATE OF ________ ) ) ss:
COUNTY OF _________ )
On the ____________ day of ___________, 1997, before me personally came
__________________, to me known, who, being be me duly sworn, did depose and say
that he/she resides at _______________, that he/she is ___________ of
_______________, one of the corporations described in and which executed the
foregoing instrument and that he/she signed his/her name thereto by authority of
the Board of Directors of said corporation.
[Notarial Seal]
Notary Public
COMMISSION EXPIRES
<PAGE>
EXHIBIT A-1
-----------
FORM OF CERTIFICATE TO BE GIVEN BY PERSON ENTITLED
TO RECEIVE BEARER SECURITY OR TO OBTAIN INTEREST
PAYABLE PRIOR TO THE EXCHANGE DATE
CERTIFICATE
-----------
[insert title or sufficient description of Debt Securities to be delivered]
This is to certify that, as of the date hereof, and except as set forth
below, the above-captioned Debt Securities held by you for our account (i) are
owned by person(s) that are not citizens or residents of the United States,
domestic partnerships, domestic corporations or any estate or trust the income
of which is subject to United States federal income taxation regardless of its
source ("United States person(s)"), (ii) are owned by United States person(s)
that are (a) foreign branches of United States financial institutions (financial
institutions, as defined in United States Treasury Regulations Section 2.165-
12(c)(1)(v) are herein referred to as "financial institutions") purchasing for
their own account or for resale, or (b) United States person(s) who acquired the
Debt Securities through foreign branches of United States financial institutions
and who hold the Debt Securities through such United States financial
institutions on the date hereof (and in either case (a) or (b), each such United
States financial institution hereby agrees, on its own behalf or through its
agent, that you may advise BRE PROPERTIES, INC. or its agent that such financial
institution will comply with the requirements of Section 165(j)(3)(A), (B) or
(C) of the United States Internal Revenue Code of 1986, as amended, and the
regulations thereunder), or (iii) are owned by United States or foreign
financial institutions) for purposes of resale during the restricted period (as
defined in United States Treasury Regulations Section 1.163-5(c)(2)(i)(D)(7)),
and, in addition, if the owner is a United States or foreign financial
institution described in clause (iii) above (whether or not also described in
clause (i) or (ii)), this is to further certify that such financial institution
has not acquired the Debt Securities for purposes of resale directly or
indirectly to a United States person or to a person within the United States or
its possessions.
As used herein, "United States" means the United States of America
(including the States and the District of Columbia); and its "possessions"
include Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, Wake Island
and the Northern Mariana Islands.
We undertake to advise you promptly by tested telex on or prior to the date
on which you intend to submit your certification relating to the above-captioned
Debt Securities held by you for our account in accordance with your operating
procedures if any applicable statement herein is not correct on such date, and
in the absence of any such notification it may be assumed that this
certification applies as of such date.
This certificate excepts and does not relate to [U.S.$] ____________ of
such interest in the above-captioned securities in respect of which we are not
able to certify and as to which we understand an exchange for an interest in a
Permanent Global Debt Security or an exchange for and delivery of definitive
Debt Securities (or, if relevant, collection of any interest) cannot be made
until
<PAGE>
we do so certify.
We understand that this certificate may be required in connection with
certain tax legislation in the United States. If administrative or legal
proceedings are commenced or threatened in connection with which this
certificate is or would be relevant, we irrevocably authorize you to produce
this certificate or a copy thereof to any interested party in such proceedings.
Dated:_______________, 19__
[To be dated no earlier than the 15th day prior
to (i) the Exchange Date or (ii) the relevant
Interest Payment Date occurring prior to the
Exchange Date, as applicable]
[Name of Person Making Certification]
(Authorized Signatory)
Name:
Title:
<PAGE>
EXHIBIT A-2
-----------
FORM OF CERTIFICATE TO BE GIVEN BY EUROCLEAR
AND CEDEL S.A. IN CONNECTION WITH THE EXCHANGE OF
A PORTION OF A TEMPORARY GLOBAL SECURITY OR TO
OBTAIN INTEREST PAYABLE PRIOR TO THE EXCHANGE DATE
CERTIFICATE
-----------
[Insert title or sufficient description of Debt Securities to be delivered]
This is to certify that, based solely on written certifications that we
have received in writing, by tested telex or by electronic transmission from
each of the persons appearing in our records as persons entitled to a portion of
the principal amount set forth below (our "Member Organizations") substantially
in the form attached hereto, as of the date hereof, [U.S.$] ___________________
principal amount of the above-captioned Debt Securities (i) is owned by
person(s) that are not citizens or residents of the United States, domestic
partnerships, domestic corporations or any estate or trust the income of which
is subject to United States Federal income taxation regardless of its source
("United States person(s)"), (ii) is owned by United States person(s) that are
(a) foreign branches of United States financial institutions (financial
institutions, as defined in U.S. Treasury Regulations Section 1.165-12(c)(1)(v)
are herein referred to as "financial institutions") purchasing for their own
account or for resale, or (b) United States person(s) who acquired the Debt
Securities through foreign branches of United States financial institutions and
who hold the Debt Securities through such United States financial institutions
on the date hereof (and in either case (a) or (b), each such financial
institution has agreed, on its own behalf or through its agent, that we may
advise BRE PROPERTIES, INC. or its agent that such financial institution will
comply with the requirements of Section 165(j)(3)(A), (B) or (C) of the Internal
Revenue Code of 1986, as amended, and the regulations thereunder), or (iii) is
owned by United States or foreign financial institutions) for purposes of resale
during the restricted period (as defined in United States Treasury Regulations
Section 1.163-5(c)(2)(i)(D)(7)), and, to the further effect, that financial
institutions described in clause (iii) above (whether or not also described in
clause (i) or (ii)) have certified that they have not acquired the Debt
Securities for purposes of resale directly or indirectly to a United States
person or to a person within the United States or its possessions.
As used herein, "United States" means the United States of America
(including the States and the District of Columbia) ; and its possessions
include Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, Wake Island
and the Northern Mariana Islands.
We further certify that (i) we are not making available herewith for
exchange (or, if relevant, collection of any interest) any portion of the
temporary global Debt Security representing the above-captioned Debt Securities
excepted in the above-referenced certificates of Member Organizations and (ii)
as of the date hereof we have not received any notification from any of our
Member Organizations to the effect that the statements made by such Member
Organizations with respect to any portion of the part submitted herewith for
exchange (or, if relevant, collection of any interest)
<PAGE>
are no longer true and cannot be relied upon as of the date hereof.
We understand that this certification is required in connection with
certain tax legislation in the United States. If administrative or legal
proceedings are commenced or threatened in connection with which this
certificate is or would be relevant, we irrevocably authorize you to produce
this certificate or a copy thereof to any interested party in such proceedings.
Dated: _______________, 19__
[To be dated no earlier than the Exchange Date
or the relevant Interest Payment Date occurring
prior to the Exchange Date, as applicable]
(Morgan Guaranty Trust Company of New York, Brussels
Office,] as Operator of the Euroclear System (Cedel S.A.]
By:
<PAGE>
Exhibit 12
BRE PROPERTIES, INC.
STATEMENT OF COMPUTATION OF RATIOS
OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
(DOLLAR AMOUNTS IN THOUSANDS) 1997 1996 1995 1994 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Income before gain on sales of investments in
rental properties, minority interest and
provision for investment loss.................. $49,345 $37,014 $23,789 $22,566 $19,531
Provision for investment loss.................. - - (2,000) - -
------- ------- ------- ------- -------
Income before gain on sales of investments in
rental properties and minority interest....... $49,345 $37,014 $21,789 $22,566 $19,531
======= ======== ======= ======= =======
Fixed charges:
Interest................................ $21,606 $16,325 $ 7,973 $ 5,599 $ 5,656
Capitalized Interest.................... 1,178 269 - - -
Minority Interest....................... 972 - - - -
Other................................... 112 108 105 101 98
------- ------- ------- ------- -------
$23,868 $16,702 $ 8,078 $ 5,700 $ 5,754
======= ======== ======= ======= =======
Income before gain on sale of investments
in rental properties, minority interest,
provision for investment loss and fixed
charges, excluding capitalized interest and
minority interest.............................. $71,063 $53,447 $31,867 $28,266 $25,285
======= ======== ======= ======= =======
Divided by fixed charges....................... $23,868 $16,702 $ 8,078 $ 5,700 $ 5,754
======= ======== ======= ======= =======
Ratio of earnings to fixed charges................... 3.0 3.2 4.0 5.0 4.4
======= ======== ======= ======= =======
</TABLE>
<PAGE>
Exhibit 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in Amendment
No. 1 to the Registration Statement (Form S-3) and related Prospectus of BRE
Properties, Inc. for the registration of $750,000,000 in Debt Securities,
Preferred Shares, Depositary Shares, Common Stock Warrants and Common Stock
(which also constitutes post-effective Amendment No. 2 to Registration
Statement No. 333-24915), and to the incorporation by reference therein of our
report dated January 14, 1998, with respect to the financial statements and
schedule of BRE Properties, Inc. included in its Annual Report on Form 10-K
for the year ended December 31, 1997, as filed with the Securities and
Exchange Commission.
/s/ Ernst & Young LLP
----------------------
March 23, 1998
San Francisco, California
<PAGE>
Exhibit 25.1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________
FORM T-1
Statement of Eligibility and Qualification Under the
Trust Indenture Act of 1939 of a Corporation
Designated to Act as Trustee
_______________________
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(B)(2)____
_________________________
CHASE MANHATTAN BANK AND TRUST COMPANY,
NATIONAL ASSOCIATION
(Exact name of trustee as specified in its charter)
95-4655078
(I.R.S. Employer Identification No.)
101 California Street, San Francisco, California
(Address of principal executive offices)
94111
(Zip Code)
__________________
BRE PROPERTIES, INC.
(Exact name of Obligor as specified in its charter)
Maryland
(State or other jurisdiction of incorporation or organization)
94-1722214
(I.R.S. Employer Identification No.)
44 Montgomery Street, 36th Floor
San Francisco, California
(Address of principal executive offices)
94104
(Zip Code)
________________________________
Senior Unsecured Notes
(Title of Indenture securities)
<PAGE>
ITEM 1. GENERAL INFORMATION.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to which it
is subject.
Comptroller of the Currency, Washington, D.C.
Board of Governors of the Federal Reserve System, Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
ITEM 2. AFFILIATIONS WITH OBLIGOR.
If the Obligor is an affiliate of the trustee, describe each such
affiliation.
None.
ITEM 4. Trusteeships under Other Indentures
(a) Title of the securities outstanding under each such other indenture.
$50,000,000 7.20% Notes due June 15, 2007 issued under Indenture
dated as of June 23, 1997
$130,000,000 7 1/8% Notes due February 15, 2013 issued under
Indenture dated as of June 23, 1997
(b) A brief statement of the facts relied upon as a basis for the claim
that no conflicting interest within the meaning of Section 310 (b) (1) of the
Act arises as a result of the trusteeship under any such other Indenture,
including a statement as to how the indenture securities will rank as compared
with the securities issued under such other indenture.
The Trustee is not deemed to have a conflicting interest within the
meaning of Section 310 (b) (1) of the Act because (I) the indenture securities
referenced in (a) above (the "Prior Securities") are not in default and (ii)
proviso (I) under 310 (b) (1) is applicable and excludes the operations of 310
(b) (1) as the indenture to be qualified and the indenture entered into in
connection with the Prior Securities (the "Prior Indenture") are wholly
unsecured and rank equally and the Prior Indenture is specifically described in
the indenture to be qualified.
ITEM 16. LIST OF EXHIBITS.
List below all exhibits filed as part of this statement of eligibility.
Exhibit 1. Articles of Association of the Trustee as Now in Effect (see
Exhibit 1 to Form T-1 filed in connection with Registration
Statement No. 333-41329 which is incorporated by reference).
Exhibit 2. Certificate of Authority of the Trustee to Commence Business (see
Exhibit 2 to Form T-1 filed in connection with Registration
Statement No. 333-41329, which is incorporated by reference).
<PAGE>
Exhibit 3. Authorization of the Trustee to Exercise Corporate Trust Powers
(contained in Exhibit 2).
Exhibit 4. Existing By-Laws of the Trustee (see Exhibit 4 to Form T-1 filed
in connection with Registration Statement No. 333-41329, which is
incorporated by reference).
Exhibit 5. Not Applicable
Exhibit 6. The consent of the Trustee required by Section 321 (b) of the Act
(see Exhibit 6 to Form T-1 filed in connection with Registration
Statement No. 333-41329, which is incorporated by reference).
Exhibit 7. A copy of the latest report of condition of the Trustee,
published pursuant to law or the requirements of its supervising
or examining authority.
Exhibit 8. Not Applicable
Exhibit 9. Not Applicable
<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the
Trustee, Chase Manhattan Bank and Trust Company, National Association, has duly
caused this statement of eligibility and qualification to be signed on its
behalf by the undersigned, thereunto duly authorized, all in the City of San
Francisco, and State of California, on the 26th day of March, 1998.
---
CHASE MANHATTAN BANK AND TRUST
COMPANY, NATIONAL ASSOCIATION
By /s/ Cecil D. Bobey
-------------------
Cecil D. Bobey
Assistant Vice President
<PAGE>
<TABLE>
EXHIBIT 7. Report of Condition of the Trustee.
=======================================================================================================
<S> <C>
CONSOLIDATED REPORT OF CONDITION OF Chase Manhattan Bank and Trust Company, N.A.
----------------------------------------------
(Legal Title)
LOCATED AT 1800 Century Park East, Ste. 400 Los Angeles, CA 94111
-------------------------------- --------------------- --------- --------
(Street) (City) (State) (Zip)
AS OF CLOSE OF BUSINESS ON December 31, 1997
---------------------
</TABLE>
<TABLE>
ASSETS DOLLAR AMOUNT's IN THOUSANDS
<S> <C> <C>
1. Cash and balances due from
a. Noninterest-bearing balances and currency and coin (1,2) 550
b. Interest bearing balances (3) 0
2. Securities
a. Held-to-maturity securities (from Schedule RC-B, column A) 0
b. Available-for-sale securities (from Schedule RC-B, column D) 1,053
3. Federal Funds sold (4) and securities purchased agreements to resell 54,210
4. Loans and lease financing receivables:
a. Loans and leases, net of unearned income (from Schedule RC-C) 23
b. LESS: Allowance for loan and lease losses 0
c. LESS: Allocated transfer risk reserve 0
d. Loans and leases, net of unearned income, allowance, and reserve (item
4.a minus 4.b and 4.c) 23
5. Trading assets 0
6. Premises and fixed assets (including capitalized leases) 180
7. Other real estate owned (from Schedule RC-M) 0
8. Investments in unconsolidated subsidiaries and associated companies
(from Schedule RC-M) 0
9. Customers liability to this bank on acceptances outstanding 0
10. Intangible assets (from Schedule RC-M) 1,737
11. Other assets (from Schedule RC-F) 2,904
12a. TOTAL ASSETS 60,657
b. Losses deferred pursuant to 12 U.S.C. 1823 (j) 0
c. Total assets and losses deferred pursuant to 12 U.S.C. 1823 (j)
(sum of items 12.a and 12.b) 60,657
</TABLE>
(1) includes cash items in process of collection and unposted debits.
(2) The amount reported in this item must be greater than or equal to the sum
of Schedule RC-M, items 3.a and 3.b
(3) includes time certificates of deposit not held for trading.
(4) Report "term federal funds sold" in Schedule RC, item 4.a "Loans and leases,
net of unearned income" and in Schedule RC-C, part 1.
<PAGE>
<TABLE>
<CAPTION>
LIABILITIES
<S> <C>
13. Deposits:
a. In domestic offices (sum of totals of columns A and C from
Schedule RC-E) 31,177
(1) Noninterest-bearing 6,718
(2) Interest-bearing 24,459
b. In foreign offices, Edge and Agreement subsidiaries, and IBF=
(1) Noninterest-bearing
(2) Interest-bearing
14. Federal funds purchased (2) and securities sold under agreements to
repurchase 0
15. a. Demand notes issued to the U.S. Treasury 0
b. Trading liabilities 0
16. Other borrowed money (includes mortgage indebtedness and obligations
under capitalized leases):
a. With a remaining maturity of one year or less 0
b. With a remaining maturity of more than one year through three years 0
c. With a remaining maturity of more than three years 0
17. Not applicable
18. Bank's liability on acceptances executed and outstanding 0
19. Subordinated notes and Debentures (3) 0
20. Other liabilities (from Schedule RC-G) 4,975
21. Total liabilities (sum of items 13 through 20) 36,152
22. Not applicable
<CAPTION>
EQUITY CAPITAL
23. Perpetual preferred stock and related surplus 0--
24. Common stock-- 600
25. Surplus (exclude all surplus related to preferred stock) 12,590
26. a. Undivided profits and capital reserves 11,315
b. Net unrealized holding gains (losses) on available-for-sale securities 0
27. Cumulative foreign currency translation adjustments
28. a. Total equity capital (sum of items 23 through 27) 24,505
b. Losses deferred pursuant to 12 U.S.C. 1823 (j) 0
c. Total equity capital and losses deferred pursuant to 12 U.S.C. 1823 (j)
(sum of items 28.a and 28.b) 24,505
29. Total liabilities, equity capital, and losses deferred pursuant to 12 U.S.C.
1823 (j) (sum of items 21 and 28.c) 60,657
</TABLE>
