AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 31,1998
REGISTRATION NO. 333-64615
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
ASSET INVESTORS CORPORATION
(Exact name of registrant as specified in its charter)
MARYLAND 84-1038736
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
3410 SOUTH GALENA STREET DAVID M. BECKER
SUITE 210 CHIEF FINANCIAL OFFICER
DENVER, COLORADO 80231 AND SECRETARY
(303) 614-9400 3410 SOUTH GALENA STREET
(Address, including zip code and SUITE 210
telephone number, including DENVER, COLORADO 80231
area code, of registrant's (303) 614-9400
principal executive offices) (Name, address, including zip code,
and telephone number, including
area code, of agent for service)
COPY TO:
MICHAEL V. GISSER
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
300 SOUTH GRAND AVENUE
LOS ANGELES, CALIFORNIA 90071
(213) 687-5000
Approximate Date of Commencement of Proposed Sale to the Public:
From time to time after this Registration Statement becomes effective.
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, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. |X|
If the Form is filed to register additional securities for an
offering pursuant to Rule 464(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of
the earlier registration statement for the same offering. |_|
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. |_|
If delivery of the prospectus is expected to be made pursuant to
Rule 434, please check the following box. |_|
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 BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
PROSPECTUS
ASSET INVESTORS CORPORATION
$200,000,000
DEBT SECURITIES
PREFERRED STOCK
COMMON STOCK
WARRANTS
Assets Investors Corporation, a Maryland corporation ("AIC"), may
offer from time to time (i) senior, senior subordinated or subordinated
debt securities (the "Debt Securities") consisting of debentures, notes
and/or other unsecured evidences of indebtedness, (ii) shares of preferred
stock, par value $.01 per share (the "Preferred Stock"), (iii) shares of
its Common Stock, par value $.01 per share (the "Common Stock"), and (iv)
Warrants to purchase Debt Securities, Preferred Stock or Common Stock, as
shall be designated by AIC at the time of the offering (the "Warrants").
The Debt Securities, the Preferred Stock, the Common Stock and the Warrants
are collectively referred to as the "Securities" and will have an aggregate
initial offering price of up to $200,000,000. The Securities may be offered
separately or together (in any combination) and as separate series, in any
case, in amounts, at prices and on terms to be determined at the time of
sale.
The form in which the Securities are to be issued, and the terms of
such Securities, including without limitation, their specific designation,
aggregate principal amount or aggregate initial offering price, maturity,
if any, rate and times of payment of interest or dividends, if any,
redemption, conversion, exchange and sinking fund terms, if any, voting or
other rights, if any, exercise price and detachability, if any, and other
specific terms will be set forth in a Prospectus Supplement (the
"Prospectus Supplement"), together with the terms of offering of such
Securities. If so specified in the applicable Prospectus Supplement, Debt
Securities of a series may be issued in whole or in part in the form of one
or more temporary or permanent global securities. The Prospectus Supplement
will also contain information, as applicable, about certain material United
States Federal income tax considerations relating to the particular
Securities offered thereby. The Prospectus Supplement will also contain
information, where applicable, as to any listing on a national securities
exchange of the Securities covered by such Prospectus Supplement.
The Securities may be offered directly through agents designated from
time to time by AIC, or to or through underwriters or dealers. If any
agents or underwriters are involved in the sale of any of the Securities,
their names, and any applicable purchase price, fee, commission or discount
arrangement between or among them, will be set forth, or will be calculable
from the information set forth, in the applicable Prospectus Supplement.
See "Plan of Distribution." No Securities may be sold without delivery of
the applicable Prospectus Supplement describing the method and terms of the
offering of such Securities.
In addition, this Prospectus relates to the offer and sale from time
to time by certain selling stockholders of up to 1,545,007 shares of Common
Stock, as described herein under "Selling Stockholders." AIC will not
receive any proceeds from the sale of such shares of Common Stock.
PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THE MATTERS DISCUSSED
UNDER "RISK FACTORS" SET FORTH BEGINNING ON PAGE 10 HEREOF AND IN THE
APPLICABLE PROSPECTUS SUPPLEMENT.
------------------------------
Neither the Securities and Exchange Commission nor any State Securities
Commission has approved or disapproved these securities or determined
if this Prospectus is truthful or complete.
Any representation to the contrary is a criminal offense.
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December 31, 1998
You should rely only on the information contained in or incorporated
by reference in this prospectus or any prospectus supplement. We have not
authorized anyone to provide you with different information. We are not
making an offer of these securities in any state where the offer is not
permitted. You should not assume that the information contained in or
incorporated by reference in this prospectus or any prospectus supplement
is accurate as of any date other than the date on the front of these
documents.
TABLE OF CONTENTS
Page
THE COMPANY...............................................................1
RISK FACTORS..............................................................2
Recent Change in Business Strategy:.................................3
Risks of Acquisition and Development Activities.....................3
Risks Associated With Debt Financing................................5
Increases in Interest Rates May Increase our Interest Expense.......5
Risks of Interest Rate Hedging Arrangements.........................5
We Depend on Distributions and Other Payments from Our Subsidiaries.6
Real Estate Investment Risks........................................6
Possible Environmental Liabilities..................................7
Laws Benefitting Disabled Persons May Result in Unanticipated
Expenses......................................................7
Rent Control Legislation............................................8
Control and Influence by Directors, Executive Officers
and Significant Stockholders.................................8
Changes in Investment and Financing Policies Without Stockholder
Approval......................................................8
Dependence on Certain Executive Officers............................9
Possible Conflicts of Interest; Transactions with Affiliates........9
Tax Risks..........................................................10
Possible Adverse Consequences of Limits on Ownership of Shares.....11
Our Charter and Maryland Law May Limit the Ability of a
Third Party to Acquire Control of the Company...............11
Uninsured Loss.....................................................12
Expenses of Obtaining Additional Management........................12
Effect of Shares Available for Future Sale on Price of Common
Stock or Preferred Stock.....................................12
Effect of Market Interest Rates on Price of Common or
Preferred Stock..............................................13
Year 2000 Compliance...............................................13
USE OF PROCEEDS..........................................................13
RATIO OF EARNINGS TO FIXED CHARGES
DESCRIPTION OF DEBT SECURITIES...........................................14
DESCRIPTION OF PREFERRED STOCK...........................................24
DESCRIPTION OF COMMON STOCK..............................................28
DESCRIPTION OF WARRANTS..................................................33
PLAN OF DISTRIBUTION.....................................................35
SELLING STOCKHOLDERS.....................................................37
PLAN OF DISTRIBUTION.....................................................40
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS................................41
OTHER TAX CONSIDERATIONS.................................................59
WHERE YOU CAN FIND MORE INFORMATION......................................59
LEGAL MATTERS............................................................60
EXPERTS..................................................................60
THE COMPANY
AIC is a Maryland corporation that was formed in 1986 and has elected
to be treated for United States federal income tax purposes as a real
estate investment trust ("REIT"). AIC's Common Stock is listed on the New
York Stock Exchange under the symbol "AIC." In May, 1997, AIC transferred
substantially all of its assets and liabilities to Asset Investors
Operating Partnership, L.P. (the "Operating Partnership") in exchange for a
general partner interest in the Operating Partnership, and AIC conducts
substantially all of its operations through the Operating Partnership and
subsidiary entities thereunder. As of November 30, 1998, AIC held a 76.45%
interest in the capital and profits of the Operating Partnership, as its
sole general partner.
AIC, through the Operating Partnership and its other direct and
indirect controlled subsidiary entities (collectively, the "Company"), is
engaged in the ownership, acquisition, development, management and
financing of manufactured home communities. The Company is
self-administered and self-managed. As of November 30, 1998, the Company
held interests, as owner, ground lessee or mortgage lender (including
certain participating mortgages), in 23 manufactured home communities and
two recreational vehicle parks consisting of a number of developed
homesites, sites ready for homes, sites available for future development
and recreational vehicle sites (the "Direct Properties"). In addition, AIC
held an interest in an entity that managed ten communities for third party
and affiliate owners (such managed communities, the "Managed Properties",
and, together with the Direct Properties, the "Properties").
In addition to its direct and indirect interest in the Properties,
the Operating Partnership also owns approximately 27% of the common stock
of Commercial Assets, Inc. ("CAX"), a publicly traded Maryland corporation
that has elected to be taxed as a REIT. The Operating Partnership also owns
the non-voting stock of AIC Manufactured Housing Corp. (together with its
subsidiaries, "AICMHC") and Asset Investors Equity, Inc. (together with its
subsidiaries, "AIE").
AIC's headquarters are located at 3410 Galena Street, Suite 210,
Denver, Colorado 80231 and its telephone number is (303) 614-9400.
RISK FACTORS
Before you invest in our securities, you should be aware that there
are various risks, including those described below. You should consider
carefully these risk factors together with all of the information included
in this prospectus before you decide to purchase our securities.
Some of the information in this prospectus may contain
forward-looking statements. Such statements can be identified by the use of
forward-looking terminology such as "may," "will," "expect," "anticipate,"
"estimate," "continue" or other similar words. These statements discuss
future expectations, contain projections of results of operations or of
financial condition or state other "forward-looking" information. When
considering such forward-looking statements, you should keep in mind the
risk factors and other cautionary statements in this prospectus. The risk
factors noted in this section and other factors noted throughout this
prospectus, including certain risks and uncertainties, could cause our
actual results to differ materially from those contained in any
forward-looking statement.
RECENT CHANGE IN BUSINESS STRATEGY:
Until March 1997, we had invested our resources in unrated credit
support debt interests in non-conforming residential mortgage loan
securitizations known as "non-agency MBS bonds." At that time, we
contributed our non-agency MBS bonds to an owner trust in which the Company
retained an equity interest. The owner trust sold, for $70,795,000 in cash,
privately-placed debt securities representing senior interests in the
trust's assets, without recourse to us. We have reinvested the cash
proceeds from the resecuritization in equity interests in manufactured
housing communities and related assets, which is expected to reduce our
current return on assets but also might result in increased opportunities
for capital appreciation and reduced portfolio risk.
RISKS OF ACQUISITION AND DEVELOPMENT ACTIVITIES
Generally. The selective acquisition, development and expansion of
manufactured housing communities is one component of our growth strategy.
However, we can make no assurance as to our ability to identify or complete
transactions in the future. Although we seek to acquire, develop and expand
properties only when such activities are accretive on a per share basis,
such transactions may fail to perform in accordance with our expectations.
When we develop or expand properties, we are subject to the risks that:
o costs may exceed original estimates;
o projected occupancy and rental rates at the property may not
be realized;
o financing may not be available on favorable terms;
o construction and lease-up may not be completed on schedule; and
o we may experience difficulty or delays in obtaining necessary
zoning, land-use, building, occupancy, and other governmental
permits and authorizations.
We May Have Difficulty Managing Our Rapid Growth. We have grown
rapidly. Since beginning to acquire manufactured home communities in May
1997, we have completed numerous acquisition transactions, expanding our
portfolio of properties to include, as of November 30, 1998, 23
manufactured housing communities with 4,610 developed homesites, 790 sites
ready for homes and 1,960 sites available for development, and 2
recreational vehicle parks with 380 sites. Our acquisitions have included
purchases of both properties and participating mortgage interests, where we
lend money secured by the underlying property and earn interest on the loan
plus a share of either profits or revenues from the properties. Our ability
to successfully integrate acquired businesses and properties depends on our
ability to:
o attract and retain qualified personnel;
o integrate the personnel and operations of the acquired
businesses;
o maintain uniform standards, controls, procedures and policies;
and
o maintain adequate accounting and information systems.
We can provide no assurance that we will be able to accomplish these
goals and successfully integrate any acquired businesses or properties. If
we fail to successfully integrate such businesses, our results of
operations could be adversely affected.
Management of Expanding CAX Portfolio. We may also have difficulty
managing CAX's growth and expanding portfolio of properties. We manage
CAX's day-to-day operations and provide investment advisory services in
connection with acquisitions pursuant to a management contract between AIE
and CAX. We also manage all of CAX's properties pursuant to separate
property management contracts with CAX. Since August 1998, CAX has
completed a number of acquisitions and, as of November 30, 1998, owns an
interest in 6 manufactured housing communities with 640 developed
homesites, 20 sites ready for homes and 1,200 sites available for
development. Our ability to successfully manage this growing portfolio of
properties depends to a large extent on the same factors listed above for
managing our own growth and properties. The management of CAX and its
expanding portfolio of properties is a growing component of our business,
and failure to properly manage these activities could adversely affect our
results of operations.
RISKS ASSOCIATED WITH DEBT FINANCING
Our strategy is generally to incur debt to increase the return on our
equity while maintaining acceptable interest coverage ratios. We seek to
maintain a ratio of free cash flow to interest expense of at least 2:1.
However, our Board of Directors could change this strategy at any time and
increase our leverage. Our organizational documents do not limit the amount
of debt that we may incur. As part of our strategy, we intend to utilize
long-term, fixed-rate, fully amortizing debt. As of November 30, 1998, we
had $50.1 million of indebtedness outstanding on a consolidated basis, all
of which was secured. The debt is comprised of $40.7 million of
non-recourse secured, long-term debt, $8.6 million of secured, short-term
debt and a $0.8 million secured, line of credit. We expect to extend the
maturity of the $8.6 million loan until it is refinanced with non-recourse
secured, long-term financing. Payments of principal and interest may leave
us with insufficient cash resources to operate our properties or pay
distributions required to be paid in order to maintain our qualification as
a REIT. We are also subject to the risk that our cash flow from operations
will be insufficient to make required payments of principal and interest,
and the risk that existing indebtedness will not be refinanced or that the
terms of any refinancing will not be as favorable as the terms of existing
indebtedness. If we fail to make required payments of principal and
interest on any debt, our lenders could foreclose on the properties
securing such debt with a consequent loss of income and asset value to us.
As of November 30, l998, 53% of our real estate and 48% of our total assets
were encumbered by debt.
INCREASES IN INTEREST RATES MAY INCREASE OUR INTEREST EXPENSE
As of November 30, 1998, none of our long-term debt and all of our
short-term debt was subject to variable interest rates. An increase in
interest rates could increase our interest expense and adversely affect our
cash flow and our ability to service our indebtedness and make
distributions.
RISKS OF INTEREST RATE HEDGING ARRANGEMENTS
From time to time, in anticipation of refinancing debt, we enter into
agreements to reduce the risks associated with increases in short term
interest rates. Although these agreements provide us with some protection
against rising interest rates, these agreements also reduce the benefits to
us when interest rates decline. These agreements involve the following
risks:
o interest rate movements during the term of the agreement may
result in a gain or loss to us;
o we may be exposed to losses if the hedge is not indexed to the
same rate as the debt anticipated to be incurred; and
o if the counterparty to the agreement fails to pay, we may
incur a loss.
WE DEPEND ON DISTRIBUTIONS AND OTHER PAYMENTS FROM OUR SUBSIDIARIES
All of our properties are owned and all of our operations are
conducted by the Operating Partnership and its subsidiaries. As a result,
we depend on distributions and other payments from the Operating
Partnership in order to satisfy our financial obligations and make payments
to our investors. The ability of the Operating Partnership to make such
distributions and other payments is dependent upon its earnings and may be
subject to statutory or contractual limitations. As an equity investor in
the Operating Partnership, our right to receive assets upon its liquidation
or reorganization will be effectively subordinated to the claims of its
creditors. To the extent that we are recognized as a creditor of the
Operating Partnership, our claims would still be subordinated to any
security interest in or other lien on its assets and to any of its debt or
other obligations that are senior to our interest.
REAL ESTATE INVESTMENT RISKS
Our ability to make payments to our investors depends on our ability
to generate funds from operations in excess of required debt payments and
capital expenditures. Funds from operations and the value of our properties
may be adversely affected by events or conditions which are beyond our
control. Such events or conditions could include:
o the general economic climate;
o competition from other manufactured home communities and
alternative housing;
o local conditions, such as an increase in unemployment or an
oversupply of manufactured home sites or a reduction in demand
that might adversely affect occupancy or rental rates;
o increases in operating costs (including real estate taxes) due
to inflation and other factors, which may not necessarily be
offset by increased rents;
o changes in governmental regulations and the related costs of
compliance;
o changes in tax laws and housing laws, including the enactment
of rent control laws or other laws regulating multifamily housing;
o changes in interest rate levels and the availability of
financing; and
o the relative illiquidity of real estate investments.
POSSIBLE ENVIRONMENTAL LIABILITIES
Various Federal, state and local laws subject property owners or
operators to liability for the costs of removal or rededication of certain
hazardous substances released on a property. Such laws often impose without
regard to whether the owner or operator knew of, or was responsible for,
the release of the hazardous substances. The presence of, or the failure to
properly remediate, hazardous substances may adversely affect occupancy at
contaminated manufactured home communities and our ability to sell, rent or
borrow against contaminated properties. In addition to the costs associated
with investigation and rededication actions brought by governmental
agencies, the presence of hazardous wastes on a property could result in
personal injury or similar claims by private plaintiffs. Various laws also
impose, on persons who arrange for the disposal or treatment of hazardous
or toxic substances, liability for the cost of removal or rededication of
hazardous substances at the disposal or treatment facility. These laws
often impose liability whether or not the person arranging for the disposal
ever owned or operated the disposal facility.
LAWS BENEFITTING DISABLED PERSONS MAY RESULT IN UNANTICIPATED EXPENSES
Under the Americans with Disabilities Act of 1990 (the "ADA"), all
places of public accommodation are required to meet certain Federal
requirements related to access and use by disabled persons. These
requirements became effective in 1992. A number of additional Federal,
state and local laws exist which also may require modifications to our
properties or restrict certain further renovations of the properties, with
respect to access thereto by disabled persons. For example, the Fair
Housing Amendments Act of 1988 (the "FHAA") requires multifamily
residential properties first occupied after March 13, 1990 to be accessible
to the handicapped. Noncompliance with the ADA or the FHAA could result in
the imposition of fines or an award of damages to private litigants and
also could result in an order to correct any non-complying feature, which
could result in substantial capital expenditures. Although we believe that
our properties are substantially in compliance with present requirements,
we may incur unanticipated expenses to comply with the ADA and FHAA.
RENT CONTROL LEGISLATION
State and local rent control laws in certain jurisdictions may limit
our ability to increase rents and to recover increases in operating
expenses and the costs of capital improvements. Enactment of such laws has
been considered from time to time in other jurisdictions. Approximately 75%
of the Direct Properties are located, and we may purchase additional
properties, in markets that are either subject to rent control or in which
rent-limiting legislation exists or may be enacted.
CONTROL AND INFLUENCE BY DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT
STOCKHOLDERS
Members of our management hold in the aggregate approximately 15.4%
of the Common Stock (assuming that all of the OP Units they hold are
exchanged for shares of Common Stock) and could acquire an additional 12.4%
of the Common Stock (giving effect to certain contingent consideration in
connection with the acquisition of our REIT advisor and assuming that all
contingent OP Units and stock options are exchanged or exercised, as the
case may be). In addition, one holder of OP Units, Wilder Corporation of
Delaware, holds a number of OP Units which, if exchanged for shares of
Common Stock, would result in such holder owning approximately 10.7% of the
Common Stock. Accordingly, such persons (assuming conversion of their OP
Units, if applicable) may have substantial influence on us, which influence
might not be consistent with the interests of other stockholders, and on
the outcome of any matters submitted to our stockholders for approval.
Although there is no current agreement, understanding or arrangement for
these stockholders to act together on any matter, these stockholders could
be in a position to exercise significant influence over our affairs if they
were to act together in the future.
CHANGES IN INVESTMENT AND FINANCING POLICIES WITHOUT STOCKHOLDER APPROVAL
Our investment and financing policies, and our policies with respect
to certain other activities, including growth, debt, capitalization,
distributions, REIT status and operating policies, are determined by the
Board of Directors. Although the Board of Directors has no present
intention to do so, these policies may be amended or revised from time to
time at the discretion of the Board of Directors without notice to or a
vote of our stockholders. Accordingly, stockholders have no control over
changes in our policies and changes in our policies may not fully serve the
interests of all stockholders. DEPENDENCE ON CERTAIN EXECUTIVE OFFICERS
We are dependent on the efforts of our executive officers, in
particular our Chairman and Chief Executive Officer, Terry Considine, our
Vice Chairman, Thomas L. Rhodes, and our President and Chief Operating
Officer, Bruce E. Moore. The loss of their services could have an adverse
effect on our operations. We do not currently have employment agreements
with, or maintain or contemplate obtaining any "key man" life insurance on,
our executive officers.
Neither Mr. Considine nor Mr. Rhodes devotes full time to the
business of the Company. Both are employed, and have business interests,
outside the Company. Mr. Moore devotes substantially all of his time to the
business of the Company.
POSSIBLE CONFLICTS OF INTEREST; TRANSACTIONS WITH AFFILIATES
We have been, and continue to be, involved in various transactions
with a number of our affiliates, including executive officers and directors
and entities in which they own interests. For example, in order to satisfy
certain REIT requirements, Messrs. Considine and Rhodes directly or
indirectly control our management companies, AICMHC and AIE. AICMHC,
through its 50% interest in a subsidiary in which Bruce E. Moore, our
President and Chief Operating Officer, owns a minority interest, manages
all of our properties and certain third party and affiliate properties as
well. AIE manages and provides investment advice to CAX. Although we own a
95% non-voting interest in each of these management companies, we have no
control over them or their operations. As a result, the management
companies could implement business decisions or policies that are not in
our best interests.
We are in the same business as CAX. So that we may each acquire
manufactured housing communities in a manner that will maximize value to
our respective stockholders and to avoid the appearance of impropriety, we
have agreed with CAX that, until CAX has invested at least $50 million in
the acquisition of manufactured housing communities, we will not acquire
any additional communities, other than acquisitions in which shares of our
capital stock or OP Units constitute a material part of the consideration
paid. We have also agreed with CAX that, until CAX has invested
substantially all of its assets, including the proceeds of indebtedness
equal to at least 50% of the book value of its properties, in the
acquisition of manufactured housing communities, we will coordinate with
CAX any acquisitions of manufactured housing communities so that we each
may meet our investment objectives and we will not acquire any such
properties unless the consideration paid consists of either debt proceeds,
OP Units, and/or shares of our capital stock.
TAX RISKS
Adverse Consequences of Failure to Qualify as a REIT. Although we
believe that we operate in a manner that enables us to meet the
requirements for qualification as a REIT for Federal income tax purposes,
no assurance can be given that the Internal Revenue Service ("IRS") will
not challenge our qualification.
Rules regarding REIT qualification are highly technical and complex,
and no assurance can be given as to AIC's compliance with these
requirements in the past, or its ability to comply in the future. In
addition, AIC's ability to qualify as a REIT depends in part upon the
actions of third parties over which AIC has no control, or only limited
influence. For instance, AIC's qualification depends upon the conduct of
certain entities with which AIC has a direct or indirect relationship as a
lender, lessor, or holder of a non-controlling equity interest. It also
depends upon the qualification of CAX as a REIT, which in turn requires
that either (a) certain instruments issued by a trust in which CAX holds an
equity interest are treated for federal income tax purposes as
indebtedness, or (b) CAX had reasonable cause for any resultant failure to
satisfy the gross income requirements applicable to REITs. See "Certain
Federal Income Tax Considerations -- Taxation of AIC -- Tax Opinion" and
"-- Requirements for Qualification -- Income Tests".
If we fail to qualify as a REIT, we would not be allowed a deduction
for distributions to shareholders in computing our taxable income and we
would be subject to Federal income tax at regular corporate rates. We also
could be subject to the Federal alternative minimum tax. Unless we are
entitled to relief under the tax law, we could not elect to be taxed as a
REIT for four years following the year during which we were disqualified.
Therefore, if we lose our REIT status, the funds available for payment to
our investors would be reduced substantially for each of the years
involved. See "Certain Federal Income Tax Considerations - Taxation of AIC
- - Failure to Qualify."
Effect of Distribution Requirements. As a REIT, we are subject to
annual distribution requirements, which limit the amount of cash we have
available for other business purposes, including amounts to fund our
growth. See "Certain Federal Income Tax Considerations - Taxation of AIC -
Distribution Requirements."
Possible Legislative or Other Acts Affecting REITs. The rules dealing
with Federal income taxation are constantly under review by persons
involved in the legislative process and by the IRS and the U.S. Treasury
Department. Changes to the tax law could adversely affect our investors. It
cannot be predicted whether, when, in what forms, or with what effective
dates, the tax laws applicable to us or our investors will be changed. See
"Other Tax Considerations - Possible Legislative or Other Actions Affecting
REITs."
Other Tax Liabilities. Even if we qualify as a REIT, we and our
subsidiaries may be subject to certain Federal, state and local taxes on
our income and property that could reduce operating cash flow. See "Certain
Federal Income Tax Considerations - Taxation of AIC - Taxation of REITs in
General."
POSSIBLE ADVERSE CONSEQUENCES OF LIMITS ON OWNERSHIP OF SHARES
Our Charter limits direct or indirect ownership of our common stock
by any single shareholder to 9.8% of the outstanding shares. The Charter
also prohibits anyone from buying shares if the purchase would result in us
losing our REIT status. This could happen if a share transaction results in
fewer than 100 persons owning all of our shares or in five or fewer
persons, applying certain broad attribution rules of the Internal Revenue
Code, owning 50% or more of our shares. If you or anyone else acquires
shares in excess of the ownership limit or in violation of the ownership
requirements of the Internal Revenue Code for REITs, the transfer will be
considered null and void and the intended transferee will be deemed never
to have had an interest in the shares. The intended transferee may be
deemed, at our option, to be acting as our agent in acquiring the shares
and to be holding the shares on our behalf. We may redeem any shares owned
by you or any other person in excess of the ownership limit at the then
current market price for the shares. Upon any such redemption, the affected
person shall no longer be entitled to any distributions or other benefits
on those shares, except for payment of the redemption price.
OUR CHARTER AND MARYLAND LAW MAY LIMIT THE ABILITY OF A THIRD PARTY TO
ACQUIRE CONTROL OF THE COMPANY
Ownership Limit. The 9.8% ownership limit discussed above may have
the effect of precluding acquisition of control of us by a third party
without the consent of our Board of Directors.
Preferred Stock. Our Charter authorizes our Board of Directors to
issue up to 50,000,000 shares of capital stock. As of November 30, 1998,
5,015,594 shares of Common Stock were issued and outstanding. Under the
Charter, our Board of Directors has the authority to classify and
reclassify any of our unissued shares of capital stock into shares of
preferred stock with such preferences, rights, powers and restrictions as
the Board of Directors may determine. The authorization and issuance of
preferred stock could have the effect of delaying or preventing someone
from taking control of us, even if a change in control were in our
shareholders' best interests.
Staggered Board. The Board of Directors of the Company has been
divided into three classes of directors. The term of one class will expire
each year. Directors for each class will be chosen for a three year term
upon the expiration of such class's term, and the directors in the other
two classes will continue in office. The staggered terms for directors may
affect the stockholders' ability to change control of the Company even if a
change in control were in the stockholders' interest.
Maryland Business Statutes. As a Maryland corporation, we are subject
to various Maryland laws which may have the effect of discouraging offers
to acquire us and of increasing the difficulty of consummating any such
offers, even if our acquisition would be in our shareholders' best
interests. The Maryland General Corporation Law restricts mergers and other
business combination transactions between us and any person who acquires
beneficial ownership of shares of our stock representing 10% or more of the
voting power without our Board of Directors' prior approval. Any such
business combination transaction could not be completed until five years
after the person acquired such voting power, and only with the approval of
shareholders representing 80% of all votes entitled to be cast and 66% of
the votes entitled to be cast, excluding the interested shareholder.
Maryland law also provides that a person who acquires shares of our stock
that represent 20% or more of the voting power in electing directors will
have no voting rights unless approved by a vote of two-thirds of the shares
eligible to vote.
UNINSURED LOSS
We maintain comprehensive liability, fire, flood (where appropriate),
extended coverage, and rental loss insurance with respect to the Direct
Properties with policy specifications, limits, and deductibles customarily
carried for similar properties. Certain types of losses, however, may be
either uninsurable or not economically insurable, such as losses due to
earthquakes, riots, or acts of war. Should an uninsured loss occur, we
could lose both our investment in and anticipated profits and cash flow
from affected Direct Properties.
EXPENSES OF OBTAINING ADDITIONAL MANAGEMENT
We fill vacant positions or new positions from time to time as
vacancies occur or as we determine creation of a new position is prudent.
The persons ultimately hired to fill these positions will be integral to
our management team. The compensation expense to us will increase as a
result of filling these positions.
EFFECT OF SHARES AVAILABLE FOR FUTURE SALE ON PRICE OF COMMON STOCK OR
PREFERRED STOCK
Sales of a substantial number of shares of Common Stock or Preferred
Stock, or the perception that such sales could occur, could adversely
affect prevailing market prices for shares of Common Stock or future market
prices for shares of Preferred Stock. Up to 1,545,007 shares of Common
Stock may be sold in the future by certain holders of OP Units
(exchangeable for shares of Common Stock). In addition, 3,169,541 shares of
Common Stock have been reserved for issuance pursuant to our stock option
plans. All such shares may be sold pursuant to registration rights or
available exemptions from registration. No prediction can be made regarding
the effect that future sales of shares of Common Stock will have on the
market prices of shares.
EFFECT OF MARKET INTEREST RATES ON PRICE OF COMMON OR PREFERRED STOCK
One of the factors that may influence the market price of the Common
Stock or Preferred Stock is annual distributions per share. An increase in
market interest rates may lead purchasers of shares of Common Stock or
Preferred Stock to demand a higher return on their investment, which could
adversely affect the market price of the Common Stock or the Preferred
Stock.
YEAR 2000 COMPLIANCE
The Company's hardware and software systems that are critical to its
business operations are currently Year 2000 compliant. Upon failure of any
system, any data included in critical software (such as rent-rolls and
certain record-keeping systems) could be transferred to alternative
commercially available software at a reasonable cost to the Company and
within a reasonable time period to enable the Company to continue its
business operations without any material interruption of or material effect
on its business, results of operations or financial condition. In addition,
management anticipates that any hardware or software that the Company
acquires (including in order to upgrade existing systems) between now and
December 31, 1999 will be Year 2000 compliant.
Management believes that the cost of modification or replacement of
its accounting and reporting software and hardware that it is not compliant
with Year 2000 requirements will not be material to the Company's financial
position or results of operations.
USE OF PROCEEDS
Unless otherwise described in the applicable Prospectus Supplement,
AIC intends to use the net proceeds from the sale of the Securities (other
than proceeds from the sale by any Selling Stockholder of its shares of
Common Stock) for working capital and general corporate purposes, which may
include the repayment of outstanding indebtedness, the financing of future
acquisitions (which may include real properties, interests therein or real
estate-related securities) and the improvement of certain of the Direct
Properties. Pending the use thereof, AIC intends to invest any net proceeds
in short-term, interest-bearing securities.
The Selling Stockholders will receive all of the net proceeds from
the sale of shares of Common Stock offered by such Selling Stockholders
hereby. AIC will not receive any proceeds from the sale of such shares by
the Selling Stockholders.
RATIO OF EARNINGS TO FIXED CHARGES
The Company's ratio of earnings to fixed charges for the nine months
ended September 30, 1998 was 0.81:1 and for the years ended December 31,
1997, December 31, 1996, December 31, 1995, December 31, 1994 and December
31, 1993 was 20.5:1, 110.9:1, 1.4:1,1.1:1, and 0.9:1, respectively.
The amount of the deficiency in earnings over fixed charges for the
nine months ended September 30, 1998 was $250,000.
The ratio of earnings to fixed charges for the Company was computed
by dividing earnings by fixed charges. For this purpose, "earnings"
consists of income before minority interest plus fixed charges (other than
any interest which has been capitalized); and "fixed charges" consists of
interest expense (including amortization of loan costs) and interest which
has been capitalized.
DESCRIPTION OF DEBT SECURITIES
GENERAL
The following description sets forth certain general terms and
provisions of the Debt Securities to which any Prospectus Supplement may
relate. The particular terms of the Debt Securities offered by any
Prospectus Supplement and the extent, if any, to which such general
provisions may apply to the Debt Securities so offered will be described in
the Prospectus Supplement relating to such Debt Securities.
The Debt Securities may be issued, from time to time, in one or more
series, and will constitute either senior Debt Securities ("Senior Debt
Securities"), senior subordinated Debt Securities ("Senior Subordinated
Debt Securities") or subordinated Debt Securities ("Subordinated Debt
Securities"). Senior Debt Securities may be issued under an Indenture (the
"Senior Debt Securities Indenture") to be entered into between AIC and a
trustee to be named in the applicable Prospectus Supplement. The Senior
Subordinated Debt Securities may be issued from time to time under an
Indenture (the "Senior Subordinated Debt Securities Indenture") to be
entered into between AIC and a trustee to be named in the applicable
Prospectus Supplement. The Subordinated Debt Securities may be issued from
time to time under an Indenture (the "Subordinated Debt Securities
Indenture") to be entered into between AIC and a trustee to be named in the
applicable Prospectus Supplement. The Debt Securities may be convertible or
non-convertible.
The Senior Debt Securities Indenture, the Senior Subordinated Debt
Securities Indenture, and the Subordinated Debt Securities Indenture are
referred to herein individually as an "Indenture" and, collectively, as the
"Indentures." Forms of the Indentures will be filed as exhibits to the
Registration Statement of which this Prospectus is a part or incorporated
by reference from documents subsequently incorporated herein by reference.
The Indentures will be subject to and governed by the Trust Indenture Act
of 1939, as amended (the "TIA"). Capitalized terms used in this section
which are not otherwise defined in this Prospectus shall have the meanings
set forth in the Indenture to which they relate. The statements made under
this heading relating to the Debt Securities and the Indentures are
summaries of the material provisions of the Debt Securities and the
Indentures, do not purport to be complete and are subject to, and are
qualified in their entirety by reference to, all the provisions of the
Indentures and the Debt Securities, including the definitions therein of
certain terms.
The Debt Securities will be direct, unsecured obligations of AIC. The
Indentures do not limit the aggregate principal amount of Debt Securities
that may be issued thereunder and provide that Debt Securities may be
issued thereunder from time to time in one or more series. Under the
Indentures, AIC will have the ability to issue Debt Securities with terms
different from those of Debt Securities previously issued, without the
consent of the holders of previously issued series of Debt Securities, in
an aggregate principal amount determined by AIC.
The applicable Prospectus Supplement or Prospectus Supplements
relating to any Senior Subordinated Debt Securities or Subordinated Debt
Securities will set forth the aggregate amount of outstanding indebtedness,
as of the most recent practicable date, that by the terms of such Debt
Securities would be senior to such Debt Securities and any limitation on
the issuance of additional senior indebtedness.
Debt Securities may be issued and sold at a discount below their
principal amount ("Discount Securities"). Special United States Federal
income tax considerations applicable to Debt Securities issued with
original issue discount, including Discount Securities, will be described
in more detail in any applicable Prospectus Supplement. Even if Debt
Securities are not issued at a discount below their principal amount, such
Debt Securities may, for United States Federal income tax purposes, be
deemed to have been issued with "original issue discount" ("OlD") because
of certain interest payment characteristics. In addition, special United
States Federal tax considerations or other restrictions or terms applicable
to any Debt Securities offered exclusively to United States aliens or
denominated in a currency other than United States dollars will be set
forth in a Prospectus Supplement relating thereto.
The applicable Prospectus Supplement or Prospectus Supplements will
describe, among other things, the following terms of the Debt Securities
offered thereby (the "Offered Debt Securities"): (i) the title of the
Offered Debt Securities; (ii) any limit on the aggregate principal amount
of the Offered Debt Securities; (iii) whether the Offered Debt Securities
may be represented initially by a Debt Security in temporary or permanent
global form, and if so, the initial Depositary with respect to such
temporary or permanent global Debt Security and whether the circumstances
under which beneficial owners of interests in any such temporary or
permanent global Debt Security may exchange such interests for Debt
Securities of such series and of like tenor of any authorized form and
denomination; (iv) the price or prices at which the Offered Debt Securities
will be issued; (v) the date or dates on which the principal of the Offered
Debt Securities is payable or the method of determination thereof; (vi) the
place or places where and the manner in which the principal of and premium,
if any, and interest, if any, on such Offered Debt Securities will be
payable and the place or places where such Offered Debt Securities may be
presented for transfer and, if applicable, conversion or exchange; (vii)
the rate or rates at which the Offered Debt Securities will bear interest,
or the method of calculating such rate or rates, if any, and the date or
dates from which such interest, if any, will accrue; (viii) the dates (the
"Interest Payment Dates"), if any, on which any interest on the Offered
Debt Securities will be payable, and the regular record date (the "Regular
Record Date") for any interest payable on any Offered Debt Securities; (ix)
the right or obligation, if any, of AIC to redeem or purchase Debt
Securities of the series pursuant to any sinking fund or analogous
provisions or at the option of a holder thereof, the conditions, if any,
giving rise to such right or obligation, and the period or periods within
which, and the price or prices at which and the terms and conditions upon
which Debt Securities of the series shall be redeemed or purchased, in
whole or part, and any provisions for the remarketing of such Debt
Securities; (x) whether such Offered Debt Securities are convertible or
exchangeable into other debt or equity securities of AIC, and, if so, the
terms and conditions upon which such conversion or exchange will be
effected including the initial conversion or exchange price or rate and any
adjustments thereto, the conversion or exchange period and other conversion
or exchange provisions; (xi) any terms applicable to such Offered Debt
Securities issued at original issue discount below their stated principal
amount, including the issue price thereof and the rate or rates at which
such original issue discount will accrue; (xii) if other than the principal
amount thereof, the portion of the principal amount of the Offered Debt
Securities which will be payable upon declaration or acceleration of the
maturity thereof pursuant to an event of default; (xiii) any modifications
of or additions to the events of default or covenants of AIC with respect
to such Offered Debt Securities that are not inconsistent with this
Prospectus; (xiv) any special United States Federal income tax
considerations applicable to the Offered Debt Securities; and (xv) any
other terms of the Offered Debt Securities not inconsistent with the
provisions of the Indenture.
The applicable Prospectus Supplement will also describe the following
terms of any series of Senior Subordinated Debt Securities or Subordinated
Debt Securities offered hereby in respect of which this Prospectus is being
delivered: (a) the rights, if any, to defer payments of interest on the
Senior Subordinated Debt Securities or Subordinated Debt Securities of such
series by extending the interest payment period, and the duration of such
extensions, and (b) the subordination terms of the Senior Subordinated Debt
Securities or Subordinated Debt Securities of such series. The foregoing is
not intended to be an exclusive list of the terms that may be applicable to
any Offered Debt Securities and shall not limit in any respect the ability
of AIC to issue Debt Securities with terms different from or in addition to
those described above or elsewhere in this Prospectus provided that such
terms are not inconsistent with this Prospectus. Any such Prospectus
Supplement will also describe any special provisions for the payment of
additional amounts with respect to the Offered Debt Securities.
Since the operations of AIC are currently conducted through its
subsidiaries, AIC's cash flow and its consequent ability to service debt,
including the Debt Securities, are dependent, in large part, upon the
earnings of its subsidiaries and the distribution of those earnings to AIC,
whether by distributions or dividends, loans or otherwise. The payment of
distributions or dividends and the making of loans and advances to AIC by
its subsidiaries may be subject to statutory or contractual restrictions,
are contingent upon the earnings of those subsidiaries and are subject to
various business considerations. Any right of AIC to receive assets of any
of its subsidiaries upon their liquidation or reorganization (and the
consequent right of the holders of the Debt Securities to participate in
those assets) will be effectively subordinated to the claims of that
subsidiary's creditors (including trade creditors), except to the extent
that AIC is itself recognized as a creditor of such subsidiary, in which
case the claims of AIC would still be subordinate to any security interests
in the assets of such subsidiary and any indebtedness of such subsidiary
senior to that held by AIC.
CONVERTIBILITY
No series of Debt Securities that may be issued and sold pursuant
hereto will be convertible into, or exchangeable for, other securities or
property, except as set forth in the applicable Prospectus Supplement,
which will set forth the terms and conditions upon which such conversion or
exchange may be effected, including the initial conversion or exchange rate
and any adjustments thereto, the conversion or exchange period and any
other conversion or exchange provisions.
FORM, EXCHANGE, REGISTRATION AND TRANSFER
The Debt Securities of a series may be issued solely as registered
Debt Securities. Debt Securities of a series may be issuable in whole or in
part in the form of one or more global Debt Securities, as described below
under "Global Debt Securities." Unless otherwise indicated in an applicable
Prospectus Supplement, Debt Securities will be issuable in denominations of
$1,000 and integral multiples thereof. Debt Securities of any series will
be exchangeable for other Debt Securities of the same series of any
authorized denominations and of a like aggregate principal amount and
tenor.
Debt Securities may be presented for exchange as provided above and,
unless otherwise indicated in an applicable Prospectus Supplement, may be
presented for registration of transfer, at the office or agency of AIC
designated as registrar or co-registrar with respect to such series of Debt
Securities, without service charge and upon payment of any taxes,
assessments or other governmental charges as described in the Indenture.
Such transfer or exchange will be effected on the books of the registrar or
any other transfer agent appointed by AIC upon such registrar or transfer
agent, as the case may be, being satisfied with the documents of title and
identity of the person making the request. AIC intends to initially appoint
the Trustee for the Offered Debt Securities as the registrar for such
Offered Debt Securities and the name of any different or additional
registrar designated by AIC with respect to the Offered Debt Securities
will be included in the Prospectus Supplement relating thereto. If a
Prospectus Supplement refers to any transfer agents (in addition to the
registrar) designated by AIC with respect to any series of Debt Securities,
AIC may at any time rescind the designation of any such transfer agent or
approve a change in the location through which any such transfer agent
acts, except that AIC will be required to maintain a transfer agent in the
Borough of Manhattan, The City of New York. AIC may at any time designate
additional transfer agents with respect to any series of Debt Securities.
In the event of any partial redemption of Debt Securities of any
series, AIC will not be required to (i) issue, register the transfer of or
exchange Debt Securities of that series during a period beginning at the
opening of business 15 days before any selection of Debt Securities of that
series to be redeemed and ending at the close of business on the day of
mailing of the relevant notice of redemption; or (ii) register the transfer
of or exchange any Debt Security, or portion thereof, called for
redemption, except the unredeemed portion of any Debt Security being
redeemed in part.
PAYMENT AND PAYING AGENTS
Unless otherwise indicated in an applicable Prospectus Supplement,
payment of principal of, and interest, if any, on, Debt Securities will be
made at the office of such paying agent or paying agents as AIC may
designate from time to time, except that, at the option of AIC, payment of
principal or interest may be made by check or by wire transfer to an
account maintained by the payee. Unless otherwise indicated in an
applicable Prospectus Supplement, payment of any installment of interest on
Debt Securities will be made to the person in whose name such Debt Security
is registered at the close of business on the Regular Record Date for such
interest.
Unless otherwise indicated in an applicable Prospectus Supplement,
the Trustee for the Offered Debt Securities will be designated as AIC's
sole paying agent for payments with respect to the Offered Debt Securities.
Any other paying agents initially designated by AIC for the Offered Debt
Securities will be named in an applicable Prospectus Supplement. AIC may at
any time designate additional paying agents or rescind the designation of
any paying agent or approve a change in the office through which any paying
agent acts, except that AIC will be required to maintain a paying agent in
the Borough of Manhattan, The City of New York.
All moneys paid by AIC to a paying agent for the payment of principal
of, or interest, if any, on, any Debt Security which remains unclaimed at
the end of two years after such principal or interest shall have become due
and payable will be repaid to AIC, and the holder of such Debt Security or
any coupon will thereafter look only to AIC for payment thereof.
GLOBAL DEBT SECURITIES
The Debt Securities of a series may be issued in whole or in part in
global form. A Debt Security in global form will be deposited with, or on
behalf of, a depositary, which will be identified in the applicable
Prospectus Supplement. A global Debt Security may be issued only in
registered form and in either temporary or permanent form. A Debt Security
in global form may not be transferred except as a whole to the depositary
for such Debt Security or to a nominee or successor of such depositary. If
any Debt Securities of a series are issuable in global form, the applicable
Prospectus Supplement will describe the circumstances, if any, under which
beneficial owners of interests in any such global Debt Security may
exchange such interests for definitive Debt Securities of such series and
of like tenor and principal amount in any authorized form and denomination,
the manner of payment of principal of and interest, if any, on any such
global Debt Security and the specific terms of the depositary arrangement
with respect to any such global Debt Security.
MERGERS AND SALES OF ASSETS
AIC may not consolidate with or merge into any other person or
convey, transfer or lease its properties and assets substantially as an
entirety to another person, unless, among other things, (i) the resulting,
surviving or transferee person (if other than AIC) is organized and
existing under the laws of the United States, any state thereof or the
District of Columbia and such person expressly assumes all obligations of
AIC under the Debt Securities and the Indenture, and (ii) immediately after
giving effect to such transaction, no Default or Event of Default shall
have occurred or be continuing under the Indenture. Upon the assumption of
AIC's obligations by a person to whom such properties or assets are
conveyed, transferred or leased, subject to certain exceptions, AIC shall
be discharged from all obligations under the Debt Securities and the
Indenture.
EVENTS OF DEFAULT
Each Indenture provides that, if an Event of Default specified
therein shall have occurred and be continuing, with respect to each series
of the Debt Securities outstanding thereunder individually, the Trustee or
the holders of not less than 25% in aggregate principal amount of the
outstanding Debt Securities of such series may declare the principal amount
(or, if any of the Debt Securities of such series are Discount Securities,
such portion of the principal amount of such Debt Securities as may be
specified by the terms thereof) of the Debt Securities of such series to be
immediately due and payable. Under certain circumstances, the holders of a
majority in aggregate principal amount of the outstanding Debt Securities
of such series may rescind such a declaration.
Under each Indenture, an Event of Default is defined as, with respect
to each series of Debt Securities outstanding thereunder individually, any
of the following: (i) default in payment of the principal of any Debt
Securities of such series; (ii) default in payment of any interest on any
Debt Securities of such series when due, continuing for 30 days (or 60
days, in the case of Senior Subordinated Debt Securities or Subordinated
Debt Securities); (iii) default by AIC in compliance with its other
agreements in the Debt Securities of such series or the Indenture relating
to the Debt Securities of such series upon the receipt by AIC of notice of
such default given by the Trustee for such Debt Securities or the holders
of at least 25% in aggregate principal amount of the outstanding Debt
Securities of such series and AIC's failure to cure such default within 60
days after receipt by AIC of such notice; (iv) certain events of bankruptcy
or insolvency; and (v) any other Event of Default set forth in an
applicable Prospectus Supplement with respect to the Debt Securities of
such series.
The Trustee shall give notice to holders of the Debt Securities of
any continuing default known to the Trustee within 90 days after the
occurrence thereof; provided, that the Trustee may withhold such notice, as
to any default other than a payment default, if it determines in good faith
that withholding the notice is in the interests of the holders.
The holders of a majority in principal amount of the outstanding Debt
Securities of any series may direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred on the Trustee with respect to the
Debt Securities of such series; provided that such direction shall not be
in conflict with any law or the Indenture and subject to certain other
limitations. Before proceeding to exercise any right or power under the
Indenture at the direction of such holders, the Trustee shall be entitled
to receive from such holders reasonable security or indemnity satisfactory
to it against the costs, expenses and liabilities which might be incurred
by it in complying with any such direction. With respect to each series of
Debt Securities, no holder will have any right to pursue any remedy with
respect to the Indenture or such Debt Securities, unless (i) such holder
shall have previously given the Trustee written notice of a continuing
Event of Default with respect to the Debt Securities of such series; (ii)
the holders of at least 25% in aggregate principal amount of the
outstanding Debt Securities of such series shall have made a written
request to the Trustee to pursue such remedy; (iii) such holder or holders
have offered to the Trustee reasonable indemnity satisfactory to the
Trustee; (iv) the holders of a majority in aggregate principal amount of
the outstanding Debt Securities of such series have not given the Trustee a
direction inconsistent with such request within 60 days after receipt of
such request; and (v) the Trustee shall have failed to comply with the
request within such 60-day period.
Notwithstanding the foregoing, the right of any holder of any Debt
Securities to receive payment of the principal of and interest in respect
of such Debt Securities on the date specified in such Debt Securities as
the fixed date on which an amount equal to the principal of such Debt
Securities or an installment of principal thereof or interest thereon is
due and payable (the "Stated Maturity" or "Stated Maturities") or to
institute suit for the enforcement of any such payments shall not be
impaired or adversely affected without such holder's consent. The holders
of at least a majority in aggregate principal amount of the outstanding
Debt Securities of any series may waive an existing default with respect to
such series and its consequences, other than (i) any default in any payment
of the principal of, or interest on, any Debt Securities of such series or
(ii) any default in respect of certain covenants or provisions in the
Indenture which may not be modified without the consent of the holder of
each of the outstanding Debt Securities of such series affected as
described in "Modification and Waiver" below.
Each Indenture provides that AIC shall deliver to the Trustee within
120 days after the end of each fiscal year of AIC an officers' certificate
stating whether or not the signers know of any default that occurred during
such period.
MODIFICATION AND WAIVER
AIC and the Trustee may execute a supplemental indenture without the
consent of the holders of the Debt Securities (i) to add to the covenants,
agreements and obligations of AIC for the benefit of the holders of all the
Debt Securities of any series or to surrender any right or power conferred
in the Indenture upon AIC; (ii) to evidence the succession of another
corporation, partnership or other Person to AIC and the assumption by it of
the obligations of AIC under the Indenture and the Debt Securities; (iii)
to establish the form or terms of Debt Securities of any series as
permitted by the Indenture; (iv) to provide for the acceptance of
appointment under the Indenture of a successor Trustee with respect to the
Debt Securities of one or more series and to add to or change any
provisions of the Indenture as shall be necessary to provide for or
facilitate the administration of the trusts by more than one Trustee; (v)
to cure any ambiguity, defect or inconsistency; (vi) to add to, change or
eliminate any provisions (which addition, change or elimination may apply
to one or more series of Debt Securities), provided that any such addition,
change or elimination does not (a) apply to any Debt Securities of any
series created prior to the execution of such supplemental indenture that
is entitled to the benefit of such provision or (b) modify the rights of
the holder of any such Debt Securities with respect to such provision;
(vii) to secure the Debt Securities; or (viii) to make any other change
that does not adversely affect the rights of any holder of Debt Securities.
Each Indenture provides that, with the consent of the holders of not
less than a majority in aggregate principal amount of the outstanding Debt
Securities of the series affected by such supplemental indenture, AIC and
the Trustee may also execute a supplemental indenture to add provisions to,
or change in any manner or eliminate any provisions of the Indenture with
respect to such series of Debt Securities or modify in any manner the
rights of the holders of the Debt Securities of such series; provided that
no such supplemental indenture will, without the consent of the holder of
each such outstanding Debt Security affected thereby (i) change the stated
maturity of the principal of, or any installment of principal or interest
on, any such Debt Security or any premium payable upon redemption or
repurchase thereof, or reduce the amount of principal of any Debt Security
that is a Discount Security and that would be due and payable upon
declaration of acceleration of maturity thereof; (ii) reduce the principal
amount of, or the rate of interest on, any such Debt Security; (iii) change
the place or currency of payment of principal 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 above-stated percentage of holders of Debt Securities of any
series necessary to modify or amend the Indenture for such Debt Securities;
(vi) modify the foregoing requirements or reduce the percentage in
principal amount of outstanding Debt Securities of any series necessary to
waive any covenant or past default; or (vii) in the case of Senior
Subordinated Debt Securities or Subordinated Debt Securities, amend or
modify any of the provisions of such Indenture relating to subordination of
the Debt Securities in any manner adverse to the holders of such Debt
Securities. Holders of not less than a majority in principal amount of the
outstanding Debt Securities of any series may waive certain past defaults
and may waive compliance by AIC with certain of the restrictive covenants
described above or in any supplemental indenture or Prospectus Supplement
with respect to the Debt Securities of such series.
DISCHARGE AND DEFEASANCE
Unless otherwise indicated in an applicable Prospectus Supplement,
each Indenture provides that AIC may satisfy and discharge obligations
thereunder with respect to the Debt Securities of any series by delivering
to the Trustee for cancellation all outstanding Debt Securities of such
series or depositing with the Trustee, after such outstanding Debt
Securities have become due and payable, cash sufficient to pay at Stated
Maturity all of the outstanding Debt Securities of such series and paying
all other sums payable under the Indenture with respect to such series.
In addition, unless otherwise indicated in an applicable Prospectus
Supplement, each Indenture provides that: AIC (a) shall be discharged from
its obligations in respect of the Debt Securities of such series
("defeasance and discharge"), or (b) may cease to comply with certain
restrictive covenants ("covenant defeasance"), including those described
under "Mergers and Sales of Assets," and any such omission shall not be an
Event of Default with respect to the Debt Securities of such series, in
each case, at any time prior to the Stated Maturity or redemption thereof,
when AIC has irrevocably deposited with the Trustee, in trust, (i)
sufficient funds to pay the principal of and interest to Stated Maturity
(or redemption) on, the Debt Securities of such series, or (ii) such amount
of direct obligations of, or obligations the principal of (and premium, if
any) and interest on which are fully guaranteed by, the government of the
United States and which are not subject to prepayment, redemption or call,
as will, together with the predetermined and certain income to accrue
thereon without consideration of any reinvestment thereof, be sufficient to
pay when due the principal of (and premium, if any) and interest to Stated
Maturity (or redemption) on, the Debt Securities of such series. Upon such
defeasance and discharge, the holders of the Debt Securities of such series
shall no longer be entitled to the benefits of the Indenture, except for
the purposes of registration of transfer and exchange of the Debt
Securities of such series and replacement of lost, stolen or mutilated Debt
Securities and shall look only to such deposited funds or obligations for
payment. In addition, under present law such defeasance and discharge is
likely to be treated as a redemption of the Debt Securities of that series
prior to maturity in exchange for such money or United States government
obligations. In that event, each holder would generally recognize, at the
time of defeasance, gain or loss measured by the difference between the
amount of such money and the fair market value of the United States
government obligations deemed received and such holder's tax basis in the
Debt Securities deemed surrendered. Thereafter, each holder would likely be
treated as if such holder held an undivided interest in the money (or
investments made therewith) or the United States government obligations (or
investments made with interest received therefrom), would generally be
subject to tax liability in respect of interest income and/or original
issue discount, if applicable, thereon and would recognize any gain or loss
upon any disposition, including redemption, of such assets or obligations.
Although tax might be owed, the holder of a defeased Debt Security would
not receive any cash until the maturity or an earlier redemption of the
Debt Security (except for current payments of interest on the Debt
Securities of that issue). Such tax treatment could affect the purchase
price that a holder would receive upon the sale of the Debt Securities.
Holders are urged to consult their own tax advisors with respect to the tax
treatment of defeasance of any Debt Securities.
THE TRUSTEES
The Senior Debt Securities Trustee, the Senior Subordinated Debt
Securities Trustee and the Subordinated Debt Securities Trustee will be
named in the applicable Prospectus Supplement. Each Trustee will be
permitted to engage in other transactions with AIC and each of its
subsidiaries; however, if a Trustee acquires any conflicting interest, it
must eliminate such conflict or resign.
DESCRIPTION OF PREFERRED STOCK
GENERAL
AIC may issue, from time to time, shares of one or more series or
classes of Preferred Stock. The following description sets forth certain
general terms and provisions of the Preferred Stock to which any Prospectus
Supplement may relate. The particular terms of any series of Preferred
Stock and the extent, if any, to which such general provisions may apply to
the series of Preferred Stock so offered will be described in the
Prospectus Supplement relating to such Preferred Stock. The following
summary of the material provisions of the Preferred Stock do not purport to
be complete and is subject to, and is qualified in its entirety by express
reference to, the provisions of AIC's Articles of Incorporation (the
"Charter") relating to a specific series of the Preferred Stock, which will
be in the form filed as an exhibit to or incorporated by reference in the
Registration Statement of which this Prospectus is a part at or prior to
the time of issuance of such series of Preferred Stock.
Under the Charter, AIC has the authority to issue up to 50,000,000
shares of capital stock, which may be classified or reclassified as
Preferred Stock. The Board of Directors of AIC (the "Board of Directors" or
the "Board") may classify or reclassify any unissued shares of capital
stock by setting or changing in any one or more respects the preferences,
conversion or other rights, voting powers, restrictions, limitations as to
dividends, qualifications or terms or conditions of redemption of such
shares of capital stock including, but not limited to, ownership
restrictions consistent with the Ownership Limit (defined below under
"Description of Common Stock -- Restrictions on Transfer") with respect to
each class or subclass of capital stock.
The Board of Directors of AIC shall be authorized to determine for
each series of Preferred Stock, and the Prospectus Supplement shall set
forth with respect to such series: (i) the designation of such shares and
the number of shares that constitute such series, (ii) the dividend rate
(or the method of calculation thereof), if any, on the shares of such
series and the priority as to payment of dividends with respect to other
classes or series of capital stock of AIC, (iii) the dividend periods (or
the method of calculation thereof), (iv) the voting rights of the shares,
(v) the liquidation preference and the priority as to payment of such
liquidation preference with respect to other classes or series of capital
stock of AIC and any other rights of the shares of such series upon any
liquidation or winding-up of AIC, (vi) whether or not and on what terms the
shares of such series will be subject to redemption or repurchase at the
option of AIC, (vii) whether and on what terms the shares of such series
will be convertible into or exchangeable for other debt or equity
securities of AIC, (viii) whether the shares of such series of Preferred
Stock will be listed on a securities exchange, (x) any special United
States Federal income tax considerations applicable to such series, and
(ix) the other rights and privileges and any qualifications, limitations or
restrictions of such rights or privileges of such series not inconsistent
with the Charter and the Maryland General Corporation Law ("MGCL").
DIVIDENDS
Holders of shares of Preferred Stock shall be entitled to receive,
when and as declared by the Board of Directors out of funds of AIC legally
available therefor, an annual cash dividend payable at such dates and at
such rates, if any, per share per annum as set forth in the applicable
Prospectus Supplement.
Unless otherwise set forth in the applicable Prospectus Supplement,
each series of Preferred Stock will rank junior as to dividends to any
Preferred Stock that may be issued in the future that is expressly senior
as to dividends to the Preferred Stock. If at any time AIC has failed to
pay accrued dividends on any such senior shares at the time such dividends
are payable, AIC may not pay any dividend on the Preferred Stock or redeem
or otherwise repurchase shares of Preferred Stock until such accumulated
but unpaid dividends on such senior shares have been paid or set aside for
payment in full by AIC.
Unless otherwise set forth in the applicable Prospectus Supplement,
no dividends (other than dividends payable in common stock or other capital
stock ranking junior to the Preferred Stock of any series as to dividends
and upon liquidation) shall be declared or paid or set aside for payment,
nor shall any other distribution be declared or made upon the common stock,
or any other capital stock of AIC ranking junior to or on a parity with the
Preferred Stock of such series as to dividends, nor shall any common stock
or any other capital stock of AIC ranking junior to or on a parity with the
Preferred Stock of such series as to dividends or upon liquidation 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 shares of any such stock) by AIC (except by conversion into or
exchange for other capital stock of AIC ranking junior to the Preferred
Stock of such series as to dividends and upon liquidation) unless (i) if
such series of Preferred Stock has a cumulative dividend, full cumulative
dividends on the Preferred Stock of such series have been or
contemporaneously are declared and paid or declared and a sum sufficient
for the payment thereof set apart for all past dividend periods and the
then current dividend period and (ii) if such series of Preferred Stock
does not have a cumulative dividend, full dividends on the Preferred Stock
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; provided, however, that any monies
theretofore deposited in any sinking fund with respect to any preferred
stock in compliance with the provisions of such sinking fund may thereafter
be applied to the purchase or redemption of such preferred stock in
accordance with the terms of such sinking fund, regardless of whether at
the time of such application full cumulative dividends upon shares of the
Preferred Stock outstanding on the last dividend payment date shall have
been paid or declared and set apart for payment; and provided, further,
that any such junior or parity preferred stock or common stock may be
converted into or exchanged for stock of AIC ranking junior to the
Preferred Stock as to dividends.
The amount of dividends payable for the initial dividend period or
any period shorter than a full dividend period shall be computed on the
basis of a 360-day year of twelve 30-day months. Accrued but unpaid
dividends will not bear interest.
CONVERTIBILITY
No series of Preferred Stock will be convertible into, or
exchangeable for, other securities or property except as set forth in the
applicable Prospectus Supplement, which will set forth the terms and
conditions upon which such conversion or exchange may be effected,
including the initial conversion or exchange rate and any adjustments
thereto, the conversion or exchange period and any other conversion or
exchange provisions.
REDEMPTION AND SINKING FUND
No series of Preferred Stock will be redeemable or be entitled to
receive the benefit of a sinking fund except as set forth in the applicable
Prospectus Supplement, which will set forth the terms and conditions
thereof, including the dates and redemption prices of any such redemption,
any conditions thereto, and any other redemption or sinking fund
provisions.
LIQUIDATION RIGHTS
Unless otherwise set forth in the applicable Prospectus Supplement,
in the event of any liquidation, dissolution or winding up of AIC, the
holders of shares of each series of Preferred Stock are entitled to receive
out of assets of AIC available for distribution to stockholders, before any
distribution of assets is made to holders of: (i) any other shares of
preferred stock ranking junior to such series of Preferred Stock as to
rights upon liquidation, dissolution or winding up; and (ii) shares of
common stock, liquidating distributions per share in the amount of the
liquidation preference specified in the applicable Prospectus Supplement
for such series of Preferred Stock plus any dividends accrued and
accumulated but unpaid to the date of final distribution; but the holders
of each series of Preferred Stock will not be entitled to receive the
liquidating distribution of, plus such dividends on, such shares until the
liquidation preference of any shares of AIC's capital stock ranking senior
to such series of the Preferred Stock as to the rights upon liquidation,
dissolution or winding up shall have been paid (or a sum set aside therefor
sufficient to provide for payment) in full. If upon any liquidation,
dissolution or winding up of AIC, the amounts payable with respect to the
Preferred Stock, and any other Preferred Stock ranking as to any such
distribution on a parity with the Preferred Stock are not paid in full, the
holders of the Preferred Stock and such other parity Preferred Stock will
share ratably in any such distribution of assets in proportion to the full
respective preferential amount to which they are entitled. Unless otherwise
specified in a Prospectus Supplement for a series of Preferred Stock, after
payment of the full amount of the liquidating distribution to which they
are entitled, the holders of shares of Preferred Stock will not be entitled
to any further participation in any distribution of assets by AIC. Neither
a consolidation or merger of AIC with another corporation nor a sale of
securities shall be considered a liquidation, dissolution or winding up of
AIC.
VOTING RIGHTS
Holders of Preferred Stock will not have any voting rights except as
set forth below or in the applicable Prospectus Supplement or as otherwise
from time to time required by law. Whenever dividends on any applicable
series of Preferred Stock or any other class or series of stock ranking on
a parity with the applicable series of Preferred Stock with respect to the
payment of dividends shall be in arrears for the equivalent of six
quarterly dividend periods, whether or not consecutive, the holders of
shares of such series of Preferred Stock (voting separately as a class with
all other series of Preferred Stock then entitled to such voting rights)
will be entitled to vote for the election of two of the authorized number
of directors of AIC at the next annual meeting of stockholders and at each
subsequent meeting until all dividends accumulated on such series of
Preferred Stock shall have been fully paid or set apart for payment. The
term of office of all directors elected by the holders of such Preferred
Stock shall terminate immediately upon the termination of the right of the
holders of such Preferred Stock to vote for directors. Unless otherwise set
forth in the applicable Prospectus Supplement, holders of shares of
Preferred Stock will have one vote for each share held.
So long as any shares of any series of Preferred Stock remain
outstanding, AIC shall not, without the consent of holders of at least
two-thirds of the shares of such series of Preferred Stock outstanding at
the time, voting separately as a class with all other series of Preferred
Stock of AIC upon which like voting rights have been conferred and are
exercisable, (i) issue or increase the authorized amount of any class or
series of stock ranking prior to the outstanding Preferred Stock as to
dividends or upon liquidation or (ii) amend, alter or repeal the provisions
of AIC's Charter relating to such series of Preferred Stock, whether by
merger, consolidation or otherwise, so as to materially adversely affect
any power, preference or special right of such series of Preferred Stock or
the holders thereof; provided, however, that any increase in the amount of
the authorized common stock or authorized preferred stock or any increase
or decrease in the number of shares of any series of preferred stock or the
creation and issuance of other series of common stock or preferred stock
ranking on a parity with or junior to Preferred Stock as to dividends and
upon liquidation, dissolution or winding up shall not be deemed to
materially adversely affect such powers, preferences or special rights.
MISCELLANEOUS
The holders of Preferred Stock will have no preemptive rights. The
Preferred Stock, upon issuance against full payment of the purchase price
therefor, will be fully paid and nonassessable. Shares of Preferred Stock
redeemed or otherwise reacquired by AIC shall resume the status of
authorized and unissued shares of Preferred Stock undesignated as to
series, and shall be available for subsequent issuance. There are no
restrictions on repurchase or redemption of the Preferred Stock while there
is any arrearage on sinking fund installments except as may be set forth in
an applicable Prospectus Supplement. Payment of dividends on, and the
redemption or repurchase of, any series of Preferred Stock may be
restricted by loan agreements, indentures and other agreements entered into
by AIC. The accompanying Prospectus Supplement will describe any material
contractual restrictions on such dividend payments.
NO OTHER RIGHTS
The shares of a series of Preferred Stock will not have any
preferences, voting powers or relative, participating, optional or other
special rights except as set forth above or in the applicable Prospectus
Supplement or the Charter or as otherwise required by law.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for each series of Preferred Stock
will be designated in the applicable Prospectus Supplement.
DESCRIPTION OF COMMON STOCK
GENERAL
The Charter authorizes the issuance of up to 50,000,000 shares of
Common Stock with a par value of $.01 per share. As of November 30, 1998,
there were 5,015,594 shares of Common Stock issued and outstanding. In
addition, up to 169,541 and 3,000,000 shares of Common Stock have been
reserved for issuance under AIC's Stock Option and Incentive Compensation
Plan (the "1997 Plan") and AIC's 1998 Stock Incentive Plan (the "1998
Plan"), respectively. The Common Stock is traded on the NYSE under the
symbol "AIC." Norwest Bank Minnesota, N.A. serves as transfer agent and
registrar of the Common Stock.
Holders of the Common Stock are entitled to receive dividends, when
and as declared by the Board of Directors, out of funds legally available
therefor. The holders of shares of Common Stock, upon any liquidation,
dissolution or winding-up of AIC, are entitled to receive ratably any
assets remaining after payment in full of all liabilities of AIC and the
liquidation preferences of preferred stock. The shares of Common Stock
possess ordinary voting rights for the election of Directors and in respect
of other corporate matters, each share entitling the holder thereof to one
vote. Holders of shares of Common Stock do not have cumulative voting
rights in the election of Directors, which means that holders of more than
50% of the shares of Common Stock voting for the election of Directors can
elect all of the Directors if they choose to do so and the holders of the
remaining shares cannot elect any Directors (subject to the fact that
Directors' terms are staggered, with one of three classes being elected
each year). Holders of shares of Common Stock do not have preemptive
rights, which means they have no right to acquire any additional shares of
Common Stock that may be issued by AIC at a subsequent date.
RESTRICTIONS ON TRANSFER
For AIC to qualify as a REIT under the Internal Revenue Code of 1986,
as amended (the "Code"), not more than 50% in value of its outstanding
capital stock may be owned, directly or indirectly, by five or fewer
individuals (as defined in the Code to include certain entities) during the
last half of a taxable year, and the shares of common stock must be
beneficially owned by 100 or more persons during at least 335 days of a
taxable year of 12 months or during a proportionate part of a shorter
taxable year (see "Certain Federal Income Tax Considerations -- Taxation of
AIC -- Income Tests"). Because the Board of Directors believes that it is
desirable for AIC to continue to qualify as a REIT, the Board of Directors
has adopted, and the shareholders have approved, provisions of AIC's
Charter restricting the acquisition of shares of Common Stock.
Subject to certain exceptions specified in AIC's Charter, no holder
may own, or be deemed to own by virtue of various attribution and
constructive ownership provisions of the Code and Rule 13d-3 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), more than
9.8% of the outstanding shares of Common Stock (the "Ownership Limit"). The
Board of Directors has the right to refuse to transfer shares if, as a
result of the transfer, any person would hold, directly or indirectly,
shares in excess of the Ownership Limit. The Board of Directors may, in its
discretion, exempt from the Ownership Limit, and from certain filing
requirements described below, ownership or transfers of certain designated
shares while owned by or transferred to a person who has provided the Board
with evidence and assurances acceptable to the Board that the qualification
of AIC as a REIT would not be jeopardized. The Ownership Limit shall not
apply to the acquisition of shares of AIC by an underwriter in a public
offering of shares of AIC, or in any transaction involving the issuance of
shares by AIC, in which the Board of Directors determines that the
underwriter or other person or party initially acquiring such shares will
timely distribute such shares to or among others such that, following such
distribution, none of the shares will be owned, directly or indirectly, by
any person in excess of the Ownership Limit.
Any acquisition of shares of AIC that would result in the
disqualification of AIC as a REIT shall be void to the fullest extent
permitted under applicable law and the intended transferee of such shares
shall be deemed never to have had an interest therein. If the foregoing
provision is determined to be void or invalid by virtue of any legal
decision, statute, rule or regulation, then the transferee of such shares
shall be deemed, at the option of AIC, to have acted as agent on behalf of
AIC in acquiring such shares and to hold such shares on behalf of AIC.
All shares of Common Stock owned, directly or indirectly, by any
person in excess of the Ownership Limit may be redeemed by AIC, in the
discretion of the Board of Directors, by mailing a written notice of
redemption to the holder of such shares not less than one week prior to the
redemption date as determined by the Board of Directors and included in the
notice. The price to be paid for the shares shall be equal to (A) the
closing price of the shares on the last business day prior to the
redemption date on the principal national securities exchange on which such
shares are listed or admitted to trading, or (B) if such shares are not so
listed or admitted to trading, the closing bid price on such last business
day as reported on the National Association of Securities Dealers Automated
Quotation Systems, if quoted thereon, or (C) if not determinable as
aforesaid, the net asset value of the shares redeemed, as determined in
good faith by the Board of Directors. Notwithstanding the foregoing
sentence, in no event may the redemption price be greater than the net
asset value of the shares redeemed, as determined in good faith by the
Board of Directors. The price paid for any shares redeemed shall be paid on
the redemption date fixed by the Board of Directors and included in the
notice to the shareholder. From and after the date fixed for redemption,
the holder of any shares so called for redemption shall cease to be
entitled to any distributions and other benefits with respect to such
shares, except only the right to payment of the redemption price fixed as
aforesaid.
Prior to any transfer or transaction which would cause a stockholder
to own, directly or by virtue of the attribution provisions of the Code and
Rule 13d-3 under the Exchange Act, shares in excess of the Ownership Limit,
and in any event upon demand by the Board of Directors, such stockholder
must file an affidavit with AIC containing the information specified in
AIC's Charter at least 15 days prior to any such transfer or transaction or
within 10 days after demand therefor, as the case may be. In addition, the
Board of Directors has the right to refuse to transfer any shares
purportedly transferred other than in compliance with the foregoing filing
provisions. Whenever it is deemed by the Board of Directors to be prudent
in protecting the tax status of AIC, the Board of Directors may require to
be filed with AIC a statement or affidavit from each proposed transferee of
shares of AIC setting forth the number of shares already owned by the
transferee and any related person(s) specified in the form prescribed by
the Board of Directors for that purpose.
The Board of Directors has the right to refuse to transfer any shares
of AIC's Common Stock to any person if the ownership of shares by such
person would result in the imposition of a tax on AIC or any other holder
(nominee or otherwise) of shares of AIC (a "Disqualified Organization").
Any shares of AIC owned by a Disqualified Organization may, in the
discretion of the Board, be redeemed by AIC at the redemption price and in
the same manner as shares owned in excess of the Ownership Limit may be
redeemed pursuant to the provisions contained in the second preceding
paragraph. If the foregoing provision of this paragraph is determined to be
void or invalid by virtue of any legal decision, statute, rule or
regulation, then any Disqualified Organization holding shares of AIC shall
be deemed, at the option of AIC, to have acted as an agent of AIC in
acquiring such shares and to hold such shares on behalf of AIC. The
Board of Directors may adopt such procedures regarding the transfer and
redemption of shares as it deems necessary to implement the foregoing
provisions.
The ownership limitations may have the effect of precluding
acquisition of control of AIC by certain third parties unless the Board of
Directors determines that maintenance of REIT status is no longer in the
best interests of AIC.
BUSINESS COMBINATIONS
Under the MGCL, certain "business combinations" (including a merger,
consolidation, share exchange or, in certain circumstances, an asset
transfer or issuance or reclassification of equity securities) between a
Maryland corporation and any person who beneficially owns 10% or more of
the voting power of the corporation's shares, or an affiliate of the
corporation who, at any time within the two-year period prior to the date
in question, was the beneficial owner of 10% or more of the voting power of
the then outstanding voting stock of the corporation (an "Interested
Stockholder") or an affiliate thereof, are prohibited for five years after
the most recent date on which the Interested Stockholder became an
Interested Stockholder. Thereafter, any such business combination must be
recommended by the board of directors of the corporation and approved by
the affirmative vote of at least (a) 80% of the votes entitled to be cast
by holders of outstanding voting shares of the corporation, voting together
as a single voting group, and (b) two-thirds of the votes entitled to be
cast by holders of outstanding voting shares of the corporation, other than
shares held by the Interested Stockholder with whom the business
combination is to be effected, unless, among other conditions, the
corporation's shareholders receive a minimum price (as defined in the MGCL)
for their shares and the consideration is received in cash or in the same
form as previously paid by the Interested Stockholder for its shares. The
business combination statute could have the effect of discouraging offers
to acquire AIC and of increasing the difficulty of consummating any such
offer. These provisions of the MGCL do not apply, however, to business
combinations that are approved or exempted by the board of directors of the
corporation prior to the time that the Interested Stockholder becomes an
Interested Stockholder.
CONTROL SHARE ACQUISITIONS
The MGCL provides that "control shares" of a Maryland corporation
acquired in a "control share acquisition" have no voting rights except to
the extent approved by a vote of two-thirds of the votes entitled to be
cast on the matter, excluding shares of stock owned by the acquirer or by
officers or directors who are employees of the corporation. "Control
shares" are voting shares of stock that, if aggregated with all other
shares of stock previously acquired by that person, would entitle the
acquirer to exercise voting power in electing directors within one of the
following ranges of voting power: (i) one-fifth or more but less than
one-third, (ii) one- third or more but less than a majority or (iii) a
majority or more of all voting power. Control shares do not include shares
the acquiring person is then entitled to vote as a result of having
previously obtained stockholder approval.
A "control share acquisition" means the acquisition of control
shares, subject to certain exceptions. A person who has made or proposes to
make a control share acquisition, upon satisfaction of certain conditions
(including an undertaking to pay expenses), may compel the corporation's
board of directors to call a special meeting of shareholders, to be held
within 50 days of demand, to consider the voting rights of the shares. If
no request for a meeting is made, the corporation may itself present the
question at any shareholders meeting.
If voting rights are not approved at the meeting or if the acquiring
person does not deliver an "acquiring person statement" as required by the
statute, then, subject to certain conditions and limitations, the
corporation may redeem any or all of the control shares (except those for
which voting rights have previously been approved) for fair value
determined, without regard to voting rights, as of the date of the last
control share acquisition or of any meeting of shareholders at which the
voting rights of such shares were considered and not approved. If voting
rights for control shares are approved at a shareholders meeting and the
acquirer becomes entitled to vote a majority of the shares entitled to
vote, all other shareholders may exercise appraisal rights. The fair value
of the shares as determined for purposes of the appraisal rights may not be
less than the highest price per share paid in the control share
acquisition, and certain limitations and restrictions otherwise applicable
to the exercise of dissenters' rights do not apply in the context of a
control share acquisition.
The control share acquisition statute does not apply to shares
acquired in a merger, consolidation or share exchange if the corporation is
a party to the transaction, or to acquisitions approved or exempted by the
corporation's articles of incorporation or bylaws prior to the control
share acquisition. The control share acquisition statute could have the
effect of discouraging offers to acquire AIC and of increasing the
difficulty of consummating any such offer.
DESCRIPTION OF WARRANTS
GENERAL
AIC may issue, together with other Securities registered hereunder or
separately, warrants for the purchase of Debt Securities, Preferred Stock
or Common Stock (the "Warrants"). The Warrants may be issued under a
Warrant Agreement (each, a "Warrant Agreement") to be entered into between
AIC and a bank or trust company, as warrant agent (the "Warrant Agent"), as
set forth in the applicable Prospectus Supplement relating to any or all
Warrants in respect of which this Prospectus is being delivered. The
Warrant Agent will act solely as an agent of AIC in connection with the
Warrants of a particular series and will not assume any obligation or
relationship of agency or trust for or with any holders or beneficial
owners of Warrants. The Warrant Agreement for each Warrant, including the
forms of certificates representing the Warrants ("Warrant Certificates"),
will be filed as an exhibit to, or incorporated by reference in, the
Registration Statement of which this Prospectus forms a part at or prior to
the time of the issuance of such Warrants.
The following description sets forth certain general terms and
provisions of the Warrants to which any Prospectus Supplement may relate.
The particular terms of the Warrants to which any Prospectus Supplement may
relate and the extent, if any, to which such general provisions may apply
to the Warrants so offered will be described in the applicable Prospectus
Supplement. Capitalized terms used in this section which are not otherwise
defined in this Prospectus shall have the meanings set forth in the Warrant
Agreement and Warrant Certificate. The following summary of the material
provisions of the Warrants, Warrant Agreement and Warrant Certificate does
not purport to be complete and is subject to, and is qualified in its
entirety by express reference to, all the provisions of the Warrant
Agreement and Warrant Certificate, including the definitions therein of
certain terms.
Reference is made to the applicable Prospectus Supplement for the
terms of Warrants in respect of which this Prospectus is being delivered,
the Warrant Agreement relating to such Warrants and the Warrant
Certificates representing such Warrants, including the following: (i) the
designation, aggregate principal amount and terms of the Debt Securities or
the designation and terms of the Preferred Stock, if any, purchasable upon
exercise of such Warrants; (ii) the procedures and conditions relating to
the exercise of such Warrants; (iii) the designation and terms of any
related Securities with which such Warrants are issued and the number of
such Warrants issued with each such Security; (iv) the date, if any, on and
after which such Warrants and the related Securities will be separately
transferable; (v) the offering price of the Warrants, if any; (vi) the
principal amount of Debt Securities or the number of shares of Preferred
Stock or Common Stock purchasable upon exercise of each Warrant and the
price at which such principal amount of Debt Securities or shares of
Preferred Stock or Common Stock may be purchased upon such exercise, or the
method of determining such number and price; (vii) the date on which the
right to exercise such Warrants shall commence and the date on which such
right shall expire; (viii) a discussion of United States Federal income tax
considerations applicable to the ownership or exercise of such Warrants;
(ix) whether the Warrants represented by the Warrant Certificates will be
issued in registered or bearer form, and, if registered, where they may be
transferred and registered; (x) call provisions of such Warrants, if any;
and (xi) any other terms of the Warrants.
Warrant Certificates will be exchangeable for new Warrant
Certificates of different denominations and Warrants may be exercised at
the corporate trust office of the Warrant Agent or any other office
indicated in the applicable Prospectus Supplement. Prior to the exercise of
their Warrants, holders of Warrants will not have any of the rights of
holders of the Securities purchasable upon such exercise and will not be
entitled to payments of principal of (or premium, if any) or interest, if
any, on the Debt Securities purchasable upon such exercise or to any
dividend payments or voting rights that holders of the Preferred Stock or
Common Stock purchasable upon such exercise may be entitled to.
Each Warrant will entitle the holder to purchase for cash such
principal amount of Debt Securities, or such number of shares of Preferred
Stock or Common Stock, at such exercise price as shall, in each case, be
set forth in, or be determinable as set forth in, the applicable Prospectus
Supplement relating to the Warrants offered thereby. Unless otherwise
specified in the applicable Prospectus Supplement, Warrants may be
exercised at any time up to 5:00 p.m. New York City time on the expiration
date set forth in the applicable Prospectus Supplement. After 5:00 p.m. New
York City time on the expiration date, unexercised Warrants will become
void.
Warrants may be exercised as set forth in the applicable Prospectus
Supplement relating to the Warrants. Upon receipt of payment and the
Warrant Certificate properly completed and duly executed at the corporate
trust office of the Warrant Agent or any other office indicated in the
applicable Prospectus Supplement, AIC will, as soon as practicable, forward
the Securities purchasable upon such exercise. If less than all of the
Warrants represented by such Warrant Certificate are exercised, a new
Warrant Certificate will be issued for the remaining amount of Warrants.
PLAN OF DISTRIBUTION
AIC may sell the Securities to one or more underwriters for public
offering and sale by them or may sell the Securities to investors directly
or through agents or dealers. Any such underwriter, agent or dealer
involved in the offer and sale of the Securities will be named in the
applicable Prospectus Supplement.
Underwriters may offer and sell the 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, at prices related to the prevailing market
prices at the time of sale or at negotiated prices. AIC also may, from time
to time, authorize underwriters acting as AIC's agents to offer and sell
the Securities upon the terms and conditions set forth in the applicable
Prospectus Supplement. In connection with the sale of Securities,
underwriters may be deemed to have received compensation from AIC in the
form of underwriting discounts or commissions and may also receive
commissions from purchasers of Securities for whom they may act as agent.
Underwriters may sell Securities to or through dealers, and such dealers
may receive compensation in the form of discounts, concessions or
commissions (which may be changed from time to time) from the underwriters
and/or commissions from the purchasers for whom they may act as agent.
Any underwriting compensation paid by AIC to underwriters or agents
in connection with the offering of 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
Securities may be deemed to be underwriters under the Securities Act, and
any discounts and commissions received by them and any profit realized by
them on resale of the 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 AIC, to indemnification
against and contribution toward certain civil liabilities, including
liabilities under the Securities Act.
If a dealer is utilized in the sale of the Securities in respect of
which this Prospectus is delivered, AIC will sell such Securities to such
dealer, as principal. The dealer may then resell such Securities to the
public at varying prices to be determined by such dealer at the time of
resale.
If so indicated in the applicable Prospectus Supplement, AIC will
authorize dealers acting as AIC's agents to solicit offers by certain
institutions to purchase Securities from AIC at the public offering price
set forth in such Prospectus Supplement pursuant to Delayed Delivery
Contracts ("Contracts") providing for payment and delivery on the date or
dates stated in such Prospectus Supplement. Each Contract will be for an
amount not less than, and the aggregate principal amount or number of
Securities sold pursuant to Contracts shall not be less nor more than, the
respective amounts or numbers 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 AIC.
Such Contracts will not be subject to any conditions except (a) the
purchase by an institution of the 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
(b) if the Securities are being sold to underwriters, AIC shall have sold
to such underwriters the total principal amount or number of the Securities
less the principal amount or number thereof covered by the Contracts. The
Prospectus Supplement will set forth the commission payable for
solicitation of such Contracts. Agents and underwriters will have no
responsibility in respect of the delivery or performance of Contracts.
Until the distribution of the Securities offered pursuant to any
Prospectus Supplement is completed, the Commission's rules may limit the
ability of any underwriter participating in such distribution to bid for
and purchase the Securities offered thereby and other securities of AIC. As
an exception to these rules, the underwriters are permitted to engage in
certain transactions that stabilize or maintain the price of such
securities. Such transactions consist of bids or purchases for the purpose
of pegging, fixing or maintaining the price of such securities. If any such
underwriter creates a short position in such securities in connection with
the offering, such underwriter may reduce such short position by purchasing
securities.
In general, bids for or purchases of a security for the purpose of
stabilization or to reduce a short position could cause the price of the
security to be higher than it might otherwise be in the absence of such
bids or purchases.
Neither AIC nor any underwriter participating in any distribution
makes any representation or prediction as to the direction or magnitude of
any effect that the transactions described above may have on the price of
the offered Securities or other securities of AIC. In addition, neither AIC
nor any such underwriter makes any representation that such underwriter
will engage in such transactions or that such transactions, once commenced,
will not be discontinued without notice.
Certain of the underwriters, if any, and their affiliates may be
customers of, engage in transactions with and perform services for AIC in
the ordinary course of business.
The Securities may or may not be listed on a national securities
exchange. No assurances can be given that there will be a market for any of
the Securities.
SELLING STOCKHOLDERS
GENERAL
In addition to the offer and sale of the Securities as described
above in this Prospectus, this Prospectus relates to periodic offers and
sales of up to 1,545,007 shares of Common Stock by the selling stockholders
named below and their respective pledgees, donees and other successors in
interest (collectively, "the Selling Stockholders"). The shares of Common
Stock that may be offered and sold by the Selling Stockholders include
shares that may be issued in exchange for Partnership Units ("OP Units") of
the Operating Partnership.
The following table sets forth certain information with respect to
the Selling Stockholders and their beneficial ownership of shares of Common
Stock as of the date hereof. Except as indicated below, none of the Selling
Stockholders holds any position, office or has had any other material
relationship with AIC, or any of its predecessors or affiliates, during the
past three years.
SHARES OWNED SHARES OFFERED
SELLING STOCKHOLDER PRIOR TO OFFER HEREBY(1)
Terry Considine 408,538(2) 240,659
Thomas L. Rhodes 175,899(3) 168,037
Bruce E. Moore 112,403(4) 25,355
Bruce D. Benson 131,696(5) 75,160
HFIC, Inc. 62,651(6) 25,471
Wilder Corporation of Delaware 601,891(7)
601,891
Salem Farm Mobile Home Park, 0(8) 44,583
Inc.
Roth Associates of New Jersey 0(9) 50,710
Gary D. Rose 63,839(10) 75,160
Richard Gilder 155,203(11) 177,845
William Ingram 51,071(12) 60,127
(1) Unless otherwise indicated, the number of shares shown as offered
hereby reflects the number of shares of Common Stock (subject to
adjustment pursuant to antidilution adjustment provisions) that may
by issued to the Selling Stockholder from time to time by AIC in
exchange for OP Units tendered for redemption by such Selling
Stockholder pursuant to the Agreement of Limited Partnership of the
Operating Partnership.
(2) TERRY CONSIDINE has been Chairman of the Board of Directors and Chief
Executive Officer of AIC since April 1998. From September 1996 to
April 1998, Mr. Considine served as Co-Chairman of the Board of
Directors and Co-Chief Executive Officer of AIC. Mr. Considine also
serves as Chairman of the Board of Directors and Chief Executive
Officer of CAX. Mr. Considine's shares are held by Titahotwo Ltd. and
Titahothree Ltd., limited partnerships in which he is the sole
general partner. The number of shares shown as owned by Mr. Considine
prior to this offering includes 204,432 OP Units redeemable within 60
days.
(3) THOMAS L. RHODES has been Vice Chairman of the Board of Directors of
AIC since April 1998. From September 1996 to April 1998, Mr. Rhodes
served as Co-Chairman of the Board of Directors and Co-Chief
Executive Officer of AIC. Mr. Rhodes also serves as Vice Chairman of
the Board of Directors of CAX. The number of shares shown as owned by
Mr. Rhodes prior to this offering includes 138,604 OP Units
redeemable within 60 days.
(4) BRUCE E. MOORE was appointed as President and Chief Operating Officer
of AIC in February 1998. The number of shares shown as owned by Mr.
Moore includes 8,721 shares owned by Brandywine Real Estate
Management Services Corporation, an entity controlled by Mr. Moore.
Mr. Moore owns 25,355 OP Units, none of which are redeemable within
60 days.
(5) BRUCE D. BENSON has served as a Director of AIC and CAX since October
1996. Mr. Benson owns 75,160 OP Units, 63,839 of which are redeemable
within 60 days.
(6) The number of shares shown as owned by HFIC, Inc. prior to this
offering includes 25,471 OP Units, 22,651 of which are redeemable
within 60 days.
(7) The Selling Stockholder owns 601,891 OP Units, all of which are
redeemable within 60 days.
(8) The Selling Stockholder owns 44,583 OP Units, none of which are
redeemable within 60 days.
(9) The Selling Stockholder owns 50,710 OP Units, none of which are
redeemable within 60 days.
(10) The Selling Stockholder owns 75,160 OP Units, 63,839 of which are
redeemable within 60 days.
(11) The Selling Stockholder owns 177,845 OP Units, 155,203 of which are
redeemable within 60 days.
(12) The Selling Stockholder owns 60,127 OP Units, 51,071 of which are
redeemable within 60 days.
Because the Selling Stockholders may sell some or all of the shares
of Common Stock offered hereby, and because there are currently no
agreements, arrangements or understandings with respect to the sale of any
of such shares, no estimate can be given as to the number of
shares of Common Stock that will be held by the Selling Stockholders upon
termination of any offering made hereby.
PLAN OF DISTRIBUTION
This Prospectus relates to the offer and sale from time to time by
the Selling Stockholders of up to 1,545,007 shares of Common Stock. The
Common Stock may be sold from time to time by the Selling Stockholders.
Such sales may be made in underwritten offerings or in open market or block
transactions or otherwise on the NYSE, or such other national securities
exchange or automated interdealer quotation system on which shares of
Common Stock are then listed, in the over-the-counter market, in private
transactions or otherwise at prices related to prevailing market prices at
the time of the sale or negotiated prices. Some or all of the shares of
Common Stock may be sold through brokers acting on behalf of the Selling
Stockholders or to dealers for resale for such dealers. In connection with
such sales, such brokers and dealers may receive compensation in the form
of discounts or commissions from the Selling Stockholders and may receive
commissions from the purchasers of such shares for whom they act as broker
or agent (which discounts and commissions are not anticipated to exceed
those customary in the types of transactions involved). The Selling
Stockholders may offer to sell and may sell shares of the Common Stock in
options transactions or deliver such shares to cover short sales "against
the box." If necessary, a supplemental or amended Prospectus will describe
the method of sale in greater detail. In effecting sales, brokers or
dealers engaged by the Selling Stockholders and/or purchasers of the Common
Stock may arrange for other brokers or dealers to participate. In addition,
any of the Common Stock covered by this Prospectus which qualifies for sale
pursuant to Rule 144 under the Securities Act may be sold under Rule 144
rather than pursuant to this Prospectus.
If shares of Common Stock are sold in an underwritten offering, the
shares will be acquired by the underwriters for their own accounts and may
be resold from time to time in one or more transactions, including
negotiated transactions, at a fixed public offering price or prices at the
time of the sale or at negotiated prices. Any initial public offering price
and any discounts or commissions allowed or reallowed or paid to dealers
may be changed from time to time. Underwriters may sell shares to or
through brokers or dealers, and such brokers and dealers may receive
compensation in the form of discounts, commissions or commissions from the
underwriters and may receive commissions from the purchasers of such shares
for whom they act as broker or agent (which discounts and commissions are
not anticipated to exceed those customary in the types of transactions
involved).
AIC has agreed to pay all expenses in connection with the
registration of the Common Stock being offered hereby by the Selling
Stockholders. Selling Stockholders are responsible for paying any other
selling expenses, including underwriting discounts and brokers'
commissions, and expenses of Selling Stockholders' counsel.
The Selling Stockholders and any underwriter, broker or dealer who
acts in connection with the sale of the Common Stock hereunder may be
deemed to be "underwriters" within the meaning of Section 2(11) of the
Securities Act, and any compensation received by them and any profit on any
resale of the Common Stock as principals may be deemed to be underwriting
discounts and commissions under the Securities Act.
The Selling Stockholders have been advised that during the time each
is engaged in "distribution" (as defined under Regulation M under the
Exchange Act) of the securities covered by this Prospectus, each must
comply with Regulation M under the Exchange Act and pursuant thereto: (i)
shall not engage in any stabilization activity in connection with AIC's
securities and (ii) shall not bid for or purchase any securities of AIC or
attempt to induce any person to purchase any of AIC's securities other than
as permitted under the Securities Act. Any Selling Stockholders who may be
"affiliated purchasers" of AIC as defined in Regulation M have been further
advised that they must coordinate their sales under this Prospectus with
each other and AIC for purposes of Regulation M. Each Selling Stockholder
must also furnish each purchaser or broker through which Common Stock is
sold copies of this Prospectus. AIC has deposited copies of this Prospectus
with the NYSE pursuant to Rule 153 under the Securities Act.
In order to comply with the securities laws of certain jurisdictions,
the securities offered hereby will be offered or sold in such jurisdictions
only through registered or licensed brokers or dealers. In addition, in
certain jurisdictions the securities offered hereby may not be offered or
sold unless they have been registered or qualified for sale in such
jurisdictions or an exemption from registration or qualification is
available and is complied with.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of certain federal income tax
considerations relating to the acquisition, holding, and disposition of the
Securities. The Prospectus Supplement may contain additional information,
as applicable, about certain United States federal income tax
considerations relating to the particular Securities offered thereby. The
discussion contained herein is based upon the Internal Revenue Code of
1986, as amended (the "Code"), regulations issued thereunder ("Treasury
Regulations"), rulings and other administrative pronouncements issued by
the Internal Revenue Service ("IRS"), and judicial decisions, all in effect
as of the date of this Prospectus, and all of which are subject to change,
possibly with retroactive effect. The summary is also based upon the
assumption that the operation of each of the entities comprising the
Company, as well as certain affiliated entities (including CAX) will be in
accordance with its applicable organizational documents or partnership
agreement. This summary is for general information only and does not
purport to discuss all aspects of federal income taxation that may be
important to a particular investor in light of its investment or tax
circumstances, or to certain types of investors subject to special tax
rules (including financial institutions, broker-dealers, insurance
companies, and, except to the extent discussed below, tax-exempt
organizations and foreign investors, as determined for United States
federal income tax purposes). This summary assumes that investors will hold
their Securities as "capital assets" (generally, property held for
investment).
THE FEDERAL INCOME TAX TREATMENT OF HOLDERS OF SECURITIES DEPENDS IN
SOME INSTANCES ON DETERMINATIONS OF FACT AND INTERPRETATIONS OF COMPLEX
PROVISIONS OF FEDERAL INCOME TAX LAW FOR WHICH NO CLEAR PRECEDENT OR
AUTHORITY MAY BE AVAILABLE. EACH PROSPECTIVE INVESTOR SHOULD CONSULT ITS
TAX ADVISOR REGARDING THE FEDERAL, STATE, LOCAL AND FOREIGN TAX
CONSEQUENCES OF ACQUIRING, HOLDING, EXCHANGING, OR OTHERWISE DISPOSING OF
SECURITIES, AND OF AIC'S ELECTION TO BE TREATED FOR FEDERAL INCOME TAX
PURPOSES AS A REIT.
TAXATION OF AIC
AIC elected to be taxed as a REIT commencing with its initial taxable
year ended December 31, 1986. AIC believes that it was organized and has
operated in such a manner as to qualify for taxation as a REIT, and intends
to continue to operate in such a manner. No assurance can be given,
however, that it was organized and has operated in such a manner as to
qualify as a REIT, or that it will continue to operate in such a manner in
the future.
Tax Opinion
Qualification and taxation as a REIT depends on AIC's ability to meet
on a continuing basis, through actual operating results, distribution
levels, and diversity of stock ownership, various qualification tests
imposed upon REITs pursuant to the Code. In addition, AIC's ability to
qualify as a REIT depends in part upon the operating results,
organizational structure and entity classification for federal income tax
purposes of certain affiliated entities, including the qualification of CAX
as a REIT. See "Tax Aspects of Investments in Affiliated Entities" below.
The ability of CAX to qualify as a REIT requires, among other things, that
either (i) certain notes issued by a certain trust in which CAX holds an
indirect equity interest (the "Trust Notes") are classified for federal
income tax purposes as indebtedness, or (ii) notwithstanding any failure of
the Trust Notes to be treated as indebtedness for federal income tax
purposes, CAX had reasonable cause for any resultant failure to satisfy the
income tests applicable to REITs. See "Requirements for Qualification -
Income Tests" and "Tax Aspects of Investments in Affiliated Entities -
CAX", below.
Ernst and Young LLP has issued an opinion substantially to the effect
that the Trust Notes are more likely than not to be treated as indebtedness
for federal income tax purposes. Based in part upon the opinion of Ernst
and Young LLP as described above, Skadden, Arps, Slate, Meagher & Flom LLP
("Counsel") has issued an opinion substantially to the effect that AIC has
been organized in conformity with the requirements for qualification as a
REIT, and its actual and proposed method of operation will enable it to
meet the requirements for qualification and taxation as a REIT under the
Code with respect to its 1998 taxable year. Counsel has not rendered an
opinion as to whether the Trust Notes constitute indebtedness for federal
income tax purposes.
It must be emphasized that the opinions of Counsel and of Ernst and
Young LLP, as described above, are based on various assumptions relating to
the organization and operation of AIC and CAX, and are conditioned upon
certain representations made by the management of AIC and CAX as to certain
relevant factual matters. While AIC intends to operate so that it will
qualify as a REIT, given the highly complex nature of the rules governing
REITs, the ongoing importance of factual determinations, and the
possibility of future changes in the circumstances of AIC, no assurance can
be given by Counsel, Ernst & Young LLP or AIC that AIC will so qualify for
any particular year. The opinions are expressed as of their respective
dates, and Counsel and Ernst and Young LLP have no obligation to advise
holders of Securities of any subsequent change in the matters stated,
represented or assumed, or of any subsequent change in the applicable law.
Opinions of Counsel and Ernst and Young LLP are not binding on the IRS, and
no assurance can be given that the IRS will not challenge the conclusions
set forth in such opinions. In addition, Counsel has not historically
represented the Company, and its opinion does not cover taxable years ended
prior to 1998.
Taxation of REITs in General
As indicated above, qualification and taxation as a REIT
depends upon AIC's ability to meet, on a continuing basis, various
qualification requirements imposed upon REITs pursuant to the Code, some of
which are summarized below. While AIC intends to operate so that it
qualifies as a REIT, no assurance can be given that AIC satisfies the REIT
tests or will continue to do so. See "Failure to Qualify" below.
Provided that AIC qualifies as a REIT, it will generally not be
subject to federal corporate income tax on its net income that is currently
distributed to its stockholders. This treatment substantially eliminates
the "double taxation" (at the corporate and stockholder levels) that
generally results from investment in a corporation. Rather, income
generated by a REIT generally is taxed only at the shareholder level upon a
distribution of dividends by the REIT. Net operating losses, foreign tax
credits and other tax attributes of a REIT generally do not pass through to
the stockholders of the REIT, subject to special rules relating to capital
gains recognized by a REIT and distributions thereof, as described below.
See "Taxation of Stockholders - Taxation of Taxable Domestic Stockholders -
Distributions."
If AIC qualifies as a REIT, it may nonetheless be subject to federal
tax in certain circumstances, including the following: First, AIC will
generally be taxed at regular corporate rates on any undistributed income,
including undistributed net capital gains. Second, under certain
circumstances, AIC may be subject to the "alternative minimum tax" on its
items of tax preference. Third, if AIC 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% tax. Fourth, if AIC should fail to satisfy the 75% gross income test
or the 95% gross income test (as discussed below), but nonetheless
maintains its qualification as a REIT because certain other requirements
are met, it will be subject to a 100% tax on an amount equal to (a) the
greater of the amount by which AIC fails the 75% or the 95% gross income
test, as the case may be, multiplied by (b) a fraction intended to reflect
AIC's profitability. Fifth, if AIC 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
(other than certain long-term capital gains that AIC elects to retain and
pay the tax thereon), and (iii) any undistributed taxable income from prior
periods, AIC would be subjected to a 4% excise tax on the excess of such
required distribution over the amounts actually distributed. Sixth, AIC may
be required to pay monetary penalties to the IRS in certain circumstances,
including if it fails to meet certain record keeping requirements intended
to monitor its compliance with rules relating to the composition of a
REIT's shareholders, as described below. (See "Requirements for
Qualification".) Seventh, if AIC acquires assets from a corporation that
was taxable pursuant to subchapter C of the Code (a "subchapter C
corporation") in a transaction in which the adjusted tax basis of the
assets in the hands of AIC is determined by reference to the adjusted tax
basis of such assets in the hands of the subchapter C corporation, under
Treasury Regulations that are yet to be issued, the subchapter C
corporation would be required to recognize any net built-in gain that would
have been realized if it had liquidated on the day before the date of the
transfer. Pursuant to IRS Notice 88-19, however, in lieu of taxation of the
transferor subchapter C corporation as described immediately above, AIC may
elect to be subject to tax at the highest corporate income tax rate then
applicable if it subsequently recognizes gain on the disposition of any
such assets during the ten-year period following their acquisition from the
subchapter C corporation. In addition, AIC could also be subject to tax in
certain situations and on certain transactions not presently contemplated.
Requirements for Qualification
The Code defines a REIT as a corporation, trust or association (1)
that is managed by one or more trustees or directors; (2) the beneficial
ownership of which is evidenced by transferable shares, or by transferable
certificates of beneficial interest; (3) which would be taxable as a
domestic corporation but for the special Code provisions applicable to
REITs; (4) that is neither a financial institution nor an insurance company
subject to certain provisions of the Code; (5) the beneficial ownership of
which is held by 100 or more persons; (6) in which, during the last half of
each taxable year, not more than 50% in value of the outstanding stock is
owned, directly or indirectly, by five or fewer "individuals" (as defined
in the Code to include certain entities); and (7) which meets certain other
tests described below (including with respect to the nature of its income
and assets). The Code provides that conditions (1) through (4) must be met
during the entire taxable year, and that condition (5) 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. AIC's Charter provides
certain restrictions regarding transfers of its shares, which provisions
are intended to assist AIC in satisfying the share ownership requirements
described in conditions (5) and (6) above.
To monitor AIC's compliance with the share ownership requirements,
AIC is generally required to maintain records regarding the actual
ownership of its shares. To do so, AIC must demand written statements each
year from the record holders of certain percentages of its stock in which
the record holders are to disclose the actual owners of the shares (i.e.,
the persons required to include in gross income the dividends paid by AIC).
A list of those persons failing or refusing to comply with this demand must
be maintained as part of AIC's records. Failure by AIC to comply with the
foregoing record keeping requirements could subject it to certain monetary
penalties, but would not, effective with respect to the 1998 taxable year
and thereafter, affect its qualification as a REIT. A stockholder who fails
or refuses to comply with the demand is required by Treasury Regulations to
submit a statement with its tax return disclosing the actual ownership of
the shares and certain other information.
In addition, a corporation generally may not elect to become a REIT
unless its taxable year is the calendar year. AIC satisfies this
requirement.
Ownership of Partnership Interests. In the case of a REIT that is a
partner in a partnership, Treasury Regulations provide that the REIT is
deemed to own its proportionate share of the partnership's assets, and to
earn its proportionate share of the partnership's income, for purposes of
the asset and gross income tests applicable to REITs as described below. In
addition, the assets and gross income of the partnership are deemed to
retain the same character in the hands of the REIT. Thus, AIC's
proportionate share of the assets, liabilities and items of income of the
partnerships and limited liability companies in which it has a direct or
indirect ownership interest, including the Operating Partnership
(collectively, the "Subsidiary Partnerships") will be treated as assets,
liabilities and items of income of AIC for purposes of applying the REIT
requirements described herein. A summary of certain rules governing the
federal income taxation of partnerships and their partners is provided
below in "Tax Aspects of AIC's Investments in Affiliated Entities -
Partnerships."
Wholly-Owned Subsidiaries. If a REIT owns a corporate subsidiary that
is a "qualified REIT subsidiary," that subsidiary is disregarded for
federal income tax purposes, and all assets, liabilities and items of
income, deduction and credit of the subsidiary are treated as assets,
liabilities and items of income, deduction and credit of the REIT itself,
including for purposes of the gross income and asset tests applicable to
REITs as described below. A qualified REIT subsidiary is any corporation
wholly owned by a REIT, or by other qualified REIT subsidiaries, or by a
combination of the two. AIC has several such wholly-owned corporate
subsidiaries. Similarly, a single member limited liability company owned by
AIC or by the Operating Partnership would also generally be disregarded as
a separate entity for federal income tax purposes.
Income Tests. In order to maintain qualification as a REIT, AIC
annually must satisfy two gross income requirements. First, at least 75% of
AIC's gross income (excluding gross income from sales of inventory or
dealer property in "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",
dividends received from other REITs, and certain interest income derived
from mortgage loans secured by real property), or from certain types of
temporary investments. Second, at least 95% of AIC's gross income
(excluding gross income from prohibited transactions) for each taxable year
must be derived from some combination of such income from investments in
real property, as well as other dividends, interest and gain from the sale
or disposition of stock or securities.
Rents received by AIC directly or through the Subsidiary Partnerships
will qualify as "rents from real property" in satisfying the gross income
requirements described above, only if several conditions are met, including
the following. 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."
Moreover, for rents received to qualify as "rents from real property," the
REIT generally must not operate or manage the property or furnish or render
services to the tenants of such property, other than through an
"independent contractor" from which the REIT derives no revenue. However,
AIC and its affiliates are permitted to directly perform services that are
"usually or customarily rendered" in connection with the rental of space
for occupancy only and are not otherwise considered rendered to the
occupant of the property. In addition, effective in 1998, AIC and its
affiliates may provide non-customary services to tenants of its properties
without disqualifying all of the rent from the property if the payment for
such services does not exceed 1% of the total gross income from the
property. For purposes of this test, the income received from such
non-customary services is deemed to be at least 150% of the direct cost of
providing the services. Rental income derived from any lessee that is an
entity will also qualify as rents from real property only to the extent
that AIC does not directly or indirectly hold a 10% or greater interest, as
measured by vote or value, in the lessee's equity.
To the extent that a REIT derives interest income from a mortgage
loan or income from the rental of real property where all or a portion of
the amount of interest or rental income payable is contingent, such income
generally will qualify for purposes of the gross income tests only if it is
based upon the gross receipts or sales, and not the net income or profits,
of the borrower or lessee. The foregoing limitation does not apply,
however, where the borrower or lessee leases substantially all of its
interest in the property to tenants (or subtenants), to the extent that the
rental income derived by the borrower or lessee, as the case may be, would
qualify as rents from real property had it been earned by a REIT. The
Company and CAX have made certain mortgage loans and entered into certain
ground leases (as lessor) in reliance upon the exception described in the
preceding sentence. Accordingly, the ability of AIC and CAX to treat the
income derived from these arrangements as income that qualifies for
purposes of the REIT gross income tests will depend, in part, upon the
character of the income generated by particular borrower or lessee, which
may not be within the control of AIC or CAX. As described below (see "Tax
Aspects of Investments in Affiliated Entities - CAX"), the ability of AIC
to qualify as a REIT will depend upon CAX's qualification as a REIT.
AIC indirectly receives distributions from certain corporations that
are not REITs or qualified REIT subsidiaries, including AICMHC and AIE
("Taxable Corporations"). Such distributions will be classified as dividend
income to the extent of the earnings and profits of the distributing
Taxable Corporation. Such distributions will generally constitute
qualifying income for purposes of the 95% gross income test, but not under
the 75% gross income test.
If AIC (or CAX) 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 will be generally available if AIC's (or
CAX's) failure to meet such tests was due to reasonable cause and not due
to willful neglect, AIC (or CAX) attaches a schedule of the sources of its
income to its return, and any incorrect information on the schedule was not
due to fraud with intent to evade tax. The tax opinion of Counsel as
described above, relating to the qualification of AIC as a REIT, is based
upon the application of these relief provisions in the event that the Trust
Notes are not treated as indebtedness for federal income tax purposes. See
"Taxation of AIC Tax Opinion." It is not possible to state whether AIC and
CAX would be entitled to the benefit of the foregoing relief provisions in
all circumstances. If these relief provisions are inapplicable to a
particular set of circumstances involving AIC or CAX, AIC and/or CAX will
not qualify as a REIT. As discussed above under "Taxation of AIC - Taxation
of REITs in General," even where these relief provisions apply, a tax would
be imposed upon the amount by which AIC (or CAX) fails to satisfy the
particular gross income test.
Asset Tests. AIC, at the close of each quarter of its taxable year,
must also satisfy three tests relating to the nature of its assets. First,
at least 75% of the value of AIC's total assets must be represented by some
combination of real estate assets (including its allocable share of real
estate assets held by the Subsidiary Partnerships, and stock of other
corporations that qualify as REITs), certain stock or debt instruments
purchased by the Company with new capital, cash, cash items, and U.S.
government securities. For this purpose, real estate assets include
interests in real property, and certain mortgage backed securities and
mortgage loans. Second, not more than 25% of AIC'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 AIC may not exceed 5% of the value of AIC's
total assets, and AIC may not own more than 10% of any one issuer's
outstanding voting securities.
AIC indirectly owns interests in certain Taxable Corporations,
including AICMHC and AIE. As set forth above, the ownership of more than
10% of the voting securities of any one issuer by a REIT or the investment
of more than 5% of the REIT's total assets in any one issuer's securities
is prohibited by the asset tests. AIC believes that its indirect ownership
interests in the Taxable Corporations qualify under these rules. However,
no independent appraisals have been obtained to support AIC's conclusions
as to the value of the Operating Partnership's total assets or the value of
the Operating Partnership's interest in the Taxable Corporations, and these
values are subject to change in the future. Accordingly, there can be no
assurance that the IRS will not contend that the Operating Partnership's
ownership interests in the Taxable Corporations disqualifies AIC from
treatment as a REIT.
As indicated above (see "- Wholly-Owned Subsidiaries"), a corporate
subsidiary of a REIT that is a qualified REIT subsidiary is disregarded for
federal income tax purposes. AIC's ownership of the voting stock of its
qualified REIT subsidiaries therefore does not violate the general
restriction against ownership of more than 10% of the voting securities of
any issuer.
Annual Distribution Requirements. AIC, in order to qualify as a REIT,
is required to distribute dividends (other than capital gain dividends) to
its stockholders in an amount at least equal to (A) the sum of (i) 95% of
AIC's "REIT taxable income" (computed without regard to the deduction for
dividends paid and AIC's net capital gain) and (ii) 95% of the net income
(after tax), if any, from foreclosure property, minus (B) the sum of
certain items of noncash income. Such distributions must be paid in the
taxable year to which they relate, or in the following taxable year if
declared before AIC timely files its tax return for such year and if paid
with or before the first regular dividend payment after such declaration.
To the extent that AIC distributes at least 95%, but less than 100%, of its
"REIT taxable income," as adjusted, it will be subject to tax thereon at
ordinary corporate tax rates. AIC may elect to retain, rather than
distribute, its net long-term capital gains and pay tax on such gains. In
such a case, AIC could elect to have its stockholders include their
proportionate share of such undistributed long-term capital gains in
income, and to receive a corresponding credit for their share of the tax
paid by AIC. AIC's stockholders would then increase the adjusted basis of
their AIC shares by the difference between the designated amounts included
in their long-term capital gains and the tax deemed paid with respect to
their shares. To the extent that AIC has available net operating losses and
capital losses carried forward from prior tax years, such losses may, in
part, reduce the amount of distributions that AIC must make in order to
comply with the REIT distribution requirements described in this paragraph.
However, such losses generally will not affect the character, in the hands
of stockholders, of any distributions that are actually made by AIC (which
are generally taxable to stockholders to the extent that AIC has current or
accumulated earnings and profits). See "Taxation of Stockholders - Taxation
of Taxable Domestic Stockholders - Distributions".
If AIC should fail to distribute during each calendar year (without
regard to distributions made in the following tax year but prior to the
filing of AIC's tax return) 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 (excluding retained long-term capital gains), and (iii) any
undistributed taxable income from prior periods, AIC would be subject to a
4% excise tax on the excess of such required distribution over the amounts
actually distributed. AIC believes that it has made, and intends to make,
timely distributions sufficient to satisfy this annual distribution
requirement.
It is possible that AIC, from time to time, may not have sufficient
cash to meet the 95% distribution requirement due to timing differences
between (i) the actual receipt of cash (including receipt of distributions
from the Operating Partnership), and (ii) the inclusion of certain items in
income by AIC for federal income tax purposes. In the event that such
timing differences occur, in order to meet the 95% distribution
requirement, AIC may find it necessary to arrange for short-term, or
possibly long-term, borrowings, or to pay dividends in the form of taxable
in-kind distributions of property.
Under certain circumstances, AIC may be able to rectify a failure to
meet the distribution requirement for a year by paying "deficiency
dividends" to stockholders in a later year, which may be included in AIC's
deduction for dividends paid for the earlier year. In such a case, AIC may
be able to avoid losing its REIT status or being taxed on amounts
distributed as deficiency dividends. However, AIC will be required to pay
interest and a penalty based on the amount of any such deduction taken for
deficiency dividends.
Absence of Earnings and Profits. The Code provides that when a REIT
acquires a corporation that is or was a subchapter C corporation, the
acquiror may qualify as a REIT only if, as of the close of the year of
acquisition, it has no "earnings and profits" acquired from such subchapter
C corporation. If AIC succeeds to the earnings and profits of a subchapter
C corporation in connection with an acquisition of its assets or otherwise,
it must distribute such earnings and profits effective on or before
December 31 of the year of such acquisition. Any adjustments to the
subchapter C corporation's income for taxable years ending on or before the
closing of such acquisition by AIC, including as a result of an examination
of its returns by the IRS, could affect the calculation of its earnings and
profits and thus AIC's ability to qualify as a REIT.
Failure to Qualify
If AIC fails to qualify for taxation as a REIT in any taxable year,
and the relief provisions do not apply, AIC will be subject to tax
(including any applicable alternative minimum tax) on its taxable income at
regular corporate rates. Distributions to stockholders in any year in which
AIC fails to qualify will not be deductible by AIC nor will they be
required to be made. In such event, to the extent of current and
accumulated earnings and profits, all distributions to stockholders will be
taxable as ordinary income, and, subject to certain limitations of the
Code, corporate distributees may be eligible for the dividends received
deduction. Unless AIC is entitled to relief under specific statutory
provisions, AIC would also be disqualified from taxation as a REIT for the
four taxable years following the year during which qualification was lost.
It is not possible to state whether in all circumstances AIC would be
entitled to such statutory relief.
TAX ASPECTS OF INVESTMENTS IN AFFILIATED ENTITIES
Partnerships
General. Substantially all of AIC's investments are held indirectly
through the Operating Partnership. In general, partnerships are
"pass-through" entities that are not subject to federal income tax. Rather,
partners are allocated their proportionate shares of the items of income,
gain, loss, deduction and credit of a partnership, and are potentially
subject to tax thereon, without regard to whether the partners receive a
distribution from the partnership. AIC will include in its income its
proportionate share of the foregoing partnership items for purposes of the
various REIT income tests and in the computation of its REIT taxable
income. Moreover, for purposes of the REIT asset tests, AIC will include
its proportionate share of assets held by the Operating Partnership and the
other Subsidiary Partnerships. See "Taxation of AIC Requirements for
Qualification - Ownership of Partnership Interests."
Entity Classification. AIC's direct and indirect investment in
partnerships involves special tax considerations, including the possibility
of a challenge by the IRS of the status of any of the Subsidiary
Partnerships as a partnership (as opposed to an association taxable as a
corporation) for federal income tax purposes. If any of these entities were
treated as an association for federal income tax purposes, it would be
taxable as a corporation and therefore subject to an entity-level tax on
its income. In such a situation, the character of AIC's assets and items of
gross income would change and could preclude AIC from satisfying the REIT
asset tests and/or the gross income tests (see "Taxation of AIC -
Requirements for Qualification Asset Tests" and "- Income Tests"), and in
turn could prevent AIC from qualifying as a REIT. See "Taxation of AIC -
Failure to Qualify", above, for a discussion of the effect of AIC's failure
to meet such tests for a taxable year. In addition, any change in the
status of any of the Subsidiary Partnerships for tax purposes might be
treated as a taxable event, in which case AIC might incur a tax liability
without any related cash distributions.
Tax Allocations with Respect to the Properties. Under the Code and
the Treasury Regulations, 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 for tax
purposes 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
Partnership has acquired its interest in certain properties by way of
contributions of appreciated property (including certain of the Direct
Properties), and may acquire additional properties in that manner in the
future. Consequently, allocations must be made in a manner consistent with
these requirements. Where a partner contributes cash to a partnership that
holds appreciated property, the Treasury Regulations provide for a similar
allocation of such items to the other (i.e., non-contributing) partners.
These rules apply to the contribution by AIC to the Operating Partnership
of the cash proceeds received in any offerings of its stock.
In general, certain holders of interests in the Operating Partnership
will be allocated lower amounts of depreciation deductions for tax purposes
and increased taxable income and gain on the sale by the Operating
Partnership or other Subsidiary Partnerships of contributed properties.
This will tend to eliminate the Book-Tax Difference over the life of these
partnerships. However, the special allocations do not always entirely
rectify 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 properties in the hands of the Operating Partnership or
other Subsidiary Partnerships may cause AIC to be allocated lower
depreciation and other deductions, and possibly greater 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 AIC to recognize taxable income in excess of cash proceeds, which
might adversely affect AIC's ability to comply with the REIT distribution
requirements. See "Taxation of AIC - Requirements for Qualification -
Annual Distribution Requirements."
With respect to any property purchased or to be purchased by any of
the Subsidiary Partnerships (other than through the issuance of interests
in the acquiring partnership) subsequent to the formation of AIC, such
property will initially have a tax basis equal to its fair market value,
and the special allocation provisions described above will not apply.
Sale of the Properties. AIC's share of any gain realized by the
Operating Partnership or any other Subsidiary Partnership on the sale of
any property held as inventory or primarily for sale to customers in the
ordinary course of business will be treated as income from a prohibited
transaction that is subject to a 100% penalty tax. See "Taxation of AIC -
Taxation of REITs in General." Under existing law, whether property is held
as inventory or primarily for sale to customers in the ordinary course of a
trade or business is a question of fact that depends upon all of the facts
and circumstances with respect to the particular transaction. The Operating
Partnership and the other Subsidiary Partnerships generally intend to hold
their interests in the Direct Properties for investment with a view to
long-term appreciation, to engage in the business of acquiring, developing,
owning, operating, financing and leasing the Direct Properties, and to make
such occasional sales of the Direct Properties, including peripheral land,
as are consistent with AIC's investment objectives.
Taxable Corporations
A portion of the amounts to be used to fund distributions to
stockholders of AIC is expected to come from distributions made by certain
Taxable Corporations, including AICMHC and AIE, to the Operating
Partnership, and interest paid by Taxable Corporations on certain notes
held by the Operating Partnership. In general, Taxable Corporations pay
federal, state and local income taxes on their taxable income at normal
corporate rates. Any federal, state or local income taxes that the Taxable
Corporations are required to pay may reduce AIC's cash flow from operating
activities and its ability to make payments to holders of its Securities.
In order for AIC to qualify as a REIT, as of the end of each calendar
quarter, the value of its direct or indirect interest in any Taxable
Corporation generally may not exceed 5% of the value of its total assets,
and AIC may not directly or indirectly own more than 10% of the outstanding
voting securities of any Taxable Corporation. See "Taxation of AIC
Requirements for Qualification - Asset Tests". AIC believes that it has
satisfied both the 5% and the 10% asset requirements as they relate to the
Company's interests in Taxable Corporations, and AIC intends to monitor
these interests so that the value of securities of any one issuer do not
exceed 5% of AIC's total assets. However, no assurance can be given that
the relative values of the Company's assets will not change, or that they
will be accepted by the IRS.
Wholly-Owned Corporations
As described above (see "Taxation of AIC - Requirements for
Qualification - Wholly- Owned Subsidiaries"), a corporation that is
wholly-owned by a REIT and constitutes a qualified REIT subsidiary is
generally disregarded for federal income tax purposes. In the event that a
qualified REIT subsidiary of AIC ceases to be wholly owned, for example if
any equity interest in the subsidiary is acquired by a person other than
AIC or another qualified REIT subsidiary of AIC, the subsidiary could no
longer be treated as a qualified REIT subsidiary. Such an event could, in
turn, adversely affect AIC's ability to satisfy the various asset and gross
income requirements applicable to REITs, including the requirement that a
REIT may not own, directly or indirectly, more than 10% of the voting
securities of a Taxable Corporation. See "Taxation of AIC - Requirements
for Qualification - Asset Tests" and "- Income Tests".
CAX
Stock of a corporation that qualifies as a REIT is treated, in the
hands of a shareholder that is a REIT, as a qualifying interest in real
property for purposes of the asset tests applicable to the shareholder
REIT, and any dividend income derived from such stock is treated as
qualifying income of the shareholder for purposes of the 95% and 75% gross
income requirements described above. See "Taxation of AIC - Requirements of
Qualification - Asset Tests" and "- Income Tests". AIC holds approximately
27% of the outstanding stock of CAX, a public corporation which has elected
to be taxed as a REIT.
CAX, as a separate REIT, is subject to all of the same REIT
qualification requirements that apply to AIC, as described above. See
"Taxation of AIC Requirements for Qualification". In the event that CAX
were to fail to qualify as a REIT, or were to terminate its election to be
taxed as a REIT, this would alter the composition of AIC's income and
assets and would preclude AIC from qualifying as a REIT. The qualification
of CAX, and hence AIC, as a REIT, depends upon either (1) the Trust Notes
qualifying as indebtedness for federal income tax purposes, or (2) the
availability of relief on the basis of reasonable cause in the event of any
resultant failure of CAX to satisfy the gross income tests applicable to
REITs. See "Taxation of AIC - Tax Opinion", and "Taxation of AIC -
Requirements for Qualification - Income Tests."
TAXATION OF STOCKHOLDERS
Taxation of Taxable Domestic Stockholders
Distributions. Provided that AIC qualifies as a REIT, distributions
made to its taxable domestic stockholders out of current or accumulated
earnings and profits (and not designated as capital gain dividends) will be
taken into account by them as ordinary income and will not be eligible for
the dividends received deduction for corporations. Distributions that are
designated as capital gain dividends will be taxed to shareholders as
long-term capital gains (to the extent that they do not exceed AIC's actual
net capital gain for the taxable year), without regard to the period for
which the stockholder has held its stock. A similar treatment will apply to
long-term capital gains retained by AIC, to the extent that AIC elects the
application of recently enacted provisions of the Code that treat
stockholders of a REIT as having received, for federal income tax purposes,
undistributed capital gains of the REIT, while passing through to
stockholders a corresponding credit for taxes paid by the REIT on such
retained capital gains. Corporate stockholders may be required to treat up
to 20% of certain capital gain dividends as ordinary income.
Distributions in excess of current and accumulated earnings and
profits will not be taxable to a stockholder to the extent that they do not
exceed the adjusted basis of the stockholder's shares in respect of which
the distributions were made, but rather, will reduce the adjusted basis of
such shares. To the extent that such distributions exceed the adjusted
basis of a stockholder's shares in respect of which the distributions were
made, they will be included in income as long-term capital gain (or
short-term capital gain if the shares have been held for one year or less),
provided that the shares are a capital asset in the hands of the
stockholder. In addition, any dividend declared by AIC in October, November
or December of any year and payable to a stockholder of record on a
specified date in any such month shall be treated as both paid by AIC and
received by the stockholder on December 31 of such year, provided that the
dividend is actually paid by AIC before the end of January of the following
calendar year.
To the extent that AIC has available net operating losses and capital
losses carried forward from prior tax years, such losses may reduce the
amount of distributions that AIC must make in order to comply with the REIT
distribution requirements. See "Taxation of AIC Requirements for
Qualification - Annual Distribution Requirements". Such losses, however,
are not passed through to stockholders and do not offset income of
stockholders from other sources, nor would they affect the character of any
distributions that are actually made by AIC, which are generally subject to
tax in the hands of stockholders to the extent that AIC has current or
accumulated earnings and profits.
Dispositions of AIC Stock. In general, under the recently enacted
Internal Revenue Service Restructuring and Reform Act of 1998, capital
gains recognized by individuals and other non-corporate stockholders upon
the sale or disposition of shares of AIC stock will be subject to a maximum
federal income tax rate of 20% if the AIC stock is held for more than 12
months, and will be taxed at ordinary income rates if the AIC stock is held
for 12 months or less. Capital losses recognized by a stockholder upon the
disposition of AIC stock held for more than one year at the time of
disposition will be considered long-term capital losses. In addition, any
loss upon a sale or exchange of shares of AIC stock by a stockholder 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 of
distributions received from AIC that are required to be treated by such
stockholder as long-term capital gain.
Taxation of Foreign Stockholders
The following is a discussion of certain anticipated United States
federal income and estate tax consequences of the ownership and disposition
of AIC stock applicable to Non-U.S. Holders of AIC stock. A "Non-U.S.
Holder" is any person other than (i) a citizen or resident of the United
States, (ii) a corporation or partnership created or organized in the
United States or under the laws of the United States or of any state
thereof or the District of Columbia, (iii) an estate whose income is
includable in gross income for U.S. federal income tax purposes regardless
of its source, or (iv) a trust if a United States court is able to exercise
primary supervision over the administration of such trust and one or more
United States fiduciaries have the authority to control all substantial
decisions of such trust. The discussion is based on current law and is for
general information only. The discussion addresses only certain and not all
aspects of United States federal income and estate taxation.
Ordinary Dividends. The portion of dividends received by Non-U.S.
Holders payable out of AIC's earnings and profits which are not
attributable to capital gains of AIC and which are not effectively
connected with a U.S. trade or business of the Non-U.S. Holder will be
subject to U.S. withholding tax at the rate of 30% (unless reduced by
treaty). In general, Non- U.S. Holders will not be considered engaged in a
U.S. trade or business solely as a result of their ownership of AIC stock.
In cases where the dividend income from a Non-U.S. Holder's investment in
AIC stock is (or is treated as) effectively connected with the Non-U.S.
Holder's conduct of a U.S. trade or business, the Non-U.S. Holder generally
will be subject to U.S. tax at graduated rates, in the same manner as
domestic stockholders are taxed with respect to such dividends (and may
also be subject to the 30% branch profits tax in the case of a Non-U.S.
Holder that is a corporation).
Non-Dividend Distributions. Unless AIC stock constitutes a United
States Real Property Interest (a "USRPI"), distributions by AIC which are
not dividends out of the earnings and profits of AIC will not be subject to
U.S. income or withholding tax. In general, except as described below (see
"Taxation of Stockholders - Taxation of Foreign Stockholders Dispositions
of AIC Stock"), a USRPI includes the stock of a corporation if 50% or more
of the corporation's assets, by value, at any time within a prescribed
testing period, consist of certain direct or indirect interests in real
property located within the United States. If it cannot be determined at
the time at which a distribution is made whether or not such distribution
will exceed current and accumulated earnings and profits, the distribution
will be subject to withholding at the rate applicable to dividends.
However, the Non-U.S. Holder may seek a refund of such amounts from the IRS
if it is subsequently determined that such distribution was, in fact, in
excess of current and accumulated earnings and profits of AIC. If AIC stock
constitutes a USRPI, distributions by AIC in excess of the sum of its
earnings and profits plus and the stockholder's basis in its AIC stock will
be taxed pursuant to the Foreign Investment in Real Property Tax Act of
1980 ("FIRPTA") at the rate of tax (including any applicable capital gains
rates) that would apply to a domestic stockholder of the same type (e.g. an
individual or a corporation, as the case may be), and the collection of
such tax will be enforced by a refundable withholding at a rate of 10% of
the amount by which the distribution exceeds the stockholder's share of
AIC's earnings and profits.
Capital Gain Dividends. Under FIRPTA, a distribution made by AIC to a
Non-U.S. Holder, to the extent attributable to gains from dispositions of
USRPIs such as the properties beneficially owned by AIC ("USRPI Capital
Gains"), will be considered effectively connected with a U.S. trade or
business of the Non-U.S. Holder and subject to U.S. income tax at the rates
applicable to U.S. individuals or corporations, without regard to whether
such distribution is designated as a capital gain dividend. In addition,
AIC will be required to withhold tax equal to 35% of the amount of
dividends to the extent such dividends constitute USRPI Capital Gains.
Distributions subject to FIRPTA may also be subject to a 30% branch profits
tax in the hands of Non-U.S. Holder that is a corporation.
Dispositions of AIC Stock. Unless AIC stock constitutes a USRPI, a
sale of such stock by a Non-U.S. Holder generally will not be subject to
U.S. taxation under FIRPTA. The stock will not constitute a USRPI if AIC is
a "domestically controlled REIT." A domestically controlled REIT is a REIT
in which, at all times during a specified testing period, less than 50% in
value of its shares is held directly or indirectly by Non-U.S. Holders. AIC
believes that it is, and it expects to continue to be, a domestically
controlled REIT and, therefore, the sale of AIC stock should not be subject
to taxation under FIRPTA. Because AIC's Common Stock is publicly traded,
however, no assurance can be given that AIC is or will continue to be a
domestically controlled REIT.
Even if AIC does not constitute a domestically controlled REIT, a
Non-U.S. Holder's sale of stock nonetheless will generally not be subject
to tax under FIRPTA as a sale of a USRPI, provided that (i) the stock is
"regularly traded" (as defined by applicable Treasury Regulations) on an
established securities market (e.g., the NYSE, on which AIC Common Stock is
listed), and (ii) the selling Non-U.S. Holder held 5% or less of AIC's
outstanding stock at all times during a specified testing period.
If gain on the sale of stock of AIC were subject to taxation under
FIRPTA, the Non-U.S. Holder would be subject to the same treatment as a
U.S. stockholder with respect to such gain (subject to applicable
alternative minimum tax and a special alternative minimum tax in the case
of nonresident alien individuals), and the purchaser of the stock could be
required to withhold 10% of the purchase price and remit such amount to the
IRS.
Gain from the sale of AIC stock that would not otherwise be subject
to FIRPTA will nonetheless be taxable in the United States to a Non-U.S.
Holder in two cases: (i) if the Non- U.S. Holder's investment in the AIC
stock is effectively connected with a U.S. trade or business conducted by
such Non-U.S. Holder, the Non-U.S. Holder will be subject to the same
treatment as a U.S. stockholder with respect to such gain, or (ii) if the
Non-U.S. Holder is a nonresident alien individual who was present in the
United States for 183 days or more during the taxable year and has a "tax
home" in the United States, the nonresident alien individual will be
subject to a 30% tax on the individual's capital gain.
Estate Tax. AIC stock owned or treated as owned by an individual who
is not a citizen or resident (as specially defined for U.S. federal estate
tax purposes) of the United States at the time of death will be includable
in the individual's gross estate for U.S. federal estate tax purposes,
unless an applicable estate tax treaty provides otherwise. Such
individual's estate may be subject to U.S. federal estate tax on the
property includable in the estate for U.S. federal estate tax purposes.
Information Reporting Requirements and Backup Withholding
AIC will report to its U.S. stockholders and to the IRS the amount of
distributions paid during each calendar year, and the amount of tax
withheld, if any. Under the backup withholding rules, a stockholder may be
subject to backup withholding at the rate of 31% with respect to
distributions 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 as to no loss
of exemption from backup withholding, and otherwise complies with the
applicable requirements of the backup withholding rules. A stockholder who
does not provide AIC with his correct taxpayer identification number also
may be subject to penalties imposed by the IRS. Any amount paid as backup
withholding will be creditable against the stockholder's income tax
liability.
In addition, AIC may be required to withhold a portion of capital
gain distributions to any Non-U.S. Holders who fail to certify their
foreign status to AIC. The IRS has issued final Treasury Regulations
regarding the backup withholding rules as applied to Non-U.S. Holders.
Those final Treasury Regulations alter the current system of backup
withholding compliance and will be effective for payments made after
December 31, 1999. Prospective investors in Securities should consult their
tax advisors regarding the application of these Treasury Regulations.
Taxation of Tax-Exempt Stockholders
Tax-exempt entities, including qualified employee pension and profit
sharing trusts and individual retirement accounts ("Exempt Organizations"),
generally are exempt from federal income taxation. However, they are
subject to taxation upon their unrelated business taxable income ("UBTI").
While many investments in real estate generate UBTI, the IRS has ruled that
dividend distributions from a REIT to an exempt employee pension trust do
not constitute UBTI, provided that the shares of the REIT are not otherwise
used in an unrelated trade or business of the exempt employee pension
trust. Based on that ruling, amounts distributed by AIC to Exempt
Organizations should generally not constitute UBTI. However, if an Exempt
Organization finances its acquisition of the AIC stock with debt, a portion
of its income from AIC may constitute UBTI pursuant to the "debt-financed
property" rules.
OTHER TAX CONSIDERATIONS
POSSIBLE LEGISLATIVE OR OTHER ACTIONS AFFECTING REITS
The rules dealing with federal income taxation are constantly under
review by persons involved in the legislative process and by the IRS and
the U.S. Treasury Department. Changes to the federal laws and
interpretations thereof could adversely affect an investment in AIC. For
example, a proposal issued by President Clinton on February 2, 1998, if
enacted into law, may adversely affect the ability of AIC to expand the
present activities of Taxable Corporations or similarly structured
affiliates in which the Company holds, or may in the future hold, an
interest. It cannot be predicted whether, when, in what forms, or with what
effective dates, the tax laws applicable to AIC, or an investment therein,
will be changed.
STATE, LOCAL AND FOREIGN TAXES
AIC and its stockholders may be subject to state, local or foreign
taxation in various jurisdictions, including those in which it or they
transact business, own property or reside. The Company owns properties
located in a number of states and local jurisdictions, and may be required
to file tax returns in some or all of those jurisdictions. The state, local
or foreign tax treatment of AIC and its stockholders may not conform to the
federal income tax treatment discussed above. Consequently, prospective
investors should consult their own tax advisors regarding the application
and effect of state, local and foreign income and other tax laws on an
investment in the Securities.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the SEC. You may read and copy any document we file
at the SEC's public reference rooms in Washington, D.C., New York, New York
and Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further
information on the public reference rooms. Our SEC filings are also
available to the public at the SEC's web site at http://www.sec.gov.
The SEC allows us to "incorporate by reference" the information we
file with them, which means that we can disclose important information to
you by referring you to those documents. The information incorporated by
reference is considered to be part of this prospectus, and later
information filed with the SEC will update and supersede this information.
We incorporate by reference the documents listed below and any future
filings made with the SEC under Section 13(a), 13(c), 14 or 15 of the
Securities Exchange Act of 1934 until our offering is completed.
(i) Annual Report on Form 10-K for the year ended December
31, 1997;
(ii) Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1998 (as amended by Amendment No. 1 filed
August 14, 1998), June 30, 1998 and September 30, 1998;
and
(iii) Current Reports on Form 8-K dated January 31, 1998,
February 27, 1998 (as amended by Amendment No. 1 filed
May 13, 1998), May 29, 1998 (as amended by Amendment No.
1 filed July 29, 1998) and July 16, 1998 (as amended by
Amendment No. 1 filed September 28, 1998).
You may request a copy of these filings, at no cost, by writing or
calling us at the following address and telephone number:
Asset Investors Corporation
3410 South Galena Street, Suite 210
Denver, Colorado 80231
(303) 614-9400
LEGAL MATTERS
The validity of the Securities offered hereby and the shares of
Common Stock to be offered hereby by the Selling Stockholders will be
passed upon for AIC and the Selling Stockholders, as applicable, by Piper &
Marbury L.L.P., Baltimore, Maryland. Certain matters as to Maryland law
will be passed upon for AIC by Piper& Marbury L.L.P.
EXPERTS
The consolidated financial statements and schedules of Asset
Investors Corporation, and the financial statements of Commercial Assets,
Inc.,in each case included in AIC's Annual Report on Form 10-K for the year
ended December 31, 1997, and (i) the Statements of Excess of Revenues over
Specific Operating Expenses of Salem Farm Manufactured Home Community and
Mullica Woods Adult Community, in each case for the year ended December 31,
1997, included in Amendment No. 1 to AIC's Current Report on Form 8-K filed
May 13, 1998; (ii) the Statements of Excess of Revenues over Specific
Operating Expenses of Brentwood West Manufactured Home Community and
Serendipity Manufactured Home Community, in each case for the year ended
December 31, 1997, included in Amendment No. 1 to AIC's Current Report on
Form 8-K filed July 29, 1998; and (iii) the Statements of Excess of
Revenues over Specific Operating Expenses of the Gulfstream Harbor
Manufactured Home Communities, for the year ended December 31, 1997,
included in Amendment No. 1 to AIC's Current Report on Form 8-K filed
September 28, 1998, have, in all cases, been audited by Ernst & Young LLP,
independent auditors, as set forth in their reports thereon included
therein, respectively, and incorporated herein by reference. Such
consolidated and combined financial statements and Statements of Excess of
Revenues over Specific Operating Expenses, respectively, are incorporated
herein by reference in reliance upon such reports given upon the authority
of such firm as experts in accounting and auditing.
Any financial statements and schedules hereafter filed by AIC
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act and
incorporated by reference in this Prospectus that have been examined and
are the subject of a report by independent accountants will be so
incorporated herein by reference in reliance upon such reports given and
upon the authority of such firms as experts in accounting and auditing to
the extent covered by consents filed with the Commission.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTIONS.
The estimated expenses, other than underwriting discounts and
commissions, in connection with the offering of the Securities, are as
follows:
Registration Fee - Securities and
Exchange Commission $ 66,375
Printing and Engraving Expenses 125,000
Legal Fees and Expenses (other than
Blue Sky) 600,000
Accounting Fees and Expenses 75,000
Blue Sky Fees and Expenses (including
fees of counsel) 20,000
Trustee's and registrar's fees and expenses 5,000
NASD Transaction Fees 6,750
Miscellaneous 10,000
--------
TOTAL $908,125
========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
AIC's Charter limits the liability of AIC's directors and officers to
AIC and its stockholders to the fullest extent permitted from time to time
by Maryland law. Maryland law presently permits the liability of directors
and officers to a corporation or its stockholders for money damages to be
limited, except (i) to the extent that it is proved that the director or
officer actually received an improper benefit or profit in money, property
or services for the amount of the benefit or profit in money, property or
services actually received, or (ii) if a judgment or other final
adjudication is entered in a proceeding based on a finding that the
director's or officer's action, or failure to act, was the result of active
and deliberate dishonesty and was material to the cause of action
adjudicated in the proceeding. This provision does not limit the ability of
AIC or its stockholders to obtain other relief, such as an injunction or
rescission.
The Charter and AIC's Bylaws require AIC to indemnify its directors
and officers and permits AIC to indemnify certain other parties to the
fullest extent permitted from time to time by Maryland law. The MGCL
permits a corporation to indemnify its directors, officers and
certain other parties against judgments, penalties, fines, settlements and
reasonable expenses actually incurred by them in connection with any
proceeding to which they may be made a party by reason of their service to
or at the request of the corporation, unless it is established that (i) the
act or omission of the indemnified party was material to the matter giving
rise to the proceeding and (x) was committed in bad faith or (y) was the
result of active and deliberate dishonesty, (ii) the indemnified party
actually received an improper personal benefit in money, property or
services or (iii) in the case of any criminal proceeding, the indemnified
party had reasonable cause to believe that the act or omission was
unlawful. Indemnification may be made against judgments, penalties, fines,
settlements and reasonable expenses actually incurred by the director or
officer in connection with the proceeding; provided, however, that if the
proceeding is one by or in the right of the corporation, indemnification
may not be made with respect to any proceeding in which the director or
officer has been adjudged to be liable to the corporation. In addition, a
director or officer may not be indemnified with respect to any proceeding
charging improper personal benefit to the director or officer in which the
director or officer was judged to be liable on the basis that personal
benefit was improperly received. The termination of any proceeding by
conviction, or upon a plea of nolo contendere or its equivalent, or an
entry of any order of probation prior to judgment, creates a rebuttable
presumption that the director or officer did not meet the requisite
standard of conduct required for indemnification to be permitted. It is the
position of the Securities and Exchange Commission that indemnification of
directors and officers for liabilities arising under the Securities Act is
against public policy and is unenforceable pursuant to Section 14 of the
Securities Act.
AIC has entered into agreements with certain of its officers,
pursuant to which AIC has agreed to indemnify such officers to the fullest
extent permitted by applicable law.
The Agreement of Limited Partnership of the Operating Partnership
(the "Operating Partnership Agreement") also provides for indemnification
of AIC, and any director, officer or shareholder of AIC, as set forth in
the Operating Partnership Agreement.
ITEM 16. EXHIBITS.
**1.1 Form of Underwriting Agreement for Debt Securities.
**1.2 Form of Underwriting Agreement for Preferred Stock.
**1.3 Form of Underwriting Agreement for Common Stock.
**1.4 Form of Underwriting Agreement for Warrants.
4.1 Form of Senior Debt Securities Indenture (including form of Note).
4.2 Form of Senior Subordinated Debt Securities Indenture (including
form of Note).
4.3 Form of Subordinated Debt Securities Indenture (including form of
Note).
**4.4 Form of Warrant Agreement (including form of Warrant Certificate).
**4.5 Form of Preferred Stock Certificate.
***4.6 Specimen certificate for Common Stock.
5.1 Opinion of Piper & Marbury L.L.P. regarding the validity of the
securities offered hereby.
8.1 Opinion of Skadden, Arps, Slate, Meagher & Flom LLP regarding tax
matters.
12.1 Computation of ratio of earnings to fixed charges.
23.1 Consent of Ernst & Young LLP.
23.2 Consent of Skadden, Arps, Slate, Meagher &
Flom LLP (included in their opinion filed as Exhibit 8.1).
23.3 Consent of Piper & Marbury L.L.P. (included in their opinion filed
as Exhibit 5.1).
24 Power of Attorney (included on page II-5).
**25.1 Statement of Eligibility and Qualification of Trustee under the
Senior Debt Securities Indenture.
**25.2 Statement of Eligibility and Qualification of Trustee under the
Senior Subordinated Debt Securities Indenture.
**25.3 Statement of Eligibility and Qualification of Trustee under the
Subordinated Debt Securities Indenture.
- ---------------
* Filed previously.
** To be filed by amendment or incorporated by reference prior to the
offering of Securities.
*** Incorporated by reference from AIC's Annual Report on Form 10-K filed
on December 31, 1988.
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;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar
value of securities offered would not exceed that
which was registered) and any deviation from the low or high
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% change in the maximum
aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration
statement;
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)
(ii) shall 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 registrant pursuant to section 13 or section
15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, 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.
(b) The undersigned registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act of 1933, each filing
of the registrant's annual report pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement 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.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing provisions,
or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
the payment by the registrant of expenses incurred or paid by a
director, officer or controlling person of the registrant in the successful
defense of any action, suit, or proceeding) is asserted by such director,
officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.
(d) The undersigned registrant hereby undertakes to file an
application for the purpose of determining the eligibility of the trustee
to act under subsection (a) of Section 310 of the Trust Indenture Act in
accordance with the rules and regulations prescribed by the Commission
under Section 305(b) (2) of the Trust Indenture Act.
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints
Terry Considine and David M. Becker his or her true and lawful
attorney-in-fact and agents, each acting alone, with full power of
substitution and resubstitution, for him or her and in his or her name,
place and stead, in any and all capacities, to sign any or all amendments
(including post-effective amendments) to this Registration Statement, and
to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents, each acting alone, full power and
authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he or she might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, each acting alone,
or his or her substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
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 this Form S-3 and has duly
caused this Amendment No. 1 to the Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of
Denver, State of Colorado, on the 31st day of December, 1998.
ASSET INVESTORS CORPORATION
By: /s/ David M. Becker
----------------------------------
Name: David M. Becker
Title:Chief Financial Officer
and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 1 to the Registration Statement on Form S-3 has been signed
below by the following persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
/s/ Terry Considine Chairman of the Board of December 31, 1998
- ---------------------- Directors and Chief Executive
Terry Considine Officer
/s/ Thomas L. Rhodes Vice Chairman of the Board of December 31, 1998
- ---------------------- Directors
Thomas L. Rhodes
/s/ Bruce E. Moore President, Chief Operating December 31, 1998
- ---------------------- Officer and Director
Bruce E. Moore
/s/ David M. Becker Chief Financial Officer and December 31, 1998
- ---------------------- Secretary
David M. Becker
/s/ Elliot H. Kline Director December 31, 1998
- ----------------------
Elliot H. Kline
/s/ Richard L. Robinson
- ----------------------- Director December 31, 1998
Richard L. Robinson
/s/ Tim Shultz
- ---------------------- Director December 31, 1998
Tim Shultz
/s/ Bruce D. Benson Director December 31, 1998
- ---------------------
Bruce D. Benson
/s/ William J. White
- ----------------------- Director December 31, 1998
William J. White
EXHIBIT 4.1
ASSET INVESTORS CORPORATION
SENIOR DEBT SECURITIES
INDENTURE
Dated as of __________
UNITED STATES TRUST COMPANY OF NEW YORK,
Trustee
<PAGE>
CROSS REFERENCE TABLE(1)
TIA INDENTURE
SECTION SECTION
------- ---------
310 (a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . 7.8; 7.10
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(a)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(a)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(a)(5) . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.8; 7.10
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A
311 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.11
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.11
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
312 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.7
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.3
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.3
313 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.6
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.6
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.6; 12.2
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.6
314 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2; 12.2
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(c)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . 12.4
(c)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . 12.4
(c)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.5
(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3
315 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.5; 12.2
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.11
316 (a)(1)(A) . . . . . . . . . . . . . . . . . . . . . . . . . 6.5
(a)(1)(B) . . . . . . . . . . . . . . . . . . . . . . . . . 6.4
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.7
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
317 (a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . 6.8
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . 6.9
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.6
318 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.1
------------------
(1) Note: This Cross Reference Table shall not, for any purpose, be
deemed to be part of the Indenture.
<PAGE>
TABLE OF CONTENTS(2)
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.2 Other Definitions . . . . . . . . . . . . . . . . . . . 5
SECTION 1.3 Incorporation by Reference of Trust Indenture Act . . . 5
SECTION 1.4 Rules of Construction. . . . . . . . . . . . . . . . . . 6
--------------------
(2) Note: This Table of Contents shall not, for any reason, be deemed
to be part of the Indenture.
ARTICLE II
THE SECURITIES
SECTION 2.1 Forms Generally. . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.2 Securities in Global Form. . . . . . . . . . . . . . . . 7
SECTION 2.3 Title, Terms and Denominations. . . . . . . . . . . . . 8
SECTION 2.4 Execution, Authentication, Delivery and Dating . . . . . 10
SECTION 2.5 Registrar and Paying Agent. . . . . . . . . . . . . . . 13
SECTION 2.6 Paying Agent to Hold Money and Securities in Trust. . . 14
SECTION 2.7 Securityholder Lists. . . . . . . . . . . . . . . . . . 14
SECTION 2.8 Transfer and Exchange. . . . . . . . . . . . . . . . . . 14
SECTION 2.9 Replacement Securities. . . . . . . . . . . . . . . . . 17
SECTION 2.10 Outstanding Securities; Determinations of Holders'
Action . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 2.11 Temporary Securities . . . . . . . . . . . . . . . . . . 19
SECTION 2.12 Cancellation . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 2.13 Payment of Interest; Interest Rights Preserved . . . . . 20
SECTION 2.14 Persons Deemed Owners . . . . . . . . . . . . . . . . . 21
SECTION 2.15 Computation of Interest . . . . . . . . . . . . . . . . 21
ARTICLE III
REDEMPTION
SECTION 3.1 Right to Redeem; Notices to Trustee. . . . . . . . . . . 21
SECTION 3.2 Selection of Securities to be Redeemed. . . . . . . . . 22
SECTION 3.3 Notice of Redemption. . . . . . . . . . . . . . . . . . 22
SECTION 3.4 Effect of Notice of Redemption. . . . . . . . . . . . . 23
SECTION 3.5 Deposit of Redemption Price. . . . . . . . . . . . . . . 23
SECTION 3.6 Securities Redeemed in Part. . . . . . . . . . . . . . . 23
ARTICLE IV
COVENANTS
SECTION 4.1 Payment of Securities. . . . . . . . . . . . . . . . . . 24
SECTION 4.2 SEC Reports. . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 4.3 Compliance Certificate. . . . . . . . . . . . . . . . . 24
SECTION 4.4 Further Instruments and Acts. . . . . . . . . . . . . . 24
SECTION 4.5 Maintenance of Office or Agency. . . . . . . . . . . . . 24
ARTICLE V
SUCCESSOR CORPORATION
SECTION 5.1 When Company May Merge or Transfer Assets. . . . . . . . 25
ARTICLE VI
DEFAULTS AND REMEDIES
SECTION 6.1 Events of Default. . . . . . . . . . . . . . . . . . . . 26
SECTION 6.2 Acceleration. . . . . . . . . . . . . . . . . . . . . . 27
SECTION 6.3 Other Remedies. . . . . . . . . . . . . . . . . . . . . 28
SECTION 6.4 Waiver of Past Defaults. . . . . . . . . . . . . . . . . 28
SECTION 6.5 Control by Majority. . . . . . . . . . . . . . . . . . . 28
SECTION 6.6 Limitation on Suits. . . . . . . . . . . . . . . . . . . 29
SECTION 6.7 Rights of Holders to Receive Payment. . . . . . . . . . 29
SECTION 6.8 Collection Suit by Trustee. . . . . . . . . . . . . . . 29
SECTION 6.9 Trustee May File Proofs of Claim. . . . . . . . . . . . 30
SECTION 6.10 Priorities . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 6.11 Undertaking for Costs . . . . . . . . . . . . . . . . . 31
SECTION 6.12 Waiver of Stay, Extension or Usury Laws . . . . . . . . 31
ARTICLE VII
TRUSTEE
SECTION 7.1 Duties of Trustee. . . . . . . . . . . . . . . . . . . . 32
SECTION 7.2 Rights of Trustee. . . . . . . . . . . . . . . . . . . . 33
SECTION 7.3 Individual Rights of Trustee, etc. . . . . . . . . . . . 33
SECTION 7.4 Trustee's Disclaimer. . . . . . . . . . . . . . . . . . 33
SECTION 7.5 Notice of Defaults. . . . . . . . . . . . . . . . . . . 33
SECTION 7.6 Reports by Trustee to Holders. . . . . . . . . . . . . . 34
SECTION 7.7 Compensation and Indemnity. . . . . . . . . . . . . . . 34
SECTION 7.8 Replacement of Trustee. . . . . . . . . . . . . . . . . 35
SECTION 7.9 Successor Trustee by Merger. . . . . . . . . . . . . . . 36
SECTION 7.10 Eligibility; Disqualification . . . . . . . . . . . . . 36
SECTION 7.11 Preferential Collection of Claims Against Company. . . . 37
ARTICLE VIII
SATISFACTION AND DISCHARGE
SECTION 8.1 Discharge of Liability on Securities. . . . . . . . . . 37
SECTION 8.2 Repayment to the Company. . . . . . . . . . . . . . . . 37
SECTION 8.3 Option to Effect Defeasance or Covenant Defeasance. . . 38
SECTION 8.4 Defeasance and Discharge. . . . . . . . . . . . . . . . 38
SECTION 8.5 Covenant Defeasance. . . . . . . . . . . . . . . . . . . 38
SECTION 8.6 Condition to Defeasance or Covenant Defeasance. . . . . 39
ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 9.1 Supplemental Indentures without Consent of Holders. . . 39
SECTION 9.2 Supplemental Indentures with Consent of Holders. . . . . 40
SECTION 9.3 Compliance with Trust Indenture Act. . . . . . . . . . . 41
SECTION 9.4 Revocation and Effect of Consents, Waivers and
Actions . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 9.5 Notation on or Exchange of Securities. . . . . . . . . . 41
SECTION 9.6 Trustee to Sign Supplemental Indentures. . . . . . . . . 42
SECTION 9.7 Effect of Supplemental Indentures. . . . . . . . . . . . 42
ARTICLE X
SINKING FUNDS
SECTION 10.1 Applicability of Article . . . . . . . . . . . . . . . . 42
SECTION 10.2 Satisfaction of Sinking Fund Payments with
Securities . . . . . . . . . . . . . . . . . . . . . 42
SECTION 10.3 Redemption of Securities for Sinking Fund . . . . . . . 43
ARTICLE XI
ACTIONS OF HOLDERS OF SECURITIES
SECTION 11.1 Purposes for which Meetings may be Called . . . . . . . 43
SECTION 11.2 Call, Notice and Place of Meetings . . . . . . . . . . . 43
SECTION 11.3 Persons Entitled to Vote at Meetings . . . . . . . . . . 44
SECTION 11.4 Quorum; Action . . . . . . . . . . . . . . . . . . . . . 44
SECTION 11.5 Determination of Voting Rights; Conduct and
Adjournment of Meetings. . . . . . . . . . . . . . . . 45
SECTION 11.6 Counting Votes and Recording Action of Meetings . . . . 46
SECTION 11.7 Actions of Holders Generally . . . . . . . . . . . . . . 46
ARTICLE XII
MISCELLANEOUS
SECTION 12.1 Trust Indenture Act Controls . . . . . . . . . . . . . . 47
SECTION 12.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 12.3 Communication by Holders with Other Holders . . . . . . 49
SECTION 12.4 Certificate and Opinion as to Conditions Precedent . . . 49
SECTION 12.5 Statements Required in Certificate or Opinion . . . . . 49
SECTION 12.6 Separability Clause . . . . . . . . . . . . . . . . . . 49
SECTION 12.7 Rules by Trustee, Paying Agent and Registrar . . . . . . 50
SECTION 12.8 Legal Holidays . . . . . . . . . . . . . . . . . . . . . 50
SECTION 12.9 Governing Law . . . . . . . . . . . . . . . . . . . . . 50
SECTION 12.10 No Recourse Against Others . . . . . . . . . . . . . . . 50
SECTION 12.11 Successors . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 12.12 Effect of Headings and Table of Contents . . . . . . . . 50
SECTION 12.13 Benefits of Indenture . . . . . . . . . . . . . . . . . 51
SECTION 12.14 Multiple Originals . . . . . . . . . . . . . . . . . . . 51
<PAGE>
INDENTURE dated as of ____________, by and among Asset Investors
Corporation, a Maryland corporation ("Company"), and United States Trust
Company of New York, as trustee ("Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of its unsecured
debentures, notes or other evidences of indebtedness (herein called the
"Securities") to be issued in one or more series as in this Indenture
provided.
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually covenanted and agreed,
for the equal and ratable benefit of the Holders of the Securities or each
series thereof as follows:
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1 Definitions.
"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 or cause the direction of 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.
"Board of Directors" means either the board of directors of the
Company or any committee of such board authorized with respect to any
matter to exercise the powers of the Board of Directors of the Company.
"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" means, except as otherwise specified as contemplated by
Section 2.3(a), with respect to any Place of Payment or any other
particular location referred to in this Indenture or in the Securities,
means each Monday, Tuesday, Wednesday, Thursday and Friday which is not a
day on which banking institutions in that Place of Payment or other
location are authorized or obligated by law or executive order to close.
"Capital Stock" for any corporation means any and all shares,
interests, rights to purchase, warrants, options, participations or other
equivalents of or interests in (however designated) stock issued by that
corporation.
"cash" means such coin or currency of the United States as at any time
of payment is legal tender for the payment of public and private debts.
"Company" means the party named as the "Company" in the first
paragraph of this Indenture until a successor replaces it pursuant to the
applicable provisions of this Indenture and, thereafter, shall mean such
successor.
"Company Request" or "Company Order" means a written request or order
signed in the name of the Company, by its Chairman of the Board, a Vice
Chairman, its President or a Vice President, and by its Treasurer, an
Assistant Treasurer, its Secretary or an Assistant Secretary, and delivered
to the Trustee or, with respect to Sections 2.4, 2.8, 2.11 and 7.2, any
other employee of the Company named in an Officers' Certificate delivered
to the Trustee.
"Default" means any event which is, or after notice or passage of time
or both would be, an Event of Default.
"Depositary" means, with respect to the Securities of any series
issuable or issued in whole or in part in global form, the Person specified
as contemplated by Section 2.3(a) as the Depositary with respect to such
series of Securities, until a successor shall have become such pursuant to
the applicable provisions of this Indenture, and thereafter "Depositary"
shall mean or include such successor.
"Discount Security" means any Security which provides for an amount
less than the Principal Amount thereof to be due and payable upon a
declaration of acceleration of the Maturity thereof pursuant to Section
6.2.
"Dollar" or "$" means a dollar or other equivalent unit in such coin
or currency of the United States as at the time shall be legal tender for
the payment of public and private debts.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Holder" or "Securityholder," when used with respect to any Security,
means a person in whose name a Security is registered on the Registrar's
books.
"Indenture" means this Indenture, as amended or supplemented from time
to time in accordance with the terms hereof and shall include the terms of
a particular series of Securities established as contemplated in Section
2.3(a).
"interest," when used with respect to a Discount Security which by its
terms bears interest only after Maturity, means interest payable after
Maturity.
"Interest Payment Date," when used with respect to any Security, means
the Stated Maturity of an installment of interest on such Security.
"Maturity," when used with respect to any Security, means the date on
which the Principal of such Security or an installment of Principal or, in
the case of a Discount Security, the Principal Amount payable upon a
declaration of acceleration pursuant to Section 6.2, becomes due and
payable as therein or herein provided, whether at the Stated Maturity or by
declaration of acceleration, call for redemption or otherwise.
"Officer" means the Chairman of the Board, any Vice Chairman, the
President, any Vice President, the Treasurer, the Secretary, any Assistant
Treasurer or any Assistant Secretary of the Company.
"Officers' Certificate" means a written certificate containing the
information specified in Sections 12.4 and 12.5, signed in the name of the
Company by its Chairman of the Board, a Vice Chairman, its President or a
Vice President, and by its Treasurer, an Assistant Treasurer, its Secretary
or an Assistant Secretary, and delivered to the Trustee.
"Opinion of Counsel" means a written opinion containing the
information specified in Sections 12.4 and 12.5, from legal counsel who is
acceptable to the Trustee. The counsel may be an employee of, or counsel
to, the Company or the Trustee.
"Periodic Offering" means an offering of Securities of a series from
time to time the specific terms of which Securities, including, without
limitation, the rate or rates of interest, if any, thereon, the Stated
Maturity or Maturities thereof, the original issue date or dates thereof,
the redemption provisions, if any, and any other terms specified as
contemplated by Section 2.3(a) with respect thereto, are to be determined
by the Company, or one or more of the Company's agents designated in an
Officers' Certificate, upon the issuance of such Securities.
"person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated
organization, or government or any agency or political subdivision thereof.
"Place of Payment," when used with respect to the Securities of any
series, means the place or places where, subject to the provisions of
Section 4.5, the Principal of and any interest on the Securities of that
series are payable as specified as contemplated by Section 2.3(a).
"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by
such particular Security; and, for the purposes of this definition, any
Security authenticated and delivered under Section 2.9 in exchange for or
in lieu of a mutilated, destroyed, lost or stolen Security shall be deemed
to evidence the same debt as the mutilated, destroyed, lost or stolen
Security.
"Principal" or "Principal Amount" of a Security, except as otherwise
specifically provided in this Indenture, means the outstanding principal of
the Security plus the premium, if any, of the Security.
"Redemption Date" or "redemption date," when used with respect to any
Security to be redeemed, shall mean the date specified for redemption of
such Security in accordance with the terms of such Security and this
Indenture.
"Redemption Price" or "redemption price," when used with respect to
any Security to be redeemed, means the price at which it is to be redeemed
pursuant to this Indenture.
"Regular Record Date" for the interest payable on any Interest Payment
Date on the Securities of any series means the date specified for that
purpose as contemplated by Section 2.3(a).
"SEC" means the Securities and Exchange Commission.
"Securities" has the meaning stated in the first recital of this
Indenture and more particularly means any Securities authenticated and
delivered under this Indenture.
"Securityholder" or "Holder," when used with respect to any Security,
means a person in whose name a Security is registered on the Registrar's
books.
"Special Record Date" for the payment of any Defaulted Interest on the
Securities of any issue means a date fixed by the Trustee pursuant to
Section 2.13.
"Stated Maturity," when used with respect to any Security or any
installment of Principal thereof or interest thereon, means the date
specified in such Security as the fixed date on which an amount equal to
the Principal of such Security or an installment of Principal thereof or
interest there on is due and payable.
"Subsidiary" means, with respect to any person, a corporation of which
a majority of the Capital Stock having voting power under ordinary
circumstances to elect a majority of the board of directors of such
corporation is owned by (i) such person, (ii) such person and one or more
Subsidiaries of such person or (iii) one or more Subsidiaries of such
person.
"TIA" means the Trust Indenture Act of 1939 as in effect on the date
of this Indenture, except as provided in Section 9.3.
"Trust Officer" means any officer of the Trustee assigned by the
Trustee to administer its corporate trust matters.
"Trustee" means the party named as the "Trustee" in the first
paragraph of this Indenture until a successor replaces it pursuant to the
applicable provisions of this Indenture and, thereafter, shall mean such
successor.
"United States" means the United States of America, its territories,
its possessions (including the Commonwealth of Puerto Rico), and other
areas subject to its jurisdiction.
SECTION 1.2 Other Definitions.
Defined in
Term Section
---- ----------
"Bankruptcy Law" 6.1
"Custodian" 6.1
"Defaulted Interest" 2.13
"Event of Default" 6.1
"Legal Holiday" 13.8
"Notice of Default " 6.1
"Outstanding" 2.10
"Paying Agent" 2.5
"Registrar" 2.5
SECTION 1.3 Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture. The
following TIA terms used in this Indenture have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Securities.
"indenture security holder" means a Holder or Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Company.
All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule
have the meanings assigned to them by such definitions.
SECTION 1.4 Rules of Construction. Unless the context otherwise
requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with generally accepted accounting
principles in the United States as in effect from time to time;
(3) "or" is not exclusive;
(4) "including" means including, without limitation; and
(5) words in the singular include the plural, and words in the
plural include the singular.
ARTICLE II
THE SECURITIES
SECTION 2.1 Forms Generally. The Securities of each series shall be
in substantially such form (including global form) as shall be established
by delivery to the Trustee of an Officers' Certificate or in one or more
indentures supplemental hereto, in each case with such appropriate
insertions, omissions, substitutions and other variations as are required
or permitted by this Indenture, and may have such letters, numbers or other
marks of identification and such legends or endorsements placed thereon as
may be required to comply with the rules of any securities exchange or as
may, consistently herewith, be determined by the Officers executing such
Securities as evidenced by their execution of the Securities. The
Officers' Certificate so establishing the form of Security of any series
shall be delivered to the Trustee at or prior to the delivery of the
Company Order contemplated by Section 2.4 for the authentication and
delivery of such Securities.
The permanent Securities shall be printed, lithographed or engraved or
produced by any combination of these methods or may be produced in any
other manner, provided, that such method is permitted by the rules of any
securities exchange on which such Securities may be listed, all as
determined by the Officers executing such Securities as evidenced by their
execution of such Securities.
SECTION 2.2 Securities in Global Form. If Securities of a series are
issuable in temporary or permanent global form, as specified as
contemplated by Section 2.3(a), then, notwithstanding clause (10) of
Section 2.3(a) and the provisions of Section 2.3(b), any such Security
shall represent such of the Outstanding Securities of such series as shall
be specified therein and may provide that it shall represent the aggregate
amount of Outstanding Securities from time to time endorsed thereon and
that the aggregate amount of Outstanding Securities represented thereby may
from time to time be reduced to reflect exchanges. Any endorsement of a
Security in global form to reflect the amount of any increase or decrease
in the amount of Outstanding Securities represented thereby shall be made
by the Trustee in such manner and upon instructions given by such person or
persons as shall be specified therein or in the Company Order to be
delivered to the Trustee pursuant to Section 2.4 or Section 2.11. Subject
to the provisions of Section 2.4 and, if applicable, Section 2.11, the
Trustee shall deliver and redeliver any Security in global form in the
manner and upon instructions given by the person or persons specified
therein or in the applicable Company Order. If a Company Order pursuant to
Section 2.4 or 2.11 has been, or simultaneously is, delivered, any
instructions by the Company with respect to endorsement or delivery or
redelivery of a Security in global form shall be in writing but need not
comply with Section 12.4 or 12.5 and need not be accompanied by an Opinion
of Counsel.
The provisions of the last sentence of Section 2.4 shall apply to any
Security represented by a Security in global form if such Security was
never issued and sold by the Company, and the Company delivers to the
Trustee the Security in global form together with written instructions
(which need not comply with Section 12.4 or 12.5 and need not be
accompanied by an Opinion of Counsel) with regard to the reduction in the
Principal Amount of Securities represented thereby, together with the
written statement contemplated by the last sentence of Section 2.4.
Notwithstanding the provisions of Sections 2.1 and 2.13, unless
otherwise specified as contemplated by Section 2.3(a), payment of Principal
of and any interest on any Security in global form shall be made to the
person or persons specified therein.
SECTION 2.3 Title, Terms and Denominations.
(a) The aggregate Principal Amount of Securities which may be
authenticated and delivered under this Indenture shall be unlimited.
The Securities may be issued in one or more series. There shall be
established and, subject to Section 2.4, set forth, or determined in the
manner provided, in an Officers' Certificate of the Company, or established
in one or more indentures supplemental hereto:
(1) the title of the Securities of the series (which shall
distinguish the Securities of the series from all other Securities);
(2) any limit upon the aggregate Principal Amount of the
Securities of the series which may be authenticated and delivered
under this Indenture (except for Securities authenticated and
delivered upon registration of transfer of, or in exchange for, or in
lieu of, other Securities of the series pursuant to Sections 2.8, 2.9,
2.11, 3.6, 9.5 or 10.3 and except for any Securities which, pursuant
to Section 2.4, are deemed never to have been authenticated and
delivered hereunder);
(3) whether any Securities of the series may be represented
initially by a Security in temporary or permanent global form and, if
so, the initial Depositary with respect to any such temporary or
permanent global Security, and if other than as provided in Section
2.8 or Section 2.11, as applicable, whether and the circumstances
under which beneficial owners of interests in any such temporary or
permanent global Security may exchange such interests for Securities
of such series and of like tenor of any authorized form and
denomination;
(4) the person to whom any interest on any Security of the
series shall be payable, if other than the person in whose name that
Security (or one or more Predecessor Securities) is registered at the
close of business on the Regular Record Date for such interest, and
the extent to which, or the manner in which (including any
certification requirement and other terms and conditions under which),
any interest payable on a temporary or permanent global Security on an
Interest Payment Date will be paid if other than in the manner
provided in Section 2.2 and Section 2.4, as applicable;
(5) the date or dates on which the Principal of the Securities
of the series is payable or the method of determination thereof;
(6) the rate or rates at which the Securities of the series
shall bear interest, if any, the date or dates from which any such
interest shall accrue, the Interest Payment Dates on which any such
interest shall be payable and the Regular Record Date for any interest
payable on any Securities on any Interest Payment Date;
(7) the place or places where, subject to the provisions of
Section 4.5, the Principal of and any interest on Securities of the
series shall be payable, any Securities of the series may be
surrendered for registration of transfer, Securities of the series may
be surrendered for exchange and notices and demands to or upon the
Company in respect of the Securities of the series and this Indenture
may be served;
(8) the period or periods within which, the price or prices at
which and the terms and conditions upon which, Securities of the
series may be redeemed, in whole or in part, at the option of the
Company;
(9) the obligation, if any, of the Company to redeem or purchase
Securities of the series pursuant to any sinking fund or analogous
provisions or at the option of a Holder thereof, the conditions, if
any, giving rise to such obligation, and the period or periods within
which, the price or prices at which and the terms and conditions upon
which Securities of the series shall be redeemed or purchased, in
whole or in part, and any provisions for the remarketing of such
Securities;
(10) the denominations in which any Securities of the series
shall be issuable, if other than denominations of $1,000 and any
integral multiple thereof;
(11) if other than the Principal Amount thereof, the portion of
the Principal Amount of any Securities of the series which shall be
payable upon declaration of acceleration of the Maturity thereof
pursuant to Section 6.2;
(12) if other than as defined in Section 1.1, the meaning of
"Business Day" when used with respect to any Securities of the series;
(13) if and the terms and conditions upon which the Securities
of the series may or must be converted into securities of the Company
or exchanged for securities of the Company;
(14) any terms applicable to Original Issue Discount, if any (as
that term is defined in the Internal Revenue Code of 1986 and the
Regulations thereunder), including the rate or rates at which such
Original Issue Discount, if any, shall accrue;
(15) if the Securities of the series may be issued or delivered
(whether upon original issuance or upon exchange of a temporary
Security of such series or otherwise), or any installment of Principal
of or any interest is payable, only upon receipt of certain
certificates or other documents or satisfaction of other conditions in
addition to those specified in this Indenture, the form and terms of
such certificates, documents or conditions; and
(16) any other terms of the series (which terms shall not be
inconsistent with the provisions of this Indenture, except as
permitted by Section 9.1(7)).
All Securities of any one series shall be substantially identical
except as to denomination and the rate or rates of interest, if any, and
Stated Maturity, the date from which interest, if any, shall accrue and
except as may otherwise be provided in or pursuant to an Officers'
Certificate pursuant to this Section 2.3(a) or in any indenture
supplemental hereto. All Securities of any one series need not be issued
at the same time and, unless otherwise provided, a series may be reopened
for issuances of additional Securities of such series or for the
establishment of additional terms with respect to the Securities of such
series.
If any of the terms of the series are established by action taken
pursuant to a Board Resolution, a copy of any appropriate record of such
action shall be certified by the Secretary or an Assistant Secretary of the
Company and delivered to the Trustee at or prior to the delivery of the
Officers' Certificate setting forth the terms of the series. With respect
to Securities of a series subject to a Periodic Offering, such Board
Resolution or Officers' Certificate may provide general terms for
Securities of such series and provide either that the specific terms of
particular Securities of such series shall be specified in a Company Order
or that such terms shall be determined by the Company, or one or more of
the Company's agents designated in an Officers' Certificate, in accordance
with the Company Order as contemplated by the first proviso of the third
paragraph of Section 2.4.
(b) Unless otherwise provided as contemplated by Section 2.3(a) with
respect to any series of Securities, any Securities of a series shall be
issuable in denominations of $1,000 and any integral multiple thereof.
SECTION 2.4 Execution, Authentication, Delivery and Dating. The
Securities shall be executed on behalf of the Company by its Chairman of
the Board, one of its Vice Chairmen, its President or one of its Vice
Presidents, or the Treasurer or any Assistant Treasurer, under its
corporate seal reproduced thereon attested by its Secretary or one of its
Assistant Secretaries. The signature of any of these officers on the
Securities may be manual or facsimile.
Securities bearing the manual or facsimile signatures of individuals
who were at any time the proper officers of the Company shall bind the
Company, notwithstanding that such individuals or any of them have ceased
to hold such offices prior to the authentication and delivery of such
Securities or did not hold such offices at the date of such Securities.
At any time and from time to time after the execution and delivery of
this Indenture, the Company may deliver Securities of any series executed
by the Company to the Trustee for authentication, together with a Company
Order for the authentication and delivery of such Securities; and the
Trustee in accordance with such Company Order shall authenticate and
deliver such Securities; provided, however, that, with respect to
Securities of a series subject to a Periodic Offering, (a) such Company
Order may be delivered by the Company to the Trustee prior to the delivery
to the Trustee of such Securities for authentication and delivery, (b) the
Trustee shall authenticate and deliver Securities of such series for
original issue from time to time, in an aggregate Principal Amount not
exceeding the aggregate Principal Amount established for such series,
pursuant to a Company Order or pursuant to such procedures acceptable to
the Trustee as may be specified from time to time by a Company Order, (c)
the rate or rates of interest, if any, the Stated Maturity or Maturities,
the original issue date or dates, the redemption provisions, if any, and
any other terms of Securities of such series shall be determined by a
Company Order or pursuant to such procedures and (d) if provided for in
such procedures, such Company Order may authorize authentication and
delivery pursuant to oral or electronic instructions from the Company, or
the Company's duly authorized agent or agents designated in an Officers'
Certificate, which oral instructions shall be promptly confirmed in
writing.
If the forms or terms of the Securities of the series have been
established in or pursuant to one or more Officers' Certificates as
permitted by Sections 2.1 and 2.3(a), in authenticating such Securities,
and accepting the additional responsibilities under this Indenture in
relation to such Securities, the Trustee shall be entitled to receive, and
(subject to Section 7.1) shall be fully protected in relying upon, an
Opinion of Counsel stating:
(a) that the form and terms of such Securities have been duly
authorized by the Company and established in conformity with the provisions
of this Indenture; and
(b) that such Securities when authenticated and delivered by the
Trustee and issued by the Company in the manner and subject to any
conditions specified in such Opinion of Counsel, will constitute valid and
legally binding obligations of the Company, enforceable in accordance with
their terms, subject to customary exceptions;
provided, however, that, with respect to Securities of a series subject to
a Periodic Offering, the Trustee shall be entitled to receive such Opinion
of Counsel only once at or prior to the time of the first authentication of
Securities of such series and that the Opinion of Counsel above may state:
(x) that the forms of such Securities have been, and the terms of
such Securities (when established in accordance with such procedures
as may be specified from time to time in a Company Order, all as
contemplated by and in accordance with a Board Resolution or an
Officers' Certificate pursuant to Section 2.3(a), as the case may be)
will have been, duly authorized by the Company and established in
conformity with the provisions of this Indenture; and
(y) that such Securities when (1) executed by the Company, (2)
completed, authenticated and delivered by the Trustee in accordance
with this Indenture, and (3) issued by the Company in the manner and
subject to any conditions specified in such Opinion of Counsel, will
constitute valid and legally binding obligations of the Company,
enforceable in accordance with their terms, subject to customary
exceptions.
With respect to Securities of a series subject to a Periodic Offering,
the Trustee may conclusively rely, as to the authorization by the Company
of any of such Securities, the form and terms thereof and the legality,
validity, binding effect and enforceability thereof, upon the Opinion of
Counsel and other documents delivered pursuant to Sections 2.1 and 2.3(a)
and this Section, as applicable, at or prior to the time of the first
authentication of Securities of such series unless and until it has
received written notification that such opinion or other documents have
been superseded or revoked. In connection with the authentication and
delivery of Securities of a series subject to a Periodic Offering, the
Trustee shall be entitled to assume, unless it has actual knowledge to the
contrary, that the Company's instructions to authenticate and deliver such
Securities do not violate any rules, regulations or orders of any
governmental agency or commission having jurisdiction over the Company.
Notwithstanding the provisions of Section 2.3(a) and of the preceding
three paragraphs, if all Securities of a series are subject to a Periodic
Offering, it shall not be necessary to deliver the Officers' Certificate
otherwise required pursuant to Section 2.3(a) at or prior to the time of
authentication of each Security of such series if such Officers'
Certificate is delivered at or prior to the authentication upon original
issuance of the first Security of such series to be issued.
Each Security shall be dated the date of its authentication.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Securities. Unless otherwise provided in the
appointment, an authenticating agent may authenticate Securities whenever
the Trustee may do so. Each reference in this Indenture to authentication
by the Trustee includes authentication by such agent.
No Security shall be entitled to any benefit under this Indenture or
be valid or obligatory for any purpose unless there appears on such
Security a certificate of authentication substantially in the form provided
for herein duly executed by the Trustee by manual signature of an
authorized signatory, and such certificate upon any Security shall be
conclusive evidence, and the only evidence, that such Security has been
duly authenticated and delivered hereunder. The Trustee's certificate of
authentication shall be in substantially the following form:
This is one of the Securities of the series designated therein
referred to in the within-mentioned Indenture.
United States Trust Company of New York,
as Trustee
By:______________________________________
Authorized Signatory
Notwithstanding the foregoing, if any Security shall have been duly
authenticated and delivered hereunder but never issued and sold by the
Company, and the Company shall deliver such Security to the Trustee for
cancellation as provided in Section 2.12 together with a written statement
(which need not comply with Section 12.4 or 12.5 and need not be
accompanied by an Opinion of Counsel) stating that such Security has never
been issued and sold by the Company, for all purposes of this Indenture
such Security shall be deemed never to have been authenticated and
delivered hereunder and shall never be entitled to the benefits of this
Indenture.
SECTION 2.5 Registrar and Paying Agent. The Company shall maintain,
with respect to each series of Securities, an office or agency where such
Securities may be presented for registration of transfer or for exchange
("Registrar") and, in the Borough of Manhattan, The City of New York, an
office or agency where such Securities may be presented for purchase or
payment ("Paying Agent"). The Registrar shall keep a register of the
Securities and of their transfer and exchange. The Company may have one or
more co-registrars and one or more additional paying agents. The term
Paying Agent includes any additional paying agent.
The Company shall enter into an appropriate agency agreement with
respect to each series of Securities with any Registrar, Paying Agent or
co-registrar (if not the Trustee). The agreement shall implement the
provisions of this Indenture that relate to such agent. The Company shall
notify the Trustee of the name and address of any such agent. If the
Company fails to maintain a Registrar or Paying Agent for a particular
series of Securities, the Trustee shall act as such and shall be entitled
to appropriate compensation therefor pursuant to Section 7.7. The Company
or any Subsidiary or an Affiliate of either of them may act as Paying
Agent, Registrar or co-registrar.
The Company initially appoints the Trustee as the Registrar and Paying
Agent in connection with such Securities.
SECTION 2.6 Paying Agent to Hold Money and Securities in Trust.
Except as otherwise provided herein, prior to or on each due date of
payments in respect of any series of Securities, the Company shall deposit
with the Paying Agent with respect to such Securities a sum of money
sufficient to make such payments when so becoming due. The Company shall
require each Paying Agent (other than the Trustee) to agree in writing that
the Paying Agent shall hold in trust for the benefit of Holders or the
Trustee all money held by such Paying Agent for the making of payments in
respect of the Securities of such series and shall notify the Trustee of
any default by the Company in making any such payment. At any time during
the continuance of any such default, a Paying Agent shall, upon the written
request of the Trustee, forthwith pay to the Trustee all money so held in
trust with respect to such Securities. If the Company, a Subsidiary or an
Affiliate of either of them acts as Paying Agent for a series of
Securities, it shall segregate the money held by it as Paying Agent with
respect to such Securities and hold it as a separate trust fund. The
Company at any time may require a Paying Agent for a series of Securities
to pay all money held by it with respect to such Securities to the Trustee
and to account for any money disbursed by it. Upon doing so, such Paying
Agent shall have no further liability for the money.
SECTION 2.7 Securityholder Lists. The Trustee shall preserve in as
current a form as is reasonably practicable the most recent list available
to it of the names and addresses of Holders of each series of Securities.
If the Trustee is not the Registrar for any series of Securities, the
Company shall cause to be furnished to the Trustee at least semiannually on
June 1 and December 1 a listing of Holders of such series of Securities
dated within 15 days of the date on which the list is furnished and at such
other times as the Trustee may request in writing a list in such form and
as of such date as the Trustee may reasonably require of the names and
addresses of Securityholders of such series of Securities.
SECTION 2.8 Transfer and Exchange. Upon surrender for registration
of transfer of any Security at the office or agency of the Company
designated pursuant to Section 4.5 for such purpose, the Company shall
execute, and the Trustee shall authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Securities of any
authorized denomination or denominations of a like aggregate Principal
Amount and tenor. The Company shall not charge a service charge for any
registration of transfer or exchange, but the Company may require payment
of a sum sufficient to pay all taxes, assessments or other governmental
charges that may be imposed in connection with the transfer or exchange of
the Securities from the Securityholder requesting such transfer or exchange
(other than any exchange of a temporary Security for a definitive Security
not involving any change in ownership or any exchange pursuant to Section
2.11, 3.6, 9.5 or 10.3, not involving any transfer).
Notwithstanding any other provisions (other than the provisions set
forth in the sixth and seventh paragraphs) of this Section, a Security in
global form representing all or a portion of the Securities of a series may
not be transferred except as a whole by the Depositary for such series to a
nominee of such Depositary or by a nominee of such Depositary to such
Depositary or another nominee of such Depositary or by such Depositary or
any such nominee to a successor Depositary for such series or a nominee of
such successor Depositary.
At the option of the Holder, Securities of any series may be exchanged
for other Securities of the same series of any authorized denomination or
denominations, of a like aggregate Principal Amount and tenor, upon
surrender of the Securities to be exchanged at such office or agency.
Whenever any Securities are so surrendered for exchange, the Company shall
execute, and the Trustee shall authenticate and deliver, the Securities
which the Holder making the exchange is entitled to receive.
Whenever any Securities are so surrendered for exchange, the Company
shall execute, and the Trustee or a duly appointed authenticating agent
shall authenticate and deliver, the Securities which the Holder making the
exchange is entitled to receive.
If at any time the Depositary for the Securities of a series notifies
the Company that it is unwilling or unable to continue as Depositary for
the Securities of such series, the Company shall appoint a successor
Depositary with respect to the Securities of such series. If a successor
Depositary for the Securities of such series is not appointed by the
Company within 90 days after the Company receives such notice, the Company
will execute, and the Trustee, upon receipt of a Company Order for the
authentication and delivery of definitive Securities of such series, will
authenticate and deliver Securities of such series in definitive form in an
aggregate Principal Amount equal to the Principal Amount of the Security or
Securities in global form representing such series in exchange for such
Security or Securities in global form.
The Company may at any time and in its sole discretion determine that
the Securities of any series issued in the form of one or more global
Securities shall no longer be represented by such global Security or
Securities. In such event the Company will execute, and the Trustee, upon
receipt of a Company Order for the authentication and delivery of
definitive Securities of such series, will authenticate and deliver
Securities of such series in definitive form and in an aggregate Principal
Amount equal to the Principal Amount of the Security or Securities in
global form representing such series in exchange for such Security or
Securities in global form.
Notwithstanding the foregoing, except as otherwise specified in the
preceding two paragraphs or as contemplated by Section 2.3(a), any
permanent global Security shall be exchangeable only as provided in this
paragraph. If the beneficial owners of interests in a permanent global
Security are entitled to exchange such interests for definitive Securities
of such series and of like Principal Amount and tenor but of another
authorized form and denomination, as specified as contemplated by Section
2.3(a), then without unnecessary delay but in any event not later than the
earliest date on which such interests may be so exchanged, the Company
shall deliver to the Trustee definitive Securities in aggregate Principal
Amount equal to the Principal Amount of such permanent global Security,
executed by the Company. On or after the earliest date on which such
interests may be so exchanged, such permanent global Security shall be
surrendered by the Depositary with respect thereto 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 Securities without charge and the Trustee
shall authenticate and deliver, in exchange for each portion of such
permanent global Security, an equal aggregate Principal Amount of
definitive Securities of the same series of authorized denominations and of
like tenor as the portion of such permanent global Security to be
exchanged; provided, however, that notwithstanding the last paragraph of
this Section 2.8, no such exchanges may occur during a period beginning at
the opening of business 15 days before any selection of Securities of that
series to be redeemed and ending on the relevant Redemption Date. If a
Security is issued in exchange for any portion of a permanent global
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 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
Security is payable in accordance with the provisions of this Indenture.
Upon the exchange of a Security in global form for Securities in
definitive form, such Security in global form shall be cancelled by the
Trustee. Securities issued in exchange for a Security in global form
pursuant to this Section 2.8 shall be registered in such names and in such
authorized denominations as the Depositary for such Security in global
form, pursuant to instructions from its direct or indirect participants or
otherwise, shall instruct the Trustee. The Trustee shall deliver such
Securities to the persons in whose names such Securities are so registered.
All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the Company, evidencing the
same debt, and entitled to the same benefits under this Indenture, as the
Securities surrendered upon such registration of transfer or exchange.
Every Security presented or surrendered for registration of transfer
or for exchange shall (if so required by the Company or the Trustee) be
duly endorsed, or be accompanied by a written instrument of transfer in
form satisfactory to the Company and the Registrar duly executed, by the
Holder thereof or his attorney duly authorized in writing.
The Company shall not be required (i) to issue, register the transfer
of or exchange Securities of any series during a period beginning at the
opening of business 15 days before any selection of Securities of that
series to be redeemed and ending (except as otherwise provided in the first
proviso in the eighth paragraph of this Section 2.8) at the close of
business on the day of the mailing of the relevant notice of redemption, or
(ii) to register the transfer of or exchange any Security so selected for
redemption, in whole or in part, except the unredeemed portion of any
Security being redeemed in part.
SECTION 2.9 Replacement Securities. If (a) any mutilated Security is
surrendered to the Trustee, or (b) the Company and the Trustee receive
evidence to their satisfaction of the destruction, loss or theft of any
Security, and there is delivered to the Company and the Trustee such
security or indemnity as may be required by them to save each of them
harmless, then, in the absence of notice to the Company or the Trustee that
such Security has been acquired by a bona fide purchaser, the Company shall
execute and upon its written request the Trustee shall authenticate and
deliver, in exchange for any such mutilated Security or in lieu of any such
destroyed, lost or stolen Security, a new Security of the same series and
of like tenor and Principal Amount, bearing a number not contemporaneously
outstanding.
In case any such mutilated, destroyed, lost or stolen Security has
become or is about to become due and payable, the Company in its discretion
may, instead of issuing a new Security, pay such Security.
Upon the issuance of any new Securities under this Section, the
Company may require the payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in relation thereto and any
other expenses (including the fees and expenses of the Trustee) connected
therewith.
Every new Security of any series issued pursuant to this Section in
lieu of any mutilated, destroyed, lost or stolen Security shall constitute
an original additional contractual obligation of the Company, whether or
not the destroyed, lost or stolen Security shall be at any time enforceable
by anyone, and any such new Security shall be entitled to all benefits of
this Indenture equally and proportionately with any and all other
Securities of that issue duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Securities.
SECTION 2.10 Outstanding Securities; Determinations of Holders'
Action. Securities of any series "Outstanding" at any time are, as of the
date of determination, all the Securities of such series theretofore
authenticated by the Trustee for such series except for those cancelled by
it, those delivered to it for cancellation and those described in this
Section 2.10 as not outstanding. A Security does not cease to be
"Outstanding" because the Company or an Affiliate thereof holds the
Security; provided, however, that in determining whether the Holders of the
requisite Principal Amount of Outstanding Securities have given or
concurred in any request, demand, authorization, direction, notice, consent
or waiver hereunder, Securities owned by the Company or any other obligor
upon the Securities or any Affiliate of the Company or such other obligor
shall be disregarded and deemed not to be outstanding, except that, in
determining whether the Trustee shall be protected in relying upon any such
request, demand, authorization, direction, notice, consent or waiver, only
Securities which the Trustee knows to be so owned shall be so disregarded.
Securities so owned which have been pledged in good faith may be regarded
as Outstanding if the pledgee establishes to the satisfaction of the
Trustee the pledgee's right so to act with respect to such Securities and
that the pledgee is not the Company or any other obligor upon the
Securities or any Affiliate of the Company or of such other obligor.
Subject to the foregoing, only Securities outstanding at the time of such
determination shall be considered in any such determination (including,
without limitation, determinations pursuant to Articles 6 and 9). In
addition, in determining whether the Holders of the requisite Principal
Amount of Outstanding Securities have given or concurred in any request,
demand, authorization, direction, notice, consent or waiver hereunder, the
Principal Amount of a Discount Security that shall be deemed to be
Outstanding shall be the amount of the Principal thereof that would be due
and payable as of the date of such determination upon acceleration of the
Maturity thereof pursuant to Section 6.2.
If a Security has been paid pursuant to Section 2.9 or in exchange for
or in lieu of which another Security has been authenticated and delivered
pursuant to this Indenture, it ceases to be outstanding unless the Trustee
receives proof satisfactory to it that the replaced Security is held by a
bona fide purchaser.
If the Trustee (other than the Company) holds, in accordance with this
Indenture, on a Redemption Date or on Stated Maturity, money sufficient to
pay Securities payable on that date, then on and after that date such
Securities shall cease to be outstanding and interest, if any, on such
Securities shall cease to accrue; provided, that if such Securities are to
be redeemed, notice of such redemption has been duly given pursuant to this
Indenture or provision therefor satisfactory to the Trustee has been made.
SECTION 2.11 Temporary Securities. Pending the preparation of
definitive Securities of any series, the Company may execute, and upon
Company Order the Trustee shall authenticate and deliver, temporary
Securities which are printed, lithographed, typewritten, mimeographed or
otherwise produced, in any authorized denomination, substantially of the
tenor of the definitive Securities in lieu of which they are issued, in
registered form, and with such appropriate insertions, omissions,
substitutions and other variations as the Officers executing such
Securities may determine, as conclusively evidenced by their execution of
such Securities. Such temporary Securities may be in global form.
If temporary Securities for some or all of the Securities of any
series are issued, the Company will cause definitive Securities
representing such Securities to be prepared without unreasonable delay.
After the preparation of such definitive Securities, the temporary
Securities shall be exchangeable for such definitive Securities of like
tenor upon surrender of the temporary Securities at the office or agency of
the Company designated for such purpose pursuant to Section 4.5 for such
series for the purpose of exchanges of Securities of such series, without
charge to the Holder. Upon surrender for cancellation of any one or more
temporary Securities of any series the Company shall execute and the
Trustee shall authenticate and deliver in exchange therefor a like
Principal Amount of definitive Securities of the same series and of like
tenor of authorized denominations. Until so exchanged the temporary
Securities shall in all respects be entitled to the same benefits under
this Indenture as definitive Securities.
Until exchanged in full as hereinabove provided, the temporary
Securities of any series shall in all respects be entitled to the same
benefits under this Indenture as permanent Securities of the same series
and of like tenor authenticated and delivered hereunder.
SECTION 2.12 Cancellation. All Securities surrendered for payment,
redemption, 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 all Securities so delivered shall
be promptly cancelled by it. The Company may at any time deliver to the
Trustee for cancellation any Securities previously authenticated and
delivered hereunder which the Company may have acquired in any manner
whatsoever (including Securities received by the Company in exchange or
payment for other Securities of the Company) and may deliver to the Trustee
(or to any other person for delivery to the Trustee) for cancellation any
Securities previously authenticated hereunder which the Company has not
issued and sold, and all Securities so delivered shall be promptly
cancelled by the Trustee. The Company may not reissue, or issue new
Securities to replace, Securities it has paid or delivered to the Trustee
for cancellation. No Securities shall be authenticated in lieu of or in
exchange for any Securities cancelled as provided in this Section, except
as expressly permitted in the form of Securities for any particular series
or as permitted by this Indenture. All cancelled Securities held by the
Trustee shall be destroyed by the Trustee and evidence of their destruction
delivered to the Company unless the Company directs by Company Order that
the Trustee deliver cancelled Securities to the Company.
SECTION 2.13 Payment of Interest; Interest Rights Preserved. Unless
otherwise provided as contemplated by Section 2.3(a) with respect to any
series of Securities, interest on any Security which is payable, and is
punctually paid or duly provided for, on any Interest Payment Date shall be
paid to the person in whose name that Security (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record
Date for such interest.
Any interest on any Security of any series which is payable, but
is not punctually paid or duly provided for, on any Interest Payment Date
(herein called "Defaulted Interest") shall forthwith cease to be payable to
the Holder on the relevant Regular Record Date by virtue of having been
such Holder, and such Defaulted Interest may be paid by the Company, at its
election in each case, as provided in clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted
Interest to the persons in whose names the Securities of such
series (or their respective Predecessor Securities) are registered
at the close of business on a Special Record Date for the payment
of such Defaulted Interest, which shall be fixed in the following
manner. The Company shall notify the Trustee in writing of the
amount of Defaulted Interest proposed to be paid on each Security
and the date of the proposed payment, and at the same time the
Company shall deposit with the Trustee an amount of money equal to
the aggregate amount proposed to be paid in respect of such
Defaulted Interest or shall make arrangements satisfactory to the
Trustee for such deposit prior to the date of the proposed
payment, such money when deposited to be held in trust for the
benefit of the persons entitled to such Defaulted Interest as 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 Securities at his address as it
appears in the Security Register, not less than 10 days prior to
such Special Record Date. Notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor having
been so mailed, such Defaulted Interest shall be paid to the
persons in whose names the Securities (or their respective
Predecessor Securities) are registered at the close of business on
such Special Record Date and shall no longer be payable pursuant
to the following Clause (2).
(2) The Company may make payment of any Defaulted Interest on
the Securities in any other lawful manner not inconsistent with
the requirements of any securities exchange on which such
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
2.8, each Security delivered under this Indenture upon registration of
transfer of or in exchange for or in lieu of any other Security shall carry
the rights to interest accrued and unpaid, and to accrue, which were
carried by such other Security.
SECTION 2.14 Persons Deemed Owners. Prior to due presentment of a
Security for registration of transfer, the Company, the Trustee and any
agent of the Company or the Trustee may treat the person in whose name such
Security is registered as the owner of such Security for the purpose of
receiving payment of Principal of and (except as otherwise specified as
contemplated by Section 2.3(a) and subject to Section 2.8 and Section 2.13)
interest on such Security and for all other purposes whatsoever, whether or
not such Security be overdue, and neither the Company, the Trustee nor any
agent of the Company or the Trustee shall be affected by notice to the
contrary.
None of the Company, the Trustee, any Paying Agent or the
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 Security in global form or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests.
SECTION 2.15 Computation of Interest . Except as otherwise
specified as contemplated by Section 2.3(a) for Securities of any series,
(i) interest on any Securities which bear interest at a fixed rate shall be
computed on the basis of a 360-day year comprised of twelve 30-day months
and (ii) interest on any Securities which bear interest at a variable rate
shall be computed on the basis of the actual number of days in an interest
period divided by 360.
ARTICLE III
REDEMPTION
SECTION 3.1 Right to Redeem; Notices to Trustee. 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 2.3(a) for Securities of any series)
in accordance with this Article. In the case of any redemption at the
election of the Company of less than all of the Securities of any series,
the Company shall, within the time period set forth below, notify the
Trustee in writing of the Redemption Date, the Principal Amount and any
other information necessary to identify the Securities of such series to be
redeemed and the Redemption Price.
The Company shall give the notice to the Trustee provided for in
this Section 3.1 at least 60 days before the Redemption Date (unless a
shorter notice shall be satisfactory to the Trustee).
SECTION 3.2 Selection of Securities to be Redeemed. Unless
otherwise specified as contemplated by Section 2.3(a) with respect to any
series of Securities, if less than all the Securities of any series with
the same issue date, interest rate and Stated Maturity are to be redeemed,
the Trustee shall select the particular Securities to be redeemed by a
method the Trustee considers fair and appropriate, which method may provide
for the selection for redemption of portions (equal to the minimum
authorized denomination for Securities of that series or any integral
multiple thereof) of the Principal Amount of Securities of such series of a
denomination larger than the minimum authorized denomination for Securities
of that series. The Trustee shall make the selection not more than 60 days
before the Redemption Date from Outstanding Securities of such series not
previously called for redemption. Provisions of this Indenture that apply
to Securities called for redemption also apply to portions of Securities
called for redemption. The Trustee shall notify the Company promptly in
writing of the Securities to be redeemed and, in the case of any portions
of Securities to be redeemed, the principal amount thereof to be redeemed.
SECTION 3.3 Notice of Redemption. Unless otherwise specified as
contemplated by Section 2.3(a) with respect to any series of Securities, at
least 30 days but not more than 60 days before a Redemption Date, the
Company shall mail a notice of redemption by first-class mail, postage
prepaid, to each Holder of Securities to be redeemed.
The notice shall identify the Securities to be redeemed and shall
state:
(1) the Redemption Date;
(2) the Redemption Price;
(3) if fewer than all the Outstanding Securities of any
series are to be redeemed, the identification (and, in the case of
partial redemption, the Principal Amounts) of the particular
Securities to be redeemed;
(4) that on the Redemption Date the Redemption Price will
become due and payable upon each such Security (or portion
thereof) to be redeemed and, if applicable, that interest thereon
will cease to accrue on and after said date;
(5) the place or places where such Securities maturing after
the Redemption Date, are to be surrendered for payment of the
Redemption Price; and
(6) that the redemption is for a sinking fund, if such is the
case.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at the Company's expense; provided,
however, that, in all cases, the text of such Company Notice shall be
prepared by the Company.
SECTION 3.4 Effect of Notice of Redemption. Once notice of
redemption is given, Securities called for redemption become due and
payable on the Redemption Date and at the Redemption Price stated in the
notice, and from and after such date (unless the Company shall default in
the payment of the Redemption Price and accrued interest) such Securities
shall cease to bear interest. Upon surrender of any such Security for
redemption in accordance with said notice, such Security shall be paid by
the Company at the Redemption Price, together with accrued interest to the
Redemption Date; provided, however, that, unless otherwise specified as
contemplated by Section 2.3(a), installments of interest on Securities
whose Stated Maturity is on or prior to the Redemption Date shall be
payable to the Holders of such Securities, or one or more Predecessor
Securities, registered as such at the close of business on the relevant
Regular Record Dates according to their terms and the provisions of
Sections 2.8 and 2.13.
If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the Principal shall, until paid, bear
interest from the Redemption Date at the rate prescribed therefor in the
Security.
SECTION 3.5 Deposit of Redemption Price. Prior to or on the
Redemption Date, the Company shall deposit with the Paying Agent (or if the
Company or a Subsidiary or an Affiliate of either of them is the Paying
Agent, shall segregate and hold in trust) money sufficient to pay the
Redemption Price and (except if the Redemption Date shall be an Interest
Payment Date) accrued interest on, of all Securities to be redeemed on that
date other than Securities or portions of Securities called for redemption
which prior thereto have been delivered by the Company to the Trustee for
cancellation. If such money is then held by the Company in trust and is
not required for such purpose, it shall be discharged from such trust.
SECTION 3.6 Securities Redeemed in Part. Any Security which is to
be redeemed only in part shall be surrendered at the office or agency of
the Company designated therefor pursuant to Section 4.5 (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 upon such surrender, the Company shall execute and the
Trustee shall authenticate and deliver to the Holder of such Security a new
Security or Securities of the same series and of like tenor, in an
authorized denomination as requested by such Holder, equal in aggregate
Principal Amount to and in exchange for the unredeemed portion of the
Principal of the Security surrendered.
ARTICLE IV
COVENANTS
SECTION 4.1 Payment of Securities. The Company shall promptly make
all payments in respect of each series of Securities on the dates and in
the manner provided in the Securities and, to the extent not otherwise so
provided, pursuant to this Indenture. An installment of Principal of or
interest on the Securities shall be considered paid on the date it is due
if the Trustee or a Paying Agent (other than the Company or an Affiliate of
the Company) holds on that date funds designated for and sufficient to pay
such installment. At the Company's option, payments of Principal or
interest may be made by check or by transfer to an account maintained by
the payee.
SECTION 4.2 SEC Reports. The Company shall file with the Trustee,
within 15 days after it files such annual and quarterly reports,
information, documents and other reports with the SEC, copies of its annual
report and of the information, documents and other reports (or copies of
such portions of any of the foregoing as the SEC may by rules and
regulations prescribe) which the Company is required to file with the SEC
pursuant to Section 13 or 15(d) of the Exchange Act. The Company also
shall comply with the other provisions of TIA Section 314(a).
SECTION 4.3 Compliance Certificate. The Company shall deliver to
the Trustee within 120 days after the end of each fiscal year of the
Company (beginning with the first fiscal year ending on or after the date
hereof) an Officers' Certificate stating whether or not the signers know of
any Default that occurred during such period. If they do, such Officers'
Certificate shall describe the Default and its status.
SECTION 4.4 Further Instruments and Acts. Upon request of the
Trustee, the Company will execute and deliver such further instruments and
do such further acts as may be reasonably necessary or proper to carry out
more effectively the purposes of this Indenture.
SECTION 4.5 Maintenance of Office or Agency.
The Company will maintain in the Borough of Manhattan, the City
of New York, an office or agency where Securities of that series may
be presented or surrendered for payment, where any Securities of that
series may be surrendered for registration of transfer, where Securities of
that series may be surrendered for exchange, purchase or redemption and
where notices and demands to or upon the Company in respect of the
Securities of that series and this Indenture may be served. The office of
the Trustee in New York, New York shall be such office or agency for all of
the aforesaid purposes unless the Company shall maintain some other office
or agency for such purposes and shall give prompt written notice to the
Trustee of the location, and any change in the location, of such other
office or agency. If at any time the Company shall fail to maintain any
such required office or agency in respect of any series of Securities or
shall fail to furnish the Trustee with the address thereof, such
presentations and surrenders of Securities of that series may be made and
notices and demands may be made or served at the address of the Trustee set
forth in Section 12.2, and the Company hereby appoints the same as its
agent to receive such respective presentations, surrenders, notices and
demands.
The Company may also from time to time designate one or more other
offices or agencies where the Securities of one or more series may be
presented or surrendered for any or all such purposes and may from time to
time rescind such designations; provided, however, that no such designation
or rescission shall in any manner relieve the Company of its obligation to
maintain an office or agency in accordance with the requirements set forth
above for Securities of any series for such purposes. The Company will
give prompt written notice to the Trustee of any such designation or
rescission and of any change in the location of any such other office or
agency.
ARTICLE V
SUCCESSOR CORPORATION
SECTION 5.1 When Company May Merge or Transfer Assets. The Company
shall not consolidate with or merge with or into any other person or
convey, transfer or lease its properties and assets substantially as an
entirety to any person, unless:
(a) either (1) the Company shall be the continuing
corporation or (2) the person (if other than the Company)
formed by such consolidation or into which the Company is
merged or the person which acquires by conveyance,
transfer or lease the properties and assets of the
Company substantially as an entirety (i) shall be a
corporation, partnership or trust organized and validity
existing under the laws of the United States or any state
thereof or the District of Columbia and (ii) shall
expressly assume, by an indenture supplemental hereto,
executed and delivered to the Trustee, in form
satisfactory to the Trustee, all of the obligations of
the Company under the Securities and this Indenture;
(b) immediately after giving effect to such
transaction, no Default shall have occurred and be
continuing; and
(c) the Company shall have delivered to the Trustee
an Officers' Certificate and an Opinion of Counsel, each
stating that such consolidation, merger,
conveyance, transfer or lease and, if a supplemental indenture is
required in connection with such transaction, such supplemental
indenture, comply with this Article and that all conditions
precedent herein relating to such transaction have been satisfied.
The successor person formed by such consolidation or into which
the Company is merged or the successor person to which such conveyance,
transfer or lease is made shall succeed to, and be substituted for, and may
exercise every right and power of, the Company under this Indenture with
the same effect as if such successor had been named as the Company herein;
and thereafter, except in the case of a lease of its properties and assets
substantially as an entirety, the Company shall be discharged from all
obligations and covenants under this Indenture and the Securities.
ARTICLE VI
DEFAULTS AND REMEDIES
SECTION 6.1 Events of Default. Unless otherwise specified as
contemplated by Section 2.3(a) with respect to any series of securities, an
"Event of Default" occurs, with respect to each series of the Securities
individually, if:
(1) the Company defaults in (a) the payment of the principal
of any Security of such series at its Maturity or (b) the payment
of any interest upon any Security of such series when the same
becomes due and payable and continuance of such default for a
period of 30 days;
(2) the Company fails to comply with any of its agreements in
the Securities or this Indenture (other than those referred to in
clause (1) above and other than a covenant or warranty a default
in whose performance or whose breach is elsewhere in this Section
specifically dealt with or which has been expressly included in
this Indenture solely for the benefit of a series of Securities
other than such series) and such failure continues for 60 days
after receipt by the Company of a Notice of Default;
(3) there shall have been the entry by a court of competent
jurisdiction of (a) a decree or order for relief in respect of the
Company in an involuntary case or proceeding under any applicable
Bankruptcy Law or (b) a decree or order adjudging the Company
bankrupt or insolvent, or seeking reorganization, arrangement,
adjustment or composition of or in respect of the Company under
any applicable federal or state law, or appointing a custodian,
receiver, liquidator, assignee, trustee, sequestrator (or other
similar official) of the Company or of any substantial part of its
property, or ordering the wind up or liquidation of its affairs,
and any such decree or order for relief shall continue to be in
effect, or any such other decree or order shall be unstayed and in
effect, for a period of 60 consecutive days;
(4) (a) the Company commences a voluntary case or proceeding
under any applicable Bankruptcy Law or any other case or
proceeding to be adjudicated bankrupt or insolvent, (b) the
Company consents to the entry of a decree or order for relief in
respect of the Company in an involuntary case or proceeding under
any applicable Bankruptcy Law or to the commencement of any
bankruptcy or insolvency case or proceeding against it, (c) the
Company files a petition or answer or consent seeking
reorganization or substantially comparable relief under any
applicable federal state law, (d) the Company (x) consents to the
filing of such petition or the appointment of, or taking
possession by, a custodian, receiver, liquidator, assignee,
trustee, sequestrator or similar official of the Company or of any
substantial part of its property, (y) makes an assignment for the
benefit of creditors or (z) admits in writing its inability to pay
its debts generally as they become due or (e) the Company takes
any corporate action in furtherance of any such actions in this
clause (4); or
(5) any other Event of Default provided with respect to
Securities of that series.
"Bankruptcy Law" means Title 11, United States Code, or any
similar Federal or state law for the relief of debtors. "Custodian" means
any receiver, trustee, assignee, liquidator, custodian or similar official
under any Bankruptcy Law.
A Default under clause (2) above is not an Event of Default
until the Trustee notifies the Company, or the Holders of at least 25% in
aggregate Principal Amount of the Outstanding Securities of such series
notify the Company and the Trustee, of the Default and the Company does not
cure such Default within the time specified in clause (2) above after
receipt of such notice. Any such notice must specify the Default, demand
that it be remedied and state that such notice is a "Notice of Default."
SECTION 6.2 Acceleration. If an Event of Default with respect to
Securities of any series at the time Outstanding (other than an Event of
Default specified in Section 6.1(3) or (4)) occurs and is continuing, the
Trustee by notice to the Company, or the Holders of at least 25% in
aggregate Principal Amount of the Outstanding Securities of that series by
notice to the Company and the Trustee, may declare the Principal Amount
(or, if any of the Securities of that series are Discount Securities, such
portion of the Principal Amount of such Securities as may be specified in
the terms thereof) of all the Securities of that series to be immediately
due and payable. Upon such a declaration, such Principal (or portion
thereof) shall be due and payable immediately. If an Event of Default
specified in Section 6.1(3) or (4) occurs and is continuing, the Principal
(or portion thereof) of all the Securities of that series shall become and
be immediately due and payable without any declaration or other act on the
part of the Trustee or any Securityholders. The Holders of a majority in
aggregate Principal Amount of the Outstanding Securities of any series, by
notice to the Trustee (and without notice to any other Securityholder) may
rescind an acceleration with respect to that series and its consequences if
the rescission would not conflict with any judgment or decree and all
existing Events of Default with respect to Securities of such series have
been cured or waived except nonpayment of the Principal (or portion
thereof) of Securities of such series that has become due solely as a
result of such acceleration and if all amounts due to the Trustee under
Section 7.7 have been paid. No such rescission shall affect any subsequent
Default or impair any right consequent thereto.
SECTION 6.3 Other Remedies. If an Event of Default with respect to
a series of Outstanding Securities occurs and is continuing, the Trustee
may pursue any available remedy to (a) collect the payment of the whole
amount then due and payable on such Securities for Principal and interest,
with interest upon the overdue Principal and, to the extent that payment of
such interest shall be legally enforceable, upon overdue installments of
interest from the date such interest was due, at the rate or rates
prescribed therefor in such Securities and, in addition thereto, such
further amount as shall be sufficient to cover the costs and expenses of
collection, including amounts due the Trustee under Section 7.7 or (b)
enforce the performance of any provision of the Securities or this
Indenture.
The Trustee may maintain a proceeding even if the Trustee does
not possess any of the Securities or does not produce any of the Securities
in the proceeding. A delay or omission by the Trustee or any
Securityholder in exercising any right or remedy accruing upon an Event of
Default shall not impair the right or remedy or constitute a waiver of, or
acquiescence in, the Event of Default. No remedy is exclusive of any other
remedy. All available remedies are cumulative.
SECTION 6.4 Waiver of Past Defaults. The Holders of a majority in
aggregate Principal Amount of the Outstanding Securities of any series,
by notice to the Trustee (and without notice to any other Securityholder),
may on behalf of the Holders of all the Securities of such series waive an
existing Default with respect to such series and its consequences except
(1) an Event of Default described in Section 6.1(1) with respect to such
series or (2) a Default in respect of a provision that under Section 9.2
cannot be amended without the consent of the Holder of each Outstanding
Security of such series affected. When a Default is waived, it is deemed
cured, but no such waiver shall extend to any subsequent or other Default
or impair any consequent right.
SECTION 6.5 Control by Majority. The Holders of a majority in
aggregate Principal Amount of the Outstanding Securities of any series may
direct the time, method and place of conducting any proceeding for any
remedy available to the Trustee or of exercising any trust or power
conferred on the Trustee with respect to the Securities of such series.
However, the Trustee may refuse to follow any direction that conflicts with
law or this Indenture or that the Trustee determines in good faith is
unduly prejudicial to the rights of other Securityholders or would involve
the Trustee in personal liability.
SECTION 6.6 Limitation on Suits. A Holder of any Security of any
series may not pursue any remedy with respect to this Indenture or the
Securities unless:
(1) the Holder gives to the Trustee written notice stating
that an Event of Default with respect to the Securities of that
series is continuing;
(2) the Holders of at least 25% in aggregate Principal Amount
of the Outstanding Securities of that series make a written
request to the Trustee to pursue the remedy;
(3) such Holder or Holders offer to the Trustee reasonable
security or indemnity against any loss, liability or expense
satisfactory to the Trustee;
(4) the Trustee does not comply with the request within 60
days after receipt of the notice, the request and the offer of
security or indemnity; and
(5) the Holders of a majority in aggregate Principal Amount
of the Outstanding Securities of that series do not give the
Trustee a direction inconsistent with such request during such 60-
day period.
A Securityholder may not use this Indenture to prejudice the
rights of any other Securityholder or to obtain a preference or priority
over any other Securityholder.
SECTION 6.7 Rights of Holders to Receive Payment. Notwithstanding
any other provision of this Indenture, the right, which is absolute and
unconditional, of any Holder of any Security to receive payment of the
Principal of and (subject to Section 2.13) interest on such Security on
the Stated Maturity or Maturities expressed in such Security (or, in the
case of redemption, on the Redemption Date) held by such Holder, on or
after the respective due dates expressed in the Securities or any
Redemption Date, or to bring suit for the enforcement of any such
payment on or after such respective dates, shall not be impaired or
affected adversely without the consent of each such Holder.
SECTION 6.8 Collection Suit by Trustee. If an Event of Default
described in Section 6.1(1) with respect to Securities of any series occurs
and is continuing, the Trustee may recover judgment in its own name and as
trustee of an express trust against the Company for the whole amount owing
with respect to such series of Securities and the amounts provided for in
Section 7.7.
SECTION 6.9 Trustee May File Proofs of Claim. In case of the
pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial
proceeding relative to the Company or any other obligor upon the Securities
or the property of the Company or of such other obligor or their creditors,
the Trustee (irrespective of whether the Principal of the Securities shall
then be due and payable as therein expressed or by declaration or otherwise
and irrespective of whether the Trustee shall have made any demand on the
Company for the payment of overdue Principal or interest) shall be entitled
and empowered, by intervention in such proceeding or otherwise,
(a) to file and prove a claim for the whole amount
of Principal and interest owing and unpaid in respect of
the 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 any
other amount due the Trustee under Section 7.7) and of
the Holders of Securities allowed in such judicial
proceeding, and
(b) 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
similar official in any such judicial proceeding is hereby authorized by
each Holder of Securities to make such payments to the Trustee and, in the
event that the Trustee shall consent to the making of such payments
directly to the Holders of Securities, to pay the Trustee any amount due it
for the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel, and any other amounts due the Trustee
under Section 7.7.
Nothing herein contained shall be deemed to authorize the Trustee
to authorize or consent to or accept or adopt on behalf of any Holder of a
Security any plan of reorganization, arrangement, adjustment or composition
affecting the Securities or the rights of any Holder thereof, or to
authorize the Trustee to vote in respect of the claim of any Holder of a
Security in any such proceeding.
SECTION 6.10 Priorities. If the Trustee collects any money pursuant
to this Article 6, it shall pay out the money in the following order and,
in case of the distribution of such money on account of Principal or
interest, upon presentation of the Securities, 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 Trustee for amounts due under Section 7.7;
SECOND: to Securityholders for amounts due and unpaid for the
Principal and interest on the Securities in respect of which or for the
benefit of which such money has been collected, ratably, without preference
or priority of any kind, according to the amounts due and payable on such
Securities for Principal and interest, respectively; and
THIRD: the balance, if any, to the Company.
The Trustee may fix a record date and payment date for any payment
to Securityholders pursuant to this Section 6.10. At least 15 days before
such record date, the Company shall mail to each Securityholder and the
Trustee a notice that states the record date, the payment date and amount
to be paid.
SECTION 6.11 Undertaking for Costs. In any suit for the enforcement
of any right or remedy under this Indenture or in any suit against the
Trustee for any action taken or omitted by it as Trustee, a court in its
discretion may require the filing by any party litigant in the suit of an
undertaking to pay the costs of the suit, and the court in its discretion
may assess reasonable costs, including reasonable attorneys' fees, against
any party litigant in the suit, having due regard to the merits and good
faith of the claims or defenses made by the party litigant. This Section
6.11 does not apply to a suit by the Trustee, a suit by a Holder pursuant
to Section 6.7 or a suit by Holders of more than 10% in aggregate Principal
Amount of the Outstanding Securities of any series, or to any suit
instituted by any Holder of any Security for the enforcement of the payment
of the Principal of or interest on any Security on or after the Stated
Maturity or Maturities expressed in such Security (or, in the case of
redemption, on or after the Redemption Date).
SECTION 6.12 Waiver of Stay, Extension or Usury Laws. The Company
covenants (to the extent that it may lawfully do so) that it will not at
any time insist upon, or plead, or in any manner whatsoever claim or take
the benefit or advantage of, any stay or extension law or any usury or
other law wherever enacted, now or at any time hereafter in force, which
may affect the covenants or the performance of this Indenture; and the
Company (to the extent that it may lawfully do so) hereby expressly waives
all benefit or advantage of any such law, and covenants that it will not
hinder, delay or impede the execution of any power herein granted to the
Trustee, but will suffer and permit the execution of every such power as
though no such law had been enacted.
ARTICLE VII
TRUSTEE
SECTION 7.1 Duties of Trustee.
(a) If an Event of Default has occurred and is continuing, the
Trustee shall exercise the rights and powers vested in it by this Indenture
and use the same degree of care and skill in its exercise as a prudent man
would exercise or use under the circumstances in the conduct of his own
affairs.
(b) Except during the continuance of an Event of Default:
(1) the Trustee need perform only those duties that are
specifically set forth in this Indenture and no others and shall
not be liable except for the performance of such duties; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates
or opinions furnished to the Trustee and conforming to the
requirements of this Indenture. However, the Trustee shall
examine the certificates and opinions to determine whether or not
they conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(1) this paragraph (c) does not limit the effect of paragraph
(b) of this Section 7.1;
(2) the Trustee shall not be liable for any error of judgment
made in good faith by a Trust Officer unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts; and
(3) the Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with
a direction received by it pursuant to Section 6.5.
(d) Every provision of this Indenture that in any way relates to
the Trustee is subject to paragraphs (a), (b), (c) and (e) of this Section
7.1.
(e) The Trustee may refuse to perform any duty or exercise any
right or power or extend or risk its own funds or otherwise incur any
financial liability unless it receives indemnity satisfactory to it against
any loss, liability or expense.
(f) 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 not be liable for any interest on any money received by it
except as the Trustee may otherwise agree with the Company.
SECTION 7.2 Rights of Trustee. (a) The Trustee may rely on any
document believed by it to be genuine and to have been signed or presented
by the proper person. The Trustee need not investigate any fact or matter
stated in the document.
(b) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel. The Trustee
shall not be liable for any action it takes or omits to take in good faith
in reliance on such Officers' Certificate or Opinion of Counsel.
(c) The Trustee may act through agents and shall not be
responsible for the misconduct or negligence of any agent appointed with
due care.
(d) Subject to the provisions of Section 7.1 (c), the Trustee
shall not be liable for any action it takes or omits to take in good faith
which it believes to be authorized or within its rights or powers.
SECTION 7.3 Individual Rights of Trustee, etc. The Trustee in its
individual or any other capacity may become the owner or pledgee of
Securities and may otherwise deal with the Company or its Affiliates with
the same rights it would have if it were not Trustee. Any Paying Agent,
Registrar or co-registrar or any other agent of the Company may do the same
with like rights. However, the Trustee must comply with Sections 7.10 and
7.11.
SECTION 7.4 Trustee's Disclaimer. The Trustee makes no
representation as to the validity or adequacy of this Indenture or the
Securities. The Trustee shall not be accountable for the Company's use of
the proceeds from the Securities and, shall not be responsible for any
statement in the registration statement for the Securities under the
Securities Act of 1933, as amended, or in the Indenture or the Securities
(other than its certificate of authentication) or for the determination as
to which beneficial owners are entitled to receive any notices hereunder.
SECTION 7.5 Notice of Defaults. If a Default with respect to the
Securities of any series occurs and is continuing and if it is known to the
Trustee, the Trustee shall give to each Holder of Securities of such series
notice of such Default in the manner set forth in TIA Section 315(b) within
90 days after it occurs. The Trustee shall have no duty to inquire as to
the performance of the Company's covenants in Article IV hereof. In
addition, the Trustee shall not be deemed to have knowledge of any Default
or Event of Default except (i) any Event of Default occurring pursuant to
Section 4.1 or 6.1(l) or (ii) any Default or Event of Default of which the
Trustee shall have received written notification or obtained actual
knowledge.
SECTION 7.6 Reports by Trustee to Holders. Within 60 days after
each May 15 beginning with the May 15 following the date of this Indenture,
the Trustee shall mail to each Holder of Securities a brief report dated as
of such May 15 that complies with TIA Section 313(a). The Trustee also
shall comply with TIA Section 313(b) and (c).
A copy of each report at the time of its mailing to Holders of
Securities shall be filed with the SEC and each stock exchange on which the
Securities of that series may be listed. The Company agrees to notify the
Trustee whenever the Securities of a particular series become listed on any
stock exchange and of any delisting thereof.
SECTION 7.7 Compensation and Indemnity. The Company agrees:
(a) 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);
(b) to reimburse the Trustee upon its request for
all reasonable expenses, disbursements and advances
incurred or made by the Trustee in accordance with any
provision of this Indenture (including the reasonable
compensation and the expenses, advances 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
(c) to indemnify the Trustee for, and to hold it
harmless against, any loss, liability or expense incurred
without negligence or bad faith on its part, arising out
of or in connection with the acceptance or administration
of this trust, 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.
To secure the Company's payment obligations in this Section 7.7,
the Trustee shall have a lien prior to the Securities on all money or
property held or collected by the Trustee, except that held in trust to pay
the Principal of or interest, if any, on particular Securities.
The Company's payment obligations pursuant to this Section 7.7
shall survive the discharge of this Indenture. When the Trustee incurs
expenses after the occurrence of a Default specified in Section 6.1(3) or
(4), the expenses are intended to constitute expenses of administration
under any Bankruptcy Law.
SECTION 7.8 Replacement of Trustee. The Trustee may resign by so
notifying the Company; provided, however, no such resignation shall be
effective until a successor Trustee has accepted its appointment pursuant
to this Section 7.8. The Holders of a majority in aggregate Principal
Amount of the Outstanding Securities of any series at the time outstanding
may remove the Trustee with respect to the Securities of such series by so
notifying the Trustee and may appoint a successor Trustee. The Company
shall remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or public officer takes charge of the Trustee
or its property; or
(4) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, with respect to the Securities of one or
more series, the Company shall promptly appoint, by resolution of its Board
of Directors, a successor Trustee with respect to the Securities of that or
those series (it being understood that any such successor Trustee may be
appointed with respect to the Securities of one or more or all of such
series and that at any time there shall be only one Trustee with respect to
the Securities of any series).
In the case of the appointment hereunder of a successor Trustee
with respect to all Securities, every such successor Trustee shall deliver
a written acceptance of its appointment to the retiring Trustee and to the
Company. Thereupon, the resignation or removal of the retiring Trustee
shall become effective and the successor Trustee shall have all the rights,
powers and duties of the Trustee under this Indenture. The successor
Trustee shall mail a notice of its succession to Holders of Securities of
the particular series with respect to which such successor Trustee has been
appointed. The retiring Trustee shall promptly transfer all property held
by it as Trustee to the successor Trustee, subject to the lien provided for
in Section 7.7.
In case of the appointment hereunder of a successor Trustee with
respect to the Securities of one or more (but not all) series, the Company,
the retiring Trustee and each successor Trustee with respect to the
Securities of one or more series shall execute and deliver an indenture
supplemental hereto wherein each successor Trustee shall accept such
appointment and which (1) shall contain such provisions as shall be
necessary or desirable to transfer and confirm to, and to vest in, each
successor Trustee all the rights, powers, trusts and duties of the retiring
Trustee with respect to the Securities of that or those series to which the
appointment of such successor Trustee relates, (2) if the retiring Trustee
is not retiring with respect to all Securities, shall contain such
provisions as shall be deemed necessary or desirable to confirm that all
the rights, powers, trusts and duties of the retiring Trustee with respect
to the Securities of that or those series as to which the retiring Trustee
is not retiring shall continue to be vested in the 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 as co-
Trustees of the same trust and that each such Trustee shall be trustee of a
trust or trusts hereunder separate and apart from any trust or trusts
hereunder administered by any other such Trustee; and upon the execution
and delivery of such supplemental indenture the resignation or removal of
the retiring Trustee shall become effective to the extent provided therein
and each such successor Trustee, without any further act, deed or
conveyance, shall become vested with all the rights, powers, trusts and
duties of the retiring Trustee with respect to the Securities of that or
those series to which the appointment of such successor Trustee relates;
but, on request of the Company or any successor Trustee, such retiring
Trustee shall duly assign, transfer and deliver to such successor Trustee
all property and money held by such retiring Trustee hereunder with respect
to the Securities of that or those series to which the appointment of such
successor Trustee relates, subject, nevertheless, to its lien, if any,
provided for in Section 7.7.
If a successor Trustee with respect to the Securities of any
series does not take office within 30 days after the retiring Trustee
resigns or is removed, the retiring Trustee, the Company or the Holders of
a majority in aggregate Principal Amount of the Outstanding Securities of
such series at the time outstanding may petition any court of competent
jurisdiction for the appointment of a successor Trustee with respect to the
Securities of such series.
If the Trustee fails to comply with Section 7.10, any Holder of a
Security of such series may petition any court of competent jurisdiction
for the removal of such Trustee and the appointment of a successor Trustee.
SECTION 7.9 Successor Trustee by Merger. If the Trustee consolidates
with, merges or converts into, or transfers all or substantially all its
corporate trust business or assets to, another corporation, the resulting,
surviving or transferee corporation without any further act shall be the
successor Trustee.
SECTION 7.10 Eligibility; Disqualification. The Trustee shall at
all times satisfy the requirements of TIA Section 310(a)(1) and 310(a)(5).
The Trustee shall have a combined capital and surplus of at least
$50,000,000 as set forth in its most recent published annual report of
condition. The Trustee shall comply with TIA Section 310(b). In
determining whether the Trustee has conflicting interests as defined in TIA
Section 310(b)(1), the provisions contained in the proviso to TIA Section
310(b)(1) shall be deemed incorporated herein.
SECTION 7.11 Preferential Collection of Claims Against Company.
The Trustee shall comply with TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). A Trustee who has resigned or
been removed shall be subject to TIA Section 311(a) to the extent indicated
therein.
ARTICLE VIII
SATISFACTION AND DISCHARGE
SECTION 8.1 Discharge of Liability on Securities. Except as
otherwise provided as contemplated by Section 2.3(a), when (a) the Company
delivers to the Trustee all Outstanding Securities or all Outstanding
Securities of any series, as the case may be, theretofore authenticated and
delivered (other than (i) Securities which have been destroyed, lost or
stolen and which have been replaced or paid as provided in Section 2.9,
(ii) Securities 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 2.6)
for cancellation or (b) all Outstanding Securities have become due and
payable and the Company deposits with the Trustee cash sufficient to pay at
Stated Maturity the Principal Amount of all Principal of and interest on
Outstanding Securities or all Outstanding Securities of such series (other
than Securities replaced pursuant to Section 2.9), and if in either case
the Company pays all other sums payable hereunder by the Company, then this
Indenture shall, subject to Section 7.7, cease to be of further effect as
to all Outstanding Securities or all Outstanding Securities of any series,
as the case may be. The Trustee shall join in the execution of a document
prepared by the Company acknowledging satisfaction and discharge of this
Indenture on demand of the Company accompanied by an Officers' Certificate
and Opinion of Counsel and at the cost and expense of the Company.
SECTION 8.2 Repayment to the Company. The Trustee and the Paying
Agent shall return to the Company on Company Request any money held by them
for the payment of any amount with respect to the Securities that remains
unclaimed for two years; provided, however, that the Trustee or such Paying
Agent, before being required to make any such return, may at the expense
and direction of the Company mail to each Holder of such Securities 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 mailing, any
unclaimed money then remaining will be returned to the Company. After
return to the Company, Holders entitled to the money must look to the
Company for payment as general creditors unless an applicable abandoned
property law designates another person.
SECTION 8.3 Option to Effect Defeasance or Covenant Defeasance.
Unless otherwise specified as contemplated by Section 2.3(a) with
respect to Securities of a particular series, the Company, may at its
option, by Board Resolution, at any time, with respect to any series of
Securities, elect to have either Section 8.4 or Section 8.5 be applied to
all of the outstanding Securities of any series (the "Defeased
Securities"), upon compliance with the conditions set forth below in this
Article VIII.
SECTION 8.4 Defeasance and Discharge.
Upon the Company's exercise under Section 8.3 of the option
applicable to this Section 8.4, the Company shall be deemed to have been
discharged from its obligations with respect to the Defeased Securities on
the date the conditions set forth below 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 the defeased Securities, which shall thereafter be deemed to
be "outstanding" only for the purposes of Sections 2.4, 2.5, 2.6, 2.9,
2.11, 2.12, 4.1, 4.5, 6.6, 6.7, 7.7, 7.8 and 8.2 of this Indenture and to
have satisfied all its other obligations under such series of Securities
and this Indenture insofar as such series of Securities are concerned (and
the Trustee, at the expense of the Company, and, upon written request,
shall execute proper instruments acknowledging the same). Subject to
compliance with this Article VIII, the Company may exercise its option
under this Section 8.4 notwithstanding the prior exercise of its option
under Section 8.5 with respect to a series of Securities.
SECTION 8.5 Covenant Defeasance.
Upon the Company's exercise under Section 8.3 of the option
applicable to this Section 8.5, the Company shall be released from its
obligations under Sections 4.2 and 4.3 and Article V and such other
provisions as may be provided as contemplated by Section 2.3(a) with
respect to Securities of a particular series and with respect to the
Defeased Securities on and after the date the conditions set forth below
are satisfied (hereinafter "covenant defeasance"), and the Defeased
Securities 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 if any thereof) in connection with such covenants,
but shall continue to be deemed "outstanding" for all other purposes
hereunder. For this purpose, such covenant defeasance means that, with
respect to the Defeased Securities, 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 Article, whether directly or indirectly, by
reason of any reference elsewhere herein to any such Section or Article or
by reason of any reference in any such Section or Article to any other
provisions herein or in any other document and such omission to comply
shall not constitute a Default or an Event of Default under Section 6.1
but, except as specified above, the remainder of this Indenture and such
Defeased Securities shall be unaffected thereby.
SECTION 8.6 Condition to Defeasance or Covenant Defeasance. It shall
be a condition to the application of either Section 8.4 or Section 8.5 to a
series of outstanding Securities that the Company shall have irrevocably
deposited with the Trustee, in trust, (i) sufficient funds to pay the
Principal of and interest to Stated Maturity (or redemption) on, the Debt
Securities of such series, or (ii) such amount of direct obligations of,
or obligations the principal of and interest on which are fully guaranteed
by, the government of the United States, and which are not subject to
prepayment, redemption or call, as will, together with the predetermined
and certain income to accrue thereon without consideration of any
reinvestment thereof, be sufficient to pay when due the Principal of, and
interest to Stated Maturity (or redemption) on, the Debt Securities of
such series.
ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 9.1 Supplemental Indentures without Consent of Holders.
Without the consent of any Holders of Securities, the Company 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 corporation to the
Company and the assumption by any such successor of the covenants
of the Company herein and in the Securities; or
(2) to add to the covenants, agreements and obligations of
the Company for the benefit of the Holders of all of the
Securities or any series thereof, or to surrender any right or
power herein conferred upon the Company; or
(3) to establish the form or terms of Securities of any
series as permitted by Sections 2.1 and 2.3(a), respectively; or
(4) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Securities of
one or more series and to add to or change any of the provisions
of this Indenture as shall be necessary to provide for or
facilitate the administration of the trusts hereunder by more than
one Trustee, pursuant to the requirements of Section 7.8; or
(5) to cure any ambiguity, defect or inconsistency; or
(6) to add to, change or eliminate any of the provisions of
this Indenture (which addition, change or elimination may apply to
one or more series of Securities), provided that any such
addition, change or elimination shall neither (A) apply to any
Security of any series created prior to the execution of such
supplemental indenture and entitled to the benefit of such
provision nor (B) modify the rights of the Holder of any such
Security with respect to such provision; or
(7) to secure the Securities; or
(8) to make any other change that does not adversely affect
the rights of any Securityholder.
SECTION 9.2 Supplemental Indentures with Consent of Holders. With
the written consent of the Holders of at least a majority in aggregate
Principal Amount of the Outstanding Securities of each series affected by
such supplemental indenture, the Company and the Trustee may amend this
Indenture or the Securities of any series or may enter into an indenture or
indentures supplemental hereto for the purpose of adding any provisions to
or changing in any manner or eliminating any of the provisions of this
Indenture or of modifying in any manner the rights of the Holders of the
Securities of such series under this Indenture; provided, however, that no
such amendment or supplemental indenture shall, without the consent of the
Holder of each Outstanding Security affected thereby:
(1) change the Stated Maturity of the Principal of, or any
installment of Principal of or interest on, any such Security, or
reduce the Principal Amount thereof or the rate of interest
thereon or any premium payable upon redemption thereof or reduce
the amount of Principal of any such Discount Security that would
be due and payable upon a declaration of acceleration of maturity
thereof pursuant to Section 6.2, or change the Place of Payment,
or change the coin or currency in which, any Principal of, or any
installment of interest on, any such Security is payable, or
impair the right to institute suit for the enforcement of any such
payment on or after the Stated Maturity thereof (or, in the case
of redemption, on or after the Redemption Date);
(2) reduce the percentage in Principal Amount of the
Outstanding Securities of any series, the consent of whose Holders
is required for any such amendment or supplemental indenture, or
the consent of whose Holders is required for any waiver (of
compliance with certain provisions of this Indenture or certain
defaults hereunder and their consequences) with respect to the
Securities of such series provided for in this Indenture; or
(3) modify any of the provisions of this Section, Section 6.4
or 6.7, except to increase the percentage of Outstanding
Securities of such series required for such actions or to provide
that certain other provisions of this Indenture cannot be modified
or waived without the consent of the Holder of each Outstanding
Security affected thereby.
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 Securities, or
which modifies the rights of the Holders of Securities of such series with
respect to such covenant or other provision, shall be deemed not to affect
the rights under this Indenture of the Holders of Securities of any other
series.
It shall not be necessary for the consent of the Holders under
this Section 9.2 to approve the particular form of any proposed amendment
or supplemental indenture, but it shall be sufficient if such consent
approves the substance thereof.
After an amendment or supplemental indenture under this Section
9.2 becomes effective, the Company shall mail to each Holder of the
particular Securities affected thereby a notice briefly describing the
amendment.
SECTION 9.3 Compliance with Trust Indenture Act. Every supplemental
indenture executed pursuant to this Article shall comply with the TIA as
then in effect.
SECTION 9.4 Revocation and Effect of Consents, Waivers and Actions.
Until an amendment or waiver with respect to a series of Securities becomes
effective, a consent to it or any other action by a Holder of a Security of
that series hereunder is a continuing consent by the Holder and every
subsequent Holder of that Security or portion of that Security that
evidences the same obligation as the consenting Holder's Security, even if
notation of the consent, waiver or action is not made on the Security.
However, any such Holder or subsequent Holder may revoke the consent,
waiver or action as to such Holder's Security or portion of the Security
if the Trustee receives the notice of revocation before the Company or an
agent of the Company certifies to the Trustee that the consent of the
requisite aggregate Principal Amount of the Securities of that series has
been obtained. After an amendment, waiver or action becomes effective, it
shall bind every Holder of Securities of that series.
The Company may, but shall not be obligated to, fix a record date
for the purpose of determining the Holders entitled to consent to any
amendment or waiver with respect to a series of Securities. If a record
date is fixed, then notwithstanding the first two sentences of the
immediately preceding paragraph, those persons who were Holders of
Securities of that series at such record date (or their duly designated
proxies), and only those persons, shall be entitled to revoke any consent
previously given, whether or not such persons continue to be Holders after
such record date. No such consent shall be valid or effective for more
than 90 days after such record date.
SECTION 9.5 Notation on or Exchange of Securities. Securities of
any series authenticated and delivered after the execution of any
supplemental indenture with respect to such series pursuant to this Article
may, and shall if required by the Trustee, bear a notation in form approved
by the Trustee as to any matter provided for in such supplemental
indenture. If the Company shall so determine, new Securities of such
series so modified as to conform, in the opinion of the Trustee and the
Board of Directors, to any such supplemental indenture may be prepared and
executed by the Company and authenticated and delivered by the Trustee in
exchange for outstanding Securities of that series.
SECTION 9.6 Trustee to Sign Supplemental Indentures. The Trustee
shall sign any supplemental indenture authorized pursuant to this Article 9
if the amendment does not adversely affect the rights, duties, liabilities
or immunities of the Trustee. If it does, the Trustee may, but need not,
sign it. In signing such amendment, the Trustee shall be entitled to
receive, and (subject to the provisions of Section 7.1) shall be fully
protected in relying upon, an Officers' Certificate and an Opinion of
Counsel stating that such amendment is authorized or permitted by this
Indenture.
SECTION 9.7 Effect of Supplemental Indentures. Upon the execution of
any supplemental indenture under this Article, this Indenture shall be
modified in accordance therewith, and such supplemental indenture shall
form a part of this Indenture for all purposes; and every Holder of
Securities theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby, except to the extent otherwise set forth thereon.
ARTICLE X
SINKING FUNDS
SECTION 10.1 Applicability of Article. The provisions of this
Article shall be applicable to any sinking fund for the retirement of
Securities of a series, except as otherwise specified as contemplated by
Section 2.3(a) for Securities of such series.
The minimum amount of any sinking fund payment provided for by the
terms of Securities of any series is herein referred to as a "mandatory
sinking fund payment," and any payment in excess of such minimum amount
provided for by the terms of Securities of any series is herein referred to
as an "optional sinking fund payment." If provided for by the terms of
Securities of any series, the cash amount of any sinking fund payment may
be subject to reduction as provided in Section 10.2. Each sinking fund
payment shall be applied to the redemption of Securities of any series as
provided for by the terms of the Securities of such series.
SECTION 10.2 Satisfaction of Sinking Fund Payments with Securities.
The Company (1) may deliver Outstanding Securities of a series with the
same issue date, interest rate and Stated Maturity (other than any
previously called for redemption), and (2) may apply as a credit Securities
of a series with the same issue date, interest rate and Stated Maturity
which have been redeemed either at the election of the Company pursuant to
the terms of such Securities or through the application of permitted
optional sinking fund payments pursuant to the terms of such Securities, in
each case, in satisfaction of all or any part of any mandatory sinking fund
payment with respect to the Securities of such series with the same issue
date, interest rate and Stated Maturity; provided that such Securities have
not been previously so credited. Such Securities shall be received and
credited for such purpose by the Trustee at the Redemption Price specified
in such Securities for redemption through operation of the sinking fund and
the amount of such sinking fund payment shall be reduced accordingly.
SECTION 10.3 Redemption of Securities for Sinking Fund. Not less
than 60 days (or such shorter period as shall be acceptable to the Trustee)
prior to each sinking fund payment date for any series of Securities, the
Company will deliver to the Trustee an Officers' Certificate specifying the
amount of the next sinking fund payment for that series pursuant to the
terms of that series, the portion thereof, if any, which is to be satisfied
by payment of cash and the portion thereof, if any, which is to be
satisfied by delivering and crediting Securities of that series pursuant to
Section 10.2 and will also deliver to the Trustee any Securities to be so
delivered. Not less than 30 days before each such sinking fund payment
date the Trustee shall select the Securities to be redeemed upon such
sinking fund payment date in the manner specified in Section 3.2 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 3.3. Such notice
having been duly given, the redemption of such Securities shall be made
upon the terms and in the manner stated in Sections 3.4 and 3.6.
ARTICLE XI
ACTIONS OF HOLDERS OF SECURITIES
SECTION 11.1 Purposes for which Meetings may be Called. A meeting
of Holders of Securities of any series may be called at any time and from
time to time pursuant to this Article to make, give or take any request,
demand, authorization, direction, notice, consent, waiver or other action
provided by this Indenture to be made, given or taken by Holders of
Securities of such series.
SECTION 11.2 Call, Notice and Place of Meetings. (a) The Trustee
may at any time call a meeting of Holders of Securities of any series for
any purpose specified in Section 11.1, to be held at such time and at such
place in the Borough of Manhattan, The City of New York or, with the
approval of the Company, at any other place. Notice of every meeting of
Holders of Securities of any series, setting forth the time and the place
of such meeting and in general terms the action proposed to be taken at
such meeting, shall be given, in the manner provided in Section 12.2, 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 or the Holders of at least
10% in Principal Amount of the Outstanding Securities of any series shall
have requested the Trustee to call a meeting of the Holders of Securities
of such series for any purpose specified in Section 11.1, by written
request setting forth in reasonable detail the action proposed to be taken
at the meeting, and the Trustee shall not have made the first publication
of the notice of such meeting within 21 days after receipt of such request
or shall not thereafter proceed to cause the meeting to be held as provided
herein, then the Company or the Holders of Securities of such series in the
amount above specified, as the case may be, may determine the time and the
place in the Borough of Manhattan, The City of New York, or in such other
place as shall be determined and approved by the Company, for such meeting
and may call such meeting for such purposes by giving notice thereof as
provided in subsection (a) of this Section 11.2.
SECTION 11.3 Persons Entitled to Vote at Meetings. To be entitled to
vote at any meeting of Holders of Securities of any series, a person shall
be (1) a Holder of one or more Outstanding Securities of such series, or
(2) a person appointed by an instrument in writing as proxy for a Holder or
Holders of one or more Outstanding Securities of such series by such Holder
or Holders. The only persons who shall be entitled to be present or to
speak at any meeting of Holders of Securities of any series shall be the
persons entitled to vote at such meeting and their counsel, any
representatives of the Trustee and its counsel and any representatives of
the Company and its counsel.
SECTION 11.4 Quorum; Action. The persons entitled to vote a
majority in Principal Amount of the Outstanding Securities of a series
shall constitute a quorum for a meeting of Holders of Securities of such
series. In the absence of a quorum within 30 minutes of the time appointed
for any such meeting, the meeting shall, if convened at the request of
Holders of Securities of such series, be dissolved. In any other case, the
meeting may be adjourned for a period 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 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 11.2(a), except
that such notice need be given only once not less than five days prior to
the date on which the meeting is scheduled to be reconvened. Notice of the
reconvening of an adjourned meeting shall state expressly the percentage,
as provided above, of the principal amount of the Outstanding Securities of
such series which shall constitute a quorum.
Except as limited by the proviso to Section 9.2, 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 Securities
of that series; provided, however, that, except as limited by the proviso
to Section 9.2, any resolution with respect to any request, demand,
authorization, direction, notice, consent, waiver or other action which
this Indenture expressly provides may be made, given or taken by the
Holders of a specified percentage, which is less than a majority, in
Principal Amount of the Outstanding Securities of a series may be adopted
at a meeting or an adjourned meeting duly reconvened and at which a quorum
is present as aforesaid by the affirmative vote of the Holders of such
specified percentage in Principal Amount of the Outstanding Securities of
that series.
Any resolution passed or decision taken at any meeting of Holders
of Securities of any series duly held in accordance with this Section shall
be binding on all the Holders of Securities of such series, whether or not
present or represented at the meeting.
SECTION 11.5 Determination of Voting Rights; Conduct and Adjournment
of Meetings. (a) Notwithstanding any other provisions of this Indenture,
the Trustee may make such reasonable regulations as it may deem advisable
for any meeting of Holders of Securities of a series in regard to proof of
the holding of Securities of such series and of the appointment of proxies
and in regard to the appointment and duties of inspectors of votes, the
submission and examination of proxies, certificates and other evidence of
the right to vote, and such other matters concerning the conduct of the
meeting as it shall deem appropriate. Except as otherwise permitted or
required by any such regulations, the holding of Securities shall be proved
in the manner specified in Section 11.7 and the appointment of any proxy
shall be proved in the manner specified in Section 11.7. 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 11.7 or other proof.
(b) The Trustee shall, by an instrument in writing, appoint a
temporary chairman of the meeting, unless the meeting shall have been
called by the Company or by Holders of Securities as provided in Section
11.2 (b), in which case the Company or the Holders of Securities of the
series calling the meeting, as the case may be, shall in like manner
appoint a temporary chairman. A permanent chairman and a permanent
secretary of the meeting shall be elected by vote of the persons entitled
to vote a majority in Principal Amount of the Outstanding Securities of
such series represented at the meeting.
(c) At any meeting each Holder of a Security of such series or
proxy shall be entitled to vote with respect to the Outstanding Securities
of such series held or represented by him; provided, however, that no vote
shall be cast or counted at any meeting in respect of any Security
challenged as not Outstanding and ruled by the chairman of the meeting to
be not Outstanding. The chairman of the meeting shall have no right to
vote, except as a Holder of a Security of such series or proxy.
(d) Any meeting of Holders of Securities of any series duly
called pursuant to Section 11.2 at which a quorum is present may be
adjourned from time to time by persons entitled to vote a majority in
Principal Amount of the Outstanding Securities of such series represented
at the meeting; and the meeting may be held as so adjourned without further
notice.
SECTION 11.6 Counting Votes and Recording Action of Meetings.
The vote upon any resolution submitted to any meeting of Holders of
Securities of any series shall be by written ballots on which shall be
subscribed signatures of the Holders of Securities of such series or of
their representatives by proxy and the Principal Amounts and serial numbers
of the Outstanding Securities of such series held or represented by them.
The permanent chairman of the meeting shall appoint two inspectors of votes
who shall count all votes cast at the meeting for or against any resolution
and who shall make and file with the secretary of the meeting their
verified written reports in duplicate of all votes cast at the meeting. A
record, at least in duplicate, of the proceedings of each meeting of
Holders of Securities of any series shall be prepared by the secretary of
the meeting and there shall be attached to said record the original reports
of the inspectors of votes on any vote by ballot taken thereat and
affidavits by one or more persons having knowledge of the facts setting
forth a copy of the notice of the meeting and showing that said notice was
given as provided in Section 11.2 and, if applicable, Section 11.4. 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.
SECTION 11.7 Actions of Holders Generally. (a) Any request, demand,
authorization, direction, notice, consent, waiver or other action provided
by this Indenture to be given or taken by Holders may be embodied in and
evidenced by one or more instruments of substantially similar tenor signed
by such Holders in person or by an agent duly appointed in writing.
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. Proof of execution of any such instrument or of a writing
appointing any such agent, or of the holding by any person of a Security,
shall be sufficient for any purpose of this Indenture and (subject to
Section 7.1) conclusive in favor of the Trustee and the Company, if made in
the manner provided in this Section. The record of any meeting of Holders
of Securities shall be proved in the manner provided in Section 11.6.
(b) The fact and date of the execution by any person of any such
instrument or writing, or the authority of the persons executing the same,
may be proved in any reasonable manner which the Trustee deems sufficient.
(c) The Principal Amount and serial numbers of Securities held by
the person, and the date of holding the same, shall be proved by the books
of the Registrar.
(d) Any request, demand, authorization, direction, notice,
consent, waiver or other act of the Holder of any Security in accordance
with this Section shall bind every future Holder of the same Security and
the Holder of every Security issued upon the registration of transfer
thereof or in exchange therefor or in lieu thereof in respect of anything
done, omitted or suffered to be done by the Trustee or the Company in
reliance thereon, whether or not notation of such action is made upon such
Security.
(e) If the Company shall solicit from the Holders any request,
demand, authorization, direction, notice, consent, waiver or other act in
accordance with this Section, the Company may, at its option, by or
pursuant to an Officers' Certificate delivered to the Trustee, fix in
advance a record date for the determination of Holders entitled to give
such request, demand, authorization, direction, notice, consent, waiver or
such other act, but the Company shall have no obligation to do so. 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 percentage of Outstanding
Securities or Outstanding Securities of a series, as the case may be, have
authorized or agreed or consented to such request, demand, authorization,
direction, notice, consent, waiver or other act, and for that purpose the
Outstanding Securities or Outstanding Securities of the series, as the case
may be, shall be computed as of such record date; provided, that no such
authorization, agreement or consent by the Holders on the record date shall
be deemed effective unless such request, demand, authorization, direction,
notice, consent, waiver or other act shall become effective pursuant to the
provisions of clause (a) of this Section 11.7 not later than six months
after the record date.
ARTICLE XII
MISCELLANEOUS
SECTION 12.1 Trust Indenture Act Controls. If any provision of this
Indenture limits, qualifies or conflicts with another provision hereof
which is required to be included in this Indenture by the TIA, the required
provision shall control.
SECTION 12.2 Notices. Any notice or communication shall be in
writing and delivered in person or mailed by first-class mail, postage
prepaid, addressed as follows:
if to the Company:
Asset Investors Corporation
3410 South Galena Street, Suite 210
Denver, Colorado 80231
Attention: [ ]
if to the Trustee:
United States Trust Company of New York
114 West 47th Street
New York, NY 10036
Attention: Corporate Trust Department
The Company or the Trustee by notice to the other may designate
additional or different addresses for subsequent notices or communications.
Any notice or communication given to a Holder of Securities shall
be mailed to such Securityholder at the Securityholder's address as it
appears on the registration books of the Registrar and shall be
sufficiently given if so mailed within the time prescribed.
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.
Failure to mail a notice or communication to a Securityholder or
any defect in it shall not affect its sufficiency with respect to other
Holders of Securities of the same series. If a notice or communication is
mailed in the manner provided above, it is duly given, whether or not
received by the addressee.
If the Company mails a notice or communication to the Holders of
Securities of a particular series, it shall mail a copy to the Trustee and
each Registrar, co-registrar or Paying Agent, as the case may be, with
respect to such series.
In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give notice to
Holders of Securities by mail, then such notification as shall be made with
the acceptance of the Trustee shall constitute a sufficient notification
for every purpose hereunder. In any case where notice to Holders of
Securities is given by mail, neither the failure to mail such notice, nor
any defect in any notice so mailed, to any particular Holder of a Security
shall affect the sufficiency of such notice with respect to other Holders
of Securities given as provided herein.
SECTION 12.3 Communication by Holders with Other Holders.
Securityholders may communicate pursuant to TIA Section 312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities. The Company and the Trustee, the Registrar or the Paying Agent
with respect to a particular series of Securities, and anyone else, shall
have the protection of TIA Section 312(c).
SECTION 12.4 Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company to the Trustee to take any
action under this Indenture, the Company shall furnish to the Trustee:
(1) an Officers' Certificate stating that, in the opinion of
the signers, all conditions precedent, if any, provided for in
this Indenture relating to the proposed action have been complied
with; and
(2) an Opinion of Counsel stating that, in the opinion of
such counsel, all such conditions precedent have been complied
with.
SECTION 12.5 Statements Required in Certificate or Opinion. Each
Officers' Certificate or Opinion of Counsel with respect to compliance with
a covenant or condition provided for in this Indenture shall include:
(1) statement that each person making such Officers'
Certificate or Opinion of Counsel has read such covenant or
condition;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such Officers' Certificate or Opinion of Counsel are
based;
(3) a statement that, in the opinion of each such person, he
has made such examination or investigation as is necessary to
enable such person to express an informed opinion as to whether or
not such covenant or condition has been complied with; and
(4) a statement that, in the opinion of such person, such
covenant or condition has been complied with.
SECTION 12.6 Separability Clause. In case any provision in this
Indenture or in the Securities shall be invalid, illegal or unenforceable,
the validity, legality and enforceability of the remaining provisions shall
not in any way be affected or impaired thereby.
SECTION 12.7 Rules by Trustee, Paying Agent and Registrar. With
respect to the Securities of a particular series, the Trustee with respect
to such series of Securities may make reasonable rules for action by or a
meeting of Holders of such series of Securities. With respect to the
Securities of a particular series, the Registrar and the Paying Agent with
respect to such series of Securities may make reasonable rules for their
functions.
SECTION 12.8 Legal Holidays. A "Legal Holiday" is any day other
than a Business Day. If any specified date (including an Interest Payment
Date, Redemption Date or Stated Maturity of any Security, or a date for
giving notice) is a Legal Holiday at any Place of Payment or place for
giving notice, then (notwithstanding any other provision of this Indenture
or of the Securities other than a provision in the Securities of any series
which specifically states that such provision shall apply in lieu of this
Section) payment of interest or Principal need not be made at such Place of
Payment, or such other action need not be taken, on such date, but the
action shall be taken on the next succeeding day that is not a Legal
Holiday at such Place of Payment with the same force and effect as if made
on the Interest Payment Date or Redemption Date, or at the Stated Maturity
or such other date and to the extent applicable no Original Issue Discount
or interest, if any, shall accrue for the intervening period.
SECTION 12.9 Governing Law. THIS INDENTURE AND THE SECURITIES SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK, AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF
NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
SECTION 12.10 No Recourse Against Others. A director, officer,
employee or stockholder, as such, of the Company shall not have any
liability for any obligations of the Company under the Securities or this
Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. By accepting a Security, each Holder of such
Security shall waive and release all such liability. The waiver and
release shall be part of the consideration for the issue of the Securities.
SECTION 12.11 Successors. All agreements of the Company in this
Indenture and the Securities shall bind its respective successor. All
agreements of the Trustee in this Indenture shall bind its successor.
SECTION 12.12 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 12.13 Benefits of Indenture. Nothing in this Indenture
or in the Securities, express or implied, shall give to any person, other
than the parties hereto and their successors hereunder and the Holders of
Securities, any benefits or any legal or equitable right, remedy or claim
under this Indenture.
SECTION 12.14 Multiple Originals. The parties may sign any number
of copies of this Indenture. Each signed copy shall be an original, but
all of them together represent the same agreement. One signed copy is
enough to prove this Indenture.
ASSET INVESTORS CORPORATION
By:______________________________________
Name:
Title:
Attest:
____________________________
Name:
Title:
UNITED STATES TRUST COMPANY OF NEW YORK,
as Trustee
By:_____________________________________
Name:
Title:
Attest:
_____________________________
Name:
Title:
EXHIBIT 4.2
ASSET INVESTORS CORPORATION
SENIOR SUBORDINATED DEBT SECURITIES
INDENTURE
Dated as of__________
UNITED STATES TRUST COMPANY OF NEW YORK,
Trustee
<PAGE>
CROSS REFERENCE TABLE(1)
TIA INDENTURE
SECTION SECTION
------- ---------
310 (a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . 7.8; 7.10
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(a)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(a)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(a)(5) . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.8; 7.10
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A
311 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.11
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.11
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
312 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.7
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.3
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.3
313 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.6
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.6
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.6; 13.2
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.6
314 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2; 13.2
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(c)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . 13.4
(c)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . 13.4
(c)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.5
(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3
315 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.5; 13.2
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.11
316 (a)(1)(A) . . . . . . . . . . . . . . . . . . . . . . . . . 6.5
(a)(1)(B) . . . . . . . . . . . . . . . . . . . . . . . . . 6.4
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.7
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
317 (a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . 6.8
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . 6.9
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.6
318 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.1
- -----------------------
(1) Note: This Cross Reference Table sh
be deemed to be part of the Indenture.
<PAGE>
TABLE OF CONTENTS(2)
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1 Definitions. . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.2 Other Definitions. . . . . . . . . . . . . . . . . . . . 5
SECTION 1.3 Incorporation by Reference of Trust Indenture Act. . . . 6
SECTION 1.4 Rules of Construction. . . . . . . . . . . . . . . . . . 6
----------------------
(2) Note: This Table of Contents shall not, for any reason,
be deemed to be part of the Indenture.
ARTICLE II
THE SECURITIES
SECTION 2.1 Forms Generally. . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.2 Securities in Global Form. . . . . . . . . . . . . . . . 7
SECTION 2.3 Title, Terms and Denominations. . . . . . . . . . . . . 8
SECTION 2.4 Execution, Authentication, Delivery and Dating . . . . . 11
SECTION 2.5 Registrar and Paying Agent. . . . . . . . . . . . . . . 13
SECTION 2.6 Paying Agent to Hold Money and Securities in Trust. . . 14
SECTION 2.7 Securityholder Lists. . . . . . . . . . . . . . . . . . 14
SECTION 2.8 Transfer and Exchange. . . . . . . . . . . . . . . . . . 15
SECTION 2.9 Replacement Securities. . . . . . . . . . . . . . . . . 17
SECTION 2.10 Outstanding Securities; Determinations of Holders'
Action . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 2.11 Temporary Securities . . . . . . . . . . . . . . . . . . 19
SECTION 2.12 Cancellation . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 2.13 Payment of Interest; Interest Rights Preserved . . . . . 20
SECTION 2.14 Persons Deemed Owners . . . . . . . . . . . . . . . . . 21
SECTION 2.15 Computation of Interest . . . . . . . . . . . . . . . . 21
ARTICLE III
REDEMPTION
SECTION 3.1 Right to Redeem; Notices to Trustee. . . . . . . . . . . 22
SECTION 3.2 Selection of Securities to be Redeemed. . . . . . . . . 22
SECTION 3.3 Notice of Redemption. . . . . . . . . . . . . . . . . . 22
SECTION 3.4 Effect of Notice of Redemption. . . . . . . . . . . . . 23
SECTION 3.5 Deposit of Redemption Price. . . . . . . . . . . . . . . 23
SECTION 3.6 Securities Redeemed in Part. . . . . . . . . . . . . . . 24
ARTICLE IV
COVENANTS
SECTION 4.1 Payment of Securities. . . . . . . . . . . . . . . . . . 24
SECTION 4.2 SEC Reports. . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 4.3 Compliance Certificate. . . . . . . . . . . . . . . . . 24
SECTION 4.4 Further Instruments and Acts. . . . . . . . . . . . . . 25
SECTION 4.5 Maintenance of Office or Agency. . . . . . . . . . . . . 25
SECTION 4.6 Limitations on the Incurrence of Certain Other Debt. . . 25
ARTICLE V
SUCCESSOR CORPORATION
SECTION 5.1 When Company May Merge or Transfer Assets. . . . . . . . 26
ARTICLE VI
DEFAULTS AND REMEDIES
SECTION 6.1 Events of Default. . . . . . . . . . . . . . . . . . . . 26
SECTION 6.2 Acceleration. . . . . . . . . . . . . . . . . . . . . . 28
SECTION 6.3 Other Remedies. . . . . . . . . . . . . . . . . . . . . 28
SECTION 6.4 Waiver of Past Defaults. . . . . . . . . . . . . . . . . 29
SECTION 6.5 Control by Majority. . . . . . . . . . . . . . . . . . . 29
SECTION 6.6 Limitation on Suits. . . . . . . . . . . . . . . . . . . 29
SECTION 6.7 Rights of Holders to Receive Payment. . . . . . . . . . 30
SECTION 6.8 Collection Suit by Trustee. . . . . . . . . . . . . . . 30
SECTION 6.9 Trustee May File Proofs of Claim. . . . . . . . . . . . 30
SECTION 6.10 Priorities . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 6.11 Undertaking for Costs . . . . . . . . . . . . . . . . . 31
SECTION 6.12 Waiver of Stay, Extension or Usury Laws . . . . . . . . 32
ARTICLE VII
TRUSTEE
SECTION 7.1 Duties of Trustee. . . . . . . . . . . . . . . . . . . . 32
SECTION 7.2 Rights of Trustee. . . . . . . . . . . . . . . . . . . . 33
SECTION 7.3 Individual Rights of Trustee, etc. . . . . . . . . . . . 33
SECTION 7.4 Trustee's Disclaimer. . . . . . . . . . . . . . . . . . 34
SECTION 7.5 Notice of Defaults. . . . . . . . . . . . . . . . . . . 34
SECTION 7.6 Reports by Trustee to Holders. . . . . . . . . . . . . . 34
SECTION 7.7 Compensation and Indemnity. . . . . . . . . . . . . . . 34
SECTION 7.8 Replacement of Trustee. . . . . . . . . . . . . . . . . 35
SECTION 7.9 Successor Trustee by Merger. . . . . . . . . . . . . . . 37
SECTION 7.10 Eligibility; Disqualification . . . . . . . . . . . . . 37
SECTION 7.11 Preferential Collection of Claims Against Company . . . 37
ARTICLE VIII
SATISFACTION AND DISCHARGE
SECTION 8.1 Discharge of Liability on Securities. . . . . . . . . . 37
SECTION 8.2 Repayment to the Company. . . . . . . . . . . . . . . . 38
SECTION 8.3 Option to Effect Defeasance or Covenant Defeasance. . . 38
SECTION 8.4 Defeasance and Discharge. . . . . . . . . . . . . . . . 38
SECTION 8.5 Covenant Defeasance. . . . . . . . . . . . . . . . . . . 38
SECTION 8.6 Condition to Defeasance or Covenant Defeasance. . . . . 39
ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 9.1 Supplemental Indentures without Consent of Holders. . . 39
SECTION 9.2 Supplemental Indentures with Consent of Holders. . . . . 40
SECTION 9.3 Compliance with Trust Indenture Act. . . . . . . . . . . 41
SECTION 9.4 Revocation and Effect of Consents, Waivers and
Actions . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 9.5 Notation on or Exchange of Securities. . . . . . . . . . 42
SECTION 9.6 Trustee to Sign Supplemental Indentures. . . . . . . . . 42
SECTION 9.7 Effect of Supplemental Indentures. . . . . . . . . . . . 42
ARTICLE X
SINKING FUNDS
SECTION 10.1 Applicability of Article . . . . . . . . . . . . . . . 43
SECTION 10.2 Satisfaction of Sinking Fund Payments with
Securities . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 10.3 Redemption of Securities for Sinking Fund . . . . . . . 43
ARTICLE XI
ACTIONS OF HOLDERS OF SECURITIES
SECTION 11.1 Purposes for which Meetings may be Called . . . . . . . 44
SECTION 11.2 Call, Notice and Place of Meetings . . . . . . . . . . . 44
SECTION 11.3 Persons Entitled to Vote at Meetings . . . . . . . . . . 44
SECTION 11.4 Quorum; Action . . . . . . . . . . . . . . . . . . . . . 45
SECTION 11.5 Determination of Voting Rights; Conduct and
Adjournment of Meetings . . . . . . . . . . . . . . . 45
SECTION 11.6 Counting Votes and Recording Action of Meetings . . . . 46
SECTION 11.7 Actions of Holders Generally . . . . . . . . . . . . . . 47
ARTICLE XII
SUBORDINATION
SECTION 12.1 Securities Subordinate to Senior Indebtedness . . . . . 48
SECTION 12.2 Payment Over of Proceeds upon Dissolution, Etc. . . . . 49
SECTION 12.3 Acceleration of Securities . . . . . . . . . . . . . . . 50
SECTION 12.4 Default in Senior Indebtedness . . . . . . . . . . . . . 51
SECTION 12.5 Payment Permitted if No Default . . . . . . . . . . . . 52
SECTION 12.6 Subrogation Rights of Holders of Senior Indebtedness . . 52
SECTION 12.7 Provision Solely to Define Relative Rights . . . . . . . 52
SECTION 12.8 Trustee to Effectuate Subordination . . . . . . . . . . 53
SECTION 12.9 No Waiver of Subordination Provisions . . . . . . . . . 53
SECTION 12.10 Notice to Trustee . . . . . . . . . . . . . . . . . . . 54
SECTION 12.11 Reliance on Judicial Order or Certificate of
Liquidating Agent . . . . . . . . . . . . . . . . . . 54
SECTION 12.12 Trustee Not Fiduciary for Holders of Senior
Indebtedness . . . . . . . . . . . . . . . . . . . . 55
SECTION 12.13 Rights of Trustee as Holder of Senior Indebtedness;
Preservation of Trustee's Rights . . . . . . . . . . 55
SECTION 12.14 Article XII Applicable to Paying Agents . . . . . . . . 55
ARTICLE XIII
MISCELLANEOUS
SECTION 13.1 Trust Indenture Act Controls . . . . . . . . . . . . . . 56
SECTION 13.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 13.3 Communication by Holders with Other Holders . . . . . . 57
SECTION 13.4 Certificate and Opinion as to Conditions Precedent . . . 57
SECTION 13.5 Statements Required in Certificate or Opinion . . . . . 57
SECTION 13.6 Separability Clause . . . . . . . . . . . . . . . . . . 58
SECTION 13.7 Rules by Trustee, Paying Agent and Registrar . . . . . . 58
SECTION 13.8 Legal Holidays . . . . . . . . . . . . . . . . . . . . . 58
SECTION 13.9 Governing Law . . . . . . . . . . . . . . . . . . . . . 58
SECTION 13.10 No Recourse Against Others . . . . . . . . . . . . . . . 58
SECTION 13.11 Successors . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 13.12 Effect of Headings and Table of Contents . . . . . . . . 59
SECTION 13.13 Benefits of Indenture . . . . . . . . . . . . . . . . . 59
SECTION 13.14 Multiple Originals . . . . . . . . . . . . . . . . . . 60
<PAGE>
INDENTURE dated as of __________, by and among Asset Investors
Corporation, a Maryland corporation ("Company"), and United States Trust
Company of New York, as trustee ("Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of its unsecured
debentures, notes or other evidences of indebtedness (herein called the
"Securities") to be issued in one or more series as in this Indenture
provided.
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually covenanted and agreed,
for the equal and ratable benefit of the Holders of the Securities or each
series thereof as follows:
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1 Definitions.
"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 or cause the direction of 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.
"Board of Directors" means either the board of directors of the
Company or any committee of such board authorized with respect to any
matter to exercise the powers of the Board of Directors of the Company.
"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" means, except as otherwise specified as contemplated by
Section 2.3(a), with respect to any Place of Payment or any other
particular location referred to in this Indenture or in the Securities,
means each Monday, Tuesday, Wednesday, Thursday and Friday which is not a
day on which banking institutions in that Place of Payment or other
location are authorized or obligated by law or executive order to close.
"Capital Stock" for any corporation means any and all shares,
interests, rights to purchase, warrants, options, participations or other
equivalents of or interests in (however designated) stock issued by that
corporation.
"cash" means such coin or currency of the United States as at any time
of payment is legal tender for the payment of public and private debts.
"Company" means the party named as the "Company" in the first
paragraph of this Indenture until a successor replaces it pursuant to the
applicable provisions of this Indenture and, thereafter, shall mean such
successor.
"Company Request" or "Company Order" means a written request or order
signed in the name of the Company, by its Chairman of the Board, a Vice
Chairman, its President or a Vice President, and by its Treasurer, an
Assistant Treasurer, its Secretary or an Assistant Secretary, and delivered
to the Trustee or, with respect to Sections 2.4, 2.8, 2.11 and 7.2, any
other employee of the Company named in an Officers' Certificate delivered
to the Trustee.
"Debt" means with respect to any person at any date, without
duplication (i) all obligations of such person for borrowed money, (ii) all
obligations of such person evidenced by bonds, debentures, notes or other
similar instruments, (iii) all Debt of others secured by a lien on any
asset of such person, whether or not such Debt is assumed by such person,
(iv) all obligations of such person pursuant to leases which are required
to be capitalized under generally accepted accounting principles
consistently applied and (v) all Debt of others for the payment of which
such person is responsible or liable as obligor or guarantor.
"Default" means any event which is, or after notice or passage of time
or both would be, an Event of Default.
"Depositary" means, with respect to the Securities of any series
issuable or issued in whole or in part in global form, the Person specified
as contemplated by Section 2.3(a) as the Depositary with respect to such
series of Securities, until a successor shall have become such pursuant to
the applicable provisions of this Indenture, and thereafter "Depositary"
shall mean or include such successor.
"Discount Security" means any Security which provides for an amount
less than the Principal Amount thereof to be due and payable upon a
declaration of acceleration of the Maturity thereof pursuant to Section
6.2.
"Dollar" or "$" means a dollar or other equivalent unit in such coin
or currency of the United States as at the time shall be legal tender for
the payment of public and private debts.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Holder" or "Securityholder," when used with respect to any Security,
means a person in whose name a Security is registered on the Registrar's
books.
"Indenture" means this Indenture, as amended or supplemented from time
to time in accordance with the terms hereof and shall include the terms of
a particular series of Securities established as contemplated in Section
2.3(a).
"interest," when used with respect to a Discount Security which by its
terms bears interest only after Maturity, means interest payable after
Maturity.
"Interest Payment Date," when used with respect to any Security, means
the Stated Maturity of an installment of interest on such Security.
"Maturity," when used with respect to any Security, means the date on
which the Principal of such Security or an installment of Principal or, in
the case of a Discount Security, the Principal Amount payable upon a
declaration of acceleration pursuant to Section 6.2, becomes due and
payable as therein or herein provided, whether at the Stated Maturity or by
declaration of acceleration, call for redemption or otherwise.
"Officer" means the Chairman of the Board, any Vice Chairman, the
President, any Vice President, the Treasurer, the Secretary, any Assistant
Treasurer or any Assistant Secretary of the Company.
"Officers' Certificate" means a written certificate containing the
information specified in Sections 13.4 and 13.5, signed in the name of the
Company by its Chairman of the Board, a Vice Chairman, its President or a
Vice President, and by its Treasurer, an Assistant Treasurer, its Secretary
or an Assistant Secretary, and delivered to the Trustee.
"Opinion of Counsel" means a written opinion containing the
information specified in Sections 13.4 and 13.5, from legal counsel who is
acceptable to the Trustee. The counsel may be an employee of, or counsel
to, the Company or the Trustee.
"Periodic Offering" means an offering of Securities of a series from
time to time the specific terms of which Securities, including, without
limitation, the rate or rates of interest, if any, thereon, the Stated
Maturity or Maturities thereof, the original issue date or dates thereof,
the redemption provisions, if any, and any other terms specified as
contemplated by Section 2.3(a) with respect thereto, are to be determined
by the Company, or one or more of the Company's agents designated in an
Officers' Certificate, upon the issuance of such Securities.
"person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated
organization, or government or any agency or political subdivision thereof.
"Place of Payment," when used with respect to the Securities of any
series, means the place or places where, subject to the provisions of
Section 4.5, the Principal of and any interest on the Securities of that
series are payable as specified as contemplated by Section 2.3(a).
"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by
such particular Security; and, for the purposes of this definition, any
Security authenticated and delivered under Section 2.9 in exchange for or
in lieu of a mutilated, destroyed, lost or stolen Security shall be deemed
to evidence the same debt as the mutilated, destroyed, lost or stolen
Security.
"Principal" or "Principal Amount" of a Security, except as otherwise
specifically provided in this Indenture, means the outstanding principal of
the Security plus the premium, if any, of the Security.
"Redemption Date" or "redemption date," when used with respect to any
Security to be redeemed, shall mean the date specified for redemption of
such Security in accordance with the terms of such Security and this
Indenture.
"Redemption Price" or "redemption price," when used with respect to
any Security to be redeemed, means the price at which it is to be redeemed
pursuant to this Indenture.
"Regular Record Date" for the interest payable on any Interest Payment
Date on the Securities of any series means the date specified for that
purpose as contemplated by Section 2.3(a).
"SEC" means the Securities and Exchange Commission.
"Securities" has the meaning stated in the first recital of this
Indenture and more particularly means any Securities authenticated and
delivered under this Indenture.
"Securityholder" or "Holder," when used with respect to any Security,
means a person in whose name a Security is registered on the Registrar's
books.
"Special Record Date" for the payment of any Defaulted Interest on the
Securities of any issue means a date fixed by the Trustee pursuant to
Section 2.13.
"Stated Maturity," when used with respect to any Security or any
installment of Principal thereof or interest thereon, means the date
specified in such Security as the fixed date on which an amount equal to
the Principal of such Security or an installment of Principal thereof or
interest there on is due and payable.
"Subsidiary" means, with respect to any person, a corporation of which
a majority of the Capital Stock having voting power under ordinary
circumstances to elect a majority of the board of directors of such
corporation is owned by (i) such person, (ii) such person and one or more
Subsidiaries of such person or (iii) one or more Subsidiaries of such
person.
"TIA" means the Trust Indenture Act of 1939 as in effect on the date
of this Indenture, except as provided in Section 9.3.
"Trust Officer" means any officer of the Trustee assigned by the
Trustee to administer its corporate trust matters.
"Trustee" means the party named as the "Trustee" in the first
paragraph of this Indenture until a successor replaces it pursuant to the
applicable provisions of this Indenture and, thereafter, shall mean such
successor.
"United States" means the United States of America, its territories,
its possessions (including the Commonwealth of Puerto Rico), and other
areas subject to its jurisdiction.
SECTION 1.2 Other Definitions.
Defined in
Term Section
---- ----------
"Bankruptcy Law" 6.1
"Custodian" 6.1
"Defaulted Interest" 2.13
"Event of Default" 6.1
"Legal Holiday" 13.8
"Notice of Default " 6.1
"Outstanding" 2.10
"Paying Agent" 2.5
"Registrar" 2.5
"Senior Indebtedness" 13.1
SECTION 1.3 Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture. The
following TIA terms used in this Indenture have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Securities.
"indenture security holder" means a Holder or Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Company.
All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule
have the meanings assigned to them by such definitions.
SECTION 1.4 Rules of Construction. Unless the context otherwise
requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with generally accepted accounting
principles in the United States as in effect from time to time;
(3) "or" is not exclusive;
(4) "including" means including, without limitation; and
(5) words in the singular include the plural, and words in the
plural include the singular.
ARTICLE II
THE SECURITIES
SECTION 2.1 Forms Generally. The Securities of each series shall be
in substantially such form (including global form) as shall be established
by delivery to the Trustee of an Officers' Certificate or in one or more
indentures supplemental hereto, in each case with such appropriate
insertions, omissions, substitutions and other variations as are required
or permitted by this Indenture, and may have such letters, numbers or other
marks of identification and such legends or endorsements placed thereon as
may be required to comply with the rules of any securities exchange or as
may, consistently herewith, be determined by the Officers executing such
Securities as evidenced by their execution of the Securities. The
Officers' Certificate so establishing the form of Security of any series
shall be delivered to the Trustee at or prior to the delivery of the
Company Order contemplated by Section 2.4 for the authentication and
delivery of such Securities.
The permanent Securities shall be printed, lithographed or engraved or
produced by any combination of these methods or may be produced in any
other manner, provided, that such method is permitted by the rules of any
securities exchange on which such Securities may be listed, all as
determined by the Officers executing such Securities as evidenced by their
execution of such Securities.
SECTION 2.2 Securities in Global Form. If Securities of a series are
issuable in temporary or permanent global form, as specified as
contemplated by Section 2.3(a), then, notwithstanding clause (10) of
Section 2.3(a) and the provisions of Section 2.3(b), any such Security
shall represent such of the Outstanding Securities of such series as shall
be specified therein and may provide that it shall represent the aggregate
amount of Outstanding Securities from time to time endorsed thereon and
that the aggregate amount of Outstanding Securities represented thereby may
from time to time be reduced to reflect exchanges. Any endorsement of a
Security in global form to reflect the amount of any increase or decrease
in the amount of Outstanding Securities represented thereby shall be made
by the Trustee in such manner and upon instructions given by such person or
persons as shall be specified therein or in the Company Order to be
delivered to the Trustee pursuant to Section 2.4 or Section 2.11. Subject
to the provisions of Section 2.4 and, if applicable, Section 2.11, the
Trustee shall deliver and redeliver any Security in global form in the
manner and upon instructions given by the person or persons specified
therein or in the applicable Company Order. If a Company Order pursuant to
Section 2.4 or 2.11 has been, or simultaneously is, delivered, any
instructions by the Company with respect to endorsement or delivery or
redelivery of a Security in global form shall be in writing but need not
comply with Section 13.4 or 13.5 and need not be accompanied by an Opinion
of Counsel.
The provisions of the last sentence of Section 2.4 shall apply to any
Security represented by a Security in global form if such Security was
never issued and sold by the Company, and the Company delivers to the
Trustee the Security in global form together with written instructions
(which need not comply with Section 13.4 or 13.5 and need not be
accompanied by an Opinion of Counsel) with regard to the reduction in the
Principal Amount of Securities represented thereby, together with the
written statement contemplated by the last sentence of Section 2.4.
Notwithstanding the provisions of Sections 2.1 and 2.13, unless
otherwise specified as contemplated by Section 2.3(a), payment of Principal
of and any interest on any Security in global form shall be made to the
person or persons specified therein.
SECTION 2.3 Title, Terms and Denominations.
(a) The aggregate Principal Amount of Securities which may be
authenticated and delivered under this Indenture shall be unlimited.
The Securities may be issued in one or more series. There shall be
established and, subject to Section 2.4, set forth, or determined in the
manner provided, in an Officers' Certificate of the Company, or established
in one or more indentures supplemental hereto:
(1) the title of the Securities of the series (which shall
distinguish the Securities of the series from all other Securities);
(2) any limit upon the aggregate Principal Amount of the
Securities of the series which may be authenticated and delivered
under this Indenture (except for Securities authenticated and
delivered upon registration of transfer of, or in exchange for, or in
lieu of, other Securities of the series pursuant to Sections 2.8, 2.9,
2.11, 3.6, 9.5 or 10.3 and except for any Securities which, pursuant
to Section 2.4, are deemed never to have been authenticated and
delivered hereunder);
(3) whether any Securities of the series may be represented
initially by a Security in temporary or permanent global form and, if
so, the initial Depositary with respect to any such temporary or
permanent global Security, and if other than as provided in Section
2.8 or Section 2.11, as applicable, whether and the circumstances
under which beneficial owners of interests in any such temporary or
permanent global Security may exchange such interests for Securities
of such series and of like tenor of any authorized form and
denomination;
(4) the person to whom any interest on any Security of the
series shall be payable, if other than the person in whose name that
Security (or one or more Predecessor Securities) is registered at the
close of business on the Regular Record Date for such interest, and
the extent to which, or the manner in which (including any
certification requirement and other terms and conditions under which),
any interest payable on a temporary or permanent global Security on an
Interest Payment Date will be paid if other than in the manner
provided in Section 2.2 and Section 2.4, as applicable;
(5) the date or dates on which the Principal of the Securities
of the series is payable or the method of determination thereof;
(6) the rate or rates at which the Securities of the series
shall bear interest, if any, the date or dates from which any such
interest shall accrue, the Interest Payment Dates on which any such
interest shall be payable and the Regular Record Date for any interest
payable on any Securities on any Interest Payment Date;
(7) the place or places where, subject to the provisions of
Section 4.5, the Principal of and any interest on Securities of the
series shall be payable, any Securities of the series may be
surrendered for registration of transfer, Securities of the series may
be surrendered for exchange and notices and demands to or upon the
Company in respect of the Securities of the series and this Indenture
may be served;
(8) the period or periods within which, the price or prices at
which and the terms and conditions upon which, Securities of the
series may be redeemed, in whole or in part, at the option of the
Company;
(9) the obligation, if any, of the Company to redeem or purchase
Securities of the series pursuant to any sinking fund or analogous
provisions or at the option of a Holder thereof, the conditions, if
any, giving rise to such obligation, and the period or periods within
which, the price or prices at which and the terms and conditions upon
which Securities of the series shall be redeemed or purchased, in
whole or in part, and any provisions for the remarketing of such
Securities;
(10) the denominations in which any Securities of the series
shall be issuable, if other than denominations of $1,000 and any
integral multiple thereof;
(11) if other than the Principal Amount thereof, the portion of
the Principal Amount of any Securities of the series which shall be
payable upon declaration of acceleration of the Maturity thereof
pursuant to Section 6.2;
(12) if other than as defined in Section 1.1, the meaning of
"Business Day" when used with respect to any Securities of the series;
(13) if and the terms and conditions upon which the Securities
of the series may or must be converted into securities of the Company
or exchanged for securities of the Company;
(14) any terms applicable to Original Issue Discount, if any (as
that term is defined in the Internal Revenue Code of 1986 and the
Regulations thereunder), including the rate or rates at which such
Original Issue Discount, if any, shall accrue;
(15) if the Securities of the series may be issued or delivered
(whether upon original issuance or upon exchange of a temporary
Security of such series or otherwise), or any installment of Principal
of or any interest is payable, only upon receipt of certain
certificates or other documents or satisfaction of other conditions in
addition to those specified in this Indenture, the form and terms of
such certificates, documents or conditions; and
(16) any other terms of the series (which terms shall not be
inconsistent with the provisions of this Indenture, except as
permitted by Section 9.1(7)).
All Securities of any one series shall be substantially identical
except as to denomination and the rate or rates of interest, if any, and
Stated Maturity, the date from which interest, if any, shall accrue and
except as may otherwise be provided in or pursuant to an Officers'
Certificate pursuant to this Section 2.3(a) or in any indenture
supplemental hereto. All Securities of any one series need not be issued
at the same time and, unless otherwise provided, a series may be reopened
for issuances of additional Securities of such series or for the
establishment of additional terms with respect to the Securities of such
series.
If any of the terms of the series are established by action taken
pursuant to a Board Resolution, a copy of any appropriate record of such
action shall be certified by the Secretary or an Assistant Secretary of the
Company and delivered to the Trustee at or prior to the delivery of the
Officers' Certificate setting forth the terms of the series. With respect
to Securities of a series subject to a Periodic Offering, such Board
Resolution or Officers' Certificate may provide general terms for
Securities of such series and provide either that the specific terms of
particular Securities of such series shall be specified in a Company Order
or that such terms shall be determined by the Company, or one or more of
the Company's agents designated in an Officers' Certificate, in accordance
with the Company Order as contemplated by the first proviso of the third
paragraph of Section 2.4.
(b) Unless otherwise provided as contemplated by Section 2.3(a) with
respect to any series of Securities, any Securities of a series shall be
issuable in denominations of $1,000 and any integral multiple thereof.
SECTION 2.4 Execution, Authentication, Delivery and Dating. The
Securities shall be executed on behalf of the Company by its Chairman of
the Board, one of its Vice Chairmen, its President or one of its Vice
Presidents, or the Treasurer or any Assistant Treasurer, under its
corporate seal reproduced thereon attested by its Secretary or one of its
Assistant Secretaries. The signature of any of these officers on the
Securities may be manual or facsimile.
Securities bearing the manual or facsimile signatures of individuals
who were at any time the proper officers of the Company shall bind the
Company, notwithstanding that such individuals or any of them have ceased
to hold such offices prior to the authentication and delivery of such
Securities or did not hold such offices at the date of such Securities.
At any time and from time to time after the execution and delivery of
this Indenture, the Company may deliver Securities of any series executed
by the Company to the Trustee for authentication, together with a Company
Order for the authentication and delivery of such Securities; and the
Trustee in accordance with such Company Order shall authenticate and
deliver such Securities; provided, however, that, with respect to
Securities of a series subject to a Periodic Offering, (a) such Company
Order may be delivered by the Company to the Trustee prior to the delivery
to the Trustee of such Securities for authentication and delivery, (b) the
Trustee shall authenticate and deliver Securities of such series for
original issue from time to time, in an aggregate Principal Amount not
exceeding the aggregate Principal Amount established for such series,
pursuant to a Company Order or pursuant to such procedures acceptable to
the Trustee as may be specified from time to time by a Company Order, (c)
the rate or rates of interest, if any, the Stated Maturity or Maturities,
the original issue date or dates, the redemption provisions, if any, and
any other terms of Securities of such series shall be determined by a
Company Order or pursuant to such procedures and (d) if provided for in
such procedures, such Company Order may authorize authentication and
delivery pursuant to oral or electronic instructions from the Company, or
the Company's duly authorized agent or agents designated in an Officers'
Certificate, which oral instructions shall be promptly confirmed in
writing.
If the forms or terms of the Securities of the series have been
established in or pursuant to one or more Officers' Certificates as
permitted by Sections 2.1 and 2.3(a), in authenticating such Securities,
and accepting the additional responsibilities under this Indenture in
relation to such Securities, the Trustee shall be entitled to receive, and
(subject to Section 7.1) shall be fully protected in relying upon, an
Opinion of Counsel stating:
(a) that the form and terms of such Securities have been duly
authorized by the Company and established in conformity with the provisions
of this Indenture; and
(b) that such Securities when authenticated and delivered by the
Trustee and issued by the Company in the manner and subject to any
conditions specified in such Opinion of Counsel, will constitute valid and
legally binding obligations of the Company, enforceable in accordance with
their terms, subject to customary exceptions;
provided, however, that, with respect to Securities of a series subject to
a Periodic Offering, the Trustee shall be entitled to receive such Opinion
of Counsel only once at or prior to the time of the first authentication of
Securities of such series and that the Opinion of Counsel above may state:
(x) that the forms of such Securities have been, and the terms of
such Securities (when established in accordance with such procedures
as may be specified from time to time in a Company Order, all as
contemplated by and in accordance with a Board Resolution or an
Officers' Certificate pursuant to Section 2.3(a), as the case may be)
will have been, duly authorized by the Company and established in
conformity with the provisions of this Indenture; and
(y) that such Securities when (1) executed by the Company, (2)
completed, authenticated and delivered by the Trustee in accordance
with this Indenture, and (3) issued by the Company in the manner and
subject to any conditions specified in such Opinion of Counsel, will
constitute valid and legally binding obligations of the Company,
enforceable in accordance with their terms, subject to customary
exceptions.
With respect to Securities of a series subject to a Periodic Offering,
the Trustee may conclusively rely, as to the authorization by the Company
of any of such Securities, the form and terms thereof and the legality,
validity, binding effect and enforceability thereof, upon the Opinion of
Counsel and other documents delivered pursuant to Sections 2.1 and 2.3(a)
and this Section, as applicable, at or prior to the time of the first
authentication of Securities of such series unless and until it has
received written notification that such opinion or other documents have
been superseded or revoked. In connection with the authentication and
delivery of Securities of a series subject to a Periodic Offering, the
Trustee shall be entitled to assume, unless it has actual knowledge to the
contrary, that the Company's instructions to authenticate and deliver such
Securities do not violate any rules, regulations or orders of any
governmental agency or commission having jurisdiction over the Company.
Notwithstanding the provisions of Section 2.3(a) and of the preceding
three paragraphs, if all Securities of a series are subject to a Periodic
Offering, it shall not be necessary to deliver the Officers' Certificate
otherwise required pursuant to Section 2.3(a) at or prior to the time of
authentication of each Security of such series if such Officers'
Certificate is delivered at or prior to the authentication upon original
issuance of the first Security of such series to be issued.
Each Security shall be dated the date of its authentication.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Securities. Unless otherwise provided in the
appointment, an authenticating agent may authenticate Securities whenever
the Trustee may do so. Each reference in this Indenture to authentication
by the Trustee includes authentication by such agent.
No Security shall be entitled to any benefit under this Indenture or
be valid or obligatory for any purpose unless there appears on such
Security a certificate of authentication substantially in the form provided
for herein duly executed by the Trustee by manual signature of an
authorized signatory, and such certificate upon any Security shall be
conclusive evidence, and the only evidence, that such Security has been
duly authenticated and delivered hereunder. The Trustee's certificate of
authentication shall be in substantially the following form:
This is one of the Securities of the series designated therein
referred to in the within-mentioned Indenture.
United States Trust Company of New York,
as Trustee
By:____________________________________
Authorized Signatory
Notwithstanding the foregoing, if any Security shall have been duly
authenticated and delivered hereunder but never issued and sold by the
Company, and the Company shall deliver such Security to the Trustee for
cancellation as provided in Section 2.12 together with a written statement
(which need not comply with Section 13.4 or 13.5 and need not be
accompanied by an Opinion of Counsel) stating that such Security has never
been issued and sold by the Company, for all purposes of this Indenture
such Security shall be deemed never to have been authenticated and
delivered hereunder and shall never be entitled to the benefits of this
Indenture.
SECTION 2.5 Registrar and Paying Agent. The Company shall maintain,
with respect to each series of Securities, an office or agency where such
Securities may be presented for registration of transfer or for exchange
("Registrar") and, in the Borough of Manhattan, The City of New York, an
office or agency where such Securities may be presented for purchase or
payment ("Paying Agent"). The Registrar shall keep a register of the
Securities and of their transfer and exchange. The Company may have one or
more co-registrars and one or more additional paying agents. The term
Paying Agent includes any additional paying agent.
The Company shall enter into an appropriate agency agreement with
respect to each series of Securities with any Registrar, Paying Agent or
co-registrar (if not the Trustee). The agreement shall implement the
provisions of this Indenture that relate to such agent. The Company shall
notify the Trustee of the name and address of any such agent. If the
Company fails to maintain a Registrar or Paying Agent for a particular
series of Securities, the Trustee shall act as such and shall be entitled
to appropriate compensation therefor pursuant to Section 7.7. The Company
or any Subsidiary or an Affiliate of either of them may act as Paying
Agent, Registrar or co-registrar.
The Company initially appoints the Trustee as the Registrar and Paying
Agent in connection with such Securities.
SECTION 2.6 Paying Agent to Hold Money and Securities in Trust.
Except as otherwise provided herein, prior to or on each due date of
payments in respect of any series of Securities, the Company shall deposit
with the Paying Agent with respect to such Securities a sum of money
sufficient to make such payments when so becoming due. The Company shall
require each Paying Agent (other than the Trustee) to agree in writing that
the Paying Agent shall hold in trust for the benefit of Holders or the
Trustee all money held by such Paying Agent for the making of payments in
respect of the Securities of such series and shall notify the Trustee of
any default by the Company in making any such payment. At any time during
the continuance of any such default, a Paying Agent shall, upon the written
request of the Trustee, forthwith pay to the Trustee all money so held in
trust with respect to such Securities. If the Company, a Subsidiary or an
Affiliate of either of them acts as Paying Agent for a series of
Securities, it shall segregate the money held by it as Paying Agent with
respect to such Securities and hold it as a separate trust fund. The
Company at any time may require a Paying Agent for a series of Securities
to pay all money held by it with respect to such Securities to the Trustee
and to account for any money disbursed by it. Upon doing so, such Paying
Agent shall have no further liability for the money.
SECTION 2.7 Securityholder Lists. The Trustee shall preserve in as
current a form as is reasonably practicable the most recent list available
to it of the names and addresses of Holders of each series of Securities.
If the Trustee is not the Registrar for any series of Securities, the
Company shall cause to be furnished to the Trustee at least semiannually on
June 1 and December 1 a listing of Holders of such series of Securities
dated within 15 days of the date on which the list is furnished and at such
other times as the Trustee may request in writing a list in such form and
as of such date as the Trustee may reasonably require of the names and
addresses of Securityholders of such series of Securities.
SECTION 2.8 Transfer and Exchange. Upon surrender for registration
of transfer of any Security at the office or agency of the Company
designated pursuant to Section 4.5 for such purpose, the Company shall
execute, and the Trustee shall authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Securities of any
authorized denomination or denominations of a like aggregate Principal
Amount and tenor. The Company shall not charge a service charge for any
registration of transfer or exchange, but the Company may require payment
of a sum sufficient to pay all taxes, assessments or other governmental
charges that may be imposed in connection with the transfer or exchange of
the Securities from the Securityholder requesting such transfer or exchange
(other than any exchange of a temporary Security for a definitive Security
not involving any change in ownership or any exchange pursuant to Section
2.11, 3.6, 9.5 or 10.3, not involving any transfer).
Notwithstanding any other provisions (other than the provisions set
forth in the sixth and seventh paragraphs) of this Section, a Security in
global form representing all or a portion of the Securities of a series may
not be transferred except as a whole by the Depositary for such series to a
nominee of such Depositary or by a nominee of such Depositary to such
Depositary or another nominee of such Depositary or by such Depositary or
any such nominee to a successor Depositary for such series or a nominee of
such successor Depositary.
At the option of the Holder, Securities of any series may be exchanged
for other Securities of the same series of any authorized denomination or
denominations, of a like aggregate Principal Amount and tenor, upon
surrender of the Securities to be exchanged at such office or agency.
Whenever any Securities are so surrendered for exchange, the Company shall
execute, and the Trustee shall authenticate and deliver, the Securities
which the Holder making the exchange is entitled to receive.
Whenever any Securities are so surrendered for exchange, the Company
shall execute, and the Trustee or a duly appointed authenticating agent
shall authenticate and deliver, the Securities which the Holder making the
exchange is entitled to receive.
If at any time the Depositary for the Securities of a series notifies
the Company that it is unwilling or unable to continue as Depositary for
the Securities of such series, the Company shall appoint a successor
Depositary with respect to the Securities of such series. If a successor
Depositary for the Securities of such series is not appointed by the
Company within 90 days after the Company receives such notice, the Company
will execute, and the Trustee, upon receipt of a Company Order for the
authentication and delivery of definitive Securities of such series, will
authenticate and deliver Securities of such series in definitive form in an
aggregate Principal Amount equal to the Principal Amount of the Security or
Securities in global form representing such series in exchange for such
Security or Securities in global form.
The Company may at any time and in its sole discretion determine that
the Securities of any series issued in the form of one or more global
Securities shall no longer be represented by such global Security or
Securities. In such event the Company will execute, and the Trustee, upon
receipt of a Company Order for the authentication and delivery of
definitive Securities of such series, will authenticate and deliver
Securities of such series in definitive form and in an aggregate Principal
Amount equal to the Principal Amount of the Security or Securities in
global form representing such series in exchange for such Security or
Securities in global form.
Notwithstanding the foregoing, except as otherwise specified in the
preceding two paragraphs or as contemplated by Section 2.3(a), any
permanent global Security shall be exchangeable only as provided in this
paragraph. If the beneficial owners of interests in a permanent global
Security are entitled to exchange such interests for definitive Securities
of such series and of like Principal Amount and tenor but of another
authorized form and denomination, as specified as contemplated by Section
2.3(a), then without unnecessary delay but in any event not later than the
earliest date on which such interests may be so exchanged, the Company
shall deliver to the Trustee definitive Securities in aggregate Principal
Amount equal to the Principal Amount of such permanent global Security,
executed by the Company. On or after the earliest date on which such
interests may be so exchanged, such permanent global Security shall be
surrendered by the Depositary with respect thereto 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 Securities without charge and the Trustee
shall authenticate and deliver, in exchange for each portion of such
permanent global Security, an equal aggregate Principal Amount of
definitive Securities of the same series of authorized denominations and of
like tenor as the portion of such permanent global Security to be
exchanged; provided, however, that notwithstanding the last paragraph of
this Section 2.8, no such exchanges may occur during a period beginning at
the opening of business 15 days before any selection of Securities of that
series to be redeemed and ending on the relevant Redemption Date. If a
Security is issued in exchange for any portion of a permanent global
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 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
Security is payable in accordance with the provisions of this Indenture.
Upon the exchange of a Security in global form for Securities in
definitive form, such Security in global form shall be cancelled by the
Trustee. Securities issued in exchange for a Security in global form
pursuant to this Section 2.8 shall be registered in such names and in such
authorized denominations as the Depositary for such Security in global
form, pursuant to instructions from its direct or indirect participants or
otherwise, shall instruct the Trustee. The Trustee shall deliver such
Securities to the persons in whose names such Securities are so registered.
All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the Company, evidencing the
same debt, and entitled to the same benefits under this Indenture, as the
Securities surrendered upon such registration of transfer or exchange.
Every Security presented or surrendered for registration of transfer
or for exchange shall (if so required by the Company or the Trustee) be
duly endorsed, or be accompanied by a written instrument of transfer in
form satisfactory to the Company and the Registrar duly executed, by the
Holder thereof or his attorney duly authorized in writing.
The Company shall not be required (i) to issue, register the transfer
of or exchange Securities of any series during a period beginning at the
opening of business 15 days before any selection of Securities of that
series to be redeemed and ending (except as otherwise provided in the first
proviso in the eighth paragraph of this Section 2.8) at the close of
business on the day of the mailing of the relevant notice of redemption, or
(ii) to register the transfer of or exchange any Security so selected for
redemption, in whole or in part, except the unredeemed portion of any
Security being redeemed in part.
SECTION 2.9 Replacement Securities. If (a) any mutilated Security is
surrendered to the Trustee, or (b) the Company and the Trustee receive
evidence to their satisfaction of the destruction, loss or theft of any
Security, and there is delivered to the Company and the Trustee such
security or indemnity as may be required by them to save each of them
harmless, then, in the absence of notice to the Company or the Trustee that
such Security has been acquired by a bona fide purchaser, the Company shall
execute and upon its written request the Trustee shall authenticate and
deliver, in exchange for any such mutilated Security or in lieu of any such
destroyed, lost or stolen Security, a new Security of the same series and
of like tenor and Principal Amount, bearing a number not contemporaneously
outstanding.
In case any such mutilated, destroyed, lost or stolen Security has
become or is about to become due and payable, the Company in its discretion
may, instead of issuing a new Security, pay such Security.
Upon the issuance of any new Securities under this Section, the
Company may require the payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in relation thereto and any
other expenses (including the fees and expenses of the Trustee) connected
therewith.
Every new Security of any series issued pursuant to this Section in
lieu of any mutilated, destroyed, lost or stolen Security shall constitute
an original additional contractual obligation of the Company, whether or
not the destroyed, lost or stolen Security shall be at any time enforceable
by anyone, and any such new Security shall be entitled to all benefits of
this Indenture equally and proportionately with any and all other
Securities of that issue duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Securities.
SECTION 2.10 Outstanding Securities; Determinations of Holders'
Action. Securities of any series "Outstanding" at any time are, as of the
date of determination, all the Securities of such series theretofore
authenticated by the Trustee for such series except for those cancelled by
it, those delivered to it for cancellation and those described in this
Section 2.10 as not outstanding. A Security does not cease to be
"Outstanding" because the Company or an Affiliate thereof holds the
Security; provided, however, that in determining whether the Holders of the
requisite Principal Amount of Outstanding Securities have given or
concurred in any request, demand, authorization, direction, notice, consent
or waiver hereunder, Securities owned by the Company or any other obligor
upon the Securities or any Affiliate of the Company or such other obligor
shall be disregarded and deemed not to be outstanding, except that, in
determining whether the Trustee shall be protected in relying upon any such
request, demand, authorization, direction, notice, consent or waiver, only
Securities which the Trustee knows to be so owned shall be so disregarded.
Securities so owned which have been pledged in good faith may be regarded
as Outstanding if the pledgee establishes to the satisfaction of the
Trustee the pledgee's right so to act with respect to such Securities and
that the pledgee is not the Company or any other obligor upon the
Securities or any Affiliate of the Company or of such other obligor.
Subject to the foregoing, only Securities outstanding at the time of such
determination shall be considered in any such determination (including,
without limitation, determinations pursuant to Articles 6 and 9). In
addition, in determining whether the Holders of the requisite Principal
Amount of Outstanding Securities have given or concurred in any request,
demand, authorization, direction, notice, consent or waiver hereunder, the
Principal Amount of a Discount Security that shall be deemed to be
Outstanding shall be the amount of the Principal thereof that would be due
and payable as of the date of such determination upon acceleration of the
Maturity thereof pursuant to Section 6.2.
If a Security has been paid pursuant to Section 2.9 or in exchange for
or in lieu of which another Security has been authenticated and delivered
pursuant to this Indenture, it ceases to be outstanding unless the Trustee
receives proof satisfactory to it that the replaced Security is held by a
bona fide purchaser.
If the Trustee (other than the Company) holds, in accordance with this
Indenture, on a Redemption Date or on Stated Maturity, money sufficient to
pay Securities payable on that date, then on and after that date such
Securities shall cease to be outstanding and interest, if any, on such
Securities shall cease to accrue; provided, that if such Securities are to
be redeemed, notice of such redemption has been duly given pursuant to this
Indenture or provision therefor satisfactory to the Trustee has been made.
SECTION 2.11 Temporary Securities. Pending the preparation of
definitive Securities of any series, the Company may execute, and upon
Company Order the Trustee shall authenticate and deliver, temporary
Securities which are printed, lithographed, typewritten, mimeographed or
otherwise produced, in any authorized denomination, substantially of the
tenor of the definitive Securities in lieu of which they are issued, in
registered form, and with such appropriate insertions, omissions,
substitutions and other variations as the Officers executing such
Securities may determine, as conclusively evidenced by their execution of
such Securities. Such temporary Securities may be in global form.
If temporary Securities for some or all of the Securities of any
series are issued, the Company will cause definitive Securities
representing such Securities to be prepared without unreasonable delay.
After the preparation of such definitive Securities, the temporary
Securities shall be exchangeable for such definitive Securities of like
tenor upon surrender of the temporary Securities at the office or agency of
the Company designated for such purpose pursuant to Section 4.5 for such
series for the purpose of exchanges of Securities of such series, without
charge to the Holder. Upon surrender for cancellation of any one or more
temporary Securities of any series the Company shall execute and the
Trustee shall authenticate and deliver in exchange therefor a like
Principal Amount of definitive Securities of the same series and of like
tenor of authorized denominations. Until so exchanged the temporary
Securities shall in all respects be entitled to the same benefits under
this Indenture as definitive Securities.
Until exchanged in full as hereinabove provided, the temporary
Securities of any series shall in all respects be entitled to the same
benefits under this Indenture as permanent Securities of the same series
and of like tenor authenticated and delivered hereunder.
SECTION 2.12 Cancellation. All Securities surrendered for payment,
redemption, 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 all Securities so delivered shall
be promptly cancelled by it. The Company may at any time deliver to the
Trustee for cancellation any Securities previously authenticated and
delivered hereunder which the Company may have acquired in any manner
whatsoever (including Securities received by the Company in exchange or
payment for other Securities of the Company) and may deliver to the Trustee
(or to any other person for delivery to the Trustee) for cancellation any
Securities previously authenticated hereunder which the Company has not
issued and sold, and all Securities so delivered shall be promptly
cancelled by the Trustee. The Company may not reissue, or issue new
Securities to replace, Securities it has paid or delivered to the Trustee
for cancellation. No Securities shall be authenticated in lieu of or in
exchange for any Securities cancelled as provided in this Section, except
as expressly permitted in the form of Securities for any particular series
or as permitted by this Indenture. All cancelled Securities held by the
Trustee shall be destroyed by the Trustee and evidence of their destruction
delivered to the Company unless the Company directs by Company Order that
the Trustee deliver cancelled Securities to the Company.
SECTION 2.13 Payment of Interest; Interest Rights Preserved. Unless
otherwise provided as contemplated by Section 2.3(a) with respect to any
series of Securities, interest on any Security which is payable, and is
punctually paid or duly provided for, on any Interest Payment Date shall be
paid to the person in whose name that Security (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record
Date for such interest.
Any interest on any Security of any series which is payable, but
is not punctually paid or duly provided for, on any Interest Payment Date
(herein called "Defaulted Interest") shall forthwith cease to be payable to
the Holder on the relevant Regular Record Date by virtue of having been
such Holder, and such Defaulted Interest may be paid by the Company, at its
election in each case, as provided in clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted
Interest to the persons in whose names the Securities of such
series (or their respective Predecessor Securities) are registered
at the close of business on a Special Record Date for the payment
of such Defaulted Interest, which shall be fixed in the following
manner. The Company shall notify the Trustee in writing of the
amount of Defaulted Interest proposed to be paid on each Security
and the date of the proposed payment, and at the same time the
Company shall deposit with the Trustee an amount of money equal to
the aggregate amount proposed to be paid in respect of such
Defaulted Interest or shall make arrangements satisfactory to the
Trustee for such deposit prior to the date of the proposed
payment, such money when deposited to be held in trust for the
benefit of the persons entitled to such Defaulted Interest as 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 Securities at his address as it
appears in the Security Register, not less than 10 days prior to
such Special Record Date. Notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor having
been so mailed, such Defaulted Interest shall be paid to the
persons in whose names the Securities (or their respective
Predecessor Securities) are registered at the close of business on
such Special Record Date and shall no longer be payable pursuant
to the following Clause (2).
(2) The Company may make payment of any Defaulted Interest on
the Securities in any other lawful manner not inconsistent with
the requirements of any securities exchange on which such
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
2.8, each Security delivered under this Indenture upon registration of
transfer of or in exchange for or in lieu of any other Security shall carry
the rights to interest accrued and unpaid, and to accrue, which were
carried by such other Security.
SECTION 2.14 Persons Deemed Owners. Prior to due presentment of a
Security for registration of transfer, the Company, the Trustee and any
agent of the Company or the Trustee may treat the person in whose name such
Security is registered as the owner of such Security for the purpose of
receiving payment of Principal of and (except as otherwise specified as
contemplated by Section 2.3(a) and subject to Section 2.8 and Section 2.13)
interest on such Security and for all other purposes whatsoever, whether or
not such Security be overdue, and neither the Company, the Trustee nor any
agent of the Company or the Trustee shall be affected by notice to the
contrary.
None of the Company, the Trustee, any Paying Agent or the
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 Security in global form or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests.
SECTION 2.15 Computation of Interest. Except as otherwise
specified as contemplated by Section 2.3(a) for Securities of any series,
(i) interest on any Securities which bear interest at a fixed rate shall be
computed on the basis of a 360-day year comprised of twelve 30-day months
and (ii) interest on any Securities which bear interest at a variable rate
shall be computed on the basis of the actual number of days in an interest
period divided by 360.
ARTICLE III
REDEMPTION
SECTION 3.1 Right to Redeem; Notices to Trustee. 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 2.3(a) for Securities of any series)
in accordance with this Article. In the case of any redemption at the
election of the Company of less than all of the Securities of any series,
the Company shall, within the time period set forth below, notify the
Trustee in writing of the Redemption Date, the Principal Amount and any
other information necessary to identify the Securities of such series to be
redeemed and the Redemption Price.
The Company shall give the notice to the Trustee provided for in
this Section 3.1 at least 60 days before the Redemption Date (unless a
shorter notice shall be satisfactory to the Trustee).
SECTION 3.2 Selection of Securities to be Redeemed. Unless
otherwise specified as contemplated by Section 2.3(a) with respect to any
series of Securities, if less than all the Securities of any series with
the same issue date, interest rate and Stated Maturity are to be redeemed,
the Trustee shall select the particular Securities to be redeemed by a
method the Trustee considers fair and appropriate, which method may provide
for the selection for redemption of portions (equal to the minimum
authorized denomination for Securities of that series or any integral
multiple thereof) of the Principal Amount of Securities of such series of a
denomination larger than the minimum authorized denomination for Securities
of that series. The Trustee shall make the selection not more than 60 days
before the Redemption Date from Outstanding Securities of such series not
previously called for redemption. Provisions of this Indenture that apply
to Securities called for redemption also apply to portions of Securities
called for redemption. The Trustee shall notify the Company promptly in
writing of the Securities to be redeemed and, in the case of any portions
of Securities to be redeemed, the principal amount thereof to be redeemed.
SECTION 3.3 Notice of Redemption. Unless otherwise specified as
contemplated by Section 2.3(a) with respect to any series of Securities, at
least 30 days but not more than 60 days before a Redemption Date, the
Company shall mail a notice of redemption by first-class mail, postage
prepaid, to each Holder of Securities to be redeemed.
The notice shall identify the Securities to be redeemed and shall
state:
(1) the Redemption Date;
(2) the Redemption Price;
(3) if fewer than all the Outstanding Securities of any
series are to be redeemed, the identification (and, in the case of
partial redemption, the Principal Amounts) of the particular
Securities to be redeemed;
(4) that on the Redemption Date the Redemption Price will
become due and payable upon each such Security (or portion
thereof) to be redeemed and, if applicable, that interest thereon
will cease to accrue on and after said date;
(5) the place or places where such Securities maturing after
the Redemption Date, are to be surrendered for payment of the
Redemption Price; and
(6) that the redemption is for a sinking fund, if such is the
case.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at the Company's expense; provided,
however, that, in all cases, the text of such Company Notice shall be
prepared by the Company.
SECTION 3.4 Effect of Notice of Redemption. Once notice of
redemption is given, Securities called for redemption become due and
payable on the Redemption Date and at the Redemption Price stated in the
notice, and from and after such date (unless the Company shall default in
the payment of the Redemption Price and accrued interest) such Securities
shall cease to bear interest. Upon surrender of any such Security for
redemption in accordance with said notice, such Security shall be paid by
the Company at the Redemption Price, together with accrued interest to the
Redemption Date; provided, however, that, unless otherwise specified as
contemplated by Section 2.3(a), installments of interest on Securities
whose Stated Maturity is on or prior to the Redemption Date shall be
payable to the Holders of such Securities, or one or more Predecessor
Securities, registered as such at the close of business on the relevant
Regular Record Dates according to their terms and the provisions of
Sections 2.8 and 2.13.
If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the Principal shall, until paid, bear
interest from the Redemption Date at the rate prescribed therefor in the
Security.
SECTION 3.5 Deposit of Redemption Price. Prior to or on the
Redemption Date, the Company shall deposit with the Paying Agent (or if the
Company or a Subsidiary or an Affiliate of either of them is the Paying
Agent, shall segregate and hold in trust) money sufficient to pay the
Redemption Price and (except if the Redemption Date shall be an Interest
Payment Date) accrued interest on, of all Securities to be redeemed on that
date other than Securities or portions of Securities called for redemption
which prior thereto have been delivered by the Company to the Trustee for
cancellation. If such money is then held by the Company in trust and is
not required for such purpose, it shall be discharged from such trust.
SECTION 3.6 Securities Redeemed in Part. Any Security which is to
be redeemed only in part shall be surrendered at the office or agency of
the Company designated therefor pursuant to Section 4.5 (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 upon such surrender, the Company shall execute and the
Trustee shall authenticate and deliver to the Holder of such Security a new
Security or Securities of the same series and of like tenor, in an
authorized denomination as requested by such Holder, equal in aggregate
Principal Amount to and in exchange for the unredeemed portion of the
Principal of the Security surrendered.
ARTICLE IV
COVENANTS
SECTION 4.1 Payment of Securities. The Company shall promptly
make all payments in respect of each series of Securities on the dates and
in the manner provided in the Securities and, to the extent not otherwise
so provided, pursuant to this Indenture. An installment of Principal of or
interest on the Securities shall be considered paid on the date it is due
if the Trustee or a Paying Agent (other than the Company or an Affiliate of
the Company) holds on that date funds designated for and sufficient to pay
such installment. At the Company's option, payments of Principal or
interest may be made by check or by transfer to an account maintained by
the payee.
SECTION 4.2 SEC Reports. The Company shall file with the Trustee,
within 15 days after it files such annual and quarterly reports,
information, documents and other reports with the SEC, copies of its annual
report and of the information, documents and other reports (or copies of
such portions of any of the foregoing as the SEC may by rules and
regulations prescribe) which the Company is required to file with the SEC
pursuant to Section 13 or 15(d) of the Exchange Act. The Company also
shall comply with the other provisions of TIA Section 314(a).
SECTION 4.3 Compliance Certificate. The Company shall deliver to
the Trustee within 120 days after the end of each fiscal year of the
Company (beginning with the first full fiscal year ending on or after the
date hereof) an Officers' Certificate stating whether or not the signers
know of any Default that occurred during such period. If they do, such
Officers' Certificate shall describe the Default and its status.
SECTION 4.4 Further Instruments and Acts. Upon request of the
Trustee, the Company will execute and deliver such further instruments and
do such further acts as may be reasonably necessary or proper to carry out
more effectively the purposes of this Indenture.
SECTION 4.5 Maintenance of Office or Agency.
The Company will maintain in the Borough of Manhattan, the
City of New York, an office or agency where Securities of that series may
be presented or surrendered for payment, where any Securities of that
series may be surrendered for registration of transfer, where Securities of
that series may be surrendered for exchange, purchase or redemption and
where notices and demands to or upon the Company in respect of the
Securities of that series and this Indenture may be served. The office of
the Trustee in New York, New York shall be such office or agency for all of
the aforesaid purposes unless the Company shall maintain some other office
or agency for such purposes and shall give prompt written notice to the
Trustee of the location, and any change in the location, of such other
office or agency. If at any time the Company shall fail to maintain any
such required office or agency in respect of any series of Securities or
shall fail to furnish the Trustee with the address thereof, such
presentations and surrenders of Securities of that series may be made and
notices and demands may be made or served at the address of the Trustee set
forth in Section 13.2, and the Company hereby appoints the same as its
agent to receive such respective presentations, surrenders, notices and
demands.
The Company may also from time to time designate one or more other
offices or agencies where the Securities of one or more series may be
presented or surrendered for any or all such purposes and may from time to
time rescind such designations; provided, however, that no such designation
or rescission shall in any manner relieve the Company of its obligation to
maintain an office or agency in accordance with the requirements set forth
above for Securities of any series for such purposes. The Company will
give prompt written notice to the Trustee of any such designation or
rescission and of any change in the location of any such other office or
agency.
SECTION 4.6 Limitations on the Incurrence of Certain Other Debt.
The Company shall not create, incur, issue, assume, guaranty or otherwise
become directly or indirectly liable for or with respect to or otherwise
permit to exist any Debt of the Company that is subordinate in right of
payment to any Debt of the Company unless such Debt is either pari passu
with the Securities or subordinate in right of payment to the Securities
pursuant to subordination provisions that are at least as favorable to the
holders of the Securities as the subordination provision set forth in this
Indenture with respect to Senior Indebtedness.
ARTICLE V
SUCCESSOR CORPORATION
SECTION 5.1 When Company May Merge or Transfer Assets. The Company
shall not consolidate with or merge with or into any other person or
convey, transfer or lease its properties and assets substantially as an
entirety to any person, unless:
(a) either (1) the Company shall be the continuing
corporation or (2) the person (if other than the Company)
formed by such consolidation or into which the Company is
merged or the person which acquires by conveyance,
transfer or lease the properties and assets of the
Company substantially as an entirety (i) shall be a
corporation, partnership or trust organized and validity
existing under the laws of the United States or any state
thereof or the District of Columbia and (ii) shall
expressly assume, by an indenture supplemental hereto,
executed and delivered to the Trustee, in form
satisfactory to the Trustee, all of the obligations of
the Company under the Securities and this Indenture;
(b) immediately after giving effect to such
transaction, no Default shall have occurred and be
continuing; and
(c) the Company shall have delivered to the Trustee
an Officers' Certificate and an Opinion of Counsel, each
stating that such consolidation, merger, conveyance,
transfer or lease and, if a supplemental indenture is
required in connection with such transaction, such
supplemental indenture, comply with this Article and that
all conditions precedent herein relating to such
transaction have been satisfied.
The successor person formed by such consolidation or into which
the Company is merged or the successor person to which such conveyance,
transfer or lease is made shall succeed to, and be substituted for, and may
exercise every right and power of, the Company under this Indenture with
the same effect as if such successor had been named as the Company herein;
and thereafter, except in the case of a lease of its properties and assets
substantially as an entirety, the Company shall be discharged from all
obligations and covenants under this Indenture and the Securities.
ARTICLE VI
DEFAULTS AND REMEDIES
SECTION 6.1 Events of Default. Unless otherwise specified as
contemplated by Section 2.3(a) with respect to any series of securities, an
"Event of Default" occurs, with respect to each series of the Securities
individually, if:
(1) the Company defaults in (a) the payment of the principal
of any Security of such series at its Maturity or (b) the payment
of any interest upon any Security of such series when the same
becomes due and payable and continuance of such default for a
period of 30 days;
(2) the Company fails to comply with any of its agreements in
the Securities or this Indenture (other than those referred to in
clause (1) above and other than a covenant or warranty a default
in whose performance or whose breach is elsewhere in this Section
specifically dealt with or which has been expressly included in
this Indenture solely for the benefit of a series of Securities
other than such series) and such failure continues for 60 days
after receipt by the Company of a Notice of Default;
(3) there shall have been the entry by a court of competent
jurisdiction of (a) a decree or order for relief in respect of the
Company in an involuntary case or proceeding under any applicable
Bankruptcy Law or (b) a decree or order adjudging the Company
bankrupt or insolvent, or seeking reorganization, arrangement,
adjustment or composition of or in respect of the Company under
any applicable federal or state law, or appointing a custodian,
receiver, liquidator, assignee, trustee, sequestrator (or other
similar official) of the Company or of any substantial part of its
property, or ordering the wind up or liquidation of its affairs,
and any such decree or order for relief shall continue to be in
effect, or any such other decree or order shall be unstayed and in
effect, for a period of 60 consecutive days;
(4) (a) the Company commences a voluntary case or proceeding
under any applicable Bankruptcy Law or any other case or
proceeding to be adjudicated bankrupt or insolvent, (b) the
Company consents to the entry of a decree or order for relief in
respect of the Company in an involuntary case or proceeding under
any applicable Bankruptcy Law or to the commencement of any
bankruptcy or insolvency case or proceeding against it, (c) the
Company files a petition or answer or consent seeking
reorganization or substantially comparable relief under any
applicable federal state law, (d) the Company (x) consents to the
filing of such petition or the appointment of, or taking
possession by, a custodian, receiver, liquidator, assignee,
trustee, sequestrator or similar official of the Company or of any
substantial part of its property, (y) makes an assignment for the
benefit of creditors or (z) admits in writing its inability to pay
its debts generally as they become due or (e) the Company takes
any corporate action in furtherance of any such actions in this
clause (4); or
(5) any other Event of Default provided with respect to
Securities of that series.
"Bankruptcy Law" means Title 11, United States Code, or any
similar Federal or state law for the relief of debtors. "Custodian" means
any receiver, trustee, assignee, liquidator, custodian or similar official
under any Bankruptcy Law.
A Default under clause (2) above is not an Event of Default
until the Trustee notifies the Company, or the Holders of at least 25% in
aggregate Principal Amount of the Outstanding Securities of such series
notify the Company and the Trustee, of the Default and the Company does not
cure such Default within the time specified in clause (2) above after
receipt of such notice. Any such notice must specify the Default, demand
that it be remedied and state that such notice is a "Notice of Default."
SECTION 6.2 Acceleration. If an Event of Default with respect to
Securities of any series at the time Outstanding (other than an Event of
Default specified in Section 6.1(3) or (4)) occurs and is continuing, the
Trustee by notice to the Company, or the Holders of at least 25% in
aggregate Principal Amount of the Outstanding Securities of that series by
notice to the Company and the Trustee, may declare the Principal Amount
(or, if any of the Securities of that series are Discount Securities, such
portion of the Principal Amount of such Securities as may be specified in
the terms thereof) of all the Securities of that series to be immediately
due and payable. Upon such a declaration, such Principal (or portion
thereof) shall be due and payable immediately. If an Event of Default
specified in Section 6.1(3) or (4) occurs and is continuing, the Principal
(or portion thereof) of all the Securities of that series shall become and
be immediately due and payable without any declaration or other act on the
part of the Trustee or any Securityholders. The Holders of a majority in
aggregate Principal Amount of the Outstanding Securities of any series, by
notice to the Trustee (and without notice to any other Securityholder) may
rescind an acceleration with respect to that series and its consequences if
the rescission would not conflict with any judgment or decree and all
existing Events of Default with respect to Securities of such series have
been cured or waived except nonpayment of the Principal (or portion
thereof) of Securities of such series that has become due solely as a
result of such acceleration and if all amounts due to the Trustee under
Section 7.7 have been paid. No such rescission shall affect any subsequent
Default or impair any right consequent thereto.
SECTION 6.3 Other Remedies. If an Event of Default with respect to
a series of Outstanding Securities occurs and is continuing, the Trustee
may pursue any available remedy to (a) collect the payment of the whole
amount then due and payable on such Securities for Principal and interest,
with interest upon the overdue Principal and, to the extent that payment of
such interest shall be legally enforceable, upon overdue installments of
interest from the date such interest was due, at the rate or rates
prescribed therefor in such Securities and, in addition thereto, such
further amount as shall be sufficient to cover the costs and expenses of
collection, including amounts due the Trustee under Section 7.7 or (b)
enforce the performance of any provision of the Securities or this
Indenture.
The Trustee may maintain a proceeding even if the Trustee does
not possess any of the Securities or does not produce any of the Securities
in the proceeding. A delay or omission by the Trustee or any
Securityholder in exercising any right or remedy accruing upon an Event of
Default shall not impair the right or remedy or constitute a waiver of, or
acquiescence in, the Event of Default. No remedy is exclusive of any other
remedy. All available remedies are cumulative.
SECTION 6.4 Waiver of Past Defaults. The Holders of a majority
in aggregate Principal Amount of the Outstanding Securities of any series,
by notice to the Trustee (and without notice to any other Securityholder),
may on behalf of the Holders of all the Securities of such series waive an
existing Default with respect to such series and its consequences except
(1) an Event of Default described in Section 6.1(1) with respect to such
series or (2) a Default in respect of a provision that under Section 9.2
cannot be amended without the consent of the Holder of each Outstanding
Security of such series affected. When a Default is waived, it is deemed
cured, but no such waiver shall extend to any subsequent or other Default
or impair any consequent right.
SECTION 6.5 Control by Majority. The Holders of a majority in
aggregate Principal Amount of the Outstanding Securities of any series may
direct the time, method and place of conducting any proceeding for any
remedy available to the Trustee or of exercising any trust or power
conferred on the Trustee with respect to the Securities of such series.
However, the Trustee may refuse to follow any direction that conflicts with
law or this Indenture or that the Trustee determines in good faith is
unduly prejudicial to the rights of other Securityholders or would involve
the Trustee in personal liability.
SECTION 6.6 Limitation on Suits. A Holder of any Security of any
series may not pursue any remedy with respect to this Indenture or the
Securities unless:
(1) the Holder gives to the Trustee written notice stating
that an Event of Default with respect to the Securities of that
series is continuing;
(2) the Holders of at least 25% in aggregate Principal Amount
of the Outstanding Securities of that series make a written
request to the Trustee to pursue the remedy;
(3) such Holder or Holders offer to the Trustee reasonable
security or indemnity against any loss, liability or expense
satisfactory to the Trustee;
(4) the Trustee does not comply with the request within 60
days after receipt of the notice, the request and the offer of
security or indemnity; and
(5) the Holders of a majority in aggregate Principal Amount
of the Outstanding Securities of that series do not give the
Trustee a direction inconsistent with such request during such 60-
day period.
A Securityholder may not use this Indenture to prejudice the
rights of any other Securityholder or to obtain a preference or priority
over any other Securityholder.
SECTION 6.7 Rights of Holders to Receive Payment. Notwithstanding
any other provision of this Indenture, the right, which is absolute and
unconditional, of any Holder of any Security to receive payment of the
Principal of and (subject to Section 2.13) interest on such Security on
the Stated Maturity or Maturities expressed in such Security (or, in the
case of redemption, on the Redemption Date) held by such Holder, on or
after the respective due dates expressed in the Securities or any
Redemption Date, or to bring suit for the enforcement of any such
payment on or after such respective dates, shall not be impaired or
affected adversely without the consent of each such Holder.
SECTION 6.8 Collection Suit by Trustee. If an Event of Default
described in Section 6.1(1) with respect to Securities of any series occurs
and is continuing, the Trustee may recover judgment in its own name and as
trustee of an express trust against the Company for the whole amount owing
with respect to such series of Securities and the amounts provided for in
Section 7.7.
SECTION 6.9 Trustee May File Proofs of Claim. In case of the
pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial
proceeding relative to the Company or any other obligor upon the Securities
or the property of the Company or of such other obligor or their creditors,
the Trustee (irrespective of whether the Principal of the Securities shall
then be due and payable as therein expressed or by declaration or otherwise
and irrespective of whether the Trustee shall have made any demand on the
Company for the payment of overdue Principal or interest) shall be entitled
and empowered, by intervention in such proceeding or otherwise,
(a) to file and prove a claim for the whole amount
of Principal and interest owing and unpaid in respect of
the 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 any
other amount due the Trustee under Section 7.7) and of
the Holders of Securities allowed in such judicial
proceeding, and
(b) 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
similar official in any such judicial proceeding is hereby authorized by
each Holder of Securities to make such payments to the Trustee and, in the
event that the Trustee shall consent to the making of such payments
directly to the Holders of Securities, to pay the Trustee any amount due it
for the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel, and any other amounts due the Trustee
under Section 7.7.
Nothing herein contained shall be deemed to authorize the Trustee
or the holders of Senior Indebtedness to authorize or consent to or accept
or adopt on behalf of any Holder of a Security any plan of reorganization,
arrangement, adjustment or composition affecting the Securities or the
rights of any Holder thereof, or to authorize the Trustee to vote in
respect of the claim of any Holder of a Security in any such proceeding.
SECTION 6.10 Priorities. If the Trustee collects any money
pursuant to this Article 6, it shall pay out the money in the following
order and, in case of the distribution of such money on account of
Principal or interest, upon presentation of the Securities, 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 Trustee for amounts due under Section 7.7;
SECOND: to holders of Senior Indebtedness as provided for in
Article XII;
THIRD: to Securityholders for amounts due and unpaid for the
Principal and interest on the Securities in respect of which or for the
benefit of which such money has been collected, ratably, without preference
or priority of any kind, according to the amounts due and payable on such
Securities for Principal and interest, respectively; and
FOURTH: the balance, if any, to the Company.
The Trustee may fix a record date and payment date for any payment
to Securityholders pursuant to this Section 6.10. At least 15 days before
such record date, the Company shall mail to each Securityholder and the
Trustee a notice that states the record date, the payment date and amount
to be paid.
SECTION 6.11 Undertaking for Costs. In any suit for the enforcement
of any right or remedy under this Indenture or in any suit against the
Trustee for any action taken or omitted by it as Trustee, a court in its
discretion may require the filing by any party litigant in the suit of an
undertaking to pay the costs of the suit, and the court in its discretion
may assess reasonable costs, including reasonable attorneys' fees, against
any party litigant in the suit, having due regard to the merits and good
faith of the claims or defenses made by the party litigant. This Section
6.11 does not apply to a suit by the Trustee, a suit by a Holder pursuant
to Section 6.7 or a suit by Holders of more than 10% in aggregate Principal
Amount of the Outstanding Securities of any series, or to any suit
instituted by any Holder of any Security for the enforcement of the payment
of the Principal of or interest on any Security on or after the Stated
Maturity or Maturities expressed in such Security (or, in the case of
redemption, on or after the Redemption Date).
SECTION 6.12 Waiver of Stay, Extension or Usury Laws. The Company
covenants (to the extent that it may lawfully do so) that it will not at
any time insist upon, or plead, or in any manner whatsoever claim or take
the benefit or advantage of, any stay or extension law or any usury or
other law wherever enacted, now or at any time hereafter in force, which
may affect the covenants or the performance of this Indenture; and the
Company (to the extent that it may lawfully do so) hereby expressly waives
all benefit or advantage of any such law, and covenants that it will not
hinder, delay or impede the execution of any power herein granted to the
Trustee, but will suffer and permit the execution of every such power as
though no such law had been enacted.
ARTICLE VII
TRUSTEE
SECTION 7.1 Duties of Trustee.
(a) If an Event of Default has occurred and is continuing, the
Trustee shall exercise the rights and powers vested in it by this Indenture
and use the same degree of care and skill in its exercise as a prudent man
would exercise or use under the circumstances in the conduct of his own
affairs.
(b) Except during the continuance of an Event of Default:
(1) the Trustee need perform only those duties that are
specifically set forth in this Indenture and no others and shall
not be liable except for the performance of such duties; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates
or opinions furnished to the Trustee and conforming to the
requirements of this Indenture. However, the Trustee shall
examine the certificates and opinions to determine whether or not
they conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(1) this paragraph (c) does not limit the effect of paragraph
(b) of this Section 7.1;
(2) the Trustee shall not be liable for any error of judgment
made in good faith by a Trust Officer unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts; and
(3) the Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with
a direction received by it pursuant to Section 6.5.
(d) Every provision of this Indenture that in any way relates to
the Trustee is subject to paragraphs (a), (b), (c) and (e) of this Section
7.1.
(e) The Trustee may refuse to perform any duty or exercise any
right or power or extend or risk its own funds or otherwise incur any
financial liability unless it receives indemnity satisfactory to it against
any loss, liability or expense.
(f) 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 not be liable for any interest on any money received by it
except as the Trustee may otherwise agree with the Company.
SECTION 7.2 Rights of Trustee. (a) The Trustee may rely on any
document believed by it to be genuine and to have been signed or presented
by the proper person. The Trustee need not investigate any fact or matter
stated in the document.
(b) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel. The Trustee
shall not be liable for any action it takes or omits to take in good faith
in reliance on such Officers' Certificate or Opinion of Counsel.
(c) The Trustee may act through agents and shall not be
responsible for the misconduct or negligence of any agent appointed with
due care.
(d) Subject to the provisions of Section 7.1 (c), the Trustee
shall not be liable for any action it takes or omits to take in good faith
which it believes to be authorized or within its rights or powers.
SECTION 7.3 Individual Rights of Trustee, etc. The Trustee in
its individual or any other capacity may become the owner or pledgee of
Securities and may otherwise deal with the Company or its Affiliates with
the same rights it would have if it were not Trustee. Any Paying Agent,
Registrar or co-registrar or any other agent of the Company may do the same
with like rights. However, the Trustee must comply with Sections 7.10 and
7.11.
SECTION 7.4 Trustee's Disclaimer. The Trustee makes no
representation as to the validity or adequacy of this Indenture or the
Securities. The Trustee shall not be accountable for the Company's use of
the proceeds from the Securities and, shall not be responsible for any
statement in the registration statement for the Securities under the
Securities Act of 1933, as amended, or in the Indenture or the Securities
(other than its certificate of authentication) or for the determination as
to which beneficial owners are entitled to receive any notices hereunder.
SECTION 7.5 Notice of Defaults. If a Default with respect to the
Securities of any series occurs and is continuing and if it is known to the
Trustee, the Trustee shall give to each Holder of Securities of such series
notice of such Default in the manner set forth in TIA Section 315(b) within
90 days after it occurs. The Trustee shall have no duty to inquire as to
the performance of the Company's covenants in Article IV hereof. In
addition, the Trustee shall not be deemed to have knowledge of any Default
or Event of Default except (i) any Event of Default occurring pursuant to
Section 4.1 or 6.1(l) or (ii) any Default or Event of Default of which the
Trustee shall have received written notification or obtained actual
knowledge.
SECTION 7.6 Reports by Trustee to Holders. Within 60 days after
each May 15 beginning with the May 15 following the date of this Indenture,
the Trustee shall mail to each Holder of Securities a brief report dated as
of such May 15 that complies with TIA Section 313(a). The Trustee also
shall comply with TIA Section 313(b) and (c).
A copy of each report at the time of its mailing to Holders of
Securities shall be filed with the SEC and each stock exchange on which the
Securities of that series may be listed. The Company agrees to notify the
Trustee whenever the Securities of a particular series become listed on any
stock exchange and of any delisting thereof.
SECTION 7.7 Compensation and Indemnity. The Company agrees:
(a) 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);
(b) to reimburse the Trustee upon its request for
all reasonable expenses, disbursements and advances
incurred or made by the Trustee in accordance with any
provision of this Indenture (including the reasonable
compensation and the expenses, advances 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
(c) to indemnify the Trustee for, and to hold it
harmless against, any loss, liability or expense incurred
without negligence or bad faith on its part, arising out
of or in connection with the acceptance or administration
of this trust, 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.
To secure the Company's payment obligations in this Section 7.7,
the Trustee shall have a lien prior to the Securities on all money or
property held or collected by the Trustee, except that held in trust to pay
the Principal of or interest, if any, on particular Securities.
The Company's payment obligations pursuant to this Section 7.7
shall survive the discharge of this Indenture. When the Trustee incurs
expenses after the occurrence of a Default specified in Section 6.1(3) or
(4), the expenses are intended to constitute expenses of administration
under any Bankruptcy Law.
SECTION 7.8 Replacement of Trustee. The Trustee may resign by so
notifying the Company; provided, however, no such resignation shall be
effective until a successor Trustee has accepted its appointment pursuant
to this Section 7.8. The Holders of a majority in aggregate Principal
Amount of the Outstanding Securities of any series at the time outstanding
may remove the Trustee with respect to the Securities of such series by so
notifying the Trustee and may appoint a successor Trustee. The Company
shall remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or public officer takes charge of the Trustee
or its property; or
(4) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, with respect to the Securities of one or
more series, the Company shall promptly appoint, by resolution of its Board
of Directors, a successor Trustee with respect to the Securities of that or
those series (it being understood that any such successor Trustee may be
appointed with respect to the Securities of one or more or all of such
series and that at any time there shall be only one Trustee with respect to
the Securities of any series).
In the case of the appointment hereunder of a successor Trustee
with respect to all Securities, every such successor Trustee shall deliver
a written acceptance of its appointment to the retiring Trustee and to the
Company. Thereupon, the resignation or removal of the retiring Trustee
shall become effective and the successor Trustee shall have all the rights,
powers and duties of the Trustee under this Indenture. The successor
Trustee shall mail a notice of its succession to Holders of Securities of
the particular series with respect to which such successor Trustee has been
appointed. The retiring Trustee shall promptly transfer all property held
by it as Trustee to the successor Trustee, subject to the lien provided for
in Section 7.7.
In case of the appointment hereunder of a successor Trustee with
respect to the Securities of one or more (but not all) series, the Company,
the retiring Trustee and each successor Trustee with respect to the
Securities of one or more series shall execute and deliver an indenture
supplemental hereto wherein each successor Trustee shall accept such
appointment and which (1) shall contain such provisions as shall be
necessary or desirable to transfer and confirm to, and to vest in, each
successor Trustee all the rights, powers, trusts and duties of the retiring
Trustee with respect to the Securities of that or those series to which the
appointment of such successor Trustee relates, (2) if the retiring Trustee
is not retiring with respect to all Securities, shall contain such
provisions as shall be deemed necessary or desirable to confirm that all
the rights, powers, trusts and duties of the retiring Trustee with respect
to the Securities of that or those series as to which the retiring Trustee
is not retiring shall continue to be vested in the 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 as co-
Trustees of the same trust and that each such Trustee shall be trustee of a
trust or trusts hereunder separate and apart from any trust or trusts
hereunder administered by any other such Trustee; and upon the execution
and delivery of such supplemental indenture the resignation or removal of
the retiring Trustee shall become effective to the extent provided therein
and each such successor Trustee, without any further act, deed or
conveyance, shall become vested with all the rights, powers, trusts and
duties of the retiring Trustee with respect to the Securities of that or
those series to which the appointment of such successor Trustee relates;
but, on request of the Company or any successor Trustee, such retiring
Trustee shall duly assign, transfer and deliver to such successor Trustee
all property and money held by such retiring Trustee hereunder with respect
to the Securities of that or those series to which the appointment of such
successor Trustee relates, subject, nevertheless, to its lien, if any,
provided for in Section 7.7.
If a successor Trustee with respect to the Securities of any
series does not take office within 30 days after the retiring Trustee
resigns or is removed, the retiring Trustee, the Company or the Holders of
a majority in aggregate Principal Amount of the Outstanding Securities of
such series at the time outstanding may petition any court of competent
jurisdiction for the appointment of a successor Trustee with respect to the
Securities of such series.
If the Trustee fails to comply with Section 7.10, any Holder of a
Security of such series may petition any court of competent jurisdiction
for the removal of such Trustee and the appointment of a successor Trustee.
SECTION 7.9 Successor Trustee by Merger. If the Trustee
consolidates with, merges or converts into, or transfers all or
substantially all its corporate trust business or assets to, another
corporation, the resulting, surviving or transferee corporation without any
further act shall be the successor Trustee.
SECTION 7.10 Eligibility; Disqualification. The Trustee shall at
all times satisfy the requirements of TIA Section 310(a)(1) and 310(a)(5).
The Trustee shall have a combined capital and surplus of at least
$50,000,000 as set forth in its most recent published annual report of
condition. The Trustee shall comply with TIA Section 310(b). In
determining whether the Trustee has conflicting interests as defined in TIA
Section 310(b)(1), the provisions contained in the proviso to TIA Section
310(b)(1) shall be deemed incorporated herein.
SECTION 7.11 Preferential Collection of Claims Against Company.
The Trustee shall comply with TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). A Trustee who has resigned or
been removed shall be subject to TIA Section 311(a) to the extent indicated
therein.
ARTICLE VIII
SATISFACTION AND DISCHARGE
SECTION 8.1 Discharge of Liability on Securities. Except as
otherwise provided as contemplated by Section 2.3(a), when (a) the Company
delivers to the Trustee all Outstanding Securities or all Outstanding
Securities of any series, as the case may be, theretofore authenticated and
delivered (other than (i) Securities which have been destroyed, lost or
stolen and which have been replaced or paid as provided in Section 2.9,
(ii) Securities 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 2.6)
for cancellation or (b) all Outstanding Securities have become due and
payable and the Company deposits with the Trustee cash sufficient to pay at
Stated Maturity the Principal Amount of all Principal of and interest on
Outstanding Securities or all Outstanding Securities of such series (other
than Securities replaced pursuant to Section 2.9), and if in either case
the Company pays all other sums payable hereunder by the Company, then this
Indenture shall, subject to Section 7.7, cease to be of further effect as
to all Outstanding Securities or all Outstanding Securities of any series,
as the case may be. The Trustee shall join in the execution of a document
prepared by the Company acknowledging satisfaction and discharge of this
Indenture on demand of the Company accompanied by an Officers' Certificate
and Opinion of Counsel and at the cost and expense of the Company.
SECTION 8.2 Repayment to the Company. The Trustee and the Paying
Agent shall return to the Company on Company Request any money held by them
for the payment of any amount with respect to the Securities that remains
unclaimed for two years; provided, however, that the Trustee or such Paying
Agent, before being required to make any such return, may at the expense
and direction of the Company mail to each Holder of such Securities 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 mailing, any
unclaimed money then remaining will be returned to the Company. After
return to the Company, Holders entitled to the money must look to the
Company for payment as general creditors unless an applicable abandoned
property law designates another person.
SECTION 8.3 Option to Effect Defeasance or Covenant Defeasance.
Unless otherwise specified as contemplated by Section 2.3(a) with
respect to Securities of a particular series, the Company, may at its
option, by Board Resolution, at any time, with respect to any series of
Securities, elect to have either Section 8.4 or Section 8.5 be applied to
all of the outstanding Securities of any series (the "Defeased
Securities"), upon compliance with the conditions set forth below in this
Article VIII.
SECTION 8.4 Defeasance and Discharge.
Upon the Company's exercise under Section 8.3 of the option
applicable to this Section 8.4, the Company shall be deemed to have been
discharged from its obligations with respect to the Defeased Securities on
the date the conditions set forth below 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 the defeased Securities, which shall thereafter be deemed to
be "outstanding" only for the purposes of Sections 2.4, 2.5, 2.6, 2.9,
2.11, 2.12, 4.1, 4.5, 6.6, 6.7, 7.7, 7.8 and 8.2 of this Indenture and to
have satisfied all its other obligations under such series of Securities
and this Indenture insofar as such series of Securities are concerned (and
the Trustee, at the expense of the Company, and, upon written request,
shall execute proper instruments acknowledging the same). Subject to
compliance with this Article VIII, the Company may exercise its option
under this Section 8.4 notwithstanding the prior exercise of its option
under Section 8.5 with respect to a series of Securities.
SECTION 8.5 Covenant Defeasance.
Upon the Company's exercise under Section 8.3 of the option
applicable to this Section 8.5, the Company shall be released from its
obligations under Sections 4.2 and 4.3 and Article V and such other
provisions as may be provided as contemplated by Section 2.3(a) with
respect to Securities of a particular series and with respect to the
Defeased Securities on and after the date the conditions set forth below
are satisfied (hereinafter "covenant defeasance"), and the Defeased
Securities 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 if any thereof) in connection with such covenants,
but shall continue to be deemed "outstanding" for all other purposes
hereunder. For this purpose, such covenant defeasance means that, with
respect to the Defeased Securities, 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 Article, whether directly or indirectly, by
reason of any reference elsewhere herein to any such Section or Article or
by reason of any reference in any such Section or Article to any other
provisions herein or in any other document and such omission to comply
shall not constitute a Default or an Event of Default under Section 6.1
but, except as specified above, the remainder of this Indenture and such
Defeased Securities shall be unaffected thereby.
SECTION 8.6 Condition to Defeasance or Covenant Defeasance. The
following shall be the conditions to application of either Section 8.4
or Section 8.5 to a series of outstanding Securities.
(a) The Company shall have irrevocably deposited with the Trustee,
in trust, (i) sufficient funds to pay the Principal of and interest to
Stated Maturity (or redemption) on, the Debt Securities of such series, or
(ii) such amount of direct obligations of, or obligations the principal of
and interest on which are fully guaranteed by, the government of the United
States, and which are not subject to prepayment, redemption or call, as
will, together with the predetermined and certain income to accrue thereon
without consideration of any reinvestment thereof, be sufficient to pay
when due the Principal of, and interest to Stated Maturity (or redemption)
on, the Debt Securities of such series.
(b) The Company shall have delivered to the Trustee an opinion of
counsel to the effect that the funds deposited pursuant to Section 8.6(a)
will not be subject to any rights of the holders of Senior Indebtedness.
ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 9.1 Supplemental Indentures without Consent of Holders.
Without the consent of any Holders of Securities, the Company 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 corporation to the
Company and the assumption by any such successor of the covenants
of the Company herein and in the Securities; or
(2) to add to the covenants, agreements and obligations of
the Company for the benefit of the Holders of all of the
Securities or any series thereof, or to surrender any right or
power herein conferred upon the Company; or
(3) to establish the form or terms of Securities of any
series as permitted by Sections 2.1 and 2.3(a), respectively; or
(4) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Securities of
one or more series and to add to or change any of the provisions
of this Indenture as shall be necessary to provide for or
facilitate the administration of the trusts hereunder by more than
one Trustee, pursuant to the requirements of Section 7.8; or
(5) to cure any ambiguity, defect or inconsistency; or
(6) to add to, change or eliminate any of the provisions of
this Indenture (which addition, change or elimination may apply to
one or more series of Securities), provided that any such
addition, change or elimination shall neither (A) apply to any
Security of any series created prior to the execution of such
supplemental indenture and entitled to the benefit of such
provision nor (B) modify the rights of the Holder of any such
Security with respect to such provision; or
(7) to secure the Securities; or
(8) to make any other change that does not adversely affect
the rights of any Securityholder.
SECTION 9.2 Supplemental Indentures with Consent of Holders. With
the written consent of the Holders of at least a majority in aggregate
Principal Amount of the Outstanding Securities of each series affected by
such supplemental indenture, the Company and the Trustee may amend this
Indenture or the Securities of any series or may enter into an indenture or
indentures supplemental hereto for the purpose of adding any provisions to
or changing in any manner or eliminating any of the provisions of this
Indenture or of modifying in any manner the rights of the Holders of the
Securities of such series under this Indenture; provided, however, that no
such amendment or supplemental indenture shall, without the consent of the
Holder of each Outstanding Security affected thereby:
(1) change the Stated Maturity of the Principal of, or any
installment of Principal of or interest on, any such Security, or
reduce the Principal Amount thereof or the rate of interest
thereon or any premium payable upon redemption thereof or reduce
the amount of Principal of any such Discount Security that would
be due and payable upon a declaration of acceleration of maturity
thereof pursuant to Section 6.2, or change the Place of Payment,
or change the coin or currency in which, any Principal of, or any
installment of interest on, any such Security is payable, or
impair the right to institute suit for the enforcement of any such
payment on or after the Stated Maturity thereof (or, in the case
of redemption, on or after the Redemption Date);
(2) reduce the percentage in Principal Amount of the
Outstanding Securities of any series, the consent of whose Holders
is required for any such amendment or supplemental indenture, or
the consent of whose Holders is required for any waiver (of
compliance with certain provisions of this Indenture or certain
defaults hereunder and their consequences) with respect to the
Securities of such series provided for in this Indenture;
(3) make any change in the terms of the Subordination of the
Securities in a manner adverse to the Holders of any series of
outstanding Securities; or
(4) modify any of the provisions of this Section, Section 6.4
or 6.7, except to increase the percentage of Outstanding
Securities of such series required for such actions or to provide
that certain other provisions of this Indenture cannot be modified
or waived without the consent of the Holder of each Outstanding
Security affected thereby.
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 Securities, or
which modifies the rights of the Holders of Securities of such series with
respect to such covenant or other provision, shall be deemed not to affect
the rights under this Indenture of the Holders of Securities of any other
series.
It shall not be necessary for the consent of the Holders under
this Section 9.2 to approve the particular form of any proposed amendment
or supplemental indenture, but it shall be sufficient if such consent
approves the substance thereof.
After an amendment or supplemental indenture under this Section
9.2 becomes effective, the Company shall mail to each Holder of the
particular Securities affected thereby a notice briefly describing the
amendment.
SECTION 9.3 Compliance with Trust Indenture Act. Every supplemental
indenture executed pursuant to this Article shall comply with the TIA as
then in effect.
SECTION 9.4 Revocation and Effect of Consents, Waivers and
Actions. Until an amendment or waiver with respect to a series of
Securities becomes effective, a consent to it or any other action by a
Holder of a Security of that series hereunder is a continuing consent by
the Holder and every subsequent Holder of that Security or portion of that
Security that evidences the same obligation as the consenting Holder's
Security, even if notation of the consent, waiver or action is not made on
the Security. However, any such Holder or subsequent Holder may revoke the
consent, waiver or action as to such Holder's Security or portion of the
Security if the Trustee receives the notice of revocation before the
Company or an agent of the Company certifies to the Trustee that the
consent of the requisite aggregate Principal Amount of the Securities of
that series has been obtained. After an amendment, waiver or action
becomes effective, it shall bind every Holder of Securities of that series.
The Company may, but shall not be obligated to, fix a record date
for the purpose of determining the Holders entitled to consent to any
amendment or waiver with respect to a series of Securities. If a record
date is fixed, then notwithstanding the first two sentences of the
immediately preceding paragraph, those persons who were Holders of
Securities of that series at such record date (or their duly designated
proxies), and only those persons, shall be entitled to revoke any consent
previously given, whether or not such persons continue to be Holders after
such record date. No such consent shall be valid or effective for more
than 90 days after such record date.
SECTION 9.5 Notation on or Exchange of Securities. Securities of
any series authenticated and delivered after the execution of any
supplemental indenture with respect to such series pursuant to this Article
may, and shall if required by the Trustee, bear a notation in form approved
by the Trustee as to any matter provided for in such supplemental
indenture. If the Company shall so determine, new Securities of such
series so modified as to conform, in the opinion of the Trustee and the
Board of Directors, to any such supplemental indenture may be prepared and
executed by the Company and authenticated and delivered by the Trustee in
exchange for outstanding Securities of that series.
SECTION 9.6 Trustee to Sign Supplemental Indentures. The Trustee
shall sign any supplemental indenture authorized pursuant to this Article 9
if the amendment does not adversely affect the rights, duties, liabilities
or immunities of the Trustee. If it does, the Trustee may, but need not,
sign it. In signing such amendment, the Trustee shall be entitled to
receive, and (subject to the provisions of Section 7.1) shall be fully
protected in relying upon, an Officers' Certificate and an Opinion of
Counsel stating that such amendment is authorized or permitted by this
Indenture.
SECTION 9.7 Effect of Supplemental Indentures. Upon the
execution of any supplemental indenture under this Article, this Indenture
shall be modified in accordance therewith, and such supplemental indenture
shall form a part of this Indenture for all purposes; and every Holder of
Securities theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby, except to the extent otherwise set forth thereon.
ARTICLE X
SINKING FUNDS
SECTION 10.1 Applicability of Article. The provisions of this
Article shall be applicable to any sinking fund for the retirement of
Securities of a series, except as otherwise specified as contemplated by
Section 2.3(a) for Securities of such series.
The minimum amount of any sinking fund payment provided for by the
terms of Securities of any series is herein referred to as a "mandatory
sinking fund payment," and any payment in excess of such minimum amount
provided for by the terms of Securities of any series is herein referred to
as an "optional sinking fund payment." If provided for by the terms of
Securities of any series, the cash amount of any sinking fund payment may
be subject to reduction as provided in Section 10.2. Each sinking fund
payment shall be applied to the redemption of Securities of any series as
provided for by the terms of the Securities of such series.
SECTION 10.2 Satisfaction of Sinking Fund Payments with Securities.
The Company (1) may deliver Outstanding Securities of a series with the
same issue date, interest rate and Stated Maturity (other than any
previously called for redemption), and (2) may apply as a credit Securities
of a series with the same issue date, interest rate and Stated Maturity
which have been redeemed either at the election of the Company pursuant to
the terms of such Securities or through the application of permitted
optional sinking fund payments pursuant to the terms of such Securities, in
each case, in satisfaction of all or any part of any mandatory sinking fund
payment with respect to the Securities of such series with the same issue
date, interest rate and Stated Maturity; provided that such Securities have
not been previously so credited. Such Securities shall be received and
credited for such purpose by the Trustee at the Redemption Price specified
in such Securities for redemption through operation of the sinking fund and
the amount of such sinking fund payment shall be reduced accordingly.
SECTION 10.3 Redemption of Securities for Sinking Fund. Not less
than 60 days (or such shorter period as shall be acceptable to the Trustee)
prior to each sinking fund payment date for any series of Securities, the
Company will deliver to the Trustee an Officers' Certificate specifying the
amount of the next sinking fund payment for that series pursuant to the
terms of that series, the portion thereof, if any, which is to be satisfied
by payment of cash and the portion thereof, if any, which is to be
satisfied by delivering and crediting Securities of that series pursuant to
Section 10.2 and will also deliver to the Trustee any Securities to be so
delivered. Not less than 30 days before each such sinking fund payment
date the Trustee shall select the Securities to be redeemed upon such
sinking fund payment date in the manner specified in Section 3.2 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 3.3. Such notice
having been duly given, the redemption of such Securities shall be made
upon the terms and in the manner stated in Sections 3.4 and 3.6.
ARTICLE XI
ACTIONS OF HOLDERS OF SECURITIES
SECTION 11.1 Purposes for which Meetings may be Called. A meeting
of Holders of Securities of any series may be called at any time and from
time to time pursuant to this Article to make, give or take any request,
demand, authorization, direction, notice, consent, waiver or other action
provided by this Indenture to be made, given or taken by Holders of
Securities of such series.
SECTION 11.2 Call, Notice and Place of Meetings. (a) The Trustee
may at any time call a meeting of Holders of Securities of any series for
any purpose specified in Section 11.1, to be held at such time and at such
place in the Borough of Manhattan, The City of New York or, with the
approval of the Company, at any other place. Notice of every meeting of
Holders of Securities of any series, setting forth the time and the place
of such meeting and in general terms the action proposed to be taken at
such meeting, shall be given, in the manner provided in Section 13.2, 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 or the Holders of at least
10% in Principal Amount of the Outstanding Securities of any series shall
have requested the Trustee to call a meeting of the Holders of Securities
of such series for any purpose specified in Section 11.1, by written
request setting forth in reasonable detail the action proposed to be taken
at the meeting, and the Trustee shall not have made the first publication
of the notice of such meeting within 21 days after receipt of such request
or shall not thereafter proceed to cause the meeting to be held as provided
herein, then the Company or the Holders of Securities of such series in the
amount above specified, as the case may be, may determine the time and the
place in the Borough of Manhattan, The City of New York, or in such other
place as shall be determined and approved by the Company, for such meeting
and may call such meeting for such purposes by giving notice thereof as
provided in subsection (a) of this Section 11.2.
SECTION 11.3 Persons Entitled to Vote at Meetings. To be
entitled to vote at any meeting of Holders of Securities of any series, a
person shall be (1) a Holder of one or more Outstanding Securities of such
series, or (2) a person appointed by an instrument in writing as proxy for
a Holder or Holders of one or more Outstanding Securities of such series by
such Holder or Holders. The only persons who shall be entitled to be
present or to speak at any meeting of Holders of Securities of any series
shall be the persons entitled to vote at such meeting and their counsel,
any representatives of the Trustee and its counsel and any representatives
of the Company and its counsel.
SECTION 11.4 Quorum; Action. The persons entitled to vote a
majority in Principal Amount of the Outstanding Securities of a series
shall constitute a quorum for a meeting of Holders of Securities of such
series. In the absence of a quorum within 30 minutes of the time appointed
for any such meeting, the meeting shall, if convened at the request of
Holders of Securities of such series, be dissolved. In any other case, the
meeting may be adjourned for a period 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 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 11.2(a), except
that such notice need be given only once not less than five days prior to
the date on which the meeting is scheduled to be reconvened. Notice of the
reconvening of an adjourned meeting shall state expressly the percentage,
as provided above, of the principal amount of the Outstanding Securities of
such series which shall constitute a quorum.
Except as limited by the proviso to Section 9.2, 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 Securities
of that series; provided, however, that, except as limited by the proviso
to Section 9.2, any resolution with respect to any request, demand,
authorization, direction, notice, consent, waiver or other action which
this Indenture expressly provides may be made, given or taken by the
Holders of a specified percentage, which is less than a majority, in
Principal Amount of the Outstanding Securities of a series may be adopted
at a meeting or an adjourned meeting duly reconvened and at which a quorum
is present as aforesaid by the affirmative vote of the Holders of such
specified percentage in Principal Amount of the Outstanding Securities of
that series.
Any resolution passed or decision taken at any meeting of Holders
of Securities of any series duly held in accordance with this Section shall
be binding on all the Holders of Securities of such series, whether or not
present or represented at the meeting.
SECTION 11.5 Determination of Voting Rights; Conduct and Adjournment
of Meetings. (a) Notwithstanding any other provisions of this Indenture,
the Trustee may make such reasonable regulations as it may deem advisable
for any meeting of Holders of Securities of a series in regard to proof of
the holding of Securities of such series and of the appointment of proxies
and in regard to the appointment and duties of inspectors of votes, the
submission and examination of proxies, certificates and other evidence of
the right to vote, and such other matters concerning the conduct of the
meeting as it shall deem appropriate. Except as otherwise permitted or
required by any such regulations, the holding of Securities shall be proved
in the manner specified in Section 11.7 and the appointment of any proxy
shall be proved in the manner specified in Section 11.7. 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 11.7 or other proof.
(b) The Trustee shall, by an instrument in writing, appoint a
temporary chairman of the meeting, unless the meeting shall have been
called by the Company or by Holders of Securities as provided in Section
11.2 (b), in which case the Company or the Holders of Securities of the
series calling the meeting, as the case may be, shall in like manner
appoint a temporary chairman. A permanent chairman and a permanent
secretary of the meeting shall be elected by vote of the persons entitled
to vote a majority in Principal Amount of the Outstanding Securities of
such series represented at the meeting.
(c) At any meeting each Holder of a Security of such series or
proxy shall be entitled to vote with respect to the Outstanding Securities
of such series held or represented by him; provided, however, that no vote
shall be cast or counted at any meeting in respect of any Security
challenged as not Outstanding and ruled by the chairman of the meeting to
be not Outstanding. The chairman of the meeting shall have no right to
vote, except as a Holder of a Security of such series or proxy.
(d) Any meeting of Holders of Securities of any series duly
called pursuant to Section 11.2 at which a quorum is present may be
adjourned from time to time by persons entitled to vote a majority in
Principal Amount of the Outstanding Securities of such series represented
at the meeting; and the meeting may be held as so adjourned without further
notice.
SECTION 11.6 Counting Votes and Recording Action of Meetings.
The vote upon any resolution submitted to any meeting of Holders of
Securities of any series shall be by written ballots on which shall be
subscribed signatures of the Holders of Securities of such series or of
their representatives by proxy and the Principal Amounts and serial numbers
of the Outstanding Securities of such series held or represented by them.
The permanent chairman of the meeting shall appoint two inspectors of votes
who shall count all votes cast at the meeting for or against any resolution
and who shall make and file with the secretary of the meeting their
verified written reports in duplicate of all votes cast at the meeting. A
record, at least in duplicate, of the proceedings of each meeting of
Holders of Securities of any series shall be prepared by the secretary of
the meeting and there shall be attached to said record the original reports
of the inspectors of votes on any vote by ballot taken thereat and
affidavits by one or more persons having knowledge of the facts setting
forth a copy of the notice of the meeting and showing that said notice was
given as provided in Section 11.2 and, if applicable, Section 11.4. 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.
SECTION 11.7 Actions of Holders Generally. (a) Any request,
demand, authorization, direction, notice, consent, waiver or other action
provided by this Indenture to be given or taken by Holders may be embodied
in and evidenced by one or more instruments of substantially similar tenor
signed by such Holders in person or by an agent duly appointed in writing.
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. Proof of execution of any such instrument or of a writing
appointing any such agent, or of the holding by any person of a Security,
shall be sufficient for any purpose of this Indenture and (subject to
Section 7.1) conclusive in favor of the Trustee and the Company, if made in
the manner provided in this Section. The record of any meeting of Holders
of Securities shall be proved in the manner provided in Section 11.6.
(b) The fact and date of the execution by any person of any such
instrument or writing, or the authority of the persons executing the same,
may be proved in any reasonable manner which the Trustee deems sufficient.
(c) The Principal Amount and serial numbers of Securities held by
the person, and the date of holding the same, shall be proved by the books
of the Registrar.
(d) Any request, demand, authorization, direction, notice,
consent, waiver or other act of the Holder of any Security in accordance
with this Section shall bind every future Holder of the same Security and
the Holder of every Security issued upon the registration of transfer
thereof or in exchange therefor or in lieu thereof in respect of anything
done, omitted or suffered to be done by the Trustee or the Company in
reliance thereon, whether or not notation of such action is made upon such
Security.
(e) If the Company shall solicit from the Holders any request,
demand, authorization, direction, notice, consent, waiver or other act in
accordance with this Section, the Company may, at its option, by or
pursuant to an Officers' Certificate delivered to the Trustee, fix in
advance a record date for the determination of Holders entitled to give
such request, demand, authorization, direction, notice, consent, waiver or
such other act, but the Company shall have no obligation to do so. 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 percentage of Outstanding
Securities or Outstanding Securities of a series, as the case may be, have
authorized or agreed or consented to such request, demand, authorization,
direction, notice, consent, waiver or other act, and for that purpose the
Outstanding Securities or Outstanding Securities of the series, as the case
may be, shall be computed as of such record date; provided, that no such
authorization, agreement or consent by the Holders on the record date shall
be deemed effective unless such request, demand, authorization, direction,
notice, consent, waiver or other act shall become effective pursuant to the
provisions of clause (a) of this Section 11.7 not later than six months
after the record date.
ARTICLE XII
SUBORDINATION
SECTION 12.1 Securities Subordinate to Senior Indebtedness.
Unless otherwise specified as contemplated by Section 2.3(a), the
Securities shall be subordinated to Senior Indebtedness as set forth in
this Article XII. The Company covenants and agrees, and each Holder of a
Security of any series by such Holder's acceptance thereof likewise
covenants and agrees, that, to the extent and in the manner hereinafter set
forth in this Article XII, the indebtedness represented by the Securities
and the payment of the Principal Amount, interest and such other amounts as
provided for in Section 2.3(a), if any, in respect of each and all of the
Securities are hereby expressly made subordinate and subject in right of
payment to the prior payment in full of all Senior Indebtedness.
"Senior Indebtedness" means the principal of (and premium, if any)
and interest on (including interest accruing after the filing of a petition
initiating any proceeding pursuant to any Bankruptcy Law, but only to the
extent allowed or permitted to the holder of such Debt of the Company
against the bankruptcy or any other insolvency estate of the Company in
such proceeding) and other amounts due on or in connection with any Debt of
the Company incurred, assumed or guaranteed by the Company, whether
outstanding on the date of the Indenture or thereafter incurred, assumed or
guaranteed and all renewals, extensions and refundings of any such Debt of
the Company; provided, however, that the following will not constitute
Senior Indebtedness:
(a) any Debt of the Company as to which, in the instrument
creating the same or evidencing the same or pursuant to which the
same is outstanding, it is expressly provided that such Debt of
the Company shall be subordinated to any other Debt of the
Company;
(b) any Debt of the Company which by its terms states that such
Debt of the Company shall not be senior in right of payment to the
Securities;
(c) Debt of the Company in respect of the Securities;
(d) any Debt of the Company to any Affiliate of the Company or
Subsidiary of the Company; and
(e) any Debt of the Company issued pursuant to that certain
Indenture dated as of ___________, among the Company and United
States Trust Company of New York, as trustee relating to
subordinated debt securities (which such debt securities shall
rank junior in right of payment to the Securities).
SECTION 12.2 Payment Over of Proceeds upon Dissolution, Etc.
Upon any distribution of assets of the Company in the event of:
(a) any insolvency or bankruptcy case or proceeding, or any
receivership, liquidation, reorganization or other similar case or
proceeding in connection therewith, relative to the Company or to
its creditors, as such, or to its assets, or
(b) any liquidation, dissolution or other winding up of the
Company, whether voluntary or involuntary and whether or not
involving insolvency or bankruptcy, or
(c) any assignment for the benefit of creditors or any other
marshalling of assets and liabilities of the Company,
then and in such event
(1) the holders of Senior Indebtedness shall be entitled to
receive payment in full of all amounts due or to become due on or
in respect of all Senior Indebtedness, or provision shall be made
for such payment in cash, before the Holders of the Securities are
entitled to receive any payment on account of the Principal
Amount, interest or such other amounts as may be provided for in
Section 2.3(a), if any, in respect of the Securities; and
(2) any payment or distribution of assets of the Company of
any kind or character, whether in cash, property or securities, by
set-off or otherwise, to which the Holders or the Trustee would be
entitled but for the provisions of this Article XII, including any
such payment or distribution which may be payable or deliverable
by reason of the payment of any other Debt of the Company being
subordinated to the payment of the Securities, shall be paid by
the liquidating trustee or agent or other person making such
payment or distribution, whether a trustee in bankruptcy, a
receiver or liquidating trustee or otherwise, directly to the
holders of 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 according to the
aggregate amounts remaining unpaid on account of the principal of,
and premium, if any, and interest on the 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 to the holders of
such Senior Indebtedness.
In the event that, notwithstanding the foregoing provisions of
this Section 12.2, the Trustee or the Holder of any Security shall receive
any payment or distribution of assets of the Company of any kind or
character, whether in cash, property or securities, including any such
payment or distribution which may be payable or deliverable by reason of
the payment of any other Debt of the Company being subordinated to the
payment of the Securities, before all Senior Indebtedness is paid in full
or payment thereof provided for, and if such fact shall then have been made
known to the Trustee as provided in Section 12.10, or, as the case may be,
such Holder, then and in such event such payment or distribution shall be
paid over or delivered forthwith to the trustee in bankruptcy, receiver,
liquidating trustee, custodian, assignee, agent or other person making
payment or distribution of assets of the Company for application to the
payment of all Senior Indebtedness remaining unpaid, to the extent
necessary to pay all Senior Indebtedness in full, after giving effect to
any concurrent payment or distribution to or for the holders of Senior
Indebtedness.
For purposes of this Article XII only, the words "cash, property
or securities," or any combination thereof, shall not be deemed to include
shares of Capital Stock of the Company as reorganized or readjusted, or
securities of the Company or any other corporation provided for by a plan
of reorganization or readjustment the payment of which is subordinated, at
least to the extent provided in this Article XII with respect to the
Securities, to the payment of all Senior Indebtedness which may at the time
be outstanding; provided, however, that (i) Senior Indebtedness is assumed
by the new corporation, if any, resulting from any such reorganization or
readjustment, and (ii) the rights of the holders of the Senior Indebtedness
are not, without the consent of such holders, altered, in any manner
adverse to such holders, by such reorganization or readjustment.
The consolidation of the Company with, or the merger of the
Company into, another corporation or the liquidation or dissolution of the
Company following the conveyance or transfer of all or substantially all of
its assets to another person upon the terms and conditions set forth in
Article V shall not be deemed a dissolution, winding up, liquidation,
reorganization, assignment for the benefit of creditors or marshalling of
assets and liabilities of the Company for the purposes of this Section 12.2
if the corporation formed by such consolidation or into which the Company
is merged or the person which acquires by conveyance or transfer all or
substantially all of the assets of the Company, as the case may be, shall,
as a part of such consolidation, merger, conveyance or transfer, comply
with the conditions set forth in Article V.
SECTION 12.3 Acceleration of Securities. In the event that any
Securities are declared due and payable before their Stated Maturity
pursuant to Section 6.2, then and in each such event the Company shall
promptly notify holders of Senior Indebtedness of such acceleration. The
Company may not pay the Securities until 120 days have passed after such
acceleration occurs and may thereafter pay the Securities if this Article
XII permits the payment at that time.
In the event that, notwithstanding the foregoing, the Company
shall make any payment to the Trustee or the Holder of any Securities
prohibited by the foregoing provisions of this Section 12.3, and if such
facts then shall have been known or thereafter shall have been made known
to the Trustee (as provided in Section 12.10) or to such Holder, as the
case may be, pursuant to the terms of this Indenture, then and in each such
event such payment shall be paid over and delivered forthwith to the
Company for the benefit of the holders of Senior Indebtedness by or on
behalf of the person holding such payment.
The provisions of this Section 12.3 shall not apply to any payment
with respect to which Section 12.2 would be applicable.
SECTION 12.4 Default in Senior Indebtedness. The Company may
not make any payment of the Principal Amount, interest or other such
amounts as may be provided for in Section 2.3(a), if any, in respect of the
Securities and may not acquire any Securities for cash or property (other
than for Capital Stock of the Company) if:
(1) a default on Senior Indebtedness occurs and is continuing
that permits holders of such Senior Indebtedness to accelerate its
maturity; and
(2) the default is the subject of judicial proceedings or the
Company receives a notice of default thereof from any person who
may give such notice pursuant to the instrument evidencing or
document governing such Senior Indebtedness. If the Company
receives any such notice, then a similar notice received within
nine months thereafter relating to the same default on the same
issue of Senior Indebtedness shall not be effective for purposes
of this Section 12.4.
The Company may resume payments on the Securities and may acquire
Securities if and when:
(A) the default is cured or waived; or
(B) 120 or more days pass after the receipt by the Company of
the notice described in clause (2) above and the default is not
then the subject of judicial proceedings; and
this Article XII otherwise permits the payment or acquisition at that time.
In the event that, notwithstanding the foregoing, the Company
shall make any payment to the Trustee or the Holder of any Security
prohibited by the foregoing provisions of this Section 12.4, and if such
fact then shall have been known or thereafter shall have been made known to
the Trustee as provided in Section 12.10 or such Holder, as the case may
be, pursuant to the terms of this Indenture, then and in each such event
such payment shall be paid over and delivered forthwith to the Company for
the benefit of the holders of the Senior Indebtedness by or on behalf of
the person holding such payment.
The provisions of this Section 12.4 shall not apply to any payment
with respect to which Section 12.2 would be applicable.
SECTION 12.5 Payment Permitted if No Default. Nothing contained
in this Article XII or elsewhere in this Indenture or in any of the
Securities shall prevent (a) the Company, at any time except during the
pendency of any case, proceeding, dissolution, liquidation or other winding
up, assignment for the benefit of creditors or other marshalling of assets
and liabilities of the Company referred to in Section 12.2 or under the
conditions described in Section 12.3 or 12.4, from making payments at any
time of the Principal Amount, interest or such other amounts as may be
provided for in Section 2.3(a), if any, as the case may be, in respect of
the Securities, or (b) the application by the Trustee or the retention by
any Holder of any money deposited with it hereunder to the payment of or on
account of the Principal Amount, interest or such other amounts as may be
provided for in Section 2.3(a), if any, as the case may be, in respect of
the Securities if the Trustee did not have, at the time provided in the
proviso to the first paragraph of Section 12.10, notice that such payment
would have been prohibited by the provisions of this Article XII.
SECTION 12.6 Subrogation Rights of Holders of Senior Indebtedness.
Subject to the payment in full of all Senior Indebtedness, the Holders of
the Securities shall be subrogated to the extent of the payments or
distributions made to the holders of such Senior Indebtedness pursuant to
the provisions of this Article XII to the rights of the holders of such
Senior Indebtedness to receive payments or distributions of cash, property
or securities applicable to the Senior Indebtedness until the Principal
Amount, interest or such other amounts as provided for in Section 2.3(a),
if any, as the case may be, in respect of the Securities shall be paid in
full. For purposes of such subrogation, no payments or distributions to
the holders of the Senior Indebtedness of any cash, property or securities
to which the Holders of the Securities or the Trustee would be entitled
except for the provisions of this Article XII, and no payments pursuant
to the provisions of this Article XII to the Company or to the holders of
Senior Indebtedness by Holders of the Securities or the Trustee, shall,
as between the Company, its creditors other than holders of Senior
Indebtedness and the Holders of the Securities, be deemed to be a payment
or distribution by the Company to or on account of the Senior Indebtedness.
SECTION 12.7 Provision Solely to Define Relative Rights. The
provisions of this Article XII are intended solely for the purpose of
defining the relative rights of the Holders of the Securities, on one hand,
and the holders of Senior Indebtedness, on the other hand. Nothing
contained in this Article XII or elsewhere in this Indenture or in the
Securities is intended to or shall:
(a) impair, as between the Company and the Holders of the
Securities, the obligation of the Company, which is absolute and
unconditional, to pay to the Holders of the Securities the
Principal Amount, interest or such other amounts as may be
provided for in Section 2.3(a), if any, as the case may be, in
respect of the Securities as and when the same shall become due
and payable in accordance with the terms of the Securities and
this Indenture and which, subject to the rights under this Article
XII of the holders of Senior Indebtedness, is intended to rank
equally with all other general obligations of the Company; or
(b) affect the relative rights against the Company of the
Holders of the Securities and creditors of the Company other than
holders of Senior Indebtedness; or
(c) prevent the Trustee or the Holder of any Security from
exercising all remedies otherwise permitted by applicable law upon
default under this Indenture, subject to the rights, if any, under
this Article XII of the holders of Senior Indebtedness to receive
cash, property or securities otherwise payable or deliverable to
the Trustee or such Holder.
SECTION 12.8 Trustee to Effectuate Subordination. Each Holder
of a Security by such Holder's acceptance thereof authorizes and directs
the Trustee on such Holder's behalf to take such action as may be necessary
or appropriate to effectuate the subordination provided in this Article XII
and appoints the Trustee such Holder's attorney-in-fact for any and all
such purposes.
SECTION 12.9 No Waiver of Subordination Provisions. No right of
any present or future holder of any Senior Indebtedness to enforce
subordination as herein provided shall at any time in any way be prejudiced
or impaired by any act or failure to act on the part of the Company or by
any act or failure to act, in good faith, by any such holder, or by any
noncompliance 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.
Without in any way limiting the generality of the foregoing
paragraph, the holders of Senior Indebtedness may, at any time and from
time to time, without the consent of, or notice to, the Trustee or the
Holders of the Securities, without incurring responsibility to the Holders
of the Securities and without impairing or releasing the subordination
provided in this Article XII or the obligations hereunder of the Holders of
the Securities to the holders of Senior Indebtedness, do any one or more of
the following: (i) change the manner, place or terms of payment or extend
the time of payment of, or renew or alter, Senior Indebtedness, or
otherwise amend or supplement in any manner Senior Indebtedness or any
instrument evidencing the same or any agreement under which Senior
Indebtedness is outstanding; (ii) sell, exchange, release or otherwise
dispose of any property pledged, mortgaged or otherwise securing Senior
Indebtedness; (iii) release any person liable in any manner for the
collection of Senior Indebtedness and (iv) exercise or refrain from
exercising any rights against the Company or any other person.
SECTION 12.10 Notice to Trustee. The Company shall give prompt
written notice to the Trustee of any fact known to the Company which would
prohibit the making of any payment to or by the Trustee in respect of the
Securities. Failure to give such notice shall not affect the subordination
of the Securities to Senior Indebtedness. Notwithstanding the provisions of
this Article XII or any other provision of this Indenture, the Trustee
shall not be charged with knowledge of the existence of any facts which
would prohibit the making of any payment to or by the Trustee in respect of
the Securities, unless and until the Trustee shall have received written
notice thereof at the address specified in Section 13.2 from the Company or
a holder of Senior Indebtedness or from any trustee or agent therefor; and,
prior to the receipt of any such written notice, the Trustee, subject to
the provisions of Section 7.1, shall be entitled in all respects to assume
that no such facts exist; provided, however, that if a Trust Officer of the
Trustee shall not have received, at least three Business Days prior to the
date upon which by the terms hereof any such money may become payable for
any purpose (including, without limitation, the payment of the Principal
Amount, interest or such other amounts as may be provided for in Section
2.3(a), if any, as the case may be, in respect of any Security), the notice
with respect to such money provided for in this Section 12.10, then,
anything herein contained to the contrary notwithstanding, the Trustee
shall have full 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 within
three Business Days prior to such date.
Subject to the provisions of Section 7.1, the Trustee shall be
entitled to rely on the delivery to it of a written notice by a person
representing himself to be a holder of Senior Indebtedness (or a trustee or
agent on behalf of such holder) to establish that such notice has been
given by a holder of Senior Indebtedness (or a trustee or agent on behalf
of any such holder). In the event that the Trustee determines in good faith
that further evidence is required with respect to the right of any person
as a holder of Senior Indebtedness to participate in any payment or
distribution pursuant to this Article XII, the Trustee may request such
person to furnish evidence to the reasonable satisfaction of the Trustee as
to the amount of Senior Indebtedness held by such person, the extent to
which such person is entitled to participate in such payment or
distribution and any other facts pertinent to the rights of such person
under this Article XII, and if such evidence is not furnished, the Trustee
may defer any payment which it may be required to make for the benefit of
such person pursuant to the terms of this Indenture pending judicial
determination as to the right of such person to receive such payment.
SECTION 12.11 Reliance on Judicial Order or Certificate of
Liquidating Agent. Upon any payment or distribution of assets of the
Company referred to in this Article XII, the Trustee, subject to the
provisions of Section 7.1, and the Holders of the Securities shall be
entitled to rely upon any order or decree entered by any court of competent
jurisdiction in which such insolvency, bankruptcy, receivership,
liquidation, reorganization, dissolution, winding up or similar case or
proceeding is pending, or a certificate of the trustee in bankruptcy,
liquidating trustee, custodian, receiver, assignee for the benefit of
creditors, agent or other person making such payment or distribution,
delivered to the Trustee or to the Holders of Securities, for the purpose
of ascertaining the persons entitled to participate in such payment or
distribution, the holders of Senior Indebtedness and other indebtedness of
the Company, the amount thereof or payable thereon, the amount or amounts
paid or distributed thereon and all other facts pertinent thereto or to
this Article XII.
SECTION 12.12 Trustee Not Fiduciary for Holders of Senior
Indebtedness. The Trustee shall not be deemed to owe any fiduciary duty
to the holders of Senior Indebtedness and shall not be liable to any such
holders if the Trustee shall in good faith mistakenly pay over or
distribute to Holders of Securities or to the Company or to any other
person cash, property or securities to which any holders of Senior
Indebtedness shall be entitled by virtue of this Article XII or otherwise.
The Trustee shall not be charged with knowledge of the existence of Senior
Indebtedness or of any facts that would prohibit any payment hereunder
unless a Trust Officer of the Trustee shall have received notice to that
effect at the address of the Trustee set forth in Section 13.2. With
respect to the holders of Senior Indebtedness, the Trustee undertakes to
perform or to observe only such of its covenants or obligations as are
specifically set forth in this Article XII and no implied covenants or
obligations with respect to holders of Senior Indebtedness shall be read
into this Indenture against the Trustee.
SECTION 12.13 Rights of Trustee as Holder of Senior Indebtedness;
Preservation of Trustee's Rights. The Trustee in its individual capacity
shall be entitled to all the rights set forth in this Article XII with
respect to any Senior Indebtedness which may at any time be held by it, to
the same extent as any other holder of Senior Indebtedness, and nothing in
this Indenture shall deprive the Trustee of any of its rights as such
holder.
Nothing in this Article XII shall apply to claims of, or payments
to, the Trustee under or pursuant to Section 7.7.
SECTION 12.14 Article XII Applicable to Paying Agents. The term
"Trustee" as used in this Article XII shall (unless the context otherwise
requires) be construed as extending to and including the Paying Agent
within its meaning as fully for all intents and purposes as if the Paying
Agent were named in this Article XII in addition to or in place of the
Trustee; provided, however, that Sections 12.10 and 12.12 shall not apply
to the Company or any Affiliate of the Company if it or such Affiliate acts
as Paying Agent.
ARTICLE XIII
MISCELLANEOUS
SECTION 13.1 Trust Indenture Act Controls. If any provision of this
Indenture limits, qualifies or conflicts with another provision hereof
which is required to be included in this Indenture by the TIA, the required
provision shall control.
SECTION 13.2 Notices. Any notice or communication shall be in
writing and delivered in person or mailed by first-class mail, postage
prepaid, addressed as follows:
if to the Company:
Asset Investors Corporation
3410 South Galena Street, Suite 210
Denver, Colorado 80231
Attention: [ ]
if to the Trustee:
United States Trust Company of New York
114 West 47th Street
New York, NY 10036
Attention: Corporate Trust Department
The Company or the Trustee by notice to the other may designate
additional or different addresses for subsequent notices or communications.
Any notice or communication given to a Holder of Securities shall
be mailed to such Securityholder at the Securityholder's address as it
appears on the registration books of the Registrar and shall be
sufficiently given if so mailed within the time prescribed.
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.
Failure to mail a notice or communication to a Securityholder or
any defect in it shall not affect its sufficiency with respect to other
Holders of Securities of the same series. If a notice or communication is
mailed in the manner provided above, it is duly given, whether or not
received by the addressee.
If the Company mails a notice or communication to the Holders of
Securities of a particular series, it shall mail a copy to the Trustee and
each Registrar, co-registrar or Paying Agent, as the case may be, with
respect to such series.
In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give notice to
Holders of Securities by mail, then such notification as shall be made with
the acceptance of the Trustee shall constitute a sufficient notification
for every purpose hereunder. In any case where notice to Holders of
Securities is given by mail, neither the failure to mail such notice, nor
any defect in any notice so mailed, to any particular Holder of a Security
shall affect the sufficiency of such notice with respect to other Holders
of Securities given as provided herein.
SECTION 13.3 Communication by Holders with Other Holders.
Securityholders may communicate pursuant to TIA Section 312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities. The Company and the Trustee, the Registrar or the Paying Agent
with respect to a particular series of Securities, and anyone else, shall
have the protection of TIA Section 312(c).
SECTION 13.4 Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company to the Trustee to take any
action under this Indenture, the Company shall furnish to the Trustee:
(1) an Officers' Certificate stating that, in the opinion of
the signers, all conditions precedent, if any, provided for in
this Indenture relating to the proposed action have been complied
with; and
(2) an Opinion of Counsel stating that, in the opinion of
such counsel, all such conditions precedent have been complied
with.
SECTION 13.5 Statements Required in Certificate or Opinion. Each
Officers' Certificate or Opinion of Counsel with respect to compliance with
a covenant or condition provided for in this Indenture shall include:
(1) statement that each person making such Officers'
Certificate or Opinion of Counsel has read such covenant or
condition;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such Officers' Certificate or Opinion of Counsel are
based;
(3) a statement that, in the opinion of each such person, he
has made such examination or investigation as is necessary to
enable such person to express an informed opinion as to whether or
not such covenant or condition has been complied with; and
(4) a statement that, in the opinion of such person, such
covenant or condition has been complied with.
SECTION 13.6 Separability Clause. In case any provision in this
Indenture or in the Securities shall be invalid, illegal or unenforceable,
the validity, legality and enforceability of the remaining provisions shall
not in any way be affected or impaired thereby.
SECTION 13.7 Rules by Trustee, Paying Agent and Registrar. With
respect to the Securities of a particular series, the Trustee with respect
to such series of Securities may make reasonable rules for action by or a
meeting of Holders of such series of Securities. With respect to the
Securities of a particular series, the Registrar and the Paying Agent with
respect to such series of Securities may make reasonable rules for their
functions.
SECTION 13.8 Legal Holidays. A "Legal Holiday" is any day other
than a Business Day. If any specified date (including an Interest Payment
Date, Redemption Date or Stated Maturity of any Security, or a date for
giving notice) is a Legal Holiday at any Place of Payment or place for
giving notice, then (notwithstanding any other provision of this Indenture
or of the Securities other than a provision in the Securities of any series
which specifically states that such provision shall apply in lieu of this
Section) payment of interest or Principal need not be made at such Place of
Payment, or such other action need not be taken, on such date, but the
action shall be taken on the next succeeding day that is not a Legal
Holiday at such Place of Payment with the same force and effect as if made
on the Interest Payment Date or Redemption Date, or at the Stated Maturity
or such other date and to the extent applicable no Original Issue Discount
or interest, if any, shall accrue for the intervening period.
SECTION 13.9 Governing Law. THIS INDENTURE AND THE SECURITIES SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK, AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF
NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
SECTION 13.10 No Recourse Against Others. A director, officer,
employee or stockholder, as such, of the Company shall not have any
liability for any obligations of the Company under the Securities or this
Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. By accepting a Security, each Holder of such
Security shall waive and release all such liability. The waiver and
release shall be part of the consideration for the issue of the Securities.
SECTION 13.11 Successors. All agreements of the Company in this
Indenture and the Securities shall bind its respective successor. All
agreements of the Trustee in this Indenture shall bind its successor.
SECTION 13.12 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 13.13 Benefits of Indenture. Nothing in this Indenture
or in the Securities, express or implied, shall give to any person, other
than the parties hereto and their successors hereunder and the Holders of
Securities, any benefits or any legal or equitable right, remedy or claim
under this Indenture.
SECTION 13.14 Multiple Originals. The parties may sign any number
of copies of this Indenture. Each signed copy shall be an original, but
all of them together represent the same agreement. One signed copy is
enough to prove this Indenture.
ASSET INVESTORS CORPORATION
By:______________________________________
Name:
Title:
Attest:
__________________________
Name:
Title:
AMERICAN BANK NATIONAL ASSOCIATION,
as Trustee
By:______________________________________
Name:
Title:
Attest:
-------------------------
Name:
Title:
EXHIBIT 4.3
ASSET INVESTORS CORPORATION
SUBORDINATED DEBT SECURITIES
INDENTURE
Dated as of __________
UNITED STATES TRUST COMPANY OF NEW YORK,
Trustee
<PAGE>
CROSS REFERENCE TABLE(1)
TIA INDENTURE
SECTION SECTION
------- ---------
310 (a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . 7.8; 7.10
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(a)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(a)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(a)(5) . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.8; 7.10
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A
311 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.11
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.11
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
312 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.7
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.3
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.3
313 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.6
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.6
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.6; 13.2
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.6
314 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2; 13.2
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(c)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . 13.4
(c)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . 13.4
(c)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.5
(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3
315 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.5; 13.2
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.11
316 (a)(1)(A) . . . . . . . . . . . . . . . . . . . . . . . . . 6.5
(a)(1)(B) . . . . . . . . . . . . . . . . . . . . . . . . . 6.4
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.7
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
317 (a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . 6.8
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . 6.9
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.6
318 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.1
------------------
(1) Note: This Cross Reference Table shall not, for any purpose, be
deemed to be part of the Indenture.
<PAGE>
TABLE OF CONTENTS(2)
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1 Definitions. . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.2 Other Definitions. . . . . . . . . . . . . . . . . . . . 5
SECTION 1.3 Incorporation by Reference of Trust Indenture Act. . . . 6
SECTION 1.4 Rules of Construction. . . . . . . . . . . . . . . . . . 6
--------------------
(2) Note: This Table of Contents shall not, for any reason, be deemed
to be part of the Indenture.
ARTICLE II
THE SECURITIES
SECTION 2.1 Forms Generally. . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.2 Securities in Global Form. . . . . . . . . . . . . . . . 7
SECTION 2.3 Title, Terms and Denominations. . . . . . . . . . . . . 8
SECTION 2.4 Execution, Authentication, Delivery and Dating . . . . . 11
SECTION 2.5 Registrar and Paying Agent. . . . . . . . . . . . . . . 13
SECTION 2.6 Paying Agent to Hold Money and Securities in Trust . . . 14
SECTION 2.7 Securityholder Lists. . . . . . . . . . . . . . . . . . 14
SECTION 2.8 Transfer and Exchange. . . . . . . . . . . . . . . . . . 15
SECTION 2.9 Replacement Securities. . . . . . . . . . . . . . . . . 17
SECTION 2.10 Outstanding Securities; Determinations of Holders'
Action . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 2.11 Temporary Securities . . . . . . . . . . . . . . . . . . 19
SECTION 2.12 Cancellation . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 2.13 Payment of Interest; Interest Rights Preserved . . . . . 20
SECTION 2.14 Persons Deemed Owners . . . . . . . . . . . . . . . . . 21
SECTION 2.15 Computation of Interest . . . . . . . . . . . . . . . . 21
ARTICLE III
REDEMPTION
SECTION 3.1 Right to Redeem; Notices to Trustee. . . . . . . . . . . 22
SECTION 3.2 Selection of Securities to be Redeemed. . . . . . . . . 22
SECTION 3.3 Notice of Redemption. . . . . . . . . . . . . . . . . . 22
SECTION 3.4 Effect of Notice of Redemption. . . . . . . . . . . . . 23
SECTION 3.5 Deposit of Redemption Price. . . . . . . . . . . . . . . 23
SECTION 3.6 Securities Redeemed in Part. . . . . . . . . . . . . . . 24
ARTICLE IV
COVENANTS
SECTION 4.1 Payment of Securities. . . . . . . . . . . . . . . . . . 24
SECTION 4.2 SEC Reports. . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 4.3 Compliance Certificate. . . . . . . . . . . . . . . . . 24
SECTION 4.4 Further Instruments and Acts. . . . . . . . . . . . . . 25
SECTION 4.5 Maintenance of Office or Agency. . . . . . . . . . . . . 25
SECTION 4.6 Limitations on the Incurrence of Certain Other Debt. . . 25
ARTICLE V
SUCCESSOR CORPORATION
SECTION 5.1 When Company May Merge or Transfer Assets. . . . . . . . 26
ARTICLE VI
DEFAULTS AND REMEDIES
SECTION 6.1 Events of Default. . . . . . . . . . . . . . . . . . . . 26
SECTION 6.2 Acceleration. . . . . . . . . . . . . . . . . . . . . . 28
SECTION 6.3 Other Remedies. . . . . . . . . . . . . . . . . . . . . 28
SECTION 6.4 Waiver of Past Defaults. . . . . . . . . . . . . . . . . 29
SECTION 6.5 Control by Majority. . . . . . . . . . . . . . . . . . . 29
SECTION 6.6 Limitation on Suits. . . . . . . . . . . . . . . . . . . 29
SECTION 6.7 Rights of Holders to Receive Payment. . . . . . . . . . 30
SECTION 6.8 Collection Suit by Trustee. . . . . . . . . . . . . . . 30
SECTION 6.9 Trustee May File Proofs of Claim. . . . . . . . . . . . 30
SECTION 6.10 Priorities . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 6.11 Undertaking for Costs. . . . . . . . . . . . . . . . . . 31
SECTION 6.12 Waiver of Stay, Extension or Usury Laws. . . . . . . . . 32
ARTICLE VII
TRUSTEE
SECTION 7.1 Duties of Trustee . . . . . . . . . . . . . . . . . . . 32
SECTION 7.2 Rights of Trustee . . . . . . . . . . . . . . . . . . . 33
SECTION 7.3 Individual Rights of Trustee, etc. . . . . . . . . . . . 33
SECTION 7.4 Trustee's Disclaimer . . . . . . . . . . . . . . . . . . 34
SECTION 7.5 Notice of Defaults . . . . . . . . . . . . . . . . . . . 34
SECTION 7.6 Reports by Trustee to Holders . . . . . . . . . . . . . 34
SECTION 7.7 Compensation and Indemnity . . . . . . . . . . . . . . . 34
SECTION 7.8 Replacement of Trustee . . . . . . . . . . . . . . . . . 35
SECTION 7.9 Successor Trustee by Merger . . . . . . . . . . . . . . 37
SECTION 7.10 Eligibility; Disqualification . . . . . . . . . . . . . 37
SECTION 7.11 Preferential Collection of Claims Against Company. . . . 37
ARTICLE VIII
SATISFACTION AND DISCHARGE
SECTION 8.1 Discharge of Liability on Securities. . . . . . . . . . 37
SECTION 8.2 Repayment to the Company. . . . . . . . . . . . . . . . 38
SECTION 8.3 Option to Effect Defeasance or Covenant Defeasance. . . 38
SECTION 8.4 Defeasance and Discharge. . . . . . . . . . . . . . . . 38
SECTION 8.5 Covenant Defeasance. . . . . . . . . . . . . . . . . . . 38
SECTION 8.6 Condition to Defeasance or Covenant Defeasance. . . . . 39
ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 9.1 Supplemental Indentures without Consent of Holders. . . 39
SECTION 9.2 Supplemental Indentures with Consent of Holders. . . . . 40
SECTION 9.3 Compliance with Trust Indenture Act. . . . . . . . . . . 41
SECTION 9.4 Revocation and Effect of Consents, Waivers and
Actions . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 9.5 Notation on or Exchange of Securities. . . . . . . . . . 42
SECTION 9.6 Trustee to Sign Supplemental Indentures. . . . . . . . . 42
SECTION 9.7 Effect of Supplemental Indentures. . . . . . . . . . . . 42
ARTICLE X
SINKING FUNDS
SECTION 10.1 Applicability of Article . . . . . . . . . . . . . . . . 43
SECTION 10.2 Satisfaction of Sinking Fund Payments with
Securities . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 10.3 Redemption of Securities for Sinking Fund . . . . . . . 43
ARTICLE XI
ACTIONS OF HOLDERS OF SECURITIES
SECTION 11.1 Purposes for which Meetings may be Called . . . . . . . 44
SECTION 11.2 Call, Notice and Place of Meetings . . . . . . . . . . . 44
SECTION 11.3 Persons Entitled to Vote at Meetings . . . . . . . . . . 44
SECTION 11.4 Quorum; Action . . . . . . . . . . . . . . . . . . . . . 45
SECTION 11.5 Determination of Voting Rights; Conduct and
Adjournment of Meetings. . . . . . . . . . . . . . . . 45
SECTION 11.6 Counting Votes and Recording Action of Meetings . . . . 46
SECTION 11.7 Actions of Holders Generally . . . . . . . . . . . . . . 47
ARTICLE XII
SUBORDINATION
SECTION 12.1 Securities Subordinate to Senior Indebtedness . . . . . 48
SECTION 12.2 Payment Over of Proceeds upon Dissolution, Etc. . . . . 48
SECTION 12.3 Acceleration of Securities . . . . . . . . . . . . . . . 50
SECTION 12.4 Default in Senior Indebtedness . . . . . . . . . . . . . 51
SECTION 12.5 Payment Permitted if No Default . . . . . . . . . . . . 52
SECTION 12.6 Subrogation Rights of Holders of Senior
Indebtedness . . . . . . . . . . . . . . . . . . . . . 52
SECTION 12.7 Provision Solely to Define Relative Rights . . . . . . . 52
SECTION 12.8 Trustee to Effectuate Subordination . . . . . . . . . . 53
SECTION 12.9 No Waiver of Subordination Provisions . . . . . . . . . 53
SECTION 12.10 Notice to Trustee . . . . . . . . . . . . . . . . . . . 53
SECTION 12.11 Reliance on Judicial Order or Certificate of
Liquidating Agent . . . . . . . . . . . . . . . . . . 54
SECTION 12.12 Trustee Not Fiduciary for Holders of Senior
Indebtedness . . . . . . . . . . . . . . . . . . . . . 55
SECTION 12.13 Rights of Trustee as Holder of Senior Indebtedness;
Preservation of Trustee's Rights . . . . . . . . . . . 55
SECTION 12.14 Article XII Applicable to Paying Agents . . . . . . . . 55
ARTICLE XIII
MISCELLANEOUS
SECTION 13.1 Trust Indenture Act Controls . . . . . . . . . . . . . . 56
SECTION 13.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 13.3 Communication by Holders with Other Holders . . . . . . 57
SECTION 13.4 Certificate and Opinion as to Conditions Precedent . . . 57
SECTION 13.5 Statements Required in Certificate or Opinion . . . . . 57
SECTION 13.6 Separability Clause . . . . . . . . . . . . . . . . . . 58
SECTION 13.7 Rules by Trustee, Paying Agent and Registrar . . . . . . 58
SECTION 13.8 Legal Holidays . . . . . . . . . . . . . . . . . . . . . 58
SECTION 13.9 Governing Law . . . . . . . . . . . . . . . . . . . . . 58
SECTION 13.10 No Recourse Against Others . . . . . . . . . . . . . . . 58
SECTION 13.11 Successors . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 13.12 Effect of Headings and Table of Contents . . . . . . . . 59
SECTION 13.13 Benefits of Indenture . . . . . . . . . . . . . . . . . 59
SECTION 13.14 Multiple Originals . . . . . . . . . . . . . . . . . . . 60
<PAGE>
INDENTURE dated as of ________, by and among Asset Investors
Corporation, a Maryland corporation ("Company"), and United States Trust
Company of New York, as trustee ("Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of its unsecured
debentures, notes or other evidences of indebtedness (herein called the
"Securities") to be issued in one or more series as in this Indenture
provided.
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually covenanted and agreed,
for the equal and ratable benefit of the Holders of the Securities or each
series thereof as follows:
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1 Definitions.
"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 or cause the direction of 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.
"Board of Directors" means either the board of directors of the
Company or any committee of such board authorized with respect to any
matter to exercise the powers of the Board of Directors of the Company.
"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" means, except as otherwise specified as contemplated by
Section 2.3(a), with respect to any Place of Payment or any other
particular location referred to in this Indenture or in the Securities,
means each Monday, Tuesday, Wednesday, Thursday and Friday which is not a
day on which banking institutions in that Place of Payment or other
location are authorized or obligated by law or executive order to close.
"Capital Stock" for any corporation means any and all shares,
interests, rights to purchase, warrants, options, participations or other
equivalents of or interests in (however designated) stock issued by that
corporation.
"cash" means such coin or currency of the United States as at any time
of payment is legal tender for the payment of public and private debts.
"Company" means the party named as the "Company" in the first
paragraph of this Indenture until a successor replaces it pursuant to the
applicable provisions of this Indenture and, thereafter, shall mean such
successor.
"Company Request" or "Company Order" means a written request or order
signed in the name of the Company, by its Chairman of the Board, a Vice
Chairman, its President or a Vice President, and by its Treasurer, an
Assistant Treasurer, its Secretary or an Assistant Secretary, and delivered
to the Trustee or, with respect to Sections 2.4, 2.8, 2.11 and 7.2, any
other employee of the Company named in an Officers' Certificate delivered
to the Trustee.
"Debt" means with respect to any person at any date, without
duplication (i) all obligations of such person for borrowed money, (ii) all
obligations of such person evidenced by bonds, debentures, notes or other
similar instruments, (iii) all Debt of others secured by a lien on any
asset of such person, whether or not such Debt is assumed by such person,
(iv) all obligations of such person pursuant to leases which are required
to be capitalized under generally accepted accounting principles
consistently applied and (v) all Debt of others for the payment of which
such person is responsible or liable as obligor or guarantor.
"Default" means any event which is, or after notice or passage of time
or both would be, an Event of Default.
"Depositary" means, with respect to the Securities of any series
issuable or issued in whole or in part in global form, the Person specified
as contemplated by Section 2.3(a) as the Depositary with respect to such
series of Securities, until a successor shall have become such pursuant to
the applicable provisions of this Indenture, and thereafter "Depositary"
shall mean or include such successor.
"Discount Security" means any Security which provides for an amount
less than the Principal Amount thereof to be due and payable upon a
declaration of acceleration of the Maturity thereof pursuant to Section
6.2.
"Dollar" or "$" means a dollar or other equivalent unit in such coin
or currency of the United States as at the time shall be legal tender for
the payment of public and private debts.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Holder" or "Securityholder," when used with respect to any Security,
means a person in whose name a Security is registered on the Registrar's
books.
"Indenture" means this Indenture, as amended or supplemented from time
to time in accordance with the terms hereof and shall include the terms of
a particular series of Securities established as contemplated in Section
2.3(a).
"interest," when used with respect to a Discount Security which by its
terms bears interest only after Maturity, means interest payable after
Maturity.
"Interest Payment Date," when used with respect to any Security, means
the Stated Maturity of an installment of interest on such Security.
"Maturity," when used with respect to any Security, means the date on
which the Principal of such Security or an installment of Principal or, in
the case of a Discount Security, the Principal Amount payable upon a
declaration of acceleration pursuant to Section 6.2, becomes due and
payable as therein or herein provided, whether at the Stated Maturity or by
declaration of acceleration, call for redemption or otherwise.
"Officer" means the Chairman of the Board, any Vice Chairman, the
President, any Vice President, the Treasurer, the Secretary, any Assistant
Treasurer or any Assistant Secretary of the Company.
"Officers' Certificate" means a written certificate containing the
information specified in Sections 13.4 and 13.5, signed in the name of the
Company by its Chairman of the Board, a Vice Chairman, its President or a
Vice President, and by its Treasurer, an Assistant Treasurer, its Secretary
or an Assistant Secretary, and delivered to the Trustee.
"Opinion of Counsel" means a written opinion containing the
information specified in Sections 13.4 and 13.5, from legal counsel who is
acceptable to the Trustee. The counsel may be an employee of, or counsel
to, the Company or the Trustee.
"Periodic Offering" means an offering of Securities of a series from
time to time the specific terms of which Securities, including, without
limitation, the rate or rates of interest, if any, thereon, the Stated
Maturity or Maturities thereof, the original issue date or dates thereof,
the redemption provisions, if any, and any other terms specified as
contemplated by Section 2.3(a) with respect thereto, are to be determined
by the Company, or one or more of the Company's agents designated in an
Officers' Certificate, upon the issuance of such Securities.
"person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated
organization, or government or any agency or political subdivision thereof.
"Place of Payment," when used with respect to the Securities of any
series, means the place or places where, subject to the provisions of
Section 4.5, the Principal of and any interest on the Securities of that
series are payable as specified as contemplated by Section 2.3(a).
"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by
such particular Security; and, for the purposes of this definition, any
Security authenticated and delivered under Section 2.9 in exchange for or
in lieu of a mutilated, destroyed, lost or stolen Security shall be deemed
to evidence the same debt as the mutilated, destroyed, lost or stolen
Security.
"Principal" or "Principal Amount" of a Security, except as otherwise
specifically provided in this Indenture, means the outstanding principal of
the Security plus the premium, if any, of the Security.
"Redemption Date" or "redemption date," when used with respect to any
Security to be redeemed, shall mean the date specified for redemption of
such Security in accordance with the terms of such Security and this
Indenture.
"Redemption Price" or "redemption price," when used with respect to
any Security to be redeemed, means the price at which it is to be redeemed
pursuant to this Indenture.
"Regular Record Date" for the interest payable on any Interest Payment
Date on the Securities of any series means the date specified for that
purpose as contemplated by Section 2.3(a).
"SEC" means the Securities and Exchange Commission.
"Securities" has the meaning stated in the first recital of this
Indenture and more particularly means any Securities authenticated and
delivered under this Indenture.
"Securityholder" or "Holder," when used with respect to any Security,
means a person in whose name a Security is registered on the Registrar's
books.
"Special Record Date" for the payment of any Defaulted Interest on the
Securities of any issue means a date fixed by the Trustee pursuant to
Section 2.13.
"Stated Maturity," when used with respect to any Security or any
installment of Principal thereof or interest thereon, means the date
specified in such Security as the fixed date on which an amount equal to
the Principal of such Security or an installment of Principal thereof or
interest there on is due and payable.
"Subsidiary" means, with respect to any person, a corporation of which
a majority of the Capital Stock having voting power under ordinary
circumstances to elect a majority of the board of directors of such
corporation is owned by (i) such person, (ii) such person and one or more
Subsidiaries of such person or (iii) one or more Subsidiaries of such
person.
"TIA" means the Trust Indenture Act of 1939 as in effect on the date
of this Indenture, except as provided in Section 9.3.
"Trust Officer" means any officer of the Trustee assigned by the
Trustee to administer its corporate trust matters.
"Trustee" means the party named as the "Trustee" in the first
paragraph of this Indenture until a successor replaces it pursuant to the
applicable provisions of this Indenture and, thereafter, shall mean such
successor.
"United States" means the United States of America, its territories,
its possessions (including the Commonwealth of Puerto Rico), and other
areas subject to its jurisdiction.
SECTION 1.2 Other Definitions.
Defined in
Term Section
---- ----------
"Bankruptcy Law" 6.1
"Custodian" 6.1
"Defaulted Interest" 2.13
"Event of Default" 6.1
"Legal Holiday" 13.8
"Notice of Default " 6.1
"Outstanding" 2.10
"Paying Agent" 2.5
"Registrar" 2.5
"Senior Indebtedness" 13.1
SECTION 1.3 Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture. The
following TIA terms used in this Indenture have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Securities.
"indenture security holder" means a Holder or Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Company.
All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule
have the meanings assigned to them by such definitions.
SECTION 1.4 Rules of Construction. Unless the context otherwise
requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with generally accepted accounting
principles in the United States as in effect from time to time;
(3) "or" is not exclusive;
(4) "including" means including, without limitation; and
(5) words in the singular include the plural, and words in the
plural include the singular.
ARTICLE II
THE SECURITIES
SECTION 2.1 Forms Generally. The Securities of each series shall be
in substantially such form (including global form) as shall be established
by delivery to the Trustee of an Officers' Certificate or in one or more
indentures supplemental hereto, in each case with such appropriate
insertions, omissions, substitutions and other variations as are required
or permitted by this Indenture, and may have such letters, numbers or other
marks of identification and such legends or endorsements placed thereon as
may be required to comply with the rules of any securities exchange or as
may, consistently herewith, be determined by the Officers executing such
Securities as evidenced by their execution of the Securities. The
Officers' Certificate so establishing the form of Security of any series
shall be delivered to the Trustee at or prior to the delivery of the
Company Order contemplated by Section 2.4 for the authentication and
delivery of such Securities.
The permanent Securities shall be printed, lithographed or engraved or
produced by any combination of these methods or may be produced in any
other manner, provided, that such method is permitted by the rules of any
securities exchange on which such Securities may be listed, all as
determined by the Officers executing such Securities as evidenced by their
execution of such Securities.
SECTION 2.2 Securities in Global Form. If Securities of a series are
issuable in temporary or permanent global form, as specified as
contemplated by Section 2.3(a), then, notwithstanding clause (10) of
Section 2.3(a) and the provisions of Section 2.3(b), any such Security
shall represent such of the Outstanding Securities of such series as shall
be specified therein and may provide that it shall represent the aggregate
amount of Outstanding Securities from time to time endorsed thereon and
that the aggregate amount of Outstanding Securities represented thereby may
from time to time be reduced to reflect exchanges. Any endorsement of a
Security in global form to reflect the amount of any increase or decrease
in the amount of Outstanding Securities represented thereby shall be made
by the Trustee in such manner and upon instructions given by such person or
persons as shall be specified therein or in the Company Order to be
delivered to the Trustee pursuant to Section 2.4 or Section 2.11. Subject
to the provisions of Section 2.4 and, if applicable, Section 2.11, the
Trustee shall deliver and redeliver any Security in global form in the
manner and upon instructions given by the person or persons specified
therein or in the applicable Company Order. If a Company Order pursuant to
Section 2.4 or 2.11 has been, or simultaneously is, delivered, any
instructions by the Company with respect to endorsement or delivery or
redelivery of a Security in global form shall be in writing but need not
comply with Section 13.4 or 13.5 and need not be accompanied by an Opinion
of Counsel.
The provisions of the last sentence of Section 2.4 shall apply to any
Security represented by a Security in global form if such Security was
never issued and sold by the Company, and the Company delivers to the
Trustee the Security in global form together with written instructions
(which need not comply with Section 13.4 or 13.5 and need not be
accompanied by an Opinion of Counsel) with regard to the reduction in the
Principal Amount of Securities represented thereby, together with the
written statement contemplated by the last sentence of Section 2.4.
Notwithstanding the provisions of Sections 2.1 and 2.13, unless
otherwise specified as contemplated by Section 2.3(a), payment of Principal
of and any interest on any Security in global form shall be made to the
person or persons specified therein.
SECTION 2.3 Title, Terms and Denominations.
(a) The aggregate Principal Amount of Securities which may be
authenticated and delivered under this Indenture shall be unlimited.
The Securities may be issued in one or more series. There shall be
established and, subject to Section 2.4, set forth, or determined in the
manner provided, in an Officers' Certificate of the Company, or established
in one or more indentures supplemental hereto:
(1) the title of the Securities of the series (which shall
distinguish the Securities of the series from all other Securities);
(2) any limit upon the aggregate Principal Amount of the
Securities of the series which may be authenticated and delivered
under this Indenture (except for Securities authenticated and
delivered upon registration of transfer of, or in exchange for, or in
lieu of, other Securities of the series pursuant to Sections 2.8, 2.9,
2.11, 3.6, 9.5 or 10.3 and except for any Securities which, pursuant
to Section 2.4, are deemed never to have been authenticated and
delivered hereunder);
(3) whether any Securities of the series may be represented
initially by a Security in temporary or permanent global form and, if
so, the initial Depositary with respect to any such temporary or
permanent global Security, and if other than as provided in Section
2.8 or Section 2.11, as applicable, whether and the circumstances
under which beneficial owners of interests in any such temporary or
permanent global Security may exchange such interests for Securities
of such series and of like tenor of any authorized form and
denomination;
(4) the person to whom any interest on any Security of the
series shall be payable, if other than the person in whose name that
Security (or one or more Predecessor Securities) is registered at the
close of business on the Regular Record Date for such interest, and
the extent to which, or the manner in which (including any
certification requirement and other terms and conditions under which),
any interest payable on a temporary or permanent global Security on an
Interest Payment Date will be paid if other than in the manner
provided in Section 2.2 and Section 2.4, as applicable;
(5) the date or dates on which the Principal of the Securities
of the series is payable or the method of determination thereof;
(6) the rate or rates at which the Securities of the series
shall bear interest, if any, the date or dates from which any such
interest shall accrue, the Interest Payment Dates on which any such
interest shall be payable and the Regular Record Date for any interest
payable on any Securities on any Interest Payment Date;
(7) the place or places where, subject to the provisions of
Section 4.5, the Principal of and any interest on Securities of the
series shall be payable, any Securities of the series may be
surrendered for registration of transfer, Securities of the series may
be surrendered for exchange and notices and demands to or upon the
Company in respect of the Securities of the series and this Indenture
may be served;
(8) the period or periods within which, the price or prices at
which and the terms and conditions upon which, Securities of the
series may be redeemed, in whole or in part, at the option of the
Company;
(9) the obligation, if any, of the Company to redeem or purchase
Securities of the series pursuant to any sinking fund or analogous
provisions or at the option of a Holder thereof, the conditions, if
any, giving rise to such obligation, and the period or periods within
which, the price or prices at which and the terms and conditions upon
which Securities of the series shall be redeemed or purchased, in
whole or in part, and any provisions for the remarketing of such
Securities;
(10) the denominations in which any Securities of the series
shall be issuable, if other than denominations of $1,000 and any
integral multiple thereof;
(11) if other than the Principal Amount thereof, the portion of
the Principal Amount of any Securities of the series which shall be
payable upon declaration of acceleration of the Maturity thereof
pursuant to Section 6.2;
(12) if other than as defined in Section 1.1, the meaning of
"Business Day" when used with respect to any Securities of the series;
(13) if and the terms and conditions upon which the Securities
of the series may or must be converted into securities of the Company
or exchanged for securities of the Company;
(14) any terms applicable to Original Issue Discount, if any (as
that term is defined in the Internal Revenue Code of 1986 and the
Regulations thereunder), including the rate or rates at which such
Original Issue Discount, if any, shall accrue;
(15) if the Securities of the series may be issued or delivered
(whether upon original issuance or upon exchange of a temporary
Security of such series or otherwise), or any installment of Principal
of or any interest is payable, only upon receipt of certain
certificates or other documents or satisfaction of other conditions in
addition to those specified in this Indenture, the form and terms of
such certificates, documents or conditions; and
(16) any other terms of the series (which terms shall not be
inconsistent with the provisions of this Indenture, except as
permitted by Section 9.1(7)).
All Securities of any one series shall be substantially identical
except as to denomination and the rate or rates of interest, if any, and
Stated Maturity, the date from which interest, if any, shall accrue and
except as may otherwise be provided in or pursuant to an Officers'
Certificate pursuant to this Section 2.3(a) or in any indenture
supplemental hereto. All Securities of any one series need not be issued
at the same time and, unless otherwise provided, a series may be reopened
for issuances of additional Securities of such series or for the
establishment of additional terms with respect to the Securities of such
series.
If any of the terms of the series are established by action taken
pursuant to a Board Resolution, a copy of any appropriate record of such
action shall be certified by the Secretary or an Assistant Secretary of the
Company and delivered to the Trustee at or prior to the delivery of the
Officers' Certificate setting forth the terms of the series. With respect
to Securities of a series subject to a Periodic Offering, such Board
Resolution or Officers' Certificate may provide general terms for
Securities of such series and provide either that the specific terms of
particular Securities of such series shall be specified in a Company Order
or that such terms shall be determined by the Company, or one or more of
the Company's agents designated in an Officers' Certificate, in accordance
with the Company Order as contemplated by the first proviso of the third
paragraph of Section 2.4.
(b) Unless otherwise provided as contemplated by Section 2.3(a) with
respect to any series of Securities, any Securities of a series shall be
issuable in denominations of $1,000 and any integral multiple thereof.
SECTION 2.4 Execution, Authentication, Delivery and Dating. The
Securities shall be executed on behalf of the Company by its Chairman of
the Board, one of its Vice Chairmen, its President or one of its Vice
Presidents, or the Treasurer or any Assistant Treasurer, under its
corporate seal reproduced thereon attested by its Secretary or one of its
Assistant Secretaries. The signature of any of these officers on the
Securities may be manual or facsimile.
Securities bearing the manual or facsimile signatures of individuals
who were at any time the proper officers of the Company shall bind the
Company, notwithstanding that such individuals or any of them have ceased
to hold such offices prior to the authentication and delivery of such
Securities or did not hold such offices at the date of such Securities.
At any time and from time to time after the execution and delivery of
this Indenture, the Company may deliver Securities of any series executed
by the Company to the Trustee for authentication, together with a Company
Order for the authentication and delivery of such Securities; and the
Trustee in accordance with such Company Order shall authenticate and
deliver such Securities; provided, however, that, with respect to
Securities of a series subject to a Periodic Offering, (a) such Company
Order may be delivered by the Company to the Trustee prior to the delivery
to the Trustee of such Securities for authentication and delivery, (b) the
Trustee shall authenticate and deliver Securities of such series for
original issue from time to time, in an aggregate Principal Amount not
exceeding the aggregate Principal Amount established for such series,
pursuant to a Company Order or pursuant to such procedures acceptable to
the Trustee as may be specified from time to time by a Company Order, (c)
the rate or rates of interest, if any, the Stated Maturity or Maturities,
the original issue date or dates, the redemption provisions, if any, and
any other terms of Securities of such series shall be determined by a
Company Order or pursuant to such procedures and (d) if provided for in
such procedures, such Company Order may authorize authentication and
delivery pursuant to oral or electronic instructions from the Company, or
the Company's duly authorized agent or agents designated in an Officers'
Certificate, which oral instructions shall be promptly confirmed in
writing.
If the forms or terms of the Securities of the series have been
established in or pursuant to one or more Officers' Certificates as
permitted by Sections 2.1 and 2.3(a), in authenticating such Securities,
and accepting the additional responsibilities under this Indenture in
relation to such Securities, the Trustee shall be entitled to receive, and
(subject to Section 7.1) shall be fully protected in relying upon, an
Opinion of Counsel stating:
(a) that the form and terms of such Securities have been duly
authorized by the Company and established in conformity with the provisions
of this Indenture; and
(b) that such Securities when authenticated and delivered by the
Trustee and issued by the Company in the manner and subject to any
conditions specified in such Opinion of Counsel, will constitute valid and
legally binding obligations of the Company, enforceable in accordance with
their terms, subject to customary exceptions;
provided, however, that, with respect to Securities of a series subject to
a Periodic Offering, the Trustee shall be entitled to receive such Opinion
of Counsel only once at or prior to the time of the first authentication of
Securities of such series and that the Opinion of Counsel above may state:
(x) that the forms of such Securities have been, and the terms of
such Securities (when established in accordance with such procedures
as may be specified from time to time in a Company Order, all as
contemplated by and in accordance with a Board Resolution or an
Officers' Certificate pursuant to Section 2.3(a), as the case may be)
will have been, duly authorized by the Company and established in
conformity with the provisions of this Indenture; and
(y) that such Securities when (1) executed by the Company, (2)
completed, authenticated and delivered by the Trustee in accordance
with this Indenture, and (3) issued by the Company in the manner and
subject to any conditions specified in such Opinion of Counsel, will
constitute valid and legally binding obligations of the Company,
enforceable in accordance with their terms, subject to customary
exceptions.
With respect to Securities of a series subject to a Periodic Offering,
the Trustee may conclusively rely, as to the authorization by the Company
of any of such Securities, the form and terms thereof and the legality,
validity, binding effect and enforceability thereof, upon the Opinion of
Counsel and other documents delivered pursuant to Sections 2.1 and 2.3(a)
and this Section, as applicable, at or prior to the time of the first
authentication of Securities of such series unless and until it has
received written notification that such opinion or other documents have
been superseded or revoked. In connection with the authentication and
delivery of Securities of a series subject to a Periodic Offering, the
Trustee shall be entitled to assume, unless it has actual knowledge to the
contrary, that the Company's instructions to authenticate and deliver such
Securities do not violate any rules, regulations or orders of any
governmental agency or commission having jurisdiction over the Company.
Notwithstanding the provisions of Section 2.3(a) and of the preceding
three paragraphs, if all Securities of a series are subject to a Periodic
Offering, it shall not be necessary to deliver the Officers' Certificate
otherwise required pursuant to Section 2.3(a) at or prior to the time of
authentication of each Security of such series if such Officers'
Certificate is delivered at or prior to the authentication upon original
issuance of the first Security of such series to be issued.
Each Security shall be dated the date of its authentication.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Securities. Unless otherwise provided in the
appointment, an authenticating agent may authenticate Securities whenever
the Trustee may do so. Each reference in this Indenture to authentication
by the Trustee includes authentication by such agent.
No Security shall be entitled to any benefit under this Indenture or
be valid or obligatory for any purpose unless there appears on such
Security a certificate of authentication substantially in the form provided
for herein duly executed by the Trustee by manual signature of an
authorized signatory, and such certificate upon any Security shall be
conclusive evidence, and the only evidence, that such Security has been
duly authenticated and delivered hereunder. The Trustee's certificate of
authentication shall be in substantially the following form:
This is one of the Securities of the series designated therein
referred to in the within-mentioned Indenture.
United States Trust Company of New York,
as Trustee
By:_____________________________________
Authorized Signatory
Notwithstanding the foregoing, if any Security shall have been duly
authenticated and delivered hereunder but never issued and sold by the
Company, and the Company shall deliver such Security to the Trustee for
cancellation as provided in Section 2.12 together with a written statement
(which need not comply with Section 13.4 or 13.5 and need not be
accompanied by an Opinion of Counsel) stating that such Security has never
been issued and sold by the Company, for all purposes of this Indenture
such Security shall be deemed never to have been authenticated and
delivered hereunder and shall never be entitled to the benefits of this
Indenture.
SECTION 2.5 Registrar and Paying Agent. The Company shall maintain,
with respect to each series of Securities, an office or agency where such
Securities may be presented for registration of transfer or for exchange
("Registrar") and, in the Borough of Manhattan, The City of New York, an
office or agency where such Securities may be presented for purchase or
payment ("Paying Agent"). The Registrar shall keep a register of the
Securities and of their transfer and exchange. The Company may have one or
more co-registrars and one or more additional paying agents. The term
Paying Agent includes any additional paying agent.
The Company shall enter into an appropriate agency agreement with
respect to each series of Securities with any Registrar, Paying Agent or
co-registrar (if not the Trustee). The agreement shall implement the
provisions of this Indenture that relate to such agent. The Company shall
notify the Trustee of the name and address of any such agent. If the
Company fails to maintain a Registrar or Paying Agent for a particular
series of Securities, the Trustee shall act as such and shall be entitled
to appropriate compensation therefor pursuant to Section 7.7. The Company
or any Subsidiary or an Affiliate of either of them may act as Paying
Agent, Registrar or co-registrar.
The Company initially appoints the Trustee as the Registrar and Paying
Agent in connection with such Securities.
SECTION 2.6 Paying Agent to Hold Money and Securities in Trust.
Except as otherwise provided herein, prior to or on each due date of
payments in respect of any series of Securities, the Company shall deposit
with the Paying Agent with respect to such Securities a sum of money
sufficient to make such payments when so becoming due. The Company shall
require each Paying Agent (other than the Trustee) to agree in writing that
the Paying Agent shall hold in trust for the benefit of Holders or the
Trustee all money held by such Paying Agent for the making of payments in
respect of the Securities of such series and shall notify the Trustee of
any default by the Company in making any such payment. At any time during
the continuance of any such default, a Paying Agent shall, upon the written
request of the Trustee, forthwith pay to the Trustee all money so held in
trust with respect to such Securities. If the Company, a Subsidiary or an
Affiliate of either of them acts as Paying Agent for a series of
Securities, it shall segregate the money held by it as Paying Agent with
respect to such Securities and hold it as a separate trust fund. The
Company at any time may require a Paying Agent for a series of Securities
to pay all money held by it with respect to such Securities to the Trustee
and to account for any money disbursed by it. Upon doing so, such Paying
Agent shall have no further liability for the money.
SECTION 2.7 Securityholder Lists. The Trustee shall preserve in as
current a form as is reasonably practicable the most recent list available
to it of the names and addresses of Holders of each series of Securities.
If the Trustee is not the Registrar for any series of Securities, the
Company shall cause to be furnished to the Trustee at least semiannually on
June 1 and December 1 a listing of Holders of such series of Securities
dated within 15 days of the date on which the list is furnished and at such
other times as the Trustee may request in writing a list in such form and
as of such date as the Trustee may reasonably require of the names and
addresses of Securityholders of such series of Securities.
SECTION 2.8 Transfer and Exchange. Upon surrender for registration
of transfer of any Security at the office or agency of the Company
designated pursuant to Section 4.5 for such purpose, the Company shall
execute, and the Trustee shall authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Securities of any
authorized denomination or denominations of a like aggregate Principal
Amount and tenor. The Company shall not charge a service charge for any
registration of transfer or exchange, but the Company may require payment
of a sum sufficient to pay all taxes, assessments or other governmental
charges that may be imposed in connection with the transfer or exchange of
the Securities from the Securityholder requesting such transfer or exchange
(other than any exchange of a temporary Security for a definitive Security
not involving any change in ownership or any exchange pursuant to Section
2.11, 3.6, 9.5 or 10.3, not involving any transfer).
Notwithstanding any other provisions (other than the provisions set
forth in the sixth and seventh paragraphs) of this Section, a Security in
global form representing all or a portion of the Securities of a series may
not be transferred except as a whole by the Depositary for such series to a
nominee of such Depositary or by a nominee of such Depositary to such
Depositary or another nominee of such Depositary or by such Depositary or
any such nominee to a successor Depositary for such series or a nominee of
such successor Depositary.
At the option of the Holder, Securities of any series may be exchanged
for other Securities of the same series of any authorized denomination or
denominations, of a like aggregate Principal Amount and tenor, upon
surrender of the Securities to be exchanged at such office or agency.
Whenever any Securities are so surrendered for exchange, the Company shall
execute, and the Trustee shall authenticate and deliver, the Securities
which the Holder making the exchange is entitled to receive.
Whenever any Securities are so surrendered for exchange, the Company
shall execute, and the Trustee or a duly appointed authenticating agent
shall authenticate and deliver, the Securities which the Holder making the
exchange is entitled to receive.
If at any time the Depositary for the Securities of a series notifies
the Company that it is unwilling or unable to continue as Depositary for
the Securities of such series, the Company shall appoint a successor
Depositary with respect to the Securities of such series. If a successor
Depositary for the Securities of such series is not appointed by the
Company within 90 days after the Company receives such notice, the Company
will execute, and the Trustee, upon receipt of a Company Order for the
authentication and delivery of definitive Securities of such series, will
authenticate and deliver Securities of such series in definitive form in an
aggregate Principal Amount equal to the Principal Amount of the Security or
Securities in global form representing such series in exchange for such
Security or Securities in global form.
The Company may at any time and in its sole discretion determine that
the Securities of any series issued in the form of one or more global
Securities shall no longer be represented by such global Security or
Securities. In such event the Company will execute, and the Trustee, upon
receipt of a Company Order for the authentication and delivery of
definitive Securities of such series, will authenticate and deliver
Securities of such series in definitive form and in an aggregate Principal
Amount equal to the Principal Amount of the Security or Securities in
global form representing such series in exchange for such Security or
Securities in global form.
Notwithstanding the foregoing, except as otherwise specified in the
preceding two paragraphs or as contemplated by Section 2.3(a), any
permanent global Security shall be exchangeable only as provided in this
paragraph. If the beneficial owners of interests in a permanent global
Security are entitled to exchange such interests for definitive Securities
of such series and of like Principal Amount and tenor but of another
authorized form and denomination, as specified as contemplated by Section
2.3(a), then without unnecessary delay but in any event not later than the
earliest date on which such interests may be so exchanged, the Company
shall deliver to the Trustee definitive Securities in aggregate Principal
Amount equal to the Principal Amount of such permanent global Security,
executed by the Company. On or after the earliest date on which such
interests may be so exchanged, such permanent global Security shall be
surrendered by the Depositary with respect thereto 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 Securities without charge and the Trustee
shall authenticate and deliver, in exchange for each portion of such
permanent global Security, an equal aggregate Principal Amount of
definitive Securities of the same series of authorized denominations and of
like tenor as the portion of such permanent global Security to be
exchanged; provided, however, that notwithstanding the last paragraph of
this Section 2.8, no such exchanges may occur during a period beginning at
the opening of business 15 days before any selection of Securities of that
series to be redeemed and ending on the relevant Redemption Date. If a
Security is issued in exchange for any portion of a permanent global
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 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
Security is payable in accordance with the provisions of this Indenture.
Upon the exchange of a Security in global form for Securities in
definitive form, such Security in global form shall be cancelled by the
Trustee. Securities issued in exchange for a Security in global form
pursuant to this Section 2.8 shall be registered in such names and in such
authorized denominations as the Depositary for such Security in global
form, pursuant to instructions from its direct or indirect participants or
otherwise, shall instruct the Trustee. The Trustee shall deliver such
Securities to the persons in whose names such Securities are so registered.
All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the Company, evidencing the
same debt, and entitled to the same benefits under this Indenture, as the
Securities surrendered upon such registration of transfer or exchange.
Every Security presented or surrendered for registration of transfer
or for exchange shall (if so required by the Company or the Trustee) be
duly endorsed, or be accompanied by a written instrument of transfer in
form satisfactory to the Company and the Registrar duly executed, by the
Holder thereof or his attorney duly authorized in writing.
The Company shall not be required (i) to issue, register the transfer
of or exchange Securities of any series during a period beginning at the
opening of business 15 days before any selection of Securities of that
series to be redeemed and ending (except as otherwise provided in the first
proviso in the eighth paragraph of this Section 2.8) at the close of
business on the day of the mailing of the relevant notice of redemption, or
(ii) to register the transfer of or exchange any Security so selected for
redemption, in whole or in part, except the unredeemed portion of any
Security being redeemed in part.
SECTION 2.9 Replacement Securities. If (a) any mutilated Security is
surrendered to the Trustee, or (b) the Company and the Trustee receive
evidence to their satisfaction of the destruction, loss or theft of any
Security, and there is delivered to the Company and the Trustee such
security or indemnity as may be required by them to save each of them
harmless, then, in the absence of notice to the Company or the Trustee that
such Security has been acquired by a bona fide purchaser, the Company shall
execute and upon its written request the Trustee shall authenticate and
deliver, in exchange for any such mutilated Security or in lieu of any such
destroyed, lost or stolen Security, a new Security of the same series and
of like tenor and Principal Amount, bearing a number not contemporaneously
outstanding.
In case any such mutilated, destroyed, lost or stolen Security has
become or is about to become due and payable, the Company in its discretion
may, instead of issuing a new Security, pay such Security.
Upon the issuance of any new Securities under this Section, the
Company may require the payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in relation thereto and any
other expenses (including the fees and expenses of the Trustee) connected
therewith.
Every new Security of any series issued pursuant to this Section in
lieu of any mutilated, destroyed, lost or stolen Security shall constitute
an original additional contractual obligation of the Company, whether or
not the destroyed, lost or stolen Security shall be at any time enforceable
by anyone, and any such new Security shall be entitled to all benefits of
this Indenture equally and proportionately with any and all other
Securities of that issue duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Securities.
SECTION 2.10 Outstanding Securities; Determinations of Holders'
Action. Securities of any series "Outstanding" at any time are, as of the
date of determination, all the Securities of such series theretofore
authenticated by the Trustee for such series except for those cancelled by
it, those delivered to it for cancellation and those described in this
Section 2.10 as not outstanding. A Security does not cease to be
"Outstanding" because the Company or an Affiliate thereof holds the
Security; provided, however, that in determining whether the Holders of the
requisite Principal Amount of Outstanding Securities have given or
concurred in any request, demand, authorization, direction, notice, consent
or waiver hereunder, Securities owned by the Company or any other obligor
upon the Securities or any Affiliate of the Company or such other obligor
shall be disregarded and deemed not to be outstanding, except that, in
determining whether the Trustee shall be protected in relying upon any such
request, demand, authorization, direction, notice, consent or waiver, only
Securities which the Trustee knows to be so owned shall be so disregarded.
Securities so owned which have been pledged in good faith may be regarded
as Outstanding if the pledgee establishes to the satisfaction of the
Trustee the pledgee's right so to act with respect to such Securities and
that the pledgee is not the Company or any other obligor upon the
Securities or any Affiliate of the Company or of such other obligor.
Subject to the foregoing, only Securities outstanding at the time of such
determination shall be considered in any such determination (including,
without limitation, determinations pursuant to Articles 6 and 9). In
addition, in determining whether the Holders of the requisite Principal
Amount of Outstanding Securities have given or concurred in any request,
demand, authorization, direction, notice, consent or waiver hereunder, the
Principal Amount of a Discount Security that shall be deemed to be
Outstanding shall be the amount of the Principal thereof that would be due
and payable as of the date of such determination upon acceleration of the
Maturity thereof pursuant to Section 6.2.
If a Security has been paid pursuant to Section 2.9 or in exchange for
or in lieu of which another Security has been authenticated and delivered
pursuant to this Indenture, it ceases to be outstanding unless the Trustee
receives proof satisfactory to it that the replaced Security is held by a
bona fide purchaser.
If the Trustee (other than the Company) holds, in accordance with this
Indenture, on a Redemption Date or on Stated Maturity, money sufficient to
pay Securities payable on that date, then on and after that date such
Securities shall cease to be outstanding and interest, if any, on such
Securities shall cease to accrue; provided, that if such Securities are to
be redeemed, notice of such redemption has been duly given pursuant to this
Indenture or provision therefor satisfactory to the Trustee has been made.
SECTION 2.11 Temporary Securities. Pending the preparation of
definitive Securities of any series, the Company may execute, and upon
Company Order the Trustee shall authenticate and deliver, temporary
Securities which are printed, lithographed, typewritten, mimeographed or
otherwise produced, in any authorized denomination, substantially of the
tenor of the definitive Securities in lieu of which they are issued, in
registered form, and with such appropriate insertions, omissions,
substitutions and other variations as the Officers executing such
Securities may determine, as conclusively evidenced by their execution of
such Securities. Such temporary Securities may be in global form.
If temporary Securities for some or all of the Securities of any
series are issued, the Company will cause definitive Securities
representing such Securities to be prepared without unreasonable delay.
After the preparation of such definitive Securities, the temporary
Securities shall be exchangeable for such definitive Securities of like
tenor upon surrender of the temporary Securities at the office or agency of
the Company designated for such purpose pursuant to Section 4.5 for such
series for the purpose of exchanges of Securities of such series, without
charge to the Holder. Upon surrender for cancellation of any one or more
temporary Securities of any series the Company shall execute and the
Trustee shall authenticate and deliver in exchange therefor a like
Principal Amount of definitive Securities of the same series and of like
tenor of authorized denominations. Until so exchanged the temporary
Securities shall in all respects be entitled to the same benefits under
this Indenture as definitive Securities.
Until exchanged in full as hereinabove provided, the temporary
Securities of any series shall in all respects be entitled to the same
benefits under this Indenture as permanent Securities of the same series
and of like tenor authenticated and delivered hereunder.
SECTION 2.12 Cancellation. All Securities surrendered for payment,
redemption, 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 all Securities so delivered shall
be promptly cancelled by it. The Company may at any time deliver to the
Trustee for cancellation any Securities previously authenticated and
delivered hereunder which the Company may have acquired in any manner
whatsoever (including Securities received by the Company in exchange or
payment for other Securities of the Company) and may deliver to the Trustee
(or to any other person for delivery to the Trustee) for cancellation any
Securities previously authenticated hereunder which the Company has not
issued and sold, and all Securities so delivered shall be promptly
cancelled by the Trustee. The Company may not reissue, or issue new
Securities to replace, Securities it has paid or delivered to the Trustee
for cancellation. No Securities shall be authenticated in lieu of or in
exchange for any Securities cancelled as provided in this Section, except
as expressly permitted in the form of Securities for any particular series
or as permitted by this Indenture. All cancelled Securities held by the
Trustee shall be destroyed by the Trustee and evidence of their destruction
delivered to the Company unless the Company directs by Company Order that
the Trustee deliver cancelled Securities to the Company.
SECTION 2.13 Payment of Interest; Interest Rights Preserved. Unless
otherwise provided as contemplated by Section 2.3(a) with respect to any
series of Securities, interest on any Security which is payable, and is
punctually paid or duly provided for, on any Interest Payment Date shall be
paid to the person in whose name that Security (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record
Date for such interest.
Any interest on any Security of any series which is payable, but
is not punctually paid or duly provided for, on any Interest Payment Date
(herein called "Defaulted Interest") shall forthwith cease to be payable to
the Holder on the relevant Regular Record Date by virtue of having been
such Holder, and such Defaulted Interest may be paid by the Company, at its
election in each case, as provided in clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted
Interest to the persons in whose names the Securities of such
series (or their respective Predecessor Securities) are registered
at the close of business on a Special Record Date for the payment
of such Defaulted Interest, which shall be fixed in the following
manner. The Company shall notify the Trustee in writing of the
amount of Defaulted Interest proposed to be paid on each Security
and the date of the proposed payment, and at the same time the
Company shall deposit with the Trustee an amount of money equal to
the aggregate amount proposed to be paid in respect of such
Defaulted Interest or shall make arrangements satisfactory to the
Trustee for such deposit prior to the date of the proposed
payment, such money when deposited to be held in trust for the
benefit of the persons entitled to such Defaulted Interest as 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 Securities at his address as it
appears in the Security Register, not less than 10 days prior to
such Special Record Date. Notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor having
been so mailed, such Defaulted Interest shall be paid to the
persons in whose names the Securities (or their respective
Predecessor Securities) are registered at the close of business on
such Special Record Date and shall no longer be payable pursuant
to the following Clause (2).
(2) The Company may make payment of any Defaulted Interest on
the Securities in any other lawful manner not inconsistent with
the requirements of any securities exchange on which such
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
2.8, each Security delivered under this Indenture upon registration of
transfer of or in exchange for or in lieu of any other Security shall carry
the rights to interest accrued and unpaid, and to accrue, which were
carried by such other Security.
SECTION 2.14 Persons Deemed Owners. Prior to due presentment of a
Security for registration of transfer, the Company, the Trustee and any
agent of the Company or the Trustee may treat the person in whose name such
Security is registered as the owner of such Security for the purpose of
receiving payment of Principal of and (except as otherwise specified as
contemplated by Section 2.3(a) and subject to Section 2.8 and Section 2.13)
interest on such Security and for all other purposes whatsoever, whether or
not such Security be overdue, and neither the Company, the Trustee nor any
agent of the Company or the Trustee shall be affected by notice to the
contrary.
None of the Company, the Trustee, any Paying Agent or the
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 Security in global form or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests.
SECTION 2.15 Computation of Interest . Except as otherwise
specified as contemplated by Section 2.3(a) for Securities of any series,
(i) interest on any Securities which bear interest at a fixed rate shall be
computed on the basis of a 360-day year comprised of twelve 30-day months
and (ii) interest on any Securities which bear interest at a variable rate
shall be computed on the basis of the actual number of days in an interest
period divided by 360.
ARTICLE III
REDEMPTION
SECTION 3.1 Right to Redeem; Notices to Trustee. 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 2.3(a) for Securities of any series)
in accordance with this Article. In the case of any redemption at the
election of the Company of less than all of the Securities of any series,
the Company shall, within the time period set forth below, notify the
Trustee in writing of the Redemption Date, the Principal Amount and any
other information necessary to identify the Securities of such series to be
redeemed and the Redemption Price.
The Company shall give the notice to the Trustee provided for in
this Section 3.1 at least 60 days before the Redemption Date (unless a
shorter notice shall be satisfactory to the Trustee).
SECTION 3.2 Selection of Securities to be Redeemed. Unless
otherwise specified as contemplated by Section 2.3(a) with respect to any
series of Securities, if less than all the Securities of any series with
the same issue date, interest rate and Stated Maturity are to be redeemed,
the Trustee shall select the particular Securities to be redeemed by a
method the Trustee considers fair and appropriate, which method may provide
for the selection for redemption of portions (equal to the minimum
authorized denomination for Securities of that series or any integral
multiple thereof) of the Principal Amount of Securities of such series of a
denomination larger than the minimum authorized denomination for Securities
of that series. The Trustee shall make the selection not more than 60 days
before the Redemption Date from Outstanding Securities of such series not
previously called for redemption. Provisions of this Indenture that apply
to Securities called for redemption also apply to portions of Securities
called for redemption. The Trustee shall notify the Company promptly in
writing of the Securities to be redeemed and, in the case of any portions
of Securities to be redeemed, the principal amount thereof to be redeemed.
SECTION 3.3 Notice of Redemption. Unless otherwise specified as
contemplated by Section 2.3(a) with respect to any series of Securities, at
least 30 days but not more than 60 days before a Redemption Date, the
Company shall mail a notice of redemption by first-class mail, postage
prepaid, to each Holder of Securities to be redeemed.
The notice shall identify the Securities to be redeemed and shall
state:
(1) the Redemption Date;
(2) the Redemption Price;
(3) if fewer than all the Outstanding Securities of any
series are to be redeemed, the identification (and, in the case of
partial redemption, the Principal Amounts) of the particular
Securities to be redeemed;
(4) that on the Redemption Date the Redemption Price will
become due and payable upon each such Security (or portion
thereof) to be redeemed and, if applicable, that interest thereon
will cease to accrue on and after said date;
(5) the place or places where such Securities maturing after
the Redemption Date, are to be surrendered for payment of the
Redemption Price; and
(6) that the redemption is for a sinking fund, if such is the
case.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at the Company's expense; provided,
however, that, in all cases, the text of such Company Notice shall be
prepared by the Company.
SECTION 3.4 Effect of Notice of Redemption. Once notice of
redemption is given, Securities called for redemption become due and
payable on the Redemption Date and at the Redemption Price stated in the
notice, and from and after such date (unless the Company shall default in
the payment of the Redemption Price and accrued interest) such Securities
shall cease to bear interest. Upon surrender of any such Security for
redemption in accordance with said notice, such Security shall be paid by
the Company at the Redemption Price, together with accrued interest to the
Redemption Date; provided, however, that, unless otherwise specified as
contemplated by Section 2.3(a), installments of interest on Securities
whose Stated Maturity is on or prior to the Redemption Date shall be
payable to the Holders of such Securities, or one or more Predecessor
Securities, registered as such at the close of business on the relevant
Regular Record Dates according to their terms and the provisions of
Sections 2.8 and 2.13.
If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the Principal shall, until paid, bear
interest from the Redemption Date at the rate prescribed therefor in the
Security.
SECTION 3.5 Deposit of Redemption Price. Prior to or on the
Redemption Date, the Company shall deposit with the Paying Agent (or if the
Company or a Subsidiary or an Affiliate of either of them is the Paying
Agent, shall segregate and hold in trust) money sufficient to pay the
Redemption Price and (except if the Redemption Date shall be an Interest
Payment Date) accrued interest on, of all Securities to be redeemed on that
date other than Securities or portions of Securities called for redemption
which prior thereto have been delivered by the Company to the Trustee for
cancellation. If such money is then held by the Company in trust and is
not required for such purpose, it shall be discharged from such trust.
SECTION 3.6 Securities Redeemed in Part. Any Security which is to be
redeemed only in part shall be surrendered at the office or agency of the
Company designated therefor pursuant to Section 4.5 (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
upon such surrender, the Company shall execute and the Trustee shall
authenticate and deliver to the Holder of such Security a new Security or
Securities of the same series and of like tenor, in an authorized
denomination as requested by such Holder, equal in aggregate Principal
Amount to and in exchange for the unredeemed portion of the Principal of
the Security surrendered.
ARTICLE IV
COVENANTS
SECTION 4.1 Payment of Securities. The Company shall promptly make
all payments in respect of each series of Securities on the dates and in
the manner provided in the Securities and, to the extent not otherwise so
provided, pursuant to this Indenture. An installment of Principal of or
interest on the Securities shall be considered paid on the date it is due
if the Trustee or a Paying Agent (other than the Company or an Affiliate of
the Company) holds on that date funds designated for and sufficient to pay
such installment. At the Company's option, payments of Principal or
interest may be made by check or by transfer to an account maintained by
the payee.
SECTION 4.2 SEC Reports. The Company shall file with the Trustee,
within 15 days after it files such annual and quarterly reports,
information, documents and other reports with the SEC, copies of its annual
report and of the information, documents and other reports (or copies of
such portions of any of the foregoing as the SEC may by rules and
regulations prescribe) which the Company is required to file with the SEC
pursuant to Section 13 or 15(d) of the Exchange Act. The Company also
shall comply with the other provisions of TIA Section 314(a).
SECTION 4.3 Compliance Certificate. The Company shall deliver to the
Trustee within 120 days after the end of each fiscal year of the Company
(beginning with the first fiscal year ending on or after the date hereof)
an Officers' Certificate stating whether or not the signers know of any
Default that occurred during such period. If they do, such Officers'
Certificate shall describe the Default and its status.
SECTION 4.4 Further Instruments and Acts. Upon request of the
Trustee, the Company will execute and deliver such further instruments and
do such further acts as may be reasonably necessary or proper to carry out
more effectively the purposes of this Indenture.
SECTION 4.5 Maintenance of Office or Agency.
The Company will maintain in the Borough of Manhattan, the City
of New York, an office or agency where Securities of that series may be
presented or surrendered for payment, where any Securities of that
series may be surrendered for registration of transfer, where Securities of
that series may be surrendered for exchange, purchase or redemption and
where notices and demands to or upon the Company in respect of the
Securities of that series and this Indenture may be served. The office of
the Trustee in New York, New York shall be such office or agency for all of
the aforesaid purposes unless the Company shall maintain some other office
or agency for such purposes and shall give prompt written notice to the
Trustee of the location, and any change in the location, of such other
office or agency. If at any time the Company shall fail to maintain any
such required office or agency in respect of any series of Securities or
shall fail to furnish the Trustee with the address thereof, such
presentations and surrenders of Securities of that series may be made and
notices and demands may be made or served at the address of the Trustee set
forth in Section 13.2, and the Company hereby appoints the same as its
agent to receive such respective presentations, surrenders, notices and
demands.
The Company may also from time to time designate one or more other
offices or agencies where the Securities of one or more series may be
presented or surrendered for any or all such purposes and may from time to
time rescind such designations; provided, however, that no such designation
or rescission shall in any manner relieve the Company of its obligation to
maintain an office or agency in accordance with the requirements set forth
above for Securities of any series for such purposes. The Company will
give prompt written notice to the Trustee of any such designation or
rescission and of any change in the location of any such other office or
agency.
SECTION 4.6 Limitations on the Incurrence of Certain Other Debt.
The Company shall not create, incur, issue, assume, guaranty or otherwise
become directly or indirectly liable for or with respect to or otherwise
permit to exist any Debt of the Company that is subordinate in right of
payment to any Debt of the Company unless such Debt is either pari passu
with the Securities or subordinate in right of payment to the Securities
pursuant to subordination provisions that are at least as favorable to the
holders of the Securities as the subordination provision set forth in this
Indenture with respect to Senior Indebtedness.
ARTICLE V
SUCCESSOR CORPORATION
SECTION 5.1 When Company May Merge or Transfer Assets. The Company
shall not consolidate with or merge with or into any other person or
convey, transfer or lease its properties and assets substantially as an
entirety to any person, unless:
(a) either (1) the Company shall be the continuing
corporation or (2) the person (if other than the Company)
formed by such consolidation or into which the Company is
merged or the person which acquires by conveyance,
transfer or lease the properties and assets of the
Company substantially as an entirety (i) shall be a
corporation, partnership or trust organized and validity
existing under the laws of the United States or any state
thereof or the District of Columbia and (ii) shall
expressly assume, by an indenture supplemental hereto,
executed and delivered to the Trustee, in form
satisfactory to the Trustee, all of the obligations of
the Company under the Securities and this Indenture;
(b) immediately after giving effect to such
transaction, no Default shall have occurred and be
continuing; and
(c) the Company shall have delivered to the Trustee
an Officers' Certificate and an Opinion of Counsel, each
stating that such consolidation, merger, conveyance,
transfer or lease and, if a supplemental indenture is
required in connection with such transaction, such
supplemental indenture, comply with this Article and that
all conditions precedent herein relating to such
transaction have been satisfied.
The successor person formed by such consolidation or into which
the Company is merged or the successor person to which such conveyance,
transfer or lease is made shall succeed to, and be substituted for, and may
exercise every right and power of, the Company under this Indenture with
the same effect as if such successor had been named as the Company herein;
and thereafter, except in the case of a lease of its properties and assets
substantially as an entirety, the Company shall be discharged from all
obligations and covenants under this Indenture and the Securities.
ARTICLE VI
DEFAULTS AND REMEDIES
SECTION 6.1 Events of Default. Unless otherwise specified as
contemplated by Section 2.3(a) with respect to any series of securities, an
"Event of Default" occurs, with respect to each series of the Securities
individually, if:
(1) the Company defaults in (a) the payment of the principal
of any Security of such series at its Maturity or (b) the payment
of any interest upon any Security of such series when the same
becomes due and payable and continuance of such default for a
period of 30 days;
(2) the Company fails to comply with any of its agreements in
the Securities or this Indenture (other than those referred to in
clause (1) above and other than a covenant or warranty a default
in whose performance or whose breach is elsewhere in this Section
specifically dealt with or which has been expressly included in
this Indenture solely for the benefit of a series of Securities
other than such series) and such failure continues for 60 days
after receipt by the Company of a Notice of Default;
(3) there shall have been the entry by a court of competent
jurisdiction of (a) a decree or order for relief in respect of the
Company in an involuntary case or proceeding under any applicable
Bankruptcy Law or (b) a decree or order adjudging the Company
bankrupt or insolvent, or seeking reorganization, arrangement,
adjustment or composition of or in respect of the Company under
any applicable federal or state law, or appointing a custodian,
receiver, liquidator, assignee, trustee, sequestrator (or other
similar official) of the Company or of any substantial part of its
property, or ordering the wind up or liquidation of its affairs,
and any such decree or order for relief shall continue to be in
effect, or any such other decree or order shall be unstayed and in
effect, for a period of 60 consecutive days;
(4) (a) the Company commences a voluntary case or proceeding
under any applicable Bankruptcy Law or any other case or
proceeding to be adjudicated bankrupt or insolvent, (b) the
Company consents to the entry of a decree or order for relief in
respect of the Company in an involuntary case or proceeding under
any applicable Bankruptcy Law or to the commencement of any
bankruptcy or insolvency case or proceeding against it, (c) the
Company files a petition or answer or consent seeking
reorganization or substantially comparable relief under any
applicable federal state law, (d) the Company (x) consents to the
filing of such petition or the appointment of, or taking
possession by, a custodian, receiver, liquidator, assignee,
trustee, sequestrator or similar official of the Company or of any
substantial part of its property, (y) makes an assignment for the
benefit of creditors or (z) admits in writing its inability to pay
its debts generally as they become due or (e) the Company takes
any corporate action in furtherance of any such actions in this
clause (4); or
(5) any other Event of Default provided with respect to
Securities of that series.
"Bankruptcy Law" means Title 11, United States Code, or any
similar Federal or state law for the relief of debtors. "Custodian" means
any receiver, trustee, assignee, liquidator, custodian or similar official
under any Bankruptcy Law.
A Default under clause (2) above is not an Event of Default
until the Trustee notifies the Company, or the Holders of at least 25% in
aggregate Principal Amount of the Outstanding Securities of such series
notify the Company and the Trustee, of the Default and the Company does not
cure such Default within the time specified in clause (2) above after
receipt of such notice. Any such notice must specify the Default, demand
that it be remedied and state that such notice is a "Notice of Default."
SECTION 6.2 Acceleration. If an Event of Default with respect to
Securities of any series at the time Outstanding (other than an Event of
Default specified in Section 6.1(3) or (4)) occurs and is continuing, the
Trustee by notice to the Company, or the Holders of at least 25% in
aggregate Principal Amount of the Outstanding Securities of that series by
notice to the Company and the Trustee, may declare the Principal Amount
(or, if any of the Securities of that series are Discount Securities, such
portion of the Principal Amount of such Securities as may be specified in
the terms thereof) of all the Securities of that series to be immediately
due and payable. Upon such a declaration, such Principal (or portion
thereof) shall be due and payable immediately. If an Event of Default
specified in Section 6.1(3) or (4) occurs and is continuing, the Principal
(or portion thereof) of all the Securities of that series shall become and
be immediately due and payable without any declaration or other act on the
part of the Trustee or any Securityholders. The Holders of a majority in
aggregate Principal Amount of the Outstanding Securities of any series, by
notice to the Trustee (and without notice to any other Securityholder) may
rescind an acceleration with respect to that series and its consequences if
the rescission would not conflict with any judgment or decree and all
existing Events of Default with respect to Securities of such series have
been cured or waived except nonpayment of the Principal (or portion
thereof) of Securities of such series that has become due solely as a
result of such acceleration and if all amounts due to the Trustee under
Section 7.7 have been paid. No such rescission shall affect any subsequent
Default or impair any right consequent thereto.
SECTION 6.3 Other Remedies. If an Event of Default with respect to a
series of Outstanding Securities occurs and is continuing, the Trustee may
pursue any available remedy to (a) collect the payment of the whole amount
then due and payable on such Securities for Principal and interest, with
interest upon the overdue Principal and, to the extent that payment of such
interest shall be legally enforceable, upon overdue installments of
interest from the date such interest was due, at the rate or rates
prescribed therefor in such Securities and, in addition thereto, such
further amount as shall be sufficient to cover the costs and expenses of
collection, including amounts due the Trustee under Section 7.7 or (b)
enforce the performance of any provision of the Securities or this
Indenture.
The Trustee may maintain a proceeding even if the Trustee does
not possess any of the Securities or does not produce any of the Securities
in the proceeding. A delay or omission by the Trustee or any
Securityholder in exercising any right or remedy accruing upon an Event of
Default shall not impair the right or remedy or constitute a waiver of, or
acquiescence in, the Event of Default. No remedy is exclusive of any other
remedy. All available remedies are cumulative.
SECTION 6.4 Waiver of Past Defaults. The Holders of a majority in
aggregate Principal Amount of the Outstanding Securities of any series, by
notice to the Trustee (and without notice to any other Securityholder),
may on behalf of the Holders of all the Securities of such series waive an
existing Default with respect to such series and its consequences except
(1) an Event of Default described in Section 6.1(1) with respect to such
series or (2) a Default in respect of a provision that under Section 9.2
cannot be amended without the consent of the Holder of each Outstanding
Security of such series affected. When a Default is waived, it is deemed
cured, but no such waiver shall extend to any subsequent or other Default
or impair any consequent right.
SECTION 6.5 Control by Majority. The Holders of a majority in
aggregate Principal Amount of the Outstanding Securities of any series may
direct the time, method and place of conducting any proceeding for any
remedy available to the Trustee or of exercising any trust or power
conferred on the Trustee with respect to the Securities of such series.
However, the Trustee may refuse to follow any direction that conflicts with
law or this Indenture or that the Trustee determines in good faith is
unduly prejudicial to the rights of other Securityholders or would involve
the Trustee in personal liability.
SECTION 6.6 Limitation on Suits. A Holder of any Security of any
series may not pursue any remedy with respect to this Indenture or the
Securities unless:
(1) the Holder gives to the Trustee written notice stating
that an Event of Default with respect to the Securities of that
series is continuing;
(2) the Holders of at least 25% in aggregate Principal Amount
of the Outstanding Securities of that series make a written
request to the Trustee to pursue the remedy;
(3) such Holder or Holders offer to the Trustee reasonable
security or indemnity against any loss, liability or expense
satisfactory to the Trustee;
(4) the Trustee does not comply with the request within 60
days after receipt of the notice, the request and the offer of
security or indemnity; and
(5) the Holders of a majority in aggregate Principal Amount
of the Outstanding Securities of that series do not give the
Trustee a direction inconsistent with such request during such 60-
day period.
A Securityholder may not use this Indenture to prejudice the
rights of any other Securityholder or to obtain a preference or priority
over any other Securityholder.
SECTION 6.7 Rights of Holders to Receive Payment. Notwithstanding
any other provision of this Indenture, the right, which is absolute and
unconditional, of any Holder of any Security to receive payment of the
Principal of and (subject to Section 2.13) interest on such Security on the
Stated Maturity or Maturities expressed in such Security (or, in the case
of redemption, on the Redemption Date) held by such Holder, on or after the
respective due dates expressed in the Securities or any Redemption Date, or
to bring suit for the enforcement of any such payment on or after such
respective dates, shall not be impaired or affected adversely without the
consent of each such Holder.
SECTION 6.8 Collection Suit by Trustee. If an Event of Default
described in Section 6.1(1) with respect to Securities of any series occurs
and is continuing, the Trustee may recover judgment in its own name and as
trustee of an express trust against the Company for the whole amount owing
with respect to such series of Securities and the amounts provided for in
Section 7.7.
SECTION 6.9 Trustee May File Proofs of Claim. In case of the
pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial
proceeding relative to the Company or any other obligor upon the Securities
or the property of the Company or of such other obligor or their creditors,
the Trustee (irrespective of whether the Principal of the Securities shall
then be due and payable as therein expressed or by declaration or otherwise
and irrespective of whether the Trustee shall have made any demand on the
Company for the payment of overdue Principal or interest) shall be entitled
and empowered, by intervention in such proceeding or otherwise,
(a) to file and prove a claim for the whole amount
of Principal and interest owing and unpaid in respect of
the 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 any
other amount due the Trustee under Section 7.7) and of
the Holders of Securities allowed in such judicial
proceeding, and
(b) 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
similar official in any such judicial proceeding is hereby authorized by
each Holder of Securities to make such payments to the Trustee and, in the
event that the Trustee shall consent to the making of such payments
directly to the Holders of Securities, to pay the Trustee any amount due it
for the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel, and any other amounts due the Trustee
under Section 7.7.
Nothing herein contained shall be deemed to authorize the Trustee
or the holders of Senior Indebtedness to authorize or consent to or accept
or adopt on behalf of any Holder of a Security any plan of reorganization,
arrangement, adjustment or composition affecting the Securities or the
rights of any Holder thereof, or to authorize the Trustee to vote in
respect of the claim of any Holder of a Security in any such proceeding.
SECTION 6.10 Priorities. If the Trustee collects any money pursuant
to this Article 6, it shall pay out the money in the following order and,
in case of the distribution of such money on account of Principal or
interest, upon presentation of the Securities, 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 Trustee for amounts due under Section 7.7;
SECOND: to holders of Senior Indebtedness as provided for in
Article XII;
THIRD: to Securityholders for amounts due and unpaid for the
Principal and interest on the Securities in respect of which or for the
benefit of which such money has been collected, ratably, without preference
or priority of any kind, according to the amounts due and payable on such
Securities for Principal and interest, respectively; and
FOURTH: the balance, if any, to the Company.
The Trustee may fix a record date and payment date for any payment
to Securityholders pursuant to this Section 6.10. At least 15 days before
such record date, the Company shall mail to each Securityholder and the
Trustee a notice that states the record date, the payment date and amount
to be paid.
SECTION 6.11 Undertaking for Costs. In any suit for the
enforcement of any right or remedy under this Indenture or in any suit
against the Trustee for any action taken or omitted by it as Trustee, a
court in its discretion may require the filing by any party litigant in the
suit of an undertaking to pay the costs of the suit, and the court in its
discretion may assess reasonable costs, including reasonable attorneys'
fees, against any party litigant in the suit, having due regard to the
merits and good faith of the claims or defenses made by the party litigant.
This Section 6.11 does not apply to a suit by the Trustee, a suit by a
Holder pursuant to Section 6.7 or a suit by Holders of more than 10% in
aggregate Principal Amount of the Outstanding Securities of any series, or
to any suit instituted by any Holder of any Security for the enforcement of
the payment of the Principal of or interest on any Security on or after the
Stated Maturity or Maturities expressed in such Security (or, in the case
of redemption, on or after the Redemption Date).
SECTION 6.12 Waiver of Stay, Extension or Usury Laws. The Company
covenants (to the extent that it may lawfully do so) that it will not at
any time insist upon, or plead, or in any manner whatsoever claim or take
the benefit or advantage of, any stay or extension law or any usury or
other law wherever enacted, now or at any time hereafter in force, which
may affect the covenants or the performance of this Indenture; and the
Company (to the extent that it may lawfully do so) hereby expressly waives
all benefit or advantage of any such law, and covenants that it will not
hinder, delay or impede the execution of any power herein granted to the
Trustee, but will suffer and permit the execution of every such power as
though no such law had been enacted.
ARTICLE VII
TRUSTEE
SECTION 7.1 Duties of Trustee.
(a) If an Event of Default has occurred and is continuing, the
Trustee shall exercise the rights and powers vested in it by this Indenture
and use the same degree of care and skill in its exercise as a prudent man
would exercise or use under the circumstances in the conduct of his own
affairs.
(b) Except during the continuance of an Event of Default:
(1) the Trustee need perform only those duties that are
specifically set forth in this Indenture and no others and shall
not be liable except for the performance of such duties; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates
or opinions furnished to the Trustee and conforming to the
requirements of this Indenture. However, the Trustee shall
examine the certificates and opinions to determine whether or not
they conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(1) this paragraph (c) does not limit the effect of paragraph
(b) of this Section 7.1;
(2) the Trustee shall not be liable for any error of judgment
made in good faith by a Trust Officer unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts; and
(3) the Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with
a direction received by it pursuant to Section 6.5.
(d) Every provision of this Indenture that in any way relates to
the Trustee is subject to paragraphs (a), (b), (c) and (e) of this Section
7.1.
(e) The Trustee may refuse to perform any duty or exercise any
right or power or extend or risk its own funds or otherwise incur any
financial liability unless it receives indemnity satisfactory to it against
any loss, liability or expense.
(f) 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 not be liable for any interest on any money received by it
except as the Trustee may otherwise agree with the Company.
SECTION 7.2 Rights of Trustee. (a) The Trustee may rely on any
document believed by it to be genuine and to have been signed or presented
by the proper person. The Trustee need not investigate any fact or matter
stated in the document.
(b) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel. The Trustee
shall not be liable for any action it takes or omits to take in good faith
in reliance on such Officers' Certificate or Opinion of Counsel.
(c) The Trustee may act through agents and shall not be
responsible for the misconduct or negligence of any agent appointed with
due care.
(d) Subject to the provisions of Section 7.1 (c), the Trustee
shall not be liable for any action it takes or omits to take in good faith
which it believes to be authorized or within its rights or powers.
SECTION 7.3 Individual Rights of Trustee, etc. The Trustee in its
individual or any other capacity may become the owner or pledgee of
Securities and may otherwise deal with the Company or its Affiliates with
the same rights it would have if it were not Trustee. Any Paying Agent,
Registrar or co-registrar or any other agent of the Company may do the same
with like rights. However, the Trustee must comply with Sections 7.10 and
7.11.
SECTION 7.4 Trustee's Disclaimer. The Trustee makes no
representation as to the validity or adequacy of this Indenture or the
Securities. The Trustee shall not be accountable for the Company's use of
the proceeds from the Securities and, shall not be responsible for any
statement in the registration statement for the Securities under the
Securities Act of 1933, as amended, or in the Indenture or the Securities
(other than its certificate of authentication) or for the determination as
to which beneficial owners are entitled to receive any notices hereunder.
SECTION 7.5 Notice of Defaults. If a Default with respect to the
Securities of any series occurs and is continuing and if it is known to the
Trustee, the Trustee shall give to each Holder of Securities of such series
notice of such Default in the manner set forth in TIA Section 315(b) within
90 days after it occurs. The Trustee shall have no duty to inquire as to
the performance of the Company's covenants in Article IV hereof. In
addition, the Trustee shall not be deemed to have knowledge of any Default
or Event of Default except (i) any Event of Default occurring pursuant to
Section 4.1 or 6.1(l) or (ii) any Default or Event of Default of which the
Trustee shall have received written notification or obtained actual
knowledge.
SECTION 7.6 Reports by Trustee to Holders. Within 60 days after each
May 15 beginning with the May 15 following the date of this Indenture, the
Trustee shall mail to each Holder of Securities a brief report dated as of
such May 15 that complies with TIA Section 313(a). The Trustee also shall
comply with TIA Section 313(b) and (c).
A copy of each report at the time of its mailing to Holders of
Securities shall be filed with the SEC and each stock exchange on which the
Securities of that series may be listed. The Company agrees to notify the
Trustee whenever the Securities of a particular series become listed on any
stock exchange and of any delisting thereof.
SECTION 7.7 Compensation and Indemnity. The Company agrees:
(a) 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);
(b) to reimburse the Trustee upon its request for
all reasonable expenses, disbursements and advances
incurred or made by the Trustee in accordance with any
provision of this Indenture (including the reasonable
compensation and the expenses, advances 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
(c) to indemnify the Trustee for, and to hold it
harmless against, any loss, liability or expense incurred
without negligence or bad faith on its part, arising out
of or in connection with the acceptance or administration
of this trust, 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.
To secure the Company's payment obligations in this Section 7.7,
the Trustee shall have a lien prior to the Securities on all money or
property held or collected by the Trustee, except that held in trust to pay
the Principal of or interest, if any, on particular Securities.
The Company's payment obligations pursuant to this Section 7.7
shall survive the discharge of this Indenture. When the Trustee incurs
expenses after the occurrence of a Default specified in Section 6.1(3) or
(4), the expenses are intended to constitute expenses of administration
under any Bankruptcy Law.
SECTION 7.8 Replacement of Trustee. The Trustee may resign by so
notifying the Company; provided, however, no such resignation shall be
effective until a successor Trustee has accepted its appointment pursuant
to this Section 7.8. The Holders of a majority in aggregate Principal
Amount of the Outstanding Securities of any series at the time outstanding
may remove the Trustee with respect to the Securities of such series by so
notifying the Trustee and may appoint a successor Trustee. The Company
shall remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or public officer takes charge of the Trustee
or its property; or
(4) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, with respect to the Securities of one or
more series, the Company shall promptly appoint, by resolution of its Board
of Directors, a successor Trustee with respect to the Securities of that or
those series (it being understood that any such successor Trustee may be
appointed with respect to the Securities of one or more or all of such
series and that at any time there shall be only one Trustee with respect to
the Securities of any series).
In the case of the appointment hereunder of a successor Trustee
with respect to all Securities, every such successor Trustee shall deliver
a written acceptance of its appointment to the retiring Trustee and to the
Company. Thereupon, the resignation or removal of the retiring Trustee
shall become effective and the successor Trustee shall have all the rights,
powers and duties of the Trustee under this Indenture. The successor
Trustee shall mail a notice of its succession to Holders of Securities of
the particular series with respect to which such successor Trustee has been
appointed. The retiring Trustee shall promptly transfer all property held
by it as Trustee to the successor Trustee, subject to the lien provided for
in Section 7.7.
In case of the appointment hereunder of a successor Trustee with
respect to the Securities of one or more (but not all) series, the Company,
the retiring Trustee and each successor Trustee with respect to the
Securities of one or more series shall execute and deliver an indenture
supplemental hereto wherein each successor Trustee shall accept such
appointment and which (1) shall contain such provisions as shall be
necessary or desirable to transfer and confirm to, and to vest in, each
successor Trustee all the rights, powers, trusts and duties of the retiring
Trustee with respect to the Securities of that or those series to which the
appointment of such successor Trustee relates, (2) if the retiring Trustee
is not retiring with respect to all Securities, shall contain such
provisions as shall be deemed necessary or desirable to confirm that all
the rights, powers, trusts and duties of the retiring Trustee with respect
to the Securities of that or those series as to which the retiring Trustee
is not retiring shall continue to be vested in the 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 as co-
Trustees of the same trust and that each such Trustee shall be trustee of a
trust or trusts hereunder separate and apart from any trust or trusts
hereunder administered by any other such Trustee; and upon the execution
and delivery of such supplemental indenture the resignation or removal of
the retiring Trustee shall become effective to the extent provided therein
and each such successor Trustee, without any further act, deed or
conveyance, shall become vested with all the rights, powers, trusts and
duties of the retiring Trustee with respect to the Securities of that or
those series to which the appointment of such successor Trustee relates;
but, on request of the Company or any successor Trustee, such retiring
Trustee shall duly assign, transfer and deliver to such successor Trustee
all property and money held by such retiring Trustee hereunder with respect
to the Securities of that or those series to which the appointment of such
successor Trustee relates, subject, nevertheless, to its lien, if any,
provided for in Section 7.7.
If a successor Trustee with respect to the Securities of any
series does not take office within 30 days after the retiring Trustee
resigns or is removed, the retiring Trustee, the Company or the Holders of
a majority in aggregate Principal Amount of the Outstanding Securities of
such series at the time outstanding may petition any court of competent
jurisdiction for the appointment of a successor Trustee with respect to the
Securities of such series.
If the Trustee fails to comply with Section 7.10, any Holder of a
Security of such series may petition any court of competent jurisdiction
for the removal of such Trustee and the appointment of a successor Trustee.
SECTION 7.9 Successor Trustee by Merger. If the Trustee consolidates
with, merges or converts into, or transfers all or substantially all its
corporate trust business or assets to, another corporation, the resulting,
surviving or transferee corporation without any further act shall be the
successor Trustee.
SECTION 7.10 Eligibility; Disqualification. The Trustee shall at
all times satisfy the requirements of TIA Section 310(a)(1) and 310(a)(5).
The Trustee shall have a combined capital and surplus of at least
$50,000,000 as set forth in its most recent published annual report of
condition. The Trustee shall comply with TIA Section 310(b). In
determining whether the Trustee has conflicting interests as defined in TIA
Section 310(b)(1), the provisions contained in the proviso to TIA Section
310(b)(1) shall be deemed incorporated herein.
SECTION 7.11 Preferential Collection of Claims Against Company.
The Trustee shall comply with TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). A Trustee who has resigned or
been removed shall be subject to TIA Section 311(a) to the extent indicated
therein.
ARTICLE VIII
SATISFACTION AND DISCHARGE
SECTION 8.1 Discharge of Liability on Securities. Except as
otherwise provided as contemplated by Section 2.3(a), when (a) the Company
delivers to the Trustee all Outstanding Securities or all Outstanding
Securities of any series, as the case may be, theretofore authenticated and
delivered (other than (i) Securities which have been destroyed, lost or
stolen and which have been replaced or paid as provided in Section 2.9,
(ii) Securities 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 2.6)
for cancellation or (b) all Outstanding Securities have become due and
payable and the Company deposits with the Trustee cash sufficient to pay at
Stated Maturity the Principal Amount of all Principal of and interest on
Outstanding Securities or all Outstanding Securities of such series (other
than Securities replaced pursuant to Section 2.9), and if in either case
the Company pays all other sums payable hereunder by the Company, then this
Indenture shall, subject to Section 7.7, cease to be of further effect as
to all Outstanding Securities or all Outstanding Securities of any series,
as the case may be. The Trustee shall join in the execution of a document
prepared by the Company acknowledging satisfaction and discharge of this
Indenture on demand of the Company accompanied by an Officers' Certificate
and Opinion of Counsel and at the cost and expense of the Company.
SECTION 8.2 Repayment to the Company. The Trustee and the Paying
Agent shall return to the Company on Company Request any money held by them
for the payment of any amount with respect to the Securities that remains
unclaimed for two years; provided, however, that the Trustee or such Paying
Agent, before being required to make any such return, may at the expense
and direction of the Company mail to each Holder of such Securities 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 mailing, any
unclaimed money then remaining will be returned to the Company. After
return to the Company, Holders entitled to the money must look to the
Company for payment as general creditors unless an applicable abandoned
property law designates another person.
SECTION 8.3 Option to Effect Defeasance or Covenant Defeasance.
Unless otherwise specified as contemplated by Section 2.3(a) with
respect to Securities of a particular series, the Company, may at its
option, by Board Resolution, at any time, with respect to any series of
Securities, elect to have either Section 8.4 or Section 8.5 be applied to
all of the outstanding Securities of any series (the "Defeased
Securities"), upon compliance with the conditions set forth below in this
Article VIII.
SECTION 8.4 Defeasance and Discharge.
Upon the Company's exercise under Section 8.3 of the option
applicable to this Section 8.4, the Company shall be deemed to have been
discharged from its obligations with respect to the Defeased Securities on
the date the conditions set forth below 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 the defeased Securities, which shall thereafter be deemed to
be "outstanding" only for the purposes of Sections 2.4, 2.5, 2.6, 2.9,
2.11, 2.12, 4.1, 4.5, 6.6, 6.7, 7.7, 7.8 and 8.2 of this Indenture and to
have satisfied all its other obligations under such series of Securities
and this Indenture insofar as such series of Securities are concerned (and
the Trustee, at the expense of the Company, and, upon written request,
shall execute proper instruments acknowledging the same). Subject to
compliance with this Article VIII, the Company may exercise its option
under this Section 8.4 notwithstanding the prior exercise of its option
under Section 8.5 with respect to a series of Securities.
SECTION 8.5 Covenant Defeasance.
Upon the Company's exercise under Section 8.3 of the option
applicable to this Section 8.5, the Company shall be released from its
obligations under Sections 4.2 and 4.3 and Article V and such other
provisions as may be provided as contemplated by Section 2.3(a) with
respect to Securities of a particular series and with respect to the
Defeased Securities on and after the date the conditions set forth below
are satisfied (hereinafter "covenant defeasance"), and the Defeased
Securities 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 if any thereof) in connection with such covenants,
but shall continue to be deemed "outstanding" for all other purposes
hereunder. For this purpose, such covenant defeasance means that, with
respect to the Defeased Securities, 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 Article, whether directly or indirectly, by
reason of any reference elsewhere herein to any such Section or Article or
by reason of any reference in any such Section or Article to any other
provisions herein or in any other document and such omission to comply
shall not constitute a Default or an Event of Default under Section 6.1
but, except as specified above, the remainder of this Indenture and such
Defeased Securities shall be unaffected thereby.
SECTION 8.6 Condition to Defeasance or Covenant Defeasance. The
following shall be the conditions to application of either Section 8.4
or Section 8.5 to a series of outstanding Securities.
(a) The Company shall have irrevocably deposited with the Trustee,
in trust, (i) sufficient funds to pay the Principal of and interest to
Stated Maturity (or redemption) on, the Debt Securities of such series, or
(ii) such amount of direct obligations of, or obligations the principal of
and interest on which are fully guaranteed by, the government of the United
States, and which are not subject to prepayment, redemption or call, as
will, together with the predetermined and certain income to accrue thereon
without consideration of any reinvestment thereof, be sufficient to pay
when due the Principal of, and interest to Stated Maturity (or redemption)
on, the Debt Securities of such series.
(b) The Company shall have delivered to the Trustee an opinion of
counsel to the effect that the funds deposited pursuant to Section 8.6(a)
will not be subject to any rights of the holders of Senior Indebtedness.
ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 9.1 Supplemental Indentures without Consent of Holders.
Without the consent of any Holders of Securities, the Company 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 corporation to the
Company and the assumption by any such successor of the covenants
of the Company herein and in the Securities; or
(2) to add to the covenants, agreements and obligations of
the Company for the benefit of the Holders of all of the
Securities or any series thereof, or to surrender any right or
power herein conferred upon the Company; or
(3) to establish the form or terms of Securities of any
series as permitted by Sections 2.1 and 2.3(a), respectively; or
(4) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Securities of
one or more series and to add to or change any of the provisions
of this Indenture as shall be necessary to provide for or
facilitate the administration of the trusts hereunder by more than
one Trustee, pursuant to the requirements of Section 7.8; or
(5) to cure any ambiguity, defect or inconsistency; or
(6) to add to, change or eliminate any of the provisions of
this Indenture (which addition, change or elimination may apply to
one or more series of Securities), provided that any such
addition, change or elimination shall neither (A) apply to any
Security of any series created prior to the execution of such
supplemental indenture and entitled to the benefit of such
provision nor (B) modify the rights of the Holder of any such
Security with respect to such provision; or
(7) to secure the Securities; or
(8) to make any other change that does not adversely affect
the rights of any Securityholder.
SECTION 9.2 Supplemental Indentures with Consent of Holders. With
the written consent of the Holders of at least a majority in aggregate
Principal Amount of the Outstanding Securities of each series affected by
such supplemental indenture, the Company and the Trustee may amend this
Indenture or the Securities of any series or may enter into an indenture or
indentures supplemental hereto for the purpose of adding any provisions to
or changing in any manner or eliminating any of the provisions of this
Indenture or of modifying in any manner the rights of the Holders of the
Securities of such series under this Indenture; provided, however, that no
such amendment or supplemental indenture shall, without the consent of the
Holder of each Outstanding Security affected thereby:
(1) change the Stated Maturity of the Principal of, or any
installment of Principal of or interest on, any such Security, or
reduce the Principal Amount thereof or the rate of interest
thereon or any premium payable upon redemption thereof or reduce
the amount of Principal of any such Discount Security that would
be due and payable upon a declaration of acceleration of maturity
thereof pursuant to Section 6.2, or change the Place of Payment,
or change the coin or currency in which, any Principal of, or any
installment of interest on, any such Security is payable, or
impair the right to institute suit for the enforcement of any such
payment on or after the Stated Maturity thereof (or, in the case
of redemption, on or after the Redemption Date);
(2) reduce the percentage in Principal Amount of the
Outstanding Securities of any series, the consent of whose Holders
is required for any such amendment or supplemental indenture, or
the consent of whose Holders is required for any waiver (of
compliance with certain provisions of this Indenture or certain
defaults hereunder and their consequences) with respect to the
Securities of such series provided for in this Indenture;
(3) make any change in the terms of the Subordination of the
Securities in a manner adverse to the Holders of any series of
outstanding Securities; or
(4) modify any of the provisions of this Section, Section 6.4
or 6.7, except to increase the percentage of Outstanding
Securities of such series required for such actions or to provide
that certain other provisions of this Indenture cannot be modified
or waived without the consent of the Holder of each Outstanding
Security affected thereby.
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 Securities, or
which modifies the rights of the Holders of Securities of such series with
respect to such covenant or other provision, shall be deemed not to affect
the rights under this Indenture of the Holders of Securities of any other
series.
It shall not be necessary for the consent of the Holders under
this Section 9.2 to approve the particular form of any proposed amendment
or supplemental indenture, but it shall be sufficient if such consent
approves the substance thereof.
After an amendment or supplemental indenture under this Section
9.2 becomes effective, the Company shall mail to each Holder of the
particular Securities affected thereby a notice briefly describing the
amendment.
SECTION 9.3 Compliance with Trust Indenture Act. Every supplemental
indenture executed pursuant to this Article shall comply with the TIA as
then in effect.
SECTION 9.4 Revocation and Effect of Consents, Waivers and Actions.
Until an amendment or waiver with respect to a series of Securities becomes
effective, a consent to it or any other action by a Holder of a Security of
that series hereunder is a continuing consent by the Holder and every
subsequent Holder of that Security or portion of that Security that
evidences the same obligation as the consenting Holder's Security, even if
notation of the consent, waiver or action is not made on the Security.
However, any such Holder or subsequent Holder may revoke the consent,
waiver or action as to such Holder's Security or portion of the Security if
the Trustee receives the notice of revocation before the Company or an
agent of the Company certifies to the Trustee that the consent of the
requisite aggregate Principal Amount of the Securities of that series has
been obtained. After an amendment, waiver or action becomes effective, it
shall bind every Holder of Securities of that series.
The Company may, but shall not be obligated to, fix a record date
for the purpose of determining the Holders entitled to consent to any
amendment or waiver with respect to a series of Securities. If a record
date is fixed, then notwithstanding the first two sentences of the
immediately preceding paragraph, those persons who were Holders of
Securities of that series at such record date (or their duly designated
proxies), and only those persons, shall be entitled to revoke any consent
previously given, whether or not such persons continue to be Holders after
such record date. No such consent shall be valid or effective for more
than 90 days after such record date.
SECTION 9.5 Notation on or Exchange of Securities. Securities of any
series authenticated and delivered after the execution of any supplemental
indenture with respect to such series pursuant to this Article may, and
shall if required by the Trustee, bear a notation in form approved by the
Trustee as to any matter provided for in such supplemental indenture. If
the Company shall so determine, new Securities of such series so modified
as to conform, in the opinion of the Trustee and the Board of Directors,
to any such supplemental indenture may be prepared and executed by the
Company and authenticated and delivered by the Trustee in exchange for
outstanding Securities of that series.
SECTION 9.6 Trustee to Sign Supplemental Indentures. The Trustee
shall sign any supplemental indenture authorized pursuant to this Article 9
if the amendment does not adversely affect the rights, duties, liabilities
or immunities of the Trustee. If it does, the Trustee may, but need not,
sign it. In signing such amendment, the Trustee shall be entitled to
receive, and (subject to the provisions of Section 7.1) shall be fully
protected in relying upon, an Officers' Certificate and an Opinion of
Counsel stating that such amendment is authorized or permitted by this
Indenture.
SECTION 9.7 Effect of Supplemental Indentures. Upon the execution of
any supplemental indenture under this Article, this Indenture shall be
modified in accordance therewith, and such supplemental indenture shall
form a part of this Indenture for all purposes; and every Holder of
Securities theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby, except to the extent otherwise set forth thereon.
ARTICLE X
SINKING FUNDS
SECTION 10.1 Applicability of Article. The provisions of this
Article shall be applicable to any sinking fund for the retirement of
Securities of a series, except as otherwise specified as contemplated by
Section 2.3(a) for Securities of such series.
The minimum amount of any sinking fund payment provided for by the
terms of Securities of any series is herein referred to as a "mandatory
sinking fund payment," and any payment in excess of such minimum amount
provided for by the terms of Securities of any series is herein referred to
as an "optional sinking fund payment." If provided for by the terms of
Securities of any series, the cash amount of any sinking fund payment may
be subject to reduction as provided in Section 10.2. Each sinking fund
payment shall be applied to the redemption of Securities of any series as
provided for by the terms of the Securities of such series.
SECTION 10.2 Satisfaction of Sinking Fund Payments with Securities.
The Company (1) may deliver Outstanding Securities of a series with the
same issue date, interest rate and Stated Maturity (other than any
previously called for redemption), and (2) may apply as a credit Securities
of a series with the same issue date, interest rate and Stated Maturity
which have been redeemed either at the election of the Company pursuant to
the terms of such Securities or through the application of permitted
optional sinking fund payments pursuant to the terms of such Securities, in
each case, in satisfaction of all or any part of any mandatory sinking fund
payment with respect to the Securities of such series with the same issue
date, interest rate and Stated Maturity; provided that such Securities have
not been previously so credited. Such Securities shall be received and
credited for such purpose by the Trustee at the Redemption Price specified
in such Securities for redemption through operation of the sinking fund and
the amount of such sinking fund payment shall be reduced accordingly.
SECTION 10.3 Redemption of Securities for Sinking Fund. Not less
than 60 days (or such shorter period as shall be acceptable to the Trustee)
prior to each sinking fund payment date for any series of Securities, the
Company will deliver to the Trustee an Officers' Certificate specifying the
amount of the next sinking fund payment for that series pursuant to the
terms of that series, the portion thereof, if any, which is to be satisfied
by payment of cash and the portion thereof, if any, which is to be
satisfied by delivering and crediting Securities of that series pursuant to
Section 10.2 and will also deliver to the Trustee any Securities to be so
delivered. Not less than 30 days before each such sinking fund payment
date the Trustee shall select the Securities to be redeemed upon such
sinking fund payment date in the manner specified in Section 3.2 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 3.3. Such notice
having been duly given, the redemption of such Securities shall be made
upon the terms and in the manner stated in Sections 3.4 and 3.6.
ARTICLE XI
ACTIONS OF HOLDERS OF SECURITIES
SECTION 11.1 Purposes for which Meetings may be Called. A meeting of
Holders of Securities of any series may be called at any time and from time
to time pursuant to this Article to make, give or take any request, demand,
authorization, direction, notice, consent, waiver or other action provided
by this Indenture to be made, given or taken by Holders of Securities of
such series.
SECTION 11.2 Call, Notice and Place of Meetings. (a) The Trustee may
at any time call a meeting of Holders of Securities of any series for any
purpose specified in Section 11.1, to be held at such time and at such
place in the Borough of Manhattan, The City of New York or, with the
approval of the Company, at any other place. Notice of every meeting of
Holders of Securities of any series, setting forth the time and the place
of such meeting and in general terms the action proposed to be taken at
such meeting, shall be given, in the manner provided in Section 13.2, 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 or the Holders of at least
10% in Principal Amount of the Outstanding Securities of any series shall
have requested the Trustee to call a meeting of the Holders of Securities
of such series for any purpose specified in Section 11.1, by written
request setting forth in reasonable detail the action proposed to be taken
at the meeting, and the Trustee shall not have made the first publication
of the notice of such meeting within 21 days after receipt of such request
or shall not thereafter proceed to cause the meeting to be held as provided
herein, then the Company or the Holders of Securities of such series in the
amount above specified, as the case may be, may determine the time and the
place in the Borough of Manhattan, The City of New York, or in such other
place as shall be determined and approved by the Company, for such meeting
and may call such meeting for such purposes by giving notice thereof as
provided in subsection (a) of this Section 11.2.
SECTION 11.3 Persons Entitled to Vote at Meetings. To be entitled to
vote at any meeting of Holders of Securities of any series, a person shall
be (1) a Holder of one or more Outstanding Securities of such series, or
(2) a person appointed by an instrument in writing as proxy for a Holder or
Holders of one or more Outstanding Securities of such series by such Holder
or Holders. The only persons who shall be entitled to be present or to
speak at any meeting of Holders of Securities of any series shall be the
persons entitled to vote at such meeting and their counsel, any
representatives of the Trustee and its counsel and any representatives of
the Company and its counsel.
SECTION 11.4 Quorum; Action. The persons entitled to vote a majority
in Principal Amount of the Outstanding Securities of a series shall
constitute a quorum for a meeting of Holders of Securities of such series.
In the absence of a quorum within 30 minutes of the time appointed for any
such meeting, the meeting shall, if convened at the request of Holders of
Securities of such series, be dissolved. In any other case, the meeting
may be adjourned for a period 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 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 11.2(a), except
that such notice need be given only once not less than five days prior to
the date on which the meeting is scheduled to be reconvened. Notice of the
reconvening of an adjourned meeting shall state expressly the percentage,
as provided above, of the principal amount of the Outstanding Securities of
such series which shall constitute a quorum.
Except as limited by the proviso to Section 9.2, 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 Securities
of that series; provided, however, that, except as limited by the proviso
to Section 9.2, any resolution with respect to any request, demand,
authorization, direction, notice, consent, waiver or other action which
this Indenture expressly provides may be made, given or taken by the
Holders of a specified percentage, which is less than a majority, in
Principal Amount of the Outstanding Securities of a series may be adopted
at a meeting or an adjourned meeting duly reconvened and at which a quorum
is present as aforesaid by the affirmative vote of the Holders of such
specified percentage in Principal Amount of the Outstanding Securities of
that series.
Any resolution passed or decision taken at any meeting of Holders
of Securities of any series duly held in accordance with this Section shall
be binding on all the Holders of Securities of such series, whether or not
present or represented at the meeting.
SECTION 11.5 Determination of Voting Rights; Conduct and Adjournment
of Meetings. (a) Notwithstanding any other provisions of this Indenture,
the Trustee may make such reasonable regulations as it may deem advisable
for any meeting of Holders of Securities of a series in regard to proof of
the holding of Securities of such series and of the appointment of proxies
and in regard to the appointment and duties of inspectors of votes, the
submission and examination of proxies, certificates and other evidence of
the right to vote, and such other matters concerning the conduct of the
meeting as it shall deem appropriate. Except as otherwise permitted or
required by any such regulations, the holding of Securities shall be proved
in the manner specified in Section 11.7 and the appointment of any proxy
shall be proved in the manner specified in Section 11.7. 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 11.7 or other proof.
(b) The Trustee shall, by an instrument in writing, appoint a
temporary chairman of the meeting, unless the meeting shall have been
called by the Company or by Holders of Securities as provided in Section
11.2 (b), in which case the Company or the Holders of Securities of the
series calling the meeting, as the case may be, shall in like manner
appoint a temporary chairman. A permanent chairman and a permanent
secretary of the meeting shall be elected by vote of the persons entitled
to vote a majority in Principal Amount of the Outstanding Securities of
such series represented at the meeting.
(c) At any meeting each Holder of a Security of such series or
proxy shall be entitled to vote with respect to the Outstanding Securities
of such series held or represented by him; provided, however, that no vote
shall be cast or counted at any meeting in respect of any Security
challenged as not Outstanding and ruled by the chairman of the meeting to
be not Outstanding. The chairman of the meeting shall have no right to
vote, except as a Holder of a Security of such series or proxy.
(d) Any meeting of Holders of Securities of any series duly
called pursuant to Section 11.2 at which a quorum is present may be
adjourned from time to time by persons entitled to vote a majority in
Principal Amount of the Outstanding Securities of such series represented
at the meeting; and the meeting may be held as so adjourned without further
notice.
SECTION 11.6 Counting Votes and Recording Action of Meetings. The
vote upon any resolution submitted to any meeting of Holders of Securities
of any series shall be by written ballots on which shall be subscribed
signatures of the Holders of Securities of such series or of their
representatives by proxy and the Principal Amounts and serial numbers of
the Outstanding Securities of such series held or represented by them. The
permanent chairman of the meeting shall appoint two inspectors of votes who
shall count all votes cast at the meeting for or against any resolution and
who shall make and file with the secretary of the meeting their verified
written reports in duplicate of all votes cast at the meeting. A record,
at least in duplicate, of the proceedings of each meeting of Holders of
Securities of any series shall be prepared by the secretary of the meeting
and there shall be attached to said record the original reports of the
inspectors of votes on any vote by ballot taken thereat and affidavits by
one or more persons having knowledge of the facts setting forth a copy of
the notice of the meeting and showing that said notice was given as
provided in Section 11.2 and, if applicable, Section 11.4. 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.
SECTION 11.7 Actions of Holders Generally. (a) Any request, demand,
authorization, direction, notice, consent, waiver or other action provided
by this Indenture to be given or taken by Holders may be embodied in and
evidenced by one or more instruments of substantially similar tenor signed
by such Holders in person or by an agent duly appointed in writing. 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. Proof
of execution of any such instrument or of a writing appointing any such
agent, or of the holding by any person of a Security, shall be sufficient
for any purpose of this Indenture and (subject to Section 7.1) conclusive
in favor of the Trustee and the Company, if made in the manner provided in
this Section. The record of any meeting of Holders of Securities shall be
proved in the manner provided in Section 11.6.
(b) The fact and date of the execution by any person of any such
instrument or writing, or the authority of the persons executing the same,
may be proved in any reasonable manner which the Trustee deems sufficient.
(c) The Principal Amount and serial numbers of Securities held by
the person, and the date of holding the same, shall be proved by the books
of the Registrar.
(d) Any request, demand, authorization, direction, notice,
consent, waiver or other act of the Holder of any Security in accordance
with this Section shall bind every future Holder of the same Security and
the Holder of every Security issued upon the registration of transfer
thereof or in exchange therefor or in lieu thereof in respect of anything
done, omitted or suffered to be done by the Trustee or the Company in
reliance thereon, whether or not notation of such action is made upon such
Security.
(e) If the Company shall solicit from the Holders any request,
demand, authorization, direction, notice, consent, waiver or other act in
accordance with this Section, the Company may, at its option, by or
pursuant to an Officers' Certificate delivered to the Trustee, fix in
advance a record date for the determination of Holders entitled to give
such request, demand, authorization, direction, notice, consent, waiver or
such other act, but the Company shall have no obligation to do so. 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 percentage of Outstanding
Securities or Outstanding Securities of a series, as the case may be, have
authorized or agreed or consented to such request, demand, authorization,
direction, notice, consent, waiver or other act, and for that purpose the
Outstanding Securities or Outstanding Securities of the series, as the case
may be, shall be computed as of such record date; provided, that no such
authorization, agreement or consent by the Holders on the record date shall
be deemed effective unless such request, demand, authorization, direction,
notice, consent, waiver or other act shall become effective pursuant to the
provisions of clause (a) of this Section 11.7 not later than six months
after the record date.
ARTICLE XII
SUBORDINATION
SECTION 12.1 Securities Subordinate to Senior Indebtedness. Unless
otherwise specified as contemplated by Section 2.3(a), the Securities shall
be subordinated to Senior Indebtedness as set forth in this Article XII.
The Company covenants and agrees, and each Holder of a Security of any
series by such Holder's acceptance thereof likewise covenants and agrees,
that, to the extent and in the manner hereinafter set forth in this Article
XII, the indebtedness represented by the Securities and the payment of the
Principal Amount, interest and such other amounts as provided for in
Section 2.3(a), if any, in respect of each and all of the Securities are
hereby expressly made subordinate and subject in right of payment to the
prior payment in full of all Senior Indebtedness.
"Senior Indebtedness" means the principal of (and premium, if any)
and interest on (including interest accruing after the filing of a petition
initiating any proceeding pursuant to any Bankruptcy Law, but only to the
extent allowed or permitted to the holder of such Debt of the Company
against the bankruptcy or any other insolvency estate of the Company in
such proceeding) and other amounts due on or in connection with any Debt of
the Company incurred, assumed or guaranteed by the Company, whether
outstanding on the date of the Indenture or thereafter incurred, assumed or
guaranteed and all renewals, extensions and refundings of any such Debt of
the Company; provided, however, that the following will not constitute
Senior Indebtedness:
(a) any Debt of the Company as to which, in the instrument
creating the same or evidencing the same or pursuant to which the
same is outstanding, it is expressly provided that such Debt of
the Company shall be subordinated to any other Debt of the
Company, unless such Debt of the Company expressly provides that
such Debt of the Company shall be senior in right of payment to
the Securities;
(b) any Debt of the Company which by its terms states that such
Debt of the Company shall not be senior in right of payment to the
Securities;
(c) Debt of the Company in respect of the Securities; and
(d) any Debt of the Company to any Affiliate of the Company or
Subsidiary of the Company.
SECTION 12.2 Payment Over of Proceeds upon Dissolution, Etc. Upon
any distribution of assets of the Company in the event of:
(a) any insolvency or bankruptcy case or proceeding, or any
receivership, liquidation, reorganization or other similar case or
proceeding in connection therewith, relative to the Company or to
its creditors, as such, or to its assets, or
(b) any liquidation, dissolution or other winding up of the
Company, whether voluntary or involuntary and whether or not
involving insolvency or bankruptcy, or
(c) any assignment for the benefit of creditors or any other
marshalling of assets and liabilities of the Company,
then and in such event
(1) the holders of Senior Indebtedness shall be entitled to
receive payment in full of all amounts due or to become due on or
in respect of all Senior Indebtedness, or provision shall be made
for such payment in cash, before the Holders of the Securities are
entitled to receive any payment on account of the Principal
Amount, interest or such other amounts as may be provided for in
Section 2.3(a), if any, in respect of the Securities; and
(2) any payment or distribution of assets of the Company of
any kind or character, whether in cash, property or securities, by
set-off or otherwise, to which the Holders or the Trustee would be
entitled but for the provisions of this Article XII, including any
such payment or distribution which may be payable or deliverable
by reason of the payment of any other Debt of the Company being
subordinated to the payment of the Securities, shall be paid by
the liquidating trustee or agent or other person making such
payment or distribution, whether a trustee in bankruptcy, a
receiver or liquidating trustee or otherwise, directly to the
holders of 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 according to the
aggregate amounts remaining unpaid on account of the principal of,
and premium, if any, and interest on the 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 to the holders of
such Senior Indebtedness.
In the event that, notwithstanding the foregoing provisions of
this Section 12.2, the Trustee or the Holder of any Security shall receive
any payment or distribution of assets of the Company of any kind or
character, whether in cash, property or securities, including any such
payment or distribution which may be payable or deliverable by reason of
the payment of any other Debt of the Company being subordinated to the
payment of the Securities, before all Senior Indebtedness is paid in full
or payment thereof provided for, and if such fact shall then have been made
known to the Trustee as provided in Section 12.10, or, as the case may be,
such Holder, then and in such event such payment or distribution shall be
paid over or delivered forthwith to the trustee in bankruptcy, receiver,
liquidating trustee, custodian, assignee, agent or other person making
payment or distribution of assets of the Company for application to the
payment of all Senior Indebtedness remaining unpaid, to the extent
necessary to pay all Senior Indebtedness in full, after giving effect to
any concurrent payment or distribution to or for the holders of Senior
Indebtedness.
For purposes of this Article XII only, the words "cash, property
or securities," or any combination thereof, shall not be deemed to include
shares of Capital Stock of the Company as reorganized or readjusted, or
securities of the Company or any other corporation provided for by a plan
of reorganization or readjustment the payment of which is subordinated, at
least to the extent provided in this Article XII with respect to the
Securities, to the payment of all Senior Indebtedness which may at the time
be outstanding; provided, however, that (i) Senior Indebtedness is assumed
by the new corporation, if any, resulting from any such reorganization or
readjustment, and (ii) the rights of the holders of the Senior Indebtedness
are not, without the consent of such holders, altered, in any manner
adverse to such holders, by such reorganization or readjustment.
The consolidation of the Company with, or the merger of the
Company into, another corporation or the liquidation or dissolution of the
Company following the conveyance or transfer of all or substantially all of
its assets to another person upon the terms and conditions set forth in
Article V shall not be deemed a dissolution, winding up, liquidation,
reorganization, assignment for the benefit of creditors or marshalling of
assets and liabilities of the Company for the purposes of this Section 12.2
if the corporation formed by such consolidation or into which the Company
is merged or the person which acquires by conveyance or transfer all or
substantially all of the assets of the Company, as the case may be, shall,
as a part of such consolidation, merger, conveyance or transfer, comply
with the conditions set forth in Article V.
SECTION 12.3 Acceleration of Securities. In the event that any
Securities are declared due and payable before their Stated Maturity
pursuant to Section 6.2, then and in each such event the Company shall
promptly notify holders of Senior Indebtedness of such acceleration. The
Company may not pay the Securities until 120 days have passed after such
acceleration occurs and may thereafter pay the Securities if this Article
XII permits the payment at that time.
In the event that, notwithstanding the foregoing, the Company
shall make any payment to the Trustee or the Holder of any Securities
prohibited by the foregoing provisions of this Section 12.3, and if such
facts then shall have been known or thereafter shall have been made known
to the Trustee (as provided in Section 12.10) or to such Holder, as the
case may be, pursuant to the terms of this Indenture, then and in such
event such payment shall be paid over and delivered forthwith to the
Company for the benefit of the holders of Senior Indebtedness by or on
behalf of the person holding such payment.
The provisions of this Section 12.3 shall not apply to any payment
with respect to which Section 12.2 would be applicable.
SECTION 12.4 Default in Senior Indebtedness. The Company may not
make any payment of the Principal Amount, interest or other such amounts as
may be provided for in Section 2.3(a), if any, in respect of the Securities
and may not acquire any Securities for cash or property (other than for
Capital Stock of the Company) if:
(1) a default on Senior Indebtedness occurs and is continuing
that permits holders of such Senior Indebtedness to accelerate its
maturity; and
(2) the default is the subject of judicial proceedings or the
Company receives a notice of default thereof from any person who
may give such notice pursuant to the instrument evidencing or
document governing such Senior Indebtedness. If the Company
receives any such notice, then a similar notice received within
nine months thereafter relating to the same default on the same
issue of Senior Indebtedness shall not be effective for purposes
of this Section 12.4.
The Company may resume payments on the Securities and may acquire
Securities if and when:
(A) the default is cured or waived; or
(B) 120 or more days pass after the receipt by the Company of
the notice described in clause (2) above and the default is not
then the subject of judicial proceedings; and
this Article XII otherwise permits the payment or acquisition at that time.
In the event that, notwithstanding the foregoing, the Company
shall make any payment to the Trustee or the Holder of any Security
prohibited by the foregoing provisions of this Section 12.4, and if such
fact then shall have been known or thereafter shall have been made known to
the Trustee as provided in Section 12.10 or such Holder, as the case may
be, pursuant to the terms of this Indenture, then and in each such event
such payment shall be paid over and delivered forthwith to the Company for
the benefit of the holders of the Senior Indebtedness by or on behalf of
the person holding such payment.
The provisions of this Section 12.4 shall not apply to any payment
with respect to which Section 12.2 would be applicable.
SECTION 12.5 Payment Permitted if No Default. Nothing contained in
this Article XII or elsewhere in this Indenture or in any of the Securities
shall prevent (a) the Company, at any time except during the pendency of
any case, proceeding, dissolution, liquidation or other winding up,
assignment for the benefit of creditors or other marshalling of assets
and liabilities of the Company referred to in Section 12.2 or under the
conditions described in Section 12.3 or 12.4, from making payments at any
time of the Principal Amount, interest or such other amounts as may be
provided for in Section 2.3(a), if any, as the case may be, in respect of
the Securities, or (b) the application by the Trustee or the retention by
any Holder of any money deposited with it hereunder to the payment of or on
account of the Principal Amount, interest or such other amounts as may be
provided for in Section 2.3(a), if any, as the case may be, in respect of
the Securities if the Trustee did not have, at the time provided in the
proviso to the first paragraph of Section 12.10, notice that such payment
would have been prohibited by the provisions of this Article XII.
SECTION 12.6 Subrogation Rights of Holders of Senior Indebtedness.
Subject to the payment in full of all Senior Indebtedness, the Holders of
the Securities shall be subrogated to the extent of the payments or
distributions made to the holders of such Senior Indebtedness pursuant to
the provisions of this Article XII to the rights of the holders of such
Senior Indebtedness to receive payments or distributions of cash, property
or securities applicable to the Senior Indebtedness until the Principal
Amount, interest or such other amounts as provided for in Section 2.3(a),
if any, as the case may be, in respect of the Securities shall be paid in
full. For purposes of such subrogation, no payments or distributions to the
holders of the Senior Indebtedness of any cash, property or securities to
which the Holders of the Securities or the Trustee would be entitled except
for the provisions of this Article XII, and no payments pursuant to the
provisions of this Article XII to the Company or to the holders of Senior
Indebtedness by Holders of the Securities or the Trustee, shall, as between
the Company, its creditors other than holders of Senior Indebtedness and
the Holders of the Securities, be deemed to be a payment or distribution by
the Company to or on account of the Senior Indebtedness.
SECTION 12.7 Provision Solely to Define Relative Rights. The
provisions of this Article XII are intended solely for the purpose of
defining the relative rights of the Holders of the Securities, on one hand,
and the holders of Senior Indebtedness, on the other hand. Nothing
contained in this Article XII or elsewhere in this Indenture or in the
Securities is intended to or shall:
(a) impair, as between the Company and the Holders of the
Securities, the obligation of the Company, which is absolute and
unconditional, to pay to the Holders of the Securities the
Principal Amount, interest or such other amounts as may be
provided for in Section 2.3(a), if any, as the case may be, in
respect of the Securities as and when the same shall become due
and payable in accordance with the terms of the Securities and
this Indenture and which, subject to the rights under this Article
XII of the holders of Senior Indebtedness, is intended to rank
equally with all other general obligations of the Company; or
(b) affect the relative rights against the Company of the
Holders of the Securities and creditors of the Company other than
holders of Senior Indebtedness; or
(c) prevent the Trustee or the Holder of any Security from
exercising all remedies otherwise permitted by applicable law upon
default under this Indenture, subject to the rights, if any, under
this Article XII of the holders of Senior Indebtedness to receive
cash, property or securities otherwise payable or deliverable to
the Trustee or such Holder.
SECTION 12.8 Trustee to Effectuate Subordination. Each Holder of a
Security by such Holder's acceptance thereof authorizes and directs the
Trustee on such Holder's behalf to take such action as may be necessary or
appropriate to effectuate the subordination provided in this Article XII
and appoints the Trustee such Holder's attorney-in-fact for any and all
such purposes.
SECTION 12.9 No Waiver of Subordination Provisions. No right of
any present or future holder of any Senior Indebtedness to enforce
subordination as herein provided shall at any time in any way be prejudiced
or impaired by any act or failure to act on the part of the Company or by
any act or failure to act, in good faith, by any such holder, or by any
noncompliance 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.
Without in any way limiting the generality of the foregoing
paragraph, the holders of Senior Indebtedness may, at any time and from
time to time, without the consent of, or notice to, the Trustee or the
Holders of the Securities, without incurring responsibility to the Holders
of the Securities and without impairing or releasing the subordination
provided in this Article XII or the obligations hereunder of the Holders of
the Securities to the holders of Senior Indebtedness, do any one or more of
the following: (i) change the manner, place or terms of payment or extend
the time of payment of, or renew or alter, Senior Indebtedness, or
otherwise amend or supplement in any manner Senior Indebtedness or any
instrument evidencing the same or any agreement under which Senior
Indebtedness is outstanding; (ii) sell, exchange, release or otherwise
dispose of any property pledged, mortgaged or otherwise securing Senior
Indebtedness; (iii) release any person liable in any manner for the
collection of Senior Indebtedness and (iv) exercise or refrain from
exercising any rights against the Company or any other person.
SECTION 12.10 Notice to Trustee. The Company shall give prompt
written notice to the Trustee of any fact known to the Company which would
prohibit the making of any payment to or by the Trustee in respect of the
Securities. Failure to give such notice shall not affect the subordination
of the Securities to Senior Indebtedness. Notwithstanding the provisions of
this Article XII or any other provision of this Indenture, the Trustee
shall not be charged with knowledge of the existence of any facts which
would prohibit the making of any payment to or by the Trustee in respect of
the Securities, unless and until the Trustee shall have received written
notice thereof at the address specified in Section 13.2 from the Company or
a holder of Senior Indebtedness or from any trustee or agent therefor; and,
prior to the receipt of any such written notice, the Trustee, subject to
the provisions of Section 7.1, shall be entitled in all respects to assume
that no such facts exist; provided, however, that if a Trust Officer of the
Trustee shall not have received, at least three Business Days prior to the
date upon which by the terms hereof any such money may become payable for
any purpose (including, without limitation, the payment of the Principal
Amount, interest or such other amounts as may be provided for in Section
2.3(a), if any, as the case may be, in respect of any Security), the notice
with respect to such money provided for in this Section 12.10, then,
anything herein contained to the contrary notwithstanding, the Trustee
shall have full 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 within
three Business Days prior to such date.
Subject to the provisions of Section 7.1, the Trustee shall be
entitled to rely on the delivery to it of a written notice by a person
representing himself to be a holder of Senior Indebtedness (or a trustee or
agent on behalf of such holder) to establish that such notice has been
given by a holder of Senior Indebtedness (or a trustee or agent on behalf
of any such holder). In the event that the Trustee determines in good faith
that further evidence is required with respect to the right of any person
as a holder of Senior Indebtedness to participate in any payment or
distribution pursuant to this Article XII, the Trustee may request such
person to furnish evidence to the reasonable satisfaction of the Trustee as
to the amount of Senior Indebtedness held by such person, the extent to
which such person is entitled to participate in such payment or
distribution and any other facts pertinent to the rights of such person
under this Article XII, and if such evidence is not furnished, the Trustee
may defer any payment which it may be required to make for the benefit of
such person pursuant to the terms of this Indenture pending judicial
determination as to the right of such person to receive such payment.
SECTION 12.11 Reliance on Judicial Order or Certificate of
Liquidating Agent. Upon any payment or distribution of assets of the
Company referred to in this Article XII, the Trustee, subject to the
provisions of Section 7.1, and the Holders of the Securities shall be
entitled to rely upon any order or decree entered by any court of competent
jurisdiction in which such insolvency, bankruptcy, receivership,
liquidation, reorganization, dissolution, winding up or similar case or
proceeding is pending, or a certificate of the trustee in bankruptcy,
liquidating trustee, custodian, receiver, assignee for the benefit of
creditors, agent or other person making such payment or distribution,
delivered to the Trustee or to the Holders of Securities, for the purpose
of ascertaining the persons entitled to participate in such payment or
distribution, the holders of Senior Indebtedness and other indebtedness of
the Company, the amount thereof or payable thereon, the amount or amounts
paid or distributed thereon and all other facts pertinent thereto or to
this Article XII.
SECTION 12.12 Trustee Not Fiduciary for Holders of Senior
Indebtedness. The Trustee shall not be deemed to owe any fiduciary duty
to the holders of Senior Indebtedness and shall not be liable to any such
holders if the Trustee shall in good faith mistakenly pay over or
distribute to Holders of Securities or to the Company or to any other
person cash, property or securities to which any holders of Senior
Indebtedness shall be entitled by virtue of this Article XII or otherwise.
The Trustee shall not be charged with knowledge of the existence of Senior
Indebtedness or of any facts that would prohibit any payment hereunder
unless a Trust Officer of the Trustee shall have received notice to that
effect at the address of the Trustee set forth in Section 13.2. With
respect to the holders of Senior Indebtedness, the Trustee undertakes to
perform or to observe only such of its covenants or obligations as are
specifically set forth in this Article XII and no implied covenants or
obligations with respect to holders of Senior Indebtedness shall be read
into this Indenture against the Trustee.
SECTION 12.13 Rights of Trustee as Holder of Senior Indebtedness;
Preservation of Trustee's Rights. The Trustee in its individual capacity
shall be entitled to all the rights set forth in this Article XII with
respect to any Senior Indebtedness which may at any time be held by it, to
the same extent as any other holder of Senior Indebtedness, and nothing in
this Indenture shall deprive the Trustee of any of its rights as such
holder.
Nothing in this Article XII shall apply to claims of, or payments
to, the Trustee under or pursuant to Section 7.7.
SECTION 12.14 Article XII Applicable to Paying Agents. The term
"Trustee" as used in this Article XII shall (unless the context otherwise
requires) be construed as extending to and including the Paying Agent
within its meaning as fully for all intents and purposes as if the Paying
Agent were named in this Article XII in addition to or in place of the
Trustee; provided, however, that Sections 12.10 and 12.12 shall not apply
to the Company or any Affiliate of the Company if it or such Affiliate acts
as Paying Agent.
ARTICLE XIII
MISCELLANEOUS
SECTION 13.1 Trust Indenture Act Controls. If any provision of this
Indenture limits, qualifies or conflicts with another provision hereof
which is required to be included in this Indenture by the TIA, the required
provision shall control.
SECTION 13.2 Notices. Any notice or communication shall be in
writing and delivered in person or mailed by first-class mail, postage
prepaid, addressed as follows:
if to the Company:
Asset Investors Corporation
3410 South Galena Street, Suite 210
Denver, Colorado 80231
Attention: [ ]
if to the Trustee:
United States Trust Company of New York
114 West 47th Street
New York, NY 10036
Attention: Corporate Trust Department
The Company or the Trustee by notice to the other may designate
additional or different addresses for subsequent notices or communications.
Any notice or communication given to a Holder of Securities shall
be mailed to such Securityholder at the Securityholder's address as it
appears on the registration books of the Registrar and shall be
sufficiently given if so mailed within the time prescribed.
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.
Failure to mail a notice or communication to a Securityholder or
any defect in it shall not affect its sufficiency with respect to other
Holders of Securities of the same series. If a notice or communication is
mailed in the manner provided above, it is duly given, whether or not
received by the addressee.
If the Company mails a notice or communication to the Holders of
Securities of a particular series, it shall mail a copy to the Trustee and
each Registrar, co-registrar or Paying Agent, as the case may be, with
respect to such series.
In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give notice to
Holders of Securities by mail, then such notification as shall be made with
the acceptance of the Trustee shall constitute a sufficient notification
for every purpose hereunder. In any case where notice to Holders of
Securities is given by mail, neither the failure to mail such notice, nor
any defect in any notice so mailed, to any particular Holder of a Security
shall affect the sufficiency of such notice with respect to other Holders
of Securities given as provided herein.
SECTION 13.3 Communication by Holders with Other Holders.
Securityholders may communicate pursuant to TIA Section 312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities. The Company and the Trustee, the Registrar or the Paying Agent
with respect to a particular series of Securities, and anyone else, shall
have the protection of TIA Section 312(c).
SECTION 13.4 Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company to the Trustee to take any
action under this Indenture, the Company shall furnish to the Trustee:
(1) an Officers' Certificate stating that, in the opinion of
the signers, all conditions precedent, if any, provided for in
this Indenture relating to the proposed action have been complied
with; and
(2) an Opinion of Counsel stating that, in the opinion of
such counsel, all such conditions precedent have been complied
with.
SECTION 13.5 Statements Required in Certificate or Opinion. Each
Officers' Certificate or Opinion of Counsel with respect to compliance with
a covenant or condition provided for in this Indenture shall include:
(1) statement that each person making such Officers'
Certificate or Opinion of Counsel has read such covenant or
condition;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such Officers' Certificate or Opinion of Counsel are
based;
(3) a statement that, in the opinion of each such person, he
has made such examination or investigation as is necessary to
enable such person to express an informed opinion as to whether or
not such covenant or condition has been complied with; and
(4) a statement that, in the opinion of such person, such
covenant or condition has been complied with.
SECTION 13.6 Separability Clause. In case any provision in this
Indenture or in the Securities shall be invalid, illegal or unenforceable,
the validity, legality and enforceability of the remaining provisions shall
not in any way be affected or impaired thereby.
SECTION 13.7 Rules by Trustee, Paying Agent and Registrar. With
respect to the Securities of a particular series, the Trustee with respect
to such series of Securities may make reasonable rules for action by or a
meeting of Holders of such series of Securities. With respect to the
Securities of a particular series, the Registrar and the Paying Agent with
respect to such series of Securities may make reasonable rules for their
functions.
SECTION 13.8 Legal Holidays. A "Legal Holiday" is any day other
than a Business Day. If any specified date (including an Interest Payment
Date, Redemption Date or Stated Maturity of any Security, or a date for
giving notice) is a Legal Holiday at any Place of Payment or place for
giving notice, then (notwithstanding any other provision of this Indenture
or of the Securities other than a provision in the Securities of any series
which specifically states that such provision shall apply in lieu of this
Section) payment of interest or Principal need not be made at such Place of
Payment, or such other action need not be taken, on such date, but the
action shall be taken on the next succeeding day that is not a Legal
Holiday at such Place of Payment with the same force and effect as if made
on the Interest Payment Date or Redemption Date, or at the Stated Maturity
or such other date and to the extent applicable no Original Issue Discount
or interest, if any, shall accrue for the intervening period.
SECTION 13.9 Governing Law. THIS INDENTURE AND THE SECURITIES SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK, AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF
NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
SECTION 13.10 No Recourse Against Others. A director, officer,
employee or stockholder, as such, of the Company shall not have any
liability for any obligations of the Company under the Securities or this
Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. By accepting a Security, each Holder of such
Security shall waive and release all such liability. The waiver and
release shall be part of the consideration for the issue of the Securities.
SECTION 13.11 Successors. All agreements of the Company in this
Indenture and the Securities shall bind its respective successor. All
agreements of the Trustee in this Indenture shall bind its successor.
SECTION 13.12 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 13.13 Benefits of Indenture. Nothing in this Indenture or
in the Securities, express or implied, shall give to any person, other
than the parties hereto and their successors hereunder and the Holders of
Securities, any benefits or any legal or equitable right, remedy or claim
under this Indenture.
SECTION 13.14 Multiple Originals. The parties may sign any
number of copies of this Indenture. Each signed copy shall be an original,
but all of them together represent the same agreement. One signed copy is
enough to prove this Indenture.
ASSET INVESTORS CORPORATION
By:_____________________________________
Name:
Title:
Attest:
____________________________
Name:
Title:
UNITED STATES TRUST COMPANY OF NEW YORK,
as Trustee
By:_____________________________________
Name:
Title:
Attest:
_____________________________
Name:
Title:
EXHIBIT 5.1
PIPER & MARBURY
L.L.P.
CHARLES CENTER SOUTH
36 SOUTH CHARLES STREET
BALTIMORE, MARYLAND 21201-3018
410-539-2530 WASHINGTON
FAX: 410-539-0489 NEW YORK
PHILADELPHIA
EASTON
December 30,1998
ASSET INVESTORS CORPORATION
3410 South Galena Street
Denver, Colorado 80231
Registration Statement on Form S-3
Ladies and Gentlemen:
We have acted as special Maryland counsel to Asset Investors
Corporation, a Maryland corporation (the "Company"), in connection with the
registration under the Securities Act of 1933, as amended (the "Act"),
pursuant to a Registration Statement on Form S-3 (Registration Number
333-64615) of the Company filed with the Securities and Exchange Commission
(the "Commission") on September 29, 1998, (the "Registration Statement"),
including the prospectus included therein at the time the Registration
Statement is declared effective (the "Prospectus"), for offering (a) by the
Company from time to time of up to $200,000,000 aggregate initial offering
price of: (i) senior, senior subordinated, or subordinated debt securities
(the "Debt Securities") consisting of debentures, notes, and/or other
unsecured evidences of indebtedness; (ii) shares of Common Stock, par value
$0.01 per share (the "New Common Shares"); (iii) shares of Preferred Stock,
par value $0.01 per share (the "Preferred Stock"); and (iv) warrants to
purchase the New Common Shares (the "Common Stock Warrants"), the Preferred
Stock (the "Preferred Stock Warrants"), or the Debt Securities (the "Debt
Securities Warrants") as shall be designated by the Company at the time of
the offering (collectively, the "Warrants") and (b) by certain selling
stockholders of the Company, up to 1,545,007 shares (plus such additional
shares as may be issued pursuant to certain anti-dilution provisions) of
Common Stock, par value $0.01 per share (the "Exchange Shares") that may be
issued by the Company in exchange for up to 1,545,007 Partnership Common
Units (the "OP Units") of Asset Investors Operating Partnership, L.P., a
Delaware limited partnership (the "Operating Partnership") tendered for
redemption. The Debt Securities, the New Common Shares, the Preferred
Stock, and the Warrants are collectively referred to as the "Securities."
The Registration Statement provides that the Securities may be offered
separately or together, in separate series, in amounts, at prices, and on
terms to be set forth in one or more supplements to the Prospectus (each a
"Prospectus Supplement"). This opinion is being provided at your request in
connection with the filing of the Registration Statement.
In our capacity as special Maryland counsel, we have reviewed the
following documents:
(a) The Registration Statement, including the Prospectus (the
"Prospectus"), relating to the issuance of the Securities, which
forms part of the Registration Statement;
(b) The Charter, certified by the Department of Assessments
and Taxation of the State of Maryland (the "MSDAT"), and By-Laws, as
amended and restated and in effect on the date hereof, of the
Company;
(c) Certified resolutions of the Board of Directors of the
Company relating to (i) the Company's organization, (ii) the
authorization of the filing of the Registration Statement, and (iii)
the authorization of the issuance of the Securities and the Exchange
Shares, respectively;
(d) A short-form good standing certificate for the Company,
dated a recent date, issued by the MSDAT;
(e) A Certificate of Secretary (the "Certificate") of the
Company, dated the date hereof, as to certain factual matters;
(f) The Agreement of Limited Partnership of the Operating
Partnership dated as of April 30, 1997 (the "Partnership
Agreement"); and
(g) Such other documents as we have considered necessary to
the rendering of the opinions expressed below.
In our examination of the aforesaid documents, we have assumed,
without independent investigation, the genuineness of all signatures, the
legal capacity of all individuals who have executed any of the aforesaid
documents, the authenticity of all documents submitted to us as originals,
and the conformity with originals of all documents submitted to us as
copies (and the authenticity of the originals of such copies), and the
accuracy and completeness of all public records reviewed by us. In making
our examination of documents executed by parties other than the Company
(and for purposes of the documents referred to below to be executed by
parties other than the Company), we have assumed that such parties had the
power, corporate or other, to enter into and perform all obligations
thereunder, and we have also assumed the due authorization by all requisite
action, corporate or other, and the valid execution and delivery by such
parties of such documents and the validity, binding effect, and
enforceability thereof with respect to such parties. As to any facts
material to this opinion which we did not independently establish or
verify, we have relied solely upon the Certificate.
We further assume that:
(a) The issuance, sale, amount, and terms of the Securities
to be offered from time to time by the Company will be authorized
and determined by proper action of the Board of Directors (or where
permitted, a committee of the Board of Directors) of the Company
(each, a "Board Action") in accordance with the Company's Charter
and By-Laws and applicable law, in each case so as not to result in
a default under or breach of any agreement or instrument binding
upon the Company and so as to comply with any requirement or
restriction imposed by any court or governmental or regulatory body
having jurisdiction over the Company.
(b) The issuance, sale, amount, and terms of the Debt
Securities (including Debt Securities that are the subject of Debt
Securities Warrants) to be offered from time to time by the Company
will be authorized and determined by proper Board Action in
accordance with the Company's Charter and By-Laws and applicable
law, in each case so as not to result in a default under or breach
of any agreement or instrument binding upon the Company and so as to
comply with any requirement or restriction imposed by any court or
governmental or regulatory body having jurisdiction over the
Company.
(c) Any Debt Securities will be issued under a valid and
legally binding indenture (an "Indenture") that conforms to the
description thereof set forth in the Prospectus (and any applicable
Prospectus Supplement) and will comply with the Company's Charter
and By-Laws and applicable law.
(d) To the extent that the obligations of the Company under
any Debt Securities or related Indenture may be dependent upon such
matters, the financial institution to be identified in such
Indenture as trustee (the "Trustee") will be duly organized, validly
existing, and in good standing under the laws of its jurisdiction of
organization; the Trustee will be duly qualified to engage in the
activities contemplated by such Indenture; such Indenture will have
been duly authorized, executed, and delivered by the Trustee and
will constitute the legally valid and binding obligation of the
Trustee enforceable against the Trustee in accordance with its
terms; the Trustee will be in compliance, generally, with respect to
acting as Trustee under such Indenture, with applicable laws and
regulations; and the Trustee will have the requisite organizational
and legal power and authority to perform its obligations under such
Indenture.
(e) Appropriate debentures, notes, and/or other evidences of
indebtedness evidencing the Debt Securities will be executed and
authenticated in accordance with the Indenture, will be delivered
upon the issuance and sale of the Debt Securities, and will comply
with the Indenture, the Company's Charter and By-Laws, and
applicable law.
(f) Prior to the issuance of any shares of the New Common
Shares or the Preferred Stock or of any of the Common Stock Warrants
or the Preferred Stock Warrants, there will exist, under the Charter
of the Company, the requisite number of authorized but unissued
shares of the New Common Shares or the Preferred Stock (and
securities of any class into which any of the Preferred Stock may be
convertible), as the case may be, and that all actions necessary to
the creation of any such Preferred Stock (and securities of any class
into which any of the Preferred Stock may be convertible), whether
by Charter amendment or by classification or reclassification of
existing capital stock and the filing of Articles Supplementary,
will have been taken.
(g) Appropriate certificates representing shares of the New
Common Shares or the Preferred Stock will be executed and delivered
upon issuance and sale of any shares of the New Common Shares or the
Preferred Stock, as the case may be, and will comply with the
Company's Charter and By-Laws and applicable law.
(h) Any Warrants will be issued under a valid and legally
binding warrant agreement (a "Warrant Agreement") that conforms to
the description thereof set forth in the Prospectus (and any
applicable Prospectus Supplement), and will comply with the
Company's Charter and By-Laws and applicable law.
(i) To the extent that the obligations of the Company under
any Warrant Agreement may be dependent upon such matters, the
financial institution to be identified in such Warrant Agreement as
warrant agent (the "Warrant Agent") will be duly organized, validly
existing, and in good standing under the laws of its jurisdiction of
organization; the Warrant Agent will be duly qualified to engage in
the activities contemplated by such Warrant Agreement; such Warrant
Agreement will have been duly authorized, executed, and delivered by
the Warrant Agent and will constitute the legally valid and binding
obligation of the Warrant Agent enforceable against the Warrant
Agent in accordance with its terms; the Warrant Agent will be in
compliance, generally, with respect to acting as Warrant Agent under
such Warrant Agreement, with applicable laws and regulations; and
the Warrant Agent will have the requisite organizational and legal
power and authority to perform its obligations under such Warrant
Agreement.
(j) The underwriting agreements for offerings of the
Securities (each, an "Underwriting Agreement," and collectively, the
"Underwriting Agreements") will be valid and legally binding
contracts that conform to the description thereof set forth in the
Prospectus (and any applicable Prospectus Supplement).
(k) The issuance of the Common Shares, Preferred Stock and
the Exchange Shares will not violate any of the Ownership Limit
provisions as defined in Article VII of the Company's Charter.
Based upon the foregoing and having regard for such legal
consideration as we deem relevant, we are of the opinion and advise you
that:
1. When a series of the Debt Securities has been duly
authorized and established in accordance with the applicable Board
Action, the terms of the Indenture, the Company's Charter and
By-laws, and applicable law, and, upon execution, issuance, and
delivery of the Debt Securities against payment therefor in
accordance with the terms and provisions of such Board Action, the
Indenture, the Registration Statement (as declared effective under
the Act), the Prospectus or the applicable Prospectus Supplement,
and, if applicable, an Underwriting Agreement, or upon issuance and
delivery of the Debt Securities pursuant to the exercise of one or
more Debt Securities Warrants or the exchange of one or more series
of the Preferred Stock exchangeable into the Debt Securities, the
Debt Securities will constitute valid and legally binding
obligations of the Company.
2. Upon due authorization by Board Action of an issuance of
New Common Shares, and upon issuance and delivery of certificates
for shares of such New Common Shares against payment therefor in
accordance with the terms and provisions of such Board Action, the
Registration Statement (as declared effective under the Act), the
Prospectus or the applicable Prospectus Supplement and, if
applicable, an Underwriting Agreement, or upon issuance and delivery
of certificates for shares of the New Common Shares pursuant to the
exercise of one or more Common Stock Warrants or the conversion of
one or more series of the Preferred Stock convertible into the New
Common Shares, the shares of the New Common Shares represented by
such certificates will be duly authorized, validly issued, fully
paid, and non-assessable.
3. When a series of the Preferred Stock (and securities of
any class into which any of the Preferred Stock may be convertible)
has been duly authorized and established in accordance with the
applicable Board Action, the terms of the Company's Charter and
By-Laws, and applicable law, and, upon issuance and delivery of
certificates for shares of such series of the Preferred Stock
against payment therefor in accordance with the terms and provisions
of such Board Action, the Registration Statement (as declared
effective under the Act), the Prospectus or the applicable
Prospectus Supplement, and, if applicable, an Underwriting
Agreement, or upon issuance and delivery of certificates for shares
of the Preferred Stock pursuant to the exercise of one or more
Preferred Stock Warrants or the conversion of one or more series of
the Preferred Stock convertible into the Preferred Stock, the shares
of the Preferred Stock represented by such certificates will be duly
authorized, validly issued, fully paid, and non-assessable.
4. When the Warrants have been duly authorized and
established in accordance with the applicable Board Action, the
terms of the Company's Charter and By-Laws, and applicable law, and,
upon execution, issuance, and delivery of the Warrants against
payment therefor in accordance with the terms and provisions of such
Board Action, the Warrant Agreement, the Registration Statement (as
declared effective under the Act), the Prospectus or the applicable
Prospectus Supplement, and, if applicable, an Underwriting
Agreement, the Warrants will constitute valid and legally binding
obligations of the Company.
5. The Exchange Shares to be issued and exchanged for OP
Units tendered for redemption have been duly authorized by the Board
of Directors and, when such OP Units have been exchanged in
accordance with the terms of the Partnership Agreement and stock
certificates representing such Exchange Shares have been executed,
issued and delivered, such Exchange Shares will be validly issued,
fully paid, and non-assessable.
The opinion stated herein relating to the validity and binding
nature of obligations of the Company is subject to (i) the effect of any
applicable bankruptcy, insolvency (including, without limitation, all laws
relating to fraudulent transfers), reorganization, moratorium, or similar
laws affecting creditors' rights generally and (ii) the effect of general
principles of equity (regardless of whether considered in a proceeding in
equity or at law).
This opinion is limited to the laws of the State of Maryland,
exclusive of the securities or "blue sky" laws of the State of Maryland.
This opinion is rendered as of the date hereof. We assume no obligation to
update this opinion to reflect any facts or circumstances which may
hereafter come to our attention or changes in the law which may hereafter
occur. To the extent that any documents referred to herein are governed by
the law of a jurisdiction other than Maryland, we have assumed that the
laws of such jurisdiction are the same as the laws of Maryland.
We hereby consent to the filing of this opinion with the Commission
as Exhibit 5.1 to the Registration Statement and to the reference to our
firm under the heading "Legal Matters" in the Registration Statement. We
further consent to the reliance on this opinion by Skadden, Arps, Slate,
Meagher & Flom LLP, in rendering their opinion to the Company in connection
with the filing of the Registration Statement. This opinion is limited to
the matters set forth herein, and no other opinion should be inferred
beyond the matters expressly stated.
Very truly yours,
/s/ Piper & Marbury L.L.P.
EXHIBIT 8.1
Skadden, Arps, Slate, Meagher & Flom llp
300 SOUTH GRAND AVENUE
LOS ANGELES, CALIFORNIA 90071-3144
---
(213) 687-5000
Fax: (213) 687-5600
December 31, 1998
347640
Asset Investors Corporation
3410 South Galena Street
Suite 210
Denver, Colorado 80231
Re: Certain Federal Income Tax Matters
Ladies and Gentlemen:
We have acted as special counsel to Asset Investors
Corporation, a Maryland corporation ("AIC"), in connection with the
preparation of the Registration Statement on Form S-3 (File No. 333-64615),
as initially filed with the Securities and Exchange Commission on September
29, 1998, and subsequently amended by Amendment No. 1 thereto filed on
December 31, 1998 (as so amended, the "Registration Statement"). This
opinion is being delivered at your request in connection with the filing of
the Registration Statement. All capitalized terms used herein, unless
otherwise specified, have the meanings ascribed to them in the Registration
Statement.
In connection with this opinion, we have examined originals or
copies, certified or otherwise identified to our satisfaction, of the
Registration Statement and such other documentation and information
provided by you as we have deemed necessary or appropriate as a basis for
the opinion set forth herein. In addition, you have provided us with, and
we are relying upon, certificates containing certain representations and
covenants of officers of AIC and certain affiliated entities (the
"Officers' Certificates") relating to, among other things, the actual and
proposed operations of AIC and the entities in which it holds, or has held,
a direct or indirect interest (the "Company"). For purposes of our opinion,
we have not made an independent investigation of the facts and
representations set forth in the Officers' Certificates, the Registration
Statement, or in any other document. We have, consequently, assumed and
relied on your representations that the information presented in such
documents (including representations as to the nature of the Company's
assets and operations in prior years), or otherwise furnished to us,
accurately and completely describes all material facts relevant to our
opinion. No facts have come to our attention, however, that would cause us
to question the accuracy and completeness of such facts or documents in a
material way. We have not historically represented the Company, and
representations upon which we are relying relate, in part, to periods
during which we were not engaged by the Company. We have also relied upon
conclusions 1., 2., and 3., and the analysis corresponding thereto,
contained in the opinion of Ernst & Young LLP dated December 31, 1998.
In our review of certain documents in connection with our
opinion as expressed below, we have assumed the legal capacity of all
natural persons, the genuineness of all signatures, the authenticity of all
documents submitted to us as originals, the conformity to original
documents of all documents submitted to us as certified, conformed or
photostatic copies, and the authenticity of the originals of such copies.
Where documents have been provided to us in draft form, we have assumed
that the final executed versions of such documents will not differ
materially from such drafts.
Our opinion is also based on the correctness of the following
assumptions: (i) AIC and each of the entities comprising the Company has
been and will continue to be operated in accordance with the laws of the
jurisdiction in which it was formed and in the manner described in the
relevant partnership agreement or other organizational documents, (ii)
there will be no changes in the applicable laws of the State of Maryland or
of any other state under the laws of which any of the entities comprising
the Company have been formed, (iii) each of the written agreements to which
the Company is a party will be implemented, construed and enforced in
accordance with its terms, without regard to any parol evidence, and (iv)
any representation or statement of intent as to events occurring in the
future, or made on the basis of knowledge or belief, or similarly
qualified, is correct and accurate without such qualification.
In rendering our opinion, we have considered and relied upon
the Internal Revenue Code of 1986, as amended (the "Code"), the regulations
promulgated thereunder ("Regulations"), administrative rulings and the
other interpretations of the Code and the Regulations by the courts and the
Internal Revenue Service ("IRS"), all as they exist at the date hereof. It
should be noted that the Code, Regulations, judicial decisions, and
administrative interpretations are subject to change at any time and, in
some circumstances, with retroactive effect. A material change that is made
after the date hereof in any of the foregoing bases for our opinion could
affect our conclusions herein. In this regard, an opinion of counsel with
respect to an issue merely represents counsel's best judgment as to the
outcome on the merits with respect to such issue, is not binding on the IRS
or the courts, and it is not a guarantee that the IRS will not assert a
contrary position with respect to such issue or that a court will not
sustain such a position if asserted by the IRS.
We express no opinion as to the laws of any jurisdiction other
than the Federal laws of the United States of America to the extent
specifically referred to herein.
Based on the foregoing, we are of the opinion that:
1. Commencing with AIC's taxable year that began on January 1,
1998, AIC was organized in conformity with the requirements for
qualification as a real estate investment trust ("REIT") under the Code,
and its actual method of operation from January 1, 1998 through the date of
this letter has enabled, and its proposed method of operation will enable
it to meet the requirements for qualification and taxation as a REIT. We
express no opinion with respect to any prior taxable year. As noted in the
Registration Statement, AIC's qualification and taxation as a REIT depend
upon its ability to meet, through actual annual operating results, certain
requirements, including requirements relating to distribution levels and
diversity of stock ownership, and various other qualification requirements
imposed by the Code, compliance with which will not be reviewed by us.
Accordingly, no assurance can be given that the actual results of AIC's
operation for any one taxable year will satisfy the requirements for
qualification and taxation as a REIT under the Code.
2. Although the discussion set forth in the Registration
Statement under the caption "Certain Federal Income Tax Considerations"
does not purport to discuss all possible United States federal income tax
consequences of the purchase, ownership and disposition of the Securities,
such discussion, although general in nature, constitutes, in all material
respects, a fair and accurate summary under current law of certain material
United States federal income tax consequences of the purchase, ownership
and disposition of the Securities discussed therein by a holder who
purchases such Securities, subject to the qualifications set forth therein.
The United States federal income tax consequences of an investment in the
Securities by an investor will depend upon that holder's particular
situation, and we express no opinion as to the completeness of the
discussion set forth in "Certain Federal Income Tax Considerations" as
applied to any particular holder.
Other than as expressly stated above, we express no opinion on
any issue relating to AIC, the Company, or any investment therein. This
opinion is intended for the exclusive use of the person to whom it is
addressed and, except as set forth herein, it may not be used, circulated,
quoted or relied upon for any other purpose without our prior written
consent. We consent to the filing of this opinion as an exhibit to the
Registration Statement, and to the references to Skadden, Arps, Slate,
Meagher & Flom LLP under the caption "Certain Federal Income Tax
Considerations" in the Registration Statement. In giving this consent, we
do not thereby admit that we are within the category of persons whose
consent is required under Section 7 of the Securities Act of 1933, as
amended, or the rules or regulations of the Securities and Exchange
Commission thereunder. This opinion is expressed as of the date hereof, and
we disclaim any undertaking to advise you of any subsequent changes in the
matters stated, represented, or assumed herein, or of any subsequent
changes in applicable law.
Very truly yours,
Skadden, Arps, Slate, Meagher &
Flom LLP
EXHIBIT 12.1
Asset Investors Corporation
Ratio of Earnings to Fixed Charges
(dollar amounts in thousands)
<TABLE>
<CAPTION>
Nine
Months
Ended
September Year Ended December 31,
30,
------------------------------------------------------
1998 1997 1996 1995 1994 1993
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net income (loss) before
minority interest $ (250) $7,192 $9,673 $14,626 $ 13,865 $ (31,138)
Add: Interest expense 1,390 368 88 36,106 118,338 249,392
--------------------------------------------------------------
Total earnings $1,140 $7,560 $9,761 $50,732 $ 132,203 $ 218,254
==============================================================
Interest expense $1,390 $ 368 $ 88 $36,106 $ 118,338 $ 249,392
Interest capitalized 15 -- -- -- -- --
--------------------------------------------------------------
Total fixed charges $1,405 $ 368 $ 88 $36,106 $ 118,338 $ 249,392
==============================================================
Ratio of earnings to fixed
charges 0.81 20.54 110.92 1.41 1.12 0.88
==============================================================
</TABLE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts"
in the Registration Statement (Form S-3 No.333-64615) and related
Prospectus of and "Certain Federal Income Tax Considerations" Asset
Investors Corporation for the registration of debt securities, preferred
stock, common stock and warrants and to the incorporation by reference
therein of our reports (a) dated February 6, 1998, with respect to the
consolidated financial statements and schedules of Asset Investors
Corporation and (b) dated February 6,1998 with respect to the financial
statements of Commercial Assets, Inc., both of which are included in the
Asset Investors Corporation Annual Report (Form 10-K) for the year ended
December 31,1997, filed with the Securities and Exchange Commission. In
addition, we consent to the incorporation by reference of (a) our report
dated April 16, 1998 with respect to the Statement of Excess of Revenues
Over Specific Operating Expenses of The Salem Farms Manufactured Home
Community and (b) our report dated April 16, 1998 with respect to the
Statement of Excess of Revenues Over Specific Operating Expenses of The
Mullica Woods Adult Community, both of which are included in Amendment No.
1 to Asset Investors Corporation's Current Report on Form 8-K dated May 13,
1998 filed with the Securities and Exchange Commission; (c) our report
dated June 9, 1998 with respect to the Statement of Excess of Revenues Over
Specific Operating Expenses of The Brentwood West Manufactured Home
Community and (d) our report dated June 9, 1998 with respect to the
Statement of Excess of Revenues Over Specific Operating Expenses of The
Serendipity Manufactured Home Community, both of which are included in
Amendment No. 1 to Asset Investors Corporation's Current Report on Form 8-K
dated July 29, 1998, filed with the Securities and Exchange Commission; and
(e) our report dated September 25, 1998 with respect to the Statement of
Excess of Revenues Over Specific Operating Expenses of The Gulfstream
Harbor Manufactured Home Communities included in Amendment No. 1 to Asset
Investors Corporation's Current Report on Form 8-K dated September 28,
1998, filed with the Securities and Exchange Commission.
Ernst & Young LLP
December 31, 1998
Denver, Colorado
