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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported): JULY 24, 1998
LENNAR CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 1-11749 59-1281887
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File No.) Identification No.)
700 NORTHWEST 107TH AVENUE, MIAMI, FLORIDA 33172
(Address of Principal Executive Office) (Zip Code)
Registrant's Telephone Number, Including Area Code: (305) 559-4000
NOT APPLICABLE
(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS
On February 3, 1998, Lennar Corporation (the "Company") filed a
registration statement on Form S-3 (File No. 333-45527) (the "Registration
Statement"), relating to $500,000,000 aggregate offering price of common stock,
preferred stock, depositary shares representing shares of preferred stock,
warrants and debt securities with the Securities and Exchange Commission (the
"SEC"). On February 12, 1998 the Registration Statement was declared effective
by the SEC. The Company has offered for a total of $200,040,030 ($230,046,035 if
an underwriters' over-allotment option is exercised in full) Zero Coupon Senior
Convertible Debentures Due 2018 (the "Debentures") with an aggregate principal
amount of $431,000,000 ($495,650,000 if the underwriter's over-allotment option
is exercised in full) at maturity in an underwritten public offering through
the several underwriters (the "Underwriters") listed on Schedule I to the
Underwriting Agreement which is filed as Exhibit 1.1 to this Report. The
Debentures are being issued pursuant to an Indenture dated December 31, 1997
and a First Supplemental Indenture dated as of July 29, 1998. The First
Supplemental Indenture is filed as Exhibit 4.1 to this Report.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(c) Exhibits
1.1 Underwriting Agreement dated July 24, 1998 by and between the
Company and the Underwriters named therein.
4.1 Form of First Supplemental Indenture dated as of July 29,
1998 between the Company and the Trustee
23.1 Consent of Deloitte & Touche LLP
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
LENNAR CORPORATION
By: /s/ Stuart A. Miller
------------------------------------
Stuart A. Miller
President
Date: July 28, 1998
S-1
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EXHIBIT INDEX
EXHIBIT
1.1 Underwriting Agreement dated July 24, 1998 by and between the
Company and the Underwriters named therein
4.1 Form of First Supplemental Indenture dated as of July 29, 1998
between the Company and the Trustee
23.1 Consent of Deloitte & Touche LLP
E-1
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EXHIBIT 1.1
LENNAR CORPORATION
$431,000,000
Zero Coupon Senior Convertible Debentures Due 2018
UNDERWRITING AGREEMENT
July 24, 1998
BT Alex. Brown Incorporated
Smith Barney Inc.
c/o BT Alex. Brown Incorporated
One Bankers Trust Plaza
130 Liberty Street
New York, New York 10006
Ladies and Gentlemen:
Lennar Corporation, a Delaware corporation (the "Company"), proposes to
issue and sell to you (together, the "Underwriters"), severally and not jointly,
$431,000,000 aggregate principal amount at maturity (the "Firm Securities") of
the Company's Zero Coupon Senior Convertible Debentures Due 2018 (the
"Debentures"). The respective principal amounts at maturity of the Firm
Securities to be so purchased by the several Underwriters are set forth opposite
your names in Schedule I hereto. The Company also proposes to sell at the
Underwriters' option an aggregate of up to an additional $64,650,000 principal
amount at maturity (the "Option Securities") of Debentures as set forth below.
The Firm Securities and the Option Securities (to the extent the aforementioned
option is exercised) are herein collectively called the "Securities." The
Securities are to be issued under an Indenture dated as of December 31, 1997
(the "Base Indenture") between the Company and First National Bank of Chicago,
as trustee (the "Trustee"), as supplemented by a Supplemental Indenture to be
dated as of July 29, 1998 (the "Supplemental Indenture"). The Base Indenture as
supplemented by the Supplemental Indenture is referred to herein as the
"Indenture".
The holders of Securities will be entitled at any time on or prior to
the maturity date of the Securities to convert any
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Securities, unless previously redeemed or purchased by the Company, into shares
of the Company's Common Stock, par value $.10 per share ("Common Stock"), in
accordance with the terms of the Securities and the Indenture, at an initial
conversion rate of 12.3768 shares of Common Stock per $1,000 principal amount at
maturity.
In consideration of the mutual agreements contained herein and of the
interests of the parties in the transactions contemplated hereby, the parties
hereto agree as follows:
I. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to each of the
Underwriters as follows:
*A.A registration statement on Form S-3 (File No. 333-45527),
including a basic prospectus relating to certain debt and equity securities to
be offered from time to time by the Company, has been prepared by the Company in
conformity with the requirements of the Securities Act of 1933, as amended (the
"Act"), and the Rules and Regulations (the "Rules and Regulations") of the
Securities and Exchange Commission (the "Commission") thereunder and has been
filed with the Commission. The Company has complied with the conditions for the
use of Form S-3. Copies of such registration statement, including any amendments
thereto, the preliminary prospectuses (meeting the requirements of the Rules and
Regulations) contained therein and the exhibits, financial statements and
schedules, as finally amended and revised, as well as copies of any Preliminary
Prospectuses (as defined below), have heretofore been delivered by the Company
to you. Such registration statement, which is herein referred to as the
"Registration Statement," has become effective under the Act and no
post-effective amendment to the Registration Statement has been filed as of the
date of this Agreement. The Company has filed with the Commission pursuant to
Rule 424(b) a preliminary supplement to the basic prospectus included in the
Registration Statement and will hereafter file with the Commission pursuant to
Rule 424(b) a final supplement to such basic prospectus, in each case relating
to the Securities and the offering thereof. "Basic Prospectus" means the
prospectus included in the Registration Statement at the time it became
effective under the Act. "Prospectus" means the Basic Prospectus, together with
the final prospectus supplement relating to the Securities first filed with the
Commission pursuant to Rule 424(b). Each preliminary prospectus supplement to
the Basic Prospectus which describes the Securities and the
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offering thereof and is used prior to the filing of the Prospectus with the
Commission, together with the Basic Prospectus, is herein referred to as a
"Preliminary Prospectus." Any reference herein to the Registration Statement,
the Basic Prospectus, any Preliminary Prospectus or to the Prospectus shall be
deemed to refer to and include any documents incorporated by reference therein,
and, in the case of any reference herein to any Prospectus, also shall be deemed
to include any documents incorporated by reference therein, and any supplements
or amendments thereto, filed with the Commission after the date of filing of the
Prospectus under Rule 424(b) or 430A, and prior to the termination of the
offering of the Securities by the Underwriters.
*B.The Company has been duly organized and is validly existing
as a corporation in good standing under the laws of the State of Delaware, with
corporate or other power and authority to own or lease its properties and
conduct its business as described in the Registration Statement. Each of the
Subsidiaries (as defined below) and the Land Partnership (as defined below) has
been duly organized and is validly existing as a corporation or partnership, as
applicable, in good standing under the laws of the jurisdiction of its
incorporation or formation, with corporate or other power and authority to own
or lease its properties and conduct its business as described in the
Registration Statement. The Company, each of the Subsidiaries and the Land
Partnership are duly qualified to transact business in all jurisdictions in
which the conduct of their business requires such qualification, except where
the failure to be so qualified would not, individually or in the aggregate, have
a material adverse effect on the condition, financial or otherwise, of the
Company and the Subsidiaries taken as a whole or the business, management,
properties, assets, rights, operations or prospects of the Company and the
Subsidiaries taken as a whole (a "Material Adverse Effect"). The Subsidiaries
listed on Exhibit 21 to the Company's Annual Report on Form 10-K for the year
ended November 30, 1997 constitute all the Subsidiaries at November 30, 1997
other than Subsidiaries that, if considered in the aggregate as a single
subsidiary, would not have constituted a "significant subsidiary" of the
Company, within the meaning of Rule 1-02(w) of the Commission's Regulation S-X.
There are no "significant subsidiaries" of the Company other than the Designated
Subsidiaries (as defined below), and, at the date of this Agreement, the
Subsidiaries other than the Designated Subsidiaries, if considered in the
aggregate as a single subsidiary, would not constitute a "significant
subsidiary" of the Company. The outstanding shares of capital stock of each of
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the Subsidiaries have been duly authorized and validly issued, are fully paid
and non-assessable and are owned by the Company or another Subsidiary free and
clear of all liens, encumbrances and equities and claims (except for the pledge
of the shares of certain of the direct and indirect subsidiaries of Lennar
Financial Services, Inc. ("LFS") to the lenders under LFS's credit agreement);
and no options, warrants or other rights to purchase, agreements or other
obligations to issue or other rights to convert any obligations into shares of
capital stock or ownership interests in the Subsidiaries or the Land Partnership
are outstanding. The Company indirectly owns a 50% interest in Lennar Land
Partners, a Delaware general partnership (the "Land Partnership"). Such interest
in the Land Partnership has been duly authorized and validly issued and is owned
by a Subsidiary indirectly wholly owned by the Company, free and clear of all
liens, encumbrances and equities and claims. For purposes of this Agreement, a
"Subsidiary" means a direct or indirect "subsidiary" of the Company, as such
term is defined in Rule 405 under the Act. For purposes of this Agreement, the
following Subsidiaries are "Designated Subsidiaries": Lennar Homes, Inc., Lennar
Homes of Arizona, Inc., Lennar Homes of California, Inc., Lennar Homes of Texas,
Inc., Houston Village Builders, Inc., Friendswood Land Development Company,
Lennar Management, Inc., Greystone Homes, Inc., Universal American Mortgage
Company, UAMC Asset Corp. and LFS.
*C.The information set forth under the caption
"Capitalization" in the Prospectus is true and correct. The outstanding shares
of Common Stock and the Company's Class B Common Stock, par value $.10 per share
("Class B Common Stock"), have been duly authorized and validly issued and are
fully paid and non-assessable; and no preemptive rights of stockholders exist
with respect to the capital stock or any other securities of the Company or the
issue and sale thereof. Neither the filing of the Registration Statement nor the
offering or sale of the Securities as contemplated by this Agreement gives rise
to any rights, other than those which have been waived or satisfied, for or
relating to the registration of any shares of Common Stock.
*D.The Securities are convertible into Common Stock in
accordance with the terms of the Indenture and the Securities; the shares of
Common Stock issuable upon conversion of the Securities have been duly issued
and reserved for issuance upon such conversion and, if and when issued upon such
conversion, will be validly issued, fully paid and non-assessable and will
conform to the description thereof contained in the Registration Statement.
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*E.The Company has all requisite corporate power and authority
to execute, deliver and perform each of its obligations under the Securities.
The Securities, when issued, will be in the form contemplated by the Indenture.
The Securities have each been duly and validly authorized by the Company and,
when executed by the Company and authenticated by the Trustee in accordance with
the provisions of the Indenture and delivered to and paid for by the
Underwriters in accordance with the terms of this Agreement, will have been duly
executed, issued and delivered and will constitute valid and legally binding
obligations of the Company (assuming the due authorization, execution and
delivery of the Indenture by the Trustee and the due authorization and delivery
of the Securities by the Trustee in accordance with the Indenture), entitled to
the benefits of the Indenture, and enforceable against the Company in accordance
with their terms, except that the enforcement thereof may be subject to (i)
bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or
other similar laws now or hereafter in effect relating to creditors' rights
generally, and (ii) general principles of equity and the discretion of the court
before which any proceeding therefor may be brought (regardless of whether such
enforcement is considered in a proceeding in equity or at law).
*F.The Company has all requisite corporate power and authority
to execute, deliver and perform its obligations under the Indenture. The
Indenture has been duly qualified under the Trust Indenture Act of 1939, as
amended (the "Trust Indenture Act"). The Indenture has been duly and validly
authorized by the Company, and the Base Indenture (assuming the due
authorization, execution and delivery by the Trustee) has been duly executed and
delivered and constitutes a valid and legally binding agreement of the Company,
enforceable against the Company in accordance with its terms, except that the
enforcement thereof may be subject to (i) bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally and (ii) general
principles of equity and the discretion of the court before which any proceeding
therefor may be brought (regardless of whether such enforcement is considered in
a proceeding in equity or at law). When the Supplemental Indenture is executed
and delivered by the Company (assuming the due authorization, execution and
delivery by the Trustee), the Supplemental Indenture will have been duly
executed and delivered and the Indenture will constitute a valid and legally
binding agreement of the Company, enforceable against the Company in accordance
with its terms, except that the enforcement thereof may be subject to (i)
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bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or
other similar laws now or hereafter in effect relating to creditors' rights
generally and (ii) general principles of equity and the discretion of the court
before which any proceeding therefor may be brought (regardless of whether such
enforcement is considered in a proceeding in equity or at law).
*G.Each of the Indenture and the Securities conforms in all
material respects to the description thereof in the Prospectus as supplemented
or amended.
*H.The Company has all requisite corporate power and authority
to execute, deliver and perform its obligations under this Agreement and to
consummate the transactions contemplated hereby. This Agreement and the
consummation by the Company of the transactions contemplated hereby have been
duly and validly authorized by the Company. This Agreement has been duly
executed and delivered by the Company.
*I.The Commission has not issued an order preventing or
suspending the use of any Prospectus relating to the proposed offering of the
Securities nor instituted proceedings for that purpose. The Registration
Statement contains, and the Prospectus and any amendments or supplements thereto
will contain, all statements which are required to be stated therein by, and
will conform, to the requirements of the Act and the Rules and Regulations and
the Trust Indenture Act. The documents incorporated by reference in the
Prospectus, at the time filed with the Commission conformed, in all material
respects to the requirements of the Securities Exchange Act of 1934 (the
"Exchange Act") or the Act, as applicable, and the rules and regulations of the
Commission thereunder. The Registration Statement and any amendment thereto do
not contain, and will not contain, any untrue statement of a material fact and
do not omit, and will not omit, to state any material fact required to be stated
therein or necessary to make the statements therein not misleading. The
Prospectus and any amendments and supplements thereto do not contain, and will
not contain, any untrue statement of material fact; and do not omit, and will
not omit, to state any material fact required to be stated therein or necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading; provided, however, that the Company makes no
representations or warranties as to information contained in or omitted from the
Registration Statement or the Prospectus, or any such amendment or supplement,
in reliance upon, and in conformity with, written
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information furnished to the Company by or on behalf of any Underwriter
specifically for use in the preparation thereof.
*J.The consolidated financial statements of the Company and
the Subsidiaries, together with related notes and schedules, as incorporated by
reference in the Prospectus, present fairly the financial position and the
results of operations and cash flows of the Company and the consolidated
Subsidiaries, at the indicated dates and for the indicated periods. Such
financial statements and related schedules have been prepared in accordance with
generally accepted accounting principles, consistently applied throughout the
periods involved, except as disclosed therein, and all adjustments necessary for
a fair presentation of results for such periods have been made. The summary
financial and statistical data included or incorporated by reference in the
Prospectus presents fairly the information shown therein and such data has been
compiled on a basis consistent with the financial statements presented therein
and the books and records of the Company. The pro forma financial statements and
other pro forma financial information included or incorporated by reference in
the Registration Statement and the Prospectus present fairly the information
shown therein, have been prepared in accordance with the Commission's rules and
guidelines with respect to pro forma financial statements, have been properly
compiled on the pro forma bases described therein, and, in the opinion of the
Company, the assumptions used in the preparation thereof are reasonable and the
adjustments used therein are appropriate to give effect to the transactions or
circumstances referred to therein.
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*K.Each of Deloitte & Touche LLP and Ernst & Young LLP, who
have certified certain of the financial statements filed with the Commission and
incorporated by reference in the Registration Statement and the Prospectus, are
independent public accountants as required by the Act and the Rules and
Regulations.
*L.There is no action, suit, claim or proceeding pending or,
to the knowledge of the Company, threatened against the Company, any of the
Subsidiaries or the Land Partnership before any court or administrative agency
or otherwise which if determined adversely to the Company, any of its
Subsidiaries or the Land Partnership might result in any material adverse change
in the earnings, business, management, properties, assets, rights, operations,
condition (financial or otherwise) or prospects of the Company and the
Subsidiaries taken as a whole or might prevent the consummation of the
transactions contemplated hereby, except as set forth in the Prospectus.
*M.The Company, the Subsidiaries and the Land Partnership have
good and marketable title to all of the properties and assets reflected in the
financial statements (or as described in the Registration Statement or the
Prospectus) hereinabove described, subject to no lien, mortgage, pledge, charge
or encumbrance of any kind except those reflected in such financial statements
(or as described in the Registration Statement or the Prospectus) or which are
not material in amount. The Company and the Subsidiaries occupy their leased
properties under valid and binding leases conforming in all material respects to
the description thereof set forth or incorporated by reference in the
Registration Statement or the Prospectus.
*N.The Company, the Subsidiaries and the Land Partnership have
timely filed all Federal, State, local and foreign tax returns which have been
required to be filed (taking into account any applicable extensions) and have
paid all taxes indicated by said returns and all assessments received by them or
any of them to the extent that such taxes have become due and are not being
contested in good faith and for which an adequate reserve for accrual has been
established in accordance with generally accepted accounting principles. All tax
liabilities of the Company and the Subsidiaries have been adequately provided
for in the consolidated financial statements of the Company, and the Company
does not know of any actual or proposed additional material tax assessments.
*O.Since the respective dates as of which information is given
in the Registration Statement and the Prospectus, as it
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has been amended or supplemented, there has not been any material adverse change
or any development involving a prospective material adverse change in or
otherwise materially affecting the earnings, business, management, properties,
assets, rights, operations, condition (financial or otherwise), or prospects of
the Company and its Subsidiaries taken as a whole, whether or not occurring in
the ordinary course of business, and there has not been any material transaction
entered into or any material transaction that is probable of being entered into
by the Company, the Subsidiaries or the Land Partnership, other than
transactions in the ordinary course of business and changes and transactions
described in the Prospectus, as it has been amended or supplemented. The Company
and the Subsidiaries have no material contingent obligations which are not
disclosed in the Company's financial statements which are incorporated by
reference in the Prospectus.
*P.Neither the Company, any of the Subsidiaries nor the Land
Partnership is or with the giving of notice or lapse of time or both, will be,
in violation of or in default under its Charter or By-Laws or other comparable
documents or under any agreement, lease, contract, indenture or other instrument
or obligation to which it is a party or by which it, or any of its properties,
is bound, which default is of material significance in respect of the condition,
financial or otherwise, of the Company and its Subsidiaries taken as a whole or
the business, management, properties, assets, rights, operations, condition
(financial or otherwise) or prospects of the Company and the Subsidiaries taken
as a whole. The execution and delivery of this Agreement, the Indenture and the
Securities and the consummation of the transactions herein and therein
contemplated and the fulfillment of the terms hereof and thereof will not
conflict with or result in a breach of any of the terms or provisions of, or
constitute a default under (or an event which with the giving of notice or lapse
of time or both would constitute a default under), or result in the imposition
or creation of (or the obligation to create or impose) a lien on any property or
assets of the Company, any Subsidiary or the Land Partnership with respect to,
any indenture, mortgage, deed of trust or other agreement or instrument to which
the Company, any Subsidiary or the Land Partnership is a party, or of the
Charter or By-Laws or other comparable documents of the Company, any Subsidiary
or the Land Partnership or any order, rule or regulation applicable to the
Company, any Subsidiary or the Land Partnership of any court or of any
regulatory body or administrative agency or other governmental body having
jurisdiction.
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*Q.Each approval, consent, order, authorization, designation,
declaration or filing by or with any regulatory, administrative or other
governmental body necessary in connection with the execution and delivery by the
Company of this Agreement, the Indenture and the Securities and the consummation
of the transactions herein and therein contemplated (except such additional
steps as may be required by the Commission, the National Association of
Securities Dealers, Inc. (the "NASD") or such additional steps as may be
necessary to qualify the Securities for public offering by the Underwriters
under state securities or Blue Sky laws) has been obtained or made and is in
full force and effect.
*R.Each of the Company, the Subsidiaries and the Land
Partnership holds all material licenses, certificates and permits (collectively,
"Permits") from governmental authorities which are necessary to the conduct of
its businesses, and has fulfilled and performed in all material respects its
obligations with respect to the Permits; and neither the Company nor any of the
Subsidiaries has infringed any patents, patent rights, trade names, trademarks
or copyrights, which infringement is material to the business of the Company and
the Subsidiaries taken as a whole. The Company knows of no material infringement
by others of patents, patent rights, trade names, trademarks or copyrights owned
by or licensed to the Company or any of the Subsidiaries.
*S.Neither the Company, nor to the Company's knowledge, any of
its affiliates, has taken or may take, directly or indirectly, any action
designed to cause or result in, or which has constituted or which might
reasonably be expected to constitute, the stabilization or manipulation of the
price of the Securities or shares of Common Stock to facilitate the sale or
resale of the Securities. The Company acknowledges that the Underwriters may
engage in stabilizing transactions in the Securities and Common Stock in
accordance with Regulation M under the Exchange Act.
*T.Neither the Company nor any Subsidiary is an "investment
company" within the meaning of such term under the Investment Company Act of
1940, as amended (the "Investment Company Act") and the rules and regulations of
the Commission thereunder.
*U.The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurances that (i) transactions are
executed in accordance with management's general or specific authorization; (ii)
transactions
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are recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain
accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
*V.Neither the Company nor any of the Subsidiaries nor any
agent acting on their behalf has taken or will take any action that might cause
this Agreement or the sale of the Securities to violate Regulation G, T, U or X
of the Board of Governors of the Federal Reserve System, in each case as in
effect, or as the same may hereafter be in effect, on the Closing Date.
*W.Except as described in the Prospectus or as would not have
a Material Adverse Effect, (i) each of the Company, the Subsidiaries and the
Land Partnership is in compliance with and not subject to liability under
applicable Environmental Laws (as defined below), (ii) each of the Company, the
Subsidiaries and the Land Partnership has made all filings and provided all
notices required under any applicable Environmental Law, and has and is in
compliance with all Permits required under any applicable Environmental Laws and
each of them is in full force and effect, (iii) there is no civil, criminal or
administrative action, suit, demand, claim, hearing, notice of violation,
investigation, proceeding, notice or demand letter or request for information
pending or, to the knowledge of the Company, threatened against the Company, any
Subsidiary or the Land Partnership under any Environmental Law, (iv) no lien,
charge, encumbrance or restriction has been recorded under any Environmental Law
with respect to any assets, facility or property owned, operated, leased or
controlled by the Company, any Subsidiary or the Land Partnership, (v) neither
the Company, any Subsidiary nor the Land Partnership has received notice that it
has been identified as a potentially responsible party under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended
("CERCLA"), or any comparable state law and (vi) no property or facility of the
Company or any Subsidiary or the Land Partnership is (A) listed or proposed for
listing on the National Priorities List under CERCLA or (B) listed in the
Comprehensive Environmental Response, Compensation, Liability Information System
List promulgated pursuant to CERCLA, or on any comparable list maintained by any
state or local governmental authority.
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For purposes of this Agreement, "Environmental Laws" means the
common law and all applicable federal, state and local laws or regulations,
codes, orders, decrees, judgments or injunctions issued, promulgated, approved
or entered thereunder, relating to pollution or protection of public or employee
health and safety or the environment, including, without limitation, laws
relating to (i) emissions, discharges, releases or threatened releases of
hazardous materials into the environment (including, without limitation, ambient
air, surface water, groundwater, land surface or subsurface strata), (ii) the
manufacture, processing, distribution, use, generation, treatment, storage,
disposal, transport or handling of hazardous materials, and (iii) underground
and aboveground storage tanks, and related piping, and emissions, discharges,
releases or threatened releases therefrom.
*A.There is no strike, labor dispute, slowdown or work
stoppage with the employees of the Company, the Subsidiaries or the Land
Partnership which is pending or, to the knowledge of the Company, threatened,
which would have a Material Adverse Effect.
*B.The Company, its Subsidiaries and the Land Partnership
carry, or are covered by, insurance in such amounts and covering such risks as
is adequate for the conduct of their respective businesses and the value of
their respective properties and as is customary for companies engaged in similar
industries.
*C.The Company is in compliance in all material respects with
all presently applicable provisions of the Employee Retirement Income Security
Act of 1974, as amended, including the regulations and published interpretations
thereunder ("ERISA"); no "reportable event" (as defined in ERISA) has occurred
with respect to any "pension plan" (as defined in ERISA) for which the Company
would have any liability; the Company has not incurred and does not expect to
incur liability under (i) Title IV of ERISA with respect to termination of, or
withdrawal from, any "pension plan" or (ii) Sections 412 or 4971 of the Internal
Revenue Code of 1986, as amended, including the regulations and published
interpretations thereunder (the "Code"); and each "pension plan" for which the
Company would have any liability that is intended to be qualified under Section
401(a) of the Code is so qualified in all material respects and nothing has
occurred, whether by action or by failure to act, which would cause the loss of
such qualification.
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*D.To the best of the Company's knowledge, there are no
affiliations or associations between any member of the NASD and any of the
Company's officers, directors or 5% or greater security holders, except as set
forth in the Registration Statement.
II. Purchase, Sale and Delivery of the Firm SECURITIES.
*A.On the basis of the representations, warranties and
covenants herein contained, and subject to the conditions herein set forth, the
Company agrees to sell to each Underwriter and each Underwriter agrees,
severally and not jointly, to purchase the aggregate principal amount at
maturity of Firm Securities set forth opposite the name of each Underwriter in
Schedule I hereof, subject to adjustments in accordance with Section 9 hereof,
at a purchase price of 45.253% of such aggregate principal amount at maturity.
*B.Payment for the Firm Securities to be sold hereunder is to
be made by wire transfer of Federal (same day) funds to the order of the Company
against delivery of certificates therefor to the Underwriters. Such payment and
delivery are to be made through the facilities of The Depository Trust Company,
New York, New York at 10:00 a.m., New York time, on the third business day after
the date of this Agreement (or, if the Underwriters determine the price of the
Firm Securities after 4:30 p.m., New York time, on the date hereof, the fourth
business day) or at such other time and date not later than five business days
thereafter as you and the Company shall agree upon, such time and date being
herein referred to as the "Closing Date." (As used herein, "business day" means
a day on which the New York Stock Exchange is open for trading and on which
banks in New York are open for business and are not permitted by law or
executive order to be closed.) The certificates for the Firm Securities in
definitive form will be delivered in such denominations and in such
registrations as the Underwriters request in writing not later than the second
full business day prior to the Closing Date, and will be made available for
inspection by the Underwriters at least one business day prior to the Closing
Date.
*C.In addition, on the basis of the representations and
warranties herein contained and subject to the terms and conditions herein set
forth, the Company hereby grants an option to the several Underwriters to
purchase the Option Securities at a purchase price of 45.253% of the aggregate
principal amount at maturity of the Option Securities, plus accrued Original
Issue
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<PAGE> 14
Discount (as defined in the Indenture), if any, from the Closing Date to the
Option Closing Date (as defined below). The option granted hereby may be
exercised in whole or in part by giving written notice (i) at any time before
the Closing Date and (ii) only once thereafter within 30 days after the date of
this Agreement, by the Underwriters to the Company setting forth the aggregate
principal amount at maturity of Option Securities as to which the several
Underwriters are exercising the option, the names and denominations in which the
Option Securities are to be registered and the time and date at which such
certificates are to be delivered. The time and date at which certificates for
Option Securities are to be delivered shall be determined by the Underwriters
but shall not be earlier than three nor later than 10 full business days after
the exercise of such option, nor in any event prior to the Closing Date (such
time and date being herein referred to as the "Option Closing Date"). If the
date of exercise of the option is three or more days before the Closing Date,
the notice of exercise shall set the Closing Date as the Option Closing Date.
The aggregate principal amount at maturity of Option Securities to be purchased
by each Underwriter shall be in the same proportion to the total number of
Option Securities being purchased as the aggregate principal amount at maturity
of Firm Securities being purchased by such Underwriter bears to $431,000,000
adjusted by you in such manner as to provide denominations of principal amount
at maturity of $1,000 or integral multiples thereof. The option with respect to
the Option Securities granted hereunder may be exercised only to cover
over-allotments in the sale of the Firm Securities by the Underwriters. You may
cancel such option at any time prior to its expiration by giving written notice
of such cancellation to the Company. To the extent, if any, that the option is
exercised, payment for the Option Securities shall be made on the Option Closing
Date by wire transfer of Federal (same day) funds through the facilities of The
Depository Trust Company in New York, New York to the order of the Company.
III. Offering by the Underwriters.
It is understood that the several Underwriters are to make a
public offering of the Firm Securities as soon as the Underwriters deem it
advisable to do so. The Firm Securities are to be initially offered to the
public at the initial public offering price set forth in the Prospectus. The
Underwriters may from time to time thereafter change the public offering price
and other selling terms. To the extent, if at all, that any Option Securities
are purchased pursuant to Section 2 hereof, the
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<PAGE> 15
Underwriters will have offered them to the public on the foregoing terms.
I. Covenants of the Company.
The Company covenants and agrees with the several Underwriters
that:
*A.The Company will (A) use its best efforts to prepare and
timely file with the Commission under Rule 424(b) of the Rules and Regulations a
Prospectus in a form approved by the Underwriters, and (B) not file any
amendment to the Registration Statement or supplement to the Prospectus or
document incorporated by reference therein of which the Underwriters shall not
previously have been advised and furnished with a copy or to which the
Underwriters shall have reasonably objected in writing or which is not in
compliance with the Rules and Regulations and (C) file on a timely basis all
reports and any definitive proxy or information statements required to be filed
by the Company with the Commission subsequent to the date of the Prospectus and
prior to the termination of the offering of the Securities by the Underwriters.
*B.The Company will advise the Underwriters promptly (A) when
any post-effective amendment to the Registration Statement shall have become
effective, (B) of receipt of any comments from the Commission relating to the
Registration Statement, the Prospectus or any documents incorporated by
reference therein, (C) of any request of the Commission for amendment of the
Registration Statement or for supplement to the Prospectus or for any additional
information, and (D) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the use of the
Prospectus or of the institution of any proceedings for that purpose. The
Company will use its best efforts to prevent the issuance of any such stop order
preventing or suspending the use of the Prospectus and to obtain as soon as
possible the lifting thereof, if issued.
*C.The Company will cooperate with the Underwriters in
endeavoring to qualify the Securities for sale under the securities laws of such
jurisdictions as the Underwriters may reasonably have designated in writing and
will make such applications, file such documents, and furnish such information
as may be reasonably required for that purpose, provided the Company shall not
be required to qualify as a foreign corporation or to file a general consent to
service of process in any
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<PAGE> 16
jurisdiction where it is not now so qualified or required to file such a
consent. The Company will, from time to time, prepare and file such statements,
reports, and other documents, as are or may be required to continue such
qualifications in effect for so long a period as the Underwriters may reasonably
request for distribution of the Securities.
*D.The Company will deliver to, or upon the order of, the
Underwriters, from time to time, as many copies of any Preliminary Prospectus as
the Underwriters may reasonably request. The Company will deliver to, or upon
the order of, the Underwriters during the period when delivery of a Prospectus
is required under the Act, as many copies of the Prospectus in final form, or as
thereafter amended or supplemented, as the Underwriters may reasonably request.
The Company will deliver to the Underwriters at or before the Closing Date,
three copies of the Registration Statement and all amendments thereto including
all exhibits filed therewith, and will deliver to the Underwriters such number
of copies of the Registration Statement (including such number of copies of the
exhibits filed therewith that may reasonably be requested), including documents
incorporated by reference therein, and of all amendments thereto, as the
Underwriters may reasonably request.
*E.The Company will comply with the Act and the Rules and
Regulations, and the Exchange Act, and the rules and regulations of the
Commission thereunder, so as to permit the completion of the distribution of the
Securities as contemplated in this Agreement and the Prospectus. If during the
period in which a prospectus is required by law to be delivered by an
Underwriter or dealer, any event shall occur as a result of which, in the
judgment of the Company or in the reasonable opinion of the Underwriters, it
becomes necessary to amend or supplement the Prospectus in order to make the
statements therein, in the light of the circumstances existing at the time the
Prospectus is delivered to a purchaser, not misleading, or, if it is necessary
at any time to amend or supplement the Prospectus to comply with any law, the
Company promptly will either (i) prepare and file with the Commission an
appropriate amendment to the Registration Statement or supplement to the
Prospectus or (ii) prepare and file with the Commission an appropriate filing
under the Exchange Act which shall be incorporated by reference in the
Prospectus so that the Prospectus as so amended or supplemented will not, in the
light of the circumstances when it is so delivered, be misleading, or so that
the Prospectus will comply with the law.
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<PAGE> 17
*F.The Company will make generally available to its security
holders, as soon as it is practicable to do so, but in any event not later than
15 months after the effective date of the Registration Statement, an earning
statement (which need not be audited) in reasonable detail, covering a period of
at least 12 consecutive months beginning after the effective date of the
Registration Statement, which earning statement shall satisfy the requirements
of Section 11(a) of the Act and Rule 158 of the Rules and Regulations and will
advise you in writing when such statement has been so made available.
*G.Prior to the Closing Date, the Company will furnish to the
Underwriters, as soon as they have been prepared by or are available to the
Company, a copy of any unaudited interim financial statements of the Company for
any period subsequent to the period covered by the most recent financial
statements appearing in the Registration Statement and the Prospectus.
*H.No offering, sale, short sale, grant of any option for the
sale of, or other disposition of any shares of Voting Stock or other securities
convertible into or exchangeable or exercisable for shares of Voting Stock or
derivatives of Voting Stock (or agreement for such) will be made for a period of
60 days after the date of this Agreement, directly or indirectly, by the Company
otherwise than hereunder or with the prior written consent of BT Alex. Brown
Incorporated, except that the Company may issue and sell and enter into any
agreement to issue and sell (i) the Securities pursuant to this Agreement, (ii)
shares of Common Stock upon conversion of Class B Common Stock outstanding on
the date of this Agreement, (iii) shares of Common Stock issued upon exercise of
options, or under employee stock plans, in existence on the date of this
Agreement, (iv) options granted under option plans as they exist on the date of
this Agreement and (v) shares of Voting Stock as consideration in the
acquisition by the Company and its Subsidiaries of properties, businesses and
interests in the ordinary course of their business. For purposes of this
Agreement, "Voting Stock" means the Common Stock, Class B Common Stock and any
other stock of the Company which votes together with the Common Stock in the
election of directors (without regard to whether there has been an arrearage in
the payment of dividends of dividends on preferred stock).
*I.The Company will use its best efforts to list on the New
York Stock Exchange, subject to notice of issuance, the shares of Common Stock
into which the Securities are convertible.
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<PAGE> 18
*J.The Company has caused each officer, director and
stockholder of the Company listed on Schedule II to furnish to you, on or prior
to the date of this agreement, a letter or letters, in form and substance
satisfactory to the Underwriters, pursuant to which each such person has agreed
not to sell, offer to sell, sell short, grant any option for the sale of, or
otherwise dispose of, any shares of Voting Stock, or any other securities
convertible, exchangeable or exercisable for shares of Voting Stock or
derivatives of Voting Stock owned by such person (or as to which such person has
the right to direct the disposition of) or request the registration for the
offer or sale of any of the foregoing for a period of 60 days after the date of
this Agreement, directly or indirectly, except with the prior written consent of
BT Alex. Brown Incorporated ("Lockup Agreements").
*K.The Company shall apply the net proceeds of its sale of the
Securities as set forth in the Prospectus.
*L.The Company shall not invest, or otherwise use the proceeds
received by the Company from its sale of the Securities in such a manner as
would require the Company or any of the Subsidiaries to register as an
investment company under the Investment Company Act.
*M.The Company will maintain a transfer agent and, if
necessary under the jurisdiction of incorporation of the Company, a registrar
for the Common Stock.
*N.The Company will not take, directly or indirectly, any
action designed to cause or result in, or that has constituted or might
reasonably be expected to constitute, the stabilization or manipulation of the
price of any securities of the Company.
II. Costs and Expenses.
The Company will pay all costs, expenses and fees incident to
the performance of the obligations of the Company under this Agreement,
including, without limiting the generality of the foregoing, the following:
accounting fees of the Company; the fees and disbursements of counsel for the
Company; the cost of printing and delivering to, or as requested by, the
Underwriters copies of the Registration Statement, Preliminary Prospectuses, the
Prospectus and any supplements or amendments thereto, this Agreement, the
Underwriters' Invitation Letter, the Listing Application, the Blue Sky Survey
and any supplements or
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<PAGE> 19
amendments thereto; the filing fees of the Commission; the filing fees and
expenses (including legal fees and disbursements) incident to securing any
required review by the NASD of the terms of the sale of the Securities; the
Listing Fee of the New York Stock Exchange with respect to the shares of Common
Stock into which the Securities are convertible; and the expenses, including the
fees and disbursements of counsel for the Underwriters, incurred in connection
with the qualification of the Securities under State securities or Blue Sky
laws. The Company shall not, however, be required to pay for any of the
Underwriters expenses (other than those related to qualification under NASD
regulation and State securities or Blue Sky laws) except that, if this Agreement
shall not be consummated because the conditions in Section 6 hereof are not
satisfied, or because this Agreement is terminated by the Underwriters pursuant
to Section 11 hereof, or by reason of any failure, refusal or inability on the
part of the Company to perform any undertaking or satisfy any condition of this
Agreement or to comply with any of the terms hereof on its part to be performed,
unless such failure to satisfy said condition or to comply with said terms shall
be due to the default or omission of any Underwriter, then the Company shall
reimburse the several Underwriters for reasonable out-of-pocket expenses,
including fees and disbursements of counsel, reasonably incurred in connection
with investigating, marketing and proposing to market the Securities or in
contemplation of performing their obligations hereunder; but the Company shall
not in any event be liable to any of the several Underwriters for damages on
account of loss of anticipated profits from the sale by them of the Securities.
I. Conditions of Obligations of the Underwriters.
The several obligations of the Underwriters to purchase the
Firm Securities on the Closing Date and the Option Securities, if any, on the
Option Closing Date are subject to the accuracy, as of the Closing Date or the
Option Closing Date, as the case may be, of the representations and warranties
of the Company contained herein, and to the performance by the Company of its
covenants and obligations hereunder and to the following additional conditions:
*A.The Registration Statement and all post-effective
amendments thereto shall have become effective and any and all filings required
by Rule 424 and Rule 430A of the Rules and Regulations shall have been made, and
any request of the Commission for additional information (to be included in the
Registration Statement or otherwise) shall have been disclosed to
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<PAGE> 20
the Underwriters and complied with to their reasonable satisfaction. No stop
order suspending the effectiveness of the Registration Statement, as amended
from time to time, shall have been issued and no proceedings for that purpose
shall have been taken or, to the knowledge of the Company, shall be contemplated
by the Commission and no injunction, restraining order, or other order of any
nature by a Federal or state court of competent jurisdiction shall have been
issued as of the Closing Date which would prevent the issuance of the
Securities.
*B.The Underwriters shall have received on the Closing Date or
the Option Closing Date, as the case may be, the opinion of Rogers & Wells LLP,
counsel for the Company, dated the Closing Date or the Option Closing Date, as
the case may be, addressed to the Underwriters (and stating that it may be
relied upon by counsel to the Underwriters) to the effect that:
*1. The Company has been duly organized and is
validly existing as a corporation in good standing under the laws of the State
of Delaware, with corporate power and authority to own or lease its properties
and conduct its business as described in the Prospectus; each of the Designated
Subsidiaries and the Land Partnership has been duly organized and is validly
existing as a corporation or partnership, as applicable, in good standing under
the laws of the jurisdiction of its incorporation or formation, with corporate
or other power and authority to own or lease its properties and conduct its
business as described in the Prospectus; the Company, each of the Designated
Subsidiaries and the Land Partnership are duly qualified to transact business in
all jurisdictions in which the conduct of their business requires such
qualification, except where, to the best of such counsel's knowledge, the
failure to qualify would have a materially adverse effect upon the business of
the Company and the Subsidiaries taken as a whole; and the outstanding shares of
capital stock of each of the Designated Subsidiaries have been duly authorized
and validly issued and are fully paid and non-assessable and are owned by the
Company or a Subsidiary; and, to the best of such counsel's knowledge, the
outstanding shares of capital stock of each of the Designated Subsidiaries are
owned free and clear of all liens, encumbrances and equities and claims (except
for the pledge of the shares of certain of the direct and indirect subsidiaries
of LFS to the lenders under LFS's credit agreement), and no options, warrants or
other rights to purchase, agreements or other obligations to issue or other
rights to convert any obligations into any shares of capital stock or of
ownership interests in the Designated Subsidiaries or the Land Partnership are
outstanding. The Company indirectly owns a 50% interest in
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<PAGE> 21
the Land Partnership. Such interest in the Land Partnership has been duly
authorized and validly issued and is owned by a Subsidiary which, to the best of
such counsel's knowledge, is indirectly wholly owned by the Company, free and
clear of all liens, encumbrances and equities and claims.
*2. The Company has authorized and outstanding
capital stock as set forth under the caption "Capitalization" in the Prospectus;
the authorized shares of Common Stock and Class B Common Stock have been duly
authorized; the outstanding shares of the Common Stock and Class B Common Stock
have been duly authorized and validly issued and are fully paid and
non-assessable; the Securities are convertible into Common Stock in accordance
with the terms of the Indenture and the Securities; the shares of Common Stock
issuable upon conversion of the Securities have been duly reserved for issuance
upon such conversion and, if and when issued upon such conversion, will be
validly issued, fully paid and non-assessable and will conform to the
description thereof contained in the Prospectus; and no preemptive rights of
stockholders exist with respect to the capital stock or any other securities of
the Company or the issue or sale thereof.
*3. Except as described in or contemplated by the
Prospectus, to the best of such counsel's knowledge, there are no outstanding
securities of the Company convertible or exchangeable into or evidencing the
right to purchase or subscribe for any shares of capital stock of the Company
and there are no outstanding or authorized options, warrants or rights of any
character obligating the Company to issue any shares of its capital stock or any
securities convertible or exchangeable into or evidencing the right to purchase
or subscribe for any shares of such stock; and except as described in the
Prospectus, to the knowledge of such counsel, no holder of any securities of the
Company or any other person has the right, contractual or otherwise, which has
not been satisfied or effectively waived, to cause the Company to sell or
otherwise issue to them, or to permit them to underwrite the sale of, any of the
Securities or the right to have any shares of Common Stock or other securities
of the Company included in the Registration Statement or the right, as a result
of the filing of the Registration Statement, to require registration under the
Act of any shares of Common Stock or other securities of the Company.
*4. The Company has all requisite corporate power and
authority to execute, deliver and perform its obligations under the Securities
and the Indenture.
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*5. The Indenture has been duly qualified under the
Trust Indenture Act; the Indenture has been duly and validly authorized,
executed and delivered by the Company, and (assuming the due authorization,
execution and delivery thereof by the Trustee) constitutes the valid and legally
binding agreement of the Company, enforceable against the Company in accordance
with its terms, except that the enforcement thereof may be subject to (i)
bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or
other similar laws now or hereafter in effect relating to creditors' rights
generally and (ii) general principles of equity and the discretion of the court
before which any proceeding therefor may be brought (regardless of whether such
enforcement is considered in a proceeding in equity or at law).
*6. The Securities are in the form contemplated by
the Indenture. The Securities have each been duly and validly authorized,
executed and delivered by the Company and, when paid for by the Underwriters in
accordance with the terms of this Agreement (assuming the due authorization,
execution and delivery of the Indenture by the Trustee and due authentication
and delivery of the Securities by the Trustee in accordance with the Indenture),
will constitute the valid and legally binding obligations of the Company,
entitled to the benefits of the Indenture, and enforceable against the Company
in accordance with their terms, except that the enforcement thereof may be
subject to (i) bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights generally and (ii) general principles of equity and the
discretion of the court before which any proceeding therefor may be brought
(regardless of whether such enforcement is considered in a proceeding in equity
or at law).
*7. The Company has all requisite corporate power and
authority to execute, deliver and perform its obligations under this Agreement
and to consummate the transactions contemplated hereby; this Agreement and the
consummation by the Company of the transactions contemplated hereby have been
duly and validly authorized by the Company. This Agreement has been duly
executed and delivered by the Company.
*8. The Indenture and the Securities conform as to
legal matters in all material respects to the descriptions thereof contained in
the Prospectus as supplemented or amended.
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<PAGE> 23
*9. The Registration Statement has become effective
under the Act and, to the best of the knowledge of such counsel, no stop order
proceedings with respect thereto have been instituted or are pending or
threatened under the Act.
*10. The Registration Statement, the Prospectus and
each amendment or supplement thereto and document incorporated by reference
therein comply as to form in all material respects with the requirements of the
Act or the Exchange Act, as applicable, and the applicable rules and regulations
thereunder (except that such counsel need express no opinion as to the financial
statements and related schedules incorporated by reference therein). The
conditions for the use of Form S-3, set forth in the General Instructions
thereto, have been satisfied.
*11. The statements under the captions "Description
of Debentures," "Certain Federal Income Tax Considerations," "Description of
Debt Securities" and "Description of Capital Stock" in the Prospectus and Item
15 of the Registration Statement, insofar as such statements constitute a
summary of documents referred to therein or matters of law, fairly summarize in
all material respects the information called for with respect to such documents
and matters.
*12. Such counsel does not know of any contracts or
documents required to be filed as exhibits to or incorporated by reference in
the Registration Statement or described in the Registration Statement or the
Prospectus which are not so filed, incorporated by reference or described as
required, and such contracts and documents as are summarized in the Registration
Statement or the Prospectus are fairly summarized in all material respects.
*13. Such counsel knows of no material legal or
governmental proceedings pending or threatened against the Company, any of the
Subsidiaries or the Land Partnership except as set forth in the Prospectus.
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<PAGE> 24
*14. The execution and delivery of this Agreement,
the Indenture and the Securities and the consummation of the transactions herein
and therein contemplated do not and will not conflict with or result in a breach
of any of the terms or provisions of, or constitute a default under (or an event
which with the giving of notice or lapse of time or both would constitute a
default under) or result in the imposition or creation of (or the obligation to
create or impose) a lien on any property or assets of the Company, any
Designated Subsidiary or the Land Partnership with respect to, the Charter,
By-Laws or other comparable documents of the Company, any Designated Subsidiary
or the Land Partnership, or any agreement or instrument known to such counsel to
which the Company, any of the Designated Subsidiaries or the Land Partnership is
a party or by which the Company, any of the Designated Subsidiaries or the Land
Partnership may be bound or any order, rule or regulation known to such counsel
to be applicable to the Company, any Designated Subsidiary or the Land
Partnership of any court or of any regulatory body or administrative agency or
other governmental body having jurisdiction.
*15. No approval, consent, order, authorization,
designation, declaration or filing by or with any regulatory, administrative or
other governmental body is necessary in connection with the execution and
delivery of this Agreement, the Indenture and the Securities and the
consummation of the transactions herein and therein contemplated (other than as
may be required by the NASD or as required by State securities and Blue Sky laws
as to which such counsel need express no opinion) except such as have been
obtained or made, specifying the same.
*16. The Company is not, and will not become, as a
result of the consummation of the transactions contemplated by this Agreement,
and application of the net proceeds therefrom as described in the Prospectus,
required to register as an investment company under the Investment Company Act.
*17. Neither the consummation of the transactions
contemplated by this Agreement nor the sale, issuance, execution or delivery of
the Securities will violate Regulation G, T, U or X of the Board of Governors of
the Federal Reserve System.
In rendering such opinion, Rogers & Wells LLP may
rely as to matters governed by the laws of states other than New York, Delaware
General Corporation Law or Federal laws on local
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<PAGE> 25
counsel in such jurisdictions, provided that in each case Rogers & Wells LLP
shall state that they believe that they and the Underwriters are justified in
relying on such other counsel. In addition to the matters set forth above, such
opinion shall also include a statement to the effect that nothing has come to
the attention of such counsel which leads them to believe that (i) the
Registration Statement, at the time it became effective under the Act (but after
giving effect to any modifications incorporated therein pursuant to Rule 430A
under the Act) and as of the Closing Date or the Option Closing Date, as the
case may be, contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading, and (ii) the Prospectus, or any supplement
thereto, on the date it was filed pursuant to the Rules and Regulations and as
of the Closing Date or the Option Closing Date, as the case may be, contained an
untrue statement of a material fact or omitted to state a material fact
necessary in order to make the statements, in the light of the circumstances
under which they were made, not misleading (except that such counsel need
express no view as to financial statements, schedules and statistical
information therein). With respect to such statement, Rogers & Wells LLP may
state that their belief is based upon the procedures set forth therein, but is
without independent check and verification (except with respect to the matters
addressed in subparagraph (xi)).
*A.The Underwriters shall have received from Willkie Farr &
Gallagher, counsel for the Underwriters, an opinion dated the Closing Date or
the Option Closing Date, as the case may be, with respect to certain legal
matters relating to this Agreement, and such other related matters as the
Underwriters may reasonably require. In rendering such opinion, Willkie Farr &
Gallagher shall have received and may rely upon such certificates and other
documents and information as they may reasonably request to pass upon such
matters.
*B.The Underwriters shall have received at or prior to the
Closing Date from Willkie Farr & Gallagher a memorandum or summary, in form and
substance satisfactory to the Underwriters, with respect to the qualification
for offering and sale by the Underwriters of the Securities under the State
securities or Blue Sky laws of such jurisdictions as the Underwriters may
reasonably have designated to the Company.
*C.You shall have received, on each of the date hereof, the
Closing Date and the Option Closing Date, as the case may be,
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<PAGE> 26
a letter dated the date hereof, the Closing Date or the Option Closing Date, as
the case may be, in form and substance satisfactory to you, of Deloitte & Touche
LLP confirming that they are independent public accountants within the meaning
of the Act and the applicable published Rules and Regulations thereunder and
stating that in their opinion the financial statements and schedules examined by
them and incorporated by reference in the Prospectus comply as to form in all
material respects with the applicable accounting requirements of the Act and the
related published Rules and Regulations; and containing such other statements
and information as is ordinarily included in accountants' "comfort letters" to
Underwriters with respect to the financial statements and certain financial and
statistical information contained in the Registration Statement and Prospectus.
*D.The Underwriters shall have received on the Closing Date or
the Option Closing Date, as the case may be, a certificate or certificates of
the Chief Executive Officer and the Chief Financial Officer of the Company to
the effect that, as of the Closing Date or the Option Closing Date, as the case
may be, each of them severally represents on behalf of the Company as follows:
*1.The Registration Statement has become effective
under the Act and no stop order suspending the effectiveness of the
Registrations Statement has been issued, and no proceedings for such purpose
have been taken or are, to his knowledge, contemplated by the Commission;
*2.The representations and warranties of the Company
contained in Section 1 hereof are true and correct as of the Closing Date or the
Option Closing Date, as the case may be;
*3. All filings which he has been advised by counsel
are required to have been made pursuant to Rule 424 or 430A under the Act have
been made;
*4.He or she has carefully examined the Registration
Statement and the Prospectus and, in his or her opinion, as of the effective
date of the Registration Statement, the statements contained in the Registration
Statement were true and correct, and such Registration Statement and Prospectus
did not omit to state a material fact required to be stated therein or necessary
in order to make the statements therein not misleading, and since the effective
date of the Registration Statement, no event has occurred which should have been
set forth
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in a supplement to or an amendment of the Prospectus which has not been so set
forth in such supplement or amendment; and
*5.Since the respective dates as of which information
is given in the Registration Statement and Prospectus, there has not been any
material adverse change or any development involving a prospective material
adverse change in or affecting the condition, financial or otherwise, of the
Company and its Subsidiaries taken as a whole or the earnings, business,
management, properties, assets, rights, operations, condition (financial or
otherwise) or prospects of the Company and the Subsidiaries taken as a whole,
whether or not arising in the ordinary course of business.
*E.The Company shall have furnished to the Underwriters such
further certificates and documents confirming the representations and
warranties, covenants and conditions contained herein and related matters as the
Underwriters may reasonably have requested.
*F.The shares of Common Stock into which the Securities are
convertible shall have been approved for listing on the New York Stock Exchange,
subject to notice of issuance.
*G.The Lockup Agreements described in Section 4(j) shall be in
full force and effect.
*H.The Supplemental Indenture shall have been duly executed
and delivered by the Company and the Trustee, and the Firm Securities or Option
Securities, as the case may be, shall have been duly executed by the Company,
and such Securities shall have been duly authenticated by the Trustee.
The opinions and certificates mentioned in this Agreement
shall be deemed to be in compliance with the provisions hereof only if they are
in all material respects reasonably satisfactory to the Underwriters and to
Willkie Farr & Gallagher, counsel for the Underwriters.
If any of the conditions hereinabove provided for in this
Section 6 shall not have been fulfilled when and as required by this Agreement
to be fulfilled, the obligations of the Underwriters hereunder may be terminated
by the Underwriters by notifying the Company of such termination in writing or
by telegram at or prior to the Closing Date or the Option Closing Date, as the
case may be.
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In such event, the Company and the Underwriters shall not be
under any obligation to each other (except to the extent provided in Sections 5
and 8 hereof).
I. Conditions of the Obligations of the Company.
The obligations of the Company to sell and deliver the portion
of the Securities required to be delivered as and when specified in this
Agreement are subject to the conditions that at the Closing Date or the Option
Closing Date, as the case may be, no stop order suspending the effectiveness of
the Registration Statement shall have been issued and in effect or proceedings
therefor initiated or threatened.
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<PAGE> 29
I. Indemnification.
*A.The Company agrees:
(1)to indemnify and hold harmless each Underwriter
and each person, if any, who controls any Underwriter within
the meaning of the Act, against any losses, claims, damages or
liabilities to which such Underwriter or any such controlling
person may become subject under the Act or otherwise, insofar
as such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) arise out of or are based upon
(i) any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement, the
Basic Prospectus, any Preliminary Prospectus, the Prospectus
or any amendment or supplement thereto or (ii) the omission or
alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein
not misleading; provided, however, that the Company will not
be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement, or omission or
alleged omission in the Registration Statement, the Basic
Prospectus, any Preliminary Prospectus, the Prospectus, or
such amendment or supplement, made in reliance upon and in
conformity with written information furnished to the Company
by or through the Underwriters specifically for use in the
preparation thereof.
(2)to reimburse each Underwriter and each such
controlling person upon demand for any legal or other
out-of-pocket expenses reasonably incurred by such Underwriter
or such controlling person in connection with investigating or
defending any such loss, claim, damage or liability, action or
proceeding or in responding to a subpoena or governmental
inquiry related to the offering of the Securities, whether or
not such Underwriter or controlling person is a party to any
action or proceeding. In the event that it is finally
judicially determined that the Underwriters were not entitled
to receive payments for legal and other expenses pursuant to
this subparagraph, the Underwriters will promptly return all
sums that had been advanced pursuant hereto.
29
<PAGE> 30
*A.Each Underwriter severally and not jointly will indemnify
and hold harmless the Company, each of its directors and officers and each
person, if any, who controls the Company within the meaning of the Act, against
any losses, claims, damages or liabilities to which the Company or any such
director, officer, or controlling person may become subject under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) arise out of or are based upon (i) any untrue
statement or alleged untrue statement of any material fact contained in the
Registration Statement, the Basic Prospectus, any Preliminary Prospectus, the
Prospectus or any amendment or supplement thereto, or (ii) the omission or the
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading in the light of the
circumstances under which they were made; and will reimburse any legal or other
expenses reasonably incurred by the Company or any such director, officer, or
controlling person in connection with investigating or defending any such loss,
claim, damage, liability, action or proceeding; provided, however, that each
Underwriter will be liable in each case to the extent, but only to the extent,
that such untrue statement or alleged untrue statement or omission or alleged
omission has been made in the Registration Statement, the Basic Prospectus, any
Preliminary Prospectus, the Prospectus or such amendment or supplement, in
reliance upon and in conformity with written information furnished to the
Company by or through the Underwriters specifically for use in the preparation
thereof. This indemnity agreement will be in addition to any liability which
such Underwriter may otherwise have.
*B.In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to this Section 8, such person (the
"indemnified party") shall promptly notify the person against whom such
indemnity may be sought (the "indemnifying party") in writing. No
indemnification provided for in Section 8(a) or (b) shall be available to any
party who shall fail to give notice as provided in this Section 8(c) if the
party to whom notice was not given was unaware of the proceeding to which such
notice would have related and was materially prejudiced by the failure to give
such notice, but the failure to give such notice shall not relieve the
indemnifying party or parties from any liability which it or they may have to
the indemnified party for contribution or otherwise than on account of the
provisions of Section 8(a) or (b). In case any such proceeding shall be brought
against any indemnified party and it
30
<PAGE> 31
shall notify the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate therein and, to the extent
that it shall wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel reasonably satisfactory to
such indemnified party and shall pay as incurred the fees and disbursements of
such counsel related to such proceeding. In any such proceeding, any indemnified
party shall have the right to retain its own counsel at its own expense.
Notwithstanding the foregoing, the indemnifying party shall pay as incurred (or
within 30 days of presentation) the fees and expenses of the counsel retained by
the indemnified party in the event (i) the indemnifying party and the
indemnified party shall have mutually agreed to the retention of such counsel,
(ii) the named parties to any such proceeding (including any impleaded parties)
include both the indemnifying party and the indemnified party and representation
of both parties by the same counsel would be inappropriate due to actual or
potential differing interests between them or (iii) the indemnifying party shall
have failed to assume the defense and employ counsel reasonably acceptable to
the indemnified party within a reasonable period of time after notice of
commencement of the action. It is understood that the indemnifying party shall
not, in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the reasonable fees and expenses of more than one
separate firm for all such indemnified parties. Such firm shall be designated in
writing by you in the case of parties indemnified pursuant to Section 8(a) and
by the Company in the case of parties indemnified pursuant to Section 8(b). The
indemnifying party shall not be liable for any settlement of any proceeding
effected without its written consent but if settled with such consent or if
there be a final judgment for the plaintiff, the indemnifying party agrees to
indemnify the indemnified party from and against any loss or liability by reason
of such settlement or judgment. In addition, the indemnifying party will not,
without the prior written consent of the indemnified party, settle or compromise
or consent to the entry of any judgment in any pending or threatened claim,
action or proceeding of which indemnification may be sought hereunder (whether
or not any indemnified party is an actual or potential party to such claim,
action or proceeding) unless such settlement, compromise or consent includes an
unconditional release of each indemnified party from all liability arising out
of such claim, action or proceeding.
*C.If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party under
Section 8(a) or (b) above in respect of
31
<PAGE> 32
any losses, claims, damages or liabilities (or actions or proceedings in respect
thereof) referred to therein, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of such losses,
claims, damages or liabilities (or actions or proceedings in respect thereof) in
such proportion as is appropriate to reflect the relative benefits received by
the Company on the one hand and the Underwriters on the other from the offering
of the Securities. If, however, the allocation provided by the immediately
preceding sentence is not permitted by applicable law then each indemnifying
party shall contribute to such amount paid or payable by such indemnified party
in such proportion as is appropriate to reflect not only such relative benefits
but also the relative fault of the Company on the one hand and the Underwriters
on the other in connection with the statements or omissions which resulted in
such losses, claims, damages or liabilities, (or actions or proceedings in
respect thereof), as well as any other relevant equitable considerations. The
relative benefits received by the Company on the one hand and the Underwriters
on the other shall be deemed to be in the same proportion as the total net
proceeds from the offering (before deducting expenses) received by the Company
bear to the total underwriting discounts and commissions received by the
Underwriters, in each case as set forth in the table on the cover page of the
Prospectus as amended or supplemented. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company on the one hand or the
Underwriters on the other and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company, and the Underwriters agree that it would not be
just and equitable if contributions pursuant to this Section 8(d) were
determined by pro rata allocation (even if the Underwriters were treated as one
entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to above in this Section
8(d). The amount paid or payable by an indemnified party as a result of the
losses, claims, damages or liabilities (or actions or proceedings in respect
thereof) referred to above in this Section 8(d) shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this subsection (e), (i) no Underwriter shall
be required to contribute any amount in excess
32
<PAGE> 33
of the underwriting discounts and commissions applicable to the Securities
purchased by such Underwriter and (ii) no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations in this Section 8(d) to
contribute are several in proportion to their respective underwriting
obligations and not joint.
*A.In any proceeding relating to the Registration Statement,
the Basic Prospectus, any Preliminary Prospectus, the Prospectus or any
supplement or amendment thereto, each party against whom contribution may be
sought under this Section 8 hereby consents to the jurisdiction of any court
having jurisdiction over any other contributing party, agrees that process
issuing from such court may be served upon him or it by any other contributing
party and consents to the service of such process and agrees that any other
contributing party may join him or it as an additional defendant in any such
proceeding in which such other contributing party is a party.
*B.Any losses, claims, damages, liabilities or expenses for
which an indemnified party is entitled to indemnification or contribution under
this Section 8 shall be paid by the indemnifying party to the indemnified party
as such losses, claims, damages, liabilities or expenses are incurred. The
indemnity and contribution agreements contained in this Section 8 and the
representations and warranties of the Company set forth in this Agreement shall
remain operative and in full force and effect, regardless of (i) any
investigation made by or on behalf of any Underwriter or any person controlling
any Underwriter, the Company, its directors or officers or any persons
controlling the Company, (ii) acceptance of any Securities and payment therefor
hereunder, and (iii) any termination of this Agreement. A successor to any
Underwriter, or to the Company, its directors or officers, or any person
controlling the Company, shall be entitled to the benefits of the indemnity,
contribution and reimbursement agreements contained in this Section 8.
II. Default by Underwriters.
If on the Closing Date or the Option Closing Date, as the case
may be, any Underwriter shall fail to purchase and pay for the portion of the
Securities which such Underwriter has agreed to purchase and pay for on such
date (otherwise than by reason of any default on the part of the Company), you
shall use your reasonable efforts to procure within 36 hours thereafter one or
more of the other Underwriters, or any others, to purchase
33
<PAGE> 34
from the Company in such respective amounts as may be agreed upon and upon the
terms set forth herein, the Firm Securities or Option Securities, as the case
may be, which the defaulting Underwriter or Underwriters failed to purchase. If
during such 36 hours you shall not have procured such other Underwriters, or any
others, to purchase the Firm Securities or Option Securities, as the case may
be, agreed to be purchased by the defaulting Underwriter or Underwriters, then
(a) if the aggregate principal amount at maturity of Securities with respect to
which such default shall occur does not exceed 10% of the principal amount at
maturity of the Firm Securities or Option Securities, as the case may be,
covered hereby, the other Underwriters shall be obligated, severally, in
proportion to the respective principal amounts which they are obligated to
purchase hereunder, to purchase the Firm Securities or Option Securities, as the
case may be, which such defaulting Underwriter or Underwriters failed to
purchase, or (b) if the aggregate principal amount at maturity of Firm
Securities or Option Securities, as the case may be, with respect to which such
default shall occur exceeds 10% of the principal amount at maturity of the Firm
Securities or Option Securities, as the case may be, covered hereby, the Company
or you will have the right, by written notice to the parties to this Agreement,
to terminate this Agreement without liability on the part of the non-defaulting
Underwriters or of the Company except to the extent provided in Section 8
hereof. In the event of a default by any Underwriter or Underwriters, as set
forth in this Section 9, the Closing Date or Option Closing Date, as the case
may be, may be postponed for such period, not exceeding seven days, as you may
determine in order that the required changes in the Registration Statement or in
the Prospectus or in any other documents or arrangements may be effected. The
term "Underwriter" includes any person substituted for a defaulting Underwriter.
Any action taken under this Section 9 shall not relieve any defaulting
Underwriter from liability in respect of any default of such Underwriter under
this Agreement.
I. Notices.
All communications hereunder shall be in writing and, except
as otherwise provided herein, will be mailed, delivered, telecopied or
telegraphed and confirmed as follows: if to the Underwriters, to BT Alex. Brown
Incorporated, One Bankers Trust Plaza, 130 Liberty Street, New York, New York
10006, Attention: Richard W. Thaler, Jr.; with a copy to BT Alex. Brown
Incorporated, One Bankers Trust Plaza, 130 Liberty Street, New York, New York
10006, Attention: General Counsel; if to the
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<PAGE> 35
Company, to Lennar Corporation, 700 N.W. 107th Avenue, Miami, Florida 33172,
Attention: Chief Financial Officer.
I. Termination.
*A.This Agreement may be terminated by you by notice to the
Company at any time prior to the Closing Date if any of the following has
occurred: (i) since the respective dates as of which information is given in the
Registration Statement and the Prospectus, any material adverse change or any
development involving a prospective material adverse change in or affecting the
condition, financial or otherwise, of the Company and its Subsidiaries taken as
a whole or the earnings, business, management, properties, assets, rights,
operations, condition (financial or otherwise) or prospects of the Company and
its Subsidiaries taken as a whole, whether or not arising in the ordinary course
of business; (ii) any outbreak or escalation of hostilities or declaration of
war or national emergency or other national or international calamity or crisis
or change in economic or political conditions if the effect of such outbreak,
escalation, declaration, emergency, calamity, crisis or change on the financial
markets of the United States would, in your judgment, make it impracticable or
inadvisable to market the Securities or to enforce contracts for the sale of the
Securities; (iii) suspension of trading in securities generally on the New York
Stock Exchange or the American Stock Exchange or limitation on prices (other
than limitations on hours or numbers of days of trading) for securities on
either such Exchange; (iv) the enactment, publication, decree or other
promulgation of any statute, regulation, rule or order of any court or other
governmental authority which in your opinion materially and adversely affects or
may materially and adversely affect the business or operations of the Company;
(v) declaration of a banking moratorium by United States or New York State
authorities; (vi) any downgrading, or placement on any watch list for possible
downgrading, in the rating of the Company's debt securities by any "nationally
recognized statistical rating organization" (as defined for purposes of Rule
436(g) under the Act); (vii) the suspension of trading of the Common Stock by
the New York Stock Exchange, the Commission, or any other governmental
authority; or (viii) the taking of any action by any governmental body or agency
in respect of its monetary or fiscal affairs which in your reasonable opinion
has a material adverse effect on the securities markets in the United States; or
*B.as provided in Sections 6 and 9 of this Agreement.
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<PAGE> 36
II. Successors.
This Agreement has been and is made solely for the benefit of
the Underwriters and the Company and their respective successors, executors,
administrators, heirs and assigns, and the officers, directors and controlling
persons referred to herein, and no other person will have any right or
obligation hereunder. No purchaser of any of the Securities from any Underwriter
shall be deemed a successor or assign merely because of such purchase.
I. Information Provided by Underwriters.
The Company and the Underwriters acknowledge and agree that
the only information furnished or to be furnished by any Underwriter to the
Company for inclusion in any Prospectus or the Registration Statement consists
of the information set forth in the last paragraph on the front cover page
(insofar as such information relates to the Underwriters), legends required by
Item 502(d) of Regulation S-K under the Act and the information under the
caption "Underwriting" in the Prospectus.
I. Miscellaneous.
The reimbursement, indemnification and contribution agreements
contained in this Agreement and the representations, warranties and covenants in
this Agreement shall remain in full force and effect regardless of (a) any
termination of this Agreement, (b) any investigation made by or on behalf of any
Underwriter or controlling person thereof, or by or on behalf of the Company or
its directors or officers and (c) delivery of and payment for the Securities
under this Agreement.
This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York.
If the foregoing letter is in accordance with your
understanding of our agreement, please sign and return to us the enclosed
duplicates hereof, whereupon it will become a binding agreement among the
Company and the several Underwriters in accordance with its terms.
Very truly yours,
36
<PAGE> 37
LENNAR CORPORATION
By: /s/ Stuart A. Miller
-------------------------------------
The foregoing Underwriting
Agreement is hereby confirmed
and accepted as of the date
first above written.
BT ALEX. BROWN INCORPORATED
SMITH BARNEY INC.
By: BT Alex. Brown Incorporated
By: /s/ Richard W. Thaler, Jr.
---------------------------
Authorized Officer
37
<PAGE> 38
SCHEDULE I
Schedule of Underwriters
<TABLE>
<CAPTION>
Principal Amount at Maturity of
Underwriter Firm Securities to be Purchased
- ----------- -------------------------------
<S> <C>
BT Alex. Brown Incorporated $323,250,000
Smith Barney Inc. 107,750,000
-------------------
Total $431,000,000
</TABLE>
38
<PAGE> 39
SCHEDULE II
Schedule of PERSONS EXECUTING LOCKUP AGREEMENTS
Leonard Miller
Stuart A. Miller
Warburg, Pincus Investors, L.P.
39
<PAGE> 1
Exhibit 4.1
LENNAR CORPORATION,
Issuer
TO
THE FIRST NATIONAL BANK OF CHICAGO,
Trustee
----------------------------
FIRST SUPPLEMENTAL INDENTURE
DATED AS OF JULY 29, 1998
TO INDENTURE
DATED AS OF DECEMBER 31, 1997
----------------------------
Relating To
Zero Coupon Senior Convertible Debentures Due 2018
<PAGE> 2
FIRST SUPPLEMENTAL INDENTURE, dated as of July 29, 1998 (the
"Supplemental Indenture"), to Indenture, dated as of December 31, 1997, between
Lennar Corporation (the "Company"), a Delaware corporation having its principal
office at 700 N.W. 107th Avenue, Miami, Florida 33172, and The First National
Bank of Chicago (the "Trustee"), a national banking association, organized under
the laws of the United States of America which has its corporate trust office at
One First National Plaza, Suite 0126, Chicago, Illinois 60670-0126.
RECITALS OF THE COMPANY
WHEREAS, the Company has heretofore executed and delivered to the
Trustee an Indenture, dated as of December 31, 1997 (the "Indenture"), providing
for the issuance from time to time of its debentures, notes and other evidences
of unsecured indebtedness, to be issued in one or more series as therein
provided ("Securities");
WHEREAS, Section 2.02 of the Indenture provides that the Company and
the Trustee, at any time and from time to time, may enter into an indenture
which supplements the Indenture to establish the terms of Securities of any
series;
WHEREAS, the Company has duly authorized the creation of an issue of
Securities to be known as the Zero Coupon Senior Convertible Debentures Due 2018
(the "Debentures") and to provide therefor the Company has duly authorized the
execution and delivery of this Supplemental Indenture; and
WHEREAS, all things necessary to make the Debentures, when executed by
the Company and authenticated and delivered hereunder and duly issued by the
Company, the valid obligations of the Company, and to make this Supplemental
Indenture a valid agreement of the Company, in accordance with their and its
terms, have been done.
NOW, THEREFORE, THIS FIRST SUPPLEMENTAL INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Debentures by the Holders thereof, each party agrees for the benefit of each
other party and for the equal and ratable benefit of the Holders of the
Debentures, as follows:
ARTICLE ONE
DEFINITIONS
SECTION 1.01. Capitalized terms used but not defined in this Supplemental
Indenture shall have the meanings ascribed to them in the Indenture.
<PAGE> 3
SECTION 1.02. References in this Supplemental Indenture to section numbers shall
be deemed to be references to section numbers of this Supplemental Indenture
unless otherwise specified.
SECTION 1.03. In the case of capitalized terms defined in this Supplemental
Indenture that are also defined in the Indenture, the meanings ascribed to such
terms in this Supplemental Indenture shall apply with respect to the Debentures.
SECTION 1.04. For purposes of this Supplemental Indenture, the following terms
have the meanings ascribed to them as follows:
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"beneficial owner" shall be determined in accordance with Rule 13d-3
promulgated by the SEC under the Securities Exchange Act of 1934.
"Cash" has the meaning provided in Section 2.04.
A "Change in Control" shall be deemed to have occurred at such time
after the original issuance of the Debentures as:
(a) any Person (including any syndicate or group deemed to be
a "person" under Section 13(d)(3) of the Securities Exchange Act of 1934), other
than the Company, any Subsidiary of the Company, any employee benefit plan of
the Company or any such Subsidiary, or Permitted Holders is or becomes the
beneficial owner, directly or indirectly, through a purchase or other
acquisition transaction or series of transactions (other than a merger or
consolidation involving the Company), of shares of capital stock of the Company
entitling such Person to exercise in excess of 50% of the total voting power of
all shares of capital stock of the Company entitled to vote generally in the
election of directors;
(b) there occurs any consolidation of the Company with, or
merger of the Company into, any other Person, any merger of another Person into
the Company, or any sale or transfer of the assets of the Company as, or
substantially as, an entirety, to another Person (other than (i) any such
transaction pursuant to which the holders of the Voting Stock immediately prior
to such transaction have, directly or indirectly, shares of capital stock of the
continuing or surviving corporation immediately after such transaction which
entitle such holders to exercise in
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<PAGE> 4
excess of 50% of the total voting power of all shares of capital stock of the
continuing or surviving corporation entitled to vote generally in the election
of directors and (ii) any merger (A) which does not result in any
reclassification, conversion, exchange or cancellation of outstanding shares of
Voting Stock or (B) which is effected solely to change the jurisdiction of
incorporation of the Company and results in a reclassification, conversion or
exchange of outstanding shares of Voting Stock solely into shares of stock
carrying substantially the same relative rights as the Voting Stock); or
(c) a change in the Board of Directors of the Company in which
the individuals who constituted the Board of Directors of the Company at the
beginning of the two-year period immediately preceding such change (together
with any other director whose election to the Board of Directors of the Company
or whose nomination for election by the stockholders of the Company was approved
by a vote of at least a majority of the directors then in office either who were
directors at the beginning of such period or whose election or nomination for
election was previously so approved) cease for any reason to constitute a
majority of the directors then in office;
provided, however, that a Change in Control shall not be deemed to have occurred
if either (I) the Closing Price per share of the Common Stock for any ten (10)
Trading Days (each, a "Pricing Trading Date") within the period of 20
consecutive Trading Days ending immediately before the Change in Control shall
equal or exceed 105% of the price determined by dividing (x) the sum of the
Issue Price plus Original Issue Discount accrued to such Trading Day, by (y) the
Conversion Rate, provided that at least five Pricing Trading Dates occur within
the 10 consecutive Trading Days ending immediately before the Change in Control
or (II) (x) at least 90% of the consideration (excluding cash payments for
fractional shares) in the transaction or transactions constituting the Change in
Control consists of shares of common stock with full voting rights traded on a
national securities exchange or quoted on the Nasdaq National Market (or which
shall be so traded or quoted when issued or exchanged in connection with such
Change in Control) (such securities being referred to as "Publicly Traded
Securities") and as a result of such transaction or transactions such Debentures
become convertible solely into such Publicly Traded Securities and (y) the
consideration in the transaction or transactions constituting the Change in
Control consists of cash, Publicly Traded Securities or a combination of cash
and Publicly Traded Securities with an aggregate fair market value (which, in
the case of Publicly Traded Securities, shall be equal to the average Closing
Price of such Publicly Traded Securities during the five (5) consecutive Trading
Days commencing with the Trading Day following consummation of the transaction
or transactions constituting the Change in Control) of at least 105% of the
price determined by dividing (A) the sum of the Issue Price plus Original Issue
Discount accrued to the date immediately preceding
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<PAGE> 5
the date of consummation of such Change in Control, by (B) the Conversion Rate.
"Change in Control Purchase Date" has the meaning provided in Section
2.03.
"Change in Control Purchase Notice" has the meaning provided in Section
2.03.
"Change in Control Purchase Price" has the meaning provided in Section
2.03.
"Closing Price" with respect to any securities on any day shall mean
the closing sale price regular way on such day or, in case no such sale takes
place on such day, the average of the reported closing bid and asked prices,
regular way, in each case on the New York Stock Exchange, or, if such security
is not listed or admitted to trading on such Exchange, on the principal national
security exchange or quotation system on which such security is quoted or listed
or admitted to trading, or, if not quoted or listed or admitted to trading on
any national securities exchange or quotation system, the average of the closing
bid and asked prices of such security on the over-the-counter market on the day
in question as reported by the National Quotation Bureau Incorporated, or a
similar generally accepted reporting service, or if not so available, in such
manner as furnished by any New York Stock Exchange member firm selected from
time to time by the Board of Directors for that purpose, or a price determined
in good faith by the Board of Directors or, to the extent permitted by
applicable law, a duly authorized committee thereof, whose determination shall
be conclusive.
"Common Stock" means the Company's Common Stock, par value $.10 per
share.
"Company Change in Control Purchase Notice" has the meaning provided in
Section 2.03.
"Company Notice" has the meaning provided in Section 2.04.
"Company Notice Date" has the meaning provided in Section 2.04.
"Controlled" means ownership or control of more than 50% of the voting
power of such entity.
"Conversion Agent" means the office or agency designated by the Company
where Debentures may be presented for conversion.
"Conversion Date" has the meaning provided in Section 2.06.
"Conversion Rate" has the meaning provided in Section 2.06.
"Debentures" has the meaning provided in the Recitals.
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<PAGE> 6
"Depositary" has the meaning provided in Article Three.
"Distributed Securities" has the meaning provided in Section 2.07.
"Event of Default" has the meaning provided in Section 5.01.
"Expiration Time" has the meaning provided in Section 2.07.
"fair market value" shall mean the amount which a willing buyer would
pay a willing seller in an arm's length transaction.
"Final Maturity" or "Final Maturity Date" shall be July 29, 2018.
"Funded Debt" of any Person means all Indebtedness for borrowed money
created, incurred, assumed or guaranteed in any manner by such person, and all
Indebtedness, contingent or otherwise, incurred or assumed by such person in
connection with the acquisition of any business, property or asset, which in
each case matures more than one year after, or which by its terms is renewable
or extendible or payable out of the proceeds of similar Indebtedness incurred
pursuant to the terms of any revolving credit agreement or any similar agreement
at the option of such person for a period ending more than one year after the
date as of which Funded Debt is being determined; provided, however, that Funded
Debt shall not include (i) any Indebtedness for the payment, redemption or
satisfaction of which money (or evidences of indebtedness, if permitted under
the instrument creating or evidencing such indebtedness) in the necessary amount
shall have been irrevocably deposited in trust with a trustee or proper
depository either on or before the maturity or redemption date thereof or (ii)
any Indebtedness of such person to any of its subsidiaries or of any subsidiary
to such person or any other subsidiary or (iii) any Indebtedness incurred in
connection with the financing of operating, construction or acquisition
projects, provided that the recourse for such indebtedness is limited to the
assets of such projects.
"Global Securities" means with respect to the Debentures issued
hereunder, a Debenture which is executed by the Company and authenticated and
delivered by the Trustee to the Depositary or pursuant to the Depositary's
instruction, all in accordance with this Supplemental Indenture and any
supplemental indentures hereto, if any, or certified resolution of the Board of
Directors and pursuant to a written request by the Company, which shall be
registered in the name of the Depositary or its nominee and which shall
represent, and shall be denominated in an amount equal to the aggregate
Principal Amount at Final Maturity of, all of the outstanding Debentures or any
portion thereof, in either case having the same terms, including, without
limitation, the same original Issue Date and Final Maturity Date.
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"Indebtedness" means, with respect to the Company or any Subsidiary,
and without duplication, (a) the principal of and premium, if any, and interest
on, and fees, costs, enforcement expenses, collateral protection expenses and
other reimbursement or indemnity obligations in respect to all indebtedness or
obligations of the Company or any Subsidiary to any Person, including but not
limited to banks and other lending institutions, for money borrowed that is
evidenced by a note, bond, debenture, loan agreement, or similar instrument or
agreement (including purchase money obligations with original maturities in
excess of one year and noncontingent reimbursement obligations in respect of
amounts paid under letters of credit); (b) all reimbursement obligations and
other liabilities (contingent or otherwise) of the Company or any Subsidiary
with respect to letters of credit, bank guarantees or bankers' acceptances, (c)
all obligations and liabilities (contingent or otherwise) in respect of leases
of the Company or any Subsidiary required, in conformity with generally accepted
accounting principles, to be accounted for as capital lease obligations on the
balance sheet of the Company, (d) all obligations of the Company or any
Subsidiary (contingent or otherwise) with respect to an interest rate or other
swap, cap or collar agreement or other similar instrument or agreement or
foreign currency hedge, exchange, purchase or similar instrument or agreement,
(e) all direct or indirect guaranties or similar agreements by the Company or
any Subsidiary in respect of, and obligations or liabilities (contingent or
otherwise) of the Company or such Subsidiary to purchase or otherwise acquire,
or otherwise assure a creditor against loss in respect of, indebtedness,
obligations or liabilities of another Person of the kind described in clauses
(a) through (d), (f) any indebtedness or other obligations, excluding any
operating leases the Company or any Subsidiary is currently (or may become) a
party to, described in clauses (a) through (d) secured by any Lien existing on
property which is owned or held by the Company or Subsidiary, regardless of
whether the indebtedness or other obligation secured thereby shall have been
assumed by the Company or such Subsidiary and (g) any and all deferrals,
renewals, extensions and refinancing of, or amendments, modifications or
supplements to, any indebtedness, obligation or liability of the kind described
in clauses (a) through (f).
"Indenture" has the meaning provided in the Recitals.
"Issue Date" of any Debenture means the date on which the Debenture was
originally issued or deemed issued as set forth on the face of the Debenture.
"Issue Price" of any Debenture means, in connection with the original
issuance of such Debenture, the initial issue price at which the Debenture is
issued as set forth on the face of the Debenture.
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"Lien" means any mortgage, pledge, lien, encumbrance, charge or
security interest of any kind.
"Market Price" means the average of the daily Sale Prices of the Common
Stock for the 10 Trading Day period ending on (if the third Business Day prior
to the applicable date in question is a Trading Day or, if not, then on the last
Trading Day prior to) the third Business Day prior to the applicable date in
question, appropriately adjusted to take into account the occurrence during the
period commencing on the first of such Trading Days during such 10 Trading Day
period and ending on such date in question any event that would result in an
adjustment of the Conversion Rate with respect to the Common Stock.
"Original Issue Discount" of any Debenture means the difference between
the Issue Price and the Principal Amount at Final Maturity of the Debenture as
set forth on the face of the Debenture.
"Paying Agent" means the office or agency designated by the Company
where Debentures may be presented for payment.
"Permitted Holders" means any current holder of the Company's Class B
Common Stock and any permitted transferee of the Company's Class B Common Stock
under the terms of the Company's Certificate of Incorporation as it exists on
July 29, 1998.
"Permitted Liens" has the meaning provided in Section 4.01.
"Permitted Sale-Leaseback Transactions" has the meaning provided in
Section 4.02.
"Person" means any individual, corporation, partnership, joint venture,
joint-stock company, trust, unincorporated organization or government or any
government agency or political subdivision.
"Pricing Trading Date" has the meaning provided in the definition of
Change in Control in Section 1.04.
"Principal", "Principal Amount" or "principal" of a debt security,
including the Debentures, means the principal of the security, including any
accrued Original Issue Discount on the security.
"Publicly Traded Securities" the meaning provided in the definition of
Change in Control in Section 1.04.
"Purchase Date" has the meaning provided in Section 2.04.
"Purchase Notice" has the meaning provided in Section 2.04.
"Purchase Price" has the meaning provided in Section 2.04.
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"Purchased Shares" has the meaning provided in Section 2.07.
"Record Date" shall mean, with respect to any dividend, distribution or
other transaction or event in which the holders of Common Stock have the right
to receive any cash, securities or other property or in which the Common Stock
(or other applicable security) is exchanged for or converted into any
combination of cash, securities or other property, the date fixed for
determination of shareholders entitled to receive such cash, securities or other
property (whether such date is fixed by the Board of Directors or by statute,
contract or otherwise).
"Redemption Date," when used with respect to any Debenture to be
redeemed, means the date fixed for such redemption by or pursuant to this
Supplemental Indenture.
"Redemption Price," when used with respect to any Debenture to be
redeemed, means the price at which it is to be redeemed pursuant to this
Supplemental Indenture.
"Sale-Leaseback Transaction" means any arrangement with any person
providing for the leasing by the Company or a Subsidiary as lessee of any real
or tangible personal property, which property has been or is to be sold or
transferred by the Company or such Subsidiary to such person.
"Sale Price" of the Common Stock on any date means the average of the
high and low per share sale price (or if no sale prices are reported, the
average of the bid and ask prices or, if more than one in either case, the
average of the average bid and average ask prices) on such date as reported in
the composite transactions reported on the principal United States securities
exchange on which the Common Stock is listed or, if the Common Stock is not
listed on a United States national or regional stock exchange, as reported by
the National Association of Securities Dealers Automated Quotation System.
"Supplemental Indenture" has the meaning provided in the Preamble.
"Subsidiary" means (i) a corporation or other entity of which a
majority in voting power of the stock or other interests is owned by the
Company, by a Subsidiary of the Company or by the Company and one or more
Subsidiaries of the Company or (ii) a partnership, the sole general partner of
which is the Company or any Subsidiary.
"Trading Day" shall mean (x) if the applicable security is listed or
admitted for trading on the New York Stock Exchange, the Nasdaq National Market
or another national security exchange, a day on which the New York Stock
Exchange, the Nasdaq National Market or another national security exchange is
open for business or (y) if the applicable security is quoted on the Nasdaq
National Market, a day on which trades may be made thereon or (z)
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if the applicable security is not so listed, admitted for trading or quoted, any
day other than a Saturday or Sunday or a day on which banking institutions in
the State of New York are authorized or obligated by law or executive order to
close.
"Trustee" means the person named as such in this Supplemental Indenture
and, subject to the provisions of Article 7 of the Indenture, any successor to
that person.
"Voting Stock" means the Common Stock, the Company's Class B Common
Stock and any other stock of the Company which votes together with the Common
Stock in the election of directors (without regard to whether there has been an
arrearage in the payment of dividends on preferred stock).
ARTICLE TWO
ZERO COUPON SENIOR CONVERTIBLE DEBENTURES DUE 2018
SECTION 2.01. In accordance with Section 2.02 of the Indenture, there is hereby
created a series of Securities under the Indenture entitled "Zero Coupon Senior
Convertible Debentures due 2018".
(1) The form of the Debentures is attached hereto as Exhibit A, and the
form of the certificate of authentication is attached hereto as Exhibit B.
(2) Subject to Section 2.09 of the Indenture and applicable law, the
aggregate Principal Amount at Final Maturity of the Debentures which may be
authenticated and delivered is limited to $495,650,000.
(3) The aggregate Principal Amount at Final Maturity of the Debentures
shall be payable on the Final Maturity Date unless earlier repaid or converted
in accordance with this Supplemental Indenture.
(4) The Debentures shall be issued at an Issue Price of $464.13 per
$1,000 Principal Amount at Final Maturity. There shall be no periodic payments
of interest on the Debentures. The calculation of the accrual of Original Issue
Discount in the period during which each Debenture remains outstanding shall be
on a semiannual bond equivalent basis using a 360-day year composed of twelve
30-day months, and such accrual shall commence on the Issue Date of the
Debentures. In the event of the maturity, conversion, purchase by the Company at
the option of a Holder or redemption of a Debenture, Original Issue Discount, if
any, shall cease to accrue on such Debenture, under the terms and subject to the
conditions of this Supplemental Indenture.
(5) All amounts payable in connection with the Debentures shall be
denominated and payable in the lawful currency of the United States.
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(6) The Debentures shall be payable and may be presented for
conversion, registration of transfer and exchange, without service charge, at
the office of the Company maintained for such purpose in New York, New York,
which shall initially be the office or agency of the Trustee.
SECTION 2.02. Optional Redemption by the Company.
(1) Right to Redeem; Notice to Trustee. The Company, at its option, may
redeem the Debentures in accordance with the provisions of paragraphs 5 and 7 of
the Debentures. If the Company elects to redeem Debentures pursuant to paragraph
5 of the Debentures, it shall notify the Trustee in writing of the Redemption
Date, the Principal Amount at Final Maturity of Debentures to be redeemed and
the Redemption Price. The Company shall give the notice to the Trustee provided
for in this Section 2.02(1) at least 30 days but not more than 60 days before
the Redemption Date (unless a shorter notice shall be satisfactory to the
Trustee).
(2) Selection of Debentures to be Redeemed. If any Debenture selected
for partial redemption is thereafter surrendered for conversion in part before
termination of the conversion right with respect to the portion of the Debenture
so selected, the converted portion of such Debenture shall be deemed (so far as
may be), solely for purposes of determining the aggregate Principal Amount at
Final Maturity of Debentures to be redeemed by the Company, to be the portion
selected for redemption. Debentures which have been converted during a selection
of Debentures to be redeemed may be treated by the Trustee as outstanding for
the purpose of such selection. Nothing in this Section 2.02(2) shall affect the
right of any Holder to convert any Debenture pursuant to Sections 2.06, 2.07 and
2.08 before the termination of the conversion right with respect thereto.
(3) Notice of Redemption. At least 30 days but not more than 60 days
before a Redemption Date, the Company shall mail or cause to be mailed a notice
of redemption by first-class mail to the Trustee and to each Holder of
Debentures to be redeemed at such Holder's address as it appears on the
Debenture register.
The notice shall identify the Debentures to be redeemed and shall
state:
(a) the Redemption Date;
(b) the Redemption Price;
(c) the then current Conversion Rate;
(d) the name and address of the Paying Agent and the
Conversion Agent;
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(e) that Debentures called for redemption must be presented
and surrendered to the Paying Agent to collect the Redemption Price;
(f) that the Debentures called for redemption may be converted
at any time before the close of business on the Redemption Date;
(g) that Holders who wish to convert Debentures must satisfy
the requirements in paragraph 9 of the Debentures;
(h) that, unless the Company defaults in making the redemption
payment, the only remaining right of the Holder shall be to receive payment of
the Redemption Price upon presentation and surrender to the Paying Agent of the
Debentures;
(i) if fewer than all the outstanding Debentures are to be
redeemed, the certificate number and Principal Amounts at Final Maturity of the
particular Debentures to be redeemed;
(j) that Original Issue Discount on Debentures called for
redemption shall cease to accrue on and after the Redemption Date; and
(k) the CUSIP number or numbers for the Debentures called for
redemption.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at the Company's expense.
(4) Effect of Notice of Redemption. Once notice of redemption is
mailed, Debentures called for redemption become due and payable on the
Redemption Date and at the Redemption Price stated in the notice, except for
Debentures that are converted in accordance with the provisions of Sections
2.06, 2.07 and 2.08. Upon presentation and surrender to the Paying Agent,
Debentures called for redemption shall be paid at the Redemption Price.
(5) Sinking Fund. There shall be no sinking fund provided for the
Debentures.
SECTION 2.03. Repurchase at Option of the Holder Upon a Change in Control.
(1) If a Change in Control shall occur at any time prior to the Final
Maturity Date, each Holder of Debentures shall have the right, at such Holder's
option, to require the Company to purchase such Holder's Debentures on the date
(the "Change in Control Purchase Date") (or if such date is not a Business Day,
the next succeeding Business Day) that is 35 days after the date of the Change
in Control. The Debentures shall be repurchased in integral multiples of $l,000
of Principal Amount at Final Maturity. The Company shall purchase such
Debentures for Cash at a price (the "Change in Control Purchase Price") equal to
the
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Issue Price plus accrued Original Issue Discount to the Change in Control
Purchase Date. No Debentures may be repurchased at the option of the Holders due
to a Change in Control if there has occurred and is continuing an Event of
Default (other than a default in the payment of the Change in Control Purchase
Price with respect to such Debentures).
(2) The Company, or at its request (which must be received by the
Trustee at least three Business Days (or such lesser period as agreed to by the
Trustee) prior to the date the Trustee is requested to give such notice as
described below) the Trustee in the name of and at the expense of the Company,
shall mail to all Holders of record of the Debentures a notice (a "Company
Change in Control Notice") of the occurrence of a Change in Control and of the
repurchase right arising as a result thereof on or before the fifteenth day
after the occurrence of such Change in Control. The Company shall promptly
furnish to the Trustee a copy of such notice.
(3) For a Debenture to be so repurchased at the option of the Holder,
the Paying Agent must receive such Debenture with the form entitled "Change in
Control Purchase Notice" on the reverse thereof duly completed, together with
such Debenture duly endorsed for transfer, on or before the Change in Control
Purchase Date. All questions as to the validity, eligibility (including time of
receipt) and acceptance of any Debenture for redemption shall be determined by
the Company, whose determination shall be final and binding.
SECTION 2.04. Purchase of Debentures at the Option of the Holder.
(1) General. On each of July 29, 2003, July 29, 2008 and July 29, 2013
(each, a "Purchase Date"), at the purchase price specified in paragraph 6 of the
Debentures (each, a "Purchase Price"), a Holder of Debentures shall have the
option to require the Company to purchase any outstanding Debentures, upon:
(a) delivery to the Paying Agent by the Holder of a written
notice of purchase (a "Purchase Notice") at any time from the opening of
business on the date that is 20 Business Days prior to a Purchase Date until the
close of business on such Purchase Date, stating:
(i) the certificate numbers of the Debentures which
the Holder shall deliver to be purchased;
(ii) the portion of the Principal Amount at Final
Maturity of the Debentures which the Holder shall deliver to be purchased, which
portion must be $1,000 in Principal Amount at Final Maturity or a multiple
thereof;
(iii) that such Debentures shall be purchased as of
the Purchase Date pursuant to the terms and conditions
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specified in paragraph 6 of the Debentures and in this Supplemental Indenture;
and
(iv) if the Company elects, pursuant to a Company
Notice, to pay the Purchase Price to be paid as of such Purchase Date, in whole
or in part, in Common Stock but such portion of the Purchase Price shall
ultimately be payable to such Holder in Cash because any of the conditions to
the payment of the Purchase Price in Common Stock are not satisfied prior to or
on the Purchase Date, as set forth in Section 2.04(4), whether such Holder
elects (x) to withdraw such Purchase Notice as to some or all of the Debentures
to which such Purchase Notice relates (stating the Principal Amount at Final
Maturity and certificate numbers of the Debentures as to which such withdrawal
shall relate), or (y) to receive Cash in respect of the entire Purchase Price
for all Debentures (or portions thereof) to which such Purchase Notice relates;
and
(b) delivery or book-entry transfer of such Debenture to the
Paying Agent prior to, on or after the Purchase Date (together with all
necessary endorsements) at the offices of the Paying Agent, such delivery or
transfer being a condition to receipt by the Holder of the Purchase Price
therefor; provided, however, that such Purchase Price shall be so paid pursuant
to this Section 2.04 only if the Debenture so delivered or transferred to the
Paying Agent shall conform in all respects to the description thereof in the
related Purchase Notice.
If a Holder, in such Holder's Purchase Notice (and in any written
notice of withdrawal of a portion of a Holder's Debentures previously submitted
for purchase pursuant to a Purchase Notice, the portion that remains subject to
the Purchase Notice), fails to indicate such Holder's choice with respect to the
election set forth in clause (iv) of Section 2.04(1)(a), such Holder shall be
deemed to have elected to receive Cash in respect of all Debentures subject to
such Purchase Notice in the circumstances set forth in such clause (iv).
The Company shall purchase from the Holder thereof, pursuant to this
Section 2.04, a portion of a Debenture if the Principal Amount at Final Maturity
of such portion is $1,000 or a multiple of $1,000. Provisions of this
Supplemental Indenture that apply to the purchase of all of a Debenture also
apply to the purchase of such portion of such Debenture.
Any purchase by the Company contemplated pursuant to the provisions of
this Section 2.04 shall be consummated by the delivery of the consideration to
be received by the Holder promptly following the later of the Purchase Date and
the time of delivery or book-entry transfer of the Debenture.
Notwithstanding anything herein to the contrary, any Holder delivering
to the Paying Agent the Purchase Notice contemplated by this Section 2.04(1)
shall have the right at any time prior to
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the close of business on the Purchase Date to withdraw such Purchase Notice (in
whole or in part) by delivery of a written notice of withdrawal to the Paying
Agent in accordance with Section 2.05(1).
The Paying Agent shall promptly notify the Company of the receipt by it
of any Purchase Notice or written notice of withdrawal thereof.
(2) Company's Right to Elect Manner of Payment of Purchase Price. The
Company may elect with respect to any Purchase Date to pay the Purchase Price in
respect of the Debentures to be purchased pursuant to Section 2.04(1) as of such
Purchase Date, in U.S. legal tender ("Cash") or Common Stock, or in any
combination of Cash and Common Stock, subject to the conditions set forth in
Sections 2.04(3) and (4). The Company shall designate, in the Company Notice
delivered pursuant to Section 2.04(5), whether the Company shall purchase the
Debentures for Cash or Common Stock, or, if a combination thereof, the
percentages of the Purchase Price of Debentures in respect of which it shall pay
in Cash and/or Common Stock; provided that the Company shall pay Cash for
fractional interests in Common Stock. For purposes of determining the existence
of potential fractional interests, all Debentures subject to purchase by the
Company held by a Holder shall be considered together (no matter how many
separate certificates are to be presented). Each Holder whose Debentures are
purchased pursuant to this Section 2.04 shall receive the same percentage of
Cash and/or Common Stock in payment of the Purchase Price for such Debentures,
except (a) as provided in Section 2.04(4) with regard to the payment of Cash in
lieu of fractional interests in Common Stock and (b) in the event that the
Company is unable to purchase the Debentures of a Holder or Holders for Common
Stock because any necessary qualifications or registrations of the Common Stock
under applicable federal or state securities laws cannot be obtained, the
Company may purchase the Debentures of such Holder or Holders for Cash. Once the
Company has given its Company Notice to Holders, the Company may not change its
election with respect to the consideration (or components or percentages of
components thereof) to be paid except pursuant to this Section 2.04(2) or
Section 2.04(4).
At least five Business Days before the Company Notice Date, the Company
shall deliver an Officers' Certificate to the Trustee specifying:
(a) the manner of payment selected by the Company,
(b) the information required by Section 2.04(5),
(c) if the Company elects to pay the Purchase Price, or a
specified percentage thereof, in Common Stock, that the conditions to such
manner of payment set forth in Section 2.04(4) have been or shall be complied
with, and
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(d) whether the Company desires the Trustee to give the Company
Notice required by Section 2.04(5).
(3) Purchase with Cash. At the option of the Company, the Purchase
Price of Debentures in respect of which a Purchase Notice pursuant to Section
2.04(1) has been given, or a specified percentage thereof, may be paid by the
Company with Cash equal to the aggregate Purchase Price, or such specified
percentage thereof, as the case may be, of such Debentures. No Debentures may be
purchased at the option of the Holders with Cash if there has occurred and is
continuing an Event of Default (other than a default in the payment of the
Purchase Price with respect to such Debentures).
(4) Payment by Issuance of Common Stock. At the option of the Company,
the Purchase Price of Debentures in respect of which a Purchase Notice pursuant
to Section 2.04(1) has been given, or a specified percentage thereof, may be
paid by the Company by the issuance of a number of shares of Common Stock equal
to the quotient obtained by dividing (a) the amount of Cash to which the Holders
would have been entitled had the Company elected to pay all or such specified
percentage, as the case may be, of the Purchase Price of such Debentures in Cash
by (b) the Market Price of a share of Common Stock, subject to the next
succeeding paragraph.
The Company shall not issue a fractional share of Common Stock in
payment of the Purchase Price. Instead the Company shall pay Cash for the
current market value of the fractional share. The current market value of a
fraction of a share shall be determined by multiplying the Market Price by such
fraction and rounding the product to the nearest whole cent. It is understood
that if a Holder elects to have more than one Debenture purchased, the number of
shares of Common Stock shall be based on the aggregate amount of Debentures to
be purchased.
The Company's right to exercise its election to purchase the Debentures
pursuant to Section 2.04 through the issuance of shares of Common Stock shall be
conditioned upon:
(a) the Company having given timely written notice in
accordance with Section 2.04(5) to the Trustee of its election to purchase all
or a specified percentage of the Debentures with Common Stock as provided
herein;
(b) (i) (A) the registration of the shares of Common Stock to
be issued in respect of the payment of the specified percentage of the Purchase
Price under the Securities Act of 1933 or (B) the issuance of the shares of
Common Stock in an action which is exempt from the registration requirements of
the Securities Act of 1933 and which will not result in such shares of Common
Stock being deemed "restricted securities" under the Securities Act of 1933 or
otherwise and (ii) the registration of
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the shares of Common Stock under the Securities Exchange Act of 1934;
(c) any necessary qualification or registration under
applicable state securities laws or the availability of an exemption from such
qualification and registration; and
(d) the receipt by the Trustee of an Officers' Certificate and
an Opinion of Counsel each stating that (i) the terms of the issuance of the
Common Stock are in conformity with this Supplemental Indenture and (ii) the
shares of Common Stock to be issued by the Company in payment of the specified
percentage of the Purchase Price in respect of Debentures have been duly
authorized and, when issued and delivered pursuant to the terms of this
Supplemental Indenture in payment of the specified percentage of the Purchase
Price in respect of Debentures, shall be validly issued, fully paid and
nonassessable, and, in the case of such Officers' Certificate, stating that
conditions (a), (b) and (c) above have been satisfied and, in the case of such
Opinion of Counsel, stating that conditions (b) and (c) above have been
satisfied.
Such Officers' Certificate shall also set forth the number of shares of
Common Stock to be issued for each $1,000 Principal Amount at Final Maturity of
Debentures and the Sale Price of a share of Common Stock on each Trading Day
during the period during which the Market Price is calculated and ending on the
Purchase Date. The Company may elect to pay the Purchase Price (or any portion
thereof) in Common Stock only if the information necessary to calculate the
Market Price is reported in a daily newspaper of national circulation. If any of
the conditions set forth in this Section 2.04(4) are not satisfied with respect
to a Holder or Holders prior to or on the Purchase Date and the Company elected
to purchase the Debentures to be purchased as of such Purchase Date pursuant to
this Section 2.04 through the issuance of shares of Common Stock, the Company
shall pay the entire Purchase Price in respect of such Debentures of such Holder
or Holders in Cash.
Upon determination of the actual number of shares of Common Stock which
the Holder of each $1,000 Principal Amount at Final Maturity of the Debentures
shall receive, the Company shall publish such determination in a daily newspaper
of national circulation.
(5) Notice of Election. The Company's notices of election to purchase
with Cash or Common Stock, or any combination thereof (each a "Company Notice"),
shall be sent to the Holders (and to beneficial owners as required by applicable
law) at their addresses shown in the Debenture register maintained by the
Registrar not less than 20 Business Days prior to the Purchase Date (the
"Company Notice Date"). Such Company Notices shall state the manner of payment
elected and shall contain the following information:
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In the event the Company has elected to pay a Purchase Price (or a
specified percentage thereof) with Common Stock, the Company Notice shall:
(a) state that each Holder shall receive Common Stock with a
Market Price determined as of a specified date prior to the Purchase Date equal
to such specified percentage of the Purchase Price of the Debentures held by
such Holder (except any Cash amount to be paid in lieu of fractional share); and
(b) set forth the method of calculating the Market Price.
In any case, each Company Notice shall include a form of Purchase
Notice to be completed by a Holder and shall state:
(a) the Purchase Price and Conversion Rate;
(b) the name and address of the Paying Agent and the
Conversion Agent;
(c) that Debentures as to which a Purchase Notice has been
given may be converted only if the applicable Purchase Notice has been withdrawn
in accordance with the terms of this Supplemental Indenture;
(d) that Debentures must be surrendered to the Paying Agent to
collect payment;
(e) that the Purchase Price for any Debenture as to which a
Purchase Notice has been given and not withdrawn shall be paid promptly
following the later of the Purchase Date and the time of surrender of such
Debenture as described in (d);
(f) the procedures the Holder must follow under Section 2.04;
(g) briefly, the conversion rights of the Debentures; and
(h) the procedures for withdrawing a Purchase Notice
(including, without limitation, for a conditional withdrawal pursuant to the
terms of Section 2.04(1)(a)(iv)).
At the Company's request and at the Company's expense, the Trustee
shall give the Company Notice in the Company's name; provided, however, that, in
all cases, the text of the Company Notice shall be prepared by the Company.
(6) Covenants of the Company. All shares of Common Stock delivered upon
conversion or purchase of the Debentures shall be newly issued shares or
treasury shares, shall be fully paid and nonassessable and shall be free from
preemptive rights and free of any lien or adverse claim.
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The Company shall cause to have listed or quoted all such shares of
Common Stock on each United States national securities exchange or over-the
counter or other domestic market on which the Common Stock is then listed or
quoted.
(7) Procedure Upon Purchase. On or before 11:00 a.m. New York City time
on the Business Day next following the Purchase Date, the Company shall deposit
with the Paying Agent Cash (in respect of a Cash purchase under Section 2.04(3)
or for fractional interests, as applicable), or shares of Common Stock, or a
combination thereof, as applicable, sufficient to pay the aggregate Purchase
Price of the Debentures to be purchased pursuant to this Section 2.04. Payment
of the Purchase Price for such Debenture shall be made as soon as practicable
following the later of the Purchase Date or the time of book-entry transfer or
delivery of such Debenture. If the Company is delivering Common Stock, the
Company shall deliver to each Holder entitled to receive Common Stock, through
the Paying Agent, a certificate for the number of full shares of Common Stock,
as applicable, issuable in payment of such Purchase Price and Cash in lieu of
any fractional interests. The Person in whose name the certificate for Common
Stock is registered shall be treated as a holder of record following the
Purchase Date. Subject to Section 2.04(4), no payment or adjustment shall be
made for dividends on the Common Stock the record date for which occurred on or
prior to the Purchase Date. If the Paying Agent holds, in accordance with the
terms of the Indenture, money or securities sufficient to pay the Purchase Price
of such Debenture on the Business Day following the Purchase Date, then, on and
after such date, such Debenture shall cease to be outstanding and Original Issue
Discount on such Debenture shall cease to accrue, whether or not book-entry
transfer of such Debenture is made or such Debenture is delivered to the Paying
Agent, and all other rights of the Holder shall terminate (other than the right
to receive the Purchase Price upon delivery or transfer of the Debenture).
(8) Taxes. If a Holder of a Debenture is paid in Common Stock, the
Company shall pay any documentary, stamp or similar issue or transfer tax due on
such issue of shares of Common Stock. However, the Holder shall pay any such tax
which is due because the Holder requests the shares of Common Stock to be issued
in a name other than the Holder's name. The Paying Agent may refuse to deliver
the certificates representing the Common Stock being issued in a name other than
the Holder's name until the Paying Agent receives a sum sufficient to pay any
tax which shall be due because the shares of Common Stock are to be issued in a
name other than the Holder's name. Nothing herein shall preclude any income tax
withholding required by law or regulations.
SECTION 2.05. Further Conditions for Purchase at the Option of Holders Upon a
Change in Control and Purchase of Debentures at the Option of the Holder.
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(1) Effect of Purchase Notice or Change in Control Purchase Notice.
Upon receipt by the Company of the Purchase Notice or Change in Control Purchase
Notice specified in Section 2.04(1) or Section 2.03(2), as applicable, the
Holder of the Debenture in respect of which such Purchase Notice or Change in
Control Purchase Notice, as the case may be, was given shall (unless such
Purchase Notice or Change in Control Purchase Notice is withdrawn as specified
in the following two paragraphs) thereafter be entitled to receive solely the
Purchase Price or Change in Control Purchase Price, as the case may be, with
respect to such Debenture. Such Purchase Price or Change in Control Purchase
Price shall be paid to such Holder promptly following the later of (x) the
Purchase Date or the Change in Control Purchase Date, as the case may be, with
respect to such Debenture (provided the conditions in Section 2.04(1) or Section
2.03(3), as applicable, have been satisfied) and (y) the time of delivery or
book-entry transfer of such Debenture to the Paying Agent by the Holder thereof
in the manner required by Section 2.04(1) or Section 2.03(3), as applicable.
Debentures in respect of which a Purchase Notice or Change in Control Purchase
Notice, as the case may be, has been given by the Holder thereof may not be
converted for shares of Common Stock on or after the date of the delivery of
such Purchase Notice (or Change in Control Purchase Notice, as the case may be),
unless such Purchase Notice (or Change in Control Purchase Notice, as the case
may be) has first been validly withdrawn as specified in the following two
paragraphs.
A Purchase Notice or Change in Control Purchase Notice, as the case may
be, may be withdrawn by means of a written notice of withdrawal delivered to the
office of the Paying Agent at any time prior to the close of business on the
Purchase Date or the Change in Control Purchase Date, as the case may be, to
which it relates specifying;
(a) the certificate number of the Debenture in respect of
which such notice of withdrawal is being submitted,
(b) the Principal Amount at Final Maturity of the Debenture
with respect to which such notice of withdrawal is being submitted, and
(c) the Principal Amount at Final Maturity, if any, of such
Debenture which remains subject to the original Purchase Notice or Company
Change in Control Notice, as the case may be, and which has been or shall be
delivered for purchase by the Company.
A written notice of withdrawal of a Purchase Notice may be in the form
of (i) a conditional withdrawal contained in a Purchase Notice pursuant to the
terms of Section 2.04(1)(a)(iv) or (ii) a conditional withdrawal containing the
information set forth in Section 2.04(1)(a)(iv) and the preceding paragraph and
contained in a written notice of withdrawal delivered to the Paying Agent as set
forth in the preceding paragraph.
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There shall be no purchase of any Debentures pursuant to Section 2.04
(other than through the issuance of Common Stock in payment of the Purchase
Price, including Cash in lieu of any fractional shares) or redemption pursuant
to Section 2.03 if there has occurred prior to, on or after, as the case may be,
the giving, by the Holders of such Debentures, of the required Purchase Notice
(or Change in Control Purchase Notice, as the case may be) and is continuing an
Event of Default (other than a default in the payment of the Purchase Price or
Change in Control Purchase Price, as the case may be, with respect to such
Debentures).
(2) Deposit of Purchase Price or Change in Control Purchase Price. On
or before 11:00 a.m. New York City time on the Business Day next following a
Purchase Date or a Change in Control Purchase Date, as the case may be, the
Company shall deposit with the Trustee or with the Paying Agent (or, if the
Company or an Affiliate of the Company is acting as the Paying Agent, shall
segregate and hold in trust) an amount of money and/or Common Stock, if
permitted hereunder, sufficient to pay the aggregate Purchase Price or Change in
Control Purchase Price, as the case may be, of all the Debentures or portions
thereof which are to be purchased as of such Purchase Date or Change in Control
Redemption Date, as the case may be.
(3) Debentures Purchased in Part. Any Debenture that is to be purchased
only in part shall be surrendered at the office of the Paying Agent (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 such Holder's attorney duly authorized in
writing) and the Company shall execute and the Trustee shall authenticate and
deliver to the Holder of such Debenture, without service charge, a new Debenture
or Debentures, of any authorized denomination as requested by such Holder in
aggregate Principal Amount at Final Maturity equal to, and in exchange for, the
portion of the Principal Amount at Final Maturity of the Debenture so
surrendered which is not purchased or redeemed.
(4) Covenant to Comply with Securities Laws Upon Purchase of
Debentures. In connection with any offer to purchase Debentures under Sections
2.03 or 2.04 hereof, the Company shall (a) comply with Rule 13e-4 (which term,
as used herein, includes any successor provision thereto) under the Securities
Exchange Act of 1934, if applicable, (b) file the related Schedule 13E-4 (or any
successor schedule, form or report) under the Securities Exchange Act of 1934,
if applicable, and (c) otherwise comply with all federal and state securities
laws so as to permit the rights and obligations under Sections 2.03 and 2.04 to
be exercised in the time and in the manner specified in Sections 2.03 and 2.04.
(5) Repayment to the Company. The Trustee and the Paying Agent shall
return to the Company any cash or shares of Common
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<PAGE> 22
Stock that remain unclaimed as provided in paragraph 12 of the Debentures,
together with interest that the Trustee has agreed to pay, if any, or dividends,
if any, paid thereon while such shares are held by the Trustee or the Paying
Agent, held by them for the payment of a Purchase Price or Change in Control
Purchase Price, as the case may be; provided, however, that to the extent that
the aggregate amount of cash or shares of Common Stock deposited by the Company
pursuant to Section 2.05(2) exceeds the aggregate Purchase Price or Change in
Control Purchase Price, as the case may be, of the Debentures or portions
thereof which the Company is obligated to purchase as of the Purchase Date or
Change in Control Purchase Date, as the case may be, then promptly after the
Business Day following the Purchase Date or Change in Control Purchase Date, as
the case may be, the Trustee and the Paying Agent shall return any such excess
to the Company together with interest that the Trustee has agreed to pay, if
any, or dividends, if any, paid thereon while such shares are held by the
Trustee or the Paying Agent.
SECTION 2.06. Conversion of Debentures.
(1) Right to Convert. A Holder of a Debenture may convert such
Debenture for Common Stock at any time during the period stated in paragraph 9
of the Debentures; provided, however, that if the Debentures are properly
presented for conversion before July 29, 2003 pursuant to the requirements of
this Section 2.06, the Company, at its option, instead of delivering shares of
Common Stock, may pay the Holder an amount equal to the Market Price of the
Common Stock on the day the Debentures are properly presented for conversion.
The number of shares of Common Stock issuable upon conversion of a Debenture per
$1,000 of Principal Amount at Final Maturity (the "Conversion Rate") shall be
that set forth in paragraph 9 in the Debentures, subject to adjustment as herein
set forth.
A Holder may convert a portion of the Principal Amount at Final
Maturity of a Debenture if the portion is $1,000 or a multiple of $1,000.
Provisions of this Supplemental Indenture that apply to conversion of all of a
Debenture also apply to conversion of a portion of a Debenture.
(2) Conversion Procedures. To convert a Debenture a Holder must satisfy
the requirements in paragraph 9 of the Debentures. The date on which the Holder
of Debentures satisfies all those requirements is the conversion date (the
"Conversion Date"). Unless the Conversion Date is prior to July 29, 2003 and the
Company elects to pay the Market Price of the Common Stock instead of issuing
shares of Common Stock, as soon as practicable, but in no event later than the
seventh Business Day, after the Conversion Date the Company shall deliver to the
Holder, through the Conversion Agent, a certificate for the number of full
shares of Common Stock issuable upon the conversion and Cash in lieu of any
fractional share determined pursuant to Section 2.06(3). The Person in whose
name the
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certificate is registered shall be treated as a stockholder of record on and
after the Conversion Date; provided, however, that no surrender of a Debenture
on any date when the stock transfer books of the Company shall be closed shall
be effective to constitute the Person or Persons entitled to receive the shares
of Common Stock upon such conversion as the record holder or holders of such
shares of Common Stock on such date, but such surrender shall be effective to
constitute the Person or Persons entitled to receive such shares of Common Stock
as the record holder or holders thereof for all purposes at the close of
business on the next succeeding day on which such stock transfer books are open;
such conversion shall be at the Conversion Rate in effect on the date that such
Debenture shall have been surrendered for conversion, as if the stock transfer
books of the Company had not been closed. Upon conversion of a Debenture, such
Person shall no longer be a Holder of such Debenture.
If the Company elects to pay Cash instead of issuing shares with regard
to a Debenture presented for conversion before July 29, 2003, the Company shall
notify the Holder of such election no later than the seventh Business Day after
the Conversion Date. The Holder shall then have until the fifteenth Business Day
after the Conversion Date to withdraw the election to convert the Debenture. If
the Holder does not withdraw such election to convert, the Company shall pay the
Market Price of the shares not later than the twentieth Business Day after the
Conversion Date.
No payment or adjustment shall be made for dividends on or other
distributions with respect to any Voting Stock except as provided in Section
2.07. On conversion of a Debenture, that portion of accrued Original Issue
Discount attributable to the period from the Issue Date of the Debenture to the
Conversion Date with respect to the converted Debenture shall not be canceled,
extinguished or forfeited, but rather shall be deemed to be paid in full to the
Holder thereof through delivery of the (a) Common Stock (together with the Cash
payment, if any, in lieu of fractional shares) in exchange for the Debenture
being converted pursuant to the provisions hereof or (b) the Company's payment
of the Market Price of such shares of Common Stock, if the Conversion Date is
prior to July 29, 2003 and the Company elects to pay the Market Price of such
shares of Common Stock instead of issuing shares of Common Stock.
If a Holder converts more than one Debenture at the same time, the
number of shares of Common Stock issuable upon the conversion shall be based on
the total Principal Amount at Final Maturity of the Debentures converted.
Upon surrender of a Debenture that is converted in part, the Company
shall execute, and the Trustee shall authenticate and deliver to the Holder, a
new Debenture in an authorized denomination equal in Principal Amount at Final
Maturity to the unconverted portion of the Debenture surrendered.
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If the last day on which a Debenture may be converted is a Legal
Holiday in a place where a Conversion Agent is located, the Debenture may be
surrendered to that Conversion Agent on the next succeeding day that it is not a
Legal Holiday.
(3) Cash Payments in Lieu of Fractional Shares. The Company shall not
issue a fractional share of Common Stock upon conversion of a Debenture. Instead
the Company shall deliver Cash for the current market value of the fractional
share. The current market value of a fractional share shall be determined to the
nearest 1/10,000th of a share by multiplying the Market Price of a full share of
Common Stock by the fractional amount and rounding the product to the nearest
whole cent.
(4) Taxes on Conversion. If a Holder converts a Debenture, the Company
shall pay any documentary, stamp or similar issue or transfer tax due on the
issue of shares of Common Stock upon the conversion. However, the Holder shall
pay any such tax which is due because the Holder requests the shares to be
issued in a name other than the Holder's name. The Conversion Agent may refuse
to deliver the certificates representing the Common Stock being issued in a name
other than the Holder's name until the Conversion Agent receives a sum
sufficient to pay any tax which shall be due because the shares are to be issued
in a name other than the Holder's name. Nothing herein shall preclude any tax
withholding required by law or regulations.
(5) Company to Provide Stock. The Company shall, prior to issuance of
any Debentures hereunder, and from time to time as may be necessary, reserve out
of its authorized but unissued Common Stock a sufficient number of shares of
Common Stock to permit the conversion of the Debentures.
All shares of Common Stock delivered upon conversion of the Debentures
shall be newly issued shares or treasury shares, shall be duly and validly
issued and fully paid and nonassessable and shall be free from preemptive rights
and free of any lien or adverse claim.
The Company shall endeavor promptly to comply with all federal and
state securities laws regulating the order and delivery of shares of Common
Stock upon the conversion of Debentures, if any, and shall cause to have listed
or quoted all such shares of Common Stock on each United States national
securities exchange or over-the counter or other domestic market on which the
Common Stock is then listed or quoted.
SECTION 2.07. Adjustments to Conversion Rate. The Conversion Rate shall be
adjusted from time to time by the Company as follows:
(1) In case the Company shall (a) pay a dividend, or make a
distribution, in shares of its Voting Stock, on its Voting Stock, (b) subdivide
its outstanding Voting Stock into a greater number
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<PAGE> 25
of shares, or (c) combine its outstanding Voting Stock into a smaller number of
shares, the Conversion Rate in effect immediately prior thereto shall be
adjusted so that the holder of any Debenture thereafter surrendered for
conversion shall be entitled to receive the number of shares of Common Stock of
the Company which such holder would have owned or have been entitled to receive
after the happening of any of the events described above had such Debenture been
converted immediately prior to the happening of such event. If any dividend or
distribution of the type described in clause (a) above is not so paid or made,
the Conversion Rate shall again be adjusted to the Conversion Rate which would
then be in effect if such dividend or distribution had not been declared. An
adjustment made pursuant to this Section 2.07 shall become effective immediately
after the Record Date in the case of a dividend and shall become effective
immediately after the effective date in the case of subdivision or combination.
(2) In case the Company shall issue rights or warrants to all holders
of any class or series of its Voting Stock entitling them (for a period expiring
within 45 days after the date fixed for determination of stockholders entitled
to receive such rights or warrants) to subscribe for or purchase Voting Stock at
a price per share less than the Market Price per share of Common Stock at the
Record Date for the determination of stockholders entitled to receive such
rights or warrants, the Conversion Rate in effect immediately prior thereto
shall be adjusted so that the same shall equal the Conversion Rate determined by
multiplying the Conversion Rate in effect immediately prior to the date of the
issuance of such rights or warrants by a fraction of which the numerator shall
be the number of shares of Voting Stock outstanding on the date of issuance of
such rights or warrants plus the number of additional shares of Voting Stock
offered for subscription or purchase, and of which the denominator shall be the
number of shares of Voting Stock outstanding on the date of issuance of such
rights or warrants plus the number of shares which the aggregate offering price
of the total number of shares so offered would purchase at such Market Price.
Such adjustment shall be made successively whenever any such rights or warrants
are issued, and shall become effective immediately after the opening of business
on the day following the Record Date for the determination of the stockholders
entitled to receive such rights or warrants. To the extent that shares of Voting
Stock are not delivered after the expiration of such rights or warrants, the
Conversion Rate shall be readjusted to the Conversion Rate which would then be
in effect had the adjustments made upon the issuance of such rights or warrants
been made on the basis of delivery of only the number of shares of Voting Stock
actually delivered. If such rights or warrants are not so issued, the Conversion
Rate shall again be adjusted to be the Conversion Rate which would then be in
effect if such Record Date for the determination of stockholders entitled to
receive such rights or warrants had not been fixed. In determining whether any
rights or warrants entitle the holders to subscribe for or purchase
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<PAGE> 26
shares of Voting Stock at less than such Market Price, and in determining the
aggregate offering price of such shares of Voting Stock, there shall be taken
into account any consideration received by the Company for such rights or
warrants, the value of such consideration, if other than cash, to be determined
by the Board of Directors.
(3) In case the Company shall, by dividend or otherwise, distribute to
all holders of its Voting Stock (excluding any distribution in connection with
the liquidation, dissolution or winding up of the Company, whether voluntary or
involuntary) any shares of any class of capital stock of the Company (other than
Voting Stock) or evidences of its indebtedness or assets (other than Cash) or
rights or warrants to subscribe for or purchase any of its Debentures (excluding
those referred to in Section 2.07(2) hereof) (any of the foregoing hereinafter
in this Section 2.07(3) called the "Distributed Securities"), then, the
Conversion Rate shall be adjusted so that the same shall equal the Conversion
Rate determined by multiplying the Conversion Rate in effect immediately prior
to the date of such distribution by a fraction of which the numerator shall be
the Market Price per share of the Common Stock on the Record Date mentioned
below, and the denominator shall be the Market Price per share of the Common
Stock on such Record Date less the fair market value on such Record Date (as
determined by the Board of Directors of the Company, whose determination shall
be conclusive, and described in a certificate filed with the Trustee) of the
Distributed Securities so distributed applicable to one share of Voting Stock.
Such adjustment shall become effective immediately after the Record Date for the
determination of stockholders entitled to receive such distribution.
Notwithstanding the foregoing, in the event the then fair market value (as so
determined) of the portion of the Distributed Securities so distributed
applicable to one share of Voting Stock is equal to or greater than the Market
Price of the Common Stock on the Record Date, in lieu of the foregoing
adjustment, adequate provision shall be made so that each Holder shall have the
right to receive upon conversion the amount of Distributed Securities such
Holder would have received had such Holder converted each Debenture on such
Record Date. In the event that such distribution is not so paid or made, the
Conversion Rate shall again be adjusted to the Conversion Rate which would then
be in effect if such distribution had not been declared. If the Board of
Directors determines the fair market value of any distribution for purposes of
this Section 2.07(3) by reference to the actual or when issued trading market
for any Debentures, it must in doing so consider the prices in such market over
the same period used in computing the Market Price of the Common Stock.
Notwithstanding the foregoing provisions of this Section 2.07(3), no
adjustment shall be made thereunder for any distribution of Distributed
Securities if the Company makes proper provision so that each Holder of a
Debenture who converts such Debenture (or any portion thereof) after the Record
Date for
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<PAGE> 27
such distribution shall be entitled to receive upon such conversion, in addition
to the shares of Common Stock issuable upon such conversion, the amount and kind
of Distributed Securities that such Holder would have been entitled to receive
if such Holder had, immediately prior to such Record Date, converted such
Debenture for Common Stock; provided that, with respect to any Distributed
Securities that are convertible, exchangeable or exercisable, the foregoing
provision shall only apply to the extent (and so long as) the Distributed
Securities receivable upon conversion of such Debenture would be convertible,
exchangeable or exercisable, as applicable, without any loss of rights or
privileges for a period of at least 60 days following conversion of such
Debenture.
In the event the Company implements a stockholder rights plan, such
rights plan shall provide that upon conversion of the Debentures the Holders
shall receive, in addition to the Common Stock issuable upon such conversion,
the rights issued under such rights plan (notwithstanding the occurrence of an
event causing such rights to separate from the Common Stock at or prior to the
time of conversion).
(4) In case the Company shall, by dividend or otherwise, distribute to
all holders of any class of its Voting Stock cash (excluding any cash that is
distributed upon a merger or consolidation to which Section 2.08(6) applies or
as part of a distribution referred to in Section 2.07(3)) in an aggregate amount
that, combined together with (a) the aggregate amount of any other such
distributions to all holders of any class of its Voting Stock made exclusively
in cash within the 12 months preceding the date of payment of such distribution,
and in respect of which no adjustment pursuant to this Section 2.07(4) has been
made, and (b) the aggregate of any cash plus the fair market value (as
determined by the Board of Directors, whose determination shall be conclusive
and described in a resolution of the Board of Directors) of consideration
payable in respect of any tender offer by the Company for all or any portion of
any class of its Voting Stock concluded within the 12 months preceding the date
of payment of such distribution, and in respect of which no adjustment pursuant
to Section 2.07(5) has been made, exceeds 10% of the product of the Market Price
(determined as provided herein) on the Record Date with respect to such
distribution times the number of shares of Voting Stock outstanding on such
date, then, and in each such case, immediately after the close of business on
such date, the Conversion Rate shall be increased so that the same shall equal
the Conversion Rate determined by multiplying the Conversion Rate in effect
immediately prior to the record date by a fraction of which the numerator shall
be such Market Price of the Common Stock and the denominator shall be the Market
Price of the Common Stock on the record date less the amount of cash so
distributed (and not excluded as provided above) applicable to one share of
Voting Stock, such increase to be effective immediately prior to the opening of
business on the day following the record date and
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<PAGE> 28
the number of shares of Voting Stock outstanding on the Record Date and
provided, however, that, if the portion of the cash so distributed applicable to
one share of Voting Stock is equal to or greater than the Market Price of the
Common Stock on the Record Date, in lieu of the foregoing adjustment, adequate
provision shall be made so that each Holder shall have the right to receive upon
conversion the amount of cash such Holder would have received had such Holder
converted such Debenture immediately prior to such Record Date. If such dividend
or distribution is not so paid or made, the Conversion Rate shall again be
adjusted to be the Conversion Rate which would then be in effect if such
dividend or distribution had not been declared. If any adjustment is required to
be made as set forth in this Section 2.07(4) as a result of a distribution that
is a quarterly dividend, such adjustment shall be based upon the amount by which
such distribution exceeds the amount of the quarterly cash dividend permitted to
be excluded pursuant hereto. If an adjustment is required to be made as set
forth in this Section 2.07(4) above as a result of a distribution that is not a
quarterly dividend, such adjustment shall be based upon the full amount of the
distribution.
(5) In case a tender offer made by the Company or any of its
subsidiaries for all or any portion of any class of its Voting Stock expires and
such tender offer (as amended upon the expiration thereof) requires the payment
to stockholders (based on the acceptance (up to any maximum specified in the
terms of the tender offer) of Purchased Shares) of an aggregate consideration
having a fair market value (as determined by the Board of Directors, whose
determination shall be conclusive and described in a resolution of the Board of
Directors) that, combined together with (a) the aggregate of the cash plus the
fair market value (as determined by the Board of Directors, whose determination
shall be conclusive and described in a resolution of the Board of Directors), as
of the expiration of such tender offer, of consideration payable in respect of
any other tender offers, by the Company or any of its subsidiaries for all or
any portion of any class of its Voting Stock expiring within the 12 months
preceding the expiration of such tender offer and in respect of which no
adjustment pursuant to this Section 2.07(5) has been made, and (b) the aggregate
amount of any distributions to all holders of the Voting Stock made exclusively
in cash within 12 months preceding the expiration of such tender offer and in
respect of which no adjustment pursuant to Section 2.07(4) has been made,
exceeds 10% of the product of the Market Price (determined as provided herein)
as of the last time (the "Expiration Time") tenders could have been made
pursuant to such tender offer (as it may be amended) times the number of shares
of Voting Stock outstanding (including any tendered shares) at the Expiration
Time, then, and in each such case, immediately prior to the opening of business
on the day after the date of the Expiration Time, the Conversion Rate shall be
increased so that the same shall equal the Conversion Rate determined by
multiplying the Conversion Rate in effect immediately prior to
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<PAGE> 29
the Expiration Time by a fraction of which the numerator shall be the number of
shares of Voting Stock outstanding (including any tendered or exchanged shares)
on the Expiration Time multiplied by the Market Price of the Common Stock on the
Trading Day next succeeding the Expiration Time and the denominator shall be the
sum of (x) the fair market value (determined as aforesaid) of the aggregate
consideration payable to stockholders based on the acceptance (up to an maximum
specified in the terms of the tender or exchanged offer) of all shares validly
tendered or exchanged and not withdrawn as of the Expiration Time (the shares
deemed so accepted, up to any such maximum, being referred to as the "Purchased
Shares") and (y) the product of the number of shares of Voting Stock outstanding
(less any Purchased Shares) on the Expiration Time and the Market Price of the
Common Stock on the Trading Day next succeeding the Expiration Time such
reduction (if any) to become effective immediately prior to the opening of
business on the day following the Expiration Time. If the Company is obligated
to purchase shares pursuant to any such tender offer, but the Company is
permanently prevented by applicable law from effecting any such purchases or all
such purchases are rescinded, the Conversion Rate shall again be adjusted to be
the Conversion Rate which would then be in effect if such tender offer had not
been made.
(6) For purposes of this Section 2.07, the number of shares of Voting
Stock at any time outstanding shall not include shares held in the treasury of
the Company but shall include shares issuable in respect of scrip certificates
issued in lieu of fractions of shares of Voting Stock. The Company shall not pay
any dividend or make any distribution on shares of Voting Stock held in the
treasury of the Company.
SECTION 2.08. Miscellaneous Provisions Relating to Conversion.
(1) When Adjustment May be Deferred. No adjustment in the Conversion
Rate need be made unless the adjustment would require an increase or decrease of
at least 1% in the Conversion Rate then in effect provided that any adjustment
that would otherwise be required to be made shall be carried forward and taken
into account in any subsequent adjustment. Except as stated in Section 2.07, the
Conversion Rate will not be adjusted for the issuance of Voting Stock or any
securities convertible into or exchangeable for Voting Stock or carrying the
right to purchase any of the foregoing. Any adjustments that are made shall be
carried forward and taken into account any subsequent adjustment. All
calculations under Sections 2.06, 2.07 and 2.08 shall be made to the nearest
cent or to the nearest 1/10,000th of a share, as the case may be.
(2) When No Adjustment Required. No adjustment need be made for rights
to purchase Voting Stock pursuant to a Company plan for reinvestment of
dividends or interest. No adjustment need be made for a change in the par value
or no par value of the Voting Stock. To the extent the Debentures become
convertible
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into cash, assets, property or Debentures (other than capital stock of the
Company), no adjustment need be made thereafter as to the cash, assets, property
or such Debentures. Interest shall not accrue on the cash.
(3) Notice of Adjustment. Whenever the Conversion Rate is adjusted, the
Company shall promptly mail to Holders a notice of the adjustment. The Company
shall file with the Trustee and the Conversion Agent such notice. The
certificate shall, absent manifest error, be conclusive evidence that the
adjustment is correct. Neither the Trustee nor any Conversion Agent shall be
under any duty or responsibility with respect to any such certificate except to
exhibit the same to any Holder desiring inspection thereof.
(4) Voluntary Increase. The Company may make such increases in the
Conversion Rate, in addition to those required by Section 2.07, as the Board of
Directors considers to be advisable to avoid or diminish any income tax to
holders of Voting Stock or rights to purchase Voting Stock resulting from any
dividend or distribution of stock (or rights to acquire stock) or from any event
treated as such for income tax purposes. To the extent permitted by applicable
law, the Company may from time to time increase the Conversion Rate by any
amount for any period of time if the period is at least 20 days, the increase is
irrevocable during the period and the Board of Directors shall have made a
determination that such increase would be in the best interests of the Company,
which determination shall be conclusive. Whenever the Conversion Rate is so
increased, the Company shall mail to Holders and file with the Trustee and the
Conversion Agent a notice of such increase. Neither the Trustee nor any
Conversion Agent shall be under any duty or responsibility with respect to any
such certificate except to exhibit the same to any Holder desiring inspection
thereof. Such Company shall mail the notice at least 15 days before the date the
increased Conversion Rate takes effect. The notice shall state the increased
Conversion Rate and the period it shall be in effect.
(5) Notice to Holders Prior to Certain Actions. In case:
(a) the Company shall declare a dividend (or any other
distribution) on its Voting Stock that would require an adjustment in the
Conversion Rate pursuant to Section 2.07;
(b) the Company shall authorize the granting to all or
substantially all the Holders of its Voting Stock of rights or warrants to
subscribe for or purchase any share of any class or any other rights or
warrants;
(c) of any reclassification or reorganization of the Voting
Stock of the Company (other than a subdivision or combination of its outstanding
Voting Stock, or a change in par value, or from par value to
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no par value, or from no par value to par value), or of any consolidation or
merger to which the Company is a party and for which approval of any
shareholders of the Company is required, or of the sale or transfer of all or
substantially all of the assets of the Company; or
(d) of the voluntary or involuntary dissolution, liquidation
or winding-up of the Company, the Company shall cause to be filed with the
Trustee and to be mailed to each Holder of Debentures at his address appearing
on the Debenture register, as promptly as possible but in any event at least 15
days prior to the applicable date hereinafter specified, a notice stating (x)
the date on which a record is to be taken for the purpose of such dividend,
distribution or rights or warrants, or, if a record is not to be taken, the date
as of which the holders of Voting Stock of record to be entitled to such
dividend, distribution, or rights or warrants are to be determined, or (y) the
date on which such reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation or winding-up is expected to become effective or occur,
and the date as of which it is expected that holders of Voting Stock of record
shall be entitled to exchange their Voting Stock for securities or other
property deliver-able upon such reclassification, consolidation, merger, sale,
transfer, dissolution, liquidation or winding-up. Failure to give such notice,
or any defect therein, shall not affect the legality or validity of such
dividend, distribution, reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation or winding-up.
(6) Effect of Reclassification, Consolidation, Merger or Sale. If any
of the following events occur, namely (a) any reclassification or change of
outstanding shares of Voting Stock (other than a change in par value, or from
par value to no par value, or from no par value to par value, or as a result of
a subdivision or combination), (b) any consolidation, merger or combination of
the Company with another corporation as a result of which holders of Voting
Stock shall be entitled to receive stock, Debentures or other property or assets
(including cash) with respect to or in exchange for such Voting Stock, or (c)
any sale or conveyance of the properties and assets of the Company as, or
substantially as, an entirety to any other corporation as a result of which
holders of Voting Stock shall be entitled to receive stock, Debentures or other
property or assets (including cash) with respect to or in exchange for such
Voting Stock, then the Company or the successor or purchasing corporation, as
the case may be, shall execute with the Trustee a supplemental indenture,
providing that each Debenture shall be convertible into the kind and amount of
shares of stock and other Debentures or property or assets (including cash)
receivable upon such reclassification, change, consolidation, merger,
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combination, sale or conveyance by a holder of a number of shares of Voting
Stock issuable upon conversion of such Debentures immediately prior to such
reclassification, change, consolidation, merger, combination, sale or
conveyance. Such supplemental indenture shall provide for adjustments which
shall be as nearly equivalent as may be practicable to the adjustments provided
for in this Section 2.08(6).
The Company shall cause notice of the execution of such supplemental
indenture to be mailed to each Holder of Debentures, at his address appearing on
the Debenture register, within 20 days after execution thereof. Failure to
deliver such notice shall not affect the legality or validity of such
supplemental indenture.
The above provisions of this Section shall similarly apply to
successive reclassifications, changes, consolidations, mergers, combinations,
sales and conveyances.
If this Section 2.08(6) applies to any event or occurrence, Section
2.07 shall not apply.
(7) Responsibility of Trustee. The Trustee and any other Conversion
Agent shall not at any time be under any duty or responsibility to any Holder of
Debentures to either calculate the Conversion Rate or determine whether any
facts exist which may require any adjustment of the Conversion Rate, or with
respect to the nature or extent or calculation of any such adjustment when made,
or with respect to the method employed, or herein or in any supplemental
indenture provided to be employed, in making the same and shall be protected in
relying upon an Officer's Certificate with respect to the same. The Trustee and
any other Conversion Agent shall not be accountable with respect to the validity
or value (or the kind or amount) of any shares of Common Stock, or of any
securities or property, which may at any time be issued or delivered upon the
conversion of any Debenture and the Trustee and any other Conversion Agent make
no representations with respect thereto. Subject to the provisions of Article
Seven of the Indenture, neither the Trustee nor any Conversion Agent shall be
responsible for any failure of the Company to issue, transfer or deliver any
shares of Common Stock or stock certificates or other securities or property or
cash upon the surrender of any Debenture for the purpose of conversion or to
comply with any of the duties, responsibilities or covenants of the Company
contained in this Section. Without limiting the generality of the foregoing,
neither the Trustee nor any Conversion Agent shall be under any responsibility
to determine the correctness of any provisions contained in any supplemental
indenture entered into pursuant to Section 2.08(6) relating either to the kind
or amount of shares of stock or securities or property (including cash)
receivable by Holders upon the conversion of their Debentures after any event
referred to in such Section 2.08(6) or to any adjustment to be made with respect
thereto, but, subject to the provisions of Article Seven of the Indenture, may
accept as conclusive evidence of the correctness of any such provisions, and
shall be protected in relying upon, the Officer's Certificate (which the Company
shall
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be obligated to file with the Trustee prior to the execution of any such
supplemental indenture) with respect thereto.
(8) Simultaneous Adjustments. In the event that Sections 2.06, 2.07 or
2.08 require adjustments to the Conversion Rate under more than one of Sections
2.07(1), (2), (3) or (4), and the Record Dates for the distributions giving rise
to such adjustments shall occur on the same date, then such adjustments shall be
made by applying, first, the provisions of Section 2.07(3), second, the
provisions of Section 2.07(4), third, the provisions of Section 2.07(1), and
fourth, the provisions of Section 2.07(2).
(9) Successive Adjustments. After an adjustment to the Conversion Rate
under Sections 2.06, 2.07 or 2.08, any subsequent event requiring an adjustment
under Sections 2.06, 2.07 or 2.08 shall cause an adjustment to the Conversion
Rate as so adjusted.
(10) General Considerations. Whenever successive adjustments to the
Conversion Rate are called for pursuant to Sections 2.06, 2.07 or 2.08, such
adjustments shall be made to the Market Price as may be necessary or appropriate
to effectuate the intent of Sections 2.06, 2.07 or 2.08 and to avoid unjust or
inequitable results as determined in good faith by the Board of Directors.
ARTICLE THREE
GLOBAL SECURITIES
SECTION 3.01. If the Board of Directors of the Company shall establish that the
Debentures are to be issued in whole or in part in the form of one or more
Global Securities, then the Company shall execute and the Trustee or its agent
shall authenticate and deliver such Global Security or Securities which (1)
shall represent, and shall be denominated in an amount equal to the aggregate
Principal Amount at Final Maturity of, the outstanding Debentures to be
represented by such Global Security or Securities, or such portion thereof as
the Company shall specify in writing to the Trustee, (2) shall be registered in
the name of The Depository Trust Company, New York, New York (the "Depositary")
or its nominee, (3) shall be delivered by the Trustee or its agent to the
Depositary or pursuant to the Depositary's instruction and (4) shall bear a
legend substantially to the following effect:
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR THE INDIVIDUAL
DEBENTURES REPRESENTED HEREBY, THIS GLOBAL SECURITY MAY NOT BE
TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE
DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR
ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH
NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR
DEPOSITARY.
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Interests in the Global Securities shall be issued only in denominations of
$1,000 or integral multiples thereof.
SECTION 3.02. Notwithstanding any other provisions herein but subject to the
provisions of Section 3.03 below, unless the terms of a Global Security
expressly permit such Global Security to be exchanged in whole or in part for
individual Debentures, a Global Security may be transferred, in whole but not in
part and in the manner provided in Section 2.08 of the Indenture, only to a
nominee of the Depositary for such Global Security, or to the Depositary, or a
successor Depositary for such Global Security selected or approved by the
Company, or to a nominee of such successor Depositary.
SECTION 3.03. (1) If at any time the Depositary for a Global Security notifies
the Company that it is unwilling or unable to continue as Depositary for such
Global Security or if at any time the Depositary for the Debentures ceases to be
a clearing agency registered under the Securities Exchange Act of 1934 or other
applicable statute or regulation, the Company shall appoint a successor
Depositary with respect to such Global Security. If a successor Depositary for
such Global Security is not appointed by the Company within 90 days after the
Company receives such notice or becomes aware of such ineligibility, the Company
shall execute, and the Trustee or its agent, upon receipt of a written request
by the Company for the authentication and delivery of individual Debentures in
exchange for such Global Security, shall authenticate and deliver, individual
Debentures in an aggregate Principal Amount at Final Maturity equal to the
Principal Amount at Final Maturity of the Global Security in exchange for such
Global Security.
(2) The Company may at any time and in its sole discretion determine
that the Debentures or portion thereof issued or issuable 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 shall execute, and the Trustee, upon
receipt of a written request by the Company for the authentication and delivery
of individual Debentures in exchange in whole or in part for such Global
Security, shall authenticate and deliver individual Debentures in definitive
form in an aggregate Principal Amount at Final Maturity equal to the Principal
Amount at Final Maturity of such Global Security or Securities representing such
series or portion thereof in exchange for such Global Security or Securities.
(3) If specified by the Company with respect to Debentures issued or
issuable in the form of a Global Security, the Depositary for such Global
Security may surrender such Global Security in exchange in whole or in part for
individual Debentures in definitive form on such terms as are acceptable to the
Company and such Depositary. Thereupon the Company shall execute, and the
Trustee or its agent shall authenticate and deliver, without service-charge, (a)
to each Person specified by
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such Depositary a new Debenture or Debentures of any authorized denomination as
requested by such Person in aggregate Principal Amount at Final Maturity equal
to and in exchange for such Person's beneficial interest in the Global Security;
and (b) to such Depositary a new Global Security in an authorized denomination
equal to the difference, if any, between the Principal Amount at Final Maturity
of the surrendered Global Security and the aggregate Principal Amount at Final
Maturity of Debentures delivered to the Holders thereof.
(4) In any exchange provided for in any of the preceding three
paragraphs, the Company shall execute and the Trustee or its agent shall
authenticate and deliver individual Debentures in definitive registered form in
authorized denominations. Upon the exchange of the entire Principal Amount at
Final Maturity of a Global Security for individual Debentures, such Global
Security shall be canceled by the Trustee or its agent. Except as provided in
the preceding paragraph, Debentures issued in exchange for a Global Security
pursuant to this Section shall be registered in such names and in such
authorized denominations as the Depositary for such Global Security, pursuant to
instructions from its direct or indirect participants or otherwise, shall
instruct the Trustee or the Registrar. The Trustee or the Registrar shall
deliver such Debentures to the Persons in whose names such Debentures are so
registered.
ARTICLE FOUR
ADDITIONAL COVENANTS
SECTION 4.01. Limitation on Liens. The Company shall not, nor shall it permit
any Subsidiary to, create, assume, incur or suffer to exist any Lien upon any of
its properties or assets, whether owned on the Issue Date or thereafter
acquired, unless (1) if such Lien secures Indebtedness which is pari passu with
the Debentures, then the Debentures are secured on an equal and ratable basis
with the obligation so secured until such time as such obligation is no longer
secured by a Lien or (2) if such Lien secures Indebtedness which is subordinated
to the Debentures, any such Lien shall be subordinated to the Lien granted to
the holders of the Debentures to the same extent as such Indebtedness is
subordinated to the Debentures.
There shall be excluded from the restriction referred to in the next
preceding paragraph the following Liens (the Liens set forth in the following
clauses (a) through (i) being the "Permitted Liens"): (a) Liens on property of a
Person existing at the time such Person is merged into or consolidated with or
otherwise acquired by the Company or any Subsidiary, provided that such Liens
were in existence prior to, and were not created in contemplation of, such
merger, consolidation or acquisitions and do not extend to any assets other than
those of the Person merged into or consolidated with the Company or a
Subsidiary; (b) Liens on property existing at the time of acquisition thereof by
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the Company or any Subsidiary; provided that such Liens were in existence prior
to, and were not created in contemplation of, such acquisition and do not extend
to any assets other than the property acquired; (c) Liens imposed by law such as
carriers', warehouseman's or mechanics' Liens, and other Liens to secure the
performance of statutory obligations, surety or appeal bonds, performance bonds
or other obligations of a like nature incurred in the ordinary course of
business; (d) Liens securing Indebtedness representing, or incurred to finance,
the cost of acquiring, constructing or improving any assets, provided that the
principal amount of such Indebtedness does not exceed 100% of such cost,
including construction charges; (e) Liens existing on the Issue Date; (f) Liens
for taxes, assessments or governmental charges or claims that are not yet
delinquent or that are being contested in good faith by appropriate proceedings
promptly instituted and diligently concluded; provided that any reserve or other
appropriate provision as shall be required in conformity with GAAP shall have
been made therefor; (g) Liens securing refinancing Indebtedness; provided that
any such Lien does not extend to or cover any property or assets other than the
property or assets securing Indebtedness so refunded, refinanced or extended;
(h) any extensions, substitutions, modifications, replacements or renewals of
the foregoing; and (i) easements, rights-of-way and other similar encumbrances
incurred in the ordinary course of business and encumbrances consisting of
zoning restrictions, licenses, restrictions on the use of property or minor
imperfections in title thereto which, in the aggregate, are not material in
amount, and which do not in any case materially detract from the Company's
properties subject thereto.
Notwithstanding the foregoing, the Company may, and may permit any
Subsidiary to, create, assume, incur or suffer to exist any Lien upon any of its
properties or assets without equally and ratably securing the Debentures if the
aggregate amount of all Indebtedness then outstanding secured by such Lien and
all similar Liens, together with the aggregate net sale proceeds from all
Sale-Leaseback Transactions which are not Permitted Sale-Leaseback Transactions,
does not exceed 15% of the total consolidated stockholders' equity of the
Company as shown on the most recent consolidated balance sheet that is contained
or incorporated in the latest annual report on Form 10-K (or equivalent report)
or quarterly report on Form 10-Q (or equivalent report) filed with the
Securities and Exchange Commission, and is as of a date not more than 181 days
prior to the date of determination, in the case of the consolidated balance
sheet contained or incorporated in an annual report on Form 10-K, or 135 days
prior to the date of determination, in the case of the consolidated balance
sheet contained in the quarterly report on Form 10-Q; provided that Indebtedness
secured by Permitted Liens shall not be included in the amount of such secured
Indebtedness.
SECTION 4.02. Sale and Leaseback Transactions. The Company shall not, nor shall
it permit any Subsidiary to, enter into any
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Sale-Leaseback Transaction. There will be excluded from this restriction the
following Sale-Leaseback Transactions (the Sale-Leaseback Transactions set forth
in the following clauses (1) through (3) being "Permitted Sale-Leaseback
Transactions"): (1) a Sale-Leaseback Transaction involving the leasing by the
Company and its Subsidiaries of model homes in their communities, (2) a
Sale-Leaseback Transaction relating to a property which occurs within 120 days
from the date of acquisition of such property by the Company or a Subsidiary or
the date of the completion of construction or commencement of full operations on
such property, whichever is later, or (3) a Sale-Leaseback Transaction where the
Company, within 120 days after such Sale-Leaseback Transaction, applies or
causes to be applied to the retirement of Funded Debt of the Company or any
Subsidiary (other than Funded Debt of the Company which by its terms or the
terms of the instrument pursuant to which it was issued is subordinate in right
of payment to the Debentures) proceeds of the sale of such property, but only to
the extent of the amount of proceeds so applied.
Notwithstanding the foregoing provisions, the Company may, and may
permit any Subsidiary to, effect any Sale-Leaseback Transaction involving any
real or tangible personal property which is not a Permitted Sale-Leaseback
Transaction, provided that the aggregate net sales proceeds from all
Sale-Leaseback Transactions which are not Permitted Sale-Leaseback Transactions,
together with all Indebtedness secured by Liens other than Permitted Liens, does
not exceed 15% of the total consolidated stockholders' equity of the Company as
shown on the most recent consolidated balance sheet that is contained or
incorporated in the latest annual report on Form 10-K (or equivalent report) or
quarterly report on Form 10-Q (or equivalent report) filed with the Securities
and Exchange Commission, and is as of a date not more than 181 days prior to the
date of determination, in the case of the consolidated balance sheet contained
or incorporated in an annual report on Form 10-K, or 135 days prior to the date
of determination, in the case of the consolidated balance sheet contained in the
quarterly report on Form 10-Q.
ARTICLE FIVE
REMEDIES
SECTION 5.01. Additional Events of Default. In addition to the applicable Events
of Default set forth in Section 6.01 of the Indenture, any one of the following
events shall constitute an "Event of Default" hereunder and thereunder whenever
used with respect to the Debentures in this Supplemental Indenture (whatever the
reason for such Event of Default and whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
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(1) a default by the Company in the payment of the any principal
(including accrued Original Issue Discount), Redemption Price, Purchase Price,
or Change in Control Purchase Price due with respect to the Debentures;
(2) a default by the Company or any Subsidiary with respect to its
obligation to pay Indebtedness for borrowed money (other than Indebtedness which
is non-recourse to the Company or the Subsidiary), which default shall have
resulted in the acceleration of, or be a failure to pay at final maturity,
Indebtedness aggregating more than $20 million;
(3) a failure to perform any other covenant or warranty of the Company
herein and in the Indenture, which continues for 30 days after written notice as
provided in Section 6.01 of the Indenture;
(4) final judgments or orders are rendered against the Company or any
of its Subsidiaries which require the payment by the Company or any of its
Subsidiaries of an amount (to the extent not covered by insurance) in excess of
$20 million and such judgments or orders remain unstayed or unsatisfied for more
than 60 days and are not being contested in good faith by appropriate
proceedings; or
(5) any event described in Sections 6.01(4) or 6.01(5) of the Indenture
with respect to the Company or any of its Subsidiaries.
SECTION 5.02. Acceleration of Maturity; Rescission and Annulment. If an Event of
Default occurs and is continuing, unless the principal of the Debentures has
already become due and payable, the Trustee by notice to the Company, or the
Holders of not less than 25 percent in aggregate Principal Amount at Final
Maturity of the Debentures then outstanding by notice to the Company and the
Trustee may declare the Issue Price and accrued Original Issue Discount to the
date of declaration on all of the Debentures to be immediately due and payable.
Upon such a declaration, such Issue Price and accrued Original Issue Discount
shall be due and payable immediately. If an Event of Default specified in
Section 6.01(4) or (5) of the Indenture or Section 5.01(5) of this Supplemental
Indenture occurs and is continuing, the Issue Price and accrued Original Issue
Discount accrued to the date of the occurrence of the bankruptcy or insolvency
on all of the Debentures shall automatically become and be immediately due and
payable without any declaration or other act on the part of the Trustee or any
Holders. The Holders of a majority in aggregate Principal Amount at Final
Maturity of the Debentures then outstanding, on behalf of the Holders of all of
the Debentures, by notice to the Company and the Trustee (and without notice to
any other Holder), may rescind an acceleration and its consequences if the
rescission would not conflict with any judgment or decree and if all existing
Events of Default have been cured or waived except nonpayment of the Issue Price
and
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accrued Original Issue Discount on any of the Debentures that have become due
solely as a result of acceleration and if all amounts due to the Trustee under
Section 7.07 of the Indenture have been paid. No such rescission shall affect
any subsequent Default or impair any right consequent thereto.
In case the Trustee shall have proceeded to enforce any right under
this Supplemental Indenture and such proceedings shall have been discontinued or
abandoned because of such waiver or rescission and annulment or for any other
reason or shall have been determined adversely to the Trustee, then and in every
such case the Company, the Holders of Debentures, and the Trustee shall be
restored respectively to their several positions and rights hereunder and all
rights, remedies and powers of the Company, the Holders of Debentures, and the
Trustee shall continue as though no such proceeding had been taken.
The Trustee shall within 90 days after a Trust Officer has knowledge of
the occurrence of a Default or any Event of Default, mail to all Holders, as the
names and addresses of such Holders appear upon the Debenture register, notice
of all Defaults or Events of Default known to a Trust Officer, unless such
Default or Event of Default is cured or waived before the giving of such notice
and provided that, except in the case of default in the payment of the Principal
Amount at Final Maturity, Issue Price, accrued Original Issue Discount,
Redemption Price, Purchase Price, Change in Control Purchase Price, as the case
may be, on any of the Debentures, the Trustee shall be protected in withholding
such notice if and so long as a trust committee of directors and/or officers of
the Trustee in good faith determines that the withholding of such notice is in
the interest of the Holders.
The Holders of a majority in Principal Amount at Final Maturity of the
Debentures then outstanding shall have the right to direct the time, method and
place of conducting any proceedings for any remedy available to the Trustee,
subject to certain limitations specified in the Indenture.
ARTICLE SIX
DISCHARGE OF SUPPLEMENTAL INDENTURE
Except as set forth in this Article Six to the contrary, the terms in Article
Eight of the Indenture shall govern.
SECTION 6.01. Discharge of Supplemental Indenture. When (1) the Company shall
deliver to the Trustee for cancellation all Debentures theretofore authenticated
(other than any Debentures which have been destroyed, lost or stolen and in lieu
of or in substitution for which other Debentures shall have been authenticated
and delivered) and not theretofore canceled, or (2) all the Debentures not
theretofore canceled or delivered to the Trustee for cancellation shall have
become due and payable, or
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are by their terms to become due and payable within one year or are to be
canceled upon redemption within one year under arrangements satisfactory to the
Trustee for the giving of notice of redemption, and the Company shall deposit
with the Trustee, in trust, monies sufficient to pay at the Final Maturity Date
or upon redemption all of the Debentures (other than any Debentures which shall
have been mutilated, destroyed, lost or stolen and in lieu of or in substitution
for which other Debentures shall have been authenticated and delivered) not
theretofore canceled or delivered to the Trustee for cancellation, including the
Principal Amount at Final Maturity, accrued Original Issue Discount accrued to
such Final Maturity Date or Redemption Date, as the case may be, and if in
either case the Company shall also pay or cause to be paid all other sums
payable hereunder by the Company, then the Indenture with respect to the
Debentures and this Supplemental Indenture shall cease to be of further effect
(except as to (i) remaining rights of registration of transfer, substitution and
exchange and conversion of Debentures, (ii) rights hereunder of Holders to
receive payments of the Principal Amount at Final Maturity, including Original
Issue Discount due with respect to the Debentures and the other rights, duties
and obligations of Holders, as beneficiaries hereof with respect to the amounts,
if any, so deposited with the Trustee and (iii) the rights, obligations and
immunities of the Trustee hereunder and under the Indenture with respect to the
Debentures), and the Trustee, on demand of the Company accompanied by an
Officers' Certificate and an Opinion of Counsel as required by Section 6.03 and
at the cost and expense of the Company, shall execute proper instruments
acknowledging satisfaction of and discharging the Indenture with respect to the
Debentures and this Supplemental Indenture; the Company, however, hereby agrees
to reimburse the Trustee for any costs or expenses thereafter reasonably and
properly incurred by the Trustee and to compensate the Trustee for any services
thereafter reasonably and properly rendered by the Trustee in connection with
the Indenture with respect to the Debentures, this Supplemental Indenture or the
Debentures.
SECTION 6.02. Reinstatement. If the Trustee or the Paying Agent is unable to
apply any money in accordance with Section 8.02 of the Indenture by reason of
any order or judgment of any court of governmental authority enjoining,
restraining or otherwise prohibiting such application, the Company's obligations
under the Indenture with respect to the Debentures, this Supplemental Indenture
and the Debentures shall be revived and reinstated as though no deposit had
occurred pursuant to Section 6.01 until such time as the Trustee or the Paying
Agent is permitted to apply all such money in accordance with Section 8.02 of
the Indenture, provided, however, that if the Company makes any payment of
Principal Amount at Final Maturity or Original Issue Discount of any Debenture
following the reinstatement of its obligations, the Company shall be subrogated
to the rights of the Holders of such Debentures to receive such payment from the
money held by the Trustee or Paying Agent.
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SECTION 6.03. Officers' Certificate; Opinion of Counsel. Upon any application or
demand by the Company to the Trustee to take any action under Section 6.01, the
Company shall furnish to the Trustee an Officers' Certificate stating that all
conditions precedent, if any, provided for in the Indenture and this
Supplemental Indenture relating to the proposed action have been complied with,
and an Opinion of Counsel stating that, in the opinion of such counsel, all such
conditions precedent have been complied with.
Each certificate or Opinion of Counsel provided for in this
Supplemental Indenture and delivered to the Trustee with respect to compliance
with a condition or covenant pursuant to the previous paragraph shall include
(1) a statement that the Person making such certificate or opinion has read such
covenant or condition, (2) a brief statement as to the nature and scope of the
examination or investigation upon which the statement or opinion contained in
such certificate or opinion is based, (3) a statement that, in the opinion of
such Person, he has made such examination or investigation as is necessary to
enable him to express an informed opinion as to whether or not such covenant or
condition has been complied with and (4) a statement as to whether or not, in
the opinion of such Person, such condition or covenant has been complied with.
ARTICLE SEVEN
SUPPLEMENTAL INDENTURES
SECTION 7.01. With Consent of Holders. In addition to those matters described in
Section 9.02 of the Indenture which require the consent of the Holder so
affected to amend, supplement or waive any provision of the Indenture or this
Supplemental Indenture, without the consent of the Holder so affected, the
Company and the Trustee may not:
(1) extend the fixed maturity of any Debenture, reduce the Principal
Amount at Final Maturity, Issue Price, Purchase Price, Change in Control
Purchase Price, Redemption Price or amount of Cash paid in lieu of shares of
Common Stock, change the accrual of Original Issue Discount, change the
obligation of the Company to repurchase any Debenture upon the occurrence of any
Change in Control in a manner adverse to Holders of Debentures, impair the right
of a Holder to institute suit for the payment thereof, change the currency in
which the Debentures are payable, or impair the right to convert the Debentures
into Common Stock in any material respect, or change any Purchase Date, without
the consent of the Holder of each Debenture so affected, or
(2) reduce the aforesaid percentage of Debentures the Holders of which
are required to consent to any such supplemental indenture, without the consent
of the Holders of all of the Debentures then outstanding.
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Except as set forth in this Article Seven to the contrary, the terms in
Article Nine of the Indenture shall govern.
ARTICLE EIGHT
MISCELLANEOUS
SECTION 8.01. TIA Controls. If any provision hereof limits, qualifies or
conflicts with the duties imposed by Section 310 through 317 of the TIA, the
imposed duties shall control.
SECTION 8.02. Conflict with Indenture. To the extent not expressly amended or
modified by this Supplemental Indenture, the Indenture shall remain in full
force and effect. If any provision of this Supplemental Indenture relating to
the Debentures is inconsistent with any provision of the Indenture, the
provision of this Supplemental Indenture shall control with regard to the
Debentures.
SECTION 8.03. Governing Law. This Supplemental Indenture and the Debentures
shall be governed by and construed in accordance with the laws of the State of
New York. The Company submits to the jurisdiction of the courts of the State of
New York sitting in the Borough of Manhattan, City of New York, and of the
United States District Court for the Southern District of New York, in any
action or proceeding to enforce any of its obligations under this Supplemental
Indenture or with regard to the Debentures, and agrees not to seek a transfer of
any such action or proceeding on the basis of inconvenience of the forum or
otherwise (but the Company shall not be prevented from removing any such action
or proceeding from a state court to the United States District Court for the
Southern District of New York). The Company agrees that process in any such
action or proceeding may be served upon it by registered mail or in any other
manner permitted by the rules of the court in which the action or proceeding is
brought.
SECTION 8.04. Successors. All agreements of the Company in the Indenture, this
Supplemental Indenture and the Debentures shall bind its successors. All
agreements of the Trustee in the Indenture and this Supplemental Indenture shall
bind its successors.
SECTION 8.05. Counterparts. This instrument may be executed in any number of
counterparts, each of which so executed shall be deemed to be an original, but
all such counterparts shall together constitute but one and the same instrument.
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<PAGE> 43
IN WITNESS WHEREOF, the parties to this Supplemental Indenture have
caused it to be duly executed as of the day and year first above written.
LENNAR CORPORATION
By:_____________________________________
THE FIRST NATIONAL BANK OF CHICAGO
By:_____________________________________
Name:
Title:
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<PAGE> 44
EXHIBIT A
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR THE INDIVIDUAL
DEBENTURES REPRESENTED HEREBY, THIS GLOBAL SECURITY MAY NOT BE TRANSFERRED
EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A
NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY
OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE
OF SUCH SUCCESSOR DEPOSITARY.
LENNAR CORPORATION
ZERO COUPON SENIOR CONVERTIBLE DEBENTURE DUE 2018
No. __
Issue Date: July 29, 1998 Original Issue Discount: $535.87
Issue Price: $464.13 (for each $1,000 Principal Amount
(for each $1,000 Principal at Final Maturity)
Amount at Final Maturity)
CUSIP: ____________________________
Lennar Corporation, a Delaware corporation, promises to pay to
__________ or registered assigns, on July 29, 2018 the Principal Amount of
__________ Dollars ($__________).
This Debenture shall not bear periodic interest. Original Issue
Discount shall accrue as specified on the other side of this Debenture. This
Debenture is convertible as specified on the other side of this Debenture.
Additional provisions of this Debenture are set forth on the other side
of this Debenture.
<PAGE> 45
IN WITNESS WHEREOF, Lennar Corporation has caused this instrument to be
duly executed under its corporate seal.
LENNAR CORPORATION
By:_____________________________________
Title:
Attest:
By:_____________________________________
Title:
[SEAL]
Dated: July , 1998
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
This is one of the Debentures
described in the within-
mentioned Indenture and
Supplemental Indenture.
THE FIRST NATIONAL BANK OF
CHICAGO, as Trustee
By:___________________________
Authorized Signatory
<PAGE> 46
LENNAR CORPORATION
ZERO COUPON SENIOR CONVERTIBLE DEBENTURE DUE 2018
1. INTEREST
This Debenture shall not bear periodic interest, except that if the
Principal hereof or any portion of such Principal is not paid when due (whether
upon acceleration pursuant to Section 4.02 of the Supplemental Indenture, upon
the date set for payment of the Redemption Price pursuant to paragraph 5 hereof,
upon the date set for payment of a Purchase Price or Change in Control Purchase
Price pursuant to paragraph 6 hereof or upon the Final Maturity of this
Debenture), then in each such case the overdue amount shall bear interest at the
rate of 3.875% per annum, compounded semiannually (to the extent that the
payment of such interest shall be legally enforceable), which interest shall
accrue from the date such overdue amount was due to the date payment of such
amount, including interest thereon, has been made or duly provided for. All such
interest shall be payable on demand. The accrual of such interest on overdue
amounts shall be in lieu of, and not in addition to, the continued accrual of
Original Issue Discount.
The Original Issue Discount (the difference between the Issue Price and
the Principal Amount at Final Maturity of the Debenture) in the period during
which a Debenture remains outstanding, shall accrue at 3.875% per annum, on a
semiannual bond equivalent basis using a 360-day year composed of twelve 30-day
months, commencing on the Issue Date of this Debenture.
2. METHOD OF PAYMENT
Subject to the terms and conditions of the Supplemental Indenture, the
Company shall make payments in respect of the Debentures to the Persons who are
registered Holders of Debentures at the close of business on the Business Day
preceding the Redemption Date or Final Maturity, as the case may be, or at the
close of business on a Purchase Date or Change in Control Purchase Date, as the
case may be. Holders must surrender Debentures to a Paying Agent to collect such
payments in respect of the Debentures. The Company shall pay cash amounts in
money of the United States that at the time of payment is legal tender for
payment of public and private debts. However, the Company may make such cash
payments by check payable in such money.
3. PAYING AGENT, CONVERSION AGENT AND REGISTRAR
Initially, The First National Bank of Chicago, a national banking
association (the "Trustee"), shall act as Paying Agent, Conversion Agent and
Registrar. The Company may appoint and change any Paying Agent, Conversion
Agent, Registrar or co-registrar without notice, other than notice to the
Trustee. The
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<PAGE> 47
Company or any of its Subsidiaries or any of their Affiliates may act as Paying
Agent, Conversion Agent, Registrar or co-registrar.
4. SUPPLEMENTAL INDENTURE
The Company issued the Debentures under a supplemental indenture (the
"Supplemental Indenture"), dated as of July 29, 1998, between the Company and
the Trustee. Capitalized terms used herein and not defined herein have the
meanings ascribed thereto in the Supplemental Indenture. The Debentures are
subject to all such terms, and Holders are referred to the Supplemental
Indenture for a statement of those terms.
The Debentures are general unsecured obligations of the Company limited
to $495,650,000 aggregate Principal Amount at Final Maturity. The Supplemental
Indenture does not limit other indebtedness of the Company.
5. REDEMPTION AT THE OPTION OF THE COMPANY
No sinking fund is provided for the Debentures. The Debentures are
redeemable as a whole, or from time to time in part, at any time at the option
of the Company at the Redemption Prices set forth below, provided that the
Debentures are not redeemable prior to July 29, 2003.
The table below shows Redemption Prices of a Debenture per $1,000
Principal Amount on the dates shown below and at Final Maturity, which prices
reflect accrued Original Issue Discount calculated to each such date. The
Redemption Price of a Debenture redeemed between such dates shall include an
additional amount reflecting the additional Original Issue Discount accrued
since the next preceding date in the table to but excluding the actual
Redemption Date.
-2-
<PAGE> 48
<TABLE>
<CAPTION>
(1) (2) (3)
Accrued Original
Issue Discount Redemption
Debenture at % Price
Redemption Date Issue Price (1) + (2)
<S> <C> <C> <C>
July 29, 2003 $ 464.13 $ 98.18 $ 562.31
July 29, 2004 464.13 120.19 584.32
July 29, 2005 464.13 143.05 607.18
July 29, 2006 464.13 166.80 630.93
July 29, 2007 464.13 191.49 655.62
July 29, 2008 464.13 217.14 681.27
July 29, 2009 464.13 243.79 707.92
July 29, 2010 464.13 271.49 735.62
July 29, 2011 464.13 300.27 764.40
July 29, 2012 464.13 330.18 794.31
July 29, 2013 464.13 361.26 825.39
July 29, 2014 464.13 393.55 857.68
July 29, 2015 464.13 427.11 891.24
July 29, 2016 464.13 461.98 926.11
July 29, 2017 464.13 498.22 962.35
At Final Maturity 464.13 535.87 1,000.00
</TABLE>
6. PURCHASE BY THE COMPANY AT THE OPTION OF THE HOLDER; PURCHASE AT THE
OPTION OF THE HOLDER UPON A CHANGE IN CONTROL
(a) Subject to the terms and conditions of the Supplemental Indenture,
a Holder of Debentures shall have the option to require the Company to purchase
the Debentures held by such Holder on the following Purchase Dates and at the
following Purchase Prices per $1,000 Principal Amount at Final Maturity, upon
delivery of a Purchase Notice containing the information set forth in the
Supplemental Indenture, from the opening of business on the date that is 20
Business Days prior to such Purchase Date until the close of business on such
Purchase Date and upon
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<PAGE> 49
delivery of the Debentures to the Paying Agent by the Holder as set forth in the
Supplemental Indenture. Such Purchase Prices may be paid, at the option of the
Company, in cash or by the issuance and delivery of shares of Common Stock of
the Company, or in any combination thereof.
<TABLE>
<CAPTION>
Purchase Date Purchase Price
- ------------- --------------
<S> <C>
July 29, 2003............................................ $ 562.31
July 29, 2008............................................ 681.27
July 29, 2013............................................ 825.39
</TABLE>
Debentures in denominations larger than $1,000 of Principal Amount at Final
Maturity may be purchased in part, but only in multiples of $1,000 of Principal
Amount at Final Maturity.
(b) If a Change in Control shall occur at any time prior to the Final
Maturity Date, each Holder of Debentures shall have the right, at such Holder's
option and subject to the terms and conditions of the Supplemental Indenture, to
require the Company to purchase such Holder's Debentures on the Business Day
that is 35 days after the date of the Change in Control for a Change in Control
Purchase Price equal to the Issue Price plus accrued Original Issue Discount to
the Change in Control Purchase Date, which Change in Control Purchase Price
shall be paid in cash. Debentures in denominations larger than $1,000 of
Principal Amount at Final Maturity may be redeemed in part in connection with a
Change in Control, but only in multiples of $1,000 of Principal Amount at Final
Maturity.
(c) Holders have the right to withdraw any Purchase Notice or Change in
Control Purchase Notice, as the case may be, by delivery to the Paying Agent of
a written notice of withdrawal in accordance with the provisions of the
Supplemental Indenture.
(d) If cash sufficient to pay a Change in Control Purchase Price or
cash (and/or Common Stock if permitted under the Supplemental Indenture)
sufficient to pay a Purchase Price, as the case may be, of all Debentures or
portions thereof to be purchased as of the Purchase Date or the Change in
Control Purchase Date, as the case may be, is deposited with the Paying Agent on
the Business Day following the Purchase Date or the Change in Control Purchase
Date, as the case may be, Original Issue Discount ceases to accrue on such
Debentures (or portions thereof) on and after such date, and the Holder thereof
shall have no other rights as such (other than the right to receive the Purchase
Price or Change in Control Purchase Price, as the case may be, upon surrender or
such Debenture).
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<PAGE> 50
7. NOTICE OF REDEMPTION AT THE OPTION OF THE COMPANY
Notice of redemption at the option of the Company shall be mailed at
least 30 days but not more than 60 days before the Redemption Date to each
Holder of Debentures to be redeemed at the Holder's registered address. If money
sufficient to pay the Redemption Price of all Debentures (or portions thereof)
to be redeemed on the Redemption Date is deposited with the Paying Agent prior
to or on the Redemption Date, on and after such date Original Issue Discount
ceases to accrue on such Debentures or portions thereof. Debentures in
denominations larger than $1,000 Principal Amount at Final Maturity may be
redeemed in part but only in multiples of $1,000 or Principal Amount at Final
Maturity.
8. RANKING
The Debentures shall be direct, unsecured obligations of the Company
and shall rank equally in right of payment with all other unsecured and
unsubordinated indebtedness of the Company.
9. CONVERSION
Subject to the next two succeeding sentences and the right of the
Company to elect to pay the Market Price of the Common Stock instead of issuing
shares of Common Stock if the Conversion Date is prior to July 29, 2003, a
Holder of a Debenture may convert this Debenture for Common Stock of the Company
at any time on or before the close of business on July 29, 2018. If this
Debenture is called for redemption, the Holder may convert it at any time before
the close of business on the Redemption Date. A Debenture in respect of which a
Holder has delivered a notice of exercise of the option to require the Company
to purchase such Debenture or to purchase such Debenture in the event of a
Change in Control may be converted only if the notice of exercise is withdrawn
in accordance with the terms of the Supplemental Indenture.
The initial Conversion Rate is 12.3768 shares of Common Stock per
$1,000 Principal Amount at Final Maturity, subject to adjustment in certain
events described in the Supplemental Indenture. The Company shall deliver cash
or a check in lieu of any fractional share of Common Stock.
To convert this Debenture a Holder must (1) complete and manually sign
the conversion notice on the back of this Debenture (or complete and manually
sign a facsimile of such notice) and deliver such notice to the Conversion Agent
at the office maintained by the Conversion Agent for such purpose, (2) surrender
this Debenture to the Conversion Agent, (3) furnish appropriate endorsements and
transfer documents if required by the Conversion Agent, the Company or the
Trustee and (4) pay any transfer or similar tax, if required.
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<PAGE> 51
A Holder may convert a portion of this Debenture if the Principal
Amount at Final Maturity of such portion is $1,000 or a multiple of $1,000. No
payment or adjustment shall be made for dividends on the Common Stock except as
provided in the Supplemental Indenture. On conversion of this Debenture, that
portion of accrued Original Issue Discount attributable to the period from the
Issue Date to the Conversion Date with respect to the converted portion of this
Debenture shall not be canceled, extinguished or forfeited, but rather shall be
deemed to be paid in full to the Holder thereof through the delivery of the
Common Stock (together with any cash payment in lieu of fractional shares) in
exchange for the portion of this Debenture being converted pursuant to the terms
hereof.
10. DENOMINATIONS; TRANSFER; EXCHANGE
The Debentures are in registered form, without coupons, in
denominations of $1,000 of Principal Amount at Final Maturity and multiplies of
$1,000. A Holder may transfer or convert Debentures in accordance with the
Supplemental Indenture. The Registrar may require a Holder, among other things,
to furnish appropriate endorsements and transfer documents and to pay any taxes
and fees required by law or permitted by the Supplemental Indenture. The
Registrar need not transfer or exchange any Debentures selected for redemption
(except, in the case of a Debenture to be redeemed in part, the portion of the
Debenture not to be redeemed) or any Debentures in respect of which a Purchase
Notice or Change in Control Purchase Notice has been given and not withdrawn
(except, in the case of a Debenture to be purchased in part, the portion of the
Debenture not to be purchased) or any Debentures for a period of 15 days before
any selection of Debentures to be redeemed.
11. PERSONS DEEMED OWNERS
The registered Holder of this Debenture may be treated as the owner of
this Debenture for all purposes.
12. UNCLAIMED MONEY OR PROPERTY
The Trustee and the Paying Agent shall return to the Company upon
written request any money or property held by them for the payment of any amount
with respect to the Debentures that remains unclaimed for two years, provided,
however, that the Trustee or such Paying Agent, before being required to make
any such return, shall at the expense of the Company cause to be published once
in a newspaper of general circulation in The City of New York or mail to each
such Holder notice that such money or property remains unclaimed and that, after
a date specified therein, which shall not be less than 30 days from the date of
such publication or mailing, any unclaimed money or property then remaining
shall be returned to the Company. After return to the Company, Holders entitled
to the money or property must look to the Company for
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<PAGE> 52
payment as general creditors unless an applicable abandoned property law
designates another Person.
13. AMENDMENT; WAIVER
Subject to certain exceptions set forth in the Indenture and the
Supplemental Indenture, (i) the Supplemental Indenture or the Debentures may be
amended with the written consent of the Holders of at least a majority in
aggregate Principal Amount at Final Maturity of the Debentures at the time
outstanding and (ii) certain defaults or noncompliance with certain provisions
may be waived with the written consent of the Holders of a majority in aggregate
Principal Amount at Final Maturity of the Debentures at the time outstanding.
Subject to certain exceptions set forth in the Indenture and the Supplemental
Indenture, without the consent of any Holder, the Company and the Trustee may
amend the Supplemental Indenture or the Debentures to cure any ambiguity, defect
or inconsistency, to make any change that does not adversely affect the right of
any Holder, to convey, transfer, assign, mortgage or pledge to the Trustee as
security for the Debentures, any property or assets, to convey, transfer,
assign, mortgage or pledge to the Trustee as security for the Debentures, any
property or assets, to evidence the succession of another corporation to the
Company, or successive successions, and the assumption by the successor
corporation of the covenants, agreements and obligations of the Company, to add
to the covenants of the Company such further covenants, restrictions or
conditions as the Board of Directors and the Trustee shall consider to be for
the benefit of the Holders of Debentures, and to make the occurrence, or the
occurrence and continuance, of a default in any such additional covenants,
restrictions or conditions a default or an Event of Default permitting the
enforcement of all or any of the several remedies provided in the Supplemental
Indenture, to evidence and provide for the acceptance of appointment hereunder
by a successor Trustee with respect to the Debentures, or to modify, eliminate
or add to the provisions of the Supplemental Indenture to such extent as shall
be necessary to comply with the Supplemental Indenture under the TIA, or under
any similar federal statue hereafter enacted.
14. DEFAULTS AND REMEDIES
Under the Supplemental Indenture, Events of Default include (i) a
default by the Company in the payment of any principal (including accrued
Original Issue Discount), Redemption Price, Purchase Price, or Change in Control
Purchase Price due with respect to the Debentures; (ii) a default by the Company
or any Subsidiary with respect to its obligation to pay Indebtedness for
borrowed money (other than Indebtedness which is non-recourse to the Company or
the Subsidiary), which default shall have resulted in the acceleration of, or be
a failure to pay at final maturity, Indebtedness aggregating more than $20
million; (iii) a failure to perform any other covenant or warranty of the
Company herein and in the Indenture, which continues for 30 days after written
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<PAGE> 53
notice as provided in Section 6.01 of the Indenture; (iv) final judgments or
orders are rendered against the Company or any of its Subsidiaries which require
the payment by the Company or any of its Subsidiaries of an amount (to the
extent not covered by insurance) in excess of $20 million and such judgments or
orders remain unstayed or unsatisfied for more than 60 days and are not being
contested in good faith by appropriate proceedings; and (v) any event described
in Sections 6.01(4) or 6.01(5) of the Indenture with respect to the Company or
any of its Subsidiaries. If an Event of Default occurs and is continuing, the
Trustee, or the Holders of at least 25% in aggregate Principal Amount of the
Debentures at the time outstanding, may declare the Issue Price and accrued
Original Issue Discount of all the Debentures to be due and payable immediately.
Certain events of bankruptcy or insolvency are Events of Default which shall
result in the Debentures being declared due and payable immediately upon the
occurrence of such Events of Default.
Holders may not enforce the Supplemental Indenture or the Debentures
except as provided in the Indenture or the Supplemental Indenture. The Trustee
may refuse to enforce the Supplemental Indenture or the Debentures unless it
receives reasonable indemnity or security. Subject to certain limitations,
conditions and exceptions, Holders of a majority in aggregate Principal Amount
at Final Maturity of the Debentures at the time outstanding may direct the
Trustee in its exercise of any trust or power, including the annulment of a
declaration of acceleration. The Trustee may withhold from Holders notice of any
continuing default (except a default in payment of amounts specified in clause
(i) above) if it determines that withholding notice is in their interests.
15. TRUSTEE DEALINGS WITH THE COMPANY
The Trustee under the Indenture, in its individual or any other
capacity, may become the owner or pledgee of Debentures and may otherwise deal
with and collect obligations owed to it by the Company or its Affiliates and may
otherwise deal with the Company or its Affiliates with the same rights it would
have if it were not Trustee.
16. NO RECOURSE AGAINST OTHERS
A director, officer or employee, as such, of the Company or any
subsidiary of the Company or any stockholder, as such, of the Company shall not
have any liability for any obligations of the Company under the Debentures or
the Supplemental Indenture or for any claim based on, in respect of or by reason
of such obligations or their creation. By accepting a Debenture, each Holder
waives and releases all such liability. The waiver and release are part of the
consideration for the issue of the Debentures.
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<PAGE> 54
17. AUTHENTICATION
This Debenture shall not be valid until an authorized officer of the
Trustee manually signs the Trustee's Certificate of Authentication on the other
side of this Debenture.
18. ABBREVIATIONS
Customary abbreviations may be used in the name of a Holder or an
assignee, such as TEN COM (=tenants in common), TENANT (=tenants by the
entireties), JT TEN (=joint tenants with right of survivorship and not as
tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors
Act).
19. GOVERNING LAW
THE LAWS OF THE STATE OF NEW YORK SHALL GOVERN THE SUPPLEMENTAL
INDENTURE AND THIS DEBENTURE.
The Company shall furnish to any Holder upon written request and
without charge a copy of the Supplemental Indenture which has in it the text of
this Debenture in larger type. Requests may be made to:
Lennar Corporation
700 N.W. 107th Avenue
Miami, Florida 33172
Attn: Bruce E. Gross
Vice President and Chief Financial Officer
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<PAGE> 55
CONVERSION NOTICE
To: Lennar Corporation
The undersigned registered holder of this Debenture hereby exercises
the option to convert this Debenture, or portion hereof (which is $1,000
Principal Amount at Final Maturity or a multiple thereof) designated below, for
shares of Common Stock of Lennar Corporation in accordance with the terms of the
Supplemental Indenture referred to in this Debenture, and directs that the
shares issuable and deliverable upon such conversion, together with any check in
payment for fractional shares and any Debentures representing any unconverted
principal amount hereof, be issued and delivered to the registered holder hereof
unless a different name has been indicated below. If shares or any portion of
this Debenture not converted are to be issued in the name of a Person other than
the undersigned, the undersigned shall pay all transfer taxes payable with
respect thereto.
This notice shall be deemed to be an irrevocable exercise of the option
to convert this Debenture unless the Conversion Date is prior to July 29, 2003
and the Company delivers timely notice of its election to deliver cash instead
of issuing shares of Common Stock in accordance with Section 2.06(2) of the
Supplemental Indenture. If the Company delivers such notice, the undersigned may
withdraw this notice in accordance with Section 2.06(2) of the Supplemental
Indenture.
Dated:
----------------------------
----------------------------
Signature(s)
Fill in for registration of
shares if to be delivered,
and Debentures if to be
issued other than to and in
the name of registered holder:
- ------------------------------
(Name) Principal Amount at Final
Maturity to be converted
- ------------------------------ (if less than all):
(Street Address)
$__,000
- ------------------------------
(City, state and zip code) -------------------------
Social Security or Other
Please print name and address Taxpayer Number
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<PAGE> 56
CHANGE IN CONTROL PURCHASE NOTICE
To: Lennar Corporation
The undersigned registered holder of this Debenture hereby acknowledges
receipt of a notice from Lennar Corporation (the "Company") as to the occurrence
of a Change in Control with respect to the Company and requests and instructs
the Company to repurchase this Debenture, or the portion hereof (which is $1,000
Principal Amount at Final Maturity or a multiple thereof) designated below, in
accordance with the terms of the Supplemental Indenture referred to in this
Debenture and directs that the check in payment for this Debenture or the
portion thereof and any Debentures representing any unrepurchased principal
amount hereof, be issued and delivered to the registered holder hereof unless a
different name has been indicated below. If any portion of this Debenture not
repurchased is to be issued in the name of a Person other than the undersigned,
the undersigned shall pay all transfer taxes payable with respect thereto.
Dated:
-----------------------------------
Signature(s)
Fill in for registration of shares if to be delivered, and Debentures if to be
issued other than to and in the name of registered holder:
- ------------------------------
(Name)
- ------------------------------
(Street Address)
- ------------------------------
(City, state and zip code)
Please print name and address
Principal Amount at Final
Maturity to be purchased
(if less than all):
$__,000
---------------------------
Social Security or Other
Taxpayer Number
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<PAGE> 57
ASSIGNMENT
For value received __________ hereby sell(s), assign(s) and transfer(s)
unto __________ (Please insert social security or other Taxpayer Identification
Number of assignee) the within Debenture, and hereby irrevocably constitutes and
appoints __________ attorney to transfer the said Debenture on the books of the
Company, with full power of substitution in the premises.
Dated:
---------------------------------------
Signature(s)
Signature(s) must be guaranteed by a
commercial bank or trust company or
a member firm of a major stock
exchange if shares of Common Stock
are to be issued, or Debentures to
be delivered, other than to or in
the name of the registered holder.
---------------------------------------
Signature Guarantee
NOTICE: The above signatures of the holder(s) hereof must correspond with the
name as written upon the face of the Debenture in every particular without
alteration or enlargement or any change whatever.
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<PAGE> 1
Exhibit 23.1
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Lennar Corporation
We consent to the incorporation by reference in the Registration Statement of
Lennar Corporation (333-45527) on Form S-3 of our report dated January 20, 1998,
appearing in the Annual Report on Form 10-K of Lennar Corporation for the year
ended November 30, 1997 and to the reference to our firm under the heading
"Experts" in the Prospectus Supplement dated July 24, 1998, which is a part of
the Registration Statement.
DELOITTE & TOUCHE LLP
Miami, Florida
July 27, 1998
