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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 10-K
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(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED,
EFFECTIVE OCTOBER 7, 1996).
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
FOR THE TRANSITION PERIOD FROM ____________ TO ____________
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COMMISSION FILE NUMBER 000-19480
CAPSTONE CAPITAL CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
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MARYLAND 63-1115479
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
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1000 URBAN CENTER DRIVE, SUITE 630
BIRMINGHAM, ALABAMA 35242
(Address of Principal Executive Offices, Including Zip Code)
(205) 967-2092
(Registrant's Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
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NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
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None None
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Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, $.001 PAR VALUE PER SHARE
(Title of Class)
Indicate by check mark whether the Registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
The aggregate market value of the shares of Common Stock (based upon the
closing price of these shares on the New York Stock Exchange, Inc. on March 14,
1997) of the Registrant held by non-affiliates on March 14, 1997, was
approximately $331,205,388.
As of March 14, 1997, 14,288,529 shares of the Registrant's Common Stock
were outstanding.
(2) Part III incorporates by reference portions of the Capstone Capital
Corporation Annual Proxy Statement for the fiscal year ended December 31, 1996
(to be filed with the Commission on or about March 27, 1997). Part IV
incorporates by reference portions of the Capstone Capital Corporation Annual
Report for the fiscal year ended December 31, 1996 (to be filed with the
Commission on or about March 27, 1997).
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TABLE OF CONTENTS
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PAGE
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Item 1. Business....................................................
General.....................................................
Investment Policy...........................................
Competition.................................................
Government Regulation.......................................
Medicaid, Medicare, Blue Cross and Other Revenue Sources....
Environmental Matters.......................................
Insurance...................................................
Employees...................................................
Item 2. Properties..................................................
Headquarters................................................
Investments.................................................
Selected Operators..........................................
HEALTHSOUTH.................................................
Columbia/HCA................................................
MedPartners.................................................
Integrated Health...........................................
Tenet.......................................................
Leases......................................................
Development Arrangements....................................
Item 3. Legal Proceedings...........................................
Item 4. Submission of Matters to a Vote of Security Holders.........
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters.........................................
Item 6. Selected Financial Data.....................................
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations...................................
Item 8. Financial Statements and Supplementary Data.................
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure....................................
Item 10. Directors and Executive Officers of the Registrant..........
Directors...................................................
Executive Officers..........................................
Item 11. Executive Compensation......................................
Item 12. Security Ownership of Certain Beneficial Owners and
Management..................................................
Item 13. Certain Relationships and Related Transactions..............
Item 14. Exhibits, Financial Statement Schedules and Reports on Form
8-K.........................................................
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PART I
ITEM 1. BUSINESS
GENERAL
The Company is a real estate investment trust which owns, leases and
invests in a diversified portfolio of healthcare properties (the "Investments").
As of February 28, 1997, the Investments consisted of (i) 67 healthcare
properties leased to 18 healthcare operators (the "Leased Properties") and (ii)
22 mortgage loans on healthcare properties (the "Mortgage Loans"). The
Investments are located in 17 states primarily in the southeastern and western
regions of the United States and represent a variety of facility types in
diverse healthcare industry segments. The Investments, including commitments to
invest certain of which have been partially funded, have grown from
approximately $115 million at inception on June 30, 1994 to approximately $527
million on February 28, 1997.
Substantially all of the leases (the "Leases") for Leased Properties are
triple net leases which require the lessees to pay all operating expenses,
taxes, insurance and other costs. The Leases generally provide for increases in
rent commencing after the first year, have primary terms of 10 to 15 years with
options to extend the term at least 10 years and grant the lessees a right of
first refusal to acquire the Company's interest. Mortgage Loans generally have
initial maturities of between 5 and 15 years and bear interest at a rate which
increases annually at either a specified rate or a rate based on the consumer
price index. Approximately 67% of the Company's Investments as of February 28,
1997, are operated by public healthcare companies or their subsidiaries,
including HEALTHSOUTH Corporation ("HEALTHSOUTH"), Columbia/HCA Healthcare
Corporation ("Columbia"), MedPartners, Inc. ("MedPartners"), Integrated Health
Services, Inc. ("Integrated Health"), and Tenet Healthcare Corporation
("Tenet").
The Company believes it is an important source of capital for the
healthcare industry and intends to continue investing in a high-quality
portfolio of properties managed by established operators of rehabilitation,
alternate-site care, long-term care and acute-care facilities. The Company
diversifies its portfolio by operator, geography, facility type and healthcare
industry segment. Management's investment criteria emphasize evaluation of the
(i) creditworthiness of a proposed lessee, borrower, guarantor, developer or,
under certain circumstances, sublessee of a healthcare facility, (ii)
competitive position of a proposed property, (iii) attractiveness of the
industry segment and (iv) strategic fit of a proposed property with the
Company's existing portfolio. The Company believes that there is significant
demand for REIT financing capital in the healthcare industry. In addition, the
Company believes that the substantial healthcare industry experience and
industry relationships of its management and directors will help the Company
identify, evaluate and complete additional investments.
The Company's primary objective is to provide current income for
distribution to stockholders. The Company commenced paying quarterly dividends
of $.425 per share for the quarter ended September 30, 1994, increased its
quarterly dividend to $.445 per share for the quarter ended June 30, 1995,
increased it to $.455 per share for the quarter ended June 30, 1996, increased
it to $.46 per share for the quarter ended September 30, 1996 and increased it
to $.465 per share for the quarter ended December 31, 1996.
INVESTMENT POLICY
The Company's investment objectives are to (i) generate current income for
stockholders; (ii) provide the opportunity for additional returns to
stockholders through the acquisition and development of additional properties
and the acquisition of additional mortgages, which may require the use of
additional debt or equity financing; (iii) provide stockholders with the
opportunity to realize capital growth resulting from appreciation, if any, in
the residual values of any properties acquired; and (iv) preserve and protect
stockholders' capital. There can be no assurance that any of these objectives
will be realized.
In evaluating potential investments, the Company considers such factors as
(i) the geographic area, type of property and demographic profile; (ii) the
location, construction quality, condition and design of the property; (iii) the
current and anticipated cash available for distribution and its adequacy to meet
operational
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needs and lease obligations and to provide a competitive market return on equity
to the Company's investors; (iv) the potential for capital appreciation, if any;
(v) the growth, tax and regulatory environment of the communities in which the
properties are located; (vi) the occupancy and demand for similar health
facilities in the same or nearby communities; (vii) the mix of private and
government sponsored patients; (viii) any potential alternative uses of the
facilities; (ix) prospects for liquidity through financing or refinancing; (x)
industry segment and operator diversification; and (xi) the suitability of the
potential investments in light of maintaining REIT status.
In making future investments, the Company intends to focus on established,
creditworthy potential lessees, borrowers and developers which meet the
Company's standards for quality and experience of management. In order to
determine creditworthiness of potential lessees, borrowers and developers, the
Company reviews historical and prospective financial information of lessees,
borrowers and developers, together with appropriate financial information of any
guarantor. Factors considered in connection with such financial reviews include
the net worth, profitability and cash flow, debt position, and the ability to
provide additional credit enhancements.
COMPETITION
The Company competes for investments with, among other investors,
healthcare providers, other healthcare-related REITs, real estate partnerships
and financial institutions. Certain of these investors have greater capital
resources than the Company. All of the Investments operate in a competitive
environment, and patients and referral sources, including physicians, may change
their preferences for a healthcare facility from time to time. The Investments
compete with other similar facilities in their various locations for the support
of the medical community. Additionally, other healthcare facilities in which the
Company may invest will likely compete with similar facilities for the support
of the medical community and the general public. Some significant competitive
factors for the placing of physicians in ancillary hospital facilities and
patients in medical facilities include reputation, physical appearance of the
facilities, services offered, quality of care, family preferences, physician
services, location and price.
GOVERNMENT REGULATION
The financial condition of the lessees, borrowers, guarantors and
sublessees ("Operators") may be affected by changes in the reimbursement,
licensing and certification policies of federal, state and local governments for
healthcare-related facilities. Certain of the healthcare facilities underlying
the Investments may also be affected by changes in accreditation standards or
procedures of accrediting agencies that are recognized by governments in the
certification process. In addition, expansion (including the addition of new
beds or services or acquisition of medical equipment) and occasionally the
discontinuation of services of healthcare facilities is generally subjected, in
most states, to regulatory approval through state Certificate of Need ("CON")
programs.
Rental arrangements are subject to federal and state laws and regulations
governing illegal rebates, kickbacks and referrals where co-investors are
physicians or others in a position to refer patients to the facilities. The
effect of these laws and regulations is generally to prohibit, through the
imposition of criminal and civil penalties (including program exclusion),
payment arrangements that are construed to include compensation for patient
referrals. Although there can be no assurance that government enforcement
agencies' and courts' interpretations of these laws will be consistent with that
of the Company, the Company does not believe that it has, nor is it aware that
any of the Operators have, any rental arrangements that do not comply in all
material respects with these laws. Legislative and regulatory proposals may be
enacted or adopted in the future that adversely affect physicians and other
healthcare providers that invest in healthcare facilities, regardless of whether
there is compensation for referrals, by limiting reimbursement by the Medicare
and Medicaid programs of otherwise covered services, requiring disclosures of
such interests, or imposing civil monetary and criminal penalties for violations
of proscriptions against referrals to such facilities.
State CON statutes generally provide that, prior to the addition of new
beds, the construction of new facilities or the introduction of new services, a
state health planning designated agency ("SHPDA") must
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determine that a need exists for those beds, facilities or services. The CON
process is intended to promote comprehensive healthcare planning, assist in
providing high quality healthcare at the lowest possible cost and avoid
unnecessary duplication by ensuring that only those healthcare facilities that
are needed will be built.
Typically, the provider of services submits an application to the
appropriate SHPDA with information concerning the area and population to be
served, the anticipated demand for the facility or service to be provided, the
amount of capital expenditure, the estimated annual operating costs, the
relationship of the proposed facility or service to the overall state health
plan and the cost per patient day for the type of care contemplated. Whether the
CON is granted is based upon a finding of need by the SHPDA in accordance with
criteria set forth in CON statutes and state and regional health facilities
plans. If the proposed facility or service is found to be necessary and the
applicant to be the appropriate provider, the SHPDA will issue a CON containing
a maximum amount of expenditure and a specific time period for the holder of the
CON to implement the approved project.
Licensure and certification are separate, but related, regulatory
activities. The former is usually a state or local requirement and the latter is
a federal requirement. In almost all instances, licensure and certification will
follow specific standards and requirements that are set forth in readily
available public documents. Compliance with the requirements is monitored by
annual on-site inspections by representatives of various government agencies. To
the best of the Company's knowledge, all of the hospitals affiliated with the
ancillary hospital facilities have obtained all necessary CONs. To the best of
the Company's knowledge, all of the Leased Properties have obtained CONs, where
applicable. Loss by a facility of its ability to participate in government
sponsored programs because of licensing, certification or accreditation
deficiencies or because of program exclusion resulting from violations of law
would have adverse effects on its revenues.
The American Medical Association has promulgated ethical guidelines on
physician referrals to facilities in which they have an ownership interest.
Generally, physicians are prohibited from making referrals to facilities in
which they have an ownership interest unless they provide services at the
facility (such as surgeons at surgery centers and physicians with staff
privileges at hospitals). A narrow exception to this position is permitted when
a facility is clearly needed in a community and alternative financing is not
available if certain strict conditions are satisfied. While it is generally
believed that this position is not intended to affect physician ownership in
large, publicly-traded companies such as the Company, physicians considering an
investment in the Company should be aware of the existence of these ethical
considerations and consider the potential applicability to the proposed
investment, including whether the physician is required to disclose his
investment to patients referred to such facilities.
In addition to current regulations, the Clinton administration and Congress
may propose legislation affecting the payment for and availability of health
care services. Aspects of certain health care proposals, such as reductions in
Medicare and Medicaid payments, if adopted, could adversely affect Operators.
Alternatively, other aspects of reform proposals, such as universal health
insurance coverage and coverage of certain previously uncovered services, could
have a positive impact on certain Operators. It is not possible at this time to
predict what, if any, reforms may be adopted by Congress or state legislatures.
The Company believes that healthcare regulations will continue to change
and, therefore, regularly monitors developments in healthcare law. There can be
no assurance that the operators of all of the Leased Properties will remain in
compliance with applicable law.
MEDICAID, MEDICARE, BLUE CROSS AND OTHER REVENUE SOURCES
Payments for patient care earned by Operators are received from the federal
Medicare program, state Medicaid programs, private insurance carriers, employers
and Blue Cross plans, health maintenance organizations, preferred provider
arrangements and directly from patients. Medicare payments to acute-care
hospitals for inpatient services are made pursuant to the Prospective Payment
System ("PPS") under which a hospital is paid a prospectively established rate
based on diagnosis. In general, Medicare payments for psychiatric, cancer, long
term, children's and rehabilitation hospitals, as well as distinct
rehabilitation and psychiatric units in general hospitals, are exempt from PPS
and continue to be reimbursed on a reasonable cost basis system.
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Under regulations effective October 1, 1991, the capital related costs of
PPS hospitals are to be reimbursed by the Medicare program on a prospective
basis, phased in over a 10-year transition period, eventually to be a set
federal rate. The effects of the new payment methodology on actual levels of
reimbursement cannot yet be predicted. Properties not subject to PPS will
continue to be reimbursed by Medicare for capital costs on a percentage of cost
basis, subject to certain case limitations. Payments from state Medicaid
programs for acute care, rehabilitative and psychiatric care are based on
reasonable costs or are at fixed or capitated rates. Medicare and Medicaid
payments are generally below a facility's actual charge schedule and in some
cases payments are limited, delayed or reduced because of federal and sometimes
state budget deficits.
In recent years, fundamental changes in the Medicare program (including the
implementation of a PPS for inpatient services at medical/surgical hospitals)
have resulted in reduced levels of payment for a substantial portion of
healthcare services. Moreover, healthcare facilities have experienced increasing
pressures from private payors attempting to control healthcare costs, that have
in many instances reduced reimbursement to levels approaching that of government
payors. Considerable uncertainties surround the future determination of payment
levels under the Medicare program for inpatient hospital services as well as
outpatient services. Certain types of healthcare services, such as ambulatory
surgical centers, are undergoing major changes in utilization, services covered
and reimbursement methodologies. The Company can not predict what impact these
types of changes might have on the Company or the Operators.
The federal Medicare program adopted a system of reimbursement of physician
services, known as resource-based relative value scale ("RBRVS"), which took
effect in 1992 and was phased in through 1996. The RBRVS fee schedule and other
future changes in Medicare physician reimbursement will result in a decrease
from the historical levels of compensation per Medicare patient for certain
physicians. In addition, a number of states have received approval from the
Department of Health and Human Services to contract with managed care companies,
which, in turn, enter into agreements with physicians and hospitals who
participate in the Medicaid program. In many instances, physicians and hospitals
receive a flat payment per enrollee in the managed care plan. Some hospitals and
physicians receiving these capitated payments have experienced reductions in
revenues historically received for the treatment of Medicaid patients.
In August 1993, the Omnibus Budget Reconciliation Act of 1993 ("OBRA 1993")
was enacted, which included amendments to Medicare and Medicaid laws. The
primary focus of these amendments were a reduction in payments to providers
furnishing services under Part A of the Medicare program, and to physicians,
durable medical equipment suppliers and other providers of services under Part B
of the Medicare program. These amendments have resulted in substantial
reductions in reimbursements to hospitals.
Considerable uncertainty surrounds the future determination of payment
levels for services currently being reimbursed on a cost basis. Also,
substantial areas of the Medicare program are subject to legislative and
regulatory change, administrative rulings, interpretations, administration
discretion, governmental funding restrictions and requirements for utilization
review (such as second opinions for surgery and preadmission criteria). These
matters, as well as more general governmental budgetary concerns, may
significantly reduce payments under such programs made to the Operators'
facilities, and there can be no assurance that future Medicare payment rates
will be sufficient to cover cost increases in providing services to Medicare
patients.
Blue Cross payments in different states and areas are based on costs,
negotiated rates or retail rates. Payments from health maintenance organizations
and preferred provider organizations generally are negotiated, usually at a
discount from published charge schedules, which may take the form of a flat
payment per enrollee in the plan offered by such organizations.
Third-party payors, including commercial insurance companies, health
maintenance organizations, and preferred provider organizations, increasingly
demand enhanced quality and lower or discounted prices from healthcare
providers. Moreover, many third-party payors are adopting capitated RBRVS-based
reimbursement methodologies, which are also likely to reduce potential physician
reimbursements and have already adversely affected the income of many
physicians. These demands may lead to reductions in present and future
reimbursements for services provided by Operators. Such diminution of income
could have an adverse effect on the Company's results of operations.
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ENVIRONMENTAL MATTERS
Under various federal, state and local environmental laws, ordinances and
regulations, an owner of real property may be liable for the costs of removal or
remediation of certain hazardous or toxic substances at, under or disposed of in
connection with such property, as well as certain other potential costs relating
to hazardous or toxic substances (including injuries to persons and adjacent
property as well as fines). Most, if not all, of these laws, ordinances and
regulations contain stringent enforcement provisions including, but not limited
to, the authority to impose substantial administrative, civil and criminal fines
and penalties upon violators. Such laws often impose liability without regard to
whether the owner knew of, or was responsible for, the presence or disposal of
such substances and may be imposed on the owner in connection with the
activities of an operator of the property. The cost of any required remediation,
removal, fines or personal or property damages and the owner's liability
therefor could exceed the value of the property and/or the aggregate assets of
the owner. In addition, the presence of such substances, or the failure to
properly dispose of or remediate such substances, may adversely affect the
owner's ability to sell or lease such property or to borrow using such property
as collateral.
Operations at the healthcare facilities underlying the Investments have
been and will continue to be subject to numerous federal, state and local
environmental laws, ordinances and regulations, including those relating to the
generation, segregation, handling, packaging and disposal of medical wastes as
well as facility siting, construction, occupational training and safety,
disposal of non-medical wastes, underground storage tanks and ash emissions from
incinerators. Operations of nuclear medicine departments at some of these
facilities also involve the use and handling, and subsequent disposal of,
radioactive isotopes and similar materials, activities which are closely
regulated by the Nuclear Regulatory Commission and state regulatory agencies. In
addition, several of the Investments were built prior to the time prohibitions
on the use of asbestos in building construction were enacted and other such
facilities may be acquired by the Company in the future.
The Company had Phase I environmental audits conducted on all of the
healthcare facilities underlying the Investments. Phase I environmental audits
involve preliminary reviews of title and uses of real property with little or no
sampling and should not be relied upon as the final determination of the absence
of environmental concerns. The audits indicated that none of the Leased
Properties owned by the Company or on which the Company has Mortgage Loans
contained indications of environmental contamination. Certain of the Investments
have asbestos-containing building materials. Any remedial action taken in the
future with respect to other properties owned by the Company containing asbestos
are required to be paid by the Lessees under the Leases. In addition, all of the
Leases and Mortgage Loan documents contain indemnification provisions relating
to environmental liabilities or conditions, although there can be no assurances
that the Operators will be able to fulfill their indemnification obligations.
Moreover, the scope of such indemnification obligations may be limited and there
can be no assurances that such indemnification obligations will apply to all
environmental costs or liabilities incurred by the Company. Neither the Leases
nor the Mortgage Loans give the Company control over the operations of the
Operators or their tenants, nor will the Company monitor the properties with
respect to environmental matters.
No assurance can be given that the provisions of the Leases and Mortgage
Loan documents will fully protect the Company or that any prior owner, lessee,
sublessee or future lessee of an Investment did not and will not create
environmental conditions not known to the Company. However, the Company is not
aware of any such condition or liability that would have a material adverse
effect on the Company's results of operations and financial position.
INSURANCE
The Company obtains title insurance with respect to each of the Investments
in amounts equal to their respective purchase prices or in the amount of the
Company's committed investment, insuring that the Company holds title to each of
the Investments free and clear of all liens and encumbrances, except those
approved by the Company. The Company believes that the Investments are
adequately covered by comprehensive liability, fire, flood (if available) and
extended coverage with respect to the Investments with policy specifications and
insured limits customarily carried for similar properties. However, there are
certain
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types of losses which may either be uninsurable or not economically insurable.
The Company generally does not require the Operators to carry earthquake
insurance with respect to its Investments. This decision was based upon a number
of factors, including the structural design of the buildings and the general
lack of seismic activity in the areas where the healthcare facilities underlying
the Investments are located. Should an uninsured loss occur the Company could
lose its investment in, and anticipated profits and cash flow from, an
Investment.
EMPLOYEES
As of March 24, 1997, the Company employed ten people. None of the
Company's employees is a member of a labor union and the Company considers its
relations with its employees to be excellent.
ITEM 2. PROPERTIES
HEADQUARTERS
The Company's headquarters are located in offices at 1000 Urban Center
Drive, Suite 630, Birmingham, Alabama, which are leased from an unaffiliated
party pursuant to a written lease that expires July 31, 1999. The lease covers
6,204 square feet at a rental of $17.66 per square foot, aggregating $109,562
annually.
INVESTMENTS
The following table sets forth as of December 31, 1996, certain information
regarding the Company's investments:
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TYPE OF AMOUNT OF 1996
OPERATOR AND TYPE OF PROPERTY INVESTMENT % OF REVENUE
PROPERTY NAME(1) INVESTMENT (2) (3) PORTFOLIO (4)
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HEALTHSOUTH
Altoona Rehabilitation Hospital Equity IRF $ 17,202,200 5.0% $ 1,208,269
Great Lakes Rehab. Hospital Equity IRF 14,523,233 4.2 1,920,286
One-7000 Building Equity AHF 13,386,327 3.9 1,718,577
Mechanicsburg Rehabilitation Hospital Equity IRF 12,446,057 3.6 873,943
Richmond Medical Building II Equity AHF 10,103,030 3.0 1,302,115
Birmingham Medical Building II Equity AHF 9,706,385 2.8 1,247,763
South County Medical Center Equity ASF 7,400,000 2.2 865,665
Birmingham Medical Building I Equity AHF 4,749,782 1.4 612,368
American Sports Medicine Institute Equity AHF 3,233,794 0.9 409,162
Coral Gables Rehabilitation Center Equity ORF 2,323,581 0.7 298,257
Larkin Medical Building Equity AHF 2,272,675 0.7 291,792
Richmond Medical Building I Equity AHF 2,121,241 0.6 267,410
Little Rock Rehabilitation Center Equity ORF 2,081,408 0.6 267,151
West County Surgery Center Equity ASF 1,926,642 0.6 0
Virginia Beach Rehabilitation Center Equity ORF 1,460,000 0.4 189,414
North Shore Surgical Center Equity ASF 919,420 0.3 113,550
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$105,855,775 30.9% $ 11,585,722
COLUMBIA/HCA
Sunrise Mountainview Medical Center Equity AHF $ 29,519,775 8.6% $ 2,431,834
Sarasota Medical Center Equity AHF 14,440,677 4.2 1,696,848
Beaumont Regional Professional Tower Equity AHF 8,892,446 2.6 963,535
Bonita Bay Medical Center Equity ASF 8,039,347 2.4 920,328
Cape Coral Medical Plaza Equity ASF 5,608,615 1.6 636,564
Northlake Surgical Center Equity ASF 1,050,845 0.4 124,365
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$ 67,551,705 19.8% $ 6,773,474
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TYPE OF AMOUNT OF 1996
OPERATOR AND TYPE OF PROPERTY INVESTMENT % OF REVENUE
PROPERTY NAME(1) INVESTMENT (2) (3) PORTFOLIO (4)
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MEDPARTNERS
Melbourne Medical Building Equity PC $ 9,387,537 2.7% $ 24,416
Par Place Medical Center Equity PC 6,585,580 1.9 424,658
Brookstone Office Building Equity PC 5,951,001 1.7 133,984
McCollough Clinic Equity PC 6,031,549 1.8 746,928
Melbourne Clinic Equity PC 2,450,000 0.7 1,198,803
Greenwood Medical Building Equity PC 1,801,495 0.5 237,938
Columbus OB/GYN Clinic Equity PC 1,509,000 0.4 215,990
Indialantic Medical Building Equity PC 1,232,168 0.4 195,153
West Palm Beach Medical Building Equity PC 581,693 0.2 79,771
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$ 35,530,023 10.3% $ 3,257,641
INTEGRATED HEALTH
Oakwood Nursing & Rehabilitation Equity SAC $ 10,197,045 3.0% $ 1,158,971
Mountain View Nursing Center Equity SNF 9,863,626 2.9 1,109,352
Gravois Nursing Center Equity SAC 8,590,764 2.5 964,881
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$ 28,651,435 8.4% $ 3,233,204
TENET
Midway Medical Plaza Equity AHF $ 20,616,569 6.0% $ 2,236,498
Chapman General Hospital Mortgage ACH 7,913,076 2.3 881,134
------------ ----- ------------
$ 28,529,645 8.3% $ 3,117,632
KERLAN-JOBE
Kerlan-Jobe Orthopaedic Clinic Mortgage IDF $ 3,998,950 1.2% $ 22,998
------------ ----- ------------
$ 3,998,950 1.2% $ 22,998
MEDCATH, INC.
Tucson Heart Hospital Mortgage ACH $ 4,353,526 1.3% $ 88,142
------------ ----- ------------
$ 4,353,526 1.3% $ 88,142
QUORUM
Gadsden Medical Building II Equity AHF $ 5,862,999 1.7% $ 712,461
Desert Springs Medical Plaza Equity AHF 4,751,687 1.4 578,969
Hamiter Building Equity AHF 4,422,253 1.3 537,941
Goodyear Clinic Equity AHF 1,621,732 0.5 203,175
------------ ----- ------------
$ 16,658,671 4.9% $ 2,032,546
RAMSAY HEALTH CARE
Desert Vista Hospital Equity CMHH $ 8,550,000 2.5% $ 1,047,546
Mission Vista Hospital Equity CMHH 3,950,000 1.2 524,386
------------ ----- ------------
$ 12,500,00 3.7% $ 1,571,932
HORIZON/CMS
Southeast Texas Rehab. Hospital Equity IRF $ 10,551,197 3.1% $ 797,144
------------ ----- ------------
$ 10,551,197 3.1% $ 797,144
COGBURN
Ideal Nursing Center Mortgage SNF $ 4,887,005 1.4% $ 542,591
Cogburn Health Center Mortgage SNF 3,958,508 1.2 454,236
------------ ----- ------------
$ 8,845,513 2.6% $ 996,827
</TABLE>
7
<PAGE> 10
<TABLE>
<CAPTION>
TYPE OF AMOUNT OF 1996
OPERATOR AND TYPE OF PROPERTY INVESTMENT % OF REVENUE
PROPERTY NAME(1) INVESTMENT (2) (3) PORTFOLIO (4)
---------------- ---------- -------- ------------ --------- ------------
<S> <C> <C> <C> <C> <C>
NEW VISTA HEALTH SERVICES, INC.
Diana Lynn Lodge Mortgage SNF $ 4,850,000 1.4% $ 0
West Los Angeles Pavilion Mortgage SNF 1,000,000 0.3 0
Oak Park Manor Mortgage ALF 2,196,835 0.6 53,032
------------ ----- ------------
$ 8,046,835 2.3% $ 53,032
VANGUARD CARE
Silver Haven Care Nursing Center Mortgage SNF $ 2,533,112 0.7% $ 332,773
Valley View Nursing Center Mortgage SNF 968,543 0.3 127,069
Richardson Manor Nursing Center Mortgage SNF 281,580 0.1 37,374
------------ ----- ------------
$ 3,783,235 1.1% $ 497,216
NEW MEDICAL PROPERTY INVESTORS
Southwest General Hospital Equity AHF $ 2,368,092 0.7% $ 306,624
------------ ----- ------------
$ 2,368,092 0.7% $ 306,624
TRI-COUNTY CONVALESCENT HOME, INC.
Adamsville Mortgage SNF $ 2,237,138 0.7% $ 8,531
------------ ----- ------------
$ 2,237,138 0.7% $ 8,531
SSM HEALTH SYSTEMS, INC.
Clayton Big Bend Medical Center Equity PC $ 2,280,562 0.7% $ 347,534
------------ ----- ------------
$ 2,280,562 0.7% $ 347,534
IVY HALL ASSOCIATES
Ivy Hall/Atlanta Mortgage ALF $ 147,347 0.0% $ 737
------------ ----- ------------
$ 147,347 0.0% $ 737
------------ ----- ------------
Total $341,889,649 100.0% $ 34,690,936
============ ===== ============
</TABLE>
- ---------------
(1) Operators are Lessees, Borrowers, Guarantors or primary sublessees of the
healthcare facilities.
(2) AHF means ancillary hospital facility, ACH means acute-care hospital, ALF
means assisted living facility, ASF means ambulatory surgery facility, CMHH
means comprehensive mental health hospital, IDF means integrated delivery
facility, IRF means inpatient rehabilitation facility, ORF means outpatient
rehabilitation facility, PC means physician clinic, SAC means subacute care
facility, and SNF means skilled nursing facility.
(3) Based on actual investment at December 31, 1996.
(4) Reflects actual income earned for the year ended December 31, 1996.
Ancillary hospital facilities, which are contiguous or adjacent to a
hospital, contain physician offices and provide a variety of medical services
such as diagnostic, outpatient surgery and rehabilitation services, selected
hospital support services and educational and research activities. Acute care
hospitals provide a full range of inpatient, acute healthcare services. Assisted
living facilities generally provide extended care and a variety of healthcare
services to the elderly in a more residential setting. Ambulatory surgery
facilities provide various surgical procedures, typically on an outpatient
basis. Comprehensive mental health hospitals provide a full range of treatment
for psychiatric and chemical dependency disorders. Integrated delivery
facilities provide a variety of medical services such as primary care,
laboratory and diagnostic services, outpatient surgery and emergency care.
Inpatient rehabilitation facilities provide a full range of inpatient
rehabilitation services to patients experiencing significant physical
disabilities due to various conditions, such as head injury, spinal cord injury,
stroke, certain orthopedic problems and neuromuscular disease. Outpatient
rehabilitation facilities offer a comprehensive range of rehabilitative
healthcare services, including physical and occupational therapy, and focus
predominantly on orthopedic injuries, sports injuries, work injuries, hand and
upper extremity injuries, back injuries and various neurological/neuromuscular
conditions. Physician clinics provide a variety of
8
<PAGE> 11
outpatient diagnostic and therapeutic healthcare services. Sub-acute care
facilities provide monitoring, specialized care and comprehensive rehabilitative
therapy required by subacute and medically complex patients. Skilled nursing
facilities provide extended care and a variety of acute care healthcare services
to the elderly.
SELECTED OPERATORS
Nine of the 17 Operators of the properties underlying the Company's
Investments at December 31, 1996, are subject to the reporting requirements of
the Securities and Exchange Commission (the "Commission") and file with the
Commission annual reports containing audited financial information and quarterly
reports for the first three quarters of each fiscal year containing unaudited
financial information. Certain summary information is set forth below with
respect to five public Operators whose facilities comprise approximately 51.5%
of the Company's Investments at December 31, 1996. With respect to such
companies, the information provided is derived for the limited purposes of this
report from filings made with the Commission.
While the Company has not established any definitive credit criteria, the
Company evaluates the creditworthiness of the Operators based upon a review of
publicly available financial and other information, as well as a due diligence
review of the individual financial statements and other non-financial
information provided by the Operators, to the extent available, and other data
customarily reviewed when a company makes an acquisition or significant
investment. While the Company believes the information is provided in good faith
and has no reason to believe that any such information is inaccurate in any
material respect, the Company, in most instances, has not and cannot make an
independent investigation of such information.
HEALTHSOUTH. HEALTHSOUTH, headquartered in Birmingham, Alabama, is the
nation's largest provider of outpatient and rehabilitative healthcare services.
HEALTHSOUTH provides these services through its national network of outpatient
and inpatient rehabilitation facilities, outpatient surgery centers, medical
centers and other healthcare facilities. As of December 31, 1996, HEALTHSOUTH
had over 1,000 patient care locations in 50 states. HEALTHSOUTH's 1996 revenues
were approximately $2.4 billion.
On February 18, 1997, HEALTHSOUTH entered into a plan and agreement of
merger with Horizon/ CMS Healthcare Corporation. As a result of the merger,
HEALTHSOUTH will acquire 33 inpatient rehabilitation hospitals, 58 specialty
hospitals and subacute units, 282 outpatient rehabilitation facilities, 267
long-term care facilities that Horizon/CMS owns, leases or manages, a contract
therapy business holding 1,400 contracts, an institutional pharmacy business
serving 38,500 beds, and other healthcare services.
9
<PAGE> 12
The following is a summary of certain financial information for
HEALTHSOUTH:
HEALTHSOUTH SUMMARY CONSOLIDATED FINANCIAL INFORMATION
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, SEPTEMBER 30,
1994 1995 1996
------------ ------------ -------------
(IN THOUSANDS)
<S> <C> <C> <C>
BALANCE SHEET DATA
Cash and marketable securities................... $ 129,971 $ 156,321 $ 124,852
Working capital.................................. 282,667 406,125 469,609
Total assets..................................... 2,230,093 2,931,495 3,182,772
Long-term debt................................... 1,139,087 1,391,664 1,463,927
Stockholders' equity............................. 757,583 1,185,898 1,397,231
</TABLE>
<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED DECEMBER 31, ENDED
------------------------- SEPTEMBER 30,
1994 1995 1996
----------- ----------- -------------
(IN THOUSANDS)
<S> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues.......................................... $1,649,199 $2,003,146 $1,793,766
Expenses.......................................... 1,464,526 1,791,257 1,499,773
Net Income........................................ 88,083 92,521 158,450
</TABLE>
COLUMBIA/HCA. Columbia/HCA, headquartered in Louisville, Kentucky,
provides a full range of inpatient and outpatient services and is one of the
leading hospital owners and management companies in the United States. Major
services provided by Columbia/HCA and its affiliated entities include acute
inpatient care, inpatient psychiatric care, outpatient diagnostic services,
outpatient surgery programs, outpatient psychiatric services, rehabilitation
services, skilled nursing care and home healthcare/infusion services. At
February 28, 1997, Columbia/HCA operated 347 hospitals, 147 surgery centers and
more than 550 home health agencies and extensive ancillary service providers in
37 states, England and Switzerland. Columbia/HCA is building comprehensive
networks of healthcare services, including home health, rehabilitation and
skilled nursing units in local markets around the country.
MEDPARTNERS. MedPartners, with annualized revenues of approximately $5.1
billion, is the largest physician practice management company in the United
States. MedPartners develops, consolidates and manages integrated healthcare
delivery systems. Through its network of affiliated group and independent
practice association ("IPA") physicians, MedPartners provides primary and
specialty health care services to prepaid managed care enrollees and
fee-for-service patients. MedPartners also operates one of the largest
independent prescription benefit management programs in the United States and
provides disease management services and therapies for patients with certain
chronic conditions. As of December 31, 1996, MedPartners operated in 25 states
through affiliations with approximately 8,875 physicians, including
approximately 2,603 in group practices, 5,314 through IPA relationships and 958
who were hospital-based, providing healthcare to approximately 1.6 million
prepaid enrollees.
INTEGRATED HEALTH. Integrated Health, formed in 1986, and headquartered in
Owings Mills, Maryland, is one of the nation's leading providers of subacute
healthcare services. Integrated Health's strategy is to use geriatric care
facilities as platforms to provide a wide variety of medical and rehabilitative
services more typically delivered in the acute-care hospital setting. Integrated
Health's focus on providing subacute care is designed to address the fact that
cost containment measures implemented by private insurers and limitations on
government reimbursement of hospital costs have resulted in the discharge from
hospitals of many patients who continue to require subacute care. These patients
often cannot be effectively cared for in the home because of the complex
monitoring and specialized medical treatment required. Because geriatric care
facilities have lower capital and operating costs than acute-care hospitals,
Integrated Health is able to offer these complex medical services at a
significantly lower cost than acute-care hospitals. As of December 31, 1996,
Integrated Health operated over 1,000 post-acute service locations in 40 states
throughout the United
10
<PAGE> 13
States. On October 21, 1996, Integrated Health announced that it had entered
into a definitive merger agreement pursuant to which it will acquire Coram
Healthcare Corp, which is the largest provider of home infusion services with
annualized 1996 revenues of $532 million and 112 locations in 43 states.
TENET. Tenet Healthcare Corporation, headquartered in Santa Barbara,
California, owns and operates 127 hospitals and numerous ancillary healthcare
operations serving communities in 22 states. On January 30, 1997, Tenet acquired
OrNda HealthCorp in a transaction accounted for as a pooling of interests. A
substantial number of OrNda's 50 general hospitals complement the 77 general
hospitals owned or leased by Tenet prior to the merger, particularly in south
Florida and southern California. As of January 30, 1997, the combined company
had approximately 97,000 employees and pro forma revenues of $8.8 billion for
the 12 months ended November 30, 1996.
LEASES
Each Lease relates to a healthcare facility, comprised generally of the
land, buildings, other improvements and certain fixtures, for a use, in most
cases, restricted to the intended healthcare related use and for such other uses
as may be necessary in connection with or incidental to such use (the "Primary
Intended Use"). Generally, personal property is not being purchased or leased,
although the Company has been granted an option to purchase any personal
property necessary or appropriate for the operation of the Leased Properties for
an amount equal to the then-current book value (original cost less accumulated
depreciation on the books of the Lessee). The Leases have initial terms ranging
from 10 to 15 years with the majority having one or more renewal terms providing
in total at least 10 additional years exercisable by the Lessee. The Leases are
subject to earlier termination upon the occurrence of certain contingencies.
Base rent varies by Lease, taking into consideration many factors, including the
credit of the Lessee, purchase price of the property, operating performance of
the facility, location, type and physical condition of the facility. The Leases
generally provide for additional rent commencing after the first year based on
either a set percentage increase on a rate based on the consumer price index,
with annual increases generally limited to a maximum of 5%.
Each Lease is a triple net lease and the Lessee is responsible thereunder,
in addition to base rent and any additional rent, for all additional charges,
including any fines, penalties, interest and costs which may be levied for
nonpayment or late payment thereof, all taxes, assessments, levies, fees, water
and sewer rents and charges, all governmental charges with respect to the
applicable Leased Property, all utility and other charges, including insurance
premiums, incurred in connection with the operation of the Leased Property, and
ground rent in the case of the Larkin Medical Building, Virginia Beach, North
Lake, North Shore, Great Lakes, Altoona, Mechanicsburg, Southwest General
Medical Building, Cape Coral Medical Plaza, Bonita Bay Medical Centre and
Sarasota Medical Centre facilities.
Each Lessee is required, at its expense, to maintain its leased property in
good order and repair. The Company is not required to repair, rebuild or
maintain the Leased Properties. Under certain Leases, the Company must purchase
from the Lessees certain structural capital improvements and replacements made
by such Lessees or otherwise compensate the Lessees.
Generally, the Leases also contain provisions which generally permit the
Lessees, under certain circumstances, to terminate the Leases and to repurchase
the applicable Leased Property for a price equal to the Minimum Repurchase Price
(as defined in the Leases) or to substitute another property or properties for
the applicable Leased Property. These circumstances include (i) the occurrence
of certain damage to or destruction of the Leased Properties, (ii) condemnation
and (iii) mutual agreement of the parties. The Integrated Health Leases contain
an option, commencing at the end of the fifth year, to repurchase the Leased
Property for a purchase price equal to the Minimum Repurchase Price (as defined
in the Leases). Each of the Lessees has a right of first refusal to purchase the
Leased Property during the terms of the Leases and for a short period of time
following the expiration of the terms of the Leases on the same terms and
conditions as the Company may propose to sell such Leased Property.
11
<PAGE> 14
DEVELOPMENT ARRANGEMENTS
The Company has entered into certain development funding arrangements to
provide the funding to enable healthcare operators to build facilities on
property owned or leased by the Company. The Company views development funding
as an effective way to acquire prime investments and to meet the significant
demand on the part of qualified operators for funds for development of
healthcare facilities. Providing such capital will, management believes, enhance
the Company's position as a provider of funds for the healthcare industry.
The Company contracts with a qualified third party developer to construct a
facility. Prior to making any funding advance for a development, the Company
will enter into a contract to acquire or ground lease the real estate, will
enter into a triple net lease with the third party developer and will have
approval authority with regard to plans, specifications, budgets and time
schedules for the completion of the development of the property. Under the terms
of the development funding agreements, the Company will receive funding fees
(the economic equivalent of construction period interest) on all funds advanced.
Timely completion of the development in compliance with the plans,
specifications, budgets and time schedules will be the contractual
responsibility of the third party developer. All construction and service
contracts relating to the development will be assigned to the Company. During
the term of the development of a facility, funds will be advanced pursuant to
requests made by the third party developer in accordance with the terms and
conditions of the applicable funding agreement based on costs incurred prior to
the date of such requests. As construction progresses, the Company will receive
monthly reports evidencing the third party developer's compliance with the
plans, specifications, budgets and time schedules, certified by appropriate
architects and engineers. Change orders, if any, to the plans, specifications,
budgets and time schedules will be permitted only with the approval of the
Company.
Failure by the third party developer to comply with the terms of the
funding agreements, including inability to meet budgets and time schedules, will
constitute a default on the part of the third party developer. Depending on the
nature of the default, the Company will have remedies available to it, including
the authority to remove the third party developer and undertake completion of
the development at the expense of the third party developer or the right to
require completion of the development property or repayment of the funds
invested by the Company pursuant to guarantees of the parent company of the
developer. The Company believes that it has the requisite development and
construction management oversight experience to complete, if necessary, a
development. Upon completion of the development, the applicable Operator will
have the obligation to undertake its responsibilities under the applicable
Lease.
ITEM 3. LEGAL PROCEEDINGS
The Company is not aware of any legal action pending or threatened against
it.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of stockholders during the fourth quarter
of 1996.
12
<PAGE> 15
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's Common Stock is listed on the New York Stock Exchange
("NYSE") under the symbol "CCT". The following table sets forth, for the fiscal
periods indicated, since the Common Stock began trading, the high and low
closing sales prices of the Common Stock on the NYSE, and the dividend
distributions per share declared by the Company with respect to each applicable
quarter:
<TABLE>
<CAPTION>
DISTRIBUTION
HIGH LOW PER SHARE
---- ---- ------------
<S> <C> <C> <C>
1995:
First Quarter............................................... 17 1/8 15 5/8 .425
Second Quarter.............................................. 18 15 3/8 .445
Third Quarter............................................... 19 1/4 17 3/8 .445
Fourth Quarter.............................................. 19 1/4 18 1/8 .445
1996:
First Quarter............................................... 21 1/2 18 7/8 .445
Second Quarter.............................................. 21 1/2 19 1/2 .455
Third Quarter............................................... 21 1/4 19 3/4 .46
Fourth Quarter.............................................. 21 7/8 20 3/4 .465
1997:
First Quarter (through March 24)............................ 24 1/8 22 3/8
</TABLE>
On March 24, 1997, the closing price of the Common Stock on the NYSE was
$22 1/2 per share. As of March 14, 1997, 14,288,529 shares of Common Stock were
issued and outstanding and held by approximately 500 record holders.
The Company intends to continue its policy of paying quarterly cash
dividends. Future dividends will be dependent, however, upon the Company's
earnings, financial requirements and other relevant factors.
ITEM 6. SELECTED FINANCIAL DATA
The information set forth under the caption "Selected Financial Data", set
forth on Page 5 of the Company's 1996 Annual Report to Shareholders, is
incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The Company's information relating to the management's discussion and
analysis of financial condition and results of operations, set forth on pages 10
through 16 of the Company's 1996 Annual Report to Shareholders under the caption
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Company's consolidated financial statements and the related notes
thereto, together with the report of KPMG Peat Marwick LLP thereon, set forth on
Pages 17 through 27 of the Company's 1996 Annual Report to Shareholders, are
incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
13
<PAGE> 16
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Directors
The information with respect to directors, set forth under the caption
"Election of Directors" on pages 2 through 4 of the Company's Proxy Statement
relating to the Annual Meeting of Shareholders to be held on May 1, 1997, is
incorporated herein by reference.
EXECUTIVE OFFICERS
The executive officers of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Richard M. Scrushy........................ 44 Chairman of the Board
John W. McRoberts......................... 44 President and Chief Executive Officer
William C. Harlan......................... 46 Senior Vice President and Head of
Acquisitions
Andrew L. Kizer........................... 40 Vice President, Chief Financial Officer,
Secretary and Treasurer
</TABLE>
Mr. Scrushy is Chairman and Chief Executive Officer of HEALTHSOUTH
Corporation and is a co-founder of the Company. Prior to founding HEALTHSOUTH in
1983, Mr. Scrushy served as a Vice President of Lifemark Corporation, a
NYSE-listed company. He also serves on the Board of Directors of Integrated
Health Services, Inc., and MedPartners, Inc.
Mr. McRoberts was a senior officer of AmSouth Bank of Alabama (formerly
AmSouth Bank N.A.), headquartered in Birmingham, Alabama, prior to becoming a
co-founder, President and Chief Executive Officer of the Company. He was
employed by AmSouth Bank from 1977 to 1993 and most recently was head of
Corporate Banking for the Birmingham area. Mr. McRoberts' responsibilities at
AmSouth also included oversight of the bank's entire healthcare lending
portfolio and the Birmingham based real estate lending portfolio.
Mr. Harlan was a senior vice president of SouthTrust Bank, N.A.,
headquartered in Birmingham, Alabama, prior to becoming employed by the Company.
He was employed by SouthTrust Bank, N.A. from 1976 to 1993 and was most recently
head of the bank's healthcare lending area. Mr. Harlan serves on the advisory
board of Carraway Medical Center, Inc.
Mr. Kizer, a certified public accountant, was a senior manager with KPMG
Peat Marwick in its Birmingham office prior to becoming employed by the Company.
Mr. Kizer was employed at KPMG Peat Marwick from 1985 to 1993. Prior to that
time he was employed by Arthur Andersen in its Birmingham office.
ITEM 11. EXECUTIVE COMPENSATION
The information under the caption "Executive Compensation," set forth on
pages 7 through 12 in the Company's Proxy Statement relating to the Annual
Meeting of Shareholders to be held on May 1, 1997, is incorporated herein by
reference. The Comparative Performance Graph and the Compensation Committee
Report on Executive Compensation, also included in the Proxy Statement, are
expressly not incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information under the caption "Security Ownership of Certain Beneficial
Owners and Management," set forth on pages 6 through 7 in the Company's Proxy
Statement relating to the Annual Meeting of Shareholders to be held on May 1,
1997, is incorporated herein by reference.
14
<PAGE> 17
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information under the caption "Certain Relationships and Related
Transactions," set forth on page 13 in the Company's Proxy Statement relating to
the Annual Meeting of Shareholders to be held on May 1, 1997, is incorporated
herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) Index to Consolidated Financial Statements, Consolidated Financial
Statement Schedules and Exhibits.
1. Consolidated Financial Statements: The following consolidated
financial statements of Capstone Capital Corporation are incorporated
herein by reference in Item 8 from the Company's 1996 Annual Report to
Shareholders:
Independent Auditors' Report
Consolidated Balance Sheets as of December 31, 1996 and December
31, 1995.
Consolidated Statements of Income for the Years Ended December 31,
1996 and December 31, 1995, and for the period from inception to
December 31, 1994.
Consolidated Statements of Cash Flow for the Fiscal Years Ended
December 31, 1996 and December 31, 1995, and for the period from
inception to December 31, 1994.
Consolidated Statements of Stockholders' Equity for the Fiscal
Years Ended December 31, 1996 and December 31, 1995, and for the period
from inception to December 31, 1994.
Notes to Consolidated Financial Statements.
2. Consolidated Financial Statement Schedules:
Independent Auditors' Report on Consolidated Financial Statement
Schedules
Schedule III -- Real Estate and Accumulated Depreciation as of
December 31, 1996
Schedule IV -- Mortgage Loans on Real Estate as of December 31,
1996
All other schedules are omitted because they are not applicable or
not required or because the information is included in the Company's
consolidated financial statements or notes thereto.
3. Exhibits
The exhibits listed on the accompanying Index of Exhibits are filed
as a part of this report or are incorporated herein by reference.
The Company agrees to furnish to the Securities and Exchange
Commission, upon request, a copy of each instrument defining the rights
of holders of the Company's long-term debt.
CAPSTONE CAPITAL CORPORATION WILL FURNISH TO EACH STOCKHOLDER, UPON
WRITTEN REQUEST, COPIES OF THE EXHIBITS REFERRED TO ABOVE AT A COST OF
TEN CENTS PER PAGE. REQUESTS SHOULD BE ADDRESSED TO: ANDREW L. KIZER,
SECRETARY, CAPSTONE CAPITAL CORPORATION, 1000 URBAN CENTER DRIVE, SUITE
630, BIRMINGHAM, ALABAMA 35242.
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Company during the last quarter of
the fiscal year ended December 31, 1996.
15
<PAGE> 18
(c) Exhibits
The response to this portion of Item 14 is submitted as a separate section
of this report. See Item 14(a)(3) and separate Exhibit Index attached hereto.
(d) Financial Statement Schedules
The response to this portion of Item 14 is submitted as a separate section
of this report. See Item 14(a)(2).
16
<PAGE> 19
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of
Birmingham, State of Alabama, on March 31, 1997.
CAPSTONE CAPITAL CORPORATION
By: /s/ JOHN W. MCROBERTS
------------------------------------
John W. McRoberts,
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------- ----- ----
<C> <S> <C>
/s/ JOHN W. MCROBERTS President and Chief Executive March 31, 1997
- --------------------------------------------------- Officer (Principal Executive
John W. McRoberts Officer)
/s/ ANDREW L. KIZER Vice President, Chief Financial March 31, 1997
- --------------------------------------------------- Officer, Secretary and Treasurer
Andrew L. Kizer (Principal Financial Officer)
/s/ RICHARD M. SCRUSHY Chairman of the Board March 31, 1997
- ---------------------------------------------------
Richard M. Scrushy
/s/ MICHAEL D. MARTIN Director March 31, 1997
- ---------------------------------------------------
Michael D. Martin
/s/ GEORGE E. BOGLE Director March 31, 1997
- ---------------------------------------------------
George E. Bogle
/s/ ROBERT N. ELKINS Director March 31, 1997
- ---------------------------------------------------
Robert N. Elkins
/s/ ERIC R. HANSON Director March 31, 1997
- ---------------------------------------------------
Eric R. Hanson
/s/ W. BARRY MORTON Director March 31, 1997
- ---------------------------------------------------
W. Barry Morton
/s/ LARRY D. STRIPLIN, JR. Director March 31, 1997
- ---------------------------------------------------
Larry D. Striplin, Jr.
/s/ LARRY R. HOUSE Director March 31, 199
- ---------------------------------------------------
</TABLE>
17
<PAGE> 20
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<S> <C>
3.1 -- Articles of Incorporation of the Company incorporated by
reference (pursuant to the provisions of Rule 12b-32) to
Exhibit 3.1 to the Company's Form S-11 Registration
Statement No. 33-77788, dated April 15, 1994, together with
Amendment to Articles of Incorporation incorporated by
reference to Exhibit 3.3 to the Company's Form S-11
Registration Statement No. 33-77788, and Amendment to
Articles of Incorporation incorporated by reference to
Exhibit 3.4 to Amendment No. 2 to the Company's Form S-11
Registration Statement No. 33-77788.
3.2 -- Amended and Restated By-Laws of the Company incorporated by
reference (pursuant to the provisions of Rule 12b-32) to
Exhibit 3.2 to Amendment No. 1 to the Company's Form S-11
Registration Statement No. 33-89756, dated March 6, 1995.
4.1 -- Specimen of Common Stock Certificate incorporated by
reference (pursuant to the provisions of Rule 12b32) to
Exhibit 4 to the Company's Form S-11 Registration Statement
No. 33-77788, dated April 15, 1994.
4.2 -- Form of Indenture for the 10 1/2% Convertible Subordinated
Debentures due 2002 between the Company and AmSouth Bank of
Alabama (including the form of Debenture included therein),
incorporated by reference (pursuant to the provisions of
Rule 12b-32) to Exhibit 4 to the Company's Form S-11
Registration Statement No. 33-89756, dated March 6, 1995.
4.3 -- Form of Indenture for the Senior Debt Securities,
incorporated by reference (pursuant to the provisions of
Rule 12b-32) to Exhibit 4.3 to Amendment No. 2 to the
Company's Form S-3 Registration Statement No. 33-97926,
dated November 22, 1995.
4.4 -- Indenture for the Subordinated Debt Securities dated March
14, 1997, between the Company and AmSouth Bank of Alabama.
4.5 -- First Supplemental Indenture for the 6.55% Convertible
Subordinated Debentures due 2002, dated March 14, 1997,
between the Company and AmSouth Bank of Alabama.
10.1 -- Agreement of Sale and Purchase with respect to American
Sports Medicine Institute, Birmingham Medical Building I and
Birmingham Medical Building II, incorporated by reference
(pursuant to the provisions of Rule 12b-32) to Exhibit 10.1
to the Company's Form S-11 Registration Statement No.
33-77788, dated April 15, 1994.
10.2 -- Agreement of Sale and Purchase with respect to One-7000
Building, incorporated by reference (pursuant to the
provisions of Rule 12b-32) to Exhibit 10.2 to the Company's
Form S-11 Registration Statement No. 33-77788, dated April
15, 1994.
10.3 -- Agreement of Sale and Purchase with respect to Coral Gables
MRI, incorporated by reference (pursuant to the provisions
of Rule 12b-32) to Exhibit 10.3 to the Company's Form S-11
Registration Statement No. 33-77788, dated April 15, 1994.
10.4 -- Agreement of Sale and Purchase with respect to Little Rock,
incorporated by reference (pursuant to the provisions of
Rule 12b-32) to Exhibit 10.4 to the Company's Form S-11
Registration Statement No. 33-77788, dated April 15, 1994.
</TABLE>
<PAGE> 21
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<S> <C>
10.5 -- Agreement of Sale and Purchase with respect to Larkin
Medical Building, incorporated by reference (pursuant to the
provisions of Rule 12b-32) to Exhibit 10.5 to the Company's
Form S-11 Registration Statement No. 33-77788, dated April
15, 1994.
10.6 -- Agreement of Sale and Purchase with respect to Richmond
Medical Building I and Richmond Medical Building II,
incorporated by reference (pursuant to the provisions of
Rule 12b-32) to Exhibit 10.6 to the Company's Form S-11
Registration Statement No. 33-77788, dated April 15, 1994.
10.7 -- Agreement of Sale and Purchase with respect to Virginia
Beach, incorporated by reference (pursuant to the provisions
of Rule 12b-32) to Exhibit 10.7 to the Company's Form S-11
Registration Statement No. 33-77788, dated April 15, 1994.
10.8 -- Agreement of Sale and Purchase with respect to Midway
Medical Plaza, incorporated by reference (pursuant to the
provisions of Rule 12b-32) to Exhibit 10.8 to the Company's
Form S-11 Registration Statement No. 33-77788, dated April
15, 1994.
10.9 -- Agreement of Sale and Purchase with respect to Mountain
View, incorporated by reference (pursuant to the provisions
of Rule 12b-32) to Exhibit 10.9 to the Company's Form S-11
Registration Statement No. 33-77788, dated April 15, 1994.
10.10 -- Agreement of Sale and Purchase with respect to Gravois,
incorporated by reference (pursuant to the provisions of
Rule 12b-32) to Exhibit 10.10 to the Company's Form S-11
Registration Statement No. 33-77788, dated April 15, 1994.
10.11 -- Agreement of Sale and Purchase with respect to Goodyear,
Hamiter Building and Medical Building II, incorporated by
reference (pursuant to the provisions of Rule 12b-32) to
Exhibit 10.11 to the Company's Form S-11 Registration
Statement No. 33-77788, dated April 15, 1994.
10.12 -- Agreement of Sale and Purchase with respect to Desert
Springs, incorporated by reference (pursuant to the
provisions of Rule 12b-32) to Exhibit 10.12 to the Company's
Form S-11 Registration Statement No. 33-77788, dated April
15, 1994.
10.13 -- Agreement of Sale and Purchase with respect to South Lake
Medical Center, incorporated by reference (pursuant to the
provisions of Rule 12b-32) to Exhibit 10.13 to the Company's
Form S-11 Registration Statement No. 33-77788, dated April
15, 1994.
10.14 -- Agreement of Sale and Purchase with respect to Northlake,
incorporated by reference (pursuant to the provisions of
Rule 12b-32) to Exhibit 10.14 to the Company's Form S-11
Registration Statement No. 33-77788, dated April 15, 1994.
10.15 -- Agreement of Sale and Purchase with respect to North Shore,
incorporated by reference (pursuant to the provisions of
Rule 12b-32) to Exhibit 10.15 to the Company's Form S-11
Registration Statement No. 33-77788, dated April 15, 1994.
10.16 -- 1994 Stock Incentive Plan of Crescent Capital Trust, Inc.,
incorporated by reference (pursuant to the provisions of
Rule 12b-32) to Exhibit 10.16 to the Company's Form S-11
Registration Statement No. 33-77788, dated April 15, 1994.
10.17 -- Lease Agreement between the Company and Birmingham Realty
Company, dated May 25, 1993, incorporated by reference
(pursuant to the provisions of Rule 12b-32) to Exhibit 10.17
to the Company's Form S-11 Registration Statement No.
33-77788, dated April 15, 1994.
</TABLE>
2
<PAGE> 22
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<S> <C>
10.18 -- Agreement and Certificate of Limited Partnership of Capstone
Capital of San Antonio, Ltd., an Alabama limited
partnership, incorporated by reference (pursuant to the
provisions of Rule 12b-32) to Exhibit 10.1 to the Company's
Form 8-K Current Report filed with the Commission on
November 2, 1994.
10.19 -- Agreement of Sale and Purchase By and Between MDM
Associates-San Antonio, Ltd. and Capstone Capital of San
Antonio, Ltd. d/b/a Cahaba of San Antonio, Ltd., dated
October 21, 1994, incorporated by reference (pursuant to the
provisions of Rule 12b-32) to Exhibit 10.2 to the Company's
Form 8-K Current Report filed with the Commission on
November 2, 1994.
10.20 -- Lease Agreement -- Capstone Capital of San Antonio, Ltd.
d/b/a Cahaba of San Antonio, Ltd., Lessor, and New Medical
Property Investors Company d/b/a NMP Investors Company,
Lessee, dated October 21, 1994, incorporated by reference
(pursuant to the provisions of Rule 12b-32) to Exhibit 10.3
to the Company's Form 8-K Current Report filed with the
Commission on November 2, 1994.
10.21 -- Agreement of Sale and Purchase By and Between MDM
Associates-Philadelphia, Ltd. and Capstone Capital of
Pennsylvania, Inc., dated October 20, 1994, incorporated by
reference (pursuant to the provisions of Rule 12b-32) to
Exhibit 10.4 to the Company's Form 8-K Current Report filed
with the Commission on November 2, 1994.
10.22 -- Lease Agreement -- Capstone Capital of Pennsylvania, Inc.,
Lessor, and New Medical Property Investors Company, Lessee,
dated October 21, 1994, incorporated by reference (pursuant
to the provisions of Rule 12b-32) to Exhibit 10.5 to the
Company's Form 8-K Current Report filed with the Commission
on November 2, 1994.
10.23 -- Agreement and Certificate of Limited Partnership of Capstone
of Cape Coral, Ltd., an Alabama limited partnership,
incorporated by reference (pursuant to the provisions of
Rule 12b-32) to Exhibit 10.6 to the Company's Form 8-K
Current Report filed with the Commission on November 2,
1994.
10.24 -- Agreement to Assign Ground Lease By and Between Cape Coral
Medical Plaza, L.C., and Capstone of Cape Coral, Ltd., dated
October 18, 1994, incorporated by reference (pursuant to the
provisions of Rule 12b32) to Exhibit 10.7 to the Company's
Form 8-K Current Report filed with the Commission on
November 2, 1994.
10.25 -- Development Agreement between Capstone of Cape Coral, Ltd.
and Cape Coral Medical Plaza, L.C., dated October 18, 1994,
incorporated by reference (pursuant to the provisions of
Rule 12b-32) to Exhibit 10.8 to the Company's Form 8-K
Current Report filed with the Commission on November 2,
1994.
10.26 -- Guaranty of Obligations Pursuant to Lease Agreement executed
by Jaramar, Ltd., a Texas limited liability company, dated
October 18, 1994, to induce Capstone of Cape Coral, Ltd. to
enter into a Lease Agreement with Cape Coral Medical Plaza,
L.C., incorporated by reference (pursuant to the provisions
of Rule 12b32) to Exhibit 10.9 to the Company's Form 8-K
Current Report filed with the Commission on November 2,
1994.
10.27 -- Lease Agreement -- Capstone of Cape Coral, Ltd., Lessor, and
Cape Coral Medical Plaza, L.C., Lessee, dated October 18,
1994, incorporated by reference (pursuant to the provisions
of Rule 12b-32) to Exhibit 10.10 to the Company's Form 8-K
Current Report filed with the Commission on November 2,
1994.
</TABLE>
3
<PAGE> 23
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<S> <C>
10.28 -- Agreement and Certificate of Limited Partnership of Capstone
of Bonita Bay, Ltd., an Alabama limited partnership,
incorporated by reference (pursuant to the provisions of
Rule 12b-32) to Exhibit 10.11 to the Company's Form 8-K
Current Report filed with the Commission on November 2,
1994.
10.29 -- Agreement to Assign Ground Lease By and Between Bonita Bay
Medical Centre, L.C., and Capstone of Bonita Bay, Ltd.,
dated October 18, 1994, incorporated by reference (pursuant
to the provisions of Rule 12b-32) to Exhibit 10.12 to the
Company's Form 8-K Current Report filed with the Commission
on November 2, 1994.
10.30 -- Development Agreement between Capstone of Bonita Bay, Ltd.
and Bonita Bay Medical Centre, L.C., dated October 18, 1994,
incorporated by reference (pursuant to the provisions of
Rule 12b-32) to Exhibit 10.13 to the Company's Form 8-K
Current Report filed with the Commission on November 2,
1994.
10.31 -- Guaranty of Obligations Pursuant to Lease Agreement executed
by Jaramar, Ltd., a Texas limited liability company, dated
October 18, 1994, to induce Capstone of Bonita Bay, Ltd. to
enter into a Lease Agreement with Bonita Bay Medical Centre,
L.C., incorporated by reference (pursuant to the provisions
of Rule 12b-32) to Exhibit 10.14 to the Company's Form 8-K
Current Report filed with the Commission on November 2,
1994.
10.32 -- Lease Agreement -- Capstone of Bonita Bay, Ltd., Lessor, and
Bonita Bay Medical Centre, L.C., Lessee, dated October 18,
1994, incorporated by reference (pursuant to the provisions
of Rule 12b-32) to Exhibit 10.15 to the Company's Form 8-K
Current Report filed with the Commission on November 2,
1994.
10.33 -- Agreement and Certificate of Limited Partnership of Capstone
of Sarasota, Ltd., an Alabama limited partnership,
incorporated by reference (pursuant to the provisions of
Rule 12b-32) to Exhibit 10.16 to the Company's Form 8-K
Current Report filed with the Commission on November 2,
1994.
10.34 -- Agreement to Assign Ground Lease By and Between Sarasota
Medical Centre, L.C., and Capstone of Sarasota, Ltd., dated
October 18, 1994, incorporated by reference (pursuant to the
provisions of Rule 12b-32) to Exhibit 10.17 to the Company's
Form 8-K Current Report filed with the Commission on
November 2, 1994.
10.35 -- Development Agreement between Capstone of Sarasota, Ltd. and
Sarasota Medical Centre, L.C., dated October 18, 1994,
incorporated by reference (pursuant to the provisions of
Rule 12b-32) to Exhibit 10.18 to the Company's Form 8-K
Current Report filed with the Commission on November 2,
1994.
10.36 -- Guaranty of Obligations Pursuant to Lease Agreement executed
by Jaramar, Ltd., a Texas limited liability company, dated
October 18, 1994, to induce Capstone of Sarasota, Ltd. to
enter into a Lease Agreement with Sarasota Medical Centre,
L.C., incorporated by reference (pursuant to the provisions
of Rule 12b-32) to Exhibit 10.19 to the Company's Form 8-K
Current Report filed with the Commission on November 2,
1994.
10.37 -- Lease Agreement -- Capstone of Sarasota, Ltd., Lessor, and
Sarasota Medical Centre, L.C., Lessee, dated October 18,
1994, incorporated by reference (pursuant to the provisions
of Rule 12b-32) to Exhibit 10.20 to the Company's Form 8-K
Current Report filed with the Commission on November 2,
1994.
</TABLE>
4
<PAGE> 24
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<S> <C>
10.38 -- Lease Agreement -- Crescent Capital of Alabama, Inc. and
HEALTHSOUTH Medical Center, Inc., dated June 8, 1994,
incorporated by reference (pursuant to the provisions of
Rule 12b-32) to Exhibit 10.1 to the Company's Form S-11
Registration Statement No. 33-89756, dated February 24,
1995.
10.39 -- Lease Agreement -- Midway Acquisition Company, Inc. and
Midway Hospital Medical Center, Inc. dated April 19, 1994,
incorporated by reference (pursuant to the provisions of
Rule 12b-32) to Exhibit 10.2 to the Company's Form S-11
Registration Statement No. 33-89756, dated February 24,
1995.
10.40 -- The Urban Center at Liberty Park Office Building One
Thousand Office Lease Agreement between Torchmark
Development Corporation and Crescent Capital of Alabama,
Inc., dated June 28, 1994, incorporated by reference
(pursuant to the provisions of Rule 12b-32) to Exhibit 10.3
to the Company's Form S-11 Registration Statement No.
33-89756, dated February 24, 1995.
10.41 -- Adoption Agreement for AmSouth Bank of Alabama Standardized
401(k) Profit Sharing Plan and Trust, dated February 10,
1995, incorporated by reference (pursuant to the provisions
of Rule 12b-32) to Exhibit 10.4 to the Company's Form S-11
Registration Statement No. 33-89756, dated February 24,
1995.
10.42 -- Confirmation of Rate Cap Transaction between the Company and
NationsBank of North Carolina, N.A., dated December 7, 1994,
incorporated by reference (pursuant to the provisions of
Rule 12b-32) to Exhibit 10.5 to the Company's Form S-11
Registration Statement No. 33-89756, dated February 24,
1995.
10.43 -- Lease Agreement between Crescent Capital of Alabama, Inc.
and HEALTHSOUTH Medical Center, Inc., dated June 8, 1994
(Birmingham), incorporated by reference (pursuant to the
provisions of Rule 12b-32) to Exhibit 10.1 to the Company's
Form 10-Q, dated August 15, 1994.
10.44 -- Lease Agreement between Crescent Capital of Alabama, Inc.
and HEALTHSOUTH Rehabilitation Corporation, dated June 8,
1994 (Larkin), incorporated by reference (pursuant to the
provisions of Rule 12b-32) to Exhibit 10.2 to the Company's
Form 10-Q, dated August 15, 1994.
10.45 -- Lease Agreement between Capstone Capital Trust, Inc. and
HEALTHSOUTH Rehabilitation Corporation, dated June 8, 1994
(Coral Gables), incorporated by reference (pursuant to the
provisions of Rule 12b-32) to Exhibit 10.3 to the Company's
Form 10-Q, dated August 15, 1994.
10.46 -- Lease Agreement between Capstone Capital Trust, Inc. and
HEALTHSOUTH Rehabilitation Corporation, dated June 8, 1994
(Little Rock), incorporated by reference (pursuant to the
provisions of Rule 12b-32) to Exhibit 10.4 to the Company's
Form 10-Q, dated August 15, 1994.
10.47 -- Lease Agreement between Capstone Capital Trust, Inc. and
HEALTHSOUTH Rehabilitation Corporation, dated June 8, 1994
(Larkin annex), incorporated by reference (pursuant to the
provisions of Rule 12b-32) to Exhibit 10.5 to the Company's
Form 10-Q, dated August 15, 1994.
10.48 -- Lease Agreement between Capstone Capital Trust, Inc. and
HEALTHSOUTH of Virginia, Inc., dated June 8, 1994
(Richmond), incorporated by reference (pursuant to the
provisions of Rule 12b-32) to Exhibit 10.6 to the Company's
Form 10-Q, dated August 15, 1994.
</TABLE>
5
<PAGE> 25
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<S> <C>
10.49 -- Lease Agreement between Capstone Capital Trust, Inc. and
HEALTHSOUTH Rehabilitation Corporation, dated June 8, 1994
(Virginia Beach), incorporated by reference (pursuant to the
provisions of Rule 12b-32) to Exhibit 10.7 to the Company's
Form 10-Q, dated August 15, 1994.
10.50 -- Lease Agreement between Midway Acquisition Company, Inc. and
Midway Hospital Medical Center, Inc., dated April 19, 1994
(Midway), incorporated by reference (pursuant to the
provisions of Rule 12b-32) to Exhibit 10.8 to the Company's
Form 10-Q, dated August 15, 1994.
10.51 -- Lease Agreement between Crescent Capital of Pennsylvania,
Inc. and Mountain View Nursing Center, Inc., dated June 15,
1994 (Mountain View), incorporated by reference (pursuant to
the provisions of Rule 12b-32) to Exhibit 10.9 to the
Company's Form 10-Q, dated August 15, 1994.
10.52 -- Lease Agreement between Capstone Capital Trust, Inc. and
Gravois Health Care, Inc., dated June 15, 1994 (Gravois),
incorporated by reference (pursuant to the provisions of
Rule 12b-32) to Exhibit 10.10 to the Company's Form 10-Q,
dated August 15, 1994.
10.53 -- Lease Agreement between Crescent Capital of Alabama, Inc.
and QHG of Gadsden, Inc., dated June 9, 1994 (Gadsden),
incorporated by reference (pursuant to the provisions of
Rule 12b-32) to Exhibit 10.11 to the Company's Form 10-Q,
dated August 15, 1994.
10.54 -- Lease Agreement between Capstone Capital Trust, Inc. and
NC-DSH, Inc., dated June 9, 1994 (Desert Springs),
incorporated by reference (pursuant to the provisions of
Rule 12b-32) to Exhibit 10.12 to the Company's Form 10-Q,
dated August 15, 1994.
10.55 -- Lease Agreement between Capstone Capital Trust, Inc. and
Surgical Health Corporation, dated June 16, 1994 (South
County), incorporated by reference (pursuant to the
provisions of Rule 12b-32) to Exhibit 10.13 to the Company's
Form 10-Q, dated August 15, 1994.
10.56 -- Lease Agreement between Capstone Capital Trust, Inc. and
Surgical Health Corporation, dated June 16 1994 (Northlake),
incorporated by reference (pursuant to the provisions of
Rule 12b-32) to Exhibit 10.14 to the Company's Form 10-Q,
dated August 15, 1994.
10.57 -- Lease Agreement between Capstone Capital Trust, Inc. and
Surgical Health Corporation d/b/a Evanston Properties, Inc.,
dated June 16, 1994 (North Shore), incorporated by reference
(pursuant to the provisions of Rule 12b-32) to Exhibit 10.15
to the Company's Form 10-Q, dated August 15, 1994.
10.58 -- Guaranty of Obligations pursuant to Lease Agreement between
Crescent Capital of Alabama, Inc. and HEALTHSOUTH
Rehabilitation Corporation, dated June 8, 1994, incorporated
by reference (pursuant to the provisions of Rule 12b-32) to
Exhibit 10.16 to the Company's Form 10-Q, dated August 15,
1994.
10.59 -- Guaranty of Obligations pursuant to Lease Agreement between
Capstone Capital Trust, Inc. and HEALTHSOUTH Rehabilitation
Corporation, dated June 8, 1994, incorporated by reference
(pursuant to the provisions of Rule 12b-32) to Exhibit 10.17
to the Company's Form 10-Q, dated August 15, 1994.
10.60 -- Guaranty of Obligations pursuant to Lease Agreement between
OrNda Healthcorp and Midway Acquisition Company, Inc., dated
April 19, 1994, incorporated by reference (pursuant to the
provisions of Rule 12b-32) to Exhibit 10.18 to the Company's
Form 10-Q, dated August 15, 1994.
</TABLE>
6
<PAGE> 26
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<S> <C>
10.61 -- Guaranty of Obligations pursuant to Lease Agreement between
Crescent Capital of Pennsylvania, Inc. and Integrated Health
Services, Inc., dated June 15, 1995, incorporated by
reference (pursuant to the provisions of Rule 12b-32) to
Exhibit 10.19 to the Company's Form 10-Q, dated August 15,
1994.
10.62 -- Guaranty of Obligations pursuant to Lease Agreement between
Capstone Capital Trust, Inc. and Integrated Health Services,
Inc., incorporated by reference (pursuant to the provisions
of Rule 12b-32) to Exhibit 10.20 to the Company's Form 10-Q,
dated August 15, 1994.
10.63 -- Guaranty of Obligations pursuant to Lease Agreement between
Crescent Capital of Alabama, Inc. and Quorum Health Group,
Inc., dated June 9, 1994, incorporated by reference
(pursuant to the provisions of Rule 12b-32) to Exhibit 10.21
to the Company's Form 10-Q, dated August 15, 1994.
10.64 -- Guaranty of Obligations pursuant to Lease Agreement between
Capstone Capital Trust, Inc. and Quorum Health Group, Inc.,
dated June 9, 1994, incorporated by reference (pursuant to
the provisions of Rule 12b-32) to Exhibit 10.22 to the
Company's Form 10-Q, dated August 15, 1994.
10.65 -- Guaranty of Obligations pursuant to Lease Agreement between
Capstone Capital of Alabama, Inc. and MedPartners, Inc.,
dated July 28, 1994, incorporated by reference (pursuant to
the provisions of Rule 12b-32) to Exhibit 10.23 to the
Company's Form 10-Q, dated August 15, 1994.
10.66 -- Revolving Credit and Reimbursement Agreement by and among
Capstone Capital Corporation, NationsBank of Georgia,
National Association, as Lender, and NationsBank of Georgia,
National Association, as Agent, dated June 22, 1994,
incorporated by reference (pursuant to the provisions of
Rule 12b-32) to Exhibit 10.6 to Amendment No. 2 to the
Company's Form S-11 Registration Statement No. 33-89756,
filed with the Commission on March 20, 1995.
10.67 -- Amendment Agreement No. 1 to Revolving Credit and
Reimbursement Agreement and Certain Other Loan Documents by
and among Capstone Capital Corporation, NationsBank of
Georgia, National Association, as Lender, and NationsBank of
Georgia, National Association, as Agent, dated October 26,
1994, incorporated by reference (pursuant to the provisions
of Rule 12b-32) to Exhibit 10.7 to Amendment No. 2 to the
Company's Form S-11 Registration Statement No. 33-89756,
filed with the Commission on March 20, 1995.
10.68 -- Amendment Agreement No. 2 to Revolving Credit and
Reimbursement Agreement and Certain Other Loan Documents by
and among Capstone Capital Corporation, NationsBank of
Georgia, National Association, as Lender, and NationsBank of
Georgia, National Association, as Agent, dated March 17,
1995, incorporated by reference (pursuant to the provisions
of Rule 12b-32) to Exhibit 10.8 to Amendment No. 2 to the
Company's Form S-11 Registration Statement No. 33-89756,
filed with the Commission on March 20, 1995.
10.69 -- Agreement of Sale and Purchase by and Between HEALTHSOUTH
Corporation, HEALTHSOUTH of Great Lakes, Inc. (Seller) and
Capstone Capital of Pennsylvania, Inc. (Purchaser), dated
March 17, 1995, incorporated by reference (pursuant to the
provisions of Rule 12b-32) to Exhibit 10(qqq) to the Form
10-K Annual Report of the Company dated March 29, 1995.
</TABLE>
7
<PAGE> 27
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<S> <C>
10.70 -- Lease Agreement between Capstone Capital of Pennsylvania,
Inc. and HEALTHSOUTH Corporation, dated March 24, 1995
(Great Lakes), incorporated by reference (pursuant to the
provisions of Rule 12b-32) to Exhibit 10(rrr) to the Form
10-K Annual Report of the Company dated March 29, 1995.
10.71 -- First Amendment to 1994 Stock Incentive Plan of Capstone
Capital Corporation.
10.72 -- Employment and Noncompetition Agreement by and between
Capstone Capital Corporation and John W. McRoberts dated
effective November 1, 1996.
10.73 -- Amended and Restated Revolving Credit and Reimbursement
Agreement by and among Capstone Capital Corporation;
NationsBank, National Association (South), AmSouth Bank of
Alabama, Credit Lyonnais New York Branch, National City
Bank, Kentucky, Creditanstalt Corporate Finance, Inc., The
Bank of Nova Scotia, First Commercial Bank, The Sumitomo
Bank, Limited, as Lenders; and NationsBank, National
Association (South), as Agent, dated June 24, 1996.
10.74 -- Amendment No. 1 to Amended and Restated Revolving Credit and
Reimbursement Agreement by and among Capstone Capital
Corporation and NationsBank, N.A. (South) as Agent, dated
February 28, 1997.
11 -- Statement re computation of per share earnings.
12 -- Statement re computation of ratios.
13 -- Capstone Capital Corporation Annual Report to Shareholders
for the Fiscal Year Ended December 31, 1996. Such Annual
Report shall not be deemed to be filed with the Securities
and Exchange Commission as a part of this Form 10-K Annual
Report or otherwise subject to the liabilities of Section 18
of the Securities Exchange Act of 1934, as amended (except
for the specific portions thereof which are incorporated by
reference in this Form 10-K Annual Report).
18 -- Letter re change in accounting principles.
21 -- Subsidiaries.
23(a) -- Consent of KPMG Peat Marwick LLP.
27 -- Financial Data Schedule (for SEC use only).
</TABLE>
8
<PAGE> 28
INDEPENDENT AUDITORS' REPORT
The Stockholders and Board of Directors
Capstone Capital Corporation:
Under date of January 20, 1997, we reported on the consolidated balance sheets
of Capstone Capital Corporation as of December 31, 1996 and 1995, and the
related consolidated statements of income, stockholders' equity, and cash flows
for the years ended December 31, 1996 and 1995, and for the period from June
30, 1994 (inception) to December 31, 1994, as contained in the 1996 annual
report to stockholders.
These consolidated financial statements and our report thereon are incorporated
by reference in the annual report on Form 10-K for the year 1996. In connection
with our audits of the aforementioned consolidated financial statements, we
also audited the related consolidated financial statement schedules as listed
in the accompanying index. These consolidated financial statement schedules are
the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statement schedules based on our audits.
In our opinion such financial statement schedules, when considered in relation
to the basic consolidated financial statements taken as a whole, present
fairly, in all material respects, the information set forth therein.
Birmingham, Alabama
January 20, 1997
KPMG Peat Marwick LLP
<PAGE> 29
CAPSTONE CAPITAL CORPORATION
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1996
<TABLE>
<CAPTION>
COST CAPITALIZED SUBSEQUENT
DESCRIPTION INITIAL COST TO ACQUISITION
- ------------------------------------- ---- -------------------- --------------------------- -----------------------------
TYPE BUILDINGS & CARRYING
PROPERTY (1) (2) LOCATION LAND IMPROVEMENTS IMPROVEMENTS COSTS
- ------------ --- -------- ---- ------------ ------------ -----
<S> <C> <C> <C> <C> <C> <C>
Midway Medical Plaza AHF Los Angeles, CA $4,093,477 $16,522,062 $ 1,030 -
Sarasota Medical Centre AHF Sarasota, FL - - 4,440,677 -
One-7000 Medical Building AHF S. Miami, FL 737,168 12,649,159 - -
Richmond Medical Building II AHF Richmond, VA 1,084,545 9,018,485 - -
Birmingham Medical Building II AHF Birmingham, AL 1,866,774 7,835,011 4,600 -
Medical Building II AHF Gadsden, AL 41,372 5,821,627 - -
Birmingham Medical Building I AHF Birmingham, AL 701,301 4,048,481 - -
Desert Springs AHF Las Vegas, NV 1,469,286 3,282,401 - -
Hamiter Building AHF Gadsden, AL 82,743 4,339,510 - -
American Sports Medicine Institute AHF Birmingham, AL 822,390 2,411,404 - -
Southwest General Medical Building AHF San Antonio, TX - 2,361,042 7,050 -
Larkin Annex Medical Building AHF S. Miami, FL 1,514,728 757,947 - -
Richmond Medical Building AHF Richmond, VA 1,084,545 1,036,696 - -
Goodyear Clinic AHF Gadsden, AL 75,680 1,546,052 - -
Beaumont Regional Professional Towers AHF Beaumont, TX - 8,892,446 - -
Sunrise Mountainview AHF Las Vegas, NV - 29,519,775 - -
Melbourne Medical Building PC Melbourne, FL 3,275,000 6,112,537 - -
McCollough Medical Plaza PC Birmingham, AL 1,200,000 4,831,549 - -
South County Medical Center II PC St. Louis, MO - - 1,677,517 -
Greenwood Medical Building PC Memphis, TN 352,586 1,448,909 - -
Columbus OB/GYN PC Columbus, GA 245,000 1,264,000 - -
Indialantic Medical Building PC Melbourne, FL 480,000 752,168 - -
West Palm Beach Medical Building PC West Palm, FL 90,000 491,693 - -
Par Place Medical PC Palm Bay, FL 750,000 5,819,038 16,542 -
Brookstone PC Tampa, FL 850,000 5,101,001 - -
Melbourne Clinic PC Melbourne, FL 660,000 1,790,000 - -
Clayton Big Bend PC St. Louis, MO 533,650 1,746,912 - -
Bonita Bay Medical Centre ASF Bonita Springs, FL - - 8,039,347 -
South County Medical Plaza ASF St. Louis, MO 1,024,000 6,376,000 - -
Cape Coral Medical Plaza ASF Cape Coral, FL - - 5,608,615 -
Northlake ASF Tucker, GA - 1,050,845 - -
North Shore ASF Evanston, IL 141,375 778,045 - -
West County Surgery ASF Town & Country, MO 565,000 1,358,682 2,960 -
Mountain View LTC Greensburg, PA 207,868 9,655,758 - -
Oakwood SAC Alexandria, VA 313,570 9,848,800 34,675 -
Gravois SAC St. Louis, MO 1,427,162 7,163,602 - -
Great Lakes Rehabilitation Hospital IRF Erie, PA - 14,523,233 - -
Southeast Texas Rehabilitation IRF Beaumont, TX 925,000 9,609,294 16,903 -
Altoona Rehabilitation IRF Altoona, PA 1,150,000 16,033,654 18,546 -
Mechanicsburg Rehabilitation IRF Mechanicsburg, PA 850,000 11,578,962 17,095 -
Desert Vista CMHH Mesa, AZ 1,185,758 7,364,242 - -
Mission Vista CMHH San Antonio, TX 238,809 3,711,192 - -
Coral Gables ORF Coral Gables, FL 580,646 1,742,935 - -
</TABLE>
<TABLE>
<CAPTION>
GROSS AMOUNT AT WHICH
DESCRIPTION CARRIED AT DECEMBER 31, 1996
- ------------------------------------- -----------------------------------------------------
ACCUMULATED
BUILDINGS & TOTAL DEPRECIATION DATE
PROPERTY (1) LAND IMPROVEMENTS (3) (4) ACQUIRED
- ------------ ---- ------------ ------- ------------ --------
<S> <C> <C> <C> <C> <C>
Midway Medical Plaza $4,093,477 $16,523,092 $20,616,569 $1,036,574 6/30/94
Sarasota Medical Centre - 14,440,677 14,440,677 504,164 7/1/95
One-7000 Medical Building 737,168 12,649,159 13,386,327 795,140 6/30/94
Richmond Medical Building II 1,084,545 9,018,485 10,103,030 575,558 6/30/94
Birmingham Medical Building II 1,866,774 7,839,611 9,706,385 497,774 6/30/94
Medical Building II 41,372 5,821,627 5,862,999 369,148 6/30/94
Birmingham Medical Building I 701,301 4,048,481 4,749,782 259,228 6/30/94
Desert Springs 1,469,286 3,282,401 4,751,687 213,210 6/30/94
Hamiter Building 82,743 4,339,510 4,422,253 274,800 6/30/94
American Sports Medicine Institute 822,390 2,411,404 3,233,794 157,552 6/30/94
Southwest General Medical Building - 2,368,092 2,368,092 130,086 10/21/94
Larkin Annex Medical Building 1,514,728 757,947 2,272,675 52,165 6/30/94
Richmond Medical Building 1,084,545 1,036,696 2,121,241 67,716 6/30/94
Goodyear Clinic 75,680 1,546,052 1,621,732 98,012 6/30/94
Beaumont Regional Professional Towers - 8,892,446 8,892,446 79,558 8/23/96
Sunrise Mountainview - 29,519,775 29,519,775 539,991 3/31/96
Melbourne Medical Building 3,275,000 6,112,537 9,387,537 209,891 8/17/95
McCollough Medical Plaza 1,200,000 4,831,549 6,031,549 299,099 7/28/94
South County Medical Center II - 1,677,517 1,677,517 - (6)
Greenwood Medical Building 352,586 1,448,909 1,801,495 76,122 1/31/95
Columbus OB/GYN 245,000 1,264,000 1,509,000 44,433 8/7/95
Indialantic Medical Building 480,000 752,168 1,232,168 26,038 8/17/95
West Palm Beach Medical Building 90,000 491,693 581,693 25,284 1/15/95
Par Place Medical 750,000 5,835,580 6,585,580 74,766 6/28/96
Brookstone 850,000 5,101,001 5,951,001 32,457 9/30/96
Melbourne Clinic 660,000 1,790,000 2,450,000 4,428 11/26/96
Clayton Big Bend 533,650 1,746,912 2,280,562 28,318 5/31/96
Bonita Bay Medical Centre - 8,039,347 8,039,347 292,546 7/1/95
South County Medical Plaza 1,024,000 6,376,000 7,400,000 421,402 6/30/94
Cape Coral Medical Plaza - 5,608,615 5,608,615 245,754 4/1/95
Northlake - 1,050,845 1,050,845 68,630 6/30/94
North Shore 141,375 778,045 919,420 51,243 6/30/94
West County Surgery 565,000 1,361,642 1,926,642 186 12/31/96
Mountain View 207,868 9,655,758 9,863,626 607,308 6/30/94
Oakwood 313,570 9,883,475 10,197,045 515,017 12/15/94
Gravois 1,427,162 7,163,602 8,590,764 460,269 6/30/94
Great Lakes Rehabilitation Hospital - 14,523,233 14,523,233 645,679 3/27/95
Southeast Texas Rehabilitation 925,000 9,626,197 10,551,197 173,299 7/1/96
Altoona Rehabilitation 1,150,000 16,052,200 17,202,200 258,214 5/10/96
Mechanicsburg Rehabilitation 850,000 11,596,057 12,446,057 186,539 5/10/96
Desert Vista 1,185,758 7,364,242 8,550,000 331,527 4/17/95
Mission Vista 238,809 3,711,192 3,950,001 164,430 4/17/95
Coral Gables 580,646 1,742,935 2,323,581 112,552 6/30/94
</TABLE>
<PAGE> 30
<TABLE>
<CAPTION>
COST CAPITALIZED SUBSEQUENT
DESCRIPTION INITIAL COST TO ACQUISITION
- ----------------------------------------------------------- ----------------------------- -----------------------------
TYPE BUILDINGS & CARRYING
PROPERTY (1) (2) LOCATION LAND IMPROVEMENTS IMPROVEMENTS COSTS
- ------------ ---- -------- -------- ------------ ------------ --------
<S> <C> <C> <C> <C> <C> <C>
Little Rock ORF Little Rock, AK 333,240 1,748,168 - -
Virginia Beach ORF Virginia Beach, VA - 1,460,000 - -
Arcon DeFuniak Springs Center IDF DeFuniak Springs, FL - - 2,032,700 -
Arcon Crystal Beach Center IDF Destin, FL - - 4,082,442 -
Arcon Soddy Daisy Center IDF Soddy Daisy, TN - - 269,342 -
Remington Park ALF Remington Park, TX - - 1,357,981 -
Grand Court of San Angelo ALF San Angelo, TX - - 809,983 -
Kingsley Place of Henderson ALF Henderson, TX - - 113,596 -
Kingsley Place of Oakwell ALF San Antonio, TX - - 788,537 -
Kingsley Place Medical Center ALF San Antonio, TX - - 506,723 -
Kingsley Place of McKinney ALF McKinney, TX - - 550,362 -
Augusta Gardens ALF Augusta, GA - - 461,596 -
------------ ------------ ----------- ------
Total $ 30,952,673 $243,403,317 $40,858,819 $ 0
============ ============ =========== ======
</TABLE>
<TABLE>
<CAPTION>
GROSS AMOUNT AT WHICH
DESCRIPTION CARRIED AT DECEMBER 31, 1996
- ----------------------------------------------------- -------------------------------------------
ACCUMULATED
TYPE BUILDINGS & TOTAL DEPRECIATION DATE
PROPERTY (1) (2) LOCATION LAND IMPROVEMENTS (3) (4) ACQUIRED
- ------------ ---- -------- ---------- ------------ ------ ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Little Rock ORF Little Rock, AK 333,240 1,748,168 2,081,408 117,136 6/30/94
Virginia Beach ORF Virginia Beach, VA - 1,460,000 1,460,000 94,148 6/30/94
Arcon DeFuniak Springs Center IDF DeFuniak Springs, FL - 2,032,700 2,032,700 - (6)
Arcon Crystal Beach Center IDF Destin, FL - 4,082,442 4,082,442 - (6)
Arcon Soddy Daisy Center IDF Soddy Daisy, TN - 269,342 269,342 - (6)
Remington Park ALF Remington Park, TX - 1,357,981 1,357,981 - (6)
Grand Court of San Angelo ALF San Angelo, TX - 809,983 809,983 - (6)
Kingsley Place of Henderson ALF Henderson, TX - 113,596 113,596 - (6)
Kingsley Place of Oakwell ALF San Antonio, TX - 788,537 788,537 - (6)
Kingsley Place Medical Center ALF San Antonio, TX - 506,723 506,723 - (6)
Kingsley Place of McKinney ALF McKinney, TX - 550,362 550,362 - (6)
Augusta Gardens ALF Augusta, GA - 461,596 461,596 - (6)
------------ ------------ ------------ -----------
Total $ 30,952,673 $284,262,136 (5) $315,214,809 $11,217,391
============ ============ ============ ===========
</TABLE>
(1) None of the properties is subject to encumbrance except for the Sunrise
Mountainview facility which is collateral for a mortgage note with a
balance as of 12/31/96 of $23,228,418.
(2) AHF means ancillary hospital facility, PC means off-campus physician
clinic, ASF means ambulatory surgery facility, SAC means subacute care
facility, IRF means inpatient rehabilitation facility, CMHH means
comprehensive mental health hospital and ORF means outpatient
rehabilitation facility, SNF means skilled nursing facility, ALF means
assisted living facility.
<PAGE> 31
CAPSTONE CAPITAL CORPORATION
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION - (CONTINUED)
<TABLE>
<CAPTION>
DECEMBER 31, 1996 DECEMBER 31, 1995 DECEMBER 31, 1994
--------------------------- ---------------------------- ----------------------------
ACCUMULATED ACCUMULATED ACCUMULATED
COST DEPRECIATION COST DEPRECIATION COST DEPRECIATION
------------- ------------ -------------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
(3) Balance at Beginning of Year $212,828,121 $ 5,570,953 $152,739,813 $1,411,772 $ - $ -
Acquisitions 97,436,498 n/a 60,050,899 n/a 144,748,091 n/a
Cost of Real Estate Sold (10,563,181) (375,373) - - - -
Properties Under Construction 15,513,371 n/a 37,409 n/a 7,991,722 n/a
Depreciation n/a 6,021,811 n/a 4,159,181 n/a 1,411,772
------------- ----------- -------------- ------------ ------------ ----------
Balance at End of Year $315,214,809 $11,217,391 $212,828,121 $5,570,953 $152,739,813 $1,411,772
============ =========== ============== ============ ============ ==========
</TABLE>
(4) Depreciation is calculated using a 40 year life for all completed
facilities.
(5) Aggregate cost for federal income tax purposes.
(6) Properties are under construction. Completion is expected during 1997.
<PAGE> 32
CAPSTONE CAPITAL CORPORATION
SCHEDULE IV-MORTGAGE LOANS ON REAL ESTATE
DECEMBER 31, 1996
<TABLE>
<CAPTION>
Principal
Amount
of Loans
Subject
To
Delinquent
Final Periodic Face Carrying Principle
Interest Maturity Payment Prior Amount of Amount of or
Property Location Rate Date Terms Liens Mortgages Mortgages (11) Interest
- ---------- -------- -------- ---- ----- ----- --------- -------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
First Mortgages:
Chapman General Hospital Orange, CA 11.29% August 10, 2009 (1) - $ 8,000,000 $ 7,913,076 -
Cogburn Health Center Mobile, AL 11.65% August 31, 2009 (2) - 4,000,000 3,958,508 -
Ideal Nursing Center Mobile, AL 11.65% August 31, 2009 (3) - 4,890,000 4,887,005 -
Silver Haven Care Center Burleson, TX 13.39% October 15, 2005 (4) - 2,550,000 2,533,112 -
Valley View Nursing Home Granbury, TX 13.39% October 15, 2005 (4) - 975,000 968,543 -
Richardson Manor Burleson, TX 13.39% October 15, 2005 (5) - 300,000 281,581 -
Oak Park Manor Claremont, CA 10.00% May 7, 2002 (6) - 2,200,000 2,196,835 -
Diana Lynn Lodge Los Angeles, CA 10.00% October 10, 2002 (6) - 4,850,000 4,850,000 -
West Los Angeles Pavilion Los Angeles, CA 10.00% October 10, 2002 (6) - 1,000,000 1,000,000 -
Tri County Adamsville, TN 10.50% November 25, 2001 (7) - 2,250,000 2,237,138 -
Construction Loans:
Ivy Hall Atlanta, GA 11.25% January 1, 2002 (8) - 147,347 147,347 -
Medistar/Kerlan Jobe Los Angeles, CA 9.99% (9) (9) - 3,998,950 3,998,950 -
Tucson Heart Hospital Tucson, AZ 9.25% November 1, 2004 (10) - 4,353,526 4,353,526 -
----------- ----------- ---
Total $39,514,823 $39,325,621(12) $ 0
=========== =========== ===
</TABLE>
(1) Payments are based on an annual interest rate increase of two percent of
the rate in effect for the prior twelve month period. Monthly
payments are based on a 30 year amortization with a final balloon payment
of principal at maturity. The note may be prepaid after August 31, 2001
with a 3% premium which decreases to 1% during the period from August
31, 2001 to August 31, 2004, after which there is no prepayment premium.
(2) Payments are based on annual interest rate increases equal to the annual
increase in the CPI. Monthly payments are based on a 30 year amortization
with a final balloon payment of principal at maturity. The note may be
prepaid after August 31, 1999 with a 1% prepayment premium until August
31, 2001, after which there is no prepayment premium.
(3) Payments are based on annual interest rate increases equal to the annual
increases in the CPI. Interest only payments are due through September
30, 1996 at which time monthly payments begin which are based on a 30 year
amortization with a final balloon payment of principal at maturity. The
note may be prepaid after August 31, 1999 with a 1% prepayment premium
until August 31, 3002 after which there is no prepayment premium.
(4) Payments are based on an annual interest rate increase to three percent
of the rate in effect for the prior twelve month period. Monthly payments
are based on a 25 year amortization with a final balloon payment of
principal at maturity. The note may be prepaid at any time with a
prepayment premium equal to five percent of the amount prepaid during the
first loan year, decreasing by one percent per loan year thereafter.
(5) Payments are based on an annual interest rate increase of three percent
of the rate in effect for the prior twelve month period. Monthly payments
are based on a 10 year amortization with a final balloon payment of
principal at maturity. The note may be prepaid at any time with a
prepayment premium equal to five percent of the amount prepaid during the
first loan year, decreasing by one percent per loan year thereafter.
(6) Payments are based on annual interest rate increases equal to the greater
of 3% or CPI but no greater than 6%, adjusted annually.
(7) Payments are based on a per annum rate of interest equal to 10.5%
increased annually on each anniversary date by an amount equal to the
greater of 4% or the change in the Consumer Price Index.
(8) Interest only payments are due during the construction phase based on the
Prime Rate plus 370 basis points, as it fluctuates. Subsequent to the
construction period, the outstanding principal balance will bear interest
at 12% to be adjusted annually by multiplying the fixed rate by the
greater of 1.04 or the annual increase in the U.S. City Average Consumer
Price Index for all Urban consumers but not more than 1.06.
(9) Principal and all accrued interest are payable on the earlier of demand or
January 1, 1998.
(10) Interest only payments are due during the construction phase based on the
NationsBank at Georgia, N. A. floating commercial rate plus one percent.
After completion of construction the interest rate will be determined by
adding 350 basis points to the 7 year United States Treasury and will be
adjusted each year by adding 27 basis points to the last effective rate.
<PAGE> 33
(11)
<TABLE>
<CAPTION>
DECEMBER 31, 1996 DECEMBER 31, 1995 DECEMBER 31, 1994
----------------- ------------------ -----------------
<S> <C> <C> <C>
Balance at Beginning of Period $24,988,753 $13,244,230
New Mortgage Loans 24,260,938 $ 3,825,000 $13,237,471
Increase to Existing Mortgage 290,000 8,001,005 -
Collection of Principal (10,214,070) (81,482) (13,241)
----------- ----------- -----------
Balance at End of Period $39,325,621 $24,988,753 $13,224,230
=========== =========== ===========
</TABLE>
(12) Aggregate cost for Federal income tax purposes.
<PAGE> 1
EXHIBIT 4.4
----------------------------------------------------------------
----------------------------------------------------------------
CAPSTONE CAPITAL CORPORATION
TO
AMSOUTH BANK OF ALABAMA, TRUSTEE
--------------
INDENTURE
Dated as of March 14, 1997
-------------
SUBORDINATED DEBT SECURITIES
===============================================================
<PAGE> 2
CERTAIN SECTIONS OF THIS INDENTURE RELATING TO
SECTIONS 310 THROUGH 318, INCLUSIVE, OF
THE TRUST INDENTURE ACT OF 1939:
<TABLE>
<CAPTION>
Trust Indenture Indenture Section
Act Section
<S> <C> <C>
Section 310 (a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 609
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 609
(a)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(a)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 608
610
Section 311 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 613
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 613
Section 312 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 701
702
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 702
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 702
Section 313 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 703
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 703
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 703
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 703
Section 314 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 704
(a)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
1004
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(c)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
(c)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
(c)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
Section 315 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 601
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 602
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 601
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 601
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 514
Section 316 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
(a)(1)(A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 502
512
(a)(1)(B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 513
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 508
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
Section 317 (a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 503
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 504
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1003
Section 318 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
</TABLE>
- ------------------------------
NOTE: This reconciliation and tie shall not, for any purpose, be deemed to be
a part of the Indenture.
<PAGE> 3
TABLE OF CONTENTS
-----------
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PARTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
RECITALS OF THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 101. Definitions:
Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Affiliate; control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Authenticating Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Board Resolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Business Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Company Request; Company Order . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Corporate Trust Officer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Covenant Defeasance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Defaulted Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Defeasance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Depositary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Expiration Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Global Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Holder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Interest Payment Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Investment Company Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Maturity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Notice of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Officers' Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Original Issue Discount Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
</TABLE>
i
<PAGE> 4
<TABLE>
<S> <C> <C>
Outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Place of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Predecessor Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Redemption Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Redemption Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Regular Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Responsible Officer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Securities Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Security Register and Security Registrar . . . . . . . . . . . . . . . . . . . . . . . . . 7
Senior Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Special Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Stated Maturity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
U.S. Government Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Vice President . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 102. Compliance Certificates and Opinions. . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 103. Form of Documents Delivered to Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 104. Acts of Holders; Record Dates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 105. Notices, Etc., to Trustee and Company . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 106. Notice to Holders; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 107. Conflict with Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 108. Effect of Headings and Table of Contents. . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 109. Successors and Assigns. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 110. Separability Clause . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 111. Benefits of Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 112. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 113. Legal Holidays. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 114. No Recourse Against Others. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE TWO
SECURITY FORMS
SECTION 201. Forms Generally . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 202. Form of Face of Security. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 203. Form of Reverse of Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 204. Form of Legend for Global Securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 205. Form of Trustee's Certificate of Authentication . . . . . . . . . . . . . . . . . . . . . . 23
</TABLE>
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<PAGE> 5
ARTICLE THREE
THE SECURITIES
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SECTION 301. Amount Unlimited; Issuable in Series. . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 302. Denominations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 303. Execution, Authentication, Delivery and Dating. . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 304. Temporary Securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 305. Registration; Registration of Transfer and Exchange . . . . . . . . . . . . . . . . . . . . 29
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities. . . . . . . . . . . . . . . . . . . . . . 31
SECTION 307. Payment of Interest; Interest Rights Preserved . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 308. Persons Deemed Owners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 309. Cancellation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 310. Computation of Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 311. CUSIP Numbers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. Satisfaction and Discharge of Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 402. Application of Trust Money. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
ARTICLE FIVE
REMEDIES
SECTION 501. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 502. Acceleration of Maturity; Rescission and Annulment. . . . . . . . . . . . . . . . . . . . . 38
SECTION 503. Collection of Indebtedness and Suits for
Enforcement by Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 504. Trustee May File Proofs of Claim. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 505. Trustee May Enforce Claims Without Possession
of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 506. Application of Money Collected. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 507. Limitation on Suits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 508. Unconditional Right of Holders to Receive Principal,
Premium and Interest and to Convert . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 509. Restoration of Rights and Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 510. Rights and Remedies Cumulative. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 511. Delay or Omission Not Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 512. Control by Holders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 513. Waiver of Past Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 514. Undertaking for Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 515. Waiver of Usury, Stay or Extension Laws . . . . . . . . . . . . . . . . . . . . . . . . . . 44
</TABLE>
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<PAGE> 6
ARTICLE SIX
THE TRUSTEE
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SECTION 601. Certain Duties and Responsibilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 602. Notice of Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 603. Certain Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 604. Not Responsible for Recitals or Issuance of Securities . . . . . . . . . . . . . . . . . . 46
SECTION 605. May Hold Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 606. Money Held in Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 607. Compensation and Reimbursement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 608. Disqualification; Conflicting Interests . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 609. Corporate Trustee Required; Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 610. Resignation and Removal; Appointment of Successor . . . . . . . . . . . . . . . . . . . . . 48
SECTION 611. Acceptance of Appointment by Successor. . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 612. Merger, Conversion, Consolidation or Succession
to Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 613. Preferential Collection of Claims Against Company . . . . . . . . . . . . . . . . . . . . . 51
SECTION 614. Appointment of Authenticating Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 701. Company to Furnish Trustee Names and Addresses
of Holders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 702. Preservation of Information; Communications
to Holders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 703. Reports by Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 704. Reports by Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 705. Notice of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 801. Company May Consolidate, Etc., Only on
Certain Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 802. Successor Substituted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
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ARTICLE NINE
SUPPLEMENTAL INDENTURES
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SECTION 901. Supplemental Indentures Without Consent of Holders . . . . . . . . . . . . . . . . . . . . 56
SECTION 902. Supplemental Indentures With Consent of Holders . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 903. Execution of Supplemental Indentures. . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 904. Effect of Supplemental Indentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 905. Conformity with Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 906. Reference in Securities to Supplemental Indentures. . . . . . . . . . . . . . . . . . . . . 59
ARTICLE TEN
COVENANTS
SECTION 1001. Payment of Principal, Premium and Interest. . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 1002. Maintenance of Office or Agency . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 1003. Money for Securities Payments to Be Held in Trust . . . . . . . . . . . . . . . . . . . . . 60
SECTION 1004. Statement by Officers as to Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 1005. Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 1006. Maintenance of Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 1007. Payment of Taxes and Other Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 1008. Waiver of Certain Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 1009. Calculation of Original Issue Discount. . . . . . . . . . . . . . . . . . . . . . . . . . . 63
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
SECTION 1101. Applicability of Article. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 1102. Election to Redeem; Notice to Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 1103. Selection by Trustee of Securities to Be Redeemed . . . . . . . . . . . . . . . . . . . . . 63
SECTION 1104. Notice of Redemption. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
SECTION 1105. Deposit of Redemption Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
SECTION 1106. Securities Payable on Redemption Date . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
SECTION 1107. Securities Redeemed in Part . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
ARTICLE TWELVE
SINKING FUNDS
SECTION 1201. Applicability of Article. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
SECTION 1202. Satisfaction of Sinking Fund Payments with Securities . . . . . . . . . . . . . . . . . . . 67
SECTION 1203. Redemption of Securities for Sinking Fund . . . . . . . . . . . . . . . . . . . . . . . . 67
</TABLE>
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ARTICLE THIRTEEN
DEFEASANCE AND COVENANT DEFEASANCE
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SECTION 1301. Company's Option to Effect Defeasance or
Covenant Defeasance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 1302. Defeasance and Discharge. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 1303. Covenant Defeasance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 1304. Conditions to Defeasance or Covenant Defeasance . . . . . . . . . . . . . . . . . . . . . . 69
SECTION 1305. Deposited Money and U.S. Government Obligations
to Be Held in Trust; Miscellaneous Provisions . . . . . . . . . . . . . . . . . . . 71
SECTION 1306. Reinstatement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
ARTICLE FOURTEEN
CONVERSION OF SECURITIES
SECTION 1401. Applicability; Conversion Privilege
and Conversion Price. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
SECTION 1402. Exercise of Conversion Privilege. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
SECTION 1403. Fractions of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
SECTION 1404. Adjustment of Conversion Price. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
SECTION 1405. Notice of Adjustments of Conversion Price . . . . . . . . . . . . . . . . . . . . . . . . . 78
SECTION 1406. Notice of Certain Corporate Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
SECTION 1407. Company to Reserve Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
SECTION 1408. Taxes on Conversions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
SECTION 1409. Covenant as to Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
SECTION 1410. Cancellation of Converted Securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
SECTION 1411. Provisions in Case of Reclassification, Consolidation,
Merger or Sale of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
SECTION 1412. Responsibility of Trustee and Conversion Agent. . . . . . . . . . . . . . . . . . . . . . . 81
ARTICLE FIFTEEN
SUBORDINATION OF SECURITIES
SECTION 1501. Securities Subordinate to Senior Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
SECTION 1502. Payment Over of Proceeds Upon Dissolution, Etc. . . . . . . . . . . . . . . . . . . . . . . 82
SECTION 1503. Prior Payment to Senior Debt Upon
Acceleration of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
SECTION 1504. No Payment When Senior Debt in Default. . . . . . . . . . . . . . . . . . . . . . . . . . . 84
SECTION 1505. Payment Permitted if no Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
SECTION 1506. Subrogation to Rights of Holders of
Senior Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
</TABLE>
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SECTION 1507. Provisions Solely to Define Relative Rights . . . . . . . . . . . . . . . . . . . . . . . 86
SECTION 1508. Trustee to Effectuate Subordination . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
SECTION 1509. No Waiver of Subordination Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . 86
SECTION 1510. Notice to Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
SECTION 1511. Reliance on Judicial Order or Certificate
of Liquidating Agent . . . . . . . . . . . . . . . . . . . . . . . . . . 87
SECTION 1512. Trustee Not Fiduciary for Holders of Senior
Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
SECTION 1513. Rights of Trustee as Holder of Senior Debt;
Preservation of Trustee's Rights. . . . . . . . . . . . . . . . . . . . . . . . . . 88
SECTION 1514. Article Applicable to Paying Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
SECTION 1515. Certain Conversions Deemed Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
TESTIMONIUM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
SIGNATURES AND SEALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
ACKNOWLEDGEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
</TABLE>
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<PAGE> 10
INDENTURE, dated as of March 14, 1997, between CAPSTONE CAPITAL
CORPORATION, a corporation duly organized and existing under the laws of the
State of Maryland (herein called the "Company"), having its principal office at
1000 Urban Center Drive, Suite 630, Birmingham, Alabama 35242, and AMSOUTH BANK
OF ALABAMA, an Alabama banking corporation, as Trustee (herein called the
"Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of its unsecured
subordinated debentures, notes or other evidences of indebtedness (herein
called the "Securities"), to be issued in one or more series as in this
Indenture provided.
All things necessary to make this Indenture a valid agreement of the
Company, in accordance with its terms, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually agreed, for the equal and
proportionate benefit of all Holders of the Securities or of series thereof, as
follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 101. DEFINITIONS.
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings
assigned to them in this Article and include the plural as well as the
singular;
(2) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the
meanings assigned to them therein;
<PAGE> 11
(3) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted
accounting principles, and, except as otherwise herein expressly
provided, the term "generally accepted accounting principles" with
respect to any computation required or permitted hereunder shall mean
such accounting principles as are generally accepted in the United
States of America at the date of such computation;
(4) unless the context otherwise requires, any reference to an
"Article" or a "Section" refers to an Article or a Section, as the
case may be, of this Indenture; and
(5) the words "herein", "hereof" and "hereunder" and other
words of similar import refer to this Indenture as a whole and not to
any particular Article, Section or other subdivision.
"Act", when used with respect to any Holder, has the meaning specified
in Section 104.
"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.
"Authenticating Agent" means any Person authorized by the Trustee
pursuant to Section 614 to act on behalf of the Trustee to authenticate
Securities of one or more series.
"Board of Directors" means either the board of directors of the
Company or any duly authorized committee of that board.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted by
the Board of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"Business Day", when used with respect to any Place of Payment, means
any day which is not a day on which banking institutions in that Place of
Payment are authorized or obligated by law or executive order to close.
"Commission" means the Securities and Exchange Commission, from time to
time constituted, created under the Exchange Act, or, if at any time after the
execution of this instrument such Commission is not existing and performing the
duties now assigned to it under the Trust Indenture Act, then the body
performing such duties at such time.
"Common Stock" means the common stock of the company.
2
<PAGE> 12
"Company" means the Person named as the "Company" in the first
paragraph of this instrument until a successor Person shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor Person.
"Company Request" or "Company Order" means a written request or order
signed in the name of the Company by its Chairman of the Board, its President
or a Vice President, and by its Treasurer, an Assistant Treasurer, its
Secretary or an Assistant Secretary, and delivered to the Trustee.
"Corporate Trust Office" means the principal office of the Trustee in
Birmingham, Alabama at which at any particular time its corporate trust
business shall be administered, which office at the date hereof is located at
1901 6th Avenue North, Birmingham, Alabama 35203, Attention: Corporate Trust
Administration.
"Corporation" means a corporation, association, company, limited
liability company, joint-stock company or business trust.
"Covenant Defeasance" has the meaning specified in Section 1303.
"Conversion Date" means the last date on which a Holder has the right
to convert a Security at a particular conversion price.
"Defaulted Interest" has the meaning specified in Section 307.
"Defeasance" has the meaning specified in Section 1302.
"Depositary" means, with respect to Securities of any series issuable
in whole or in part in the form of one or more Global Securities, a clearing
agency registered under the Exchange Act that is designated to act as
Depositary for such Securities as contemplated by Section 301.
"Event of Default" has the meaning specified in Section 501.
"Exchange Act" means the Securities Exchange Act of 1934 and any
statute successor thereto, in each case as amended from time to time.
"Expiration Date" has the meaning specified in Section 104.
"Global Security" means a Security that evidences all or part of the
Securities of any series and bears the legend set forth in Section 204 (or such
legend as may be specified as contemplated by Section 301 for such Securities).
"Holder" means a Person in whose name a Security is registered in the
Security Register.
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"Indebtedness" with respect to any Person means (i) any debt (a) for
money borrowed, or (b) evidenced by a bond, note, debenture, or similar
instrument (including purchase money obligations) given in connection with the
acquisition of any business, property or assets, whether by purchase, merger,
consolidation or otherwise, but shall not include any account payable or other
obligation created or assumed by a Person in the ordinary course of business in
connection with the obtaining of materials or services, or (c) which is a
direct or indirect obligation which arises as a result of banker's acceptances
or bank letters of credit issued to secure obligations of such Person, or to
secure the payment of revenue bonds issued for the benefit of such Person,
whether contingent or otherwise; (ii) any debt of others described in the
preceding clause (i) which such Person has guaranteed or for which it is
otherwise liable; (iii) the obligation of such Person as lessee under any lease
of property which is reflected on such Person's balance sheet as a capitalized
lease; and (iv) any deferral, amendment, renewal, extension, supplement or
refunding of any liability of the kind described in any of the preceding
clauses (i), (ii) and (iii); provided, however, that in computing the
Indebtedness of any Person there shall be excluded any particular indebtedness
if, upon or prior to the maturity thereof, there shall have been deposited with
a depository in trust money (or evidence of Indebtedness, if permitted by the
instrument creating such Indebtedness) in the necessary amount to pay, redeem
or satisfy such Indebtedness as it becomes due, and the amount so deposited
shall not be included in any computation of the assets of such Person.
"Indenture" means this instrument as originally executed and as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof,
including, for all purposes of this instrument and any such supplemental
indenture, the provisions of the Trust Indenture Act that are deemed to be a
part of and govern this instrument and any such supplemental indenture,
respectively. The term "Indenture" shall also include the terms of particular
series of Securities established as contemplated by Section 301.
"interest", when used with respect to an Original Issue Discount
Security which by its terms bears interest only after Maturity, means interest
payable after Maturity.
"Interest Payment Date", when used with respect to any Security, means
the Stated Maturity of an installment of interest on such Security.
"Investment Company Act" means the Investment Company Act of 1940 and
any statute successor thereto, in each case as amended from time to time.
"Maturity", when used with respect to any Security, means the date on
which the principal of such Security or an installment of principal becomes due
and payable as therein or herein provided, whether at the Stated Maturity or by
declaration of acceleration, call for redemption or otherwise.
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<PAGE> 14
"Notice of Default" means a written notice of the kind specified in
Section 501(4) or 501(5) or any similar notice that may be specified in any
event of default with respect to a particular series of Securities established
as contemplated by Section 301.
"Officers' Certificate" means a certificate signed by the Chairman of
the Board, the President or a Vice President, and by the Treasurer, an
Assistant Treasurer, the Secretary or an Assistant Secretary of the Company,
and delivered to the Trustee. One of the officers signing an Officers'
Certificate given pursuant to Section 1004 shall be the principal executive,
financial or accounting officer of the Company.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for the Company, and who shall be acceptable to the Trustee.
"Original Issue Discount Security" means any Security which provides
for an amount less than the principal amount thereof to be due and payable upon
a declaration of acceleration of the Maturity thereof pursuant to Section 502.
"Outstanding", when used with respect to Securities, means, as of the
date of determination, all Securities theretofore authenticated and delivered
under this Indenture, except:
(1) Securities theretofore canceled by the Trustee or delivered
to the Trustee for cancellation;
(2) Securities for whose payment or redemption money in the
necessary amount has been theretofore deposited with the Trustee or
any Paying Agent (other than the Company) in trust or set aside and
segregated in trust by the Company (if the Company shall act as its
own Paying Agent) for the Holders of such Securities; provided that,
if such Securities are to be redeemed, notice of such redemption has
been duly given pursuant to this Indenture or provision therefor
satisfactory to the Trustee has been made;
(3) Securities as to which Defeasance has been effected
pursuant to Section 1302;
(4) Securities which have been paid pursuant to Section 306 or
in exchange for or in lieu of which other Securities have been
authenticated and delivered pursuant to this Indenture, other than any
such Securities in respect of which there shall have been presented to
the Trustee proof satisfactory to it that such Securities are held by
a bona fide purchaser in whose hand such Securities are valid
obligations of the Company; and
(5) Securities which have been delivered to the Trustee for
conversion pursuant to Article Fourteen;
provided, however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Securities have given, made or taken any
request, demand, authorization, direction, notice, consent, waiver or other
action hereunder as of any date, (A) the principal
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<PAGE> 15
amount of an Original Issue Discount Security which shall be deemed to be
Outstanding shall be the amount of the principal thereof which would be due and
payable as of such date upon acceleration of the Maturity thereof to such date
pursuant to Section 502, (B) if, as of such date, the principal amount payable
at the Stated Maturity of a Security is not determinable, the principal amount
of such Security which shall be deemed to be Outstanding shall be the amount as
specified or determined as contemplated by Section 301, (C) the principal
amount of a Security denominated in one or more foreign currencies or currency
units which shall be deemed to be Outstanding shall be the U.S. dollar
equivalent, determined as of such date in the manner provided as contemplated
by Section 301, of the principal amount of such Security (or, in the case of a
Security described in Clause (A) or (B) above, of the amount determined as
provided in such Clause), and (D) Securities owned by the Company or any other
obligor upon the Securities or any Affiliate of the Company or of such other
obligor shall be disregarded and deemed not to be Outstanding, except that, in
determining whether the Trustee shall be protected in relying upon any such
request, demand, authorization, direction, notice, consent, waiver or other
action, only Securities which the Trustee knows to be so owned shall be so
disregarded. Securities so owned that have been pledged in good faith may be
regarded as Outstanding if the pledgee establishes to the satisfaction of the
Trustee the pledgee's right so to act with respect to such Securities and that
the pledgee is not the Company or any other obligor upon the Securities or any
Affiliate of the Company or of such other obligor.
"Paying Agent" means any Person authorized by the Company to pay the
principal of or any premium or interest on any Securities on behalf of the
Company.
"Person" means any individual, corporation, partnership, joint
venture, trust, unincorporated organization or government or any agency or
political subdivision thereof.
"Place of Payment", when used with respect to the Securities of any
series, means the place or places where the principal of and any premium and
interest on the Securities of that series are payable as specified as
contemplated by Section 301.
"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security; and, for the purposes of this definition, any Security
authenticated and delivered under Section 306 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Security shall be deemed to evidence the
same debt as the mutilated, destroyed, lost or stolen Security.
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"Redemption Date", when used with respect to any Security to be
redeemed, means the date fixed for such redemption by or pursuant to this
Indenture.
"Redemption Price", when used with respect to any Security to be
redeemed, means the price at which it is to be redeemed pursuant to this
Indenture.
"Regular Record Date" for the interest payable on any Interest Payment
Date on the Securities of any series means the date specified for that purpose
as contemplated by Section 301.
"Responsible Officer", when used with respect to the Trustee, means
the chairman or any vice-chairman of the board of directors, the chairman or
any vice-chairman of the executive committee of the board of directors, the
chairman of the trust committee, the president, any vice president, the
secretary, any assistant secretary, the treasurer, any assistant treasurer, the
cashier, any assistant cashier, any trust officer or assistant trust officer,
the controller or any assistant controller or any other officer of the Trustee
customarily performing functions similar to those performed by any of the above
designated officers and also means, with respect to a particular corporate
trust matter, any other officer to whom such matter is referred because of his
knowledge of and familiarity with the particular subject.
"Securities" has the meaning stated in the first recital of this
Indenture and more particularly means any Securities authenticated and
delivered under this Indenture.
"Securities Act" means the Securities Act of 1933 and any statute
successor thereto, in each case as amended from time to time.
"Security Register" and "Security Registrar" have the respective
meanings specified in Section 305.
"Senior Debt" means the principal of (and premium, if any) and unpaid
interest (including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to the Company whether or not a claim
for post-filing interest is allowed in such proceeding), fees, charges,
expenses, reimbursement and indemnification obligations, and all other amounts
payable under or in respect of Indebtedness of the Company, whether any such
Indebtedness exists as of the date hereof or is created, incurred, assumed or
guaranteed after such date, other than (i) Indebtedness that by its terms or by
operation of law is subordinated to or on a parity with the Securities, (ii)
Indebtedness owed to a Subsidiary of the Company, and (iii) Indebtedness owing
in respect of the Company's 10 1/2% Convertible Subordinated Debentures due
2002.
"Special Record Date" for the payment of any Defaulted Interest means
a date fixed by the Trustee pursuant to Section 307.
"Stated Maturity", when used with respect to any Security or any
installment of principal thereof or interest thereon, means the date specified
in such Security as the fixed date on which the principal of such Security or
such installment of principal or interest is due and payable.
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<PAGE> 17
"Subsidiary" means (i) a corporation at least 50% of whose capital
stock with voting power, under ordinary circumstances, to elect directors is,
at the time, directly owned by the Company or by one or more other
Subsidiaries, or by the Company and one or more other Subsidiaries, or (ii) a
partnership in which the Company or a Subsidiary of the Company is, at the
time, a general partner of such partnership, or (iii) any other Person (other
than a corporation or a partnership) in which the Company, one or more
Subsidiaries of the Company, or the Company and one or more Subsidiaries,
directly or indirectly, at the date of determination thereof, has (a) at least
a 50% ownership interest or (b) the power to elect or direct the election of
the directors or other governing body of such Person.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in
force at the date as of which this instrument was executed; provided, however,
that in the event the Trust Indenture Act of 1939 is amended after such date,
"Trust Indenture Act" means, to the extent required by any such amendment, the
Trust Indenture Act of 1939 as so amended.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this instrument until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean or include each Person who is then a Trustee hereunder,
and if at any time there is more than one such Person, "Trustee" as used with
respect to the Securities of any series shall mean the Trustee with respect to
Securities of that series.
"U.S. Government Obligation" has the meaning specified in Section 1304.
"Vice President", when used with respect to the Company or the
Trustee, means any vice president, whether or not designated by a number or a
word or words added before or after the title "vice president".
SECTION 102. COMPLIANCE CERTIFICATES AND OPINIONS.
Upon any application or request by the Company to the Trustee to take
any action under any provision of this Indenture, the Company shall furnish to
the Trustee such certificates and opinions as may be required under the Trust
Indenture Act. Each such certificate or opinion shall be given in the form of
an Officers' Certificate, if to be given by an officer of the Company, or an
Opinion of Counsel, if to be given by counsel, and shall comply with the
requirements of the Trust Indenture Act and any other requirements set forth in
this Indenture.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (except for certificates
provided for in Section 1004) shall include,
(1) a statement that each individual signing such certificate
or opinion has read such covenant or condition and the definitions
herein relating thereto;
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(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of each such individual,
he has made such examination or investigation as is necessary to
enable him to express an informed opinion as to whether or not such
covenant or condition has been complied with; and
(4) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
SECTION 103. FORM OF DOCUMENT DELIVERED TO TRUSTEE.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate or opinion of counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company, unless such counsel knows, or in the exercise of reasonable care
should know, that the certificate or opinion or representations with respect to
such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
SECTION 104. ACTS OF HOLDERS; RECORD DATES.
Any request, demand, authorization, direction, notice, consent, waiver
or other action provided or permitted by this Indenture to be given, made or
taken by Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by agent duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee and, where it is hereby expressly required, to the Company. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Holders signing
such instrument or instruments. Proof
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of execution of any such instrument or of a writing appointing any such agent
shall be sufficient for any purpose of this Indenture and (subject to Section
601) conclusive in favor of the Trustee and the Company, if made in the manner
provided in this Section.
The fact and date of the execution by any Person of any such
instrument of writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where
such execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his authority. The fact and date of the execution of any such instrument in
writing, or the authority of the Person executing the same, may also be proved
in any other manner which the Trustee deems sufficient.
The ownership of Securities shall be proved by the Security Register.
Any request, demand, authorization, direction, notice, consent, waiver
or other Act of the Holder of any Security shall bind every future Holder of
the same Security and the Holder of every Security issued upon the registration
of transfer thereof or in exchange therefor or in lieu thereof in respect of
anything done, omitted or suffered to be done by the Trustee or the Company in
reliance thereon, whether or not notation of such action is made upon the
Security.
The Company may, in the circumstances permitted by the Trust Indenture
Act, set any day as a record date for the purpose of determining the Holders of
Outstanding Securities of any series entitled to give, make or take any
request, demand, authorization, direction, notice, consent, waiver or other Act
provided or permitted by this Indenture to be given, made or taken by Holders
of Securities of such series, provided that the Company may not set a record
date for, and the provisions of this paragraph shall not apply with respect to,
the giving or making of any notice, declaration, request or direction referred
to in the next paragraph. If any record date is set pursuant to this paragraph,
the Holders of Outstanding Securities of the relevant series on such record
date, and no other Holders, shall be entitled to take relevant action, whether
or not such Holders remain Holders after such record date; provided that no
such action shall be effective hereunder unless taken on or prior to the
applicable Expiration Date by Holders of the requisite principal amount of
Outstanding Securities of such series on such record date. Nothing in this
paragraph shall be construed to prevent the Company from setting a new record
date for any action for which a record date has previously been set pursuant to
this paragraph (whereupon the record date previously set shall automatically
and with no action by any Person be canceled and of no effect), and nothing in
this paragraph shall be construed to render ineffective any action taken by
Holders of the requisite principal amount of Outstanding Securities of the
relevant series on the date such action is taken. Promptly after any record
date is set pursuant to this paragraph, the Company, at its own expense, shall
cause notice of such record date, the proposed action by Holders and the
applicable Expiration Date to be given to the Trustee in writing and to each
Holder of Securities of the relevant series in the manner set forth in Section
106.
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The Trustee may set any day as a record date for the purpose of
determining the Holders of Outstanding Securities of any series entitled to
join in the giving or making of (i) any Notice of Default, (ii) any declaration
of acceleration referred to in Section 502, (iii) any request to institute
proceedings referred to in Section 507(2) or (iv) any direction referred to in
Section 512, in each case with respect to Securities of such series. If any
record date is set pursuant to this paragraph, the Holders of Outstanding
Securities of such series on such record date, and no other Holders, shall be
entitled to join in such notice, declaration, request or direction, whether or
not such Holders remain Holders after such record date; provided that no such
action shall be effective hereunder unless taken on or prior to the applicable
Expiration Date by Holders of the requisite principal amount of Outstanding
Securities of such series on such record date. Nothing in this paragraph shall
be construed to prevent the Trustee from setting a new record date for any
action for which a record date has previously been set pursuant to this
paragraph (whereupon the record date previously set shall automatically and
with no action by any Person be canceled and of no effect), and nothing in this
paragraph shall be construed to render ineffective any action taken by Holders
of the requisite principal amount of Outstanding Securities of the relevant
series on the date such action is taken. Promptly after any record date is set
pursuant to this paragraph, the Trustee, at the Company's expense, shall cause
notice of such record date, the proposed action by Holders and the applicable
Expiration Date to be given to the Company in writing and to each Holder of
Securities of the relevant series in the manner set forth in Section 106.
With respect to any record date set pursuant to this Section, the
party hereto which sets such record dates may designate any day as the
"Expiration Date" and from time to time may change the Expiration Date to any
earlier or later day; provided that no such change shall be effective unless
notice of the proposed new Expiration Date is given to the other party hereto
in writing, and to each Holder of Securities of the relevant series in the
manner set forth in Section 106, on or prior to the existing Expiration Date.
If an Expiration Date is not designated with respect to any record date set
pursuant to this Section, the party hereto which set such record date shall be
deemed to have initially designated the 180th day after such record date as the
Expiration Date with respect thereto, subject to its right to change the
Expiration Date as provided in this paragraph. Notwithstanding the foregoing,
no Expiration Date shall be later than the 180th day after the applicable
record date.
Without limiting the foregoing, a Holder entitled hereunder to take
any action hereunder with regard to any particular Security may do so with
regard to all or any part of the principal amount of such Security or by one or
more duly appointed agents each of which may do so pursuant to such appointment
with regard to all or any part of such principal amount.
SECTION 105. NOTICES, ETC., TO TRUSTEE AND COMPANY.
Any request, demand, authorization, direction, notice, consent, waiver
or Act of Holders or other document provided or permitted by this Indenture to
be made upon, given or furnished to, or filed with,
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(1) the Trustee by any Holder or by the Company shall be
sufficient for every purpose hereunder if made, given, furnished or
filed in writing to or with the Trustee at its Corporate Trust Office,
Attention: Corporate Trust Administration, or
(2) the Company by the Trustee or by any Holder shall be
sufficient for every purpose hereunder (unless otherwise herein
expressly provided) if in writing and mailed, first-class postage
prepaid, to the Company addressed to it at the address of its
principal office specified in the first paragraph of this instrument,
Attention: Secretary, or at any other address previously furnished in
writing to the Trustee by the Company.
SECTION 106. NOTICE TO HOLDERS; WAIVER.
Where this Indenture provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid, to each Holder affected
by such event, at his address as it appears in the Security Register, not later
than the latest date (if any), and not earlier than the earliest date (if any),
prescribed for the giving of such notice. In any case where notice to Holders
is given by mail, neither the failure to mail such notice, nor any defect in
any notice so mailed, to any particular Holder shall affect the sufficiency of
such notice with respect to other Holders. Where this Indenture provides for
notice in any manner, such notice may be waived in writing by the person
entitled to receive such notice, either before or after the event, and such
waiver shall be the equivalent of such notice. Waivers of notice by Holders
shall be filed with the Trustee, but such filing shall not be a condition
precedent to the validity of any action taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give such notice by
mail, then such notification as shall be made with the approval of the Trustee
shall constitute a sufficient notification for every purpose hereunder.
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SECTION 107. CONFLICT WITH TRUST INDENTURE ACT.
If any provision hereof limits, qualifies or conflicts with a
provision of the Trust Indenture Act that is required under such Act to be a
part of and govern this Indenture, the latter provision shall control. If any
provision of this Indenture modifies or excludes any provision of the Trust
Indenture Act that may be so modified or excluded, the latter provision shall
be deemed to apply to this Indenture as so modified or to be excluded, as the
case may be.
SECTION 108. EFFECT OF HEADINGS AND TABLE OF CONTENTS.
The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.
SECTION 109. SUCCESSORS AND ASSIGNS.
All covenants and agreements in this Indenture by the Company shall
bind its successors and assigns, whether so expressed or not.
SECTION 110. SEPARABILITY CLAUSE.
In case any provision in this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 111. BENEFITS OF INDENTURE.
Nothing in this Indenture or in the Securities, express or implied,
shall give to any Person, other than the parties hereto and their successors
hereunder, the holders of Senior Debt (to the extent and on the terms set forth
in Article XV) and the Holders, any benefit or any legal or equitable right,
remedy or claim under this Indenture.
SECTION 112. GOVERNING LAW.
This Indenture and the Securities shall be governed by and construed
in accordance with the law of the State of New York, without regard to
principles of conflicts of law.
SECTION 113. LEGAL HOLIDAYS.
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In any case where any Interest Payment Date, Redemption Date,
Conversion Date or Stated Maturity of any Security shall not be a Business Day
at any Place of Payment, then (notwithstanding any other provision of this
Indenture or of the Securities (other than a provision of any Security which
specifically states that such provision shall apply in lieu of this Section))
payment of interest or principal (and premium, if any) or conversion need not
be made at such Place of Payment on such date, but may be made on the next
succeeding Business Day at such Place of Payment with the same force and effect
as if made on the Interest Payment Date, Redemption Date or Conversion Date, or
at the Stated Maturity, provided that no interest shall accrue with respect to
such payment for the period from and after such Interest Payment Date,
Redemption Date or Stated Maturity, as the case may be.
SECTION 114. NO RECOURSE AGAINST OTHERS.
A director, officer, employee, stockholder or incorporator, as such,
of the Company shall not have any liability for any obligations of the Company
under the Securities or this Indenture or for any claim based on, in respect of
or by reason of such obligations or their creation. Each holder of a Security
by accepting such Security waives and releases all such liability. Such waiver
and release are part of the consideration for the issuance of the Securities.
ARTICLE TWO
SECURITY FORMS
SECTION 201. FORMS GENERALLY.
The Securities of each series shall be in substantially the form set
forth in this Article, or in such other form as shall be established by or
pursuant to a Board Resolution or in one or more indentures supplemental
hereto, in each case with such appropriate insertions, omissions, substitutions
and other variations as are required or permitted by this Indenture, and may
have such letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with the rules of any
securities exchange or Depositary therefor or as may, consistently herewith, be
determined by the officers executing such Securities, as evidenced by their
execution thereof. If the form of Securities of any series is established by
action taken pursuant to a Board Resolution, a copy of an appropriate record of
such action shall be certified by the Secretary or an Assistant Secretary of
the Company and delivered to the Trustee at or prior to the delivery of the
Company Order contemplated by Section 303 for the authentication and delivery
of such Securities.
The definitive Securities shall be printed, lithographed or engraved
on steel engraved borders or may be produced in any other manner, all as
determined by the officers executing such Securities, as evidenced by their
execution of such Securities.
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SECTION 202. FORM OF FACE OF SECURITY.
[Insert any legend required by the Internal Revenue Code and the
regulations thereunder.]
CAPSTONE CAPITAL CORPORATION
----------------------------------------------
No. $
--------------- ----------
CUSIP No.
----------
CAPSTONE CAPITAL CORPORATION, a corporation duly organized and
existing under the laws of the State of Maryland (herein called the "Company",
which term includes any successor Person under the Indenture hereinafter
referred to), for value received, hereby promises to pay to
_____________________________________, or registered assigns, the principal sum
of _____________________________ Dollars on __________________________, and to
pay interest thereon from the date of issue or the most recent Interest Payment
Date to which interest has been paid or duly provided for, semiannually on
_____________________ and ____________________ in each year, commencing as of
________, at the rate of [_________ %] per annum, until the principal hereof is
paid or made available for payment, provided that any principal and premium,
and any such installment of interest, which is overdue shall bear interest at
the rate of [_________ %] per annum (to the extent that the payment of such
interest shall be legally enforceable), from the dates such amounts are due
until they are paid or made available for payment, and such interest shall be
payable on demand. The interest so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, as provided in such Indenture,
be paid to the Person in whose name this Security (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record Date
for such interest, which shall be the __________ or __________ (whether or not
a Business Day), as the case may be, next preceding such Interest Payment Date.
Any such interest not so punctually paid or duly provided for will forthwith
cease to be payable to the Holder on such Regular Record Date and may either be
paid to the Person in whose name this Security (or one or more Predecessor
Securities) is registered at the close of business on a Special Record Date for
the payment of such Defaulted Interest to be fixed by the Trustee, notice
whereof shall be given to Holders of Securities of this series not less than 10
days prior to such Special Record Date, or be paid at any time in any other
lawful manner not inconsistent with the requirements of any securities exchange
on which the Securities of this series may be listed, and upon such notice as
may be required by such exchange, all as more fully provided in said Indenture.
[If the Security is not to bear interest prior to Maturity, insert -
The principal of this Security shall not bear interest except in the case of a
default in payment of principal upon acceleration, upon redemption or at Stated
Maturity and in such case the overdue principal and any overdue premium shall
bear interest at the rate of _________% per annum (to the extent that the
payment of such interest shall be legally enforceable), from the dates such
amounts are due until
15
<PAGE> 25
they are paid or made available for payment. Interest on any overdue principal
or premium shall be payable on demand. Any such interest on any overdue
principal or premium which is not so paid on demand shall bear interest at the
rate of _________% per annum (to the extent that the payment of such interest
shall be legally enforceable), from the dates such amounts are due until they
are paid or made available for payment. Interest on any overdue interest shall
be payable on demand.]
Payment of the principal of (and premium, if any) and [if applicable,
insert - any such] interest on this Security will be made at the office or
agency of the Company maintained for that purpose in [ ], in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts; provided, however, that at the
option of the Company payment of interest may be made by check mailed to the
address of the Person entitled thereto as such address shall appear in the
Security Register.
Reference is hereby made to the further provisions of this Security
set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.
No stockholder, director, officer, employee or incorporator, as such,
past, present or future, of the Company or any successor corporation shall have
any liability for any obligation of the Company under the Securities or the
Indenture or for any claim based on, in respect of or by reason of, such
obligations or their creation. Each Holder of a Security by accepting a
Security waives and releases all such liability. This waiver and release are
part of the consideration for the issuance of the Securities.
Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof by manual signature, this
Security shall not be entitled to any benefit under the Indenture or be valid
or obligatory for any purpose.
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<PAGE> 26
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
CAPSTONE CAPITAL CORPORATION
By
--------------------------------
Attest:
- ------------------------------------
SECTION 203. FORM OF REVERSE OF SECURITY.
This security is one of a duly authorized issue of securities of the
Company called the "Securities"), issued and to be issued in one or more series
under an Indenture, dated as of _______________________ (herein called the
"Indenture", which term shall have the meaning assigned to it in such
instrument), between the Company and AmSouth Bank of Alabama, as trustee
(herein called the "Trustee", which term includes any successor trustee under
the Indenture), and reference is hereby ade to the Indenture and all
indentures supplemental thereto for a statement of the respective rights,
limitations of rights, duties and immunities thereunder of the Company, the
Trustee and the Holders of the Securities and of the terms upon which the
Securities are, and are to be, authenticated and delivered. This Security is
one of the series designated on the face hereof [if applicable, insert -
limited or aggregate principal amount to $_________ ].
[If applicable, insert - Subject to and upon compliance with the
provisions of the Indenture, the Holder of this Security is entitled, at his
option, at any time on or before the close of business on _________ , or in case
this Security or a portion hereof is called for redemption, then in respect of
this Security or such portion hereof until and including, but (unless the
Company defaults in making the payment due upon redemption) not after, the
close of business on the date prior to the Redemption Date, to convert this
Security (or any portion of the principal amount hereof which is $1,000 or an
integral multiple thereof), at the principal amount hereof, or of such portion,
into a fully paid and non-assessable shares (calculated as to each conversion
to the nearest 1/100 of a share) of Common Stock of the Company at a conversion
price per share of Common Stock equal to $_______ per share (or at the current
adjusted conversion price if an adjustment has been made as provided in the
Indenture) by surrender of this Security, duly endorsed or assigned to the
Company or in blank, to the Company at its office or agency in _________ ,
accompanied by written notice to the Company that the Holder hereof elects to
convert this Security, or if less than the entire principal amount hereof is to
be converted the portion hereof to be converted and, in case such surrender
shall be made during the period from the close of business on any Regular
Record Date next preceding any Interest Payment Date to the opening
17
<PAGE> 27
of business on such Interest Payment Date (unless this Security or the portion
thereof being converted has been called for redemption on a Redemption Date
within such period), also accompanied by payment in New York Clearing House or
other funds acceptable to the Company of an amount equal to the interest
payable on such Interest Payment Date on the principal amount of this Security
then being converted. Subject to the aforesaid requirement for payment and, in
the case of a conversion after the Regular Record Date next preceding any
Interest Payment Date and on or before such Interest Payment Date, to the right
of the Holder of this Security (or any Predecessor Security) of record at such
Regular Record Date to receive an installment of interest (with certain
exceptions provided in the Indenture), no payment or adjustment is to be made
on conversion for interest accrued hereon or for dividends on the shares of
Common Stock issued on conversion. No fractions of shares of scrip representing
fractions of shares will be issued on conversion, but instead of any fractional
interest the Company shall pay a cash adjustment as provided in the Indenture.
The conversion price is subject to adjustment as provided in the Indenture. In
addition, the Indenture provides that in case of certain consolidations or
mergers to which the Company is a party or the transfer of substantially all of
the assets of the Company, the Indenture shall be amended, without the consent
of any Holders of Securities, so that this Security, if then outstanding, will
be convertible thereafter, during the period this Security shall be convertible
as specified above, only into the kind and amount of securities, cash and other
property receivable upon the consolidation, merger or transfer by a holder of
the number of shares of Common Stock into which this Security might have been
converted immediately prior to such consolidation, merger or transfer (assuming
such holder of Common Stock failed to exercise any rights of election and
received per share the kind and amount received per share by a plurality of
non-electing shares).]
[If applicable, insert - The Securities of this series are subject to
redemption upon not less than 30 days' nor more than 60 days' notice by mail,
[if applicable, insert - (1) on ___________ in any year commencing with the
year __________ and ending with the year ________ through operation of the
sinking fund for this series at a Redemption Price equal to 100% of the
principal amount, and (2)] at any time [if applicable, insert - on or after
_________, 19_____], as a whole or in part, at the election of the Company, at
the following Redemption Prices (expressed as percentages of the principal
amount): If redeemed during the 12-month period beginning ________________ of
the years indicated,
Redemption Redemption
Year Price Year Price
- ---- ----- ---- -----
and thereafter at a Redemption Price equal to _____% of the principal amount,
together in the case of any such redemption [(whether through operation of the
sinking fund or otherwise)] with
18
<PAGE> 28
accrued interest to the Redemption Date, but interest installments whose Stated
Maturity is on or prior to such Redemption Date will be payable to the Holders
of such Securities, or one or more Predecessor Securities, of record at the
close of business on the relevant Record Dates referred to on the face hereof,
all as provided in the Indenture.
[If applicable, insert - The sinking fund for this series provides for
the redemption on _______________ in each year beginning with the year ______
and ending with the year ______ of [If applicable, insert - not less than
$__________ ("mandatory sinking fund") and not more than] $__________ aggregate
principal amount of Securities of this series. Securities of this series
acquired or redeemed by the Company otherwise than through [if applicable,
insert mandatory] sinking fund payments may be credited against subsequent [if
applicable, insert - mandatory] sinking fund payments otherwise required to be
made [if applicable, insert -, in the inverse order in which they become due].]
[If the Security is subject to redemption of any kind, insert - In the
event of redemption [if applicable, insert - or conversion] of this Security in
part only, a new Security or Securities of this series and of like tenor for
the unredeemed [if applicable, insert - or unconverted] portion hereof will be
issued in the name of the Holder hereof upon the cancellation hereof.]
The Company covenants and agrees, and each Holder of a Security, by
his acceptance thereof, likewise covenants and agrees, that to the extent and
in the manner set forth in Article Fifteen of the Indenture, the indebtedness
represented by the Securities and the payment of principal (and premium, if
any) and interest on each and all of the Securities are hereby expressly made
subordinate and subject in right of payment to the prior payment in full of all
Senior Debt.
[If applicable, insert - The Indenture contains provisions for
defeasance at any time of the entire indebtedness of this Security and Events
of Default with respect to this Security, in each case upon compliance with
certain conditions set forth in the Indenture.]
[If the Security is not an Original Issue Discount Security, insert -
If an Event of Default with respect to Securities of this series shall occur
and be continuing, the principal of the Securities of this series may be
declared due and payable in the manner and with the effect provided in the
Indenture.]
[If the Security is an Original Issue Discount Security, insert - If an
Event of Default with respect to Securities of this series shall occur and be
continuing, an amount of principal of the Securities of this series may be
declared due and payable in the manner and with the effect provided in the
Indenture. Such amount shall be equal to insert formula for determining the
amount. Upon payment (i) of the amount of principal so declared due and payable
and (ii) of interest on any overdue principal, premium and interest (in each
case to the extent that the payment of such interest shall be legally
enforceable), all of the Company's obligations in respect of the payment of the
principal of and premium and interest, if any, on the Securities of this series
shall terminate.]
19
<PAGE> 29
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities of each series to be
affected under the Indenture at any time by the Company and the Trustee with
the consent of the Holders of a majority in principal amount of the Securities
at the time Outstanding of each series to be affected. The Indenture also
contains provisions permitting the Holders of specified percentages in the
principal amount of the Securities of each series at the time Outstanding, on
behalf of the Holders of all Securities of such series, to waive compliance by
the Company with certain provisions of the Indenture and certain past defaults
under the Indenture and their consequences. Any such consent or waiver by the
Holder of this Security shall be conclusive and binding upon such Holder and
upon all future Holders of this Security and of any Security issued upon the
registration of transfer hereof or in exchange herefor or in lieu hereof,
whether or not notation of such consent or waiver is made upon this Security.
As provided in and subject to the provisions of the Indenture, the
Holder of this Security shall not have the right to institute any proceeding
with respect to the Indenture or for the appointment of a receiver or trustee
or for any other remedy thereunder, unless such Holder shall have previously
given the Trustee written notice of a continuing Event of Default with respect
to the Securities of this series, the Holders of not less than 25% in principal
amount of the Securities of this series at the time Outstanding shall have made
written request to the Trustee to institute proceedings in respect of such
Event of Default as Trustee and offered the Trustee reasonable indemnity, and
the Trustee shall not have received from the Holders of a majority in principal
amount of Securities of this series at the time Outstanding a direction
inconsistent with such request, and shall have failed to institute any such
proceeding, for 60 days after receipt of such notice, request and offer of
indemnity. The foregoing shall not apply to any suit instituted by the Holder
of this Security for the enforcement of payment of principal hereof or any
premium or interest hereon on or after the respective due dates expressed
herein.
Subject to the rights of holders of Senior Debt, as set forth in the
Indenture, no other reference herein to the Indenture and no provision of this
Security or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of and any
premium and interest on this Security at the time, place and rate, and in the
coin or currency, herein prescribed [if applicable, insert - or to convert this
Security as provided in the Indenture].
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Security is registrable in the Security
Register, upon surrender of this Security for registration of transfer at the
office or agency of the Company in any place where the principal of and any
premium and interest on this Security are payable, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Security Registrar duly executed by, the Holder hereof or his
attorney duly authorized in writing, and thereupon one or more new Securities
of this series and of like tenor, of authorized denominations and for the same
aggregate principal amount, will be issued to the designated transferee or
transferees.
20
<PAGE> 30
The Securities of this series are issuable only in registered form
without coupons in denominations of $1,000 and any integral multiple thereof.
As provided in the Indenture and subject to certain limitations therein set
forth, Securities of this series are exchangeable for a like aggregate
principal amount of Securities of this series and of like tenor of a different
authorized denomination, as requested by the Holder surrendering the same.
No service charge shall be made for any such registration of transfer
or exchange, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name this Security is registered as the owner
hereof for all purposes, whether or not this Security be overdue, and neither
the Company, the Trustee nor any such agent shall be affected by notice to the
contrary.
[If applicable, insert - Interest on the principal balance of this
Security shall be calculated on the basis of a 360-day year of twelve 30-day
months].
THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.
All terms used in this Security which are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
[If applicable, insert -
[FORM OF CONVERSION NOTICE]
To: CAPSTONE CAPITAL CORPORATION
The undersigned owner of this Security hereby irrevocably exercises
the option to convert this Security, or portion hereof (which is $1,000 or an
integral multiple thereof) below designated, into shares of Common Stock in
accordance with the terms of the Indenture referred to in this Security, and
directs that the shares issuable and deliverable upon the conversion, together
with any check in payment for fractional shares and any Securities,
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 are to be issued in the name of a person other than the
undersigned, the undersigned will pay all transfer taxes payable with respect
thereto. Any amount required to be paid by the undersigned on account of
interest accompanies this Security.
21
<PAGE> 31
Dated:
Fill in for registration
of shares of Common
Stock and Securities if
to be issued otherwise
than to the registered
holder.
Principal Amount to be
converted (in an
integral multiple of
$1,000, if less than
all):
$
- ------------------
Name
- ------------------
Address
- -------------------------------- ------------------------------
(Please print name and address, Signature
including zip code number)
SOCIAL SECURITY OR OTHER
TAXPAYER IDENTIFYING
NUMBER: _________
[SIGNATURE GUARANTEED - required only if Common Stock and Securities are to be
issued and delivered to other than the registered holder]
________ ]
SECTION 204. FORM OF LEGEND FOR GLOBAL SECURITIES.
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<PAGE> 32
Unless otherwise specified as contemplated by Section 301 for the
Securities evidenced thereby, every global Security authenticated and delivered
hereunder shall bear a legend in substantially the following form:
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A
NOMINEE THEREOF. THIS SECURITY MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A
SECURITY REGISTERED, AND NO TRANSFER OF THIS SECURITY IN WHOLE OR IN PART MAY
BE REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITARY OR A
NOMINEE THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
INDENTURE.
SECTION 205. FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION.
The Trustee's certificates of authentication shall be in substantially
the following form:
This is one of the Securities of the series designated therein
referred to in the within-mentioned Indenture.
Dated: AMSOUTH BANK OF ALABAMA,
As Trustee
By
-----------------------------
Authorized Signatory
ARTICLE THREE
THE SECURITIES
SECTION 301. AMOUNT UNLIMITED; ISSUABLE IN SERIES.
The aggregate principal amount of Securities which may be
authenticated and delivered under this Indenture is unlimited.
The Securities may be issued in one or more series. There shall be
established in or pursuant to a Board Resolution and, subject to Section 303,
set forth, or determined in the manner
23
<PAGE> 33
provided, in an Officers' Certificate, or established in one or more indentures
supplemental hereto, prior to the issuance of Securities of any series,
(1) the title of the Securities of the series (which shall
distinguish the Securities of the series from Securities of any other
series);
(2) any limit upon the aggregate principal amount of the
Securities of the series which may be authenticated and delivered
under this Indenture (except for Securities authenticated and
delivered upon registration of transfer of, or in exchange for, or in
lieu of, other Securities of the series pursuant to Section 304, 305,
306, 906 or 1107 and except for any Securities which, pursuant to
Section 303, are deemed never to have been authenticated and delivered
hereunder);
(3) the Person to whom any interest on a Security of the
series shall be payable, if other than the Person in whose name that
Security (or one or more Predecessor Securities) is registered at the
close of business on the Regular Record Date for such interest;
(4) the date or dates on which the principal of any Securities
of the series is payable;
(5) the rate or rates at which any Securities of the series
shall bear interest, if any, or the method of calculation thereof, the
date or dates from which any such interest shall accrue, the Interest
Payment Dates on which any such interest shall be payable and the
Regular Record Date for any such interest payable on any Interest
Payment Date;
(6) the place or places where the principal of and any premium
and interest on any Securities of the series shall be payable;
(7) the period or periods within which, the events upon the
occurrence of which, and the price or prices at which any Securities
of the series may be redeemed, in whole or in part, at the option of
the Company and, if other than by a Board Resolution, the manner in
which any election by the Company to redeem the Securities shall be
evidenced;
(8) the obligation, if any, of the Company to redeem or
purchase any Securities of the series pursuant to any sinking fund or
analogous provisions or at the option of the Holder thereof and the
period or periods within which, the price or prices at which and the
terms and conditions upon which any Securities of the series shall be
redeemed, repaid or purchased, in whole or in part, pursuant to such
obligation;
(9) if other than denominations of $1,000 and any integral
multiple thereof, the denominations in which any Securities of the
series shall be issuable;
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<PAGE> 34
(10) if the amount of principal of or any premium or interest
on any Securities of the series may be determined with reference to an
index or pursuant to a formula, the manner in which such amounts shall
be determined;
(11) if other than the currency of the United States of
America, the currency, currencies or currency units in which the
principal of or any premium or interest on any Securities of the
series shall be payable and the manner of determining the equivalent
thereof in the currency of the United States of America for any
purpose, including for purposes of the definition of "Outstanding" in
Section 101;
(12) if the principal of or any premium or interest on any
Securities of the series is to be payable, at the election of the
Company or the Holder thereof, in one or more currencies or currency
units other than that or those in which such Securities are stated to
be payable, the currency, currencies or currency units in which the
principal of or any premium or interest on such Securities as to which
such election is made shall be payable, the periods within which and
the terms and conditions upon which such election is to be made and
the amount so payable (or the manner in which such amount shall be
determined);
(13) if other than the entire principal amount thereof, the
portion of the principal amount of any Securities of the series which
shall be payable upon declaration of acceleration of the Maturity
thereof pursuant to Section 502;
(14) if the principal amount payable at the Stated Maturity of
any Securities of the series will not be determinable as of any one or
more dates prior to the Stated Maturity, the amount which shall be
deemed to be the principal amount of such Securities as of any such
date for any purpose thereunder or hereunder, including the principal
amount thereof which shall be due and payable upon any Maturity other
than the Stated Maturity or which shall be deemed to be Outstanding as
of any date prior to the Stated Maturity (or, in any such case, the
manner in which such amount deemed to be the principal amount shall be
determined);
(15) if applicable, that the Securities of the series shall be
subject to either or both of Defeasance or Covenant Defeasance as
provided in Article Thirteen; provided that no series of Securities
that is convertible into or exchangeable for shares of Common Stock or
other securities pursuant to Section 301(19) shall be subject to
Defeasance pursuant to Section 1302;
(16) if applicable, that any Securities of the series shall be
issuable in whole or in part in the form of one or more Global
Securities and, in such case, the respective Depositaries for such
Global Securities, the form of any legend or legends which shall
be borne by any such Globa Security in addition to or in lieu of that
set forth in Section 204 and any circumstances in addition or in
lieu of those set forth in Clause (2) of the last paragraph of Section
305 in which any such Global Security may be exchanged in whole
25
<PAGE> 35
or in part for Securities registered, and any transfer of such Global
Security in whole or in part may be registered, in the name or names
of Persons other than the Depositary for such Global Security or a
nominee thereof;
(17) any addition to or change in the Events of Default which
applies to any Securities of the series and any change in the right of
the Trustee or the requisite Holders of such Securities to declare the
principal amount thereof due and payable pursuant to Section 502;
(18) any addition to, deletion from or change in the covenants
set forth in Article Ten which applies to Securities of the series;
(19) the terms and conditions, if any, pursuant to which the
Securities are convertible into or exchangeable for Common Stock or
other securities;
(20) any addition to, deletion from or change in the
subordination provisions contained in Article XV with respect to
Securities of the series; and
(21) any other terms of the series (which terms shall not be
inconsistent with the provisions of this Indenture, except as
permitted by Section 901(5)).
All Securities of any one series shall be substantially identical
except as to denomination and except as may otherwise be provided in or
pursuant to the Board Resolution referred to above and (subject to Section 303)
set forth, or determined in the manner provided, in the Officers' Certificate
referred to above or in any such indenture supplemental hereto.
If any of the terms of the series are established by action taken
pursuant to a Board Resolution, a copy of an appropriate record of such action
shall be certified by the Secretary or an Assistant Secretary of the Company
and delivered to the Trustee at or prior to the delivery of the Officers'
Certificate setting forth the terms of the series.
SECTION 302. DENOMINATIONS.
The Securities of each series shall be issuable only in registered
form without coupons and only in such denominations as shall be specified as
contemplated by Section 301. In the absence of any such specified denomination
with resect to the Securities of any series, the Securities of such series
shall be issuable in denominations of $1,000 and any integral multiple thereof.
SECTION 303. EXECUTION, AUTHENTICATION, DELIVERY AND DATING.
The Securities shall be executed on behalf of the Company by its
Chairman of the Board, its President or one of its Vice Presidents, under its
corporate seal reproduced thereon attested
26
<PAGE> 36
by its Secretary or one of its Assistant Secretaries. The signature of any of
these officers on the Securities may be manual or facsimile.
Securities bearing the manual or facsimile signatures of individuals
who were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did not
hold such offices at the date of such Securities.
At any time and from time to time after the execution and delivery of
this Indenture, the Company may deliver Securities of any series executed by
the Company to the Trustee for authentication, together with a Company order
for the authentication and delivery of such Securities, and the Trustee in
accordance with the Company Order shall authenticate and deliver such
Securities. If the form or terms of the Securities of the series have been
established by or pursuant to one or more Board Resolutions as permitted by
sections 201 and 301, in authenticating such Securities, and accepting the
additional responsibilities under this Indenture in relation to such
Securities, the Trustee shall be entitled to receive, and (subject to Section
601) shall be fully protected in relying upon, an Opinion of Counsel stating,
(1) if the form of such Securities has been established by or
pursuant to Board Resolution as permitted by Section 201, that such
form has been established in conformity with the provisions of this
Indenture;
(2) if the terms of such Securities have been established by
or pursuant to Board Resolution as permitted by Section 301, that such
terms have been established in conformity with the provisions of this
Indenture; and
(3) that such Securities, when authenticated and delivered by
the Trustee and issued by the Company in the manner and subject to any
conditions specified in such Opinion of Counsel, will constitute valid
and legally binding obligations of the Company enforceable in
accordance with their terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights to
general equity principles.
If such form or terms have been so established, the Trustee shall not
be required to authenticate such Securities if the issue of such Securities
pursuant to this Indenture will affect the Trustee's own rights, duties or
immunities under the Securities and this Indenture or otherwise in a manner
which is not reasonably acceptable to the Trustee.
Notwithstanding the provisions of Section 301, and of the preceding
paragraph, if all Securities of a series are not to be originally issued at one
time, it shall not be necessary to deliver the Officers' Certificate otherwise
required pursuant to Section 301 or the Company Order and Opinion of Counsel
otherwise required pursuant to such preceding paragraph at or prior to the
authentication of each Security of such series if such documents are delivered
at or prior to the authentication upon original issuance of the first Security
of such series to be issued.
27
<PAGE> 37
Each Security shall be dated the date of its authentication.
No Security shall be entitled to any benefit under this Indenture or
be valid or obligatory for any purpose unless there appears on such Security a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by manual signature, and such certificate upon any
Security shall be conclusive evidence, and the only evidence that such Security
has been duly authenticated and delivered hereunder. Notwithstanding the
foregoing, if any Security shall have been authenticated and delivered
hereunder but never issued and sold by the Company, and the Company shall
deliver such Security to the Trustee for cancellation as provided in Section
309, for all purposes of this Indenture such Security shall be deemed never to
have been authenticated and delivered hereunder and shall never be entitled to
the benefits of this Indenture.
SECTION 304. TEMPORARY SECURITIES.
Pending the preparation of definitive Securities of any series, the
Company may execute, and upon Company Order the Trustee shall authenticate and
deliver, temporary Securities which are printed, lithographed, typewritten,
mimeographed or otherwise produced, in any authorized denomination,
substantially of the tenor of the definitive Securities in lieu of which they
are issued and with such appropriate insertions, omissions, substitutions and
other variations as the officers executing such Securities may determine, as
evidenced by their execution of such Securities.
If temporary Securities of any series are issued, the Company will
cause definitive Securities of that series to be prepared without unreasonable
delay. After the preparation of definitive Securities of such series, the
temporary Securities of such series shall be exchangeable for definitive
Securities of such series upon surrender of the temporary Securities of such
series at the office or agency of the Company in a Place of Payment for that
series, without charge to the Holder. Upon surrender for cancellation of any
one or more temporary Securities of any series, the Company shall execute and
the Trustee shall authenticate and deliver in exchange therefor one or more
definitive Securities of the same series, of any authorized denominations and
of like tenor and aggregate principal amount. Until so exchanged, the temporary
Securities of any series shall in all respects be entitled to the same benefits
under this Indenture as definitive Securities of such series and tenor.
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SECTION 305. REGISTRATION; REGISTRATION OF TRANSFER AND EXCHANGE.
The Company shall cause to be kept at the Corporate Trust Office of
the Trustee a register (the register maintained in such office and in any other
office or agency of the Company in a Place of Payment being herein sometimes
collectively referred to as the "Security Register") in which, subject to such
reasonable regulations as it may prescribe, the Company shall provide for the
registration of Securities and of transfers of Securities. The Trustee is
hereby appointed "Security Registrar" for the purpose of registering Securities
and transfers of Securities as herein provided.
Upon surrender for registration of transfer of any Security of a
series at the office or agency of the Company in a Place of Payment for that
series, the Company shall execute, and the Trustee shall authenticate and
deliver, in the name of the designated transferee or transferees, one or more
new Securities of the same series, of any authorized denominations and of like
tenor and aggregate principal amount.
At the option of the Holder, Securities of any series may be exchanged
for other Securities of the same series, of any authorized denominations and of
like tenor and aggregate principal amount, upon surrender of the Securities to
be exchanged at such office or agency. Whenever any Securities are so
surrendered for exchange, the Company shall execute, and the Trustee shall
authenticate and deliver, the Securities which the Holder making the exchange
is entitled to receive.
All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the Company, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the Securities
surrendered upon such registration of transfer or exchange.
Every Security presented or surrendered for registration of transfer
or for exchange shall (if so required by the Company or the Trustee) be duly
endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Company and the Security Registrar duly executed, by the
Holder thereof or his attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of Securities, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
with any registration of transfer or exchange of Securities, other than
exchanges pursuant to Section 304, 906 or 1107 not involving any transfer.
If the Securities of any series (or of any series and specified tenor)
are to be redeemed in part, the Company shall not be required (A) to issue,
register the transfer of or exchange any Securities of that series (or of that
series and specified tenor, as the case may be) during a period beginning at
the opening of business 15 days before the day of the mailing of a notice of
redemption of any such Securities selected for redemption under Section 1103
and ending at the close of business on the day of such mailing, or (B) to
register the transfer of or exchange any
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Security so selected for redemption in whole or in part, except the unredeemed
portion of any Security being redeemed in part.
The provisions of Clauses (1), (2), (3) and (4) below shall apply only
to Global Securities:
(1) Each Global Security authenticated under this Indenture
shall be registered in the name of the Depositary designated for such
Global Security or a nominee thereof and deposited with such
Depositary or a nominee thereof or custodian therefor, shall be issued
in a denomination or aggregate denomination equal to the portion of
the aggregate principal amount of Securities of the applicable series
to be represented by such Global Security, and shall constitute a
single Security for all purposes of this Indenture.
(2) Notwithstanding any other provision in this Indenture, no
Global Security may be exchanged in whole or in part for Securities
registered, and no transfer of a Global Security in whole or in part
may be registered, in the name of any Person other than the Depositary
for such Global Security or a nominee thereof or a successor
Depositary or a nominee thereof unless (A) such Depositary (i) has
notified the Company that it is unwilling or unable to continue as
Depositary for such Global Security or (ii) has ceased to be a
clearing agency registered under the Exchange Act, and in either case
a successor Depositary is not appointed within 90 days by the Company,
(B) there shall have occurred and be continuing an Event of Default
with respect to such Global Security or (C) there shall exist such
circumstances, if any, in addition to or in lieu of the foregoing as
have been specified for this purpose as contemplated by Section 301.
(3) Subject to Clause (2) above, any exchange of a Global
Security for other Securities may be made in whole or in part, and all
Securities issued in exchange for a Global Security or any portion
thereof shall be registered in such names as the Depositary for such
Global Security shall direct.
(4) Every Security authenticated and delivered upon
registration of transfer of, or in exchange for or in lieu of, a
Global Security or any portion thereof, whether pursuant to this
Section, Section 304, 306, 906 or 1107 or otherwise, shall be
authenticated and delivered in the form of, and shall be, a Global
Security, unless such Security is registered in the name of a Person
other than the Depositary for such Global Security or a nominee
thereof.
SECTION 306. MUTILATED, DESTROYED, LOST AND STOLEN SECURITIES.
If any mutilated Security is surrendered to the Trustee, the Company
shall execute and the Trustee shall authenticate and deliver in exchange
therefor a new Security of the same series and of like tenor and principal
amount and bearing a number not contemporaneously outstanding.
If there shall be delivered to the Company and the Trustee (i)
evidence to their satisfaction of the destruction, loss or theft of any
Security and (ii) such security or indemnity as may be
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required by them to save each of them and any agent of either of them harmless,
then, in the absence of notice to the Company or the Trustee that such Security
has been acquired by a bona fide purchaser, the Company shall execute and the
Trustee shall authenticate and deliver, in lieu of any such destroyed, lost or
stolen Security, a new Security of the same series and of like tenor and
principal amount and bearing a number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security has
become or is about to become due and payable, the Company in its discretion
may, instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section, the Company
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Security of any series issued pursuant to this Section in
lieu of any destroyed, lost or stolen Security shall constitute an original
additional contractual obligation of the Company, whether or not the destroyed,
lost or stolen Security shall be at any time enforceable by anyone, and shall
be entitled to all the benefits of this Indenture equally and proportionately
with any and all other Securities of that series duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Securities.
SECTION 307. PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED.
Except as otherwise provided as contemplated by Section 301 with
respect to any series of Securities, interest on any Security which is payable,
and is punctually paid or duly provided for, on any Interest Payment Date shall
be paid to the Person in whose name that Security (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record Date
for such interest.
Any interest on any Security of any series which is payable, but is
not punctually paid or duly provided for, on any Interest Payment Date (herein
called "Defaulted Interest") shall forthwith cease to be payable to the Holder
on the relevant Regular Record Date by virtue of having been such Holder, and
such Defaulted Interest shall be paid by the Company, at its election in each
case, as provided in either Clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted
Interest to the Persons in whose names the Securities of such series
(or their respective Predecessor Securities) are registered at the
close of business on a Special Record Date for the payment of such
Defaulted Interest, which shall be fixed in the following manner. The
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Company shall notify the Trustee in writing of the amount of Defaulted
Interest proposed to be paid on each Security of such series and the
date of the proposed payment, and at the same time the Company shall
deposit with the Trustee an amount of money equal to the aggregate
amount proposed to be paid in respect of such Defaulted Interest or
shall make arrangements satisfactory to the Trustee for such deposit
prior to the date of the proposed payment, such money when deposited
to be held in trust for the benefit of the Persons entitled to such
Defaulted Interest as in this Clause provided. Thereupon the Trustee
shall fix a Special Record Date for the payment of such Defaulted
Interest which shall be not more than 15 days and not less than 10
days prior to the date of the proposed payment and not less than 10
days after the receipt by the Trustee of the notice of the proposed
payment. The Trustee shall promptly notify the Company of such Special
Record Date and, in the name and at the expense of the Company, shall
cause notice of the proposed payment of such Defaulted Interest and
the Special Record Date therefor to be given to each Holder of
Securities of such series in the manner set forth in Section 106, not
less than 10 days prior to such Special Record Date. Notice of the
proposed payment of such Defaulted Interest and the Special Record
Date therefor having been so mailed, such Defaulted Interest shall be
paid to the Persons in whose names the Securities of such series (or
their respective Predecessor Securities) are registered at the close
of business on such Special Record Date and shall no longer be payable
pursuant to the following Clause (2).
(2) The Company may make payment of any Defaulted Interest on
the Securities of any series in any other lawful manner not
inconsistent with the requirements of any securities exchange on which
such Securities may be listed, and upon such notice as may be required
by such exchange, if, after notice given by the Company to the Trustee
of the proposed payment pursuant to this Clause, such manner of
payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Security shall carry the rights to interest accrued
and unpaid, and to accrue, which were carried by such other Security.
Subject to the provisions of Section 1402, in case of any Security
which is converted after any Regular Record Date and on or prior to the next
succeeding Interest Payment Date, interest whose Stated Maturity is on such
Interest Payment Date shall be payable on such Interest Payment Date
notwithstanding such conversion, and such interest (whether or not punctually
paid or duly provided for) shall be paid to the Person in whose name that
Security (or one or more Predecessor Securities) is registered at the close of
business on such Regular Record Date. Except as otherwise expressly provided in
the immediately preceding sentence in the case of any Security which is
converted, interest whose Stated Maturity is after the date of conversion of
such Security shall not be payable.
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SECTION 308. PERSONS DEEMED OWNERS.
Prior to due presentment of a Security for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name such Security is registered as the owner of such
Security for the purpose of receiving payment of principal of and any premium
and (subject to Section 307) any interest on such Security and for all other
purposes whatsoever, whether or not such Security be overdue, and neither the
Company, the Trustee nor any agent of the Company or the Trustee shall be
affected by notice to the contrary.
SECTION 309. CANCELLATION.
All Securities surrendered for payment, redemption, registration of
transfer or exchange or conversion or for credit against any sinking fund
payment shall, if surrendered to any Person other than the Trustee, be
delivered to the Trustee and shall be promptly canceled by it. The Company may
at any time deliver to the Trustee for cancellation any Securities previously
authenticated and delivered hereunder which the Company may have acquired in
any manner whatsoever, and may deliver to the Trustee (or to any other Person
for delivery to the Trustee) for cancellation any Securities previously
authenticated hereunder which the Company has not issued and sold, and all
Securities so delivered shall be promptly canceled by the Trustee. No
Securities shall be authenticated in lieu of or in exchange for any Securities
canceled as provided in this Section, except as expressly permitted by this
Indenture. All canceled Securities held by the Trustee shall be disposed of in
a manner customary to the Trustee as directed by a Company Order.
SECTION 310. COMPUTATION OF INTEREST.
Except as otherwise specified as contemplated by Section 301 for
Securities of any series, interest on the Securities of each series shall be
computed on the basis of a 360-day year of twelve 30-day months.
SECTION 311. CUSIP NUMBERS.
The Company in issuing the Securities may use "CUSIP" numbers (if then
generally in use), and, if so, the Trustee shall use "CUSIP" numbers in notices
of redemption as a convenience to Holders; provided that any such notice may
state that no representation is made as to the correctness of such numbers
either as printed on the Securities or as contained in any notice of a
redemption and that reliance may be placed only on the other identification
numbers printed on the Securities, and any such redemption shall not be
affected by any defect in or omission of such numbers.
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ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. SATISFACTION AND DISCHARGE OF INDENTURE.
This Indenture shall upon Company Request cease to be of further
effect (except as to any surviving rights of conversion, registration of
transfer or exchange of Securities herein expressly provided for), and the
Trustee, at the expense of the Company, shall execute proper instruments
acknowledging satisfaction and discharge of this Indenture, when
(1) either
(A) all Securities theretofore authenticated and delivered
(other than (i) Securities which have been destroyed, lost or stolen
and which have been replaced or paid as provided in Section 306 and
(ii) Securities for whose payment money has theretofore been deposited
in trust or segregated and held in trust by the Company and thereafter
repaid to the Company or discharged from such trust, as provided in
Section 1003) have been delivered to the Trustee for cancellation
and/or conversion; or
(B) all such Securities not theretofore delivered to the
Trustee for cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated
Maturity within one year, or
(iii) are to be called for redemption within one year
under arrangements satisfactory to the Trustee for the giving
of notice of redemption by the Trustee in the name, and at the
expense, of the Company,
and the Company, in the case of (i), (ii) or (iii) above, has
deposited or caused to be deposited with the Trustee as trust funds in
trust for the purpose money in an amount sufficient to pay and
discharge the entire indebtedness on such Securities not theretofore
delivered to the Trustee for cancellation, for principal and any
premium and interest to the date of such deposit (in the case of
Securities which have become due and payable) or to the Stated
Maturity or Redemption Date, as the case may be;
(2) the Company has paid or caused to be paid all other sums payable
hereunder by the Company; and
(3) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that all conditions precedent
herein provided for relating to the satisfaction and discharge of this
Indenture have been complied with.
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Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 607, the obligations of
the Trustee to any Authenticating Agent under Section 614 and, if money shall
have been deposited with the Trustee pursuant to subclause (B) of Clause (1) of
this Section, the obligations of the Trustee under Section 402 and the last
paragraph of Section 1003 shall survive.
SECTION 402. APPLICATION OF TRUST MONEY.
Subject to the provisions of the last paragraph of Section 1003, all
money deposited with the Trustee pursuant to Section 401 shall be held in trust
and applied by it, in accordance with the provisions of the Securities and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal and any premium
and interest for whose payment such money has been deposited with the Trustee.
Money deposited pursuant to this Section in accordance with this Indenture
shall not be subject to claims of the holders of Senior Debt under Article
Fifteen.
ARTICLE FIVE
REMEDIES
SECTION 501. EVENTS OF DEFAULT.
"Event of Default", wherever used herein with respect to Securities of
any series, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be occasioned by the provisions of
Article Fifteen or be voluntary or involuntary or be effected by operation of
law or pursuant to any judgment, decree or order of any court or any order,
rule or regulation of any administrative or governmental body):
(1) default in the payment of any interest upon any Security
of that series when it becomes due and payable, and continuance of
such default for a period of 30 days; or
(2) default in the payment of the principal of or any premium,
if any, on any Security of that series; or
(3) default in the deposit of any sinking fund payment, when
and as due by the terms of a Security of that series; or
(4) default in the performance, or breach, of any covenant or
warranty of the Company in this Indenture (other than a covenant or
warranty a default in whose performance or whose breach is elsewhere
in this Section specifically dealt with or which
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has expressly been included in this Indenture solely for the
benefit of series of Securities other than that series), and
continuance of such default or breach for a period of 60 days after
there has been given, by registered or certified mail, to the Company
by the Trustee or to the Company and the Trustee by the Holders of at
least 25% in principal amount of the Outstanding Securities of that
series a written notice specifying such default or breach and
requiring it to be remedied and stating that such notice is a "Notice
of Default" hereunder; or
(5) (a) a default under any bond, debenture, note or other
evidence of indebtedness for money borrowed by the Company or any
Subsidiary (including a default with respect to Securities of any
series other than that series) having an aggregate principal amount
outstanding of at least $5,000,000, or under any mortgage, indenture
or instrument (including this Indenture) under which there may be
issued or by which there may be secured or evidenced any indebtedness
for money borrowed by the Company having an aggregate principal amount
outstanding of at least $5,000,000, whether such indebtedness now
exists or shall hereafter be created, which default shall have
resulted in such indebtedness becoming or being declared due and
payable prior to the date on which it would otherwise have become due
and payable, without such indebtedness having been discharged, or (b)
a failure to pay Indebtedness in the outstanding principal amount of
at least $5,000,000 at its stated maturity after demand therefor;
provided, that in each case of (a) and (b) above within a period of 10
days after there shall have been given, by registered or certified
mail, to the Company by the Trustee or to the Company and the Trustee
by the Holders of at least 25% in principal amount of the Outstanding
Securities of that series a written notice specifying such default and
(a) requiring the Company to cause such Indebtedness to be discharged
or cause such acceleration to be rescinded or annulled, or (b)
requiring the Company to pay the Indebtedness which the Company failed
to pay at maturity after demand therefor and in each case stating that
such notice is a "Notice of Default" hereunder; provided, however,
that, subject to the provisions of Sections 601 and 602, the Trustee
shall not be deemed to have knowledge of such default unless either
(A) a Responsible Officer of the Trustee shall have knowledge of such
default or (B) the Trustee shall have received written notice thereof
from the Company, from any Holder, from the holder of any such
indebtedness or from the Trustee under any such mortgage, indenture or
other instrument; or
(6) the entry by a court or courts of competent jurisdiction
of a final judgment or final judgments for the payment of money
against the Company or any Subsidiary which remain undischarged for a
period (during which execution shall not be effectively stayed, the
posting of any required bond not being deemed an execution for
purposes hereof) of 30 days after all rights to appeal have been
exhausted, provided that the aggregate amount of all such judgments
exceeds $5,000,000; or
(7) the entry by a court having jurisdiction in the premises
of (A) a decree or order for relief in respect of the Company in an
involuntary case or proceeding under any applicable Federal or State
bankruptcy, insolvency, reorganization or other similar law or
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(B) a decree or order adjudging the Company a bankrupt or
insolvent, or approving as properly filed a petition seeking
reorganization, arrangement, adjustment or composition of or in
respect of the Company under any applicable Federal or State law, or
appointing a custodian, receiver, liquidator, assignee, trustee,
sequestrator or other similar official of the Company or of any
substantial part of its property, or ordering the winding up or
liquidation of its affairs, and the continuance of any such decree or
order for relief or any such other decree or order unstayed and in
effect for a period of 60 consecutive days; or
(8) the commencement by the Company of a voluntary case or
proceeding under any applicable Federal or State bankruptcy,
insolvency, reorganization or other similar law or of any other case
or proceeding to be adjudicated a bankrupt or insolvent, or the
consent by it to the entry of a decree or order for relief in respect
of the Company in an involuntary case or proceeding under any
applicable Federal or State bankruptcy, insolvency, reorganization or
other similar law or to the commencement of any bankruptcy or
insolvency case or proceeding against it, or the filing by it of a
petition or answer or consent seeking reorganization or relief under
any applicable Federal or State law, or the consent by it to the
filing of such petition or to the appointment of or taking possession
by a custodian, receiver, liquidator, assignee, trustee, sequestrator
or other similar official of the Company or of any substantial part of
its property, or the making by it of an assignment for the benefit of
creditors, or the admission by it in writing of its inability to pay
its debts generally as they become due, or the taking of corporate
action by the Company in furtherance of any such action; or
(9) any other Event of Default provided with respect to
Securities of that series.
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SECTION 502. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT.
If an Event of Default (other than an Event of Default specified in
Section 501(7) or 501(8)) with respect to Securities of any series at the time
Outstanding occurs and is continuing, then in every such case the Trustee or
the Holders of not less than 25% in principal amount of the Outstanding
Securities of that series may declare the principal amount of all the
Securities of that series (or, if any Securities of that series are Original
Issue Discount Securities, such portion of the principal amount of such
Securities as may be specified by the terms thereof) to be due and payable
immediately, by a notice in writing to the Company (and to the Trustee if given
by Holders), and upon any such declaration such principal amount (or specified
amount) shall become immediately due and payable. If an Event of Default
specified in Section 501(7) or 501(8) with respect to Securities of any series
at the time Outstanding occurs, the principal amount of all the Securities of
that series (or, if any Securities of that series are Original Issue Discount
Securities, such portion of the principal amount of such Securities as may be
specified by the terms thereof) shall automatically, and without any
declaration or other action on the part of the Trustee or any Holder, become
immediately due and payable.
At any time after such a declaration of acceleration with respect to
Securities of any series has been made and before a judgment or decree for
payment of the money due has been obtained by the Trustee as hereinafter in
this Article provided, the Holders of a majority in principal amount of the
Outstanding Securities of that series, by written notice to the Company and the
Trustee, may rescind and annul such declaration and its consequences if
(1) the Company has paid or deposited with the Trustee a sum
sufficient to pay
(A) all overdue interest on all Securities of that series,
(B) the principal of (and premium, if any, on) any Securities
of that series which have become due otherwise than by such
declaration of acceleration and any interest thereon at the rate or
rates prescribed therefor in such Securities,
(C) to the extent that payment of such interest is lawful,
interest upon overdue interest at the rate or rates prescribed
therefor in such Securities, and
(D) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel; and
(2) all Events of Default with respect to Securities of that series,
other than the non-payment of the principal of Securities of that
series which have become due solely by such declaration of
acceleration, have been cured or waived as provided in Section 513.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
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SECTION 503. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY TRUSTEE.
The Company covenants that if
(1) default is made in the payment of any interest on any
Security when such interest becomes due and payable and such default
continues for a period of 30 days, or
(2) default is made in the payment of the principal of (or
premium, if any, on) any Security at the Maturity thereof,
the Company will, upon demand of the Trustee, pay to it, for the benefit of the
Holders of such Securities, the whole amount then due and payable on such
Securities for principal and any premium and interest and, to the extent that
payment of such interest shall be legally enforceable, interest on any overdue
principal and premium and on any overdue interest, at the rate or rates
prescribed therefor in such Securities, and, in addition thereto, such further
amount as shall be sufficient to cover the costs and expenses of collection,
including the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel.
If an Event of Default with respect to Securities of any series occurs
and is continuing, the Trustee may in its discretion proceed to protect and
enforce its rights and the rights of the Holders of Securities of such series
by such appropriate judicial proceedings as the Trustee shall deem most
effectual to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy.
SECTION 504. TRUSTEE MAY FILE PROOFS OF CLAIM.
In case of any judicial proceeding relative to the Company (or any
other obligor upon the Securities), its property or its creditors, the Trustee
shall be entitled and empowered, by intervention in such proceeding or
otherwise, to take any and all actions authorized under the Trust Indenture Act
in order to have claims of the Holders and the Trustee allowed in any such
proceeding. In particular, the Trustee shall be authorized to collect and
receive any moneys or other property payable or deliverable on any such claims
and to distribute the same; and any custodian, receiver, assignee, trustee,
liquidator, sequestrator or other similar official in any such judicial
proceeding is hereby authorized by each Holder to make such payments to the
Trustee and, in the event that the Trustee shall consent to the making of such
payments directly to the Holders, to pay to the Trustee any amount due it for
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 607.
No provision of this Indenture shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any Holder
any plan of reorganization, arrangement,
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adjustment or composition affecting the Securities or the rights of any Holder
thereof or to authorize the Trustee to vote in respect of the claim of any
Holder in any such proceeding; provided, however, that the Trustee may, on
behalf of the Holders, vote for the election of a trustee in bankruptcy or
similar official and be a member of a creditors' or other similar committee.
SECTION 505. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF SECURITIES.
All rights of action and claims under this Indenture or the Securities
may be prosecuted and enforced by the Trustee without the possession of any of
the Securities or the production thereof in any proceeding relating thereto,
and any such proceeding instituted by the Trustee shall be brought in its own
name as trustee of an express trust, and any recovery of judgment shall, after
provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Holders of the Securities in respect of which such
judgment has been recovered.
SECTION 506. APPLICATION OF MONEY COLLECTED.
Any money collected by the Trustee pursuant to this Article shall be
applied in the following order, at the date or dates fixed by the Trustee and,
in case of the distribution of such money on account of principal or any
premium or interest, upon presentation of the Securities and the notation
thereon of the payment if only partially paid and upon surrender thereof if
fully paid:
FIRST: To the payment of all amounts due the Trustee under
Section 607; and
SECOND: To the payment of the amounts then due and unpaid for
principal of and any premium and interest on the Securities in respect
of which or for the benefit of which such money has been collected,
ratably, without preference or priority of any kind, according to the
amounts due and payable on such Securities for principal and any
premium and interest, respectively.
SECTION 507. LIMITATION ON SUITS.
No Holder of any Security of any series shall have any right to
institute any proceeding, judicial or otherwise, with respect to this
Indenture, or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless
(1) such Holder has previously given written notice to the
Trustee of a continuing Event of Default with respect to the
Securities of that series;
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(2) the Holders of not less than 25% in principal amount of
the Outstanding Securities of that series shall have made written
request to the Trustee to institute proceedings in respect of such
Event of Default in its own name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee
reasonable indemnity against the costs, expenses and liabilities to be
incurred in compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such
proceeding; and
(5) no direction inconsistent with such written request has
been given to the Trustee during such 60 day period by the Holders of
a majority in principal amount of the Outstanding Securities of that
series;
it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other of
such Holders, or to obtain or to seek to obtain priority or preference over any
other of such Holders or to enforce any right under this Indenture, except in
the manner herein provided and for the equal and ratable benefit of all of such
Holders.
SECTION 508. UNCONDITIONAL RIGHTS OF HOLDERS TO RECEIVE PRINCIPAL, PREMIUM AND
INTEREST AND TO CONVERT.
Notwithstanding any other provision in this Indenture, but subject to
Article Fifteen of this Indenture, the Holder of any Security shall have the
right, which is absolute and unconditional, to receive payment of the principal
of and any premium and (subject to Section 307) interest on such Security on
the respective Stated Maturities expressed in such Security (or, in the case of
redemption, on the Redemption Date), to convert such Security in accordance
with Article Fourteen and to institute suit for the enforcement of any such
payment or such right of conversion, and such rights shall not be impaired
without the consent of such Holder.
SECTION 509. RESTORATION OF RIGHTS AND REMEDIES.
If the Trustee or any Holder has instituted any proceeding to enforce
any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case, subject to any
determination in such proceeding, the Company, the Trustee and the Holders
shall be restored severally and respectively to their former positions
hereunder and thereafter all rights and remedies of the Trustee and the Holders
shall continue as though no such proceeding had been instituted.
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SECTION 510. RIGHTS AND REMEDIES CUMULATIVE.
Except as otherwise provided with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities in the last
paragraph of Section 306, no right or remedy herein conferred upon or reserved
to the Trustee or to the Holders is intended to be exclusive of any other right
or remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent
the concurrent assertion or employment of any other appropriate right or
remedy.
SECTION 511. DELAY OR OMISSION NOT WAIVER.
No delay or omission of the Trustee or of any Holder of any Securities
to exercise any right or remedy accruing upon any Event of Default shall impair
any such right or remedy or constitute a waiver of any such Event of Default or
an acquiescence therein. Every right and remedy given by this Article or by law
to the Trustee or to the Holders may be exercised from time to time, and as
often as may be deemed expedient, by the Trustee or by the Holders, as the case
may be.
SECTION 512. CONTROL BY HOLDERS.
The Holders of a majority in principal amount of the Outstanding
Securities of any series shall have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred on the Trustee, with respect to the
Securities of such series, provided that
(1) such direction shall not be in conflict with any rule of
law or with this Indenture, and
(2) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction.
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SECTION 513. WAIVER OF PAST DEFAULTS.
The Holders of not less than a majority in principal amount of the
Outstanding Securities of any series may on behalf of the Holders of all the
Securities of such series waive any past default hereunder with respect to such
series and its consequences, except a default
(1) in the payment of the principal of or any premium or
interest on any Security of such series, or
(2) in respect of a covenant or provision hereof which under
Article Nine cannot be modified or amended without the consent of the
Holder of each Outstanding Security of such series affected.
Upon any such waiver, such default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other default or impair any right consequent thereon.
SECTION 514. UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy under this
Indenture, or in any suit against the Trustee for any action taken, suffered or
omitted by it as Trustee, a court may require any party litigant in such suit
to file an undertaking to pay the costs of such suit, and may assess costs
against any such party litigant, in the manner and to the extent provided in
the Trust Indenture Act. The provisions of this Section shall not apply to any
suit instituted by the Trustee, to any suit instituted by the Company, to any
suit instituted by any Holder, or group of Holders of an aggregate more than 10
percent in principal amount of the Securities then outstanding, or to any suit
instituted by any Holder for the enforcement of the payment of the principal of
or interest on any Security, on or after the respective due dates expressed in
such Security.
SECTION 515. WAIVER OF USURY, STAY OR EXTENSION LAWS.
The Company covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, or plead, or in any manner whatsoever
claim or take the benefit or advantage of, any usury, stay or extension law
wherever enacted, now or at any time hereafter in force, which may affect the
covenants or the performance of this Indenture; and the Company (to the extent
that it may lawfully do so) hereby expressly waives all benefit or advantage of
any such law and covenants that it will not hinder, delay or impede the
execution of any power herein granted to the Trustee, but will suffer and
permit the execution of every such power as though no such law had been
enacted.
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ARTICLE SIX
THE TRUSTEE
SECTION 601. CERTAIN DUTIES AND RESPONSIBILITIES.
The duties and responsibilities of the Trustee shall be as provided by
the Trust Indenture Act. Notwithstanding the foregoing, no provision of this
Indenture shall require the Trustee to expend or risk its own funds or
otherwise incur any financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if it shall have
reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it.
Whether or not therein expressly so provided, every provision of this Indenture
relating to the conduct or affecting the liability of or affording protection
to the Trustee shall be subject to the provisions of this Section.
SECTION 602. NOTICE OF DEFAULTS.
If a default occurs hereunder with respect to Securities of any
series, the Trustee shall give the Holders of Securities of such series notice
of such default as and to the extent provided by the Trust Indenture Act;
provided, however, that in the case of any default of the character specified
in Section 501(4) with respect to Securities of such series, no such notice to
Holders shall be given until at least 30 days after the occurrence thereof. For
the purpose of this Section, the term "default" means any event which is, or
after notice or lapse of time or both would become, an Event of Default with
respect to Securities of such series.
SECTION 603. CERTAIN RIGHTS OF TRUSTEE.
Subject to the provisions of Section 601:
(1) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent,
order, bond, debenture, note, other evidence of indebtedness or other
paper or document believed by it to be genuine and to have been signed
or presented by the proper party or parties;
(2) any request or direction of the Company mentioned herein
shall be sufficiently evidenced by a Company Request or Company Order,
and any resolution of the Board of Directors shall be sufficiently
evidenced by a Board Resolution;
(3) whenever in the administration of this Indenture the
Trustee shall deem it desirable that a matter be proved or established
prior to taking, suffering or omitting any
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action hereunder, the Trustee (unless other evidence be herein
specifically prescribed) may, in the absence of bad faith on its part,
rely upon an Officers' Certificate;
(4) the Trustee may consult with counsel of its selection and
the advice of such counsel (to be confirmed in writing) or any Opinion
of Counsel shall be full and complete authorization and protection in
respect of any action taken, suffered or omitted by it hereunder in
good faith and in reliance thereon;
(5) the Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at the request
or direction of any of the Holders pursuant to this Indenture, unless
such Holders shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which might be
incurred by it in compliance with such request or direction;
(6) the Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of indebtedness
or other paper or document, but the Trustee, in its discretion, may
make such further inquiry or investigation into such facts or matters
as it may see fit, and, if the Trustee shall determine to make such
further inquiry or investigation, it shall be entitled to examine the
books, records and premises of the Company, personally or by agent or
attorney;
(7) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents or attorneys and the Trustee shall not be responsible
for any misconduct or negligence on the part of any agent or attorney
appointed with due care by it hereunder; and
(8) the Trustee shall not be liable for any action taken,
suffered, or omitted to be taken by it in good faith and reasonably
believed by it to be authorized or within the discretion or rights or
powers conferred upon it by this Indenture.
SECTION 604. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES.
The recitals contained herein and in the Securities, except the
Trustee's certificates of authentication, shall be taken as the statements of
the Company, and neither the Trustee nor any Authenticating Agent assumes any
responsibility for their correctness. The Trustee makes no representations as
to the validity or sufficiency of this Indenture or of the Securities. Neither
the Trustee nor any Authenticating Agent shall be accountable for the use or
application by the Company of Securities or the proceeds thereof.
SECTION 605. MAY HOLD SECURITIES.
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The Trustee, any Authenticating Agent, any Paying Agent, any Security
Registrar or any other agent of the Company, in its individual or any other
capacity, may become the owner or pledgee of Securities and, subject to
Sections 608 and 613, may otherwise deal with the Company with the same rights
it would have if it were not Trustee, Authenticating Agent, Paying Agent,
Security Registrar or such other agent.
SECTION 606. MONEY HELD IN TRUST.
Money held by the Trustee in trust hereunder need not be segregated
from other funds except to the extent required by law. The Trustee shall be
under no liability for interest on any money received by it hereunder except as
otherwise agreed in writing with the Company.
SECTION 607. COMPENSATION AND REIMBURSEMENT.
The Company agrees
(1) to pay to the Trustee from time to time such reasonable
compensation as the Company and the Trustee shall from time to time
agree in writing for all services rendered by it hereunder (which
compensation shall not be limited by any provision of law in regard to
the compensation of a trustee of an express trust);
(2) except as otherwise expressly provided herein, to
reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in
accordance with any provision of this Indenture (including the
reasonable compensation and the expenses and disbursements of its
agents and counsel), except any such expense, disbursement or advance
as may be attributable to its negligence or bad faith; and
(3) to indemnify the Trustee and any predecessor Trustee for,
and to hold it harmless against, any loss, liability or expense
incurred without negligence or bad faith on its part, arising out of
or in connection with the acceptance or administration of the trust or
trusts hereunder, including the costs and expenses of defending itself
against any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder.
The Trustee shall have a lien prior to the Securities as to all
property and funds held by it hereunder for any amount owing it or any
predecessor Trustee pursuant to this Section 607, except with respect to funds
held in trust for the benefit of the Holders of particular Securities.
When the Trustee incurs expenses or renders services in connection with
an Event of Default specified in Section 501(7) or Section 501(8), the expenses
(including the reasonable charges and expenses of its counsel) and the
compensation for the services are intended to
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constitute expenses of administration under any applicable Federal or state
bankruptcy, insolvency or other similar law.
The provisions of this Section shall survive the termination of this
Indenture.
SECTION 608. DISQUALIFICATION; CONFLICTING INTERESTS.
If the Trustee has or shall acquire a conflicting interest within the
meaning of the Trust Indenture Act, the Trustee shall either eliminate such
interest or resign, to the extent and in the manner provided by, and subject to
the provisions of, the Trust Indenture Act and this Indenture. To the extent
permitted by such Act, the Trustee shall not be deemed to have a conflicting
interest by virtue of being a trustee under this Indenture with respect to
Securities of more than one series.
SECTION 609. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY.
There shall at all times be a Trustee hereunder which shall be a
Person eligible pursuant to the Trust Indenture Act to act as such and shall
have a combined capital and surplus of at least $50,000,000. If any such Person
publishes reports of condition at least annually, pursuant to law or to the
requirements of its supervising or examining authority, then for the purposes
of this Section and to the extent permitted by the Trust Indenture Act, the
combined capital and surplus of such Person shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. If at any time the Trustee with respect to the Securities of any
series shall cease to be eligible in accordance with the provisions of this
Section, it shall resign immediately in the manner and with the effect
hereinafter specified in this Article.
SECTION 610. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.
No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of Section 611.
The Trustee may resign at any time with respect to the Securities of
one or more series by giving written notice thereof to the Company.
The Trustee may be removed at any time with respect to the Securities
of any series by Act of the Holders of a majority in principal amount of the
Outstanding Securities of such series, delivered to the Trustee and to the
Company.
If at any time:
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(1) the Trustee shall fail to comply with Section 608 after
written request therefor by the Company or by any Holder who has been
a bona fide Holder of a Security for at least six months, or
(2) the Trustee shall cease to be eligible under Section 609
and shall fail to resign after written request therefor by the Company
or by any such Holder, or
(3) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Trustee or of
its property shall be appointed or any public officer shall take
charge or control of the Trustee or of its property or affairs for the
purpose of rehabilitation, conservation or liquidation,
then, in any such case, (A) the Company by a Board Resolution may remove the
Trustee with respect to all Securities, or (B) subject to Section 514, any
Holder who has been a bona fide Holder of a Security for at least six months
may, on behalf of himself and all others similarly situated, petition any court
of competent jurisdiction for the removal of the Trustee with respect to all
Securities and the appointment of a successor Trustee or Trustees.
If the instrument of acceptance by a successor Trustee required by
Section 611 shall not have been delivered to the Trustee within 30 days after
the giving of such notice of resignation or removal, the Trustee resigning or
being removed may petition any court of competent jurisdiction for the
appointment of a successor Trustee with respect to the Securities of such
series.
If the Trustee shall resign, be removed or become incapable of acting,
or if a vacancy shall occur in the office of Trustee for any cause, with
respect to the Securities of one or more series, the Company, by a Board
Resolution, shall promptly appoint a successor Trustee or Trustees with respect
to the Securities of that or those series (it being understood that any such
successor Trustee may be appointed with respect to the Securities of one or
more or all of such series and that at any time there shall be only one Trustee
with respect to the Securities of any particular series) and shall comply with
the applicable requirements of Section 611. If, within one year after such
resignation, removal or incapability, or the occurrence of such vacancy, a
successor Trustee with respect to the Securities of any series shall be
appointed by Act of the Holders of a majority in principal amount of the
Outstanding Securities of such series delivered to the Company and the retiring
Trustee, the successor Trustee so appointed shall, forthwith upon its
acceptance of such appointment in accordance with the applicable requirements
of Section 611, become the successor Trustee with respect to the Securities of
such series and to that extent supersede the successor Trustee appointed by the
Company. If no successor Trustee with respect to the Securities of any series
shall have been so appointed by the Company or the Holders and accepted
appointment in the manner required by Section 611, the retiring Trustee or any
Holder who has been a bona fide Holder of a Security of such series for at
least six months may, on behalf of himself and all others similarly situated,
petition any court of competent jurisdiction for the appointment of a successor
Trustee with respect to the Securities of such series.
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The Company shall give notice of each resignation and each removal of
the Trustee with respect to the Securities of any series and each appointment
of a successor Trustee with respect to the Securities of any series to all
Holders of Securities of such series in the manner provided in Section 106.
Each notice shall include the name of the successor Trustee with respect to the
Securities of such series and the address of its Corporate Trust Office.
SECTION 611. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.
In case of the appointment hereunder of a successor Trustee with
respect to all Securities, every such successor Trustee so appointed shall
execute, acknowledge and deliver to the Company and to the retiring Trustee an
instrument accepting such appointment, and thereupon the resignation or removal
of the retiring Trustee shall become effective and such successor Trustee,
without any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Trustee; but, on the request
of the Company or the successor Trustee, such retiring Trustee shall, upon
payment of its charges, execute and deliver an instrument transferring to such
successor Trustee all the rights, powers and trusts of the retiring Trustee and
shall duly assign, transfer and deliver to such successor Trustee all property
and money held by such retiring Trustee hereunder.
In case of the appointment hereunder of a successor Trustee with
respect to the Securities of one or more (but not all) series, the Company, the
retiring Trustee and each successor Trustee with respect to the Securities of
one or more series shall execute and deliver an indenture supplemental hereto
wherein each successor Trustee shall accept such appointment and which (1)
shall contain such provisions as shall be necessary or desirable to transfer
and confirm to, and to vest in, each successor Trustee all the rights, powers,
trusts and duties of the retiring Trustee with respect to the Securities of
that or those series to which the appointment of such successor Trustee
relates, (2) if the retiring Trustee is not retiring with respect to all
Securities, shall contain such provisions as shall be deemed necessary or
desirable to confirm that all the rights, powers, trusts and duties of the
retiring Trustee with respect to the Securities of that or those series as to
which the retiring Trustee is not retiring shall continue to be vested in the
retiring Trustee, and (3) shall add to or change any of the provisions of this
Indenture as shall be necessary to provide for or facilitate the administration
of the trusts hereunder by more than one Trustee, it being understood that
nothing herein or in such supplemental indenture shall constitute such Trustees
co-trustee of the same trust and that each such Trustee shall be trustee of a
trust or trusts hereunder separate and apart from any trust or trusts hereunder
administered by any other such Trustee; and upon the execution and delivery of
such supplemental indenture the resignation or removal of the retiring Trustee
shall become effective to the extent provided therein and each such successor
Trustee, without any further act, deed or conveyance, shall become vested with
all the rights, powers, trusts and duties of the retiring Trustee with respect
to the Securities of that or those series to which the appointment of such
successor Trustee relates; but, on request of the Company or any successor
Trustee, such retiring Trustee shall duly assign, transfer and deliver to such
successor Trustee all property and money held by such retiring Trustee
hereunder with
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respect to the Securities of that or those series to which the appointment of
such successor Trustee relates.
Upon request of any such successor Trustee, the Company shall execute
any and all instruments for more fully and certainly vesting in and confirming
to such successor Trustee all such rights, powers and trusts referred to in the
first or second preceding paragraph, as the case may be.
No successor Trustee shall accept its appointment unless at the time
of such acceptance such successor Trustee shall be qualified and eligible under
this Article.
SECTION 612. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS.
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which the Trustee shall be a party, or
any corporation succeeding to all or substantially all the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be otherwise qualified and eligible under this
Article, without the execution or filing of any paper or any further act on the
part of any of the parties hereto. In case any Securities shall have been
authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation to such authenticating Trustee may adopt
such authentication and deliver the Securities so authenticated with the same
effect as if such successor Trustee had itself authenticated such Securities.
SECTION 613. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
If and when the Trustee shall be or become a creditor of the Company
(or any other obligor upon the Securities), the Trustee shall be subject to the
provisions of the Trust Indenture Act regarding the collection of claims
against the Company (or any such other obligor).
SECTION 614. APPOINTMENT OF AUTHENTICATING AGENT.
The Trustee may appoint an Authenticating Agent or Agents with respect
to one or more series of Securities which shall be authorized to act on behalf
of the Trustee to authenticate Securities of such series issued upon original
issue and upon exchange, registration of transfer, partial conversion or
partial redemption thereof or pursuant to Section 306, and Securities so
authenticated shall be entitled to the benefits of this Indenture and shall be
valid and obligatory for all purposes as if authenticated by the Trustee
hereunder. Wherever reference is made in this Indenture to the authentication
and delivery of Securities by the Trustee or the Trustee's certificate of
authentication, such reference shall be deemed to include authentication and
delivery on behalf of the Trustee by an Authenticating Agent and a certificate
of authentication executed
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on behalf of the Trustee by an Authenticating Agent. Each Authenticating Agent
shall be acceptable to the Company and shall at all times be a corporation
organized and doing business under the laws of the United States of America,
any State thereof or the District of Columbia, authorized under such laws to
act as Authenticating Agent, having a combined capital and surplus of not less
than $50,000,000 and subject to supervision or examination by Federal or State
authority. If such Authentication Agent publishes reports of condition at least
annually, pursuant to law or to the requirements of said supervising or
examining authority, then for the purposes of this Session, the combined
capital and surplus of such Authenticating Agent shall be deemed to be its
combined capital and surplus as set forth in its most recent report of
condition so published. If at any time an Authenticating Agent shall cease to
be eligible in accordance with the provisions of this Section, such
Authenticating Agent shall resign immediately in the manner and with the effect
specified in this Section.
Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency or
corporate trust business of an Authenticating Agent, shall continue to be an
Authenticating Agent, provided such corporation shall be otherwise eligible
under this Section, without the execution or filing of any paper or any further
act on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written
notice thereof to the Trustee and to the Company. The Trustee may at any time
terminate the agency of an Authenticating Agent by giving written notice
thereof to such Authenticating Agent and to the Company. Upon receiving such a
notice of resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent which shall be acceptable to the Company and shall give notice of such
appointment in the manner provided in Section 106 to all Holders of Securities
of the series with respect to which such Authenticating Agent will serve. Any
successor Authenticating Agent upon acceptance of its appointment hereunder
shall become vested with all the rights, powers and duties of its predecessor
hereunder, with like effect as if originally named as an Authenticating Agent.
No successor Authenticating Agent shall be appointed unless eligible under the
provisions of this Section.
The Trustee agrees to pay to each Authenticating Agent from time to
time reasonable compensation for its services under this Section, and the
Trustee shall be entitled to be reimbursed for such payments, subject to the
provisions of Section 607.
If an appointment with respect to one or more series is made pursuant
to this Section, the Securities of such series may have endorsed thereon, in
addition to the Trustee's certificate of authentication, an alternative
certificate of authentication in the following form:
This is one of the Securities of the series designated therein
referred to in the within-mentioned Indenture.
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AMSOUTH BANK OF ALABAMA,
As Trustee
By
------------------------------------
As Authenticating Agent
By
------------------------------------
Authorized Officer
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 701. COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES OF HOLDERS.
The Company will furnish or cause to be furnished to the Trustee
(1) semi-annually, not later than March 15 and September 15 in
each year, a list, in such form as the Trustee may reasonably require,
of the names and addresses of the Holders of Securities of each series
as of the preceding March 1 or September 1, as the case may be, and
(2) at such other times as the Trustee may request in writing within
30 days after the receipt by the Company of any such request, a list
of similar form and content as of a date not more than 15 days prior
to the time such list is furnished; excluding from any such list names
and addresses received by the Trustee in its capacity as Security
Registrar.
SECTION 702. PRESERVATION OF INFORMATION; COMMUNICATION TO HOLDERS.
The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most recent
list furnished to the Trustee as provided in Section 701 and the names and
addresses of Holders received by the Trustee in its capacity as Security
Registrar. The Trustee may destroy any list furnished to it as provided in
Section 701 upon receipt of a new list so furnished.
The rights of Holders to communicate with other Holders with respect
to their rights under this Indenture or under the Securities, and the
corresponding rights and privileges of the Trustee, shall be as provided by the
Trust Indenture Act.
Every Holder of Securities, by receiving and holding the same, agree
with the Company and the Trustee that neither the Company nor the Trustee nor
any agent of either of them shall
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be held accountable by reason of any disclosure of information as to names and
addresses of Holders made pursuant to the Trust Indenture Act.
SECTION 703. REPORTS BY TRUSTEE.
The Trustee shall transmit to Holders such reports concerning the
Trustee and its actions under this Indenture as may be required pursuant to the
Trust Indenture Act at the times and in the manner provided pursuant thereto.
Reports so required to be transmitted at stated intervals of not more than 12
months shall be transmitted within 60 days after the first date of issuance of
Securities and on each anniversary of such date.
A copy of each such report shall, at the time of such transmission to
Holders, be filed by the Trustee with each stock exchange upon which any
Securities are listed, with the Commission and with the Company. The Company
will promptly notify the Trustee when any Securities are listed on any stock
exchange.
SECTION 704. REPORTS BY COMPANY.
The Company shall file with the Trustee and the Commission, and
transmit to Holders, such information, documents and other reports, and such
summaries thereof, as may be required pursuant to the Trust Indenture Act at
the time and in the manner provided pursuant to such Act; provided that any
such information, documents or reports required to be filed with the Commission
pursuant to Section 13 or 15(d) of the Exchange Act shall be filed with the
Trustee within 15 days after the same is so required to be filed with the
Commission.
Delivery of such reports, information and documents to the Trustee is
for informational purpose only and the Trustee's receipt of such shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
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SECTION 705. NOTICE OF DEFAULT.
The Company shall file with the Trustee written notice of the
occurrence of any Event of Default within five Business Days of its becoming
aware of any such Event of Default.
ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 801. COMPANY MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS.
The Company shall not consolidate with or merge into any other Person
or convey, transfer or lease its properties and assets substantially as an
entirety to any Person, and the Company shall not permit any Person to
consolidate with or merge into the Company or convey, transfer or lease its
properties and assets substantially as an entirety to the Company, unless:
(1) in case the Company shall consolidate with or merge into
another Person or convey, transfer or lease its properties and assets
substantially as an entirety to any Person, the Person formed by such
consolidation or into which the Company is merged or the Person which
acquires by conveyance or transfer, or which leases, the properties
and assets of the Company substantially as an entirety shall be a
corporation, partnership or trust, shall be organized and validly
existing under the laws of the United States of America, any State
thereof or the District of Columbia and shall expressly assume, by an
indenture supplemental hereto, executed and delivered to the Trustee,
in form satisfactory to the Trustee, the due and punctual payment of
the principal of and any premium and interest on all the Securities
and the performance or observance of every covenant of this Indenture
on the part of the Company to be performed or observed and shall have
provided for conversion rights in accordance with Section 1411 with
respect to each series of Securities afforded conversion thereunder;
and
(2) immediately after giving effect to such transaction and
treating any indebtedness which becomes an obligation of the Company
or any Subsidiary as a result of such transaction as having been
incurred by the Company or such Subsidiary at the time of such
transaction, no Event of Default, and no event which, after notice or
lapse of time or both, would become an Event of Default, shall have
happened and be continuing.
SECTION 802. SUCCESSOR SUBSTITUTED.
Upon any consolidation of the Company with, or merger of the Company
into, any other Person or any conveyance, transfer or lease of the properties
and assets of the Company substantially as an entirety in accordance with
Section 801, the successor Person formed by such
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consolidation or into which the Company is merged or to which such conveyance,
transfer or lease is made shall succeed to, and be substituted for, and may
exercise every right and power of, the Company under this Indenture with the
same effect as if such successor Person had been named as the Company herein,
and thereafter, except in the case of a lease, the predecessor Person shall be
relieved of all obligations and covenants under this Indenture and the
Securities.
ARTICLE NINE
SUPPLEMENTAL INDENTURES
SECTION 901. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS.
Without the consent of any Holders, the Company, when authorized by a
Board Resolution, and the Trustee, at any time and from time to time, may enter
into one or more indentures supplemental hereto, in form satisfactory to the
Trustee, for any of the following purposes:
(1) to evidence the succession of another Person to the Company
and the assumption by any such successor of the covenants of the
Company herein and in the Securities; or
(2) to add to the covenants of the Company for the benefit of
the Holders of all or any series of Securities (and if such covenants
are to be for the benefit of less than all series of Securities,
stating that such covenants are expressly being included solely for
the benefit of such series) or to surrender any right or power herein
conferred upon the Company; or
(3) to add additional Events of Default for the benefit of the
Holders of all or any series of Securities (and if such additional
Events of Default are to be for the benefit of less than all series of
Securities, stating that such additional Events of Default are
expressly being included solely for the benefit of such series); or
(4) to add to or change any of the provisions of this
Indenture to such extent as shall be necessary to permit or facilitate
the issuance of Securities in bearer form, registrable or not
registrable as to principal, and with or without interest coupons, or
to permit or facilitate the issuance of Securities in uncertificated
form; or
(5) to add to, change or eliminate any of the provisions of
this Indenture in respect of one or more series of Securities,
provided that any such addition, change or elimination (A) shall
neither (i) apply to any Security of any series created prior to the
execution of such supplemental indenture and entitled to the benefit
of such provision nor (ii) modify the rights of the Holder of any such
Security with respect to such provision or (B) shall become effective
only when there is no such Security Outstanding; or
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(6) to secure the Security; or
(7) to establish the form or terms of Securities of any series
as permitted by Sections 201 and 301; or
(8) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Securities of one
or more series and to add to or change any of the provisions of this
Indenture as shall be necessary to provide for or facilitate the
administration of the trusts hereunder by more than one Trustee,
pursuant to the requirements of Section 611; or
(9) to make provision with respect to the conversion of Holders
pursuant to the requirements of Article Fourteen; or
(10) to cure any ambiguity, to correct or supplement any
provision herein which may be defective or inconsistent with any other
provision herein, or to make any other provisions with respect to
matters or questions arising under this Indenture, provided that such
action pursuant to this Clause (10) shall not adversely affect the
interests of the Holders of Securities of any series in any material
respect.
SECTION 902. SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS.
With the consent of the Holders of not less than a majority in
principal amount of the Outstanding Securities of each series affected by such
supplemental indenture, by Act of said Holders delivered to the Company and the
Trustee, the Company, when authorized by a Board Resolution, and the Trustee
may enter into an indenture or indentures supplemental hereto for the purpose
of adding any provisions to or changing in any manner or eliminating any of the
provisions of this Indenture or of modifying in any manner the rights of the
Holders of Securities of such series under this Indenture; provided, however,
that no such supplemental indenture shall, without the consent of the Holder of
each Outstanding Security affected thereby,
(1) change the Stated Maturity of the principal of, or any
installment of principal of or interest on, any Security, or reduce
the principal amount thereof or the rate of interest thereon or any
premium payable upon the redemption thereof, or reduce the amount of
the principal of an Original Issue Discount Security or any other
Security which would be due and payable upon a declaration of
acceleration of the Maturity thereof pursuant to Section 502, or
change any Place of Payment where, or the coin or currency in which,
any Security or any premium or interest thereon is payable, or
impair the right to institute suit for the enforcement of any such
payment on or after the Stated Maturity thereof (or, in the case of
redemption, on or after the Redemption Date), or modify the provisions
of this Indenture with respect to the conversion of the Securities in
a manner adverse to the Holders, or modify the provisions of this
Indenture with respect to the subordination of the Securities in a
manner adverse to the Holders, or
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(2) reduce the percentage in principal amount of the
Outstanding Securities of any series, the consent of whose Holders is
required for any such supplemental indenture, or the consent of whose
Holders is required for any waiver (of compliance with certain
provisions of this Indenture or certain defaults hereunder and their
consequences) provided for in this Indenture, or
(3) modify any of the provisions of this Section, Section 513
or Section 1008, except to increase any such percentage or to provide
that certain other provisions of this Indenture cannot be modified or
waived without the consent of the Holder of each Outstanding Security
affected thereby; provided, however, that this clause shall not be
deemed to require the consent of any Holder with respect to changes in
the references to "the Trustee" and concomitant changes in this
Section, Section 513 and Section 1008, or the deletion of this
proviso, in accordance with the requirements of Sections 611 and
901(8).
A supplemental indenture which changes or eliminates any covenant or other
provision of this Indenture which has expressly been included solely for the
benefit of one or more particular series of Securities, or which modifies the
rights of the Holders of Securities of such series with respect to such
covenant or other provision, shall be deemed not to affect the rights under
this Indenture of the Holders of Securities of any other series.
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental indenture, but it
shall be sufficient if such Act shall approve the substance thereof.
The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Persons entitled to consent to any indenture
supplemental hereto. If a record date is fixed, the Holders on such record
date, or their duly designated proxies, and only such Persons, shall be
entitled to consent to such supplemental indenture, whether or not such Holders
remain Holders after such record date; provided, that unless such consent shall
have become effective by virtue of the requisite percentage having been
obtained prior to the date which is 90 days after such record date, any such
consent previously given shall automatically and without further action by any
Holder be canceled and of no further effect.
SECTION 903. EXECUTION OF SUPPLEMENTAL INDENTURES.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby
of the trusts created by this Indenture, the Trustee shall be entitled to
receive, and (subject to Section 601) shall be fully protected in relying upon,
an Opinion of Counsel stating that the execution of such supplemental indenture
is authorized or permitted by this Indenture. The Trustee may, but shall not be
obligated to, enter into any such supplemental indenture which affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise.
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SECTION 904. EFFECT OF SUPPLEMENTAL INDENTURES.
Upon the execution of any supplemental indenture under this Article,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every
Holder of Securities theretofore or thereafter authenticated and delivered
hereunder shall be bound thereby.
SECTION 905. CONFORMITY WITH TRUST INDENTURE ACT.
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act.
SECTION 906. REFERENCE IN SECURITIES TO SUPPLEMENTAL INDENTURES.
Securities of any series authenticated and delivered after the
execution of any supplemental indenture pursuant to this Article may, and shall
if required by the Trustee, bear a notation in form approved by the Trustee as
to any matter provided for in such supplemental indenture. If the Company shall
so determine, new Securities of any series so modified as to conform, in the
opinion of the Trustee and the Company, to any such supplemental indenture may
be prepared and executed by the Company and authenticated and delivered by the
Trustee in exchange for Outstanding Securities of such series.
ARTICLE TEN
COVENANTS
SECTION 1001. PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST.
The Company covenants and agrees for the benefit of each series of
Securities that it will duly and punctually pay the principal of and any
premium and interest on the Securities of that series in accordance with the
terms of the Securities and this Indenture.
SECTION 1002. MAINTENANCE OF OFFICE OR AGENCY.
The Company will maintain in each Place of Payment for any series of
Securities an office or agency where Securities of that series may be presented
or surrendered for payment, where Securities of that series may be surrendered
for registration of transfer or exchange or surrendered for conversion and
where notices and demands to or upon the Company in respect of the Securities
of that series and this Indenture may be served. The Company will give prompt
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written notice to the Trustee of the location, and any change in the location,
of such office or agency. If at any time the Company shall fail to maintain any
such required office or agency or shall fail to furnish the Trustee with the
address thereof, such presentations, surrenders, notices and demands may be
made or served at the Corporate Trust Office of the Trustee, and the Company
hereby appoints the Trustee as its agent to receive all such presentations,
surrenders, notices and demands.
The Company may also from time to time designate one or more other
offices or agencies where the Securities of one or more series may be presented
or surrendered for any or all such purposes and may from time to time rescind
such designations; provided, however, that no such designation or rescission
shall in any manner relieve the Company of its obligation to maintain an office
or agency in each Place of Payment for Securities of any series for such
purposes. The Company will give prompt written notice to the Trustee of any
such designation or rescission and of any change in the location of any such
other office or agency.
SECTION 1003. MONEY FOR SECURITIES PAYMENTS TO BE HELD IN TRUST.
If the Company shall at any time act as its own Paying Agent with
respect to any series of Securities, it will, on or before each due date of the
principal of or any premium or interest on any of the Securities of that
series, segregate and hold in trust for the benefit of the Persons entitled
thereto a sum sufficient to pay the principal and any premium and interest so
becoming due until such sums shall be paid to such Persons or otherwise
disposed of as herein provided and will promptly notify the Trustee of its
action or failure so to act.
Whenever the Company shall have one or more Paying Agents for any
series of Securities, it will, prior to each due date of the principal of or
any premium or interest on any Securities of that series, deposit with a Paying
Agent a sum sufficient to pay such amount, such sum to be held as provided by
the Trust Indenture Act, and (unless such Paying Agent is the Trustee) the
Company will promptly notify the Trustee of its action or failure so to act.
The Company will cause each Paying Agent for any series of Securities
other than the Trustee to execute and deliver to the Trustee an instrument in
which such Paying Agent shall agree with the Trustee, subject to the provisions
of this Section, that such Paying Agent will (1) comply with the provisions of
the Trust Indenture Act applicable to it as a Paying Agent and (2) during the
continuance of any default by the Company (or any other obligor upon the
Securities of that series) in the making of any payment in respect of the
Securities of that series, upon the written request of the Trustee, forthwith
pay to the Trustee all sums held in trust by such Paying Agent for payment in
respect of the Securities of that series.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held
in trust by the Company or such Paying Agent, such sums to be held by the
Trustee upon the same trusts as those upon which such sums were held by the
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Company or such Paying Agent; and, upon such payment by any Paying Agent to the
Trustee, such Paying Agent shall be released from all further liability with
respect to such money.
Any money deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust for the payment of the principal of or any premium or
interest on any Security of any series and remaining unclaimed for two years
after such principal, premium or interest has become due and payable shall be
paid to the Company on Company Request, or (if then held by the Company) shall
be discharged from such trust; and the Holder of such Security shall
thereafter, as an unsecured general creditor, look only to the Company for
payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust money, and all liability of the Company as trustee
thereof, shall thereupon cease; provided, however, that the Trustee or such
Paying Agent, before being required to make any such repayment, may at the
expense of the Company cause to be published once, in a newspaper published in
the English language, customarily published on each Business Day and of general
circulation in New York, New York, notice that such money remains unclaimed and
that, after a date specified therein, which shall not be less than 30 days from
the date of such publication, any unclaimed balance of such money then
remaining will be repaid to the Company.
SECTION 1004. STATEMENT BY OFFICERS AS TO DEFAULT.
The Company will deliver to the Trustee, within 120 days after the end
of each fiscal year of the Company ending after the date hereof, an Officers'
Certificate, stating whether or not to the best knowledge of the signers
thereof the Company is in default in the performance and observance of any of
the terms, provisions and conditions of this Indenture (without regard to any
period of grace or requirement of notice provided hereunder) and, if the
Company shall be in default, specifying all such defaults and the nature and
status thereof of which they may have knowledge.
SECTION 1005. EXISTENCE.
Subject to Article Eight, the Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its existence,
rights (charter and statutory) and franchises; provided, however, that the
Company shall not be required to preserve any such right or franchise if the
Board of Directors shall determine that the preservation thereof is no longer
desirable in the conduct of the business of the Company and that the loss
thereof is not disadvantageous in any material respect to the Holders.
SECTION 1006. MAINTENANCE OF PROPERTIES.
The Company will keep and will cause its Subsidiaries to keep all
properties used or useful in the conduct of its business or the business of its
Subsidiaries in good working order and
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condition (ordinary wear and tear excepted) and will make or cause to be made
such necessary repairs, replacements and renewals thereof as in the judgment of
the Company may be necessary to conduct such business in accordance with
customary business practices; provided, however, that nothing in this Section
shall prevent the Company from discontinuing the operation or maintenance of
any of such properties if such discontinuance is, in the judgment of the
Company, desirable in the conduct of its business or the business of any
Subsidiary and not disadvantageous in any material respect to the Holders.
SECTION 1007. PAYMENT OF TAXES AND OTHER CLAIMS.
The Company will pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (1) all taxes, assessments and
governmental charges levied or imposed upon the Company or any Subsidiary or
upon the income, profits or property of the Company or any Subsidiary, and (2)
all lawful claims for labor, materials and supplies which, if unpaid, might by
law become a lien upon the property of the Company or any Subsidiary; provided,
however, that the Company shall not be required to pay or discharge or cause to
be paid or discharged any such tax, assessment, charge or claim whose amount,
applicability or validity is being contested in good faith by appropriate
proceedings.
SECTION 1008. WAIVER OF CERTAIN COVENANTS.
Except as otherwise specified as contemplated by Section 301 for
Securities of such series, the Company may, with respect to the Securities of
any series, omit in any particular instance to comply with any term, provision
or condition set forth in any covenant provided pursuant to Section 301(18),
901(2) or 901(7) for the benefit of the Holders of such series if before the
time for such compliance the Holders of at least a majority in principal amount
of the Outstanding Securities of such series shall, by Act of such Holders,
either waive such compliance in such instance or generally waive compliance
with such term, provision or condition, but no such waiver shall extend to or
affect such term, provision or condition except to the extent so expressly
waived, and, until such waiver shall become effective, the obligations of the
Company and the duties of the Trustee in respect of any such term, provision or
condition shall remain in full force and effect.
SECTION 1009. CALCULATION OF ORIGINAL ISSUE DISCOUNT.
The Company shall file with the Trustee promptly at the end of each
calendar year a written notice specifying the amount of original issue discount
(including daily rates and accrual periods) accrued on Outstanding Securities
as of the end of such year.
ARTICLE ELEVEN
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REDEMPTION OF SECURITIES
SECTION 1101. APPLICABILITY OF ARTICLE.
Securities of any series which are redeemable before their Stated
Maturity shall be redeemable in accordance with their terms and (except as
otherwise specified as contemplated by Section 301 for such Securities) in
accordance with this Article.
SECTION 1102. ELECTION TO REDEEM; NOTICE TO TRUSTEE.
The election of the Company to redeem any Securities shall be
evidenced by a Board Resolution or in another manner specified as contemplated
by Section 301 for such Securities. In case of any redemption at the election
of the Company of less than all the Securities of any series (including any
such redemption affecting only a single Security), the Company shall, at least
60 days prior to the Redemption Date fixed by the Company (unless a shorter
notice shall be satisfactory to the Trustee), notify the Trustee of such
Redemption Date, of the principal amount of Securities of such series to be
redeemed and, if applicable, of the tenor of the Securities to be redeemed. In
the case of any redemption of Securities prior to the expiration of any
restriction on such redemption provided in the terms of such Securities or
elsewhere in this Indenture, the Company shall furnish the Trustee with an
Officers Certificate evidencing compliance with such restriction.
SECTION 1103. SELECTION BY TRUSTEE OF SECURITIES TO BE REDEEMED.
If less than all the Securities of any series are to be redeemed
(unless all the Securities of such series and of a specified tenor are to be
redeemed or unless such redemption affects only a single Security), the
particular Securities to be redeemed shall be selected not more than 60 days
prior to the Redemption Date by the Trustee, from the Outstanding Securities of
such series not previously called for redemption, by such method as the Trustee
shall deem fair and appropriate and which may provide for the selection for
redemption of a portion of the principal amount of any Security of such series,
provided that the unredeemed portion of the principal amount of any Security
shall be in an authorized denomination (which shall not be less than the
minimum authorized denomination) for such Security. If less than all the
Securities of such series and of a specified tenor are to be redeemed (unless
such redemption affects only a single Security), the particular Securities to
be redeemed shall be selected not more than 60 days prior to the Redemption
Date by the Trustee, from the Outstanding Securities of such series and
specified tenor not previously called for redemption in accordance with the
preceding sentence.
The Trustee shall promptly notify the Company in writing of the
Securities selected for redemption as aforesaid and, in case of any Securities
selected for partial redemption as aforesaid, the principal amount thereof to
be redeemed.
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The provisions of the two preceding paragraphs shall not apply with
respect to any redemption affecting only a single Security, whether such
Security is to be redeemed in whole or in part. In the case of any such
redemption in part, the unredeemed portion of the principal amount of the
Security shall be in an authorized denomination (which shall not be less than
the minimum authorized denomination) for such Security.
If any Security selected for partial redemption is converted in part
before termination of the conversion right with respect to the portion of the
Security so selected, the converted portion of such Security shall be deemed to
be the portion selected for redemption. Securities that have been converted
during a selection of Securities to be redeemed shall be treated by the Trustee
as Outstanding for the purpose of such selection.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Securities shall relate,
in the case of any Securities redeemed or to be redeemed only in part, to the
portion of the principal amount of such Securities which has been or is to be
redeemed.
SECTION 1104. NOTICE OF REDEMPTION.
Notice of redemption shall be given by first-class mail, postage
prepaid, mailed not less than 30 nor more than 60 days prior to the Redemption
Date, to each Holder of Securities to be redeemed, at his address appearing in
the Security Register.
All notices of redemption shall include the CUSIP number, if any, and
shall state:
(1) the Redemption Date,
(2) the Redemption Price,
(3) if less than all the Outstanding Securities of any series
consisting of more than a single Security are to be redeemed, the
identification (and, in the case of partial redemption of any such Securities,
the principal amounts) of the particular Securities to be redeemed and, if
less than all the Outstanding Securities of any series consisting of a single
Security are to be redeemed, the principal amount of the particular Security to
be redeemed,
(4) that on the Redemption Date the Redemption Price will become due
and payable upon each such Security to be redeemed and, if applicable, that
interest thereon will cease to accrue on and after said date,
(5) in the case of any Securities that are convertible pursuant to
Article Fourteen, the conversion price, the date on which the right to convert
the principal of the Securities to be redeemed will terminate and the place or
places where such Securities may be surrendered for conversion,
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(6) the place or places where each such Security is to be surrendered
for payment of the Redemption Price, and
(7) that the redemption is for a sinking fund, if such is the case.
Notice of redemption of Securities to be redeemed at the election of
the Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company and shall be irrevocable.
SECTION 1105. DEPOSIT OF REDEMPTION PRICE.
Prior to any Redemption Date, the Company shall deposit with the
Trustee or with a Paying Agent (or, if the Company is acting as its own Paying
Agent, segregate and hold in trust as provided in Section 1003) an amount of
money sufficient to pay the Redemption Price of, and (except if the Redemption
Date shall be an Interest Payment Date) accrued interest on, all the Securities
which are to be redeemed on that date other than any Securities called for
redemption on that date which have been converted prior to the date of such
deposit.
If any Security called for redemption is converted, any money
deposited with the Trustee or with any Paying Agent or so segregated and held
in trust for the redemption of such Security shall (subject to any right of the
Holder of such Security or any Predecessor Security to receive interest as
provided in the last paragraph of Section 307) be paid to the Company upon
Company Request or, if then held by the Company, shall be discharged from such
trust.
SECTION 1106. SECURITIES PAYABLE ON REDEMPTION DATE.
Notice of redemption having been given as aforesaid, the Securities so
to be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified, and from and after such date (unless the
Company shall default in the payment of the Redemption Price and accrued
interest) such Securities shall cease to bear interest. Upon surrender of any
such Security for redemption in accordance with said notice, such Security
shall be paid by the Company at the Redemption Price, together with accrued
interest to the Redemption Date; provided, however, that, unless otherwise
specified as contemplated by Section 301, installments of interest whose Stated
Maturity is on or prior to the Redemption Date will be payable to the Holders
of such Securities, or one or more Predecessor Securities, registered as such
at the close of business on the relevant Record Dates according to their terms
and the provisions of Section 307.
If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal and any premium shall, until
paid, bear interest from the Redemption Date at the rate prescribed therefor in
the Security.
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SECTION 1107. SECURITIES REDEEMED IN PART.
Any Security which is to be redeemed only in part shall be surrendered
at a Place of Payment therefor (with, if the Company or the Trustee so
requires, due endorsement by, or a written instrument of transfer in form
satisfactory to the Company and the Trustee duly executed by, the Holder
thereof or his attorney duly authorized in writing), and the Company shall
execute, and the Trustee shall authenticate and deliver to the Holder of such
Security without service charge, a new Security or Securities of the same
series and of like tenor, of any authorized denomination as requested by such
Holder, in an aggregate principal amount equal to and in exchange for the
unredeemed portion of the principal of the Security so surrendered.
ARTICLE TWELVE
SINKING FUNDS
SECTION 1201. APPLICABILITY OF ARTICLE.
The provisions of this Article shall be applicable to any sinking fund
for the retirement of Securities of any series except as otherwise specified as
contemplated by Section 301 for such Securities.
The minimum amount of any sinking fund payment provided for by the
terms of any Securities is herein referred to as a "mandatory sinking fund
payment", and any payment in excess of such minimum amount provided for by the
terms of such Securities is herein referred to as an "optional sinking fund
payment". If provided for by the terms of any Securities, the cash amount of
any sinking fund payment may be subject to reduction as provided in Section
1202. Each sinking fund payment shall be applied to the redemption of
Securities as provided for by the terms of such Securities.
SECTION 1202. SATISFACTION OF SINKING FUND PAYMENTS WITH SECURITIES.
The Company (1) may deliver Outstanding Securities of a series (other
than any previously called for redemption) and (2) may apply as a credit
Securities of a series which have been converted pursuant to Article Fourteen
of this Indenture or which have been redeemed either at the election of the
Company pursuant to the terms of such Securities or through the application of
permitted optional sinking fund payments pursuant to the terms of such
Securities, in each case in satisfaction of all or any part of any sinking fund
payment with respect to any Securities of such series required to be made
pursuant to the terms of such Securities as and to the extent provided for by
the terms of such Securities; provided that the Securities to be so credited
have not been previously so credited. The Securities to be so credited shall be
received and credited for such purpose by the Trustee at the Redemption Price,
as specified in the Securities so to be
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redeemed, for redemption through operation of the sinking fund and the amount
of such sinking fund payment shall be reduced accordingly.
SECTION 1203. REDEMPTION OF SECURITIES FOR SINKING FUND.
Not less than 60 days prior to each sinking fund payment date for any
Securities, the Company will deliver to the Trustee an Officers' Certificate
specifying the amount of the next ensuing sinking fund payment for such
Securities pursuant to the terms of such Securities, the portion thereof, if
any, which is to be satisfied by payment of cash and the portion thereof, if
any, which is to be satisfied by delivering and crediting Securities pursuant
to Section 1202 and will also deliver to the Trustee any Securities to be so
delivered. Not less than 30 nor more than 45 days prior to each such sinking
fund payment date, the Trustee shall select the Securities to be redeemed upon
such sinking fund payment date in the manner specified in Section 1103 and
cause notice of the redemption thereof to be given in the name of and at the
expense of the Company in the manner provided in Section 1104. Such notice
having been duly given, the redemption of such Securities shall be made upon
the terms and in the manner stated in Sections 1106 and 1107.
ARTICLE THIRTEEN
DEFEASANCE AND COVENANT DEFEASANCE
SECTION 1301. COMPANY'S OPTION TO EFFECT DEFEASANCE OR COVENANT DEFEASANCE.
If applicable to a particular series of Securities, the Company may
elect, at its option at any time, to have Section 1302 or Section 1303 applied
to any such series of Securities or any Securities of such series, as the case
may be, designated pursuant to Section 301 as being defeasible pursuant to such
Section 1302 or 1303, in accordance with any applicable requirements provided
pursuant to Section 301 and upon compliance with the conditions set
forth below in this Article. Any such election shall be evidenced by a Board
Resolution or in another manner specified as contemplated by Section 301 for
such Securities.
SECTION 1302. DEFEASANCE AND DISCHARGE.
Upon the Company's exercise of its option (if any) to have this
Section applied to any series of Securities or any Securities of such series,
as the case may be, the Company shall be deemed to have been discharged from
its obligations with respect to such Securities as provided in this Section on
and after the date the conditions set forth in Section 1304 are satisfied
(hereinafter called "Defeasance"). For this purpose, such Defeasance means that
the Company shall be deemed to have paid and discharged the entire indebtedness
represented by such Securities and to have satisfied all its other obligations
under such Securities and this Indenture
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insofar as such Securities are concerned (and the Trustee, at the expense of
the Company, shall execute proper instruments acknowledging the same), subject
to the following which shall survive until otherwise terminated or discharged
hereunder: (1) the rights of Holders of such Securities to receive, solely from
the trust fund described in Section 1304 and as more fully set forth in such
Section, payments in respect of the principal of and any premium and interest
on such Securities when payments are due, (2) the Company's obligations with
respect to such Securities under Sections 304, 305, 306, 1002 and 1003, (3) the
rights, powers, trusts, duties and immunities of the Trustee hereunder and (4)
this Article. Subject to compliance with this Article, the Company may exercise
its option (if any) to have this Section applied to any applicable Securities
notwithstanding the prior exercise of its option (if any) to have Section 1303
applied to such Securities.
SECTION 1303. COVENANT DEFEASANCE.
Upon the Company's exercise of its option (if any) to have this
Section applied to any applicable series of Securities or any Securities of
such series, as the case may be, (1) the Company shall be released from its
obligations under Section 801, Sections 1005 through 1007, inclusive, and any
covenants provided pursuant to Section 301(18), 901(2) or 901(7) for the
benefit of the Holders of such Securities and (2) the occurrence of any event
specified in Sections 501(4) (with respect to any of Section 801, Sections 1005
through 1007, inclusive, and any such covenants provided pursuant to Section
301(18), 901(2) or 901(7)), 501(5), 501(6) and 501(9) shall be deemed not to be
or result in an Event of Default, in each case with respect to such Securities
as provided in this Section on and after the date the conditions set forth in
Section 1304 are satisfied (hereinafter called "Covenant Defeasance"). For this
purpose, such Covenant Defeasance means that, with respect to such Securities,
the Company may omit to comply with and shall have no liability in respect of
any term, condition or limitation set forth in any such specified Section (to
the extent so specified in the case of Section 501(4)), whether directly or
indirectly by reason of any reference elsewhere herein to any such Section or
by reason of any reference in any such Section to any other provision herein or
in any other document, but the remainder of this Indenture and such Securities
shall be unaffected thereby.
SECTION 1304. CONDITIONS TO DEFEASANCE OR COVENANT DEFEASANCE.
The following shall be the conditions to the application of Section
1302 or Section 1303 to any applicable series of Securities or any Securities
of such series, as the case may be:
(1) The Company shall irrevocably have deposited or caused to
be deposited with the Trustee (or another trustee which satisfies the
requirements contemplated by Section 609 and agrees to comply with the
provisions of this Article applicable to it) as trust funds in trust
for the purpose of making the following payments, specifically pledged
as security for, and dedicated solely to, the benefits of the Holders
of such Securities, (A) money in an amount, or (B) U.S. Government
Obligations which through the scheduled
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payment of principal and interest in respect thereof in
accordance with their terms will provide, not later than one day
before the due date of any payment, money in an amount, or (C) a
combination thereof, in each case sufficient, in the opinion of a
nationally recognized firm of independent public accountants expressed
in a written certification thereof delivered to the Trustee, to pay
and discharge, and which shall be applied by the Trustee (or any such
other qualifying trustee) to pay and discharge, the principal of and
any premium and interest on such Securities on their respective Stated
Maturities, in accordance with the terms of this Indenture and such
Securities. As used herein, "U.S. Government Obligation" means (x) any
security which is (i) a direct obligation of the United States of
America for the payment of which the full faith and credit of the
United States of America is pledged or (ii) an obligation of a Person
controlled or supervised by and acting as an agency or instrumentality
of the United States of America the payment of which is
unconditionally guaranteed as a full faith and credit obligation by
the United States of America, which, in either case (i) or (ii), is
not callable or redeemable at the option of the issuer thereof, and
(y) any depositary receipt issued by a bank (as defined in Section
3(a)(2) of the Securities Act) as custodian with respect to any U.S.
Government Obligation which is specified in Clause (x) above and held
by such bank for the account of the holder of such depositary receipt,
or with respect to any specific payment of principal of or interest on
any U.S. Government Obligation which is so specified and held,
provided that (except as required by law) such custodian is not
authorized to make any deduction from the amount payable to the holder
of such depositary receipt from any amount received by the custodian
in respect of the U.S. Government Obligation or the specific payment
of principal or interest evidenced by such depositary receipt.
(2) In the event of an election to have Section 1302 apply to
any applicable series of Securities or any Securities of such series,
as the case may be, the Company shall have delivered to the Trustee an
Opinion of Counsel stating that (A) the Company has received from, or
there has been published by, the Internal Revenue Service a ruling or
(B) since the date of this instrument, there has been a change in the
applicable Federal income tax law, in either case (A) or (B) to the
effect that, and based thereon such opinion shall confirm that, the
Holder of such Securities will not recognize gain or loss for Federal
income tax purposes as a result of the deposit, Defeasance and
discharge to be effected with respect to such Securities and will be
subject to Federal income tax on the same amount, in the same manner
and at the same time as would be the case if such deposit, Defeasance
and discharge were not to occur.
(3) In the event of an election to have Section 1303 apply to
any applicable series of Securities or any Securities of such series,
as the case may be, the Company shall have delivered to the Trustee an
Opinion of Counsel to the effect that the Holders of such Securities
will not recognize gain or loss for Federal income tax purposes as a
result of the deposit and Covenant Defeasance to be effected with
respect to such Securities and will be subject to Federal income tax
on the same amount, in the same manner and at the same times as would
be the case if such deposit and Covenant Defeasance were not to occur.
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(4) The Company shall have delivered to the Trustee an
Officers' Certificate to the effect that neither such Securities nor
any other Securities of the same series, if then listed on any
securities exchange, will be delisted as a result of such deposit.
(5) No event which is, or after notice or lapse of time or
both would become, an Event of Default with respect to such Securities
or any other Securities shall have occurred and be continuing at the
time of such deposit or, with regard to any such event specified in
Sections 501(7) and (8), at any time on or prior to the 91st day after
the date of such deposit (it being understood that this condition
shall not be deemed satisfied until after such 91st day).
(6) Such Defeasance or Covenant Defeasance shall not cause the
Trustee to have a conflicting interest within the meaning of the Trust
Indenture Act (assuming all Securities are in default within the
meaning of such Act).
(7) Such Defeasance or Covenant Defeasance shall not result in
a breach or violation of, or constitute a default under, any other
agreement or instrument to which the Company is a party or by which it
is bound.
(8) Such Defeasance or Covenant Defeasance shall not result in
the trust arising from such deposit constituting an investment company
within the meaning of the Investment Company Act unless such trust
shall be registered under such Act or exempt from registration
thereunder.
(9) The Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that all
conditions precedent with respect to such Defeasance or Covenant
Defeasance have been complied with.
SECTION 1305. DEPOSITED MONEY AND U.S. GOVERNMENT OBLIGATIONS TO BE HELD IN
TRUST; MISCELLANEOUS PROVISIONS.
Subject to the provisions of the last paragraph of Section 1003, all
money and U.S. Government Obligations (including the proceeds thereof)
deposited with the Trustee or other qualifying trustee (solely for purpose of
this Section and Section 1306, the Trustee and any such other trustee are
referred to collectively as the "Trustee") pursuant to Section 1304 in respect
of any Securities shall be held in trust and applied by the Trustee, in
accordance with the provisions of such Securities and this Indenture, to the
payment, either directly or through any such Paying Agent (including the
Company acting as its own Paying Agent) as the Trustee may determine, to the
Holders of such Securities, of all sums due and to become due thereon in
respect of principal and any premium and interest, but money so held in trust
need not be segregated from other funds except to the extent required by law.
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The Company shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the U.S. Government Obligations
deposited pursuant to Section 1304 or the principal and interest received in
respect thereof other than any such tax, fee or other charge which by law is
for the account of the Holders of Outstanding Securities.
Anything in this Article to the contrary notwithstanding, the Trustee
shall deliver or pay to the Company from time to time upon Company Request any
money or U.S. Government Obligations held by it as provided in Section 1304
with respect to any Securities which, in the opinion of a nationally recognized
firm of independent public accountants expressed in a written certification
thereof delivered to the Trustee, are in excess of the amount thereof which
would then be required to be deposited to effect the Defeasance or Covenant
Defeasance, as the case may be, with respect to such Securities.
SECTION 1306. REINSTATEMENT.
If the Trustee or the Paying Agent is unable to apply any money in
accordance with this Article with respect to any Securities by reason of any
order or judgment of any court or governmental authority enjoining, restraining
or otherwise prohibiting such application, then the obligations under this
Indenture and such Securities from which the Company has been discharged or
released pursuant to Section 1302 or 1303 shall be revived and reinstated as
though no deposit had occurred pursuant to this Article with respect to such
Securities, until such time as the Trustee or Paying Agent is permitted to
apply all money held in trust pursuant to Section 1305 with respect to such
Securities in accordance with this Article; provided, however, that if the
Company makes any payment of principal of or any premium or interest on any
such Security following such reinstatement of its obligations, the Company
shall be subrogated to the rights (if any) of the Holders of such Securities to
receive such payment from the money so held in trust.
ARTICLE FOURTEEN
CONVERSION OF SECURITIES
SECTION 1401. APPLICABILITY; CONVERSION PRIVILEGE AND CONVERSION PRICE.
Securities of any series which are convertible into Common Stock shall
be convertible in accordance with their terms and (except as otherwise
specified as contemplated by Section 301 for Securities of any series) in
accordance with this Article.
Subject to and upon compliance with the provisions of this Article, at
the option of the Holder thereof, any Security or any portion of the principal
amount thereof which is an integral multiple of the authorized denomination
thereof may be converted at the principal amount thereof, or of such portion
thereof, into fully paid and nonassessable shares (calculated as to each
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conversion to the nearest 1/100 of a share) of Common Stock, at the conversion
price, determined as hereinafter provided, in effect at the time of conversion.
Such conversion right shall expire at the close of business on the date
specified for Securities of such series. In case a Security or portion thereof
is called for redemption, such conversion right in respect of the Security or
portion so called shall expire at the close of business on the date prior to
the Redemption Date, unless the Company defaults in making the payment due upon
redemption.
The price at which shares of Common Stock shall be delivered upon
conversion (herein called the "conversion price") shall be the price specified
in relation to Securities of such series pursuant to Section 301. The
conversion price shall be adjusted in certain instances as provided in Section
1404.
SECTION 1402. EXERCISE OF CONVERSION PRIVILEGE.
In order to exercise the conversion privilege, the Holder of any
Security to be converted shall surrender such Security, duly endorsed or
assigned to the Company or in blank, at any office or agency of the Company
maintained for that purpose pursuant to Section 1002, accompanied by written
notice to the Company (which shall be substantially in the form set forth in
Section 203) at such office or agency or, if applicable, by notice in
accordance with the procedure of the Depositary that the Holder elects to
convert such Security or, if less than the entire principal amount thereof is
to be converted, the portion thereof to be converted. Securities surrendered
for conversion during the period from the close of business on any Regular
Record Date next preceding any Interest Payment Date to the opening of business
on such Interest Payment Date shall (except in the case of Securities or
portions thereof which have been called for redemption on a Redemption Date
within such period) be accompanied by payment in New York Clearing House funds
or other funds acceptable to the Company of an amount equal to the interest
payable on such Interest Payment Date on the principal amount of Securities
being surrendered for conversion; provided, however, that a Security
surrendered for conversion on an Interest Payment Date need not be accompanied
by a payment and interest on the principal amount of the Security being
converted will be paid on such Interest Payment Date to the Holder of such
Security on the immediately preceding Record Date. Except as provided in the
Securities and subject to the last paragraph of Section 307, no payment or
adjustment shall be made upon any conversion on account of any interest accrued
on the Securities surrendered for conversion or on account of any dividends on
the Common Stock issued upon conversion.
Securities shall be deemed to have been converted immediately prior to
the close of business on the day of surrender of such Securities for conversion
in accordance with the foregoing provisions, and at such time the rights of the
Holders of such Securities as Holders shall cease, and the Person or Persons
entitled to receive the shares of Common Stock issuable upon conversion shall
be treated for all purposes as the record holder or holders of such shares of
Common Stock at such time. As promptly as practicable on or after the
conversion date, the Company shall issue and shall deliver at such office or
agency a certificate or certificates for the
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number of full shares of Common Stock issuable upon conversion, together with
payment in lieu of any fraction of a share, as provided in Section 1403.
In the case of any Security which is converted in part only, upon such
conversion the Company shall execute and the Trustee shall authenticate and
deliver to the Holder thereof, at the expense of the Company, a new Security or
Securities of authorized denominations in aggregate principal amount equal to
the unconverted portion of the principal amount of such Security.
SECTION 1403. FRACTIONS OF SHARES.
No fractional shares of Common Stock shall be issued upon conversion
of Securities. If more than one Security shall be surrendered for conversion at
one time by the same Holder, the number of full shares which shall be issuable
upon conversion thereof shall be computed on the basis of the aggregate
principal amount of the Securities (or specified portions thereof) so
surrendered. Instead of any fractional share of Common Stock which would
otherwise be issuable upon conversion of any Security or Securities (or
specified portions thereof), the Company shall pay a cash adjustment in respect
of such fraction in an amount equal to the same fraction of the market price
per share of Common Stock (as determined by the Board of Directors or in any
manner prescribed by the Board of Directors) at the close of business on the
day prior to the day of conversion.
SECTION 1404. ADJUSTMENT OF CONVERSION PRICE.
The conversion price shall be subject to adjustment from time to time
as follows:
(1) In case the Company shall pay or make a dividend or other
distribution on its Common Stock, the conversion price in effect at
the opening of business on the day following the date fixed for the
determination of stockholders entitled to receive such dividend or
other distribution shall be reduced by multiplying such conversion
price by a fraction of which (x) the numerator shall be the number of
shares of Common Stock outstanding at the close of business on the
date fixed for such determination and (y) the denominator shall be the
sum of such number of shares and the total number of shares
constituting such dividend or other distribution, such reduction to
become effective immediately after the opening of business on the day
following the date fixed for such determination. For the purposes of
this paragraph (1), the number of shares of Common 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 shares of Common Stock. The Company
will not pay any dividend or make any distribution on shares of Common
Stock held in the treasury of the Company.
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(2) In case the Company shall issue rights or warrants (which
rights or warrants expire within 45 days and are not available on an
equivalent basis to Holders of the Securities convertible pursuant to
this Article Fourteen upon conversion) to all holders of its Common
Stock entitling them to subscribe for or purchase shares of Common
Stock at a price per share less than the current market price per
share (determined as provided in paragraph (6) of this Section) of the
Common Stock on the date fixed for the determination of stockholders
entitled to receive such rights or warrants, the conversion price in
effect at the opening of business on the day following the date fixed
for such determination shall be reduced by multiplying such conversion
price by a fraction of which the numerator shall be the number of
shares of Common Stock outstanding at the close of business on the
date fixed for such determination plus the number of shares of Common
Stock which the aggregate of the offering price of the total number of
shares of Common Stock so offered for subscription or purchase would
purchase at such current market price and the denominator shall be the
number of shares of Common Stock outstanding at the close of business
on the date fixed for such determination plus the number of shares of
Common Stock so offered for subscription or purchase, such reduction
to become effective immediately after the opening of business on the
day following the date fixed for such determination; provided,
however, that to the extent that shares of Common Stock are not
delivered after the expiration of such rights or warrants, the
conversion price shall be readjusted (but only with respect to
Securities converted after such expiration) to the conversion price
that would then be in effect had the adjustments made upon the
issuance of such rights or warrants been made upon the basis of
delivery of only the number of shares of Common Stock actually issued.
In determining whether any rights or warrants entitle the holders of
Common Stock to subscribe for or purchase shares of Common Stock at
less than fair market value, there shall be taken into account any
consideration received by the Company upon issuance and upon exercise
of such rights or warrants, the value of such consideration, if other
than cash, to be determined by the Board of Directors (whose
determination shall be conclusive and described in a Board
Resolution). For the purposes of this paragraph (2), the number of
shares of Common Stock 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 Common Stock. The Company will not issue any rights or warrants in
respect of shares of Common Stock held in the treasury of the Company.
(3) In case outstanding shares of Common Stock shall be
subdivided into a greater number of shares of Common Stock, the
conversion price in effect at the opening of business on the day
following the day upon which such subdivision becomes effective shall
be proportionately reduced, and, conversely, in case outstanding
shares of Common Stock shall each be combined into a smaller number of
shares of Common Stock, the conversion price in effect at the opening
of business on the day following the day upon which such combination
becomes effective shall be proportionately increased, such reduction
or increase, as the case may be, to become effective immediately after
the opening of business on the day following the day upon which such
subdivision or combination becomes effective.
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(4) In case the Company shall, by dividend or otherwise, at
any time distribute Excess Cash to all holders of its Common Stock,
the conversion price shall be reduced so that the same shall equal the
price determined by multiplying the conversion price in effect
immediately prior to the effectiveness of the conversion price
reduction contemplated by this paragraph (4) by a fraction of which
the numerator shall be the current market price per share (determined
as provided in paragraph (6) of this Section) of the Common Stock on
such date less the amount of Excess Cash so distributed applicable to
one share of Common Stock and the denominator shall be such current
market price per share of the Common Stock, such reduction to become
effective immediately prior to the opening of business on the day
following the date fixed for the determination of stockholders
entitled to receive such cash dividend. "Excess Cash" shall mean any
dividend or distribution (excluding, in all events, any dividend or
distribution described in paragraph (5) of this Section) consisting
exclusively of cash and declared with respect to shares of Common
Stock to the extent such dividend or distribution when added to all
other dividends or distributions on shares of Common Stock consisting
exclusively of cash and made during the immediately preceding 12
months (applicable to one outstanding share of Common Stock) exceeds
15% of the current market price per share of the Common Stock
immediately preceding the date fixed for the determination of
stockholders entitled to receive such cash dividend.
(5) In case the Company shall, by dividend or otherwise,
distribute to all holders of its Common Stock evidences of its
indebtedness or assets or rights or warrants to subscribe for or
purchase any of its securities (including securities, but excluding
any dividend or distribution referred to in paragraph (1) of this
Section, any rights or warrants referred to in paragraph (2) of this
Section, any subdivision or combination referred to in paragraph (3)
of this Section, and any dividend or distribution payable in cash
(other than cash dividends or distributions made out of Excess Cash as
provided in paragraph (4) of this Section, which shall be treated
under such paragraph (4)), the conversion price shall be adjusted so
that the same shall equal the price determined by multiplying the
conversion price in effect immediately prior to the close of business
on the date fixed for the determination of stockholders entitled to
receive such distribution by a fraction of which the numerator shall
be the current market price per share (determined as provided in
paragraph (6) of this Section) of the Common Stock on the date fixed
for such determination less the then fair market value (as determined
by the Board of Directors, whose determination shall be conclusive and
described in a Board Resolution filed with the Trustee) of the portion
of the assets or evidences of indebtedness so distributed applicable
to one share of Common Stock and the denominator shall be such current
market price per share of the Common Stock, such adjustment to become
effective immediately prior to the opening of business on the day
following the date fixed for the determination of stockholders
entitled to receive such distribution. For the purposes of this
paragraph (5), the distribution of a security which is distributed not
only to the holders of the Common Stock on the date fixed for the
distribution of such security, but also is distributed with each share
of Common Stock delivered to a Holder exercising the conversion
privilege subsequent to such distribution date, shall not require an
adjustment
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of the conversion price pursuant to this paragraph (5); provided
that on the date, if any, on which a Holder exercising the
conversion privilege would no longer be entitled to receive such
security with a share of Common Stock (other than as a result of the
termination of all such securities), a distribution of such securities
shall be deemed to have occurred and the conversion price shall
be adjusted as provided in this paragraph (5) (and such day shall be
deemed to be "the date fixed for the determination of the stockholders
entitled to receive such distribution," and "the date fixed for such
determination" within the meaning of the immediately preceding
sentence).
(6) For the purpose of any computation under paragraphs (2),
(4) and (5) of this Section, the current market price per share of
Common Stock on any date shall be deemed to be the average of the
daily closing prices for the five consecutive Business Days selected
by the Company commencing not more than 20 Business Days before, and
ending not later than, the earlier of the day in question and the day
before the "ex" date with respect to the issuance or distribution
requiring such computation. The closing price for each day shall be
the last reported sales price regular way or, in case no such reported
sale takes place on such day, the average of the reported closing bid
and asked prices regular way, in either case on the New York Stock
Exchange or, if the Common Stock is not listed or admitted to trading
on such Exchange, on the principal national securities exchange on
which the Common Stock is listed or admitted to trading or, if not
listed or admitted to trading on any national securities exchange, on
the National Association of Securities Dealers Automated Quotations
National Market System or, if the Common Stock is not listed or
admitted to trading on any national securities exchange or quoted on
such National Market System, the average of the closing bid and asked
prices in the over-the-counter market as furnished by any New York
Stock Exchange member firm selected from time to time by the Company
for that purpose. For purposes of this paragraph, the term "'ex'
date", when used with respect to any issuance or distribution, means
the first date on which the Common Stock trades in a regular way on
such exchange or in such market without the right to receive such
issuance or distribution.
(7) The Company may make such reductions in the conversion
price, in addition to those required by paragraphs (1) through (5) of
this Section, as it considers to be advisable in order that any event
treated for Federal income tax purposes as a dividend of stock or
stock rights shall not be taxable to the recipients.
(8) Notwithstanding any provision of this Indenture to the
contrary, no adjustment in the conversion price shall be required
unless such adjustment would require an increase or decrease of at
least one percent in such price; provided, however, that any
adjustments which by reason of this paragraph (8) are not required to
be made shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this Article shall be
made to the nearest cent or to the nearest one-hundredth of a share,
as the case may be.
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(9) The Company from time to time (by action of the Board of
Directors) may decrease the conversion price by any amount for any
period of time if the period is at least twenty days, the decrease is
irrevocable during the period and the Board of Directors in its sole
discretion shall have made a determination that such decrease would be
in the best interests of the Company, which determination shall be
conclusive and evidenced by a Board Resolution filed with the Trustee.
Whenever the conversion price is decreased pursuant to the preceding
sentence, the Company shall mail to holders of record of the
Securities a notice of the decrease at least fifteen days prior to the
date such decrease takes effect, and such notice shall state the
decreased conversion price and the period it will be in effect.
(10) Notwithstanding any provision of this Indenture to the
contrary, no adjustment in the conversion price will be made for the
issuance of shares of capital stock to directors, employees or
independent contractors pursuant to the Company's or any of its
Subsidiaries' stock option, stock ownership or other benefit plans or
arrangements or trusts related thereto or for issuance of any Common
Stock pursuant to any plan providing for the reinvestment of dividends
or interest payable on securities of the Company and the investment of
additional optional amounts in Common Stock under such plan.
(11) If the Company shall take any action affecting the Common
Stock, other than action described in this Section 1404, that in the
sole discretion of the Board of Directors would materially adversely
affect the conversion rights of the holders of the Securities, the
Company may, but shall not be obligated to, adjust the conversion
price for the Securities, to the extent permitted by law, in such
manner, and at such time, as the Board of Directors, in its sole
discretion, may determine to be equitable in the circumstances.
SECTION 1405. NOTICE OF ADJUSTMENTS OF CONVERSION PRICE.
Whenever the conversion price is adjusted as herein provided:
(a) the Company shall compute the adjusted conversion price in
accordance with Section 1404 and shall prepare a certificate signed by
the Treasurer or Director of Treasury of the Company setting forth the
adjusted conversion price and showing in reasonable detail the facts
upon which such adjustment is based, and such certificate shall
forthwith be filed at the Corporate Trust Office of the Trustee and at
each office or agency maintained for the purpose of conversion of
Securities pursuant to Section 1002; and
(b) a notice stating that the conversion price has been
adjusted and setting forth the adjusted conversion price shall
forthwith be required, and as soon as practicable after it is
required, such notice shall be mailed by the Company to all Holders at
their last addresses as they shall appear in the Security Register.
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SECTION 1406. NOTICE OF CERTAIN CORPORATE ACTION.
In case:
(a) the Company shall declare a dividend (or any other
distribution) on its Common Stock payable otherwise than in cash out
of its retained earnings; or
(b) the Company shall authorize the granting to the holders of
its Common Stock of rights or warrants to subscribe for or purchase
any shares of capital stock: of any class or of any other rights; or
(c) the Company shall declare a dividend out of Excess Cash; or
(d) of any reclassification of the Common Stock of the Company
(other than a subdivision or combination of its outstanding shares of
Common Stock), or of any consolidation or merger to which the Company
is a party and for which approval of any stockholders of the Company
is required, or of the sale or transfer of all or substantially all of
the assets of the Company; or
(e) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company;
then the Company shall cause to be filed at the Corporate Trust Office of the
Trustee and at each office or agency maintained for the purpose of conversion
of Securities pursuant to Section 1002, and shall cause to be mailed to all
Holders at their last addresses as they shall appear in the Security Register,
at least 15 days (or 10 days in any case specified in clause (a) or (b) above)
prior to the applicable record, effective or expiration date hereinafter
specified, a notice stating (x) the date on which a record is to be taken for
the purpose of such dividend, distribution, rights or warrants, or, if a record
is not to be taken, the date as of which the holders of Common Stock of record
to be entitled to such dividend, distribution, 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, and the date as of which it is expected that holders of
Common Stock of record shall bc entitled to exchange their Common Stock for
securities, cash or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer, dissolution, liquidation or winding up.
Neither the failure to give any such notice nor any defect therein shall affect
the legality or validity of any action described in clause (a) through (e) of
this Section 1406.
SECTION 1407. COMPANY TO RESERVE SHARES
The Company shall at all times reserve and keep available, free from
preemptive rights, out of its authorized but unissued Common Stock, for the
purpose of effecting the conversion of
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Securities, the full number of shares of Common Stock then issuable upon the
conversion of all Outstanding Securities.
SECTION 1408. TAXES ON CONVERSIONS.
The Company will pay any and all taxes that may be payable in respect
of the issue or delivery of Common Stock on conversion of Securities pursuant
hereto. The Company shall not, however, be required to pay any tax which may be
payable in respect of any transfer involved in the issue and delivery of Common
Stock in a name other than that of the Holder of the Security or Securities to
be converted, and no such issue or delivery shall be made unless and until the
Person requesting such issue has paid to the Company the amount of any such
tax, or has established to the satisfaction of the Company that such tax has
been paid.
SECTION 1409. COVENANT AS TO SHARES.
The Company covenants that all Common Stock which may be issued upon
conversion of Securities will upon issue be fully paid and nonassessable.
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SECTION 1410. CANCELLATION OF CONVERTED SECURITIES.
All Securities delivered for conversion shall be delivered to the
Trustee to be canceled by or at the direction of the Trustee, which shall
dispose of the same as provided in Section 309.
SECTION 1411. PROVISIONS IN CASE OF RECLASSIFICATION, CONSOLIDATION, MERGER OR
SALE OF ASSETS.
In case of any capital reorganization or reclassification of the
capital stock of the Company (other than solely a change in par value, or from
par value to no par value) or any consolidation of the Company with, or merger
of the Company into, any other Person, any merger of another Person into the
Company (other than a merger which does not result in any reclassification,
conversion, exchange or cancellation of outstanding Common Stock or preferred
shares of beneficial interest of the Company) or any sale or transfer of all or
substantially all of the assets of the Company, the Holder of each Security
then outstanding shall have the right thereafter, during the period such
Security shall be convertible as specified in Section 1401, to convert such
Security only into the kind and amount of securities, cash and other property
receivable upon such reorganization, recapitalization, consolidation, merger,
sale or transfer by a holder of the number of shares of Common Stock into which
such Security might have been converted immediately prior to such
reorganization, consolidation, merger, sale or transfer, assuming such holder
of Common Stock (i) is not a Person with which the Company consolidated or into
which the Company merged or which merged into the Company or to which such sale
or transfer was made, as the case may be ("constituent Person"), or an
Affiliate of a constituent Person and (ii) failed to exercise his rights of
election, if any, as to the kind or amount of securities, cash and other
property receivable upon such consolidation, merger, sale or transfer (provided
that if the kind or amount of securities, cash and other property receivable
upon such consolidation, merger, sale or transfer is not the same for each
share of Common Stock held immediately prior to such consolidation, merger,
sale or transfer by others than a constituent Person or an Affiliate thereof
and in respect of which such rights of election shall not have been exercised
("non-electing share"), then for the purpose of this Section the kind and
amount of securities, cash and other property receivable upon such
consolidation, merger, sale or transfer by each non-electing share shall be
deemed to be the kind and amount so receivable per share by a plurality of the
non-electing shares). The Company shall not effect any consolidation, merger,
sale or transfer unless, prior to or simultaneously with the consummation
thereof the Person formed by such consolidation or resulting from such merger
or which acquires such assets, as the case may be, shall execute and deliver to
the Trustee a supplemental indenture pursuant to which such Person assumes the
obligation to deliver to the Holder of each Security such securities, cash and
other property as such Holder may be entitled to in accordance with the
provisions of this Section 1411. Such supplemental indenture shall provide for
adjustments which, for events subsequent to the effective date of such
supplemental indenture, shall be as nearly equivalent as may be practicable to
the adjustments provided for in this Article. The Trustee shall not be under
any responsibility to determine the correctness of any provision contained in
such supplemental indenture relating to either the kind or amount of shares of
stock or securities or
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cash or property receivable by Holders upon the conversion of their Securities
after any such consolidation, merger, sale or transfer. The above provisions of
this Section shall similarly apply to successive consolidations, mergers, sales
or transfers.
SECTION 1412. RESPONSIBILITY OF TRUSTEE AND CONVERSION AGENT.
Neither the Trustee nor any agent appointed to effect conversions
shall at any time be under any duty or responsibility to any Holder of
Securities to determine whether any facts exist which may require any
adjustment of the conversion price, or with respect to the nature or extent 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. Neither the Trustee nor any such conversion agent shall be accountable
with respect to the validity or value (or the kind or amount) of any Common
Stock or of any securities or property which may at any time be issued or
delivered upon the conversion of any Security; and neither the Trustee nor any
such conversion agent makes any representation with respect thereto. Neither
the Trustee nor any such 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 to make any cash payment
upon the delivery of any Security for the purpose of conversion or to comply
with any of the covenants contained in this Article.
ARTICLE FIFTEEN
SUBORDINATION OF SECURITIES
SECTION 1501. SECURITIES SUBORDINATE TO SENIOR DEBT.
The Company covenants and agrees, and each Holder of a Security, by
his acceptance thereof, likewise covenants and agrees, that, to the extent and
in the manner hereinafter set forth in this Article, the indebtedness
represented by the Securities and the payment of the principal of (and premium,
of any) and interest on each and all of the Securities are hereby expressly
made subordinate and subject in right of payment to the prior payment in full
of all Senior Debt.
SECTION 1502. PAYMENT OVER OF PROCEEDS UPON DISSOLUTION, ETC.
In the event of (a) any insolvency or bankruptcy case or proceeding, or
any receivership, liquidation, reorganization or other similar case or
proceeding in connection therewith, relative to the Company or to its
creditors, as such, or to its assets, or (b) any liquidation, dissolution or
other winding up of the Company, whether voluntary or involuntary and whether
or not involving insolvency or bankruptcy, or (c) any assignment for the
benefit of creditors or any other marshalling of assets and liabilities of the
Company, then and in any such event the holders of
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Senior Debt shall be entitled to receive payment in full of all amounts due or
to become due on or in respect of all Senior Debt, or provision shall be made
for such payment in cash, before the Holders of the Securities are entitled to
receive any payment on account of principal of (or premium, if any) or interest
on the Securities, and to that end the holders of Senior Debt shall be entitled
to receive, for application to the payment thereof, any payment or distribution
of any kind or character, whether in cash, property or securities, including
any such payment or distribution which may be payable or deliverable by reason
of the payment of any other indebtedness of the Company being subordinated to
the payment of the Securities, which may be payable or deliverable in respect
of the Securities in any such case, proceeding, dissolution, liquidation or
other winding up event.
In the event that, notwithstanding the foregoing provisions of this
Section, the Trustee or the Holder of any Security shall have received any
payment or distribution of assets of the Company of any kind or character,
whether in cash, property or securities, including any such payment or
distribution which may be payable or deliverable by reason of the payment of
any other indebtedness of the Company being subordinated to the payment of the
Securities, before all Senior Debt is paid in full or payment thereof provided
for, and if such fact shall, at or prior to the time of such payment or
distribution, have been made known to the Trustee or, as the case may be, such
Holder, then and in such event such payment or distribution shall be paid over
or delivered forthwith to the trustee in bankruptcy, receiver, liquidating
trustee, custodian, assignee, agent or other Person making payment or
distribution of assets of the Company for application to the payment of all
Senior Debt remaining unpaid, to the extent necessary to pay all Senior Debt in
full, after giving effect to any concurrent payment or distribution to or for
the holders of Senior Debt. Any taxes that have been withheld or deducted from
any payment or distribution in respect of the Securities, or any taxes that
ought to have been withheld or deducted from any such payment or distribution
that have been remitted to the relevant taxing authority, shall not be
considered to be an amount that the Trustee or the Holder of any Security
received for purposes of this Section.
For purposes of this Article only, the words "cash, property or
securities" shall not be deemed to include shares of stock of the Company as
reorganized or readjusted, or securities of the Company or any other
corporation provided for by a plan of reorganization or readjustment which are
subordinated in right of payment to all Senior Debt which may at the time be
outstanding to substantially the same extent as, or to a greater extent than,
the Securities are so subordinated as provided in this Article. The
consolidation of the Company with, or the merger of the Company into, another
Person or the liquidation or dissolution of the Company following the
conveyance or transfer of its properties and assets substantially as an
entirety to another Person upon the terms and conditions set forth in Article
Eight shall not be deemed a dissolution, winding up, liquidation,
reorganization, assignment for the benefit of creditors or marshalling of
assets and liability of the Company for the purposes of this Section if the
Person formed by such consolidation or into which the Company is merged or the
Person which acquires by conveyance or transfer such properties and assets
substantially as an entirety, as the case may be, shall, as a part of such
consolidation, merger, conveyance or transfer, comply with the conditions set
forth in Article Eight.
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SECTION 1503. PRIOR PAYMENT TO SENIOR DEBT UPON ACCELERATION OF SECURITIES.
In the event that any Securities are declared due and payable before
their Stated Maturity, then and in such event the holders of Senior Debt shall
be entitled to receive payment in full of all amounts due or to become due on
or in respect of all Senior Debt or provision shall be made for such payment in
cash, before the Holders of the Securities are entitled to receive any payment
(including any payment which may be payable by reason of the payment of any
other indebtedness of the Company being subordinated to the payment of the
Securities) by the Company on account of the principal of (or premium, if any)
or interest on the Securities or on account of the purchase or other
acquisition of Securities; provided, however, that nothing in this Section
shall prevent the satisfaction of any sinking fund payment in accordance with
Article Twelve by delivering and crediting pursuant to Section 1202 Securities
which have been acquired (upon redemption or otherwise) or which have been
converted pursuant to Article 14 prior to such declaration of acceleration.
In the event that, notwithstanding the foregoing, the Company shall
make any payment to the Trustee or the Holder of any Security prohibited by the
foregoing provisions of this Section, and if such fact shall, at or prior to
the time of such payment, have been made known to the Trustee or, as the case
may be, such Holder, then and in such event such payment shall be paid over and
delivered forthwith to the Company.
The provisions of this Section shall not apply to any payment with
respect to which Section 1402 would be applicable.
SECTION 1504. NO PAYMENT WHEN SENIOR DEBT IN DEFAULT.
In the event and during the continuation of any default in the payment
of principal of (or premium, if any) or interest on any Senior Debt beyond any
applicable grace period with respect thereto, or in the event that any event of
default with respect to any Senior Debt shall have occurred and be continuing
permitting the holders of such Senior Debt (or a trustee on behalf of the
holders thereof) to declare such Senior Debt due and payable prior to the date
on which it would otherwise have become due and payable, unless and until such
event of default shall have been cured or waived or shall have ceased to exist
and such acceleration shall have been rescinded or annulled, or (b) in the
event any judicial proceeding shall be pending with respect to any such default
in payment or event of default, then no payment (including any payment which
may be payable by reason of the payment of any other indebtedness of the
Company being subordinated to the payment of the Securities) shall be made by
the Company on account of principal of (or premium, if any) or interest on the
Securities or on account of the purchase or other acquisition of Securities;
provided, however, that nothing in this Section shall prevent the satisfaction
of any sinking fund payment in accordance with Article Twelve by delivering and
crediting pursuant to Section 1202 Securities which have been acquired (upon
redemption or otherwise) or which have been converted pursuant to Article 14
prior to such default in payment or event of default.
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In the event that, notwithstanding the foregoing, the Company shall
make any payment to the Trustee or the Holder of any Security prohibited by the
foregoing provisions of this Section, and if such fact shall, at or prior to
the time of such payment, have been made known to the Trustee or, as the case
may be, such Holder, then and in such event such payment shall be paid over and
delivered forthwith to the Company.
The provisions of this Section shall not apply to any payment with
respect to which Section 1402 would be applicable.
SECTION 1505. PAYMENT PERMITTED IN CERTAIN SITUATIONS.
Nothing contained in this Article or elsewhere in this Indenture or in
any of the Securities shall prevent (a) the Company, at any time except during
the pendency of any case, proceeding, dissolution, liquidation or other winding
up, assignment for the benefit of creditors or other marshalling of assets and
liabilities of the Company referred to in Section 1502 or under the conditions
described in Section 1503 or 1504, from making payments at any time of
principal of (and premium, if any) or interest on the Securities, or (b) the
application by the Trustee of any money deposited with it hereunder to the
payment of or on account of the principal of (and premium, if any) or interest
on the Securities or the retention of such payment by the holders, if, at the
time of such application by the Trustee, it did not have knowledge that such
payment would have been prohibited by the provisions of this Article.
SECTION 1506. SUBROGATION TO RIGHTS OF HOLDERS OF SENIOR DEBT.
Subject to the payment in full of all Senior Debt or the provision for
such payment in cash or cash equivalents or otherwise in a manner satisfactory
to the holders of Senior Debt, the Holders of the Securities shall be
subrogated to the extent of the payments or distributions made to the holders
of such Senior Debt pursuant to the provisions of this Article (equally and
ratably with the holders of indebtedness of the Company which by its express
terms is subordinated to indebtedness of the Company to substantially the same
extent as the Securities are subordinated to the Senior Debt and is entitled to
like rights of subrogation) to the rights of the holders of such Senior Debt to
receive payments and distributions of cash, property and securities applicable
to the Senior Debt until the principal of (and premium, if any) and interest on
the Senior Debt shall be paid in full. For purposes of such subrogation, no
payments or distributions to the holders of the Senior Debt of any cash,
property or securities to which the Holders of the Securities or the Trustee
would be entitled except for the provisions of this Article, and no payments
over pursuant to the provisions of this Article to the holders of Senior
Debt by Holders of the Securities or the Trustee, shall, as among the Company,
its creditors other than holders of Senior Debt and the Holders of the
Securities, be deemed to be a payment or distribution by the Company to or on
account of the Senior Debt.
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SECTION 1507. PROVISIONS SOLELY TO DEFINE RELATIVE RIGHTS.
The provisions of this Article are and are intended solely for the
purpose of defining the relative rights of the Holders of the Securities on the
one hand and the holders of Senior Debt on the other hand. Nothing contained in
this Article or elsewhere in this Indenture or in the Securities is intended to
or shall (a) impair, as among the Company, its creditors other than holders of
Senior Debt and the Holders of the Securities, the obligation of the Company,
which is absolute and unconditional (and which, subject to the rights under
this Article of the holders of Senior Debt, is intended to rank equally with
all other general obligations of the Company), to pay to the Holders of the
Securities the principal of (and premium, if any) and interest on the
Securities as and when the same shall become due and payable in accordance with
their terms; or (b) affect the relative rights against the Company of the
Holders of the Securities and creditors of the Company other than the holders
of Senior Debt; or (c) prevent the Trustee or the Holder of any Security from
exercising all remedies otherwise permitted by applicable law upon default
under this Indenture, subject to the rights, if any, under this Article of the
holders of Senior Debt to receive cash, property and securities otherwise
payable or deliverable to the Trustee or such Holder.
SECTION 1508. TRUSTEE TO EFFECTUATE SUBORDINATION.
Each Holder of a Security by his acceptance thereof authorizes and
directs the Trustee on his behalf to take such action as may be necessary or
appropriate to effectuate the subordination provided in this Article and
appoints the Trustee his attorney-in-fact for any and all such purposes.
SECTION 1509. NO WAIVER OF SUBORDINATION PROVISIONS.
No right of any present or future holders of any Senior Debt to
enforce subordination as herein provided shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the Company
or by any act or failure to act, in good faith, by any such holder, or by any
non-compliance by the Company with the terms, provisions and covenants of this
Indenture, regardless of any knowledge thereof any such holder may have or be
otherwise charged with.
Without in any way limiting the generality of the foregoing paragraph,
the holders of Senior Debt may, at any time and from time to time, without the
consent of or notice to the Trustee or the Holders of the Securities, without
incurring responsibility to the Holders of the Securities and without impairing
or releasing the subordination provided in this Article or the obligations
hereunder of the Holders of the Securities to the holders of Senior Debt do any
one or more of the following: (i) change the manner, place or terms of payment
or extend the time of payment of, or renew or alter, Senior Debt or otherwise
amend or supplement in any manner Senior Debt or any instrument evidencing the
same or any agreement under which Senior Debt
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is outstanding; (ii) sell, exchange, release or otherwise deal with any
property pledged, mortgaged or otherwise securing Senior Debt; (iii) release
any Person liable in any manner for the collection of Senior Debt; and (iv)
exercise or refrain from exercising any rights against the Company and any
other Person.
SECTION 1510. NOTICE TO TRUSTEE.
The Company shall give prompt written notice to the Trustee of any
fact known to the Company which would prohibit the making of any payment to or
by the Trustee in respect of the Securities. Notwithstanding the provisions of
this Article or any other provision of this Indenture, the Trustee shall not be
charged with knowledge of the existence of any facts which would prohibit the
making of any payment to or by the Trustee in respect of the Securities, unless
and until the Trustee shall have received written notice thereof from the
Company or a holder of Senior Debt or from any trustee therefor; and, prior to
the receipt of any such written notice, the Trustee, subject to the provisions
of Section 601, shall be entitled in all respects to assume that no such facts
exist.
Subject to the provisions of Section 601, the Trustee shall be
entitled to rely on the delivery to it of a written notice by a Person
representing himself to be a holder of Senior Debt (or a trustee therefor) to
establish that such notice has been given by a holder of Senior Debt (or a
trustee therefor). In the event that the Trustee determines in good faith that
further evidence is required with respect to the right of any Person as a
holder of Senior Debt to participate in any payment or distribution pursuant to
this Article, the Trustee may request such Person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amount of Senior Debt held by
such Person, the extent to which such Person is entitled to participate in such
payment or distribution and any other facts pertinent to the rights of such
Person under this Article, and if such evidence is not furnished, the Trustee
may defer any payment to such Person pending judicial determination as to the
right of such Person to receive such payment.
SECTION 1511. RELIANCE ON JUDICIAL ORDER OR CERTIFICATE OF LIQUIDATING AGENT.
Upon any payment or distribution of assets of the Company referred to
in this Article, the Trustee, subject to the provisions of Section 601, and the
Holders of the Securities shall be entitled to rely upon any order or decree
entered by any court of competent jurisdiction in which such insolvency,
bankruptcy, receivership, liquidation, reorganization, dissolution, winding up
or similar case or proceeding is pending, or a certificate of the trustee in
bankruptcy, receiver, liquidating trustee, custodian, assignee for the benefit
of creditors, agent or other Person making such payment or distribution,
delivered to the Trustee or to the Holders of Securities, for the purpose of
ascertaining the Persons entitled to participate in such payment or
distribution, the holders of Senior Debt and other indebtedness of the Company,
the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article.
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SECTION 1512. TRUSTEE NOT FIDUCIARY FOR HOLDERS OF SENIOR DEBT.
The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Debt and shall not be liable to any such holders or creditors
if it shall in good faith pay over or distribute to Holders of Securities or to
the Company or to any other Person cash, property or securities to which any
holders of Senior Debt shall be entitled by virtue of this Article or
otherwise.
SECTION 1513. RIGHTS OF TRUSTEE AS HOLDER OF SENIOR DEBT; PRESERVATION OF
TRUSTEE'S RIGHTS.
The Trustee in its individual capacity shall be entitled to all the
rights set forth in this Article with respect to any Senior Debt which may at
any time be held by it, to the same extent as any other holder of Senior Debt
and nothing in this Indenture shall deprive the Trustee of any of its rights as
such holder.
Nothing in this Article shall apply to claims of, or payments to, the
Trustee under or pursuant to Section 607.
SECTION 1514. ARTICLE APPLICABLE TO PAYING AGENTS.
In case at any time any Paying Agent other than the Trustee shall have
been appointed by the Company and be then acting hereunder, the term "Trustee"
as used in this Article shall in such case (unless the context otherwise
requires) be construed as extending to and including such Paying Agent within
its meaning as fully for all intents and purposes as if such Paying Agent were
named in this Article in addition to or in place of the Trustee; provided,
however, that Section 1413 shall not apply to the Company or any Affiliate of
the Company if it or such Affiliate acts as Paying Agent.
SECTION 1515. CERTAIN CONVERSIONS DEEMED PAYMENT.
For the purposes of this Article only, (1) the issuance and delivery
of Common Stock upon conversion of Securities in accordance with Article
Fourteen shall not be deemed to constitute a payment or distribution on account
of the principal of or premium or interest on Securities or on account of the
purchase or other acquisition of Securities, and (2) the payment, issuance or
delivery of cash, property or securities (other than Common Stock) upon
conversion of a Security shall be deemed to constitute payment on account of
the principal of such Security. Nothing contained in this Article or elsewhere
in this Indenture or in the Securities is intended to or shall impair, as among
the Company, its creditors other than holders of Senior Debt and the Holders of
the Securities, the right, which is absolute and unconditional, of the Holder
of any Security to convert such Security in accordance with Article Fourteen.
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EXHIBIT 4.5
---------------------------------------------------------------------------
CAPSTONE CAPITAL CORPORATION
TO
AMSOUTH BANK OF ALABAMA, Trustee
____________________
First Supplemental Indenture
Dated as of March 14, 1997
$65,000,000 Aggregate Principal Amount
of 6.55% Convertible Subordinated Debentures
due 2002
____________________
SUBORDINATED DEBT SECURITIES
---------------------------------------------------------------------------
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TABLE OF CONTENTS
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DEFINITIONS . . . . . . . . . . . . . . . . 2
SECTION 101. Definition of Terms . . . . . . . . . . . . . . 2
ARTICLE TWO
THE DEBENTURES . . . . . . . . . . . . . . 4
SECTION 201. Title and Terms . . . . . . . . . . . . . . . . 4
ARTICLE THREE
FORM OF DEBENTURES. . . . . . . . . . . . . 6
SECTION 301. Form Generally . . . . . . . . . . . . . . . . . 6
SECTION 302. Form of Face of Debenture. . . . . . . . . . . . 6
SECTION 303. Form of Reverse of Debenture . . . . . . . . . . 8
SECTION 304. Global Debentures . . . . . . . . . . . . . . . 17
SECTION 305. Form of Trustee's Certificate of Authentication. 17
ARTICLE FOUR
RESTRICTIONS ON OWNERSHIP AND TRANSFER. . . 18
SECTION 401. Ownership and Transfer Restrictions. . . . . . . 18
ARTICLE FIVE
CONVERSION OF DEBENTURES. . . . . . . . . . 19
SECTION 501. Conversion Privilege and Conversion Rate . . . . 19
SECTION 502. Exercise of Conversion Privilege . . . . . . . . 19
SECTION 503. Fractions of Shares. . . . . . . . . . . . . . . 20
SECTION 504. Adjustment of Conversion Rate. . . . . . . . . . 21
SECTION 505. Notice of Adjustments of Conversion Rate . . . . 26
SECTION 506. Notice of Certain Corporate Action . . . . . . . 27
SECTION 507. Company to Reserve Common Stock. . . . . . . . . 28
SECTION 508. Taxes on Conversions . . . . . . . . . . . . . . 28
SECTION 509. Covenant as to Common Stock. . . . . . . . . . . 29
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SECTION 510. Cancellation of Converted Debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 511. Provisions in Case of Reclassification, Consolidation, Merger or Sale of Assets . . . . . . 29
SECTION 512. Responsibility of Trustee and Conversion Agent . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 513. Refusal to Convert Debentures to Protect REIT Status . . . . . . . . . . . . . . . . . . . 30
ARTICLE SIX
REDEMPTION OF DEBENTURES . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 601. Right of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 602. Applicability of Article . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 603. Election to Redeem; Notice to Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 604. Selection by Trustee of Debentures to be Redeemed . . . . . . . . . . . . . . . . . . . . . 32
SECTION 605. Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 606. Deposit of Redemption Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 607. Debentures Payable on Redemption Date . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 608. Debentures Redeemed in Part . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE SEVEN
RIGHT TO REQUIRE REPURCHASE . . . . . . . . . . . . . . . . . . . . . 34
SECTION 701. Right to Require Repurchase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 702. Notice; Method of Exercising Repurchase Right . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 703. Deposit of Repurchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 704. Debentures Not Repurchased on Repurchase Date . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 705. Debentures Repurchased in Part . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 706. Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE EIGHT
REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 801. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 802. Acceleration of Maturity; Rescission and Annulment . . . . . . . . . . . . . . . . . . . . 40
SECTION 803. Collection of Indebtedness and Suits for Enforcement by Trustee . . . . . . . . . . . . . . 41
SECTION 804. Trustee May File Proofs of Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
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SECTION 805. Trustee May Enforce Claims Without Possession of Debentures . . . . . . . . . . . . . . . . 42
SECTION 806. Application of Money Collected . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 807. Limitation on Suits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 808. Unconditional Rights of Holders to Receive Principal, Premium and Interest and to
Convert . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 809. Restoration of Rights and Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 810. Rights and Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 811. Delay or Omission Not Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 812. Control by Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 813. Waiver of Past Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 814. Undertaking for Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 815. Waiver of Usury, Stay or Extension Laws . . . . . . . . . . . . . . . . . . . . . . . . . . 45
ARTICLE NINE
SUBORDINATION OF DEBENTURES . . . . . . . . . . . . . . . . . . . . . 46
SECTION 901. Debentures Subordinate to Senior Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 902. Payment Over of Proceeds Upon Dissolution, Etc. . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 903. Prior Payment to Senior Debt Upon Acceleration of Debentures . . . . . . . . . . . . . . . 47
SECTION 904. No Payment When Senior Debt in Default . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 905. Payment Permitted in Certain Situations . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 906. Subrogation to Rights of Holders of Senior Debt . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 907. Provisions Solely to Define Relative Rights . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 908. Trustee to Effectuate Subordination . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 909. No Waiver of Subordination Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 910. Notice to Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 911. Reliance on Judicial Order or Certificate of Liquidating Agent . . . . . . . . . . . . . . 51
SECTION 912. Trustee Not Fiduciary for Holders of Senior Debt . . . . . . . . . . . . . . . . . . . . . 52
SECTION 913. Rights of Trustee as Holder of Senior Debt; Preservation of Trustee's Rights . . . . . . . 52
SECTION 914. Article Applicable to Paying Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 915. Certain Conversions Deemed Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
ARTICLE TEN
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 1001. Scope of this First Supplemental Indenture . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 1002. Ratification of Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
</TABLE>
iii
<PAGE> 5
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
SECTION 1003. Trustee Not Responsible for Recitals . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 1004. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 1005. Separability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 1006. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
</TABLE>
iv
<PAGE> 6
FIRST SUPPLEMENTAL INDENTURE, dated as of March 14, 1997 (the "First
Supplemental Indenture"), between CAPSTONE CAPITAL CORPORATION, a corporation
duly organized and existing under the laws of the State of Maryland (herein
called the "Company"), having its principal office at 1000 Urban Center Drive,
Suite 630, Birmingham, Alabama 35242, and AMSOUTH BANK OF ALABAMA, an Alabama
banking corporation, as Trustee (herein called the "Trustee").
WHEREAS, the Company has executed and delivered the Indenture dated as
of March 14, 1997 (the "Base Indenture") to the Trustee to provide for the
future issuance of the Company's unsecured subordinated debentures, notes or
other evidences of indebtedness (the "Securities"), to be issued from time to
time in one or more series as might be determined by the Company under the Base
Indenture, as may thereafter be supplemented;
WHEREAS, pursuant to the terms of the Base Indenture, the Company
desires to provide for the establishment of a new series of its Securities to
be known as its 6.55% Convertible Subordinated Debentures due 2002 (the
"Debentures"), the terms, provisions and conditions of such Debentures and the
form thereof to be set forth as provided in the Base Indenture as supplemented
by this First Supplemental Indenture;
WHEREAS, Section 901 of the Base Indenture provides, among other
things, that the Company and the Trustee may enter into indentures supplemental
to the Base Indenture without the consent of holders of Securities for, among
other things, the purpose of establishing the forms and terms of securities of
any series as permitted by Sections 201 and 301 thereof and to add to, change
or eliminate any of the provisions of the Base Indenture in respect of one or
more series of Securities to be issued thereunder; and
WHEREAS, all things necessary to make the Debentures, when executed by
the Company and authenticated and delivered by the Trustee, the valid and
binding obligations of the Company and to make this First Supplemental
Indenture a valid and binding supplemental indenture and agreement according to
its terms, have been done;
NOW THEREFORE, in consideration of the purchase and acceptance of the
Debentures by the holders thereof, and for the purpose of setting forth the
terms, provisions and conditions of the Debentures and the form thereof, the
Company covenants and agrees with the Trustee as follows:
<PAGE> 7
ARTICLE ONE
DEFINITIONS
SECTION 101. DEFINITION OF TERMS.
Unless the context otherwise requires:
(a) references herein to the Indenture shall mean the Base
Indenture as supplemented by this First Supplemental Indenture;
(b) a term defined in the Base Indenture has the same meaning when
used in this First Supplemental Indenture unless otherwise defined herein (in
which case the definition set forth herein shall govern);
(c) a term defined anywhere in this First Supplemental Indenture
has the same meaning throughout;
(d) the singular includes the plural and vice versa; and
(e) headings are for convenience of reference only and do not
affect interpretation.
"Accreted Value" with respect to a Debenture in connection with a
Change of Control means the Issue Price of such Debenture plus accrued Original
Issue Discount on such Debenture to the date of such Change of Control.
"Base Indenture" has the meaning set forth in the recitals above.
"Blockage Period" has the meaning specified in Section 904 hereof.
"Blockage Termination Event" has the meaning specified in Section 904
hereof.
"Change of Control" has the meaning specified in Section 706 hereof.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" means the Person named as the "Company" in the first
paragraph of this First Supplemental Indenture until a successor Person shall
have become such pursuant to the applicable provisions of the Indenture, and
thereafter "Company" shall mean such successor Person.
"Conversion Rate" has the meaning specified in Section 501 hereof.
"Debentures" has the meaning set forth in the recitals above.
2
<PAGE> 8
"Events of Default" with respect to the Debentures has the meaning
specified in Section 801 hereof.
"First Supplemental Indenture" has the meaning set forth in the
recitals above.
"Indenture" means the Base Indenture as supplemented by this First
Supplemental Indenture, as the same may from time to time be supplemented or
amended by one or more supplemental indentures thereto, including for all
purposes, the provisions of the Trust Indenture Act deemed to be a part
thereof.
"Interest Payment Date" means the Stated Maturity of an installment of
interest on the Debentures.
"Issue Price" means $903.00 per $1,000 principal amount of Debentures,
which represents Original Issue Discount of 9.70% from the principal amount
thereof payable at its Stated Maturity.
"Original Issue Discount" means $97.00 per $1,000 principal amount of
Debentures, representing the excess of the principal amount per Debenture
payable at its Stated Maturity over the Issue Price per Debenture.
"Regular Record Date," for the interest payable on any Interest Payment
Date, means the February 28 or August 31 (whether or not a Business Day), as
the case may be, next preceding such Interest Payment Date.
"REIT" means a real estate investment trust under Section 856 through
859 of the Code.
"Repurchase Event" has the meaning specified in Section 706 hereof.
"Repurchase Price" has the meaning specified in Section 701 hereof.
"Repurchase Date" has the meaning specified in Section 701 hereof.
"Securities" has the meaning set forth in the recitals above.
"Senior Non-Payment Default" has the meaning specified in Section 904
hereof.
"Senior Payment Default" has the meaning specified in Section 904
hereof.
"Trustee" means the Person named as "Trustee" in the first paragraph of
this First Supplemental Indenture until a successor Trustee with respect to the
Debentures shall have become such pursuant to the applicable provisions of the
Indenture, and thereafter "Trustee" shall mean such successor Person.
3
<PAGE> 9
"Yield to Maturity" means 9.00% per annum.
Certain terms used in Article Five hereof are defined therein.
ARTICLE TWO
THE DEBENTURES
SECTION 201. TITLE AND TERMS.
The aggregate principal amount of Debentures which may be authenticated
and delivered under the Indenture is limited to $74,750,000 (including
$9,750,000 aggregate principal amount of Debentures that may be sold to the
Underwriters by the Company upon exercise of the over-allotment option granted
pursuant to the Underwriting Agreement dated March 10, 1997 between the Company
and the Underwriters referred to therein), except for Debentures authenticated
and delivered upon registration of transfer of, or in exchange for, or in lieu
of, other Debentures pursuant to Section 304, 305, 306 or 906 of the Base
Indenture or Section 608 of this First Supplemental Indenture and except for
any Debentures which, pursuant to Section 303 of the Base Indenture, are deemed
never to have been authenticated and delivered under the Indenture.
The Debentures shall be known and designated as the "6.55% Convertible
Subordinated Debentures due 2002" of the Company. The Stated Maturity of the
Debentures shall be March 14, 2002 and the Debentures (including Debentures
issued upon any exercise of the over-allotment option referred to in the
immediately preceding paragraph) shall bear interest at the rate of 6.55% per
annum, from the date of original issuance of Debentures pursuant to the
Indenture or from the most recent Interest Payment Date to which interest has
been paid or duly provided for, as the case may be, payable semi-annually on
March 14 and September 14, commencing September 14, 1997, until the principal
thereof is paid or made available for payment. The Debentures are Original
Issue Discount Securities within the meaning of the Indenture and will be
issued at an Original Issue Discount (the excess of the principal amount of the
Debentures payable at their Stated Maturity over the Issue Price) of 9.70% from
the principal amount thereof payable at Stated Maturity. The rate of interest
on the Debentures and accrual of such Original Issue Discount represent a Yield
to Maturity, compounded semi-annually, of 9.00% per annum. Each Debenture
shall be dated the date of its authentication, except that Debentures issued
upon any exercise of the over-allotment option referred to in the immediately
preceding paragraph shall be dated the date which is the same as the date of
original issuance of Debentures pursuant to the Indenture (notwithstanding
anything to the contrary provided for in Section 303 of the Base Indenture).
4
<PAGE> 10
The principal of and premium, if any, and interest on the Debentures
shall be payable, and the conversion and transfer of Debentures may be
registered, at the office or agency of the Company or the Trustee maintained
for that purpose in New York, New York and at any other office or agency
maintained by the Company or the Trustee for such purpose. Principal of and
premium, if any, and interest on Debentures which are Global Securities held of
record by the Depositary or its nominee will be payable in same day funds.
The Debentures shall be subject to the ownership and transfer
restrictions set forth in Article Four hereof.
The Debentures shall be convertible as provided in Article Five hereof
(and such Article Five shall supersede Article Fourteen of the Base Indenture
with respect to the Debentures).
The Debentures shall be redeemable at the option of the Company as
provided in Article Six hereof (and such Article Six shall supersede Article
Eleven of the Base Indenture with respect to the Debentures).
The Debentures shall be subject to repurchase at the option of the
Holder as provided in Article Seven hereof.
The Debentures shall be subordinated in right of payment to Senior Debt
as provided in Article Nine hereof (and such Article Nine shall supersede
Article Fifteen of the Base Indenture with respect to the Debentures).
The Debentures shall not be subject to the defeasance provisions of
Article Thirteen of the Base Indenture.
The Debentures shall not be subject to any sinking fund.
Remedies with respect to the Debentures shall be as provided in Article
Eight hereof (and such Article Eight shall supersede Article Five of the Base
Indenture with respect to the Debentures).
The Debentures shall be substantially in the form provided for by
Article Three hereof.
The last paragraph of Section 307 of the Base Indenture
notwithstanding, in the case of any Debenture which is converted after any
Regular Record Date and on or prior to the next succeeding Interest Payment
Date (other than any Debenture whose Maturity is prior to such Interest Payment
Date), interest whose Stated Maturity is on such Interest Payment Date shall be
payable on such Interest Payment Date notwithstanding such conversion, and such
interest (whether or not punctually paid or duly provided for) shall be paid to
the Person in whose name that Debenture (or one or
5
<PAGE> 11
more Predecessor Debentures) is registered at the close of business on such
Regular Record Date, provided, however, that Debentures so surrendered for
conversion (except Debentures or portions thereof called for redemption) shall
be accompanied by payment in New York Clearing House funds or other funds
acceptable to the Company of an amount equal to the interest payable on such
Interest Payment Date on the principal amount being surrendered for conversion.
Except as otherwise expressly provided in the immediately preceding sentence,
in the case of any Debenture which is converted, interest whose Stated Maturity
is after the date of conversion of such Debenture shall not be payable.
Any reference in the Base Indenture to any Section or Article therein
which is superseded by any Section or Article contained in this First
Supplemental Indenture shall be deemed to refer to such superseding Section or
Article contained in this First Supplemental Indenture, to the extent
applicable.
ARTICLE THREE
FORM OF DEBENTURES
SECTION 301. FORM GENERALLY.
The Debentures shall be in substantially the form set forth in this
Article, with such appropriate insertions, omissions, substitutions and other
variations as are required or permitted by the Indenture, and may have such
letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with the rules of any
securities exchange or depositary therefor or as may, consistently herewith, be
determined by the officers executing such Debentures, as evidenced by their
execution thereof.
SECTION 302. FORM OF FACE OF DEBENTURE.
CAPSTONE CAPITAL CORPORATION
6.55% Convertible Subordinated Debentures due 2002
No. _____________ $______________
CUSIP No.______________
CAPSTONE CAPITAL CORPORATION, a corporation duly organized and existing
under the laws of the State of Maryland (herein called the "Company," which
term includes any successor Person under the Indenture hereinafter referred
to), for value received, hereby promises to pay to ___________________________,
or registered assigns, the principal sum of _______________________________
Dollars on March 14,
6
<PAGE> 12
2002, and to pay interest thereon from the date of issue or the most recent
Interest Payment Date to which interest has been paid or duly provided for,
semi-annually on March 14 and September 14 in each year, commencing
September 14, 1997, at the rate of 6.55% per annum, until the principal hereof
is paid or made available for payment. The interest so payable, and punctually
paid or duly provided for, on any Interest Payment Date will, as provided in
the Indenture, be paid to the Person in whose name this Debenture (or one or
more Predecessor Debentures) is registered at the close of business on the
Regular Record Date for such interest, which shall be the February 28 or August
31 (whether or not a Business Day), as the case may be, next preceding such
Interest Payment Date. Any such interest not so punctually paid or duly
provided for will forthwith cease to be payable to the Holder on such Regular
Record Date and may either be paid to the Person in whose name this Debenture
(or one or more Predecessor Debentures) is registered at the close of business
on a Special Record Date for the payment of such Defaulted Interest to be fixed
by the Trustee, notice whereof shall be given to Holders of Debentures of this
series not less than 10 days prior to such Special Record Date, or be paid at
any time in any other lawful manner not inconsistent with the requirements of
any securities exchange on which the Debentures may be listed, and upon such
notice as may be required by such exchange, all as more fully provided in said
Indenture.
Payment of the principal of and premium, if any, and interest on this
Debenture will be payable, and the conversion and transfer of this Debenture
may be registered, at the office or agency of the Company or the Trustee
maintained for that purpose in New York, New York and at any other office or
agency maintained by the Company or the Trustee for such purpose. Principal of
and premium, if any, and interest on Debentures which are Global Securities and
are held of record by the Depositary or its nominee will be payable in same day
funds. Interest shall be computed on the basis of a 360-day year of twelve
30-day months.
Reference is hereby made to the further provisions of this Debenture
set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.
No stockholder, director, officer, employee or incorporator, as such,
past, present or future, of the Company or any successor corporation shall have
any liability for any obligation of the Company under the Indenture or for any
claim based on, in respect of or by reason of, such obligations or their
creation. Each Holder of a Debenture by accepting such Debenture waives and
releases all such liability. This waiver and release are part of the
consideration for the issuance of the Debentures.
Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof by manual signature, this
Debenture shall not be entitled to any benefit under the Indenture or be valid
or obligatory for any purpose.
7
<PAGE> 13
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
CAPSTONE CAPITAL CORPORATION
By__________________________
Attest:
_____________________________
SECTION 303. FORM OF REVERSE OF DEBENTURE.
IF NECESSARY TO EFFECT COMPLIANCE BY THE COMPANY WITH CERTAIN PROVISIONS OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), THE TRANSFER OF
OWNERSHIP OF THE DEBENTURES REPRESENTED BY THIS CERTIFICATE AND THE CONVERSION
OF SUCH DEBENTURES INTO SHARES OF COMMON STOCK OF THE COMPANY MAY BE PROHIBITED
UPON THE TERMS AND CONDITIONS SET FORTH BELOW AND IN THE INDENTURE AND THE
ARTICLES OF INCORPORATION AND BYLAWS OF THE COMPANY. THE COMPANY WILL FURNISH
A COPY OF SUCH TERMS AND CONDITIONS TO THE REGISTERED HOLDER OF THIS
CERTIFICATE UPON REQUEST AND WITHOUT CHARGE. TO ENABLE THE COMPANY TO ENSURE
THAT IT COMPLIES WITH THE PROVISIONS OF THE CODE, THE HOLDER OF THE DEBENTURES
REPRESENTED BY THIS CERTIFICATE AND ANY PROPOSED TRANSFEREE OF SUCH HOLDER
SHALL UPON DEMAND DISCLOSE TO THE COMPANY IN WRITING SUCH INFORMATION AS THE
COMPANY MAY DEEM NECESSARY FOR SUCH PURPOSES.
This Debenture is one of a duly authorized issue of Debentures of the
Company designated as its 6.55% Convertible Subordinated Debentures due 2002
(herein called the "Debentures"), limited in aggregate principal amount to
$74,750,000 (including Debentures issuable pursuant to the Underwriters'
over-allotment option provided for in the Underwriting Agreement dated March
10, 1997 between the Company and the Underwriters referred to therein), issued
and to be issued under an Indenture, dated as of March 14, 1997 (as
supplemented by the First Supplemental Indenture thereto dated as of March 14,
1997, herein called the "Indenture"), between the Company and AmSouth Bank of
Alabama, as trustee (herein called the "Trustee," which term includes
8
<PAGE> 14
any successor trustee under the Indenture), and reference is hereby made to the
Indenture and all indentures supplemental thereto for a statement of the
respective rights, limitations of rights, duties and immunities thereunder of
the Company, the Trustee and the Holders of the Debentures and of the terms
upon which the Debentures are, and are to be, authenticated and delivered.
Subject to and upon compliance with the provisions of the Indenture,
the Holder of this Debenture is entitled, at his option, at any time on or
before the close of business on March 14, 2002, or in case this Debenture or a
portion hereof is called for redemption, then in respect of this Debenture or
such portion hereof until and including, but (unless the Company defaults in
making the payment due upon redemption) not after, the close of business on the
Business Day preceding the Redemption Date, to convert this Debenture (or any
portion of the principal amount hereof which is $1,000 or an integral multiple
thereof), at the principal amount hereof (or any portion of the principal
amount hereof which is $1,000 or an integral multiple thereof) into fully paid
and non-assessable shares (calculated as to each conversion to the nearest
1/100 of a share) of Common Stock of the Company at a Conversion Rate of
39.4754 shares of Common Stock for each $1,000 principal amount of Debentures
converted (or at the current adjusted Conversion Rate if an adjustment has been
made as provided in the Indenture) by surrender of this Debenture, duly
endorsed or assigned to the Company or in blank, to the Company at the office
or agency of the Company or the Trustee maintained for such purpose in New
York, New York, accompanied by written notice to the Company that the Holder
hereof elects to convert this Debenture, or if less than the entire principal
amount hereof is to be converted,the portion hereof to be converted and, in
case such surrender shall be made during the period from the close of business
on any Regular Record Date next preceding any Interest Payment Date to the
close of business on such Interest Payment Date (unless this Debenture or the
portion thereof being converted has been called for redemption), also
accompanied by payment in New York Clearing House funds or other funds
acceptable to the Company of an amount equal to the interest payable on such
Interest Payment Date on the principal amount of this Debenture then being
converted. Subject to the aforesaid requirement for payment and, in the case
of a conversion after the Regular Record Date next preceding any Interest
Payment Date and on or before such Interest Payment Date, to the right of the
Holder of this Debenture (or any Predecessor Debenture) of record at such
Regular Record Date to receive an installment of interest (with certain
exceptions provided in the Indenture), no payment or adjustment is to be made
on conversion for interest accrued hereon or for dividends on the shares of
Common Stock issued on conversion. No fractions of shares or scrip representing
fractions of shares will be issued on conversion, but instead of any fractional
interest the Company shall pay a cash adjustment as provided in the Indenture.
The Conversion Rate is subject to adjustment as provided in the Indenture. In
addition, the Indenture provides that in case of certain consolidations or
mergers to which the Company is a party or the transfer of substantially all of
the assets of the Company, the Indenture shall be amended, without the consent
of any Holders of Debentures, so that this Debenture, if then outstanding, will
be convertible thereafter, during the period this Debenture shall be
convertible as specified above, only into the kind and amount of
9
<PAGE> 15
securities, cash and other property receivable upon the consolidation, merger
or transfer by a holder of the number of shares of Common Stock into which this
Debenture might have been converted immediately prior to such consolidation,
merger or transfer (assuming such holder of Common Stock failed to exercise any
rights of election and received per share the kind and amount received per
share by a plurality of non-electing shares).
The Debentures are subject to redemption upon not less than 30 and not
more than 60 days' notice by mail, at any time on or after March 16, 2000, as a
whole or in part, at the election of the Company, at the Redemption Prices set
forth below, plus accrued and unpaid interest to the Redemption Date (subject
to the right of Holders of record on the relevant Regular Record Date to
receive interest due on an Interest Payment Date that is on or prior to the
Redemption Date).
If redeemed during the 12-month period beginning March 14 in the year
indicated (March 16, in the case of 2000), the Redemption Price per Debenture
shall be:
<TABLE>
<CAPTION>
Year Redemption Price
---- ----------------
<S> <C>
2000 . . . . . . . . $989.48
2001 . . . . . . . . $994.14
</TABLE>
Notwithstanding the foregoing, the Debentures will be subject to
redemption, in whole or in part, at any time, to the extent necessary for the
Company to continue to qualify as a REIT. The Redemption Price for such
Debentures redeemed shall equal the Issue Price, plus accrued and unpaid
interest and accrued Original Issue Discount to and including the Redemption
Date. The Company may exercise such redemption powers solely with respect to
Holders who pose a threat to the Company's REIT status and only to the extent
deemed necessary or advisable by the Board of Directors to preserve such
status.
In certain circumstances involving the occurrence of a Repurchase
Event, the Holder hereof shall have the right to require the Company to
repurchase this Debenture at the Issue Price, plus accrued interest and accrued
Original Issue Discount to and including the Repurchase Date, but interest
installments whose Stated Maturity is on or prior to such Repurchase Date will
be payable to the Holders of such Debentures, or one or more Predecessor
Debentures, of record at the close of business on the relevant Record Dates
referred to on the face hereof, all as provided in the Indenture.
In the event of redemption, repurchase or conversion of this Debenture
in part only, a new Debenture or Debentures for the unredeemed, unrepurchased
or unconverted portion hereof will be issued in the name of the Holder hereof
upon the cancellation hereof.
10
<PAGE> 16
The Company covenants and agrees, and each Holder of a Debenture, by
his acceptance thereof, likewise covenants and agrees, that to the extent and
in the manner set forth in the Indenture, the indebtedness represented by the
Debentures and the payment of principal of and premium, if any, and interest on
each and all of the Debentures are hereby expressly made subordinate and
subject in right of payment to the prior payment in full of all Senior Debt.
If an Event of Default with respect to the Debentures shall occur and
be continuing, the Debentures may be declared due and payable in an amount of
principal of the Debentures equal to the Issue Price plus accrued Original
Issue Discount to the date of such declaration in the manner and with the
effect provided in the Indenture. Upon payment (i) of the amount of principal
so declared due and payable and (ii) of interest on any overdue principal,
premium, if any, and interest in the manner provided for in the Indenture (in
each case to the extent that the payment of such interest shall be legally
enforceable), all of the Company's obligations in respect of the payment of the
principal of and premium, if any, and interest on the Debentures shall
terminate.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Debentures to be effected under
the Indenture at any time by the Company and the Trustee with the consent of
the Holders of a majority in principal amount of the Debentures at the time
Outstanding. The Indenture also contains provisions permitting the Holders of
specified percentages in the principal amount of the Debentures at the time
Outstanding, on behalf of the Holders of all Debentures, to waive compliance by
the Company with certain provisions of the Indenture and certain past defaults
under the Indenture and their consequences. Any such consent or waiver by the
Holder of this Debenture shall be conclusive and binding upon such Holder and
upon all future Holders of this Debenture and of any Debenture issued upon the
registration of transfer hereof or in exchange herefor or in lieu hereof,
whether or not notation of such consent or waiver is made upon this Debenture.
As provided in and subject to the provisions of the Indenture, the Holder of
this Debenture shall not have the right to institute any proceeding with
respect to the Indenture or for the appointment of a receiver or trustee or for
any other remedy thereunder, unless such Holder shall have previously given the
Trustee written notice of a continuing Event of Default with respect to the
Debentures, the Holders of not less than 25% in principal amount of the
Debentures at the time Outstanding shall have made written request to the
Trustee to institute proceedings in respect of such Event of Default as Trustee
and offered the Trustee reasonable indemnity, and the Trustee shall not have
received from the Holders of a majority in principal amount of Debentures at
the time Outstanding a direction inconsistent with such request, and shall have
failed to institute any such proceeding, for 60 days after receipt of such
notice, request and offer of indemnity. The foregoing shall not apply to any
suit instituted by the Holder of this Debenture for the enforcement of payment
of principal hereof or any premium or interest hereon on or after the
respective due dates expressed herein.
11
<PAGE> 17
Subject to the rights of holders of Senior Debt, as set forth in the
Indenture, no other reference herein to the Indenture and no provision of this
Debenture or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of and
premium, if any, and interest on this Debenture at the time, place and rate, and
in the coin or currency, herein prescribed or to convert this Debenture as
provided in the Indenture.
As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this Debenture is registrable in the Security
Register, upon surrender of this Debenture for registration of transfer at the
office or agency of the Company in any place where the principal of and premium,
if any, and interest on this Debenture are payable, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Security Registrar duly executed by, the Holder hereof or his
attorney authorized in writing, and thereupon one or more new Debentures, of
authorized denominations and for the same aggregate principal amount, will be
issued to the designated transferee or transferees. The Security Registrar
shall not be required to register the transfer of any Debentures if such
transfer, in the good faith opinion of the Board of Directors, (i) might cause
the Company to fail to comply with any requirement necessary for the continued
qualification of the Company as a REIT under Section 856 through 859 of the Code
or (ii) would result in a single Person owning more than 9.8% of the Company's
outstanding stock within the meaning of the Code.
The Debentures are issuable only in registered form without coupons in
denominations of $1,000 and any integral multiple thereof. As provided in the
Indenture and subject to certain limitations therein set forth, Debentures are
exchangeable for a like aggregate principal amount of Debentures of a different
authorized denomination, as requested by the Holder surrendering the same.
No service charge shall be made for any such registration of transfer or
exchange, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Debenture for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name this Debenture is registered as the owner hereof for
all purposes, whether or not this Debenture be overdue, and neither the Company,
the Trustee nor any such agent shall be affected by notice to the contrary.
THIS DEBENTURE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.
All terms used in this Debenture which are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
12
<PAGE> 18
The Company will furnish to any Debentureholder upon written request and
without charge a copy of the Indenture. Requests may be made to: Capstone
Capital Corporation, c/o Secretary, 1000 Urban Center Drive, Suite 630,
Birmingham, Alabama 35242.
KEEP THIS CERTIFICATE IN A SAFE PLACE, IF IT IS LOST, STOLEN OR
DESTROYED, THE COMPANY MAY REQUIRE A BOND OF INDEMNITY AS
A CONDITION TO THE ISSUANCE OF A REPLACEMENT CERTIFICATE.
13
<PAGE> 19
[FORM OF CONVERSION NOTICE]
To: CAPSTONE CAPITAL CORPORATION
The undersigned owner of this Debenture hereby irrevocably exercises the
option to convert this Debenture, or portion hereof (which is $1,000 or an
integral multiple thereof) below designated, into shares of Common Stock in
accordance with the terms of the Indenture referred to in this Debenture, and
directs that the shares issuable and deliverable upon the 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 are to be issued in the name of a person other than the undersigned, the
undersigned will pay all transfer taxes payable with respect thereto. Any
amount required to be paid by the undersigned on account of interest accompanies
this Debenture.
Dated:
------------------------------
Signature(s) NOTICE: THE SIGNATURE(S) TO THIS
------------------------ ASSIGNMENT MUST CORRESPOND WITH
THE NAME(S) AS WRITTEN UPON THE
THE FACE OF THE CERTIFICATE IN
EVERY PARTICULAR, WITHOUT
ALTERATION OR ENLARGEMENT OR
ANY CHANGE WHATSOEVER.
Signature Guarantee:
----------------
THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION
(BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH
MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTY MEDALLION PROGRAM), PURSUANT TO
S.E.C. 17Ad-15.
Fill in for registration
of shares of Common Stock
and Debentures if to be
issued otherwise than to
the registered holder:
- -----------------------------------
Name
- -----------------------------------
Address
- -----------------------------------
(please print name and address,
including zip code number)
Principal Amount to be
converted (in an integral
multiple of $1,000, if
less than all):
$
--------------------------------------
Social Security Or Other Taxpayer
Identification Number Of Owner:
14
<PAGE> 20
[FORM OF ASSIGNMENT]
If you the holder want to assign this Debenture, fill in the form below
and have your signature guaranteed:
I or we assign and transfer this Debenture to
_____________________________________________________________________________
(Insert assignee's social security or tax ID number)_________________________
_____________________________________________________________________________
_____________________________________________________________________________
(Print or type assignee's name, address and zip code) and irrevocably appoint
_____________________________________________________________________________
agent to transfer this Debenture on the books of the Company. The agent may
substitute another to act for him.
_____________________________________________________________________________
Date:_________________________ Your signature:_______________________________
NOTICE: THE SIGNATURE(S) TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME(S)
AS WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR, WITHOUT
ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER.
Signature Guarantee:_________________________________________________________
THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION
(BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH
MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTY MEDALLION PROGRAM), PURSUANT TO
S.E.C. RULE 17Ad-15.
15
<PAGE> 21
[OPTION OF HOLDER TO ELECT PURCHASE]
If you wish to have this Debenture purchased by the Company pursuant to
Section 701 of the First Supplemental Indenture dated as of March 14, 1997,
check the box: [ ]
If you wish to have a portion of this Debenture (which is $1,000 or an
integral multiple thereof) purchased by the Company pursuant to Section 701 of
the First Supplemental Indenture dated as of March 14, 1997, state the amount
you wish to have purchased:
$____________________
Date: ___________________ Your Signature(s):__________________________
NOTICE: THE SIGNATURE(S) TO THIS
ASSIGNMENT MUST CORRESPOND WITH THE
NAME(S) AS WRITTEN UPON THE FACE OF
THE CERTIFICATE IN EVERY PARTICULAR,
WITHOUT ALTERATION OR ENLARGEMENT OR
ANY CHANGE WHATSOEVER.
Tax Identification No.: ___________
Signature Guarantee: ____________________________________________________
THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION
(BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH
MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTY MEDALLION PROGRAM), PURSUANT TO
S.E.C. RULE 17Ad-15.
16
<PAGE> 22
SECTION 304. GLOBAL DEBENTURES.
Debentures may be issued in the form of Global Securities. Every
Debenture authenticated and delivered hereunder as a Global Security shall, in
addition to any other legends required by the Depositary, bear a legend in
substantially the following form:
THIS DEBENTURE IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR
A NOMINEE THEREOF. THIS DEBENTURE MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A
DEBENTURE REGISTERED, AND NO TRANSFER OF THIS DEBENTURE IN WHOLE OR IN PART MAY
BE REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE
THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
Owners of beneficial interests in Debentures represented by a Global
Security shall be entitled to receive physical delivery of Debentures in
definitive form only under the circumstances set forth in Section 305 of the
Base Indenture and as set forth in the next sentence. An owner of a beneficial
interest in Debentures represented by a Global Security may, on terms acceptable
to the Company and the Depositary, receive Debentures in definitive form in
exchange for such beneficial interest. In any such instance, the owner of such
benefical interest will be entitled to physical delivery in definitive form of
Debentures represented by the Global Security equal in principal amount to such
beneficial interest and to have such Debentures registered in its name.
SECTION 305. FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION.
The Trustee's certificate of authentication shall be in substantially
the following form:
This is one of the Securities referred to in the within-mentioned
Indenture.
Dated: AMSOUTH BANK OF ALABAMA,
As Trustee
By__________________________________
Authorized Signatory
17
<PAGE> 23
ARTICLE FOUR
RESTRICTIONS ON OWNERSHIP AND TRANSFER
SECTION 401. OWNERSHIP AND TRANSFER RESTRICTIONS.
(a) To protect the Company's status as a REIT, a Person may not
own or convert any Debenture if such ownership or conversion, in the good
faith opinion of the Board of Directors, (i) might cause the Company to fail
to comply with any requirement necessary for the continued qualification of
the Company as a REIT or (ii) would result in a single Person owning more than
9.8% of the Company's outstanding stock within the meaning of the Code. For
the purpose of the preceding sentence, a Person shall be considered to own
shares of Company stock which are owned directly by such Person (held of record
by such Person or such Person's nominee or nominees) and shares of Company
stock which are owned indirectly by such Person (including shares of Common
Stock issuable upon conversation of the Debentures) pursuant to Sections 542,
544 and 856 of the Code and the regulations promulgated thereunder.
(b) The Security Registrar shall not be required to register the
transfer of any Debentures if such transfer, in the good faith opinion of the
Board of Directors, (i) might cause the Company to fail to comply with any
requirement necessary for the continued qualification of the Company as a REIT
under Section 856 through 859 of the Code or (ii) would result in a single
Person owning more than 9.8% of the Company's outstanding stock within the
meaning of the Code. The Company shall advise the Security Registrar in
writing promptly of any determination by the Board of Directors not to permit
a transfer of any Debenture pursuant to the immediately preceding sentence,
identifying such Debenture by Holder and any other appropriate method, and
shall instruct the Security Registrar not to register the transfer of such
Debenture. The Security Registrar shall not be liable to the Company, Holders
of Debentures or any other Persons for transfers of such Debentures effected
prior to its receipt of such written instructions from the Company and the
Company shall indemnify the Security Registrar for all claims, costs and
expenses incurred by it in connection with refusing to transfer Debentures as
instructed by the Company.
The ownership and transfer of Debentures and the conversion
thereof shall also be subject to such additional restrictions as may be
provided for in the Articles of Incorporation and Bylaws of the Company.
18
<PAGE> 24
ARTICLE FIVE
CONVERSION OF DEBENTURES
SECTION 501. CONVERSION PRIVILEGE AND CONVERSION RATE.
Subject to and upon compliance with the provisions of this Article, at
the option of the Holder thereof, any Debenture or any portion of the principal
amount thereof which equals $1,000 or any integral multiple thereof may be
converted at any time at or prior to March 14, 2002, at the principal amount
thereof, or of such portion thereof, into fully paid and nonassessable shares
(calculated as to each conversion to the nearest 1/100 of a share) of Common
Stock, at the Conversion Rate, determined as hereinafter provided, in effect at
the time of conversion. Such conversion right shall expire at the close of
business on March 14, 2002. In case a Debenture or portion thereof is called
for redemption, such conversion right in respect of the Debenture or portion so
called shall expire at the close of business on the business day preceding the
applicable Redemption Date, unless the Company defaults in making the payment
due upon redemption.
The rate at which shares of Common Stock shall be delivered upon
conversion (herein called the "Conversion Rate") shall be initially 39.4754
shares of Common Stock for each $1,000 principal amount of Debentures. The
Conversion Rate shall be adjusted in certain instances as provided in paragraphs
(a), (b), (c), (d), (e) and (h) of Section 504.
SECTION 502. EXERCISE OF CONVERSION PRIVILEGE.
In order to exercise the conversion privilege, the Holder of any
Debenture shall surrender such Debenture, duly endorsed or assigned to the
Company or in blank, at any office or agency of the Company maintained pursuant
to Section 201 hereof, accompanied by written notice to the Company in the form
provided in the Debenture (or such other notice as is acceptable to the Company)
at such office or agency that the Holder elects to convert such Debenture or, if
less than the entire principal amount thereof is to be converted, the portion
thereof to be converted. Debentures surrendered for conversion during the
period from the opening of business on any Regular Record Date next preceding
any Interest Payment Date to the close of business on such Interest Payment Date
shall (except in the case of Debentures or portions thereof which have been
called for redemption) be accompanied by payment in New York Clearing House
funds or other funds acceptable to the Company of an amount equal to the
interest payable on such Interest Payment Date on the principal amount being
surrendered for conversion. Except as provided in the immediately preceding
sentence and subject to the last paragraph of Section 201 hereof, no payment or
adjustment shall be made upon any conversion on account of any interest accrued
on the Debentures surrendered for conversion or on account of any dividends on
the Common Stock issued upon conversion.
19
<PAGE> 25
Upon conversion of a Debenture, a holder will not receive any cash
payment representing accrued Original Issue Discount. The Company's delivery to
the holder of the number of shares of Common Stock into which such Debenture is
converted (together with a cash payment, if any, in lieu of any fractional
share) will satisfy the Company's obligation to pay the principal amount at
maturity of such Debenture as well as the accrued Original Issue Discount
attributable to the period from the issue date to the conversion date. Thus,
the accrued Original Issue Discount will be deemed to be paid in full rather
than cancelled, extinguished or forfeited. The Conversion Rate will not be
adjusted at any time during the term of such Debenture for accrued Original
Issue Discount.
Debentures shall be deemed to have been converted immediately prior to
the close of business on the day of surrender of such Debentures for conversion
in accordance with the foregoing provisions, and at such time the rights of the
Holders of such Debentures as Holders shall cease, and the Person or Persons
entitled to receive the Common Stock issuable upon conversion shall be treated
for all purposes of the record holder or holders of such Common Stock as and
after such time. As promptly as practicable on or after the conversion date,
the Company shall issue and shall deliver at such office or agency a certificate
or certificates for the number of full shares of Common Stock issuable upon
conversion, together with payment in lieu of any fraction of a share, as
provided in Section 503.
In the case of any Debenture which is converted in part only, upon such
conversion the Company shall execute and the Trustee shall authenticate and
deliver to the Holder thereof, at the expense of the Company, a new Debenture or
Debentures of authorized denominations in aggregate principal amount equal to
the unconverted portion of the principal amount of such Debenture.
SECTION 503. FRACTIONS OF SHARES.
No fractional share of Common Stock shall be issued upon conversion of
Debentures. If more than one Debenture shall be surrendered for conversion at
one time by the same Holder, the number of full shares which shall be issuable
upon conversion thereof shall be computed on the basis of the aggregate
principal amount of the Debentures (or specified portions thereof) so
surrendered. Instead of any fractional share of Common Stock which would
otherwise be issuable upon conversion of any Debenture or Debentures (or
specified portions thereof), the Company shall pay a cash adjustment in respect
of such fraction in an amount equal to the same fraction of the Closing Price
(as hereinafter defined) at the close of business on the day of conversion (or,
if such day is not a Trading Day (as hereafter defined), on the Trading Day
immediately preceding such day).
20
<PAGE> 26
SECTION 504. ADJUSTMENT OF CONVERSION RATE.
(a) In case the Company shall pay or make a dividend or other
distribution on the Common Stock exclusively in Common Stock or shall pay or
make a dividend or other distribution on any other class of capital stock of the
Company which dividend or distribution includes Common Stock, the Conversion
Rate in effect at the opening of business on the day following the date fixed
for the determination of shareholders entitled to receive such dividend or other
distribution shall be increased by multiplying such Conversion Rate by a
fraction of which the numerator shall be the sum of the number of shares of
Common Stock outstanding at the close of business on the date fixed for such
determination and the total number of shares constituting such dividend or other
distribution and the denominator shall be the number of shares of Common Stock
outstanding at the close of business on the date fixed for such determination,
such increase to become effective immediately after the opening of business on
the day following the date fixed for such determination. For the purpose of
this paragraph (a), the number of shares of Common Stock at any time outstanding
shall not include shares held in the treasury of the Company. The Company shall
not pay any dividend or make any distribution on shares of Common Stock held in
the treasury of the Company.
(b) Subject to paragraph (f) of this Section, in case the Company
shall pay or make a dividend or other distribution on the Common Stock
consisting exclusively of, or shall otherwise issue to all holders of the Common
Stock, rights or warrants entitling the holders thereof to subscribe for or
purchase shares of Common Stock at a price per share less than the Current
Market Price (determined as provided in paragraph (g) of this Section) on the
date fixed for the determination of shareholders entitled to receive such rights
or warrants, the Conversion Rate in effect at the opening of business on the day
following the date fixed for such determination shall be increased by
multiplying such Conversion Rate by a fraction of which the numerator shall be
the number of shares of Common Stock outstanding at the close of business on the
date fixed for such determination plus the number of shares of Common Stock so
offered for subscription or purchase and the denominator shall be the number of
shares of Common Stock outstanding at the close of business on the date fixed
for such determination plus the number of shares of Common Stock which the
aggregate of the offering price of the total number of shares of Common Stock so
offered for subscription or purchase would purchase at such Current Market
Price, such increase to become effective immediately after the opening of
business on the day following the date fixed for such determination. For the
purposes of this paragraph (b), the number of shares of Common Stock at any time
outstanding shall not include shares held in the treasury of the Company. The
Company shall not issue any rights or warrants in respect of shares of Common
Stock held in the treasury of the Company.
(c) In case outstanding shares of Common Stock shall be subdivided
into a greater number of shares of Common Stock, the Conversion Rate in effect
at the opening of business on the day following the day upon which such
subdivision becomes
21
<PAGE> 27
effective shall be proportionately increased, and, conversely, in case
outstanding shares of Common Stock shall be combined into a smaller number of
shares of Common Stock, the Conversion Rate in effect at the opening of
business on the day following the day upon which such combination becomes
effective shall be proportionately reduced, such increase or reduction, as the
case may be, to become effective immediately after the opening of business on
the day following the day upon which subdivision or combination becomes
effective.
(d) Subject to the last sentence of this paragraph (d) and to
paragraph (f) of this Section, in case the Company shall, by dividend or
otherwise, distribute to all holders of the Common Stock evidences of its
indebtedness, shares of any class of its capital stock, cash or other assets
(including securities, but excluding any (i) rights or warrants referred to in
paragraph (b) of this Section, (ii) dividend or distribution paid exclusively in
cash and (iii) dividend or distribution referred to in paragraph (a) of this
Section), the Conversion Rate shall be increased by multiplying the Conversion
Rate in effect immediately prior to the close of business on the date fixed for
the determination of shareholders entitled to such distribution by a fraction of
which the numerator shall be the Current Market Price (determined as provided in
paragraph (g) of this Section) on such date and the denominator shall be such
Current Market Price less the fair market value (as determined by the Board of
Directors, whose determination shall be conclusive and described in a Board
Resolution) on such date of the portion of the evidences of indebtedness, shares
of capital stock, cash and other assets to be distributed applicable to one
share of Common Stock, such increase to become effective immediately prior to
the opening of business on the day following such date. If the Board of
Directors determines the fair market value of any distribution for purposes of
this paragraph (d) by reference to the actual or when-issued trading market for
any securities comprising part or all of such distribution, it must in doing so
consider the prices in such market over the same period used in computing the
Current Market Price pursuant to paragraph (g) of this Section, to the extent
possible. For purposes of this paragraph (d), any dividend or distribution that
includes shares of Common Stock, rights or warrants to subscribe for or purchase
shares of Common Stock or securities convertible into or exchangeable for shares
of Common Stock shall be deemed to be (x) a dividend or distribution of the
evidences of indebtedness, cash, assets or shares of capital stock other than
such shares of Common Stock, such rights or warrants or such convertible or
exchangeable securities (making any Conversion Rate increase required by this
paragraph (d)) immediately followed by (y) in the case of such shares of Common
Stock or such rights or warrants, a dividend or distribution thereof (making any
further Conversion Rate increase required by paragraph (a) and (b) of this
Section, except any shares of Common Stock included in such dividend or
distribution shall not be deemed "outstanding at the close of business on the
date fixed for such determination" within the meaning of paragraph (a) of this
Section), or (z) in the case of such convertible or exchangeable securities, a
dividend or distribution of the number of shares of Common Stock as would then
be issuable upon the conversion or exchange thereof, whether or not the
conversion or exchange of such securities is subject to any conditions (making
any further Conversion Rate increase required by paragraph (a) of this Section,
except the
22
<PAGE> 28
shares deemed to constitute such dividend or distribution shall not be deemed
"outstanding at the close of business on the date fixed for such determination"
within the meaning of paragraph (a) of this Section).
(e) In case a tender offer made by the Company or any Subsidiary
for all or any portion of the Common Stock shall be consummated and such tender
offer shall involve an aggregate consideration having a fair market value (as
determined by the Board of Directors, whose determination shall be conclusive
and described in a Board Resolution) as of the last time (the "Expiration Time")
that tenders may be made pursuant to such tender offer (as it shall have been
amended) that, together with 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 Board Resolution) as of the Expiration Time of the
other consideration paid in respect of any other tender offer by the Company or
a Subsidiary for all or any portion of the Common Stock consummated within the
12 months preceding the Expiration Time and in respect of which no Conversion
Rate adjustment pursuant to this paragraph (e) has been made previously, exceeds
the greater of (A) 12.5% of the product of the Current Market Price (determined
as provided in paragraph (g) of this Section) immediately prior to the
Expiration Time times the number of shares of Common Stock outstanding
(including any tendered shares) at the Expiration Time or (B) the Company's
retained earnings as of the Expiration Time, the Conversion Rate shall be
increased by multiplying the Conversion Rate in effect immediately prior to the
Expiration Time by a fraction of which the numerator shall be the product of (X)
the Current Market Price (determined as provided in paragraph (g) of this
Section) immediately prior to the Expiration Time times (Y) the number of shares
of Common Stock outstanding at the Expiration Time minus the number of shares
accepted for payment in such tender offer (the "Purchased Shares") and the
denominator shall be the product of (A) such Current Market Price times such
number of outstanding shares (including any tendered shares at the Expiration
Time) minus (B) the fair market value (determined as aforesaid) of the aggregate
consideration payable to shareholders upon consummation of such tender offer,
such increase to become effective immediately prior to the opening of business
on the day following the Expiration Time; provided, that if the number of
Purchased Shares or the aggregate consideration payable therefor have not been
finally determined by such opening of business, the adjustment required by this
paragraph (e) shall, pending such final determination, be made based upon the
preliminarily announced results of such tender offer, and, after such final
determination shall have been made, the adjustment required by this paragraph
(e) shall be made based upon the number of Purchased Shares and the aggregate
consideration payable therefor as so finally determined.
(f) Rights or warrants issued by the Company to all holders of the
Common Stock entitling the holders thereof to subscribe for or purchase shares
of Common Stock (either initially or under certain circumstances), which rights
or warrants (i) are deemed to be transferred with such shares of Common Stock,
(ii) are not exercisable until the occurrence of a specified event or events
("Trigger Event") and (iii) are also issued in respect of future issuances of
Common Stock, shall for purposes
23
<PAGE> 29
of this Section 504 not be deemed issued until the occurrence of the earliest
Trigger Event. If any such rights or warrants, including any such existing
rights or warrants distributed prior to the date of this Indenture are subject
to subsequent events, upon the occurence of each of which such rights or
warrants shall become exercisable to purchase different securities, evidences of
indebtedness or other assets, then the occurrence of each such event shall be
deemed to be such date of issuance and record date with respect to new rights
or warrants (and a termination or expiration of the existing rights or warrants
without exercise by the holder thereof). In addition, in the event of any
distribution (or deemed distribution) of rights or warrants, or any Trigger
Event with respect thereto, that was counted for purposes of calculating a
distribution amount for which an adjustment to the Conversion Rate under this
Section 504 was made, (1) in the case of any such rights or warrant which shall
all have been redeemed or repurchased without exercise by any holders thereof,
the Conversion Rate shall be readjusted upon such final redemption or repurchase
to give effect to such distribution or Trigger Event, as the case may be, as
though it were a cash distribution, equal to the per share redemption or
repurchase price received by a holder or holders of Common Stock with respect to
such rights or warrants (assuming such holder had retained such rights or
warrants), made to all holders of Common Stock as of the date of such redemption
or repurchase, and (2) in the case of such rights or warrants which shall have
expired or been terminated without exercise by any holders thereof, the
Conversion Rate shall be readjusted as if such rights and warrants had not been
issued.
Notwithstanding any other provision of this Section 504 to the contrary,
rights, warrants, evidences of indebtedness, other securities, cash or other
assets (including, without limitation, any rights distributed pursuant to any
stockholder rights plan) shall be deemed not to have been distributed for
purposes of this Section 504 if the Company makes proper provision so that each
holder of Debentures who converts a Debenture (or any portion thereof) after the
date fixed for determination of stockholders entitled to receive 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
such distributions that such holder would have been entitled to receive if such
holder had, immediately prior to such determination date, converted such
Debenture into Common Stock.
(g) For the purpose of any computation under this paragraph and
paragraphs (b) and (d) of this Section, the current market price per share of
Common Stock (the "Current Market Price") on any date shall be deemed to be the
average of the daily Closing Prices for the 5 consecutive Trading Days selected
by the Company commencing not more than 20 Trading Days before, and ending not
later than, the date in question; provided, however, that (i) if the "ex" date
for any event (other than the issuance or distribution requiring such
computation) that requires an adjustment to the Conversion Rate pursuant to
paragraph (a), (b), (c), (d) or (e) above occurs on or after the 20th Trading
Day prior to the date in question and prior to the "ex" date for the issuance or
distribution requiring such computation, the Closing Price for each Trading Day
prior to the "ex" date for such other event shall be adjusted by multiplying
such
24
<PAGE> 30
Closing Price by the reciprocal of the fraction by which the Conversion Rate is
so required to be adjusted as a result of such other event, (ii) if the "ex"
date for any event (other than the issuance or distribution requiring such
computation) that requires an adjustment to the Conversion Rate pursuant to
paragraph (a), (b), (c), (d) or (e) above occurs on or after the "ex" date for
the issuance or distribution requiring such computation and on or prior to the
date in question, the Closing Price for each Trading Day on and after the "ex"
date for such other event shall be adjusted by multiplying such Closing Price by
the same fraction by which the Conversion Rate is so required to be adjusted as
a result of such other event, and (iii) if the "ex" date for the issuance or
distribution requiring such computation is on or prior to the date in question,
after taking into account any adjustment required pursuant to clause (ii) of
this proviso, the Closing Price for each Trading Day on or after such "ex" date
shall be adjusted by adding thereto the amount of any cash and the fair market
value on the date in question (as determined by the Board of Directors in a
manner consistent with any determination of such value for purposes of paragraph
(d) of this Section, whose determination shall be conclusive and described in a
Board Resolution) of the evidences of indebtedness, shares of capital stock or
assets being distributed applicable to one share of Common Stock as of the close
of business on the day before such "ex" date. For the purpose of any
computation under paragraph (e) of this Section, the Current Market Price on any
date shall be deemed to be the average of the daily Closing Prices for the 5
consecutive Trading Days selected by the Company commencing on or after the
latest (the "Commencement Date") of (i) the date 20 Trading Days before the date
in question, (ii) the date of commencement of the tender offer requiring such
computation and (iii) the date of the last amendment, if any, of such tender
offer involving a change in the maximum number of shares for which tenders are
sought or a change in the consideration offered, and ending not later than the
Expiration Time of such tender offer; provided, however, that if the "ex" date
for any event (other than the tender offer requiring such computation) that
requires an adjustment to the Conversion Rate pursuant to paragraph (a), (b),
(c), (d) or (e) above occurs on or after the Commencement Date and prior to the
Expiration Time for the tender offer requiring such computation, the Closing
Price for each Trading Day prior to the "ex" date for such other event shall be
adjusted by multiplying such Closing Price by the reciprocal of the fraction by
which the Conversion Rate is so required to be adjusted as a result of such
other event. The closing price for any Trading Day (the "Closing Price") shall
be the last reported sales price regular way or, in case no such reported sale
takes place on such day, the average of the reported closing bid and asked
prices regular way, in either case on the New York Stock Exchange or, if the
Common Stock is not listed or admitted to trading on such exchange, on the
principal national securities exchange on which the Common Stock is listed or
admitted to trading or, if not listed or admitted to trading on any national
securities exchange, on the Nasdaq Stock Market's National Market or, if the
Common Stock is not listed or admitted to trading on any national securities
exchange or quoted on such National Market, the average of the closing bid and
asked prices in the over-the-counter market as furnished by any New York Stock
Exchange member firm selected from time to time by the Company for that
purpose. For purposes of this paragraph, the term "Trading Day" means each
Monday, Tuesday, Wednesday, Thursday and Friday, other than any day on which
securities are
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generally not traded on the applicable securities exchange or in the applicable
securities market and the term "'ex' date," (i) when used with respect to any
issuance or distribution, means the first date on which the Common Stock trades
regular way on the relevant exchange or in the relevant market from which the
Closing Prices were obtained without the right to receive such issuance or
distribution, (ii) when used with respect to any subdivision or combination of
shares of Common Stock, means the first date on which the Common Stock trades
regular way on such exchange or in such market after the time at which such
subdivision or combination becomes effective, and (iii) when used with respect
to any tender offer means the first date on which the Common Stock trades
regular way on such exchange or in such market after the last time that tenders
may be made pursuant to such tender offer (as it shall have been amended).
(h) The Company may, but shall not be obligated to, make such
increases in the Conversion Rate, in addition to those required by paragraphs
(a), (b), (c), (d) and (e) of this Section, as it considers to be advisable (as
evidenced by a Board Resolution) in order that any event treated for federal
income tax purposes as a dividend of stock or stock rights shall not be taxable
to the recipients or, if that is not possible, to diminish any income taxes that
are otherwise payable because of such event.
(i) No adjustment in the Conversion Rate shall be required unless
such adjustment (plus any other adjustments not previously made by reason of
this paragraph (i)) would require an increase or decrease of at least 1% in the
Conversion Rate; provided, however, that any adjustments which by reason of this
paragraph (i) are not required to be made shall be carried forward and taken
into account in any subsequent adjustment.
(j) Notwithstanding any other provision of this Section 504, no
adjustment to the Conversion Rate shall result in shares of Common Stock being
issued upon conversion at an effective price below the then par value per share
of the Common Stock, and any such purported adjustment shall instead increase
the Conversion Rate to such number resulting in the issuance of shares of Common
Stock at an effective price equal to par value. The Company hereby covenants
not to take any action to increase the par value per share of the Common Stock.
SECTION 505. NOTICE OF ADJUSTMENTS OF CONVERSION RATE.
Whenever the Conversion Rate is adjusted as herein provided:
(a) the Company shall compute the adjusted Conversion Rate
in accordance with Section 504 hereof and shall prepare an
Officers' Certificate signed by the Treasurer of the Company setting
forth the adjusted Conversion Rate and showing in reasonable detail
the facts upon which such adjustment is based, and such certificate
shall forthwith be filed (with a copy to the Trustee) at each office
or agency maintained for the purpose of conversion of Debentures
pursuant to Section 201 hereof; and
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(b) a notice stating that the Conversion Rate has been
adjusted and setting forth the adjusted Conversion Rate shall
forthwith be prepared, and as soon as practicable after it is
prepared, such notice shall be mailed by the Company to all Holders
at their last addresses as they shall appear in the Debenture
Register.
SECTION 506. NOTICE OF CERTAIN CORPORATE ACTION.
(a) In case:
(i) the Company shall declare a dividend (or any
other distribution) on its Common Stock payable otherwise than
exclusively in cash; or
(ii) the Company shall authorize the granting to
the holders of its Common Stock of rights or warrants to
subscribe for or purchase any shares of capital stock of any
class or of any other rights (excluding shares of capital stock
or options for capital stock issued pursuant to a benefit plan
for employees, officers or directors of the Company); or
(iii) of any reclassification of the Common Stock
(other than a subdivision or combination of the
outstanding shares of Common Stock), or of any consolidation,
merger or share exchange to which the Company is a party and
for which approval of any stockholders of the Company is
required, or of the sale or transfer of all or substantially
all of the assets of the Company; or
(iv) of the voluntary or involuntary dissolution,
liquidation or winding up of the Company; or
(v) the Company or any Subsidiary shall commence
a tender offer for all or a portion of the outstanding shares
of Common Stock (or shall amend any such tender offer to
change the maximum number of shares being sought or the amount
or type of consideration being offered therefor);
then the Company shall cause to be filed at each office or agency maintained
pursuant to Section 201 hereof, and shall cause to be mailed to all Holders at
their last addresses as they shall appear in the Debenture Register, at least
20 days (or 10 days in any case specified in clause (i), (ii) or (iii) above)
prior to the applicable record, effective or expiration 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 granting of rights or warrants,
or, if a record is not to be taken, the date as of which the holders of Common
Stock of record who will be entitled to such dividend, distribution, rights or
warrants are to be determined, (y) the date on which such reclassification,
consolidation, merger, share
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exchange, sale, transfer, dissolution, liquidation or winding up is expected to
become effective, and the date as of which it is expected that holders of
Common Stock of record shall be entitled to exchange their shares of Common
Stock for securities, cash or other property deliverable upon such
reclassification, consolidation, merger, share exchange, sale, transfer,
dissolution, liquidation or winding up, or (z) the date on which such tender
offer commenced, the date on which such tender offer is scheduled to expire
unless extended, the consideration offered and the other material terms thereof
(or the material terms of any amendment thereto). Neither the failure to give
any such notice nor any defect therein shall affect the legality or validity of
any action described in clauses (i) through (v) of this Section 506(a).
(b) In case the Company or any Affiliate of the Company shall
propose to engage in a "Rule 13e-3 Transaction" (as defined in the Commission's
Rule 13e-3 under the Exchange Act) the Company shall, no later than the date on
which any information with respect to such Rule 13e-3 Transaction is first
required to be given to the Commission or any other person pursuant to such
Rule 13e-3, cause to be mailed to all Holders at their last addresses as they
shall appear in the Security Register, a copy of all information required to be
given to the Commission or such other person pursuant to such Rule 13e-3. The
information required to be given under this paragraph shall be in addition to
and not in lieu of any other information required to be given by the Company
pursuant to this Section 506 or any other provision of the Debentures or the
Indenture.
SECTION 507. COMPANY TO RESERVE COMMON STOCK.
The Company shall at all times reserve and keep available, free from
preemptive rights, out of the authorized but unissued Common Stock or out of
the Common Stock held in treasury, for the purpose of effecting the conversion
of Debentures, the full number of shares of Common Stock then issuable upon the
conversion of all outstanding Debentures. Shares of Common Stock issuable upon
conversion of outstanding Debentures shall be issued out of the Common Stock
held in Treasury to the extent available.
SECTION 508. TAXES ON CONVERSIONS.
The Company will pay any and all taxes that may be payable in respect
of the issue or delivery of shares of Common Stock on conversion of Debentures
pursuant hereto. The Company shall not, however, be required to pay any tax
which may be payable in respect of any transfer involved in the issue and
delivery of shares of Common Stock in a name other than that of the Holder of
the Debenture or Debentures to be converted, and no such issue or delivery
shall be made unless and until the Person requesting such issue has paid to the
Company the amount of any such tax, or has established to the satisfaction of
the Company that such tax has been paid.
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SECTION 509. COVENANT AS TO COMMON STOCK.
The Company covenants that all shares of Common Stock which
may be issued upon conversion of Debentures will upon issue be fully paid
and nonassessable and, except as provided in Section 508 hereof, the Company
will pay all taxes, liens and charges with respect to the issue thereof.
SECTION 510. CANCELLATION OF CONVERTED DEBENTURES.
All Debentures delivered for conversion shall be delivered to
the Trustee to be canceled by or at the direction of the Trustee, which shall
dispose of the same as provided in Section 309 of the Base Indenture.
SECTION 511. PROVISIONS IN CASE OF RECLASSIFICATION, CONSOLIDATION, MERGER
OR SALE OF ASSETS.
In case of any capital reorganization or reclassification of
the capital stock of the Company (other than solely a change in par value, or
from par value to no par value) or any consolidation of the Company with, or
merger of the Company into, any other Person, any merger of another Person into
the Company (other than a merger which does not result in any reclassification,
conversion, exchange or cancellation of outstanding Common Stock or preferred
shares of beneficial interest of the Company) or any sale or transfer of all or
substantially all of the assets of the Company, the Holder of each Debenture
then outstanding shall have the right thereafter, during the period such
Debenture shall be convertible as specified in Section 501, to convert such
Debenture only into the kind and amount of securities, cash and other property
receivable upon such reorganization, recapitalization, consolidation, merger,
sale or transfer by a holder of the number of shares of Common Stock into which
such Debenture might have been converted immediately prior to such
reorganization, consolidation, merger, sale or transfer, assuming such holder
of Common Stock (i) is not a Person with which the Company consolidated or into
which the Company merged or which merged into the Company or to which such sale
or transfer was made, as the case may be ("constituent Person"), or an
Affiliate of a constituent Person and (ii) failed to exercise his rights of
election, if any, as to the kind or amount of securities, cash and other
property receivable upon such consolidation, merger, sale or transfer (provided
that if the kind or amount of securities, cash and other property receivable
upon such consolidation, merger, sale or transfer is not the same for each
share of Common Stock held immediately prior to such consolidation, merger,
sale or transfer by others than a constituent Person or an Affiliate thereof
and in respect of which such rights of election shall not have been exercised
("non-electing share"), then for the purpose of this Section the kind and
amount of securities, cash and other property receivable upon such
consolidation, merger, sale or transfer by each non-electing share shall be
deemed to be the kind and amount so receivable per share by a plurality of the
non-electing shares). The Company shall not effect any consolidation, merger,
sale or transfer unless, prior to or simultaneously with the consummation
thereof the Person formed by such consolidation or resulting from
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such merger or which acquires such assets, as the case may be, shall execute
and deliver to the Trustee a supplemental indenture pursuant to which such
Person assumes the obligation to deliver to the Holder of each
Debenture such securities, cash and other property as such Holder may be
entitled to in accordance with the provisions of this Section 511. Such
supplemental indenture shall provide for adjustments which, for events
subsequent to the effective date of such supplemental indenture, shall be as
nearly equivalent as may be practicable to the adjustments provided for in this
Article. The Trustee shall not be under any responsibility to determine the
correctness of any provision contained in such supplemental indenture relating
to either the kind or amount of shares of stock or securities or cash or
property receivable by Holders upon the conversion of their Debentures after
any such consolidation, merger, sale or transfer. The above provisions of this
Section shall similarly apply to successive consolidations, mergers, sales or
transfers.
SECTION 512. RESPONSIBILITY OF TRUSTEE AND CONVERSION AGENT.
Neither the Trustee nor any agent appointed to effect
conversions shall at any time be under any duty or responsibility to any Holder
of Debentures to determine whether any facts exist which may require any
adjustment of the conversion price, or with respect to the nature or extent
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. Neither the Trustee nor any such conversion agent shall be accountable
with respect to the validity or value (or the kind or amount) of any Common
Stock or of any securities or property which may at any time be issued or
delivered upon the conversion of any Debenture; and neither the Trustee nor any
such conversion agent makes any representation with respect thereto. Neither
the Trustee nor any such 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 to make any cash payment
upon the delivery of any Debenture for the purpose of conversion or to comply
with any of the covenants contained in this Article.
SECTION 513. REFUSAL TO CONVERT DEBENTURES TO PROTECT REIT STATUS.
Notwithstanding anything herein to the contrary, neither the
Company, any conversion agent nor the Security Registrar shall be required to
take any steps to effect the conversion of any Debenture or Debentures if such
conversion, in the good faith opinion of the Board of Directors, (a) might
cause the Company to fail to comply with any requirement necessary for the
continued qualification of the Company as a REIT or (b) would result in a
single Person owning more than 9.8% of the Company's outstanding stock within
the meaning of the Code. For the purpose of the preceding sentence, a Person
shall be considered to own shares of Company stock which are owned directly by
such Person (held of record by such Person or such Person's nominee or
nominees) and shares of Company stock which are owned indirectly by such Person
(including shares of Common Stock issuable upon conversion of the Debentures)
pursuant to Sections 542, 544 and 856 of the Code and the regulations
promulgated thereunder.
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Any attempted conversion of a Debenture or Debentures by a Holder in violation
of the limits set forth above shall be null and void ab initio as to such
Holder and such Holder shall not acquire any rights or economic interest in the
Common Stock issuable upon such conversion. The Company shall advise the
Security Registrar and any conversion agent in writing promptly of any such
determination by the Board of Directors with respect to any Debentures,
identifying such Debenture by Holder and other appropriate method, and shall
instruct the Security Registrar and any conversion agent not to register the
transfer of such Debenture. The Security Registrar and any conversion agent
shall not be liable to the Company, Holders of Debentures or any other Persons
for conversions of such Debentures effected prior to its receipt of such
written instructions from the Company and the Company shall indemnify the
Security Registrar and any conversion agent of all claims, costs and expenses
incurred by it in connection with refusing to convert Debentures as instructed
by the Company.
ARTICLE SIX
REDEMPTION OF DEBENTURES
SECTION 601. RIGHT OF REDEMPTION.
The Debentures may be redeemed at the election of the Company, in
whole or from time to time in part, at any time on or after March 16, 2000,
at the Redemption Prices specified in the form of Debenture set forth in
Article Three, together with accrued and unpaid interest to and including the
Redemption Date.
Notwithstanding the foregoing paragraph, the Debentures will be
subject to redemption, in whole or in part, at any time, to the extent
necessary for the Company to continue to qualify as a REIT. The Redemption
Price for such Debentures redeemed shall equal the Issue Price, plus accrued
and unpaid interest and accrued Original Issue Discount to and including the
Redemption Date. The Company may exercise such redemption powers solely with
respect to Holders who pose a threat to the Company's REIT status and only to
the extent deemed necessary or advisable by the Board of Directors to preserve
such status.
SECTION 602. APPLICABILITY OF ARTICLE.
Redemption of Debentures at the election of the Company as
permitted by any provision of the Indenture shall be made in accordance
with such provision and this Article.
SECTION 603. ELECTION TO REDEEM; NOTICE TO TRUSTEE.
The election of the Company to redeem any Debentures pursuant
to Section 601 shall be evidenced by a Board Resolution. In case of any
redemption at the
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election of the Company of less than all the Debentures, the Company shall,
at least 60 days prior to the Redemption Date fixed by the Company (unless a
shorter period shall be satisfactory to the Trustee), notify the Trustee of
such Redemption Date and of the principal amount of Debentures to be redeemed.
In case of any redemption at the election of the Company of all of the
Debentures, the Company shall, at least 45 days prior to the Redemption Date
fixed by the Company (unless a shorter period shall be satisfactory to the
Trustee), notify the Trustee of such Redemption Date.
SECTION 604. SELECTION BY TRUSTEE OF DEBENTURES TO BE REDEEMED.
If less than all the Debentures are to be redeemed, the
particular Debentures to be redeemed shall be selected not more than 60 days
prior to the Redemption Date by the Trustee, from the Outstanding Debentures
not previously called for redemption, by lot or pro rata or by such other
method as the Trustee shall deem fair and appropriate and which may provide for
the selection for redemption of portions (equal to $1,000 or any integral
multiple thereof) of the principal amount of Debentures of a denomination
larger than $1,000.
If any Debenture selected for partial redemption is converted
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) to be the portion selected for redemption.
Debentures which have been converted during a selection of Debentures to be
redeemed shall be treated by the Trustee as Outstanding for the purpose of such
selection. In any case where more than one Debenture is registered in the same
name, the Trustee in its discretion may treat the aggregate principal amount so
registered as if it were represented by one Debenture.
The Trustee shall promptly notify the Company and each
Security Registrar in writing of the Debentures selected for redemption and, in
the case of any Debentures selected for partial redemption, the principal
amount thereof to be redeemed.
For all purposes of the Indenture, unless the context
otherwise requires, all provisions relating to the redemption of Debentures
shall relate, in the case of any Debentures redeemed or to be redeemed only in
part, to the portion of the principal amount of such Debentures which has been
or is to be redeemed.
SECTION 605. NOTICE OF REDEMPTION.
Notice of redemption shall be given by first-class mail,
postage prepaid, mailed not less than 30 nor more than 60 days prior to the
Redemption Date, to the Trustee and to each Holder of Debentures to be
redeemed, at his address appearing in the Security Register.
All notices of redemption shall state:
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(a) the Redemption Date,
(b) the Redemption Price,
(c) if less than all the Outstanding Debentures are to
be redeemed, the identification (and, in the case of partial
redemption of any Debentures, the principal amounts) of the
particular Debentures to be redeemed,
(d) that on the Redemption Date the Redemption Price
will become due and payable upon each such Debenture to be redeemed
and that (unless the Company shall default in payment of the
Redemption Price) interest thereon will cease to accrue on and after
said date,
(e) the Conversion Rate, the date on which the right to
convert the Debentures to be redeemed will terminate and the place or
places where such Debentures may be surrendered for conversion, and
(f) the place or places where such Debentures are to be
surrendered for payment of the Redemption
Price.
Notice of redemption of Debentures to be redeemed at the
election of the Company shall be given by the Company or, at the Company's
request received by the Trustee at least 40 days prior to the Redemption Date,
by the Trustee in the name and at the expense of the Company.
SECTION 606. DEPOSIT OF REDEMPTION PRICE.
At or prior to 9:00 a.m. (New York City time) on any
Redemption Date, the Company shall deposit with the Trustee or with a Paying
Agent (or, if the Company is acting as its own Paying Agent, segregate and hold
in trust as provided in Section 1003 of the Base Indenture) an amount of
money in same day funds sufficient to pay the Redemption Price of, and (except
if the Redemption Date shall be an Interest Payment Date) accrued interest on,
all the Debentures or portions thereof which are to be redeemed on that date
other than any Debentures called for redemption on that date which have been
converted prior to the date of such deposit.
If any Debenture called for redemption is converted, any money
deposited with the Trustee or with any Paying Agent or so segregated and held
in trust for the redemption of such Debenture shall (subject to any right of
the Holder of such Debenture or any Predecessor Debenture to receive
interest as provided in the last paragraph of Section 201 hereof) be paid to
the Company upon Company Request or, if then held by the Company, shall be
discharged from such trust.
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SECTION 607. DEBENTURES PAYABLE ON REDEMPTION DATE.
Notice of redemption having been given as aforesaid, the Debentures so
to be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified, and from and after such date (unless the
Company shall default in the payment of the Redemption Price and accrued
interest) such Debentures shall cease to bear interest. Upon surrender of any
such Debenture for redemption in accordance with said notice, such Debenture
shall be paid by the Company at the Redemption Price, together with accrued
interest to the Redemption Date; provided, however, that installments of
interest whose Stated Maturity is on or prior to the Redemption Date shall be
payable to the Holders of such Debentures, or one or more Predecessor
Debentures, registered as such at the close of business on the relevant Record
Dates according to their terms and the provisions of Section 307 of the Base
Indenture and the last paragraph of Section 201 hereof.
If any Debenture called for redemption shall not be so paid upon
surrender thereof for redemption, such Debenture shall, until paid, bear
interest to the extent permitted by applicable law from the Redemption Date at
the Yield to Maturity.
SECTION 608. DEBENTURES REDEEMED IN PART.
Any Debenture which is to be redeemed only in part shall be surrendered
at an office or agency of the Company maintained for that purpose pursuant to
Section 1002 of the Base Indenture (with, if the Company or the Trustee so
requires, due endorsement by, or a written instrument of transfer in form
satisfactory to the Company and the Trustee duly executed by, the Holder
thereof or his attorney duly authorized in writing), and the Company shall
execute, and the Trustee shall authenticate and deliver to the Holder of such
Debenture without service charge, a new Debenture or Debentures, of any
authorized denomination as requested by such Holder, in aggregate principal
amount equal to and in exchange for the unredeemed portion of the principal of
the Debenture so surrendered.
ARTICLE SEVEN
RIGHT TO REQUIRE REPURCHASE
SECTION 701. RIGHT TO REQUIRE REPURCHASE.
In the event that there shall occur a Repurchase Event (as defined in
Section 706 hereof), then each Holder shall have the right, at such Holder's
option, to require the Company to purchase, and upon the exercise of such
right, the Company shall, subject to the provisions of Article Nine hereof,
purchase, all or any part of such Holder's Debentures no later than the date
(the "Repurchase Date") that is 45 days after the date the Company gives notice
of the Repurchase Event as contemplated in Section
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702(a) hereof at a price (the "repurchase Price") equal to the Issue Price,
together with accured and unpaid interest and accrued Original Issue Discount
to and including the Repurchase Date.
SECTION 702. NOTICE; METHOD OF EXERCISING REPURCHASE RIGHT.
(a) On or beofre the 30trh day after the occurence of a
Repurchase Event, the Company, or at the request of the Company received
by the Trustee at least 60 days prior to the Repurchase Date, the Trustee (in
the name and at the expense of the Company), shall give notice of the
occurrence of the Repurchase Event and of the repurchase right set forth herein
arising as a result thereof by first-class mail, postage prepaid, to the
Trustee and to each Holder of the Debentures at such Holder's address appearing
in the Security Register. The Company shall also deliver a copy of such notice
of a repurchase right to the Trustee.
Each notice of a repurchase right shall state:
(1) the event constituting the Repurchase Event and the
date thereof,
(2) the Repurchase Date,
(3) the date by which the repurchase right must be
exercised,
(4) the Repurchase Price, and
(5) the instructions a Holder must follow to exercise a
repurchase right.
No failure of the Company to give the foregoing notice shall
limit any Holder's right to exercise a repurchase right. The Trustee shall
have no affirmative obligation to determine if there shall have occurred a
Repurchase Event.
(b) To exercise a repurchase right, a Holder shall
deliver to the Company (or an agent designated by the Company for such purpose
in the notice referred to in (a) above) and to the Trustee on or before the
close of business on the Repurchase Date (i) written notice of the Holder's
exercise of such right, which notice shall set forth the name of the Holder,
the principal amount of the Debenture or Debentures (or portion of a Debenture)
to be repurchased, and a statement that an election to exercise the repurchase
right is being made thereby, and (ii) the Debenture or Debentures with respect
to which the repurchase right is being exercised, duly endorsed for transfer to
the Company. Such written notice shall be irrevocable. If the Repurchase Date
falls between any Regular Record Date and the next succeeding Interest Payment
Date, Debentures to be repurchased must be accompanied by payment from the
Holder of an amount equal to the interest thereon which the registered Holder
thereof is to receive on such Interest Payment Date.
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In the event a repurchase right shall be exercised
in accordance with the terms hereof, the Company shall on the Repurchase Date
pay or cause to be paid in cash to the Holder thereof the Repurchase Price of
the Debenture or Debentures as to which the repurchase right had been
exercised. In the event that a repurchase right is exercised with respect to
less than the entire principal amount of a surrendered Debenture, the Company
shall execute and deliver to the Trustee and the Trustee shall authenticate for
issuance in the name of the Holder a new Debenture or Debentures in the
aggregate principal amount of the unrepurchased portion of such surrendered
security.
SECTION 703. DEPOSIT OF REPURCHASE PRICE.
On or prior to the Repurchase Date, the Company shall deposit
with the Trustee or with a Paying Agent (or, if the Company is acting as its
own Paying Agent, segregate and hold in trust as provided in Section 1003 of
the Base Indenture) an amount of money in same day funds sufficient to pay the
Repurchase Price of the Debentures which are to be repaid on the Repurchase
Date.
SECTION 704. DEBENTURES NOT REPURCHASED ON REPURCHASE DATE.
If any Debenture surrendered for repurchase shall not be so
paid on the Repurchase Date, such Debenture shall, until paid, bear interest to
the extent permitted by applicable law from the Repurchase Date at the Yield to
Maturity.
SECTION 705. DEBENTURES REPURCHASED IN PART.
Any Debenture which is to be repurchased only in part shall
be surrendered at any office or agency of the Company designated for that
purpose pursuant to Section 1002 of the Base Indenture (with, if the Company or
the Trustee so requires, due endorsement by, or written instrument of transfer
in form satisfactory to the Company and the Trustee duly executed by, the
Holder thereof or his attorney duly authorized in writing), and the Company
shall execute, and the Trustee shall authenticate and deliver to the Holder of
such Debenture without service charge, a new Debenture or Debentures of any
authorized denomination as requested by such Holder, in aggregate principal
amount equal to and in exchange for the unrepurchased portion of the principal
of the Debenture so surrendered.
SECTION 706. CERTAIN DEFINITIONS.
For purposes of this Article:
(a) "Repurchase Event" means a Change of Control occurring on or
after the date of this Supplemental Indenture and on or prior to March 14, 2002
and giving rise to the right under this Article Seven on the part of each
Holder of a Debenture to require, at the Holder's option, the Company to
repurchase such Holder's Debentures, unless: (i) the Current Market Price (as
defined in Section 504(g) hereof) per share of
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the Common Stock is at least equal to 105% of the Accreted Value of $1,000
principal amount of Debentures divided by the Conversion Rate then in effect
immediately preceding the time of such Change of Control; (ii) all of the
consideration (excluding cash payments for fractional shares) in the
transaction giving rise to such Change of Control to the holders of Common
Stock consists of shares of common stock that are, or immediately upon issuance
will be, listed on a national securities exchange or quoted on the Nasdaq
National Market, and as a result of such transaction the Debentures become
convertible solely into such common stock; or (iii) all of the consideration in
the transaction giving rise to such Change of Control to the holders of Common
Stock consists of cash, securities that are, or immediately upon issuance will
be, listed on a national securities exchange or quoted on the Nasdaq National
Market, or a combination of cash and such securities, and the aggregate fair
market value of such consideration (which, in the case of such securities,
shall be equal to the average of the daily Closing Price (as defined in Section
504(g) hereof) of such securities during the ten consecutive Trading Days (as
defined in Section 504(g) hereof) per share commencing with the sixth Trading
Day following consummation of such transaction) is at least 105% of the
Accreted Value of the Debentures divided by the Conversion Rate in effect on
the date immediately preceding the closing date of such transaction.
(b) "Change of Control" means any of the following: (i) the sale,
lease, conveyance or other disposition of all or substantially all of the
Company's assets as an entirety or substantially as an entirety to any "person"
or "group" (as such terms are used for purposes of Sections 13(d) and 14(d) of
the Exchange Act, whether or not applicable) in one or a series of transactions
or (ii) any transaction or series of transactions (as a result of a tender
offer, merger, consolidation or otherwise) that results in any "person" or
"group" (as such terms are used for purposes of Sections 13(d) and 14(d) of the
Exchange Act, whether or not applicable) becoming the "beneficial owner" (as
that term is used in Rules 13d-3 and 13d-5 under the Exchange Act, whether or
not applicable, except that a person shall be deemed to have "beneficial
ownership" of all shares that any such person has the right to acquire, whether
such right is exercisable immediately or only after the passage of time),
directly or indirectly, of more than 50% of the total voting power entitled to
vote in the election of directors of the Company.
ARTICLE EIGHT
REMEDIES
SECTION 801. EVENTS OF DEFAULT.
"Event of Default," wherever used herein with respect to the
Debentures, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be occasioned by the provisions of
Article Nine hereof or be voluntary or involuntary or be effected by operation
of law or pursuant to any judgment,
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decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(1) default in the payment of all or any part of the principal of
or premium, if any, on any Debenture when and as the same becomes due and
payable at Stated Maturity, upon redemption, repurchase at the option of the
Holder, acceleration, or otherwise, whether or not such payment is prohibited
by the provisions of Article Nine hereof; or
(2) default in the payment of any interest upon any Debenture
when it becomes due and payable, whether or not such payment is prohibited by
the provisions of Article Nine, and continuance such default for a period of 30
days; or
(3) failure to provide timely notice of a Repurchase Event as
required in accordance with the provisions of Article Seven hereof; or
(4) default in the performance, or breach, of any covenant or
warranty of the Company in the Indenture (other than a covenant or warranty a
default in whose performance or whose breach is elsewhere in this Section
specifically dealt with or which has expressly been included in the Indenture
solely for the benefit of series of Securities other than the Debentures), and
continuance of such default or breach for a period of 60 days after there has
been given, by registered or certified mail, to the Company by the Trustee or
to the Company and the Trustee by the Holders of at least 25% in principal
amount of the Outstanding Debentures a written notice specifying such default
or breach and requiring it to be remedied and stating that such notice is a
"Notice of Default" hereunder; or
(5) (a) a default under any bond, debenture, note or other
evidence of Indebtedness for money borrowed by the Company or any Subsidiary
(including a default with respect to Securities of any series other than the
Debentures) having an aggregate principal amount outstanding of at least
$5,000,000, or under any mortgage, indenture or instrument (including, without
limitation, the Indenture) under which there may be issued or by which there
may be secured or evidenced any Indebtedness for money borrowed by the Company
or any Subsidiary having an aggregate principal amount outstanding of at least
$5,000,000, whether such Indebtedness now exists or shall hereafter be created,
which default shall have resulted in such Indebtedness becoming or being
declared due and payable prior to the date on which it would otherwise have
become due and payable, without such Indebtedness having been discharged, or
(b) a failure to pay Indebtedness in the outstanding principal amount of at
least $5,000,000 at its stated maturity after demand therefor; provided, that
in each case of (a) and (b) above within a period of 10 days after the Trustee
or the Holders, as applicable, have received written notice of such event from
the Company or, in the case of the Holders, from the Trustee, there shall have
been given, by registered or certified mail, to the Company by the Trustee or
to the Company and the Trustee by the Holders of at least 25% in principal
amount of the Outstanding Debentures a written notice specifying such default
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and (x) requiring the Company to cause such Indebtedness to be discharged or
cause such acceleration to be rescinded or annulled, or (y) requiring the
Company to pay the Indebtedness which the Company failed to pay at maturity
after demand therefor and in each case stating that such notice is a "Notice of
Default" hereunder; or
(6) the entry by a court or courts of competent jurisdiction of a
final judgment or final judgments for the payment of money against the Company
or any Subsidiary which remain undischarged for a period (during which
execution shall not be effectively stayed, the posting of any required bond not
being deemed an execution for purposes hereof) of 30 days after all rights to
appeal have been exhausted, provided that the aggregate amount of all such
judgments exceeds $5,000,000; or
(7) the entry by a court having jurisdiction in the premises of
(A) a decree or order for relief in respect of the Company or any Subsidiary in
an involuntary case or proceeding under any applicable Federal or State
bankruptcy, insolvency, reorganization or other similar law or (B) a decree or
order adjudging the Company or any Subsidiary a bankrupt or insolvent, or
approving as properly filed a petition seeking reorganization, arrangement,
adjustment or composition of or in respect of the Company or any Subsidiary
under any applicable Federal or State law, or appointing a custodian, receiver,
liquidator, assignee, trustee, sequestrator or other similar official of the
Company or any Subsidiary or of any substantial part of their respective
property, or ordering the winding up or liquidation of the Company's or any
Subsidiary's affairs, and the continuance of any such decree or order for
relief or any such other decree or order unstayed and in effect for a period of
60 consecutive days; or
(8) the commencement by the Company or any Subsidiary of a
voluntary case or proceeding under any applicable Federal or State bankruptcy,
insolvency, reorganization or other similar law or of any other case or
proceeding to be adjudicated a bankrupt or insolvent, or the consent by the
Company or any Subsidiary to the entry of a decree or order for relief in
respect of the Company or any Subsidiary in an involuntary case or proceeding
under any applicable Federal or State bankruptcy, insolvency, reorganization or
other similar law or to the commencement of any bankruptcy or insolvency case
or proceeding against the Company or any Subsidiary, or the filing by the
Company or any Subsidiary of a petition or answer or consent seeking
reorganization or relief under any applicable Federal or State law, or the
consent by the Company or any Subsidiary to the filing of such petition or to
the appointment of or taking possession by a custodian, receiver, liquidator,
assignee, trustee, sequestrator or other similar official of the Company or any
Subsidiary or of any substantial part of their respective property, or the
making by the Company or any Subsidiary of an assignment for the benefit of
creditors, or the admission by the Company or any Subsidiary in writing of its
inability to pay its debts generally as they become due, or the taking of
corporate action by the Company or any Subsidiary in furtherance of any such
action.
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SECTION 802. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT.
If an Event of Default (other than an Event of Default specified in
Section 801(7) or 801(8)) with respect to the Debentures occurs and is
continuing, then in every such case the Trustee or the Holders of not less than
25% in principal amount of the Outstanding Debentures may declare the portion
of principal equal to the Issue Price plus accrued Original Issue Discount to
the date of such declaration to be due and payable immediately, by a notice in
writing to the Company (and to the Trustee if given by Holders), and upon any
such declaration such principal amount (or specified amount) shall become
immediately due and payable. If an Event of Default specified in Section 801(7)
or 801(8) with respect to the Debentures occurs, the portion of principal equal
to the Issue Price plus accrued Original Issue Discount to the date of such
Event of Default shall automatically, and without any declaration or other
action on the part of the Trustee or any Holder, become immediately due and
payable.
At any time after such a declaration of acceleration with respect to
the Debentures has been made and before a judgment or decree for payment of the
money due has been obtained by the Trustee as hereinafter in this Article
provided, the Holders of a majority in principal amount of the Outstanding
Debentures, by written notice to the Company and the Trustee, may rescind and
annul such declaration and its consequences if
(1) the Company has paid or deposited with the Trustee a sum
sufficient to pay
(A) all overdue interest on all Debentures,
(B) the principal of and premium, if any, on any
Debentures which have become due otherwise than by such declaration of
acceleration and any interest thereon at the rate borne by the Debentures,
(C) to the extent that payment of such interest is
lawful, interest upon overdue interest at the Yield to Maturity, and
(D) all sums paid or advanced by the Trustee hereunder
and the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel; and
(2) all Events of Default with respect to the Debentures, other
than the non-payment of the principal of Debentures which have become due
solely by such declaration of acceleration, have been cured or waived as
provided in Section 813 hereof.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
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SECTOPM 803. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY TRUSTEE
The Company covenants that if
(1) default is made in the payment of any interest on
any Debenture when such interest becomes due and payable and
such default continues for a period of 30 days, or
(2) default is made in the payment of all or any portion
of the principal of or premium, if any, on any Debenture at the
Maturity thereof,
the Company will, upon demand of the Trustee, pay to it, for the benefit of the
Holders of such Debentures, the whole amount then due and payable on such
Debentures for principal and any premium and interest and, to the extent that
payment of such interest shall be legally enforceable, interest on any overdue
principal and premium and on any overdue interest, at the Yield to Maturity,
and, in addition thereto, such further amount as shall be sufficient to cover
the costs and expenses of collection, including the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel.
If an Event of Default with respect to the Debentures occurs and is
continuing, the Trustee may in its discretion proceed to protect and enforce
its rights and the rights of the Holders of the Debentures by such appropriate
judicial proceedings as the Trustee shall deem most effectual to protect and
enforce any such rights, whether for the specific enforcement of any covenant
or agreement in the Indenture or in aid of the exercise of any power granted in
the Indenture, or to enforce any other proper remedy.
SECTION 804. TRUSTEE MAY FILE PROOFS OF CLAIM.
In case of any judicial proceeding relative to the Company (or any
other obligor upon the Debentures), its property or its creditors, the Trustee
shall be entitled and empowered, by intervention in such proceeding or
otherwise, to take any and all actions authorized under the Trust Indenture Act
in order to have claims of the Holders and the Trustee allowed in any such
proceeding. In particular, the Trustee shall be authorized to collect and
receive any moneys or other property payable or deliverable on any such claims
and to distribute the same, and any custodian, receiver, assignee, trustee,
liquidator, sequestrator or other similar official in any such judicial
proceeding is hereby authorized by each Holder to make such payments to the
Trustee and, in the event that the Trustee shall consent to the making of such
payments directly to the Holders, to pay to the Trustee any amount due it for
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 607 of the Base Indenture.
No provision of the Indenture shall be deemed to authorize the Trustee
to authorize or consent to or accept or adopt on behalf of any Holder any plan
of
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reorganization, arrangement, adjustment or composition affecting the Debentures
or the rights of any Holder thereof or to authorize the Trustee to vote
in respect of the claim of any Holder in any such proceeding; provided,
however, that the Trustee may, on behalf of the Holders, vote for the election
of a trustee in bankruptcy or similar official and be a member of a creditors'
or other similar committee.
SECTION 805. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF DEBENTURES.
All rights of action and claims under the Indenture or the Debentures
may be prosecuted and enforced by the Trustee without the possession of any of
the Debentures or the production thereof in any proceeding relating thereto,
and any such proceeding instituted by the Trustee shall be brought in its own
name as trustee of an express trust, and any recovery of judgment shall, after
provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Holders of the Debentures in respect of which such
judgment has been recovered.
SECTION 806. APPLICATION OF MONEY COLLECTED.
Any money collected by the Trustee pursuant to this Article shall be
applied in the following order, at the date or dates fixed by the Trustee and,
in case of the distribution of such money on account of principal or premium,
if any, or interest, upon presentation of the Debentures and the notation
thereon of the payment if only partially paid and upon surrender thereof if
fully paid:
FIRST: To the payment of all amounts due the Trustee under
Section 607 of the Base Indenture;
SECOND: Subject to Article Nine hereof, to the payment of the
amounts then due and unpaid for principal of and any premium, if
any, and interest on the Debentures in respect of which or for the
benefit of which such money has been collected, ratably, without
preference or priority of any kind, according to the amounts due and
payable on such Debentures for principal and any premium and
interest, respectively; and
THIRD: To the Company, the remainder, if any.
SECTION 807. LIMITATION ON SUITS.
No Holder of any Debenture shall have any right to institute any
proceeding, judicial or otherwise, with respect to the Indenture, or for the
appointment of a receiver or trustee, or for any other remedy hereunder, unless
(1) such Holder has previously given written notice to
the Trustee of a continuing Event of Default with respect to the
Debentures;
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(2) the Holders of not less than 25% in principal amount of
the Outstanding Debentures shall have made written request to the
Trustee to institute proceedings in respect of such Event of Default
in its own name as Trustee under the Indenture;
(3) such Holder or Holders have offered to the Trustee
reasonable indemnity against the costs, expenses and liabilities to
be incurred in compliance with such request;
(4) the Trustee for 60 days after its receipt of such
notice, request and offer of indemnity has failed to institute
any such proceeding; and
(5) no direction inconsistent with such written request has
been given to the Trustee during such 60 day period by the Holders of
a majority in principal amount of the Outstanding Debentures;
it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing of, any
provision of this Indenture to affect, disturb or prejudice the rights of any
other of such Holders, or to obtain or to seek to obtain priority or preference
over any other of such Holders or to enforce any right under the Indenture,
except in the manner herein provided and for the equal and ratable benefit of
all of such Holders.
SECTION 808. UNCONDITIONAL RIGHTS OF HOLDERS TO RECEIVE PRINCIPAL, PREMIUM
AND INTEREST AND TO CONVERT.
Notwithstanding any other provision in the Indenture, but subject to
Article Nine hereof, the Holder of any Debenture shall have the right, which is
absolute and unconditional, to receive payment of the principal of and any
premium and (subject to Section 307 of the Base Indenture and the last paragraph
of Section 201 hereof) interest on such Debenture on the respective Stated
Maturities expressed in such Debenture (or, in the case of redemption, on the
Redemption Date), to convert such Debenture in accordance with Article Five
hereof and to institute suit for the enforcement of any such payment or such
right of conversion, and such rights shall not be impaired without the consent
of such Holder.
SECTION 809. RESTORATION OF RIGHTS AND REMEDIES.
If the Trustee or any Holder has instituted any proceeding to enforce
any right or remedy under the Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case, subject to any
determination in such proceeding, the Company, the Trustee and the Holders shall
be restored severally and respectively to their former positions hereunder and
thereafter all rights and remedies of the Trustee and the Holders shall continue
as though no such proceeding had been instituted.
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SECTION 810. RIGHTS AND REMEDIES CUMULATIVE.
Except as otherwise provided with respect to the replacement or payment
of mutilated, destroyed, lost or stolen Debentures in the last paragraph of
Section 306 of the Base Indenture, no right or remedy in the Indenture conferred
upon or reserved to the Trustee or to the Holders is intended to be exclusive of
any other right or remedy, and every right and remedy shall, to the extent
permitted by law, be cumulative and in addition to every other right and remedy
given under the Indenture or now or hereafter existing at law or in equity or
otherwise. The assertion or employment of any right or remedy under the
Indenture, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
SECTION 811. DELAY OR OMISSION NOT WAIVER.
No delay or omission of the Trustee or of any Holder of any Debentures
to exercise any right or remedy accruing upon any Event of Default shall impair
any such right or remedy or constitute a waiver of any such Event of Default or
an acquiescence therein. Every right and remedy given by this Article or by law
to the Trustee or to the Holders may be exercised from time to time, and as
often as may be deemed expedient, by the Trustee or by the Holders, as the case
may be.
SECTION 812. CONTROL BY HOLDERS.
The Holders of a majority in principal amount of the Outstanding
Debentures shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred on the Trustee, with respect to the Debentures,
provided that
(1) such direction shall not be in conflict with any rule
of law or with the Indenture, and
(2) the Trustee may take any other action deemed proper by
the Trustee which is not inconsistent with such direction.
SECTION 813. WAIVER OF PAST DEFAULTS.
The Holders of not less than a majority in principal amount of the
Outstanding Debentures may on behalf of the Holders of all the Debentures waive
any past default hereunder with respect to the Debentures and its consequences,
except a default
(1) in the payment of the principal of or premium, if any,
or interest on any Debenture, or
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(2) in respect of a covenant or provision of the Indenture
which under Article Nine of the Base Indenture cannot be modified or
amended without the consent of the Holder of each Outstanding
Debenture affected.
Upon any such waiver, such default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured, for every
purpose of the Indenture; but no such waiver shall extend to any subsequent or
other default or impair any right consequent thereon.
References in Section 902 of the Base Indenture to Section 513 thereof
shall be deemed to refer to this Section 813 for purposes of the Debentures.
SECTION 814. UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy under the
Indenture, or in any suit against the Trustee for any action taken, suffered or
omitted by it as Trustee, a court may require any party litigant in such suit to
file an undertaking to pay the costs of such suit, and may assess costs against
any such party litigant, in the manner and to the extent provided in the Trust
Indenture Act. The provisions of this Section shall not apply to any suit
instituted by the Trustee, to any suit instituted by the Company, to any suit
instituted by any Holder, or group of Holders of an aggregate more than 10
percent in principal amount of the Debentures then outstanding, or to any suit
instituted by any Holder for the enforcement of the payment of the principal of,
premium, if any, or interest on any Debenture, on or after the respective due
dates expressed in such Debenture (including, in the case of redemption, on or
after the Redemption Date and in the case of repurchase, on or after the
Repurchase Date).
SECTION 815. WAIVER OF USURY, STAY OR EXTENSION LAWS.
The Company covenants (to the extent that it may lawfully do so) that it will
not at any time insist upon, or plead, or in any manner whatsoever claim or take
the benefit or advantage of, any usury, stay or extension law wherever enacted,
now or at any time hereafter in force, which may affect the covenants or the
performance of the Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such law
and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
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ARTICLE NINE
SUBORDINATION OF DEBENTURES
SECTION 901. DEBENTURES SUBORDINATE TO SENIOR DEBT.
The Company covenants and agrees, and each Holder of a Debenture, by his
acceptance thereof, likewise covenants and agrees, that, to the extent and in
the manner hereinafter set forth in this Article, the indebtedness represented
by the Debentures and the payment of the principal of and premium, if any, and
interest on each and all of the Debentures are hereby expressly made subordinate
and subject in right of payment to the prior payment in full of all Senior
Debt.
SECTION 902. PAYMENT OVER OF PROCEEDS UPON DISSOLUTION, ETC.
In the event of (a) any insolvency or bankruptcy case or proceeding, or
any receivership, liquidation, reorganization or other similar case or
proceeding in connection therewith, relative to the Company or to its creditors,
as such, or to its assets, or (b) any liquidation, dissolution or other winding
up of the Company, whether voluntary or involuntary and whether or not involving
insolvency or bankruptcy, or (c) any assignment for the benefit of creditors or
any other marshalling of assets and liabilities of the Company, then and in any
such event the holders of Senior Debt shall be entitled to receive payment in
full of all amounts due or to become due on or in respect of all Senior Debt, or
provision shall be made for such payment in cash, before the Holders of the
Debentures are entitled to receive any payment on account of principal of,
premium, if any, or interest on the Debentures, and to that end the holders of
Senior Debt shall be entitled to receive, for application to the payment
thereof, any payment or distribution of any kind or character, whether in cash,
property or securities, including any such payment or distribution which may be
payable or deliverable by reason of the payment of any other indebtedness of the
Company being subordinated to the payment of the Debentures, which may be
payable or deliverable in respect of the Debentures in any such case,
proceeding, dissolution, liquidation or other winding up event.
In the event that, notwithstanding the foregoing provisions of this
Section, the Trustee or the Holder of any Debenture shall have received any
payment or distribution of assets of the Company of any kind or character,
whether in cash, property or securities, including any such payment or
distribution which may be payable or deliverable by reason of the payment of any
other indebtedness of the Company being subordinated to the payment of the
Debentures, before all Senior Debt is paid in full or payment thereof provided
for, and if such fact shall, at or prior to the time of such payment or
distribution, have been made known to the Trustee or, as the case may be, such
Holder, then and in such event such payment or distribution shall be paid over
or delivered forthwith to the trustee in bankruptcy, receiver, liquidating
trustee, custodian, assignee, agent or other Person making payment or
distribution of assets of the Company for application to the payment of all
Senior Debt remaining unpaid, to the extent
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necessary to pay all Senior Debt in full, after giving effect to any concurrent
payment or distribution to or for the holders of Senior Debt. Any taxes that
have been withheld or deducted from any payment or distribution in respect of
the Debentures, or any taxes that ought to have been withheld or deducted from
any such payment or distribution that have been remitted to the relevant taxing
authority, shall not be considered to be an amount that the trustee or the
Holder of any Debenture received for purposes of this Section.
For purposes of this Article only, the words "cash, property or
securities" shall not be deemed to include shares of stock of the Company as
reorganized or readjusted, or securities of the Company or any other corporation
provided for by a plan of reorganization or readjustment which are subordinated
in right of payment to all Senior Debt which may at the time be outstanding to
substantially the same extent as, or to a greater extent than, the Debentures
are so subordinated as provided in this Article. The consolidation of the
Company with, or the merger of the Company into, another Person or the
liquidation or dissolution of the Company following the conveyance or transfer
of its properties and assets substantially as an entirety to another Person upon
the terms and conditions set forth in Article Eight of the Base Indenture shall
not be deemed a dissolution, winding up, liquidation, reorganization, assignment
for the benefit of creditors or marshalling of assets and liability of the
Company for the purposes of this Section if the Person formed by such
consolidation or into which the Company is merged or the Person which acquires
by conveyance or transfer such properties and assets substantially as an
entirety, as the case may be, shall, as a part of such consolidation, merger,
conveyance or transfer, comply with the conditions set forth in Article Eight of
the Base Indenture.
SECTION 903. PRIOR PAYMENT TO SENIOR DEBT UPON ACCELERATION OF DEBENTURES.
In the event that any Debentures are declared due and payable before
their Stated Maturity, then and in such event the holders of Senior Debt shall
be entitled to receive payment in full of all amounts due or to become due on or
in respect of all Senior Debt or provision shall be made for such payment in
cash, before the Holders of the Debentures are entitled to receive any payment
(including any payment which may be payable by reason of the payment of any
other indebtedness of the Company being subordinated to the payment of the
Debentures) by the Company on account of the principal of, premium, if any, or
interest on the Debentures or on account of the purchase or other acquisition of
Debentures.
In the event that, notwithstanding the foregoing, the Company shall make
any payment to the Trustee or the Holder of any Debenture prohibited by the
foregoing provisions of this Section, and if such fact shall, at or prior to the
time of such payment, have been made known to the Trustee or, as the case may
be, such Holder, then and in such event such payment shall be paid over and
delivered forthwith to the Company.
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The provisions of this Section shall not apply to any payment with
respect to which Section 902 hereof would be applicable.
SECTION 904. NO PAYMENT WHEN SENIOR DEBT IN DEFAULT.
In the event and during the continuation of any default in the payment
of principal of, premium, if any, or interest on any Senior Debt beyond any
applicable grace period with respect thereto (a "Senior Payment Default") then
no payment (including any payment which may be payable by reason of the payment
of any other indebtedness of the Company being subordinated to the payment of
the Debentures) shall be made by the Company on account of principal of, or
premium, if any, or interest on the Debentures or on account of the purchase or
other acquisition of Debentures.
During the continuance of any non-payment default or event of default
with respect to Senior Debt in an aggregate principal amount of at least $10
million pursuant to which the maturity thereof is or may be accelerated, or in
the event any judicial proceeding shall be pending with respect to any such
default, then, upon receipt by the Trustee of notice thereof from the holders of
such Senior Debt (a "Senior Non-Payment Default"), unless and until (i) such
default or event of default shall have been cured or waived or shall have ceased
to exist, or (ii) a Default under either Section 801(7) or Section 801(8) hereof
involving the Company or any Subsidiary of the Company shall have occurred and
be continuing, or (iii) such Senior Debt shall have been paid in full (each of
clause (i), (ii) and (iii) being a "Blockage Termination Event"), no payment or
distribution will be made by or on behalf of the Company on account of or with
respect to the Debentures (except for those funds held in trust for the benefit
of the Holders of any Debentures to such Holders) during a period (a "Blockage
Period") commencing on the date of receipt of such notice by the Trustee and
ending 179 days thereafter.
In addition to the restrictions on payment set forth in the two
immediately preceding paragraphs, so long as no Blockage Termination Event shall
have occurred, upon the occurrence of either a Senior Payment Default or a
Senior Non-Payment Default, neither the Trustee nor any Holder of the
Debentures may take any action to accelerate the maturity of the Debentures
during any Blockage Period (with respect to a Senior Payment Default, the
Blockage Period shall be deemed to commence on the date which is the first date
payment should have been made).
Notwithstanding anything herein to the contrary, (i) in no event will a
Blockage Period extend beyond the 179 days from the date the payment on the
Debentures was due and (ii) there must be 180 days in any 365 day period during
which no Blockage Period is in effect. Not more than one Blockage Period may be
commenced with respect to the Debentures during any period of 365 consecutive
days. No default or event of default that existed or was continuing on the date
of commencement of any Blockage Period with respect to the Senior Debt
initiating such Blockage Period may be, or be made, the basis for the
commencement of any other Blockage Period by the holders of such Senior Debt,
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<PAGE> 54
whether or not within a period of 365 consecutive days, unless such default or
event of default has been cured or waived for a period of not less than 90
consecutive days.
In the event that, notwithstanding the foregoing, the Company shall make
any payment to the Trustee or the Holder of any Debenture prohibited by the
foregoing provisions of this Section, and if such fact shall, at or prior to the
time of such payment, have been made known to the Trustee or, as the case may
be, such Holder, then and in such event such payment shall be paid over and
delivered forthwith to the Company.
The provisions of this Section shall not apply to any payment with
respect to which Section 902 hereof would be applicable.
SECTION 905. PAYMENT PERMITTED IN CERTAIN SITUATIONS.
Nothing contained in this Article or elsewhere in the Indenture or in
any of the Debentures shall prevent (a) the Company, at any time except during
the pendency of any case, proceeding, dissolution, liquidation or other winding
up, assignment for the benefit of creditors or other marshalling of assets and
liabilities of the Company referred to in Section 902 hereof or under the
conditions described in Section 903 or 904 hereof, from making payments at any
time of principal of, premium, if any, or interest on the Debentures, or (b) the
application by the Trustee of any money deposited with it hereunder to the
payment of or on account of the principal of, premium, if any, or interest on
the Debentures or the retention of such payment by the holders, if, at the time
of such application by the Trustee, it did not have knowledge that such payment
would have been prohibited by the provisions of this Article.
SECTION 906. SUBROGATION TO RIGHTS OF HOLDERS OF SENIOR DEBT.
Subject to the payment in full of all Senior Debt or the provision for
such payment in cash or cash equivalents or otherwise in a manner satisfactory
to the holders of Senior Debt, the Holders of the Debentures shall be subrogated
to the extent of the payments or distributions made to the holders of such
Senior Debt pursuant to the provisions of this Article (equally and ratably with
the holders of indebtedness of the Company which by its express terms is
subordinated to indebtedness of the Company to substantially the same extent as
the Debentures are subordinated to the Senior Debt and is entitled to like
rights of subrogation) to the rights of the holders of such Senior Debt to
receive payments and distributions of cash, property and securities applicable
to the Senior Debt until the principal of, premium, if any, and interest on the
Debentures shall be paid in full. For purposes of such subrogation, no payments
or distributions to the holders of the Senior Debt of any cash, property or
securities to which the Holders of the Debentures or the Trustee would be
entitled except for the provisions of this Article, and no payments over
pursuant to the provisions of this Article to the holders of Senior Debt by
Holders of the Debentures or the Trustee shall, as among the Company, its
creditors other than holders of Senior Debt and the Holders of the Debentures,
be
49
<PAGE> 55
deemed to be a payment or distribution by the Company to or on account of the
Senior Debt.
SECTION 907. PROVISIONS SOLELY TO DEFINE RELATIVE RIGHTS.
The provisions of this Article are and are intended solely for the
purpose of defining the relative rights of the Holders of the Debentures on the
one hand and the holders of Senior Debt on the other hand. Nothing contained in
this Article or elsewhere in the Indenture or in the Debentures is intended to
or shall (a) impair, as among the Company, its creditors other than holders of
Senior Debt and the Holders of the Debentures, the obligation of the Company,
which is absolute and unconditional, to pay to the Holders of the Debentures the
principal of and premium, if any, and interest on the Debentures as and when the
same shall become due and payable in accordance with their terms; or (b) affect
the relative rights against the Company of the Holders of the Debentures and
creditors of the Company other than the holders of Senior Debt; or (c) prevent
the Trustee or the Holder of any Debenture from exercising all remedies
otherwise permitted by applicable law upon default under the Indenture, subject
to the rights, if any, under this Article of the holders of Senior Debt to
receive cash, property and securities otherwise payable or deliverable to the
Trustee or such Holder.
SECTION 908. TRUSTEE TO EFFECTUATE SUBORDINATION.
Each Holder of a Debenture by his acceptance thereof authorizes and
directs the Trustee on his behalf to take such action as may be necessary or
appropriate to effectuate the subordination provided in this Article and
appoints the Trustee his attorney-in-fact for any and all such purposes.
SECTION 909. NO WAIVER OF SUBORDINATION PROVISIONS.
No right of any present or future holders of any Senior Debt to enforce
subordination as herein provided shall at any time in any way be prejudiced or
impaired by any act or failure to act on the part of the Company or by any act
or failure to act, in good faith, by any such holder, or by any non-compliance
by the Company with the terms, provisions and covenants of the Indenture,
regardless of any knowledge thereof any such holder may have or be otherwise
charged with.
Without in any way limiting the generality of the foregoing paragraph,
the holders of Senior Debt may, at any time and from time to time, without the
consent of or notice to the Trustee or the Holders of the Debentures, without
incurring responsibility to the Holders of the Debentures and without impairing
or releasing the subordination provided in this Article or the obligations
hereunder of the Holders of the Debentures to the holders of Senior Debt do any
one or more of the following: (i) change the manner, place or terms of payment
or extend the time of payment of, or renew or alter, Senior Debt or otherwise
amend or supplement in any manner Senior Debt or any instrument evidencing the
same or any agreement under which Senior Debt is outstanding; (ii) sell,
50
<PAGE> 56
exchange, release or otherwise deal with any property pledged, mortgaged or
otherwise securing Senior Debt; (iii) release any Person liable in any manner
for the collection of Senior Debt; and (iv) exercise or refrain from exercising
any rights against the Company and any other Person.
SECTION 910. NOTICE TO TRUSTEE.
The Company shall give prompt written notice to the Trustee of any fact
known to the Company which would prohibit the making of any payment to or by the
Trustee in respect of the Debentures. Notwithstanding the provisions of this
Article or any other provision of the Indenture, the Trustee shall not be
charged with knowledge of the existence of any facts which would prohibit the
making of any payment to or by the Trustee in respect of the Debentures, unless
and until the Trustee shall have received written notice thereof from the
Company or a holder of Senior Debt or from any trustee therefor; and, prior to
the receipt of any such written notice, the Trustee, subject to the provisions
of Section 601 of the Base Indenture, shall be entitled in all respects to
assume that no such facts exist.
Subject to the provisions of Section 601 of the Base Indenture, the
Trustee shall be entitled to rely on the delivery to it of a written notice by a
Person representing himself to be a holder of Senior Debt (or a trustee
therefor) to establish that such notice has been given by a holder of Senior
Debt (or a trustee therefor). In the event that the Trustee determines in good
faith that further evidence is required with respect to the right of any Person
as a holder of Senior Debt to participate in any payment or distribution
pursuant to this Article, the Trustee may request such Person to furnish
evidence to the reasonable satisfaction of the Trustee as to the amount of
Senior Debt held by such Person, the extent to which such Person is entitled to
participate in such payment or distribution and any other facts pertinent to the
rights of such Person under this Article, and if such evidence is not furnished,
the Trustee may defer any payment to such Person pending judicial determination
as to the right of such Person to receive such payment.
SECTION 911. RELIANCE ON JUDICIAL ORDER OR CERTIFICATE OF LIQUIDATING AGENT.
Upon any payment or distribution of assets of the Company referred to in
this Article, the Trustee, subject to the provisions of Section 601 of the Base
Indenture, and the Holders of the Debentures shall be entitled to rely upon any
order or decree entered by any court of competent jurisdiction in which such
insolvency, bankruptcy, receivership, liquidation, reorganization, dissolution,
winding up or similar case or proceeding is pending, or a certificate of the
trustee in bankruptcy, receiver, liquidating trustee, custodian, assignee for
the benefit of creditors, agent or other Person making such payment or
distribution, delivered to the Trustee or to the Holders of Debentures, for the
purpose of ascertaining the Persons entitled to participate in such payment or
distribution, the holders of Senior Debt and other indebtedness of the Company,
the amount thereof or payable thereon, the amount or amounts paid or distributed
thereon and all other facts pertinent thereto or to this Article.
51
<PAGE> 57
SECTION 912. TRUSTEE NOT FIDUCIARY FOR HOLDERS OF SENIOR DEBT.
The Trustee shall not be deemed to owe any fiduciary duty to the holders
of Senior Debt and shall not be liable to any such holders or creditors if it
shall in good faith pay over or distribute to Holders of Debentures or to the
Company or to any other Person cash, property or securities to which any holders
of Senior Debt shall be entitled by virtue of this Article or otherwise.
SECTION 913. RIGHTS OF TRUSTEE AS HOLDER OF SENIOR DEBT; PRESERVATION OF
TRUSTEE'S RIGHTS.
The Trustee in its individual capacity shall be entitled to all the
rights set forth in this Article with respect to any Senior Debt which may at
any time be held by it, to the same extent as any other holder of Senior Debt
and nothing in the Indenture shall deprive the Trustee of any of its rights as
such holder.
Nothing in this Article shall apply to claims of, or payments to, the
Trustee under or pursuant to Section 607 of the Base Indenture.
SECTION 914. ARTICLE APPLICABLE TO PAYING AGENTS.
In case at any time any Paying Agent other than the Trustee shall have
been appointed by the Company and be then acting under the Indenture, the term
"Trustee" as used in this Article shall in such case (unless the context
otherwise requires) be construed as extending to and including such Paying Agent
within its meaning as fully for all intents and purposes as if such Paying Agent
were named in this Article in addition to or in place of the Trustee; provided,
however, that Section 913 hereof shall not apply to the Company or any Affiliate
of the Company if it or such Affiliate acts as Paying Agent.
SECTION 915. CERTAIN CONVERSIONS DEEMED PAYMENT.
For purposes of this Article only, (1) the issuance and delivery of
junior securities upon conversion of Debentures in accordance with Article Five
hereof shall not be deemed to constitute a payment or distribution on account of
the principal of or premium, if any, or interest on Debentures or on account of
the purchase or other acquisition of Debentures, and (2) the payment, issuance
or delivery of cash, property or securities (other than junior securities) upon
conversion of a Debenture shall be deemed to constitute payment on account of
the principal of such Debenture. For the purposes of this Section, the term
"junior securities" means (a) shares of any class of capital stock of the
Company and (b) securities of the Company which are subordinated in right of
payment to all Senior Debt which may be outstanding at the time of issuance or
delivery of such securities to substantially the same extent as, or to a greater
extent than, the Debentures are so subordinated as provided in this Article.
Nothing contained in this Article or elsewhere in the Indenture or in the
Debentures is intended to or shall impair,
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<PAGE> 58
as among the Company, its creditors other than holders of Senior Debt and the
Holders of the Debentures, the right, which is absolute and unconditional, of
the Holder of any Debenture to convert such Debenture in accordance with Article
Five hereof.
ARTICLE TEN
MISCELLANEOUS
SECTION 1001. SCOPE OF THIS FIRST SUPPLEMENTAL INDENTURE.
The changes, modifications and supplements to the Indenture effected by
this First Supplemental Indenture shall only be applicable with respect to, and
govern the terms of, the Debentures and shall not apply to any other Securities
that may be issued by the Company under the Indenture.
SECTION 1002. RATIFICATION OF INDENTURE.
The Indenture, as supplemented by this First Supplemental Indenture, is
in all respects ratified and confirmed, and this First Supplemental Indenture
shall be deemed part of the Indenture in the manner and to the extent herein and
therein provided.
SECTION 1003. TRUSTEE NOT RESPONSIBLE FOR RECITALS.
The recitals herein contained are made by the Company and not by the
Trustee, and the Trustee assumes no responsibility for the correctness thereof.
The Trustee makes no representation as to the validity or sufficiency of this
First Supplemental Indenture.
SECTION 1004. GOVERNING LAW.
This First Supplemental Indenture and each Debenture shall be governed
by and construed in accordance with the laws of the State of New York, without
regard to the principles of conflicts of laws thereof.
SECTION 1005. SEPARABILITY.
In case any one or more of the provisions contained in this First
Supplemental Indenture or in the Debentures shall for any reason be held to be
invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provisions of this First
Supplemental Indenture or of the Debentures, but this First Supplemental
Indenture and the Debentures shall be construed as if such invalid or illegal or
unenforceable provision had never been contained herein or therein.
53
<PAGE> 59
SECTION 1006. COUNTERPARTS.
This First Supplemental Indenture may be executed in any number of
counterparts each of which shall be an original, but such counterparts shall
together constitute but one and the same instrument.
54
<PAGE> 60
IN WITNESS WHEREOF, the parties hereto have caused this First
Supplemental Indenture to be duly executed, and their respective corporate seals
to be hereunto affixed and attested, all as of the day and year first above
written.
CAPSTONE CAPITAL CORPORATION
By:_________________________
Name:
Title:
Attest:
By:___________________________________
Name:
Title:
AMSOUTH BANK OF ALABAMA,
as Trustee
By:_________________________
Name:
Title:
Attest:
By:___________________________________
Name:
Title:
<PAGE> 61
STATE OF ALABAMA )
) ss.:
COUNTY OF JEFFERSON )
On the _____ day of ____________, ____, before me personally came
____________ to me known, who, being by me duly sworn, did depose and say that
he is ____________ of ____________, one of the corporations described in and
which executed the foregoing instrument; that he knows the seal of said
corporation; that the seal affixed to said instrument is such corporate seal;
that it was so affixed by authority of the Board of Directors of said
corporation; and that he signed his name thereto by like authority.
----------------------------
STATE OF ALABAMA )
) ss.:
COUNTY OF JEFFERSON )
On the _____ day of ____________, ____, before me personally
came ____________ to me known, who, being by me duly sworn, did depose and say
that he is ____________ of ____________, one of the corporations described in
and which executed the foregoing instrument; that he knows the seal of said
corporation; that the seal affixed to said instrument is such corporate seal;
that it was so affixed by authority of the Board of Directors of said
corporation; and that he signed his name thereto by like authority.
----------------------------
<PAGE> 1
EXHIBIT 10.71
STATE OF ALABAMA )
JEFFERSON COUNTY )
AMENDMENT TO 1994 STOCK INCENTIVE PLAN
OF CAPSTONE CAPITAL CORPORATION
(FORMERLY CRESCENT CAPITAL TRUST, INC.)
The Capstone Capital Corporation 1994 Stock Incentive Plan,
which plan was adopted by the Board of Directors of Capstone Capital
Corporation on March 31, 1994, and approved by the Shareholders of Capstone
Capital Corporation on March 31, 1994 (the "Plan"), is hereby amended as
follows:
1. Section 3(a) of the Plan shall be deleted in its
entirety and there shall be substituted in lieu thereof the following:
"(a) Subject to the provisions of Section 3(c) and
Section 12 of the Plan, the aggregate number of shares of
Common Stock that may be issued or transferred or exercised
pursuant to Incentive Stock Awards under the Plan will not
exceed the greater of: (i) seven percent (7%) of the Company's
outstanding Common Stock, or (ii) one million sixty three
thousand six hundred (1,063,600) shares of Common Stock."
2. Except as set forth in Paragraph 1 above, all other
provisions of the Plan shall remain unchanged.
3. The changes set forth in this Amendment shall be and
hereby are incorporated in the Capstone Capital Corporation 1994 Stock
Incentive Plan.
Date amendment adopted by Board of Directors: December 14, 1995.
Date amendment adopted by Shareholders: May 1, 1996.
<PAGE> 1
EXHIBIT 10.72
CAPSTONE CAPITAL CORPORATION
EMPLOYMENT AND NONCOMPETITION AGREEMENT
THIS EMPLOYMENT AND NONCOMPETITION AGREEMENT (the "Agreement")
is made and entered into as of the 1st day of November, 1996 ("Effective
Date"), by and between Capstone Capital Corporation, a Maryland corporation
(the "Company"), and John W. McRoberts (the "Employee").
RECITAL
WHEREAS, the Company desires to employ the Employee as its
President and Chief Executive Officer and the Employee is willing to accept
such employment by the Company, on the terms and subject to the conditions set
forth in this Agreement.
AGREEMENT
THE PARTIES HERETO AGREE AS FOLLOWS:
1. DUTIES. During the term of this Agreement, the
Employee agrees to be employed by and to serve the Company as its President and
Chief Executive Officer, and the Company agrees to employ and retain the
Employee in such capacities. The Employee shall devote such of his business
time, energy and skill to the affairs of the Company as shall be necessary to
perform the duties of such position. The Employee shall report only to the
Company's Board of Directors and at all times during the term of this Agreement
shall have powers and duties at least commensurate with his position as
President and Chief Executive Office. The Employee's principal place of
business with respect to his services to the Company shall be within 10 miles
of Birmingham, Alabama.
2. TERM OF EMPLOYMENT.
2.1 DEFINITIONS. For purposes of this Agreement
the following terms shall have the following meanings:
(a) "TERMINATION FOR CAUSE" shall mean
termination by the Company of the Employee's employment by the Company by
reason of the Employee's willful dishonesty towards, fraud upon, or deliberate
injury or attempted injury to, the Company or by reason of the Employee's
willful material breach of this Agreement which has resulted in material injury
to the Company.
(b) "TERMINATIONS OTHER THAN FOR CAUSE"
shall mean termination by the Company of the Employee's employment by the
Company (other than in a Termination for Cause) and shall include constructive
termination of the Employee's employment by reason of material breach of this
Agreement by the Company, such constructive termination to be effective upon
notice from the Employee to the Company of such constructive termination.
(c) "VOLUNTARY TERMINATION" shall mean
termination by the Employee of the Employee's employment by the Company other
than (i) constructive termination as
<PAGE> 2
described in subsection 2.1(b), (ii) "Termination Upon a Change in Control,"
and (iii) termination by reason of the Employee's death, or disability as
described in Sections 2.5 and 2.6.
(d) "TERMINATION UPON A CHANGE IN
CONTROL" shall mean a termination by the Employee of the Employee's employment
with the Company following a "Change in Control."
(e) "CHANGE IN CONTROL" shall mean (i)
the time that the Company first determines that any person and all other
persons who constitute a group (within the meaning of Section 12(d)(3) of the
Securities Exchange Act of 1934 (the "Exchange Act")) have acquired direct or
indirect beneficial ownership (within the meaning of Rule 13d-3 under the
Exchange Act) of twenty percent (20%) or more of the Company's outstanding
securities, or (ii) the first day on which a majority of the members of the
Company's Board of Directors are not "Continuing Directors."
(f) "CONTINUING DIRECTORS" shall mean,
as of any date of determination, any member of the Board of Directors of the
Company who (i) was a member of that Board of Directors on August 14, 1996,
(ii) has been a member of that Board of Directors for the two years immediately
preceding such date of determination, or (iii) was nominated for election or
elected to the Board of Directors with the affirmative vote of the greater of
(x) a majority of Continuing Directors who were members of the Board at the
time of such nomination or election or (y) at least three Continuing Directors.
2.2 BASIC TERM. The term of employment of
the Employee by the Company shall be for a period beginning with the Effective
Date and ending on December 31, 2000, unless terminated earlier pursuant to
this Section 2. This Agreement shall be extended automatically for an
additional one year period on January 1 of each year, unless terminated earlier
pursuant to this Section 2.
2.3 TERMINATION FOR CAUSE. Termination For Cause
may be effected by the Company at any time during the term of this Agreement
and shall be effected by written notification to the Employee from the Board of
Directors stating the reason for termination. Upon Termination For Cause, the
Employee immediately shall be paid all accrued salary, bonus compensation to
the extent earned, vested deferred compensation, if any, (other than pension
plan or profit sharing plan benefits which will be paid in accordance with the
applicable plan), any benefits under any plans of the Company in which the
Employee is a participant to the full extent of the Employee's rights under
such plans, accrued vacation pay and any appropriate business expenses incurred
by the Employee in connection with his duties hereunder, all to the date of
termination, but the Employee shall not be paid any other compensation or
reimbursement of any kind, including without limitation, severance
compensation.
2.4 TERMINATION OTHER THAN FOR CAUSE.
Notwithstanding anything else in this Agreement, the Company may effect a
Termination Other Than For Cause at any time upon giving written notice to the
Employee of such termination. Upon any Termination Other Than For Cause, the
Employee shall immediately be paid all accrued salary, bonus compensation to
the extent earned, vested deferred compensation, if any, (other than pension
plan or profit sharing plan benefits which will be paid in accordance with the
applicable plan), any benefits under any plans of the Company in which the
Employee is a participant to the full extent of the Employee's rights under
such plans (including accelerated vesting of any awards granted to the Employee
under the Company's 1994 Stock Incentive
2
<PAGE> 3
Plan), accrued vacation pay and any appropriate business expenses incurred by
the Employee in connection with his duties hereunder, all to the date of
termination, and all severance compensation provided in Section 4.1, but no
other compensation or reimbursement of any kind.
2.5 TERMINATION BY REASON OF DISABILITY. If,
during the term of this Agreement, the Employee, in the reasonable judgment of
the Board of Directors of the Company, has failed to perform his duties under
this Agreement on account of illness or physical or mental incapacity, and such
illness or incapacity continues for a period of more than twelve (12)
consecutive months, the Company shall have the right to terminate the
Employee's employment hereunder by written notification to the Employee and
payment to the Employee of all accrued salary, bonus compensation to the extent
earned, vested deferred compensation, if any, (other than pension plan or
profit sharing plan benefits which will be paid in accordance with the
applicable plan), any benefits under any plans of the Company in which the
Employee is a participant to the full extent of the Employee's rights under
such plans (including accelerated vesting of any awards granted to the Employee
under the Company's 1994 Employee Incentive Plan), accrued vacation pay and any
appropriate business expenses incurred by the Employee in connection with his
duties hereunder, all to the date of termination, with the exception of medical
and dental benefits which shall continue through the expiration of this
Agreement, but the Employee shall not be paid any other compensation or
reimbursement of any kind, including without limitation, severance
compensation.
2.6 DEATH. In the event of the Employee's death
during the term of this Agreement, the Employee's employment shall be deemed to
have terminated as of the last day of the month during which his death occurs,
and the Company shall pay to his estate or such beneficiaries as the Employee
may from time to time designate all accrued salary, bonus compensation to the
extent earned, vested deferred compensation, if any, (other than pension plan
or profit sharing plan benefits which will be paid in accordance with the
applicable plan), any benefits under any plans of the Company in which the
Employee is a participant to the full extent of the Employee's rights under
such plans (including accelerated vesting of any awards granted to the Employee
under the Company's 1994 Stock Incentive Plan), accrued vacation pay and any
appropriate business expenses incurred by the Employee in connection with his
duties hereunder, all to the date of termination, and his base salary for a
period of three months after the date this Agreement is deemed terminated as
provided above, but the Employee's estate shall not be paid any other
compensation or reimbursement of any kind, including without limitation,
severance compensation.
2.7 VOLUNTARY TERMINATION. In the event of a
Voluntary Termination, the Company shall immediately pay all accrued salary,
bonus compensation to the extent earned, vested deferred compensation, if any,
(other than pension plan or profit sharing plan benefits which will be paid in
accordance with the applicable plan), any benefits under any plans of the
Company in which the Employee is a participant to the full extent of the
Employee's rights under such plans, accrued vacation pay and any appropriate
business expenses incurred by the Employee in connection with his duties
hereunder, all to the date of termination, but no other compensation or
reimbursement of any kind, including without limitation, severance
compensation.
2.8 TERMINATION UPON A CHANGE IN CONTROL. In the
event of a Termination Upon a Change of Control, the Employee shall immediately
be paid all accrued salary, bonus compensation to the extent earned, vested
deferred compensation, if any, (other than pension plan or profit sharing plan
benefits which will be paid in accordance with the applicable plan), any
benefits under
3
<PAGE> 4
any plans of the Company in which the Employee is a participant to the full
extent of the Employee's rights under such plans (including accelerated vesting
of any awards granted to the Employee under the Company's 1994 Stock Incentive
Plan), accrued vacation pay and any appropriate business expenses incurred by
the Employee in connection with his duties hereunder, all to the date of
termination, and all severance compensation provided in Section 4.1, but no
other compensation or reimbursement of any kind.
2.9 NOTICE OF TERMINATION. The Company may
effect a termination of this Agreement pursuant to the provisions of this
Section 2 upon giving thirty (30) days' written notice to the Employee of such
termination. The Employee may effect a termination of this Agreement pursuant
to the provisions of this Section 2 upon giving sixty (60) days' written notice
to the Company of such termination.
3. SALARY, BENEFITS AND BONUS COMPENSATION.
3.1 BASE SALARY. As payment for the services to
be rendered by the Employee as provided in Section 1 and subject to the terms
and conditions of Section 2, the Company agrees to pay to the Employee a "Base
Salary" for the period beginning on the Effective Date hereof through December
31, 1996, at the rate of $285,000 per annum payable in equal monthly
installments of $23,750. The Base Salary for each year (or proration thereof)
beginning January 1, 1997, shall be determined by the Compensation Committee of
the Board of Directors (the "Compensation Committee") and ratified by the
Board, which shall authorize an increase in the Employee's Base Salary in an
amount which, at a minimum, shall be equal to the cumulative cost-of-living
increase on the Base Salary as reported in the "Consumer Price Index,
Birmingham, Alabama, All Items," published by the U.S. Department of Labor
(using January 1, 1996, as the base date for computation). The Employee's Base
Salary shall be reviewed annually by the Compensation Committee.
3.2 BONUSES. The Employee shall be eligible to
receive a bonus for each year (or portion thereof) during the term of this
Agreement and any extensions thereof, with the actual amount of any such bonus
to be determined by the Compensation Committee and ratified by the Board of
Directors based upon their evaluation of the Employee's performance during such
year. All such bonuses shall be payable within ninety (90) days after the end
of the fiscal year to which such bonus relates. All such bonuses shall be
reviewed annually by the Compensation Committee.
3.3 THE EMPLOYEE BENEFITS. The Employee shall be
eligible to participate in such of the Company's benefits and deferred
compensation plans as are now generally available or later made generally
available to executive officers of the Company, including, without limitation,
the Company's 1994 Stock Incentive Plan, Section 401(k) plan, profit sharing
plans, club membership dues, professional dues, annual physical examinations,
dental and medical plans, personal catastrophe and disability insurance,
retirement plans and supplementary executive retirement plans, if any. For
purposes of establishing the length of service under any benefit plans or
programs of the Company, the Employee's employment with the Company will be
deemed to have commenced on the date that Employee first commenced employment
with the Company.
3.4 VACATION. The Employee shall be entitled to
four (4) weeks of vacation during each year during the term of this Agreement
and any extensions thereof, prorated for partial years.
4
<PAGE> 5
3.5 LIFE INSURANCE. For the term of this
Agreement and any extensions thereof, the Company shall at its expense procure
and keep in effect life insurance on the life of the Employee, payable to such
beneficiaries as the Employee may from time to time designate, in the aggregate
amount, net of any reimbursements to the Company, of five times the Employee's
Base Salary. Such policy may be owned by the Employee or by a member of his
immediate family.
3.6 REIMBURSEMENT FOR EXPENSES. During the term
of this Agreement, the Company shall reimburse the Employee for reasonable and
properly documented out-of-pocket business and/or entertainment expenses
incurred by the Employee in connection with his duties under this Agreement.
3.7 DISABILITY INSURANCE. During the term of
this Agreement, the Company shall provide the Employee, either through a
corporate group disability insurance plan or otherwise, with disability
insurance coverage equal to the greater of (a) at least 75% of his base salary,
or (b) the maximum amount obtainable.
3.8 CAR ALLOWANCE. During the term of this
Agreement, the Company shall provide a car allowance to the Employee for an
automobile to be used by Employee in connection with the execution of his
duties under this Agreement in the amount of $750.00 per month, subject to an
annual adjustment at the discretion of the Compensation Committee of a minimum
of the increase in cost-of-living as defined in Section 3.1.
4. SEVERANCE COMPENSATION.
4.1 SEVERANCE COMPENSATION IN THE EVENT OF A
TERMINATION UPON A CHANGE IN CONTROL OR OTHER THAN FOR CAUSE. In the event the
Employee's employment is terminated in a Termination Upon a Change in Control
or Other Than For Cause, the Employee shall be paid as severance compensation
his Base Salary (at the rate payable at the time of such termination), for a
period of 24 months from the date of termination of this Agreement on the dates
specified in Section 3.1. Notwithstanding anything in this Section 4.1 to the
contrary, the Employee may in the Employee's sole discretion, by delivery of a
notice to the Company within thirty (30) days following a Termination Upon a
Change in Control or Other Than for Cause, elect to receive from the Company a
lump sum severance payment by bank cashier's check equal to the present value
of the flow of cash payments that would otherwise be paid to the Employee
pursuant to this Section 4.1. Such present value shall be determined as of the
date of delivery of the notice of election by the Employee and shall be based
on a discount rate equal to the interest rate of 90-day U.S. Treasury bills, as
reported in the Wall Street Journal (or similar publication), on the date of
delivery of the election notice. If the Employee elects to receive a lump sum
severance payment, the Company shall make such payment to the Employee within
ten (10) days following the date on which the Employee notifies the Company of
the Employee's election. In addition to the severance payment payable under
this Section 4.1, the Employee shall be paid an amount equal to the average
annual bonus earned by the Employee in the two (2) years immediately preceding
the date of termination. The Employee shall also be entitled to an accelerated
vesting of any awards granted to the Employee under the Company's 1994 Stock
Incentive Plan. The Employee shall continue to accrue retirement benefits and
shall continue to enjoy any benefits under any plans of the Company in which
the Employee is a participant to the full extent of the Employee's rights under
such plans, including any perquisites provided under this Agreement, through
the period of payment of severance compensation under this Agreement; provided,
however, that the benefits under any such plans of the Company in
5
<PAGE> 6
which the Employee is a participant, including any such perquisites, shall
cease upon re-employment by a new employer.
4.2 NO SEVERANCE COMPENSATION UNDER OTHER
TERMINATION. In the event of a Voluntary Termination, Termination For Cause,
termination by reason of the Employee's disability pursuant to Section 2.5, or
termination by reason of the Employee's death pursuant to Section 2.6, the
Employee or his estate shall not be paid any severance compensation.
4.3 LIMIT ON AGGREGATE COMPENSATION UPON A CHANGE
IN CONTROL. Notwithstanding anything else in this Agreement, solely in the
event of a Termination Upon a Change in Control pursuant to Section 2.8, the
amount of severance compensation paid to the Employee under Sections 2 and 4 or
otherwise, but exclusive of any payments to the Employee in respect of any
stock options then held by the Employee (or any compensation deemed to be
received by the Employee in connection with the exercise of any stock options
at any time) or by virtue of the Employee's exercise of stock options under the
Company's 1994 Stock Incentive Plan upon a Change in Control, shall not include
any amount that the Company is prohibited from deducting for federal income tax
purposes by virtue of Section 280G of the Internal Revenue Code of 1986, as
amended, or any successor provision.
5. NON-COMPETITION OBLIGATIONS.
5.1 GENERAL RESTRICTION. Unless waived or
reduced by the Company, during the term of this Agreement and for a period of
24 months thereafter, Employee will not, without the Company's prior written
consent, directly or indirectly, alone or as a partner, joint venturer,
officer, director, employee, consultant, agent, independent contractor or
stockholder of any company or business, engage in any business activity in the
United States which is substantially similar to or in direct competition with
any of the business activities of or services provided by the Company at such
time. The ownership by Employee of not more than one percent of the shares of
stock of any corporation having a class of equity securities actively traded on
a national securities exchange or on the Nasdaq National Stock Market shall not
be deemed, in and of itself, to violate the prohibitions of this Section 5.
5.2 ENFORCEABILITY. The parties have entered
into this Section 5 of this Agreement in good faith and for the reasons set
forth in the recitals hereto and assume that this Agreement is legally binding.
If, for any reason, this Agreement or this Section 5 is not binding or
enforceable because of the geographical scope or because of the term, then the
parties agree that this Agreement shall be deemed amended and effective to the
widest geographical area and/or the longest period of time as may be legally
enforceable.
5.3 EQUITABLE RELIEF. The Employee acknowledges
that the rights and privileges granted to the Company in this Section 5 are of
special and unique character, which gives them a peculiar value, the loss of
which may not be reasonably or adequately compensated for by damages in an
action of law, and that a breach thereof by the Employee of this Agreement will
cause the Company great and irreparable injury and damage. Accordingly, the
Employee hereby agrees that the Company shall be entitled to remedies of
injunction, specific performance or other equitable relief to prevent a breach
of this Section 5 of this Agreement by the Employee. This provision shall not
be construed as a waiver of any other rights or remedies the Company may have
for damages or otherwise.
6
<PAGE> 7
6. MISCELLANEOUS.
6.1 PAYMENT OBLIGATIONS. The Company's
obligation to pay the Employee the compensation and to make the arrangements
provided herein shall be unconditional, and the Employee shall have no
obligation whatsoever to mitigate damages hereunder. If litigation after a
change in control shall be brought to enforce or interpret any provision
contained herein, the Company, to the extent permitted by applicable law and
the Company's Articles of Incorporation and Bylaws, hereby indemnifies the
Employee for the Employee's reasonable attorneys' fees and disbursements
incurred in such litigation.
6.2 WAIVER. The waiver of the breach of any
provision of this Agreement shall not operate or be construed as a waiver of
any subsequent breach of the same or other provision hereof.
6.3 ENTIRE AGREEMENT; MODIFICATIONS. Except as
otherwise provided herein, this Agreement represents the entire understanding
among the parties with respect to the subject matter hereof, and this Agreement
supersedes any and all prior understandings, agreements, plans and
negotiations, whether written or oral with respect to the subject matter hereof
including without limitation, any understandings, agreements or obligations
respecting any past or future compensation, bonuses, reimbursements or other
payments to the Employee from the Company. All modifications to the Agreement
must be in writing and signed by the party against whom enforcement of such
modification is sought.
6.4 NOTICES. All notices and other
communications under this Agreement shall be in writing and shall be given by
telegraph or first class mail, certified or registered with return receipt
requested, and shall be deemed to have been duly given three (3) days after
mailing or twelve (12) hours after transmission of a telegram to the respective
persons named below:
If to the Company: Capstone Capital Corporation
1000 Urban Center Drive
Birmingham, Alabama 35242
Phone: (205) 967-2092
Fax: (205) 967-9066
If to the Employee: John W. McRoberts
4113 Old Leeds Lane
Birmingham, Alabama 35213
Phone: (205) 879-9548
Any party may change such party's address for notices by notice duly given
pursuant to this Section 6.4.
6.5 HEADINGS. The Section headings herein are
intended for reference and shall not by themselves determine the construction
or interpretation of this Agreement.
6.6 GOVERNING LAW. This Agreement shall be
governed by and construed in accordance with the laws of the State of Alabama.
7
<PAGE> 8
6.7 ARBITRATION. Any controversy or claim
arising out of or relating to this Agreement, or breach thereof, shall be
settled by arbitration in Birmingham, Alabama, in accordance with the Rules of
the American Arbitration Association, and judgment upon any proper award
rendered by the arbitrators may be entered in any court having jurisdiction
thereof. There shall be three (3) arbitrators, one (1) to be chosen directly
by each party at will, and the third arbitrator to be selected by the two (2)
arbitrators so chosen. To the extent permitted by the Rules of the American
Arbitration Association, the selected arbitrators may grant equitable relief.
Each party shall pay the fees of the arbitrator selected by him and of his own
attorneys, and the expenses of his witnesses and all other expenses connected
with the presentation of his case. The cost of the arbitration including the
cost of the record or transcripts thereof, if any, administrative fees, and all
other fees and costs shall be borne equally by the parties.
6.8 SEVERABILITY. Should a court or other body
of competent jurisdiction determine that any provision of this Agreement is
excessive in scope or otherwise invalid or unenforceable, such provision shall
be adjusted rather than voided, if possible, and all other provisions of this
Agreement shall be deemed valid and enforceable to the extent possible.
6.9 SURVIVAL OF THE COMPANY'S OBLIGATIONS. The
Company's obligations hereunder shall not be terminated by reason of any
liquidation, dissolution, bankruptcy, cessation of business, or similar event
relating to the Company. This Agreement shall not be terminated by any merger
or consolidation or other reorganization of the Company. In the event any such
merger, consolidation or reorganization shall be accomplished by transfer of
stock or by transfer of assets or otherwise, the provisions of this Agreement
shall be binding upon and inure to the benefit of the surviving or resulting
corporation or person. This Agreement shall be binding upon and inure to the
benefit of the executors, administrators, heirs, successors and assigns of the
parties; provided, however, that except as herein expressly provided, this
Agreement shall not be assignable either by the Company (except to an affiliate
of the Company in which event the Company shall remain liable if the affiliate
fails to meet any obligations to make payments or provide benefits or
otherwise) or by the Employee.
6.10 COUNTERPARTS. This Agreement may be executed
in one or more counterparts, all of which taken together shall constitute one
and the same Agreement.
6.11 WITHHOLDINGS. All compensation and benefits
to the Employee hereunder shall be reduced by all federal, state, local and
other withholdings and similar taxes and payments required by applicable law.
6.12 INDEMNIFICATIONS. In addition to any rights
to indemnification to which the Employee is entitled to under the Company's
Amended and Restated Articles of Incorporation and Amended and Restated Bylaws,
the Company shall indemnify the Employee at all times during and after the term
of this Agreement to the maximum extent permitted under Section 2-418 of the
Maryland General Corporation Law or any successor provision thereof and any
other applicable state law, and shall pay the Employee's expenses in defending
any civil or criminal action, suit, or proceeding in advance of the final
disposition of such action, suit, or proceeding, to the maximum extent
permitted under such applicable state laws.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement effective as of the day and year first above written.
8
<PAGE> 9
THE COMPANY:
Capstone Capital Corporation, a
Maryland Corporation
By /s/ Richard M. Scrushy
------------------------------------
Its Chairman
---------------------------------
Date: 11/1/96
----------------------------------
THE EMPLOYEE:
/s/ John W. McRoberts
---------------------------------------
John W. McRoberts
Date: 11/1/96
----------------------------------
9
<PAGE> 1
EXHIBIT 10.73
AMENDED AND RESTATED
REVOLVING CREDIT
AND
REIMBURSEMENT AGREEMENT
by and among
CAPSTONE CAPITAL CORPORATION
NATIONSBANK, NATIONAL ASSOCIATION (SOUTH),
AMSOUTH BANK OF ALABAMA,
CREDIT LYONNAIS NEW YORK BRANCH,
NATIONAL CITY BANK, KENTUCKY,
CREDITANSTALT CORPORATE FINANCE, INC.,
THE BANK OF NOVA SCOTIA,
FIRST COMMERCIAL BANK,
THE SUMITOMO BANK, LIMITED, as Lenders
and
NATIONSBANK, NATIONAL ASSOCIATION (SOUTH), as Agent
June 24, 1996
<PAGE> 2
TABLE OF CONTENTS
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ARTICLE I
Definitions and Terms
<S> <C> <C>
1.01 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.02 Accounting Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
1.03 UCC Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE II
The Loans
2.01 Revolving Credit Facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
2.02 Payment of Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
2.03 Payment of Principal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
2.04 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
2.05 Pro Rata Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
2.06 Reductions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
2.07 Increase and Decrease in Amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
2.08 Conversions and Elections of Subsequent Interest
Periods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
2.09 Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
2.10 Deficiency Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
2.11 Adjustments by Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
2.12 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
2.13 Extension of Revolving Credit Termination Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
2.14 Swing Line . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE III
Letters of Credit
3.01 Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
3.02 Reimbursement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
3.03 Letter of Credit Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
3.04 Administrative Fees and Reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE IV
Yield Protection and Illegality
4.01 Additional Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
4.02 Suspension of Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
4.03 Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
4.04 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
4.05 Alternate Loan and Lender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
4.06 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
</TABLE>
i
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<TABLE>
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ARTICLE V
Conditions of Closing, Making Loans and Issuing
Letters of Credit
<S> <C> <C>
5.01 Conditions of Closing, Initial Advance and
Issuance of Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
5.02 Conditions of Further Loans and Issuance of
Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
ARTICLE VI
Representations and Warranties
6.01 Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
ARTICLE VII
Affirmative Covenants
7.01 Financial Reports, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
7.02 Maintain Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
7.03 Existence, Qualification, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
7.04 Regulations and Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
7.05 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
7.06 True Books . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
7.07 Pay Indebtedness to Lenders and Perform Other
Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
7.08 Right of Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
7.09 Observe all Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
7.10 Covenants Extending to Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
7.11 Officer's Knowledge of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
7.12 Suits or Other Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
7.13 Environmental Reports. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
7.14 Notice of Discharge of Hazardous Material or
Environmental Complaint . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
7.15 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
7.16 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
7.17 ERISA Requirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
7.18 REIT Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
7.19 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
7.20 New Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
7.21 Swap Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
ARTICLE VIII
Negative Covenants
8.01 Consolidated Tangible Net Worth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
8.02 Consolidated Interest Coverage Ratio. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
8.03 Consolidated Leverage Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
</TABLE>
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<S> <C>
8.04 Consoliated Senior Leverage Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
8.05 Consolidated Fixed Charge Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
8.06 Required Coverage Ratio. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
8.07 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
8.08 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
8.09 Transfer of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
8.10 Investments; Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
8.11 Capital Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
8.12 Merger or Consolidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
8.13 Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
8.14 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
8.15 Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
8.16 Dissolution, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
8.17 Rate Hedging Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
8.18 Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
8.19 Investment Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
8.20 Subordinated Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
8.21 Negative Pledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
ARTICLE IX
Events of Default and Acceleration
9.01 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
9.02 Agent to Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
9.03 Cumulative Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
9.04 No Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
9.05 Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
9.06 Allocation of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
ARTICLE X
The Agent
10.01 Appointment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
10.02 Attorneys-in-fact . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
10.03 Limitation on Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
10.04 Reliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
10.05 Notice of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
10.06 No Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
10.07 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
10.08 Lender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
10.09 Resignation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
10.10 Sharing of Payments, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
10.11 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
</TABLE>
iii
<PAGE> 5
<TABLE>
<CAPTION>
Page
----
ARTICLE XI
Miscellaneous
<S> <C>
11.01 Assignments and Participations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
11.02 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
11.03 Setoff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
11.04 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
11.05 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
11.06 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
11.07 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
11.08 Waivers by Borrower . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
11.09 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
11.10 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
11.11 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
11.12 Headings and References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
11.13 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
11.14 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
11.15 Agreement Controls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
11.16 Usury Savings Clause . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
EXHIBIT A Applicable Commitment Percentages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
EXHIBIT B Form of Assignment and Acceptance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
EXHIBIT C Notice of Appointment (or Revocation) of Authorized Representative . . . . . . . . . . . . . . . . . . . 103
EXHIBIT D-1 Form of Borrowing Notice--Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
EXHIBIT D-2 Form of Borrowing Notice--Swing Line Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
EXHIBIT E Form of Interest Rate Selection Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
EXHIBIT F-1 Form of Revolving Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
EXHIBIT F-2 Form of Swing Line Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112
EXHIBIT G Form of Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114
EXHIBIT H Form of Opinion of Borrower's Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122
EXHIBIT I Compliance Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123
Schedule 1.01 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128
Schedule 6.01(d) Subsidiaries and Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129
Schedule 6.01(f) Contingent Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130
Schedule 6.01(j) Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131
Schedule 6.01(s) Material Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132
Schedule 7.05 Existing Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133
Schedule 8.10 Loans and Investments (in addition to Schedule 6.01(d)) . . . . . . . . . . . . . . . . . . . . 134
</TABLE>
iv
<PAGE> 6
AMENDED AND RESTATED
REVOLVING CREDIT AND REIMBURSEMENT AGREEMENT
THIS AMENDED AND RESTATED REVOLVING CREDIT AND REIMBURSEMENT
AGREEMENT, dated as of June 24, 1996 (the "Agreement"), is made by and among:
CAPSTONE CAPITAL CORPORATION, a Maryland corporation having its
principal place of business in Birmingham, Alabama (the "Borrower"); and
NATIONSBANK, NATIONAL ASSOCIATION (SOUTH), a national banking
association organized and existing under the laws of the United States of
America and having its principal place of business in Atlanta, Georgia
("NationsBank"), the Lenders signatory hereto and each other lender which may
hereafter execute and deliver an instrument of assignment with respect to this
Agreement pursuant to Section 11.01 (hereinafter NationsBank and such other
lenders may be referred to individually as a "Lender" or collectively as the
"Lenders"); and
NATIONSBANK, NATIONAL ASSOCIATION (SOUTH), in its capacity as agent
for the Lenders (in such capacity, the "Agent");
W I T N E S S E T H:
WHEREAS, the Borrower, the Agent and certain of the Lenders (the
"Existing Lenders") have entered into a Revolving Credit and Reimbursement
Agreement dated June 22, 1994, as amended by Amendments No. 1 through No. 5
(the "Original Agreement") pursuant to which the Existing Lenders have agreed
to make available to the Borrower loans of up to $100,000,000 (the "Prior
Loans"), which Prior Loans are evidenced by notes in favor of the Existing
Lenders (the "Existing Notes"); and
WHEREAS, the Borrower has requested that the Lenders amend and restate
the Original Agreement in its entirety in order to make available to the
Borrower a revolving credit facility of up to $150,000,000 which shall include
thereunder a letter of credit facility of up to $10,000,000 and a swing line
facility of $10,000,000, the proceeds of such loans to be used for general
corporate purposes including the acquisition of health care properties; and
WHEREAS, the Lenders are willing to amend and restate the Original
Agreement and make such facilities available to the Borrower upon the terms and
conditions set forth herein; and
WHEREAS, all existing Subsidiaries of the Borrower have executed a
Guaranty in favor of the Agent for the benefit of the Existing Lenders
(collectively, the "Existing Guaranty");
NOW, THEREFORE, the Borrower, the Lenders and the Agent hereby agree
as follows:
<PAGE> 7
ARTICLE I
Definitions and Terms
1.01 Definitions. For the purposes of this Agreement, in addition to
the definitions set forth above, the following terms shall have the respective
meanings set forth below:
"Advance" means a borrowing under the Revolving Credit
Facility consisting of the aggregate principal amount of a Base Rate
Loan or a Eurodollar Rate Loan, as the case may be;
"Affiliate" means a Person (i) which directly or indirectly
through one or more intermediaries controls, or is controlled by, or
is under common control with the Borrower; (ii) which beneficially
owns or holds 5% or more of any class of the outstanding voting stock
(or in the case of a Person which is not a corporation, 5% or more of
the equity interest) of the Borrower; (iii) 5% or more of any class of
the outstanding voting stock (or in the case of a Person which is not
a corporation, 5% or more of the equity interest) of which is
beneficially owned or held by the Borrower. The term "control" means
the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of a Person,
whether through ownership of voting stock, by contract or otherwise;
"Applicable Commitment Percentage" means, for each Lender,
with respect to the Obligations hereunder (each a type of "credit
exposure"), including its Participations and its obligations hereunder
to NationsBank to acquire Participations, a fraction (expressed as a
percentage), the numerator of which shall be the then amount of such
Lender's Revolving Credit Commitment and the denominator of which
shall be the Total Revolving Credit Commitment, which Revolving Credit
Commitment for each Lender as of the Closing Date is as set forth in
Exhibit A attached hereto and incorporated herein by this reference;
provided that the Applicable Commitment Percentage of each Lender
shall be increased or decreased to reflect any assignments to or by
such Lender effected in accordance with Section 11.01 hereof;
"Applicable Margin" means with respect to a Eurodollar Rate
Loan that percent per annum set forth below opposite the applicable
Consolidated Senior Leverage Ratio which percent shall be the
Applicable Margin effective beginning on the day next following the
receipt of the completed certificate delivered pursuant to Section
7.01(a)(ii) or Section 7.01(b)(ii) setting forth the Consolidated
Senior Leverage Ratio as at the end of the period for which such
certificate is delivered:
2
<PAGE> 8
<TABLE>
<CAPTION>
Consolidated Senior
Leverage Ratio Applicable Margin
-------------- -----------------
<S> <C>
Less than .55 to 1.00 but 1 5/8%
Greater than or Equal
to .50 to 1.00
Less than .50 to 1.00 but 1 1/2%
Greater than or Equal
to .45 to 1.00
Less than .45 to 1.00 but 1 3/8%
Greater than or Equal
to .40 to 1.00
Less than .40 to 1.00 but 1 1/4%
Greater than or Equal
to .30 to 1.00
Less than .30 to 1.00 but 1 1/8%
Greater than or Equal
to .25 to 1.00
Less than .25 to 1.00 1 %
</TABLE>
"Applications and Agreements for Letters of Credit" means,
collectively, the Applications and Agreements for Letters of Credit
executed by the Borrower from time to time and delivered to
NationsBank to support the issuance of Letters of Credit;
"Assignment and Acceptance" shall mean an Assignment and
Acceptance in the form of Exhibit B (with blanks appropriately filled
in) delivered to the Agent in connection with an assignment of a
Lender's interest under this Agreement pursuant to Section 11.01;
"Authorized Representative" means any of the Chairman,
President or Vice Presidents of the Borrower or, with respect to
financial matters, the Treasurer or chief financial officer of the
Borrower or any other person expressly designated by the Board of
Directors of the Borrower (or the appropriate committee thereof) as an
Authorized Representative of the Borrower, as set forth from time to
time in a certificate in the form attached hereto as Exhibit C;
"Base Rate" means the greater of (i) the Federal Funds
Effective Rate plus one-half of one percent (1/2%) or (ii) the Prime
Rate;
"Base Rate Loan" means all or portions of the Loan for which
the rate of interest is determined by reference to the Base Rate;
3
<PAGE> 9
"Board" means the Board of Governors of the Federal Reserve
System (or any successor body);
"Borrowing Notice" means the notice delivered by an Authorized
Representative in connection with an Advance, in the form attached
hereto as Exhibit D-1;
"Business Day" means any day which is not a Saturday, Sunday
or a day on which banks in both the States of North Carolina and New
York are authorized or obligated by law, executive order or
governmental decree to be closed;
"Capital Expenditures" means for any period the sum of
(without duplication) (i) all expenditures (whether paid in cash or
accrued as liabilities) by the Borrower or any Subsidiary during that
period that are for items that would be classified in accordance with
Generally Accepted Accounting Principles as "property, plant or
equipment" or comparable items on the consolidated balance sheet of
the Borrower, plus (ii) with respect to any Capital Lease entered into
by the Borrower or its Subsidiaries during such period, the present
value of the lease payments due under such Capital Lease over the term
of such Capital Lease applying a discount rate equal to the interest
rate provided in such lease (or in the absence of a stated interest
rate that rate used in the preparation of the financial statements
described in Section 7.01(a) hereof), or (iii) any other item that is
properly capitalized in accordance with Generally Accepted Accounting
Principles, excluding, however, the amount of any Capital Expenditures
paid for with proceeds of casualty insurance;
"Capital Leases" means all leases which have been or should be
capitalized in accordance with Generally Accepted Accounting
Principles as in effect from time to time including Statement No. 13
of the Financial Accounting Standards Board and any successor thereof;
"Closing Date" means the date as of which this Agreement is
executed by the Borrower, the Lenders and the Agent and on which the
conditions set forth in Section 5.01 hereof have been satisfied;
"Code" means the Internal Revenue Code of 1986, as amended,
any successor provision or provisions and any regulations promulgated
thereunder;
"Consistent Basis" in reference to the application of
Generally Accepted Accounting Principles means the accounting
principles observed in the period referred to are comparable in all
material respects to those applied in the preparation of the audited
financial statements of the Borrower referred to in Section 6.01(f)(i)
hereof;
4
<PAGE> 10
"Consolidated EBITDA" means, with respect to the Borrower and
its Subsidiaries for any period of computation thereof, the sum of,
without duplication, (i) Consolidated Net Income, plus (ii)
Consolidated Interest Expense during such period, plus (iii) taxes on
income during such period, plus (iv) amortization during such period,
plus (v) without duplication, any depreciation during such period, all
determined on a consolidated basis in accordance with Generally
Accepted Accounting Principles applied on a Consistent Basis;
"Consolidated Fixed Charge Ratio" means, with respect to the
Borrower and its Subsidiaries for the Four-Quarter Period ending on
the date of computation thereof, the ratio of (a) Consolidated EBITDA
to (b) Consolidated Fixed Charges;
"Consolidated Fixed Charges" means, with respect to Borrower
and its Subsidiaries, for the periods indicated, the sum of, without
duplication, (i) Consolidated Interest Expense, (ii) dividends and
distributions (other than dividends payable solely in common stock of
the Borrower), and (iii) required principal payments of Consolidated
Indebtedness (excluding any portion of the Revolving Credit Facility);
"Consolidated Indebtedness" means all Indebtedness of the
Borrower and its Subsidiaries, all determined on a consolidated basis;
"Consolidated Interest Coverage Ratio" means, with respect to
the Borrower and its Subsidiaries for the Four-Quarter Period ending
on the date of computation thereof, the ratio of (a) Consolidated Net
Income plus, to the extent deducted in determining Consolidated Net
Income, taxes based on income and Consolidated Interest Expense to (b)
Consolidated Interest Expense;
"Consolidated Interest Expense" means, with respect to any
period of computation thereof, the gross interest expense of the
Borrower and its Subsidiaries, including without limitation (i) the
amortization of debt discounts, (ii) the amortization of all fees
(including, without limitation, fees payable in respect of a Swap
Agreement) payable in connection with the incurrence of Indebtedness
to the extent included in interest expense and (iii) the portion of
any liabilities incurred in connection with Capital Leases allocable
to interest expense, all determined on a consolidated basis in
accordance with Generally Accepted Accounting Principles applied on a
Consistent Basis;
"Consolidated Leverage Ratio" means the ratio of Consolidated
Indebtedness to Consolidated Total Capital;
"Consolidated Net Income" means, for any period of computation
thereof, the gross revenues from operations of the
5
<PAGE> 11
Borrower and its Subsidiaries (including payments received by the
Borrower and its Subsidiaries of (i) interest income, and (ii)
dividends and distributions made in the ordinary course of their
businesses by Persons in which investment is permitted pursuant to
Section 8.10 and not related to an extraordinary event) less all
operating and non-operating expenses of the Borrower and its
Subsidiaries including taxes on income, all determined on a
consolidated basis in accordance with Generally Accepted Accounting
Principles applied on a Consistent Basis; but excluding as income: (i)
net gains on the sale, conversion or other disposition of capital
assets, (ii) net gains on the acquisition, retirement, sale or other
disposition of capital stock and other securities of the Borrower or
its Subsidiaries, (iii) net gains on the collection of proceeds of
life insurance policies, (iv) any write-up of any asset, and (v) any
other net gain or credit of an extraordinary nature as determined in
accordance with Generally Accepted Accounting Principles applied on a
Consistent Basis;
"Consolidated Senior Indebtedness" means Consolidated
Indebtedness minus Subordinated Indebtedness;
"Consolidated Senior Leverage Ratio" means the ratio of
Consolidated Senior Indebtedness to Consolidated Total Capital;
"Consolidated Shareholders' Equity" means, at any time as of
which the amount thereof is to be determined, the sum of the following
in respect of the Borrower and its Subsidiaries (determined on a
consolidated basis and excluding intercompany items among the Borrower
and its Subsidiaries and any upward adjustment after the Closing Date
due to revaluation of assets): (i) the amount of issued and
outstanding share capital, plus (ii) the amount of additional paid-in
capital and retained income (or, in the case of a deficit, minus the
amount of such deficit), minus, without duplication, (iii) the amount
of any deferred compensation or other contra-equity account, as
determined in accordance with Generally Accepted Accounting Principles
applied on a Consistent Basis;
"Consolidated Tangible Net Worth" means at any time as of
which the amount thereof is to be determined, Consolidated
Shareholders' Equity minus the sum of the following (without
duplication of deductions in respect of items already deducted in
arriving at surplus and retained earnings): (a) the book value of all
assets which would be treated as intangible assets under Generally
Accepted Accounting Principles, such as (without limitation) goodwill
(whether representing the excess of cost over book value of assets
acquired or otherwise), capitalized expenses, unamortized debt
discount and expense, consignment inventory rights, patents,
trademarks, trade names, copyrights, franchises and licenses; and (b),
without
6
<PAGE> 12
duplication, all reserves (other than contingency reserves not
allocated to any particular purpose), including without limitation
reserves for depreciation, depletion, amortization, obsolescence,
deferred income taxes, insurance and inventory valuation;
"Consolidated Total Capital" means the sum of Consolidated
Shareholders' Equity and Consolidated Indebtedness;
"Contingent Obligation" of any Person means all contingent
liabilities required (or which, upon the creation or incurring
thereof, would be required) to be included in the consolidated
financial statements (including footnotes) of such Person in
accordance with Generally Accepted Accounting Principles applied on a
Consistent Basis, including Statement No. 5 of the Financial
Accounting Standards Board, and any obligation of such Person
guaranteeing or in effect guaranteeing any Indebtedness, dividend or
other obligation of any other Person (the "primary obligor") in any
manner, whether directly or indirectly, including obligations of such
Person however incurred:
(1) to purchase such Indebtedness or other obligation
or any property or assets constituting security therefor;
(2) to advance or supply funds in any manner (i) for
the purchase or payment of such Indebtedness or other
obligation, or (ii) to maintain a minimum working capital, net
worth or other balance sheet condition or any income statement
condition of the primary obligor;
(3) to grant or convey any lien, security interest,
pledge, charge or other encumbrance on any property or assets
of such Person to secure payment of such Indebtedness or other
obligation;
(4) to lease property or to purchase securities or
other property or services primarily for the purpose of
assuring the owner or holder of such Indebtedness or
obligation of the ability of the primary obligor to make
payment of such Indebtedness or other obligation; or
(5) otherwise to assure the owner of the Indebtedness
or such obligation of the primary obligor against loss in
respect thereof;
with respect to Contingent Obligations, such liabilities shall be
computed at the amount which, in light of all the facts and
circumstances existing at the time, represent the amount which can
reasonably be expected to become an actual or matured liability as
determined by Borrower's independent accountant;
7
<PAGE> 13
"Default" means any event or condition which, with the giving
or receipt of notice or lapse of time or both, would constitute an
Event of Default hereunder;
"Dollars" and the symbol "$" means dollars constituting legal
tender for the payment of public and private debts in the United
States of America;
"Eligible Securities" means the following obligations and any
other obligations previously approved in writing by the Agent:
(a) Government Securities;
(b) the following debt securities of the following
agencies or instrumentalities of the United States of America
if at all times the full faith and credit of the United States
of America is pledged to the full and timely payment of all
interest and principal thereof:
(i) all direct or fully guaranteed
obligations of the United States Treasury; and
(ii) mortgage-backed securities and
participation certificates guaranteed by the
Government National Mortgage Association;
(c) the following obligations of the following
agencies or instrumentalities of the United States of America:
(i) participation certificates and debt
obligations of the Federal Home Loan Mortgage
Corporation;
(ii) consolidated debt obligations, and
obligations secured by a letter of credit, of the
Federal Home Loan Banks; and
(iii) debt obligations and mortgage-backed
securities of the Federal National Mortgage
Association which have not had the interest portion
thereof severed therefrom;
(d) obligations of any corporation organized under
the laws of any state of the United States of America or under
the laws of any other nation, payable in the United States of
America, expressed to mature not later than 92 days following
the date of issuance thereof and rated in an investment grade
rating category by S&P and Moody's;
(e) interest bearing demand or time deposits or
certificates of deposit maturing within one year from the
8
<PAGE> 14
date of acquisition issued by a Lender or by bank or trust
company organized under the laws of the United States or of
any state thereof having capital surplus and undivided profits
aggregating at least $250,000,000 and being rated A-3 or
better by S&P or A or better by Moody's;
(f) capital stock of REITs, provided the aggregate
fair market value of such stock at no time exceeds $250,000;
(g) Repurchase Agreements;
(h) Pre-Refunded Municipal Obligations;
(i) shares of mutual funds which invest in
obligations described in paragraphs (a) through (g) above, the
shares of which mutual funds are at all times rated "AAA" by
S&P; and
(j) asset-backed remarketed certificates of
participation representing a fractional undivided interest in
the assets of a trust, which certificates are rated at least
"A-1" by S&P and "P- 1" by Moody's.
Obligations listed in paragraphs (a), (b) and (c) above which
are in book-entry form must be held in a trust account with the Federal
Reserve Bank or with a clearing corporation or chain of clearing
corporations which has an account with the Federal Reserve Bank;
"Environmental Laws" means, collectively, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as
amended, the Superfund Amendments and Reauthorization Act of 1986, the
Resource Conservation and Recovery Act, the Toxic Substances Control
Act, as amended, the Clean Air Act, as amended, the Clean Water Act,
as amended, any other "Superfund" or "Superlien" law or any other
federal, or applicable state or local statute, law, ordinance, code,
rule, regulation, order or decree regulating, relating to, or imposing
liability or standards of conduct concerning, any hazardous, toxic or
dangerous waste, substance or material;
"ERISA" means, at any date, the Employee Retirement Income
Security Act of 1974, as amended, and the regulations thereunder, all
as the same shall be in effect at such date;
"Euro Business Day" means a Business Day on which the relevant
international financial markets are open for the transaction of the
business contemplated by this Agreement in London, England and New
York, New York;
9
<PAGE> 15
"Eurodollar Rate" means the interest rate per annum
calculated according to the following formula:
Eurodollar = Interbank Offered Rate + Applicable
---------------------------------- Margin
Rate 1 - Eurodollar Reserve Percentage
"Eurodollar Rate Loan" means a Loan for which the rate of
interest is determined by reference to the Eurodollar Rate;
"Eurodollar Reserve Percentage" means, for any day, that
percentage (expressed as a decimal) which is in effect from time to
time under Regulation D or any successor regulation, as the maximum
reserve requirement (including any basic, supplemental, emergency,
special, or marginal reserves) applicable with respect to Eurocurrency
liabilities as that term is defined in Regulation D (or against any
other category of liabilities that includes deposits by reference to
which the interest rate on Eurodollar Rate Loans is determined),
whether or not the Agent or any Lender has any Eurocurrency
liabilities subject to such requirements, without benefits of credits
or proration, exceptions or offsets that may be available from time to
time to the Agent or any Lender. The Eurodollar Rate shall be
adjusted automatically on and as of the effective date of any change
in the Eurodollar Reserve Percentage;
"Event of Default" means any of the occurrences set forth as
such in Section 9.01 hereof;
"Excluded Lease" means any Lease as to which the lessee has
either failed to make any required payment thereunder or is in default
of any other material provision of such Lease, and which Lease is
described on an Annex to the certificate required to be delivered to
the Agent pursuant to Section 7.01(a) and Section 7.01(b);
"Existing Letters of Credit" means those Letters of Credit
issued by NationsBank pursuant to the Original Agreement which remain
outstanding on the Closing Date and are described in Schedule 1.01
attached hereto;
"Federal Funds Effective Rate" for any day, as used herein,
means the rate per annum (rounded upward to the nearest 1/100 of 1%)
announced by the Federal Reserve Bank of New York (or any successor)
on such day as being the weighted average of the rates on overnight
Federal funds transactions arranged by Federal funds brokers on the
previous trading day, as computed and announced by such Federal
Reserve Bank (or any successor) in substantially the same manner as
such Federal Reserve Bank computes and announces the weighted average
it refers to as the "Federal Funds Effective Rate" as of the date of
this Agreement; provided, if such Federal Reserve Bank (or its
successor) does not announce such rate on any day, the
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<PAGE> 16
"Federal Funds Effective Rate" for such day shall be the Federal Funds
Effective Rate for the last day on which such rate was announced;
"Fiscal Year" means the 12 month period of the Borrower
commencing on January 1 of each calendar year and ending on December
31 of each calendar year;
"Four-Quarter Period" means a period of four full consecutive
quarterly periods, taken together as one accounting period;
"Generally Accepted Accounting Principles" means those
principles of accounting set forth in pronouncements of the Financial
Accounting Standards Board, the American Institute of Certified Public
Accountants or which have other substantial authoritative support and
are applicable in the circumstances as of the date of a report, as
such principles are from time to time supplemented and amended, as
interpreted by the Borrower's independent accountants;
"Government Securities" means direct obligations of, or
obligations the timely payment of principal and interest on which are
fully and unconditionally guaranteed by, the United States of America;
"Governmental Authority" shall mean any Federal, state,
municipal, national or other governmental department, commission,
board, bureau, agency or instrumentality or political subdivision
thereof or any entity or officer exercising executive, legislative or
judicial, regulatory or administrative functions of or pertaining to
any government or any court, in each case whether of a state of the
United States, the United States or a foreign governmental entity;
"Hazardous Material" means and includes any hazardous, toxic
or dangerous waste, substance or material, the generation, handling,
storage, disposal, treatment or emission of which is subject to any
Environmental Law;
"Indebtedness" means with respect to any Person, without
duplication, all Indebtedness for Money Borrowed, all indebtedness of
such Person for the acquisition of property, all indebtedness secured
by any Lien on the property of such Person whether or not such
indebtedness is assumed, all liability of such Person by way of
endorsements (other than for collection or deposit in the ordinary
course of business), all Contingent Obligations and other items which
in accordance with Generally Accepted Accounting Principles is
classified as a liability on a balance sheet; but excluding all
accounts payable in the ordinary course of business so long as payment
therefor is due within one year; provided that in no event shall the
term Indebtedness include partners' capital, surplus
11
<PAGE> 17
and retained earnings, minority interest in Subsidiaries, lease
obligations (other than pursuant to Capital Leases), reserves for
deferred income taxes and investment credits, other deferred credits
and reserves, and deferred compensation obligations;
"Indebtedness for Money Borrowed" means all indebtedness in
respect of money borrowed, including without limitation all Capital
Leases and the deferred purchase price of any property or asset,
evidenced by a promissory note, bond or similar written obligation for
the payment of money (including, but not limited to, conditional sales
or similar title retention agreements);
"Interbank Offered Rate" means, with respect to any Eurodollar
Rate Loan for the Interest Period applicable thereto, the average
(rounded upward to the nearest one-hundredth (1/100) of one percent)
per annum rate of interest determined by the Agent (each such
determination to be conclusive and binding absent manifest error) as
of two Euro Business Days prior to the first day of such Interest
Period, as the effective rate at which deposits in immediately
available funds in Dollars are being, have been, or would be offered
or quoted by the Agent to major banks in the applicable interbank
market for Eurodollar deposits at any time during the Euro Business
Day which is the second Euro Business Day immediately preceding the
first day of such Interest Period, for a term comparable to such
Interest Period and in the amount of such Eurodollar Rate Loan. If no
such offers or quotes are generally available for such amount, then
the Agent shall be entitled to determine the Eurodollar Rate by
estimating in its reasonable judgment the per annum rate (as described
above) that would be applicable if such quote or offers were generally
available;
"Interest Period" for each Eurodollar Rate Loan means a period
commencing on the date such Eurodollar Rate Loan is made or converted
and each subsequent period commencing on the last day of the
immediately preceding Interest Period for such Eurodollar Rate Loan,
and ending, at the Borrower's option, on the date one, two, three or
six months thereafter as notified to the Agent by the Authorized
Representative three (3) Euro Business Days prior to the beginning of
such Interest Period; provided, that,
(i) if the Authorized Representative fails to notify
the Agent of the length of an Interest Period three (3) Euro
Business Days prior to the first day of such Interest Period,
the Loan for which such Interest Period was to be determined
shall be deemed to be a Base Rate Loan as of the first day
thereof;
12
<PAGE> 18
(ii) if an Interest Period for a Eurodollar Rate Loan
would end on a day which is not a Euro Business Day such
Interest Period shall be extended to the next Euro Business
Day (unless such extension would cause the applicable Interest
Period to end in the succeeding calendar month, in which case
such Interest Period shall end on the next preceding Euro
Business Day); and
(iii) there shall not be more than eight (8) Interest
Periods in effect on any day;
"Interest Rate Selection Notice" means the telefacsimile or
telephonic request of an Authorized Representative to elect a
subsequent Interest Period for or to convert a Loan or Loans of any
type hereunder, as such election or conversion shall be otherwise
permitted herein. Any Interest Rate Selection Notice shall be binding
on and irrevocable by the Borrower and shall be confirmed in the case
of telephonic notice by facsimile transmission delivered to the Agent,
effective upon receipt, on the same Business Day upon which the
telephonic request is made, by the Authorized Representative in the
form attached hereto as Exhibit E;
"LC Account Agreement" means the LC Account Agreement dated as
of the date hereof between the Borrower and the Agent, as amended or
modified from time to time;
"Leases" means all lease agreements in effect at any point in
time pursuant to which (i) the Borrower or a Subsidiary leases real
property owned by it to a Person who is not an Affiliate of the
Borrower or its Subsidiaries or (ii) a Person who is the maker of a
Third Party Note has leased real property acquired, improved or
refinanced by it with the proceeds of a Third Party Loan to another
Person who is not an Affiliate of the Borrower or its Subsidiaries;
"Lending Office" means, as to each Lender, the Lending Office
of such Lender designated on the signature pages hereof or in an
Assignment and Acceptance or such other office of such Lender (or of
an affiliate of such Lender) as such Lender may from time to time
specify to the Authorized Representative and the Agent as the office
by which its Loans are to be made and maintained;
"Lessee" or "Lessees" means those persons leasing Properties
from the Borrower or its Subsidiaries or a maker of a Third Party Note
which leases property that secures a Third Party Loan;
"Letter of Credit" means a standby letter of credit issued by
NationsBank for the account of the Borrower in favor of a Person
advancing credit or securing an obligation on
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<PAGE> 19
behalf of the Borrower, including the Existing Letters of Credit;
"Letter of Credit Commitment" means with respect to each
Lender, the obligation of such Lender to acquire Letter of Credit
Participations up to an aggregate stated amount at any one time
outstanding equal to such Lender's Applicable Commitment Percentage of
the Total Letter of Credit Commitment as the same may be increased or
decreased from time to time pursuant to this Agreement;
"Letter of Credit Facility" means the facility described in
Article III hereof providing for the issuance by NationsBank for the
account of the Borrower of Letters of Credit in an aggregate stated
amount at any time outstanding not exceeding the Total Letter of
Credit Commitment;
"Lien" means any interest in property securing any obligation
owed to, or a claim by, a Person other than the owner of the property,
whether such interest is based on the common law, statute or contract,
and including but not limited to the lien or security interest arising
from a mortgage, encumbrance, pledge, security agreement, conditional
sale or trust receipt or a lease, consignment or bailment for security
purposes. For the purposes of this Agreement, the Borrower and its
Subsidiaries shall be deemed to be the owners of any property which
either of them have acquired or hold subject to a conditional sale
agreement, financing lease, or other arrangement pursuant to which
title to the property has been retained by or vested in some other
Person for security purposes;
"Loan" or "Loans" means any of the Eurodollar Rate Loans or
Base Rate Loans;
"Loan Documents" means this Agreement, the Notes, the
Subsidiary Guaranty, Applications and Agreements for Letters of
Credit, the LC Account Agreement and all other instruments and
documents heretofore or hereafter executed or delivered to and in
favor of any Lender or the Agent in connection with the Loans or the
Letters of Credit made, issued or created under this Agreement as the
same may be amended, modified or supplemented from time to time;
"Majority Lenders" means, as of any date, Lenders on such date
having Credit Exposures (as defined in the definition of Required
Lenders herein) aggregating more than 50% of the aggregate Credit
Exposures of all Lenders on such date;
"Material Agreements" means each of the contracts and
agreements designated as such on Schedule 6.01(s) attached hereto;
14
<PAGE> 20
"Moody's" means Moody's Investors Service, Inc., a Delaware
corporation;
"Multi-employer Plan" means an employee pension benefit plan
covered by Title IV of ERISA and in respect of which the Borrower or
any Subsidiary is an "employer" as described in Section 4001(b) of
ERISA, which is also a multi-employer plan as defined in Section
4001(a)(3) of ERISA;
"Notes" means, collectively, (i) the promissory notes of the
Borrower evidencing Loans executed and delivered to the Lenders as
provided in Section 2.04(a) hereof substantially in the form attached
hereto as Exhibit F-1, with appropriate insertions as to amounts, dates
and names of Lenders and (ii) the promissory note of the Borrower
evidencing Swing Line Loans executed and delivered to NationsBank as
provided in Section 2.04(b) hereof substantially in the form attached
hereto as Exhibit F-2;
"Obligations" means the obligations, liabilities and
Indebtedness of the Borrower with respect to (i) the principal and
interest on the Loans as evidenced by the Notes, (ii) the
Reimbursement Obligations, (iii) all liabilities of Borrower to any
Lender which arise under a Swap Agreement, and (iv) the payment and
performance of all other obligations, liabilities and Indebtedness of
the Borrower to the Lenders or the Agent hereunder, under any one or
more of the other Loan Documents or with respect to the Loans;
"Outstanding Letters of Credit" means all undrawn amounts of
Letters of Credit plus Reimbursement Obligations;
"Participation" means, (i) with respect to any Lender (other
than NationsBank) and a Letter of Credit, the extension of credit
represented by the participation of such Lender hereunder in the
liability of NationsBank in respect of a Letter of Credit issued by
NationsBank in accordance with the terms hereof and (ii) with respect
to any Lender (other than NationsBank) and a Swing Line Loan, the
extension of credit represented by the participation of such Lender
hereunder in the liability of NationsBank in respect of a Swing Line
Loan made by NationsBank in accordance with the terms hereof;
"PBGC" means the Pension Benefit Guaranty Corporation;
"Person" means an individual, partnership, corporation, trust,
limited liability company, unincorporated organization, association,
joint venture or a government or agency or political subdivision
thereof;
"Pre-Refunded Municipal Obligations" means obligations of any
state of the United States of America or of any municipal corporation
or other public body organized under the laws of
15
<PAGE> 21
any such state which are rated, based on the escrow, in the highest
investment rating category by both S&P and Moody's and which have been
irrevocably called for redemption and advance refunded through the
deposit in escrow of Government Securities or other debt securities
which are (i) not callable at the option of the issuer thereof prior
to maturity, (ii) irrevocably pledged solely to the payment of all
principal and interest on such obligations as the same becomes due and
(iii) in a principal amount and bear such rate or rates of interest as
shall be sufficient to pay in full all principal of, interest, and
premium, if any, on such obligations as the same becomes due as
verified by a nationally recognized firm of certified public
accountants;
"Prime Rate" means the rate of interest per annum announced
publicly by the Agent as its prime rate from time to time. The Prime
Rate is not necessarily the best or the lowest rate of interest
offered by the Agent;
"Principal Office" means the office of the Agent at
Independence Center, 15th Floor, Charlotte, North Carolina 28255,
Attention: Corporate Administrative Services or such other office and
address as the Agent may from time to time designate;
"Properties" mean real property, heretofore, presently or
hereafter owned or leased by, or otherwise under the control of, the
Borrower or any of its Subsidiaries;
"Qualifying Real Property" means real property, and
improvements thereon, which is owned by or subject to a leasehold
estate in favor of the Borrower or a Subsidiary; provided, however, if
such ownership is of a leasehold interest the remaining term of such
lease, including rights of extension or renewal, as at the date of any
determination shall not be less than 15 years; provided, further,
there shall be excluded from Qualifying Real Property any real
property which is subject to an Excluded Lease;
"Rate Hedging Obligations" means any and all obligations of
the Borrower, whether absolute or contingent and howsoever and
whensoever created, arising, evidenced or acquired (including all
renewals, extensions and modifications thereof and substitutions
therefor), under (a) any and all agreements, devices or arrangements
designed to protect at least one of the parties thereto from the
fluctuations of interest rates, exchange rates or forward rates
applicable to such party's assets, liabilities or exchange
transactions, including, but not limited to, dollar-denominated or
cross-currency interest rate exchange agreements, forward currency
exchange agreements, interest rate cap or collar protection
agreements, forward rate currency or interest rate options, puts,
warrants and those commonly known as interest rate "swap" agreements;
16
<PAGE> 22
and (b) any and all cancellations, buybacks, reversals, terminations
or assignments of any of the foregoing;
"Registration Statement" means the Registration Statement of
the Borrower on Form S-11, Registration No. 33-89756, as filed by the
Borrower with the Securities and Exchange Commission on March 6, 1995,
together with any amendment thereto;
"Regulation D" means Regulation D of the Board as the same may
be amended or supplemented from time to time;
"Regulatory Change" means any change effective after the
Closing Date in United States federal or state laws or regulations
(including Regulation D and capital adequacy regulations) or foreign
laws or regulations or the adoption or making after such date of any
interpretations, directives or requests applying to a class of banks,
which includes any of the Lenders, under any United States federal or
state or foreign laws or regulations (whether or not having the force
of law) by any court or governmental or monetary authority charged
with the interpretation or administration thereof or compliance by any
Lender with any request or directive regarding capital adequacy,
including with respect to "highly leveraged transactions," whether or
not having the force of law, whether or not failure to comply
therewith would be unlawful and whether or not published or proposed
prior to the date hereof;
"Reimbursement Obligation" shall mean at any time, the
obligation of the Borrower with respect to any Letter of Credit to
reimburse NationsBank and the Lenders to the extent of their
respective Participations (including by the receipt by NationsBank of
proceeds of Loans pursuant to Section 3.02) for amounts theretofore
paid by NationsBank pursuant to a drawing under such Letter of Credit;
"REIT" means a real estate investment trust qualified for
treatment as such for federal income tax purposes under Sections 856
through 860 of the Internal Revenue Code of 1986, as amended;
"Repurchase Agreement" means a repurchase agreement entered
into with any financial institution whose debt obligations or
commercial paper are rated "A" by either of S&P or Moody's or "A-1" by
S&P or "P-1" by Moody's;
"Required Coverage Ratio" means the ratio of Unencumbered Real
Property Assets (as determined by the lesser of book value or
appraised value) to unsecured Indebtedness;
"Required Lenders" means, as of any date, Lenders on such date
having Credit Exposures (as defined below) aggregating at
17
<PAGE> 23
least 51% of the aggregate Credit Exposures of all the Lenders on such
date. For purposes of the preceding sentence, the amount of the "
Credit Exposure" of each Lender shall be equal to the aggregate
principal amount of the Loans owing to such Lender plus the aggregate
unutilized amounts of such Lender's Revolving Credit Commitment
(without regard to any Swing Line Outstandings) plus the amount of
such Lender's Applicable Commitment Percentage of Outstanding Letters
of Credit; provided that, (i) if any Lender shall have failed to pay
to NationsBank its Applicable Commitment Percentage of any drawing
under any Letter of Credit resulting in an outstanding Reimbursement
Obligation, such Lender's Credit Exposure attributable to Letters of
Credit, Reimbursement Obligations and the Letter of Credit Commitment
shall be deemed to be held by NationsBank for purposes of this
definition and (ii) if any Lender shall fail to pay to NationsBank its
Applicable Commitment Percentage of any Swing Line Loan, such Lender's
Credit Exposure attributable to all Swing Line Outstandings shall be
deemed to be held by NationsBank for purposes of this definition;
"Revolving Credit Advance Account" means an account on the
books of the Agent in which
(i) each Advance by the Agent pursuant to Section
2.01 shall be debited thereto by recording therein on the date
of such Advance a debit entry in the amount of such Advance;
and
(ii) each payment made to the Agent for credit to the
Revolving Credit Advance Account shall be credited thereto by
recording therein on the date paid to the Agent a credit entry
in the amount of such payment;
"Revolving Credit Commitment" means with respect to each
Lender, the obligation of such Lender to make Loans to the Borrower up
to an aggregate principal amount at any one time outstanding equal to
such Lender's percentage as set forth on Exhibit A hereto of the Total
Revolving Credit Commitment as the same may be increased or decreased
from time to time pursuant to this Agreement;
"Revolving Credit Debit Balance" means an amount equal to the
excess, if any, of all debit entries over all credit entries required
to be recorded pursuant to Section 2.01 hereof in a Revolving Credit
Advance Account of the Agent up to and including the date of
computation;
"Revolving Credit Facility" means the facility described in
Article II hereof providing for Loans to the Borrower by the Lenders in
the aggregate principal amount of Total Revolving Credit Commitment
less the aggregate amount of Outstanding Letters of Credit;
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<PAGE> 24
"Revolving Credit Termination Date" means (i) June 24, 1999 or
(ii) such earlier date of termination of Lenders' obligations pursuant
to Section 9.01 upon the occurrence of an Event of Default, or (iii)
such date as the Borrower may voluntarily permanently terminate the
Revolving Credit Facility by payment in full of all Obligations
(including the discharge of all Obligations of NationsBank and the
Lenders with respect to Letters of Credit and Participations) or (iv)
such later date as the Borrower and the Lenders shall agree in writing
pursuant to Section 2.13 hereof;
"S&P" means Standard & Poor's Ratings Group, a division of
McGraw-Hill;
"Secured Non-Recourse Indebtedness" means Indebtedness of the
Borrower or any of its Subsidiaries which is secured by an ownership
interest in real property and improvements thereon and as to which
Indebtedness no recourse is available to the holder of such
Indebtedness against the Borrower and any of its Subsidiaries (except
to the extent described in Schedule 1.01 or otherwise permitted by the
Required Lenders), recourse being limited to the real property and
improvements securing such Indebtedness;
"Single Employer Plan" means any employee pension benefit plan
covered by Title IV of ERISA and in respect of which the Borrower or
any Subsidiary is an "employer" as described in Section 4001(b) of
ERISA, which is not a Multi-employer Plan;
"Solvent" means, when used with respect to any Person, that at
the time of determination:
(i) the fair value of its assets (both at fair
valuation and at present fair saleable value on an orderly
basis) is in excess of the total amount of its liabilities,
including, without limitation, Contingent Obligations; and
(ii) it is then able and expects to be able to pay
its debts as they mature; and
(iii) it has capital sufficient to carry on its
business as conducted and as proposed to be conducted;
"Subordinated Indebtedness" means Indebtedness of the Borrower
or its Subsidiaries which (i) is subordinated in right of payment,
including upon liquidation or dissolution, to payment in full of Senior
Indebtedness, (ii) bears interest at a per annum rate of not to exceed
11 1/2%, giving effect to any discount, (iii) prohibits acceleration
thereof and efforts to collect such Indebtedness until 180 days
following acceleration of Senior Indebtedness, (iv) contains covenants
and conditions no more restrictive than those contained in
19
<PAGE> 25
this Agreement, (v) is unsecured, and (vi) is otherwise acceptable to
the Required Lenders;
"Subsidiary" means any corporation or other entity in which
more than 50% of its outstanding voting stock or more than 50% of all
equity interests is owned directly or indirectly by the Borrower
and/or by one or more of the Borrower's Subsidiaries;
"Subsidiary Guaranty" means the Amended and Restated Guaranty
Agreement executed and delivered by a Subsidiary of the Borrower to
the Agent for the benefit of the Lenders as at the Closing Date and
each Guaranty Agreement substantially in the form of Exhibit G
delivered to the Agent pursuant to Section 7.20 hereof;
"Swap Agreement" means one or more agreements with respect to
Indebtedness evidenced by the Notes between the Borrower and another
Person, on terms mutually acceptable to such Borrower and such Person,
which agreements create Rate Hedging Obligations;
"Swing Line" means the revolving line of credit established by
NationsBank in favor of the Borrower pursuant to Section 2.14;
"Swing Line Loans" means loans made by NationsBank to the
Borrower pursuant to Section 2.14;
"Swing Line Outstandings" means, as of any date of
determination, the aggregate principal amount of all Swing Line Loans
then outstanding;
"Third Party Loan" means a Loan permitted under Section
8.10(v) made, participated in or otherwise acquired by the Borrower or
its Subsidiary to a Person the proceeds of which are used to (i)
acquire or improve real property and personal property associated
therewith which is used as a healthcare facility (which term shall
include without limitation medical office buildings and other
facilities the primary purpose of which is the provision of healthcare
or healthcare-related services) or will be used as a health care
facility upon completion of improvements, (ii) fully refinance
existing indebtedness used to acquire real property and improvements
which is used or will be used as a healthcare facility, provided such
property in either case is the subject of a Lease or operated by the
maker of the Third Party Note evidencing such Loan or (iii) finance
the acquisition of a controlling ownership interest in an entity whose
assets consist primarily of healthcare facilities;
"Third Party Note" means a promissory note evidencing a Third
Party Loan;
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<PAGE> 26
"Total Letter of Credit Commitment" means an amount not to
exceed $10,000,000;
"Total Revolving Credit Commitment" means an amount equal to
$150,000,000, as reduced from time to time in accordance with Section
2.07;
"Unencumbered Real Property Assets" means Qualifying Real
Property of the Borrower and its Subsidiaries which are at all times
free and clear of and not subject to any Lien, pledge, security
interest or encumbrances securing Indebtedness or subject to any
limitation as to the right to Lien, mortgage or encumber such
Qualifying Real Property;
"Unused Fee" means a fee equal to the Unused Margin times the
sum of the daily amount by which the Total Revolving Credit Commitment
exceeds the sum of the average daily Revolving Credit Debit Balance
(without giving effect to Swing Line Outstandings) and Outstanding
Letters of Credit for each quarter period ending on the last day of
March, June, September and December;
"Unused Margin" means with respect to the Unused Fee that
percent per annum set forth below opposite the applicable Consolidated
Senior Leverage Ratio which percent shall be the Unused Fee effective
beginning on the day next following the receipt of the completed
certificate delivered pursuant to Section 7.01(a)(ii) or Section
7.01(b)(ii) setting forth the Consolidated Senior Leverage Ratio as at
the end of the period for which such certificate is delivered:
<TABLE>
<CAPTION>
Consolidated Senior
Leverage Ratio Unused Margin
-------------- -------------
<S> <C>
Less than .55 to 1.00 but Greater than or Equal to .50 to 1.00 1/4%
Less than .50 to 1.00 but Greater than or Equal to .45 to 1.00 1/4%
Less than .45 to 1.00 but Greater than or Equal to .40 to 1.00 1/4%
Less than .40 to 1.00 but Greater than or Equal to .30 to 1.00 1/4%
Less than .30 to 1.00 but Greater than or Equal to .25 to 1.00 1/5%
Less than .25 to 1.00 1/5%
</TABLE>
1.02 Accounting Terms. All accounting terms not specifically defined
herein shall have the meanings assigned to such terms and shall be interpreted
in accordance with Generally Accepted Accounting Principles applied on a
Consistent Basis.
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<PAGE> 27
1.03 UCC Terms. Each term defined in Article 1 or 9 of the Georgia
Uniform Commercial Code shall have the meaning given therein unless otherwise
defined herein, except to the extent that the Uniform Commercial Code of another
jurisdiction is controlling, in which case such terms shall have the meaning
given in the Uniform Commercial Code of the applicable jurisdiction.
22
<PAGE> 28
ARTICLE II
The Loans
2.01 Revolving Credit Facility
(a) Commitment. Subject to the terms and conditions of this
Agreement, each Lender severally agrees to make Advances to the Borrower, from
time to time from the Closing Date until but not including the Revolving Credit
Termination Date on a pro rata basis as to the total borrowing requested by the
Borrower on any day determined by its Applicable Commitment Percentage up to
but not exceeding the Revolving Credit Commitment of such Lender, provided,
however, that the Lenders will not be required and shall have no obligation to
make any Advance (i) so long as a Default or an Event of Default has occurred
and is continuing or (ii) if the Agent has accelerated the maturity of the
Notes as a result of an Event of Default; provided further, however, that
immediately after giving effect to each Advance, the principal amount of
outstanding Loans plus the amount of all Outstanding Letters of Credit and
Swing Line Outstandings shall not exceed the Total Revolving Credit Commitment.
Within such limits, the Borrower may borrow, repay and reborrow hereunder, on a
Business Day in the case of a Base Rate Loan and on a Euro Business Day in the
case of a Eurodollar Rate Loan, from the Closing Date until, but (as to
borrowings and reborrowings) not including, the Revolving Credit Termination
Date; provided, however, that (x) no Eurodollar Rate Loan shall be made which
has an Interest Period that extends beyond the Revolving Credit Termination
Date and (y) each Eurodollar Rate Loan may, subject to the provisions of
Section 2.08, be repaid only on the last day of the Interest Period with
respect thereto.
(b) Amounts. The aggregate unpaid principal amount of the Loans,
Outstanding Letters of Credit and Swing Line Outstandings shall not exceed at
any time, an amount equal to the Total Revolving Credit Commitment. Each Loan
hereunder and each conversion under Section 2.08 shall be in an amount of at
least $500,000, and, if greater than $500,000, an integral multiple of
$100,000.
(c) Advances. (i) An Authorized Representative shall give the Agent
(1) at least three (3) Euro Business Days' irrevocable telefacsimile or
telephonic notice of each Eurodollar Rate Loan (whether representing an
additional borrowing hereunder or the conversion of borrowing hereunder from
Base Rate Loans to Eurodollar Rate Loans) prior to 11:00 A.M., Charlotte, North
Carolina time; and (2) irrevocable telefacsimile or telephonic notice of each
Base Rate Loan representing an additional borrowing hereunder prior to 11:00
A.M. Charlotte, North Carolina time on the day of such proposed Base Rate Loan.
Each such Borrowing Notice, which shall be effective upon receipt by the Agent,
shall specify the amount of the borrowing, the type (Base or Eurodollar) of
Loan, the date of borrowing, if a Eurodollar Rate Loan, the Interest
23
<PAGE> 29
Period to be used in the computation of interest and the manner of
disbursement. The Authorized Representative shall provide the Agent written
confirmation of each such telephonic notice on the same day by telefacsimile
transmission in the form attached hereto as Exhibit D or E, as applicable, with
appropriate insertions but failure to provide such confirmation shall not
affect the validity of such telephonic notice. Notice of receipt of such
Borrowing Notice shall be provided by the Agent to each Lender by telephone or
telefacsimile with reasonable promptness, but not later than 1:00 P.M.,
Charlotte, North Carolina time on the same day as Agent's receipt of such
notice. The Agent shall provide each Lender written confirmation of such
telephonic confirmation by telefacsimile transmission but failure to provide
such notice shall not affect the validity of such telephonic notice.
(ii) Not later than 2:00 P.M., Charlotte, North Carolina time on the
date specified for each borrowing under this Section 2.01, each Lender shall,
pursuant to the terms and subject to the conditions of this Agreement, make the
amount of the Loan or Loans to be made by it on such day available to the
Agent, by depositing or transferring the proceeds thereof in immediately
available funds at the Principal Office. The amount so received by the Agent
shall, subject to the terms and conditions of this Agreement, be made available
to the Borrower by delivery of the proceeds thereof as shall be directed in
the applicable Borrowing Notice by the Authorized Representative.
(iii) Notwithstanding the foregoing, if a drawing is made under any
Letter of Credit prior to the Revolving Credit Termination Date, the drawing
shall be paid by the Agent without the requirement of notice from the Borrower
from immediately available funds which shall be advanced by the Lenders under
the Revolving Credit Facility. If a drawing is presented under any Letter of
Credit in accordance with the terms thereof and if Borrower shall not
immediately reimburse NationsBank for the amount of such draw or payment then
notice of such drawing or payment shall be provided promptly by NationsBank to
the Agent and the Agent shall provide notice to each Lender by telephone or
telefacsimile. If notice to the Lenders of a drawing under any Letter of
Credit is given by the Agent at or before 12:00 noon Charlotte, North Carolina
time on any Business Day, each Lender shall, pursuant to the conditions of this
Agreement, make a Base Rate Loan in the amount of such Lender's Applicable
Commitment Percentage of such drawing or payment and shall pay such amount to
the Agent for the account of NationsBank at the Principal Office in Dollars and
in immediately available funds before 2:30 P.M. Charlotte, North Carolina time
on the same Business Day. If notice to the Lenders of a drawing under a Letter
of Credit is given by the Agent after 12:00 noon Charlotte, North Carolina time
on any Business Day, each Lender shall, pursuant to the terms and subject to
the conditions of this Agreement, make a Base Rate Loan in the amount of such
Lender's Applicable Commitment Percentage of such drawing or payment and shall
pay such amount to the Agent for the
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account of NationsBank at the Principal Office in Dollars and in immediately
available funds before 12:00 noon Charlotte, North Carolina time on the next
following Business Day. Such Base Rate Loan shall continue unless and until
the Borrower converts such Base Rate Loan in accordance with the terms of
Section 2.08 hereof.
2.02 Payment of Interest. (a) The Borrower shall pay interest to the
Agent for the account of each Lender on the outstanding and unpaid principal
amount of each Loan made by such Lender for the period commencing on the date of
such Loan until such Loan shall be due at the then applicable Base Rate for Base
Rate Loans or applicable Eurodollar Rate for Eurodollar Rate Loans, as
designated by the Authorized Representative pursuant to Section 2.01 hereof or
as otherwise provided herein; provided, however, that if any amount shall not be
paid when due (at maturity, by acceleration or otherwise), all amounts
outstanding hereunder shall bear interest thereafter (i) in the case of a
Eurodollar Rate Loan, until the end of the Interest Period with respect to such
Eurodollar Rate Loan, at a rate of two percent (2%) above such Eurodollar Rate
and (ii) thereafter, and with respect to Base Rate Loans, at a rate of interest
per annum which shall be four percent (4%) above the Base Rate or the maximum
rate permitted by applicable law, whichever is lower, from the date such amount
was due and payable until the date such amount is paid in full.
(b) Interest on each Loan shall be computed on the basis of a year of
360 days and calculated for the actual number of days elapsed. Interest on
each Loan shall be paid (a) quarterly in arrears on the last Business Day of
each March, June, September and December, commencing June 30, 1996, on each
Base Rate Loan, (b) on the last day of the applicable Interest Period for each
Eurodollar Rate Loan, or at the end of each three month period, whichever is
earlier, and (c) upon payment in full of the principal amount of such Loan and
termination of this Agreement.
2.03 Payment of Principal. (a) The principal amount of each Loan shall
be due and payable to the Agent for the benefit of each Lender in full on the
Revolving Credit Termination Date. The duration of the initial Interest Period
for each Loan that is a Eurodollar Rate Loan shall be as specified in the
initial Borrowing Notice. The Borrower shall have the option to elect the
duration of subsequent Interest Periods and to convert the Loans in accordance
with Section 2.08 hereof. If the Agent does not receive a notice of election of
duration of an Interest Period or to convert by the time prescribed by Section
2.08 hereof, the Borrower shall be deemed to have elected to convert such Loan
to (or continue such Loan as) a Base Rate Loan until the Borrower notifies the
Agent in accordance with Section 2.08.
(b) Each payment of principal (including any prepayment) and payment
of interest shall be made to the Agent at the Principal Office, for the account
of each Lender's applicable Lending Office, in Dollars and in immediately
available funds before 12:30 P.M.
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Charlotte, North Carolina time on the date such payment is due. The Agent may,
but shall not be obligated to, debit the amount of any such payment which is
not made by such time to any ordinary deposit account, if any, of the Borrower
with the Agent. The Borrower shall give the Agent prior telephonic or
telefacsimile notice of any payment of principal, such notice to be given by
not later than 11:00 a.m. Charlotte, North Carolina time, on the date of such
payment.
(c) The Agent shall deem any payment by or on behalf of the Borrower
hereunder that is not made both (a) in Dollars and in immediately available
funds and (b) prior to 12:30 P.M. Charlotte, North Carolina time to be a non-
conforming payment. Any such payment shall not be deemed to be received by the
Agent until the time such funds become available funds. Any non-conforming
payment may constitute or become a Default or Event of Default. The Agent shall
give prompt telephonic notice to the Authorized Representative and each of the
Lenders (confirmed in writing) if any payment is non-conforming. Interest shall
continue to accrue on any principal as to which a non-conforming payment is made
until such funds become available funds (but in no event less than the period
from the date of such payment to the next succeeding Business Day) at a rate of
interest per annum which shall be two percent (2%) above the Base Rate or the
maximum rate permitted by applicable law, whichever is lower, from the date such
amount was due and payable until the date such amount is paid in full.
(d) In the event that any payment hereunder or under the Notes becomes
due and payable on a day other than a Business Day, then such due date shall be
extended to the next succeeding Business Day; provided that interest shall
continue to accrue during the period of any such extension.
2.04 Notes. (a) Loans (other than Swing Line Loans) made by each
Lender shall be evidenced by, and be repayable with interest in accordance with
the terms of, the promissory notes payable to the order of such Lender in the
respective amounts of its Applicable Commitment Percentage of the Total
Revolving Credit Commitment, which Notes shall be dated the Closing Date or such
later date pursuant to an Assignment and Acceptance and shall be duly completed,
executed and delivered by the Borrower.
(b) Swing Line Loans made by NationsBank shall be evidenced by and
repayable with interest, in accordance with the terms of, the promissory note
payable to the order of NationsBank in the principal amount of $10,000,000.
2.05 Pro Rata Payments. Except as otherwise provided herein, (a) each
payment on account of the principal of and interest on the Loans and the fees
described in Section 2.09 hereof shall be made to the Agent for the account of
the Lenders pro rata based on their Applicable Commitment Percentages, (b) all
payments to be made by the Borrower for the account of each of the Lenders on
account of
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principal, interest and fees, shall be made without set-off or counterclaim,
and (c) the Agent will promptly distribute payments received to the Lenders.
2.06 Reductions. The Borrower shall, by notice from an Authorized
Representative, have the right from time to time (but not more frequently than
once during each fiscal quarter), upon not less than five (5) Business Days
written notice to the Agent to reduce the Total Revolving Credit Commitment. The
Agent shall give each Lender, within one (1) Business Day, telephonic notice
(confirmed in writing) of such reduction. Each such reduction shall be in the
aggregate amount of $5,000,000 or such greater amount which is in an integral
multiple of $1,000,000, and shall permanently reduce the Total Revolving Credit
Commitment of the Lenders pro rata. No such reduction shall result in the
payment of any Eurodollar Rate Loan other than on the last day of the Interest
Period of such Loan unless such prepayment is accompanied by amounts due, if
any, under Section 4.04. Each reduction of the Total Revolving Credit
Commitment shall be accompanied by payment of the Notes to the extent that the
sum of the Revolving Credit Debit Balance, the Outstanding Letters of Credit and
Swing Line Outstandings exceeds the Total Revolving Credit Commitment, after
giving effect to such reduction, together with accrued and unpaid interest on
the amounts prepaid.
2.07 Increase and Decrease in Amounts. The amount of the Total
Revolving Credit Commitment which shall be available to the Borrower shall be
reduced by the aggregate amount of all Outstanding Letters of Credit and Swing
Line Outstandings.
2.08 Conversions and Elections of Subsequent Interest Periods. Provided
that no Default or Event of Default shall have occurred and be continuing and
subject to the limitations set forth below and in Sections 4.01(b), 4.02 and
4.03 hereof, the Borrower may:
(a) upon notice to the Agent on or before 10:30 A.M. Charlotte, North
Carolina time on any Business Day convert all or a part of Eurodollar Rate Loans
to Base Rate Loans on the last day of the Interest Period for such Eurodollar
Rate Loans;
(b) on three (3) Euro Business Days' notice to the Agent on or before
10:30 A.M. Charlotte, North Carolina time:
(i) elect a subsequent Interest Period for all or a portion of
Eurodollar Rate Loans to begin on the last day of the current Interest
Period for such Eurodollar Rate Loans;
(ii) convert Base Rate Loans to Eurodollar Rate Loans on any
date.
Notice of any such elections or conversions shall be in the form of
Exhibit E attached hereto and shall specify the effective
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date of such election or conversion and the Interest Period to be applicable to
the Loan as continued or converted. Each election and conversion pursuant to
this Section 2.08 shall be subject to the limitations on Eurodollar Rate Loans
set forth in the definition of "Interest Period" herein and in Sections 2.01,
2.02 and Article IV hereof. All such continuations or conversions of Loans shall
be effected pro rata based on the Applicable Commitment Percentages of the
Lenders.
2.09 Fee. For the period beginning on the date of satisfaction of the
conditions set forth in Section 5.02 and ending on the Revolving Credit
Termination Date (or such earlier date on which the Revolving Credit Facility
has terminated), the Borrower agrees to pay to the Agent, for the pro rata
benefit of the Lenders based on their Applicable Commitment Percentages, the
Unused Fee. Such payments of fees provided for in this subsection (b) shall be
due in arrears on the last Business Day of each March, June, September and
December beginning June 30, 1996 to and on the Revolving Credit Termination Date
(or such earlier date on which the Revolving Credit Facility has terminated).
Notwithstanding the foregoing, so long as any Lender fails to make available any
portion of its Revolving Credit Commitment when requested, such Lender shall not
be entitled to receive payment of its pro rata share of such fee until such
Lender shall make available such portion. Such fee shall be calculated on the
basis of a year of 360 days for the actual number of days elapsed.
2.10 Deficiency Advances. No Lender shall be responsible for any
default of any other Lender in respect to such other Lender's obligation to make
any Loan hereunder nor shall the Revolving Credit Commitment of any Lender
hereunder be increased as a result of such default of any other Lender. Without
limiting the generality of the foregoing, in the event any Lender shall fail to
advance funds to the Borrower as herein provided, the Agent may in its
discretion, but shall not be obligated to, advance under the Note in its favor
as a Lender all or any portion of such amount or amounts (each, a "deficiency
advance") and shall thereafter be entitled to payments of principal of and
interest on such deficiency advance in the same manner and at the same interest
rate or rates to which such other Lender would have been entitled had it made
such advance under its Note; provided that, upon payment to the Agent from such
other Lender of the entire outstanding amount of each such deficiency advance,
together with accrued and unpaid interest thereon, from the most recent date or
dates interest was paid to the Agent by the Borrower on each Loan comprising the
deficiency advance at the interest rate per annum for overnight borrowing by the
Agent from the Federal Reserve Bank, then such payment shall be credited against
the applicable Note of the Agent in full payment of such deficiency advance and
the Borrower shall be deemed to have borrowed the amount of such deficiency
advance from such other Lender as of the most recent date or dates, as the
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case may be, upon which any payments of interest were made by the Borrower
thereon.
2.11 Adjustments by Agent. Notwithstanding the construction of "pro
rata" to mean based on the Applicable Percentage Commitments and any provisions
contained herein for the advancement of funds or distribution of payments on a
pro rata basis, the Agent may, in its discretion, but shall not be obligated to,
adjust downward or upward (but not in excess of any applicable Revolving Credit
Commitment) the principal amount of any Loan to be made by any Lender to the
nearest amount which is evenly divisible by $100, and make appropriate related
adjustment in the distribution of payments of principal and interest on the
Loans.
2.12 Use of Proceeds. The proceeds of the Loans made pursuant to the
Revolving Credit Facility hereunder shall be used by the Borrower (i) to make
loans and investments permitted under Section 8.10(v), and (ii) for general
corporate purposes, including the acquisition of health care related properties
by lease or purchase.
2.13 Extension of Revolving Credit Termination Date. At the request of
the Borrower the Lenders may, in their sole discretion, elect to extend the
Revolving Credit Termination Date then in effect for two additional periods of
one year each. The Borrower shall notify the Lenders of its request for such an
extension by delivering to the Agent and the Lenders notice of such request
signed by an Authorized Representative not more than ninety (90) days nor less
than sixty (60) days prior to the first or second anniversary of the Closing
Date. If the Lenders shall elect to so extend, the Agent shall notify the
Borrower in writing within thirty (30) days of its receipt of such request for
extension of the decision of the Lenders of whether to extend the Revolving
Credit Termination Date. Failure by the Agent to give such notice shall
constitute refusal by the Lenders to extend the Revolving Credit Termination
Date.
2.l4. Swing Line. (a) Notwithstanding any other provision of this
Agreement to the contrary, in order to administer the Revolving Credit Facility
in an efficient manner and to minimize the transfer of funds between the Agent
and the Lenders, NationsBank shall make available Swing Line Loans to the
Borrower prior to the Revolving Credit Termination Date. NationsBank shall not
make any Swing Line Loan pursuant hereto (i) if to the actual knowledge of
NationsBank the Borrower is not in compliance with all the conditions to the
making of Loans set forth in this Agreement, (ii) if after giving effect to such
Swing Line Loan, the Swing Line Outstandings exceed $10,000,000 or (iii) if
after giving effect to such Swing Line Loan, the sum of the Swing Line
Outstandings, Revolving Credit Outstandings and Letter of Credit Outstandings
exceeds the Total Revolving Credit Commitment. Swing Line Loans shall be limited
to Base Rate Loans. The Company may borrow, repay and reborrow under this
Section 2.l4. Unless notified to the
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contrary by NationsBank, borrowings under the Swing Line shall be made in the
minimum amount of $100,000 or, if greater, in amounts which are integral
multiples of $10,000, upon written request by telefacsimile transmission,
effective upon receipt, by an Authorized Representative of the Borrower made to
NationsBank not later than 12:30 P.M. on the Business Day of the requested
borrowing. Each such Borrowing Notice shall specify the amount of the
borrowing and the date of borrowing, and shall be in the form of Exhibit D-2,
with appropriate insertions. Unless notified to the contrary by NationsBank,
each repayment of a Swing Line Loan shall be in an amount which is an integral
multiple of $10,000 or the aggregate amount of all Swing Line Outstandings. If
the Borrower instructs NationsBank to debit any demand deposit account of the
Borrower in the amount of any payment with respect to a Swing Line Loan, or
NationsBank otherwise receives repayment, after 12:30 P.M. on a Business Day,
such payment shall be deemed received on the next Business Day.
(b) Swing Line Loans shall bear interest at the Base Rate or such other
rate as may be agreed to by the Borrower and NationsBank, the interest payable
on Swing Line Loans is solely for the account of NationsBank, and all accrued
and unpaid interest on Swing Line Loans shall be payable on the dates and in the
manner provided in Section 2.02 with respect to interest on Base Rate Loans. The
Swing Line Outstandings shall be evidenced by the Note delivered to NationsBank
pursuant to Section 2.04(b).
(c) Upon the making of a Swing Line Loan, each Lender shall be deemed
to have purchased from NationsBank a Participation therein in an amount equal to
that Lender's Applicable Commitment Percentage of such Swing Line Loan. Upon
demand made by NationsBank, each Lender shall, according to its Applicable
Commitment Percentage of such Swing Line Loan, promptly provide to NationsBank
its purchase price therefor in an amount equal to its Participation therein. Any
Advance made by a Lender pursuant to demand of NationsBank of the purchase price
of its Participation shall be deemed a Base Rate Loan under Section 2.01 until
the Borrower converts such Base Rate Loan in accordance with the terms of
Section 2.08. The obligation of each Lender to so provide its purchase price to
NationsBank shall be absolute and unconditional and shall not be affected by the
occurrence of an Event of Default or any other occurrence or event.
The Borrower, at its option and subject to the terms hereof, may
request an Advance pursuant to Section 2.01 in an amount sufficient to repay
Swing Line Outstandings on any date and the Agent shall provide from the
proceeds of such Advance to NationsBank the amount necessary to repay such
Swing Line Outstandings (which NationsBank shall then apply to such repayment)
and credit any balance of the Advance in immediately available funds in the
manner directed by the Borrower pursuant to Section 2.01(c)(ii). The proceeds
of such Advances shall be paid to NationsBank for application to the Swing Line
Outstandings and the
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Lenders shall then be deemed to have made Loans in the amount of such Advances.
The Swing Line shall continue in effect until the Revolving Credit Termination
Date, at which time all Swing Line Outstandings and accrued interest thereon
shall be due and payable in full.
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ARTICLE III
Letters of Credit
3.01 Letters of Credit. NationsBank agrees, subject to the terms and
conditions of this Agreement, upon request of Borrower to issue from time to
time for the account of Borrower Letters of Credit upon delivery to NationsBank
of an Application and Agreement for Letter of Credit in form and content
acceptable to NationsBank; provided, that the Outstanding Letters of Credit
shall not exceed the Total Letter of Credit Commitment. No Letter of Credit
shall be issued by NationsBank with an (i) expiry date greater than one year
from the date of issuance of such Letter of Credit and (ii) an expiry date or
payment date occurring subsequent to the fifth Business Day preceding the
Revolving Credit Termination Date. NationsBank shall not be required to issue
any Letter of Credit if the Outstanding Letters of Credit and Swing Line
Outstandings when added to the face amount of any requested Letter of Credit and
the Revolving Credit Debit Balance exceeds the Total Revolving Credit
Commitment.
3.02 Reimbursement.
(a) The Borrower hereby unconditionally agrees immediately to
pay to NationsBank on demand at the Principal Office all amounts required to pay
all drafts drawn or purporting to be drawn under the Letters of Credit and all
reasonable expenses incurred by NationsBank in connection with the Letters of
Credit and in any event and without demand to place in possession of NationsBank
(which shall include Advances under the Revolving Credit Facility if permitted
by Section 2.01(c) hereof and Swing Line Loans if permitted under Section 2.14)
sufficient funds to pay all debts and liabilities arising under any Letter of
Credit. The Borrower's obligations to pay NationsBank under this Section 3.02,
and NationsBank's right to receive the same, shall be absolute and unconditional
and shall not be affected by any circumstance whatsoever. NationsBank agrees to
give the Borrower prompt notice of any request for a draw under a Letter of
Credit. NationsBank may charge any account the Borrower may have with it for any
and all amounts NationsBank pays under a Letter of Credit, plus charges and
reasonable expenses as from time to time agreed to by NationsBank and the
Borrower; provided that to the extent permitted by Section 2.01(c)(iii) and
Section 2.14, amounts shall be paid pursuant to Advances under the Revolving
Credit Facility or, if the Borrower shall elect, by Swing Line Loans. The
Borrower agrees that NationsBank may, in its sole discretion, accept or pay, as
complying with the terms of any Letter of Credit, any drafts or other documents
otherwise in order which may be signed or issued by an administrator, executor,
trustee in bankruptcy, debtor in possession, assignee for the benefit of
creditors, liquidator, receiver, attorney in fact or other legal representative
of a party who is authorized under such Letter of Credit to draw or issue any
drafts or other documents. The Borrower agrees to pay NationsBank
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interest on any amounts not paid when due hereunder at the Base Rate plus two
percent (2%), or the maximum rate permitted by applicable law, if lower.
(b) In accordance with the provisions of Section 2.01(c)
hereof, NationsBank shall notify the Agent (and shall also notify the Borrower)
of any drawing under any Letter of Credit as promptly as practicable following
the receipt by NationsBank of such drawing.
(c) Each Lender (other than NationsBank) shall automatically
acquire on the date of issuance thereof, a Participation in the liability of
NationsBank in respect of each Letter of Credit in an amount equal to such
Lender's Applicable Commitment Percentage of such liability, and to the extent
that the Borrower is obligated to pay NationsBank under Section 3.02(a), each
Lender (other than NationsBank) thereby shall absolutely, unconditionally and
irrevocably assume, and shall be unconditionally obligated to pay to NationsBank
as hereinafter described, its Applicable Commitment Percentage of the liability
of NationsBank under such Letter of Credit. Prior to the Revolving Credit
Termination Date, each Lender (including NationsBank in its capacity as a
Lender) shall, subject to the terms and conditions of Article II, make a Base
Rate Loan to the Borrower by paying to the Agent for the account of NationsBank
at the Principal Office in Dollars and in immediately available funds, an amount
equal to its Applicable Commitment Percentage of any drawing under a Letter of
Credit, all as described and pursuant to Section 2.01(c). With respect to
drawings under any of the Letters of Credit, each Lender, upon receipt from the
Agent of notice of a drawing in the manner described in Section 2.01(c), shall
promptly pay to the Agent for the account of NationsBank, prior to the
applicable time set forth in Section 2.01(c), its Applicable Commitment
Percentage of such drawing. Simultaneously with the making of each such payment
by a Lender to NationsBank, such Lender shall, automatically and without any
further action on the part of NationsBank or such Lender, acquire a
Participation in an amount equal to such payment (excluding the portion thereof
constituting interest) in the related Reimbursement Obligation of the Borrower.
The Reimbursement Obligations of the Borrower shall be immediately due and
payable whether by Advances made in accordance with Section 2.01(c), Swing Line
Loans in accordance with Section 2.14, or otherwise. Each Lender's obligation to
make payment to the Agent for the account of NationsBank pursuant to this
Section 3.02(c), and the right of NationsBank to receive the same, shall be
absolute and unconditional, shall not be affected by any circumstance whatsoever
and shall be made without any offset, abatement, withholding or reduction
whatsoever. If any Lender is obligated to pay but does not pay amounts to the
Agent for the account of NationsBank in full upon such request as required by
this Section 3.02(c), such Lender shall, on demand, pay to the Agent for the
account of NationsBank interest on the unpaid amount for each day during the
period commencing on the date of notice
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given to such Lender pursuant to Section 2.01(c) until such Lender pays such
amount to the Agent for the account of NationsBank in full at the interest rate
per annum for overnight borrowing by NationsBank from the Federal Reserve Bank.
(d) Promptly following the end of each calendar quarter,
NationsBank shall deliver to the Agent a notice describing the aggregate undrawn
amount of all Letters of Credit at the end of such quarter. Upon the request of
any Lender from time to time, NationsBank shall deliver to the Agent, and the
Agent shall deliver to such Lender, any other information reasonably requested
by such Lender with respect to each Outstanding Letter of Credit.
(e) The issuance by NationsBank of each Letter of Credit
shall, in addition to the conditions precedent set forth in Section 5.01 hereof,
be subject to the conditions that such Letter of Credit be in such form and
contain such terms as shall be reasonably satisfactory to NationsBank consistent
with the then current practices and procedures of NationsBank with respect to
similar letters of credit, and the Borrower shall have executed and delivered
such other instruments and agreements relating to such Letters of Credit as
NationsBank shall have reasonably requested consistent with such practices and
procedures. All Letters of Credit shall be issued pursuant to and subject to the
Uniform Customs and Practice for Documentary Credits, 1993 revision,
International Chamber of Commerce Publication No. 500 and all subsequent
amendments and revisions thereto.
(f) Without duplication of Section 10.07 hereof, the Borrower
hereby agrees to indemnify and hold harmless NationsBank, each other Lender and
the Agent from and against any and all claims and damages, losses, liabilities,
reasonable costs and expenses which NationsBank, such other Lender or the Agent
may incur (or which may be claimed against NationsBank, such other Lender or the
Agent) by any Person by reason of or in connection with the issuance or transfer
of or payment or failure to pay under any Letter of Credit; provided that the
Borrower shall not be required to indemnify NationsBank, any other Lender or the
Agent for any claims, damages, losses, liabilities, costs or expenses to the
extent, but only to the extent, (i) caused by the willful misconduct or gross
negligence of the party to be indemnified or (ii) caused by the failure of
NationsBank to pay under any Letter of Credit after the presentation to it of a
request strictly complying with the terms and conditions of such Letter of
Credit, unless such payment is prohibited by any law, regulation, court order or
decree. The indemnification and hold harmless provisions of this Section 3.02(f)
shall survive repayment of the Obligations, occurrence of the Revolving Credit
Termination Date and expiration or termination of this Agreement.
(g) Without limiting Borrower's rights as set forth in Section
3.02(f) above, the obligation of the Borrower to immediately reimburse Agent for
drawings made under Letters of
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Credit shall be absolute, unconditional and irrevocable, and shall be performed
strictly in accordance with the terms of this Agreement and such Letters of
Credit and the related applications for any Letter of Credit, under all
circumstances whatsoever, including, without limitation, the following
circumstances:
(i) any lack of validity or enforceability of the Letter of
Credit, the obligation supported by the Letter of Credit or any other agreement
or instrument relating thereto (collectively, the "Related Documents");
(ii) any amendment or waiver of or any consent to or departure
from all or any of the Related Documents;
(iii) the existence of any claim, setoff, defense (other than
the defense of payment in accordance with the terms of this Agreement) or other
rights which the Borrower may have at any time against any beneficiary or any
transferee of a Letter of Credit (or any persons or entities for whom any such
beneficiary or any such transferee may be acting), Agent, Lenders or any other
person or entity, whether in connection with the Loan Documents, the Related
Documents or any unrelated transaction;
(iv) any breach of contract or other dispute between the
Borrower and any beneficiary or any transferee of a Letter of Credit (or any
persons or entities for whom such beneficiary or any such transferee may be
acting), Agent, Lenders or any other Person;
(v) any draft, statement or any other document presented under
the Letter of Credit proving to be forged, fraudulent, invalid or insufficient
in any respect or any statement therein being untrue or inaccurate in any
respect whatsoever;
(vi) any delay, extension of time, renewal, compromise or
other indulgence or modification granted or agreed to by Agent, with or without
notice to or approval by the Borrower in respect of any of Borrower's
Obligations under this Agreement; or
(vii) any other circumstance or happening whatsoever, whether
or not similar to any of the foregoing;
provided, however, that nothing contained herein shall be deemed to release
NationsBank or any other Lender of any liability for actual loss arising as a
result of its gross negligence or willful misconduct or out of the wrongful
dishonor by NationsBank of a proper demand for payment made under and strictly
complying with the terms of any Letter of Credit.
3.03 Letter of Credit Fee. The Borrower agrees to pay to the Agent, for
the pro rata benefit of the Lenders based on their Applicable Commitment
Percentages, a fee on the aggregate amount available to be drawn on each
Outstanding Letter of Credit at a rate per annum equal to the Applicable Margin
in effect from time
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to time. Such payment of fees provided for in this Section 3.03 shall be due
with respect to each Letter of Credit quarterly in arrears, on the last day of
each March, June, September and December. Such fee shall be calculated on the
basis of a year of 360 days for the actual number of days elapsed. In
addition, the Borrower shall pay to the Agent a Letter of Credit fronting fee
of one-eighth of one percent (1/8%) per annum of the face amount of each Letter
of Credit, such fee to be paid in arrears on the last day of each March, June,
September and December, the first such payment to be due on the first such date
occurring after there is more than one Lender.
3.04 Administrative Fees and Reserves. The Borrower shall pay to
NationsBank such administrative fee and other fees, if any, in connection with
the Letters of Credit in such amounts and at such times as NationsBank and the
Borrower shall agree from time to time.
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ARTICLE IV
Yield Protection and Illegality
4.01 Additional Costs. (a) The Borrower shall promptly pay to the Agent
for the account of a Lender from time to time, without duplication, such amounts
as such Lender may reasonably determine to be necessary to compensate it for any
costs incurred by such Lender which it determines are attributable to its making
or maintaining any Loan or its obligation to make any Loans, or the issuance or
maintenance by NationsBank of or any other Lender's Participation in any Letter
of Credit issued or Swing Line Loan extended hereunder, or any reduction in any
amount receivable by such Lender under this Agreement, the Notes or the Letters
of Credit in respect of any of such Loans or such obligation or the Letters of
Credit, including reductions in the rate of return on a Lender's capital (such
increases in costs and reductions in amounts receivable and returns being herein
called "Additional Costs"), resulting from any Regulatory Change which: (i)
changes the basis of taxation of any amounts payable to such Lender under this
Agreement or the Notes in respect of any of such Loans or Letters of Credit
(other than taxes imposed on or measured by the income, revenues or assets); or
(ii) imposes or modifies any reserve, special deposit, or similar requirements
relating to any extensions of credit or other assets of, or any deposits with or
other liabilities of, such Lender (other than any such reserve, deposit or
requirement reflected in the Prime Rate, the Federal Funds Effective Rate or the
Eurodollar Rate, in each case computed in accordance with the respective
definitions of such terms set forth in Section 1.01 hereof); or (iii) has or
would have the effect of reducing the rate of return on capital of any such
Lender to a level below that which the Lender could have achieved but for such
Regulatory Change (taking into consideration such Lender's policies with respect
to capital adequacy); or (iv) imposes any other condition adversely affecting
the Agent or the Lenders under this Agreement, the Notes or the issuance or
maintenance of, or any Lender's Participation in, the Letters of Credit or Swing
Line Loans (or any of such extensions of credit or liabilities). Each Lender
will notify the Authorized Representative and the Agent of any event occurring
after the Closing Date which would entitle it to compensation pursuant to this
Section 4.01(a) as promptly as practicable after it obtains knowledge thereof
and determines to request such compensation.
(b) Without limiting the effect of the foregoing provisions of this
Section 4.01, in the event that, by reason of any Regulatory Change, any Lender
either (i) incurs Additional Costs based on or measured by the excess above a
specified level of the amount of a category of deposits or other liabilities of
the Lender which includes deposits by reference to which the interest rate on
Eurodollar Rate Loans is determined as provided in this Agreement or a category
of extensions of credit or other assets of any Lender which includes Eurodollar
Rate Loans or (ii) becomes subject to
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restrictions on the amount of such a category of liabilities or assets which it
may hold, then, if the Lender so elects by notice to the other Lenders, the
obligation hereunder of such Lender to make, and to convert Base Rate Loans
into, Eurodollar Rate Loans that are the subject of such restrictions shall be
suspended until the date such Regulatory Change ceases to be in effect and the
Borrower shall, on the last day(s) of the then current Interest Period(s) for
outstanding Eurodollar Rate Loans convert such Eurodollar Rate Loans into Base
Rate Loans; provided, however, that the suspension of such obligation and the
conversion of any Eurodollar Rate Loans into Base Rate Loans shall apply only
to any Lender who is affected by such restrictions and who has provided such
notice to the other Lenders, and the obligation of the other Lenders to make,
and to convert Base Rate Loans into, Eurodollar Rate Loans shall not be
affected by such restrictions. In the event that the obligation of some, but
not all of the Lenders to make, or to convert Base Rate Loans into, Eurodollar
Rate Loans is suspended, then any request by the Borrower during the pendency
of such suspension for a Eurodollar Rate Loan shall be deemed a request for
such Eurodollar Rate Loan from the Lender(s) not subject to such suspension and
for a Base Rate Loan from the Lender(s) who are subject to such suspension, in
each case in the respective amounts based on the Lenders' respective Revolving
Credit Commitments.
(c) Determinations by any Lender for purposes of this Section 4.01 of
the effect of any Regulatory Change on its costs of making or maintaining, or
being committed to make, Loans or by NationsBank as issuer of any Letter of
Credit of the effect of any Regulatory Change on its costs in connection with
the issuance or maintenance of, or any other Lender's Participation in, any
Letter of Credit issued or Swing Line Loans extended hereunder, or on amounts
receivable by any Lender in respect of Loans or Letters of Credit, and of the
additional amounts required to compensate the Lender in respect of any
Additional Costs, shall be conclusive absent manifest error, provided that such
determinations are made on a reasonable basis taking into account such Lender's
reasonable policies as to the allocation of capital, costs and other items. The
Lender requesting such compensation shall furnish to the Authorized
Representative and the Agent within one hundred and eighty (180) days of the
incurrence of any Additional Costs for which compensation is sought an
explanation of the Regulatory Change and calculations, in reasonable detail,
setting forth such Lender's determination of any such Additional Costs.
4.02 Suspension of Loans. Anything herein to the contrary
notwithstanding, if, on or prior to the determination of any interest rate for
any Eurodollar Rate Loan for any Interest Period, the Agent determines (which
determination made on a reasonable basis shall be conclusive absent manifest
error) that:
(a) quotations of interest rates for the relevant deposits
referred to in the definition of "Eurodollar Rate" in
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Section 1.01 hereof are not being provided in the relevant amounts or
for the relevant maturities for purposes of determining the rate of
interest for such Eurodollar Rate Loan as provided in this Agreement;
or
(b) the relevant rates of interest referred to in the
definition of "Base Rate" in Section 1.01 hereof upon the basis of
which the Eurodollar Rate for such Interest Period is to be determined
do not adequately reflect the cost to the Lenders of making or
maintaining such Eurodollar Rate Loan for such Interest Period or such
Eurodollar Rate Loan (which determination shall be made on a reasonable
basis by the Agent, and the Person making such determination shall
furnish the Authorized Representative evidence of the facts leading to
such determination);
then the Agent shall give the Authorized Representative prompt notice thereof,
and so long as such condition remains in effect, the Lenders shall be under no
obligation to make Eurodollar Rate Loans that are subject to such condition, or
to convert Loans into Eurodollar Rate Loans, and the Borrower shall on the last
day(s) of the then current Interest Period(s) for outstanding Eurodollar Rate
Loans, as applicable, convert such Eurodollar Rate Loans into a Eurodollar Rate
Loan if such Eurodollar Rate Loan is not subject to the same or similar
condition, or Base Rate Loans, if available hereunder. The Agent shall give
the Authorized Representative notice describing in reasonable detail any event
or condition described in this Section 4.02 promptly following the
determination by the Agent that the availability of Eurodollar Rate Loans is,
or is to be, suspended as a result thereof.
4.03 Illegality. Notwithstanding any other provision of this Agreement,
in the event that it becomes unlawful for any Lender to honor its obligation to
make or maintain Eurodollar Rate Loans hereunder, then such Lender shall
promptly notify the Borrower thereof (with a copy to the Agent) and such
Lender's obligation to make or continue Eurodollar Rate Loans, or convert Base
Rate Loans into Eurodollar Rate Loans, shall be suspended until such time as
such Lender may again make and maintain Eurodollar Rate Loans, and such Lender's
outstanding Eurodollar Rate Loans shall be converted into Base Rate Loans in
accordance with Section 2.08 hereof.
4.04 Compensation. The Borrower shall promptly pay to each Lender, upon
the request of such Lender, such amount or amounts as shall be sufficient (in
the reasonable determination of Lender) to compensate it for any loss, cost or
expense incurred by it as a result of:
(a) any payment, prepayment or conversion of a Eurodollar Rate
Loan on a date other than the last day of the Interest Period for such
Eurodollar Rate Loan, including without limitation any conversion
required pursuant to Section 4.03; or
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(b) any failure by the Borrower to borrow a Eurodollar Rate
Loan on the date for such borrowing specified in the relevant Borrowing
Notice under Article II hereof;
such compensation to include, without limitation, an amount equal to the
excess, if any, of (i) the amount of interest which would have accrued on the
principal amount so paid, prepaid or converted or not borrowed for the period
from the date of such payment, prepayment or conversion or failure to borrow or
convert to the last day of the then current Interest Period for such Loan (or,
in the case of a failure to borrow or convert, the Interest Period for such
Loan which would have commenced on the date scheduled for such borrowing or
conversion) at the applicable rate of interest for such Eurodollar Rate Loan
provided for herein over (ii) the Interbank Offered Rate (as reasonably
determined by the Agent) for Dollar deposits of amounts comparable to such
principal amount and maturities comparable to such period. A determination of
a Lender as to the amounts payable pursuant to this Section 4.04 shall be
conclusive, provided that such determinations are made on a reasonable basis.
The Lender requesting compensation under this Section 4.04 shall furnish to the
Authorized Representative and the Agent calculations in reasonable detail
setting forth such Lender's determination of the amount of such compensation.
4.05 Alternate Loan and Lender. (a) In the event any Lender suspends
the making of any Eurodollar Rate Loan pursuant to this Article IV (herein a
"Restricted Lender"), the Restricted Lender's Commitment Percentage of any
Eurodollar Rate Loan shall bear interest at either the Base Rate or the
Eurodollar Rate for which the suspension does not apply, as selected by
Borrower, until the Restricted Lender once again makes available the applicable
Eurodollar Rate Loan. Notwithstanding the provisions of Section 2.02(b),
interest shall be payable to the Restricted Lender at the time and manner as
paid to those Lenders making available Eurodollar Rate Loans.
(b) In the event any Lender shall continue to be a Restricted Lender
for more than three consecutive months, such Restricted Lender hereby agrees
that upon the request of the Borrower, upon the Borrower causing to be delivered
to the Agent (i) a substitute lender acceptable to the Agent, (ii) an Assignment
and Acceptance Agreement executed by such substitute lender pursuant to Section
11.01(a), and (iii) immediately available funds in an amount sufficient to pay
all amounts owed hereunder to such Restricted Lender, it shall execute the
Assignment and Acceptance Agreement referred to above and surrender its Note to
the Borrower upon receipt of payment of amounts owed to its under this
Agreement.
4.06 Taxes. All payments by the Borrower of principal of, and interest
on, the Loans and all other amounts payable hereunder shall be made free and
clear of and without deduction for any present or future excise, stamp or other
taxes, fees, duties, levies, imposts, charges, deductions, withholdings or other
charges
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of any nature whatsoever imposed by any taxing authority, but excluding (i)
franchise taxes, (ii) any taxes (other than withholding taxes) that would not be
imposed but for a connection between a Lender or the Agent and the jurisdiction
imposing such taxes (other than a connection arising solely by virtue of the
activities of such Lender or the Agent pursuant to or in respect of this
Agreement or any other Loan Document), (iii) any withholding taxes payable with
respect to payments hereunder or under any other Loan Document under laws
(including, without limitation, any statute, treaty, ruling, determination or
regulation) in effect on the Closing Date, (iv) any taxes imposed on or measured
by any Lender's assets, net income, receipts or branch profits and (v) any taxes
arising after the Closing Date solely as a result of or attributable to Lender
changing its designated lending office after the date such Lender becomes a
party hereto (such non-excluded items being collectively called "Taxes"). In the
event that any withholding or deduction from any payment to be made by the
Borrower hereunder is required in respect of any Taxes pursuant to any
applicable law, rule or regulation, then the Borrower will
(a) pay directly to the relevant authority the full amount
required to be so withheld or deducted;
(b) promptly forward to the Agent an official receipt or other
documentation satisfactory to the Agent evidencing such payment to such
authority; and
(c) pay to the Agent for the account of the Lender such
additional amount or amounts as is necessary to ensure that the net
amount actually received by each Lender will equal the full amount such
Lender would have received had no such withholding or deduction been
required.
Prior to the date that any Lender or participant organized under the
laws of a jurisdiction outside the United States becomes a party hereto, such
Person shall deliver to the Borrower and the Agent such certificates, documents
or other evidence, as required by the Code or Treasury Regulations issued
pursuant thereto, properly completed, currently effective and duly executed by
such Lender or participant establishing that such payment is (i) not subject to
United States Federal backup withholding tax and (ii) not subject to United
States Federal withholding tax under the Code because such payment is either
effectively connected with the conduct by such Lender or participant of a trade
or business in the United States or totally exempt from United States Federal
withholding tax by reason of the application of the provisions of a treaty to
which the United States is a party or such Lender is otherwise exempt.
If the Borrower fails to pay any Taxes when due to the appropriate
taxing authority or fails to remit to the Agent, for the account of the
respective Lender, the required receipts or other required documentary
evidence, the Borrower shall indemnify
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the Lenders for any incremental Taxes, interest or penalties that may become
payable by any Lender as a result of any such failure. For purposes of this
Section 4.06, a distribution hereunder by the Agent or any Lender to or for the
account of any Lender shall be deemed a payment by the Borrower.
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ARTICLE V
Conditions of Closing, Making Loans and Issuing
Letters of Credit
5.01 Conditions of Closing, Initial Advance and Issuance of Letters of
Credit. The execution and delivery by the Agent and the Lenders of this
Agreement, the making of an initial Advance and issuance of a Letter of Credit
are subject to the conditions precedent that the Agent shall have received on
the Closing Date, in form and substance satisfactory to the Agent and Lenders,
the following:
(a) executed originals of each of this Agreement, the Notes
and the other Loan Documents, together with all schedules and exhibits
thereto;
(b) favorable written opinion of counsel to the Borrower and
its Subsidiaries dated the Closing Date, addressed to the Agent and the
Lenders and satisfactory to Smith Helms Mulliss & Moore, L.L.P.,
special counsel to the Agent, substantially in the forms of Exhibit H
attached hereto;
(c) resolutions of the board of directors or other appropriate
governing body (or of the appropriate committee thereof) of the
Borrower and its Subsidiaries certified by its secretary or assistant
secretary as of the Closing Date, appointing the initial Authorized
Representative (in the case of the Borrower) and approving and adopting
the Loan Documents to be executed by the Borrower or its Subsidiaries,
as the case may be, and authorizing the execution and delivery thereof;
(d) specimen signatures of officers of the Borrower or its
Subsidiaries, as the case may be, executing the Loan Documents on
behalf of such Person, certified by the secretary or assistant
secretary of the Borrower or its Subsidiaries;
(e) the charter documents or partnership agreement, as the
case may be, of the Borrower and its Subsidiaries certified as of a
recent date by the Secretary of State of its state of incorporation or
a certificate as to the absence of any change thereto;
(f) the by-laws of the Borrower and its Subsidiaries certified
as of the Closing Date as true and correct by the secretary or
assistant secretary of the Person to whom such by-laws relate or a
certificate as to the absence of any change thereto;
(g) certificates issued as of a recent date by the Secretaries
of State of the jurisdiction of incorporation of the Borrower and its
Subsidiaries, as the case may be, as to
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the due existence and good standing of the Borrower and its
Subsidiaries therein;
(h) appropriate certificates of qualification to do business,
good standing and, where appropriate, authority to conduct business
under assumed name, issued in respect of the Borrower as of a recent
date by the Secretary of State or comparable official of each
jurisdiction in which the failure to be qualified to do business or
authorized so to conduct business could materially adversely affect the
business, operations or conditions, financial or otherwise, of the
Borrower;
(i) notice of appointment of the initial Authorized
Representative;
(j) certificate as of March 31, 1996 in the form of Exhibit I;
(k) evidence of insurance required by Section 7.05;
(l) such other documents, instruments, certificates and
opinions as the Agent or any Lender may reasonably request on or prior
to the Closing Date in connection with the consummation of the
transactions contemplated hereby.
5.02 Conditions of Further Loans and Issuance of Letters of Credit. The
obligations of the Lenders to make any Loans, and NationsBank to issue Letters
of Credit and to make Swing Line Loans hereunder on or subsequent to the Closing
Date are subject to the satisfaction of the following conditions:
(a) the Agent shall have received a notice of such borrowing
or request if required by Article II hereof;
(b) the representations and warranties of the Borrower set
forth in Article VI hereof and in each of the other Loan Documents
shall be true and correct in all material respects on and as of the
date of such Advance, Swing Line Loan or issuance of such Letters of
Credit, as the case may be, with the same effect as though such
representations and warranties had been made on and as of such date,
except to the extent that such representations and warranties expressly
relate to an earlier date and except that the financial statements
referred to in Section 6.01(f)(i) shall be deemed to be those financial
statements most recently delivered to the Agent and the Lenders
pursuant to Section 7.01 hereof;
(c) in the case of the issuance of a Letter of Credit,
Borrower shall have executed and delivered to NationsBank an
Application and Agreement for Letter of Credit in form and content
acceptable to NationsBank together with such other instruments and
documents as it shall request;
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(d) at the time of each such Advance, Swing Line Loan or
issuance of each Letter of Credit, as the case may be, no Default or
Event of Default specified in Article IX hereof, shall have occurred
and be continuing;
(e) immediately after giving effect to a Loan or Letter of
Credit the aggregate principal balance of all outstanding Loans and
Participations for each Lender and in the aggregate shall not exceed,
respectively, (i) such Lender's Revolving Credit Commitment or Letter
of Credit Commitment or (ii) the Total Revolving Credit Commitment or
the Total Letter of Credit Commitment; and
(f) immediately after giving effect to each Swing Line Loan,
the Swing Line Outstandings shall not exceed $10,000,000.
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ARTICLE VI
Representations and Warranties
6.01 Representations and Warranties. The Borrower represents and
warrants with respect to itself and to its Subsidiaries (which representations
and warranties shall survive the delivery of the documents mentioned herein and
the making of Loans), that:
(a) Organization and Authority.
(i) the Borrower and each Subsidiary is a corporation
or partnership duly organized and validly existing under the
laws of the jurisdiction of its incorporation or formation;
(ii) the Borrower and each Subsidiary (x) has the
requisite power and authority to own its properties and assets
and to carry on its business as now being conducted and as
contemplated in the Loan Documents, and (y) is qualified to do
business in every jurisdiction in which failure so to qualify
would have a material adverse effect on the business or
operations of the Borrower or any Subsidiary;
(iii) the Borrower has the power and authority to
execute, deliver and perform this Agreement and the Notes, and
to borrow hereunder, and the Borrower and each Subsidiary has
the power and authority to execute, deliver and perform each
of the other Loan Documents to which it is a party;
(iv) when executed and delivered, each of the Loan
Documents to which it is a party will be the legal, valid and
binding obligation or agreement, as the case may be, of the
Borrower and each Subsidiary, enforceable against the Borrower
and each Subsidiary in accordance with its terms, subject to
the effect of any applicable bankruptcy, moratorium,
insolvency, reorganization or other similar law affecting the
enforceability of creditors' rights generally and to the
effect of general principles of equity which may limit the
availability of equitable remedies (whether in a proceeding at
law or in equity);
(b) Loan Documents. The execution, delivery and performance by
the Borrower of each of the Loan Documents:
(i) have been duly authorized by all requisite
corporate action (including any required shareholder approval)
of the Borrower and its Subsidiaries required for the lawful
execution, delivery and performance thereof;
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(ii) do not violate any provisions of (1) applicable
law, rule or regulation, (2) any order of any court or other
agency of government binding on the Borrower or any Subsidiary
of Borrower, or their respective properties, or (3) the
charter documents or by-laws of Borrower or any Subsidiary;
(iii) will not be in conflict with, result in a
breach of or constitute an event of default, or an event
which, with notice or lapse of time, or both, would constitute
an event of default, under any indenture, agreement or other
instrument to which Borrower or any Subsidiary is a party, or
by which the properties or assets of Borrower or any
Subsidiary are bound;
(iv) will not result in the creation or imposition of
any Lien, charge or encumbrance of any nature whatsoever upon
any of the properties or assets of Borrower or any Subsidiary
of Borrower.
(c) Solvency. Borrower is Solvent after giving effect to the
transactions contemplated by this Agreement and the other Loan
Documents.
(d) Subsidiaries and Stockholders. Borrower has no
Subsidiaries other than those Persons listed as Subsidiaries in
Schedule 6.01(d) hereto; Schedule 6.01(d) to this Agreement states as
of the date hereof the authorized and issued capitalization of each
Subsidiary listed thereon, the number of shares or other equity
interests of each class of capital stock or interest issued and
outstanding of each such Subsidiary and the number and/or percentage of
outstanding shares or other equity interest (including options,
warrants and other rights to acquire any interest) of each such class
of capital stock or equity interest owned by Borrower or by any such
Subsidiary; the outstanding shares or other equity interests of each
such Subsidiary have been duly authorized and validly issued and are
fully paid and nonassessable; and Borrower and each such Subsidiary
owns beneficially and of record all the shares and other interests it
is listed as owning in Schedule 6.01(d), free and clear of any Lien.
(e) Ownership Interests. Borrower owns no interest in any
Person other than the Persons listed in Schedule 6.01(d) hereto;
(f) Financial Condition. (i) The Borrower has heretofore
furnished to each Lender an audited consolidated balance sheet of the
Borrower and its Subsidiaries as at December 31, 1995 and the notes
thereto and the related consolidated statements of income, sources and
uses of cash and reconciliation of capital for the Fiscal Year then
ended as examined and certified by KPMG Peat Marwick and unaudited
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interim consolidated financial statements of the Borrower and its
Subsidiaries consisting of a consolidated balance sheet and related
statement of income, without notes, for and as of the quarter ended
March 31, 1996 as certified by an Authorized Representative. Except
as set forth therein, such financial statements (including the notes
thereto) present fairly the financial condition of the Borrower and
its Subsidiaries as of the end of such Fiscal Year and as of the end
of such fiscal quarter and results of its operations and the changes
in its equity and cash flow for the Fiscal Year and fiscal quarter
then ended, all in conformity with Generally Accepted Accounting
Principles applied on a Consistent Basis, except that the interim
financial statements have been prepared in accordance with the
accounting principles applied, and in the manner used, for the
preparation of interim unaudited consolidated financial statements of
the Borrower and its Subsidiaries for previous interim fiscal periods
and present the consolidated financial condition of the Borrower and
its Subsidiaries as of their respective dates and the results of
operations of the Borrower and its Subsidiaries for the periods then
ended. Except as disclosed therein, neither the Borrower nor any
Subsidiaries has, as of the date hereof, any known and material direct
liability;
(ii) since March 31, 1996, there has been no material adverse
change in the condition, financial or otherwise, of the Borrower and
its Subsidiaries or in the businesses, properties and operations of the
Borrower and its Subsidiaries, nor have such businesses or properties,
been materially adversely affected as a result of any fire, explosion,
earthquake, accident, strike, lockout, combination of workers, flood,
embargo or act of God;
(iii) except as set forth in the financial statements referred
to in Section 6.01(f)(i) or in Schedule 6.01(f) or Schedule 6.01(j)
hereto, neither Borrower nor any Subsidiary has incurred, other than in
the ordinary course of business, any material indebtedness,
obligations, commitments or other liability contingent or otherwise
which remain outstanding or unsatisfied;
(g) Title to Properties. The Borrower and its Subsidiaries
have title to their respective properties, subject to no transfer
restrictions or Liens of any kind, except for Liens permitted under
Section 8.08 hereof;
(h) Taxes. The Borrower and its Subsidiaries have filed or
caused to be filed all federal, state and local tax returns which are
required to be filed by them and except for taxes and assessments being
contested in good faith and against which reserves satisfactory to the
Borrower's independent certified public accountants have been
established, have paid or caused to be paid all taxes as shown on said
returns or on
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any assessment received by them, to the extent that such taxes have
become due;
(i) Other Agreements. Neither the Borrower nor any Subsidiary
is
(i) a party to any judgment, order, decree or any
agreement or instrument or subject to restrictions materially
adversely affecting the business, properties or assets,
operation or condition (financial or otherwise) of the
Borrower or of any Subsidiary; or
(ii) in default in the performance, observance or
fulfillment of any of the obligations, covenants or conditions
contained in any agreement or instrument to which the Borrower
or any Subsidiary is a party, which default has, or if not
remedied within any applicable grace period could have, a
material adverse effect on the business, operations or
condition, financial or otherwise, of the Borrower or any
Subsidiary;
(j) Litigation. Except as set forth in Schedule 6.01(j)
hereto, there is no action, suit or proceeding at law or in equity or
by or before any governmental instrumentality or agency or arbitral
body pending, or, to the knowledge of the Borrower, threatened by or
against the Borrower or any Subsidiary or affecting the Borrower or any
Subsidiary or any properties or rights of the Borrower or any
Subsidiary, which could reasonably be expected to materially adversely
affect the financial condition, business or operations of the Borrower
or any Subsidiary;
(k) Margin Stock. Neither the Borrower nor any Subsidiary owns
any "margin stock" as such term is defined in Regulation U, as amended
(12 C.F.R. Part 221), of the Board. The proceeds of the borrowings made
pursuant to Article II hereof will be used by the Borrower only for the
purposes set forth in Section 2.12 hereof. None of such proceeds will
be used, directly or indirectly, for the purpose of purchasing or
carrying any margin stock or for the purpose of reducing or retiring
any Indebtedness which was originally incurred to purchase or carry
margin stock or for any other purpose which might constitute any of the
Loans under this Agreement a "purpose credit" within the meaning of
said Regulation U or Regulation X (12 C.F.R. Part 224) of the Board.
Neither the Borrower nor any agent acting in its behalf has taken or
will take any action which might cause this Agreement or any of the
documents or instruments delivered pursuant hereto to violate any
regulation of the Board or to violate the Securities Exchange Act of
1934, as amended, or the Securities Act of 1933, as amended, or any
state securities laws, in each case as in effect on the date hereof;
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(l) Investment Company. Neither the Borrower nor any
Subsidiary is an "investment company," or an "affiliated person" of, or
"promoter" or "principal underwriter" for, an "investment company," as
such terms are defined in the Investment Company Act of 1940, as
amended (15 U.S.C. Section 80a-1, et seq.). The application of the
proceeds of the Loans and repayment thereof by the Borrower and the
performance by the Borrower of the transactions contemplated by this
Agreement will not violate any provision of said Act, or any rule,
regulation or order issued by the Securities and Exchange Commission
thereunder, in each case as in effect on the date hereof;
(m) Patents, Etc. The Borrower and its Subsidiaries own or
have the right to use, under valid license agreements or otherwise, all
material patents, licenses, franchises, trademarks, trademark rights,
trade names, trade name rights, trade secrets and copyrights necessary
to the conduct of their businesses as now conducted, without known
conflict with any patent, license, franchise, trademark, trade secrets
and confidential commercial or proprietary information, trade name,
copyright, rights to trade secrets or other proprietary rights of any
other Person;
(n) No Untrue Statement. Neither this Agreement nor any other
Loan Document or certificate or document executed and delivered by or
on behalf of the Borrower in accordance with or pursuant to any Loan
Document contains any misrepresentation or untrue statement of material
fact or omits to state a material fact necessary, in light of the
circumstance under which it was made, in order to make any such
representation or statement contained therein not misleading in any
material respect;
(o) No Consents, Etc. Neither the respective businesses or
properties of the Borrower or any Subsidiary, nor any relationship
between the Borrower or any Subsidiary and any other Person, nor any
circumstance in connection with the execution, delivery and performance
of the Loan Documents and the transactions contemplated hereby is such
as to require a consent, approval or authorization of, or filing,
registration or qualification with, any governmental or other authority
or any other Person on the part of the Borrower or any Subsidiary as a
condition to the execution, delivery and performance of, or
consummation of the transactions contemplated by, this Agreement or the
other Loan Documents or if so, such consent, approval, authorization,
filing, registration or qualification has been obtained or effected, as
the case may be;
(p) ERISA.
(i) None of the employee benefit plans maintained at any
time by the Borrower or any Subsidiary or the trusts
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created thereunder has engaged in a prohibited transaction which could
subject any such employee benefit plan or trust to a material tax or
penalty on prohibited transactions imposed under Internal Revenue Code
Section 4975 or ERISA;
(ii) None of the employee benefit plans maintained
at any time by the Borrower or any Subsidiary which are employee
pension benefit plans and which are subject to Title IV of ERISA or
the trusts created thereunder has been terminated so as to result in a
material liability of the Borrower under ERISA nor has any such
employee benefit plan of the Borrower or any Subsidiary incurred any
material liability to the Pension Benefit Guaranty Corporation
established pursuant to ERISA, other than for required insurance
premiums which have been paid or are not yet due and payable; neither
the Borrower nor any Subsidiary has withdrawn from or caused a partial
withdrawal to occur with respect to any Multi-employer Plan resulting
in any assessed and unpaid withdrawal liability; the Borrower and the
Subsidiaries have made or provided for all contributions to all such
employee pension benefit plans which they maintain and which are
required as of the end of the most recent fiscal year under each such
plan; neither the Borrower nor any Subsidiary has incurred any
accumulated funding deficiency with respect to any such plan, whether
or not waived; nor has there been any reportable event, or other event
or condition, which presents a material risk of termination of any
such employee benefit plan by such Pension Benefit Guaranty
Corporation;
(iii) The present value of all vested accrued
benefits under the employee pension benefit plans which are subject to
Title IV of ERISA, maintained by the Borrower or any Subsidiary, did
not, as of the most recent valuation date for each such plan, exceed
the then current value of the assets of such employee benefit plans
allocable to such benefits;
(iv) The consummation of the Loans and the
issuance of the Letters of Credit provided for in Article II and
Article III will not involve any prohibited transaction under ERISA
which is not subject to a statutory or administrative exemption;
(v) To the best of the Borrower's knowledge, each
employee pension benefit plan subject to Title IV of ERISA, maintained
by the Borrower or any Subsidiary, has been administered in accordance
with its terms in all material respects and is in compliance in all
material respects with all applicable requirements of ERISA and other
applicable laws, regulations and rules;
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(vi) There has been no withdrawal liability incurred and
unpaid with respect to any Multi-employer Plan to which the Borrower or
any Subsidiary is or was a contributor;
(vii) As used in this Agreement, the terms "employee
benefit plan," "employee pension benefit plan," "accumulated funding
deficiency," "reportable event," and "accrued benefits" shall have the
respective meanings assigned to them in ERISA, and the term "prohibited
transaction" shall have the meaning assigned to it in Code Section 4975
and ERISA;
(viii) Neither the Borrower nor any Subsidiary has
any liability not disclosed on any of the financial statements
furnished to the Lenders pursuant to Section 7.01(f) hereof,
contingent or otherwise, under any plan or program or the equivalent
for unfunded post-retirement benefits, including pension, medical and
death benefits, which liability would have a material adverse effect
on the financial condition of the Borrower or any Subsidiary.
(q) No Default. As of the date hereof, there does not exist
any Default or Event of Default hereunder;
(r) Hazardous Materials. Neither the Borrower nor, to the best
of Borrower's knowledge, any previous owner or operator of the
Properties or any other Person, has generated, stored, or disposed of
any Hazardous Material on any portion of the Properties, or transferred
any Hazardous Material from the Properties to any other location,
giving rise to any liability of the Borrower or any Subsidiary which
would have a materially adverse effect on the Borrower or any
Subsidiary. The Borrower and each Subsidiary is in compliance with all
applicable environmental laws and the Borrower has not been notified of
any action, suit, proceeding or investigation which calls into question
compliance by the Borrower or any Subsidiary with any environmental
laws or which seeks to suspend, revoke or terminate any license, permit
or approval necessary for the generation, handling, storage, treatment
or disposal of any Hazardous Material;
(s) Material Agreements. The agreements identified on Schedule
6.01(s) hereto are all of the material business agreements to which the
Borrower or any Subsidiary is a party or by which any of them is
affected. Each Material Agreement is in full force and effect, and the
Borrower and its Subsidiaries are in compliance in all material
respects with the terms and provisions applicable to them contained in
such Material Agreement.
(t) RICO. Neither the Borrower nor any Subsidiary is engaged
in or has engaged in any course of conduct that could subject any of
their respective properties to any Lien, seizure or other forfeiture
under any criminal law, racketeer
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influenced and corrupt organizations law, civil or criminal, or other
similar laws;
(u) Employment Matters. The Borrower and all Subsidiaries are
in compliance in all material respects with all applicable laws, rules
and regulations pertaining to labor or employment matters, including
without limitation those pertaining to wages, hours, occupational
safety and taxation and there is neither pending or threatened any
material litigation, administrative proceeding nor, to the knowledge of
the Borrower, any investigation, in respect of such matters;
(v) REIT. The Borrower has done all things necessary to
qualify as a REIT, has been organized in conformity with the
requirements for qualification as a REIT and its method of operation as
described in the Registration Statement will permit it to meet the
requirements for qualification and taxation as an REIT;
(w) Leases. Each of the Leases is in full force and effect and
each of Borrower, the lessor under Leases and each Lessee under the
Leases is in compliance with all of the terms and conditions of the
Leases to which they are a party.
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ARTICLE VII
Affirmative Covenants
Until the Obligations have been paid and satisfied in full and this
Agreement has been terminated in accordance with the terms hereof, unless the
Required Lenders shall otherwise consent in writing, the Borrower will and will
cause each Subsidiary to:
7.01 Financial Reports, Etc. (a) as soon as practical and in any event
within 90 days after the end of each Fiscal Year of the Borrower, deliver or
cause to be delivered to the Agent and each Lender (i) a consolidated balance
sheet of the Borrower and its Subsidiaries, and the notes thereto, and the
related consolidated statements of income, sources and uses of cash and
reconciliation of capital and the respective notes thereto, for such Fiscal
Year, setting forth in each case comparative financial statements for the
preceding Fiscal Year, all prepared in accordance with Generally Accepted
Accounting Principles applied on a Consistent Basis and containing, opinions of
KPMG Peat Marwick, or other such independent certified public accountants
selected by the Borrower and approved by the Required Lenders, which are
unqualified as to the scope of the audit performed and as to the "going concern"
status of the Borrower; and (ii) a certificate of an Authorized Representative
demonstrating compliance with Sections 8.01, 8.02, 8.03, 8.04, 8.05, 8.06, 8.10,
8.11 and 8.16 of this Agreement, which certificate shall be in the form attached
hereto as Exhibit I;
(b) as soon as practical and in any event within 45 days after the end
of each calendar quarter (except the last month of the Fiscal Year), deliver to
the Agent and each Lender (i) a consolidated balance sheet of the Borrower and
its Subsidiaries as of the end of such reporting period, the related
consolidated statements of income, sources and uses of cash and reconciliation
of capital for such reporting period and for the period from the beginning of
the Fiscal Year through the end of such reporting period, accompanied by a
certificate of an Authorized Representative to the effect that such financial
statements present fairly the financial position of the Borrower and its
Subsidiaries as of the end of such reporting period and the results of their
operations and the changes in their financial position for such reporting
period, such financial statements to be prepared in the manner used and applying
accounting principles, for the preparation of interim unaudited financial
statements of the Borrower and its Subsidiaries for previous interim fiscal
periods, and (ii) containing computations for such quarter comparable to that
required pursuant to Section 7.01(a)(ii);
(c) together with each delivery of the financial statements required by
Section 7.01(a)(i) hereof, deliver to the Agent and each Lender a letter from
the Borrower's accountants specified in Section 7.01(a)(i) hereof stating that
in performing the audit
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necessary to render an opinion on the financial statements delivered under
Section 7.01(a)(i), they obtained no knowledge of any Default or Event of
Default by the Borrower in the fulfillment of the terms and provisions of this
Agreement insofar as they relate to financial matters (which at the date of such
statement remains uncured); and if the accountants have obtained knowledge of
such Default or Event of Default, a statement specifying the nature and period
of existence thereof;
(d) promptly upon their becoming available to the Borrower, the
Borrower shall deliver to the Agent and each Lender a copy of (i) all regular or
special reports or effective registration statements which Borrower or any
Subsidiary shall file with the Securities and Exchange Commission (or any
successor thereto) or any securities exchange, (ii) any proxy statement
distributed by the Borrower to its shareholders, bondholders or the financial
community in general, and (iii) any management letter or other report submitted
to the Borrower or any of its Subsidiaries by independent accountants in
connection with any annual, interim or special audit of the Borrower or any of
its Subsidiaries;
(e) promptly, from time to time, deliver to the Agent and each Lender
upon request of the Agent copies of any notices, certificates, financial
statements, agreements or other documents delivered to the Borrower by makers of
Third Party Notes, Lessees or Guarantors; and
(f) promptly, from time to time, deliver or cause to be delivered to
the Agent and each Lender such other information regarding Borrower's and each
Subsidiary's operations, business affairs and financial condition as the Agent
or such Lender may reasonably request. The Agent and the Lenders are hereby
authorized to deliver a copy of any such financial information delivered
hereunder to the Lenders (or any affiliate of any Lender) or to the Agent, to
any regulatory authority having jurisdiction over any of the Lenders pursuant to
any written request therefor, or, subject to Section 11.01(e) hereof, to any
other Person who shall acquire or consider the acquisition of a participation
interest in or assignment of any Loan or Letter of Credit permitted by this
Agreement.
7.02 Maintain Properties. Maintain or cause to be maintained all
properties necessary to its operations in good working order and condition
(ordinary wear and tear excepted) and make all needed repairs, replacements and
renewals as are necessary to conduct its business in accordance with customary
business practices.
7.03 Existence, Qualification, Etc. Do or cause to be done all things
necessary to preserve and keep in full force and effect its existence and all
material rights and franchises, trade names, trademarks and permits and maintain
its license or qualification to do business as a foreign corporation and good
standing in each jurisdiction in which its ownership or lease of property or the
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nature of its business makes such license or qualification necessary.
7.04 Regulations and Taxes. Comply with or contest in good faith all
statutes and governmental regulations and pay all taxes, assessments,
governmental charges, claims for labor, supplies, rent and any other obligation
which, if unpaid, might become a Lien against any of its properties except
liabilities being contested in good faith and against which adequate reserves
have been established.
7.05 Insurance. (i) Keep or cause Lessees to keep all of its insurable
properties adequately insured at all times with responsible insurance carriers
against loss or damage by fire and other hazards as are customarily insured
against by similar businesses owning such properties similarly situated, (ii)
maintain general public liability insurance at all times with responsible
insurance carriers against liability on account of damage to persons and
property having such limits, deductibles, exclusions and co-insurance and other
provisions providing no less coverage than that specified in Schedule 7.05
attached hereto, such insurance policies to be in form satisfactory to the
Agent, and (iii) maintain insurance under all applicable workers' compensation
laws (or in the alternative, maintain required reserves if self-insured for
workers' compensation purposes).
7.06 True Books. Keep true books of record and account in which full,
true and correct entries will be made of all of its dealings and transactions,
and set up on its books such reserves as may be required by Generally Accepted
Accounting Principles with respect to doubtful accounts and all taxes,
assessments, charges, levies and claims and with respect to its business in
general, and include such reserves in interim as well as year-end financial
statements.
7.07 Pay Indebtedness to Lenders and Perform Other Covenants. (a) Make
full and timely payment of the principal of and interest on the Notes and all
other Obligations whether now existing or hereafter arising; and (b) duly comply
with all the terms and covenants contained in all Loan Documents and other
instruments and documents given to the Agent or the Lenders pursuant hereto or
thereto.
7.08 Right of Inspection. Permit any Person designated by any Lender or
the Agent at the Lender's or Agent's expense, as the case may be, to visit and
inspect any of the properties, corporate books and financial reports of the
Borrower and its Subsidiaries, and to discuss their respective affairs, finances
and accounts with their principal officers and independent certified public
accountants, all at reasonable times, at reasonable intervals and with
reasonable prior notice.
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7.09 Observe all Laws. Conform to and duly observe in all material
respects all laws, rules and regulations and all other valid requirements of any
regulatory authority with respect to the conduct of its business.
7.10 Covenants Extending to Subsidiaries. Cause each of its
Subsidiaries to do with respect to itself, its business and its assets, each of
the things required of the Borrower in Sections 7.02 through 7.09, inclusive.
7.11 Officer's Knowledge of Default. Upon any officer of the Borrower
obtaining knowledge of any Default or Event of Default hereunder or under any
other obligation of the Borrower or any Subsidiary, cause such officer or an
Authorized Representative to promptly notify the Agent of the nature thereof,
the period of existence thereof, and what action the Borrower proposes to take
with respect thereto.
7.12 Suits or Other Proceedings. Upon an officer of the Borrower
obtaining knowledge of any litigation or other proceedings being instituted
against the Borrower or any Subsidiary, or any attachment, levy, execution or
other process being instituted against any assets of the Borrower or any
Subsidiary, in an aggregate amount greater than $100,000 not otherwise covered
by insurance, promptly deliver to the Agent written notice thereof stating the
nature and status of such litigation, dispute, proceeding, levy, execution or
other process.
7.13 Environmental Reports. Promptly provide to the Agent true,
accurate and complete copies of any and all documents, including reports,
submissions, notices, orders, directives, findings and correspondence made by
Borrower to the United States Environmental Protection Agency ("EPA"), the
United States Occupational Safety and Health Administration ("OSHA") or to any
other federal, state or local authority pursuant to any federal, state or local
law, code or ordinance and all rules and regulations promulgated thereunder
which require informational submissions concerning environmental, health or
safety matters.
7.14 Notice of Discharge of Hazardous Material or Environmental
Complaint. Give to the Agent immediate written notice of any complaint, order,
directive, claim, citation or notice by any governmental authority or any Person
to Borrower or any successor with respect to (i) air emissions, (ii) spills,
releases or discharges to soils or improvements located thereon, surface water,
groundwater or the sewer, septic system or waste treatment, storage or disposal
systems servicing any properties of Borrower, (iii) noise emissions, (iv) solid
or liquid waste disposal, or (v) the use, generation, storage, transportation or
disposal of Hazardous Material. Such notices shall include, among other
information, the name of the party who filed the claim, the nature of the claim
and the actual or potential amount of the claim. Borrower shall promptly comply
with its obligations under
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law with regard to such matters. However, Borrower shall not be obligated to
give such notice to the Agent of discharge or existence of any Hazardous
Material which occurs legally in accordance with and pursuant to the terms and
conditions of a valid governmental permit, license, certificate or approval
therefor.
7.15 Indemnification. The Borrower hereby agrees to defend, indemnify
and hold the Agent and the Lenders harmless from and against any and all claims,
losses, liabilities, damages and expenses (including, without limitation,
cleanup costs and reasonable attorneys' fees) arising directly or indirectly
from, out of or by reason of the handling, storage, treatment, emission or
disposal of any Hazardous Material by or in respect of the Borrower or any
Subsidiary or property owned or leased or operated by the Borrower or any
Subsidiary. The provisions of this Section 7.15 shall survive repayment of the
Obligations, occurrence of the Revolving Credit Termination Date and expiration
or termination of this Agreement.
7.16 Further Assurances. At its cost and expense, upon request of the
Agent, duly execute and deliver or cause to be duly executed and delivered, to
the Agent such further instruments, documents, certificates, financing and
continuation statements, and do and cause to be done such further acts that may
be reasonably necessary or advisable in the reasonable opinion of the Agent to
carry out more effectively the provisions and purposes of this Agreement and the
other Loan Documents.
7.17 ERISA Requirement. Comply in all material respects with all
requirements of ERISA applicable to it and furnish to the Agent as soon as
possible and in any event (i) within thirty (30) days after the Borrower knows
or has reason to know that any reportable event with respect to any employee
benefit plan maintained by the Borrower or any Subsidiary which could give rise
to termination or the imposition of any material tax or penalty has occurred,
written statement of an Authorized Representative describing in reasonable
detail such reportable event and any action which the Borrower or applicable
Subsidiary proposes to take with respect thereto, together with a copy of the
notice of such reportable event given to the PBGC or a statement that said
notice will be filed with the annual report of the United States Department of
Labor with respect to such plan if such filing has been authorized, (ii)
promptly after receipt thereof, a copy of any notice that the Borrower or any
Subsidiary may receive from the PBGC relating to the intention of the PBGC to
terminate any employee benefit plan or plans of the Borrower or any Subsidiary
or to appoint a trustee to administer any such plan, and (iii) within 10 days
after a filing with the PBGC pursuant to Section 412(n) of the Code of a notice
of failure to make a required installment or other payment with respect to a
plan, a certificate of an Authorized Representative setting forth details as to
such failure and the action that the Borrower or its affected Subsidiary, as
applicable, proposes to take with respect thereto, together with a copy of such
notice given to the PBGC.
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7.18 REIT Status. Do all things required to qualify as and to maintain
its status as a REIT.
7.19 Use of Proceeds. Use the proceeds of the Loans solely for the
purposes specified in Section 2.12 hereof.
7.20 New Subsidiaries. Simultaneously with the acquisition or creation
of any Subsidiary, cause to be delivered to the Agent for the benefit of the
Lenders each of the following:
(i) a Guaranty Agreement in a form acceptable to the Agent
pursuant to which such Subsidiary unconditionally guarantees payment of
the Obligations;
(ii) an opinion of counsel to the Subsidiary dated as of the
date of delivery of the Guaranty Agreement provided in the foregoing
clause (i) and addressed to the Agent and the Lenders, in form and
substance reasonably acceptable to the Agent (which opinion may include
assumptions and qualifications of similar effect to those contained in
the opinions of counsel delivered pursuant to Section 5.01(b) hereof),
to the effect that:
(A) such Subsidiary is duly organized, validly
existing and in good standing in the jurisdiction of its
organization, has the requisite power and authority to own its
properties and conduct its business as then owned and then
proposed to be conducted and is duly qualified to transact
business and is in good standing as a foreign corporation or
limited partnership in each other jurisdiction in which the
character of the properties owned or leased, or the business
carried on by it, requires such qualification;
(B) the execution, delivery and performance of the
Guaranty Agreement described in clause (i) of this Section
7.20 to which such Subsidiary is a signatory has been duly
authorized by all requisite corporate or partnership action
(including any required shareholder or partner approval), such
agreement has been duly executed and delivered and constitutes
the valid and binding obligation of such Subsidiary,
enforceable against such Subsidiary in accordance with its
terms, subject to the effect of any applicable bankruptcy,
moratorium, insolvency, reorganization or other similar law
affecting the enforceability of creditors' rights generally
and to the effect of general principles of equity which may
limit the availability of equitable remedies (whether in a
proceeding at law or in equity); and
(iii) current copies of the charter documents, including
partnership agreements and certificate of limited partnership, if
applicable, and bylaws of such Subsidiary, minutes of duly
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called and conducted meetings (or duly effected consent actions) of
the Board of Directors, partners, or appropriate committees thereof
(and, if required by such charter documents, bylaws or by applicable
laws, of the shareholders or partners) of such Subsidiary authorizing
the actions and the execution and delivery of documents described in
clause (i) of this Section 7.20 and evidence satisfactory to the Agent
(confirmation of the receipt of which will be provided by the Agent to
the Lenders) that such Subsidiary is Solvent as of such date and after
giving effect to the Guaranty Agreement.
7.21 Swap Agreements. If at any time the Revolving Credit Debit Balance
equals or exceeds $67,000,000 and thereafter continues to exceed $60,000,000 and
the three month Eurodollar Rate increases by 1% within a period of twelve months
from and after the date the Revolving Credit Debit Balance equals or exceeds
$67,000,000 the Borrower will enter into Swap Agreements which protect the
Borrower with respect to interest rate fluctuations (in form and substance
reasonably acceptable to the Majority Lenders) in a notional amount equal to not
less than 50% of the average daily Revolving Credit Debit Balance.
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ARTICLE VIII
Negative Covenants
Until the Obligations have been paid and satisfied in full and this
Agreement has been terminated in accordance with the terms hereof, unless the
Required Lenders shall otherwise consent in writing, the Borrower will not, nor
will it permit any Subsidiary to:
8.01 Consolidated Tangible Net Worth. Permit Consolidated Tangible Net
Worth to be less than the sum of (A) $152,000,000 at the time of the initial
Advance under Section 5.01 plus (B) after the Initial Advance 95% of the
proceeds of each sale of equity interest (including those constituting
Indebtedness exchangeable, convertible or exercisable into equity interests) in
the Borrower or any Subsidiary.
8.02 Consolidated Interest Coverage Ratio. Permit at any time the
Consolidated Interest Coverage Ratio to be 1.50 to 1.00 or less.
8.03 Consolidated Leverage Ratio. Permit at any time the Consolidated
Leverage Ratio to be .60 to 1.00 or greater.
8.04 Consolidated Senior Leverage Ratio. Permit the Consolidated Senior
Leverage Ratio to be (i) .55 to 1.00 or greater during the period from the
Closing Date through June 30, 1997 and (ii) .50 to 1.00 or greater at all times
thereafter.
8.05 Consolidated Fixed Charge Ratio. Permit at any time the
Consolidated Fixed Charge Ratio to be 1.00 to 1.00 or less.
8.06 Required Coverage Ratio. At all times that the Senior Leverage
Ratio is (i) greater than or equal to .50 to 1.00 permit the Required Coverage
Ratio to be less than 1.60 to 1.00, or (ii) less than .50 to 1.00 permit the
Required Coverage Ratio to be less than 1.50 to 1.00.
8.07 Indebtedness. Incur, create, assume or permit to exist any
Indebtedness, howsoever evidenced, except
(i) Indebtedness owed the Agent or the Lenders in connection
with this Agreement;
(ii) the endorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of business;
(iii) additional Indebtedness of not to exceed in the
aggregate outstanding amount of $1,000,000 incurred to purchase
equipment;
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(iv) secured Non-recourse Indebtedness not exceeding in the
aggregate $75,000,000;
(v) secured Non-recourse Indebtedness of Capstone of Las
Vegas, Ltd. in an outstanding amount of $23,300,000 which Indebtedness
shall be paid in accordance with its terms;
(vi) existing Subordinated Indebtedness described on Schedule
8.07; and
(vii) additional Subordinated Indebtedness.
8.08 Liens. Incur, create or permit to exist any pledge, Lien, charge
or other encumbrance of any nature whatsoever with respect to any property or
assets now owned or hereafter acquired by the Borrower or any of its
Subsidiaries, other than
(i) Liens imposed by law for taxes, assessments or charges of
any Governmental Authority for claims not yet due or which are being
contested in good faith by appropriate proceedings and with respect to
which adequate reserves or other appropriate provisions are being
maintained in accordance with Generally Accepted Accounting Principles;
(ii) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, materialmen and other Liens imposed by law or
created in the ordinary course of business and in existence less than
120 days from the date of creation thereof for amounts not yet due or
which are being contested in good faith by appropriate proceedings and
with respect to which adequate reserves or other appropriate provisions
are being maintained in accordance with Generally Accepted Accounting
Principles;
(iii) Liens incurred or deposits made in the ordinary course
of business (including, without limitation, surety bonds and appeal
bonds) in connection with workers' compensation, unemployment insurance
and other types of social security benefits or to secure the
performance of tenders, bids, leases, contracts (other than for the
repayment of Indebtedness), statutory obligations and other similar
obligations or arising as a result of progress payments under
government contracts;
(iv) easements (including, without limitation, reciprocal
easement agreements and utility agreements), rights-of-way, covenants,
consents, reservations, encroachments, variations and zoning and other
restrictions, charges or encumbrances (whether or not recorded), which
do not interfere materially with the ordinary conduct of the business
of the Borrower or any Subsidiary and which do not materially detract
from the value of the property to which they attach or materially
impair the use thereof to the Borrower or any Subsidiary;
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(v) purchase money Liens to secure Indebtedness permitted
under Section 8.07(iii) hereof so long as such Indebtedness is incurred
to purchase equipment, the Indebtedness represents not less than 75% of
the purchase price of such assets, and no other property other than the
property acquired with the proceeds of such Indebtedness secures such
Indebtedness; and
(vi) Liens on the leasehold interest of Capstone of Las Vegas,
Ltd. to secure Indebtedness described in Section 8.07(v); and
(vii) Liens securing Indebtedness permitted under Section 8.07
(iv).
8.09 Transfer of Assets. Sell, lease, transfer or otherwise dispose of
(i) any assets of the Borrower or its Subsidiaries in any Fiscal Year which
assets cost in the aggregate $5,000,000 or more unless Borrower shall have
furnished the Agent with a certificate in the form of Exhibit I demonstrating
that on a historical basis after giving effect to the sale of such assets for
the Four-Quarter Period most recently ended no Default or Event of Default would
exist hereunder.
8.10 Investments; Acquisitions. Purchase, own, invest in or otherwise
acquire, directly or indirectly, any stock or other securities or all or
substantially all of the assets, or make or permit to exist any interest
whatsoever in any other Person or permit to exist any loans or advances to any
Person; provided, Borrower and its Subsidiaries may maintain investments or
invest in or acquire
(i) Eligible Securities;
(ii) accounts receivable arising and trade credit granted in
the ordinary course of business and any securities received in
satisfaction or partial satisfaction thereof in connection with
accounts of financially troubled Persons to the extent reasonably
necessary in order to prevent or limit loss;
(iii) loans and investments described on Schedule 8.10
attached hereto;
(iv) loans and investments in Subsidiaries so long as Borrower
shall have and such Subsidiary shall immediately fulfill the
requirements of Section 7.20;
(v) Third Party Loans;
(vi) the acquisition of all or substantially all of the assets
of a Person if such assets consist of a health care related property
and after giving effect to such acquisition no Default or Event of
Default exists hereunder; and
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(vii) loans in an aggregate principal amount not to exceed
$1,000,000 to executive officers.
8.11 Capital Expenditures. Make or permit to be made during any Fiscal
Year on a non-cumulative basis (so that any amounts not expended in one Fiscal
Year may not be expended in a subsequent Fiscal Year) Capital Expenditures in
excess of (i) $3,000,000 with respect to any one Property or a new facility
acquired by Borrower and (ii) $20,000,000 in the aggregate; provided, however,
that expenditures incurred to acquire new facilities (not connected to or a part
of an existing facility or constituting renovations or improvements to a then
owned facility) shall not be deemed Capital Expenditures.
8.12 Merger or Consolidation. (a) Consolidate with or merge into any
other Person, or (b) permit any other Person to merge into it, or (c) liquidate,
wind-up or dissolve or sell, transfer or lease or otherwise dispose of all or a
substantial part of its assets (other than sales in the ordinary course of
business); provided, however, (i) any Subsidiary of the Borrower may merge or
transfer all or substantially all of its assets into or consolidate with any
wholly-owned Subsidiary of the Borrower, (ii) any Person may merge with the
Borrower if the Borrower shall be the survivor thereof and such merger shall not
cause, create or result in the occurrence of any Default or Event of Default
hereunder and (iii) Required Lenders shall have consented in writing to the
merger of any Person, other than a wholly-owned Subsidiary, into Borrower.
8.13 Transactions with Affiliates. Enter into any transaction after the
date hereof, including, without limitation, the purchase, sale, leasing or
exchange of property, real or personal, or the rendering of any service, with
any Affiliate of the Borrower, except (a) that such Persons may render services
to the Borrower or its Subsidiaries for compensation at the same rates generally
paid by Persons engaged in the same or similar businesses for the same or
similar services and (b) in the ordinary course of and pursuant to the
reasonable requirements of the Borrower's (or any Subsidiary's) business
consistent with past practice of the Borrower and its Subsidiaries and upon fair
and reasonable terms no less favorable to the Borrower (or any Subsidiary) than
would be obtained in a comparable arm's-length transaction with a Person not an
Affiliate.
8.14 ERISA. With respect to all employee pension benefit plans
maintained by the Borrower or any Subsidiary:
(i) terminate any of such employee pension benefit plans so as
to incur any liability to the Pension Benefit Guaranty Corporation
established pursuant to ERISA;
(ii) allow or suffer to exist any prohibited transaction
involving any of such employee pension benefit plans or any trust
created thereunder which would subject the Borrower or
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a Subsidiary to a tax or penalty or other liability on prohibited
transactions imposed under Internal Revenue Code Section 4975 or
ERISA;
(iii) fail to pay to any such employee pension benefit plan
any contribution which it is obligated to pay under the terms of such
plan;
(iv) allow or suffer to exist any accumulated funding
deficiency, whether or not waived, with respect to any such employee
pension benefit plan;
(v) allow or suffer to exist any occurrence of a reportable
event or any other event or condition, which presents a material risk
of termination by the Pension Benefit Guaranty Corporation of any such
employee pension benefit plan that is a Single Employer Plan, which
termination could result in any liability to the Pension Benefit
Guaranty Corporation; or
(vi) incur any withdrawal liability with respect to any
Multi-employer Plan.
8.15 Fiscal Year. Change its Fiscal Year.
8.16 Dissolution, etc. Wind up, liquidate or dissolve (voluntarily or
involuntarily) or commence or suffer any proceedings seeking any such winding
up, liquidation or dissolution, except in connection with the merger or
consolidation of Subsidiaries into each other or into a Borrower permitted
pursuant to Section 8.12.
8.17 Rate Hedging Obligations. Incur any Rate Hedging Obligations or
enter into any agreements, arrangements, devices or instruments relating to Rate
Hedging Obligations, except in regard to Indebtedness.
8.18 Leases. Permit at any time weighted average life to the maturity
of all the Leases to be less than one year following the Revolving Credit
Termination Date.
8.19 Investment Policies. Except as otherwise permitted by the bylaws
of the Borrower, deviate from the investment policies of the Borrower as
described in Borrower's Registration Statement.
8.20 Subordinated Indebtedness. Amend, modify, supplement or otherwise
change the provision of any agreement, indenture, debenture, note or other
instrument or document containing terms or conditions pursuant to which
Subordinated Indebtedness is created or incurred.
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8.21 Negative Pledge. Enter into any agreement, arrangement or
understanding, other than this Agreement, limiting the right of the Borrower or
any Subsidiary to create any Lien, encumbrance or security interest in or with
respect to any of their assets.
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ARTICLE IX
Events of Default and Acceleration
9.01 Events of Default. If any one or more of the following events
(herein called "Events of Default") shall occur for any reason whatsoever (and
whether such occurrence shall be voluntary or involuntary or come about or be
effected by operation of law or pursuant to or in compliance with any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body), that is to say:
(a) if default shall be made in the due and punctual payment
of the principal of any Loan or Reimbursement Obligation, when and as
the same shall be due and payable whether pursuant to any provision of
Article II or Article III hereof, at maturity, by acceleration or
otherwise; or
(b) if default shall be made in the due and punctual payment
of any amount of interest on any Loan or of any fees or other amounts
payable to the Lenders, the Agent or NationsBank under the Loan
Documents on the date on which the same shall be due and payable; or
(c) if default shall be made in the performance or observance
of any covenant set forth in Sections 7.06, 7.07(a), 7.08, 7.11, 7.18
or Article VIII hereof; or
(d) if a default shall be made in the performance or
observance of, or shall occur under, any covenant, agreement or
provision contained in this Agreement or the Notes (other than as
described in clauses (a), (b) or (c) above) and such default shall
continue for 30 or more days after the earlier of receipt of notice of
such default by the Authorized Representative from the Agent or the
Borrower becomes aware of such default, or if a default shall be made
in the performance or observance of, or shall occur under, any
covenant, agreement or provision contained in any of the other Loan
Documents (beyond any applicable grace period, if any, contained
therein) or in any instrument or document evidencing or creating any
obligation, guaranty, or Lien in favor of the Agent or the Lenders or
delivered to the Agent or the Lenders in connection with or pursuant to
this Agreement or any of the Obligations, or if any Loan Document
ceases to be in full force and effect (other than by reason of any
action by the Agent), or if without the written consent of the Agent,
this Agreement or any other Loan Document shall be disaffirmed or shall
terminate, be terminable or be terminated or become void or
unenforceable for any reason whatsoever (other than in accordance with
its terms in the absence of default or by reason of any action by the
Agent); or
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(e) if a default shall occur, which is not waived, (i) in the
payment of any principal, interest, premium or other amounts with
respect to any Indebtedness (other than the Loans) of the Borrower or
of any Subsidiary, or (ii) in the performance, observance or
fulfillment of any term or covenant contained in any agreement or
instrument under or pursuant to which any such Indebtedness may have
been issued, created, assumed, guaranteed or secured by the Borrower or
any Subsidiary, and such default shall continue for more than the
period of grace, if any, therein specified, or if such default shall
permit the holder of any such Indebtedness to accelerate the maturity
thereof; or
(f) if any representation, warranty or other statement of fact
contained herein or any other Loan Document or in any writing,
certificate, report or statement at any time furnished to the Agent or
any Lender by or on behalf of the Borrower or any Subsidiary pursuant
to or in connection with this Agreement or the other Loan Documents, or
otherwise, shall be false or misleading in any material respect when
given; or
(g) if the Borrower or any Subsidiary shall be unable to pay
its debts generally as they become due; file a petition to take
advantage of any insolvency statute; make an assignment for the benefit
of its creditors; commence a proceeding for the appointment of a
receiver, trustee, liquidator or conservator of itself or of the whole
or any substantial part of its property; file a petition or answer
seeking reorganization or arrangement or similar relief under the
federal bankruptcy laws or any other applicable law or statute; or
(h) if a court of competent jurisdiction shall enter an order,
judgment or decree appointing a custodian, receiver, trustee,
liquidator or conservator of the Borrower or any Subsidiary or of the
whole or any substantial part of its properties and such order,
judgment or decree continues unstayed and in effect for a period of
sixty (60) days, or approve a petition filed against the Borrower or
any Subsidiary seeking reorganization or arrangement or similar relief
under the federal bankruptcy laws or any other applicable law or
statute of the United States of America or any state, which petition is
not dismissed within sixty (60) days; or if, under the provisions of
any other law for the relief or aid of debtors, a court of competent
jurisdiction shall assume custody or control of the Borrower or any
Subsidiary or of the whole or any substantial part of its properties,
which control is not relinquished within sixty (60) days; or if there
is commenced against the Borrower or any Subsidiary any proceeding or
petition seeking reorganization, arrangement or similar relief under
the federal bankruptcy laws or any other applicable law or statute of
the
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United States of America or any state which proceeding or petition
remains undismissed for a period of sixty (60) days; or if the
Borrower or any Subsidiary takes any action to indicate its consent to
or approval of any such proceeding or petition; or
(i) if (i) any judgment where the amount not covered by
insurance (or the amount as to which the insurer denies liability) is
in excess of $100,000 is rendered against the Borrower or any
Subsidiary, or (ii) there is any attachment, injunction or execution
against any of the Borrower's or any Subsidiary's properties for any
amount in excess of $100,000; and such judgment, attachment, injunction
or execution remains unpaid, unstayed, undischarged, unbonded or
undismissed for a period of thirty (30) days; or
(j) if the Borrower or any Subsidiary shall, other than in the
ordinary course of business (as determined by past practices), suspend
all or any part of its operations material to the conduct of the
business of the Borrower or such Subsidiary, taken as a whole; or
(k) if (i) the Borrower or any Subsidiary shall engage in any
prohibited transaction (as described in Section 8.14(ii) hereof), which
is not subject to a statutory or administrative exemption, involving
any employee pension benefit plan of the Borrower or any Subsidiary,
(ii) any accumulated funding deficiency (as referred to in Section
8.14(iv) hereof), whether or not waived, shall exist with respect to
any Single Employer Plan, (iii) a reportable event (as referred to in
Section 8.14(v) hereof) (other than a reportable event for which the
statutory notice requirement to the Pension Benefit Guaranty
Corporation has been waived by regulation) shall occur with respect to,
or proceedings shall commence to have a trustee appointed, or a trustee
shall be appointed to administer or to terminate, any Single Employer
Plan, which reportable event or institution or proceedings is, in the
reasonable opinion of the Required Lenders, likely to result in the
termination of such Single Employer Plan for purposes of Title IV of
ERISA, and in the case of such a reportable event, the continuance of
such reportable event shall be unremedied for sixty (60) days after
notice of such reportable event pursuant to Section 4043(a), (c) or (d)
of ERISA is given, as the case may be, (iv) any Single Employer Plan
shall terminate for purposes of Title IV of ERISA, and such termination
results in a material liability of the Borrower or any Subsidiary to
such Single Employer Plan or the Pension Benefit Guaranty Corporation,
(v) the Borrower or any Subsidiary shall withdraw from a Multi-employer
Plan for purposes of Title IV of ERISA, and, as a result of any such
withdrawal, the Borrower or any Subsidiary shall incur withdrawal
liability to such Multi-employer Plan, or (vi) any other event or
condition shall occur or exist; and in each
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case in clauses (i) through (vi) of this Section 9.01(k), such event
or condition, together with all other such events or conditions, if
any, could subject the Borrower or any Subsidiary to any tax, penalty
or other liabilities, and in each such case the event or condition is
not remedied to the satisfaction of the Required Lenders within ninety
(90) days after the earlier of (i) receipt of notice of such event or
condition by the Authorized Representative from the Agent or (ii) the
Borrower becomes aware of such event or condition; or
(l) if the Borrower or any Subsidiary shall breach any of the
terms or conditions of any agreement under which any Rate Hedging
Obligation permitted pursuant to Section 8.17 is created and such
breach shall continue beyond any grace period, if any, relating thereto
pursuant to the terms of such Obligation, or the Borrower or any
Subsidiary shall disaffirm or seek to disaffirm any such agreement or
any of its obligations thereunder; or
(m) if Borrower shall not qualify as of the date of the
initial Advance and at all times thereafter as a REIT; or
(n) the payment or redemption of or the occurrence of any
event giving rise to the right to require payment or redemption of any
Subordinated Indebtedness; or
(o) if at any time more than 50% of outstanding securities of
the Borrower having voting rights in the election of directors (i) is
owned by a Person or group of Persons acting together or in concert
with one another or (ii) is owned beneficially by five (5) or less
Persons;
then, and in any such event and at any time thereafter, if such Event of
Default or any other Event of Default shall have not been waived,
(A) either or both of the following actions may be
taken: (i) the Agent, with the consent of the Required
Lenders, may, and at the direction of the Required Lenders
shall, declare any obligation of the Lenders to make further
Loans or of NationsBank to issue Letters of Credit terminated,
whereupon the obligation of each Lender to make further Loans
or of NationsBank to make Swing Line Loans or issue Letters of
Credit, hereunder shall terminate immediately, and (ii) the
Agent shall at the direction of the Required Lenders, at their
option, declare by notice to the Borrower any or all of the
Obligations to be immediately due and payable, and the same,
including all interest accrued thereon and all other
obligations of the Borrower to the Agent and the Lenders,
shall forthwith become immediately due and payable without
presentment, demand, protest, notice or other formality of any
kind, all of which are hereby expressly waived, anything
contained herein or in any
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instrument evidencing the Obligations to the contrary
notwithstanding; provided, however, that notwithstanding the
above, if there shall occur an Event of Default under clause
(g) or (h) above, then the obligation of the Lenders to lend
and NationsBank to make Swing Line Loans and to issue Letters
of Credit hereunder shall automatically terminate and any and
all of the Obligations shall be immediately due and payable
without the necessity of any action by the Agent or the
Required Lenders or notice to the Agent or the Lenders;
(B) the Borrower shall, upon demand of the Agent or
the Required Lenders, deposit cash with the Agent in
accordance with the LC Account Agreement in an amount equal to
the amount of any Letters of Credit remaining undrawn or
unpaid, as collateral security for the repayment of any future
drawings or payments under such Letters of Credit and the
Borrower shall forthwith deposit and pay such amounts and such
amounts shall be held by the Agent pursuant to the terms of
the applicable Application and Agreement for Letter of Credit;
and
(C) the Agent and the Lenders shall have all of the
rights and remedies available under the Loan Documents or
under any applicable law.
9.02 Agent to Act. In case any one or more Events of Default shall
occur and not have been waived, the Agent may, and at the direction of the
Required Lenders shall, proceed to protect and enforce their rights or remedies
either by suit in equity or by action at law, or both, whether for the specific
performance of any covenant, agreement or other provision contained herein or in
any other Loan Document, or to enforce the payment of the Obligations or any
other legal or equitable right or remedy.
9.03 Cumulative Rights. No right or remedy herein conferred upon the
Lenders or the Agent is intended to be exclusive of any other rights or remedies
contained herein or in any other Loan Document, and every such right or remedy
shall be cumulative and shall be in addition to every other such right or remedy
contained herein and therein or now or hereafter existing at law or in equity or
by statute, or otherwise.
9.04 No Waiver. No course of dealing between the Borrower and any
Lender or the Agent or any failure or delay on the part of any Lender or the
Agent in exercising any rights or remedies under any Loan Document or otherwise
available to it shall operate as a waiver of any rights or remedies and no
single or partial exercise of any rights or remedies shall operate as a waiver
or preclude the exercise of any other rights or remedies hereunder or of the
same right or remedy on a future occasion.
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9.05 Default. The Agent and the Lenders shall have no right to
accelerate any of the Loans upon, or to institute any action or proceeding
before any court to realize upon collateral as a result of, the occurrence of
any Default which shall not also constitute an Event of Default; provided,
however, nothing contained in this sentence shall in any respect impair or
adversely affect the right, power and authority of the Agent and the Lenders (i)
to take any action expressly required or permitted to be taken under the Loan
Documents upon the occurrence of any Default (and including any action or
proceeding which the Agent may determine to be necessary or appropriate in
furtherance of any such expressly authorized action) and (ii) to take any action
provided under the Loan Documents or otherwise available by statute, at law or
in equity upon the occurrence of any Default.
9.06 Allocation of Proceeds. If an Event of Default has occurred and
not been waived, and the maturity of the Notes has been accelerated pursuant to
Article IX hereof, all payments received by the Agent hereunder, in respect of
any principal of or interest on the Obligations or any other amounts payable by
the Borrower hereunder shall be applied by the Agent in the following order:
(i) amounts due to the Lenders pursuant to Sections 2.09,
3.03, 7.15, 11.05 and 11.11 hereof;
(ii) amounts due to (A) NationsBank pursuant to Section 3.04
hereof, and (B) the Agent pursuant to Section 10.11 hereof;
(iii) payments of interest on Loans, Swing Line Loans and
Reimbursement Obligations, to be applied for the ratable benefit of the Lenders
(with amounts payable in respect of Swing Line Outstandings being included in
such calculation and paid to NationsBank);
(iv) payments of principal on Loans, Swing Line Loans and
Reimbursement Obligations, to be applied for the ratable benefit of the Lenders
(with amounts payable in respect of Swing Line Outstandings being included in
such calculation and paid to NationsBank);
(v) payment of cash amounts to the Agent in respect of
Outstanding Letters of Credit pursuant to Section 9.01(B) hereof;
(vi) payment of Obligations owed a Lender or Lenders pursuant
to Swap Agreements on a pro rata basis according to amounts owed;
(vii) payments of all other amounts due under this Agreement,
if any, to be applied for the ratable benefit of the Lenders; and
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(viii) any surplus remaining after application as provided for
herein, to the Borrowers or otherwise as may be required by applicable law.
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ARTICLE X
The Agent
10.01 Appointment. Each Lender (including NationsBank in its capacity
as issuer of the Letters of Credit) hereby irrevocably designates and appoints
NationsBank as the Agent of the Lenders under this Agreement, and each of the
Lenders hereby irrevocably authorizes NationsBank as the Agent for such Lender,
to take such action on its behalf under the provisions of this Agreement and the
other Loan Documents and to exercise such powers as are expressly delegated to
the Agent by the terms of this Agreement, together with such other powers as are
reasonably incidental thereto. The Agent shall not have any duties or
responsibilities, except those expressly set forth herein, or any fiduciary
relationship with any of the Lenders, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or otherwise exist against the Agent.
10.02 Attorneys-in-fact. The Agent may execute any of its duties under
this Agreement by or through agents or attorneys-in-fact and shall be entitled
to advice of counsel concerning all matters pertaining to such duties. The Agent
shall not be responsible for the negligence, gross negligence or willful
misconduct of any agents or attorneys-in-fact selected by it with reasonable
care.
10.03 Limitation on Liability. Neither the Agent nor any of its
officers, directors, employees, agents or attorneys-in-fact shall be liable to
the Lenders for any action lawfully taken or omitted to be taken by it or them
under or in connection with this Agreement except for its or their own gross
negligence or willful misconduct. Neither the Agent nor any of its affiliates
shall be responsible in any manner to any of the Lenders for any recitals,
statements, representations or warranties made by the Borrower or any of its
Subsidiaries, or any officer or representative thereof contained in this
Agreement or in any of the other Loan Documents, or in any certificate, report,
statement or other document referred to or provided for in or received by the
Agent under or in connection with this Agreement, or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or
any of the other Loan Documents, or for any failure of the Borrower to perform
its obligations thereunder, or for any recitals, statements, representations or
warranties made, or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of any collateral. The Agent shall not be under
any obligation to any of the Lenders to ascertain or to inquire as to the
observance or performance of any of the terms, covenants or conditions of this
Agreement or any of the other Loan Documents on the part of the Borrower or to
inspect the properties, books or records of the Borrower or its Subsidiaries.
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10.04 Reliance. The Agent shall be entitled to rely, and shall be fully
protected in relying, upon any Note, writing, resolution, notice, consent
certificate, affidavit, letter, cablegram, telegram, telecopy or telex message,
statement, order or other document or conversation believed by it to be genuine
and correct and to have been signed, sent or made by the proper Person or
Persons and upon advice and statements of legal counsel (including, without
limitation, counsel to the Borrower), independent accountants and other experts
selected by the Agent. The Agent may deem and treat the payee of any Note as the
owner thereof for all purposes unless an Assignment and Acceptance shall have
been filed with and accepted by the Agent. The Agent shall be fully justified in
failing or refusing to take any action under this Agreement unless it shall
first receive advice or concurrence of the Lenders or the Required Lenders as
provided in this Agreement or it shall first be indemnified to its satisfaction
by the Lenders against any and all liability and expense which may be incurred
by it by reason of taking or continuing to take any such action. The Agent shall
in all cases be fully protected in acting, or in refraining from acting, under
this Agreement and the other Loan Documents in accordance with a request of the
Required Lenders, and such request and any action taken or failure to act
pursuant thereto shall be binding upon all the Lenders and all present and
future holders of the Notes.
10.05 Notice of Default. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless the Agent has received notice from a Lender, the Authorized
Representative or the Borrower referring to this Agreement, describing such
Default or Event of Default and stating that such notice is a "notice of
default". In the event that the Agent receives such a notice, the Agent shall
promptly give notice thereof to the Lenders. The Agent shall take such action
with respect to such Default or Event of Default as shall be reasonably directed
by the Required Lenders; provided that, unless and until the Agent shall have
received such directions, the Agent may (but shall not be obligated to) take
such action, or refrain from taking such action, with respect to such Event of
Default as it shall deem advisable in the best interests of the Lenders.
10.06 No Representations. Each Lender expressly acknowledges that
neither the Agent nor any of its affiliates has made any representations or
warranties to it and that no act by the Agent hereafter taken, including any
review of the affairs of the Borrower or any of its Subsidiaries, shall be
deemed to constitute any representation or warranty by the Agent to any Lender.
Each Lender represents to the Agent that it has, independently and without
reliance upon the Agent or any other Lender, and based on such documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the financial condition, creditworthiness, affairs, status
and nature of the Borrower and its Subsidiaries and made its own decision to
enter into this Agreement. Each Lender also represents that it will,
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independently and without reliance upon the Agent or any other Lender, and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under this Agreement and to make such investigation
as it deems necessary to inform itself as to the status and affairs, financial
or otherwise, of the Borrower and its Subsidiaries. Except for notices,
reports and other documents expressly required to be furnished to the Lenders
by the Agent hereunder, the Agent shall not have any duty or responsibility to
provide any Lender with any credit or other information concerning the affairs,
financial condition or business of the Borrower or any of its Subsidiaries
which may come into the possession of the Agent or any of its affiliates.
10.07 Indemnification. The Lenders agree to indemnify the Agent in its
capacity as such (to the extent not reimbursed by the Borrower or its
Subsidiaries and without limiting any obligations of the Borrower or any
Subsidiary so to do), ratably according to the respective principal amount of
the Notes held by them (or, if no Notes are outstanding, ratably in accordance
with their respective Applicable Commitment Percentages as then in effect) from
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which may at any time (including without limitation at any
time following the payment of the Notes) be imposed on, incurred by or asserted
against the Agent in any way relating to or arising out of this Agreement or any
other document contemplated by or referred to herein or the transactions
contemplated hereby or any action taken or omitted by the Agent under or in
connection with any of the foregoing; provided that no Lender shall be liable
for the payment of any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from the Agent's gross negligence or willful misconduct. The
agreements in this subsection shall survive the payment of the Obligations and
the termination of this Agreement.
10.08 Lender. The Agent and its affiliates may make loans to, accept
deposits from and generally engage in any kind of business with the Borrower and
its Subsidiaries as though it were not the Agent hereunder. With respect to its
Loans made or renewed by it and any Note issued to it, the Agent shall have the
same rights and powers under this Agreement as any Lender and may exercise the
same as though it were not the Agent, and the terms "Lender" and "Lenders"
shall, unless the context otherwise indicates, include the Agent in its
individual capacity.
10.09 Resignation. If the Agent shall resign as Agent under this
Agreement, then the Required Lenders may appoint, with the consent, so long as
there shall not have occurred and be continuing a Default or Event of Default,
of the Borrower, which consent shall
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not be unreasonably withheld, a successor Agent for the Lenders, which
successor Agent shall be a commercial bank organized under the laws of the
United States or any state thereof, having a combined surplus and capital of
not less than $500,000,000, whereupon such successor Agent shall succeed to the
rights, powers and duties of the former Agent and the obligations of the former
Agent shall be terminated and canceled, without any other or further act or
deed on the part of such former Agent or any of the parties to this Agreement;
provided, however, that the former Agent's resignation shall not become
effective until such successor Agent has been appointed and has succeeded of
record to all right, title and interest in any collateral held by the Agent;
provided, further, that if the Required Lenders and, if applicable, the
Borrower cannot agree as to a successor Agent within ninety (90) days after
such resignation, the Agent shall appoint a successor Agent which satisfies the
criteria set forth above in this Section 10.09 for a successor Agent and the
parties hereto agree to execute whatever documents are necessary to effect such
action under this Agreement or any other document executed pursuant to this
Agreement; provided, however that in such event all provisions of this
Agreement and the Loan Documents, shall remain in full force and effect. After
any retiring Agent's resignation hereunder as Agent, the provisions of this
Article X shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Agent under this Agreement.
10.10 Sharing of Payments, etc. Each Lender agrees that if it shall,
through the exercise of a right of banker's lien, set-off, counterclaim or
otherwise, obtain payment with respect to its Obligations (other than pursuant
to Article IV) which results in its receiving more than its pro rata share of
the aggregate payments with respect to all of the Obligations (other than any
payment pursuant to Article IV), then (A) such Lender shall be deemed to have
simultaneously purchased from the other Lenders a share in their Obligations so
that the amount of the Obligations held by each of the Lenders shall be pro rata
and (B) such other adjustments shall be made from time to time as shall be
equitable to insure that the Lenders share such payments ratably; provided,
however, that for purposes of this Section 10.10 the term "pro rata" shall be
determined with respect to both the Revolving Credit Commitment of each Lender
and to the Total Revolving Credit Commitments after subtraction in each case of
amounts, if any, by which any such Lender has not funded its share of the
outstanding Loans and Reimbursement Obligations. If all or any portion of any
such excess payment is thereafter recovered from the Lender which received the
same, the purchase provided in this Section 10.10 shall be rescinded to the
extent of such recovery, without interest. The Borrower expressly consents to
the foregoing arrangements and agrees that each Lender so purchasing a portion
of the other Lenders' Obligations may exercise all rights of payment (including,
without limitation, all rights of set-off, banker's lien or counterclaim) with
respect to such portion as fully as if such Lender were the direct holder of
such portion.
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10.11 Fees. At such time as there shall be more than one Lender
hereunder and at all times thereafter, the Borrower agrees to pay to the Agent,
for its individual account, an annual Agent's fee in an amount as agreed to by
the Agent and the Borrower, such fee to be paid quarterly in advance commencing
on the first day after the date there shall be more than one Lender.
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ARTICLE XI
Miscellaneous
11.01 Assignments and Participations.
(a) At any time after the Closing Date each Lender may, with the prior
consent of the Agent and, so long as no Default or Event of Default exists
hereunder, the Borrower, which consents shall not be unreasonably withheld (it
being understood that consent may be withheld by the Borrower if such assignment
would subject the Borrower to the payment of any additional amounts pursuant to
the provisions of Section 4.06 hereof), assign to one or more banks or financial
institutions all or a portion of its rights and obligations under this Agreement
(including, without limitation, all or a portion of the Note payable to its
order); provided, that (i) each such assignment shall be of a constant, and not
a varying, percentage of all of the assigning Lender's rights and obligations
(including Loans and Participations) under this Agreement, (ii) for each
assignment involving the issuance and transfer of a Note, the assigning Lender
shall execute an Assignment and Acceptance and the Borrower hereby consents to
execute a replacement Note to give effect to the assignment, (iii) the minimum
Revolving Credit Commitment which shall be assigned is $5,000,000 (together with
which the assigning Lender's applicable portion of Participations and the Letter
of Credit Commitment shall also be assigned) and (iv) such assignee shall have
an office located in the United States. Upon such execution, delivery, approval
and acceptance, from and after the effective date specified in each Assignment
and Acceptance, (x) the assignee thereunder shall be a party hereto and, to the
extent that rights and obligations hereunder or under such Note have been
assigned or negotiated to it pursuant to such Assignment and Acceptance have the
rights and obligations of a Lender hereunder and a holder of such Note and (y)
the assignor thereunder shall, to the extent that rights and obligations
hereunder or under such Note have been assigned or negotiated by it pursuant to
such Assignment and Acceptance, relinquish its rights and be released from its
obligations under this Agreement. No assignee shall have the right to further
assign its rights and obligations pursuant to this Section 11.01. Any Lender who
makes an assignment shall pay to the Agent a one-time administrative fee of
$2,500.00 which fee shall not be reimbursed by the Borrower.
(b) By executing and delivering an Assignment and Acceptance, the
Lender assignor thereunder and the assignee thereunder confirm to and agree with
each other and the other parties hereto as follows: (i) the assignment made
under such Assignment and Acceptance is made under such Assignment and
Acceptance without recourse; (ii) such assigning Lender makes no representation
or warranty and assumes no responsibility with respect to the financial
condition of the Borrower or any Subsidiary or the performance or observance by
the Borrower or any Subsidiary of any of its obligations under any Loan Document
or any other instrument
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or document furnished pursuant hereto; (iii) such assignee confirms that it has
received a copy of this Agreement, together with copies of the financial
statements delivered pursuant to Section 6.01(f) or Section 7.01, as the case
may be, and such other Loan Documents and other documents and information as it
has deemed appropriate to make its own credit analysis and decision to enter
into such Assignment and Acceptance; (iv) such assignee will, independently and
without reliance upon the Agent, such assigning Lender or any other Lender and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under this Agreement; (v) such assignee appoints and authorizes the Agent to
take such action as agent on its behalf and to exercise such powers under this
Agreement, the Notes and the other Loan Documents as are delegated to the Agent
by the terms hereof and thereof, together with such powers as are reasonably
incidental thereto; and (vi) such assignee agrees that it will perform in
accordance with their terms all of the obligations which by the terms of this
Agreement are required to be performed by it as a Lender and a holder of such
Notes.
(c) The Agent shall maintain at its address referred to herein a copy
of each Assignment and Acceptance delivered to and accepted by it.
(d) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender, the Agent shall give prompt notice thereof to Borrower.
(e) Each Lender may sell participations at its expense to one or more
banks or other entities as to all or a portion of its rights and obligations
under this Agreement; provided, that (i) such Lender's obligations under this
Agreement shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations,
(iii) such Lender shall remain the holder of any Note issued to it for the
purpose of this Agreement, (iv) such participations shall be in a minimum amount
of $1,000,000 and shall include an allocable portion of such Lender's
Participation, and (v) Borrower, the Agent and the other Lenders shall continue
to deal solely and directly with such Lender in connection with such Lender's
rights and obligations under this Agreement and with regard to any and all
payments to be made under this Agreement; provided, that the participation
agreement between a Lender and its participants may provide that such Lender
will obtain the approval of such participant prior to such Lender's agreeing to
any amendment or waiver of any provisions of this Agreement which would (A)
extend the maturity of any Note, (B) reduce the interest rate hereunder, or (C)
increase the Revolving Credit Commitment of the Lender granting the
participation other than as permitted by Section 2.07, and (vi) the sale of any
such participations which require Borrower to file a registration statement with
the United States Securities and Exchange Commission or under the securities
regulations or laws of any state shall not be permitted.
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(f) Notwithstanding anything to the contrary contained herein or in any
of the other Loan Documents, any Lender may assign all or any portion of its
rights and obligations under the Loan Documents and the Notes to any affiliate
of such Lender, and any Lender may pledge all or any portion of its interest
under the Loan Documents and the Notes to any Federal Reserve Bank as security
for obligations of such Lender to such Federal Reserve Bank, without the consent
of the Borrower, the Agent or any other Lender and without the payment of the
administrative fee referred to in Section 11.01(a).
11.02 Notices. Except as provided below, any notice shall be
conclusively deemed to have been received by any party hereto and be effective
on the day on which delivered to such party (against receipt therefor) at the
address set forth below or such other address as such party shall specify to the
other parties in writing (or, in the case of telephonic notice or notice by
telecopy, telegram or telex (where the receipt of such message is verified by
return) expressly provided for hereunder, when received at such telephone,
telecopy or telex number as may from time to time be specified in written or
verbal notice to the other parties hereto or otherwise received), or if sent
prepaid by certified or registered mail return receipt requested on the third
Business Day after the day on which mailed, addressed to such party at said
address:
(a) if to the Borrower:
Capstone Capital Corporation
1000 Urban Center Drive, Suite 630
Birmingham, Alabama 35242
Attention: John M. McRoberts
Telephone: (205) 967-2092
Telefacsimile: (205) 967-9066
(b) if to the Agent:
NationsBank, National Association (South)
600 Peachtree Street, N.E., 21st Floor
Atlanta, Georgia 30308-2213
Attention: Corporate Finance Department
Telephone: (404) 607-5524
Telefacsimile: (404) 607-6467
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with a copy to:
NationsBank, National Association
Independence Center, 15th Floor
Charlotte, North Carolina 28255
Attention: Melissa Mullis,
Agency Services
Telephone: (704) 386-9371
Telefacsimile: (704) 386-9923
(c) if to NationsBank in its capacity as issuer of the
Letters of Credit:
NationsBank, National Association (South)
715 Peachtree Street, N.E.
Atlanta, Georgia 30308
Attention: Letter of Credit Department
Telephone: (404) 607-2321
Telefacsimile: (404) 607-3238
(d) if to the Lenders:
At the addresses set forth on the signature pages
hereof and on the signature page of each Assignment
and Acceptance.
11.03 Setoff. The Borrower agrees that the Agent and each Lender shall
have a lien for all the Obligations of the Borrower upon all deposits or deposit
accounts, of any kind, or any interest in any deposits or deposit accounts
thereof, now or hereafter pledged, mortgaged, transferred or assigned to the
Agent or such Lender or otherwise in the possession or control of the Agent or
such Lender (other than for safekeeping) for any purpose for the account or
benefit of the Borrower and including any balance of any deposit account or of
any credit of the Borrower with the Agent or such Lender, whether now existing
or hereafter established, hereby authorizing the Agent and each Lender at any
time or times with or without prior notice to apply such balances or any part
thereof to such of the Obligations of the Borrower to the Lenders then past due
and in such amounts as they may elect, and whether or not the collateral or the
responsibility of other Persons primarily, secondarily or otherwise liable may
be deemed adequate. For the purposes of this paragraph, all remittances and
property shall be deemed to be in the possession of the Agent or such Lender as
soon as the same may be put in transit to it by mail or carrier or by other
bailee.
11.04 Survival. All covenants, agreements, representations and
warranties made herein shall survive the making by the Lenders of the Loans and
the expiration of the Letters of Credit and the execution and delivery to the
Lenders of this Agreement and the Notes and shall continue in full force and
effect so long as any of Obligations remain outstanding or any Lender has any
commitment
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hereunder or the Borrower has continuing obligations hereunder unless otherwise
provided herein. Whenever in this Agreement, any of the parties hereto is
referred to, such reference shall be deemed to include the successors and
permitted assigns of such party and all covenants, provisions and agreements by
or on behalf of the Borrower which are contained in this Agreement, the Notes
and the other Loan Documents shall inure to the benefit of the successors and
permitted assigns of the Lenders or any of them.
11.05 Expenses. The Borrower agrees (a) to pay or reimburse the Agent
for all its reasonable and customary out-of-pocket costs and expenses incurred
in connection with the preparation, negotiation and execution of, this Agreement
or any of the other Loan Documents (including travel expenses relating to
closing), and the consummation of the transactions contemplated hereby and
thereby, including, without limitation, the reasonable and customary fees and
disbursements of counsel to the Agent, as well as all such expenses and costs
arising in connection with any amendment, supplement or modification to this
Agreement or any other Loan Documents, (b) to pay or reimburse the Agent and the
Lenders for all their reasonable costs and expenses incurred in connection with
the enforcement or preservation of any rights under this Agreement and the other
Loan Documents, including without limitation, the reasonable fees and
disbursements of their counsel and any payments in indemnification or otherwise
payable by the Lenders to the Agent pursuant to the Loan Documents, (c) to pay,
indemnify and hold the Agent and the Lenders harmless from any and all recording
and filing fees and any and all liabilities with respect to, or resulting from
any failure to pay or delay in paying, documentary, stamp, excise and other
similar taxes, if any, which may be payable or determined to be payable in
connection with the execution and delivery of this Agreement or any other Loan
Documents, or consummation of any amendment, supplement or modification of, or
any waiver or consent under or in respect of, this Agreement or any other Loan
Documents, and (d) to pay, indemnify, and hold the Agent and the Lenders
harmless from and against any and all other liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever with respect to the execution, delivery,
enforcement, performance and administration of this Agreement and the other Loan
Documents or in any respect relating to the transactions contemplated hereby or
thereby, (all the foregoing, collectively, the "indemnified liabilities");
provided, however, that the Borrower shall have no obligation hereunder with
respect to indemnified liabilities arising from (i) the willful misconduct or
gross negligence of or the willful breach of the Loan Documents by the party
seeking indemnification, (ii) legal proceedings commenced against the Agent or
any Lender by any security holder or creditor thereof arising out of and based
upon rights afforded any such security holder or creditor solely in its capacity
as such, (iii) any taxes imposed upon the Agent or any Lender other than the
documentary, stamp, excise and similar taxes described in clause (c) above or
any tax resulting from any
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Regulatory Change, which tax would be payable to Lenders by Borrower pursuant
to Article IV hereof, (iv) taxes imposed and costs and expenses incurred as a
result of a transfer or assignment of any Note, participation or assignment of
a portion of its rights or (v) any taxes imposed upon or any costs or expenses
incurred by any transferee of any Note. The agreements in this subsection
shall survive repayment of the Notes and all other Obligations hereunder and
termination of this Agreement.
11.06 Amendments. No amendment, modification or waiver of any provision
of this Agreement or any of the Loan Documents and no consent by the Lenders to
any departure therefrom by the Borrower shall be effective unless such
amendment, modification or waiver shall be in writing and signed by the Agent,
but only upon having received the written consent of the Required Lenders, and
the same shall then be effective only for the period and on the conditions and
for the specific instances and purposes specified in such writing; provided,
however, that, no such amendment, modification or waiver
(i) which changes, extends or waives any provision of Section
10.10 or this Section 11.06, the amount of or the due date of any
scheduled installment of or the rate of interest payable on any
Obligation or the amount of any fees payable to Lenders, changes the
definition of Required Lenders, which permits an assignment by
Borrower of its Obligations hereunder, which reduces the required
consent of Lenders provided hereunder (other than as provided in
Section 4.05 hereof), which increases, decreases or extends the
Revolving Credit Commitment of any Lender or which increases or
extends the Letter of Credit Facility or which waives any condition to
the making of any Loan shall be effective unless in writing and signed
by each of the Lenders; provided, however, the Required Lenders may in
their sole discretion waive any Default or Event of Default (other
than any Event of Default under Section 9.01(a), (b), (g) or (h));
(ii) which releases any Subsidiary from its Subsidiary
Guaranty shall be effective unless with the written consent of each of
the Lenders;
(iii) which affects the rights, privileges or obligations of
NationsBank as provider of Swing Line Loans and issuer of Letters of
Credit, shall be effective unless signed in writing by NationsBank; or
(iv) which affects the rights, privileges, immunities or
indemnities of the Agent shall be effective unless in writing and
signed by the Agent.
Notwithstanding any provision of the other Loan Documents to the contrary, as
between the Agent and the Lenders, execution by the Agent shall not be deemed
conclusive evidence that the Agent has
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obtained the written consent of the Required Lenders. No notice to or demand on
the Borrower in any case shall entitle the Borrower to any other or further
notice or demand in similar or other circumstances, except as otherwise
expressly provided herein. No delay or omission on any Lender's or the Agent's
part in exercising any right, remedy or option shall operate as a waiver of such
or any other right, remedy or option or of any Default or Event of Default.
11.07 Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed an
original, and it shall not be necessary in making proof of this Agreement to
produce or account for more than one such fully-executed counterpart.
11.08 Waivers by Borrower. In any litigation in any court with respect
to, in connection with, or arising out of this Agreement, the Loans, any of the
Notes, any of the other Loan Documents, the Obligations, or any instrument or
document delivered pursuant to this Agreement or the other Loan Documents, or
the validity, protection, interpretation, collection or enforcement thereof, or
any other claim or dispute howsoever arising between the Borrower and the
Lenders or the Agent, the Borrower and each Lender and the Agent hereby waive,
to the extent permitted by applicable law, trial by jury in connection with any
such litigation.
The Borrower, the Agent and the Lenders believe that, inasmuch as this
Agreement and the transactions contemplated hereby have been entered into and
consummated outside the State of Alabama, such transactions constitute
transactions in interstate commerce, so that neither the Agent nor any of the
Lenders is required, solely by entering into this Agreement and consummating
the transactions contemplated hereby, to qualify to do business as a foreign
corporation within the State of Alabama. Notwithstanding the foregoing,
however, the Borrower hereby irrevocably waives all rights that it may have to
raise, in any action brought by any of the Lenders or the Agent to enforce the
rights of the Lenders and the Agent hereunder or under any of the other Loan
Documents, or the obligations of the Borrower hereunder or thereunder, any
defense which is based upon the failure of any of the Lenders or the Agent to
qualify to do business as a foreign corporation in the State of Alabama,
including, but not limited to, any defenses based upon Section 232 of the
Alabama Constitution of 1901, Section 10-2B-15.01 of the Code of Alabama
(1975) or Section 40-14-4 of the Code of Alabama (1975), or any successor
provision to any thereof. The foregoing waiver is made knowingly and
voluntarily and is a material inducement for the Agent and the Lenders to enter
into the transactions contemplated by this Agreement or any of the other Loan
Documents.
11.09 Termination. The termination of this Agreement shall not affect
any rights of the Borrower, the Lenders or the Agent or
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any obligation of the Borrower, the Lenders or the Agent, arising prior to the
effective date of such termination, and the provisions hereof shall continue to
be fully operative until all transactions entered into or rights created or
obligations incurred prior to such termination have been fully disposed of,
concluded or liquidated and the Obligations arising prior to or after such
termination have been irrevocably paid in full. The rights granted to the
Agent for the benefit of the Lenders hereunder and under the other Loan
Documents shall continue in full force and effect, notwithstanding the
termination of this Agreement, until all of the Obligations have been paid in
full after the termination hereof (other than Obligations in the nature of
continuing indemnities or expense reimbursement obligations not yet due and
payable) or the Borrower has furnished the Lenders and the Agent with an
indemnification satisfactory to the Agent and each Lender with respect thereto.
All representations, warranties, covenants, waivers and agreements contained
herein shall survive termination hereof until payment in full of the
Obligations unless otherwise provided herein. Notwithstanding the foregoing,
if after receipt of any payment of all or any part of the Obligations, any
Lender is for any reason compelled to surrender such payment to any Person
because such payment is determined to be void or voidable as a preference,
impermissible setoff, a diversion of trust funds or for any other reason, this
Agreement shall continue in full force and the Borrower shall be liable to, and
shall indemnify and hold such Lender harmless for, the amount of such payment
surrendered until such Lender shall have been finally and irrevocably paid in
full. The provisions of the foregoing sentence shall be and remain effective
notwithstanding any contrary action which may have been taken by the Lenders in
reliance upon such payment, and any such contrary action so taken shall be
without prejudice to the Lenders' rights under this Agreement and shall be
deemed to have been conditioned upon such payment having become final and
irrevocable.
11.10 Governing Law. ALL DOCUMENTS EXECUTED PURSUANT TO THE
TRANSACTIONS CONTEMPLATED HEREIN, INCLUDING, WITHOUT LIMITATION, THIS AGREEMENT
AND EACH OF THE LOAN DOCUMENTS SHALL BE DEEMED TO BE CONTRACTS MADE UNDER, AND
FOR ALL PURPOSES SHALL BE CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS AND
JUDICIAL DECISIONS OF THE STATE OF GEORGIA. THE BORROWER HEREBY SUBMITS TO THE
JURISDICTION AND VENUE OF THE STATE AND FEDERAL COURTS OF GEORGIA FOR THE
PURPOSES OF RESOLVING DISPUTES HEREUNDER OR FOR THE PURPOSES OF COLLECTION.
11.11 Indemnification. (a) In consideration of the execution and
delivery of this Agreement by the Agent and each Lender and the extension of the
Revolving Credit Commitments, the Borrower hereby indemnifies, exonerates and
holds the Agent and each Lender and each of their respective officers,
directors, employees and agents (collectively, the "Indemnified Parties") free
and harmless from and against any and all actions, causes of
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action, suits, losses, costs, liabilities and damages, and expenses
incurred in connection therewith (irrespective of whether any such
Indemnified Party is a party to the action for which indemnification hereunder
is sought), including reasonable attorneys' fees and disbursements
(collectively, the "Indemnified Liabilities"), incurred by the Indemnified
Parties or any of them as a result of, or arising out of, or relating to any
transaction financed or to be financed in whole or in part, directly or
indirectly, with the proceeds of any Loan (including any Swing Line Loan) or
supported by any Letter of Credit, except for any such Indemnified Liabilities
arising for the account of a particular Indemnified Party by reason of the bad
faith, gross negligence or willful misconduct of, or willful breach of the Loan
Documents by, such Indemnified Party or an officer, co-officer, director,
co-director, employee, co-employee, agent or co-agent of such Indemnified Party
or a transfer or disposition of a Note by an Indemnified Party, and if and to
the extent that the foregoing undertaking may be unenforceable for any reason,
the Borrower hereby agrees to make the maximum contribution to the payment and
satisfaction of each of the Indemnified Liabilities which is permissible under
applicable law.
(b) If a claim is to be made by a party entitled to indemnification
under this Section 11.11 or Section 7.15 against the indemnifying party, the
party entitled to such indemnification shall give written notice to the
indemnifying party promptly after the party entitled to indemnification
receives actual notice of any claim, action, suit, loss, cost, liability,
damage or expense incurred or instituted for which the indemnification is
sought. If requested by the Borrower in writing, and so long as no Default or
Event of Default shall have occurred and be continuing, such indemnitee shall
contest the validity, applicability and/or amount of such suit, action, or
cause of action to the extent such contest may be conducted in good faith on
legally supportable grounds. If any lawsuit or enforcement action is filed
against any party entitled to the benefit of indemnity under this Section
11.11, written notice thereof shall be given to the indemnifying party as soon
as practicable (and in any event within 15 days after the service of the
citation or summons). Notwithstanding the foregoing, the failure so to notify
the indemnifying party as provided in this Section 11.11 will relieve
indemnifying party from liability hereunder only if and to the extent that such
failure results in the forfeiture by the indemnifying party of substantive
rights and defenses. After such notice, if the indemnifying party shall
acknowledge in writing to the indemnified party that the indemnifying party
shall be obligated under the terms of its indemnity hereunder in connection
with such lawsuit or action, then, so long as no Default or Event of Default
shall occur and be continuing, the indemnifying party shall be entitled, if it
so elects, to take control of the defense and investigation of such lawsuit or
action and to employ and engage counsel of its own choice reasonably acceptable
to the indemnified party to handle and defend the same, at the indemnifying
party's cost, risk and
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expense, provided, however, that the indemnifying party and its counsel
shall proceed with diligence and in good faith with respect thereto. If (i)
the engagement of such counsel by the indemnifying party would present a
conflict of interest which would prevent such counsel from effectively
defending such action on behalf of the indemnified party, (ii) the defendants
in, or targets of, any such lawsuit or action include both the indemnified
party and indemnifying party, and the indemnified party reasonably concludes
that there may be legal defenses available to it that are different from or in
addition to those available to the indemnifying party, (iii) the indemnifying
party fails to assume the defense of the lawsuit or action or to employ counsel
reasonably satisfactory to such indemnified party, in either case in a timely
manner, or (iv) a Default or Event of Default shall occur and be continuing,
then such indemnified party may employ separate counsel to represent or defend
it in any such action or proceeding and the indemnifying party will pay the
fees and disbursements of such counsel, provided, however, that each indemnitee
shall endeavor, but shall not be obligated, in connection with any matter
covered by this Section 11.11 which also involves other indemnities, to use
reasonable efforts to avoid unnecessary duplication of efforts by counsel for
all indemnities and provided further, that in no event shall the Borrowers be
liable for the fees and expenses of more than one separate firm for the
indemnified parties. The indemnified party shall cooperate (with all out of
pocket costs and expenses associated therewith to be paid by the indemnifying
party) in all reasonable respects with the indemnifying party and such
attorneys in the investigation, trial and defense of such lawsuit or action and
any appeal arising therefrom; provided, however, that the indemnified party
may, at its own cost (except as set forth in, and in accordance with, the
foregoing sentence), participate in the investigation, trial and defense of
such lawsuit or action and any appeal arising therefrom. If the indemnifying
party has acknowledged to the indemnified party its obligation to indemnify
hereunder, the indemnified party, so long as no Default or Event of Default
shall have occurred and be continuing, shall not settle such lawsuit or
enforcement action without the prior written consent of the indemnifying party
and, if the indemnifying party has not so acknowledged its obligation, the
indemnified party shall not settle such lawsuit or enforcement action within 20
days' prior written notice to the indemnifying party.
11.12 Headings and References. The headings of the Articles and
Sections of this Agreement are inserted for convenience of reference only and
are not intended to be a part of, or to affect the meaning or interpretation of
this Agreement. Words such as "hereof", "hereunder", "herein" and words of
similar import shall refer to this Agreement in its entirety and not to any
particular Section or provisions hereof, unless so expressly specified. As used
herein, the singular shall include the plural, and the masculine shall include
the feminine or a neutral gender, and vice versa, whenever the context requires.
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11.13 Severability. If any provision of this Agreement or the other
Loan Documents shall be determined to be illegal or invalid as to one or more of
the parties hereto, then such provision shall remain in effect with respect to
all parties, if any, as to whom such provision is neither illegal nor invalid,
and in any event all other provisions hereof shall remain effective and binding
on the parties hereto.
11.14 Entire Agreement. This Agreement, together with the other Loan
Documents, constitutes the entire agreement between the parties with respect to
the subject matter hereof and supersedes all previous proposals, negotiations,
representations, commitments and other communications between or among the
parties, both oral and written, with respect thereto.
11.15 Agreement Controls. In the event that any term of any of the Loan
Documents other than this Agreement conflicts with any term of this Agreement,
the terms and provisions of this Agreement shall control.
11.16 Usury Savings Clause. Notwithstanding any other provision herein,
the aggregate interest rate charged under any of the Notes, including all
charges or fees in connection therewith deemed in the nature of interest under
Georgia law, shall not exceed the Highest Lawful Rate (as such term is defined
below). If the rate of interest (determined without regard to the preceding
sentence) under this Agreement at any time exceeds the Highest Lawful Rate (as
defined below), the outstanding amount of the Loans made hereunder shall bear
interest at the Highest Lawful Rate until the total amount of interest due
hereunder equals the amount of interest which would have been due hereunder if
the stated rates of interest set forth in this Agreement had at all times been
in effect. In addition, if when the Loans made hereunder are repaid in full the
total interest due hereunder (taking into account the increase provided for
above) is less than the total amount of interest which would have been due
hereunder if the stated rates of interest set forth in this Agreement had at all
times been in effect, then to the extent permitted by law, the Borrower shall
pay to the Agent an amount equal to the difference between the amount of
interest paid and the amount of interest which would have been paid if the
Highest Lawful rate had at all times been in effect. Notwithstanding the
foregoing, it is the intention of the Lenders and the Borrower to conform
strictly to any applicable usury laws. Accordingly, if any lender contracts for,
charges, or receives any consideration which constitutes interest in excess of
the Highest Lawful rate, then any such excess shall be canceled automatically
and, if previously paid, shall at such Lender's option be applied to the
outstanding amount of the Loans made hereunder or be refunded to the Borrower.
As used in this paragraph, the term "Highest Lawful Rate" means the maximum
lawful interest rate, if any, that at any time or from time to time may be
contracted for, charged, or received under the laws applicable to such Lender
which are presently in effect or, to the extent allowed by law, under such
applicable laws which may hereafter be in effect and which allow a higher
maximum nonusurious interest rate than applicable laws now allow.
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IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be made, executed and delivered by their duly authorized officers as of the day
and year first above written.
CAPSTONE CAPITAL CORPORATION
WITNESS: By: /s/ ANDREW L. KIZER
---------------------------------
Name: Andrew L. Kizer
/s/ R. MALLOY McKEITH Title: Vice President/Secretary/
- ------------------------- Treasurer
/s/ TERRY L. SIAGO
- -------------------------
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NATIONSBANK, NATIONAL ASSOCIATION
(SOUTH) as Agent for the Lenders
COMMITMENT:
$40,000,000
By: /s/ CATHERINE S. RHODES
------------------------------
Name: Catherine S. Rhodes
Title: Vice President
NATIONSBANK, NATIONAL ASSOCIATION (SOUTH)
By: /s/ CATHERINE S. RHODES
------------------------------
Name: Catherine S. Rhodes
Title: Vice President
Lending Office:
Independence Center, 15th Floor
Charlotte, North Carolina 28255
Wire Transfer Instructions:
NationsBank, National Association (South)
Atlanta, Georgia
ABA# 061000052
Reference: CAPSTONE
Attention: Melissa Mullis,
Agency Services
Account No.: 136621-010197
91
<PAGE> 97
AMSOUTH BANK OF ALABAMA
COMMITMENT:
$25,000,000
By: /s/ WILLIAM P. BAINES
----------------------------------
Name: William P. Baines
--------------------------------
Title: Vice President
-------------------------------
Lending Office:
AmSouth Bank of Alabama
1900 5th Avenue
Birmingham, Alabama
Wire Transfer Instructions:
AmSouth Bank of Alabama
Birmingham, Alabama
ABA # 062000019
Reference: Acct #__________
CAPSTONE
Attention: Lisa Mann
92
<PAGE> 98
CREDIT LYONNAIS NEW YORK BRANCH
COMMITMENT:
$25,000,000
By: /s/ PASCAL POUPELLE
-------------------------------------
Name: Pascal Poupelle
-----------------------------------
Title: Senior Vice President
----------------------------------
Lending Office:
Credit Lyonnais New York Branch
1301 Avenue of the Americas
New York, New York 10019
Wire Transfer Instructions:
Credit Lyonnais New York Branch
New York, New York 10019
ABA #0260-0807-3
Account #01-881-792-14000001
Reference: Capstone
Attention: Loan Servicing
---------------------
93
<PAGE> 99
NATIONAL CITY BANK, KENTUCKY
COMMITMENT:
$15,000,000
By: /s/
----------------------------------
Title: Vice President
-------------------------------
Lending Office:
101 S. Fifth Street, 8th Floor
Louisville, Kentucky 40202
Wire Transfer Instructions:
National City Bank, Kentucky
Louisville, Kentucky
ABA # 0830-0005-6
Reference: CAPSTONE
Attention: Sandy Walker
94
<PAGE> 100
CREDITANSTALT CORPORATE FINANCE, INC.
COMMITMENT:
$15,000,000
By: /s/ SCOTT KRAY
----------------------------------
Name: Scott Kray
--------------------------------
Title: Senior Associate
-------------------------------
By: /s/ JOSEPH LONGOSZ
----------------------------------
Name: Joseph Longosz
--------------------------------
Title: Vice President
-------------------------------
Lending Office:
Atlanta, Georgia
------------------------------
-------------------------------------
Wire Transfer Instructions:
Chemical Bank
-----------------------------
New York, New York
-----------------------------
ABA # 021000128
--------------------
Reference: Creditanstalt, New York
------------------------
Attention:
-------------------
Account No. 544-7-73095
-------------
95
<PAGE> 101
THE BANK OF NOVA SCOTIA
COMMITMENT:
$10,000,000
By: /s/ DANA MALONEY
--------------------------------
Name: Dana Maloney
------------------------------
Title: Relationship Manager
-----------------------------
Lending Office:
The Bank of Nova Scotia
Atlanta Agency
600 Peachtree Street, N.E.
Suite 2700
Atlanta, Georgia 30308
Wire Transfer Instructions:
The Bank of Nova Scotia
The Bank of Nova Scotia,
New York Agency
ABA # 026002532
For Further Credit to Account
0606634 Atlanta Agency
Attention: CAPSTONE
96
<PAGE> 102
FIRST COMMERCIAL BANK
COMMITMENT:
$10,000,000
By: /s/ A TODD BEARD
----------------------------------
Name: A Todd Beard
--------------------------------
Title: First Vice President
-------------------------------
Lending Office:
First Commercial Bank
2000 A Southbridge Parkway
Birmingham, Alabama 35209
Wire Transfer Instructions:
First Commercial Bank
Birmingham, Alabama
ABA # 062003605
Reference: CAPSTONE
Attention: Todd Beard or Paul Fehn
97
<PAGE> 103
THE SUMITOMO BANK, LIMITED
COMMITMENT:
$10,000,000
By: /s/ LAUREN P. CARRIGAN
-----------------------------------
Name: Lauren P. Carrigan
---------------------------------
Title: Assistant Vice President
--------------------------------
Lending Office:
303 Peachtree Street
Suite 4420
Atlanta, Georgia 30308
Wire Transfer Instructions:
The Sumitomo Bank, Limited
233 S. Wacker Drive, Suite 5400
Chicago, Illinois 60606
ABA # 071001850
Reference: CAPSTONE
Attention: Maria Martinez
---------------
Account No. n/a
-------------
98
<PAGE> 104
EXHIBIT A
Applicable Commitment Percentages
<TABLE>
<CAPTION>
Applicable
Lender Revolving Credit Commitment
- ------ Commitment Percentage
---------- ----------
<S> <C> <C>
NationsBank, N.A. (South) $ 40,000,000 26.666666667%
AmSouth Bank of Alabama 25,000,000 16.666666667%
Credit Lyonnais New York
Branch 25,000,000 16.666666667%
National City Bank, Kentucky 15,000,000 10.000000000%
Creditanstalt Corporate
Finance, Inc. 15,000,000 10.000000000%
The Bank of Nova Scotia 10,000,000 6.666666667%
First Commercial Bank 10,000,000 6.666666667%
The Sumitomo Bank, Limited 10,000,000 6.666666667%
------------ -------------
$150,000,000 100%
</TABLE>
99
<PAGE> 1
EXHIBIT 10.74
AMENDMENT NO. 1 TO
AMENDED AND RESTATED
REVOLVING CREDIT AND REIMBURSEMENT AGREEMENT
THIS AMENDMENT AGREEMENT is made and entered into this 28th day of
February, 1997, by and among CAPSTONE CAPITAL CORPORATION, a Maryland
corporation (herein called the "Borrower"), NATIONSBANK, N.A. (SOUTH) (the
"Agent"), as Agent for the lenders (the "Lenders") party to the Amended and
Restated Revolving Credit and Reimbursement Agreement dated June 24, 1996 among
such Lenders, Borrower and the Agent (the "Agreement") and each of the Lenders
party to the Agreement.
W I T N E S S E T H:
WHEREAS, the Borrower, the Agent and the Lenders have entered into the
Agreement pursuant to which the Lenders have agreed to make revolving loans to
the Borrower in the principal amount of $150,000,000 as evidenced by the Notes
(as defined in the Agreement); and
WHEREAS, the parties hereto desire further to amend the Agreement in
the manner herein set forth effective as of the date hereof;
NOW, THEREFORE, the Borrower, the Agent and the Lenders do hereby agree
as follows:
1. Definitions. The term "Agreement" as used herein and in the
Loan Documents (as defined in the Agreement) shall mean the Agreement as hereby
amended and modified. Unless the context otherwise requires, all terms used
herein without definition shall have the definition provided therefor in the
Agreement.
2. Amendments. Subject to the conditions hereof, the Agreement
is hereby amended, effective as of the date hereof, as follows:
(a) The definition of "Total Revolving Credit Commitment" in
Section 1.01 is hereby amended in its entirety so that as amended it
shall read as follows:
"'Total Revolving Credit Commitment' means an amount
equal to (i) $170,000,000 or (ii) at such time as existing
Exhibit A hereto is amended by the entering into of an
Amendment Agreement in the form of Exhibit J by the Borrower,
the Agent and any lender or lenders agreeing to provide
additional Loans of up to $10,000,000, an amount equal to
$180,000,000, as such amounts are reduced from time to time in
accordance with Section 2.07;"
(b) Exhibit A to the Agreement is amended in its entirety so
that as amended it is in the form and content attached hereto as
Exhibit A; and
<PAGE> 2
(c) A new Exhibit J substantially in the form attached hereto
is added to the Agreement.
3. Each Subsidiary of the Borrower has joined in the execution of this
Amendment Agreement for the purpose of (i) agreeing to the amendment to the
Agreement including the increase in the Total Revolving Credit Commitment to
$180,000,000 and (ii) confirming its guarantee of payment of all the
Obligations. Each Lender agrees that the Total Revolving Credit Commitment may
be increased to $180,000,000 without the requirement that such Lender join in
the execution of an Amendment Agreement in the form of Exhibit J hereto.
4. Representations and Warranties. The Borrower hereby certifies that:
(a) The representations and warranties made by Borrower in
Article VI thereof are true on and as of the date hereof except that
the financial statements referred to in Section 6.01(f) shall be those
most recently furnished to each Lender pursuant to Section 7.01(a) and
(b);
(b) There has been no material change in the condition,
financial or otherwise, of the Borrower and its Subsidiaries since the
date of the most recent financial reports of the Borrower received by
each Lender under Section 7.01 thereof, other than changes in the
ordinary course of business, none of which has been a material adverse
change;
(c) The business and properties of the Borrower and its
Subsidiaries are not, and since the date of the most recent financial
report of the Borrower and its Subsidiaries received by each Lender
under Section 7.01 thereof have not been, adversely affected in any
substantial way as the result of any fire, explosion, earthquake,
accident, strike, lockout, combination of workers, flood, embargo,
riot, activities of armed forces, war or acts of God or the public
enemy, or cancellation or loss of any major contracts; and
(d) No event has occurred and no condition exists which, upon
the consummation of the transaction contemplated hereby, constituted a
Default or an Event of Default on the part of the Borrower under the
Agreement or the Notes either immediately or with the lapse of time or
the giving of notice, or both.
5. Conditions. As a condition to the effectiveness of this
Amendment Agreement, the Borrower shall deliver, or cause to be delivered to the
Agent, the following:
(a) Twelve (12) executed counterparts of this Amendment
Agreement;
(b) Executed Notes;
(c) Resolution of the Board of Directors of Borrower and
each Subsidiary;
2
<PAGE> 3
(d) a certificate of the Secretary or Assistant Secretary
of the Borrower as to Charter, Bylaws, Resolutions and incumbency of
officers executing this Amendment Agreement;
(e) a certificate of the Secretary or Assistant Secretary
of each Subsidiary as to the Charter, Bylaws, Resolutions and
incumbency of officers executing this Amendment Agreement;
(f) an opinion of counsel for the Borrower and its
Subsidiaries in form and content acceptable to the Agent;
(g) a certificate of an Authorized Representative
demonstrating compliance, as of December 31, 1996, with Sections 8.01,
8.02, 8.03, 8.04, 8.05 and 8.06 of the Agreement, which certificate
shall be substantially in the form of Exhibit I to the Agreement;
(h) such other instruments and documents as the Agent may
reasonably request; and
(i) receipt by the Agent for the benefit of itself and
the Lenders of all fees payable to the Agent and the Lenders.
6. Other Documents. All instruments and documents incident to the
consummation of the transactions contemplated hereby shall be satisfactory in
form and substance to the Agent and its counsel; the Agent shall have received
copies of all additional agreements, instruments and documents which it may
reasonably request in connection therewith, including evidence of the authority
of Borrower to enter into the transactions contemplated by this Amendment
Agreement, in each case such documents, when appropriate, to be certified by
appropriate corporate or governmental authorities; and all proceedings of the
Borrowers relating to the matters provided for herein shall be satisfactory to
the Agent and its counsel.
7. Entire Agreement. This Amendment Agreement sets forth the
entire understanding and agreement of the parties hereto in relation to the
subject matter hereof and supersedes any prior negotiations and agreements among
the parties relative to such subject matter. No promise, conditions,
representation or warranty, express or implied, not herein set forth shall bind
any party hereto, and no one of them has relied on any such promise, condition,
representation or warranty. Each of the parties hereto acknowledges that, except
as in this Amendment Agreement or otherwise expressly stated, no
representations, warranties or commitments, express or implied, have been made
by any other party to the other. None of the terms of conditions of this
Amendment Agreement may be changed, modified, waived or canceled orally or
otherwise, except by writing, signed by all the parties hereto, specifying such
change, modification, waiver or cancellation of such terms or conditions, or of
any proceeding or succeeding breach thereof.
8. Full Force and Effect of Agreement. Except as hereby
specifically amended, modified or supplemented, the Agreement and all of the
other Loan Documents are hereby confirmed and ratified in all respects and shall
remain in full force and effect according to their respective terms.
3
<PAGE> 4
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
agreement to be duly executed by their duly authorized officers, all as of the
day and year first above written.
CAPSTONE CAPITAL CORPORATION
WITNESS:
/s/ Alice Kay Lamon By: /s/ Andrew L. Kizer
- ---------------------------- -------------------------------------
Name: Andrew L. Kizer
Title: Vice President/Secretary/Treasurer
- ----------------------------
4
<PAGE> 5
GUARANTORS:
CAPSTONE CAPITAL OF ALABAMA, INC.
CAPSTONE CAPITAL OF PENNSYLVANIA, INC.
CAPSTONE CAPITAL OF CALIFORNIA, INC.
CAPSTONE CAPITAL OF BONITA BAY, INC.
CAPSTONE CAPITAL OF CAPE CORAL, INC.
CAPSTONE CAPITAL OF SARASOTA, INC.
WITNESS: CAPSTONE CAPITAL OF TEXAS, INC.
CAPSTONE CAPITAL OF LAS VEGAS, INC.
/s/ Alice Kay Lamon CAPSTONE CAPITAL OF BAYTOWN, INC.
- --------------------------
By: /s/ Andrew L. Kizer
- -------------------------- ------------------------------------
Name: Andrew L. Kizer
Title: Vice President/Secretary/Treasurer
CAPSTONE OF BONITA BAY, LTD.
By its General Partner:
Capstone Capital of Bonita Bay, Inc.
By: /s/ Andrew L. Kizer
------------------------------------
Name: Andrew L. Kizer
Title: Vice President/Secretary/Treasurer
CAPSTONE OF CAPE CORAL, LTD.
By its General Partner:
Capstone Capital of Cape Coral, Inc.
By: /s/ Andrew L. Kizer
------------------------------------
Name: Andrew L. Kizer
Title: Vice President/Secretary/Treasurer
CAPSTONE OF SARASOTA, LTD.
By its General Partner:
Capstone Capital of Sarasota, Inc.
By: /s/ Andrew L. Kizer
------------------------------------
Name: Andrew L. Kizer
Title: Vice President/Secretary/Treasurer
5
<PAGE> 6
CAPSTONE CAPITAL OF SAN ANTONIO, LTD.
By its General Partner:
Capstone Capital of Cape Coral, Inc.
By: /s/ Andrew L. Kizer
------------------------------------
Name: Andrew L. Kizer
Title: Vice President/Secretary/Treasurer
CAPSTONE OF LAS VEGAS, LTD.
By its General Partner:
Capstone Capital of Las Vegas, Inc.
By: /s/ Andrew L. Kizer
------------------------------------
Name: Andrew L. Kizer
Title: Vice President/Secretary/Treasurer
CAPSTONE OF BAYTOWN, LTD.
By its General Partner:
Capstone Capital of Baytown, Inc.
By: /s/ Andrew L. Kizer
------------------------------------
Name: Andrew L. Kizer
Title: Vice President/Secretary/Treasurer
6
<PAGE> 7
NATIONSBANK, NATIONAL ASSOCIATION
(SOUTH), as Agent
By: /s/ Nancy S. Goldman
------------------------------------
Name: NANCY S. GOLDMAN
----------------------------------
Title: VICE PRESIDENT
---------------------------------
7
<PAGE> 8
AMSOUTH BANK OF ALABAMA
By: /s/ Mark Housel
------------------------------------
Name: L. MARK HOUSEL
----------------------------------
Title: COMMERCIAL BANKING OFFICER
---------------------------------
8
<PAGE> 9
CREDIT LYONNAIS NEW YORK BRANCH
By: /s/ Farboud Tavangar
------------------------------------
Name: Farboud Tavangar
----------------------------------
Title: First Vice President
---------------------------------
9
<PAGE> 10
NATIONAL CITY BANK OF KENTUCKY
By: /s/ Roderic M. Brown
------------------------------------
Name: Roderic M. Brown
----------------------------------
Title: Vice President
---------------------------------
10
<PAGE> 11
CREDITANSTALT CORPORATE FINANCE, INC.
By: /s/ Robert M. Biringer
------------------------------------
Name: Robert M. Biringer
----------------------------------
Title: Executive Vice President
---------------------------------
By: /s/ Scott Kray
------------------------------------
Name: Scott Kray
----------------------------------
Title: Senior Associate
---------------------------------
11
<PAGE> 12
THE BANK OF NOVA SCOTIA
By: /s/ Dana Maloney
------------------------------------
Name: DANA MALONEY
----------------------------------
Title: RELATIONSHIP MANAGER
---------------------------------
12
<PAGE> 13
FIRST COMMERCIAL BANK
By: /s/ James Michael Pnebub Jr.
------------------------------------
Name: JAMES MICHAEL PNEBUB JR.
----------------------------------
Title: COMMERCIAL LOAN OFFICER
---------------------------------
13
<PAGE> 14
THE SUMITOMO BANK, LIMITED
By: /s/ Sybil H. Weldon
------------------------------------
Name: SYBIL H. WELDON
----------------------------------
Title: VICE PRESIDENT & MANAGER
---------------------------------
By: /s/ Lauren P. Carrigan
------------------------------------
Name: LAUREN P. CARRIGAN
----------------------------------
Title: ASST. VICE PRESIDENT
---------------------------------
14
<PAGE> 15
EXHIBIT A
Applicable Commitment Percentages
<TABLE>
<CAPTION>
Applicable
Revolving Credit Commitment
Lender Commitment Percentage
- ------ ---------- ----------
<S> <C> <C>
NationsBank, N.A. (South) $ 45,000,000 26.470588235%
AmSouth Bank of Alabama $ 25,000,000 14.705882353%
Credit Lyonnais New York Branch $ 30,000,000 17.647058824%
National City Bank of Kentucky $ 15,000,000 8.823529412%
Creditanstalt Corporate Finance, Inc. $ 25,000,000 14.705882353%
The Bank of Nova Scotia $ 10,000,000 5.882352941%
First Commercial Bank $ 10,000,000 5.882352941%
The Sumitomo Bank, Limited $ 10,000,000 5.882352941%
------------ -------------
Total $170,000,000 100%
</TABLE>
15
<PAGE> 1
Exhibit 11
Capstone Capital Corporation
Computation of Net Income Per Common Share
<TABLE>
<CAPTION> From
June 30, 1994
Year Ended Year Ended Inception) to
December 31, December 31, December 31,
1996 1995 1994
----------- ----------- -------------
<S> <C> <C> <C>
PRIMARY:
Weighted average shares outstanding 11,086,086 6,271,242 5,980,000
Net income $ 18,913,689 $ 9,708,391 $4,762,734
Net income per common share $ 1.71 $ 1.55 $ 0.80
FULLY DILUTED:
Weighted average shares outstanding 11,086,086 6,271,242 5,980,000
Net effect of assumed conversion of convertible debt 2,073,127 2,325,421 -
------------ ----------- ----------
Total weighted average shares and common stock
equivalents outstanding 13,159,213 8,596,663 5,980,000
============ =========== ==========
Net income $ 18,913,689 $ 9,708,391 $4,762,734
Convertiblle debt interest expense 3,219,427 3,867,364 -
------------ ----------- ----------
Adjusted Net Income $ 22,133,116 $13,575,755 $4,762,734
============ =========== ==========
Net income per common share $ 1.68 $ 1.58 $ 0.80
============ =========== ==========
</TABLE>
<PAGE> 1
EXHIBIT 12
CAPSTONE CAPITAL CORPORATION
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
FROM
JUNE 30, 1994
YEAR YEAR (INCEPTION) TO
ENDED DECEMBER 31, ENDED DECEMBER 31, DECENBER 31,
1996 1995 1994
-------------- ------------- -------------
<S> <C> <C> <C>
EARNINGS
Net Income 18,913,689 9,708,391 4,762,734
Plus Fixed Charges 9,389,931 9,459,360 1,544,579
Less Interest Capitalized Included above (522,686) (466,668) (94,858)
------------- ------------ ------------
EARNINGS BEFORE FIXED CHARGES 27,750,934 18,701,083 6,212,455
============= ============ ============
FIXED CHARGES:
Interest Exprense 8,812,170 8,786,913 1,438,860
Amortization of Def. Debenture costs - 183,052 -
Interest Capitalized 552,686 466,668 94,858
Estimated interest factor of rental expense 25,075 22,727 10,861
(33% of $75,948, $68,871, $32,913 respectively) ------------- ------------ -------------
TOTAL FIXED CHARGES 9,389,931 9,459,360 1,544,579
============= ============ =============
RATIO OF EARNINGS TO FIXED CHARGES 3.0 x 2.0 x 4.0 x
============= ============ ==============
</TABLE>
<PAGE> 1
[PAGES 10 THROUGH 16 OF THE COMPANY'S 1996 ANNUAL REPORT TO SHAREHOLDERS]
EXHIBIT 13.1
MANAGEMENT'S DISCUSSION
OVERVIEW
The Company is an indefinite life REIT which was incorporated in Maryland
on March 31, 1994. The Company commenced operations on June 30, 1994, with the
receipt of proceeds from the sale of 5,980,000 shares of common stock. The
Company invests in a diversified portfolio of income-producing, healthcare-
related real estate, which it leases, and provides mortgage financing to
healthcare operators. The Company believes that it is an important source of
capital for the healthcare industry and intends to continue investing in a high
quality portfolio of properties managed by established operators of
rehabilitation, alternate-site care, long-term care, and acute-care facilities.
The Company diversifies its portfolio by operator, geography, facility type and
healthcare industry segment. The Company's primary objective is to provide
current income for distribution to stockholders.
The Company incurs operating and administrative expenses, principally
compensation expense for its officers and other employees, office rent and
occupancy costs, and various expenses incurred in connection with acquiring
additional facilities or providing additional mortgage financing. The Company is
self-administered and managed by its executives and staff, and does not engage a
separate advisor for administrative or investment services, although the Company
does engage legal, accounting, tax, and financial advisors from time to time.
All taxes, maintenance, and other operating costs associated with leased
properties are generally paid by the lessees. The Company intends to continue to
declare and pay quarterly dividends to its stockholders in amounts not less than
the amounts required to maintain REIT status under the Internal Revenue Code.
The Company's ability to pay dividends will depend upon its cash available for
distribution.
RESULTS OF OPERATIONS
Year Ended 1996 compared to the Year Ended 1995
In 1996, the Company reported net income of $18.9 million, or $1.71 primary
net income per common share, compared to $9.7 million, or $1.55 primary net
income per common share in 1995. The increase in net income is attributable to
increases in rental and mortgage income from property acquisitions and
additional mortgage fundings, while total interest expense experienced only a
minor increase due to conversions of the Company's Convertible Subordinated
Debentures (Debentures) to common stock and a decrease in the weighted average
interest rate of the unsecured line of credit (Bank Credit Facility) during
1996.
Total income increased $11.3 million, or 45.5%, to $36.0 million in 1996
over the previous year's total income of $24.7 million. The increase is due
primarily to rental income increasing $9.2 million in 1996 to $32.0 million from
1995's total of $22.8 million. The Company acquired eight additional properties
during the year and also recognized a full year's rental income on the twelve
properties acquired in 1995. Additionally, mortgage interest income increased
$1.4 million, or 73.6%, to $3.2 million in 1996 from $1.8 million in 1995, due
to additional mortgage fundings of $14.5 million during 1996.
Total expenses in 1996 were $17.0 million compared to $15.0 million in
1995, an increase of $2.0 million or 13.6%. This is primarily attributable to an
increase in depreciation expense of $1.8 million in 1996 resulting from the
Company's acquisition of eight properties during the year and the recognition of
a full year's depreciation expense on the twelve properties that were acquired
in 1995. Interest expense experienced only a slight increase for 1996 due to
$26.3 million in conversions of the Company's debentures to common stock and to
a decrease in the weighted average interest rate of the Bank Credit Facility.
Year ended December 31, 1995, compared to the period from June 30, 1994,
(inception) through December 31, 1994.
Revenues for the year ended December 31, 1995 totaled $24.7 million,
increasing $16.5 million, over 1994 revenues of $8.2 million. The increase in
revenues is primarily attributable to the recognition of a full year of revenues
from investments made during the partial year of 1994 and the revenues from
additional
<PAGE> 2
investments made during 1995. Specifically, a full year of revenues from 1994
investments added $11.1 million to revenues, and revenues from investments made
in 1995 added an additional $5.4 million.
Interest expense for the year ended December 31, 1995, totaled $8.8
million, increasing $7.4 million, over 1994 interest expense of $1.4 million.
The increase in interest expense is attributable to an increase of $3.5 million
in interest expense related to a full year of interest expense on amounts
borrowed under the Bank Credit Facility during 1994 and the interest expense on
amounts borrowed under the Bank Credit Facility during 1995. Additionally, $3.9
million of the increase in interest expense is due to interest expense related
to the issuance of $52 million of convertible debentures issued in March 1995.
Depreciation and amortization for the year ended December 31, 1995, totaled
$4.7 million, increasing $3.2 million over 1994 depreciation and amortization of
$1.5 million. $3.1 million of the increase in depreciation and amortization is
due primarily to a full year of depreciation on and amortization Remington Park
Assisted Living Center/rendering Medistar/Integrated Living Communities Baytown,
Texas of investments made in 1994 and the depreciation on and amortization of
additional investments made during 1995. Additionally, $0.2 million of the
increase is due to amortization of deferred financing costs related to the
issuance of $52 million of convertible debentures issued in March, 1995.
LIQUIDITY AND CAPITAL RESOURCES
The Company requires capital in order to fund investments in healthcare
properties through sale/leaseback transactions or mortgage financing. To fund
these investments, the Company utilizes its cash flow from operations and a
combination of long-term and short-term capital including both equity and debt.
The Company s long-term capital includes equity securities and convertible
debentures. The Company's short-term capital is obtained through the use of its
Bank Credit Facility. The Company initially funds investments and working
capital needs through borrowings under the Bank Credit Facility, existing cash
and cash equivalents, and cash flow from operations. Thereafter, the Company
raises capital through issuance of additional long-term and short-term
indebtedness or the issuance of its securities in private or public
transactions. There can be no assurance that acceptable financing for future
investments can be obtained.
During the year ended December 31, 1996, the Company invested approximately
$102.4 million to acquire or construct real estate assets and invested
approximately $14.3 million in mortgage loans to healthcare providers. As of
December 31, 1996, the Company s investments totaled $354.6 million, consisting
of real estate properties of $302.6 million, real estate development projects of
$12.7 million, and mortgage notes receivable of $39.3 million. The 57 real
estate properties consist of sixteen ancillary hospital facilities, ten
physician clinics, nine skilled nursing facilities, six ambulatory surgery
facilities, four inpatient rehabilitation facilities, three outpatient
rehabilitation facilities, two comprehensive mental health hospitals, two sub-
acute care facilities, two assisted living facilities, two acute care hospitals,
and one integrated delivery facility. The real estate properties are located in
thirteen states and are leased or financed with seventeen healthcare-related
entities or their subsidiaries pursuant to long-term leases. There are eleven
real estate development projects with six healthcare operators consisting of
seven assisted living facilities, three integrated delivery facilities, and one
physician clinic. The mortgage notes receivable consist of thirteen mortgages
made to eight healthcare operators and secured by the real estate of five
long-term care facilities, three skilled nursing facilities, two acute-care
hospital facilities, two assisted living facilities, and one integrated delivery
facility.
During March 1995, the Company sold $52 million aggregate principal amount
of 10.50% Debentures due 2002. The net offering proceeds were used to reduce the
outstanding balance of the Company's Bank Credit Facility. As of December 31,
1996, a total of $34.3 million in the principal amount of the debentures had
been converted into 2.1 million common shares resulting in a decrease of $34.3
million in the debentures and an increase of $34.3 million in stockholders
equity.
During October 1995, the Company filed a registration statement
("Shelf-Registration") with the Securities and Exchange commission to enable the
Company to offer up to an aggregate of $250,000,000 in debt securities,
preferred stock, and common stock at prices and terms to be determined at the
time of sale. In December 1995, the Company sold 3.45 million shares of common
stock at a per share price of $18.125. The net offering proceeds of $58.6
million were used to reduce the outstanding balance of the Company's Bank
<PAGE> 3
Credit Facility. Additionally, in November 1996, the Company sold 2.68 million
shares of common stock at a per share price of $20.875. The net offering
proceeds of $52.8 million were also used to reduce the outstanding balance of
the Company's Bank Credit Facility.
In June 1996, the Company completed an amendment and restatement of its
Bank Credit Facility, increasing the principal amount to $150 million from its
previous principal amount of $100 million, extending the term to June 24, 1999,
from its previous term of June 22, 1997, and adjusting the determination of the
interest rate. At December 31, 1996, the outstanding balance of the Bank Credit
Facility was $68.5 million with a weighted average interest rate of 6.82%. The
maximum availability at year end was $81.5 million.
The Bank Credit Facility bears interest at a rate chosen by the Company
from either the Bank s base rate or the Euro-dollar rate plus a percentage rate
ranging from 1.00 percent to 1.625 percent depending upon the Company s senior
debt to consolidated total capital ratio for the preceding fiscal quarter. In
addition, the Company pays from 0.20 percent to 0.25 percent per annum on the
unused portion of funds available for borrowing under the Bank Credit Facility.
The commitment fee percentage is based on the Company s senior debt to total
capital ratio.
The Bank Credit Facility contains certain representations, warranties and
financial, and other covenants customary in such loan agreements.
The Bank Credit Facility is unsecured; however, upon the occurrence of an
event of default under the Bank Credit Facility, at the option of the lenders,
the Bank Credit Facility may become secured by a significant portion of the
assets of the Company, including certain of the leased properties and mortgage
notes receivable.
The Bank Credit Facility, which is participated in by a consortium of eight
banks, will be available until June 24, 1999, and the principal balance
outstanding thereunder will mature on that date. The Company intends to renew
the Bank Credit Facility or to repay the outstanding balance thereunder at
maturity from the proceeds of a refinancing or from the sale of debt or equity
securities. There can be no assurances that the lenders will renew the Bank
Credit Facility on terms favorable to the Company or that the Company will be
able to refinance at that time.
COMMITMENTS
The Company has committed a total of $102.8 million towards the acquisition
and construction of real estate properties and providing mortgage financing. As
of December 31, 1996, the Company had funded approximately $21.2 million towards
these commitments, with the balance of $81.6 million expected to be funded
throughout 1997. Financing for these commitments may be provided by funds from
operations, borrowings under the Bank Credit Facility, which the Company expects
to increase in 1997, or private placements or public offerings of debt or
equity.
Special Note Regarding Forward-Looking Statements
Any statement contained in this report which is not a historical fact, or
which might otherwise be considered an opinion or projection concerning the
Company or its business, whether expressed or implied, is meant as, and should
be considered, a forward-looking statement as that term is defined in the
Private Securities Litigation Reform Act of 1996. Forward-looking statements are
based on assumptions and opinions concerning a variety of known and unknown
risks, including but not necessarily limited to changes in market conditions,
natural disasters, and other catastrophic events, increased competition, changes
in availability and cost of reinsurance, changes in governmental regulations,
and general economic conditions, as well as other risks more completely
described in the Company's filings with the Securities and Exchange Commission.
If any of these assumptions or opinions may also prove materially incorrect, any
forward-looking statements made on the basis of such assumptions or opinions may
also prove materially incorrect in one or more respects.
<PAGE> 1
[PAGE 5 OF THE COMPANY'S ANNUAL REPORT TO STOCKHOLDERS]
EXHIBIT 13.2
SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
FOR PERIOD FROM
YEAR ENDED YEAR ENDED INCEPTION TO
DECEMBER 31, 1996 DECEMBER 31, 1995 DECEMBER 31, 1994
----------------- ----------------- -----------------
<S> <C> <C> <C>
STATEMENT OF INCOME DATA
Revenues...................................... $ 35,952,336 $ 24,707,272 $ 8,240,162
Net income.................................... 18,913,689 9,708,391 4,762,734
Net income per share.......................... 1.71 1.55 0.80
Weighted average shares outstanding-
Primary..................................... 11,086,086 6,271,242 5,980,000
Fully Diluted............................... 13,159,213 8,596,663 --
OTHER DATA
Funds from operations (I)-
Primary..................................... 22,632,815 12,523,303 5,628,243
Fully diluted............................... 25,852,242 16,390,667 --
Funds from operations per share-
Primary..................................... 2.04 2.00 0.94
Fully Diluted............................... 1.97 1.91 --
Dividends distributed......................... 19,206,375 10,641,666 2,541,500
Dividends distributed per share............... 1.81 1.74 0.425
BALANCE SHEET DATA
Real estate properties, net................... 303,997,418 207,257,168 151,328,041
Mortgage notes receivable..................... 39,325,621 24,988,753 13,224,230
Total assets.................................. 356,695,116 240,624,883 166,363,670
Convertible subordinated debentures........... 17,657,000 43,947,000 --
Bank credit facility.......................... 68,500,000 30,225,000 67,500,000
Mortgage Note Payable......................... 23,228,417 -- --
------------ ------------ ------------
Total stockholders' equity.......... $241,555,519 $163,746,655 $ 98,388,985
============ ============ ============
</TABLE>
(1) Funds from operations is computed as net income (computed in accordance with
generally accepted accounting principles), excluding rental income
recognized on a straight-line basis on those leases with scheduled rent
increases, and less book gains on the sale of assets, plus depreciation and
amortization. Management considers funds from operations to be an
informative measure of the performance of an equity REIT and consistent with
measures used by analysts to evaluate equity REITs. Funds from operations
does not represent cash generated from operating activities in accordance
with generally accepted accounting principles, is not necessarily indicative
of cash available to fund cash needs and should not be considered as an
alternative to net income as an indicator of the company's operating
performance or as an alternative to cash flow as a measure of liquidity.
<PAGE> 1
[PAGES 17 TO 27 OF THE COMPANY'S 1996 ANNUAL REPORT TO SHAREHOLDERS]
EXHIBIT 13.3
INDEPENDENT AUDITORS' REPORT
The Stockholders and Board of Directors
Capstone Capital Corporation:
We have audited the accompanying consolidated balance sheets of Capstone
Capital Corporation as of December 31, 1996 and 1995, and the related
consolidated statements of income, stockholders equity, and cash flows for the
years ended December 31, 1996 and 1995 and for the period from June 30, 1994
(inception) to December 31, 1994. These financial statements are the
responsibility of the Company s management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above, present fairly,
in all material respects, the financial position of Capstone Capital Corporation
as of December 31, 1996 and 1995, and the results of its operations and its cash
flows for the year ended December 31, 1996 and 1995 and for the period from June
30, 1994 (inception) to December 31, 1994, in conformity with generally accepted
accounting principles.
KPMG PEAT MARWICK LLP
Birmingham, Alabama
January 20, 1997
<PAGE> 2
CAPSTONE CAPITAL CORPORATION
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1996 1995
------------ ------------
<S> <C> <C>
ASSETS
Real estate properties
Land...................................................... $ 30,952,673 $ 24,669,023
Land improvements......................................... 2,350,309 2,350,309
Buildings and improvements................................ 269,261,047 185,771,380
Construction in progress.................................. 12,650,780 37,409
------------ ------------
315,214,809 212,828,121
Less accumulated depreciation............................. (11,217,391) (5,570,953)
------------ ------------
Real estate properties, net............................ 303,997,418 207,257,168
Mortgage notes receivable................................... 39,325,621 24,988,753
Cash........................................................ 1,122,241 675,568
Accrued rental income....................................... 4,689,976 2,518,323
Other assets................................................ 7,559,860 5,185,071
------------ ------------
Total assets...................................... $356,695,116 $240,624,883
============ ============
LIABILITIES AND STOCKHOLDERS EQUITY
Liabilities
Convertible subordinated debentures....................... $ 17,657,000 $ 43,947,000
Bank credit facility...................................... 68,500,000 30,225,000
Mortgage note payable..................................... 23,228,417 --
Accrued expenses and other liabilities.................... 5,754,180 2,706,228
------------ ------------
Total liabilities................................. 115,139,597 76,878,228
============ ============
Stockholders' equity
Preferred stock, $.001 par value, 10,000,000 shares
authorized; none issued................................ -- --
Common stock, $.001 par value, 50,000,000 shares
authorized; 14,247,947 shares and 9,929,732 shares
issued and outstanding, respectively................... 14,247 9,929
Additional paid-in-capital................................ 240,832,943 162,735,711
Loans to officers to finance stock purchases.............. (286,944) (286,944)
Retained Earnings......................................... 995,273 1,287,959
------------ ------------
Total stockholders' equity........................ 241,555,519 163,746,655
------------ ------------
Total liabilities and stockholders' equity........ $356,695,116 $240,624,883
============ ============
</TABLE>
The accompanying notes are an integral part of this financial statement
<PAGE> 3
CAPSTONE CAPITAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
FOR THE
PERIOD FROM
YEAR ENDED YEAR ENDED INCEPTION TO
DECEMBER 31, 1996 DECEMBER 31, 1995 DECEMBER 31, 1994
----------------- ----------------- -----------------
<S> <C> <C> <C>
Revenues
Rental income............................... $31,959,674 $22,774,371 $7,674,494
Mortgage interest income.................... 3,159,228 1,819,725 455,844
Gain from sale of property.................. 197,191 -- --
Other income................................ 636,243 113,176 109,824
----------- ----------- ----------
Total income........................ 35,952,336 24,707,272 8,240,162
----------- ----------- ----------
Expenses
General and administrative.................. 1,669,678 1,515,130 536,662
Depreciation................................ 6,021,811 4,180,868 1,416,574
Amortization................................ 293,267 515,970 85,332
Interest (net of $552,686 capitalized in
1996, $466,668 in 1995, and $94,858 in
1994).................................... 8,812,170 8,786,913 1,438,860
Property operations......................... 241,721 -- --
----------- ----------- ----------
Total expenses...................... 17,038,647 14,998,881 3,477,428
----------- ----------- ----------
Net income.................................... $18,913,689 $ 9,708,391 $4,762,734
=========== =========== ==========
Net Income Per Common Share................... $ 1.71 $ 1.55 $ 0.80
=========== =========== ==========
Weighted Averages Shares Outstanding.......... 11,086,086 6,271,242 5,980,000
=========== =========== ==========
</TABLE>
The accompanying notes are an integral part of this financial statement
<PAGE> 4
CAPSTONE CAPITAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOW
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, 1996 DECEMBER 31, 1995 DECEMBER 31, 1996
----------------- ----------------- -----------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income.................................. $ 18,913,689 $ 9,708,391 $ 4,762,734
Gain from sale of property.................. (197,191) -- --
Depreciation................................ 6,021,811 4,180,868 1,416,574
Amortization................................ 293,267 515,970 85,332
Increase in accrued rental income........... (2,398,760) (1,881,926) (636,397)
Construction funding deposit................ (768,423) -- --
Increase in receivables and other assets.... (1,568,075) (282,847) (934,482)
Increase in accrued expenses and other
liabilities.............................. 2,129,026 1,800,831 474,685
------------ ------------ ------------
Net cash provided by operating
activities........................ 22,425,344 14,041,287 5,168,446
------------ ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of real estate properties......... (102,025,229) (60,088,309) (152,739,813)
Proceeds from sale of properties.............. 8,206,289 -- --
Investment in mortgage notes receivable....... (22,769,689) (11,764,523) (13,224,230)
Collections on mortgage notes receivable...... 2,189,430 -- --
Payment of earnest money deposit.............. -- (2,900,000) --
------------ ------------ ------------
Net cash used in investing
activities........................ (114,399,199) (74,752,832) (165,964,043)
------------ ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Increase (decrease) in bank credit facility... 38,275,000 (37,275,000) 67,500,000
Proceeds from mortgage note payable........... 19,907,321 -- --
Principal payments on mortgage note payable... (71,583) -- --
Proceeds from issuance of common stock, net... 52,764,529 58,648,707 96,360,228
Proceeds from issuance of convertible
subordinated debentures..................... -- 52,000,000 --
Financing costs related to issuance of
convertible subordinated debentures......... -- (2,017,934) --
Capital contributions from minority
interests................................... 687,611 430,711 --
Payment of dividends.......................... (19,206,375) (10,641,666) (2,541,500)
Proceeds from dividend reinvestment plan...... 64,025 6,108 --
Increase in loans to finance stock
purchases................................... -- (94,467) (192,477)
------------ ------------ ------------
Net cash provided by financing
activities........................ 92,420,528 61,056,459 161,126,251
------------ ------------ ------------
Increase in cash.............................. 446,673 344,914 330,654
Cash, beginning of period..................... 675,568 330,654 --
------------ ------------ ------------
Cash, end of period $ 1,122,241 $ 675,568 $ 330,654
============ ============ ============
</TABLE>
The accompanying notes are an integral part of this financial statement
<PAGE> 5
CAPSTONE CAPITAL CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
<TABLE>
<CAPTION>
LOANS TO
COMMON STOCK ADDITIONAL OFFICERS TO TOTAL
-------------------- PAID-IN FINANCE STOCK RETAINED STOCKHOLDERS'
SHARES AMOUNT CAPITAL PURCHASES EARNINGS EQUITY
---------- ------- ------------ ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Proceeds from initial public
offering 5,980,000 $ 5,980 $ 96,354,248 -- -- $ 96,360,228
Loans to finance stock
purchases.................... -- -- -- (192,477) -- (192,477)
Net Income..................... 4,762,734 4,762,734
Dividends paid during 1994
($0.425 per share)........... -- -- -- -- (2,541,500) (2,541,500)
---------- ------- ------------ --------- ----------- ------------
BALANCE DECEMBER 31, 1994...... 5,980,000 5,980 96,354,248 $(192,477) 2,221,234 98,388,985
Shares issued in conversion of
convertible debentures to
common stock................. 499,404 499 8,052,384 -- -- 8,052,883
Convertible debenture issuance
costs related to conversion
of debentures to common
stock........................ -- -- (322,296) -- -- (322,296)
Proceeds from sale of 3,450,000
shares less related expenses
of $3,882,543................ 3,450,000 3,450 58,645,267 -- -- 58,648,717
Proceeds from issuance of
shares under the dividend
reinvestment plan............ 328 -- 6,108 -- -- 6,108
Loans to finance stock
purchases.................... -- -- -- (94,467) -- (94,467)
Net income..................... -- -- -- -- 9,708,391 9,708,391
Dividends paid during 1995
($1.74 per share)............ -- -- -- -- (10,641,666) (10,641,666)
---------- ------- ------------ --------- ----------- ------------
BALANCE DECEMBER 31, 1995...... 9,929,732 9,929 162,735,711 (286,944) 1,287,959 163,746,655
Shares issued in conversion of
convertible debentures to
common stock................. 1,630,310 1,630 26,288,370 -- -- 26,290,000
Convertible debenture issuance
costs related to conversion
of debentures to common
stock........................ (1,017,004) -- -- (1,017,004)
Proceeds from sale of 2,684,700
shares less related expenses
of $338,827.................. 2,684,700 2,685 52,761,844 -- -- 52,764,529
Proceeds from issuance of
shares under the dividend
reinvestment plan............ 3,205 3 64,022 -- -- 64,025
Net income..................... -- -- -- -- 18,913,689 18,913,689
Dividends paid during 1996
($1.81 per share)............ -- -- -- -- (19,206,375) (19,206,375)
---------- ------- ------------ --------- ----------- ------------
BALANCE DECEMBER 31, 1996...... 14,247,947 $14,247 $240,832,943 $(286,944) $ 995,273 $241,555,519
========== ======= ============ ========= =========== ============
</TABLE>
The accompanying notes are an integral part of this financial statement
<PAGE> 6
CAPSTONE CAPITAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. ORGANIZATION
Capstone Capital Corporation (the "Company") is an indefinite life real
estate investment trust ("REIT") which was incorporated in Maryland on March 31,
1994. The Company commenced operations on June 30, 1994, with the receipt of
proceeds from its initial public offering of 5,980,000 shares of common stock.
The Company owns healthcare related properties which it leases, and it also
provides mortgage financing to healthcare operators.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation -- The consolidated financial statements include the
accounts of the Company and its wholly-owned subsidiaries and its majority-owned
partnerships. Inter-company accounts and transactions have been eliminated.
Use of Estimates in the Preparation of Financial Statements -- The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Real Estate Properties -- Real estate properties are recorded at cost.
Acquisition costs and transaction fees are added to the purchase price. No
allowance for investment losses is considered necessary. The cost of real estate
properties acquired is allocated between land, land improvements, and buildings
and improvements based upon estimated market values at the time of acquisition.
Depreciation is provided for on a straight-line basis over an estimated useful
life of 40 years for building and improvements and 20 years for land
improvements.
Federal Income Taxes -- No provision has been made for federal taxes. The
Company intends at all times to qualify as a REIT under sections 856 through 860
of the Internal Revenue Code of 1986, as amended. The Company must distribute at
least 95% of REIT taxable income to its stockholders and meet other requirements
to continue to qualify as a REIT.
Rental Income -- Rental income is recognized as earned over the life of the
lease agreements. Certain of the lease agreements provide for scheduled annual
rent increases. These rent increases are recognized on a straight-line basis
over the term of the lease.
Mortgage Interest Income -- Mortgage interest income is recognized based on
the interest rates and principal amounts outstanding of the mortgage notes
receivable. Certain of the mortgage notes receivable provide for scheduled
annual interest rate increases.
Net Income Per Share -- Net income per share is computed using the weighted
average number of shares outstanding during the period.
Prior Year Reclassifications -- Certain classifications have been made to
the 1995 and 1994 financial statements to conform to the current year
presentation.
NOTE 3. REAL ESTATE PROPERTIES
As of December 31, 1996, the Company had investments in 44 leased real
estate properties totaling $302.6 million. These real estate properties consist
of sixteen ancillary hospital facilities, ten physician clinics, six ambulatory
surgery facilities, four inpatient rehabilitation facilities, three outpatient
rehabilitation facilities, two comprehensive mental health hospitals, two
sub-acute care facilities, and one skilled nursing facility. The properties are
located in thirteen states and are leased to ten healthcare-related entities or
their subsidiaries pursuant to long-term leases. In addition, the Company has
invested approximately $12.7 million
<PAGE> 7
CAPSTONE CAPITAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
in eleven development projects at various stages of completion. The Company has
remaining commitments of approximately $67.2 million for development projects
completion and expects all projects to be completed by the end of 1997.
The Company's properties are generally leased pursuant to fixed term
operating leases expiring from 2001 to 2012 and provide for options to extend
the lease terms for at least ten years. The leases generally provide the
lessees, during the terms of the leases and for a short period of time following
expiration, with the right of first refusal to purchase the leased property on
the same terms and conditions as the Company may propose to a third party.
Each lease generally requires the lessee to pay base rent, additional rent
commencing after the first year based on a set percentage increase or an
increase in the consumer price index, and all taxes (including property taxes),
maintenance, and other operating costs associated with the leased property.
Lessees that accounted for more than 10 percent of the Company's rental
income for the year ended December 31, 1996, were: HEALTHSOUTH Corporation,
$11.6 million and Columbia/HCA, $6.8 million.
Future minimum lease payments for the next five years under the
non-cancelable operating leases as of December 31, 1996 are as follows:
1997 -- $32,879,486; 1998 -- $33,295,707; 1999 -- $33,773,104;
2000 -- $34,370,668; 2001 -- $34,022,518. These amounts include only those
increases in lease payments related to leases that provide for set
percentage increases or set minimum increases in the consumer price index.
They do not include those increases in lease payments which may occur based
on the increase in the consumer price index but without set minimums.
NOTE 4. MORTGAGE NOTES RECEIVABLE
As of December 31, 1996, the Company had provided $39.3 million in mortgage
financing for thirteen properties located in six states. The mortgage notes
receivable are secured by the real estate of eight skilled nursing facilities,
two assisted living facilities, two acute-care hospitals, and one integrated
delivery facility, which are operated by eight healthcare operators.
Two of the facilities (one acute care hospital and one assisted living
facility) are under construction, and the Company has committed a total of $18.9
million in construction and term loans for these projects. As of December 31,
1996, the Company had advanced a total of $4.5 million toward these financing
commitments. The Company expects to disburse the remainder of the committed
funds in 1997.
The Company's mortgage notes receivable require monthly installments of
principal and interest, with final payment dates ranging from 2001 to 2012, and
bear rates ranging from 9.25 percent to 11.75 percent at December 31, 1996. Each
mortgage note receivable provides for the initial interest rates to be increased
annually by either a set rate or upon an increase in the consumer price index.
NOTE 5. MORTGAGE NOTE PAYABLE
On June 26, 1996, the Company entered into a mortgage note with a life
insurance company for a principal amount of $23.3 million ("Mortgage Note"). The
Mortgage Note bears interest at 8.5% and is payable in 360 monthly payments of
principal and interest. The Mortgage Note is collateralized by an ancillary
hospital facility purchased in January 1996 for $30 million.
NOTE 6. BANK CREDIT FACILITY
On June 24, 1996, the Company completed an amendment and restatement of its
unsecured line of credit ("Bank Credit Facility") which provides for an increase
to $150 million from its previous principal amount of
<PAGE> 8
CAPSTONE CAPITAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
$100 million, an extension of the term to June 24, 1999 from June 22, 1997, and
an adjustment in the determination of the interest rate. The Bank Credit
Facility is participated in by a consortium of eight banks. At December 31,
1996, the Company had drawn $68,500,000 against the Bank Credit Facility for the
purchase of real estate properties and the funding of mortgage loans.
Borrowings under the amended and restated Bank Credit Facility bear an
interest rate chosen by the Company from either the Bank's base rate or the
Eurodollar rate plus a percentage rate ranging from 1.00 percent to 1.625
percent, depending upon the Company's senior debt to consolidated total capital
ratio for the preceding fiscal quarter. In addition, the Company pays a
commitment fee of 0.20 percent to 0.25 percent per annum on the unused portion
of funds available for borrowing under the Bank Credit Facility. The commitment
fee percentage is based on the Company's senior debt to total capital ratio.
The Bank Credit Facility contains certain representations, warranties and
financial and other covenants customary in such loan agreements.
NOTE 7. CONVERTIBLE SUBORDINATED DEBENTURES
As of December 31, 1996, the Company had $17,657,000 aggregate principal
amount of 10.50% Convertible Subordinated Debentures ( Debentures ) outstanding.
The Debentures mature on April 1, 2002, unless redeemed earlier by the
Company or converted by the holders. Payments of interest to the holders of the
Debentures are required each April 1 and October 1, commencing October 1, 1995.
The Debentures are convertible into shares of common stock of the Company at the
option of the holder at any time prior to redemption or stated maturity, at a
conversion price of $16.125 per share. The Debentures are subordinated to all
existing and future senior indebtedness of the Company and subordinated to all
existing and future liabilities and obligations of subsidiaries and partnerships
of the Company. The Debentures are redeemable, at the Company's option, in
whole, or from time to time, in part, at any time from April 5, 2000, through
March 31, 2002, at redemption prices ranging from 101.5% to 103.0%, plus accrued
and unpaid interest to and including the redemption date.
NOTE 8. STOCK OPTIONS
During 1995, the Financial Accounting Standards Board issued Financial
Accounting Statement No. 123, "Accounting for Stock-Based Compensation", ("FAS
123"). The Statement defines a fair value based method of accounting for an
employee stock option. It also allows an entity to continue using the intrinsic
value based accounting method prescribed by APB Opinion No. 25, "Accounting for
Stock Issued to Employees". The Company has continued to use this method to
account for its stock options. However, FAS 123 requires entities electing to
remain with the intrinsic method of accounting to provide pro forma disclosures
of net income and earnings per share as if the fair value based method of
accounting had been applied. Information about the Company's stock option plan
and the related required disclosures follow.
Pursuant to the Company's 1994 stock incentive plan, 1,063,600 shares of
common stock have been reserved for issuance. Options to acquire 602,500 and
413,000 shares at an exercise price of $18.375 and $16.50, respectively, were
granted in 1995 and 1994, respectively. There is no vesting period for these
options and they may be exercised within 10 years from the grant dates. No
options had been exercised as of December 31, 1996.
<PAGE> 9
CAPSTONE CAPITAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The pro forma information regarding net income and net income per common
share as required by FAS 123 is provided below. The fair value for these options
was estimated at the date of grant using the Roll-Geske option pricing model
with the following assumptions:
Risk free interest rate -- 6.33%, Volatility factor -- 16.96% and
Weighted average expected life of the options -- 8 years.
<TABLE>
<CAPTION>
1995
----------
<S> <C>
Net Income:
As reported............................................... $9,709,391
Pro forma................................................. $6,432,598
Net Income per common share:
As reported............................................... $ 1.55
Pro forma................................................. $ 1.03
</TABLE>
NOTE 9. RELATED PARTY TRANSACTIONS
During 1994 and 1995, the Company funded loans to certain officers for the
purpose of acquiring the Company's common stock. The loans, which are due on
demand and collateralized by the stock, totaled $286,944 at December 31, 1996,
and bear interest at the prime rate, which was 8.25% at December 31, 1996. In
addition, the Company has other loans to employees totaling $273,000 which bear
interest at the prime rate.
Certain of the Company's directors are directors and/or executive officers
of HEALTHSOUTH Corporation, MedPartners Inc., and Integrated Health Services,
Inc. During 1996, the Company received rental income of $11.6 million, $6.8
million and $3.2 million from HEALTHSOUTH Corporation, MedPartners Inc. and
Integrated Health Services, Inc., respectively.
NOTE 10. DIVIDENDS
In order to qualify as a REIT, the Company must, among other requirements,
distribute at least 95% of its REIT taxable income to its stockholders. Per
share dividend payments by the Company were characterized in the following
manner for income tax purposes:
<TABLE>
<CAPTION>
1996 1995 1994
----- ----- ------
<S> <C> <C> <C>
Ordinary Income.................................... $1.56 $1.54 $0.425
Return of Capital.................................. 0.25 0.20 --
----- ----- ------
Total dividends paid..................... $1.81 $1.74 $0.425
</TABLE>
In 1995, the Company adopted a dividend reinvestment and stock purchase
plan ("Plan") and reserved 1,000,000 shares of common stock for issuance under
the Plan. Participants can automatically reinvest all or a portion of cash
dividends in shares of the Company's common stock and can make voluntary cash
payments for additional shares. The price of the shares purchased with
reinvested dividends will be at 95% of the shares market value on the dividend
payment date. Under the Plan, the Company received $64,025 during 1996 in
exchange for 3,205 shares of stock and $6,108 in exchange for 328 shares of
stock during 1995.
<PAGE> 10
CAPSTONE CAPITAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 11. SUPPLEMENTAL CASH FLOW INFORMATION
Supplemental disclosure of cash flow information is as follows:
<TABLE>
<CAPTION>
FOR PERIOD
FOR THE YEAR FOR THE YEAR FROM
ENDED ENDED INCEPTION TO
DEC. 31, 1996 DEC. 31, 1995 DEC. 31, 1994
------------- ------------- -------------
<S> <C> <C> <C>
Cash payments for bank credit facility
interest expense........................... $ 4,472,210 $ 5,337,009 $1,359,092
Cash payments for convertible subordinated
debenture interest expense................. 3,496,540 2,713,755 --
Convertible subordinated debentures converted
into shares of common stock:
Convertible subordinated debentures.......... (26,290,000) (8,053,000) --
Financing costs.............................. (1,017,006) (322,296) --
Shares of common stock....................... 1,630,310 499,404 --
Additional paid in capital................... 25,271,364 7,730,088 --
</TABLE>
NOTE 12. DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair values of the Company's financial instruments approximate their
carrying values due to the pricing and terms of these instruments and/or their
short term nature, except for the convertible subordinated debentures for which
fair value at December 31, 1996, is $25,867,505, based on the quoted market
price.
NOTE 13. COMMITMENTS AND CONTINGENCIES
The Company has committed a total of $102.8 million towards the acquisition
and construction of real estate properties and providing mortgage financing. As
of December 31, 1996, the Company had funded approximately $21.2 million towards
these commitments, with the balance of $81.6 million expected to be funded
throughout 1997.
NOTE 14. SUBSEQUENT EVENTS
On January 20, 1997, the Company declared a dividend of $0.465 per share to
the holders of common stock on February 3, 1997. The dividend was paid in cash
on February 18, 1997. The dividend related to the quarter ended December 31,
1996.
<PAGE> 1
EXHIBIT 18
The financial statements in the report do not reflect
a change from last year in any accounting principles or
practices or in the method of applying any such principles or
practices.
<PAGE> 1
EXHIBIT 21
SUBSIDIARIES OF
CAPSTONE CAPITAL CORPORATION
Name of Subsidiary State of Organization
------------------ ---------------------
Capstone Capital of Alabama, Inc. Alabama
Capstone Capital of Baytown, Inc. Alabama
Capstone Capital of Bonita Bay, Inc. Alabama
Capstone Capital of California, Inc. Alabama
Capstone Capital of Cape Coral, Inc. Alabama
Capstone Capital of Las Vegas, Inc. Alabama
Capstone Capital of Pennsylvania, Inc. Pennsylvania
Capstone Capital of Sarasota, Inc. Alabama
Capstone Capital of Texas, Inc. Alabama
<PAGE> 1
CONSENT OF KPMG PEAT MARWICK LLP
The Board of Directors
Capstone Capital Corporation:
We consent to incorporation by reference in registration statements No.
33-77788 and No. 33-97926 on Form S-3 and No. 333-21581 on Form S-8 of our
reports dated January 20, 1997, relating to the consolidated balance sheets of
Capstone Capital Corporation as of December 31, 1996 and 1995, and the related
consolidated statements of income, stockholders' equity, and cash flows for the
years ended December 31, 1996 and 1995, and for the period from June 30, 1994
(inception) to December 31, 1994, and all related schedules, which reports
appear in or incorporated by reference in the December 31, 1996 annual report
on Form 10-K of Capstone Capital Corporation.
Birmingham, Alabama
March 26, 1997
KPMG Peat Marwick LLP
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM THE FINANCIAL
STATEMENTS OF CAPSTONE CAPITAL CORPORATION FOR THE YEAR ENDED DECEMBER 31, 1996,
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 1,122,241
<SECURITIES> 0
<RECEIVABLES> 335,304
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 10,757,880
<PP&E> 302,874,866
<DEPRECIATION> 11,275,768
<TOTAL-ASSETS> 356,695,116
<CURRENT-LIABILITIES> 3,899,467
<BONDS> 17,657,000
0
0
<COMMON> 14,247
<OTHER-SE> 240,832,943
<TOTAL-LIABILITY-AND-EQUITY> 356,695,116
<SALES> 0
<TOTAL-REVENUES> 35,952,336
<CGS> 0
<TOTAL-COSTS> 17,038,647
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,812,170
<INCOME-PRETAX> 18,913,689
<INCOME-TAX> 0
<INCOME-CONTINUING> 18,913,689
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 18,913,689
<EPS-PRIMARY> 1.71
<EPS-DILUTED> 1.68
</TABLE>
