AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 5, 1996
REGISTRATION NO. 333-2674
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
HOME PROPERTIES OF NEW YORK, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
---------------
MARYLAND 16-1455126
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
850 CLINTON SQUARE
ROCHESTER, NEW YORK 14604
(716) 546-4900
(ADDRESS, INCLUDING ZIP CODE, AND
TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
---------------
ANN M. MCCORMICK, ESQ.
VICE PRESIDENT, SECRETARY AND GENERAL COUNSEL
HOME PROPERTIES OF NEW YORK, INC.
850 CLINTON SQUARE
ROCHESTER, NEW YORK 14604
(716) 246-4105
(NAME, ADDRESS, INCLUDING ZIP CODE,
AND TELEPHONE NUMBER, INCLUDING AREA
CODE, OF AGENT FOR SERVICE)
---------------
COPIES TO:
DEBORAH MCLEAN QUINN, ESQ.
NIXON, HARGRAVE, DEVANS & DOYLE
ONE CLINTON SQUARE
ROCHESTER, NEW YORK 14604
(716) 263-1307
---------------
<PAGE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: As soon
as practicable after this Registration Statement becomes effective.
If only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. / /
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection
with dividend or interest reinvestment plans, check the following box.
/X/
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the
Registrant shall file a further amendment which specifically states that
this Registration Statement shall thereafter become effective in accordance
with Section 8(a) of the Securities Act of 1933 or until this Registration
Statement shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
<PAGE>
HOME PROPERTIES OF NEW YORK , INC.
______________________
CROSS-REFERENCE SHEET
PURSUANT TO ITEM 501(B) OF REGULATION S-K
SHOWING LOCATION IN PROSPECTUS OF INFORMATION
REQUIRED BY ITEMS OF FORM S-3
FORM S-3 ITEM NUMBER AND CAPTION PROSPECTUS CAPTION OR LOCATION
1. Forepart of the Registration
Statement and Outside Front Cover
Page of Prospectus. . . . . . . . . Outside Front Cover Page
2. Inside Front and Outside Back
Cover Pages of Prospectus . . . . . Inside Front and Outside Back
Cover Pages, Documents
Incorporated by Reference,
Additional Information
3. Summary Information, Risk Factors
and Ratio of Earnings to Fixed
Charges . . . . . . . . . . . . . . The Company; Risk Factors
4. Use of Proceeds . . . . . . . . . . Use of Proceeds
5. Determination of Offering Price . . Description of Capital Stock; Plan
of Distribution
6. Dilution. . . . . . . . . . . . . . Inapplicable
7. Selling Security Holders. . . . . . Inapplicable
8. Plan of Distribution. . . . . . . . Outside Front Cover Pages; Plan of
Distribution
9. Description of Securities to be
Registered. . . . . . . . . . . . . Outside Front Cover Page;
Description of Capital Stock;
Description of Debt Securities
10. Interests of Named Experts and
Counsel . . . . . . . . . . . . . . Legal Matters
11. Material Changes . . . . . . . . . Inapplicable
12. Incorporation of Certain
Information by Reference. . . . . . Documents Incorporated by
Reference
13. Disclosure of Commission Position
on Indemnification for Securities
Act Liabilities . . . . . . . . . . Inapplicable
<PAGE>
PROSPECTUS
HOME PROPERTIES OF NEW YORK, INC.
COMMON STOCK
PREFERRED STOCK
COMMON STOCK PURCHASE
RIGHTS OR WARRANTS AND
DEBT SECURITIES
---------------
Home Properties of New York, Inc. (the "Company") may from time
to time offer in one or more series (i) shares of its common stock,
par value $.01 per share (the "Common Stock"); (ii) shares of its
preferred stock, par value $.01 per share (the "Preferred Stock);
(iii) rights or warrants to purchase shares of its Common Stock
(the "Common Stock Purchase Rights") and (iv) one or more series of
debt securities ("Debt Securities") which may be either senior debt
securities or subordinated debt securities, with an aggregate
public offering price of up to $100,000,000.00 on terms to be
determined at the time or times of offering. The Common Stock,
Preferred Stock, and Common Stock Purchase Rights and Debt
Securities (collectively, the "Offered Securities") may be offered,
separately or together, in separate classes or series, in amounts,
at prices and on terms to be set forth in a supplement to this
Prospectus (a "Prospectus Supplement").
The specific terms of the Offered Securities in respect of which
this Prospectus is being delivered will be set forth in the
applicable Prospectus Supplement and will include, where
applicable, (i) in the case of Common Stock, any initial public
offering price; (ii) in the case of Preferred Stock, the specific
title and stated value, any dividend, liquidation, redemption,
conversion, voting and other rights, and any initial public
offering price; (iii) in the case of Common Stock Purchase Rights,
the duration, offering price, exercise price and any reallocation
of Purchase Rights not initially subscribed, and (iv) in the case
of Debt Securities, the title, aggregate principal amount,
denominations, maturity, rate (which may be fixed or variable) or
method of calculation thereof, time of payment of any interest, any
terms for redemption at the option of the holder or the Company,
any terms for sinking fund payments, rank, any conversion or
exchange rights, any listing on a securities exchange, and the
initial public offering price and any other terms in connection
with the offering and sale of any Debt Securities. In addition,
such specific terms may include limitations on direct or beneficial
ownership and restrictions on transfer of the Offered Securities,
in each case as may be appropriate to preserve the status of the
Company as a real estate investment trust ("REIT") for federal
income tax purposes.
The applicable Prospectus Supplement will also contain
information, where applicable, about certain United States federal
income tax considerations relating to, and any listing on a
securities exchange of, the Offered Securities covered by such
Prospectus Supplement. The Common Stock is listed on the New York
Stock Exchange under the symbol "HME." Any Common Stock offered
pursuant to a Prospectus Supplement will be listed on such
exchange, subject to official notice of issuance.
The Offered Securities may be offered directly, through agents
designated from time to time by the Company, or to or through
underwriters or dealers. If any agents or underwriters are
involved in the sale of any of the Offered Securities, their names,
and any applicable purchase price, fee, commission or discount
arrangement between or among them will be set forth, or will be
calculable from the information set forth, in the applicable Prospectus
Supplement. See "Plan of Distribution."
No Offered Securities may be sold without delivery of the applicable
Prospectus Supplement describing the method and terms of the offering of
such class or series of the Offered Securities.
---------------
SEE "RISK FACTORS" (beginning on page 4) FOR INFORMATION THAT SHOULD BE
CONSIDERED BY PROSPECTIVE INVESTORS.
---------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
---------------
THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED
ON OR ENDORSED THE MERITS OF THIS OFFERING. ANY
REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
The date of this Prospectus is September 5, 1996
<PAGE>
NO PERSON IS AUTHORIZED IN CONNECTION WITH ANY OFFERING MADE HEREBY TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS, AND ANY INFORMATION OR
REPRESENTATION NOT CONTAINED OR INCORPORATED HEREIN MUST NOT BE RELIED UPON
AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY,
BY ANY PERSON IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL FOR SUCH PERSON TO
MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS AT
ANY TIME NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, IMPLY
THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE
HEREOF.
IN CONNECTION WITH AN OFFERING OF SECURITIES, THE UNDERWRITERS, IF ANY,
FOR SUCH OFFERING MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR
MAINTAIN THE MARKET PRICES OF THE SECURITIES AT LEVELS ABOVE THOSE WHICH
MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE
EFFECTED ON THE NEW YORK STOCK EXCHANGE OR OTHERWISE. SUCH STABILIZING, IF
COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
__________________________
ADDITIONAL INFORMATION
Home Properties has filed with the Securities and Exchange Commission
(the "Commission"), 450 Fifth Street, N.W., Washington, D.C. 20549, a
Registration Statement on Form S-3 under the Securities Act of 1933, as
amended (the "Securities Act"), and the rules and regulations promulgated
thereunder, with respect to the securities offered pursuant to this
Prospectus. This Prospectus, which is part of the Registration Statement,
does not contain all of the information set forth in the Registration
Statement and the exhibits thereto. For further information with respect
to the Company and such securities, reference is made to the Registration
Statement and such exhibits, copies of which may be examined without charge
at, or obtained upon payment of prescribed fees from, the Public Reference
Section of the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549 and will also be available for inspection and
copying at the regional offices of the Commission located at Seven World
Trade Center, 13th Floor, New York, New York 10048 and at 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661-2511.
Home Properties is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files, reports and proxy statements and other
information with the Commission. Such reports, proxy statements and other
information can be inspected and copied at the locations described above.
Copies of such materials can be obtained from the Public Reference Section
of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates. In addition, the Common Stock is listed on the New York
Stock Exchange and similar information concerning Home Properties can be
inspected at the New York Stock Exchange, 20 Broad Street, New York, New
York 10005.
Home Properties furnishes its stockholders with annual reports
containing audited financial statements with a report thereon by its
independent public accountants.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents, which have been filed by Home Properties under
the Exchange Act with the Commission, are incorporated in this Prospectus
by reference: the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1995, as amended by Form 10-K/A Amendment No. 1 (File
No. 1-13136), the Company's Quarterly Report on Form 10-Q for the quarterly
period ending March 31, 1996 (File No. 1-13136); the Company's Current
Report on Form 8-K dated September 14, 1995 as amended by Form 8-K/A
Amendment No. 1 and Amendment No. 2 (File No. 1-13136); the Company's
Current Report on Form 8-K dated January 1, 1996 as amended by Form 8-K/A
Amendment No. 1 (File No. 1-13136); the Company's Quarterly Report on
Form 10-Q for the quarterly period ending June 30, 1996 (File No. 1-13136)
and all other reports filed by the Company pursuant to Section 13(a) or
15(d) of the Exchange Act since December 31, 1995.
All reports and other documents subsequently filed by the Company
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior
to the filing of a post-effective amendment which indicates that all
securities offered hereby have been sold or which deregisters all
securities then remaining unsold, shall be deemed to be incorporated by
references in and to be a part of this Prospectus from the date of filing
of such reports and documents (provided, however, that the information
referred to in Instruction 8 to Item 402(a)(3) of Regulation S-K
promulgated by the Securities and Exchange Commission is not incorporated
herein by reference).
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in the Registration Statement containing this
Prospectus or in any other subsequently filed documents which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this
Prospectus.
The Company hereby undertakes to provide without charge to each person
to whom a copy of this Prospectus has been delivered, upon the written or
oral request of any such person, a copy of any and all of the documents
referred to above which have been or may be incorporated in this Prospectus
by reference, other than exhibits to those documents. Requests should be
directed to: David P. Gardner, Chief Financial Officer, Home Properties of
New York, Inc., 850 Clinton Square, Rochester, New York 14604 (716) 546-
4900.
THE COMPANY
As used in this section, the terms "Home Properties" and "Company",
includes Home Properties of New York, Inc., a Maryland corporation, Home
Properties of New York, L.P., a New York limited partnership, and the
Management Companies.
Home Properties of New York, Inc. is a self-administered, self-managed,
fully integrated real estate investment trust formed in November, 1993 to
continue and expand the multifamily residential real estate business of
Home Leasing Corporation, which was organized in 1967. The Company is one
of the largest owners and operators of multifamily residential properties
in Upstate New York (based on the number of apartment units) and the only
publicly traded real estate investment trust headquartered in the area. It
recently combined its operations with those of Conifer Realty, Inc. and its
affiliates ("Conifer"), another large owner and operator of multifamily
properties throughout New York State.
Home Properties conducts substantially all of its business and owns all
of its properties through Home Properties of New York, L.P. (the "Operating
Partnership"). To comply with certain technical requirements of the
Internal Revenue Code of 1986, as amended (the "Code") applicable to real
estate investment trusts ("REITs"), the Operating Partnership carries out
portions of its property management and development activities through Home
Properties Management, Inc. ("HP Management") and other entities organized
on a similar basis as HP Management (collectively, the "Management
Companies").
Home Properties currently owns and manages 23 communities with 6,008
apartment units and one community containing 202 manufactured home sites.
The Company also holds general partner interests in an additional 3,368
apartment units and manages 1,363 apartment units and approximately 1.6
million square feet of commercial space for other owners (primarily
affiliates). The 10,739 total apartment units now owned and/or managed by
Home Properties are primarily located throughout New York State. The
Company is fully integrated with operations that include multifamily
acquisitions, development, redevelopment, management, marketing, finance,
leasing and asset management.
The Company's executive offices are located at 850 Clinton Square,
Rochester, New York 14604. Its telephone number is (716) 546-4900.
RISK FACTORS
An investment in the Shares involves various risks. In addition to
general investment risks and those factors set forth elsewhere in this
Prospectus, prospective investors should consider, among other things, the
following factors:
DEPENDENCE ON UPSTATE NEW YORK REGION
A significant number of the properties owned and managed by the
Company (the "Properties") are located in the Upstate New York Region. At
June 30, 1996, 5,604 of the Company's owned multifamily units (or 90%) were
located in the Upstate New York Region. Accordingly, the Company's
performance is partially linked to economic conditions and the demand for
apartments in the Upstate New York Region. A decline in the economy in
this region generally may result in a decline in the demand for apartments
which may adversely affect the ability of the Company to make distributions
to stockholders.
DEBT FINANCING; NO LIMITATION ON DEBT
The Company is subject to the customary risks associated with debt
financing including the potential inability to refinance existing mortgage
indebtedness upon maturity on favorable terms. If a property is mortgaged
to secure payment of indebtedness and the Company is unable to make
mortgage payments, the property could be foreclosed upon with a consequent
loss of cash flow and asset value to the Company. In addition, the Company
funds acquisitions and development activities partially through short-term
borrowings. It expects to refinance any properties purchased with short-
term debt either with long-term debt or equity financing depending upon
economic conditions at the time of refinancing. The Board of Directors has
adopted a policy of limiting the Company's indebtedness to approximately
50% of its market capitalization (i.e., the market value of issued and
outstanding shares of Common Stock and Units plus total debt), but the
organizational documents of the Company do not contain any limitation on
the amount or percentage of indebtedness, funded or otherwise, the Company
may incur. Accordingly, the Board of Directors could alter or eliminate
its current policy on borrowing. If this policy were changed, the Company
could become more highly leveraged, resulting in an increase in debt
service that could adversely affect the Company's ability to make expected
distributions to its stockholders and an increased risk of default on the
Company's indebtedness. At June 30, 1996, the ratio of the Company's
indebtedness to its market capitalization was 44.4%.
The Company has established its debt policy relative to the market
capitalization of the Company rather than to the book value of its assets,
a ratio that is frequently employed. The Company has used its market
capitalization because it believes that the book value of its assets (which
to a large extent is the depreciated value of real property, the Company's
primary tangible asset) does not accurately reflect its ability to borrow
and to meet debt service requirements. The market capitalization of the
Company, however, is more variable than book value and may not necessarily
reflect the fair market value of the underlying assets of the Company at
all times. Although the Company will consider factors other than market
capitalization in making decisions regarding the incurrence of indebtedness
(such as the estimated market value of such assets upon refinancing and the
ability of particular properties and the Company as a whole to generate
cash flow to cover expected debt service), there can be no assurance that
the amount of debt service will not impair the Company's ability to make
distributions to its stockholders.
FAILURE TO QUALIFY AS A REIT
Although the Company believes that it is organized and operated to
qualify as a real estate investment trust (a "REIT") under the Internal
Revenue Code of 1986, as amended (the "Code"), no assurance can be given
that the Company will remain so qualified. Qualification as a REIT
involves the application of highly technical and complex Code provisions
for which there are only limited judicial or administrative
interpretations. The complexity of these provisions and applicable
Treasury Regulations is also increased in the context of a REIT that holds
its assets in partnership form. The determination of various factual
matters and circumstances not entirely within the Company's control may
affect its ability to qualify as a REIT. In addition, no assurance can be
given that legislation, new regulations, administrative interpretations, or
court decisions will not significantly change the tax laws with respect to
the qualification as a REIT or the Federal income tax consequences of such
qualification; however, the Company is not aware of any proposal in
Congress to amend the tax laws that would materially and adversely affect
the Company's ability to operate as a REIT.
If in any taxable year the Company fails to qualify as a REIT, the
Company would not be allowed a deduction for distributions to shareholders
in computing its taxable income and would be subject to Federal income tax
(including any applicable alternative minimum tax) on its taxable income at
regular corporate rates. As a result, the amount available for
distribution to the Company's shareholders would be reduced for the year or
years involved. In addition, unless entitled to relief under certain
statutory provisions, the Company would also be disqualified from treatment
as a REIT for the four taxable years following the year during which
qualification was lost.
DEPENDENCE OF THE COMPANY ON THE OPERATING PARTNERSHIP TO MAKE
DISTRIBUTIONS
The Company's sole material asset is its interest in the Operating
Partnership, and the Company's dividend policy is based on the Operating
Partnership's distribution policy. Even if the Operating Partnership makes
sufficient distributions to enable the Company to satisfy the REIT
distribution requirements described above, other priorities for utilization
of cash could reduce additional distributions by the Operating Partnership
to partners and, accordingly, the funds available to the Company to pay
dividends. In addition, the Operating Partnership is likely to borrow
funds to enable it to follow its distribution policy. Borrowings to
finance distributions will result in an increase in interest expense for
the Operating Partnership and a corresponding reduction in the amount that
the Operating Partnership would otherwise distribute to its partners.
EFFECT OF DISTRIBUTION REQUIREMENTS
To maintain its qualification as a REIT, Home Properties must
distribute to its stockholders annually at least 95% of REIT taxable
income. Under certain circumstances, Home Properties may not have
sufficient cash or other liquid assets to meet this distribution
requirement. This could arise because of timing differences between income
recognition and cash receipts and disbursements (income may have to be
reported before cash is received, or expenses may have to be paid before a
deduction is allowed), and Home Properties could have taxable income
without sufficient cash to meet the REIT distribution requirements. The
Company also may face competing demands for its cash, such as expenditures
for future acquisitions or for improvements or repairs to the Properties.
In these situations, the funds necessary to meet the distribution
requirements or the other expenditures would have to be obtained, to the
extent available, primarily from cash flow, net proceeds from the issuance
of equity securities, the sale of existing properties, institutional
borrowings and the issuance of debt securities. In such instances, the
Company might need to borrow funds in order to avoid adverse tax
consequences even if management believed that the then prevailing interest
rates, terms and other market conditions were not generally favorable for
such borrowings or that such borrowings would not be advisable in the
absence of such tax considerations. No assurance can be given that
necessary funds will be available to allow Home Properties to meet the REIT
requirements or the Company's other obligations.
REAL ESTATE INVESTMENT CONSIDERATIONS
Occupancy and Ability of Residents to Pay Rent. The Company is
dependent on rental income to pay operating expenses and to generate cash
to enable Home Properties to make distributions to its stockholders. If
the Company is unable to attract and retain residents or if its residents
are unable, through an adverse change in the economic condition of the
region or otherwise, to pay their rental obligations, Home Properties'
ability to make expected distributions will be adversely affected.
Illiquidity of Real Estate. Real estate investments are relatively
illiquid and, therefore, the Company has limited ability to vary its
portfolio quickly in response to changes in economic or other conditions.
In addition, the prohibition in the Code on REITs holding property for sale
and related regulations may affect the Company's ability to sell properties
without adversely affecting distributions to Home Properties' stockholders.
Compliance With Laws and Regulations. Many laws and governmental
regulations are applicable to the Properties and changes in these laws and
regulations, or their interpretation by agencies and the courts, occur
frequently. Under the Americans with Disabilities Act of 1990 (the "ADA"),
all places of public accommodation are required to meet certain federal
requirements related to access and use by disabled persons. These
requirements became effective in 1992. Compliance with the ADA requires
removal of structural barriers to handicapped access in certain public
areas of the Properties, where such removal is "readily achievable." The
ADA does not, however, consider residential properties, such as apartment
communities, to be public accommodations or commercial facilities, except
to the extent portions of such facilities, such as a leasing office, are
open to the public. A number of additional federal, state and local laws
exist which also may require modifications to the Properties, or restrict
certain further renovations thereof, with respect to access thereto by
disabled persons. For example, the Fair Housing Amendments Act of 1988
(the "FHAA") requires apartment communities first occupied after March 13,
1990 to be accessible to the handicapped. Non-compliance with the ADA or
the FHAA could result in the imposition of fines or an award of damages to
private litigants. Although management believes that the Properties are
substantially in compliance with present requirements, the Company may
incur additional costs in complying with the ADA for both existing
properties and properties acquired in the future. The Company believes
that the Properties that are subject to the FHAA are in compliance with
such laws.
Under the federal Fair Housing Act and state fair housing laws,
discrimination on the basis of certain protected classes is prohibited.
The Company has a policy against any kind of discriminatory behavior and
trains its employees to avoid discrimination or the appearance of
discrimination. There is no assurance, however, that an employee will not
violate the Company's policy against discrimination and violate the fair
housing laws. Such a violation could subject the Company to legal action
and the possible awards of damages.
Under various laws and regulations relating to the protection of the
environment, an owner of real estate may be held liable for the costs of
removal or remediation of certain hazardous or toxic substances located on
or in the property. These laws often impose liability without regard to
whether the owner was responsible for, or even knew of, the presence of
such substances. The presence of such substances may adversely affect the
owner's ability to rent or sell the property or use the property as
collateral. Independent environmental consultants conducted "Phase I"
environmental audits (which involve visual inspection but not soil or
groundwater analysis) of substantially all of the Properties owned by the
Company prior to their acquisition by the Company. The Phase I audit
reports did not reveal any significant issues of environmental concern, nor
is the Company aware of any environmental liability that management
believes would have a material adverse effect on the Company. One issue
raised by the Phase I audit reports was the existence in certain of the
Properties of asbestos that does not require remediation under current
conditions. There is no assurance that Phase I reports would reveal all
environmental liabilities or that environmental conditions not known to the
Company may exist now or in the future on existing properties or those
subsequently acquired which would result in liability to the Company for
remediation or fines, either under existing laws and regulations or future
changes to such requirements.
If compliance with the various laws and regulations, now existing or
hereafter adopted, exceeds the Company's budgets for such items, Home
Properties' ability to make expected distributions could be adversely
affected.
Competition in the Company's Markets. The Company plans to continue
to acquire additional multifamily residential properties in New York State
and may expand its activity into nearby states. There are a number of
multifamily developers and other real estate companies that compete with
the Company in seeking properties for acquisition, prospective residents
and land for development. Most of the Company's Properties are in
developed areas where there are other properties of the same type.
Competition from other properties may affect the Company's ability to
attract and retain residents, to increase rental rates and to minimize
expenses of operation. Virtually all of the leases for the Properties are
short-term leases (i.e., one year or less).
HAP Contracts. Approximately 11% of the apartment units owned by the
Company are entitled to the benefits of Housing Assistance Payments
contracts ("HAP Contracts") with the U.S. Department of Housing and Urban
Development. The future of the HAP Contract program is uncertain. If the
HAP Contracts are not renewed by HUD or if the HAP Contract program is
terminated, there could be an adverse effect on cash flow of the Properties
affected. If any of the above occurred, Home Properties' ability to make
expected distributions to stockholders could be adversely affected.
Uninsured Losses. Certain extraordinary losses may not be covered by
the Company's comprehensive liability, fire, extended and rental loss
insurance. If an uninsured loss occurred, the Company could lose its
investment in and cash flow from the affected Property (but would be
required to repay any indebtedness secured by that Property and related
taxes and other charges).
Capital Improvements. The properties owned by the Company and which
it may acquire vary widely in age and require capital improvements
regularly. If the cost of improvements, whether required to attract and
retain residents or to comply with governmental requirements, substantially
exceed management's expectations, cash available for distribution to
stockholders would be reduced. The actual expenditures on capital
improvements by the Company has varied from property to property as the
Company has repositioned newly acquired properties. These expenditures
were within the expectations of management and taken into account in the
price paid for the units.
Risks of Affiliated Property Management Business. Almost all of
the properties managed by the Company pursuant to management contracts are
owned by affiliates of Home Leasing and Conifer. Although the management
contracts are generally for one to five years in most cases, these
contracts may be terminated by the owners at any time in the event the
property is sold or on 30 to 60 days' notice. Since these managed
properties are generally owned by limited partnerships of which Home
Leasing or Conifer is the general partner and in which various members of
management and their affiliates have significant ownership interests,
conflicts could arise in enforcement of the management contracts. Such
conflicts could arise with respect to liabilities incurred by the Company
as property manager which the owners are required to pay or indemnify the
Company against and which such owners are unable or unwilling to pay.
Conflicts of interest may also arise in connection with the property
owners' decisions to sell the properties or renegotiate the management
contracts. Any of these events could adversely affect the Company's
ability to make distributions to stockholders.
Risks of Real Estate Development and Government Assisted Multifamily
Housing Development Activities. While the Company's primary focus is
currently on the acquisition of multifamily residential properties, it is
also a part of the Company's operating strategy to seek attractive
opportunities for development, primarily of government assisted properties.
All of the Company's development activities at June 30, 1996 related to
government-assisted multifamily residential properties. The real estate
development business involves significant risks in addition to those
involved in the ownership and operation of established properties,
including the risks that construction and long-term financing may not be
available on favorable terms and that construction may not be completed on
schedule or on budget resulting in increased debt service expense and
construction costs. A primary source of support for government assisted
multifamily housing is the federal "Low Income Housing Tax Credit" program
(the "Tax Credit Program"). The Tax Credit Program was included in the Tax
Reform Act of 1986 and was extended several times. The Tax Credit Program
may be subjected to a sunset provision effective in 1997. Even if this
occurs, management believes that Congress is likely to extend the Program
on an annual basis since it is the only large scale rental housing program
currently available to encourage the construction and operation of rental
housing for low and moderate income households. In addition, management
believes that there will continue to be a need for subsidized housing and
that various forms of government subsidy programs will be available,
although their format may change. From time to time, the Company plans to
make advances in connection with development projects.
LIMITS ON OWNERSHIP AND CHANGE OF CONTROL
In order to maintain its qualification as a REIT, not more than 50%
in value of the outstanding stock of Home Properties may be owned, directly
or indirectly, by five or fewer individuals (as defined in the Code to include
certain entities) at any time during the last half of its taxable year.
Home Properties has limited ownership of the issued and outstanding Shares
by any single stockholder to 8.0% of the outstanding Shares. Norman and
Nelson Leenhouts will be permitted to acquire additional Shares, except to
the extent that such acquisition results in 50% or more in value of the
outstanding Common Stock of the Company being owned, directly or
indirectly, by five or fewer individuals. Although the Board of Directors
presently has no intention of doing so, the Board of Directors could waive
these restrictions if it were satisfied, based upon the advice of tax
counsel or otherwise, that such action would be in the best interests of
Home Properties. Shares acquired or transferred in breach of the
limitation may be redeemed by Home Properties for the lesser of the price
paid or the average closing price for the ten trading days immediately
preceding redemption or may be sold at the direction of the Company. A
transfer of Shares to a person who, as a result of the transfer, violates
the ownership limit will be void and the Shares will automatically be
converted into shares of Excess Stock. See "Description of Capital Stock -
- - Restrictions on Transfer" for additional information regarding the
ownership limits.
The Articles of Incorporation authorize the Board of Directors to
issue up to a total of thirty million Shares and ten million shares of
preferred stock and to establish the rights and preferences of any shares
issued. No shares of preferred stock will be issued or outstanding at the
completion of the Offering. Further, under the Articles of Incorporation,
the stockholders to not have cumulative voting rights.
The percentage ownership limit, the issuance of preferred stock in the
future and the absence of cumulative voting rights could have the effect of
(i) delaying or preventing a change of control of Home Properties even if a
change in control were in stockholders' interest; (ii) deterring tender
offers for the Shares that may be beneficial to the stockholders; or
(iii) limiting the opportunity for stockholders to receive a premium for
their Shares that might otherwise exist if an investor attempted to
assemble a block of Shares in excess of the percentage ownership limit or
otherwise to effect a change of control of Home Properties.
DEPENDENCE ON KEY PERSONNEL
The Company is dependent on the efforts of its executive officers,
particularly Norman Leenhouts, Nelson Leenhouts and Richard Crossed, for
strategic business direction and their experience in the real estate market
in the Upstate New York Region. The loss of their services could have an
adverse effect on the operations of the Company. The Company does not
have, and is not currently contemplating obtaining, key man life insurance
for its executive officers.
CONFLICTS OF INTEREST WITH RESPECT TO PROPERTY MANAGEMENT
Unlike persons acquiring Common Stock, the Company's executive
officers own most of their interest in the Company through Units of limited
partnership interest in the Operating Partnership. As a result of their
status as holders of Units, the executive officers and other limited
partners may have interests that conflict with stockholders with respect to
business decisions affecting the Company and the Operating Partnership. In
particular, certain executive officers may suffer different or more adverse
tax consequence than the Company upon the sale or refinancing of some of
the Properties as a result of unrealized gain attributable to certain
Properties. Thus, executive officers and the stockholders may have
different objectives regarding the appropriate pricing and timing of any
sale or refinancing of Properties. In addition, executive officers of the
Company, as limited partners of the Operating Partnership, have the right
to approve certain fundamental transactions such as the sale of all or
substantially all of the assets of the Operating Partnership, merger or
consolidation or dissolution of the Operating Partnership and certain
amendments to the Operating Partnership Agreement.
The Company manages multifamily residential properties through the
Operating Partnership and commercial and development properties and certain
multifamily residential properties through the Management Companies. As a
result, the Leenhoutses and other officers of and directors of the Company
will devote a significant portion of their business time and efforts to the
management of properties not owned by the Company.
Some officers of the Company have a significant interest in certain of
the managed properties as the only stockholders of Home Leasing or Conifer,
the general partners of the partnerships that own such managed properties
and as holders of other ownership interests. Accordingly, such officers
will have conflicts of interest between their fiduciary obligations to the
partnerships that own such managed properties and their fiduciary
obligations as officers and directors of the Company, particularly with
respect to the enforcement of the management contracts and timing of the
sale of the managed properties.
In order to comply with technical requirements of the federal income
tax laws pertaining to the qualification of REITs, the Operating
Partnership owns all of the outstanding non-voting common stock (990
shares) of one of the Management Companies,- Home Properties Management,
Inc., and Norman and Nelson Leenhouts own all of the outstanding voting
common stock (10 shares). The Operating Partnership also owns all of the
outstanding non-voting common stock (891 shares) of another of the
Management Companies, Conifer Realty Corporation, and Norman and Nelson
Leenhouts and Richard Crossed own all of the outstanding voting common
stock (9 shares). As a result, although the Company will receive
substantially all of the economic benefits of the business carried on by
the Management Companies through the Company's right to receive dividends,
the Company will not be able to elect directors and officers of the
Management Companies and, therefore, the Company's ability to cause
dividends to be declared or paid or influence the day-to-day operations of
the Management Companies will be limited. Furthermore, although the
Company will receive a management fee for managing the managed properties,
this fee has not been negotiated at arm's length and may not represent a
fair price for the services rendered.
SHARES AVAILABLE FOR FUTURE SALE
Sales of substantial amounts of shares of Common Stock in the public
market or the perception that such sales might occur could adversely affect
the market price of the Common Stock. The Operating Partnership has issued
an aggregate of 1,203,019 Units through June 30, 1996 to persons other than
the Company which may be exchanged on a one-for-one basis for shares of
Common Stock under certain circumstances. In addition, as of June 30,
1996, Home Properties has granted options to purchase an aggregate of
629,632 shares of Common Stock to certain directors, officers and employees
of the Company.
All of the Shares issuable upon the exchange of Units or the exercise
of options will be "restricted securities" within the meaning of Rule 144
under the Securities Act of 1933, as amended (the "Securities Act"), and
may not be transferred unless they are registered under the Securities Act
or are otherwise transferrable under Rule 144. The Company expects to file
a registration statement with respect to such shares of Common Stock,
thereby allowing shares issuable under the Company's Stock Benefit Plans
and in exchange for Units to be transferred or resold without restriction
under the Securities Act, unless held by directors, executive officers or
other affiliates of Home Properties.
In addition to the limits placed on the sale of "restricted
securities" by operation of Rule 144 and other provisions of the Securities
Act, Norman and Nelson Leenhouts have agreed not to dispose of their shares
for a five-year period ending on August 4, 1999, and the other directors
and executive officers of the Company have agreed not to dispose of any of
their Shares for differing periods in each case, subject to certain
exceptions which include the ability to pledge their securities as
collateral for loans provided the pledgee is subject to the same
restrictions on disposition.
USE OF PROCEEDS
Unless otherwise described in the applicable Prospectus Supplement,
the Company intends to use the net proceeds from the sale of the Offered
Securities for general corporate purposes, which may include the
acquisition of multifamily residential properties as suitable opportunities
arise, the expansion and improvement of certain properties in the Company's
portfolio, payment of development costs for new multifamily residential
properties and the repayment of certain indebtedness outstanding at such
time.
DESCRIPTION OF CAPITAL STOCK
GENERAL
The authorized capital stock of Home Properties consists of 30 million
shares of Common Stock, par value $.01 per share ("Common Stock"),
10 million shares of excess stock ("Excess Stock"), par value $.01 per
share, and 10 million shares of preferred stock ("Preferred Stock"), par
value $.01 per share. The following summary description of the Common
Stock, the Preferred Stock and the Common Stock Purchase Rights or Warrants
and Debt Securities sets forth certain general terms and conditions of the
capital stock of Home Properties to which any Prospectus Supplement may
relate. The descriptions below do not purport to be complete and are
qualified entirely by reference to Home Properties' Articles of Amendment
and Restatement of Articles of Incorporation, as amended ("Articles of
Incorporation"), any certificate of designations with respect to Preferred
Stock and any applicable Prospectus Supplement.
COMMON STOCK
All shares of Common Stock offered will be duly authorized, fully
paid, and nonassessable. Holders of the Common Stock will have no
conversion, redemption, sinking fund or preemptive rights; however, shares
of Common Stock will automatically convert into shares of Excess Stock as
described below. Under the Maryland General Corporation Law ("MGCL"),
stockholders are generally not liable for Home Properties' debts or
obligations, and the holders of shares will not be liable for further calls
or assessments by Home Properties. Subject to the provisions of Home
Properties' Articles of Incorporation regarding Excess Stock described
below, all shares of Common Stock have equal dividend, distribution,
liquidation and other rights and will have no preference or exchange
rights.
Subject to the right of any holders of Preferred Stock to receive
preferential distributions, the holders of the shares of Common Stock will
be entitled to receive distributions in the form of dividends if and when
declared by the Board of Directors of Home Properties out of funds legally
available therefor, and, upon liquidation of Home Properties, each
outstanding share of Common Stock will be entitled to participate pro rata
in the assets remaining after payment of, or adequate provision for, all
known debts and liabilities of Home Properties, including debts and
liabilities arising out of its status of general partner of the Operating
Partnership, and any liquidation preference of issued and outstanding
Preferred Stock. Home Properties intends to continue paying quarterly
distributions.
The holder of each outstanding share of Common Stock will be entitled
to one vote on all matters presented to stockholders for a vote, subject to
the provisions of Home Properties' Articles of Incorporation regarding
Excess Stock described below. As described below, the Board of Directors
of Home Properties may, in the future, grant holders of one or more series
of Preferred Stock the right to vote with respect to certain matters when
it fixes the attributes of such series of Preferred Stock. Pursuant to the
MGCL, Home Properties cannot dissolve, amend its charter, merge with
another entity, sell all or substantially all its assets, engage in a share
exchange or engage in similar transactions unless such action is approved
by stockholders holding a majority of the outstanding shares entitled to
vote on such matter. In addition, the Amended and Restated Partnership
Agreement of the Operating Partnership (the "Partnership Agreement")
requires that any merger or sale of all or substantially all of the assets
of Operating Partnership be approved by partners holding a majority of the
outstanding Units, excluding Operating Partnership Units held by Home
Properties. Home Properties' Articles of Incorporation provide that its
Bylaws may be amended by its Board of Directors.
The holder of each outstanding share of Common Stock will be entitled
to one vote in the election of directors who serve for terms of one year.
Holders of the shares of Common Stock will have no right to cumulative
voting for the election of directors. Consequently, at each annual meeting
of stockholders, the holders of a majority of the shares entitled to vote
in the election of directors will be able to elect all of the directors.
Directors may be removed only for cause and only with the affirmative vote
of the holders of a majority of the shares entitled to vote in the election
of directors.
PREFERRED STOCK
Preferred Stock may be issued from time to time, in one or more
series, as authorized by the Board of Directors of Home Properties. The
Board of Directors will fix the attributes of any Preferred Stock that it
authorizes for issuance. Because the Board of Directors has the power to
establish the preferences and rights of each series of Preferred Stock, it
may afford the holders of any series of Preferred Stock preferences, powers
and rights, voting or otherwise, senior to the rights of holders of shares
of Common Stock. The issuance of Preferred Stock could have the effect of
delaying or preventing a change in control of Home Properties.
The applicable Prospectus Supplement will describe specific terms of
the shares of Preferred Stock offered thereby, including, among other
things: (i) the title or designation of the series of Preferred Stock;
(ii) the number of shares of the series of Preferred Stock offered, the
liquidation preference per share and the offering price of the Preferred
Stock; (iii) the dividend rate(s), period(s) and/or payment date(s) or
method(s) of calculation thereof applicable to the Preferred Stock;
(iv) the date from which dividends on such Preferred Stock shall
accumulate, if at all; (v) any restrictions on the issuance of shares of
the same series or of any other class or series; (vi) the provision for a
sinking fund, if any, for such Preferred Stock; (vii) the provision for
redemption, if applicable, of such Preferred Stock; (viii) any listing of
such Preferred Stock on any securities exchange; (ix) the terms and
conditions, if applicable, upon which such Preferred Stock will be
convertible into Common Stock of the Company, including the conversion
price (or manner of calculation thereof); (x) any other specific terms,
preferences, rights, limitations or restrictions of such Preferred Stock,
including any voting rights; (xi) a discussion of federal income tax
considerations applicable to such Preferred Stock; (xii) the relative
ranking and preferences of such Preferred Stock as to dividend rights and
rights upon liquidation, dissolution or winding up of the affairs of Home
Properties; (xiii) any limitations on issuance of any series of Preferred
Stock, ranking senior to or on a parity with such series of Preferred Stock
as to dividend rights and rights upon liquidation, dissolution or winding
of the affairs of the Company; and (xiv) any limitations on direct or
beneficial ownership and restriction on transfer, in each case as may be
appropriate to preserve the status of the Company as a REIT.
Unless otherwise specified in the Prospectus Supplement, the Preferred
Stock will, with respect to dividend rights and rights upon liquidation,
dissolution or winding up of Home Properties, rank (i) senior to all
classes or series of Common Stock and to all other equity securities
ranking junior to such Preferred Stock, (ii) on a parity with all equity
securities issued by Home Properties the terms of which specifically
provide that such equity securities rank on a parity with the Preferred
Stock, and (iii) junior to all equity securities issued by Home Properties
the terms of which specifically provide that such equity securities rank
senior to the Preferred Stock. The term "equity securities" does not
include convertible debt securities.
Upon any voluntary or involuntary liquidation, dissolution or winding
up of the affairs of Home Properties, then, before any distribution or
payment shall be made to the holders of any shares of Common Stock, any
Excess Shares or any other class or series of capital stock of Home
Properties ranking junior to the Preferred Stock in the distribution of
assets upon any liquidation, dissolution or winding up of Home Properties,
the holders of shares of each series of Preferred Stock shall be entitled
to receive out of assets of Home Properties legally available for
distribution to shareholders liquidating distributions in the amount of the
liquidation preference per share (set forth in the applicable Prospectus
Supplement), plus an amount equal to all dividends accrued and unpaid
thereon (which shall not include any accumulation in respect of unpaid
dividends for prior dividend periods if such shares of Preferred Stock do
not have cumulative dividend). After payment of the full amount of the
liquidating distributions to which they are entitled, the holders of shares
of Preferred Stock will have no right or claim to any of the remaining
assets of Home Properties. In the event that, upon any such voluntary or
involuntary liquidation, dissolution or winding up, the available assets of
Home Properties are insufficient to pay the amount of the liquidating
distributions on all outstanding shares of Preferred Stock and the
corresponding amounts payable on all shares of other classes or series of
capital stock of Home Properties ranking on a parity with such shares of
Preferred Stock in the distribution of assets, then the holders of such
shares of Preferred Stock and all other such classes or series of capital
stock shall share ratably in any such distribution of assets in proportion
to the full liquidating distributions to which they would otherwise be
respectively entitled.
COMMON STOCK PURCHASE RIGHTS
The applicable Prospectus Supplement will describe the specific terms
of any rights or warrants to purchase Common Stock offered thereby,
including, among other things: the duration, offering price and exercise
price of the Common Stock Purchase Rights and any provisions for the
reallocation of Purchase Rights not initially subscribed. The Prospectus
Supplement will describe the persons to whom the Common Stock Purchase
Rights will be issued (Home Properties' stockholders, the general public or
others) and any conditions to the offer and sale of the Common Stock
Purchase Rights offered thereby.
RESTRICTIONS ON TRANSFER
Ownership Limits. Home Properties' Articles of Incorporation contain
certain restrictions on the number of shares of capital stock that
stockholders may own. For Home Properties to qualify as a REIT under the
Code, no more than 50% in value of its outstanding shares of capital stock
may be owned, directly or indirectly, by five or fewer individuals (as
defined in the Code to include certain entities) during the last half of a
taxable year or during a proportionate part of a shorter taxable year. The
capital stock must also be beneficially owned by 100 or more persons during
at least 335 days of a taxable year or during a proportionate part of a
shorter taxable year. Because Home Properties expects to continue to
qualify as a REIT, its Articles of Incorporation contain restrictions on
the ownership and transfer of shares of its capital stock intended to
ensure compliance with these requirements.
Subject to certain exceptions specified in the Articles of
Incorporation, no holder may own, or be deemed to own by virtue of the
attribution provisions of the Code, more than 8.0% (the "Ownership Limit")
of the value of the issued and outstanding shares of capital stock of Home
Properties. Stockholders ("Existing Holders") whose holdings exceeded the
Ownership Limit immediately after Home Properties' initial public offering
of its Common Stock, assuming that all Units of the Operating Partnership
are counted as shares of Common Stock, are permitted to continue to hold
the number of shares they held on such date and may acquire additional
shares of capital stock upon (i) the exchange of Units for Shares, (ii) the
exercise of stock options or receipt of grants of shares of capital stock
pursuant to a stock benefit plan, (iii) the acquisition of shares of
capital stock pursuant to a dividend reinvestment plan, (iv) the transfer
of shares of capital stock from another Existing Holder or the estate of an
Existing Holder by devise, gift or otherwise, or (v) the foreclosure on a
pledge of shares of capital stock; provided, no such acquisition may cause
any Existing Holder to own, directly or by attribution, more than 17.5%
(the "Existing Holder Limit") of the issued and outstanding Shares, subject
to certain additional restrictions. The Board of Directors of Home
Properties may increase or decrease the Ownership Limit and Existing Holder
Limit from time to time, but may not do so to the extent that after giving
effect to such increase or decrease (i) five beneficial owners of Shares
could beneficially own in the aggregate more than 49.5% of the aggregate
value of the outstanding capital stock of Home Properties or (ii) any
beneficial owner of capital stock would violate the Ownership Limit or
Existing Holder Limit as a result of a decrease. The Board of Directors
may waive the Ownership Limit or the Existing Holder Limit with respect to
a holder if such holder provides evidence acceptable to the Board of
Directors that such holder's ownership will not jeopardize Home Properties'
status as a REIT.
Any transfer of outstanding capital stock of Home Properties
("Outstanding Stock") that would (i) cause any holder, directly or by
attribution, to own capital stock having a value in excess of the Ownership
Limit or Existing Holder Limit, (ii) result in shares of capital stock
other than Excess Stock, if any, to be owned by fewer than 100 persons,
(iii) result in Home Properties being closely held within the meaning of
section 856(h) of the Code, or (iv) otherwise prevent Home Properties from
satisfying any criteria necessary for it to qualify as a REIT, is null and
void, and the purported transferee acquires no rights to such Outstanding
Stock.
Outstanding Stock owned by or attributable to a stockholder or shares
of Outstanding Stock purportedly transferred to a stockholder which cause
such stockholder or any other stockholder to own shares of capital stock in
excess of the Ownership Limit or Existing Holder Limit will automatically
convert into shares of Excess Stock. Such Excess Stock will be transferred
by operation of law to a separate trust, with Home Properties acting as
trustee, for the exclusive benefit of the person or persons to whom such
Outstanding Stock may be ultimately transferred without violating the
Ownership Limit or Existing Holder Limit. Excess Stock is not treasury
stock, but rather constitutes a separate class of issued and outstanding
stock of Home Properties. While the Excess Stock is held in trust, it will
not be entitled to vote, will not be considered for purposes of any
stockholder vote or the determination of a quorum for such vote and will
not be entitled to participate in dividends or other distributions. Any
record owner or purported transferee of Outstanding Stock which has
converted into Excess Stock (the "Excess Holder") who receives a dividend
or distribution prior to the discovery by Home Properties that such
Outstanding Stock has been converted into Excess Stock must repay such
dividend or distribution upon demand. While Excess Stock is held in trust,
Home Properties will have the right to purchase it from the trust for the
lesser of (i) the price paid for the Outstanding Stock which converted into
Excess Stock by the Excess Holder (or the market value of the Outstanding
Stock on the date of conversion if no consideration was given for the
Outstanding Stock) or (ii) the market price of shares of capital stock
equivalent to the Outstanding Stock which converted into Excess Stock (as
determined in the manner set forth in the Articles of Incorporation) on the
date Home Properties exercises its option to purchase. Home Properties
must exercise this right within the 90-day period beginning on the date on
which it receives written notice of the transfer or other event resulting
in the conversion of Outstanding Stock into Excess Stock. Upon the
liquidation of Home Properties, distributions will be made with respect to
such Excess Stock as if it consisted of the Outstanding Stock from which it
was converted.
Any Excess Holder, with respect to each trust created upon the
conversion of Outstanding Stock into Excess Stock, may designate any
individual as a beneficiary of such trust; provided, such person would be
permitted to own the Outstanding Stock which converted into the Excess
Stock held by the trust under the Ownership Limit or Existing Holder Limit
and the consideration paid to such Excess Holder in exchange for
designating such person as the beneficiary is not in excess of the price
paid for the Outstanding Stock which converted into Excess Stock by the
Excess Holder (or the market value of the Outstanding Stock on the date of
conversion if no consideration was given for the Outstanding Stock). Home
Properties' redemption right must have expired or been waived prior to such
designation. Immediately upon the designation of a permitted beneficiary,
the Excess Stock, if any, will automatically convert into shares of the
Outstanding Stock from which it was converted and Home Properties as
trustee of the trust will transfer such shares, if any, and any proceeds
from redemption or liquidation to the beneficiary.
If the restrictions on ownership and transfer, conversion provisions
or trust arrangements in Home Properties' Articles of Incorporation are
determined to be void or invalid by virtue of any legal decision, statute,
rule or regulation, then the Excess Holder of any Outstanding Stock that
would have converted into shares of Excess Stock if the conversion
provisions of the Articles of Incorporation were enforceable and valid
shall be deemed to have acted as an agent on behalf of Home Properties in
acquiring such Outstanding Stock and to hold such Outstanding Stock on
behalf of Home Properties unless Home Properties waives its right to this
remedy.
The foregoing ownership and transfer limitations may have the effect
of precluding acquisition of control of Home Properties without the consent
of its Board of Directors. All certificates representing shares of capital
stock will bear a legend referring to the restrictions described above.
The foregoing restrictions on transferability and ownership will not apply
if the Board of Directors determines, and the stockholders concur, that it
is no longer in the best interests of Home Properties to attempt to
qualify, or to continue to qualify, as a REIT. Approval of the limited
partners of the Operating Partnership to terminate REIT status is also
required.
Ownership Reports. Every owner of more than 5% of the issued and
outstanding shares of capital stock of Home Properties must file a written
notice with Home Properties containing the information specified in the
Articles of Incorporation no later than January 31 of each year. In
addition, each stockholder shall, upon demand, be required to disclose to
Home Properties in writing such information as Home Properties may request
in order to determine the effect of such stockholder's direct, indirect and
attributed ownership of shares of capital stock on Home Properties' status
as a REIT or to comply with any requirements of any taxing authority or
other governmental agency.
CERTAIN OTHER PROVISIONS OF MARYLAND LAW AND CHARTER DOCUMENTS
The following discussion summarizes certain provisions of MGCL and
Home Properties' Articles of Incorporation and Bylaws. This summary does
not purport to be complete and is subject to and qualified in its entirety
by reference to the Articles of Incorporation and Bylaws, copies of which
are filed as exhibits to the Registration Statement of which this
Prospectus constitutes a part. See "Additional Information."
Limitation of Liability and Indemnification. The Articles of
Incorporation and Bylaws limit the liability of directors and officers to
Home Properties and its stockholders to the fullest extent permitted from
time to time by the MGCL and require Home Properties to indemnify its
directors, officers and certain other parties to the fullest extent
permitted from time to time by the MGCL.
Business Combinations. Under the MGCL, certain "business
combinations" (including a merger, consolidation, share exchange or, in
certain circumstances, an asset transfer or issuance or reclassification of
equity securities) between a Maryland corporation and any person who
beneficially owns 10% or more of the voting power of the outstanding voting
stock of the corporation or an affiliate or associate of the corporation
who, at any time within the two-year period immediately prior to the date
in question, was the beneficial owner, directly or indirectly, of 10% or
more of the voting power of the then-outstanding voting stock of the
corporation (an "Interested Stockholder") or an affiliate thereof, are
prohibited for five years after the most recent date on which the
Interested Stockholder became an Interested Stockholder. Thereafter, in
addition to any other required vote, any such business combination must be
recommended by the board of directors of such corporation and approved by
the affirmative vote of at least (i) 80% of the votes entitled to be cast
by holders of outstanding shares of voting stock of the corporation, voting
together as a single voting group, and (ii) two-thirds of the votes
entitled to be cast by holders of voting stock of the corporation (other
than voting stock held by the Interested Stockholder who will, or whose
affiliate will, be a party to the business combination or by an affiliate
or associate of the Interested Stockholder) voting together as a single
voting group. The extraordinary voting provisions do not apply if, among
other things, the corporation's stockholders receive a price for their
shares determined in accordance with the MGCL and the consideration is
received in cash or in the same form as previously paid by the Interested
Stockholder for its shares. These provisions of the MGCL do not apply,
however, to business combinations that are approved or exempted by the
board of directors of the corporation prior to the time that the Interested
Stockholder becomes an Interested Stockholder. The Articles of
Incorporation of Home Properties contain a provision exempting from these
provisions of the MGCL any business combination involving the Leenhoutses
(or their affiliates) or any other person acting in concert or as a group
with any of the foregoing persons.
Control Share Acquisitions. The MGCL provides that "control shares"
of a Maryland corporation acquired in a "control share acquisition" have no
voting rights except to the extent approved by the affirmative vote of
two-thirds of the votes entitled to be cast on the matter other than
"interested shares" (shares of stock in respect of which any of the
following persons is entitled to exercise or direct the exercise of the
voting power of shares of stock of the corporation in the election of
directors: an "acquiring person," an officer of the corporation or an
employee of the corporation who is also a director). "Control shares" are
shares of stock which, if aggregated with all other such shares of stock
owned by the acquiring person, or in respect of which such person is
entitled to exercise or direct the exercise of voting power of shares of
stock of the corporation in electing directors within one of the following
ranges of voting power: (i) one-fifth or more but less than one-third,
(ii) one-third or more but less than a majority, or (iii) a majority of
more of all voting power. Control shares do not include shares the
acquiring person is entitled to vote as a result of having previously
obtained stockholder approval. The control share acquisition statute does
not apply to shares acquired in a merger, consolidation or share exchange
if the corporation is a party to the transaction, or to acquisitions
approved or exempted by the charter or bylaws of the corporation.
A person who has made or proposes to make a control share acquisition,
under certain conditions (including an undertaking to pay expenses), may
compel the board of directors to call a special meeting of stockholders to
be held within 50 days of demand to consider the voting rights of the
control shares upon delivery of an acquiring person statement containing
certain information required by the MGCL, including a representation that
the acquiring person has the financial capacity to make the proposed
control share acquisition, and a written undertaking to pay the
corporation's expenses of the special meeting (other than the expenses of
those opposing approval of the voting rights). If no request for a meeting
is made, the corporation may itself present the question at any
stockholders meeting.
If voting rights are not approved at the meeting or if the acquiring
person does not deliver an acquiring person statement as required by the
MGCL, then, subject to certain conditions and limitations, the corporation
may redeem any or all of the control shares (except those for which voting
rights have previously been approved) for fair value, determined without
regard to the absence of voting rights for control shares, as of the date
of the last control share acquisition or, if a stockholder meeting is held,
as of the date of the meeting of stockholders at which the voting rights of
such shares are considered and not approved. If voting rights for control
shares are approved at a stockholders' meeting before the control share
acquisition and the acquiring person becomes entitled to exercise or direct
the exercise of a majority or more of all voting power, all other
stockholders may exercise rights of objecting shareholders under Maryland
law to receive the fair value of their Shares. The fair value of the
Shares for such purposes may not be less than the highest price per share
paid by the acquiring person in the control share acquisition. Certain
limitations and restrictions otherwise applicable to the exercise of
objecting shareholders' rights do not apply in the context of a control
share acquisition.
The Articles of Incorporation contain a provision exempting from the
control share acquisition statute any and all acquisitions to the extent
that such acquisitions would not violate the Ownership Limit or Existing
Owner Limit. There can be no assurance that such provision will not be
amended or eliminated at any point in the future.
DESCRIPTION OF DEBT SECURITIES
The following description of the terms of the Debt Securities sets
forth certain general terms and provisions of the Debt Securities to which
any Prospectus Supplement may relate. The particular terms of the Debt
Securities offered by any Prospectus Supplement and the extent, if any, to
which such general provisions may apply to the Debt Securities so offered
will be described in the Prospectus Supplement relating to such Debt
Securities.
The Debt Securities are to be issued in one or more series under an
Indenture, a copy of which is filed as an Exhibit to the Registration
Statement of which this Prospectus forms a part, as amended or supplemented
by one or more supplemental indentures, (the "Indenture"), to be entered
into between the Company and a financial institution as Trustee (the
"Trustee"). The statements herein relating to the Debt Securities and
the Indenture are summaries and are subject to the detailed provisions of
the applicable Indenture. The following summaries of certain provisions of
the Indenture do not purport to be complete and are subject to, and are
qualified in their entirety by reference to, all of the provisions of the
Indenture, including the definitions therein of certain terms capitalized
in this Prospectus.
GENERAL
The Indenture does not limit the aggregate amount of Debt Securities
which may be issued thereunder, nor does it limit the incurrence or
issuance of other secured or unsecured debt of the Company.
The Debt Securities will be unsecured general obligations of the
Company and will rank with all other unsecured and unsubordinated
obligations of the Company as described in the applicable Prospectus
Supplement. The Indenture provides that the Debt Securities may be issued
from time to time in one or more series. The Company may authorize the
issuance and provide for the terms of a series of Debt Securities pursuant
to a supplemental indenture.
Reference is made to the Prospectus Supplement relating to the
particular series of Debt Securities being offered thereby for the terms of
such Debt Securities, including, where applicable: (1) the specific
designation of such Debt Securities; (2) any limit upon the aggregate
principal amount of such Debt Securities; (3) the date or dates on which
the principal of and premium, if any, on such Debt Securities will mature
or the method of determining such date or dates; (4) the rate or rates
(which may be fixed, variable or zero) at which such Debt Securities will
bear interest, if any, or the method of calculating such rate or rates;
(5) the date or dates from which interest, if any, will accrue or the
method by which such date or dates will be determined; (6) the date or
dates on which interest, if any, will be payable and the record date or
dates therefor; (7) the place or places where principal of, premium, if
any, and interest, if any, on such Debt Securities may be redeemed, in
whole or in part, at the option of the Company; (8) the obligation, if any,
of the Company to redeem or purchase such Debt Securities pursuant to any
sinking fund or analogous provisions or upon the happening of a specified
event and the period or periods within which, the price or prices at which
and the other terms and conditions upon which, such Debt Securities shall
be redeemed or purchased, in whole or in part, pursuant to such
obligations; (9) the denominations in which such Debt Securities are
authorized to be issued; (10) the currency or currency unit for which Debt
Securities may be purchased or in which Debt Securities may be denominated
and/or the currency or currencies (including currency unit or units) in
which principal of, premium, if any, and interest, if any, on such Debt
Securities will be payable and whether the Company or the holders of any
such Debt Securities may elect to receive payments in respect of such Debt
Securities in a currency or currency unit other than that in which such
Debt Securities are stated to be payable; (11) if the amount of payments of
principal of and premium, if any, or any interest, if any, on such Debt
Securities may be determined with reference to an index based on a currency
or currencies other than that in which such Debt Securities are stated to
be payable, the manner in which such amount shall be determined; (12) if
the amount of payments of principal of and premium, if any, or interest, if
any, on such Debt Securities may be determined with reference to changes in
the prices of particular securities or commodities or otherwise by
application of a formula, 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 such Debt Securities which will be
payable upon declaration of the acceleration of the maturity thereof or the
method by which such portion shall be determined; (14) the person to whom
any interest on any such Debt Security shall be payable if other than the
person in whose name such Debt Security is registered on the applicable
record date; (15) any addition to, or modification or deletion of, any
Event of Default or any covenant of the Company specified in the Indenture
with respect to such Debt Securities; (16) the application, if any, of such
means of defeasance as may be specified for such Debt Securities; and
(17) any other special terms pertaining to such Debt Securities. Unless
otherwise specified in the applicable Prospectus Supplement, the Debt
Securities will not be listed on any securities exchange.
Unless otherwise specified in the applicable Prospectus Supplement,
Debt Securities will be issued only in fully registered form without
coupons. Unless the Prospectus Supplement relating thereto specifies
otherwise, Debt Securities will be denominated in U.S. dollars and will be
issued only in denominations of U.S. $1,000 and any integral multiple
thereof.
Debt Securities may be sold at a substantial discount below their
stated principal amount and may bear no interest or interest at a rate
which at the time of issuance is below market rates. Certain federal
income tax consequences and special considerations applicable to any such
Debt Securities will be described in the applicable Prospectus Supplement.
If the amount of payments of principal of and premium, if any, or any
interest on Debt Securities of any series is determined with reference to
any type of index or formula or changes in prices of particular securities
or commodities, the federal income tax consequences, specific terms and
other information with respect to such Debt Securities and such index or
formula and securities or commodities will be described in the applicable
Prospectus Supplement.
If the principal of and premium, if any, or any interest on Debt
Securities of any series are payable in a foreign or composite currency,
the restrictions, elections, federal income tax consequences, specific
terms and other information with respect to such Debt Securities and such
currency will be described in the applicable Prospectus Supplement.
The Prospectus Supplement, with respect to any particular series of
Debt Securities being offered thereby which provide for optional
redemption, prepayment or conversion of such Debt Securities on the
occurence of certain event, such as a change of control of the Company,
will provide: (1) a discussion of the effects that such provisions may have
in deterring certain mergers, tender offers or other takeover attempts, as
well as any possible adverse effect on the market price of the Company's
securities or the ability to obtain additional financing in the future; (2)
a statement the Company will comply with any applicable provisions of the
requirements of Rule 14e-1 under the Securities Exchange Act of 1934 and
any other applicable securities laws in connection with any optional
redemption, prepayment or conversion provisions and any related offers by
the Company (including, if such Debt Securities are convertible, Rule 13e-
4); (3) a disclosure of any cross-defaults in other indebtedness which may
result as a consequence of the occurence of certain events so that the
payments on such Debt Securities would be effectively subordinated; (4) a
disclosure of effect of any failure to repurchase under the applicable
Indenture, including in the event of a change of control of the Company;
(5) a disclosure of any risk that sufficient funds may not be available at
the time of any event resulting in a repurchase obligation; and (6) a
discussion of any definition of "change of control" contained in the
applicable Indenture.
PAYMENT, REGISTRATION, TRANSFER AND EXCHANGE
Unless otherwise provided in the applicable Prospectus Supplement,
payments in respect of the Debt Securities will be made in the designated
currency at the office or agency of the Company maintained for that purpose
as the Company may designate from time to time, except that, at the option
of the Company, interest payments, if any, on Debt Securities in registered
form may be made by checks mailed to the holders of Debt Securities
entitled thereto at their registered addresses. Unless otherwise indicated
in an applicable Prospectus Supplement, payment of any installment of
interest on Debt Securities in registered form will be made to the person
in whose name such Debt Security is registered at the close of business on
the regular record date for such interest.
Unless otherwise provided in the applicable Prospectus Supplement,
Debt Securities in registered form will be transferable or exchangeable at
the agency of the Company maintained for such purpose as designated by the
Company from time to time. Debt Securities may be transferred or
exchanged without service charge, other than any tax or other governmental
charge imposed in connection therewith.
CONSOLIDATION, MERGER OR SALE BY THE COMPANY
Under the terms of the Indenture, the Company shall not be
consolidated with or merge into any other corporation or transfer or lease
its assets substantially as an entirety, unless (i) the corporation formed
by such consolidation or into which the Company is merged or the
corporation which acquires its assets is organized in the United States and
expressly assumes all of the obligations of the Company under the Debt
Securities and all Indentures and (ii) immediately after giving effect to
such transaction, no Default or Event of Default shall have occurred and be
continuing. Upon any such consolidation, merger or transfer, the successor
corporation formed by such consolidation, or into which the Company is
merged or to which such sale is made shall succeed to, and be substituted
for the Company under the Indenture.
The Indenture contains no covenants or other specific provisions to
afford protection to holders of the Debt Securities in the event of a
highly leveraged transaction or a change in control of the Company, except
to the limited extent described above. Such covenants or provisions are
not subject to waiver by the Company's Board of Directors without the
consent of the holders of not less than a majority in principal amount of
the outstanding Debt Securities of each series affected by the waiver as
described under "Modification of the Indenture" below.
EVENTS OF DEFAULT, NOTICE AND CERTAIN RIGHTS ON DEFAULT
The Indenture provides that, if an Event of Default specified therein
occurs with respect to the Debt Securities of any series and is continuing,
the Trustee for such series or the holders of 25% in aggregate principal
amount of all of the outstanding Debt Securities of that series, by written
notice to the Company (and to the Trustee for such series, if notice is
given by such holders of Debt Securities), may declare the principal of
(or, if the Debt Securities of that series are Original Issue Discount
Securities, such portion of the principal amount specified in the
Prospectus Supplement) and accrued interest on all the Debt Securities of
that series to be immediately due and payable.
The Indenture provides that the Trustee will, subject to certain
exceptions, within a specified number of days after the occurrence of a
Default with respect to the Debt Securities of any series, give to the
holders of the Debt Securities of that series notice of all Defaults known
to it unless such Default shall have been cured or waived. "Default" means
any event which is or after notice or passage of time or both, would be an
Event of Default.
The Indenture provides that the holders of a majority in aggregate
principal amount of the Debt Securities of each series affected (with each
such series voting as a class) may direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee for such
series, or exercising any trust or power conferred on such Trustee.
The Indenture includes a covenant that the Company will file annually
with the Trustee a certificate as to the Company's compliance with all
conditions and covenants of the Indenture.
The holders of a majority in aggregate principal amount of any series
of Debt Securities by notice to the Trustee may waive on behalf of the
holders of all Debt Securities of such series, any past Default or Event of
Default with respect to that series and its consequences, except a Default
or Event of Default in the payment of the principal of, premium, if any, or
interest, if any, on any Debt Security or a provision of the Indenture
which cannot be amended without the consent of the holder of each
Outstanding Security of such series adversely affected.
MODIFICATION OF THE INDENTURE
The Indenture contains provisions permitting the Company and the
Trustee to enter into one or more supplemental indentures without the
consent of the holders of any of the Debt Securities in order (i) to
evidence the succession of another corporation to the Company and the
assumption of the covenants of the Company by a successor to the Company;
(ii) to add to the covenants of the Company or surrender any right or power
of the Company; (iii) to add additional Events of Default with respect to
any series of Debt Securities; (iv) to add or change any provisions to such
extent as necessary to permit or facilitate the issuance of Debt Securities
in book entry form or, if allowed without penalty under applicable laws and
regulations, to permit payment in respect of Debt Securities in bearer form
in the United States; (v) to change or eliminate any provision affecting
Debt Securities not yet issued; (vi) to secure the Debt Securities;
(vii) to establish the form or terms of Debt Securities; (viii) to cure any
ambiquity, to correct or supplement any provision of the Indenture which
may be inconsistent with any other provision thereof, provided that such
action does not adversely affect the interests of any holder of Debt
Securities of any series; (ix) to make provision with respect to the
conversion rights of holders of Debt Securities; or (x) to conform to any
mandatory provisions of law.
The Indenture also contain provisions permitting the Company and the
Trustee, with the consent of the holders of a majority in aggregate
principal amount of the outstanding Debt Securities affected by such
supplemental indenture (with the Debt Securities of each series voting as a
class), to execute supplemental indentures adding any provisions to or
changing or eliminating any of the provisions of the Indenture or any
supplemental indenture or modifying the rights of the holders of Debt
Securities of such series, except that no such supplemental indenture may,
without the consent of the holder of each Debt Security so affected,
(i) change the time for payment of principal or premium, if any, or
interest on any Debt Security; (ii) reduce the principal of, or any
installment of principal of, or premium, if any, or interest on any Debt
Security, or change the manner in which the amount of any of the foregoing
is determined; (iii) reduce the amount of premium, if any, payable upon the
redemption of any Debt Security; (iv) reduce the amount of principal
payable upon acceleration of the maturity of any Original Issue Discount
Security; (v) reduce the percentage in principal amount of the outstanding
Debt Securities affected thereby, the consent of whose holders is required
for modification or amendment of the Indenture or for waiver or compliance
with certain provisions of the Indenture or for waiver of certain defaults;
(vi) make any change which adversely affects the right to convert
convertible Debt Securities or decrease the conversion rate or increase the
conversion price; or (vii) modify the provisions relating to waiver of
certain defaults or any of the foregoing provisions.
DEFEASANCE
If so described in the Prospectus Supplement relating to Debt
Securities of a specific series, the Company may discharge its indebtedness
and its obligations or terminate certain of its obligations and convenants
under the Indenture with respect to the Debt Securities of such series by
depositing funds or obligations issued or guaranteed by the United States
government with the Trustee. The Prospectus Supplement will more fully
describe the provisions, if any, relating to such discharge or termination
of obligations.
THE TRUSTEE
The Prospectus Supplement will identify the Trustee under the
applicable Indenture. The Company may also maintain banking and other
commercial relationships with any Trustee and its affiliates in the
ordinary course of business.
FEDERAL INCOME TAX CONSIDERATIONS
INTRODUCTORY NOTES
The following discussion summarizes certain federal income tax
considerations that may be relevant to a prospective holder of shares of
Common Stock. Any Prospectus Supplement which relates to a series of
Preferred Stock or of Debt Securities will set forth the federal income tax
consequences of that Preferred Stock to a prospective holder. The
following discussion is not exhaustive of all possible tax considerations
and does not give a detailed discussion of any state, local or foreign tax
considerations. This discussion does not address all of the aspects of
federal income taxation that may be relevant to stockholders in light of
their particular circumstances or to certain types of stockholders subject
to special treatment under the federal income tax laws (including insurance
companies, tax-exempt entities, financial institutions or broker-dealers,
foreign corporations and persons who are not citizens or residents of the
United States).
This discussion contains a general summary of certain Code sections
that govern the federal income tax treatment of a REIT and its
stockholders. These sections of the Code are highly technical and complex.
This summary is qualified in its entirety by the applicable Code
provisions, the Treasury Regulations promulgated thereunder and
administrative and judicial interpretations thereof. Home Properties has
not sought or obtained any ruling from the Internal Revenue Service or any
opinions of counsel specifically related to the tax matters described
below.
EACH PROSPECTIVE PURCHASER IS ADVISED TO CONSULT WITH HIS OR HER OWN
TAX ADVISOR REGARDING THE SPECIFIC TAX CONSEQUENCES TO HIM OR HER OF THE
PURCHASE, OWNERSHIP AND SALE OF SHARES OF COMMON STOCK AND THE ELECTION BY
HOME PROPERTIES TO BE TAXED AS A REAL ESTATE INVESTMENT TRUST, INCLUDING
THE FEDERAL, STATE, LOCAL, FOREIGN, AND OTHER TAX CONSEQUENCES OF SUCH
PURCHASE, OWNERSHIP, SALE, AND ELECTION AND OF POTENTIAL CHANGES IN
APPLICABLE TAX LAWS.
TAXATION OF HOME PROPERTIES AS A REIT
Home Properties plans has to be taxed as a REIT under Sections 856
through 860 of the Code. Home Properties believes that, commencing with
its taxable year ending December 31, 1994, it is organized and operates in
such a manner as to qualify for taxation as a REIT under the Code, and Home
Properties intends to continue to operate in such a manner. No assurance,
however, can be given that Home Properties will operate in a manner so as
to qualify or remain qualified as a REIT.
If Home Properties qualifies for taxation as a REIT, it generally
will not be subject to federal corporate income taxes on net income that it
currently distributes to its stockholders. This treatment substantially
eliminates the "double taxation" (at the corporate and stockholder levels)
that generally results from investment in a regular corporation. However,
Home Properties will be subject to federal income tax in the following
circumstances. First, Home Properties will be taxed at regular corporate
rates on any undistributed REIT taxable income, including undistributed net
capital gains. Second, under certain circumstances, Home Properties may be
subject to the "alternative minimum tax" on its items of tax preference.
Third, if Home Properties has (i) net income from the sale or other
disposition of "foreclosure property" (which is, in general, property
acquired by Home Properties by foreclosure or otherwise on default on a
loan secured by the property) which is held primarily for sale to customers
in the ordinary course of business or (ii) other nonqualifying income from
foreclosure property, it will be subject to tax at the highest corporate
rate on such income. Fourth, if Home Properties has net income from
prohibited transactions (which are, in general, certain sales or other
dispositions of property (other than foreclosure property) held primarily
for sale to customers in the ordinary course of business), such income will
be subject to a 100% tax. Fifth, if Home Properties should fail to satisfy
the 75% gross income test or the 95% gross income test (as discussed in
"Requirements for Qualification - Income Tests" below), and has nonetheless
maintained its qualification as a REIT because certain other requirements
have been met, it will be subject to a 100% tax on the net income
attributable to the greater of the amount by which Home Properties fails
the 75% or 95% test, multiplied by a fraction intended to reflect Home
Properties' profitability. Sixth, if Home Properties should fail to
distribute during each calendar year at least the sum of (i) 85% of its
REIT ordinary income for such year, (ii) 95% of its REIT capital gain net
income for such year, and (iii) any undistributed taxable income from prior
years, Home Properties would be subject to a 4% excise tax on the excess of
such required distribution over the amounts actually distributed. Seventh,
if Home Properties disposes of any asset acquired from a C corporation
(i.e., a corporation generally subject to full corporate level tax) in a
transaction in which the basis of the asset in Home Properties' hands is
determined by reference to the basis of the asset (or any other property)
in the hands of the C corporation, and Home Properties recognizes gain on
the disposition of such asset during the 10-year period beginning on the
date on which such asset was acquired by the Company, then, to the extent
of such property's "built-in" gain (the excess of the fair market value of
such property at the time of acquisition by Home Properties over the
adjusted basis in such property at such time), such gain will be subject to
tax at the highest regular corporate rate applicable.
REQUIREMENTS FOR QUALIFICATION.
Generally. To qualify as a REIT, an entity must be a corporation,
trust or association: (1) which is managed by one or more trustees or
directors; (2) the beneficial ownership of which is evidenced by
transferable shares or by transferable certificates of beneficial interest;
(3) which would be taxable as a domestic corporation but for Sections 856
through 859 of the Code; (4) which is neither a financial institution nor
an insurance company subject to certain provisions of the Code; (5) the
beneficial ownership of which is held by 100 or more persons; (6) during
the last half of each taxable year not more than 50% in value of the
outstanding stock of which is owned, directly or indirectly, by five or
fewer individuals (as defined in the Code to include certain entities); and
(7) which meets certain other tests, described below, regarding the nature
of its income and assets. The Code provides that conditions (1) to (4),
inclusive, must be met during the entire taxable year and that condition
(5) must be met during at least 335 days of a taxable year of 12 months, or
during a proportionate part of a taxable year of less than 12 months.
Electing REIT treatment requires that the entity adopt a calendar year
accounting period.
Home Properties satisfies the requirements set forth above. In
addition, Home Properties' Articles of Incorporation provide restrictions
regarding the transfer of its shares that are intended to assist Home
Properties in continuing to satisfy the share ownership requirements
described in (5) and (6) above. See "Description of Capital Stock -
Restrictions on Transfer."
In the case of a REIT which is a partner in a partnership, Treasury
Regulations provide that the REIT is deemed to own its proportionate share
of the assets of the partnership and is deemed to be entitled to the income
of the partnership attributable to such share. In addition, the character
of the assets and gross income of the partnership retain the same character
in the hands of the REIT for purposes of Section 856 of the Code, including
satisfying the gross income tests and asset tests. Thus, Home Properties'
proportionate share of the assets, liabilities and items of income of the
Operating Partnership and the partnerships, if any, in which the Operating
Partnership will have an interest will be treated as assets, liabilities
and items of Home Properties for purposes of applying the requirements
described herein.
Income Tests. In order to maintain qualification as a REIT, there are
three gross income requirements that must be satisfied annually. First, at
least 75% of the REIT's gross income (excluding gross income from
prohibited transactions) for each taxable year must be derived directly or
indirectly from investments relating to real property or mortgages on real
property (including "rents from real property" and, in certain
circumstances, interest) or from certain types of temporary investments.
Second, at least 95% of the REIT's gross income (excluding gross income
from prohibited transactions) for each taxable year must be derived from
such real property investments, and from dividends, interest and gain from
the sale or disposition of stock or securities, or from any combination of
the foregoing. Third, short-term gain from the sale or other disposition
of stock or securities, gain from prohibited transactions and gain on the
sale or other disposition of real property held for less than four years
(apart from involuntary conversions and sales of foreclosure property) must
represent less than 30% of the REIT's gross income (including gross income
from prohibited transactions) for each taxable year.
Rents received by Home Properties will qualify as "rents from real
property" in satisfying the gross income requirements for a REIT described
above only if several conditions are met. First, the amount of rent must
not be based in whole or in part on the income or profits of any person.
However, an amount received or accrued generally will not be excluded from
the term "rents from real property" solely by reason of being based on a
fixed percentage or percentages of receipts of sales. Second, the Code
provides that rents received from a resident will not qualify as "rents
from real property" in satisfying the gross income tests if the Company, or
an owner of 10% or more of the Company, directly or constructively owns 10%
or more of such tenant (a "Related Party Tenant"). Third, if rent
attributable to personal property, leased in connection with a lease of
real property, is greater than 15% of the total rent received under the
lease, then the portion of rent attributable to such personal property will
not qualify as "rents from real property." Finally, for rents received to
qualify as "rents from real property," Home Properties generally must not
operate or manage the property or furnish or render services to tenants,
other than through an "independent contractor" who is adequately
compensated and from whom Home Properties derives no revenue. The
"independent contractor" requirement, however, does not apply to the extent
the services provided by Home Properties are "usually or customarily
rendered" in connection with the rental of space for occupancy only (such
as furnishing water, heat, light and air conditioning, and cleaning
windows, public entrances and lobbies) and are not otherwise considered
"rendered to the occupant."
It is expected that Home Properties' real estate investments will
continue to give rise to income that will enable it to satisfy all of the
income tests described above. Substantially all of Home Properties' income
will be derived from its interest in the Operating Partnership, which will,
for the most part, qualify as "rents from real property" for purposes of
the 75% and the 95% gross income tests.
The Operating Partnership does not and does not anticipate charging
more than a de minimis amount of rent that is based in whole or in part on
the income or profits of any person (except by reason of being based on a
percentage of receipts or sales, as described above). The Operating
Partnership does not anticipate receiving rents in excess of a de minimis
amount from Related Party Tenants. The Operating Partnership does not
anticipate holding a lease on any property in which rents attributable to
personal property constitute greater than 15% of the total rents received
under the lease. Neither Home Properties nor the Operating Partnership
will knowingly directly perform services considered to be rendered to the
occupant of property. The Operating Partnership will perform all
development, construction and leasing services for, and will operate and
manage, the properties owned by it directly without using an "independent
contractor." Management believes that the only material services to be
provided to lessees of these properties will be those usually or
customarily rendered in connection with the rental of space for occupancy
only. Home Properties does not anticipate that the Operating Partnership
will provide services that might be considered rendered primarily for the
convenience of the occupants of the property.
The Operating Partnership owns all of the non-voting common stock of
the Management Companies, corporations that are taxable as regular
corporations. The Management Companies will perform management,
development, construction and leasing services for certain properties not
owned by the Company. The income earned by and taxed to the Management
Companies would be nonqualifying income if earned by Home Properties
through the Operating Partnership. As a result of the corporate structure,
the income will be earned by and taxed to the Management Companies and will
be received by the Operating Partnership only indirectly as dividends that
qualify under the 95% test.
To the extent the Operating Partnership does not immediately use the
proceeds of the Offering, these funds will be invested in interest-bearing
accounts and short-term, interest-bearing securities. The interest income
earned on those funds is expected to be includible under the 75% test as
"qualified temporary investment income" (which includes income earned on
stock or debt instruments acquired with the proceeds of a stock offering,
not including amounts received under a dividend reinvestment plan).
Qualified temporary investment income treatment only applies during the
one-year period beginning on the date Home Properties receives the new
capital.
If Home Properties fails to satisfy one or both of the 75% or 95%
gross income tests for any taxable year, it may nevertheless qualify as a
REIT for such year if it is entitled to relief under certain provisions of
the Code. These relief provisions generally will be available if Home
Properties' failure to meet such tests was due to reasonable cause and not
due to willful neglect, Home Properties attaches a schedule of the sources
of its income to its return, and any income information on the schedules
was not due to fraud with intent to evade tax. It is not possible,
however, to state whether in all circumstances Home Properties would be
entitled to the benefit of these relief provisions. As discussed above in
"Generally," even if these relief provisions apply, a tax would be imposed
with respect to the excess net income. No similar mitigation provision
applies to provide relief if the 30% income test is failed, and in such
case, Home Properties would cease to qualify as a REIT. See "Failure to
Qualify" below.
Asset Tests. The Company, at the close of each quarter of its taxable
year, must also satisfy three tests relating to the nature of its assets.
First, at least 75% of the value of Home Properties' total assets must be
represented by real estate assets, cash and cash items (including
receivables) and government securities. For this purpose real estate
assets include (i) Home Properties' allocable share of real estate assets
held by the Operating Partnership and partnerships in which the Operating
Partnership owns an interest or held by "qualified REIT subsidiaries" of
Home Properties and (ii) stock or debt instruments held for not more than
one year purchased with the proceeds of a stock offering or long-term (at
least five-year) debt offering of the Company. Second, not more than 25%
of Home Properties' total assets may be represented by securities other
than those in the 75% asset class. Third, of the investments included in
the 25% asset class, the value of any one issuer's securities owned by Home
Properties may not exceed 5% of the value of Home Properties' total assets,
and Home Properties may not own more than 10% of any one issuer's
outstanding voting securities (excluding securities of a qualified REIT
subsidiary or another REIT).
Home Properties anticipates that it will continue to be able to comply
with these asset tests. Home Properties is deemed to hold directly its
proportionate share of all real estate and other assets of the Operating
Partnership and should be considered to hold its proportionate share of all
assets deemed owned by the Operating Partnership through its ownership of
partnership interests in other partnerships. As a result, Home Properties
plans to hold more than 75% of its assets as real estate assets. In
addition, Home Properties does not plan to hold any securities representing
more than 10% of any one issuer's voting securities, other than any
qualified REIT subsidiary, nor securities of any one issuer exceeding 5% of
the value of Home Properties' gross assets (determined in accordance with
generally accepted accounting principles). As previously discussed, Home
Properties is deemed to own its proportionate share of the assets of a
partnership in which it is a partner so that the partnership interest,
itself, is not a security for purposes of this asset test.
The Operating Partnership owns all of the nonvoting common stock of
the Management Companies. The Operating Partnership does not own any of
the voting securities of the Management Companies. Management believes
that Home Properties' interest in the securities of the Management
Companies through the Operating Partnership does not exceed 5% of the total
value of Home Properties' assets. No independent appraisals have been
obtained.
After initially meeting the asset tests at the close of any quarter,
Home Properties will not lose its status as a REIT for failure to satisfy
the asset tests at the end of a later quarter solely by reason of changes
in asset values. If the failure to satisfy the asset tests results from an
acquisition of securities or other property during a quarter, the failure
can be cured by disposition of sufficient nonqualifying assets within 30
days after the close of that quarter. Home Properties intends to maintain
adequate records of the value of its assets to ensure compliance with the
asset tests, and to take such other action within 30 days after the close
of any quarter as may be required to cure any noncompliance. However,
there can be no assurance that such other action will always be successful.
Annual Distribution Requirements. The Company, in order to qualify as
a REIT, is required to distribute dividends (other than capital gain
dividends) to its stockholders in an amount at least equal to (a) the sum
of (i) 95% of Home Properties' "REIT taxable income" (computed without
regard to the dividends paid deduction and the REIT's net capital gain) and
(ii) 95% of the net income (after tax), if any, from foreclosure property,
minus (b) the sum of certain items of noncash income. Such distributions
must be paid in the taxable year to which they relate, or in the following
taxable year if declared before Home Properties timely files its tax return
for such year and if paid on or before the first regular dividend payment
after such declaration. To the extent that Home Properties does not
distribute all of its net capital gain or distributes at least 95%, but
less than 100%, of its "REIT taxable income," as adjusted, it will be
subject to tax on the undistributed amount at regular capital gains and
ordinary corporate tax rates. Furthermore, if Home Properties should fail
to distribute during each calendar year at least the sum of (i) 85% of its
REIT ordinary income for such year; (ii) 95% of its REIT capital gain
income for such year, and (iii) any undistributed taxable income from prior
periods, Home Properties would be subject to a 4% excise tax on the excess
of such required distribution over the amounts actually distributed.
Home Properties intends to continue to make timely distributions
sufficient to satisfy the annual distribution requirements. In this
regard, the Partnership Agreement of the Operating Partnership authorizes
the Company, as general partner, to take such steps as may be necessary to
cause the Operating Partnership to distribute to its partners an amount
sufficient to permit Home Properties to meet these distribution
requirements. It is possible, however, that the Company, from time to
time, may not have sufficient cash or other liquid assets to meet the 95%
distribution requirement due to timing differences between the actual
receipt of income and actual payment of deductible expenses and the
inclusion of such income and deduction of such expenses in arriving at
taxable income of the Company, or if the amount of nondeductible expenses
such as principal amortization or capital expenditures exceed the amount of
noncash deductions. In the event that such timing differences occur, in
order to meet the 95% distribution requirement, Home Properties may cause
the Operating Partnership to arrange for short-term, or possibly long-term,
borrowing to permit the payment of required dividends. If the amount of
nondeductible expenses exceeds noncash deductions, the Operating
Partnership may refinance its indebtedness to reduce principal payments and
borrow funds for capital expenditures.
Under certain circumstances, Home Properties may be able to rectify a
failure to meet the distribution requirement for a year by paying
"deficiency dividends" to stockholders in a later year that may be included
in Home Properties' deduction for dividends paid for the earlier year.
Thus, Home Properties may be able to avoid being taxed on amounts
distributed as deficiency dividends; however, Home Properties will be
required to pay interest to the IRS based upon the amount of any deduction
taken for deficiency dividends.
Failure to Qualify. If Home Properties fails to qualify for taxation
as a REIT in any taxable year and the relief provisions do not apply, Home
Properties will be subject to tax (including any applicable alternative
minimum tax) on its taxable income at regular corporate rates.
Distributions to stockholders in any year in which Home Properties fails to
qualify will not be deductible by the Company, nor will they be required to
be made. In such event, to the extent of current and accumulated earnings
and profits, distributions to stockholders will be taxable as ordinary
income to the extent of current and accumulated earnings and profits, and,
subject to certain limitations in the Code, corporate distributees may be
eligible to claim the dividends received deduction. Unless entitled to
relief under specific statutory provisions, Home Properties also will be
disqualified from taxation as a REIT for the four taxable years following
the year during which qualification was lost. If is not possible to state
whether in all circumstances Home Properties would be entitled to such
statutory relief.
TAXATION OF STOCKHOLDERS
Taxation of Taxable Domestic Stockholders. As long as Home Properties
qualifies as a REIT, distributions made to Home Properties' taxable
domestic stockholders out of current or accumulated earnings and profits
(and not designated as capital gain dividends) will be taken into account
by them as ordinary income and will not be eligible for the dividends
received deduction for corporations. Distributions that are designated as
capital gain dividends will be taxed as long-term capital gains (to the
extent they do not exceed Home Properties' actual net capital gain for the
taxable year) without regard to the period for which the stockholder has
held its stock. However, corporate stockholders may be required to treat
up to 20% of certain capital gain dividends as ordinary income.
Distributions in excess of current and accumulated earnings and profits
will not be taxable to a stockholder to the extent that they do not exceed
the adjusted basis of the stockholder's shares, but rather will reduce the
adjusted basis of such shares. To the extent that such distributions
exceed the adjusted basis of a stockholder's shares, they will be included
in income as long-term capital gain (or short-term capital gain if the
shares have been held for one year or less), assuming the shares are a
capital asset in the hands of the stockholder. In addition, any dividend
declared by Home Properties in October, November or December of any year
payable to a stockholder of record on a specific date in any such month
shall be treated as both paid by Home Properties and received by the
stockholder on December 31 of such year, provided that the dividend is
actually paid by Home Properties during January of the following calendar
year. Stockholders may not include in their individual income tax returns
any net operating losses or capital losses of the Company.
In general, any loss upon a sale or exchange of shares by a
stockholder who has held such shares for six months or less (after applying
certain holding period rules) will be treated as a long-term capital loss
to the extent of distributions from Home Properties required to be treated
by such stockholder as long-term capital gain.
Distributions from Home Properties and gain from the disposition of
shares will not ordinarily be treated as passive activity income, and
therefore, stockholders generally will not be able to apply any "passive
losses" against such income. Dividends from Home Properties (to the extent
they do not constitute a return of capital) and gain from the disposition
of shares generally will be treated as investment income for purposes of
the investment interest limitation.
Home Properties will report to its domestic stockholders and the IRS
the amount of dividends paid during each calendar year, and the amount of
tax withheld, if any, with respect thereto. Under the backup withholding
rules, a stockholder may be subject to backup withholding at the rate of
31% with respect to dividends paid unless such holder (a) is a corporation
or comes within certain other exempt categories and, when required,
demonstrates this fact, or (b) provides a taxpayer identification number,
certifies as to no loss of exemption from backup withholding, and otherwise
complies with applicable requirements of the backup withholding rules. A
stockholder who does not provide Home Properties with its correct taxpayer
identification number may also be subject to penalties imposed by the IRS.
Any amount paid as backup withholding will be creditable against the
stockholder's income tax liability. In addition, Home Properties may be
required to withhold a portion of capital gain distributions made to any
stockholders who fail to certify their non-foreign status to the Company.
See "Taxation of Foreign Stockholders" below.
Taxation of Tax-Exempt Stockholders. The IRS has ruled that amounts
distributed by a REIT to a tax-exempt employees' pension trust do not
constitute "unrelated business taxable income" ("UBTI"). Although rulings
are merely interpretations of law by the IRS and may be revoked or
modified, based upon this ruling and the analysis therein, distributions by
Home Properties to a stockholder that is a tax-exempt entity should also
not constitute UBTI, provided that the tax-exempt entity has not financed
the acquisition of shares of Common Stock with "acquisition indebtedness"
within the meaning of the Code and the shares are not otherwise used in an
unrelated trade or business of the tax-exempt entity.
Congress has enacted legislation which includes a provision that
requires qualified trusts that hold more than 10% (by value) of the
interests in a REIT to treat a percentage of REIT dividends as UBTI. The
requirement applies only if (i) the qualification of the REIT depends upon
the application of a "look-through" exception to the restriction on REIT
stockholdings by five or fewer individuals, including qualified trusts (see
"Description of Capital Stock - Restrictions on Transfer"), and (ii) the
REIT is "predominantly held" by qualified trusts. The qualification of
Home Properties as a REIT currently does not depend upon application of the
"look-through" exception and Home Properties currently is not
"predominantly held" by qualified trusts.
Taxation of Foreign Stockholders. The rules governing United States
federal income taxation of nonresident alien individuals, foreign
corporations, foreign partnerships and other foreign stockholders
(collectively, "Non-U.S. Stockholders") are complex, and no attempt will be
made herein to provide more than a limited summary of such rules.
Prospective Non-U.S. Stockholders should consult with their own tax
advisors to determine the impact of U.S. federal, state and local income
tax laws with regard to an investment in the capital stock of Home
Properties, including any reporting requirements, as well as the tax
treatment of such an investment under their home country laws.
Distributions that are not attributable to gain from sales or
exchanges by Home Properties of a U.S. real property interest and not
designated by Home Properties as capital gain dividends will be treated as
dividends of ordinary income to the extent that they are made out of
current or accumulated earnings and profits of the Company. Such
distributions, ordinarily, will be subject to a withholding tax equal to
30% of the gross amount of the distribution unless an applicable tax treaty
reduces that tax. However, if income from the investment in the shares is
treated as effectively connected with the Non-U.S. Stockholder's conduct of
a United States trade or business, the Non-U.S. Stockholder generally will
be subject to a tax at graduated rates, in the same manner as U.S.
stockholders are taxed with respect to such dividends (and may also be
subject to the 30% branch profits tax if the stockholder is a foreign
corporation). Home Properties expects to withhold United States income tax
at the rate of 30% on the gross amount of any dividends paid to a Non-U.S.
Stockholder unless (1) a lower treaty rate applies and the required form
evidencing eligibility for that reduced rate is filed with Home Properties
or (2) the Non-U.S. Stockholder files an IRS Form 4224 with Home Properties
claiming that the distribution is "effectively connected" income.
Distributions in excess of current and accumulated earnings and profits of
Home Properties will not be taxable to a stockholder to the extent that
they do not exceed the adjusted basis of the stockholder's shares, but
rather will reduce the adjusted basis of such shares. To the extent that
such distributions exceed the adjusted basis of a Non-U.S. Stockholder's
shares, they will give rise to tax liability if the Non-U.S. Stockholder
would otherwise be subject to tax on any gain from the sale or disposition
of his shares as described below.
For any year in which Home Properties qualifies as a REIT,
distributions that are attributable to gain from sales or exchanges by Home
Properties of U.S. real property interests will be taxed to a Non-U.S.
Stockholder under the provisions of the Foreign Investment in Real Property
Tax Act of 1980 ("FIRPTA"). Under FIRPTA, these distributions are taxed to
a Non-U.S. Stockholder as if such gain were effectively connected with a
U.S. business. Thus, Non-U.S. Stockholders would be taxed at the normal
capital gain rates applicable to U.S. stockholders (subject to applicable
alternative minimum tax and a special alternative minimum tax in the case
of nonresident alien individuals). Distributions subject to FIRPTA may
also be subject to a 30% branch profits tax in the hands of a corporate
Non-U.S. Stockholder not entitled to treaty relief or exemption.
Home Properties will be required to withhold from distributions to
Non-U.S. Stockholders, and remit to the IRS, (a) 35% of designated capital
gain dividends (or, if greater, 35% of the amount of any distributions that
could be designated as capital gain dividends) and (b) 30% of ordinary
dividends paid out of earnings and profits. In addition, if Home
Properties designates prior distributions as capital gain dividends,
subsequent distributions, up to the amount of such prior distributions,
will be treated as capital gain dividends for purposes of withholding. A
distribution in excess of Home Properties' earnings and profits may be
subject to 30% dividend withholding if at the time of the distribution it
cannot be determined whether the distribution will be in an amount in
excess of Home Properties' current or accumulated earnings and profits.
Tax treaties may reduce Home Properties' withholding obligations. If the
amount withheld by Home Properties with respect to a distribution to a Non-
U.S. Stockholder exceeds the stockholder's United States tax liability with
respect to such distribution (as determined under the rules described
above), the Non-U.S. Stockholder may file for a refund of such excess from
the IRS. It should be noted that the 35% withholding tax rate on capital
gain dividends currently corresponds to the maximum income tax rate
applicable to corporations, but is higher than the 28% maximum rate on
capital gains of individuals.
Gain recognized by a Non-U.S. Stockholder upon a sale of shares of
capital stock generally will not be taxed under FIRPTA if a REIT is a
"domestically controlled REIT," defined generally as a REIT in which at all
times during a specified testing period less than 50% in value of the stock
was held directly or indirectly by foreign persons. It is currently
anticipated that Home Properties will be a "domestically controlled REIT,"
and therefore the sale of shares will not be subject to taxation under
FIRPTA. However, gain not subject to FIRPTA will be taxable to a Non-U.S.
Stockholder if (i) investment in the shares of capital stock is
"effectively connected" with the Non-U.S. Stockholder's U.S. trade or
business, in which case the Non-U.S. Stockholder will be subject to the
same treatment as United States stockholders with respect to such gain, or
(ii) the Non-U.S. Stockholder is a nonresident alien individual who was
present in the United States for 183 days or more during the taxable year
and has a "tax home" in the United States, in which case the nonresident
alien individual who was present in the U.S. will be subject to a 30% tax
on the individual's capital gains. If the gain on the sale of shares were
to be subject to taxation under FIRPTA, the Non-U.S. Stockholder would be
subject to the same treatment as U.S. stockholders with respect to such
gain (subject to applicable alternative minimum tax, possible withholding
tax and a special alternative minimum tax in the case of nonresident alien
individuals). A purchaser of shares of capital stock from a Non-U.S.
Stockholder will not be required under FIRPTA to withhold on the purchase
price if the purchased shares are "regularly traded" on an established
securities market or if Home Properties is a domestically controlled REIT.
Otherwise, under FIRPTA the purchaser of shares may be required to withhold
10% of the purchase price and remit such amount to the IRS.
INCOME TAXATION OF THE OPERATING PARTNERSHIP,
THE UNDERLYING PARTNERSHIPS AND THEIR PARTNERS
The following discussion summarizes certain federal income tax
considerations applicable to Home Properties' investment in the Operating
Partnership.
Classification of the Operating Partnership. Home Properties
will be entitled to include in its income its distributive share of the
income and to deduct its distributive share of the losses of the Operating
Partnership (including the Operating Partnership's share of the income or
losses of any partnerships in which it owns an interest) only if the
Operating Partnership is classified for federal income tax purposes as a
partnership rather than an association taxable as a corporation. An
organization formed as a partnership will be treated as a partnership for
federal income tax purposes rather than as a corporation only if it has no
more than two of the four corporate characteristics that the Treasury
Regulations use to distinguish a partnership from a corporation for tax
purposes. These four characteristics are continuity of life,
centralization of management, limited liability, and free transferability
of interests.
The Operating Partnership has not requested, nor does it intend to
request, a ruling from the IRS that it will be treated as a partnership for
federal income tax purposes.
If for any reason the Operating Partnership was taxable as a
corporation rather than as a partnership for federal income tax purposes,
Home Properties would not be able to satisfy the income and asset
requirements for REIT status. See "- Requirements for Qualification -
Income Tests" and "- Requirements for Qualification - Asset Tests." In
addition, any change in the Operating Partnership's status for tax purposes
might be treated as a taxable event, in which case Home Properties might
incur a tax liability without any related cash distribution. See "-
Requirements for Qualification - Annual Distribution Requirements."
Further, items of income and deduction of the Operating Partnership would
not pass through to its partners, and its partners would be treated as
stockholders for tax purposes. The Operating Partnership would be required
to pay income tax at corporate tax rates on its net income, and
distributions to its partners would constitute dividends that would not be
deductible in computing the Operating Partnership's taxable income.
Partners, Not Partnerships, Subject to Tax. A partnership is not a
taxable entity for federal income tax purposes. Rather, a partner is
required to take into account its allocable share of a partnership's
income, gains, losses, deductions and credits for any taxable year of the
partnership ending within or with the taxable year of the partner, without
regard to whether the partner has received or will receive any
distributions from the partnership.
Partnership Allocations. Although a partnership agreement will
generally determine the allocation of income and losses among partners,
such allocations may be disregarded for tax purposes under section 704(b)
of the Code if they do not have substantial economic effect. If an
allocation is not recognized for federal income tax purposes, the item
subject to the allocation will be reallocated in accordance with the
partners' interests in the partnership, which will be determined by taking
into account all of the facts and circumstances relating to the economic
arrangement of the partners with respect to such item. The Operating
Partnership's allocations of taxable income and loss are intended to comply
with the requirements of section 704(b) of the Code and the Treasury
Regulations promulgated thereunder.
Tax Allocations with Respect to the Properties. When property is
contributed to a partnership in exchange for an interest in the
partnership, the partnership generally takes a carryover basis in that
property for tax purposes equal to the adjusted basis of the contributing
partners in the property, rather than a basis equal to the fair market
value of the property at the time of contribution. Pursuant to section
704(c) of the Code, income, gain, loss and deduction attributable to such
contributed property must be allocated in a manner such that the
contributing partner is charged with, or benefits from, respectively, the
unrealized gain or unrealized loss associated with the property at the time
of the contribution. The amount of such unrealized gain or unrealized loss
is generally equal to the difference between the fair market value of the
contributed property at the time of contribution and the adjusted tax basis
of such property at the time of contribution (a "Book-Tax Difference").
Such allocations are solely for federal income tax purposes and do not
affect the book capital accounts or other economic or legal arrangements
among the partners.
The partners of the Operating Partnership other than Home Properties
(the "Contributing Partners") are deemed to have contributed general or
limited partnership interests in other partnerships owning multifamily
residential properties which were acquired by Operating Partnership and
which may have had an adjusted tax basis which is less than the fair market
value of such interests (the "Contributed Interests"). Upon the merger or
dissolution of the such partnerships and the transfer of the properties to
the Operating Partnership, the Contributing Partners were deemed to have
contributed the portion of the properties represented by the Contributed
Interests (the "Contributed Property") to the Operating Partnership, and
the Operating Partnership's tax basis in the Contributed Property will be
the tax basis of the Contributing Partners in the Contributed Interests.
Because the Contributed Property has a Book-Tax Difference, the Operating
Partnership Agreement will require allocations to be made in a manner
consistent with section 704(c) of the Code.
Under these special rules, the Contributing Partners may be allocated
lower amounts of depreciation deductions for tax purposes with respect to
the Contributed Property than the amount of such deductions that would be
allocated to them if such Contributed Property had a tax basis equal to its
fair market value at the time of contribution. In addition, in the event
of the disposition of any of the Contributed Property, all income
attributable to the Book-Tax Difference of such Contributed Property
generally will be allocated to the Contributing Partners, and Home
Properties generally will be allocated only its share of capital gains
attributable to appreciation, if any, occurring after the contribution of
the Contributed Property. These allocations will tend to eliminate the
Book-Tax Differences with respect to the Contributed Property over the life
of the Operating Partnership. However, the special allocation rules of
Section 704(c) may not entirely eliminate the Book-Tax Difference on an
annual basis or with respect to a specific taxable transaction such as a
sale. Thus, the carryover basis of the Contributed Property in the hands
of the Operating Partnership could cause Home Properties (i) to be
allocated lower amounts of depreciation and other deductions for tax
purposes than would be allocated to Home Properties if the Contributed
Property had a tax basis equal to its fair market value at the time of
contribution, and (ii) possibly to be allocated taxable gain in the event
of a sale of Contributed Property in excess of the economic or book income
allocated to Home Properties as a result of such sale. These allocations
possibly could cause Home Properties to recognize taxable income in excess
of cash proceeds, which might adversely affect its ability to comply with
the REIT distribution requirements. See " - Requirements for Qualification
- - Annual Distribution Requirements."
Depreciation. The Operating Partnership's assets other than cash will
consist largely of property treated as purchased by the Operating
Partnership. The Operating Partnership has an aggregate basis in the
assets of each partnership it acquires equal to the sum of the purchase
price paid for the partnership interests. To the extent that the Operating
Partnership's basis in a piece of depreciable property exceeds the basis of
the property when it was held by the acquired partnership, such basis
should in effect be treated as a newly acquired, separate asset and
entitled to 39-year depreciation.
Section 704(c) of the Code requires that depreciation as well as gain
and loss be allocated in a manner so as to take into account the variation
between the fair market value and tax basis of the property contributed.
Similarly, amortization on intangible contracts for services contributed to
the Operating Partnership will be allocated as required by section 704(c)
of the Code. Depreciation with respect to any property purchased by the
Operating Partnership subsequent to the admission of its partners will be
allocated among the partners in accordance with their respective percentage
interests in the Operating Partnership.
Sale of Partnership Property. Generally, any gain realized by a
partnership on the sale of property held by the partnership for more than
one year will be long-term capital gain, except for any portion of such
gain that is treated as depreciation or cost recovery recapture. However,
under the REIT Requirements, Home Properties' share as a partner of any
gain realized by the Operating Partnership on the sale of any property held
as inventory or other property held primarily for sale to customers in the
ordinary course of a trade or business will be treated as income from a
prohibited transaction that is subject to a 100% penalty tax. See "-
Taxation of Home Properties as a REIT." Such prohibited transaction income
will also have an adverse effect upon Home Properties' ability to satisfy
the income tests for REIT status. See "- Requirements for Qualification -
Income Tests." Under existing law, whether property is held as inventory
or primarily for sale to customers in the ordinary course of a trade or
business is a question of fact that depends on all the facts and
circumstances with respect to the particular transaction. A safe harbor to
avoid classification as a prohibited transaction exists as to real estate
assets held for the production of rental income by a REIT for at least four
years where in any taxable year the REIT has made no more than seven sales
of property or, in the alternative, the aggregate of the adjusted bases of
all properties sold does not exceed 10% of the adjusted bases of all of the
REIT's properties during the year and the expenditures includible in a
property's basis made during the four-year period prior to disposition must
not exceed 30% of the property's net sales price. The Operating
Partnership intends to hold its properties for investment with a view to
long-term appreciation, to engage in the business of acquiring, developing,
owning, and operating and leasing the properties and to make such
occasional sales of the properties, including adjoining land, as are
consistent with Home Properties' and the Operating Partnership's investment
objectives. No assurance can be given, however, that every property sale
by the Operating Partnership will constitute a sale of property held for
investment.
OTHER TAX CONSIDERATIONS
The Management Companies. A portion of the amounts to be used to
fund distributions to stockholders is expected to come from the Management
Companies through dividends on stock of the Management Companies to be held
by the Operating Partnership. The Management Companies do not qualify as a
REITs and will pay federal, state and local tax income taxes on its net
income at normal corporate tax rates. Home Properties expects that the
Management Companies' income, after deducting its expenses, will not give
rise to significant corporate tax liabilities. The amount of corporate tax
liability will increase if the IRS disallows the items of expense which
Home Properties expects to be allocated to the Management Companies.
State and Local Tax Considerations. Home Properties and the
Management Companies will, and Home Properties' stockholders may, be
subject to state or local taxation in various states or local
jurisdictions, including those in which the Company, its stockholders or
the Operating Partnership transact business or reside. The state and local
tax treatment of Home Properties and its stockholders may not conform to
the federal income tax consequences discussed above. Consequently,
prospective stockholders should consult their own tax advisors regarding
the effect of state and local tax laws on their investment in the Company.
Possible Federal Tax Developments. The rules dealing with federal
income taxation are constantly under review by the IRS, the Treasury
Department and Congress. New federal tax legislation or other provisions
may be enacted into law or new interpretations, rulings or Treasury
Regulations could be adopted, all of which could affect the taxation of
Home Properties or of its stockholders. No prediction can be made as to
the likelihood of passage of any new tax legislation or other provisions
either directly or indirectly affecting Home Properties or its
stockholders. Consequently, the tax treatment described herein may be
modified prospectively or retroactively by legislative, judicial or
administrative action.
ERISA CONSIDERATIONS
A fiduciary of a pension, profit-sharing, retirement or other employee
benefit plan ("Plan") subject to the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), should consider the fiduciary standards
under ERISA in the context of the Plan's particular circumstances before
authorizing an investment of any of such Plan's assets in shares of Home
Properties' capital stock. Accordingly, such fiduciary should consider
whether the investment (i) satisfies the diversification requirements of
section 404(a)(1)(C) of ERISA, (ii) is in accordance with the documents and
instruments governing the Plan to the extent consistent with ERISA, (iii)
is prudent and an appropriate investment for the Plan, based on examination
of the Plan's overall investment portfolio and (iv) is for the exclusive
benefit of Plan participants and beneficiaries, as required by ERISA.
In addition to the imposition of general fiduciary standards, ERISA
and the corresponding provisions of the Code prohibit a wide range of
transactions involving Plans and persons who have certain relationships to
Plans ("parties in interest" within the meaning of ERISA, "disqualified
persons" within the meaning of the Code). The Code's prohibited
transaction rules also apply to certain transactions between "disqualified
persons" and individual retirement accounts or annuities ("IRAs"), as
defined in section 408(a) and (b) of the Code. Thus, a Plan fiduciary and
an IRA considering an investment in shares also should consider whether the
acquisition or the continued holding of shares might constitute or give
rise to a direct or indirect prohibited transaction.
Those persons proposing to invest on behalf of Plans should also
consider whether a purchase of one or more shares of capital stock will
cause the assets of Home Properties to be deemed assets of the Plan for
purposes of the fiduciary responsibility and prohibited transaction
provisions of ERISA and the Code. The Department of Labor (the "DOL") has
issued regulations (the "DOL Regulations") as to what constitutes assets of
a Plan under ERISA. Under the DOL Regulations, if a Plan acquires an
equity interest in an entity, the Plan's assets would include, for purposes
of the fiduciary responsibility provisions of ERISA and the prohibited
transaction rules of ERISA and the Code, both the equity interest and an
undivided interest in each of the entity's underlying assets unless (a)
such interest is a "publicly offered security," (b) such interest is a
security issued by an investment company registered under the Investment
Company Act of 1940, as amended, or (c) another specified exception
applies.
PLAN OF DISTRIBUTION
The Company may sell the Offered Securities through underwriters or
dealers, directly to one or more purchasers, through agents or through a
combination of any such methods of sale. Any such underwriter or agent
involved in the offer and sale of the Offered Securities will be named in
the applicable Prospectus Supplement.
The distribution of the Offered Securities may be effected from time
to time in one or more transactions at a fixed price or prices, which may
be changed, at market prices prevailing at the time of sale, at prices
related to such prevailing market prices, or at negotiated prices.
In connection with the sale of the Offered Securities, underwriters or
agents may receive compensation from the Company or from purchasers of the
Offered Securities, for whom they may act as agents, in the form of
discounts, concessions or commissions. Underwriters may sell the Offered
Securities to or through dealers, and such dealers may receive compensation
in the form of discounts, concessions or commissions from the underwriters
and/or commissions from the purchasers for whom they may act as agents.
Underwriters, dealers and agents that participate in the distribution of
the Offered Securities may be deemed to be underwriters under the
Securities Act, and any discounts or commissions they receive from the
Company and any profit on the sale of the capital stock they realize may be
deemed to be underwriting discounts and commissions under the Securities
Act. Any such underwriting or agent will be identified, and any such
compensation received from the Company will be described, in the applicable
Prospectus Supplement.
Any Common Stock sold pursuant to a Prospectus Supplement will be
listed on the New York Stock Exchange, subject to official notice of
issuance. Unless otherwise specified in the related Prospectus Supplement,
each series of Offered Securities other than Common Stock will be a new
issue with no established trading market. The Company may elect to list
any series of Preferred Stock or other securities on an exchange, but is
not obligated to do so. It is possible that one or more underwriters may
make a market in a series of Offered Securities, but will not be obligated
to do so and may discontinue any market making at any time without notice.
Therefore, no assurance can be given as to the liquidity of the trading
market for the Offered Securities.
Under agreements into which the Company may enter, underwriters,
dealers and agents who participate in the distribution of the Offered
Securities may be entitled to indemnification by the Company against
certain liabilities, including liabilities under the Securities Act.
Underwriters, dealers and agents may engage in transactions with, or
perform services for, or be tenants of, the Company in the ordinary course
of business.
In order to comply with the securities laws of certain states, if
applicable, the Offered Securities will be sold in such jurisdictions only
through registered or licensed brokers or dealers. In addition, in certain
states the Offered Securities may not be sold unless they have been
registered or qualified for sale in the applicable state or an exemption
from the registration or qualification requirement is available and is
complied with.
EXPERTS
The financial statements incorporated by reference in this Prospectus
or elsewhere in the Registration Statement have been incorporated herein in
reliance on the reports audited by Coopers & Lybrand L.L.P., independent
accountants, given on the authority of that firm as experts in accounting
and auditing.
LEGAL MATTERS
The legality of the Offered Securities issued pursuant to any
Prospectus Supplement will be passed upon by Nixon, Hargrave, Devans &
Doyle LLP. In addition, Nixon, Hargrave, Devans & Doyle LLP will provide
an opinion with respect to certain tax matters which form the basis of the
discussion under "Federal Income Tax Considerations".
<PAGE>
NO DEALER, SALESPERSON OR OTHER
INDIVIDUAL HAS BEEN AUTHORIZED
TO GIVE ANY INFORMATION OR MAKE
ANY REPRESENTATIONS NOT
CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFERING
COVERED BY THIS PROSPECTUS. IF HOME PROPERTIES
GIVEN OR MADE, SUCH INFORMATION OF
OR REPRESENTATIONS MUST NOT BE NEW YORK, INC.
RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY. THIS
PROSPECTUS DOES NOT CONSTITUTE
AN OFFER TO SELL, OR A
SOLICITATION OF AN OFFER TO BUY, COMMON STOCK
THE COMMON STOCK IN ANY PREFERRED STOCK
JURISDICTION WHERE, OR TO ANY COMMON STOCK PURCHASE
PERSON TO WHOM, IT IS UNLAWFUL RIGHTS OR WARRANTS
TO MAKE ANY SUCH OFFER OR DEBT SECURITIES
SOLICITATION. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR
ANY SALE MADE HEREUNDER SHALL,
UNDER ANY CIRCUMSTANCES, CREATE
AN IMPLICATION THAT THERE HAS
NOT BEEN ANY CHANGE IN THE FACTS
SET FORTH IN THIS PROSPECTUS OR
IN THE AFFAIRS OF THE COMPANY
SINCE THE DATE HEREOF.
SUMMARY SEPTEMBER 5, 1996
TABLE OF CONTENTS
Page
Additional Information . . . 2
Documents Incorporated by
Reference. . . . . . . . . . 3
The Company. . . . . . . . . 3
Risk Factors . . . . . . . . 4
Use of Proceeds. . . . . . . 12
Description of Capital
Stock. . . . . . . . . . . 12
Description of Debt
Securities . . . . . . . . 20
Federal Income Tax
Considerations . . . . . . 25
Plan of Distribution . . . . 40
Experts. . . . . . . . . . . 41
Legal Matters. . . . . . . . 41
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table is an itemized listing of expenses to be
incurred by the Company in connection with the issuance and distribution of
the shares of Common Stock being registered hereby, other than discounts
and commissions:
SEC Registration Fee . . . . . . . . . . . $ 34,482.76
NYSE Listing Fee . . . . . . . . . . . . . *
Printing and Engraving Costs . . . . . . . *
Legal Fees and Expenses. . . . . . . . . . 12,000.00*
Accounting Fees and Expenses . . . . . . . 2,000.00*
Miscellaneous. . . . . . . . . . . . . . . 5,000.00*
____________
Total. . . . . . . . . . . . . . . . . $ 53,482.76*
=============
*Estimate
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
See original filing.
ITEM 16. EXHIBITS
Number Description
3.1 Articles of Amendment and Restatement of Articles of Incorporation
of Home Properties of New York, Inc. (the "Company")
3.2 Amended and Restated By-Laws of the Company
4.1 Form of certificate representing shares of Common Stock of the
Company
4.2 Agreement of the Company to file instruments defining the rights of
holders of long term debt or it or its subsidiaries with the
Commission on request
4.3 Credit Agreement between Manufacturers and Traders Trust Company,
Home Properties of New York, L.P. (the "Operating Partnership") and
the Company
4.4 Amendment Agreement between M&T, the Operating Partnership and the
Company
4.5 Mortgage Spreader, Consolidation and Modification Agreement between
M&T and the Operating Partnership, together with form of Mortgage,
Assignment of Leases and Rents and Security Agreement incorporated
therein by reference
4.6 Mortgage Note made by the Operating Partnership payable to M&T in
the principal amount of $12,298,999
4.7 Demand Grid Note, dated August 22, 1996, from the Operating
Partnership to M&T in the maximum principal amount of $25,000,000
4.8 Spreader, Consolidation, Modification and Extension Agreement,
dated as of October 26, 1995, between John Hancock Mutual Life
Insurance Company and the Operating Partnership relating to
indebtedness in the principal amount of $20,500,000.
4.9 Form of Indenture for Debt Securities*
5.1 Opinion of Nixon,Hargrave, Devans & Doyle LLP regarding the
legality of the Common Stock being registered*
10.1 Amended and Restated Agreement of Limited Partnership of the
Operating Partnership
10.2 Amendments No. One through Eight to the Agreement of Limited
Partnership of the Operating Partnership
24.1 Consent of Nixon, Hargrave, Devans & Doyle LLP (included as part of
Exhibit 5)
24.2 Consent of Coopers & Lybrand LLP
25 Power of Attorney (included on signature page)
* Included with this filing.
ITEM 17. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions,
or otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the Registrant of expenses incurred or paid by a
director, officer or controlling person of the Registrant in the successful
defense of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it
is against public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed as
part of this Registration Statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the Registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be
part of this Registration Statement as of the time it was declared
effective.
(2) For the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a form
of prospectus shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering thereof.
(3) For purposes of determining any liability under the Securities
Act of 1933, each filing of the Registrant's annual report pursuant to
Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and,
where applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the registration statement shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(4) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement to include
any material information with respect to the plan of distribution not
previously disclosed in the registration statement or any material change
to such information in the registration statement.
The undersigned registrant hereby undertakes, at the time of any
proposed offer of Debt Securities pursuant to a Prospectus Supplement, to
file an application for the purpose of determining the eligibility of the
trustee to act under Subsection (a) of Section 310 of the Trust Indenture
Act in accordance with the rules and regulations prescribed by the
Commission under Section 305(b)(2) of the Trust Indenture Act.
The undersigned registrant hereby undertakes, at the time of any
proposed offer of any Common Stock Purchase Rights pursuant to a Prospectus
Supplement, to further supplement the prospectus, after the expiration of
the subscription period, to set forth the results of the subscription
offer, the transactions by the underwriters, if any, during the
subscription period, the amount of any unsubscribed securities to be
purchased by the underwriters, and the terms of any subsequent reoffering
thereof. If any public offering by the underwriters is to be made on terms
differing from those set forth on the cover page of the applicable
Prospectus Supplement, a post-effective amendment will be filed to set
forth the terms of such offering.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it
meets all the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Rochester, New York, on the 5th
day of September, 1996.
HOME PROPERTIES OF NEW YORK, INC.
By: /s/ Norman Leenhouts
Norman P. Leenhouts
Chairman and Co-Chief Executive Officer
By: /s/ Nelson B. Leenhouts
Nelson B. Leenhouts
President and Co-Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
_/s/ Norman P. Leenhouts Director, Chairman September 5, 1996
Norman P. Leenhouts and Co-Chief Executive
Officer (Principal
Executive Officer)
/s/ Nelson B. Leenhouts Director, President September 5, 1996
Nelson B. Leenhouts and Co-Chief Executive
Officer (Principal
Executive Officer)
/s/ Richard J. Crossed Director, Executive Vice September 5, 1996
Richard J. Crossed President
/s/ Amy L. Tait Director, Executive Vice September 5, 1996
Amy L. Tait President and Chief
Operating Officer
/s/ David P. Gardner Vice President, Chief September 5, 1996
David P. Gardner Financial Officer
and Treasurer
(Principal Financial and
Accounting Officer)
* _______________________ Director September 5, 1996
Burton S. August, Sr.
* _______________________ Director September 5, 1995
William Balderston, III
* _______________________ Director September 5, 1995
Leonard F. Helbig, III
* _______________________ Director September 5, 1995
Roger W. Kober
* _______________________ Director September 5, 1995
Clifford W. Smith, Jr.
* _______________________ Director September 5, 1995
Paul L. Smith
* By /s/ Norman P. Leenhouts
Attorney-in-Fact
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with
Securities and Exchange Commission. These securities may not be sold nor
may offers to buy be accepted prior to the time the registration statement
becomes effective. This prospectus shall not constitute an offer to sell
or the solicitation of an offer to buy nor shall there by any sale of these
securities in any State in which such offer, soliciation or sale would be
unlawful prior to registration or qualification under the securities laws
of any such State.
<PAGE>
EXHIBIT INDEX
Home Properties of New York, Inc. (the "Company")
Registration Statement on Form S-3 No. 333-2674
NUMBER DESCRIPTION LOCATION
3.1 Articles of Amendment and Restatement Form S-11, File
of Articles of Incorporation of the No. 33-78862
Company ("S-11")
3.2 Amended and Restated By-Laws of the Company S-11
4.1 Form of certificate representing shares S-11
of Common Stock of the Company
4.2 Agreement of the Company to file S-11
instruments defining the rights of holders
of long term debt or it or its subsidiaries
with the Commission on request
4.3 Credit Agreement between Manufacturers and Form 10-Q for
Traders Trust Company, Home Properties of Quarter Ended
New York, L.P. (the "Operating Partnership") 6/30/94 (File
and the Company 1-13136)
("6/94 10-Q")
4.4 Amendment Agreement between M&T, the Operating Form 10-K for
Partnership and the Company Year Ended
12/31/94
("1994 10-K")
4.5 Mortgage Spreader, Consolidation and Modification 6/94 10-Q
Agreement between M&T and the Operating Partnership,
together with form of Mortgage, Assignment of Leases
and Rents and Security Agreement incorporated
therein by reference
4.6 Mortgage Note made by the Operating Partnership 6/94 10-Q
payable to M&T in the principal amount of $12,298,999
4.7 Demand Grid Note, dated August 22, 1996, from the Filed herewith
Operating Partnership to M&T in the maximum principal
amount of $25,000,000
4.8 Spreader, Consolidation, Modification and Extension Form 10-K for
Agreement, dated as of October 26, 1995, between John Year Ended
Hancock Mutual Life Insurance Company and the 12/31/95
Operating Partnership relating to indebtedness in ("1995 10-K")
the principal amount of $20,500,000
4.9 Form of Indenture for Debt Securities Filed herewith
5.1 Opinion of Nixon, Hargrave, Devans & Doyle LLP Filed herewith
regarding the legality of the Common Stock being
registered
10.1 Amended and Restated Agreement of Limited S-11
Partnership of the Operating Partnership
10.2 Amendments No. One through Eight to the Agreement 1995 10-K
of Limited Partnership of the Operating Partnership
24.1 Consent of Nixon, Hargrave, Devans & Doyle LLP Included with
Exhibit 5
24.2 Consent of Coopers & Lybrand LLP Filed herewith
25 Power of Attorney Included on
signature page
DEMAND GRID NOTE
Rochester, New York $25,000,000
August 22, 1996
For purposes of this Note:
1. The "Bank" means Manufacturers and Traders Trust Company, a
New York banking corporation having its chief executive office at One M&T
Plaza, Buffalo, New York 14240.
2. The "Bank's Prime Rate" means the rate per year announced by
the Bank as the prime rate of interest of the Bank.
3. The "Borrower" means Home Properties of New York, L.P.,
a New York limited partnership having its chief executive office at 850
Clinton Square, Rochester, New York 14604.
4. "Business Day" means any day on which banks are open to
conduct regular business in both New York City and London.
5. The "Corporate General Partner" means Home Properties of New
York, Inc., a Maryland business corporation having its chief executive
office at 850 Clinton Square, Rochester, New York 14604.
6. The "Credit" means a line of credit made available by the
Bank to the Borrower in the maximum principal amount equal to the Limiting
Principal Amount.
7. "Demand" means any demand by the Holder for the payment of
the Outstanding Principal Amount.
8. "Distribution" means, with respect to any corporation,
(a) any dividend or other distribution, whether in cash or in the form of
any other asset, on account of any of its stock or (b) any payment on
account of the purchase, redemption, retirement or other acquisition of any
of its stock.
9. The "Holder" means the Bank or any transferee of this Note.
10. The "Limiting Principal Amount" means $25,000,000.
11. "Loan" means any loan made by the Bank pursuant to the
Credit.
12. "One-Month Libor Rate" means, for any calendar month, the
rate, as determined by the Bank from any broker, quoting service or
commonly available source utilized by the Bank and as adjusted, in the sole
discretion of the Bank, to reflect any increased cost directly or
indirectly resulting from, or any reserve required by, applicable law, any
guideline or program of any court, agency or other governmental authority
or any other circumstance affecting the London interbank eurodollar market,
at which United States dollar deposits in immediately available funds are
offered in the London interbank eurodollar market at approximately 11:00
a.m. London time (or as soon thereafter as practicable) on the date that is
two Business Days before the first Business Day of such calendar month for
delivery on the first Business Day of such calendar month for a one-month
period.
13. The "Outstanding Principal Amount" means the outstanding
principal amount of this Note.
14. "Person" means (a) any individual, corporation, partnership,
limited liability company, joint venture, trust or unincorporated
association or (b) any other entity, body, organization or group.
15. "Related Entity" means (a) the Borrower, (b) the Corporate
General Partner or (c) any Person (i) of which the Borrower or the
Corporate General Partner now or hereafter has beneficial ownership,
whether direct or indirect, of 50% or more of the outstanding shares of any
class of stock or 50% or more of any class of other ownership interest or
(ii) such lower percentage of the outstanding shares of any class of such
stock or any class of such other ownership interest as is sufficient to
render such Person a subsidiary of the Borrower or the Corporate General
Partner for purposes of generally accepted accounting principles as in
effect at the time of determination of the status of such Person for
purposes of this definition.
16. "Request" means any oral (including, but not limited to,
telephonic), written (including, but not limited to, facsimile) or other
request for a Loan that (a) states the original principal amount of such
Loan, the date such Loan is requested to be made and the purpose of such
Loan, (b) certifies that no change in the Partnership Agreement of the
Borrower or the Certificate of Incorporation or By-laws of the Corporate
General Partner has been made since the date of this Note except as
disclosed in such request or a prior such request and (c) contains any
other information required by the Bank prior to the making of such Loan.
For value received, the Borrower promises to pay to the order of
the Bank at any of the banking offices of the Bank, in lawful money of the
United States and immediately available funds, on demand (a) the Limiting
Principal Amount or the Outstanding Principal Amount, if less,
(b) interest, calculated on the basis of a 360-day year for the actual
number of days each year (365 or 366, as applicable), on the Outstanding
Principal Amount from and including the date of this Note to but not
including the date the Outstanding Principal Amount is paid in full at a
rate per year that shall (i) on each day beginning before the Outstanding
Principal Amount becomes due, whether pursuant to any Demand or otherwise,
be 1.90% above the One-Month Libor Rate for the calendar month in which
such day falls and (ii) on each day subsequent to the last day described in
clause (a)(i) of this sentence be 4% above the rate in effect such
subsequent day as the Bank's Prime Rate (provided, however, that (A) in no
event shall such interest be payable at a rate in excess of the maximum
rate permitted by applicable law and (B) solely to the extent necessary to
result in such interest not being payable at a rate in excess of such
maximum rate, any amount that would be treated as part of such interest
under a final judicial interpretation of applicable law shall be deemed to
have been a mistake and automatically canceled, and, if received by the
Bank, shall be refunded to the Borrower, it being the intention of the Bank
and the Borrower that such interest not be payable at a rate in excess of
such maximum rate) and (c) each cost and expense (including, but not
limited to, the reasonable fees and disbursements of counsel to the Holder,
whether retained for advice, litigation or any other purpose) incurred by
the Holder in endeavoring to (i) collect any amount payable pursuant to
this Note and remaining unpaid, (ii) preserve or exercise any right or
remedy of the Holder pursuant to this Note or (iii) preserve or exercise
any right or remedy of the Holder relating to, enforce or realize upon any
guaranty, endorsement, collateral, subordination or other security or
assurance of payment now or hereafter securing the payment of or otherwise
now or hereafter applicable to any amount payable pursuant to this Note.
In the absence of any Demand, a payment of interest pursuant to
this Note shall become due on the first day of each calendar month.
In the absence of any earlier Demand, the Outstanding Principal
Amount shall become due on August 22, 1997.
If any of the Outstanding Principal Amount or any interest
payable pursuant to this Note is not paid within ten days after the date it
becomes due, whether pursuant to any Demand or otherwise, the Borrower
shall pay to the Holder on demand a late charge of 6% thereof.
The Bank may make any Loan in reliance upon any Request that the
Bank in good faith believes to be valid and to have been made in the name
or on behalf of the Borrower by any officer of the Corporate General
Partner unless prior to receipt of such Request by the Bank the Bank
received from the Corporate General Partner and had a reasonable time to
act on written notice revoking the authority of such officer to make a
Request in the name or on behalf of the Borrower. The Bank shall not incur
any liability to the Borrower or any other Person as a direct or indirect
result of making any Loan in accordance with the preceding sentence.
The Credit is available subject to the Bank's continuing review
and right of modification, restriction, suspension or termination at any
time for any reason without any prior notice to the Borrower. No
modification, restriction, suspension or termination of the Credit shall
affect the obligation of the Borrower to repay the original principal
amount of each Loan, the obligation of the Borrower to pay interest on the
outstanding principal amount of each Loan or any other obligation of the
Borrower to the Holder pursuant to this Note or otherwise.
For each period (1) beginning on the date of this Note and ending
on the last day of the calendar quarter containing such date,
(2) consisting of any calendar quarter beginning after the calendar quarter
containing the date of this Note and before the calendar quarter containing
the first date any Demand is made or (3) beginning on the first day of the
calendar quarter containing the first date any Demand is made and ending on
such date, the Borrower shall pay to the Bank on demand a non-usage fee
equal to the product obtained by multiplying (a) the difference between the
Limiting Principal Amount and the daily average during such period of the
Outstanding Principal Amount first by (b) 1/4% and then by (c) the fraction
obtained by dividing the number of days in such period by 360 (provided,
however, that (i) in no event shall there be payable any such non-usage fee
that would result in interest being payable on the Outstanding Principal
Amount at a rate in excess of the maximum rate permitted by applicable law
and (ii) solely to the extent necessary to result in such interest not
being payable at a rate in excess of such maximum rate, any amount that
would be treated as part of such interest under a final judicial
interpretation of applicable law shall be deemed to have been a mistake and
automatically canceled and, if received by the Bank, shall be refunded to
the Borrower, it being the intention of the Bank and the Borrower that such
interest not be payable at a rate in excess of such maximum rate).
There shall be payable as principal pursuant to this Note only so
much of the Limiting Principal Amount as shall have been advanced by the
Bank as a Loan or Loans and is outstanding. The Holder shall set forth on
the schedule attached to and made a part of this Note or any similar
schedule (including, but not limited to, any similar schedule maintained in
computerized records) annotations evidencing (1) the date and original
principal amount of each Loan, (2) the date and amount of each payment to
be applied to the Outstanding Principal Amount and (3) the Outstanding
Principal Amount after each Loan and each such payment. Each such
annotation shall, in the absence of manifest error, be conclusive and
binding upon the Borrower. No failure by the Holder to make and no error
by the Holder in making any annotation on such attached schedule or any
such similar schedule shall affect the obligation of the Borrower to repay
the original principal amount of each Loan, the obligation of the Borrower
to pay interest on the outstanding principal amount of each Loan or any
other obligation of the Borrower to the Holder pursuant to this Note or
otherwise.
Until the Credit has been terminated by the Bank and all amounts
payable pursuant to this Note have been fully and indefeasibly paid or
otherwise discharged, the Borrower shall, unless the prior written consent
of the Holder to not doing so shall have been obtained by the Borrower,
assure that:
1. The aggregate outstanding principal amount at any time of
liabilities of Related Entities arising from the borrowing of any money or
the deferral of any of the purchase price of any asset or pursuant to any
capital lease does not exceed 50% of the total of (a) the aggregate market
value at such time of all outstanding shares of stock of the Corporate
General Partner, (b) the aggregate market value at such time of all
outstanding partnership interests in the Borrower not owned by the
Corporate General Partner and (c) the aggregate outstanding principal
amount at such time of liabilities of the Borrower and the Corporate
General Partner arising from the borrowing of any money or the deferral of
any of the purchase price of any asset or pursuant to any capital lease;
2. The combined net income of all Related Entities for any
fiscal year of the Corporate General Partner before distributions and
non-cash expenses is at least 120% of the higher of (a) all principal and
interest scheduled to become due during the immediately following fiscal
year of the Corporate General Partner with respect to liabilities of
Related Entities arising from the borrowing of any money or the deferral of
any of the purchase price of any asset or pursuant to any capital lease,
except for any balloon payment of any of such principal that is scheduled
to become due during such immediately following fiscal year and is
reasonably expected to be refinanced, extended or paid prior to becoming
due, or (b) all principal and interest that would be scheduled to become
due during such immediately following fiscal year in connection with a loan
for which (i) the principal amount was equal to the aggregate outstanding
principal amount at the end of such fiscal year of such liabilities,
(ii) the rate of interest was a fixed rate of 9% per year and (iii) 300
monthly payments of principal and interest equal in amount were scheduled
to be made to repay the principal amount thereof and pay interest in
connection therewith;
3. The combined earnings of all Related Entities for any fiscal
year of the Corporate General Partner before interest, tax, depreciation
and amortization expense are at least 200% of all principal and interest
scheduled to become due during the immediately following fiscal year of the
Corporate General Partner with respect to liabilities of Related Entities
arising from the borrowing of any money or the deferral of the purchase
price of any asset or pursuant to any capital lease, except for any balloon
payment of any of such principal that is scheduled to become due during
such immediately following fiscal year and is reasonably expected to be
refinanced, extended or paid prior to becoming due;
4. The aggregate outstanding principal amount at the end of
each fiscal quarter of the Corporate General Partner of liabilities of
Related Entities does not exceed 550% of the combined earnings of all
Related Entities for such fiscal quarter before interest, tax, depreciation
and amortization expense;
5. The combined earnings of all Related Entities for any fiscal
year of the Corporate General Partner before interest, tax, depreciation
and amortization expense that are attributable to assets not subject to any
mortgage, security interest or other lien are at least 200% of the higher
of (a) all principal and interest scheduled to become due during the
immediately following fiscal year of the Corporate General Partner with
respect to liabilities of Related Entities (i) arising from the borrowing
of any money or the deferral of the purchase price of any asset or pursuant
to any capital lease and (ii) the payment of which is not secured by any
mortgage, security interest or other lien on any asset of any Related
Entity, except for any balloon payment of any of such principal that is
scheduled to become due during such immediately following fiscal year and
is reasonably expected to be refinanced, extended or paid prior to becoming
due, or (b) all principal and interest that would be scheduled to become
due during such immediately following fiscal year in connection with a loan
for which (i) the principal amount was equal to the daily average of the
Outstanding Principal Amount during such fiscal year of such liabilities,
(ii) the rate of interest was a fixed rate of 8% per year and (iii) 300
monthly payments of principal and interest equal in amount were scheduled
to be made the repay the principal amount thereof and pay interest in
connection therewith;
6. The aggregate market value at any time of all real property
interests of Related Entities not subject to any mortgage, security
interest or other lien is at least 150% of the aggregate outstanding
principal amount at such time of liabilities of Related Entities
(a) arising from the borrowing of any money or the deferral of any of the
purchase price of any asset or pursuant to any capital lease and (b) the
payment of which is not secured by any mortgage, security interest or other
lien on any asset of any Related Entity; and
7. No Related Entity that is a corporation declares, pays or
makes any Distribution, except for (a) dividends payable solely in any of
its stock, (b) cash dividends paid to the Borrower or the Corporate General
Partner by any Related Entity all of the outstanding shares of stock of
which other than shares required by applicable law to enable any individual
to serve as a director of such Related Entity are owned by the Borrower or
the Corporate General Partner at the time of such payment and (c) during
each fiscal year of the Corporate General Partner, cash dividends declared
or paid by the Corporate General Partner in an amount not exceeding (i) the
consolidated earnings of the Corporate General Partner for such fiscal year
before depreciation and amortization expense minus (ii) all principal
scheduled to become due during the immediately following fiscal year of the
Corporate General Partner with respect to liabilities of Related Entities
arising from the borrowing of any money or the deferral of any of the
purchase price of any asset or pursuant to any capital lease, except for
any balloon payment of any of such principal that is scheduled to become
due during such immediately following fiscal year and is reasonably
expected to be refinanced, extended or paid prior to becoming due.
Each accounting term used in this Note shall be construed as of
any time in accordance with generally accepted accounting principles as in
effect at such time. Each accounting computation that this Note requires
to be made as of any time shall be made in accordance with such principles
as in effect at such time, except where such principles are incompatible
with any requirement of this Note.
All amounts payable pursuant to this Note and remaining unpaid
shall, without any notice, demand, presentment or protest of any kind (each
of which is knowingly, voluntarily, intentionally and irrevocably waived by
the Borrower), automatically become immediately due if the Borrower
commences or has commenced against it any proceeding pursuant to any
bankruptcy or insolvency statute.
This Note shall be governed by and construed, interpreted and
enforced in accordance with the internal law of the State of New York,
without regard to principles of conflict of laws.
This Note is given in replacement of and substitution for, but
not payment of, a Demand Grid Note, dated July 15, 1996, in the maximum
principal amount of $17,000,000 executed and delivered to the Bank by the
Borrower.
THE BORROWER KNOWINGLY, VOLUNTARILY, INTENTIONALLY AND
IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO
ANY ACTION OR OTHER LEGAL PROCEEDING, WHETHER BASED ON ANY CONTRACT, ON ANY
NEGLIGENT OR INTENTIONAL TORT, ON ANY STATUTE, REGULATION OR OTHER LAW OR
OTHERWISE, IN CONNECTION WITH, OR OTHERWISE RELATING TO, (A) THIS NOTE OR
ANY GUARANTY, ENDORSEMENT, COLLATERAL, SUBORDINATION OR OTHER SECURITY OR
ASSURANCE OF PAYMENT NOW OR HEREAFTER DIRECTLY OR INDIRECTLY SECURING THE
PAYMENT OF, OR OTHERWISE NOW OR HEREAFTER DIRECTLY OR INDIRECTLY APPLICABLE
TO, ANY AMOUNT PAYABLE PURSUANT TO THIS NOTE, (B) ANY OTHER WRITING
HERETOFORE OR HEREAFTER EXECUTED IN CONNECTION WITH, OR OTHERWISE RELATING
TO, THIS NOTE OR ANY SUCH GUARANTY, ENDORSEMENT, COLLATERAL, SUBORDINATION
OR OTHER SECURITY OR ASSURANCE OF PAYMENT OR (C) ANY COURSE OF DEALING,
COURSE OF PERFORMANCE OR OTHER CONDUCT HERETOFORE OR HEREAFTER PURSUED, ANY
ACTION HERETOFORE OR HEREAFTER TAKEN OR OMITTED TO BE TAKEN, OR ANY ORAL OR
WRITTEN REPRESENTATION HERETOFORE OR HEREAFTER MADE, BY OR ON BEHALF OF THE
HOLDER IN CONNECTION WITH, OR OTHERWISE RELATING TO, THIS NOTE OR ANY SUCH
GUARANTY, ENDORSEMENT, COLLATERAL, SUBORDINATION OR OTHER SECURITY OR
ASSURANCE OF PAYMENT.
HOME PROPERTIES OF NEW YORK, L.P.
By /s/ Norman Leenhouts
Norman Leenhouts, Chairman
HOME PROPERTIES OF NEW YORK, INC.,
Its Sole General Partner
By /s/Norman Leenhouts
Norman Leenhouts, Chairman
ACKNOWLEDGMENT
STATE OF NEW YORK )
: SS.
COUNTY OF MONROE )
On the 21st day of August in year 1996, before me personally came
Norman Leenhouts, to me known, who being by me duly sworn, did depose and
say that he resides at 1206 Fairway 18, Macedon, New York; that he is the
Chairman of Home Properties of New York, Inc., the corporation which
executed the above instrument on behalf of Home Properties of New York,
L.P., the limited partnership described therein and of which said
corporation is the sole general partner; and that he signed his name
thereto by order of the board of directors of said corporation.
/s/ Ann M. McCormick
Notary Public
<PAGE>
SCHEDULE OF ADVANCES AND PAYMENTS
Original Outstanding
Principal Date Principal Principal
Date of Amount of of Amount of Amount of Approving
Loan Loan Payment Payment Note Employee
Exhibit 4.9
HOME PROPERTIES OF NEW YORK, INC.
TO
___________________
TRUSTEE
PROPOSED FORM OF INDENTURE
Dated as of ____________, 1996
Debt Securities
HOME PROPERTIES OF NEW YORK, INC.
Cross reference between certain Sections
of this Indenture, dated as of _____________, 1996, and
Sections 310 through 318, inclusive, of
the Trust Indenture Act of 1939:
Trust Indenture
Act Section Indenture Section
310(a)(1) 6.09
(a)(2) 6.09
(a)(3) Not Applicable
(a)(4) Not Applicable
(a)(5) Not Applicable
(b) 6.08
6.10
311(a) 6.13
(b) 6.13
312(a) 7.01 and 7.02(a)
(b) 7.02(b)
(c) 7.02(c)
313(a) 7.03(a)
(b) 7.03(a)
(c) 7.03(a)
(d) 7.03(b)
314(a) 7.04
(a)(4) 1.02
10.04
(b) Not Applicable
(c)(1) 1.02
(c)(2) 1.02
(c)(3) Not Applicable
(d) Not Applicable
(e) 1.02
315(a) 6.01
(b) 6.02
(c) 6.01
(d) 6.01
(e) 5.14
316(a) 1.01
(a)(1)(A) 5.02 and 5.12
(a)(1)(B) 5.02 and 5.13
(a)(2) Not Applicable
(b) 5.08
(c) 1.04(c)
317(a)(1) 5.03
(a)(2) 5.04
(b) 10.03
318(a) 1.07
NOTE: This cross-reference shall not, for any purpose, be deemed to be a
part of the Indenture.
<PAGE>
TABLE OF CONTENTS
Page
PARTIES
RECITALS OF THE COMPANY
ARTICLE ONE
General and Other Provisions of General Application
Section 1.01 Definitions . . . . . . . . . . . . . . . . . . .
Act. . . . . . . . . . . . . . . . . . . . .
Board of Directors . . . . . . . . . . . . .
Board Resolution . . . . . . . . . . . . . .
Business Day . . . . . . . . . . . . . . . .
Commission . . . . . . . . . . . . . . . . .
Common Stock . . . . . . . . . . . . . . . .
Company. . . . . . . . . . . . . . . . . . .
Company Request. . . . . . . . . . . . . . .
Company Order. . . . . . . . . . . . . . . .
Corporate Trust Office . . . . . . . . . . .
Corporation. . . . . . . . . . . . . . . . .
Covenant Defeasance. . . . . . . . . . . . .
Defaulted Interest . . . . . . . . . . . . .
Defeasance . . . . . . . . . . . . . . . . .
Event of Default . . . . . . . . . . . . . .
Exchange Act . . . . . . . . . . . . . . . .
Floating or Adjustable Rate Provision. . . .
Floating or Adjustable Rate Security . . . .
Holder . . . . . . . . . . . . . . . . . . .
Indenture. . . . . . . . . . . . . . . . . .
Interest . . . . . . . . . . . . . . . . . .
Interest Payment Date. . . . . . . . . . . .
Maturity . . . . . . . . . . . . . . . . . .
Notice of Default. . . . . . . . . . . . . .
Officers' Certificate. . . . . . . . . . . .
Operative Partnership. . . . . . . . . . . .
Opinion of Counsel . . . . . . . . . . . . .
Original Issue Discount Security . . . . . .
Outstanding. . . . . . . . . . . . . . . . .
Paying Agent . . . . . . . . . . . . . . . .
Person . . . . . . . . . . . . . . . . . . .
Place of Payment . . . . . . . . . . . . . .
Predecessor Security . . . . . . . . . . . .
Redemption Date. . . . . . . . . . . . . . .
Redemption Price . . . . . . . . . . . . . .
Regular Record Date. . . . . . . . . . . . .
Responsible Officer. . . . . . . . . . . . .
Securities . . . . . . . . . . . . . . . . .
Security Register. . . . . . . . . . . . . .
Security Registrar . . . . . . . . . . . . .
Special Record Date. . . . . . . . . . . . .
Stated Maturity. . . . . . . . . . . . . . .
Subsidiary . . . . . . . . . . . . . . . . .
Trustee. . . . . . . . . . . . . . . . . . .
Trust Indenture Act. . . . . . . . . . . . .
U.S. Government Obligations. . . . . . . . .
Section 1.02 Compliance Certificates and Opinions. . . . . . .
Section 1.03 Form of Documents Delivered to Trustee. . . . . .
Section 1.04 Acts of Holders; Record Dates . . . . . . . . . .
Section 1.05 Notices to Trustee and Company. . . . . . . . . .
Section 1.06 Notice to Holders; Waiver . . . . . . . . . . . .
Section 1.07 Conflict with Trust Indenture Act . . . . . . . .
Section 1.08 Effect of Headings and Table of Contents. . . . .
Section 1.09 Successors and Assigns. . . . . . . . . . . . . .
Section 1.10 Separability Clause . . . . . . . . . . . . . . .
Section 1.11 Benefits of Indenture . . . . . . . . . . . . . .
Section 1.12 Governing Law . . . . . . . . . . . . . . . . . .
Section 1.13 Legal Holidays. . . . . . . . . . . . . . . . . .
Section 1.14 Non-Recourse against Stockholders,
Directors and Officers . . . . . . . . . .
ARTICLE TWO
Security Forms
Section 2.01 Forms Generally . . . . . . . . . . . . . . . . .
Section 2.02 Form of Face of Security. . . . . . . . . . . . .
Section 2.03 Form of Reverse Security. . . . . . . . . . . . .
Section 2.04 Form of Legend for Global Securities. . . . . . .
Section 2.05 Form of Trustee's Certificate of
Authentication . . . . . . . . . . . . . .
Section 2.06 Form of Conversion Notice . . . . . . . . . . . .
ARTICLE THREE
The Securities
Section 3.01 Amount Unlimited; Issuable in Series. . . . . . .
Section 3.02 Denominations . . . . . . . . . . . . . . . . . .
Section 3.03 Execution, Authentication, Delivery and
Dating . . . . . . . . . . . . . . . . . .
Section 3.04 Temporary Securities. . . . . . . . . . . . . . .
Section 3.05 Registration, Registration of Transfer and
Exchange . . . . . . . . . . . . . . . . .
Section 3.06 Mutilated, Destroyed, Lost and Stolen
Securities . . . . . . . . . . . . . . . .
Section 3.07 Payment of Interest; Interest Rights
Preserved. . . . . . . . . . . . . . . . .
Section 3.08 Persons Deemed Owners . . . . . . . . . . . . . .
Section 3.09 Cancellation. . . . . . . . . . . . . . . . . . .
Section 3.10 Computation of Interest . . . . . . . . . . . . .
ARTICLE FOUR
Satisfaction and Discharge
Section 4.01 Satisfaction and Discharge of Indenture . . . . .
Section 4.02 Application of Trust Fund . . . . . . . . . . . .
ARTICLE FIVE
Remedies
Section 5.01 Events of Default
Section 5.02 Acceleration of Maturity; Rescission and
Annulment. . . . . . . . . . . . . . . . .
Section 5.03 Collection of Indebtedness and Suits for
Enforcement by Trustee . . . . . . . . . .
Section 5.04 Trustee May File Proofs of Claim. . . . . . . . .
Section 5.05 Trustee May Enforce Claims Without
Possession of Securities . . . . . . . . .
Section 5.06 Application of Money Collected. . . . . . . . . .
Section 5.07 Limitation on Suits . . . . . . . . . . . . . . .
Section 5.08 Unconditional Right of Holders to Receive
Principal, Premium and Interest and to
Convert. . . . . . . . . . . . . . . . . .
Section 5.09 Restoration of Rights and Remedies. . . . . . . .
Section 5.10 Rights and Remedies Cumulative. . . . . . . . . .
Section 5.11 Delay or Omission Not Waiver. . . . . . . . . . .
Section 5.12 Control by Holders. . . . . . . . . . . . . . . .
Section 5.13 Waiver of Past Defaults . . . . . . . . . . . . .
Section 5.14 Undertaking for Costs . . . . . . . . . . . . . .
ARTICLE SIX
The Trustee
Section 6.01 Certain Duties and Responsibilities . . . . . . .
Section 6.02 Notice of Defaults. . . . . . . . . . . . . . . .
Section 6.03 Certain Rights of Trustee . . . . . . . . . . . .
Section 6.04 Not Responsible for Recitals or Issuance
of Securities. . . . . . . . . . . . . . .
Section 6.05 May Hold Securities . . . . . . . . . . . . . . .
Section 6.06 Money Held in Trust . . . . . . . . . . . . . . .
Section 6.07 Compensation and Reimbursement. . . . . . . . . .
Section 6.08 Disqualification; Conflicting Interests . . . . .
Section 6.09 Corporate Trustee Required; Eligibility . . . . .
Section 6.10 Resignation and Removal; Appointment of
Successor. . . . . . . . . . . . . . . . .
Section 6.11 Acceptance of Appointment by Successor. . . . . .
Section 6.12 Merger, Conversion, Consolidation or
Succession to Business . . . . . . . . . .
Section 6.13 Preferential Collection of Claims Against
Company
Section 6.14 Appointment of Authenticating Agent . . . . . . .
ARTICLE SEVEN
Holders' Lists and Reports by Trustee and Company
Section 7.01 Company to Furnish Trustee Names and
Addresses of Holders . . . . . . . . . . .
Section 7.02 Preservation of Information; Communications
to Holders . . . . . . . . . . . . . . . .
Section 7.03 Reports by Trustee. . . . . . . . . . . . . . . .
Section 7.04 Reports by Company. . . . . . . . . . . . . . . .
ARTICLE EIGHT
Consolidation, Merger, or Sale of Assets
Section 8.01 Conditions to Consolidation, Merger or Sale . . .
Section 8.02 Successor Substituted . . . . . . . . . . . . . .
ARTICLE NINE
Supplemental Indentures
Section 9.01 Supplemental Indentures Without Consent of
Holders. . . . . . . . . . . . . . . . . .
Section 9.02 Supplemental Indentures With Consent of
Holders. . . . . . . . . . . . . . . . . .
Section 9.03 Execution of Supplemental Indentures. . . . . . .
Section 9.04 Effect of Supplemental Indentures . . . . . . . .
Section 9.05 Revocation and Effect of Consents . . . . . . . .
Section 9.06 Conformity with Trust Indenture Act . . . . . . .
Section 9.07 Reference in Securities to Supplemental
Indentures . . . . . . . . . . . . . . . .
Section 9.08 Waiver of Compliance by Holders . . . . . . . . .
ARTICLE TEN
Covenants
Section 10.01 Payment of Principal, Premium and Interest. . . .
Section 10.02 Maintenance of Office or Agency . . . . . . . . .
Section 10.03 Money for Securities Payments to Be Held in
Trust. . . . . . . . . . . . . . . . . . .
Section 10.04 Statement by Officers as to Default . . . . . . .
Section 10.05 Limitations on Liens on Interests in
Operating Partnership. . . . . . . . . . .
ARTICLE ELEVEN
Redemption of Securities
Section 11.01 Applicability of Article. . . . . . . . . . . . .
Section 11.02 Election to Redeem; Notice to Trustee . . . . . .
Section 11.03 Selection by Trustee of Securities to
Be Redeemed. . . . . . . . . . . . . . . .
Section 11.04 Notice of Redemption. . . . . . . . . . . . . . .
Section 11.05 Deposit of Redemption Price . . . . . . . . . . .
Section 11.06 Securities Payable on Redemption Date . . . . . .
Section 11.07 Securities Redeemed in Part . . . . . . . . . . .
ARTICLE TWELVE
Conversion of Securities
Section 12.01 Applicability of Article. . . . . . . . . . . . .
Section 12.02 Exercise of Conversion Privilege. . . . . . . . .
Section 12.03 No Fractional Shares. . . . . . . . . . . . . . .
Section 12.04 Adjustment of Conversion Price. . . . . . . . . .
Section 12.05 Notice of Certain Corporate Actions . . . . . . .
Section 12.06 Reservation of Shares of Common Stock . . . . . .
Section 12.07 Payment of Certain Taxes Upon Conversion. . . . .
Section 12.08 Nonassessability. . . . . . . . . . . . . . . . .
Section 12.09 Effect of Consolidation or Merger on
Conversion Privilege . . . . . . . . . . .
Section 12.10 Duties of Trustee Regarding Conversion. . . . . .
Section 12.11 Repayment of Certain Funds Upon
Conversion . . . . . . . . . . . . . . . .
ARTICLE THIRTEEN
Defeasance and Covenant Defeasance
Section 13.01 Company's Option to Effect Defeasance or
Covenant Defeasance. . . . . . . . . . . .
Section 13.02 Defeasance and Discharge. . . . . . . . . . . . .
Section 13.03 Covenant Defeasance . . . . . . . . . . . . . . .
Section 13.04 Conditions to Defeasance or Covenant
Defeasance . . . . . . . . . . . . . . . .
Section 13.05 Deposited Money and U.S. Government
Obligations to be Held in Trust; Other
Miscellaneous Provisions . . . . . . . . .
Section 13.06 Reinstatement . . . . . . . . . . . . . . . . . .
ARTICLE FOURTEEN
Sinking Funds
Section 14.01 Applicability of Article. . . . . . . . . . . . .
Section 14.02 Satisfaction of Sinking Fund Payments
with Securities. . . . . . . . . . . . . .
Section 14.03 Redemption of Securities for Sinking Fund . . . .
<PAGE>
THIS INDENTURE, is dated as of ____________, 1996 and is between HOME
PROPERTIES OF NEW YORK, INC., a Maryland corporation (the "Company"),
having its principal office at 850 Clinton Square, Rochester, New York
14604, and _______________________, a ________________ duly organized and
existing under the laws of ________________________, as Trustee (herein
called the "Trustee").
The Company has authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of its notes,
debentures or other evidence of indebtedness (the "Securities"), in one or
more series as provided in this Indenture.
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, and for benefit of all Holders of the
Securities or of series thereof and the parties hereto, the parties hereto
as follows:
ARTICLE ONE
Definitions and Other Provisions
of General Application
Section 1.01 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;
(2) all other terms used herein which are defined in the Trust
Indenture Act or the Securities Act of 1933, as amended, either directly or
by reference therein, have the meanings assigned to them in the applicable
act;
(3) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with United States 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 at the date of such
computation;
(4) the words "Article" and "Section" refer to an Article and
Section, respectively, 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 unless context otherwise
requires.
"Act", when used with respect to any Holder, means any request,
demand, authorization, direction, notice, consent, waiver or other action
provided, required or permitted to be given by the holders.
"Board of Directors" means either (i) the board of directors of the
Company, the executive committee of such board of directors or any other
duly authorized committee of directors and/or officers appointed by such
board of directors or executive committee, or (ii) one or more duly
authorized officers of the Company to whom the board of directors of the
Company or a committee thereof has delegated the authority to act with
respect to the matters contemplated by this Indenture.
"Board Resolution" means (i) 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 or a committee thereof and to be in full
force and effect on the date of such certification or (ii) a certificate
signed by the authorized officer or officers of the Company to whom the
board of directors of the Company or a committee thereof has delegated its
authority.
"Business Day", when used with respect to any Place of Payment, means
each Monday, Tuesday, Wednesday, Thursday and Friday 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.
"Common Stock" means, the Company's common stock, par value $0.01 per
share.
"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 any of the following individuals: the
Chairman, the President, the Chief Financial Officer or an Executive Vice
President.
"Corporate Trust Office" means the principal office of the Trustee
located at _________________, at which at any particular time its corporate
trust business shall be administered.
"Corporation" means a corporation, association, company, joint-stock
company or business trust.
"Covenant Defeasance" has the meaning specified in Section 13.03.
"Defaulted Interest" has the meaning specified in Section 3.07.
"Defeasance" has the meaning specified in Section 13.02.
"Event of Default" has the meaning specified in Section 5.01.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, and any successor statute thereto.
"Floating or Adjustable Rate Provision" means a formula or provision,
specified in or pursuant to an indenture supplemental hereto, providing for
the determination, whether pursuant to objective factors or pursuant to the
sole discretion of any Person (including the Company), and periodic
adjustment of the interest rate borne by a Floating or Adjustable Rate
Security.
"Floating or Adjustable Rate Security" means any Security which
provides for interest thereon at a periodic rate that may vary from time to
time over the term thereof in accordance with a Floating or Adjustable Rate
Provision.
"Holder" means a Person in whose name a Security is registered in the
Security Register.
"Indenture" means this instrument as originally executed or as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions
thereof, 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 3.01.
"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.
"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.
"Notice of Default" means a written notice of the kind specified in
Section 5.01(4) and Section 5.01(5).
"Officers' Certificate" means a certificate signed by any of the
following individuals: the Chairman, the President, the Chief Financial
Officer or an Executive Vice President.
"Operating Partnership" means Home Properties of New York L.P., a New
York limited partnership.
"Opinion of Counsel" means a written opinion of counsel, who may be an
employee of or counsel to the Company, or who may be other counsel
reasonably satisfactory 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 5.02.
"Outstanding", when used with respect to Securities, means, as of the
date of determination, all Securities theretofore authenticated and
delivered under this Indenture, except:
(i) Securities theretofore canceled by the Trustee or
delivered to the Trustee for cancellation;
(ii) Securities for whose payment or redemption funds 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;
(iii) Securities as to which Defeasance has been effected
pursuant to Section 13.02; and
(iv) Securities which have been paid pursuant to Section 3.06
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 hands such Securities are valid
obligations of the Company;
provided, however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Securities have given any request,
demand, authorization, direction, notice, consent or waiver hereunder,
(A) the principal amount of an Original issue Discount Security that shall
be deemed to be Outstanding shall be the amount of the principal thereof
that would be due and payable as of the date of such determination upon
acceleration of the Maturity thereof pursuant to Section 5.02, and
(B) Securities owned by (i) the Company or any other obligor upon the
Securities or (ii) any Subsidiary of the Company or of such other obligor
upon the Securities shall be disregarded and deemed not to be Outstanding,
except that, in determining whether the Trustee shall be protected in
relying upon any such request, demand, authorization, direction, notice,
consent or waiver, only Securities which the Trustee knows to be so owned
shall be so disregarded. Securities so owned which have been pledged in
good faith may be regarded as Outstanding if the pledgee establishes to the
satisfaction of the Trustee the pledgee's right so to act with respect to
such Securities and that the pledgee is not the Company or any other
obligor upon the Securities or any Subsidiary 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 3.01.
"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.
"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 3.01.
"Responsible Officer", when used with respect to the Trustee, means
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, or any other office 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 or her 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.
"Security Register" and "Security Registrar" have the respective
meaning specified in Section 3.05.
"Special Record Date" for the payment of any Defaulted Interest means
a date fixed by the Trustee pursuant to Section 3.07.
"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.
"Subsidiary" means a corporation more than 50% of the voting power of
which is controlled, directly or indirectly, by the Company or by one or
more other Subsidiaries, or by the Company and one or more other
Subsidiaries. For the purposes of this definition, "voting power" means
the power to vote for the election of directors, whether at all times or
only so long as no senior class of stock has such voting power by reason of
any contingency.
"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, 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.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended and 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, and except as provided in Section 9.06.
"U.S. Government Obligations" has the meaning specified in
Section 13.04.
Section 1.02 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 (excluding
certificates provided for in Section 10.04) shall include:
(1) a statement that each Person signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of each such Person, such
Person has made such examination or investigation as is necessary to enable
such Person to express an informed opinion as to whether or not such
covenant or condition has been complied with; and
(4) a statement as to whether, in the opinion of each such
Person, such condition or covenant has been complied with.
Section 1.03 Form of Documents Delivered to Trustee. In any case
where several matters are required to be certified by, or covered by an
opinion of, any specified Person, it is not necessary that all such matters
be certified by, or covered by the opinion of, only one such Person, or
that they be so certified or covered by only one document, but one such
Person may certify or give an opinion 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 its 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.
Any certificate, statement or opinion of an officer of the Company or
of counsel may be based, insofar as it relates to accounting matters, upon
a certificate, opinion or representation by an accountant or firm of
accountants in the employ of the Company, unless such office or counsel, as
the case may be, knows, or in the exercise of reasonable care should know,
that the certificate, opinion or representation with respect to such
accounting matters upon which its certificate, statement or opinion may be
based is 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 1.04 Acts of Holders; Record Dates.
(a) Any Act provided or permitted by this Indenture to be given
or taken by Holders may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such Holders in person
or by agent duly appointed in writing; and, except as otherwise expressly
provided herein, 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. Proof 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 6.01) conclusive in favor of the
Trustee and the Company, if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer
authorized by law to take acknowledgments of deeds, certifying that the
individual signing such instrument or writing acknowledged to him or her
the execution thereof or in any other manner which the Trustee deems
sufficient and such proof of execution shall be conclusive in favor of the
Trustee and the Company.
(c) To the extent permitted by the Trust Indenture Act, the
Company may fix any day as the record date for the purpose of determining
the Holders of Outstanding Securities of any series entitled Act, or to
vote on any action, authorized or permitted to be given or taken by Holders
of Outstanding Securities of such series. If not set by the Company prior
to the first solicitation of a Holder, or prior to such vote, the record
date for any such action or vote shall be the later of the 30th day prior
to such first solicitation or vote or the date of the most recent list of
Holders delivered under Section 7.01. Only the Holders of Securities of
such series on such record date shall be entitled to give or take, or vote
on, the relevant action.
(d) The ownership of Securities shall be proved by the Security
Register or by a certificate of the Security Registrar.
(e) 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 such Security.
Section 1.05 Notices 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, given or
furnished to, or filed with:
(1) the Trustee by any Holder or by the Company shall be
sufficient for every purpose hereunder if made, given, furnished or filed
in writing to or with the Trustee at its Corporate Trust Office;
(2) the Company by the Trustee or by any Holder shall be
sufficient for every purpose hereunder (unless otherwise expressly provided
herein) 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; provided, however, that the same
shall be made, given, furnished or filed only when received by the Company,
Attention: Chief Financial Officer, or at any other address previously
furnished in writing to the Trustee by the Company.
Section 1.06 Notice to Holders; Waiver. Where this Indenture
provides for notice to Holders of any event, such notice shall be
sufficiently given (unless otherwise expressly provided herein) if in
writing and mailed, first-class postage prepaid, to each Holder affected by
such event, at its address as it appears in the Security Register;
provided, however, that the Company or the Trustee, upon a good faith
determination that mailing is in the circumstances impractical, may give
such notice by any other method which, in the reasonable belief of the
Company or, in the case of the Trustee, of the Company and the Trustee, is
likely to be received by the Holders. 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.
Section 1.07 Conflict with Trust Indenture Act. If any provisions
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 required 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 1.08 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 1.09 Successors and Assigns. All covenants and agreements in
this Indenture by the Company and the Trustee shall bind its successors and
assigns, whether so expressed or not.
Section 1.10 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 1.11 Benefits of Indenture. Nothing in this Indenture or in
the Securities, express or implied, shall give to any Person, other than
the parties hereto and their successors hereunder and the Holders, any
benefit or any legal or equitable right, remedy or claim under this
Indenture.
Section 1.12 Governing Law. THIS INDENTURE AND THE SECURITIES SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK, BUT WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.
Section 1.13 Legal Holidays. In any case where any Interest Payment
Date, Redemption Date or Stated Maturity of any Security or the last day on
which a Holder has the right to convert a Security at a particular
conversion price shall not be a Business Day at any Place of Payment, then
payment of interest or principal (and premium, if any) or conversion shall
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 or
Redemption Date, or at the Stated Maturity.
Section 1.14 Non-Recourse against Stockholders, Directors, Officers
and Partners. No recourse shall be had for the payment of the principal of
or premium, if any, or interest, if any, on any Security, or for any claim
based thereon, or otherwise in respect of any Security, this Indenture or
any indenture supplemental hereto, against any past, present or future
stockholder, director or officer of the Company or of any successor
corporation or the partners of any affiliate, whether by virtue of any
constitution, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise. All such liability is hereby expressly
waived and released as a condition of, and as consideration for, the
execution of this Indenture and the issue of the Securities.
ARTICLE TWO
Security Forms
Section 2.01 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 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 any industry standard.
The definitive Securities shall be printed, lithographed or produced
in any other manner, as determined by the officers executing such
Securities, as evidenced by their execution of such Securities.
Section 2.02 Form of Face of Security.
[Any legend required by the Internal Revenue Code and the regulations
thereunder or any federal or state securities laws.]
HOME PROPERTIES OF NEW YORK, INC.
No. $___________
HOME PROPERTIES OF NEW YORK, INC., a Maryland corporation (the
"Company"), for value received, hereby promises to pay to
_______________________, or registered assigns, the principal sum of
_____________ Currency [if the Security is to bear interest prior to
Maturity, "and to pay interest thereon from _________ or from the most
recent interest Payment Date to which interest has been paid or duly
provided for, semi-annually on ___________ and __________ in each year"]
[If other than semi-annual payments, frequency of payments and payment
dates "commencing ___________, at"] [if the Security is to bear interest at
a fixed rate, "the rate of _____% per annum."] [if the Security is a
Floating or Adjustable Rate Security, "a rate per annum computed-determined
in accordance with the (defined name of Floating or Adjustable Rate
Provision) set forth below"] [If the security is to bear interest at a rate
determined with reference to an index, refer to description of index below
until the principal hereof is paid or made available for payment if
applicable, and (to the extent that the payment of such interest shall be
legally enforceable) at the rate of ____% per annum on any overdue
principal and premium and on any overdue installment of interest. 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 Securities are Floating or Adjustable Rate Securities with
respect to which the principal of or any premium or interest may be
determined with reference to an index, insert the text of the Floating or
Adjustable Rate Provision.]
[If the Security is not to bear interest prior to Maturity, "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 of this Security
shall bear interest at the rate of ___% per annum (to the extent that the
payment of such interest shall be legally enforceable), which shall accrue
from the date of such default in payment to the date payment of such
principal has been made or duly provided for. Interest on any overdue
principal shall be payable on demand. Any such interest on any overdue
principal that 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), which shall accrue from the date of such demand for
payment to the date payment of such interest has been made or duly provided
for, and such interest shall also be payable on demand.
Payment of the principal of (and premium, if any) and if applicable,
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 United States 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.
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.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
Dated:
HOME PROPERTIES OF NEW YORK, INC.
By:______________________________
Title:___________________________
Attest:
Section 2.03. Form of Reverse Security.
This Security is one of a duly authorized issue of securities of the
Company (herein called the "Securities"), issued and to be issued in one or
more series under an Indenture, dated as of ___________ (herein called the
"Indenture"), between the Company and _______________, as Trustee (herein
called the "Trustee"), which term includes any successor trustee under the
Indenture), to which Indenture and all indentures supplemental thereto
reference is hereby made 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, limited in aggregate
principal amount to _____________.
If applicable, 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, (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 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 on or before
____________, ____% and, if redeemed during the 12 month period beginning
of the years indicated,
Year Redemption Year Redemption
Price Price
and thereafter at a Redemption Price equal to ___________ of the principal
amount, together in the case of any such redemption if applicable, (whether
through operation of the sinking fund or otherwise) with 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 fact hereof,
all as provided in the Indenture.
If applicable, the Securities of this series are subject to redemption
upon not less than 30 days' nor more than 60 days' notice by mail, (1) on
_________ in any year commencing with the year _______ and ending with the
year _____ through operation of the sinking fund for this series at the
Redemption Prices for redemption through operation of the sinking fund
(expressed as percentages of the principal amount) set forth in the table
below, and (2) at any time on or after __________, as a whole or in part,
at the election of the Company, at the Redemption Prices for redemption
otherwise than through operation of the sinking fund (expressed as
percentages of the principal amount) set forth in the table below: If
redeemed during the 12-month period beginning _________ of the years
indicated,
Year Redemption Price For Redemption Price For Redemption
Redemption Through Otherwise
Operation of the Than through Operation of the
Sinking Fund Sinking Fund
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 accrued interest to the
Redemption Date, but interest installments whose Stated Maturity in 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.
The sinking fund for this series provides for the redemption on
_______________ in each year beginning with the year _____ and ending with
the year of 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 mandatory sinking fund payments may be credited
against subsequent inverse order in which they become due.
If the Security is subject to redemption, in the event of redemption
of this Security in party only, a new Security or Securities of this series
and of like tenor for the unredeemed portion hereof will be issued in the
name of the Holder hereof upon the cancellation hereof.
The Indenture contains provisions for defeasance at any time of
(1) the entire indebtedness of this Security or (2) certain restrictive
covenants 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 convertible into Common Stock of the Company,
subject to the provisions of the Indenture, the Holder of this Security is
entitled, at its option, at any time on or before [insert date] (except
that, in case this Security or any portion hereof shall be called for
redemption, such right shall terminate with respect to this Security or
portion hereof, as the case may be, so called for redemption at the close
of business on the date fixed for redemption as provided in the Indenture
unless the Company defaults in making the payment due upon redemption), to
convert the principal amount of this Security (or any portion 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
1/100th of a share) of the Common Stock of the Company, as said shares
shall be constituted at the date of conversion, at the conversion price of
$ ________ principal amount of Securities for each share of Common Stock,
or at the adjusted conversion price in effect at the date of conversion
determined as provided in the Indenture, upon surrender of this Security,
together with the conversion notice hereon duly executed, to the Company at
the designated office or agency of the Company in ___________, accompanied
(if so required by the Company) by instruments of transfer, in form
satisfactory to the Company and to the Trustee, duly executed by the Holder
or by its duly authorized attorney in writing. Such surrendering shall, if
made during any period beginning at the close of business on a Regular
Record Date and ending at the opening of business on the Interest Payment
Date next following such Regular Record Date (unless this Security or the
portion being converted shall have been called for redemption on a
Redemption Date during such period), also be accompanied by payment in
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 adjustment is to be
made on conversion for interest accrued hereon or for dividends on shares
of Commons Stock issued on conversion. The Company is not required to
issue fractional shares upon any such conversion, but shall make adjustment
therefor in cash on the basis of the current market value of such
fractional interest 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 sale 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 sale 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 sale (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), assuming
if such consolidation, merger or sale is prior to __________, 19__, that
this Security were convertible at the time of such consolidation, merger or
sale at the initial conversion price specified above as adjusted from to
such time pursuant to the Indenture. In the event of conversion of this
Security in party only, a new Security or Securities for the unconverted
portion hereof shall be issued in the name of the Holder hereof upon the
cancellation hereof.
If the Security is convertible into other securities or property,
specify the conversion features and the form of conversion notice pursuant
to Section 2.06 hereof.
If the Security is not an Original Issue Discount Security, 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, 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 and
overdue 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 interest, if any, on the
Securities of this series shall terminate.
The Indenture permits 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, with certain exceptions as therein provided
with respect to certain modifications or amendments which may not be made
without the consent of each Holder of such Security affected thereby. The
Indenture also permits certain amendments and modifications thereto from
time to time by the Company and the Trustee without the consent of the
Holders of any series of the Securities to be affected thereby for certain
specified purposes, including curing ambiguities, defects or
inconsistencies and making any such change that does not adversely affect
the rights of any Holder of such series of the Securities, as provided
therein.
The Indenture contains provisions permitting the Holders of specified
percentages in 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 hereof or in lieu hereof, whether or not
notation of such consent or waiver is made upon this Security.
No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligations of the Company,
which is absolute and unconditional, to pay the principal of and any
premium and Interest on this Security at the times, place and rate(s), and
in the coin or currency, herein prescribed.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Security is registerable 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.
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 is overdue,
and neither the Company, the Trustee nor any such agent shall be affected
by notice to the contrary.
No recourse shall be had for the payment of the principal of (and
premium, if any) or interest on this Security, or for any claim based
hereon, or otherwise in respect hereof, or based on or in respect of the
Indenture or any indenture supplemental thereto, against any incorporator,
stockholder, officer or director, as such, past, present or future, of the
Company or of any successor corporation, whether by virtue of any
constitution, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise, all such liability being, by the
acceptance hereof and as part of the consideration for the issue hereof,
expressly waived and released.
All terms used in this Security which are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
Section 2.04 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 of the series designated therein
referred to in the within-mentioned Indenture.
As Trustee
By:
Authorized Officer
Section 2.05 Form of Conversion Notice.
To Home Properties of New York, Inc.
The undersigned hereby irrevocably exercises the option to convert
this Security, or portion hereof (which is $______ or an integral multiple
thereof) below designated, into shares of Common Stock of the Company 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 this Notice is being delivered on a date after the
close of business on a Regular Record Date and prior to the opening of
business on the related Interest Payment Date (unless this Security or the
portion thereof being converted has been called for redemption on a
Redemption Date within such period), this Notice is accompanied by payment,
in funds acceptable to the Company, of an amount equal to the interest
payable on such Interest Payment Date of the principal of this Security to
be converted. 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 hereto. Any amount required to be paid by the undersigned on
account of interest accompanies this security.
Principal Amount to be Converted
(in an integral multiple of
$________ , if less than all):
$_________
Dated
___________________________________
Signature
Signature(s) must be guaranteed by a commercial bank or trust company
or a member firm of a national stock exchange if shares of Common are to be
delivered, or Securities to be issued, other than to and in the name of the
registered owner.
___________________________________
Signature Guarantee
Fill in for registration of shares of Common Stock and Security if to
be issued otherwise than to the registered holder.
Social Security or other Taxpayer
(Name)
Identifying Number
(Address)
Please print Name and Address (including zip
code number)
ARTICLE THREE
The Securities
Section 3.01 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 one or more indentures
supplemental hereto, prior to the issuance of Securities of any series, the
following:
(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 Sections 3.04, 3.05, 3.06, 9.07 or
11.07 and except for any Securities which, pursuant to Section 3.03, are
deemed never to have been authenticated and delivered hereunder);
(3) the Person who 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 the Securities
of the series is payable;
(5) the rate or rates at which the Securities of the series
shall bear interest, if any, or the Floating or Adjustable Rate Provision
pursuant to which such rates shall be determined, the date or dates from
which such interest shall accrue, the Interest Payment Dates on which any
such interest shall be payable and the regular Record Date for any interest
payable on any Interest Payment Date;
(6) whether the Securities of the series would be secured
pursuant to Section 9.01(6);
(7) the place or places where the principal of and any premium
and interest on Securities of the series shall be payable;
(8) the period or periods within which, the price or prices at
which (including premium, if any) and the terms and conditions upon which
Securities of the series shall be redeemed, in whole or in part, at the
option of the Company pursuant to a sinking fund or otherwise;
(9) the obligation, if any, of the Company to redeem or purchase
Securities of the series pursuant to any sinking fund or analogous
provisions or at the option of a Holder thereof and the period or periods
within which, the price or prices at which and the terms and conditions
upon which Securities of the series shall be redeemed or purchased, in
whole or in part, pursuant to such obligation;
(10) the terms of any right to convert Securities of the series
into shares of Common Stock of the Company or other securities or property;
(11) if other than denominations of $1,000 and any integral
multiple thereof, the denominations in which Securities of the series shall
be issuable;
(12) if the amount of payments of principal of or any premium or
interest on any Securities of the series may be determined with reference
to one or more indices, the manner in which such amounts shall be
determined;
(13) if other than the principal amount thereof, the portion of
the principal amount of Securities of the series which shall be payable
upon declaration of acceleration of the Maturity thereof pursuant to
Section 5.02 or provable under any applicable federal or state bankruptcy
or similar law pursuant to Section 5.04;
(14) any other event or events of default applicable with respect
to the Securities of the series in addition to those provided in
Section 5.01(1) through (7);
(15) any other covenant or warranty included for the benefit of
Securities of the series in addition to those included in this Indenture
for the benefit of Securities of all series, or any other covenant or
warranty included for the benefit of Securities of the series in lieu of
any covenant or warranty included in this Indenture for the benefit of
Securities of all series, or any provision that any covenant or warranty
included in this Indenture for the benefit of Securities of all series
shall not be for the benefit of Securities of the series, or any
combination of such covenants, warranties or provisions;
(16) any restriction or condition on the transferability of the
Securities of the series;
(17) any authenticating or paying agents, registrars, conversion
agents or any other agents with respect to the Securities of the series;
and
(18) any other terms of the series (which terms shall not be
inconsistent with the provisions of this Indenture, except as permitted by
Section 9.01(5).
All Securities of any one series shall be substantially identical
except as to denomination and except as may otherwise be provided or in any
such indenture supplemental hereto.
Section 3.02 Denominations. The Securities of each series shall be
issuable in registered form without coupons in such denominations as shall
be specified as contemplated by Section 3.01. In the absence of any such
provisions with respect 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 3.03 Execution, Authentication, Delivery and Dating. The
securities shall be executed on behalf of the Company by its Chairman, its
President, any Executive Vice President or its its Chief Financial Officer
under its corporate seal reproduced thereon attested by its Secretary or
one of its Assistant Secretaries. The signature of any of these officers
on the Securities may be manual or facsimile.
The seal of the Company may be in the form of a facsimile thereof and
may be impressed, affixed, imprinted or otherwise reproduced on the
Securities. 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. Minor typographical and other minor errors in the text of any
Security or minor defects in the seal or facsimile signature on any
Security shall not affect the validity or enforceability of such Security
if it has been duly authenticated and delivered by the Trustee.
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 in or pursuant to one or more indentures supplemental
hereto as permitted by Sections 2.01 and 3.01, 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 6.01) shall be fully protected in relying
upon, an Opinion of Counsel stating,
(a) if the form of such Securities has been established by or
pursuant to indentures supplemental hereto as permitted by Section 2.01,
that such form has been established in conformity with the provisions of
this Indenture;
(b) if the terms of such Securities have been established by or
pursuant to indentures supplemental hereto as permitted by Section 3.01,
that such terms have been established in conformity with the provisions of
this Indenture; and
(c) 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 generally and to general equity
principles.
The Trustee shall have the right to decline to authenticate and
deliver any Securities under this Section if the Trustee, being advised by
counsel, determines that such action may not lawfully be taken or if the
Trustee in good faith by its board of directors, executive committee, or a
trust committee of directors or committee of Responsible Officers of the
Trustee shall determine that such action would expose the Trustee to
personal liability to existing Holders of Securities.
Notwithstanding the provisions of Section 3.01 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 Company Order and
Opinion of Counsel otherwise required pursuant to such preceding paragraph
at or prior to the time of 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.
Each Security shall be dated.
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, 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 3.09, 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 3.04 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 of the Company 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 a like aggregate principal amount and
tenor. 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.
Section 3.05 Registration, Registration of Transfer and Exchange.
The Company shall cause to be kept at the Corporate Trust Office of the
Trustee a register (the "Security Register") in which, subject to such
reasonable regulations as it or the Trustee 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 any
series at the Corporate Trust Office, 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 a like aggregate principal amount
and tenor.
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 a like aggregate principal amount and tenor, upon surrender of the
Securities to be exchanged at such office or agency. Whenever any
Securities are so surrendered for exchange, the Company shall execute, and
the Trustee shall authenticate and deliver, the Securities which the Holder
making the exchange is entitled to receive.
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,
exchange, redemption or payment 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 or the Trustee 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 3.04 or 11.07 not
involving any transfer.
Neither the Company nor the Trustee shall be required (i) to issue,
register the transfer of or exchange Securities of any series during a
period beginning at the opening of business 15 days before the day of the
mailing of a notice of redemption of Securities of that series selected for
redemption under Section 11.03 and ending at the close of business on the
day of such mailing, or (ii) to register the transfer of or exchange any
Security so selected for redemption in whole or in part, except the
unredeemed portion of any Security being redeemed in part.
Section 3.06 Mutilated, Destroyed, Lost and Stolen Securities. If
there shall be delivered to the Company and the Trustee (i) a mutilated
Security, or (ii) evidence to their satisfaction of the destruction,loss or
theft of any Security and in either case such security or indemnity as may
be required by either of 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 mutilated, 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
or the Trustee may required 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
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 3.07 Payment of Interest; Interest Rights Preserved. Except
as otherwise provided as contemplated by Section 3.01 with respect to any
series of Securities, interest on any Security which is payable, and is
punctually paid or duly provided for, on any Interest Payment Date shall be
paid to the Person in whose name that Security (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record
Date for such interest.
Any interest on any Security of any series which is payable, but is
not punctually paid or duly provided for, on any Interest Payment Date
(herein called "Defaulted Interest") shall forthwith cease to be payable to
the Holder on the relevant Regular Record Date by virtue of having been
such Holder, and such Defaulted Interest may be paid by the Company, at its
election in each case, as provided in Clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted
Interest to the Persons in whose names the Securities of such series (or
their respective Predecessor Securities) are registered at the close of
business on a Special Record Date for the payment of such Defaulted
Interest, which shall be fixed in the following manner. The Company shall
notify the Trustee in writing of the amount of Defaulted Interest proposed
to be paid on each Security 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 15
days after the receipt by the Trustee of the notice of the proposed
payment. The Trustee shall promptly notify the Company of such Special
Record Date and, in the name and at the expense of the Company, shall cause
notice of the proposed payment of such Defaulted Interest and the Special
Record Date therefor to be mailed, first-class postage prepaid, to each
Holder of Securities of such series at its address as it appears in the
Security Register, not less than 10 days prior to such Special Record Date.
Notice of the proposed payment of such Defaulted Interest and the Special
Record Date therefor having been so mailed, such Defaulted Interest shall
be paid to the Persons in whose names the Securities 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 12.02, in the case of any
Security which is converted after any Regular Record Date and on or prior
to the next succeeding Interest Payment Date (other than any Security the
principal of (or premium, if any, on)) which shall become due and payable,
whether at a Stated maturity or by declaration of acceleration, call for
redemption, or otherwise, 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 Security (or any 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.
Section 3.08 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 3.07) 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 3.09 Cancellation. All Securities surrendered for payment,
redemption, registration of transfer or exchange or for credit against any
sinking fund payment or for conversion 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 as
directed by a Company Order. Acquisition by the Company of any Security
shall not operate as a redemption or satisfaction of the indebtedness
represented by such Security unless and until the same is delivered to the
Trustee for cancellation.
Section 3.10 Computation of Interest. Except as otherwise specified
as contemplated by Section 3.01 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.
ARTICLE FOUR
Satisfaction and Discharge
Section 4.01 Satisfaction and Discharge of Indenture. This Indenture
shall cease to be of further effect (except as to any surviving rights of
conversion, registration of transfer or exchange of Securities of a series
herein expressly provided for) with respect to Securities of any series,
and the Trustee, at the expense of the Company, shall execute proper
instruments acknowledging satisfaction and discharge of this Indenture with
respect to a series, when
(1) either
(A) all Securities of such series 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 3.06 and
(ii) Securities of such series for whose payment money
has theretofore been deposited in trust or segregated
and held in trust by the Company and thereafter repaid
to the Company or discharged from such trust, as
provided in Section 10.03) have been delivered to the
Trustee for cancellation; or
(B) all such Securities of such series 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 in trust irrevocably (A) money (in
United States dollars) in an amount, or (B) U.S. Government obligations
that through the scheduled payment of principal and interest in respect
thereof in accordance with their terms will provide, not later than one day
before the due date of any payment, money in an amount, or (C) a
combination thereof, 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 the entire
indebtedness on such Securities of such series not theretofore delivered to
the Trustee for cancellation, for principal of (and premium, if any) and
interest to the date of such deposit (in the case of Securities of such
series 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 with respect to
such series have been complied with.
In the event there are Securities of two or more series outstanding
hereunder, the Trustee shall be required to execute an instrument
acknowledging satisfaction and discharge of this Indenture only if
requested to do so with respect to Securities of a particular series as to
which it is Trustee and if the other conditions thereto are met.
Notwithstanding the satisfaction and discharge of this Indenture with
respect to a particular series, the obligations of the Company to the
Trustee under Section 6.07 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 4.02 and the last paragraph of
Section 10.03 shall survive until there are no Securities Outstanding with
respect to a particular series and the obligations of the Company and the
Trustee with respect to all other series of Securities shall survive.
Section 4.02 Application of Trust Fund. Subject to provisions of the
last paragraph of Section 10.03, all amounts deposited with the Trustee
pursuant to Section 4.01 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 funds have been deposited with the Trustee.
ARTICLE FIVE
Remedies
Section 5.01 Events of Default. "Event of Default" whenever used
with respect to Securities of a series means any one of the following
events and such other events as may be established with respect to the
Securities of such series as contemplated by Section 3.01 hereof:
(1) Default in the payment of any installment of interest upon
any of the Securities of such series as and when the same
shall become due and payable, and continuance of such
default for a period of 15 days; or
(2) Default in the payment of the principal of or premium, if
any, on any of the Securities of such series as and when the
same shall become due and payable either at maturity, upon
redemption, by declaration of acceleration or otherwise and
the continuance of such default for a period of 15 days; or
(3) Default in the making of any sinking fund payment, whether
mandatory or optional, and when the same shall become due
and payable by the terms of the Securities of such series;
or
(4) Failure on the part of the Company duly to observe or
perform in any material respect any other of the covenants
or agreements on the part of the Company contained in this
Indenture (other than those set forth exclusively in the
terms of any other particular series of Securities
established as contemplated by this Indenture for the
benefit of such other series) and written notice of such
failure, stating that such notice is a "Notice of Default"
hereunder, and requiring the Company to remedy the same,
shall have been given by registered or certified mail,
return receipt requested, to the Company by the Trustee, or
to the Company and the Trustee by the holders of at least
25% in aggregate principal amount of the Outstanding
Securities of that series, and such failure shall have
continued unremedied for a period of 90 days after the date
of the Company's receipt of such Notice of Default; or
(5) An event of default, as defined in any indenture or
instrument evidencing or under which the Company or any
Principal Subsidiary shall have outstanding indebtedness for
borrowed money in a principal amount in excess of
$25,000,000, shall happen and be continuing and such
indebtedness shall have been accelerated so that the same
shall be or become due and payable prior to the date on
which the same would otherwise have become due and payable
or (ii) the Company or any Principal Subsidiary shall
default in the payment at final maturity of outstanding
indebtedness for borrowed money in a principal amount in
excess of $25,000,000, and such acceleration or default at
maturity shall not be waived, rescinded or annulled within
30 days after written notice thereof, stating that such
notice is a "Notice of Default" hereunder, shall have been
given to the Company by the Trustee (if such event be known
to it), or to the Company and the Trustee by the holders of
at least 25% in aggregate principal amount of the
Outstanding Securities of that series; provided, however,
that if such acceleration under such indenture or instrument
or default at maturity shall be remedied or cured by the
Company or Principal Subsidiary, or waived, rescinded or
annulled by the requisite holders of such indebtedness, then
the Event of Default hereunder by reason thereof shall be
deemed likewise to have been thereupon remedied, cured or
waived without further action upon the part of either the
Trustee or any of the Holders; or
(6) A decree or order by a court having jurisdiction in the
premises shall have been entered adjudging the Company a
bankrupt or insolvent, or approving as properly filed a
petition seeking reorganization, arrangement, adjustment or
composition of the Company under any applicable Federal or
State bankruptcy or similar law, and such decree or order
shall have continued undischarged and unstayed for a period
of 90 days; or a decree or order of a court having
jurisdiction in the premises for the appointment of a
receiver, liquidator, trustee, assignee, sequestrator or
similar official in bankruptcy or insolvency of the Company
or of all or substantially all of its property, or for the
winding up or liquidation of its affairs, shall have been
entered, and such decree or order shall have continued
undischarged and unstayed for a period of 90 days; or
(7) The Company shall institute proceedings to be adjudicated a
voluntary bankrupt, or shall consent to the filing of a
bankruptcy proceeding against it, or shall file a petition
or answer or consent seeking reorganization, arrangement,
adjustment or composition under any applicable Federal or
State bankruptcy or similar law, or shall consent to the
filing of any such petition, or shall consent to the
appointment of a receiver, liquidator, trustee, assignee,
sequestrator or similar official in bankruptcy or insolvency
of the Company Or of all or substantially all of its
property, or shall make an assignment for the benefit of
creditors, or shall admit in writing its inability to pay
its debts generally as they become due and its willingness
to be adjudged a bankrupt, or corporate action shall be
taken by the Company in furtherance of any of the aforesaid
purposes.
Upon receipt by the Trustee of any notice with respect to a Default
pursuant to this Section 5.01 with respect to Securities of any series, a
record date shall automatically and without any other action by any Person
be set for the purpose of determining the holders of Outstanding Securities
of such series entitled to join in issuing Notice of Default, which record
date shall be the close of business on the day the Trustee receives such
notice with respect to a default. The Holders of Outstanding Securities of
such series on such record date (or their duly appointed agents), and only
such Persons, shall be entitled to join in issuing a Notice of Default,
whether or not such Holders remain Holders after such record date; provided
that, unless such Notice of Default shall have become effective by virtue
of Holders of at least 25% in principal amount of Outstanding Securities of
such series on such record date (or their duly appointed agents) having
joined therein on or prior to the 90th day after such record date, such
Notice of Default shall automatically and without any action by any Person
be canceled and of no further effect.
The Company shall deliver to the Trustee written notice of any Event
of Default or event which with the giving of notice or lapse of time or
both would become an Event of Default under clauses (4), (5), (6) and (7)
hereof within 30 days of the knowledge thereof by the Company, provided
that in the case of clause (4) no such notice will be required to be given
by the Company if such default shall be cured by the Company within such 30
day period.
Subject to the provisions of Sections 6.01 and 6.02, the Trustee shall
not be charged with knowledge of any Event of Default unless written notice
thereof shall have been given to the Trustee by the Company, the Paying
Agent of that series (provided that no such notice shall be required to be
given if the Trustee acts as Paying Agent of such series), or with respect
to an Event of Default under clause (5) of this Section by the holder of
any such indebtedness or an agent of the holder of any such indebtedness or
by the trustee then acting under any such indenture or other instrument
under which such default shall have occurred, or by Holders of at least 25%
in aggregate principal amount of the Outstanding Securities of that series.
Section 5.02 Acceleration of Maturity; Rescission and Annulment. If
an Event of Default 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 (or, if any of
the Securities of that series are Original Issue Discount Securities, such
portion of the principal amount of such Securities as may be specified in
the terms thereof) of all of the Securities of that series to be due and
payable immediately, by a notice in writing to the Company (and to the
Trustee if given by Holders), and upon any such declaration such principal
amount (or specified amount) shall 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
except such costs and expenses as are a result of
negligence or bad faith on the part of the Trustee;
and
(2) all Events of Default with respect to Securities of that
series, other than the non-payment of the principal of and
interest, if any, on the Securities of that series which
have become due solely by such declaration of acceleration,
have been cured or waived as provided in Section 5.13.
No such rescission shall affect any subsequent default or impair any
right consequent thereon.
Upon receipt by the Trustee of any declaration of acceleration, or any
rescission and annulment of any such declaration, pursuant to this
Section 5.02 with respect to Securities of any series, a record date shall
automatically and without any other action by any Person be set for the
purpose of determining the Holders of Outstanding Securities of such series
entitled to join in such declaration, or rescission and annulment, as the
case may be, which record date shall be the close of business on the day
the Trustee receives such declaration, or rescission and annulment, as the
case may be. The Holders of outstanding Securities of such series on such
record date (or their duly appointed agents), and only such Persons, shall
be entitled to join in such declaration, or rescission and annulment, as
the case may be, whether or not such Holders remain Holders after such
record date; provided that, unless such declaration, or rescission and
annulment, as the case may be, shall have become effective by virtue of
Holders of at least 25%, in the case of any declaration of acceleration, or
a majority, in the case of any rescission or annulment, in principal amount
of Outstanding Securities of such series on such record date (or their duly
appointed agents) having joined therein on or prior to the 90th day after
such record date, such declaration, or rescission and annulment, as the
case may be, shall automatically and without any action by any Person be
canceled and of no further effect.
Section 5.03 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 written 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 except such costs and
expenses as are a result of negligence or bad faith on the
part of the Trustee. Until such demand is made by the
Trustee, the Company may pay the principal of and premium,
if any, and interest, if any, on the Securities of any
series to the registered holders, whether or not the
Securities of such series are overdue.
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 5.04 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 6.07 except such costs and expenses, as are a result of
negligence or bad faith on the part of the Trustee.
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, 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 5.05 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 except such costs and expenses, as are a result of
negligence or bad faith on the part of the Trustee, be for the ratable
benefit of the Holders of the Securities in respect of which such judgment
has been recovered.
Section 5.06 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 6.07;
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 an such Securities for principal and any
premium and interest, respectively; and
THIRD: To the payment of the remainder, if any, to the Company
or any other Person lawfully entitled thereto.
Section 5.07 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;
(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 indemnity
reasonably satisfactory in form and substance to the Trustee
against the costs, expenses and liabilities to be incurred
in compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute any
such proceeding; and
(5) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the
Holders of a majority in principal amount of the Outstanding
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 5.08 Unconditional Right of Holders to Receive Principal,
Premium and Interest and to Convert. Notwithstanding any other provision
in 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 3.07) any interest on such Security on
the Stated Maturity or Maturities expressed in such Security (or, in the
case of redemption, on the Redemption Date) and to convert such Securities
in accordance with Article Twelve 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 5.09 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.
Section 5.10 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 3.06,
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 5.11. 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. Subject to Section 5.07, 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 5.12. Control by Holders. The Holders of not less than 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.
Upon receipt by the Trustee of any such direction with respect to
Securities of any series, a record date shall be set for determining the
Holders of Outstanding Securities of such series entitled to join in such
direction, which record date shall be the close of business on the day the
Trustee receives such direction. The Holders of Outstanding Securities of
such series on such record date (or their duly appointed agents), and only
such Persons, shall be entitled to join in such direction, whether or not
such Holders remain Holders after such record date; provided that, unless
such direction shall have become effective by virtue of Holders of at least
a majority in principal amount of Outstanding Securities of such series on
such record date (or their duly appointed agents) having joined therein on
or prior to the 90th day after such record date, such direction shall
automatically and without any action by any Person be canceled and of no
further effect. Nothing in this paragraph shall prevent a Holder (or a
duly appointed agent thereof) from giving, before or after the expiration
of such 90-day period, a direction contrary to or different from, or, after
the expiration of such period, identical to, a direction that has been
canceled pursuant to the proviso to the preceding sentence, in which event
a new record date in respect thereof shall be set pursuant to this
paragraph.
Section 5.13. 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 5.14 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.
ARTICLE SIX
The Trustee
Section 6.01 Certain Duties and Responsibilities. The duties and
responsibilities of the Trustee shall be as provided by the Trust Indenture
Act.
(a) If an Event of Default with Respect to securities of any
Series at the time Outstanding has occurred and is
continuing, the Trustee shall exercise such of the rights
and powers vested in it by this Indenture, and use the same
degree of care and skill in their exercise, as a prudent
person would exercise or use under the circumstances in the
conduct of his or her own affairs.
(b) Except during the continuance of an Event of Default:
(1) the Trustee need perform only those duties that are
specifically set forth in this Indenture and no others
and no implied covenants or obligations shall be read
into this Indenture against the Trustee; and
(2) the Trustee may conclusively rely, as to the truth of
the statements and the correctness of the opinions
expressed therein, in the absence of bad faith on its
part, upon certificates or opinions furnished to the
Trustee and conforming to the requirements of this
Indenture. The Trustee, however, shall examine the
certificates and opinions to determine whether or not
they conform to the requirements of this Indenture but
need not verify the accuracy of the contents thereof.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act, or its
own wilful misconduct, except that:
(1) this paragraph does not limit the effect of
paragraph (b) of this Section;
(2) the Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer,
unless it is proved that the Trustee was negligent in
ascertaining the pertinent facts; and
(3) the Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in
accordance with a direction received by it pursuant to
Section 5.12.
(d) Every provision of this Indenture that in any way relates to
the Trustee is subject to paragraphs (a), (b) and (c) of
this Section.
(e) The Trustee may refuse to perform any duty or exercise any
right or power unless it receives indemnity satisfactory to
it against any loss, liability or expense.
(f) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree with the
Company. Money held in trust by the Trustee need not be
segregated from other funds, except to the extent required
by law.
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 6.02 Notice of Defaults. If a default or an Event of Default
occurs and is continuing hereunder with respect to Securities of any
series, and if such default or Event of Default is known to a Responsible
Officer of the Trustee, the Trustee shall mail the Holders of Securities of
such series notice of such default within 90 days after it occurs;
provided, however, that in the case of any default of the character
specified in Section 5.01(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. Except in the case of a default in payment on any
Security of any series or in the payment of any sinking fund installment,
the Trustee may withhold notice if and so long as a trust committee of
Responsible Officers of the Trustee in good faith determines that
withholding the notice is in the interest of Holders of securities of such
series. 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 6.03. Certain Rights of Trustee. Subject to the provisions
of
(a) 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;
(b) 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
may be sufficiently evidenced by a Board Resolution;
(c) whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or
established prior to taking, suffering or omitting any
action hereunder, the Trustee (unless other evidence be
herein specifically prescribed) may, in the absence of bad
faith on its part, rely upon an Officers, Certificate;
(d) the Trustee may consult with counsel and the written advice
of such Counsel or any opinion of Counsel shall be full and
complete authorization and protection in respect of any
action taken, suffered or omitted by it hereunder in good
faith and in reliance thereon;
(e) 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 security or indemnity reasonably satisfactory in
form and substance to the Trustee against the costs,
expenses and liabilities which might be incurred by it in
compliance with such request or direction;
(f) 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 upon
reasonable notice to the Company be entitled to examine the
books, records and premises of the Company, personally or by
agent or attorney at a time and place acceptable to the
Company;
(g) 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
(h) the Trustee shall not be liable for any action it takes or
omits to take in good faith which it reasonably believes to
be authorized or within its rights or powers.
Section 6.04 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 the Trustee or any Authenticating Agent assumes no
responsibility for their correctness. The Trustee makes no representations
as to the validity or sufficiency of this Indenture or of the Securities.
The Trustee or any Authenticating Agent shall not be accountable for the
use or application by the Company of Securities or the proceeds thereof.
Section 6.05 May Hold Securities. 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 6.08 and 6.13, 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 6.06 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 with the
Company.
Section 6.07 Compensation and Reimbursement. The Company agrees
(1) to pay to the Trustee from time to time reasonable
compensation for all services rendered by it hereunder
(which compensation shall not be limited by any provision of
law in regard to the compensation of a trustee of an express
trust);
(2) except as otherwise expressly provided herein, to reimburse
the Trustee upon its written 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 reasonable
expenses and disbursements of its agents and outside
counsel), except any such expense, disbursement or advance
as may be attributable to its negligence or bad faith; and
(3) to indemnify the Trustee for, and to hold it harmless
against, any loss, liability or expense incurred without
negligence or bad faith on its part, arising out of or in
connection with the acceptance or administration of the
trust or trusts and the performance of its duties hereunder,
including the reasonable costs and expenses of defending
itself against any claim or liability in connection with the
exercise or performance of any of its powers or duties
hereunder.
To secure the Company's payment obligations in this Section, the
Trustee shall have a lien prior to the Securities on all money or property
of the Company held or collected by the Trustee in its capacity as Trustee
or as Paying Agent hereunder (but not in any other capacity), except that
held in trust to pay principal of (and premium, if any) or interest on
particular Securities.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 5.01(6) or (7) occurs with respect to any
series of Securities, the expenses and the compensation for the services
are intended to constitute expenses of administration under any Federal or
State bankruptcy law or similar law.
The Company's obligations under this Section 6.07 and any lien arising
hereunder shall survive the resignation or removal of the Trustee, the
discharge of the Company's obligations pursuant to Article Four or Article
Thirteen hereof and the termination of this Indenture.
Section 6.08 Disqualification; Conflicting Interests. If the Trustee
has or shall acquire any 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.
Section 6.09 Corporate Trustee Required; Eligibility. There shall at
all times be a Trustee hereunder which shall be a Person that is eligible
pursuant to the Trust Indenture Act to act as such and has a combined
capital and surplus of at least $50,000,000 or is a subsidiary of a
corporation which shall be a Person that has a combined capital and surplus
of at least $50,000,000 and which unconditionally guarantees the
obligations of the Trustee hereunder. If such Person 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 Section,
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 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 6.10. Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Trustee and no appointment
of a successor Trustee pursuant to this Article shall become
effective until the acceptance of appointment by the
successor Trustee in accordance with the applicable
requirements of Section 6.11.
(b) 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. If the instrument of acceptance by
a successor Trustee required by Section 6.11 shall not have
been delivered to the Trustee within 30 days after the
giving of such notice of resignation, the resigning Trustee
may petition any court of competent jurisdiction for the
appointment of a successor Trustee with respect to the
Securities of such series.
(c) 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.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 6.08 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 6.09 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, (i) the Company by a Board Resolution may
remove the Trustee with respect to all Securities, or
(ii) subject to Section 5.14, any Holder who has been a bona fide
Holder of a Security for at least six months may, on behalf of
itself 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.
(e) If the Trustee shall resign, be removed or be 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 6.11. 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 6.11, 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 6.11, any
Holder who has been a bona fide Holder of a Security of such
series for at least six months may, on behalf of itself 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.
(f) 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 1.06. 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 6.11. Acceptance of Appointment by Successor.
(a) 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.
(b) 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 such 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 the rights, powers, trust
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 Trustee co-trustees of the same trust and
that each such Trustee shall be trustee of a trust or trusts
hereunder separate and apart from any trust or trusts
hereunder administered by any other such Trustee; and upon
the execution and delivery of such supplemental indenture
the resignation or removal of the retiring Trustee shall
become effective to the extent provided therein and each
such successor Trustee, without any further act, deed or
conveyance, shall become vested with all the rights, powers,
trusts and duties of the retiring Trustee with respect to
the Securities of that or those series to which the
appointment of such successor Trustee relates; but, on
request of the Company or any successor Trustee, such
retiring Trustee shall duly assign, transfer and deliver to
such successor Trustee all property and money held by such
retiring Trustee hereunder with respect to the Securities of
that or those series to which the appointment of such
successor Trustee relates.
(c) Upon request of any such successor Trustee, the Company
shall execute any and all instruments for more fully and
certainly vesting in and confirming to such successor
Trustee all such rights, powers and trusts referred to in
paragraphs (a) and (b) of this Section, as the case may be.
(d) No successor shall accept its appointment unless at the time
of such acceptance such successor Trustee shall be qualified
and eligible under this Article.
Section 6.12 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 6.13 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).
ARTICLE SEVEN
Holders' Lists and Reports by Trustee and Company
Section 7.01 Company to Furnish Trustee Names and Addresses of
Holders.
The Company will furnish or cause to be furnished to the Trustee
(a) semiannually, not later than 10 days after each Regular
Record Date in each year, a list for each series of
Securities, in such form as the Trustee may reasonably
require, of the names and addresses of the Holders of
Securities of such series as of the preceding Regular Record
Date, and
(b) at such other times as the Trustee may request in writing,
within 30 days after the receipt by the Company of any such
request, a list of similar form and content as of a date not
more than 15 days prior to the time such list is furnished;
excluding from any such list names and addresses received by the Trustee in
its capacity as Security Registrar.
Section 7.02 Preservation of Information; Communications to Holders.
(a) 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 7.01 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 7.01 upon receipt of a new list so
furnished.
(b) The rights of the 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.
(c) Every Holder of Securities, by receiving and holding the
same, agrees with the Company and the Trustee that neither
the Company nor the Trustee nor any agent of either of them
shall 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 7.03. Reports by Trustee.
(a) 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. To
the extent that any such report is required by the Trust
Indenture Act with respect to any 12 month period, such
report shall cover the 12 month period ending December 31
and shall be transmitted by the next succeeding April 30.
(b) 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
notify the Trustee when any Securities are listed on any
stock exchange.
Section 7.04 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 times 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.
ARTICLE EIGHT
Consolidation, Merger, or Sale of Assets
Section 8.01 Conditions to Consolidation, Merger or Sale. The
Company shall not consolidate with or merge into any other Person or sell
its properties and assets as, or substantially as, an entirety to any
Person, and the Company shall not permit any Person to consolidate with or
merge into the Company, unless:
(1) in case the Company shall consolidate with or merge into
another Person or sell its properties and assets as, or
substantially as, an entirety to any Person, the Person
formed by such consolidation or into which the Company is
merged or the Person which purchases the properties and
assets of the Company as, or 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 the conversion rights, if
any, shall be provided for in accordance with Article
Twelve, by supplemental indenture satisfactory in form to
the Trustee, executed and delivered to the Trustee, by the
Person (if other than the Company) formed by such
consolidation or into which the Company shall have been
merged or by the corporation which shall have acquired the
Company's assets;
(2) immediately after giving effect to such transaction, no
Event of Default shall have happened and be continuing; and
(3) the Company has delivered to the Trustee an Officers'
Certificate and an opinion of Counsel, each stating that
such consolidation, merger, or sale and, if a supplemental
indenture is required in connection with such transaction,
such supplemental indenture comply with this Article and
that all conditions precedent herein provided for relating
to such transaction have been complied with.
Section 8.02 Successor Substituted. Upon any consolidation of the
Company with, or merger of the Company into, any other Person or any sale
of the properties and assets of the Company as, or substantially as, an
entirety in accordance with Section 8.01, the successor Person formed by
such consolidation or into which the Company is merged or to which such
sale 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, the predecessor Person shall be relieved of all obligations
and covenants under this Indenture and the Securities.
ARTICLE NINE
Supplemental Indentures
Section 9.01 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 any additional Events of Default; 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(if allowed without penalty under applicable
laws and regulations), 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
(i) shall neither (A) apply to any Security of any series
created prior to the execution of such supplemental
indenture and entitled to the benefit of such provision nor
(B) modify the rights of the Holder of any such Security
with respect to such provision or (ii) shall become
effective only when there is no such Security Outstanding;
or
(6) to secure the Securities pursuant to the requirements of
Section 10.05, or to otherwise secure the Securities of any
series; or
(7) to establish the form or terms of Securities of any series
as permitted by Sections 2.01 and 3.01; 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 6.11(b); or
(9) to cure any ambiguity, to correct or supplement any
provision herein which may be 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
shall not adversely affect the interests of the Holders of
Securities of any series in any material respect; or
(10) to make provision with respect to the conversion rights of
Holders pursuant to the requirements of Article Twelve,
including providing for the conversion of the securities
into any security or property of the Company; or
(11) to conform to any mandatory provisions of law.
Section 9.02 Supplemental Indentures With Consent of Holders. With
the consent of the Holders of not less than a majority of 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 (including any change in the Floating or Adjustable
Rate Provision pursuant to which such rate is determined
that would reduce such rate for any period) or any premium
payable upon the redemption thereof, or reduce the amount of
the principal of an Original Issue Discount Security that
would be due and payable upon a declaration of acceleration
of the Maturity thereof pursuant to Section 5.02, or change
any Place of Payment where, or the 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
(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) if applicable, make any change that adversely affects the
right to convert any security to which the provisions of
Article Twelve are applicable or, except as provided in this
indenture, decrease the conversion rate or increase the
conversion price of any such security, or
(4) modify any of the provisions of this Section, Section 5.13
or Section 9.08, 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 and Section 9.08, or the deletion of this
proviso, in accordance with the requirements of
Sections 6.11(b) and 9.01(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.
Section 9.03 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 6.01) 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 and, with respect to
supplemental indentures under Section 9.02 hereof, evidence of the consents
of Holders required in connection therewith. The Trustee may, but shall
not be obligated to, enter into any such supplemental indenture which
affects the Trustee's own rights, duties or immunities under this Indenture
or otherwise.
Section 9.04 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 9.05 Revocation and Effect of Consents. Until an amendment
or supplement under this Article or a waiver under this Article becomes
effective, a consent to it by a Holder of a Security is a continuing
consent by the Holder and every subsequent Holder of a Security or portion
of a Security that evidences the same debt as the consenting Holder's
Security, even if notation of the consent is not made on any Security.
However, except as otherwise provided in the consent, any such Holder or
subsequent Holder may revoke the consent as to his Security or portion of a
Security if the Trustee receives the notice of revocation before the date
the amendment, supplement or waiver becomes effective.
After an amendment or supplement becomes effective, it shall bind
every Holder.
Section 9.06 Conformity with Trust Indenture Act. Every supplemental
indenture executed pursuant to this Article shall conform to the
requirements of the Trust Indenture Act.
Section 9.07 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.
Section 9.08 Waiver of Compliance by Holders. Anything in this
Indenture to the contrary notwithstanding, any of the acts which the
Company is required to do, or is prohibited from doing, by any of the
provisions of this Indenture may, to the extent that such provisions might
be changed or eliminated by a supplemental indenture pursuant to
Section 9.02 upon consent of Holders of not less than a majority in
aggregate principal amount of the then Outstanding Securities of the series
affected, be omitted or done by the Company, if there is obtained the prior
consent or waiver of the Holders of at least a majority in aggregate
principal amount of the then outstanding Securities of such series.
ARTICLE TEN
Covenants
Section 10.01 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 or cause to be paid 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 10.02. Maintenance of Office or Agency. So long as any
Securities are outstanding, 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, where Securities of that series may be 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 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 10.03 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 (i) comply with the
provisions of the Trust Indenture Act applicable to it as a Paying Agent
and (ii) 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, and 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 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 request and 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
the Borough of Manhattan, the City of 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 10.04. 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, a certificate signed by the
Company's principal executive officer, principal financial officer or
principal accounting officer stating to the best knowledge of the signer
thereof whether or not the Company has complied during such immediately
preceding fiscal year with and is in compliance with all terms, conditions
and covenants of this Indenture (without regard to any period of grace or
requirement of notice provided hereunder) and if the signer has obtained
knowledge of any continuing default by the Company in the performance,
observation or fulfillment of any such term, condition or covenant,
specifying each such default and the nature thereof.
Section 10.05. Limitations on Liens on Interests in Operating
Partnership. So long as any of the Securities remains Outstanding, the
Company will not, and will not permit the Operating Partnership to, issue,
assume, incur or guarantee any indebtedness for borrowed money secured by a
mortgage, pledge, lien or other encumbrance in the nature of a lien
("Lien") on any of the limited partnership interests in the Operating
Partnership owned by the Company.
ARTICLE ELEVEN
Redemption of Securities
Section 11.01 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 3.01 for Securities of any series) in accordance
with this Article.
Section 11.02 Election to Redeem; Notice to Trustee. In case of any
redemption at the election of the Company of the Securities of any series,
the Company shall, at least 30 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, the specific provision of the
Securities of such series pursuant to which such Securities being called
for redemption are being 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 11.03 Selection by Trustee of Securities to Be Redeemed. If
less than all the Securities of any series are to be redeemed (unless all
of the Securities of such series and of a specified tenor are to be
redeemed), the particular Securities to be redeemed shall be selected not
more than 15 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 portions (equal to the minimum
authorized denomination for Securities of that series or any integral
multiple thereof) of the principal amount of Securities of such series of a
denomination larger than the minimum authorized denomination for Securities
of that series. If less than all of the Securities of such series and of a
specified tenor are to be redeemed, the particular Securities to be
redeemed shall be selected not more than 15 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.
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 (so far as may be) to be the portion selected for redemption.
Securities which 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.
The Trustee shall promptly notify the Company in writing of the
Securities selected for redemption and, in the case of any Securities
selected for partial redemption, the principal amount thereof to be
redeemed.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of 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 11.04 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 its address appearing in the Security
Register.
All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price,
(3) if less than all the Outstanding Securities of any series
are to be redeemed, the identification (and, in the case of
partial redemption of any Securities, the principal amounts)
of the particular Securities to be redeemed,
(4) that on the Redemption Date the Redemption Price will become
due and payable upon each such Security to be redeemed and,
if applicable, that interest thereon will cease to accrue on
and after said date,
(5) if applicable, the conversion price, and that the date on
which the right to convert the principal of the Securities
or the portions thereof to be redeemed will terminate will
be the Redemption Date and the place or places where such
Securities may be surrendered for conversion,
(6) the place or places where such Securities are 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.
Section 11.05 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 10.03) 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 or portion thereof 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 or portion
thereof 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 3.07) be paid to the Company upon Company Request or, if then
held by the Company, shall be discharged from such trust.
Section 11.06 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 3.01, installments of interest whose
Stated Maturity is on or prior to the Redemption Date shall be payable to
the Holders of such Securities, or one or more Predecessor Securities,
registered as such at the close of business on the relevant Record Dates
according to their terms and the provisions of Section 3.07.
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.
Section 11.07 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
aggregate principal amount equal to and in exchange for the unredeemed
portion of the principal of the Security so surrendered.
ARTICLE TWELVE
Conversion of Securities
Section 12.01 Applicability of Article. The provisions of this
Article shall be applicable to the Securities of any series which are
convertible into shares of Common Stock of the Company, and the issuance of
such shares of Common Stock upon the conversion of such Securities, except
as otherwise specified as contemplated by Section 3.01 for the Securities
of such series.
Section 12.02 Exercise of Conversion Privilege. In order to exercise
a conversion privilege, the Holder of a Security of a series with such a
privilege shall surrender such Security to the Company at the office or
agency maintained for that purpose pursuant to Section 10.02, accompanied
by written notice to the Company that the Holder elects to convert such
Security or a specified portion thereof. Such notice shall also state, if
different from the name and address of such Holder, the name or names (with
address) in which the certificate or certificates for shares of Common
Stock which shall be issuable on such conversion shall be issued.
Securities surrendered for conversion shall (if so required by the Company
or the Trustee) be duly endorsed by or accompanied by instruments of
transfer in forms satisfactory to the Company and the Trustee duly executed
by the registered Holder or its attorney duly authorized in writing; and
Securities so surrendered for conversion during the period from the close
of business on any Regular Record Date to the opening of business on the
next succeeding Interest Payment Date (excluding Securities or portions
thereof called for redemption during such period) shall also be accompanied
by payment in funds acceptable to the Company of an amount equal to the
interest payable on such Interest Payment Date on the principal amount of
such Security then being converted, and such interest shall be payable to
such registered Holder notwithstanding the conversion of such Security,
subject to the provisions of Section 3.07 relating to the payment of
Defaulted Interest by the Company. As promptly as practicable after the
receipt of such notice and of any payment required pursuant to a Board
Resolution and, subject to Section 3.03, set forth, or determined in the
manner provided, in an Officers' Certificate, or established in one or more
indentures supplemental hereto setting forth the terms of such series of
Security, and the surrender of such Security in accordance with such
reasonable regulations as the Company may prescribe, the Company shall
issue and shall deliver, at the office or agency at which such Security is
surrendered, to such Holder or on its written order, a certificate or
certificates for the number of full shares of Common Stock issuable upon
the conversion of such Security (or specified portion thereof), in
accordance with the provisions of such Board Resolution, Officers'
Certificate or supplemental indenture, and cash as provided therein in
respect of any fractional share of such Common Stock otherwise issuable
upon such conversion. Such conversion shall be deemed to have been
effected immediately prior to the close of business on the date on which
such notice and such payment, if required, shall have been received in
proper order for conversion by the Company and such Security shall have
been surrendered as aforesaid (unless such Holder shall have so surrendered
such Security and shall have instructed the Company to effect the
conversion on a particular date following such surrender and such Holder
shall be entitled to convert such Security on such date, in which case such
conversion shall be deemed to be effected immediately prior to the close of
business on such date) and at such time the rights of the Holder of such
Security as such Security Holder shall cease and the person or persons in
whose name or names any certificate or certificates for shares of Common
Stock of the Company shall be issuable upon such conversion shall be deemed
to have become the Holder or Holders of record of the shares represented
thereby. Except as set forth above and subject to the final paragraph of
Section 3.07, 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 of the
Company issued upon such conversion.
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 or on the order of the Holder thereof, at the expense of the
Company, a new Security or Securities of the same series, of authorized
denominations, in aggregate principal amount equal to the unconverted
portion of such Security.
Section 12.03 No Fractional Shares. No fractional share of Common
Stock of the Company shall be issued upon conversions of Securities of any
series. 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 shall be computed on the basis of the aggregate
principal amount of the Securities (or specified portions thereof to the
extent permitted hereby) so surrendered. If, except for the provisions of
this Section 12.03, any Holder of a Security or Securities would be
entitled to a fractional share of Common Stock of the Company upon the
conversion of such Security or Securities, or specified portions thereof,
the Company shall pay to such Holder an amount in cash equal to the current
market value of such fractional share computed, (i) if such Common Stock is
listed or admitted to unlisted trading privileges on a national securities
exchange, on the basis of the last reported sale price regular way on such
exchange on the last trading day prior to the date of conversion upon which
such a sale shall have been effected, or (ii) if such Common Stock is not
at the time so listed or admitted to unlisted trading privileges on a
national securities exchange, on the basis of the average of the bid and
asked prices of such Common Stock in the over-the-counter market, on the
last trading day prior to the date of conversion, as reported by the
National Quotation Bureau, Incorporated or similar organization if the
National Quotation Bureau, Incorporated is no longer reporting such
information, or if not so available, the fair market price as determined by
the Board of Directors. For purposes of this Section, "trading day" shall
mean each Monday, Tuesday, Wednesday, Thursday and Friday other than any
day an which the Common Stock is not traded on the New York Stock Exchange,
or if the Common Stock is not traded on the New York Stock Exchange, on the
principal exchange or market on which the Common Stock is traded or quoted.
Section 12.04 Adjustment of Conversion Price. The conversion price
of Securities of any series that is convertible into Common Stock of the
Company shall be adjusted for any stock dividends, stock splits,
reclassification, combinations or similar transactions in accordance with
the term of the supplemental indenture setting forth the terms of the
Securities of such series.
Whenever the conversion price is adjusted, the Company shall compute
the adjusted conversion price in accordance with terms of the applicable
supplemental indenture and shall prepare an Officers' Certificate 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 each office or agency maintained for the purpose of
conversion of Securities pursuant to Section 10.02 and, if different, with
the Trustee. The Company shall forthwith cause a notice setting forth the
adjusted conversion price to be mailed, first class postage prepaid, to
each Holder of Securities of such series at its address appearing on the
Security Register and to any conversion agent other than the Trustee.
Section 12.05 Notice of Certain Corporate Actions. 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 (other than a dividend for
which approval of any shareholders of the Company is
required); or
(b) the Company shall authorize the granting to the holders of
its Common Stock of rights, options or warrants to subscribe
for or purchase any shares of capital stock of any class or
of any other rights (other than any such grant for which
approval of any shareholders of the company is required); or
(c) 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, merger or
share exchange to which the Company is a party and for which
approval of any shareholders of the Company is required), or
of the sale of all or substantially all of the assets of the
Company; or
(d) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company;
then the Company shall cause to be filed with the Trustee, and shall cause
to be mailed to all Holders at their last addresses as they shall appear in
the Securities Register, at least 20 days (or 10 days in any case specified
in clause (a) or (b) above) prior to the applicable record date hereinafter
specified, a notice stating (i) the date on which a record is to be taken
for the purpose of such dividend, distribution, rights, options 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, options or warrants are to be determined, or (ii) the
date on which such reclassification, consolidation, merger, share exchange,
sale, 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, dissolution,
liquidation or winding up.
Section 12.06 Reservation of Shares of Common Stock. 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 Securities, the full number of shares of Common
Stock of the Company then issuable upon the conversion of all outstanding
Securities of any series that has conversion rights.
Section 12.07 Payment of Certain Taxes Upon Conversion. The Company
will pay and all taxes that may be payable in respect of the issue or
delivery of shares of its 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 shares of its 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 12.08 Nonassessability. The Company covenants that all
shares of its Common Stock which may be issued upon conversion of
Securities will upon issue in accordance with the terms hereof be duly and
validly issued and fully paid and nonassessable.
Section 12.09 Effect of Consolidation or Merger on Conversion
Privilege.
In case of any consolidation of the Company with, or merger of the
Company into or with any other Person, or in case of any sale of all or
substantially all of the assets of the Company, the Company or the Person
formed by such consolidation or the Person into which the Company shall
have been merged or the Person which shall have acquired such assets, as
the case may be, shall execute and deliver to the Trustee a supplemental
indenture providing that the Holder of each Security then outstanding of
any series that is convertible into Common Stock of the Company shall have
the right, which right shall be the exclusive conversion right thereafter
available to said Holder (until the expiration of the conversion right of
such Security), to convert such Security into the kind and amount of shares
of stock or other securities or property (including cash) receivable upon
such consolidation, merger or sale by a holder of the number of shares of
Common Stock of the Company into which such Security might have been
converted immediately prior to such consolidation, merger or sale, subject
to compliance with the other provisions of this Indenture, such Security
and such supplemental indenture. Such supplemental indenture shall provide
for adjustments which shall be as nearly equivalent as may be practicable
to the adjustments provided for in such Security. The above provisions of
this Section shall similarly apply to successive consolidations, mergers or
sales. It is expressly agreed and understood that anything in this
Indenture to the contrary notwithstanding, if, pursuant to such merger,
consolidation or sale, holders of outstanding shares of Common Stock of the
Company do not receive shares of common stock of the surviving corporation
but receive other securities, cash or other property or any combination
thereof, Holders of Securities shall not have the right to thereafter
convert their Securities into common stock of the surviving corporation or
the corporation which shall have acquired such assets, but rather, shall
have the right upon such conversion to receive the other securities, cash
or other property receivable by a holder of the number of shares of Common
Stock of the Company into which the Securities held by such holder might
have been converted immediately prior to such consolidation, merger or
sale, all as more fully provided in the first sentence of this
Section 12.09. Anything in this Section 12.09 to the contrary
notwithstanding, the provisions of this Section 12.09 shall not apply to a
merger or consolidation of another corporation with or into the Company
pursuant to which both of the following conditions are applicable: (i) the
Company is the surviving corporation and (ii) the outstanding shares of
Common Stock of the Company are not changed or converted into any other
securities or property (including cash) or changed in number or character
or reclassified pursuant to the terms of such merger or consolidation.
As evidence of the kind and amount of shares of stock or other
securities or property (including cash) into which Securities may properly
be convertible after any such consolidation, merger or sale, or as to the
appropriate adjustments of the conversion prices applicable with respect
thereto, the Trustee shall be furnished with and may accept the certificate
or opinion of an independent certified public accountant with respect
thereto; and, in the absence of bad faith on the part of the Trustee, the
Trustee may conclusively rely thereon, and shall not be responsible or
accountable to any Holder of Securities for any provision in conformity
therewith or approved by such independent certified accountant which may be
contained in said supplemental indenture.
Section 12.10 Duties of Trustee Regarding Conversion. Neither the
Trustee nor any shall at any time be under any duty or responsibility to
any Holder of Securities of any series that is convertible into Common
Stock of the Company 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, whether herein or in any supplemental indenture, any resolutions
of the Board of Directors or written instrument executed by one or more
officers of the Company provided to be employed in making the same.
Neither the Trustee nor any conversion agent shall be accountable with
respect to the validity or value (or the kind or amount) of any shares of
Common Stock of the Company, or of any securities or property, which may at
any time be issued or delivered upon the conversion of any Securities and
neither the Trustee nor any conversion agent makes any representation with
respect thereto. Subject to the provisions of Section 6.01, neither the
Trustee nor any conversion agent shall be responsible for any failure of
the Company to issue, transfer or deliver any shares of its Common Stock or
stock certificates or other securities or property upon the surrender of
any Security for the purpose of conversion or to comply with any of the
covenants of the Company contained in this Article Twelve or in the
applicable supplemental indenture, resolutions of the Board of Directors or
written instrument executed by one or more duly authorized officers of the
Company.
Section 12.11 Repayment of Certain Funds Upon Conversion. Any funds
which at any time shall have been deposited by the Company or on its behalf
with the Trustee or any other paying agent for the purpose of paying the
principal of, and premium, if any, and interest, if any, on any of the
Securities (including funds deposited for the sinking fund referred to in
Article Three hereof) and which shall not be required for such purposes
because of the conversion of such Securities as provided in this Article
Twelve shall after such conversion be repaid to the Company by the Trustee
upon the Company's written request by Company Request.
ARTICLE THIRTEEN
Defeasance and Covenant Defeasance
Section 13.01 Company's Option to Effect Defeasance or Covenant
Defeasance. The Company may elect, at any time, to have either
Section 13.02 or Section 13.03 applied to the outstanding Securities of any
series, upon compliance with the conditions set forth below in this Article
Thirteen.
Section 13.02 Defeasance and Discharge. Upon the Company's exercise
of the option provided in Section 13.01 to have this Section 13.02 applied
to the Outstanding Securities of any series, the Company shall be deemed to
have been discharged from its obligations, with respect to the Outstanding
Securities of such series as provided in this Section on and after the date
the conditions set forth in Section 13.04 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 the Outstanding Securities of such series and to have
satisfied all its other obligations under the Securities of such series and
this Indenture insofar as the Securities of such series 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 Securities of such series to receive, solely from the trust
fund described in Section 13.04 and as more fully set forth in such
Section, payments in respect of the principal of and any premium and
interest on such Securities of such series when payments are due, (2) the
Company's obligations with respect to the Securities of such series under
Sections 3.04, 3.05, 3.06, 10.02 and 10.03, (3) the rights, powers, trusts,
duties and immunities of the Trustee hereunder, including, without
limitation, its rights under Section 6.07 and (4) this Article Thirteen.
Subject to compliance with this Article Thirteen, the Company may exercise
its option provided in Section 13.01 to have this Section 13.02 applied to
the Outstanding Securities of any series notwithstanding the prior exercise
of its option provided in Section 13.01 to have Section 13.03 applied to
the outstanding Securities of such series.
Section 13.03 Covenant Defeasance. Upon the Company's exercise of
the option provided in Section 13.01 to have this Section 13.03 applied to
the Outstanding Securities of any series, (1) the Company shall be released
from its obligations under Section 10.05 and Section 8.01 and (2) the
occurrence of any event specified in Sections 5.01(3), 5.01(4) (with
respect to Section 10.05 and Section 8.01) and 5.01(5) shall be deemed not
to be or result in an Event of Default, in each case with respect to the
Outstanding Securities of such series as provided in this Section on and
after the date the conditions set forth in Section 13.04 are satisfied
(hereinafter called "Covenant Defeasance"). For this purpose, such
Covenant Defeasance means that 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 5.01(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 the Securities of such
series shall be unaffected thereby.
Section 13.04 Conditions to Defeasance or Covenant Defeasance. The
following shall be the conditions to application of either Section 13.02 or
Section 13.03 to the Outstanding Securities of any series:
(1) The Company shall irrevocably have deposited or caused to be
deposited with the Trustee (or another trustee that
satisfies the requirements contemplated by Section 6.09 and
agrees to comply with the provisions of this Article
Thirteen applicable to it) as trust funds in trust for the
purpose of making the following payments, specifically
pledged as security for, and dedicated solely to, the
benefit of the Holders of outstanding Securities of such
series, (i) money in an amount, or (ii) U.S. Government
Obligations that through the scheduled payment of principal
and interest in respect thereof in accordance with their
terms will provide, not later than one day before the due
date of any payment, money in an amount, or (iii) 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 the Securities of such
series on the respective Stated Maturities, in accordance
with the terms of this Indenture and the Securities of such
series. As used herein, "U.S. Government Obligation" means
(x) any security that is (i) a direct obligation of the
United States of America for the payment of which 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 for 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 of 1933, as
amended) as custodian with respect to any specific payment
of principal of or interest on any such U.S. Government
Obligation specified in Clause (x) and held by such
custodian for the account of the holder of such depositary
receipt, or with respect to any specific payment of
principal of or interest on any such U.S. Government
Obligation, 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 case of an election under Section 13.02, the Company
shall have delivered to the Trustee an Opinion of Counsel
stating that (i) the Company has received from, or there has
been published by, the Internal Revenue Service, a ruling or
(ii) since the date hereof, there has been a change in the
applicable Federal income tax law, in case of either (i) or
(ii) to the effect that, and based thereon such opinion
shall confirm that, the Holders 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 the Securities of such series 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, Defeasance and discharge were not to occur.
(3) In the case of an election under Section 13.03, the Company
shall have delivered to the Trustee an Opinion of Counsel to
the effect that the Holder of the Outstanding Securities of
such series will not recognize gain or loss for Federal
income tax purposes as result of the deposit and Covenant
Defeasance to be effected with respect to the Securities of
such series 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.
(4) The Company shall have delivered to the Trustee an Officers'
Certificate to the effect that the Securities of such
series, if then listed on any securities exchange, will not
be delisted as a result of such deposit.
(5) No Event of Default or event that (after notice or lapse of
time or both) would become an Event of Default shall have
occurred and be continuing at the time of such deposit or,
with regard to any Event of Default or any such event
specified in Sections 5.01(6) and 5.01(7), at any time on or
prior to the 90th day after the date of such deposit (it
being understood that this condition shall not be deemed
satisfied until after such 90th day).
(6) The Company shall have delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel, each stating that all
conditions precedent with respect to such Defeasance or
Covenant Defeasance have been complied with.
(7) 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 of 1940, as amended, unless such trust shall be
qualified under such Act or exempt from regulation
thereunder.
Section 13.05 Deposited Money and U.S. Government Obligations to be
Held In Trust; Other Miscellaneous Provisions. Subject to the provisions
of the last paragraph of Section 10.03, all money and U.S. Government
Obligations (including the proceeds thereof) deposited with the Trustee or
other qualifying trustee (solely for purposes of this section and
Section 13.06, the Trustee and any such other trustee are referred to
collectively as the "Trustee") pursuant to Section 13.04 in respect of the
Securities of any Defeasible Series shall be held in trust and applied by
the Trustee, in accordance with the provisions of the Securities of such
series 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 Securities of such series, 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.
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 13.04 or the principal and
interest received in respect thereof other than any such tax, fee or other
charge that by law is for the account of the Holders of outstanding
Securities.
Anything in this Article Thirteen 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 13.04 with respect to Securities of any Defeasible Series that, 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 that would then be required to
be deposited to effect an equivalent Defeasance or Covenant Defeasance with
respect to the Securities of such series.
Section 13.06 Reinstatement. If the Trustee or the Paying Agent is
unable to apply any money in accordance with this Article Thirteen with
respect to the Securities of any series by reason of any order or judgment
of any court or governmental authority enjoining, restraining or otherwise
prohibiting such application, then the Company's obligations under this
Indenture and the Securities of such series shall be revived and reinstated
as though no deposit had occurred pursuant to this Article Thirteen with
respect to Securities of such series until such time as the Trustee or
Paying Agent is permitted to apply all money held in trust pursuant to
Section 13.05 with respect to Securities of such series in accordance with
this Article Thirteen; provided, however, that if the Company makes any
payment of principal of or any premium or interest on any Security of such
series following the reinstatement of its obligations, the Company shall be
subrogated to the rights of the Holders of Securities of such series to
receive such payment from the money so held in trust.
ARTICLE FOURTEEN
Sinking Funds
Section 14.01 Applicability of Article. The provisions of this
Article shall be applicable to any sinking fund for the retirement of
Securities of a series except as otherwise specified as contemplated by
Section 3.01 for Securities of such series.
The minimum amount of any sinking fund payment provided for by the
terms of Securities of any series is herein referred to as a "mandatory
sinking fund payment", and any payment in excess of such minimum amount
provided for by the terms of Securities of any series is herein referred to
as an "optional sinking fund payment." If provided for by the terms of
Securities of any series, the cash amount of any sinking fund payment may
be subject to reduction as provided in Section 12.11. Each sinking fund
payment shall be applied to the redemption of Securities of any series as
provided for by the terms of Securities of such series.
Section 14.02 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 Twelve
or Securities of a series which have been acquired or 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 or otherwise, in each case in
satisfaction of all or any part of any sinking fund payment with respect to
the Securities of such series required to be made pursuant to the terms of
such Securities as provided for by the terms of such series; provided that
such Securities have not been previously so credited. Such Securities
shall be received and credited for such purpose by the Trustee at the
Redemption Price specified in such Securities for redemption through
operation of the sinking fund and the amount of such sinking fund payment
shall be reduced accordingly.
Section 14.03 Redemption of Securities for Sinking Fund. Not less
than 60 days prior to each sinking fund payment date for any series of
Securities, the Company will deliver to the Trustee an Officers Certificate
specifying the amount of the next ensuing sinking fund payment for that
series pursuant to the terms of that series, the portion thereof, if any,
which is to be satisfied by payment of cash and the portion thereof, if
any, which is to be satisfied by delivering and crediting Securities of
that series pursuant to Section 12.02 and will also deliver to the Trustee
any Securities to be so delivered. Not less than 30 nor more than 60 days
before each such sinking fund payment date the Trustee shall select the
Securities to be redeemed upon such sinking fund payment date in the manner
specified in Section 11.03 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 11.04 and provide a copy thereof to the Company five
(5) days in advance of the mailing thereof. Such notice having been duly
given, the redemption of such Securities shall be made upon the terms and
in the manner stated in Sections 11.06 and 11.07.
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed, and their respective corporate seals to be hereunto
affixed and attested, all as of the day and year first above written.
HOME PROPERTIES OF NEW YORK, INC.
By____________________________
Title_________________________
Attest
[TRUSTEE]
______________________________
By____________________________
Title_________________________
Attest
<PAGE>
STATE OF NEW YORK)
) ss.:
COUNTY OF MONROE )
On the ____ day of __________, 1996, before me personally came
__________________________, to me known, who, being by me duly sworn, did
depose and say that (s)he is _______________ of Home Properties of New
York, Inc., one of the corporations described in and which executed the
foregoing instrument; that (s)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 (s)he signed her/his name thereto by like authority.
STATE OF NEW YORK)
: ss.:
COUNTY OF MONROE )
On the ____ day of __________, 1996, before me personally came
__________________________, to me known, who, being by me duly sworn, did
depose and say that (s)he is _______________ of _______ , one of the
corporations described in and which executed the foregoing instrument; that
(s)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 (s)he signed her/his
name thereto by like authority.
Exhibit 5.1
Nixon, Hargrave, Devans & Doyle LLP
Attorneys and Counsellors at Law
Clinton Square
Post Office Box 1051
Rochester, New York 14603-1051
(716) 263-1000
FAX: (716) 263-1600
September 5, 1996
Home Properties of New York, Inc.
850 Clinton Square
Rochester, New York 14604
Gentlemen:
We have acted as counsel to Home Properties of New York, Inc.
(the "Company") in connection with the Registration Statement on Form S-3,
Registration No. 333-2674 filed by the Company with the Securities and
Exchange Commission under the Securities Act of 1933, as amended, relating to
the issuance of up to $100,000,000 in aggregate public offering price of
securities of the Company which may consist of (i) shares of Common Stock
of the Company, par value $.01 per share; (ii) shares of its preferred stock,
par value $.01 per share (the "Preferred Stock); (iii) rights or warrants to
purchase shares of its Common Stock (the "Common Stock Purchase Rights")
and (iv) one or more series of debt securities ("Debt Securities") which
may be either senior debt securities or subordinated debt securities.
We have examined the originals or copies, certified or otherwise
identified to our satisfaction, of all such records of the Company and all
such agreements, certificates of public officials, certificates of officers or
other representatives of the Company, and such other documents, certificates
and corporate or other records as we have deemed necessary or appropriate as a
basis for the opinions set forth herein, including (i) the Articles of
Incorporation of the Company, as amended to the date hereof, (ii) the By-Laws
of the Company, as amended to the date hereof, (iii) certified copies of
certain resolutions duly adopted by the Board of Directors and stockholders
of the Company, and (iv) the Registration Statement.
Based upon the foregoing, it is our opinion that the shares of
Common Stock have been duly authorized, and, after the Common Stock shall
have been issued and delivered as described in such Registration Statement
and the consideration therefor shall have been received by the Company,
such shares of Common Stock will be validly issued, fully paid and
nonassessable.
We hereby consent to the filing of this opinion as an exhibit to
the above-referenced Registration Statement and to the use of our name as
it appears under the caption "Legal Matters" in the prospectus contained in
such Registration Statement.
Very truly yours,
/s/ Nixon, Hargrave, Devans & Doyle LLP
Exhibit 24.2
Consent of Independent Accountants
We consent to the incorporation by reference in the Registration Statement
of Home Properties of New York, Inc. on Form S-3 (No. 333-2674) of our
report dated February 1, 1996, on our audits of the consolidated financial
statements of Home Properties of New York, Inc. as of December 31, 1995 and
1994, for the year ended December 31, 1995 and the period from August 4, 1994
through December 31, 1994, and the combined financial statements of the
Original Properties for the period from January 1, 1994 through August 3,
1994, and the year ended December 31, 1993, which report is included in the
Annual Report on Form 10-K/A Amendment No. 1. We also consent to the
reference to our firm under the caption "Experts".
/s/ Coopers & Lybrand LLP
Rochester, New York
September 5, 1996
