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INSIGNIA FINANCIAL GROUP, INC.
as Issuer
TO
FIRST UNION NATIONAL BANK OF SOUTH CAROLINA
as Trustee
INDENTURE
dated as of November 1, 1996
6 1/2% Convertible Subordinated Debentures
Due 2016
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TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS............................................................................................1
SECTION 1.1 Definitions........................................................................................1
ARTICLE II ISSUE, DESCRIPTION, EXECUTION, REGISTRATION AND EXCHANGE OF NOTES.....................................9
SECTION 2.1 Designation and Principal Amount...................................................................9
SECTION 2.2 Form of Debentures; Initial Issuance to Property Trustee...........................................9
SECTION 2.3 Denomination of Debentures; Payment of Interest; Extension of Interest Payment Period.............11
SECTION 2.4 Execution, Authentication, Delivery and Dating....................................................14
SECTION 2.5 Registration, Registration of Transfer and Exchange...............................................15
SECTION 2.6 Mutilated, Destroyed, Lost and Stolen Debentures..................................................16
SECTION 2.7 Temporary Debentures..............................................................................16
SECTION 2.8 Persons Deemed Owners.............................................................................17
SECTION 2.9 Cancellation......................................................................................17
ARTICLE III REDEMPTION OF DEBENTURES............................................................................17
SECTION 3.1 Optional Redemption by Company....................................................................17
SECTION 3.2 Tax Event Redemption..............................................................................18
SECTION 3.3 Applicability of Article..........................................................................19
SECTION 3.4 No Sinking Fund...................................................................................19
SECTION 3.5 Election to Redeem; Notice to Trustee.............................................................19
SECTION 3.6 Selection by Trustee of Debentures to Be Redeemed.................................................19
SECTION 3.7 Notice of Redemption..............................................................................20
SECTION 3.8 Deposit of Redemption Price.......................................................................20
SECTION 3.9 Debentures Payable on Redemption Date.............................................................21
SECTION 3.10 Debentures Redeemed in Part......................................................................21
ARTICLE IV SUBORDINATION OF DEBENTURES..........................................................................21
SECTION 4.1 Debentures Subordinate to Senior Indebtedness.....................................................21
SECTION 4.2 Payment Over of Proceeds Upon Dissolution, Etc....................................................21
SECTION 4.3 Prior Payment to Senior Indebtedness Upon Acceleration of Debentures..............................22
SECTION 4.4 No Payment When Senior Indebtedness in Default....................................................23
SECTION 4.5 Payment Permitted in Certain Situations...........................................................23
SECTION 4.6 Subrogation to Rights of Holders of Senior Indebtedness...........................................23
SECTION 4.7 Provisions Solely to Define Relative Rights.......................................................24
SECTION 4.8 Trustee to Effectuate Subordination...............................................................24
SECTION 4.9 No Waiver of Subordination Provisions.............................................................24
SECTION 4.10 Notice to Trustee................................................................................25
SECTION 4.11 Reliance on Judicial Order or Certificate of Liquidating Agent...................................25
SECTION 4.12 Trustee Not Fiduciary for Holders of Senior Indebtedness.........................................26
SECTION 4.13 Rights of Trustee as Holder of Senior Indebtedness, Preservation of Trustee's Rights.............26
SECTION 4.14 Article Applicable to Paying Agents..............................................................26
SECTION 4.15 Certain Conversions Deemed Payment...............................................................26
ARTICLE V CERTAIN COVENANTS.....................................................................................27
SECTION 5.1 Payment of Principal, Premium and Interest........................................................27
SECTION 5.2 Maintenance of Office or Agency...................................................................27
SECTION 5.3 Money for Debentures Payments to Be Held in Trust.................................................27
i
SECTION 5.4 Existence.........................................................................................28
SECTION 5.5 Statement by Officers as to Default...............................................................29
SECTION 5.6 Limitation on Dividends and Other Payments........................................................29
SECTION 5.7 Covenants as to the Insignia Trust................................................................29
SECTION 5.8 Payment of Expenses of the Insignia Trust.........................................................30
SECTION 5.9 Registration Rights...............................................................................30
ARTICLE VI HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY....................................................31
SECTION 6.1 Company to Furnish Trustee Names and Addresses of Holders.........................................31
SECTION 6.2 Preservation of Information; Communications to Holders............................................32
SECTION 6.3 Reports by Trustee................................................................................33
SECTION 6.4 Reports by Company................................................................................33
ARTICLE VII DEFAULTS AND REMEDIES...............................................................................34
SECTION 7.1 Events of Default.................................................................................34
SECTION 7.2 Acceleration of Maturity; Rescission and Annulment................................................35
SECTION 7.3 Collection of Indebtedness and Suits for Enforcement by Trustee...................................36
SECTION 7.4 Trustee May File Proofs of Claim..................................................................37
SECTION 7.5 Trustee May Enforce Claims Without Possession of Debentures.......................................37
SECTION 7.6 Application of Money Collected....................................................................37
SECTION 7.7 Limitation on Suits...............................................................................38
SECTION 7.8 Unconditional Right of Holders to Receive Principal and Interest and to Convert...................38
SECTION 7.9 Restoration of Rights and Remedies................................................................39
SECTION 7.10 Rights and Remedies Cumulative...................................................................39
SECTION 7.11 Delay or Omission Not Waiver.....................................................................39
SECTION 7.12 Control by Holders of Debentures.................................................................39
SECTION 7.13 Waiver of Past Defaults..........................................................................39
SECTION 7.14 Undertaking for Costs............................................................................40
SECTION 7.15 Waiver of Stay or Extension Laws.................................................................40
SECTION 7.16 Enforcement by Holders of Convertible Preferred Securities.......................................41
ARTICLE VIII CONCERNING THE TRUSTEE.............................................................................41
SECTION 8.1 Duties and Responsibilities of the Trustee; During Default; Prior to Default......................41
SECTION 8.2 Certain Rights of Trustee.........................................................................42
SECTION 8.3 Not Responsible for Recitals or Issuance of Debentures............................................43
SECTION 8.4 May Hold Debentures...............................................................................43
SECTION 8.5 Money Held in Trust...............................................................................44
SECTION 8.6 Compensation and Reimbursement....................................................................44
SECTION 8.7 Resignation and Removal; Appointment of Successor.................................................44
SECTION 8.8 Acceptance of Appointment by Successor............................................................46
SECTION 8.9 Disqualification; Conflicting Interests...........................................................46
SECTION 8.10 Corporate Trustee Required; Eligibility..........................................................46
SECTION 8.11 Preferential Collection of Claims Against Company................................................46
SECTION 8.12 Merger, Conversion, Consolidation or Succession to Business......................................47
SECTION 8.13 Appointment of Authenticating Agent..............................................................47
SECTION 8.14. Notice of Defaults..............................................................................48
ARTICLE IX ACTS OF HOLDERS......................................................................................48
SECTION 9.1 Acts of Holders...................................................................................48
ARTICLE X MEETINGS OF HOLDERS OF DEBENTURES.....................................................................50
ii
SECTION 10.1 Purposes for Which Meetings May be Called........................................................50
SECTION 10.2 Call, Notice and Place of Meetings...............................................................50
SECTION 10.3 Persons Entitled to Vote at Meetings.............................................................50
SECTION 10.4 Quorum; Action...................................................................................51
SECTION 10.5 Determination of Voting Rights; Conduct and Adjournment of Meetings..............................51
SECTION 10.6 Counting Votes and Recording Action of Meetings..................................................52
ARTICLE XI SUPPLEMENTAL INDENTURES..............................................................................52
SECTION 11.1 Supplemental Indentures Without Consent of Holders...............................................52
SECTION 11.2 Supplemental Indentures With Consent of Holders..................................................53
SECTION 11.3 Execution of Supplemental Indentures.............................................................54
SECTION 11.4 Effect of Supplemental Indentures................................................................54
SECTION 11.5 Conformity with Trust Indenture Act..............................................................54
SECTION 11.6 Reference in Debentures to Supplemental Indentures...............................................54
ARTICLE XII CONSOLIDATION, MERGER, SALE OR CONVEYANCE...........................................................55
SECTION 12.1 Company May Consolidate, Etc. on Certain Terms...................................................55
SECTION 12.2 Successor Corporation Substituted................................................................55
SECTION 12.3 Opinion of Counsel to Trustee....................................................................56
ARTICLE XIII SATISFACTION AND DISCHARGE.........................................................................56
SECTION 13.1 Satisfaction and Discharge of Indenture..........................................................56
SECTION 13.2 Application of Trust Money.......................................................................57
ARTICLE XIV IMMUNITY OF INCORPORATORS, SHAREHOLDERS, OFFICERS, DIRECTORS AND EMPLOYEES.........................57
ARTICLE XV CONVERSION OF CONVERTIBLE DEBENTURES.................................................................58
SECTION 15.1 Conversion Rights................................................................................58
SECTION 15.2 Conversion Procedures............................................................................58
SECTION 15.3 Conversion Price Adjustments.....................................................................59
SECTION 15.4 Merger, Consolidation, or Sale of Assets.........................................................64
SECTION 15.5 Notice of Adjustments of Conversion Price........................................................64
SECTION 15.6 Prior Notice of Certain Events...................................................................65
SECTION 15.7 Dividend or Interest Reinvestment Plans..........................................................65
SECTION 15.8 Certain Additional Rights........................................................................66
SECTION 15.9 Reservation of Shares of Common Stock............................................................66
SECTION 15.10 Payment of Certain Taxes upon Conversion........................................................66
SECTION 15.11 Nonassessability................................................................................67
SECTION 15.12 Duties of Trustee Regarding Conversion..........................................................67
SECTION 15.13 Repayment of Certain Funds upon Conversion......................................................67
SECTION 15.14 Restrictions on Common Stock Issuable Upon Conversion...........................................67
ARTICLE XVI MISCELLANEOUS PROVISIONS............................................................................68
SECTION 16.1 Compliance Certificates and Opinions.............................................................68
SECTION 16.2 Form of Documents Delivered to Trustee...........................................................68
SECTION 16.3 Notices, Etc., to Trustee and Company............................................................69
SECTION 16.4 Notice to Holders of Debentures; Waiver..........................................................69
SECTION 16.5 Language of Notices, Etc.........................................................................70
SECTION 16.6 Conflict with Required Provisions of the Trust Indenture Act.....................................70
iii
SECTION 16.7 Effect of Headings and Table of Contents.........................................................70
SECTION 16.8 Successors and Assigns...........................................................................70
SECTION 16.9 Separability Clause..............................................................................70
SECTION 16.10 Benefits of Indenture...........................................................................70
SECTION 16.11 Governing Law...................................................................................70
SECTION 16.12 Legal Holidays..................................................................................70
SECTION 16.13 Execution in Counterparts.......................................................................71
Exhibit A: Form of Debenture
iv
INDENTURE, dated as of November 1, 1996, between Insignia Financial
Group, Inc., a corporation duly organized and existing under the laws of the
State of Delaware (herein called the "Company," as more fully defined in
Section 1.1), having its principal office at One Insignia Financial Xxxxx,
Xxxx Xxxxxx Xxx 0000, Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000, and First Union
National Bank of South Carolina, a national banking association having its
principal corporate trust office at 0000 Xxxx Xxxxxx, Xxxxxx Xxxxx, Xxxxxxxx,
Xxxxx Xxxxxxxx, as Trustee (herein called the "Trustee," as more fully defined
in Section 1.1).
RECITALS OF THE COMPANY:
WHEREAS, for its lawful corporate purposes, the Company has duly
authorized the issue of its 6 1/2% Convertible Subordinated Debentures due
2016 (hereinafter sometimes called the "Debentures"), in an aggregate
principal amount not to exceed $134,020,650 (or up to $154,123,750 if the
overallotment option granted under the Purchase Agreement is exercised in
full) and, to provide the terms and conditions upon which the Debentures are
to be authenticated, issued and delivered, the Company has duly authorized the
execution and delivery of this Indenture; and
WHEREAS, the Debentures, the certificate of authentication to be
borne by the Debentures, and the form of assignment, and the form of
conversion notice to be borne by the Debentures are to be substantially in the
forms hereinafter provided for; and
WHEREAS, all acts and things necessary to make the Debentures, when
executed by the Company and authenticated and delivered by the Trustee or a
duly authorized authenticating agent, as in this Indenture provided, the
valid, binding and legal obligations of the Company, and to constitute these
presents a valid agreement according to its terms, have been done and
performed, and the execution of this Indenture and the issue hereunder of the
Debentures have in all respects been duly authorized.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
That in order to declare the terms and conditions upon which the
Debentures are, and are to be, authenticated, issued and delivered, and in
consideration of the premises and of the purchase and acceptance of the
Debentures by the Holders thereof, the Company covenants and agrees with the
Trustee for the equal and proportionate benefit of the respective Holders from
time to time of the Debentures (except as otherwise provided below), as
follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 DEFINITIONS
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings assigned
to them in this Article and include the plural as well as the
singular;
(b) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the
meanings assigned to them therein;
(c) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted
accounting principles in the United States of America, and, except as
otherwise herein expressly provided, the term "generally accepted
accounting principles" with respect to any computation required or
permitted hereunder shall mean such accounting principles as are
generally accepted in the United States of America at the date of
such computation;
(d) 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;
(e) headings are for convenience of reference only and do not
affect interpretation; and
(f) the following terms have the meanings given to them in the
Declaration: (i) Clearing Agency; (ii) Common Stock; (iii) Conversion
Agent; (iv) Convertible Preferred Security Certificate; (v) Delaware
Trustee; (vi) Dissolution Tax Opinion; (vii) DTC; (viii) Investment
Company Event; (ix) No-Recognition Opinion; (x) Property Trustee;
(xi) Purchase Agreement; (xii) Redemption Tax Opinion; (xiii) Regular
Trustees; (xiv) Special Event; and (xv) Tax Event.
"Act," when used with respect to any Holder of a Debenture, has the
meaning specified in Section 9.1.
"Actual Knowledge" means, with respect to the Trustee's knowledge of
an occurrence, receipt by a Responsible Officer of the Trustee of written
notice of such occurrence from the Company or a Holder or Holders of at least
ten percent (10%) of the Outstanding principal amount of the Debentures.
"Additional Interest" has the meaning specified in Section 2.3(b).
"Additional Payment" means any Additional Interest, Compounded
Interest, or Liquidated Damages.
"Affiliate" has the same meaning as given to that term in Rule 405 of
the Securities Act of 1933, as amended, or any successor rule thereunder.
"Authenticating Agent" means any Person authorized by the Trustee
pursuant to Section 8.13 to act on behalf of the Trustee to authenticate
Debentures.
"Authorized Newspaper" means a newspaper, in the English language or
in an official language of the country of publication, customarily published
on each Business Day, whether or not published on Saturdays, Sundays or
holidays, and of general circulation in the place in connection with which the
term is used, or in the financial community of such place. Where successive
publications are required to be made in Authorized Newspapers, the successive
publications may be made in the same or in different newspapers in the same
city meeting the foregoing requirements and in each case on any Business Day.
"Board of Directors" means either the board of directors of the
Company or any duly authorized committee of that board.
2
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted
by the Board of Directors and to be in full force and effect on the date of
such certification, and delivered to the Trustee.
"Book-Entry Debenture" means a Debenture evidencing all or part of
the Debentures, issued to the Depositary or its nominee, and registered in the
name of such Depositary or nominee.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in the City of New
York or the city in which the Corporate Trust Office is located are authorized
or obligated by law or executive order to close or be closed.
"Cedel S.A." means Cedel Bank, Societe Anonyme, or its successor.
"Closing Price" of any common stock on any day shall mean the last
reported sale price regular way on such day or, in case no such sale takes
place on such day, the average of the reported closing bid and asked prices
regular way of such common stock, in each case on the NYSE Composite Tape or,
if the common stock is not listed or admitted to trading on such exchange, on
the principal national securities exchange on which such common stock is
listed or admitted to trading, or, if not listed or admitted to trading on any
national securities exchange, the average of the closing bid and asked prices
as furnished by any New York Stock Exchange member firm selected from time to
time by the Board of Directors of the Company for that purpose or, if not so
available in such manner, as otherwise determined in good faith by the Board
of Directors.
"Commission" means the United States Securities and Exchange
Commission.
"Common Securities" means undivided beneficial interests in the
assets of the Insignia Trust which rank pari passu with the Convertible
Preferred Securities issued by the Insignia Trust; provided, however, that,
upon the occurrence of an event of default under the Declaration, the rights
of holders of Common Securities to payment in respect to distributions and
payments upon liquidation, redemption and otherwise are subordinated to the
rights of holders of the Convertible Preferred Securities.
"Common Securities Guarantee" means any Guarantee that the Company
enters into with the Property Trustee or other Persons that operates directly
or indirectly for the benefit of holders of the Common Securities.
"Common Stock" includes any stock of any class of the Company which
has no preference in respect of dividends or of amounts payable in the event
of any voluntary or involuntary liquidation, dissolution or winding up of the
Company and which is not subject to redemption by the Company. Subject to the
anti-dilution provisions of any Debenture, however, shares of Common Stock
issuable on conversion of a Debenture shall include only shares of the class
designated as Class A Common Stock of the Company at the date hereof or shares
of any class or classes resulting from any reclassification or
reclassifications thereof and which have no preference in respect of the
payment of dividends or the distribution of assets upon any voluntary or
involuntary liquidation, dissolution or winding-up of the Company and which
are not subject to redemption by the Company, provided, however, that, if at
any time there shall be more than one such resulting class, the shares of each
such class then so issuable shall be substantially in the proportion which the
total number of shares of such class resulting from all such reclassifications
bears to the total number of shares of such classes resulting from all such
reclassifications.
"Company" means the Person named as the "Company" in the first
paragraph of this Indenture until a successor Person shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor Person.
3
"Company Request" or "Company Order" means a written request or order
signed in the name of the Company by the Chairman of the Board of Directors or
the President or any Vice Chairman or any Vice President and by the Treasurer
or the Secretary or any Assistant Treasurer or any Assistant Secretary of the
Company and delivered to the Trustee.
"Compounded Interest" has the meaning specified in Section 2.3(c).
"Conversion Price" has the meaning specified in Section 15.1.
"Convertible Preferred Securities" means undivided beneficial
interests in the assets of the Insignia Trust which rank pari passu with the
Common Securities issued by the Insignia Trust; provided, however, that, upon
the occurrence of an event of default under the Declaration, the rights of
holders of Common Securities to payment in respect to distributions and
payments upon liquidation, redemption and otherwise are subordinated to the
rights of holders of Convertible Preferred Securities.
"Corporate Trust Office" means the principal office of the Trustee at
which at any particular time its corporate trust business shall be
administered, which as of the date hereof is located at the address set forth
in the first paragraph of this Indenture.
"Corporation" means a corporation, association, company, joint-stock
company or business trust.
"Debenture Register" and "Debenture Registrar" have the respective
meanings specified in Section 2.5.
"Debenture" has the meaning stated in the first recital of this
Indenture and more particularly means any Debenture authenticated and
delivered under this Indenture.
"Declaration" means the Amended and Restated Declaration of Trust of
the Insignia Trust, as it may be amended from time to time in accordance with
its terms.
"Default" means any event or condition that is, or after notice or
passage of time or both would be, an Event of Default.
"Deferred Interest" has the meaning specified in Section 2.3(c).
"Depositary" means The Depositary Trust Company until a successor
Depositary shall have been appointed pursuant to procedures adopted under
Section 2.5, and thereafter the term "Depositary" shall mean or include each
Person who is then a Depositary hereunder.
"Direct Action" means a proceeding instituted by a holder of
Convertible Preferred Securities directly against the Company to enforce
rights under the Debentures in certain circumstances, as specified in Section
7.16.
"Dissolution Event" means that, as a result of the occurrence and
continuation of a Special Event, the Insignia Trust is to be dissolved in
accordance with the Declaration, and the Debentures held by the Property
Trustee are to be distributed to the holders of the Trust Securities pro rata
in accordance with the Declaration.
"Dollar" or "$" means a dollar or other equivalent unit in such coin
or currency of the United States of America as at the time shall be legal
tender for the payment of public and private debts.
4
"Euroclear" means Xxxxxx Guaranty Trust Company of New York, Brussels
Office, or its successor as operator of the Euroclear System.
"Event of Default" has the meaning specified in Section 7.1.
"Extended Interest Payment Period" has the meaning specified in
Section 2.3(c).
"Global Debenture" has the meaning specified in Section 2.3(a).
"Guarantor" means the Company, in its capacity as guarantor under any
Trust Securities Guarantee.
"Holder," when used with respect to any Debenture, means the Person
in whose name the Debenture is registered in the Debenture 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 hereof
and shall include the terms of the Debentures.
"Interest Payment Date" has the meaning set forth in the form of
Debenture.
"Insignia Trust" means Insignia Financing I, a Delaware statutory
business trust.
"Liquidated Damages" has the meaning set forth in Section 5.9.
"Maturity," when used with respect to any Debenture, means the date
on which the principal of such Debenture becomes due and payable as therein or
herein provided, whether at the Stated Maturity or by declaration of
acceleration, call for redemption or otherwise.
"Maturity Date" means the date on which the Debentures mature and on
which the principal shall be due and payable together with all accrued and
unpaid interest thereon including Compounded Interest and Additional Interest,
if any.
"Non Book-Entry Convertible Preferred Securities" has the meaning
specified in Section 2.3.
"Officers' Certificate" means a certificate signed by the Chairman of
the Board of Directors or the President or any Vice Chairman or any Vice
President and by the Treasurer or the Secretary or any Assistant Treasurer or
any Assistant Secretary of the Company and delivered to the Trustee.
"Opinion of Counsel" means a written opinion of counsel, who may be
an employee of or counsel for the Company, and who shall be acceptable to the
Trustee.
"Optional Redemption Price" has the meaning specified in Section
3.1(a).
"Outstanding," when used with respect to the Debentures, means, as of
the date of determination, all Debentures theretofore authenticated and
delivered under this Indenture, except:
(i) Debentures theretofore canceled by the Trustee or delivered
to the Trustee for cancellation;
5
(ii) Debentures for whose payment or redemption of which money
or United States Government Obligations in the necessary amount has
been theretofore deposited in accordance with Article XIII 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 Debentures; provided,
however, that, if Debentures or portions of Debentures are to be
redeemed prior to the Maturity thereof, notice of such redemption has
been duly given pursuant to this Indenture or provision therefor
satisfactory to the Trustee has been made;
(iii) Debentures in lieu of which other Debentures have been
authenticated and delivered pursuant to this Indenture, other than
any Debentures in respect of which there shall have been presented to
the Trustee proof satisfactory to it that such Debentures are held by
a bona fide purchaser in whose hands such Debentures are valid
obligations of the Company; and
(iv) Debentures converted into Common Stock pursuant to Article
XV, except as otherwise provided in Section 3.6;
provided, however, that in determining whether the Holders of the requisite
aggregate principal amount of the Outstanding Debentures have given any
request, demand, authorization, direction, notice, consent or waiver hereunder
or whether a quorum is present at a meeting of Holders of Debentures,
Debentures owned by the Company or any other obligor upon such Debentures, or
any Affiliate of the Company or of such other obligor, shall be disregarded
and deemed not to be Outstanding, except that, in determining whether the
Trustee shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, or upon any such
determination as to the presence of a quorum, only Debentures as to which the
Trustee has Actual Knowledge to be so owned shall be so disregarded.
Debentures 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 Debentures and that the pledgee
is not the Company or any other obligor upon such Debentures or any Affiliate
of the Company or of such other obligor.
"Paying Agent" means any Person authorized by the Company to pay the
principal of and any premium and interest on any Debentures on behalf of the
Company.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, trust, association, joint stock company,
limited liability company, unincorporated association or government or any
agency or political subdivision thereof, or any other entity of whatever
nature.
"Place of Payment," when used with respect to the Debentures, means
the place or places where, subject to the provisions of Section 5.2, the
principal of and any premium and interest on the Debentures are payable as
specified in or contemplated by the Debentures.
"Predecessor Debenture" of a Debenture means every previous Debenture
evidencing all or a portion of the same debt as that evidenced by such
Debenture; and, for the purposes of this definition, a Debenture authenticated
and delivered under Section 2.6 in exchange for or in lieu of a mutilated,
destroyed, lost or stolen Debenture shall be deemed to evidence the same debt
as the mutilated, destroyed, lost or stolen Debenture.
"Preferred Securities Guarantee" means any Guarantee that the
Guarantor may enter into with the Property Trustee or other Persons that
operates directly or indirectly for the benefit of holders of the Convertible
Preferred Securities.
6
"Redemption Date," when used with respect to any Debenture to be
redeemed, means the date fixed for such redemption by or pursuant to this
Indenture.
"Redemption Price," when used with respect to any Debenture to be
redeemed, means the price at which it is to be redeemed pursuant to this
Indenture.
"Regular Record Date" for the interest payable on any Interest
Payment Date means the date 15 days prior to such Interest Payment Date,
whether or not such day is a Business Day.
"Responsible Officer" means, when used with respect to the Trustee,
the chairman of the board of directors, the executive committee of the board
of directors, the chairman of the trust committee, the president, any vice
president, any assistant vice president, the secretary, any assistant
secretary, the treasurer, any assistant treasurer, any trust officer or
assistant trust officer, the controller or any assistant controller or any
other officer of the Trustee customarily performing functions similar to those
performed by any of the above designated officers and also means, with respect
to a particular corporate trust matter, any other officer to whom such matter
is referred because of such officer's knowledge of and familiarity with the
particular subject.
"Restricted Securities Legend" means the legend restricting transfer
of the Debentures in the form set forth in Section 2.2.
"Senior Indebtedness" means, with respect to the Company, the
principal of, premium, if any, interest on, and any other payment due pursuant
to, any of the following, whether outstanding on the date of this Indenture or
thereafter incurred or created: (a) all indebtedness of the Company for money
borrowed or evidenced by notes, debentures, bonds or other securities
(including, but not limited to, those which are convertible or exchangeable
for securities of the Company and indebtedness owed to subsidiaries and
affiliates of the Company); (b) all indebtedness of the Company due and owing
with respect to letters of credit (including, but not limited to,
reimbursement obligations with respect thereto); (c) all obligations of the
Company due and owing with respect to reimbursement agreements under any
surety bond, insurance policy, bankers' acceptance, security purchase
facility, or similar agreement or arrangement; (d) all indebtedness or other
obligations of the Company due and owing with respect to interest rate and
currency swap agreements, cap, floor and collar agreements, currency spot and
forward contracts and other similar agreements and arrangements; (e) all
indebtedness consisting of commitment or standby fees due and payable to
lending institutions with respect to credit facilities or letters of credit
available to the Company; (f) all obligations of the Company under leases
required or permitted to be capitalized under generally accepted accounting
principles; (g) all obligations of the Company issued or assumed as the
deferred purchase price of property or services, all conditional sale
obligations of the Company, and all obligations of the Company under any title
retention agreement; (h) all obligations of the Company under agreements or
arrangements with respect to deferred compensation due its employees or
employees of its Subsidiaries and its obligations under employee benefit
plans; (i) all indebtedness or obligations of others of the kinds described in
any of the preceding clauses (a), (b), (c), (d), (e), (f), (g), or (h) that
are (x) assumed by or guaranteed in any manner by the Company or in effect
guaranteed (directly or indirectly) by the Company through an agreement to
purchase, contingent or otherwise, or in its capacity as a general partner of
any entity, and all obligations of the Company under any such guarantee or
other arrangements, or (y) secured by a lien on any property or asset of the
Company (whether or not such obligation is assumed by the Company); and (j)
all renewals, extensions, refundings, deferrals, amendments or modifications
of indebtedness or obligations of the kinds described in any of the preceding
clauses (a), (b), (c), (d), (e), (f), (g), (h), or (i); unless in the case of
any particular indebtedness, obligation, renewal, extension, refunding,
amendment, modification or supplement, the instrument or other document
creating or evidencing the same or the assumption or guarantee of the same
expressly provides that such indebtedness, renewal, extension,
7
refunding, amendment, modification or supplement is subordinate to, or is not
superior to, or is pari passu with, the Debentures; provided that Senior
Indebtedness shall not include indebtedness for trade payables or constituting
the deferred purchase price of assets or services incurred in the ordinary
course of business.
"Special Redemption Price" has the meaning set forth in Section 3.2.
"Stated Maturity," when used with respect to any Debenture or any
installment of interest thereon, means the date specified in such Debenture as
the fixed date on which the principal of such Debenture or such installment of
interest is due and payable.
"Subsidiary" means, with respect to any Person, (i) any corporation
at least a majority of whose outstanding Voting Stock shall at the time be
owned, directly or indirectly, by such Person or by one or more of its
Subsidiaries or by such Person and one or more of its Subsidiaries, (ii) any
general partnership, joint venture, business trust or similar entity, at least
a majority of whose outstanding partnership or similar interests shall at the
time be owned by such Person or by one or more of its Subsidiaries or by such
Person and one or more of its Subsidiaries and (iii) any limited partnership
of which such Person or any of its Subsidiaries is a general partner.
"Trading Day" shall mean a day on which any securities are traded on
the national securities exchange or quotation system used to determine the
Closing Price.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this Indenture until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean or include each Person who is then a Trustee hereunder,
and if at any time there is more than one such Person, "Trustee" shall mean
all such Persons.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in
force at the date as of which this instrument was executed, provided, however,
that in the event the Trust Indenture Act of 1939 is amended after such date,
"Trust Indenture Act" means, to the extent of any such amendment, the Trust
Indenture Act of 1939 as so amended.
"Trust Securities" means Common Securities and Convertible Preferred
Securities.
"Trust Securities Guarantees" means the Common Securities Guarantee
and the Preferred Securities Guarantee.
"United States" means the United States of America (including the
States and the District of Columbia), its territories, its possessions and
other areas subject to its jurisdiction.
"U.S. Government Obligations" means direct obligations of the United
States for the payment of which its full faith and credit is pledged, or
obligations of a Person controlled or supervised by and acting as an agency or
instrumentality of the United States and the payment of which is
unconditionally guaranteed as a full faith and credit obligation by the United
States which, in either case, are not callable or redeemable at the option of
the issuer thereof, and shall also include a 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 such U.S. Government Obligations or a
specific payment of principal of or interest on any such U.S. Government
Obligations held by such custodian for the account of the holder of such
depositary receipt, provided that (except as required by law) such custodian
is not authorized to make any deduction from the amount payable to the holder
of such depositary receipt from any amount received by the custodian in
respect of the U.S. Government Obligations or the specific payment of
principal of or interest on the U.S. Government Obligations evidenced by such
depositary receipt.
8
"Voting Stock," as applied to stock of any Person, means shares,
interests, participations or other equivalents in the equity interest (however
designated) in such Person having ordinary voting power for the election of a
majority of the directors (or the equivalent) of such Person, other than
shares, interests, participations or other equivalents having such power only
by reason of the occurrence of a contingency.
ARTICLE II
ISSUE, DESCRIPTION, EXECUTION, REGISTRATION
AND EXCHANGE OF NOTES
SECTION 2.1 DESIGNATION AND PRINCIPAL AMOUNT.
The Debentures shall be designated as " 6 1/2% Convertible
Subordinated Debentures due 2016". The aggregate principal amount of
Debentures that may be authenticated and delivered pursuant to this Indenture
is limited to the sum of (i) $134,020,650 plus (ii) up to an additional
$20,103,100 in the event that the over-allotment option granted in the
Purchase Agreement is exercised in full (except for Debentures authenticated
and delivered upon registration of transfer of, or in exchange for, or in lieu
of, other Debentures pursuant to Sections 2.5, 2.6, 2.7, 3.6, and 15.2). Upon
the execution of this Indenture, or from time to time thereafter, such
Debentures may be executed by the Company and delivered to the Trustee for
authentication, and the Trustee shall thereupon authenticate and deliver such
Debentures upon the written order of the Company, signed by (a) its President,
any Executive or Senior Vice President or any Vice President and (b) its
Treasurer or any Assistant Treasurer or its Secretary or any Assistant
Secretary, without any further action by the Company hereunder.
SECTION 2.2 FORM OF DEBENTURES; INITIAL ISSUANCE TO PROPERTY
TRUSTEE.
The Debentures and the Trustee's Certificate of Authentication to be
borne by the Debentures shall be in substantially the form set forth in
Exhibit A, which is incorporated in and made a part of this Indenture.
Any of the Debentures may have such letters, numbers or other marks
of identification (including different CUSIP numbers) and such notations,
legends and endorsements as the officer of the Company executing the same may
approve (execution thereof by such officer to be conclusive evidence of such
approval) and as are not inconsistent with the provisions of this Indenture,
or as may be required to comply with any law or with any rule or regulation
made pursuant thereto or with any rule or regulation of any securities
exchange or automated quotation system on which the Debentures may be listed
or designated for issuance or with the procedures of the Depositary, or to
conform to usage. The Company shall furnish any such legend not contained in
Exhibit A to the Trustee in writing.
The terms and provisions contained in the form of Debentures attached
as Exhibit A hereto shall constitute, and are hereby expressly made a part of,
this Indenture and to the extent applicable, the Company and the Trustee, by
their execution and delivery of this Indenture, expressly agree to such terms
and provisions and to be bound thereby.
The definitive Debentures shall be typewritten or printed,
lithographed or engraved or produced by any combination of these methods on
steel engraved borders or may be produced in any other manner permitted by the
rules of any securities exchange on which the Debentures may be listed, all as
determined by the officers executing such Debentures, as evidenced by their
execution of such Debentures.
9
The Debentures initially issued to the Property Trustee shall be in
the form of one or more individual certificates in definitive, fully
registered form without coupons and shall bear the following legend (the
"Restricted Securities Legend") unless the Company determines otherwise in
accordance with applicable law:
THIS SECURITY AND ANY COMMON STOCK ISSUED ON CONVERSION HEREOF HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY
INTEREST OR PARTICIPATION HEREIN MAY BE OFFERED, SOLD, OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION
THEREFROM. THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF, REPRESENTS,
ACKNOWLEDGES, AND AGREES FOR THE BENEFIT OF INSIGNIA FINANCIAL GROUP, INC.
(THE "COMPANY") THAT: (I) IT HAS ACQUIRED A "RESTRICTED SECURITY" THAT HAS NOT
BEEN REGISTERED UNDER THE SECURITIES ACT; (II) IT WILL NOT OFFER, SELL OR
OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE WHICH IS THREE YEARS AFTER
THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE
COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY
PREDECESSOR OF THIS SECURITY) (THE "RESALE RESTRICTION TERMINATION DATE")
EXCEPT (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS
BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE
SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES
ACT ("RULE 144A"), TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED
INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE
IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D)
PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED
STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E) TO AN
INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (a)(1),
(2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THE
SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL
"ACCREDITED INVESTOR," FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR
OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE
SECURITIES ACT, OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND, IN EACH CASE, IN
ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES OR ANY APPLICABLE JURISDICTION; AND (III) IT WILL, AND EACH SUBSEQUENT
HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THIS SECURITY OF THE
RESALE RESTRICTIONS SET FORTH IN (II) ABOVE. ANY OFFER, SALE OR OTHER
DISPOSITION PURSUANT TO THE FOREGOING CLAUSE (D), (E) OR (F) IS SUBJECT TO THE
RIGHT OF THE ISSUER OF THIS SECURITY AND THE TRUSTEES FOR SUCH ISSUER (i) TO
REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION OR OTHER
INFORMATION SATISFACTORY TO EACH OF THEM IN FORM AND SUBSTANCE, AND (ii) IN
EACH OF THE FOREGOING CASES, TO REQUIRE THAT A CERTIFICATE OF TRANSFER IN THE
FORM APPEARING ON THIS SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEROR
TO THE TRANSFER AGENT. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF A
HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.
10
SECTION 2.3 DENOMINATION OF DEBENTURES; PAYMENT OF INTEREST;
EXTENSION OF INTEREST PAYMENT PERIOD.
(a) Except as provided below, the Debentures shall be issued in fully
registered certificated form without coupons, in denominations of $50 in
principal amount and integral multiples thereof. Principal and interest on the
Debentures issued in certificated form will be payable, the transfer of such
Debentures will be registrable, and such Debentures will be exchangeable for
Debentures bearing identical terms and provisions at the office or agency of
the Trustee; provided, however, that payment of interest may be made at the
option of the Company by check mailed to the Holder at such address as shall
appear in the Debenture Register. Notwithstanding the foregoing, so long as
the Holder of any Debentures is the Property Trustee, the payment of the
principal of and interest (including Compounded Interest and Additional
Interest, if any) on such Debentures held by the Property Trustee will be made
at such place and to such account as may be designated by the Property
Trustee.
In connection with a Dissolution Event, (i) the Debentures in
certificated form may be presented to the Trustee by the Property Trustee in
exchange for a global Debenture in an aggregate principal amount equal to the
aggregate principal amount of all outstanding Debentures (a "Global
Debenture"), to be registered in the name of the Depositary, or its nominee,
and delivered by the Trustee to the Depositary for crediting to the accounts
of its participants pursuant to the instructions of the Regular Trustees. The
Company upon any such presentation shall execute a Global Debenture in such
aggregate principal amount and deliver the same to the Trustee for
authentication and delivery in accordance with this Indenture. Payments on the
Debentures issued as a Global Debenture will be made to the Depositary; and
(ii) if any Convertible Preferred Securities are held in non
book-entry certificated form, any Convertible Preferred Security Certificate
which represents Convertible Preferred Securities other than Convertible
Preferred Securities held by the Clearing Agency or its nominee ("Non
Book-Entry Convertible Preferred Securities") will be deemed to represent
beneficial interests in Debentures having an aggregate principal amount equal
to the aggregate liquidation amount of the Non Book-Entry Convertible
Preferred Securities until such Convertible Preferred Security Certificates
are presented to the Debenture Registrar for transfer or reissuance at which
time such Convertible Preferred Security Certificates will be canceled and a
Debenture, registered in the name of the holder of the Convertible Preferred
Security Certificate or the transferee of the holder of such Convertible
Preferred Security Certificate, as the case may be, with an aggregate
principal amount equal to the aggregate liquidation amount of the Convertible
Preferred Security Certificate canceled, will be executed by the Company and
delivered to the Trustee for authentication and delivery in accordance with
this Indenture. On issue of such Debentures, Debentures with an equivalent
aggregate principal amount that were presented by the Property Trustee to the
Trustee will be deemed to have been canceled.
A Global Debenture may be transferred, in whole but not in part, only
to another nominee of the Depositary, or to a successor depositary selected or
approved by the Company or to a nominee of such successor Depositary.
(b) Each Debenture will bear interest at the rate specified in
Exhibit A (the "Coupon Rate") from November 1, 1996 until the principal
thereof becomes due and payable, and on any overdue principal and (to the
extent that payment of such interest is enforceable under applicable law) on
any overdue installment of interest at the Coupon Rate, compounded quarterly,
payable (subject to the provisions of this Section 2.3) quarterly in arrears
on March 31, June 30, September 30 and December 31 of each year (each, an
"Interest Payment Date"), commencing on December 31, 1996, to the Person in
whose name such Debenture or any predecessor Debenture is registered, at the
close of business on the Regular Record Date for such interest installment.
11
Any interest on any Debenture 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 (i) or (ii) below:
(i) The Company may elect to make payment of any Defaulted
Interest to the Persons in whose names the Debentures are registered at the
close of business on a Special Record Date (as defined herein) 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 Debenture 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 provided in this clause. Thereupon, the Trustee
shall fix a Special Record Date (the "Special Record Date") for the payment of
such Defaulted Interest which shall be not more than 15 days and not less than
10 days prior to the date of the proposed payment and not less than 10 days
after the receipt by the Trustee of the notice of the proposed payment. The
Trustee shall promptly notify the Company of such Special Record Date and, in
the name and at the expense of the Company, shall cause notice of the proposed
payment of such Defaulted Interest and the Special Record Date therefor to be
mailed, first-class postage prepaid, to each Holder at his address as it
appears in the Debenture 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 therefore having been so mailed, such Defaulted Interest
shall be paid to the Persons in whose names the Debentures are registered at
the close of business on such Special Record Date and shall no longer be
payable pursuant to the following clause (ii).
(ii) The Company may make payment of any Defaulted Interest in
any other lawful manner not inconsistent with the requirements of any
securities exchange on which the Debentures may be listed, and, if so listed,
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 2.3(b), each
Debenture delivered under this Indenture upon registration of transfer of or
in exchange for or in lieu of any other Debenture shall carry the rights to
interest accrued and unpaid, and to accrue (including in each case Compounded
Interest), which were carried by such other Debenture.
The amount of interest payable for any period will be computed on the
basis of a 360-day year of twelve 30-day months. In the event that any date on
which interest is payable on the Debentures is not a Business Day, then
payment of interest payable on such date will be made on the next succeeding
day which is a Business Day (and without any interest or other payment in
respect of any such delay), except that, if such Business Day is in the next
succeeding calendar year, such payment shall be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on such date.
If, at any time while the Property Trustee is the Holder of any
Debentures, the Insignia Trust or the Property Trustee is required to pay any
taxes, duties, assessments or governmental charges of whatever nature (other
than withholding taxes) imposed by the United States, or any other taxing
authority, then, in any such case, the Company will pay as additional interest
("Additional Interest") on the Debentures held by the Property Trustee, such
additional amounts as shall be required so that the net amounts received and
retained by the Insignia Trust and the Property Trustee after paying such
taxes, duties, assessments or
12
other governmental charges will be equal to the amounts the Insignia Trust and
the Property Trustee would have received had no such taxes, duties,
assessments or other government charges been imposed.
(c) As long as an Event of Default shall not have occurred and be
continuing, the Company shall have the right, at any time and from time to
time during the term of the Debentures, to defer payments of interest by
extending the interest payment period of such Debentures for a period not
exceeding 20 consecutive quarters (the "Extended Interest Payment Period"),
during which Extended Interest Payment Period no interest (including any
Additional Interest, Compounded Interest, and Liquidated Damages) shall be due
and payable; provided that no Extended Interest Payment Period may extend
beyond the Maturity Date or any earlier Redemption Date. To the extent
permitted by applicable law, interest at the Coupon Rate, the payment of which
has been deferred because of the extension of the interest payment period
pursuant to this Section 2.3, will bear interest thereon at the Coupon Rate
compounded quarterly for each quarter of the Extended Interest Payment Period
("Compounded Interest"). At the end of the Extended Interest Payment Period,
the Company shall pay all interest accrued and unpaid on the Debentures,
including any Additional Interest, Compounded Interest and Liquidated Damages
(together, "Deferred Interest") that shall be payable, to the Holders of
Debentures in whose names the Debentures are registered in the Debenture
Register on the first Regular Record Date after the end of the Extended
Interest Payment Period. Before the termination of any Extended Interest
Payment Period, the Company may further extend such period, provided that such
period together with all such further extensions thereof shall not exceed 20
consecutive quarters, or extend beyond the Stated Maturity of the Debentures.
Upon the termination of any Extended Interest Payment Period and upon the
payment of all Deferred Interest then due, the Company may commence a new
Extended Interest Payment Period, subject to the foregoing requirements. No
interest shall be due and payable during an Extended Interest Payment Period,
except at the end thereof, but the Company may prepay at any time all or any
portion of the interest accrued during an Extended Interest Payment Period.
If the Property Trustee is the only registered Holder of the
Debentures at the time the Company selects an Extended Interest Payment
Period, the Company shall give written notice to the Regular Trustees, the
Property Trustee and the Trustee of its election of such Extended Interest
Payment Period one Business Day before the earlier of (i) the next succeeding
date on which Distributions on the Trust Securities issued by the Insignia
Trust are payable, or (ii) the date the Insignia Trust is required to give
notice of the record date, or the date such Distributions are payable, to the
New York Stock Exchange or other applicable self-regulatory organization or to
holders of Convertible Preferred Securities issued by the Insignia Trust, but
in any event at least 10 Business Days before such record date.
If the Property Trustee is not the only Holder of the Debentures at
the time the Company elects an Extended Interest Payment Period, the Company
shall give the Holders of Debentures and the Trustee written notice of its
selection of such Extended Interest Payment Period at least 10 Business Days
before the earlier of (i) the next succeeding Interest Payment Date, or (ii)
the date the Company is required to give notice of the record date or payment
date with respect to such interest payment to the New York Stock Exchange or
other applicable self-regulatory organization or to Holders of Debentures, but
in any event at least two Business Days before such record date.
The quarter in which any notice is given pursuant to paragraph (c) of
this Section 2.3 shall be counted as one of the 20 quarters permitted in the
maximum Extended Interest Payment Period permitted under this Section 2.3.
13
SECTION 2.4 EXECUTION, AUTHENTICATION, DELIVERY AND DATING.
Debentures shall be signed on behalf of the Company by both (a) its
Chairman of the Board of Directors or any Vice Chairman of the Board of
Directors or its President or one of its Vice Presidents and (b) its Treasurer
or one of its Assistant Treasurers or its Secretary or one of its Assistant
Secretaries, under its corporate seal which may, but need not, be attested.
The signature of any of these officers on Debentures may be manual or
facsimile.
Debentures 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 Debentures
or did not hold such offices at the date of such Debentures. At any time and
from time to time after the execution and delivery of this Indenture, the
Company may deliver Debentures executed by the Company to the Trustee for
authentication, together with a Company Order for the authentication and
delivery of Debentures, and the Trustee in accordance with the Company Order
shall authenticate and make Debentures available for delivery.
Each Debenture shall be dated the date of its authentication.
No Debenture shall be entitled to any benefit under this Indenture or
be valid or obligatory for any purpose unless there appears on the Debenture a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by manual signature, and such certificate upon any
Debenture shall be conclusive evidence, and the only evidence, that such
Debenture has been duly authenticated and delivered hereunder.
Notwithstanding the foregoing, if any Debenture shall have been
authenticated and delivered hereunder but never issued and sold by the
Company, and the Company shall deliver such Debenture to the Trustee for
cancellation as provided in Section 2.9 together with a written statement
stating that such Debenture has never been issued and sold by the Company, for
all purposes of this Indenture such Debenture shall be deemed never to have
been authenticated and delivered hereunder and shall never be entitled to the
benefits of this Indenture.
SECTION 2.5 REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE.
The Company shall cause to be kept at an office or agency to be
maintained by the Company in accordance with Section 5.2 a register (the
"Debenture Register") in which, subject to such reasonable regulations as it
may prescribe, the Company shall provide for the registration of transfers of
Debentures. The Trustee is hereby appointed "Debenture Registrar" for the
purpose of registering transfers of Debentures as herein provided.
Upon due surrender for registration of transfer of any Debenture at
the office or agency of the Company maintained pursuant to Section 5.2 for
such purpose in a Place of Payment, the Company shall execute, and the Trustee
shall authenticate and make available for delivery, in the name of the
designated transferee or transferees, one or more new Debentures of any
authorized denominations and of a like aggregate principal amount and tenor.
At the option of the Holder, Debentures may be exchanged for other
Debentures of any authorized denominations and of a like aggregate principal
amount and tenor, upon surrender of the Debentures to be exchanged at any such
office or agency. Whenever any Debentures are so surrendered for exchange, the
14
Company shall execute, and the Trustee shall authenticate and make available
for delivery, the Debentures which the Holder making the exchange is entitled
to receive.
Whenever any Debentures are so surrendered for exchange, the Company
shall execute, and the Trustee shall authenticate and make available for
delivery, the Debentures which the Holder making the exchange is entitled to
receive.
All Debentures issued upon any registration of transfer or exchange
of Debentures shall be the valid obligations of the Company, evidencing the
same debt, and entitled to the same benefits under this Indenture, as the
Debentures surrendered upon such registration of transfer or exchange.
Every Debenture presented or surrendered for registration of transfer
or for exchange shall (if so required by the Company or the Trustee or any
transfer agent) be duly endorsed, or be accompanied by a written instrument of
transfer in the form included in Exhibit A or in other form satisfactory to
the Company and the Debenture Registrar or any transfer agent 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 Debentures, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed
in connection with any registration of transfer or exchange of Debentures,
other than exchanges pursuant to Section 2.7, 3.7 or 15.2 not involving any
transfer.
The Company shall not be required (i) to issue, register the transfer
of or exchange Debentures during a period beginning at the opening of business
15 days before any selection of Debentures to be redeemed and ending at the
close of business on the day of the mailing of the relevant notice of
redemption, or (ii) to register the transfer of or exchange any Debenture so
selected for redemption, in whole or in part, except the unredeemed portion of
any Debenture being redeemed in part.
The Debentures shall not be transferred, except in compliance with
the Restricted Securities Legend, unless any such transfer is otherwise
determined by the Company to be in compliance with applicable law. Upon any
distribution of the Debentures to the holders of the Trust Securities in
accordance with the Declaration, the Company and the Trustee shall enter into
a supplemental indenture pursuant to Section 11.1(g) to provide for transfer
restrictions (including legends, if any, to be included on the Debentures) and
procedures with respect to the Debentures substantially similar to those
contained in the Declaration to the extent applicable in the circumstances
existing at the time of such distribution and the appointment of a Depositary.
SECTION 2.6 MUTILATED, DESTROYED, LOST AND STOLEN DEBENTURES.
If any mutilated Debenture is surrendered to the Trustee, the Company
shall execute and the Trustee shall authenticate and make available for
delivery in exchange therefor a new Debenture of like principal amount and
tenor and bearing a number not contemporaneously outstanding, and such
mutilated Debenture shall be canceled by the Trustee in accordance with the
Indenture.
If there shall be delivered to the Company and the Trustee (i)
evidence to their satisfaction of the destruction, loss or theft of any
Debenture and (ii) such security or indemnity as may be required by them,
then, in the absence of notice to the Company or the Trustee that such
Debenture has been acquired by a bona fide purchaser, the Company shall,
subject to the following paragraph, execute, and the Trustee shall
authenticate and make available for delivery, in lieu of any such destroyed,
lost or stolen Debenture, a new Debenture of like principal amount and tenor
and bearing a number not contemporaneously outstanding.
15
In case any such mutilated, destroyed, lost or stolen Debenture has
become or is about to become due and payable, the Company in its discretion
may, instead of issuing a new Debenture, pay such Debenture.
Upon the issuance of any new Debenture under this Section, the
Company may require 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 Debenture issued pursuant to this Section in lieu of any
destroyed, lost or stolen Debenture shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Debenture shall be at any time enforceable by anyone, and any such new
Debenture shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Debentures.
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 Debentures.
SECTION 2.7 TEMPORARY DEBENTURES.
Pending the preparation of definitive Debentures, the Company may
execute, and upon Company Order the Trustee shall authenticate and make
available for delivery, temporary Debentures which are printed, lithographed,
typewritten, mimeographed or otherwise produced, in any authorized
denomination, substantially of the tenor of the definitive Debentures in lieu
of which they are issued, in registered form and with such appropriate
insertions, omissions, substitutions and other variations as the officers
executing such Debentures may determine, as evidenced by their execution of
such Debentures.
If temporary Debentures are issued, the Company will cause definitive
Debentures to be prepared without unreasonable delay. After the preparation of
definitive Debentures, all temporary Debentures may be surrendered in exchange
therefor, at the office of the Debenture Registrar, and the Company shall
execute and the Trustee shall authenticate and deliver an equal aggregate
principal amount of definitive Debentures in certificated form in exchange for
temporary Debentures. Such exchange shall be made by the Company at its own
expense and without any charge therefor. Until so exchanged, temporary
Debentures shall in all respects be entitled to the same benefits and subject
to the same limitations under this Indenture as Debentures in definitive
certificated form authenticated and delivered hereunder.
SECTION 2.8 PERSONS DEEMED OWNERS.
Prior to due presentment of a Debenture for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name such Debenture is registered as the owner of such
Debenture for the purpose of receiving payment of principal of (and premium,
if any) and (subject to Sections 2.3 and 2.5) any interest or Additional
Payments on such Debenture and for all other purposes whatsoever, whether or
not such Debenture shall 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 2.9 CANCELLATION.
All Debentures surrendered for payment, redemption, registration of
transfer or exchange or for credit against any sinking fund payment shall, if
surrendered to any Person other than the Trustee, be delivered to the Trustee
and promptly shall be canceled by the Trustee. The Company may at any time
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deliver to the Trustee for cancellation any Debentures 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 Debentures previously authenticated
hereunder which the Company has not issued and sold, and all Debentures so
delivered promptly shall be canceled by the Trustee. No Debentures shall be
authenticated in lieu of or in exchange for any Debentures canceled as provided
in this Section, except as expressly permitted by this Indenture. All canceled
Debentures held by the Trustee shall be disposed of as directed by a Company
Order; provided that the Trustee shall not be required to destroy the
certificates representing the canceled Debentures.
ARTICLE III
REDEMPTION OF DEBENTURES
SECTION 3.1 OPTIONAL REDEMPTION BY COMPANY.
(a) Subject to the provisions of Sections 3.1(b), (c), and (d) and to
the other provisions of this Article III, the Company shall have the right to
redeem the Debentures, in whole or in part, from time to time, on or after
November 1, 1999, upon not less than 20 days nor more than 60 days notice to
the Holders of the Debentures, at the following prices (expressed as
percentages of the principal amount of the Debentures) (the "Optional
Redemption Price"), if redeemed during the 12-month period beginning September
30 (or, in the case of 1999, the period beginning November 1):
Year Redemption Price
---- ----------------
1999 ......................102.0%
2000 ......................101.0%
2001 and thereafter...................100.0%
plus, in each case, accrued and unpaid interest (including Additional Payments,
if any) to, but excluding, the Redemption Date.
The Optional Redemption Price shall be paid prior to 12:00 noon, New
York time, on the Redemption Date or at such earlier time as the Company
determines, provided that the Company shall deposit with the Trustee an amount
sufficient to pay the Optional Redemption Price by 10:00 a.m., New York time,
on the date such Optional Redemption Price is to be paid.
(b) If a partial redemption of the Debentures would result in the
delisting of the Convertible Preferred Securities issued by the Insignia Trust
from any national securities exchange or other organization on which the
Convertible Preferred Securities are then listed, the Company shall not be
permitted to effect such partial redemption and may only redeem the Debentures
in whole.
(c) The Company may not redeem fewer than all of the outstanding
Debentures unless all accrued and unpaid interest has been paid on all of the
outstanding Debentures.
(d) Notwithstanding the foregoing, if Debentures are redeemed on any
March 31, June 30, September 30, or December 31, accrued and unpaid interest
(and Additional Payments, if any) shall be payable to Holders of record on the
relevant record date, instead of the Holders on the Redemption Date.
(e) Notwithstanding the foregoing, the Trustee shall not redeem any
Debentures pursuant to this Section 3.1 or mail any notice of optional
redemption during the continuance of a default in payment of interest or
premium on the Debentures or of any Event of Default of which, in the case of
any
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Event of Default other than under Section 7.1(a) or (b), a Responsible
Officer of the Trustee has Actual Knowledge.
SECTION 3.2 TAX EVENT REDEMPTION.
If a Tax Event has occurred and is continuing and:
(a) the Company has received a Redemption Tax Opinion; or
(b) after receiving a Dissolution Tax Opinion, the Regular
Trustees shall have been informed by tax counsel rendering the
Dissolution Tax Opinion that a No-Recognition Opinion cannot be
delivered to the Trust,
then, notwithstanding Section 3.1(a) but subject to Sections 3.1(b), (c), and
(d), the Company shall have the right upon not less than 20 days nor more than
60 days notice to the Holders of the Debentures to redeem the Debentures, in
whole or in part, for cash within 90 days following the occurrence of such Tax
Event (the "90-Day Period") at a redemption price equal to 100% of the
principal amount to be redeemed plus any accrued and unpaid interest (including
Additional Payments, if any) thereon to the date of such redemption (the
"Special Redemption Price"); provided, however, that, if at the time there is
available to the Company or the Insignia Trust the opportunity to eliminate,
within the 90-Day Period, the Tax Event by taking some ministerial action
("Ministerial Action"), such as filing a form or making an election, or
pursuing some other similar reasonable measure which has no adverse effect on
the Company, the Insignia Trust or the Holders of the Trust Securities issued
by the Insignia Trust, the Company shall pursue such Ministerial Action in lieu
of redemption; and, provided, further, that the Company shall have no right to
redeem the Debentures while the Insignia Trust is pursuing any Ministerial
Action pursuant to its obligations under the Declaration.
The Special Redemption Price shall be paid prior to 12:00 noon, New
York time, on the Redemption Date or at such earlier time as the Company
determines, provided that the Company shall deposit with the Trustee an amount
sufficient to pay the Special Redemption Price by 10:00 a.m., New York time, on
the date such Special Redemption Price is to be paid.
SECTION 3.3 APPLICABILITY OF ARTICLE.
Redemption of Debentures at the election of the Company, as permitted
by Section 3.1 and 3.2, shall be made in accordance with such Sections and this
Article.
SECTION 3.4 NO SINKING FUND.
The Debentures are not entitled to the benefit of any sinking fund.
SECTION 3.5 ELECTION TO REDEEM; NOTICE TO TRUSTEE.
The election of the Company to redeem Debentures shall be evidenced by
an Officers' Certificate. In the case of any redemption at the election of the
Company, the Company shall, at least 45 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 and of the principal amount of
Debentures to be redeemed.
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SECTION 3.6 SELECTION BY TRUSTEE OF DEBENTURES TO BE REDEEMED.
If less than all the Debentures are to be redeemed, the particular
Debentures to be redeemed shall be selected not more than 60 days prior to the
Redemption Date by the Trustee, from the Outstanding Debentures not previously
called for redemption, on a pro rata basis, in portions equal to $50 (or any
integral multiple thereof) of the principal amount of Debentures.
If Debentures selected for partial redemption are converted into
Common Stock in part before termination of the conversion right with respect to
the portion of the Debentures so selected, the converted portion of the
Debentures shall be deemed (so far as may be) to be the portion selected for
redemption. Debentures (or portions thereof) which have been converted into
Common Stock during a selection of Debentures to be redeemed shall be treated
by the Trustee as Outstanding for the purpose of such selection. In any case
where more than one Debenture is registered in the same name, the Trustee in
its discretion may treat the aggregate principal amount so registered as if it
were represented by one Debenture.
The Trustee shall promptly notify the Company in writing of the
Debentures selected for redemption and, in the case of any Debentures selected
for partial redemption, the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Debentures shall relate,
in the case of any Debentures redeemed or to be redeemed only in part, to the
portion of the principal amount of the Debentures which has been or is to be
redeemed.
SECTION 3.7 NOTICE OF REDEMPTION.
Notice of redemption shall be given in the manner provided in Section
16.4 to the Holders of Debentures to be redeemed not less than 20 nor more than
60 days prior to the Redemption Date. All notices of redemption shall identify
the Debentures (including the CUSIP number) to be redeemed and shall state:
(a) the Redemption Date;
(b) the Redemption Price and the amount of accrued interest and
Additional Payments, if any, to be paid upon such redemption;
(c) if less than all the Outstanding Debentures are to be
redeemed, the aggregate principal amount of Debentures to be redeemed,
the aggregate principal amount of Debentures to be outstanding after
such partial redemption, the identification (and, in the case of
partial redemption, the principal amounts) of the particular
Debentures to be redeemed, and a statement to the effect that on or
after the Redemption Date upon surrender of such Debenture a new
Debenture in the principal amount equal to the unredeemed portion will
be issued;
(d) that on the Redemption Date the Redemption Price will become
due and payable upon each such Debenture to be redeemed and, if
applicable, that interest thereon will cease to accrue on and after
said date;
(e) the place or places where such Debentures are to be
surrendered for payment of the Redemption Price; and
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(f) the Conversion Price then in effect, the date on which the
right to convert the Debentures to be redeemed will terminate, and the
place or places where such Debentures may be surrendered for
conversion.
A notice of redemption published as contemplated by Section 16.4 need
not identify particular Debentures to be redeemed.
Notice of redemption of Debentures to be redeemed at the election of
the Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company.
SECTION 3.8 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 5.3) 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 (including Additional
Payments, if any) on, all the Debentures which are to be redeemed on that date.
If any Debenture called for redemption is converted into Common Stock,
any money deposited with the Trustee or with any Paying Agent or so segregated
and held in trust for the redemption of such Debenture shall (subject to any
right of the Holder of such Debenture or any Predecessor Debenture to receive
interest as provided in this Indenture) be paid to the Company upon Company
Request or, if then held by the Company, shall be discharged from such trust.
SECTION 3.9 DEBENTURES PAYABLE ON REDEMPTION DATE.
Notice of redemption having been given as aforesaid, the Debentures so
to be redeemed shall on the Redemption Date become due and payable at the
Redemption Price therein specified, and from and after such date (unless the
Company shall default in the payment of the Redemption Price and accrued
interest) such Debentures shall cease to bear interest. Upon surrender of any
such Debenture for redemption in accordance with said notice, such Debenture
shall be paid by the Company at the Redemption Price together with accrued
interest (including Additional Payments, if any) to the Redemption Date;
subject to the provisions of Section 3.1(d).
If any Debenture called for redemption shall not be so paid upon
surrender thereof for redemption, the principal and any premium shall, until
paid, bear interest (including Additional Payments, if any) from the Redemption
Date at the rate prescribed therefor in the Debenture.
SECTION 3.10 DEBENTURES REDEEMED IN PART.
Any Debenture 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 make available for delivery to
the Holder of such Debenture without service charge, a new Debenture or
Debentures 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 Debenture so surrendered.
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ARTICLE IV
SUBORDINATION OF DEBENTURES
SECTION 4.1 DEBENTURES SUBORDINATE TO SENIOR INDEBTEDNESS.
The Company covenants and agrees, and each Holder of a Debenture, by
the Holder's acceptance thereof, likewise covenants and agrees, that, to the
extent and in the manner hereinafter set forth in this Article, the
indebtedness represented by the Debenture and the payment of the principal of
(and premium, if any) and interest (including Additional Payments) on each and
all of the Debentures are hereby expressly made subordinate and junior in right
of payment to the prior payment in full of all Senior Indebtedness of the
Company, whether outstanding at the date of this Indenture or thereafter
incurred. No provision of this Article shall prevent the occurrence of any
Default or Event of Default hereunder.
SECTION 4.2 PAYMENT OVER OF PROCEEDS UPON DISSOLUTION, ETC.
Upon any payment by the Company or distribution of assets of the
Company of any kind or character, whether in cash, property or securities, to
creditors upon any dissolution or winding-up or liquidation or reorganization
of the Company, whether voluntary or involuntary or in bankruptcy, insolvency,
receivership or other proceedings, all amounts due upon all Senior Indebtedness
of the Company shall first be paid in full, or payment thereof provided for in
money in accordance with its terms, before any payment is made by the Company
on account of the principal (and premium, if any) or interest (including
Additional Payments) on the Debentures; and upon any such dissolution or
winding-up or liquidation or reorganization, any payment by the Company, or
distribution of assets of the Company of any kind or character, whether in
cash, property or securities, which the Holders of the Debentures or the
Trustee would be entitled to receive from the Company, except for the
provisions of this Article, shall be paid by the Company or by any receiver,
trustee in bankruptcy, liquidating trustee, agent or other Person making such
payment or distribution, or by the Holders of the Debentures or by the Trustee
under the Indenture if received by them or it, directly to the holders of
Senior Indebtedness of the Company (pro rata to such holders on the basis of
the respective amounts of Senior Indebtedness held by such holders, as
calculated by the Company) or their representative or representatives, or to
the trustee or trustees under any indenture pursuant to which any instruments
evidencing such Senior Indebtedness may have been issued, as their respective
interests may appear, to the extent necessary to pay such Senior Indebtedness
in full, in money or money's worth, after giving effect to any concurrent
payment or distribution to or for the holders of such Senior Indebtedness,
before any payment or distribution is made to the Holders of the Debentures or
to the Trustee.
In the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company of any kind or character, whether in
cash, property or securities, prohibited by the foregoing shall be received by
the Trustee before all Senior Indebtedness of the Company is paid in full, or
provision is made for such payment in money in accordance with its terms, such
payment or distribution shall be held in trust for the benefit of and shall be
paid over or delivered to the holders of such Senior Indebtedness or their
representative or representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing such Senior Indebtedness
may have been issued, and their respective interests may appear, as calculated
by the Company, for application to the payment of all Senior Indebtedness of
the Company, as the case may be, remaining unpaid to the extent necessary to
pay such Senior Indebtedness in full in money in accordance with its terms,
after giving effect to any concurrent payment or distribution to or for the
benefit of the holders of such Senior Indebtedness.
21
For purposes of this Article only, the words "cash, property or
securities" shall not be deemed to include shares of stock of the Company as
reorganized or readjusted, or securities of the Company or any other
corporation provided for by a plan of reorganization or readjustment, which are
subordinated in right of payment to all Senior Indebtedness which may at the
time be outstanding to substantially the same extent as, or to a greater extent
than, the Debentures are so subordinated as provided in this Article. The
consolidation of the Company with, or the merger of the Company into, another
Person or the liquidation or dissolution of the Company following the
conveyance or transfer of its properties and assets substantially as an
entirety to another Person upon the terms and conditions set forth in Article
XII shall not be deemed a dissolution, winding up, liquidation, reorganization,
assignment for the benefit of creditors or marshaling of assets and liabilities
of the Company for the purposes of this Section if the Person formed by such
consolidation or into which the Company is merged or the Person which acquires
by conveyance or transfer such properties and assets substantially as an
entirety, as the case may be, shall, as a part of such consolidation, merger,
conveyance or transfer, comply with the conditions set forth in Article XII.
SECTION 4.3 PRIOR PAYMENT TO SENIOR INDEBTEDNESS UPON ACCELERATION
OF DEBENTURES.
In the event that any Debentures are declared due and payable before
their Stated Maturity, then and in such event the holders of Senior
Indebtedness shall be entitled to receive payment in full of all amounts due or
to become due on or in respect of all Senior Indebtedness or provision shall be
made for such payment in cash, before the Holders of the Debentures are
entitled to receive any payment (including any payment which may be payable by
reason of the payment of any other indebtedness of the Company being
subordinated to the payment of the Debentures) by the Company on account of the
principal of (or premium, if any) or interest (including Additional Payments)
on the Debentures or on account of the purchase or other acquisition of
Debentures.
In the event that, notwithstanding the foregoing, the Company shall
make any payment to the Trustee or the Holder of any Debenture prohibited by
the foregoing provisions of this Section, and if such fact shall, at or prior
to the time of such payment, have been made known to the Trustee or, as the
case may be, such Holder, then and in such event such payment shall be paid
over and delivered forthwith to the Company.
SECTION 4.4 NO PAYMENT WHEN SENIOR INDEBTEDNESS IN DEFAULT.
In the event and during the continuation of any default by the Company
in the payment of principal, premium, interest or any other payment due on any
Senior Indebtedness of the Company, as the case may be, beyond any applicable
grace period with respect thereto, or in the event that the maturity of any
Senior Indebtedness of the Company, as the case may be, has been accelerated
because of a default, then no payment shall be made by the Company with respect
to the principal (including redemption payments) of, or premium, if any, or
interest (including Additional Payments) on the Debentures, unless and until
such default is cured or waived or ceases to exist or any such acceleration or
demand for payment has been rescinded.
In the event that, notwithstanding the foregoing, any payment shall be
received by the Trustee when such payment is prohibited by the preceding
paragraph of this Section 4.4, such payment shall be held in trust for the
benefit of, and shall be paid over or delivered to, the holders of Senior
Indebtedness or their respective representatives, or to the trustee or trustees
under any indenture pursuant to which any of such Senior Indebtedness may have
been issued, as their respective interests may appear, but only to the extent
that the holders of the Senior Indebtedness (or their representative or
representatives or a trustee) notify the Trustee in writing within 90 days of
such payment of the amounts then due and owing on the Senior
22
Indebtedness and only the amounts specified in such notice to the Trustee shall
be paid to the holders of Senior Indebtedness.
SECTION 4.5 PAYMENT PERMITTED IN CERTAIN SITUATIONS.
Nothing contained in this Article or elsewhere in this Indenture or in
any of the Debentures shall prevent (a) the Company, at any time except during
the pendency of any dissolution, winding-up, liquidation or reorganization of
the Company, whether voluntary or involuntary, or any bankruptcy, insolvency,
receivership or other proceedings of the Company referred to in Section 4.2 or
under the conditions described in Section 4.3 or 4.4, from making payments at
any time of principal of, or premium, if any, or interest (including Additional
Payments) on the Debentures, or (b) the application by the Trustee of any money
deposited with it hereunder to the payment of or on account of the principal
of, or premium, if any, or interest (including Additional Payments) on the
Debentures or the retention of such payment by the Holders, if, at the time of
such application by the Trustee, it did not have Actual Knowledge that such
payment would have been prohibited by the provisions of this Article.
SECTION 4.6 SUBROGATION TO RIGHTS OF HOLDERS OF SENIOR
INDEBTEDNESS.
Subject to the payment in full of all Senior Indebtedness or the
provision for such payment in cash or cash equivalents or otherwise in a manner
satisfactory to the holders of Senior Indebtedness, the rights of the Holders
of Debentures shall be subrogated to the extent of the payments or
distributions made to the holders of such Senior Indebtedness pursuant to the
provisions of this Article (equally and ratably with the holders of
indebtedness of the Company which by its express terms is subordinated to
indebtedness of the Company to substantially the same extent as the Debentures
are subordinated to the Senior Indebtedness and is entitled to like rights of
subrogation) to the rights of the holders of such Senior Indebtedness to
receive payments and distributions of cash, property and securities applicable
to the Senior Indebtedness until the principal of (and premium, if any) and
interest on the Debentures shall be paid in full. For purposes of such
subrogation, no payments or distributions to the holders of the Senior
Indebtedness of any cash, property or securities to which the Holders of
Debentures or the Trustee would be entitled except for the provisions of this
Article, and no payments over pursuant to the provisions of this Article to or
for the benefit of the holders of Senior Indebtedness by Holders of Debentures
or the Trustee, shall, as among the Company, its creditors other than holders
of Senior Indebtedness, and the Holders of Debentures, be deemed to be a
payment or distribution by the Company to or on account of the Senior
Indebtedness.
SECTION 4.7 PROVISIONS SOLELY TO DEFINE RELATIVE RIGHTS.
The provisions of this Article are and are intended solely for the
purpose of defining the relative rights of the Holders of Debentures on the one
hand and the holders of Senior Indebtedness on the other hand. Nothing
contained in this Article or elsewhere in this Indenture or in the Debentures
is intended to or shall (a) impair, as among the Company, its creditors other
than holders of Senior Indebtedness and the Holders of Debentures, the
obligation of the Company, which is absolute and unconditional (and which,
subject to the rights under this Article of the holders of Senior Indebtedness,
is intended to rank equally with all other general obligations of the Company),
to pay to the Holders of Debentures the principal of (and premium, if any) and
interest on the Debentures as and when the same shall become due and payable in
accordance with their terms; or (b) affect the relative rights against the
Company of the Holders of Debentures and creditors of the Company, as the case
may be, other than the holders of Senior Indebtedness; or (c) prevent the
Trustee or the Holder of any Debenture from exercising all remedies otherwise
permitted by applicable law upon default under this Indenture, subject to the
rights, if any, under
23
this Article of the holders of Senior Indebtedness to receive cash, property
and securities otherwise payable or deliverable to the Trustee or such Holder.
SECTION 4.8 TRUSTEE TO EFFECTUATE SUBORDINATION.
Each Holder of a Debenture by such Holder's acceptance thereof
authorizes and directs the Trustee on such Holder's behalf to take such action
as may be necessary or appropriate to effectuate the subordination provided in
this Article and appoints the Trustee such Holder's attorney-in-fact for any
and all such purposes.
SECTION 4.9 NO WAIVER OF SUBORDINATION PROVISIONS.
No right of any present or future holder of any Senior Indebtedness to
enforce subordination as herein provided shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the Company
or by any act or failure to act, in good faith, by any such holder, or by any
noncompliance by the Company with the terms, provisions and covenants of this
Indenture, regardless of any knowledge thereof any such holder may have or be
otherwise charged with.
Without in any way limiting the generality of the foregoing paragraph,
the holders of Senior Indebtedness may, at any time and from time to time,
without the consent of or notice to the Trustee or the Holders of Debentures,
without incurring responsibility to the Holders of Debentures and without
impairing or releasing the subordination provided in this Article or the
obligations hereunder of the Holders of Debentures to the holders of Senior
Indebtedness do any one or more of the following: (a) change the manner, place
or terms of payment or extend the time of payment of, or renew or alter, Senior
Indebtedness or otherwise amend or supplement in any manner Senior Indebtedness
or any instrument evidencing the same or any agreement under which Senior
Indebtedness is outstanding; (b) sell, exchange, release or otherwise deal with
any property pledged, mortgaged or otherwise securing Senior Indebtedness; (c)
release any Person liable in any manner for the collection of Senior
Indebtedness; and (d) exercise or refrain from exercising any rights against
the Company and any other Person.
SECTION 4.10 NOTICE TO TRUSTEE.
The Company shall give prompt written notice to a Responsible Officer
of the Trustee of any fact known to the Company which would prohibit the making
of any payment to or by the Trustee in respect of any Debentures pursuant to
the provisions of this Article. Notwithstanding the provisions of this Article
or any other provision of this Indenture, the Trustee shall not be charged with
knowledge of the existence of any facts which would prohibit the making of any
payment to or by the Trustee in respect of any Debentures pursuant to the
provisions of this Article, unless and until a Responsible Officer of the
Trustee shall have received written notice thereof from the Company or a holder
or holders of Senior Indebtedness or from any trustee therefor; and, prior to
the receipt of any such written notice, the Trustee, subject to the provisions
of Section 8.2, shall be entitled in all respects to assume that no such facts
exist; provided, however, that if the Trustee shall have not received the
notice provided for in this Section at least two Business Days prior to the
date upon which, by the terms hereof, any money may become payable for any
purpose (including, without limitation, the payment of the principal of (or
premium, if any) or interest on any Debentures), then, anything herein
contained to the contrary notwithstanding, the Trustee shall have full power
and authority to receive such money and to apply the same to the purposes for
which they were received, and shall not be affected by any notice to the
contrary that may be received by it within two Business Days prior to such
date.
24
Subject to the provisions of Section 8.2, the Trustee shall be
entitled to rely on the delivery to it of a written notice by a Person
representing himself to be a holder of Senior Indebtedness (or a trustee
therefor) to establish that such notice has been given by a holder of Senior
Indebtedness (or a trustee therefor). In the event that the Trustee determines
in good faith that further evidence is required with respect to the right of
any Person as a holder of Senior Indebtedness to participate in any payment or
distribution pursuant to this Article, the Trustee may request such Person to
furnish evidence to the reasonable satisfaction of the Trustee as to the amount
of Senior Indebtedness held by such Person, the extent to which such Person is
entitled to participate in such payment or distribution and any other facts
pertinent to the rights of such Person under this Article, and if such evidence
is not furnished, the Trustee may defer any payment to such Person pending
judicial determination as to the right of such Person to receive such payment.
SECTION 4.11 RELIANCE ON JUDICIAL ORDER OR CERTIFICATE OF
LIQUIDATING AGENT.
Upon any payment or distribution of assets of the Company referred to
in this Article, the Trustee, subject to the provisions of Section 8.2, and the
Holders of Debentures shall be entitled conclusively to rely upon any order or
decree entered by any court of competent jurisdiction in which such insolvency,
bankruptcy, receivership, liquidation, reorganization, dissolution, winding up
or similar case or proceeding is pending, or a certificate of the trustee in
bankruptcy, receiver, liquidating trustee, custodian, assignee for the benefit
of creditors, agent or other Person making such payment or distribution,
delivered to the Trustee or to the Holders of Debentures, for the purpose of
ascertaining the Persons entitled to participate in such payment or
distribution, the holders of Senior Indebtedness and other indebtedness of the
Company, as the case may be, the amount thereof or payable thereon, the amount
or amounts paid or distributed thereon and all other facts pertinent thereto or
to this Article.
SECTION 4.12 TRUSTEE NOT FIDUCIARY FOR HOLDERS OF SENIOR
INDEBTEDNESS.
With respect to the holders of Senior Indebtedness, the Trustee
undertakes to perform or to observe only such of its covenants and obligations
as are specifically set forth in this Article, and no implied covenants or
obligations with respect to the holders of such Senior Indebtedness shall be
read into the Indenture against the Trustee. The Trustee shall not be deemed to
owe any fiduciary duty to the holders of Senior Indebtedness.
SECTION 4.13 RIGHTS OF TRUSTEE AS HOLDER OF SENIOR INDEBTEDNESS,
PRESERVATION OF TRUSTEE'S RIGHTS.
The Trustee in its individual capacity shall be entitled to all the
rights set forth in this Article with respect to any Senior Indebtedness which
may at any time be held by it, to the same extent as any other holder of Senior
Indebtedness and nothing in this Indenture shall deprive the Trustee of any of
its rights as such holder.
Nothing in this Article shall apply to claims of, or payments to, the
Trustee under or pursuant to Section 8.6.
SECTION 4.14 ARTICLE APPLICABLE TO PAYING AGENTS.
In case at any time any Paying Agent other than the Trustee shall have
been appointed by the Company and be then acting hereunder, the term "Trustee"
as used in this Article shall in such case (unless the context otherwise
requires) be construed as extending to and including such Paying Agent within
its
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meaning as fully for all intents and purposes as if such Paying Agent were
named in this Article in addition to or in place of the Trustee; provided,
however, that Section 4.13 shall not apply to the Company or any Affiliate of
the Company if it or such Affiliate acts as Paying Agent.
SECTION 4.15 CERTAIN CONVERSIONS DEEMED PAYMENT.
For the purposes of this Article only, (a) the issuance and delivery
of junior securities (or cash paid in lieu of fractional shares) upon
conversion of Debentures in accordance with Article XV, shall not be deemed to
constitute a payment or distribution on account of the principal of or premium
or interest on Debentures or on account of the purchase or other acquisition of
Debentures, and (b) the payment, issuance or delivery of cash, property or
securities (other than junior securities and cash paid in lieu of fractional
shares) upon conversion of a Debenture shall be deemed to constitute payment on
account of the principal of such Debenture. For the purposes of this Section,
the term "junior securities" means (i) shares of any stock of any class of the
Company and (ii) securities of the Company which are subordinated in right of
payment to all Senior Indebtedness which may be outstanding at the time of
issuance or delivery of such securities to substantially the same extent as, or
to a greater extent than, the Debentures are so subordinated as provided in
this Article. Nothing contained in this Article or elsewhere in this Indenture
or in the Debentures is intended to or shall impair, as among the Company, its
creditors other than holders of Senior Indebtedness and the Holders of
Debentures, the right, which is absolute and unconditional, of the Holder of
any Debenture to convert such Debenture in accordance with Article XV.
ARTICLE V
CERTAIN COVENANTS
SECTION 5.1 PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST.
The Company covenants and agrees that it will duly and punctually pay
the principal of and any premium and interest (including any Additional
Payments) on the Debentures in accordance with the terms of the Debentures and
this Indenture.
SECTION 5.2 MAINTENANCE OF OFFICE OR AGENCY.
The Company will maintain in the United States an office or agency
where Debentures may be presented or surrendered for payment, where Debentures
may be surrendered for registration of transfer, exchange, or conversion and
where notices and demands to or upon the Company in respect of Debentures and
this Indenture may be served. The Company will give prompt notice to the
Trustee and to the Holders as provided in Sections 16.3 and 16.4, respectively,
of the location and any change in the location, of any such office or agency.
If at any time the Company shall fail to maintain any such required office or
agency in respect of Debentures or shall fail to furnish the Trustee with the
address thereof, such presentations and surrenders of Debentures may be made
and notices and demands may be made or served at the Corporate Trust Office of
the Trustee, and the Company hereby appoints the same as its agent to receive
such respective presentations, surrenders, notices and demands.
The Company may also from time to time designate one or more other
offices or agencies where the Debentures may be presented or surrendered for
any or all such purposes and may from time to time rescind such designations;
provided, however, that no such designation or rescission shall in any manner
relieve the Company of its obligation to maintain an office or agency in
accordance with the requirements set forth above for such purposes. The Company
will give prompt written notice to the Trustee and the
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Holders of Debentures of any such designation or rescission and of any change
in the location of any such other office or agency.
SECTION 5.3 MONEY FOR DEBENTURES PAYMENTS TO BE HELD IN TRUST.
If the Company shall at any time act as its own Paying Agent with
respect to Debentures, it will, on or before each due date of the principal of
and any premium or interest on any of the Debentures, segregate and hold in
trust for the benefit of the Persons entitled thereto a sum sufficient to pay
the principal and any premium or 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 to act.
Whenever the Company shall have one or more Paying Agents for
Debentures it will, prior to each due date of the principal of and any premium
or interest on any Debentures, deposit with a Paying Agent a sum sufficient to
pay the principal and any premium or interest so becoming due, such sum to be
held in trust for the benefit of the Persons entitled to such principal,
premium or interest, and (unless such Paying Agent is the Trustee) the Company
will promptly notify the Trustee of its action or failure to act.
The Company will cause each Paying Agent for Debentures 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:
(a) hold all sums held by it for the payment of the principal of
and any premium or interest on Debentures in trust for the benefit of
the Persons entitled thereto until such sums shall be paid to such
Persons or otherwise disposed of as herein provided;
(b) give the Trustee notice of any default by the Company (or any
other obligor upon the Debentures) in the making of any payment of
principal of and any premium or interest on the Debentures; and
(c) at any time during the continuance of any such default, upon
the written request of the Trustee, forthwith pay to the Trustee all
sums so held in trust by such Paying Agent.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held
in trust by the Company or such Paying Agent, such sums to be held by the
Trustee upon the same trusts as those upon which such sums were held by the
Company or such Paying Agent; and, upon such payment by any Paying Agent to the
Trustee, such Paying Agent shall be released from all further liability with
respect to such 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 and any premium or
interest on any Debenture and remaining unclaimed for two years after such
principal and any 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 the Debenture shall thereafter,
as an unsecured general creditor, look only to the Company for payment thereof,
and all liability of the Trustee or such Paying Agent with respect to such
trust money and all liability of the Company as trustee thereof shall thereupon
cease; provided, however, that the Trustee or such Paying Agent, before being
required to make any such repayment, may at the expense of the Company cause to
be published once, in an Authorized Newspaper in each Place of Payment, notice
that such money remains unclaimed and that after a date specified therein,
which shall not be
27
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 5.4 EXISTENCE.
Subject to Article XII, the Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its existence,
rights (charter and statutory) and franchises; provided, however, that the
Company shall not be required to preserve any such right or franchise if the
Board of Directors shall determine that the preservation thereof is no longer
desirable in the conduct of the business of the Company and that the loss
thereof is not disadvantageous in any material respect to the Holders.
SECTION 5.5 STATEMENT BY OFFICERS AS TO DEFAULT.
The Company will deliver to the Trustee, within 120 days after the end
of each fiscal year of the Company ending after the date hereof, an Officers'
Certificate signed by its principal executive officer, principal financial
officer or principal accounting officer stating whether or not to the best
knowledge of the signer thereof the Company is in default in the performance
and observance of any of the terms, provisions and conditions of this Indenture
(without regard to any period of grace or requirement of notice provided
hereunder), and if the Company shall be in default, specifying all such
defaults and the nature and status thereof of which they may have knowledge.
The Company shall file with the Trustee, within five Business Days
after becoming aware of any Default or Event of Default, an Officers'
Certificate specifying such Default or Event of Default and what action the
Company is taking or proposes to take with respect thereto.
SECTION 5.6 LIMITATION ON DIVIDENDS AND OTHER PAYMENTS.
In the event that (i) an Event of Default shall have occurred and be
continuing, (ii) the Guarantor shall be in default with respect to its payment
of any obligations under the Preferred Securities Guarantee, or (iii) the
Company shall have given notice of its election to defer payments of interest
on Debentures pursuant to Section 2.3(c) and any Extended Interest Payment
Period shall be continuing, then, in each case, the Company shall not--
(x) declare or pay any dividend on, make any distributions with
respect to, or redeem, purchase or make a liquidation payment with
respect to, any of its capital stock (other than (A) purchases or
acquisitions of shares of Common Stock in connection with the
satisfaction by the Company of its obligations under any employee
benefit plans, (B) as a result of a reclassification of capital stock
of the Company or the exchange or conversion of one class or series of
the Company's capital stock for another class or series of capital
stock of the Company, or (C) the purchase of fractional interests in
shares of the Company's capital stock pursuant to the conversion or
exchange provisions of such capital stock of the Company or the
security being converted or exchanged), or
(y) the Company shall not make any payment of interest, principal
or premium, if any, on or repay, repurchase or redeem any debt
securities (including guarantees) issued by the Company which rank
pari passu with or junior to the Debentures; or
(z) make any guarantee payments with respect to the foregoing
(other than pursuant to the Preferred Securities Guarantee).
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Notwithstanding the foregoing, the Company will be permitted, in any
event, to make dividend, redemption, liquidation and guarantee payments on
capital stock of the Company, and interest, principal, redemption and guarantee
payments on debt securities issued by the Company ranking pari passu with or
junior to the Debentures, where the payment is made by way of securities
(including capital stock) that rank junior to the securities on which such
payment is being made.
SECTION 5.7 COVENANTS AS TO THE INSIGNIA TRUST.
For so long as the Trust Securities remain outstanding, the Company
will (a) maintain 100% direct or indirect ownership of the Common Securities of
the Insignia Trust; provided, however, that any permitted successor of the
Company hereunder may succeed to the Company's ownership of the Common
Securities; (b) not to cause, as sponsor of the Insignia Trust, or to permit,
as holder of the Common Securities, termination, dissolution or winding up of
the Insignia Trust, except in connection with a distribution of the Debentures
as provided in the Declaration and in connection with certain mergers,
consolidations or amalgamations as provided for in the Declaration, (c) use its
reasonable efforts, consistent with the terms of the Declaration, to cause the
Insignia Trust (i) to remain a statutory business trust, except in connection
with a distribution of Debentures to the holders of Trust Securities in
liquidation of the Insignia Trust, the redemption of all of the Trust
Securities of the Insignia Trust, or certain mergers, consolidations or
amalgamations, each as permitted by the Declaration, and (ii) to continue to be
classified as a grantor trust for United States federal income tax purposes;
and (d) to use its reasonable efforts to cause each holder of Trust Securities
to be treated as owning an undivided beneficial interest in the Debentures.
SECTION 5.8 PAYMENT OF EXPENSES OF THE INSIGNIA TRUST.
In connection with the offering, sale and issuance of the Debentures
to the Property Trustee and the sale of the Trust Securities by the Insignia
Trust, the Company shall:
(a) pay for all costs, fees and expenses relating to the offering,
sale and issuance of the Debentures;
(b) be responsible for and pay for all obligations (other than with
respect to the Trust Securities) of the Insignia Trust, pay for all costs and
expenses of the Insignia Trust (including, but not limited to, costs and
expenses relating to the organization of the Insignia Trust, the offering, sale
and issuance of the Trust Securities (including commissions to the Initial
Purchasers in connection therewith), the fees and expenses of the Property
Trustee and the Delaware Trustee, the costs and expenses relating to the
operation of the Insignia Trust, including without limitation, costs and
expenses of accountants, attorneys, statistical or bookkeeping services,
expenses for printing and engraving and computing or accounting equipment,
paying agent(s), registrar(s), transfer agent(s), duplicating, travel and
telephone and other telecommunications expenses and costs and expenses incurred
in connection with the acquisition, financing, and disposition of Insignia
Trust assets); and
(c) pay any and all taxes (other than United States withholding taxes
attributable to the Insignia Trust or its assets), and all liabilities, costs
and expenses with respect to such taxes, of the Insignia Trust.
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SECTION 5.9 REGISTRATION RIGHTS.
The holders of the Convertible Preferred Securities, the Debentures,
the Preferred Securities Guarantee, and the shares of Common Stock of the
Company issuable upon conversion of the Debentures into Common Stock
(collectively, the "Registrable Securities") are entitled to the benefits of a
Registration Rights Agreement, dated as of November 1, 1996, among the Company
and the Initial Purchasers (the "Registration Rights Agreement"). Pursuant to
the Registration Rights Agreement, the Company has agreed for the benefit of
the holders of Registrable Securities that (i) it will, at its cost, within 90
days after the date of original issuance of the Debentures, file a shelf
registration statement (the "Shelf Registration Statement") with the Commission
with respect to the resales of the Registrable Securities, (ii) it will use all
reasonable efforts to cause such Shelf Registration Statement to be declared
effective by the Commission as promptly as practicable and in no event later
than 180 days after the date of original issuance of the Debentures, and (iii)
the Company will use all reasonable efforts to maintain such Shelf Registration
Statement continuously effective under the Securities Act until three years
after the latest date of original issuance of the Debentures or such earlier
date as is provided in the Registration Rights Agreement (the "Effectiveness
Period").
If (i) on or prior to 90 days following the date of original issuance
of the Registrable Debentures, a Shelf Registration Statement has not been
filed with the Commission, or (ii) on or prior to the 180th day following the
date of original issuance of the Debentures, such Shelf Registration Statement
is not declared effective (each, a "Registration Default"), additional interest
("Liquidated Damages") will accrue on the Debentures from and including the day
following such Registration Default. Liquidated Damages will be paid quarterly
in arrears, with the first quarterly payment due on the first interest or
distribution payment date, as applicable, following the date on which such
Liquidated Damages begin to accrue, and will accrue at a rate per annum equal
to an additional one-quarter of one percent (0.25%) of the principal amount, to
and including the 90th day following such Registration Default and one-half of
one percent (0.50%) thereof from and after the 91st day following such
Registration Default. Upon (x) the filing of the Shelf Registration Statement
after the 90-day period described in clause (i) above or (y) the effectiveness
of the Shelf Registration Statement after the 180-day period described in
clause (ii) above, the interest rate borne by the Debentures from the date of
such filing or effectiveness, as the case may be, will be reduced to the
interest rate then in effect on the Debentures.
ARTICLE VI
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 6.1 COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES OF
HOLDERS.
As required by Section 312(a) of the Trust Indenture Act, the Company
will furnish or cause to be furnished to the Trustee:
(a) semiannually, not later than March 31 and September 30 of
each year, a list, in such form as the Trustee may reasonably require,
of the names and addresses of the Holders of the Debentures ("List of
Holders") as of a date not more than 15 days prior to the delivery
thereof, provided, however, that the Company shall not be obligated to
provide such List of Holders at any time the List of Holders does not
differ from the most recent List of Holders given to the Trustee by or
on behalf of the Company, and in the absence of the provision of any
such List of Holders to the Trustee, then notice shall be deemed to
have been given to the Trustee that the List of Holders has not
changed since the most recent List of Holders; and
30
(b) at any other time, within 30 days of receipt by the Company
of a written request for a List of Holders as of a date no more than
15 days before such List of Holders is given to the Trustee.
The Trustee shall preserve, in as current a form as is reasonably practicable,
all information contained in Lists of Holders given to it or which it receives
in the capacity as Debenture Registrar or Paying Agent (if acting in such
capacity), provided, however, that the Trustee may destroy any List of Holders
previously given to it on receipt of a new List of Holders.
SECTION 6.2 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 of Debentures (i) contained in
the most recent list furnished to the Trustee pursuant to Section 6.1, (ii)
received by the Trustee in its capacity as Debenture Registrar and (iii) filed
with it within the two preceding years pursuant to Section 313(c)(2) of the
Trust Indenture Act. The Trustee may (A) destroy any list furnished to it as
provided in Section 312(a) of the Trust Indenture Act upon receipt of a new
list so furnished, (B) destroy any information received by it as Paying Agent
(if so acting) hereunder upon delivering to itself as Trustee, not earlier than
March 20 or September 20 of each year, a list containing the names and
addresses of the Holders of Debentures obtained from such information since the
delivery of the next previous list, if any, (C) destroy any list delivered to
itself as Trustee which was compiled from information received by it as Paying
Agent (if so acting) hereunder upon the receipt of a new list so delivered and
(D) destroy not earlier than two years after filing, any information filed with
it pursuant to Section 313(c)(2) of the Trust Indenture Act.
(b) If three or more Holders of Debentures (herein referred to as
"applicants") apply in writing to the Trustee, and furnish to the Trustee
reasonable proof that each such applicant has owned a Debenture for a period of
at least six months preceding the date of such application, and such
application states that the applicants desire to communicate with other Holders
of Debentures with respect to their rights under this Indenture or under the
Debentures and is accompanied by a copy of the form of proxy or other
communication which such applicants propose to transmit, then the Trustee
shall, within five Business Days after the receipt of such application, at its
election, either (i) afford such applicants access to the information preserved
at the time by the Trustee in accordance with Section 6.2(a), or (ii) inform
such applicants as to the approximate number of Holders of Debentures whose
names and addresses appear in the information preserved at the time by the
Trustee in accordance with Section 6.2(a), and as to the approximate cost of
mailing to such Holders the form of proxy or other communication, if any,
specified in such application.
If the Trustee shall elect not to afford such applicants access to
such information, the Trustee shall, upon the written request of such
applicants, mail to each Holder of Debentures whose name and address appears in
the information preserved at the time by the Trustee in accordance with Section
6.2(a) a copy of the form of proxy or other communication which is specified in
such request, with reasonable promptness after a tender to the Trustee of the
material to be mailed and of payment, or provision for the payment of the
reasonable expenses of mailing, unless within five days after such tender the
Trustee shall mail to such applicants and file with the Commission, together
with a copy of the material to be mailed, a written statement to the effect
that, in the opinion of the Trustee, such mailing would be contrary to the best
interests of the Holders of Debentures or would be in violation of applicable
law. Such written statement shall specify the basis of such opinion. If the
Commission, after opportunity for a hearing upon the objections specified in
the written statement so filed, shall enter an order refusing to sustain any of
such objections or if after the entry of an order sustaining one or more of
such objections, the Commission shall
31
find, after notice and opportunity for hearing, that all the objections so
sustained have been met and shall enter an order so declaring, the Trustee
shall mail copies of such material to all such Holders of Debentures with
reasonable promptness after the entry of such order and the renewal of such
tender; otherwise the Trustee shall be relieved of any obligation or duty to
such applicants respecting their application.
(c) Every Holder of Debentures, 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
the disclosure of any such information as to the names and addresses of the
Holders of Debentures in accordance with Section 6.2(b), regardless of the
source from which such information was derived and that the Trustee shall not
be held accountable by reason of mailing any material pursuant to a request
made under Section 6.2(b).
SECTION 6.3 REPORTS BY TRUSTEE.
The Trustee shall in each year transmit to Holders such reports
concerning the Trustee and its actions under this Indenture as may be required
pursuant to the Trust Indenture Act in the manner provided pursuant thereto.
If required by Section 313(a) of the Trust Indenture Act, the Trustee shall,
within 60 days after each May 15 following the date of this Indenture deliver
to Holders a brief report, dated as of such May 15, which complies with the
provisions of Section 313(a).
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
Debentures are listed, with the Commission and with the Company. The Company
will promptly notify the Trustee when any Debentures are listed on any stock
exchange.
SECTION 6.4 REPORTS BY COMPANY.
The Company shall:
(a) file with the Trustee, within 15 days after the Company is
required to file the same with the Commission, copies of the annual
reports and of the information, documents and other reports (or
copies of such portions of any of the foregoing as the Commission may
from time to time by rules and regulations prescribe) which the
Company may be required to file with the Commission pursuant to
Section 13 or Section 15(d) of the Exchange Act; or, if the Company
is not required to file information, documents or reports pursuant to
either of such Sections, then it shall file with the Trustee and the
Commission, in accordance with rules and regulations prescribed from
time to time by the Commission, such of the supplementary and
periodic information, documents and reports which may be required
pursuant to Section 13 of the Exchange Act in respect of a security
listed and registered on a national securities exchange as may be
prescribed from time to time in such rules and regulations;
(b) file with the Trustee and the Commission, in accordance with
rules and regulations prescribed from time to time by the Commission,
such additional information, documents and reports required to be
filed with respect to compliance by the Company with the conditions
and covenants of this Indenture as may be required from time to time
by such rules and regulations; and
(c) transmit to all Holders, in the manner and to the extent
provided in Section 313(c) of the Trust Indenture Act, within 30 days
after the filing thereof with the Trustee, such summaries of any
information, documents and reports required to be filed by the
Company pursuant to
32
paragraphs (a) and (b) of this Section as may be required by rules
and regulations prescribed from time to time by the Commission.
Delivery of such reports, information and documents to the Trustee is
for informational purposes only and the Trustee's receipt of such shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
ARTICLE VII
DEFAULTS AND REMEDIES
SECTION 7.1 EVENTS OF DEFAULT.
"Event of Default," wherever used herein with respect to the
Debentures, means any one or more of the following events (whatever the reason
for such Event of Default and whether it shall be voluntary or involuntary or
be effected by operation of law or pursuant to any judgment, decree or order
of any court or any order, rule or regulation of any administrative or
governmental body):
(a) default in the payment of any interest upon any Debenture,
including any Compounded Interest, Additional Interest, or Liquidated
Damages in respect thereof, when it becomes due and payable, and
continuance of such default for a period of 30 days (whether or not
such payment is prohibited by the subordination provisions set forth
in Article IV hereof); provided, however, that a valid extension of
an interest payment period by the Company in accordance with the
terms of this Indenture shall not constitute a default in the payment
of interest (including any Additional Payments) for this purpose; or
(b) default in the payment of the principal of (or premium, if
any, on) any Debenture as and when the same shall become due and
payable whether at maturity, upon redemption, by declaration or
otherwise (whether or not such payment is prohibited by the
subordination provisions set forth in Article IV hereof); or
(c) failure by the Company to issue and deliver Common Stock or
other property issuable upon an election to convert such Debentures
pursuant to Article XV (whether or not such delivery is prohibited by
the subordination provisions set forth in Article IV); or
(d) default in the performance, or breach, of any covenant or
warranty of the Company in this Indenture (other than a covenant or
warranty a default in whose performance or whose breach is elsewhere
in this Section specifically dealt with), and continuance of such
default or breach for a period of 90 days after there has been given,
by registered or certified mail, to the Company by the Trustee or to
the Company and the Trustee by the Holders of at least 25% in
principal amount of the Outstanding Debentures, a written notice
specifying such default or breach and requiring it to be remedied and
stating that such notice is a "Notice of Default"), hereunder; or
(e) the entry by a court having jurisdiction in the premises of
a decree or order for relief in respect of the Company in an
involuntary case or proceeding under any applicable federal or state
bankruptcy, insolvency, reorganization or other similar law, or
appointing a custodian, receiver, liquidation, assignee, trustee,
sequestrator or other similar official of the Company or of any
substantial part of their property, or ordering the winding up or
liquidation of its affairs, and
33
the continuance of any such decree or order for relief or any such
other decree or order unstayed and in effect for a period of 60
consecutive days; or
(f) the commencement by the Company of a voluntary case or
proceeding under any applicable federal or state bankruptcy,
insolvency, reorganization or other similar law or of any other case
or proceeding to be adjudicated a bankrupt or insolvent, or the
consent by it to the entry of a decree or order for relief in respect
of the Company in an involuntary case or proceeding under any
applicable federal or state bankruptcy, insolvency, reorganization or
other similar law or to the commencement of any bankruptcy or
insolvency case or proceeding against it, or the filing by it of a
petition or answer or consent seeking reorganization or relief under
any applicable federal or state law, or the consent by it to the
filing of such petition or to the appointment of or taking possession
by a custodian, receiver, liquidation, assignee, trustee,
sequestrator or similar official of the Company or of any substantial
part of their property, or the making by it of an assignment for the
benefit of creditors; or
(g) the voluntary or involuntary dissolution, winding-up, or
termination of the Insignia Trust except in connection with (i) the
distribution of Debentures to holders of Trust Securities in
liquidation of their interest in the Insignia Trust, (ii) the
redemption of all of the outstanding Trust Securities of the Insignia
Trust or (iii) certain mergers, consolidations or amalgamations, each
as permitted by the Declaration.
SECTION 7.2 ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT.
If an Event of Default described in clause (a), (b), (c), (d), or (g)
of Section 7.1 above occurs and is continuing, then, and in each and every
such case, unless the principal of all of the Debentures shall have already
become due and payable, either the Trustee or the Holders of not less than 25%
in aggregate principal amount of the Debentures then Outstanding hereunder, by
notice in writing to the Company (and to the Trustee if given by the Holders
of Debentures), may declare the entire principal of all Debentures and all
interest accrued thereon (including any Additional Payments) and any other
amounts payable hereunder to be due and payable immediately, and upon any such
declaration the same shall become immediately due and payable.
If an Event of Default described in clause (e) or (f) of Section 7.1
occurs, the entire principal of all Debentures and all interest accrued
thereon (including any Additional Payments) and any other amounts payable
hereunder shall become immediately due and payable, without any declaration or
other act on the part of the Trustee or the Holders.
At any time after a declaration of acceleration has been made and
before a judgment or decree for payment of the money due has been obtained by
the Trustee as provided in this Article hereinafter, the Holders of a majority
in aggregate principal amount of the Outstanding Debentures, by written notice
to the Company and the Trustee, may rescind and annul such declaration and its
consequences if:
(1) the Company has paid or deposited with the Trustee a sum
sufficient to pay--
(A) all overdue interest (including any Additional Interest,
Compounded Interest and Liquidated Damages) on all Debentures,
(B) the principal of any Debentures which have become due
otherwise than by such declaration of acceleration and interest
thereon at the rate borne by the Debentures, and
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(C) all sums paid or advanced by the Trustee and each
predecessor Trustee hereunder and the reasonable compensation,
expenses, disbursements and advances of the Trustee and each
predecessor Trustee and their respective agents and counsel;
and
(2) all Events of Default, other than the non-payment of the
principal of Debentures that have become due solely by such
declaration of acceleration, have been cured or waived as provided in
Section 7.13.
No such rescission shall affect any subsequent default or impair any
right consequent thereon.
In case the Trustee shall have proceeded to enforce any right with
respect to Debentures under this Indenture and such proceedings shall have
been discontinued or abandoned because of such rescission or annulment or for
any other reason or shall have been determined adversely to the Trustee, then
and in every such case the Company and the Trustee shall be restored
respectively to their former positions and rights hereunder, and all rights,
remedies and powers of the Company and the Trustee shall continue as though no
such proceedings had been taken.
SECTION 7.3 COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT
BY TRUSTEE.
The Company covenants that if,
(a) default is made in the payment of any interest (including
Additional Payments) on any Debenture when such interest becomes due
and payable and such default continues for a period of 30 days
(provided that a valid extension of the interest payment period by
the Company pursuant to this Indenture shall not constitute a default
in the payment of any interest (including Additional Payments) for
this purpose), or
(b) default is made in the payment of the principal of any
Debenture at Maturity thereof,
the Company will, upon demand of the Trustee, pay to it, for the benefit of
the Holders of Debentures, the whole amount then due and payable on Debentures
for principal and interest (including any Additional Payments) and, to the
extent that payment of such interest shall be legally enforceable under
applicable law, interest on any overdue principal and on any overdue interest,
at the rate per annum stated in the Debentures; 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 under Section 8.6.
If the Company fails to pay such amounts forthwith upon such demand,
the Trustee, in its own name and as trustee of an express trust, may institute
a judicial proceeding for the collection of the sums so due and unpaid, may
(in addition to exercising any other rights pursuant to Section 7.2) prosecute
such proceeding to judgment or final decree and may enforce the same against
the Company or any other obligor upon the Debentures and collect the moneys
adjudged or decreed to be payable in the manner provided by law out of the
property of the Company or any other obligor upon the Debentures, wherever
situated.
If an Event of Default with respect to Debentures occurs and is
continuing, the Trustee may in its discretion proceed to protect and enforce
its rights and the rights of the Holders of Debentures by such appropriate
judicial proceedings as the Trustee shall deem most effectual to protect and
enforce any such rights, either at law or in equity or in bankruptcy or
otherwise whether for the specific enforcement of any
35
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 7.4 TRUSTEE MAY FILE PROOFS OF CLAIM.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or any other obligor upon the
Debentures or the property of the Company or of such other obligor or their
creditors, the Trustee (irrespective of whether the principal of Debentures
shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have made any demand
on the Company for the payment of overdue principal or interest) shall be
entitled and empowered, by intervention in such proceeding or otherwise,
(a) to file and prove a claim for the whole amount of principal
and any premium and interest owing and unpaid in respect of the
Debentures and to file such other papers or documents as may be
necessary or advisable in order to have the claims of the Trustee
(including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel)
and of the Holders of Debentures allowed in such judicial proceeding,
and
(b) to collect and receive any moneys or other property payable
or deliverable on any such claims and to distribute the same, and any
custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby
authorized by each Holder of Debentures to make such payments to the
Trustee and, in the event that the Trustee shall consent to the
making of such payments directly to the Holders of Debentures, 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 8.6.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder of a
Debenture any plan of reorganization, arrangement, adjustment or composition
affecting the Debentures or the rights of any Holder thereof or to authorize
the Trustee to vote in respect of the claim of any Holder of Debentures in any
such proceeding.
SECTION 7.5 TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF
DEBENTURES.
All rights of action and claims under this Indenture or under any of
the terms established with respect to the Debentures may be prosecuted and
enforced by the Trustee without the possession of any of the Debentures or the
production thereof in any proceeding relating thereto, and any such proceeding
instituted by the Trustee shall be brought in its own name as trustee of an
express trust, and any recovery of judgment shall, after provision for the
payment of the reasonable compensation, expenses, disbursements and advances
of the Trustee, its agents and counsel due under Section 8.6, be for the
ratable benefit of the Holders of the Debentures in respect of which such
judgment has been recovered.
SECTION 7.6 APPLICATION OF MONEY COLLECTED.
Subject to the provisions of Article IV, any money collected by the
Trustee pursuant to this Article with respect to Debentures 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 Debentures, and the notation thereon of the
payment if only partially paid and upon surrender thereof if fully paid:
36
FIRST: To the payment of all amounts due the Trustee under Section
8.6;
SECOND: To the payment of the amounts then due and unpaid for
principal of and interest (including any Additional Payments) on the
Debentures in respect of which such money has been collected, ratably, without
preference or priority of any kind, according to the amounts due and payable
on Debentures for principal and any premium and interest, respectively.
SECTION 7.7 LIMITATION ON SUITS.
No Holder of any Debenture 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;
(a) such Holder has previously given written notice to the
Trustee of a continuing Event of Default;
(b) the Holders of not less than 25% in principal amount of the
Outstanding Debentures shall have made written request to the Trustee
to institute proceedings in respect of such Event of Default in its
own name as Trustee hereunder;
(c) such Holder or Holders shall have offered to the Trustee
reasonable indemnity against the costs, expenses and liabilities to
be incurred in compliance with such request;
(d) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such
proceeding; and
(e) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Holders of a
majority in principal amount of the Outstanding Debentures;
it being understood and intended that no one or more of such Holders shall
have any right in any manner whatever by virtue of, or by availing of, any
provision of this Indenture to affect, disturb or prejudice the rights of any
other of such Holders, or to obtain or to seek to obtain priority or
preference over any other of such Holders or to enforce any right under this
Indenture, except in the manner herein provided and for the equal and ratable
benefit of all of such Holders.
SECTION 7.8 UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE
PRINCIPAL AND INTEREST AND TO CONVERT.
Notwithstanding any other provision in this Indenture, but subject to
Article IV of this Indenture, the Holder of any Debenture shall have the
right, which is absolute and unconditional, to receive payment of the
principal of and (subject to Section 2.3) interest (including any Additional
Payments) on the Debentures on the Stated Maturity or Maturities expressed in
the Debentures (or, in the case of redemption, on the Redemption Date) and to
convert such Debenture into Common Stock in accordance with Article XV and to
institute suit for the enforcement of any such payment and right to convert,
and such rights shall not be impaired without the consent of such Holder.
37
SECTION 7.9 RESTORATION OF RIGHTS AND REMEDIES.
If the Trustee or any Holder of Debentures 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 of Debentures 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 7.10 RIGHTS AND REMEDIES CUMULATIVE.
Except as otherwise provided with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Debentures in the last
paragraph of Section 2.6, no right or remedy herein conferred upon or reserved
to the Trustee or to the Holders of Debentures 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 7.11 DELAY OR OMISSION NOT WAIVER.
No delay or omission of the Trustee or of any Holder of any Debenture
to exercise any right or remedy accruing upon any Event of Default occurring
and continuing as aforesaid shall impair any such right or remedy or
constitute a waiver of any such Event of Default or an acquiescence therein.
Subject to the provisions of Section 7.7, every right and remedy
given by this Article or by law to the Trustee or to the Holders of Debentures
may be exercised from time to time, and as often as may be deemed expedient,
by the Trustee or by the Holders of Debentures, as the case may be.
SECTION 7.12 CONTROL BY HOLDERS OF DEBENTURES.
The Holders of a majority in aggregate principal amount of the
Outstanding Debentures shall have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred on the Trustee, with respect to the
Debentures, provided that,
(a) such direction shall not be in conflict with any rule of law
or with this Indenture, and
(b) the Trustee may take any other action deemed proper by the
Trustee that is not inconsistent with such direction.
SECTION 7.13 WAIVER OF PAST DEFAULTS.
The Holders of not less than a majority in principal amount of the
Outstanding Debentures may on behalf of the Holders of all the Debentures
waive any past default hereunder with respect to the Debentures and its
consequences, except a default
38
(a) in the payment of the principal of (or premium, if any) or
any interest (including Additional Interest, Compounded Interest and
Liquidated Damages) on any Debenture as and when the same shall
become due by the terms of Debentures otherwise than by acceleration
(unless such default has been cured and sums sufficient to pay all
matured installments of interest and principal and any premium has
been deposited with the Trustee (in accordance with Section 7.2)), or
(b) in the covenants contained in Sections 5.6 and 5.7, or
(c) in respect of a covenant or provision hereof which under
Article XI cannot be modified or amended without the consent of the
Holder of each Outstanding Debenture affected; provided, however,
that if the Debentures are held by the Insignia Trust or a trustee of
such trust, such waiver or modification to such waiver shall not be
effective until the holders of a majority in liquidation preference
of Trust Securities of the Insignia Trust shall have consented to
such waiver or modification to such waiver; provided further, that if
the consent of the Holder of each Outstanding Debenture is required,
such waiver shall not be effective until each holder of the Trust
Securities of the Insignia Trust shall have consented to such waiver.
Upon any such waiver, the default covered thereby shall cease to
exist, and any Event of Default arising therefrom shall be deemed to have been
cured, for every purpose of this Indenture and the Company, the Trustee and
the holders of the Debentures shall be restored to their former positions and
rights hereunder, respectively; but no such waiver shall extend to any
subsequent or other default or impair any right consequent thereon.
SECTION 7.14 UNDERTAKING FOR COSTS.
All parties to this Indenture agree, and each Holder of any Debenture
by such Holder's acceptance thereof shall be deemed to have agreed, that any
court may in its discretion require, in any suit for the enforcement of any
right or remedy under this Indenture, or in any suit against the Trustee for
any action taken, suffered or omitted by it as Trustee, the filing by any
party litigant in such suit of an undertaking to pay the costs of such suit,
and that such court may in its discretion assess reasonable costs, including
reasonable attorneys' fees and expenses, against any party litigant in such
suit, having due regard to the merits and good faith of the claims or defenses
made by such party litigant; but the provisions of this Section shall not
apply to any suit instituted by the Company, to any suit instituted by the
Trustee, to any suit instituted by any Holder or group of Holders holding in
the aggregate more than 10% in principal amount of the Outstanding Debentures,
or to any suit instituted by any Holder of any Debenture for the enforcement
of the payment of the principal of or any premium or interest (including
Additional Payments) on such Debenture on or after the Stated Maturity or
Maturities expressed in such Debenture (or, in the case of redemption, on or
after the Redemption Date) or the right to convert such Debenture in
accordance with the provisions of this Indenture.
SECTION 7.15 WAIVER OF STAY OR EXTENSION LAWS.
The Company covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, or plead, or in any manner whatsoever
claim or take the benefit or advantage of, any stay or extension law wherever
enacted, now or at any time hereafter in force, which may affect the covenants
or the performance of this Indenture; and the Company (to the extent that it
may lawfully do so) hereby expressly waives all benefit or advantage of any
such law and covenants that it will not hinder, delay or impede the execution
of any power herein granted to the Trustee, but will suffer and permit the
execution of every such power as though no such law had been enacted.
39
SECTION 7.16 ENFORCEMENT BY HOLDERS OF CONVERTIBLE PREFERRED
SECURITIES.
(a) Notwithstanding anything to the contrary contained herein, if the
Property Trustee as Holder of the Debentures fails to enforce its rights under
the Debentures (other than rights arising from an Event of Default described
in Section 7.16(b)) for a period of 30 days after any holder of Convertible
Preferred Securities shall have made a written request to the Property Trustee
to enforce such rights, such holder of Convertible Preferred Securities may,
to the fullest extent permitted by law, institute a Direct Action to enforce
the Property Trustee's rights as Holder of the Debentures, without first
instituting any legal proceeding against the Property Trustee or any other
Person.
(b) Notwithstanding anything to the contrary contained herein, if an
Event of Default has occurred and is continuing and such Event of Default is
attributable to the failure of the Company to pay interest (including any
Additional Payments) or principal on the Debentures on the date such interest
or principal is otherwise payable, the Company acknowledges that, in such
event, a holder of Convertible Preferred Securities may institute a Direct
Action for enforcement of payment to such Holder of the principal of or
interest on the Debentures having a principal amount equal to the aggregate
liquidation amount of the Preferred Securities of such Holder, on or after the
respective due date specified in the Debentures, without first instituting any
legal proceeding against the Property Trustee or any other Person.
(c) Notwithstanding any payment made to such holder of Convertible
Preferred Securities by the Company in connection with a Direct Action, the
Company shall remain obligated to pay the principal of or interest on the
Debentures held by the Insignia Trust or the Property Trustee and the Company
shall be subrogated to the rights of the holder of such Convertible Preferred
Securities with respect to payments on the Convertible Preferred Securities to
the extent of any payments made by the Company to such holder in any Direct
Action.
ARTICLE VIII
CONCERNING THE TRUSTEE
SECTION 8.1 DUTIES AND RESPONSIBILITIES OF THE TRUSTEE; DURING
DEFAULT; PRIOR TO DEFAULT.
With respect to the Holders of Debentures issued hereunder, the
Trustee, prior to the occurrence of an Event of Default with respect to the
Debentures and after the curing or waiving of all Events of Default which may
have occurred with respect to Debentures, undertakes to perform such duties
and only such duties as are specifically set forth in this Indenture. In case
an Event of Default with respect to the Debentures has occurred (which has not
been cured or waived), the Trustee shall exercise with respect to the
Debentures such of the rights and powers vested in it by this Indenture, and
shall use the same degree of care and skill in their exercise, as a prudent
man would exercise or use under the circumstances in the conduct of his own
affairs. No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own willful misconduct, except that:
(a) prior to the occurrence of an Event of Default with respect
to the Debentures and after the curing or waiving of all such Events
of Default with respect to the Debentures which may have occurred:
(i) the duties and obligations of the Trustee with respect
to the Debentures shall be determined solely by the express
provisions of this Indenture, and the Trustee shall
40
not be liable except for the performance of such duties and
obligations as are specifically set forth in this Indenture, and
no implied covenants or obligations shall be read into this
Indenture against the Trustee; and
(ii) in the absence of bad faith on the part of the
Trustee, the Trustee may conclusively rely, as to the truth of
the statements and the correctness of the opinions expressed
therein, upon any statements, certificates or opinions furnished
to the Trustee and conforming to the requirements of this
Indenture; but in the case of any such statements, certificates
or opinions which by any provision hereof are specifically
required to be furnished to the Trustee, the Trustee shall be
under a duty to examine the same to determine whether or not, on
their face, they conform to the requirements of this Indenture,
but shall otherwise have no duty to determine the accuracy or
completeness thereof or whether the same comply with applicable
laws;
(b) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer or Responsible Officers
of the Trustee, unless it shall be proved that the Trustee was
negligent in ascertaining the pertinent facts;
(c) the Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in good faith in accordance with
the direction of the Holders pursuant to Section 7.12 relating to the
time, method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred
upon the Trustee, under this Indenture; and
(d) whether or not therein 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 8.1
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.
SECTION 8.2 CERTAIN RIGHTS OF TRUSTEE.
Subject to the provisions of the Trust Indenture Act:
(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
or as otherwise expressly provided herein 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;
41
(d) the Trustee may consult with counsel of its selection and
the advice of such counsel or any Opinion of Counsel shall be full
and complete authorization and protection in respect of any action
taken, suffered or omitted by it hereunder in good faith and in
reliance thereon;
(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 of Debentures pursuant to this
Indenture, unless such Holders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and
liabilities which might be incurred by it in compliance with such
request or direction; provided, however, that nothing contained in
this Section 8.2(e) shall be taken to relieve the Trustee, upon the
occurrence of an Event of Default, from its obligations expressly
created hereunder to exercise the rights and powers vested in it by
this Indenture;
(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 be entitled to examine the
books, records and premises of the Company, personally or by agent or
attorney; and
(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.
SECTION 8.3 NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF DEBENTURES.
The recitals contained herein and in the Debentures (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 any Debentures. The
Trustee or any Authenticating Agent shall not be accountable for the use or
application by the Company of Debentures or the proceeds thereof.
SECTION 8.4 MAY HOLD DEBENTURES.
The Trustee, any Authenticating Agent, any Paying Agent, any
Debenture Registrar or any other agent of the Company, in its individual or
any other capacity, may become the owner or pledgee of Debentures and, subject
to Sections 8.9 and 8.11, may otherwise deal with the Company with the same
rights it would have if it were not Trustee, Authenticating Agent, Paying
Agent, Debenture Registrar or such other agent.
SECTION 8.5 MONEY HELD IN TRUST.
Money held by the Trustee in trust hereunder need not be segregated
from other funds except to the extent required by law. The Trustee shall be
under no liability for interest on any money received by it hereunder except
as otherwise agreed in writing with the Company.
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SECTION 8.6 COMPENSATION AND REIMBURSEMENT.
The Company agrees:
(a) to pay to the Trustee or any predecessor Trustee from time
to time such compensation as shall be agreed in writing between the
Company and the Trustee for all services rendered by it hereunder
(which compensation shall not be limited by any provision of law in
regard to the compensation of a trustee of an express trust);
(b) except as otherwise expressly provided herein, to reimburse
the Trustee or any predecessor Trustee upon its request for all
reasonable expenses, disbursements and advances incurred or made by
the Trustee in accordance with any provision of this Indenture
(including the compensation and the expenses and disbursements of its
agents and counsel), except any such expense, disbursement or advance
as may be attributable to its negligence or bad faith; and
(c) to indemnify the Trustee and any predecessor Trustee for,
and to hold it harmless against, any and all loss, damage, claim,
liability or expense, including taxes (other than taxes based on the
income of the Trustee) incurred without negligence or bad faith on
its part, arising out of or in connection with the acceptance or
administration of the trust or trusts hereunder, including the costs
and expenses of defending itself against any claim or liability in
connection with the exercise or performance of any of its powers or
duties hereunder.
When the Trustee incurs expenses or renders services in connection
with an Event of Default specified in Section 7.1(e) or Section 7.1(f), the
expenses (including the reasonable charges and expenses of its counsel) and
the compensation for the services are intended to constitute expenses of
administration under any applicable federal or state bankruptcy, insolvency or
other similar laws.
The provisions of this Section 8.6 shall survive the termination of
this Indenture.
SECTION 8.7 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 8.8.
(b) The Trustee may resign at any time with respect to the Debentures
by giving written notice thereof to the Company. If the instrument of
acceptance by a successor Trustee required by Section 8.8 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
Debentures.
(c) The Trustee may be removed at any time with respect to the
Debentures by Act of the Holders of a majority in principal amount of the
Outstanding Debentures delivered to the Trustee and to the Company. If the
instrument of acceptance by a successor Trustee required by Section 8.8 shall
not have been delivered to the Trustee within 30 days after the delivery of
such Act of removal, the Trustee being removed may petition any court of
competent jurisdiction for the appointment of a successor Trustee with respect
to the Debentures.
(d) If at any time:
43
(1) the Trustee shall fail to comply with Section 310(b) of
the Trust Indenture Act after written request therefor by the
Company or by any Holder of a Debenture who has been a bona fide
Holder of a Debenture for at least six months, or
(2) the Trustee shall cease to be eligible under Section
8.10 and Section 310(a) of the Trust Indenture Act and shall
fail to resign after written request therefor by the Company or
by any Holder of a Debenture who has been a bona fide Holder of
a Debenture for at least six months, or
(3) the Trustee shall become incapable of acting or shall
be adjudged a bankrupt or insolvent or a receiver of the Trustee
or of its property shall be appointed or any public officer
shall take charge or control of the Trustee or of its property
or affairs for the purpose of rehabilitation, conservation or
liquidation, then, in any such case, (i) the Company by a Board
Resolution may remove the Trustee with respect to all
Debentures, or (ii) subject to Section 7.14 any Holder of a
Debenture who has been a bona fide Holder of a Debenture for at
least six months may, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction
for the removal of the Trustee with respect to all Debentures
and the appointment of a successor Trustee or Trustees.
(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause,
with respect to the Debentures, the Company, by a Board Resolution, shall
promptly appoint a successor Trustee or Trustees with respect to the
Debentures (it being understood that at any time there shall be only one
Trustee with respect to the Debentures) and shall comply with the applicable
requirements of Section 8.8. If, within one year after such resignation,
removal or incapability, or the occurrence of such vacancy, a successor
Trustee with respect to the Debentures shall be appointed by Act of the
Holders of a majority in principal amount of Outstanding Debentures 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 8.8, become the successor Trustee with
respect to the Debentures and to that extent supersede the successor Trustee
appointed by the Company. If no successor Trustee with respect to the
Debentures shall have been so appointed by the Company or the Holders of
Debentures and accepted appointment in the manner required by Section 8.8, any
Holder of a Debenture who has been a bona fide Holder of a Debenture for at
least six months may, on behalf of himself and all others similarly situated,
petition any court of competent jurisdiction for the appointment of a
successor Trustee with respect to the Debentures.
(f) The Company shall give notice of each resignation and each
removal of the Trustee with respect to the Debentures and each appointment of
a successor Trustee with respect to the Debentures in the manner provided in
Section 16.4. Each notice shall include the name of the successor Trustee with
respect to the Debentures and the address of its Corporate Trust Office.
SECTION 8.8 ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.
(a) In case of the appointment hereunder of a successor Trustee with
respect to all Debentures, 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
written 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
44
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) Upon the written request of any such successor Trustee, the
Company shall execute any and all instruments for more fully and certainly
vesting in and confirming to such successor Trustee all such rights, powers
and trusts referred to in paragraph (a) of this Section.
(c) No successor Trustee shall accept its appointment unless at the
time of such acceptance such successor Trustee shall be qualified and eligible
under this Article.
SECTION 8.9 DISQUALIFICATION; CONFLICTING INTERESTS.
If the Trustee has or shall acquire a conflicting interest within the
meaning of the Trust Indenture Act, the Trustee shall either eliminate such
interest or resign, to the extent and in the manner provided by, and subject
to the provisions of, the Trust Indenture Act and this Indenture.
SECTION 8.10 CORPORATE TRUSTEE REQUIRED; ELIGIBILITY.
There shall be at all times 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. 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 hereunder specified in this
Article.
SECTION 8.11 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 Debentures), the Trustee shall be subject to
the provisions of the Trust Indenture Act regarding the collection of claims
against the Company (or any such other obligor).
SECTION 8.12 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 Debentures 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 Debentures so authenticated with the
same effect as if such successor Trustee had itself authenticated such
Debentures.
SECTION 8.13 APPOINTMENT OF AUTHENTICATING AGENT.
The Trustee may appoint an Authenticating Agent or Agents with
respect to Debentures which shall be authorized to act on behalf of the
Trustee to authenticate Debentures issued upon original issue or
45
upon exchange, registration of transfer or partial redemption thereof or
pursuant to Section 2.6, and Debentures so authenticated shall be entitled to
the benefits of this Indenture and shall be valid and obligatory for all
purposes as if authenticated by the Trustee hereunder.
Wherever reference is made in this Indenture to the authentication
and delivery of Debentures by the Trustee or the Trustee's certificate of
authentication such reference shall be deemed to include authentication and
delivery on behalf of the Trustee by an Authenticating Agent and a certificate
of authentication executed on behalf of the Trustee by an Authenticating
Agent. Each Authenticating Agent shall be acceptable to the Company. If such
Authenticating Agent publishes reports of condition at least annually,
pursuant to law or to the requirements of said supervising or examining
authority, then for the purposes of this Section, the combined capital and
surplus of such Authenticating Agent shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. If at any time an Authenticating Agent shall cease to be eligible
in accordance with the provisions of this Section, such Authenticating Agent
shall resign immediately in the manner and with the effect specified in this
Section.
Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating
Agent shall be a party, or any corporation succeeding to the corporate agency
or corporate trust business of such Authenticating Agent, shall continue to be
an Authenticating Agent provided such corporation shall be otherwise eligible
under this Section, without the execution or filing of any paper or any
further act on the part of the Trustee or such Authenticating Agent.
An Authenticating Agent may resign at any time by giving written
notice thereof to the Trustee and to the Company. The Trustee may at any time
terminate the agency of an Authenticating Agent by giving written notice
thereof to such Authenticating Agent and to the Company. Upon receiving such a
notice of resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent which shall be acceptable to the Company and shall promptly give notice
of such appointment to all Holders of Debentures pursuant to Section 16.4. Any
successor Authenticating Agent upon acceptance of its appointment hereunder
shall become vested with all the rights, powers and duties of its predecessor
hereunder with like effect as if originally named as an Authenticating Agent.
No successor Authenticating Agent shall be appointed unless eligible under the
provisions of this Section.
The Company agrees to pay to each Authenticating Agent from time to
time reasonable compensation for its services under this Section.
If an appointment with respect to Debentures is made pursuant to this
Section, the Debentures may have endorsed thereon, in addition to the
Trustee's certificate of authentication, an alternative certificate of
authentication in the following form:
46
This is one of the Debentures referred to in the within-mentioned
Indenture.
First Union National Bank of South Carolina
By
-----------------------------------------
Authenticating Agent
By
-----------------------------------------
Authorized Signatory
If all of the Debentures may not be originally issued at one time,
and if the Company has an Affiliate eligible to be appointed as an
Authenticating Agent hereunder or the Trustee does not have an office capable
of authenticating Debentures upon original issuance located in a Place of
Payment where the Company wishes to have Debentures authenticated upon
original issuance, the Trustee, if so requested by the Company in writing
(which writing need not comply with Section 16.1 and need not be accompanied
by an Opinion of Counsel), shall appoint in accordance with this Section an
Authenticating Agent (which if so requested by the Company, shall be such
Affiliate of the Company) having an office in a Place of Payment designated by
the Company with respect to the Debentures.
SECTION 8.14. NOTICE OF DEFAULTS.
If a Default occurs hereunder with respect to Debentures, the Trustee
shall give the Holders of Debentures notice of such Default as and to the
extent provided by the Trust Indenture Act; provided, however, that in the
case of any Default of the character specified in Section 7.1(d), no such
notice to Holders shall be given until at least 30 days after the occurrence
thereof.
ARTICLE IX
ACTS OF HOLDERS
SECTION 9.1 ACTS OF HOLDERS.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action 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. Except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are
delivered to the Trustee and, where it is hereby expressly required, to the
Company. Such instrument or instruments (and the action embodied therein and
evidenced thereby) are herein sometimes referred to as the "Act" of the
Holders signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent or proxy, or of the
holding by any Person of a Debenture, shall be sufficient for any purpose of
this Indenture and (subject to Section 8.1) 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
47
or writing acknowledged to such notary public or other such officer the
execution thereof. Where such execution is by a signer acting in a capacity
other than the signer's individual capacity, such certificate or affidavit
shall also constitute sufficient proof of the signer's authority. The fact and
date of the execution of any such instrument or writing, or the authority of
the Person executing the same, may also be proved in any other manner which
the Trustee reasonably deems sufficient.
(c) The principal amount of Debentures held by any Person, and the
date of holding the same, shall be proved by the Debenture Register.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the Holder of a Debenture shall bind every future
Holder of the same Debenture and the Holder of every Debenture 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 Debenture.
(e) The Company may, in the circumstances permitted by the Trust
Indenture Act, fix any day as the record date for the purpose of determining
the Holders of Outstanding Debentures entitled to give, make or take any
request, demand, authorization, direction, notice, consent, waiver or other
action, or to vote on any action, authorized or permitted to be given or taken
by Holders. If not set by the Company prior to the first solicitation of a
Holder made by any Person in respect of any such action, or, in the case of
any such vote, prior to such vote, the record date for any such action or vote
shall be the 30th day (or, if later, the date of the most recent list of
Holders required to be provided pursuant to Section 6.1) prior to such first
solicitation or vote, as the case may be. With regard to any record date, only
the Holders on such date (or their duly designated proxies) shall be entitled
to give or take, or vote on, the relevant action. With regard to any action
that may be given or taken hereunder only by Holders of a requisite principal
amount of Outstanding Debentures (or their duly appointed agents) and for
which a record date is set pursuant to this paragraph, the Company may, at its
option, set an expiration date after which no such action purported to be
given or taken by any Holder shall be effective hereunder unless given or
taken on or prior to such expiration date by Holders of the requisite
principal amount of Outstanding Debentures on such record date (or their duly
appointed agents). On or prior to any expiration date set pursuant to this
paragraph, the Company may, on one or more occasions at its option, extend
such date to any later date. Nothing in this paragraph shall prevent any
Holder (or any duly appointed agent thereof) from giving or taking, after any
expiration date, any action identical to, or, at any time, contrary to or
different from, any action given or taken, or purported to have been given or
taken, hereunder by a Holder on or prior to such date, in which event the
Company may set a record date in respect thereof pursuant to this clause.
ARTICLE X
MEETINGS OF HOLDERS OF DEBENTURES
SECTION 10.1 PURPOSES FOR WHICH MEETINGS MAY BE CALLED.
A meeting of Holders of Debentures may be called at any time and from
time to time pursuant to this Article to make, give or take any request,
demand, authorization, direction, notice, consent, waiver or other action
provided by this Indenture to be made, given or taken by Holders of
Debentures.
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SECTION 10.2 CALL, NOTICE AND PLACE OF MEETINGS.
(a) The Trustee may at any time call a meeting of Holders of
Debentures for any purpose specified in Section 10.1, to be held at such time
and at such place in the Borough of Manhattan, The City of New York as the
Trustee shall determine. Notice of every meeting of Holders of Debentures
setting forth the time and the place of such meeting and in general terms the
action proposed to be taken at such meeting, shall be given, in the manner
provided in Section 16.4, not less than 21 nor more than 180 days prior to the
date fixed for the meeting (or, in the case of a meeting of Holders with
respect to Debentures all or part of which are represented by a Book-Entry
Debenture, not less than 20 nor more than 40 days).
(b) In case at any time the Company, pursuant to a Board Resolution,
or the Holders of at least 25% in principal amount of the Outstanding
Debentures shall have requested the Trustee to call a meeting of the Holders
of Debentures for any purpose specified in Section 10.1, by written request
setting forth in reasonable detail the action proposed to be taken at the
meeting, and the Trustee shall not have mailed the first notice of such
meeting within 21 days after receipt of such request or shall not thereafter
proceed to cause the meeting to be held as provided herein, then the Company
or the Holders of Debentures in the amount above specified, as the case may
be, may determine the time and the place in the Borough of Manhattan, The City
of New York for such meeting and may call such meeting for such purposes by
giving notice thereof as provided in Subsection (a) of this Section.
SECTION 10.3 PERSONS ENTITLED TO VOTE AT MEETINGS.
Upon the calling of a meeting of Holders with respect to the
Debentures all or part of which are represented by a Book-Entry Debenture, a
record date shall be established for determining Holders of Outstanding
Debentures entitled to vote at such meeting, which record date shall be the
close of business on the day the notice of the meeting of Holders is given in
accordance with Section 10.2. The Holders on such record date, and their
designated proxies, and only such Persons, shall be entitled to vote at any
meeting of Holders. To be entitled to vote at any meeting of Holders a Person
shall (a) be a Holder of one or more Debentures or (b) be a Person appointed
by an instrument in writing as proxy by a Holder of one or more Debentures;
provided, however, that in the case of any meeting of Holders with respect to
the Debentures all or part of which are represented by a Book-Entry Debenture,
only Holders, or their designated proxies, of record on the record date
established pursuant to Section 10.3 hereof shall be entitled to vote at such
meeting. The only Persons who shall be entitled to be present or to speak at
any meeting of Holders shall be the Persons entitled to vote at such meeting
and their counsel and any representatives of the Trustee and its counsel and
any representatives of the Company and its counsel.
SECTION 10.4 QUORUM; ACTION.
The Persons entitled to vote a majority in principal amount of the
Outstanding Debentures shall constitute a quorum for a meeting of Holders of
Debentures; provided, however, that if any action is to be taken at such
meeting with respect to a consent or waiver which this Indenture expressly
provides may be given by the Holders of a specified percentage in aggregate
principal amount of Outstanding Debentures that is less or greater than a
majority in principal amount of the Outstanding Debentures, then, with respect
to such action (and only such action) the Persons entitled to vote such lesser
or greater percentage in principal amount of the Outstanding Debentures shall
constitute a quorum. In the absence of a quorum within 30 minutes of the time
appointed for any such meeting, the meeting shall, if convened at the request
of Holders of Debentures, be dissolved. In any other case the meeting may be
adjourned for a period of not less than 10 days as determined by the chairman
of the meeting prior to the adjournment of such meeting. In the absence of a
quorum at any such adjourned meeting, such adjourned meeting may be further
49
adjourned for a period of not less than 10 days as determined by the chairman
of the meeting prior to the adjournment of such adjourned meeting. Notice of
the reconvening of any adjourned meeting shall be given as provided in Section
10.2(a), except that such notice need be given only once not less than five
days prior to the date on which the meeting is scheduled to be reconvened.
Notice of the reconvening of an adjourned meeting shall state expressly the
percentage, as provided above, of the principal amount of the outstanding
Debentures which shall constitute a quorum. Notwithstanding the foregoing, no
meeting of Holders with respect to Debentures which is represented in whole or
in part by a Book-Entry Debenture, shall be adjourned to a date more than 90
days after the record date for such meeting unless the Trustee shall send out
a new notice of meeting and establish, in accordance with Section 10.3, a new
record date for Holders entitled to vote at such meeting.
Except as limited by the proviso to Section 11.2, any resolution
presented to a meeting or adjourned meeting duly reconvened at which a quorum
is present as aforesaid may be adopted by the affirmative vote of the Holders
of a majority in principal amount of the Outstanding Debentures; provided,
however, that, except as limited by the proviso to Section 11.2, any
resolution with respect to any consent or waiver which this Indenture
expressly provides may be given by the Holders of a specified percentage in
aggregate principal amount of Outstanding Debentures that is less or greater
than a majority in principal amount of the Outstanding Debentures may be
adopted at a meeting or an adjourned meeting duly convened and at which a
quorum is present as aforesaid only by the affirmative vote of the Holders of
such specified percentage in principal amount of the Outstanding Debentures.
Any resolution passed or decision taken at any meeting of Holders of
Debentures duly held in accordance with this Section shall be binding on all
the Holders of Debentures, whether or not present or represented at the
meeting.
SECTION 10.5 DETERMINATION OF VOTING RIGHTS; CONDUCT AND ADJOURNMENT
OF MEETINGS.
(a) Notwithstanding any other provisions of this Indenture, the
Trustee may make such reasonable regulations as it may deem advisable for any
meeting of Holders of Debentures in regard to proof of the holding of
Debentures and of the appointment of proxies and in regard to the appointment
and duties of inspectors of votes, the submission and examination of proxies,
certificates and other evidence of the right to vote, and such other matters
concerning the conduct of the meeting as it shall deem appropriate. Except as
otherwise permitted or required by any such regulations, the holding of
Debentures shall be proved in the manner specified in Section 9.1 and the
appointment of any proxy shall be proved in the manner specified in Section
9.1 or by having the signature of the person executing the proxy witnessed or
guaranteed by any trust company, bank or banker authorized by Section 9.1.
Such regulations may provide that written instruments appointing proxies,
regular on their face, may be presumed valid and genuine without the proof
specified in Section 9.1 or other proof.
(b) The Trustee shall, by an instrument in writing, appoint a
temporary chairman of the meeting, unless the meeting shall have been called
by the Company or by Holders of Debentures as provided in Section 10.2(b), in
which case the Company or the Holders of Debentures calling the meeting, as
the case may be, shall in like manner appoint a temporary chairman. A
permanent chairman and a permanent secretary of the meeting shall be elected
by vote of the Persons entitled to vote a majority in principal amount of the
Outstanding Debentures represented at the meeting.
(c) At any meeting each Holder of a Debenture or proxy shall be
entitled to one vote for each $ 50 principal amount of the Outstanding
Debentures held or represented by him; provided, however, that no vote shall
be cast or counted at any meeting in respect of any Debenture challenged as
not Outstanding
50
and ruled by the chairman of the meeting to be not Outstanding. The chairman
of the meeting shall have no right to vote, except as a Holder of a Debenture
or proxy.
(d) Any meeting of Holders of Debentures duly called pursuant to
Section 10.2 at which a quorum is present may be adjourned from time to time
by Persons entitled to vote a majority in principal amount of the Outstanding
Debentures represented at the meeting; and the meeting may be held as so
adjourned without further notice.
SECTION 10.6 COUNTING VOTES AND RECORDING ACTION OF MEETINGS.
The vote upon any resolution submitted to any meeting of Holders of
Debentures shall be by written ballots on which shall be subscribed the
signatures of the Holders of Debentures or of their representatives by proxy
and the principal amounts and serial numbers of the Outstanding Debentures
held or represented by them. The permanent chairman of the meeting shall
appoint two inspectors of votes who shall count all votes cast at the meeting
for or against any resolution and who shall make and file with the secretary
of the meeting their verified written reports in duplicate of all votes cast
at the meeting. A record, at least in duplicate, of the proceedings of each
meeting of Holders of Debentures shall be prepared by the secretary of the
meeting and there shall be attached to said record the original reports of the
inspectors of votes on any vote by ballot taken thereat and affidavits by one
or more persons having knowledge of the facts setting forth a copy of the
notice of the meeting and showing that said notice was given as provided in
Section 10.2 and, if applicable, Section 10.4. Each copy shall be signed and
verified by the affidavits of the chairman and secretary of the meeting and
one such copy shall be delivered to the Company, and another to the Trustee to
be preserved by the Trustee, the latter to have attached thereto the ballots
voted at the meeting. Any record so signed and verified shall be conclusive
evidence of the matters therein stated.
ARTICLE XI
SUPPLEMENTAL INDENTURES
SECTION 11.1 SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS.
Without the consent of any Holders of Debentures, 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:
(a) 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 Debentures; or
(b) to add to the covenants of the Company for the benefit of the
Holders of Debentures or to surrender any right or power herein
conferred upon the Company; or
(c) to add any additional Events of Default; or
(d) to evidence and provide for the acceptance of appointment
thereunder by a successor Trustee with respect to the Debentures 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 8.8; or
(e) to make provision with respect to the conversion rights of
Holders pursuant to the requirements of Article XV; or
51
(f) 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
shall not, in the opinion of the Board of Directors, adversely affect
the interests of the Holders of Debentures in any material respect;
or
(g) to make provision for transfer procedures, certification,
book-entry provisions, the form of restricted securities legends, if
any, to be placed on the Debentures, and all other matters required
pursuant to Section 2.5 or otherwise necessary, desirable, or
appropriate in connection with the issuance of Debentures to holders
of Trust Securities in the event of a distribution of Debentures by
the Insignia Trust if a Special Event occurs and is continuing.
SECTION 11.2 SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS.
With the consent of the Holders of not less than a majority in
aggregate principal amount of the Outstanding Debentures 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 Debentures under this Indenture; provided, however,
that no such supplemental indenture shall, without the consent of each Holder
of each Outstanding Debenture,
(a) change the Stated Maturity of the principal of, or (except
as contemplated by Section 2.3(c)) any installment of interest
(including any Additional Payments) on, any Debenture, or reduce the
principal amount thereof or the rate of interest thereon or any
premium payable upon the redemption thereof, or change the coin or
currency in which any Debenture 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
(b) reduce the percentage in principal amount of the Outstanding
Debentures, the consent of whose Holders is required for any such
supplemental indenture, or the consent of whose Holders is required
for any waiver of certain defaults hereunder and their consequences
provided for in this Indenture, or reduce the requirements of Section
10.4 for quorum or voting; or
(c) modify any of the provisions of this Section or Section
7.13, 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
Debenture; or
(d) make any change that adversely affects the right to convert
any Debenture into Common Stock as provided in Article XV or decrease
the conversion rate or increase the conversion price of any such
Debenture, or
(e) make any change in Article IV that adversely affects the
rights of any Holders of Outstanding Debentures.
So long as any Convertible Preferred Securities are outstanding, no
supplemental indenture shall, without the consent of each holder of
Convertible Preferred Securities, amend Section 7.16 so as to eliminate or
materially impair the right of such holders to institute Direct Actions in the
circumstances set forth therein.
52
It shall not be necessary for any Act of Holders of Debentures 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 11.3 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 8.2) shall be fully protected in relying
upon, an Opinion of Counsel stating that the execution of such supplemental
indenture is authorized or permitted by this Indenture. The Trustee may, but
shall not be obligated to, enter into any such supplemental indenture which
affects the Trustee's own rights, duties or immunities under this Indenture or
otherwise.
SECTION 11.4 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 Debentures theretofore or thereafter authenticated and
delivered hereunder shall be bound thereby.
SECTION 11.5 CONFORMITY WITH TRUST INDENTURE ACT.
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act of 1939, as amended, in
effect on such date.
SECTION 11.6 REFERENCE IN DEBENTURES TO SUPPLEMENTAL INDENTURES.
Debentures 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 as to any matter provided for in such
supplemental indenture. If the Company shall so determine, new Debentures so
modified as to conform, in the opinion of 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
Debentures.
ARTICLE XII
CONSOLIDATION, MERGER, SALE OR CONVEYANCE
SECTION 12.1 COMPANY MAY CONSOLIDATE, ETC. ON CERTAIN TERMS.
The Company shall not merge or consolidate with any other corporation
or sell or convey all or substantially all of its assets to any Person, unless
(a) either the Company shall be the continuing corporation, or the successor
corporation (if other than the Company) shall be a corporation organized under
the laws of the United States of America or any State thereof and shall
expressly assume the due and punctual payment of the principal of and interest
on all the Debentures, according to their tenor, and the due and punctual
performance and observance of all of the covenants and conditions of this
Indenture to be performed or observed by the Company, by supplemental
indenture satisfactory to the Trustee, executed and delivered to the Trustee
by such corporation, and (b) the Company or such successor corporation, as
53
the case may be, shall not, immediately after such merger or consolidation, or
such sale or conveyance, be in default in the performance of any such covenant
or condition.
SECTION 12.2 SUCCESSOR CORPORATION SUBSTITUTED.
In case of any such consolidation, merger, sale or conveyance, and
following such an assumption by the successor corporation, such successor
corporation shall succeed to and be substituted for the Company, with the same
effect as if it had been named herein. Such successor corporation may cause to
be signed, and may issue either in its own name or in the name of the Company
prior to such succession any or all of the Debentures issuable hereunder which
theretofore shall not have been signed by the Company and delivered to the
Trustee; and, upon the order of such successor corporation instead of the
Company and subject to all the terms, conditions and limitations in this
Indenture prescribed, the Trustee shall authenticate and shall deliver any
securities which previously shall have been signed and delivered by the
officers of the Company, to the Trustee for authentication, and any Debentures
which such successor corporation thereafter shall cause to be signed and
delivered to the Trustee for that purpose. All of the Debentures so issued
shall in all respects have the same legal rank and benefit under this
Indenture as the Debentures theretofore or thereafter issued in accordance
with the terms or this Indenture as though all of such Debentures had been
issued at the date of the execution hereof.
In case of any such consolidation, merger, sale or conveyance such
changes in phraseology and form (but not in substance) may be made in the
Debentures thereafter to be issued as may be appropriate.
In the event of any such sale or conveyance (other than a conveyance
by way of lease) the Company or any successor corporation which shall
theretofore have become such in the manner described in this Article shall be
discharged from all obligations and covenants under this Indenture and the
Debentures and may be liquidated and dissolved.
SECTION 12.3 OPINION OF COUNSEL TO TRUSTEE.
The Trustee may receive an Opinion of Counsel, prepared in accordance
with Section 16.1, as conclusive evidence that any such consolidation, merger,
sale, lease or conveyance, and any such assumption, and any such liquidation
or dissolution, complies with the applicable provisions of this Indenture.
ARTICLE XIII
SATISFACTION AND DISCHARGE
SECTION 13.1 SATISFACTION AND DISCHARGE OF INDENTURE.
This Indenture shall upon Company Request cease to be of further
effect (except as to any surviving rights of registration of transfer or
exchange of Debentures herein expressly provided for), and the Trustee, at the
expense of the Company, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture, when:
(a) either
(1) all Debentures theretofore authenticated and delivered
(other than (i) Debentures which have been destroyed, lost or
stolen and which have been replaced or paid
54
as provided in Section 2.6, and (ii) Debentures 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 5.3) have been delivered to the Trustee for
cancellation; or
(2) all such Debentures not theretofore delivered to the
Trustee for cancellation,
(i) have become due and payable, or
(ii) will become due and payable at their Stated
Maturity within one year, or
(iii) are to be called for redemption within one year
under arrangements satisfactory to the Trustee for the
giving of notice of redemption by the Trustee in the name,
and at the expense, of the Company,
and the Company, in the case of (i), (ii) or (iii) above, has
deposited or caused to be deposited with the Trustee as trust
funds in trust for the purpose, an amount sufficient to pay and
discharge the entire indebtedness on such Debentures not
theretofore delivered to the Trustee for cancellation, for
principal (and premium, if any) and any interest (including any
Additional Payments) to the date of such deposit (in the case of
Debentures which have become due and payable) or to the Stated
Maturity or Redemption Date, as the case may be;
(b) the Company has paid or caused to be paid all other sums payable
hereunder by the Company; and
(c) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that all conditions precedent
herein provided for relating to the satisfaction and discharge of this
Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 8.6, the obligations
of the Company to any Authenticating Agent under SECTION 8.13 and, if money
shall have been deposited with the Trustee pursuant to clause (a)(2) of this
Section, the obligations of the Trustee under Section 13.2 and the last
paragraph of Section 5.3 shall survive.
SECTION 13.2 APPLICATION OF TRUST MONEY.
Subject to the provisions of the last paragraph of Section 5.3, all
money deposited with the Trustee pursuant to Section 13.1 shall be held in
trust and applied by it, in accordance with the provisions of the Debentures
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 premium,
if any) and any interest for whose payment such money has been deposited with
the Trustee.
55
ARTICLE XIV
IMMUNITY OF INCORPORATORS, SHAREHOLDERS,
OFFICERS, DIRECTORS AND EMPLOYEES.
No recourse under or upon any obligation, covenant or agreement of
this Indenture, or of a Debenture, or for any claim based thereon or otherwise
in respect thereof, shall be had against any incorporator, shareholder,
officer, director or employee, as such, past, present or future, of the
Company or of any successor corporation, either directly or through the
Company, whether by virtue of any constitution, statute or rule of law, or by
the enforcement of any assessment or penalty or otherwise; it being expressly
understood that this Indenture and the obligations issued hereunder are solely
corporate obligations of the Company, and that no such personal liability
whatever shall attach to, or is or shall be incurred by, the incorporators,
shareholders, officers, directors or employees, as such, of the Company or of
any successor corporation, or any of them, because of the creation of the
indebtedness hereby authorized, or under or by reason of the obligations or
agreements contained in this Indenture or in any of the Debentures or implied
therefrom; and that any and all such personal liability, either at common law
or in equity or by constitution or statute, of, and any and all such rights
and claims against, every such incorporator, shareholder, officer, director or
employee, as such, because of the creation of the indebtedness hereby
authorized, or under or by reason of the obligations or agreements contained
in this Indenture or in any of the Debentures or implied therefrom, are hereby
expressly waived and released as a condition of, and as a consideration for,
the execution of this Indenture and the issue of such Debentures.
All payments of interest and other amounts, if any, to be made by the
Trustee hereunder shall be made only from the money deposited with the Trustee
and only to the extent that the Trustee shall have sufficient income or
proceeds to make such payments in accordance with the terms of this Indenture,
and each Holder thereof, by its acceptance of a Debenture, agrees that it will
look solely to the income and proceeds deposited with the Trustee to the
extent available for distribution to such Holder as provided and that the
Trustee, its incorporators, shareholders, officers, directors and employees
are not personally liable in any manner to such Holder for any amounts payable
or any liability under this Indenture or any Debenture.
ARTICLE XV
CONVERSION OF CONVERTIBLE DEBENTURES
SECTION 15.1 CONVERSION RIGHTS.
Subject to and upon compliance with the provisions of this Article
XV, the Debentures are convertible, at the option of the Holder, at any time
beginning December 31, 1996 and prior to the close of business on September
30, 2016 (or, in the case of Debentures called for redemption, prior to the
close of business on the Business Day prior to the corresponding Redemption
Date) into fully paid and nonassessable shares of Common Stock at an initial
conversion rate of 1.8868 shares of Common Stock for each $50 in aggregate
principal amount of Debentures (equal to a Conversion Price of $26.50 per
share of Common Stock), subject to adjustment as described in this Article XV.
A Holder of Debentures may convert any portion of the principal amount of the
Debentures into that number of fully paid and nonassessable shares of Common
Stock obtained by dividing the principal amount of the Debentures to be
converted by such Conversion Price. All calculations under this Article XV
shall be made to the nearest cent or to the nearest 1/100th of a share, as the
case may be.
56
SECTION 15.2 CONVERSION PROCEDURES.
(a) In order to convert all or a portion of the Debentures,
the Holder thereof shall deliver to the Conversion Agent an irrevocable Notice
of Conversion setting forth the principal amount of Debentures to be
converted, together with the name or names, if other than the Holder, in which
the shares of Common Stock should be issued upon conversion and, if such
Debentures are definitive Debentures, surrender to the Conversion Agent the
Debentures to be converted, duly endorsed or assigned to the Company or in
blank. In addition, a holder of Convertible Preferred Securities may exercise
its right under the Declaration to convert such Convertible Preferred
Securities into Common Stock by delivering to the Conversion Agent an
irrevocable Notice of Conversion setting forth the information called for by
the preceding sentence and directing the Conversion Agent (i) to exchange such
Convertible Preferred Securities for a portion of the Debentures held by the
Insignia Trust (at an exchange rate of $50 principal amount of Debentures for
each Convertible Preferred Security) and (ii) to immediately convert such
Debentures, on behalf of such holder, into Common Stock pursuant to this
Article XV and, if such Convertible Preferred Securities are in definitive
form, surrendering such Convertible Preferred Securities, duly endorsed or
assigned to the Insignia Trust or in blank. So long as any Convertible
Preferred Securities are outstanding, the Insignia Trust shall not convert any
Debentures except pursuant to a Notice of Conversion delivered to the
Conversion Agent by a holder of Convertible Preferred Securities.
If a Notice of Conversion is delivered on or after a Regular
Record Date and prior to the subsequent Interest Payment Date, the Holder on
the Regular Record Date will be entitled to receive the interest payable on
the subsequent Interest Payment Date on the portion of Debentures to be
converted notwithstanding the conversion thereof prior to such Interest
Payment Date. Except as otherwise provided in the immediately preceding
sentence, in the case of any Debenture which is converted, interest whose
payment date is after the date of conversion of such Debenture shall not be
payable, and the Company shall not make nor be required to make any other
payment, adjustment or allowance with respect to accrued but unpaid interest
(including Additional Payments) on the Debentures being converted, which shall
be deemed to be paid in full. Each conversion shall be deemed to have been
effected immediately prior to the close of business on the day on which the
Notice of Conversion was received (the "Conversion Date") by the Conversion
Agent from the Holder or from a holder of the Convertible Preferred Securities
effecting a conversion thereof pursuant to its conversion rights under the
Declaration, as the case may be.
The Person or Persons entitled to receive Common Stock
issuable upon such conversion shall be treated for all purposes as the record
holder or holders of such Common Stock as of the Conversion Date. As promptly
as practicable on or after the Conversion Date, the Company shall issue and
deliver at the office of the Conversion Agent, unless otherwise directed by
the Holder in the Notice of Conversion, a certificate or certificates for the
number of full shares of Common Stock issuable upon such conversion, together
with the cash payment, if any, in lieu of any fraction of any share to the
Person or Persons entitled to receive the same. The Conversion Agent shall
deliver such certificate or certificates to such Person or Persons.
(b) The Company's delivery upon conversion of the fixed
number of shares of Common Stock into which the Debentures are convertible
(together with the cash payment, if any, in lieu of fractional shares) shall
be deemed to satisfy the Company's obligation to pay the principal amount at
Maturity of the portion of Debentures so converted and any unpaid interest
(including Additional Payments) accrued on such Debentures at the time of such
conversion.
(c) No fractional shares of Common Stock will be issued as a
result of conversion, but in lieu thereof, the Company shall pay to the
Conversion Agent a cash adjustment in an amount equal to the same fraction of
the Closing Price of such fractional interest on the date on which the
Debentures
57
were duly surrendered to the Conversion Agent for conversion, or, if such day
is not a Trading Day, on the next Trading Day, and the Conversion Agent in
turn will make such payment, if any, to the Holder of the Debentures or the
holder of the Convertible Preferred Securities so converted.
(d) In the event of the conversion of any Debenture in part
only, a new Debenture or Debentures for the unconverted portion thereof will
be issued in the name of the Holder thereof upon the cancellation thereof in
accordance with this Section 15.2.
(e) In effecting the conversion transactions described in
this Section 15.2, the Conversion Agent is acting as agent of the holders of
Convertible Preferred Securities (in the exchange of Convertible Preferred
Securities for Debentures) and as agent of the Holders of Debentures (in the
conversion of Debentures into Common Stock), as the case may be. The
Conversion Agent is hereby authorized (i) to exchange Debentures held by the
Insignia Trust from time to time for Convertible Preferred Securities in
connection with the conversion of such Convertible Preferred Securities in
accordance with this Article XV and (ii) to convert all or a portion of the
Debentures into Common Stock and thereupon to deliver such shares of Common
Stock in accordance with the provisions of this Article XV and to deliver to
the Insignia Trust a new Debenture or Debentures for any resulting unconverted
principal amount.
SECTION 15.3 CONVERSION PRICE ADJUSTMENTS.
The Conversion Price shall be adjusted from time to time as follows:
(a) In case the Company shall, while any of the Debentures
are outstanding, (i) pay a dividend or make a distribution with respect to
Common Stock in shares of Common Stock, (ii) subdivide outstanding shares of
Common Stock, (iii) combine outstanding shares of Common Stock into a smaller
number of shares or (iv) issue by reclassification of shares of Common Stock
any shares of capital stock of the Company, the conversion privilege and the
Conversion Price for the Debentures shall be adjusted so that the Holder of
any Debenture thereafter surrendered for conversion shall be entitled to
receive the number of shares of capital stock of the Company which such Holder
would have owned immediately following such action had such Debenture been
converted immediately prior thereto. An adjustment made pursuant to this
Subsection (a) shall become effective immediately after the record date in the
case of a dividend or other distribution and shall become effective
immediately after the effective date in case of a subdivision, combination or
reclassification (or immediately after the record date if a record date shall
have been established for such event). If, as a result of an adjustment made
pursuant to this Subsection (a), the Holder of any Debenture thereafter
surrendered for conversion shall become entitled to receive shares of two or
more classes or series of capital stock of the Company, the Board of Directors
(whose determination shall be conclusive and shall be described in a Board
Resolution filed with the Trustee) shall determine the allocation of the
adjusted Conversion Price for the Debentures between or among shares of such
classes or series of capital stock.
(b) In case the Company shall, while any of the Debentures
are outstanding, issue rights or warrants to all holders of Common Stock
entitling them (for a period expiring within 45 days after the record date
mentioned below) to subscribe for or purchase shares of Common Stock at a
price per share less than the current market price per share of Common Stock
(as determined pursuant to Subsection (g) below) on the record date mentioned
below, the Conversion Price for the Debentures shall be adjusted so that the
Conversion Price shall equal the price determined by multiplying the
Conversion Price in effect immediately prior to the date of issuance of such
rights or warrants by a fraction of which the numerator shall be the number of
shares of Common Stock outstanding on the date of issuance of such rights or
warrants plus the number of shares which the aggregate offering price of the
total number of shares so
58
offered for subscription or purchase would purchase at such current market
price, and of which the denominator shall be the number of shares of Common
Stock outstanding on the date of issuance of such rights or warrants plus the
number of additional shares of Common Stock offered for subscription or
purchase. Such adjustment shall become effective immediately after the record
date for the determination of stockholders entitled to receive such rights or
warrants. To the extent that shares of Common Stock are not so delivered after
the expiration of such rights or warrants, the Conversion Price shall be
readjusted to the Conversion Price which would then be in effect if such date
fixed for the determination of stockholders entitled to receive such rights or
warrants had not been fixed. For the purposes of this subsection, the number
of shares of Common Stock at any time outstanding shall not include shares
held in the treasury of the Company. The Company shall not issue any rights or
warrants in respect of shares of Common Stock held in the treasury of the
Company. In case any rights or warrants referred to in this subsection in
respect of which an adjustment shall have been made shall expire unexercised
within 45 days after the same shall have been distributed or issued by the
Company, the Conversion Price shall be readjusted at the time of such
expiration to the Conversion Price that would have been in effect if no
adjustment had been made on account of the distribution or issuance of such
expired rights or warrants.
(c) Subject to the last sentence of this subsection (c), in
case the Company shall, by dividend or otherwise, distribute to all holders of
Common Stock evidences of its indebtedness, shares of any class or series of
capital stock, cash or assets or rights or warrants to subscribe for or
purchase any of its securities (excluding any rights or warrants referred to
in subsection (b), any dividend or distribution paid exclusively in cash and
any dividend or distribution referred to in subsection (a) of this Section
15.3), the Conversion Price shall be reduced so that the Conversion Price
shall equal the price determined by multiplying the Conversion Price in effect
immediately prior to the effectiveness of the Conversion Price reduction
contemplated by this subsection (c) by a fraction of which the numerator shall
be the current market price per share (determined as provided in subsection
(g)) of the Common Stock on the date fixed for the payment of such
distribution (the "Reference Date") less the fair market value (as determined
in good faith by the Board of Directors, whose determination shall be
conclusive and described in a resolution of the Board of Directors), on the
Reference Date, of the portion of the evidences of indebtedness, shares of
capital stock, cash and assets so distributed or of such subscription rights
or warrants applicable to one share of Common Stock and of which the
denominator shall be such current market price per share of the Common Stock,
such reduction to become effective immediately prior to the opening of
business on the day following the Reference Date; provided, however, that in
the event the numerator shall be less than one, in lieu of the foregoing
adjustment, adequate provision shall be made so that each Holder of Debentures
shall have the right to receive upon conversion the amount of such
distribution such Holder would have received had such Holder converted each
Debenture immediately prior to the Reference Date. In the event that such
dividend or distribution is not so paid or made, the Conversion Price shall
again be adjusted to be the Conversion Price which would then be in effect if
such dividend or distribution had not occurred. If the Board of Directors
determines the fair market value of any distribution for purposes of this
subsection (c) by reference to the actual or when issued trading market for
any securities comprising such distribution, it must in doing so consider the
prices in such market over the same period used in computing the current
market price per share of Common Stock (determined as provided in subsection
(g)). For purposes of this subsection (c), any dividend or distribution that
includes shares of Common Stock or rights or warrants to subscribe for or
purchase shares of Common Stock shall be deemed instead to be (i) a dividend
or distribution of the evidences of indebtedness, shares of capital stock,
cash or assets other than such shares of Common Stock or such rights or
warrants (making any Conversion Price reduction required by this subsection
(c)) immediately followed by (ii) a dividend or distribution of such shares of
Common Stock or such rights or warrants (making any further Conversion Price
reduction required by subsection (a) or (b)), except (A) the Reference Date of
such dividend or distribution as defined in this subsection (c) shall be
substituted as (1) "the record date in the case of a dividend or other
distribution," and (2) "the record date for the determination of stockholders
entitled to receive such rights or warrants" and (3) "the date fixed for
59
such determination" within the meaning of subsections (a) and (b) and (B) any
shares of Common Stock included in such dividend or distribution shall not be
deemed outstanding for purposes of computing any adjustment of the Conversion
Price in subsection (a).
(d) In case the Company shall pay or make a dividend or
other distribution on the Common Stock exclusively in cash (excluding any
quarterly cash dividend on Common Stock to the extent that the aggregate cash
dividend per share of Common Stock in any quarter does not exceed the greater
of (i) the amount per share of Common Stock of the immediately preceding
quarterly dividend on Common Stock to the extent such preceding quarterly
dividend did not require an adjustment of the Conversion Price pursuant to
this subsection (d) (as adjusted to reflect subdivisions or combinations of
Common Stock), and (ii) 3.125% of the current market price per share
determined as provided in subsection (g), and excluding any dividend or
distribution in connection with the liquidation, dissolution or winding-up of
the Company), the Conversion Price shall be reduced so that the same shall
equal the price determined by multiplying the Conversion Price in effect
immediately prior to the effectiveness of the Conversion Price reduction
contemplated by this subsection (d) by a fraction of which the numerator shall
be the current market price per share (determined as provided in subsection
(g)) of Common Stock on the date fixed for the payment of such distribution
less the amount of cash so distributed (and not excluded as provided above)
applicable to one share of Common Stock and of which the denominator shall be
such current market price per share of the Common Stock (determined as
provided in subsection (g)), such reduction to become effective immediately
prior to the opening of business on the day following the date fixed for the
payment of such distribution; provided, however, that in the event the portion
of the cash so distributed applicable to one share of Common Stock is equal to
or greater than the current market price per share (as defined in subsection
(g)) of Common Stock on the record date mentioned above, in lieu of the
foregoing adjustment, adequate provision shall be made so that each Holder of
Debentures shall have the right to receive upon conversion the amount of cash
such Holder would have received had such Holder converted each Debenture
immediately prior to the record date for the distribution of the cash. If an
adjustment is required to be made pursuant to this subsection (d) as a result
of a distribution that is a quarterly dividend, such adjustment shall be based
upon the amount by which such distribution exceeds the amount of the quarterly
cash dividend permitted to be excluded as provided above. If an adjustment is
required to be made pursuant to this subsection (d) as a result of a
distribution that is not a quarterly dividend, such adjustment shall be based
upon the full amount of the distribution. In the event that such dividend or
distribution is not so paid or made, the Conversion Price shall again be
adjusted to be the Conversion Price which would then be in effect if such
record date had not been fixed.
(e) In case a tender or exchange offer (other than an
odd-lot offer) made by the Company or any Subsidiary of the Company for all or
any portion of the Common Stock shall expire and such tender or exchange offer
shall involve the payment by the Company or such Subsidiary of consideration
per share of Common Stock having a fair market value (as determined in good
faith by the Board of Directors, whose determination shall be conclusive and
described in a resolution of the Board of Directors) at the last time (the
"Expiration Time") tenders or exchanges may be made pursuant to such tender or
exchange offer (as it shall have been amended) that exceeds the Closing Price
of the Common Stock on the Trading Day next succeeding the Expiration Time,
the Conversion Price shall be reduced so that the same shall equal the price
determined by multiplying the Conversion Price in effect immediately prior to
the effectiveness of the Conversion Price reduction contemplated by this
subsection (e) by a fraction (which shall not be greater than one) of which
the numerator shall be the number of shares of Common Stock outstanding
(including any tendered or exchanged shares) at the Expiration Time multiplied
by the Closing Price of Common Stock on the Trading Day next succeeding the
Expiration Time and of which the denominator shall be the sum of (i) the fair
market value (determined as aforesaid) of the aggregate consideration payable
to stockholders based on the acceptance (up to any maximum specified in the
terms of the tender or exchange offer) of all shares validly tendered or
exchanged and not withdrawn as
60
of the Expiration Time (the shares deemed so accepted, up to any such maximum,
being referred to as the "Purchased Shares") and (ii) the product of the
number of shares of the Common Stock outstanding (less any Purchased Shares)
at the Expiration Time and the Closing Price of Common Stock on the Trading
Day next succeeding the Expiration Time, such reduction to become
retroactively effective immediately prior to the opening of business on the
day following the Expiration Time.
(f) In case a tender or exchange offer made by a Person
other than the Company or any Subsidiary of the Company for all or any portion
of the Common Stock shall expire and such tender or exchange offer shall
involve the payment by a Person other than the Company or any Subsidiary of
the Company of consideration per share of Common Stock having a fair market
value (as determined in good faith by the Board of Directors, whose
determination shall be conclusive and described in a resolution of the Board
of Directors) at the applicable Expiration Time that exceeds the Closing Price
of the Common Stock on the Trading Day next succeeding the applicable
Expiration Time in which as of the closing date of the offer the Board of
Directors of the Company is not recommending rejection of the offer, the
Conversion Price shall be reduced so that the same shall equal the price
determined by multiplying the Conversion Price in effect immediately prior to
the effectiveness of the Conversion Price reduction contemplated by this
subsection (f) by a fraction (which shall not be greater than one) of which
the numerator shall be the number of shares of Common Stock outstanding
(including any tendered or exchanged shares) at the Expiration Time multiplied
by the Closing Price of the Common Stock on the Trading Day next succeeding
the Expiration Time and of which the denominator shall be the sum of (i) the
fair market value (determined as aforesaid) of the aggregate consideration
payable to stockholders based on the acceptance (up to any maximum specified
in the terms of the tender or exchange offer) of all shares validly tendered
or exchanged and not withdrawn as of the Expiration Time (the shares deemed so
accepted, up to any such maximum, being referred to as the "Purchased Shares")
and (ii) the product of the number of shares of Common Stock outstanding (less
any Purchased Shares) at the Expiration Time and the Closing Price of the
Common Stock on the Trading Day next succeeding the Expiration Time, such
reduction to become retroactively effective immediately prior to the opening
of business on the day following the Expiration Time; provided, however, that
the reduction of the Conversion Price contemplated by this subsection (f) will
only be made if the tender offer or exchange offer is made for an amount which
increases that Person's ownership of Common Stock to more than 25% of the
total shares of Common Stock outstanding and provided, further, that the
reduction of the Conversion Price contemplated by this subsection (f) will not
be made if as of the close of the offer, the offering documents with respect
to such offer disclose a plan or an intention to cause the Company to engage
in a consolidation or merger of the Company or a sale of all or substantially
all of the assets of the Company.
(g) For the purpose of any computation under subsections
(b), (c) or (d), the current market price per share of Common Stock on any
date in question shall be deemed to be the average of the daily Closing Prices
for the ten Trading Day period ending on the earlier of the day in question
and, if applicable, the day before the "ex" date with respect to the issuance
or distribution requiring such computation; provided, however, that if more
than one event occurs that would require an adjustment pursuant to subsections
(a) through (f), inclusive, the Board of Directors may make such adjustments
to the Closing Prices during such ten Trading Day period as it deems
appropriate to effectuate the intent of the adjustments in this Section 15.3,
in which case any such determination by the Board of Directors shall be set
forth in a Board Resolution and shall be conclusive. For purposes of this
paragraph, the term "ex" date, (1) when used with respect to any issuance or
distribution, means the first date on which the Common Stock trades regular
way on the New York Stock Exchange or on such successor securities exchange as
the Common Stock may be listed or in the relevant market from which the
Closing Prices were obtained without the right to receive such issuance or
distribution, and (2) when used with respect to any tender or exchange offer,
means the first date on which the Common Stock trades regular way on such
securities exchange or in such market after the Expiration Time of such offer.
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(h) The Company may make such reductions in the Conversion
Price, in addition to those required by subsections (a) through (f), as the
Board of Directors considers to be advisable to avoid or diminish any income
tax to holders of Common Stock or rights to purchase Common Stock resulting
from any dividend or distribution of stock (or rights to acquire stock) or
from any event treated as such for income tax purposes. The Company from time
to time may elect to reduce the Conversion Price by any amount for any period
of time if the period is at least 20 days, the reduction is irrevocable during
the period, and the Board of Directors shall have made a determination that
such reduction would be in the best interest of the Company, which
determination shall be conclusive. Whenever the Conversion Price is reduced
pursuant to the preceding sentence, the Company shall mail to Holders of
record of the Debentures a notice of the reduction at least 15 days prior to
the date the reduced Conversion Price takes effect, and such notice shall
state the reduced Conversion Price and the period it will be in effect.
(i) No adjustment in the Conversion Price shall be required
unless such adjustment would require an increase or decrease of at least 1% in
the Conversion Price; provided, however, that any adjustments which by reason
of this subsection (i) are not required to be made shall be carried forward
and taken into account in determining whether any subsequent adjustment shall
be required.
(j) If any action would require adjustment of the Conversion
Price pursuant to more than one of the provisions described above, only one
adjustment shall be made and such adjustment shall be the amount of adjustment
that has the highest absolute value to the Holder of Debentures.
SECTION 15.4 MERGER, CONSOLIDATION, OR SALE OF ASSETS.
(a) In the event that the Company shall be a party to any
transaction, (including without limitation (i) any recapitalization or
reclassification of the Common Stock (other than a change in par value, or
from par value to no par value, or from no par value to par value, or as a
result of a subdivision or combination of the Common Stock), (ii) any
consolidation of the Company with, or merger of the Company into, any other
Person, any merger of another Person into the Company (other than a merger
which does not result in a reclassification, conversion, exchange or
cancellation of outstanding shares of Common Stock of the Company), (iii) any
sale or transfer of all or substantially all of the assets of the Company or
(iv) any compulsory share exchange), pursuant to which either shares of Common
Stock shall be converted into the right to receive other securities, cash or
other property, or, in the case of a sale or transfer of all or substantially
all of the assets of the Company, the holders of Common Stock shall be
entitled to receive other securities, cash or other property, then lawful
provision shall be made as part of the terms of such transaction whereby the
Holder of each Debenture then outstanding shall have the right thereafter to
convert such Debenture only into the kind and amount of the securities, cash
or other property that would have been receivable upon such recapitalization,
reclassification, consolidation, merger, sale, transfer or share exchange by a
holder of the number of shares of Common Stock issuable upon conversion of
such Debenture immediately prior to such recapitalization, reclassification,
consolidation, merger, sale, transfer or share exchange, subject to funds
being legally available for such purpose under applicable law at the time of
such conversion.
(b) The company or the Person formed by such consolidation
or resulting from such merger or which acquired such assets or which acquires
the Company's shares, as the case may be, shall make provision in its
certificate or articles of incorporation or other constituent document to
establish such right. Such certificate or articles of incorporation or other
constituent document shall provide for adjustments which, for events
subsequent to the effective date of such certificate or articles of
incorporation or other constituent document, shall be as nearly equivalent as
may be practicable to the adjustments provided for in this Article XV. The
above provisions shall similarly apply to successive transactions of the
foregoing type.
62
SECTION 15.5 NOTICE OF ADJUSTMENTS OF CONVERSION PRICE.
Whenever the Conversion Price is adjusted as herein provided:
(a) the Company shall compute the adjusted Conversion Price
and shall prepare a certificate signed by the Chief Financial Officer or the
Treasurer of the Company setting forth the adjusted Conversion Price and
showing in reasonable detail the facts upon which such adjustment is based,
and such certificate shall forthwith be filed with the Trustee and the
transfer agent for the Convertible Preferred Securities and the Debentures;
and
(b) a notice stating the Conversion Price has been adjusted
and setting forth the adjusted Conversion Price shall as soon as practicable
be mailed by the Company to all record holders of Convertible Preferred
Securities and the Debentures at their last addresses as they appear upon the
transfer books of the Insignia Trust and the Company.
SECTION 15.6 PRIOR NOTICE OF CERTAIN EVENTS.
In case:
(a) the Company shall (i) declare any dividend (or any other
distribution) on its Common Stock, other than (A) a dividend payable in shares
of Common Stock or (B) a dividend payable in cash that would not require an
adjustment pursuant to Section 15.3(c) or (d) or (ii) authorize a tender or
exchange offer that would require an adjustment pursuant to Section 15.3(e);
(b) the Company shall authorize the granting to all holders
of Common Stock of rights or warrants to subscribe for or purchase any shares
of stock of any class or series or of any other rights or warrants;
(c) of any reclassification of Common Stock (other than a
subdivision or combination of the outstanding Common Stock, or a change in par
value, or from par value to no par value, or from no par value to par value),
or of any consolidation or merger to which the Company is a party and for
which approval of any stockholders of the Company shall be required, or of the
sale or transfer of all or substantially all of the assets of the Company or
of any compulsory share exchange whereby the Common Stock is converted into
other securities, cash or other property; or
(d) of the voluntary or involuntary dissolution, liquidation
or winding up of the Company; then the Company shall (i) if any Convertible
Preferred Securities are outstanding, cause to be filed with the Trustee and
the transfer agent for the Convertible Preferred Securities, and shall cause
to be mailed to the holders of record of the Convertible Preferred Securities,
at their last addresses as they shall appear upon the transfer books of the
Insignia Trust or (ii) cause to be filed with the Trustee and mailed to all
Holders at their last addresses as they shall appear in the Debenture
Register, at least 15 days prior to the applicable record or effective date
hereinafter specified, a notice stating (A) the date on which a record (if
any) is to be taken for the purpose of such dividend, distribution, rights or
warrants or, if a record is not to be taken, the date as of which the holders
of Common Stock of record to be entitled to such dividend, distribution,
rights or warrants are to be determined or (B) the date on which such
reclassification, consolidation, merger, sale, transfer, share exchange,
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, sale, transfer, share exchange, dissolution, liquidation or
63
winding up (but no failure to mail such notice or any defect therein or in the
mailing thereof shall affect the validity of the corporate action required to
be specified in such notice).
SECTION 15.7 DIVIDEND OR INTEREST REINVESTMENT PLANS.
Notwithstanding the foregoing provisions, the issuance of any shares
of Common Stock pursuant to any plan providing for the reinvestment of
dividends or interest payable on securities of the Company and the investment
of additional optional amounts in shares of Common Stock under any such plan,
and the issuance of any shares of Common Stock or options or rights to
purchase such shares pursuant to any employee benefit plan or program of the
Company or pursuant to any option, warrant, right or exercisable, exchangeable
or convertible security outstanding as of the date hereof, shall not be deemed
to constitute an issuance of Common Stock or exercisable, exchangeable or
convertible securities by the Company to which any of the adjustment
provisions described above applies. There shall also be no adjustment of the
Conversion Price in case of the issuance of any stock (or securities
convertible into or exchangeable for stock) of the Company except as
specifically described in this Article XV.
SECTION 15.8 CERTAIN ADDITIONAL RIGHTS.
In case the Company shall, by dividend or otherwise, declare or make
a distribution on the Common Stock referred to in Section 15.3 (c) or 15.3(d)
(including, without limitation, dividends or distributions referred to in the
last sentence of Section 15.3(d)), the Holder of Debentures, upon the
conversion thereof subsequent to the close of business on the date fixed for
the determination of stockholders entitled to receive such distribution and
prior to the effectiveness of the Conversion Price adjustment in respect of
such distribution, shall also be entitled to receive for each share of Common
Stock into which Debentures are converted, the portion of the shares of Common
Stock, rights, warrants, evidences of indebtedness, shares of capital stock,
cash and assets so distributed applicable to one share of Common Stock;
provided, however, that, at the election of the Company (whose election shall
be evidenced by a resolution of the Board of Directors) with respect to all
Holders so converting, the Company may, in lieu of distributing to such Holder
any portion of such distribution not consisting of cash or securities of the
Company, pay such Holder an amount in cash equal to the fair market value
thereof (as determined in good faith by the Board of Directors, whose
determination shall be conclusive and described in a resolution of the Board
of Directors). If any conversion of Debentures described in the immediately
preceding sentence occurs prior to the payment date for a distribution to
holders of Common Stock which the Holder of Debentures so converted is
entitled to receive in accordance with the immediately preceding sentence, the
Company may elect (such election to be evidenced by a Board Resolution) to
distribute to such Holder a due xxxx for the shares of Common Stock, rights,
warrants, evidences of indebtedness, shares of capital stock, cash or assets
to which such Holder is so entitled, provided, that such due xxxx (a) meets
any applicable requirements of the principal national securities exchange or
other market on which the Common Stock is then traded and (b) requires payment
or delivery of such shares of Common Stock, rights, warrants, evidences of
indebtedness, shares of capital stock, cash or assets no later than the date
of payment or delivery thereof to holders of shares of Common Stock receiving
such distribution.
SECTION 15.9 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 or treasury
shares, for the purpose of effecting the conversion of Debentures, the full
number of shares of Common Stock then issuable upon the conversion of all
outstanding Debentures.
64
SECTION 15.10 PAYMENT OF CERTAIN TAXES UPON CONVERSION.
The Company will pay any and all taxes that may be payable in
respect of the issue or delivery of shares of Common Stock on conversion of
Debentures pursuant hereto. The Company shall not, however, be required to pay
any tax which may be payable in respect of any transfer involved in the issue
and delivery of shares of Common Stock in a name other than that of the Holder
of the Debenture or Debentures to be converted, and no such issue or delivery
shall be made unless and until the person requesting such issue has paid to
the Company the amount of any such tax, or has established, to the
satisfaction of the Company, that such tax has been paid.
SECTION 15.11 NONASSESSABILITY.
The Company covenants that all shares of Common Stock which may be
issued upon conversion of Debentures will upon issue in accordance with the
terms hereof be duly and validly issued and fully paid and nonassessable.
SECTION 15.12 DUTIES OF TRUSTEE REGARDING CONVERSION.
Neither the Trustee nor any Conversion Agent shall at any time be
under any duty or responsibility to any Holder of Debentures that is
convertible into Common Stock 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 (or whether a
supplemental indenture need be entered into), 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, or of any
securities or property, which may at any time be issued or delivered upon the
conversion of any Debentures and neither the Trustee nor any Conversion Agent
makes any representation with respect thereto. Neither the Trustee nor any
Conversion Agent shall be responsible for any failure of the Company to issue,
transfer or deliver any shares of Common Stock or stock certificates or other
securities or property upon the surrender of any Debenture for the purpose of
conversion or to comply with any of the covenants of the Company contained in
this Article XV 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. All Debentures delivered for conversion
shall be delivered to the Trustee to be canceled by or at the direction of the
Trustee, which shall dispose of the same as provided in Section 2.9.
SECTION 15.13 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 Debentures and which shall not be required for such purposes because of
the conversion of such Debentures as provided in this Article XV shall after
such conversion be repaid to the Company by the Trustee upon the Company's
written request.
SECTION 15.14 RESTRICTIONS ON COMMON STOCK ISSUABLE UPON CONVERSION.
(a) Shares of Common Stock to be issued upon conversion of a Debenture
in respect of Restricted Preferred Securities (as defined in the Declaration)
shall bear such restrictive legends as the Company may provide in accordance
with applicable law. Neither the Trustee nor the Conversion Agent
65
shall have any responsibility for the inclusion or content of any such
restrictive legend on such Common Stock; provided, however, that the Trustee
or the Conversion Agent shall have provided to the Company or to the Company's
transfer agent for such Common Stock, prior to or concurrently with a request
to the Company to deliver to such Conversion Agent certificates for such
Common Stock, written notice that the Convertible Preferred Securities
delivered for conversion are Restricted Preferred Securities.
(b) If shares of Common Stock to be issued upon conversion of a
Debenture in respect of Restricted Preferred Securities are to be registered
in a name other than that of the Holder of such Convertible Preferred
Security, then the Person in whose name such shares of Common Stock are to be
registered must deliver to the Conversion Agent a certificate satisfactory to
the Company and signed by such Person, as to compliance with the restrictions
on transfer applicable to such Convertible Preferred Security. Neither the
Trustee nor any Conversion Agent or Registrar shall be required to register in
a name other than that of the Holder shares of Common Stock or such
Certificate Preferred Securities issued upon conversion of any such
Convertible Preferred Security in respect of such Convertible Preferred
Securities not so accompanied by a properly completed certificate.
ARTICLE XVI
MISCELLANEOUS PROVISIONS
SECTION 16.1 COMPLIANCE CERTIFICATES AND OPINIONS.
Except as otherwise expressly provided by this Indenture, upon any
application or request by the Company to the Trustee to take any action under
any provision of this Indenture, the Company shall furnish to the Trustee an
Officers' Certificate stating that all conditions precedent, if any, provided
for in this Indenture relating to the proposed action have been complied with
and an Opinion of Counsel stating that in the opinion of such counsel all such
conditions precedent, if any, have been complied with, except that in the case
of any such application or request as to which the furnishing of such
documents is specifically required by any provision of this Indenture relating
to such particular application or request, no additional certificate or
opinion need be furnished. Every certificate or opinion by or on behalf of the
Company with respect to compliance with a condition or covenant provided for
in this Indenture, except for certificates provided for in Section 5.5, shall
include:
(a) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions
herein relating thereto;
(b) 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;
(c) a statement that, in the opinion of each such individual,
the individual has made such examination or investigation as is
necessary to enable such individual to express an informed opinion as
to whether or not such covenant or condition has been complied with;
and
(d) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
66
SECTION 16.2 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 such officer's
certificate or opinion is based are erroneous. Any such certificate or Opinion
of Counsel may be based, insofar as it relates to factual matters, upon a
certificate or opinion of, or representations by, an officer or officers of
the Company stating that the information with respect to such factual matters
is in the possession of the Company, unless such counsel knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
SECTION 16.3 NOTICES, ETC., TO TRUSTEE AND COMPANY.
Any request, demand, authorization, direction, notice, consent,
waiver or Act of Holders or other document provided or permitted by this
Indenture to be made upon, given or furnished to, or filed with,
(a) the Trustee by any Holder or by the Company shall be
sufficient for every purpose hereunder if made, given, furnished or
filed in writing to or with the Trustee at its Corporate Trust Office,
Attention: Corporate Trust Trustee Administration, or
(b) the Company by the Trustee or by any Holder shall be
sufficient for every purpose hereunder (unless otherwise herein
expressly provided) if in writing and mailed, first-class postage
prepaid, to the Company addressed to it at the address of its
principal office specified in the first paragraph of this Indenture,
to the attention of its Treasurer, or at any other address previously
furnished in writing to the Trustee by the Company.
SECTION 16.4 NOTICE TO HOLDERS OF DEBENTURES; WAIVER.
Except as otherwise expressly provided herein, where this Indenture
provides for notice to Holders of Debentures of any event, such notice shall
be sufficiently given to Holders of Debentures if in writing and mailed,
first-class postage prepaid, to each Holder of a Debenture affected by such
event, at the address of such Holder as it appears in the Debenture Register,
not earlier than the earliest date, and not later than the latest date,
prescribed for the giving of such notice.
In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give such notice to
Holders of Debentures by mail, then such notification as shall be made with
the approval of the Trustee shall constitute sufficient notice to such Holders
for every purpose hereunder. In any case where notice to Holders of Debentures
is given by mail, neither the failure to mail
67
such notice, nor any defect in any notice mailed to any particular Holder of a
Debenture shall affect the sufficiency of such notice with respect to other
Holders of Debentures.
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 of Debentures 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 16.5 LANGUAGE OF NOTICES, ETC.
Any request, demand, authorization, direction, notice, consent or
waiver required or permitted under this Indenture shall be in the English
language, except that any published notice may be in an official language of
the country of publication.
SECTION 16.6 CONFLICT WITH REQUIRED PROVISIONS OF THE TRUST
INDENTURE ACT.
If and to the extent that any provision of this Indenture limits,
qualifies or conflicts with another provision included in this Indenture which
is required to be included in this Indenture by any of Sections 310 to 318,
inclusive, of the Trust Indenture Act, such required provision shall control.
SECTION 16.7 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 16.8 SUCCESSORS AND ASSIGNS.
All covenants and agreements in this Indenture by the Company shall
bind its successors and assigns, whether so expressed or not.
SECTION 16.9 SEPARABILITY CLAUSE.
In case any provision in this Indenture or the Debentures 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 16.10 BENEFITS OF INDENTURE.
Nothing in this Indenture or the Debentures, express or implied,
shall give to any Person, other than the parties hereto, any Authenticating
Agent, any Paying Agent, any Debentures Registrar and their successors
hereunder and the Holders of Debentures, any benefit or any legal or equitable
right, remedy or claim under this Indenture.
68
SECTION 16.11 GOVERNING LAW.
This Indenture and the Debentures shall be governed by and construed
in accordance with the laws of the State of New York, without regard to the
conflicts of laws principles thereof.
SECTION 16.12 LEGAL HOLIDAYS.
In any case where any Interest Payment Date, Redemption Date, sinking
fund payment date, Maturity or Stated Maturity of a Debenture shall not be a
Business Day at any Place of Payment, then (notwithstanding any other
provision of this Indenture or of the Debentures other than a provision in
Debentures which specifically states that such provision shall apply in lieu
of this Section) payment of interest or principal (and premium, if any) need
not be made at such Place of Payment on such date, but may be made on the next
succeeding Business Day at such Place of Payment with the same force and
effect as if made on the Interest Payment Date or Redemption Date, or at the
Stated Maturity, provided that no interest shall accrue on the amount so
payable for the period from and after such Interest Payment Date, Redemption
Date or Stated Maturity, as the case may be, to such succeeding Business Day.
SECTION 16.13 EXECUTION IN COUNTERPARTS.
This instrument may be executed in any number of counterparts, each
of which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
69
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed as of the day and year first above written.
INSIGNIA FINANCIAL GROUP, INC.
By /s/ Xxxxxx Xxxxxx
------------------------------------------
Name: Xxxxxx Xxxxxx
Title: Chief Operating Officer and Treasurer
FIRST UNION NATIONAL BANK OF SOUTH CAROLINA
By /s/ Xxxxxxxx X. Xxxxx
------------------------------------------
Name: Xxxxxxxx X. Xxxxx
Title: Vice President
70
EXHIBIT A
---------
[(FORM OF FACE OF CONVERTIBLE DEBENTURE)]
[IF THE DEBENTURE IS TO BE A GLOBAL DEBENTURE, INSERT THE FOLLOWING --
This Debenture is a Book Entry Debenture within the meaning of the Indenture
hereinafter referred to and is registered in the name of a Depositary or a
nominee of a Depositary. This Debenture is exchangeable for Convertible
Debentures registered in the name of a Person other than the Depositary or its
nominee only in the limited circumstances described in the Indenture, and no
transfer of this Debenture (other than a transfer of this Debenture as a whole
by the Depositary to a nominee of the Depositary or by a nominee of the
Depositary to the Depositary or another nominee of the Depositary) may be
registered except in such limited circumstances.
Unless this Debenture is presented by an authorized representative of The
Depositary Trust Company (55 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx) to the issuer
or its agent for registration of transfer, exchange or payment, and any
Debenture issued is registered in the name of Cede & Co. or such other name as
requested by an authorized representative of The Depositary Trust Company and
any payment hereon is made to Cede & Co. or such other person or entity so
named by The Depositary Trust Company, ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS WRONGFUL since the registered
owner hereof, Cede & Co., has an interest herein.]
THIS SECURITY AND ANY COMMON STOCK ISSUED ON CONVERSION HEREOF HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE OFFERED, SOLD, OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. THE HOLDER
OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF, REPRESENTS, ACKNOWLEDGES, AND
AGREES FOR THE BENEFIT OF INSIGNIA FINANCIAL GROUP, INC. (THE "COMPANY") THAT:
(I) IT HAS ACQUIRED A "RESTRICTED SECURITY" THAT HAS NOT BEEN REGISTERED UNDER
THE SECURITIES ACT; (II) IT WILL NOT OFFER, SELL OR OTHERWISE TRANSFER SUCH
SECURITY, PRIOR TO THE DATE WHICH IS THREE YEARS AFTER THE LATER OF THE
ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY
AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF
THIS SECURITY) (THE "RESALE RESTRICTION TERMINATION DATE") EXCEPT (A) TO THE
COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED
EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE
ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE
144A"), TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL
BUYER" AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE
TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND
SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE
MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL
"ACCREDITED INVESTOR" WITHIN THE MEANING OF
SUBPARAGRAPH (a)(1), (2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT THAT
IS ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN
INSTITUTIONAL "ACCREDITED INVESTOR," FOR INVESTMENT PURPOSES AND NOT WITH A
VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN
VIOLATION OF THE SECURITIES ACT, OR (F) PURSUANT TO ANOTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND, IN
EACH CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF ANY STATE OF
THE UNITED STATES OR ANY APPLICABLE JURISDICTION; AND (III) IT WILL, AND EACH
SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THIS
SECURITY OF THE RESALE RESTRICTIONS SET FORTH IN (II) ABOVE. ANY OFFER, SALE
OR OTHER DISPOSITION PURSUANT TO THE FOREGOING CLAUSE (D), (E) OR (F) IS
SUBJECT TO THE RIGHT OF THE ISSUER OF THIS SECURITY AND THE TRUSTEES FOR SUCH
ISSUER (i) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION OR
OTHER INFORMATION SATISFACTORY TO EACH OF THEM IN FORM AND SUBSTANCE, AND (ii)
IN EACH OF THE FOREGOING CASES, TO REQUIRE THAT A CERTIFICATE OF TRANSFER IN
THE FORM APPEARING ON THIS SECURITY IS COMPLETED AND DELIVERED BY THE
TRANSFEROR TO THE TRANSFER AGENT. THIS LEGEND WILL BE REMOVED UPON THE REQUEST
OF A HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.
CUSIP No._____________________
Certificate No._______________ $_____________
INSIGNIA FINANCIAL GROUP, INC.
6 1/2% CONVERTIBLE SUBORDINATED DEBENTURE
Insignia Financial Group, Inc., a Delaware corporation (the "Company",
which term includes any successor corporation under the Indenture hereinafter
referred to), for value received, hereby promises to pay to ______________ or
registered assigns, the principal sum of _____________ Dollars ($___________)
{ADD FOR GLOBAL DEBENTURE OR DEBENTURE ORIGINALLY ISSUED TO PROPERTY TRUSTEE:
(as increased or decreased as indicated on Schedule A attached hereto)} on
September 30, 2016, and to pay interest on said principal sum from November 1,
1996, or from the most recent interest payment date (each such date, an
"Interest Payment Date") to which interest has been paid or duly provided for,
quarterly (subject to deferral as set forth herein) in arrears on March 31,
June 30, September 30, and December 31 of each year commencing December 31,
1996, at the rate of 6 1/2% per annum until the principal hereof shall have
become due and payable, and on any overdue principal and premium, if any, and
(without duplication and to the extent that payment of such interest is
enforceable under applicable law) on any overdue installment of interest at
the same rate per annum compounded quarterly. The amount of interest payable
on any Interest Payment Date shall be computed on the basis of
2
a 360-day year of twelve 30-day months. In the event that any date on which
interest is payable on this Convertible Debenture is not a Business Day, then
payment of interest payable on such date will be made on the next succeeding
day that is a Business Day (and without any interest or other payment in
respect of any such delay), except that, if such Business Day is in the next
succeeding calendar year, such payment shall be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on such date. The interest installment so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, as provided in the Indenture
(referred to on the reverse hereof), be paid to the person in whose name this
Convertible Debenture (or one or more Predecessor Debentures, as defined in
said Indenture) is registered on the Regular Record Date for such interest
installment which shall be the close of business on the date 15 days prior to
such Interest Payment Date unless otherwise provided in the Indenture. Any
such interest installment not punctually paid or duly provided for shall
forthwith cease to be payable to the registered Holders on such Regular Record
Date and may be paid to the Person in whose name this Convertible Debenture
(or one or more Predecessor Debentures) is registered at the close of business
on a special record date to be fixed by the Trustee (referred to on the
reverse hereof) for the payment of such defaulted interest, notice whereof
shall be given to the registered Holders of the Convertible Debentures not
less than 10 days prior to such special record date, or may be paid at any
time in any other lawful manner not inconsistent with the requirements of any
securities exchange on which the Convertible Debentures may be listed, and
upon such notice as may be required by such exchange, all as more fully
provided in the Indenture. The principal of (and premium, if any) and the
interest on this Convertible Debenture shall be payable at the office or
agency of the Trustee maintained for that purpose in any coin or currency of
the United States of America that at the time of payment is legal tender for
payment of public and private debts; provided, however, that payment of
interest may be made at the option of the Company by check mailed to the
registered Holder at such address as shall appear in the Debenture Register.
Notwithstanding the foregoing, so long as the Holder of this Convertible
Debenture is the Property Trustee, the payment of the principal of (and
premium, if any) and interest on this Convertible Debenture will be made at
such place and to such account as may be designated by the Property Trustee.
The indebtedness evidenced by this Convertible Debenture is, to the
extent provided in the Indenture, subordinate and junior in right of payment
to the prior payment in full of all Senior Indebtedness, and this Convertible
Debenture is issued subject to the provisions of the Indenture with respect
thereto. Each Holder of this Convertible Debenture, by accepting the same, (a)
agrees to and shall be bound by such provisions, (b) authorizes and directs
the Trustee on his or her behalf to take such action as may be necessary or
appropriate to acknowledge or effectuate the subordination so provided and (c)
appoints the Trustee his or her attorney-in-fact for any and all such
purposes. Each Holder hereof, by his or her acceptance hereof, hereby waives
all notice of the acceptance of the subordination provisions contained herein
and in the Indenture by each holder of Senior Indebtedness, whether now
outstanding or hereafter incurred, and waives reliance by each such Holder
upon said provisions.
This Convertible Debenture shall not be entitled to any benefit under the
Indenture hereinafter referred to, be valid or become obligatory for any
purpose until the Certificate of Authentication hereon shall have been signed
by or on behalf of the Trustee.
3
The provisions of this Convertible Debenture are continued on the reverse
side hereof and such continued provisions shall for all purposes have the same
effect as though fully set forth at this place.
IN WITNESS WHEREOF, the Company has caused this instrument to be
executed.
INSIGNIA FINANCIAL GROUP, INC.
By:__________________________
Name:
Title:
Attest:
By:___________________________
Name:
Title:
4
[FORM OF CERTIFICATE OF AUTHENTICATION]
CERTIFICATE OF AUTHENTICATION
This is one of the Debentures referred to in the within-mentioned
Indenture.
Dated:
--------------------------------
First Union National Bank of South Carolina, as Trustee
By:
----------------------------------
Authorized Signatory
[FORM OF REVERSE OF DEBENTURE]
This Convertible Debenture is one of a duly authorized series of
Debentures of the Company (herein sometimes referred to as the "Debentures"),
specified in the Indenture, all issued or to be issued in one series under and
pursuant to an Indenture (the "Indenture") dated as of November 1, 1996, duly
executed and delivered between the Company and First Union National Bank of
South Carolina, as Trustee (the "Trustee"), to which Indenture (which term
shall include, collectively, any and all indentures supplemental thereto)
reference is hereby made for a description of the rights, limitations of
rights, obligations, duties and immunities thereunder of the Trustee, the
Company and the Holders of Convertible Debentures. This series of Debentures
is limited in aggregate principal amount as specified in the Indenture and is
herein sometimes referred to as the "Convertible Debentures."
Upon the occurrence and during the continuation of a Tax Event, in
certain circumstances, this Convertible Debenture may become due and payable,
in whole or in part, at the principal amount together with any interest
accrued thereon, including Additional Payments (the "Special Redemption
Price"). The Special Redemption Price shall be paid prior to 12:00 noon, New
York time, on the date of such redemption or at such earlier time as the
Company determines.
In addition, the Company shall have the right to redeem this Convertible
Debenture at the option of the Company, upon not less than 20 nor more than 60
days' notice, in whole or in part at any time on or after November 1, 1999 (an
"Optional Redemption") at the following prices (expressed as percentages of
the principal amount of the Convertible Debentures) (the "Optional Redemption
Price") together with accrued and unpaid interest, including Additional
Payments, if any, to, but excluding, the redemption date, if redeemed during
the 12-month period beginning September 30 (or, in the case of 1999, the
period beginning November 1):
5
Year Redemption Price
---- ----------------
1999 102.0%
2000 101.0%
2001 and thereafter 100.0%
If Convertible Debentures are redeemed on any March 31, June 30,
September 30, or December 31, accrued and unpaid interest shall be payable to
Holders of record on the relevant record date, instead of the Holders on the
Redemption Date.
So long as the corresponding Convertible Preferred Securities are
outstanding, the proceeds from the redemption of any of the Convertible
Debentures will be used to redeem Convertible Preferred Securities.
If the Convertible Debentures are only partially redeemed by the Company
pursuant to an Optional Redemption, the Convertible Debentures will be
redeemed on a pro rata basis, in portions equal to $50 (or any integral
multiple thereof) of the principal amount of Convertible Debentures.
In the event of redemption of this Convertible Debenture in part only, a
new Convertible Debenture or Convertible Debentures for the unredeemed portion
hereof will be issued in the name of the Holder hereof upon the cancellation
hereof.
In case an Event of Default, as defined in the Indenture, shall have
occurred and be continuing, the principal of all of the Convertible Debentures
and all interest accrued thereon (including any Additional Payments) may be
declared, and upon such declaration shall become, due and payable, in the
manner, with the effect and subject to the conditions provided in the
Indenture.
The Indenture contains provisions permitting the Company and the Trustee,
with the consent of the Holders of not less than a majority in aggregate
principal amount of the Debentures affected at the time outstanding, as
defined in the Indenture, to execute supplemental indentures for the purpose
of adding any provisions to or changing in any manner or eliminating any of
the provisions of the Indenture or of any supplemental indenture or of
modifying in any manner the rights of the Holders of the Debentures; provided,
however, that no such supplemental indenture shall (a) change the fixed
maturity of any Debenture, or reduce the principal amount thereof, or reduce
the rate or extend the time of payment of interest thereon, or reduce any
premium payable upon the redemption thereof, or make any change that adversely
affects the right to convert any Debenture or make any change in the
subordination provisions that adversely affects the rights of any Holders of
any Debenture, without the consent of the Holder of each Debenture so
affected, or (b) reduce the aforesaid percentage of Debentures, the Holders of
which are required to consent to any such supplemental indenture, without the
consent of the Holders of each Debenture then outstanding and affected
thereby. The Indenture also contains provisions permitting the Holders of a
majority in aggregate principal amount of the Debentures at the time
outstanding, on behalf of all of the Holders of the Debentures, to waive any
past default in the performance of any of the covenants contained in the
Indenture, or established pursuant to the Indenture, and its consequences,
except a default in the payment of the principal of or premium, if any, or
interest on any Debentures or a default
6
with respect to certain covenants concerning the Insignia Trust more fully set
forth in the Indenture or a default in respect of any provision in the
Indenture that cannot be modified without the consent of the Holders of all
Debentures affected thereby. Any such consent or waiver by the registered
Holder of this Convertible Debenture (unless revoked as provided in the
Indenture) shall be conclusive and binding upon such Holder and upon all
future Holders and owners of this Convertible Debenture and of any Convertible
Debenture issued in exchange herefor or in place hereof (whether by
registration of transfer or otherwise), irrespective of whether or not any
notation of such consent or waiver is made upon this Convertible Debenture.
No reference herein to the Indenture and no provision of this Convertible
Debenture or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of and
premium, if any, and interest on this Convertible Debenture at the time and
place and at the rate and in the money herein prescribed.
As long as an Event of Default shall not have occurred and be continuing
and certain other conditions have been satisfied, the Company shall have the
right at any time during the term of the Convertible Debentures and from time
to time to extend the interest payment period of such Convertible Debentures
for up to 20 consecutive quarters (an "Extended Interest Payment Period"), at
the end of which period the Company shall pay all interest (including
Additional Payments) then accrued and unpaid (together with interest thereon
at the rate specified for the Convertible Debentures to the extent that
payment of such interest is enforceable under applicable law) to the Holders
as they appear on the transfer records of the Company as of the first Regular
Record Date after the Extended Interest Payment Period. Before the termination
of any such Extended Interest Payment Period, the Company may further extend
such Extended Interest Payment Period, provided that such Extended Interest
Payment Period together with all such further extensions thereof shall not
exceed 20 consecutive quarters. At the termination of any such Extended
Interest Payment Period and upon the payment of all accrued and unpaid
interest (including all Additional Payments) then due, the Company may
commence a new Extended Interest Payment Period.
As provided in the Indenture and subject to certain limitations therein
set forth, this Convertible Debenture is transferable by the registered Holder
hereof on the Debenture Register of the Company, upon surrender of this
Convertible Debenture for registration of transfer at the office or agency of
the Trustee in Columbia, South Carolina accompanied by a written instrument or
instruments of transfer in form satisfactory to the Company or the Trustee
duly executed by the registered Holder hereof or his or her attorney duly
authorized in writing, and thereupon one or more new Convertible Debentures of
authorized denominations and for the same aggregate principal amount will be
issued to the designated transferee or transferees. No service charge will be
made for any such transfer, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in relation
thereto.
Prior to due presentment for registration of transfer of this Convertible
Debenture, the Company, the Trustee, any paying agent and the Debenture
Registrar may deem and treat the registered Holder hereof as the absolute
owner hereof (whether or not this Convertible Debenture shall be overdue and
notwithstanding any notice of ownership or
7
writing hereon made by anyone other
than the Debenture Registrar) for the purpose of receiving payment of or on
account of the principal hereof and premium, if any, and interest due hereon
and for all other purposes, and neither the Company nor the Trustee nor any
paying agent nor any Debenture Registrar shall be affected by any notice to
the contrary.
No recourse shall be had for the payment of the principal of or the
interest on this Convertible Debenture, or for any claim based hereon, or
otherwise in respect hereof, or based on or in respect of the Indenture,
against any incorporator, stockholder, officer or director, past, present or
future, as such, of the Company or of any predecessor or 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 issuance hereof, expressly waived and released.
The Holder of any Convertible Debenture has the right, exercisable at any
time beginning December 31, 1996 and prior to the close of business (New York
time) on September 30, 2016 (or, in the case of a Convertible Debenture called
for redemption, prior to the close of business on the Business Day prior to
the corresponding redemption date), to convert the principal amount thereof
(or any portion thereof that is an integral multiple of $50) into shares of
Common Stock at the initial conversion rate of 1.8868 shares of Common Stock
for each $50 in aggregate principal amount of Convertible Debenture
(equivalent to a Conversion Price of $26.50 per share of Common Stock),
subject to adjustment under certain circumstances.
To convert a Convertible Debenture, a Holder must (a) complete and sign a
conversion notice substantially in the form attached hereto, (b) surrender the
Convertible Debenture to the Conversion Agent, (c) furnish appropriate
endorsements or transfer documents if required by the Conversion Agent and (d)
pay any transfer or similar tax, if required. Upon conversion, no adjustment
or payment will be made for interest (including Additional Payments) or
dividends, but if any Holder surrenders a Convertible Debenture for conversion
on or after the Regular Record Date for the payment of an installment of
interest and prior to the opening of business on the next Interest Payment
Date, then, notwithstanding such conversion, the interest payable on such
Interest Payment Date will be paid to the registered Holder of such
Convertible Debenture on such Regular Record Date. The number of shares
issuable upon conversion of a Convertible Debenture is determined by dividing
the principal amount of the Convertible Debentures converted by the Conversion
Price in effect on the Conversion Date. No fractional shares will be issued
upon conversion but a cash adjustment will be made for any fractional
interest. The outstanding principal amount of any Convertible Debenture shall
be reduced by the portion of the principal amount thereof converted into
shares of Common Stock.
The Convertible Debentures are issuable only in registered form without
Coupons in denominations of $50 and any integral multiple thereof. As provided
in the Indenture and subject to certain limitations therein set forth,
Convertible Debentures are exchangeable for a like aggregate principal amount
of Convertible Debentures of a different authorized denomination, as requested
by the Holder surrendering the same.
All terms used in this Convertible Debenture that are not defined herein
but are defined in the Indenture shall have the meanings assigned to them in
the Indenture.
8
THE INTERNAL LAWS OF THE STATE OF NEW YORK SHALL GOVERN THE INDENTURE AND
THE CONVERTIBLE DEBENTURES WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES
THEREOF.
[FORM OF ELECTION TO CONVERT]
ELECTION TO CONVERT
To: Insignia Financial Group, Inc.
The undersigned owner of this Convertible Debenture hereby irrevocably
exercises the option to convert this Convertible Debenture, or the portion
below designated, into Class A Common Stock of INSIGNIA FINANCIAL GROUP, INC.
in accordance with the terms of the Indenture referred to in this Convertible
Debenture, and directs that the shares issuable and deliverable upon
conversion, together with any check in payment for fractional shares, be
issued in the name of and delivered to the undersigned, unless a different
name has been indicated in the assignment below. If shares are to be issued in
the name of a person other than the undersigned, the undersigned will pay all
transfer taxes payable with respect thereto.
Date: ,
------------ ----
in whole in part
---- ----
Portion of Convertible Debenture to be converted
($50 or integral multiples thereof):
$
------------------------
Signature (for conversion only)
Please Print or Typewrite Name and Address,
Including Zip Code, and Social Security or Other
Identifying Number
-------------------------------------------------
-------------------------------------------------
-------------------------------------------------
-------------------------------------------------
Signature Guarantee: (1)
-------------------------
(1) Signature must be guaranteed by an "eligible guarantor institution" that
is a bank, stockbroker, savings and loan association or credit union
meeting the requirements of the Conversion Agent, which requirements
include membership or participation in the Securities Transfer Agents
Medallion Program ("STAMP") or such other "signature guarantee program"
as may be determined by the Conversion Agent in addition to, or in
substitution for, STAMP, all in accordance with the Securities Exchange
Act of 1934, as amended.
10
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this
Convertible Debenture to:
------------------------------------------------------------------------------
------------------------------------------------------------------------------
------------------------------------------------------------------------------
(Insert assignee's social security or tax identification number)
------------------------------------------------------------------------------
------------------------------------------------------------------------------
------------------------------------------------------------------------------
(Insert address and zip code of assignee)
------------------------------------------------------------------------------
------------------------------------------------------------------------------
------------------------------------------------------------------------------
and irrevocably appoints
-----------------------------------------------------
agent to transfer this Convertible Debenture on the books of the Company. The
agent may substitute another to act for him or her.
Date:
-------------------------
Signature:
---------------------
(Sign exactly as your name appears on the other side of this Convertible
Debenture)
Signature Guarantee(2):
-----------------------------
(2) Signature must be guaranteed by an "eligible guarantor institution" that
is a bank, stockbroker, savings and loan association or credit union
meeting the requirements of the Registrar, which requirements include
membership or participation in the Securities Transfer Agents Medallion
Program ("STAMP") or such other "signature guarantee program" as may be
determined by the Debenture Registrar in addition to, or in substitution
for, STAMP, all in accordance with the Securities Exchange Act of 1934,
as amended.
11
[TO BE ATTACHED TO GLOBAL DEBENTURE OR DEBENTURE
ORIGINALLY ISSUED TO PROPERTY TRUSTEE]
SCHEDULE A
The original principal amount of this Debenture shall be $__________. The
following increases or decreases in the principal amount of this Debenture
have been made:
Signature of
authorized
Date of Amount of Amount of Principal amount of officer of
increase/ increase in decrease in Debenture following Trustee or
decrease principal amount principal amount increase/decrease Custodian
-------- ---------------- ---------------- ----------------- ---------
12
