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M.D.C. HOLDINGS, INC.,
Issuer
and
FIRST BANK NATIONAL ASSOCIATION,
Trustee
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INDENTURE
Dated as of December 15, 1993
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8-3/4% Convertible Subordinated Notes due 2005
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TABLE OF CONTENTS
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PAGE
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ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1 Definitions............................... 1
SECTION 1.2 Incorporation by Reference of TIA......... 14
SECTION 1.3 Rules of Construction..................... 15
ARTICLE TWO
THE SECURITIES
SECTION 2.1 Form and Dating........................... 16
SECTION 2.2 Execution and Authentication.............. 16
SECTION 2.3 Registrar, Paying Agent and Conversion
Agent..................................... 17
SECTION 2.4 Paying Agent to Hold Assets in Trust...... 18
SECTION 2.5 Securityholder Lists...................... 18
SECTION 2.6 Transfer and Exchange..................... 19
SECTION 2.7 Replacement Securities.................... 19
SECTION 2.8 Outstanding Securities.................... 20
SECTION 2.9 Treasury Securities....................... 20
SECTION 2.10 Temporary Securities...................... 21
SECTION 2.11 Cancellation.............................. 21
SECTION 2.12 Defaulted Interest........................ 21
SECTION 2.13 Legending of the Securities;
Restrictions on Transfers................. 23
ARTICLE THREE
REDEMPTION
SECTION 3.1 Right of Redemption....................... 24
SECTION 3.2 Notices to Trustee........................ 24
SECTION 3.3 Selection of Securities to Be Redeemed.... 24
SECTION 3.4 Notice of Redemption...................... 25
SECTION 3.5 Effect of Notice of Redemption............ 27
SECTION 3.6 Deposit of Redemption Price............... 27
SECTION 3.7 Securities Redeemed in Part............... 28
SECTION 3.8 Conversion Arrangements on Call for
Redemption ............................... 28
2
ARTICLE FOUR
COVENANTS
SECTION 4.1 Payment of Securities.................... 28
SECTION 4.2 Maintenance of Office or Agency.......... 29
SECTION 4.3 Corporate Existence...................... 30
SECTION 4.4 Payment of Taxes and Other Claims........ 30
SECTION 4.5 Maintenance of Properties and
Insurance................................ 30
SECTION 4.6 Compliance Certificate; Notice of
Default.................................. 31
SECTION 4.7 SEC Reports.............................. 32
SECTION 4.8 Limitation on Transactions with
Affiliates............................... 33
SECTION 4.9 Waiver of Stay, Extension or Usury
Laws..................................... 34
SECTION 4.10 Repurchase of Notes at the Option of
the Holder Upon a Change of Control ..... 35
ARTICLE FIVE
SUCCESSOR CORPORATION
SECTION 5.1 When Company May Merge, Etc. ............ 38
SECTION 5.2 Successor Corporation Substituted........ 39
ARTICLE SIX
EVENTS OF DEFAULT AND REMEDIES
SECTION 6.1 Events of Default........................ 39
SECTION 6.2 Acceleration of Maturity Date;
Rescission and Annulment................. 42
SECTION 6.3 Collection of Indebtedness and Suits
for Enforcement by Trustee .............. 43
SECTION 6.4 Trustee May File Proofs of Claim......... 44
SECTION 6.5 Trustee May Enforce Claims Without
Possession of Securities................. 45
SECTION 6.6 Priorities............................... 46
SECTION 6.7 Limitation on Suits...................... 46
SECTION 6.8 Unconditional Right of Holders to
Receive Principal, Premium and
Interest................................. 47
SECTION 6.9 Rights and Remedies Cumulative........... 47
SECTION 6.10 Delay or Omission Not Waiver............. 48
SECTION 6.11 Control by Holders....................... 48
SECTION 6.12 Waiver of Past Default................... 48
SECTION 6.13 Undertaking for Costs.................... 49
SECTION 6.14 Restoration of Rights and Remedies....... 49
3
ARTICLE SEVEN
TRUSTEE
SECTION 7.1 Duties of Trustee........................ 50
SECTION 7.2 Rights of Trustee........................ 51
SECTION 7.3 Individual Rights of Trustee............. 52
SECTION 7.4 Trustee's Disclaimer..................... 53
SECTION 7.5 Notice of Default........................ 53
SECTION 7.6 Reports by Trustee to Holders............ 53
SECTION 7.7 Compensation and Indemnity............... 53
SECTION 7.8 Replacement of Trustee................... 55
SECTION 7.9 Successor Trustee by Merger, Etc......... 56
SECTION 7.10 Eligibility; Disqualification............ 56
SECTION 7.11 Preferential Collection of Claims
Against Company.......................... 56
ARTICLE EIGHT
SATISFACTION AND DISCHARGE
SECTION 8.1 Satisfaction, Discharge of the
Indenture, Covenant Defeasance........... 57
SECTION 8.2 Termination of Obligations Upon
Cancellation of the Securities........... 59
SECTION 8.3 Survival of Certain Obligations.......... 60
SECTION 8.4 Acknowledgment of Discharge by Trustee... 61
SECTION 8.5 Application of Trust Assets.............. 61
SECTION 8.6 Repayment to the Company................. 61
SECTION 8.7 Reinstatement............................ 62
ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.1 Supplemental Indentures Without
Consent of Holders....................... 62
SECTION 9.2 Amendments, Supplemental Indentures and
Waivers with Consent of Holders ......... 63
SECTION 9.3 Compliance with TIA...................... 65
SECTION 9.4 Revocation and Effect of Consents........ 66
SECTION 9.5 Notation on or Exchange of Securities.... 67
SECTION 9.6 Trustee to Sign Amendments, Etc.......... 67
4
ARTICLE TEN
MEETINGS OF SECURITYHOLDERS
SECTION 10.1 Purposes for Which Meetings May
Be Called................................ 67
SECTION 10.2 Manner of Calling Meetings............... 68
SECTION 10.3 Call of Meetings by Company or Holders... 68
SECTION 10.4 Who May Attend and Vote at Meetings...... 69
SECTION 10.5 Regulations May Be Made by Trustee;
Conduct of the Meeting; Voting Rights;
Adjournment.............................. 69
SECTION 10.6 Voting at the Meeting and Record to Be
Kept .................................... 70
SECTION 10.7 Exercise of Rights of Trustee or
Holders May Not Be Hindered or
Delayed by Call of Meeting............... 71
ARTICLE ELEVEN
CONVERSION
SECTION 11.1 Conversion Privilege.................... 71
SECTION 11.2 Conversion Procedure.................... 72
SECTION 11.3 Fractional Shares....................... 73
SECTION 11.4 Taxes on Conversion..................... 73
SECTION 11.5 Company to Provide Stock................ 73
SECTION 11.6 Conversion Price Adjustment............. 74
SECTION 11.7 Adjustment for Shares Issued
Below Market Price...................... 75
SECTION 11.8 Adjustment for Other Distributions...... 76
SECTION 11.9 Adjustment for Common Stock Issuances... 78
SECTION 11.10 Adjustment for Issuances of
Convertible Securities.................. 80
SECTION 11.11 Adjustment to Number of Conversion
Shares.................................. 82
SECTION 11.12 Voluntary Adjustment.................... 82
SECTION 11.13 Current Market Price.................... 82
SECTION 11.14 Consideration Received.................. 82
SECTION 11.15 When Adjustment May Be Deferred......... 83
SECTION 11.16 When No Adjustment Required............. 84
SECTION 11.17 Notice of Adjustment.................... 84
SECTION 11.18 Notice of Certain Transactions.......... 84
SECTION 11.19 Reorganization of the Company........... 85
SECTION 11.20 Trustee's Disclaimer.................... 85
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ARTICLE TWELVE
SUBORDINATION
SECTION 12.1 Securities Subordinated to Senior
Indebtedness........................... 85
SECTION 12.2 No Payment on Securities in
Certain Circumstances.................. 86
SECTION 12.3 Securities Subordinated to Prior
Payment of all Senior Indebtedness on
Dissolution, Liquidation or
Reorganization......................... 88
SECTION 12.4 Holders to Be Subrogated to Rights of
Holders of Senior Indebtedness ........ 90
SECTION 12.5 Obligations of the Company
Unconditional.......................... 90
SECTION 12.6 Trustee Entitled to Assume Payments
Not Prohibited in Absence of Notice.... 91
SECTION 12.7 Application by Trustee of Assets
Deposited with It...................... 91
SECTION 12.8 Subordination Rights Not Impaired
by Acts or Omissions of the Company
or Holders of Senior Indebtedness ..... 92
SECTION 12.9 Holders Authorize Trustee to
Effectuate Subordination of Securities. 92
SECTION 12.10 Right of Trustee to Hold Senior
Indebtedness........................... 93
SECTION 12.11 Article Twelve Not to Prevent
Events of Default...................... 93
SECTION 12.12 No Fiduciary Duty of Trustee to
Holders of Senior Indebtedness......... 94
ARTICLE THIRTEEN
MISCELLANEOUS
SECTION 13.1 TIA Controls........................... 94
SECTION 13.2 Notices................................ 94
SECTION 13.3 Communications by Holders with
Other Holders.......................... 95
SECTION 13.4 Certificate and Opinion as to
Conditions Precedent................... 95
SECTION 13.5 Statements Required in Certificate or
Opinion ............................... 96
SECTION 13.6 Rules by Trustee, Paying Agent,
Registrar.............................. 97
SECTION 13.7 Legal Holidays......................... 97
SECTION 13.8 Governing Law.......................... 97
SECTION 13.9 No Adverse Interpretation of Other
Agreements............................. 98
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SECTION 13.10 No Recourse Against Others.......... 98
SECTION 13.11 Successors.......................... 98
SECTION 13.12 Duplicate Originals................. 98
SECTION 13.13 Severability........................ 98
SECTION 13.14 Table of Contents, Headings, etc.... 99
SIGNATURES......................................... 100
Exhibit A FORM OF NOTE............................. A
Exhibit B FORM OF SENIOR NOTES INDENTURE........... B
7
CROSS-REFERENCE TABLE
TIA INDENTURE
SECTION SECTION
- ------- -------
310(a)(1) ............................................ 7.10
(a)(2) ........................................... 7.10
(a)(3) ........................................... N.A.
(a)(4) ........................................... N.A.
(a)(5) ........................................... 7.10
(b) .............................................. 7.8;
7.10;
13.2
(c) .............................................. N.A.
311(a) .............................................. 7.11
(b) .............................................. 7.11
(c) .............................................. N.A.
312(a) .............................................. 2.5
(b) .............................................. 13.3
(c) .............................................. 13.3
313(a) .............................................. 7.6
(b)(1) ........................................... N.A.
(b)(2) ........................................... 7.6
(c) .............................................. 7.6;
13.2
(d) .............................................. 7.6
314(a) .............................................. 4.8;
12.2
(b) .............................................. N.A.
(c)(1) ........................................... 2.2;
7.2;
13.4
(c)(2) ........................................... 7.2;
13.4
(c)(3) ........................................... N.A.
(d) .............................................. N.A.
(e) .............................................. 13.5
(f) .............................................. N.A.
315(a) .............................................. 7.1(b)
(b) .............................................. 7.5;
7.6;
13.2
(c) .............................................. 7.1(a)
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Note: This Cross-Reference Table shall not, for any
purpose, be deemed to be a part of this Inden-
ture.
8
(d) ............................................... 2.8;
6.12;
7.1(c)
(e) ............................................... 6.14
316(a)(last sentence) ................................ 2.9
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Note: This Cross-Reference Table shall not, for any
purpose, be deemed to be a part of this Inden-
ture.
9
INDENTURE, dated as of December 15, 1993, among M.D.C. Holdings, Inc., a
Delaware corporation (the "Company"), and First Bank National Association, as
Trustee (the "Trustee").
Each party hereto agrees as follows for the benefit of each other party
and for the equal and ratable benefit of the Holders of the Company's 8-3/4%
Convertible Subordinated Notes due 2005:
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1 Definitions.
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"Affiliate" means, with respect to any specified Person, (i) any other
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Person directly or indirectly controlling or controlled by, or under direct or
indirect common control with, such specified Person, or (ii) any officer,
director, a Person acting with respect to such Person in a similar capacity, or
controlling shareholder of such other Person. For purposes of this definition,
the term "control" means (a) the power to direct the management and policies of
a Person, either directly or through one or more intermediaries, whether through
the ownership of voting securities, by contract, or otherwise, or (b) without
limiting the foregoing, the beneficial ownership of 10% or more of the voting
power of the voting common equity of such Person (on a fully diluted basis).
Notwithstanding the foregoing, the term "Affiliate" will not include, with
respect to the Company or any Wholly Owned Subsidiary of the Company, any Wholly
Owned Subsidiary of the Company and, with respect to Richmond Homes, any Wholly
Owned Subsidiary of Richmond Homes.
"Agent" means any Registrar, Paying Agent, co-Registrar or Conversion
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Agent.
"Bankruptcy Law" means Title 11, U.S. Code or any similar Federal,
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state or foreign law for the relief of debtors.
"Board of Directors" means, with respect to any Person, the Board of
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Directors of such Person or any committee of the Board of Directors of such
Person authorized, with respect to any particular matter, to exercise the power
of the Board of Directors of such Person.
1
"Board Resolution" means, with respect to any Person, a duly adopted
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resolution of the Board of Directors of such Person.
"Business Day" means a day that is not a Legal Holiday.
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"Capital Stock" means, with respect to any Person, any capital stock of
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such Person and shares, interests, participations or other ownership interests
(however designated), of any Person and any rights (other than debt securities
convertible into corporate stock), warrants or options to purchase any of the
foregoing, including (without limitation) each class of common stock and
preferred stock of such Person if such Person is a corporation or membership
interests if such Person is a limited liability company and each general and
limited partnership interest of such Person if such Person is a partnership.
"Capitalized Lease Obligation" means obligations under a lease that are
----------------------------
required to be capitalized for financial reporting purposes in accordance with
GAAP (including Statement of Financial Accounting Standards No. 13 of the
Financial Accounting Standards Board), and the amount of Indebtedness
represented by such obligations shall be the capitalized amount of such
obligations, as determined in accordance with GAAP.
"cash" means U.S. Legal Tender.
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"Change of Control" shall have the meaning specified in Section 4.10.
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"Change of Control Offer" shall have the meaning specified in Section
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4.10.
"Change of Control Payment Date" shall have the meaning specified in
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Section 4.10.
"Change of Control Purchase Price" shall have the meaning specified in
--------------------------------
Section 4.10.
2
"Common Stock" shall mean the common stock, par value $.01 per share,
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of the Company, now or hereafter issued.
"Company" means the party named as such in this Indenture until a
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successor replaces it pursuant to the Indenture and thereafter means such
successor.
"Conversion Agent" shall have the meaning specified in Section 2.3.
----------------
"Conversion Date" shall have the meaning specified in Section 11.2.
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"Convertible Notes" means any of the 8-3/4% Convertible Subordinated
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Notes due 2005 issued by the Company pursuant to this Indenture.
"Current Market Price" shall have the meaning specified in Section
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11.13.
"Custodian" means any receiver, trustee, assignee, liquidator,
---------
sequestrator or similar official under any Bankruptcy Law.
"Default" means any event or condition that is, or after notice or
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passage of time or both would be, an Event of Default.
"Defaulted Interest" shall have the meaning specified in Section 2.12.
------------------
"Disqualified Capital Stock" means (i) with respect to any Person, any
--------------------------
Capital Stock of such Person or its Subsidiaries that, by its terms or by the
terms of any security into which it is convertible or exchangeable, is, or upon
the happening of an event or the passage of time would be, required to be
redeemed or repurchased by such Person or its Subsidiaries, including at the
option of the holder, in whole or in part, or has, or upon the happening of an
event or passage of time would have, a redemption or similar payment due on or
prior to the Stated Maturity and (ii) with respect to any Subsidiary of the
Company that is not an Unrestricted Subsidiary, any Capital Stock (other than
(a) Capital Stock owned by the Company or a Wholly Owned Subsidiary of the
Company that is not an Unrestricted Subsidiary and (b) common stock with no
preferences or privileges and with
3
no redemption or repayment provisions); provided that any Capital Stock which
--------
would not constitute Disqualified Capital Stock but for provisions thereof
giving holders thereof the right to require the Company to repurchase or redeem
such Capital Stock upon the occurrence of a change of control of the Company
occurring prior to the Stated Maturity of the Notes will not constitute
Disqualified Capital Stock if the change of control provisions applicable to
such Capital Stock are no more favorable to the holders of such Capital Stock
than those with respect to the Holders set forth in Section 4.10 and such
Capital Stock specifically provides that the Company will not repurchase or
redeem (or be required to repurchase or redeem) any such Capital Stock pursuant
to such provisions prior to the Company's repurchase of Notes pursuant to
Section 4.10.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended from time to time, and any successor statute.
"Event of Default" shall have the meaning specified in Section 6.1.
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"Exchange Act" means the Securities Exchange Act of 1934, as amended,
------------
and the rules and regulations promulgated by the SEC thereunder.
"Excluded Person" means any beneficial holder of 10% or more of any
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class of common stock of the Company outstanding immediately prior to the Issue
Date.
"Final Change of Control Put Date" shall have the meaning specified in
--------------------------------
Section 4.10.
"GAAP" means generally accepted accounting principles as in effect in
----
the United States applied on a basis consistent with that used in the
preparation of the audited financial statements of the Company for the fiscal
year ended December 31, 1993.
4
"Holder" or "Securityholder" means the Person in whose name a Security
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is registered on the Registrar's books.
"Indebtedness" means, with respect to any Person (without duplication),
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(i) all liabilities (other than trade payables and accrued expenses incurred in
the ordinary course of business) of such Person (a) for borrowed money (whether
or not the recourse of the lender is to the whole of the assets of such Person
or only to a portion thereof), (b) evidenced by bonds, notes, debentures or
similar instruments or letters of credit or representing the balance deferred
and unpaid of the purchase price of any property or services, (c) evidenced by
bankers' acceptances or similar instruments issued or accepted by financial
institutions or Interest Swap Obligations (other than those that fix or cap the
interest rate on variable rate indebtedness or that fix the exchange rate in
connection with indebtedness denominated in a foreign currency, and other than
the purchase of hedging transactions in the ordinary course of business), or (d)
for the payment of money relating to a Capitalized Lease Obligation; (ii)
reimbursement obligations of such Person with respect to letters of credit;
(iii) all liabilities of others of the kind described in the preceding clause
(i) or (ii) that such Person has guaranteed or that is otherwise its legal
liability and all mandatory obligations (including at the option of the holder
thereof) to purchase, redeem or acquire any Disqualified Capital Stock; and (iv)
all obligations of others secured by a Lien (other than a Permitted Lien) to
which the property or assets (including, without limitation, leasehold interests
and any other tangible or intangible property rights) of such Person are
subject, whether or not the obligations secured thereby shall have been assumed
by or shall otherwise be such Person's legal liability. The amount of
Indebtedness of any Person at any date will be, in the case of clause (iv) (if
the Indebtedness referred to therein is not assumed by such Person), the lesser
of the (a) fair market value of all assets subject to the Lien securing the
Indebtedness of others on the date that the Lien attaches or (b) amount of the
Indebtedness secured.
5
"Indenture" means this Indenture, as amended or supplemented from time
---------
to time in accordance with the terms hereof.
"Indentures" means (i) this Indenture and (ii) the Senior Notes
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Indenture.
"Interest Payment Date" means the stated due date of an installment of
---------------------
interest on the Securities.
"Interest Swap Obligation" means any obligation of any Person pursuant
------------------------
to any arrangement whereby, directly or indirectly, such Person is entitled to
receive from time to time periodic payments calculated by applying either a
fixed or floating rate of interest on a stated notional amount in exchange for
periodic payments made by such Person calculated by applying a fixed or floating
rate of interest on the same notional amount; provided, that the term "Interest
--------
Swap Obligation" shall also include interest rate exchange, collar, swap option,
future contracts or other similar agreements providing interest rate protection.
"Issue Date" means the date of first issuance of the Notes under this
----------
Indenture.
"Legal Holiday" shall have the meaning provided in Section 13.7.
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"Lien" means any mortgage, lien, pledge, charge, security interest,
----
or other encumbrance of any kind, whether or not filed, recorded or otherwise
perfected under applicable law (including any conditional sale or other title
retention agreement and any lease deemed to constitute a security interest and
any option or other agreement to give any security interest).
"Maturity Date," when used with respect to any Security, means the date
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on which the principal of such Security becomes due and payable as therein or
herein provided, whether at the Stated Maturity, Change of Control Payment
Date, or by declaration of acceleration, call for redemption or otherwise.
"Material Subsidiary" means "Material Subsidiary" as that term is
-------------------
defined by the Senior Notes Indenture.
6
"NASDAQ" shall have the meaning provided in Section 11.3.
------
"NMS" shall have the meaning provided in Section 11.3.
---
"Non-Recourse Indebtedness" means, with respect to any Person,
-------------------------
Indebtedness (or portion thereof) of such Person for which the sole legal
recourse for collection of principal, premium, and interest on such Indebtedness
is against the specific property identified in the instruments evidencing or
securing such Indebtedness, which property was acquired with the proceeds of
such Indebtedness or such Indebtedness was Incurred within 180 days after the
acquisition of such property, without any liability on the part of the Company
or any Subsidiary of the Company that is not an Unrestricted Subsidiary for any
deficiency with respect to principal, premium and interest.
"Notes" means the 8-3/4% Convertible Subordinated Notes due 2005, as
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supplemented from time to time in accordance with the terms hereof, issued under
this Indenture.
"Officer" means, with respect to the Company, the Chairman of the Board,
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the Chief Executive Officer, the President, any Vice President, the Chief
Financial Officer, the Treasurer, the Controller, or the Secretary of the
Company.
"Officers' Certificate" means, with respect to the Company, a
---------------------
certificate signed by two Officers or by an Officer and an Assistant Secretary
of the Company and otherwise complying with the requirements of Sections 13.4
and 13.5.
"Opinion of Counsel" means a written opinion from legal counsel who is
------------------
reasonably acceptable to the Trustee complying with the requirements of Sections
13.4 and 13.5. Unless otherwise required by the Trustee, the counsel may be
outside counsel to the Company.
"Paying Agent" shall have the meaning specified in Section 2.3.
------------
7
"Permitted Liens" means (i) Liens for taxes, assessments or governmental
---------------
charges or claims that either (a) are not yet delinquent, (b) are being
contested in good faith by appropriate proceedings and as to which appropriate
reserves have been established or other provisions have been made in accordance
with GAAP, or (c) solely encumber property abandoned or in the process of being
abandoned and with respect to which there is no recourse to the Company or any
Subsidiary that is not an Unrestricted Subsidiary, (ii) statutory Liens of
landlords and carriers', warehousemen's, mechanics', suppliers', materialmen's,
repairmen's or other Liens imposed by law and arising in the ordinary course of
business and with respect to amounts that, to the extent applicable, either (a)
are not yet delinquent or (b) are being contested in good faith by appropriate
proceedings and as to which appropriate reserves have been established or other
provisions have been made in accordance with GAAP, (iii) Liens incurred or
deposits made in the ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of social security, (iv)
Liens incurred or deposits made to secure the performance of tenders, bids,
leases, statutory obligations, surety and appeal bonds, progress payments,
government contracts, utility services and other obligations of like nature in
each case incurred in the ordinary course of business of the Company and its
Subsidiaries that are not Unrestricted Subsidiaries, (v) attachment or judgment
Liens with respect to judgments or proceedings which, with the passage of time,
would not constitute an Event of Default and which are being contested in good
faith by appropriate proceedings, (vi) easements, rights-of-way, restrictions
and other similar charges, encumbrances or burdens not materially interfering
with the ordinary course of business of the Company and its Subsidiaries that
are not Unrestricted Subsidiaries, (vii) leases or subleases granted to others
not materially interfering with the ordinary course of business of the Company
and its Subsidiaries that are not Unrestricted Subsidiaries, (viii) purchase
money mortgages (including, without limitation, Capitalized Lease Obligations
and purchase money security interests), (ix) Liens on assets securing
Indebtedness which refinanced Indebtedness that was previously secured by such
assets, (x) any interest in or title of a lessor to property subject to any
Capitalized Lease Obligations incurred in compliance with this Indenture, (xi)
Liens existing on the date of the Indenture, including without limitation,
8
Liens securing Indebtedness existing on the Issue Date, (xii) any option,
contract or other agreement to sell or purchase an asset or participate in the
income or revenue derived therefrom, (xiii) Liens securing Non-Recourse
Indebtedness of the Company or a Subsidiary that is not an Unrestricted
Subsidiary, (xiv) Liens on property or assets of any Subsidiary securing
Indebtedness of such Subsidiary owing to the Company or one or more of its
Wholly Owned Subsidiaries that are not Unrestricted Subsidiaries, (xv) Liens
with respect to any asset which Lien existed at the time such asset was
acquired by the Company or any of its Subsidiaries, provided that such Liens
--------
only extend to assets that were subject to Liens prior to the acquisition of
such asset by such Person, (xvi) any legal right of, or right granted in good
faith to, a lender or lenders to which the Company or a Subsidiary that is not
an Unrestricted Subsidiary may be indebted to offset against, or appropriate and
apply to the payment of, such Indebtedness any and all balances, credits,
deposits, accounts or monies of the Company or a Subsidiary that is not an
Unrestricted Subsidiary with or held by such lender or lenders, (xvii) any
pledge or deposit of cash or property by the Company or any Subsidiary that is
not an Unrestricted Subsidiary in conjunction with obtaining surety and
performance bonds and letters of credit required to engage in constructing
on-site and off-site improvements or as otherwise required by political
subdivisions or other governmental authorities in the ordinary course of
business or secured indebtedness, (xviii) Liens in favor of the Trustee arising
pursuant to this Indenture, (xix) Liens incurred in the ordinary course of
business as security for the Company's or its Subsidiaries' that are not
Unrestricted Subsidiaries obligations with respect to indemnification in favor
of title insurance providers, (xx) letters of credit, bonds or other assets
pledged to secure insurance in the ordinary course of business, (xxi) Liens on
assets securing warehouse lines of credit and other credit facilities to finance
the operations of the Company's mortgage lending Subsidiaries that are not
Unrestricted Subsidiaries and Liens related to issuances of collateralized
mortgage obligations and mortgage-related securities, and (xxii) Liens on
property or assets of any Subsidiary of Richmond Homes securing Indebtedness of
such Subsidiary owing to Richmond Homes or one or more of its Subsidiaries that
is not an Unrestricted Subsidiary or Liens on property or assets of Richmond
Homes securing Indebtedness of Richmond Homes to one or more Subsidiaries that
are not Unrestricted Subsidiaries and (xxiii) any other
9
Liens, provided that such Liens under this clause (xxiii) do not at any time
--------
attach to property with fair value, in the aggregate, in excess of $5 million.
"Person" means any corporation, individual, limited liability company,
------
joint stock company, joint venture, partnership, unincorporated association,
governmental regulatory entity, country, state or political subdivision thereof,
trust, municipality or other entity.
"Placement Memorandum" means the Company's Private Placement Memorandum
--------------------
dated December 17, 1993, as supplemented to the Issue Date, pursuant to which
the Notes were originally offered.
"Plan of Liquidation" means, with respect to any Person, a plan that
-------------------
provides for, contemplates or the effectuation of which is preceded or
accompanied by (whether or not substantially contemporaneously) (i) the sale,
lease, conveyance or other disposition of all or substantially all of the assets
of such Person otherwise than as an entirety or substantially as an entirety and
(ii) the distribution of all or substantially all of the proceeds of such sale,
lease, conveyance or other disposition and all or substantially all of the
remaining assets of such Person to holders of Capital Stock or a class or
classes of Indebtedness of such Person.
"principal" of any Indebtedness (including the Securities) means the
---------
principal of such Indebtedness plus, without duplication, any applicable
premium, if any, on such Indebtedness.
"property" means any right or interest in or to property or assets of
--------
any kind whatsoever, whether real, personal or mixed and whether tangible or
intangible.
"Record Date" means a Record Date specified in the Securities whether
-----------
or not such Record Date is a Business Day.
"Redemption Date," when used with respect to any Security to be
---------------
redeemed, means the date fixed for such redemption pursuant to this Indenture
and Paragraph 5 of the Securities.
"Redemption Price," when used with respect to any Security to be
----------------
redeemed, means the redemption price for such redemption pursuant to Paragraph 5
in the Secu-
10
rities, which shall include, without duplication, in each case, accrued and
unpaid interest to the Redemption Date.
"Reference Period" with regard to any Person means the four full fiscal
----------------
quarters of such Person ended on or immediately preceding any date upon which
any determination is to be made pursuant to the terms of the Notes or this
Indenture for which financial information is available.
"Registrar" shall have the meaning specified in Section 2.3.
---------
"Registration Rights Agreement" means the Convertible Notes Registration
-----------------------------
Rights Agreement, dated as of December 28, 1993, by and among the Company and
the initial purchasers of the Notes, as such may be amended or modified from
time to time.
"Richmond Homes" means Richmond Homes, Inc. I, a Delaware corporation,
--------------
or its legal successor.
"SEC" means the Securities and Exchange Commission.
---
"Securities" means the Notes.
----------
"Securities Act" means the Securities Act of 1933, as amended, and the
--------------
rules and regulations of the SEC promulgated thereunder.
"Senior Indebtedness" means the principal of, interest on and any other
-------------------
amounts owing with respect to any Indebtedness of the Company, whether
outstanding on the Issue Date or thereafter created, incurred, assumed, or
guaranteed by the Company (including, but not limited to, the Senior Notes),
unless, in the case of any particular Indebtedness, the instrument creating or
evidencing the same or the assumption or guarantee thereof expressly provides
that such Indebtedness shall be pari passu or subordinate in right of payment to
---- -----
the Notes; provided, however, Senior Indebtedness shall not include (a) in the
-------- -------
case of the obligation of the Company in respect of each Note, the obligation of
the Company in respect of other Notes, (b) Indebtedness of the Company to a
Subsidiary or an Affiliate of the Company, (c) Indebtedness to, or guaranteed on
behalf of, any individual shareholder, director, officer or employee of the
Company or of any Subsidiary of the Company (including, without limitation,
11
amounts owed for compensation), (d) Indebtedness represented by Capitalized
Lease Obligations, (e) Indebtedness and other amounts incurred in connection
with obtaining goods, materials or services, (f) Disqualified Capital Stock and
(g) Indebtedness incurred in violation of the Indenture.
"Senior Notes" means the $190,000,000 principal amount of 11-1/8% Senior
------------
Notes due 2003 and 11-1/8% Series B Senior Notes due 2003, issued pursuant to
the Senior Notes Indenture.
"Senior Notes Indenture" means the Indenture, dated as of December 15,
----------------------
1993, by and among the Company, the Guarantors and Pledgors named therein and
First Bank National Association, as trustee, relating to the Senior Notes, a
form of which is attached as Exhibit B, as the same shall be amended, modified
and supplemented from time to time.
"Special Record Date" for payment of any Defaulted Interest means a
-------------------
date fixed by the Trustee pursuant to Section 2.12.
"Specific Performance Contracts" means, collectively, that certain
------------------------------
Specific Performance Contract, dated December 28, 1989, between Richmond Homes
Limited and Richmond American Homes of Colorado, Inc. II (now known as Richmond
Homes, Inc. I), and that certain Specific Performance Contract, dated December
28, 1989, between M.D.C. Land Corporation and Richmond American Homes of
Colorado, Inc. II (now known as Richmond Homes, Inc. I), as amended or modified
from time to time so long as no such amendment or modification shall adversely
affect the Company; provided that an amendment or modification that solely
--------
extends the maturity of payments thereof shall not be deemed to affect the
Company adversely.
"Stated Maturity," when used with respect to any Security, means
---------------
December 15, 2005.
"Subsidiary" of any Person means (i) any (A) corporation of which at
----------
least a majority of the aggregate voting power of all classes of Capital Stock
is directly or indirectly beneficially owned by such Person, and (B) entity
other than a corporation of which such Person directly or indirectly
beneficially owns at least a majority of the Capital Stock, (ii) in the case of
the Company, Richmond Homes and its Subsidiaries for so long
12
as the Company is required to consolidate Richmond Homes and its Subsidiaries in
its financial statements in accordance with GAAP, and (iii) any Person (other
than political subdivisions or enterprises thereof or governmental agencies)
required to be consolidated for financial accounting purposes in accordance with
GAAP. To the extent Richmond Homes becomes, and for so long as Richmond Homes
remains, a Wholly Owned Subsidiary of the Company, all references in this
Indenture to Wholly Owned Subsidiaries of the Company shall include Richmond
Homes and its Wholly Owned Subsidiaries that are not Unrestricted Subsidiaries.
"Surviving Person" shall have the meaning specified in Section 5.1(a)
----------------
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code (S)(S)
---
77aaa-77bbbb) as in effect on the date of the execution of this Indenture.
"Trustee" means the party named as such in this Indenture until a
-------
successor replaces it in accordance with the provisions of this Indenture and
thereafter means such successor.
"Trust Officer" means any officer within the corporate trust department
-------------
(or any successor group) of the Trustee including any vice president, assistant
vice president, secretary, assistant secretary or any other officer or assistant
officer of the Trustee customarily performing functions similar to those
performed by the Persons who at that time shall be such officers, and also
means, with respect to a particular corporate trust matter, any other officer of
the corporate trust department (or any successor group) of the Trustee to whom
such trust matter is referred because of his knowledge of and familiarity with
the particular subject.
"U.S. Government Obligations" means direct non-callable obligations of,
---------------------------
or noncallable obligations guaranteed by, the United States of America for the
payment of which obligation or guarantee the full faith and credit of the United
States of America is pledged.
"U.S. Legal Tender" means such coin or currency of the United States
-----------------
of America as at the time of payment
13
shall be legal tender for the payment of public and private debts.
"Unrestricted Subsidiary" means each of the Subsidiaries of the Company
-----------------------
so designated by a resolution adopted by the Board of Directors of the Company
as provided by and in compliance with the Senior Notes Indenture; provided that
--------
the term "Unrestricted Subsidiary" shall have no effect in the event the Senior
Notes Indenture is no longer in effect.
"Voting Stock" means Capital Stock of the Company having generally the
------------
right to vote in the election of the directors of the Company.
"Wholly Owned Subsidiary" of any Person means (i) a Subsidiary of such
-----------------------
Person of which 100% of the common equity (except for (x) directors' qualifying
shares, (y) certain minority interests owned by other Persons solely due to
local law requirements that there be more than one stockholder, but which
interest is not in excess of what is required for such purpose and (z) shares
required by law to be owned by an individual holding a real estate broker
license as a condition to such Subsidiary being licensed as a real estate
broker, but which interest is not in excess of what is required for such
purpose) is owned directly by such Person or through one or more Wholly Owned
Subsidiaries of such Person, or (ii) any entity other than a corporation in
which such Person, directly or indirectly, owns all of the common equity of such
entity.
SECTION 1.2 Incorporation by Reference of TIA.
---------------------------------
Whenever this Indenture refers to a provision of the TIA, such provision
is incorporated by reference in and made a part of this Indenture. The
following TIA terms used in this Indenture have the following meanings:
"Commission" means the SEC.
---------
"indenture securities" means the Securities.
--------------------
"indenture securityholder" means a Holder or a Securityholder.
------------------------
"indenture to be qualified" means this Indenture.
-------------------------
14
"indenture trustee" or "institutional trustee" means the Trustee.
----------------- ---------------------
"obligor" on the indenture Securities means the Company and any other
-------
obligor on the Securities.
All other TIA terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule and not
otherwise defined herein have the meanings assigned to them thereby.
SECTION 1.3 Rules of Construction.
---------------------
Unless the context otherwise requires:
(1) a term has the meaning
assigned to it;
(2) an accounting term not
otherwise defined has the meaning assigned to
it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular in-
clude the plural, and words in the plural in-
clude the singular;
(5) provisions apply to succes-
sive events and transactions;
(6) "herein," "hereof" and
other words of similar import refer to this
Indenture as a whole and not to any particular
Article, Section or other subdivision; and
(7) references to Sections or
Articles means reference to such Section or
Article in this Indenture, unless stated other-
wise.
15
ARTICLE TWO
THE SECURITIES
SECTION 2.1 Form and Dating.
---------------
The Notes and the Trustee's certificate of authentication, in
respect thereof, shall be substantially in the form of Exhibit A hereto.
The Securities may have notations, legends or endorsements required by law,
stock exchange rule or usage. The Company shall approve the form of the
Securities and any notation, legend or endorsement on them. Any such
notations, legends or endorsements not contained in the form of Note
attached as Exhibit A hereto shall be delivered in writing to the Trustee.
Each Security shall be dated the date of its authentication.
The terms and provisions contained in the form of Securities 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.
SECTION 2.2 Execution and Authentication.
----------------------------
Two Officers shall sign, or one Officer shall sign and one Officer
shall attest to, the Notes for the Company by manual or facsimile
signature. The Company's seal shall be impressed, affixed, imprinted or
reproduced on the Notes and may be in facsimile form.
If an Officer whose signature is on a Note was an Officer at the
time of such execution but no longer holds that office at the time the
Trustee authenticates the Note, the Note shall be valid nevertheless and
the Company shall nevertheless be bound by the terms of the Notes and this
Indenture.
A Security shall not be valid until an authorized signatory of the
Trustee manually signs the certificate of authentication on the Security
but such signature shall be conclusive evidence that the Security has been
authenticated pursuant to the terms of this Indenture.
The Trustee shall authenticate Securities for original issue in the
aggregate principal amount of up to
16
$50,000,000 upon a written order of the Company in the form of an Officers'
Certificate. The Officers' Certificate shall specify the amount of
Securities to be authenticated and the date on which the Securities are to
be authenticated. The aggregate principal amount of Securities outstanding
at any time may not exceed $50,000,000, except as provided in Section 2.7.
Upon the written order of the Company in the form of an Officers'
Certificate, the Trustee shall authenticate Securities in substitution of
Securities originally issued to reflect any name change of the Company.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Securities. Unless otherwise provided in the
appointment, an authenticating agent may authenticate Securities whenever
the Trustee may do so. Each reference in this Indenture to authentication
by the Trustee includes authentication by such agent. An authenticating
agent has the same rights as an Agent to deal with any Obligor, any
Affiliate of any Obligor, or any of their respective Subsidiaries.
Securities shall be issuable only in registered form without
coupons in denominations of $1,000 and any integral multiple thereof.
SECTION 2.3 Registrar, Paying Agent and Conversion Agent.
--------------------------------------------
The Company shall maintain an office or agency in New York, New
York, where Securities may be presented for registration of transfer or for
exchange ("Registrar"), an office or agency where Securities may be
presented for payment ("Paying Agent") and where notices and demands to or
upon the Company in respect of the Notes may be served and an office or
agency where Securities may be presented for conversion ("Conversion
Agent"). The Company may act as its own Registrar, Paying Agent or
Conversion Agent, except that, for the purposes of Articles Three and
Eight, and Sections 2.11 and 4.10, none of the Company nor any Affiliate of
the Company shall act as Paying Agent. The Registrar shall keep a register
of the Securities and of their transfer and exchange. The Company may have
one or more co-Registrars, one or more additional Paying Agents and one or
more additional Conversion Agents. The term "Paying Agent" includes any
additional Paying Agent; the term "Conversion Agent" includes any
additional Conversion Agent. The Company hereby initially appoints the
Trustee
17
as Registrar, Paying Agent and Conversion Agent, and the Trustee hereby
initially agrees so to act.
The Company shall enter into an appropriate written agency
agreement with any Agent not a party to this Indenture, which agreement
shall implement the provisions of this Indenture that relate to such Agent.
The Company shall promptly notify the Trustee in writing of the name and
address of any such Agent. If the Company fails to maintain a Registrar,
Paying Agent or Conversion Agent, the Trustee shall act as such.
SECTION 2.4 Paying Agent to Hold Assets in Trust.
------------------------------------
The Company shall require each Paying Agent other than the Trustee
to agree in writing that each Paying Agent shall hold in trust for the
benefit of Holders or the Trustee all assets held by the Paying Agent for
the payment of principal of, premium, if any, or interest on, the
Securities (whether such assets have been distributed to it by the
Company), and shall notify the Trustee in writing of any Default in making
any such payment. If the Company acts as Paying Agent, it shall segregate
such assets and hold them as a separate trust fund for the benefit of the
Holders or the Trustee. The Company at any time may require a Paying Agent
to distribute all assets held by it to the Trustee and account for any
assets disbursed and the Trustee may at any time during the continuance of
any payment Default, upon written request to a Paying Agent, require such
Paying Agent to distribute all assets held by it to the Trustee and to
account for any assets distributed. Upon distribution to the Trustee of
all assets that shall have been delivered by the Company to the Paying
Agent, the Paying Agent (if other than the Company) shall have no further
liability for such assets.
SECTION 2.5 Securityholder Lists.
--------------------
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses
of Holders. If the Trustee is not the Registrar, the Company shall furnish
to the Trustee on or before the tenth Business Day preceding each Interest
Payment Date and at such other times as the Trustee may request in writing
a list in such form and as of such date as the Trustee reasonably may
require of the names and addresses of Holders.
18
SECTION 2.6 Transfer and Exchange.
---------------------
When Securities are presented to the Registrar or a co-Registrar
with a request to register the transfer of such Securities or to exchange
such Securities for an equal principal amount of Securities of other
authorized denominations, the Registrar or co-Registrar shall register the
transfer or make the exchange as requested if its reasonable requirements
for such transaction are met; provided, however, that the Securities
-------- -------
surrendered for transfer or exchange shall be duly endorsed or accompanied
by a written instrument of transfer in form reasonably satisfactory to the
Company and the Registrar or co-Registrar, duly executed by the Holder
thereof or his attorney duly authorized in writing. To permit
registrations of transfers and exchanges, the Company shall execute and the
Trustee shall authenticate Securities at the Registrar's or co-Registrar's
request. No service charge shall be made for any registration of transfer
or exchange, but the Company may require payment of a sum sufficient to
cover any transfer tax, assessments, or similar governmental charge payable
in connection therewith (other than any such transfer taxes, assessments,
or similar governmental charge payable upon exchanges or transfers pursuant
to Section 2.2, 2.10, 3.7, 9.5, or 4.10). The Registrar or co-Registrar
shall not be required to register the transfer of or exchange of (a) any
Security selected for redemption in whole or in part pursuant to Article
Three, except the unredeemed portion of any Security being redeemed in
part, or (b) any Security for a period beginning 15 Business Days before
the mailing of a notice of an offer to repurchase pursuant to Section 4.10
hereof or redeem Securities pursuant to Article 3 hereof and ending at the
close of business on the day of such mailing.
SECTION 2.7 Replacement Securities.
----------------------
If a mutilated Security is surrendered to the Trustee or if the
Holder of a Security claims and submits an affidavit or other evidence,
satisfactory to the Trustee, to the Trustee to the effect that the Security
has been lost, destroyed or wrongfully taken, the Company shall issue and
the Trustee shall authenticate a replacement Security if the Trustee's
requirements are met. If required by the Trustee or the Company, such
Holder must provide an indemnity bond or other indemnity, sufficient in the
judgment of both the Company and the Trustee, to protect the Company, the
Trustee or any Agent from any
19
loss which any of them may suffer if a Security is replaced. The Company
may charge such Holder for its reasonable, out-of-pocket expenses in
replacing a Security.
Every replacement Security is an additional obligation of the
Company.
SECTION 2.8 Outstanding Securities.
----------------------
Securities outstanding at any time are all the Securities that have
been authenticated by the Trustee except those cancelled by it, those
delivered to it for cancellation and those described in this Section 2.8 as
not outstanding. A Security does not cease to be outstanding because the
Company or an Affiliate of the Company holds the Security, except as
provided in Section 2.9.
If a Security is replaced pursuant to Section 2.7 (other than a
mutilated Security surrendered for replacement), it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Security is held by a bona fide purchaser. A mutilated Security
---- ----
ceases to be outstanding upon surrender of such Security and replacement
thereof pursuant to Section 2.7.
If on a Redemption Date or the Stated Maturity the Paying Agent
(other than the Company or an Affiliate of the Company) holds U.S. Legal
Tender or U.S. Government Obligations sufficient to pay all of the
principal and interest due on the Securities payable on that date and
payment of the Securities called for redemption is not otherwise prohibited
pursuant to Article Twelve hereof or otherwise, then on and after that date
such Securities cease to be outstanding and interest on them ceases to
accrue.
SECTION 2.9 Treasury Securities.
-------------------
In determining whether the Holders of the required principal amount
of Securities have concurred in any direction, amendment, supplement,
waiver or consent, Securities owned by the Company and Affiliates of the
Company shall be disregarded, except that, for the purposes of determining
whether the Trustee shall be protected in relying on any such direction,
amendment, supplement, waiver or consent, only Securities that the
20
Trustee knows or has reason to know are so owned shall be disregarded.
SECTION 2.10 Temporary Securities.
--------------------
Until definitive Securities are ready for delivery, the Company may
prepare, and the Trustee shall authenticate, temporary Securities.
Temporary Securities shall be substantially in the form of definitive
Securities but may have variations that the Company reasonably and in good
faith considers appropriate for temporary Securities. Without unreasonable
delay, at the time that the registration statement pursuant to the
Registration Rights Agreement becomes effective, the Company shall prepare
and the Trustee shall authenticate definitive Securities in exchange for
temporary Securities. Until so exchanged, the temporary Securities shall
in all respects be entitled to the same benefits under this Indenture as
permanent Securities authenticated and delivered hereunder.
SECTION 2.11 Cancellation.
------------
The Company at any time may deliver Securities to the Trustee for
cancellation. The Registrar and the Paying Agent shall forward to the
Trustee any Securities surrendered to them for transfer, exchange or
payment. The Trustee, or at the direction of the Trustee, the Registrar or
the Paying Agent (other than the Company or an Affiliate of the Company),
and no one else, shall cancel and, at the written direction of the Company,
shall dispose of all Securities surrendered for transfer, exchange, payment
or cancellation. Subject to Section 2.7, the Company may not issue new
Securities to replace Securities it has paid or delivered to the Trustee
for cancellation. No Securities shall be authenticated in lieu of or in
exchange for any Securities cancelled as provided in this Section 2.11,
except as expressly permitted in the form of Securities and as permitted by
this Indenture.
SECTION 2.12 Defaulted Interest.
------------------
Interest on any Security which is payable, and is punctually paid
or duly provided for, on any Interest Payment Date shall be paid to the
person in whose name that Security (or one or more predecessor Securities)
is registered at the close of business on the Record Date for such
interest.
21
Any interest on any Security which is payable, but is not
punctually paid or duly provided for, on any Interest Payment Date plus, to
the extent lawful, any interest payable on the defaulted interest (herein
called "Defaulted Interest") shall forthwith cease to be payable to the
registered holder on the relevant Record Date by virtue of having been such
Holder, and such Defaulted Interest may be paid by the Company, at its
election in each case, as provided in clause (1) or (2) below:
(1) The Company may elect to make payment of any
Defaulted Interest to the persons in whose names the Securities are
registered at the close of business on a Special Record Date for the
payment of such Defaulted Interest, which shall be fixed in the
following manner. The Company shall notify the Trustee in writing of
the amount of Defaulted Interest proposed to be paid on each Security
and the date of the proposed payment, and at the same time the Company
shall deposit with the Trustee an amount of money equal to the
aggregate amount proposed to be paid in respect of such Defaulted
Interest or shall make arrangements satisfactory to the Trustee for
such deposit prior to the date of the proposed payment, such money when
deposited to be held in trust for the benefit of the Persons entitled
to such Defaulted Interest as provided in this clause (1). Thereupon
the Trustee shall fix a Special Record Date for the payment of such
Defaulted Interest which shall be not more than 15 days and not less
than 10 days prior to the date of the proposed payment and not less
than 10 days after the receipt by the Trustee of the notice of the
proposed payment. The Trustee shall promptly notify the Company of
such Special Record Date and, in the name and at the expense of the
Company, shall cause notice of the proposed payment of such Defaulted
Interest and the Special Record Date therefor to be mailed, first-class
postage prepaid, to each Holder at his address as it appears in the
security register not less than 10 days prior to such Special Record
Date. The Trustee may, in its discretion, in the name and at the
expense of the Company, cause a similar notice to be published at least
once in a newspaper, customarily published in the English language on
each
22
Business Day and of general circulation in New York, New York, but such
publication shall not be a condition precedent to the establishment of
such Special Record Date. Notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor having been
mailed as aforesaid, such Defaulted Interest shall be paid to the
persons in whose names the Securities (or their respective predecessor
Securities) are registered on such Special Record Date and shall no
longer be payable pursuant to the following clause (2).
(2) The Company may make payment of any Defaulted
Interest in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the Securities may be
listed, and upon such notice as may be required by such exchange, if,
after notice given by the Company to the Trustee of the proposed
payment pursuant to this clause, such manner shall be deemed
practicable by the Trustee.
Subject to the foregoing provisions of this Section 2.12, each
Security delivered under this Indenture upon transfer of or in exchange for or
in lieu of any other Security shall carry the rights to interest accrued and
unpaid, and to accrue, which were carried by such other Security.
SECTION 2.13 Legending of the Securities; Restrictions on Transfers.
------------------------------------------------------
Until such time as the same is no longer a Restricted Security, each
certificate evidencing the Securities (and all Securities issued in exchange
therefor or substitution thereof) shall bear a legend in substantially the form
set forth on the form of Note set forth as Exhibit A hereto. Prior to any
transfer or exchange of a legended Security for another Security, the Company
shall deliver an Officers' Certificate to the Trustee directing it to transfer
or exchange such Security for another legended or unlegended Security, subject
to compliance with any transfer restrictions.
23
ARTICLE THREE
REDEMPTION
SECTION 3.1 Right of Redemption.
-------------------
Redemption of Securities, as permitted or required by any provision of
this Indenture, shall be made in accordance with such provision and this Article
Three. The Securities may be redeemed in cash at the election of the Company,
as a whole or from time to time in part, at any time on or after December 15,
1998, at the Redemption Prices specified in the form of Note attached as Exhibit
A set forth therein under the caption "Redemption," in each case, including
accrued and unpaid interest, if any, to the Redemption Date.
SECTION 3.2 Notices to Trustee.
------------------
If the Company elects to redeem Securities pursuant to Paragraph 5 of
the Securities, it shall notify the Trustee in writing of the Redemption Date
and the principal amount of Securities to be redeemed and whether it wants the
Trustee to give notice of redemption to the Holders.
If the Company elects to credit the principal amount of Securities to be
redeemed pursuant to Paragraph 5 of the Securities by crediting against any such
redemption Securities it has not previously delivered to the Trustee for
cancellation, it shall so notify the Trustee and deliver such Securities with
such notice.
The Company shall give each notice to the Trustee provided for in this
Section 3.2 at least 45 days before the Redemption Date (unless a shorter notice
shall be satisfactory to the Trustee).
SECTION 3.3 Selection of Securities To Be Redeemed
--------------------------------------
If less than all of the Securities are to be redeemed pursuant to
Paragraph 5 thereof, the Trustee shall select the Securities to be redeemed pro
---
rata or by lot or by such other method as the Trustee shall determine to be fair
- ----
and appropriate and in such manner as complies with any applicable legal and
stock exchange requirements.
24
The Trustee shall make the selection from the Securities outstanding and
not previously called for redemption and shall promptly notify the Company in
writing of the Securities selected for redemption and, in the case of any
Security selected for partial redemption, the principal amount thereof to be
redeemed. Securities in denominations of $1,000 may be redeemed only in whole.
The Trustee may select for redemption portions (equal to $1,000 or any integral
multiple thereof) of the principal of Securities that have denominations larger
than $1,000. Provisions of this Indenture that apply to Securities called for
redemption also apply to portions of Securities called for redemption.
SECTION 3.4 Notice of Redemption.
--------------------
At least 15 days and not more than 60 days before a Redemption Date, the
Company shall mail a notice of redemption by first class mail, postage prepaid,
to the Trustee and each Holder, at such Holder's last address as then shown upon
the books of the registrar, whose Securities are to be redeemed. At the
Company's request, the Trustee shall give the notice of redemption in the
Company's name and at the Company's expense. Each notice for redemption shall
identify the Securities to be redeemed and shall state:
(1) the Redemption Date;
(2) the Redemption Price, including the amount of accrued
and unpaid interest to be paid upon such redemption;
(3) the conversion price;
(4) the name, address and telephone number of the Paying
Agent and Conversion Agent;
(5) that Securities called for redemption must be
surrendered to the Paying Agent at the address specified
in such notice to collect the Redemption Price;
(6) that, unless (a) the Company defaults in its obligation
to deposit U.S. Legal Tender with the Paying Agent in
accordance with Section 3.6 hereof or (b) such
redemption payment is prohibited pursuant to
25
Article Twelve hereof or otherwise, interest on
Securities called for redemption ceases to accrue on and
after the Redemption Date and the only remaining right
of the Holders of such Securities is to receive payment
of the Redemption Price, including accrued and unpaid
interest to the Redemption Date, upon surrender to the
Paying Agent of the Securities called for redemption and
to be redeemed;
(7) if any Security is being redeemed in part, the portion
of the principal amount, equal to $1,000 or any integral
multiple thereof, of such Security equal to the
unredeemed portion thereof and that, on and after the
Redemption Date, and upon surrender of such Security, a
new Security or Securities in aggregate principal amount
equal to the unredeemed portion thereof will be issued;
(8) if less than all the Securities are to be redeemed, the
identification of the particular Securities (or portion
thereof) to be redeemed, as well as the aggregate
principal amount of such Securities to be redeemed and
the aggregate principal amount of Securities to be
outstanding after such partial redemption;
(9) that Securities called for redemption may be converted
at any time prior to the close of business on the second
Business Day prior to the Redemption Date;
(10) that Holders who want to convert Securities must
satisfy the requirements of Paragraph 8 of the
Securities;
(11) the CUSIP number of the Securities to be redeemed; and
(12) that the notice is being sent pursuant to this Section
3.4 and pursuant to the optional redemption provisions
of Paragraph 5 of the Securities.
26
SECTION 3.5 Effect of Notice of Redemption.
------------------------------
Once notice of redemption is mailed in accordance with Section 3.4,
Securities called for redemption become due and payable on the Redemption Date
and at the Redemption Price, including accrued and unpaid interest to the
Redemption Date. Upon surrender to the Trustee or Paying Agent, such Securities
called for redemption shall be paid at the Redemption Price, including interest,
if any, accrued and unpaid on the Redemption Date; provided that if the
--------
Redemption Date is after a regular Record Date and on or prior to the Interest
Payment Date, the accrued interest shall be payable to the Holder of the
redeemed Securities registered on the relevant Record Date; and provided,
--------
further, that if a Redemption Date is a Legal Holiday, payment shall be made on
- -------
the next succeeding Business Day and no interest shall accrue for the period
from such Redemption Date to such succeeding Business Day.
SECTION 3.6 Deposit of Redemption Price.
---------------------------
On or prior to the Redemption Date, the Company shall deposit with the
Paying Agent (other than the Company or an Affiliate of the Company) U.S. Legal
Tender sufficient to pay the Redemption Price of, including accrued and unpaid
interest to the Redemption Date on, all Securities to be redeemed on such
Redemption Date (other than Securities or portions thereof called for redemption
on that date that have been delivered by the Company to the Trustee for
cancellation). The Paying Agent shall promptly return to the Company any U.S.
Legal Tender so deposited which is not required for that purpose upon the
written request of the Company.
If the Company complies with the preceding paragraph and the other
provisions of this Article Three and payment of the Securities called for
redemption is not prohibited under Article Twelve or otherwise, interest on the
Securities to be redeemed will cease to accrue on the applicable Redemption
Date, whether or not such Securities are presented for payment. Notwithstanding
anything herein to the contrary, if any Security surrendered for redemption in
the manner provided in the Securities shall not be so paid upon surrender for
redemption because of the failure of the Company to comply with the preceding
paragraph, interest shall continue to accrue and be paid from the Redemption
Date until such payment is made on the unpaid principal, and, to the extent
27
lawful, on any interest not paid on such unpaid principal, in each case at the
rate and in the manner provided in Section 4.1 hereof and the Securities.
SECTION 3.7 Securities Redeemed in Part.
---------------------------
Upon surrender of a Security that is to be redeemed in part, the Company
shall execute and the Trustee shall authenticate and deliver to the Holder,
without service charge, a new Security or Securities equal in principal amount
to the unredeemed portion of the Security surrendered.
SECTION 3.8 Conversion Arrangements on Call for Redemption.
----------------------------------------------
In connection with any redemption of Securities, the Company may (but
shall not be obligated to) arrange for the purchase and conversion of any
Securities by an agreement with one or more investment bankers or other
purchasers to purchase any or all of such Securities by paying to Holders, or to
the Trustee or a Paying Agent in trust for the Holders, on or before the close
of business on the Business Day immediately preceding the Redemption Date an
amount not less than the Redemption Price. Notwithstanding anything to the
contrary contained in this Article Three, the obligation of the Company to pay
the Redemption Price shall be satisfied and discharged to the extent such amount
is so paid by such purchasers. Pursuant to such an agreement, any Securities
tendered by the Holder thereof for redemption or not duly surrendered for
conversion or redemption by the Holder thereof shall be deemed acquired by such
purchasers from such Holders and surrendered by such purchasers for conversion,
all as of immediately prior to the close of business on the Business Day prior
to the Redemption Date, subject to payment of the above amount as aforesaid.
ARTICLE FOUR
COVENANTS
SECTION 4.1 Payment of Securities.
---------------------
The Company shall pay the principal of and interest on the Securities on
the dates and in the manner provided in the Securities. An installment of
principal
28
of or interest on the Securities shall be considered paid on the date it is due
if the Trustee or Paying Agent (other than the Company, a Subsidiary of the
Company or an Affiliate of the Company) holds for the benefit of the Holders, on
that date, U.S. Legal Tender deposited and designated for and sufficient to pay
the installment or otherwise as is in compliance with Section 4.3 of the
Purchase Agreement.
The Company shall pay interest on overdue principal and on overdue
installments of interest at the rate specified in the Securities compounded
semi-annually, to the extent lawful.
SECTION 4.2 Maintenance of Office or Agency.
-------------------------------
The Company shall maintain in New York, New York, an office or agency
where Securities may be presented or surrendered for payment, where Securities
may be surrendered for registration of transfer, exchange or conversion and
where notices and demands to or upon the Company in respect of the Securities
and this Indenture may be served. The Company shall give prompt written notice
to the Trustee of the location, and any change in the location, of such office
or agency. If at any time the Company shall fail to maintain any such required
office or agency or shall fail to furnish the Trustee with the address thereof,
such presentations, surrenders, notices and demands may be made or served at the
address of the Trustee set forth in Section 13.2.
The Company may also from time to time designate one or more other
offices or agencies where the Securities 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 New
York, New York, for such purposes. The Company shall give prompt written notice
to the Trustee of any such designation or rescission and of any change in the
location of any such other office or agency. The Company hereby initially
designates the office of the agent of the Trustee at the address set forth in
Article Thirteen as such office of the Company.
29
SECTION 4.3 Corporate Existence.
-------------------
Subject to Article Five, the Company shall do or cause to be done all
things necessary to preserve and keep in full force and effect its corporate
existence and the corporate or other existence of each of its Subsidiaries in
accordance with the respective organizational documents of each of them and the
rights (charter and statutory) and corporate franchises of the Company and each
of its Subsidiaries; provided, however, that the Company shall not be required
-------- -------
to preserve, with respect to itself, any right or franchise, and with respect to
any of its Subsidiaries, any such existence, right or franchise, if the Board of
Directors of the Company shall determine in good faith that the preservation
thereof is no longer desirable in the conduct of the business of the Company.
SECTION 4.4 Payment of Taxes and Other Claims.
---------------------------------
The Company shall, and shall cause each of its Subsidiaries to, pay or
discharge or cause to be paid or discharged, before the same shall become
delinquent, (i) all taxes, assessments and governmental charges (including
withholding taxes and any penalties, interest and additions to taxes) levied or
imposed upon the Company or any of its Subsidiaries or any of their respective
properties and assets and (ii) all lawful claims, whether for labor, materials,
supplies, services or anything else, which have become due and payable and which
by law have or may become a Lien upon the property and assets of the Company or
any of its Subsidiaries; provided, however, that the Company shall not be
-------- -------
required to pay or discharge or cause to be paid or discharged any such tax,
assessment, charge or claim (i) whose amount, applicability or validity is being
contested in good faith by appropriate proceedings and for which disputed
amounts adequate reserves have been established in accordance with GAAP or (ii)
that solely encumbers property abandoned or in the process of being abandoned
and with respect to which there is no recourse to the Company or any Subsidiary.
SECTION 4.5 Maintenance of Properties and Insurance.
---------------------------------------
The Company shall cause all properties used or useful to the conduct of
its business and the business of each of its Subsidiaries that is not an
Unrestricted
30
Subsidiary to be maintained and kept in good condition consistent with industry
standards and shall cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as in its reasonable
judgment may be necessary, so that the business carried on in connection
therewith may be properly and advantageously conducted at all times; provided,
--------
however, that nothing in this Section 4.5 shall prevent the Company from
- -------
discontinuing any operation or maintenance of any of such properties, or
disposing of any of them, if such discontinuance or disposal is (a), in the
judgment of the Company desirable in the conduct of the business of the Company
and (b) not disadvantageous in any material respect to the Holders.
The Company shall provide, or cause to be provided, for itself and each
of its Subsidiaries that is not an Unrestricted Subsidiary, insurance (including
appropriate self-insurance) against loss or damage of the kinds that, in the
reasonable, good faith opinion of the Company are adequate and appropriate for
the conduct of the business of the Company and such Subsidiaries that are not
Unrestricted Subsidiaries in a prudent manner, with reputable insurers or with
the government of the United States of America or an agency or instrumentality
thereof, in such amounts, with such deductibles, and by such methods as shall be
customary, in the reasonable, good faith opinion of the Company and adequate and
appropriate for the conduct of the business of the Company and such Subsidiaries
in a prudent manner for corporations similarly situated in the industry.
SECTION 4.6 Compliance Certificate; Notice of Default.
-----------------------------------------
(a) The Company shall deliver to the Trustee within 120 days after the
end of its fiscal year an Officers' Certificate complying with Section 314(a)(4)
of the TIA and stating that a review of its activities and the activities of its
Subsidiaries during the preceding fiscal year has been made under the
supervision of the signing Officers with a view to determining whether the
Company has kept, observed, performed and fulfilled its obligations under this
Indenture and further stating, as to each such Officer signing such certificate,
whether or not the signer knows of any failure by the Company or any Subsidiary
of the Company to comply with any conditions or covenants in this Indenture and,
if such signor does know of such a failure to comply, the certificate shall
31
describe such failure with particularity. The Officers' Certificate shall also
notify the Trustee should the relevant fiscal year end on any date other than
the current fiscal year end date.
(b) The Company shall, so long as any of the Securities are
outstanding, deliver to the Trustee, promptly upon becoming aware of any Default
or Event of Default under this Indenture, an Officers' Certificate specifying
such Default or Event of Default and what action the Company is taking or
proposes to take with respect thereto. The Trustee shall not be deemed to have
knowledge of a Default or an Event of Default unless one of its trust officers
receives notice of the Default giving rise thereto from the Company or any of
the Holders.
SECTION 4.7 SEC Reports.
-----------
The Company shall deliver to the Trustee and each Holder, within 15 days
after it files the same with the SEC, copies of all reports and information (or
copies of such portions of any of the foregoing as the SEC may by rules and
regulations prescribe), if any, exclusive of exhibits, which the Company is
required to file with the SEC pursuant to Section 13 or 15(d) of the Exchange
Act or pursuant to the immediately following sentence. So long as any
Securities remain outstanding, the Company shall file with the Commission such
reports as may be required pursuant to Section 13 of the Exchange Act in respect
of a security registered pursuant to Section 12 of the Exchange Act. If the
Company is not subject to the requirements of Section 13 or 15(d) of the
Exchange Act (or otherwise required to file reports pursuant to the immediately
preceding sentence), the Company shall deliver to the Trustee and to each
Holder, within 15 days after it would have been required to file such
information with the SEC were it required to do so, financial statements,
including any notes thereto (and, in the case of a fiscal year end, an auditors'
report by an independent certified public accounting firm of established
national reputation), and a "Management's Discussion and Analysis of Financial
Condition and Results of Operations," substantially equivalent to that which it
would have been required to include in such quarterly or annual reports,
information, documents or other reports if it had been subject to the
requirements of Section 13 or 15(d) of the Exchange Act. The Company shall also
comply with the other provisions of TIA (S) 314(a).
32
The Trustee has no duty to review the financial reports and other
information for the purpose of determining compliance with any provision of this
Indenture.
SECTION 4.8 Limitation on Transactions with Affiliates.
------------------------------------------
(a) Neither the Company nor any of its Subsidiaries may, make any loan,
advance, guaranty or capital contribution to or for the benefit of, or sell,
lease, transfer or otherwise dispose of any of its properties or assets to, or
for the benefit of, or purchase or lease any property or assets from, or enter
into or amend any contract, agreement or understanding with, or for the benefit
of any Affiliate which transaction involves or has a value in excess of $250,000
(each an "Affiliate Transaction"), except for transactions made in good faith,
the terms of which are at least as favorable as the terms which could be
obtained by the Company or such Subsidiary, as the case may be, in a comparable
transaction made on an arm's-length basis with Persons who are not Affiliates.
(b) Notwithstanding the foregoing, (i) with respect to any Affiliate
Transaction or series of related Affiliate Transactions with an aggregate value
in excess of $1,000,000, such transaction must first be approved, by a majority
of the independent directors of the Board of Directors of the Company pursuant
to a Board Resolution, on terms which are at least as favorable as the terms
which could be obtained by the Company or such Subsidiary, as the case may be,
in a comparable transaction made on an arm's length basis with Persons who are
not Affiliates and (ii) with respect to any Affiliate Transaction or related
series of Affiliate Transactions with an aggregate value in excess of
$10,000,000, the Company must first obtain a favorable written opinion from an
independent financial advisor of national reputation as to the fairness from a
financial point of view of such transaction to the Company or such Subsidiary,
as the case may be.
(c) Notwithstanding the foregoing, Affiliate Transactions shall not
include (i) transactions exclusively between or among the Company and its Wholly
Owned Subsidiaries that are not Unrestricted Subsidiaries, (ii) transactions in
which the sole participants are Wholly Owned Subsidiaries of the Company that
are not Unrestricted Subsidiaries or transactions between the Company
33
and its Wholly Owned Subsidiaries that are not Unrestricted Subsidiaries
permitted under Section 5.1, (iii) any contract, agreement or understanding
with, or for the benefit of, or planned for the benefit of, employees of the
Company or any Subsidiaries (in their capacity as such) that has been approved
by the Board of Directors, (iv) Capital Stock issuances to members of the Board
of Directors, officers and employees of the Company or its Subsidiaries pursuant
to plans approved by the stockholders of the Company or the respective
Subsidiary that is not an Unrestricted Subsidiary, (v) home sales and readily
marketable mortgage loans to employees, officers and directors of the Company
and Subsidiaries in the ordinary course of business, (vi) payment of regular
fees and reimbursement of expenses to directors of the Company who are not
employees of the Company and wages and other compensation to officers of the
Company or any of its Subsidiaries, (vii) contractual arrangements in effect on
the Issue Date and renewals and extensions thereof not involving modifications
adverse to the Company or any Subsidiary of the Company that is not an
Unrestricted Subsidiary, (ix) normal banking relationships with an Affiliate on
an arm's-length basis or (x) any item described by Section 4.10(c)(ii) of the
Senior Notes Indenture.
SECTION 4.9 Waiver of Stay, Extension or Usury Laws.
---------------------------------------
The Company covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay or extension law or any usury law or
other law which would prohibit or forgive the Company from paying all or any
portion of the principal of or interest on the Securities as contemplated
herein, wherever enacted, now or at any time hereafter in force, or which may
affect the covenants or the performance of this Indenture; and (to the extent
that it may lawfully do so) the Company 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.
34
SECTION 4.10 Repurchase of Notes at the Option of the Holder Upon a
------------------------------------------------------
Change of Control.
- -----------------
(a) In the event that a Change of Control (as defined below) has
occurred, each Holder will have the right, at such Holder's option, subject to
the terms and conditions of this Section 4.10, to require the Company to
repurchase all or any part of such Holder's Notes (provided that the principal
--------
amount of such Notes must be $1,000 or an integral multiple thereof) on the date
that is no later than 60 Business Days (unless later required by applicable law)
after the occurrence of such Change of Control (the "Change of Control Payment
Date"), at a cash price equal to 101% of the principal amount thereof, plus
accrued and unpaid interest, if any (the "Change of Control Purchase Price"), to
the Change of Control Payment Date.
(b) The Company shall notify the Trustee within 10 Business Days after
the Company knows or reasonably should know as a result of a public filing of
the occurrence of each Change of Control. Within 20 Business Days after the
Company knows or reasonably should know as a result of a public filing of the
occurrence of each Change of Control, the Company will make an unconditional
offer (a "Change of Control Offer") to all Holders of Notes to purchase all of
the Notes at the Change of Control Purchase Price by sending written notice of a
Change of Control Offer, by first class mail, to each Holder at its registered
address, with a copy to the Trustee. The notice to Holders, which shall govern
the terms of the Offer, shall state:
(1) that the Change of Control Offer is being made pursuant to
this Section 4.10 and that all Securities, or portions thereof, tendered
will be accepted for payment;
(2) the Change of Control Purchase Price (including the amount of
accrued and unpaid interest), the Change of Control Payment Date and the
Final Change of Control Put Date (as defined below);
(3) that any Security, or portion thereof, not tendered or
accepted for payment will continue to accrue interest;
35
(4) that, unless the Company defaults in depositing U.S. Legal
Tender with the Paying Agent in accordance with the first paragraph of
clause (c) of this Section 4.10, or payment is otherwise prevented, any
Security, or portion thereof, accepted for payment pursuant to the Change
of Control Offer shall cease to accrue interest after the Change of Control
Payment Date;
(5) that Holders electing to have a Security, or portion thereof,
purchased pursuant to a Change of Control Offer will be required to
surrender the Security, with the form entitled "Option of Holder to Elect
Purchase" on the reverse of the Security completed, to the Paying Agent
(which may not for purposes of this Section 4.10, notwithstanding anything
in this Indenture to the contrary, be the Company or any Affiliate of the
Company) at the address specified in the notice prior to the close of
business on the third Business Day prior to the Change of Control Payment
Date (the "Final Change of Control Put Date");
(6) that Holders will be entitled to withdraw their election, in
whole or in part, if the Paying Agent receives, prior to the close of
business on the Final Change of Control Put Date, a telegram, telex,
facsimile transmission or letter setting forth the name of the Holder, the
principal amount of the Securities the Holder is withdrawing and a
statement that such Holder is withdrawing his election to have such
principal amount of Notes purchased; and
(7) a brief description of the events resulting in such Change of
Control.
(c) On or before the Change of Control Payment Date, the Company will
(i) accept for payment Notes or portions thereof properly tendered pursuant to
the Change of Control Offer, (ii) deposit with the Paying Agent U.S. Legal
Tender sufficient to pay the Change of Control Purchase Price (together with
accrued and unpaid interest) of all Notes so tendered and (iii) deliver to the
Trustee Notes so accepted together with an Officers' Certificate identifying the
Notes or portions thereof
36
being purchased by the Company. The Paying Agent will promptly mail to the
Holders of Notes so accepted payment in an amount equal to the Change of Control
Purchase Price (together with accrued and unpaid interest), and the Trustee will
promptly authenticate and mail or deliver to such Holders a new Note equal in
principal amount to any unpurchased portion of the Note surrendered. Any Notes
not so accepted will be promptly mailed or delivered by the Company to the
Holder thereof. The Company will announce publicly the results of the Change of
Control Offer on or as soon as practicable after the Change of Control Payment
Date.
"Change of Control" means (i) any sale, transfer or other conveyance
(other than to the Company or a Wholly Owned Subsidiary), whether direct or
indirect, of all or substantially all of the assets of the Company, on a
consolidated basis, to any "person" or "group" in one transaction or a series of
related transactions, provided that a transaction where the holders of all
classes of Voting Stock of the Company immediately prior to such transaction
own, directly or indirectly, 50% or more of the aggregate voting power of all
classes of Voting Stock of such "person" or "group" immediately after such
transaction will not be a Change of Control, or (ii) any "person" or "group,"
other than the Management Group (as defined below) is or becomes the "beneficial
owner," directly or indirectly, of more than 50% of the total voting power of
the Voting Stock then outstanding. The "Management Group" shall consist of at
least a majority of the executive officers of the Company as of the date of the
Indenture as disclosed in the Placement Memorandum, members of their immediate
families, certain trusts for their benefit, and legal representatives of, or
heirs, beneficiaries or legatees receiving Common Stock (or securities
convertible or exchangeable for Common Stock) under any such person's estate.
For the purposes of this definition, (i) the terms "person" and "group"
shall have the meanings used for purposes of Rules 13d-3 and 13d-5 of the
Exchange Act, whether or not applicable; provided that no Excluded Person and no
--------
person or group controlled by Excluded Persons shall be deemed to be a "person"
or "group" and (ii) the term "beneficial owner" shall have the meaning used in
Rules 13d-3 and 13d-5 under the Exchange Act, whether or not applicable, except
that a person shall be deemed to have "beneficial ownership" of all shares that
any such person has the right to acquire, whether such
37
right is exercisable immediately or only after the passage of time or upon the
occurrence of certain events.
Notwithstanding anything to the contrary in this Section 4.10, the
Company shall not be obligated to make any payment of the Change of Control
Purchase Price unless and until the Company shall have satisfied its
obligations, if any, to make similar payments pursuant to Section 4.l6 of the
Senior Notes Indenture.
ARTICLE FIVE
SUCCESSOR CORPORATION
SECTION 5.1 When Company May Merge, Etc.
----------------------------
(a) The Company may not consolidate with or merge with or into another
Person or, directly or indirectly, sell, lease or convey all or substantially
all of its assets (computed on a consolidated basis), whether in a single
transaction or a series of related transactions, to another Person or group of
affiliated Persons, unless (i) either (A) the Company is the continuing
corporation or (B) the resulting, surviving or transferee entity (the "Surviving
Person") is a corporation or partnership organized under the laws of the United
States, any state thereof or the District of Columbia and expressly assumes by
supplemental indenture all of the obligations of the Company under the Notes and
this Indenture; (ii) no Default or Event of Default shall exist or shall occur
immediately before or after giving effect to such transaction; and (iii)
immediately after giving effect to such transaction on a pro forma basis, the
--- -----
net worth of the surviving or transferee entity on a stand-alone basis is at
least equal to the net worth of the Company immediately prior to such
transaction. The provisions of clause (iii) above shall not apply to a
transaction between the Company and its Wholly Owned Subsidiaries that are not
Unrestricted Subsidiaries.
(b) For purposes of clause (a), the sale, lease, conveyance,
assignment, transfer, or other disposition of all or substantially all of the
properties and assets of one or more Subsidiaries of the Company, which
properties and assets, if held by the Company instead of such Subsidiaries,
would constitute all or substantially all of the properties and assets of the
Company on a consolidated basis, shall be deemed to be the transfer of
38
all or substantially all of the properties and assets of the Company.
SECTION 5.2 Successor Corporation Substituted.
---------------------------------
Upon any consolidation or merger, or any transfer of assets in
accordance with Section 5.1, the Surviving Person formed by such consolidation
or into which the Company is merged or to which such transfer is made, shall
succeed to, and be substituted for, and may exercise every right and power of,
the Company under this Indenture with the same effect as if such Surviving
Person had been named as the Company herein. When a Surviving Person duly
assumes all of the obligations of the Company pursuant hereto and pursuant to
the Securities, the predecessor shall be released from such obligations.
ARTICLE SIX
EVENTS OF DEFAULT AND REMEDIES
SECTION 6.1 Events of Default.
-----------------
"Event of Default," wherever used herein, means any one of the following
events (whatever the reason for such Event of Default and whether it shall be
caused voluntarily or involuntarily or effected, without limitation, by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(1) default in the payment of interest on the Notes as and when
the same becomes due and payable and the continuance of any such failure
for 30 days;
(2) default in the payment of all or any part of the principal or
premium, if any, on the Notes when and as the same become due and payable
at maturity, redemption, by declaration of acceleration or otherwise,
including payment of the Change of Control Purchase Price;
(3) default in the observance or performance of, or breach of, any
covenant, agreement or warranty of the Company contained
39
in the Notes or this Indenture (other than a default in the performance of
any covenant, agreement or warranty which is specifically dealt with
elsewhere in this Section 6.1), and continuance of such default or breach
for a period of 45 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 Holders of at least 25% in aggregate principal amount of the
outstanding Securities, a written notice specifying such default or breach,
requiring it to be remedied and stating that such notice is a "Notice of
Default" hereunder;
(4) a decree, judgment, or order by a court of competent
jurisdiction shall have been entered adjudging the Company or any of its
Material Subsidiaries as bankrupt or insolvent, or approving as properly
filed a petition in an involuntary case or proceeding seeking
reorganization of the Company or any of its Material Subsidiaries under any
bankruptcy or similar law, or a decree, judgment or order of a court of
competent jurisdiction over the appointment of a receiver, liquidator,
trustee, or assignee in bankruptcy or insolvency of the Company, any of its
Material Subsidiaries, or of the property of any such Person, or the
winding up or liquidation of the affairs of any such Person, shall have
been entered, and the continuance of any such decree, judgment or order
unstayed and in effect for a period of 45 consecutive days;
(5) the Company or any of its Material Subsidiaries shall
institute proceedings to be adjudicated a voluntary bankrupt (including
conversion of an involuntary proceeding into a voluntary proceeding), or
shall consent to the filing of a bankruptcy proceeding against it, or shall
file a petition or answer or consent to the filing of any such petition, or
shall consent to the appointment of a Custodian, receiver, liquidator,
trustee, or assignee in bankruptcy or insolvency of it or any of its assets
or property, or shall make a general assignment for the benefit of
creditors, or shall admit in writing its inability
40
to pay its debts generally as they become due, or shall, within the meaning
of any Bankruptcy Law, become insolvent, fail generally to pay its debts as
they become due;
(6) (A) the acceleration of any Indebtedness (other than
Non-Recourse Indebtedness) of the Company or any of its Subsidiaries that
are not Unrestricted Subsidiaries that has an outstanding principal amount
of $5,000,000 or more in the aggregate to be immediately due and payable;
provided that, in the event any such acceleration is withdrawn or otherwise
--------
rescinded (including satisfaction of such Indebtedness) within a period of
ten business days after such acceleration by the holders of such
Indebtedness, any Event of Default under this clause (v) will be deemed to
be cured and any acceleration under this Indenture will be deemed withdrawn
or rescinded; and (B) the failure by the Company or any of its Subsidiaries
that are not Unrestricted Subsidiaries to make any principal, premium,
interest or other required payment in respect of Indebtedness (other than
Non-Recourse Indebtedness) of the Company or any of its Subsidiaries that
are not Unrestricted Subsidiaries with an outstanding aggregate principal
amount of $5,000,000 or more (after giving effect to any applicable grace
period set forth in the documents governing such Indebtedness); and
(7) one or more final judgments (in the amount not covered by
insurance or not reserved for) or the issuance of any warrant of attachment
against any portion of the property or assets of the Company or any
Subsidiary of the Company that is not an Unrestricted Subsidiary, which, in
the aggregate, are at least $5,000,000 at any one time rendered against the
Company or any of its Subsidiaries that are not Unrestricted Subsidiaries
by a court of competent jurisdiction and not bonded, satisfied or
discharged for a period (during which execution shall not be effectively
stayed) of (A) 45 days after the judgment (which, if there is more than one
judgment, causes such judgments to exceed $5,000,000 in the aggregate)
becomes final and such court shall not have ordered or
41
approved, and the parties shall not have agreed upon, the payment of such
judgment at a later date or dates or (B) 45 days after all or any part of
such judgment is payable pursuant to any court order or agreement between
the parties.
If a Default occurs and is continuing and if it is known to the Trustee,
the Trustee must, within 90 days after the occurrence of such Default, give to
the Holders notice of such Default; provided that, except in the case of a
--------
Default in payment of principal of, premium, if any, or interest on the Notes,
including a Default in the payment of the Change of Control Purchase Price as
required by this Indenture, the Trustee will be protected in withholding such
notice if it in good faith determines that the withholding of such notice is in
the interest of the Holders.
SECTION 6.2 Acceleration of Maturity Date; Rescission and Annulment.
-------------------------------------------------------
If an Event of Default occurs and is continuing (other than an Event of
Default specified in Section 6.1(4) or (5) of this Article Six, relating to the
Company or its Material Subsidiaries), then in each such case, unless the
principal of all of the Notes shall have already become due and payable, either
the Trustee or the Holders of 25% in aggregate principal amount of the Notes
then outstanding, by notice in writing to the Company (and to the Trustee if
given by the Holders) (an "Acceleration Notice"), may declare all principal,
determined as set forth below, including in each case accrued interest thereon,
or, as appropriate, the Change of Control Purchase Price (solely with respect to
a Default relating to the payment of the Change of Control Purchase Price) to be
due and payable immediately. If an Event of Default specified in Section 6.1(4)
or (5) occurs, all principal and accrued and unpaid interest thereon will be
immediately due and payable on all outstanding Notes without any declaration or
other act on the part of the Trustee or the Holders.
At any time after such a declaration of acceleration is made and before
a judgment or decree for payment of the money due has been obtained by the
Trustee as hereinafter provided in this Article Six, the Holders of a majority
in aggregate principal amount of then outstanding Securities, by written notice
to the Company
42
and the Trustee, may waive, on behalf of all Holders, any such declaration of
acceleration if:
(1) the Company has paid or deposited with the Trustee a sum
sufficient to pay
(A) all overdue interest on all Securities,
(B) the principal of (and premium, if any, applicable to) any
Securities which would become due otherwise than by such declaration of
acceleration, and interest thereon at the rate borne by the Securities,
(C) to the extent that payment of such interest is lawful, interest
upon overdue interest at the rate borne by the Securities,
(D) all sums paid or advanced by the Trustee hereunder and the
compensation, expenses, disbursements and advances of the Trustee, its
agents and counsel, and
(2) all Events of Default, other than the non-payment of the
principal of, premium, if any, and interest on Securities which have become
due solely by such declaration of acceleration, have been cured or waived
as provided in Section 6.12, including, if applicable, any Event of Default
relating to the covenants contained in Section 4.10.
Notwithstanding the previous sentence of this Section 6.2, no waiver shall be
effective for any Event of Default or event which with notice or lapse of time
or both would be an Event of Default with respect to any covenant or provision
which cannot be modified or amended without the consent of the Holder of each
outstanding Security, unless all such affected Holders agree, in writing, to
waive such Event of Default or event. No such waiver shall cure or waive any
subsequent default or impair any right consequent thereon.
SECTION 6.3 Collection of Indebtedness and Suits for Enforcement by
-------------------------------------------------------
Trustee.
- -------
The Company covenants that if an Event of Default in payment of
principal, premium, or interest
43
specified in clause (1) or (2) of Section 6.1 occurs and is continuing, the
Company shall, upon demand of the Trustee, pay to it, for the benefit of the
Holders of such Securities, the whole amount then due and payable on such
Securities for principal, premium (if any) and interest, and, to the extent that
payment of such interest shall be legally enforceable, interest on any overdue
principal (and premium, if any) and on any overdue interest, at the rate borne
by the Securities, and, in addition thereto, such further amount as shall be
sufficient to cover the costs and expenses of collection, including compensation
to, and expenses, disbursements and advances of the Trustee, its agents and
counsel.
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 in favor of the
Holders, may institute a judicial proceeding for the collection of the sums so
due and unpaid, may prosecute such proceeding to judgment or final decree and
may enforce the same against the Company or any other obligor upon the
Securities 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 Securities, wherever situated.
If an Event of Default occurs and is continuing, the Trustee may in its
discretion proceed to protect and enforce its rights and the rights of the
Holders by such appropriate judicial proceedings as the Trustee shall deem most
effective to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy.
SECTION 6.4 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 upon the Securities or the property
of the Company, the Trustee (irrespective of whether the principal of the
Securities shall then be due and payable as therein expressed or by declaration
or otherwise and irrespective of whether the Trustee shall have made any demand
on the Company for the payment of overdue principal or interest) shall be
entitled and
44
empowered, by intervention in such proceeding or otherwise to take any and all
actions under the TIA, including
(i) to file and prove a claim for the whole amount of principal
(and premium, if any) and interest owing and unpaid in respect of the
Securities and to file such other papers or documents as may be necessary
or advisable in order to have the claims of the Trustee (including any
claim for the reasonable compensation, expenses, disbursements and advances
of the Trustee, its agents and counsel) and of the Holders allowed in such
judicial proceeding, and
(ii) to collect and receive any moneys or other property payable
or deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Holder to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the Holders, to
pay to the Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 7.7.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment, or composition affecting the Securities
or the rights of any Holder thereof or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding.
SECTION 6.5 Trustee May Enforce Claims Without Possession of
------------------------------------------------
Securities.
- ----------
All rights of action and claims under this Indenture or the Securities
may be prosecuted and enforced by the Trustee without the possession of any of
the Securities or the production thereof in any proceeding relating thereto, and
any such proceeding instituted by the Trustee shall be brought in its own name
as trustee of an express trust in favor of the Holders, and any recovery of
judgment shall, after provision for the
45
payment of compensation to, and expenses, disbursements and advances of the
Trustee, its agents and counsel, be for the ratable benefit of the Holders of
the Securities in respect of which such judgment has been recovered.
SECTION 6.6 Priorities.
----------
Any money collected by the Trustee pursuant to this Article Six 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, premium (if
any) or interest, upon presentation of the Securities and the notation thereon
of the payment if only partially paid and upon surrender thereof if fully paid:
FIRST: To the Trustee in payment of all amounts due pursuant to
Section 7.7;
SECOND: Subject to Article Twelve, to the Holders in payment of the
amounts then due and unpaid for principal of, premium (if any) and interest on,
the Securities in respect of which or for the benefit of which such money has
been collected, ratably, without preference or priority of any kind, according
to the amounts due and payable on such Securities for principal, premium (if
any) and interest, respectively; and
THIRD: Subject to Article Twelve, to whomever may be lawfully
entitled thereto, the remainder, if any.
SECTION 6.7 Limitation on Suits.
-------------------
No Holder of any Security shall have any right to order or direct the
Trustee 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 then
outstanding Securities 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;
46
(C) such Holder or Holders have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities to be
incurred or reasonably probable 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 Securities;
it being understood and intended that no one or more 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 Holders,
or to obtain or to seek to obtain priority or preference over any other Holders
or to enforce any right under this Indenture, except in the manner herein
provided and for the equal and ratable benefit of all the Holders.
SECTION 6.8 Unconditional Right of Holders to Receive Principal,
----------------------------------------------------
Premium and Interest.
- --------------------
Notwithstanding any other provision of this Indenture, the Holder of any
Security shall have the right, which is absolute and unconditional, to receive
payment of the principal of, and premium (if any) and interest on, such Security
on the Maturity Date of such payment as expressed in such Security (in the case
of redemption, the Redemption Price on the applicable Redemption Date, and in
the case of the Change of Control Purchase Price, on the applicable Change of
Control Payment Date), and to institute suit for the enforcement of any such
payment after such respective dates, and such rights shall not be impaired
without the consent of such Holder.
SECTION 6.9 Rights and Remedies Cumulative.
------------------------------
Except as otherwise provided with respect to the replacement or payment
of mutilated, destroyed, lost or stolen Securities in Section 2.7, no right or
remedy herein conferred upon or reserved to the Trustee or to the Holders is
intended to be exclusive of any other
47
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 6.10 Delay or Omission Not Waiver.
----------------------------
No delay or omission by the Trustee or by any Holder of any Security to
exercise any right or remedy arising upon any Event of Default shall impair the
exercise of any such right or remedy or constitute a waiver of any such Event of
Default. Every right and remedy given by this Article Six or by law to the
Trustee or to the Holders may be exercised from time to time, and as often as
may be deemed expedient, by the Trustee or by the Holders, as the case may be.
SECTION 6.11 Control by Holders.
------------------
The Holder or Holders of a majority in aggregate principal amount of
then outstanding Securities 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 upon the Trustee, provided that:
--------
(1) such direction shall not be in conflict with any rule of law
or with this Indenture,
(2) the Trustee shall not determine that the action so directed
would be unjustly prejudicial to the Holders not taking part in such
direction, and
(3) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction.
SECTION 6.12 Waiver of Past Default.
----------------------
Subject to Section 6.8, the Holder or Holders of not less than a
majority in aggregate principal amount of the outstanding Securities may, on
behalf of all Holders, waive any past default hereunder and its consequences,
except a default
48
(A) in the payment of the principal of, premium, if any, or
interest on, any Security not yet cured, or
(B) in respect of a covenant or provision hereof which, under
Article Nine, cannot be modified or amended without the consent of the
Holder of each outstanding Security affected.
Upon any such waiver, such default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other default or impair the exercise of any right arising therefrom.
SECTION 6.13 Undertaking for Costs.
---------------------
All parties to this Indenture agree, and each Holder of any Security by
his 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 to be taken 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, 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 aggregate
principal amount of the outstanding Securities, or to any suit instituted by any
Holder for enforcement of the payment of principal of, or premium (if any) or
interest on, any Security on or after the respective Maturity Date expressed in
such Security (including, in the case of redemption, on or after the Redemption
Date).
SECTION 6.14 Restoration of Rights and Remedies.
----------------------------------
If the Trustee or any Holder has instituted any proceeding to enforce
any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined
49
adversely to the Trustee or to such Holder, then and in every case, subject to
any determination in such proceeding, the Company, the Trustee and the Holders
shall be restored severally and respectively to their former positions
hereunder and thereafter all rights and remedies of the Trustee and the Holders
shall continue as though no such proceeding had been instituted.
ARTICLE SEVEN
TRUSTEE
The Trustee hereby accepts the trust imposed upon it by this Indenture
and covenants and agrees to perform the same, as herein expressed.
SECTION 7.1 Duties of Trustee.
-----------------
(a) If a Default or an Event of Default has occurred and is continuing,
the Trustee shall exercise such of the rights and powers vested in it by this
Indenture and use the same degree of care and skill in their exercise as a
prudent Person would exercise or use under the circumstances in the conduct of
his own affairs.
(b) Except during the continuance of a Default or an Event of Default:
(1) The Trustee need perform only those duties as are specifically
set forth in this Indenture and no others, and no covenants or obligations
shall be implied in or read into this Indenture which are adverse to the
Trustee.
(2) In the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to the requirements of this Indenture. However,
the Trustee shall examine the certificates and opinions to determine
whether or not they conform to the requirements of this Indenture.
50
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(1) This paragraph does not limit the effect of paragraph (b) of
this Section 7.1.
(2) The Trustee shall not be liable for any error of judgment made
in good faith by a Trust Officer, unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts.
(3) The Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.11.
(d) 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 to take or omit to take any action
under this Indenture or at the request, order or direction of the Holders 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.
(e) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b), (c), (d) and (f) of this Section 7.1.
(f) The Trustee shall not be liable for interest on any assets received
by it except as the Trustee may agree in writing with the Company. Assets held
in trust by the Trustee need not be segregated from other assets except to the
extent required by law.
SECTION 7.2 Rights of Trustee.
-----------------
Subject to Section 7.1:
(a) The Trustee may rely on any document believed by it to be genuine
and to have been signed or
51
presented by the proper Person. The Trustee need not investigate any fact or
matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may consult
with counsel and may require an Officers' Certificate or an Opinion of Counsel,
which shall conform to Sections 13.4 and 13.5. The Trustee shall not be liable
for any action it takes or omits to take in good faith in reliance on such
certificate or opinion.
(c) The Trustee may act through its attorneys and agents and shall not
be responsible for the misconduct or negligence of any agent appointed with due
care.
(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith which it believes to be authorized or within its rights or
powers.
(e) The Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, notice, request, direction, consent, order, bond, debenture, 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.
(f) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request, order or
direction of any of the Holders, pursuant to the provisions of this Indenture,
unless such Holders shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which may be incurred
therein or thereby.
SECTION 7.3 Individual Rights of Trustee.
----------------------------
The Trustee in its individual or any other capacity may become the owner
or pledgee of Securities and may otherwise deal with the Company, its
Subsidiaries, or their respective Affiliates with the same rights it would have
if it were not Trustee. Any Agent may do the same with like rights. However,
the Trustee must comply with Sections 7.10 and 7.11.
52
SECTION 7.4 Trustee's Disclaimer.
--------------------
The Trustee makes no representation as to the validity or adequacy of
this Indenture or the Securities and it shall not be accountable for the
Company's use of the proceeds from the Securities, and it shall not be
responsible for any statement in the Securities, other than the Trustee's
certificate of authentication, or the use or application of any funds received
by a Paying Agent other than the Trustee.
SECTION 7.5 Notice of Default.
-----------------
If a Default occurs and is continuing and if it is known to the Trustee,
the Trustee must, within 90 days after the occurrence of such default, mail to
each Holder notice of such Default, except in the case of a default in payment
of principal of, premium, if any, or interest on, the Notes, including a default
in the payment of the Change of Control Purchase Price as required by this
Indenture. The Trustee will be protected in withholding such notice if it in
good faith determines that the withholding of such notice is in the interest of
the Holders.
SECTION 7.6 Reports by Trustee to Holders.
-----------------------------
Within 60 days after each May 15, beginning with the May 15 following
the date of this Indenture, the Trustee shall, if required, mail to each Holder
a brief report dated as of such May 15 that complies with TIA (S)313(a). The
Trustee also shall comply with TIA (S)(S) 313(b) and 313(c).
The Company shall promptly notify the Trustee in writing if the
Securities become listed on any stock exchange or automatic quotation system.
A copy of each report at the time of its mailing to Holders shall be
mailed to the Company and filed with the SEC and each stock exchange, if any, on
which the Securities are listed.
SECTION 7.7 Compensation and Indemnity.
--------------------------
The Company shall pay to the Trustee from time to time reasonable
compensation for its services. The Trustee's compensation shall not be limited
by any law on compensation of a trustee of an express trust. The Company shall
reimburse the Trustee upon request for all
53
reasonable disbursements, expenses and advances incurred or made by it. Such
expenses shall include the reasonable compensation, disbursements and expenses
of the Trustee's agents, accountants, experts and counsel.
The Company shall indemnify the Trustee (in its capacity as Trustee) and
each of its officers, directors, attorneys-in-fact and agents for, and hold it
harmless against, any claim, demand, expense (including but not limited to
reasonable compensation, disbursements and expenses of the Trustee's agents and
counsel), loss or liability incurred by it without negligence or bad faith on
its part, arising out of or in connection with the administration of this trust
and its rights or duties hereunder including the reasonable costs and expenses
of defending itself against any claim or liability in connection with the
exercise or performance of any of its powers or duties hereunder. The Trustee
shall notify the Company promptly of any claim asserted against the Trustee for
which it may seek indemnity. The Company shall defend the claim and the Trustee
shall provide reasonable cooperation at the Company's expense in the defense.
The Trustee may have separate counsel and the Company shall pay the reasonable
fees and expenses of such counsel; provided that the Company will not be
--------
required to pay such fees and expenses if it assumes the Trustee's defense and
there is no conflict of interest between the Company and the Trustee in
connection with such defense. The Company need not pay for any settlement made
without its written consent. The Company need not reimburse any expense or
indemnify against any loss or liability to the extent incurred by the Trustee
through its negligence, bad faith or willful misconduct.
To secure the Company's payment obligations in this Section 7.7, the
Trustee shall have a lien prior to the Securities on all assets held or
collected by the Trustee, in its capacity as Trustee, except assets held in
trust to pay principal and premium, if any, of or interest on particular
Securities.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.1(4) or (5) occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.
The Company's obligations under this Section 7.7 and any lien arising
hereunder shall survive the
54
resignation or removal of the Trustee, the discharge of the Company's
obligations pursuant to Article Eight of this Indenture and any rejection or
termination of this Indenture under any Bankruptcy Law.
SECTION 7.8 Replacement of Trustee.
----------------------
The Trustee may resign by so notifying the Company in writing. The
Holder or Holders of a majority in principal amount of the outstanding
Securities may remove the Trustee by so notifying the Company and the Trustee in
writing and may appoint a successor trustee with the Company's consent. The
Company may remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver, Custodian, or other public officer takes charge of
the Trustee or its property; or
(4) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holder or
Holders of a majority in principal amount of the Securities may appoint a
successor Trustee to replace the successor Trustee appointed by the Company.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Immediately after that
and provided that all sums owing to the Trustee provided for in Section 7.7 have
been paid, the retiring Trustee shall transfer all property held by it as
Trustee to the successor Trustee, subject to the lien provided in Section 7.7,
the resignation or removal of the retiring Trustee shall become effective, and
the successor Trustee shall have all the rights, powers and duties of the
Trustee under this Indenture. A successor Trustee shall mail notice of its
succession to each Holder.
55
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Holder or Holders of at least 10% in principal amount of the outstanding
Securities may petition any court of competent jurisdiction for the appointment
of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any Holder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.
Notwithstanding replacement of the Trustee pursuant to this Section 7.8,
the Company's obligations under Section 7.7 shall continue for the benefit of
the retiring Trustee.
SECTION 7.9 Successor Trustee by Merger, Etc.
---------------------------------
If the Trustee consolidates with, merges or converts into, or transfers
all or substantially all of its corporate trust business to, another
corporation, the resulting, surviving or transferee corporation without any
further act shall, if such resulting, surviving or transferee corporation is
otherwise eligible hereunder, be the successor Trustee.
SECTION 7.10 Eligibility; Disqualification.
-----------------------------
The Trustee shall at all times satisfy the requirements of TIA (S)
310(a)(1) and TIA (S) 310(a)(5). The Trustee shall have a combined capital and
surplus of at least $50,000,000 as set forth in its most recent published annual
report of condition. The Trustee shall comply with TIA (S) 310(b).
SECTION 7.11 Preferential Collection of Claims Against Company.
-------------------------------------------------
The Trustee shall comply with TIA (S) 311(a), excluding any creditor
relationship listed in TIA (S)311(b). A Trustee who has resigned or been
removed shall be subject to TIA (S) 311(a) to the extent indicated.
56
ARTICLE EIGHT
SATISFACTION AND DISCHARGE
SECTION 8.1 Satisfaction, Discharge of the Indenture, Covenant
--------------------------------------------------
Defeasance.
- ----------
The Company shall be deemed to have paid and discharged the entire
Indebtedness on the Notes and this Indenture shall cease to be of further effect
(except as to (i) rights of registration of transfer, substitution and exchange
of Notes and the Company's right of optional redemption, (ii) rights of Holders
to receive payments of principal of, premium, if any, and interest on the Notes
(but not the Change of Control Purchase Price of the Notes) and any other rights
of the Holders with respect to such amounts, (iii) the rights, obligations and
immunities of the Trustee under the Indenture and (iv) certain other specified
provisions in this Indenture (the foregoing exceptions (i) through (iv) are
collectively referred to as the "Reserved Rights")), if:
(1) the Company irrevocably deposits in trust for the benefit of
the Holders of the Notes with the Trustee, pursuant to an irrevocable trust
and security agreement in form and substance reasonably satisfactory to the
Trustee, (i) U.S. Legal Tender in an amount, (ii) U.S. Government
Obligations, or (iii) a combination thereof after payment of all Federal,
state and local taxes or other charges or assessments in respect thereof
payable by the Trustee, which through the payment of principal and interest
will provide, not later than one day before the due date of payment in
respect of the Notes, U.S. Legal Tender in an amount which, in the opinion
of a nationally recognized firm of independent certified public accountants
expressed in a written certification thereof (in form and substance
reasonably satisfactory to the Trustee) delivered to the Trustee, is
sufficient to pay the principal of, premium, if any, and interest on the
Notes then outstanding on the dates on which any such payments are due and
payable in accordance with the terms of this Indenture and of the Notes;
57
(2) such deposits shall not cause the Trustee to have a
conflicting interest as defined in and for purposes of the TIA;
(3) no Default or Event of Default shall have occurred or be
continuing on the date of such deposit or shall occur on or before the 91st
day (or one day after such greater period of time in which any such deposit
of trust funds may remain subject to bankruptcy or insolvency laws) after
the date of such deposit, and such deposit will not result in a Default or
Event of Default under this Indenture or a breach or violation of, or
constitute a default under, any other instrument to which the Company or
any Subsidiary of the Company other than an Unrestricted Subsidiary is a
party or by which it or its property is bound;
(4) the deposit, defeasance and discharge will not be deemed, or
result in, a Federal income taxable event to the Holders of the Securities
and the Holders will be subject to Federal income tax in the same amounts
and in the same manner and at the same times as would have been the case if
such deposit and defeasance had not occurred;
(5) the deposit shall not result in the Company, the Trustee or
the trust being subject to regulation under the Investment Company Act of
1940;
(6) after the passage of 90 days (or any greater period of time in
which any such deposit of trust funds may remain subject to Bankruptcy Laws
insofar as those laws apply to the Company) following the irrevocable
deposit of the trust funds, such funds will not be subject to any
Bankruptcy Laws affecting creditors' rights generally;
(7) Holders of the Securities will have a valid, perfected and
unavoidable (under applicable bankruptcy or insolvency laws), subject to
the passage of time referred
58
to in clause (6) above, first-priority security interest in the trust
funds; and
(8) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel (who may be outside counsel to the
Company, but not in-house counsel to the Company) (other than an Opinion of
Counsel with respect to clause (7)), each in form and substance
satisfactory to the Trustee, stating that it has complied with all
conditions precedent specified in this Indenture.
In the event all or any portion of the Securities are to be redeemed
through such irrevocable trust, the Company must make arrangements satisfactory
to the Trustee, for the giving of the notice of such redemption or redemptions
by the Trustee in the name and at the expense of the Company.
In the event that the Company takes the necessary action to comply with
the provisions described in this Section 8.1 and the Securities are declared due
and payable because of the occurrence of an Event of Default within the time
period specified in Section 8.1(3), or at any time under Section 8.3, the
Company will remain liable for all amounts due on the Securities at the time of
acceleration resulting from such Event of Default in excess of the amount of
U.S. Legal Tender and U.S. Government Obligations deposited with the Trustee
pursuant to this Section 8.1 at the time of such acceleration.
SECTION 8.2 Termination of Obligations Upon Cancellation of the
---------------------------------------------------
Securities.
- ----------
In addition to the Company's rights under Section 8.1, the Company may
terminate all of its obligations under this Indenture (subject to Section 8.3)
when:
(1) either (A) all Securities theretofore authenticated and
delivered (other than Notes which have been destroyed, lost or stolen and
which have been replaced or paid as provided in Section 2.7) have been
delivered to the Trustee for cancellation or (B) all such Notes not
theretofore delivered to the Trustee for cancellation have become due and
payable or will become due and payable within one year and the Company has
irrevocably
59
deposited or caused to be deposited with the Trustee for the benefit of the
Holders of the Notes U.S. Legal Tender or U.S. Governmental Obligations in
an amount sufficient to pay and discharge the entire indebtedness on the
Notes, not theretofore delivered to the Trustee for cancellation, for
principal of, premium, if any, and interest on the Notes, to the date of
deposit or Stated Maturity or redemption and with respect to this clause
(B) no default or Event of Default shall have occurred or be continuing on
the date of such deposit or shall occur on or before the 91st day (or one
day after such greater period of time in which any such deposit of trust
funds may remain subject to bankruptcy or insolvency laws) after the date
of such deposit, and such deposit will not result in a Default or Event of
Default under this Indenture or a breach or violation of, or constitute a
default under, any other instrument to which the Company or any Subsidiary
of the Company is a party or by which it or its property is bound;
(2) the Company has paid or caused to be paid all sums payable
hereunder by the Company; and
(3) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent specified herein relating to the satisfaction and discharge of
this Indenture have been complied with.
SECTION 8.3 Survival of Certain Obligations.
-------------------------------
Notwithstanding the satisfaction and discharge of this Indenture
and of the Securities referred to in Section 8.1 or 8.2, the respective
obligations of the Company and the Trustee under Sections 2.2, 2.3, 2.4,
2.5, 2.6, 2.7, 2.11, 2.12, Article Three, 4.1, 4.2, 4.4, 6.7, 6.8, 7.7,
7.8, 8.5, 8.6, 8.7, Article Eleven, 13.1, 13.2, 13.7, 13.8, and this
Section 8.3 shall survive until the Securities are no longer outstanding,
and thereafter the obligations of the Company and the Trustee under
Sections 6.8, 7.7, 7.8, 8.5, 8.6, 8.7 and this Section 8.3 shall survive.
Nothing contained in this
60
Article Eight shall abrogate any of the obligations or duties of the
Trustee under this Indenture.
SECTION 8.4 Acknowledgment of Discharge by Trustee.
--------------------------------------
After (i) the conditions of Section 8.1 or 8.2 have been satisfied,
(ii) the Company has paid or caused to be paid all other sums payable
hereunder by the Company and (iii) the Company has delivered to the Trustee
an Officers' Certificate and an Opinion of Counsel, each stating that all
conditions precedent referred to in clause (i), above, relating to the
satisfaction and discharge of this Indenture have been complied with, the
Trustee upon request shall acknowledge in writing the discharge of the
Company's obligations under this Indenture except for those surviving
obligations specified in Section 8.3.
SECTION 8.5 Application of Trust Assets.
---------------------------
The Trustee shall hold any U.S. Legal Tender or U.S. Government
Obligations deposited with it in the irrevocable trust established pursuant
to Section 8.1 or 8.2. The Trustee shall apply the deposited U.S. Legal
Tender or U.S. Government Obligations, together with earnings thereon,
through the Paying Agent (other than the Company or any Subsidiary of the
Company), in accordance with this Indenture and the terms of the
irrevocable trust agreement, to the payment of principal of and interest on
the Securities.
SECTION 8.6 Repayment to the Company.
------------------------
Upon termination of the trust established pursuant to Section 8.1
or 8.2, the Trustee and the Paying Agent shall promptly pay to the Company
upon request any excess U.S. Legal Tender or U.S. Government Obligations
held by them.
The Trustee and the Paying Agent shall pay to the Company upon
request, and, if applicable, in accordance with the irrevocable trust
established pursuant to Section 8.1 or 8.2, any U.S. Legal Tender or U.S.
Government Obligations held by them for the payment of principal of or
interest on the Securities that remain unclaimed for two years after the
date on which such payment shall have become due; provided, however, that
-------- -------
the Trustee or such Paying Agent, before being required to
61
make any such repayment, may, at the expense of the Company, cause to be
published once, in a newspaper customarily published on each Business Day
and of general circulation in New York, New York, notice that such money
remains unclaimed and that, after a date specified therein, which shall not
be less than 30 days from the date of such publication, any unclaimed
balance of such money then remaining shall be repaid to the Company. After
payment to the Company, Holders entitled to such payment must look to the
Company for such payment as general creditors unless an applicable
abandoned property law designates another Person.
SECTION 8.7 Reinstatement.
-------------
If the Trustee or Paying Agent is unable to apply any U.S. Legal
Tender or U.S. Government Obligations in accordance with Section 8.1 or 8.2
by reason of any legal proceeding or by reason of any order or judgment of
any court or governmental authority enjoining, restraining or otherwise
prohibiting such application, the Company's obligations under this
Indenture and the Securities shall be revived and reinstated as though no
deposit had occurred pursuant to Section 8.1 or 8.2 until such time as the
Trustee or Paying Agent is permitted to apply all such U.S. Legal Tender or
U.S. Government Obligations in accordance with Section 8.1 or 8.2;
provided, however, that if the Company has made any payment of principal of
-------- -------
or interest on any Securities because of the reinstatement of its
obligations, the Company shall be subrogated to the rights of the Holders
of such Securities to receive such payment from the U.S. Legal Tender or
U.S. Government Obligations held by the Trustee or Paying Agent.
ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.1 Supplemental Indentures Without Consent of Holders.
--------------------------------------------------
Without the consent of any Holder, the Company, when authorized by
Board Resolutions, 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:
62
(1) to cure any ambiguity, defect, or inconsistency, or to make
any other provisions with respect to matters or questions arising under
this Indenture which shall not be inconsistent with the provisions of this
Indenture, provided such action pursuant to this clause (1) shall not
adversely affect the interests of any Holder in any respect;
(2) to add to the covenants of the Company for the benefit of the
Holders, or to add guarantors, or to surrender any right or power herein
conferred upon the Company or to make any other change that does not
adversely affect the rights of any Holder, provided that the Company has
--------
delivered to the Trustee an Opinion of Counsel stating that such change
does not adversely affect the rights of any Holder;
(3) to provide for collateral for the Notes;
(4) to evidence the succession of another Person to the Company,
and the assumption by any such successor of the obligations of the Company,
herein and in the Securities in accordance with Article Five and Section
11.17;
(5) to comply with the TIA; or
(6) to evidence, and provide for the acceptance of, the
appointment of a successor Trustee hereunder.
SECTION 9.2 Amendments, Supplemental Indentures and Waivers with
----------------------------------------------------
Consent of Holders.
- ------------------
Subject to Section 6.8, with the consent of the Holders of not less
than a majority in aggregate principal amount of then outstanding Notes, by
written act of said Holders delivered to the Company and the Trustee, the
Company, when authorized by Board Resolutions, and the Trustee may amend or
supplement this Indenture or the Notes or 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 provi-
63
sions of this Indenture or the Notes or of modifying in any manner the
rights of the Holders under this Indenture or the Securities. Subject to
Section 6.8, the Holder or Holders of not less than a majority in principal
amount of then outstanding Securities may waive compliance by the Company
with any provision of this Indenture or the Securities. Notwithstanding
any of the above, however, no such amendment, supplemental indenture or
waiver shall, without the consent of the Holder of each outstanding Note
affected thereby:
(1) reduce the percentage of principal amount of Securities whose
Holders must consent to an amendment, supplement or waiver of any provision
of this Indenture or the Securities;
(2) reduce the rate or extend the time for payment of interest on
any Security;
(3) reduce the principal amount of any Security, reduce the Change
of Control Purchase Price, or the Redemption Price;
(4) change the Maturity Date of any Security;
(5) alter the redemption provisions of Article Three or the terms
or provisions of Section 4.10, in any case, in a manner adverse to any
Holder;
(6) make any changes in the provisions concerning waivers of
Defaults or Events of Default by Holders of the Securities (except to
increase any required percentage or to provide that certain other
provisions hereof cannot be modified or waived without the consent of the
Holders of each outstanding Security affected thereby) or the rights of
Holders to recover the principal or premium of, interest on, or redemption
payment with respect to, any Security;
(7) make any changes in Section 6.4, 6.7 or the third sentence of
this Section 9.2;
64
(8) make the principal of, or the interest on, any Security
payable with anything or in any manner other than as provided for in this
Indenture (including changing the place of payment where, or the coin or
currency in which, any Security or any premium or the interest thereon is
payable) and the Securities as in effect on the date hereof; or
(9) make the Securities expressly subordinated in right of payment
to any extent not contemplated by Article Twelve or under any circumstances
not contemplated by Article Twelve to any other Indebtedness.
It shall not be necessary for the consent of the Holders under this
Section 9.2 to approve the particular form of any proposed amendment, supplement
or waiver, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment, supplement or waiver under this Section 9.2 becomes
effective, the Company shall mail to the Holders affected thereby a notice
briefly describing the amendment, supplement or waiver. Any failure of the
Company to mail such notice, or any defect therein, shall not, however, in any
way impair or affect the validity of any such supplemental indenture.
After an amendment, supplement or waiver under this Section 9.2 or 9.4
becomes effective, it shall bind each Holder.
In connection with any amendment, supplement or waiver under this
Article Nine, the Company may, but shall not be obligated to, offer to any
Holder who consents to such amendment, supplement or waiver, or to all Holders,
consideration for such Holder's consent to such amendment, supplement or waiver.
SECTION 9.3 Compliance with TIA.
-------------------
Every amendment, waiver or supplement of this Indenture or the
Securities shall comply with the TIA as then in effect.
65
SECTION 9.4 Revocation and Effect of Consents.
---------------------------------
Until an amendment, waiver or supplement becomes effective, a consent to
it by a Holder is a continuing consent by the Holder and every subsequent Holder
of a Note or portion of a Note that evidences the same debt as the consenting
Holder's Note, even if notation of the consent is not made on any Note.
However, any such Holder or subsequent Holder may revoke the consent as to his
Note or portion of his Note by written notice to the Company or the Person
designated by the Company as the Person to whom consents should be sent if such
revocation is received by the Company or such Person before the date on which
the Trustee receives an Officers' Certificate certifying that the Holders of the
requisite principal amount of Notes have consented (and not theretofore revoked
such consent) to the amendment, supplement or waiver.
The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Holders entitled to consent to any amendment,
supplement or waiver, which record date shall be the date so fixed by the
Company notwithstanding the provisions of the TIA. If a record date is fixed,
then notwithstanding the last sentence of the immediately preceding paragraph,
those Persons who were Holders at such record date, and only those Persons (or
their duly designated proxies), shall be entitled to revoke any consent
previously given, whether or not such Persons continue to be Holders after such
record date. No such consent shall be valid or effective for more than 90 days
after such record date.
After an amendment, supplement or waiver becomes effective, it shall
bind every Holder, unless it makes a change described in any of clauses (1)
through (9) of Section 9.2, in which case, the amendment, supplement or waiver
shall bind only each Holder of a Security who has consented to it and every
subsequent Holder of a Security or portion of a Security that evidences the same
debt as the consenting Holder's Security; provided that any such waiver shall
--------
not impair or affect the right of any Holder to receive payment of principal and
premium of and interest on a Security, on or after the respective dates set for
such amounts to become due and payable expressed in such Security, or to bring
suit for the enforcement of any such payment on or after such respective dates.
66
SECTION 9.5 Notation on or Exchange of Securities.
-------------------------------------
If an amendment, supplement or waiver changes the terms of a Note, the
Trustee may require the Holder of the Note to deliver it to the Trustee or
require the Holder to put an appropriate notation on the Note. The Trustee may
place an appropriate notation on the Note about the changed terms and return it
to the Holder. Alternatively, if the Company or the Trustee so determines, the
Company in exchange for the Note shall issue and the Trustee shall authenticate
a new Note that reflects the changed terms. Any failure to make the appropriate
notation or to issue a new Note shall not affect the validity of such amendment,
supplement or waiver.
SECTION 9.6 Trustee to Sign Amendments, Etc.
--------------------------------
The Trustee shall execute any amendment, supplement or waiver authorized
pursuant to this Article Nine; provided that the Trustee may, but shall not be
--------
obligated to, execute any such amendment, supplement or waiver which affects the
Trustee's own rights, duties or immunities under this Indenture. The Trustee
shall be entitled to receive, and shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of any amendment, supplement or
waiver authorized pursuant to this Article Nine is authorized or permitted by
this Indenture.
ARTICLE TEN
MEETINGS OF SECURITYHOLDERS
SECTION 10.1 Purposes for Which Meetings May Be Called.
-----------------------------------------
A meeting of Holders may be called at any time and from time to time
pursuant to the provisions of this Article Ten for any of the following
purposes:
(a) to give any notice to the Company or to the Trustee, or to give any
directions to the Trustee, or to waive or to consent to the waiving of any
Default or Event of Default hereunder and its consequences, or to take any other
action authorized to be taken by Holders pursuant to any of the provisions of
Article Six;
67
(b) to remove the Trustee or appoint a successor Trustee pursuant to
the provisions of Article Seven;
(c) to consent to an amendment, supplement or waiver pursuant to the
provisions of Section 9.2; or
(d) to take any other action (i) authorized to be taken by or on behalf
of the Holder or Holders of any specified aggregate principal amount of the
Notes under any other provision of this Indenture, or authorized or permitted by
law or (ii) which the Trustee deems necessary or appropriate in connection with
the administration of this Indenture.
SECTION 10.2 Manner of Calling Meetings.
--------------------------
The Trustee may at any time call a meeting of Holders to take any action
specified in Section 10.1, to be held at such time and at such place in New
York, New York, or elsewhere as the Trustee shall determine. Notice of every
meeting of Holders, setting forth the time and place of such meeting and in
general terms the action proposed to be taken at such meeting, shall be mailed
by the Trustee, first-class postage prepaid, to the Company and to the Holders
at their last addresses as they shall appear on the registration books of the
Registrar, not less than 10 nor more than 60 days prior to the date fixed for a
meeting.
Any meeting of Holders shall be valid without notice if the Holders of
all Securities then outstanding are present in Person or by proxy, or if notice
is waived before or after the meeting by the Holders of all Securities
outstanding, and if the Company and the Trustee are either present by duly
authorized representatives or have, before or after the meeting, waived notice.
SECTION 10.3 Call of Meetings by Company or Holders.
--------------------------------------
In case at any time the Company, pursuant to a Board Resolution, or the
Holders of not less than 10% in aggregate principal amount of the Securities
then outstanding, shall have requested the Trustee to call a meeting of Holders
to take any action specified in Section 10.1, by written request setting forth
in reasonable detail the action proposed to be taken at the meeting,
68
and the Trustee shall not have mailed the notice of such meeting within 20 days
after receipt of such request, then the Company or the Holders of Notes in the
amount above specified may determine the time and place in New York, New York or
elsewhere for such meeting and may call such meeting for the purpose of taking
such action, by mailing or causing to be mailed notice thereof as provided in
Section 10.2, or by causing notice thereof to be published at least once in each
of two successive calendar weeks (on any Business Day during such week) in a
newspaper or newspapers printed in the English language, customarily published
at least five days a week of a general circulation in New York, New York, the
first such publication to be not less than 10 nor more than 60 days prior to the
date fixed for the meeting.
SECTION 10.4 Who May Attend and Vote at Meetings.
-----------------------------------
To be entitled to vote at any meeting of Holders, a Person shall (a) be
a registered Holder of one or more Securities, or (b) be a Person appointed by
an instrument in writing as proxy for the registered Holder or Holders of Notes
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 10.5 Regulations May Be Made by Trustee; Conduct of the
--------------------------------------------------
Meeting; Voting Rights; Adjournment.
- -----------------------------------
Notwithstanding any other provision of this Indenture, the Trustee may
make such reasonable regulations as it may deem advisable for any action by or
any meeting of Holders, in regard to proof of the holding of Notes and of the
appointment of proxies, and in regard to the appointment and duties of
inspectors of votes, and 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 think appropriate. Such regulations may fix
a record date and time for determining the Holders of record of Notes entitled
to vote at such meeting, in which case those and only those Persons who are
Holders of Notes at the record date and time so fixed, or their proxies, shall
be entitled to vote at such meeting whether or not they shall be such Holders at
the time of the meeting.
69
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 as provided in Section 10.3, in which case the Company or
the Holders 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 Holders of a majority in principal
amount of the Securities represented at the meeting and entitled to vote.
At any meeting each Holder or proxy shall be entitled to one vote for
each $1,000 principal amount of Securities held or represented by him; provided,
--------
however, that no vote shall be cast or counted at any meeting in respect of any
- -------
Securities challenged as not outstanding and ruled by the chairman of the
meeting to be not then outstanding. The chairman of the meeting shall have no
right to vote other than by virtue of Securities held by him or instruments in
writing as aforesaid duly designating him as the proxy to vote on behalf of
other Holders. Any meeting of Holders duly called pursuant to the provisions of
Section 10.2 or Section 10.3 may be adjourned from time to time by vote of the
Holder or Holders of a majority in aggregate principal amount of the Notes
represented at the meeting and entitled to vote, and the meeting may be held as
so adjourned without further notice.
SECTION 10.6 Voting at the Meeting and Record to Be Kept.
-------------------------------------------
The vote upon any resolution submitted to any meeting of Holders shall
be by written ballots on which shall be subscribed the signatures of the Holders
of Notes or of their representatives by proxy and the principal amount of the
Notes voted by the ballot. 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 in duplicate of the proceedings of each meeting of Holders
shall be prepared by the secretary of the meeting and there shall be attached to
such 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
70
showing that such notice was mailed as provided in Section 10.2 or published as
provided in Section 10.3. The record shall be signed and verified by the
affidavits of the permanent chairman and the secretary of the meeting and one of
the duplicates shall be delivered to the Company and the other to the Trustee to
be preserved by the Trustee, the latter to have attached thereto the ballots
voted at the meeting.
Any record so signed and verified shall be conclusive evidence of the
matters therein stated.
SECTION 10.7 Exercise of Rights of Trustee or Holders May Not Be
---------------------------------------------------
Hindered or Delayed by Call of Meeting.
- --------------------------------------
Nothing contained in this Article Ten shall be deemed or construed to
authorize or permit, by reason of any call of a meeting of Holders or any rights
expressly or impliedly conferred hereunder to make such call, any hindrance or
delay in the exercise of any right or rights conferred upon or reserved to the
Trustee or to the Holders under any of the provisions of this Indenture or of
the Securities.
ARTICLE ELEVEN
CONVERSION
SECTION 11.1 Conversion Privilege.
--------------------
A Holder of a Security may convert it, or a portion thereof, subject to
prior redemption or repurchase, into Common Stock at any time during the period
stated in Paragraph 8 of the Securities.
The initial conversion rate is stated in Paragraph 8 of the Securities.
The conversion rate is subject to adjustment in accordance with Sections 11.6
through 11.14.
The right to convert Notes called for redemption or subject to an offer
to repurchase will terminate at the close of business on the second Business Day
prior to the redemption or repurchase date, and will be lost if not exercised
prior to that time unless the Company defaults in making the payments due upon
redemption or repurchase.
71
A Holder may convert a portion of a Security if the portion is $1,000 or
integral multiples thereof. Provisions of this Indenture that apply to
conversion of all of a Security also apply to conversion of a portion of it.
SECTION 11.2 Conversion Procedure.
--------------------
To convert a Security a Holder must satisfy the requirements in
Paragraph 8 of the Securities. The date on which the Holder satisfies all those
requirements is the conversion date (the "Conversion Date"). As soon as
practicable, the Company shall deliver to the Holder through the Conversion
Agent a certificate for the number of full shares of Common Stock issuable upon
conversion and a check in lieu of any fractional share. The person in whose
name the certificate is registered shall be treated as a stockholder of record
on and after the Conversion Date.
If any Note is converted between the record date for the payment of
interest and the next succeeding Interest Payment Date, such Note must be
accompanied by funds equal to the interest payable on such succeeding Interest
Payment Date on the principal amount so converted (unless such Note shall have
been called for redemption, in which case no such payment shall be required). A
Note converted on an Interest Payment Date need not be accompanied by any
payment, and the interest on the principal amount of the Note being converted
will be paid on such Interest Payment Date to the registered holder of such Note
on the immediately preceding record date. Subject to the aforesaid right of the
registered holder to receive interest, no payment or adjustment will be made on
conversion for interest accrued on the converted Note or for dividends on the
Common Stock issued on conversion.
If a Holder converts more than one Security at the same time, the number
of full shares issuable upon the conversion shall be based on the total
principal amount of the Securities converted.
Upon surrender of a Security that is converted in part the Trustee shall
authenticate for the Holder a new Security equal in principal amount to the
unconverted portion of the Security surrendered.
72
If the last day on which a Security may be converted is a Legal Holiday
in a place where a Conversion Agent is located, the Security may be surrendered
to that Conversion Agent on the next succeeding day that is not a Legal Holiday.
SECTION 11.3 Fractional Shares.
-----------------
The Company will not issue a fractional share of Common Stock upon
conversion of a Security. Instead the Company will deliver its check for the
market value of a fractional share. The market value of a fraction of a share
shall be determined by multiplying the market price of a full share of Common
Stock by such fraction and rounding the result to the nearest cent.
The market price of a share of Common Stock for the purposes of this
Section 11.3 shall be the last reported sale price of a share of Common Stock on
the principal national securities exchange on which the shares of Common Stock
are listed or admitted to trading or on the National Association of Securities
Dealers National Market System ("NMS") on the first Business Day prior to the
day of conversion, or, if the Common Stock is not then listed on an exchange,
the closing sale price (or the quoted closing bid price if there were no sales)
as reported by the National Association of Securities Dealers Automated
Quotation System ("NASDAQ") on the first business day prior to the day of
conversion. In the absence of one or more such quotations, the Board of
Directors shall determine in good faith the current market price.
SECTION 11.4 Taxes on Conversion.
-------------------
The Company shall pay any documentary, stamp or similar issue or
transfer tax due on the issue of shares of Common Stock upon the conversion.
However, the Holder shall pay any such tax which is due because the shares are
issued in a name other than that of the Holder.
SECTION 11.5 Company to Provide Stock.
------------------------
The Company shall reserve out of its authorized but unissued Common
Stock or its Common Stock held in treasury shares of Common Stock sufficient to
permit the conversion of all of the Securities at any time.
73
All shares of Common Stock which may be issued upon conversion of the
Securities shall be validly issued, fully paid and non-assessable.
The Company will endeavor to comply with all securities laws regulating
the offer and delivery of shares of Common Stock upon conversion of Securities
and will cause such shares to be listed on each national securities exchange on
which the Common Stock is then listed.
SECTION 11.6 Conversion Price Adjustment.
---------------------------
If the Company:
(1) pays a dividend or makes a distribution on its Common Stock in
shares of its Common Stock;
(2) subdivides its outstanding shares of Common Stock into a
greater number of shares;
(3) combines its outstanding shares of Common Stock into a smaller
number of shares; or
(4) issues by reclassification of its Common Stock any shares of
its capital stock (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing
corporation),
then the conversion privilege and the conversion rate in effect immediately
prior to such action shall be adjusted so that the Holder of a Security
thereafter converted may receive the number of shares of capital stock of the
Company which he would have owned immediately following such action if he had
converted the Security immediately prior to such action.
The adjustment shall become effective immediately after the record date
in the case of a dividend or distribution and immediately after the effective
date in the case of a subdivision, combination or reclassification.
74
After such allocation, the conversion privilege and the conversion rate
of each class of capital stock shall thereafter be subject to adjustment on
terms comparable to those applicable to Common Stock in this Article Eleven.
SECTION 11.7 Adjustment for Shares Issued Below Market Price.
-----------------------------------------------
If the Company shall pay a dividend, make a distribution or otherwise
issue rights, options, or warrants to holders of Common Stock, as such,
entitling them to subscribe for or purchase shares of Common Stock (or
securities convertible or exchangeable into Common Stock) at a price per share
of Common Stock (or having an initial conversion or exchange price per share of
Common Stock, if a security convertible or exchangeable into Common Stock) less
than the Current Market Price of a share of Common Stock on the record date
relating to such dividend, distribution or issuance, then, immediately after
such record date, the conversion rate shall be adjusted in accordance with the
following formula:
N x P
-----
O + M
---------
C' = C x O + N
where:
C' = the adjusted conversion rate.
C = the then current conversion rate.
O = the number of shares of Common
Stock outstanding on the record
date.
N = the number of additional shares of
Common Stock offered or issuable
on the exercise of the rights,
options or warrants.
P = the offering price per share of
the additional shares subject to
the rights or warrants.
M = the Current Market Price per share
of Common Stock on the record
date.
The adjustment shall be made successively whenever any such rights,
options or warrants are issued
75
and shall become effective immediately after such record date. If such rights
or warrants are not issued, the conversion rate shall be immediately readjusted,
effective as of the date when the Board of Directors determines not to issue
such rights or warrants, to the conversion rate which would then be in effect if
such record date had not been fixed. If such rights or warrants are issued but,
at the end of the period during which such warrants or rights are exercisable,
not all warrants or rights shall have been exercised, the conversion rate shall
be immediately readjusted to what it would have been if "N" in the above formula
had been the number of shares actually issued.
SECTION 11.8 Adjustment for Other Distributions.
----------------------------------
If the Company shall set a record date to pay a dividend or make a
distribution to holders of shares of Common Stock (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing corporation) of (i) securities other than Common
Stock, (ii) evidences of its indebtedness, (iii) assets, or (iv) rights,
options, or warrants to acquire securities of the Company, then in each such
case the conversion rate in effect immediately after the applicable record date
shall be adjusted in accordance with the following formula:
C' = C x M - F
-----
M
where:
C' = the adjusted conversion rate.
C = the then current conversion rate.
M = the Current Market Price per share
of Common Stock on the applicable
record date.
F = the aggregate fair market value (as
reasonably determined in good faith
by the Board of Directors of the
Company) on the applicable record
date of the assets (including cash),
indebtedness, securities, rights or
warrants divided by the number of
outstanding shares of Common Stock.
76
The adjustment shall be made successively whenever any such distribution
is made and shall become effective immediately after such record date. In the
event that such distribution is not made, the conversion rate then in effect
shall be readjusted, effective as of the date when the Board of Directors
determines not to make such distribution, to the conversion rate which would
then be in effect if such record date had not been fixed. Such adjustment shall
be made successively whenever such a record date is fixed.
If at the end of the period during which any warrants or rights
described by subsection 11.8(iv) are exercisable, not all of such warrants,
options, or rights shall have been exercised, the conversion rate shall be
immediately readjusted to what it would have been if "F" in the above formula
had not included the fair market value on the record date of such expired
warrants or rights, but were still divided by the same number of outstanding
shares of Common Stock.
This Section 11.8 shall not apply to cash dividends paid out of the
Company's consolidated cumulative earnings after the Issue Date. In addition,
this Section 11.8 does not apply to distributions referred to in Section 11.6 or
rights, options or warrants referred to in Section 11.7.
This Section does not apply to cash dividends or cash distributions paid
out of consolidated current or retained earnings as shown on the books of the
Company.
Notwithstanding the foregoing, in the event that the Company shall
distribute rights or warrants (other than those referred to in Section 11.7
above) ("Rights") pro rata to holders of Common Stock, the Company may, in lieu
--- ----
of making any adjustment pursuant to this Section 11.8, make proper provision so
that each Holder of a Security who converts such Security (or any portion
thereof) after the record date for such distribution and prior to the expiration
or redemption of the Rights shall be entitled to receive upon such conversion,
in addition to the shares of Common Stock issuable upon such conversion, a
number of Rights to be determined as follows: (i) if such conversion occurs on
or prior to the date for the distribution to the holders of Rights of separate
certificates evidencing such Rights (the "Distribution Date"), the same number
of Rights to which a holder of a number of shares of Common Stock equal to the
77
number of shares of Common Stock issuable upon such conversion is entitled at
the time of such conversion in accordance with the terms and provisions of and
applicable to the Rights; and (ii) if such conversion occurs after the
Distribution Date, the same number of Rights to which a holder of the number of
shares of Common Stock into which the principal amount of the Security so
converted was convertible immediately prior to the Distribution Date would have
been entitled on the Distribution Date in accordance with the terms and
provisions of and applicable to the Rights.
SECTION 11.9 Adjustment for Common Stock Issuances.
-------------------------------------
If the Company issues shares of Common Stock for a consideration per
share less than the Current Market Price per share of Common Stock on the date
the Company fixes the offering price of such additional shares, the conversion
rate shall be adjusted in accordance with the following formula:
P
---
O + M
-------
C' = C x A
where:
C' = the adjusted conversion rate.
C = the then current conversion rate.
O = the number of shares outstanding
immediately prior to the issuance of
such additional shares.
P = the aggregate consideration received
for the issuance of such additional
shares.
M = the Current Market Price per share on
the date of issuance of such additional
shares.
A = the number of shares outstanding
immediately after the issuance of such
additional shares.
78
The adjustment shall be made successively whenever any such issuance is
made, and shall become effective immediately after such issuance.
This Section 11.9 does not apply to (i) any of the transactions
described in Sections 11.7, 11.8 or 11.10, (ii) Common Stock issued to the
Company's employees under bona fide employee benefit plans, or issued by the
---- ----
Company pursuant to an employment agreement or consulting agreement, which plan
or agreement has been adopted or approved by the Board of Directors of the
Company and, when required by law, approved by the holders of Common Stock, if
such Common Stock would otherwise be covered by this Section 11.9 (but only to
the extent that the aggregate number of shares excluded hereby and issued after
the Issue Date pursuant to such plans and agreements shall not exceed 15% of the
Common Stock outstanding at the time of the adoption of any such plan or
agreement, exclusive of antidilution adjustments thereunder), (iii) Common Stock
issued to shareholders of any Person which, in an arm's-length transaction,
merges into or with the Company, or any Subsidiary of the Company, in proportion
to their stock holdings of such Person immediately prior to such merger, upon
such merger, (iv) Common Stock issued in a bona fide public offering pursuant to
---- ----
a firm commitment underwriting by an investment banking firm (except for any
such public offering in which the aggregate underwriting discounts and
commissions exceed 10%), (v) Common Stock issued in a bona fide private
---- ----
placement through a placement agent that is a member firm of the National
Association of Securities Dealers, Inc. (the "NASD") (except to the extent that
any discount from the Current Market Price attributable to restrictions on
transferability of the Common Stock, as determined in good faith by the Board of
Directors of the Company and described in a Board Resolution which the Company
shall cause to be given to the Conversion Agent, shall exceed 15%), (vi) the
Company's Common Stock issued upon the exercise of warrants, rights or options
which had been issued for fair value with an exercise price at least equal to
the Current Market Price of the Company's Common Stock at the time of issuance
of such warrant, right or option, (vii) the exercise of options or warrants, or
the conversion or exchange of other securities convertible or exchangeable for
Common Stock pursuant to their terms as outstanding on the Issue Date or (viii)
Common Stock issued in connection with a merger exclusively between Richmond
Homes and a Wholly Owned Subsidiary of the Company that is not an Unrestricted
Subsidiary.
79
SECTION 11.10 Adjustment for Issuances of Convertible Securities.
--------------------------------------------------
If the Company issues any securities convertible into or exchangeable or
exercisable for Common Stock (other than securities issued in transactions
described in Sections 11.7, 11.8, or 11.9) for a consideration per share of
Common Stock initially deliverable upon conversion, exchange or exercise of such
securities less than the Current Market Price per share on the date of issuance
of such securities, or if such securities are not immediately convertible,
exchangeable or exercisable, on the date such securities become convertible,
exchangeable or exercisable the conversion rate shall be adjusted in accordance
with the following formula:
P
---
O + M
-------
C' = C x O + D
where:
C' = the adjusted conversion rate.
C = the then current conversion rate.
O = the number of shares outstanding
immediately prior to the issuance
of such securities.
P = the aggregate consideration
received for the issuance of such
securities.
M = the Current Market Price per share
on the date of issuance of such
securities or on the date such
securities become convertible,
exchangeable or exercisable.
D = the maximum number of shares
deliverable upon conversion,
exchange or exercise of such
securities at the initial
conversion, exchange or exercise
rate.
The adjustment shall be made successively whenever any such issuance is
made, and shall become effective immediately after such issuance.
If all of the Common Stock deliverable upon conversion, exchange or
exercise of such securities has
80
not been issued when such securities are no longer outstanding, then the
conversion rate shall promptly be readjusted to the conversion rate which would
then be in effect had the adjustment upon the issuance of such securities been
made on the basis of the actual number of shares of Common Stock issued upon
conversion, exchange or exercise of such securities.
This Section 11.10 does not apply to (i) securities convertible into or
exchangeable or exercisable for Common Stock issued to shareholders of any
person which, in an arm's-length transaction, merges into or with the Company,
or any subsidiary of the Company, in proportion to their stock holdings of such
person immediately prior to such merger, upon such merger, (ii) securities
convertible into or exercisable or exchangeable for Common Stock issued to the
Company's employees under bona fide employee benefit plans, or issued by the
Company pursuant to an employment agreement or consulting agreement, which plan
or agreement has been adopted or approved by the Board of Directors of the
Company and, when required by law, approved by the holders of Common Stock, if
such Common Stock would otherwise be covered by this Section 11.10 (but only to
the extent that the aggregate number of shares excluded hereby and issued after
the Issue Date pursuant to such plans and agreements shall not exceed 15% of the
Common Stock outstanding at the time of the adoption of any such plan or
agreement, exclusive of antidilution adjustments thereunder), (iii) securities
convertible into or exchangeable or exercisable for Common Stock issued in a
bona fide public offering pursuant to a firm commitment underwriting by an
- ---- ----
investment banking firm (except for any such public offering in which the
aggregate underwriting discounts and commissions exceed 10%), or (iv) securities
convertible into or exchangeable or exercisable for Common Stock issued in a
bona fide private placement through a placement agent which is a member firm of
- ---- ----
the NASD (except to the extent that any discount from the Current Market Price
attributable to restrictions on transferability of Common Stock issuable upon
conversion, exchange or exercise, as determined in good faith by the Board of
Directors of and described in a Board Resolution which the Company shall cause
to be given to the Conversion Agent, shall exceed 15%).
81
SECTION 11.11 Adjustment to Number of Conversion Shares.
-----------------------------------------
Upon each adjustment of the conversion rate pursuant to this Article
Eleven, each Note shall thereupon evidence the right to purchase that number of
shares of Common Stock (calculated to the nearest hundredth of a share) obtained
by multiplying the number of shares of Common Stock purchasable upon conversion
of the Note immediately prior to such adjustment by the conversion rate in
effect immediately prior to such adjustment and dividing the product so obtained
by the conversion rate in effect immediately after such adjustment. The
adjustment pursuant to this Section 11.11 to the number of shares of Common
Stock purchasable upon conversion of a Note shall be made each time an
adjustment of the conversion rate is made pursuant to this Article Eleven.
SECTION 11.12 Voluntary Adjustment.
--------------------
The Company at any time may lower the conversion rate, temporarily or
otherwise, so long as such action does not cause Common Stock to be issued at
less than its par value.
SECTION 11.13 Current Market Price.
--------------------
In this Article Eleven the "Current Market Price" per share of Common
Stock on any date is the average of the last reported sale prices of a share of
Common Stock on the principal national securities exchange on which the shares
of Common Stock are listed or admitted to trading or, if not traded thereon, on
the NMS, or, if the Common Stock is not then listed on such an exchange or on
the NMS, the closing sale prices (or the quoted closing bid prices if there were
no sales) as reported by NASDAQ for any 20 consecutive trading days commencing
30 trading days before the date in question. In the absence of one or more such
quotations, the Board of Directors reasonably and in good faith shall determine
the Current Market Price.
SECTION 11.14 Consideration Received.
----------------------
For purposes of any computation respecting consideration received
pursuant to Sections 11.9 and 11.10, the following shall apply:
82
(1) in the case of the issuance of shares of Common Stock for
cash, the consideration shall be the amount of such cash, provided that in
--------
no case shall any deduction be made for any commissions, discounts or other
expenses incurred by the Company for any underwriting of the issue or
otherwise in connection therewith;
(2) in the case of the issuance of shares of Common Stock for a
consideration in whole or in part other than cash, the consideration other
than cash shall be deemed to be the fair market value thereof as determined
in good faith by the Board of Directors (irrespective of the accounting
treatment thereof) and described in a Board Resolution which shall be filed
with the Trustee; and
(3) in the case of the issuance of securities convertible into or
exchangeable for shares, the aggregate consideration received therefor
shall be deemed to be the consideration received by the Company for the
issuance of such securities plus the additional minimum consideration, if
any, to be received by the Company upon the conversion or exchange thereof
(the consideration in each case to be determined in the same manner as
provided in clauses (1) and (2) of this Section).
SECTION 11.15 When Adjustment May Be Deferred.
-------------------------------
No adjustment in the conversion rate need be made unless the adjustment
would require a change of at least l% in the conversion rate then in effect;
provided, however, that any adjustments that would otherwise be required to be
- -------- -------
made shall be carried forward and taken into account in any subsequent
adjustment.
All calculations under this Article Eleven shall be made to the nearest
cent or to the nearest 1/100th of a share, as the case may be.
In any case in which this Article Eleven shall require that an
adjustment shall become effective immediately after a record date for an event,
the Company may defer until the occurrence of such event (1) issuing to
83
the Holder of any Security converted after such record date and before the
occurrence of such event the additional shares of Common Stock issuable upon
such conversion by reason of the adjustment required by such event over and
above the shares of Common Stock issuable upon such conversion before giving
effect to such adjustment and (2) paying to such Holder any amount in cash in
lieu of a fractional share of Common Stock pursuant to Section 11.3; provided,
--------
however, that the Company shall deliver to such Holder a due bill or other
- -------
appropriate instrument evidencing such Holder's rights to receive such
additional shares of Common Stock, and such cash, upon the occurrence of the
event requiring such adjustment.
SECTION 11.16 When No Adjustment Required.
---------------------------
No adjustment need be made for a change in the par value or no par value
of the Common Stock.
SECTION 11.17 Notice of Adjustment.
--------------------
Whenever the conversion rate is adjusted, the Company shall promptly
mail to Holders a notice of the adjustment. The Company shall file with the
Trustee an Officers' Certificate or a certificate from the Company's independent
public accountants briefly stating the facts requiring the adjustment and the
manner of computing it. The certificate shall be conclusive evidence that the
adjustment is correct, absent manifest error.
SECTION 11.18 Notice of Certain Transactions.
------------------------------
If:
(1) the Company proposes to take any action that would require an
adjustment in the conversion rate,
(2) the Company proposes to take any action that would require a
supplemental indenture pursuant to Section 11.19, or
(3) there is a proposed liquidation or dissolution of the Company,
the Company shall mail to Holders a notice stating the proposed record date for
a dividend or distribution or the proposed effective date of a subdivision,
combination, reclassification, consolidation, merger, transfer,
84
lease, liquidation or dissolution. The Company shall mail the notice at least
15 days before such date. Failure to mail the notice or any defect therein shall
not affect the validity of the transaction.
SECTION 11.19 Reorganization of the Company.
-----------------------------
If the Company is a party to a transaction subject to Section 5.1 or a
merger which reclassifies or changes its outstanding Common Stock, the successor
corporation shall enter into a supplemental indenture which shall provide that
the Holder of a Security may convert it into the kind and amount of securities,
cash or other assets which such Holder would have owned immediately after the
consolidation, merger, transfer or lease if such Holder had converted the
Security immediately before the effective date of the transaction. The
supplemental indenture shall provide for adjustments which shall be as nearly
equivalent as may be practical to the adjustments provided for in this Article
Eleven. The successor Company shall mail to Holders a notice briefly describing
the supplemental indenture.
If this Section applies to any such transaction, reclassification or
change, Sections 11.6 through 11.10 shall not apply thereto.
SECTION 11.20 Trustee's Disclaimer.
--------------------
The Trustee shall have no duty to determine whether an adjustment under
this Article Eleven or under the terms of the Securities shall be made, or if
made, whether such adjustment was properly made. The Trustee shall have no duty
to determine whether any supplemental indenture required by Section 11.19 meets
the requirements of such Section 11.19.
ARTICLE TWELVE
SUBORDINATION
SECTION 12.1 Securities Subordinated to Senior Indebtedness.
----------------------------------------------
Each Holder, by accepting Securities, agrees that (a) the payment of the
principal of and interest on the Securities and (b) any payment on account of
the acquisition or redemption of the Securities by the
85
Company (including, without limitation, pursuant to Section 4.10) is
subordinated to the extent and in the manner provided in this Article Twelve, to
the prior payment in full of all Senior Indebtedness of the Company and that
these subordination provisions are for the benefit of the holders of such Senior
Indebtedness.
This Article Twelve shall constitute a continuing offer to all Persons
who become holders of, or continue to hold, Senior Indebtedness, and such
provisions are made for the benefit of the holders of Senior Indebtedness, and
such holders are made obligees hereunder and any one or more of them may enforce
such provisions.
SECTION 12.2 No Payment on Securities in Certain Circumstances.
-------------------------------------------------
(a) No payment shall be made by the Company on account of the
principal of, premium, if any, or interest on the Securities or to defease or
acquire any of the Securities (including repurchases of Securities pursuant to
Section 4.10) for cash or property, or on account of the redemption provisions
of the Securities, (i) upon the maturity of any Senior Indebtedness by lapse of
time, acceleration (unless waived) or otherwise, unless and until all principal
of and interest on (including any post-petition interest) such Senior
Indebtedness and all other obligations in respect thereof shall first be paid in
full or such payment is duly provided for, or (ii) upon an event of default in
payment of any principal of, premium, if any, or interest on any Senior
Indebtedness when the same becomes due and payable, whether at maturity or at a
date fixed for prepayment or by declaration or otherwise (a "Payment Default"),
unless and until such Payment Default has been cured or waived or otherwise has
ceased to exist.
(b) Upon the occurrence of an event of default (other than a Payment
Default) with respect to any Senior Indebtedness, as such event of default is
defined in the instrument under which it is outstanding, permitting the holders
(or any requisite percentage thereof) to accelerate the maturity thereof or
demand payment upon written notice of such event of default given to the Company
and the Trustee by the Company holders of an aggregate of $10,000,000 principal
amount outstanding of such Senior Indebtedness or their representative (a
"Payment Notice"), then, unless and until such event of default shall have been
cured or waived or
86
shall have otherwise ceased to exist, no payment shall be made by the Company on
account of the principal of or premium, if any, or interest on the Securities,
or to defease or acquire or repurchase any of the Securities for cash or
property, or on account of the redemption provisions of the Securities, in any
such case. Notwithstanding the foregoing, unless (a) the Senior Indebtedness in
respect of which such event of default exists has been declared due and payable
in its entirety within 179 days after the Payment Notice is delivered as set
forth, above (the "Payment Blockage Period"), and (b) such declaration has not
been rescinded or waived, subject to Section 12.2(a), the Company shall be
required to pay all sums not paid to the Holders of the Securities during the
Payment Blockage Period due to the foregoing prohibitions and to resume all
other payments as and when due on the Securities. Any number of Payment Notices
may be given; provided, however, that (i) not more than one Payment Notice shall
-------- -------
be given within a period of any 360 consecutive days and (ii) no event of
default that existed upon the date of such Payment Notice or the commencement of
such Payment Blockage Period (whether or not such event of default is on the
same issue of Senior Indebtedness) shall be made the basis for the commencement
of any other Payment Blockage Period.
(c) In furtherance of the provisions of Section 12.1, in the event
that, notwithstanding the foregoing provisions of this Section 12.2, any payment
or distribution of assets of the Company on account of principal of or interest
on the Securities or to defease or acquire any of the Securities (including
repurchases of Securities pursuant to Section 4.10) for cash, property or
securities, or on account of the redemption provisions of the Securities shall
be made by the Company and received by the Trustee, by any Holder or by any
Paying Agent (or, if the Company is acting as its own Paying Agent, money for
any such payment shall be segregated and held in trust), at a time when such
payment or distribution was prohibited by the provisions of this Section 12.2,
then, unless such payment or distribution is no longer prohibited by this
Section 12.2, such payment or distribution (subject to the provisions of
Sections 12.6 and 12.7) shall be received and held in trust by the Trustee or
such Holder or Paying Agent for the benefit of the holders of Senior
Indebtedness of the Company, and shall be paid or delivered by the Trustee or
such Holders or such Paying Agent, as the case may be, to the holders of Senior
Indebtedness of the Company remaining unpaid or
87
unprovided for or representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing any of such Senior
Indebtedness of the Company may have been issued, ratably according to the
aggregate amounts on account of the Senior Indebtedness of the Company held or
represented by each, to the extent necessary to enable payment in full (except
as such payment otherwise shall have been provided for, of all Senior
Indebtedness of the Company remaining unpaid, after giving effect to all
concurrent payments and distributions and all provisions therefor to or for the
holders of such Senior Indebtedness, but only to the extent that as to any
holder of such Senior Indebtedness, as promptly as practical following notice
from the Trustee to the holders of such Senior Indebtedness that such prohibited
payment has been received by the Trustee, Holder(s) or Paying Agent (or has been
segregated as provided above), such holder (or a representative thereof)
notifies the Trustee of the amounts then due and owing on such Senior
Indebtedness, if any, held by such holder and only the amounts specified in such
notices to the Trustee shall be paid to the holders of such Senior Indebtedness.
SECTION 12.3 Securities Subordinated to Prior Payment of all Senior
------------------------------------------------------
Indebtedness on Dissolution, Liquidation or Reorganization.
- ----------------------------------------------------------
Upon any distribution of assets of the Company upon any dissolution,
winding up, total or partial liquidation or reorganization of the Company,
whether voluntary or involuntary, in bankruptcy, insolvency, receivership or
similar proceeding or upon assignment for the benefit of creditors:
(a) the holders of all Senior Indebtedness of the Company shall first
be entitled to receive payments in full (or to have such payment duly provided
for) of the principal of and interest and other amounts payable in respect
thereof, before the Holders are entitled to receive any payment on account of
the principal of, premium, if any, and interest on the Securities;
(b) any payment or distribution of assets of the Company of any kind
or character, whether in cash, property or securities, to which the Holders or
the Trustee on behalf of the Holders would be entitled except for the provisions
of this Article Twelve, shall be paid by the liquidating trustee or agent or
other Person
88
making such a payment or distribution, directly to the holders of Senior
Indebtedness of the Company or their representative, ratably according to the
respective amounts of Senior Indebtedness of the Company held or represented by
each, to the extent necessary to make payment in full (or have such payment duly
provided for) of all such Senior Indebtedness remaining unpaid after giving
effect to all concurrent payments and distributions and all provisions therefor
to or for the holders of such Senior Indebtedness; and
(c) 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 shall be received by the Trustee or the Holders or any
Paying Agent (or, if the Company is acting as its own Paying Agent, money for
any such payment or distribution shall be segregated or held in trust) on
account of principal of or interest on the Securities before all Senior
Indebtedness of the Company is paid in full, or provision made for its payment,
such payment or distribution (subject to the provisions of Sections 12.6 and
12.7) shall be received and held in trust by the Trustee or such Holder or
Paying Agent for the benefit of the holders of such Senior Indebtedness, or
their respective representative, ratably according to the respective amounts of
Senior Indebtedness of the Company held or represented by each, to the extent
necessary to make payment in full (except as such payment otherwise shall have
been provided for) of all such Senior Indebtedness remaining unpaid after giving
effect to all concurrent payments and distributions and all provisions therefor
to or for the holders of such Senior Indebtedness, but only to the extent that
as to any holder of such Senior Indebtedness, as promptly as practical following
notice from the Trustee to the holders of such Senior Indebtedness that such
prohibited payment has been received by the Trustee, Holder(s) or Paying Agent
(or has been segregated as provided above), such holder (or a representative
therefor) notifies the Trustee of the amounts then due and owing on such Senior
Indebtedness, if any, held by such holder and only the amounts specified in such
notices to the Trustee shall be paid to the holders of such Senior Indebtedness.
The Company shall give prompt written notice to the Trustee of any
dissolution, winding up, liquidation or reorganization of the Company or
assignment for the benefit of creditors by the Company.
89
SECTION 12.4 Holders to Be Subrogated to Rights of Holders of Senior
-------------------------------------------------------
Indebtedness.
- ------------
Subject to the payment in full of all Senior Indebtedness of the
Company, the Holders of Securities shall be subrogated to the rights of the
holders of such Senior Indebtedness to receive payments or distributions of
assets of the Company applicable to the Senior Indebtedness until all amounts
owing on the Securities shall be paid in full, and for the purpose of such
subrogation no such payments or distributions to the holders of such Senior
Indebtedness by or on behalf of the Company, or by or on behalf of the Holders
by virtue of this Article Twelve, which otherwise would have been made to the
Holders shall, as between the Company and the Holders, be deemed to be payment
by the Company to or on account of such Senior Indebtedness, it being understood
that the provisions of this Article Twelve are and are intended solely for the
purpose of defining the relative rights of the Holders, on the one hand, and the
holders of such Senior Indebtedness, on the other hand.
If any payment or distribution to which the Holders would otherwise have
been entitled but for the provisions of this Article Twelve shall have been
applied, pursuant to the provisions of this Article Twelve, to the payment of
amounts payable under Senior Indebtedness of the Company, then the Holders shall
be entitled to receive from the holders of such Senior Indebtedness any payments
or distributions received by such holders of Senior Indebtedness in excess of
the amount sufficient to pay all amounts payable under or in respect of such
Senior Indebtedness in full.
SECTION 12.5 Obligations of the Company Unconditional.
----------------------------------------
Nothing contained in this Article Twelve or elsewhere in this Indenture
or in the Securities is intended to or shall impair, as between the Company and
the Holders, the obligation of the Company, which is absolute and unconditional,
to pay to the Holders the principal of, premium, if any, and interest on the
Securities as and when the same shall become due and payable in accordance with
their terms, or is intended to or shall affect the relative rights of the
Holders and creditors of the Company other than the holders of the Senior
Indebtedness, nor shall anything herein or therein prevent the Trustee or any
Holder from exercising all
90
remedies otherwise permitted by applicable law upon default under this
Indenture, subject to the rights, if any, under this Article Twelve, of the
holders of Senior Indebtedness in respect of cash, property or Securities of the
Company received upon the exercise of any such remedy. Notwithstanding anything
to the contrary in this Article Twelve or elsewhere in this Indenture or in the
Securities, upon any distribution of assets of the Company referred to in this
Article Twelve, the Trustee, subject to the provisions of Sections 7.1 and 7.2,
and the Holders shall be entitled to rely upon any order or decree made by any
court of competent jurisdiction in which such dissolution, winding up,
liquidation or reorganization proceedings are pending, or a certificate of the
liquidating trustee or agent or other Person making any distribution to the
Trustee or to the Holders for the purpose of ascertaining the Persons entitled
to participate in such distribution, the holders of the Senior Indebtedness and
other Indebtedness of the Company, the amount thereof or payable thereon, the
amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Article Twelve. Nothing in this Section 12.5 shall apply to
the claims of, or payments to, the Trustee under or pursuant to Section 7.7.
SECTION 12.6 Trustee Entitled to Assume Payments Not Prohibited in
-----------------------------------------------------
Absence of Notice.
- -----------------
The Trustee shall not at any time be charged with knowledge of the
existence of any facts which would prohibit the making of any payment to or by
the Trustee unless and until a Trust Officer of the Trustee or any Paying Agent
shall have received, no later than three Business Days prior to such payment,
written notice thereof from the Company or from one or more holders of Senior
Indebtedness or from any representative therefor and, prior to the receipt of
any such written notice, the Trustee, subject to the provisions of Sections 7.1
and 7.2, shall be entitled in all respects conclusively to assume that no such
fact exists.
SECTION 12.7 Application by Trustee of Assets Deposited with It.
--------------------------------------------------
U.S. Legal Tender or U.S. Government Obligations deposited in trust with
the Trustee pursuant to and in accordance with Section 8.1 or 8.2 shall be for
the sole benefit of the Holders and, to the extent (i) the making of such
deposit by The Company shall not have been
91
in contravention of any term or provision of any agreement creating or
evidencing Senior Indebtedness of the Company and (ii) allocated for the payment
of Securities, shall not be subject to the subordination provisions of this
Article Twelve. Otherwise, any deposit of assets by the Company with the
Trustee or any Paying Agent (whether or not in trust) for the payment of
principal of or interest on any Securities shall be subject to the provisions of
Sections 12.1, 12.2, 12.3 and 12.4; provided, that, if prior to the third
-------- ----
Business Day preceding the date on which by the terms of this Indenture any such
assets may become distributable for any purpose (including without limitation,
the payment of either principal of or interest on any Security) the Trustee or
such Paying Agent shall not have received with respect to such assets the
written notice provided for in Section 12.6, then the Trustee or such Paying
Agent shall have full power and authority to receive such assets and to apply
the same to the purpose for which they were received, and shall not be affected
by any notice to the contrary which may be received by it on or after such date.
SECTION 12.8 Subordination Rights Not Impaired by Acts or Omissions
------------------------------------------------------
of the Company or Holders of Senior Indebtedness.
- ------------------------------------------------
No right of any present or future holders of any Senior Indebtedness to
enforce subordination provisions contained in this Article Twelve 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 of this Indenture,
regardless of any knowledge thereof which any such holder may have or be
otherwise charged with. The holders of Senior Indebtedness may extend, renew,
modify or amend the terms of the Senior Indebtedness or any security therefor
and release, sell or exchange such security and otherwise deal freely with the
Company all without affecting the liabilities and obligations of the parties to
this Indenture or the Holders.
SECTION 12.9 Holders Authorize Trustee to Effectuate Subordination of
--------------------------------------------------------
Securities.
- ----------
Each Holder of the Securities by his acceptance thereof authorizes and
expressly directs the Trustee on his behalf to take such action as may be
necessary or appropriate to effectuate the subordination provisions
92
contained in this Article Twelve and to protect the rights of the Holders
pursuant to this Indenture, and appoints the Trustee his attorney-in-fact for
such purpose, including, in the event of any dissolution, winding up,
liquidation or reorganization of the Company (whether in bankruptcy, insolvency
or receivership proceedings or upon an assignment for the benefit of creditors
or any other marshalling of assets and liabilities of the Company) tending
towards liquidation of the business and assets of the Company, the immediate
filing of a claim for the unpaid balance of such Holder's Securities in the form
required in said proceedings and cause said claim to be approved. If the
Trustee does not file a proper claim or proof of debt in the form required in
such proceeding prior to 30 days before the expiration of the time to file such
claim or claims, then the holders of the Senior Indebtedness or their
representative are or is hereby authorized to have the right to file and are or
is hereby authorized to file an appropriate claim for and on behalf of the
Holders of said Securities. Nothing herein contained shall be deemed to
authorize the Trustee or the holders of Senior Indebtedness or their
representative to authorize or consent to or accept or adopt on behalf of any
Holder any plan of reorganization, arrangement, adjustment or composition
affecting the Securities or the rights of any Holder thereof, or to authorize
the Trustee or the holders of Senior Indebtedness or their representative to
vote in respect of the claim of any Holder in any such proceeding.
SECTION 12.10 Right of Trustee to Hold Senior Indebtedness.
--------------------------------------------
The Trustee shall be entitled to all of the rights set forth in this
Article Twelve in respect of any Senior Indebtedness at any time held by it to
the same extent as any other holder of Senior Indebtedness, and nothing in this
Indenture shall be construed to deprive the Trustee of any of its rights as such
holder.
SECTION 12.11 Article Twelve Not to Prevent Events of Default.
-----------------------------------------------
The failure to make a payment on account of principal of, premium, if
any, or interest on the Securities by reason of any provision of this Article
Twelve shall not be construed as preventing the occurrence of a Default or an
Event of Default under Section 6.1 or in any way prevent the Holders from
exercising any right
93
hereunder other than the right to receive payment on the Securities.
SECTION 12.12 No Fiduciary Duty of Trustee to Holders of Senior
-------------------------------------------------
Indebtedness.
- ------------
The Trustee shall not be deemed to owe any fiduciary duty to the holders
of Senior Indebtedness, and shall not be liable to any such holders (other than
for its willful misconduct or negligence) if it shall in good faith mistakenly
pay over or distribute to the Holders of Securities or the Company or any other
Person, cash, property or securities to which any holders of Senior Indebtedness
shall be entitled by virtue of this Article Twelve or otherwise. Nothing in
this Section 12.12 shall affect the obligation of any other such Person to hold
such payment for the benefit of, and to pay such payment over to, the holders of
Senior Indebtedness or their representative.
ARTICLE THIRTEEN
MISCELLANEOUS
SECTION 13.1 TIA Controls.
------------
If any provision of this Indenture limits, qualifies, or conflicts with
the duties imposed by operation of the TIA, the imposed duties, upon
qualification of this Indenture under the TIA, shall control.
SECTION 13.2 Notices.
-------
Any notices or other communications to the Company or the Trustee
required or permitted hereunder shall be in writing, and shall be sufficiently
given if made by hand delivery, by telex, by telecopier or registered or
certified mail, postage prepaid, return receipt requested, addressed as follows:
if to the Company or any Guarantor:
M.D.C. Holdings, Inc.
3600 South Yosemite Street,
Suite 900
Denver, Colorado 80237
Telecopy No.: (303) 793-2760
Attention: Chief Financial Officer
94
if to the Trustee:
First Bank National Association
180 East Fifth Street
St. Paul, Minnesota 55101
Telecopy No.: (612) 244-4300
Attention: Corporate Trust Department
The Company or the Trustee by notice to each other party may designate
additional or different addresses as shall be furnished in writing by such
party. Any notice or communication to the Company or the Trustee shall be deemed
to have been given or made as of the date so delivered, if personally delivered;
when answered back, if telexed; when receipt is acknowledged, if telecopied; and
five Business Days after mailing if sent by registered or certified mail,
postage prepaid (except that a notice of change of address shall not be deemed
to have been given until actually received by the addressee).
Any notice or communication mailed to a Holder shall be mailed to him by
first class mail or other equivalent means at his address as it appears on the
registration books of the Registrar and shall be sufficiently given to him if so
mailed within the time prescribed.
Failure to mail a notice or communication to a Holder or any defect in
it shall not affect its sufficiency with respect to other Holders. If a notice
or communication is mailed in the manner provided above, it is duly given,
whether or not the addressee receives it.
SECTION 13.3 Communications by Holders with Other Holders.
--------------------------------------------
Holders may communicate pursuant to TIA (S)312(b) with other Holders
with respect to their rights under this Indenture or the Notes. The Company,
the Trustee, the Registrar and any other Person shall have the protection of TIA
(S) 312(c).
SECTION 13.4 Certificate and Opinion as to Conditions Precedent.
--------------------------------------------------
Upon any request or application by the Company to the Trustee to take
any action under this Indenture, the Company shall furnish to the Trustee:
95
(1) an Officers' Certificate (in form and substance reasonably
satisfactory to the Trustee) stating that, in the opinion of the signers,
all conditions precedent, if any, provided for in this Indenture relating
to the proposed action have been complied with; and
(2) an Opinion of Counsel (in form and substance reasonably
satisfactory to the Trustee) stating that, in the opinion of such counsel,
all such conditions precedent have been complied with.
SECTION 13.5 Statements Required in Certificate or Opinion.
---------------------------------------------
Each certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture shall include:
(1) a statement that the Person making such certificate or opinion
has read such covenant or condition;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such Person, he has made
such examination or investigation as is necessary to enable him to express
an informed opinion as to whether or not such covenant or condition has
been complied with; and
(4) a statement as to whether or not, in the opinion of each such
Person, such condition or covenant has been complied with; provided,
--------
however, that with respect to matters of fact an Opinion of Counsel may
-------
rely on an Officers' Certificate or certificates of public officials.
96
SECTION 13.6 Rules by Trustee, Paying Agent, Registrar.
-----------------------------------------
The Trustee may make reasonable rules for action by or at a meeting of
Holders. The Paying Agent or Registrar may make reasonable rules for its
respective function.
SECTION 13.7 Legal Holidays.
--------------
A "Legal Holiday" used with respect to a particular place of payment is
a Saturday, a Sunday or a day on which banking institutions at such place are
not required to be open. If a payment date is a Legal Holiday at such place,
payment may be made at such place on the next succeeding day that is not a Legal
Holiday, and no interest shall accrue for the intervening period.
SECTION 13.8 Governing Law.
-------------
THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE
AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW. THE COMPANY HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF
ANY NEW YORK STATE COURT SITTING IN THE BOROUGH OF MANHATTAN OR ANY FEDERAL
COURT SITTING IN BOROUGH OF MANHATTAN IN RESPECT OF ANY SUIT, ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE AND THE SECURITIES, AND
IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, JURISDICTION OF THE AFORESAID COURTS. THE COMPANY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW,
TRIAL BY JURY AND ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING
OF THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT
AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT
HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. NOTHING HEREIN SHALL AFFECT THE
RIGHT OF THE TRUSTEE OR ANY HOLDERS TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST
THE COMPANY IN ANY OTHER JURISDICTION.
97
SECTION 13.9 No Adverse Interpretation of Other Agreements.
---------------------------------------------
This Indenture may not be used to interpret another indenture, loan or
debt agreement of any of the Company or any of its Subsidiaries. Any such
indenture, loan or debt agreement may not be used to interpret this Indenture.
SECTION 13.10 No Recourse Against Others.
--------------------------
A director, officer, employee, stockholder or incorporator, as such, of
the Company or its Subsidiaries shall not have any liability for any obligations
of the Company under the Notes or this Indenture or for any claim based on, in
respect of or by reason of such obligations or their creations. Each Holder by
accepting a Security waives and releases all such liability. Such waiver and
release are part of the consideration for the issuance of the Notes.
SECTION 13.11 Successors.
----------
All agreements of the Company in this Indenture and the Notes shall bind
its successor. All agreements of the Trustee in this Indenture shall bind its
successor.
SECTION 13.12 Duplicate Originals.
-------------------
All parties may sign any number of copies or counterparts of this
Indenture. Each signed copy or counterpart shall be an original, but all of
them together shall represent the same agreement.
SECTION 13.13 Severability.
------------
In case any one or more of the provisions in this Indenture or in the
Notes shall be held invalid, illegal or unenforceable, in any respect for any
reason, the validity, legality and enforceability of any such provision in every
other respect and of the remaining provisions shall not in any way be affected
or impaired thereby, it being intended that all of the provisions hereof shall
be enforceable to the full extent permitted by law.
98
SECTION 13.14 Table of Contents, Headings, etc.
---------------------------------
The Table of Contents, Cross-Reference Table and headings of the
Articles and the Sections of this Indenture have been inserted for convenience
of reference only, are not to be considered a part hereof and shall in no way
modify or restrict any of the terms or provisions hereof.
99
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed as of the date first written above.
M.D.C. HOLDINGS, INC.
By: /s/ Spencer I. Browne
-----------------------------
Name: Spencer I. Browne
Title: President
[Seal]
Attest: /s/ Paris G. Reece
------------------
FIRST BANK NATIONAL ASSOCIATION,
as Trustee
By:
-----------------------------
Name:
Title:
Attest:
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed as of the date first written above.
M.D.C. HOLDINGS, INC.
By:
-----------------------------
Name:
Title:
[Seal]
Attest:
FIRST BANK NATIONAL ASSOCIATION,
as Trustee
By: /s/ Scott Strodthoff
-----------------------------
Name: Scott Strodthoff
Title: Assistant Vice President
Attest: /s/ D. Chalupsky
----------------
EXHIBITS
Exhibit A - Form of Note
Exhibit B - Form of Senior Notes Indenture
101
Exhibit A
[FORM OF NOTE]
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED. SUCH SECURITIES MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED, EXCEPT
PURSUANT TO (i) A REGISTRATION STATEMENT WITH RESPECT TO SUCH SECURITIES
THAT IS EFFECTIVE UNDER SUCH ACT, (ii) RULE 144 OR RULE 144A UNDER SUCH
ACT, OR (iii) ANY OTHER EXEMPTION FROM REGISTRATION UNDER SUCH ACT RELATING
TO THE DISPOSITION OF SECURITIES, AND IN EACH CASE IN ACCORDANCE WITH ANY
APPLICABLE LAWS OF ANY STATE OF THE UNITED STATES OF AMERICA AND THE TERMS
OF A CERTAIN PURCHASE AGREEMENT PURSUANT TO WHICH THE SECURITIES WERE
INITIALLY SOLD.
M.D.C. HOLDINGS, INC.
8-3/4% CONVERTIBLE SUBORDINATED NOTE
DUE 2005
No. $
M.D.C. Holdings, Inc., a Delaware corporation (hereinafter called 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, on December 15, 2005.
Interest Payment Dates: December 15 and June 15.
Record Dates: December 1 and June 1.
Reference is made to the further provisions of this Note on the reverse
side, which will, for all purposes, have the same effect as if set forth at this
place.
A-1
IN WITNESS WHEREOF, the Company has caused this Instrument to be duly
executed under its corporate seal.
M.D.C. HOLDINGS, INC.
By:
---------------------------
[Name]
[Title]
Attest:
- -----------------------------
[Name]
[Assistant] Secretary
[Seal]
A-2
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Notes described in the within-mentioned Indenture.
FIRST BANK NATIONAL ASSOCIATION
as Trustee
By:
------------------------------
Authorized Signatory
Dated:
A-3
M.D.C. HOLDINGS, INC.
8-3/4% CONVERTIBLE SUBORDINATED NOTE
DUE 2005
1. Interest.
--------
M.D.C. Holdings, Inc., a Delaware corporation (the "Company"), promises
to pay interest on the principal amount of this Note at a rate of 8-3/4% per
annum. To the extent it is lawful, the Company promises to pay interest on any
interest payment due but unpaid on such principal amount at a rate of 8-3/4% per
annum compounded semi-annually.
The Company will pay interest semi-annually on December 15 and June 15
of each year (each, an "Interest Payment Date"), commencing June 15, 1994.
Interest on the Notes will accrue from the date of issuance or from the most
recent Interest Payment Date to which interest has been paid or provided for;
provided that, if there is no existing Default in the payment of interest and if
- --------
this Note is authenticated between a record date referred to on the face hereof
and the next succeeding Interest Payment Date, interest shall accrue from such
Interest Payment Date. Interest will be computed on the basis of a 360-day year
comprised of twelve 30-day months.
2. Method of Payment.
-----------------
The Company shall pay interest on the Notes (except defaulted interest)
to the persons in whose names such Notes are registered at the close of business
on December 1 or June 1 preceding such Interest Payment Date. Holders must
surrender Notes to a Paying Agent to collect principal payments. Except as
provided below, the Company shall pay principal and interest in such coin or
currency of the United States of America as at the time of payment shall be
legal tender for payment of public and private debts ("U.S. Legal Tender"). At
the option of the Company, payment of interest may be made by check mailed to
the Holders of the Notes at the addresses set forth upon the registry books of
the Company. No service charge will be made for any registration of transfer or
exchange of Notes, but the Company may require payment of a sum sufficient to
cover any tax or
A-4
other governmental charge payable in connection therewith.
3. Paying Agent, Registrar and Conversion Agent.
--------------------------------------------
Initially, First Bank National Association (the "Trustee"), will act as
Paying Agent, Registrar and Conversion Agent. The Company may change any Paying
Agent, Registrar or Conversion Agent without notice. Subject to limitations
under certain circumstances, the Company, its Subsidiaries or Affiliates may act
as Paying Agent, Registrar, co-Registrar or Conversion Agent.
4. Indenture.
---------
The Company issued the Notes under an Indenture, dated as of December
15, 1993 (the "Indenture"), between the Company and the Trustee. Capitalized
terms herein are used as defined in the Indenture unless otherwise defined
herein. The terms of the Notes include those stated in the Indenture and those
made part of the Indenture by reference to the Trust Indenture Act, as in effect
on the date of the Indenture. The Notes are subject to all such terms, and
Holders of Notes are referred to the Indenture and said Act for a statement of
them. The Notes are general unsecured, subordinated obligations of the Company
limited in aggregate principal amount to $50,000,000.
5. Redemption.
----------
The Notes may not be so redeemed before December 15, 1998. The Notes
may be redeemed in whole or from time to time in part at any time on and after
December 15, 1998, at the option of the Company, at the Redemption Price
(expressed as a percentage of principal amount) set forth below with respect to
the indicated Redemption Date, in each case, together with any accrued but
unpaid interest, if any, to the Redemption Date.
A-5
If redeemed during
the 12-month period
beginning December 15 Redemption Price
--------------------- ----------------
1998.................. 105%
1999.................. 104%
2000.................. 103%
2001.................. 102%
2002.................. 101%
2003 and thereafter... 100%
In the case of a partial redemption, the Trustee shall select the Notes
or portions thereof for redemption on a pro rata basis by lot or in such other
--------
manner as it deems appropriate and fair. The Notes may be redeemed in part only
in multiples of $1,000 of principal amount.
Any such redemption will comply with Article Three of the Indenture.
6. Notice of Redemption.
--------------------
Notice of redemption will be mailed by first class mail at least 15 days
and not more than 60 days before the Redemption Date to each Holder of Notes to
be redeemed at his address then shown upon the books of the registrar. Notes in
denominations larger than $1,000 may be redeemed in part. Any notice that
relates to a Note to be redeemed in part only must state the portion of the
principal amount equal to the unredeemed portion thereof and must state that on
and after the date fixed for redemption, upon surrender of such Note, a new Note
or Notes in a principal amount equal to the unredeemed portion thereof will be
issued.
Except as set forth in the Indenture, from and after any Redemption
Date, if monies for the redemption of the Notes called for redemption shall have
been deposited with the Paying Agent on or before such Redemption Date, the
Notes called for redemption will cease to accrue interest and the only right of
the Holders of such Notes will be to receive payment of the Redemption Price and
any accrued and unpaid interest to the Redemption Date.
A-6
7. Denominations; Transfer; Exchange.
---------------------------------
The Notes are in registered form, without coupons, in denominations of
$1,000 and integral multiples of $1,000. A Holder may register the transfer of,
or exchange Notes in accordance with, the Indenture. The Registrar may require
a Holder, among other things, to furnish appropriate endorsements and transfer
documents and to pay any taxes and fees required by law or permitted by the
Indenture. The Registrar need not register the transfer of or exchange any
Notes selected for redemption.
8. Conversion.
----------
A Holder of a Note may convert it into Common Stock of the Company at
any time prior to the close of business on December 15, 2005, subject to prior
redemption or repurchase, to convert such Notes or portion thereof (which are
$1,000 or integral multiples thereof) into Common Stock of the Company, at the
conversion rate computed in compliance with the Indenture. The initial
conversion rate is $7.75 principal amount of Notes for each share of Common
Stock (initially equal to 129.03 shares of Common Stock per $1,000 principal
amount of the Notes), subject to adjustment in certain events. The Company will
deliver a check in lieu of any fractional share. On conversion, no payment or
adjustment for interest accrued on the Notes will be made nor for dividends on
the Common Stock issued on conversion. If any Note is converted between the
record date for the payment of interest and the next succeeding interest payment
date, such Note must be accompanied by funds equal to the interest payable on
such succeeding Interest Payment Date on the principal amount so converted
(unless such Note shall have been called for redemption, in which case no such
payment shall be required), and the interest on the principal amount of the Note
being converted will be paid on such next succeeding Interest Payment Date to
the registered holder of such Note on the immediately preceding record date
except as provided in the Indenture. A Note converted on an Interest Payment
Date need not be accompanied by any payment, and the interest on the principal
amount of the Note being converted will be paid on such interest payment date to
the registered holder of such Note on the immediately preceding record date,
except as provided by the Indenture.
A-7
To convert a Note a Holder must (1) complete and sign the conversion
notice on the back of the Note, (2) surrender the Note to the Conversion Agent,
(3) furnish appropriate endorsements and transfer documents if required by the
Registrar or Conversion Agent and (4) pay any transfer or similar tax if
required. A Holder may convert a portion of a Note if the portion is $1,000 or
a whole multiple of $1,000.
9. Subordination.
-------------
The Notes are subordinated in right of payment, in the manner and to the
extent set forth in the Indenture, to the prior payment in full of all Senior
Indebtedness (as defined in the Indenture). Each Holder by accepting a Note
agrees to such subordination and authorizes the Trustee to give it effect.
10. Persons Deemed Owners.
---------------------
The registered Holder of a Note may be treated as the owner of it for
all purposes.
11. Unclaimed Money.
---------------
If money for the payment of principal or interest remains unclaimed for
two years, the Trustee and the Paying Agent(s) will pay the money back to the
Company at its written request. After that, all liability of the Trustee and
such Paying Agent(s) with respect to such money shall cease.
12. Discharge Prior to Redemption or Maturity.
-----------------------------------------
If the Company at any time deposits into an irrevocable trust with the
Trustee U.S. Legal Tender or U.S. Government Obligations sufficient to pay the
principal of and interest on the Notes to redemption or maturity and complies
with the other provisions of the Indenture relating thereto, the Company will be
discharged from certain provisions of the Indenture and the Notes (including the
financial covenants, but excluding, among other things, its obligation to pay
the principal of and interest on the Notes).
13. Amendment; Supplement; Waiver.
-----------------------------
Subject to certain exceptions, the Indenture or the Notes may be amended
or supplemented with the written
A-8
consent of the Holders of at least a majority in aggregate principal amount of
the Notes then outstanding, and any existing Default or Event of Default or
compliance with any provision may be waived with the consent of the Holders of a
majority in aggregate principal amount of the Notes then outstanding. Without
notice to or consent of any Holder, the parties thereto may amend or supplement
the Indenture or the Notes to, among other things, cure any ambiguity, defect or
inconsistency, or make any other change that does not adversely affect the
rights of any Holder of a Note.
14. Restrictive Covenants.
---------------------
The Indenture imposes certain limitations on the ability of the Company
and its Subsidiaries to, among other things, enter into transactions with
Affiliates, and a limitation on the ability of the Company to merge or
consolidate with any other Person. The limitations are subject to many
important qualifications and exceptions. The Company must annually report to
the Trustee on compliance with such limitations.
15. Change of Control.
-----------------
In the event that a Change of Control (as defined in Section 4.10 of the
Indenture) has occurred, each Holder will have the right, at such Holder's
option, subject to the terms and conditions set forth in the Indenture, to
require the Company to repurchase in the manner specified in the Indenture, all
or any part (in integral multiples of $1,000) of such Holder's Notes.
16. Successors.
----------
When a successor assumes all the obligations of its predecessor under
the Notes and the Indenture, the predecessor will be released from those
obligations.
17. Defaults and Remedies.
---------------------
If an Event of Default occurs and is continuing (other than an Event of
Default specified in Sections 6.1 (4) and (5) of the Indenture), then in every
such case, unless the principal of all of the Notes shall have already become
due and payable, either the Trustee or the Holders of 25% in aggregate principal
amount of the Notes then outstanding, by notice in writing to the Company (and
to the Trustee if given by Holders) (an "Accelera-
A-9
tion Notice"), may declare all principal, determined as set forth below,
including in each case accrued interest thereon, or, as appropriate, the Change
of Control Purchase Price to be due and payable immediately. If an Event of
Default specified in Sections 6.1 (4) or (5) of the Indenture, relating to the
Company or any of its Material Subsidiaries occurs, all principal and accrued
interest thereon will be immediately due and payable on all outstanding Notes
without any declaration or other act on the part of the Trustee or the Holders.
Subject to certain conditions being met, the Holders of no less than a majority
in aggregate principal amount of the Notes then outstanding generally are
authorized to rescind such acceleration if all existing Events of Default, other
than the non-payment of the principal of, premium, if any, and interest on the
Notes which have become due solely by such acceleration, have been cured or
waived. Holders may not enforce the Indenture or the Notes, except as provided
in the Indenture.
18. No Recourse Against Others.
--------------------------
No stockholder, director, officer, employee or incorporator, as such,
past, present or future, of the Company or any successor corporation shall have
any liability for any obligation of the Company under the Notes or the Indenture
or for any claim based on, in respect of or by reason of, such obligations or
their creation. Each Holder of a Note, by accepting a Note, waives and releases
all such liability. The waiver and release are part of the consideration for
the issuance of the Notes.
19. Authentication.
--------------
This Note shall not be valid until the Trustee or authenticating agent
signs the certificate of authentication on the other side of this Note.
20. Abbreviations and Defined Terms.
-------------------------------
Customary abbreviations may be used in the name of a Holder of a Note or
an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the
entireties), JT TEN (= joint tenants with right of survivorship and not as
tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors
Act).
A-10
21. CUSIP Numbers.
-------------
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company will cause CUSIP numbers to be
printed on the Notes as a convenience to the Holders of the Notes. No
representation is made as to the accuracy of such numbers as printed on the
Notes and reliance may be placed only on the other identification numbers
printed hereon.
22. Trustee Dealings with the Company.
---------------------------------
The Trustee under the Indenture, in its individual or any other
capacity, may make loans to, accept deposits from, and perform services for the
Company or its Affiliates, and may otherwise deal with the Company, its
Subsidiaries or its Affiliates, as if it were not Trustee.
A-11
[FORM OF] ASSIGNMENT
I or we assign this Note to
_________________________________________________________
_________________________________________________________
_________________________________________________________
(Print or type name, address and zip code of assignee)
Insert Social Security or other identifying number of assignee:
_________________________
and irrevocably appoint __________ agent to transfer this Note on the books of
the Company. The agent may substitute another to act for him.
Dated: __________ Signed: _________________________
_____________________________________________________
(Sign exactly as name appears on
the other side of this Note)
A-12
[FORM OF ELECTION TO CONVERT]
CONVERSION NOTICE
To convert this Note into Common Stock of the Company, check the box:
[_]
To convert only part of this Note, state the amount (must be in
multiples of $1,000):
$_____________________________
If you want the stock certificate made out in another person's name,
fill in the form below:
_______________________________________
_______________________________________
_______________________________________
_______________________________________
(Print or type other person's name, address, including zip code, and social
security or other taxpayer identification number)
Dated: __________ Signed: _________________________
_____________________________________________________
(Sign exactly as name appears on the other side of this Note)
A-13
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company
pursuant to Section 4.10 of the Indenture, check the box:
[_]
If you want to elect to have only part of this Note purchased by the
Company pursuant to Section 4.10 of the Indenture, as the case may be, state the
amount you want to be purchased: $________
Date: ________________ Signature:____________________________
(Sign exactly as your name
appears on the other side
of this Note)
Signature Guarantee: ___________________________________
A-14