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WELLSFORD REAL PROPERTIES, INC.
and
WILMINGTON TRUST COMPANY,
as Trustee
8.25% CONVERTIBLE JUNIOR SUBORDINATED DEBENTURES
INDENTURE
Dated as of May 5, 2000
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WELLSFORD REAL PROPERTIES, INC.
Reconciliation and tie between Trust Indenture Act of 1939
and Indenture dated as of May 5, 2000
Trust Indenture
Act Section Indenture Section
----------- -----------------
310 (a) (1)....................................... 6.10
(a) (2)....................................... 6.10
(a) (3)....................................... Not Applicable
(a) (4)....................................... Not Applicable
(a) (5)....................................... 6.10
(b) .......................................... 6.8, 6.10
311 (a) .......................................... 6.11
(b) .......................................... 6.11
312 (a) .......................................... 4.1, 4.2
(b) .......................................... 4.2
(c) .......................................... 4.2
313(a)(1) - (5) & (7) (8)............................. 6.6
(a) (6)....................................... Not Applicable
(b) (1)....................................... Not Applicable
(b) (2)....................................... 6.6
(c) .......................................... 6.6
(d) .......................................... 6.6
314(a) (1) - (3)....................................... 4.3
(a(4) .......................................... 3.4
(b) .......................................... Not Applicable
(c(1) .......................................... 2.6
(c(2) .......................................... 2.6
(c(3) .......................................... Not Applicable
(d) .......................................... Not Applicable
(e) .......................................... 14.5
(f) .......................................... Not Applicable
315(a) .......................................... 6.1
(b) .......................................... 6.5
(c) .......................................... 6.1
(d) .......................................... 6.1
(d)(1) .......................................... 6.1
(d)(2) .......................................... 6.1
(d)(3) .......................................... 6.1
Trust Indenture
Act Section Indenture Section
----------- -----------------
(e) .......................................... 5.10
316(a) .......................................... 7.4
(a(1)(A).......................................... 5.8
(a(1)(B).......................................... 5.1, 5.9
(a)(2) .......................................... Not Applicable
(b) .......................................... 5.6
(c) .......................................... 7.1
317(a)(1) .......................................... 5.2
(a)(2) .......................................... 5.2
(b) .......................................... 3.3
318(a) .......................................... 14.7
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Note:This reconciliation and tie shall not, for any purpose, be deemed to be
part of the Indenture.
TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS..................................................1
Section 1.1 Certain Terms Defined........................................1
ARTICLE II THE CONVERTIBLE DEBENTURES..................................10
Section 2.1 Designation and Principal Amount............................10
Section 2.2 Maturity....................................................10
Section 2.3 Form and Payment............................................11
Section 2.4 Exchange and Registration of Transfer of Convertible
Debentures; Restrictions on Transfers; Depositary...........11
Section 2.5 Interest....................................................15
Section 2.6 Authentication and Delivery of Convertible Debentures.......16
Section 2.7 Execution of Convertible Debentures.........................17
Section 2.8 Certificate of Authentication...............................17
Section 2.9 Denomination and Date of Convertible Debentures;
Payments of Interest........................................18
Section 2.10 Registration, Transfer and Exchange.........................19
Section 2.11 Mutilated, Defaced, Destroyed, Lost and Stolen Convertible
Debentures..................................................21
Section 2.12 Cancellation of Convertible Debentures......................22
Section 2.13 Temporary Convertible Debentures............................22
ARTICLE III COVENANTS OF THE COMPANY....................................23
Section 3.1 Payment of Principal and Interest...........................23
Section 3.2 Offices for Payment, etc....................................23
Section 3.3 Paying Agents...............................................23
Section 3.4 Written Statement to Trustee................................24
Section 3.5 Limitation on Dividends. ..................................24
Section 3.6 Covenants as to WRP Trust...................................25
Section 3.7 Existence...................................................25
ARTICLE IV HOLDERS OF CONVERTIBLE DEBENTURES LISTS AND
REPORTS BY THE COMPANY AND THE TRUSTEE......................25
Section 4.1 Company to Furnish Trustee Information as to Names and
Addresses of Holders of Convertible Debentures..............25
Section 4.2 Preservation and Disclosure of Holders of Convertible
Debentures Lists............................................26
Section 4.3 Reports by the Company......................................27
Page
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ARTICLE V REMEDIES OF THE TRUSTEE AND HOLDERS OF
CONVERTIBLE DEBENTURES ON EVENT OF DEFAULT .................28
Section 5.1 Event of Default Defined; Acceleration of Maturity;
Waiver of Default...........................................28
Section 5.2 Collection of Indebtedness by Trustee; Trustee May
Prove Debt .................................................31
Section 5.3 Application of Proceeds.....................................33
Section 5.4 Restoration of Rights on Abandonment of Proceedings.........33
Section 5.5 Limitations on Suits by Holders of Convertible Debentures...34
Section 5.6 Unconditional Right of Holders of Convertible Debentures
to Institute Certain Suits..................................34
Section 5.7 Powers and Remedies Cumulative; Delay or Omission Not
Waiver of Default...........................................34
Section 5.8 Control by Holders of Convertible Debentures................35
Section 5.9 Waiver of Past Defaults.....................................35
Section 5.10 Right of Court to Require Filing of Undertaking to Pay
Costs ......................................................36
Section 5.11 Suits for Enforcement.......................................36
Section 5.12 Unconditional Right of Holders to Receive Principal
and Interest and to Convert.................................36
ARTICLE VI CONCERNING THE TRUSTEE......................................37
Section 6.1 Duties of the Trustee.......................................37
Section 6.2 Rights of Trustee...........................................38
Section 6.3 Individual Rights of Trustee................................39
Section 6.4 Trustee's Disclaimer........................................39
Section 6.5 Notice of Defaults..........................................39
Section 6.6 Reports by Trustee to Holders...............................39
Section 6.7 Compensation and Indemnity..................................40
Section 6.8 Replacement of Trustee......................................40
Section 6.9 Successor Trustee by Merger.................................41
Section 6.10 Eligibility; Disqualification...............................41
Section 6.11 Preferential Collection of Claims Against Company...........41
ARTICLE VII CONCERNING THE HOLDERS OF CONVERTIBLE DEBENTURES............42
Section 7.1 Evidence of Action Taken by Holders of Convertible
Debentures .................................................42
Section 7.2 Proof of Execution of Instruments...........................42
Section 7.3 Holders to be Treated as Owners.............................42
Section 7.4 Convertible Debentures Owned by Company Deemed Not
Outstanding.................................................42
Section 7.5 Right of Revocation of Action Taken.........................43
ARTICLE VIII SUPPLEMENTAL INDENTURES.....................................43
Page
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Section 8.1 Supplemental Indentures Without Consent of Holders of
Convertible Debentures......................................43
Section 8.2 Supplemental Indentures With Consent of Holders of
Convertible Debentures......................................44
Section 8.3 Effect of Supplemental Indenture............................45
Section 8.4 Documents to Be Given to Trustee............................46
Section 8.5 Notation on Convertible Debentures in Respect of
Supplemental Indentures.....................................46
ARTICLE IX CONSOLIDATION, MERGER, SALE OR CONVEYANCE ..................46
Section 9.1 Company May Consolidate, etc., on Certain Terms.............46
Section 9.2 Successor or Substituted....................................47
Section 9.3 Opinion of Counsel to Trustee...............................47
ARTICLE X REDEMPTION OF THE CONVERTIBLE DEBENTURES ...................47
Section 10.1 Tax Event Redemption........................................47
Section 10.2 Optional Redemption by Company..............................48
Section 10.3 No Sinking Fund.............................................52
Section 10.4 Election to Redeem; Notice of Redemption; Partial
Redemptions ................................................52
Section 10.5 Payment of Convertible Debentures Called for Redemption.....53
Section 10.6 Exclusion of Certain Convertible Debentures from
Eligibility for Selection for Redemption....................54
Section 10.7 Required Redemption.........................................54
ARTICLE XI CONVERSION OF CONVERTIBLE DEBENTURES........................55
Section 11.1 Conversion Rights...........................................55
Section 11.2 Conversion Procedures.......................................55
Section 11.3 Conversion Price Adjustments................................57
Section 11.4..............................................................61
Section 11.5 Trustee Not Responsible for Determining Conversion Price or
Adjustments.................................................61
Section 11.6 Reservation of Common Shares................................62
Section 11.7 Payment of Certain Taxes upon Conversion....................62
Section 11.8 Nonassessability............................................62
ARTICLE XII SUBORDINATION OF CONVERTIBLE DEBENTURES.....................62
Section 12.1 Convertible Debentures Subordinate to Senior Indebtedness...62
Section 12.2 Payment Over of Proceeds upon Dissolution, Etc..............62
Section 12.3 Prior Payment to Senior Indebtedness upon Acceleration
of Convertible Debentures...................................64
Section 12.4 No Payment When Senior Indebtedness in Default..............64
Section 12.5 Payment Permitted in Certain Situations.....................64
Page
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Section 12.6 Subrogation to Rights of Holders of Senior Indebtedness.....65
Section 12.7 Provisions Solely to Define Relative Rights.................65
Section 12.8 Trustee to Effectuate Subordination.........................66
Section 12.9 No Waiver of Subordination Provisions.......................66
Section 12.10 Notice to Trustee...........................................66
Section 12.11 Reliance on Judicial Order or Certificate of
Liquidating Agent ..........................................67
Section 12.12 Trustee Not Fiduciary for Holders of Senior Indebtedness....67
Section 12.13 Rights of Trustee as Holder of Senior Indebtedness;
Preservation of Trustee's Rights............................67
Section 12.14 Article Applicable to Paying Agents.........................68
Section 12.15 Certain Conversions Deemed Payment..........................68
Section 12.16 Further Subrogation.........................................68
ARTICLE XIII EXPENSES....................................................69
Section 13.1 Payment of Expenses.........................................69
Section 13.2 Payment Upon Resignation or Removal.........................69
ARTICLE XIV MISCELLANEOUS PROVISIONS....................................70
Section 14.1 Incorporators, Shareholders, Officers and Directors of
Company Exempt from Individual Liability....................70
Section 14.2 Provisions of Indenture for the Sole Benefit of Parties
and Holders of Convertible Debentures.......................70
Section 14.3 Right to Assign; Successors and Assigns Bound by Indenture..70
Section 14.4 Notices and Demands on Company, Trustee and Holders of
Convertible Debentures......................................70
Section 14.5 Officers' Certificates and Opinions of Counsel;
Statements to Be Contained Therein..........................71
Section 14.6 Payments Due on Saturdays, Sundays and Holidays.............72
Section 14.7 Conflict of Any Provision of Indenture with Trust
Indenture Act ..............................................72
Section 14.8 Delaware Law to Govern......................................72
Section 14.9 Counterparts................................................73
Section 14.10 Effect of Headings; Gender..................................73
Section 14.11 Acceptable Counsel..........................................73
Page
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EXHIBITS
Exhibit A Specimen Copy of 8.25% Convertible Junior Subordinated Debentures
THIS INDENTURE, dated as of May 5, 2000, between WELLSFORD REAL PROPERTIES,
INC., a Maryland corporation (the"Company"), and WILMINGTON TRUST COMPANY (the
"Trustee").
W I T N E S S E T H:
-------------------
WHEREAS, the Company desires and has requested the Trustee to join it in
the execution and delivery of this Indenture in order to establish and provide
for the issuance by the Company of convertible debentures designated as its
8.25% Convertible Junior Subordinated Debentures (the "Convertible Debentures"),
a specimen copy of which is attached hereto as Exhibit A, on the terms set forth
herein;
WHEREAS, WRP Convertible Trust I, a Delaware statutory business trust ("WRP
Trust" or the "Trust"), has offered to ERP Operating Limited Partnership, an
Illinois limited partnership, in a private placement of $25,000,000 aggregate
liquidation amount of its 8.25% Convertible Trust Preferred Securities (the
"Convertible Preferred Securities"), representing undivided beneficial interests
in the assets of the Trust, and proposes to invest the proceeds from such
offering, together with the proceeds of the issuance and sale by the Trust to
the Company of $775,000 aggregate liquidation amount of its 8.25% Convertible
Trust Common Securities, in $25,775,000 aggregate principal amount of the
Convertible Debentures; and
WHEREAS, all things necessary to make this Indenture a valid agreement of
the Company and the Trustee, in accordance with its terms, have been done.
NOW, THEREFORE:
There is hereby established the terms of the Convertible Debentures to be
issued under this Indenture, which shall be as set forth herein and in the form
of Convertible Debentures attached hereto as Exhibit A, and in consideration of
the premises and the purchase and acceptance of the Convertible Debentures by
the holders thereof, the Company mutually covenants and agrees with the Trustee,
for the equal and proportionate benefit of all holders of the Convertible
Debentures, as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Certain Terms Defined. The following terms (except as otherwise
expressly provided or unless the context otherwise clearly requires) for all
purposes of this Indenture and of any indenture supplemental hereto shall have
the respective meanings specified in this Section. All other terms used in this
Indenture that are defined in the Trust Indenture Act of 1939, as amended (the
"Trust Indenture Act"), or the definitions of which in the Securities Act of
1933, as amended (the "Securities Act"), are referred to in the Trust Indenture
Act, including terms defined therein by reference to the Securities Act (except
as herein otherwise expressly provided or unless the context otherwise clearly
requires), shall have the meanings assigned to such terms in the Trust Indenture
Act and in the Securities Act as in force at the date of this Indenture. All
accounting terms used herein and not expressly defined shall have the meanings
assigned to such terms in accordance with generally accepted accounting
principles, and the term "generally accepted accounting principles" means such
accounting principles as are generally accepted at the time of any computation.
The words "herein," "hereof" and "hereunder" and other words of similar import
refer to this Indenture as a whole, as supplemented and amended from time to
time, and not to any particular Article, Section or other subdivision. The terms
defined in this Article have the meanings assigned to them in this Article and
include the plural as well as the singular.
"Additional Sums" shall have the meaning set forth in Section 2.5(d).
"Affiliate" has the same meaning as given to that term in Rule 405 of the
Securities Act or any successor rule thereunder.
"Applicants" has the meaning specified in Section 4.2(b).
"Board of Directors" means either the Board of Directors of the Company or
any duly authorized committee of that Board.
"Business Day" means any day other than a Saturday, Sunday, or any other
day on which banking institutions in New York, New York or Wilmington, Delaware
are permitted or required by any applicable law to close.
"Capital Stock" means, with respect to any Person, any and all shares,
interests, units representing interests, participations, rights in or other
equivalents (however designated) of such Person's capital stock, including, with
respect to partnerships, limited liability companies and business trusts,
partnership interests (whether general or limited), membership interests,
beneficial interests and any other interest or participation that confers upon a
Person the right to receive a share of the profits and losses of, or
distributions of assets of, such partnership, limited liability company or
business trust, and any rights (other than debt securities convertible into
capital stock), warrants or options exchangeable for or convertible into such
capital stock.
"Closing Price" with respect to any security on any day means the last
reported sale price, regular way on such day, or, if no sale takes place on such
day, the average of the reported closing bid and asked prices on such day,
regular way, in either case as reported on the American Stock Exchange, or, if
such security is not listed or admitted to trading on the American Stock
Exchange, on the principal national securities exchange on which such security
is listed or admitted to trading, or, if such security is not listed or admitted
to trading on a national securities exchange, on the National Market System of
the National Association of Securities Dealers, Inc., or, if such security is
not quoted or admitted to trading on such quotation system, on the principal
quotation system on which such security is listed or admitted to trading or
quoted, or, if not listed or admitted to trading or quoted on any national
securities exchange or quotation system, the average of the closing bid and
asked prices of such security in the over-the-counter market on the day in
question as reported by the National Quotation Bureau Incorporated, or a similar
generally accepted reporting service, or, if not so available in such manner, as
furnished by any American Stock Exchange member firm selected from time to time
by the Board of Directors (or any committee duly authorized by the Board of
Directors) of the Company for that purpose or, if not so available in such
manner, as otherwise determined in good faith by the Board of Directors (or any
committee duly authorized by the Board of Directors) of the Company.
"Commission" means the Securities and Exchange Commission, as from time to
time constituted, created under the Exchange Act, as amended, or if at any time
after the execution and delivery of this Indenture such Commission is not
existing and performing the duties now assigned to it under the Trust Indenture
Act, then the body performing such duties on such date.
"Common Securities" means undivided beneficial interests in the assets of
the WRP Trust which rank pari passu with the Convertible Preferred Securities
issued by the WRP Trust; provided, however, that upon the occurrence of an Event
of Default, the rights of holders of the Common Securities to payment in respect
of distributions and payments upon liquidation, redemption and otherwise are
subordinated to the rights to payment of holders of the Convertible Preferred
Securities.
"Common Securities Guarantee" means the Common Securities Guarantee
Agreement dated as of May 5, 2000 by the Guarantor.
"Common Shares" includes shares of common stock, $.01 par value per share,
of the Company.
"Company" means Wellsford Real Properties, Inc., a Maryland corporation,
until a successor corporation shall have become such pursuant to the applicable
provisions of this Indenture, and thereafter "Company" shall mean such successor
corporation.
"Convertible Debenture" or "Convertible Debentures" has the meaning stated
in the first recital of this Indenture and more particularly means any
Convertible Debentures authenticated and delivered under this Indenture.
"Convertible Preferred Securities" has the meaning specified in the
recitals to this Indenture.
"Conversion Agent" has the meaning assigned thereto in the Declaration.
"Conversion Date" has the meaning specified in Section 11.2(a).
"Conversion Price" has the meaning set forth in Section 11.1.
"Conversion Shares" has the meaning set forth in Section 11.3(c).
"Corporate Trust Office" means the principal corporate trust office of the
Trustee at which at any particular time its corporate trust business shall be
administered, which office at the date of execution of this Indenture is located
at 1100 North Market Street, 9th Floor, Wilmington, Delaware 19890-0001,
Attention: Corporate Trust Administration.
"Coupon Rate" has the meaning specified in Section 2.5(a).
"Declaration" means the Declaration of Trust of WRP Convertible Trust I, a
Delaware statutory business trust, dated as of May 5, 2000.
"Debt" of a Person means, all indebtedness of such Person which is for
money borrowed.
"defaulted interest" has the meaning specified in Section 2.9.
"Delaware Trustee" has the meaning specified in the Declaration.
"Distribution Date" has the meaning set forth in Section 11.3(c).
"Dollar" means the coin or currency of the United States of America which
as of the time of payment is legal tender for the payment of public and private
debts.
"ERPLP" means ERP Operating Limited Partnership, an Illinois limited
partnership.
"Event of Default" has the meaning specified in Section 5.1.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Guarantor" means the Company in its capacity as guarantor under any Trust
Securities Guarantees.
"Holder" or "Holder of Convertible Debentures" or other similar terms mean
the person in whose name such Convertible Debenture is registered in the
Security Register.
"incur" means to issue, incur, assume, guarantee, become liable,
contingently or otherwise, with respect to, or otherwise become responsible for
the payment of, any Debt.
"Indenture" means this instrument as originally executed and delivered or
as it may from time to time be amended or supplemented as herein provided, as so
amended or supplemented or both, and shall include the forms and terms of the
Convertible Debentures appearing as Exhibit A to this instrument.
"Institutional Trustee" has the meaning specified in the Declaration.
"Interest Payment Date," when used with respect to any Convertible
Debenture, means the Stated Maturity of an installment of interest on such
Convertible Debenture, which date shall fall on the fifteenth day of January,
April, July and October of each year.
"Interest Period" has the meaning set forth in Section 2.5(a).
"Issuance Date" has the meaning set forth in Section 2.5(a).
"Lien" means any mortgage or deed of trust, pledge, assignment, security
interest, lien, charge, or other encumbrance or preferential arrangement
(including, without limitation, any conditional sale or other title retention
agreement having substantially the same economic effect as any of the
foregoing).
"Maturity" when used with respect to any Convertible Debenture means the
date on which the principal of such Convertible Debenture or an installment of
principal becomes due and payable as therein or herein provided, whether at
Stated Maturity or by declaration of acceleration, call for redemption or
otherwise.
"Maturity Date" means the date on which the Convertible Debentures mature
and on which the principal shall be due and payable together with all accrued
and unpaid interest thereon including Additional Sums, if any.
"Ministerial Action" has the meaning specified in Section 10.1(a).
"90-Day Period" has the meaning specified in Section 10.1(a).
"Notice of Conversion" has the meaning specified in Section 11.2(a).
"Offeror" has the meaning specified in Section 2.4(c).
"Officers' Certificate" means a certificate signed on behalf of the Company
by the Chairman of the Board of Trustees or any vice chairman or the president
or any vice president and by the chief financial officer, the treasurer, the
controller, any assistant treasurer, the secretary or any assistant secretary of
the Company and delivered to the Trustee. Each such certificate shall include
the statements provided for in Section 14.5.
"Opinion of Counsel" means a written opinion of legal counsel, who may be
an employee of or counsel to the Company, and who shall be reasonably acceptable
to the Trustee. Each Opinion of Counsel shall include the statements provided
for in Section 14.5, if and to the extent required hereby.
"Optional Redemption Price" has the meaning specified in Section 10.2.
"Outstanding" when used with reference to Convertible Debentures, subject
to the provisions of Section 7.4, means, as of any particular time, all
Convertible Debentures authenticated and delivered under this Indenture, except:
(a) Convertible Debentures theretofore canceled by the Trustee or
delivered to the Trustee for cancellation;
(b) Convertible Debentures, or portions thereof, for the payment or
redemption of which moneys in the necessary amount and in the required
currency shall have been deposited in trust with the Trustee or with any
Paying Agent (other than the Company) or shall have been set aside,
segregated and held in trust by the Company for the Holders of such
Convertible Debentures (if the Company shall act as its own Paying Agent),
provided that if such Convertible Debentures, or portions thereof, are to
be redeemed prior to the Maturity thereof, notice of such redemption shall
have been given as herein provided, or provision satisfactory to the
Trustee shall have been made for giving such notice; and
(c) Convertible Debentures that have been paid pursuant to Section
2.11, converted into Common Shares pursuant to Article XI, or in exchange
for or in lieu of which other Convertible Debentures have been
authenticated and delivered pursuant to the Indenture (except with respect
to any such Convertible Debenture as to which proof satisfactory to the
Trustee and the Company is presented that such Convertible Debenture is
held by a person in whose hands such Convertible Debenture is a legal,
valid and binding obligation of the Company).
"Paying Agent" means any Person (which may include the Company) authorized
by the Company to pay the principal of or interest, if any, on any Convertible
Debenture on behalf of the Company.
"Persons" or "Person" means any individual, corporation, partnership, joint
venture, limited liability company, association, joint stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Place of Payment", when used with respect to the Convertible Debentures,
means the place or places where the principal of and interest, if any, on the
Convertible Debentures are payable as specified pursuant to Section 3.2.
"Predecessor Convertible Debenture" of a Convertible Debenture means every
previous Convertible Debenture evidencing all or a portion of the same debt as
that evidenced by such Convertible Debenture; and, for the purposes of this
definition, a Convertible Debenture authenticated and delivered under Section
2.11 in exchange for or in lieu of a mutilated, destroyed, lost or stolen
Convertible Debenture shall be deemed to evidence the same debt as the
mutilated, destroyed, lost or stolen Convertible Debenture.
"Preferred Securities Guarantee" means the Preferred Securities Guarantee
Agreement dated as of May 5, 2000 between the Guarantor and Wilmington Trust
Company, as Preferred Guarantee Trustee.
"Preferred Stock", as applied to the Capital Stock of any Person, means
Capital Stock of such Person of any class or classes (however designated) that
ranks prior, as to the payment of dividends or as to the distribution of assets
upon any voluntary or involuntary liquidation, dissolution or winding up of such
Person, to shares of Capital Stock of any other class of such Person.
"principal" whenever used with reference to the Convertible Debentures or
any Convertible Debenture or any portion thereof, shall be deemed to include
"and premium, if any."
"QIB" or "Qualified Institutional Buyer" shall mean "Qualified
Institutional Buyer" as such term is defined in Rule 144A under the Securities
Act.
"record date" has the meaning specified in Section 2.9.
"Redemption Price" has the meaning specified in Section 10.1(a).
"Registrar" has the meaning specified in Section 2.10.
"Regular Trustees" has the meaning specified in the Declaration.
"Regulation S" means Regulation S under the Securities Act.
"Representative" means (a) the indenture trustee or other trustee, agent or
representative for any Senior Indebtedness or (b) with respect to any Senior
Indebtedness that does not have any such trustee, agent or other representative
(i) in the case of such Senior Indebtedness issued pursuant to an agreement
providing for voting arrangements as among the holders or owners of such Senior
Indebtedness, any holder or owner of such Senior Indebtedness acting with the
consent of the required persons necessary to bind such holders or owners of such
Senior Indebtedness and (ii) in the case of all other such Senior Indebtedness,
the holder or owner of such Senior Indebtedness.
"Responsible Officer" when used with respect to the Trustee means any
officer within the corporate trust department (or any successor department) of
the Trustee including any vice president, assistant vice president, assistant
secretary, senior trust officer, trust officer or any other officer or assistant
officer of the Trustee customarily performing functions similar to those
performed by the persons who at the time shall be such officers, respectively,
or to whom any corporate trust matter is referred at the Corporate Trust Office
because of his or her knowledge of and familiarity with the particular subject.
"Restricted Convertible Debenture" has the meaning specified in Section
2.4(a).
"Rights" has the meaning specified in Section 11.3(c).
"Rule 144" means Rule 144 under the Securities Act.
"Rule 144A" means Rule 144A under the Securities Act.
"Sales Notice" has the meaning specified in Section 2.4(c).
"Securities Act" means the Securities Act of 1933, as amended.
"Security Register" has the meaning specified in Section 2.10.
"Senior Indebtedness" means, with respect to the Company, (i) the
principal, premium, if any, and interest in respect of (a) indebtedness of the
Company for money borrowed (but excluding trade accounts payable arising in the
ordinary course of business) under any credit agreements, notes, guarantees or
similar documents and (b) indebtedness evidenced by securities, debentures,
bonds or other similar instruments issued by the Company; (ii) all capital lease
obligations of the Company; (iii) all obligations of the Company issued or
assumed as the deferred purchase price of property, all conditional sale
obligations of the Company and all obligations of the Company under any title
retention agreement (but excluding trade accounts
payable arising in the ordinary course of business); (iv) all obligations of the
Company for reimbursement on any letter of credit, banker's acceptance, security
purchase facility or similar credit transaction; (v) all obligations of the
Company (contingent or otherwise) with respect to an interest rate or other
swap, cap or collar agreements or other similar instruments or agreements or
foreign currency hedge, exchange, purchase or similar instruments or agreements;
(vi) all obligations of the types referred to in clauses (i) through (v) of
other Persons for the payment of which the Company is responsible or liable as
obligor, guarantor or otherwise; and (vii) all obligations of the types referred
to in clauses (i) through (vi) above of other Persons secured by any lien on any
property or asset of the Company (whether or not such obligation is assumed by
the Company), whether outstanding on the date of this Indenture or thereafter
created, incurred, assumed, guaranteed or in effect guaranteed by the Company,
except for any such indebtedness that is by its terms subordinated to or pari
passu with the Convertible Debentures. Such Senior Indebtedness shall continue
to be Senior Indebtedness irrespective of any deferrals, renewals, extensions or
refundings of, or amendments, modifications, supplements or waivers of any term
of such Senior Indebtedness.
"Stated Maturity" when used with respect to any Convertible Debenture or
any installment of principal thereof or interest thereon, means the date on
which the principal of such Convertible Debenture or such installment of
principal or interest is due and payable in accordance with the terms thereof,
including, with respect to interest, each Interest Payment Date.
"Subsidiary" means any corporation, association, partnership or other
business entity of which more than 50% of the total voting power of the
outstanding Capital Stock (or other interests) entitled (without regard to the
occurrence of any contingency) to vote in the election of directors, general
partners, managers, managing members, managing partners or trustees thereof or,
if such persons are not elected, to vote on any matter that is submitted to the
vote of all persons holding ownership interests in such entity, is at the time
owned or controlled, directly or indirectly, by (i) the Company, (ii) the
Company and one or more Subsidiaries or (iii) one or more Subsidiaries.
"Trading Day" shall mean a day on which any securities are traded on the
national securities exchange or quotation system used to determine the Closing
Price.
"Transfer Restriction Termination Date" means the earlier of the first date
on which (i) the Convertible Preferred Securities, the Convertible Debentures
and any Common Shares issued or issuable upon the conversion or exchange thereof
(other than (A) such securities acquired by the Company or any Affiliate thereof
since the Issue Date of the Convertible Preferred Securities and (B) Common
Shares issued upon the conversion or exchange of any such security described in
clause (A) above) may be sold pursuant to Rule 144(k) (or any successor
provision) and (ii) all of such Convertible Preferred Securities, Convertible
Debentures and/or Common Shares shall have been sold pursuant to an effective
registration statement.
"Trust" or "WRP Trust" means WRP Convertible Trust I, a Delaware statutory
business trust.
"Trust Indenture Act" or "TIA" (except as otherwise provided in Sections
8.1 and 8.2) means the Trust Indenture Act of 1939, as amended, as in force at
the date as of which this Indenture was originally executed.
"Trust Securities" means the Common Securities and the Convertible
Preferred Securities of WRP Trust.
"Trust Securities Guarantees" means the Common Securities Guarantee and the
Preferred Securities Guarantee.
"Trustee" means the Person identified as "Trustee" in the first paragraph
hereof until a successor Trustee shall have become such pursuant to the
provisions hereof, and thereafter, "Trustee" shall mean or include each Person
who is then a Trustee hereunder.
"United States of America" or "United States" means the United States of
America (including the states and the District of Columbia), its territories,
possessions, the Commonwealth of Puerto Rico and other areas subject to its
jurisdiction.
"U.S. Person" means (i) a citizen or resident of the United States, (ii) a
corporation, partnership or other entity created or organized in or under the
laws of the United States or any state or political subdivision thereof, (iii)
an estate the income of which is subject to United States federal income
taxation regardless of its sources or (iv) a trust whose administration is
subject to the primary supervision of a United States court and which has one or
more United States fiduciaries who have the authority to control all substantial
decisions of the Trust.
"vice president" when used with respect to the Company or the Trustee,
means any vice president, whether or not designated by a number or a word or
words added before or after the title of "vice president."
ARTICLE II
THE CONVERTIBLE DEBENTURES
Section 2.1 Designation and Principal Amount. There are hereby authorized
Convertible Debentures designated the "8.25% Convertible Junior Subordinated
Debentures," in aggregate principal amount of at least $25,775,000 plus any
additional Convertible Debentures issuable pursuant to Section 2.5(c) hereof and
any additional Convertible Debentures issuable pursuant to the Trust Securities
Guarantees, which amount shall be as set forth in any written order of the
Company for the authentication and delivery of Convertible Debentures pursuant
to Section 2.6 of this Indenture. In the event that additional Convertible
Debentures are issued pursuant to the Trust Securities Guarantees, such
additional Convertible Debentures will be issued in replacement of the initially
issued Convertible Debentures not distributed as provided for in the Trust
Securities Guarantees, and such initially issued Debentures shall be deemed
automatically canceled and retired. The Trustee agrees to promptly deliver to
the Company and cancel any of the Convertible Debentures originally issued
hereunder or any replacements or substitutions therefor (which come into the
possession of the Trustee) the failure of which to not distribute to the Holders
of Preferred Securities or Common Securities resulted in the issuance of
additional Convertible Debentures pursuant to the aforesaid Trust Securities
Guarantees.
Section 2.2 Maturity. The Maturity Date is May 4, 2022.
Section 2.3 Form and Payment.
(a) Except as provided in Section 2.6, the Convertible Debentures shall be
issued in fully registered certificated form, without coupons, in denominations
of $25.00 in principal amount and integral multiples thereof. Principal and
interest on the Convertible Debentures issued in certificated form will be
payable, the transfer of such Convertible Debentures will be registrable and
such Convertible Debentures will be exchangeable for Convertible Debentures
bearing identical terms and provisions at the office or agency of the Trustee;
provided, however, that payment of interest may be made at the option of the
Company by check mailed to the Holder at such address as shall appear in the
Security Register. Notwithstanding the foregoing, so long as the Holder of any
Convertible Debentures is the Institutional Trustee, the payment of the
principal of and interest (including Additional Sums, if any) on such
Convertible Debentures held by the Institutional Trustee will be made in
immediately available funds at such place and to such account as may be
designated by the Institutional Trustee.
(b) The Convertible Debentures are subject to the terms set forth in this
Indenture including, without limitation, Exhibit A hereto, the terms of which
are hereby incorporated in their entirety by reference.
(c) The Convertible Debentures and the Trustee's Certificate of
Authentication to be endorsed thereon are to be substantially in the form of
Exhibit A to this Indenture.
(d) The definitive Convertible Debentures shall be printed, lithographed or
engraved on steel engraved borders or may be produced in any other manner, all
as determined by the officers executing such Convertible Debentures, as
evidenced by their execution of such Convertible Debentures.
Section 2.4 Exchange and Registration of Transfer of Convertible
Debentures; Restrictions on Transfers; Depositary.
(a) Each Convertible Debenture that bears or is required to bear the legend
set forth in this Section 2.4(a) (a "Restricted Convertible Debenture") shall be
subject to the restrictions on transfer provided in the legend set forth in this
Section 2.4(a), unless such restrictions on transfer shall be waived by the
written consent of the Company, and the Holder of each Restricted Convertible
Debenture, by such Holder's acceptance thereof, agrees to be bound by such
restrictions on transfer. As used in this Section 2.4(a) and in Section 2.4(b),
the term "transfer" encompasses any sale, pledge, transfer or other disposition
of any Restricted Convertible Debenture.
Prior to the Transfer Restriction Termination Date, any certificate
evidencing a Convertible Debenture shall bear a legend in substantially the
following form, unless otherwise agreed by the Company (with written notice
thereof to the Trustee):
THE SECURITY REPRESENTED HEREBY HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR
TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH
IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1)
REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS AN
INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1),
(2), (3) OR (7) UNDER THE SECURITIES ACT) ("INSTITUTIONAL ACCREDITED
INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS
ACQUIRING THE SECURITY REPRESENTED HEREBY IN AN OFFSHORE TRANSACTION,
(2) AGREES THAT IT WILL NOT PRIOR TO THE EXPIRATION OF THE HOLDING
PERIOD APPLICABLE TO SALES OF THE SECURITY REPRESENTED HEREBY UNDER
RULE 144(K) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION)
RESELL OR OTHERWISE TRANSFER THE SECURITY REPRESENTED HEREBY OR, IF
THIS SECURITY IS CONVERTIBLE INTO COMMON SHARES, THE COMMON SHARES
ISSUABLE UPON CONVERSION OR EXCHANGE OF THIS SECURITY EXCEPT (A) TO
WELLSFORD REAL PROPERTIES, INC. (THE "COMPANY") OR ANY SUBSIDIARY
THEREOF, (B) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT, (C) TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE
WITH RULE 144A UNDER THE SECURITIES ACT, (D) TO AN INSTITUTIONAL
ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE
TRUSTEE UNDER THE INDENTURE (OR, IF THIS CERTIFICATE REPRESENTS COMMON
SHARES, THE TRANSFER AGENT FOR THE COMMON SHARES), A SIGNED LETTER
CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE
RESTRICTIONS ON TRANSFER OF THE SECURITY REPRESENTED HEREBY (THE FORM
OF WHICH LETTER CAN BE OBTAINED FROM SUCH TRUSTEE OR TRANSFER AGENT),
(E) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH RULE 904 UNDER THE
SECURITIES ACT OR (F) PURSUANT TO THE EXEMPTION FROM REGISTRATION
PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE), AND (3)
AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THE SECURITY
REPRESENTED HEREBY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT
OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THE SECURITY
REPRESENTED HEREBY PRIOR TO THE EXPIRATION OF THE HOLDING PERIOD
APPLICABLE TO SALES OF THE SECURITY REPRESENTED HEREBY UNDER RULE
144(K) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION), THE
HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF
RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO
THE TRUSTEE UNDER THE INDENTURE (OR, IF THIS CERTIFICATE REPRESENTS
COMMON SHARES, SUCH HOLDER MUST FURNISH TO THE TRANSFER AGENT SUCH
CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS THE COMPANY OR
WRP CONVERTIBLE TRUST I (THE "TRUST") MAY REASONABLY REQUIRE TO
CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION
FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT). IF THIS CERTIFICATE DOES NOT
REPRESENT COMMON SHARES AND IF THE
PROPOSED TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR OR A
PURCHASER WHO IS NOT A U.S. PERSON, THE HOLDER MUST, PRIOR TO SUCH
TRANSFER, FURNISH TO THE TRUSTEE UNDER THE INDENTURE, SUCH
CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS THE COMPANY OR
THE TRUST MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS
BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THIS
LEGEND WILL BE REMOVED AFTER THE EXPIRATION OF THE HOLDING PERIOD
APPLICABLE TO SALES OF THE SECURITY REPRESENTED HEREBY UNDER RULE
144(K) UNDER THE SECURITIES ACT. AS USED HEREIN, THE TERMS "OFFSHORE
TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS
GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT. THIS SECURITY
IS ALSO SUBJECT TO THE RESTRICTIONS ON TRANSFER SET FORTH IN THE
INDENTURE.
Following the Transfer Restriction Termination Date, any Convertible
Debenture or security issued in exchange or substitution therefor (other than
(i) Convertible Debentures acquired by the Company or any Affiliate thereof
since the issue date of the Convertible Preferred Securities and (ii) Common
Shares issued upon the conversion or exchange of any Convertible Debenture
described in clause (i) above) may upon surrender of such Convertible Debenture
or security for exchange to the Registrar in accordance with the provisions of
this Section 2.4, be exchanged for a new Convertible Debenture or Convertible
Debentures or security or securities, of like tenor and aggregate principal
amount, which shall not bear the restrictive legend required by this Section
2.4(a).
(b) Any Convertible Debenture or Common Shares issued upon the conversion
or exchange of a Convertible Debenture that, prior to the Transfer Restriction
Termination Date, is purchased or owned by the Company or any Affiliate thereof
may not be resold by the Company or such Affiliate unless registered under the
Securities Act or resold pursuant to an exemption from the registration
requirements of the Securities Act in a transaction which results in such
Convertible Debentures or Common Shares, as the case may be, no longer being
"restricted securities" (as defined under Rule 144).
(c) Each Convertible Debenture shall be subject to the restrictions on
transfer provided in this Section 2.4(c).
(i) If a holder of a Convertible Debenture (the "Offeror") desires to sell,
assign, transfer, encumber, or otherwise dispose of any of his Convertible
Debentures, he shall give written notice to the Company of his desire to do so
and of the price per debenture and other terms under which he proposes to
dispose of his Convertible Debentures (the "Sales Notice"), which Sales Notice
shall constitute an offer
on the part of the Offeror to sell to the Company any such Convertible
Debentures upon the terms and conditions set forth in such notice.
(ii) Unless, within ten (10) Business Days after the giving of the Sales
Notice by the Offeror pursuant to subparagraph (i) of this Section 2.4(c), the
Company shall give written notice to the Offeror that the Company irrevocably
commits to purchase the Convertible Debentures subject of the Sales Notice at
the price and under the terms specified in the Sales Notice given by the
Offeror, the Company shall be deemed to have rejected the offer of the Offeror
to sell the Convertible Debentures subject of the Sales Notice and the Offeror
shall be free without restriction under this Section 2.4(c) to sell the
Convertible Debentures subject of the Sales Notice to any other Person, provided
however, if the price per debenture is less than the price, or the other terms
are more favorable than those, contained in the Sales Notice, the Offeror shall
again offer to sell the Convertible Debentures in accordance with the provisions
of subparagraph (i) of this Section 2.4(c) before it may complete any such sale
and provided further, that the Convertible Debentures subject of the Sales
Notice shall again be subject to the provisions of subparagraph (i) of this
Section 2.4(c) if within ninety (90) days after the giving of the Sales Notice,
the Offeror shall not have completed the disposition of such Convertible
Debentures.
(iii) If the Company irrevocably commits to purchase the Convertible
Debentures as contemplated by subparagraph (ii) of this Section 2.4(c), the
closing of such purchase shall take place at the principal place of business of
the Company at 10:00 A.M. (New York City time) on the third (3rd) day following
the expiration of the ten (10) day period referred to in subparagraph (ii) of
this Section 2.4(c), or if such day is not a Business Day, then the next day
that is a Business Day.
(iv) The provisions of this Section 2.4(c) shall not apply to one or more
transfers of the Convertible Debentures by ERPLP to any Affiliate of ERPLP.
(v) The Convertible Debentures are not transferable by the Trustee, except
as specifically permitted pursuant to the terms of this Indenture.
Section 2.5 Interest.
(a) Each Convertible Debenture will bear interest at the rate of 8.25% per
annum of the principal amount of $25.00 ($2.0625 per annum, $0.515625 per
quarter), from and including May 5, 2000 (the "Issuance Date") to and including
the Maturity Date (the rate of interest is hereinafter referred to as the
"Coupon Rate"), until the principal thereof becomes due and payable, which
interest will be payable in equal quarterly payments in arrears of $0.515625 per
Convertible Debenture on the fifteenth day of January, April, July and October
of each year (each, an "Interest Payment Date"), commencing on July 17, 2000, to
the Person in whose name
such Convertible Debenture is registered, at the close of business on the record
date for such interest installment, which shall be the close of business on the
fifteenth day prior to that Interest Payment Date. Each quarterly period ending
on an Interest Payment Date is hereinafter referred to as an "Interest Period."
(b) The amount of interest payable for the initial Interest Period and for
any Interest Period shorter than a full Interest Period shall be prorated and be
computed on the basis of a 360-day year of twelve 30-day months. In the event
that any date on which interest is payable on the Convertible Debentures is not
a Business Day, then payment of interest payable on such date will be made on
the next succeeding day that is a Business Day (and without any interest or
other payment in respect of any such delay), except that, if such Business Day
is in the next succeeding calendar year, such payment shall be made on the
immediately preceding Business Day, in each case with the same force and effect
as if made on such date.
(c) For any twelve quarterly interest periods during the term of the
Convertible Debentures, whether or not consecutive, and whether or not the
Company has available cash to pay interest, the Company shall have the right to
pay the interest due on the Convertible Debentures by the issuance of additional
Convertible Debentures, the number of which shall be determined by dividing the
total amount of interest to be paid by the issuance of additional Convertible
Debentures by $25.00. Any such additional Convertible Debentures issued pursuant
to this Section 2.5(c) shall be governed by and subject to all of the terms and
conditions of this Indenture. Notwithstanding any other provision hereof, no
fractional interests in Convertible Debentures shall be issued in connection
with the payment of any interest on Convertible Debentures in additional
Convertible Debentures. Instead, any Holder of Outstanding Convertible
Debentures having a fractional interest arising upon the payment of interest in
additional Convertible Debentures shall, on the related Interest Payment Date,
be paid an amount in cash equal to $25.00 times the fraction of a Convertible
Debenture to which such Holder would otherwise be entitled.
(d) If at any time the Trust is required to pay any taxes, duties,
assessments or governmental charges of whatever nature (other than withholding
taxes) imposed by the United States, or any other taxing authority, then, in any
such case, the Company will pay as additional sums ("Additional Sums") such
additional amounts as shall be required so that the net amounts received and
retained by the Trust after paying any such taxes, duties, assessments or other
governmental charges will not be less than the amounts the Trust would have
received had no such taxes, duties, assessments or other government charges been
imposed so long as the Trust is the holder of the Convertible Debentures.
Section 2.6 Authentication and Delivery of Convertible Debentures. At any
time and from time to time after the execution and delivery of this Indenture,
the Company may deliver Convertible Debentures in the aggregate principal amount
of $25,775,000 plus any additional Convertible Debentures
issuable pursuant to Section 2.5(c) hereof and any additional Convertible
Debentures issuable pursuant to the Preferred Securities Guarantee and the
Common Securities Guarantee executed by the Company to the Trustee for
authentication, and the Trustee shall thereupon authenticate and make available
for delivery such Convertible Debentures to or upon the written order of the
Company, signed by both (i) the chairman of its Board of Directors, or any vice
chairman of its Board of Directors, or its president or any vice president and
(ii) its chief financial officer, chief accounting officer, treasurer or any
assistant treasurer or its secretary or any assistant secretary, without any
further action by the Company. In authenticating such Convertible Debentures and
accepting the additional responsibilities under this Indenture in relation to
such Convertible Debentures, the Trustee shall be entitled to receive and
(subject to Section 6.1) shall be fully protected in relying upon:
(a) a copy of any resolution or resolutions of the Board of Directors
relating to the issuance of such Convertible Debentures, in each case certified
by the secretary or an assistant secretary of the Company;
(b) a supplemental indenture, if any;
(c) an Opinion of Counsel, prepared in accordance with Section 14.5, which
shall state that the Convertible Debentures have been duly authorized, and, when
authenticated and delivered by the Trustee and issued by the Company in the
manner and subject to any conditions specified in such Opinion of Counsel, will
constitute valid and binding obligations of the Company enforceable in
accordance with their terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization or other laws relating to or affecting the
enforcement of creditors' rights generally and by general equitable principles,
regardless of whether such enforceability is considered in a proceeding in
equity or at law.
Notwithstanding the provisions of the preceding paragraph, if the
Convertible Debentures are not to be originally issued at one time, it shall not
be necessary to deliver the resolution of the Board of Trustees and Opinion of
Counsel otherwise required pursuant to such preceding paragraph at or prior to
the time of authentication of each Convertible Debenture if such documents are
delivered at or prior to the time of authentication upon original issuance of
the first Convertible Debentures to be issued. After the original issuance of
the first Convertible Debenture to be issued, any separate request by the
Company that the Trustee authenticate Convertible Debentures for original
issuance will be deemed to be a certification by the Company that it is in
compliance with all conditions precedent provided for in this Indenture relating
to the authentication and delivery of such Convertible Debentures.
The Trustee shall have the right to decline to authenticate and deliver any
Convertible Debentures under this Section if the Trustee is advised by counsel
in good faith that the issuance of such Convertible Debentures would expose the
Trustee to personal liability or is unlawful.
Section 2.7 Execution of Convertible Debentures. The Convertible Debentures
shall be signed on behalf of the Company by the chairman of its Board of
Directors, or any vice chairman of its Board of Directors, or its president or
any vice president and attested by its chief financial officer, treasurer or any
assistant treasurer or its secretary or any assistant secretary, under its
corporate seal. Such signatures may be the manual or facsimile signatures of
such officers. The seal of the Company may be in the form of a facsimile thereof
and may be impressed, affixed, imprinted or otherwise reproduced on the
Convertible Debentures. Typographical and other minor errors or defects in any
such reproduction of the seal or any such signature shall not affect the
validity or enforceability of any Convertible Debenture that has been duly
authenticated and delivered by the Trustee.
In case any officer of the Company who shall have signed any of the
Convertible Debentures shall cease to be such officer before the Convertible
Debenture so signed shall be authenticated and delivered by the Trustee or
disposed of by the Company, such Convertible Debenture nevertheless may be
authenticated and delivered or disposed of as though the person who signed such
Convertible Debenture had not ceased to be such officer of the Company; and any
Convertible Debenture may be signed on behalf of the Company by such persons as,
at the actual date of the execution of such Convertible Debenture, shall be the
proper officers of the Company, although at the date of the execution and
delivery of this Indenture any such person was not such an officer.
Section 2.8 Certificate of Authentication. Only such Convertible Debentures
as shall bear thereon a certificate of authentication substantially in the form
attached hereto as a part of Exhibit A and executed by the Trustee by the manual
signature of one of its authorized signatories shall be entitled to the benefits
of this Indenture or be valid or obligatory for any purpose. The execution of
such certificate by the Trustee upon any Convertible Debenture executed by the
Company shall be conclusive evidence that the Convertible Debenture so
authenticated has been duly authenticated and delivered hereunder and that the
Holder is entitled to the benefits of this Indenture.
Notwithstanding the foregoing, if any Convertible Debenture shall have been
duly authenticated and delivered hereunder but never issued and sold by the
Company, the Company shall deliver such Convertible Debenture to the Trustee for
cancellation as provided in Section 2.12 together with a written statement
(which need not comply with Section 14.5 and need not be accompanied by an
Opinion of Counsel) stating that such Convertible Debenture has never been
issued and sold by the Company, and for all purposes of this Indenture such
Convertible Debenture shall be deemed never to have been authenticated and
delivered hereunder and shall never be entitled to the benefits of this
Indenture.
Section 2.9 Denomination and Date of Convertible Debentures; Payments of
Interest. Convertible Debentures shall be issuable in denominations of $25.00
and any integral multiple
thereof. The Convertible Debentures shall be numbered, lettered, or otherwise
distinguished in such manner or in accordance with such plans as the officers of
the Company executing the same may determine with the approval of the Trustee as
evidenced by the execution and authentication thereof.
Each Convertible Debenture shall be dated the date of its authentication.
The term "record date" as used with respect to any Interest Payment Date
(except for payment of defaulted interest) shall mean the close of business on
the fifteenth day preceding such Interest Payment Date, whether or not such
record date is a Business Day.
Any interest on any Convertible Debenture which is payable, but is not
punctually paid or duly provided for, on any Interest Payment Date (called
"defaulted interest" for purposes of this Section) shall remain due and payable
but, solely with respect to the previously declared relevant record date, shall
forthwith cease to be payable to the Holder on such relevant record date by
virtue of his 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
clause (2) below:
(1) The Company may elect to make payment of any defaulted
interest to the persons in whose names any such Convertible Debentures
(or their respective Predecessor Convertible Debentures) 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
Convertible Debenture and the date of the proposed payment, and at the
same time the Company shall deposit with the Trustee an amount of
money equal to the aggregate amount proposed to be paid in respect of
such defaulted interest or shall make arrangements satisfactory to the
Trustee for such deposit prior to the date of the proposed payment,
such money when deposited to be held in trust for the benefit of the
persons entitled to such defaulted interest as in this clause
provided. Thereupon the Trustee shall fix a special record date for
the payment of such defaulted interest in respect of Convertible
Debentures which shall not be more than 15 nor 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 thereof 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. Notice of the proposed
payment of such defaulted interest and the special record date
therefor having been mailed as aforesaid, such defaulted interest in
respect of Convertible Debentures shall be paid to the person in whose
names such Convertible Debentures (or their respective predecessor
Convertible Debentures) are
registered on such special record date and such defaulted interest
shall no longer be payable pursuant to the following clause (2).
(2) The Company may make payment of any defaulted interest on the
Convertible Debentures in any other lawful manner not inconsistent
with the requirements of any securities exchange on which the
Convertible Debentures may be listed, and upon such notice as may be
required by such exchange, if, after notice given by the Company to
the Trustee of the proposed payment pursuant to this clause, such
manner of payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section, each Convertible
Debenture delivered under this Indenture upon transfer of or in exchange for or
in lieu of any other Convertible Debenture shall carry the rights to interest
accrued and unpaid, and to accrue, which were carried by such other Convertible
Debenture.
In the case of any Convertible Debenture which is converted into Common
Shares of the Company after any record date and on or prior to the next
succeeding Interest Payment Date (other than any Convertible Debenture whose
Maturity is prior to such Interest Payment Date), interest whose Stated Maturity
is on such Interest Payment Date shall be payable on such Interest Payment Date
notwithstanding such conversion, and such interest (whether or not punctually
paid or duly provided for) shall be paid to the Person in whose name that
Convertible Debenture (or one or more Predecessor Convertible Debentures) is
registered at the close of business on such record date. However, if a
redemption date falls between a record date and the subsequent Interest Payment
Date, the amount of such payment shall include accumulated and unpaid interest
accrued to, but excluding, such redemption date. Except as otherwise expressly
provided in the first two sentences of this paragraph, in the case of any
Convertible Debenture which is converted, interest whose Stated Maturity is
after the date of conversion of such Convertible Debenture shall not be payable.
Section 2.10 Registration, Transfer and Exchange. The provisions of this
Section 2.10 shall be subject in their entirety to the provisions of Section
2.4. The Company will cause to be kept at each office or agency to be maintained
for the purpose as provided in Section 3.2 a register or registers (herein
sometimes referred to as the "Security Register") in which, subject to such
reasonable regulations as it may prescribe, the Company will provide for the
registration and the registration of the transfer or exchange of the Convertible
Debentures. The Trustee is hereby appointed and accepts the appointment as
Registrar (the "Registrar") for purposes of registering, and registering
transfers of, the Convertible Debentures.
Upon surrender for registration of transfer of any Convertible Debenture at
any such office or agency to be maintained for the purpose as provided in
Section 3.2, the Company shall execute and the Trustee shall authenticate and
make available for delivery in the name of the
transferee or transferees a new Convertible Debenture or Convertible Debentures
of a like tenor and containing the same terms (other than the principal amount
thereof, if more than one Convertible Debenture is executed, authenticated and
delivered in respect of any Convertible Debenture so presented, in which case
the aggregate principal amount of the executed, authenticated and delivered
Convertible Debentures shall equal the principal amount of the Convertible
Debenture presented in respect thereof) and conditions.
At the option of the Holder thereof, Convertible Debentures may be
exchanged for a Convertible Debenture or Convertible Debentures having
authorized denominations and an equal aggregate principal amount, upon surrender
of such Convertible Debentures to be exchanged at the agency of the Company that
shall be maintained for such purpose in accordance with Section 3.2 and upon
payment, if the Company shall so require, of the charge hereinafter provided.
Whenever any Convertible Debentures are so surrendered for exchange, the Company
shall execute, and the Trustee shall authenticate and deliver, the Convertible
Debentures which the Holder making the exchange is entitled to receive. All
Convertible Debentures surrendered upon any exchange or transfer provided for in
this Indenture shall be promptly canceled by the Trustee and the Trustee will
deliver a certificate of cancellation thereof to the Company.
All Convertible Debentures issued upon any transfer or exchange of
Convertible Debentures shall be the valid obligations of the Company, evidencing
the same debt, and entitled to the same benefits under this Indenture, as the
Convertible Debentures surrendered upon such transfer or exchange.
Every Convertible Debenture presented or surrendered for registration of
transfer or exchange shall (if so required by the Company or the Trustee) be
duly endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Company and the Trustee duly executed by the Holder thereof
or his attorney duly authorized in writing.
No service charge shall be made to the Holder for any registration of
transfer or exchange of Convertible Debentures, but the company may require
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection with any transfer or exchange of Convertible
Debentures, other than exchanges pursuant to Sections 2.13, 8.5 or 11.5 not
involving any transfer.
The Company shall not be required (i) to issue, register the transfer of or
exchange any Convertible Debenture during a 15-day period prior to the day of
mailing of the relevant notice of redemption or (ii) to register the transfer of
or exchange any Convertible Debenture so selected for redemption in whole or in
part, except, in the case of any Convertible Debenture to be redeemed in part,
the portion thereof not redeemed.
Section 2.11 Mutilated, Defaced, Destroyed, Lost and Stolen Convertible
Debentures. In case any temporary or definitive Convertible Debenture shall
become mutilated or defaced or be destroyed, lost or stolen, then, in the
absence of notice to the Company or the Trustee that the Convertible Debenture
has been acquired by a bona fide purchaser, the Company shall execute, and upon
the written request of any officer of the Company, the Trustee shall
authenticate and make available for delivery a new Convertible Debenture of like
tenor and principal amount and with the same terms and conditions, bearing a
number not contemporaneously outstanding, in exchange and substitution for the
mutilated or defaced Convertible Debenture or in lieu of and substitution for
the Convertible Debenture so destroyed, lost or stolen. In every case the
applicant for a substitute Convertible Debenture shall furnish to the Company
and to the Trustee and to any agent of the Company or the Trustee such security
or indemnity as may be required by them to indemnify and defend and to save each
of them harmless and, in every case of destruction, loss or theft, evidence to
their satisfaction of the destruction, loss or theft of such Convertible
Debenture and of the ownership thereof and in the case of mutilation or
defacement shall surrender the Convertible Debenture to the Trustee or such
agent.
Upon the issuance of any substitute Convertible Debenture, the Company may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses (including
the fees and expenses of the Trustee or its agent) connected therewith. In case
any Convertible Debenture which has matured or is about to mature or has been
called for redemption in full shall become mutilated or defaced or be destroyed,
lost or stolen, the Company may, instead of issuing a substitute Convertible
Debenture, pay or authorize, the payment of the same (without surrender thereof
except in the case of a mutilated or defaced Convertible Debenture); provided,
however, that the applicant for such payment shall furnish to the Company and to
the Trustee and any agent of the Company or the Trustee such security or
indemnity as any of them may require to save each of them harmless, and, in
every case of destruction, loss or theft, the applicant shall also furnish to
the Company and the Trustee and any agent of the Company or the Trustee evidence
to their satisfaction of the destruction, loss or theft of such Convertible
Debenture and of the ownership thereof.
Every substitute Convertible Debenture issued pursuant to the provisions of
this Section by virtue of the fact that any Convertible Debenture is destroyed,
lost or stolen shall constitute a contractual obligation of the Company, and
shall be entitled to all the benefits of (but shall be subject to all the
limitations of rights set forth in) this Indenture equally and proportionately
with any and all other Convertible Debentures duly authenticated and delivered
hereunder. All Convertible Debentures shall be held upon the express condition
that, to the extent permitted by law, the foregoing provisions are exclusive
with respect to the replacement or payment of mutilated, defaced, destroyed,
lost or stolen Convertible Debentures and shall preclude any and all other
rights or remedies notwithstanding any law or statute existing or hereafter
enacted to the contrary with respect to the replacement or payment of negotiable
instruments or other securities without their surrender.
Section 2.12 Cancellation of Convertible Debentures. All Convertible
Debentures surrendered for payment, redemption, conversion, registration of
transfer or exchange, or for credit against any payment in respect of a sinking
or analogous fund, shall, if surrendered to the Company or any agent of the
Company or the Trustee, be delivered to the Trustee for cancellation or, if
surrendered to the Trustee, shall be canceled by it; and no Convertible
Debentures shall be issued in lieu thereof, except as expressly permitted by any
of the provisions of this Indenture. The Company may at any time deliver to the
Trustee for cancellation any Convertible Debentures previously authenticated
hereunder which the Company has not issued and sold and all Convertible
Debentures so delivered shall be promptly canceled by the Trustee. If the
Company shall acquire any of the Convertible Debentures, such acquisition shall
not operate as a redemption or satisfaction of the indebtedness represented by
such Convertible Debentures unless and until the same are delivered to the
Trustee for cancellation. All canceled Convertible Debentures shall be disposed
of as directed by a Company Order or, in the absence of such Company Order, in
accordance with the Trustee's customary practices. The Trustee shall provide a
certificate of destruction to the Company with respect to all Convertible
Debentures disposed of by the Trustee.
Section 2.13 Temporary Convertible Debentures. Pending the preparation of
definitive Convertible Debentures, the Company may execute and the Trustee shall
authenticate and make available for delivery temporary Convertible Debentures
(printed, lithographed, typewritten or otherwise reproduced, in each case in
form reasonably acceptable to the Trustee). Temporary Convertible Debentures
shall be issuable in any authorized denomination, and substantially in the form
of the definitive Convertible Debentures but with such omissions, insertions and
variations as may be appropriate for temporary Convertible Debentures, all as
may be determined by the Company with the reasonable concurrence of the Trustee.
Temporary Convertible Debentures may contain such reference to any provisions of
this Indenture as may be appropriate. Every temporary Convertible Debenture
shall be executed by the Company and be authenticated by the Trustee upon the
same conditions and in substantially the same manner, and with like effect, as
the definitive Convertible Debentures. Without unreasonable delay the Company
shall execute and shall furnish definitive Convertible Debentures and thereupon
temporary Convertible Debentures may be surrendered in exchange therefor without
charge to the Holder at each office or agency to be maintained by the Company
for that purpose pursuant to Section 3.2, and the Trustee shall authenticate and
make available for delivery in exchange for such temporary Convertible
Debentures an equal aggregate principal amount of definitive Convertible
Debentures of authorized denominations. Until so exchanged, the temporary
Convertible Debentures shall be entitled to the same benefits under this
Indenture as definitive Convertible Debentures.
ARTICLE III
COVENANTS OF THE COMPANY
Section 3.1 Payment of Principal and Interest. The Company covenants and
agrees for the benefit of the Holders of the Convertible Debentures that it will
duly and punctually pay or cause to be paid the principal of, and interest on,
each of the Convertible Debentures in accordance with the terms of such
Convertible Debentures and of this Indenture. The interest on Convertible
Debentures (together with any additional amounts payable pursuant to the terms
of such Convertible Debentures) shall be payable only to the Holders thereof and
at the option of the Company may be paid by wire transfer or by mailing checks
for such interest payable to such Holders at their last addresses as they appear
on the Security Register.
Section 3.2 Offices for Payment, etc. So long as any of the Convertible
Debentures remain outstanding, the Company will maintain the following: an
office or agency in the Borough of Manhattan, City of New York (a) where the
Convertible Debentures may be presented for payment, (b) where the Convertible
Debentures may be presented for registration of transfer and for exchange as
provided in this Indenture, and (c) where notices and demands may be served upon
the Company in respect of the Convertible Debentures, or this Indenture.
The Company will give to the Trustee written notice of the location of any
such office or agency and of any change of location thereof. In case the Company
shall fail to so designate or maintain any such office or agency or shall fail
to give such notice of the location or of any change in the location thereof,
presentations and demands may be made and notices may be served at the Corporate
Trust Office.
Section 3.3 Paying Agents. Whenever the Company is not the Paying Agent, it
shall appoint a Paying Agent other than the Trustee with respect to the
Convertible Debentures, it will cause such Paying Agent to execute and deliver
to the Trustee an instrument in which such Paying Agent shall agree with the
Trustee, subject to the provisions of this Section:
(a) that it will hold all sums received by it as such Paying
Agent for the payment of the principal of or interest on the
Convertible Debentures (whether such sums have been paid to it by the
Company or by any other obligor on the Convertible Debentures) in
trust for the benefit of the Holders of the Convertible Debentures or
of the Trustee, and upon the occurrence of an Event of Default and
upon the written request of the Trustee, pay over all such sums
received by it to the Trustee; and
(b) that it will give the Trustee notice of any failure by the
Company (or by any other obligor on the Convertible Debentures) to
make any payment of the
principal of or interest on the Convertible Debentures when the same
shall be due and payable.
The Company hereby appoints the Trustee as Paying Agent and the Trustee
accepts such appointment as Paying Agent and agrees to hold all sums received by
it as such Paying Agent for the payment of the principal of, or interest on, the
Convertible Debentures (whether such sums have been paid to it by the Company or
by any other obligor on the Convertible Debentures) in trust for the benefit of
the Holders of the Convertible Debentures.
The Company will, on or prior to each due date of the principal of or
interest on the Convertible Debentures, deposit in a timely manner with the
Paying Agent a sum sufficient to pay such principal or interest so becoming due,
and (unless such Paying Agent is the Trustee) the Company will promptly notify
the Trustee of any failure to take such action.
If the Company shall act as its own Paying Agent with respect to the
Convertible Debentures, it will, on or before each due date of the principal of
or interest on the Convertible Debentures, set aside, segregate and hold in
trust for the benefit of the holders of the Convertible Debentures a sum
sufficient to pay such principal or interest so becoming due. The Company will
promptly notify the Trustee of any failure to take such action.
Section 3.4 Written Statement to Trustee. The Company will deliver to the
Trustee, within 120 days after the end of each fiscal year of the Company ending
after the date hereof, a brief certificate (which need not comply with Section
14.5) from the principal executive, financial or accounting officer of the
Company as to his or her knowledge, after due inquiry, of the Company's
compliance with all conditions and covenants under this Indenture (such
compliance to be determined without regard to any period of grace or requirement
of notice provided under this Indenture), and if the Company shall not be in
compliance, specifying all such defaults or non-compliance and the nature and
status thereof.
Section 3.5 Limitation on Dividends. If any Convertible Debentures are
outstanding and (i) there shall have occurred any Event of Default or any event
that, with the giving of notice or lapse of time or both, would constitute an
Event of Default, or (ii) the Guarantor shall be in default with respect to its
payment or other obligations pursuant to Section 5.1 of the Preferred Securities
Guarantee or Section 2.1 of the Common Securities Guarantee, then the Company
shall not (a) declare or pay any dividend on, make any distribution with respect
to, or redeem, purchase or make a liquidation payment with respect to, any of
its Capital Stock or (b) make any payment of interest, principal or premium, if
any, on or repay, repurchase or redeem any debt securities issued by the Company
that rank pari passu with or junior in interest to the Convertible Debentures or
make any guarantee payments with respect to any guarantee by the Company of the
debt securities of any subsidiary of the Company if such guarantee ranks pari
passu with or junior in interest to the Convertible Debentures (other than (i)
as a result of a reclassification of the Capital Stock of the Company or
the exchange or conversion of one class or series of the Capital Stock of the
Company for another class or series of the Capital Stock of the Company, (ii)
the purchase of fractional interests in shares of the Capital Stock of the
Company pursuant to the conversion or exchange provisions of such Capital Stock
or the security being converted into or exchanged for such Capital Stock, (iii)
dividends or distributions in Common Shares of the Company, (iv) any declaration
of a dividend in connection with the implementation of a shareholders' rights
plan, or the issuance of Capital Stock under any such plan in the future, or the
redemption or repurchase of any such rights pursuant thereto, (v) payments under
the Trust Securities Guarantees, (vi) purchases of Common Shares of the Company
related to the issuance of Common Shares of the Company or rights under any of
the Company's benefit plans for its directors, officers or employees and (vii)
prior obligations under any dividend reinvestment and stock purchase plans to
issue shares other than as a result of the payment of a dividend), in each case
unless and until such default or Event of Default shall have been cured.
Section 3.6 Covenants as to WRP Trust. For so long as the Trust Securities
remain outstanding, the Company will (a) maintain 100% direct or indirect
ownership of the Common Securities of WRP Trust, provided, however, that any
permitted successor of the Company under this Indenture may succeed to the
Company's ownership of the Common Securities, (b) use its best efforts to cause
WRP Trust (i) to remain a statutory business trust, except in connection with
the distribution of Convertible Debentures to the holders of Trust Securities in
liquidation of WRP Trust, the redemption of all of the Trust Securities of WRP
Trust, or certain mergers or consolidations, each as permitted by the
Declaration, and (ii) to continue to be classified as a grantor trust for United
States federal income tax purposes and (c) use its best efforts to cause each
holder of Trust Securities to be treated as owning an undivided beneficial
interest in the Convertible Debentures.
Section 3.7 Existence. Except as permitted by the Declaration and Article
IX hereof, the Company will do or cause to be done all things necessary to
preserve and keep in full force and effect the Company's existence, rights
(charter and statutory) and franchises; provided, however, that the Company
shall not be required to preserve any such right or franchise if the Board of
Directors shall determine that the preservation thereof is no longer desirable
in the conduct of the business of the Company and that the loss thereof is not
disadvantageous in any material respect to the Holders.
ARTICLE IV
HOLDERS OF CONVERTIBLE DEBENTURES LISTS AND REPORTS
BY THE COMPANY AND THE TRUSTEE
Section 4.1 Company to Furnish Trustee Information as to Names and
Addresses of Holders of Convertible Debentures. The Company covenants and agrees
that it will furnish or cause to be furnished to the Trustee a list in such form
as the Trustee may reasonably require of the names and addresses of the Holders
of the Convertible Debentures:
(i) semiannually and not more than 15 days after each record date
for the payment of interest on such Convertible Debentures, as
hereinabove specified, as of such record date, and
(ii) at such other times as the Trustee may reasonably request in
writing, within 30 days after receipt by the Company of any such
request, such list to be as of a date not more than 15 days prior to
the time such information is furnished, provided that if and so long
as the Trustee shall be the Registrar, such list shall not be required
to be furnished.
Section 4.2 Preservation and Disclosure of Holders of Convertible
Debentures Lists.
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, all information as to the names and addresses of the Holders of
Convertible Debentures contained in the most recent list furnished to it as
provided in Section 4.1 or maintained by the Trustee in its capacity as
Registrar, if so acting. The Trustee may destroy any list furnished to it as
provided in Section 4.1 upon receipt of a new list so furnished.
(b) In case three or more Holders of Convertible Debentures or, if there
are less than five Holders, the Holders of not less than a majority in aggregate
principal amount of the Convertible Debentures (hereinafter referred to as
"applicants") apply in writing to the Trustee and furnish to the Trustee
reasonable proof that each such applicant has owned a Convertible Debenture for
a period of at least 30 days preceding the date of such application, and such
application states that the applicants desire to communicate with other Holders
of Convertible Debentures (in which case the applicants must all hold
Convertible Debentures) or with Holders of all Convertible Debentures with
respect to their rights under this Indenture or under such Convertible
Debentures and such application is accompanied by a copy of the form of proxy or
other communication which such applicants propose to transmit, then the Trustee
shall, within five business days after the receipt of such application, at is
election, either
(i) afford to such applicants access to the information preserved
at the time by the Trustee in accordance with the provisions of
subsection (a) of this Section, or
(ii) inform such applicants as to the approximate number of
Holders of Convertible Debentures or of all Convertible Debentures, as
the case may be, whose names and addresses appear in the information
preserved at the time by the Trustee, in accordance with the
provisions of subsection (a) of this Section, as to the approximate
cost of mailing to such Holders of Convertible Debentures the form of
proxy or other communication, if any, specified in such application.
If the Trustee shall elect not to afford to such applicants access to such
information, the Trustee shall, upon the written request of such applicants,
mail to each Holder of Convertible Debentures or all Holders of Convertible
Debentures, as the case may be, whose name and address appears in the
information preserved at the time by the Trustee in accordance with the
provisions of subsection (a) of this Section, a copy of the form of proxy or
other communication which is specified in such request, with reasonable
promptness after a tender to the Trustee of the material to be mailed and of
payment, or provision for the payment, of the reasonable expenses of mailing,
unless within five days after such tender, the Trustee shall mail to such
applicants and file with the Commission together with a copy of the material to
be mailed, a written statement to the effect that, in the opinion of the
Trustee, such mailing would be contrary to the best interests of the Holders of
Convertible Debentures or could be in violation of applicable law. Such written
statement shall specify the basis of such opinion. If the Commission, after
opportunity for a hearing upon the objections specified in the written statement
so filed, shall enter an order refusing to sustain any of such objections or if,
after the entry of such order sustaining one or more of such objections, the
Commission shall find, after notice and opportunity for hearing, that all the
objections so sustained have been met, and shall enter an order so declaring,
the Trustee shall mail copies of such material to all such Holders of
Convertible Debentures with reasonable promptness after the entry of such order
and the renewal of such tender; otherwise the Trustee shall be relieved of any
obligation or duty to such applicants respecting their application.
(c) Each and every Holder of Convertible Debentures, by receiving and
holding the same, agrees with the Company and the Trustee that neither the
Company nor the Trustee nor any agent of the Company or the Trustee shall be
held accountable by reason of the disclosure of any such information as to the
names and addresses of the Holders of Convertible Debentures in accordance with
the provisions of subsection (b) of this Section, regardless of the source from
which such information was derived, and that the Trustee shall not be held
accountable by reason of mailing any material pursuant to a request made under
such subsection (b).
Section 4.3 Reports by the Company. The Company covenants:
(a) to file with the Trustee, within 15 days after the Company is
required to file the same with the Commission, copies of the annual
reports and of the information, documents, and other reports (or
copies of such portions and any of the
foregoing as the Commission may from time to time by rules and
regulations prescribe) which the Company may be required to file with
the Commission pursuant to Section 13 or Section 15(d) of the Exchange
Act, or if the Company is not required to file information, documents,
or reports pursuant to either of such Sections, then to file with the
Trustee and the Commission to the extent permitted, in accordance with
rules and regulations prescribed from time to time by the Commission,
such of the supplementary and periodic information, documents, and
reports which may be required pursuant to Section 13 of the Exchange
Act, in respect of a security listed and registered on a national
securities exchange as may be prescribed from time to time in such
rules and regulations;
(b) to file with the Trustee and the Commission, in accordance
with rules and regulations prescribed from time to time by the
Commission, such additional information, documents, and reports with
respect to compliance by the Company with the conditions and covenants
provided for in this Indenture as may be required from time to time by
such rules and regulations; and
(c) to transmit by mail to the Holders of Convertible Debentures
in the manner and to the extent required by Sections 6.6 and 14.4,
within 30 days after the filing thereof with the Trustee, such
summaries of any information, documents, and reports required to be
filed by the Company pursuant to subsections (a) and (b) of this
Section as may be required to be transmitted to such Holders by rules
and regulations prescribed from time to time by the Commission.
ARTICLE V
REMEDIES OF THE TRUSTEE AND HOLDERS OF
CONVERTIBLE DEBENTURES ON EVENT OF DEFAULT
Section 5.1 Event of Default Defined; Acceleration of Maturity; Waiver of
Default. "Event of Default" with respect to the Convertible Debentures wherever
used herein, means any one or more of the following events which shall have
occurred and be continuing (whatever the reason for such Event of Default and
whether it shall be voluntary or involuntary or be effected by operation of law
or pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):
(a) default in the payment of any interest on the Convertible
Debentures, in cash or by the issuance of additional Convertible
Debentures pursuant to Section
2.5(c) hereof (including any Additional Sums), or any additional
amounts payable in respect of any Convertible Debentures when it
becomes due and payable, and continuance of such default for a period
of 30 days, without regard to the application of Section 2.9 hereof;
or
(b) default in the payment of the principal of, or premium, if
any, on any Convertible Debentures as and when the same shall become
due and payable whether at maturity, upon redemption, by declaration
or otherwise; or
(c) default in the performance, or breach of any covenant or
warranty of the Company contained in the Convertible Debentures or in
this Indenture (other than a covenant or warranty a default in whose
performance or whose breach is elsewhere in this Section specifically
dealt with), and continuance of such default or breach for a period of
30 days after there has been given, by registered or certified mail,
to the Company by the Trustee or to the Company and the Trustee by the
Holders of at least 25% in aggregate principal amount of the
Outstanding Convertible Debentures a written notice specifying such
default or breach and requiring it to be remedied and stating that
such notice is a "Notice of Default" hereunder; or
(d) the entry by a court having jurisdiction in the premises of
(A) a decree or order for relief in respect of the Company in an
involuntary case or proceeding under any applicable federal or state
bankruptcy, insolvency, reorganization or other similar law or (B) a
decree or order adjudging the Company a bankrupt or insolvent, or
approving as properly filed a petition seeking reorganization,
arrangement, adjustment or composition of or in respect of the Company
under any applicable federal or state law, or appointing a custodian,
receiver, liquidator, assignee, trustee, sequestrator or other similar
official of the Company or of all or any substantial part of its
property, or ordering the winding up or liquidation of its affairs,
and the continuance of any such decree or order for relief or any such
other decree or order unstayed and in effect for a period of 90
consecutive days; or
(e) the commencement by the Company of a voluntary case or
proceeding under any applicable federal or state bankruptcy,
insolvency, reorganization or other similar law or of any other case
or proceeding to be adjudicated a bankrupt or insolvent, or the
consent by it to the entry of a decree or order for relief in respect
of the Company in an involuntary case or proceeding under any
applicable federal or state bankruptcy, insolvency, reorganization or
other similar law or to the commencement of any bankruptcy or
insolvency case or proceeding against it, or the filing by it of a
petition or answer or consent seeking reorganization or relief under
any applicable federal or state law, or the consent by it to the
filing of such petition or to the appointment of or taking possession
by a custodian, receiver, liquidator, assignee, trustee, sequestrator
or similar official of the Company or of all or any substantial
part of its property, or the making by it of an assignment for the
benefit of creditors, or the admission by it in writing of its
inability to pay its debts generally as they become due, or the taking
of corporate action by the Company in furtherance of any such action;
or
(f) failure by the Company to convert Convertible Debentures into
Common Shares of the Company upon an appropriate election by a holder
of Trust Securities or a Holder of Convertible Debentures to convert
such Trust Securities or Convertible Debentures, as the case may be,
into such Common Shares (whether or not conversion or exchange is
prohibited by the subordination provisions set forth herein); or
(g) the WRP Trust shall have voluntarily or involuntarily
dissolved, wound- up its business or otherwise terminated its
existence except in connection with (i) the distribution of
Convertible Debentures to holders of Trust Securities in liquidation
of their interest in the WRP Trust upon the occurrence of a Special
Event, as defined in the Declaration, or upon the occurrence of events
as described in Section 3 of Annex I to the Declaration, (ii) the
redemption of all of the outstanding Trust Securities of the WRP
Trust, (iii) the conversion of all outstanding Convertible Preferred
Securities into Common Shares of the Company or (iv) certain mergers
or consolidations, each as permitted by the Declaration or Article IX
hereof;
(h) the Company shall have consummated a merger or consolidation
in which the successor will be taxed as a partnership for federal
income tax purposes;
(i) the Company shall convert into, or otherwise be taxed as, a
partnership for federal income tax purposes; or
(j) all or substantially all of the assets of the Company have
been transferred to an entity taxable as a partnership for federal
income tax purposes (for purposes of this paragraph (j), the
"partnership"), unless the Company is taxable as a REIT, is the
managing general partner of the partnership, owns in excess of 90% of
the partnership interests of the partnership, causes the partnership
to issue debentures to the Company with the same rights and privileges
as the Convertible Debentures, and the partnership has succeeded to
substantially all of the assets of the Company and has taken the
assets in exchange for a guarantee of the Convertible Debentures.
If an Event of Default occurs and is continuing, then and in each and every
such case, unless the principal of all Convertible Debentures shall have already
become due and payable, either the Trustee or the Holders of not less than 25%
in aggregate principal amount of the
Convertible Debentures then Outstanding hereunder, by notice in writing to the
Company (and to the Trustee if given by such Holders), may declare the entire
principal of, plus accrued and unpaid interest on, all the Convertible
Debentures (including Additional Sums, if any) and any other amounts payable
under this Indenture to be due and payable immediately, and upon any such
declaration the same shall become and shall be immediately due and payable.
These provisions, however, are subject to the condition that if at any time
after the principal and other amounts due on the Convertible Debentures shall
have been so declared due and payable, and before any judgment or decree for the
payment of the moneys due shall have been obtained or entered as hereinafter
provided, the Company shall pay or shall deposit with the Trustee a sum
sufficient to pay all matured installments of interest, if any, upon all the
Convertible Debentures and the principal of any and all Convertible Debentures
which shall have become due otherwise than by such acceleration (with interest
upon such principal) or deposit in Dollars such amount as shall be sufficient to
cover reasonable compensation to the Trustee, its agents, attorneys and counsel
and all other expenses and liabilities incurred, and all advances with interest
made, by the Trustee, its agents, attorneys and counsel and if any and all
defaults under this Indenture, other than the nonpayment of the principal and
interest of Convertible Debentures which shall have become due by such
acceleration, shall have been cured or waived as provided herein, then and in
every such case the Holders of a majority in aggregate principal amount of the
Convertible Debentures then Outstanding, by written notice to the Company and to
the Trustee for the Convertible Debentures, may waive all defaults and rescind
and annul such declaration and its consequences; but no such waiver or
rescission and annulment shall extend to or shall affect any subsequent default
or shall impair any right consequent thereon.
Section 5.2 Collection of Indebtedness by Trustee; Trustee May Prove Debt.
The Company covenants that (a) in case default shall be made in the payment of
any installment of interest on any of the Convertible Debentures when such
interest shall have become due and payable, and such default shall have
continued for a period of 30 days, or (b) in case default shall be made in the
payment of all or any part of the principal of any of the Convertible Debentures
when the same shall have become due and payable, whether upon Maturity or upon
any redemption or by declaration or otherwise, then upon demand of the Trustee
for the Convertible Debentures, the Company will pay to the Trustee for the
benefit of the Holders of the Convertible Debentures the whole amount that then
shall have become due and payable on all Convertible Debentures for principal of
or interest, as the case may be (with interest to the date of such payment upon
the overdue principal and, to the extent that payment of such interest is
enforceable under applicable law, on overdue installments of interest at the
same rate as the rate of interest specified in the Convertible Debentures); and
in addition thereto, such further amount as shall be sufficient to cover the
costs and expenses of collection, including reasonable compensation to, and all
expenses and liabilities incurred and all advances with interest made by, the
Trustee and each predecessor Trustee except as a result of its negligence or bad
faith.
Until such demand is made by the Trustee, the Company may pay the principal
of and interest on the Convertible Debentures to the persons entitled thereto,
whether or not the principal of and interest on the Convertible Debentures are
overdue.
In case the Company shall fail forthwith to pay such amounts upon such
demand, the Trustee for the Convertible Debentures, in its own name and as
trustee of an express trust, shall be entitled and empowered to institute any
action or proceedings at law or in equity for the collection of the sums so due
and unpaid, and may prosecute any such action or proceedings to judgment or
final decree, and may enforce any such judgment or final decree against the
Company or other obligor upon such Convertible Debentures and collect in the
manner provided by law out of the property of the Company or other obligor upon
such Convertible Debentures, wherever situated, the moneys adjudged or decreed
to be payable.
In case there shall be pending proceedings relative to the Company or any
other obligor upon the securities under Title 11 of the United States Code or
any other applicable federal or state bankruptcy, insolvency or other similar
law, or in case a receiver, assignee or trustee in bankruptcy or reorganization,
liquidator, sequestrator or similar official shall have been appointed for or
taken possession of the Company or its property or such other obligor, or in
case of any other comparable judicial proceedings relative to the Company or
other obligor under the Convertible Debentures, or to the property of the
Company or such other obligor, the Trustee, irrespective of whether the
principal of any Convertible Debentures shall then be due and payable as therein
expressed or by declaration or otherwise and irrespective of whether the Trustee
shall have made any demand pursuant to the provisions of this Section, shall be
entitled and empowered, by intervention in such proceeding or otherwise:
(a) to file and prove a claim or claims for the whole amount of
principal and interest owing and unpaid in respect of the Convertible
Debentures, and to file such other papers or documents as may be
necessary or advisable in order to have the claims of the Trustee
(including any claim for reasonable compensation to, and all expenses
and liabilities incurred and all advances with interest made by, the
Trustee and each predecessor Trustee, and their respective agents,
attorneys and counsel, except as a result of negligence or bad faith)
and of the Holders of Convertible Debentures allowed in any judicial
proceedings relative to the Company or other obligor upon all
Convertible Debentures, or to the property of the Company or such
obligor, and
(b) to collect and receive any moneys or other property payable
or deliverable on any such claims, and to distribute all amounts
received with respect to the claims of the Holders of Convertible
Debentures and of the Trustee on their behalf; and any trustee,
receiver, liquidator, custodian or other similar official is hereby
authorized by each of the Holders of Convertible Debentures to make
payments to the Trustee for the Convertible Debentures, and, in the
event that such Trustee shall consent to
the making of payments directly to the Holders of Convertible
Debentures, to pay to such Trustee such amounts as shall be sufficient
to cover reasonable compensation to, and all expenses and liabilities
incurred and all advances with interest made by, such Trustee, each
predecessor Trustee and their respective agents, attorneys and counsel
and all other amounts due to such Trustee or any predecessor Trustee
pursuant to Section 6.7, except as a result of Trustee's negligence or
bad faith.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder of
Convertible Debentures any plan of reorganization, arrangement, adjustment or
composition affecting the Convertible Debentures or the rights of any Holder
thereof, or to authorize the Trustee to vote in respect of the claim of any
Holder of Convertible Debentures in any such proceeding.
All rights of action and of asserting claims under this Indenture, or under
any of the Convertible Debentures, may be enforced by the Trustee for the
Convertible Debentures without the possession of any of the Convertible
Debentures or the production thereof at any trial or other proceedings relative
thereto, any such action or proceedings instituted by the Trustee shall be
brought in its own name as trustee of an express trust, and any recovery of
judgment, subject to the payment of the expenses, disbursements and compensation
of the Trustee, each predecessor Trustee and their respective agents and
attorneys, shall be for the ratable benefit of the Holders of the Convertible
Debentures in respect of which such action was taken.
In any proceedings brought by the Trustee for the Convertible Debentures
(and also any proceedings involving the interpretation of any provision of this
Indenture to which the Trustee shall be a party), the Trustee shall be held to
represent all the Holders of the Convertible Debentures in respect of which such
action was taken, and it shall not be necessary to make any Holders of such
Convertible Debentures parties to any such proceedings.
Section 5.3 Application of Proceeds. Any moneys collected by the Trustee
for the Convertible Debentures pursuant to this Article in respect of the
Convertible Debentures shall be applied in the following order at the date or
dates fixed by such Trustee and, in case of the distribution of such moneys on
account of principal or interest, upon presentation of the several Convertible
Debentures in respect of which moneys have been collected and stamping (or
otherwise noting) thereon the payment, or issuing Convertible Debentures in
reduced principal amounts in exchange for the presented Convertible Debentures
if only partially paid, or upon surrender thereof if fully paid:
FIRST: To the payment of costs and expenses applicable in respect
of which moneys have been collected, including reasonable compensation
to, and all expenses and liabilities incurred and all advances with
interest made by, the Trustee and each predecessor Trustee and their
respective agents and attorneys and all other amounts
due to the Trustee or any predecessor Trustee pursuant to Section 6.7,
except as a result of Trustee's negligence or bad faith;
SECOND: To the payment of the amounts then due and unpaid for
interest on the Convertible Debentures for which principal is not yet
due and payable in respect of which moneys have been collected, such
payments to be made ratably to the persons entitled thereto, without
discrimination or preference, according to the amounts then due and
payable on such Convertible Debentures for interest;
THIRD: To the payment of the amounts then due and unpaid for
principal of and interest on the Convertible Debentures for which
principal is due and payable in respect of which moneys have been
collected, such payments to be made ratably to the persons entitled
thereto, without discrimination or preference, according to the
amounts then due and payable on such Convertible Debentures of
principal and interest, respectively; and
FOURTH: To the payment of the remainder, if any, to the Company
or any other Person lawfully entitled thereto.
Section 5.4 Restoration of Rights on Abandonment of Proceedings. In case
the Trustee for the Convertible Debentures or any Holder shall have proceeded to
enforce any right under this Indenture and such proceedings shall have been
discontinued or abandoned for any reason, or shall have been determined
adversely to the Trustee or to such Holder, then and in every such case, subject
to the determination in any such proceeding, the Company, the Trustee and the
Holders shall be restored respectively to their former positions and rights
hereunder, and all rights, remedies and powers of the Company, the Trustee and
the Holders of Convertible Debentures shall continue as though no such
proceedings had been taken.
Section 5.5 Limitations on Suits by Holders of Convertible Debentures. No
Holder of any Convertible Debenture shall have any right by virtue or by
availing of any provision of this Indenture to institute any action or
proceeding at law or in equity or in bankruptcy or otherwise upon or under with
respect to this Indenture, or for the appointment of a trustee, receiver,
liquidator, custodian or other similar official or for any other remedy
hereunder, unless such Holder previously shall have given to the Trustee written
notice of any Event of Default and of the continuance thereof, as hereinbefore
provided, and unless also the Holders of not less than 25% in aggregate
principal amount of the Convertible Debentures then Outstanding shall have made
written request upon the Trustee to institute such action or proceedings in its
own name as trustee hereunder and shall have offered to the Trustee such
reasonable indemnity, as it may require, against the costs, expenses and
liabilities to be incurred therein or thereby and the Trustee for 30 days after
its receipt of such notice, request and offer of indemnity shall have failed to
institute any such action
or proceeding and no direction inconsistent with such written request shall have
been given to the Trustee during such 30 day period by Holders of a majority in
principal amount of the Convertible Debentures then Outstanding; it being
understood and intended, and being expressly covenanted by the taker and Holder
of every Convertible Debenture with every other taker and Holder of a
Convertible Debenture and the Trustee, that no one or more Holders of
Convertible Debentures shall have any right in any manner whatever, by virtue or
by availing of any provision of this Indenture to affect, disturb or prejudice
the rights of any other such Holder of Convertible Debentures, or to obtain or
seek to obtain priority over or preference to any other such Holder or to
enforce any right under this Indenture, except in the manner herein provided and
for the equal, ratable and common benefit of all Holders of Convertible
Debentures.
Section 5.6 Unconditional Right of Holders of Convertible Debentures to
Institute Certain Suits. Notwithstanding any provision in this Indenture and any
provision of any Convertible Debenture, the right of any Holder of any
Convertible Debenture to receive payment of the principal of and (subject to
Section 2.9) interest on such Convertible Debenture at the respective rates, in
the respective amount on or after the respective due dates expressed in such
Convertible Debenture, and to institute suit for the enforcement of any such
payment on or after such respective dates, shall not be impaired or affected
without the consent of such Holder.
Section 5.7 Powers and Remedies Cumulative; Delay or Omission Not Waiver of
Default. Except as provided in Section 2.11 and Section 5.5, no right or remedy
herein conferred upon or reserved to the Trustee or to the Holders of
Convertible Debentures is intended to be exclusive of any other right or remedy,
and every right and remedy shall, to the extent permitted by law, be cumulative
and in addition to every other right and remedy given hereunder or now or
hereafter existing at law or in equity or otherwise. The assertion or employment
of any right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
No delay or omission of the Trustee or of any Holder of Convertible
Debentures to exercise any right or power accruing upon any Event of Default
occurring and continuing as aforesaid shall impair any such right or power or
shall be construed to be a waiver of any such Event of Default or an
acquiescence therein; and, subject to Section 5.5, every power and remedy given
by this Indenture or by law to the Trustee or to the Holders of Convertible
Debentures may be exercised from time to time, and as often as shall be deemed
expedient, by the Trustee or the Holders of Convertible Debentures.
Section 5.8 Control by Holders of Convertible Debentures. The Holders of a
majority in aggregate principal amount of the Convertible Debentures at the time
Outstanding shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred on the Trustee with respect to the
Convertible Debentures by this Indenture; provided that such direction shall not
be in conflict with any rule of law or the provisions of this Indenture; and
provided further that the Trustee, being advised by counsel, shall have the
right to decline to follow any such direction if the Trustee shall determine
that the action or proceedings so directed would involve the Trustee in personal
liability or if the Trustee in good faith shall so determine that the actions or
forbearance specified in or pursuant to such direction would be unduly
prejudicial to the interest of Holders of the Convertible Debentures not joining
in the giving of said direction.
Section 5.9 Waiver of Past Defaults. The Holders of not less than a
majority in aggregate principal amount of the Convertible Debentures at the time
Outstanding may on behalf of the Holders of all the Convertible Debentures waive
any past default hereunder or its consequences, except a default:
(a) in the payment of the principal of (or premium, if any) or
any interest on any Convertible Debenture as and when the same shall
become due by the terms of Convertible Debentures otherwise than by
acceleration (unless such default has been cured and sums sufficient
to pay all matured installments of interest and principal and any
premium has been deposited with the Trustee (in accordance with
Section 5.1)), or
(b) in respect of a covenant or provision hereof which under
Article VIII cannot be modified or amended without the consent of the
Holder of each Outstanding Convertible Debenture affected;
provided, however, that if the Convertible Debentures are held by the WRP Trust
or the Institutional Trustee of such Trust, such waiver or modification to such
waiver shall not be effective until the holders of a majority in aggregate
liquidation amount of Trust Securities of the WRP Trust shall have consented to
such waiver or modification to such waiver; provided further, that if the
consent of the Holder of each Outstanding Convertible Debenture is required,
such waiver shall not be effective until each holder of the Trust Securities of
the WRP Trust shall have consented to such waiver.
Upon any such waiver, such default shall cease to exist and be deemed to
have been cured and not to have occurred, and any Event of Default arising
therefrom shall be deemed to have been cured and not to have occurred for every
purpose of this Indenture; but no such waiver
shall extend to any subsequent or other default or Event of Default or impair
any right consequent thereon.
Section 5.10 Right of Court to Require Filing of Undertaking to Pay Costs.
All parties to this Indenture agree, and each Holder of any Convertible
Debenture, 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 by it as Trustee,
the filing by any party litigant in such suit of an undertaking to pay the costs
of such suit, and that such court may in its discretion assess reasonable costs,
including reasonable attorneys' fees and expenses, against any party litigant in
such suit, having due regard to the merits and good faith of the claims or
defenses made by such party litigant; but the provisions of this Section shall
not apply to any suit instituted by the Trustee, to any suit instituted by any
Holder of Convertible Debentures or group of Holders of Convertible Debentures
holding in the aggregate more than 10% in principal amount of the Outstanding
Convertible Debentures, or to any suit instituted by a Holder of Convertible
Debentures for the enforcement of the payment of the principal of or interest on
any Convertible Debenture on or after the due date expressed in such Convertible
Debenture or any date fixed for redemption.
Section 5.11 Suits for Enforcement. In case an Event of Default has
occurred, has not been waived and is continuing, the Trustee may in its
discretion proceed to protect and enforce the rights vested in it by this
Indenture by such appropriate judicial proceedings as the Trustee shall deem
most effectual to protect and enforce any of such rights, either at law or in
equity or in bankruptcy or otherwise, whether for the specific enforcement of
any covenant or agreement contained in this Indenture or in aid of the exercise
of any power granted in this Indenture or to enforce any other legal or
equitable right vested in the Trustee by this Indenture or by law.
Section 5.12 Unconditional Right of Holders to Receive Principal and
Interest and to Convert. Notwithstanding any other provision in this Indenture,
the Holder of any Convertible Debenture shall have the right, which is absolute
and unconditional, to receive payment of the principal of and interest
(including Additional Sums, if any) on such Convertible Debenture on the
respective Stated Maturities expressed in such Convertible Debenture (or, in the
case of redemption, on the redemption date) and to convert such Convertible
Debenture in accordance with Article XI and to institute suit for the
enforcement of any such payment and right to convert, and such rights shall not
be impaired without the consent of such Holder. If the Institutional Trustee is
the sole Holder of the Convertible Debentures, any holder of the Preferred
Securities shall have the right to institute suit on behalf of the Trust for the
enforcement of any such payment and right to convert. The Company may not amend
the Indenture to remove the foregoing right to institute a suit directly against
the Company without the prior written consent of the holders of all of the
Preferred Securities. If the right to institute a suit directly against the
Company is removed following the effectiveness of a registration statement in
respect of the Convertible Debentures, the Trust may become subject to the
reporting obligations under the Exchange Act. The Company shall have a right of
set-off to the extent of any payments made by the Company to such holder in any
such suit.
ARTICLE VI
CONCERNING THE TRUSTEE
Section 6.1 Duties of the Trustee.
(a) If an Event of Default has occurred and is continuing with respect to
the Convertible Debentures, the Trustee shall exercise the rights and powers
vested in it by this Indenture and use the same degree of care and skill in its
exercise as a prudent person would exercise or use under the circumstances in
the conduct of his or her own affairs.
(b) Except during the continuance of an Event of Default with respect to
the Convertible Debentures:
(i) the Trustee need perform only those duties that are
specifically set forth in this Indenture and no others; and
(ii) 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 on their face to the
requirements of this Indenture. However, in the case of any such
certificates or opinions which by any provision hereof are
specifically required to be furnished to the Trustee, the Trustee
shall examine the certificates and opinions to determine whether or
not they conform on their face to the requirements of this Indenture.
(c) The Trustee may not be relieved from liability for its own negligent
failure to act or its own willful misconduct, except that:
(i) this paragraph (c) does not limit the effect of paragraph (b)
of this Section 6.1;
(ii) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer unless it is proved that
the Trustee was negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 5.8.
(d) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b), (c) and (e) of this Section 6.1.
(e) The Trustee may refuse to perform any duty or exercise any right or
power or extend or risk its own funds or otherwise incur any financial liability
unless it receives indemnity satisfactory to it against any loss, liability or
expense.
(f) Money held by the Trustee in trust hereunder need not be segregated
from other funds except to the extent required by law. The Trustee shall be
under no liability for interest on any money received by it hereunder except as
otherwise agreed in writing with the Company.
Section 6.2 Rights of Trustee. Subject to Section 6.1 and the provisions of
the Trust Indenture Act:
(a) The Trustee may rely on any document believed by it to be genuine and
to have been signed or 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 require an
Officers' Certificate or an Opinion of Counsel. The Trustee shall not be liable
for any action it takes or omits to take in good faith in reliance on such
Officers' Certificate or Opinion of Counsel.
(c) Subject to the provisions of Section 6.1(c), 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.
(d) The Trustee may consult with counsel of its selection and the advice of
such counsel or any opinion of counsel shall be full and complete authorization
and protection in respect of any action taken, suffered or omitted by it
hereunder in good faith and in reliance thereon in accordance with such advice
or opinion of counsel.
(e) The Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Indenture at the request or direction of any of
the Holders pursuant to this Indenture, unless such Holders shall have offered
to the Trustee reasonable security or indemnity against the costs, expenses and
liabilities which might be incurred by it in compliance with such request or
direction.
(f) The Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by it
hereunder.
Section 6.3 Individual Rights of Trustee. The Trustee in its individual or
any other capacity may become the owner or pledgee of Convertible Debentures and
may otherwise deal with the Company or its Affiliates with the same rights it
would have if it were not Trustee. Any Paying Agent, Registrar or co- Registrar
may do the same with like rights. However, the Trustee must comply with Sections
6.10 and 6.11.
Section 6.4 Trustee's Disclaimer. The Trustee makes no representation as to
the validity or adequacy of this Indenture or the Convertible Debentures, it
shall not be accountable for the Company's use of the proceeds from the
Convertible Debentures and it shall not be responsible for any statement in the
registration statement for the Common Shares of the Company into which the
Convertible Debentures are convertible under the Securities Act or in the
Indenture or the Convertible Debentures (other than its certificate of
authentication).
Section 6.5 Notice of Defaults. If a default occurs and is continuing with
respect to any Convertible Debentures and if it is known to the Trustee through
oral or written notice to a Responsible Officer, the Trustee shall give to each
Holder of Convertible Debentures notice of the default within 30 days after such
default occurs. Except in the case of a default described in Section 5.1(a) or
(b), the Trustee may withhold the notice if and so long as a committee of its
Responsible Officers in good faith determines that withholding the notice is in
the interest of Holders of Convertible Debentures.
Section 6.6 Reports by Trustee to Holders. Within 60 days after each
December 31 beginning with the December 31 following the date of this Indenture,
the Trustee shall mail to each Holder of Convertible Debentures and each other
person specified in TIA Section 313(c) a brief report dated as of such December
31 that complies with TIA Section 313(a) to the extent required thereby. The
Trustee also shall comply with TIA Section 313(b).
A copy of each report at the time of its mailing to Holders of Convertible
Debentures shall be filed with the Commission and each securities exchange on
which the Convertible Debentures are listed. The Company agrees promptly to
notify the Trustee whenever the Convertible Debentures become listed on any
securities exchange and of any delisting thereof.
Section 6.7 Compensation and Indemnity. The Company agrees:
(a) to pay to the Trustee from time to time in Dollars such
compensation as shall be agreed to in writing between the Company and
the Trustee for all services rendered by it hereunder (which
compensation shall not be limited by any provision of law in regard to
the compensation of a trustee of an express trust);
(b) to reimburse the Trustee upon its request for all reasonable
expenses, disbursements and advances with interest thereon incurred or
made by the Trustee in accordance with any provision of this Indenture
(including the reasonable compensation and the expenses, advances with
interest thereon and disbursements of its agents and counsel), except
to the extent any such expense, disbursement or advance may be
attributable to its negligence or bad faith; and
(c) to indemnify the Trustee in Dollars for, and to hold it
harmless against, any loss, liability or expense arising out of or in
connection with the acceptance or administration of this trust or the
performance of its duties hereunder, including the costs and expenses
of defending itself against any claim or liability in connection with
the exercise or performance of any of its powers or duties hereunder
(including the reasonable compensation and the expenses, advances with
interest thereon and disbursements of its agents and counsel), except
to the extent that any such loss, liability or expense may be
attributable to its negligence or bad faith.
As security for the performance of the obligations of the Company in this
Section 6.7, the Trustee shall have a lien prior to the Convertible Debentures
on all money or property held or collected by the Trustee, except that held in
trust to pay the principal of or interest, if any, on particular Convertible
Debentures.
"Trustee" for purposes of this Section 6.7 includes any predecessor
Trustee, provided that the negligence or bad faith of any Trustee shall not be
attributable to any other Trustee.
The Company's payment obligations pursuant to this Section 6.7 shall
survive the discharge of this Indenture. When the Trustee incurs expenses after
the occurrence of a default specified in Sections 5.1(d) and 5.1(e), such
expenses are intended to constitute expenses of administration under bankruptcy
law.
Section 6.8 Replacement of Trustee. The Trustee may resign at any time with
respect to Convertible Debentures by so notifying the Company; provided,
however, no such resignation shall be effective until a successor Trustee has
accepted its appointment pursuant to this Section 6.8. The Holders of a majority
in aggregate principal amount of the Outstanding Convertible Debentures may
remove the Trustee at any time by so notifying the Trustee and the Company. The
Company shall remove the Trustee if:
(1) the Trustee fails to comply with Section 6.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or public officer takes charge of the Trustee or
its property; or
(4) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the office
of Trustee for any reason, with respect to the Convertible Debentures, the
Company shall promptly appoint, by resolution of its Board of Trustees, a
successor Trustee with respect to the Convertible Debentures.
A successor Trustee shall deliver a written acceptance of its appointment
to the retiring Trustee and to the Company. Thereupon 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 with
respect to the Convertible Debentures. The successor Trustee shall mail a notice
of its succession to Holders of Convertible Debentures so affected. The retiring
Trustee shall promptly transfer all property held by it as Trustee to the
successor Trustee, subject to the lien provided for in Section 6.7.
If a successor Trustee does not take office within 30 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Holders of a majority in aggregate principal amount of the Convertible
Debentures at the time Outstanding may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
If the Trustee fails to comply with Section 6.10, any Holder of Convertible
Debentures may petition any court of competent jurisdiction for the removal of
the Trustee and the appointment of a successor Trustee.
Section 6.9 Successor Trustee by Merger. If the Trustee consolidates with,
merges or converts into, or transfers all or substantially all its corporate
trust business or assets to, another corporation, the resulting, surviving or
transferee corporation without any further act shall be the successor Trustee.
Section 6.10 Eligibility; Disqualification. The Trustee shall at all times
satisfy the requirements of TIA Section 310(a)(1) and Section 310(a)(5). The
Trustee shall have 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 Section 310(b).
Section 6.11 Preferential Collection of Claims Against Company. The Trustee
shall comply with TIA Section 311(a), excluding any creditor relationship listed
in TIA Section 311(b). A Trustee who has resigned or been removed shall be
subject to TIA Section 311(a) to the extent indicated therein.
ARTICLE VII
CONCERNING THE HOLDERS OF CONVERTIBLE DEBENTURES
Section 7.1 Evidence of Action Taken by Holders of Convertible Debentures.
(a) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided in this Indenture to be given or taken by a specified
percentage in principal amount of the Holders of Convertible Debentures may be
embodied in and evidenced by one or more instruments of substantially similar
tenor signed by such specified percentage of Holders of Convertible Debentures
in person or by agent duly appointed in writing; and, except as herein otherwise
expressly provided, such action shall become effective when such instrument or
instruments are delivered to the Trustee. Proof of execution of any instrument
or of a writing appointing any such agent shall be sufficient for any purpose of
this Indenture and (subject to Sections 6.1 and 6.2) conclusive in favor of the
Trustee and the Company, if made in the manner provided in this Article.
(b) The ownership of such Convertible Debentures shall be proved by the
Security Register.
Section 7.2 Proof of Execution of Instruments. Subject to Sections 6.1 and
6.2, the execution of any instrument by a Holder of Convertible Debentures or
his agent or proxy may be proved in accordance with such reasonable rules and
regulations as may be prescribed by the Trustee or in such manner as shall be
satisfactory to the Trustee.
Section 7.3 Holders to be Treated as Owners. The Company, the Trustee and
any agent of the Company or the Trustee may deem and treat the person in whose
name any Convertible Debenture shall be registered upon the Security Register as
the absolute owner of such Convertible Debenture (whether or not such
Convertible Debenture shall be overdue and notwithstanding any notification of
ownership or other writing thereon) for the purpose of receiving payment of or
on account of the principal of and (subject to Section 2.9) interest on such
Convertible Debenture and for all other purposes; and neither the Company nor
the Trustee nor any agent of the Company or the Trustee shall be affected by any
notice to the contrary.
Section 7.4 Convertible Debentures Owned by Company Deemed Not Outstanding.
In determining whether the Holders of the requisite aggregate principal amount
of Outstanding Convertible Debentures have concurred in any direction, consent
or waiver under this Indenture, Convertible Debentures which are owned by the
Company or any other obligor on the Convertible Debentures with respect to which
such determination is being made or by any
person directly or indirectly controlling or controlled by or under direct or
indirect common control with the Company or any other obligor on the Convertible
Debentures with respect to which such determination is being made shall be
disregarded and deemed not to be Outstanding for the purpose of any such
determination (it being understood that ERPLP and any affiliate of ERPLP shall
not be deemed to be under common control with the Company), except that for the
purpose of determining whether the Trustee shall be protected in relying on any
such direction, consent or waiver only Convertible Debentures which the Trustee
knows are so owned shall be so disregarded. Convertible Debentures so owned
which have been pledged in good faith may be regarded as Outstanding if the
pledgee establishes to the satisfaction of the Trustee the pledgee's right so to
act with respect to such Convertible Debentures and that the pledgee is not the
Company or any other obligor upon the Convertible Debentures or any person
directly or indirectly controlling or controlled by or under direct or indirect
common control with the Company or any other obligor on the Convertible
Debentures.
Section 7.5 Right of Revocation of Action Taken. At any time prior to (but
not after) the evidencing to the Trustee, as provided in Section 7.1, of the
taking of any action by the Holders of the percentage in aggregate principal
amount of the Convertible Debentures, as the case may be, specified in this
Indenture in connection with such action, any Holder of a Convertible Debenture
the serial number of which is shown by the evidence to be included among the
serial numbers of the Convertible Debentures the Holders of which have consented
to such action may, by filing written notice at the Corporate Trust Office and
upon proof of holding as provided in this Article, revoke such action so far as
concerns such Convertible Debenture. Except as aforesaid any such action taken
by the Holder of any Convertible Debentures shall be conclusive and binding upon
such Holder and upon all future Holders and owners of such Convertible Debenture
and of any Convertible Debentures issued in exchange or substitution therefor,
irrespective of whether or not any notation in regard thereto is made upon any
such Convertible Debenture. Any action taken by the Holders of the percentage in
aggregate principal amount of the Convertible Debentures, as the case may be,
specified in this Indenture in connection with such action shall be conclusively
binding upon the Company, the Trustee and the Holders of all the Convertible
Debentures affected by such action.
ARTICLE VIII
SUPPLEMENTAL INDENTURES
Section 8.1 Supplemental Indentures Without Consent of Holders of
Convertible Debentures. The Company, when authorized by a resolution of its
Board of Directors, and the Trustee for the Convertible Debentures may from time
to time and at any time enter into an indenture or indentures supplemental
hereto (which shall conform to the provisions of the Trust
Indenture Act as in force at the date of the execution thereof), in form
satisfactory to such Trustee, for one or more of the following purposes:
(a) to convey, transfer, assign, mortgage or pledge to the
Trustee as security for the Convertible Debentures any property or
assets;
(b) to evidence the succession of another corporation to the
Company, or successive successions, and the assumption by the
successor corporation of the covenants, agreements and obligations of
the Company pursuant to Article IX;
(c) to add to the covenants of the Company further covenants,
restrictions, conditions or provisions for the protection of the
Holders of Convertible Debentures;
(d) to cure any ambiguity or to correct or supplement any
provision contained herein or in any supplemental indenture which may
be defective or inconsistent with any other provision contained herein
or in any supplemental indenture, or to make such other provisions in
regard to matters or questions arising under this Indenture or under
any supplemental indenture as the Board of Directors may deem
necessary or desirable, and which shall not materially and adversely
affect the interests of the Holders of the Convertible Debentures; or
(e) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Convertible
Debentures.
The Trustee is hereby authorized to join with the Company in the execution
of any such supplemental indenture, to make any further appropriate agreements
and stipulations which may be therein contained and to accept the conveyance,
transfer, assignment, mortgage or pledge of any property thereunder, but the
Trustee shall not be obligated to enter into any such supplemental indenture
which affects the Trustee's own rights, duties or immunities under this
Indenture or otherwise.
Any supplemental indenture authorized by the provisions of this Section may
be executed without the consent of the Holders of any of the Convertible
Debentures at the time Outstanding, notwithstanding any of the provisions of
Section 8.2.
Section 8.2 Supplemental Indentures With Consent of Holders of Convertible
Debentures. With the consent (evidenced as provided in Article VII) of the
Holders of not less than a majority in aggregate principal amount of the
Convertible Debentures at the time Outstanding (voting as one class), the
Company, when authorized by a resolution of its Board of Trustees, and the
Trustee may, from time to time and at any time, enter into an indenture or
indentures supplemental hereto (which shall conform to the provisions of the
Trust Indenture Act
as in force at the date of execution thereof) for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Indenture or of any supplemental indenture or of modifying in any manner
the rights of the Holders of the Convertible Debentures; provided, however, that
no such supplemental indenture shall (a) extend the Stated Maturity of any
Convertible Debenture, or reduce the principal amount thereof or any premium
thereon, or reduce the rate or extend the time of payment of interest thereon,
or reduce any amount payable on redemption thereof, or make the principal
thereof or interest thereon payable in any coin or currency other than that
provided in the Convertible Debentures or in accordance with the terms thereof,
or impair or affect the right of any Holder of Convertible Debentures to
institute suit for payment thereof, or adversely affect the right to convert
Convertible Debentures, or modify the subordination provisions of this Indenture
in any manner adverse to the Holders of Convertible Debentures without the
consent of the Holders of each Convertible Debenture so affected, or (b) reduce
the aforesaid percentage of Convertible Debentures, the consent of the Holders
of which is required for any such supplemental indenture, without the consent of
the Holders of each Convertible Debenture so affected; provided further, that no
such supplemental indenture shall result in the realization of unrelated
business income for the Holders of the Convertible Debentures without the
consent of each Holder of Convertible Debentures.
Upon the request of the Company, accompanied by a copy of a resolution of
the Board of Trustees certified by the secretary or assistant secretary of the
Company authorizing the execution of any such supplemental indenture, and upon
the filing with the Trustee of evidence of the consent of Holders of Convertible
Debentures as aforesaid and other documents, if any, required by Section 7.1,
the Trustee shall join with the Company in the execution of such supplemental
indenture or otherwise, in which case such Trustee may in its discretion, but
shall not be obligated to, enter into such supplemental indenture which affects
the Trustee's own rights, duties or immunities under this Indenture or
otherwise.
It shall not be necessary for the consent of the Holders of Convertible
Debentures under this Section to approve the particular form of any proposed
supplemental indenture, but it shall be sufficient if such consent shall approve
the substance thereof.
Promptly after the execution by the Company and the Trustee of any
supplemental indenture pursuant to the provisions of this Section, the Company
shall give notice thereof to the Holders of then Outstanding Convertible
Debentures, by mailing a notice thereof by first-class mail to such Holders at
their addresses as they shall appear on the Security Register, and in each case
such notice shall set forth in general terms the substance of such supplemental
indenture. Any failure of the Company to give such notice, or any defect
therein, shall not, however, in any way impair or affect the validity of any
such supplemental indenture.
Section 8.3 Effect of Supplemental Indenture. Every supplemental indenture
executed pursuant to this Article VIII
shall conform to the requirements of the Trust Indenture Act. Upon the execution
of any supplemental indenture pursuant to the provisions hereof, this Indenture
shall be and be deemed to be modified and amended in accordance therewith and
the respective rights, limitations of rights, obligations, duties and immunities
under this Indenture of the Trustee, the Company and the Holders of Convertible
Debentures shall thereafter be determined, exercised and enforced hereunder
subject in all respects to such modifications and amendments, and all the terms
and conditions of any such supplemental indenture shall be and be deemed to be a
part of the terms and conditions of this Indenture for any and all purposes.
Section 8.4 Documents to Be Given to Trustee. The Trustee, subject to the
provisions of Sections 6.1 and 6.2, shall receive an Officers' Certificate and
an Opinion of Counsel as conclusive evidence that any supplemental indenture
executed pursuant to this Article VIII complies with the applicable provisions
of this Indenture.
Section 8.5 Notation on Convertible Debentures in Respect of Supplemental
Indentures. Convertible Debentures authenticated and delivered after the
execution of any supplemental indenture pursuant to the provisions of this
Article VIII may bear, upon the direction of the Company, a notation in form
satisfactory to the Trustee for the Convertible Debentures as to any matter
provided for by such supplemental indenture. If the Company or the Trustee shall
so determine, new Convertible Debentures so modified as to conform, in the
opinion of the Trustee and the Company, to any modification of this Indenture
contained in any such supplemental indenture may be prepared by the Company,
authenticated by the Trustee and delivered in exchange for the Convertible
Debentures then Outstanding.
ARTICLE IX
CONSOLIDATION, MERGER, SALE OR CONVEYANCE
Section 9.1 Company May Consolidate, etc., on Certain Terms. The Company
may sell, transfer, lease or otherwise convey all or substantially all of its
assets on a consolidated basis to any Person, or consolidate or merge with or
into, any other Person, provided that in any such case, (a) either (i) the
Company shall be the continuing entity, or (ii) if the Company is not the
continuing entity, the successor entity or Person which acquires by sale,
transfer, lease or other conveyance all or substantially all of the assets of
the Company, shall be a Person organized and validly existing under the laws of
the United States of America or any state thereof or the District of Columbia
and shall expressly assume the due and punctual payment of the principal of,
premium, if any, and interest (including Additional Sums) on all of the
Convertible Debentures according to their tenor, and the due and punctual
performance and observance of all of the covenants, agreements
and conditions of this Indenture to be performed or observed by the Company by
supplemental indenture satisfactory to the Trustee, executed and delivered to
the Trustee by such corporation or entity or Person, by amendment thereto, (b)
immediately after such merger or consolidation, or such sale, transfer, lease or
other conveyance, no Event of Default, and no event which, after notice or lapse
of time or both, would become an Event of Default, shall have occurred and be
continuing, and (c) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that the requirements of
this Section have been complied with.
Section 9.2 Successor or Substituted Person. In case of any such
consolidation, merger, sale, transfer, or conveyance (but not in the case of any
such lease), and following such an assumption by the successor person, such
successor person shall succeed to and be substituted for the Company, with the
same effect as if it had been named herein, and the Company shall be discharged
from all obligations and covenants under this Indenture and the Convertible
Debentures and may be liquidated and dissolved. Such successor person may cause
to be signed, and may issue either in its own name or in the name of the Company
any or all of the Convertible Debentures issuable hereunder which theretofore
shall not have been signed by the Company and be delivered to the Trustee; and,
upon the order of such successor corporation instead of the Company and subject
to all the terms, conditions and limitations in this Indenture prescribed, the
Trustee shall authenticate and shall make available for delivery any Convertible
Debentures which previously shall have been signed and delivered by the officers
of the Company to the Trustee for authentication, and any Convertible
Debentures, which such successor person thereafter shall cause to be signed and
delivered to the Trustee for that purpose. All of the Convertible Debentures so
issued shall in all respects have the same legal rank and benefit under this
Indenture as the Convertible Debentures theretofore or thereafter issued in
accordance with the terms of this Indenture as though all of such Convertible
Debentures had been issued at the date of the execution hereof.
In case of any such consolidation, merger, sale, transfer, lease or
conveyance such changes in phraseology and form (but not in substance) may be
made in the Convertible Debentures thereafter to be issued as may be
appropriate.
Section 9.3 Opinion of Counsel to Trustee. The Trustee, subject to the
provisions of Sections 6.1 and 6.2, may receive an Opinion of Counsel, prepared
in accordance with Section 14.5, as conclusive evidence that any such
consolidation, merger, sale, lease or conveyance, and any such assumption, and
any such liquidation or dissolution, complies with the applicable provisions of
this Indenture.
ARTICLE X
REDEMPTION OF THE CONVERTIBLE DEBENTURES
Section 10.1 Tax Event Redemption.
If a Tax Event (as defined in the Declaration) has occurred and is
continuing and:
(i) the Company has received a Redemption Tax Opinion (as defined
in Annex I to the Declaration); or
(ii) after receiving a Dissolution Tax Opinion (as defined in
Annex I to the Declaration), the Regular Trustees shall have been
informed by tax counsel rendering the Dissolution Tax Opinion that a
No Recognition Opinion (as defined in Annex I to the Declaration)
cannot be delivered to the Trust,
then, notwithstanding Section 10.2(a) but subject to Section 10.2(b), the
Company shall have the right, at its option, upon not less than 30 days nor more
than 60 days notice to the Holders of the Convertible Debentures to redeem the
Convertible Debentures, in whole or in part, for cash within 90 days following
the occurrence of such Tax Event (the "90-Day Period") at a redemption price
equal to 100% of the principal amount to be redeemed plus any accrued and unpaid
interest thereon to the date of such redemption (the "Redemption Price"),
provided that if at the time there is available to the Company or the Trust the
opportunity to eliminate, within the 90-Day Period, the Tax Event by taking some
ministerial action, such as filing a form or making an election, or pursuing
some other similar reasonable measure which has no adverse effect on the
Company, the Trust or the Holders of the Trust Securities issued by the Trust
("Ministerial Action"), the Company shall pursue such Ministerial Action in lieu
of redemption.
Section 10.2 Optional Redemption by Company.
(a) Subject to the provisions of Section 10.2(b) and to the provisions of
this Article X generally, except as otherwise may be specified in Section 10.1
or elsewhere in this Indenture, the Company shall have the right to redeem the
Convertible Debentures, in whole or in part, from time to time, on or after May
30, 2002. Any redemption pursuant to this paragraph will be made upon not less
than 30 days nor more than 60 days notice to the Holders of the Convertible
Debentures, at a price equal to 100% of the principal amount of the Convertible
Debentures (the "Optional Redemption Price") together with accrued and unpaid
interest (including Additional Sums, if any) to, but excluding, the redemption
date.
If Convertible Debentures are redeemed on any January 15, April 15, July 15
or October 15, accrued and unpaid interest shall be payable to holders of record
on the relevant record date.
The Company may not redeem fewer than all of the Outstanding Convertible
Debentures unless all accrued and unpaid interest has been paid on all
Convertible Debentures for all quarterly interest payment periods terminating on
or prior to the date of redemption.
So long as the corresponding Trust Securities are outstanding, the proceeds
from the redemption of the Convertible Debentures will be used to redeem the
Trust Securities.
If the Convertible Debentures are only partially redeemed pursuant to this
Section 10.2, the Convertible Debentures will be redeemed pro rata. The Optional
Redemption Price, together with any required interest payment, shall be paid in
immediately available funds prior to 12:00 noon, New York City time, on the
redemption date or at such earlier time as the Company determines provided that
the Company shall deposit with the Trustee an amount sufficient to pay the
Optional Redemption Price, together with any required interest payment, by 10:00
a.m., New York City time, on the date such amounts are to be paid. Partial
redemptions must be in an amount not less than $25.00 principal amount of
Convertible Debentures.
If Convertible Debentures selected for partial redemption are converted in
part before termination of the conversion right with respect to the portion of
the Convertible Debentures so selected, the converted portion of the Convertible
Debentures shall be deemed (so far as may be) to be the portion selected for
redemption. Convertible Debentures (or portions thereof) which have been
converted during a selection of Convertible Debentures to be redeemed shall be
treated by the Trustee as Outstanding for the purpose of such selection. In any
case where more than one Convertible Debenture is registered in the same name,
the Trustee in its discretion may treat the aggregate principal amount so
registered as if it were represented by one Convertible Debenture.
If any Convertible Debenture called for redemption is converted into Common
Shares of the Company, any money deposited with the Trustee or with any Paying
Agent or so segregated and held in trust for the redemption of such Convertible
Debenture shall (subject to any right of the Holder of such Convertible
Debenture or any Predecessor Convertible Debenture to receive interest as
provided in the last paragraph of Section 2.9) be paid to the Company upon the
Company's request or, if then held by the Company, shall be discharged from such
trust.
(b) If (i) a holder of Convertible Preferred Securities desires to convert
any of its Convertible Preferred Securities called for redemption into Common
Shares (effectively by converting such holder's share of the related Convertible
Debentures into Common Shares in accordance with the terms of the Indenture and
the Declaration) but such conversion would cause any direct or indirect holder
of Convertible Preferred Securities which is classified as a real estate
investment trust ("REIT") under Section 856 of the Code ("Preferred Holder") to:
(A) own more than 5% of the total outstanding voting securities of the Company,
(B) own more than 5% of the value of the total outstanding securities of the
Company, (C) violate the requirements of Code Section 856(c)(4)(B), or (D)
otherwise lose its status as a REIT under the Code (such Convertible Preferred
Securities which upon conversion into Common Shares would result in a REIT
owning
Common Shares in a manner described in subclause (A), (B), (C) or (D) of this
Section 10.2(b)(i) are referred to herein as the "Unconvertible Shares" and an
amount of Convertible Debentures equal to the aggregate liquidation amount of
the Unconvertible Shares is referred to herein as, the "Unconvertible
Debentures"), and (ii) any Preferred Holder has delivered to the Company, prior
to the date on which the Company would otherwise have redeemed the Convertible
Preferred Securities (the "Redemption Date"), a written notice signed by each
holder of Convertible Preferred Securities who desires to convert any of such
holder's Convertible Preferred Securities into Common Shares in accordance with
the terms of the Indenture and the Declaration which written notice sets forth
both the number of Convertible Preferred Securities that each such holder
desires to convert and the number of such Convertible Preferred Securities of
such holder that constitute Unconvertible Shares; then the Trust shall notify
the Company and the Company shall: (x) convert such Holder's Convertible
Debentures (other than the Unconvertible Debentures) for Common Shares in
accordance with the terms of the Indenture and the Declaration, (y) pay each
Holder of Convertible Debentures so converted in subsection (x) above and each
Holder of Unconvertible Debentures an amount of cash equal to the amount of any
accrued but unpaid interest owing on such Holder's Convertible Debentures so
converted and such Holder's Unconvertible Debentures, and (z) pay each Holder of
Unconvertible Debentures an amount of cash equal to the product of (A) the
Closing Price of a Common Share on the trading date immediately prior to the
Redemption Date, multiplied by (B) the maximum number of Common Shares into
which the Unconvertible Debentures held by such Holder could have been converted
in accordance with the terms of the Indenture and the Declaration on the trading
date immediately prior to the Redemption Date. For purposes of clause (i) of
this Section 10.2(b), a REIT shall be considered to own directly each of the
securities of the Company that are owned by such REIT directly or indirectly.
The Company shall reasonably and timely cooperate in furnishing the information
necessary to apply the provisions of this Section 10.2(b) to a holder of
Convertible Preferred Securities who requests such information in writing.
(c) If mutually agreed on or after January 1, 2001 by the Company and any
holder of Convertible Preferred Securities otherwise subject to Section 10.2(b),
a conversion of Convertible Debentures having a principal amount equal to the
liquidation amount of the Convertible Preferred Securities held by such holder
(and such holder's related Convertible Preferred Securities) into Common Shares
shall occur without regard to Section 10.2(b) provided the Company receives an
opinion of counsel in a form which is reasonably acceptable to the Holders that
the Company, or any successor thereto, qualifies as either a REIT under Section
856(a) of the Code or as a "taxable REIT subsidiary" of EQR (or any successor
thereto) under Section 856(l) of the Code.
(d) If a partial redemption of the Convertible Debentures would result in
the delisting of the Convertible Preferred Securities issued by the Trust from
any national securities exchange or other organization on which the Convertible
Preferred Securities are then listed, the Company shall not be permitted to
effect such partial redemption and may only redeem the Convertible Debentures in
whole.
(e) Notwithstanding anything in this Indenture to the contrary:
(i) If (A) the Company enters into an agreement for a business combination
with another entity, whether by merger or other reorganization, and the
resulting or surviving entity (the "Survivor") wants to either (i) revoke a
prior election to be a taxable REIT subsidiary ("TRS") under Section 856(l) of
the Code, or (ii) desires to not become a TRS or a REIT in the future, and (B)
following such business combination, on an as converted pro forma basis (without
duplication), the aggregate outstanding Convertible Preferred Securities,
Convertible Debentures held in exchange for Convertible Preferred Securities,
and Common Shares held by reason of converting any of the foregoing held by any
Preferred Holder have an aggregate vote or value in excess of 5% of the total
voting power or total value of the outstanding securities of the Survivor, then
the Company shall give written notice of the foregoing (at least 45 days prior
to consummating such business combination) to each Preferred Holder. If within
thirty (30) days after receipt of such notice, such Preferred Holder fails to
(i) notify the Company in writing of its desire to not have the Convertible
Debentures redeemed, (ii) furnish to the Company its written consent and
election to revoke any prior TRS election jointly made by the Company (or any
successor) and the Preferred Holder or its Affiliates, and (iii) waive in
writing any future obligation of the Company (or any successor) to become a TRS
or a REIT, then, immediately prior to and in connection with the consummation of
the business combination described in subsection (e)(i)(A) above, the Company
shall redeem all of the Unconvertible Debentures (as determined by such
Preferred Holder with reference to Unconvertible Shares pursuant to Section
10.2(b)(ii) above) held by the WRP Trust or such Preferred Holder and its
Affiliates (including prior to May 30, 2002) in the manner and in the amounts
provided in Sections 10.2(b)(ii)(y) and (z) of the Indenture; provided, however,
that if the amount of payment calculated in accordance with Section
10.2(b)(ii)(z) above with respect to the Unconvertible Debentures is less than
the Optional Redemption Price with respect to the Unconvertible Debentures, in
lieu of paying such amount calculated in accordance with Section 10.2(b)(ii)(z),
the Company shall pay the Optional Redemption Price with respect to the
Unconvertible Debentures. Upon consummation of the foregoing, any and all
obligations of the Company to become or remain a TRS or a REIT or to deliver
opinions to that effect shall be terminated. All other Convertible Debentures
and related Convertible Preferred Securities shall remain outstanding unless the
liquidation amount of such outstanding Convertible Preferred Securities is less
than $10,000,000, in which event the Company shall redeem for cash all of such
Convertible Debentures equal to the liquidation amount of the outstanding
Convertible Preferred Securities in accordance with Section 10.2(a) above. For
purposes of calculating the 5% limitation described above, the Company shall
reasonably and timely cooperate in furnishing relevant information to a
Preferred Holder that requests such information in writing. For purposes of this
Section 10.2(e), a Preferred Holder shall be considered to hold directly all
securities it owns directly and indirectly.
(ii) If the events described in subsection (e)(1)(A) above have occurred,
the Company gives written notice thereof to each Preferred Holder, and the pro
forma
computation described in subsection (e)(1)(B) results in a Preferred Holder
otherwise subject to Section 10.2(b) and its Affiliates owning 5% or less of
both the total voting power (on an as converted basis) or total value of the
outstanding securities of the Company, then the Convertible Debentures need not
be redeemed and any and all obligations of the Company to become or remain a TRS
or a REIT or to deliver opinions to that effect shall be terminated.
(iii) If the Company desires to take any action that would violate the
terms of Section 5.1(h), (i) or (j), then the Company can take such action
provided the Company redeems all outstanding Common Securities, Convertible
Debentures, Convertible Preferred Securities and any Common Shares acquired in
conversion thereof, by paying to the respective holders thereof in cash an
amount equal to (i) the Closing Price on the trading date immediately prior to
the Redemption Date of each such Common Share acquired in the aforementioned
conversion, and (ii) with respect to outstanding Convertible Debentures, Common
Securities and Convertible Preferred Securities the greater of, without
duplication (x) the Optional Redemption Price for all outstanding Convertible
Debentures (together with any required interest payment under Section 10.2(a)
above) plus the Redemption Price (as defined in the Declaration) for the Common
Securities and Convertible Preferred Securities and (y) the Closing Price of the
Common Shares into which such Convertible Debentures, Common Securities and
Convertible Preferred Securities, without duplication, are convertible on the
trading date immediately prior to the Redemption Date.
Section 10.3 No Sinking Fund. The Convertible Debentures are not entitled
to the benefit of any sinking fund or subject to any sinking fund.
Section 10.4 Election to Redeem; Notice of Redemption; Partial Redemptions.
The election of the Company to redeem any Convertible Debentures shall be
evidenced by, or pursuant to, a resolution of the Board of Directors. Notice of
redemption to the Holders of Convertible Debentures required to be redeemed or
to be redeemed as a whole or in part at the option of the Company shall be given
by giving notice of such redemption as provided in Section 15.4, at least 30
days and not more than 60 days prior to the date fixed for redemption to such
Holders of Convertible Debentures. Any notice which is mailed in the manner
herein provided shall be conclusively presumed to have been duly given, whether
or not the Holder receives the notice. Neither the failure to give notice by
mail, nor any defect in the notice so mailed to the Holder of any Convertible
Debenture designated for redemption as a whole or in part shall affect the
validity of the proceedings for such redemption.
The notice of redemption to each such Holder shall specify the date fixed
for redemption, the "CUSIP" number or numbers for such Convertible Debentures,
the redemption price, the Place or Places of Payment, that payment will be made
upon presentation and surrender of such Convertible Debentures, that interest
accrued to the date fixed for redemption will be paid as specified in such
notice and that on and after said date interest thereon or on the
portions thereof to be redeemed will cease to accrue, the conversion rate or
price, the date on which the right to convert the Convertible Debentures to be
redeemed will terminate and the place or places where such Convertible
Debentures may be surrendered for conversion. If less than all of the
Convertible Debentures are to be redeemed, the notice of redemption shall
specify the number of the Convertible Debentures to be redeemed. In case any
Convertible Debenture is to be redeemed in part, the notice of redemption shall
state the portion of the principal amount thereof to be redeemed and shall state
that on and after the date fixed for redemption, upon surrender of such
Convertible Debenture, a new Convertible Debenture or Convertible Debentures in
principal amount equal to the unredeemed portion thereof will be issued.
The notice of redemption of Convertible Debentures to be redeemed at the
option of the Company shall be given by the Company or, at the Company's
request, by the Trustee in the name and at the expense of the Company. If such
notice is to be given by the Trustee, the Company shall provide notice of such
redemption to the Trustee at least 60 days prior to the date fixed for
redemption (unless a shorter notice shall be satisfactory to the Trustee). If
such notice is given by the Company, the Company shall provide a copy of such
notice given to the Holders of such redemption to the Trustee at least 2 days
prior to the date such notice is given to such Holders, but in any event at
least 30 days and not more than 60 days prior to the date fixed for redemption.
Not later than the redemption date specified in the notice of redemption
given as provided in this Section, the Company will have on deposit with the
Trustee or with one or more Paying Agents (or, if the Company is acting as its
own Paying Agent, set aside, segregate and hold in trust as provided in Section
3.3) in funds available on such date an amount of money sufficient to redeem on
the redemption date all the Convertible Debentures so called for redemption at
the appropriate redemption price, together with accrued interest to the date
fixed for redemption. If less than all of the Outstanding Convertible Debentures
are to be redeemed at the election of the Company, the Company will deliver to
the Trustee at least 60 days prior to the date fixed for redemption (unless a
shorter notice shall be satisfactory to the Trustee) an Officers' Certificate
stating the aggregate principal amount of Convertible Debentures to be redeemed.
For all purposes of this Indenture, unless the context otherwise requires,
all provisions relating to the redemption of Convertible Debentures shall
relate, in the case of any Convertible Debenture redeemed or to be redeemed only
in part, to the portion of the principal amount of such Convertible Debenture
which has been or is to be redeemed.
Section 10.5 Payment of Convertible Debentures Called for Redemption. If
notice of redemption has been given as above provided, the Convertible
Debentures or portions of Convertible Debentures specified in such notice shall
become due and payable on the date and at the place stated in such notice at the
Redemption Price, and on and after said date (unless the Company shall default
in the payment of such Convertible Debentures at the Redemption Price) interest
on the Convertible Debentures or portions of Convertible Debentures so called
for redemption shall cease to accrue,
and, except as provided in Section 6.1, such Convertible Debentures shall cease
from and after the date fixed for redemption to be entitled to any benefit or
security under this Indenture, and the Holders thereof shall have no right in
respect of such Convertible Debentures except the right to receive the
redemption price thereof and unpaid interest to the date fixed for redemption.
On presentation and surrender of such Convertible Debentures at a Place of
Payment specified in said notice, said Convertible Debentures or the specified
portions thereof shall be paid and redeemed by the Company at the applicable
redemption price, together with interest accrued thereon to the date fixed for
redemption; provided that, payment of interest becoming due on or prior to the
date fixed for redemption shall be payable to the Holders of such Convertible
Debentures registered as such on the relevant record date subject to the terms
and provisions of Section 2.9 hereof.
If any Convertible Debenture called for redemption shall not be so paid
upon surrender thereof for redemption, the principal shall, until paid or duly
provided for, bear interest from the date fixed for redemption at the Coupon
Rate.
Upon presentation of any Convertible Debenture redeemed in part only, the
Company shall execute and the Trustee shall authenticate and make available for
delivery to or on the order of the Holder thereof, at the expense of the
Company, a new Convertible Debenture or Convertible Debentures, of authorized
denominations, in principal amount equal to the unredeemed portion of the
Convertible Debenture so presented.
Section 10.6 Exclusion of Certain Convertible Debentures from Eligibility
for Selection for Redemption. Convertible Debentures shall be excluded from
eligibility for selection for redemption if they are identified by registration
and certificate number in a written statement signed by an authorized officer of
the Company and delivered to the Trustee at least 30 days prior to the last date
on which notice of redemption may be given as being owned of record and
beneficially by, and not pledged or hypothecated by, either (a) the Company or
(b) an entity specifically identified in such written statement as directly or
indirectly controlling or controlled by or under direct or indirect common
control with the Company (it being understood that ERPLP and any Affiliate of
ERPLP shall not be deemed to be under common control with the Company).
Section 10.7 Required Redemption. Upon the occurrence of the earlier of (i)
an Event of Default (for purposes of this Section an Event of Default shall have
the meaning given it in Section 4(j) of Annex I to the Declaration) or (ii) May
30, 2012, the holder of any Convertible Preferred Securities may, at its option,
cause the Trust to redeem at any time all of the Convertible Preferred
Securities held by such holder at the Redemption Price, payable in cash. In the
event a holder of the Convertible Preferred Securities requires the Trust to
redeem such Securities, then the Trust shall require the Company to redeem a
like aggregate principal amount of Convertible Debentures from Holders of
Convertible Debentures which aggregate principal amount shall equal the
aggregate Redemption Price of
such Convertible Preferred Securities so redeemed. Notwithstanding the
provisions of this Section 10.7, provided an Event of Default has not occurred,
the Regular Trustees shall have the right to extend the date during which a
required redemption of Convertible Preferred Securities is not permitted for two
separate additional five (5) year periods if the Coupon Rate is changed to the
then market rate of preferred stock comparable to the Convertible Preferred
Securities on the first day of each such additional five year period; provided,
however, in no event shall the Coupon Rate be reduced. In the event that the
Trust increases the Coupon Rate on the Convertible Preferred Securities in
accordance with the preceding sentence, then the Company shall increase the
Coupon Rate on the Convertible Debentures in a like percentage amount for a like
period.
ARTICLE XI
CONVERSION OF CONVERTIBLE DEBENTURES
Section 11.1 Conversion Rights. Subject to and upon compliance with the
provisions of this Article XI, the Convertible Debentures are convertible, at
the option of the Holders, at any time through the close of business on the last
Business Day prior to the Maturity Date (or, in the case of Convertible
Debentures called for redemption, prior to the close of business on the Business
Day prior to the corresponding redemption date) into fully paid and
nonassessable Common Shares of the Company at an initial conversion rate of
2.2474 Common Shares for each $25.00 in principal amount of Convertible
Debentures (equivalent to a conversion price of $11.124 per Common Share,
subject to certain adjustments set forth in this Article XI (as so adjusted, the
"Conversion Price")), subject to adjustment and reset as described in this
Article XI. Subject to the following sentence, a Holder of Convertible
Debentures may convert any portion of the principal amount of the Convertible
Debentures into that number of fully paid and nonassessable Common Shares
obtained by dividing the principal amount of the Convertible Debentures to be
converted by such Conversion Price. All calculations under this Article XI shall
be made to the nearest cent or to the nearest 1/100th of a share, as the case
may be.
Section 11.2 Conversion Procedures.
(a) In order to convert all or a portion of the Convertible Debentures, the
Holder thereof shall deliver to the Conversion Agent an irrevocable notice of
conversion (the "Notice of Conversion") setting forth the principal amount of
Convertible Debentures to be converted, together with the name or names, if
other than the Holder, in which the Common Shares should be issued upon
conversion and, surrender to the Conversion Agent the Convertible Debentures to
be converted, duly endorsed or assigned to the Company or in blank. In addition,
a holder of Convertible Preferred Securities may exercise its right under the
Declaration to convert
such Convertible Preferred Securities into Common Shares by delivering to the
Conversion Agent an irrevocable Notice of Conversion setting forth the
information called for by the preceding sentence and directing the Conversion
Agent (i) to exchange such Convertible Preferred Securities for a portion of the
Convertible Debentures held by the Trust (at an exchange rate of $25.00
principal amount of Convertible Debentures for each Convertible Preferred
Security) and (ii) to immediately convert such Convertible Debentures, on behalf
of such holder, into Common Shares of the Company pursuant to this Article XI
and surrendering such Convertible Preferred Securities, duly endorsed or
assigned to the Company or in blank. So long as any Convertible Preferred
Securities are outstanding, the Trust shall not convert any Convertible
Debentures except pursuant to a Notice of Conversion delivered to the Conversion
Agent by a holder of Convertible Preferred Securities.
If a Notice of Conversion is delivered on or after the record date and
prior to the subsequent Interest Payment Date, the Holder will be entitled to
receive the interest payable on the subsequent Interest Payment Date on the
portion of Convertible Debentures to be converted notwithstanding the conversion
thereof prior to such Interest Payment Date. However, if a redemption date falls
between a record date and the subsequent Interest Payment Date, the Holder will
be entitled to receive, on such Interest Payment Date, the interest accrued to,
but excluding, the redemption date. Except as otherwise provided in the first
and second sentences of this paragraph, in the case of any Convertible Debenture
which is converted, interest the Stated Maturity of which is after the date of
conversion of such Convertible Debenture shall not be payable, and the Company
shall not make nor be required to make any other payment, adjustment or
allowance with respect to accrued but unpaid interest on the Convertible
Debentures being converted, which shall be deemed to be paid in full. Each
conversion shall be deemed to have been effected immediately prior to the close
of business on the day on which the Notice of Conversion was received (the
"Conversion Date") by the Conversion Agent from the Holder or from a holder of
the Convertible Preferred Securities effecting a conversion thereof pursuant to
its conversion rights under the Declaration, as the case may be. The Person or
Persons entitled to receive the Common Shares issuable upon such conversion
shall be treated for all purposes as the record holder or holders of such Common
Shares as of the Conversion Date. As promptly as practicable on or after the
Conversion Date, the Company shall issue and deliver at the office of the
Conversion Agent, unless otherwise directed by the Holder in the Notice of
Conversion, a certificate or certificates for the number of full Common Shares
issuable upon such conversion, together with the cash payment, if any, in lieu
of any fraction of any share to the Person or Persons entitled to receive the
same. The Conversion Agent shall deliver such certificate or certificates to
such Person or Persons.
(b) The Company's delivery upon conversion of the fixed number of Common
Shares into which the Convertible Debentures are convertible (together with the
cash payment, if any, in lieu of any fractional share and the interest payable
pursuant to Section 11.2(a)) shall be deemed to satisfy the Company's obligation
to pay the principal amount at
Maturity of the portion of Convertible Debentures so converted and any unpaid
interest accrued on such Convertible Debentures at the time of such conversion.
(c) The Company shall pay to the Conversion Agent a cash adjustment in an
amount equal to the same fraction of the Closing Price of such fractional
interest on the date on which the Convertible Debentures were duly surrendered
to the Conversion Agent for conversion, or, if such day is not a Trading Day, on
the next Trading Day, and the Conversion Agent in turn will make such payment,
if any, to the Holder of the Convertible Debentures or the holder of the
Convertible Preferred Securities so converted.
(d) In the event of the conversion of any Convertible Debenture in part
only, the Company shall execute and the Trustee shall authenticate and make
available for delivery to or on the order of the Holder thereof, at the expense
of the Company, a new Convertible Debenture or Convertible Debentures in the
aggregate principal amount equal to the unconverted portion thereof.
(e) In effecting the conversion transactions described in this Section
11.2, the Conversion Agent is acting as agent of the holders of Convertible
Preferred Securities (in the exchange of Convertible Preferred Securities for
Convertible Debentures) and as agent of the Holders of Convertible Debentures
(in the conversion of Convertible Debentures into Common Shares), as the case
may be. The Conversion Agent is hereby authorized (i) to exchange Convertible
Debentures held by the Trust from time to time for Convertible Preferred
Securities in connection with the conversion of such Convertible Preferred
Securities in accordance with this Article XI and (ii) to convert all or a
portion of the Convertible Debentures into Common Shares and thereupon to
deliver such Common Shares in accordance with the provisions of this Article XI
and to deliver to the Trust a new Convertible Debenture or Convertible
Debentures for any resulting unconverted principal amount.
Section 11.3 Conversion Price Adjustments. The Conversion Price shall be
adjusted from time to time as follows:
(a) In case the Company shall (1) pay or make a distribution in Common
Shares to holders of the Common Shares, (2) reclassify the outstanding Common
Shares into shares of some other class or series of shares, (3) subdivide the
outstanding Common Shares into a greater number of Common Shares or (4) combine
the outstanding Common Shares into a smaller number of Common Shares, the
conversion rate immediately prior to such action shall be adjusted so that the
Holder of any Convertible Debentures thereafter surrendered for conversion shall
be entitled to receive the number of Common Shares which he would have owned
immediately following such action had such Convertible Debentures been converted
immediately prior thereto. An adjustment made pursuant to this Section 11.3(a)
shall become effective immediately after the record date in the case of a
distribution and shall become effective immediately after the effective date in
the case of a subdivision, combination or reclassification.
(b) In case the Company shall issue rights, options or warrants to all
holders of the Common Shares entitling them to subscribe for or purchase Common
Shares (or securities convertible into Common Shares) at a price per share less
than the current market price (as determined pursuant to Section 11.3(d)) of the
Common Shares on such record date, or shall issue options in excess of the
limitations set forth in Section 11.4 hereof, the number of Common Shares into
which each Convertible Debenture shall be convertible shall be adjusted so that
the same shall be equal to the number determined by multiplying the number of
Common Shares into which such Convertible Debenture was convertible immediately
prior to such record date by a fraction of which the numerator shall be the
number of Common Shares outstanding on such record date plus the number of
additional Common Shares offered (or into which the convertible securities so
offered are convertible), and of which the denominator shall be the number of
Common Shares outstanding on such record date, plus the number of Common Shares
which the aggregate offering price of the additional Common Shares offered (or
into which the convertible securities so offered are convertible) would purchase
at such current market price. Such adjustments shall become effective
immediately after such record date for the determination of the holders of the
Common Shares entitled to receive such distribution. For purposes of this
subsection (b), the number of Common Shares at any time outstanding shall not
include Common Shares purchased by the Company.
(c) In case the Company shall distribute to all holders of the Common
Shares any class of shares of stock other than Common Shares, evidences of
indebtedness or assets of the Company (other than cash distributions out of
current or retained earnings), or shall distribute to all holders of the Common
Shares rights or warrants to subscribe for securities (other than those referred
to in Section 11.3(b)), then in each such case the number of Common Shares into
which each Convertible Debenture shall be convertible shall be adjusted so that
the same shall equal the number determined by multiplying the number of Common
Shares into which such Convertible Debenture was convertible immediately prior
to the date of such distribution by a fraction of which the numerator shall be
the current market price (determined as provided in Section 11.3(d)) of the
Common Shares on the record date mentioned below, and of which the denominator
shall be such current market price of the Common Shares, less the then fair
market value (as determined by the Board of Directors of the Company, whose
determination shall be conclusive evidence of such fair market value) of the
portion of the securities or assets so distributed or of such subscription
rights or warrants applicable to one Common Share. Such adjustment shall become
effective immediately after the record date for the determination of the holders
of the Common Shares entitled to receive such distribution. Notwithstanding the
foregoing, in the event that the Company shall distribute rights or warrants
(other than those referred to in Section 11.3(b)) ("Rights") pro rata to holders
of the Common Shares, the Company may, in lieu of making any adjustment pursuant
to this Section 11.3(c), make proper provision so that each holder of a
Convertible Debenture who converts such security 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 Common Shares
issuable upon such
conversion (the "Conversion Shares"), a number of Rights to be determined as
follows: (1) 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 Common Shares equal to the number of Conversion Shares is entitled
at the time of such conversion in accordance with the terms and provisions of
and applicable to the Rights; and (2) if such conversion occurs after the
Distribution Date, the same number of Rights to which a holder of the number of
Common Shares into which a Convertible Debenture 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.
(d) The current market price per share of the Common Shares on any date
shall be deemed to be the average of the daily closing prices for 30 consecutive
Trading Days commencing 45 Trading Days before the date in question. The closing
price for each day shall be the last reported sales price or, in case no such
reported sale takes place on such date, the average of the reported closing bid
and asked prices regular way, in either case on the American Stock Exchange, or
if the Common Shares are not listed or admitted to trading on such exchange, on
the principal national securities exchange on which the Common Shares are listed
or admitted to trading or, if not listed or admitted to trading on any national
securities exchange, the closing sale price of the Common Shares or, in case no
reported sale takes place, the average of the closing bid and asked prices, on
Nasdaq or any comparable system, or if the Common Shares are not quoted on
Nasdaq or any comparable system, the closing sale price or, in case no reported
sale takes place, the average of the closing bid and asked prices, as furnished
by any two members of the National Association of Securities Dealers, Inc.
selected from time to time by the Company for that purpose.
(e) In any case in which this Section 11.3 shall require that an adjustment
be made immediately following a record date, the Company may elect to defer (but
only until five Business Days following the mailing of the notice described in
Section 11.2) issuing to the Holder of any Convertible Debenture converted after
such record date the Common Shares and other shares of stock of the Company
issuable upon such conversion over and above the Common Shares and other shares
of stock of the Company issuable upon such conversion only on the basis of the
conversion rate prior to adjustment; and, in lieu of the shares the issuance of
which is so deferred, the Company shall issue or cause its transfer agents to
issue appropriate evidence of the right to receive such shares.
(f) No adjustment in the conversion rate shall be required until cumulative
adjustments result in a change of 1% or more of the conversion price as in
effect prior to the last adjustment of the conversion rate; provided, however,
that any adjustment which by reason of this Section 11.3(f) is not required to
be made shall be carried forward and taken into account in any subsequent
adjustment. All calculations under this Section 11.3 shall be made to the
nearest
cent ($.01) or the nearest one-hundredth (1/100th) of a share, as the case may
be. No adjustment to the conversion rate shall be made for cash dividends.
(g) In the event that, as a result of an adjustment made pursuant to
Section 11.3, the Holder of any Convertible Debentures thereafter surrendered
for conversion shall become entitled to receive any shares of stock of the
Company other than Common Shares, thereafter the number of such other shares so
receivable upon conversion of any Convertible Debenture shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Common Shares contained in
this Section 11.3.
(h) The Company may make such increases in the conversion rate, in addition
to any increases or decreases required by Sections 11.3(a), (b) and (c), as is
considered to be advisable in order that any event treated for federal income
tax purposes as a distribution of shares or share rights shall not be taxable to
the recipients thereof.
(i) Whenever the conversion rate is adjusted, the Company shall promptly
mail to all Holders of record of Convertible Debentures a notice of the
adjustment and shall cause to be prepared a certificate signed by a principal
financial officer of the Company setting forth the adjusted conversion rate and
a brief statement of the facts requiring such adjustment and the computation
thereof; such certificate shall forthwith be filed with each transfer agent for
the Convertible Debentures.
(j) In the event that:
(i) the Company takes any action which would require an
adjustment in the conversion rate,
(ii) the Company consolidates or merges with, or transfers all or
substantially all of its assets to, another corporation and
shareholders of the Company must approve the transaction, or
(iii) there is a dissolution, winding up or liquidation of the
Company,
a Holder of Convertible Debentures may wish to convert some or all of such
Convertible Debentures into Common Shares prior to the record date for, or the
effective date of, the transaction so that he may receive the rights, warrants,
securities or assets which a holder of Common Shares on that date may receive.
Therefore, the Company shall mail to holders of Convertible Debentures a notice
stating the proposed record or effective date of the transaction, as the case
may be. The Company shall mail the notice at least ten days before such date;
however, failure to mail such notice or any defect therein shall not affect the
validity of any transaction referred to in clause (i), (ii) or (iii) of this
Section 11.3(j).
(k) If any of the following shall occur, namely: (i) any reclassification
or change of outstanding Common Shares issuable upon conversion of Convertible
Debentures (other than a change in par value, or from par value to no par value,
or from no par value to par value, or as a result of a subdivision or
combination), (ii) any consolidation or merger to which the Company is a party
other than a consolidation or merger in which the Company is the continuing
corporation and which does not result in any reclassification of, or change
(other than a change in name, or par value, or from par value to no par value,
or from no par value to par value, or as a result of a subdivision or
combination) in, outstanding Common Shares or (iii) any sale, transfer or lease
of all or substantially all of the property or business of the Company as an
entirety, then the Company, or such successor or purchasing entity, as the case
may be, shall, as a condition precedent to such reclassification, change,
consolidation, merger, sale, transfer or lease, agree in writing that each
Convertible Debenture shall be convertible into the kind and amount of shares of
stock and other securities and property (including cash) receivable upon such
reclassification, change, consolidation, merger, sale, transfer or lease by a
holder of the number of Common Shares deliverable upon conversion of such
Convertible Debentures immediately prior to such reclassification, change,
consolidation, merger, sale, transfer or lease. Such writing shall provide for
adjustments which shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Section 11. The foregoing, however, shall not
in any way affect the right that a Holder of Convertible Debentures may
otherwise have, pursuant to clause (2) of the last sentence of 11.3.(c) to
receive Rights upon conversion of Convertible Debentures. If, in the case of any
such reclassification, change, consolidation, merger, sale, transfer or lease,
the shares of stock or other securities and property (including cash) receivable
thereupon by a holder of the Common Shares includes shares of stock or
beneficial interest or other securities and property of a corporation or other
entity other than the successor or purchasing corporation, as the case may be,
in such reclassification, change, consolidation, merger, sale, transfer or
lease, then such other corporation or other entity shall agree in writing to
additional provisions to protect the interests of the Holders of Convertible
Debentures as the Board of Directors of the Company shall reasonably consider
necessary by reason of the foregoing. The provisions of this Section 11.3(k)
shall similarly apply to successive consolidations, mergers, sales, transfers or
leases.
No holder of Convertible Debentures will possess any preemptive rights to
subscribe for or acquire any unissued shares of the Company (whether now or
hereafter authorized) or securities of the Company convertible into or carrying
a right to subscribe to or acquire shares of the Company.
Section 11.4 So long as any Convertible Debentures are Outstanding, WRP
shall not issue any options to purchase Common Shares of WRP ("Employee Stock
Options") to officers, directors or employees of, or consultants to, WRP,
whether pursuant to employee stock option or purchase plans of WRP or employment
or consulting agreements or otherwise for an exercise price which is less than
the Closing Price of such Common Shares on
the date of grant. In the event the number of Common Shares subject to Employee
Stock Options, excluding any Employee Stock Options which were issued in
exchange for options to purchase shares of Wellsford Residential Property Trust,
at any time exceeds, in the aggregate, 10% of the Common Shares of WRP
outstanding at such time, all Employee Stock Options outstanding at such time in
excess of such 10%, shall be deemed for purposes of Section 12.3(b) hereof to
have an exercise price per share equal to 20% of the average Closing Price of a
Common Share on each date of grant of Employee Stock Options exercisable for
Common Shares in excess of such 10%.
Section 11.5 Trustee Not Responsible for Determining Conversion Price or
Adjustments. Neither the Trustee nor any Conversion Agent shall at any time be
under any duty or responsibility to any Holder of any Convertible Debenture to
determine whether any facts exist which may require any adjustment of the
Conversion Price, or with respect to the nature or extent of any such adjustment
when made, or with respect to the method employed. Neither the Trustee nor any
Conversion Agent shall be accountable with respect to the validity or value (or
the kind or amount) of any Common Shares or of any securities or property, which
may at any time be issued or delivered upon the conversion of any Convertible
Debenture; and neither the Trustee nor any Conversion Agent makes any
representation with respect thereto. Neither the Trustee nor any Conversion
Agent shall be responsible for any failure of the Company to make any cash
payment or to issue, transfer or deliver any Common Shares of the Company or
stock certificates or other securities or property upon the surrender of any
Convertible Debenture for the purpose of conversion. All Convertible Debentures
delivered for conversion shall be delivered to the Trustee to be canceled by or
at the discretion of the Trustee, which shall dispose of the same as provided in
Section 2.12 of this Indenture.
Section 11.6 Reservation of Common Shares. The Company shall at all times
reserve and keep available, free from preemptive rights, out of its authorized
but unissued Common Shares, for the purpose of effecting the conversion of
Convertible Debentures, the full number of Common Shares of the Company then
issuable upon the conversion of all Outstanding Convertible Debentures.
Section 11.7 Payment of Certain Taxes upon Conversion. The Company will pay
any and all taxes that may be payable in respect of the issue or delivery of its
Common Shares on conversion of Convertible Debentures pursuant hereto. The
Company shall not, however, be required to pay any tax which may be payable in
respect of any transfer involved in the issue and delivery of its Common Shares
in a name other than that of the Holder of the Convertible Debenture or
Convertible Debentures to be converted, and no such issue or delivery shall be
made unless and until the person requesting such issue has paid to the Company
the amount of any such tax, or has established, to the satisfaction of the
Company, that such tax has been paid.
Section 11.8 Nonassessability. The Company covenants that all Common Shares
which may be issued upon conversion of Convertible Debentures will upon issue in
accordance with the terms hereof be duly and validly issued and fully paid and
nonassessable.
ARTICLE XII
SUBORDINATION OF CONVERTIBLE DEBENTURES
Section 12.1 Convertible Debentures Subordinate to Senior Indebtedness. The
Company covenants and agrees, and each Holder of a Convertible Debenture, by the
Holder's acceptance thereof, likewise covenants and agrees, that, to the extent
and in the manner hereinafter set forth in this Article, the indebtedness
represented by the Convertible Debentures and the payment of the principal of
(and premium, if any) and interest on each and all of the Convertible Debentures
are hereby expressly made subordinate and junior in right of payment to the
prior payment in full of all Senior Indebtedness of the Company, whether
outstanding at the date of this Indenture or thereafter incurred. No provision
of this Article shall prevent the occurrence of any default or Event of Default
hereunder.
Section 12.2 Payment Over of Proceeds upon Dissolution, Etc. In the event
of (i) any insolvency, bankruptcy, receivership, liquidation, reorganization,
readjustment, composition or other similar proceeding relating to the Company,
its creditors or its property, (ii) any proceeding for the liquidation,
dissolution or other winding up of the Company voluntarily or involuntarily,
whether or not involving insolvency or bankruptcy proceedings, (iii) any
assignment by the Company for the benefit of creditors or (iv) any other
marshalling of assets of the Company, all amounts due upon all Senior
Indebtedness of the Company (including any interest thereon accruing after the
commencement of such proceedings) shall first be paid in full, or payment
thereof provided for in money in accordance with its terms, before any payment
is made by the Company on account of the principal (and premium, if any) or
interest on the Convertible Debentures; and any payment by the Company, or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities, which the Holders of the Convertible Debentures or the
Trustee would be entitled to receive from the Company, except for the provisions
of this Article, shall be paid by the Company or by any receiver, trustee in
bankruptcy, liquidation trustee, agent or other Person making such payment or
distribution, or by the Holders of the Convertible Debentures or by the Trustee
under this Indenture if received by them or it, directly to the holders of
Senior Indebtedness of the Company (pro rata to such holders on the basis of the
respective amounts of Senior Indebtedness held by such holders, as calculated by
the Company) or their representative or representatives, or to the trustee or
trustees under any indenture pursuant to which any instruments evidencing such
Senior Indebtedness may have been issued, as their
respective interests may appear, to the extent necessary to pay such Senior
Indebtedness (including any interest thereon accruing after the commencement of
such proceedings) in full, after giving effect to any concurrent payment or
distribution to or for the holders of such Senior Indebtedness, before any
payment or distribution is made to the Holders of the Convertible Debentures or
to the Trustee.
In the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities, prohibited by the foregoing, shall be received by the
Trustee before all Senior Indebtedness of the Company is paid in full, or
provision is made for such payment, such payment or distribution shall be held
in trust for the benefit of and shall be paid over or delivered to the holders
of such Senior Indebtedness or their representative or representatives, or to
the trustee or trustees under any indenture pursuant to which any instruments
evidencing such Senior Indebtedness may have been issued, as their respective
interests may appear, as calculated by the Company, for application to the
payment of all Senior Indebtedness of the Company, remaining unpaid to the
extent necessary to pay such Senior Indebtedness in full, after giving effect to
any concurrent payment or distribution to or for the benefit of the holders of
such Senior Indebtedness.
For purposes of this Article only, the words "cash, property or securities"
shall not be deemed to include shares of Capital Stock of the Company as
reorganized or readjusted, or securities of the Company or any other corporation
provided for by a plan of reorganization or readjustment which are subordinated
in right of payment to all Senior Indebtedness which may at the time be
outstanding to substantially the same extent as, or to a greater extent than,
the Convertible Debentures are so subordinated as provided in this Article. The
consolidation of the Company with, or the merger of the Company into, another
Person or the liquidation or dissolution of the Company following the conveyance
or transfer of its properties and assets substantially as an entirety to another
Person upon the terms and conditions set forth in Article IX of this Indenture
shall not be deemed a dissolution, winding up, liquidation, reorganization,
readjustment, composition, assignment for the benefit of creditors or
marshalling of assets and liabilities of the Company for the purposes of this
Section if the Person formed by such consolidation or into which the Company is
merged or the Person which acquires by conveyance or transfer such properties
and assets substantially as an entirety, as the case may be, shall, as a part of
such consolidation, merger, conveyance or transfer, comply with the conditions
set forth in Article IX of this Indenture.
Section 12.3 Prior Payment to Senior Indebtedness upon Acceleration of
Convertible Debentures. In the event that any Convertible Debentures are
declared due and payable before their Stated Maturity, then and in such event
the holders of Senior Indebtedness shall be entitled to receive payment in full
of all amounts then due on or in respect of all Senior Indebtedness or provision
shall be made for such payment in cash, before the Holders of the Convertible
Debentures are entitled to receive any payment (including any payment which may
be payable by reason of the payment of any other indebtedness of the Company
being subordinated to the payment of the Convertible Debentures) by the Company
on account of the principal of (or premium, if any) or interest on the
Convertible Debentures or on account of the purchase or other acquisition of
Convertible Debentures.
In the event that, notwithstanding the foregoing, the Company shall make
any payment to the Trustee or the Holder of any Convertible Debenture prohibited
by the foregoing provisions of this Section, and if such fact shall, at or prior
to the time of such payment, have been made known to the Trustee or, as the case
may be, such Holder, then and in such event such payment shall be paid over and
delivered forthwith to the Company.
The provisions of this Section shall not apply to any payment with respect
to which Section 12.2 would be applicable.
Section 12.4 No Payment When Senior Indebtedness in Default. In the event
and during the continuation of any default by the Company in the payment of
principal, premium, if any, interest or any other payment due on any Senior
Indebtedness of the Company, as the case may be, beyond any applicable grace
period with respect thereto, or in the event that the maturity of any Senior
Indebtedness of the Company has been accelerated because of a default, then, in
any such case, no payment shall be made by the Company with respect to the
principal (including redemption payments, if any) of, premium, if any, or
interest on the Convertible Debentures until such default is cured or waived or
ceases to exist or any such acceleration or demand for payment has been
rescinded.
Section 12.5 Payment Permitted in Certain Situations. Nothing contained in
this Article or elsewhere in this Indenture or in the Convertible Debentures
shall prevent (a) the Company, at any time except during the pendency of any
dissolution, winding-up, liquidation or reorganization of the Company, whether
voluntary or involuntary, or any bankruptcy, insolvency, receivership or other
proceedings of the Company referred to in Section 12.2 or under the conditions
described in Section 12.3 or 12.4, from making payments at any time of principal
of or premium, if any, or interest on the Convertible Debentures, or (b) the
application by the Trustee of any money deposited with it hereunder to the
payment of or on account of the principal of, or premium, if any, or interest on
the Convertible Debentures or the retention of such payment by the Holders, if,
at the time of such application by the Trustee, it did not have knowledge that
such payment would have been prohibited by the provisions of this Article.
Section 12.6 Subrogation to Rights of Holders of Senior Indebtedness.
Subject to the payment in full of all Senior Indebtedness or the provision for
such payment in cash or cash equivalents or otherwise in a manner satisfactory
to the holders of Senior Indebtedness, the Holders of Convertible Debentures
shall be subrogated to the extent of the payments or distributions made to the
holders
of such Senior Indebtedness pursuant to the provisions of this Article (equally
and ratably with the holders of indebtedness of the Company which by its express
terms is subordinated to indebtedness of the Company to substantially the same
extent as the Convertible Debentures are subordinated to the Senior Indebtedness
and is entitled to like rights of subrogation) to the rights of the holders of
such Senior Indebtedness to receive payments and distributions of cash, property
and securities applicable to the Senior Indebtedness until the principal of (and
premium, if any) and interest on the Convertible Debentures shall be paid in
full. For purposes of such subrogation, no payments or distributions to the
holders of the Senior Indebtedness of any cash, property or securities to which
the Holders of Convertible Debentures or the Trustee would be entitled except
for the provisions of this Article, and no payments over pursuant to the
provisions of this Article to or for the benefit of the holders of Senior
Indebtedness by Holders of Convertible Debentures or the Trustee, shall, as
among the Company, its creditors other than holders of Senior Indebtedness and
the Holders of Convertible Debentures, be deemed to be a payment or distribution
by the Company to or on account of the Senior Indebtedness.
Section 12.7 Provisions Solely to Define Relative Rights. The provisions of
this Article are and are intended solely for the purpose of defining the
relative rights of the Holders of Convertible Debentures on the one hand and the
holders of Senior Indebtedness on the other hand. Nothing contained in this
Article or elsewhere in this Indenture or in the Convertible Debentures is
intended to or shall (a) impair, as among the Company, its creditors other than
holders of Senior Indebtedness and the Holders of Convertible Debentures, the
obligation of the Company, which is absolute and unconditional (and which,
subject to the rights under this Article of the holders of Senior Indebtedness,
is intended to rank equally with all other general obligations of the Company),
to pay to the Holders of Convertible Debentures the principal of (and premium,
if any) and interest on the Convertible Debentures as and when the same shall
become due and payable in accordance with their terms; or (b) affect the
relative rights against the Company of the Holders of Convertible Debentures and
creditors of the Company, as the case may be, other than the holders of Senior
Indebtedness; or (c) prevent the Trustee or the Holder of any Convertible
Debenture from exercising all remedies otherwise permitted by applicable law
upon default under this Indenture, subject to the rights, if any, under this
Article of the holders of Senior Indebtedness to receive cash, property and
securities otherwise payable or deliverable to the Trustee or such Holder.
Section 12.8 Trustee to Effectuate Subordination. Each Holder of a
Convertible Debenture by such Holder's acceptance thereof authorizes and directs
the Trustee on such Holder's behalf to take such action as may be necessary or
appropriate to effectuate the subordination provided in this Article and
appoints the Trustee such Holder's attorney-in-fact for any and all such
purposes.
Section 12.9 No Waiver of Subordination Provisions. No right of any present
or future holder of any Senior Indebtedness to enforce subordination as herein
provided shall at any time in any way be prejudiced or impaired
by any act or failure to act on the part of the Company or by any act or failure
to act, in good faith, by any such holder, or by any noncompliance by the
Company with the terms, provisions and covenants of this Indenture, regardless
of any knowledge thereof any such holder may have or be otherwise charged with.
Without in any way limiting the generality of the foregoing paragraph, the
holders of Senior Indebtedness may, at any time and from time to time, without
the consent of or notice to the Trustee or the Holders of the Convertible
Debentures, without incurring responsibility to the Holders of Convertible
Debentures and without impairing or releasing the subordination provided in this
Article or the obligations hereunder of the Holders of Convertible Debentures to
the holders of Senior Indebtedness do any one or more of the following: (a)
change the manner, place or terms of payment or extend the time of payment of,
or renew or alter, Senior Indebtedness or otherwise amend or supplement in any
manner Senior Indebtedness or any instrument evidencing the same or any
agreement under which Senior Indebtedness is outstanding; (b) sell, exchange,
release or otherwise deal with any property pledged, mortgaged or otherwise
securing Senior Indebtedness; (c) release any Person liable in any manner for
the collection of Senior Indebtedness; and (d) exercise or refrain from
exercising any rights against the Company and any other Person.
Section 12.10 Notice to Trustee. The Company shall give prompt written
notice to a Responsible Officer of the Trustee of any fact known to the Company
which would prohibit the making of any payment to or by the Trustee in respect
of the Convertible Debentures pursuant to the provisions of this Article.
Notwithstanding the provisions of this Article or any other provision of this
Indenture, the Trustee shall not be charged with knowledge of the existence of
any facts which would prohibit the making of any payment to or by the Trustee in
respect of the Convertible Debentures pursuant to the provisions of this
Article, unless and until a Responsible Officer of the Trustee shall have
received written notice thereof from the Company or a holder or holders of
Senior Indebtedness or from any trustee therefor; and, prior to the receipt of
any such written notice, the Trustee, subject to the provisions of Section 6.2
of this Indenture, shall be entitled in all respects to assume that no such
facts exist; provided, however, that if the Trustee shall have not received the
notice provided for in this Section at least two Business Days prior to the date
upon which by the terms hereof any money may become payable for any purpose
(including, without limitation, the payment of the principal of (or premium, if
any) or interest on any Convertible Debentures), then, anything herein contained
to the contrary notwithstanding, the Trustee shall have full power and authority
to receive such money and to apply the same to the purposes for which they were
received, and shall not be affected by any notice to the contrary that may be
received by it within two Business Days prior to such date.
Subject to the provisions of Section 6.2 of this Indenture, the Trustee
shall be entitled to rely on the delivery to it of a written notice by a Person
representing himself to be a holder of Senior Indebtedness (or a trustee
therefor) to establish that such notice has been given by a
holder of Senior Indebtedness (or a trustee therefor). In the event that the
Trustee determines in good faith that further evidence is required with respect
to the right of any Person as a holder of Senior Indebtedness to participate in
any payment or distribution pursuant to this Article, the Trustee may request
such Person to furnish evidence to the reasonable satisfaction of the Trustee as
to the amount of Senior Indebtedness held by such Person, the extent to which
such Person is entitled to participate in such payment or distribution and any
other facts pertinent to the rights of such Person under this Article, and if
such evidence is not furnished, the Trustee may defer any payment to such Person
pending judicial determination as to the right of such Person to receive such
payment.
Section 12.11 Reliance on Judicial Order or Certificate of Liquidating
Agent. Upon any payment or distribution of assets of the Company referred to in
this Article, the Trustee, subject to the provisions of Section 6.2 of this
Indenture, and the Holders of Convertible Debentures shall be entitled to
conclusively rely upon any order or decree entered by any court of competent
jurisdiction in which such insolvency, bankruptcy, receivership, liquidation,
reorganization, dissolution, winding up or similar case or proceeding is
pending, or a certificate of the trustee in bankruptcy, receiver, liquidating
trustee, custodian, assignee for the benefit of creditors, agent or other Person
making such payment or distribution, delivered to the Trustee or to the Holders
of Convertible Debentures, for the purpose of ascertaining the Persons entitled
to participate in such payment or distribution, the holders of Senior
Indebtedness and other indebtedness of the Company, as the case may be, the
amount thereof or payable thereon, the amount or amounts paid or distributed
thereon and all other facts pertinent thereto or to this Article.
Section 12.12 Trustee Not Fiduciary for Holders of Senior Indebtedness.
With respect to the holders of Senior Indebtedness, the Trustee undertakes to
perform or to observe only such of its covenants and obligations as are
specifically set forth in this Article, and no implied covenants or obligations
with respect to the holders of such Senior Indebtedness shall be read into this
Indenture against the Trustee. Except with respect to Section 12.4, 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 or creditors if it
shall in good faith pay over or distribute to Holders of Convertible Debentures
or to the Company or to any other Person cash, property or securities to which
any holders of Senior Indebtedness shall be entitled by virtue of this Article
or otherwise.
Section 12.13 Rights of Trustee as Holder of Senior Indebtedness;
Preservation of Trustee's Rights. The Trustee in its individual capacity shall
be entitled to all the rights set forth in this Article with respect to any
Senior Indebtedness which may at any time be held by it, to the same extent as
any other holder of Senior Indebtedness and nothing in this Indenture shall
deprive the Trustee of any of its rights as such holder.
Nothing in this Article XII shall apply to claims of, or payments to, the
Trustee under or pursuant to Section 6.7 of this Indenture.
Section 12.14 Article Applicable to Paying Agents. In case at any time any
Paying Agent other than the Trustee shall have been appointed by the Company and
be then acting hereunder, the term "Trustee" as used in this Article shall in
such case (unless the context otherwise requires) be construed as extending to
and including such Paying Agent within its meaning as fully for all intents and
purposes as if such Paying Agent were named in this Article in addition to or in
place of the Trustee; provided, however, that Section 12.13 shall not apply to
the Company or any Affiliate of the Company if it or such Affiliate acts as
Paying Agent.
Section 12.15 Certain Conversions Deemed Payment. For purposes of this
Article only, (a) the issuance and delivery of junior securities (or cash paid
in lieu of fractional shares) upon conversion or redemption of Convertible
Debentures in accordance with Article XI shall not be deemed to constitute a
payment or distribution on account of the principal of or premium or interest on
Convertible Debentures or on account of the purchase or other acquisition of
Convertible Debentures, and (b) the payment, issuance or delivery of cash,
property or securities (other than junior securities and cash paid in lieu of
fractional shares) upon conversion or redemption of a Convertible Debenture
shall be deemed to constitute payment on account of the principal of such
Convertible Debenture. For the purposes of this Section, the term "junior
securities" means (i) shares of any Capital Stock of any class of the Company
and (ii) securities of the Company which are subordinated in right of payment to
all Senior Indebtedness which may be outstanding at the time of issuance or
delivery of such securities to substantially the same extent as, or to a greater
extent than, the Convertible Debentures are so subordinated as provided in this
Article. Nothing contained in this Article or elsewhere in this Indenture or in
the Convertible Debentures is intended to or shall impair, as among the Company,
its creditors other than holders of Senior Indebtedness and the Holders of
Convertible Debentures, the right, which is absolute and unconditional, of the
Holder of any Convertible Debenture to convert such Convertible Debenture in
accordance with Article XI.
Section 12.16 Further Subrogation. The Company shall be subrogated to all
(if any) rights of the Trust and any holder of beneficial interests in the
assets of the Trust against the Trustee in respect of any breach by the Trustee
of any of its obligations under this Indenture.
ARTICLE XIII
EXPENSES
Section 13.1 Payment of Expenses. In connection with the offering, sale and
issuance of the Convertible Debentures to the Institutional Trustee and in
connection with the sale of the Trust Securities by the Trust, the Company, in
its capacity as borrower with respect to the Convertible Debentures, shall:
(a) pay all costs and expenses of the Trust (including, but not
limited to, costs and expenses relating to the organization of the
Trust, the fees and expenses of the Institutional Trustee and the
Delaware Trustee, the costs and expenses relating to the operation of
the Trust, including without limitation, costs and expenses of
accountants, attorneys, statistical or bookkeeping services, expenses
for printing and engraving and computing or accounting equipment,
paying agent(s), registrar(s), transfer agent(s), duplicating, travel
and telephone and other telecommunications expenses and costs and
expenses incurred in connection with the acquisition, financing, and
disposition of Trust assets);
(b) pay all costs and expenses related to the enforcement by the
Institutional Trustee of the rights of the holders of the Trust
Securities;
(c) be primarily liable for any indemnification obligations
arising with respect to the Declaration; and
(d) pay any and all taxes (other than United States income and
withholding taxes attributable to the Trust or its assets) and all
liabilities, costs and expenses with respect to such taxes of the
Trust.
Section 13.2 Payment Upon Resignation or Removal. Upon termination of this
Indenture or the removal or resignation of the Trustee pursuant to Section 6.8
of this Indenture, the Company shall pay to the Trustee all amounts accrued to
the date of such termination, removal or resignation. Upon termination of the
Declaration or the removal or resignation of the Delaware Trustee or the
Institutional Trustee, as the case may be, pursuant to Section 5.6 of the
Declaration, the Company shall pay to the Delaware Trustee or the Institutional
Trustee, and their respective counsel, as the case may be, all amounts accrued
to the date of such termination, removal or resignation.
ARTICLE XIV
MISCELLANEOUS PROVISIONS
Section 14.1 Incorporators, Shareholders, Officers and
Directors of Company Exempt from Individual Liability. No recourse under or upon
any obligations, covenant or agreement contained in this Indenture, in any
Convertible Debenture, or because of any indebtedness evidenced thereby, shall
be had against any incorporator, as such or against any past, present or future
shareholder, officer or director, as such, of the Company or of any predecessor
or successor thereof, either directly or through the Company or any successor,
under any rule of law, statute or constitutional provision or by the enforcement
of any assessment or by any legal or equitable proceeding or otherwise, all such
liability being expressly waived and released by the acceptance of the
Convertible Debentures by the Holders thereof and as part of the consideration
of the issue of the Convertible Debentures.
Section 14.2 Provisions of Indenture for the Sole Benefit of Parties and
Holders of Convertible Debentures. Nothing in this Indenture or in the
Convertible Debentures, expressed or implied, shall give or be construed to give
to any Person, firm or corporation, other than the parties hereto, any Paying
Agent and their successors hereunder, the holders of Senior Indebtedness, the
holders of Convertible Preferred Securities (to the extent provided herein) and
the Holders of the Convertible Debentures any legal or equitable right, remedy
or claim under this Indenture or under any covenant or provision herein
contained, all such covenants and provisions being for the sole benefit of the
parties hereto and their successors and of the Holders of the Convertible
Debentures.
Section 14.3 Right to Assign; Successors and Assigns Bound by Indenture.
The Company shall have the right at all times to assign any of its respective
rights or obligations under this Indenture to a direct or indirect wholly-owned
Subsidiary of the Company, other than an entity which will be taxed as a
partnership for federal income tax purposes; provided that, in the event of any
such assignment, the Company shall remain liable for all of its obligations
under this Indenture. Subject to the foregoing, this Indenture will be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns. The rights and obligations of the parties under this
Indenture may not otherwise be assigned by such parties.
All the covenants, stipulations, promises and agreements in this Indenture
by the parties hereto shall bind their respective successors and assigns,
whether so expressed or not.
Section 14.4 Notices and Demands on Company, Trustee and Holders of
Convertible Debentures. Any notice or demand which by any provision of this
Indenture is required or permitted to be given or served by the Trustee or by
the Holders of Convertible Debentures to or on the Company may be given or
served by being deposited postage prepaid, first-class mail (except as otherwise
specifically provided herein) addressed (until another address of the Company is
filed by the Company with the Trustee) to Wellsford Real Properties, Inc., 535
Madison Avenue, 26th Floor, New York, New York 10022, Attention: Jeffrey H.
Lynford. Any notice, direction, request or demand by the Company or any Holder
of Convertible Debentures to or upon the Trustee shall be deemed to have been
sufficiently given or made, for all purposes, if given or made at the Corporate
Trust Office.
Where this Indenture provides for notice to Holders of Convertible
Debentures of any event such notice shall be sufficiently given (unless
otherwise herein expressly provided) if in writing and mailed by first-class
mail, postage prepaid to such Holders as their names and addresses appear in the
Security Register within the time prescribed. Where this Indenture provides for
notice in any manner, such notice may be waived in writing by the Person
entitled to receive such notice, either before or after the event, and such
waiver shall be the equivalent of such notice. Waivers of notice by Holders
shall be filed with the Trustee, but such filing shall not be a condition
precedent to the validity of any action taken in reliance upon such waiver. In
any case where notice to Holders is given by mail, neither the failure to mail
such notice, nor any defect in any notice so mailed, shall affect the
sufficiency of such notice, and any notice which is mailed in the manner herein
provided shall be conclusively presumed to have been duly given.
In case, by reason of the suspension of or irregularities in regular mail
service, it shall be impracticable to mail notice to the Company and Holders of
Convertible Debentures when such notice is required to be given pursuant to any
provision of this Indenture, then any manner of giving such notice as shall be
reasonably acceptable to the Trustee shall be deemed to be a sufficient giving
of such notice.
Section 14.5 Officers' Certificates and Opinions of Counsel; Statements to
Be Contained Therein. Upon any application or demand by the Company to the
Trustee to take action under any of the provisions of this Indenture, the
Company shall furnish to the Trustee an Officers' Certificate stating that all
conditions precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with and an Opinion of Counsel stating that
in the opinion of such counsel all such conditions precedent, if any, have been
complied with, except that in the case of any such application or demand as to
which the furnishing of such documents is specifically required by any provision
of this Indenture relating to such particular application or demand, no
additional certificate or opinion need be furnished.
Each certificate or opinion provided for in this Indenture and delivered to
the Trustee with respect to compliance with a condition or covenant provided for
in this Indenture shall include (a) a statement that the person making such
certificate or opinion has read such covenant or condition and the definitions
herein relating thereto, (b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions contained in
such certificate or opinion are based, (c) a statement that, in the opinion of
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 (d) a
statement as to whether or not, in the opinion of such person, such condition or
covenant has been complied with.
Any certificate, statement or opinion of any officer of the Company may be
based, insofar as it relates to legal matters, upon a certificate or opinion of
or representations by counsel, unless such officer knows that the certificate or
opinion or representations with respect to the matters upon which his
certificate, statement or opinion may be based as aforesaid are erroneous, or in
the exercise of reasonable care should know that the same are erroneous. Any
certificate, statement or opinion of counsel may be based, insofar as it relates
to factual matters or information with respect to which is in the possession of
the Company, upon the certificate, statement or opinion of or representations by
an officer or officers of the Company, unless such counsel knows that the
certificate, statement or opinion or representations with respect to the matters
upon which his certificate, statement or opinion may be based as aforesaid are
erroneous, or in the exercise of reasonable care should know that the same are
erroneous.
Any certificate, statement or opinion of an officer of the Company or of
counsel may be based, insofar as it relates to accounting matters, upon a
certificate or opinion of or representations by an accountant or firm of
accountants in the employ of the Company, unless such officer or counsel, as the
case may be, knows that the certificate or opinion or representations with
respect to the accounting matters upon which his certificate, statement or
opinion may be based as aforesaid are erroneous, or in the exercise of
reasonable care should know that the same are erroneous.
Any certificate or opinion of any independent firm of public accountants
filed with and directed to the Trustee shall contain a statement that such firm
is independent.
Section 14.6 Payments Due on Saturdays, Sundays and Holidays. Except as
otherwise provided in Section 2.5, if the date of Maturity of interest on or
principal of the Convertible Debentures or the date fixed for redemption or
repayment of any such Convertible Debenture shall not be a Business Day, then
payment of interest or principal need not be made on such date, but may be made
on the next succeeding Business Day; provided that if such next succeeding
Business Day falls in the next succeeding calendar year, such payment shall be
made on the immediately preceding Business Day, in each case with the same force
and effect as if made on the date of Maturity or the date fixed for redemption,
and no interest shall accrue for the period after such date.
Section 14.7 Conflict of Any Provision of Indenture with Trust Indenture
Act. If and to the extent that any provision of this Indenture limits, qualifies
or conflicts with another provision included in this Indenture which is required
by the Trust Indenture Act, such required provision shall control.
Section 14.8 Delaware Law to Govern. THIS INDENTURE AND THE CONVERTIBLE
DEBENTURES SHALL BE DEEMED TO BE CONTRACTS MADE AND TO BE PERFORMED ENTIRELY IN
THE STATE OF DELAWARE, AND FOR ALL PURPOSES SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF SAID STATE WITHOUT REGARD TO THE CONFLICTS OF LAW
RULES OF SAID STATE.
Section 14.9 Counterparts. This Indenture may be executed in any number of
counterparts, each of which shall be an original; but such counterparts shall
together constitute but one and the same instrument.
Section 14.10 Effect of Headings; Gender. The Article and Section headings
herein and the Table of Contents are for convenience only and shall not affect
the construction hereof. The use of the masculine, feminine or neuter gender
herein shall not limit in any way the applicability of any term or provision
hereof.
Section 14.11 Acceptable Counsel. In each instance herein which states that
legal counsel needs to be acceptable to a party (or similar language to that
affect), the law firm of Robinson Silverman Pearce Aronsohn & Berman LLP shall
be deemed to be acceptable legal counsel.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, and their respective corporate seals to be hereto affixed and
attested, all as of the day and year first above written.
WELLSFORD REAL PROPERTIES, INC.
By: /s/ Edward Lowenthal
----------------------------------
Name: Edward Lowenthal
Title: President
WILMINGTON TRUST COMPANY,
as Trustee
By: /s/ Jennifer Matz
----------------------------------
Name: Jennifer Matz
Title: Assistant Vice President
No. 1 $ 25,775,000
WELLSFORD REAL PROPERTIES, INC.
8.25% CONVERTIBLE JUNIOR SUBORDINATED DEBENTURE
PRIOR TO THE TRANSFER RESTRICTION TERMINATION DATE, ANY CERTIFICATE
EVIDENCING A CONVERTIBLE DEBENTURE SHALL BEAR A LEGEND IN SUBSTANTIALLY THE
FOLLOWING FORM, UNLESS OTHERWISE AGREED BY THE COMPANY (WITH WRITTEN NOTICE
THEREOF TO THE TRUSTEE): THE SECURITY EVIDENCED HEREBY HAS NOT BEEN REGISTERED
UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR
THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING
SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT) OR (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE
501(A)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT) ("INSTITUTIONAL ACCREDITED
INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THE SECURITY
EVIDENCED HEREBY IN AN OFFSHORE TRANSACTION, (2) AGREES THAT IT WILL NOT PRIOR
TO THE EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE SECURITY
EVIDENCED HEREBY UNDER RULE 144(K) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR
PROVISION), RESELL OR OTHERWISE TRANSFER THE SECURITY EVIDENCED HEREBY OR, IF
THIS SECURITY IS CONVERTIBLE INTO COMMON SHARES, THE COMMON SHARES ISSUABLE UPON
CONVERSION OR EXCHANGE OF THIS SECURITY EXCEPT (A) TO WELLSFORD REAL PROPERTIES,
INC. (THE "COMPANY") OR ANY SUBSIDIARY THEREOF, (B) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, (C) TO A QUALIFIED
INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (D)
TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES
TO THE TRUSTEE UNDER THE INDENTURE (OR, IF THIS CERTIFICATE EVIDENCES COMMON
SHARES, THE TRANSFER AGENT FOR THE COMMON SHARES), A SIGNED LETTER CONTAINING
CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER
OF THE SECURITY EVIDENCED HEREBY (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM
SUCH TRUSTEE OR TRANSFER AGENT), (E) OUTSIDE THE UNITED STATES IN COMPLIANCE
WITH RULE 904 UNDER THE SECURITIES ACT OR (F) PURSUANT TO THE EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE) AND
(3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THE SECURITY EVIDENCED
HEREBY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN
CONNECTION WITH ANY TRANSFER OF THE SECURITY EVIDENCED HEREBY PRIOR TO THE
EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE SECURITY EVIDENCED
HEREBY UNDER RULE 144(K) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION),
THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF
RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE
TRUSTEE UNDER THE INDENTURE (OR, IF THIS CERTIFICATE EVIDENCES COMMON SHARES,
SUCH HOLDER MUST FURNISH TO THE TRANSFER AGENT SUCH CERTIFICATIONS, LEGAL
OPINIONS OR OTHER INFORMATION AS THE COMPANY OR WRP CONVERTIBLE TRUST I (THE
"TRUST") MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE
PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT). IF THIS CERTIFICATE DOES NOT
EVIDENCE COMMON SHARES AND IF THE PROPOSED TRANSFEREE IS AN INSTITUTIONAL
ACCREDITED INVESTOR OR A PURCHASER WHO IS NOT A U.S. PERSON, THE HOLDER MUST,
PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE UNDER THE INDENTURE, SUCH
CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS THE COMPANY OR THE TRUST
MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO
AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT. THIS LEGEND WILL BE REMOVED AFTER THE
EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE SECURITY EVIDENCED
HEREBY UNDER RULE 144(K) UNDER THE SECURITIES ACT. AS USED HEREIN, THE TERMS
"OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS
GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT. THIS SECURITY IS ALSO
SUBJECT TO THE RESTRICTIONS ON TRANSFER SET FORTH IN THE INDENTURE.
Wellsford Real Properties, Inc., a Maryland corporation (the "Company",
which term includes any successor corporation or other entity under the
Indenture hereinafter referred to), for value received, hereby promises to pay
to, Wilmington Trust Company, as Institutional Trustee (the "Institutional
Trustee") for WRP Convertible Trust I or registered assigns, the principal sum
of Twenty-Five Million Seven Hundred Seventy Five Thousand Dollars ($25,775,000)
and to pay interest on said principal sum from May 5, 2000 (the "Issuance
Date"), or from the most recent interest payment date to which interest has been
paid or duly provided for, quarterly in arrears by payment of $0.515625 per
Convertible Debenture on the fifteenth day of January, April July and October
(each such date, an "Interest Payment Date") of each year commencing July 17,
2000, at the rate of 8.25% per annum ($2.0625 per annum, $0.515625 per quarter)
from and including the Issuance Date to and including the Maturity Date, until
the principal hereof shall have become due and payable, and on any overdue
principal and premium, if any, and (without duplication and to the extent that
payment of such interest is enforceable under applicable law) on any overdue
installment of interest at the same rate per annum compounded quarterly. Each
quarterly period ending on an Interest Payment Date is hereafter referred to as
an "Interest Period." The amount of interest payable for the initial Interest
Period and for any Interest Period shorter than a full Interest Period shall be
prorated and shall be computed on the basis of a 360-day year of twelve 30-day
months. For any twelve quarterly interest periods during the term of the
Convertible Debentures, whether or not consecutive, and whether or not the
Company has available cash with which to pay interest, the Company shall have
the right to pay the interest due on the Convertible Debentures by the issuance
of additional Convertible Debentures, the number of which shall be determined by
dividing the total amount of interest to be paid by the issuance of additional
Convertible Debentures by $25.00. In the event that any date on which interest
is payable on this Convertible Debenture is not a Business Day, then payment of
interest payable on such date will be made on the next succeeding day that is a
Business Day (and without any interest or other payment in respect of any such
delay), except that, if such Business Day is in the next succeeding calendar
year, such payment shall be made on the immediately preceding Business Day, in
each case with the same force and effect as if made on such date. The interest
installment so payable, and punctually paid or duly provided for, on any
Interest Payment Date will, as provided in the Indenture (referred to on the
reverse hereof) be paid to the person in whose name this Convertible Debenture
(or one or more Predecessor Convertible Debentures, as defined in said
Indenture) is registered on the record date for such interest installment, which
shall be the close of business on the fifteenth day prior to such Interest
Payment Date. Any such interest installment not punctually paid or duly provided
for shall forthwith cease to be payable to the registered Holders on such record
date and may be paid to the Person in whose name this Convertible Debenture (or
one or more Predecessor Convertible Debentures) is registered at the close of
business on a special record date to be fixed by the Trustee for the payment of
such defaulted interest, notice whereof shall be given to the registered Holders
of the Convertible Debentures not less than 10 days prior to such special record
date, or may be paid at any time in any other lawful manner not inconsistent
with the requirements of any securities exchange on which the Convertible
Debentures may be listed, and upon such notice as may be required by such
exchange, all as more fully provided in the Indenture. The principal of (and
premium, if any) and the interest on this Convertible Debenture shall be payable
at the office or agency of the Trustee maintained for that purpose in any coin
or currency of the United States of America that at the time of payment is legal
tender for payment of public and private debts; provided, however, that payment
of interest may be made at the option of the Company by check mailed to the
registered Holder at such address as shall appear in the Security Register.
Notwithstanding the foregoing, so long as the Holder of this Convertible
Debenture is the Institutional Trustee, the payment of the principal of (and
premium, if any) and interest on this Convertible Debenture will be made at such
place and to such account as may be designated by the Institutional Trustee.
The indebtedness evidenced by this Convertible Debenture is, to the extent
provided in the Indenture, subordinate and junior in right of payment to the
prior payment in full of all Senior Indebtedness, and this Convertible Debenture
is issued subject to the provisions of the Indenture with respect thereto. Each
Holder of this Convertible Debenture, by accepting the same, (a) agrees to and
shall be bound by such provisions, (b) authorizes and directs the Trustee on his
or her behalf to take such action as may be necessary or appropriate to
acknowledge or effectuate the subordination so provided and (c) appoints the
Trustee his or her attorney-in-fact for any and all such purposes. Each Holder
hereof, by his or her acceptance hereof, hereby waives all notice of the
acceptance of the subordination provisions contained herein and in the Indenture
by each holder of Senior Indebtedness, whether now outstanding or hereafter
incurred, and waives reliance by each such holder upon said provisions.
This Convertible Debenture shall not be entitled to any benefit under the
Indenture hereinafter referred to, be valid or become obligatory for any purpose
until the Certificate of Authentication hereon shall have been signed by or on
behalf of the Trustee. The provisions of this Convertible Debenture are
continued on the reverse side hereof and such continued provisions shall for all
purposes have the same effect as though fully set forth at this place.
Capitalized terms used but not defined herein shall have the meaning given them
in the Indenture.
IN WITNESS WHEREOF, the Company has caused this instrument to be executed.
WELLSFORD REAL PROPERTIES, INC.
By: /s/ Edward Lowenthal
-----------------------------------------
Name: Edward Lowenthal
Title: President
Attest:
By: /s/ James J. Burns
-----------------------------------------
Name: James J. Burns
Title: Senior Vice President
CERTIFICATE OF AUTHENTICATION
This is one of the Convertible Debentures described in the within-mentioned
Indenture.
Dated: May 5, 2000
WILMINGTON TRUST COMPANY, By:
as Trustee ----------------------------------------
Authorized Signatory
FORM OF REVERSE OF DEBENTURE
This Convertible Debenture is one of the 8.25% Convertible Junior
Subordinated Debentures (herein referred to as the "Convertible Debentures"),
issued or to be issued under and pursuant to an Indenture dated as of May 5,
2000, duly executed and delivered between the Company and Wilmington Trust
Company, as Trustee (the "Trustee") (the "Indenture"), to which Indenture and
all indentures supplemental thereto reference is hereby made for a description
of the rights, limitations of rights, obligations, duties and immunities
thereunder of the Trustee, the Company and the Holders of the Convertible
Debentures. The Convertible Debentures are limited in aggregate principal amount
as specified in the Indenture.
Because of the occurrence and continuation of a Tax Event, in certain
circumstances, this Convertible Debenture may be redeemed prior to maturity at
the principal amount specified on the face hereof together with any interest
accrued thereon (the "Redemption Price"). The Redemption Price shall be paid
prior to 12:00 noon, New York City time, on the date of such redemption or at
such earlier time as the Company determines. The Company shall have the right to
redeem this Convertible Debenture at the option of the Company, upon not less
than 30 nor more than 60 days notice, without premium or penalty, in whole or in
part at any time on or after May 30, 2002 (an "Optional Redemption") at a price
equal to 100% of the principal amount of the Convertible Debentures (the
"Optional Redemption Price") together with accrued and unpaid interest
(including Additional Sums, if any) to, but excluding, the redemption date. The
Holder of this Convertible Debenture also has the right to require that this
Convertible Debenture be redeemed pursuant to the terms of the Indenture.
If Convertible Debentures are redeemed on any January 15, April 15, July 15
or October 15, accrued and unpaid interest shall be payable to holders of record
on the relevant record date.
So long as the corresponding Trust Securities are outstanding, the proceeds
from the redemption of any of the Convertible Debentures will be used to redeem
Trust Securities.
If the Convertible Debentures are only partially redeemed by the Company
pursuant to an Optional Redemption, the Convertible Debentures will be redeemed
pro rata.
In the event of redemption of this Convertible Debenture in part only, a
new Convertible Debenture or Convertible Debentures for the unredeemed portion
hereof will be issued in the name of the Holder hereof upon the cancellation
hereof.
In case an Event of Default, as defined in the Indenture, shall have
occurred and be continuing, the principal of all of the Convertible Debentures
and the interest accrued thereon may be declared, and upon such declaration
shall become, due and payable, in the manner, with the effect and subject to the
conditions provided in the Indenture.
The Indenture contains provisions permitting the Company and the Trustee,
with the consent of the Holders of a majority of the aggregate principal amount
of the Convertible Debentures at the time Outstanding, evidenced as provided in
the Indenture, to execute supplemental indentures adding any provisions to or
changing in any manner or eliminating any of the provisions of the Indenture or
of any supplemental indenture or modifying in any manner the rights of the
Holders of the Convertible Debentures; provided, however, that no such
supplemental indenture shall (i) extend the Stated Maturity of any Convertible
Debenture, or reduce the principal amount thereof or any premium thereon, or
reduce the rate or extend the time of payment of interest thereon, or reduce any
amount payable upon redemption thereof, or impair or affect the right of any
Holder to institute suit for the payment thereof, without the consent of the
Holder of each Convertible Debenture so affected, or (ii) reduce the aforesaid
percentage of Convertible Debentures, the Holders of which are required to
consent to any such supplemental indenture, without the consent of the Holder of
each Convertible Debenture. It is also provided in the Indenture that, with
respect to certain defaults or Events of Default regarding the Convertible
Debentures, prior to any declaration accelerating the maturity of such
Convertible Debentures, the Holders of a majority in aggregate principal amount
Outstanding of the Convertible Debentures (or, in the case of certain defaults
or Events of Default, all of the Convertible Debentures), may on behalf of the
Holders of all the Convertible Debentures waive any such past default or Event
of Default and its consequences. The preceding sentence shall not, however,
apply to a default in the payment of the principal of or premium, if any, or
interest on any of the Convertible Debentures. Any such consent or waiver by the
Holder of this Convertible Debenture (unless revoked as provided in the
Indenture) shall be conclusive and binding upon such Holder and upon all future
Holders and owners of this Convertible Debenture and any Convertible Debenture
which may be issued in exchange or substitution therefor, irrespective of
whether or not any notation thereof is made upon this Convertible Debenture or
such other Convertible Debenture.
No reference herein to the Indenture and no provision of this Convertible
Debenture or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of and
premium, if any, and interest on this Convertible Debenture at the time and
place and at the rate and in the money herein prescribed.
As provided in the Indenture and subject to certain limitations therein set
forth, this Convertible Debenture is transferable by the registered Holder
hereof on the Security Register of the Company, upon surrender of this
Convertible Debenture for registration of transfer at the office or agency of
the Trustee in the City and State of New York accompanied by a written
instrument or instruments of transfer in form satisfactory to the Company or the
Trustee duly executed by the registered Holder hereof or his attorney duly
authorized in writing, and thereupon one or more new Convertible Debentures of
authorized denominations and for the same aggregate principal amount will be
issued to the designated transferee or transferees. No service charge will be
made for any such transfer, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in relation
thereto.
Prior to due presentment for registration of transfer of this Convertible
Debenture, the Company, the Trustee, any paying agent and the Registrar may deem
and treat the registered Holder hereof as the absolute owner hereof (whether or
not this Convertible Debenture shall be overdue and notwithstanding any notice
of ownership or writing hereon made by anyone other than the Registrar) for the
purpose of receiving payment of or on account of the principal hereof and
premium, if any, and interest due hereon and for all other purposes, and neither
the Company nor the Trustee nor any paying agent nor any Registrar shall be
affected by any notice to the contrary.
No recourse shall be had for the payment of the principal of or the
interest on this Convertible Debenture, or for any claim based hereon, or
otherwise in respect hereof, or based on or in respect of the Indenture, against
any incorporator, shareholder, officer or director, trustee, past, present or
future, as such, of the Company or of any predecessor or successor corporation,
whether by virtue of any constitution, statute or rule of law, or by the
enforcement of any assessment or penalty or otherwise, all such liability being,
by the acceptance hereof and as part of the consideration for the issuance
hereof, expressly waived and released.
The Holder of any Convertible Debenture has the right, exercisable at any
time through the close of business (New York City time) on the last Business Day
prior to the Maturity Date (or, in the case of a Convertible Debenture called
for redemption, prior to the close of business on the Business Day prior to the
corresponding redemption date), to convert the principal amount thereof (or any
portion thereof that is an integral multiple of $25.00) into Common Shares of
the Company at the initial conversion rate of 2.2474 Common Shares for each
Convertible Debenture (equivalent to a Conversion Price of $11.124 per Common
Share), subject to adjustment under certain circumstances.
To convert a Convertible Debenture, a Holder must (a) complete and sign a
conversion notice substantially in the form attached hereto, (b) surrender the
Convertible Debenture to a Conversion Agent, (c) furnish appropriate
endorsements or transfer documents if required by the Conversion Agent and (d)
pay any transfer or similar tax, if required. Upon conversion, no adjustment or
payment will be made for interest or dividends, but if any Holder surrenders a
Convertible Debenture for conversion on or after the record date for the payment
of an installment of interest and prior to
the opening of business on the next Interest Payment Date, then, notwithstanding
such conversion, the interest payable on such Interest Payment Date will be paid
to the registered Holder of such Convertible Debenture on such record date. In
such event, such Convertible Debenture, when surrendered for conversion, need
not be accompanied by payment of an amount equal to the interest payable on such
Interest Payment Date on the portion so converted. The number of shares issuable
upon conversion of a Convertible Debenture is determined by dividing the
principal amount of the Convertible Debenture converted by the Conversion Price
in effect on the Conversion Date. No fractional shares will be issued upon
conversion but a cash adjustment will be made for any fractional interest. The
outstanding principal amount of any Convertible Debenture shall be reduced by
the portion of the principal amount thereof converted into Common Shares.
The Convertible Debentures are issuable only in registered form without
coupons in denominations of $25.00 and any integral multiple thereof. As
provided in the Indenture and subject to certain limitations therein set forth,
Convertible Debentures are exchangeable for a like aggregate principal amount of
Convertible Debentures of a different authorized denomination, as requested by
the Holder surrendering the same.
THE INDENTURE AND THE CONVERTIBLE DEBENTURES SHALL BE DEEMED TO BE
CONTRACTS MADE AND TO BE PERFORMED ENTIRELY IN THE STATE OF DELAWARE, AND FOR
ALL PURPOSES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
SAID STATE WITHOUT REGARD TO THE CONFLICTS OF LAW RULES OF SAID STATE.
This Indenture is subject to the Election to Convert and Assignment forms
annexed hereto and made a part hereof.
ELECTION TO CONVERT
To: Wellsford Real Properties, Inc.
The undersigned owner of this Convertible Debenture hereby irrevocably
exercises the option to convert this Convertible Debenture, or the portion below
designated, into Common Shares of WELLSFORD REAL PROPERTIES, INC. in accordance
with the terms of the Indenture referred to in this Convertible Debenture, and
directs that the shares issuable and deliverable upon conversion, together with
any check in payment for fractional shares, be issued in the name of and
delivered to the undersigned, unless a different name has been indicated in the
assignment below. If shares are to be issued in the name of a person other than
the undersigned, the undersigned will pay all transfer taxes payable with
respect thereto.
Date: _______________, ____
Conversion in whole _____ in part _____
Portion of Convertible Debenture to be converted (if applicable):
($25.00 or integral multiples thereof): $_________________
Please indicate in the spaces below the name(s) in which the
_________________________ Common Shares are to be issued, if such
name(s) is other than the undersigned, along with the address(es) of
such person(s).
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Signature (for conversion only)
Please Print or Typewrite Name and Address, Including Zip Code, and
Social Security or Other Identifying Number
-----------------------------------------------------
-----------------------------------------------------
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ASSIGNMENT
For value received__________________________ hereby sell(s), assign(s) and
transfer(s) unto _______________________________________________________________
(Please insert social security or other taxpayer identification number of
assignee) the within Convertible Debenture and hereby irrevocably constitutes
and appoints _____________________________ attorney-in-fact to transfer the said
Convertible Debenture on the books of the Company, with full power of
substitution in the premises.
In connection with any transfer of the within Convertible Debenture
occurring prior to the Transfer Restriction Termination Date, the undersigned
confirms that such Convertible Debenture is being transferred:
/ / To Wellsford Real Properties, Inc. or a subsidiary thereof; or
/ / Pursuant to and in compliance with Rule 144A under the Securities
Act of 1933, as amended; or
/ / To an Institutional Accredited Investor pursuant to and in
compliance with the Securities Act of 1933, as amended; or
/ / Pursuant to and in compliance with Regulation S under the
Securities Act of 1933, as amended; or
/ / Pursuant to and in compliance with Rule 144 under the Securities
Act of 1933, as amended;
/ / Pursuant to an effective registration statement;
/ / To ERPOLP; or
/ / To a taxable REIT subsidiary of Equity Residential Properties
Trust or any successor thereto.
and unless the box below is checked, the undersigned confirms that such
Convertible Debenture is not being transferred to an "affiliate" of the Company
as defined in Rule 144 under the Securities Act of 1933, as amended (an
"Affiliate"):
/ / The transferee is an Affiliate of the Company.
Dated:
---------------- ------------------------------------
------------------------------------
Signature(s)
NOTICE: The above signatures of the holder(s) hereof must correspond with the
name as written upon the face of this Convertible Debenture in every particular
without alteration or enlargement or any change whatever.