EXHIBIT 4.1
_______________________________________________________________
_______________________________________________________________
CONTINENTAL HOMES HOLDING CORP.
AND
MANUFACTURERS AND TRADERS TRUST COMPANY,
as
Trustee
____________
Indenture
Dated as of November 1, 1995
____________
$86,250,000
% CONVERTIBLE SUBORDINATED NOTES DUE 2005
_______________________________________________________________
_______________________________________________________________
CROSS-REFERENCE TABLE
TIA Indenture
Section Section
310(a)(1)...................................... 7.10
(a)(2)...................................... 7.10
(a)(3)...................................... N.A.
(a)(4)...................................... N.A.
(b) ...................................... 7.08; 7.10; 12.02
(c) ...................................... N.A.
311(a) ...................................... 7.11
(b) ...................................... 7.11
(c) ...................................... N.A.
312(a) ...................................... 2.05
(b) ...................................... 12.03
(c) ...................................... 12.03
313(a) ...................................... 7.06
(b)(1)...................................... N.A.
(b)(2)...................................... N.A.
(c) ...................................... 7.06; 12.02
(d) ...................................... 7.06
314(a) ...................................... 4.03; 12.02
(b) ...................................... N.A.
(c)(1)...................................... 12.04
(c)(2)...................................... 12.04
(c)(3)...................................... N.A.
(d) ...................................... N.A.
(e) ...................................... 12.05
(f) ...................................... N.A.
315(a) ...................................... 7.01(b)
(b) ...................................... 7.05; 12.02
(c) ...................................... 7.01(a)
(d) ...................................... 7.01(c)
(e) ...................................... 6.11
316(a)(last sentence).......................... 2.09
(a)(1)(A)................................... 6.05
(a)(1)(B)................................... 6.04
(a)(2)...................................... N.A.
(b) ...................................... 6.07
(c) ...................................... N.A.
317(a)(1)...................................... 6.08
(a)(2)...................................... 6.09
(b) ...................................... 2.04
318(a) ...................................... 12.01
_____________
N.A. means Not Applicable.
This cross-reference table does not constitute a part of the
Indenture.
TABLE OF CONTENTS
Section Page
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
1.01. Definitions ............................................. 1
1.02. Other Definitions ....................................... 3
1.03. Incorporation by Reference of Trust
Indenture Act.......................................... 4
1.04. Rules of Construction ................................... 5
ARTICLE 2
THE SECURITIES
2.01. Form and Dating ......................................... 5
2.02. Execution and Authentication ............................ 5
2.03. Registrar, Paying Agent and Conversion
Agent ................................................. 7
2.04. Paying Agent to Hold Money in Trust...................... 7
2.05. Securityholder Lists .................................... 8
2.06. Transfer and Exchange ................................... 8
2.07. Replacement Securities .................................. 8
2.08. Outstanding Securities .................................. 9
2.09. Securities Held by the Company or an
Affiliate ............................................. 9
2.10. Temporary Securities .................................... 10
2.11. Cancellation ............................................ 10
2.12. Defaulted Interest ...................................... 10
ARTICLE 3
REDEMPTION
3.01. Notices to Trustee ...................................... 10
3.02. Selection of Securities to Be Redeemed .................. 10
3.03. Notice of Redemption .................................... 11
3.04. Effect of Notice of Redemption .......................... 12
3.05. Deposit of Redemption Price ............................. 12
3.06. Securities Redeemed in Part ............................. 13
ARTICLE 4
COVENANTS
4.01. Payment of Securities ................................... 13
4.02. Maintenance of Office or Agency ......................... 13
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4.03. SEC Reports ............................................. 14
4.04. Compliance Certificate .................................. 14
4.05. Stay, Extension and Usury Laws .......................... 14
4.06. Corporate Existence ..................................... 15
4.07. Notice of Default ....................................... 15
4.08. Change in Control ....................................... 15
ARTICLE 5
SUCCESSORS
5.01. When Company May Merge, etc. ............................ 19
5.02. Successor Substituted ................................... 20
ARTICLE 6
DEFAULTS AND REMEDIES
6.01. Events of Default ....................................... 20
6.02. Acceleration ............................................ 22
6.03. Other Remedies .......................................... 23
6.04. Waiver of Past Defaults ................................. 23
6.05. Control by Majority ..................................... 23
6.06. Limitation on Suits ..................................... 23
6.07. Rights of Holders to Receive Payment .................... 24
6.08. Collection Suit by Trustee .............................. 24
6.09. Trustee May File Proofs of Claim ........................ 24
6.10. Priorities .............................................. 25
6.11. Undertaking for Costs ................................... 25
ARTICLE 7
TRUSTEE
7.01. Duties of Trustee ....................................... 26
7.02. Rights of Trustee ....................................... 27
7.03. Individual Rights of Trustee ............................ 27
7.04. Trustee's Disclaimer .................................... 28
7.05. Notice of Defaults ...................................... 28
7.06. Reports by Trustee to Holders ........................... 28
7.07. Compensation and Indemnity .............................. 28
7.08. Replacement of Trustee .................................. 29
7.09. Successor Trustee by ▇▇▇▇▇▇, etc. ....................... 30
7.10. Eligibility; Disqualification ........................... 30
7.11. Preferential Collection of Claims
Against Company ....................................... 31
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ARTICLE 8
DISCHARGE OF INDENTURE
8.01. Termination of Company's Obligations..................... 31
8.02. Application of Trust Money .............................. 32
8.03. Repayment to Company .................................... 32
8.04. Reinstatement ........................................... 33
ARTICLE 9
AMENDMENTS
9.01. Without Consent of Holders .............................. 33
9.02. With Consent of Holders ................................. 34
9.03. Compliance with Trust Indenture Act ..................... 35
9.04. Revocation and Effect of Consents ....................... 35
9.05. Notation on or Exchange of Securities ................... 35
9.06. Trustee Protected ....................................... 36
ARTICLE 10
CONVERSION
10.01. Conversion Privilege .................................... 36
10.02. Conversion Procedure .................................... 36
10.03. Fractional Shares ....................................... 37
10.04. Taxes on Conversion ..................................... 38
10.05. Company to Provide Stock ................................ 38
10.06. Adjustment for Change in Capital Stock .................. 38
10.07. Adjustment for Shares Issued Below
Market Price .......................................... 39
10.08. Adjustment for Other Distributions ...................... 42
10.09. Adjustment for Cash Distributions ....................... 43
10.10. Adjustment for Tender or Exchange
Offers ................................................ 44
10.11. Voluntary Adjustment .................................... 45
10.12. Current Market Price .................................... 45
10.13. When Adjustment May be Deferred ......................... 45
10.14. When No Adjustment Required ............................. 46
10.15. Notice of Adjustment .................................... 46
10.16. Notice of Certain Transactions .......................... 46
10.17. Reorganization of the Company ........................... 47
10.18. Rights and Warrants ..................................... 47
10.19. Company Determination Final ............................. 48
10.20. Trustee's Disclaimer .................................... 48
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ARTICLE 11
SUBORDINATION
11.01. Agreement to Subordinate ................................ 48
11.02. Certain Definitions ..................................... 49
11.03. Liquidation; Dissolution; Bankruptcy .................... 50
11.04. Company Not to Make Payments with
Respect to Securities in Certain
Circumstances ......................................... 50
11.05. Acceleration of Securities .............................. 51
11.06. When Distribution Must Be Paid Over ..................... 51
11.07. Notice by Company ....................................... 51
11.08. Subrogation ............................................. 52
11.09. Subordination May Not Be Impaired by
Company ............................................... 52
11.10. Distribution or Notice to
Representative ........................................ 52
11.11. Rights of Trustee and Paying Agent ...................... 52
11.12. Officers' Certificate ................................... 53
11.13. Obligation of Company Unconditional ..................... 53
ARTICLE 12
MISCELLANEOUS
12.01. Trust Indenture Act Controls ............................ 54
12.02. Notices ................................................. 55
12.03. Communication by Holders with Other
Holders ............................................... 55
12.04. Certificate and Opinion as to Conditions
Precedent ............................................. 56
12.05. Statements Required in Certificate or
Opinion ............................................... 56
12.06. Rules by Trustee and Agents ............................. 57
12.07. Legal Holidays .......................................... 57
12.08. No Recourse Against Others .............................. 57
12.09. Duplicate Originals ..................................... 57
12.10. Governing Law ........................................... 57
12.11. No Adverse Interpretation of Other
Agreements ............................................ 57
12.12. Successors .............................................. 58
12.13. Separability ............................................ 58
12.14. Table of Contents, Headings, etc. ....................... 58
SIGNATURES .......................................................... 59
EXHIBIT A-FORM OF SECURITY .......................................... A-1
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INDENTURE dated as of November 1, 1995 between
CONTINENTAL HOMES HOLDING CORP., a Delaware corporation (the
"Company"), and MANUFACTURERS AND TRADERS TRUST COMPANY, a duly
organized and existing banking corporation organized under the
laws of the State of New York, as trustee (the "Trustee").
Each party agrees as follows for the benefit of the
other party and for the equal and ratable benefit of the
Holders of the Company's % Convertible Subordinated Notes
due 2005 (the "Securities").
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions.
"Affiliate" means any person directly or indirectly
controlling or controlled by or under direct or indirect common
control with the Company. For this purpose, "control" shall
mean the power to direct the management and policies of a
person through the ownership of securities, by contract or
otherwise.
"Agent" means any Registrar, Paying Agent, Conversion
Agent or co-Registrar.
"Board of Directors" means the Board of Directors of
the Company or any committee of the Board authorized to act for
it hereunder.
"Capital Stock" means any and all shares, interests,
participations or other equivalents (however designated) of
capital stock of the Company and all warrants or options to
acquire such capital stock.
"Common Stock" means the Common Stock, par value $.01
per share, of the Company or any security into which the Common
Stock may be converted.
"Company" means the party named as such above and any
other obligor until a successor replaces it pursuant to the
applicable provision hereof and thereafter means such
successor.
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"Corporate Trust Office of the Trustee" shall be at
the address of the Trustee specified in Section 12.02 or such
other address as the Trustee may give notice of to the Company.
"Default" means any event which is, or after notice
or passage of time or both would be, an Event of Default.
"High and Low Sale Prices" of the Common Stock on any
trading day means the average of the high and low sale price of
the Common Stock as reported on the Composite Tape for New York
Stock Exchange-Listed Stocks (or if not listed or admitted to
trading on the New York Stock Exchange, then on the principal
national securities exchange on which the Common Stock is
listed or admitted to trading, or, if not listed or admitted to
trading on any national securities exchange, then as reported
by the National Association of Securities Dealers, Inc.,
through NASDAQ or a similar organization if NASDAQ is no longer
reporting information) on such trading day or if no such sale
takes place on such day, the average of the highest bid and
lowest asked prices regular way on the New York Stock Exchange
(or if not listed or admitted to trading on such Exchange, on
the principal national securities exchange on which the Common
Stock is listed or admitted to trading, or if not listed or
admitted to trading on any national securities exchange, the
average of the highest bid and lowest asked prices as reported
by the National Association of Securities Dealers, Inc.,
through NASDAQ or a similar organization if NASDAQ is no longer
reporting information) on such trading day. If on such trading
day the Common Stock is not quoted by any such organization,
the fair market value of such Common Stock on such day, as
determined by the Board of Directors, shall be used.
"Holder" or "Securityholder" means a person in whose
name a Security is registered on the Registrar's books.
"Indenture" means this Indenture as amended from time
to time.
"Officer" means the Chief Executive Officer, the
President, the Chief Operating Officer, any Vice President, the
Treasurer or the Secretary of the Company.
"Officers' Certificate" means a certificate signed by
two Officers or by an Officer and an Assistant Treasurer or an
Assistant Secretary of the Company.
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"Opinion of Counsel" means a written opinion from
legal counsel who may be an employee of or counsel for the
Company or other counsel reasonably acceptable to the Trustee.
"person" means any individual, corporation,
partnership, joint venture, association, joint-stock company,
trust, unincorporated organization or government or other
agency or political subdivision thereof.
"principal" of a debt security means the principal of
the security plus the premium, if any, on the security.
"SEC" means the Securities and Exchange Commission.
"Securities" means the Securities described above
issued under this Indenture.
"subsidiary" means (i) a corporation a majority of
whose capital stock with voting power, under ordinary
circumstances, to elect directors is at the time, directly or
indirectly, owned by the Company, by one or more subsidiaries
of the Company or by the Company and one or more subsidiaries
thereof or (ii) any other person (other than a corporation) in
which the Company, one or more subsidiaries thereof or the
Company and one or more subsidiaries thereof, directly or
indirectly, at the date of determination thereof have at least
majority ownership interest.
"TIA" means the Trust Indenture Act of 1939, as
amended (15 U.S. Code Sections 77aaa-77bbbb), as in effect on the
date of this Indenture, except as provided in Section 9.03.
"Trustee" means the party named as such in this
Indenture until a successor replaces it and thereafter means
the successor.
"Trust Officer" means any officer of the Trustee
assigned by the Trustee to administer its corporate trust
matters.
SECTION 1.02. Other Definitions.
Term Defined in Section
"Bankruptcy Law" ......................... 6.01
"business day" ........................... 12.07
"Change in Control" ...................... 4.08
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"Conversion Agent" ....................... 2.03
"Conversion Price ........................ 4.08(i)
"Conversion Shares" ...................... 10.18
"Custodian" .............................. 6.01
"Distribution Date" ...................... 10.18
"Event of Default" ....................... 6.01
"Exchange Act" ........................... 4.03
"Expiration Time" ........................ 10.10
"Legal Holiday ........................... 12.07
"Management Group" ....................... 4.08
"NASDAQ" ................................. 10.03
"NMS" .................................... 10.03
"Offer" .................................. 10.10
"Paying Agent" ........................... 2.03
"Purchased Shares" ....................... 10.10
"Registrar ............................... 2.03
"Representative" ......................... 11.02
"Repurchase Date" ........................ 4.08
"Repurchase Price" ....................... 4.08
"Repurchase Right" ....................... 4.08
"Repurchase Right Notice" ................ 4.08
"Senior Indebtedness" .................... 11.02
"U.S. Government Obligations" ............ 8.01
SECTION 1.03. Incorporation by Reference of Trust
Indenture Act.
Whenever this Indenture refers to a provision of the
TIA, the provision is incorporated by reference in and made a
part of this Indenture.
The following TIA terms used in this Indenture have
the following meanings:
"indenture securities" means the Securities.
"indenture security holder" means a Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means
the Trustee.
"obligor" on the indenture securities means the
Company.
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All other terms used in this Indenture that are
defined by the TIA, defined by TIA reference to another statute
or defined by SEC rule under the TIA have the meanings so
assigned to them.
SECTION 1.04. Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined
has the meaning assigned to it in accordance with
generally accepted accounting principles in effect
on the date hereof;
(3) "or" is not exclusive;
(4) words in the singular include the plural
and in the plural include the singular;
(5) provisions apply to successive events
and transactions; and
(6) "herein," "hereof" and other words of
similar import refer to this Indenture as a whole
and not to any particular Article, Section or
other Subdivision.
ARTICLE 2
THE SECURITIES
SECTION 2.01. Form and Dating.
The Securities and the Trustee's certificate of
authentication shall be substantially in the form set forth in
Exhibit A, which is incorporated in and forms a part of this
Indenture. The Securities may have notations, legends or
endorsements required by law, stock exchange rule or usage.
Each Security shall be dated the date of its authentication.
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SECTION 2.02. Execution and Authentication.
Two Officers shall sign the Securities for the
Company by manual or facsimile signature. The Company's seal
shall be reproduced on the Securities.
If an Officer whose signature is on a Security no
longer holds that office at the time the Security is
authenticated, the Security shall nevertheless be valid.
A Security shall not be valid until authenticated by
the manual signature of the Trustee. The signature shall be
conclusive evidence that the Security has been authenticated
under this Indenture.
The Trustee shall authenticate Securities for
original issue in the aggregate principal amount of up to
$75,000,000, upon a written order of the Company signed by two
Officers or by an Officer and an Assistant Treasurer or
Assistant Secretary of the Company; provided that if such order
directs the issuance of $75,000,000 in aggregate principal
amount of Securities, the Trustee shall, upon a second written
order not later than , 1995, authenticate additional
Securities for original issue not to exceed $11,250,000 in
aggregate principal amount as specified in the second order to
cover over-allotments, if any. Each order shall specify the
amount of Securities to be authenticated and the date on which
the original issue of Securities is to be authenticated. The
aggregate principal amount of Securities outstanding at any
time may not exceed the amount of Securities issued pursuant to
this paragraph except as provided in Section 2.07.
The Trustee may appoint an authenticating agent
acceptable to the Company to authenticate Securities. An
authenticating agent may authenticate Securities whenever the
Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such
agent. An authenticating agent has the same rights as an Agent
to deal with the Company or an Affiliate.
The Securities shall be issuable only in registered
form without coupons and only in denominations of $1,000 and
any integral multiple thereof.
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SECTION 2.03. Registrar, Paying Agent and
Conversion Agent.
The Company shall maintain in the Borough of
Manhattan, The City of New York, an office or agency where
Securities may be presented for registration of transfer or for
exchange ("Registrar"), an office or agency where Securities
may be presented for payment ("Paying Agent") and an office or
agency where Securities may be presented for conversion
("Conversion Agent"). The Registrar shall keep a register of
the Securities and of their transfer and exchange. The Company
may appoint or change one or more co-registrars, one or more
additional paying agents and one or more additional conversion
agents without notice and may act in any such capacity on its
own behalf. The term "Paying Agent" includes any additional
paying agent; the term "Conversion Agent" includes any
additional conversion agent.
The Company shall enter into an appropriate agency
agreement with any Agent not a party to this Indenture. The
agreement shall implement the provisions of this Indenture that
relate to such Agent. The Company shall notify the Trustee of
the name and address of any Agent not a party to this
Indenture. If the Company fails to maintain a Registrar,
Paying Agent or Conversion Agent, the Trustee shall act as
such.
The Company initially appoints the Trustee as Paying
Agent, Registrar and Conversion Agent.
SECTION 2.04. Paying Agent to Hold Money in
Trust.
Each Paying Agent shall hold in trust for the benefit
of the Securityholders or the Trustee all moneys held by such
Paying Agent for the payment of principal of or interest on the
Securities, and shall notify the Trustee of any default by the
Company in making any such payment. While any such default
continues, the Trustee may require a Paying Agent to pay all
money held by it to the Trustee. The Company at any time may
require a Paying Agent to pay all money held by it to the
Trustee. Upon payment over to the Trustee, such Paying Agent
shall have no further liability for the money. If the Company
acts as Paying Agent, it shall segregate and hold as a separate
trust fund all money held by it as Paying Agent.
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SECTION 2.05. Securityholder Lists.
The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of
the names and addresses of Securityholders. If the Trustee is
not the Registrar, the Company shall furnish to the Trustee on
or before each interest payment date and at such other times as
the Trustee may request in writing a list, in such form and as
of such date as the Trustee may reasonably require, of the
names and addresses of Securityholders.
SECTION 2.06. Transfer and Exchange.
Where Securities are presented to the Registrar or a
co-Registrar with a request to register the transfer or to
exchange them for an equal principal amount of Securities of
other authorized denominations, the Registrar shall register
the transfer or make the exchange if the requirements of
Section 8-401(1) of the New York Uniform Commercial Code are
met. To permit registrations of transfer and exchanges, the
Trustee shall authenticate Securities at the Registrar's
request. The Company or the Trustee, as the case may be, shall
not be required (a) to issue, authenticate, register the
transfer of or exchange any Security during a period beginning
at the opening of business 15 days before the mailing of a
notice of redemption of the Securities selected for redemption
under Section 3.02 and ending at the close of business on the
day of such mailing, or (b) to register the transfer of or
exchange any Security so selected for redemption, in whole or
in part, except the unredeemed portion of Securities being
redeemed in part.
No service charge shall be made for any registration
of transfer or exchange of Securities, but the Company may
require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any
transfer, registration of transfer or exchange of Securities,
other than exchanges pursuant to Section 2.10, 3.06, 9.05 or
10.02 not involving any transfer.
SECTION 2.07. Replacement Securities.
If the Holder of a Security claims that the Security
has been mutilated, lost, destroyed or wrongfully taken, the
Company shall issue and the Trustee shall authenticate a
replacement Security if the requirements of Section 8-405 of
the New York Uniform Commercial Code are met and, in the case
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of a mutilated Security, such mutilated Security is surrendered
to the Trustee. If required by the Trustee or the Company, an
indemnity bond must be sufficient in the judgment of both to
protect the Company, the Trustee, or any Agent from any loss
which any of them may suffer if a Security is replaced. The
Company or the Trustee may charge for its expenses in replacing
a Security.
In case any such mutilated, destroyed or wrongfully
taken Security has become or is about to become due and
payable, the Company in its discretion may, instead of issuing
a new Security, pay such Security when due.
Every replacement Security is an additional
obligation of the Company.
SECTION 2.08. Outstanding Securities.
Securities outstanding at any time are all the
Securities authenticated by the Trustee except for those
converted, those cancelled by it, those delivered to it for
cancellation and those described in this Section as not
outstanding. A Security does not cease to be outstanding
because the Company or one of its subsidiaries or Affiliates
holds the Security.
If a Security is replaced pursuant to Section 2.07,
it ceases to be outstanding unless the Trustee receives proof
satisfactory to it, or a court holds, that the replaced
Security is held by a bona fide purchaser.
If the Paying Agent (other than the Company) holds on
a redemption date, repurchase date or maturity date money
sufficient to pay Securities payable on that date, then on and
after that date, such Securities shall be deemed to be no
longer outstanding and interest on them shall cease to accrue.
SECTION 2.09. Securities Held by the Company or an Affiliate.
In determining whether the Holders of the required
principal amount of Securities have concurred in any direction,
waiver or consent, Securities owned by the Company or a
subsidiary or an Affiliate shall be disregarded, except that
for the purposes of determining whether the Trustee shall be
protected in relying on any such direction, waiver or consent,
only Securities which the Trustee actually knows are so owned
shall be so disregarded.
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SECTION 2.10. Temporary Securities.
Until definitive Securities are ready for delivery,
the Company may prepare and the Trustee shall authenticate
temporary Securities. Temporary Securities shall be
substantially in the form of definitive Securities but may have
variations that the Company considers appropriate for temporary
Securities. Without unreasonable delay, the Company shall
prepare and the Trustee shall authenticate definitive
Securities in exchange for temporary Securities.
SECTION 2.11. Cancellation.
The Company at any time may deliver Securities to the
Trustee for cancellation. The Registrar, Paying Agent and
Conversion Agent shall forward to the Trustee any Securities
surrendered to them for registration of transfer, exchange,
payment or conversion. The Trustee shall cancel all Securities
surrendered for registration of transfer, exchange, payment,
conversion or cancellation and may destroy cancelled Securities
and deliver a certificate of any such destruction to the
Company. The Company may not issue new Securities to replace
Securities that it has paid or delivered to the Trustee for
cancellation or that any Securityholder has converted pursuant
to Article 10.
SECTION 2.12. Defaulted Interest.
If and to the extent the Company defaults in a
payment of interest on the Securities, it shall pay the
defaulted interest in any lawful manner plus, to the extent not
prohibited by applicable statute or case law, interest payable
on the defaulted interest. It may pay the defaulted interest
to the persons who are Securityholders on a subsequent special
record date. The Company shall fix such record date and
payment date. At least 15 days before the record date, the
Company shall mail to Securityholders a notice that states the
record date, payment date and amount of interest to be paid.
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ARTICLE 3
REDEMPTION
SECTION 3.01. Notices to Trustee.
If the Company wants to redeem Securities pursuant to
paragraph 5 of the Securities, it shall notify the Trustee at
least 20 days prior to the redemption date (unless a shorter
notice period shall be satisfactory to the Trustee) of the
redemption date and the principal amount of Securities to be
redeemed.
SECTION 3.02. Selection of Securities to Be Redeemed.
If less than all the Securities are to be redeemed,
the Trustee shall select the Securities to be redeemed on
either a pro rata basis or by lot or such other method as the
Trustee shall deem fair and equitable, but in any event, in
such manner as complies with applicable legal and stock
exchange requirements. The Trustee shall make the selection
from Securities outstanding not previously called for
redemption. The Trustee may select for redemption portions of
the principal of Securities that have denominations larger than
$1,000. Securities and portions of them it selects shall be in
amounts of $1,000 or whole multiples of $1,000. Provisions of
this Indenture that apply to Securities called for redemption
also apply to portions of Securities called for redemption.
SECTION 3.03. Notice of Redemption.
At least 15 days but not more than 60 days before a
redemption date, the Company shall mail by first-class mail a
notice of redemption to each Holder whose Securities are to be
redeemed.
The notice shall identify the Securities and the
principal amount thereof to be redeemed and shall state:
(1) the redemption date;
(2) the redemption price (including the amount of
accrued and unpaid interest to be paid on the Securities
called for redemption);
(3) the then current conversion rate;
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(4) the name and address of the Paying Agent and
Conversion Agent;
(5) that the right to convert Securities called for
redemption shall terminate at the close of business on the
second business day before the redemption date;
(6) that Holders who want to convert Securities must
satisfy the requirements in paragraph 8 of the Securities;
(7) that Securities called for redemption must be
surrendered to the Paying Agent to collect the redemption
price;
(8) that interest on Securities called for
redemption ceases to accrue on and after the redemption
date; and
(9) the CUSIP number of the Securities.
At the Company's request, the Trustee shall give the
notice of redemption in the Company's name and at the Company's
expense.
SECTION 3.04. Effect of Notice of Redemption.
Once a notice of redemption is mailed, Securities
called for redemption become due and payable on the redemption
date at the redemption price and, on and after such date
(unless the Company shall default in the payment of the
redemption price), such Securities shall cease to bear
interest. Upon surrender to the Paying Agent, such Securities
shall be paid at the redemption price plus accrued interest to
the redemption date.
SECTION 3.05. Deposit of Redemption Price.
On or before 10:00 a.m. on the redemption date, the
Company shall deposit with the Paying Agent money in funds
immediately available on the redemption date sufficient to pay
the redemption price of and accrued interest on all Securities
to be redeemed on that date. The Paying Agent shall return to
the Company, as soon as practicable, any money not required for
that purpose because of conversion of Securities.
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SECTION 3.06. Securities Redeemed in Part.
Upon surrender of a Security that is redeemed in
part, the Trustee shall authenticate for the Holder a new
Security equal in principal amount to the unredeemed portion of
the Security surrendered.
If any Security selected for partial redemption is
converted in part, the converted portion of such Security shall
be deemed (so far as may be) to be the portion selected for
redemption.
ARTICLE 4
COVENANTS
SECTION 4.01. Payment of Securities.
The Company shall pay the principal of and interest
on the Securities on the dates and in the manner provided in
the Securities. Principal and interest shall be considered
paid on the date due if the Paying Agent holds on that date
money sufficient to pay all principal and interest then due.
The Company shall pay interest on overdue principal
at the rate borne by the Securities. The Company shall pay
interest on overdue installments of interest at the same rate
to the extent not prohibited by applicable statute or case law.
SECTION 4.02. Maintenance of Office or Agency.
The Company will maintain in the Borough of
Manhattan, The City of New York, an office or agency where
Securities may be surrendered for registration of transfer or
exchange or conversion and where notices and demands to or upon
the Company in respect of the Securities and this Indenture may
be served. The Company will give prompt written notice to the
Trustee of the location, and any change in the location, of
such office or agency. If at any time the Company shall fail
to maintain any such required office or agency or shall fail to
furnish the Trustee with the address thereof, such
presentations, surrenders, notices and demands may be made or
served at the Corporate Trust Office of the Trustee.
The Company may also from time to time designate one
or more other offices or agencies where the Securities may be
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presented or surrendered for any or all such purposes and may
from time to time rescind such designations; provided, however,
that no such designation or rescission shall in any manner
relieve the Company of its obligation to maintain an office or
agency in the Borough of Manhattan, The City of New York for
such purposes. The Company will give prompt written notice to
the Trustee of any such designation or rescission and of any
change in the location of any such other office or agency.
The Company hereby designates the Corporate Trust
Office of the Trustee in the Borough of Manhattan, the City of
New York, an agency of the Company in accordance with Section
2.03.
SECTION 4.03. SEC Reports.
The Company shall file with the Trustee within 15
days after it files them with the SEC copies of the annual
reports and of the information, documents and other reports (or
copies of such portions of any of the foregoing as the SEC may
by rules and regulations prescribe) which the Company is
required to file with the SEC pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). The Company also shall comply with the other
provisions of TIA Section 314(a).
So long as the Securities remain outstanding, the
Company shall cause its annual reports to shareholders and any
other financial reports furnished by it to shareholders
generally to be mailed to the Holders at their addresses
appearing in the register of Securities maintained by the
Registrar.
SECTION 4.04. Compliance Certificate.
The Company shall deliver to the Trustee within 120
days after the end of each fiscal year of the Company an
Officers' Certificate stating whether or not the signatories
know of any Default by the Company in performing any of its
obligations under this Indenture or the Securities. If they do
know of any such Default, the certificate shall describe the
Default and its status.
SECTION 4.05. Stay, Extension and Usury Laws.
The Company covenants (to the extent that it may
lawfully do so) that it will not at any time insist upon,
plead, or in any manner whatsoever claim or take the benefit or
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advantage of, any stay, extension or usury law wherever
enacted, now or at any time hereafter in force, which may
affect the covenants or the performance of this Indenture; and
the Company (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and
covenants that it will not, by resort to any such law, hinder,
delay or impede the execution of any power herein granted to
the Trustee, but will suffer and permit the execution of every
such power as though no such law had been enacted.
SECTION 4.06. Corporate Existence.
Subject to Article 5, the Company will do or cause to
be done all things necessary to preserve and keep in full force
and effect its corporate existence and the corporate existence
of each subsidiary in accordance with the respective
organizational documents of each subsidiary and the rights
(charter and statutory), licenses and franchises to the Company
and its subsidiaries; provided, however, that the Company shall
not be required to preserve any such right, license or
franchise, or the corporate existence of any subsidiary, if in
the judgment of the Board of Directors of the Company, (i) such
preservation or existence is not material to the conduct of
business of the Company and (ii) the loss of such right,
license or franchise or the dissolution of such subsidiary does
not have a material adverse impact on the Holders.
SECTION 4.07. Notice of Default.
In the event that any Default under Section 6.01
hereof shall occur the Company will give prompt written notice
of such Default to the Trustee.
SECTION 4.08. Change in Control.
(a) In the event that there shall occur a Change in
Control (as defined below) of the Company, each Holder of a
Security shall have the right (the "Repurchase Right") upon
receipt of a Repurchase Right Notice (as defined below), at
such Holder's option, to require the Company to repurchase any
Security of such Holder or any portion of the principal amount
thereof which is $1,000 or an integral multiple of $1,000, on
the date (the "Repurchase Date") that is 45 days after the date
of the Repurchase Right Notice, or, if such 45th day is a Legal
Holiday, the next subsequent day which is not a Legal Holiday,
unless otherwise required by applicable law, at a purchase
price equal to 100% of the principal amount thereof, plus
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accrued and unpaid interest to the Repurchase Date (the
"Repurchase Price"). The right to require the repurchase of
Securities shall not continue after a discharge of the Company
from its obligations with respect to the Securities in
accordance with Article 8.
(b) Within 30 days after the occurrence of a Change
in Control, the Company, or, at the request of the Company, the
Trustee, shall give notice of the occurrence of the Change in
Control and of the Repurchase Right set forth herein to each
Holder (the "Repurchase Right Notice"). The Company shall also
deliver a copy of the Repurchase Right Notice to the Trustee.
Any such notice shall contain all instructions and materials
necessary to enable such Holders to deliver Securities pursuant
to the Repurchase Right including, without limitation, the
following:
(1) the Repurchase Date;
(2) the date by which the Repurchase Right must be
exercised;
(3) the Repurchase Price;
(4) that Securities are to be surrendered for
payment of the Repurchase Price;
(5) that the exercise of the Repurchase Right is
irrevocable, except that Holders who elect to exercise the
Repurchase Right will retain the right to convert
Securities submitted for repurchase until the close of
business on the second business day before the Repurchase
Date; and
(6) the then existing Conversion Rate for conversion
of Securities, the date on which the right to convert the
principal of the Securities to be repurchased will
terminate and the place or places where such Securities
may be surrendered for conversion.
(c) To exercise a Repurchase Right, a Holder shall
deliver to the Company (if it is acting as its own Paying
Agent) or to a Paying Agent designated by the Company for such
purpose in the notice referred to above on or before the 30th
day after the date of the Repurchase Right Notice, or, if such
day is a Legal Holiday, the next subsequent day which is not a
Legal Holiday, (i) written notice of the Holder's exercise of
such right, which notice shall set forth the name of the
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Holder, the principal amount of Securities (or portions
thereof) to be repurchased, a statement that an election to
exercise the Repurchase Right is being made thereby and
(ii) the Securities with respect to which the Repurchase Right
is being exercised, duly endorsed for transfer to the Company,
and the Holder of such Securities shall be entitled to receive
from the Company (if it is acting as its own Paying Agent) or
such Paying Agent a nontransferable receipt of deposit
evidencing such deposit. Such written notice shall be
irrevocable, except as provided in Section 4.08(b) above. If
the Repurchase Date is between a regular record date for the
payment of interest and the next succeeding interest payment
date, any Security to be repurchased must be accompanied by
funds equal to the interest payable on such succeeding interest
payment date on the principal amount to be repurchased (unless
such Security shall have been called for redemption, in which
case no such payment shall be required), and the interest on
the principal amount of the Security being repurchased will be
paid on such next succeeding interest payment date to the
registered holder of such Security on the immediately preceding
record date. A Security repurchased on an interest payment
date need not be accompanied by any payment, and the interest
on the principal amount of the Security being repurchased will
be paid on such interest payment date to the registered holder
of such Security on the immediately preceding record date.
(d) In the event a Repurchase Right shall be
exercised in accordance with the terms hereof, the Company
shall pay or cause to be paid the applicable Repurchase Price
with respect to the Securities as to which the Repurchase Right
shall have been exercised to the Holder on the Repurchase Date.
(e) Prior to a Repurchase Date, the Company shall
deposit with the Trustee or with a Paying Agent (or, if the
Company is acting as its own Paying Agent, segregate and hold
in trust in accordance with Section 2.04) an amount of money
sufficient to pay the Repurchase Price payable in respect of
all of the Securities which are to be repurchased on that date.
If any Security submitted for repurchase is converted prior to
the repurchase thereof, any money deposited with the Trustee or
with any Paying Agent or so segregated and held in trust for
the redemption of such Security shall be paid to the Company on
its request, or, if then held by the Company, shall be
discharged from such trust.
(f) Both the notice of the Company and the notice of
the Holder having been given as specified in this Section 4.08,
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the Securities so to be repurchased shall, on the Repurchase
Date, become due and payable at the Repurchase Price applicable
thereto and from and after such date (unless the Company shall
default in the payment of the Repurchase Price) such Securities
shall cease to bear interest. Upon surrender of any such
Security for repurchase in accordance with said notice, such
Security shall be paid by the Company at the Repurchase Price.
If any Security shall not be paid upon surrender thereof for
repurchase, the principal and premium, if any, shall, until
paid, bear interest from the Repurchase Date at the rate borne
by such Security.
(g) Any Security which is to be submitted for
repurchase only in part shall be delivered pursuant to this
Section 4.08 (with, if the Company or the Trustee so requires,
due endorsement by, or a written instrument of transfer in form
satisfactory to the Company and the Trustee duly executed by,
the Holder thereof or his attorney duly authorized in writing),
and the Company shall execute, and the Trustee shall
authenticate and make available for delivery to the Holder of
such Security without any service charge, a new Security or
Securities, of any authorized denomination as requested by such
Holder, of the same tenor and in aggregate principal amount
equal to and in exchange for the portion of the principal of
such Security not submitted for repurchase.
(h) If any repurchase pursuant to the foregoing
provisions constitutes an "issuer tender offer" as defined in
Rule 13e-4 under the Exchange Act, the Company will comply with
the requirements of Rule 13e-4, Rule 14e-1 and any other tender
offer rules under the Exchange Act which then may be
applicable, including the filing of an Issuer Tender Offer
Statement on Schedule 13E-4 with the SEC and the furnishing of
certain information contained therein to the Holders.
(i) As used in this Section 4.08:
A "Change in Control" of the Company shall be deemed
to have occurred at such time as any person, together with its
affiliates or associates, other than the Management Group (as
defined below) is or becomes the beneficial owner, directly or
indirectly, through a purchase, merger or other acquisition
transaction, of shares of capital stock of the Company
entitling such person to exercise 50% or more of the total
voting power of all shares of capital stock of the Company
entitled to vote in elections of directors; provided that a
Change in Control shall not be deemed to have occurred if
either (i) the
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last sale price of the Common Stock for any five
trading days during the ten trading days immediately preceding
the Change in Control is at least equal to 105% of the
Conversion Price in effect on the day of the Change in Control
or (ii) all of the consideration (excluding cash payments for
fractional shares) in the transaction or transactions
constituting the Change in Control consists of shares of common
stock traded on a national securities exchange or through
NASDAQ or another comparable quotation system. "Beneficial
owner" shall be determined in accordance with Rule 13d-3, as in
effect on the date of the execution of this Indenture,
promulgated by the Securities and Exchange Commission under the
Exchange Act. The "Management Group" shall consist of the
executive officers of the Company as of the date hereof,
members of their immediate families, certain trusts for their
benefit, and legal representatives of, or heirs, beneficiaries
or legatees receiving Common Stock under, any such person's
estate.
"Conversion Price" shall be deemed to equal $1,000
divided by the conversion rate on the date of calculation.
ARTICLE 5
SUCCESSORS
SECTION 5.01. When Company May Merge, etc.
The Company shall not consolidate with or merge into,
or directly or indirectly transfer or lease all or
substantially all of its assets to, any person unless:
(1) the person formed by or surviving any such
consolidation or merger (if other than the Company), or to
which such sale or conveyance shall have been made, is a
person organized and existing under the laws of the United
States, any State thereof or the District of Columbia;
(2) the person formed by or surviving any such
consolidation or merger (if other than the Company), or to
which such sale or conveyance shall have been made,
assumes by supplemental indenture all the obligations of
the Company under the Securities and this Indenture; and
(3) immediately after giving effect to such
transaction no Default or Event of Default exists.
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The Company shall deliver to the Trustee prior to the
consummation of the proposed transaction an Officers'
Certificate to the foregoing effect and an Opinion of Counsel
stating that the proposed transaction and such supplemental
indenture comply with this Indenture.
SECTION 5.02. Successor Substituted.
Upon any consolidation or merger or transfer or lease
of all or substantially all of the assets of the Company in
accordance with Section 5.01, the successor person formed by
such consolidation or into which the Company is merged or to
which such transfer or lease is made shall succeed to, and be
substituted for, and may exercise every right and power of, and
shall assume every duty and obligation of, the Company under
this Indenture with the same effect as if such successor
corporation had been named as the Company herein. When the
successor corporation assumes all obligations of the Company
hereunder, all obligations of the predecessor corporation shall
terminate.
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01. Events of Default.
An "Event of Default" occurs if:
(1) the Company defaults in the payment of interest
on any Security when the same becomes due and payable and
the default continues for a period of 30 days, whether or
not such payment shall be prohibited by the provisions of
Article 11 hereof;
(2) the Company defaults in the payment of the
principal of any Security when the same becomes due and
payable at maturity, upon acceleration or otherwise,
whether or not such payment shall be prohibited by the
provisions of Article 11 hereof;
(3) the Company fails to comply with any of its
other agreements in the Securities or this Indenture and
the default continues for the period and after the notice
specified below;
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(4) an event of default shall have occurred and be
continuing under any security or other evidence of
indebtedness of the Company or any of its subsidiaries
whether such indebtedness now exists or shall be created
hereafter, which event of default results in an
acceleration of a principal amount of such indebtedness
which, together with any such other indebtedness so
accelerated, aggregates more than $10,000,000, and such
acceleration is not waived or rescinded or such
indebtedness, paid or discharged within a period and after
the notice specified below;
(5) a final judgment or judgments for the payment of
money in excess of $10,000,000 in the aggregate are
rendered against the Company and such judgment or
judgments remain unstayed, unsatisfied or undischarged for
the period and after the notice specified below;
(6) the Company pursuant to or within the meaning of
any Bankruptcy Law:
(A) commences a voluntary case,
(B) consents to the entry of an order for
relief against it in an involuntary case,
(C) consents to the appointment of a Custodian
of it or for all or substantially all of its
property, or
(D) makes a general assignment for the benefit
of its creditors; or
(7) a court of competent jurisdiction enters an
order or decree under any Bankruptcy Law that:
(A) is for relief against the Company in an
involuntary case,
(B) appoints a Custodian of the Company for all
or substantially all of its property, or
(C) orders the liquidation of the Company,
and the order or decree remains unstayed and in effect for
90 days.
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The term "Bankruptcy Law" means Title 11, U.S. Code
or any similar Federal or state law for the relief of debtors.
The term "Custodian" means any receiver, trustee, assignee,
liquidator or similar official under any Bankruptcy Law.
A default under clause (3), (4) or (5) is not an
Event of Default until the Trustee or the Holders of at least
25% in principal amount of the Securities notify the Company of
the default and the Company does not cure the default within 60
days with respect to clause (3) or (5), and within 30 days with
respect to clause (4), after receipt of the notice. The notice
must specify the default, demand that it be remedied and state
that the notice is a "Notice of Default". If the Holders of
25% in principal amount of the outstanding Securities request
the Trustee to give such notice on their behalf, the Trustee
shall do so.
The Trustee shall not be deemed to have notice of any
Default hereunder unless it shall have actual knowledge of such
Default or it shall have received written notice thereof making
specific reference to such Default as a Default.
SECTION 6.02. Acceleration.
If an Event of Default (other than an Event of
Default specified in Section 6.01(6) or (7)) occurs and is
continuing, the Trustee by notice to the Company, or the
Holders of at least 25% in principal amount of the Securities
by notice to the Company and the Trustee, may declare the
principal of and accrued interest on all the Securities to be
due and payable. Upon such declaration such principal and
interest shall be due and payable immediately. If an Event of
Default specified in Section 6.01(6) or (7) occurs, all unpaid
principal and accrued interest on the Securities then
outstanding shall ipso facto become and be immediately due and
payable without any declaration or other act on the part of the
Trustee or any Securityholder. The Holders of a majority in
principal amount of the Securities by notice to the Trustee may
rescind an acceleration and its consequences if the rescission
would not conflict with any judgment or decree and if all
existing Events of Default have been cured or waived except
nonpayment of principal or interest that has become due solely
because of the acceleration.
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SECTION 6.03. Other Remedies.
Notwithstanding any other provision of this
Indenture, if an Event of Default occurs and is continuing, the
Trustee may pursue any available remedy by proceeding at law or
in equity to collect the payment of principal of or interest on
the Securities or to enforce the performance of any provision
of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does
not possess any of the Securities or does not produce any of
them in the proceeding. A delay or omission by the Trustee or
any Securityholder in exercising any right or remedy accruing
upon an Event of Default shall not impair the right or remedy
or constitute a waiver of or acquiescence in the Event of
Default. All remedies are cumulative.
SECTION 6.04. Waiver of Past Defaults.
Subject to Sections 6.07 and 9.02, the Holders of a
majority in principal amount of the Securities by notice to the
Trustee may waive an existing Default and its consequences.
When a Default is waived, it is cured and ceases.
SECTION 6.05. Control by Majority.
The Holders of a majority in principal amount of the
Securities may 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 it. However, the
Trustee may refuse to follow any direction that conflicts with
law or this Indenture, is unduly prejudicial to the rights of
other Securityholders or would involve the Trustee in personal
liability and the Trustee may take any other action deemed
proper by the Trustee which is not inconsistent with such
direction.
SECTION 6.06. Limitation on Suits.
Except as provided in Section 6.07, a Securityholder
may pursue a remedy with respect to this Indenture or the
Securities only if:
(1) the Holder gives to the Trustee written notice
of a continuing Event of Default;
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(2) the Holders of at least 25% in principal amount
of the Securities make a written request to the Trustee to
institute proceedings in respect of such Event of Default;
(3) such Holder or Holders offer to the Trustee
reasonable indemnity against any loss, liability or
expense;
(4) the Trustee does not comply with the request
within 60 days after receipt of the request and the offer
of indemnity; and
(5) during such 60-day period the Holders of a
majority in principal amount of the Securities do not give
the Trustee a direction inconsistent with the request.
A Securityholder may not use this Indenture to
prejudice the rights of another Securityholder or to obtain a
preference or priority over another Securityholder.
SECTION 6.07. Rights of Holders to Receive Payment.
Notwithstanding any other provision of this
Indenture, the right of any Holder of a Security to receive
payment of principal of and interest on the Security, on or
after the respective due dates expressed in the Security, or to
bring suit for the enforcement of any such payment on or after
such respective dates, shall not be impaired or affected
without the consent of the Holder.
Notwithstanding any other provision of this
Indenture, the right of any Holder of a Security to bring suit
for the enforcement of the right to convert the Security shall
not be impaired or affected without the consent of the Holder.
SECTION 6.08. Collection Suit by Trustee.
If an Event of Default specified in Section 6.01(1)
or (2) occurs and is continuing, the Trustee may recover
judgment in its own name and as trustee of an express trust
against the Company for the whole amount of principal and
interest remaining unpaid.
SECTION 6.09. Trustee May File Proofs of Claim.
The Trustee may file such proofs of claim and other
papers or documents as may be necessary or advisable in order
to have the claims of the Trustee, any predecessor Trustee and
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the Securityholders allowed in any judicial proceedings
relative to the Company, its creditors or its property.
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 the Securities any plan of
reorganization, arrangement, adjustment or composition
affecting the Securities or the rights of any Holder thereof,
or to authorize the Trustee to vote in respect of the claim of
any Holder of the Securities in any such proceeding.
SECTION 6.10. Priorities.
If the Trustee collects any money pursuant to this
Article, it shall pay out the money in the following order:
First: to the Trustee for amounts due under Section
7.07;
Second: to holders of Senior Indebtedness to the
extent required by Article 11;
Third: to Securityholders for amounts due and unpaid
on the Securities for principal and interest, ratably,
without preference or priority of any kind, according to
the amounts due and payable on the Securities for
principal and interest, respectively; and
Fourth: to the Company.
The Trustee may fix a record date and payment date
for any payment by it to Securityholders pursuant to this
Section.
SECTION 6.11. Undertaking for Costs.
In any suit for the enforcement of any right or
remedy under this Indenture or in any suit against the Trustee
for any action taken or omitted by it as Trustee, a court in
its discretion may require the filing by any party litigant in
the suit other than the Trustee of an undertaking to pay the
costs of the suit, and the court in its discretion may assess
reasonable costs, including reasonable attorneys' fees, against
any party litigant in the suit, having due regard to the merits
and good faith of the claims or defenses made by the party
litigant. This Section does not apply to a suit by the
Trustee, a
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suit by a Holder pursuant to Section 6.07 or a suit
by Holders of more than 10% in principal amount of the
Securities.
ARTICLE 7
TRUSTEE
SECTION 7.01. Duties of Trustee.
(a) If an Event of Default has occurred and is
continuing, the Trustee shall exercise such of the rights and
powers vested in it by this Indenture, and use the same degree
of care and skill in their exercise, as a prudent person would
exercise or use under the circumstances in the conduct of his
own affairs.
(b) Except during the continuance of an Event of
Default:
(1) The Trustee need perform only those duties that
are specifically set forth in this Indenture and no
others.
(2) In the absence of bad faith on its part, the
Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed
therein, upon certificates or opinions furnished to the
Trustee and conforming to the requirements of this
Indenture. However, the Trustee shall examine the
certificates and opinions to determine whether or not they
conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liability
for its own negligent action, its own negligent failure to act
or its own willful misconduct, except that:
(1) This paragraph does not limit the effect of
paragraph (b) of this Section 7.01.
(2) The Trustee shall not be liable for any error of
judgment made in good faith by a Trust Officer, unless it
is proved that the Trustee was negligent in ascertaining
the pertinent facts.
(3) The Trustee shall not be liable with respect to
any action it takes or omits to take in good faith in
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accordance with a direction received by it pursuant to
Section 6.05.
(d) Every provision of this Indenture that in any
way relates to the Trustee is subject to paragraphs (a), (b)
and (c) of this Section 7.01.
(e) The Trustee may refuse to perform any duty or
exercise any right or power unless it receives indemnity
satisfactory to it against any loss, liability or expense.
(f) The Trustee shall not be liable for interest on
any money received by it except as the Trustee may agree with
the Company. Money held in trust by the Trustee need not be
segregated from other funds except to the extent required by
law.
SECTION 7.02. Rights of Trustee.
(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 and/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
Certificate or Opinion.
(c) The Trustee may act through agents and shall not
be responsible for the misconduct or negligence of any agent
appointed with due care.
(d) The Trustee shall not be liable for any action
it takes or omits to take in good faith which it believes to be
authorized or within its rights or powers.
SECTION 7.03. Individual Rights of Trustee.
The Trustee in its individual or any other capacity
may become the owner or pledgee of Securities and may otherwise
deal with the Company or an Affiliate thereof with the same
rights it would have if it were not Trustee. Any Agent may do
the same with like rights. The Trustee, however, must comply
with Sections 7.10 and 7.11.
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SECTION 7.04. Trustee's Disclaimer.
The Trustee makes no representation as to the
validity or adequacy of this Indenture or the Securities; it
shall not be accountable for the Company's use of the proceeds
from the Securities; and it shall not be responsible for any
statement in the Securities other than its certificate of
authentication.
SECTION 7.05. Notice of Defaults.
If a Default occurs and is continuing and if it is
actually known to the Trustee or the Trustee has received
written notice thereof, the Trustee shall mail to each
Securityholder a notice of the Default within 90 days after it
occurs. Except in the case of a Default in payment of
principal of or interest on any Security, the Trustee may
withhold the notice if and so long as it in good faith
determines that withholding the notice is in the interests of
Securityholders.
SECTION 7.06. Reports by Trustee to Holders.
If required by TIA Section 313(a), within 60 days after
each May 1 beginning with May 1, 1996, the Trustee shall mail
to each Securityholder as required by TIA Section 313(c) a brief
report dated as of such date that complies with TIA Section 313(a).
The Trustee also shall comply with TIA Section 313(b).
A copy of each report at the time of its mailing to
Securityholders shall be filed by the Trustee with the SEC and
each stock exchange, if any, on which the Securities are
listed. The Company shall notify the Trustee when the
Securities are listed on any stock exchange.
SECTION 7.07. Compensation and Indemnity.
The Company shall pay to the Trustee from time to
time such compensation for its services as shall be agreed upon
in writing. The Trustee's compensation shall not be limited by
any law on compensation of a trustee of an express trust. The
Company shall reimburse the Trustee upon request for all
reasonable out-of-pocket expenses incurred by it. Such
expenses shall include the reasonable compensation and out-of-
pocket expenses of the Trustee's agents and counsel.
The Company shall indemnify the Trustee against any
loss or liability (including the fees and expenses of counsel)
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incurred by it in connection with the administration of this
trust and the performance of its duties hereunder. The Company
need not pay for any settlement made without its consent. The
Trustee shall notify the Company promptly of any claim for
which it may seek indemnification. The Company need not
reimburse any expense or indemnify against any loss or
liability incurred by the Trustee through the Trustee's
negligence or bad faith.
To secure the Company's payment obligations in this
Section, the Trustee shall have a lien prior to the Securities
on all money or property held or collected by the Trustee,
except that held in trust to pay principal and interest on
particular Securities.
When the Trustee incurs expenses or renders services
after an Event of Default specified in Section 6.01(6) or (7)
occurs, the expenses and the compensation for the services are
intended to constitute expenses of administration under any
Bankruptcy Law.
SECTION 7.08. Replacement of Trustee.
A resignation or removal of the Trustee and
appointment of a successor Trustee shall become effective only
upon the successor Trustee's acceptance of appointment as
provided in this Section.
The Trustee may resign by so notifying the Company.
The Holders of a majority in principal amount of the Securities
may remove the Trustee by so notifying the Trustee and the
Company and may appoint a successor Trustee with the Company's
consent. The Company may remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged a bankrupt or an
insolvent;
(3) a receiver or other public officer takes charge
of the Trustee or its property; or
(4) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy
exists in the office of Trustee for any reason, the Company
shall promptly appoint a successor Trustee. Within one year
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after the successor Trustee takes office, the Holders of a
majority in principal amount of the Securities may appoint a
successor Trustee to replace the successor Trustee appointed by
the Company.
If a successor Trustee does not take office within 60
days after the retiring Trustee resigns or is removed, the
retiring Trustee, the Company or the Holders of at least 10% in
principal amount of the Securities may petition any court of
competent jurisdiction for the appointment of a successor
Trustee.
If the Trustee fails to comply with Section 7.10, any
Holder may petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor
Trustee.
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. The successor Trustee shall mail
a notice of its succession to Securityholders. 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 7.07.
SECTION 7.09. Successor Trustee by ▇▇▇▇▇▇, etc.
If the Trustee consolidates, merges or converts into,
or transfers all or substantially all of its corporate trust
business to another corporation, the successor corporation
without any further act shall be the successor Trustee.
SECTION 7.10. Eligibility; Disqualification.
This Indenture shall always have a Trustee who
satisfies the requirements of TIA Section 310(a)(1). The Trustee
shall always have a combined capital and surplus of at least
$50,000,000 as set forth in its most recent published annual
report of condition. The Trustee shall comply with TIA
Section 310(b).
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SECTION 7.11. 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.
ARTICLE 8
DISCHARGE OF INDENTURE
SECTION 8.01. Termination of Company's Obligations.
The Company may terminate all of its obligations
under this Indenture if all Securities previously authenticated
and delivered (other than mutilated, destroyed, lost or stolen
Securities which have been replaced or paid) have been
delivered to the Trustee for cancellation or if:
(1) the Securities mature within one year or all of
them are to be called for redemption within one year under
arrangements satisfactory to the Trustee for giving the
notice of redemption;
(2) the Company irrevocably deposits in trust with
the Trustee money or U.S. Government Obligations
sufficient to pay principal of and interest on the
Securities to maturity or redemption, as the case may be.
Immediately after making the deposit, the Company shall
give notice of such event to the Securityholders;
(3) the Company has paid or caused to be paid all
sums then payable by the Company to the Trustee hereunder
as of the date of such deposit; and
(4) the Company has delivered to the Trustee an
Officers' Certificate stating that all conditions
precedent provided for herein relating to the satisfaction
and discharge of this Indenture have been complied with.
The Company may make the deposit only during the one-year
period and only if Article 11 permits it.
However, the Company's obligations in Sections 2.03, 2.04,
2.05, 2.06, 2.07, 4.01, 7.07, 7.08 and 8.03, and in Article 10,
shall survive until the Securities are no longer outstanding.
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Thereafter the Company's obligations in Sections 7.07 and 8.03
shall survive.
After a deposit pursuant to this Section 8.01, the
Trustee upon request shall acknowledge in writing the discharge
of the Company's obligations under the Securities and this
Indenture except for those surviving obligations specified
above.
In order to have money available on a payment date to
pay principal or interest on the Securities, the U.S.
Government Obligations shall be payable as to principal or
interest on or before such payment date in such amounts as will
provide the necessary money.
"U.S. Government Obligations" means direct non-
callable obligations of, or non-callable obligations guaranteed
by, the United States of America for the payment of which the
full faith and credit of the United States of America is
pledged.
SECTION 8.02. Application of Trust Money.
The Trustee shall hold in trust money or U.S.
Government Obligations deposited with it pursuant to Section
8.01. It shall apply the deposited money and the money from
U.S. Government Obligations through the Paying Agent and in
accordance with this Indenture to the payment of principal of
and interest on the Securities. Money and securities so held
in trust are not subject to the subordination provisions of
Article 11.
SECTION 8.03. Repayment to Company.
The Trustee and the Paying Agent shall promptly pay
to the Company upon request any excess money or securities held
by them at any time. The Trustee and the Paying Agent shall
pay to the Company upon request any money held by them for the
payment of principal or interest that remains unclaimed for two
years; provided, however, that the Trustee or such Paying
Agent, before being required to make any such repayment, may,
at the expense of the Company, cause to be published once in a
newspaper of general circulation in The City of New York or
cause to be mailed to each Holder, notice stating that such
money remains and that, after a date specified therein, which
shall not be less than 30 days form the date of such
publication or mailing, any unclaimed balance of such money
then remaining will be repaid to the Company. After payment to
the
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Company, Securityholders entitled to the money must look to
the Company for payment as general creditors unless an
applicable abandoned property law designates another person.
SECTION 8.04. Reinstatement.
If the Trustee or Paying Agent is unable to apply any
money or U.S. Government Obligations in accordance with Section
8.01 by reason of any legal proceeding or by reason of any
order or judgment of any court or governmental authority
enjoining, restraining or otherwise prohibiting such
application, the Company's obligations under this Indenture and
the Securities shall be revived and reinstated as though no
deposit had occurred pursuant to Section 8.01 until such time
as the Trustee or Paying Agent is permitted to apply all such
money or U.S. Government Obligations in accordance with
Section 8.01; provided, however, that if the Company has made
any payment of interest on or principal of any Securities
because of the reinstatement of its obligations, the Company
shall be subrogated to the rights of the Holders of such
Securities to receive such payment from the money or U.S.
Government Obligations held by the Trustee or Paying Agent.
ARTICLE 9
AMENDMENTS
SECTION 9.01. Without Consent of Holders.
The Company, with the consent of the Trustee, may
amend or supplement this Indenture or the Securities without
notice to or the consent of any Securityholder:
(1) to cure any ambiguity, omission, defect or
inconsistency;
(2) to comply with Sections 5.01 and 10.14;
(3) to provide for uncertificated Securities in
addition to certificated Securities; or
(4) to make any change that does not materially
adversely affect the rights of any Securityholder.
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SECTION 9.02. With Consent of Holders.
The Company, with the consent of the Trustee, may
amend or supplement this Indenture or the Securities without
notice to any Securityholder but with the written consent of
the Holders of at least a majority in principal amount of the
Securities then outstanding. Subject to Section 6.07, the
Holders of a majority in principal amount of the Securities
then outstanding may waive compliance by the Company with any
provision of this Indenture or the Securities without notice to
any Securityholder. However, without the consent of each
Securityholder affected, an amendment, supplement or waiver,
including a waiver pursuant to Section 6.04, may not:
(1) reduce the amount of Securities whose Holders
must consent to an amendment, supplement or waiver;
(2) reduce the rate of or change the time for
payment of interest on any Security;
(3) reduce the principal of or change the fixed
maturity of any Security (including, without limitation,
the optional redemption provisions, but excluding
Section 4.08);
(4) waive a default in the payment of principal of
or interest on any Security;
(5) make any Security payable in money other than
that stated in the Security;
(6) make any change in Section 6.04, Section 6.07 or
Section 9.02; or
(7) make any change that adversely affects the right
to convert any Security, including decreasing the
conversion rate of any Security (except as such rate may
be decreased pursuant to the provisions of Article Ten
hereof).
Promptly after an amendment under this Section
becomes effective, the Company shall mail to Securityholders a
notice briefly describing the amendment.
It shall not be necessary for the consent of the
Holders under this Section to approve the particular form of
-35-
any proposed amendment or supplement, but it shall be
sufficient if such consent approves the substance thereof.
SECTION 9.03. Compliance with Trust Indenture Act.
Every amendment to this Indenture or the Securities
shall comply with the TIA as then in effect.
SECTION 9.04. Revocation and Effect of Consents.
Until an amendment, supplement or waiver becomes
effective, a consent to it by a Holder of a Security is a
continuing consent by the Holder and every subsequent Holder of
a Security or portion of a Security that evidences the same
debt as the consenting ▇▇▇▇▇▇'s Security, even if notation of
the consent is not made on any Security. However, any such
Holder or subsequent Holder may revoke the consent as to his
Security or portion of a Security if the Trustee receives the
notice of revocation before the date the amendment, supplement
or waiver becomes effective. An amendment, supplement or
waiver becomes effective in accordance with its terms and
thereafter binds every Securityholder.
After an amendment, supplement or waiver becomes
effective with respect to the Securities, it shall bind every
Securityholder unless it makes a change described in any of
clauses (1) through (7) of Section 9.02. In that case the
amendment, supplement or waiver shall bind each Holder of a
Security who has consented to it and, provided that notice of
such amendment, supplement or waiver is reflected on a Security
that evidences the same debt as the consenting Holder's
Security, every subsequent Holder of a Security or portion of a
Security that evidences the same debt as the consenting
▇▇▇▇▇▇'s Security.
SECTION 9.05. Notation on or Exchange of Securities.
If an amendment, supplement or waiver changes the
terms of a Security, the Trustee may require the Holder of the
Security to deliver it to the Trustee. The Trustee may place
an appropriate notation on the Security about the changed terms
and return it to the Holder. Alternatively, if the Company or
the Trustee so determines, the Company in exchange for the
Security shall issue and the Trustee shall authenticate a new
Security that reflects the changed terms.
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SECTION 9.06. Trustee Protected.
The Trustee need not sign any amendment, supplement
or waiver authorized pursuant to this Article that adversely
affects the Trustee's rights. The Trustee shall be entitled to
receive and rely upon an Opinion of Counsel and an Officers'
Certificate that any supplemental indenture complies with the
Indenture.
ARTICLE 10
CONVERSION
SECTION 10.01. Conversion Privilege.
A Holder of a Security may convert it into Common
Stock at any time during the period stated in paragraph 8 of
the Securities.
The initial conversion rate is stated in paragraph 8
of the Securities. The conversion rate is subject to
adjustment in accordance with Sections 10.06 through 10.14.
A Holder may convert a portion of a Security if the
portion is $1,000 or integral multiples thereof. Provisions of
this Indenture that apply to conversion of all of a Security
also apply to conversion of a portion of it.
SECTION 10.02. Conversion Procedure.
To convert a Security a Holder must satisfy the
requirements in paragraph 8 of the Securities. The date on
which the Holder satisfies all those requirements is the
conversion date. As soon as practicable, the Company shall
deliver to the Holder through the Conversion Agent a
certificate for the number of full shares of Common Stock
issuable upon the conversion and a check in lieu of any
fractional share. The person in whose name the certificate is
registered shall be treated as a stockholder of record on and
after the conversion date.
If any Security is converted between the record date
for the payment of interest and the next succeeding interest
payment date, such Security must be accompanied by funds equal
to the interest payable on such succeeding interest payment
date on the principal amount so converted (unless such Security
-37-
shall have been called for redemption, in which case no such
payment shall be required). A Security converted on an
interest payment date need not be accompanied by any payment,
and the interest on the principal amount of the Security being
converted will be paid on such interest payment date to the
registered Holder of such Security on the immediately preceding
record date. Subject to the aforesaid right of the registered
Holder to receive interest, no payment or adjustment will be
made on conversion for interest accrued on the converted
Security or for dividends on the Common Stock issued upon
conversion.
If a Holder converts more than one Security at the
same time, the number of full shares issuable upon the
conversion shall be based on the total principal amount of the
Securities converted.
Upon surrender of a Security that is converted in
part the Trustee shall authenticate for the Holder a new
Security equal in principal amount to the unconverted portion
of the Security surrendered.
If the last day on which a Security may be converted
is a Legal Holiday in a place where a Conversion Agent is
located, the Security may be surrendered to that Conversion
Agent on the next succeeding day that is not a Legal Holiday.
SECTION 10.03. Fractional Shares.
The Company will not issue a fractional share of
Common Stock upon conversion of a Security. Instead the
Company will deliver its check for the market value of a
fractional share. The market value of a fraction of a share is
determined as follows: Multiply the market price of a full
share by the fraction and round the result to the nearest cent.
The market price of a share of Common Stock for the
purposes of Section 10.03 is the last reported sale price of a
share of Common Stock on the principal national securities
exchange on which the shares of Common Stock are listed or
admitted to trading or on the National Association of
Securities Dealers National Market System ("NMS") on the
business day next preceding the date of conversion, or, if the
Common Stock is not then listed on an exchange, the closing
sale price (or the quoted closing bid price if there were no
sales) as reported by the National Association of Securities
Dealers Automated Quotation System ("NASDAQ") on the business
day next
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preceding the date of conversion. In the absence of
one or more such quotations, the Board of Directors shall
determine the current market price on the basis of such
quotations as it considers appropriate.
SECTION 10.04. Taxes on Conversion.
If a Holder of a Security converts it, the Company
shall pay any documentary, stamp or similar issue or transfer
tax due on the issue of shares of Common Stock upon the
conversion. However, the Holder shall pay any such tax which
is due because the shares are issued in a name other than the
Holder's name.
SECTION 10.05. Company to Provide Stock.
The Company shall reserve out of its authorized but
unissued Common Stock or its Common Stock held in treasury
enough shares of Common Stock to permit the conversion of all
of the Securities.
All shares of Common Stock which may be issued upon
conversion of the Securities shall be validly issued, fully
paid and non-assessable.
The Company will endeavor to comply with all
securities laws regulating the offer and delivery of shares of
Common Stock upon conversion of Securities and will endeavor to
list such shares on each national securities exchange on which
the Common Stock is listed.
SECTION 10.06. Adjustment for Change in
Capital Stock.
If the Company:
(1) pays a dividend or makes a distribution on its
Capital Stock in shares of its Common Stock;
(2) subdivides its outstanding shares of Common
Stock into a greater number of shares;
(3) combines its outstanding shares of Common Stock
into a smaller number of shares; or
(4) issues by reclassification of its Common Stock
any shares of its Capital Stock,
-39-
then the conversion privilege and the conversion rate in effect
immediately prior to such action shall be adjusted so that the
Holder of a Security thereafter converted may receive the
number of shares of Capital Stock of the Company which he would
have owned immediately following such action if he had
converted the Security immediately prior to such action.
The adjustment shall become effective immediately
after the record date in the case of a dividend or distribution
and immediately after the effective date in the case of a
subdivision, combination or reclassification.
If after an adjustment a Holder of a Security may,
upon conversion, receive shares of two or more classes of
Capital Stock of the Company, the Board of Directors shall
determine the allocation of the adjusted conversion rate
between or among the classes of Capital Stock. After such
allocation, the conversion privilege and the conversion rate of
each class of Capital Stock shall thereafter be subject to
adjustment on terms comparable to those applicable to Common
Stock in this Article 10.
SECTION 10.07. Adjustment for Shares Issued Below
Market Price.
If the Company issues to all holders of Common Stock
shares of Common Stock or rights, options or warrants to
subscribe for or purchase shares of Common Stock, or any
securities convertible into or exchangeable for shares of
Common Stock, or rights, options or warrants to subscribe for
or purchase such convertible or exchangeable securities
(excluding shares of Common Stock, rights, options, warrants
therefor or convertible or exchangeable securities or rights,
options, or warrants therefor issued in transactions described
in Section 10.06) at a Price Per Share (as defined and
determined according to the formula given below) lower than the
current market price (see Section 10.12) on the date of such
issuance, the conversion rate shall be adjusted in accordance
with the following formula:
AC = CC x O + N
-----------
O + (N x R)
-------
M
where:
AC = the adjusted conversion rate.
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CC = the then current conversion rate.
O = the number of shares of Common Stock outstanding
immediately prior to such issuance.
N = the "Number of Shares," which (i) in the case of shares of
Common Stock is the number of shares issued; (ii) in the
case of rights, options or warrants to subscribe for or
purchase shares of Common Stock or of securities
convertible into or exchangeable for shares of Common
Stock, is the maximum number of shares of Common Stock
initially issuable upon exercise, conversion or exchange
thereof; and (iii) in the case of rights, options or
warrants to subscribe for or purchase convertible or
exchangeable securities, is the maximum number of shares
of Common Stock initially issuable upon the conversion or
exchange of the convertible or exchangeable securities
issuable upon the exercise of such rights, options or
warrants.
R = the proceeds received or receivable by the Company, which
(i) in the case of shares of Common Stock is the total
amount received or receivable by the Company in
consideration for the sale and issuance of the shares;
(ii) in the case of rights, options or warrants to
subscribe for or purchase shares of Common Stock or of
securities convertible into or exchangeable for shares of
Common Stock, is the total amount received or receivable
by the Company in consideration for the sale and issuance
of such rights, options, warrants or convertible or
exchangeable securities, plus the minimum aggregate amount
of additional consideration, other than the convertible or
exchangeable securities, payable to the Company upon
exercise, conversion or exchange thereof; and (iii) in the
case of rights, options or warrants to subscribe for or
purchase convertible or exchangeable securities, is the
total amount received or receivable by the Company in
consideration for the sale and issuance of such rights,
options or warrants, plus the minimum aggregate
consideration payable to the Company upon the exercise
thereof, plus the minimum aggregate amount of additional
consideration, other than the convertible or exchangeable
securities, payable upon the conversion or exchange of the
convertible or exchangeable securities; provided that in
each case the proceeds received or receivable by the
Company shall be deemed to be the amount of gross cash
proceeds without deducting therefrom any compensation paid
or discount allowed in the sale, underwriting or purchase
thereof by underwriters or
-41-
dealers or others performing similar services or any
expenses incurred in connection therewith.
M = the current market price per share of Common Stock on the
date of issue of the shares of Common Stock or the rights,
options or warrants to subscribe for or purchase shares of
Common Stock or the securities convertible into or
exchangeable for shares of Common Stock or the rights,
options or warrants to subscribe for or purchase
convertible or exchangeable securities.
"Price Per Share" shall be defined and determined
according to the following formula:
P = R
---
N
where:
P = Price Per Share
and R and N have the meanings assigned above.
If the Company shall issue shares of Common Stock or
rights, options, warrants or convertible or exchangeable
securities for a consideration consisting, in whole or in part,
of property other than cash the amount of such consideration
shall be determined in good faith by the Board of Directors
whose determination shall be conclusive and evidenced by a
resolution of the Board of Directors filed with the Trustee.
The adjustment shall be made successively whenever ay
such additional shares of Common Stock or such rights, options,
warrants or convertible or exchangeable securities are issued,
and shall become effective immediately after the date of issue
of such shares, rights, options, warrants or convertible or
exchangeable securities; provided, however, that if any such
rights, options or warrants issued by the Company as described
in this Section 10.07 are only exercisable upon the occurrence
of certain triggering events relating to control and provided
for in shareholders rights plans, then the conversion rate will
not be adjusted as provided in this Section 10.07 until such
triggering events occur.
To the extent that such rights, options or warrants
expire unexercised or to the extent any convertible or
exchangeable securities are redeemed by the Company or
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otherwise cease to be convertible or exchangeable into shares
of Common Stock, the conversion rate shall be readjusted to the
conversion rate which would then be in effect had the
adjustment made upon the date of issuance of such rights,
options, warrants or convertible or exchangeable securities
been made upon the basis of the issuance of rights, options or
warrants to subscribe for or purchase only the number of shares
of Common Stock as to which such rights, options or warrants
were actually exercised and the number of shares of Common
Stock that were actually issued upon the conversion or exchange
of the convertible or exchangeable securities.
SECTION 10.08. Adjustment for Other Distributions.
If the Company distributes to all holders of its
Common Stock evidences of indebtedness, shares of Capital Stock
other than Common Stock, cash or other assets (including
securities, but other than (x) dividends or distributions
exclusively in cash or (y) any dividend or distribution for
which an adjustment is required to be made in accordance with
Section 10.06 or 10.07) the conversion rate shall be adjusted
in accordance with the following formula:
AC = CC x (O x M)
-----------
(O x M) - F
where:
AC = the adjusted conversion rate.
CC = the then current conversion rate.
O = the number of shares of Common Stock outstanding on the
record date mentioned below.
M = the current market price per share of Common Stock, as
defined in Section 10.12, on the record date mentioned
below.
F = the fair market value on the record date of the
evidences of indebtedness, assets, securities or cash
distributed. The Board of Directors shall determine the
fair market value.
The adjustment shall become effective immediately
after the record date for the determination of stockholders
entitled to receive the distribution.
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This Section does not apply to reclassifications or
distributions referred to in Section 10.06. Also, this Section
does not apply to shares issued below market price referred to
in Section 10.07.
SECTION 10.09. Adjustment for Cash Distributions.
If the Company distributes to all holders of Common
Stock cash (excluding any all-cash portions of distributions
for which an adjustment is required to be made in accordance
with Section 10.08) in an aggregate amount that, combined
together with (i) all other such all-cash distributions made
within the then preceding 12 months in respect of which no
adjustment has been made and (ii) any cash and the fair market
value of other consideration paid or payable in respect of any
tender offer by the Company for Common Stock concluded within
the preceding 12 months in respect of which no adjustment has
been made, exceeds 20% of the Company's market capitalization
(defined as being the product of the then current market price
of the Common Stock determined in accordance with Section 10.12
times the number of shares of Common Stock then outstanding) on
the record date of such distribution, the conversion rate shall
be adjusted in accordance with the following formula:
AC = CC x M
-----
M - C
where:
AC = the adjusted conversion rate.
CC = the then current conversion rate.
M = the current market price per share of Common Stock (see
Section 10.12) on the record date mentioned above.
C = the amount of cash distributed applicable to one share
of Common Stock.
Notwithstanding the foregoing, in the event that the
cash so distributed applicable to one share of Common Stock
equals or exceeds such current market price per share of Common
Stock, or such current market price exceeds such amount of cash
by less than $0.10 per share, the conversion rate shall not be
adjusted pursuant to this Section 10.09.
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The adjustment shall become effective immediately
after the record date for the determination of the stockholders
entitled to receive such distribution.
SECTION 10.10. Adjustment for Tender or Exchange Offers.
If the Company completes a tender or exchange offer
for all or any portion of the Common Stock (any such tender or
exchange offer being referred to as an "Offer") that involves
an aggregate consideration having a fair market value as of the
expiration of such Offer (the "Expiration Time") that, together
with (i) any cash and the fair market value of any other
consideration payable in respect of any other Offer, as of the
expiration of such other Offer and in respect for which no
conversion rate adjustment pursuant to this Section 10.10 has
been made, and (ii) the aggregate amount of any all-cash
distributions referred to in Section 10.09 to all holders of
Common Stock within the 12 months preceding the expiration of
such Offer for which no conversion rate adjustment pursuant to
such Section 10.09 has been made, exceeds 20% of the product of
the then current market price per share (see Section 10.12) of
the Common Stock at the Expiration Time times the number of
shares of Common Stock outstanding (including any tendered
shares) at the Expiration Time, the conversion rate shall be
adjusted in accordance with the following formula:
AC = CC x M x (O - P)
-----------
(M x O) - F
where:
AC = the adjusted conversion rate.
CC = the then current conversion rate.
M = the current market price per share of Common Stock (see
Section 10.12) at the Expiration Time.
O = the number of shares of Common Stock outstanding
(including any tendered shares) at the Expiration Time.
F = the fair market value of the aggregate consideration
payable to stockholders based on the acceptance (up to
any maximum specified in the terms of the Offer) of all
shares validly tendered and not withdrawn as of the
Expiration Time (the shares deemed so accepted being
-45-
referred to as the "Purchase Shares"). The Board of
Directors shall determine the fair market value.
P = Purchased Shares.
The adjustment shall become effective immediately
prior to the opening of business on the day following the
Expiration Time.
SECTION 10.11. Voluntary Adjustment.
The Company at any time may increase the conversion
rate, temporarily or otherwise, by any amount but in no event
shall such conversion rate result in the issuance of Common
Stock at a price less than the par value of the Common Stock at
the time such increase is made.
SECTION 10.12. Current Market Price.
In Sections 10.07, 10.08, 10.09 and 10.10 the current
market price per share of Common Stock on any date is the
average of the last reported sale prices of a share of Common
Stock on the principal national securities exchange on which
the shares of Common Stock are listed or admitted to trading or
on the NMS, or, if the Common Stock is not then listed on an
exchange or on the NMS, the closing sale prices (or the quoted
closing bid prices if there were no sales) as reported by
NASDAQ for 30 consecutive trading days commencing 45 trading
days before the date in question. In the absence of one or
more such quotations, the Board of Directors shall determine
the current market price on the basis of such quotations as it
considers appropriate.
SECTION 10.13. When Adjustment May Be Deferred.
No adjustment in the conversion rate need be made
unless the adjustment would require a change of at least 1% in
the conversion rate. Any adjustments that are not made due to
the immediately preceding sentence shall be carried forward and
taken into account in any subsequent adjustment.
All calculations under this Article shall be made to
the nearest cent or to the nearest 1/100th of a share, as the
case may be.
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SECTION 10.14. When No Adjustment Required.
Except as set forth in Section 10.07, no adjustment
in the conversion rate shall be made because the Company
issues, in exchange for cash, property or services, shares of
Common Stock, or any securities convertible into shares of
Common Stock, or securities carrying the right to purchase
shares of Common Stock or such convertible securities.
No adjustment in the conversion rate need be made for
rights to purchase or the sale of Common Stock pursuant to a
Company plan providing for reinvestment of dividends or
interest.
No adjustment in the conversion rate need be made for
a change in the par value of the Common Stock.
No adjustment need be made for a transaction referred
to in Section 10.06, 10.07, 10.08, 10.09 or 10.10 if Security-
holders are to participate in the transaction on a basis and
with notice that the Board of Directors determines to be fair
and appropriate in light of the basis and notice on which
holders of Common Stock participate in the transaction.
SECTION 10.15. Notice of Adjustment.
Whenever the conversion rate is adjusted, the Company
shall promptly mail to Securityholders a notice of the
adjustment. The Company shall file with the Trustee an
Officers' Certificate or a certificate from the Company's
independent public accountants briefly stating the facts
requiring the adjustment and the manner of computing it. The
certificate shall be conclusive evidence that the adjustment is
correct, absent manifest error.
SECTION 10.16. Notice of Certain Transactions.
If:
(1) the Company proposes to take any action that
would require an adjustment in the conversion rate,
(2) the Company proposes to take any action that
would require a supplemental indenture pursuant to Section
10.17, or
-47-
(3) there is a proposed liquidation or dissolution
of the Company,
the Company shall mail to Securityholders a notice stating the
proposed record date for a dividend or distribution or the
proposed effective date of a subdivision, combination,
reclassification, consolidation, merger, transfer, lease,
liquidation or dissolution. The Company shall mail the notice
at least 15 days before such date. Failure to mail the notice
or any defect in it shall not affect the validity of the
transaction.
SECTION 10.17. Reorganization of the Company.
If the Company is a party to a transaction subject to
Section 5.01 or a merger which reclassifies or changes its
outstanding Common Stock, the successor corporation shall enter
into a supplemental indenture which shall provide that the
Holder of a Security may convert it into the kind and amount of
securities, cash or other assets which he would have owned
immediately after the consolidation, merger, transfer or lease
if he had converted the Security immediately before the
effective date of the transaction. The supplemental indenture
shall provide for adjustments which shall be as nearly
equivalent as may be practical to the adjustments provided for
in this Article 10. The successor Company shall mail to
Securityholders a notice briefly describing the supplemental
indenture.
If this Section applies, Sections 10.06, 10.07,
10.08, 10.09 and 10.10 do not apply.
SECTION 10.18. Rights and Warrants.
If the Company distributes rights or warrants (other
than those referred to in Section 10.07 above) pro rata to all
holders of Common Stock, so long as any such rights or warrants
have not expired or been redeemed by the Company, the Company
shall make proper provision so that the Holder of any Security
surrendered for conversion will be entitled to receive upon
such conversion, in addition to the shares of Common Stock
issuable upon such conversion (the "Conversion Shares"), a
number of rights or warrants to be determined as follows: (i)
if such conversion occurs on or prior to the date for the
distribution to the holders of Common Stock of rights or
warrants of separate certificates evidencing such rights or
warrants (the "Distribution Date"), the same number of rights
or warrants to which a holder of a number of shares of Common
Stock equal to
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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 or warrants, and
(ii) if such conversion occurs after such Distribution Date,
the same number of rights or warrants to which a holder of the
number of shares of Common Stock into which the principal
amount of such Security so converted was convertible
immediately prior to such Distribution Date would have been
entitled on such Distribution Date in accordance with the terms
and provisions of and applicable to the rights or warrants.
SECTION 10.19. Company Determination Final.
Any determination that the Board of Directors must
make pursuant to this Article 10 is conclusive, absent manifest
error.
SECTION 10.20. Trustee's Disclaimer.
The Trustee has no duty to determine when an
adjustment under this Article 10 or under the terms of the
Securities should be made, how it should be made or what it
should be. The Trustee has no duty to determine whether any
provisions of a supplemental indenture under Section 10.17 are
correct. The Trustee makes no representation as to the
validity or value of any securities or assets issued upon
conversion of Securities. The Trustee shall not be responsible
for the Company's failure to comply with this Article 10. Each
Conversion Agent other than the Company shall have the same
protection under this Section 10.20 as the Trustee.
ARTICLE 11
SUBORDINATION
SECTION 11.01. Agreement to Subordinate.
The Company agrees, and each Securityholder by
accepting a Security agrees, that the indebtedness evidenced by
the Securities and the payment of principal thereof and
interest thereon are subordinated in right of payment, to the
extent and in the manner provided in this Article 11, to the
prior payment in full of all Senior Indebtedness and that the
subordination is for the benefit of the holders of Senior
Indebtedness.
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Money and securities held in trust pursuant to
Article 8 are not subject to the subordination provisions of
this Article 11.
SECTION 11.02. Certain Definitions.
"Representative" means the indenture trustee or other
trustee, agent or representative for an issue of Senior
Indebtedness.
"Senior Indebtedness" means the principal of (and
premium, if any) and interest on (a) any and all indebtedness
and obligations of the Company (including indebtedness of
others guaranteed by the Company) other than the Securities,
whether or not contingent and whether outstanding on the date
of this Indenture or thereafter created, incurred or assumed,
which (i) is for money borrowed; (ii) is evidenced by any bond,
note, debenture or similar instrument; (iii) represents the
unpaid balance on the purchase price of any property, business
or asset of any kind; (iv) is an obligation of the Company as
lessee under any and all leases of property, equipment or other
assets required to be capitalized on the balance sheet of the
lessee under generally accepted accounting principles; (v) is a
reimbursement obligation of the Company with respect to letters
of credit; (vi) are obligations of the Company with respect to
interest swap obligations and foreign exchange agreements; or
(vii) are obligations of others secured by a lien to which any
of the properties or assets (including, without limitation,
leasehold interests and any other tangible or intangible
property rights) of the Company are subject, whether or not the
obligations secured thereby shall have been assumed by the
Company or shall otherwise be the Company's legal liability and
(b) any deferrals, amendments, renewals, extensions,
modifications and refundings of any indebtedness or obligations
of the types referred to above; provided that Senior
Indebtedness shall not include (i) the Securities; (ii) the
Company's 6 7/8% Convertible Subordinated Notes due 2002;
(iii) any indebtedness or obligation of the Company which, by
its terms or the terms of the instrument creating or evidencing
it, is not superior in right of payment to the Securities;
(iv) any indebtedness or obligation of the Company to any of
its subsidiaries and (v) any indebtedness or obligation
incurred by the Company in connection with the purchase of
assets, materials or services in the ordinary course of
business and which constitutes a trade payable.
-50-
SECTION 11.03. Liquidation; Dissolution; Bankruptcy.
Upon any distribution to creditors of the Company in
a liquidation or dissolution of the Company or in a bankruptcy,
reorganization, insolvency, receivership or similar proceeding
relating to the Company or its property:
(1) holders of Senior Indebtedness shall be entitled
to receive payment in full of the principal of and
interest to the date of payment on the Senior Indebtedness
before Securityholders shall be entitled to receive any
payment of principal of or interest on Securities; and
(2) until the Senior Indebtedness is paid in full,
any distribution to which Securityholders would be
entitled but for this Article 11 shall be made to holders
of Senior Indebtedness as their interests may appear,
except the Securityholders may receive securities that are
subordinated to Senior Indebtedness to at least the same
extent as the Securities.
SECTION 11.04. Company Not to Make Payments
with Respect to Securities
in Certain Circumstances.
Except for payment in or distribution of securities
that are subordinated to Senior Indebtedness to at least the
same extent as the Securities, the Company shall not make any
payment with respect to the principal of or interest on any of
the Securities, or make any other payment with respect to the
purchase or other acquisition of any of the Securities:
(a) if there shall have occurred a default in the
payment of the principal of or interest on any Senior
Indebtedness; or
(b) if there shall exist at the time of such
payment, or such payment would create, an event of default
(or an event which, with the giving of notice or the
passage of time or both, would become an event of default)
with respect to any Senior Indebtedness which would permit
the holders (or any specified proportion of such holders)
of such Senior Indebtedness to accelerate the maturity
thereof, and if notification of such default or event of
default has been given to the Company by a holder of such
Senior Indebtedness or by a trustee, agent or
Representative for an issue of Senior Indebtedness;
-51-
unless and until, in each case, whether described in clause (a)
or clause (b), such default or event of default shall have been
cured or waived in the manner required by the instrument
relating to such Senior Indebtedness or shall otherwise have
ceased to exist.
Regardless of anything to the contrary herein,
nothing shall prevent (a) any payment by the Trustee to the
Securityholders of amounts deposited with it pursuant to
Article Eight or (b) any payment by the Trustee or the Paying
Agent as permitted by Section 11.11.
SECTION 11.05. Acceleration of Securities.
If payment of the Securities is accelerated because
of an Event of Default, the Company shall promptly notify
holders of Senior Indebtedness of the acceleration.
SECTION 11.06. When Distribution Must Be Paid Over.
In the event that the Company shall make any payment
to the Trustee of the principal of or interest on the
Securities at a time when such payment is prohibited by Section
11.03 or 11.04, such payment shall be held by the Trustee, in
trust for the benefit of, and shall be paid forthwith over and
delivered to, the holders of Senior Indebtedness (pro rata as
to each of such holders on the basis of the respective amounts
of Senior Indebtedness held by them) or their Representative or
the trustee under the indenture or other agreement (if any)
pursuant to which Senior Indebtedness may have been issued, as
their respective interests may appear, for application to the
payment of all Senior Indebtedness remaining unpaid to the
extent necessary to pay all Senior Indebtedness in full in
accordance with its terms, after giving effect to any
concurrent payment or distribution to or for the holders of
Senior Indebtedness.
If a distribution is made to Securityholders that
because of this Article 11 should not have been made to them,
the Securityholders who receive the distribution shall hold it
in trust for holders of Senior Indebtedness and pay it over to
them as their interests may appear.
SECTION 11.07. Notice by Company.
The Company shall promptly notify the Trustee and the
Paying Agent in writing of any facts known to the Company that
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would cause a payment of principal of or interest on Securities
to violate this Article 11.
SECTION 11.08. Subrogation.
After all Senior Indebtedness is paid in full and
until the Securities are paid in full, Securityholders shall be
subrogated to the rights of holders of Senior Indebtedness to
receive distributions applicable to Senior Indebtedness to the
extent that distributions otherwise payable to the Security-
holders have been applied to the payment of Senior Indebted-
ness. A distribution made under this Article 11 to holders of
Senior Indebtedness which otherwise would have been made to
Securityholders is not, as between the Company and
Securityholders, a payment by the Company on Senior
Indebtedness.
SECTION 11.09. Subordination May Not Be
Impaired by Company.
No right of any holder of Senior Indebtedness to
enforce the subordination of the indebtedness evidenced by the
Securities shall be impaired by any act or failure to act by
the Company or by its failure to comply with this Indenture.
SECTION 11.10. Distribution or Notice
to Representative.
Whenever a distribution is to be made or a notice
given to holders of Senior Indebtedness, the distribution may
be made and the notice given to their Representative.
SECTION 11.11. Rights of Trustee and Paying Agent.
The Trustee or Paying Agent may continue to make
payments on the Securities until it receives written notice of
facts that would cause a payment of principal of or interest on
the Securities to violate this Article 11. Only the Company, a
Representative or a holder of an issue of Senior Indebtedness
that has no Representative may give the notice.
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 Representative on
behalf of such holder) to establish that such notice has been
given by a holder of Senior Indebtedness or a Representative on
behalf of any such holder. In the event that the Trustee
-53-
determines in good faith that further evidence is required with
respect to the right of any person who is a holder of Senior
Indebtedness to participate in any payment or distribution
pursuant to this Article 11, 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 11,
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 or until such time
as the Trustee shall be otherwise satisfied as to the right of
such person to receive such payment.
The Trustee in its individual or any other capacity
may hold Senior Indebtedness with the same rights it would have
if it were not Trustee. Any Agent may do the same with like
rights.
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 holder if it shall mistakenly pay over or
distribute to Securityholders or the Company or any other
person money or assets to which any holders of Senior
Indebtedness shall be entitled by virtue of this Article 11 or
otherwise.
SECTION 11.12. Officers' Certificate.
If there occurs an event referred to in Section 11.03
or 11.04, the Company shall promptly give to the Trustee an
Officers' Certificate (on which the Trustee may conclusively
rely) identifying all holders of Senior Indebtedness or their
Representatives and the principal amount of Senior Indebtedness
then outstanding held by each such holder and stating the
reasons why such Officers' Certificate is being delivered to
the Trustee.
SECTION 11.13. Obligation of Company Unconditional.
Nothing contained in this Article 11 or elsewhere in
this Indenture or in any Security is intended to or shall
impair, as between the Company, its creditors other than
holders of Senior Indebtedness and the Holders of the
Securities, the obligation of the Company, which is absolute
and unconditional, to pay to the Holders of the Securities the
principal of and interest on the Securities as and when the
same shall
-54-
become due and payable in accordance with their
terms, or is intended to or shall affect the relative rights of
the Holders of the Securities and creditors of the Company
other than the holders of the Senior Indebtedness, nor shall
anything herein or therein prevent the Trustee or the Holder of
any Security from exercising all remedies otherwise permitted
by applicable law upon default under this Indenture, subject to
the rights, if any, under this Article 11 of the holders of
Senior Indebtedness in respect of cash, property or securities
of the Company received upon the exercise of any such remedy.
Upon any distribution of assets of the Company referred to in
this Article 11, the Trustee, subject to the provisions of
Sections 7.01 and 7.02, and the Holders of the Securities shall
be entitled to rely upon any order or decree by any court of
competent jurisdiction in which such dissolution, winding up,
liquidation or reorganization proceedings are pending, or a
certificate of the liquidating trustee or agent or other person
making any distribution to the Trustee or the Holders of the
Securities, for the purpose of ascertaining the persons
entitled to participate in such distribution, the holders of
the Senior Indebtedness and other indebtedness of the Company,
the amount thereof or payable thereon, the amount or amounts
paid or distributed thereon and all other facts pertinent
thereto or to this Article 11. Nothing contained in this
Article 11 or elsewhere in this Indenture or in any Security is
intended to or shall affect the obligation of the Company to
make, or prevent the Company from making, at ay time except
during the pendency of any dissolution, winding up, liquidation
or reorganization proceeding, and except during the continuance
of any default specified in Section 11.04 (not cured or
waived), payments at any time of the principal or of interest
on the Securities.
ARTICLE 12
MISCELLANEOUS
SECTION 12.01. Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies
or conflicts with another provision which is required to be
included in this Indenture by the TIA, the required provision
shall control.
-55-
SECTION 12.02. Notices.
Any notice or communication by the Company or the
Trustee to the other is duly given if in writing and delivered
in person, mailed by first-class mail or by express delivery to
the other's address stated in this Section 12.02. The Company
or the Trustee by notice to the other may designate additional
or different addresses for subsequent notices or
communications.
Any notice or communication to a Securityholder shall
be mailed by first-class mail to his address shown on the
register kept by the Registrar. Failure to mail a notice or
communication to a Securityholder or any defect in it shall not
affect its sufficiency with respect to other Securityholders.
If a notice or communication is mailed in the manner
provided above within the time prescribed, it is duly given,
whether or not the addressee receives it.
If the Company mails a notice or communication to
Securityholders, it shall mail a copy to the Trustee and each
Agent at the same time.
All notices or communications shall be in writing.
The Company's address is:
Continental Homes Holding Corp.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Secretary
The Trustee's address is:
Manufacturers and Traders Trust Company
▇▇▇ ▇&▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ 14203
Attention: Corporate Trust Department
SECTION 12.03. Communication by Holders with
Other Holders.
Securityholders may communicate pursuant to TIA
Section 312(b) with other Securityholders with respect to their
rights under this Indenture or the Securities. The Company,
-56-
the Trustee, the Registrar and anyone else shall have the
protection of TIA Section 312(c).
SECTION 12.04. Certificate and Opinion as
to Conditions Precedent.
Upon any request or application by the Company to the
Trustee to take any action under this Indenture the Company
shall furnish to the Trustee:
(1) an Officers' Certificate stating that, in the
opinion of the signers, all conditions precedent, if any,
provided for in this Indenture relating to the proposed
action have been complied with; and
(2) an Opinion of Counsel stating that, in the
opinion of such counsel, all such conditions precedent
have been complied with.
Each signer of an Officers' Certificate or an Opinion
of Counsel may (if so stated) rely, effectively, upon an
Opinion of Counsel as to legal matters and an Officers'
Certificate as to factual matters if such signer reasonably and
in good faith believes in the accuracy of the document relied
upon.
SECTION 12.05. Statements Required in Certificate
or Opinion.
Each certificate or opinion with respect to
compliance with a condition or covenant provided for in this
Indenture shall include:
(1) a statement that the person making such
certificate or opinion has read such covenant or
condition;
(2) a brief statement as to the nature and scope of
the examination or investigation upon which the statements
or opinions contained in such certificate or opinion are
based;
(3) a statement that, in the opinion of such person,
he has made such examination or investigation as is
necessary to enable him to express an informed opinion as
to whether or not such covenant or condition has been
complied with; and
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(4) a statement as to whether or not, in the opinion
of such person, such condition or covenant has been
complied with.
SECTION 12.06. Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by
or at a meeting of Securityholders. The Registrar, Paying
Agent or Conversion Agent may make reasonable rules and set
reasonable requirements for their respective functions.
SECTION 12.07. Legal Holidays.
A "Legal Holiday" is a Saturday, a Sunday or a day on
which banking institutions are not required to be open in The
City of New York, in the State of New York or in the city in
which the Trustee administers its corporate trust business. If
a payment date is a Legal Holiday at a place of payment,
payment may be made at that place on the next succeeding day
that is not a Legal Holiday, and no interest shall accrue on
that payment for the intervening period.
A "business day" is a day other than a Legal Holiday.
SECTION 12.08. No Recourse Against Others.
All liability described in the Securities of any
director, officer, employee or stockholder, as such, of the
Company is waived and released.
SECTION 12.09. Duplicate Originals.
The parties may sign any number of copies of this
Indenture. Each signed copy shall be an original, but all of
them together represent the same agreement.
SECTION 12.10. Governing Law.
The laws of the State of New York, without regard to
principles of conflicts of law, shall govern this Indenture and
the Securities.
SECTION 12.11. No Adverse Interpretation
of Other Agreements.
This Indenture may not be used to interpret another
indenture, loan or debt agreement of the Company or a
-58-
subsidiary. Any such indenture, loan or debt agreement may not
be used to interpret this Indenture.
SECTION 12.12. Successors.
All agreements of the Company in this Indenture and
the Securities shall bind its successors. All agreements of
the Trustee in this Indenture shall bind its successors.
SECTION 12.13. Separability.
In case any provision in this Indenture or in the
Securities shall be valid, illegal or unenforceable, the
validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby
and a Holder shall have no claim therefor against any party
hereto.
SECTION 12.14. Table of Contents, Headings, etc.
The Table of Contents, Cross-Reference Table and
headings of the Articles and Sections of this Indenture have
been inserted for convenience of reference only, are not to be
considered a part hereof and shall in no way modify or restrict
any of the terms or provisions hereof.
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SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused
this Indenture to be duly executed, and their respective
corporate seals to be hereunto affixed and attested, all as of
the day and year first above written.
CONTINENTAL HOMES HOLDING CORP.
By:
----------------------------
Title: Chief Executive Officer
MANUFACTURERS AND TRADERS TRUST
COMPANY, as Trustee
By:
----------------------------
Title:
EXHIBIT A
REGISTERED [Face of Security] REGISTERED
NUMBER DOLLARS
CONTINENTAL HOMES HOLDING CORP.
............. .............
% CONVERTIBLE SUBORDINATED NOTE DUE 2005
CONTINENTAL HOMES HOLDING CORP., a Delaware corporation
(herein called the "Company"), for value received, hereby
promises to pay to or registered
assigns, the principal sum of Dollars on
November 1, 2005, and to pay interest thereon as provided on the
reverse hereof, until the principal hereof is paid or duly
provided for.
Interest Payment Dates: May 1 and November 1
Record Dates: April 15 and October 15
The provisions on the back of this certificate are
incorporated as if set forth on the face hereof.
IN WITNESS WHEREOF, CONTINENTAL HOMES HOLDING CORP. has
caused this instrument to be duly signed under its corporate
seal.
[SEAL] CONTINENTAL HOMES HOLDING CORP.
By:
-----------------------------
[Title]
By:
-----------------------------
[Title]
A-2
TRUSTEES'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities referred
to in the within-mentioned Indenture.
Manufacturers and Traders Trust Company,
as Trustee
By: ______________________________
Signatory
Dated: ___________________
A-3
[REVERSE OF SECURITY]
CONTINENTAL HOMES HOLDING CORP.
% CONVERTIBLE SUBORDINATED NOTE DUE 2005
1. Interest. Continental Homes Holding Corp., a
Delaware corporation (the "Company"), promises to pay interest on
the principal amount of this Security at the rate per annum shown
above. The Company will pay interest semi-annually on May 1 and
November 1 of each year, commencing May 1, 1996. Interest on the
Securities will accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from the
date of original issuance of the Securities set forth on the face
of this Security. Interest will be computed on the basis of a
360-day year of twelve 30-day months.
2. Method of Payment. The Company will pay interest
on the Securities (except defaulted interest) to the persons who
are registered Holders of Securities at the close of business on
the record date set forth on the face of this Security next
preceding the applicable interest payment date. Holders must
surrender Securities to a Paying Agent to collect principal
payments. The Company will pay principal, premium, if any, and
interest in money of the United States that at the time of
payment is legal tender for payment of public and private debts.
However, the Company must pay principal, premium, if any, and
interest by check payable in such money. It may mail an interest
check to a Holder's registered address.
3. Paying Agent, Registrar, Conversion Agent.
Initially, Manufacturers and Traders Trust Company (the
"Trustee") will act as Paying Agent, Registrar and Conversion
Agent. The Company may change any Paying Agent, Registrar,
Conversion Agent or co-registrar without notice. The Company may
act in any such capacity.
4. Indenture. The Company issued the Securities
under an Indenture dated as of November 1, 1995 (the "Indenture")
between the Company and the Trustee. The terms of the Securities
include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939, as
amended (15 U.S. Code Sections 77aaa-77bbbb) (the "Act"), as in effect
on the date of the Indenture. The Securities are subject to all
such terms, and Securityholders are referred to the Indenture and
the Act for a statement of such terms. The Securities are
A-4
general unsecured subordinated obligations of the Company limited
to $86,250,000 aggregate principal amount (except for Securities
issued in substitution for destroyed, mutilated, lost or stolen
Securities). Terms used herein which are defined in the
Indenture have the meanings assigned to them in the Indenture.
5. Optional Redemption. The Securities may be
redeemed on at least 15 and not more than 60 days' notice at the
option of the Company on or after November 3, 1998, in whole at
any time or in part from time to time. The redemption price
(expressed as a percentage of principal amount) together with
accrued and unpaid interest to the redemption date, are as
follows for the 12-month period beginning November 1 of the
following years (except November 3 in 1998):
Year Percentage Year Percentage
1998 % 2002 %
1999 % 2003 100.00%
2000 % 2004 100.00%
2001 %
6. Notice of Redemption. Notice of redemption will
be mailed at least 15 days but not more than 60 days before the
redemption date to each Holder of Securities to be redeemed at
his registered address. Securities in denominations larger
than $1,000 may be redeemed in part but only in whole multiples
of $1,000. On and after the redemption date, interest ceases
to accrue on Securities or portions of them called for
redemption.
7. Change in Control. In the event of a Change in
Control (as hereinafter defined) with respect to the Company,
then each Holder of the Securities shall have the right, at the
Holder's option, to require the Company to buy such Holder's
Securities including any portion thereof which is $1,000 or any
integral multiple thereof on the date (the "Repurchase Date")
that is 45 days after the date of the Repurchase Right Notice
at a purchase price equal to 100% of the principal amount
thereof, plus accrued and unpaid interest to the Repurchase
Date (the "Repurchase Price").
On or before the 30th day after the occurrence of a
Change in Control, the Company is obligated to give notice of
the occurrence of such Change in Control, and of the date
before which a Holder must notify the Company of such ▇▇▇▇▇▇'s
intention to exercise the redemption option, the procedure
A-5
which such Holder must follow to exercise such right. To
exercise the redemption option, the Holder of a Security must
deliver on or before the 30th day after the date of the
Repurchase Right Notice, written notice to the Company of the
Holder's exercise of such option together with the Security or
Securities with respect to which the option is being exercised,
duly endorsed for transfer. Exercise of the redemption option
by the Holder of a Security will be irrevocable, except that a
Holder who submits such Security will retain the right to
convert such Security into Common Stock until the close of
business on the second business day prior to the Repurchase
Date. If the Repurchase Date falls between any interest
payment record date and the next succeeding interest payment
date, Securities must be accompanied by payment of an amount
equal to the interest thereon which the registered Holder is to
receive on such interest payment date.
If any repurchase pursuant to the foregoing
provisions constitutes an "issuer tender offer" as defined in
Rule 13e-4 under the Exchange Act, the Company will comply with
the requirements of Rule 13e-4, Rule 14e-1 and any other tender
offer rules under the Exchange Act which then may be
applicable, including the filing of an Issuer Tender Offer
Statement on Schedule 13E-4 with the SEC and the furnishing of
certain information contained therein to the Holders.
A "Change in Control" of the Company shall be deemed
to have occurred at such time as any person, together with its
affiliates or associates, other than the Management Group (as
defined in the Indenture) is or becomes the beneficial owner,
directly or indirectly, through a purchase, merger or other
acquisition transaction, of shares of capital stock of the
Company entitling such person to exercise 50% or more of the
total voting power of all shares of capital stock of the
Company entitled to vote in elections of directors, provided
that a Change in Control shall not be deemed to have occurred
if either (i) the last sale price of the Common Stock for any
five trading days during the ten trading days immediately
preceding the Change in Control is at least equal to 105% of
the Conversion Price (as defined in the Indenture) in effect on
the day of the Change in Control or (ii) all of the
consideration (excluding cash payments for fractional shares)
in the transaction or transactions constituting the Change in
Control consists of shares of common stock traded on a national
securities exchange or through NASDAQ or another comparable
quotation system.
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8. Conversion. A Holder of a Security may convert
it into Common Stock of the Company at any time before the
close of business on November 1, 2005, or, if the Security is
called for redemption, the Holder may convert it at any time
before the close of business on the second business day before
the date fixed for redemption. The initial conversion rate is
shares of Common Stock per $1,000 principal amount of the
Securities, subject to adjustment under certain circumstances.
The Company will deliver a check in lieu of any fractional
share. On conversion no payment or adjustment for interest
accrued on the Securities will be made nor for dividends on the
Common Stock issued on conversion. If any Security is
converted between the record date for the payment of interest
and the next succeeding interest payment date, such Security
must be accompanied by funds equal to the interest payable on
such succeeding interest payment date on the principal amount
so converted (unless such Security shall have been called for
redemption, in which case no such payment shall be required).
A Security converted on an interest payment date need not be
accompanied by any payment, and the interest on the principal
amount of the Security being converted will be paid on such
interest payment date to the registered holder of such Security
on the immediately preceding record date.
To convert a Security a Holder must (1) complete and
sign the conversion notice on the back of the Security,
(2) surrender the Security to a Conversion Agent, (3) furnish
appropriate endorsements and transfer documents if required by
the Registrar or Conversion Agent and (4) pay any transfer or
similar tax if required. A Holder may convert a portion of a
Security if the portion is $1,000 or a whole multiple of
$1,000.
9. Subordination. The Securities are subordinated
in right of payment, in the manner and to the extent set forth
in the Indenture, to the prior payment in full of all Senior
Indebtedness (as defined in the Indenture). Each Holder by
accepting a Security agrees to such subordination and
authorizes the Trustee to give it effect.
10. Denominations, Transfer, Exchange. The
Securities are in registered form without coupons in
denominations of $1,000 and whole multiples of $1,000. The
transfer of Securities may be registered and Securities may be
exchanged as provided in the Indenture. The Registrar may
require a Holder, among other things, to furnish appropriate
endorsements and transfer documents. No service charge shall
be made for any
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such registration or transfer or exchange, but
the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection
therewith. The Registrar need not exchange or register the
transfer of any Security selected for redemption in whole or in
part. Also, it need not exchange or register the transfer of
any Securities for a period of 15 days before a selection of
Securities to be redeemed.
11. Persons Deemed Owners. The registered Holder of
a Security may be treated as its owner for all purposes.
12. Merger or Consolidation. The Company may not
consolidate with, or merge into, or directly or indirectly
transfer or lease all or substantially all of its assets to,
another person unless: the person is a corporation; such
corporation assumes by supplemental indenture all the
obligations of the Company under the Securities and the
Indenture; and giving effect to the transaction, no Default or
Event of Default (as defined in the Indenture) shall exist.
13. Amendments and Waivers. Subject to certain
exceptions, the Indenture or the Securities may be amended with
the consent of the Holders of at least a majority in principal
amount of the Securities outstanding; and any existing default
may be waived with the consent of the Holders of a majority in
principal amount of the Securities. Without the consent of any
Securityholder, the Indenture or the Securities may be amended
to cure any ambiguity, omission, defect or inconsistency or to
provide for uncertificated Securities in addition to
certificated Securities, to comply with Sections 5.01 and 10.16
of the Indenture or to make any change that does not materially
adversely affect the rights of any Securityholder.
14. Defaults and Remedies. An Event of Default is:
default for 30 days in payment of interest on the Securities;
default in payment of principal on the Securities when due;
failure by the Company for 60 days after notice to it to comply
with any of its other agreements in the Indenture or the
Securities; acceleration prior to maturity of other
indebtedness in excess of an aggregate of $10,000,000 which is
not rescinded or annulled within 30 days after notice; the
rendering of a final judgment or judgments against the Company
in excess of $10,000,000, which is not discharged, satisfied or
stayed within a period of 60 days after notice; and certain
events of bankruptcy or insolvency. If any Event of Default
occurs and is continuing, the Trustee or the Holders of at
least 25% in
A-8
principal amount of the Securities may declare all
the Securities to be due and payable immediately. The Holders
of a majority in principal amount of the Securities by notice
to the Trustee may waive a Default and its consequences.
Securityholders may not enforce the Indenture or the Securities
except as provided in the Indenture. The Trustee may require
indemnity satisfactory to it before it enforces the Indenture
or the Securities. Subject to certain limitations, Holders of
a majority in principal amount of the Securities may direct the
Trustee in its exercise of any trust or power. The Trustee may
withhold from Securityholders notice of any continuing default
(except a default in payment of principal or interest) if it
determines that withholding notice is in their interests. The
Company must furnish an annual compliance certificate to the
Trustee.
15. Trustee Dealings with Company. Manufacturers
and Traders Trust Company, the Trustee under the Indenture, or
any banking institution serving as successor Trustee
thereunder, in its individual or any other capacity, may make
loans to, accept deposits from, and perform services for the
Company or its Affiliates, and may otherwise deal with the
Company or its Affiliates, as if it were not Trustee.
16. No Recourse Against Others. A director,
officer, employee or stockholder, as such, of the Company shall
not have any liability for any obligations of the Company under
the Securities or the Indenture or for any claim based on, in
respect of or by reason of such obligations or their creation.
Each Securityholder by accepting a Security waives and releases
all such liability. The waiver and releases are part of the
consideration for the issue of the Securities.
17. Authentication. This Security shall not be
valid until authenticated by the manual signature of the
Trustee or an authenticating agent.
18. Abbreviations. Customary abbreviations may be
used in the name of a Securityholder or an assignee, such as:
TEN COM (= tenants in common), TEN ENT (= tenant by the
entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A
(= Uniform Gifts to Minors Act).
THE COMPANY WILL FURNISH TO ANY SECURITYHOLDER UPON
WRITTEN REQUEST AND WITHOUT CHARGE A COPY OF THE INDENTURE.
REQUESTS MAY BE MADE TO: Continental Homes Holding Corp., 7001
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▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: Corporate Secretary.
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ASSIGNMENT FORM CONVERSION NOTICE
To assign this Security, fill To convert this Security
in the form below: into Common Stock of the
Company, check the box:
I or we assign and transfer _____
this Security to: /____/
__________________
To convert only part of
this Security, state the
(Insert Assignee's Soc. amount (must be in
Sec. or Tax I.D. No.) multiples of $1,000):
$
__________________________ If you want the stock
certificate made out in
__________________________ another person's name,
fill in the form below:
__________________________
__________________________ (Insert other person's
(Print or type assignee's Soc. Sec. or Tax I.D.
name, address and zip code) no.)
----------------------------
and irrevocably appoint ___
----------------------------
___________________ agent
to transfer this Security ----------------------------
on the books of the
Company. The agent may ----------------------------
substitute another (Print or type other
to act for him. person's name, address
and zip code)
----------------------------------------------------------------------
Date: __________________ Signature(s):________________________________
---------------------------
(Sign exactly as your
name(s) appear(s) on
the other side of this
Security)
A-11
Signature(s) guaranteed by:
------------------------------------------
(All signatures must be
guaranteed by a member of a
national securities exchange or
of the National Association of
Securities Dealers, Inc. or by a
commercial bank or trust company
located in the United States)
A-12
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security
repurchased by the Company pursuant to Section 4.08 of the
Indenture, check the box:
____
/___/
If you want to elect to have only part of this
Security purchased by the Company pursuant to Section 4.08 of
the Indenture, state the amount:
$ ___________________________________
(in an integral multiple of $1,000)
Date: ______________________ Signature(s): _________________
_______________________________
(Sign exactly as your name(s)
appear(s) on the other side of
this Security)
Signature(s) guaranteed by: __________________________________
(All signatures must be guaranteed
by a member of a national
securities exchange or of the
National Association of
Securities Dealers, Inc. or by a
commercial bank or trust company
located in the United States)