As filed with the
Securities and Exchange Commission on August 10, 2007
Registration
No. 333-143390
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 1
to
Form S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
CAPSTEAD MORTGAGE CORPORATION
(Exact name of registrant as specified in its charter)
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Maryland
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75-2027937
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(State of jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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Phillip A. Reinsch
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8401 North Central Expressway
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8401 North Central Expressway
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Suite 800
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Suite 800
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Dallas, Texas 75225-4410
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Dallas, Texas 75225-4410
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(214) 874-2323
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(214) 874-2323
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(Address including zip code, and telephone number,
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(Name, address, including zip code, and
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including area code, of registrants principal executive
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telephone number, including area code, of agent for
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offices)
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service)
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Copies to:
David Barbour
Andrews Kurth LLP
1717 Main Street
Suite 3700
Dallas, Texas 75201
(214) 659-4400
Approximate date of commencement of proposed sale to the public:
From time to time after
the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered pursuant to dividend or
interest reinvestment plans, please check the following box.
o
If any of the securities being registered on this Form are to be offered on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities
offered only in connection with dividend or interest reinvestment
plans, check the following
box.
þ
If this Form is filed to register additional securities for an offering pursuant to Rule
462(b) under the Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same offering.
o
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities
Act, check the following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering.
o
If this Form is a registration statement pursuant to General Instruction I.D. or a
post-effective amendment thereto that shall become effective upon filing with the Commission
pursuant to Rule 462(e) under the Securities Act, check the following box:
o
If this Form is a post-effective amendment to a registration statement filed pursuant to
General Instruction I.D. filed to register additional securities or additional classes of
securities pursuant to Rule 413(b) under the Securities Act, check the following box:
o
CALCULATION OF REGISTRATION FEE
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Title of each class of securities to
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Proposed maximum aggregate
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be registered
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offering price
(1)
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Amount of registration fee
(2)
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Common Stock, $0.01 par
value per share
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Preferred Stock, $0.10 par
value per share
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Debt Securities
(3)
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Warrants
(4)
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Total
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$
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500,000,000
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(5)
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$
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15,350
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(6)
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(1)
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The proposed aggregate offering prices per class of security will be determined from time
to time by the registrant in connection with the issuance by the registrant of the securities
registered hereunder.
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(2)
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Calculated pursuant to Rule 457(o) of the rules and regulations of the Securities Act of
1933, as amended.
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(3)
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Debt securities may be issued with original issue discount such that the aggregate initial
public offering price will not exceed $500,000,000, together with the other securities issued
hereunder.
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(4)
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The warrants represent rights to purchase other classes of securities of Capstead Mortgage
Corporation registered hereunder.
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(5)
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In no event will the aggregate initial offering price of all securities issued from time to
time pursuant to this Registration Statement exceed $500,000,000 or the equivalent thereof in
one or more foreign currencies, foreign currency units, or composite currencies. The
securities registered hereunder may be sold separately or as units with other securities
registered hereunder.
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(6)
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Previously paid.
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The registrant hereby amends this registration statement on such date or dates as may be necessary
to delay its effective date until the registrant shall file a further amendment which specifically
states that this Registration Statement shall thereafter become effective in accordance with
Section
8(a)
of the Securities Act of 1933, as amended, or until the registration statement shall
become effective on such date as the Commission, acting pursuant to said Section
8(a)
, may
determine.
PROSPECTUS
$500,000,000
COMMON STOCK
PREFERRED STOCK
DEBT SECURITIES
WARRANTS
Capstead Mortgage Corporation intends to offer and sell from time to time the debt
and equity securities described in this prospectus. The total offering price of the securities
described in this prospectus will not exceed $500,000,000 in the aggregate.
We will provide the specific terms of any securities we may offer in a supplement to this
prospectus. You should carefully read this prospectus and any applicable prospectus supplement
before deciding to invest in these securities.
Our common stock is listed on the New York Stock Exchange under the symbol CMO. We may
make any sales of our common shares under this prospectus, if any, on or through the facilities
of the New York Stock Exchange, to or through a market maker, or to or through an electronic
communications network, at market prices prevailing at the time of sale, or in any other manner
permitted by law (including, without limitation, privately negotiated
transactions). On August 9,
2007, the last reported sale price of our common stock as reported
was $9.40 per share.
The securities may be offered directly, through agents designated by us from time to time,
or through underwriters or dealers.
Investing in our securities involves risks. See Risk Factors beginning on page 1 of
this prospectus for information regarding risks associated with an investment in our
securities.
Neither the Securities and Exchange Commission nor any state securities commission
has approved or disapproved of these securities or determined if this prospectus is truthful or
complete. Any representation to the contrary is a criminal offense.
The date
of this prospectus is August 10, 2007.
TABLE OF CONTENTS
You should rely only on the information contained or incorporated by reference in this
prospectus. We have not authorized anyone else to provide you with different information. If anyone
provides you with different or inconsistent information, you should not rely on it. An offer to
sell these securities will not be made in any jurisdiction where the offer and sale is not
permitted. You should assume that the information appearing in this prospectus, as well as
information we previously filed with the Securities and Exchange Commission and incorporated by
reference, is accurate as of the date on the front cover of this prospectus only. Our business,
financial condition, results of operations and prospects may have changed since that date.
i
ABOUT THIS PROSPECTUS
This prospectus is part of a shelf registration statement. We may sell, from time to time, in
one or more offerings, any combinations of the securities described in this prospectus. This
prospectus only provides you with a general description of the securities we may offer. Each time
we sell securities under this prospectus, we will provide a prospectus supplement that contains
specific information about the terms of the securities. The prospectus supplement may also add,
update or change information contained in this prospectus. You should read both this prospectus and
any prospectus supplement together with the additional information described under the heading
Where You Can Find More Information.
The total dollar amount of the securities sold under this prospectus will not exceed
$500,000,000.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and other documents with the
Securities and Exchange Commission under the Securities Exchange Act of 1934. You may read and copy
any materials that we file with the SEC without charge at the public reference room of the
Securities and Exchange Commission, 450 Fifth Street, N.W., Room 1024, Washington, DC 20549.
Information about the operation of the public reference room may be obtained by calling the
Securities and Exchange Commission at 1-800-SEC-0330. Also, the SEC maintains an internet website
that contains reports, proxy and information statements, and other information regarding issuers,
including Capstead, that file electronically with the SEC. The public can obtain any documents that
we file with the SEC at www.sec.gov.
We also make available free of charge on or through our internet website (www.capstead.com)
our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and,
if applicable, amendments to those reports filed or furnished pursuant to Section 13(a) of the
Exchange Act as soon as reasonably practicable after we electronically file such material with, or
furnish it to, the SEC.
This prospectus is part of a registration statement on Form S-3 that we filed with the
Securities and Exchange Commission. This prospectus does not contain all of the information set
forth in the registration statement and exhibits and schedules to the registration statement. For
further information with respect to our company and our securities, reference is made to the
registration statement, including the exhibits and schedules to the registration statement.
Statements contained in this prospectus as to the contents of any contract or other document
referred to in this prospectus are not necessarily complete and, where that contract is an exhibit
to the registration statement, each statement is qualified in all respects by reference to the
exhibit to which the reference relates.
INCORPORATION OF INFORMATION BY REFERENCE
The SEC allows us to incorporate by reference the information we file with them, which means
that we can disclose important information to you by referring you to other documents that we file
with the SEC. These incorporated documents contain important business and financial information
about us that is not included in or delivered with this prospectus. The information incorporated by
reference is considered to be part of this prospectus, and later information filed with the SEC
will update and supersede this information.
We incorporate by reference the documents listed below and any future filings we make with the
SEC under Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, until the
offering of securities covered by this prospectus is complete:
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our Annual Report on Form 10-K for the year ended December 31, 2006;
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our Quarterly Reports on Form 10-Q for the quarters ended
March 31, 2007 and June 30, 2007; and
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our Current Reports on Form 8-K, filed with the SEC on February 9, 2007 (with respect
to item 5.02 only), May 7, 2007 and June 18, 2007.
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You may obtain copies of these documents at no cost by writing or telephoning us at the
following address:
Investor Relations
Capstead Mortgage Corporation
8401 N. Central Expressway, Suite 800
Dallas, Texas 75225
(214) 874-2323
A WARNING ABOUT FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements (within the meaning of the Private
Securities Litigation Reform Act of 1995) that inherently involve risks and uncertainties. Our
actual results and liquidity can differ materially from those anticipated in these forward-looking
statements because of changes in the level and composition of our investments and unforeseen
factors. As discussed in our filings with the Securities and Exchange Commission (the SEC), these
factors may include, but are not limited to, changes in general economic conditions, the
availability of suitable qualifying investments from both an investment return and regulatory
perspective, the availability of new investment capital, fluctuations in interest rates and levels
of mortgage prepayments, deterioration in credit quality and ratings, the effectiveness of risk
management strategies, the impact of leverage, liquidity of secondary markets and credit markets,
increases in costs and other general competitive factors. In addition to the above considerations,
actual results and liquidity related to investments in loans secured by commercial real estate are
affected by borrower performance under operating or development plans, lessee performance under
lease agreements, changes in general as well as local economic conditions and real estate markets,
increases in competition and inflationary pressures, changes in the tax and regulatory environment
including zoning and environmental laws, uninsured losses or losses in excess of insurance limits
and the availability of adequate insurance coverage at reasonable costs, among other factors.
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OUR COMPANY
We were incorporated on April 15, 1985, in Maryland and commenced operations in September
1985. We are a mortgage investment firm operating as a real estate investment trust (REIT) that
earns income from investing in real estate-related assets on a leveraged basis and from other
investment strategies. These investments currently consist primarily of a core portfolio of
residential, adjustable-rate mortgage securities issued and guaranteed by government-sponsored
entities, either Fannie Mae or Freddie Mac or by an agency of the federal government, Ginnie Mae.
We also seek to opportunistically invest a portion of our investment capital in credit-sensitive
commercial real estate-related assets, including subordinate commercial real estate loans.
We and our qualified REIT subsidiaries have elected to be taxed as a REIT under the Internal
Revenue Code of 1986, as amended (the Code), and intend to continue to do so. As a result of this
election, we and our qualified REIT subsidiaries are not taxed at the corporate level on taxable
income distributed to stockholders, provided that certain REIT qualification tests are met.
Certain of our affiliates, which may be consolidated with us for financial reporting purposes, may
not be consolidated for federal income tax purposes because such entities may elect taxable REIT
subsidiary tax status. All taxable income of any such taxable REIT subsidiaries would be subject to
federal and state income taxes, where applicable.
Our principal executive offices are located at 8401 N. Central Expressway, Suite 800, Dallas,
Texas 75225. Our telephone number is (214) 874-2323. Our website is http://www.capstead.com. The
contents of our website are not a part of this prospectus. Our shares of common stock are traded
on the New York Stock Exchange, or the NYSE, under the symbol CMO.
RISK FACTORS
An investment in our securities involves various risks. You should carefully consider the risk
factors incorporated by reference to our most recent Annual Report on
Form 10-K
and the other
information contained in this prospectus, as updated by our subsequent filings under the Securities
Exchange Act of 1934, as amended, and the risk factors and other information contained in the
applicable prospectus supplement before acquiring any of our securities.
USE OF PROCEEDS
Unless otherwise indicated in a prospectus supplement, we expect to use the net proceeds from
the sale of these securities for general corporate purposes.
RATIO OF INCOME FROM CONTINUING OPERATIONS (BEFORE FIXED CHARGES) TO
COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
The following table sets forth the historical ratios of income from continuing operations
(before fixed charges) to combined fixed charges and our preferred stock dividends for the periods
indicated:
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Six Months
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Ended
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Year Ended December 31,
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June
30, 2007
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2006
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2005
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2004
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2003
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2002
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Ratio of income from continuing
operations (before fixed charges)
to combined fixed charges
and preferred stock dividends
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1.01:1
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1.30:1
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1.48:1
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1.40:1
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Deficiency of income from continuing
operations (before fixed charges)
to combined fixed charges
and preferred stock dividends
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$
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16,413
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$
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3,061
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1
DESCRIPTION OF OUR CAPITAL STOCK
General
We were formed under the laws of the State of Maryland. Rights of our stockholders are
governed by the Maryland General Corporation Law, or MGCL, our charter and our bylaws. The
following is a summary of the material provisions of our capital stock. Copies of our charter and
bylaws are filed as exhibits to the registration statement of which this prospectus is a part. See
Where You Can Find More Information.
Authorized Stock
Our charter provides that we may issue up to 100 million shares of voting common stock, par
value $.01 per share, and 100 million shares of preferred stock, par value $.10 per share.
Power to Issue Additional Shares of Our Common Stock and Preferred Stock
We believe that the power of our board of directors, without stockholder approval, to issue
additional authorized but unissued shares of our common stock or preferred stock and to classify or
reclassify unissued shares of our common stock or preferred stock and thereafter to cause us to
issue such classified or reclassified shares of stock provides us with flexibility in structuring
possible future financings and acquisitions and in meeting other needs which might arise. The
additional classes or series, as well as the common stock, will be available for issuance without
further action by our stockholders, unless stockholder consent is required by applicable law or the
rules of any stock exchange or automated quotation system on which our securities may be listed or
traded. Although our board of directors does not intend to do so, it could authorize us to issue an
additional class or series of stock that could, depending upon the terms of the particular class or
series, delay, defer or prevent a transaction or a change of control of our company that might
involve a premium price for our stockholders or otherwise be in their best interest.
Restrictions on Ownership and Transfer
Our charter provides that if our board of directors determines in good faith that the direct
or indirect ownership of our stock has or may become concentrated to an extent which would cause us
to fail to qualify or be qualified as a REIT under Sections 856(a)(5) or (6) of the Code, or
similar provisions of successor statutes, we may redeem or repurchase any number of shares of
common stock and/or preferred stock sufficient to maintain or bring such ownership into conformity
with the Code and may refuse to transfer or issue shares of common stock and/or preferred stock to
any person whose acquisition would result in our being unable to conform with the requirements of
the Code. In general, Code Sections 856(a)(5) and (6) provide that, as a REIT, we must have at
least 100 beneficial owners for 335 days of each taxable year and that we cannot qualify as a REIT
if, at any time during the last half of our taxable year, more than 50% in value of our outstanding
stock is owned, directly or indirectly, by or for not more than five individuals. In addition, our
charter provides that we may redeem or refuse to transfer any shares of our capital stock to the
extent necessary to prevent the imposition of a penalty tax as a result of ownership of those
shares by certain disqualified organizations, including governmental bodies and tax-exempt entities
that are not subject to tax on unrelated business taxable income. The redemption or purchase price
for those shares shall be equal to the fair market value of those shares as reflected in the
closing sales price for those shares if then listed on a national securities exchange, or the
average of the closing sales prices for those shares if then listed on more than one national
securities exchange, or if those shares are not then listed on a national securities exchange, the
latest bid quotation for the shares if then traded over-the-counter on the last business day for
which closing prices are available immediately preceding the day on which notices of such
acquisitions are sent or, if no such closing sales prices or quotations are available, then the net
asset value of those shares as determined by our board of directors in accordance with the
provisions of applicable law.
Transfer Agent and Registrar
The transfer agent and registrar for our common stock and preferred stock is Wells Fargo
Shareholder Services.
2
DESCRIPTION OF OUR COMMON STOCK
The following description of our common stock sets forth certain general terms and provisions
of our common stock to which any prospectus supplement may relate, including a prospectus
supplement providing that common stock will be issuable upon conversion or exchange of our debt
securities or preferred stock or upon the exercise of warrants to purchase our common stock.
All shares of our common stock covered by this prospectus will be duly authorized, fully paid
and nonassessable. Subject to the preferential rights of any other class or series of stock and to
the provisions of the charter regarding the restrictions on transfer of stock, holders of shares of
our common stock are entitled to receive dividends on such stock when, as and if authorized by our
board of directors out of funds legally available therefor and declared by us and to share ratably
in the assets of our company legally available for distribution to our stockholders in the event of
our liquidation, dissolution or winding up after payment of or adequate provision for all known
debts and liabilities of our company, including the preferential rights on dissolution of any class
or classes of preferred stock.
Subject to the provisions of our charter regarding the restrictions on transfer of stock, each
outstanding share of our common stock entitles the holder to one vote on all matters submitted to a
vote of stockholders, including the election of directors and, except as provided with respect to
any other class or series of stock, the holders of such shares will possess the exclusive voting
power. There is no cumulative voting in the election of our board of directors, which means that
the holders of a plurality of the outstanding shares of our common stock can elect all of the
directors then standing for election and the holders of the remaining shares will not be able to
elect any directors.
Holders of shares of our common stock have no preference, conversion, exchange, sinking fund,
redemption or appraisal rights and have no preemptive rights to subscribe for any securities of our
company. Subject to the provisions of the charter regarding the restrictions on transfer of stock,
shares of our common stock will have equal dividend, liquidation and other rights.
Under the MGCL, a Maryland corporation generally cannot dissolve, amend its charter, merge,
consolidate, transfer all or substantially all of its assets, engage in a statutory share exchange
or engage in similar transactions outside the ordinary course of business unless declared advisable
by the board of directors and approved by the affirmative vote of stockholders holding at least
two-thirds of the shares entitled to vote on the matter unless a lesser percentage (but not less
than a majority of all of the votes entitled to be cast on the matter) is set forth in the
corporations charter. Our charter does not provide for a lesser percentage for these matters.
However, Maryland law permits a corporation to transfer all or substantially all of its assets
without the approval of the stockholders of the corporation to one or more persons if all of the
equity interests of the person or persons are owned, directly or indirectly, by the corporation.
Because operating assets may be held by a corporations subsidiaries, as in our situation, this may
mean that a subsidiary of a corporation can transfer all of its assets without a vote of the
corporations stockholders.
Our charter authorizes our board of directors to reclassify any unissued shares of our common
stock into other classes or series of classes of stock and to establish the number of shares in
each class or series and to set the preferences, conversion and other rights, voting powers,
restrictions, limitations as to dividends or other distributions, qualifications or terms or
conditions of redemption for each such class or series.
DESCRIPTION OF OUR PREFERRED STOCK
Our charter authorizes our board of directors to classify any unissued shares of preferred
stock and to reclassify any previously classified but unissued shares of any series. Prior to
issuance of shares of each series, our board of directors is required by the MGCL and our charter
to set the terms, preferences, conversion or other rights, voting powers, restrictions, limitations
as to dividends or other distributions, qualifications and terms or conditions of redemption for
each such series. Thus, our board of directors could authorize the issuance of shares of preferred
stock with terms and conditions that could have the effect of delaying, deferring or preventing a
transaction or a change of control of our company that might involve a premium price for holders of
our common stock or otherwise be in their best interest. As of the date hereof, 202,246 shares of
Series A Preferred Stock and 15,819,432 shares of
3
Series B Preferred Stock are outstanding. Our preferred stock will, when issued, be fully
paid and nonassessable and will not have, or be subject to, any preemptive or similar rights.
The prospectus supplement relating to the series of preferred stock offered by that supplement
will describe the specific terms of those securities, including:
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the title and stated value of that preferred stock;
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the number of shares of that preferred stock offered, the liquidation preference per
share and the offering price of that preferred stock;
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the dividend rate(s), period(s) and payment date(s) or method(s) of calculation thereof
applicable to that preferred stock;
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whether dividends will be cumulative or non-cumulative and, if cumulative, the date
from which dividends on that preferred stock will accumulate;
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the voting rights applicable to that preferred stock;
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the procedures for any auction and remarketing, if any, for that preferred stock;
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the provisions for a sinking fund, if any, for that preferred stock;
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the provisions for redemption including any restriction thereon, if applicable, of that preferred stock;
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any listing of that preferred stock on any securities exchange;
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the terms and conditions, if applicable, upon which that preferred stock will be
convertible into shares of our common stock, including the conversion price (or manner of
calculation of the conversion price) and conversion period;
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a discussion of federal income tax considerations applicable to that preferred stock;
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any limitations on issuance of any series of preferred stock ranking senior to or on a
parity with that series of preferred stock as to dividend rights and rights upon
liquidation, dissolution or winding up of our affairs;
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in addition to those limitations described above under DESCRIPTION OF CAPITAL STOCK
Restrictions on Ownership and Transfer, any other limitations on actual and constructive
ownership and restrictions on transfer, in each case as may be appropriate to preserve our
status as a REIT; and
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any other specific terms, preferences, rights, limitations or restrictions of that
preferred stock.
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Rank Within Our Capital Structure
Unless otherwise specified in the applicable prospectus supplement, the preferred stock will,
with respect to dividend rights and rights upon liquidation, dissolution or winding up of our
affairs rank:
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senior to all classes or series of common stock and to all equity securities ranking
junior to the preferred stock with respect to dividend rights or rights upon liquidation,
dissolution or winding up of our affairs;
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on a parity with all equity securities issued by us the terms of which specifically
provide that those equity securities rank on a parity with the preferred stock with
respect to dividend rights or rights upon liquidation, dissolution or winding up of our
affairs; and
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junior to all equity securities issued by us the terms of which specifically provide
that those equity securities rank senior to the preferred stock with respect to dividend
rights or rights upon liquidation, dissolution or winding up of our affairs.
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The term equity securities does not include convertible debt securities.
Dividends
Subject to the preferential rights of any other class or series of stock and to the provisions
of the charter regarding the restrictions on transfer of stock, holders of shares of our preferred
stock will be entitled to receive dividends on such stock when, as and if authorized by our board
of directors out of funds legally available therefor and declared by us, at rates and on dates as
will be set forth in the applicable prospectus supplement.
Dividends on any series or class of our preferred stock may be cumulative or noncumulative, as
provided in the applicable prospectus supplement. Dividends, if cumulative, will be cumulative from
and after the date set forth in the applicable prospectus supplement. If our board of directors
fails to authorize a dividend payable on a dividend payment date on any series or class of
preferred stock for which dividends are noncumulative, then the holders of that series or class of
preferred stock will have no right to receive a dividend in respect of the dividend period ending
on that dividend payment date, and we will have no obligation to pay the dividend accrued for that
period, whether or not dividends on such series or class are declared or paid for any future
period.
If any shares of preferred stock of any series or class are outstanding, no dividends may be
authorized or paid or set apart for payment on the preferred stock of any other series or class
ranking, as to dividends, on a parity with or junior to the preferred stock of that series or class
for any period unless:
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the series or class of preferred stock has a cumulative dividend, and full cumulative
dividends have been or contemporaneously are authorized and paid or authorized and a sum
sufficient for the payment of those dividends is set apart for payment on the preferred
stock of that series or class for all past dividend periods and the then current dividend
period; or
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the series or class of preferred stock does not have a cumulative dividend, and full
dividends for the then current dividend period have been or contemporaneously are
authorized and paid or authorized and a sum sufficient for the payment of those dividends
is set apart for the payment on the preferred stock of that series or class.
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When dividends are not paid in full (or a sum sufficient for the full payment is not set
apart) upon the shares of preferred stock of any series or class and the shares of any other series
or class of preferred stock ranking on a parity as to dividends with the preferred stock of that
series or class, then all dividends authorized on shares of preferred stock of that series or class
and any other series or class of preferred stock ranking on a parity as to dividends with that
preferred stock shall be authorized pro rata so that the amount of dividends authorized per share
on the preferred stock of that series or class and other series or class of preferred stock will in
all cases bear to each other the same ratio that accrued dividends per share on the shares of
preferred stock of that series or class (which will not include any accumulation in respect of
unpaid dividends for prior dividend periods if the preferred stock does not have a cumulative
dividend) and that other series or class of preferred stock bear to each other. No interest, or sum
of money in lieu of interest, will be payable in respect of any dividend payment or payments on
preferred stock of that series or class that may be in arrears.
Redemption
We may have the right or may be required to redeem one or more series of preferred stock, in
whole or in part, in each case upon the terms, if any, and at the time and at the redemption prices
set forth in the applicable prospectus supplement.
If a series of preferred stock is subject to mandatory redemption, we will specify in the
applicable prospectus supplement the number of shares we are required to redeem, when those
redemptions start, the
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redemption price, and any other terms and conditions affecting the redemption. The redemption
price will include all accrued and unpaid dividends, except in the case of noncumulative preferred
stock. The redemption price may be payable in cash or other property, as specified in the
applicable prospectus supplement. If the redemption price for preferred stock of any series or
class is payable only from the net proceeds of the issuance of our stock, the terms of that
preferred stock may provide that, if no such stock shall have been issued or to the extent the net
proceeds from any issuance are insufficient to pay in full the aggregate redemption price then due,
that preferred stock shall automatically and mandatorily be converted into shares of our applicable
stock pursuant to conversion provisions specified in the applicable prospectus supplement.
Liquidation Preference
Upon any voluntary or involuntary liquidation or dissolution of us or winding up of our
affairs, then, before any distribution or payment will be made to the holders of common stock or
any other series or class of stock ranking junior to any series or class of the preferred stock in
the distribution of assets upon any liquidation, dissolution or winding up of our affairs, the
holders of that series or class of preferred stock will be entitled to receive out of our assets
legally available for distribution to shareholders liquidating distributions in the amount of the
liquidation preference per share (set forth in the applicable prospectus supplement), plus an
amount equal to all dividends accrued and unpaid on the preferred stock (which will not include any
accumulation in respect of unpaid dividends for prior dividend periods if the preferred stock does
not have a cumulative dividend). After payment of the full amount of the liquidating distributions
to which they are entitled, the holders of preferred stock will have no right or claim to any of
our remaining assets.
If, upon any voluntary or involuntary liquidation, dissolution or winding up, the legally
available assets are insufficient to pay the amount of the liquidating distributions on all
outstanding shares of any series or class of preferred stock and the corresponding amounts payable
on all shares of other classes or series of our stock of ranking on a parity with that series or
class of preferred stock in the distribution of assets upon liquidation, dissolution or winding up,
then the holders of that series or class of preferred stock and all other classes or series of
capital stock will share ratably in any distribution of assets in proportion to the full
liquidating distributions to which they would otherwise be respectively entitled.
If liquidating distributions have been made in full to all holders of any series or class of
preferred stock, our remaining assets will be distributed among the holders of any other classes or
series of stock ranking junior to that series or class of preferred stock upon liquidation,
dissolution or winding up, according to their respective rights and preferences and in each case
according to their respective number of shares. For these purposes, the consolidation or merger of
us with or into any other entity, or the sale, lease, transfer or conveyance of all or
substantially all of our property or business, will not be deemed to constitute a liquidation,
dissolution or winding up of our affairs.
Voting Rights
Holders of preferred stock will not have any voting rights, except as set forth below or as
indicated in the applicable prospectus supplement.
Unless provided otherwise for any series or class of preferred stock, so long as any shares of
preferred stock of a series or class remain outstanding, we will not, without the affirmative vote
or consent of the holders of at least a majority of the shares of that series or class of preferred
stock outstanding at the time, given in person or by proxy, either in writing or at a meeting (such
series or class voting separately as a class):
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authorize or create, or increase the authorized or issued amount of, any class or
series of stock ranking prior to that series or class of preferred stock with respect to
payment of dividends or the distribution of assets upon liquidation, dissolution or
winding up or reclassify any authorized stock into any of those shares, or create,
authorize or issue any obligation or security convertible into or evidencing the right to
purchase any of those shares; or
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amend, alter or repeal the provisions of our charter or articles supplementary for such
series or class of preferred stock, whether by merger, consolidation or otherwise, so as
to materially and adversely affect any
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right, preference, privilege or voting power of that series or class of preferred stock or
the holders of the preferred stock.
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However, any increase in the amount of the authorized preferred stock or the creation or
issuance of any other series or class of preferred stock, or any increase in the amount of
authorized shares of such series or class or any other series or class of preferred stock, in each
case ranking on a parity with or junior to the preferred stock of that series or class with respect
to payment of dividends or the distribution of assets upon liquidation, dissolution or winding up,
will not be deemed to materially and adversely affect such rights, preferences, privileges or
voting powers.
These voting provisions will not apply if, at or prior to the time when the act with respect
to which that vote would otherwise be required will be effected, all outstanding shares of that
series or class of preferred stock have been redeemed or called for redemption upon proper notice
and sufficient funds have been deposited in trust to effect that redemption.
Conversion Rights
The terms and conditions, if any, upon which shares of any series or class of preferred stock
are convertible into shares of common stock will be set forth in the applicable prospectus
supplement. The terms will include:
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the number of shares of common stock into which the preferred stock is convertible;
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the conversion price (or manner of calculation of the conversion price);
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the conversion period;
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provisions as to whether conversion will be at the option of the holders of the preferred stock or us,
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the events requiring an adjustment of the conversion price; and
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provisions affecting conversion in the event of the redemption of the preferred stock.
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Series A Preferred Stock
Our board of directors has classified and designated 5,465,000 shares of Series A Preferred
Stock, of which 202,246 shares are currently outstanding. The Series A Preferred Stock generally
provides for the following rights, preferences and obligations.
Dividend Rights.
Holders of the Series A Preferred Stock are entitled to receive, when, as
and if declared by our board of directors out of funds legally available therefor, cumulative
preferential cash dividends at the rate of $1.60 per annum per share, and no more, payable in equal
quarterly installments on each March 31, June 30, September 30 and December 31.
Liquidation Rights
. Upon any voluntary or involuntary liquidation, dissolution or winding up
of our company, the holders of Series A Preferred Stock will be entitled to receive a liquidation
preference of $16.40 per share, plus any accumulated, accrued and unpaid dividends (whether or not
declared), before any payment or distribution will be made or set aside for holders of any junior
stock.
Redemption Provisions
. We may redeem Series A Preferred Stock, in whole or from time to time
in part, at a cash redemption price equal to 100% of the liquidation preference plus all accrued
and unpaid dividends (whether or not earned or declared) to the date fixed for redemption. The
Series A Preferred Stock has no stated maturity and is not subject to any sinking fund or mandatory
redemption provisions.
Voting Rights
. Holders of Series A Preferred Stock generally have no voting rights, except in
certain circumstances when our board of directors will be expanded by two seats and the holders of
Series A Preferred
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Stock will be entitled to elect these two directors. In addition, the issuance of senior
shares or certain changes to the terms of the Series A Preferred Stock that would be materially
adverse to the rights of holders of Series A Preferred Stock cannot be made without the affirmative
vote of holders of at least 66 2/3% of the outstanding Series A Preferred Stock and shares of any
class or series of shares ranking on a parity with the Series A Preferred Stock which are entitled
to similar voting rights, if any, voting as a single class.
Conversion and Preemptive Rights
. Holders of the Series A Preferred Stock may, at their
option, convert shares of Series A Preferred Stock into shares of our common stock at the rate of
1.5512 shares of our common stock for each share of Series A Preferred Stock converted. The
conversion rates of the Series A Preferred Stock are subject to adjustment in certain
circumstances. Holders of shares of our Series A Preferred Stock have no preemptive rights to
subscribe for any securities of our company.
Series B
Preferred Stock
Our board of directors has classified and designated 31,000,000 shares of Series B Preferred
Stock, of which 15,819,432 shares are currently outstanding. The Series B Preferred Stock
generally provides for the following rights, preferences and obligations.
Dividend Rights.
Holders of the Series B Preferred Stock are entitled to receive, when, as and
if declared by our board of directors out of funds legally available therefor, cumulative
preferential cash dividends at the annual rate of $1.26 per share, and no more, payable in equal
monthly installments on each monthly dividend payment date.
Liquidation Rights
. Upon any voluntary or involuntary liquidation, dissolution or winding up
of our company, the holders of Series B Preferred Stock will be entitled to receive a liquidation
preference of $11.38 per share, plus an amount equal to all accumulated, accrued and unpaid
dividends (whether or not declared) to the date of liquidation, dissolution or winding up of the
affairs of our company, before any payment or distribution will be made to or set apart for the
holders of any junior stock.
Redemption Provisions
. We may redeem Series B Preferred Stock, in whole or from time to time
in part, at a cash redemption price equal to $12.50 per share, plus all accrued and unpaid
dividends (whether or not earned or declared) to the date fixed for redemption. The Series B
Preferred Stock has no stated maturity and is not subject to any sinking fund or mandatory
redemption provisions.
Voting Rights
. Holders of Series B Preferred Stock are entitled to vote on (i) all matters
submitted to the holders of our common stock together with the holders of our common stock as a
single class and (ii) certain matters affecting the Series Preferred Stock as a separate class. In
certain circumstances, our board of directors will be expanded by two seats and the holders of
Series B Preferred Stock will be entitled to elect these two directors.
So long as 20% or more of the aggregate number of shares of Series B Preferred Stock issued in
connection with the Tyler Cabot merger remain outstanding, the affirmative vote of at least a
majority of the outstanding shares of such Series B Preferred Stock will be required for the sale,
lease or conveyance by us of all or substantially all of our property or business, or our
consolidation or merger with any other corporation unless the corporation resulting from such
consolidation or merger will have after such consolidation or merger no class of shares either
authorized or outstanding ranking prior to or on a parity with the Series B Preferred Stock except
the same number of shares ranking prior to or on a parity with the Series B Preferred Stock and
having the same rights and preferences as our authorized and outstanding shares immediately
preceding such consolidation or merger, and each holder of Series B Preferred Stock immediately
preceding such consolidation or merger shall receive the same number of shares, with the same
rights and preferences, of the resulting corporation.
Conversion and Preemptive Rights
. Holders of Series B Preferred Stock may, at their option,
convert shares of Series B Preferred Stock into shares of the our common stock at the rate of
0.5980 shares of our common stock for each share of Series B Preferred Stock converted. The
conversion rates of the Series B Preferred Stock are subject to adjustment in certain
circumstances. Holders of shares of our Series B Preferred Stock have no preemptive rights to
subscribe for any securities of our company.
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DESCRIPTION OF OUR DEBT SECURITIES
The following description, together with the additional information we include in any
applicable prospectus supplements, summarizes the material terms and provisions of the debt
securities that we may offer under this prospectus. While the terms we have summarized below will
apply generally to any future debt securities we may offer, we will describe the particular terms
of any debt securities that we may offer in more detail in the applicable prospectus supplement. If
we indicate in a prospectus supplement, the terms of any debt securities we offer under that
prospectus supplement may differ from the terms we describe below.
The debt securities will be our direct unsecured general obligations and may include
debentures, notes, bonds or other evidences of indebtedness. The debt securities will be either
senior debt securities or subordinated debt securities. The debt securities will be issued under
one or more separate indentures. Senior debt securities will be issued under a senior indenture,
and subordinated debt securities will be issued under a subordinated indenture. We use the term
indentures to refer to both the senior indenture and the subordinated indenture.
The forms of indentures are filed as exhibits to the
registration statement of which this prospectus forms a part.
The indentures
will be qualified under the Trust Indenture Act of 1939, as amended. We use the term trustee to refer to either the
senior trustee or the subordinated trustee, as applicable.
The following summaries of material provisions of the debt securities and indentures are
subject to, and qualified in their entirety by reference to, all the provisions of the indenture
applicable to a particular series of debt securities.
General
We will describe in each prospectus supplement the following terms relating to a series of
debt securities:
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the title;
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any limit on the amount that may be issued;
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whether or not we will issue the series of debt securities in global form, the terms
and who the depository will be;
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the maturity date;
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the annual interest rate, which may be fixed or variable, or the method for determining
the rate and the date interest will begin to accrue, the dates interest will be payable
and the regular record dates for interest payment dates or the method for determining such
dates;
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whether or not the debt securities will be secured or unsecured, and the terms of any secured debt;
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the terms of the subordination of any series of subordinated debt;
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the place where payments will be payable;
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our right, if any, to defer payment of interest and the maximum length of any such deferral period;
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the date, if any, after which, and the price at which, we may, at our option, redeem
the series of debt securities pursuant to any optional redemption provisions;
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the date, if any, on which, and the price at which we are obligated, pursuant to any
mandatory sinking fund provisions or otherwise, to redeem, or at the holders option to
purchase, the series of debt securities;
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whether the indenture will restrict our ability to pay dividends, or will require us to
maintain any asset ratios or reserves;
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whether we will be restricted from incurring any additional indebtedness;
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a discussion on any material or special United States federal income tax considerations
applicable to the debt securities;
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the denominations in which we will issue the series of debt securities, if other than
denominations of $1,000 and any integral multiple thereof; and
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any other specific terms, preferences, rights or limitations of, or restrictions on,
the debt securities not inconsistent with the applicable indentures.
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We may
issue debt securities at less than the principal amount payable at maturity. We refer to these
securities as original issue discount securities. If material or applicable,
we will describe in the applicable prospectus supplement special US federal income tax,
accounting and other considerations applicable to original issue discount securities.
Consolidation, Merger or Sale
Under the terms of the indentures, we would be generally permitted to
consolidate or merge with another company. We would be also
permitted to sell, convey, transfer, lease or otherwise dispose of all
or substantially all of our assets to another company. However, we
would not be able to take any of these actions unless the following
conditions are met:
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if we merge out of existence or sell our assets, the other company must be an entity
organized under the laws of one of the states of the United States or the District of
Columbia or under United States federal law and must agree to be legally responsible
for our debt securities; and
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immediately after the merger, sale of assets or other transaction, we may not be
in default on the debt securities.
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Events of Default Under the Indenture
The following are events of default under the indentures with respect to any series of debt
securities that we may issue:
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if we fail to pay the principal or any premium on a debt security
when due, for more than a specified number of days past the due date;
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if we fail to pay interest on a debt
security when due, for more than a specified number of days past the due date;
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if we fail to deposit any sinking fund
payment when due, for more than a specified number of days past the due date;
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if we fail to observe or perform any other covenant contained in the debt securities or
the indentures, other than a covenant specifically relating to another series of debt
securities, and our failure continues for a number of days to be stated in the indenture
after we receive notice from the trustee or holders of at least 25% in aggregate principal
amount of the outstanding debt securities of the applicable series; and
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if specified events of bankruptcy, insolvency or reorganization occur as to us.
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If an event of default with respect to debt securities of any series occurs and is continuing,
the trustee or the holders of at least 25% in aggregate principal amount of the outstanding debt
securities of that series, by notice to us in writing, and to the trustee if notice is given by
such holders, may declare the unpaid principal of, premium, if any, and accrued interest, if any,
due and payable immediately.
The holders of a majority in principal amount of the outstanding debt securities of an
affected series may waive any default or event of default with respect to the series and its
consequences, except defaults or events of default regarding payment of principal, premium, if any,
or interest, unless we have cured the default or event of default in accordance with the indenture.
Any waiver shall cure the default or event of default.
Subject to the terms of the indentures, if an event of default under an indenture shall occur
and be continuing, the trustee will be under no obligation to exercise any of its rights or powers
under such indenture at the request or direction of any of the holders of the applicable series of
debt securities, unless such holders have offered
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the trustee reasonable indemnity. The holders of a majority in principal amount of the
outstanding debt securities of any series will have the right to direct the time, method and place
of conducting any proceeding for any remedy available to the trustee, or exercising any trust or
power conferred on the trustee, with respect to the debt securities of that series, provided that:
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the direction so given by the holder is not in conflict with any law or the applicable
indenture; and
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subject to its duties under the Trust Indenture Act, the trustee need not take any
action that might involve it in personal liability or might be unduly prejudicial to the
holders not involved in the proceeding.
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A holder of the debt securities of any series will only have the right to institute a
proceeding under the indentures or to appoint a receiver or trustee, or to seek other remedies if:
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the holder has given written notice to the trustee of a continuing event of default
with respect to that series;
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the holders of at least 25% in aggregate principal amount of the outstanding debt
securities of that series have made written request, and such holders have offered
reasonable indemnity to the trustee to institute the proceeding as trustee;
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the trustee does not institute the proceeding, and does not receive from the holders of
a majority in aggregate principal amount of the outstanding debt securities of that series
other conflicting directions within 60 days after the notice,
request and offer; and
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no direction inconsistent with such written request has been given to the trustee during such 60-day period by
the holders of a majority in principal amount of the debt securities of that series.
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These limitations do not apply to a suit instituted by a holder of debt securities if we
default in the payment of the principal, premium, if any, or interest on, the debt securities.
We will periodically file statements with the trustee regarding our compliance with specified
covenants in the indentures.
Modification of Indenture; Waiver
We and the trustee may change an indenture without the consent of any holders with respect to
specific matters, including:
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to fix any ambiguity, defect or inconsistency in the indenture; and
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to change anything that does not materially adversely affect the interests of any
holder of debt securities of any series.
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In addition, under the indentures, the rights of holders of a series of debt securities may be
changed by us and the trustee with the written consent of the holders of at least a majority in
aggregate principal amount of the outstanding debt securities of each series that is affected.
However, we and the trustee may only make the following changes with the consent of each holder of
any outstanding debt securities affected:
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changing the stated maturity of the principal or interest on
a series of debt securities;
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reducing the principal amount, reducing the rate of or extending the time of payment of
interest, or any premium payable upon the redemption of any debt securities;
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changing the currency of payment on a debt security;
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impair your right to sue for payment;
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modify the subordination provisions, if any, in a manner that is adverse to you;
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reducing the percentage of debt
securities the holders of which are required to consent to any amendment; or
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modify any of the foregoing provisions.
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Certain Covenants
The indentures contain certain covenants requiring us to take certain actions and prohibiting
us from taking certain actions, including the following:
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we must maintain a paying agent in each place of payment for the debt securities;
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we will do or cause to be done all things necessary to preserve and keep in full force and
effect our existence; and
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we will cause all properties used or useful in the conduct of our business to be maintained
and kept in good condition.
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Any additional or different covenants or modifications to the foregoing covenants with respect
to any series of debt securities will be described in the applicable prospectus supplement.
Redemption
The indentures provide that the debt securities of any series that are redeemable may be
redeemed at any time at our option, in whole or in part. Debt securities may also be subject to
optional or mandatory redemption on terms and conditions described in the applicable prospectus
supplement.
From and after notice has been given as provided in the applicable indenture, if funds for the
redemption of any debt securities called for redemption shall have been made available on such
redemption date, such debt securities will cease to bear interest on the date fixed for such
redemption specified in such notice, and the only right of the holders of the debt securities will
be to receive payment of the redemption price.
Discharge, Defeasance and Covenant Defeasance
To the extent stated in the prospectus supplement, we may elect to apply the provisions in the
indentures relating to defeasance and discharge of indebtedness, or to defeasance of restrictive
covenants, to the debt securities of any series. The indentures provide that, upon satisfaction of
the requirements described below, we may terminate all of our obligations under the debt securities
of any series and the applicable indenture, known as legal defeasance, other than our obligation:
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to maintain a registrar and paying agents and hold monies for payment in trust;
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to register the transfer or exchange of the debt securities; and
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to replace mutilated, destroyed, lost or stolen debt securities.
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In addition, we may terminate our obligation to comply with any restrictive covenants under
the debt securities of any series or the applicable indenture, known as covenant defeasance.
We may exercise our legal defeasance option even if we have previously exercised our covenant
defeasance option. If we exercise either defeasance option, payment of the debt securities may not
be accelerated because of the occurrence of events of default.
To exercise either defeasance option as to debt securities of any series, we must irrevocably
deposit in trust with the trustee money and/or obligations backed by the full faith and credit of
the United States that will provide money in an amount sufficient in the written opinion of a
nationally recognized firm of independent public accountants to pay the principal of, premium, if
any, and each installment of interest on the debt securities. We may only establish this trust if,
among other things:
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no event of default shall have occurred or be continuing;
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in the case of legal defeasance, we have delivered to the trustee an opinion of counsel to
the effect that we have received from, or there has been published by, the Internal Revenue Service
a ruling or there has been a change in law, which in the opinion of our counsel, provides that
holders of the debt securities will not recognize gain or loss for federal income tax purposes as a
result of such deposit, defeasance and discharge and will be subject to federal income tax on the
same amount, in the same manner and at the same times as would have been the case if such deposit,
defeasance and discharge had not occurred;
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in the case of covenant defeasance, we have delivered to the trustee an opinion of counsel
to the effect that the holders of the debt securities will not recognize gain or loss for federal
income tax purposes as a result of such deposit and covenant defeasance and will be subject to
federal income tax on the same amount, in the same manner and at the same times as would have been
the case if such deposit and covenant defeasance had not occurred; and
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we satisfy other customary conditions precedent described in the applicable indenture.
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Conversion and Exchange of Securities
The terms and conditions, if any, upon which any debt securities are convertible or
exchangeable into debt securities, common stock, preferred stock or other securities or property
will be set forth in the applicable prospectus supplement relating thereto. Such terms will
include:
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whether such debt securities are convertible or exchangeable into debt securities, common
stock, preferred stock or other securities or property;
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the conversion price (or manner of calculation thereof);
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the conversion period;
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provisions as to whether conversion will be at the option of the holders or us;
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the events requiring an adjustment of the conversion price and provisions affecting
conversion in the event of the redemption of such debt securities; and
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any restrictions on conversion, including restrictions directed at maintaining our REIT
status.
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Form, Exchange and Transfer
We will issue the debt securities of each series only in fully registered form without coupons
and, unless we otherwise specify in the applicable prospectus supplement, in denominations of
$1,000 and any integral multiple thereof. The indentures provide that we may issue debt securities
of a series in temporary or permanent global form and as book-entry securities that will be
deposited with, or on behalf of, The Depository Trust Company or another depository named by us and
identified in a prospectus supplement with respect to that series.
At the option of the holder, subject to the terms of the indentures and the limitations
applicable to global securities described in the applicable prospectus supplement, the holder of
the debt securities of any series can exchange the debt securities for other debt securities of the
same series, in any authorized denomination and of like tenor and aggregate principal amount.
Subject to the terms of the indentures and the limitations applicable to global securities set
forth in the applicable prospectus supplement, holders of the debt securities may present the debt
securities for exchange or for registration of transfer, duly endorsed or with the form of transfer
endorsed thereon duly executed if so required by us or the security registrar, at the office of the
security registrar or at the office of any transfer agent designated by us for this purpose. Unless
otherwise provided in the debt securities that the holder presents for transfer or exchange, we
will make no service charge for any registration of transfer or exchange, but we may require
payment of any taxes or other governmental charges.
We will name in the applicable prospectus supplement the security registrar, and any transfer
agent in addition to the security registrar, that we initially designate for any debt securities.
We may at any time designate additional transfer agents or rescind the designation of any transfer
agent or approve a change in the office through which any transfer agent acts, except that we will
be required to maintain a transfer agent in each place of payment for the debt securities of each
series.
If we elect to redeem the debt securities of any series, we will not be required to:
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issue, register the transfer of, or exchange any debt securities of that series during
a period beginning at the opening of business 15 days before the day of mailing of a
notice of redemption of any debt securities that may be selected for redemption and ending
at the close of business on the day of the mailing; or
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register the transfer of or exchange any debt securities so selected for redemption, in
whole or in part, except the unredeemed portion of any debt securities we are redeeming in
part.
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Information Concerning the Trustee
The trustee, other than during the occurrence and continuance of an event of default under an
indenture, undertakes to perform only those duties as are specifically set forth in the applicable
indenture. Upon an event of default under an indenture, the trustee must use the same degree of
care as a prudent person would exercise or use in the conduct of his or her own affairs. Subject to
this provision, the trustee is under no obligation to exercise any of the powers given it by the
indentures at the request of any holder of debt securities unless it is offered reasonable security
and indemnity against the costs, expenses and liabilities that it might incur.
Payment and Paying Agents
Unless we otherwise indicate in the applicable prospectus supplement, we will make payment of
the interest on any debt securities on any interest payment date to the person in whose name the
debt securities, or one or more predecessor securities, are registered at the close of business on
the regular record date for the interest.
We will pay principal of and any premium and interest on the debt securities of a particular
series at the office of the paying agents designated by us, except that unless we otherwise
indicate in the applicable prospectus supplement, we will make interest payments by check which we
will mail to the holder. Unless we otherwise indicate in a prospectus supplement, we will designate
the corporate trust office of the trustee in the City of New York as our sole paying agent for
payments with respect to debt securities of each series. We will name in the applicable prospectus
supplement any other paying agents that we initially designate for the debt securities of a
particular series. We will maintain a paying agent in each place of payment for the debt securities
of a particular series.
All money we pay to a paying agent or the trustee for the payment of the principal of or any
premium or interest on any debt securities which remains unclaimed at the end of two years after
such principal, premium or interest has become due and payable will be repaid to us, and the holder
of the security thereafter may look only to us for payment thereof.
Subordination
The prospectus supplement relating to any offering of subordinated debt securities will
describe the specific subordination provisions. However, unless otherwise noted in the prospectus
supplement, subordinated debt securities will be subordinate and junior in right of payment to
senior indebtedness.
The indebtedness underlying any subordinated debt securities will be payable only if all
payments due under our senior indebtedness, as defined in the applicable indenture and any
indenture supplement, including any outstanding senior debt securities, have been made. If we
distribute our assets to creditors upon any dissolution, winding-up, liquidation or reorganization
or in bankruptcy, insolvency, receivership or similar proceedings, we must first pay all amounts
due or to become due on all senior indebtedness before we pay the principal of, or any premium or
interest on, the subordinated debt securities. In the event the subordinated debt securities are
accelerated because of an event of default, we may not make any payment on the subordinated debt
securities until we have paid all senior indebtedness or the acceleration is rescinded.
By reason of such subordination, if we experience a bankruptcy, dissolution or reorganization,
holders of senior indebtedness may receive more, ratably, and holders of subordinated debt
securities may receive less, ratably, than our other creditors. The indenture for subordinated debt
securities may not limit our ability to incur additional senior or subordinated indebtedness.
Governing Law
The indentures and the debt securities will be governed by and construed in accordance with
the laws of the State of New York, except to the extent that the Trust Indenture Act is applicable.
DESCRIPTION OF OUR WARRANTS
This section describes the general terms and provisions of our securities warrants. The
applicable prospectus supplement will describe the specific terms of the securities warrants
offered through that prospectus supplement as well as any general terms described in this section
that will not apply to those securities warrants.
We may issue securities warrants for the purchase of our debt securities, preferred stock, or
common stock. We may issue warrants independently or together with other securities, and they may
be attached to or separate from the other securities. Each series of securities warrants will be
issued under a separate warrant agreement that we will enter into with a bank or trust company, as
warrant agent, as detailed in the applicable prospectus supplement. The
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warrant agent will act solely as our agent in connection with the securities warrants and will
not assume any obligation, or agency or trust relationship, with you.
The prospectus supplement relating to a particular issue of securities warrants will describe
the terms of those securities warrants, including, where applicable:
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the aggregate number of the securities covered by the warrant;
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the designation, amount and terms of the securities purchasable upon exercise of the warrant;
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the exercise price for our debt securities, the amount of debt securities upon exercise
you will receive, and a description of that series of debt securities;
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the exercise price for shares of our preferred stock, the number of shares of preferred
stock to be received upon exercise, and a description of that series of our preferred
stock;
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the exercise price for shares of our common stock and the number of shares of common
stock to be received upon exercise;
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the expiration date for exercising the warrant;
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the minimum or maximum amount of warrants that may be exercised at any time;
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a discussion of U.S. federal income tax consequences; and
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any other material terms of the securities warrants.
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After the warrants expire they will become void. The prospectus supplement will describe how
to exercise securities warrants. A holder must exercise warrants for our preferred stock or common
stock through payment in U.S. dollars. All securities warrants will be issued in registered form.
The prospectus supplement may provide for the adjustment of the exercise price of the securities
warrants.
Until a holder exercises warrants to purchase our debt securities, preferred stock, or common
stock, that holder will not have any rights as a holder of our debt securities, preferred stock, or
common stock by virtue of ownership of warrants.
BOOK-ENTRY SECURITIES
The securities offered by means of this prospectus may be issued in whole or in part in
book-entry form, meaning that beneficial owners of the securities will not receive certificates
representing their ownership interests in the securities, except in the event the book-entry system
for the securities is discontinued. Securities issued in book entry form will be evidenced by one
or more global securities that will be deposited with, or on behalf of, a depositary identified in
the applicable prospectus supplement relating to the securities. We expect that The Depository
Trust Company will serve as depository. Unless and until it is exchanged in whole or in part for
the individual securities represented by that security, a global security may not be transferred
except as a whole by the depository for the global security to a nominee of that depository or by a
nominee of that depository to that depository or another nominee of that depository or by the
depository or any nominee of that depository to a successor depository or a nominee of that
successor. Global securities may be issued in either registered or bearer form and in either
temporary or permanent form. The specific terms of the depositary arrangement with respect to a
class or series of securities that differ from the terms described here will be described in the
applicable prospectus supplement.
Unless otherwise indicated in the applicable prospectus supplement, we anticipate that the
provisions described below will apply to depository arrangements.
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Upon the issuance of a global security, the depository for the global security or its nominee
will credit on its book-entry registration and transfer system the respective principal amounts of
the individual securities represented by that global security to the accounts of persons that have
accounts with such depository, who are called participants. Those accounts will be designated by
the underwriters, dealers or agents with respect to the securities or by us if the securities are
offered and sold directly by us. Ownership of beneficial interests in a global security will be
limited to the depositorys participants or persons that may hold interests through those
participants. Ownership of beneficial interests in the global security will be shown on, and the
transfer of that ownership will be effected only through, records maintained by the applicable
depository or its nominee (with respect to beneficial interests of participants) and records of the
participants (with respect to beneficial interests of persons who hold through participants). The
laws of some states require that certain purchasers of securities take physical delivery of such
securities in definitive form. These limits and laws may impair the ability to own, pledge or
transfer beneficial interest in a global security.
So long as the depository for a global security or its nominee is the registered owner of such
global security, that depository or nominee, as the case may be, will be considered the sole owner
or holder of the securities represented by that global security for all purposes under the
applicable indenture or other instrument defining the rights of a holder of the securities. Except
as provided below or in the applicable prospectus supplement, owners of beneficial interest in a
global security will not be entitled to have any of the individual securities of the series
represented by that global security registered in their names, will not receive or be entitled to
receive physical delivery of any such securities in definitive form and will not be considered the
owners or holders of that security under the applicable indenture or other instrument defining the
rights of the holders of the securities.
Payments of amounts payable with respect to individual securities represented by a global
security registered in the name of a depository or its nominee will be made to the depository or
its nominee, as the case may be, as the registered owner of the global security representing those
securities. None of us, our officers and directors or any trustee, paying agent or security
registrar for an individual series of securities will have any responsibility or liability for any
aspect of the records relating to or payments made on account of beneficial ownership interests in
the global security for such securities or for maintaining, supervising or reviewing any records
relating to those beneficial ownership interests.
We expect that the depository for a series of securities offered by means of this prospectus
or its nominee, upon receipt of any payment of principal, premium, interest, dividend or other
amount in respect of a permanent global security representing any of those securities, will
immediately credit its participants accounts with payments in amounts proportionate to their
respective beneficial interests in the principal amount of that global security for those
securities as shown on the records of that depository or its nominee. We also expect that payments
by participants to owners of beneficial interests in that global security held through those
participants will be governed by standing instructions and customary practices, as is the case with
securities held for the account of customers in bearer form or registered in street name. Those
payments will be the responsibility of these participants.
If a depository for a series of securities is at any time unwilling, unable or ineligible to
continue as depository and a successor depository is not appointed by us within 90 days, we will
issue individual securities of that series in exchange for the global security representing that
series of securities. In addition, we may, at any time and in our sole discretion, subject to any
limitations described in the applicable prospectus supplement relating to those securities,
determine not to have any securities of that series represented by one or more global securities
and, in that event, will issue individual securities of that series in exchange for the global
security or securities representing that series of securities.
MATERIAL PROVISIONS OF MARYLAND LAW AND OF OUR CHARTER AND BYLAWS
The following is a summary of certain provisions of Maryland law and of our charter and
bylaws. Copies of our charter and bylaws are filed as exhibits to the registration statement of
which this prospectus is a part. See Where You Can Find More Information.
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The Board of Directors
Our bylaws provide that the number of directors of our company may be established by our board
of directors but may not be fewer than the minimum number permitted under the MGCL nor more than
25. Any vacancy will be filled, at any regular meeting or at any special meeting called for that
purpose, by a majority of the remaining directors.
Pursuant to our charter, each member of our board of directors will serve one year terms and
until their successors are elected and qualified. Holders of shares of our common stock will have
no right to cumulative voting in the election of directors. Consequently, at each annual meeting of
stockholders at which our board of directors is elected, the holders of a plurality of the shares
of our common stock will be able to elect all of the members of our board of directors.
Business Combinations
Maryland law prohibits business combinations between a corporation and an interested
stockholder or an affiliate of an interested stockholder for five years after the most recent date
on which the interested stockholder becomes an interested stockholder. These business combinations
include a merger, consolidation, statutory share exchange, or, in circumstances specified in the
statute, certain transfers of assets, certain stock issuances and transfers, liquidation plans and
reclassifications involving interested stockholders and their affiliates as asset transfer or
issuance or reclassification of equity securities. Maryland law defines an interested stockholder
as:
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any person who beneficially owns 10% or more of the voting power of our voting stock;
or
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an affiliate or associate of the corporation who, at any time within the two-year
period prior to the date in question, was the beneficial owner of 10% or more of the
voting power of the then-outstanding voting stock of the corporation.
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A person is not an interested stockholder if the board of directors approves in advance the
transaction by which the person otherwise would have become an interested stockholder. However, in
approving the transaction, the board of directors may provide that its approval is subject to
compliance, at or after the time of approval, with any terms and conditions determined by the board
of directors.
After the five year prohibition, any business combination between a corporation and an
interested stockholder generally must be recommended by the board of directors and approved by the
affirmative vote of at least:
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80% of the votes entitled to be cast by holders of the then outstanding shares of
common stock; and
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two-thirds of the votes entitled to be cast by holders of the common stock other
than shares held by the interested stockholder with whom or with whose affiliate the
business combination is to be effected or shares held by an affiliate or associate of
the interested stockholder.
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These super-majority vote requirements do not apply if certain fair price requirements set
forth in the MGCL are satisfied.
The statute permits various exemptions from its provisions, including business combinations
that are approved by the board of directors before the time that the interested stockholder becomes
an interested stockholder.
Control Share Acquisitions
The MGCL provides that control shares of a Maryland corporation acquired in a control share
acquisition have no voting rights except to the extent approved at a special meeting by the
affirmative vote of two-thirds of the votes entitled to be cast on the matter, excluding shares of
stock in a corporation in respect of which any of the following persons is entitled to exercise or
direct the exercise of the voting power of shares of stock of the
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corporation in the election of directors: (i) a person who makes or proposes to make a control
share acquisition, (ii) an officer of the corporation or (iii) an employee of the corporation who
is also a director of the corporation. Control shares are voting shares of stock which, if
aggregated with all other such shares of stock previously acquired by the acquiror or in respect of
which the acquiror is able to exercise or direct the exercise of voting power (except solely by
virtue of a revocable proxy), would entitle the acquiror to exercise voting power in electing
directors within one of the following ranges of voting power: (i) one-tenth or more but less than
one-third, (ii) one-third or more but less than a majority, or (iii) a majority or more of all
voting power. Control shares do not include shares the acquiring person is then entitled to vote as
a result of having previously obtained stockholder approval. A control share acquisition means
the acquisition of control shares, subject to certain exceptions.
A person who has made or proposes to make a control share acquisition, upon satisfaction of
certain conditions (including an undertaking to pay expenses), may compel our board of directors to
call a special meeting of stockholders to be held within 50 days of demand to consider the voting
rights of the shares. If no request for a meeting is made, the corporation may itself present the
question at any stockholders meeting.
If voting rights are not approved at the meeting or if the acquiring person does not deliver
an acquiring person statement as required by the statute, then, subject to certain conditions and
limitations, the corporation may redeem any or all of the control shares (except those for which
voting rights have previously been approved) for fair value determined, without regard to the
absence of voting rights for the control shares, as of the date of the last control share
acquisition by the acquiror or of any meeting of stockholders at which the voting rights of such
shares are considered and not approved. If voting rights for control shares are approved at a
stockholders meeting and the acquiror becomes entitled to vote a majority of the shares entitled to
vote, all other stockholders may exercise appraisal rights. The fair value of the shares as
determined for purposes of such appraisal rights may not be less than the highest price per share
paid by the acquiror in the control share acquisition.
The control share acquisition statute does not apply (i) to shares acquired in a merger,
consolidation or share exchange if the corporation is a party to the transaction or (ii) to
acquisitions approved or exempted by the charter or bylaws of the corporation.
Amendment to Our Charter
Our charter may be amended only if declared advisable by the board of directors and approved
by the affirmative vote of the holders of at least two-thirds of all of the votes entitled to be
cast on the matter.
Dissolution of Our Company
The dissolution of our company must be declared advisable by the board of directors and
approved by the affirmative vote of the holders of not less than two-thirds of all of the votes
entitled to be cast on the matter.
Advance Notice of Director Nominations and New Business
Our bylaws provide that:
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with respect to an annual meeting of stockholders, the only business to be
considered and the only proposals to be acted upon will be those properly brought
before the annual meeting:
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pursuant to our notice of the meeting;
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by, or at the direction of, a majority of our board of directors; or
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by a stockholder who is entitled to vote at the meeting and has complied with
the advance notice procedures set forth in our bylaws;
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with respect to special meetings of stockholders, only the business specified in our
companys notice of meeting may be brought before the meeting of stockholders unless
otherwise provided by law; and
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nominations of persons for election to our board of directors at any annual or
special meeting of stockholders may be made only:
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by, or at the direction of, our board of directors; or
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by a stockholder who is entitled to vote at the meeting and has complied with
the advance notice provisions set forth in our bylaws.
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Anti-Takeover Effect of Certain Provisions of Maryland Law and of Our Charter and Bylaws
The advance notice provisions of our bylaws could delay, defer or prevent a transaction or a
change of control of our company that might involve a premium price for holders of our common stock
or otherwise be in their best interest.
Indemnification and Limitation of Directors and Officers Liability
Our charter provide for indemnification of our officers and directors against liabilities to
the fullest extent permitted by the MGCL, as amended from time to time.
The MGCL permits a corporation to indemnify a director or officer who has been successful, on
the merits or otherwise, in the defense of any proceeding to which he or she is made a party by
reason of his or her service in that capacity. The MGCL permits a corporation to indemnify its
present and former directors and officers, among others, against judgments, penalties, fines,
settlements and reasonable expenses actually incurred by them in connection with any proceeding to
which they may be made a party by reason of their service in those or other capacities unless it is
established that:
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an act or omission of the director or officer was material to the matter giving rise
to the proceeding and:
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was committed in bad faith; or
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was the result of active and deliberate dishonesty;
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the director or officer actually received an improper personal benefit in money,
property or services; or
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in the case of any criminal proceeding, the director or officer had reasonable cause
to believe that the act or omission was unlawful.
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However, under the MGCL, a Maryland corporation may not indemnify for an adverse judgment in a
suit by or in the right of the corporation (other than for expenses incurred in a successful
defense of such an action) or for a judgment of liability on the basis that personal benefit was
improperly received. In addition, the MGCL permits a corporation to advance reasonable expenses to
a director or officer upon the corporations receipt of:
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a written affirmation by the director or officer of his good faith belief that he
has met the standard of conduct necessary for indemnification by the corporation; and
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a written undertaking by the director or on the directors behalf to repay the
amount paid or reimbursed by the corporation if it is ultimately determined that the
director did not meet the standard of conduct.
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Our bylaws obligate us, to the fullest extent permitted by Maryland law in effect from time to
time, to indemnify and, without requiring a preliminary determination of the ultimate entitlement
to indemnification, pay or reimburse reasonable expenses in advance of final disposition of a
proceeding to:
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any present or former director or officer who is made a party to the proceeding by
reason of his or her service in that capacity; or
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any individual who, while a director or officer of our company and at our request,
serves or has served another corporation, real estate investment trust, partnership,
joint venture, trust, employee benefit plan or any other enterprise as a director,
officer, partner or trustee and who is made a party to the proceeding by reason of his
or her service in that capacity.
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Our bylaws also obligate us to indemnify and advance expenses to any person who served a
predecessor of ours in any of the capacities described in second and third bullet points above and
to any employee or agent of our company or a predecessor of our company.
Insofar as the foregoing provisions permit indemnification of directors, officers or persons
controlling us for liability arising under the Securities Act, we have been informed that in the
opinion of the Securities and Exchange Commission, this indemnification is against public policy as
expressed in the Securities Act and is therefore unenforceable.
FEDERAL INCOME TAX CONSEQUENCES OF OUR STATUS AS A REIT
The following discussion is a summary of the material federal income tax considerations that
may be relevant to a prospective holder of securities, and, unless otherwise noted in the following
discussion, expresses the opinion of Andrews Kurth LLP insofar as it relates to matters of United
States federal income tax law and legal conclusions with respect to those matters. The discussion
does not address all aspects of taxation that may be relevant to particular investors in light of
their personal investment or tax circumstances, or to certain types of investors that are subject
to special treatment under the federal income tax laws, such as insurance companies, financial
institutions or broker-dealers, tax-exempt organizations (except to the limited extent discussed in
Taxation of Tax-Exempt Stockholders), foreign corporations and persons who are not citizens or
residents of the United States (except to the limited extent discussed in Taxation of Non-U.S.
Holders), investors who hold or will hold securities as part of hedging or conversion
transactions, investors subject to federal alternative minimum tax, investors that have a principal
place of business or tax home outside the United States and investors whose functional currency
is not the United States dollar.
The statements of law in this discussion and the opinion of Andrews Kurth LLP are based on
current provisions of the Internal Revenue Code of 1986, as amended, or the Code, existing
temporary and final Treasury regulations thereunder, and current administrative rulings and court
decisions. No assurance can be given that future legislative, judicial, or administrative actions
or decisions, which may be retroactive in effect, will not affect the accuracy of any statements in
this prospectus with respect to the transactions entered into or contemplated prior to the
effective date of such changes.
We urge you to consult your own tax advisor regarding the specific tax consequences to you of
ownership of our securities and of our election to be taxed as a REIT. Specifically, we urge you to
consult your own tax advisor regarding the federal, state, local, foreign, and other tax
consequences of such ownership and election and regarding potential changes in applicable tax laws.
Taxation of Our Company
We are currently taxed as a REIT under the federal income tax laws. We believe that we are
organized and operate in such a manner as to qualify for taxation as a REIT under the Code, and we
intend to continue to operate in such a manner, but no assurance can be given that we will operate
in a manner so as to continue to qualify as a REIT. This section discusses the laws governing the
federal income tax treatment of a REIT and its investors. These laws are highly technical and
complex.
Andrews Kurth LLP has acted as our counsel in connection with the filing of this registration
statement. In the opinion of Andrews Kurth LLP for the taxable years beginning September 5, 1985,
and ending December 31, 2006, we qualified to be taxed as a REIT pursuant to sections 856 through
860 of the Code, and our organization and
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present and proposed method of operation enables us to meet the requirements for qualification
and taxation as a REIT under the Code. Investors should be aware that Andrews Kurth LLPs opinion
is based upon customary assumptions, is conditioned upon the accuracy of certain representations
made by us as to factual matters, including representations regarding the nature of our assets and
the future conduct of our business, and is not binding upon the Internal Revenue Service (IRS) or
any court. In addition, Andrews Kurth LLPs opinion is based on existing federal income tax law
governing qualification as a REIT, which is subject to change either prospectively or
retroactively. Moreover, our continued qualification and taxation as a REIT depend upon our ability
to meet on a continuing basis, through actual annual operating results, certain qualification tests
set forth in the federal tax laws. Those qualification tests include the percentage of income that
we earn from specified sources, the percentage of our assets that falls within specified
categories, the diversity of our share ownership, and the percentage of our earnings that we
distribute. While Andrews Kurth LLP has reviewed those matters in connection with the foregoing
opinion, Andrews Kurth LLP will not review our compliance with those tests on a continuing basis.
Accordingly, no assurance can be given that the actual results of our operation for any particular
taxable year will satisfy such requirements. For a discussion of the tax consequences of our
failure to qualify as a REIT, see Failure to Qualify.
If we qualify as a REIT, we generally will not be subject to federal income tax on the taxable
income that we distribute to our stockholders. The benefit of that tax treatment is that it avoids
the double taxation, or taxation at both the corporate and stockholder levels, that generally
results from owning stock in a corporation. However, we will be subject to federal tax in the
following circumstances:
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We will pay federal income tax on taxable income, including net capital gain, that
we do not distribute to our stockholders during, or within a specified time period
after, the calendar year in which the income is earned.
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Under certain circumstances, we may be subject to the alternative minimum tax on
items of tax preference.
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We will pay income tax at the highest corporate rate on (1) net income from the sale
or other disposition of property acquired through foreclosure (foreclosure property)
that we hold primarily for sale to customers in the ordinary course of business and (2)
other non-qualifying income from foreclosure property.
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We will pay a 100% tax on net income from sales or other dispositions of property,
other than foreclosure property, that we hold primarily for sale to customers in the
ordinary course of business.
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If we fail to satisfy the 75% gross income test or the 95% gross income test, as
described below under Income Tests, and nonetheless continue to qualify as a REIT
because we meet other requirements, we will pay a 100% tax on (1) the gross income
attributable to the greater of the amounts by which we fail the 75% and 95% gross
income tests, multiplied by (2) a fraction intended to reflect our profitability.
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If we fail to distribute during a calendar year at least the sum of (1) 85% of our
REIT ordinary income for such year, (2) 95% of our REIT capital gain net income for
such year, and (3) any undistributed taxable income from prior periods, we will pay a
4% excise tax on the excess of this required distribution over the sum of the amount we
actually distributed, plus any retained amounts on which income tax has been paid at
the corporate level.
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We may elect to retain and pay income tax on our net long-term capital gain. In that
case a U.S. holder, as defined below under Taxation of U.S. Holders, would be
taxed on its proportionate share of our undistributed long-term capital gain (to the
extent that a timely designation of such gain is made by us to the stockholder) and
would receive a credit or refund for its proportionate share of the tax we paid.
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If we acquire any asset from a C corporation, or a corporation that generally is
subject to full corporate-level tax, in a merger or other transaction in which we
acquire a basis in the asset that is determined by reference to the C corporations
basis in the asset, we will pay tax at the highest regular corporate rate applicable if
we recognize gain on the sale or disposition of such asset during the 10-year period
after we acquire such asset. The amount of gain on which we will pay tax generally is
the lesser of: (1) the amount of gain that we recognize at the time of the sale or
disposition; or (2) the amount of gain that we would have recognized if we had sold the
asset at the time we acquired the asset.
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We will incur a 100% excise tax on transactions with a taxable REIT subsidiary
(TRS) that are not conducted on an arms-length basis.
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If we fail to satisfy certain asset tests, described below
under Asset Tests and
nonetheless continue to qualify as a REIT because we meet certain other requirements,
we will be subject to a tax of the greater of $50,000 or at the highest corporate rate
on the income generated by the non-qualifying assets.
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We may be subject to a $50,000 tax for each failure if we fail to satisfy certain
REIT qualification requirements, other than income tests or asset tests, and the
failure is due to reasonable cause and not willful neglect.
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If we recognize excess inclusion income and have stockholders who are disqualified
organizations, we may have to pay tax at the highest corporate rate on the portion of
the excess inclusion income allocable to the stockholders that are disqualified
organizations. See Taxable Mortgage Pools below.
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In addition, notwithstanding our qualification as a REIT, we may also have to pay certain
state and local income taxes, because not all states and localities treat REITs in the same manner
that they are treated for federal income tax purposes. Moreover, as further described below, any
TRS in which we own an interest will be subject to federal and state corporate income tax on its
taxable income.
Requirements for Qualification
A REIT is a corporation, trust, or association that meets the following requirements:
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it is managed by one or more trustees or directors;
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2.
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its beneficial ownership is evidenced by transferable shares or by transferable
certificates of beneficial interest;
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3.
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it would be taxable as a domestic corporation but for the REIT provisions of
the federal income tax laws;
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4.
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it is neither a financial institution nor an insurance company subject to
special provisions of the federal income tax laws;
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5.
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at least 100 persons are beneficial owners of its shares or ownership
certificates;
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6.
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no more than 50% in value of its outstanding shares or ownership certificates
is owned, directly or indirectly, by five or fewer individuals, as defined in the
federal income tax laws to include certain entities, during the last half of each
taxable year;
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7.
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it elects to be a REIT, or has made such election for a previous taxable year,
and satisfies all relevant filing and other administrative requirements established by
the IRS that must be met to elect and maintain REIT status;
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8.
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it uses a calendar year for federal income tax purposes and complies with the
recordkeeping requirements of the federal income tax laws; and
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9.
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it meets certain other qualification tests, described below, regarding the
nature of its income and assets and the amount of its distributions.
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We must meet requirements 1 through 4 during our entire taxable year and must meet requirement
5 during at least 335 days of a taxable year of 12 months, or during a proportionate part of a
taxable year of less than 12 months. If we comply with all the requirements for ascertaining the
ownership of our outstanding shares in a taxable year and have no reason to know that we violated
requirement 6, we will be deemed to have satisfied requirement 6 for such taxable year. For
purposes of determining share ownership under requirement 6, an individual generally includes a
supplemental unemployment compensation benefits plan, a private foundation, or a portion of a trust
permanently set aside or used exclusively for charitable purposes. An individual, however,
generally does not include a trust that is a qualified employee pension or profit sharing trust
under the federal income tax laws, and beneficiaries of such a trust will be treated as holding
shares of our stock in proportion to their actuarial interests in the trust for purposes of
requirement 6.
We have issued sufficient stock with enough diversity of ownership to satisfy requirements 5
and 6 set forth above. In addition, our charter restricts the ownership and transfer of the stock
so that we should continue to satisfy requirements 5 and 6. The provisions of our charter
restricting the ownership and transfer of the stock are described in Description of Our Capital
Stock Restrictions on Ownership and Transfer.
If we comply with regulatory rules pursuant to which we are required to send annual letters to
holders of our stock requesting information regarding the actual ownership of our stock, and we do
not know, or exercising reasonable diligence would not have known, whether we failed to meet
requirement 6 above, we will be treated as having met the requirement.
In addition, we must satisfy all relevant filing and other administrative requirements
established by the IRS that must be met to elect and maintain REIT qualification.
A corporation that is a qualified REIT subsidiary is not treated as a corporation separate
from its parent REIT. All assets, liabilities, and items of income, deduction, and credit of a
qualified REIT subsidiary are treated as assets, liabilities, and items of income, deduction, and
credit of the REIT. A qualified REIT subsidiary is a corporation, other than a TRS, all of the
capital stock of which is owned by the REIT. Thus, in applying the requirements described in this
section, any qualified REIT subsidiary that we own will be ignored, and all assets, liabilities,
and items of income, deduction, and credit of that subsidiary will be treated as our assets,
liabilities, and items of income, deduction, and credit. Similarly, any wholly owned limited
liability company or certain wholly owned partnerships that we own will be disregarded, and all
assets, liabilities and items of income, deduction and credit of such limited liability company
will be treated as ours.
In the case of a REIT that is a partner in a partnership that has other partners, the REIT is
treated as owning its proportionate share of the assets of the partnership and as earning its
allocable share of the gross income of the partnership for purposes of the applicable REIT
qualification tests. For purposes of the 10% value test (as described below under Asset Tests),
our proportionate share is based on our proportionate interest in the equity interests and certain
debt securities issued by the partnership. For all of the other asset and income tests, our
proportionate share is based on our proportionate interest in the capital interests in the
partnership. Our proportionate share of the assets, liabilities, and items of income of any
partnership, joint venture, or limited liability company that is treated as a partnership for
federal income tax purposes in which we own or will acquire an interest, directly or indirectly,
are treated as our assets and gross income for purposes of applying the various REIT qualification
requirements.
Subject to restrictions on the value of TRS securities held by the REIT, a REIT is permitted
to own up to 100% of the stock of one or more TRSs. A TRS is a fully taxable corporation. The TRS
and the REIT must jointly elect to treat the subsidiary as a TRS. A corporation of which a TRS
directly or indirectly owns more than 35% of the voting power or value of the stock will be
automatically treated as a TRS. Overall, no more than 20% of the value of a REITs assets may
consist of TRS securities. See Taxable REIT Subsidiaries.
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Income Tests
We must satisfy two gross income tests annually to maintain our qualification as a REIT.
First, at least 75% of our gross income for each taxable year must consist of defined types of
income that we derive, directly or indirectly, from investments relating to real property or
mortgages on real property or qualified temporary investment income. Qualifying income for purposes
of that 75% gross income test generally includes:
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rents from real property;
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interest on debt secured by mortgages on real property or on interests in real property;
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dividends and gain from the sale of shares in other REITs;
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gain from the sale of real estate assets; and
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income derived from the temporary investment of new capital or qualified temporary
investment income, that is attributable to the issuance of our stock or a public
offering of our debt with a maturity date of at least five years and that we receive
during the one year period beginning on the date on which we received such new capital.
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Second, in general, at least 95% of our gross income for each taxable year must consist of
income that is qualifying income for purposes of the 75% gross income test, other types of
dividends and interest, gain from the sale or disposition of stock or securities, income from
certain hedging transactions, or any combination of these. Gross income from sale of any property
that we hold primarily for sale to customers in the ordinary course of business is excluded from
both income tests. In addition, income and gain from hedging transactions, as defined in
Hedging Transactions, that we enter into to hedge indebtedness incurred or to be incurred to
acquire or carry real estate assets and that are clearly and timely identified as such will be
excluded from both the numerator and the denominator for purposes of the 95% gross income test (but
not the 75% gross income test). The following paragraphs discuss the specific application of the
gross income tests to us.
Rents from Real Property
. Rent that we receive from any real property that we might own and
lease to tenants will qualify as rents from real property, which is qualifying income for
purposes of the 75% and 95% gross income tests, only if the following conditions are met:
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First, the rent must not be based, in whole or in part, on the income or profits of
any person but may be based on a fixed percentage or percentages of gross receipts or
gross sales.
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Second, neither we nor a direct or indirect owner of 10% or more of our shares of
stock may own, actually or constructively, 10% or more of a tenant other than a TRS
from whom we receive rent.
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Third, if the rent attributable to personal property leased in connection with a
lease of any real property that we might own exceeds 15% of the total rent received
under the lease, then the portion of rent attributable to that personal property will
not qualify as rents from real property.
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Fourth, we generally must not operate or manage any real property or furnish or
render services to tenants, other than through an independent contractor who is
adequately compensated, from whom we do not derive revenue, and who does not, directly
or through its stockholders, own more than 35% of our shares of stock, taking into
consideration the applicable ownership attribution rules. However, we need not provide
services through an independent contractor, but instead may provide services directly
to any such tenants, if the services are usually or customarily rendered in the
geographic area in connection with the rental of space for occupancy only and are not
considered to be provided for the tenants convenience. In addition, we may provide a
minimal amount of non-customary services to the tenants of a property, other than
through an independent contractor, as long as our income from the services (valued at
not less than 150% of our direct cost of performing such services) does not exceed 1%
of our income from the related property. Furthermore, we may own up to 100%
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of the stock of a TRS which may provide customary and noncustomary services to tenants
without tainting our rental income from the related properties. See Taxable REIT
Subsidiaries.
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Interest
. The term interest, as defined for purposes of both the 75% and 95% gross income
tests, generally does not include any amount received or accrued, directly or indirectly, if the
determination of such amount depends in whole or in part on the income or profits of any person.
However, an amount received or accrued generally will not be excluded from the term interest
solely by reason of being based on a fixed percentage or percentages of receipts or sales.
Furthermore, to the extent that interest from a loan that is based on the residual cash proceeds
from the sale of the property securing the loan constitutes a shared appreciation provision,
income attributable to such participation feature will be treated as gain from the sale of the
secured property.
In Revenue Procedure 2003-65, the IRS established a safe harbor under which interest from
loans secured by a first priority security interest in ownership interests in a partnership or
limited liability company owning real property will be treated as qualifying income for both the
75% and 95% gross income tests, provided several requirements are satisfied. Although the Revenue
Procedure provides a safe harbor on which taxpayers may rely, it does not prescribe rules of
substantive tax law. Moreover, although we anticipate that most or all of any mezzanine loans that
we make or acquire will qualify for the safe harbor in Revenue Procedure 2003-65, it is possible
that we may make or acquire some mezzanine loans that do not qualify for the safe harbor.
Prohibited Transactions
. A REIT will incur a 100% tax on the net income derived from any sale
or other disposition of property, other than foreclosure property, that the REIT holds primarily
for sale to customers in the ordinary course of a trade or business. Whether a REIT holds an asset
primarily for sale to customers in the ordinary course of a trade or business depends on the
facts and circumstances in effect from time to time, including those related to a particular asset.
We do not own assets that are held primarily for sale to customers. We will attempt to comply with
the terms of safe-harbor provisions in the federal income tax laws prescribing when an asset sale
will not be characterized as a prohibited transaction. We cannot provide assurance, however, that
we can comply with such safe-harbor provisions or that we or our subsidiaries will avoid owning
property that may be characterized as property held primarily for sale to customers in the
ordinary course of a trade or business.
Foreclosure Property
. We will be subject to tax at the maximum corporate rate on any income
from foreclosure property, other than income that would be qualifying income for purposes of the
75% gross income test, less expenses directly connected with the production of such income.
However, gross income from such foreclosure property will qualify for purposes of the 75% and 95%
gross income tests. Foreclosure property is any real property, including interests in real
property, and any personal property incident to such real property:
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that is acquired by a REIT as the result of such REIT having bid on such property at
foreclosure, or having otherwise reduced such property to ownership or possession by
agreement or process of law, after there was a default or default was imminent on a
lease of such property or on an indebtedness that such property secured;
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for which the related loan or lease was acquired by the REIT at a time when the REIT
had no intent to evict or foreclose or the REIT did not know or have reason to know
that default would occur; and
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for which such REIT makes a proper election to treat such property as foreclosure
property.
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However, a REIT will not be considered to have foreclosed on a property where the REIT takes
control of the property as a mortgagee-in-possession and cannot receive any profit or sustain any
loss except as a creditor of the mortgagor. Property generally ceases to be foreclosure property
with respect to a REIT at the end of the third taxable year following the taxable year in which the
REIT acquired such property, or longer if an extension is granted by the Secretary of the Treasury.
The foregoing grace period is terminated and foreclosure property ceases to be foreclosure property
on the first day:
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on which a lease is entered into with respect to such property that, by its terms,
will give rise to income that does not qualify for purposes of the 75% gross income
test or any amount is received or
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accrued, directly or indirectly, pursuant to a lease entered into on or after such day
that will give rise to income that does not qualify for purposes of the 75% gross
income test;
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on which any construction takes place on such property, other than completion of a
building, or any other improvement, where more than 10% of the construction of such
building or other improvement was completed before default became imminent; or
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which is more than 90 days after the day on which such property was acquired by the
REIT and the property is used in a trade or business which is conducted by the REIT,
other than through an independent contractor from whom the REIT itself does not derive
or receive any income.
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As a result of the rules with respect to foreclosure property, if a lessee defaults on its
obligations under a percentage lease, we terminate the lessees leasehold interest, and we are
unable to find a replacement lessee for the property within 90 days of such foreclosure, gross
income from operations conducted by us from such property could cease to qualify for the 75% and
95% gross income tests unless we are able to hire an independent contractor to manage and operate
the property. In such event, we might be unable to satisfy the 75% and 95% gross income tests and,
thus, might fail to qualify as a REIT.
Hedging Transactions
. From time to time, we may enter into hedging transactions with respect
to one or more of our assets or liabilities. Our hedging activities may include entering into
interest rate swaps, caps, and floors, options to purchase such items, and futures and forward
contracts. To the extent that we entered into interest rate cap contracts to hedge our indebtedness
incurred to acquire or carry real estate assets prior to January 1, 2005, any periodic income or
gain from the disposition of such contract should be qualifying income for purposes of the 95%
gross income test, but not the 75% gross income test. To the extent that we enter into hedging
transactions after December 31, 2004, income arising from clearly identified hedging transactions
that are entered into by the REIT in the normal course of business, either directly or through
certain subsidiary entities, to manage the risk of interest rate movements, price changes, or
currency fluctuations with respect to borrowings or obligations incurred or to be incurred by the
REIT to acquire or carry real estate assets is excluded from the 95% income test, but not the 75%
income test. In general, for a hedging transaction to be clearly identified, (A) the transaction
must be identified as a hedging transaction before the end of the day on which it is entered into,
and (B) the items or risks being hedged must be identified substantially contemporaneously with
the hedging transaction, meaning that the identification of the items or risks being hedged must
generally occur within 35 days after the date the transaction is entered into. We intend to
structure any hedging transactions in a manner that does not jeopardize our status as a REIT. The
REIT income and asset rules may limit our ability to hedge loans or securities acquired as
investments.
Failure to Satisfy Gross Income Tests
. If we fail to satisfy one or both of the gross income
tests for any taxable year, we nevertheless may qualify as a REIT for such year if we qualify for
relief under certain provisions of the federal income tax laws. Those relief provisions generally
will be available if:
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our failure to meet such tests is due to reasonable cause and not due to willful
neglect; and
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following our identification of the failure to meet one or both gross income tests
for a taxable year, a description of each item of our gross income included in the 75%
or 95% gross income tests is set forth in a schedule for such taxable year filed as
specified by Treasury regulations.
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We cannot predict, however, whether in all circumstances we would qualify for the relief
provisions. In addition, as discussed above in Taxation of Our Company, even if the relief
provisions apply, we would incur a 100% tax on the gross income attributable to the greater of the
amounts by which we fail the 75% and 95% gross income tests, multiplied by a fraction intended to
reflect our profitability.
Asset Tests
To maintain our qualification as a REIT, we also must satisfy the following asset tests at the
close of each quarter of each taxable year:
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First, at least 75% of the value of our total assets must consist of:
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cash or cash items, including certain receivables;
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government securities;
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interests in real property, including leaseholds and options to acquire real
property and leaseholds;
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interests in mortgages on real property;
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stock in other REITs; and
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investments in stock or debt instruments during the one-year period following
our receipt of new capital that we raise through equity offerings or offerings of
debt with at least a five-year term.
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Second, of our investments not included in the 75% asset class, the value of our
interest in any one issuers securities may not exceed 5% of the value of our total
assets.
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Third, of our investments not included in the 75% asset class, we may not own more
than 10% of the voting power or value of any one issuers outstanding securities.
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Fourth, no more than 20% of the value of our total assets may consist of the
securities of one or more TRSs.
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For purposes of the second and third asset tests, the term securities does not include stock
in another REIT, equity or debt securities of a qualified REIT subsidiary or TRS, or equity
interests in a partnership.
For purposes of the 10% value test, the term securities does not include:
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Straight debt securities, which is defined as a written unconditional promise to pay
on demand or on a specified date a sum certain in money if (i) the debt is not
convertible, directly or indirectly, into stock, and (ii) the interest rate and interest
payment dates are not contingent on profits, the borrowers discretion, or similar
factors. Straight debt securities do not include any securities issued by a partnership
or a corporation in which we or any controlled TRS (i.e., a TRS in which we own directly
or indirectly more than 50% of the voting power or value of the stock) hold non straight
debt securities that have an aggregate value of more than 1% of the issuers outstanding
securities. However, straight debt securities include debt subject to the following
contingencies:
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a contingency relating to the time of payment of interest or principal, as long as
either (i) there is no change to the effective yield of the debt obligation, other than
a change to the annual yield that does not exceed the greater of 0.25% or 5% of the
annual yield, or (ii) neither the aggregate issue price nor the aggregate face amount
of the issuers debt obligations held by us exceeds $1 million and no more than 12
months of unaccrued interest on the debt obligations can be required to be prepaid; and
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a contingency relating to the time or amount of payment upon a default or prepayment
of a debt obligation, as long as the contingency is consistent with customary
commercial practice.
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Any loan to an individual or an estate.
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Any section 467 rental agreement, other than an agreement with a related party tenant.
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Any obligation to pay rents from real property.
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Certain securities issued by governmental entities.
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Any security issued by a REIT.
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Any debt instrument of an entity treated as a partnership for federal income tax
purposes to the extent of our interest as a partner in the partnership.
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Any debt instrument of an entity treated as a partnership for federal income tax
purposes not described in the preceding bullet points if at least 75% of the partnerships
gross income, excluding income from prohibited transactions, is qualifying income for
purposes of the 75% gross income test described above in Income Tests.
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We believe that our interests in each existing mezzanine loan that is secured only by
ownership interests in an entity owning real property qualify for the safe harbor in Revenue
Procedure 2003-65, pursuant to which mezzanine loans secured by a first priority security interest
in ownership interests in a partnership or limited liability company will be treated as qualifying
assets for purposes of the 75% asset test. We may make or acquire some mezzanine loans that are
secured only by a first priority security interest in ownership interests in a partnership or
limited liability company and that do not qualify for the safe harbor in Revenue Procedure 2003-65
relating to the 75% asset test and that do not qualify as straight debt for purposes of the 10%
value test. We will make or acquire mezzanine loans that do not qualify for the safe harbor in
Revenue Procedure 2003-65 or as straight debt securities but only to the extent that such loans
will not cause us to fail the asset tests described above.
We will monitor the status of our assets for purposes of the various asset tests and will seek
to manage our assets to comply at all times with such tests. There can be no assurances, however,
that we will be successful in this effort. In this regard, to determine our compliance with these
requirements, we will need to estimate the value of the real estate securing our mortgage loans at
various times. In addition, we will have to value our investment in our other assets to ensure
compliance with the asset tests. Although we will seek to be prudent in making these estimates,
there can be no assurances that the IRS might not disagree with these determinations and assert
that a different value is applicable, in which case we might not satisfy the 75% and the other
asset tests and would fail to qualify as a REIT. If we fail to satisfy the asset tests at the end
of a calendar quarter, we will not lose our REIT qualification if:
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we satisfied the asset tests at the end of the preceding calendar quarter; and
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the discrepancy between the value of our assets and the asset test requirements arose
from changes in the market values of our assets and was not wholly or partly caused by the
acquisition of one or more non qualifying assets.
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If we did not satisfy the condition described in the second item, above, we still could avoid
disqualification by eliminating any discrepancy within 30 days after the close of the calendar
quarter in which it arose.
In the event that we violate the second or third asset tests described above at the end of any
calendar quarter, we will not lose our REIT qualification if (i) the failure is de minimis (up to
the lesser of 1% of our assets or $10 million) and (ii) we dispose of assets or otherwise comply
with the asset tests within six months after the last day of the quarter in which we identified
such failure. In the event of a more than de minimis failure of any of the asset tests, as long as
the failure was due to reasonable cause and not to willful neglect, we will not lose our REIT
qualification if we (i) dispose of assets or otherwise comply with the asset tests within six
months after the last day of the quarter in which we identified such failure, (ii) file a schedule
with the IRS describing the assets that caused such failure in accordance with regulations
promulgated by the Secretary of Treasury and (iii) pay a tax equal to the greater of $50,000 or 35%
of the net income from the nonqualifying assets during the period in which we failed to satisfy the
asset tests.
Distribution Requirements
Each taxable year, we must distribute dividends, other than capital gain dividends and deemed
distributions of retained capital gain, to our stockholders in an aggregate amount at least equal
to:
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the sum of (1) 90% of our REIT taxable income, computed without regard to the
dividends paid deduction and our net capital gain, and (2) 90% of our after-tax net
income, if any, from foreclosure property; minus
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the sum of certain items of non-cash income.
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We must pay such distributions in the taxable year to which they relate, or in the following
taxable year if we declare the distribution before we timely file our federal income tax return for
such year and pay the distribution on or before the first regular dividend payment date after such
declaration. Any dividends declared in the last three months of the taxable year, payable to
stockholders of record on a specified date during such period, will be treated as paid on December
31 of such year if such dividends are distributed during January of the following year.
We will pay federal income tax on taxable income, including net capital gain, that we do not
distribute to our stockholders. Furthermore, if we fail to distribute during a calendar year, or by
the end of January following such calendar year in the case of distributions with declaration and
record dates falling in the last three months of the calendar year, at least the sum of:
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85% of our REIT ordinary income for such year;
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95% of our REIT capital gain income for such year; and
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any undistributed taxable income from prior periods,
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we will incur a 4% nondeductible excise tax on the excess of such required distribution over the
amounts we actually distributed. We may elect to retain and pay income tax on the net long-term
capital gain we receive in a taxable year. See Taxation of Taxable U.S. Holders of Stock. If
we so elect, we will be treated as having distributed any such retained amount for purposes of the
4% excise tax described above. We intend to make timely distributions sufficient to satisfy the
annual distribution requirements.
It is possible that, from time to time, we may experience timing differences between (1) the
actual receipt of income and actual payment of deductible expenses, and (2) the inclusion of that
income and deduction of such expenses in arriving at our REIT taxable income. In addition, we may
not deduct recognized net capital losses from our REIT taxable income. As a result of the
foregoing, we may have less cash than is necessary to distribute all of our taxable income and
thereby avoid corporate income tax and the excise tax imposed on certain undistributed income. In
such a situation, we may need to borrow funds or issue additional common or preferred shares.
Under certain circumstances, we may be able to correct a failure to meet the distribution
requirement for a year by paying deficiency dividends to our stockholders in a later year. We may
include such deficiency dividends in our deduction for dividends paid for the earlier year.
Although we may be able to avoid income tax on amounts distributed as deficiency dividends, we will
be required to pay interest to the IRS based upon the amount of any deduction we take for
deficiency dividends.
Recordkeeping Requirements
To avoid a monetary penalty, we must request on an annual basis information from our
stockholders designed to disclose the actual ownership of our outstanding shares of stock. We
intend to comply with such requirements.
Failure to Qualify
If we fail to satisfy one or more requirements for REIT qualification, other than the gross
income tests and the asset tests, we could avoid disqualification if our failure is due to
reasonable cause and not to willful neglect and we pay a penalty of $50,000 for each such failure.
In addition, there are relief provisions for a failure of the gross income tests and asset tests,
as described in Income Tests and Asset Tests.
If we were to fail to qualify as a REIT in any taxable year, and no relief provision applied,
we would be subject to federal income tax on our taxable income at regular corporate rates and any
applicable alternative minimum tax. In calculating our taxable income in a year in which we failed
to qualify as a REIT, we would not be able to deduct amounts paid out to stockholders. In fact, we
would not be required to distribute any amounts to stockholders in such year. In such event, to the
extent of our current and accumulated earnings and profits, all distributions to stockholders would
be taxable as regular corporate dividends. The excess inclusion income rules (which are described
under Taxable Mortgage Pools below) will not apply to the distributions we make. Subject
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to certain limitations of the federal income tax laws, corporate stockholders might be
eligible for the dividends received deduction and individual and certain non corporate trust and
estate stockholders may be eligible for the reduced U.S. federal income tax rate of 15% on such
dividends. Unless we qualified for relief under specific statutory provisions, we also would be
disqualified from taxation as a REIT for the four taxable years following the year during which we
ceased to qualify as a REIT. We cannot predict whether in all circumstances we would qualify for
such statutory relief.
Taxation of Tax-Exempt Entities or Accounts
Tax-exempt entities or accounts, including qualified employee pension and profit sharing
trusts and individual retirement accounts, generally are exempt from federal income taxation, thus
typically dividends received by such entities are not subject to taxation when received. However,
these entities or accounts are subject to taxation on any unrelated business taxable income
generated. While many investments in real estate generate unrelated business taxable income, the
IRS has issued a published ruling that dividend distributions from a REIT to an exempt employee
pension trust do not constitute unrelated business taxable income, provided that the exempt
employee pension trust does not otherwise use the shares of the REIT in an unrelated trade or
business of the pension trust. Based on that ruling, amounts that we distribute to tax-exempt
stockholders generally should not constitute unrelated business taxable income.
However, if a tax-exempt stockholder were to finance its acquisition of our stock with debt, a
portion of the income that it receives from us would constitute unrelated business taxable income
pursuant to the debt-financed property rules. Furthermore, social clubs, voluntary employee
benefit associations, supplemental unemployment benefit trusts, and qualified group legal services
plans that are exempt from taxation under special provisions of the federal income tax laws are
subject to different unrelated business taxable income rules, which generally will require them to
characterize distributions that they receive from us as unrelated business taxable income. Finally,
if we are a pension-held REIT, a qualified employee pension or profit sharing trust that owns
more than 10% of our shares of stock is required to treat a percentage of the dividends that it
receives from us as unrelated business taxable income. That percentage is equal to the gross income
that we derive from an unrelated trade or business, if any, determined as if we were a pension
trust, divided by our total gross income for the year in which we pay the dividends. That rule
applies to a pension trust holding more than 10% of our shares of stock only if:
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the percentage of our dividends that the tax-exempt trust would be required to treat
as unrelated business taxable income is at least 5%;
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we qualify as a REIT by reason of the modification of the rule requiring that no
more than 50% of our stock be owned by five or fewer individuals that allows the
beneficiaries of the pension trust to be treated as holding our stock in proportion to
their actuarial interests in the pension trust (see Requirements for Qualification
above); and
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either (1) one pension trust owns more than 25% of the value of our stock or (2) a
group of pension trusts individually holding more than 10% of the value of our stock
collectively owns more than 50% of the value of our stock.
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The ownership and transfer restrictions in our charter reduce the risk that we may become a
pension-held REIT.
A tax-exempt entity may also be required to treat any excess inclusion income as unrelated
business taxable income as described in Taxable Mortgage Pools.
Taxation of U.S. Holders
The term U.S. holder means a holder of our securities that for U.S. federal income tax
purposes is a U.S. person. A U.S. person means:
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a citizen or resident of the United States;
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a corporation (including an entity treated as a corporation for U.S. federal income
tax purposes) created or organized in or under the laws of the United States, any of
its states, or the District of Columbia;
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an estate whose income is subject to U.S. federal income taxation regardless of its
source; or
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any trust if (1) a U.S. court is able to exercise primary supervision over the
administration of such trust and one or more U.S. persons have the authority to control
all substantial decisions of the trust or (2) it has a valid election in place to be
treated as a U.S. person.
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If a partnership, entity or arrangement treated as a partnership for U.S. federal income tax
purposes holds our securities, the federal income tax treatment of a partner in the partnership
will generally depend on the status of the partner and the activities of the partnership. If you
are a partner in a partnership holding our securities, you should consult your tax advisor
regarding the consequences of the purchase, ownership and disposition of our securities by the
partnership. The following section addresses the treatment of a U.S. holder that holds our stock;
the treatment of a U.S. holder that holds our debt securities is discussed below under Holders
of Debt Securities.
Taxation of Taxable U.S. Holders of Stock
As long as we qualify as a REIT, (1) a taxable U.S. holder of our stock must report as
ordinary income, distributions or retained long-term capital gain that are made out of our current
or accumulated earnings and profits and that we do not designate as capital gain dividends, and (2)
a corporate U.S. holder of our stock will not qualify for the dividends received deduction
generally available to corporations. In addition, dividends paid to a U.S. holder generally will
not qualify for the 15% tax rate (through 2010) for qualified dividend income. Without future
congressional action, the maximum tax rate on qualified dividend income will move to 39.6% in 2011.
Qualified dividend income generally includes dividends from most U.S. corporations but does not
generally include REIT dividends. As a result, our ordinary REIT dividends generally will continue
to be taxed at the higher tax rate applicable to ordinary income. Currently, the highest marginal
individual income tax rate on ordinary income is 35%. However, the 15% tax rate for qualified
dividend income will apply to our ordinary REIT dividends, if any, that are (1) attributable to
dividends received by us from non-REIT corporations, such as our TRSs, and (2) attributable to
income upon which we have paid corporate income tax (e.g., to the extent that we distribute less
than 100% of our taxable income). In general, to qualify for the reduced tax rate on qualified
dividend income, a stockholder must hold our stock for more than 60 days during the 121-day period
beginning on the date that is 60 days before the date on which our stock becomes ex-dividend.
A U.S. holder generally will report distributions that we designate as capital gain dividends
as long-term capital gain without regard to the period for which the U.S. holder has held our
stock. A corporate U.S. holder, however, may be required to treat up to 20% of certain capital gain
dividends as ordinary income.
We may elect to retain and pay income tax on the net long-term capital gain that we receive in
a taxable year. In that case, a U.S. holder would be taxed on its proportionate share of our
undistributed long-term capital gain, to the extent that we designate such amount in a timely
notice to such stockholder. The U.S. holder would receive a credit or refund for its proportionate
share of the tax we paid. The U.S. holder would increase the basis in its stock by the amount of
its proportionate share of our undistributed long-term capital gain, minus its share of the tax we
paid.
To the extent that we make a distribution in excess of our current and accumulated earnings
and profits, such distribution will not be taxable to a U.S. holder to the extent that it does not
exceed the adjusted tax basis of the U.S. holders stock. Instead, such distribution will reduce
the adjusted tax basis of such stock. To the extent that we make a distribution in excess of both
our current and accumulated earnings and profits and the U.S. holders adjusted tax basis in its
stock, such stockholder will recognize long-term capital gain, or short-term capital gain if the
stock has been held for one year or less, assuming the stock is a capital asset in the hands of the
U.S. holder. The IRS has ruled that if total distributions for two or more classes of stock are in
excess of current and accumulated earnings and profits, dividends must be treated as having been
distributed to those stockholders having a priority
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under the corporate charter before any distribution to stockholders with lesser priority. If
we declare a dividend in October, November, or December of any year that is payable to a U.S.
holder of record on a specified date in any such month, such dividend shall be treated as both paid
by us and received by the U.S. holder on December 31 of such year, provided that we actually pay
the dividend during January of the following calendar year.
Stockholders may not include in their individual income tax returns any of our net operating
losses or capital losses. Instead, we would carry over such losses for potential offset against our
future income generally. Taxable distributions from us and gain from the disposition of our stock
will not be treated as passive activity income, and, therefore, stockholders generally will not be
able to apply any passive activity losses, such as losses from certain types of limited
partnerships in which the stockholder is a limited partner, against such income. In addition,
taxable distributions from us and gain from the disposition of the stock generally will be treated
as investment income for purposes of the investment interest limitations.
We will notify stockholders after the close of our taxable year as to the portions of the
distributions attributable to that year that constitute ordinary income, return of capital, and
capital gain.
Taxation of U.S. Holders on the Disposition of Stock
. In general, a U.S. holder who is not a
dealer in securities must treat any gain or loss realized upon a taxable disposition of our stock
as long-term capital gain or loss if the U.S. holder has held the stock for more than one year and
otherwise as short-term capital gain or loss. However, a U.S. holder must treat any loss upon a
sale or exchange of stock held by such stockholder for six months or less as a long-term capital
loss to the extent of any actual or deemed distributions from us that such U.S. holder previously
has characterized as long-term capital gain. All or a portion of any loss that a U.S. holder
realizes upon a taxable disposition of the stock may be disallowed if the U.S. holder purchases the
same type of stock within 30 days before or after the disposition.
Capital Gains and Losses
. A taxpayer generally must hold a capital asset for more than one
year for gain or loss derived from its sale or exchange to be treated as long-term capital gain or
loss. The highest marginal individual income tax rate is currently 35%. The maximum tax rate on
long-term capital gain applicable to non-corporate taxpayers is 15% for sales and exchanges of
assets held for more than one year. The maximum tax rate on long-term capital gain from the sale or
exchange of section 1250 property, or depreciable real property, is 25% to the extent that such
gain would have been treated as ordinary income if the property were section 1245 property. With
respect to distributions that we designate as capital gain dividends and any retained capital gain
that we are deemed to distribute, we generally may designate whether such a distribution is taxable
to our non-corporate stockholders at a 15% or 25% rate. Thus, the tax rate differential between
capital gain and ordinary income for non-corporate taxpayers may be significant. In addition, the
characterization of income as capital gain or ordinary income may affect the deductibility of
capital losses. A non-corporate taxpayer may deduct capital losses not offset by capital gains
against its ordinary income only up to a maximum annual amount of $3,000. A non-corporate taxpayer
may carry forward unused capital losses indefinitely. A corporate taxpayer must pay tax on its net
capital gain at ordinary corporate rates. A corporate taxpayer may deduct capital losses only to
the extent of capital gains, with unused losses being carried back three years and forward five
years.
Information Reporting Requirements and Backup Withholding
. We will report to our stockholders
and to the IRS the amount of distributions we pay during each calendar year and the amount of tax
we withhold, if any. Under the backup withholding rules, a stockholder may be subject to backup
withholding at the rate of 28% with respect to distributions unless such holder:
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is a corporation or comes within certain other exempt categories and, when required,
demonstrates this fact; or
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provides a taxpayer identification number, certifies as to no loss of exemption from
backup withholding, and otherwise complies with the applicable requirements of the
backup withholding rules.
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A stockholder who does not provide us with its correct taxpayer identification number also may
be subject to penalties imposed by the IRS. Any amount paid as backup withholding will be
creditable against the
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stockholders income tax liability. In addition, any stockholders who fail to certify their
non-foreign status to us may be subject to withholding on a portion of capital gain distributions.
See Taxation of Non-U.S. Holders.
Taxation of Non-U.S. Holders
The rules governing U.S. federal income taxation of nonresident alien individuals, foreign
corporations, foreign partnerships, and other holders of our securities that are not U.S. persons
(collectively, non-U.S. holders) are complex. This section is only a summary of such rules as
they apply to non-U.S. holders of our stock; a summary of such rules as they apply to non-U.S.
holders of our debt securities is discussed below under Holders of Debt Securities. We urge
non-U.S. holders to consult their own tax advisors to determine the impact of federal, state, and
local income tax laws on ownership of our stock, including any reporting requirements.
A non-U.S. holder that receives a distribution that is not attributable to gain from our sale
or exchange of U.S. real property interests, as defined below, and that we do not designate as a
capital gain dividend will recognize ordinary income to the extent that we pay such distribution
out of our current or accumulated earnings and profits. A withholding tax equal to 30% of the gross
amount of the distribution ordinarily will apply to such distribution unless an applicable tax
treaty reduces or eliminates the tax. However, if a distribution is treated as effectively
connected with the non-U.S. holders conduct of a U.S. trade or business, the non-U.S. holder
generally will be subject to federal income tax on the distribution at graduated rates, in the same
manner as U.S. holders are taxed with respect to such distributions. A non-U.S. holder that is a
corporation also may be subject to the 30% branch profits tax with respect to the distribution.
Generally, a non-U.S. holder will be subject to U.S. income tax withholding at the rate of 30% on
the gross amount of any such distribution paid to a non-U.S. holder unless either:
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a lower treaty rate applies and the non-U.S. holder files an IRS Form W-8BEN
evidencing eligibility for that reduced rate with the payor; or
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the non-U.S. holder files an IRS Form W-8ECI with the payor claiming that the
distribution is effectively connected income.
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A non-U.S. holder will not incur tax on a distribution in excess of our current and
accumulated earnings and profits if the excess portion of such distribution does not exceed the
adjusted basis of its stock. Instead, the excess portion of such distribution will reduce the
adjusted basis of such stock. A non-U.S. holder will be subject to tax on a distribution that
exceeds both our current and accumulated earnings and profits and the adjusted basis of its stock,
if the non-U.S. holder otherwise would be subject to tax on gain from the sale or disposition of
its stock, as described below. Because we generally cannot determine at the time we make a
distribution whether or not the distribution will exceed our current and accumulated earnings and
profits, the entire amount of any distribution will be subject to withholding as a taxable
dividend. However, a non-U.S. holder may obtain a full or partial refund, as appropriate, of
amounts that are withheld if we later determine that a distribution in fact exceeded our current
and accumulated earnings and profits.
Unless we are a domestically-controlled REIT, as defined below, withholding at a rate of 10%
is required on any distribution that exceeds our current and accumulated earnings and profits.
Consequently, although withholding at a rate of 30% on the entire amount of any distribution is
generally required, withholding at a rate of 10% may be required on any portion of a distribution
not subject to withholding at a rate of 30%.
For any year in which we qualify as a REIT, a non-U.S. holder may incur tax on distributions
that are attributable to gain from any sale or exchange of United States real property interests
under special provisions of the federal income tax laws referred to as FIRPTA. The term United
States real property interests includes certain interests in real property and stock in
corporations at least 50% of whose assets consists of interests in real property. Under those
rules, a non-U.S. holder is taxed on distributions attributable to gain from sales of United States
real property interests as if such gain were effectively connected with a United States business of
the non-U.S. holder. A non-U.S. holder thus would be taxed on such a distribution at the normal
capital gains rates applicable to U.S. holders, subject to applicable alternative minimum tax and a
special alternative minimum tax in the case of a nonresident alien individual. A non-U.S. corporate
holder not entitled to treaty relief or exemption also may be subject to the 30% branch profits tax
on such a distribution. Except as described below with respect to regularly
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traded stock, withholding is required at a rate of 35% of any distribution that we could
designate as a capital gain dividend. A non-U.S. holder may receive a credit against its tax
liability for the amount we withhold. Any distribution with respect to any class of stock which is
regularly traded on an established securities market located in the United States, such as our
stock, shall not be treated as gain recognized from the sale or exchange of a United States real
property interest if the non-U.S. holder did not own more than 5% of such class of stock at any
time during the taxable year within which the distribution is received. The distribution will be
treated as an ordinary dividend to the non-U.S. holder and taxed as an ordinary dividend that is
not a capital gain. A non-U.S. holder is not required to file a U.S. federal income tax return by
reason of receiving such a distribution, and the branch profits tax no longer applies to such a
distribution. However, the distribution will be subject to U.S. federal income tax withholding as
an ordinary dividend as described above.
On May 17, 2006, President Bush signed into law the Tax Increase Prevention and Reconciliation
Act of 2005 (TIPRA). TIPRA requires any distribution that is made by a REIT that would otherwise
be subject to FIRPTA because the distribution is attributable to the disposition of a United States
real property interest to retain its character as FIRPTA income when distributed to any regulated
investment company or other REIT, and to be treated as if it were from the disposition of a United
States real property interest by that regulated investment company or other REIT. This provision
of TIPRA applies to distributions with respect to taxable years beginning after December 31, 2005.
A wash sale rule is also included in TIPRA for transactions involving certain dispositions of
REIT stock to avoid FIRPTA tax on dispositions of United States real property interests. These
wash sale rules are applicable to transactions occurring on or after the thirtieth day following
the date of enactment of TIPRA.
A non-U.S. holder generally will not incur tax under FIRPTA with respect to gain realized upon
a disposition of our stock as long as we are a domestically-controlled REIT. A domestically
controlled REIT is a REIT in which, at all times during a specified testing period, less than 50%
in value of its shares are held directly or indirectly by non U.S. holders. We cannot assure you
that that test will be met. However, a non-U.S. holder that owned, actually or constructively, 5%
or less of our stock at all times during a specified testing period will not incur tax under FIRPTA
with respect to any such gain if the stock is regularly traded on an established securities
market. To the extent that our stock is regularly traded on an established securities market, a
non-U.S. holder will not incur tax under FIRPTA unless it owns more than 5% of our stock. If the
gain on the sale of the stock were taxed under FIRPTA, a non-U.S. holder would be taxed in the same
manner as U.S. holders with respect to such gain, subject to applicable alternative minimum tax and
a special alternative minimum tax in the case of nonresident alien individuals. Furthermore, a
non-U.S. holder generally will incur tax on gain not subject to FIRPTA if (1) the gain is
effectively connected with the non-U.S. holders U.S. trade or business, in which case the
non-U.S. holder will be subject to the same treatment as U.S. holders with respect to such gain, or
(2) the non-U.S. holder is a nonresident alien individual who was present in the U.S. for 183 days
or more during the taxable year and has a tax home in the United States, in which case the
non-U.S. holder will incur a 30% tax on his capital gains.
Taxable REIT Subsidiaries
We may own stock of a TRS. A TRS is a fully taxable corporation for which a TRS election is
properly made. A corporation of which a TRS directly or indirectly owns more than 35% of the
voting power or value of the stock will automatically be treated as a TRS. Overall, no more than
20% of the value of our assets may consist of securities of one or more TRSs, and no more than 25%
of the value of our assets may consist of the securities of TRSs and other assets that are not
qualifying assets for purposes of the 75% asset test.
The TRS rules limit the deductibility of interest paid or accrued by a TRS to us to assure
that the TRS is subject to an appropriate level of corporate taxation. Further, the rules impose a
100% excise tax on transactions between a TRS and us or our tenants, if any, that are not conducted
on an arms-length basis.
We have formed and made a timely election with respect to one TRS presently owned.
Additionally, we may form or acquire additional TRSs in the future.
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Taxable Mortgage Pools
A taxable mortgage pool is any entity (or in certain cases, a portion of an entity) other than
a REMIC or a financial asset securitization investment trust that has the following
characteristics:
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Substantially all (generally, more than 80%) of the assets of such entity consist of
debt obligations and more than 50% of such debt obligations are real estate mortgages;
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Such entity issues two or more classes of debt obligations having different
maturities; and
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The timing and amount of payments or projected payments on the debt obligations
issued by the entity are determined in large part by the timing and amount of payments
the entity receives on the debt obligations it holds as assets.
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If a REIT is a taxable mortgage pool, or if a REIT owns a qualified REIT subsidiary that is a
taxable mortgage pool, then a portion of the REITs income will be treated as excess inclusion
income and a portion of the dividends the REIT pays to its stockholders will be considered to be
excess inclusion income. You cannot offset excess inclusion income with net operating losses or
otherwise allowable deductions. Moreover, if you are a tax-exempt stockholder, such as a domestic
pension fund, you must treat excess inclusion income as unrelated business taxable income. If you
are not a U.S. holder, your dividend distributions may be subject to withholding tax, without
regard to any exemption or reduction in rate that might otherwise apply, with respect to your share
of excess inclusion income. The manner in which excess inclusion income would be allocated among
shares of different classes of our stock or how such income is to be reported to stockholders is
not clear under current law.
Although we generally leverage our investments in mortgage securities and commercial loans, we
believe that our financing transactions do not presently cause any portion of our assets to be
treated as a taxable mortgage pool.
Redemption and Conversion of Preferred Stock
Cash Redemption of Preferred Stock
A redemption of preferred stock will be treated for federal income tax purposes as a
distribution taxable as a dividend (to the extent of our current and accumulated earnings and
profits) at ordinary income rates, unless the redemption satisfies one of the tests set forth in
Section 302(b) of the Code and is therefore treated as a sale or exchange of the redeemed shares.
Such a redemption will be treated as a sale or exchange if it (i) is substantially
disproportionate with respect to the holder (which will not be the case if only non-voting
preferred stock is redeemed), (ii) results in a complete termination of the holders equity
interest in our Company, or (iii) is not essentially equivalent to a dividend with respect to the
holder, all within the meaning of Section 302(b) of the Code.
In determining whether any of these tests has been met, shares of our common stock and
preferred stock considered to be owned by the holder by reason of certain constructive ownership
rules set forth in the Code, as well as shares of our common stock and preferred stock actually
owned by the holder, must generally be taken into account. If a holder of preferred stock owns
(actually and constructively) no shares of our outstanding common stock or an insubstantial
percentage thereof, a redemption of shares of preferred stock of that holder is likely to qualify
for sale or exchange treatment because the redemption would be not essentially equivalent to a
dividend. However, because the determination as to whether any of the alternative tests of Section
302(b) of the Code will be satisfied with respect to any particular holder of preferred stock
depends upon the facts and circumstances at the time the determination must be made. We urge
prospective holders of preferred stock to consult their own tax advisors to determine such tax
treatment.
If a redemption of preferred stock is not treated as a distribution taxable as a dividend to a
particular holder, it will be treated as a taxable sale or exchange by that holder. As a result,
the holder will recognize gain or loss for federal income tax purposes in an amount equal to the
difference between (i) the amount of cash and the fair market
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value of any property received (less any portion thereof attributable to accumulated and
declared but unpaid dividends, which will be taxable as a dividend to the extent of our current and
accumulated earnings and profits) and (ii) the holders adjusted tax basis in the shares of the
preferred stock. Such gain or loss will be capital gain or loss if the shares of preferred stock
were held as a capital asset, and will be long-term gain or loss if such shares were held for more
than one year. If a redemption of preferred stock is treated as a distribution taxable as a
dividend, the amount of the distribution will be measured by the amount of cash and the fair market
value of any property received by the holder. The holders adjusted tax basis in the redeemed
shares of the preferred stock will be transferred to the holders remaining shares of our stock. If
the holder owns no other shares of our stock, such basis may, under certain circumstances, be
transferred to a related person or it may be lost entirely. Proposed Treasury Regulations would, if
adopted, alter the method for recovering your adjusted tax basis in any shares redeemed in a
dividend-equivalent redemption. Under the proposed Treasury Regulations, you would be treated as
realizing a capital loss on the date of the dividend-equivalent redemption equal to the adjusted
tax basis of the preferred stock redeemed, subject to adjustments.
The recognition of such loss would generally be deferred until the occurrence of specified
events, such as, for example, when you cease to own, actually or constructively, any shares of our
stock. There can be no assurance that the proposed Treasury Regulations will be adopted, or that
they will be adopted in their current form.
Conversion of Preferred Stock into Common Stock
In general, no gain or loss will be recognized for federal income tax purposes upon conversion
of the preferred stock solely into shares of common stock. The basis that a stockholder will have
for tax purposes in the shares of common stock received upon conversion will be equal to the
adjusted basis for the stockholder in the shares of preferred stock so converted, and provided that
the shares of preferred stock were held as a capital asset, the holding period for the shares of
common stock received would include the holding period for the shares of preferred stock converted.
A stockholder will, however, generally recognize gain or loss on the receipt of cash in lieu of
fractional shares of common stock in an amount equal to the difference between the amount of cash
received and the stockholders adjusted basis for tax purposes in the preferred stock for which
cash was received. Furthermore, under certain circumstances, a stockholder of shares of preferred
stock may recognize gain or dividend income to the extent that there are dividends in arrears on
the shares at the time of conversion into common stock.
Adjustments to Conversion Price
Adjustments in the conversion price, or the failure to make such adjustments, pursuant to the
anti-dilution provisions of the preferred stock or otherwise, may result in constructive
distributions to the stockholders of preferred stock that could, under certain circumstances, be
taxable to them as dividends pursuant to Section 305 of the Code. If such a constructive
distribution were to occur, a stockholder of preferred stock could be required to recognize
ordinary income for tax purposes without receiving a corresponding distribution of cash.
Warrants
Upon the exercise of a warrant for common stock, a holder will not recognize gain or loss and
will have a tax basis in the common stock received equal to the tax basis in such stockholders
warrant plus the exercise price of the warrant. The holding period for the common stock purchased
pursuant to the exercise of a warrant will begin on the day following the date of exercise and will
not include the period that the stockholder held the warrant.
Upon a sale or other disposition of a warrant, a holder will recognize capital gain or loss in
an amount equal to the difference between the amount realized and the holders tax basis in the
warrant. Such a gain or loss will be long term if the holding period is more than one year. In the
event that a warrant lapses unexercised, a holder will recognize a capital loss in an amount equal
to his tax basis in the warrant. Such loss will be long term if the warrant has been held for more
than one year.
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Holders of Debt Securities
U.S. Holders
Payments of Interest
. In general, except as described below under Original Issue
Discount, interest on debt securities will be taxable to a U.S. holder as ordinary income at the
time it accrues or is received, in accordance with the U.S. holders regular method of accounting
for United States federal income tax purposes. In general, if the terms of a debt instrument
entitle a holder to receive payments other than qualified stated interest (generally, stated
interest that is unconditionally payable in cash or in property (other than debt instruments of the
issuer) at least annually at a single fixed or qualifying floating rate), such holder might be
required to recognize additional interest as original issue discount over the term of the
instrument.
Original Issue Discount
. If you own debt securities issued with original issue discount
(OID), you will be subject to special tax accounting rules, as described in greater detail below.
In that case, you should be aware that you generally must include OID in gross income in advance of
the receipt of cash attributable to that income. However, you generally will not be required to
include separately in income cash payments received on the debt securities, even if denominated as
interest, to the extent those payments do not constitute qualified stated interest, as defined
below. If we determine that a particular debt security will be an OID debt security, we will
disclose that determination in the prospectus supplement or supplements relating to those debt
securities.
A debt security with an issue price that is less than the stated redemption price at
maturity (the sum of all payments to be made on the debt security other than qualified stated
interest) generally will be issued with OID if that difference is at least 0.25% of the stated
redemption price at maturity multiplied by the number of complete years to maturity. The issue
price of each debt security in a particular offering will be the first price at which a
substantial amount of that particular offering is sold to the public. The term qualified stated
interest means stated interest that is unconditionally payable in cash or in property, other than
debt instruments of the issuer, and the interest to be paid meets all of the following conditions:
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it is payable at least once per year;
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it is payable over the entire term of the debt security; and
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it is payable at a single fixed rate or, subject to certain conditions, based on one
or more interest indices.
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If we determine that particular debt securities of a series will bear interest that is not
qualified stated interest, we will disclose that determination in the prospectus supplement or
supplements relating to those debt securities.
If you own a debt security issued with de minimis OID, which is discount that is not OID
because it is less than 0.25% of the stated redemption price at maturity multiplied by the number
of complete years to maturity, you generally must include the de minimis OID in income at the time
principal payments on the debt securities are made in proportion to the amount paid. Any amount of
de minimis OID that you have included in income will be treated as capital gain.
Certain of the debt securities may contain provisions permitting them to be redeemed prior to
their stated maturity at our option and/or at your option. OID debt securities containing those
features may be subject to rules that differ from the general rules discussed herein. If you are
considering the purchase of OID debt securities with those features, you should carefully examine
the applicable prospectus supplement or supplements and should consult your own tax advisors with
respect to those features since the tax consequences to you with respect to OID will depend, in
part, on the particular terms and features of the debt securities.
If you own OID debt securities with a maturity upon issuance of more than one year you
generally must include OID in income in advance of the receipt of some or all of the related cash
payments using the constant yield method described in the following paragraphs. This method takes
into account the compounding of interest.
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The amount of OID that you must include in income if you are the initial U.S. holder of an OID
debt security is the sum of the daily portions of OID with respect to the debt security for each
day during the taxable year or portion of the taxable year in which you held that debt security
(accrued OID). The daily portion is determined by allocating to each day in any accrual period
a pro rata portion of the OID allocable to that accrual period. The accrual period for an OID
debt security may be of any length and may vary in length over the term of the debt security,
provided that each accrual period is no longer than one year and each scheduled payment of
principal or interest occurs on the first day or the final day of an accrual period. The amount of
OID allocable to any accrual period is an amount equal to the excess, if any, of:
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the debt securitys adjusted issue price at the beginning of the accrual period
multiplied by its yield to maturity, determined on the basis of compounding at the
close of each accrual period and properly adjusted for the length of the accrual
period, over
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the aggregate of all qualified stated interest allocable to the accrual period.
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OID allocable to a final accrual period is the difference between the amount payable at
maturity, other than a payment of qualified stated interest, and the adjusted issue price at the
beginning of the final accrual period. Special rules will apply for calculating OID for an initial
short accrual period. The adjusted issue price of a debt security at the beginning of any accrual
period is equal to its issue price increased by the accrued OID for each prior accrual period,
determined without regard to the amortization of any acquisition or bond premium, as described
below, and reduced by any payments made on the debt security (other than qualified stated interest)
on or before the first day of the accrual period. Under these rules, you will generally have to
include in income increasingly greater amounts of OID in successive accrual periods. We are
required to provide information returns stating the amount of OID accrued on debt securities held
of record by persons other than corporations and other exempt holders.
Floating rate debt securities are subject to special OID rules. In the case of an OID debt
security that is a floating rate debt security, both the yield to maturity and qualified stated
interest will be determined solely for purposes of calculating the accrual of OID as though the
debt security will bear interest in all periods at a fixed rate generally equal to the rate that
would be applicable to interest payments on the debt security on its date of issue or, in the case
of certain floating rate debt securities, the rate that reflects the yield to maturity that is
reasonably expected for the debt security. Additional rules may apply if either:
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the interest on a floating rate debt security is based on more than one interest index; or
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the principal amount of the debt security is indexed in any manner.
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This discussion does not address the tax rules applicable to debt securities with an indexed
principal amount. If you are considering the purchase of floating rate OID debt securities or
securities with indexed principal amounts, you should carefully examine the prospectus supplement
or supplements relating to those debt securities, and should consult your own tax advisors
regarding the United States federal income tax consequences to you of holding and disposing of
those debt securities.
You may elect to treat all interest on any debt securities as OID and calculate the amount
includible in gross income under the constant yield method described above. For purposes of this
election, interest includes stated interest, acquisition discount, OID, de minimis OID, market
discount, de minimis market discount and unstated interest, as adjusted by any amortizable bond
premium or acquisition premium. You must make this election for the taxable year in which you
acquired the debt security, and you may not revoke the election without the consent of the IRS. You
should consult with your own tax advisors about this election.
Market Discount
. If you purchase a debt security for less than the stated redemption price of
the debt security at maturity, if the debt security was issued without OID, or the adjusted issue
price, if the debt security was issued with OID, the difference is considered market discount to
the extent it exceeds a specified de minimis exception. Under the de minimis exception, market
discount is treated as zero if the market discount is less than
1
/
4
of one percent of the stated
redemption price of the debt security multiplied by the number of complete years to maturity from
the date acquired. If you acquire a debt security at a market discount, you will be required to
treat as
37
ordinary income any partial principal payment or gain recognized on the disposition of that
debt security to the extent of the market discount which has not previously been included in your
income and is treated as having accrued at the time of the payment or disposition. In addition, you
may be required to defer the deduction of a portion of the interest on any indebtedness incurred or
maintained to purchase or carry the debt security until the debt security is disposed of in a
taxable transaction, unless you elect to include market discount in income as it accrues.
Any market discount will be considered to accrue ratably during the period from the date of
acquisition to the maturity date of the debt security, unless you elect to accrue on a constant
interest method. You may elect to include market discount in income currently as it accrues on
either a ratable or constant interest method, in which case the rule described above regarding
deferral of interest deductions will not apply. This election to include market discount in income
currently, once made, applies to all market discount obligations acquired on or after the first
taxable year to which the election applies and may not be revoked without the consent of the IRS.
Amortizable Premium
. If you purchase a debt security for an amount in excess of the sum of
all amounts payable on the debt security after the purchase date other than qualified stated
interest, you will be considered to have purchased the debt security with amortizable bond premium
equal to the amount of that excess. You generally may elect to amortize the premium using a
constant yield method over the remaining term of the debt security. The amount amortized in any
year will be treated as a reduction of your interest income from the debt security. If you do not
elect to amortize bond premium, that premium will decrease the gain or increase the loss you would
otherwise recognize on disposition of the debt security. This election to amortize premium on a
constant yield method will also apply to all debt obligations you hold or subsequently acquire on
or after the first taxable year to which the election applies and may not be revoked without the
consent of the IRS.
Sale, Exchange and Retirement of Debt Securities
. Your tax basis in the debt securities that
you beneficially own will, in general, be your cost for those debt securities increased by OID and
market discount that you previously included in income, and reduced by any amortized premium and
any cash payments received with respect to that debt security other than payments of qualified
stated interest.
Upon your sale, exchange, retirement or other taxable disposition of the debt securities, you
will recognize gain or loss equal to the difference between the amount you realize upon the sale,
exchange, retirement or other disposition (less an amount equal to any accrued stated interest that
will be treated as a payment of interest for U.S. federal income tax purposes if not previously
taken into income ) and your adjusted tax basis in the debt securities. Except as described above
with respect to market discount with respect to gain or loss attributable to changes in exchange
rates as described below with respect to foreign currency debt securities, that gain or loss will
be capital gain or loss. Capital gains of individuals derived in respect of capital assets held for
more than one year are eligible for reduced rates of taxation. The deductibility of capital losses
is subject to limitations.
Extendible Debt Securities, Renewable Debt Securities and Reset Debt Securities
. If so
specified in the prospectus supplement or supplements relating to the debt securities of a series,
we or you may have the option to extend the maturity of those debt securities. In addition, we may
have the option to reset the interest rate, the spread or the spread multiplier.
The United States federal income tax treatment of a debt security with respect to which such
an option has been exercised is unclear and will depend, in part, on the terms established for such
debt securities by us pursuant to the exercise of the option. You may be treated for federal income
tax purposes as having exchanged your debt securities for new debt securities with revised terms.
If this is the case, you would realize gain or loss equal to the difference between the issue price
of the new debt securities and your tax basis in the old debt securities.
If the exercise of the option is not treated as an exchange of old debt securities for new
debt securities, you will not recognize gain or loss as a result of such exchange.
The presence of such options may also affect the calculation of OID, among other things.
Solely for purposes of the accrual of OID, if we issue debt securities and have an option or
combination of options to extend the term of those debt securities, we will be presumed to exercise
such option or options in a manner that minimizes the yield on those debt securities. Conversely,
if you are treated as having a put option, such an option will be
38
presumed to be exercised in a manner that maximizes the yield on those debt securities. If we
exercise such option or options to extend the term of those debt securities, or your option to put
does not occur (contrary to the assumptions made), then solely for purposes of the accrual of OID,
those debt securities will be treated as reissued on the date of the change in circumstances for an
amount equal to their adjusted issue price on the date.
You should carefully examine the prospectus supplement or supplements relating to any such
debt securities, and should consult your own tax advisor regarding the United States federal income
tax consequences of the holding and disposition of such debt securities.
Information Reporting and Backup Withholding
. In general, information reporting requirements
will apply to certain payments of principal, premium, if any, redemption price, if any, OID, if
any, interest and other amounts paid to you on the debt securities and to the proceeds of sales of
the debt securities made to you unless you are an exempt recipient (such as a corporation). A
backup withholding tax may apply to such payments if you fail to provide a correct taxpayer
identification number or certification of exempt status or fail to report in full dividend and
interest income.
Any amounts withheld under the backup withholding rules will be allowed as a refund or a
credit against your U.S. federal income tax liability provided the required information is timely
furnished to the IRS.
Non-U.S. Holders
The following is a discussion of the material U.S. federal income and estate tax consequences
that generally will apply to you if you are a non-U.S. holder of debt securities.
U.S. Federal Withholding Tax
. The 30% U.S. federal withholding tax will not apply to any
payment of principal of and, under the portfolio interest rule, interest, including OID, on the
debt securities, provided that:
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you do not actually or constructively own 10% or more of the total combined voting
power of all classes of our voting stock within the meaning of Section 871(h)(3) of the
Code and related U.S. Treasury regulations;
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you are not a controlled foreign corporation that is related to us through stock
ownership;
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you are not a bank whose receipt of interest on the debt securities is described in
Section 881(c)(3)(A) of the Code;
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the interest is not considered contingent interest under Section 871(h)(4)(A) of the
Code and the related U.S. Treasury regulations; and
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you provide your name and address on an IRS Form W-8BEN (or successor form), and
certify, under penalty of perjury, that you are not a U.S. person or (2) you hold your
debt securities through certain foreign intermediaries, and you satisfy the
certification requirements of applicable U.S. Treasury regulations. Special
certification rules apply to certain non-U.S. holders that are entities rather than
individuals.
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If you cannot satisfy the requirements described above, payments of premium, if any, and
interest, including OID, made to you will be subject to the 30% U.S. federal withholding tax (which
will be deducted from such interest payments by the paying agent), unless you provide us with a
properly executed:
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IRS Form W-8BEN (or successor form) claiming an exemption from or reduction in the
rate of withholding under the benefit of an applicable tax treaty; or
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IRS Form W-8ECI (or successor form) stating that interest paid on the debt
securities is not subject to withholding tax because it is effectively connected with
your conduct of a trade or business in the United States as discussed below.
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39
Special certification rules apply to non-U.S. holders that are pass-through entities rather
than corporations or individuals. The 30% U.S. federal withholding tax generally will not apply to
any payment of principal that you realize on the sale, exchange, retirement or other taxable
disposition of any of the debt securities.
U.S. Federal Income Tax
. If you are engaged in a trade or business in the United States and
premium, if any, and interest, including OID, on the debt securities is effectively connected with
the conduct of that trade or business, you will be subject to U.S. federal income tax on that
premium, if any, and interest, including OID, on a net income basis (although you will be exempt
from the 30% withholding tax, provided the certification requirements discussed above are
satisfied) in the same manner as if you were a U.S. person. In addition, if you are a foreign
corporation, you may be subject to a branch profits tax equal to 30% (or lower applicable treaty
rate) of your earnings and profits for the taxable year, subject to adjustments, that are
effectively connected with the conduct by you of a trade or business in the United States. For this
purpose, premium, if any, and interest, including OID, on debt securities will be included in your
earnings and profits.
Any gain realized on the disposition of debt securities generally will not be subject to U.S.
federal income tax unless:
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that gain is effectively connected with your conduct of a trade or business in the
United States and, if required by an applicable income tax treaty, is attributable to a
U.S. permanent establishment; or
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you are an individual who is present in the United States for 183 days or more in
the taxable year of that disposition and certain other conditions are met.
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U.S. Federal Estate Tax
. Your estate will not be subject to U.S. federal estate tax on the
debt securities beneficially owned by you at the time of your death, provided that any payment to
you on the debt securities, including OID, would be eligible for exemption from the 30% U.S.
federal withholding tax under the portfolio interest rule described above under U.S. Federal
Withholding Tax, without regard to the certification requirement described in the fifth bullet
point of that section.
Information Reporting and Backup Withholding
. Generally, we must report to the IRS and to you
the amount of interest, including OID, on the debt securities paid to you and the amount of tax, if
any, withheld with respect to such payments. Copies of the information returns reporting such
interest payments and any withholding may also be made available to the tax authorities in the
country in which you reside under the provisions of an applicable income tax treaty.
In general, backup withholding will not apply to payments that we make or any of our paying
agents (in its capacity as such) makes to you if you have provided the required certification that
you are a non-U.S. holder as described above and provided that neither we nor any of our paying
agents has actual knowledge or reason to know that you are a U.S. holder (as described above).
In addition, you will not be subject to backup withholding and information reporting with
respect to the proceeds of the sale of debt securities within the United States or conducted
through certain U.S.-related financial intermediaries, if the payor receives the statement
described above and does not have actual knowledge or reason to know that you are a U.S. person, as
defined under the Code, or you otherwise establish an exemption.
Any amounts withheld under the backup withholding rules will be allowed as a refund or a
credit against your U.S. federal income tax liability provided the required information is timely
furnished to the IRS.
State and Local Taxes
We and/or you may be subject to state and local tax in various states and localities,
including those states and localities in which we or you transact business, own property, or
reside. The state and local tax treatment in such jurisdictions may differ from the federal income
tax treatment described above. Consequently, you should consult your own tax advisor regarding the
effect of state and local tax laws upon an investment in our securities.
40
PLAN OF DISTRIBUTION
We may sell our securities domestically or abroad, through underwriters, dealers or agents, or
directly, or through any combination of those methods. The applicable prospectus supplement will
describe the terms of the offering that it applies to, including the names of any underwriters,
dealers or agents, the purchase price for our securities, and the proceeds we expect to receive. It
will also include any delayed delivery arrangements, any underwriting discounts and other items
constituting underwriters compensation, the initial public offering price, any discounts or
concessions allowed or re-allowed or paid to dealers, and a list of any securities exchanges on
which the securities offered may be listed.
If we use underwriters in any sale, our securities will be purchased by the underwriters or
dealers for their own account and may be resold from time to time in one or more transactions,
including negotiated transactions, at a fixed public offering price or at varying prices determined
at the time of sale. Our securities may be offered to the public either through underwriting
syndicates represented by one or more managing underwriters or directly by one or more firms acting
as underwriters. The underwriters with respect to a particular underwritten offering will be named
in the applicable prospectus supplement relating to that offering. If an underwriting syndicate is
used, the managing underwriter or underwriters will be disclosed on the cover of the applicable
prospectus supplement. Generally, the obligations of the underwriters or agents to purchase the
securities that we offer will be subject to conditions precedent, and the underwriters will have to
purchase all of the offered securities if any are purchased. The initial public offering price and
any discounts or concessions allowed or re-allowed or paid to dealers may be changed from time to
time. In no event will the maximum commission or discount to be received by any NASD member or
independent broker-dealer exceed 8% for the sale of the securities registered hereunder.
If we use dealers to sell our securities, we will sell our securities to the dealers as
principals. The dealers may then resell our securities to the public at varying prices that they
determine at the time of resale. We will disclose the names of the dealers and the terms of the
transaction in the applicable prospectus supplement.
We may sell the securities through agents that we designate from time to time at fixed prices
that may be changed, or at varying prices determined at the time of sale. We will name any agent
involved in the offer or sale of our securities and specify any commissions that we will pay them.
Unless otherwise specified in the applicable prospectus supplement, any agent will be acting on a
best efforts basis for the period of its appointment.
Underwriters or agents may be paid by us or by purchasers of our securities for whom they act
as agents in the form of discounts, concessions or commissions. Underwriters, agents and dealers
participating in the distribution of our securities may all be deemed to be underwriters, and any
discounts or commissions that they receive, as well as profit they receive on the resale of our
securities, may be deemed to be underwriting discounts or commissions under the Securities Act of
1933.
A prospectus supplement may indicate that we will authorize agents, underwriters or dealers to
solicit from specified types of institutions offers to purchase our securities at the public
offering price set forth in the prospectus supplement pursuant to delayed delivery contracts
permitting payment and delivery on a specified future date. The prospectus supplement will describe
conditions of any delayed delivery contracts, as well as the commission we will pay for
solicitation of these contracts.
Some or all of the securities that we offer though this prospectus may be new issues of
securities with no established trading market. Any underwriters to whom we sell our securities for
public offering and sale may make a market in those securities, but they will not be obligated to
and they may discontinue any market making at any time without notice. Accordingly, we cannot
assure you of the liquidity of, or continued trading markets for, any securities that we offer.
In order to facilitate the offering of our securities, any underwriters or agents involved in
the offering may engage in transactions that stabilize, maintain or otherwise affect the price of
our securities, or other securities that affect payments on our securities. Specifically, the
underwriters or agents may overallot in connection with the offering, creating a short position for
their own account. In addition, to cover overallotments or to stabilize the price of our
securities, or other securities that affect payments on our securities, the underwriters or agents
may bid for and purchase the securities in the open market. In any offering of our securities
through a syndicate of underwriters,
41
the underwriting syndicate may reclaim selling concessions allowed to an underwriter or dealer
for distributing our securities if the syndicate repurchases previously distributed securities in
transactions to cover syndicate short positions, in stabilizing transactions or otherwise. Any of
these activities may stabilize or maintain the market price of our securities above independent
market levels. The underwriters or agents are not required to engage in these activities, and may
end any of these activities at any time.
Agents, dealers and underwriters may be entitled to be indemnified by us against specified
civil liabilities, including liabilities under the Securities Act of 1933, or to contribution with
respect to payments that they may be required to make.
Any underwriters, dealers or agents that we use, as well as their affiliates, may engage in
transactions with us or perform services for us in the ordinary course of business.
EXPERTS
The consolidated financial statements of Capstead Mortgage Corporation appearing in Capstead
Mortgage Corporations Annual Report (Form 10-K) for the year ended December 31, 2006, and Capstead
Mortgage Corporation managements assessment of the effectiveness of internal control over
financial reporting as of December 31, 2006 included therein, have been audited by Ernst & Young
LLP, independent registered public accounting firm, as set forth in their reports thereon, included
therein, and incorporated herein by reference. Such consolidated financial statements and
managements assessment are incorporated herein by reference in reliance upon such reports given on
the authority of such firm as experts in accounting and auditing.
LEGAL MATTERS
Certain legal matters in connection with this offering will be passed upon for us by Andrews
Kurth LLP, Dallas, Texas. In addition, the description of federal income tax consequences
contained in the section of the prospectus entitled Federal Income Tax Consequences of Our Status
as a REIT is based on the opinion of Andrews Kurth LLP. Certain Maryland law matters in
connection with this offering will be passed upon for us by Hogan & Hartson L.L.P., Baltimore,
Maryland. Andrews Kurth LLP will rely on the opinion of Hogan & Hartson L.L.P., Baltimore,
Maryland as to all matters of Maryland law.
42
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following table itemizes the expenses incurred by us in connection with the issuance and
registration of the securities being registered hereunder. All amounts shown are estimates except
the Securities and Exchange Commission registration fee.
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SEC Registration Fee
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$
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15,350
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NYSE Fees
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5,000
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Printing Expenses
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100,000
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*
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Legal Fees and Expenses
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300,000
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*
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Blue Sky Fees and Expenses
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15,000
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*
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Accounting and Fees and Expenses
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100,000
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*
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Trustees Fees and Expenses
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15,000
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*
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Miscellaneous
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4,650
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*
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Total
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$
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555,000
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*
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Fees are estimates only.
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Item 15. Indemnification of Directors and Officers.
Our charter provides for indemnification of our officers and directors against liabilities to
the fullest extent permitted by the MGCL, as amended from time to time.
The MGCL requires a corporation (unless its charter provides otherwise, which our companys
charter does not) to indemnify a director or officer who has been successful, on the merits or
otherwise, in the defense of any proceeding to which he or she is made a party by reason of his or
her service in that capacity. The MGCL permits a corporation to indemnify its present and former
directors and officers, among others, against judgments, penalties, fines, settlements and
reasonable expenses actually incurred by them in connection with any proceeding to which they may
be made a party by reason of their service in those or other capacities unless it is established
that:
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an act or omission of the director or officer was material to the matter giving rise to the proceeding and:
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was committed in bad faith; or
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was the result of active and deliberate dishonesty;
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the director or officer actually received an improper personal benefit in money, property or services; or
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in the case of any criminal proceeding, the director or officer had reasonable cause to
believe that the act or omission was unlawful.
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However, under the MGCL, a Maryland corporation may not indemnify for an adverse judgment in a
suit by or in the right of the corporation or for a judgment of liability on the basis that
personal benefit was improperly received, unless in either case a court orders indemnification and
then only for expenses. In addition, the MGCL permits a corporation to advance reasonable expenses
to a director or officer upon the corporations receipt of:
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a written affirmation by the director or officer of his good faith belief that he has
met the standard of conduct necessary for indemnification by the corporation; and
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II-1
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a written undertaking by the director or on the directors behalf to repay the amount
paid or reimbursed by the corporation if it is ultimately determined that the director did
not meet the standard of conduct.
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Our bylaws obligate us, to the fullest extent permitted by Maryland law in effect from time to
time, to indemnify and, without requiring a preliminary determination of the ultimate entitlement
to indemnification, pay or reimburse reasonable expenses in advance of final disposition of a
proceeding to:
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any present or former director or officer who is made a party to the proceeding by
reason of his or her service in that capacity; or
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any individual who, while a director or officer of our company and at our request,
serves or has served another corporation, real estate investment trust, partnership, joint
venture, trust, employee benefit plan or any other enterprise as a director, officer,
partner or trustee of such corporation, real estate investment trust, partnership,
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Our charter and bylaws also permit us to indemnify and advance expenses to any person who
served a predecessor of ours in any of the capacities described above and to any employee or agent
of our company or a predecessor of our company.
Insofar as the foregoing provisions permit indemnification of directors, officers or persons
controlling us for liability arising under the Securities Act, we have been informed that in the
opinion of the Securities and Exchange Commission, this indemnification is against public policy as
expressed in the Securities Act and is therefore unenforceable.
II-2
Item 16. Exhibits
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**
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1.1
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Form of Underwriting Agreement
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3.1
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Charter, including Articles of Incorporation, Articles Supplementary for each
outstanding Series of Preferred Stock and all other amendments to such Articles of
Incorporation (previously filed with the Commission on June 19, 2001 as an Exhibit
to the Registrants Registration Statement on Form S-3 (No. 333-63358))
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3.2
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Amended and Restated Bylaws (previously filed with the Commission on January 31,
2006 as an Exhibit to the Registrants Current Report on Form 8-K)
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4.1
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Specimen of Common Stock Certificate (previously filed with the Commission on June 29,
2001 as an Exhibit to the Registrants Registration Statement on Form S-3 (No.
333-63358))
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**
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4.2
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Form of Preferred Stock Certificate
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*
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4.3
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Form of Senior Indenture (Form of
Senior Debt Security included therein)
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*
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4.4
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Form of Subordinated Indenture
(Form of Subordinated Debt Security included therein)
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**
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4.5
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Form of Warrant Agreement
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#
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5.1
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Opinion of Andrews Kurth LLP with
respect to the legality of debt securities and warrants being registered
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#
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5.2
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Opinion of Hogan & Hartson L.L.P. with respect to the legality of common stock and
preferred stock being registered
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#
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8.1
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Opinion of Andrews Kurth LLP with respect to certain tax matters.
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11.1
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Statement Regarding Computation of Ratio of Income from Continuing Operations (Before
Fixed Charges) to Combined Fixed Charges and Preferred Stock Dividends (previously
filed with the Commission on August 7, 2007 as an Exhibit to the Registrants Quarterly
Report on Form 10-Q)
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*
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23.1
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Consent of Ernst & Young LLP
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#
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23.2
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Consent of Andrews Kurth LLP (included in its opinion filed as Exhibit 5.1 hereto)
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#
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23.3
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Consent of Hogan & Hartson L.L.P. (included in its opinion filed as Exhibit 5.2 hereto)
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#
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23.4
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Consent of Andrews Kurth LLP (included in its opinion filed as Exhibit 8.1 hereto)
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#
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24.1
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Power of Attorney
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***
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25.1
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Form T-1 Statement of
Eligibility of the Trustee for Senior Indenture under the Trust
Indenture Act of 1939, as amended
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***
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25.2
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Form T-1 Statement of
Eligibility of the Trustee for Subordinated Indenture under the Trust
Indenture Act of 1939, as amended
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*
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Filed herewith.
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**
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To be filed by an amendment or as an exhibit to a report
pursuant to Section 13(a) or 15(d) of the Exchange Act and
incorporated herein by reference if we enter into any such agreement
or issue any such instrument in connection with the offer of any
securities registered hereunder.
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***
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Where applicable, to be incorporated by reference from a
subsequent filing in accordance with Section 305(b)(2) of the Trust
Indenture Act of 1939, as amended.
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#
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Previously filed.
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II-3
Item 17.
Undertakings.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the Securities Act of
1933;
(ii) To reflect in the prospectus any facts or events arising after the effective date
of the registration statement (or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change in the information set
forth in the registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of securities offered
would not exceed that which was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the form of prospectus filed with
the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price
represent no more than a 20 percent change in the maximum aggregate offering price set forth
in the Calculation of Registration Fee table in the effective registration statement; and
(iii) To include any material information with respect to the plan of distribution not
previously disclosed in the registration statement or any material change to such
information in this registration statement;
provided, however,
that paragraphs (i), (ii) and (iii) do not apply if the information
required to be included in a post-effective amendment by those paragraphs is contained in
reports filed with or furnished to the Commission by the registrant pursuant to Section 13
or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference
in the registration statement or is contained in a form of prospectus filed pursuant to Rule
424(b) that is part of this registration statement.
(2) That, for the purpose of determining any liability under the Securities Act of
1933, each such post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial
bona fide
offering thereof.
(3) To remove from registration by means of a post-effective amendment any of the
securities being registered which remain unsold at the termination of the offering.
(4) That, for the purpose of determining liability under the Securities Act of 1933 to
any purchaser:
(i) Each prospectus filed by the registrant pursuant to Rule 424(b)(3) shall be deemed
to be part of the registration statement as of the date the filed prospectus was deemed part
of and included in the registration statement; and
(ii) Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5) or (b)(7)
as part of a registration statement in reliance on Rule 430B for the purpose of providing
the information required by Section 10(a) of the Securities Act of 1933 shall be deemed to
be part of and included in the registration statement as of the earlier of the date such
form of prospectus is first used after effectiveness or the date of the first contract of
sale of securities in the offering described in the prospectus. As provided in Rule 430B,
for liability purposes of the issuer and any person that is at that date an underwriter,
such date shall be deemed to be a new effective date of the registration statement relating
to the securities in the registration statement to which the prospectus relates, and the
offering of such securities at that time shall be deemed to be the initial
bona fide
offering thereof;
provided, however,
that no statement made in a registration statement or
prospectus that is part of the registration statement or made in a document incorporated or
deemed incorporated by reference into the registration statement or
II-4
prospectus that is part of the registration statement will, as to a purchaser with a
time of contract of sale prior to such effective date, supersede or modify any statement
that was made in the registration statement or prospectus that was part of the registration
statement or made in any such document immediately prior to such effective date.
(5) That, for the purpose of determining liability of the registrant under the
Securities Act of 1933 to any purchaser in the initial distribution of the securities, in a
primary offering of securities of the registrant pursuant to this registration statement,
regardless of the underwriting method used to sell the securities to the purchaser, if the
securities are offered or sold to such purchaser by means of any of the following
communications, the undersigned registrant will be a seller to the purchaser and will be
considered to offer or sell such securities to such purchaser:
(i) Any preliminary prospectus or prospectus of the registrant relating to the offering
required to be filed pursuant to Rule 424;
(ii) Any free writing prospectus relating to the offering prepared by or on behalf of
the undersigned registrant or used or referred to by the registrant;
(iii) The portion of any other free writing prospectus relating to the offering
containing material information about an undersigned registrant or its securities provided
by or on behalf of the undersigned registrant; and
(iv) Any other communication that is an offer in the offering made by the registrant to
the purchaser.
(b) The registrant hereby undertakes that, for purposes of determining any liability
under the Securities Act of 1933, each filing of the registrants annual report pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each
filing of an employee benefit plans annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the registration
statement shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be deemed to be the
initial
bona fide
offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities Act of 1933
may be permitted to directors, officers and controlling persons of the registrant pursuant
to the foregoing provisions, or otherwise, the registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the registrant of
expenses incurred or paid by a director, officer or controlling person of the registrant in
the successful defense of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and will be
governed by the final adjudication of such issue.
(d) The undersigned registrant hereby further undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933 the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) under the
Securities Act of 1933 shall be deemed to be part of this registration statement
as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus shall
be deemed to be a
II-5
new registration statement relating to the securities offered therein, and
the offering of the securities at that time shall be deemed to be the initial
bona fide offering thereof.
(e) The undersigned registrant hereby further undertakes to file an application for the
purpose of determining the eligibility of the trustee to act under subsection (a) of Section
310 of the Trust Indenture Act in accordance with the rules and regulations prescribed by
the Commission under Section 305(b)(2) of the Act.
II-6
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant
certifies that it has reasonable grounds to believe that the registrant meets all of the
requirements for filing on Form S-3/A and has duly caused this Form
S-3/A Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City of Dallas, State of
Texas, on this
10
th
day
of August, 2007.
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CAPSTEAD MORTGAGE CORPORATION
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By:
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/s/ Phillip A. Reinsch
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Phillip A. Reinsch
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Executive Vice President and Chief Financial Officer
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POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration
Statement has been signed by the following persons in the capacities
indicated on August 10, 2007.
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Signature
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Title
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*
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Chairman of the Board of Directors
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Paul M. Low
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Chief Executive Officer, President and Director
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(Principal Executive Officer)
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Andrew F. Jacobs
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Executive Vice President, Chief Financial Officer and
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Secretary
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Phillip A. Reinsch
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(Principal Financial and Accounting Officer)
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*
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Director
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Jack Biegler
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*
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Director
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Gary Keiser
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*
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Director
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Michael G. ONeil
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*
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Director
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Christopher W. Mahowald
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*
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Director
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Mark S. Whiting
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*
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/s/ Phillip A. Reinsch
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Phillip A. Reinsch
Attorney-In-Fact
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Exhibits
Index
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**
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1.1
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Form of Underwriting Agreement
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3.1
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Charter, including Articles of Incorporation, Articles Supplementary for each
outstanding Series of Preferred Stock and all other amendments to such Articles of
Incorporation (previously filed with the Commission on June 19, 2001 as an Exhibit
to the Registrants Registration Statement on Form S-3 (No. 333-63358))
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3.2
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Amended and Restated Bylaws (previously filed with the Commission on January 31,
2006 as an Exhibit to the Registrants Current Report on Form 8-K)
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4.1
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Specimen of Common Stock Certificate (previously filed with the Commission on June 29,
2001 as an Exhibit to the Registrants Registration Statement on Form S-3 (No.
333-63358))
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**
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4.2
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Form of Preferred Stock Certificate
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*
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4.3
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Form of Senior Indenture (Form of
Senior Debt Security included therein)
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*
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4.4
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Form of Subordinated Indenture
(Form of Subordinated Debt Security included therein)
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**
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4.5
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Form of Warrant Agreement
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#
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5.1
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Opinion of Andrews Kurth LLP with
respect to the legality of debt securities and warrants being registered
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#
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5.2
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Opinion of Hogan & Hartson L.L.P. with respect to the legality of common stock and
preferred stock being registered
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#
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8.1
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Opinion of Andrews Kurth LLP with respect to certain tax matters.
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11.1
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Statement Regarding Computation of Ratio of Income from Continuing Operations (Before
Fixed Charges) to Combined Fixed Charges and Preferred Stock Dividends (previously
filed with the Commission on August 7, 2007 as an Exhibit to the Registrants Quarterly
Report on Form 10-Q)
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*
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23.1
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Consent of Ernst & Young LLP
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#
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23.2
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Consent of Andrews Kurth LLP (included in its opinion filed as Exhibit 5.1 hereto)
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#
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23.3
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Consent of Hogan & Hartson L.L.P. (included in its opinion filed as Exhibit 5.2 hereto)
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#
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23.4
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Consent of Andrews Kurth LLP (included in its opinion filed as Exhibit 8.1 hereto)
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#
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24.1
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Power of Attorney
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***
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25.1
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Form T-1 Statement of Eligibility of the Trustee for Senior Indenture under the Trust
Indenture Act of 1939, as amended
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***
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25.2
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Form T-1 Statement of
Eligibility of the Trustee for Subordinated Indenture under the Trust
Indenture Act of 1939, as amended
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*
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Filed herewith.
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**
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To be filed by an amendment or as an exhibit to a report
pursuant to Section 13(a) or 15(d) of the Exchange Act and
incorporated herein by reference if we enter into any such agreement
or issue any such instrument in connection with the offer of any
securities registered hereunder.
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***
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Where applicable, to be incorporated by reference from a
subsequent filing in accordance with Section 305(b)(2) of the Trust
Indenture Act of 1939, as amended.
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#
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Previously filed.
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Exhibit 4.3
INDENTURE
BETWEEN
CAPSTEAD MORTGAGE CORPORATION
AND
,
AS TRUSTEE
DATED AS OF ___, 2007
SENIOR DEBT SECURITIES
(Issuable in Series)
TABLE OF CONTENTS
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Article 1 DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
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1
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Section 1.1 Definitions
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1
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Section 1.2 Incorporation by Reference of Trust Indenture Act
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9
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Section 1.3 Compliance Certificates and Opinions
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9
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Section 1.4 Form of Documents Delivered to Trustee
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10
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Section 1.5 Acts of Holders; Record Dates
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11
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Section 1.6 Notices, etc., to Trustee and Company
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13
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Section 1.7 Notice to Holders; Waiver
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13
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Section 1.8 Conflict with Trust Indenture Act
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14
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Section 1.9 Effect of Headings and Table of Contents
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14
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Section 1.10 Successors and Assigns
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14
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Section 1.11 Separability Clause
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14
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Section 1.12 Benefits of Indenture
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14
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Section 1.13 Governing Law
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14
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Section 1.14 Legal Holidays
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15
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Section 1.15 Indenture and Securities Solely Corporate Obligations
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15
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Section 1.16 Indenture May be Executed in Counterparts
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16
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Article 2 SECURITY FORMS
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16
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Section 2.1 Forms Generally
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16
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Section 2.2 Form of Trustees Certificate of Authentication
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16
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Section 2.3 Global Securities
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17
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Section 2.4 Form of Legend for Global Securities
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19
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Section 2.5 Form of Face of Security
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19
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Section 2.6 Form of Reverse of Security
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21
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Article 3 THE SECURITIES
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24
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Section 3.1 Amount Unlimited; Issuable in Series
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24
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Section 3.2 Denominations
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28
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Section 3.3 Execution, Authentication, Delivery and Dating
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28
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Section 3.4 Temporary Securities
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30
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Section 3.5 Registration; Registration of Transfer and Exchange
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31
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Section 3.6 Mutilated, Destroyed, Lost and Stolen Securities
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32
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Section 3.7 Payment of Interest; Interest Rights Preserved
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33
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Section 3.8 Persons Deemed Owners
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34
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Section 3.9 Cancellation
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35
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Section 3.10 Computation of Interest
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35
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Article 4 SATISFACTION AND DISCHARGE
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35
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Section 4.1 Satisfaction and Discharge of Indenture
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35
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Section 4.2 Application of Trust Money
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36
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Article 5 REMEDIES
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37
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Section 5.1 Events of Default
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37
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Section 5.2 Acceleration of Maturity; Rescission and Annulment
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39
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i
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Section 5.3 Collection of Indebtedness and Suits for Enforcement by Trustee
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40
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Section 5.4 Trustee May File Proofs of Claim
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40
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Section 5.5 Trustee May Enforce Claims Without Possession of Securities
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41
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Section 5.6 Application of Money Collected
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41
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Section 5.7 Limitation on Suits
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42
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Section 5.8 Right of Holders to Receive Principal, Premium and Interest
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43
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Section 5.9 Restoration of Rights and Remedies
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43
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Section 5.10 Rights and Remedies Cumulative
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43
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Section 5.11 Delay or Omission Not Waiver
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44
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Section 5.12 Control by Holders
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44
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Section 5.13 Waiver of Past Defaults
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44
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Section 5.14 Undertaking for Costs
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45
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Article 6 THE TRUSTEE
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45
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Section 6.1 Certain Duties and Responsibilities
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45
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Section 6.2 Notice of Defaults
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46
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Section 6.3 Certain Rights of Trustee
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47
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Section 6.4 Not Responsible for Recitals or Issuance of Securities
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48
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Section 6.5 May Hold Securities and Act as Trustee under Other Indentures
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48
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Section 6.6 Money Held in Trust
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48
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Section 6.7 Compensation and Reimbursement
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48
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Section 6.8 Conflicting Interests
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49
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Section 6.9 Eligibility; Disqualification
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49
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Section 6.10 Resignation and Removal; Appointment of Successor
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50
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Section 6.11 Acceptance of Appointment by Successor
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51
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Section 6.12 Merger, Conversion, Consolidation or Succession to Business
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52
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Section 6.13 Preferential Collection of Claims Against Company
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53
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Section 6.14 Appointment of Authenticating Agent
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53
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Article 7 HOLDERS LISTS AND REPORTS BY TRUSTEE AND COMPANY
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55
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Section 7.1 Company to Furnish Trustee Names and Addresses of Holders
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55
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Section 7.2 Preservation of Information; Communications to Holders
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55
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Section 7.3 Reports by Trustee
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55
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Section 7.4 Reports by Company
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56
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Article 8 CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
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56
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Section 8.1 Company May Consolidate, etc., Only on Certain Terms
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56
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Section 8.2 Successor Substituted
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56
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Article 9 SUPPLEMENTAL INDENTURES
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57
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Section 9.1 Supplemental Indentures Without Consent of Holders
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57
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Section 9.2 Supplemental Indentures with Consent of Holders
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58
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Section 9.3 Execution of Supplemental Indentures
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59
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Section 9.4 Effect of Supplemental Indentures
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59
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Section 9.5 Conformity with Trust Indenture Act
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60
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Section 9.6 Reference in Securities to Supplemental Indentures
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60
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ii
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Article 10 COVENANTS
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60
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Section 10.1 Payment of Principal, Premium and Interest
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60
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Section 10.2 Maintenance of Office or Agency
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60
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Section 10.3 Money for Securities Payments to be Held in Trust
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61
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Section 10.4 Statement by Officers as to Default
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62
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Section 10.5 Existence
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62
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Section 10.6 All Securities to be Equally and Ratably Secured
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62
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Section 10.7 Maintenance of Properties
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62
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Section 10.8 Payment of Taxes and Other Claims
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63
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Section 10.9 Waiver of Certain Covenants
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63
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Section 10.10 Additional Amounts
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63
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Article 11 REDEMPTION OF SECURITIES
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64
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Section 11.1 Applicability of Article
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64
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Section 11.2 Election to Redeem; Notice to Trustee
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64
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Section 11.3 Selection by Trustee of Securities to Be Redeemed
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64
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Section 11.4 Notice of Redemption
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65
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Section 11.5 Deposit of Redemption Price
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66
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Section 11.6 Securities Payable on Redemption Date
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66
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Section 11.7 Securities Redeemed in Part
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67
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Article 12 SINKING FUNDS
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67
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Section 12.1 Applicability of Article
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67
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Section 12.2 Satisfaction of Sinking Fund Payments with Securities
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67
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Section 12.3 Redemption of Securities for Sinking Fund
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68
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Article 13 DEFEASANCE AND COVENANT DEFEASANCE
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68
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Section 13.1 Companys Option to Effect Defeasance or Covenant Defeasance
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68
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Section 13.2 Defeasance and Discharge
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68
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Section 13.3 Covenant Defeasance
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69
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Section 13.4 Conditions to Defeasance or Covenant Defeasance
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69
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Section 13.5 Deposited Money, U. S. Government Obligations and Foreign Government
Obligations to be Held in Trust; Miscellaneous Provisions
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71
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Section 13.6 Reinstatement
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72
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iii
INDENTURE
INDENTURE, dated as of ___, between CAPSTEAD MORTGAGE CORPORATION, a Maryland
corporation (the
Company
), having its principal office at ___, and
___, as trustee, (the
Trustee
), the office of the Trustee at which at the
date hereof its corporate trust business is principally administered being ___.
RECITALS
The Company has duly authorized the execution and delivery of this Indenture to provide for
the issuance from time to time of its debentures, notes or other evidences of indebtedness (the
Securities
), to be issued in one or more series as herein provided.
This Indenture is subject to the provisions of the Trust Indenture Act and the rules and
regulations of the Commission promulgated thereunder that are required to be part of this Indenture
and, to the extent applicable, shall be governed by such provisions.
All things necessary to make this Indenture a valid agreement of the Company, in accordance
with its terms, have been done.
NOW, THEREFORE, for and in consideration of the premises and the purchase of the Securities by
the Holders thereof, each party agrees for the benefit of the other party and for the equal and
ratable benefit of the Holders of the Securities, or of series thereof, issued under this
Indenture, as follows:
ARTICLE 1
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 1.1
Definitions
.
For all purposes of this Indenture, except as otherwise expressly provided or unless the
context otherwise requires:
(1) the terms defined in this Article have the meanings assigned to them in this Article
and include the plural as well as the singular;
(2) all accounting terms not otherwise defined herein have the meanings assigned to them
in accordance with generally accepted accounting principles in the United States of America,
and, except as otherwise herein expressly provided, the term generally accepted accounting
principles with respect to any computation required or permitted hereunder shall mean such
accounting principles in the United States of America as are generally accepted as of the
time when and for the period as to which such accounting principles are to be applied;
(3) or is not exclusive;
(4) any reference to an
Article
or a
Section
refers to an Article or
a Section, as the case may be, of this Indenture;
(5) the words
herein
,
hereof
and
hereunder
and other words
of similar import refer to this Indenture as a whole and not to any particular Article,
Section or other subdivision; and
(6) certain terms, used principally in
Article 6
, are defined in
Section
1.2
.
Act
, when used with respect to any Holder, has the meaning specified in
Section
1.5
.
Additional Amounts
means any additional amounts that are required by the express
terms of a Security or by or pursuant to a Board Resolution, under circumstances specified therein
or pursuant thereto, to be paid by the Company with respect to certain taxes, assessments or other
governmental charges imposed on certain Holders and that are owing to such Holders.
Affiliate
of any specified Person means any other Person directly or indirectly
controlling or controlled by or under direct or indirect common control with such specified Person.
For purposes of this definition, control when used with respect to any specified Person means
the power to direct the management and policies of such Person, directly or indirectly, whether
through the ownership of voting securities, by contract or otherwise; and the terms controlling
and controlled have meanings correlative to the foregoing.
Authenticating Agent
means any Person, which may include the Company, authorized by
the Trustee pursuant to
Section 6.14
to act on behalf of the Trustee to authenticate
Securities of one or more series.
Authorized Newspaper
means a newspaper, in the English language or in an official
language of the country of publication, customarily published on each Business Day, whether or not
published on Saturdays, Sundays or holidays, and of general circulation in each place in connection
with which the term is used or in the financial community of each such place. Where successive
publications are required to be made in Authorized Newspapers, the successive publications may be
made in the same or in different newspapers in the same city meeting the foregoing requirements and
in each case on any Business Day.
Bankruptcy Law
means Title 11, U.S. Code, or any similar federal or state law for
the relief of debtors.
Board
or
Board of Directors
means either the board of directors of the
Company or any duly authorized committee thereof.
Board Resolution
means a copy of a resolution certified by the Secretary or an
Assistant Secretary of the Company to have been duly adopted by the Board of Directors and to be in
full force and effect on the date of such certification, and delivered to the Trustee.
Business Day
, when used with respect to any Place of Payment, means each Monday,
Tuesday, Wednesday, Thursday and Friday which is not a day on which banking institutions in
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that
Place of Payment, or the city in which the Corporate Trust Office is located, are authorized or
obligated by law or executive order to close.
Commission
means the Securities and Exchange Commission, from time to time
constituted, created under the Exchange Act, or, if at any time after the execution of this
instrument such Commission is not existing and performing the duties now assigned to it under the
Trust Indenture Act, then the body performing such duties at such time.
Company
means the Person named as the Company in the first paragraph of this
instrument until a successor Person shall have become such pursuant to the applicable provisions of
this Indenture, and thereafter Company shall mean such successor Person.
Company Request
or
Company Order
means, respectively, a written request or
order signed in the name of the Company by its Chairman of the Board, its Chief Executive Officer,
its President or a Vice President, and by its principal financial officer, its Controller, an
Assistant Controller, its Treasurer, an Assistant Treasurer, its Secretary or an Assistant
Secretary, and delivered to the Trustee.
Corporate Trust Office
means the corporate trust office of the Trustee at
[___], Attention: Corporate Trust Department, or such other office, designated by
the Trustee by written notice to the Company, at which at any particular time its corporate trust
business shall be administered.
Covenant Defeasance
has the meaning specified in
Section 13.3
.
Custodian
means any receiver, trustee, assignee, liquidator or similar official
under any Bankruptcy Law.
default
means, with respect to the Securities of any series, any event, act or
condition that is, or after notice or the passage of time or both would be, an Event of Default
with respect to Securities of such series.
Defaulted Interest
has the meaning specified in
Section 3.7
.
Defeasance
has the meaning specified in
Section 13.2
.
Depositary
means, with respect to Securities of any series issuable in whole or in
part in the form of one or more Global Securities, The Depository Trust Company, New York, New
York, another clearing agency, or any successor, registered under the Exchange Act that is
designated to act as Depositary for such Securities as contemplated by
Section 3.1
.
Dollar
or
$
means a dollar or other equivalent unit in such coin or
currency of the United States as at the time shall be legal tender for the payment of public and
private debts.
euro
or
euros
means the currency adopted by those nations participating in
the third stage of the economic and monetary union provisions of the Treaty on European Union,
signed at Maastricht on February 7, 1992.
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European Economic Area
means the member nations of the European Economic Area
pursuant to the Oporto Agreement on the European Economic Area dated May 2, 1992, as amended.
European Union
means the member nations of the European Union established by the
Treaty of European Union, signed at Maastricht on February 2, 1992, which amended the Treaty of
Rome establishing the European Community.
Event of Default
has the meaning specified in
Section 5.1
.
Exchange Act
means the Securities Exchange Act of 1934 and any statute successor
thereto, in each case as amended from time to time.
Exchange Rate
has the meaning specified in
Section 3.2
.
Expiration Date
has the meaning specified in
Section 1.5
.
Foreign Government Obligation
means with respect to Securities of any series which
are not denominated in the currency of the United States of America (x) any security which is (i) a
direct obligation of the government which issued or caused to be issued the currency in which such
security is denominated and for the payment of which obligations its full faith and credit is
pledged or, with respect to Securities of any series which are denominated in euros, a direct
obligation of any member nation of the European Union for the payment of which obligation the full
faith and credit of the respective nation is pledged so long as such nation has a credit rating at
least equal to that of the highest rated member nation of the European Economic Area, or (ii) an
obligation of a Person controlled or supervised by and acting as an agency or instrumentality of a
government specified in
clause (i)
above the payment of which is unconditionally guaranteed
as a full faith and credit obligation by such government, which, in either case (i) or (ii), is not
callable or redeemable at the option of the issuer thereof, and (y) any depositary receipt issued
by a bank (as defined in Section 3(a)(2) of the Securities Act) as custodian with respect to any
Foreign Government Obligation which is specified in
clause (x)
above and held by such bank
for the account of the holder of such depositary receipt, or with respect to any specific payment
of principal of or interest on any Foreign Government Obligation which is so specified and held,
provided that (except as required by law) such custodian is not authorized to make any deduction
from the amount payable to the holder of such depositary receipt from any amount received by the
custodian in respect of the Foreign Government Obligation or the specific payment of principal or
interest evidenced by such depositary receipt.
Global Security
means a Security that evidences all or part of the Securities of any
series and bears the legend set forth in
Section 2.4
(or such legend as may be specified as
contemplated by
Section 3.1
for such Securities).
Holder
means a Person in whose name a Security is registered in the Security
Register.
Indenture
means this instrument as originally executed and as it may from time to
time be supplemented or amended by one or more indentures supplemental hereto entered into pursuant
to the applicable provisions hereof, including, for all purposes of this instrument and any such
supplemental indenture, the provisions of the Trust Indenture Act that are deemed to be
4
a part of
and govern this instrument and any such supplemental indenture, respectively. The term Indenture
shall also include the terms of particular series of Securities established as contemplated by
Section 3.1
;
provided
,
however
, that if at any time more than one Person is
acting as Trustee under this Indenture due to the appointment of one or more separate Trustees for
any one or more separate series of Securities, Indenture shall mean, with respect to such series
of Securities for which any such Person is Trustee, this instrument as originally executed or as it
may from time to time be supplemented or amended by one or more indentures supplemental hereto
entered into pursuant to the applicable provisions hereof and shall include the terms of particular
series of Securities for which such Person is Trustee established as contemplated by
Section
3.1
, exclusive, however, of any provisions or terms which relate solely to other series of
Securities for which such Person is not Trustee, regardless of when such terms or provisions were
adopted, and exclusive of any provisions or terms adopted by means of one or more indentures
supplemental hereto executed and delivered after such Person had become such Trustee, but to which
such person, as such Trustee, was not a party; provided, further that in the event that this
Indenture is supplemented or amended by one or more indentures supplemental hereto which are only
applicable to certain series of Securities, the term Indenture for a particular series of
Securities shall exclude provisions or terms which relate solely to other series of Securities.
Interest
, when used with respect to an Original Issue Discount Security, which by
its terms bears interest only after Maturity, means interest payable after Maturity.
Interest Payment Date
, when used with respect to any Security, means the Stated
Maturity of an installment of interest on such Security.
Investment Company Act
means the Investment Company Act of 1940 and any statute
successor thereto, in each case as amended from time to time.
Judgment Currency
has the meaning specified in
Section 5.6
.
Maturity
, when used with respect to any Security, means the date on which the
principal of such Security or an installment of principal becomes due and payable as therein or
herein provided, whether at the Stated Maturity or by declaration of acceleration, repurchase at
the option of the Holder, call for redemption or otherwise.
Mortgage
means and includes any mortgage, pledge, lien, security interest,
conditional sale or other title retention agreement or other similar encumbrance.
Notice of Default means a written notice of the kind specified in
Section 5.1(4)
.
Officers Certificate
means a certificate signed by the Chairman of the Board, the
Chief Executive Officer, the President or a Vice President, and by the principal financial officer,
the Treasurer, the Controller, an Assistant Treasurer, an Assistant Controller, the Secretary or an
Assistant Secretary, of the Company, and delivered to the Trustee. One of the officers signing an
Officers Certificate given pursuant to
Section 10.4
shall be the principal executive,
financial or accounting officer of the Company.
5
Opinion of Counsel
means a written opinion of legal counsel, who may be, without
limitation, (a) an employee of the Company, or (b) outside counsel designated by the Company,
rendered, if applicable, in accordance with Section 314(c) of the Trust Indenture Act.
Original Issue Discount Security
means any Security that provides for an amount less
than the principal amount thereof to be due and payable upon a declaration of acceleration of the
Maturity thereof pursuant to
Section 5.2
.
Outstanding
when used with respect to Securities, means, as of the date of
determination, all Securities theretofore authenticated and delivered under this Indenture, except
(1) Securities theretofore canceled by the Trustee or delivered to the Trustee for
cancellation;
(2) Securities for whose payment or redemption money in the necessary amount has been
theretofore deposited with the Trustee or any Paying Agent (other than the Company) in trust
or set aside and segregated in trust by the Company (if the Company shall act as its own
Paying Agent) for the Holders of such Securities; provided that, if such Securities are to be
redeemed, notice of such redemption has been duly given pursuant to this Indenture or
provision therefor satisfactory to the Trustee has been made;
(3) Securities which have been paid pursuant to
Section 3.6
or in exchange for
or in lieu of which other Securities have been authenticated and delivered pursuant to this
Indenture, other than any such Securities in respect of which there shall have been presented
to the Trustee proof satisfactory to it that such Securities are held by a bona fide
purchaser in whose hands such Securities are valid obligations of the Company; provided,
however, that unless otherwise provided with respect to any Securities of any series pursuant
to
Section 3.1
, in determining whether the Holders of the requisite principal amount
of the Outstanding Securities have given, made or taken any request, demand, authorization,
direction, notice, consent, waiver or other action hereunder as of any date, (A) the
principal amount of an Original Issue Discount Security which shall be deemed to be
Outstanding shall be the amount of the principal thereof which would be due and payable as of
such date upon acceleration of the Maturity thereof to such date pursuant to
Section
5.2
, (B) if, as of such date, the principal amount payable at the Stated Maturity of a
Security is not determinable, the principal amount of such Security which shall be deemed to
be Outstanding shall be the amount as specified or determined as contemplated by
Section
3.1
, (C) the principal amount of a Security denominated in one or more non-U.S. dollar
currencies or currency units which shall be deemed to be Outstanding shall be the U.S. dollar
equivalent, determined as of such date in the manner provided as contemplated by
Section
3.1
, of the principal amount of such Security (or, in the case of a Security described in
clause (A)
or
(B)
above, of the amount determined as provided in such
clause), and (D) Securities owned by the Company or any other obligor upon the Securities or
any Subsidiary of the Company or of such other obligor shall be disregarded and deemed not to
be Outstanding, except that, in determining whether the Trustee shall
be protected in relying upon any such request, demand, authorization, direction, notice,
consent, waiver or other action, only Securities which a Responsible Officer of the Trustee
knows to be so owned shall be so disregarded. Securities so owned which have been
6
pledged in
good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of
the Trustee the pledgees right so to act with respect to such Securities and that the
pledgee is not the Company or any other obligor upon the Securities or any Subsidiary of the
Company or of such other obligor.
Paying Agent
means any Person, which may include the Company, authorized by the
Company to pay the principal of or any premium or interest on, or any Additional Amounts with
respect to, any one or more series of Securities on behalf of the Company.
Periodic Offering
means an offering of Securities of a series from time to time the
specific terms of which Securities, including, without limitation, the rate or rates of interest or
formula for determining the rate or rates of interest thereon, if any, the Maturity thereof and the
redemption provisions, if any, with respect thereto, are to be determined by the Company upon the
issuance of such Securities.
Person
means any individual, corporation, limited liability company, partnership,
joint venture, incorporated or unincorporated association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision thereof or other
entity of any kind.
Place of Payment
, when used with respect to the Securities of any series, means the
place or places where the principal of and any premium and interest on, or any Additional Amounts
with respect to, the Securities of that series are payable as specified as contemplated by
Section 3.1
and
10.2
.
Predecessor Security
of any particular Security means every previous Security
evidencing all or a portion of the same debt as that evidenced by such particular Security; and,
for the purposes of this definition, any Security authenticated and delivered under
Section
3.6
in exchange for or in lieu of a mutilated, destroyed, lost or stolen Security shall be
deemed to evidence the same debt as the mutilated, destroyed, lost or stolen Security.
Record Date
means any Regular Record Date or Special Record Date.
Redemption Date
, when used with respect to any Security to be redeemed, means the
date fixed for such redemption by or pursuant to the terms of such Security and this Indenture.
Redemption Price
, when used with respect to any Security to be redeemed, means the
price at which it is to be redeemed pursuant to the terms of such Security and this Indenture.
Regular Record Date
for the interest payable on any Interest Payment Date on the
Securities of any series means any date specified for that purpose as contemplated by
Section
3.1
, or, if not so specified, the first day of the calendar month of the month of such Interest
Payment Date if such Interest Payment Date is the fifteenth day of the calendar month, or the
fifteenth day of the calendar month preceding such Interest Payment Date if such Interest
Payment Date is the first day of a calendar month, whether or not such day shall be a Business
Day.
Required Currency
has the meaning specified in
Section 5.6
.
7
Responsible Officer
means, when used with respect to the Trustee, an officer of the
Trustee in the Corporate Trust Office assigned and duly authorized by the Trustee to administer its
corporate trust matters.
Securities
has the meaning stated in the first recital of this Indenture and more
particularly means any debentures, notes or other evidences of indebtedness of the Company
authenticated and delivered under this Indenture.
Securities Act
means the Securities Act of 1933 and any statute successor thereto,
in each case as amended from time to time.
Security Custodian
means, with respect to Securities of a series issued in global
form, the Trustee for Securities of such series, acting in its capacity as custodian with respect
to the Securities of such series, or any successor entity thereto.
Security Register
and Security Registrar have the respective meanings specified in
Section 3.5
.
Special Record Date
for the payment of any Defaulted Interest means a date fixed by
the Trustee pursuant to
Section 3.7
.
Stated Maturity
, when used with respect to any Security or any installment of
principal thereof or interest thereon, means the date specified in such Security as the fixed date
on which the principal of such Security or such installment of principal or interest is due and
payable.
Subsidiary
means any Person of which the Company at the time owns or controls,
directly or indirectly, more than 50% of the shares of outstanding stock or other equity interests
having general voting power under ordinary circumstances to elect a majority of the board of
directors, managers or trustees, as the case may be, of such Person (irrespective of whether or not
at the time stock of any other class or classes or other equity interests of such corporation shall
have or might have voting power by reason of the happening of any contingency).
Trust Indenture Act
means the Trust Indenture Act of 1939, as amended, as in force
at the date as of which this instrument was executed; provided, however, that in the event the
Trust Indenture Act of 1939 is amended after such date, Trust Indenture Act means, to the extent
required by any such amendment, the Trust Indenture Act of 1939 as so amended.
Trustee
means the Person named as the Trustee in the first paragraph of this
instrument until a successor Trustee shall have become such pursuant to the applicable provisions
of this Indenture, and thereafter Trustee shall mean or include each Person who is then a Trustee
hereunder, and if at any time there is more than one such Person, Trustee as used with respect to
the Securities of any series shall mean the Trustee with respect to Securities of that series.
United States
means the United States of America (including the states thereof and
the District of Columbia) and its possessions, which include Puerto Rico, the U.S. Virgin
Islands, Guam, American Somoa, Wake Island and the Northern Mariana Islands.
8
United States Alien
means any Person who, for United States federal income tax
purposes, is a foreign corporation, a nonresident alien individual, a nonresident alien or foreign
fiduciary of an estate or trust, or a foreign partnership.
U.S. Government Obligation
means (x) any security which is (i) a direct obligation
of the United States of America for the payment of which the full faith and credit of the United
States of America is pledged or (ii) an obligation of a Person controlled or supervised by and
acting as an agency or instrumentality of the United States of America the payment of which is
unconditionally guaranteed as a full faith and credit obligation by the United States of America,
which, in either case (i) or (ii), is not callable or redeemable at the option of the issuer
thereof, and (y) any depositary receipt issued by a bank (as defined in Section 3(a)(2) of the
Securities Act) as custodian with respect to any U.S. Government Obligation which is specified in
clause (x)
above and held by such bank for the account of the holder of such depositary
receipt, or with respect to any specific payment of principal of or interest on any U.S. Government
Obligation which is so specified and held, provided that (except as required by law) such custodian
is not authorized to make any deduction from the amount payable to the holder of such depositary
receipt from any amount received by the custodian in respect of the U.S. Government Obligation or
the specific payment of principal or interest evidenced by such depositary receipt.
Vice President
, when used with respect to the Company or the Trustee, means any vice
president, whether or not designated by a number or a word or words added before or after the title
vice president.
Yield to Maturity
means, when used with respect to any Original Issue Discount
Security, the yield to maturity, if any, set forth on the face thereof.
Section 1.2
Incorporation by Reference of Trust Indenture Act
.
Whenever this Indenture refers to a provision of the Trust Indenture Act, the provision is
incorporated by reference in and made a part of this Indenture. The following Trust Indenture Act
terms used in this Indenture have the following meanings:
indenture securities means the Securities.
indenture security holder means a Holder.
indenture to be qualified means this Indenture.
indenture trustee or institutional trustee means the Trustee.
obligor on the indenture securities means the Company or any other obligor on the
Securities.
All terms used in this Indenture that are defined by the Trust Indenture Act, defined by a
Trust Indenture Act reference to another statue or defined by Commission rule under the Trust
Indenture Act and not otherwise defined herein have the meanings assigned to them therein.
Section 1.3
Compliance Certificates and Opinions
.
9
Except as otherwise expressly provided by this Indenture, upon any application or request by
the Company to the Trustee to take any action under any provision of this Indenture, the Company
shall furnish to the Trustee such certificates and opinions as may be required under the Trust
Indenture Act. Each such certificate or opinion shall be given in the form of an Officers
Certificate, if to be given by an officer of the Company, or an Opinion of Counsel, if to be given
by counsel, and shall comply with the requirements of the Trust Indenture Act and any other
requirements set forth in this Indenture.
Every certificate or opinion with respect to compliance with a condition or covenant provided
for in this Indenture (other than pursuant to
Section 10.4
) shall include,
(1) a statement that each Person signing such certificate or opinion has read such
covenant or condition and the definitions herein relating thereto;
(2) a brief statement as to the nature and scope of the examination or investigation
upon which the statements or opinions contained in such certificate or opinion are based;
(3) a statement that, in the opinion of each such Person, such Person has made such
examination or investigation as is necessary to enable such Person to express an informed
opinion as to whether or not such covenant or condition has been complied with; and
(4) a statement as to whether, in the opinion of each such Person, such condition or
covenant has been complied with.
Section 1.4
Form of Documents Delivered to Trustee
.
In any case where several matters are required to be certified by, or covered by an opinion
of, any specified Person, it is not necessary that all such matters be certified by, or covered by
the opinion of, only one such Person, or that they be so certified or covered by only one document,
but one such Person may certify or give an opinion with respect to some matters and one or more
other such Persons as to other matters, and any such Person may certify or give an opinion as to
such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based, insofar as it relates to
legal matters, upon a certificate or opinion of, or representations by, counsel, unless such
officer knows, or in the exercise of reasonable care should know, that the certificate or opinion
or
representations with respect to the matters upon which his or her certificate or opinion is
based are erroneous. Any such certificate or opinion of counsel may be based, insofar as it
relates to factual matters, upon a certificate or opinion of, or representations by, an officer or
officers of the Company stating that the information with respect to such factual matters is in the
possession of the Company unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such matters are
erroneous.
Any certificate or opinion of an officer of the Company or of counsel may be based, insofar as
it relates to accounting matters, upon a certificate or opinion of or representations by an
accountant or firm of accountants employed or retained by the Company unless such officer
10
or counsel, as the case may be, knows, or in the exercise of reasonable care should know, that the
certificate or opinions or representations as to such accounting matters are erroneous.
Where any Person is required to make, give or execute two or more applications, requests,
consents, certificates, statements, opinions or other instruments under this Indenture, they may,
but need not, be consolidated and form one instrument.
Section 1.5
Acts of Holders; Record Dates
.
Any request, demand, authorization, direction, notice, consent, waiver or other action
provided or permitted by this Indenture to be given, made or taken by Holders of the Outstanding
Securities of all series or one or more series, as the case may be, may be embodied in and
evidenced by one or more instruments of substantially similar tenor signed by such Holders in
person or by agent duly appointed in writing; and, except as herein otherwise expressly provided,
such action shall become effective when such instrument or instruments are delivered to the Trustee
and, where it is hereby expressly required, to the Company. The Trustee shall promptly deliver to
the Company copies of all such instrument or instruments delivered to the Trustee. Such instrument
or instruments (and the action embodied therein and evidenced thereby) are herein sometimes
referred to as the Act of the Holders signing such instrument or instruments. Proof of execution
of any such instrument or of a writing appointing any such agent shall be sufficient for any
purpose of this Indenture and (subject to
Section 6.1
) conclusive in favor of the Trustee
and the Company, if made in the manner provided in this Section.
The fact and date of the execution by any Person of any such instrument or writing may be
proved by the affidavit of a witness of such execution or by a certificate of a notary public or
other officer authorized by law to take acknowledgments of deeds, certifying that the individual
signing such instrument or writing acknowledged to him or her the execution thereof. Where such
execution is by a signer acting in a capacity other than his or her individual capacity, such
certificate or affidavit shall also constitute sufficient proof of his or her authority. The fact
and date of the execution of any such instrument or writing, or the authority of the Person
executing the same, may also be proved in any other manner that the Trustee deems sufficient.
The ownership, date of holding, principal amount and serial numbers of Securities shall be
proved by the Security Register.
Any request, demand, authorization, direction, notice, consent, waiver or other Act of the
Holder of any Security shall bind every future Holder of the same Security and the Holder of every
Security issued upon the registration of transfer thereof or in exchange therefor or in lieu
thereof in respect of anything done, omitted or suffered to be done by the Trustee, the Company in
reliance thereon, whether or not notation of such action is made upon such Security. Any consent
or waiver of the Holder of any Security shall be irrevocable for a period of six months after the
date of execution thereof, but otherwise any such Holder or subsequent Holder may revoke the
request, demand, authorization, direction, notice, consent or other Act as to his Security or
portion of his Security; provided, however, that such revocation shall be effective only if the
Trustee receives the notice of revocation before the date the Act becomes effective.
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The Company may set any day as a record date for the purpose of determining the Holders of
Outstanding Securities of any series entitled to give, make or take any request, demand,
authorization, direction, vote, notice, consent, waiver or other action provided or permitted by
this Indenture to be given, made or taken by Holders of Securities of such series, provided that
the Company may not set a record date for, and the provisions of this paragraph shall not apply
with respect to, the giving or making of any notice, declaration, request or direction referred to
in the next paragraph. If any record date is set pursuant to this paragraph, the Holders of
Outstanding Securities of the relevant series on such record date, and no other Holders, shall be
entitled to take the relevant action, whether or not such Holders remain Holders after such record
date; provided that no such action shall be effective hereunder unless taken on or prior to the
applicable Expiration Date by Holders of the requisite principal amount of Outstanding Securities
of such series on such record date. Nothing in this paragraph shall be construed to prevent the
Company from setting a new record date for any action for which a record date has previously been
set pursuant to this paragraph (whereupon the record date previously set shall automatically and
with no action by any Person be canceled and of no effect), and nothing in this paragraph shall be
construed to render ineffective any action taken by Holders of the requisite principal amount of
Outstanding Securities of the relevant series on the date such action is taken. Promptly after any
record date is set pursuant to this paragraph, the Company, at its own expense, shall cause notice
of such record date, the proposed action by Holders and the applicable Expiration Date to be given
to the Trustee in writing and to each Holder of Securities of the relevant series in the manner set
forth in
Section 1.7
.
The Trustee may set any day as a record date for the purpose of determining the Holders of
Outstanding Securities of any series entitled to join in the giving or making of (i) any Notice of
Default, (ii) any declaration of acceleration referred to in
Section 5.2
, (iii) any request
to institute proceedings referred to in
Section 5.7(2)
or (iv) any direction referred to in
Section 5.12
, in each case with respect to Securities of such series. If any record date
is set pursuant to this paragraph, the Holders of Outstanding Securities of such series on such
record date, and no other Holders, shall be entitled to join in such notice, declaration, request
or direction, whether or not such Holders remain Holders after such record date; provided that no
such action shall be effective hereunder unless taken on or prior to the applicable Expiration Date
by Holders of the requisite principal amount of Outstanding Securities of such series on such
record date. Nothing in this paragraph shall be construed to prevent the Trustee from setting a
new record date for any action for which a record date has previously been set pursuant to this
paragraph (whereupon the record date previously set shall automatically and with no action by any
Person be canceled and of no effect), and nothing in this paragraph shall be construed to render
ineffective any action
taken by Holders of the requisite principal amount of Outstanding Securities of the relevant
series on the date such action is taken. Promptly after any record date is set pursuant to this
paragraph, the Trustee, at the Companys expense, shall cause notice of such record date, the
proposed action by Holders and the applicable Expiration Date to be given to the Company in writing
and to each Holder of Securities of the relevant series in the manner set forth in
Section
1.7
.
With respect to any record date set pursuant to this Section, the party hereto which sets such
record dates may designate any day as the Expiration Date and from time to time may change the
Expiration Date to any earlier or later day; provided that no such change shall be effective unless
notice of the proposed new Expiration Date is given to the other party hereto in
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writing, and to
each Holder of Securities of the relevant series in the manner set forth in
Section 1.7
, on
or prior to the existing Expiration Date. If an Expiration Date is not designated with respect to
any record date set pursuant to this
Section 1.5
, the party hereto which set such record
date shall be deemed to have initially designated the 180th day after such record date as the
Expiration Date with respect thereto, subject to its right to change the Expiration Date as
provided in this paragraph. Notwithstanding the foregoing, no Expiration Date shall be later than
the 180th day after the applicable record date.
Without limiting the foregoing, a Holder entitled hereunder to take any action hereunder with
regard to any particular Security may do so with regard to all or any part of the principal amount
of such Security or by one or more duly appointed agents each of which may do so pursuant to such
appointment with regard to all or any part of such principal amount.
Section 1.6
Notices, etc., to Trustee and Company
.
Any request, demand, authorization, direction, notice, consent, waiver or Act of Holders or
other document provided or permitted by this Indenture to be made upon, given or furnished to, or
filed with,
(1) the Trustee by any Holder or by the Company shall be sufficient for every purpose
hereunder if made, given, furnished or filed in writing (or by facsimile transmissions,
provided that oral confirmation of receipt shall have been received) to or with the Trustee
at its Corporate Trust Office, Attention: Corporate Trust Department, or
(2) the Company by the Trustee or by any Holder shall be sufficient for every purpose
hereunder (unless otherwise herein expressly provided) if in writing and furnished by
certified mail, return receipt requested, personally delivered or furnished via overnight
courier to the Company addressed to it at the address of its principal office specified in
the first paragraph of this instrument or at any other address previously furnished in
writing to the Trustee by the Company, Attention: Chief Financial Officer.
Section 1.7
Notice to Holders; Waiver
.
Where this Indenture provides for notice to Holders of any event, such notice shall be
sufficiently given (unless otherwise herein expressly provided) if in writing and mailed,
first-class postage prepaid, or delivered by hand or overnight courier to each Holder affected by
such event, at its address as it appears in the Security Register, not later than the latest date
(if any), and not earlier than the earliest date (if any), prescribed for the giving of such
notice. Neither the failure to mail or deliver by hand or overnight courier any notice, nor any
defect in any notice so mailed or delivered by hand or overnight courier, to any particular Holder
shall affect the sufficiency of such notice with respect to other Holders. Where this Indenture
provides for notice in any manner, such notice may be waived in writing by the Person entitled to
receive such notice, either before or after the event, and such waiver shall be the equivalent of
such notice. Waivers of notice by Holders shall be filed with the Trustee, but such filing shall
not be a condition precedent to the validity of any action taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service or by reason of any other cause it
shall be impracticable to give notice to Holders of Securities by mail, then such
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notification as
shall be made with the approval of the Trustee shall constitute a sufficient notification for every
purpose hereunder. In any case in which notice to Holders of Securities is given by mail, neither
the failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder
of a Security, shall affect the sufficiency of such notice with respect to other Holders of
Securities.
Section 1.8
Conflict with Trust Indenture Act
.
If any provision hereof limits, qualifies or conflicts with a provision of the Trust Indenture
Act or another provision hereof required to be included in this Indenture by any of the provisions
of the Trust Indenture Act, the latter provision shall control. If any provision of this Indenture
modifies or excludes any provision of the Trust Indenture Act, which may be so modified or
excluded, the latter provision shall be deemed to apply to this Indenture as so modified or to be
excluded, as the case may be.
Section 1.9
Effect of Headings and Table of Contents
.
The Article and Section headings herein and the Table of Contents are for convenience only and
shall not affect the construction hereof.
Section 1.10
Successors and Assigns
.
All covenants and agreements in this Indenture by the Company shall bind its successors and
assigns, whether or not so expressed. All agreements of the Trustee in this Indenture shall bind
its successor.
Section 1.11
Separability Clause
.
In case any provision in this Indenture or in the Securities shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
Section 1.12
Benefits of Indenture
.
Nothing in this Indenture or in the Securities, express or implied, shall give to any Person,
other than the parties hereto and their successors hereunder, any Authenticating Agent, Paying
Agent or Security Registrar, and the Holders, any benefit or any legal or equitable right, remedy
or claim under this Indenture.
Section 1.13
Governing Law
.
THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK, BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF
LAW TO THE EXTENT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
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Section 1.14
Legal Holidays
.
Unless otherwise provided with respect to any Security or Securities pursuant to
Section
3.1
, in any case where any Interest Payment Date, Redemption Date, sinking fund payment date,
or Stated Maturity or Maturity or other payment date of any Security or the last date on which a
Holder has the right to convert a Security at a particular conversion price shall not be a Business
Day at any Place of Payment, then (notwithstanding any other provision of this Indenture or of the
Securities (other than a provision of any Security which specifically states that such provision
shall apply in lieu of this Section)) payment of interest or principal (and premium, if any) or, if
applicable to a particular series of Securities, conversion need not be made at such Place of
Payment on such date, but may be made on the next succeeding Business Day at such Place of Payment
with the same force and effect as if made on the Interest Payment Date or Redemption Date, at the
Stated Maturity or on such last day for conversion, as the case may be.
Section 1.15
Indenture and Securities Solely Corporate Obligations
.
No recourse for the payment of the principal of or premium, if any, or interest on any
Security, or for any claim based thereon or otherwise in respect thereof, and no recourse under or
upon any obligation, covenant or agreement of the Company in this Indenture or in any
supplemental indenture or in any Security, or because of the creation of any indebtedness
represented thereby, shall be had, directly or indirectly, against any incorporator, subscriber to
the shares of beneficial interest (or capital stock or membership interests (as applicable)),
shareholder, stockholder, member, employee, agent, manager, officer, trustee or director, as such,
past, present or future, of the Company or the Trustee or of any predecessor or successor
corporation, either directly or through the Company or the Trustee or any predecessor or successor
corporation, whether by virtue of any constitution, statute or rule of law, or by the enforcement
of any assessment or penalty or otherwise; it being expressly understood that this Indenture and
the obligations issued hereunder are solely corporate obligations and that no such personal
liability whatever shall attach to, or is or shall be incurred by, any incorporator, subscriber to
the shares of beneficial interest (or capital stock or membership interests (as applicable)),
shareholder, stockholder, member, employee, agent, manager, officer, trustee or director, as such,
of the Company or the Trustee or of any predecessor or successor corporation, because of the
creation of the indebtedness hereby authorized, or under or by reason of the obligations, covenants
or agreements contained in this Indenture or in any of the Securities or implied therefrom; and
that any and all such personal liability of every name and nature, either at common law or in
equity or by constitution or statute, of, and any and all such rights and claims against, every
such incorporator, subscriber to the shares of beneficial interest (or capital stock or membership
interests (as applicable)), shareholder, stockholder, member, employee, agent, manager, officer,
trustee or director, as such, because of the creation of the indebtedness hereby authorized, or
under or by reason of the obligations, covenants or agreements contained in this Indenture, any
supplemental indenture hereto, any certificate or other writing delivered in connection herewith,
or in any of the Securities or implied therefrom, are hereby expressly waived and released as a
condition of, and as a consideration for, the execution of this Indenture and the issuance of such
Securities. By accepting a Security, each Holder agrees to the provisions of this
Section
1.15
and waives and releases all such liability. Such waiver and release shall be part of the
consideration for the issuance of the Securities.
15
Section 1.16
Indenture May be Executed in Counterparts
.
This instrument may be executed in any number of counterparts, each of which shall be an
original, but such counterparts shall together constitute but one and the same instrument.
ARTICLE 2
SECURITY FORMS
Section 2.1
Forms Generally
.
The Securities of each series shall be in such form or forms as shall be established by or
pursuant to one or more Board Resolutions and set forth in such Board Resolutions, or, to the
extent established pursuant to, rather than set forth in, such Board Resolutions, an Officers
Certificate detailing such establishment, or in one or more indentures supplemental hereto, in
each case with such appropriate insertions, omissions, substitutions and other variations as are
required or permitted by this Indenture, and may have such letters, numbers or other marks of
identification and such legends or endorsements placed thereon as may be required to comply with
any applicable law or with any rules or regulations pursuant thereto, or any rules of any
securities exchange or Depositary therefor or as may, consistently herewith, be determined by the
officers executing such Securities, as evidenced by their execution thereof. If the form of
Securities of any series is established by action taken pursuant to a Board Resolution, or, to the
extent established pursuant to, rather than set forth in, such Board Resolutions, an Officers
Certificate detailing such establishment, a copy of an appropriate record of such action shall be
certified by the Secretary or an Assistant Secretary of the Company and delivered to the Trustee at
or prior to the delivery of the Company Order contemplated by
Section 3.3
for the
authentication and delivery of such Securities. Any such Board Resolution, Officers Certificate
or record of such action shall have attached thereto a true and correct copy of the form of
Security referred to therein approved by or pursuant to such Board Resolution or Officers
Certificate.
The definitive Securities shall be printed, lithographed or engraved on steel engraved borders
or may be produced in any other manner, all as determined by the officers executing such
Securities, as evidenced by their execution of such Securities.
Section 2.2
Form of Trustees Certificate of Authentication
.
The Trustees certificates of authentication shall be in substantially the following form:
This is one of the Securities of the series designated herein referred to in the
within-mentioned Indenture.
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[Trustee], as Trustee
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By:
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Authorized Officer
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Section 2.3
Global Securities
.
If the Company shall establish pursuant to
Section 3.1
that the Securities of a
particular series are to be issued in whole or in part in the form of one or more Global
Securities, then the Company shall execute and the Trustee shall, in accordance with
Section
3.3
and the Company Order delivered to the Trustee thereunder, authenticate and deliver such
Global Security or Securities, which (i) shall represent, and shall be denominated in an amount
equal to the aggregate principal amount of the Outstanding Securities of such series to be
represented by such Global Security or Securities, (ii) may provide that the aggregate amount of
Outstanding
Securities represented thereby may from time to time be increased or reduced to reflect
exchanges, (iii) shall be registered in the name of the Depositary for such Global Security or
Securities or its nominee, (iv) shall be delivered by the Trustee to the Depositary or pursuant to
the Depositarys instruction and (v) shall bear a legend in accordance with the requirements of the
Depositary.
Notwithstanding any other provision of this Section or of
Section 3.5
, except as
contemplated by the provisions of this
Section 2.3
below, unless the terms of a Global
Security expressly permit such Global Security to be exchanged in whole or in part for individual
Securities, a Global Security may be transferred, in whole but not in part and in the manner
provided in
Section 3.5
, only to a nominee of the Depositary for such Global Security, or
to the Depositary, or to a successor Depositary for such Global Security selected or approved by
the Company, or to a nominee of such successor Depositary.
If at any time the Depositary for a Global Security notifies the Company that it is unwilling
or unable to continue as the Depositary for such Global Security or if at any time the Depositary
for the Securities for such series shall no longer be eligible or in good standing under the
Exchange Act, or other applicable statute or regulation, the Company shall appoint a successor
Depositary with respect to such Global Security. If a successor Depositary for such Global
Security is not appointed by the Company within 90 days after the Company receives such notice or
becomes aware of such ineligibility, the Company will execute, and the Trustee, upon receipt of a
Company Order for the authentication and delivery of Securities of such series in the form of
definitive certificates in exchange for such Global Security, will authenticate and deliver
Securities of such series in the form of definitive certificates of like tenor and terms in an
aggregate principal amount equal to the principal amount of the Global Security in exchange for
such Global Security. Such Securities will be issued to and registered in the name of such Person
or Persons as are specified by the Depositary.
The Company may at any time and in its sole discretion determine that the Securities of any
series issued or issuable in the form of one or more Global Securities shall no longer be
17
represented by such Global Security or Securities. In any such event the Company will execute, and
the Trustee, upon receipt of a Company Request for the authentication and delivery of Securities in
the form of definitive certificates in exchange in whole or in part for such Global Security, will
authenticate and deliver without service charge to each Person specified by the Depositary
Securities in the form of definitive certificates of like tenor and terms in an aggregate principal
amount equal to the principal amount of such Global Security representing such series, or the
aggregate principal amount of such Global Securities representing such series, in exchange for such
Global Security or Securities.
If specified by the Company pursuant to
Section 3.1
with respect to Securities issued
or issuable in the form of a Global Security, the Depositary for such Global Security may surrender
such Global Security in exchange in whole or in part for Securities in the form of definitive
certificates of like tenor and terms on such terms as are acceptable to the Company and such
Depositary. Thereupon the Company shall execute, and the Trustee shall authenticate and deliver,
without service charge, (A) to each Person specified by such Depositary a new Security or
Securities of the same series of like tenor and terms and any authorized denomination as requested
by such Person in aggregate principal amount equal to and in exchange for such
Persons beneficial interest in the Global Security and (B) to such Depositary a new Global
Security of like tenor and terms and in an authorized denomination equal to the difference, if any,
between the principal amount of the surrendered Global Security and the aggregate principal amount
of Securities delivered to Holders thereof.
In any exchange provided for in any of the preceding three paragraphs, the Company shall
execute and the Trustee shall authenticate and deliver Securities in the form of definitive
certificates in authorized denominations. Upon the exchange of the entire principal amount of a
Global Security for Securities in the form of definitive certificates, such Global Security shall
be canceled by the Trustee. Except as provided in the immediately preceding subparagraph,
Securities issued in exchange for a Global Security pursuant to this
Section 2.3
shall be
registered in such names and in such authorized denominations as the Depositary for such Global
Security, acting pursuant to instructions from its direct or indirect participants or otherwise,
shall instruct the Trustee. Provided that the Company and the Trustee have so agreed, the Trustee
shall deliver such Securities to the Persons in whose names the Securities are so to be registered.
Any endorsement of a Global Security to reflect the principal amount thereof, or any increase
or decrease in such principal amount, or changes in the rights of Holders of Outstanding Securities
represented thereby shall be made in such manner and by such Person or Persons as shall be
specified in or pursuant to any applicable letter of representations or other arrangement entered
into with, or procedures of, the Depositary with respect to such Global Security or in the Company
Order delivered or to be delivered pursuant to
Section 3.3
or
Section 3.4
with
respect thereto. Subject to the provisions of
Section 3.3
and, if applicable,
Section
3.4
, the Trustee shall deliver and redeliver any such Global Security in the manner and upon
instructions given by the Person or Persons specified in or pursuant to any applicable letter of
representations or other arrangement entered into with, or procedures of, the Depositary with
respect to such Global Security or in any applicable Company Order. If a Company Order pursuant to
Section 3.3
or
Section 3.4
is so delivered, any instructions by the Company with
respect to such Global Security contained therein shall be in writing but need not be accompanied
by or contained in an Officers Certificate and need not be accompanied by an Opinion of Counsel.
18
The Depositary or, if there be one, its nominee, shall be the Holder of a Global Security for
all purposes under this Indenture; and beneficial owners with respect to such Global Security shall
hold their interests pursuant to applicable procedures of such Depositary. The Company, the
Trustee, the Paying Agent and the Security Registrar shall be entitled to deal with such Depositary
for all purposes of this Indenture relating to such Global Security (including the payment of
principal, premium, if any, and interest and any Additional Amounts with respect to such Global
Security and the giving of instructions or directions by or to the beneficial owners of such Global
Security as the sole Holder of such Global Security and shall have no obligations to the beneficial
owners thereof (including any direct or indirect participants in such Depositary). None of the
Company, the Trustee, any Paying Agent or the Security Registrar shall have any responsibility or
liability for any aspect of the records relating to or payments made on account of beneficial
ownership interests of a Global Security in or pursuant to any applicable letter of representations
or other arrangement entered into with, or procedures of, the Depositary with respect to such
Global Security or for maintaining, supervising or reviewing any records relating to such
beneficial ownership interests.
Section 2.4
Form of Legend for Global Securities
.
Unless otherwise specified as contemplated by
Section 3.1
for the Securities evidenced
thereby, every Global Security authenticated and delivered hereunder shall bear a legend in
substantially the following form:
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO
AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. THIS SECURITY MAY NOT BE
EXCHANGED IN WHOLE OR IN PART FOR A SECURITY REGISTERED, AND NO TRANSFER OF THIS SECURITY IN WHOLE
OR IN PART MAY BE REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE
THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
Section 2.5
Form of Face of Security
.
[Insert any legend required by the Internal Revenue Code and the regulations thereunder.]
CAPSTEAD MORTGAGE CORPORATION
CAPSTEAD MORTGAGE CORPORATION, a corporation duly organized and existing under the laws of
Maryland (herein called the
Company
, which term includes any successor Person under the
Indenture hereinafter referred to), for value received, hereby promises to pay to
___, or registered assigns, the principal sum of ___Dollars on
___[if the Security is to bear interest prior to Maturity, insert , and to pay
interest thereon from ___or from the most recent Interest Payment Date to
which interest has been paid or duly provided for, semi-annually on ___and
___in each year, commencing ___at the rate of ___% per annum,
until the principal hereof is paid or made available for payment [if applicable, insert
19
, and
at the rate of ___% per annum on any overdue principal and premium and on any overdue installment
of interest]. The interest so payable, and punctually paid or duly provided for, on any Interest
Payment Date will, as provided in such Indenture, be paid to the Person in whose name this Security
(or one or more Predecessor Securities) is registered at the close of business on the Regular
Record Date for such interest, which shall be the or (whether
or not a Business Day), as the case may be, next preceding such Interest Payment Date. Any such
interest not so punctually paid or duly provided for will forthwith cease to be payable to the
Holder on such Regular Record Date and may either be paid to the Person in whose name this Security
(or one or more Predecessor Securities) is registered at the close of business on a Special Record
Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be
given to Holders of Securities of this series not less than 10 days prior to such Special Record
Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities
exchange on which the Securities of this series may be listed, and upon such notice as may be
required by such exchange, all as more fully provided in said Indenture].
[If the Security is not to bear interest prior to Maturity, insert The principal of this
Security shall not bear interest except in the case of a default in payment of principal upon
acceleration, upon redemption or at Stated Maturity and in such case the overdue principal of this
Security shall bear interest at the rate of ___% per annum, which shall accrue from the date of
such default in payment to the date payment of such principal has been made or duly provided for.
Interest on any overdue principal shall be payable on demand. Any such interest on any overdue
principal that is not so paid on demand shall bear interest at the rate of ___% per annum, which
shall accrue from the date of such demand for payment to the date payment of such interest has been
made or duly provided for, and such interest shall also be payable on demand.]
Payment of the principal of (and premium, if any) and [if applicable, insert any such]
interest on this Security will be made at the office or agency of the Company maintained for that
purpose in ___, in such coin or currency of the United States of America as at
the time of payment is legal tender for payment of public and private debts [if applicable, insert
; provided , however , that at the option of the Company payment of interest may be made by check
mailed to the address of the Person entitled thereto as such address shall appear in the Security
Register].
Reference is hereby made to the further provisions of this Security set forth on the reverse
hereof, which further provisions shall for all purposes have the same effect as if set forth at
this place.
Unless the certificate of authentication hereon has been executed by the Trustee referred to
on the reverse hereof by manual signature, this Security shall not be entitled to any benefit under
the Indenture or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed.
Dated:
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CAPSTEAD MORTGAGE CORPORATION
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By:
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Name:
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Title:
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Attest:
Section 2.6
Form of Reverse of Security
.
This Security is one of a duly authorized issue of securities of the Company (herein called
the
Securities
), issued and to be issued in one or more series under an Indenture, dated
as of ___, 20___(herein called the
Indenture
), between the Company and
___, as Trustee (herein called the
Trustee
, which term includes any
successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights, limitations of rights, duties
and immunities thereunder of the Company, the Trustee and the Holders of the Securities and of the
terms upon which the Securities are, and are to be, authenticated and delivered. This Security is
one of the series designated on the face hereof [ if applicable insert , limited in aggregate
principal amount to $].
[If applicable insert The Securities of this series are subject to redemption upon not less
than 30 days notice by mail, [if applicable, insert (1) on ___in any year commencing
with the year ___and ending with the year ___through operation of the sinking
fund for this series at a Redemption Price equal to 100% of the principal amount, and (2)] at any
time [if applicable insert on or after ___, 20___], as a whole or in part, at the election
of the Company, at the following Redemption Prices (expressed as percentages of the principal
amount): If redeemed [if applicable insert on or before ___, ___%, and if redeemed]
during the 12-month period beginning ___of the years indicated,
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Redemption
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and thereafter at a Redemption Price equal to ___% of the principal amount, together
in the case of any such redemption [ if applicable, insert (whether through operation of the
sinking fund or otherwise)] with accrued interest to the Redemption Date, but interest installments
whose Stated Maturity is on or prior to such Redemption Date will be payable to the Holders of such
Securities, or one or more Predecessor Securities, of record at the close of
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business on the
relevant Record Dates referred to on the face hereof, all as provided in the Indenture.]
[If applicable, insert The Securities of this series are subject to redemption upon not less
than 30 days notice by mail, (1) on ___in any year commencing with the year
___and ending with the year ___through operation of the sinking fund for this
series at the Redemption Prices for redemption through operation of the sinking fund (expressed as
percentages of the principal amount) set forth in the table below, and (2) at any time [if
applicable, insert on or after ___], as a whole or in part, at the election of the
Company, at the Redemption Prices for redemption otherwise than through operation of the
sinking fund (expressed as percentages of the principal amount) set forth in the table below:
If redeemed during the 12-month period beginning ___of the years indicated,
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and thereafter at a Redemption Price equal to ___% of the principal amount, together
in the case of any such redemption (whether through operation of the sinking fund or otherwise)
with accrued interest to the Redemption Date, but interest installments whose Stated Maturity is on
or prior to such Redemption Date will be payable to the Holders of such Securities, or one or more
Predecessor Securities, of record at the close of
business on the relevant Record Dates referred to
on the face hereof, all as provided in the Indenture.]
[If applicable, insert The sinking fund for this series provides for the redemption on
___in each year beginning with the year ___and ending with the year
___of [if applicable, insert not less than $___mandatory sinking fund) and
not more than] $___aggregate principal amount of Securities of this series. Securities of
this series acquired or redeemed by the Company otherwise than through (if applicable, insert
mandatory] sinking fund payments may be credited against subsequent [if applicable, insert
mandatory] sinking fund payments otherwise required to be made [if applicable, insert in the
inverse order in which they become due).]
[If the Security is subject to redemption of any kind, insert In the event of redemption of
this Security in part only, a new Security or Securities of this series and of like tenor for the
unredeemed portion hereof will be issued in the name of the Holder hereof upon the cancellation
hereof.]
[If applicable, insert The Indenture contains provisions for defeasance at any time of (l)
the entire indebtedness of this Security or (2) certain restrictive covenants and Events of Default
with respect to this Security, in each case upon compliance with certain conditions set forth in
the Indenture.]
22
[If the Security is not an Original Issue Discount Security, insert If an Event of Default
with respect to Securities of this series shall occur and be continuing, the principal of the
Securities of this series may be declared due and payable in the manner and with the effect
provided in the Indenture.]
[If the Security is an Original Issue Discount Security, insert If an Event of Default with
respect to Securities of this series shall occur and be continuing, an amount of principal of the
Securities of this series may be declared due and payable in the manner and with the effect
provided in the Indenture. Such amount shall be equal to insert formula for determining the
amount . Upon payment (i) of the amount of principal so declared due and payable and (ii) of
interest on any overdue principal and overdue interest all of the Companys obligations in
respect of the payment of the principal of and interest, if any, on the Securities of this series
shall terminate.]
The Indenture permits, with certain exceptions as therein provided, the amendment thereof and
the modification of the rights and obligations of the Company and the rights of the Holders of the
Securities of each series to be affected under the Indenture at any time by the Company and the
Trustee with the consent of the Holders of a majority in principal amount of the Securities at the
time Outstanding of each series to be affected. The Indenture also contains provisions permitting
the Holders of specified percentages in principal amount of the Securities of each series at the
time Outstanding, on behalf of the Holders of all Securities of such series, to waive compliance by
the Company with certain provisions of the Indenture and certain past defaults under the Indenture
and their consequences. Any such consent or waiver by the Holder of this Security shall be
conclusive and binding upon such Holder and upon all future Holders of this Security and of any
Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof,
whether or not notation of such consent or waiver is made upon this Security.
As provided in and subject to the provisions of the Indenture, the Holder of this Security
shall not have the right to institute any proceeding with respect to the Indenture or for the
appointment of a receiver or trustee or for any other remedy thereunder, unless such Holder shall
have previously given the Trustee written notice of a continuing Event of Default with respect to
the Securities of this series, the Holders of not less than 25% in principal amount of the
Securities of this series at the time Outstanding shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default as Trustee and offered the Trustee
reasonable indemnity and the Trustee shall not have received from the Holders of a majority in
principal amount of Securities of this series at the time Outstanding a direction inconsistent with
such request, and shall have failed to institute any such proceeding, for 60 days after receipt of
such notice, request and offer of indemnity. The foregoing shall not apply to any suit instituted
by the Holder of this Security for the enforcement of any payment of principal hereof or any
premium or interest hereon on or after the respective due dates expressed herein.
No reference herein to the Indenture and no provision of this Security or of the Indenture
shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay
the principal of and any premium and interest on this Security at the times, place and rate, and in
the coin or currency, herein prescribed.
23
As provided in the Indenture and subject to certain limitations therein set forth, the
transfer of this Security is registerable in the Security Register, upon surrender of this Security
for registration of transfer at the office or agency of the Company in any place where the
principal of and any premium and interest on this Security are payable, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the Company and the
Security Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing,
and thereupon one or more new Securities of this series and of like tenor, of authorized
denominations and for the same aggregate principal amount, will be issued to the designated
transferee or transferees.
The Securities of this series are issuable only in registered form without coupons in
denominations of $1,000 and any integral multiple thereof. As provided in the Indenture and
subject to certain limitations therein set forth, Securities of this series are exchangeable for a
like aggregate principal amount of Securities of this series and of like tenor of a different
authorized denomination, as requested by the Holder surrendering the same.
No service charge shall be made for any such registration of transfer or exchange, but the
Company or the Security Registrar may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of transfer, the Company, the
Trustee and any agent of the Company or the Trustee may treat the Person in whose name this
Security is registered as the owner hereof for all purposes, whether or not this Security be
overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the
contrary.
All terms used in this Security which are defined in the Indenture shall have the meanings
assigned to them in the Indenture.
ARTICLE 3
THE SECURITIES
Section 3.1
Amount Unlimited; Issuable in Series
.
The aggregate principal amount of Securities that may be authenticated and delivered under
this Indenture is unlimited.
The Securities may be issued in one or more series. There shall be established in or pursuant
to a Board Resolution and, subject to
Section 3.3
, set forth, or determined in the manner
provided, in an Officers Certificate, or established in one or more indentures supplemental
hereto, prior to the issuance of Securities of any series,
(1) the title of the Securities of the series (which shall distinguish the Securities of
the series from Securities of any other series);
(2) any limit upon the aggregate principal amount of the Securities of the series which
may be authenticated and delivered under this Indenture (except for
24
Securities authenticated
and delivered upon registration of transfer of, or in exchange for, or in lieu of, other
Securities of the series pursuant to
Section 2.3
,
3.4
,
3.5
,
3.6
,
9.6
or
11.7
and except for any Securities which, pursuant to
Section 3.3
, are deemed never to have been authenticated and delivered hereunder);
(3) the Person to whom any interest on a Security of the series shall be payable, if
other than the Person in whose name that Security (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record Date for such
interest;
(4) the date or dates on which the principal of and premium, if any, on any Securities
of the series is payable or the method of determination and/or extension of such date or
dates; and the amount or amounts of such payments of principal and premium, if any, or the
method of determination thereof;
(5) the rate or rates (which may be fixed or variable), at which any Securities of the
series shall bear interest, if any, whether and under what circumstances Additional Amounts
with respect to such Securities shall be payable, the date or dates from which any such
interest shall accrue, the Interest Payment Dates on which any such interest shall be payable
and, if other that as set forth in
Section 1.1
, the Regular Record Date for any such
interest payable on any Interest Payment Date (or the method for determining the dates and
rates);
(6) whether any of such Securities will be subject to certain optional interest rate
reset provisions;
(7) the place or places where the principal of and any premium and interest on, or any
Additional Amounts with respect to, the Securities of the series shall be payable, where the
Securities of such series may be surrendered for registration of transfer or exchange and
where notices and demands to or upon the Company in respect of the Securities of such series
and this Indenture may be served, and the method of such payment, if by wire transfer, mail
or other means;
(8) (a) the period or periods within which, the price or prices at which, the currency
or currencies (including currency units) and the terms and conditions upon which any
Securities of the series may be redeemed, in whole or in part, at the option of the Company,
(b) if other than as provided in
Section 11.3
, the manner in which the particular
Securities of such series (if less than all Securities of such series are to be redeemed) are
to be selected for redemption and (c) if other than by a Board Resolution, the manner in
which any election by the Company to redeem the Securities shall be evidenced;
(9) the obligation, if any, of the Company to redeem, purchase or repay any Securities
of the series pursuant to any sinking fund, amortization or analogous provisions or upon the
happening of a specified event or at the option of the Holder thereof and the period or
periods within which, the price or prices at which and the terms and conditions upon which
any Securities of the series shall be redeemed, purchased or repaid, in whole
25
or in part,
pursuant to such obligation and any provisions for the remarketing of such Securities;
(10) if other than denominations of $1,000 and any integral multiple thereof, the
denominations in which any Securities of the series shall be issuable;
(11) if other than the Trustee, the identity of the Securities Registrar and/or the
Paying Agent;
(12) if the amount of principal of or any premium or interest on or other payments, if
any, on any Securities of the series may be determined with reference to an index, formula or
other method (which index, formula or method may be based, without limitation, on the price
of one or more commodities, derivatives or securities; one or more securities, derivatives or
commodities exchange indices or other indices; a currency or currencies (including currency
unit or units) other than that in which the Securities of the series are denominated or
designated to be payable; or any other variable or the relationship between any variables or
combination of variables), the index, formula or other method by which such amounts shall be
determined;
(13) if other than the currency of the United States of America, the currency,
currencies or currency units (including composite currencies) in which the principal of or
any premium or interest on, or any Additional Amounts with respect to, any Securities of the
series shall be payable and the manner of determining the equivalent thereof in the currency
of the United States of America for any purpose, including for purposes of the definition of
Outstanding in
Section 1.1
;
(14) if the principal of or any premium or interest on, or any Additional Amounts with
respect to, any Securities of the series is to be payable, at the election of the Company or
the Holder thereof, in one or more currencies or currency units other than that or those in
which such Securities are stated to be payable, the currency, currencies or currency units in
which the principal of or any premium or interest on such Securities as to which such
election is made shall be payable, the periods within which and the terms and conditions upon
which such election is to be made and the amount so payable (or the manner in which such
amount shall be determined);
(15) if other than the entire principal amount thereof, the portion of the principal
amount of any Securities of the series which shall be payable upon declaration of
acceleration of the Maturity thereof pursuant to
Section 5.2
;
(16) if the principal amount payable at the Stated Maturity of any Securities of the
series will not be determinable as of any one or more dates prior to the Stated Maturity, the
amount which shall be deemed to be the principal amount of such Securities as of any such
date for any purpose thereunder or hereunder, including the principal amount thereof which
shall be due and payable upon any Maturity other than the Stated Maturity or which shall be
deemed to be Outstanding as of any date prior to the Stated Maturity (or, in any such case,
the manner in which such amount deemed to be the principal amount shall be determined);
26
(17) if applicable, that the Securities of the series, in whole or any specified part,
shall be defeasible pursuant to
Section 13.2
or
Section 13.3
or both such
Sections, or any other defeasance provisions applicable to any Securities of the series, and,
if other than by a Board Resolution, the manner in which any election by the Company to
defease such Securities shall be evidenced;
(18) the terms, if any, upon which Securities of the series may be convertible into or
exchanged for other Securities, common shares, preferred shares, other debt
securities, warrants to purchase any of the foregoing, or other securities of any kind
of the Company or any other obligor or any other property, and the terms and conditions upon
which the conversion or exchange shall be effected, including the initial conversion or
exchange price or rate, the conversion or exchange period, and any other additional
provisions;
(19) if applicable, that any Securities of the series shall be issuable in whole or in
part in the form of one or more Global Securities and, in such case, the respective
Depositaries for such Global Securities, the form of any legend or legends which shall be
borne by any such Global Security in addition to or in lieu of that set forth in
Section
2.4
;
(20) any deletions, modifications of or additions to the definitions set forth in
Section 1.1
, the Events of Default which apply to any Securities of the series and
any change in the right of the Trustee or the requisite Holders of such Securities to declare
the principal amount thereof due and payable pursuant to
Section 5.2
;
(21) any addition to, deletion of or change in the covenants set forth in
Article
10
which applies to Securities of the series;
(22) any Authenticating Agents, Paying Agents, Security Registrars or such other agents
necessary in connection with the issuance of the Securities of such series, including,
without limitation, exchange rate agents and calculation agents;
(23) if applicable, the terms of any Mortgage that will be provided for a series of
Securities, including any provisions regarding the circumstances under which collateral may
be released or substituted;
(24) if applicable, the terms of any guaranties for the Securities, including the terms
of any subordination of such guaranties, and any circumstances under which there may be
additional obligors on the Securities;
(25) provisions, if any, granting special rights to the Holders of Securities of the
series upon the occurrence of such events as may be specified;
(26) whether Securities of the series shall be issuable in registered form or bearer
form (registrable or not registrable as to principal, and with or without interest coupons),
or both, and any restrictions applicable to the offering, sale or delivery of bearer
securities and the terms upon which bearer Securities of a series may be exchanged for
registered Securities of the same series and vice versa;
27
(27) the forms of the Securities of the series;
(28) any terms which may be related to warrants, options or other rights to purchase and
sell securities issued by the Company in connection with, or for the purchase of, Securities
of such series, including whether and under what circumstances the Securities of any series
may be used toward the exercise price of any such warrants, options or other rights;
(29) if the Securities of the series will be governed by, and the extent to which such
Securities will be governed by, any law other than the laws of the state of New York;
(30) any other terms of the series (which terms shall not be inconsistent with the
provisions of this Indenture, except as permitted by
Section 9.1(5))
.
All Securities of any one series need not be identical but may vary as may be provided in or
pursuant to the Board Resolution referred to above and (subject to
Section 3.3
) set forth,
or determined in the manner provided, in the Officers Certificate referred to above or in any such
indenture supplemental hereto. All Securities of any one series need not be issued at the same
time and, unless otherwise provided, a series may be reopened, without the consent of the Holders,
for issuances of additional Securities of such series.
Section 3.2
Denominations
.
Except as specified as contemplated by
Section 3.1
, the Securities of each series
shall be issuable only in registered form without coupons. The Securities of such series shall be
issuable only in such denominations as shall be specified as contemplated by
Section 3.1
.
In the absence of any such specified denomination with respect to the Securities of any series, the
Securities of such series shall be issuable in denominations of $1,000 and any integral multiple
thereof. Unless otherwise provided as contemplated by
Section 3.1
with respect to any
series of Securities, any Securities of a series denominated in a currency other than Dollars shall
be issuable in denominations that are the equivalent, as determined by the Company by reference to
the noon buying rate in The City of New York for cable transfers for such currency (Exchange
Rate), as such rate is reported or otherwise made available by the Federal Reserve Bank of New
York, on the applicable issue date for such Securities, of $1,000 and any integral multiple
thereof.
Section 3.3
Execution, Authentication, Delivery and Dating
.
The Securities shall be executed on behalf of the Company by its Chairman of the Board, its
Chief Executive Officer, its principal financial officer, its President or one of its Vice
Presidents, and attested by its Treasurer, its Secretary or one of its Assistant Treasurers or
Assistant Secretaries. The signature of any of these officers on the Securities may be manual or
facsimile. Securities bearing the manual or facsimile signatures of individuals who were at any
time the proper officers of the Company shall bind the Company, notwithstanding that such
individuals or any of them have ceased to hold such offices prior to the authentication and
delivery of such Securities or did not hold such offices at the date of such Securities.
28
At any time and from time to time after the execution and delivery of this Indenture, the
Company may deliver Securities of any series executed by the Company to the Trustee for
authentication, together with a Company Order for the authentication and delivery of such
Securities, and the Trustee in accordance with the Company Order shall authenticate and deliver
such Securities; provided, however, that in the case of Securities offered in a Periodic Offering,
the Trustee shall authenticate and deliver such Securities from time to time in accordance
with such other procedures (including, without limitation, the receipt by the Trustee of oral or
electronic instructions from the Company or its duly authorized agents, promptly confirmed in
writing) acceptable to the Trustee as may be specified by or pursuant to a Company Order delivered
to the Trustee prior to the time of the first authentication of Securities of such series. Each
Security shall be dated the date of its authentication unless otherwise provided by a Board
Resolution, a supplemental indenture hereto or an Officers Certificate. If the form or terms of
the Securities of the series have been established by or pursuant to one or more Board Resolutions
or any other method permitted by
Sections 2.1
and
3.1
, in authenticating such
Securities, and accepting the additional responsibilities under this Indenture in relation to such
Securities, the Trustee shall be entitled to receive, and (subject to
Section 6.1
) shall be
fully protected in relying upon, a copy of such Board Resolution, the Officers Certificate setting
forth the terms of the series and an Opinion of Counsel, with such Opinion of Counsel stating,
(1) if the form or terms of such Securities have been established by or pursuant to
Board Resolution or any other method permitted by
Sections 2.1
and
3.1
, that
such form or terms have been, or in the case of Securities of a series offered in a Periodic
Offering will be, established in conformity with the provisions of this Indenture, subject in
the case of Securities offered in a Periodic Offering, to any conditions specified in such
Opinion of Counsel; and
(2) that such Securities, when authenticated and delivered by the Trustee and issued by
the Company in the manner and subject to any conditions, exceptions and qualifications
specified in such Opinion of Counsel, will constitute legal, valid and binding obligations of
the Company, enforceable in accordance with their terms, except as such enforcement is
subject to the effect of (i) bankruptcy, insolvency, fraudulent conveyance, reorganization or
other laws relating to or affecting creditors rights and (ii) general principles of equity
(regardless of whether such enforcement is considered in a proceeding in equity or at law).
Such Opinion of Counsel need express no opinion as to the enforceability of
Section
6.7
or as to whether a court in the United States would render a money judgment in a currency
other than that of the United States. Notwithstanding the provisions of
Section 3.1
and of
the preceding paragraph, if all Securities of a series are not to be originally issued at one time,
it shall not be necessary to deliver the Officers Certificate otherwise required pursuant to
Section 3.1
or the Company Order and Opinion of Counsel otherwise required pursuant to such
preceding paragraph at or prior to the authentication of each Security of such series if such
documents are delivered at or prior to the authentication upon original issuance of the first
Security of such series to be issued.
Notwithstanding that such form or terms have been so established, the Trustee shall have the
right to decline to authenticate such Securities if, in the written opinion of counsel to the
29
Trustee (which counsel may be an employee of the Trustee), such action may not lawfully be taken or
if the Trustee in good faith by its board of trustees or trustees, executive committee or a trust
committee of directors, trustees or vice presidents shall determine that such action would expose
the Trustee to personal liability to Holders of any Securities then outstanding.
With respect to Securities of a series offered in a Periodic Offering, the Trustee may rely,
as to the authorization by the Company of any of such Securities, the form and terms thereof and
the legality, validity, binding effect and enforceability thereof, upon the Opinion of Counsel and
the other documents delivered pursuant to
Sections 2.1
and
3.1
and this Section, as
applicable, in connection with the first authentication of Securities of such series.
No Security shall be entitled to any benefit under this Indenture or be valid or obligatory
for any purpose unless there appears on such Security a certificate of authentication substantially
in the form provided for herein executed by the Trustee or an Authenticating Agent by manual
signature, and such certificate upon any Security shall be conclusive evidence, and the only
evidence, that such Security has been duly authenticated and delivered hereunder. Notwithstanding
the foregoing, if any Security shall have been authenticated and delivered hereunder but never
issued and sold by the Company, and the Company shall deliver such Security to the Trustee for
cancellation as provided in
Section 3.9
, for all purposes of this Indenture such Security
shall be deemed never to have been authenticated and delivered hereunder and shall never be
entitled to the benefits of this Indenture.
The Company in issuing Securities may use CUSIP numbers (if then generally in use), and if
so, the Trustee may use the CUSIP numbers in notices of redemption or exchange as a convenience to
Holders; provided, however, that any such notice may state that no representation is made as to the
correctness or accuracy of the CUSIP number printed in the notice or on the Securities, that
reliance may be placed only on the other identification numbers printed on the Securities, and any
such redemption or exchange shall not be affected by any defect or omission of such CUSIP numbers.
The Company will promptly notify the Trustee of any change in CUSIP numbers known to an Officer of
the Company. Neither the Company nor the Trustee shall have any responsibility for any defect in
the CUSIP number that appears on any Security, check, advice of payment or redemption notice, and
any such document may contain a statement to the effect that CUSIP numbers have been assigned by an
independent service for convenience of reference and that neither the Company nor the Trustee shall
be liable for any inaccuracy in such numbers.
Section 3.4
Temporary Securities
.
Pending the preparation of definitive Securities of any series, the Company may execute, and
upon Company Order the Trustee shall authenticate and deliver, temporary Securities which are
printed, lithographed, typewritten, mimeographed or otherwise produced, in any authorized
denomination, substantially of the tenor of the definitive Securities in lieu of which they are
issued and with such appropriate insertions, omissions, substitutions and other variations as the
officers executing such Securities may determine, as evidenced by their execution of such
Securities. All or any portion of the temporary Securities of a series may be Global Securities.
30
If temporary Securities of any series are issued, the Company will cause definitive Securities
of that series to be prepared without unreasonable delay. Except in the case of temporary
Securities that are Global Securities, each of which shall be exchanged in accordance with the
provisions thereof, after the preparation of definitive Securities of such series, the
temporary Securities of such series shall be exchangeable for definitive Securities of such
series upon surrender of the temporary Securities of such series at the office or agency of the
Company in a Place of Payment for that series, without charge to the Holder. Upon surrender for
cancellation of any one or more temporary Securities of any series, the Company shall execute and
the Trustee shall authenticate and deliver in exchange therefor one or more definitive Securities
of the same series, of any authorized denominations and of like tenor and aggregate principal
amount. Until so exchanged, the temporary Securities of any series shall in all respects be
entitled to the same benefits under this Indenture as definitive Securities of such series and
tenor, except as otherwise specified as contemplated by
Section 3.1
.
Section 3.5
Registration; Registration of Transfer and Exchange
.
The Company shall cause to be kept at the Corporate Trust Office of the Trustee or in any
office or agency to be maintained by the Company in accordance with
Section 9.2
in a Place
of Payment or in such other place or medium as may be specified pursuant to
Section 3.1
a
register for each series of Securities (each register maintained in such office and in any other
office or agency of the Company in a Place of Payment being herein sometimes referred to as the
Security Register
) in which, subject to such reasonable regulations as it may prescribe,
the Company shall provide for the registration of Securities of such series and of transfers of
Securities of such series. Unless otherwise contemplated by
Section 3.1
, the Trustee is
hereby appointed Security Registrar for the purpose of registering Securities and transfers of
Securities, and for the purpose of maintaining the Security Register in respect thereof, as herein
provided.
Except as set forth in
Section 2.3
or as may be provided pursuant to
Section
3.1
, upon surrender for registration of transfer of any Security of a series at the office or
agency of the Company in a Place of Payment for that series, the Company shall execute and deliver
a Company Order requesting the Trustee to authenticate and deliver, and the Trustee shall
authenticate and deliver, in the name of the designated transferee or transferees, one or more new
Securities of the same series, of any authorized denominations and of like tenor and aggregate
principal amount.
Unless otherwise provided as contemplated by
Section 3.1
, at the option of the Holder,
Securities of any series (other than Global Securities) may be exchanged for other Securities of
the same series, of any authorized denominations and of like tenor and aggregate principal amount,
upon surrender of the Securities to be exchanged at such office or agency, and upon payment, if the
Company shall so require, of the charges hereinafter provided. Whenever any Securities are so
surrendered for exchange, the Company shall execute, and the Trustee shall authenticate and
deliver, the Securities that the Holder making the exchange is entitled to receive.
31
All Securities issued upon any registration of transfer or exchange of Securities shall be the
valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under
this Indenture, as the Securities surrendered upon such registration of transfer or exchange.
Every Security presented or surrendered for registration of transfer or for exchange shall (if
so required by the Company, Security Registrar or the Trustee) be duly endorsed, or be accompanied
by a written instrument of transfer in form satisfactory to the Company, the Security Registrar or
the Trustee, as the case may be, duly executed, by the Holder thereof or its attorney duly
authorized in writing.
Unless otherwise provided as contemplated by
Section 3.1
, 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 registration of transfer or exchange of Securities, other than exchanges
pursuant to
Section 3.4
,
9.6
or
11.7
not involving any transfer.
Unless otherwise provided as contemplated by
Section 3.1
, if the Securities of any
series (or of any series and specified tenor) are to be redeemed in whole or in part, the Company
shall not be required (A) to issue, register the transfer of or exchange any Securities of that
series (or of that series and specified tenor, as the case may be) during a period beginning at the
opening of business 15 days before the day of the mailing of a notice of redemption of any such
Securities selected for redemption under
Section 11.3
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 any Security being redeemed in
part.
Unless otherwise provided as contemplated by
Section 3.1
, the Company shall not be
required to register the transfer or exchange of Securities between a Record Date and the next
succeeding Interest Payment Date.
Section 3.6
Mutilated, Destroyed, Lost and Stolen Securities
.
If any mutilated Security is surrendered to the Trustee, the Company shall execute and deliver
a Company Order requesting the Trustee to authenticate and deliver, and the Trustee shall
authenticate and deliver, in exchange therefor a new Security of the same series and of like tenor
and principal amount and bearing a number not contemporaneously outstanding. If there shall be
delivered to the Company and the Trustee (i) evidence to their satisfaction of the destruction,
loss or theft of any Security and (ii) such security or indemnity as may be required by them to
save each of them and any agent of either of them harmless, then, in the absence of notice to the
Company or the Trustee that such Security has been acquired by a bona fide purchaser, the Company
shall execute and upon the Companys request the Trustee shall authenticate and deliver, in lieu of
any such destroyed, lost or stolen Security, a new Security of the same series and of like tenor
and principal amount and bearing a number not contemporaneously outstanding.
Notwithstanding the preceding paragraph, in case any such mutilated, destroyed, lost or stolen
Security has become or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Security, pay such Security.
32
Upon the issuance of any new Security under this
Section 3.6
, the Company may require
the payment of a sum sufficient to cover any tax or other governmental charge that may be
imposed in relation thereto and any other expenses (including the fees and expenses of the
Trustee) connected therewith.
Every new Security of any series issued pursuant to this
Section 3.6
in lieu of any
destroyed, lost or stolen Security shall constitute an original additional contractual obligation
of the Company, whether or not the destroyed, lost or stolen Security shall be at any time
enforceable by anyone, and shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Securities of that series duly issued hereunder.
The provisions of this
Section 3.6
are exclusive and shall preclude (to the extent
lawful) all other rights and remedies with respect to the replacement or payment of mutilated,
destroyed, lost or stolen Securities.
Section 3.7
Payment of Interest; Interest Rights Preserved
.
Except as otherwise provided as contemplated by
Section 3.1
with respect to any series
of Securities, interest on any Security which is payable, and is punctually paid or duly provided
for, on any Interest Payment Date shall be paid to the Person in whose name that Security (or one
or more Predecessor Securities) is registered at the close of business on the Regular Record Date
for such interest at the office or agency maintained for such purpose pursuant to
Section
9.2
; provided, however, that at the option of the Company, interest on any series of Registered
Securities that bear interest may be paid (i) by check mailed to the address of the Person entitled
thereto as it shall appear on the Security Register of such series (unless, with respect to a
Global Security, the rules of the Depositary require payment of such amount by wire transfer) or
(ii) by wire transfer to an account maintained by the Person entitled thereto as specified in the
Security Register of such series.
Unless otherwise provided as contemplated by
Section 3.1
, any interest on any Security
of any series which is payable, but is not punctually paid or duly provided for, on any Interest
Payment Date (herein called
Defaulted Interest
) shall forthwith cease to be payable to
the Holder on the relevant Regular Record Date by virtue of having been such Holder, and such
Defaulted Interest may be paid by the Company, at its election in each case, as provided in
clause (1)
or
(2)
below:
(1) The Company may elect to make payment of any Defaulted Interest to the Persons in
whose names the Securities of such series (or their respective Predecessor Securities) are
registered at the close of business on a Special Record Date for the payment of such
Defaulted Interest, which shall be fixed in the following manner. The Company shall notify
the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each
Security of such series and the date of the proposed payment, and at the same time the
Company shall deposit with the Trustee an amount of money equal to the aggregate amount
proposed to be paid in respect of such Defaulted Interest or shall make arrangements
satisfactory to the Trustee for such deposit prior to the date of the proposed payment, such
money when deposited to be held in trust for the benefit of the Persons entitled to such
Defaulted Interest as in this clause provided. Thereupon the Trustee shall
33
fix a Special Record Date for the payment of such Defaulted Interest, which shall be not
more than 15 days and not less than 10 days prior to the date of the proposed payment and not
less than 10 days after the receipt by the Trustee of the notice of the proposed payment.
The Trustee shall promptly notify the Company of such Special Record Date and, in the name
and at the expense of the Company, shall cause notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor to be given to each Holder of
Securities of such series in the manner set forth in
Section 1.7
, not less than 10
days prior to such Special Record Date. The Trustee may, in its discretion, in the name and
at the expense of the Company, cause a similar notice to be published at least once in an
Authorized Newspaper in The Borough of Manhattan, The City of New York, but such publication
shall not be a condition precedent to the establishment of such Special Record Date. Notice
of the proposed payment of such Defaulted Interest and the Special Record Date therefor
having been so mailed, such Defaulted Interest shall be paid to the Persons in whose names
the Securities of such series (or their respective Predecessor Securities) are registered at
the close of business on such Special Record Date and shall no longer be payable pursuant to
the following
clause (2)
.
(2) The Company may make payment of any Defaulted Interest on the Securities of any
series in any other lawful manner not inconsistent with the requirements of any securities
exchange on which such Securities may be listed, and upon such notice as may be required by
such exchange, if, after notice given by the Company to the Trustee of the proposed payment
pursuant to this clause, such manner of payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this
Section 3.7
, each Security delivered under
this Indenture upon registration of transfer of or in exchange for or in lieu of any other Security
shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such
other Security.
Section 3.8
Persons Deemed Owners
.
Prior to due presentment of a Security for registration of transfer, the Company, the Trustee
and any agent of the Company or the Trustee may treat the Person in whose name such Security is
registered as the owner of such Security for the purpose of receiving payment of principal of and
any premium and (subject to
Section 3.7
) any interest and any Additional Amounts or other
payments on such Security and for all other purposes whatsoever, whether or not such Security shall
be overdue, and none of the Company, the Trustee or any agent of the Company or the Trustee shall
be affected by notice to the contrary.
Except as otherwise specified as contemplated by
Section 3.1
, none of the Company, the
Trustee or any agent of the Company or the Trustee shall have any responsibility or liability for
any aspect of the records relating to or payments made on account of beneficial ownership interests
of a Global Security, or for maintaining, supervising or reviewing any records relating to such
beneficial ownership interests. Notwithstanding the foregoing, with respect to any Global
Security, nothing herein shall prevent the Company or the Trustee, or any agent of the
Company or the Trustee, from giving effect to any written certification, proxy or other
authorization furnished by any Depositary (or its nominee), as a Holder, with respect to such
34
Global Security or impair, as between such Depositary and owners of beneficial interests in such
Global Security, the operation of customary practices governing the exercise of the rights of such
Depositary (or its nominee) as Holder of such Global Security.
Section 3.9
Cancellation
.
The Company may at any time deliver to the Trustee for cancellation any Securities previously
authenticated and delivered hereunder which the Company may have acquired in any manner whatsoever,
and may deliver to the Trustee (or to any other Person for delivery to the Trustee) for
cancellation any Securities previously authenticated hereunder which the Company has not issued and
sold, and all Securities so delivered shall be promptly canceled by the Trustee. The Security
Registrar and the Paying Agent shall forward to the Trustee any Securities surrendered to them for
registration of transfer, exchange or payment, and all Securities so delivered shall be promptly
canceled by the Trustee. No Securities shall be authenticated in lieu of or in exchange for any
Securities canceled as provided in this Section, except as expressly permitted by this Indenture or
as otherwise specified as contemplated by
Section 3.1
. On request of the Company at the
time of surrender, the Trustee shall deliver to the Company canceled Securities held by the
Trustee. In the absence of such request, all canceled Securities held by the Trustee shall be
disposed of in accordance with the Trustees customary procedures.
Section 3.10
Computation of Interest
.
Except as otherwise specified as contemplated by
Section 3.1
for Securities of any
series, interest on the Securities of each series shall be computed on the basis of a 360-day year
of twelve 30-day months.
ARTICLE 4
SATISFACTION AND DISCHARGE
Section 4.1
Satisfaction and Discharge of Indenture
.
This Indenture shall upon Company Request cease to be of further effect with respect to
Securities of or within any series (except as to any surviving rights of registration of transfer
or exchange of such Securities and replacement of such Securities which may have been lost, stolen
or mutilated as herein expressly provided for), and the Trustee, at the expense of the Company,
shall execute proper instruments acknowledging satisfaction and discharge of this Indenture with
respect to such Securities, when
(1) either
(A) all such Securities theretofore authenticated and delivered (other than (i)
Securities which have been destroyed, lost or stolen and which have been replaced or
paid as provided in
Section 3.6
and (ii) Securities for whose payment money
has theretofore been deposited in trust or segregated and held in trust by the
Trustee or the Company and thereafter repaid to the Company or discharged from such
trust, as provided in
Section 10.3
) have been delivered to the Trustee for
cancellation; or
35
(B) all such Securities not theretofore delivered to the Trustee for
cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated Maturity within one
year, or
(iii) are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of notice of
redemption by the Trustee in the name, and at the expense, of the Company,
and the Company, in the case of
clause (i)
,
(ii)
or
(iii)
above, has
deposited or caused to be deposited with the Trustee as trust funds in trust for the purpose money
in an amount sufficient to pay and discharge the entire indebtedness on such Securities not
theretofore delivered to the Trustee for cancellation, for principal and any premium and interest
and any Additional Amounts to the date of such deposit (in the case of Securities which have become
due and payable) or to the Stated Maturity or Redemption Date, as the case may be;
(2) the Company has paid or caused to be paid all other sums payable hereunder by the
Company with respect to the Outstanding Securities of such series;
(3) the Company has complied with any other conditions specified pursuant to
Section
3.1
to be applicable to the Outstanding Securities of such series; and
(4) the Company has delivered to the Trustee an Officers Certificate and an Opinion of
Counsel, each stating that all conditions precedent herein provided for relating to the
satisfaction and discharge of this Indenture as to such Securities have been complied with.
If any Outstanding Securities of such series are to be redeemed prior to their Stated
Maturity, whether pursuant to any optional redemption provisions or in accordance with any
mandatory sinking fund requirement, the trust agreement evidencing the trust referred to in
subclause (B)
of
clause (1)
of this
Section 4.1
shall provide therefore and
the Company shall make such arrangements as are satisfactory to the Trustee for the giving of
notice of redemption by the Trustee in the name, and at the expense, of the Company.
Notwithstanding the satisfaction and discharge of this Indenture, the obligations of the
Company to the Trustee under
Section 6.7
, the obligations of the Trustee to any
Authenticating
Agent under
Section 6.14
and, if money shall have been deposited with the Trustee
pursuant to
subclause (B)
of
clause (1)
of this
Section 4.1
, the
obligations of the Trustee under
Section 4.2
and the last paragraph of
Section 10.3
shall survive.
Section 4.2
Application of Trust Money
.
Subject to the provisions of the last paragraph of
Section 10.3
, all money deposited
with the Trustee pursuant to
Section 4.1
shall be held in trust and applied by it, in
accordance with the
36
provisions of the Securities and this Indenture, to the payment, either
directly or through any Paying Agent (including the Company acting as its own Paying Agent) as the
Trustee may determine, to the Persons entitled thereto, of the principal and any premium and
interest or Additional Amounts for whose payment such money has been deposited with the Trustee.
ARTICLE 5
REMEDIES
Section 5.1
Events of Default
Event of Default
, wherever used herein with respect to Securities of any series,
means any one of the following events (whatever the reason for such Event of Default and whether it
shall be occasioned by the subordination provisions applicable to any Securities or be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental body), unless it is
either inapplicable to a particular series or it is specifically deleted or modified in the Board
Resolution, supplemental indenture, Officers Certificate establishing such series, or form of
Security for such series:
(1) default in the payment of any interest on, or any Additional Amounts with respect
to, any Security of that series when it becomes due and payable, and continuance of such
default for a period of 30 days (unless the entire amount of such payment is deposited by the
Company with the Trustee or with a Paying Agent prior to the expiration of such period of 30
days); or
(2) default in the payment of the principal of or any premium on any Security of that
series at its Maturity, and continuance of such default for a period of 30 days (unless the
entire amount of such payment is deposited by the Company with the Trustee or with a Paying
Agent prior to the expiration of such period of 30 days); or
(3) default in the deposit of any sinking fund payment, when and as due by the terms of
a Security of that series, and continuance of such default for a period of 30 days; or
(4) default in the performance, or breach, of any covenant or warranty of the Company in
this Indenture (other than a covenant or warranty a default in whose performance or whose
breach is elsewhere in this
Section 5.1
specifically dealt with or which has
expressly been included in this Indenture solely for the benefit of series of Securities
other than that series), and continuance of such default or breach for a period of 60 days
after there has been given, by registered or certified mail, to the Company by the Trustee or
to the Company and the Trustee by the Holders of at least 25% in principal amount of the
Outstanding Securities of that series a written notice specifying such default or breach and
requiring it to be remedied and stating that such notice is a
Notice of Default
hereunder; or
(5) the entry by a court having jurisdiction in the premises of (A) a decree or order
for relief in respect of the Company in an involuntary case or proceeding under any
37
applicable federal or state bankruptcy, insolvency, reorganization or other similar law or
(B) a decree or order adjudging the Company a bankrupt or insolvent, or approving as properly
filed a petition seeking reorganization, arrangement, adjustment or composition of or in
respect of the Company under any applicable federal or state law, or appointing a custodian,
receiver, liquidator, assignee, trustee, sequestrator or other similar official of the
Company or of any substantial part of its property, or ordering the winding up or liquidation
of its affairs, and the continuance of any such decree or order for relief or any such other
decree or order unstayed and in effect for a period of 60 consecutive days; or
(6) the commencement by the Company of a voluntary case or proceeding under any
applicable federal or state bankruptcy, insolvency, reorganization or other similar law or of
any other case or proceeding to be adjudicated a bankrupt or insolvent, or the consent by it
to the entry of a decree or order for relief in respect of the Company in an involuntary case
or proceeding under any applicable federal or state bankruptcy, insolvency, reorganization or
other similar law or to the commencement of any bankruptcy or insolvency case or proceeding
against it, or the filing by it, of a petition or answer or consent seeking reorganization or
relief under any applicable federal or state law, or the consent by it to the filing of such
petition or to the appointment of or taking possession by a custodian, receiver, liquidator,
assignee, trustee, sequestrator or similar official of the Company or of any substantial part
of its property, or the making by it of an assignment for the benefit of creditors, or the
admission by it in writing of its inability to pay its debts generally as they become due, or
the taking of corporate action by the Company in furtherance of any such action; or
(7) any other Event of Default provided with respect to Securities of that series in the
Board Resolution, supplemental indenture or Officers Certificate establishing that series.
Notwithstanding the foregoing provisions of this
Section 5.1
, if the principal of,
premium (if any) or any interest on, or any Additional Amounts with respect to, any Security is
payable in a currency or currencies (including a composite currency) other than Dollars and such
currency or currencies are not available to the Company for making payment thereof due to the
imposition of exchange controls or other circumstances beyond the control of the Company (a
Conversion Event
), the Company will be entitled to satisfy its obligations to Holders of
the Securities by making such payment in Dollars in an amount equal to the Dollar equivalent of the
amount payable in such other currency, as determined by the Company by reference to the Exchange
Rate, as such Exchange Rate is certified for customs purposes by the Federal Reserve Bank of New
York on the date of such payment, or, if such rate is not then available, on the basis of the most
recently available Exchange Rate. Notwithstanding the foregoing provisions of this
Section
5.1
, any payment made under such circumstances in Dollars where the required payment is in a
currency other than Dollars will not constitute an Event of Default under this Indenture.
Promptly after the occurrence of a Conversion Event with respect to the Securities of any
series, the Company shall give written notice thereof to the Trustee; and the Trustee, promptly
after receipt of such notice, shall give notice thereof in the manner provided in
Section
1.7
to the Holders of such series. Promptly after the making of any payment in Dollars as a
result of a Conversion Event with respect to the Securities of any series, the Company shall give
notice in
38
the manner provided in
Section 1.7
to the Holders of such series, setting forth
the applicable Exchange Rate and describing the calculation of such payments.
Section 5.2
Acceleration of Maturity; Rescission and Annulment
.
Unless the Board Resolution, supplemental indenture or Officers Certificate establishing such
series provides otherwise, if an Event of Default with respect to Securities of any series at
the time Outstanding occurs and is continuing, then in every such case the Trustee or the
Holders of not less than 25% in principal amount of the Outstanding Securities of that series may
declare the principal amount of all the Securities of that series (or, if any Securities of that
series are Original Issue Discount Securities, such portion of the principal amount of such
Securities as may be specified by the terms thereof) and premium, if any, together with accrued and
unpaid interest, if any, thereon, and Additional Amounts, if any, with respect thereto, to be due
and payable immediately, by a notice in writing to the Company (and to the Trustee if given by the
Holders), and upon any such declaration such principal amount (or specified amount) and premium, if
any, together with accrued and unpaid interest, if any, thereon, and Additional Amounts, if any,
with respect thereto, shall become immediately due and payable.
At any time after such a declaration of acceleration with respect to Securities of any series
has been made and before a judgment or decree for payment of the money due has been obtained by the
Trustee as hereinafter in this
Article 5
provided, the Holders of a majority in principal
amount of the Outstanding Securities of that series, by written notice to the Company and the
Trustee, may rescind and annul such declaration and its consequences if
(1) the Company has paid or deposited with the Trustee a sum sufficient to pay
(A) all overdue interest on, and any Additional Amounts with respect to, all
Securities of that series (or of all series, as the case may be),
(B) the principal of or premium (if any) on any Securities of that series (or
of all series, as the case may be) which have become due otherwise than by such
declaration of acceleration and interest thereon at the rate or rates prescribed
therefor in such Securities (in the case of Original Issue Discount Securities, the
Securities Yield to Maturity),
(C) to the extent that payment of such interest is lawful, interest upon
overdue interest and any Additional Amounts at the rate or rates prescribed therefor
in such Securities (in the case of Original Issue Discount Securities, the
Securities Yield to Maturity), and
(D) all sums paid or advanced by the Trustee hereunder, the compensation,
expenses, disbursements and advances due to Trustee under
Section 6.7
, and
all other amounts due under
Section 6.7
;
(2) all Events of Default with respect to Securities of that series (or of all series,
as the case may be), other than the nonpayment of the principal of Securities of that
39
series (or of all series, as the case may be) which have become due solely by such declaration of
acceleration, have been cured or waived as provided in
Section 5.13
; and
(3) the rescission would not conflict with any final judgment or decree of a court of
competent jurisdiction.
No such rescission shall affect any subsequent default or impair any right consequent thereon.
Section 5.3
Collection of Indebtedness and Suits for Enforcement by Trustee
.
The Company covenants that if
(1) default is made in the payment of any interest on, or any Additional Amounts with
respect to, any Security of any series when such interest or Additional Amounts shall become
due and payable and such default continues for a period of 30 days, or
(2) default is made in the payment of the principal of (or premium, if any, on) any
Security at the Maturity thereof, the Company will, upon demand of the Trustee, pay to it,
for the benefit of the Holders of such Securities, the whole amount then due and payable on
such Securities for principal and any premium and interest on, and Additional Amounts with
respect to, and, to the extent that payment of such interest shall be legally enforceable,
interest on any overdue principal and premium and on any overdue interest or Additional
Amounts, at the rate or rates prescribed therefor in such Securities (or in the case of
Original Issue Discount Securities, the Securities Yield to Maturity), and, in addition
thereto, such further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel, and all other amounts due the Trustee under
Section
6.7
.
If the Company fails to pay such amounts forthwith upon such demand, the Trustee, in its own
name and as trustee of an express trust, may institute a judicial proceeding for the collection of
the sums so due and unpaid, may prosecute such proceeding to judgment or final decree and may
enforce the same against the Company or any other obligor upon such Securities and collect the
moneys adjudged or deemed to be payable in the manner provided by law out of the property of the
Company or any other obligor upon such Securities, wherever situated.
In addition, if any other Event of Default with respect to Securities of any series occurs and
is continuing, the Trustee may in its discretion proceed, in its own name and as trustee of an
express trust, to protect and enforce its rights and the rights of the Holders of Securities of
such series by such appropriate judicial proceedings as the Trustee shall deem most effectual to
protect and enforce any such rights, whether for the specific enforcement of any covenant or
agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce
any other proper remedy.
Section 5.4
Trustee May File Proofs of Claim
.
40
In case of the pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial proceeding relative to the
Company or any other obligor upon the Securities or the property of the Company or of such other
obligor or their creditors, the Trustee (irrespective of whether the principal (or lesser amount in
the case of Original Issue Discount Securities) of the Securities shall then be due and
payable as therein expressed or by declaration or otherwise and irrespective of whether the
Trustee shall have made any demand on the Company for the payment of overdue principal of, premium
(if any), interest on, or any Additional Amounts with respect to, such Securities) shall be
entitled and empowered, by intervention in such proceeding or otherwise,
(1) to file and prove a claim for the whole amount of principal (or lesser amount in the
case of Original Issue Discount Securities) (and premium, if any) and interest and any
Additional Amounts owing and unpaid in respect of the Securities and to file such other
papers or documents as may be necessary or advisable to have the claims of the Trustee
(including any claim for the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel) and of the Holders allowed in such judicial proceeding,
and
(2) to collect and receive any monies or other property payable or deliverable on any
such claims and to distribute the same; and any custodian, receiver, assignee, trustee,
liquidator, sequestrator or other similar official in any such judicial proceeding is hereby
authorized by each Holder to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the Holders, to pay to the
Trustee any amount due it for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 6.7
.
No provision of this Indenture shall be deemed to authorize the Trustee to authorize or
consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement,
adjustment or composition affecting the Securities or the rights of any Holder thereof or to
authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding;
provided, however, that the Trustee may, on behalf of the Holders, vote for the election of a
trustee in bankruptcy or similar official and be a member of a creditors or other similar
committee.
Section 5.5
Trustee May Enforce Claims Without Possession of Securities
.
All rights of action and claims under this Indenture or the Securities may be prosecuted and
enforced by the Trustee without the possession of any of the Securities or the production thereof
in any proceeding relating thereto, and any such proceeding may be instituted by the Trustee in its
own name as trustee of an express trust.
Section 5.6
Application of Money Collected
.
Subject to the subordination provisions applicable to any series of Securities, any money
collected by the Trustee pursuant to this Article shall be applied and paid in the following order,
at the date or dates fixed by the Trustee and, in case of the distribution of such money on account
41
of principal or any premium or interest on, or any Additional Amounts with respect to, the
Securities, upon presentation of the Securities and the notation thereon of the payment if
only partially paid and upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee under
Section 6.7
in connection
with such series of Securities in respect of which money or other property is collected;
SECOND: Subject to the terms of any subordination entered into as contemplated by
Section
3.1
, to the payment of the amounts then due and unpaid for principal of and any premium, if
any, and interest on, and any Additional Amounts with respect to, the Securities in respect of
which or for the benefit of which such money has been collected, ratably, without preference or
priority of any kind, according to the amounts due and payable on such Securities for principal and
any premium, if any, interest on and Additional Amounts, respectively; and
THIRD: The balance, if any, to the Company or any other Person or Persons entitled thereto.
To the fullest extent allowed under applicable law, if for the purpose of obtaining judgment
against the Company in any court it is necessary to convert the sum due in respect of the principal
of, premium (if any) or interest on, or any Additional Amounts with respect to, the Securities of
any series (the
Required Currency
) into a currency in which a judgment will be rendered
(the
Judgment Currency
), the rate of exchange used shall be the rate at which in
accordance with normal banking procedures the Trustee could purchase in The City of New York the
Required Currency with the Judgment Currency on the Business Day in The City of New York next
preceding that on which final judgment is given. Neither the Company nor the Trustee shall be
liable for any shortfall nor shall any of them benefit from any windfall in payments to Holders of
Securities under this
Section 5.6
caused by a change in exchange rates between the time the
amount of a judgment against it is calculated as above and the time the Trustee converts the
Judgment Currency into the Required Currency to make payments under this
Section 5.6
to
Holders of Securities, but payment of such judgment shall discharge all amounts owed by the Company
on the claim or claims underlying such judgment.
Section 5.7
Limitation on Suits
.
Subject to
Section 5.8
, no Holder of any Security of any series shall have any right
to institute any proceeding, judicial or otherwise, with respect to this Indenture, or for the
appointment of a receiver or trustee, or for any other remedy hereunder, unless
(1) an Event of Default with respect to such series of Securities shall have occurred
and be continuing and such Holder has previously given written notice to the Trustee of such
continuing Event of Default;
(2) the Holders of not less than 25% in principal amount of the Outstanding Securities
of that series shall have made written request to the Trustee to institute proceedings in
respect of such Event of Default in its own name as Trustee hereunder;
42
(3) such Holder or Holders have offered and, if requested, provided to the Trustee
reasonable indemnity against the costs, expenses and liabilities to be incurred in compliance
with such request;
(4) the Trustee for 60 days after its receipt of such notice, request and offer of
indemnity has failed to institute any such proceeding; and
(5) no direction inconsistent with such written request has been given to the Trustee
during such 60-day period by the Holders of a majority in principal amount of the Outstanding
Securities of that series (or of all series, as the case may be).
No one or more of such Holders shall have any right in any manner whatever by virtue of, or by
availing of, any provision of this Indenture to affect, disturb or prejudice the rights of any
other of such Holders, or to obtain or to seek to obtain priority or preference over any other of
such Holders or to enforce any right under this Indenture, except in the manner herein provided and
for the equal and ratable benefit of all of such Holders.
Section 5.8
Right of Holders to Receive Principal, Premium and Interest
.
Notwithstanding any other provision in this Indenture, the right of any Holder of any Security
to receive payment of the principal of and any premium and (subject to
Section 3.7
)
interest on, or any Additional Amounts with respect to, such Security on the Stated Maturity or
Stated Maturities expressed in such Security (or, in the case of redemption, on the Redemption
Date) and to institute suit for the enforcement of any such payment after the respective due dates,
shall not be impaired without the consent of such Holder.
Section 5.9
Restoration of Rights and Remedies
.
If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy
under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has
been determined adversely to the Trustee or to such Holder, then and in every such case, subject to
any determination in such proceeding, the Company, the Trustee and the Holders shall be restored
severally and respectively to their former positions hereunder and thereafter all rights and
remedies of the Trustee and the Holders shall continue as though no such proceeding had been
instituted.
Section 5.10
Rights and Remedies Cumulative
.
Except as otherwise provided in
Section 5.7
or with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities in the last paragraph of
Section
3.6
, no right or remedy herein conferred upon or reserved to the Trustee or to the Holders is
intended to be exclusive of any other right or remedy, and every right and remedy shall, to the
extent permitted by law, be cumulative and in addition to every other right and remedy given
hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
43
Section 5.11
Delay or Omission Not Waiver
.
No delay or omission of the Trustee or of any Holder of any Securities to exercise any right
or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a
waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by
this
Article 5
or by law to the Trustee or to the Holders may be exercised from time to
time, and as often as may be deemed expedient, by the Trustee or by the Holders, as the case may
be.
Section 5.12
Control by Holders
.
With respect to Securities of any series, the Holders of a majority in principal amount of the
Outstanding Securities of such series shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power
conferred on the Trustee, relating to or arising under an Event of Default described in
clause
(1)
,
(2)
,
(3)
,
(4)
or
(7)
of
Section 5.1
, and with
respect to all Securities the Holders of a majority in principal amount of all Outstanding
Securities shall have the right to direct the time, method and place of conducting any remedy
available to the Trustee, or exercising any trust or power conferred on the Trustee, relating to or
arising under an Event of Default described in
clause (5)
or
(6)
of
Section
5.1
, provided that in each such case.
(1) the Trustee shall have the right to decline to follow any such direction if the
Trustee, being advised by counsel, determines that the action so directed may not lawfully be
taken or would conflict with this Indenture or if the Trustee in good faith shall, by a
Responsible Officer, determine that the proceedings so directed would involve it in personal
liability or be unjustly prejudicial to the Holders not taking part in such direction, and
(2) the Trustee may take any other action deemed proper by the Trustee that is not
inconsistent with such direction or this Indenture.
Section 5.13
Waiver of Past Defaults
.
Subject to
Section 5.8
and
Section 9.2
, the Holders of not less than a
majority in aggregate principal amount of the Outstanding Securities of any series may on behalf of
the Holders of all the Securities of such series waive any past default or Event of Default
described in
clause (1)
,
(2)
,
(3)
,
(4)
or
(7)
of
Section 5.1
hereunder with respect to such series and its
consequences, and the Holders of a majority in principal amount of all Outstanding Securities
may on behalf of the Holders of all Securities waive any Event of Default described in
clause
(5)
or
(6)
of
Section 5.1
hereunder and its consequences, except a default
(1) in the payment of the principal of or any premium or interest on, or any Additional
Amounts with respect to, any Security as and when the same shall become due and payable by
the terms thereof, otherwise than by acceleration (unless such default has been cured as
provided herein), or
44
(2) in respect of a covenant or provision hereof which under
Article 9
cannot be
modified or amended without the consent of the Holder of each Outstanding Security affected.
Upon any such waiver, such default shall cease to exist, and any Event of Default arising
therefrom shall be deemed to have been cured, for every purpose of this Indenture; but no such
waiver shall extend to any subsequent or other default or impair any right consequent thereon.
Section 5.14
Undertaking for Costs
.
All parties to this Indenture agree, and each Holder of any Security by his acceptance thereof
shall be deemed to have agreed, that in any suit for the enforcement of any right or remedy under
this Indenture, or in any suit against the Trustee for any action taken, suffered or omitted by it
as Trustee, a court may require any party litigant in such suit to file an undertaking to pay the
costs of such suit, and may assess costs against any such party litigant, in the manner and to the
extent provided in the Trust Indenture Act; provided that the provisions of this
Section
5.14
shall not apply to any suit instituted by the Company, to any suit instituted by the
Trustee, to any suit instituted by any Holder, or group of Holders, holding in the aggregate more
than 10% in principal amount of the outstanding Securities of any series, or to any suit instituted
by any Holder for the enforcement of the payment of the principal of or interest on any Security on
or after the Stated Maturity or Stated Maturities expressed in such Security (or, in the case of
redemption, on the redemption date).
ARTICLE 6
THE TRUSTEE
Section 6.1
Certain Duties and Responsibilities
.
(1) If an Event of Default has occurred and is continuing, the Trustee shall exercise
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 individual would exercise or use under the circumstances
in the conduct of his or her own affairs.
(2) Except during the continuance of an Event of Default:
(A) The Trustee need perform only those duties that are specifically set forth
in this Indenture and no others, and no implied covenants or obligations shall be
read into this Indenture against the Trustee.
(B) 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 Officers Certificates or Opinions of Counsel furnished to the Trustee
and conforming to the requirements of this Indenture; however, in the case of any
such Officers Certificates or Opinions of Counsel which by any provisions hereof
are specifically required to be furnished to the Trustee, the Trustee shall examine
such Officers Certificates and Opinions of Counsel to determine whether or not they
conform to the requirements of this
45
Indenture (but need not confirm or investigate
the accuracy of any mathematical calculations or other facts stated therein).
(3) The Trustee may not be relieved from liability for its own negligent action, its own
negligent failure to act or its own willful misconduct or bad faith, except that:
(A) This paragraph does not limit the effect of
clause (2)
of this
Section 6.1
.
(B) The Trustee shall not be liable for any error of judgment made in good
faith by a Responsible Officer, unless it is proved that the Trustee was negligent
in ascertaining the pertinent facts.
(C) The Trustee shall not be liable with respect to any action taken, suffered
or omitted to be taken by it with respect to Securities of any series in good faith
in accordance with the direction of the Holders of a majority in principal amount of
the Outstanding Securities of such series relating to the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or exercising any
trust or power conferred upon the Trustee, under this Indenture with respect to the
Securities of such series.
(4) Every provision of this Indenture that in any way relates to the Trustee is subject
to
clauses (1)
,
(2)
and
(3)
of this
Section 6.1
.
(5) The Trustee may refuse to perform any duty or to exercise any of the rights or
powers vested in it by this Indenture at the request or direction of any of Holder or Holders
pursuant to this Indenture, unless such Holder or Holders shall have offered and, if
requested, provided to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which might be incurred by it in compliance with such request or
direction.
(6) No provision of this Indenture shall require the Trustee to risk its own funds or
otherwise incur any financial liability in the performance of any of its duties, or in the
exercise of any of its rights or powers, if it shall have reasonable grounds for believing
that repayment of such funds or adequate indemnity against such risk is not reasonably
assured to it.
(7) The Paying Agent, the Security Registrar and any Authenticating Agent shall be
entitled to the protections, immunities and standard of care as are set forth in
clauses
(1)
,
(2)
and
(3)
of this
Section 6.1
with respect to the Trustee.
Section 6.2
Notice of Defaults
.
If a default occurs hereunder and is continuing with respect to Securities of any series and
it is known to a Responsible Officer of the Trustee, the Trustee shall give the Holders of
Securities of such series notice of such default as and to the extent provided by the Trust
Indenture Act; provided, however, that except in the case of a default in the payment of principal
of (or premium, if any) or interest on, or any Additional Amounts with respect to, any Securities
46
of such series or in the payment of any sinking fund installment, the Trustee shall be protected in
withholding such notice if and so long as the board of trustees, the executive committee or a trust
committee of directors and/or Responsible Officers of the Trustee in good faith determine that the
withholding of such notice is in the interests of the holders of Securities of such series.
Section 6.3
Certain Rights of Trustee
.
Subject to the provisions of
Section 6.1
:
(1) in the absence of bad faith on the part of the Trustee, the Trustee may rely and
shall be protected in acting or refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction, consent, order, bond,
debenture, note, coupon, other evidence of indebtedness or other paper or document believed
by it to be genuine and to have been signed or presented by the proper party or parties;
(2) the Trustee shall not be bound to make any investigation into the facts or matters
stated in any resolution, certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or
other paper or document, but the Trustee, in its discretion, may make such further inquiry or
investigation into such facts or matters as it may see fit, and, if the Trustee shall
determine to make such further inquiry or investigation, it shall be entitled to examine the
books, records and premises of the Company, personally or by agent or attorney;
(3) any request or direction of the Company mentioned herein shall be sufficiently
evidenced by a Company Request or Company Order (unless other evidence is specifically
required herein), and any resolution of the Board of Directors shall be sufficiently
evidenced by a Board Resolution;
(4) whenever in the administration of this Indenture the Trustee shall deem it desirable
that a matter be proved or established prior to taking, suffering or omitting any action
hereunder, the Trustee (unless other evidence be herein specifically prescribed), in
the absence of bad faith on its part, is entitled to and may rely upon an Officers
Certificate;
(5) the Trustee may consult with counsel and the written advice of such counsel or any
Opinion of Counsel shall be full and complete authorization and protection in respect of any
action taken, suffered or omitted by it hereunder in good faith and in reliance thereon;
(6) the Trustee may execute any of the trusts or powers hereunder or perform any duties
hereunder either directly or by or through agents or attorneys and the Trustee shall not be
responsible for any misconduct or negligence on the part of any agent or attorney appointed
with due care by it hereunder.
(7) the Trustee shall not be charged with knowledge of any default or Event of Default
with respect to the Securities of any series for which it is acting as Trustee unless either
(1) a Responsible Officer shall have actual knowledge of such default or Event of
47
Default or (2) written notice of such default or Event of Default shall have been given to the Trustee
by the Company or any other obligor on such Securities or by any Holder of such Securities;
and
(8) the Trustee shall not be liable for any action taken, suffered or omitted by it in
good faith and believed by it to be authorized or within the discretion or rights or powers
conferred upon it by this Indenture.
Section 6.4
Not Responsible for Recitals or Issuance of Securities
.
The recitals contained herein and in the Securities, except the Trustees certificates of
authentication, shall be taken as the statements of the Company, and neither the Trustee nor any
Security Registrar, Paying Agent or Authenticating Agent assumes any responsibility for their
correctness. The Trustee makes no representations as to the validity or sufficiency of this
Indenture or of the Securities. Neither the Trustee nor any Security Registrar, Paying Agent or
Authenticating Agent shall be accountable for the use or application by the Company of Securities
or the proceeds thereof.
Section 6.5
May Hold Securities and Act as Trustee under Other Indentures
.
The Trustee, any Authenticating Agent, any Paying Agent, any Security Registrar or any other
agent of the Company, in its individual or any other capacity, may become the owner or pledgee of
Securities and, subject to
Sections 6.8
and
6.13
, may otherwise deal with the
Company with the same rights it would have if it were not Trustee, Authenticating Agent, Paying
Agent, Security Registrar or such other agent.
Subject to the limitations imposed by the Trust Indenture Act, nothing in this Indenture shall
prohibit the Trustee from becoming and acting as trustee under other indentures under
which other securities, or certificates of interest of participation in other securities, of
the Company are outstanding in the same manner as if it were not Trustee hereunder.
Section 6.6
Money Held in Trust
.
Subject to the provisions of
Sections 10.3
and
13.5
, all moneys received by
the Trustee shall, until used or applied, as provided herein, be held in trust for the purposes for
which they were received. Money held by the Trustee in trust hereunder need not be segregated from
other funds except to the extent required by law. The Trustee shall be under no liability for
interest on any money received by it hereunder except as otherwise agreed in writing with the
Company. So long as no Event of Default shall have occurred and be continuing, all interest
allowed on any such moneys shall be paid by the Company from time to time upon a Company Order.
Section 6.7
Compensation and Reimbursement
.
The Company shall pay to the Trustee from time to time such reasonable compensation for its
services as the Company and the Trustee may agree in writing from time to time. The Trustees
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,
disbursements and advances incurred by it in connection with the performance
48
of its duties under this Indenture, except any such expense, disbursement or advance as may be attributable to its
negligence, willful misconduct or bad faith. Such expenses shall include the reasonable
compensation and expenses of the Trustees agents and counsel.
The Company shall indemnify the Trustee for, and hold it harmless against, any and all loss,
liability, damage, claim or expense (including attorneys fees and expenses, and including taxes
other than taxes based upon, measured by or determined by the income of the Trustee), including
without limitation the costs and expenses of defending itself against any third-party claim
(whether asserted by any Holder or any other Person (other than the Company to the extent of any
claim brought by it against the Trustee that establishes a breach by the Trustee in the observance
or performance of its duties under this Indenture)), incurred by it without negligence, willful
misconduct or bad faith arising out of or in connection with its acceptance or administration of
the trust or trusts hereunder, including the performance of its duties or the exercise of its
powers hereunder. With respect to any such claim other than a claim brought by the Company, (i)
the Trustee shall notify the Company promptly of any claim for which it may seek indemnity, (ii)
the Company may at its option defend the claim, in which event the Trustee shall cooperate in the
defense and the Trustee may have one separate counsel and the Company shall pay the reasonable fees
and expenses of such counsel and (iii) the Company need not pay for any settlement made without its
consent, which consent shall not be unreasonably withheld. This indemnification shall apply to
officers, directors, employees, shareholders and agents of the Trustee.
To secure the Companys payment obligations in this
Section 6.7
, the Trustee shall
have a lien prior to the Securities of any series on all money or property held or collected by the
Trustee, except that held in trust to pay principal of and interest on, or any Additional
Amounts with respect to, particular Securities of that series.
When the Trustee incurs expenses or renders services after an Event of Default specified in
Section 5.1(5)
or
(6)
occurs, the expenses and the compensation for the services
are intended to constitute expenses of administration under any Bankruptcy Law.
The provisions of this
Section 6.7
and any lien arising hereunder shall survive the
resignation or removal of the Trustee or the discharge of the Companys obligations under this
Indenture and the termination of this Indenture.
Section 6.8
Conflicting Interests
.
If the Trustee has or shall acquire a conflicting interest within the meaning of the Trust
Indenture Act, the Trustee shall either eliminate such conflicting interest or resign, to the
extent and in the manner and with the effect provided by, and subject to the provisions of, the
Trust Indenture Act and this Indenture. To the extent permitted by the Trust Indenture Act, the
Trustee shall not be deemed to have a conflicting interest by virtue of being a trustee under this
Indenture with respect to Securities of more than one series or any other indenture.
Section 6.9
Eligibility; Disqualification
.
There shall at all times be one (and only one) Trustee hereunder with respect to the
Securities of each series (which need not be the same Trustee for all series). A Trustee may be
49
Trustee hereunder for Securities of one or more series. Each Trustee shall be a Person that is
eligible pursuant to the Trust Indenture Act to act as such and has (or if the Trustee is a member
of a bank holding company system, its bank holding company has) a combined capital and surplus of
at least $50,000,000 and subject to supervision or examination by federal or state (or the District
of Columbia) authority. If any such Person or bank holding company publishes reports of condition
at least annually, pursuant to law or to the requirements of its supervising or examining
authority, then for the purposes of this
Section 6.9
and to the extent permitted by the
Trust Indenture Act, the combined capital and surplus of such Person or bank holding company shall
be deemed to be its combined capital and surplus as set forth in its most recent report of
condition so published. If at any time the Trustee with respect to the Securities of any series
shall cease to be eligible in accordance with the provisions of this
Section 6.9
, it shall
resign immediately in the manner and with the effect hereinafter specified in this
Article
6
.
The Indenture shall always have a Trustee who satisfies the requirements of
Sections
310(a)(1)
,
310(a)(2)
and
310(a)(5)
of the Trust Indenture Act.
Section 6.10
Resignation and Removal; Appointment of Successor
.
No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to
this Article shall become effective until the acceptance of appointment by the successor Trustee in
accordance with the applicable requirements of
Section 6.11
.
The Trustee may resign at any time with respect to the Securities of one or more series by
giving written notice thereof to the Company. If the instrument of acceptance by a successor
Trustee required by
Section 6.11
shall not have been delivered to the Trustee within 30
days after the giving of such notice of resignation, the resigning Trustee may petition at the
expense of the Company any court of competent jurisdiction for the appointment of a successor
Trustee with respect to the Securities of such series.
The Trustee may be removed at any time with respect to the Securities of any series by Act of
the Holders of a majority in principal amount of the Outstanding Securities of such series,
delivered to the Trustee and to the Company. If the instrument of acceptance by a successor
Trustee required by
Section 6.11
shall not have been delivered to the removed Trustee
within 30 days after the receipt of such notice of removal, the removed Trustee may petition at the
expense of the Company any court of competent jurisdiction for the appointment of a successor
Trustee with respect to the Securities of such series.
If at any time:
(1) the Trustee shall fail to comply with
Section 6.8
after written request
therefor by the Company or by any Holder who has been a bona fide Holder of a Security for at
least six months, or
(2) the Trustee shall cease to be eligible under
Section 6.9
and shall fail to
resign after written request therefor by the Company or by any such Holder, or
(3) the Trustee shall become incapable of acting or shall be adjudged a bankrupt or
insolvent or a receiver of the Trustee or of its property shall be appointed or
50
any public officer shall take charge or control of the Trustee or of its property or affairs for the
purpose of rehabilitation, conservation or liquidation,
then, in any such case, (A) the Company by a Board Resolution may remove the Trustee with respect
to all Securities, or (B) subject to
Section 5.14
, any Holder who has been a bona fide
Holder of a Security for at least six months may, on behalf of himself and all others similarly
situated, petition any court of competent jurisdiction for the removal of the Trustee with respect
to all Securities and the appointment of a successor Trustee or Trustees.
If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall
occur in the office of Trustee for any cause, with respect to the Securities of one or more series,
the Company by a Board Resolution shall promptly appoint a successor Trustee or Trustees with
respect to the Securities of that or those series (it being understood that any such successor
Trustee may be appointed with respect to the Securities of one or more or all of such series and
that at any time there shall be only one Trustee with respect to the Securities of any particular
series) and such successor Trustee or Trustees shall comply with the applicable requirements of
Section 6.11
. If, within one year after such resignation, removal or incapability, or the
occurrence of such vacancy, a successor Trustee with respect to the Securities of any
series shall be appointed by Act of the Holders of a majority in principal amount of the
Outstanding Securities of such series delivered to the Company and the retiring Trustee, the
successor Trustee so appointed shall, forthwith upon its acceptance of such appointment in
accordance with the applicable requirements of
Section 6.11
, become the successor Trustee
with respect to the Securities of such series and to that extent supersede the successor Trustee
appointed by the Company. If no successor Trustee with respect to the Securities of any series
shall have been so appointed by the Company or the Holders and accepted appointment in the manner
required by
Section 6.11
, the retiring Trustee may petition, or any Holder who has been a
bona fide Holder of a Security of such series for at least six months may petition, on behalf of
himself and all others similarly situated, any court of competent jurisdiction for the appointment
of a successor Trustee with respect to the Securities of such series.
The Company shall give notice of each resignation and each removal of the Trustee with respect
to the Securities of any series and each appointment of a successor Trustee with respect to the
Securities of any series to all Holders of Securities of such series in the manner provided in
Section 1.7
. Each notice shall include the name of the successor Trustee with respect to
the Securities of such series and the address of its Corporate Trust Office.
Section 6.11
Acceptance of Appointment by Successor
.
In case of the appointment hereunder of a successor Trustee with respect to all Securities,
every such successor Trustee so appointed shall execute, acknowledge and deliver to the Company and
to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or
removal of the retiring Trustee shall become effective and such successor Trustee, without any
further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties
of the retiring Trustee; but, on the request of the Company or the successor Trustee, such retiring
Trustee shall, upon payment of its charges, execute and deliver an instrument transferring to such
successor Trustee all the rights, powers and trusts of the
51
retiring Trustee and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee
hereunder.
In case of the appointment hereunder of a successor Trustee with respect to the Securities of
one or more (but not all) series, the Company, the retiring Trustee and each successor Trustee with
respect to the Securities of one or more series shall execute and deliver an indenture supplemental
hereto wherein each successor Trustee shall accept such appointment and which (1) shall contain
such provisions as shall be necessary or desirable to transfer and confirm to, and to vest in, each
successor Trustee all the rights, powers, trusts and duties of the retiring Trustee with respect to
the Securities of that or those series to which the appointment of such successor Trustee relates,
(2) if the retiring Trustee is not retiring with respect to all Securities, shall contain such
provisions as shall be deemed necessary or desirable to confirm that all the rights, powers, trusts
and duties of the retiring Trustee with respect to the Securities of that or those series as to
which the retiring Trustee is not retiring shall continue to be vested in the retiring Trustee, and
(3) shall add to or change any of the provisions of this Indenture as shall be necessary to provide
for or facilitate the administration of the trusts hereunder by more than one Trustee, it being
understood that nothing herein or in such supplemental indenture shall
constitute such Trustees co-trustees of the same trust and that each such Trustee shall be
trustee of a trust or trusts hereunder separate and apart from any trust or trusts hereunder
administered by any other such Trustee; and upon the execution and delivery of such supplemental
indenture the resignation or removal of the retiring Trustee shall become effective to the extent
provided therein and each such successor Trustee, without any further act, deed or conveyance,
shall become vested with all the rights, powers, trusts and duties of the retiring Trustee with
respect to the Securities of that or those series to which the appointment of such successor
Trustee relates; but, on request of the Company or any successor Trustee, such retiring Trustee
shall duly assign, transfer and deliver to such successor Trustee all property and money held by
such retiring Trustee hereunder with respect to the Securities of that or those series to which the
appointment of such successor Trustee relates.
Upon request of any such successor Trustee, the Company shall execute any and all instruments
for more fully and certainly vesting in and confirming to such successor Trustee all such rights,
powers and trusts referred to in the first or second preceding paragraph, as the case may be.
No successor Trustee shall accept its appointment unless at the time of such acceptance such
successor Trustee shall be qualified and eligible under this
Article 6
.
Section 6.12
Merger, Conversion, Consolidation or Succession to Business
.
Any corporation into which the Trustee may be merged or converted or with which it may be
consolidated, or any corporation resulting from any merger, conversion or consolidation to which
the Trustee shall be a party, or any corporation succeeding to or acquiring all or substantially
all the corporate trust business of the Trustee (including the administration of the trust created
by this Indenture), shall be the successor of the Trustee hereunder, provided such corporation
shall be otherwise qualified and eligible under this Article, without the execution or filing of
any paper or any further act on the part of any of the parties hereto. In case any Securities
shall have been authenticated, but not delivered, by the Trustee then in office, any
52
successor by merger, conversion or consolidation to, or by succession to or acquisition of all or substantially
all of the corporate trust business of, such successor Trustee may adopt such authentication and
deliver the Securities so authenticated with the same effect as if such successor Trustee had
itself authenticated such Securities.
Section 6.13
Preferential Collection of Claims Against Company
.
If and when the Trustee shall be or become a creditor of the Company (or any other obligor
upon the Securities) as provided in the Trust Indenture Act, the Trustee shall be subject to the
provisions of the Trust Indenture Act regarding the collection of claims against the Company (or
any such other obligor).
Section 6.14
Appointment of Authenticating Agent
The Trustee may appoint an Authenticating Agent or Agents with respect to one or more series
of Securities which shall be authorized to act on behalf of the Trustee to authenticate Securities
of such series issued upon original issue and upon exchange, registration of transfer or partial
redemption thereof or pursuant to
Section 3.6
, and Securities so authenticated shall be
entitled to the benefits of this Indenture and shall be valid and obligatory for all purposes as if
authenticated by the Trustee hereunder. Wherever reference is made in this Indenture to the
authentication and delivery of Securities by the Trustee or the Trustees certificate of
authentication, such reference shall be deemed to include authentication and delivery on behalf of
the Trustee by an Authenticating Agent and a certificate of authentication executed on behalf of
the Trustee by an Authenticating Agent. Each Authenticating Agent shall be acceptable to the
Company and, except as other specified as contemplated by
Section 3.1
, shall at all times
be a bank or trust company or corporation organized and doing business under the laws of the United
States of America, any State thereof or the District of Columbia, authorized under such laws to act
as Authenticating Agent, having (or if the Authenticating Agent is a member of a bank holding
company system, its bank holding company has) a combined capital and surplus of not less than
$50,000,000 and subject to supervision or examination by Federal or State (or the District of
Columbia) authority. If such Authenticating Agent publishes reports of condition at least
annually, pursuant to law or to the requirements of said supervising or examining authority, then
for the purposes of this
Section 6.14
, the combined capital and surplus of such
Authenticating Agent shall be deemed to be its combined capital and surplus as set forth in its
most recent report of condition so published. If at any time an Authenticating Agent shall cease
to be eligible in accordance with the provisions of this
Section 6.14
, such Authenticating
Agent shall resign immediately in the manner and with the effect specified in this
Section
6.14
.
Any corporation into which an Authenticating Agent may be merged or converted or with which it
may be consolidated, or any corporation resulting from any merger, conversion or consolidation to
which such Authenticating Agent shall be a party, or any corporation succeeding to or acquiring the
corporate agency or corporate trust business of an Authenticating Agent, shall continue to be an
Authenticating Agent, provided such corporation shall be otherwise eligible under this
Section
6.14
, without the execution or filing of any paper or any further act on the part of the
Trustee or the Authenticating Agent.
53
An Authenticating Agent for any series of Securities may resign at any time by giving written
notice thereof to the Trustee for such series and to the Company. The Trustee for any series of
Securities may at any time terminate the agency of an Authenticating Agent by giving written notice
thereof to such Authenticating Agent and to the Company. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time such Authenticating Agent shall
cease to be eligible in accordance with the provisions of this Section, the Trustee for such series
may appoint a successor Authenticating Agent which shall be acceptable to the Company and shall
give notice of such appointment in the manner provided in
Section 1.7
to all Holders of
Securities of the series with respect to which such Authenticating Agent will serve. Any successor
Authenticating Agent upon acceptance of its appointment hereunder shall become vested with all the
rights, powers and duties of its predecessor hereunder, with like effect as if originally named as
an Authenticating Agent. No successor Authenticating Agent shall be appointed unless eligible
under the provisions of this
Section 6.14
.
The Trustee agrees to pay to each Authenticating Agent from time to time reasonable
compensation for its services under this
Section 6.14
, and the Trustee shall be entitled to
be reimbursed for such payments, subject to the provisions of
Section 6.7
.
If an appointment with respect to one or more series is made pursuant to this
Section
6.14
, the Securities of such series may have endorsed thereon, in lieu of the Trustees
certificate of authentication, an alternative certificate of authentication in the following form:
This is one of the Securities of the series designated therein referred to in the
within-mentioned Indenture.
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[Trustee], as Trustee
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By:
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As Authenticating Agent
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By:
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Authorized Officer
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Notwithstanding any provision of this
Section 6.14
to the contrary, if at any time any
Authenticating Agent appointed hereunder with respect to any series of Securities shall not also be
acting as the Security Registrar hereunder with respect to any series of Securities, then, in
addition to all other duties of an Authenticating Agent hereunder, such Authenticating Agent shall
also be obligated: (i) to furnish to the Security Registrar promptly all information necessary to
enable the Security Registrar to maintain at all times an accurate and current Security Register;
and (ii) prior to authenticating any Security denominated in a foreign currency, to ascertain from
the Company the units of such foreign currency that are required to be determined by the Company
pursuant to
Section 3.2
.
54
ARTICLE 7
HOLDERS LISTS AND REPORTS BY TRUSTEE AND COMPANY
Section 7.1
Company to Furnish Trustee Names and Addresses of Holders
.
The Company will furnish or cause to be furnished to the Trustee
(1) not later than 15 days after the Regular Record Date for each respective series of
Securities, or if there is no Regular Record Date for such series of Securities,
semi-annually on January 1 and July 1, a list, in such form as the Trustee may reasonably
require, of the names and addresses of the Holders of Securities of each series as of such
date, as the case may be, and
(2) at such other times as the Trustee may request in writing, within 30 days after the
receipt by the Company of any such request, a list of similar form and content as of a date
not more than 15 days prior to the time such list is furnished; provided that no such list
need be furnished by the Company to the Trustee so long as the Trustee is acting as Security
Registrar.
Section 7.2
Preservation of Information; Communications to Holders
.
The Trustee shall preserve, in as current a form as is reasonably practicable, the names and
addresses of Holders contained in the most recent list furnished to the Trustee as provided in
Section 7.1
and the names and addresses of Holders received by the Trustee in its capacity
as Security Registrar. The Trustee may destroy any list furnished to it as provided in
Section
7.1
upon receipt of a new list so furnished.
The rights of Holders to communicate with other Holders with respect to their rights under
this Indenture or under the Securities, and the corresponding rights and privileges of the Trustee,
shall be as provided by the Trust Indenture Act.
Every Holder of Securities, by receiving and holding the same, agrees with the Company and the
Trustee that neither the Company nor the Trustee nor any agent of either of them shall be held
accountable by reason of any disclosure of information as to names and addresses of Holders made
pursuant to the Trust Indenture Act.
Section 7.3
Reports by Trustee
.
The Trustee shall transmit to Holders and any other required Persons such reports concerning
the Trustee and its actions under this Indenture as may be required pursuant to the Trust Indenture
Act at the times and in the manner provided pursuant thereto.
As promptly as practicable after each January 1 beginning with the January 1 following the
date of this Indenture, and in any event prior to March 1 in each year, the Trustee shall mail to
each Holder a brief report dated as of December 31 of the prior year if and to the extent required
by Section 313(a) of the Trust Indenture Act. The Trustee shall also comply with Section 313(b) of
the Trust Indenture Act.
55
A copy of each such report shall, at the time of such transmission to Holders, be filed by the
Trustee with each stock exchange upon which any Securities are listed, with the Commission and with
the Company. The Company will notify the Trustee when any Securities are listed on any stock
exchange.
Section 7.4
Reports by Company
.
The Company shall file with the Trustee and the Commission, and transmit to Holders and any
other required Persons within 30 days after the filing with the Trustee, such information,
documents and other reports, and such summaries thereof, as may be required pursuant to the Trust
Indenture Act at the times and in the manner provided pursuant to the Trust Indenture Act; provided
that any such information, documents or reports required to be filed with the Commission pursuant
to Section 13 or 15(d) of the Exchange Act shall be filed with the Trustee within 30 days after the
same is so required to be filed with the Commission.
ARTICLE 8
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
Section 8.1
Company May Consolidate, etc., Only on Certain Terms
.
The Company may not merge or consolidate with or into any other Person, in a transaction in
which it is not the surviving Person, or sell, convey, transfer, lease or otherwise dispose of all
or substantially all of its assets to any Person, unless (i) the surviving or transferee Person is
organized and existing under the laws of the United States or a State thereof or the District of
Columbia and such Person expressly assumes by supplemental indenture all the obligations of the
Company under the Securities and under this Indenture, (ii) immediately thereafter, giving effect
to such merger or consolidation, or such sale, conveyance, transfer or other disposition, no
default or Event of Default shall have occurred and be continuing and (iii) the Company shall have
delivered to the Trustee an Officers Certificate and an Opinion of Counsel each stating that such
merger, consolidation, sale, conveyance, transfer, lease or other disposition complies with this
Article 8
and that all conditions precedent herein provided for relating to such
transaction have been complied with.
Section 8.2
Successor Substituted
.
Upon any consolidation of the Company with, or merger of the Company into, any other Person or
any conveyance, transfer or lease of all or substantially all of the properties and assets of the
Company in accordance with
Section 8.1
, the successor Person formed by such consolidation
or into which the Company is merged or to which such sale, conveyance, transfer or lease is made
shall succeed to, and be substituted for, and may exercise every right and power of, the Company
under this Indenture with the same effect as if such successor Person had been named as the Company
herein, and thereafter, except in the case of a lease, the predecessor Person shall be relieved of
all obligations and covenants under this Indenture and the Securities.
56
ARTICLE 9
SUPPLEMENTAL INDENTURES
Section 9.1
Supplemental Indentures Without Consent of Holders
.
Without the consent of any Holders, the Company, when authorized by a Board Resolution, and
the Trustee, at any time and from time to time, may enter into one or more indentures supplemental
hereto for any of the following purposes:
(1) to evidence the succession of another Person to the Company, or successive
successions, and the assumption by any such successor of the covenants and obligations of the
Company herein and in the Securities in compliance with
Article 8
; or
(2) to add to the covenants of the Company for the benefit of the Holders of any one or
more series of Securities (and if such covenants are to be for the benefit of less than all
series of Securities, stating that such covenants are expressly being included solely for the
benefit of such series), to convey, transfer, assign, mortgage or pledge any property to or
with the Trustee or otherwise secure any series of the Securities, including provisions
regarding the circumstances under which collateral may be released or substituted, to
surrender any right or power herein conferred upon the Company or to comply with any
requirement of the Commission or otherwise in connection with the qualification of this
Indenture or any supplemental indenture under the Trust Indenture Act; or
(3) to add any additional Events of Default for the benefit of the Holders of any one or
more series of Securities (and if such additional Events of Default are to be for the benefit
of less than all series of Securities, stating that such additional Events of Default are
expressly being included solely for the benefit of such series); or
(4) to add to or change any of the provisions of this Indenture to such extent as shall
be necessary to permit or facilitate the issuance of Securities in bearer form, registrable
or not registrable as to principal, and with or without interest coupons, or to permit or
facilitate the issuance of Securities in global form or uncertificated form; or
(5) to add to, change or eliminate any of the provisions of this Indenture in respect of
one or more series of Securities, provided that any such addition, change or elimination (A)
shall neither (i) apply to any Outstanding Security of any series created prior to the
execution of such supplemental indenture and entitled to the benefit of such provision, or
(ii) modify the rights of any Holder of any Outstanding Security with respect to such
provision, or (B) shall become effective when there is no Security then Outstanding; or
(6) to add or provide for a guaranty or guarantees of the Securities or additional
obligors on the Securities; or
(7) to establish the form or terms of Securities of any series as permitted by
Sections 2.1
and
3.1
; or
57
(8) to evidence and provide for the acceptance of appointment hereunder by a successor
Trustee with respect to the Securities of one or more series and to add to or change any of
the provisions of this Indenture as shall be necessary to provide for or facilitate the
administration of the trusts hereunder by more than one Trustee, pursuant to the requirements
of
Section 6.11
; or
(9) to correct or supplement any provision herein which may be defective or inconsistent
with any other provision herein, to cure any ambiguity or omission, to correct
any mistake, or to conform to any prospectus pursuant to which Securities of any series
were offered; or
(10) to make any other provisions with respect to matters or questions arising under
this Indenture, provided such action shall not adversely affect the rights of any Holder of
Securities of any series; or
(11) to make any change that does not adversely affect the rights of any Holder.
Section 9.2
Supplemental Indentures with Consent of Holders
.
With the consent of the Holders of a majority in principal amount of the Outstanding
Securities of each series affected by such supplemental indenture (acting as one class), by Act of
said Holders delivered to the Company and the Trustee, the Company, when authorized by a Board
Resolution, and the Trustee may enter into an indenture or indentures supplemental hereto for the
purpose of adding any provisions to or changing in any manner or eliminating any of the provisions
of this Indenture or any indenture supplemental hereto or of modifying in any manner the rights of
the Holders of Securities of such series under this Indenture; provided, however, that no such
supplemental indenture shall, without the consent of the Holder of each Outstanding Security
affected thereby,
(1) change the Stated Maturity of the principal of or any installment of principal of,
or the date fixed for payment of interest on or any sinking fund payment with respect to, any
Security, or reduce the principal amount thereof or the rate of interest thereon, any
Additional Amounts with respect thereto or any premium payable upon the redemption thereof,
or change any obligation of the Company to pay Additional Amounts (except as contemplated by
Section 8.1
and permitted by
clause (1)
of
Section 9.1
), or reduce
the amount of the principal of an Original Issue Discount Security or any other Security
which would be due and payable upon a declaration of acceleration of the Maturity thereof
pursuant to
Section 5.2
, or change any Place of Payment where, or the coin or
currency or currencies (including composite currencies) in which any Security or any premium
or interest thereon or Additional Amounts with respect thereto is payable, or impair the
right to institute suit for the enforcement of any such payment on or after the Stated
Maturity thereof (or, in the case of redemption, on or after the Redemption Date), or modify
the provisions of this Indenture with respect to the subordination of a Security in a manner
adverse to the holder thereof, or
(2) reduce the percentage in principal amount of the Outstanding Securities of any
series, the consent of whose Holders is required for any such supplemental indenture,
58
or the
consent of whose Holders is required for any waiver (of compliance with certain provisions of
this Indenture or certain defaults hereunder and their consequences) provided for in this
Indenture, or
(3) modify any of the provisions of this
Section 9.2
,
Section 5.13
or
Section 10.8
, except to increase any such percentage or to provide with respect to
any particular series the right to condition the effectiveness of any supplemental indenture
as
to that series on the consent of the Holders of a specified percentage of the aggregate
principal amount of Outstanding Securities of such series (which provision may be made
pursuant to
Section 3.1
without the consent of any Holder) or to provide that certain
other provisions of this Indenture cannot be modified or waived without the consent of the
Holder of each Outstanding Security affected thereby; provided, however, that this clause
shall not be deemed to require the consent of any Holder with respect to changes in the
references to the Trustee and concomitant changes in this
Section 9.2
and
Section 10.8
, or the deletion of this proviso, in accordance with the requirements of
Sections 6.11
and
9.1(8)
.
A supplemental indenture which changes or eliminates any covenant or other provision of this
Indenture which has expressly been included solely for the benefit of one or more particular series
of Securities, or which modifies the rights of the Holders of Securities of such series with
respect to such covenant or other provision, shall be deemed not to affect the rights under this
Indenture of the Holders of Securities of any other series.
It shall not be necessary for any Act of Holders under this Section to approve the particular
form of any proposed supplemental indenture, but it shall be sufficient if such Act shall approve
the substance thereof.
Section 9.3
Execution of Supplemental Indentures
.
In executing, or accepting the additional trusts created by, any supplemental indenture
permitted by this Article or the modifications thereby of the trusts created by this Indenture, the
Trustee shall be entitled to receive, and (subject to
Sections 6.1
and
6.3
) shall
be fully protected in relying upon, an Opinion of Counsel stating that the execution of such
supplemental indenture is authorized or permitted by this Indenture. The Trustee may, but shall
not be obligated to, enter into any such supplemental indenture which affects the Trustees own
rights, duties, immunities or liabilities under this Indenture or otherwise.
Section 9.4
Effect of Supplemental Indentures
.
Upon the execution of any supplemental indenture under this
Article 9
, this Indenture
shall be modified in accordance therewith, and such supplemental indenture shall form a part of
this Indenture for all purposes; and every Holder of Securities theretofore or thereafter
authenticated and delivered hereunder shall be bound thereby; provided that if such supplemental
indenture makes any of the changes described in
clauses (1)
through
(3)
of the
first proviso to
Section 9.2
, such supplemental indenture shall bind each Holder of a
Security who has consented to it and every subsequent Holder of such Security or any part thereof.
59
Section 9.5
Conformity with Trust Indenture Act
.
Every supplemental indenture executed pursuant to this
Article 9
shall conform to the
requirements of the Trust Indenture Act.
Section 9.6
Reference in Securities to Supplemental Indentures
.
Securities of any series authenticated and delivered after the execution of any supplemental
indenture pursuant to this
Article 9
may, and shall if required by the Trustee, bear a
notation in form approved by the Trustee as to any matter provided for in such supplemental
indenture. If the Company shall so determine, new Securities of any series so modified as to
conform, in the opinion of the Trustee and the Company, to any such supplemental indenture may be
prepared and executed by the Company and authenticated and delivered by the Trustee in exchange for
Outstanding Securities of such series.
ARTICLE 10
COVENANTS
Section 10.1
Payment of Principal, Premium and Interest
.
The Company covenants and agrees for the benefit of the Holders of each series of Securities
that it will duly and punctually pay the principal of and any premium and interest on, and any
Additional Amounts with respect to, the Securities of that series in accordance with the terms of
the Securities and this Indenture.
Section 10.2
Maintenance of Office or Agency
.
The Company will maintain in each Place of Payment for any series of Securities an office or
agency where Securities of that series may be presented or surrendered for payment, where
Securities of that series may be surrendered for registration of transfer or exchange and where
notices and demands to or upon the Company in respect of the Securities of that series and this
Indenture may be served. The Company will give prompt written notice to the Trustee of the
location, and any change in the location, of any such office or agency. If at any time the Company
shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with
the address thereof, such presentations, surrenders, notices and demands may be made or served at
the Corporate Trust Office of the Trustee, and the Company hereby appoints the Trustee as its agent
to receive all such presentations, surrenders, notices and demands. Unless otherwise provided in a
supplemental indenture or pursuant to
Section 3.1
hereof, the Place of Payment for any
series of Securities shall be 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 of one or more series may be presented or surrendered for any or all such purposes
and may from time to time rescind such designations; provided, however, that no such
designation or rescission shall in any manner relieve the Company of its obligation to
maintain an office or agency in each Place of Payment for Securities of any series for such
purposes. The Company will give prompt written notice to the Trustee of any such designation or
rescission and of any change in the location of any such other office or agency.
60
Section 10.3
Money for Securities Payments to be Held in Trust
.
If the Company, any Subsidiary or any of their respective Affiliates shall at any time act as
Paying Agent with respect to any series of Securities, such Paying Agent will, on or before each
due date of the principal of or any premium or interest on, or any Additional Amounts with respect
to, any of the Securities of that series, segregate and hold in trust for the benefit of the
Persons entitled thereto a sum sufficient to pay the principal and any premium and interest, or any
Additional Amounts, so becoming due until such sums shall be paid to such Persons or otherwise
disposed of as herein provided and will promptly notify the Trustee of its action or failure so to
act.
Whenever the Company shall have one or more Paying Agents for any series of Securities, it
will, on or prior to each due date of the principal of or any premium or interest on, or Additional
Amounts with respect to, any Securities of that series, deposit with a Paying Agent a sum
sufficient to pay such amount, such sum to be held as provided by the Trust Indenture Act, and
(unless such Paying Agent is the Trustee) the Company will promptly notify the Trustee of its
action or failure so to act.
The Company will cause each Paying Agent for any series of Securities other than the Trustee
to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the
Trustee, subject to the provisions of this
Section 10.3
, that such Paying Agent will (1)
comply with the provisions of the Trust Indenture Act applicable to it as a Paying Agent and (2)
during the continuance of any default by the Company (or any other obligor upon the Securities of
that series) in the making of any payment in respect of the Securities of that series, upon the
written request of the Trustee, forthwith pay to the Trustee all sums held in trust by such Paying
Agent for payment in respect of the Securities of that series.
The Company may at any time, for the purpose of obtaining the satisfaction and discharge of
this Indenture, or with respect to one or more series of Securities, or for any other purpose, pay,
or by Company Order direct any Paying Agent to pay, to the Trustee all sums held in trust by the
Company or such Paying Agent, such sums to be held by the Trustee upon the same trusts as those
upon which such sums were held by the Company or such Paying Agent; and, upon such payment by any
Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with
respect to such money.
Any money deposited with the Trustee or any Paying Agent, or then held by the Company, in
trust for the payment of the principal of or any premium or interest on, or any Additional Amounts
with respect to, any Security of any series and remaining unclaimed for a period ending on the
earlier of the date that is ten Business Days prior to the date such money would escheat to the
State or two years after such principal, premium or interest or Additional
Amount has become due and payable shall be paid to the Company on Company Request, or (if then
held by the Company) shall be discharged from such trust; and the Holder of such Security shall
thereafter, as an unsecured general creditor, look only to the Company for payment thereof, and all
liability of the Trustee or such Paying Agent with respect to such trust money, and all liability
of the Company as trustee thereof, shall thereupon cease; provided, however, that the Trustee or
such Paying Agent, before being required to make any such repayment, may at the expense of the
Company cause to be published once, in an Authorized Newspaper in The
61
Borough of Manhattan, The
City of New York and in such other Authorized Newspapers as the Trustee shall deem appropriate,
notice that such money remains unclaimed and that, after a date specified herein, which shall not
be less than 30 days from the date of such publication, any unclaimed balance of such money then
remaining will, unless otherwise required by mandatory provisions of applicable escheat, or
abandoned or unclaimed property law, be repaid to the Company.
Section 10.4
Statement by Officers as to Default
.
At any time at which there are Outstanding Securities of any series issued under this
Indenture, the Company will deliver to the Trustee, within 120 days after the end of each fiscal
year of the Company ending after the date hereof, an Officers Certificate complying with Section
314(a)(4) of the Trust Indenture Act and stating that a review of the activities of the Company
during such year and of performance under this Indenture has been made under the supervision of the
signers thereof and stating whether or not to the best knowledge of the signers thereof, based upon
such review, the Company is in default in the performance and observance of any of the terms,
provisions and conditions of this Indenture (without regard to any period of grace or requirement
of notice provided hereunder) and, if the Company shall be in default, specifying all such defaults
and the nature and status thereof of which they may have knowledge. One of the officers signing
the Officers Certificate delivered pursuant to this
Section 10.4
shall be the principal
executive, financial or accounting officer of the Company.
Section 10.5
Existence
.
Subject to
Article 8
, the Company will do or cause to be done all things necessary to
preserve and keep in full force and effect its existence.
Section 10.6
All Securities to be Equally and Ratably Secured
.
Unless specified otherwise by the Company pursuant to
Section 3.1
with respect to any
series, the Company will not itself secure Securities of any one or more series with any Mortgage,
without effectively providing that the Securities of every other series shall be secured equally
and ratably by such Mortgage.
Section 10.7
Maintenance of Properties
.
The Company will cause all properties used or useful in the conduct of its business to be
maintained and kept in good condition, repair and working order and supplied with all necessary
equipment and will cause to be made all necessary repairs, renewals, replacements, betterments and
improvements thereof, all as, and to the extent, in the judgment of the Company may be necessary or
appropriate in connection with its business; provided, however, that nothing in this Section shall
prevent the Company from discontinuing the operation or maintenance of any of such properties if
such discontinuance is, in the judgment of the Company, desirable in the conduct of its business
and not disadvantageous in any material respect to the Holders.
62
Section 10.8
Payment of Taxes and Other Claims
.
The Company will pay or discharge or cause to be paid or discharged, before the same shall
become delinquent, (1) all taxes, assessments and governmental charges levied or imposed upon the
Company or upon the income, profits or property of the Company, and (2) all lawful claims for
labor, materials and supplies which, if unpaid, might by law become a lien upon the property of the
Company; provided, however, that the Company shall not be required to pay or discharge or cause to
be paid or discharged any such tax, assessment, charge or claim (i) whose amount, applicability or
validity is being contested in good faith by appropriate proceedings or (ii) if the failure to pay
or discharge would not have a material adverse effect on the assets, business, operations,
properties or financial condition of the Company and its Subsidiaries, taken as a whole.
Section 10.9
Waiver of Certain Covenants
.
Except as otherwise specified as contemplated by
Section 3.1
for Securities of such
series, the Company may, with respect to the Securities of any series, omit in any particular
instance to comply with any term, provision or condition set forth in any covenant provided
pursuant to
Sections 3.1(22)
,
8.1
,
9.1(2)
,
10.4
,
10.5
,
10.6
,
10.7
or
10.8
for the benefit of the Holders of such series if before
or after the time for such compliance the Holders of at least a majority in principal amount of the
Outstanding Securities of such series shall, by Act of such Holders, either waive such compliance
in such instance or generally waive compliance with such term, provision or condition, but no such
waiver shall extend to or affect such term, provision or condition except to the extent so
expressly waived, and, until such waiver shall become effective, the obligations of the Company and
the duties of the Trustee in respect of any such term, provision or condition shall remain in full
force and effect.
Section 10.10
Additional Amounts
.
If the Securities of a series expressly provide for the payment of Additional Amounts, the
Company will pay to the Holder of any Security of such series Additional Amounts as expressly
provided therein. Whenever in this Indenture there is mentioned, in any context, the payment
of the principal of, or premium (if any) or interest on any Security of any series or the net
proceeds received from the sale or exchange of any Security of any series, such mention shall be
deemed to include mention of the payment of Additional Amounts provided for in this
Section
10.10
to the extent that, in such context, Additional Amounts are, were or would be payable in
respect thereof pursuant to the provisions of this
Section 10.10
and express mention of the
payment of Additional Amounts (if applicable) in any provisions hereof shall not be construed as
excluding Additional Amounts in those provisions hereof where such express mention is not made.
If the Securities of a series provide for the payment of Additional Amounts, at least 10 days
prior to the first Interest Payment Date with respect to that series of Securities (or if the
Securities of that series will not bear interest prior to Maturity, the first day on which a
payment of principal and any premium is made), and at least 10 days prior to each date of payment
of principal and any premium or interest if there has been any change with respect to the matters
set forth in the below-mentioned Officers Certificate, the Company shall furnish the Trustee and
the Companys principal Paying Agent or Paying Agents, if other than the Trustee, with an Officers
63
Certificate instructing the Trustee and such Paying Agent or Paying Agents whether such payment of
principal of and any premium or interest on the Securities of that series shall be made to Holders
of Securities of that series who are United States Aliens without withholding for or on account of
any tax, assessment or other governmental charge described in the Securities of that series. If
any such withholding shall be required, then such Officers Certificate shall specify by country
the amount, if any, required to be withheld on such payments to such Holders of Securities and the
Company will pay to such Paying Agent the Additional Amounts required by this
Section
10.10
. The Company covenants to indemnify the Trustee and any Paying Agent for, and to hold
them harmless against any loss, liability or expense reasonably incurred without negligence,
willful misconduct or bad faith on their part arising out of or in connection with actions taken or
omitted by any of them in reliance on any Officers Certificate furnished pursuant to this
Section 10.10
.
ARTICLE 11
REDEMPTION OF SECURITIES
Section 11.1
Applicability of Article
.
Securities of any series that are redeemable in whole or in part before their Stated Maturity
shall be redeemable at the option of the Company in accordance with their terms and (except as
otherwise specified as contemplated by
Section 3.1
for such Securities) in accordance with
this
Article 11
.
Section 11.2
Election to Redeem; Notice to Trustee
.
The election of the Company to redeem any Securities shall be evidenced by a Board Resolution
or in another manner specified as contemplated by
Section 3.1
for such Securities. In
case of any redemption at the election of the Company of less than all the Securities of any
series (including any such redemption affecting only a single Security), the Company shall, at
least 45 days prior to the Redemption Date fixed by the Company (unless a shorter notice shall be
satisfactory to the Trustee), notify the Trustee of such Redemption Date, of the principal amount
of Securities of such series to be redeemed and, if applicable, of the tenor of the Securities to
be redeemed. In the case of any redemption of Securities (i) prior to the expiration of any
restriction on such redemption provided in the terms of such Securities or elsewhere in this
Indenture or (ii) pursuant to an election of the Company which is subject to a condition specified
in the terms of such Securities, the Company shall furnish the Trustee with an Officers
Certificate evidencing compliance with such restriction or condition.
Section 11.3
Selection by Trustee of Securities to Be Redeemed
.
If less than all the Securities of any series are to be redeemed (unless all the Securities of
such series and of a specified tenor are to be redeemed or unless such redemption affects only a
single Security), the particular Securities to be redeemed shall be selected not more than 45 days
prior to the Redemption Date by the Trustee, from the Outstanding Securities of such series not
previously called for redemption, on a pro-rata basis, or in the Trustees discretion, by lot, or
by such other method as the Trustee shall deem fair and appropriate, provided that the unredeemed
64
portion of the principal amount of any Security shall be in an authorized denomination (which shall
not be less than the minimum authorized denomination) for such Security.
If any Security selected for partial redemption is converted in part before termination of the
conversion right with respect to the portion of the Security so selected, the converted portion of
such Security shall be deemed (so far as may be) to be the portion selected for redemption.
The Trustee shall promptly notify the Company and the Security Registrar in writing of the
Securities selected for redemption as aforesaid and, in case of any Securities selected for partial
redemption as aforesaid, the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise requires, all provisions
relating to the redemption of Securities shall relate, in the case of any Securities redeemed or to
be redeemed only in part, to the portion of the principal amount of such Securities which has been
or is to be redeemed.
Section 11.4
Notice of Redemption
.
Notice of redemption shall be given by first-class mail, postage prepaid, mailed not fewer
than 30 nor more than 90 days prior to the Redemption Date, unless a shorter period is specified in
the Securities to be redeemed, to each Holder of Securities to be redeemed, at its address
appearing in the Security Register.
All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price (including accrued interest, if any, to be paid),
(3) if less than all the Outstanding Securities of any series consisting of more than a
single Security are to be redeemed, the identification (and, in the case of partial
redemption of any such Securities, the principal amounts) of the particular Securities to be
redeemed and, if less than all the Outstanding Securities of any series consisting of a
single Security are to be redeemed, the principal amount of the particular Security to be
redeemed,
(4) in case any Security is to be redeemed in part only, that on and after the
Redemption Date, upon surrender of such Security, the Holder of such Security will receive,
without charge, a new Security or Securities of authorized denominations for the principal
amount thereof remaining unredeemed;
(5) that on the Redemption Date the Redemption Price will become due and payable upon
each such Security to be redeemed and, if applicable, that interest thereon will cease to
accrue on and after said date,
(6) the place or places where each such Security is to be surrendered for payment of the
Redemption Price,
65
(7) if applicable, the conversion price, the date on which the right to convert the
principal of the Securities or the portions thereof to be redeemed will terminate, and the
place or places where such Securities may be surrendered for conversion,
(8) that the redemption is for a sinking fund, if such is the case, and
(9) the CUSIP number or numbers and/or common codes of the Security being redeemed.
Notice of redemption of Securities to be redeemed at the election of the Company shall be
given by the Company or, at the Companys request, by the Trustee in the name and at the expense of
the Company, provided that the Company shall have prepared and provided to the Trustee the form of
such notice, or, if acceptable to the Trustee, provided sufficient information to enable the
Trustee to prepare such notice, in each case on a timely basis.
Section 11.5
Deposit of Redemption Price
.
On or prior to any Redemption Date, the Company shall deposit with the Trustee or with a
Paying Agent (or, if the Company is acting as its own Paying Agent, segregate and hold in trust as
provided in
Section 10.3
) an amount of money sufficient to pay the Redemption Price of, and
(except if the Redemption Date shall be an Interest Payment Date) accrued interest on, all the
Securities which are to be redeemed on that date.
If any Security called for redemption is converted, any money deposited with the Trustee or
with a Paying Agent or so segregated and held in trust for the redemption of such Security shall
(subject to any right of any Holder of such Security to receive interest thereon) be paid to the
Company on Company Request, or if then held by the Company, shall be discharged from such trust.
Section 11.6
Securities Payable on Redemption Date
.
Notice of redemption having been given as aforesaid, the Securities so to be redeemed shall,
on the Redemption Date, become due and payable at the Redemption Price therein specified, and from
and after such date (unless the Company shall default in the payment of the Redemption Price and
accrued interest) such Securities shall cease to bear interest. Upon surrender of any such
Security for redemption in accordance with said notice, such Security shall be paid by the Company
at the Redemption Price, together with accrued interest (and any Additional Amounts) to the
Redemption Date; provided, however, that, unless otherwise specified as contemplated by
Section
3.1
, installments of interest whose Stated Maturity is on or prior to the Redemption Date will
be payable to the Holders of such Securities, or one or more Predecessor Securities, registered as
such at the close of business on the relevant Record Dates according to their terms and the
provisions of
Section 3.7
.
If any Security called for redemption shall not be so paid upon surrender thereof for
redemption, the principal and any premium shall, until paid, bear interest from the Redemption Date
at the rate prescribed therefor in the Security or, in the case of Original Issue Discount
Securities, the Securities Yield to Maturity.
66
Section 11.7
Securities Redeemed in Part
.
Any Security which is to be redeemed only in part shall be surrendered at a Place of Payment
therefor (with, if the Company or the Trustee so requires, due endorsement by, or a written
instrument of transfer in form satisfactory to the Company and the Trustee duly executed by, the
Holder thereof or its attorney duly authorized in writing), and the Company shall execute, and the
Trustee shall authenticate and deliver to the Holder of such Security without service charge, a new
Security or Securities of the same series and Stated Maturity and of like tenor, of any authorized
denomination as requested by such Holder, in aggregate principal amount equal to and in exchange
for the unredeemed portion of the principal of the Security so surrendered.
Unless otherwise specified as contemplated by
Section 3.1
, the Company and any
Affiliate of the Company may at any time purchase or otherwise acquire Securities in the open
market or by private agreement. Such acquisition shall not operate as or be deemed for any purpose
to be a redemption of the indebtedness represented by such Securities. Any Securities purchased or
acquired by the Company may be delivered to the Trustee and, upon such delivery, the indebtedness
represented thereby shall be deemed to be satisfied.
Section 3.9
shall apply to all
Securities so delivered.
ARTICLE 12
SINKING FUNDS
Section 12.1
Applicability of Article
.
The provisions of this
Article 12
shall be applicable to any sinking fund for the
retirement of Securities of any series except as otherwise specified as contemplated by
Section
3.1
for such Securities.
The minimum amount of any sinking fund payment provided for by the terms of any Securities is
herein referred to as a mandatory sinking fund payment, and any payment in excess of such minimum
amount provided for by the terms of such Securities is herein referred to as an optional sinking
fund payment. Unless otherwise provided for by the terms of any Securities, the cash amount of any
sinking fund payment may be subject to reduction as provided in
Section 12.2
. Each sinking
fund payment shall be applied to the redemption of Securities as provided for by the terms of such
Securities.
Section 12.2
Satisfaction of Sinking Fund Payments with Securities
.
The Company (1) may deliver Outstanding Securities of a series (other than any previously
called for redemption) and (2) may apply as a credit Securities of a series which have been
redeemed either at the election of the Company pursuant to the terms of such Securities or through
the application of permitted optional sinking fund payments pursuant to the terms of such
Securities, in each case in satisfaction of all or any part of any sinking fund payment with
respect to any Securities of such series required to be made pursuant to the terms of such
Securities as and to the extent provided for by the terms of such Securities; provided that the
Securities to be so credited have not been previously so credited. The Securities to be so
credited shall be received and credited for such purpose by the Trustee at the Redemption Price, as
67
specified in the Securities so to be redeemed, for redemption through operation of the sinking fund
and the amount of such sinking fund payment shall be reduced accordingly.
Section 12.3
Redemption of Securities for Sinking Fund
.
Not fewer than 45 days prior (unless a shorter period shall be satisfactory to the Trustee) to
each sinking fund payment date for any Securities, the Company will deliver to the Trustee an
Officers Certificate specifying the amount of the next ensuing sinking fund payment for such
Securities pursuant to the terms of such Securities, the portion thereof, if any, which is to be
satisfied by payment of cash and the portion thereof, if any, which is to be satisfied by
delivering and crediting Securities pursuant to
Section 12.2
and will also deliver to the
Trustee any Securities to be so delivered. Not fewer than 30 days prior to each such sinking fund
payment date, the Trustee shall select the Securities to be redeemed upon such sinking fund payment
date
in the manner specified in
Section 11.3
and cause notice of the redemption thereof to
be given in the name of and at the expense of the Company in the manner provided in
Section
11.4
. Such notice having been duly given, the redemption of such Securities shall be made upon
the terms and in the manner stated in
Sections 11.6
and
11.7
.
ARTICLE 13
DEFEASANCE AND COVENANT DEFEASANCE
Section 13.1
Companys Option to Effect Defeasance or Covenant Defeasance
.
The Company may elect, at its option at any time, to have
Section 13.2
or
Section
13.3
applied to any Securities or any series of Securities, as the case may be, designated
pursuant to
Section 3.1
as being defeasible pursuant to such
Sections 13.2
or
13.3
, in accordance with any applicable requirements provided pursuant to
Section
3.1
and upon compliance with the conditions set forth below in this
Article 13
. Any
such election shall be evidenced by a Board Resolution or in another manner specified as
contemplated by
Section 3.1
for such Securities.
Section 13.2
Defeasance and Discharge
.
Upon the Companys exercise of its option (if any) to have this Section applied to any
Securities or any series of Securities, as the case may be, the Company shall be deemed to have
been discharged from its obligations with respect to such Securities as provided in this Section on
and after the date the conditions set forth in
Section 13.4
are satisfied (hereinafter
called
Defeasance
). For this purpose, such Defeasance means that the Company shall be
deemed to have paid and discharged the entire indebtedness represented by such Securities and to
have satisfied all its other obligations under such Securities and this Indenture insofar as such
Securities are concerned (and the Trustee, at the expense of the Company, shall execute proper
instruments acknowledging the same), subject to the following which shall survive until otherwise
terminated or discharged hereunder:
(1) the rights of Holders of such Securities to receive, solely from the trust fund
described in
Section 13.4
and as more fully set forth in such Section, payments in
respect of the principal of and any premium and interest on, or any Additional Amounts with
respect to, such Securities when payments are due,
68
(2) the Companys obligations with respect to such Securities under
Sections
3.4
,
3.5
,
3.6
,
10.2
and
10.3
,
(3) the rights, powers, trusts, duties and immunities of the Trustee hereunder, and
(4) this
Article 13
.
Subject to compliance with this
Article 13
, the Company may exercise its option (if
any) to have this Section applied to any Securities notwithstanding the prior exercise of its
option (if any) to have
Section 13.3
applied to such Securities.
Section 13.3
Covenant Defeasance
.
Upon the Companys exercise of its option (if any) to have this
Section 13.3
applied
to any Securities or any series of Securities, as the case may be,
(1) the Company shall be released from its obligations under
Sections 8.1
,
10.4
,
10.5
,
10.6
,
10.7
or
10.8
and any covenants
provided pursuant to
Sections 3.1(22)
or
9.1(2)
for the benefit of the
Holders of such Securities and
(2) the occurrence of any event specified in
Section 5.1(4)
(with respect to any
of
Sections 8.1
,
10.4
,
10.5
,
10.6
,
10.7
or
10.8
and any such covenants provided pursuant to
Sections 3.1(22)
or
9.1(2)
) and the occurrence of any other Event of Default specified pursuant to
Section 3.1
or
Section 9.1(3)
shall be deemed not to be or result in an Event
of Default, in each case with respect to such Securities or any series of Securities as
provided in this
Section 13.3
on and after the date the conditions set forth in
Section 13.4
are satisfied (hereinafter called
Covenant Defeasance
). For
this purpose, such Covenant Defeasance means that, with respect to such Securities, the
Company may omit to comply with and shall have no liability in respect of any term, condition
or limitation set forth in any such specified Section or such other covenant (to the extent
so specified in the case of
Section 5.1(4)
and the occurrence of any Event of Default
specified pursuant to
Section 3.1
or
Section 9.1(3)
), whether directly or
indirectly by reason of any reference elsewhere herein to any such Section or such other
covenant or by reason of any reference in any such Section or such other covenant to any
other provision herein or in any other document, but the remainder of this Indenture and such
Securities shall be unaffected thereby.
Section 13.4
Conditions to Defeasance or Covenant Defeasance
.
The following shall be the conditions to the application of
Section 13.2
or
Section 13.3
to any Securities or any series of Securities, as the case may be:
(1) The Company shall have deposited or caused to be deposited irrevocably with the
Trustee (or another trustee which satisfies the requirements contemplated by
Section
6.9
and agrees to comply with the provisions of this
Article 13
applicable to it)
as trust funds in trust for the purpose of making the following payments, specifically
pledged as security for, and dedicated solely to, the benefits of the Holders of such
Securities,
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(A) in the case of Securities of a series denominated in currency of the United
States of America,
(i) cash in currency of the United States of America in an amount, or
(ii) U.S. Government Obligations which through the scheduled payment of
principal and interest in respect thereof in accordance with their terms
will provide, not later than one day before the due date of any payment, an
amount in cash, or
(iii) a combination thereof, or
(B) in the case of Securities of a series denominated in currency other than
that of the United States of America,
(i) cash in the currency in which such series of Securities is
denominated in an amount, or
(ii) Foreign Government Obligations which through the scheduled payment
of principal and interest in respect thereof in accordance with their terms
will provide, not later than one day before the due date of any payment, an
amount in cash, or
(iii) a combination thereof,
in each case sufficient, in the opinion of a nationally recognized firm of independent public
accountants expressed in a written certification thereof delivered to the Trustee, to pay and
discharge, and which shall be applied by the Trustee (or any such other qualifying trustee) to pay
and discharge, the principal of and any premium and interest on such Securities on the respective
Stated Maturities, in accordance with the terms of this Indenture and such Securities.
(2) For Securities denominated in United States dollars, in the event of an election to
have
Section 13.2
apply to any Securities or any series of Securities, as the case
may be, the Company shall have delivered to the Trustee an Opinion of Counsel stating that
(A) the Company has received from, or there has been published by, the Internal
Revenue Service a ruling or
(B) since the date of this instrument, there has been a change in the
applicable Federal income tax law, in either case
clause (A)
or
(B)
to the effect that, and based thereon such opinion shall confirm that, the Holders
of such Securities will not recognize gain or loss for Federal income tax purposes
as a result of the deposit, Defeasance and discharge to be effected with respect to
such Securities and will be subject to Federal income tax on the same amount, in the
same manner and at the same times as would be the case if such deposit, Defeasance
and discharge were not to occur.
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(3) For Securities denominated in United States dollars, in the event of an election to
have
Section 13.3
apply to any Securities or any series of Securities, as the
case may be, the Company shall have delivered to the Trustee an Opinion of Counsel to
the effect that the Holders of such Securities will not recognize gain or loss for Federal
income tax purposes as a result of the deposit and Covenant Defeasance to be effected with
respect to such Securities and will be subject to Federal income tax on the same amount, in
the same manner and at the same times as would be the case if such deposit and Covenant
Defeasance were not to occur.
(4) Such Defeasance or Covenant Defeasance shall not cause such Securities nor any other
Securities of the same series, if then listed on any securities exchange, to be delisted.
(5) No event which is, or after notice or lapse of time or both would become, an Event
of Default with respect to such Securities or any other Securities shall have occurred and be
continuing at the time of such deposit or, with regard to any such event specified in
Sections 5.1(5)
and
(6)
, at any time on or prior to the 90th day after the
date of such deposit (it being understood that this condition shall not be deemed satisfied
until after such 90th day).
(6) Such Defeasance or Covenant Defeasance shall not cause the Trustee to have a
conflicting interest within the meaning of the Trust Indenture Act (assuming all Securities
are in default within the meaning of such Act).
(7) Such Defeasance or Covenant Defeasance shall not result in a breach or violation of,
or constitute a default under, this Indenture or any other material agreement or instrument
to which the Company is a party or by which it is bound.
(8) Such Defeasance or Covenant Defeasance shall not result in the trust arising from
such deposit constituting an investment company within the meaning of the Investment Company
Act unless such trust shall be registered under such Act or exempt from registration
thereunder.
(9) The Company shall have delivered to the Trustee an Officers Certificate and an
Opinion of Counsel, each stating that all conditions precedent with respect to such
Defeasance or Covenant Defeasance have been complied with.
Section 13.5
Deposited Money, U. S. Government Obligations and Foreign Government
Obligations to be Held in Trust; Miscellaneous Provisions
.
Subject to the provisions of the last paragraph of
Section 10.3
, all money, U.S.
Government Obligations and Foreign Government Obligations (including the proceeds thereof)
deposited with the Trustee or other qualifying trustee (solely for purposes of this
Section
13.5
and
Section 13.6
, the Trustee and any such other trustee are referred to
collectively as the
Trustee
) pursuant to
Section 13.4
in respect of any
Securities shall be held in trust and applied by the Trustee, in accordance with the provisions of
such Securities and this Indenture, to the payment, either directly or through any such Paying
Agent (including the Company acting as its own Paying Agent) as the Trustee may determine, to the
Holders of such Securities, of all sums
71
due and to become due thereon in respect of principal and any premium and interest, but money
so held in trust need not be segregated from other funds except to the extent required by law.
The Company shall pay and indemnify the Trustee against any tax, fee or other charge imposed on or
assessed against the U.S. Government Obligations or Foreign Government Obligations deposited
pursuant to
Section 13.4
or the principal and interest received in respect thereof other
than any such tax, fee or other charge which by law is for the account of the Holders of
Outstanding Securities. Anything in this
Article 13
to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon Company Request any money, U.S.
Government Obligations or Foreign Government Obligations held by it as provided in
Section
13.4
with respect to any Securities which, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof delivered to the
Trustee, are in excess of the amount thereof which would then be required to be deposited to effect
the Defeasance or Covenant Defeasance, as the case may be, with respect to such Securities.
Section 13.6
Reinstatement
.
If the Trustee or the Paying Agent is unable to apply any money in accordance with this
Article 13
with respect to any Securities by reason of any order or judgment of any court
or governmental authority enjoining, restraining or otherwise prohibiting such application, then
the obligations under this Indenture and such Securities from which the Company has been discharged
or released pursuant to
Section 13.2
or
13.3
shall be revived and reinstated as
though no deposit had occurred pursuant to this
Article 13
with respect to such Securities,
until such time as the Trustee or Paying Agent is permitted to apply all money held in trust
pursuant to
Section 13.5
with respect to such Securities in accordance with this
Article 13
;
provided
,
however
, that if the Company makes any payment of
principal of or any premium or interest on any such Security following such reinstatement of its
obligations, the Company shall be subrogated to the rights (if any) of the Holders of such
Securities to receive such payment from the money so held in trust.
[signature page follows]
72
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed as of
the day and year first above written.
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CAPSTEAD MORTGAGE CORPORATION
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By:
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Name:
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Title:
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[TRUSTEE]
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By:
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Name:
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Title:
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Exhibit 4.4
INDENTURE
BETWEEN
CAPSTEAD MORTGAGE CORPORATION
AND
,
AS TRUSTEE
DATED AS OF ___, 2007
SUBORDINATED DEBT SECURITIES
(Issuable in Series)
TABLE OF CONTENTS
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Article 1 DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
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1
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Section 1.1 Definitions
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1
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Section 1.2 Incorporation by Reference of Trust Indenture Act
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9
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Section 1.3 Compliance Certificates and Opinions
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10
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Section 1.4 Form of Documents Delivered to Trustee
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10
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Section 1.5 Acts of Holders; Record Dates
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11
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Section 1.6 Notices, etc., to Trustee and Company
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13
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Section 1.7 Notice to Holders; Waiver
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13
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Section 1.8 Conflict with Trust Indenture Act
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14
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Section 1.9 Effect of Headings and Table of Contents
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14
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Section 1.10 Successors and Assigns
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14
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Section 1.11 Separability Clause
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14
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Section 1.12 Benefits of Indenture
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14
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Section 1.13 Governing Law
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14
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Section 1.14 Legal Holidays
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15
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Section 1.15 Indenture and Securities Solely Corporate Obligations
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15
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Section 1.16 Indenture May be Executed in Counterparts
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16
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Article 2 SECURITY FORMS
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16
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Section 2.1 Forms Generally
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16
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Section 2.2 Form of Trustees Certificate of Authentication
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16
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Section 2.3 Global Securities
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17
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Section 2.4 Form of Legend for Global Securities
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19
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Section 2.5 Form of Face of Security
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19
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Section 2.6 Form of Reverse of Security
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21
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Article 3 THE SECURITIES
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25
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Section 3.1 Amount Unlimited; Issuable in Series
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25
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Section 3.2 Denominations
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29
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Section 3.3 Execution, Authentication, Delivery and Dating
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29
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Section 3.4 Temporary Securities
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31
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Section 3.5 Registration; Registration of Transfer and Exchange
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32
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Section 3.6 Mutilated, Destroyed, Lost and Stolen Securities
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33
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Section 3.7 Payment of Interest; Interest Rights Preserved
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34
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Section 3.8 Persons Deemed Owners
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35
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Section 3.9 Cancellation
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36
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Section 3.10 Computation of Interest
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36
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Article 4 SATISFACTION AND DISCHARGE
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36
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Section 4.1 Satisfaction and Discharge of Indenture
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36
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Section 4.2 Application of Trust Money
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38
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Article 5 REMEDIES
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38
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Section 5.1 Events of Default
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38
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Section 5.2 Acceleration of Maturity; Rescission and Annulment
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40
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Section 5.3 Collection of Indebtedness and Suits for Enforcement by Trustee
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41
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Section 5.4 Trustee May File Proofs of Claim
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42
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Section 5.5 Trustee May Enforce Claims Without Possession of Securities
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42
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Section 5.6 Application of Money Collected
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43
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Section 5.7 Limitation on Suits
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43
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Section 5.8 Right of Holders to Receive Principal, Premium and Interest
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44
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Section 5.9 Restoration of Rights and Remedies
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44
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Section 5.10 Rights and Remedies Cumulative
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44
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Section 5.11 Delay or Omission Not Waiver
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45
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Section 5.12 Control by Holders
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45
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Section 5.13 Waiver of Past Defaults
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45
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Section 5.14 Undertaking for Costs
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46
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Article 6 THE TRUSTEE
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46
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Section 6.1 Certain Duties and Responsibilities
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46
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Section 6.2 Notice of Defaults
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47
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Section 6.3 Certain Rights of Trustee
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48
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Section 6.4 Not Responsible for Recitals or Issuance of Securities
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49
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Section 6.5 May Hold Securities and Act as Trustee under Other Indentures
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49
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Section 6.6 Money Held in Trust
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49
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Section 6.7 Compensation and Reimbursement
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49
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Section 6.8 Conflicting Interests
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50
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Section 6.9 Eligibility; Disqualification
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50
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Section 6.10 Resignation and Removal; Appointment of Successor
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51
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Section 6.11 Acceptance of Appointment by Successor
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52
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Section 6.12 Merger, Conversion, Consolidation or Succession to Business
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53
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Section 6.13 Preferential Collection of Claims Against Company
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54
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Section 6.14 Appointment of Authenticating Agent
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54
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Article 7 HOLDERS LISTS AND REPORTS BY TRUSTEE AND COMPANY
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56
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Section 7.1 Company to Furnish Trustee Names and Addresses of Holders
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56
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Section 7.2 Preservation of Information; Communications to Holders
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56
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Section 7.3 Reports by Trustee
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56
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Section 7.4 Reports by Company
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57
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Article 8 CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
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57
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Section 8.1 Company May Consolidate, etc., Only on Certain Terms
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57
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Section 8.2 Successor Substituted
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57
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Article 9 SUPPLEMENTAL INDENTURES
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58
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Section 9.1 Supplemental Indentures Without Consent of Holders
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58
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Section 9.2 Supplemental Indentures with Consent of Holders
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59
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Section 9.3 Execution of Supplemental Indentures
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60
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Section 9.4 Effect of Supplemental Indentures
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60
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Section 9.5 Conformity with Trust Indenture Act
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61
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Section 9.6 Reference in Securities to Supplemental Indentures
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61
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ii
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Article 10 COVENANTS
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61
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Section 10.1 Payment of Principal, Premium and Interest
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61
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Section 10.2 Maintenance of Office or Agency
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61
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Section 10.3 Money for Securities Payments to be Held in Trust
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62
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Section 10.4 Statement by Officers as to Default
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63
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Section 10.5 Existence
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63
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Section 10.6 All Securities to be Equally and Ratably Secured
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63
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Section 10.7 Maintenance of Properties
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63
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Section 10.8 Payment of Taxes and Other Claims
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64
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Section 10.9 Waiver of Certain Covenants
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64
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Section 10.10 Additional Amounts
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64
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Article 11 REDEMPTION OF SECURITIES
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65
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Section 11.1 Applicability of Article
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65
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Section 11.2 Election to Redeem; Notice to Trustee
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65
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Section 11.3 Selection by Trustee of Securities to Be Redeemed
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65
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Section 11.4 Notice of Redemption
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66
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Section 11.5 Deposit of Redemption Price
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67
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Section 11.6 Securities Payable on Redemption Date
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67
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Section 11.7 Securities Redeemed in Part
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68
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Article 12 SINKING FUNDS
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68
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Section 12.1 Applicability of Article
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68
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Section 12.2 Satisfaction of Sinking Fund Payments with Securities
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68
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Section 12.3 Redemption of Securities for Sinking Fund
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69
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Article 13 DEFEASANCE AND COVENANT DEFEASANCE
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69
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Section 13.1 Companys Option to Effect Defeasance or Covenant Defeasance
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69
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Section 13.2 Defeasance and Discharge
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69
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Section 13.3 Covenant Defeasance
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70
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Section 13.4 Conditions to Defeasance or Covenant Defeasance
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70
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Section 13.5 Deposited Money, U. S. Government Obligations and Foreign Government Obligations to be Held in Trust; Miscellaneous Provisions
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72
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Section 13.6 Reinstatement
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73
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Article 14 SUBORDINATION
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73
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Section 14.1 Securities Subordinated to Senior Indebtedness
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73
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Section 14.2 Right of Trustee to Hold Senior Indebtedness
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75
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Section 14.3 Subordination Not to Prevent Events of Default
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75
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Section 14.4 No Fiduciary Duty of Trustee to Holders of Senior Indebtedness
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76
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Section 14.5 Payment Permitted if No Default
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76
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Section 14.6 Article Applicable to Paying Agent
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77
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iii
INDENTURE
INDENTURE, dated as of ___, between CAPSTEAD MORTGAGE CORPORATION, a Maryland
corporation (the
Company
), having its principal office at
, and
___, as trustee, (the
Trustee
), the office of the Trustee at which at the
date hereof its corporate trust business is principally administered being ___.
RECITALS
The Company has duly authorized the execution and delivery of this Indenture to provide for
the issuance from time to time of its subordinated debentures, notes or other evidences of
indebtedness (the
Securities
), to be issued in one or more series as herein provided.
This Indenture is subject to the provisions of the Trust Indenture Act and the rules and
regulations of the Commission promulgated thereunder that are required to be part of this Indenture
and, to the extent applicable, shall be governed by such provisions.
All things necessary to make this Indenture a valid agreement of the Company, in accordance
with its terms, have been done.
NOW, THEREFORE, for and in consideration of the premises and the purchase of the Securities by
the Holders thereof, each party agrees for the benefit of the other party and for the equal and
ratable benefit of the Holders of the Securities, or of series thereof, issued under this
Indenture, as follows:
ARTICLE 1
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 1.1
Definitions
.
For all purposes of this Indenture, except as otherwise expressly provided or unless the
context otherwise requires:
(1) the terms defined in this Article have the meanings assigned to them in this Article
and include the plural as well as the singular;
(2) all accounting terms not otherwise defined herein have the meanings assigned to them
in accordance with generally accepted accounting principles in the United States of America,
and, except as otherwise herein expressly provided, the term generally accepted accounting
principles with respect to any computation required or permitted hereunder shall mean such
accounting principles in the United States of America as are generally accepted as of the
time when and for the period as to which such accounting principles are to be applied;
(3) or is not exclusive;
(4) any reference to an
Article
or a
Section
refers to an Article or
a Section, as the case may be, of this Indenture;
(5) the words
herein
,
hereof
and
hereunder
and other words
of similar import refer to this Indenture as a whole and not to any particular Article,
Section or other subdivision; and
(6) certain terms, used principally in
Article 6
, are defined in
Section
1.2
.
Act
, when used with respect to any Holder, has the meaning specified in
Section
1.5
.
Additional Amounts
means any additional amounts that are required by the express
terms of a Security or by or pursuant to a Board Resolution, under circumstances specified therein
or pursuant thereto, to be paid by the Company with respect to certain taxes, assessments or other
governmental charges imposed on certain Holders and that are owing to such Holders.
Affiliate
of any specified Person means any other Person directly or indirectly
controlling or controlled by or under direct or indirect common control with such specified Person.
For purposes of this definition, control when used with respect to any specified Person means
the power to direct the management and policies of such Person, directly or indirectly, whether
through the ownership of voting securities, by contract or otherwise; and the terms controlling
and controlled have meanings correlative to the foregoing.
Authenticating Agent
means any Person, which may include the Company, authorized by
the Trustee pursuant to
Section 6.14
to act on behalf of the Trustee to authenticate
Securities of one or more series.
Authorized Newspaper
means a newspaper, in the English language or in an official
language of the country of publication, customarily published on each Business Day, whether or not
published on Saturdays, Sundays or holidays, and of general circulation in each place in connection
with which the term is used or in the financial community of each such place. Where successive
publications are required to be made in Authorized Newspapers, the successive publications may be
made in the same or in different newspapers in the same city meeting the foregoing requirements and
in each case on any Business Day.
Bankruptcy Law
means Title 11, U.S. Code, or any similar federal or state law for
the relief of debtors.
Board
or
Board of Directors
means either the board of directors of the
Company or any duly authorized committee thereof.
Board Resolution
means a copy of a resolution certified by the Secretary or an
Assistant Secretary of the Company to have been duly adopted by the Board of Directors and to be in
full force and effect on the date of such certification, and delivered to the Trustee.
Business Day
, when used with respect to any Place of Payment, means each Monday,
Tuesday, Wednesday, Thursday and Friday which is not a day on which banking institutions in
2
that
Place of Payment, or the city in which the Corporate Trust Office is located, are authorized or
obligated by law or executive order to close.
Commission
means the Securities and Exchange Commission, from time to time
constituted, created under the Exchange Act, or, if at any time after the execution of this
instrument such Commission is not existing and performing the duties now assigned to it under the
Trust Indenture Act, then the body performing such duties at such time.
Company
means the Person named as the Company in the first paragraph of this
instrument until a successor Person shall have become such pursuant to the applicable provisions of
this Indenture, and thereafter Company shall mean such successor Person.
Company Request
or
Company Order
means, respectively, a written request or
order signed in the name of the Company by its Chairman of the Board, its Chief Executive Officer,
its President or a Vice President, and by its principal financial officer, its Controller, an
Assistant Controller, its Treasurer, an Assistant Treasurer, its Secretary or an Assistant
Secretary, and delivered to the Trustee.
Corporate Trust Office
means the corporate trust office of the Trustee at
[___], Attention: Corporate Trust Department, or such other office, designated by
the Trustee by written notice to the Company, at which at any particular time its corporate trust
business shall be administered.
Covenant Defeasance
has the meaning specified in
Section 13.3
.
Custodian
means any receiver, trustee, assignee, liquidator or similar official
under any Bankruptcy Law.
default
means, with respect to the Securities of any series, any event, act or
condition that is, or after notice or the passage of time or both would be, an Event of Default
with respect to Securities of such series.
Defaulted Interest
has the meaning specified in
Section 3.7
.
Defeasance
has the meaning specified in
Section 13.2
.
Depositary
means, with respect to Securities of any series issuable in whole or in
part in the form of one or more Global Securities, The Depository Trust Company, New York, New
York, another clearing agency, or any successor, registered under the Exchange Act that is
designated to act as Depositary for such Securities as contemplated by
Section 3.1
.
Dollar
or
$
means a dollar or other equivalent unit in such coin or
currency of the United States as at the time shall be legal tender for the payment of public and
private debts.
euro
or
euros
means the currency adopted by those nations participating in
the third stage of the economic and monetary union provisions of the Treaty on European Union,
signed at Maastricht on February 7, 1992.
3
European Economic Area
means the member nations of the European Economic Area
pursuant to the Oporto Agreement on the European Economic Area dated May 2, 1992, as amended.
European Union
means the member nations of the European Union established by the
Treaty of European Union, signed at Maastricht on February 2, 1992, which amended the Treaty of
Rome establishing the European Community.
Event of Default
has the meaning specified in
Section 5.1
.
Exchange Act
means the Securities Exchange Act of 1934 and any statute successor
thereto, in each case as amended from time to time.
Exchange Rate
has the meaning specified in
Section 3.2
.
Expiration Date
has the meaning specified in
Section 1.5
.
Foreign Government Obligation
means with respect to Securities of any series which
are not denominated in the currency of the United States of America (x) any security which is (i) a
direct obligation of the government which issued or caused to be issued the currency in which such
security is denominated and for the payment of which obligations its full faith and credit is
pledged or, with respect to Securities of any series which are denominated in euros, a direct
obligation of any member nation of the European Union for the payment of which obligation the full
faith and credit of the respective nation is pledged so long as such nation has a credit rating at
least equal to that of the highest rated member nation of the European Economic Area, or (ii) an
obligation of a Person controlled or supervised by and acting as an agency or instrumentality of a
government specified in
clause (i)
above the payment of which is unconditionally guaranteed
as a full faith and credit obligation by such government, which, in either case (i) or (ii), is not
callable or redeemable at the option of the issuer thereof, and (y) any depositary receipt issued
by a bank (as defined in Section 3(a)(2) of the Securities Act) as custodian with respect to any
Foreign Government Obligation which is specified in
clause (x)
above and held by such bank
for the account of the holder of such depositary receipt, or with respect to any specific payment
of principal of or interest on any Foreign Government Obligation which is so specified and held,
provided that (except as required by law) such custodian is not authorized to make any deduction
from the amount payable to the holder of such depositary receipt from any amount received by the
custodian in respect of the Foreign Government Obligation or the specific payment of principal or
interest evidenced by such depositary receipt.
Global Security
means a Security that evidences all or part of the Securities of any
series and bears the legend set forth in
Section 2.4
(or such legend as may be specified as
contemplated by
Section 3.1
for such Securities).
Holder
means a Person in whose name a Security is registered in the Security
Register.
Indenture
means this instrument as originally executed and as it may from time to
time be supplemented or amended by one or more indentures supplemental hereto entered into pursuant
to the applicable provisions hereof, including, for all purposes of this instrument and any such
supplemental indenture, the provisions of the Trust Indenture Act that are deemed to be
4
a part of
and govern this instrument and any such supplemental indenture, respectively. The term Indenture
shall also include the terms of particular series of Securities established as contemplated by
Section 3.1
;
provided
,
however
, that if at any time more than one Person is
acting as Trustee under this Indenture due to the appointment of one or more separate Trustees for
any one or more separate series of Securities, Indenture shall mean, with respect to such series
of Securities for which any such Person is Trustee, this instrument as originally executed or as it
may from time to time be supplemented or amended by one or more indentures supplemental hereto
entered into pursuant to the applicable provisions hereof and shall include the terms of particular
series of Securities for which such Person is Trustee established as contemplated by
Section
3.1
, exclusive, however, of any provisions or terms which relate solely to other series of
Securities for which such Person is not Trustee, regardless of when such terms or provisions were
adopted, and exclusive of any provisions or terms adopted by means of one or more indentures
supplemental hereto executed and delivered after such Person had become such Trustee, but to which
such person, as such Trustee, was not a party; provided, further that in the event that this
Indenture is supplemented or amended by one or more indentures supplemental hereto which are only
applicable to certain series of Securities, the term Indenture for a particular series of
Securities shall exclude provisions or terms which relate solely to other series of Securities.
Interest
, when used with respect to an Original Issue Discount Security, which by
its terms bears interest only after Maturity, means interest payable after Maturity.
Interest Payment Date
, when used with respect to any Security, means the Stated
Maturity of an installment of interest on such Security.
Investment Company Act
means the Investment Company Act of 1940 and any statute
successor thereto, in each case as amended from time to time.
Judgment Currency
has the meaning specified in
Section 5.6
.
Maturity
, when used with respect to any Security, means the date on which the
principal of such Security or an installment of principal becomes due and payable as therein or
herein provided, whether at the Stated Maturity or by declaration of acceleration, repurchase at
the option of the Holder, call for redemption or otherwise.
Mortgage
means and includes any mortgage, pledge, lien, security interest,
conditional sale or other title retention agreement or other similar encumbrance.
Notice of Default means a written notice of the kind specified in
Section 5.1(4)
.
Officers Certificate
means a certificate signed by the Chairman of the Board, the
Chief Executive Officer, the President or a Vice President, and by the principal financial officer,
the Treasurer, the Controller, an Assistant Treasurer, an Assistant Controller, the Secretary or an
Assistant Secretary, of the Company, and delivered to the Trustee. One of the officers signing an
Officers Certificate given pursuant to
Section 10.4
shall be the principal executive,
financial or accounting officer of the Company.
5
Opinion of Counsel
means a written opinion of legal counsel, who may be, without
limitation, (a) an employee of the Company, or (b) outside counsel designated by the Company,
rendered, if applicable, in accordance with Section 314(c) of the Trust Indenture Act.
Original Issue Discount Security
means any Security that provides for an amount less
than the principal amount thereof to be due and payable upon a declaration of acceleration of the
Maturity thereof pursuant to
Section 5.2
.
Outstanding
when used with respect to Securities, means, as of the date of
determination, all Securities theretofore authenticated and delivered under this Indenture, except
(1) Securities theretofore canceled by the Trustee or delivered to the Trustee for
cancellation;
(2) Securities for whose payment or redemption money in the necessary amount has been
theretofore deposited with the Trustee or any Paying Agent (other than the Company) in trust
or set aside and segregated in trust by the Company (if the Company shall act as its own
Paying Agent) for the Holders of such Securities; provided that, if such Securities are to be
redeemed, notice of such redemption has been duly given pursuant to this Indenture or
provision therefor satisfactory to the Trustee has been made;
(3) Securities which have been paid pursuant to
Section 3.6
or in exchange for
or in lieu of which other Securities have been authenticated and delivered pursuant to this
Indenture, other than any such Securities in respect of which there shall have been presented
to the Trustee proof satisfactory to it that such Securities are held by a bona fide
purchaser in whose hands such Securities are valid obligations of the Company; provided,
however, that unless otherwise provided with respect to any Securities of any series pursuant
to
Section 3.1
, in determining whether the Holders of the requisite principal amount
of the Outstanding Securities have given, made or taken any request, demand, authorization,
direction, notice, consent, waiver or other action hereunder as of any date, (A) the
principal amount of an Original Issue Discount Security which shall be deemed to be
Outstanding shall be the amount of the principal thereof which would be due and payable as of
such date upon acceleration of the Maturity thereof to such date pursuant to
Section
5.2
, (B) if, as of such date, the principal amount payable at the Stated Maturity of a
Security is not determinable, the principal amount of such Security which shall be deemed to
be Outstanding shall be the amount as specified or determined as contemplated by
Section
3.1
, (C) the principal amount of a Security denominated in one or more non-U.S. dollar
currencies or currency units which shall be deemed to be Outstanding shall be the U.S. dollar
equivalent, determined as of such date in the manner provided as contemplated by
Section
3.1
, of the principal amount of such Security (or, in the case of a Security described in
clause (A)
or
(B)
above, of the amount determined as provided in such
clause), and (D) Securities owned by the Company or any other obligor upon the Securities or
any Subsidiary of the Company or of such other obligor shall be disregarded and deemed not to
be Outstanding, except that, in determining whether the Trustee shall
be protected in relying upon any such request, demand, authorization, direction, notice,
consent, waiver or other action, only Securities which a Responsible Officer of the Trustee
knows to be so owned shall be so disregarded. Securities so owned which have been
6
pledged in
good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of
the Trustee the pledgees right so to act with respect to such Securities and that the
pledgee is not the Company or any other obligor upon the Securities or any Subsidiary of the
Company or of such other obligor.
Paying Agent
means any Person, which may include the Company, authorized by the
Company to pay the principal of or any premium or interest on, or any Additional Amounts with
respect to, any one or more series of Securities on behalf of the Company.
Periodic Offering
means an offering of Securities of a series from time to time the
specific terms of which Securities, including, without limitation, the rate or rates of interest or
formula for determining the rate or rates of interest thereon, if any, the Maturity thereof and the
redemption provisions, if any, with respect thereto, are to be determined by the Company upon the
issuance of such Securities.
Person
means any individual, corporation, limited liability company, partnership,
joint venture, incorporated or unincorporated association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision thereof or other
entity of any kind.
Place of Payment
, when used with respect to the Securities of any series, means the
place or places where the principal of and any premium and interest on, or any Additional Amounts
with respect to, the Securities of that series are payable as specified as contemplated by
Section 3.1
and
10.2
.
Predecessor Security
of any particular Security means every previous Security
evidencing all or a portion of the same debt as that evidenced by such particular Security; and,
for the purposes of this definition, any Security authenticated and delivered under
Section
3.6
in exchange for or in lieu of a mutilated, destroyed, lost or stolen Security shall be
deemed to evidence the same debt as the mutilated, destroyed, lost or stolen Security.
Record Date
means any Regular Record Date or Special Record Date.
Redemption Date
, when used with respect to any Security to be redeemed, means the
date fixed for such redemption by or pursuant to the terms of such Security and this Indenture.
Redemption Price
, when used with respect to any Security to be redeemed, means the
price at which it is to be redeemed pursuant to the terms of such Security and this Indenture.
Regular Record Date
for the interest payable on any Interest Payment Date on the
Securities of any series means any date specified for that purpose as contemplated by
Section
3.1
, or, if not so specified, the first day of the calendar month of the month of such Interest
Payment Date if such Interest Payment Date is the fifteenth day of the calendar month, or the
fifteenth day of the calendar month preceding such Interest Payment Date if such Interest
Payment Date is the first day of a calendar month, whether or not such day shall be a Business
Day.
Required Currency
has the meaning specified in
Section 5.6
.
7
Responsible Officer
means, when used with respect to the Trustee, an officer of the
Trustee in the Corporate Trust Office assigned and duly authorized by the Trustee to administer its
corporate trust matters.
Securities
has the meaning stated in the first recital of this Indenture and more
particularly means any debentures, notes or other evidences of indebtedness of the Company
authenticated and delivered under this Indenture.
Securities Act
means the Securities Act of 1933 and any statute successor thereto,
in each case as amended from time to time.
Security Custodian
means, with respect to Securities of a series issued in global
form, the Trustee for Securities of such series, acting in its capacity as custodian with respect
to the Securities of such series, or any successor entity thereto.
Security Register
and Security Registrar have the respective meanings specified in
Section 3.5
.
Senior Indebtedness
of the Company, means with respect to the Securities of a series
as contemplated by
Section 3.1
, the indebtedness specified in such Securities or in the
supplemental indenture pursuant to which such Securities are issued. Different series of
Securities may be subordinated to different Senior Indebtedness, and one series of Securities may
be subordinated to another series of Securities, all as and to the extent provided in the relevant
documentation for each issue of Securities.
Special Record Date
for the payment of any Defaulted Interest means a date fixed by
the Trustee pursuant to
Section 3.7
.
Stated Maturity
, when used with respect to any Security or any installment of
principal thereof or interest thereon, means the date specified in such Security as the fixed date
on which the principal of such Security or such installment of principal or interest is due and
payable.
Subsidiary
means any Person of which the Company at the time owns or controls,
directly or indirectly, more than 50% of the shares of outstanding stock or other equity interests
having general voting power under ordinary circumstances to elect a majority of the board of
directors, managers or trustees, as the case may be, of such Person (irrespective of whether or not
at the time stock of any other class or classes or other equity interests of such corporation shall
have or might have voting power by reason of the happening of any contingency).
Trust Indenture Act
means the Trust Indenture Act of 1939, as amended, as in force
at the date as of which this instrument was executed; provided, however, that in the event the
Trust Indenture Act of 1939 is amended after such date, Trust Indenture Act means, to the extent
required by any such amendment, the Trust Indenture Act of 1939 as so amended.
Trustee
means the Person named as the Trustee in the first paragraph of this
instrument until a successor Trustee shall have become such pursuant to the applicable provisions
of this Indenture, and thereafter Trustee shall mean or include each Person who is then a Trustee
hereunder, and if at any time there is more than one such Person, Trustee as
8
used with respect to
the Securities of any series shall mean the Trustee with respect to Securities of that series.
United States
means the United States of America (including the states thereof and
the District of Columbia) and its possessions, which include Puerto Rico, the U.S. Virgin
Islands, Guam, American Somoa, Wake Island and the Northern Mariana Islands.
United States Alien
means any Person who, for United States federal income tax
purposes, is a foreign corporation, a nonresident alien individual, a nonresident alien or foreign
fiduciary of an estate or trust, or a foreign partnership.
U.S. Government Obligation
means (x) any security which is (i) a direct obligation
of the United States of America for the payment of which the full faith and credit of the United
States of America is pledged or (ii) an obligation of a Person controlled or supervised by and
acting as an agency or instrumentality of the United States of America the payment of which is
unconditionally guaranteed as a full faith and credit obligation by the United States of America,
which, in either case (i) or (ii), is not callable or redeemable at the option of the issuer
thereof, and (y) any depositary receipt issued by a bank (as defined in Section 3(a)(2) of the
Securities Act) as custodian with respect to any U.S. Government Obligation which is specified in
clause (x)
above and held by such bank for the account of the holder of such depositary
receipt, or with respect to any specific payment of principal of or interest on any U.S. Government
Obligation which is so specified and held, provided that (except as required by law) such custodian
is not authorized to make any deduction from the amount payable to the holder of such depositary
receipt from any amount received by the custodian in respect of the U.S. Government Obligation or
the specific payment of principal or interest evidenced by such depositary receipt.
Vice President
, when used with respect to the Company or the Trustee, means any vice
president, whether or not designated by a number or a word or words added before or after the title
vice president.
Yield to Maturity
means, when used with respect to any Original Issue Discount
Security, the yield to maturity, if any, set forth on the face thereof.
Section 1.2
Incorporation by Reference of Trust Indenture Act
.
Whenever this Indenture refers to a provision of the Trust Indenture Act, the provision is
incorporated by reference in and made a part of this Indenture. The following Trust Indenture Act
terms used in this Indenture have the following meanings:
indenture securities means the Securities.
indenture security holder means a Holder.
indenture to be qualified means this Indenture.
indenture trustee or institutional trustee means the Trustee.
9
obligor on the indenture securities means the Company or any other obligor on the
Securities.
All terms used in this Indenture that are defined by the Trust Indenture Act, defined by a
Trust Indenture Act reference to another statue or defined by Commission rule under the Trust
Indenture Act and not otherwise defined herein have the meanings assigned to them therein.
Section 1.3
Compliance Certificates and Opinions
.
Except as otherwise expressly provided by this Indenture, upon any application or request by
the Company to the Trustee to take any action under any provision of this Indenture, the Company
shall furnish to the Trustee such certificates and opinions as may be required under the Trust
Indenture Act. Each such certificate or opinion shall be given in the form of an Officers
Certificate, if to be given by an officer of the Company, or an Opinion of Counsel, if to be given
by counsel, and shall comply with the requirements of the Trust Indenture Act and any other
requirements set forth in this Indenture.
Every certificate or opinion with respect to compliance with a condition or covenant provided
for in this Indenture (other than pursuant to
Section 10.4
) shall include,
(1) a statement that each Person signing such certificate or opinion has read such
covenant or condition and the definitions herein relating thereto;
(2) a brief statement as to the nature and scope of the examination or investigation
upon which the statements or opinions contained in such certificate or opinion are based;
(3) a statement that, in the opinion of each such Person, such Person has made such
examination or investigation as is necessary to enable such Person to express an informed
opinion as to whether or not such covenant or condition has been complied with; and
(4) a statement as to whether, in the opinion of each such Person, such condition or
covenant has been complied with.
Section 1.4
Form of Documents Delivered to Trustee
.
In any case where several matters are required to be certified by, or covered by an opinion
of, any specified Person, it is not necessary that all such matters be certified by, or covered by
the opinion of, only one such Person, or that they be so certified or covered by only
one document, but one such Person may certify or give an opinion with respect to some matters
and one or more other such Persons as to other matters, and any such Person may certify or give an
opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based, insofar as it relates to
legal matters, upon a certificate or opinion of, or representations by, counsel, unless such
officer knows, or in the exercise of reasonable care should know, that the certificate or opinion
or representations with respect to the matters upon which his or her certificate or opinion is
based
10
are erroneous. Any such certificate or opinion of counsel may be based, insofar as it
relates to factual matters, upon a certificate or opinion of, or representations by, an officer or
officers of the Company stating that the information with respect to such factual matters is in the
possession of the Company unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such matters are
erroneous.
Any certificate or opinion of an officer of the Company or of counsel may be based, insofar as
it relates to accounting matters, upon a certificate or opinion of or representations by an
accountant or firm of accountants employed or retained by the Company unless such officer or
counsel, as the case may be, knows, or in the exercise of reasonable care should know, that the
certificate or opinions or representations as to such accounting matters are erroneous.
Where any Person is required to make, give or execute two or more applications, requests,
consents, certificates, statements, opinions or other instruments under this Indenture, they may,
but need not, be consolidated and form one instrument.
Section 1.5
Acts of Holders; Record Dates
.
Any request, demand, authorization, direction, notice, consent, waiver or other action
provided or permitted by this Indenture to be given, made or taken by Holders of the Outstanding
Securities of all series or one or more series, as the case may be, may be embodied in and
evidenced by one or more instruments of substantially similar tenor signed by such Holders in
person or by agent duly appointed in writing; and, except as herein otherwise expressly provided,
such action shall become effective when such instrument or instruments are delivered to the Trustee
and, where it is hereby expressly required, to the Company. The Trustee shall promptly deliver to
the Company copies of all such instrument or instruments delivered to the Trustee. Such instrument
or instruments (and the action embodied therein and evidenced thereby) are herein sometimes
referred to as the Act of the Holders signing such instrument or instruments. Proof of execution
of any such instrument or of a writing appointing any such agent shall be sufficient for any
purpose of this Indenture and (subject to
Section 6.1
) conclusive in favor of the Trustee
and the Company, if made in the manner provided in this Section.
The fact and date of the execution by any Person of any such instrument or writing may be
proved by the affidavit of a witness of such execution or by a certificate of a notary public or
other officer authorized by law to take acknowledgments of deeds, certifying that the individual
signing such instrument or writing acknowledged to him or her the execution thereof. Where such
execution is by a signer acting in a capacity other than his or her individual capacity, such
certificate or affidavit shall also constitute sufficient proof of his or her authority. The
fact and date of the execution of any such instrument or writing, or the authority of the Person
executing the same, may also be proved in any other manner that the Trustee deems sufficient.
The ownership, date of holding, principal amount and serial numbers of Securities shall be
proved by the Security Register.
Any request, demand, authorization, direction, notice, consent, waiver or other Act of the
Holder of any Security shall bind every future Holder of the same Security and the Holder of every
Security issued upon the registration of transfer thereof or in exchange therefor or in lieu
11
thereof in respect of anything done, omitted or suffered to be done by the Trustee, the Company in
reliance thereon, whether or not notation of such action is made upon such Security. Any consent
or waiver of the Holder of any Security shall be irrevocable for a period of six months after the
date of execution thereof, but otherwise any such Holder or subsequent Holder may revoke the
request, demand, authorization, direction, notice, consent or other Act as to his Security or
portion of his Security; provided, however, that such revocation shall be effective only if the
Trustee receives the notice of revocation before the date the Act becomes effective.
The Company may set any day as a record date for the purpose of determining the Holders of
Outstanding Securities of any series entitled to give, make or take any request, demand,
authorization, direction, vote, notice, consent, waiver or other action provided or permitted by
this Indenture to be given, made or taken by Holders of Securities of such series, provided that
the Company may not set a record date for, and the provisions of this paragraph shall not apply
with respect to, the giving or making of any notice, declaration, request or direction referred to
in the next paragraph. If any record date is set pursuant to this paragraph, the Holders of
Outstanding Securities of the relevant series on such record date, and no other Holders, shall be
entitled to take the relevant action, whether or not such Holders remain Holders after such record
date; provided that no such action shall be effective hereunder unless taken on or prior to the
applicable Expiration Date by Holders of the requisite principal amount of Outstanding Securities
of such series on such record date. Nothing in this paragraph shall be construed to prevent the
Company from setting a new record date for any action for which a record date has previously been
set pursuant to this paragraph (whereupon the record date previously set shall automatically and
with no action by any Person be canceled and of no effect), and nothing in this paragraph shall be
construed to render ineffective any action taken by Holders of the requisite principal amount of
Outstanding Securities of the relevant series on the date such action is taken. Promptly after any
record date is set pursuant to this paragraph, the Company, at its own expense, shall cause notice
of such record date, the proposed action by Holders and the applicable Expiration Date to be given
to the Trustee in writing and to each Holder of Securities of the relevant series in the manner set
forth in
Section 1.7
.
The Trustee may set any day as a record date for the purpose of determining the Holders of
Outstanding Securities of any series entitled to join in the giving or making of (i) any Notice of
Default, (ii) any declaration of acceleration referred to in
Section 5.2
, (iii) any request
to institute proceedings referred to in
Section 5.7(2)
or (iv) any direction referred to in
Section 5.12
, in each case with respect to Securities of such series. If any record date
is set pursuant to this paragraph, the Holders of Outstanding Securities of such series on such
record date, and no other Holders, shall be entitled to join in such notice, declaration, request
or direction, whether or not
such Holders remain Holders after such record date; provided that no such action shall be
effective hereunder unless taken on or prior to the applicable Expiration Date by Holders of the
requisite principal amount of Outstanding Securities of such series on such record date. Nothing
in this paragraph shall be construed to prevent the Trustee from setting a new record date for any
action for which a record date has previously been set pursuant to this paragraph (whereupon the
record date previously set shall automatically and with no action by any Person be canceled and of
no effect), and nothing in this paragraph shall be construed to render ineffective any action taken
by Holders of the requisite principal amount of Outstanding Securities of the relevant series on
the date such action is taken. Promptly after any record date is set pursuant to this paragraph,
the Trustee, at the Companys expense, shall cause notice of such record date, the
12
proposed action
by Holders and the applicable Expiration Date to be given to the Company in writing and to each
Holder of Securities of the relevant series in the manner set forth in
Section 1.7
.
With respect to any record date set pursuant to this Section, the party hereto which sets such
record dates may designate any day as the Expiration Date and from time to time may change the
Expiration Date to any earlier or later day; provided that no such change shall be effective unless
notice of the proposed new Expiration Date is given to the other party hereto in writing, and to
each Holder of Securities of the relevant series in the manner set forth in
Section 1.7
, on
or prior to the existing Expiration Date. If an Expiration Date is not designated with respect to
any record date set pursuant to this
Section 1.5
, the party hereto which set such record
date shall be deemed to have initially designated the 180th day after such record date as the
Expiration Date with respect thereto, subject to its right to change the Expiration Date as
provided in this paragraph. Notwithstanding the foregoing, no Expiration Date shall be later than
the 180th day after the applicable record date.
Without limiting the foregoing, a Holder entitled hereunder to take any action hereunder with
regard to any particular Security may do so with regard to all or any part of the principal amount
of such Security or by one or more duly appointed agents each of which may do so pursuant to such
appointment with regard to all or any part of such principal amount.
Section 1.6
Notices, etc., to Trustee and Company
.
Any request, demand, authorization, direction, notice, consent, waiver or Act of Holders or
other document provided or permitted by this Indenture to be made upon, given or furnished to, or
filed with,
(1) the Trustee by any Holder or by the Company shall be sufficient for every purpose
hereunder if made, given, furnished or filed in writing (or by facsimile transmissions,
provided that oral confirmation of receipt shall have been received) to or with the Trustee
at its Corporate Trust Office, Attention: Corporate Trust Department, or
(2) the Company by the Trustee or by any Holder shall be sufficient for every purpose
hereunder (unless otherwise herein expressly provided) if in writing and furnished by
certified mail, return receipt requested, personally delivered or furnished via overnight
courier to the Company addressed to it at the address of its principal office specified
in the first paragraph of this instrument or at any other address previously furnished in
writing to the Trustee by the Company, Attention: Chief Financial Officer.
Section 1.7
Notice to Holders; Waiver
.
Where this Indenture provides for notice to Holders of any event, such notice shall be
sufficiently given (unless otherwise herein expressly provided) if in writing and mailed,
first-class postage prepaid, or delivered by hand or overnight courier to each Holder affected by
such event, at its address as it appears in the Security Register, not later than the latest date
(if any), and not earlier than the earliest date (if any), prescribed for the giving of such
notice. Neither the failure to mail or deliver by hand or overnight courier any notice, nor any
defect in any notice so mailed or delivered by hand or overnight courier, to any particular Holder
shall affect the
13
sufficiency of such notice with respect to other Holders. Where this Indenture
provides for notice in any manner, such notice may be waived in writing by the Person entitled to
receive such notice, either before or after the event, and such waiver shall be the equivalent of
such notice. Waivers of notice by Holders shall be filed with the Trustee, but such filing shall
not be a condition precedent to the validity of any action taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service or by reason of any other cause it
shall be impracticable to give notice to Holders of Securities by mail, then such notification as
shall be made with the approval of the Trustee shall constitute a sufficient notification for every
purpose hereunder. In any case in which notice to Holders of Securities is given by mail, neither
the failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder
of a Security, shall affect the sufficiency of such notice with respect to other Holders of
Securities.
Section 1.8
Conflict with Trust Indenture Act
.
If any provision hereof limits, qualifies or conflicts with a provision of the Trust Indenture
Act or another provision hereof required to be included in this Indenture by any of the provisions
of the Trust Indenture Act, the latter provision shall control. If any provision of this Indenture
modifies or excludes any provision of the Trust Indenture Act, which may be so modified or
excluded, the latter provision shall be deemed to apply to this Indenture as so modified or to be
excluded, as the case may be.
Section 1.9
Effect of Headings and Table of Contents
.
The Article and Section headings herein and the Table of Contents are for convenience only and
shall not affect the construction hereof.
Section 1.10
Successors and Assigns
.
All covenants and agreements in this Indenture by the Company shall bind its successors and
assigns, whether or not so expressed. All agreements of the Trustee in this Indenture shall bind
its successor.
Section 1.11
Separability Clause
.
In case any provision in this Indenture or in the Securities shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
Section 1.12
Benefits of Indenture
.
Nothing in this Indenture or in the Securities, express or implied, shall give to any Person,
other than the parties hereto and their successors hereunder, any Authenticating Agent, Paying
Agent or Security Registrar, and the Holders and any holders of Senior Indebtedness, any benefit or
any legal or equitable right, remedy or claim under this Indenture.
Section 1.13
Governing Law
.
14
THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK, BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF
LAW TO THE EXTENT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
Section 1.14
Legal Holidays
.
Unless otherwise provided with respect to any Security or Securities pursuant to
Section
3.1
, in any case where any Interest Payment Date, Redemption Date, sinking fund payment date,
or Stated Maturity or Maturity or other payment date of any Security or the last date on which a
Holder has the right to convert a Security at a particular conversion price shall not be a Business
Day at any Place of Payment, then (notwithstanding any other provision of this Indenture or of the
Securities (other than a provision of any Security which specifically states that such provision
shall apply in lieu of this Section)) payment of interest or principal (and premium, if any) or, if
applicable to a particular series of Securities, conversion need not be made at such Place of
Payment on such date, but may be made on the next succeeding Business Day at such Place of Payment
with the same force and effect as if made on the Interest Payment
Date or Redemption Date, at the Stated Maturity or on such last day for conversion, as the
case may be.
Section 1.15
Indenture and Securities Solely Corporate Obligations
.
No recourse for the payment of the principal of or premium, if any, or interest on any
Security, or for any claim based thereon or otherwise in respect thereof, and no recourse under or
upon any obligation, covenant or agreement of the Company in this Indenture or in any supplemental
indenture or in any Security, or because of the creation of any indebtedness represented thereby,
shall be had, directly or indirectly, against any incorporator, subscriber to the shares of
beneficial interest (or capital stock or membership interests (as applicable)), shareholder,
stockholder, member, employee, agent, manager, officer, trustee or director, as such, past, present
or future, of the Company or the Trustee or of any predecessor or successor corporation, either
directly or through the Company or the Trustee or any predecessor or successor corporation, whether
by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or
penalty or otherwise; it being expressly understood that this Indenture and the obligations issued
hereunder are solely corporate obligations and that no such personal liability whatever shall
attach to, or is or shall be incurred by, any incorporator, subscriber to the shares of beneficial
interest (or capital stock or membership interests (as applicable)), shareholder, stockholder,
member, employee, agent, manager, officer, trustee or director, as such, of the Company or the
Trustee or of any predecessor or successor corporation, because of the creation of the indebtedness
hereby authorized, or under or by reason of the obligations, covenants or agreements contained in
this Indenture or in any of the Securities or implied therefrom; and that any and all such personal
liability of every name and nature, either at common law or in equity or by constitution or
statute, of, and any and all such rights and claims against, every such incorporator, subscriber to
the shares of beneficial interest (or capital stock or membership interests (as applicable)),
shareholder, stockholder, member, employee, agent, manager, officer, trustee or director, as such,
because of the creation of the indebtedness hereby authorized, or under or by reason of the
obligations, covenants or agreements contained in this
15
Indenture, any supplemental indenture
hereto, any certificate or other writing delivered in connection herewith, or in any of the
Securities or implied therefrom, are hereby expressly waived and released as a condition of, and as
a consideration for, the execution of this Indenture and the issuance of such Securities. By
accepting a Security, each Holder agrees to the provisions of this
Section 1.15
and waives
and releases all such liability. Such waiver and release shall be part of the consideration for
the issuance of the Securities.
Section 1.16
Indenture May be Executed in Counterparts
.
This instrument may be executed in any number of counterparts, each of which shall be an
original, but such counterparts shall together constitute but one and the same instrument.
ARTICLE 2
SECURITY FORMS
Section 2.1
Forms Generally
.
The Securities of each series shall be in such form or forms as shall be established by or
pursuant to one or more Board Resolutions and set forth in such Board Resolutions, or, to the
extent established pursuant to, rather than set forth in, such Board Resolutions, an Officers
Certificate detailing such establishment, or in one or more indentures supplemental hereto, in each
case with such appropriate insertions, omissions, substitutions and other variations as are
required or permitted by this Indenture, and may have such letters, numbers or other marks of
identification and such legends or endorsements placed thereon as may be required to comply with
any applicable law or with any rules or regulations pursuant thereto, or any rules of any
securities exchange or Depositary therefor or as may, consistently herewith, be determined by the
officers executing such Securities, as evidenced by their execution thereof. If the form of
Securities of any series is established by action taken pursuant to a Board Resolution, or, to the
extent established pursuant to, rather than set forth in, such Board Resolutions, an Officers
Certificate detailing such establishment, a copy of an appropriate record of such action shall be
certified by the Secretary or an Assistant Secretary of the Company and delivered to the Trustee at
or prior to the delivery of the Company Order contemplated by
Section 3.3
for the
authentication and delivery of such Securities. Any such Board Resolution, Officers Certificate
or record of such action shall have attached thereto a true and correct copy of the form of
Security referred to therein approved by or pursuant to such Board Resolution or Officers
Certificate.
The definitive Securities shall be printed, lithographed or engraved on steel engraved borders
or may be produced in any other manner, all as determined by the officers executing such
Securities, as evidenced by their execution of such Securities.
Section 2.2
Form of Trustees Certificate of Authentication
.
The Trustees certificates of authentication shall be in substantially the following form:
This is one of the Securities of the series designated herein referred to in the
within-mentioned Indenture.
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[Trustee], as Trustee
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By:
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Authorized Officer
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Section 2.3
Global Securities
.
If the Company shall establish pursuant to
Section 3.1
that the Securities of a
particular series are to be issued in whole or in part in the form of one or more Global
Securities, then the Company shall execute and the Trustee shall, in accordance with
Section
3.3
and the Company Order delivered to the Trustee thereunder, authenticate and deliver such
Global Security or Securities, which (i) shall represent, and shall be denominated in an amount
equal to the aggregate principal amount of the Outstanding Securities of such series to be
represented by such Global Security or Securities, (ii) may provide that the aggregate amount of
Outstanding Securities represented thereby may from time to time be increased or reduced to reflect
exchanges, (iii) shall be registered in the name of the Depositary for such Global Security or
Securities or its nominee, (iv) shall be delivered by the Trustee to the Depositary or pursuant to
the Depositarys instruction and (v) shall bear a legend in accordance with the requirements of the
Depositary.
Notwithstanding any other provision of this Section or of
Section 3.5
, except as
contemplated by the provisions of this
Section 2.3
below, unless the terms of a Global
Security expressly permit such Global Security to be exchanged in whole or in part for individual
Securities, a Global Security may be transferred, in whole but not in part and in the manner
provided in
Section 3.5
, only to a nominee of the Depositary for such Global Security, or
to the Depositary, or to a successor Depositary for such Global Security selected or approved by
the Company, or to a nominee of such successor Depositary.
If at any time the Depositary for a Global Security notifies the Company that it is unwilling
or unable to continue as the Depositary for such Global Security or if at any time the Depositary
for the Securities for such series shall no longer be eligible or in good standing under the
Exchange Act, or other applicable statute or regulation, the Company shall appoint a successor
Depositary with respect to such Global Security. If a successor Depositary for such Global
Security is not appointed by the Company within 90 days after the Company receives such notice or
becomes aware of such ineligibility, the Company will execute, and the Trustee, upon receipt of a
Company Order for the authentication and delivery of Securities of such series in the form of
definitive certificates in exchange for such Global Security, will authenticate and deliver
Securities of such series in the form of definitive certificates of like tenor and terms in an
aggregate principal amount equal to the principal amount of the Global Security in exchange for
such Global Security. Such Securities will be issued to and registered in the name of such Person
or Persons as are specified by the Depositary.
The Company may at any time and in its sole discretion determine that the Securities of any
series issued or issuable in the form of one or more Global Securities shall no longer be
17
represented by such Global Security or Securities. In any such event the Company will
execute, and the Trustee, upon receipt of a Company Request for the authentication and delivery of
Securities in the form of definitive certificates in exchange in whole or in part for such Global
Security, will authenticate and deliver without service charge to each Person specified by the
Depositary Securities in the form of definitive certificates of like tenor and terms in an
aggregate principal amount equal to the principal amount of such Global Security representing such
series, or the aggregate principal amount of such Global Securities representing such series, in
exchange for such Global Security or Securities.
If specified by the Company pursuant to
Section 3.1
with respect to Securities issued
or issuable in the form of a Global Security, the Depositary for such Global Security may surrender
such Global Security in exchange in whole or in part for Securities in the form of definitive
certificates of like tenor and terms on such terms as are acceptable to the Company and such
Depositary. Thereupon the Company shall execute, and the Trustee shall authenticate and deliver,
without service charge, (A) to each Person specified by such Depositary a new Security or
Securities of the same series of like tenor and terms and any authorized denomination as requested
by such Person in aggregate principal amount equal to and in exchange for such Persons beneficial
interest in the Global Security and (B) to such Depositary a new Global Security of like tenor and
terms and in an authorized denomination equal to the difference, if any, between the principal
amount of the surrendered Global Security and the aggregate principal amount of Securities
delivered to Holders thereof.
In any exchange provided for in any of the preceding three paragraphs, the Company shall
execute and the Trustee shall authenticate and deliver Securities in the form of definitive
certificates in authorized denominations. Upon the exchange of the entire principal amount of a
Global Security for Securities in the form of definitive certificates, such Global Security shall
be canceled by the Trustee. Except as provided in the immediately preceding subparagraph,
Securities issued in exchange for a Global Security pursuant to this
Section 2.3
shall be
registered in such names and in such authorized denominations as the Depositary for such Global
Security, acting pursuant to instructions from its direct or indirect participants or otherwise,
shall instruct the Trustee. Provided that the Company and the Trustee have so agreed, the Trustee
shall deliver such Securities to the Persons in whose names the Securities are so to be registered.
Any endorsement of a Global Security to reflect the principal amount thereof, or any increase
or decrease in such principal amount, or changes in the rights of Holders of Outstanding Securities
represented thereby shall be made in such manner and by such Person or Persons as shall be
specified in or pursuant to any applicable letter of representations or other arrangement entered
into with, or procedures of, the Depositary with respect to such Global Security or in the Company
Order delivered or to be delivered pursuant to
Section 3.3
or
Section 3.4
with
respect thereto. Subject to the provisions of
Section 3.3
and, if applicable,
Section
3.4
, the Trustee shall deliver and redeliver any such Global Security in the manner and upon
instructions given by the Person or Persons specified in or pursuant to any applicable letter of
representations or other arrangement entered into with, or procedures of, the Depositary with
respect to such Global Security or in any applicable Company Order. If a Company Order pursuant to
Section 3.3
or
Section 3.4
is so delivered, any instructions by the Company with
respect to such Global Security contained therein shall be in writing but need not be accompanied
by or contained in an Officers Certificate and need not be accompanied by an Opinion of Counsel.
18
The Depositary or, if there be one, its nominee, shall be the Holder of a Global Security for
all purposes under this Indenture; and beneficial owners with respect to such Global Security shall
hold their interests pursuant to applicable procedures of such Depositary. The Company, the
Trustee, the Paying Agent and the Security Registrar shall be entitled to deal with such Depositary
for all purposes of this Indenture relating to such Global Security (including the payment of
principal, premium, if any, and interest and any Additional Amounts with respect to such Global
Security and the giving of instructions or directions by or to the beneficial owners of such Global
Security as the sole Holder of such Global Security and shall have no obligations to the beneficial
owners thereof (including any direct or indirect participants in such Depositary). None of the
Company, the Trustee, any Paying Agent or the Security Registrar shall have any responsibility or
liability for any aspect of the records relating to or payments made on account of beneficial
ownership interests of a Global Security in or pursuant to any applicable letter of representations
or other arrangement entered into with, or procedures of, the Depositary with respect to such
Global Security or for maintaining, supervising or reviewing any records relating to such
beneficial ownership interests.
Section 2.4
Form of Legend for Global Securities
.
Unless otherwise specified as contemplated by
Section 3.1
for the Securities evidenced
thereby, every Global Security authenticated and delivered hereunder shall bear a legend in
substantially the following form:
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO
AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. THIS SECURITY MAY NOT BE
EXCHANGED IN WHOLE OR IN PART FOR A SECURITY REGISTERED, AND NO TRANSFER OF THIS SECURITY IN WHOLE
OR IN PART MAY BE REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE
THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
Section 2.5
Form of Face of Security
.
[Insert any legend required by the Internal Revenue Code and the regulations thereunder.]
CAPSTEAD MORTGAGE CORPORATION
CAPSTEAD MORTGAGE CORPORATION, a corporation duly organized and existing under the laws of
Maryland (herein called the
Company
, which term includes any successor Person under the
Indenture hereinafter referred to), for value received, hereby promises to pay to
, or registered assigns, the principal sum of
Dollars on
[if the Security is to bear interest prior to Maturity, insert
19
, and to pay
interest thereon from
or from the most recent Interest Payment Date to
which interest has been paid or duly provided for, semi-annually on
and
in each year, commencing
at the rate of ___% per annum,
until the principal hereof is paid or made available for payment [if applicable, insert , and
at the rate of ___% per annum on any overdue principal and premium and on any overdue installment
of interest]. The interest so payable, and punctually paid or duly provided for, on any Interest
Payment Date will, as provided in such Indenture, be paid to the Person in whose name this Security
(or one or more Predecessor Securities) is registered at the close of business on the Regular
Record Date for such interest, which shall be the
or
(whether
or not a Business Day), as the case may be, next preceding such Interest Payment Date. Any such
interest not so punctually paid or duly provided for will forthwith cease to be payable to the
Holder on such Regular Record Date and may either be paid to the Person in whose name this Security
(or one or more Predecessor Securities) is registered at the close of business on a Special Record
Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be
given to Holders of Securities of this series not less than 10 days prior to such Special Record
Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of
any securities exchange on which the Securities of this series may be listed, and upon such notice
as may be required by such exchange, all as more fully provided in said Indenture].
[If the Security is not to bear interest prior to Maturity, insert The principal of this
Security shall not bear interest except in the case of a default in payment of principal upon
acceleration, upon redemption or at Stated Maturity and in such case the overdue principal of this
Security shall bear interest at the rate of ___% per annum, which shall accrue from the date of
such default in payment to the date payment of such principal has been made or duly provided for.
Interest on any overdue principal shall be payable on demand. Any such interest on any overdue
principal that is not so paid on demand shall bear interest at the rate of ___% per annum, which
shall accrue from the date of such demand for payment to the date payment of such interest has been
made or duly provided for, and such interest shall also be payable on demand.]
Payment of the principal of (and premium, if any) and [if applicable, insert any such]
interest on this Security will be made at the office or agency of the Company maintained for that
purpose in
, in such coin or currency of the United States of America as at
the time of payment is legal tender for payment of public and private debts [if applicable, insert
; provided , however , that at the option of the Company payment of interest may be made by check
mailed to the address of the Person entitled thereto as such address shall appear in the Security
Register].
Reference is hereby made to the further provisions of this Security set forth on the reverse
hereof, which further provisions shall for all purposes have the same effect as if set forth at
this place.
Unless the certificate of authentication hereon has been executed by the Trustee referred to
on the reverse hereof by manual signature, this Security shall not be entitled to any benefit under
the Indenture or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed.
Dated:
20
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CAPSTEAD MORTGAGE CORPORATION
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By:
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Name:
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Title:
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Attest:
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Section 2.6
Form of Reverse of Security
.
This Security is one of a duly authorized issue of securities of the Company (herein called
the
Securities
), issued and to be issued in one or more series under an Indenture, dated
as of
, 20___(herein called the
Indenture
), between the Company and
, as Trustee (herein called the
Trustee
, which term includes any
successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights, limitations of rights, duties
and immunities thereunder of the Company, the Trustee, the holders of Senior Indebtedness and the
Holders of the Securities and of the terms upon which the Securities are, and are to be,
authenticated and delivered. This Security is one of the series designated on the face hereof [ if
applicable insert , limited in aggregate principal amount to $].
[If applicable, insert Subject to and upon compliance with the provisions of the Indenture,
the Holder of this Security is entitled, at his option, at any time on or before the close of
business on
, or in case this Security or a portion hereof is called for redemption,
then in respect of this Security or such portion hereof until and including, but (unless the
Company defaults in making the payment due upon redemption) not after, the close of business on the
10th calendar day before the Redemption Date, to convert this Security (or any portion of the
principal amount hereof which is $1,000 or an integral multiple thereof), at the principal amount
hereof, or of such portion, into fully paid and non-assessable shares (calculated as to each
conversion to the nearest 1/100 of a share) of Common Stock of the Company at a conversion price
per share of Common Stock equal to $ per each share of Common Stock (or at the current
adjusted conversion price if an adjustment has been made as provided in the Indenture) by surrender
of this Security, duly endorsed or assigned to the Company or in blank, to the Company at its
office or agency in
, accompanied by written notice to the Company that the
Holder hereof elects to convert this Security, or if less than the
entire principal amount hereof is to be converted, the portion hereof to be converted, and, in
case such surrender shall be made during the period from the close of business on any Regular
Record Date next preceding any Interest Payment
21
Date to the opening of business on such Interest
Payment Date (unless this Security or the portion thereof being converted has been called for
redemption on a Redemption Date within such period), also accompanied by payment in funds
acceptable to the Company of an amount equal to the interest payable on such Interest Payment Date
on the principal amount of this Security then being converted. Subject to the aforesaid
requirement for payment and, in the case of a conversion after the Regular Record Date next
preceding any Interest Payment Date and on or before such Interest Payment Date, to the right of
the Holder of this Security (or any Predecessor Security) of record at such Regular Record Date to
receive an installment of interest (with certain exceptions provided in the Indenture), no payment
or adjustment is to be made on conversion for interest accrued hereon or for dividends on the
Common Stock issued on conversion. No fractions of shares or scrip representing fractions of
shares will be issued on conversion, but instead of any fractional interest the Company shall pay a
cash adjustment as provided in the Indenture. The conversion price is subject to adjustment as
provided in the Indenture. In addition, the Indenture provides that in case of certain
consolidations or mergers to which the Company is a party or the transfer of substantially all of
the assets of the Company, the Indenture shall be amended, without the consent of any Holders of
Securities, so that this Security, if then outstanding, will be convertible thereafter, during the
period this Security shall be convertible as specified above, only into the kind and amount of
securities, cash and other property receivable upon the consolidation, merger or transfer by a
holder of the number of shares of Common Stock into which this Security might have been converted
immediately prior to such consolidation, merger or transfer (assuming such holder of Common Stock
failed to exercise any rights of election and received per share the kind and amount received per
share by a plurality of non-electing shares).]
[If applicable insert The Securities of this series are subject to redemption upon not less
than 30 days notice by mail, [if applicable, insert (1) on
in any year commencing
with the year 20___and ending with the year
through operation of the sinking fund for
this series at a Redemption Price equal to 100% of the principal amount, and (2)] at any time [if
applicable insert on or after
, 20___], as a whole or in part, at the election of the
Company, at the following Redemption Prices (expressed as percentages of the principal amount): If
redeemed [if applicable insert on or before
, ___%, and if redeemed] during the
12-month period beginning
of the years indicated,
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Redemption
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Redemption
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and thereafter at a Redemption Price equal to ___% of the principal amount, together
in the case of any such redemption [ if applicable, insert (whether through operation of the
sinking fund or otherwise)] with accrued interest to the Redemption Date, but interest installments
whose Stated Maturity is on or prior to such Redemption Date will be payable to the Holders of such
Securities, or one or more Predecessor Securities, of record at the close of
business on the relevant Record Dates referred to on the face hereof, all as provided in the
Indenture.]
[If applicable, insert The Securities of this series are subject to redemption upon not less
than 30 days notice by mail, (1) on
in any year commencing with the year
and ending with the year
through operation of the sinking fund for this
series at the Redemption Prices for redemption through operation of the sinking fund
22
(expressed as
percentages of the principal amount) set forth in the table below, and (2) at any time [if
applicable, insert on or after
], as a whole or in part, at the election of the
Company, at the Redemption Prices for redemption otherwise than through operation of the sinking
fund (expressed as percentages of the principal amount) set forth in the table below: If redeemed
during the 12-month period beginning
of the years indicated,
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Redemption Price for
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Redemption Price for
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Redemption Through
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Redemption Otherwise
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Operation of the
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Than Through Operation
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Sinking Fund
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of the Sinking Fund
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and thereafter at a Redemption Price equal to ___% of the principal amount, together
in the case of any such redemption (whether through operation of the sinking fund or otherwise)
with accrued interest to the Redemption Date, but interest installments whose Stated Maturity is on
or prior to such Redemption Date will be payable to the Holders of such Securities, or one or more
Predecessor Securities, of record at the close of business on the relevant Record Dates referred to
on the face hereof, all as provided in the Indenture.]
[If applicable, insert The sinking fund for this series provides for the redemption on
in each year beginning with the year
and ending with the year
of [if applicable, insert not less than $
(mandatory sinking fund) and
not more than] $
aggregate principal amount of Securities of this series. Securities of
this series acquired or redeemed by the Company otherwise than through [if applicable, insert
mandatory] sinking fund payments [if applicable, insert and Securities surrendered for conversion]
may be credited against subsequent [if applicable, insert mandatory] sinking fund payments
otherwise required to be made [if applicable, insert in the inverse order in which they become
due.]
[If the Security is subject to redemption of any kind, insert In the event of redemption or
conversion of this Security in part only, a new Security or Securities of this series and of like
tenor for the unredeemed or unconverted portion hereof will be issued in the name of the Holder
hereof upon the cancellation hereof.]
The indebtedness evidenced by this Security is, to the extent provided in the Indenture,
subordinate and subject in right of payment to the prior payment in full of all Senior
Indebtedness, and this Security is issued subject to the provisions of the Indenture with respect
thereto. Each Holder of this Security, by accepting the same, (a) agrees to and shall be bound by
such provisions, (b) authorizes and directs the Trustee on his behalf to take action as may be
necessary or appropriate to effectuate the subordination so provided and (c) appoints the Trustee
his attorney-in-fact for any and all such purposes.
[If applicable, insert The Indenture contains provisions for defeasance at any time of [(l)
the entire indebtedness of this Security or (2)] certain restrictive covenants and Events of
23
Default with respect to this Security, in each case upon compliance with certain conditions set
forth in the Indenture.]
[If the Security is not an Original Issue Discount Security, insert If an Event of Default
with respect to Securities of this series shall occur and be continuing, the principal of the
Securities of this series may be declared due and payable in the manner and with the effect
provided in the Indenture.]
[If the Security is an Original Issue Discount Security, insert If an Event of Default with
respect to Securities of this series shall occur and be continuing, an amount of principal of the
Securities of this series may be declared due and payable in the manner and with the effect
provided in the Indenture. Such amount shall be equal to insert formula for determining the
amount . Upon payment (i) of the amount of principal so declared due and payable and (ii) of
interest on any overdue principal and overdue interest all of the Companys obligations in respect
of the payment of the principal of and interest, if any, on the Securities of this series shall
terminate.]
The Indenture permits, with certain exceptions as therein provided, the amendment thereof and
the modification of the rights and obligations of the Company and the rights of the Holders of the
Securities of each series to be affected under the Indenture at any time by the Company and the
Trustee with the consent of the Holders of a majority in principal amount of the Securities at the
time Outstanding of each series to be affected. The Indenture also contains provisions permitting
the Holders of specified percentages in principal amount of the Securities of each series at the
time Outstanding, on behalf of the Holders of all Securities of such series, to waive compliance by
the Company with certain provisions of the Indenture and certain past defaults under the Indenture
and their consequences. Any such consent or waiver by the Holder of this Security shall be
conclusive and binding upon such Holder and upon all future Holders of this Security and of any
Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof,
whether or not notation of such consent or waiver is made upon this Security.
As provided in and subject to the provisions of the Indenture, the Holder of this Security
shall not have the right to institute any proceeding with respect to the Indenture or for the
appointment of a receiver or trustee or for any other remedy thereunder, unless such Holder shall
have previously given the Trustee written notice of a continuing Event of Default with respect to
the Securities of this series, the Holders of not less than 25% in principal amount of the
Securities of this series at the time Outstanding shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default as Trustee and offered the Trustee
reasonable indemnity and the Trustee shall not have received from the Holders of a majority in
principal amount of Securities of this series at the time Outstanding a direction inconsistent with
such request, and shall have failed to institute any such proceeding, for 60 days after receipt of
such notice, request and offer of indemnity. The foregoing shall not apply to any suit
instituted by the Holder of this Security for the enforcement of any payment of principal hereof or
any premium or interest hereon on or after the respective due dates expressed herein.
Subject to the rights of holders of Senior Indebtedness, as set forth in the Indenture, no
other reference herein to the Indenture and no other provision of this Security or of the Indenture
24
shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay
the principal of (and premium, if any) and interest on this Security at the times, place and rate,
and in the coin or currency, herein prescribed or to convert this Security as provided in the
Indenture.
As provided in the Indenture and subject to certain limitations therein set forth, the
transfer of this Security is registerable in the Security Register, upon surrender of this Security
for registration of transfer at the office or agency of the Company in any place where the
principal of and any premium and interest on this Security are payable, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the Company and the
Security Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing,
and thereupon one or more new Securities of this series and of like tenor, of authorized
denominations and for the same aggregate principal amount, will be issued to the designated
transferee or transferees.
The Securities of this series are issuable only in registered form without coupons in
denominations of $1,000 and any integral multiple thereof. As provided in the Indenture and
subject to certain limitations therein set forth, Securities of this series are exchangeable for a
like aggregate principal amount of Securities of this series and of like tenor of a different
authorized denomination, as requested by the Holder surrendering the same.
No service charge shall be made for any such registration of transfer or exchange, but the
Company or the Security Registrar may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of transfer, the Company, the
Trustee and any agent of the Company or the Trustee may treat the Person in whose name this
Security is registered as the owner hereof for all purposes, whether or not this Security be
overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the
contrary.
All terms used in this Security which are defined in the Indenture shall have the meanings
assigned to them in the Indenture.
ARTICLE 3
THE SECURITIES
Section 3.1
Amount Unlimited; Issuable in Series
.
The aggregate principal amount of Securities that may be authenticated and delivered under
this Indenture is unlimited.
The Securities may be issued in one or more series. There shall be established in or pursuant
to a Board Resolution and, subject to
Section 3.3
, set forth, or determined in the manner
provided, in an Officers Certificate, or established in one or more indentures supplemental
hereto, prior to the issuance of Securities of any series,
25
(1) the title of the Securities of the series (which shall distinguish the Securities of
the series from Securities of any other series);
(2) any limit upon the aggregate principal amount of the Securities of the series which
may be authenticated and delivered under this Indenture (except for Securities authenticated
and delivered upon registration of transfer of, or in exchange for, or in lieu of, other
Securities of the series pursuant to
Section 2.3
,
3.4
,
3.5
,
3.6
,
9.6
or
11.7
and except for any Securities which, pursuant to
Section 3.3
, are deemed never to have been authenticated and delivered hereunder);
(3) the Person to whom any interest on a Security of the series shall be payable, if
other than the Person in whose name that Security (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date for such interest;
(4) the date or dates on which the principal of and premium, if any, on any Securities
of the series is payable or the method of determination and/or extension of such date or
dates; and the amount or amounts of such payments of principal and premium, if any, or the
method of determination thereof;
(5) the rate or rates (which may be fixed or variable), at which any Securities of the
series shall bear interest, if any, whether and under what circumstances Additional Amounts
with respect to such Securities shall be payable, the date or dates from which any such
interest shall accrue, the Interest Payment Dates on which any such interest shall be payable
and, if other that as set forth in
Section 1.1
, the Regular Record Date for any such
interest payable on any Interest Payment Date (or the method for determining the dates and
rates);
(6) whether any of such Securities will be subject to certain optional interest rate
reset provisions;
(7) the place or places where the principal of and any premium and interest on, or any
Additional Amounts with respect to, the Securities of the series shall be payable, where the
Securities of such series may be surrendered for registration of transfer or exchange and
where notices and demands to or upon the Company in respect of the Securities of such series
and this Indenture may be served, and the method of such payment, if by wire transfer, mail
or other means;
(8) (a) the period or periods within which, the price or prices at which, the currency
or currencies (including currency units) and the terms and conditions upon which
any Securities of the series may be redeemed, in whole or in part, at the option of the
Company, (b) if other than as provided in
Section 11.3
, the manner in which the
particular Securities of such series (if less than all Securities of such series are to be
redeemed) are to be selected for redemption and (c) if other than by a Board Resolution, the
manner in which any election by the Company to redeem the Securities shall be evidenced;
(9) the Senior Indebtedness to which the Securities of such series are subordinated, and
the terms of such subordination;
26
(10) the obligation, if any, of the Company to redeem, purchase or repay any Securities
of the series pursuant to any sinking fund, amortization or analogous provisions or upon the
happening of a specified event or at the option of the Holder thereof and the period or
periods within which, the price or prices at which and the terms and conditions upon which
any Securities of the series shall be redeemed, purchased or repaid, in whole or in part,
pursuant to such obligation and any provisions for the remarketing of such Securities;
(11) if other than denominations of $1,000 and any integral multiple thereof, the
denominations in which any Securities of the series shall be issuable;
(12) if other than the Trustee, the identity of the Securities Registrar and/or the
Paying Agent;
(13) if the amount of principal of or any premium or interest on or other payments, if
any, on any Securities of the series may be determined with reference to an index, formula or
other method (which index, formula or method may be based, without limitation, on the price
of one or more commodities, derivatives or securities; one or more securities, derivatives or
commodities exchange indices or other indices; a currency or currencies (including currency
unit or units) other than that in which the Securities of the series are denominated or
designated to be payable; or any other variable or the relationship between any variables or
combination of variables), the index, formula or other method by which such amounts shall be
determined;
(14) if other than the currency of the United States of America, the currency,
currencies or currency units (including composite currencies) in which the principal of or
any premium or interest on, or any Additional Amounts with respect to, any Securities of the
series shall be payable and the manner of determining the equivalent thereof in the currency
of the United States of America for any purpose, including for purposes of the definition of
Outstanding in
Section 1.1
;
(15) if the principal of or any premium or interest on, or any Additional Amounts with
respect to, any Securities of the series is to be payable, at the election of the Company or
the Holder thereof, in one or more currencies or currency units other than that or those in
which such Securities are stated to be payable, the currency, currencies or currency units in
which the principal of or any premium or interest on such Securities as to which such
election is made shall be payable, the periods within which and the terms
and conditions upon which such election is to be made and the amount so payable (or the
manner in which such amount shall be determined);
(16) if other than the entire principal amount thereof, the portion of the principal
amount of any Securities of the series which shall be payable upon declaration of
acceleration of the Maturity thereof pursuant to
Section 5.2
;
(17) if the principal amount payable at the Stated Maturity of any Securities of the
series will not be determinable as of any one or more dates prior to the Stated Maturity, the
amount which shall be deemed to be the principal amount of such Securities
27
as of any such
date for any purpose thereunder or hereunder, including the principal amount thereof which
shall be due and payable upon any Maturity other than the Stated Maturity or which shall be
deemed to be Outstanding as of any date prior to the Stated Maturity (or, in any such case,
the manner in which such amount deemed to be the principal amount shall be determined);
(18) if applicable, that the Securities of the series, in whole or any specified part,
shall be defeasible pursuant to
Section 13.2
or
Section 13.3
or both such
Sections, or any other defeasance provisions applicable to any Securities of the series, and,
if other than by a Board Resolution, the manner in which any election by the Company to
defease such Securities shall be evidenced;
(19) the terms, if any, upon which Securities of the series may be convertible into or
exchanged for other Securities, common shares, preferred shares, other debt securities,
warrants to purchase any of the foregoing, or other securities of any kind of the Company or
any other obligor or any other property, and the terms and conditions upon which the
conversion or exchange shall be effected, including the initial conversion or exchange price
or rate, the conversion or exchange period, and any other additional provisions;
(20) if applicable, that any Securities of the series shall be issuable in whole or in
part in the form of one or more Global Securities and, in such case, the respective
Depositaries for such Global Securities, the form of any legend or legends which shall be
borne by any such Global Security in addition to or in lieu of that set forth in
Section
2.4
;
(21) any deletions, modifications of or additions to the definitions set forth in
Section 1.1
, the Events of Default which apply to any Securities of the series and
any change in the right of the Trustee or the requisite Holders of such Securities to declare
the principal amount thereof due and payable pursuant to
Section 5.2
;
(22) any addition to, deletion of or change in the covenants set forth in
Article
10
which applies to Securities of the series;
(23) any Authenticating Agents, Paying Agents, Security Registrars or such other agents
necessary in connection with the issuance of the Securities of such series, including,
without limitation, exchange rate agents and calculation agents;
(24) if applicable, the terms of any Mortgage that will be provided for a series of
Securities, including any provisions regarding the circumstances under which collateral may
be released or substituted;
(25) if applicable, the terms of any guaranties for the Securities, including the terms
of any subordination of such guaranties, and any circumstances under which there may be
additional obligors on the Securities;
(26) provisions, if any, granting special rights to the Holders of Securities of the
series upon the occurrence of such events as may be specified;
28
(27) whether Securities of the series shall be issuable in registered form or bearer
form (registrable or not registrable as to principal, and with or without interest coupons),
or both, and any restrictions applicable to the offering, sale or delivery of bearer
securities and the terms upon which bearer Securities of a series may be exchanged for
registered Securities of the same series and vice versa;
(28) the forms of the Securities of the series;
(29) any terms which may be related to warrants, options or other rights to purchase and
sell securities issued by the Company in connection with, or for the purchase of, Securities
of such series, including whether and under what circumstances the Securities of any series
may be used toward the exercise price of any such warrants, options or other rights;
(30) if the Securities of the series will be governed by, and the extent to which such
Securities will be governed by, any law other than the laws of the state of New York;
(31) any other terms of the series (which terms shall not be inconsistent with the
provisions of this Indenture, except as permitted by
Section 9.1(5))
.
All Securities of any one series need not be identical but may vary as may be provided in or
pursuant to the Board Resolution referred to above and (subject to
Section 3.3
) set forth,
or determined in the manner provided, in the Officers Certificate referred to above or in any such
indenture supplemental hereto. All Securities of any one series need not be issued at the same
time and, unless otherwise provided, a series may be reopened, without the consent of the Holders,
for issuances of additional Securities of such series.
Section 3.2
Denominations
.
Except as specified as contemplated by
Section 3.1
, the Securities of each series
shall be issuable only in registered form without coupons. The Securities of such series shall be
issuable only in such denominations as shall be specified as contemplated by
Section 3.1
.
In the absence of any such specified denomination with respect to the Securities of any series, the
Securities of such series shall be issuable in denominations of $1,000 and any integral multiple
thereof. Unless otherwise provided as contemplated by
Section 3.1
with respect to any
series of
Securities, any Securities of a series denominated in a currency other than Dollars shall be
issuable in denominations that are the equivalent, as determined by the Company by reference to the
noon buying rate in The City of New York for cable transfers for such currency (Exchange Rate),
as such rate is reported or otherwise made available by the Federal Reserve Bank of New York, on
the applicable issue date for such Securities, of $1,000 and any integral multiple thereof.
Section 3.3
Execution, Authentication, Delivery and Dating
.
The Securities shall be executed on behalf of the Company by its Chairman of the Board, its
Chief Executive Officer, its principal financial officer, its President or one of its Vice
Presidents, and attested by its Treasurer, its Secretary or one of its Assistant Treasurers or
Assistant Secretaries. The signature of any of these officers on the Securities may be manual or
29
facsimile. Securities bearing the manual or facsimile signatures of individuals who were at
any time the proper officers of the Company shall bind the Company, notwithstanding that such
individuals or any of them have ceased to hold such offices prior to the authentication and
delivery of such Securities or did not hold such offices at the date of such Securities.
At any time and from time to time after the execution and delivery of this Indenture, the
Company may deliver Securities of any series executed by the Company to the Trustee for
authentication, together with a Company Order for the authentication and delivery of such
Securities, and the Trustee in accordance with the Company Order shall authenticate and deliver
such Securities; provided, however, that in the case of Securities offered in a Periodic Offering,
the Trustee shall authenticate and deliver such Securities from time to time in accordance with
such other procedures (including, without limitation, the receipt by the Trustee of oral or
electronic instructions from the Company or its duly authorized agents, promptly confirmed in
writing) acceptable to the Trustee as may be specified by or pursuant to a Company Order delivered
to the Trustee prior to the time of the first authentication of Securities of such series. Each
Security shall be dated the date of its authentication unless otherwise provided by a Board
Resolution, a supplemental indenture hereto or an Officers Certificate. If the form or terms of
the Securities of the series have been established by or pursuant to one or more Board Resolutions
or any other method permitted by
Sections 2.1
and
3.1
, in authenticating such
Securities, and accepting the additional responsibilities under this Indenture in relation to such
Securities, the Trustee shall be entitled to receive, and (subject to
Section 6.1
) shall be
fully protected in relying upon, a copy of such Board Resolution, the Officers Certificate setting
forth the terms of the series and an Opinion of Counsel, with such Opinion of Counsel stating,
(1) if the form or terms of such Securities have been established by or pursuant to
Board Resolution or any other method permitted by
Sections 2.1
and
3.1
, that
such form or terms have been, or in the case of Securities of a series offered in a Periodic
Offering will be, established in conformity with the provisions of this Indenture, subject in
the case of Securities offered in a Periodic Offering, to any conditions specified in such
Opinion of Counsel; and
(2) that such Securities, when authenticated and delivered by the Trustee and issued by
the Company in the manner and subject to any conditions, exceptions and qualifications
specified in such Opinion of Counsel, will constitute legal, valid and binding obligations of
the Company, enforceable in accordance with their terms, except as such enforcement is
subject to the effect of (i) bankruptcy, insolvency, fraudulent conveyance, reorganization or
other laws relating to or affecting creditors rights and (ii) general principles of equity
(regardless of whether such enforcement is considered in a proceeding in equity or at law).
Such Opinion of Counsel need express no opinion as to the enforceability of
Section
6.7
or as to whether a court in the United States would render a money judgment in a currency
other than that of the United States. Notwithstanding the provisions of
Section 3.1
and of
the preceding paragraph, if all Securities of a series are not to be originally issued at one time,
it shall not be necessary to deliver the Officers Certificate otherwise required pursuant to
Section 3.1
or the Company Order and Opinion of Counsel otherwise required pursuant to such
preceding paragraph at or prior to the authentication of each Security of such series if such
30
documents are delivered at or prior to the authentication upon original issuance of the first
Security of such series to be issued.
Notwithstanding that such form or terms have been so established, the Trustee shall have the
right to decline to authenticate such Securities if, in the written opinion of counsel to the
Trustee (which counsel may be an employee of the Trustee), such action may not lawfully be taken or
if the Trustee in good faith by its board of trustees or trustees, executive committee or a trust
committee of directors, trustees or vice presidents shall determine that such action would expose
the Trustee to personal liability to Holders of any Securities then outstanding.
With respect to Securities of a series offered in a Periodic Offering, the Trustee may rely,
as to the authorization by the Company of any of such Securities, the form and terms thereof and
the legality, validity, binding effect and enforceability thereof, upon the Opinion of Counsel and
the other documents delivered pursuant to
Sections 2.1
and
3.1
and this Section, as
applicable, in connection with the first authentication of Securities of such series.
No Security shall be entitled to any benefit under this Indenture or be valid or obligatory
for any purpose unless there appears on such Security a certificate of authentication substantially
in the form provided for herein executed by the Trustee or an Authenticating Agent by manual
signature, and such certificate upon any Security shall be conclusive evidence, and the only
evidence, that such Security has been duly authenticated and delivered hereunder. Notwithstanding
the foregoing, if any Security shall have been authenticated and delivered hereunder but never
issued and sold by the Company, and the Company shall deliver such Security to the Trustee for
cancellation as provided in
Section 3.9
, for all purposes of this Indenture such Security
shall be deemed never to have been authenticated and delivered hereunder and shall never be
entitled to the benefits of this Indenture.
The Company in issuing Securities may use CUSIP numbers (if then generally in use), and if
so, the Trustee may use the CUSIP numbers in notices of redemption or exchange as a convenience to
Holders; provided, however, that any such notice may state that no representation is made as to the
correctness or accuracy of the CUSIP number printed in the notice or on the Securities, that
reliance may be placed only on the other identification numbers printed on the Securities, and any
such redemption or exchange shall not be affected by any defect or omission of such CUSIP numbers.
The Company will promptly notify the Trustee of any change in CUSIP numbers known to an Officer of
the Company. Neither the Company nor the Trustee shall have any responsibility for any defect in
the CUSIP number that appears on any Security, check, advice of payment or redemption notice, and
any such document may contain a statement to the effect that CUSIP numbers have been assigned by an
independent service for convenience of reference and that neither the Company nor the Trustee shall
be liable for any inaccuracy in such numbers.
Section 3.4
Temporary Securities
.
Pending the preparation of definitive Securities of any series, the Company may execute, and
upon Company Order the Trustee shall authenticate and deliver, temporary Securities which are
printed, lithographed, typewritten, mimeographed or otherwise produced, in any authorized
denomination, substantially of the tenor of the definitive Securities in lieu of which they are
31
issued and with such appropriate insertions, omissions, substitutions and other variations as
the officers executing such Securities may determine, as evidenced by their execution of such
Securities. All or any portion of the temporary Securities of a series may be Global Securities.
If temporary Securities of any series are issued, the Company will cause definitive Securities
of that series to be prepared without unreasonable delay. Except in the case of temporary
Securities that are Global Securities, each of which shall be exchanged in accordance with the
provisions thereof, after the preparation of definitive Securities of such series, the temporary
Securities of such series shall be exchangeable for definitive Securities of such series upon
surrender of the temporary Securities of such series at the office or agency of the Company in a
Place of Payment for that series, without charge to the Holder. Upon surrender for cancellation of
any one or more temporary Securities of any series, the Company shall execute and the Trustee shall
authenticate and deliver in exchange therefor one or more definitive Securities of the same series,
of any authorized denominations and of like tenor and aggregate principal amount. Until so
exchanged, the temporary Securities of any series shall in all respects be entitled to the same
benefits under this Indenture as definitive Securities of such series and tenor, except as
otherwise specified as contemplated by
Section 3.1
.
Section 3.5
Registration; Registration of Transfer and Exchange
.
The Company shall cause to be kept at the Corporate Trust Office of the Trustee or in any
office or agency to be maintained by the Company in accordance with
Section 9.2
in a Place
of Payment or in such other place or medium as may be specified pursuant to
Section 3.1
a
register for each series of Securities (each register maintained in such office and in any other
office or agency of the Company in a Place of Payment being herein sometimes referred to as the
Security Register
) in which, subject to such reasonable regulations as it may prescribe,
the Company shall provide for the registration of Securities of such series and of transfers of
Securities of such series. Unless otherwise contemplated by
Section 3.1
, the Trustee is
hereby appointed Security Registrar for the purpose of registering Securities and transfers of
Securities, and for the purpose of maintaining the Security Register in respect thereof, as herein
provided.
Except as set forth in
Section 2.3
or as may be provided pursuant to
Section
3.1
, upon surrender for registration of transfer of any Security of a series at the office or
agency of the Company in a Place of Payment for that series, the Company shall execute and deliver
a Company Order requesting the Trustee to authenticate and deliver, and the Trustee shall
authenticate and deliver, in the name of the designated transferee or transferees, one or more new
Securities of the same series, of any authorized denominations and of like tenor and aggregate
principal amount.
Unless otherwise provided as contemplated by
Section 3.1
, at the option of the Holder,
Securities of any series (other than Global Securities) may be exchanged for other Securities of
the same series, of any authorized denominations and of like tenor and aggregate principal amount,
upon surrender of the Securities to be exchanged at such office or agency, and upon payment, if the
Company shall so require, of the charges hereinafter provided. Whenever any Securities are so
surrendered for exchange, the Company shall execute, and the Trustee shall
32
authenticate and deliver, the Securities that the Holder making the exchange is entitled to
receive.
All Securities issued upon any registration of transfer or exchange of Securities shall be the
valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under
this Indenture, as the Securities surrendered upon such registration of transfer or exchange.
Every Security presented or surrendered for registration of transfer or for exchange shall (if
so required by the Company, Security Registrar or the Trustee) be duly endorsed, or be accompanied
by a written instrument of transfer in form satisfactory to the Company, the Security Registrar or
the Trustee, as the case may be, duly executed, by the Holder thereof or its attorney duly
authorized in writing.
Unless otherwise provided as contemplated by
Section 3.1
, 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 registration of transfer or exchange of Securities, other than exchanges
pursuant to
Section 3.4
,
9.6
or
11.7
not involving any transfer.
Unless otherwise provided as contemplated by
Section 3.1
, if the Securities of any
series (or of any series and specified tenor) are to be redeemed in whole or in part, the Company
shall not be required (A) to issue, register the transfer of or exchange any Securities of that
series (or of that series and specified tenor, as the case may be) during a period beginning at the
opening of business 15 days before the day of the mailing of a notice of redemption of any such
Securities selected for redemption under
Section 11.3
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 any Security being redeemed in
part.
Unless otherwise provided as contemplated by
Section 3.1
, the Company shall not be
required to register the transfer or exchange of Securities between a Record Date and the next
succeeding Interest Payment Date.
Section 3.6
Mutilated, Destroyed, Lost and Stolen Securities
.
If any mutilated Security is surrendered to the Trustee, the Company shall execute and deliver
a Company Order requesting the Trustee to authenticate and deliver, and the Trustee shall
authenticate and deliver, in exchange therefor a new Security of the same series and of like tenor
and principal amount and bearing a number not contemporaneously outstanding. If there shall be
delivered to the Company and the Trustee (i) evidence to their satisfaction of the destruction,
loss or theft of any Security and (ii) such security or indemnity as may be required by them to
save each of them and any agent of either of them harmless, then, in the absence of notice to the
Company or the Trustee that such Security has been acquired by a bona fide purchaser, the Company
shall execute and upon the Companys request the Trustee shall authenticate and deliver, in lieu of
any such destroyed, lost or stolen Security, a new Security of the same series and of like tenor
and principal amount and bearing a number not contemporaneously outstanding.
33
Notwithstanding the preceding paragraph, in case any such mutilated, destroyed, lost or stolen
Security has become or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this
Section 3.6
, the Company may require
the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed
in relation thereto and any other expenses (including the fees and expenses of the Trustee)
connected therewith.
Every new Security of any series issued pursuant to this
Section 3.6
in lieu of any
destroyed, lost or stolen Security shall constitute an original additional contractual obligation
of the Company, whether or not the destroyed, lost or stolen Security shall be at any time
enforceable by anyone, and shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Securities of that series duly issued hereunder.
The provisions of this
Section 3.6
are exclusive and shall preclude (to the extent
lawful) all other rights and remedies with respect to the replacement or payment of mutilated,
destroyed, lost or stolen Securities.
Section 3.7
Payment of Interest; Interest Rights Preserved
.
Except as otherwise provided as contemplated by
Section 3.1
with respect to any series
of Securities, interest on any Security which is payable, and is punctually paid or duly provided
for, on any Interest Payment Date shall be paid to the Person in whose name that Security (or one
or more Predecessor Securities) is registered at the close of business on the Regular Record Date
for such interest at the office or agency maintained for such purpose pursuant to
Section
9.2
; provided, however, that at the option of the Company, interest on any series of Registered
Securities that bear interest may be paid (i) by check mailed to the address of the Person entitled
thereto as it shall appear on the Security Register of such series (unless, with respect to a
Global Security, the rules of the Depositary require payment of such amount by wire transfer) or
(ii) by wire transfer to an account maintained by the Person entitled thereto as specified in the
Security Register of such series.
Unless otherwise provided as contemplated by
Section 3.1
, any interest on any Security
of any series which is payable, but is not punctually paid or duly provided for, on any Interest
Payment Date (herein called
Defaulted Interest
) shall forthwith cease to be payable to
the Holder on the relevant Regular Record Date by virtue of having been such Holder, and such
Defaulted Interest may be paid by the Company, at its election in each case, as provided in
clause (1)
or
(2)
below:
(1) The Company may elect to make payment of any Defaulted Interest to the Persons in
whose names the Securities of such series (or their respective Predecessor Securities) are
registered at the close of business on a Special Record Date for the payment of such
Defaulted Interest, which shall be fixed in the following manner. The Company shall notify
the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each
Security of such series and the date of the proposed payment, and at the same time the
Company shall deposit with the Trustee an amount of money equal to the
34
aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make
arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed
payment, such money when deposited to be held in trust for the benefit of the Persons
entitled to such Defaulted Interest as in this clause provided. Thereupon the Trustee shall
fix a Special Record Date for the payment of such Defaulted Interest, which shall be not more
than 15 days and not less than 10 days prior to the date of the proposed payment and not less
than 10 days after the receipt by the Trustee of the notice of the proposed payment. The
Trustee shall promptly notify the Company of such Special Record Date and, in the name and at
the expense of the Company, shall cause notice of the proposed payment of such Defaulted
Interest and the Special Record Date therefor to be given to each Holder of Securities of
such series in the manner set forth in
Section 1.7
, not less than 10 days prior to
such Special Record Date. The Trustee may, in its discretion, in the name and at the expense
of the Company, cause a similar notice to be published at least once in an Authorized
Newspaper in The Borough of Manhattan, The City of New York, but such publication shall not
be a condition precedent to the establishment of such Special Record Date. Notice of the
proposed payment of such Defaulted Interest and the Special Record Date therefor having been
so mailed, such Defaulted Interest shall be paid to the Persons in whose names the Securities
of such series (or their respective Predecessor Securities) are registered at the close of
business on such Special Record Date and shall no longer be payable pursuant to the following
clause (2)
.
(2) The Company may make payment of any Defaulted Interest on the Securities of any
series in any other lawful manner not inconsistent with the requirements of any securities
exchange on which such Securities may be listed, and upon such notice as may be required by
such exchange, if, after notice given by the Company to the Trustee of the proposed payment
pursuant to this clause, such manner of payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this
Section 3.7
, each Security delivered under
this Indenture upon registration of transfer of or in exchange for or in lieu of any other Security
shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such
other Security.
Section 3.8
Persons Deemed Owners
.
Prior to due presentment of a Security for registration of transfer, the Company, the Trustee
and any agent of the Company or the Trustee may treat the Person in whose name such Security is
registered as the owner of such Security for the purpose of receiving payment of principal of and
any premium and (subject to
Section 3.7
) any interest and any Additional Amounts or other
payments on such Security and for all other purposes whatsoever, whether or not such Security shall
be overdue, and none of the Company, the Trustee or any agent of the Company or the Trustee shall
be affected by notice to the contrary.
Except as otherwise specified as contemplated by
Section 3.1
, none of the Company, the
Trustee or any agent of the Company or the Trustee shall have any responsibility or liability for
any aspect of the records relating to or payments made on account of beneficial ownership interests
of a Global Security, or for maintaining, supervising or reviewing any records relating
35
to such beneficial ownership interests. Notwithstanding the foregoing, with respect to any
Global Security, nothing herein shall prevent the Company or the Trustee, or any agent of the
Company or the Trustee, from giving effect to any written certification, proxy or other
authorization furnished by any Depositary (or its nominee), as a Holder, with respect to such
Global Security or impair, as between such Depositary and owners of beneficial interests in such
Global Security, the operation of customary practices governing the exercise of the rights of such
Depositary (or its nominee) as Holder of such Global Security.
Section 3.9
Cancellation
.
The Company may at any time deliver to the Trustee for cancellation any Securities previously
authenticated and delivered hereunder which the Company may have acquired in any manner whatsoever,
and may deliver to the Trustee (or to any other Person for delivery to the Trustee) for
cancellation any Securities previously authenticated hereunder which the Company has not issued and
sold, and all Securities so delivered shall be promptly canceled by the Trustee. The Security
Registrar and the Paying Agent shall forward to the Trustee any Securities surrendered to them for
registration of transfer, exchange or payment, and all Securities so delivered shall be promptly
canceled by the Trustee. No Securities shall be authenticated in lieu of or in exchange for any
Securities canceled as provided in this Section, except as expressly permitted by this Indenture or
as otherwise specified as contemplated by
Section 3.1
. On request of the Company at the
time of surrender, the Trustee shall deliver to the Company canceled Securities held by the
Trustee. In the absence of such request, all canceled Securities held by the Trustee shall be
disposed of in accordance with the Trustees customary procedures.
Section 3.10
Computation of Interest
.
Except as otherwise specified as contemplated by
Section 3.1
for Securities of any
series, interest on the Securities of each series shall be computed on the basis of a 360-day year
of twelve 30-day months.
ARTICLE 4
SATISFACTION AND DISCHARGE
Section 4.1
Satisfaction and Discharge of Indenture
.
This Indenture shall upon Company Request cease to be of further effect with respect to
Securities of or within any series (except as to any surviving rights of registration of transfer
or exchange of such Securities and replacement of such Securities which may have been lost, stolen
or mutilated as herein expressly provided for), and the Trustee, at the expense of the Company,
shall execute proper instruments acknowledging satisfaction and discharge of this Indenture with
respect to such Securities, when
(1) either
(A) all such Securities theretofore authenticated and delivered (other than (i)
Securities which have been destroyed, lost or stolen and which have been replaced or
paid as provided in
Section 3.6
and (ii) Securities for whose payment
36
money has theretofore been deposited in trust or segregated and held in trust
by the Trustee or the Company and thereafter repaid to the Company or discharged
from such trust, as provided in
Section 10.3
) have been delivered to the
Trustee for cancellation; or
(B) all such Securities not theretofore delivered to the Trustee for
cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated Maturity within one
year, or
(iii) are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of notice of
redemption by the Trustee in the name, and at the expense, of the Company,
and the Company, in the case of
clause (i)
,
(ii)
or
(iii)
above, has
deposited or caused to be deposited with the Trustee as trust funds in trust for the purpose money
in an amount sufficient to pay and discharge the entire indebtedness on such Securities not
theretofore delivered to the Trustee for cancellation, for principal and any premium and interest
and any Additional Amounts to the date of such deposit (in the case of Securities which have become
due and payable) or to the Stated Maturity or Redemption Date, as the case may be;
(2) the Company has paid or caused to be paid all other sums payable hereunder by the
Company with respect to the Outstanding Securities of such series;
(3) the Company has complied with any other conditions specified pursuant to
Section
3.1
to be applicable to the Outstanding Securities of such series; and
(4) the Company has delivered to the Trustee an Officers Certificate and an Opinion of
Counsel, each stating that all conditions precedent herein provided for relating to the
satisfaction and discharge of this Indenture as to such Securities have been complied with.
If any Outstanding Securities of such series are to be redeemed prior to their Stated
Maturity, whether pursuant to any optional redemption provisions or in accordance with any
mandatory sinking fund requirement, the trust agreement evidencing the trust referred to in
subclause (B)
of
clause (1)
of this
Section 4.1
shall provide therefore and
the Company shall make such arrangements as are satisfactory to the Trustee for the giving of
notice of redemption by the Trustee in the name, and at the expense, of the Company.
Notwithstanding the satisfaction and discharge of this Indenture, the obligations of the
Company to the Trustee under
Section 6.7
, the obligations of the Trustee to any
Authenticating Agent under
Section 6.14
and, if money shall have been deposited with the
Trustee pursuant to
subclause (B)
of
clause (1)
of this
Section 4.1
, the
obligations of the Trustee under
Section 4.2
and the last paragraph of
Section 10.3
shall survive.
37
Section 4.2
Application of Trust Money
.
Subject to the provisions of the last paragraph of
Section 10.3
, all money deposited
with the Trustee pursuant to
Section 4.1
shall be held in trust and applied by it, in
accordance with the provisions of the Securities and this Indenture, to the payment, either
directly or through any Paying Agent (including the Company acting as its own Paying Agent) as the
Trustee may determine, to the Persons entitled thereto, of the principal and any premium and
interest or Additional Amounts for whose payment such money has been deposited with the Trustee.
ARTICLE 5
REMEDIES
Section 5.1
Events of Default
.
Event of Default
, wherever used herein with respect to Securities of any series,
means any one of the following events (whatever the reason for such Event of Default and whether it
shall be occasioned by the subordination provisions applicable to any Securities or be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental body), unless it is
either inapplicable to a particular series or it is specifically deleted or modified in the Board
Resolution, supplemental indenture, Officers Certificate establishing such series, or form of
Security for such series:
(1) default in the payment of any interest on, or any Additional Amounts with respect
to, any Security of that series when it becomes due and payable, and continuance of such
default for a period of 30 days (unless the entire amount of such payment is deposited by the
Company with the Trustee or with a Paying Agent prior to the expiration of such period of 30
days); or
(2) default in the payment of the principal of or any premium on any Security of that
series at its Maturity, and continuance of such default for a period of 30 days (unless the
entire amount of such payment is deposited by the Company with the Trustee or with a Paying
Agent prior to the expiration of such period of 30 days); or
(3) default in the deposit of any sinking fund payment, when and as due by the terms of
a Security of that series, and continuance of such default for a period of 30 days; or
(4) default in the performance, or breach, of any covenant or warranty of the Company in
this Indenture (other than a covenant or warranty a default in whose performance or whose
breach is elsewhere in this
Section 5.1
specifically dealt with or which has
expressly been included in this Indenture solely for the benefit of series of Securities
other than that series), and continuance of such default or breach for a period of 60 days
after there has been given, by registered or certified mail, to the Company by the Trustee or
to the Company and the Trustee by the Holders of at least 25% in principal amount of the
Outstanding Securities of that series a written notice specifying such default
38
or breach and requiring it to be remedied and stating that such notice is a
Notice
of Default
hereunder; or
(5) the entry by a court having jurisdiction in the premises of (A) a decree or order
for relief in respect of the Company in an involuntary case or proceeding under any
applicable federal or state bankruptcy, insolvency, reorganization or other similar law or
(B) a decree or order adjudging the Company a bankrupt or insolvent, or approving as properly
filed a petition seeking reorganization, arrangement, adjustment or composition of or in
respect of the Company under any applicable federal or state law, or appointing a custodian,
receiver, liquidator, assignee, trustee, sequestrator or other similar official of the
Company or of any substantial part of its property, or ordering the winding up or liquidation
of its affairs, and the continuance of any such decree or order for relief or any such other
decree or order unstayed and in effect for a period of 60 consecutive days; or
(6) the commencement by the Company of a voluntary case or proceeding under any
applicable federal or state bankruptcy, insolvency, reorganization or other similar law or of
any other case or proceeding to be adjudicated a bankrupt or insolvent, or the consent by it
to the entry of a decree or order for relief in respect of the Company in an involuntary case
or proceeding under any applicable federal or state bankruptcy, insolvency, reorganization or
other similar law or to the commencement of any bankruptcy or insolvency case or proceeding
against it, or the filing by it, of a petition or answer or consent seeking reorganization or
relief under any applicable federal or state law, or the consent by it to the filing of such
petition or to the appointment of or taking possession by a custodian, receiver, liquidator,
assignee, trustee, sequestrator or similar official of the Company or of any substantial part
of its property, or the making by it of an assignment for the benefit of creditors, or the
admission by it in writing of its inability to pay its debts generally as they become due, or
the taking of corporate action by the Company in furtherance of any such action; or
(7) any other Event of Default provided with respect to Securities of that series in the
Board Resolution, supplemental indenture or Officers Certificate establishing that series.
Notwithstanding the foregoing provisions of this
Section 5.1
, if the principal of,
premium (if any) or any interest on, or any Additional Amounts with respect to, any Security is
payable in a currency or currencies (including a composite currency) other than Dollars and such
currency or currencies are not available to the Company for making payment thereof due to the
imposition of exchange controls or other circumstances beyond the control of the Company (a
Conversion Event
), the Company will be entitled to satisfy its obligations to Holders of
the Securities by making such payment in Dollars in an amount equal to the Dollar equivalent of the
amount payable in such other currency, as determined by the Company by reference to the Exchange
Rate, as such Exchange Rate is certified for customs purposes by the Federal Reserve Bank of New
York on the date of such payment, or, if such rate is not then available, on the basis of the most
recently available Exchange Rate. Notwithstanding the foregoing provisions of this
Section
5.1
, any payment made under such circumstances in Dollars where the required payment is in a
currency other than Dollars will not constitute an Event of Default under this Indenture.
39
Promptly after the occurrence of a Conversion Event with respect to the Securities of any
series, the Company shall give written notice thereof to the Trustee; and the Trustee, promptly
after receipt of such notice, shall give notice thereof in the manner provided in
Section
1.7
to the Holders of such series. Promptly after the making of any payment in Dollars as a
result of a Conversion Event with respect to the Securities of any series, the Company shall give
notice in the manner provided in
Section 1.7
to the Holders of such series, setting forth
the applicable Exchange Rate and describing the calculation of such payments.
Section 5.2
Acceleration of Maturity; Rescission and Annulment
.
Unless the Board Resolution, supplemental indenture or Officers Certificate establishing such
series provides otherwise, if an Event of Default with respect to Securities of any series at the
time Outstanding occurs and is continuing, then in every such case the Trustee or the Holders of
not less than 25% in principal amount of the Outstanding Securities of that series may declare the
principal amount of all the Securities of that series (or, if any Securities of that series are
Original Issue Discount Securities, such portion of the principal amount of such Securities as may
be specified by the terms thereof) and premium, if any, together with accrued and unpaid interest,
if any, thereon, and Additional Amounts, if any, with respect thereto, to be due and payable
immediately, by a notice in writing to the Company (and to the Trustee if given by the Holders),
and upon any such declaration such principal amount (or specified amount) and premium, if any,
together with accrued and unpaid interest, if any, thereon, and Additional Amounts, if any, with
respect thereto, shall become immediately due and payable.
At any time after such a declaration of acceleration with respect to Securities of any series
has been made and before a judgment or decree for payment of the money due has been obtained by the
Trustee as hereinafter in this
Article 5
provided, the Holders of a majority in principal
amount of the Outstanding Securities of that series, by written notice to the Company and the
Trustee, may rescind and annul such declaration and its consequences if
(1) the Company has paid or deposited with the Trustee a sum sufficient to pay
(A) all overdue interest on, and any Additional Amounts with respect to, all
Securities of that series (or of all series, as the case may be),
(B) the principal of or premium (if any) on any Securities of that series (or
of all series, as the case may be) which have become due otherwise than by such
declaration of acceleration and interest thereon at the rate or rates prescribed
therefor in such Securities (in the case of Original Issue Discount Securities, the
Securities Yield to Maturity),
(C) to the extent that payment of such interest is lawful, interest upon
overdue interest and any Additional Amounts at the rate or rates prescribed therefor
in such Securities (in the case of Original Issue Discount Securities, the
Securities Yield to Maturity), and
40
(D) all sums paid or advanced by the Trustee hereunder, the compensation,
expenses, disbursements and advances due to Trustee under
Section 6.7
, and
all other amounts due under
Section 6.7
;
(2) all Events of Default with respect to Securities of that series (or of all series,
as the case may be), other than the nonpayment of the principal of Securities of that series
(or of all series, as the case may be) which have become due solely by such declaration of
acceleration, have been cured or waived as provided in
Section 5.13
; and
(3) the rescission would not conflict with any final judgment or decree of a court of
competent jurisdiction.
No such rescission shall affect any subsequent default or impair any right consequent thereon.
Section 5.3
Collection of Indebtedness and Suits for Enforcement by Trustee
.
The Company covenants that if
(1) default is made in the payment of any interest on, or any Additional Amounts with
respect to, any Security of any series when such interest or Additional Amounts shall become
due and payable and such default continues for a period of 30 days, or
(2) default is made in the payment of the principal of (or premium, if any, on) any
Security at the Maturity thereof, the Company will, upon demand of the Trustee, pay to it,
for the benefit of the Holders of such Securities, the whole amount then due and payable on
such Securities for principal and any premium and interest on, and Additional Amounts with
respect to, and, to the extent that payment of such interest shall be legally enforceable,
interest on any overdue principal and premium and on any overdue interest or Additional
Amounts, at the rate or rates prescribed therefor in such Securities (or in the case of
Original Issue Discount Securities, the Securities Yield to Maturity), and, in addition
thereto, such further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel, and all other amounts due the Trustee under
Section
6.7
.
If the Company fails to pay such amounts forthwith upon such demand, the Trustee, in its own
name and as trustee of an express trust, may institute a judicial proceeding for the collection of
the sums so due and unpaid, may prosecute such proceeding to judgment or final decree and may
enforce the same against the Company or any other obligor upon such Securities and collect the
moneys adjudged or deemed to be payable in the manner provided by law out of the property of the
Company or any other obligor upon such Securities, wherever situated.
In addition, if any other Event of Default with respect to Securities of any series occurs and
is continuing, the Trustee may in its discretion proceed, in its own name and as trustee of an
express trust, to protect and enforce its rights and the rights of the Holders of Securities of
such series by such appropriate judicial proceedings as the Trustee shall deem most effectual to
41
protect and enforce any such rights, whether for the specific enforcement of any covenant or
agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce
any other proper remedy.
Section 5.4
Trustee May File Proofs of Claim
.
In case of the pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial proceeding relative to the
Company or any other obligor upon the Securities or the property of the Company or of such other
obligor or their creditors, the Trustee (irrespective of whether the principal (or lesser amount in
the case of Original Issue Discount Securities) of the Securities shall then be due and payable as
therein expressed or by declaration or otherwise and irrespective of whether the Trustee shall have
made any demand on the Company for the payment of overdue principal of, premium (if any), interest
on, or any Additional Amounts with respect to, such Securities) shall be entitled and empowered, by
intervention in such proceeding or otherwise,
(1) to file and prove a claim for the whole amount of principal (or lesser amount in the
case of Original Issue Discount Securities) (and premium, if any) and interest and any
Additional Amounts owing and unpaid in respect of the Securities and to file such other
papers or documents as may be necessary or advisable to have the claims of the Trustee
(including any claim for the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel) and of the Holders allowed in such judicial proceeding,
and
(2) to collect and receive any monies or other property payable or deliverable on any
such claims and to distribute the same; and any custodian, receiver, assignee, trustee,
liquidator, sequestrator or other similar official in any such judicial proceeding is hereby
authorized by each Holder to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the Holders, to pay to the
Trustee any amount due it for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 6.7
.
No provision of this Indenture shall be deemed to authorize the Trustee to authorize or
consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement,
adjustment or composition affecting the Securities or the rights of any Holder thereof or to
authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding;
provided, however, that the Trustee may, on behalf of the Holders, vote for the election of a
trustee in bankruptcy or similar official and be a member of a creditors or other similar
committee.
Section 5.5
Trustee May Enforce Claims Without Possession of Securities
.
All rights of action and claims under this Indenture or the Securities may be prosecuted and
enforced by the Trustee without the possession of any of the Securities or the production thereof
in any proceeding relating thereto, and any such proceeding may be instituted by the Trustee in its
own name as trustee of an express trust.
42
Section 5.6
Application of Money Collected
.
Subject to the subordination provisions applicable to any series of Securities, any money
collected by the Trustee pursuant to this Article shall be applied and paid in the following order,
at the date or dates fixed by the Trustee and, in case of the distribution of such money on account
of principal or any premium or interest on, or any Additional Amounts with respect to, the
Securities, upon presentation of the Securities and the notation thereon of the payment if only
partially paid and upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee under
Section 6.7
in connection
with such series of Securities in respect of which money or other property is collected;
SECOND: Subject to the terms of any subordination entered into as contemplated by
Section
3.1
, to the payment of the amounts then due and unpaid for principal of and any premium, if
any, and interest on, and any Additional Amounts with respect to, the Securities in respect of
which or for the benefit of which such money has been collected, ratably, without preference or
priority of any kind, according to the amounts due and payable on such Securities for principal and
any premium, if any, interest on and Additional Amounts, respectively; and
THIRD: The balance, if any, to the Company or any other Person or Persons entitled thereto.
To the fullest extent allowed under applicable law, if for the purpose of obtaining judgment
against the Company in any court it is necessary to convert the sum due in respect of the principal
of, premium (if any) or interest on, or any Additional Amounts with respect to, the Securities of
any series (the
Required Currency
) into a currency in which a judgment will be rendered
(the
Judgment Currency
), the rate of exchange used shall be the rate at which in
accordance with normal banking procedures the Trustee could purchase in The City of New York the
Required Currency with the Judgment Currency on the Business Day in The City of New York next
preceding that on which final judgment is given. Neither the Company nor the Trustee shall be
liable for any shortfall nor shall any of them benefit from any windfall in payments to Holders of
Securities under this
Section 5.6
caused by a change in exchange rates between the time the
amount of a judgment against it is calculated as above and the time the Trustee converts the
Judgment Currency into the Required Currency to make payments under this
Section 5.6
to
Holders of Securities, but payment of such judgment shall discharge all amounts owed by the Company
on the claim or claims underlying such judgment.
Section 5.7
Limitation on Suits
.
Subject to
Section 5.8
, no Holder of any Security of any series shall have any right
to institute any proceeding, judicial or otherwise, with respect to this Indenture, or for the
appointment of a receiver or trustee, or for any other remedy hereunder, unless
(1) an Event of Default with respect to such series of Securities shall have occurred
and be continuing and such Holder has previously given written notice to the Trustee of such
continuing Event of Default;
43
(2) the Holders of not less than 25% in principal amount of the Outstanding Securities
of that series shall have made written request to the Trustee to institute proceedings in
respect of such Event of Default in its own name as Trustee hereunder;
(3) such Holder or Holders have offered and, if requested, provided to the Trustee
reasonable indemnity against the costs, expenses and liabilities to be incurred in compliance
with such request;
(4) the Trustee for 60 days after its receipt of such notice, request and offer of
indemnity has failed to institute any such proceeding; and
(5) no direction inconsistent with such written request has been given to the Trustee
during such 60-day period by the Holders of a majority in principal amount of the Outstanding
Securities of that series (or of all series, as the case may be).
No one or more of such Holders shall have any right in any manner whatever by virtue of, or by
availing of, any provision of this Indenture to affect, disturb or prejudice the rights of any
other of such Holders, or to obtain or to seek to obtain priority or preference over any other of
such Holders or to enforce any right under this Indenture, except in the manner herein provided and
for the equal and ratable benefit of all of such Holders.
Section 5.8
Right of Holders to Receive Principal, Premium and Interest
.
Notwithstanding any other provision in this Indenture, the right of any Holder of any Security
to receive payment of the principal of and any premium and (subject to
Section 3.7
)
interest on, or any Additional Amounts with respect to, such Security on the Stated Maturity or
Stated Maturities expressed in such Security (or, in the case of redemption, on the Redemption
Date) and to institute suit for the enforcement of any such payment after the respective due dates,
shall not be impaired without the consent of such Holder.
Section 5.9
Restoration of Rights and Remedies
.
If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy
under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has
been determined adversely to the Trustee or to such Holder, then and in every such case, subject to
any determination in such proceeding, the Company, the Trustee and the Holders shall be restored
severally and respectively to their former positions hereunder and thereafter all rights and
remedies of the Trustee and the Holders shall continue as though no such proceeding had been
instituted.
Section 5.10
Rights and Remedies Cumulative
.
Except as otherwise provided in
Section 5.7
or with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities in the last paragraph of
Section
3.6
, no right or remedy herein conferred upon or reserved to the Trustee or to the Holders is
intended to be exclusive of any other right or remedy, and every right and remedy shall, to the
extent permitted by law, be cumulative and in addition to every other right and remedy given
hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or
employment of
44
any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
Section 5.11
Delay or Omission Not Waiver
.
No delay or omission of the Trustee or of any Holder of any Securities to exercise any right
or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a
waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by
this
Article 5
or by law to the Trustee or to the Holders may be exercised from time to
time, and as often as may be deemed expedient, by the Trustee or by the Holders, as the case may
be.
Section 5.12
Control by Holders
.
With respect to Securities of any series, the Holders of a majority in principal amount of the
Outstanding Securities of such series shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power
conferred on the Trustee, relating to or arising under an Event of Default described in
clause
(1)
,
(2)
,
(3)
,
(4)
or
(7)
of
Section 5.1
, and with
respect to all Securities the Holders of a majority in principal amount of all Outstanding
Securities shall have the right to direct the time, method and place of conducting any remedy
available to the Trustee, or exercising any trust or power conferred on the Trustee, relating to or
arising under an Event of Default described in
clause (5)
or
(6)
of
Section
5.1
, provided that in each such case.
(1) the Trustee shall have the right to decline to follow any such direction if the
Trustee, being advised by counsel, determines that the action so directed may not lawfully be
taken or would conflict with this Indenture or if the Trustee in good faith shall, by a
Responsible Officer, determine that the proceedings so directed would involve it in personal
liability or be unjustly prejudicial to the Holders not taking part in such direction, and
(2) the Trustee may take any other action deemed proper by the Trustee that is not
inconsistent with such direction or this Indenture.
Section 5.13
Waiver of Past Defaults
.
Subject to
Section 5.8
and
Section 9.2
, the Holders of not less than a
majority in aggregate principal amount of the Outstanding Securities of any series may on behalf of
the Holders of all the Securities of such series waive any past default or Event of Default
described in
clause (1)
,
(2)
,
(3)
,
(4)
or
(7)
of
Section 5.1
hereunder with respect to such series and its consequences, and the Holders of
a majority in principal amount of all Outstanding Securities may on behalf of the Holders of all
Securities waive any Event of Default described in
clause (5)
or
(6)
of
Section
5.1
hereunder and its consequences, except a default
(1) in the payment of the principal of or any premium or interest on, or any Additional
Amounts with respect to, any Security as and when the same shall become due and payable by
the terms thereof, otherwise than by acceleration (unless such default has been cured as
provided herein), or
45
(2) in respect of a covenant or provision hereof which under
Article 9
cannot be
modified or amended without the consent of the Holder of each Outstanding Security affected.
Upon any such waiver, such default shall cease to exist, and any Event of Default arising
therefrom shall be deemed to have been cured, for every purpose of this Indenture; but no such
waiver shall extend to any subsequent or other default or impair any right consequent thereon.
Section 5.14
Undertaking for Costs
.
All parties to this Indenture agree, and each Holder of any Security by his acceptance thereof
shall be deemed to have agreed, that in any suit for the enforcement of any right or remedy under
this Indenture, or in any suit against the Trustee for any action taken, suffered or omitted by it
as Trustee, a court may require any party litigant in such suit to file an undertaking to pay the
costs of such suit, and may assess costs against any such party litigant, in the manner and to the
extent provided in the Trust Indenture Act; provided that the provisions of this
Section
5.14
shall not apply to any suit instituted by the Company, to any suit instituted by the
Trustee, to any suit instituted by any Holder, or group of Holders, holding in the aggregate more
than 10% in principal amount of the outstanding Securities of any series, or to any suit instituted
by any Holder for the enforcement of the payment of the principal of or interest on any Security on
or after the Stated Maturity or Stated Maturities expressed in such Security (or, in the case of
redemption, on the redemption date).
ARTICLE 6
THE TRUSTEE
Section 6.1
Certain Duties and Responsibilities
.
(1) If an Event of Default has occurred and is continuing, the Trustee shall exercise
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 individual would exercise or use under the circumstances
in the conduct of his or her own affairs.
(2) Except during the continuance of an Event of Default:
(A) The Trustee need perform only those duties that are specifically set forth
in this Indenture and no others, and no implied covenants or obligations shall be
read into this Indenture against the Trustee.
(B) 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 Officers Certificates or Opinions of Counsel furnished to the Trustee
and conforming to the requirements of this Indenture; however, in the case of any
such Officers Certificates or Opinions of Counsel which by any provisions hereof
are specifically required to be furnished to the Trustee, the Trustee shall examine
such Officers Certificates and Opinions of Counsel to determine whether or not they
conform to the requirements of this
46
Indenture (but need not confirm or investigate the accuracy of any mathematical
calculations or other facts stated therein).
(3) The Trustee may not be relieved from liability for its own negligent action, its own
negligent failure to act or its own willful misconduct or bad faith, except that:
(A) This paragraph does not limit the effect of
clause (2)
of this
Section 6.1
.
(B) The Trustee shall not be liable for any error of judgment made in good
faith by a Responsible Officer, unless it is proved that the Trustee was negligent
in ascertaining the pertinent facts.
(C) The Trustee shall not be liable with respect to any action taken, suffered
or omitted to be taken by it with respect to Securities of any series in good faith
in accordance with the direction of the Holders of a majority in principal amount of
the Outstanding Securities of such series relating to the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or exercising any
trust or power conferred upon the Trustee, under this Indenture with respect to the
Securities of such series.
(4) Every provision of this Indenture that in any way relates to the Trustee is subject
to
clauses (1)
,
(2)
and
(3)
of this
Section 6.1
.
(5) The Trustee may refuse to perform any duty or to exercise any of the rights or
powers vested in it by this Indenture at the request or direction of any of Holder or Holders
pursuant to this Indenture, unless such Holder or Holders shall have offered and, if
requested, provided to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which might be incurred by it in compliance with such request or
direction.
(6) No provision of this Indenture shall require the Trustee to risk its own funds or
otherwise incur any financial liability in the performance of any of its duties, or in the
exercise of any of its rights or powers, if it shall have reasonable grounds for believing
that repayment of such funds or adequate indemnity against such risk is not reasonably
assured to it.
(7) The Paying Agent, the Security Registrar and any Authenticating Agent shall be
entitled to the protections, immunities and standard of care as are set forth in
clauses
(1)
,
(2)
and
(3)
of this
Section 6.1
with respect to the Trustee.
Section 6.2
Notice of Defaults
.
If a default occurs hereunder and is continuing with respect to Securities of any series and
it is known to a Responsible Officer of the Trustee, the Trustee shall give the Holders of
Securities of such series notice of such default as and to the extent provided by the Trust
Indenture Act; provided, however, that except in the case of a default in the payment of principal
of (or premium, if any) or interest on, or any Additional Amounts with respect to, any Securities
47
of such series or in the payment of any sinking fund installment, the Trustee shall be
protected in withholding such notice if and so long as the board of trustees, the executive
committee or a trust committee of directors and/or Responsible Officers of the Trustee in good
faith determine that the withholding of such notice is in the interests of the holders of
Securities of such series.
Section 6.3
Certain Rights of Trustee
.
Subject to the provisions of
Section 6.1
:
(1) in the absence of bad faith on the part of the Trustee, the Trustee may rely and
shall be protected in acting or refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction, consent, order, bond,
debenture, note, coupon, other evidence of indebtedness or other paper or document believed
by it to be genuine and to have been signed or presented by the proper party or parties;
(2) the Trustee shall not be bound to make any investigation into the facts or matters
stated in any resolution, certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or
other paper or document, but the Trustee, in its discretion, may make such further inquiry or
investigation into such facts or matters as it may see fit, and, if the Trustee shall
determine to make such further inquiry or investigation, it shall be entitled to examine the
books, records and premises of the Company, personally or by agent or attorney;
(3) any request or direction of the Company mentioned herein shall be sufficiently
evidenced by a Company Request or Company Order (unless other evidence is specifically
required herein), and any resolution of the Board of Directors shall be sufficiently
evidenced by a Board Resolution;
(4) whenever in the administration of this Indenture the Trustee shall deem it desirable
that a matter be proved or established prior to taking, suffering or omitting any action
hereunder, the Trustee (unless other evidence be herein specifically prescribed), in the
absence of bad faith on its part, is entitled to and may rely upon an Officers Certificate;
(5) the Trustee may consult with counsel and the written advice of such counsel or any
Opinion of Counsel shall be full and complete authorization and protection in respect of any
action taken, suffered or omitted by it hereunder in good faith and in reliance thereon;
(6) the Trustee may execute any of the trusts or powers hereunder or perform any duties
hereunder either directly or by or through agents or attorneys and the Trustee shall not be
responsible for any misconduct or negligence on the part of any agent or attorney appointed
with due care by it hereunder.
(7) the Trustee shall not be charged with knowledge of any default or Event of Default
with respect to the Securities of any series for which it is acting as Trustee unless either
(1) a Responsible Officer shall have actual knowledge of such default or Event of
48
Default or (2) written notice of such default or Event of Default shall have been given
to the Trustee by the Company or any other obligor on such Securities or by any Holder of
such Securities; and
(8) the Trustee shall not be liable for any action taken, suffered or omitted by it in
good faith and believed by it to be authorized or within the discretion or rights or powers
conferred upon it by this Indenture.
Section 6.4
Not Responsible for Recitals or Issuance of Securities
.
The recitals contained herein and in the Securities, except the Trustees certificates of
authentication, shall be taken as the statements of the Company, and neither the Trustee nor any
Security Registrar, Paying Agent or Authenticating Agent assumes any responsibility for their
correctness. The Trustee makes no representations as to the validity or sufficiency of this
Indenture or of the Securities. Neither the Trustee nor any Security Registrar, Paying Agent or
Authenticating Agent shall be accountable for the use or application by the Company of Securities
or the proceeds thereof.
Section 6.5
May Hold Securities and Act as Trustee under Other Indentures
.
The Trustee, any Authenticating Agent, any Paying Agent, any Security Registrar or any other
agent of the Company, in its individual or any other capacity, may become the owner or pledgee of
Securities and, subject to
Sections 6.8
and
6.13
, may otherwise deal with the
Company with the same rights it would have if it were not Trustee, Authenticating Agent, Paying
Agent, Security Registrar or such other agent.
Subject to the limitations imposed by the Trust Indenture Act, nothing in this Indenture shall
prohibit the Trustee from becoming and acting as trustee under other indentures under which other
securities, or certificates of interest of participation in other securities, of the Company are
outstanding in the same manner as if it were not Trustee hereunder.
Section 6.6
Money Held in Trust
.
Subject to the provisions of
Sections 10.3
and
13.5
, all moneys received by
the Trustee shall, until used or applied, as provided herein, be held in trust for the purposes for
which they were received. Money held by the Trustee in trust hereunder need not be segregated from
other funds except to the extent required by law. The Trustee shall be under no liability for
interest on any money received by it hereunder except as otherwise agreed in writing with the
Company. So long as no Event of Default shall have occurred and be continuing, all interest
allowed on any such moneys shall be paid by the Company from time to time upon a Company Order.
Section 6.7
Compensation and Reimbursement
.
The Company shall pay to the Trustee from time to time such reasonable compensation for its
services as the Company and the Trustee may agree in writing from time to time. The Trustees
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,
disbursements and advances incurred by it in connection with the performance
49
of its duties under this Indenture, except any such expense, disbursement or advance as may be
attributable to its negligence, willful misconduct or bad faith. Such expenses shall include the
reasonable compensation and expenses of the Trustees agents and counsel.
The Company shall indemnify the Trustee for, and hold it harmless against, any and all loss,
liability, damage, claim or expense (including attorneys fees and expenses, and including taxes
other than taxes based upon, measured by or determined by the income of the Trustee), including
without limitation the costs and expenses of defending itself against any third-party claim
(whether asserted by any Holder or any other Person (other than the Company to the extent of any
claim brought by it against the Trustee that establishes a breach by the Trustee in the observance
or performance of its duties under this Indenture)), incurred by it without negligence, willful
misconduct or bad faith arising out of or in connection with its acceptance or administration of
the trust or trusts hereunder, including the performance of its duties or the exercise of its
powers hereunder. With respect to any such claim other than a claim brought by the Company, (i)
the Trustee shall notify the Company promptly of any claim for which it may seek indemnity, (ii)
the Company may at its option defend the claim, in which event the Trustee shall cooperate in the
defense and the Trustee may have one separate counsel and the Company shall pay the reasonable fees
and expenses of such counsel and (iii) the Company need not pay for any settlement made without its
consent, which consent shall not be unreasonably withheld. This indemnification shall apply to
officers, directors, employees, shareholders and agents of the Trustee.
To secure the Companys payment obligations in this
Section 6.7
, the Trustee shall
have a lien prior to the Securities of any series on all money or property held or collected by the
Trustee, except that held in trust to pay principal of and interest on, or any Additional Amounts
with respect to, particular Securities of that series.
When the Trustee incurs expenses or renders services after an Event of Default specified in
Section 5.1(5)
or
(6)
occurs, the expenses and the compensation for the services
are intended to constitute expenses of administration under any Bankruptcy Law.
The provisions of this
Section 6.7
and any lien arising hereunder shall survive the
resignation or removal of the Trustee or the discharge of the Companys obligations under this
Indenture and the termination of this Indenture.
Section 6.8
Conflicting Interests
.
If the Trustee has or shall acquire a conflicting interest within the meaning of the Trust
Indenture Act, the Trustee shall either eliminate such conflicting interest or resign, to the
extent and in the manner and with the effect provided by, and subject to the provisions of, the
Trust Indenture Act and this Indenture. To the extent permitted by the Trust Indenture Act, the
Trustee shall not be deemed to have a conflicting interest by virtue of being a trustee under this
Indenture with respect to Securities of more than one series or any other indenture.
Section 6.9
Eligibility; Disqualification
.
There shall at all times be one (and only one) Trustee hereunder with respect to the
Securities of each series (which need not be the same Trustee for all series). A Trustee may be
50
Trustee hereunder for Securities of one or more series. Each Trustee shall be a Person that
is eligible pursuant to the Trust Indenture Act to act as such and has (or if the Trustee is a
member of a bank holding company system, its bank holding company has) a combined capital and
surplus of at least $50,000,000 and subject to supervision or examination by federal or state (or
the District of Columbia) authority. If any such Person or bank holding company publishes reports
of condition at least annually, pursuant to law or to the requirements of its supervising or
examining authority, then for the purposes of this
Section 6.9
and to the extent permitted
by the Trust Indenture Act, the combined capital and surplus of such Person or bank holding company
shall be deemed to be its combined capital and surplus as set forth in its most recent report of
condition so published. If at any time the Trustee with respect to the Securities of any series
shall cease to be eligible in accordance with the provisions of this
Section 6.9
, it shall
resign immediately in the manner and with the effect hereinafter specified in this
Article
6
.
The Indenture shall always have a Trustee who satisfies the requirements of
Sections
310(a)(1)
,
310(a)(2)
and
310(a)(5)
of the Trust Indenture Act.
Section 6.10
Resignation and Removal; Appointment of Successor
.
No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to
this Article shall become effective until the acceptance of appointment by the successor Trustee in
accordance with the applicable requirements of
Section 6.11
.
The Trustee may resign at any time with respect to the Securities of one or more series by
giving written notice thereof to the Company. If the instrument of acceptance by a successor
Trustee required by
Section 6.11
shall not have been delivered to the Trustee within 30
days after the giving of such notice of resignation, the resigning Trustee may petition at the
expense of the Company any court of competent jurisdiction for the appointment of a successor
Trustee with respect to the Securities of such series.
The Trustee may be removed at any time with respect to the Securities of any series by Act of
the Holders of a majority in principal amount of the Outstanding Securities of such series,
delivered to the Trustee and to the Company. If the instrument of acceptance by a successor
Trustee required by
Section 6.11
shall not have been delivered to the removed Trustee
within 30 days after the receipt of such notice of removal, the removed Trustee may petition at the
expense of the Company any court of competent jurisdiction for the appointment of a successor
Trustee with respect to the Securities of such series.
If at any time:
(1) the Trustee shall fail to comply with
Section 6.8
after written request
therefor by the Company or by any Holder who has been a bona fide Holder of a Security for at
least six months, or
(2) the Trustee shall cease to be eligible under
Section 6.9
and shall fail to
resign after written request therefor by the Company or by any such Holder, or
(3) the Trustee shall become incapable of acting or shall be adjudged a bankrupt or
insolvent or a receiver of the Trustee or of its property shall be appointed or
51
any public officer shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation,
then, in any such case, (A) the Company by a Board Resolution may remove the Trustee with respect
to all Securities, or (B) subject to
Section 5.14
, any Holder who has been a bona fide
Holder of a Security for at least six months may, on behalf of himself and all others similarly
situated, petition any court of competent jurisdiction for the removal of the Trustee with respect
to all Securities and the appointment of a successor Trustee or Trustees.
If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall
occur in the office of Trustee for any cause, with respect to the Securities of one or more series,
the Company by a Board Resolution shall promptly appoint a successor Trustee or Trustees with
respect to the Securities of that or those series (it being understood that any such successor
Trustee may be appointed with respect to the Securities of one or more or all of such series and
that at any time there shall be only one Trustee with respect to the Securities of any particular
series) and such successor Trustee or Trustees shall comply with the applicable requirements of
Section 6.11
. If, within one year after such resignation, removal or incapability, or the
occurrence of such vacancy, a successor Trustee with respect to the Securities of any series shall
be appointed by Act of the Holders of a majority in principal amount of the Outstanding Securities
of such series delivered to the Company and the retiring Trustee, the successor Trustee so
appointed shall, forthwith upon its acceptance of such appointment in accordance with the
applicable requirements of
Section 6.11
, become the successor Trustee with respect to the
Securities of such series and to that extent supersede the successor Trustee appointed by the
Company. If no successor Trustee with respect to the Securities of any series shall have been so
appointed by the Company or the Holders and accepted appointment in the manner required by
Section 6.11
, the retiring Trustee may petition, or any Holder who has been a bona fide
Holder of a Security of such series for at least six months may petition, on behalf of himself and
all others similarly situated, any court of competent jurisdiction for the appointment of a
successor Trustee with respect to the Securities of such series.
The Company shall give notice of each resignation and each removal of the Trustee with respect
to the Securities of any series and each appointment of a successor Trustee with respect to the
Securities of any series to all Holders of Securities of such series in the manner provided in
Section 1.7
. Each notice shall include the name of the successor Trustee with respect to
the Securities of such series and the address of its Corporate Trust Office.
Section 6.11
Acceptance of Appointment by Successor
.
In case of the appointment hereunder of a successor Trustee with respect to all Securities,
every such successor Trustee so appointed shall execute, acknowledge and deliver to the Company and
to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or
removal of the retiring Trustee shall become effective and such successor Trustee, without any
further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties
of the retiring Trustee; but, on the request of the Company or the successor Trustee, such retiring
Trustee shall, upon payment of its charges, execute and deliver an instrument transferring to such
successor Trustee all the rights, powers and trusts of the
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retiring Trustee and shall duly assign, transfer and deliver to such successor Trustee all
property and money held by such retiring Trustee hereunder.
In case of the appointment hereunder of a successor Trustee with respect to the Securities of
one or more (but not all) series, the Company, the retiring Trustee and each successor Trustee with
respect to the Securities of one or more series shall execute and deliver an indenture supplemental
hereto wherein each successor Trustee shall accept such appointment and which (1) shall contain
such provisions as shall be necessary or desirable to transfer and confirm to, and to vest in, each
successor Trustee all the rights, powers, trusts and duties of the retiring Trustee with respect to
the Securities of that or those series to which the appointment of such successor Trustee relates,
(2) if the retiring Trustee is not retiring with respect to all Securities, shall contain such
provisions as shall be deemed necessary or desirable to confirm that all the rights, powers, trusts
and duties of the retiring Trustee with respect to the Securities of that or those series as to
which the retiring Trustee is not retiring shall continue to be vested in the retiring Trustee, and
(3) shall add to or change any of the provisions of this Indenture as shall be necessary to provide
for or facilitate the administration of the trusts hereunder by more than one Trustee, it being
understood that nothing herein or in such supplemental indenture shall constitute such Trustees
co-trustees of the same trust and that each such Trustee shall be trustee of a trust or trusts
hereunder separate and apart from any trust or trusts hereunder administered by any other such
Trustee; and upon the execution and delivery of such supplemental indenture the resignation or
removal of the retiring Trustee shall become effective to the extent provided therein and each such
successor Trustee, without any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or
those series to which the appointment of such successor Trustee relates; but, on request of the
Company or any successor Trustee, such retiring Trustee shall duly assign, transfer and deliver to
such successor Trustee all property and money held by such retiring Trustee hereunder with respect
to the Securities of that or those series to which the appointment of such successor Trustee
relates.
Upon request of any such successor Trustee, the Company shall execute any and all instruments
for more fully and certainly vesting in and confirming to such successor Trustee all such rights,
powers and trusts referred to in the first or second preceding paragraph, as the case may be.
No successor Trustee shall accept its appointment unless at the time of such acceptance such
successor Trustee shall be qualified and eligible under this
Article 6
.
Section 6.12
Merger, Conversion, Consolidation or Succession to Business
.
Any corporation into which the Trustee may be merged or converted or with which it may be
consolidated, or any corporation resulting from any merger, conversion or consolidation to which
the Trustee shall be a party, or any corporation succeeding to or acquiring all or substantially
all the corporate trust business of the Trustee (including the administration of the trust created
by this Indenture), shall be the successor of the Trustee hereunder, provided such corporation
shall be otherwise qualified and eligible under this Article, without the execution or filing of
any paper or any further act on the part of any of the parties hereto. In case any Securities
shall have been authenticated, but not delivered, by the Trustee then in office, any
53
successor by merger, conversion or consolidation to, or by succession to or acquisition of all
or substantially all of the corporate trust business of, such successor Trustee may adopt such
authentication and deliver the Securities so authenticated with the same effect as if such
successor Trustee had itself authenticated such Securities.
Section 6.13
Preferential Collection of Claims Against Company
.
If and when the Trustee shall be or become a creditor of the Company (or any other obligor
upon the Securities) as provided in the Trust Indenture Act, the Trustee shall be subject to the
provisions of the Trust Indenture Act regarding the collection of claims against the Company (or
any such other obligor).
Section 6.14
Appointment of Authenticating Agent
.
The Trustee may appoint an Authenticating Agent or Agents with respect to one or more series
of Securities which shall be authorized to act on behalf of the Trustee to authenticate Securities
of such series issued upon original issue and upon exchange, registration of transfer or partial
redemption thereof or pursuant to
Section 3.6
, and Securities so authenticated shall be
entitled to the benefits of this Indenture and shall be valid and obligatory for all purposes as if
authenticated by the Trustee hereunder. Wherever reference is made in this Indenture to the
authentication and delivery of Securities by the Trustee or the Trustees certificate of
authentication, such reference shall be deemed to include authentication and delivery on behalf of
the Trustee by an Authenticating Agent and a certificate of authentication executed on behalf of
the Trustee by an Authenticating Agent. Each Authenticating Agent shall be acceptable to the
Company and, except as other specified as contemplated by
Section 3.1
, shall at all times
be a bank or trust company or corporation organized and doing business under the laws of the United
States of America, any State thereof or the District of Columbia, authorized under such laws to act
as Authenticating Agent, having (or if the Authenticating Agent is a member of a bank holding
company system, its bank holding company has) a combined capital and surplus of not less than
$50,000,000 and subject to supervision or examination by Federal or State (or the District of
Columbia) authority. If such Authenticating Agent publishes reports of condition at least
annually, pursuant to law or to the requirements of said supervising or examining authority, then
for the purposes of this
Section 6.14
, the combined capital and surplus of such
Authenticating Agent shall be deemed to be its combined capital and surplus as set forth in its
most recent report of condition so published. If at any time an Authenticating Agent shall cease
to be eligible in accordance with the provisions of this
Section 6.14
, such Authenticating
Agent shall resign immediately in the manner and with the effect specified in this
Section
6.14
.
Any corporation into which an Authenticating Agent may be merged or converted or with which it
may be consolidated, or any corporation resulting from any merger, conversion or consolidation to
which such Authenticating Agent shall be a party, or any corporation succeeding to or acquiring the
corporate agency or corporate trust business of an Authenticating Agent, shall continue to be an
Authenticating Agent, provided such corporation shall be otherwise eligible under this
Section
6.14
, without the execution or filing of any paper or any further act on the part of the
Trustee or the Authenticating Agent.
54
An Authenticating Agent for any series of Securities may resign at any time by giving written
notice thereof to the Trustee for such series and to the Company. The Trustee for any series of
Securities may at any time terminate the agency of an Authenticating Agent by giving written notice
thereof to such Authenticating Agent and to the Company. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time such Authenticating Agent shall
cease to be eligible in accordance with the provisions of this Section, the Trustee for such series
may appoint a successor Authenticating Agent which shall be acceptable to the Company and shall
give notice of such appointment in the manner provided in
Section 1.7
to all Holders of
Securities of the series with respect to which such Authenticating Agent will serve. Any successor
Authenticating Agent upon acceptance of its appointment hereunder shall become vested with all the
rights, powers and duties of its predecessor hereunder, with like effect as if originally named as
an Authenticating Agent. No successor Authenticating Agent shall be appointed unless eligible
under the provisions of this
Section 6.14
.
The Trustee agrees to pay to each Authenticating Agent from time to time reasonable
compensation for its services under this
Section 6.14
, and the Trustee shall be entitled to
be reimbursed for such payments, subject to the provisions of
Section 6.7
.
If an appointment with respect to one or more series is made pursuant to this
Section
6.14
, the Securities of such series may have endorsed thereon, in lieu of the Trustees
certificate of authentication, an alternative certificate of authentication in the following form:
This is one of the Securities of the series designated therein referred to in the
within-mentioned Indenture.
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[Trustee], as Trustee
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By:
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As Authenticating Agent
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By:
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Authorized Officer
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Notwithstanding any provision of this
Section 6.14
to the contrary, if at any time any
Authenticating Agent appointed hereunder with respect to any series of Securities shall not also be
acting as the Security Registrar hereunder with respect to any series of Securities, then, in
addition to all other duties of an Authenticating Agent hereunder, such Authenticating Agent shall
also be obligated: (i) to furnish to the Security Registrar promptly all information necessary to
enable the Security Registrar to maintain at all times an accurate and current Security Register;
and (ii) prior to authenticating any Security denominated in a foreign currency, to ascertain from
the Company the units of such foreign currency that are required to be determined by the Company
pursuant to
Section 3.2
.
55
ARTICLE 7
HOLDERS LISTS AND REPORTS BY TRUSTEE AND COMPANY
Section 7.1
Company to Furnish Trustee Names and Addresses of Holders
.
The Company will furnish or cause to be furnished to the Trustee
(1) not later than 15 days after the Regular Record Date for each respective series of
Securities, or if there is no Regular Record Date for such series of Securities,
semi-annually on January 1 and July 1, a list, in such form as the Trustee may reasonably
require, of the names and addresses of the Holders of Securities of each series as of
such date, as the case may be, and
(2) at such other times as the Trustee may request in writing, within 30 days after the
receipt by the Company of any such request, a list of similar form and content as of a date
not more than 15 days prior to the time such list is furnished; provided that no such list
need be furnished by the Company to the Trustee so long as the Trustee is acting as Security
Registrar.
Section 7.2
Preservation of Information; Communications to Holders
.
The Trustee shall preserve, in as current a form as is reasonably practicable, the names and
addresses of Holders contained in the most recent list furnished to the Trustee as provided in
Section 7.1
and the names and addresses of Holders received by the Trustee in its capacity
as Security Registrar. The Trustee may destroy any list furnished to it as provided in
Section
7.1
upon receipt of a new list so furnished.
The rights of Holders to communicate with other Holders with respect to their rights under
this Indenture or under the Securities, and the corresponding rights and privileges of the Trustee,
shall be as provided by the Trust Indenture Act.
Every Holder of Securities, by receiving and holding the same, agrees with the Company and the
Trustee that neither the Company nor the Trustee nor any agent of either of them shall be held
accountable by reason of any disclosure of information as to names and addresses of Holders made
pursuant to the Trust Indenture Act.
Section 7.3
Reports by Trustee
.
The Trustee shall transmit to Holders and any other required Persons such reports concerning
the Trustee and its actions under this Indenture as may be required pursuant to the Trust Indenture
Act at the times and in the manner provided pursuant thereto.
As promptly as practicable after each January 1 beginning with the January 1 following the
date of this Indenture, and in any event prior to March 1 in each year, the Trustee shall mail to
each Holder a brief report dated as of December 31 of the prior year if and to the extent required
by Section 313(a) of the Trust Indenture Act. The Trustee shall also comply with Section 313(b) of
the Trust Indenture Act.
56
A copy of each such report shall, at the time of such transmission to Holders, be filed by the
Trustee with each stock exchange upon which any Securities are listed, with the Commission and with
the Company. The Company will notify the Trustee when any Securities are listed on any stock
exchange.
Section 7.4
Reports by Company
.
The Company shall file with the Trustee and the Commission, and transmit to Holders and any
other required Persons within 30 days after the filing with the Trustee, such information,
documents and other reports, and such summaries thereof, as may be required pursuant to the Trust
Indenture Act at the times and in the manner provided pursuant to the Trust Indenture Act; provided
that any such information, documents or reports required to be filed with the Commission pursuant
to Section 13 or 15(d) of the Exchange Act shall be filed with the Trustee within 30 days after the
same is so required to be filed with the Commission.
ARTICLE 8
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
Section 8.1
Company May Consolidate, etc., Only on Certain Terms
.
The Company may not merge or consolidate with or into any other Person, in a transaction in
which it is not the surviving Person, or sell, convey, transfer, lease or otherwise dispose of all
or substantially all of its assets to any Person, unless (i) the surviving or transferee Person is
organized and existing under the laws of the United States or a State thereof or the District of
Columbia and such Person expressly assumes by supplemental indenture all the obligations of the
Company under the Securities and under this Indenture, (ii) immediately thereafter, giving effect
to such merger or consolidation, or such sale, conveyance, transfer or other disposition, no
default or Event of Default shall have occurred and be continuing and (iii) the Company shall have
delivered to the Trustee an Officers Certificate and an Opinion of Counsel each stating that such
merger, consolidation, sale, conveyance, transfer, lease or other disposition complies with this
Article 8
and that all conditions precedent herein provided for relating to such
transaction have been complied with.
Section 8.2
Successor Substituted
.
Upon any consolidation of the Company with, or merger of the Company into, any other Person or
any conveyance, transfer or lease of all or substantially all of the properties and assets of the
Company in accordance with
Section 8.1
, the successor Person formed by such consolidation
or into which the Company is merged or to which such sale, conveyance, transfer or lease is made
shall succeed to, and be substituted for, and may exercise every right and power of, the Company
under this Indenture with the same effect as if such successor Person had been named as the Company
herein, and thereafter, except in the case of a lease, the predecessor Person shall be relieved of
all obligations and covenants under this Indenture and the Securities.
57
ARTICLE 9
SUPPLEMENTAL INDENTURES
Section 9.1
Supplemental Indentures Without Consent of Holders
.
Without the consent of any Holders, the Company, when authorized by a Board Resolution, and
the Trustee, at any time and from time to time, may enter into one or more indentures supplemental
hereto for any of the following purposes:
(1) to evidence the succession of another Person to the Company, or successive
successions, and the assumption by any such successor of the covenants and obligations of the
Company herein and in the Securities in compliance with
Article 8
; or
(2) to add to the covenants of the Company for the benefit of the Holders of any one or
more series of Securities (and if such covenants are to be for the benefit of less than all
series of Securities, stating that such covenants are expressly being included solely for the
benefit of such series), to convey, transfer, assign, mortgage or pledge any property to or
with the Trustee or otherwise secure any series of the Securities, including provisions
regarding the circumstances under which collateral may be released or substituted, to
surrender any right or power herein conferred upon the Company or to comply with any
requirement of the Commission or otherwise in connection with the qualification of this
Indenture or any supplemental indenture under the Trust Indenture Act; or
(3) to add any additional Events of Default for the benefit of the Holders of any one or
more series of Securities (and if such additional Events of Default are to be for the benefit
of less than all series of Securities, stating that such additional Events of Default are
expressly being included solely for the benefit of such series); or
(4) to add to or change any of the provisions of this Indenture to such extent as shall
be necessary to permit or facilitate the issuance of Securities in bearer form,
registrable or not registrable as to principal, and with or without interest coupons, or
to permit or facilitate the issuance of Securities in global form or uncertificated form; or
(5) to add to, change or eliminate any of the provisions of this Indenture in respect of
one or more series of Securities, provided that any such addition, change or elimination (A)
shall neither (i) apply to any Outstanding Security of any series created prior to the
execution of such supplemental indenture and entitled to the benefit of such provision, or
(ii) modify the rights of any Holder of any Outstanding Security with respect to such
provision, or (B) shall become effective when there is no Security then Outstanding; or
(6) to add or provide for a guaranty or guarantees of the Securities or additional
obligors on the Securities; or
(7) to establish the form or terms of Securities of any series as permitted by
Sections 2.1
and
3.1
; or
58
(8) to evidence and provide for the acceptance of appointment hereunder by a successor
Trustee with respect to the Securities of one or more series and to add to or change any of
the provisions of this Indenture as shall be necessary to provide for or facilitate the
administration of the trusts hereunder by more than one Trustee, pursuant to the requirements
of
Section 6.11
; or
(9) to correct or supplement any provision herein which may be defective or inconsistent
with any other provision herein, to cure any ambiguity or omission, to correct any mistake,
or to conform to any prospectus pursuant to which Securities of any series were offered; or
(10) to make any other provisions with respect to matters or questions arising under
this Indenture, provided such action shall not adversely affect the rights of any Holder of
Securities of any series; or
(11) to make any change that does not adversely affect the rights of any Holder.
Section 9.2
Supplemental Indentures with Consent of Holders
.
With the consent of the Holders of a majority in principal amount of the Outstanding
Securities of each series affected by such supplemental indenture (acting as one class), by Act of
said Holders delivered to the Company and the Trustee, the Company, when authorized by a Board
Resolution, and the Trustee may enter into an indenture or indentures supplemental hereto for the
purpose of adding any provisions to or changing in any manner or eliminating any of the provisions
of this Indenture or any indenture supplemental hereto or of modifying in any manner the rights of
the Holders of Securities of such series under this Indenture; provided, however, that no such
supplemental indenture shall, without the consent of the Holder of each Outstanding Security
affected thereby,
(1) change the Stated Maturity of the principal of or any installment of principal of,
or the date fixed for payment of interest on or any sinking fund payment with respect to, any
Security, or reduce the principal amount thereof or the rate of interest thereon, any
Additional Amounts with respect thereto or any premium payable upon the redemption thereof,
or change any obligation of the Company to pay Additional Amounts (except as contemplated by
Section 8.1
and permitted by
clause (1)
of
Section 9.1
), or reduce
the amount of the principal of an Original Issue Discount Security or any other Security
which would be due and payable upon a declaration of acceleration of the Maturity thereof
pursuant to
Section 5.2
, or change any Place of Payment where, or the coin or
currency or currencies (including composite currencies) in which any Security or any premium
or interest thereon or Additional Amounts with respect thereto is payable, or impair the
right to institute suit for the enforcement of any such payment on or after the Stated
Maturity thereof (or, in the case of redemption, on or after the Redemption Date),
or modify the provisions of this Indenture with respect to the subordination of a
Security in a manner adverse to the holder thereof, or
(2) reduce the percentage in principal amount of the Outstanding Securities of any
series, the consent of whose Holders is required for any such supplemental indenture,
59
or the
consent of whose Holders is required for any waiver (of compliance with certain provisions of
this Indenture or certain defaults hereunder and their consequences) provided for in this
Indenture, or
(3) modify any of the provisions of this
Section 9.2
,
Section 5.13
or
Section 10.8
, except to increase any such percentage or to provide with respect to
any particular series the right to condition the effectiveness of any supplemental indenture
as to that series on the consent of the Holders of a specified percentage of the aggregate
principal amount of Outstanding Securities of such series (which provision may be made
pursuant to
Section 3.1
without the consent of any Holder) or to provide that certain
other provisions of this Indenture cannot be modified or waived without the consent of the
Holder of each Outstanding Security affected thereby; provided, however, that this clause
shall not be deemed to require the consent of any Holder with respect to changes in the
references to the Trustee and concomitant changes in this
Section 9.2
and
Section 10.8
, or the deletion of this proviso, in accordance with the requirements of
Sections 6.11
and
9.1(8)
.
A supplemental indenture which changes or eliminates any covenant or other provision of this
Indenture which has expressly been included solely for the benefit of one or more particular series
of Securities, or which modifies the rights of the Holders of Securities of such series with
respect to such covenant or other provision, shall be deemed not to affect the rights under this
Indenture of the Holders of Securities of any other series.
It shall not be necessary for any Act of Holders under this Section to approve the particular
form of any proposed supplemental indenture, but it shall be sufficient if such Act shall approve
the substance thereof.
Section 9.3
Execution of Supplemental Indentures
.
In executing, or accepting the additional trusts created by, any supplemental indenture
permitted by this Article or the modifications thereby of the trusts created by this Indenture, the
Trustee shall be entitled to receive, and (subject to
Sections 6.1
and
6.3
) shall
be fully protected in relying upon, an Opinion of Counsel stating that the execution of such
supplemental indenture is authorized or permitted by this Indenture. The Trustee may, but shall
not be obligated to, enter into any such supplemental indenture which affects the Trustees own
rights, duties, immunities or liabilities under this Indenture or otherwise.
Section 9.4
Effect of Supplemental Indentures
.
Upon the execution of any supplemental indenture under this
Article 9
, this Indenture
shall be modified in accordance therewith, and such supplemental indenture shall form a part of
this Indenture for all purposes; and every Holder of Securities theretofore or thereafter
authenticated and delivered hereunder shall be bound thereby; provided that if such supplemental
indenture makes any of the changes described in
clauses (1)
through
(3)
of the
first proviso to
Section 9.2
, such supplemental indenture shall bind each Holder of a
Security who has consented to it and every subsequent Holder of such Security or any part thereof.
60
Section 9.5
Conformity with Trust Indenture Act
.
Every supplemental indenture executed pursuant to this
Article 9
shall conform to the
requirements of the Trust Indenture Act.
Section 9.6
Reference in Securities to Supplemental Indentures
.
Securities of any series authenticated and delivered after the execution of any supplemental
indenture pursuant to this
Article 9
may, and shall if required by the Trustee, bear a
notation in form approved by the Trustee as to any matter provided for in such supplemental
indenture. If the Company shall so determine, new Securities of any series so modified as to
conform, in the opinion of the Trustee and the Company, to any such supplemental indenture may be
prepared and executed by the Company and authenticated and delivered by the Trustee in exchange for
Outstanding Securities of such series.
ARTICLE 10
COVENANTS
Section 10.1
Payment of Principal, Premium and Interest
.
The Company covenants and agrees for the benefit of the Holders of each series of Securities
that it will duly and punctually pay the principal of and any premium and interest on, and any
Additional Amounts with respect to, the Securities of that series in accordance with the terms of
the Securities and this Indenture.
Section 10.2
Maintenance of Office or Agency
.
The Company will maintain in each Place of Payment for any series of Securities an office or
agency where Securities of that series may be presented or surrendered for payment, where
Securities of that series may be surrendered for registration of transfer or exchange and where
notices and demands to or upon the Company in respect of the Securities of that series and
this Indenture may be served. The Company will give prompt written notice to the Trustee of
the location, and any change in the location, of any such office or agency. If at any time the
Company shall fail to maintain any such required office or agency or shall fail to furnish the
Trustee with the address thereof, such presentations, surrenders, notices and demands may be made
or served at the Corporate Trust Office of the Trustee, and the Company hereby appoints the Trustee
as its agent to receive all such presentations, surrenders, notices and demands. Unless otherwise
provided in a supplemental indenture or pursuant to
Section 3.1
hereof, the Place of
Payment for any series of Securities shall be 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 of one or more series may be presented or surrendered for any or all such purposes
and may from time to time rescind such designations; provided, however, that no such designation or
rescission shall in any manner relieve the Company of its obligation to maintain an office or
agency in each Place of Payment for Securities of any series for such purposes. The Company will
give prompt written notice to the Trustee of any such designation or rescission and of any change
in the location of any such other office or agency.
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Section 10.3
Money for Securities Payments to be Held in Trust
.
If the Company, any Subsidiary or any of their respective Affiliates shall at any time act as
Paying Agent with respect to any series of Securities, such Paying Agent will, on or before each
due date of the principal of or any premium or interest on, or any Additional Amounts with respect
to, any of the Securities of that series, segregate and hold in trust for the benefit of the
Persons entitled thereto a sum sufficient to pay the principal and any premium and interest, or any
Additional Amounts, so becoming due until such sums shall be paid to such Persons or otherwise
disposed of as herein provided and will promptly notify the Trustee of its action or failure so to
act.
Whenever the Company shall have one or more Paying Agents for any series of Securities, it
will, on or prior to each due date of the principal of or any premium or interest on, or Additional
Amounts with respect to, any Securities of that series, deposit with a Paying Agent a sum
sufficient to pay such amount, such sum to be held as provided by the Trust Indenture Act,
and (unless such Paying Agent is the Trustee) the Company will promptly notify the Trustee of
its action or failure so to act.
The Company will cause each Paying Agent for any series of Securities other than the Trustee
to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the
Trustee, subject to the provisions of this
Section 10.3
, that such Paying Agent will (1)
comply with the provisions of the Trust Indenture Act applicable to it as a Paying Agent and (2)
during the continuance of any default by the Company (or any other obligor upon the Securities of
that series) in the making of any payment in respect of the Securities of that series, upon the
written request of the Trustee, forthwith pay to the Trustee all sums held in trust by such Paying
Agent for payment in respect of the Securities of that series.
The Company may at any time, for the purpose of obtaining the satisfaction and discharge of
this Indenture, or with respect to one or more series of Securities, or for any other purpose, pay,
or by Company Order direct any Paying Agent to pay, to the Trustee all sums held in trust by the
Company or such Paying Agent, such sums to be held by the Trustee upon the same trusts as those
upon which such sums were held by the Company or such Paying Agent; and, upon such payment by any
Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with
respect to such money.
Any money deposited with the Trustee or any Paying Agent, or then held by the Company, in
trust for the payment of the principal of or any premium or interest on, or any Additional Amounts
with respect to, any Security of any series and remaining unclaimed for a period ending on the
earlier of the date that is ten Business Days prior to the date such money would escheat to the
State or two years after such principal, premium or interest or Additional Amount has become due
and payable shall be paid to the Company on Company Request, or (if then held by the Company) shall
be discharged from such trust; and the Holder of such Security shall thereafter, as an unsecured
general creditor, look only to the Company for payment thereof, and all liability of the Trustee or
such Paying Agent with respect to such trust money, and all liability of the Company as trustee
thereof, shall thereupon cease; provided, however, that the Trustee or such Paying Agent, before
being required to make any such repayment, may at the expense of the Company cause to be published
once, in an Authorized Newspaper in The
62
Borough of Manhattan, The City of New York and in such
other Authorized Newspapers as the Trustee shall deem appropriate, notice that such money remains
unclaimed and that, after a date specified herein, which shall not be less than 30 days from the
date of such publication, any unclaimed balance of such money then remaining will, unless otherwise
required by mandatory provisions of applicable escheat, or abandoned or unclaimed property law, be
repaid to the Company.
Section 10.4
Statement by Officers as to Default
.
At any time at which there are Outstanding Securities of any series issued under this
Indenture, the Company will deliver to the Trustee, within 120 days after the end of each fiscal
year of the Company ending after the date hereof, an Officers Certificate complying with Section
314(a)(4) of the Trust Indenture Act and stating that a review of the activities of the
Company during such year and of performance under this Indenture has been made under the
supervision of the signers thereof and stating whether or not to the best knowledge of the signers
thereof, based upon such review, the Company is in default in the performance and observance of any
of the terms, provisions and conditions of this Indenture (without regard to any period of grace or
requirement of notice provided hereunder) and, if the Company shall be in default, specifying all
such defaults and the nature and status thereof of which they may have knowledge. One of the
officers signing the Officers Certificate delivered pursuant to this
Section 10.4
shall be
the principal executive, financial or accounting officer of the Company.
Section 10.5
Existence
.
Subject to
Article 8
, the Company will do or cause to be done all things necessary to
preserve and keep in full force and effect its existence.
Section 10.6
All Securities to be Equally and Ratably Secured
.
Unless specified otherwise by the Company pursuant to
Section 3.1
with respect to any
series, the Company will not itself secure Securities of any one or more series with any Mortgage,
without effectively providing that the Securities of every other series shall be secured equally
and ratably by such Mortgage.
Section 10.7
Maintenance of Properties
.
The Company will cause all properties used or useful in the conduct of its business to be
maintained and kept in good condition, repair and working order and supplied with all necessary
equipment and will cause to be made all necessary repairs, renewals, replacements, betterments and
improvements thereof, all as, and to the extent, in the judgment of the Company may be necessary or
appropriate in connection with its business; provided, however, that nothing in this Section shall
prevent the Company from discontinuing the operation or maintenance of any of such properties if
such discontinuance is, in the judgment of the Company, desirable in the conduct of its business
and not disadvantageous in any material respect to the Holders.
63
Section 10.8
Payment of Taxes and Other Claims
.
The Company will pay or discharge or cause to be paid or discharged, before the same shall
become delinquent, (1) all taxes, assessments and governmental charges levied or imposed upon the
Company or upon the income, profits or property of the Company, and (2) all lawful claims for
labor, materials and supplies which, if unpaid, might by law become a lien upon the property of the
Company; provided, however, that the Company shall not be required to pay or discharge or cause to
be paid or discharged any such tax, assessment, charge or claim (i) whose
amount, applicability or validity is being contested in good faith by appropriate proceedings
or (ii) if the failure to pay or discharge would not have a material adverse effect on the assets,
business, operations, properties or financial condition of the Company and its Subsidiaries, taken
as a whole.
Section 10.9
Waiver of Certain Covenants
.
Except as otherwise specified as contemplated by
Section 3.1
for Securities of such
series, the Company may, with respect to the Securities of any series, omit in any particular
instance to comply with any term, provision or condition set forth in any covenant provided
pursuant to
Sections 3.1(22)
,
8.1
,
9.1(2)
,
10.4
,
10.5
,
10.6
,
10.7
or
10.8
for the benefit of the Holders of such series if before or after the time for such compliance the Holders of at least
a majority in principal amount of the Outstanding Securities of such series shall, by Act of such
Holders, either waive such compliance in such instance or generally waive compliance with such
term, provision or condition, but no such waiver shall extend to or affect such term, provision or
condition except to the extent so expressly waived, and, until such waiver shall become effective,
the obligations of the Company and the duties of the Trustee in respect of any such term, provision
or condition shall remain in full force and effect.
Section 10.10
Additional Amounts
.
If the Securities of a series expressly provide for the payment of Additional Amounts, the
Company will pay to the Holder of any Security of such series Additional Amounts as expressly
provided therein. Whenever in this Indenture there is mentioned, in any context, the payment of
the principal of, or premium (if any) or interest on any Security of any series or the net proceeds
received from the sale or exchange of any Security of any series, such mention shall be deemed to
include mention of the payment of Additional Amounts provided for in this
Section 10.10
to
the extent that, in such context, Additional Amounts are, were or would be payable in respect
thereof pursuant to the provisions of this
Section 10.10
and express mention of the payment
of Additional Amounts (if applicable) in any provisions hereof shall not be construed as excluding
Additional Amounts in those provisions hereof where such express mention is not made.
If the Securities of a series provide for the payment of Additional Amounts, at least 10 days
prior to the first Interest Payment Date with respect to that series of Securities (or if the
Securities of that series will not bear interest prior to Maturity, the first day on which a
payment of principal and any premium is made), and at least 10 days prior to each date of payment
of principal and any premium or interest if there has been any change with respect to the matters
set forth in the below-mentioned Officers Certificate, the Company shall furnish the Trustee and
the Companys principal Paying Agent or Paying Agents, if other than the Trustee, with an Officers
64
Certificate instructing the Trustee and such Paying Agent or Paying Agents whether such payment of
principal of and any premium or interest on the Securities of that series shall be made to Holders
of Securities of that series who are United States Aliens without withholding for or on account of
any tax, assessment or other governmental charge described in the Securities of that
series. If any such withholding shall be required, then such Officers Certificate shall
specify by country the amount, if any, required to be withheld on such payments to such Holders of
Securities and the Company will pay to such Paying Agent the Additional Amounts required by this
Section 10.10
. The Company covenants to indemnify the Trustee and any Paying Agent for,
and to hold them harmless against any loss, liability or expense reasonably incurred without
negligence, willful misconduct or bad faith on their part arising out of or in connection with
actions taken or omitted by any of them in reliance on any Officers Certificate furnished pursuant
to this
Section 10.10
.
ARTICLE 11
REDEMPTION OF SECURITIES
Section 11.1
Applicability of Article
.
Securities of any series that are redeemable in whole or in part before their Stated Maturity
shall be redeemable at the option of the Company in accordance with their terms and (except as
otherwise specified as contemplated by
Section 3.1
for such Securities) in accordance with
this
Article 11
.
Section 11.2
Election to Redeem; Notice to Trustee
.
The election of the Company to redeem any Securities shall be evidenced by a Board Resolution
or in another manner specified as contemplated by
Section 3.1
for such Securities. In case
of any redemption at the election of the Company of less than all the Securities of any series
(including any such redemption affecting only a single Security), the Company shall, at least 45
days prior to the Redemption Date fixed by the Company (unless a shorter notice shall be
satisfactory to the Trustee), notify the Trustee of such Redemption Date, of the principal amount
of Securities of such series to be redeemed and, if applicable, of the tenor of the Securities to
be redeemed. In the case of any redemption of Securities (i) prior to the expiration of any
restriction on such redemption provided in the terms of such Securities or elsewhere in this
Indenture or (ii) pursuant to an election of the Company which is subject to a condition specified
in the terms of such Securities, the Company shall furnish the Trustee with an Officers
Certificate evidencing compliance with such restriction or condition.
Section 11.3
Selection by Trustee of Securities to Be Redeemed
.
If less than all the Securities of any series are to be redeemed (unless all the Securities of
such series and of a specified tenor are to be redeemed or unless such redemption affects only a
single Security), the particular Securities to be redeemed shall be selected not more than 45 days
prior to the Redemption Date by the Trustee, from the Outstanding Securities of such series not
previously called for redemption, on a pro-rata basis, or in the Trustees discretion, by lot, or
by such other method as the Trustee shall deem fair and appropriate, provided that the unredeemed
65
portion of the principal amount of any Security shall be in an authorized denomination (which shall
not be less than the minimum authorized denomination) for such Security.
If any Security selected for partial redemption is converted in part before termination of the
conversion right with respect to the portion of the Security so selected, the converted portion of
such Security shall be deemed (so far as may be) to be the portion selected for redemption.
The Trustee shall promptly notify the Company and the Security Registrar in writing of the
Securities selected for redemption as aforesaid and, in case of any Securities selected for partial
redemption as aforesaid, the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise requires, all provisions
relating to the redemption of Securities shall relate, in the case of any Securities redeemed or to
be redeemed only in part, to the portion of the principal amount of such Securities which has been
or is to be redeemed.
Section 11.4
Notice of Redemption
.
Notice of redemption shall be given by first-class mail, postage prepaid, mailed not fewer
than 30 nor more than 90 days prior to the Redemption Date, unless a shorter period is specified in
the Securities to be redeemed, to each Holder of Securities to be redeemed, at its address
appearing in the Security Register.
All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price (including accrued interest, if any, to be paid),
(3) if less than all the Outstanding Securities of any series consisting of more than a
single Security are to be redeemed, the identification (and, in the case of partial
redemption of any such Securities, the principal amounts) of the particular Securities to be
redeemed and, if less than all the Outstanding Securities of any series consisting of a
single Security are to be redeemed, the principal amount of the particular Security to be
redeemed,
(4) in case any Security is to be redeemed in part only, that on and after the
Redemption Date, upon surrender of such Security, the Holder of such Security will receive,
without charge, a new Security or Securities of authorized denominations for the principal
amount thereof remaining unredeemed;
(5) that on the Redemption Date the Redemption Price will become due and payable upon
each such Security to be redeemed and, if applicable, that interest thereon will cease to
accrue on and after said date,
(6) the place or places where each such Security is to be surrendered for payment of the
Redemption Price,
66
(7) if applicable, the conversion price, the date on which the right to convert the
principal of the Securities or the portions thereof to be redeemed will terminate, and the
place or places where such Securities may be surrendered for conversion,
(8) that the redemption is for a sinking fund, if such is the case, and
(9) the CUSIP number or numbers and/or common codes of the Security being redeemed.
Notice of redemption of Securities to be redeemed at the election of the Company shall be
given by the Company or, at the Companys request, by the Trustee in the name and at the expense of
the Company, provided that the Company shall have prepared and provided to the Trustee the form of
such notice, or, if acceptable to the Trustee, provided sufficient information to enable the
Trustee to prepare such notice, in each case on a timely basis.
Section 11.5
Deposit of Redemption Price
.
On or prior to any Redemption Date, the Company shall deposit with the Trustee or with a
Paying Agent (or, if the Company is acting as its own Paying Agent, segregate and hold in trust as
provided in
Section 10.3
) an amount of money sufficient to pay the Redemption Price of, and
(except if the Redemption Date shall be an Interest Payment Date) accrued interest on, all the
Securities which are to be redeemed on that date.
If any Security called for redemption is converted, any money deposited with the Trustee or
with a Paying Agent or so segregated and held in trust for the redemption of such Security shall
(subject to any right of any Holder of such Security to receive interest thereon) be paid to the
Company on Company Request, or if then held by the Company, shall be discharged from such trust.
Section 11.6
Securities Payable on Redemption Date
.
Notice of redemption having been given as aforesaid, the Securities so to be redeemed shall,
on the Redemption Date, become due and payable at the Redemption Price therein specified, and from
and after such date (unless the Company shall default in the payment of the Redemption Price and
accrued interest) such Securities shall cease to bear interest. Upon surrender of any such
Security for redemption in accordance with said notice, such Security shall be paid by the Company
at the Redemption Price, together with accrued interest (and any Additional Amounts) to the
Redemption Date; provided, however, that, unless otherwise specified as contemplated by
Section
3.1
, installments of interest whose Stated Maturity is on or prior to the Redemption Date will
be payable to the Holders of such Securities, or one or more
Predecessor Securities, registered as such at the close of business on the relevant Record
Dates according to their terms and the provisions of
Section 3.7
.
If any Security called for redemption shall not be so paid upon surrender thereof for
redemption, the principal and any premium shall, until paid, bear interest from the Redemption Date
at the rate prescribed therefor in the Security or, in the case of Original Issue Discount
Securities, the Securities Yield to Maturity.
67
Section 11.7
Securities Redeemed in Part
.
Any Security which is to be redeemed only in part shall be surrendered at a Place of Payment
therefor (with, if the Company or the Trustee so requires, due endorsement by, or a written
instrument of transfer in form satisfactory to the Company and the Trustee duly executed by, the
Holder thereof or its attorney duly authorized in writing), and the Company shall execute, and the
Trustee shall authenticate and deliver to the Holder of such Security without service charge, a new
Security or Securities of the same series and Stated Maturity and of like tenor, of any authorized
denomination as requested by such Holder, in aggregate principal amount equal to and in exchange
for the unredeemed portion of the principal of the Security so surrendered.
Unless otherwise specified as contemplated by
Section 3.1
, the Company and any
Affiliate of the Company may at any time purchase or otherwise acquire Securities in the open
market or by private agreement. Such acquisition shall not operate as or be deemed for any purpose
to be a redemption of the indebtedness represented by such Securities. Any Securities purchased or
acquired by the Company may be delivered to the Trustee and, upon such delivery, the indebtedness
represented thereby shall be deemed to be satisfied.
Section 3.9
shall apply to all
Securities so delivered.
ARTICLE 12
SINKING FUNDS
Section 12.1
Applicability of Article
.
The provisions of this
Article 12
shall be applicable to any sinking fund for the
retirement of Securities of any series except as otherwise specified as contemplated by
Section
3.1
for such Securities.
The minimum amount of any sinking fund payment provided for by the terms of any Securities is
herein referred to as a mandatory sinking fund payment, and any payment in excess of such minimum
amount provided for by the terms of such Securities is herein referred to as an optional sinking
fund payment. Unless otherwise provided for by the terms of any Securities, the cash amount of any
sinking fund payment may be subject to reduction as provided in
Section 12.2
. Each sinking
fund payment shall be applied to the redemption of Securities as provided for by the terms of such
Securities.
Section 12.2
Satisfaction of Sinking Fund Payments with Securities
.
The Company (1) may deliver Outstanding Securities of a series (other than any previously
called for redemption) and (2) may apply as a credit Securities of a series which have been
redeemed either at the election of the Company pursuant to the terms of such Securities or through
the application of permitted optional sinking fund payments pursuant to the terms of such
Securities, in each case in satisfaction of all or any part of any sinking fund payment with
respect to any Securities of such series required to be made pursuant to the terms of such
Securities as and to the extent provided for by the terms of such Securities; provided that the
Securities to be so credited have not been previously so credited. The Securities to be so
credited shall be received and credited for such purpose by the Trustee at the Redemption Price, as
68
specified in the Securities so to be redeemed, for redemption through operation of the sinking fund
and the amount of such sinking fund payment shall be reduced accordingly.
Section 12.3
Redemption of Securities for Sinking Fund
.
Not fewer than 45 days prior (unless a shorter period shall be satisfactory to the Trustee) to
each sinking fund payment date for any Securities, the Company will deliver to the Trustee an
Officers Certificate specifying the amount of the next ensuing sinking fund payment for such
Securities pursuant to the terms of such Securities, the portion thereof, if any, which is to be
satisfied by payment of cash and the portion thereof, if any, which is to be satisfied by
delivering and crediting Securities pursuant to
Section 12.2
and will also deliver to the
Trustee any Securities to be so delivered. Not fewer than 30 days prior to each such sinking fund
payment date, the Trustee shall select the Securities to be redeemed upon such sinking fund payment
date in the manner specified in
Section 11.3
and cause notice of the redemption thereof to
be given in the name of and at the expense of the Company in the manner provided in
Section
11.4
. Such notice having been duly given, the redemption of such Securities shall be made upon
the terms and in the manner stated in
Sections 11.6
and
11.7
.
ARTICLE 13
DEFEASANCE AND COVENANT DEFEASANCE
Section 13.1
Companys Option to Effect Defeasance or Covenant Defeasance
.
The Company may elect, at its option at any time, to have
Section 13.2
or
Section
13.3
applied to any Securities or any series of Securities, as the case may be, designated
pursuant to
Section 3.1
as being defeasible pursuant to such
Sections 13.2
or
13.3
, in accordance with any applicable requirements provided pursuant to
Section
3.1
and upon compliance with the conditions set forth below in this
Article 13
. Any
such election shall be evidenced by a Board Resolution or in another manner specified as
contemplated by
Section 3.1
for such Securities.
Section 13.2
Defeasance and Discharge
.
Upon the Companys exercise of its option (if any) to have this Section applied to any
Securities or any series of Securities, as the case may be, the Company shall be deemed to have
been discharged from its obligations with respect to such Securities as provided in this Section on
and after the date the conditions set forth in
Section 13.4
are satisfied (hereinafter
called
Defeasance
). For this purpose, such Defeasance means that the Company shall be
deemed to have paid and discharged the entire indebtedness represented by such Securities and to have
satisfied all its other obligations under such Securities and this Indenture insofar as such
Securities are concerned (and the Trustee, at the expense of the Company, shall execute proper
instruments acknowledging the same), subject to the following which shall survive until otherwise
terminated or discharged hereunder:
(1) the rights of Holders of such Securities to receive, solely from the trust fund
described in
Section 13.4
and as more fully set forth in such Section, payments in
respect of the principal of and any premium and interest on, or any Additional Amounts with
respect to, such Securities when payments are due,
69
(2) the Companys obligations with respect to such Securities under
Sections
3.4
,
3.5
,
3.6
,
10.2
and
10.3
,
(3) the rights, powers, trusts, duties and immunities of the Trustee hereunder, and
(4) this
Article 13
.
Subject to compliance with this
Article 13
, the Company may exercise its option (if
any) to have this Section applied to any Securities notwithstanding the prior exercise of its
option (if any) to have
Section 13.3
applied to such Securities.
Section 13.3
Covenant Defeasance
.
Upon the Companys exercise of its option (if any) to have this
Section 13.3
applied
to any Securities or any series of Securities, as the case may be,
(1) the Company shall be released from its obligations under
Sections 8.1
,
10.4
,
10.5
,
10.6
,
10.7
or
10.8
and any covenants
provided pursuant to
Sections 3.1(22)
or
9.1(2)
for the benefit of the
Holders of such Securities and
(2) the occurrence of any event specified in
Section 5.1(4)
(with respect to any
of
Sections 8.1
,
10.4
,
10.5
,
10.6
,
10.7
or
10.8
and any such covenants provided pursuant to
Sections 3.1(22)
or
9.1(2)
) and the occurrence of any other Event of Default specified pursuant to
Section 3.1
or
Section 9.1(3)
shall be deemed not to be or result in an Event
of Default, in each case with respect to such Securities or any series of Securities as
provided in this
Section 13.3
on and after the date the conditions set forth in
Section 13.4
are satisfied (hereinafter called
Covenant Defeasance
). For
this purpose, such Covenant Defeasance means that, with respect to such Securities, the
Company may omit to comply with and shall have no liability in respect of any term, condition
or limitation set forth in any such specified Section or such other covenant (to the extent
so specified in the case of
Section 5.1(4)
and the occurrence of any Event of Default
specified pursuant to
Section 3.1
or
Section 9.1(3)
), whether directly or
indirectly by reason of any reference elsewhere herein to any such Section or such other
covenant or by reason of any reference in any such Section or such other covenant to any
other provision herein or in any other
document, but the remainder of this Indenture and such Securities shall be unaffected
thereby.
Section 13.4
Conditions to Defeasance or Covenant Defeasance
.
The following shall be the conditions to the application of
Section 13.2
or
Section 13.3
to any Securities or any series of Securities, as the case may be:
(1) The Company shall have deposited or caused to be deposited irrevocably with the
Trustee (or another trustee which satisfies the requirements contemplated by
Section
6.9
and agrees to comply with the provisions of this
Article 13
applicable to it)
as trust funds in trust for the purpose of making the following payments, specifically
pledged as security for, and dedicated solely to, the benefits of the Holders of such
Securities,
70
(A) in the case of Securities of a series denominated in currency of the United
States of America,
(i) cash in currency of the United States of America in an amount, or
(ii) U.S. Government Obligations which through the scheduled payment of
principal and interest in respect thereof in accordance with their terms
will provide, not later than one day before the due date of any payment, an
amount in cash, or
(iii) a combination thereof, or
(B) in the case of Securities of a series denominated in currency other than
that of the United States of America,
(i) cash in the currency in which such series of Securities is
denominated in an amount, or
(ii) Foreign Government Obligations which through the scheduled payment
of principal and interest in respect thereof in accordance with their terms
will provide, not later than one day before the due date of any payment, an
amount in cash, or
(iii) a combination thereof,
in each case sufficient, in the opinion of a nationally recognized firm of independent public
accountants expressed in a written certification thereof delivered to the Trustee, to pay and
discharge, and which shall be applied by the Trustee (or any such other qualifying trustee) to pay
and discharge, the principal of and any premium and interest on such Securities on the respective
Stated Maturities, in accordance with the terms of this Indenture and such Securities.
(2) For Securities denominated in United States dollars, in the event of an election to
have
Section 13.2
apply to any Securities or any series of Securities, as the case
may be, the Company shall have delivered to the Trustee an Opinion of Counsel stating that
(A) the Company has received from, or there has been published by, the Internal
Revenue Service a ruling or
(B) since the date of this instrument, there has been a change in the
applicable Federal income tax law, in either case
clause (A)
or
(B)
to the effect that, and based thereon such opinion shall confirm that, the Holders
of such Securities will not recognize gain or loss for Federal income tax purposes
as a result of the deposit, Defeasance and discharge to be effected with respect to
such Securities and will be subject to Federal income tax on the same amount, in the
same manner and at the same times as would be the case if such deposit, Defeasance
and discharge were not to occur.
71
(3) For Securities denominated in United States dollars, in the event of an election to
have
Section 13.3
apply to any Securities or any series of Securities, as the case
may be, the Company shall have delivered to the Trustee an Opinion of Counsel to the effect
that the Holders of such Securities will not recognize gain or loss for Federal income tax
purposes as a result of the deposit and Covenant Defeasance to be effected with respect to
such Securities and will be subject to Federal income tax on the same amount, in the same
manner and at the same times as would be the case if such deposit and Covenant Defeasance
were not to occur.
(4) Such Defeasance or Covenant Defeasance shall not cause such Securities nor any other
Securities of the same series, if then listed on any securities exchange, to be delisted.
(5) No event which is, or after notice or lapse of time or both would become, an Event
of Default with respect to such Securities or any other Securities shall have occurred and be
continuing at the time of such deposit or, with regard to any such event specified in
Sections 5.1(5)
and
(6)
, at any time on or prior to the 90th day after the
date of such deposit (it being understood that this condition shall not be deemed satisfied
until after such 90th day).
(6) Such Defeasance or Covenant Defeasance shall not cause the Trustee to have a
conflicting interest within the meaning of the Trust Indenture Act (assuming all Securities
are in default within the meaning of such Act).
(7) Such Defeasance or Covenant Defeasance shall not result in a breach or violation of,
or constitute a default under, this Indenture or any other material agreement or instrument
to which the Company is a party or by which it is bound.
(8) Such Defeasance or Covenant Defeasance shall not result in the trust arising from
such deposit constituting an investment company within the meaning of the
Investment Company Act unless such trust shall be registered under such Act or exempt
from registration thereunder.
(9) The Company shall have delivered to the Trustee an Officers Certificate and an
Opinion of Counsel, each stating that all conditions precedent with respect to such
Defeasance or Covenant Defeasance have been complied with.
Section 13.5
Deposited Money, U. S. Government Obligations and Foreign Government
Obligations to be Held in Trust; Miscellaneous Provisions
.
Subject to the provisions of the last paragraph of
Section 10.3
, all money, U.S.
Government Obligations and Foreign Government Obligations (including the proceeds thereof)
deposited with the Trustee or other qualifying trustee (solely for purposes of this
Section
13.5
and
Section 13.6
, the Trustee and any such other trustee are referred to
collectively as the
Trustee
) pursuant to
Section 13.4
in respect of any
Securities shall be held in trust and applied by the Trustee, in accordance with the provisions of
such Securities and this Indenture, to the payment, either directly or through any such Paying
Agent (including the Company acting as its own Paying Agent) as the Trustee may determine, to the
Holders of such Securities, of all sums
72
due and to become due thereon in respect of principal and
any premium and interest, but money so held in trust need not be segregated from other funds except
to the extent required by law. The Company shall pay and indemnify the Trustee against any tax,
fee or other charge imposed on or assessed against the U.S. Government Obligations or Foreign
Government Obligations deposited pursuant to
Section 13.4
or the principal and interest
received in respect thereof other than any such tax, fee or other charge which by law is for the
account of the Holders of Outstanding Securities. Anything in this
Article 13
to the
contrary notwithstanding, the Trustee shall deliver or pay to the Company from time to time upon
Company Request any money, U.S. Government Obligations or Foreign Government Obligations held by it
as provided in
Section 13.4
with respect to any Securities which, in the opinion of a
nationally recognized firm of independent public accountants expressed in a written certification
thereof delivered to the Trustee, are in excess of the amount thereof which would then be required
to be deposited to effect the Defeasance or Covenant Defeasance, as the case may be, with respect
to such Securities.
Section 13.6
Reinstatement
.
If the Trustee or the Paying Agent is unable to apply any money in accordance with this
Article 13
with respect to any Securities by reason of any order or judgment of any court
or governmental authority enjoining, restraining or otherwise prohibiting such application, then
the obligations under this Indenture and such Securities from which the Company has been
discharged or released pursuant to
Section 13.2
or
13.3
shall be revived and
reinstated as though no deposit had occurred pursuant to this
Article 13
with respect to
such Securities, until such time as the Trustee or Paying Agent is permitted to apply all money
held in trust pursuant to
Section 13.5
with respect to such Securities in accordance with
this
Article 13
;
provided
,
however
, that if the Company makes any payment of principal of or any premium or
interest on any such Security following such reinstatement of its obligations, the Company shall be
subrogated to the rights (if any) of the Holders of such Securities to receive such payment from
the money so held in trust.
ARTICLE 14
SUBORDINATION
Section 14.1
Securities Subordinated to Senior Indebtedness
.
The Company and each Holder of a Security, by his acceptance thereof, agree that (a) the
payment of the principal of, premium (if any) and interest on and any Additional Amounts with
respect to each and all the Securities and (b) any other payment in respect of the Securities,
including on account of the acquisition or redemption of Securities by the Company, is
subordinated, to the extent and in the manner provided in such Security or in the supplemental
indenture pursuant to which such Security is issued, to the prior payment in full of all Senior
Indebtedness specified in such Security or in such supplemental indenture.
Such subordination provisions shall constitute a continuing offer to all Persons who, in
reliance upon such provisions, become holders of, or continue to hold, any of such Senior
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Indebtedness, and such provisions are made for the benefit of the holders of such Senior
Indebtedness and any one or more of them may enforce such provisions.
In the event that the Company shall default in the payment of any principal of (or premium, if
any) or interest on any Senior Indebtedness of the Company when the same becomes due and payable,
whether at maturity or at a date fixed for prepayment or by declaration or otherwise, then, upon
written notice of such default to the Company by the holders of Senior Indebtedness or any trustee
therefor, unless and until such default shall have been cured or waived or shall have ceased to
exist, no direct or indirect payment (in cash, property, securities, by set-off or otherwise) shall
be made or agreed to be made on account of the principal of or interest on any of the Securities,
or in respect of any redemption, retirement, purchase or other acquisition of any of the
Securities.
In the event of
(1) any insolvency, bankruptcy, receivership, liquidation, reorganization, readjustment,
composition or other similar proceeding relating to the Company, its creditors or its
property,
(2) any proceeding for the liquidation, dissolution or other winding up of the Company,
voluntary or involuntary, whether or not involving insolvency or bankruptcy proceedings,
(3) any assignment by the Company for the benefit of creditors, or
(4) any other marshalling of the assets of the Company,
all Senior Indebtedness of the Company (including any interest thereon accruing after the
commencement of any such proceedings) shall first be paid in full before any payment or
distribution, whether in cash, securities or other property, shall be made to any Holder of any of
the Securities on account thereof. Any payment or distribution, whether in cash, securities or
other property (other than securities of the Company or any other corporation provided for by a
plan of reorganization or readjustment the payment of which is subordinate, at least to the extent
provided in these subordination provisions with respect to the indebtedness evidenced by the
Securities, to the payment of all Senior Indebtedness of the Company at the time outstanding and to
any securities issued in respect thereof under any such plan of reorganization or readjustment),
which would otherwise (but for these subordination provisions) be payable or deliverable in respect
of the Securities of any series shall be paid or delivered directly to the holders of Senior
Indebtedness of the Company in accordance with the priorities then existing among such holders
until all Senior Indebtedness of the Company (including any interest thereon accruing after the
commencement of any such proceedings) shall have been paid in full.
In the event that, notwithstanding the foregoing, any payment or distribution of any character
or any security, whether in cash, securities or other property (other than securities of the
Company or any other corporation provided for by a plan of reorganization or readjustment the
payment of which are subordinate, at least to the extent provided in these subordination provisions
with respect to the indebtedness evidenced by the Securities, to the payment of all Senior
Indebtedness of the Company at the time outstanding and to any securities issued in
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respect thereof
under any such plan or reorganization or readjustment), shall be received by the Trustee or any
Holder in contravention of any of the terms hereof such payment or distribution or security shall
be received in trust for the benefit of, and shall be paid over or delivered and transferred to,
the holders of the Senior Indebtedness of the Company at the time outstanding in accordance with
the priorities then existing among such holders for application to the payment of all Senior
Indebtedness of the Company remaining unpaid, to the extent necessary to pay all such Senior
Indebtedness of the Company in full. In the event of the failure of the Trustee or any Holder to
endorse or assign any such payment, distribution or security, each holder of Senior Indebtedness of
the Company is hereby irrevocably authorized to endorse or assign the same.
No present or future holder of any Senior Indebtedness of the Company shall be prejudiced in
the right to enforce subordination of the indebtedness evidenced by the Securities by any act or
failure to act on the part of the Company.
Senior Indebtedness of the Company shall not be deemed to have been paid in full unless the
holders thereof shall have received cash, securities or other property equal to the amount of such
Senior Indebtedness of the Company then outstanding. Upon the payment in full of all Senior
Indebtedness of the Company, the Holders of Securities of each series shall be subrogated
to all rights of any holders of Senior Indebtedness of the Company to receive any further
payments or distributions applicable to the Senior Indebtedness of the Company until the
indebtedness evidenced by the Securities of such series shall have been paid in full, and such
payments or distributions received by such Holders, by reason of such subrogation, of cash,
securities or other property which otherwise would be paid or distributed to the holders of Senior
Indebtedness of the Company, shall, as between the Company and its creditors other than the
holders of Senior Indebtedness of the Company, on the one hand, and such Holders, on the other
hand, be deemed to be a payment by the Company on account of Senior Indebtedness of the Company,
and not on account of the Securities of such series.
The Trustee and Holders will take such action (including, without limitation, the delivery of
this Indenture to an agent for the holders of Senior Indebtedness of the Company or consent to the
filing of a financing statement with respect thereto) as may, in the opinion of counsel designated
by the holders of a majority in principal amount of the Senior Indebtedness of the Company at the
time outstanding, be necessary or appropriate to assure the effectiveness of the subordination
effected by these provisions.
Section 14.2
Right of Trustee to Hold Senior Indebtedness
.
The Trustee in its individual capacity shall be entitled to all of the rights set forth in
this
Article 14
in respect of any Senior Indebtedness at any time held by it to the same
extent as any other holder of Senior Indebtedness, and nothing in this Indenture shall be construed
to deprive the Trustee of any of its rights as such holder.
Section 14.3
Subordination Not to Prevent Events of Default
.
The failure to make a payment on account of principal of, premium (if any) or interest on the
Securities by reason of any subordination provision for the benefit of holders of Senior
Indebtedness shall not be construed as preventing the occurrence of a Default or an Event of
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Default under
Section 5.1
or in any way prevent the Holders of the Securities from
exercising any right hereunder other than the right to receive payment on the Securities.
Section 14.4
No Fiduciary Duty of Trustee to Holders of Senior Indebtedness
.
Upon any payment or distribution of assets of the Company referred to in this
Article
14
, the Trustee and the Holders shall be entitled to rely on an order or decree made by any
court of competent jurisdiction in which such dissolution or winding up or liquidation or
reorganization or arrangement proceedings are pending or upon a certificate of the trustee in
bankruptcy, receiver, assignee for the benefit of creditors or other person making such payment or
distribution, delivered to the Trustee or to the Holders, for the purpose of ascertaining the
persons entitled to participate in such distribution, the holders of the Senior Indebtedness and
other indebtedness of the Company, the amount thereof or payable thereon, the amount or
amounts paid or distributed thereon and all other facts pertinent thereto or to this
Article 14
. In the absence of any such bankruptcy trustee, receiver, assignee or other
person, the Trustee shall be entitled to rely upon a written notice by a Person representing
himself to be a holder of Senior Indebtedness of the Company (or a trustee or representative on
behalf of such Holder) as evidence that such Person is a holder of such Senior Indebtedness (or is
such a trustee or representative). In the event that the Trustee determines, in good faith, that
further evidence is required with respect to the right of any person as a holder of Senior Indebtedness of the
Company to participate in any payments or distributions pursuant to this
Article 14
, the
Trustee may request such person to furnish evidence to the reasonable satisfaction of the Trustee
as to the amount of Senior Indebtedness of the Company held by such person, as to the extent to
which such person is entitled to participate in such payment or distribution, and as to other facts
pertinent to the rights of such person under this
Article 14
, and if such evidence is not
furnished, the Trustee may offer any payment to such person pending judicial determination as to
the right of such person to receive such payment.
The Trustee shall not be deemed to owe any fiduciary duty to the holders of Senior
Indebtedness, and shall not be liable to any such holders (other than for its willful misconduct or
negligence) if it shall in good faith mistakenly pay over or distribute to the Holders of the
Securities or the Company or any other Person, cash, property or securities to which any holders of
Senior Indebtedness shall be entitled by virtue of this
Article 14
or otherwise. Nothing
in this
Section 14.4
shall affect the obligation of any other such Person to hold such
payment for the benefit of, and to pay such payment over to, the holders of Senior Indebtedness or
their representative.
Section 14.5
Payment Permitted if No Default
.
Nothing contained in this
Article 14
or elsewhere in this Indenture, or in any of the
Securities, shall prevent (1) the Company, at any time except during the pendency of any
dissolution, winding up, liquidation or reorganization proceedings referred to in, or under the
conditions described in,
Section 14.1
, from making payments at any time of the principal of
or interest on the Securities or (2) the application by the Trustee or any Paying Agent of any
monies deposited with it hereunder to payments of the principal of or interest on the Securities,
if, at the time of such deposit, the Trustee or such Paying Agent, as the case may be, did not have
the written notice provided for in this
Section 14.5
of any event prohibiting the making of
such
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deposit, or if, at the time of such deposit (whether or not in trust) by the Company with the
Trustee or any Paying Agent (other than the Company) such payment would not have been prohibited by
the provisions of this Article, and the Trustee or any Paying Agent shall not be affected by any
notice to the contrary received by it on or after such date.
Anything in this
Article 14
or elsewhere in this Indenture contained to the contrary
notwithstanding, the Trustee shall not at any time be charged with knowledge of the existence of
any facts which would prohibit the making of any payment of monies to or by the Trustee and shall
be entitled conclusively to assume that no such facts exist and that no event specified in
Section 14.1
has happened, until the Trustee shall have received an Officers Certificate
of the Company to that effect or notice in writing to that effect signed by or on behalf of the
holder or holders, or their representatives, of Senior Indebtedness of the Company, as the case may be,
who shall have been certified by the Company or otherwise established to the reasonable
satisfaction of the Trustee to be such holder or holders or representatives or from any trustee
under any indenture pursuant to which such Senior Indebtedness of the Company shall be outstanding;
provided that, if prior to the third Business Day preceding the date upon which by the terms hereof
any monies become payable (including, without limitation, the payment of
either the principal of or interest on any security, or in the event of the execution of an
instrument pursuant to
Section 4.1
acknowledging satisfaction and discharge of this
Indenture, then if prior to the second Business Day preceding the date of such execution, the
Trustee or any Paying Agent shall not have received with respect to such monies the Officers
Certificate or notice provided for in this
Section 14.5
, then, anything herein contained to
the contrary notwithstanding, the Trustee or such Paying Agent shall have full power and authority
to receive such monies and apply the same to the purpose for which they were received and shall not
be affected by any notice to the contrary which may be received by it on or after such date. The
Company shall give prompt written notice to the Trustee and to the Paying Agent of any facts which
would prohibit the payment of monies to or by the Trustee or any Paying Agent.
Section 14.6
Article Applicable to Paying Agent
.
In case at any time any Paying Agent other than the Trustee shall have been appointed by the
Company and be then acting hereunder, the term Trustee as used in this
Article 14
shall
in such case (unless the context shall otherwise require) be construed as extending to and
including such Paying Agent within its meaning as fully for all intents and purposes as if such
Paying Agent were named in this
Article 14
in addition to or in place of the Trustee;
provided, however, that this
Section 14.6
shall not apply to the Company or any Affiliate
of the Company if it or such Affiliate acts as Paying Agent.
[signature page follows]
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed as of
the day and year first above written.
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CAPSTEAD MORTGAGE CORPORATION
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By:
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Name:
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Title:
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[TRUSTEE]
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By:
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Name:
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Title:
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