EXHIBIT 4.2
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X. XXXXXXXXX ENTERPRISES, INC.,
AS ISSUER
KOVNANIAN ENTERPRISES, INC.
THE GUARANTORS PARTY HERETO
AND
FIRST UNION NATIONAL BANK,
AS TRUSTEE
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INDENTURE
DATED AS OF MARCH 26, 2002
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8.875% SENIOR SUBORDINATED NOTES DUE 2012
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CROSS-REFERENCE TABLE(1)
TIA Sections Indenture Sections
------------ ------------------
Section 310(a)...............................................................7.10
(b)...............................................................7.08
Section 312.................................................................12.02
Section 313..................................................................7.06
Section 314(a).........................................................4.15, 4.16
(c)..............................................................12.04
(e)..............................................................12.05
Section 315(a).........................................................7.01, 7.02
(b).........................................................7.02, 7.05
(c)...............................................................7.01
(d)...............................................................7.02
(e)...............................................................5.09
Section 316(a).............................................2.06, 5.01, 5.03, 5.04
(b)...............................................................5.06
(c)..............................................................12.02
Section 317(a) (1)...........................................................5.07
(a) (2)...........................................................5.07
(b)...............................................................2.04
Section 318......................................................................
TABLE OF CONTENTS
Page
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ARTICLE 1
Definitions and Incorporation by Reference
SECTION 1.01. Definitions....................................................................1
SECTION 1.02. Rules of Construction.........................................................23
ARTICLE 2
The Notes
SECTION 2.01. Form, Dating and Denominations; Legends.......................................24
SECTION 2.02. Execution and Authentication; Exchange Notes; Additional Notes................25
SECTION 2.03. Registrar, Paying Agent and Authenticating Agent; Paying Agent to
Hold Money in Trust.........................................................26
SECTION 2.04. Replacement Notes.............................................................26
SECTION 2.05. Outstanding Notes.............................................................26
SECTION 2.06. Temporary Notes...............................................................27
SECTION 2.07. Cancellation..................................................................27
SECTION 2.08. CUSIP and ISIN Numbers........................................................27
SECTION 2.09. Registration, Transfer and Exchange...........................................28
SECTION 2.10. Restrictions on Transfer and Exchange.........................................30
SECTION 2.11. Regulation S Temporary Global Notes...........................................32
ARTICLE 3
Redemption; Offer to Purchase
SECTION 3.01. Optional Redemption...........................................................32
SECTION 3.02. Method and Effect of Redemption...............................................33
SECTION 3.03. Offer to Purchase.............................................................34
ARTICLE 4
Covenants
SECTION 4.01. Payment of Notes..............................................................36
SECTION 4.02. Maintenance of Office or Agency...............................................36
SECTION 4.03. Existence.....................................................................37
SECTION 4.04. Payment of Taxes and Other Claims.............................................37
SECTION 4.05. Maintenance of Properties and Insurance.......................................37
SECTION 4.06. Limitations on Indebtedness...................................................37
SECTION 4.07. Limitation on Restricted Payments.............................................38
SECTION 4.08. Limitation on Liens...........................................................40
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SECTION 4.09. Limitations on Restrictions Affecting Restricted Subsidiaries.................40
SECTION 4.10. Limitations on Dispositions of Assets.........................................42
SECTION 4.11. Guarantees by Restricted Subsidiaries.........................................43
SECTION 4.12. Repurchase of Notes upon a Change of Control..................................43
SECTION 4.13. Limitation on Transactions with Affiliates....................................44
SECTION 4.14. Limitations on Mergers, Consolidations and Sales of Assets....................45
SECTION 4.15. Reports to Holders of Notes...................................................46
SECTION 4.16. Reports to Trustee............................................................46
SECTION 4.17. Notice of Other Defaults......................................................47
SECTION 4.18. Limitation on Senior Subordinated Indebtedness................................47
ARTICLE 5
remedies
SECTION 5.01. Events of Default.............................................................47
SECTION 5.02. Other Remedies................................................................49
SECTION 5.03. Waiver of Defaults by Majority of Holders.....................................49
SECTION 5.04. Direction of Proceedings......................................................49
SECTION 5.05. Application of Moneys Collected by Trustee....................................50
SECTION 5.06. Proceedings by Holders........................................................50
SECTION 5.07. Proceedings by Trustee........................................................51
SECTION 5.08. Remedies Cumulative and Continuing............................................51
SECTION 5.09. Undertaking to Pay Costs......................................................51
SECTION 5.10. Notice of Defaults............................................................52
SECTION 5.11. Waiver of Stay, Extension or Usury Laws.......................................52
ARTICLE 6
guarantee
SECTION 6.01. Guarantee.....................................................................52
SECTION 6.02. Obligations of each Guarantor Unconditional...................................53
SECTION 6.03. Release of a Guarantor........................................................53
SECTION 6.04. Execution and Delivery of Guaranty............................................54
SECTION 6.05. Limitation on Guarantor Liability.............................................54
SECTION 6.06. Article 6 Not to Prevent Events of Default....................................54
SECTION 6.07. Waiver by the Guarantors......................................................54
SECTION 6.08. Subrogation and Contribution..................................................54
SECTION 6.09. Stay of Acceleration..........................................................54
ARTICLE 7
The Trustee
SECTION 7.01. General.......................................................................55
SECTION 7.02. Certain Rights of Trustee.....................................................55
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SECTION 7.03. Individual Rights of Trustee..................................................56
SECTION 7.04. Trustee's Disclaimer..........................................................56
SECTION 7.05. Notice of Default.............................................................56
SECTION 7.06. Reports by Trustee to Holders.................................................56
SECTION 7.07. Compensation and Indemnity....................................................57
SECTION 7.08. Replacement of Trustee........................................................57
SECTION 7.09. Successor Trustee by Merger...................................................58
SECTION 7.10. Eligibility...................................................................58
SECTION 7.11. Money Held in Trust...........................................................58
ARTICLE 8
Defeasance and Discharge
SECTION 8.01. Discharge of Issuer's Obligations.............................................58
SECTION 8.02. Legal Defeasance..............................................................59
SECTION 8.03. Covenant Defeasance...........................................................60
SECTION 8.04. Application of Trust Money....................................................60
SECTION 8.05. Repayment to Issuer...........................................................60
SECTION 8.06. Reinstatement.................................................................61
SECTION 8.07. Indemnity for U.S. Government Obligations.....................................61
ARTICLE 9
Amendments, Supplements and Waivers
SECTION 9.01. Amendments Without Consent of Holders.........................................61
SECTION 9.02. Amendments With Consent of Holders............................................62
SECTION 9.03. Effect of Consent.............................................................63
SECTION 9.04. Trustee's Rights and Obligations..............................................63
SECTION 9.05. Conformity with Trust Indenture Act...........................................63
SECTION 9.06. Payments for Consents.........................................................63
ARTICLE 10
Subordination of Notes
SECTION 10.01. Notes Subordinated to Senior Debt of the Issuer...............................63
SECTION 10.02. Issuer Not to Make Payments with Respect to Notes in Certain
Circumstances...............................................................65
SECTION 10.03. Notes Subordinated to Prior Payment of All Senior Debt of the Issuer
on Dissolution, Winding Up, Liquidation or Reorganization of Issuer.........66
SECTION 10.04. Holders to Be Subrogated to Rights of Holders of Senior Debt of the Issuer....68
SECTION 10.05. Obligations of the Issuer Unconditional.......................................68
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SECTION 10.06. Trustee Entitled to Assume Payments Not Prohibited in Absence of Notice.......69
SECTION 10.07. Application by Trustee of Monies Deposited with it............................69
SECTION 10.08. Subordination Rights Not Impaired by Acts or Omissions of Issuer or
Holders of Senior Debt of the Issuer........................................69
SECTION 10.09. Holders Authorize Trustee to Effectuate Subordination of Notes................70
SECTION 10.10. Right of Trustee to Hold Senior Debt of the Issuer............................70
SECTION 10.11. Trustee Not Fiduciary for Holders of Senior Debt of the Issuer................70
SECTION 10.12. Article 10 Not to Prevent Events of Default...................................70
SECTION 10.13. Officers' Certificate.........................................................70
ARTICLE 11
Subordination of Guarantees
SECTION 11.01. Guarantees Subordination to Senior Debt of a Guarantor........................71
SECTION 11.02. Guarantor Not to Make Payments with Respect to Notes in Certain
Circumstances...............................................................72
SECTION 11.03. Guarantee Subordinated to Prior Payment of All Senior Debt of a
Guarantor on Dissolution, Winding Up, Liquidation or
Reorganization of a Guarantor...............................................74
SECTION 11.04. Holders to Be Subrogated to Rights of Holders of Senior Debt of a Guarantor...75
SECTION 11.05. Obligations of the Guarantors Unconditional...................................75
SECTION 11.06. Trustee Entitled to Assume Payments Not Prohibited in Absence of Notice.......76
SECTION 11.07. Application by Trustee of Monies Deposited with it............................76
SECTION 11.08. Subordination Rights Not Impaired by Acts or Omissions of Any Guarantor
or Holders of Senior Debt of a Guarantor....................................77
SECTION 11.09. Holders Authorize Trustee to Effectuate Subordination of Notes................77
SECTION 11.10. Right of Trustee to Hold Senior Debt of a Guarantor...........................77
SECTION 11.11. Trustee Not Fiduciary for Holders of Senior Debt of a Guarantor...............78
SECTION 11.12. Article 11 Not to Prevent Events of Default...................................78
SECTION 11.13. Subordination of Indebtedness Owed by the Issuer to a Guarantor...............78
SECTION 11.14. Officers' Certificate.........................................................78
ARTICLE 12
Miscellaneous
SECTION 12.01. Trust Indenture Act of 1939...................................................78
SECTION 12.02. Holder Communications; Holder Actions.........................................78
SECTION 12.03. Notices.......................................................................79
SECTION 12.04. Certificate and Opinion as to Conditions Precedent............................80
SECTION 12.05. Statements Required in Certificate or Opinion.................................80
SECTION 12.06. Payment Date Other Than a Business Day........................................80
SECTION 12.07. Governing Law.................................................................81
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SECTION 12.08. No Adverse Interpretation of Other Agreements.................................81
SECTION 12.09. Successors....................................................................81
SECTION 12.10. Duplicate Originals...........................................................81
SECTION 12.11. Separability..................................................................81
SECTION 12.12. Table of Contents and Headings................................................81
SECTION 12.13. No Liability of Directors, Officers, Employees, Incorporators and
Stockholders.................................................................81
EXHIBITS
EXHIBIT A FORM OF NOTE
EXHIBIT B FORM OF
SUPPLEMENTAL INDENTURE
EXHIBIT C RESTRICTED LEGEND
EXHIBIT D DTC LEGEND
EXHIBIT E REGULATION S CERTIFICATE
EXHIBIT F RULE 144A CERTIFICATE
EXHIBIT G INSTITUTIONAL ACCREDITED INVESTOR CERTIFICATE
EXHIBIT H CERTIFICATE OF BENEFICIAL OWNERSHIP
EXHIBIT I REGULATION S TEMPORARY GLOBAL NOTE LEGEND
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INDENTURE, dated as of March 26, 2002, between X. XXXXXXXXX ENTERPRISES,
INC., a New Jersey corporation (the "Issuer"), HOVNANIAN ENTERPRISES, INC., a
Delaware corporation (the "Company"), each of the Guarantors (as defined hereto)
and FIRST UNION NATIONAL BANK, as Trustee.
RECITALS
The Issuer has duly authorized the execution and delivery of the Indenture
to provide for the issuance of up to $300,000,000 aggregate principal amount of
the Issuer's 8.875% Senior Subordinated Notes Due 2012, and, if and when issued,
any Additional Notes, together with any Exchange Notes issued therefor as
provided herein (the "NOTES"). All things necessary to make the Indenture a
valid agreement of the Issuer, in accordance with its terms, have been done, and
the Issuer has done all things necessary to make the Notes (in the case of the
Additional Notes, when duly authorized), when executed by the Issuer and
authenticated and delivered by the Trustee and duly issued by the Issuer, the
valid obligations of the Issuer as hereinafter provided.
In addition, the Guarantors party hereto have duly authorized the execution
and delivery of the Indenture as guarantors of the Notes. All things necessary
to make the Indenture a valid agreement of each Guarantor, in accordance with
its terms, have been done, and each Guarantor has done all things necessary to
make the Note Guarantees, when executed by each Guarantor, and the Notes, when
executed by the Issuer and authenticated and delivered by the Trustee and duly
issued by the Issuer, the valid obligations of such Guarantor as hereinafter
provided.
This Indenture is subject to, and will be governed by, the provisions of
the Trust Indenture Act that are required to be a part of and govern indentures
qualified under the Trust Indenture Act.
THIS INDENTURE WITNESSETH
For and in consideration of the premises and the purchase of the Notes by
the Holders thereof, the parties hereto covenant and agree, for the equal and
proportionate benefit of all Holders, as follows:
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. DEFINITIONS.
"ACQUIRED INDEBTEDNESS" means (a) with respect to any Person that becomes a
Restricted Subsidiary (or is merged into the Company, the Issuer or any
Restricted Subsidiary) after the Issue Date, Indebtedness of such Person or any
of its Subsidiaries existing at the time such Person becomes a Restricted
Subsidiary (or is merged into the Company, the Issuer or any Restricted
Subsidiary) that was not incurred in connection with, or in contemplation of,
such Person becoming a Restricted Subsidiary (or being merged into the Company,
the Issuer or any Restricted Subsidiary) and (b) with respect to the Company,
the Issuer or any Restricted Subsidiary, any Indebtedness expressly assumed by
the Company, the Issuer or any Restricted Subsidiary in connection with the
acquisition of any assets from another Person (other than the
Company, the Issuer or any Restricted Subsidiary), which Indebtedness was
not incurred by such other Person in connection with or in contemplation of such
acquisition. Indebtedness incurred in connection with or in contemplation of any
transaction described in clause (a) or (b) of the preceding sentence shall be
deemed to have been incurred by the Company or a Restricted Subsidiary, as the
case may be, at the time such Person becomes a Restricted Subsidiary (or is
merged into the Company, the Issuer or any Restricted Subsidiary) in the case of
clause (a) or at the time of the acquisition of such assets in the case of
clause (b), but shall not be deemed Acquired Indebtedness.
"ADDITIONAL NOTES" means any notes issued under the Indenture in addition
to the Original Notes, including any Exchange Notes issued in exchange for such
Additional Notes, having the same terms in all respects as the Original Notes
except that interest will accrue on the Additional Notes from their date of
issuance.
"AFFILIATE" means, when used with reference to a specified Person any
Person direct or indirectly controlling, or controlled by or under direct or
indirect common control with the Person specified.
"AGENT" means any Registrar, Paying Agent or Authenticating Agent.
"AGENT MEMBER" means a member of, or a participant in, the Depositary.
"ASSET ACQUISITION" means (a) an Investment by the Company, the Issuer or
any Restricted Subsidiary in any other Person if, as a result of such
Investment, such Person shall become a Restricted Subsidiary or shall be
consolidated or merged with or into the Company, the Issuer or any Restricted
Subsidiary or (b) the acquisition by the Company, the Issuer or any Restricted
Subsidiary of the assets of any Person, which constitute all or substantially
all of the assets or of an operating unit or line of business of such Person or
which is otherwise outside the ordinary course of business.
"ASSET DISPOSITION" means any sale, transfer, conveyance, lease or other
disposition (including, without limitation, by way of merger, consolidation or
sale and leaseback or sale of shares of Capital Stock in any Subsidiary) (each,
a "TRANSACTION") by the Company, the Issuer or any Restricted Subsidiary to any
Person of any Property having a Fair Market Value in any transaction or series
of related transactions of at least $5 million. The term "Asset Disposition"
shall not include:
(a) a transaction between the Company, the Issuer and any Restricted
Subsidiary or a transaction between Restricted Subsidiaries,
(b) a transaction in the ordinary course of business, including,
without limitation, sales (directly or indirectly), dedications and other
donations to governmental authorities, leases and sales and leasebacks of
(A) homes, improved land and unimproved land and (B) real estate (including
related amenities and improvements),
(c) a transaction involving the sale of Capital Stock of, or the
disposition of assets in, an Unrestricted Subsidiary,
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(d) any exchange or swap of assets of the Company, the Issuer or any
Restricted Subsidiary for assets that (x) are to be used by the Company,
the Issuer or any Restricted Subsidiary in the ordinary course of its Real
Estate Business and (y) have a Fair Market Value not less than the Fair
Market Value of the assets exchanged or swapped,
(e) any sale, transfer, conveyance, lease or other disposition of
assets and properties that is governed by Section 4.14 hereof, or
(f) dispositions of mortgage loans and related assets and
mortgage-backed securities in the ordinary course of a mortgage lending
business.
"ATTRIBUTABLE DEBT" means, with respect to any Capitalized Lease
Obligations, the capitalized amount thereof determined in accordance with GAAP.
"AUTHENTICATING AGENT" refers to a Person engaged to authenticate the Notes
in the stead of the Trustee.
"BANKRUPTCY LAW" means title 11 of the United States Code, as amended, or
any similar federal or state law for the relief of debtors.
"BOARD OF DIRECTORS" means the board of directors of the Issuer, or any
committee thereof duly authorized to act on its behalf.
"BOARD RESOLUTION" means a resolution duly adopted by the Board of
Directors which, as of the date of any certification thereof, remains in full
force and effect.
"BUSINESS DAY" means any day except a Saturday, Sunday or other day on
which commercial banks in
New York City or in the city where the Corporate Trust
Office of the Trustee is located are authorized by law to close.
"CAPITAL STOCK" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated) of or in
such Person's capital stock or other equity interests, and options, rights or
warrants to purchase such capital stock or other equity interests, whether now
outstanding or issued after the Issue Date, including, without limitation, all
Disqualified Stock and Preferred Stock.
"CAPITALIZED LEASE OBLIGATIONS" of any Person means the obligations of such
Person to pay rent or other amounts under a lease that is required to be
capitalized for financial reporting purposes in accordance with GAAP, and the
amount of such obligations will be the capitalized amount thereof determined in
accordance with GAAP.
"CASH EQUIVALENTS" means
(a) U.S. dollars;
(b) securities issued or directly and fully guaranteed or insured by
the U.S. government or any agency or instrumentality thereof having
maturities of one year or less from the date of acquisition;
3
(c) certificates of deposit and eurodollar time deposits with
maturities of one year or less from the date of acquisition, bankers'
acceptances with maturities not exceeding six months and overnight bank
deposits, in each case with any domestic commercial bank having capital and
surplus in excess of $500 million;
(d) repurchase obligations with a term of not more than seven days
for underlying securities of the types described in clauses (b) and (c)
entered into with any financial institution meeting the qualifications
specified in clause (c) above;
(e) commercial paper rated P-1, A-1 or the equivalent thereof by
Moody's or S & P, respectively, and in each case maturing within six months
after the date of acquisition; and
(f) investments in money market funds substantially all of the assets
of which consist of securities described in the foregoing clauses (a)
through (e).
"CERTIFICATE OF BENEFICIAL OWNERSHIP" means a certificate substantially in
the form of Exhibit H.
"CERTIFICATED NOTE" means a Note in registered individual form without
interest coupons.
"CHANGE OF CONTROL" means
(a) any sale, lease, or other transfer (in one transaction or a
series of transactions) of all or substantially all of the consolidated
assets of the Company and its Restricted Subsidiaries to any Person (other
than a Restricted Subsidiary); PROVIDED, HOWEVER, that a transaction where
the holders of all classes of Common Equity of the Company immediately
prior to such transaction own, directly or indirectly, more than 50% of all
classes of Common Equity of such Person immediately after such transaction
shall not be a Change of Control;
(b) a "person" or "group" (within the meaning of Section 13(d) of the
Exchange Act (other than (x) the Company or (y) the Permitted Hovnanian
Holders) becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act) of Common Equity of the Company representing more than 50% of
the voting power of the Common Equity of the Company;
(c) Continuing Directors cease to constitute at least a majority of
the Board of Directors of the Company;
(d) the stockholders of the Company approve any plan or proposal for
the liquidation or dissolution of the Company; PROVIDED, HOWEVER, that a
liquidation or dissolution of the Company which is part of a transaction
that does not constitute a Change of Control under the proviso contained in
clause (a) above shall not constitute a Change of Control; or
(e) a change of control shall occur as defined in the instrument
governing any publicly traded debt securities of the Company or the Issuer
which requires the Company or the Issuer to repay or repurchase such debt
securities.
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"CLEARSTREAM" means Clearstream Banking, societe anonyme, Luxembourg,
formerly Cedelbank.
"COMMISSION" means the Securities and Exchange Commission.
"COMMON EQUITY" of any Person means Capital Stock of such Person that is
generally entitled to (a) vote in the election of directors of such Person or
(b) if such Person is not a corporation, vote or otherwise participate in the
selection of the governing body, partners, managers or others that will control
the management or policies of such Person.
"COMPANY" means Hovnanian Enterprises, Inc., or any successor obligor under
the Indenture and the Note Guarantees pursuant to Section 4.14.
"CONSOLIDATED ADJUSTED TANGIBLE ASSETS" of the Company as of any date means
the Consolidated Tangible Assets of the Company, the Issuer and the Restricted
Subsidiaries at the end of the fiscal quarter immediately preceding the date
less any assets securing any Non-Recourse Indebtedness, as determined in
accordance with GAAP.
"CONSOLIDATED CASH FLOW AVAILABLE FOR FIXED CHARGES" means, for any period,
Consolidated Net Income for such period plus (each to the extent deducted in
calculating such Consolidated Net Income and determined in accordance with GAAP)
the sum for such period, without duplication, of:
(a) income taxes,
(b) Consolidated Interest Expense,
(c) depreciation and amortization expenses and other non-cash charges
to earnings, and
(d) interest and financing fees and expenses which were previously
capitalized and which are amortized to cost of sales, MINUS
all other non-cash items (other than the receipt of notes receivable) increasing
such Consolidated Net Income.
"CONSOLIDATED FIXED CHARGE COVERAGE RATIO" means, with respect to any
determination date, the ratio of (x) Consolidated Cash Flow Available for Fixed
Charges for the prior four full fiscal quarters (the "FOUR QUARTER PERIOD") for
which financial results have been reported immediately preceding the
determination date (the "TRANSACTION DATE"), to (y) the aggregate Consolidated
Interest Incurred for the Four Quarter Period. For purposes of this definition,
"CONSOLIDATED CASH FLOW AVAILABLE FOR FIXED CHARGEs" and "CONSOLIDATED INTEREST
INCURRED" shall be calculated after giving effect on a PRO FORMA basis for the
period of such calculation to:
(a) the incurrence or the repayment, repurchase, defeasance or other
discharge or the assumption by another Person that is not an Affiliate
(collectively, "REPAYMENT") of any Indebtedness of the Company, the Issuer
or any Restricted Subsidiary (and the application of the proceeds thereof)
giving rise to the need to make such calculation, and any incurrence or
repayment of other Indebtedness (and the application of the proceeds
5
thereof), at any time on or after the first day of the Four Quarter Period
and on or prior to the Transaction Date, as if such incurrence or
repayment, as the case may be (and the application of the proceeds
thereof), occurred on the first day of the Four Quarter Period, except that
Indebtedness under revolving credit facilities shall be deemed to be the
average daily balance of such Indebtedness during the Four Quarter Period
(as reduced on such pro forma basis by the application of any proceeds of
the incurrence of Indebtedness giving rise to the need to make such
calculation);
(b) any Asset Disposition or Asset Acquisition (including, without
limitation, any Asset Acquisition giving rise to the need to make such
calculation as a result of the Company, the Issuer or any Restricted
Subsidiary (including any Person that becomes a Restricted Subsidiary as a
result of any such Asset Acquisition) incurring Acquired Indebtedness at
any time on or after the first day of the Four Quarter Period and on or
prior to the Transaction Date), as if such Asset Disposition or Asset
Acquisition (including the incurrence or repayment of any such
Indebtedness) and the inclusion, notwithstanding clause (b) of the
definition of "Consolidated Net Income," of any Consolidated Cash Flow
Available for Fixed Charges associated with such Asset Acquisition as if it
occurred on the first day of the Four Quarter Period; PROVIDED, HOWEVER,
that the Consolidated Cash Flow Available for Fixed Charges associated with
any Asset Acquisition shall not be included to the extent the net income so
associated would be excluded pursuant to the definition of "Consolidated
Net Income," other than clause (b) thereof, as if it applied to the Person
or assets involved before they were acquired; and
(c) the Consolidated Cash Flow Available for Fixed Charges and the
Consolidated Interest Incurred attributable to discontinued operations, as
determined in accordance with GAAP, shall be excluded.
Furthermore, in calculating "Consolidated Cash Flow Available for Fixed
Charges" for purposes of determining the denominator (but not the numerator) of
this "Consolidated Fixed Charge Coverage Ratio,"
(a) interest on Indebtedness in respect of which a PRO FORMA
calculation is required that is determined on a fluctuating basis as of the
Transaction Date (including Indebtedness actually incurred on the
Transaction Date) and which will continue to be so determined thereafter
shall be deemed to have accrued at a fixed rate per annum equal to the rate
of interest on such Indebtedness in effect on the Transaction Date, and
(b) notwithstanding clause (a) above, interest on such Indebtedness
determined on a fluctuating basis, to the extent such interest is covered
by agreements relating to Interest Protection Agreements, shall be deemed
to accrue at the rate per annum resulting after giving effect to the
operation of such agreements.
"CONSOLIDATED INTEREST EXPENSE" of the Company for any period means the
Interest Expense of the Company, the Issuer and the Restricted Subsidiaries for
such period, determined on a consolidated basis in accordance with GAAP.
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"CONSOLIDATED INTEREST INCURRED" for any period means the Interest Incurred
of the Company, the Issuer and the Restricted Subsidiaries for such period,
determined on a consolidated basis in accordance with GAAP.
"CONSOLIDATED NET INCOME" for any period means the aggregate net income (or
loss) of the Company and its Subsidiaries for such period, determined on a
consolidated basis in accordance with GAAP; PROVIDED that there will be excluded
from such net income (loss) (to the extent otherwise included therein), without
duplication:
(a) the net income (or loss) of (x) any Unrestricted Subsidiary
(other than a Mortgage Subsidiary) or (y) any Person (other than a
Restricted Subsidiary or a Mortgage Subsidiary) in which any Person other
than the Company, the Issuer or any Restricted Subsidiary has an ownership
interest, except, in each case, to the extent that any such income has
actually been received by the Company, the Issuer or any Restricted
Subsidiary in the form of cash dividends or similar cash distributions
during such period, which dividends or distributions are not in excess of
the Company's, the Issuer's or such Restricted Subsidiary's (as applicable)
pro rata share of such Unrestricted Subsidiary's or such other Person's net
income earned during such period,
(b) except to the extent includable in Consolidated Net Income
pursuant to the foregoing clause (a), the net income (or loss) of any
Person that accrued prior to the date that (i) such Person becomes a
Restricted Subsidiary or is merged with or into or consolidated with the
Company, the Issuer or any of its Restricted Subsidiaries (except, in the
case of an Unrestricted Subsidiary that is redesignated a Restricted
Subsidiary during such period, to the extent of its retained earnings from
the beginning of such period to the date of such redesignation) or (ii) the
assets of such Person are acquired by the Company or any Restricted
Subsidiary,
(c) the net income of any Restricted Subsidiary to the extent that
(but only so long as) the declaration or payment of dividends or similar
distributions by such Restricted Subsidiary of that income is not permitted
by operation of the terms of its charter or any agreement, instrument,
judgment, decree, order, statute, rule or governmental regulation
applicable to that Restricted Subsidiary during such period,
(d) the gains or losses, together with any related provision for
taxes, realized during such period by the Company, the Issuer or any
Restricted Subsidiary resulting from (i) the acquisition of securities, or
extinguishment of Indebtedness, of the Company or any Restricted Subsidiary
or (ii) any Asset Disposition by the Company or any Restricted Subsidiary,
(e) any extraordinary gain or loss together with any related
provision for taxes, realized by the Company, the Issuer or any Restricted
Subsidiary, and
(f) any non-recurring expense recorded by the Company, the Issuer or
any Restricted Subsidiary in connection with a merger accounted for as a
"pooling-of-interests" transaction;
PROVIDED FURTHER, that for purposes of calculating Consolidated Net Income
solely as it relates to clause (iii) of Section 4.07 hereof, clause (d)(ii)
above shall not be applicable.
7
"CONSOLIDATED NET WORTH" of any Person as of any date means the
stockholders' equity (including any Preferred Stock that is classified as equity
under GAAP, other than Disqualified Stock) of such Person and its Restricted
Subsidiaries on a consolidated basis at the end of the fiscal quarter
immediately preceding such date, as determined in accordance with GAAP, less any
amount attributable to Unrestricted Subsidiaries.
"CONSOLIDATED TANGIBLE ASSETS" of the Company as of any date means the
total amount of assets of the Company, the Issuer and the Restricted
Subsidiaries (less applicable reserves) on a consolidated basis at the end of
the fiscal quarter immediately preceding such date, as determined in accordance
with GAAP, less (a) Intangible Assets and (b) appropriate adjustments on account
of minority interests of other Persons holding equity investments in Restricted
Subsidiaries.
"CONTINUING DIRECTOR" means a director who either was a member of the Board
of Directors of the Company on the date of the Indenture or who became a
director of the Company subsequent to such date and whose election or nomination
for election by the Company's stockholders, was duly approved by a majority of
the Continuing Directors on the Board of Directors of the Company at the time of
such approval, either by a specific vote or by approval of the proxy statement
issued by the Company on behalf of the entire Board of Directors of the Company
in which such individual is named as nominee for director.
"CONTROL" when used with respect to any 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.
"CORPORATE TRUST OFFICE" means the office of the Trustee at which the
corporate trust business of the Trustee is principally administered, which at
the date of the Indenture is located at 00 Xxxxx Xxxxxx, Xxxxxxxxxx, XX 00000.
"CREDIT FACILITIES" means, collectively, each of the credit facilities and
lines of credit of the Company or one or more Restricted Subsidiaries in
existence on the Issue Date and one or more other facilities and lines of credit
among or between the Company or one or more Restricted Subsidiaries and one or
more lenders pursuant to which the Company or one or more Restricted
Subsidiaries may incur indebtedness for working capital and general corporate
purposes (including acquisitions), as any such facility or line of credit may be
amended, restated, supplemented or otherwise modified from time to time, and
includes any agreement extending the maturity of, increasing the amount of, or
restructuring, all or any portion of the Indebtedness under such facility or
line of credit or any successor facilities or lines of credit and includes any
facility or line of credit with one or more lenders refinancing or replacing all
or any portion of the Indebtedness under such facility or line of credit or any
successor facility or line of credit.
"CURRENCY AGREEMENT" of any Person means any foreign exchange contract,
currency swap agreement or other similar agreement or arrangement designed to
protect such Person or any of its Subsidiaries against fluctuations in currency
values.
"CUSTODIAN" means any receiver, trustee, assignee, liquidator or similar
official under any Bankruptcy Law.
8
"DEFAULT" means any event, act or condition that is, or after notice or the
passage of time or both would be, an Event of Default.
"DEPOSITARY" means the depositary of each Global Note, which will initially
be DTC.
"DESIGNATION AMOUNT" has the meaning provided in the definition of
Unrestricted Subsidiary.
"DISQUALIFIED STOCK" means any Capital Stock that, by its terms (or by the
terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, (a) matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable
at the option of the holder thereof, in whole or in part, on or prior to the
final maturity date of the Notes or (b) is convertible into or exchangeable or
exercisable for (whether at the option of the issuer or the holder thereof) (i)
debt securities or (ii) any Capital Stock referred to in (a) above, in each
case, at any time prior to the final maturity date of the Notes; PROVIDED,
HOWEVER, that any Capital Stock that would not constitute Disqualified Stock but
for provisions thereof giving holders thereof (or the holders of any security
into or for which such Capital Stock is convertible, exchangeable or
exercisable) the right to require the Company to repurchase or redeem such
Capital Stock upon the occurrence of a change in control occurring prior to the
final maturity date of the Notes shall not constitute Disqualified Stock if the
change in control provision applicable to such Capital Stock are no more
favorable to such holders than Section 4.12 hereof and such Capital Stock
specifically provides that the Company will not repurchase or redeem any such
Capital Stock pursuant to such provisions prior to the Company's repurchase of
the Notes as are required pursuant to Section 4.12 hereof.
"DTC" means The Depository Trust Company, a
New York corporation.
"DTC LEGEND" means the legend set forth in Exhibit D.
"EUROCLEAR" means Euroclear Bank S.A./N.V., and its successors or assigns,
as operator of the Euroclear System.
"EVENT OF DEFAULT" has the meaning assigned to such term in Section 5.01.
"EXCHANGE ACT" means the Securities Exchange Act of 1934.
"EXCHANGE NOTES" means the Notes of the Issuer issued pursuant to the
Indenture in exchange for, and in an aggregate principal amount equal to, the
Initial Notes or any Initial Additional Notes in compliance with the terms of a
Registration Rights Agreement and containing terms substantially identical to
the Initial Notes or any Initial Additional Notes (except that (i) such Exchange
Notes will be registered under the Securities Act and will not be subject to
transfer restrictions or bear the Restricted Legend, and (ii) the provisions
relating to Liquidated Damages will be eliminated).
"EXCHANGE OFFER" means an offer by the Issuer to the Holders of the Initial
Notes or any Initial Additional Notes to exchange outstanding Notes for Exchange
Notes, as provided for in a Registration Rights Agreement.
"EXCHANGE OFFER REGISTRATION STATEMENT" means the Exchange Offer
Registration Statement as defined in a Registration Rights Agreement.
9
"FAIR MARKET VALUE" means, with respect to any asset, the price (after
taking into account any liabilities relating to such assets) that would be
negotiated in an arm's-length transaction for cash between a willing seller and
a willing and able buyer, neither of which is under any compulsion to complete
the transaction, as such price is determined in good faith by the Board of
Directors of the Company or a duly authorized committee thereof, as evidenced by
a resolution of such Board or committee.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession of the United States, as in effect on May 4, 1999.
"GLOBAL NOTE" means a Note in registered global form without interest
coupons.
"GLOBAL NOTE LEGEND" means the legend set forth in Exhibit I.
"GUARANTEE" means the guarantee of the Notes by each Guarantor under the
Indenture.
"GUARANTEE INITIAL PERIOD" has the meaning set forth in Section 11.02.
"GUARANTEE PAYMENT BLOCKAGE PERIOD" has the meaning set forth in Section
11.02.
"GUARANTORS" means (a) initially, the Company and each of the Company's
Restricted Subsidiaries in existence on the Issue Date, except the Issuer, KHL,
Inc. and X. Xxxxxxxxx Poland, sp. z.o.o. and (b) each of the Company's
Subsidiaries that executes a
supplemental indenture in the form of Exhibit B to
the Indenture providing for the guaranty of the payment of the Notes, or any
successor obligor under its Note Guaranty pursuant to Section 4.14., in each
case unless an until such Guarantor is released from its Note Guaranty pursuant
to the Indenture.
"HOLDER" means the Person in whose name a Note is registered in the books
of the Registrar for the Notes.
"INDEBTEDNESS" of any Person means, without duplication,
(a) any liability of such Person (i) for borrowed money or under any
reimbursement obligation relating to a letter of credit or other similar
instruments (other than standby letters of credit or similar instrument
issued for the benefit of or surety, performance, completion or payment
xxxxx, xxxxxxx money notes or similar purpose undertakings or
indemnifications issued by, such Person in the ordinary course of
business), (ii) evidenced by a bond, note, debenture or similar instrument
(including a purchase money obligation) given in connection with the
acquisition of any businesses, properties or assets of any kind or with
services incurred in connection with capital expenditures (other than any
obligation to pay a contingent purchase price which, as of the date of
incurrence thereof is not required to be recorded as a liability in
accordance with GAAP), or (iii) in respect of Capitalized Lease Obligations
(to the extent of the Attributable Debt in respect thereof),
(b) any Indebtedness of others that such Person has guaranteed to the
extent of the guarantee, PROVIDED HOWEVER, that Indebtedness of the Company
and its Restricted
10
Subsidiaries will not include the obligations of the Company or a
Restricted Subsidiary under warehouse lines of credit of Mortgage
Subsidiaries to repurchase mortgages at prices no greater than 98% of the
principal amount thereof, and upon any such purchase the excess, if any, of
the purchase price thereof over the Fair Market Value of the mortgages
acquired, will constitute Restricted Payments subject to Section 4.07
hereof,
(c) to the extent not otherwise included, the obligations of such
Person under Currency Agreements or Interest Protection Agreements to the
extent recorded as liabilities not constituting Interest Incurred, net of
amounts recorded as assets in respect of such agreements, in accordance
with GAAP, and
(d) all Indebtedness of others secured by a Lien on any asset of such
Person, whether or not such Indebtedness is assumed by such Person;
PROVIDED, that Indebtedness shall not include accounts payable, liabilities to
trade creditors of such Person or other accrued expenses arising in the ordinary
course of business. The amount of Indebtedness of any Person at any date shall
be (i) the outstanding balance at such date of all unconditional obligations as
described above, net of any unamortized discount to be accounted for as Interest
Expense, in accordance with GAAP, (ii) the maximum liability of such Person for
any contingent obligations under clause (a) above at such date, net of an
unamortized discount to be accounted for as Interest Expense in accordance with
GAAP, and (iii) in the case of clause (d) above, the lesser of (x) the fair
market value of any asset subject to a Lien securing the Indebtedness of others
on the date that the Lien attaches and (y) the amount of the Indebtedness
secured.
"INDENTURE" means this indenture, as amended or supplemented from time to
time.
"INITIAL ADDITIONAL NOTES" means Additional Notes issued in an offering not
registered under the Securities Act and any Notes issued in replacement thereof,
but not including any Exchange Notes issued in exchange therefor.
"INITIAL NOTES" means the Notes issued on the Issue Date and any Notes
issued in replacement thereof, but not including any Exchange Notes issued in
exchange therefor.
"INITIAL PERIOD" has the meaning set forth in Section 10.02.
"INITIAL PURCHASERS" means the initial purchasers party to a purchase
agreement with the Issuer relating to the sale of the Initial Notes by the
Issuer.
"INSTITUTIONAL ACCREDITED INVESTOR CERTIFICATE" means a certificate
substantially in the form of Exhibit G hereto.
"INTANGIBLE ASSETS" of the Company means all unamortized debt discount and
expense, unamortized deferred charges, goodwill, patents, trademarks, service
marks, trade names, copyrights, write-ups of assets over their prior carrying
value (other than write-ups which occurred prior to the Issue Date and other
than, in connection with the acquisition of an asset, the write-up of the value
of such asset (within one year of its acquisition) to its fair market value in
accordance with GAAP) and all other items which would be treated as intangible
on the
11
consolidated balance sheet of the Company, the Issuer and the Restricted
Subsidiaries prepared in accordance with GAAP.
"INTEREST EXPENSE" of any Person for any period means, without duplication,
the aggregate amount of (a) interest which, in conformity with GAAP, would be
set opposite the caption "interest expense" or any like caption on an income
statement for such Person (including, without limitation, imputed interest
included in Capitalized Lease Obligations, all commissions, discounts and other
fees and charges owed with respect to letters of credit and bankers' acceptance
financing, the net costs (but reduced by net gains) associated with Currency
Agreements and Interest Protection Agreements, amortization of other financing
fees and expenses, the interest portion of any deferred payment obligation,
amortization of discount or premium, if any, and all other noncash interest
expense (other than interest and other charges amortized to cost of sales), and
(b) all interest actually paid by the Company or a Restricted Subsidiary under
any guarantee of Indebtedness (including, without limitation, a guarantee of
principal, interest or any combination thereof) of any Person other than the
Company, the Issuer or any Restricted Subsidiary during such period; PROVIDED
that Interest Expense shall exclude any expense associated with the complete
writeoff of financing fees and expenses in connection with the repayment of any
Indebtedness.
"INTEREST INCURRED" of any Person for any period means, without
duplication, the aggregate amount of (a) Interest Expense and (b) all
capitalized interest and amortized debt issuance costs.
"INTEREST PAYMENT DATE" means each April 1 and October 1 of each year,
commencing October 1, 2002.
"INTEREST PROTECTION AGREEMENT" of any Person means any interest rate swap
agreement, interest rate collar agreement, option or futures contract or other
similar agreement or arrangement designed to protect such Person or any of its
Subsidiaries against fluctuations in interest rates with respect to Debt
permitted to be incurred under the Indenture.
"INVESTMENTS" of any Person means (a) all investments by such Person in any
other Person in the form of loans, advances or capital contributions, (b) all
guarantees of Indebtedness or other obligations of any other Person by such
Person, (c) all purchases (or other acquisitions for consideration) by such
Person of Indebtedness, Capital Stock or other securities of any other Person
and (d) all other items that would be classified as investments in any other
Person (including, without limitation, purchases of assets outside the ordinary
course of business) on a balance sheet of such Person prepared in accordance
with GAAP.
"ISSUE DATE" means the date on which the Initial Notes are originally
issued under the Indenture.
"LIEN" means, with respect to any Property, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such
Property. For purposes of this definition, a Person shall be deemed to own,
subject to a Lien, any Property which it has acquired or holds subject to the
interest of a vendor or lessor under any conditional sale agreement, capital
lease or other title retention agreement relating to such Property.
12
"LIQUIDATED DAMAGES" means liquidated damages owed to the Holders pursuant
to a Registration Rights Agreement.
"MARKETABLE SECURITIES" means (a) equity securities that are listed on
the
New York Stock Exchange, the American Stock Exchange or The Nasdaq National
Market and (b) debt securities that are rated by a nationally recognized rating
agency, listed on the
New York Stock Exchange or the American Stock Exchange or
covered by at least two reputable market makers.
"MOODY'S" means Xxxxx'x Investors Service, Inc. or any successor to its
debt rating business.
"MORTGAGE SUBSIDIARY" means any Subsidiary of the Company substantially all
of whose operations consist of the mortgage lending business.
"NET CASH PROCEEDS" means with respect to an Asset Disposition, cash
payments received (including any cash payments received by way of deferred
payment of principal pursuant to a note or installment receivable or otherwise
(including any cash received upon sale or disposition of such note or
receivable), but only as and when received), excluding any other consideration
received in the form of assumption by the acquiring Person of Indebtedness or
other obligations relating to the Property disposed of in such Asset Disposition
or received in any other noncash form unless and until such non-cash
consideration is converted into cash therefrom, in each case, net of all legal,
title and recording tax expenses, commissions and other fees and expenses
incurred, and all federal, state and local taxes required to be accrued as a
liability under GAAP as a consequence of such Asset Disposition, and in each
case net of a reasonable reserve for the after-tax cost of any indemnification
or other payments (fixed and contingent) attributable to the seller's
indemnities or other obligations to the purchaser undertaken by the Company, the
Issuer or any of its Restricted Subsidiaries in connection with such Asset
Disposition, and net of all payments made on any Indebtedness which is secured
by or relates to such Property, in accordance with the terms of any Lien or
agreement upon or with respect to such Property or which must by its terms or by
applicable law be repaid out of the proceeds from such Asset Disposition, and
net of all contractually required distributions and payments made to minority
interest holders in Restricted Subsidiaries or joint ventures as a result of
such Asset Disposition.
"NON-PAYMENT DEFAULT" means any event (other than a Payment Default), the
occurrence of which entitles one or more Persons to accelerate the maturity of
any Senior Debt of the Issuer or any Senior Debt of a Guarantor.
"NON-RECOURSE INDEBTEDNESS" with respect to any Person means Indebtedness
of such Person for which (a) the sole legal recourse for collection of principal
and interest on such Indebtedness is against the specific property identified in
the instruments evidencing or securing such Indebtedness and such property was
acquired with the proceeds of such Indebtedness or such Indebtedness was
incurred within 90 days after the acquisition of such property and (b) no other
assets of such Person may be realized upon in collection of principal or
interest on such Indebtedness. Indebtedness which is otherwise Non-Recourse
Indebtedness will not lose its character as Non-Recourse Indebtedness because
there is recourse to the borrower, any guarantor or any other Person for (i)
environmental warranties and indemnities, or (ii) indemnities for and
liabilities arising from fraud, misrepresentation, misapplication or non-payment
of rents, profits,
13
insurance and condemnation proceeds and other sums actually received by the
borrower from secured assets to be paid to the lender, including waste and
mechanics' liens.
"NON-U.S. PERSON" means a Person that is not a U.S. person, as defined in
Regulation S.
"NOTES" has the meaning assigned to such term in the Recitals.
"OFFER TO PURCHASE" has the meaning assigned to such term in Section 3.03.
"OFFICER" means the chairman of the Board of Directors, the president or
chief executive officer, any vice president, the chief financial officer, the
treasurer or any assistant treasurer, or the secretary or any assistant
secretary, of the Company.
"OFFICERS' CERTIFICATE" means a certificate signed in the name of the
Company (i) by the chairman of the Board of Directors, the president or chief
executive officer or a vice president and (ii) by the chief financial officer,
the treasurer or any assistant treasurer or the secretary or any assistant
secretary.
"OPINION OF COUNSEL" means a written opinion signed by legal counsel, who
may be an employee of or counsel to the Issuer, satisfactory to the Trustee.
"ORIGINAL NOTES" means the Initial Notes and any Exchange Notes issued in
exchange therefor.
"PAYING AGENT" refers to a Person engaged to perform the obligations of the
Trustee in respect of payments made or funds held hereunder in respect of the
Notes.
"PAYMENT BLOCKAGE PERIOD" has the meaning set forth in Section 10.02.
"PAYMENT DEFAULT" means any default in the payment of principal of or
interest on any Senior Debt of the Issuer or any Senior Debt of a Guarantor
beyond any applicable grace period with respect thereto.
"PERMANENT REGULATION S GLOBAL NOTE" means a Regulation S Global Note that
does not bear the Regulation S Temporary Global Note Legend.
"PERMITTED HOVNANIAN HOLDERS" means, collectively, Xxxxxx X. Xxxxxxxxx, Xxx
X. Xxxxxxxxx, the members of their immediate families, the respective estates,
spouses, heirs, ancestors, lineal descendants, legatees and legal
representatives of any of the foregoing and the trustee of any BONA FIDE trust
of which one or more of the foregoing are the sole beneficiaries or the grantors
thereof, or any entity of which any of the foregoing, individually or
collectively, beneficially own more than 50% of the Common Equity.
"PERMITTED INDEBTEDNESS" means
(a) Indebtedness under Credit Facilities which does not exceed $440
million principal amount outstanding at any one time;
(b) Indebtedness in respect of obligations of the Company and its
Subsidiaries to the trustees under indentures for debt securities;
14
(c) intercompany debt obligations of (i) the Company to the Issuer,
(ii) the Issuer to the Company, (iii) the Company or the Issuer to any
Restricted Subsidiary and (iv) any Restricted Subsidiary to the Company or
the Issuer or any other Restricted Subsidiary; PROVIDED HOWEVER, that any
Indebtedness of any Restricted Subsidiary or the Issuer or the Company owed
to any Restricted Subsidiary or the Issuer that ceases to be a Restricted
Subsidiary shall be deemed to be incurred and shall be treated as an
incurrence for purposes of Section 4.06(a) hereof at the time the
Restricted Subsidiary in question ceases to be a Restricted Subsidiary;
(d) Indebtedness of the Company or the Issuer or any Restricted
Subsidiary under any Currency Agreements or Interest Protection Agreements
in a notional amount no greater than the payments due (at the time the
related Currency Agreement or Interest Protection Agreement is entered
into) with respect to the Indebtedness or currency being hedged;
(e) Purchase Money Indebtedness;
(f) Capitalized Lease Obligations;
(g) obligations for, pledge of assets in respect of, and guaranties
of, bond financings of political subdivisions or enterprises thereof in the
ordinary course of business;
(h) Indebtedness secured only by office buildings owned or occupied
by the Company or any Restricted Subsidiary, which Indebtedness does not
exceed $10 million aggregate principal amount outstanding at any one time;
(i) Indebtedness under warehouse lines of credit, repurchase
agreements and Indebtedness, secured by mortgage loans and related assets
of mortgage lending Subsidiaries in the ordinary course of a mortgage
lending business; and
(j) Indebtedness of the Company or any Restricted Subsidiary which,
together with all other Indebtedness under this clause (j), does not exceed
$30 million aggregate principal amount outstanding at any one time.
"PERMITTED INVESTMENT" means
(a) Cash Equivalents;
(b) any Investment in the Company, the Issuer or any Restricted
Subsidiary or any Person that becomes a Restricted Subsidiary as a result
of such Investment or that is consolidated or merged with or into, or
transfers all or substantially all of the assets of it or an operating unit
or line of business to, the Company or a Restricted Subsidiary;
(c) any receivables, loans or other consideration taken by the
Company, the Issuer or any Restricted Subsidiary in connection with any
asset sale otherwise permitted by the Indenture;
(d) Investments received in connection with any bankruptcy or
reorganization proceeding, or as a result of foreclosure, perfection or
enforcement of any Lien or any
15
judgment or settlement of any Person in exchange for or satisfaction of
Indebtedness or other obligations or other property received from such
Person, or for other liabilities or obligations of such Person created, in
accordance with the terms of the Indenture;
(e) Investments in Currency Agreements or Interest Protection
Agreements described in the definition of Permitted Indebtedness;
(f) any loan or advance to an executive officer, director or employee
of the Company or any Restricted Subsidiary made in the ordinary course of
business or in accordance with past practice; PROVIDED, HOWEVER, that any
such loan or advance exceeding $1 million shall have been approved by the
Board of Directors of the Company or a committee thereof consisting of
disinterested members;
(g) Investments in joint ventures in a Real Estate Business with
unaffiliated third parties in an aggregate amount at any time outstanding
not to exceed 10% of Consolidated Tangible Assets at such time;
(h) Investments in interests in issuances of collateralized mortgage
obligations, mortgages, mortgage loan servicing, or other mortgage related
assets;
(i) obligations of the Company or a Restricted Subsidiary under
warehouse lines of credit of Mortgage Subsidiaries to repurchase mortgages;
and
(j) Investments in an aggregate amount outstanding not to exceed $10
million.
"PERMITTED LIENS" means
(a) Liens for taxes, assessments or governmental or quasi-government
charges or claims that (i) are not yet delinquent, (ii) are being contested
in good faith by appropriate proceedings and as to which appropriate
reserves have been established or other provisions have been made in
accordance with GAAP, if required, or (iii) encumber solely property
abandoned or in the process of being abandoned,
(b) statutory Liens of landlords and carriers', warehousemen's,
mechanics', suppliers', materialmen's, repairmen's or other Liens imposed
by law and arising in the ordinary course of business and with respect to
amounts that, to the extent applicable, either (i) are not yet delinquent
or (ii) are being contested in good faith by appropriate proceedings and as
to which appropriate reserves have been established or other provisions
have been made in accordance with GAAP, if required,
(c) Liens (other than any Lien imposed by the Employer Retirement
Income Security Act of 1974, as amended) incurred or deposits made in the
ordinary course of business in connection with workers' compensation.
unemployment insurance and other types of social security,
(d) Liens incurred or deposits made to secure the performance of
tenders, bids, leases, statutory obligations, surety and appeal bonds,
development obligations, progress payments, government contacts, utility
services, developer's or other obligations to make on-site or off-site
improvements and other obligations of like nature (exclusive
16
of obligations for the payment of borrowed money but including the items
referred to in the parenthetical in clause (a)(i) of the definition of
"Indebtedness"), in each case incurred in the ordinary course of business
of the Company, the Issuer and the Restricted Subsidiaries,
(e) attachment or judgment Liens not giving rise to a Default or an
Event of Default,
(f) easements, dedications, assessment district or similar Liens in
connection with municipal or special district financing, rights-of-way,
restrictions, reservations and other similar charges, burdens, and other
similar charges or encumbrances not materially interfering with the
ordinary course of business of the Company, the Issuer and the Restricted
Subsidiaries,
(g) zoning restrictions, licenses, restrictions on the use of real
property or minor irregularities in title thereto, which do not materially
impair the use of such real property in the ordinary course of business of
the Company, the Issuer and the Restricted Subsidiaries,
(h) Liens securing Indebtedness incurred pursuant to clause (h) or
(i) of the definition of Permitted Indebtedness,
(i) Liens securing Indebtedness of the Company, the Issuer or any
Restricted Subsidiary permitted to be incurred under the Indenture;
PROVIDED that the aggregate amount of all consolidated Indebtedness of the
Company, the Issuer and the Restricted Subsidiaries (including, with
respect to Capitalized Lease Obligations, the Attributable Debt in respect
thereof) secured by Liens (other than Non-Recourse Indebtedness and
Indebtedness incurred pursuant to clause (i) of the definition of Permitted
Indebtedness) shall not exceed 40% of Consolidated Adjusted Tangible Assets
at any one time outstanding (after giving effect to the incurrence of such
Indebtedness and the use of the proceeds thereof),
(j) Liens securing Non-Recourse Indebtedness of the Company, the
Issuer or any Restricted Subsidiary; PROVIDED, that such Liens apply only
to the property financed out of the net proceeds of such Non-Recourse
Indebtedness within 90 days after the incurrence of such Non-Recourse
Indebtedness,
(k) Liens securing Purchase Money Indebtedness; PROVIDED that such
Liens apply only to the property acquired, constructed or improved with the
proceeds of such Purchase Money Indebtedness within 90 days after the
incurrence of such Purchase Money Indebtedness,
(l) Liens on property or assets of the Company, the Issuer or any
Restricted Subsidiary securing Indebtedness of the Company, the Issuer or
any Restricted Subsidiary owing to the Company, the Issuer or one or more
Restricted Subsidiaries,
(m) leases or subleases granted to others not materially interfering
with the ordinary course of business of the Company and the Restricted
Subsidiaries,
17
(n) purchase money security interests (including, without limitation,
Capitalized Lease Obligations); PROVIDED that such Liens apply only to the
Property acquired and the related Indebtedness is incurred within 90 days
after the acquisition of such Property,
(o) any right of first refusal, right of first offer, option,
contract or other agreement to sell an asset; PROVIDED that such sale is
not otherwise prohibited under the Indenture,
(p) any right of a lender or lenders to which the Company, the Issuer
or a Restricted Subsidiary may be indebted to offset against, or
appropriate and apply to the payment of such, Indebtedness any and all
balances, credits, deposits, accounts or money of the Company, the Issuer
or a Restricted Subsidiary with or held by such lender or lenders or its
Affiliates,
(q) any pledge or deposit of cash or property in conjunction with
obtaining surety, performance, completion or payment bonds and letters of
credit or other similar instruments or providing xxxxxxx money obligations,
escrows or similar purpose undertakings or indemnifications in the ordinary
course of business of the Company, the Issuer and the Restricted
Subsidiaries,
(r) Liens for homeowner and property owner association developments
and assessments,
(s) Liens securing Refinancing Indebtedness; PROVIDED, that such
Liens extend only to the assets securing the Indebtedness being refinanced,
(t) Liens incurred in the ordinary course of business as security for
the obligations of the Company, the Issuer and the Restricted Subsidiaries
with respect to indemnification in respect of title insurance providers,
(u) Liens on property of a Person existing at the time such Person is
merged with or into or consolidated with the Company or any Subsidiary of
the Company or becomes a Subsidiary of the Company; PROVIDED that such
Liens were in existence prior to the contemplation of such merger or
consolidation or acquisition and do not extend to any assets other than
those of the Person merged into or consolidated with the Company or the
Subsidiary or acquired by the Company or its Subsidiaries,
(v) Liens on property existing at the time of acquisition thereof by
the Company or any Subsidiary of the Company, PROVIDED that such Liens were
in existence prior to the contemplation of such acquisition,
(w) Liens existing on the Issue Date and any extensions, renewals or
replacements thereof, and
(x) Liens on specific items of inventory or other goods and proceeds
of any Person securing such Person's obligations in respect of bankers'
acceptances issued or created for the account of such Person to facilitate
the purchase, shipment or storage of such inventory or other goods.
18
"PERSON" means any individual, corporation, partnership, limited liability
company, joint venture, incorporated or unincorporated association, joint stock
company, trust, unincorporated organization or government or any agency or
political subdivision thereof.
"PREFERRED STOCK" of any Person means all Capital Stock of such Person
which has a preference in liquidation or with respect to the payment of
dividends.
"PROPERTY" of any Person means all types of real, personal, tangible,
intangible or mixed property owned by such Person, whether or not included in
the most recent consolidated balance sheet of such Person and its Subsidiaries
under GAAP.
"PURCHASE MONEY INDEBTEDNESS" means Indebtedness of the Company, the Issuer
or any Restricted Subsidiary incurred for the purpose of financing all or any
part of the purchase price, or the cost of construction or improvement, of any
property to be used in the ordinary course of business by the Company, the
Issuer and the Restricted Subsidiaries; PROVIDED, HOWEVER, that (a) the
aggregate principal amount of such Indebtedness shall not exceed such purchase
price or cost and (b) such Indebtedness shall be incurred no later than 90 days
after the acquisition of such property or completion of such construction or
improvement.
"QUALIFIED STOCK" means Capital Stock of the Company other than
Disqualified Stock.
"REAL ESTATE BUSINESS" means homebuilding, housing construction, real
estate development or construction and related real estate activities, including
the provision of mortgage financing or title insurance.
"REFINANCING INDEBTEDNESS" means Indebtedness (to the extent not Permitted
Indebtedness) that refunds, refinances or extends any Indebtedness of the
Company, the Issuer or any Restricted Subsidiary (to the extent not Permitted
Indebtedness) outstanding on the Issue Date or other Indebtedness (to the extent
not Permitted Indebtedness) permitted to be incurred by the Company, the Issuer
or any Restricted Subsidiary pursuant to the terms of the Indenture, but only to
the extent that
(a) the Refinancing Indebtedness is subordinated, if at all, to the
Notes or the Guarantee, as the case may be, to the same extent as the
Indebtedness being refunded, refinanced or extended,
(b) the Refinancing Indebtedness is scheduled to mature either (i) no
earlier than the Indebtedness being refunded, refinanced or extended or
(ii) after the maturity date of the Notes,
(c) the portion, if any, of the Refinancing Indebtedness that is
scheduled to mature on or prior to the maturity date of the Notes has a
Weighted Average Life to Maturity at the time such Refinancing Indebtedness
is incurred that is equal to or greater than the Weighted Average Life to
Maturity of the portion of the Indebtedness being refunded, refinanced or
extended that is scheduled to mature on or prior to the maturity date of
the Notes, and
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(d) such Refinancing Indebtedness is in an aggregate principal amount
that is equal to or less than the aggregate principal amount then
outstanding under the Indebtedness being refunded, refinanced or extended.
"REGISTER" has the meaning assigned to such term in Section 2.09.
"REGISTRAR" means a Person engaged to maintain the Register.
"REGISTRATION RIGHTS AGREEMENT" means (i) the Registration Rights Agreement
dated the Issue Date between the Company and the Initial Purchasers party
thereto with respect to the Initial Notes, and (ii) with respect to any
Additional Notes, any registration rights agreements between the Company and the
Initial Purchasers party thereto relating to rights given by the Company to the
purchasers of Additional Notes to register such Additional Notes or exchange
them for Notes registered under the Securities Act.
"REGULAR RECORD DATE" for the interest payable on any Interest Payment Date
means the March 15 or September 15 (whether or not a Business Day) next
preceding such Interest Payment Date.
"REGULATION S" means Regulation S under the Securities Act.
"REGULATION S CERTIFICATE" means a certificate substantially in the form of
Exhibit E hereto.
"REGULATION S GLOBAL NOTE" means a Global Note representing Notes issued
and sold pursuant to Regulation S.
"REGULATION S TEMPORARY GLOBAL NOTE" means a Regulation S Global Note that
bears the Regulation S Temporary Global Note Legend.
"REGULATION S TEMPORARY GLOBAL NOTE LEGEND" means the legend set forth in
Exhibit I.
"RESTRICTED LEGEND" means the legend set forth in Exhibit C.
"RESTRICTED PAYMENT" means any of the following:
(a) the declaration or payment of any dividend or any other
distribution on Capital Stock of the Company, the Issuer or any Restricted
Subsidiary or any payment made to the direct or indirect holders (in their
capacities as such) of Capital Stock of the Company, the Issuer or any
Restricted Subsidiary (other than (i) dividends or distributions payable
solely in Qualified Stock and (ii) in the case of the Issuer or Restricted
Subsidiaries, dividends or distributions payable to the Company, the Issuer
or a Restricted Subsidiary);
(b) the purchase, redemption or other acquisition or retirement for
value of any Capital Stock of the Company, the Issuer or any Restricted
Subsidiary (other than a payment made to the Company, the Issuer or any
Restricted Subsidiary); and
20
(c) any Investment (other than any Permitted Investment), including
any Investment in an Unrestricted Subsidiary (including by the designation
of a Subsidiary of the Company as an Unrestricted Subsidiary) and any
amounts paid in accordance with clause (b) of the definition of
Indebtedness.
"RESTRICTED PERIOD" means the relevant 40-day distribution compliance
period as defined in Regulation S, which, for each relevant Note, commences on
the date such Note is Issued.
"RESTRICTED SUBSIDIARY" means any Subsidiary of the Company which is not an
Unrestricted Subsidiary.
"RULE 144A" means Rule 144A under the Securities Act.
"RULE 144A CERTIFICATE" means (i) a certificate substantially in the form
of Exhibit F hereto or (ii) a written certification addressed to the Issuer and
the Trustee to the effect that the Person making such certification (x) is
acquiring such Note (or beneficial interest) for its own account or one or more
accounts with respect to which it exercises sole investment discretion and that
it and each such account is a qualified institutional buyer within the meaning
of Rule 144A, (y) is aware that the transfer to it or exchange, as applicable,
is being made in reliance upon the exemption from the provisions of Section 5 of
the Securities Act provided by Rule 144A, and (z) acknowledges that it has
received such information regarding the Issuer as it has requested pursuant to
Rule 144A(d)(4) or has determined not to request such information.
"RULE 144A GLOBAL NOTE" means a Global Note that bears the Restricted
Legend representing Notes issued and sold pursuant to Rule 144A.
"S&P" means Standard & Poor's Ratings Group, a division of McGraw Hill,
Inc. and its successors.
"SECURITIES ACT" means the Securities Act of 1933.
"SENIOR DEBT OF A GUARANTOR" has the meaning set forth in Section 10.01.
"SENIOR DEBT OF THE ISSUER" has the meaning set forth in Section 10.01.
"SHELF REGISTRATION STATEMENT" means the Shelf Registration Statement as
defined in a Registration Rights Agreement.
"SIGNIFICANT SUBSIDIARY" means any Subsidiary of the Company that would
constitute a "significant subsidiary" as defined in Article 1, Rule 1-02 (w)(1)
or (2) of Regulation S-X promulgated under the Securities Act, as such
regulation is in effect on the date of the Indenture.
"SUBSIDIARY" of any Person means any corporation or other entity of which a
majority of the Capital Stock having ordinary voting power to elect a majority
of the Board of Directors or other persons performing similar functions is at
the time directly or indirectly owned or controlled by such Person.
"TRUSTEE" means the party named as such in the first paragraph of the
Indenture or any successor trustee under the Indenture pursuant to Article 7.
21
"TRUST INDENTURE ACT" means the Trust Indenture Act of 1939.
"U.S. GOVERNMENT OBLIGATIONS" means obligations issued or directly and
fully guaranteed or insured by the United States of America or by any agent or
instrumentality thereof, provided that the full faith and credit of the United
States of America is pledged in support thereof.
"UNRESTRICTED SUBSIDIARY" means any Subsidiary of the Company so designated
by a resolution adopted by the Board of Directors of the Company or a duly
authorized committee thereof as provided below; PROVIDED that (a) the holders of
Indebtedness thereof do not have direct or indirect recourse against the
Company, the Issuer or any Restricted Subsidiary, and neither the Company, the
Issuer nor any Restricted Subsidiary otherwise has liability for, any payment
obligations in respect of such Indebtedness (including any undertaking,
agreement or instrument evidencing such Indebtedness), except, in each case, to
the extent that the amount thereof constitutes a Restricted Payment permitted by
the Indenture, in the case of Non-Recourse Indebtedness, to the extent such
recourse or liability is for the matters discussed in the last sentence of the
definition of "Non-Recourse Indebtedness," or to the extent such Indebtedness is
a guarantee by such Subsidiary of Indebtedness of the Company, the Issuer or a
Restricted Subsidiary and (b) no holder of any Indebtedness of such Subsidiary
shall have a right to declare a default on such Indebtedness or cause the
payment thereof to be accelerated or payable prior to its stated maturity as a
result of a default on any Indebtedness of the Company, the Issuer or any
Restricted Subsidiary. As of the Issue Date, the Unrestricted Subsidiaries will
be the following:
Eastern National Title Insurance Agency, Inc., Eastern Title Agency, Inc.,
Founders Title Agency, Inc., Governor's Abstract Co., Inc. Xxxxxx Fair Land
Title Company I, Inc., Homebuyer's Mortgage, Inc., Hovnanian Financial Services
I, Inc., Hovnanian Financial Services II, Inc., Hovnanian Financial Services
III, Inc., Hovnanian Financial Services IV. Inc., X. Xxxxxxxxx Investment
Properties, Inc., X. Xxxxxxxxx Mortgage, Inc., Xxxxxxx Xxxxxx Homes, Inc.,
Heritage Pines, L.L.C., Kings Crossing at Xxxxxxxxxx, L.L.C., Xxxx Creek,
L.L.C., XxXxxxxx Court, L.L.C., Monticello Xxxxx, L.L.C., New Homebuyers Title
Co. (Virginia) L.L.C., New Homebuyers Title Company, L.L.C., Shadow Creek,
L.L.C., Section 13 of the Hills, L.L.C., Title Group II, L.L.C., Town Homes at
Xxxxxxxxxx, L.L.C., Westwood Hills, L.L.C., WH/PR Land Co., L.L.C., Athena
Portfolio Investors, L.P., Beacon Manor Associates, L.P., Galleria Mortgage,
L.P., Xxxxxxx Mortgage Investors, L.P., Parkway Development, Sovereign Group,
L.P., and X. Xxxxxxxxx Venture I, L.L.C.
Subject to the foregoing, the Board of Directors of the Company or a duly
authorized committee thereof may designate any Subsidiary in addition to those
named above to be an Unrestricted Subsidiary; PROVIDED HOWEVER, that (a) the net
amount (the "DESIGNATION AMOUNT") then outstanding of all previous Investments
by the Company and the Restricted Subsidiaries in such Subsidiary will be deemed
to be a Restricted Payment at the time of such designation and will reduce the
amount available for Restricted Payments under Section 4.07 hereof to the extent
provided therein, (b) the Company must be permitted under Section 4.07 hereof to
make the Restricted Payment deemed to have been made pursuant to clause (a), and
(c) after giving effect to such designation, no Default or Event of Default
shall have occurred or be continuing. In accordance with the foregoing, and not
in limitation thereof, Investments made by any Person in any Subsidiary of such
Person prior to such Person's merger with the Company or any Restricted
Subsidiary (but not in contemplation or anticipation of such merger) shall not
be counted as an
22
Investment by the Company or such Restricted Subsidiary if such Subsidiary of
such Person is designated as an Unrestricted Subsidiary.
The Board of Directors of the Company or a duly authorized committee
thereof may also redesignate an Unrestricted Subsidiary to be a Restricted
Subsidiary PROVIDED, HOWEVER, that (a) the Indebtedness of such Unrestricted
Subsidiary as of the date of such redesignation could then be incurred under
Section 4.06 hereof and (b) immediately after giving effect to such
redesignation and the incurrence of any such additional Indebtedness, the
Company and the Restricted Subsidiaries could incur $1.00 of additional
Indebtedness under Section 4.06(a) hereof. Any such designation or redesignation
by the Board of Directors of the Company or a committee thereof will be
evidenced to the Trustee by the filing with the Trustee of a certified copy of
the resolution of the Board of Directors of the Company or a committee thereof
giving effect to such designation or redesignation and an Officers' Certificate
certifying that such designation or redesignation complied with the foregoing
conditions and setting forth the underlying calculations of such Officers'
Certificate. The designation of any Person as an Unrestricted Subsidiary shall
be deemed to include a designation of all Subsidiaries of such Person as
Unrestricted Subsidiaries; PROVIDED, HOWEVER, that the ownership of the general
partnership interest (or a similar member's interest in a limited liability
company) by an Unrestricted Subsidiary shall not cause a Subsidiary of the
Company of which more than 95% of the equity interest is held by the Company or
one or more Restricted Subsidiaries to be deemed an Unrestricted Subsidiary.
"WEIGHTED AVERAGE LIFE TO MATURITY" means, when applied to any Indebtedness
or portion thereof at any date, the number of years obtained by dividing (a) the
sum of the products obtained by multiplying (i) the amount of each then
remaining installment, sinking fund, serial maturity or other required payment
of principal, including, without limitation, payment at final maturity, in
respect thereof, by (ii) the number of years (calculated to the nearest
one-twelfth) that will elapse between such date and the making of such payment
by (b) the sum of all such payments described in clause (a)(i) above.
SECTION 1.02. RULES OF CONSTRUCTION. Unless the context otherwise requires
or except as otherwise expressly provided,
(a) an accounting term not otherwise defined has the meaning assigned to
it in accordance with GAAP;
(b) "herein," "hereof" and other words of similar import refer to the
Indenture as a whole and not to any particular Section, Article or other
subdivision;
(c) all references to Sections or Articles or Exhibits refer to Sections
or Articles or Exhibits of or to the Indenture unless otherwise indicated;
(d) references to agreements or instruments, or to statutes or
regulations, are to such agreements or instruments, or statutes or regulations,
as amended from time to time (or to successor statutes and regulations); and
(e) in the event that a transaction meets the criteria of more than one
category of permitted transactions or listed exceptions the Issuer may classify
such transaction as it, in its sole discretion, determines.
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ARTICLE 2
THE NOTES
SECTION 2.01. FORM, DATING AND DENOMINATIONS; LEGENDS. The Notes and the
Trustee's certificate of authentication will be substantially in the form
attached as Exhibit A. The terms and provisions contained in the form of the
Notes annexed as Exhibit A constitute, and are hereby expressly made, a part of
the Indenture. The Notes may have notations, legends or endorsements required by
law, rules of or agreements with national securities exchanges to which the
Issuer is subject, or usage. Each Note will be dated the date of its
authentication. The Notes will be issuable in denominations of $1,000 in
principal amount and any multiple of $1,000 in excess thereof.
(a) (i) Except as otherwise provided in paragraph (c), Section
2.10(b)(iii), (b)(v), or (c) or Section 2.09(b)(iv), each Initial Note or
Initial Additional Note (other than a Permanent Regulation S Note) will
bear the Restricted Legend.
(ii) Each Global Note, whether or not an Initial Note or Additional
Note, will bear the DTC Legend.
(iii) Each Regulation S Temporary Global Note will bear the
Regulation S Temporary Global Note Legend.
(iv) Initial Notes and Initial Additional Notes offered and sold in
reliance on Regulation S will be issued as provided in Section 2.11(a).
(v) Initial Notes and Initial Additional Notes offered and sold in
reliance on any exception under the Securities Act other than Regulation S
and Rule 144A will be issued, and upon the request of the Issuer to the
Trustee, Initial Notes offered and sold in reliance on Rule 144A may be
issued, in the form of Certificated Notes.
(vi) Exchange Notes will be issued, subject to Section 2.09(b), in
the form of one or more Global Notes.
(b)(i) If the Issuer determines (upon the advice of counsel and such
other certifications and evidence as the Issuer may reasonably require)
that a Note is eligible for resale pursuant to Rule 144(k) under the
Securities Act (or a successor provision) and that the Restricted Legend is
no longer necessary or appropriate in order to ensure that subsequent
transfers of the Note (or a beneficial interest therein) are effected in
compliance with the Securities Act, or
(ii) after an Initial Note or any Initial Additional Note is
(A) sold pursuant to an effective registration statement under
the Securities Act, pursuant to the Registration Rights Agreement or
otherwise, or
(B) is validly tendered for exchange into an Exchange Note
pursuant to an Exchange Offer
24
the Issuer may instruct the Trustee to cancel the Note and issue to the Holder
thereof (or to its transferee) a new Note of like tenor and amount, registered
in the name of the Holder thereof (or its transferee), that does not bear the
Restricted Legend, and the Trustee will comply with such instruction.
(c) By its acceptance of any Note bearing the Restricted Legend (or
any beneficial interest in such a Note), each Holder thereof and each owner
of a beneficial interest therein acknowledges the restrictions on transfer
of such Note (and any such beneficial interest) set forth in this Indenture
and in the Restricted Legend and agrees that it will transfer such Note
(and any such beneficial interest) only in accordance with the Indenture
and such legend.
SECTION 2.02. EXECUTION AND AUTHENTICATION; EXCHANGE NOTES; ADDITIONAL
NOTES. (a) An Officer shall execute the Notes for the Issuer by facsimile or
manual signature in the name and on behalf of the Issuer. If an Officer whose
signature is on a Note no longer holds that office at the time the Note is
authenticated, the Note will still be valid.
(b) A Note will not be valid until the Trustee manually signs the
certificate of authentication on the Note, with the signature conclusive
evidence that the Note has been authenticated under the Indenture.
(c) At any time and from time to time after the execution and delivery of
the Indenture, the Issuer may deliver Notes executed by the Issuer to the
Trustee for authentication. The Trustee will authenticate and deliver
(i) Initial Notes for original issue in the aggregate principal
amount not to exceed $150,000,000,
(ii) Initial Additional Notes from time to time for original issue
in aggregate principal amounts up to $150,000,000 specified by the Issuer,
and
(iii) Exchange Notes from time to time for issue in exchange for a
like principal amount of Initial Notes or Initial Additional Notes
after the following conditions have been met:
(A) Receipt by the Trustee of an Officers' Certificate
specifying
(1) the amount of Notes to be authenticated and the date on which the
Notes are to be authenticated,
(2) whether the Notes are to be Initial Notes or, Additional Notes or
Exchange Notes,
(3) in the case of Initial Additional Notes, that the issuance of
such Notes does not contravene any provision of Article 4,
(4) whether the Notes are to be issued as one or more Global Notes or
Certificated Notes, and
25
(5) other information the Issuer may determine to include or the
Trustee may reasonably request.
(B) In the case of Initial Additional Notes, receipt by the
Trustee of an Opinion of Counsel confirming that the Holders of the
outstanding Notes will be subject to federal income tax in the same
amounts, in the same manner and at the same times as would have been
the case if such Additional Notes were not issued.
(C) In the case of Exchange Notes, effectiveness of an Exchange
Offer Registration Statement and Consummation (as defined in the
Registration Rights Agreement) of the exchange offer thereunder (and
receipt by the Trustee of an Officers' Certificate to that effect).
Initial Notes or Initial Additional Notes exchanged for Exchange Notes
will be cancelled by the Trustee.
SECTION 2.03. REGISTRAR, PAYING AGENT AND AUTHENTICATING AGENT; PAYING
AGENT TO HOLD MONEY IN TRUST. (a) The Issuer may appoint one or more Registrars
and one or more Paying Agents, and the Trustee may appoint an Authenticating
Agent, in which case each reference in the Indenture to the Trustee in respect
of the obligations of the Trustee to be performed by that Agent will be deemed
to be references to the Agent. The Issuer may act as Registrar or (except for
purposes of Article 8) Paying Agent. In each case the Issuer and the Trustee
will enter into an appropriate agreement with the Agent implementing the
provisions of the Indenture relating to the obligations of the Trustee to be
performed by the Agent and the related rights.
(b) The Issuer will require each Paying Agent other than the Trustee to
agree in writing that the Paying Agent will hold in trust for the benefit of the
Holders or the Trustee all money held by the Paying Agent for the payment of
principal of and interest on the Notes and will promptly notify the Trustee of
any default by the Issuer in making any such payment. The Issuer at any time may
require a Paying Agent to pay all money held by it to the Trustee and account
for any funds disbursed, and the Trustee may at any time during the continuance
of any payment default, upon written request to a Paying Agent, require the
Paying Agent to pay all money held by it to the Trustee and to account for any
funds disbursed. Upon doing so, the Paying Agent will have no further liability
for the money so paid over to the Trustee.
SECTION 2.04. REPLACEMENT NOTES. If a mutilated Note is surrendered to the
Trustee or if a Holder claims that its Note has been lost, destroyed or
wrongfully taken, the Issuer will issue and the Trustee will authenticate a
replacement Note of like tenor and principal amount and bearing a number not
contemporaneously outstanding. Every replacement Note is an additional
obligation of the Issuer and entitled to the benefits of the Indenture. If
required by the Trustee or the Issuer, an indemnity must be furnished that is
sufficient in the judgment of both the Trustee and the Issuer to protect the
Issuer and the Trustee from any loss they may suffer if a Note is replaced. The
Issuer may charge the Holder for the expenses of the Issuer and the Trustee in
replacing a Note. In case the mutilated, lost, destroyed or wrongfully taken
Note has become or is about to become due and payable, the Issuer in its
discretion may pay the Note instead of issuing a replacement Note.
SECTION 2.05. OUTSTANDING NOTES. (a) Notes outstanding at any time are all
Notes that have been authenticated by the Trustee except for
26
(i) Notes cancelled by the Trustee or delivered to it for
cancellation;
(ii) any Note which has been replaced pursuant to Section 2.04
unless and until the Trustee and the Issuer receive proof satisfactory to
them that the replaced Note is held by a BONA FIDE purchaser; and
(iii) on or after the maturity date or any redemption date or date
for purchase of the Notes pursuant to an Offer to Purchase, those Notes
payable or to be redeemed or purchased on that date for which the Trustee
(or Paying Agent, other than the Issuer or an Affiliate of the Issuer)
holds money sufficient to pay all amounts then due.
(b) A Note does not cease to be outstanding because the Issuer or one of
its Affiliates holds the Note, PROVIDED that in determining whether the Holders
of the requisite principal amount of the outstanding Notes have given or taken
any request, demand, authorization, direction, notice, consent, waiver or other
action hereunder, Notes owned by the Issuer or any Affiliate of the Issuer will
be disregarded and deemed not to be outstanding, (it being understood that in
determining whether the Trustee is protected in relying upon any such request,
demand, authorization, direction, notice, consent, waiver or other action, only
Notes which the Trustee knows to be so owned will be so disregarded). Notes so
owned which have been pledged in good faith may be regarded as outstanding if
the pledgee establishes to the satisfaction of the Trustee the pledgee's right
so to act with respect to such Notes and that the pledgee is not the Issuer or
any Affiliate of the Issuer.
SECTION 2.06. TEMPORARY NOTES. Until definitive Notes are ready for
delivery, the Issuer may prepare and the Trustee will authenticate temporary
Notes. Temporary Notes will be substantially in the form of definitive Notes but
may have insertions, substitutions, omissions and other variations determined to
be appropriate by the Officer executing the temporary Notes, as evidenced by the
execution of the temporary Notes. If temporary Notes are issued, the Issuer will
cause definitive Notes to be prepared without unreasonable delay. After the
preparation of definitive Notes, the temporary Notes will be exchangeable for
definitive Notes upon surrender of the temporary Notes at the office or agency
of the Issuer designated for the purpose pursuant to Section 4.02, without
charge to the Holder. Upon surrender for cancellation of any temporary Notes the
Issuer will execute and the Trustee will authenticate and deliver in exchange
therefor a like principal amount of definitive Notes of authorized
denominations. Until so exchanged, the temporary Notes will be entitled to the
same benefits under the Indenture as definitive Notes.
SECTION 2.07. CANCELLATION. The Issuer at any time may deliver to the
Trustee for cancellation any Notes previously authenticated and delivered
hereunder which the Issuer may have acquired in any manner whatsoever, and may
deliver to the Trustee for cancellation any Notes previously authenticated
hereunder which the Issuer has not issued and sold. Any Registrar or the Paying
Agent will forward to the Trustee any Notes surrendered to it for transfer,
exchange or payment. The Trustee will cancel all Notes surrendered for transfer,
exchange, payment or cancellation and dispose of them in accordance with its
normal procedures or the written instructions of the Issuer. The Issuer may not
issue new Notes to replace Notes it has paid in full or delivered to the Trustee
for cancellation.
SECTION 2.08. CUSIP AND ISIN NUMBERS. The Issuer in issuing the Notes may
use "CUSIP" and "ISIN" numbers, and the Trustee will use CUSIP numbers or ISIN
numbers in notices of redemption or exchange or in Offers to Purchase as a
convenience to Holders, the
27
notice to state that no representation is made as to the correctness of such
numbers either as printed on the Notes or as contained in any notice of
redemption or exchange or Offer to Purchase. The Issuer will promptly notify the
Trustee of any change in the CUSIP or ISIN numbers.
SECTION 2.09. REGISTRATION, TRANSFER AND EXCHANGE. (a) The Notes will be
issued in registered form only, without coupons, and the Issuer shall cause the
Trustee to maintain a register (the "REGISTER") of the Notes, for registering
the record ownership of the Notes by the Holders and transfers and exchanges of
the Notes.
(b) (i) Each Global Note will be registered in the name of the Depositary
or its nominee and, so long as DTC is serving as the Depositary thereof, will
bear the DTC Legend.
(ii) Each Global Note will be delivered to the Trustee as custodian
for the Depositary. Transfers of a Global Note (but not a beneficial
interest therein) will be limited to transfers thereof in whole, but not in
part, to the Depositary, its successors or their respective nominees,
except (A) as set forth in Section 2.09(b)(iv) and (B) transfers of
portions thereof in the form of Certificated Notes may be made upon request
of an Agent Member (for itself or on behalf of a beneficial owner) by
written notice given to the Trustee by or on behalf of the Depositary in
accordance with customary procedures of the Depositary and in compliance
with this Section and Section 2.10.
(iii) Agent Members will have no rights under the Indenture with
respect to any Global Note held on their behalf by the Depositary, and the
Depositary may be treated by the Issuer, the Trustee and any agent of the
Issuer or the Trustee as the absolute owner and Holder of such Global Note
for all purposes whatsoever. Notwithstanding the foregoing, the Depositary
or its nominee may grant proxies and otherwise authorize any Person
(including any Agent Member and any Person that holds a beneficial interest
in a Global Note through an Agent Member) to take any action which a Holder
is entitled to take under the Indenture or the Notes, and nothing herein
will impair, as between the Depositary and its Agent Members, the operation
of customary practices governing the exercise of the rights of a holder of
any security.
(iv) If (x) the Depositary notifies the Issuer that it is unwilling
or unable to continue as Depositary for a Global Note and a successor
depositary is not appointed by the Issuer within 90 days of the notice or
(y) an Event of Default has occurred and is continuing and the Trustee has
received a request from the Depositary, the Trustee will promptly exchange
each beneficial interest in the Global Note for one or more Certificated
Notes in authorized denominations having an equal aggregate principal
amount registered in the name of the owner of such beneficial interest, as
identified to the Trustee by the Depositary, and thereupon the Global Note
will be deemed canceled. If such Note does not bear the Restricted Legend,
then the Certificated Notes issued in exchange therefor will not bear the
Restricted Legend. If such Note bears the Restricted Legend, then the
Certificated Notes issued in exchange therefor will bear the Restricted
Legend, PROVIDED that any Holder of any such Certificated Note issued in
exchange for a beneficial interest in a Regulation S Temporary Global Note
will have the right upon presentation to the Trustee of a duly completed
Certificate of Beneficial Ownership after the Restricted Period to exchange
such Certificated Note for a Certificated Note of like
28
tenor and amount that does not bear the Restricted Legend, registered in
the name of such Holder.
(c) Each Certificated Note will be registered in the name of the holder
thereof or its nominee.
(d) A Holder may transfer a Note (or a beneficial interest therein) to
another Person or exchange a Note (or a beneficial interest therein) for another
Note or Notes of any authorized denomination by presenting to the Trustee a
written request therefor stating the name of the proposed transferee or
requesting such an exchange, accompanied by any certification, opinion or other
document required by Section 2.10. The Trustee will promptly register any
transfer or exchange that meets the requirements of this Section by noting the
same in the register maintained by the Trustee for the purpose; PROVIDED that
(i) no transfer or exchange will be effective until it is
registered in such register and
(ii) the Trustee will not be required (x) to issue, register the
transfer of or exchange any Note for a period of 15 days before a selection
of Notes to be redeemed or purchased pursuant to an Offer to Purchase, (y)
to register the transfer of or exchange any Note so selected for redemption
or purchase in whole or in part, except, in the case of a partial
redemption or purchase, that portion of any Note not being redeemed or
purchased, or (z) if a redemption or a purchase pursuant to an Offer to
Purchase is to occur after a Regular Record Date but on or before the
corresponding Interest Payment Date, to register the transfer of or
exchange any Note on or after the Regular Record Date and before the date
of redemption or purchase. Prior to the registration of any transfer, the
Issuer, the Trustee and their agents will treat the Person in whose name
the Note is registered as the owner and Holder thereof for all purposes
(whether or not the Note is overdue), and will not be affected by notice to
the contrary.
From time to time the Issuer will execute and the Trustee will authenticate
additional Notes as necessary in order to permit the registration of a transfer
or exchange in accordance with this Section.
No service charge will be imposed in connection with any transfer or
exchange of any Note, but the Issuer may require payment of a sum sufficient to
cover any transfer tax or similar governmental charge payable in connection
therewith (other than a transfer tax or other similar governmental charge
payable upon exchange pursuant to subsection (b)(iv)).
(e) (i) GLOBAL NOTE TO GLOBAL NOTE. If a beneficial interest in a Global
Note is transferred or exchanged for a beneficial interest in another Global
Note, the Trustee will (x) record a decrease in the principal amount of the
Global Note being transferred or exchanged equal to the principal amount of such
transfer or exchange and (y) record a like increase in the principal amount of
the other Global Note. Any beneficial interest in one Global Note that is
transferred to a Person who takes delivery in the form of an interest in another
Global Note, or exchanged for an interest in another Global Note, will, upon
transfer or exchange, cease to be an interest in such Global Note and become an
interest in the other Global Note and, accordingly, will thereafter be subject
to all transfer and exchange restrictions, if any, and other procedures
29
applicable to beneficial interests in such other Global Note for as long as it
remains such an interest.
(ii) GLOBAL NOTE TO CERTIFICATED NOTE. If a beneficial interest in a
Global Note is transferred or exchanged for a Certificated Note, the
Trustee will (x) record a decrease in the principal amount of such Global
Note equal to the principal amount of such transfer or exchange and (y)
deliver one or more new Certificated Notes in authorized denominations
having an equal aggregate principal amount to the transferee (in the case
of a transfer) or the owner of such beneficial interest (in the case of an
exchange), registered in the name of such transferee or owner, as
applicable.
(iii) CERTIFICATED NOTE TO GLOBAL NOTE. If a Certificated Note is
transferred or exchanged for a beneficial interest in a Global Note, the
Trustee will (x) cancel such Certificated Note, (y) record an increase in
the principal amount of such Global Note equal to the principal amount of
such transfer or exchange and (z) in the event that such transfer or
exchange involves less than the entire principal amount of the canceled
Certificated Note, deliver to the Holder thereof one or more new
Certificated Notes in authorized denominations having an aggregate
principal amount equal to the untransferred or unexchanged portion of the
canceled Certificated Note, registered in the name of the Holder thereof.
(iv) CERTIFICATED NOTE TO CERTIFICATED NOTE. If a Certificated Note
is transferred or exchanged for another Certificated Note, the Trustee will
(x) cancel the Certificated Note being transferred or exchanged, (y)
deliver one or more new Certificated Notes in authorized denominations
having an aggregate principal amount equal to the principal amount of such
transfer or exchange to the transferee (in the case of a transfer) or the
Holder of the canceled Certificated Note (in the case of an exchange),
registered in the name of such transferee or Holder, as applicable, and (z)
if such transfer or exchange involves less than the entire principal amount
of the canceled Certificated Note, deliver to the Holder thereof one or
more Certificated Notes in authorized denominations having an aggregate
principal amount equal to the untransferred or unexchanged portion of the
canceled Certificated Note, registered in the name of the Holder thereof.
SECTION 2.10. RESTRICTIONS ON TRANSFER AND EXCHANGE. (a) The transfer or
exchange of any Note (or a beneficial interest therein) may only be made in
accordance with this Section and Section 2.09 and, in the case of a Global Note
(or a beneficial interest therein), the applicable rules and procedures of the
Depositary. The Trustee shall refuse to register any requested transfer or
exchange that does not comply with the preceding sentence.
(b) Subject to paragraph (c), the transfer or exchange of any Note (or a
beneficial interest therein) of the type set forth in column A below for a Note
(or a beneficial interest therein) of the type set forth opposite in column B
below may only be made in compliance with the certification requirements (if
any) described in the clause of this paragraph set forth opposite in column C
below.
A B C
Rule 144A Global Note Rule 144A Global Note (i)
Rule 144A Global Note Regulation S Global Note (ii)
Rule 144A Global Note Certificated Note (iii)
30
Regulation S Global Note Rule 144A Global Note (iv)
Regulation S Global Note Regulation S Global Note (i)
Regulation S Global Note Certificated Note (v)
Certificated Note Rule 144A Global Note (iv)
Certificated Note Regulation S Global Note (ii)
Certificated Note Certificated Note (iii)
(i) No certification is required.
(ii) The Person requesting the transfer or exchange must deliver or
cause to be delivered to the Trustee a duly completed Regulation S
Certificate; PROVIDED that if the requested transfer or exchange is made by
the Holder of a Certificated Note that does not bear the Restricted Legend,
then no certification is required.
(iii) The Person requesting the transfer or exchange must deliver or
cause to be delivered to the Trustee (x) a duly completed Rule 144A
Certificate, (y) a duly completed Regulation S Certificate or (z) a duly
completed Institutional Accredited Investor Certificate, and/or an opinion
of counsel and such other certifications and evidence as the Issuer may
reasonably require in order to determine that the proposed transfer or
exchange is being made in compliance with the Securities Act and any
applicable securities laws of any state of the United States; PROVIDED that
if the requested transfer or exchange is made by the Holder of a
Certificated Note that does not bear the Restricted Legend, then no
certification is required. In the event that (A) the requested transfer or
exchange takes place after the Restricted Period and a duly completed
Regulation S Certificate is delivered to the Trustee or (B) a Certificated
Note that does not bear the Restricted Legend is surrendered for transfer
or exchange, upon transfer or exchange the Trustee will deliver a
Certificated Note that does not bear the Restricted Legend.
(iv) The Person requesting the transfer or exchange must deliver or
cause to be delivered to the Trustee a duly completed Rule 144A
Certificate.
(v) Notwithstanding anything to the contrary contained herein, no
such exchange is permitted if the requested exchange involves a beneficial
interest in a Regulation S Temporary Global Note. If the requested transfer
or exchange involves a beneficial interest in a Permanent Regulation S
Global Note, no certification is required and the Trustee will deliver a
Certificated Note that does not bear the Restricted Legend.
(c) No certification is required in connection with any transfer or
exchange of any Note (or a beneficial interest therein)
(i) after such Note is eligible for resale pursuant to Rule 144(k)
under the Securities Act (or a successor provision); PROVIDED that the
Issuer has provided the Trustee with a certificate to that effect, and the
Issuer may require from any Person requesting a transfer or exchange in
reliance upon this clause (i) an opinion of counsel and any other
reasonable certifications and evidence in order to support such
certificate; or
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(ii) (A) sold pursuant to an effective registration statement,
pursuant to the Registration Rights Agreement or otherwise or (B) which is
validly tendered for exchange into an Exchange Note pursuant to an Exchange
Offer.
Any Certificated Note delivered in reliance upon this paragraph will not
bear the Restricted Legend.
(d) The Trustee will retain copies of all certificates, opinions and other
documents received in connection with the transfer or exchange of a Note (or a
beneficial interest therein), and the Issuer will have the right to inspect and
make copies thereof at any reasonable time upon written notice to the Trustee.
SECTION 2.11. REGULATION S TEMPORARY GLOBAL NOTES. (a) Each Note
originally sold by the Initial Purchasers in reliance upon Regulation S will be
evidenced by one or more Regulation S Global Notes that bear the Regulation S
Temporary Global Note Legend.
(b) An owner of a beneficial interest in a Regulation S Temporary Global
Note (or a Person acting on behalf of such an owner) may provide to the Trustee
(and the Trustee will accept) a duly completed Certificate of Beneficial
Ownership at any time after the Restricted Period (it being understood that the
Trustee will not accept any such certificate during the Restricted Period).
Promptly after acceptance of a Certificate of Beneficial Ownership with respect
to such a beneficial interest, the Trustee will cause such beneficial interest
to be exchanged for an equivalent beneficial interest in a Permanent Regulation
S Global Note, and will (x) permanently reduce the principal amount of such
Regulation S Temporary Global Note by the amount of such beneficial interest and
(y) increase the principal amount of such Permanent Regulation S Global Note by
the amount of such beneficial interest.
(c) Notwithstanding anything to the contrary contained herein, beneficial
interests in a Regulation S Temporary Global Note may be held through the
Depositary only through Euroclear and Clearstream and their respective direct
and indirect participants.
(d) Notwithstanding paragraph (b), if after the Restricted Period any
Initial Purchaser owns a beneficial interest in a Regulation S Temporary Global
Note, such Initial Purchaser may, upon written request to the Trustee
accompanied by a certification as to its status as an Initial Purchaser,
exchange such beneficial interest for an equivalent beneficial interest in a
Permanent Regulation S Global Note, and the Trustee will comply with such
request and will (x) permanently reduce the principal amount of such Regulation
S Temporary Global Note by the amount of such beneficial interest and (y)
increase the principal amount of such Permanent Regulation S Global Note by the
amount of such beneficial interest.
ARTICLE 3
REDEMPTION; OFFER TO PURCHASE
SECTION 3.01. OPTIONAL REDEMPTION. At any time and from time to time on or
after April 1, 2007, the Issuer may redeem the Notes, in whole or in part, at a
redemption price equal to the percentage of principal amount set forth below
plus accrued and unpaid interest, and Liquidated Damages, if any, thereon to the
redemption date.
32
12-MONTH PERIOD
COMMENCING
APRIL 1
IN YEAR PERCENTAGE
------------------------- ----------------------
2007 104.438%
2008 102.958%
2009 101.479%
2010 and thereafter 100.000%
SECTION 3.02. METHOD AND EFFECT OF REDEMPTION. (a) If the Issuer elects to
redeem Notes, it must notify the Trustee of the redemption date and the
principal amount of Notes to be redeemed by delivering an Officers' Certificate
at least 60 days before the redemption date (unless a shorter period is
satisfactory to the Trustee). If fewer than all of the Notes are being redeemed,
the Officers' Certificate must also specify a record date not less than 15 days
after the date of the notice of redemption is given to the Trustee, and the
Trustee will select the Notes to be redeemed pro rata, or as nearly a pro rata
basis as is practicable (subject to the procedures of DTC), unless such method
is otherwise prohibited, in which case, by lot or by any other method the
Trustee in its sole discretion deems fair and appropriate, in denominations of
$1,000 principal amount and multiples thereof. The Trustee will notify the
Issuer promptly of the Notes or portions of Notes to be called for redemption.
Notice of redemption must be sent by the Issuer or at the Issuer's request, by
the Trustee in the name and at the expense of the Issuer, to Holders whose Notes
are to be redeemed at least 30 days but not more than 60 days before the
redemption date.
(b) The notice of redemption will identify the Notes to be redeemed and
will include or state the following:
(i) the redemption date;
(ii) the redemption price, including the portion thereof
representing any accrued interest or Liquidated Damages;
(iii) the place or places where Notes are to be surrendered for
redemption;
(iv) Notes called for redemption must be so surrendered in order to
collect the redemption price;
(v) on the redemption date the redemption price will become due and
payable on Notes called for redemption, and interest on Notes called for
redemption will cease to accrue on and after the redemption date;
(vi) if any Note is redeemed in part, on and after the redemption
date, upon surrender of such Note, new Notes equal in principal amount to
the unredeemed portion will be issued; and
(vii) if any Note contains a CUSIP or ISIN number, no representation
is being made as to the correctness of the CUSIP or ISIN number either as
printed on the Notes or as contained in the notice of redemption and that
the Holder should rely only on the other identification numbers printed on
the Notes.
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(c) Once notice of redemption is sent to the Holders, Notes called for
redemption become due and payable at the redemption price on the redemption
date, and upon surrender of the Notes called for redemption, the Issuer shall
redeem such Notes at the redemption price. Commencing on the redemption date,
Notes redeemed will cease to accrue interest. Upon surrender of any Note
redeemed in part, the Holder will receive a new Note equal in principal amount
to the unredeemed portion of the surrendered Note.
SECTION 3.03. OFFER TO PURCHASE. (a) An "OFFER TO PURCHASE" means an offer
by the Issuer to purchase Notes as required by the Indenture. An Offer to
Purchase must be made by written offer (the "OFFER") sent to the Holders. The
Issuer will notify the Trustee at least 15 days (or such shorter period as is
acceptable to the Trustee) prior to sending the offer to Holders of its
obligation to make an Offer to Purchase, and the offer will be sent by the
Issuer or, at the Issuer's request, by the Trustee in the name and at the
expense of the Issuer.
(b) The offer must include or state the following as to the terms of the
Offer to Purchase:
(i) the provision of the Indenture pursuant to which the Offer to
Purchase is being made;
(ii) the aggregate principal amount of the outstanding Notes offered
to be purchased by the Issuer pursuant to the Offer to Purchase (including,
if less than 100%, the manner by which such amount has been determined
pursuant to the Indenture) (the "PURCHASE AMOUNT");
(iii) the purchase price, including the portion thereof representing
accrued interest and Liquidated Damages, if any;
(iv) an expiration date (the "EXPIRATION DATE") not less than 30
days or more than 60 days after the date of the offer, and a settlement
date for purchase (the "PURCHASE DATE") not more than five Business Days
after the expiration date;
(v) information concerning the business of the Issuer and its
Subsidiaries which the Issuer in good faith believes will enable the
Holders to make an informed decision with respect to the Offer to Purchase,
at a minimum to include
(A) the most recent annual and quarterly financial statements
and "Management's Discussion and Analysis of Financial Condition and
Results of Operations" for the Company,
(B) a description of material developments in the Company's
business subsequent to the date of the latest of the financial
statements (including a description of the events requiring the Issuer
to make the Offer to Purchase), and
(C) if applicable, appropriate pro forma financial information
concerning the Offer to Purchase and the events requiring the Issuer
to make the Offer to Purchase;
(vi) a Holder may tender all or any portion of its Notes, subject to
the requirement that any portion of a Note tendered must be in a multiple
of $1,000 principal amount;
34
(vii) the place or places where Notes are to be surrendered for
tender pursuant to the Offer to Purchase;
(viii) each Holder electing to tender a Note pursuant to the offer
will be required to surrender such Note at the place or places specified in
the offer prior to the close of business on the expiration date (such Note
being, if the Issuer or the Trustee so requires, duly endorsed or
accompanied by a duly executed written instrument of transfer);
(ix) interest on any Note not tendered, or tendered but not
purchased by the Issuer pursuant to the Offer to Purchase, will continue to
accrue;
(x) on the purchase date the purchase price will become due and
payable on each Note accepted for purchase, and interest on Notes purchased
will cease to accrue on and after the purchase date;
(xi) Holders are entitled to withdraw Notes tendered by giving
notice, which must be received by the Issuer or the Trustee not later than
the close of business on the expiration date, setting forth the name of the
Holder, the principal amount of the tendered Notes, the certificate number
of the tendered Notes and a statement that the Holder is withdrawing all or
a portion of the tender;
(xii) (A) if Notes in an aggregate principal amount less than or
equal to the purchase amount are duly tendered and not withdrawn pursuant
to the Offer to Purchase, the Issuer will purchase all such Notes, and (B)
if the Offer to Purchase is for less than all of the outstanding Notes and
Notes in an aggregate principal amount in excess of the purchase amount are
tendered and not withdrawn pursuant to the offer, the Issuer will purchase
Notes having an aggregate principal amount equal to the purchase amount on
a pro rata basis, with adjustments so that only Notes in multiples of
$1,000 principal amount will be purchased;
(xiii) if any Note is purchased in part, new Notes equal in principal
amount to the unpurchased portion of the Note will be issued; and
(xiv) if any Note contains a CUSIP or ISIN number, no representation
is being made as to the correctness of the CUSIP or ISIN number either as
printed on the Notes or as contained in the offer and that the Holder
should rely only on the other identification numbers printed on the Notes.
(c) Prior to the purchase date, the Issuer will accept tendered Notes for
purchase as required by the Offer to Purchase and deliver to the Trustee all
Notes so accepted together with an Officers' Certificate specifying which Notes
have been accepted for purchase. On the purchase date the purchase price will
become due and payable on each Note accepted for purchase, and interest on Notes
purchased will cease to accrue on and after the purchase date. The Trustee will
promptly return to Holders any Notes not accepted for purchase and send to
Holders new Notes equal in principal amount to any unpurchased portion of any
Notes accepted for purchase in part.
35
(d) The Issuer will comply with Rule 14e-1 under the Exchange Act and all
other applicable laws in making any Offer to Purchase, and the above procedures
will be deemed modified as necessary to permit such compliance.
ARTICLE 4
COVENANTS
SECTION 4.01. PAYMENT OF NOTES. (a) The Issuer agrees to pay the principal
of and interest and Liquidated Damages, if any, on the Notes on the dates and in
the manner provided in the Notes and the Indenture. The Issuer shall pay
Liquidated Damages in the amounts set forth in the Registration Rights
Agreement. Not later than 9:00 A.M. (
New York City time) on the due date of any
principal of or interest on any Notes, or any redemption or purchase price of
the Notes, the Issuer will deposit with the Trustee (or Paying Agent) money in
immediately available funds sufficient to pay such amounts, provided that if the
Issuer or any Affiliate of the Issuer is acting as Paying Agent, it will, on or
before each due date, segregate and hold in a separate trust fund for the
benefit of the Holders a sum of money sufficient to pay such amounts until paid
to such Holders or otherwise disposed of as provided in the Indenture. In each
case the Issuer will promptly notify the Trustee of its compliance with this
paragraph.
(b) An installment of principal or interest will be considered paid on the
date due if the Trustee (or Paying Agent, other than the Issuer or any Affiliate
of the Issuer) holds on that date money designated for and sufficient to pay the
installment. If the Issuer or any Affiliate of the Issuer acts as Paying Agent,
an installment of principal or interest will be considered paid on the due date
only if paid to the Holders.
(c) The Issuer agrees to pay interest on overdue principal, and, to the
extent lawful, overdue installments of interest and Liquidated Damages at the
rate per annum specified in the Notes.
(d) Payments in respect of the Notes represented by the Global Notes are
to be made by wire transfer of immediately available funds to the accounts
specified by the Holders of the Global Notes. With respect to Certificated
Notes, the Issuer will make all payments by wire transfer of immediately
available funds to the accounts specified by the Holders thereof or, if no such
account is specified, by mailing a check to each Holder's registered address.
SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY. The Issuer will maintain an
office or agency where Notes may be surrendered for registration of transfer or
exchange or for presentation for payment and where notices and demands to or
upon the Issuer in respect of the Notes and the Indenture may be served. The
Issuer hereby initially designates the Corporate Trust Office of the Trustee as
such office of the Issuer. The Issuer will give prompt written notice to the
Trustee of the location, and any change in the location, of such office or
agency. If at any time the Issuer fails to maintain any such required office or
agency or fails to furnish the Trustee with the address thereof, such
presentations, surrenders, notices and demands may be made or served to the
Trustee.
The Issuer may also from time to time designate one or more other offices
or agencies where the Notes may be surrendered or presented for any of such
purposes and may from time to
36
time rescind such designations. The Issuer 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.
SECTION 4.03. EXISTENCE. The Company and the Issuer will each do or cause
to be done all things necessary to preserve and keep in full force and effect
its existence and the existence of each of its Restricted Subsidiaries in
accordance with their respective organizational documents, and the material
rights, licenses and franchises of the Company, the Issuer and each Restricted
Subsidiary, provided that the Company and the Issuer are not required to
preserve any such right, license or franchise, or the existence of any
Restricted Subsidiary, if the maintenance or preservation thereof is no longer
desirable in the conduct of the business of the Company and its Restricted
Subsidiaries taken as a whole; and provided further that this Section does not
prohibit any transaction otherwise permitted by Section 4.10 or Section 4.14.
SECTION 4.04. PAYMENT OF TAXES AND OTHER CLAIMS. The Company will pay or
discharge, and cause each of its Subsidiaries to pay or discharge before the
same become delinquent (a) all material taxes, assessments and governmental
charges levied or imposed upon the Company or any Subsidiary or its income or
profits or property, and (b) all material lawful claims for labor, materials and
supplies that, if unpaid, might by law become a Lien upon the property of the
Company or any Subsidiary, other than any such tax, assessment, charge or claim
the amount, applicability or validity of which is being contested in good faith
by appropriate proceedings and for which adequate reserves have been
established.
SECTION 4.05. MAINTENANCE OF PROPERTIES AND INSURANCE. (a) The Company
will cause all properties used or useful in the conduct of its business or the
business of any of its Restricted Subsidiaries to be maintained and kept in good
condition, repair and working order as in the judgment of the Company may be
necessary so that the business of the Company and its Restricted Subsidiaries
may be properly and advantageously conducted at all times; provided that nothing
in this Section prevents the Company or any Restricted Subsidiary from
discontinuing the use, operation or maintenance of any of such properties or
disposing of any of them, if such discontinuance or disposal is, in the judgment
of the Company, desirable in the conduct of the business of the Company and its
Restricted Subsidiaries taken as a whole.
(b) The Company will provide or cause to be provided, for itself and its
Restricted Subsidiaries, insurance (including appropriate self-insurance)
against loss or damage of the kinds customarily insured against by corporations
similarly situated and owning like properties, including, but not limited to,
products liability insurance and public liability insurance, with reputable
insurers, in such amounts, with such deductibles and by such methods as are
customary for corporations similarly situated in the industry in which the
Company and its Restricted Subsidiaries are then conducting business.
SECTION 4.06. LIMITATIONS ON INDEBTEDNESS. (a) The Company and the Issuer
will not, and will not cause or permit any Restricted Subsidiary, directly or
indirectly, to create, incur, assume, become liable for or guarantee the payment
of (collectively, an "INCURRENCE") any Indebtedness (including Acquired
Indebtedness) unless, after giving effect thereto and the application of the
proceeds therefrom, the Consolidated Fixed Charge Coverage Ratio on the date
thereof would be at least 2.0 to 1.0.
37
(b) Notwithstanding the foregoing, the provisions of the Indenture will
not prevent the incurrence of:
(i) Permitted Indebtedness,
(ii) Refinancing Indebtedness,
(iii) Non-Recourse Indebtedness,
(iv) any Guarantee of Indebtedness represented by the Notes, and
(v) any guarantee of Indebtedness incurred under Credit Facilities
in compliance with the Indenture.
(c) For purposes of determining compliance with this covenant, in the
event that an item of Indebtedness may be incurred through the first paragraph
of this covenant or by meeting the criteria of one or more of the types of
Indebtedness described in the second paragraph of this covenant (or the
definitions of the terms used therein), the Company, in its sole discretion,
(i) may classify such item of Indebtedness under and comply with
either of such paragraphs (or any of such definitions), as applicable,
(ii) may classify and divide such item of Indebtedness into more
than one of such paragraphs (or definitions), as applicable, and
(iii) may elect to comply with such paragraphs (or definitions), as
applicable, in any order.
(d) The Company and the Issuer will not, and will not cause or permit any
Guarantor to, directly or indirectly, in any event incur any Indebtedness that
purports to be by its terms (or by the terms of any agreement governing such
Indebtedness) subordinated to any other Indebtedness of the Company or of such
Guarantor, as the case may be, unless such Indebtedness is also by its terms (or
by the terms of any agreement governing such Indebtedness) made expressly
subordinated to the Notes or the Guarantee of such Guarantor, as the case may
be, to the same extent and in the same manner as such Indebtedness is
subordinated to such other Indebtedness of the Company or such Guarantor, as the
case may be.
SECTION 4.07. LIMITATION ON RESTRICTED PAYMENTS. (a) The Company and the
Issuer will not, and will not cause or permit any Restricted Subsidiary to,
directly or indirectly, make any Restricted Payment unless:
(i) no Default or Event of Default shall have occurred and be
continuing at the time of or immediately after giving effect to such
Restricted Payment;
(ii) immediately after giving effect to such Restricted Payment, the
Company could incur at least $1.00 of Indebtedness pursuant to Section
4.06(a) hereof; and
(iii) immediately after giving effect to such Restricted Payment, the
aggregate amount of all Restricted Payments (including the Fair Market
Value of any non-cash Restricted Payment) declared or made after May 4,
1999 does not exceed the sum of:
38
(A) 50% of the Consolidated Net Income of the Company on a
cumulative basis during the period (taken as one accounting period)
from and including February 1, 1999 and ending on the last day of the
Company's fiscal quarter immediately preceding the date of such
Restricted Payment (or in the event such Consolidated Net Income shall
be a deficit, minus 100% of such deficit), PLUS
(B) 100% of the aggregate net cash proceeds of and the Fair
Market Value of Property received by the Company from (1) any capital
contribution to the Company after February 1, 1999 or any issue or
sale after February 1, 1999 of Qualified Stock (other than to any
Subsidiary of the Company) and (2) the issue or sale after February 1,
1999 of any Indebtedness or other securities of the Company
convertible into or exercisable for Qualified Stock of the Company
that have been so converted or exercised, as the case may be, PLUS
(C) in the case of the disposition or repayment of any
Investment constituting a Restricted Payment made after May 4, 1999,
an amount (to the extent not included in the calculation of
Consolidated Net Income referred to in (A)) equal to the lesser of (x)
the return of capital with respect to such Investment (including by
dividend, distribution or sale of Capital Stock) and (y) the amount of
such Investment that was treated as a Restricted Payment, in either
case, less the cost of the disposition or repayment of such Investment
(to the extent not included in the calculation of Consolidated Net
Income referred to in (A)), PLUS
(D) with respect to any Unrestricted Subsidiary that is
redesignated as a Restricted Subsidiary after May 4, 1999, in
accordance with the definition of Unrestricted Subsidiary (so long as
the designation of such Subsidiary as an Unrestricted Subsidiary was
treated as a Restricted Payment made after May 4, 1999, and only to
the extent not included in the calculation of Consolidated Net Income
referred to in (A)), an amount equal to the lesser of (x) the
proportionate interest of the Company or a Restricted Subsidiary in an
amount equal to the excess of (I) the total assets of such Subsidiary,
valued on an aggregate basis at the lesser of book value and Fair
Market Value thereof, over (II) the total liabilities of such
Subsidiary, determined in accordance with GAAP, and (y) the
Designation Amount at the time of such Subsidiary's designation as an
Unrestricted Subsidiary, PLUS
(E) $17 million, MINUS
(F) the aggregate amount of all Restricted Payments (other than
Restricted Payments referred to in clause (iii) of paragraph (b)
below) made after February 1, 1999 through May 4, 1999.
(b) Clauses (ii) and (iii) of paragraph (a) will not prohibit:
(i) the payment of any dividend within 60 days of its declaration
if such dividend could have been made on the date of its declaration
without violation of the provisions of the Indenture;
39
(ii) the repurchase, redemption or retirement of any shares of
Capital Stock of the Company in exchange for, or out of the net
proceeds of the substantially concurrent sale (other than to a
Subsidiary of the Company) of, other shares of Qualified Stock; and
(iii) the purchase, redemption or other acquisition, cancellation or
retirement for value of Capital Stock, or options, warrants, equity
appreciation rights or other rights to purchase or acquire Capital Stock,
of the Company or any Subsidiary held by officers or employees or former
officers or employees of the Company or any Subsidiary (or their estates or
beneficiaries under their estates) not to exceed $10 million in the
aggregate since May 4, 1999; PROVIDED, HOWEVER that each Restricted Payment
described in clauses (i) and (ii) of this sentence shall be taken into
account for purposes of computing the aggregate amount of all Restricted
Payments pursuant to clause (iii) of the immediately preceding paragraph.
(c) For purposes of determining the aggregate and permitted amounts of
Restricted Payments made, the amount of any guarantee of any Investment in any
Person that was initially treated as a Restricted Payment and which was
subsequently terminated or expired, net of any amounts paid by the Company or
any Restricted Subsidiary in respect of such guarantee, shall be deducted.
(d) In determining the "Fair Market Value of Property" for purposes of
clause (iii) of paragraph (a), Property other than cash, Cash Equivalents and
Marketable Securities shall be deemed to be equal in value to the "equity value"
of the Capital Stock or other securities issued in exchange therefor. The equity
value of such Capital Stock or other securities shall be equal to (i) the number
of shares of Common Equity issued in the transaction (or issuable upon
conversion or exercise of the Capital Stock or other securities issued in the
transaction) multiplied by the closing sale price of the Common Equity on its
principal market on the date of the transaction (less, in the case of Capital
Stock or other securities which require the payment of consideration at the time
of conversion or exercise, the aggregate consideration payable thereupon) or
(ii) if the Common Equity is not then traded on the
New York Stock Exchange,
American Stock Exchange or Nasdaq National Market, or if the Capital Stock or
other securities issued in the transaction do not consist of Common Equity (or
Capital Stock or other securities convertible into or exercisable for Common
Equity), the value (if more than $10 million) of such Capital Stock or other
securities as determined by a nationally recognized investment banking firm
retained by the Board of Directors of the Company.
SECTION 4.08. LIMITATION ON LIENS. The Company and the Issuer will not,
and will not cause or permit any Restricted Subsidiary to, create, incur, assume
or suffer to exist any Liens which secure Indebtedness other than Senior Debt of
the Issuer or Senior Debt of a Guarantor, as the case may be, other than
Permitted Liens, on any of its Property, or on any shares of Capital Stock or
Indebtedness of any Restricted Subsidiary, unless contemporaneously therewith or
prior thereto all payments due under the Indenture and the Notes are secured on
an equal and ratable basis with the obligation or liability so secured until
such time as such obligation or liability is no longer secured by a Lien.
SECTION 4.09. LIMITATIONS ON RESTRICTIONS AFFECTING RESTRICTED
SUBSIDIARIES. The Company and the Issuer will not, and will not cause or permit
any Restricted Subsidiary to, create, assume or otherwise cause or suffer to
exist or become effective any consensual encumbrance or restriction (other than
encumbrances or restrictions imposed by law or by
40
judicial or regulatory action or by provisions of agreements that restrict the
assignability thereof) on the ability of any Restricted Subsidiary to:
(a) pay dividends or make any other distributions on its Capital Stock or
any other interest or participation in, or measured by, its profits, owned by
the Company or any other Restricted Subsidiary, or pay interest on or principal
of any Indebtedness owed to the Company or any other Restricted Subsidiary,
(b) make loans or advances to the Company or any other Restricted
Subsidiary, or
(c) transfer any of its property or assets to the Company or any other
Restricted Subsidiary,
except for
(i) encumbrances or restrictions existing under or by reason of
applicable law,
(ii) contractual encumbrances or restrictions in effect on the Issue
Date and any amendments, modifications, restatements, renewals,
supplements, refundings, replacements or refinancings thereof, PROVIDED
that such amendments, modifications, restatements, renewals, supplements,
refundings, replacements or refinancings are no more restrictive, taken as
a whole, with respect to such dividend and other payment restrictions than
those contained in such contractual encumbrances or restrictions, as in
effect on May 4, 1999,
(iii) any restrictions or encumbrances arising under Acquired
Indebtedness; PROVIDED that such encumbrance or restriction applies only to
either the assets that were subject to the restriction or encumbrance at
the time of the acquisition or the obligor on such Indebtedness and its
Subsidiaries prior to such acquisition,
(iv) any restrictions or encumbrances arising in connection with
Refinancing Indebtedness; PROVIDED, HOWEVER, that any restrictions and
encumbrances of the type described in this clause (iv) that arise under
such Refinancing Indebtedness shall not be materially more restrictive or
apply to additional assets than those under the agreement creating or
evidencing the Indebtedness being refunded, refinanced, replaced or
extended,
(v) any Permitted Lien, or any other agreement restricting the sale
or other disposition of property, securing Indebtedness permitted by the
Indenture if such Permitted Lien or agreement does not expressly restrict
the ability of a Subsidiary of the Company to pay dividends or make or
repay loans or advances prior to default thereunder,
(vi) reasonable and customary borrowing base covenants set forth in
agreements evidencing Indebtedness otherwise permitted by the Indenture,
(vii) customary non-assignment provisions in leases, licenses,
encumbrances, contracts or similar assets entered into or acquired in the
ordinary course of business,
41
(viii) any restriction with respect to a Restricted Subsidiary imposed
pursuant to an agreement entered into for the sale or disposition of all or
substantially all of the Capital Stock or assets of such Restricted
Subsidiary pending the closing of such sale or disposition,
(ix) encumbrances or restrictions existing under or by reason of the
Indenture or the Notes,
(x) purchase money obligations that impose restrictions on the
property so acquired of the nature described in clause (c) of the preceding
paragraph,
(xi) Liens permitted under the Indenture securing Indebtedness that
limit the right of the debtor to dispose of the assets subject to such
Lien,
(xii) provisions with respect to the disposition or distribution of
assets or property in joint venture agreements, assets sale agreements,
stock sale agreements and other similar agreements,
(xiii) customary provisions of any franchise, distribution or similar
agreements,
(xiv) restrictions on cash or other deposits or net worth imposed by
contracts entered into in the ordinary course of business, and
(xv) any encumbrance or restrictions of the type referred to in
clauses (a), (b) or (c) of the first paragraph of this section imposed by
any amendments, modifications, restatements, renewals, supplements,
refinancings, replacements or refinancings of the contracts, instruments or
obligations referred to in clauses (i) through (xiv) of this paragraph,
PROVIDED that such amendments, modifications, restatements, renewals,
supplements, refundings, replacements or refinancings are, in the good
faith judgment of the Company's Board of Directors, no more restrictive
with respect to such dividend and other payment restrictions than those
contained in the dividend or other payment restrictions prior to such
amendment, modification, restatement, renewal, supplement, refunding,
replacement or refinancing.
SECTION 4.10. LIMITATIONS ON DISPOSITIONS OF ASSETS. The Company and the
Issuer will not, and will not cause or permit any Restricted Subsidiary to, make
any Asset Disposition unless (x) the Company (or such Restricted Subsidiary, as
the case may be) receives consideration at the time of such Asset Disposition at
least equal to the Fair Market Value thereof, and (y) not less than 70% of the
consideration received by the Company (or such Restricted Subsidiary, as the
case may be) is in the form of cash, Cash Equivalents and Marketable Securities.
The amount of (i) any Indebtedness (other than any Indebtedness subordinated to
the Notes) of the Company or any Restricted Subsidiary that is actually assumed
by the transferee in such Asset Disposition and (ii) the fair market value (as
determined in good faith by the Board of Directors of the Company) of any
property or assets received that are used or useful in a Real Estate Business,
shall be deemed to be consideration required by clause (y) above for purposes of
determining the percentage of such consideration received by the Company or the
Restricted Subsidiaries. The Net Cash Proceeds of an Asset Disposition shall,
within one year, at the Company's election, (a) be used by the Company or a
Restricted Subsidiary in the business of the construction and sale of homes
conducted by the Company and the Restricted Subsidiaries or any other business
of the
42
Company or a Restricted Subsidiary existing at the time of such Asset
Disposition, (b) be used to repay Senior Debt of the Issuer or Senior Debt of a
Guarantor or (c) to the extent not so used, be applied to make an Offer to
Purchase Notes and, if the Company or a Restricted Subsidiary elects or is
required to do so repay, purchase or redeem any other unsubordinated
Indebtedness (on a PRO RATA basis if the amount available for such repayment,
purchase or redemption is less than the aggregate amount of (i) the principal
amount of the Notes tendered in such Offer to Purchase and (ii) the lesser of
the principal amount, or accreted value, of such other unsubordinated
Indebtedness, plus, in each case accrued interest to the date of repayment,
purchase or redemption) at 100% of the principal amount or accreted value
thereof, as the case may be, plus accrued interest and Liquidated Damages, if
any, to the date of repurchase or repayment. Notwithstanding the foregoing, (A)
the Company will not be required to apply such Net Cash Proceeds to the
repurchase of Notes in accordance with clause (c) of the preceding sentence
except to the extent that such Net Cash Proceeds, together with the aggregate
Net Cash Proceeds of prior Asset Dispositions (other than those so used) which
have not been applied in accordance with this provision and as to which no prior
Offer to Purchase shall have been made, exceed 5% of Consolidated Tangible
Assets and (B) in connection with an Asset Disposition, the Company and the
Restricted Subsidiaries will not be required to comply with the requirements of
clause (y) of the first sentence of the first paragraph of this covenant to the
extent that the non-cash consideration received in connection with such Asset
Disposition together with the sum of all non-cash consideration received in
connection with all prior Asset Disposition that has not yet been converted into
cash, does not exceed 5% of Consolidated Tangible Assets; PROVIDED HOWEVER, that
when any non-cash consideration is converted into cash, such cash shall
constitute Net Cash Proceeds and be subject to the preceding sentence.
SECTION 4.11. GUARANTEES BY RESTRICTED SUBSIDIARIES. Each existing
Restricted Subsidiary (other than KHL, Inc. and X. Xxxxxxxxx Poland, sp. z.o.o.)
will provide a Note Guaranty. The Company will be permitted to cause any
Unrestricted Subsidiary to provide a Note Guaranty. If the Issuer, the Company
or any of its Restricted Subsidiaries acquires or creates a Restricted
Subsidiary after the date of the Indenture, the new Restricted Subsidiary must
provide a Note Guaranty.
A Restricted Subsidiary required to provide a Note Guaranty shall execute a
supplemental indenture in the form of Exhibit B, and deliver an Opinion of
Counsel to the Trustee to the effect that the
supplemental indenture has been
duly authorized, executed and delivered by the Restricted Subsidiary and
constitutes a valid and binding obligation of the Restricted Subsidiary,
enforceable against the Restricted Subsidiary in accordance with its terms
(subject to customary exceptions).
SECTION 4.12. REPURCHASE OF NOTES UPON A CHANGE OF CONTROL. (a) In the
event that there shall occur a Change of Control, each Holder of Notes shall
have the right, at such Holder's option, to require the Issuer to purchase all
or any part of such Holder's Notes on a date (the "REPURCHASE DATE") that is no
later than 90 days after notice of the Change of Control, at 101% of the
principal amount thereof plus accrued and unpaid interest and Liquidated
Damages, if any, to the Repurchase Date.
(b) On or before the thirtieth day after any Change of Control, the Issuer
is obligated to mail or cause to be mailed, to all Holders of record of Notes a
notice regarding the Change of Control and the repurchase right. The notice
shall state the Repurchase Date, the date by which the repurchase right must be
exercised, the price for the Notes and the procedure which the
43
Holder must follow to exercise such right. Substantially simultaneously with
mailing of the notice, the Issuer shall cause a copy of such notice to be
published in a newspaper of general circulation in the Borough of Manhattan, The
City of
New York. To exercise such right, the Holder of such Note must deliver
at least ten days prior to the Repurchase Date written notice to the Issuer (or
an agent designated by the Issuer for such purpose) of the Holder's exercise of
such right, together with the Note with respect to which the right is being
exercised, duly endorsed for transfer; PROVIDED, HOWEVER, that if mandated by
applicable law, a Holder may be permitted to deliver such written notice nearer
to the Repurchase Date than may be specified by the Issuer.
(c) The Issuer will comply with applicable law, including Section 14(e) of
Exchange Act and Rule 14e-1 thereunder, if applicable, if the Issuer is required
to give a notice of a right of repurchase as a result of a Change of Control.
SECTION 4.13. LIMITATION ON TRANSACTIONS WITH AFFILIATES. (a) The Company
and the Issuer will not, and will not cause or permit any Restricted Subsidiary
to, make any loan, advance, guarantee or capital contribution to, or for the
benefit of, or sell, lease, transfer or otherwise dispose of any property or
assets to or for the benefit of, or purchase or lease any property or assets
from, or enter into or amend any contract, agreement or understanding with, or
for the benefit of, any Affiliate of the Company or any Affiliate of any of the
Company's Subsidiaries or any holder of 10% or more of the Common Equity of the
Company (including any Affiliates of such holders), in a single transaction or
series of related transactions (each, an "AFFILIATE TRANSACTION"), except for
any Affiliate Transaction the terms of which are at least as favorable as the
terms which could be obtained by the Company, the Issuer or such Restricted
Subsidiary, as the case may be, in a comparable transaction made on an arm's
length basis with Persons who are not such a holder, an Affiliate of such a
holder or an Affiliate of the Company or any of the Company's Subsidiaries.
(b) In addition, the Company and the Issuer will not, and will not cause
or permit any Restricted Subsidiary to, enter into an Affiliate Transaction
unless:
(i) with respect to any such Affiliate Transaction involving or
having a value of more than $1 million, the Company shall have (x) obtained
the approval of a majority of the Board of Directors of the Company and (y)
either obtained the approval of a majority of the Company's disinterested
directors or obtained an opinion of a qualified independent financial
advisor to the effect that such Affiliate Transaction is fair to the
Company, the Issuer or such Restricted Subsidiary, as the case may be, from
a financial point of view, and
(ii) with respect to any such Affiliate Transaction involving or
having a value of more than $10 million, the Company shall have (x)
obtained the approval of a majority of the Board of Directors of the
Company and (y) delivered to the Trustee an opinion of a qualified
independent financial advisor to the effect that such Affiliate Transaction
is fair to the Company, the Issuer or such Restricted Subsidiary, as the
case may be, from a financial point of view.
(c) Notwithstanding the foregoing, an Affiliate Transaction will not
include:
44
(i) any contract, agreement or understanding with, or for the
benefit of, or plan for the benefit of, employees of the Company or its
Subsidiaries generally (in their capacities as such) that has been approved
by the Board of Directors of the Company,
(ii) Capital Stock issuances to directors, officers and employees of
the Company or its Subsidiaries pursuant to plans approved by the
stockholders of the Company,
(iii) any Restricted Payment otherwise permitted under Section 4.07
hereof,
(iv) any transaction between or among the Company and one or more
Restricted Subsidiaries or between or among Restricted Subsidiaries
(PROVIDED, HOWEVER, no such transaction shall involve any other Affiliate
of the Company (other than an Unrestricted Subsidiary to the extent the
applicable amount constitutes a Restricted Payment permitted by the
Indenture)),
(v) any transaction between one or more Restricted Subsidiaries and
one or more Unrestricted Subsidiaries where all of the payments to, or
other benefits conferred upon, such Unrestricted Subsidiaries are
substantially contemporaneously dividended, or otherwise distributed or
transferred without charge, to the Company or a Restricted Subsidiary,
(vi) issuances, sales or other transfers or dispositions of
mortgages and collateralized mortgage obligations in the ordinary course of
business between Restricted Subsidiaries and Unrestricted Subsidiaries of
the Company, and
(vii) the payment of reasonable and customary fees to, and indemnity
provided on behalf of, officers, directors, employees or consultants of the
Company, the Issuer or any Restricted Subsidiary.
SECTION 4.14. LIMITATIONS ON MERGERS, CONSOLIDATIONS AND SALES OF ASSETS.
Neither the Company nor the Issuer nor any Guarantor will consolidate or merge
with or into, or sell, lease, convey or otherwise dispose of all or
substantially all of its assets (including, without limitation, by way of
liquidation or dissolution), or assign any of its obligations under the Notes,
the Guarantee or the Indenture (as an entirety or substantially as an entirety
in one transaction or in a series of related transactions), to any Person (in
each case other than in a transaction in which the Company, the Issuer or a
Restricted Subsidiary is the survivor of a consolidation or merger, or the
transferee in a sale, lease, conveyance or other disposition) unless:
(i) the Person formed by or surviving such consolidation or merger
(if other than the Company, the Issuer or the Guarantor, as the case may
be), or to which such sale, lease, conveyance or other disposition or
assignment will be made (collectively, the "SUCCESSOR"), is a corporation
or other legal entity organized and existing under the laws of the United
States or any state thereof or the District of Columbia, and the Successor
assumes by
supplemental indenture in a form reasonably satisfactory to the
Trustee all of the obligations of the Company, the Issuer or the Guarantor,
as the case may be, under the Notes or a Guarantee, as the case may be, and
the Indenture,
45
(ii) immediately after giving effect to such transaction, no Default
or Event of Default has occurred and is continuing, and
(iii) immediately after giving effect to such transaction, the
Company (or its Successor) could incur at least $1.00 of Indebtedness
pursuant to Section 4.06(a) hereof.
The foregoing provisions shall not apply to (i) a transaction involving the
sale or disposition of Capital Stock of a Guarantor, or the consolidation or
merger of a Guarantor, or the sale, lease, conveyance or other disposition of
all or substantially all of the assets of a Guarantor, that in any such case
results in such Guarantor being released from its Guarantee pursuant to the
Indenture, or (ii) a transaction the purpose of which is to change the state of
incorporation of the Company, the Issuer or any Guarantor.
SECTION 4.15. REPORTS TO HOLDERS OF NOTES. (a) The Company shall file with
the Commission the annual reports and the information, documents and other
reports required to be filed pursuant to Section 13 or 15(d) of the Exchange
Act. The Company shall file with the Trustee and mail to each Holder of record
of Notes such reports, information and documents within 15 days after it files
them with the Commission. In the event that the Company is no longer subject to
these periodic requirements of the Exchange Act, it will nonetheless continue to
file reports with the Commission and the Trustee and mail such reports to each
Holder of Notes as if it were subject to such reporting requirements. Regardless
of whether the Company is required to furnish such reports to its stockholders
pursuant to the Exchange Act, the Company will cause its consolidated financial
statements and a "Management's Discussion and Analysis of Results of Operations
and Financial Condition" written report, similar to those that would have been
required to appear in annual or quarterly reports, to be delivered to Holders of
Notes.
(b) For so long as any of the Notes remain outstanding and constitute
"restricted securities" under Rule 144, the Company will furnish to the Holders
of the Notes and prospective investors, upon their request, the information
required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act.
(c) All obligors on the Notes will comply with Section 314(a) of the Trust
Indenture Act.
(d) Delivery of these reports and information to the Trustee is for
informational purposes only and the Trustee's receipt of them will not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
SECTION 4.16. REPORTS TO TRUSTEE(a) The Company will deliver to the
Trustee within 120 days after the end of each fiscal year a written statement by
the Company's independent public accountants stating (i) that their audit
examination has included a review of the terms of this Indenture and the Notes
as they relate to accounting matters, and (ii) whether, in connection with their
audit examination, any Default has come to their attention and, if a Default has
come to their attention, specifying the nature and period of the existence
thereof.
(b) The Company shall deliver to the Trustee, on or prior to each Interest
Payment Date, an Officer's Certificate setting forth the amount of Liquidated
Damages, if any, the Issuer is required to pay on that Interest Payment Date. If
no Liquidated Damages are required to be paid
46
on a given Interest Payment Date, no such Officer's Certificate is required to
be delivered to the Trustee for that Interest Payment Date.
(c) The Company will notify the Trustee when any Notes are listed on any
national securities exchange and of any delisting.
SECTION 4.17. NOTICE OF OTHER DEFAULTS. In the event that any Indebtedness
of the Issuer or any Guarantor is declared due and payable before its maturity
because of the occurrence of any default under such Indebtedness, the Issuer or
the relevant Guarantor, as the case may be, shall promptly deliver to the
Trustee and Officers' Certificate stating such declaration; PROVIDED that the
term "Indebtedness" as used in this Section 4.17 shall not include Non-Recourse
Indebtedness.
SECTION 4.18. LIMITATION ON SENIOR SUBORDINATED INDEBTEDNESS. The Company
and the Issuer will not, and will not cause or permit any Guarantor to, incur
any Indebtedness that is subordinate in right of payment to any Senior Debt of
the Issuer or Senior Debt of a Guarantor, as the case may be, unless such
Indebtedness is pari passu with, or subordinated in right of payment to, the
Notes or any Note Guarantee; PROVIDED that the foregoing limitation shall not
apply to distinctions between categories of Senior Debt of the Issuer or Senior
Debt of a Guarantor that exist by reason of any Liens or guarantees arising or
created in respect of some but not all such Senior Debt of the Issuer or Senior
Debt of a Guarantor or priorities of paydown, from proceeds of collateral or
otherwise, among classes or tranches of any issue of Senior Debt of the Issuer
or Senior Debt of a Guarantor.
ARTICLE 5
REMEDIES
SECTION 5.01. EVENTS OF DEFAULT. (a) "EVENT OF DEFAULT" means any one or
more of the following events:
(i) the failure by the Company, the Issuer and the Guarantors to
pay interest on, or Liquidated Damages with respect to, any Note when the
same becomes due and payable and the continuance of any such failure for a
period of 30 days;
(ii) the failure by the Company, the Issuer and the Guarantors to
pay the principal or premium of any Note when the same becomes due and
payable at maturity, upon acceleration or otherwise;
(iii) the failure by the Company, the Issuer or any Restricted
Subsidiary to comply with any of its agreements or covenants in, or
provisions of, the Notes, the Guarantee or the Indenture and such failure
continues for the period and after the notice specified below (except in
the case of a default under Sections 4.12 and 4.14 hereof, which will
constitute Events of Default with notice but without passage of time);
(iv) the acceleration of any Indebtedness (other than Non-Recourse
Indebtedness) of the Company, the Issuer or any Restricted Subsidiary that
has an outstanding principal amount of $10 million or more, individually or
in the aggregate,
47
and such acceleration does not cease to exist, or such Indebtedness is not
satisfied, in either case within 30 days after such acceleration;
(v) the failure by the Company, the Issuer or any Restricted
Subsidiary to make any principal or interest payment in an amount of $10
million or more, individually or in the aggregate, in respect of
Indebtedness (other than Non-Recourse Indebtedness) of the Company or any
Restricted Subsidiary within 30 days of such principal or interest becoming
due and payable (after giving effect to any applicable grace period set
forth in the documents governing such Indebtedness);
(vi) a final judgment or judgments that exceed $10 million or more,
individually or in the aggregate, for the payment of money having been
entered by a court or courts of competent jurisdiction against the Company,
the Issuer or any of its Restricted Subsidiaries and such judgment or
judgments is not satisfied, stayed, annulled or rescinded within 60 days of
being entered;
(vii) the Company or any Restricted Subsidiary that is a Significant
Subsidiary pursuant to or within the meaning of any Bankruptcy Law:
(A) commences a voluntary case,
(B) consents to the entry of an order for relief against it in
an involuntary case,
(C) consents to the appointment of a Custodian of it or for all
or substantially all of its property, or
(D) makes a general assignment for the benefit of its
creditors;
(viii) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(A) is for relief against the Company or any Restricted
Subsidiary that is a Significant Subsidiary as debtor in an
involuntary case,
(B) appoints a Custodian of the Company or any Restricted
Subsidiary that is a Significant Subsidiary or a Custodian for all or
substantially all of the property of the Company or any Restricted
Subsidiary that is a Significant Subsidiary, or
(C) orders the liquidation of the Company or any Restricted
Subsidiary that is a Significant Subsidiary,
and the order or decree remains unstayed and in effect for 60 days, or
(ix) any Guarantee of a Guarantor which is a Significant Subsidiary
ceases to be in full force and effect (other than in accordance with the
terms of such Guarantee and the Indenture) or is declared null and void and
unenforceable or found to be invalid or any Guarantor denies its liability
under its Guarantee (other than by reason of release of a
48
Guarantor from its Guarantee in accordance with the terms of the Indenture
and the Guarantee).
A Default as described in subclause (iii) above will not be deemed an Event
of Default until the Trustee notifies the Company, or the Holders of at least 25
percent in principal amount of the then outstanding Notes notify the Company and
the Trustee, of the Default and (except in the case of a default with respect to
Sections 4.12 and 4.14 hereof) the Company does not cure the Default within 60
days after receipt of the notice. The notice must specify the Default, demand
that it be remedied and state that the notice is a "Notice of Default." If such
a Default is cured within such time period, it ceases.
If an Event of Default (other than an Event of Default with respect to the
Company resulting from subclauses (vii) or (viii) above), shall have occurred
and be continuing under the Indenture, the Trustee by notice to the Company, or
the Holders of at least 25 percent in principal amount of the Notes then
outstanding by notice to the Company and the Trustee, may declare all Notes to
be due and payable immediately. Upon such declaration of acceleration, the
amounts due and payable on the Notes will be due and payable immediately. If an
Event of Default with respect to the Company specified in subclauses (vii) or
(viii) above occurs, such an amount will ipso facto become and be immediately
due and payable without any declaration, notice or other act on the part of the
Trustee and the Company or any Holder.
Except with respect to an Event of Default pursuant to clauses (i) or (ii)
of this Section 5.01, the Trustee shall not be charged with knowledge of any
Event of Default unless written notice thereof shall have been given to the
Trustee by the Issuer or any Holder.
SECTION 5.02. OTHER REMEDIES. If an Event of Default occurs and is
continuing, the Trustee may pursue, in its own name or as trustee of an express
trust, any available remedy by proceeding at law or in equity to collect the
payment of principal of and interest or Liquidated Damages, if any, on the Notes
or to enforce the performance of any provision of the Notes or the Indenture.
The Trustee may maintain a proceeding even if it does not possess any of the
Notes or does not produce any of them in the proceeding.
SECTION 5.03. WAIVER OF DEFAULTS BY MAJORITY OF HOLDERS. The Holders of a
majority in principal amount of the Notes then outstanding by written notice to
the Trustee and the Company may waive any Default or Event of Default (other
than any Default or Event of Default in payment of principal or interest or
Liquidated Damages) on the Notes under the Indenture. Holders of a majority in
principal amount of the then outstanding Notes may rescind an acceleration and
its consequence (except an acceleration due to nonpayment of principal or
interest or Liquidated Damages, if any, on the Notes) if the rescission would
not conflict with any judgment or decree and if all existing Events of Default
(other than the non-payment of accelerated principal) have been cured or waived.
SECTION 5.04. DIRECTION OF PROCEEDINGS. The Holders may not enforce the
provisions of the Indenture, the Notes or the Guarantees except as provided in
the Indenture. Subject to certain limitations, Holders of a majority in
principal amount of the Notes then outstanding may direct the Trustee in its
exercise of any trust or power, PROVIDED, HOWEVER, that such direction does not
conflict with the terms of the Indenture. The Trustee may withhold from the
Holders notice of any continuing Default or Event of Default (except any Default
or Event of Default in payment of principal or interest or Liquidated Damages,
if any, on the Notes or that resulted
49
from the failure to comply with Section 4.12 hereof) if the Trustee determines
that withholding such notice is in the Holders' interest or would involve the
Trustee in personal liability.
SECTION 5.05. APPLICATION OF MONEYS COLLECTED BY TRUSTEE. Any moneys
collected by the Trustee pursuant to this Article with respect to Notes shall be
applied in the order following, at the date or dates fixed by the Trustee for
the distribution of such moneys, upon presentation of the Notes and stamping
thereon the payment, if only partially paid, and upon surrender thereof, if
fully paid:
FIRST: To the payment of costs and expenses of collection and
reasonable compensation to the Trustee, its agents, attorneys and counsel,
and all other expenses and liabilities incurred, and all advances made, by
the Trustee pursuant to Section 7.07 except as a result of its negligence
or bad faith;
SECOND: If the principal of the Notes shall not have become due and be
unpaid, to the payment of interest or Liquidated Damages, if any, on the
Notes with interest (to the extent that such interest has been collected by
the Trustee) upon the overdue installments of interest and Liquidated
Damages, if any, at the rate borne by the Notes, such payment to be made
ratably to the Persons entitled thereto;
THIRD: If the principal of the Notes shall have become due, by
declaration or otherwise, to the payment of the whole amount then owing and
unpaid upon the Notes for principal, interest and Liquidated Damages, if
any, with interest on the overdue principal and (to the extent that such
interest has been collected by the Trustee) upon overdue installments of
interest and Liquidated Damages, if any, at the rate borne by the Notes,
and in case such moneys shall be insufficient to pay in full the whole
amounts so due and unpaid upon the Notes, then to the payment of such
principal and interest and Liquidated Damages, if any, without preference
or priority of principal over interest or Liquidated Damages or of interest
or Liquidated Damages over principal, or of interest over Liquidated
Damages, or of any installment of interest or Liquidated Damages over any
other installment of interest or Liquidated Damages, ratably to the
aggregate of such principal and accrued and unpaid interest and Liquidated
Damages, if any; and
FOURTH: To the payment of any surplus then remaining to the Issuer,
its successors or assigns, or to whomsoever may be lawfully entitled to
receive the same.
No claim for interest which in any manner at or after maturity shall have
been transferred or pledged separate or apart from the Notes to which it
relates, or which in any manner shall have been kept alive after maturity by an
extension (otherwise than pursuant to an extension made pursuant to a plan
proposed by the Issuer to the Holders of all Notes), purchase, funding or
otherwise by or on behalf or with the consent or approval of the Issuer shall be
entitled, in case of a default hereunder, to any benefit of this Indenture,
except after prior payment in full of the principal of all Notes and of all
claims for interest not so transferred, pledged, kept alive, extended, purchased
or funded.
SECTION 5.06. PROCEEDINGS BY HOLDERS. No holder of any Notes shall have
any right by virtue of or by availing of any provision of this Indenture to
institute any suit, action or proceeding in equity or at law upon or under or
with respect to this Indenture for the appointment of a receiver or trustee or
similar official, or for any other remedy hereunder, unless such Holder
50
previously shall have given to the Trustee written notice of default and of the
continuance thereof, as hereinbefore provided, and unless the Holders of not
less than 25% in aggregate principal amount of the Notes shall have made written
request to the Trustee to institute such action, suit or proceeding in its own
name as Trustee hereunder and shall have offered to the Trustee such reasonable
indemnity as it may require against the costs, expenses and liabilities to be
incurred therein or thereby, and the Trustee for 60 days after its receipt of
such notice, request and offer of indemnity, shall have neglected or refused to
institute any such action, suit or proceeding, it being understood and intended,
and being expressly covenanted by the Holder of every Note with every other
Holder and the Trustee, that no one or more Holders of Notes shall have any
right in any manner whatever by virtue of or by availing of any provision of
this Indenture or of the Notes to affect, disturb or prejudice the rights of any
other Holder of Notes, or to obtain or seek to obtain priority over or
preference as to any other such Holder, or to enforce any right under this
Indenture or the Notes, except in the manner herein provided and for the equal,
ratable and common benefit of all Holders of Notes.
Notwithstanding any other provisions in this Indenture, however, the right
of any Holder of any Note to receive payment of the principal of, premium, if
any, and interest and Liquidated Damages, if any, on such Note, on or after the
maturity thereof, or to institute suit for the enforcement of any such payment
on or after such respective dates shall not be impaired or affected without the
consent of such Holder.
SECTION 5.07. PROCEEDINGS BY TRUSTEE. In case of an Event of Default
hereunder, the Trustee may in its discretion proceed to protect and enforce the
rights vested in it by this Indenture by such appropriate judicial proceedings
as the Trustee shall deem most effectual to protect and enforce any of such
rights, either by suit in equity or by action at law or by proceedings in
bankruptcy or otherwise, whether for the specific enforcement of any covenant or
agreement contained in this Indenture or in aid of the exercise of any power
granted in this Indenture, or to enforce any other legal or equitable right
vested in the Trustee by this Indenture or by law.
SECTION 5.08. REMEDIES CUMULATIVE AND CONTINUING. All powers and remedies
given by this Article Five to the Trustee or to the Holders shall, to the extent
permitted by law, be deemed cumulative and not exclusive of any thereof or of
any other powers and remedies available to the Trustee or the Holders, by
judicial proceedings or otherwise, to enforce the performance or observance of
the covenants and agreements contained in this Indenture, and no delay or
omission of the Trustee or of any Holder to exercise any right or power accruing
upon any default occurring and continuing as aforesaid shall impair any such
right or power, or shall be construed to be a waiver of any such default or an
acquiescence therein; and, subject to the provisions of Section 5.06, every
power 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 shall be deemed
expedient, by the Trustee or by the Holders.
SECTION 5.09. UNDERTAKING TO PAY COSTS. All parties to this Indenture
agree and each Holder of any Note by his acceptance thereof shall be deemed to
have agreed, that any court may in its discretion require, or in any suit for
the enforcement of any right or remedy under this Indenture, or in any suit
against the Trustee for any action taken or omitted by it as Trustee, the filing
by any party litigant in such suit of any undertaking to pay the cost of such
suit, and that such court may in its discretion assess reasonable costs,
including reasonable attorneys' fees and expenses, against any party litigant in
such suit, having due regard to the merits and good faith of
51
the claims or defenses made by such party litigant; but the provisions of this
Section 5.09 shall not apply 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 Notes, or to any suit instituted by any
Holders for the enforcement of the payment of the principal of or interest or
Liquidated Damages, if any, on any Note against the Issuer on or after the due
date of such Note.
SECTION 5.10. NOTICE OF DEFAULTS. The Company is required to deliver to
the Trustee an annual statement regarding compliance with the Indenture, and
include in such statement, if any officer of the Company is aware of any Default
or Event of Default, a statement specifying such Default or Event of Default and
what action the Company is taking or proposes to take with respect thereto. In
addition, the Company is required to deliver to the Trustee prompt written
notice of the occurrence of any Default or Event of Default.
SECTION 5.11. WAIVER OF STAY, EXTENSION OR USURY LAWS. The Company, the
Issuer and each Guarantor covenants, to the extent that it may lawfully do so,
that it will not at any time insist upon, or plead, or in any manner whatsoever
claim or take the benefit or advantage of, any stay or extension law or any
usury law or other law that would prohibit or forgive the Company, the Issuer or
the Guarantor from paying all or any portion of the principal of, or interest or
Liquidated Damages, if any, on the Notes as contemplated herein, wherever
enacted, now or at any time hereafter in force, or that may affect the covenants
or the performance of the Indenture. The Company, the Issuer and each Guarantor
hereby expressly waives, to the extent that it may lawfully do so, all benefit
or advantage of any such law and covenants that it will not hinder, delay or
impede the execution of any power herein granted to the Trustee, but will suffer
and permit the execution of every such power as though no such law had been
enacted.
ARTICLE 6
GUARANTEE
SECTION 6.01. GUARANTEE. Each of the Guarantors hereby unconditionally
guarantees, jointly and severally, to each Holder and to the Trustee and its
successors and assigns, irrespective of the validity and enforceability of this
Indenture, the Notes or the obligations of the Issuer hereunder or thereunder,
that: (i) the due and punctual payment of the principal of and any premium,
interest or Liquidated Damages on the Notes, whether at maturity or on an
interest payment date, by acceleration, pursuant to an Offer to Purchase or
otherwise, and interest on the overdue principal of and interest and Liquidated
Damages, if any, on the Notes, if lawful, and all other obligations of the
Issuer to the Holders or the Trustee hereunder or thereunder shall be promptly
paid in full when due or performed in accordance with the terms hereof and
thereof; including all amounts payable to the Trustee under Section 7.07 hereof,
and (ii) in case of any extension of time of payment or renewal of any Notes or
any of such other obligations, the same shall be promptly paid in full when due
or to be performed in accordance with the terms of the extension or renewal,
whether at stated maturity, by acceleration or otherwise.
If the Issuer fails to make any payment when due of any amount so
guaranteed for whatever reason, each Guarantor shall be obligated to pay the
same immediately. Each Guarantor hereby agrees that its obligations hereunder
shall be continuing, absolute and unconditional, irrespective of, and shall be
unaffected by, the validity regularity or enforceability of the Notes, this
Indenture, the absence of any action to enforce the same, any waiver or consent
52
by any Holder or the Trustee with respect to any provisions hereof or thereof,
the recovery of any judgment against the Issuer, any action to enforce the same
or any other circumstance which might otherwise constitute a legal or equitable
discharge or defense of such Guarantor. If any Holder is required by any court
or otherwise to return to the Issuer or any Guarantor, or any custodian,
trustee, liquidator or other similar official acting in relation to the Issuer
or such Guarantor, any amount paid by the Issuer or any Guarantor to the Trustee
or such Holder, this Article 6, to the extent theretofore discharged, shall be
reinstated in full force and effect. Each Guarantor agrees that is shall not be
entitled to any right of subrogation in relation to the Holders in respect of
any obligations guaranteed hereby until payment in full of all obligations
guaranteed hereby.
The Guarantee set forth in this Section 6.01 shall not be valid or become
obligatory for any purpose with respect to a Note until the certificate of
authentication on such Note shall have been signed by the Trustee or any duly
appointed agent.
SECTION 6.02. OBLIGATIONS OF EACH GUARANTOR UNCONDITIONAL. Nothing
contained in this Article 6 or elsewhere in this Indenture or in any Note is
intended to or shall impair, as between each Guarantor and the Holders, which
are absolute and unconditional, to pay to the Holders the principal of and
interest and Liquidated Damages, if any, on the Notes as and when the same shall
become due and payable in accordance with the provisions of the Guarantee or is
intended to or shall affect the relative rights of the Holders and creditors of
the Issuer, nor shall anything herein or therein prevent the Trustee or any
Holder from exercising all remedies otherwise permitted by applicable law upon
any Default under this Indenture in respect of cash, property or securities of
such Guarantor received upon the exercise of any such remedy.
Upon any distribution of assets of a Guarantor referred to in this Article
6, the Trustee, subject to the provisions of Article 7, and the Holders shall be
entitled to rely upon any order or decree made by any court of competent
jurisdiction in which such dissolution, winding up, liquidation or
reorganization proceedings are pending, or a certificate of the liquidating
trustee or agent or other person making any distribution to the Trustee or to
the Holders, for the purpose of ascertaining the persons entitled to participate
in such distribution, the holders of other indebtedness of such Guarantor, the
amount thereof or payable thereon, the amount or amounts paid or distributed
thereon and all other facts pertinent thereto or to this Article 6.
SECTION 6.03. RELEASE OF A GUARANTOR. If all or substantially all of the
assets of any Guarantor other than the Company or all of the Capital Stock of
any Guarantor other than the Company is sold (including by consolidation,
merger, issuance or otherwise) or disposed of (including by liquidation,
dissolution or otherwise) by the Company or any of its Subsidiaries, or, unless
the Company elects otherwise, if any Guarantor other than the Company is
designated an Unrestricted Subsidiary in accordance with the terms of the
Indenture, then such Guarantor (in the event of a sale or other disposition of
all of the Capital Stock of such Guarantor or a designation as an Unrestricted
Subsidiary) or the Person acquiring such assets (in the event of a sale or other
disposition of all or substantially all of the assets of such Guarantor) shall
be deemed automatically and unconditionally released and discharged from any of
its obligations under the Indenture without any further action on the part of
the Trustee or any Holder of the Notes.
An Unrestricted Subsidiary that is a Guarantor shall be deemed
automatically and unconditionally released and discharged from all obligations
under its Guarantee upon notice
53
from the Company to the Trustee to such effect, without any further action
required on the part of the Trustee or any Holder.
SECTION 6.04. EXECUTION AND DELIVERY OF GUARANTY. The execution by each
Guarantor of the Indenture (or a
supplemental indenture in the form of Exhibit
B) evidences the Note Guaranty of such Guarantor, whether or not the person
signing as an officer of the Guarantor still holds that office at the time of
authentication of any Note. The delivery of any Note by the Trustee after
authentication constitutes due delivery of the Note Guaranty set forth in the
Indenture on behalf of each Guarantor.
SECTION 6.05. LIMITATION ON GUARANTOR LIABILITY. Notwithstanding anything
to the contrary in this Article, each Guarantor, and by its acceptance of Notes,
each Holder, hereby confirms that it is the intention of all such parties that
the Note Guaranty of such Guarantor not constitute a fraudulent conveyance under
applicable fraudulent conveyance provisions of the United States Bankruptcy Code
or any comparable provision of state law. To effectuate that intention, the
Trustee, the Holders and the Guarantors hereby irrevocably agree that the
obligations of each Guarantor under its Note Guaranty are limited to the maximum
amount that would not render the Guarantor's obligations subject to avoidance
under applicable fraudulent conveyance provisions of the United States
Bankruptcy Code or any comparable provision of state law.
SECTION 6.06. ARTICLE 6 NOT TO PREVENT EVENTS OF DEFAULT. The failure to
make a payment on account of principal or interest or Liquidated Damages, if
any, on the Notes by reason of any provision in this Article 6 shall not be
construed as preventing the occurrence of any Event of Default under Section
5.01.
SECTION 6.07. WAIVER BY THE GUARANTORS. Each Guarantor hereby irrevocably
waives diligence, presentment, demand of payment, demand of performance, filing
of claims with a court in the event of insolvency of bankruptcy of the Issuer,
any right to require a proceeding first against the Issuer, the benefit of
discussion, protest, notice and all demand whatsoever and covenants that this
Guarantee shall not be discharged except by complete performance of the
obligations contained in the Notes, in this Indenture and in this Article 6.
SECTION 6.08. SUBROGATION AND CONTRIBUTION. Upon making any payment with
respect to any obligation of the Issuer under this Article, the Guarantor making
such payment will be subrogated to the rights of the payee against the Issuer
with respect to such obligation, PROVIDED that the Guarantor may not enforce
either any right of subrogation, or any right to receive payment in the nature
of contribution, or otherwise, from any other Guarantor, with respect to such
payment so long as any amount payable by the Issuer hereunder or under the Notes
remains unpaid.
SECTION 6.09. STAY OF ACCELERATION. If acceleration of the time for
payment of any amount payable by the Issuer under the Indenture or the Notes is
stayed upon the insolvency, bankruptcy or reorganization of the Issuer, all such
amounts otherwise subject to acceleration under the terms of the Indenture are
nonetheless payable by the Guarantors hereunder forthwith on demand by the
Trustee or the Holders.
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ARTICLE 7
THE TRUSTEE
SECTION 7.01. GENERAL. (a) The duties and responsibilities of the Trustee
are as provided by the Trust Indenture Act and as set forth herein. Whether or
not expressly so provided, every provision of the Indenture relating to the
conduct or affecting the liability of or affording protection to the Trustee is
subject to this Article.
(b) Except during the continuance of an Event of Default, the Trustee need
perform only those duties that are specifically set forth in the Indenture and
no others, and no implied covenants or obligations will be read into the
Indenture against the Trustee. In case an Event of Default has occurred and is
continuing, the Trustee shall exercise those rights and powers vested in it by
the Indenture, and use the same degree of care and skill in their exercise, as a
prudent man would exercise or use under the circumstances in the conduct of his
own affairs.
SECTION 7.02. CERTAIN RIGHTS OF TRUSTEE. Subject to Trust Indenture Act
Sections 315(a) through (d):
(a) The Trustee may rely, and will be protected in acting or
refraining from acting, upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document believed by it to be genuine and to have been signed or presented
by the proper Person. The Trustee need not investigate any fact or matter
stated in the document, but the Trustee, in its discretion, may make
further inquiry or investigation into such facts or matters as it sees fit.
(b) Before the Trustee acts or refrains from acting, it may require
an Officers' Certificate or an Opinion of Counsel conforming to Section
12.05 and the Trustee will not be liable for any action it takes or omits
to take in good faith in reliance on the certificate or opinion.
(c) The Trustee may act through its attorneys and agents and will
not be responsible for the misconduct or negligence of any agent appointed
with due care.
(d) The Trustee will be under no obligation to exercise any of the
rights or powers vested in it by the Indenture at the request or direction
of any of the Holders, unless such Holders have offered to the Trustee
reasonable security or indemnity against the costs, expenses and
liabilities that might be incurred by it in compliance with such request or
direction.
(e) The Trustee will not be liable for any action it takes or omits
to take in good faith that it believes to be authorized or within its
rights or powers or for any action it takes or omits to take in accordance
with the direction of the Holders in accordance with Section 5.04 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 the Indenture.
55
(f) The Trustee may consult with counsel, and the written advice of
such counsel or any Opinion of Counsel will 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.
(g) No provision of the Indenture will require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in
the performance of its duties hereunder, or in the exercise of its rights
or powers, unless it receives indemnity satisfactory to it against any
loss, liability or expense.
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE. The Trustee, in its individual
or any other capacity, may become the owner or pledgee of Notes and may
otherwise deal with the Company or its Affiliates with the same rights it would
have if it were not the Trustee. Any Agent may do the same with like rights.
However, the Trustee is subject to Trust Indenture Act Sections 310(b) and 311.
For purposes of Trust Indenture Act Section 311(b)(4) and (6):
(a) "CASH TRANSACTION" means any transaction in which full payment
for goods or securities sold is made within seven days after delivery of
the goods or securities in currency or in checks or other orders drawn upon
banks or bankers and payable upon demand; and
(b) "SELF-LIQUIDATING PAPER" means any draft, xxxx of exchange,
acceptance or obligation which is made, drawn, negotiated or incurred for
the purpose of financing the purchase, processing, manufacturing, shipment,
storage or sale of goods, wares or merchandise and which is secured by
documents evidencing title to, possession of, or a lien upon, the goods,
wares or merchandise or the receivables or proceeds arising from the sale
of the goods, wares or merchandise previously constituting the security,
provided the security is received by the Trustee simultaneously with the
creation of the creditor relationship arising from the making, drawing,
negotiating or incurring of the draft, xxxx of exchange, acceptance or
obligation.
SECTION 7.04. TRUSTEE'S DISCLAIMER. The Trustee (a) makes no
representation as to the validity or adequacy of the Indenture or the Notes, (b)
is not accountable for the Company's use or application of the proceeds from the
Notes and (c) is not responsible for any statement in the Notes other than its
certificate of authentication.
SECTION 7.05. NOTICE OF DEFAULT. If any Default occurs and is continuing
and is known to the Trustee, the Trustee will send notice of the Default to each
Holder within 90 days after it occurs, unless the Default has been cured;
PROVIDED that, except in the case of a default in the payment of the principal
of or interest or Liquidated Damages, if any, on any Note, the Trustee may
withhold the notice if and so long as the board of directors, the executive
committee or a trust committee of directors of the Trustee in good faith
determines that withholding the notice is in the interest of the Holders. Notice
to Holders under this Section will be given in the manner and to the extent
provided in Trust Indenture Act Section 313(c).
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS. Within 60 days after each May
15, beginning with May 15, 2002, the Trustee will mail to each Holder, as
provided in Trust Indenture Act Section 313(c), a brief report dated as of such
May 15, if required by Trust Indenture Act Section 313(a).
56
SECTION 7.07. COMPENSATION AND INDEMNITY. (a) The Company will pay the
Trustee compensation as agreed upon in writing for its services. The
compensation of the Trustee is not limited by any law on compensation of a
Trustee of an express trust. The Company will reimburse the Trustee upon request
for all reasonable out-of-pocket expenses, disbursements and advances incurred
or made by the Trustee, including the reasonable compensation and expenses of
the Trustee's agents and counsel.
(b) The Company will indemnify the Trustee for, and hold it harmless
against, any loss or liability or expense incurred by it without negligence or
bad faith on its part arising out of or in connection with the acceptance or
administration of the Indenture and its duties under the Indenture and the
Notes, including the costs and expenses of defending itself against any claim or
liability and of complying with any process served upon it or any of its
officers in connection with the exercise or performance of any of its powers or
duties under the Indenture and the Notes.
(c) To secure the Company's payment obligations in this Section, the
Trustee will have a lien prior to the Notes on all money or property held or
collected by the Trustee, in its capacity as Trustee, except money or property
held in trust to pay principal of, and interest or Liquidated Damages, if any,
on particular Notes.
SECTION 7.08. REPLACEMENT OF TRUSTEE. (a) (i) The Trustee may resign at
any time by written notice to the Company.
(ii) The Holders of a majority in principal amount of the
outstanding Notes may remove the Trustee by written notice to the Trustee.
(iii) If the Trustee is no longer eligible under Section 7.10 or in
the circumstances described in Trust Indenture Act Section 310(b), any
Holder that satisfies the requirements of Trust Indenture Act Section
310(b) may petition any court of competent jurisdiction for the removal of
the Trustee and the appointment of a successor Trustee.
(iv) The Company may remove the Trustee if: (A) the Trustee is no
longer eligible under Section 7.10; (B) the Trustee is adjudged a bankrupt
or an insolvent; (C) a receiver or other public officer takes charge of the
Trustee or its property; or (D) the Trustee becomes incapable of acting.
A resignation or removal of the Trustee and appointment of a successor Trustee
will become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section.
(b) If the Trustee has been removed by the Holders, Holders of a majority
in principal amount of the Notes may appoint a successor Trustee with the
consent of the Company. Otherwise, if the Trustee resigns or is removed, or if a
vacancy exists in the office of Trustee for any reason, the Company will
promptly appoint a successor Trustee. If the successor Trustee does not deliver
its written acceptance within 30 days after the retiring Trustee resigns or is
removed, the retiring Trustee, the Company or the Holders of a majority in
principal amount of the outstanding Notes may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
57
(c) Upon delivery by the successor Trustee of a written acceptance of its
appointment to the retiring Trustee and to the Company, (i) the retiring Trustee
will transfer all property held by it as Trustee to the successor Trustee,
subject to the lien provided for in Section 7.07, (ii) the resignation or
removal of the retiring Trustee will become effective, and (iii) the successor
Trustee will have all the rights, powers and duties of the Trustee under the
Indenture. Upon request of any successor Trustee, the Company will execute any
and all instruments for fully and vesting in and confirming to the successor
Trustee all such rights, powers and trusts. The Company will give notice of any
resignation and any removal of the Trustee and each appointment of a successor
Trustee to all Holders, and include in the notice the name of the successor
Trustee and the address of its Corporate Trust Office.
(d) Notwithstanding replacement of the Trustee pursuant to this Section,
the Company's obligations under Section 7.07 will continue for the benefit of
the retiring Trustee.
(e) The Trustee agrees to give the notices provided for in, and otherwise
comply with, Trust Indenture Act Section 310(b).
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER. If the Trustee consolidates
with, merges or converts into, or transfers all or substantially all of its
corporate trust business to, another corporation or national banking
association, the resulting, surviving or transferee corporation or national
banking association without any further act will be the successor Trustee with
the same effect as if the successor Trustee had been named as the Trustee in the
Indenture.
SECTION 7.10. ELIGIBILITY. The Indenture must always have a Trustee that
satisfies the requirements of Trust Indenture Act Section 310(a) and has a
combined capital and surplus of at least $25,000,000 as set forth in its most
recent published annual report of condition.
SECTION 7.11. MONEY HELD IN TRUST. The Trustee will not be liable for
interest on any money received by it except as it may agree with the Company.
Money held in trust by the Trustee need not be segregated from other funds
except to the extent required by law and except for money held in trust under
Article 8.
ARTICLE 8
DEFEASANCE AND DISCHARGE
SECTION 8.01. DISCHARGE OF ISSUER'S OBLIGATIONS. (a) Subject to
paragraph (b), the Issuer's obligations under the Notes and the Indenture, and
each Guarantor's obligations under its Note Guaranty, will terminate if:
(1) all Notes previously authenticated and delivered (other than
(a) destroyed, lost or stolen Notes that have been replaced or (b) Notes
that are paid pursuant to Section 4.01 or (c) Notes for whose payment money
or U.S. Government Obligations have been held in trust and then repaid to
the Issuer pursuant to Section 8.05) have been delivered to the Trustee for
cancellation and the Issuer has paid all sums payable by it hereunder; or
58
(2) (A) the Notes mature within one year, or all of them are to be
called for redemption within one year under arrangements satisfactory to
the Trustee for giving the notice of redemption,
(B) the Issuer irrevocably deposits in trust with the Trustee,
as trust funds solely for the benefit of the Holders, money or U.S.
Government Obligations or a combination thereof sufficient, in the
opinion of a nationally recognized firm of independent public
accountants expressed in a written certificate delivered to the
Trustee, without consideration of any reinvestment, to pay principal
of and premium, interest and Liquidated Damages, if any, on the Notes
to maturity or redemption, as the case may be, and to pay all other
sums payable by it hereunder,
(C) no Default has occurred and is continuing on the date of
the deposit,
(D) the deposit will not result in a breach or violation of, or
constitute a default under, the Indenture or any other agreement or
instrument to which the Issuer is a party or by which it is bound, and
(E) the Issuer delivers to the Trustee an Officers' Certificate
and an Opinion of Counsel, in each case stating that all conditions
precedent provided for herein relating to the satisfaction and
discharge of the Indenture have been complied with.
(b) After satisfying the conditions in clause (a)(1), only the Issuer's
obligations under Section 7.07 will survive. After satisfying the conditions in
clause (a)(2), only the Issuer's obligations in Article 2 and Sections 4.01,
4.02, 7.07, 7.08, 8.05 and 8.06 will survive. In either case, the Trustee, upon
the request and at the cost and expense of the Issuer, will acknowledge in
writing the discharge of the Issuer's obligations under the Notes and the
Indenture other than the surviving obligations.
SECTION 8.02. LEGAL DEFEASANCE. On the 91st day following the deposit
referred to in clause (1), the Issuer will be deemed to have paid and will be
discharged from its obligations in respect of the Notes and the Indenture, other
than its obligations in Article 2 and Sections 4.01, 4.02, 7.07, 7.08, 8.05 and
8.06, and each Guarantor's obligations under its Note Guaranty will terminate,
PROVIDED the following conditions have been satisfied:
(1) The Issuer has irrevocably deposited in trust with the Trustee,
as trust funds solely for the benefit of the Holders, money or U.S.
Government Obligations or a combination thereof sufficient, in the opinion
of a nationally recognized firm of independent public accountants expressed
in a written certificate thereof delivered to the Trustee, without
consideration of any reinvestment, to pay principal of and premium,
interest and Liquidated Damages, if any, on the Notes to maturity or
redemption, as the case may be, PROVIDED that any redemption before
maturity has been irrevocably provided for under arrangements satisfactory
to the Trustee.
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(2) The deposit will not result in a breach or violation of, or
constitute a default under, the Indenture or any other agreement or
instrument to which the Issuer is a party or by which it is bound.
(3) The Issuer has delivered to the Trustee either (x) a ruling
received from the Internal Revenue Service to the effect that the Holders
will not recognize income, gain or loss for federal income tax purposes as
a result of the defeasance and will be subject to federal income tax on the
same amount and in the same manner and at the same times as would otherwise
have been the case or (y) an Opinion of Counsel, based on a change in law
after the date of the Indenture, to the same effect as the ruling described
in clause (x).
(4) The Issuer has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, in each case stating that all
conditions precedent provided for herein relating to the defeasance have
been complied with.
Prior to the end of the 91-day period, none of the Issuer's obligations
under the Indenture will be discharged. Thereafter, the Trustee, upon the
request and at the cost and expense of the Issuer, will acknowledge in writing
the discharge of the Issuer's obligations under the Notes and the Indenture
except for the surviving obligations specified above.
SECTION 8.03. COVENANT DEFEASANCE. After the 91st day following the
deposit referred to in clause (1), the Issuer's obligations set forth in
Sections 4.06 through 4.13, inclusive and clause (iii) of Section 4.14, and each
Guarantor's obligations under its Note Guaranty, will terminate, and clauses
(iii), (iv), (v), (vi) and (ix) of Section 5.01 will no longer constitute Events
of Default, PROVIDED the following conditions have been satisfied:
(1) The Issuer has complied with clauses (1), (2) and (4) of
Section 8.02; and
(2) the Issuer has delivered to the Trustee an Opinion of Counsel
to the effect that the Holders will not recognize income, gain or loss for
federal income tax purposes as a result of the defeasance and will be
subject to federal income tax on the same amount and in the same manner and
at the same times as would otherwise have been the case.
Except as specifically stated above, none of the Issuer's obligations under
the Indenture will be discharged.
SECTION 8.04. APPLICATION OF TRUST MONEY. Subject to Section 8.05, the
Trustee will hold in trust the money or U.S. Government Obligations deposited
with it pursuant to Section 8.01, 8.02 or 8.03, and apply the deposited money
and the proceeds from deposited U.S. Government Obligations to the payment of
principal of and premium, interest and Liquidated Damages, if any, on the Notes
in accordance with the Notes and the Indenture. Such money and U.S. Government
Obligations need not be segregated from other funds except to the extent
required by law.
SECTION 8.05. REPAYMENT TO ISSUER. Subject to Sections 7.07, 8.01, 8.02
and 8.03, the Trustee will promptly pay to the Issuer upon request any excess
money held by the Trustee at any time and thereupon be relieved from all
liability with respect to such money. The Trustee will pay to the Issuer upon
written request any money deposited with or paid to the Trustee for the payment
of the principal of, premium, interest or Liquidated Damages, if any, with
respect to
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the Notes and not applied but remaining unclaimed for two years after the date
upon which such After payment to the Company, Holders entitled to such
principal, premium, interest or Liquidated Damages, shall have become due and
payable, shall, upon the written request of the Issuer and unless otherwise
required by mandatory provisions of applicable escheat or abandoned or unclaimed
property law, be repaid to the Issuer by the Trustee. Thereafter, the Holder of
the Notes must look solely to the Issuer for any payment such Holder may be
entitled to collect, unless otherwise required by mandatory provisions of
applicable escheat or abandoned or unclaimed property laws, and all liability of
the Trustee with respect to such money shall thereupon cease.
SECTION 8.06. REINSTATEMENT. If and for so long as the Trustee is unable
to apply any money or U.S. Government Obligations held in trust pursuant to
Section 8.01, 8.02 or 8.03 by reason of any legal proceeding or by reason of any
order or judgment of any court or governmental authority enjoining, restraining
or otherwise prohibiting such application, the Issuer's obligations under the
Indenture and the Notes will be reinstated as though no such deposit in trust
had been made. If the Issuer makes any payment of principal of or interest or
Liquidated Damages, if any, on any Notes because of the reinstatement of its
obligations, it will be subrogated to the rights of the Holders of such Notes to
receive such payment from the money or U.S. Government Obligations held in
trust.
SECTION 8.07. INDEMNITY FOR U.S. GOVERNMENT OBLIGATIONS. The Issuer shall
pay and indemnify the Trustee against any tax, fee or other charge imposed on or
assessed against the U.S. Government Obligations deposited pursuant to Sections
8.01, 8.02 or 8.03.
ARTICLE 9
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01. AMENDMENTS WITHOUT CONSENT OF HOLDERS. The Company, the
Issuer, the Guarantors and the Trustee may amend or supplement the Indenture or
the Notes without notice to or the consent of any Holder
(a) to cure any ambiguity, defect or inconsistency in the Indenture
or the Notes that does not adversely affect the interests of the Holders;
(b) to comply with Section 4.14;
(c) to comply with any requirements of the Commission in connection
with the qualification of the Indenture under the Trust Indenture Act;
(d) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee;
(e) to provide for uncertificated Notes in addition to or in place
of certificated Notes;
(f) to provide for any Guarantee of the Notes, to secure the Notes
or to confirm and evidence the release, termination or discharge of any
Guarantee of or Lien securing the Notes when such release, termination or
discharge is permitted by the Indenture;
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(g) to provide for or confirm the issuance of Additional Notes; or
(h) to make any other change that does not adversely affect the
legal rights of any Holder.
SECTION 9.02. AMENDMENTS WITH CONSENT OF HOLDERS. (a) Except as otherwise
provided in Sections 5.01, 5.03 and 5.06 or paragraph (b), the Company, the
Issuer, the Guarantors and the Trustee may amend the Indenture and the Notes
with the written consent of the Holders of a majority in principal amount of the
outstanding Notes, and the Holders of a majority in principal amount of the
outstanding Notes by written notice to the Trustee may waive future compliance
by the Company, the Issuer and the Guarantors with any provision of the
Indenture or the Notes.
(b) Notwithstanding the provisions of paragraph (a), without the consent
of each Holder affected, an amendment or waiver may not
(i) reduce the amount of Notes whose Holders must consent to an
amendment, supplement or waiver,
(ii) reduce the rate of or change the time for payment of any
interest, including default interest, on any Note,
(iii) reduce principal of or change the fixed maturity of any Note or
alter the provisions (including related definitions) with respect to
redemptions described under Section 3.01 or with respect to mandatory
offers to repurchase Notes described under Section 4.10 and 4.12,
(iv) make any Note payable in money other than that stated in the
Note,
(v) modify the ranking or priority of the Notes or any Guarantee,
(vi) make any change in Section 5.03 or 5.06,
(vii) release any Guarantor from any of its obligations under its
Guarantee or the Indenture otherwise than in accordance with the Indenture,
or
(viii) waive a continuing Default or Event of Default in the payment
of principal of or interest or Liquidated Damages on the Notes.
(c) It is not necessary for Holders to approve the particular form of any
proposed amendment, supplement or waiver, but is sufficient if their consent
approves the substance thereof.
(d) An amendment, supplement or waiver under this Section will become
effective on receipt by the Trustee of written consents from the Holders of the
requisite percentage in principal amount of the outstanding Notes. After an
amendment, supplement or waiver under this Section becomes effective, the Issuer
will send to the Holders affected thereby a notice briefly describing the
amendment, supplement or waiver. The Issuer will send
supplemental indentures to
Holders upon request. Any failure of the Issuer to send such notice, or any
defect
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therein, will not, however, in any way impair or affect the validity of any such
supplemental indenture or waiver.
SECTION 9.03. EFFECT OF CONSENT. (a) After an amendment, supplement or
waiver becomes effective, it will bind every Holder unless it is of the type
requiring the consent of each Holder affected. If the amendment, supplement or
waiver is of the type requiring the consent of each Holder affected, the
amendment, supplement or waiver will bind each Holder that has consented to it
and every subsequent Holder of a Note that evidences the same debt as the Note
of the consenting Holder.
(b) If an amendment, supplement or waiver changes the terms of a Note, the
Trustee may require the Holder to deliver it to the Trustee so that the Trustee
may place an appropriate notation of the changed terms on the Note and return it
to the Holder, or exchange it for a new Note that reflects the changed terms.
The Trustee may also place an appropriate notation on any Note thereafter
authenticated. However, the effectiveness of the amendment, supplement or waiver
is not affected by any failure to annotate or exchange Notes in this fashion.
SECTION 9.04. TRUSTEE'S RIGHTS AND OBLIGATIONS. The Trustee is entitled to
receive, and will be fully protected in relying upon, an Opinion of Counsel
stating that the execution of any amendment, supplement or waiver authorized
pursuant to this Article is authorized or permitted by the Indenture. If the
Trustee has received such an Opinion of Counsel, it shall sign the amendment,
supplement or waiver so long as the same does not adversely affect the rights of
the Trustee. The Trustee may, but is not obligated to, execute any amendment,
supplement or waiver that affects the Trustee's own rights, duties or immunities
under the Indenture.
SECTION 9.05. CONFORMITY WITH TRUST INDENTURE ACT. Every
supplemental
indenture executed pursuant to this Article shall conform to the requirements of
the Trust Indenture Act.
SECTION 9.06. PAYMENTS FOR CONSENTS. Neither the Issuer, the Company nor
any of its Subsidiaries or Affiliates may, directly or indirectly, pay or cause
to be paid any consideration, whether by way of interest, fee or otherwise, to
any Holder for or as an inducement to any consent, waiver or amendment of any of
the terms or provisions of the Indenture or the Notes unless such consideration
is offered to be paid or agreed to be paid to all Holders of the Notes that
consent, waive or agree to amend such term or provision within the time period
set forth in the solicitation documents relating to the consent, waiver or
amendment.
ARTICLE 10
SUBORDINATION OF NOTES
SECTION 10.01. NOTES SUBORDINATED TO SENIOR DEBT OF THE ISSUER. The Issuer
covenants and agrees, and each Holder of the Notes by his acceptance thereof
likewise covenants and agrees, that the payment of the principal and interest on
the Notes is subordinated, to the extent and in the manner provided in this
Article 10, to the prior payment in full of all Senior Debt of the Issuer.
"SENIOR DEBT OF THE ISSUER" means the principal of and interest on:
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(1) all Indebtedness of the Issuer;
(2) lease obligations of the Issuer;
(3) all Indebtedness, secured or unsecured, in connection with the
acquisition or improvement of any property or asset or the acquisition of
any business by the Issuer;
(4) all Indebtedness secured by any mortgage, lien, pledge, charge
or encumbrance upon property owned by the Issuer and all indebtedness
secured in the manner specified in this clause (4) even if the Issuer has
not assumed or become liable for the payment thereof;
(5) all customer deposits held in escrow accounts by the Issuer
pending closing of the related sales;
(6) all indebtedness of the Issuer created or arising under any
conditional sale or other title retention agreement with respect to
property acquired by the Issuer or otherwise representing the deferred and
unpaid balance of the purchase price of any such property, including all
indebtedness created or arising in the manner specified in this clause (6)
even though the rights and remedies of the seller or lender under such
agreement in the event of default are limited to repossession or sale of
such property;
(7) guarantees by the Issuer, direct or indirect, of any
indebtedness of another Person of the types referred to in clauses (1),
(2), (3), (4), (5) or (6); and
(8) contingent obligations of the Issuer in respect of, or to
purchase or otherwise acquire or be responsible or liable for through the
purchase of products or services irrespective of whether such products are
delivered or such services are rendered, any such indebtedness referred to
in clauses (1), (2), (3), (4), (5) or (6),
which indebtedness, lease obligation, deposit, guarantee or contingent
obligation the Issuer has directly or indirectly created, incurred, assumed,
guaranteed, or otherwise become liable or responsible for, whether currently
outstanding or hereafter created. Any reference in this definition to any
indebtedness shall be deemed to include any renewals, extensions, refundings,
amendments and modifications of any such indebtedness issued in exchange for
such indebtedness; PROVIDED, HOWEVER, that Senior Debt of the Issuer shall not
include, without limitation, (i) the Notes issued under this Indenture, (ii) the
Issuer's 9 3/4% Subordinated Notes due 2005, (iii) accounts payable or any other
indebtedness to trade creditors created or assumed by the Issuer in the ordinary
course of business in connection with the obtaining of materials or services,
(iv) any liability for federal, state or local taxes owed or owing by the Issuer
and (v) any Indebtedness as to which, in the instrument creating or evidencing
the same or pursuant to which the same is outstanding, it is provided that such
indebtedness is on a parity with or otherwise not superior in right of payment
to the Notes.
This Article 10 shall constitute a continuing offer to all persons who, in
reliance upon such provisions, become holders of, or continue to hold, Senior
Debt of the Issuer, and such provisions are made for the benefit of the holders
of Senior Debt of the Issuer, and such holders are made obligees hereunder and
any one or more of them may enforce such provisions.
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SECTION 10.02. ISSUER NOT TO MAKE PAYMENTS WITH RESPECT TO NOTES IN CERTAIN
CIRCUMSTANCES.
(a) Upon the maturity of the principal of any Senior Debt of the Issuer
(other than payment of sinking fund installments) by lapse of time, acceleration
or otherwise, all principal thereof and interest thereon shall first be paid in
full, or such payment duly provided for in cash or in a manner satisfactory to
the holders of such Senior Debt of the Issuer, before any deposit is made
pursuant to Article 8 hereof or any payment is made on account of the principal
of or interest on the Notes or to acquire any of the Notes or on account of the
mandatory redemption provisions in the Notes (except mandatory redemption
payments made in respect of Notes acquired by the Issuer before the maturity of
such Senior Debt of the Issuer), including any payment pursuant to Section 4.10
or 4.12.
(b) Unless Section 10.03 shall be applicable, upon (1) the occurrence of a
Payment Default with respect to any Senior Debt of the Issuer and receipt by the
Trustee and the Issuer of written notice of such occurrence or (2) upon
acceleration of such Senior Debt of the Issuer, then no deposit pursuant to
Article 8 hereof and no payment or distribution of any assets of the Issuer of
any kind or character shall be made by the Issuer or the Trustee on account of
principal of or interest on the Notes or on account of the purchase or
redemption or other acquisition of Notes, including any payment pursuant to
Section 4.10 or 4.12, unless and until such Payment Default shall have been
cured or waived in writing or shall have ceased to exist or such Senior Debt of
the Issuer shall have been discharged, after which the Issuer shall resume
making any and all required payments in respect of the Notes, including any
missed payments.
(c) Unless Section 10.03 shall be applicable, upon (1) the occurrence of a
Non-Payment Default and (2) receipt by the Trustee of written notice of such
occurrence, then no deposit pursuant to Article 8 hereof and no payment or
distribution of any assets of the Issuer of any kind or character shall be made
by the Issuer or the Trustee on account of any principal of or interest on the
Notes or on account of the purchase or redemption or other acquisition of Notes,
including any payment pursuant to Section 4.10 or 4.12, for a period ("PAYMENT
BLOCKAGE PERIOD") commencing on the earlier of the date of receipt by the
Trustee of such written notice from the holders of Senior Debt of the Issuer or
of a Guarantor or any representative of a holder of Senior Debt of the Issuer or
of a Guarantor unless and until (subject to any blockage of payment that may
then be in effect under subsection (a) or (b) of this Section 10.02) the earlier
of (x) more than 120 days shall have elapsed since receipt of such written
notice by the Trustee, (y) such Non-Payment Default shall have been cured or
waived in writing or shall have ceased to exist or such Senior Debt of the
Issuer or of a Guarantor shall have been discharged or (z) such Payment Blockage
Period shall have been terminated by written notice to the Issuer or the
relevant Guarantor, as the case may be, or to the Trustee from the holders of
the Senior Debt of the Issuer or any representative of the holders of the Senior
Debt of the Issuer or of a Guarantor initiating such Payment Blockage Period,
after which, in the case of clause (x), (y) or (z), the Issuer shall promptly
resume making any and all required payments in respect of the Notes, including
any missed payments. In no event shall a Payment Blockage Period extend beyond
120 days from the date of the receipt by the Trustee of the notice referred to
in clause (2) hereof (the "INITIAL PERIOD"). Any number of additional Payment
Blockage Periods may be commenced during the Initial Period; PROVIDED, HOWEVER,
that no such additional period shall extend beyond the Initial Period. After the
expiration of the Initial Period, no Payment Blockage Period may be commenced on
the basis of a Non-Payment Default on the Senior Debt of the Issuer or Senior
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Debt of a Guarantor which was the basis of a Payment Blockage Period commenced
during the Initial Period until at least 270 consecutive days have elapsed from
the last day of the Initial Period. No Non-Payment Default with respect to
Senior Debt of the Issuer or Senior Debt of a Guarantor which existed or was
continuing on the date of the commencement of any Payment Blockage Period and of
which the applicable holder(s) of Senior Debt of the Issuer or Senior Debt of a
Guarantor are aware shall be, or be made, the basis for the commencement of a
second Payment Blockage Period whether or not within a period of 270 consecutive
days unless such event of default shall have been cured or waived for a period
of not less than 90 consecutive days.
(d) In the event that notwithstanding the provisions of this Section 10.02
the Issuer shall make any deposit pursuant to Article 8 hereof or any payment or
distribution of any character to the Trustee on account of the principal of or
interest on the Notes, or on account of the mandatory redemption provisions
contained in this Indenture, including any payment pursuant to Section 4.10 or
4.12, after the happening of an event of default with respect to any Senior Debt
of the Issuer based on a default in the payment of the principal of or interest
on Senior Debt of the Issuer, or after receipt by the Trustee of written notice
as provided in this Section 10.02 of an event of default with respect to any
Senior Debt of the Issuer, or after the acceleration of the Notes pursuant to
Section 5.01, then, but only if the Trustee is in receipt of the notice
specified in Section 10.06, unless and until such default or event of default
shall have been cured or waived or shall have ceased to exist, or such
acceleration shall have been rescinded, such payment or deposit (subject to the
provisions of Sections 10.05 and 10.06) shall be held by the Trustee in trust
for the benefit of, and, if the Senior Debt of the Issuer shall have been
declared immediately due and payable, shall be paid forthwith over and delivered
to, the holders of Senior Debt of the Issuer (pro rata as to each of such
holders on the basis of the respective amounts of Senior Debt of the Issuer held
by them) or their representative or the trustee under the indenture or other
agreement (if any) pursuant to which Senior Debt of the Issuer may have been
issued, as their respective interests may appear, such payments to be made in
accordance with an Officers' Certificate as provided in Section 10.13 (on which
the Trustee may conclusively rely) identifying all holders of Senior Debt of the
Issuer and the principal amount of Senior Debt of the Issuer then outstanding
held by each and stating the reasons why such Officers' Certificate is being
delivered to the Trustee, for application to the payment of all Senior Debt of
the Issuer remaining unpaid to the extent necessary to pay all Senior Debt of
the Issuer in full in accordance with its terms, after giving effect to any
concurrent payment or distribution to or for the holders of Senior Debt of the
Issuer. In the event of the failure of any Holder of a Note to endorse or assign
any such payment or distribution, each holder of Senior Debt of the Issuer is
hereby irrevocably authorized to endorse or assign the same. The Issuer shall
give prompt written notice to the Trustee of any default under any Senior Debt
of the Issuer or under any agreement pursuant to which Senior Debt of the Issuer
may have been issued, as required by Section 4.17.
SECTION 10.03. NOTES SUBORDINATED TO PRIOR PAYMENT OF ALL SENIOR DEBT OF
THE ISSUER ON DISSOLUTION, WINDING UP, LIQUIDATION OR REORGANIZATION OF ISSUER.
In the event of (i) any insolvency, bankruptcy, receivership, liquidation,
reorganization, readjustment, composition or other similar proceeding relating
to the Issuer, its creditors or its property, (ii) any case or proceeding for
the liquidation, dissolution or other winding-up of the Issuer, voluntary or
involuntary, whether or not involving insolvency or bankruptcy proceedings,
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(iii) any assignment by the Issuer for the benefit of creditors, or (iv) any
other marshalling of the assets of the Issuer:
(a) the holders of all Senior Debt of the Issuer shall first be entitled
to receive payment in full (or to have such payment duly provided for) of the
principal and interest due thereon (including any interest thereon accruing
after commencement of any such proceeding) before the Holders of the Notes are
entitled to receive any payment or any distribution, whether in cash, securities
or other property, on account of the principal of or interest on the Notes;
(b) any payment or distribution of assets of the Issuer of any kind or
character, whether in cash, property or securities (other than securities of the
Issuer as reorganized or readjusted or securities of the Issuer or any other
Issuer, trust or corporation provided for by a plan of reorganization or
readjustment, junior, or the payment of which is otherwise subordinate, at least
to the extent provided in this Article 10, to the payment of all Senior Debt of
the Issuer at the time outstanding and to the payment of all securities issued
in exchange therefor to the holders of the Senior Debt of the Issuer at the time
outstanding), to which the Holders of the Notes or the Trustee on behalf of the
Holders of the Notes would be entitled except for the provisions of this Article
10, including any such payment or distribution which may be payable or
deliverable by reason of the payment of any other indebtedness of the Issuer
being subordinated to the payment of the Notes, shall be paid by the liquidating
trustee or agent or other person making such payment or distribution directly to
the holders of Senior Debt of the Issuer or their representative(s), or to the
trustee under any indenture under which Senior Debt of the Issuer may have been
issued (pro rata as to each such holder, representative or trustee on the basis
of the respective amounts of unpaid Senior Debt of the Issuer held or
represented by each), to the extent necessary to make payment in full of all
Senior Debt of the Issuer remaining unpaid after giving effect to any concurrent
payment or distribution or provision therefor to the holders of such Senior Debt
of the Issuer; and
(c) in the event that notwithstanding the foregoing provisions of this
Section 10.03, any payment or distribution of assets of the Issuer of any kind
or character, whether in cash, property or securities shall be received by the
Trustee or the Holders of the Notes on account of principal or interest on the
Notes before all Senior Debt of the Issuer is paid in full, or effective
provisions made for its payment, such payment or distribution (subject to the
provisions of Sections 10.05 and 10.06) shall be received and held in trust for
and shall be paid over or delivered forthwith to the liquidating trustee, agent
or other person making such payment or distribution or to the holders of the
Senior Debt of the Issuer or their representative, or to the trustee under any
indenture under which Senior Debt of the Issuer may have been issued (pro rata
as provided in subsection (b) above), for application to the payment of such
Senior Debt of the Issuer until all such Senior Debt of the Issuer shall have
been paid in full, after giving effect to any concurrent payment or distribution
or provision therefor to the holders of such Senior Debt of the Issuer.
If the Issuer effects a transaction permitted by Section 4.14, such
transaction shall not be deemed to be a dissolution, winding up, liquidation or
reorganization of the Issuer for purposes of this Section 10.03.
The Issuer shall give prompt written notice to the Trustee of any
dissolution, winding up, liquidation or reorganization of the Issuer, assignment
for the benefit of creditors by the Issuer or any other marshalling of assets of
the Issuer.
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SECTION 10.04. HOLDERS TO BE SUBROGATED TO RIGHTS OF HOLDERS OF SENIOR DEBT
OF THE ISSUER.
Subject to the payment in full of all Senior Debt of the Issuer, the
Holders of the Notes shall be subrogated to the rights of the holders of Senior
Debt of the Issuer to receive payments or distributions of assets of the Issuer
applicable to the Senior Debt of the Issuer until all amounts owing on the Notes
shall be paid in full, and for the purpose of such subrogation no payments or
distributions to the holders of Senior Debt of the Issuer by virtue of this
Article 10 which otherwise would have been made to the Holders of the Notes
shall, as among the Issuer, its creditors other than the holders of Senior Debt
of the Issuer and the Holders of the Notes, be deemed to be payment by the
Issuer to or on account of the Senior Debt of the Issuer, it being understood
that the provisions of this Article 10 are intended solely for the purpose of
defining the relative rights of the Holders of the Notes, on the one hand, and
the holders of the Senior Debt of the Issuer, on the other hand.
If any payment or distribution to which the Holders would otherwise have
been entitled but for the provisions of this Article 10 shall have been applied,
pursuant to the provisions of this Article 10, to the payment of all amounts
payable under the Senior Debt of the Issuer, then and in such case, the Holders
shall be entitled to receive from the holders of such Senior Debt of the Issuer
at the time outstanding any payments or distributions received by such holders
of Senior Debt of the Issuer in excess of the amount sufficient to pay all
amounts payable under or in respect of the Senior Debt of the Issuer in full.
SECTION 10.05. OBLIGATIONS OF THE ISSUER UNCONDITIONAL.
Nothing contained in this Article 10 or elsewhere in this Indenture or in
any Note is intended to or shall impair, as among the Issuer, its creditors
other than holders of Senior Debt of the Issuer and the Holders of the Notes,
the obligation of the Issuer, which is absolute and unconditional, to pay to the
Holders of the Notes the principal of and interest on the Notes as and when the
same shall become due and payable in accordance with their terms, or is intended
to or shall affect the relative rights of the Holders of the Notes and creditors
of the Issuer other than the holders of the Senior Debt of the Issuer, nor shall
anything herein or therein prevent the Trustee or the Holder of any Note from
exercising all remedies otherwise permitted by applicable law upon the
occurrence of a Default under this Indenture, subject to the rights, if any,
under this Article 10 of the holders of Senior Debt of the Issuer in respect of
cash, property or securities of the Issuer received upon the exercise of any
such remedy.
Upon any distribution of assets of the Issuer referred to in this Article
10, the Trustee, subject to the provisions of Article 7, and the Holders of the
Notes shall be entitled to rely upon any order or decree made by any court of
competent jurisdiction in which such dissolution, winding up, liquidation or
reorganization proceedings are pending, or a certificate of the liquidating
trustee or agent or other person making any distribution to the Trustee or to
the Holders of the Notes, for the purpose of ascertaining the persons entitled
to participate in such distribution, the holders of the Senior Debt and other
indebtedness of the Issuer, the amount thereof or payable thereon, the amount or
amounts paid or distributed thereon and all other facts pertinent thereto or to
this Article 10.
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SECTION 10.06. TRUSTEE ENTITLED TO ASSUME PAYMENTS NOT PROHIBITED IN
ABSENCE OF NOTICE.
The Trustee shall not at any time be charged with knowledge of the
existence of any facts which would prohibit the making of any payment to or by
the Trustee, and the Trustee shall not be required to withhold payment to the
Holders of Notes as provided in Section 10.02(d), unless and until the Trustee
shall have received written notice thereof at its Corporate Trust Office from
the Issuer or from one or more holders of Senior Debt of the Issuer or from any
representative thereof or trustee therefor identifying the specific sections of
this Indenture involved and describing in detail the facts that would obligate
the Trustee to withhold payments to Holders of Notes, as well as any other facts
required by the next succeeding paragraph of this Section 10.06; and, prior to
the receipt of any such written notice, the Trustee, subject to the provisions
of Article 7, shall be entitled to assume conclusively that no such facts exist.
The Trustee shall be entitled to rely on the delivery to it of a written
notice by a Person representing himself to be a holder of Senior Debt of the
Issuer (or a trustee on behalf of such holder) to establish that such notice has
been given by a holder of Senior Debt of the Issuer or a trustee on behalf of
any such holder. 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 Debt of the Issuer to participate in any payment or distribution
pursuant to this Article 10, the Trustee may request such person to furnish
evidence to the reasonable satisfaction of the Trustee as to the amount of
Senior Debt held by such Person, the extent to which such person is entitled to
participate in such payment or distribution and any other facts pertinent to the
rights of such person under this Article 10, and if such evidence is not
furnished the Trustee may defer any payment to such person pending judicial
determination as to the right of such person to receive such payment.
SECTION 10.07. APPLICATION BY TRUSTEE OF MONIES DEPOSITED WITH IT.
Except as provided in Section 8.04, any deposit of monies by the Issuer
with the Trustee or any Paying Agent (whether or not in trust) for the payment
of the principal of or interest on any Notes shall be subject to the provisions
of Sections 10.01, 10.02, 10.03 and 10.04, except that, if prior to the opening
of business on the date on which by the terms of this Indenture any such monies
may become payable for any purpose (including, without limitation, the payment
of either the principal or the interest on any Note), the Trustee shall not have
received with respect to such monies the notice provided for in Section 10.06,
then the Trustee shall have full power and authority to receive such monies and
to apply the same to the purpose for which they were received and shall not be
affected by any notice to the contrary which may be received by it on or after
such date, without, however, limiting any rights that holders of Senior Debt of
the Issuer may have to recover any such payments from the Holders in accordance
with the provisions of this Article 10.
SECTION 10.08. SUBORDINATION RIGHTS NOT IMPAIRED BY ACTS OR OMISSIONS OF
ISSUER OR HOLDERS OF SENIOR DEBT OF THE ISSUER.
No right of any present or future holders of any Senior Debt of the Issuer
to enforce subordination as provided herein shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the Issuer or
by any act or failure to act, in good faith, by any such holder, or by any
noncompliance by the Issuer with the terms of this Indenture, regardless
69
of any knowledge thereof which any such holder may have or be otherwise charged
with. The holders of Senior Debt of the Issuer may extend, renew, modify or
amend the terms of the Senior Debt of the Issuer or any security therefor and
release, sell or exchange such security and otherwise deal freely with the
Issuer, all without affecting the liabilities and obligations of the parties to
this Indenture or the Holders.
SECTION 10.09. HOLDERS AUTHORIZE TRUSTEE TO EFFECTUATE SUBORDINATION OF
NOTES.
Each Holder of the Notes by his acceptance thereof authorizes and expressly
directs the Trustee on his behalf to take such action as may be necessary or
appropriate to effectuate the subordination provided in this Article 10 and
appoints the Trustee his attorney-in-fact for such purpose, including, in the
event of any dissolution, winding up, liquidation or reorganization of the
Issuer (whether in bankruptcy, insolvency or receivership proceedings, voluntary
liquidation or upon assignment for the benefit of creditors or otherwise)
tending towards liquidation of the business and assets of the Issuer, the timely
filing of a claim for the unpaid balance of its or his Notes in the form
required in said proceedings and cause said claim to be approved. If the Trustee
does not file a proper claim or proof of debt in the form required in such
proceeding on or prior to 30 days before the expiration of the time to file such
claim or claims, then the holders of Senior Debt of the Issuer have the right to
file and are hereby authorized to file an appropriate claim for and on behalf of
the Holders of said Notes.
SECTION 10.10. RIGHT OF TRUSTEE TO HOLD SENIOR DEBT OF THE ISSUER.
The Trustee, in its individual capacity, shall be entitled to all of the
rights set forth in this Article 10 in respect of any Senior Debt of the Issuer
at any time held by it to the same extent as any other holder of Senior Debt of
the Issuer, and nothing in this Indenture shall be construed to deprive the
Trustee of any of its rights as such holder.
SECTION 10.11. TRUSTEE NOT FIDUCIARY FOR HOLDERS OF SENIOR DEBT OF THE
ISSUER.
With respect to the holders of Senior Debt of the Issuer, the Trustee
undertakes to perform or to observe only such of its covenants and obligations
as are specifically set forth in this Article 10, and no implied covenants or
obligations with respect to the holders of Senior Debt of the Issuer shall be
read into this Indenture against the Trustee. The Trustee shall not be deemed to
owe any fiduciary duty to the holders of Senior Debt of the Issuer and the
Trustee shall not be liable to any holder of Senior Debt of the Issuer if it
shall pay over or deliver to Holders of Notes, the Issuer or any other person
monies or assets to which any holder of Senior Debt of the Issuer shall be
entitled by virtue of this Article 10 or otherwise.
SECTION 10.12. ARTICLE 10 NOT TO PREVENT EVENTS OF DEFAULT.
The failure to make a payment on account of principal or interest on the
Notes by reason of any provision in this Article 10 shall not be construed as
preventing the occurrence of an Event of Default under Section 5.01.
SECTION 10.13. OFFICERS' CERTIFICATE.
If there occurs an event referred to in the first sentence of Section
10.02(d) or the first sentence of Section 10.03, the Issuer shall promptly give
to the Trustee an Officers' Certificate
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(on which the Trustee may conclusively rely) identifying all holders of Senior
Debt of the Issuer and the principal amount of Senior Debt of the Issuer then
outstanding held by each such holder and stating the reasons why such Officers'
Certificate is being delivered to the Trustee.
ARTICLE 11
SUBORDINATION OF GUARANTEES
SECTION 11.01. GUARANTEES SUBORDINATION TO SENIOR DEBT OF A GUARANTOR.
Each Guarantor covenants and agrees, and each Holder of the Notes by his
acceptance thereof likewise covenants and agrees, that the payments pursuant to
the Guarantee by such Guarantor shall be subordinated in accordance with the
following provisions of this Article 11 to the prior payment in full of all
Senior Debt of a Guarantor for such Guarantor.
"SENIOR DEBT OF A GUARANTOR" means the Principal of and interest on:
(1) all Indebtedness of a Guarantor;
(2) lease obligations of a Guarantor;
(3) all Indebtedness, secured or unsecured, in connection with the
acquisition or improvement of any property or asset or the acquisition of
any business by a Guarantor;
(4) all Indebtedness secured by any mortgage, lien, pledge, charge
or encumbrance upon property owned by a Guarantor and all indebtedness
secured in the manner specified in this clause (4) even if such Guarantor
has not assumed or become liable for the payment thereof;
(5) all customer deposits held by a Guarantor in escrow accounts
pending closing of the related sales;
(6) all indebtedness of a Guarantor created or arising under any
conditional sale or other title retention agreement with respect to
property acquired by a Guarantor or otherwise representing the deferred and
unpaid balance of the purchase price of any such property, including all
Indebtedness created or arising in the manner specified in this clause (6)
even though the rights and remedies of the seller or lender under such
agreement in the event of default are limited to repossession or sale of
such property;
(7) guarantees by a Guarantor, direct or indirect, of any
indebtedness of another Person of the types referred to in clauses (1),
(2), (3), (4), (5) or (6); and
(8) contingent obligations of a Guarantor in respect of, or to
purchase or otherwise acquire or be responsible or liable for through the
purchase of products or services, irrespective of whether such products are
delivered or such services are rendered, any such indebtedness referred to
in clauses (1), (2), (3), (4), (5) or (6),
which indebtedness, lease obligation, deposit, guarantee or contingent
obligation a Guarantor has directly or indirectly created, incurred, assumed,
guaranteed or otherwise become liable or
71
responsible for, whether currently outstanding or hereafter created. All
references to indebtedness include any renewals, extensions, refundings,
amendments and modifications of any such Indebtedness issued in exchange for
such indebtedness; PROVIDED, HOWEVER, that Senior Debt of a Guarantor shall not
include, without limitation (i) a Guarantee, (ii) the guarantee by a Guarantor
of the Issuers 9 3/4% Subordinated Notes due 2005, (iii) accounts payable or any
other indebtedness to trade creditors created or assumed by a Guarantor in the
ordinary course of business in connection with the obtaining of materials or
services, (iv) any liability for federal, state or local taxes owed or owing by
a Guarantor and (v) any Indebtedness as to which, in the instrument creating or
evidencing the same or pursuant to which the same is outstanding, it is provided
that such indebtedness is on a parity with or otherwise not superior in right of
payment to a Guarantee.
This Article 11 shall constitute a continuing offer to all persons who, in
reliance upon such provisions, become holders of, or continue to hold, Senior
Debt of a Guarantor, and such provisions are made for the benefit of the holders
of Senior Debt of a Guarantor, and such holders are made obligees hereunder and
any one or more of them may enforce such provisions.
SECTION 11.02. GUARANTOR NOT TO MAKE PAYMENTS WITH RESPECT TO NOTES IN
CERTAIN CIRCUMSTANCES.
(a) Upon the maturity of the principal of any Senior Debt of a Guarantor
(other than payment of sinking fund installments) by lapse of time, acceleration
or otherwise, all principal thereof and interest thereon shall first be paid in
full, or such payment duly provided for in cash or in a manner satisfactory to
the holders of such Senior Debt of a Guarantor, before any payment, pursuant to
the Guarantee, is made on account of the principal of or interest on the Notes
or to acquire any of the Notes or on account of the mandatory redemption
provisions in the Notes (except mandatory redemption payments made in respect of
Notes acquired by such Guarantor before the maturity of such Senior Debt of a
Guarantor), including any payment pursuant to Section 4.10 or 4.12.
(b) Unless Section 11.03 shall be applicable, upon (1) the occurrence of a
Payment Default with respect to any Senior Debt of a Guarantor and receipt by
the relevant Guarantor and the Trustee of written notice of such occurrence or
(2) upon the acceleration of such Senior Debt of a Guarantor, then no payment or
distribution of any assets of such Guarantor of any kind or character shall be
made by such Guarantor or the Trustee on account of principal of or interest on
the Notes or on account of the purchase or redemption or other acquisition of
Notes, including any payment pursuant to Section 4.10 or 4.12, unless and until
such Payment Default shall have been cured or waived in writing or shall have
ceased to exist or such Senior Debt of a Guarantor shall have been discharged,
after which the relevant Guarantor shall resume making any and all required
payments in respect of the Notes, including any missed payments.
(c) Unless Section 11.03 shall be applicable, upon (1) the occurrence of a
Non-Payment Default and (2) receipt by the Trustee of written notice of such
occurrence, then no payment or distribution of any assets of the relevant
Guarantor of any kind or character shall be made by such Guarantor or the
Trustee on account of any principal of or interest on the Notes or on account of
the purchase or redemption or other acquisition of Notes, including, any payment
pursuant to Section 4.10 or 4.12, for a period ("GUARANTEE PAYMENT BLOCKAGE
PERIOD") commencing on the earlier of the date of receipt by the Trustee of such
written notice from the holders of Senior Debt of a Guarantor or of the Issuer,
or any representative of a holder of Senior
72
Debt of a Guarantor or of the Issuer unless and until (subject to any blockage
of payment that may then be in effect under subsection (a) or (b) of this
Section 11.02) the earlier of (x) more than 120 days shall have elapsed since
receipt of such written notice by the Trustee, (y) such Non-Payment Default
shall have been cured or waived in writing or shall have ceased to exist or such
Senior Debt of a Guarantor or of the Issuer shall have been discharged or (z)
such Guarantee Payment Blockage Period shall have been terminated by written
notice to the relevant Guarantor or to the Issuer, as the case may be, or to the
Trustee from the holders of the Senior Debt of a Guarantor or of the Issuer or
any representative of the holders of the Senior Debt of a Guarantor or of the
Issuer initiating such Guarantee Payment Blockage Period, after which, in the
case of clause (x), (y) or (z), the relevant Guarantor shall promptly resume
making any and all required payments in respect of the Notes, including any
missed payments. In no event shall a Guarantee Payment Blockage Period extend
beyond 120 days from the date of the receipt by the Trustee of the notice
referred to in clause (2) hereof (the "GUARANTEE INITIAL Period"). Any number of
additional Guarantee Payment Blockage Periods may be commenced during the
Guarantee Initial Period; PROVIDED, HOWEVER, that no such additional period
shall extend beyond the Initial Period. After the expiration of the Guarantee
Initial Period, no Guarantee Payment Blockage Period may be commenced on the
basis of a Non-Payment Default on the Senior Debt of the Issuer or Senior Debt
of a Guarantor which was the basis of a Guarantee Payment Blockage Period
commenced during the Guarantee Initial Period until at least 270 consecutive
days have elapsed from the last day of the Guarantee Initial Period. No
Non-Payment Default with respect to Senior Debt of the Issuer or Senior Debt of
a Guarantor which existed or was continuing on the date of the commencement of
any Guarantee Payment Blockage Period and of which the applicable holder(s) of
Senior Debt of the Issuer or Senior Debt of a Guarantor are aware shall be, or
be made, the basis for the commencement of a second Guarantee Payment Blockage
Period whether or not within a period of 270 consecutive days unless such event
of default shall have been cured or waived for a period of not less than 90
consecutive days.
(d) In the event that notwithstanding the provisions of this Section 11.02
a Guarantor shall make, pursuant to its Guarantee, any payment or distribution
of any character to the Trustee on account of the principal of or interest on
the Notes, or on account of the mandatory redemption provisions contained in
this Indenture, including any payment pursuant to Section 4.10 or 4.12, after
the happening of an event of default with respect to any Senior Debt of a
Guarantor based on a default in the payment of the principal of or interest on
Senior Debt of a Guarantor, or after receipt by the Trustee of written notice as
provided in this Section 11.02 of an event of default with respect to any Senior
Debt of a Guarantor, or after the acceleration of the Notes pursuant to Section
5.01, then, but only if the Trustee is in receipt of the notice specified in
Section 11.06, unless and until such default or event of default shall have been
cured or waived or shall have ceased to exist, or such acceleration shall have
been rescinded, such payment (subject to the provisions of Sections 11.05 and
11.06) shall be held by the Trustee in trust for the benefit of, and, if the
Senior Debt of a Guarantor shall have been declared immediately due and payable,
shall be paid forthwith over and delivered to, the holders of Senior Debt of a
Guarantor (pro rata as to each of such holders on the basis of the respective
amounts of Senior Debt of a Guarantor held by them) or their representative or
the trustee under the indenture or other agreement (if any) pursuant to which
Senior Debt of a Guarantor may have been issued, as their respective interests
may appear, such payments to be made in accordance with an Officers' Certificate
as provided in Section 11.13 (on which the Trustee may conclusively rely)
identifying all holders of Senior Debt of a Guarantor and the principal amount
of Senior Debt of a Guarantor then outstanding held by each and stating the
reasons why such Officers' Certificate is being
73
delivered to the Trustee, for application to the payment of all Senior Debt of a
Guarantor remaining unpaid to the extent necessary to pay all Senior Debt of a
Guarantor in full in accordance with its terms, after giving effect to any
concurrent payment or distribution to or for the holders of Senior Debt of a
Guarantor. In the event of the failure of any Holder of a Note to endorse or
assign any such payment or distribution, each holder of Senior Debt of a
Guarantor is hereby irrevocably authorized to endorse or assign the same. The
relevant Guarantor shall give prompt written notice to the Trustee of any
default under any Senior Debt of a Guarantor or under any agreement pursuant to
which Senior Debt of a Guarantor may have been issued, as required by Section
4.17.
SECTION 11.03. GUARANTEE SUBORDINATED TO PRIOR PAYMENT OF ALL SENIOR DEBT
OF A GUARANTOR ON DISSOLUTION, WINDING UP, LIQUIDATION OR REORGANIZATION OF A
GUARANTOR.
In the event of (i) any insolvency, bankruptcy, receivership, liquidation,
reorganization, readjustment, composition or other similar proceeding relating
to a Guarantor, its creditors or its property, (ii) any case or proceeding for
the liquidation, dissolution or other winding-up of a Guarantor, voluntary or
involuntary, whether or not involving insolvency or bankruptcy proceedings,
(iii) any assignment by a Guarantor for the benefit of creditors, or (iv) any
other marshalling of the assets of a Guarantor:
(a) the holders of all Senior Debt of a Guarantor shall first be entitled
to receive payment in full (or to have such payment duly provided for) of the
principal and interest due thereon (including any interest thereon accruing
after commencement of any such proceeding) before the Holders of the Notes are
entitled to receive, pursuant to this Guarantee any payment or any distribution,
whether in cash, securities or other property, on account of the principal of or
interest on the Notes;
(b) any payment or distribution of assets of the Issuer of any kind or
character, whether in cash, property or securities (other than securities of a
Guarantor as reorganized or readjusted or securities of a Guarantor or any other
Issuer, trust or corporation provided for by a plan of reorganization or
readjustment, junior, or the payment of which is otherwise subordinate, at least
to the extent provided in this Article 11, to the payment of all Senior Debt of
a Guarantor at the time outstanding and to the payment of all securities issued
in exchange therefor to the holders of the Senior Debt of a Guarantor at the
time outstanding), to which the Holders of the Notes or the Trustee on behalf of
the Holders of the Notes would be entitled, pursuant to this Guarantee except
for the provisions of this Article 11, including any such payment or
distribution which may be payable or deliverable by reason of the payment of any
other indebtedness of a Guarantor being subordinated to the payment of the
Notes, shall be paid by the liquidating trustee or agent or other person making
such payment or distribution directly to the holders of Senior Debt of a
Guarantor or their representative(s), or to the trustee under any indenture
under which Senior Debt of a Guarantor may have been issued (pro rata as to each
such holder, representative or trustee on the basis of the respective amounts of
unpaid Senior Debt of a Guarantor held or represented by each), to the extent
necessary to make payment in full of all Senior Debt of a Guarantor remaining
unpaid after giving effect to any concurrent payment or distribution or
provision therefor to the holders of such Senior Debt of a Guarantor; and
(c) in the event that notwithstanding the foregoing provisions of this
Section 11.03, any payment or distribution of assets of a Guarantor of any kind
or character, whether in cash, property or securities shall be received,
pursuant to the Guarantee, by the Trustee or the Holders
74
of the Notes on account of principal or interest on the Notes before all Senior
Debt of a Guarantor is paid in full, or effective provisions made for its
payment, such payment or distribution(subject to the provisions of Sections
11.05 and 11.06) shall be received and held in trust for and shall be paid over
or delivered to the liquidating trustee, agent or other person making such
payment or distribution or to the holders of the Senior Debt of a Guarantor
remaining unpaid or unprovided for or their representative, or to the trustee
under any indenture under which Senior Debt of a Guarantor may have been issued
(pro rata as provided in subsection (b) above), for application to the payment
of such Senior Debt of a Guarantor until all such Senior Debt of a Guarantor
shall have been paid in full, after giving effect to any concurrent payment or
distribution or provision therefor to the holders of such Senior Debt of a
Guarantor.
If a Guarantor effects a transaction permitted by Section 4.14, such
transaction shall not be deemed to be a dissolution, winding up, liquidation or
reorganization of a Guarantor for purposes of this Section 11.03.
A Guarantor shall give prompt written notice to the Trustee of any
dissolution, winding up, liquidation or reorganization of such Guarantor,
assignment for the benefit of creditors by such Guarantor or any other
marshalling of assets of such Guarantor.
SECTION 11.04. HOLDERS TO BE SUBROGATED TO RIGHTS OF HOLDERS OF SENIOR DEBT
OF A GUARANTOR.
Subject to the payment in full of all Senior Debt of a Guarantor, the
Holders of the Notes shall be subrogated to the rights of the holders of Senior
Debt of a Guarantor to receive payments or distributions of assets of a
Guarantor applicable to the Senior Debt of a Guarantor until all amounts owing
under the Guarantee shall be paid in full and for the purpose of such
subrogation no payments or distributions to the holders of Senior Debt of a
Guarantor by virtue of this Article 11 which otherwise would have been made to
the Holders of the Notes, shall, as between a Guarantor, its creditors other
than holders of its Senior Debt of a Guarantor and the Holders, be deemed to be
a payment by such Guarantor to or on account of the Senior Debt of a Guarantor,
it being understood that the provisions of this Article 11 are intended solely
for the purpose of defining the relative rights of the holders of Senior Debt of
a Guarantor on the one hand and the Holders on the other hand.
If any payment or distribution to which the Holders would otherwise have
been entitled but for the provisions of this Article 11 shall have been applied,
pursuant to the provisions of this Article 11, to the payment of all amounts
payable under the Senior Debt of a Guarantor, then and in such case, the Holders
shall be entitled to receive from the holders of such Senior Debt of a Guarantor
at the time outstanding any payments or distributions received by such holders
of such Senior Debt of a Guarantor in excess of the amount sufficient to pay all
amounts payable under or in respect of such Senior Debt of a Guarantor in full.
SECTION 11.05. OBLIGATIONS OF THE GUARANTORS UNCONDITIONAL.
Nothing contained in this Article 11 or elsewhere in this Indenture or in
any Note is intended to or shall impair, as between the Guarantors and the
Holders, the obligations of each Guarantor, which are absolute and
unconditional, to pay to the Holders the principal of and interest on the Notes
as and when the same shall become due and payable in accordance with the
provisions of the Guarantees or is intended to or shall affect the relative
rights of the Holders and
75
creditors of a Guarantor other than the holders of the Senior Debt of a
Guarantor, nor shall anything herein or therein prevent the Trustee or any
Holder from exercising all remedies otherwise permitted by applicable law upon
the occurrence of a Default under this Indenture, subject to the rights, if any,
under this Article 11 of the holders of Senior Debt of a Guarantor in respect of
cash, property or securities of a Guarantor received upon the exercise of any
such remedy.
Upon any distribution of assets of a Guarantor referred to in this Article
11, the Trustee, subject to the provisions of Article 7, and the Holders of the
Notes shall be entitled to rely upon any order or decree made by any court of
competent jurisdiction in which such dissolution, winding up, liquidation or
reorganization proceedings are pending, or a certificate of the liquidating
trustee or agent or other person making any distribution to the Trustee or to
the Holders of the Notes, for the purpose of ascertaining the persons entitled
to participate in such distribution, the holders of the Senior Debt and other
indebtedness of such Guarantor, the amount thereof or payable thereon, the
amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Article 11.
SECTION 11.06. TRUSTEE ENTITLED TO ASSUME PAYMENTS NOT PROHIBITED IN
ABSENCE OF NOTICE.
The Trustee shall not at any time be charged with knowledge of the
existence of any facts which would prohibit the making of any payment to or by
the Trustee, and the Trustee shall not be required to withhold payment to the
Holders of Notes as provided in Section 11.02(d), unless and until the Trustee
shall have received written notice thereof at its Corporate Trust Office from a
Guarantor or from one or more holders of Senior Debt of a Guarantor or from any
representative thereof or trustee therefor identifying the specific sections of
this Indenture involved and describing in detail the facts that would obligate
the Trustee to withhold payments to Holders of Notes, as well as any other facts
required by the next succeeding paragraph of this Section 11.06; and, prior to
the receipt of any such written notice, the Trustee, subject to the provisions
of Article 7, shall be entitled to assume conclusively that no such facts exist.
The Trustee shall be entitled to rely on the delivery to it of a written
notice by a Person representing himself to be a holder of Senior Debt of a
Guarantor (or a trustee on behalf of such holder) to establish that such notice
has been given by a holder of Senior Debt of a Guarantor or a trustee on behalf
of any such holder. 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 Debt of a Guarantor to participate in any payment or distribution
pursuant to this Article 11, the Trustee may request such Person to furnish
evidence to the reasonable satisfaction of the Trustee as to the amount of
Senior Debt of a Guarantor held by such person, the extent to which such person
is entitled to participate in such payment or distribution and any other facts
pertinent to the rights of such person under this Article 11, and if such
evidence is not furnished the Trustee may defer any payment to such person
pending judicial determination as to the right of such person to receive such
payment.
SECTION 11.07. APPLICATION BY TRUSTEE OF MONIES DEPOSITED WITH IT.
Except as provided in Sections 8.04, any deposit of monies by a Guarantor
with the Trustee or any Paying Agent (whether or not in trust) for the payment
of the principal of or interest on any Notes shall be subject to the provisions
of Sections 11.01, 11.02, 11.03 and 11.04,
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except that, if prior to the opening of business on the date on which by the
terms of this Indenture any such monies may become payable for any purpose
(including, without limitation, the payment, pursuant to this Guarantee, of
either the principal or the interest on any Note), the Trustee shall not have
received with respect to such monies the notice provided for in Section 11.06,
then the Trustee shall have full power and authority to receive such monies and
to apply the same to the purpose for which they were received and shall not be
affected by any notice to the contrary which may be received by it on or after
such date, without, however, limiting any rights that holders of Senior Debt of
a Guarantor may have to recover any such payments from the Holders in accordance
with the provisions of this Article 11.
SECTION 11.08. SUBORDINATION RIGHTS NOT IMPAIRED BY ACTS OR OMISSIONS OF
ANY GUARANTOR OR HOLDERS OF SENIOR DEBT OF A GUARANTOR.
No right of any present or future holders of any Senior Debt of a Guarantor
to enforce subordination as provided herein shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of any Guarantor
or by any act or failure to act, in good faith, by any such holder, or by any
noncompliance by any Guarantor with the terms of this Indenture, regardless of
any knowledge thereof which any such holder may have or be otherwise charged
with. The holders of Senior Debt of a Guarantor may extend, renew, modify or
amend the terms of the Senior Debt of a Guarantor or any security therefor and
release, sell or exchange such security and otherwise deal freely with any
Guarantor, all without affecting the liabilities and obligations of the parties
to this Indenture or the Holders.
SECTION 11.09. HOLDERS AUTHORIZE TRUSTEE TO EFFECTUATE SUBORDINATION OF
NOTES.
Each Holder of the Notes by his acceptance thereof authorizes and expressly
directs the Trustee on his behalf to take such action as may be necessary or
appropriate to effectuate the subordination provided in this Article 11 and
appoints the Trustee his attorney-in-fact for such purpose, including, in the
event of any dissolution, winding up, liquidation or reorganization of a
Guarantor (whether in bankruptcy, insolvency or receivership proceedings,
voluntary liquidation or upon assignment for the benefit of creditors or
otherwise) tending towards liquidation of the business and assets of such
Guarantor, the timely filing of a claim for the unpaid balance, pursuant to the
relevant Guarantee, of its Notes in the form required in said proceedings and
cause said claim to be approved. If the Trustee does not file a proper claim or
proof of debt in the form required in such proceeding on or prior to 30 days
before the expiration of the time to file such claim or claims, then the holders
of Senior Debt of a Guarantor have the right to file and are hereby authorized
to file an appropriate claim for and on behalf of the Holders of said Notes.
SECTION 11.10. RIGHT OF TRUSTEE TO HOLD SENIOR DEBT OF A GUARANTOR.
The Trustee in its individual capacity, shall be entitled to all of the
rights set forth in this Article 11 in respect of any Senior Debt of a Guarantor
at any time held by it to the same extent as any other holder of such Senior
Debt of a Guarantor, and nothing in this Indenture shall be construed to deprive
the Trustee of any of its rights as such holder.
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SECTION 11.11. TRUSTEE NOT FIDUCIARY FOR HOLDERS OF SENIOR DEBT OF A
GUARANTOR.
With respect to the holders of Senior Debt of a Guarantor, the Trustee
undertakes to perform or to observe only such of its covenants and obligations
as are specifically set forth in this Article 11, and no implied covenants or
obligations with respect to the holders of Senior Debt of a Guarantor shall be
read into this Indenture against the Trustee. The Trustee shall not be deemed to
owe any fiduciary duty to the holders of Senior Debt of a Guarantor and the
Trustee shall not be liable to any holder of Senior Debt of a Guarantor if it
shall pay over or deliver to Holders of Notes, the relevant Guarantor or any
other person monies or assets to which any holder of Senior Debt of a Guarantor
shall be entitled by virtue of this Article 11 or otherwise.
SECTION 11.12. ARTICLE 11 NOT TO PREVENT EVENTS OF DEFAULT.
The failure to make a payment on account of principal or interest on the
Notes by reason of any provision in this Article 11 shall not be construed as
preventing the occurrence of an Event of Default under Section 5.01.
SECTION 11.13. SUBORDINATION OF INDEBTEDNESS OWED BY THE ISSUER TO A
GUARANTOR.
Any indebtedness owed by the Issuer to a Guarantor shall be subordinate to
all obligations of the Issuer with respect to the Notes and this Indenture to
the same extent as the Notes are subordinated to Senior Debt of the Issuer.
SECTION 11.14. OFFICERS' CERTIFICATE.
If there occurs an event referred to in the first sentence of Section
11.02(c) or the first sentence of Section 11.03, the relevant Guarantor shall
promptly give to the Trustee an Officers' Certificate (on which the Trustee may
conclusively rely) identifying all holders of Senior Debt of a Guarantor and the
principal amount of Senior Debt of a Guarantor then outstanding held by each
such holder and stating the reasons why such Officers' Certificate is being
delivered to the Trustee.
ARTICLE 12
MISCELLANEOUS
SECTION 12.01. TRUST INDENTURE ACT OF 1939. The Indenture shall incorporate
and be governed by the provisions of the Trust Indenture Act that are required
to be part of and to govern indentures qualified under the Trust Indenture Act.
SECTION 12.02. HOLDER COMMUNICATIONS; HOLDER ACTIONS. (a) The rights of
Holders to communicate with other Holders with respect to the Indenture or the
Notes are as provided by the Trust Indenture Act, and the Company and the
Trustee shall comply with the requirements of Trust Indenture Act Section
312(a). Neither the Company, the Issuer nor the Trustee will be held accountable
by reason of any disclosure of information as to names and addresses of Holders
made pursuant to the Trust Indenture Act.
78
(b) (i) Any request, demand, authorization, direction, notice, consent to
amendment, supplement or waiver or other action provided by this Indenture to be
given or taken by a Holder (an "ACT") may be evidenced by an instrument signed
by the Holder delivered to the Trustee. The fact and date of the execution of
the instrument, or the authority of the person executing it, may be proved in
any manner that the Trustee deems sufficient.
(ii) The Trustee may make reasonable rules for action by or at a
meeting of Holders, which will be binding on all the Holders.
(c) Any act by the Holder of any Note binds that Holder and every
subsequent Holder of a Note that evidences the same debt as the Note of the
acting Holder, even if no notation thereof appears on the Note. Subject to
paragraph (d), a Holder may revoke an act as to its Notes, but only if the
Trustee receives the notice of revocation before the date the amendment or
waiver or other consequence of the act becomes effective.
(d) The Issuer may, but is not obligated to, fix a record date (which need
not be within the time limits otherwise prescribed by Trust Indenture Act
Section 316(c)) for the purpose of determining the Holders entitled to act with
respect to any amendment or waiver or in any other regard, except that during
the continuance of an Event of Default, only the Trustee may set a record date
as to notices of default, any declaration or acceleration or any other remedies
or other consequences of the Event of Default. If a record date is fixed, those
Persons that were Holders at such record date and only those Persons will be
entitled to act, or to revoke any previous act, whether or not those Persons
continue to be Holders after the record date. No act will be valid or effective
for more than 90 days after the record date.
SECTION 12.03. NOTICES. (a) Any notice or communication to the Issuer or
the Company will be deemed given if in writing (i) when delivered in person or
(ii) five days after mailing when mailed by first class mail, or (iii) when sent
by facsimile transmission, with transmission confirmed. Notices or
communications to a Guarantor will be deemed given if given to the Issuer. Any
notice to the Trustee will be effective only upon receipt. In each case the
notice or communication should be addressed as follows:
if to the Issuer:
X. Xxxxxxxxx Enterprises, Inc.
00 Xxxxxxx 00
P.O. Box 500
Red Bank, NJ 007701
000-000-0000
if to the Trustee:
First Union National Bank
00 Xxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
ATTN: Corporate Trust Administration
(X. Xxxxxxxxx Enterprises, Inc. Senior Subordinated Notes due 2012)
000-000-0000
79
The Issuer or the Trustee by notice to the other may designate additional or
different addresses for subsequent notices or communications.
(b) Except as otherwise expressly provided with respect to published
notices, any notice or communication to a Holder will be deemed given when
mailed to the Holder at its address as it appears on the Register by first class
mail or, as to any Global Note registered in the name of DTC or its nominee, as
agreed by the Issuer, the Trustee and DTC. Copies of any notice or communication
to a Holder, if given by the Issuer or the Company, will be mailed to the
Trustee at the same time. Defect in mailing a notice or communication to any
particular Holder will not affect its sufficiency with respect to other Holders.
(c) Where the Indenture provides for notice, the notice may be waived in
writing by the Person entitled to receive such notice, either before or after
the event, and the waiver will be the equivalent of the notice. Waivers of
notice by Holders must be filed with the Trustee, but such filing is not a
condition precedent to the validity of any action taken in reliance upon such
waivers.
SECTION 12.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT. Upon any
request or application by the Issuer or the Company to the Trustee to take any
action under the Indenture, the Issuer or the Company will furnish to the
Trustee:
(a) an Officers' Certificate stating that, in the opinion of the
signers, all conditions precedent, if any, provided for in the Indenture
relating to the proposed action have been complied with; and
(b) an Opinion of Counsel stating that all such conditions precedent
relating to the proposed action have been complied with.
SECTION 12.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION. Each
certificate or opinion with respect to compliance with a condition or covenant
provided for in the Indenture must include:
(a) a statement that each person signing the certificate or opinion
has read the covenant or condition and the related definitions;
(b) a brief statement as to the nature and scope of the examination
or investigation upon which the statement or opinion contained in the
certificate or opinion is based;
(c) a statement that, in the opinion of each such person, that
person has made such examination or investigation as is necessary to enable
the person to express an informed opinion as to whether or not such
covenant or condition has been complied with; and
(d) a statement as to whether or not, in the opinion of each such
person, such condition or covenant has been complied with, PROVIDED that an
Opinion of Counsel may rely on an Officers' Certificate or certificates of
public officials with respect to matters of fact.
SECTION 12.06. PAYMENT DATE OTHER THAN A BUSINESS DAY. If any payment with
respect to a payment of any principal of, premium, if any, or interest or
Liquidated Damages, if any, on any Note (including any payment to be made on any
date fixed for redemption or
80
purchase of any Note) is due on a day which is not a Business Day, then the
payment need not be made on such date, but may be made on the next Business Day
with the same force and effect as if made on such date, and no interest will
accrue for the intervening period.
SECTION 12.07. GOVERNING LAW. The Indenture, including any Note Guaranties,
and the Notes shall be governed by, and construed in accordance with, the laws
of the State of
New York.
SECTION 12.08. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS. The Indenture
may not be used to interpret another indenture or loan or debt agreement of the
Issuer, the Company or any Subsidiary of the Company, and no such indenture or
loan or debt agreement may be used to interpret the Indenture.
SECTION 12.09. SUCCESSORS. All agreements of the Issuer, the Company or any
Guarantor in the Indenture and the Notes will bind its successors. All
agreements of the Trustee in the Indenture will bind its successor.
SECTION 12.10. DUPLICATE ORIGINALS. The parties may sign any number of
copies of the Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement.
SECTION 12.11. SEPARABILITY. In case any provision in the Indenture or in
the Notes is invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions will not in any way be affected or
impaired thereby.
SECTION 12.12. TABLE OF CONTENTS AND HEADINGS. The Table of Contents,
Cross-Reference Table and headings of the Articles and Sections of the Indenture
have been inserted for convenience of reference only, are not to be considered a
part of the Indenture and in no way modify or restrict any of the terms and
provisions of the Indenture.
SECTION 12.13. NO LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES,
INCORPORATORS AND STOCKHOLDERS. No director, officer, employee, incorporator,
member or stockholder of the Issuer, the Company or any Guarantor, as such, will
have any liability for any obligations of the Issuer, the Company or such
Guarantor under the Notes, any Note Guaranty or the Indenture or for any claim
based on, in respect of, or by reason of, such obligations. Each Holder of Notes
by accepting a Note waives and releases all such liability. The waiver and
release are part of the consideration for issuance of the Notes.
81
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused the Indenture to be duly
executed as of the date first written above.
X. XXXXXXXXX ENTERPRISES, INC.
as Issuer
/s/ J. Xxxxx Xxxxxx
-------------------
By: J. Xxxxx Xxxxxx
Title: Executive Vice President
Chief Financial Officer
HOVNANIAN ENTERPRISES, INC.
as the Company
/s/ J. Xxxxx Xxxxxx
------------------------
By: J. Xxxxx Xxxxxx
Title: Executive Vice President
Chief Financial Officer
GUARANTORS:
ALL SEASONS, INC.
ARROW PROPERTIES, INC.
BALLANTRAE DEVELOPMENT CORP.
BALLANTRAE HOME SALES, INC.
CONDOMINIUM COMMUNITY (BOWIE NEW
TOWN), INC.
CONDOMINIUM COMMUNITY (LARGO TOWN), INC.
CONDOMINIUM COMMUNITY (PARK PLACE), INC.
CONDOMINIUM COMMUNITY (QUAIL RUN), INC.
CONDOMINIUM COMMUNITY (XXXXXX DRIVE), INC.
CONSULTANTS CORPORATION
DESIGNED CONTRACTS. INC.
EXC, INC.
FORTIS HOMES, INC.
HOUSING-HOME SALES, INC.
HOVNANIAN AT TARPON LAKES I, INC.
HOVNANIAN DEVELOPMENTS OF FLORIDA, INC.
HOVNANIAN PENNSYLVANIA, INC.
K. HOV INTERNATIONAL, INC.
X. XXXXXXXXX ACQUISITIONS, INC.
X. XXXXXXXXX AT XXXXXXX VILLAGE, INC.
X. XXXXXXXXX AT ATLANTIC CITY, INC.
X. XXXXXXXXX AT BALLANTRAE ESTATES, INC.
X. XXXXXXXXX AT BARRINGTON, INC.
X. XXXXXXXXX AT BEDMINSTER II, INC.
X. XXXXXXXXX AT BEDMINSTER, INC.
X. XXXXXXXXX AT BELMONT, INC.
X. XXXXXXXXX AT BERNARDS IV, INC.
X. XXXXXXXXX AT BRANCHBURG III, INC.
X. XXXXXXXXX AT BRIDGEPORT, INC.
X. XXXXXXXXX AT BRIDGEWATER IV, INC.
X. XXXXXXXXX AT BRIDGEWATER V, INC.
X. XXXXXXXXX AT BRIDGEWATER VI, INC.
X. XXXXXXXXX AT BULL RUN, INC.
X. XXXXXXXXX AT BURLINGTON III, INC.
X. XXXXXXXXX AT BURLINGTON, INC.
X. XXXXXXXXX AT CALABRIA, INC.
X. XXXXXXXXX AT XXXXXXX XXXXX, INC.
X. XXXXXXXXX AT CARMEL DEL MAR, INC.
X. XXXXXXXXX AT CAROLINA COUNTRY
CLUB I, INC.
X. XXXXXXXXX AT CAROLINA COUNTRY
CLUB II, INC.
X. XXXXXXXXX AT CAROLINA COUNTRY
CLUB III, INC.
X. XXXXXXXXX AT CASTILE, INC.
X. XXXXXXXXX AT CEDAR GROVE I, INC.
X. XXXXXXXXX AT CEDAR GROVE II, INC.
X. XXXXXXXXX AT CHAPARRAL, INC.
X. XXXXXXXXX AT CLARKSTOWN, INC.
X. XXXXXXXXX AT COCONUT CREEK, INC.
X. XXXXXXXXX AT CRESTLINE, INC.
X. XXXXXXXXX AT XXXXXXX SPRINGS, INC.
X. XXXXXXXXX AT XXXXXXXXX, INC.
X. XXXXXXXXX AT DOMINION RIDGE, INC.
X. XXXXXXXXX AT EAST BRUNSWICK VI, INC.
X. XXXXXXXXX AT EAST BRUNSWICK VIII,
INC.
X. XXXXXXXXX AT EAST WHITELAND I, INC.
X. XXXXXXXXX AT EXETER HILLS, INC.
X. XXXXXXXXX AT FAIR LAKES XXXX, INC.
X. XXXXXXXXX AT FAIR LAKES, INC.
X. XXXXXXXXX AT FREEHOLD TOWNSHIP, INC.
X. XXXXXXXXX AT FREEHOLD TOWNSHIP I, INC.
X. XXXXXXXXX AT FT. XXXXX I, INC.
X. XXXXXXXXX AT FT. XXXXX II, INC.
X. XXXXXXXXX AT GREAT NOTCH, INC.
X. XXXXXXXXX AT HACKETTSTOWN, INC.
X. XXXXXXXXX AT HALF MOON BAY, INC.
X. XXXXXXXXX AT XXXXXXX OAKS, INC.
X. XXXXXXXXX AT HANOVER, INC.
X. XXXXXXXXX AT XXXXXXX'X MILL, INC. (a
PA Corp)
X. XXXXXXXXX AT HIGHLAND VINEYARDS, INC.
X. XXXXXXXXX AT XXXXX CREST, INC.
X. XXXXXXXXX AT HOPEWELL IV, INC.
X. XXXXXXXXX AT HOPEWELL V, INC.
X. XXXXXXXXX AT HOPEWELL VI, INC.
X. XXXXXXXXX AT XXXXXX TOWNSHIP, INC.
X. XXXXXXXXX AT HUNTER ESTATES, INC.
X. XXXXXXXXX AT JACKSONVILLE II, INC.
X. XXXXXXXXX AT JEFFERSON, INC.
X. XXXXXXXXX AT JERSEY CITY III, INC.
X. XXXXXXXXX AT KINGS GRANT I, INC.
X. XXXXXXXXX AT KLOCKNER FARMS, INC.
X. XXXXXXXXX AT LA TERRAZA, INC.
X. XXXXXXXXX AT LA TROVATA, INC.
X. XXXXXXXXX AT LAKEWOOD, INC.
X. XXXXXXXXX AT XXXXXXXX V, INC.
X. XXXXXXXXX AT LOWER SAUCON II, INC.
X. XXXXXXXXX AT LOWER SAUCON, INC.
X. XXXXXXXXX AT MAHWAH II, INC.
X. XXXXXXXXX AT MAHWAH IV, INC.(Whalepond)
X. XXXXXXXXX AT MAHWAH IX, INC.
X. XXXXXXXXX AT MAHWAH V, INC.
X. XXXXXXXXX AT MAHWAH VI, INC. (Norfolk)
X. XXXXXXXXX AT MAHWAH VII, INC.
X. XXXXXXXXX AT MAHWAH VIII, INC.
X. XXXXXXXXX AT MANALAPAN, INC.
X. XXXXXXXXX AT MARLBORO II, INC.
X. XXXXXXXXX AT MARLBORO TOWNSHIP IV, INC.
X. XXXXXXXXX AT MARLBORO TOWNSHIP VI, INC.
X. XXXXXXXXX AT MARLBORO TOWNSHIP VII,
INC.
X. XXXXXXXXX AT MARLBORO TOWNSHIP III,
INC.
X. XXXXXXXXX AT MEDFORD I, INC.
X. XXXXXXXXX AT MERRIMACK, INC.
X. XXXXXXXXX AT METRO DC SOUTH, INC.
X. XXXXXXXXX AT MONTCLAIR NJ, INC.
X. XXXXXXXXX AT MONTCLAIR, INC.
X. XXXXXXXXX AT XXXXXXXXXX I, INC.
X. XXXXXXXXX AT NEWARK URBAN RENEWAL
CORPORATION I, INC.
X. XXXXXXXXX AT NEWARK URBAN RENEWAL
CORPORATION IV, INC.
X. XXXXXXXXX AT NEWARK URBAN RENEWAL
CORPORATION V, INC.
X. XXXXXXXXX AT NORTH BERGEN, INC.
X. XXXXXXXXX AT NORTH BRUNSWICK IV, INC.
X. XXXXXXXXX AT NORTHERN WESTCHESTER, INC.
X. XXXXXXXXX AT NORTHLAKE, INC.
X. XXXXXXXXX AT OCEAN WALK, INC.
X. XXXXXXXXX AT P.C. PROPERTIES, INC.
X. XXXXXXXXX AT PARK RIDGE, INC.
X. XXXXXXXXX AT PASCO I, INC.
X. XXXXXXXXX AT XXXXX XX, INC.
X. XXXXXXXXX AT PEEKSKILL, INC.
X. XXXXXXXXX AT PEMBROKE SHORES, INC.
X. XXXXXXXXX AT PERKIOMEN I, INC.
X. XXXXXXXXX AT PERKIOMEN II, INC.
X. XXXXXXXXX AT PLAINSBORO III, INC.
X. XXXXXXXXX AT POLO TRACE, INC.
X. XXXXXXXXX AT PORT IMPERIAL NORTH, INC.
X. XXXXXXXXX AT PRINCETON, INC.
X. XXXXXXXXX AT RANCHO CHRISTIANITOS, INC.
X. XXXXXXXXX AT RARITAN I, INC.
X. XXXXXXXXX AT READINGTON II, INC.
X. XXXXXXXXX AT RESERVOIR RIDGE, INC.
X. XXXXXXXXX AT RIVER OAKS, INC.
X. XXXXXXXXX AT SAN SEVAINE, INC.
X. XXXXXXXXX AT SARATOGA, INC.
X. XXXXXXXXX AT SCOTCH PLAINS II, INC.
X. XXXXXXXXX AT SCOTCH PLAINS, INC.
X. XXXXXXXXX AT SENECA CROSSING, INC.
X. XXXXXXXXX AT SMITHVILLE, INC.
X. XXXXXXXXX AT SMITHVILLE III, INC.
X. XXXXXXXXX AT XXXXXX POINT, INC.
X. XXXXXXXXX AT SOUTH BRUNSWICK II, INC.
X. XXXXXXXXX AT SOUTH BRUNSWICK III, INC.
X. XXXXXXXXX AT SOUTH BRUNSWICK IV, INC.
X. XXXXXXXXX AT SOUTH BRUNSWICK V, INC.
X. XXXXXXXXX AT SPRING RIDGE, INC.
X. XXXXXXXXX AT XXXXX CANYON, INC.
X. XXXXXXXXX AT STONEGATE, INC. (a CA
Corporation)
X. XXXXXXXXX AT STONEGATE, INC. (a VA
Corporation)
X. XXXXXXXXX AT STONY POINT, INC.
X. XXXXXXXXX AT XXXXXX ROAD, INC.
X. XXXXXXXXX AT SULLY STATION, INC.
X. XXXXXXXXX AT SUMMERWOOD, INC.
X. XXXXXXXXX AT SYCAMORE, INC.
X. XXXXXXXXX AT TANNERY HILL, INC.
X. XXXXXXXXX AT THE BLUFF, INC.
X. XXXXXXXXX AT THE CEDARS, INC.
X. XXXXXXXXX AT THE XXXX, INC.
X. XXXXXXXXX AT THE RESERVE AT MEDFORD,
INC.
X. XXXXXXXXX AT THORNBURY, INC.
X. XXXXXXXXX AT TIERRASANTA, INC.
X. XXXXXXXXX AT TUXEDO, INC.
X. XXXXXXXXX AT UNION TOWNSHIP I, INC.
X. XXXXXXXXX AT UPPER FREEHOLD TOWNSHIP I,
INC.
X. XXXXXXXXX AT UPPER MAKEFIELD I, INC.
X. XXXXXXXXX AT UPPER MERION, INC.
X. XXXXXXXXX AT XXXX RANCH, INC.
X. XXXXXXXXX AT VALLEYBROOK II, INC.
X. XXXXXXXXX AT VALLEYBROOK, INC.
X. XXXXXXXXX AT WALL TOWNSHIP VI, INC.
X. XXXXXXXXX AT WALL TOWNSHIP VIII, INC.
X. XXXXXXXXX AT WASHINGTONVILLE, INC.
X. XXXXXXXXX AT XXXXX III, INC.
X. XXXXXXXXX AT XXXXX V, INC.
X. XXXXXXXXX AT XXXXX VI, INC.
X. XXXXXXXXX AT XXXXX VII, INC.
X. XXXXXXXXX AT WILDROSE, INC.
X. XXXXXXXXX AT XXXXXXX TRAILS, INC.
X. XXXXXXXXX AT WOODMONT, INC.
X. XXXXXXXXX AVIATION, INC.
X. XXXXXXXXX COMPANIES NORTHEAST, INC.
X. XXXXXXXXX COMPANIES OF CALIFORNIA, INC.
X. XXXXXXXXX COMPANIES OF FLORIDA, INC.
X. XXXXXXXXX COMPANIES OF MARYLAND, INC.
X. XXXXXXXXX COMPANIES OF METRO
WASHINGTON, INC.
X. XXXXXXXXX COMPANIES OF
NEW YORK, INC.
X. XXXXXXXXX COMPANIES OF NORTH CAROLINA,
INC.
X. XXXXXXXXX COMPANIES OF PENNSYLVANIA,
INC.
X. XXXXXXXXX COMPANIES OF SOUTHERN
CALIFORNIA, INC.
X. XXXXXXXXX CONSTRUCTION MANAGEMENT, INC.
X. XXXXXXXXX'X DESIGN GALLERY, INC.
X. XXXXXXXXX DEVELOPMENTS OF CALIFORNIA,
INC.
X. XXXXXXXXX DEVELOPMENTS OF MARYLAND,
INC.
X. XXXXXXXXX DEVELOPMENTS OF METRO
WASHINGTON, INC.
X. XXXXXXXXX DEVELOPMENTS OF NEW JERSEY,
INC.
X. XXXXXXXXX DEVELOPMENTS OF
NEW YORK,
INC.
X. XXXXXXXXX DEVELOPMENTS OF SOUTH
CAROLINA, INC.
X. XXXXXXXXX DEVELOPMENTS OF TEXAS, INC.
X. XXXXXXXXX EQUITIES, INC.
X. XXXXXXXXX FLORIDA DIVISION, INC.
X. XXXXXXXXX FORECAST ACQUISITION, INC.
X. XXXXXXXXX FORECAST HOMES, INC.
X. XXXXXXXXX INVESTMENT PROPERTIES OF NEW
JERSEY, INC.
X. XXXXXXXXX MARINE, INC.
X. XXXXXXXXX PORT IMPERIAL URBAN RENEWAL,
INC.
X. XXXXXXXXX PROPERTIES OF EAST BRUNSWICK
II, INC.
X. XXXXXXXXX PROPERTIES OF NB THEATRE,
INC.
X. XXXXXXXXX PROPERTIES OF NEWARK URBAN
RENEWAL CORPORATION, INC.
X. XXXXXXXXX PROPERTIES OF NORTH BRUNSWICK
II, INC.
X. XXXXXXXXX PROPERTIES OF NORTH BRUNSWICK
V, INC.
X. XXXXXXXXX PROPERTIES OF PISCATAWAY,
INC.
X. XXXXXXXXX PROPERTIES OF RED BANK, INC.
X. XXXXXXXXX PROPERTIES OF WALL, INC.
X. XXXXXXXXX REAL ESTATE INVESTMENT, INC.
X. XXXXXXXXX REAL ESTATE OF FLORIDA, INC.
X. XXXXXXXXX SOUTHEAST FLORIDA, INC.
X. XXXXXXXXX SOUTHEAST REGION, INC.
X. XXXXXXXXX'X FOUR SEASONS OF THE PALM
BEACHES, INC.
KHC ACQUISITION, INC.
KINGS GRANT EVESHAM CORP.
LANDARAMA, INC.
MATZEL & MUMFORD OF DELAWARE, INC.
M & M AT LONG BRANCH, INC.
NEW X. XXXXXXXXX DEVELOPMENTS OF FLORIDA,
INC.
PARK VILLAGE REALTY, INC.
PARTHENON GROUP, INC.
PINE BROOK CO., INC.
QUE CORPORATION
REFLECTIONS OF YOU INTERIORS, INC.
STONEBROOK HOMES, INC.
THE MATZEL & MUMFORD ORGANIZATION, INC.
THE NEW FORTIS CORPORATION
THE SOUTHAMPTON CORPORATION
TROPICAL SERVICE BUILDERS, INC.
WASHINGTON HOMES OF DELAWARE, INC.
WASHINGTON HOMES OF WEST VIRGINIA, INC.
WASHINGTON HOMES, INC.
WASHINGTON HOMES, INC. OF VIRGINIA
WESTMINSTER HOMES (CHARLOTTE), INC.
WESTMINSTER HOMES OF TENNESSEE, INC.
WESTMINSTER HOMES, INC.
WH LAND I, INC
WH LAND II, INC.
WH PROPERTIES, INC.
ARBOR WEST, L.L.C.
K. HOVNANIAN AT ST. MARGARETS, L.L.C.
K. HOVNANIAN AT ARBOR HEIGHTS, L.L.C.
K. HOVNANIAN AT ASHBURN VILLAGE, L.L.C.
K. HOVNANIAN AT BARNEGAT I, L.L.C.
K. HOVNANIAN AT BERKELEY, L.L.C.
K. HOVNANIAN AT BERNARDS V, L.L.C.
K. HOVNANIAN AT BLOOMS CROSSING, L.L.C.
K. HOVNANIAN AT BLUE HERON PINES, L.L.C.
K. HOVNANIAN AT BRENBROOKE, L.L.C.
K. HOVNANIAN AT CAMDEN I, L.L.C.
K. HOVNANIAN AT CARMEL VILLAGE, L.L.C.
K. HOVNANIAN AT CEDAR GROVE III, L.L.C.
K. HOVNANIAN AT XXXXXXX I, L.L.C.
K. HOVNANIAN AT XXXXXXX, L.L.C.
K. HOVNANIAN AT COLUMBIA TOWN CENTER,
L.L.C.
K. HOVNANIAN AT CRANBURY, L.L.C.
K. HOVNANIAN AT CURRIES XXXXX, L.L.C.
K. HOVNANIAN AT ENCINITAS RANCH,
L.L.C.
K. HOVNANIAN AT FORECAST, L.L.C.
K. HOVNANIAN AT GUTTENBERG, L.L.C.
K. HOVNANIAN AT HAMBURG, L.L.C.
K. HOVNANIAN AT HAMBURG CONTRACTORS,
L.L.C.
K. HOVNANIAN AT XXXXXXX, L.L.C.
K. HOVNANIAN AT JERSEY CITY IV, L.L.C.
K. HOVNANIAN AT KENT ISLAND, L.L.C.
K. HOVNANIAN AT XXXXXXX, L.L.C.
K. HOVNANIAN AT KING FARM, L.L.C.
K. HOVNANIAN AT LAFAYETTE ESTATES, L.L.C.
K. HOVNANIAN AT LAKE RIDGE CROSSING,
L.L.C.
K. HOVNANIAN AT LAKE TERRAPIN, L.L.C.
K. HOVNANIAN AT XXXXXXXX V, L.L.C.
K. HOVNANIAN AT XXXXXXX, L.L.C.
K. HOVNANIAN AT LITTLE EGG HARBOR, L.L.C.
K. HOVNANIAN AT LITTLE EGG HARBOR
CONTRACTORS, L.L.C.
K. HOVNANIAN AT LOWER XXXXXXXX I, L.L.C.
K. HOVNANIAN AT LOWER MORELAND II, L.L.C.
K. HOVNANIAN AT LOWER SAUCON II, L.L.C.
K. HOVNANIAN AT MANSFIELD I, LLC
X. XXXXXXXXX AT XXXXXXXXX II, LLC
X. XXXXXXXXX AT MANSFIELD III, L.L.C.
K. HOVNANIAN AT MARLBORO TOWNSHIP VIII,
L.L.C.
K. HOVNANIAN AT MARLBORO VI, L.L.C.
K. HOVNANIAN AT MARLBORO VII, L.L.C.
K. HOVNANIAN AT MENIFEE, L.L.C.
K. HOVNANIAN AT MIDDLETOWN, L.L.C.
K. HOVNANIAN AT MT. OLIVE TOWNSHIP, L.L.C.
K. HOVNANIAN AT NORTH BRUNSWICK VI, L.L.C.
K. HOVNANIAN AT NORTH HALEDON, L.L.C.
K. HOVNANIAN AT NORTHAMPTON, L.L.C.
K. HOVNANIAN AT NORTHFIELD, L.L.C.
K. HOVNANIAN AT PACIFIC BLUFFS, L.L.C.
K. HOVNANIAN AT PARAMUS, L.L.C.
K. HOVNANIAN AT PARK LANE, L.L.C.
K. HOVNANIAN AT PRINCE XXXXXXX, L.L.C.
K. HOVNANIAN AT RANCHO SANTA XXXXXXXXX,
L.L.C.
K. HOVNANIAN AT RIVERBEND, L.L.C.
K. HOVNANIAN AT RODERUCK. L.L.C.
K. HOVNANIAN AT XXXXXXX HEIGHTS, L.L.C.
K. HOVNANIAN AT SAYREVILLE, L.L.C.
K. HOVNANIAN AT SOUTH AMBOY, L.L.C.
K. HOVNANIAN AT SOUTH BANK, L.L.C.
K. HOVNANIAN AT SOUTH BRUNSWICK, L.L.C.
K. HOVNANIAN AT SPRING HILL ROAD, L.L.C.
K. HOVNANIAN AT ST. MARGARETS, L.L.C.
K. HOVNANIAN AT SUNSETS, L.L.C.
K. HOVNANIAN AT THE GABLES, L.L.C.
K. HOVNANIAN AT UPPER FREEHOLD TOWNSHIP
II, L.L.C.
K. HOVNANIAN AT UPPER FREEHOLD TOWNSHIP
III, L.L.C.
K. HOVNANIAN AT WANAQUE, L.L.C.
K. HOVNANIAN AT WASHINGTON, L.L.C.
K. HOVNANIAN AT XXXXX VIII, L.L.C.
K. HOVNANIAN AT XXXXX IX, L.L.C.
K. HOVNANIAN AT WEST MILFORD, L.L.C.
K. HOVNANIAN AT WEST WINDSOR, L.L.C.
K. HOVNANIAN AT WILLOW BROOK, L.L.C.
K. HOVNANIAN AT WINCHESTER, L.L.C.
K. HOVNANIAN AT WOODHILL ESTATES, L.L.C.
K. HOVNANIAN AT WOOLWICH, L.L.C.
K. HOVNANIAN CENTRAL ACQUISITIONS, L.L.C.
K. HOVNANIAN COMPANIES OF METRO D.C.
NORTH, L.L.C.
K. HOVNANIAN EASTERN PENNSYLVANIA, L.L.C.
K. HOVNANIAN FORECAST, L.L.C.
K. HOVNANIAN NORTH CENTRAL ACQUISITIONS,
L.L.C.
K. HOVNANIAN NORTH JERSEY ACQUISITIONS,
L.L.C.
K. HOVNANIAN SHORE ACQUISITIONS, L.L.C.
K. HOVNANIAN SOUTH JERSEY ACQUISITION,
L.L.C.
K. HOVNANIAN SOUTHERN NEW JERSEY, L.L.C.
K. HOVNANIAN'S FOUR SEASONS, L.L.C.
K. HOVNANIAN'S PRIVATE HOME PORTFOLIO,
L.L.C.
KINGS COURT AT XXXXXXXXXX, L.L.C.
M&M AT APPLE RIDGE, L.L.C.
M&M AT BROOKHILL, L.L.C.
M&M AT HERITAGE XXXXX, L.L.C.
M&M AT THE HIGHLANDS, L.L.C.
M&M AT EAST MILL, L.L.C.
M&M AT MORRISTOWN, L.L.C.
M&M AT ROOSEVELT, L.L.C.
M&M AT SHERIDAN, L.L.C.
M&M AT SPARTA, L.L.C.
M&M AT SPINNAKER POINTE, L.L.C.
M&M AT SPRUCE HOLLOW, L.L.C.
M&M AT SPRUCE XXXXXXX, L.L.C.
M&M AT SPRUCE RUN, L.L.C.
MATZEL & MUMFORD AT CRANBURY XXXXX, L.L.C.
MATZEL & MUMFORD AT FREEHOLD, L.L.C.
MATZEL & MUMFORD AT HERITAGE LANDING,
L.L.C.
MATZEL & MUMFORD AT XXXXXXXXXX, L.L.C.
MATZEL & MUMFORD AT PHILLIPSBURG, L.L.C.
MATZEL & MUMFORD AT SOUTH BRUNSWICK,
L.L.C.
MATZEL & MUMFORD AT WOODLAND CREST, L.L.C.
SECTION 14 OF THE HILLS, L.L.C.
THE LANDINGS AT SPINNAKER POINTE, L.L.C.
WESTMINSTER HOMES OF ALABAMA, L.L.C.
WESTMINSTER HOMES OF MISSISSIPPI, L.L.C.
WESTMINSTER HOMES OF SOUTH CAROLINA,
L.L.C.
XXXXXXX FAMILY BUILDERS, L.P.
M & M INVESTMENTS, L.P.
WASHABAMA, L.P.
/s/ J. Xxxxx Xxxxxx
-------------------------------------
By: J. Xxxxx Xxxxxx
Title: Executive Vice President
Chief Financial Officer
FIRST UNION NATIONAL BANK,
as Trustee
By: /s/ X. Xxxxx
--------------------
Name: Xxxxxxxxx Xxxxx
Title: Vice President
EXHIBIT A
[FACE OF NOTE]
X. XXXXXXXXX ENTERPRISES, INC.
8.875% Senior Subordinated Note Due 2012
[CUSIP] [ISIN] _______________
No. $_______________
X. Xxxxxxxxx Enterprises, Inc., a New Jersey corporation (the "ISSUER",
which term includes any successor under the Indenture hereinafter referred to),
for value received, promises to pay to ____________________, or its registered
assigns, the principal sum of ____________ DOLLARS ($______) on April 1, 2012
Initial Interest Rate: 8.875% per annum.
Interest Payment Dates: April 1 and October 1, commencing October 1, 2002.
Regular Record Dates: March 15 and September 15.
Reference is hereby make to the further provisions of this Note set forth
on the reverse hereof, which will for all purposes have the same effect as if
set forth at this place.
IN WITNESS WHEREOF, the Issuer has caused this Note to be signed manually
or by facsimile by its duly authorized officers.
Date: X. XXXXXXXXX ENTERPRISES, INC.
By:
------------------------------
Name:
Title:
A-1
(Form of Trustee's Certificate of Authentication)
This is one of the 8.875% Senior Subordinated Notes Due 2012 described in
the Indenture referred to in this Note.
FIRST UNION NATIONAL BANK,
as Trustee
By:
---------------------------------
Authorized Signatory
A-2
[REVERSE SIDE OF NOTE]
X. XXXXXXXXX ENTERPRISES, INC.
8.875% Senior Subordinated Note Due 2012
1. PRINCIPAL AND INTEREST.
The Issuer promises to pay the principal of this Note on April 1, 2012.
The Issuer promises to pay interest on the principal amount of this Note on
each interest payment date, as set forth on the face of this Note, at the rate
of 8.875% per annum.
Interest will be payable semiannually (to the holders of record of the
Notes at the close of business on the March 15 or September 15 immediately
preceding the interest payment date) on each interest payment date, commencing
October 1, 2002.
The Holder of this Note is entitled to the benefits of the Registration
Rights Agreement, dated March 26, 2002, between the Issuer, the Guarantors party
thereto and the Initial Purchasers named therein (the "REGISTRATION RIGHTS
AGREEMENT"). In the event that neither the Exchange Offer Registration Statement
(as defined in the Registration Rights Agreement) nor the Shelf Registration
Statement (as defined in the Registration Rights Agreement) is declared
effective on or prior to the date that is 150 days after the Issue Date (the
"EFFECTIVENESS DEADLINE"), the Holder shall be entitled to Liquidated Damages as
specified in the Registration Rights Agreement until the Exchange Offer
Registration Statement or the Shelf Registration Statement is declared effective
by the Commission. If the Exchange Offer Registration Statement is declared
effective but the Exchange Offer is not consummated on or prior to the earlier
to occur of 40 Business Days after the date of effectiveness of the Exchange
Offer Registration Statement, the Issuer shall be required to pay Liquidated
Damages as specified in the Registration Rights Agreement.
Interest on this Note will accrue from the most recent date to which
interest has been paid on this Note or the Note surrendered in exchange for this
Note (or, if there is no existing default in the payment of interest and if this
Note is authenticated between a regular record date and the next interest
payment date, from such interest payment date) or, if no interest has been paid,
from the Issue Date. Interest will be computed on the basis of a 360-day year of
twelve 30-day months.
The Issuer will pay interest on overdue principal, premium, if any, and, to
the extent lawful, interest and Liquidated Damages, if any, at a rate per annum
that is 1% in excess of 8.875%. Interest and Liquidated Damages not paid when
due and any interest on principal, premium or interest not paid when due will be
paid to the Persons that are Holders on a special record date, which will be the
15th day preceding the date fixed by the Issuer for the payment of such
interest, whether or not such day is a Business Day. At least 15 days before a
special record date, the Issuer will send to each Holder and to the Trustee a
notice that sets forth the special record date, the payment date and the amount
of interest to be paid.
A-3
2. INDENTURES; SUBORDINATION; NOTE GUARANTY.
This is one of the Notes issued under an Indenture dated as of March 26,
2002 (as amended from time to time, the "INDENTURE"), among the Issuer, the
Guarantors party thereto and First Union National Bank, as Trustee. Capitalized
terms used herein are used as defined in the Indenture unless otherwise
indicated. The terms of the Notes include those stated in the Indenture and
those made part of the Indenture by reference to the Trust Indenture Act. The
Notes are subject to all such terms, and Holders are referred to the Indenture
and the Trust Indenture Act for a statement of all such terms. To the extent
permitted by applicable law, in the event of any inconsistency between the terms
of this Note and the terms of the Indenture, the terms of the Indenture will
control.
The Notes are general unsecured obligations of the Issuer. The Indenture
limits the original aggregate principal amount of the Notes to $150,000,000, but
Additional Notes in an aggregate principal amount of up to $150,000,000 may be
issued pursuant to the Indenture, and the originally issued Notes and all such
Additional Notes vote together for all purposes as a single class. This Note is
subordinated as set forth in the Indenture. This Note is guaranteed, on a
subordinated basis, as set forth in the Indenture.
3. REDEMPTION AND REPURCHASE; DISCHARGE PRIOR TO REDEMPTION OR MATURITY.
This Note is subject to optional redemption, and may be the subject of an
Offer to Purchase, as further described in the Indenture. There is no sinking
fund or mandatory redemption applicable to this Note.
If the Issuer deposits with the Trustee money or U.S. Government
Obligations sufficient to pay the then outstanding principal of, premium and
Liquidated Damages, if any, and accrued interest on the Notes to redemption or
maturity, the Company may in certain circumstances be discharged from the
Indenture and the Notes or may be discharged from certain of its obligations
under certain provisions of the Indenture.
4. REGISTERED FORM; DENOMINATIONS; TRANSFER; EXCHANGE.
The Notes are in registered form without coupons in denominations of $1,000
principal amount and any multiple of $1,000 in excess thereof. A Holder may
register the transfer or exchange of Notes in accordance with the Indenture. The
Trustee may require a Holder to furnish appropriate endorsements and transfer
documents and to pay any taxes and fees required by law or permitted by the
Indenture. Pursuant to the Indenture, there are certain periods during which the
Trustee will not be required to issue, register the transfer of or exchange any
Note or certain portions of a Note.
5. DEFAULTS AND REMEDIES.
If an Event of Default, as defined in the Indenture, occurs and is
continuing, the Trustee or the Holders of at least 25% in principal amount of
the Notes may declare all the Notes to be due and payable. If a bankruptcy or
insolvency default with respect to the Issuer occurs and is continuing, the
Notes automatically become due and payable. Holders may not enforce the
Indenture or the Notes except as provided in the Indenture. The Trustee may
require indemnity
A-4
satisfactory to it before it enforces the Indenture or the Notes. Subject to
certain limitations, Holders of a majority in principal amount of the Notes then
outstanding may direct the Trustee in its exercise of remedies.
6. AMENDMENT AND WAIVER.
Subject to certain exceptions, the Indenture and the Notes may be amended,
or default may be waived, with the consent of the Holders of a majority in
principal amount of the outstanding Notes. Without notice to or the consent of
any Holder, the Issuer and the Trustee may amend or supplement the Indenture or
the Notes to, among other things, cure any ambiguity, defect or inconsistency.
7. AUTHENTICATION.
This Note is not valid until the Trustee (or Authenticating Agent) signs
the certificate of authentication on the other side of this Note.
A-5
8. ABBREVIATIONS.
Customary abbreviations may be used in the name of a Holder or an assignee,
such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties),
JT TEN (= joint tenants with right of survivorship and not as tenants in
common), CUST (= Custodian) and U/G/M/A/ (= Uniform Gifts to Minors Act).
The Company will furnish a copy of the Indenture to any Holder upon written
request and without charge.
A-6
[FORM OF NOTATION ON NOTE RELATING TO GUARANTEE]
GUARANTEE
The undersigned (the "GUARANTORS") have unconditionally guaranteed, jointly
and severally (such guarantee by each Guarantor being referred to herein as the
"GUARANTEE") (i) the due and punctual payment of the principal of and interest
on the Notes, whether at maturity, by acceleration or otherwise, the due and
punctual payment of interest on the overdue principal and interest, if any, on
the Notes, to the extent lawful, and the due and punctual performance of all
other obligations of the Issuer to the Holders or the Trustee all in accordance
with the terms set forth in Article 6 of the Indenture and (ii) in case of any
extension of time of payment or renewal of any Notes or any of such other
obligations, that the same will be promptly paid in full when due or performed
in accordance with the terms of the extension or renewal, whether at stated
maturity, by acceleration or otherwise.
The obligations of the Guarantors under this Guarantee are subordinated to
all Senior Debt of a Guarantor, as set forth in Article 11 of the Indenture.
No past, present or future stockholder, officer, director, employee or
incorporator, as such, of any of the Guarantors shall have any liability under
the Guarantee by reason of such person's status as stockholder, officer,
director, employee or incorporator. Each Holder of a Note by accepting a Note
waives and releases all such liability. This waiver and release are part of the
consideration for the issuance of the Guarantee.
Each Holder of a Note by accepting a Note agrees that any Guarantor named
below shall have no further liability with respect to its Guarantee if such
Guarantor otherwise ceases to be liable in respect of its Guarantee in
accordance with the terms of the Indenture.
The Guarantee shall not be valid or obligatory for any purpose until the
certificate of authentication on the Notes upon which the Guarantee is noted
shall have been executed by the Trustee under the Indenture by the manual
signature of one of its authorized officers.
[Guarantors]
By:
------------------------------
Title:
A-7
[FORM OF TRANSFER NOTICE]
FOR VALUE RECEIVED the undersigned registered holder hereby sell(s), assign(s)
and transfer(s) unto
Insert Taxpayer Identification No.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Please print or typewrite name and address including zip code of assignee
--------------------------------------------------------------------------------
the within Note and all rights thereunder, hereby irrevocably constituting and
appointing
--------------------------------------------------------------------------------
attorney to transfer said Note on the books of the Issuer with full power of
substitution in the premises.
A-8
[THE FOLLOWING PROVISION TO BE INCLUDED ON ALL CERTIFICATES BEARING A RESTRICTED
LEGEND]
In connection with any transfer of this Note occurring prior to ______________,
the undersigned confirms that such transfer is made without utilizing any
general solicitation or general advertising and further as follows:
CHECK ONE
/ / (1) This Note is being transferred to a "qualified institutional
buyer" in compliance with Rule 144A under the Securities Act of 1933, as amended
and certification in the form of Exhibit F to the Indenture is being furnished
herewith.
/ / (2) This Note is being transferred to a Non-U.S. Person in compliance
with the exemption from registration under the Securities Act of 1933, as
amended, provided by Regulation S thereunder, and certification in the form of
Exhibit E to the Indenture is being furnished herewith.
OR
/ / (3) This Note is being transferred other than in accordance with (1) or
(2) above and documents are being furnished which comply with the conditions of
transfer set forth in this Note and the Indenture.
If none of the foregoing boxes is checked, the Trustee is not obligated to
register this Note in the name of any Person other than the Holder hereof unless
and until the conditions to any such transfer of registration set forth herein
and in the Indenture have been satisfied.
Date:______________________
--------------------------------
Seller
By
-------------------------------
NOTICE: The signature to this assignment must
correspond with the name as written upon the
face of the within-mentioned instrument in
every particular, without alteration or any
change whatsoever.
A-9
Signature Guarantee:(1)
--------------------------
By
-------------------------------------
To be executed by an executive officer
----------
(1) Signatures must be guaranteed by an "ELIGIBLE GUARANTOR INSTITUTION"
meeting the requirements of the Registrar, which requirements include
membership or participation in the Note Transfer Agent Medallion Program
("STAMP") or such other "SIGNATURE GUARANTEE PROGRAM" as may be determined
by the Registrar in addition to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act of 1934, as amended.
A-10
OPTION OF HOLDER TO ELECT PURCHASE
If you wish to have all of this Note purchased by the Company pursuant to
Section 4.10 or Section 4.12 of the Indenture, check the box: / /
If you wish to have a portion of this Note purchased by the Company
pursuant to Section 4.10 or Section 4.12 of the Indenture, state the amount (in
original principal amount) below:
$____________________
Date:____________
Your Signature:
----------------------------
(Sign exactly as your name appears on the other side of this Note)
Signature Guarantee:(1)
---------------------------
----------
(1) Signatures must be guaranteed by an "ELIGIBLE GUARANTOR INSTITUTION"
meeting the requirements of the Registrar, which requirements include
membership or participation in the Note Transfer Agent Medallion Program
("STAMP") or such other "SIGNATURE GUARANTEE PROGRAM" as may be determined
by the Registrar in addition to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act of 1934, as amended.
A-11
SCHEDULE OF EXCHANGES OF NOTES(1)
The following exchanges of a part of this Global Note for Physical Notes or a
part of another Global Note have been made:
PRINCIPAL AMOUNT OF
THIS GLOBAL NOTE
AMOUNT OF DECREASE AMOUNT OF INCREASE IN FOLLOWING SUCH SIGNATURE OF
IN PRINCIPAL AMOUNT PRINCIPAL AMOUNT OF DECREASE (OR AUTHORIZED OFFICER
DATE OF EXCHANGE OF THIS GLOBAL NOTE THIS GLOBAL NOTE INCREASE) OF TRUSTEE
---------------------- ------------------- ---------------------- -------------------- -------------------
----------
(1) For Global Notes
A-12
EXHIBIT B
SUPPLEMENTAL INDENTURE
dated as of __________, ____
among
X. XXXXXXXXX ENTERPRISES, INC.
HOVNANIAN ENTERPRISES, INC.
The Guarantors Party Hereto
and
FIRST UNION NATIONAL BANK
as Trustee
----------------------------
8.875% Senior Subordinated Notes due 2012
B-1
THIS SUPPLEMENTAL INDENTURE (this "SUPPLEMENTAL INDENTURE"), entered into
as of __________, ____, among X. Xxxxxxxxx Enterprises, Inc., a New Jersey
corporation (the "ISSUER"), Hovnanian Enterprises, Inc. (the "COMPANY"), [list
each new guarantor and its jurisdiction of incorporation] (each an
"UNDERSIGNED") and First Union National Bank, as trustee (the "TRUSTEE").
RECITALS
WHEREAS, the Issuer, Company, the Guarantors party thereto and the Trustee
entered into the Indenture, dated as of March 26, 2002 (the "INDENTURE"),
relating to the Company's 8.875% Senior Subordinated Notes due 2012 (the
"NOTES");
WHEREAS, as a condition to the Trustee entering into the Indenture and the
purchase of the Notes by the Holders, the Company agreed pursuant to the
Indenture to cause any newly acquired or created Restricted Subsidiaries to
provide Guaranties.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained and intending to be legally bound, the parties the Indenture
hereby agree as follows:
Section 1. Capitalized terms used herein and not otherwise defined herein
are used as defined in the Indenture.
Section 2. Each Undersigned, by its execution of this Supplemental
Indenture, agrees to be a Guarantor under the Indenture and to be bound by the
terms of the Indenture applicable to Guarantors, including, but not limited to,
Article 6 and Article 11 thereof.
Section 3. This Supplemental Indenture shall be governed by and construed
in accordance with the laws of the State of New York.
Section 4. This Supplemental Indenture may be signed in various
counterparts which together will constitute one and the same instrument.
Section 5. This Supplemental Indenture is an amendment supplemental to the
Indenture and the Indenture and this Supplemental Indenture will henceforth be
read together.
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed as of the date first above written.
X. XXXXXXXXX ENTERPRISES, INC.,
as Issuer
By:
---------------------------------
Name:
Title:
HOVNANIAN ENTERPRISES, INC.,
By:
---------------------------------
Name:
Title:
[GUARANTOR]
By:
---------------------------------
Name:
Title:
FIRST UNION NATIONAL BANK,
as Trustee
By:
---------------------------------
Name:
Title:
EXHIBIT C
RESTRICTED LEGEND
THIS NOTE (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE
OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES OR TO,
OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT AS SET FORTH IN THE NEXT
SENTENCE. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE
HOLDER
(1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT) (A "QIB"), (B) IT HAS ACQUIRED
THIS NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE
SECURITIES ACT OR (C) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED
IN RULE 501(a) (1), (2), (3) OR (7) UNDER THE SECURITIES ACT) (AN "IAI"),
(2) AGREES THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER THIS NOTE OR ANY
BENEFICIAL INTEREST HEREIN, EXCEPT (A) TO THE COMPANY OR ANY OF ITS
SUBSIDIARIES, (B) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QIB
PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A, (C) IN AN OFFSHORE TRANSACTION MEETING
THE REQUIREMENTS OF RULE 903 OR 904 OF REGULATION S OF THE SECURITIES ACT, (D)
IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT,
(E) TO AN IAI THAT, PRIOR TO SUCH TRANSFER, FURNISHES THE TRUSTEE A SIGNED
LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE
TRANSFER OF THIS NOTE (THE FORM OF WHICH CAN BE OBTAINED FROM THE TRUSTEE) AND,
IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF LESS THAN
$250,000, AN OPINION OF COUNSEL ACCEPTABLE TO THE ISSUER THAT SUCH TRANSFER IS
IN COMPLIANCE WITH THE SECURITIES ACT, (F) IN ACCORDANCE WITH ANOTHER EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN
OPINION OF COUNSEL ACCEPTABLE TO THE ISSUER) OR (G) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH THE APPLICABLE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE
JURISDICTION AND
(3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE OR AN
INTEREST HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS
LEGEND.
AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTIONS" AND "UNITED STATES" HAVE
THE MEANINGS GIVEN TO THEM BY RULE 902 OF REGULATION S UNDER THE SECURITIES ACT.
THE INDENTURE CONTAINS A PROVISION
C-1
REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE IN
VIOLATION OF THE FOREGOING.
C-2
EXHIBIT D
DTC LEGEND
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE COMPANY OR ANY
OF ITS SUBSIDIARIES OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND
ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS A BENEFICIAL INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL NOTE ARE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN
PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S
NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL NOTE ARE LIMITED TO TRANSFERS
MADE IN ACCORDANCE WITH THE TRANSFER PROVISIONS OF THE INDENTURE.
D-1
EXHIBIT E
Regulation S Certificate
________, _____
First Union National Bank
00 Xxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attention: Corporate Trust Administration
Re: X. Xxxxxxxxx Enterprises, Inc.
8.875% Senior Subordinated Notes due 2012 (the "NOTES")
Issued under the Indenture (the "INDENTURE") dated
AS OF MARCH 26, 2002 RELATING TO THE NOTES
Dear Sirs:
Terms are used in this Certificate as used in Regulation S ("Regulation S")
under the Securities Act of 1933, as amended (the "Securities Act"), except as
otherwise stated herein.
[CHECK A OR B AS APPLICABLE.]
/ / A. This Certificate relates to our proposed transfer of $____
principal amount of Notes issued under the Indenture. We hereby
certify as follows:
1. The offer and sale of the Notes was not and will not be made
to a person in the United States (unless such person is
excluded from the definition of "U.S. person" pursuant to Rule
902(k)(2)(vi) or the account held by it for which it is acting
is excluded from the definition of "U.S. person" pursuant to
Rule 902(k)(2)(i) under the circumstances described in Rule
902(g)(3)) and such offer and sale was not and will not be
specifically targeted at an identifiable group of U.S.
citizens abroad.
2. Unless the circumstances described in the parenthetical in
paragraph 1 above are applicable, either (a) at the time the
buy order was originated, the buyer was outside the United
States or we and any person acting on our behalf reasonably
believed that the buyer was outside the United States or (b)
the transaction was executed in, on or through the facilities
of a designated offshore securities market, and neither we nor
any person acting on our behalf knows that the transaction was
pre-arranged with a buyer in the United States.
3. Neither we, any of our affiliates, nor any person acting on
our or their behalf has made any directed selling efforts in
the United States with respect to the Notes.
E-1
4. The proposed transfer of Notes is not part of a plan or scheme
to evade the registration requirements of the Securities Act.
5. If we are a dealer or a person receiving a selling concession,
fee or other remuneration in respect of the Notes, and the
proposed transfer takes place during the Restricted Period (as
defined in the Indenture), or we are an officer or director of
the Company or an Initial Purchaser (as defined in the
Indenture), we certify that the proposed transfer is being
made in accordance with the provisions of Rule 904(b) of
Regulation S.
/ / B. This Certificate relates to our proposed exchange of $____
principal amount of Notes issued under the Indenture for an equal
principal amount of Notes to be held by us. We hereby certify as
follows:
1. At the time the offer and sale of the Notes was made to us,
either (i) we were not in the United States or (ii) we were
excluded from the definition of "U.S. person" pursuant to Rule
902(k)(2)(vi) or the account held by us for which we were
acting was excluded from the definition of "U.S. person"
pursuant to Rule 902(k)(2)(i) under the circumstances
described in Rule 902(g)(3); and we were not a member of an
identifiable group of U.S. citizens abroad.
2. Unless the circumstances described in paragraph 1(ii) above
are applicable, either (a) at the time our buy order was
originated, we were outside the United States or (b) the
transaction was executed in, on or through the facilities of a
designated offshore securities market and we did not
pre-arrange the transaction in the United States.
3. The proposed exchange of Notes is not part of a plan or scheme
to evade the registration requirements of the Securities Act.
You and the Company are entitled to rely upon this Certificate and are
irrevocably authorized to produce this Certificate or a copy hereof to any
interested party in any administrative or legal proceeding or official inquiry
with respect to the matters covered hereby.
Very truly yours,
[NAME OF SELLER (FOR TRANSFERS) OR]
OWNER (FOR EXCHANGES)]
By:
---------------------------------
Name:
Title:
Address:
Date:________________________
X-0
XXXXXXX X
Xxxx 000X Xxxxxxxxxxx
_________, _____
First Union National Bank
00 Xxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attention: Corporate Trust Administration
Re: X. Xxxxxxxxx Enterprises, Inc.
8.875% Senior Subordinated Notes due 2012 (the "NOTES")
Issued under the Indenture (the "INDENTURE") dated
AS OF MARCH 26, 2002 RELATING TO THE NOTES
Ladies and Gentlemen:
TO BE COMPLETED BY PURCHASER IF (1) ABOVE IS CHECKED.
This Certificate relates to:
[CHECK A OR B AS APPLICABLE.]
/ / A. Our proposed purchase of $____ principal amount of Notes issued
under the Indenture.
/ / B. Our proposed exchange of $____ principal amount of Notes issued
under the Indenture for an equal principal amount of Notes to be
held by us.
We and, if applicable, each account for which we are acting, are a
qualified institutional buyer within the meaning of Rule 144A ("Rule 144A")
under the Securities Act of 1933, as amended (the "Securities Act"). If we are
acting on behalf of an account, we exercise sole investment discretion with
respect to such account. We are aware that the transfer of Notes to us, or such
exchange, as applicable, is being made in reliance upon the exemption from the
provisions of Section 5 of the Securities Act provided by Rule 144A. Prior to
the date of this Certificate we have received such information regarding the
Company as we have requested pursuant to Rule 144A(d)(4) or have determined not
to request such information.
F-1
You and the Company are entitled to rely upon this Certificate and are
irrevocably authorized to produce this Certificate or a copy hereof to any
interested party in any administrative or legal proceeding or official inquiry
with respect to the matters covered hereby.
Very truly yours,
[NAME OF PURCHASER (FOR TRANSFERS
OR OWNER (FOR EXCHANGES)]
By:
-------------------------------
Name:
Title:
Address:
Date:____________________
F-2
EXHIBIT G
Institutional Accredited Investor Certificate
First Union National Bank
00 Xxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attention: Corporate Trust Administration
Re: X. Xxxxxxxxx Enterprises, Inc.
8.875% Senior Subordinated Notes due 2012 (the "NOTES")
Issued under the Indenture (the "INDENTURE") dated
AS OF MARCH 26, 2002 RELATING TO THE NOTES
Ladies and Gentlemen:
This Certificate relates to:
[CHECK A, B OR C AS APPLICABLE.]
/ / A. Our proposed purchase of $____ principal amount of Notes issued
under the Indenture.
/ / B. Our proposed purchase of $____ principal amount of a beneficial
interest in a Global Note
/ / C. Our proposed exchange of $____ principal amount of Notes issued
under the Indenture for an equal principal amount of Notes to be
held by us.
We hereby confirm that:
1. We are an institutional "accredited investor" within the
meaning of Rule 501(a)(1), (2), (3) or (7) under the
Securities Act of 1933, as amended (the "Securities Act") (an
"Institutional Accredited Investor").
2. Any acquisition of Notes by us will be for our own account or
for the account of one or more other Institutional Accredited
Investors as to which we exercise sole investment discretion.
3. We have such knowledge and experience in financial and
business matters that we are capable of evaluating the merits
and risks of an investment in the Notes and we and any
accounts for which we are acting are able to bear the economic
risks of and an entire loss of our or their investment in the
Notes.
G-1
4. We are not acquiring the Notes or beneficial interest therein
with a view to any distribution thereof in a transaction that
would violate the Securities Act or the securities laws of any
State of the United States or any other applicable
jurisdiction; PROVIDED that the disposition of our property
and the property of any accounts for which we are acting as
fiduciary will remain at all times within our and their
control.
5. We acknowledge that the Notes have not been registered under
the Securities Act and that the Notes may not be offered or
sold within the United States or to or for the benefit of U.S.
persons except as set forth below.
6. The principal amount of Notes to which this Certificate
relates is at least equal to $250,000.
We agree for the benefit of the Company, on our own behalf and on behalf of
each account for which we are acting, that we will not resell or otherwise
transfer this note or any beneficial interest herein, except (A) to the company
or any of its subsidiaries, (B) to a person whom the we reasonably believes is a
QIB purchasing for its own account or for the account of a QIB in a transaction
meeting the requirements of Rule 144A, (C) in an offshore transaction meeting
the requirements of Rule 903 or 904 of Regulation S of the Securities Act, (D)
in a transaction meeting the requirements of Rule 144 under the Securities Act,
(E) to an IAI that, prior to such transfer, furnishes the Trustee a signed
letter containing certain representations and agreements relating to the
transfer of this Note (the form of which can be obtained from the Trustee) and,
if such transfer is in respect of an aggregate principal amount of less than
$250,000, an opinion of counsel acceptable to the company that such transfer is
in compliance with the Securities Act, (F) in accordance with another exemption
form the registration requirements of the Securities Act (and based upon an
opinion of counsel acceptable to the Company) or (G) pursuant to an effective
Registration Statement, and in each case, in accordance with the applicable
securities laws of any state of the United States or any other applicable
jurisdiction.
Prior to the registration of any transfer in accordance with (f) or (g)
above, we acknowledge that the Company reserves the right to require the
delivery of such legal opinions, certifications or other evidence as may
reasonably be required in order to determine that the proposed transfer is being
made in compliance with the Securities Act and applicable state securities laws.
We acknowledge that no representation is made as to the availability of any Rule
144 exemption from the registration requirements of the Securities Act.
We understand that the Trustee will not be required to accept for
registration of transfer any Notes acquired by us, except upon presentation of
evidence satisfactory to the Company and the Trustee that the foregoing
restrictions on transfer have been complied with. We further agree to provide to
any person acquiring any of the Notes or any beneficial interest therein from us
a notice advising such person that resales of the Notes are restricted as stated
herein.
We agree to notify you promptly in writing if any of our acknowledgments,
representations or agreements herein ceases to be accurate and complete.
G-2
We represent to you that we have full power to make the foregoing
acknowledgments, representations and agreements on our own behalf and on behalf
of any account for which we are acting.
You and the Company are entitled to rely upon this Certificate and are
irrevocably authorized to produce this Certificate or a copy hereof to any
interested party in any administrative or legal proceeding or official inquiry
with respect to the matters covered hereby.
Very truly yours,
[NAME OF PURCHASER (FOR TRANSFERS)
OR OWNER (FOR EXCHANGES)]
By:
---------------------------------
Name:
Title:
Address:
Date:_________________
G-3
Upon transfer of certificated Notes, the Notes would be registered in the
name of the new beneficial owner as follows:
By:
-------------------------------------
Date:
-----------------------------------
Taxpayer ID number:
---------------------
G-4
EXHIBIT H
[COMPLETE FORM I OR FORM II AS APPLICABLE.]
[FORM I]
CERTIFICATE OF BENEFICIAL OWNERSHIP
To: First Union National Bank
00 Xxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attention: Corporate Trust Administration OR
[Euroclear Bank S.A./N.V., as operator of the Euroclear System] OR
[Clearstream Banking, SOCIETE ANONYME]
Re: X. Xxxxxxxxx Enterprises, Inc.
8.875% Senior Subordinated Notes due 2012 (the "NOTES")
Issued under the Indenture (the "INDENTURE") dated
AS OF MARCH 26, 2002 RELATING TO THE NOTES
Ladies and Gentlemen:
We are the beneficial owner of $____ principal amount of Notes issued under
the Indenture and represented by a Regulation S Temporary Global Note (as
defined in the Indenture).
We hereby certify as follows:
[CHECK A OR B AS APPLICABLE.]
/ / A. We are a non-U.S. person (within the meaning of Regulation S under
the Securities Act of 1933, as amended).
/ / B. We are a U.S. person (within the meaning of Regulation S under the
Securities Act of 1933, as amended) that purchased the Notes in a
transaction that did not require registration under the Securities
Act of 1933, as amended.
H-1
You and the Company are entitled to rely upon this Certificate and are
irrevocably authorized to produce this Certificate or a copy hereof to any
interested party in any administrative or legal proceeding or official inquiry
with respect to the matters covered hereby.
Very truly yours,
[NAME OF BENEFICIAL OWNER]
By:
---------------------------------
Name:
Title:
Address:
Date:_______________________
[FORM II]
CERTIFICATE OF BENEFICIAL OWNERSHIP
To: First Union National Bank
00 Xxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attention: Corporate Trust Administration
Re: X. Xxxxxxxxx Enterprises, Inc.
8.875% Senior Subordinated Notes due 2012 (the "NOTES")
Issued under the Indenture (the "INDENTURE") dated
AS OF MARCH 26, 2002 RELATING TO THE NOTES
Ladies and Gentlemen:
This is to certify that based solely on certifications we have received in
writing, by tested telex or by electronic transmission from member organizations
("Member Organizations") appearing in our records as persons being entitled to a
portion of the principal amount of Notes represented by a Regulation S Temporary
Global Note issued under the above-referenced Indenture, that as of the date
hereof, $____ principal amount of Notes represented by the Regulation S
Temporary Global Note being submitted herewith for exchange is beneficially
owned by persons that are either (i) non-U.S. persons (within the meaning of
Regulation S under the Securities Act of 1933, as amended) or (ii) U.S. persons
that purchased the Notes in a transaction that did not require registration
under the Securities Act of 1933, as amended.
We further certify that (i) we are not submitting herewith for exchange any
portion of such Regulation S Temporary Global Note excepted in such Member
Organization certifications and (ii) as of the date hereof we have not received
any notification from any Member Organization to the effect that the statements
made by such Member Organization with respect to
H-2
any portion of such Regulation S Temporary Global Note submitted herewith for
exchange are no longer true and cannot be relied upon as of the date hereof.
You and the Company are entitled to rely upon this Certificate and are
irrevocably authorized to produce this Certificate or a copy hereof to any
interested party in any administrative or legal proceeding or official inquiry
with respect to the matters covered hereby.
Yours faithfully,
[EUROCLEAR BANK S.A./N.V., as operator of
the Euroclear System]
OR
[CLEARSTREAM BANKING, SOCIETE ANONYME]
By:
---------------------------------------
Name:
Title:
Address:
Date:_________________
H-3
EXHIBIT I
THIS NOTE IS A TEMPORARY GLOBAL NOTE. PRIOR TO THE EXPIRATION OF THE RESTRICTED
PERIOD APPLICABLE HERETO, BENEFICIAL INTERESTS HEREIN MAY NOT BE HELD BY ANY
PERSON OTHER THAN (1) A NON-U.S. PERSON OR (2) A U.S. PERSON THAT PURCHASED SUCH
INTEREST IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE U.S. SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"). BENEFICIAL INTERESTS HEREIN ARE NOT
EXCHANGEABLE FOR PHYSICAL NOTES OTHER THAN A PERMANENT GLOBAL NOTE IN ACCORDANCE
WITH THE TERMS OF THE INDENTURE. TERMS IN THIS LEGEND ARE USED AS USED IN
REGULATION S UNDER THE SECURITIES ACT.
I-1
