Exhibit 4.1
====================
X. XXXXXXXXX ENTERPRISES, INC.,
as Issuer
the Guarantors party hereto
and
FIRST UNION NATIONAL BANK,
as Trustee
--------------------
Indenture
Dated as of October 2, 2000
--------------------
10 1/2%
Senior Notes
Due 2007
====================
CROSS-REFERENCE TABLE/1/
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TIA Sections Indenture Sections
------------ ------------------
(S) 310 (a) ................................................................ 7.10
(b) ................................................................ 7.08
(S) 312 .................................................................... 10.02
(S) 313 .................................................................... 7.06
(S) 314 (a) ................................................................ 4.15, 4.16
(c) ................................................................ 10.04
(e) ................................................................ 10.05
(S) 315 (a) ................................................................ 7.01, 7.02
(b) ................................................................ 7.02, 7.05
(c) ................................................................ 7.01
(d) ................................................................ 7.02
(e) ................................................................ 5.09
(S) 316 (a) ................................................................ 2.06, 5.01, 5.03, 5.04
(b) ................................................................ 5.06
(c) ................................................................ 10.02
(S) 317 (a) (1) ............................................................ 5.07
(a) (2) ............................................................ 5.07
(b) ................................................................ 2.04
(S) 318 .................................................................... 10.01
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TABLE OF CONTENTS
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PAGE
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RECITALS
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions .............................................................................. 2
SECTION 1.02. Rules of Construction .................................................................... 28
ARTICLE 2
THE NOTES
SECTION 2.01. Form, Dating and Denominations; Legends .................................................. 28
SECTION 2.02. Execution and Authentication; Exchange Notes; Additional Notes ........................... 30
SECTION 2.03. Registrar, Paying Agent and Authenticating Agent; Paying Agent to Hold Money in Trust .... 31
SECTION 2.04. Replacement Notes ........................................................................ 31
SECTION 2.05. Outstanding Notes ........................................................................ 32
SECTION 2.06. Temporary Notes .......................................................................... 32
SECTION 2.07. Cancellation ............................................................................. 33
SECTION 2.08. CUSIP and CINS Numbers ................................................................... 33
SECTION 2.09. Registration, Transfer and Exchange ...................................................... 33
SECTION 2.10. Restrictions on Transfer and Exchange .................................................... 36
SECTION 2.11. Regulation S Temporary Global Notes ...................................................... 38
ARTICLE 3
REDEMPTION; OFFER TO PURCHASE
SECTION 3.01. Optional Redemption ...................................................................... 39
SECTION 3.02. Redemption with Proceeds of Public Equity Offering ....................................... 40
SECTION 3.03. Method and Effect of Redemption .......................................................... 40
SECTION 3.04. Offer to Purchase ........................................................................ 41
ARTICLE 4
COVENANTS
SECTION 4.01. Payment of Notes ......................................................................... 44
SECTION 4.02. Maintenance of Office or Agency .......................................................... 45
SECTION 4.03. Existence ................................................................................ 45
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SECTION 4.04. Payment of Taxes and Other Claims.......................................................... 45
SECTION 4.05. Maintenance of Properties and Insurance.................................................... 46
SECTION 4.06. Limitations on Indebtedness................................................................ 46
SECTION 4.07. Limitation on Restricted Payments.......................................................... 47
SECTION 4.08. Limitation on Liens........................................................................ 50
SECTION 4.09. Limitations on Restrictions Affecting Restricted Subsidiaries.............................. 50
SECTION 4.10. Limitations on Dispositions of Assets...................................................... 52
SECTION 4.11. Guarantees by Restricted Subsidiaries...................................................... 53
SECTION 4.12. Repurchase of Notes upon a Change of Control............................................... 53
SECTION 4.13. Limitation on Transactions with Affiliates................................................. 54
SECTION 4.14. Limitations on Mergers, Consolidations and Sales of Assets................................. 56
SECTION 4.15. Reports to Holders of Notes................................................................ 57
SECTION 4.16. Reports to Trustee......................................................................... 57
ARTICLE 5
REMEDIES
SECTION 5.01. Events of Default.......................................................................... 58
SECTION 5.02. Other Remedies............................................................................. 60
SECTION 5.03. Waiver of Defaults by Majority of Holders.................................................. 60
SECTION 5.04. Direction of Proceedings................................................................... 60
SECTION 5.05. Application of Moneys Collected by Trustee................................................. 61
SECTION 5.06. Proceedings by Noteholders................................................................. 62
SECTION 5.07. Proceedings by Trustee..................................................................... 62
SECTION 5.08. Remedies Cumulative and Continuing......................................................... 62
SECTION 5.09. Undertaking to Pay Costs................................................................... 63
SECTION 5.10. Notice of Defaults......................................................................... 63
SECTION 5.11. Waiver of Stay, Extension or Usury Laws.................................................... 63
ARTICLE 6
GUARANTEE
SECTION 6.01. Guarantee.................................................................................. 64
SECTION 6.02. Obligations of each Guarantor Unconditional................................................ 65
SECTION 6.03. Release of a Guarantor..................................................................... 65
SECTION 6.04. Execution and Delivery of Guaranty......................................................... 66
SECTION 6.05. Limitation on Guarantor Liability.......................................................... 66
SECTION 6.06. Article 6 Not to Prevent Events of Default................................................. 66
SECTION 6.07. Waiver by the Guarantors................................................................... 66
SECTION 6.08. Subrogation and Contribution............................................................... 66
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SECTION 6.09. Stay of Acceleration.......................................................... 66
ARTICLE 7
THE TRUSTEE
SECTION 7.01. General....................................................................... 67
SECTION 7.02. Certain Rights of Trustee..................................................... 67
SECTION 7.03. Individual Rights of Trustee.................................................. 68
SECTION 7.04. Trustee's Disclaimer.......................................................... 69
SECTION 7.05. Notice of Default............................................................. 69
SECTION 7.06. Reports by Trustee to Holders................................................. 69
SECTION 7.07. Compensation and Indemnity.................................................... 69
SECTION 7.08. Replacement of Trustee........................................................ 70
SECTION 7.09. Successor Trustee by Merger................................................... 71
SECTION 7.10. Eligibility................................................................... 71
SECTION 7.11. Money Held in Trust........................................................... 71
ARTICLE 8
DEFEASANCE AND DISCHARGE
SECTION 8.01. Discharge of Issuer's Obligations............................................. 71
SECTION 8.02. Legal Defeasance.............................................................. 72
SECTION 8.03. Covenant Defeasance........................................................... 73
SECTION 8.04. Application of Trust Money.................................................... 74
SECTION 8.05. Repayment to Issuer........................................................... 74
SECTION 8.06. Reinstatement................................................................. 74
SECTION 8.07. Indemnity for U.S. Government Obligations...................................... 75
ARTICLE 9
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01. Amendments Without Consent of Holders......................................... 75
SECTION 9.02. Amendments With Consent of Holders............................................ 76
SECTION 9.03. Effect of Consent............................................................. 77
SECTION 9.04. Trustee's Rights and Obligations.............................................. 77
SECTION 9.05. Conformity with Trust Indenture Act........................................... 77
SECTION 9.06. Payments for Consents......................................................... 78
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ARTICLE 10
MISCELLANEOUS
SECTION 10.01. Trust Indenture Act of 1939................................................ 78
SECTION 10.02. Noteholder Communications; Noteholder Actions.............................. 78
SECTION 10.03. Notices.................................................................... 79
SECTION 10.04. Certificate and Opinion as to Conditions Precedent......................... 80
SECTION 10.05. Statements Required in Certificate or Opinion.............................. 80
SECTION 10.06. Payment Date Other Than a Business Day..................................... 81
SECTION 10.07. Governing Law.............................................................. 81
SECTION 10.08. No Adverse Interpretation of Other Agreements............................... 81
SECTION 10.09. Successors................................................................. 81
SECTION 10.10. Duplicate Originals........................................................ 81
SECTION 10.11. Separability............................................................... 81
SECTION 10.12. Table of Contents and Headings............................................. 81
SECTION 10.13. 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 October 2, 2000, 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 Company has duly authorized the execution and delivery of the
Indenture to provide for the issuance of up to $150,000,000 aggregate principal
amount of the Issuer's 10 1/2% Senior Notes Due 2007, 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)
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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,
(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.
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"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;
(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)
4
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
Xxxxx'x 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
5
(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.
"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
6
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 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.
7
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.
"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
8
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.
"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
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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.
10
"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 Xxxxxx Guaranty Trust Company of New York, Brussels
Office, or 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
11
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.
"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 the Company and each
Guarantor under the Indenture.
"Guarantors" means (a) initially, each of the Company's Restricted
Subsidiaries in existence on the Issue Date, except the Issuer, KHL, Inc. and X.
Xxxxxxxxx Poland, Inc. 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.
12
"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 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
13
(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 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 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
14
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 April 1, 2001.
"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.
"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
15
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-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,
16
profits, 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 3.04.
"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.
"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
17
(a) Indebtedness under Credit Facilities which does not exceed $250
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;
(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
18
(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 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
19
(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 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,
20
(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,
(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,
21
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.
"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.
22
"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.
"Public Equity Offering" means an underwritten public offering of Common
Equity of the Company pursuant to an effective registration statement filed
under the Securities Act (excluding registration statements filed on Form S-8 or
any successor form).
"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,
23
(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
(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 on or about 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 an 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:
24
(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
(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.
25
"Securities Act" means the Securities Act of 1933.
"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.
"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:
26
X. Xxxxxxxxx Mortgage, Inc., Hovnanian Financial Services I, Inc.,
Hovnanian Financial Services II, Inc., Hovnanian Financial Services III, Inc.
and Hovnanian Financial Services IV. Inc.
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 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
27
(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.
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
28
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
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.
29
(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 $50,000,000 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,
30
(4) whether the Notes are to be issued as one or more
Global Notes or Certificated Notes, and
(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
31
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
(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
32
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 CINS Numbers. The Issuer in issuing the Notes may
use "CUSIP" and "CINS" numbers, and the Trustee will use CUSIP numbers or CINS
numbers in notices of redemption or exchange or in Offers to Purchase as a
convenience to Holders, the 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 CINS 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
33
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 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,
34
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 (iii) 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, (iv) 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 (v) 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.27 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
35
restrictions, if any, and other procedures 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.
36
(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)
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 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.
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(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
(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
38
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 the
Issuer may redeem the Notes, in whole or in part, at a redemption price equal to
the sum of (i) 100% of the principal amount thereof plus accrued and unpaid
interest and Liquidated Damages, if any, thereon to the redemption date plus
(ii) the Make-Whole Amount (as defined below), if any.
The term "Make-Whole Amount" shall mean, in connection with any optional
redemption of any Note, the excess, if any, of (i) the aggregate present value
as of the date of such redemption of each dollar of principal being redeemed and
the amount of interest (exclusive of interest accrued to the redemption date)
that would have been payable in respect of such dollar if such prepayment had
not been made, determined by discounting, on a semiannual basis, such principal
and interest at the Reinvestment Rate (determined on the business day preceding
the date of such redemption) from the respective dates on which such principal
and interest would have been payable if such payment had not been made, over
(ii) the aggregate principal amount of the Notes being redeemed.
The term "Reinvestment Rate" shall mean 0.50% (one-half of one percent)
plus the arithmetic mean of the yields under the respective headings "This Week"
and "Last Week" published in the Statistical Release under the caption "Treasury
39
Constant Maturities" for the maturity (rounded to the nearest month)
corresponding to the maturity of the principal being prepaid. If no maturity
exactly corresponds to such maturity, yields for the two published maturities
most closely corresponding to such maturity shall be calculated pursuant to the
immediately preceding sentence and the Reinvestment Rate shall be interpolated
or extrapolated from such yields on a straight-line basis, rounding in each of
such relevant periods to the nearest month. For the purpose of calculating the
Reinvestment Rate, the most recent Statistical Release published prior to the
date of determination of the Make-Whole Amount shall be used.
The term "Statistical Release" shall mean the statistical release
designated "H.15(519)" or any successor publication which is published weekly by
the Federal Reserve System and which established yields on actively traded U.S.
government securities adjusted to constant maturities or, if such statistical
release is not published at the time of any determination under the Indenture,
then such other reasonably comparable index which shall be designated by the
Issuer.
The Issuer shall calculate the Make-Whole Amount as set forth in this
Section 3. 01 and provide amount of the Make-Whole Amount to the Trustee in the
Officer's Certificate required pursuant to Section 3.03.
Section 3.02. Redemption with Proceeds of Public Equity Offering. At any
time and from time to time prior to October 1, 2003, the Issuer may redeem Notes
with the net cash proceeds received by the Company from any Public Equity
Offering at a redemption price equal to 110.50% of the principal amount plus
accrued and unpaid interest and Liquidated Damages, if any, to the redemption
date, in an aggregate principal amount for all such redemptions not to exceed
35% of the original aggregate principal amount of the Notes offered on the Issue
Date, provided that
(a) in each case the redemption takes place not later than 60 days after
the closing of the related Public Equity Offering, and
(b) not less than $97,500,000 principal amount of the Notes remains
outstanding immediately thereafter.
Section 3.03. 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
40
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 and any Make-Whole Amount;
(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 CINS number, no representation
is being made as to the correctness of the CUSIP or CINS 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.
(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.
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Section 3.04. 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
42
(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;
(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
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(xiv) if any Note contains a CUSIP or CINS number, no representation
is being made as to the correctness of the CUSIP or CINS 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.
(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
44
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 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.
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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.
(b) Notwithstanding the foregoing, the provisions of the Indenture will
not prevent the incurrence of:
(i) Permitted Indebtedness,
(ii) Refinancing Indebtedness,
46
(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
47
(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:
(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
48
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;
(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
49
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, 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 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,
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(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 (d) 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,
(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,
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(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
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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 Company or a Restricted Subsidiary existing at the
time of such Asset Disposition or (b) 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 (b) 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, Inc.) 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
53
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 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
54
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:
(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,
55
(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 Sale 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,
(ii) immediately after giving effect to such transaction, no Default
or Event of Default has occurred and is continuing,
(iii) in the case of a transaction involving the Company, immediately
after giving effect to such transaction and the use of any net proceeds
therefrom, on a pro forma basis, the Consolidated Net Worth of the Company
or the Successor as the case may be, would be at least equal to the
Consolidated Net Worth of the Company immediately prior to such transaction
(exclusive of any adjustments to Consolidated Net Worth attributable to
transaction costs) less any amount treated as a Restricted Payment in
connection with such transaction in accordance with the Indenture, and
56
(iv) 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 57 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
57
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 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.
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, and such acceleration does not cease to exist, or such
58
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
59
(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 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 60 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 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.
60
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 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
61
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 Noteholders. 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
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
62
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 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
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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. The Company and 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
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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
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
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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 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.
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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.
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,
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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
10.05 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.
(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.
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(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
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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, 2001, 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).
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.
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(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.
(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
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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 (i)
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
(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,
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(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 (1), only the Issuer's
obligations under Section 7.07 will survive. After satisfying the conditions in
clause (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.
(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
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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 clauses (iii) and (iv) 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.
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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
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.
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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 Noteholder
(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;
(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
76
(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 3.02 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 Noteholders 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 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
77
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.
78
ARTICLE 10
MISCELLANEOUS
Section 10.01. 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 10.02. Noteholder Communications; Noteholder 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.
(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.
79
Section 10.03. 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 Notes due 2007)
000-000-0000
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.
80
Section 10.04. 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 10.05. 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 10.06. 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 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 10.07. 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.
81
Section 10.08. 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 10.09. 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 10.10. 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 10.11. 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 10.12. 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 10.13. 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.
82
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
By: __________________________________
Name:
Title:
HOVNANIAN ENTERPRISES, INC.
as the Company
By: __________________________________
Name:
Title:
GUARANTORS:
HOVNANIAN ENTERPRISES, INC.
X. XXXXXXXXX AT HOPEWELL ILL, INC.
RECREATIONAL DEVELOPMENT CORP., INC.
PINE BROOK COMPANY, INC.
X. XXXXXXXXX AT BEDMINSTER, INC.
X. XXXXXXXXX AT THE BLUFF, INC.
X. XXXXXXXXX AT ATLANTIC CITY, INC.
HOVNANIAN PROPERTIES OF ATLANTIC COUNTY, INC.
MONTEGO BAY I ACQUISITION CORP., INC.
PIKE UTILITIES, INC.
ARROW PROPERTIES, INC.
X. XXXXXXXXX REAL ESTATE INVESTMENT, INC.
HOVNANIAN TEXAS, INC.
LANDARAMA, INC.
TROPICAL SERVICE BUILDERS, INC.
HOVNANIAN PENNSYLVANIA, INC.
X. XXXXXXXXX PROPERTIES OF NORTH
BRUNSWICK V, INC.
X. XXXXXXXXX DEVELOPMENTS OF TEXAS, INC.
THE MATZEL & MUMFORD ORGANIZATION, INC.
M & M INVESTMENTS, X.X.
XXXXXX & MUMFORD OF DELAWARE, INC.
PARK VILLAGE REALTY, INC.
XXXXXXX FAMILY OF BUILDERS, L.P.
REFLECTIONS OF YOU INTERIORS, INC.
XXXXXX FAIR LAND TITLE COMPANY I, INC.
X. XXXXXXXXX AT MAHWAH VIII, INC.
X. XXXXXXXXX AT WALL TOWNSHIP IV, INC.
X. XXXXXXXXX AT MONTVILLE, INC.
HOVNANIAN OF PALM BEACH, INC.
X. XXXXXXXXX COMPANIES OF FLORIDA, INC.
X. XXXXXXXXX AT FREEHOLD TOWNSHIP, INC.
HOVNANIAN PROPERTIES OF LAKE WORTH, INC.
X. XXXXXXXXX COMPANIES OF PENNSYLVANIA, INC.
X. XXXXXXXXX PROPERTIES OF XXXXXXXX, INC.
X. XXXXXXXXX AT SCOTCH PLAINS, INC.
X. XXXXXXXXX AT XXXXX XX, INC.
HOVNANIAN DEVELOPMENTS OF FLORIDA, INC.
MONTEGO BAY II ACQUISITION CORP., INC.
HOVNANIAN OF PALM BEACH VII, INC.
X. XXXXXXXXX AT WALL TOWNSHIP II, INC.
X. XXXXXXXXX ENTERPRISES, INC.
HOVNANIAN OF PALM BEACH IX, INC.
HOVNANIAN AT TARPON LAKES I, INC.
X. XXXXXXXXX COMPANIES NORTHEAST, INC.
KINGS GRANT EVESHAM CORP.
X. XXXXXXXXX AT MANALAPAN, INC.
X. XXXXXXXXX AT WALL TOWNSHIP, INC.
X. XXXXXXXXX AT EAST BRUNSWICK VII, INC.
X. XXXXXXXXX COMPANIES OF CENTRAL JERSEY, INC.
HOVNANIAN OF PALM BEACH XI, INC.
X. XXXXXXXXX AT SOUTH BRUNSWICK II, INC.
X. XXXXXXXXX AT XXXXXXXX SQUARE, INC.
X. XXXXXXXXX AT TARPON LAKES III, INC.
X. XXXXXXXXX AT HORIZON HEIGHTS, INC.
X. XXXXXXXXX AT RESERVOIR RIDGE, INC.
X. XXXXXXXXX AT JERSEY CITY I, INC.
X. XXXXXXXXX INVESTMENT PROPERTIES OF
NEW JERSEY, INC.
X. XXXXXXXXX AT FT. XXXXX I, INC.
X. XXXXXXXXX AT XXXXXX TOWNSHIP II, INC.
X. XXXXXXXXX AT KLOCKNER FARMS, INC.
X. XXXXXXXXX AT XXXXXX BEACH, INC.
XXXXX XXXXXXX CONSTRUCTION CO., INC.
X. XXXXXXXXX AT MAHWAH VII, INC.
X. XXXXXXXXX AT XXXXX III, INC.
X. XXXXXXXXX PROPERTIES OF EAST BRUNSWICK II, INC.
X. XXXXXXXXX AT KINGS GRANT I, INC.
THE NEW FORTIS CORPORATION
X. XXXXXXXXX AT CLARKSTOWN, INC.
X. XXXXXXXXX COMPANIES OF NEW YORK, INC.
X. XXXXXXXXX DEVELOPMENTS OF NEW YORK, INC.
DRYER ASSOCIATES, INC.
X. XXXXXXXXX AT PASCO I, INC.
X. XXXXXXXXX AT LAKEWOOD, INC.
X. XXXXXXXXX AT XXXXXX XXXXX XX, INC.
X. XXXXXXXXX AVIATION, INC.
X. XXXXXXXXX INVESTMENT PROPERTIES, INC.
X. XXXXXXXXX AT FT. XXXXX II, INC.
X. XXXXXXXXX AT BERNARDS II, INC.
X. XXXXXXXXX AT SOUTH BRUNSWICK III, INC.
XXXXXXX GROUP, INC.
X. XXXXXXXXX DEVELOPMENTS OF NEW JERSEY, INC.
X. XXXXXXXXX AT BRIDGEWATER V, INC.
X. XXXXXXXXX AT NORTH BRUNSWICK II, INC.
X. XXXXXXXXX AT WASHINGTONVILLE, INC.
X. XXXXXXXXX AT PEEKSKILL, INC.
X. XXXXXXXXX AT NEWARK I, INC.
X. XXXXXXXXX AT CARMEL, INC.
X. XXXXXXXXX AT EAST WINDSOR I, INC.
PARTHENON GROUP, INC.
X. XXXXXXXXX AT MARLBORO TOWNSHIP II, INC.
X. XXXXXXXXX AT SOMERSET III, INC.
R.C.K. COMMUNITY MANAGEMENT CO., INC.
X. XXXXXXXXX AT MONTCLAIR, NJ, INC.
X. XXXXXXXXX AT EAST BRUNSWICK VI, INC.
X. XXXXXXXXX AT HACKETTSTOWN, INC.
X. XXXXXXXXX COMPANIES OF NORTH CAROLINA, INC.
X. XXXXXXXXX AT MONTVILLE II, INC.
X. XXXXXXXXX AT WALL TOWNSHIP VII, INC.
X. XXXXXXXXX AT BRIDGEWATER II, INC.
X. XXXXXXXXX AT MERRIMACK, INC.
X. XXXXXXXXX AT XXXXXXXX III, INC.
X. XXXXXXXXX AT XXXXX V, INC.
X. XXXXXXXXX AT PASCO II, INC.
X. XXXXXXXXX AT DELRAY BEACH II, INC.
X. XXXXXXXXX AT BRANCHBURG I, INC.
X. XXXXXXXXX AT PLAINSBORO II, INC.
X. XXXXXXXXX AT NORTHERN WESTCHESTER, INC.
X. XXXXXXXXX AT MARLBORO TOWNSHIP, INC.
X. XXXXXXXXX AT WEST ORANGE, INC.
EASTERN TITLE AGENCY, INC.
X. XXXXXXXXX PROPERTIES OF FRANKLIN, INC.
X. XXXXXXXXX AT MAHWAH II, INC.
NEW ENGLAND COMMUNITY MANAGEMENT COMPANY, INC.
X. XXXXXXXXX AT XXXXXX TOWNSHIP, INC.
X. XXXXXXXXX AT SOUTH BRUNSWICK IV, INC.
X. XXXXXXXXX AT WALL TOWNSHIP VI, INC.
X. XXXXXXXXX PROPERTIES OF PISCATAWAY, INC.
X. XXXXXXXXX AT MAHWAH V, INC.
X. XXXXXXXXX AT MERRIMACK II, INC.
X. XXXXXXXXX AT NEWARK URBAN RENEWAL
CORPORATION I
X. XXXXXXXXX AT XXXXXXXX XXXXX, INC.
X. XXXXXXXXX AT CEDAR GROVE I, INC.
X. XXXXXXXXX AT CEDAR GROVE II, INC.
X. XXXXXXXXX AT NORTH BRUNSWICK III, INC.
X. XXXXXXXXX AT JERSEY CITY II, INC.
X. XXXXXXXXX AT BURLINGTON, INC.
X. XXXXXXXXX AT SOUTH BRUNSWICK V, INC.
X. XXXXXXXXX AT HALF MOON BAY, INC.
X. XXXXXXXXX AT JACKSONVILLE II, INC.
X. XXXXXXXXX AT BRANCHBURG II, INC.
X. XXXXXXXXX AT EMBASSY LAKES, INC.
X. XXXXXXXXX AT THE RESERVE AT MEDFORD, INC.
X. XXXXXXXXX AT BRANCHBURG III, INC.
X. XXXXXXXXX AT LOWER SAUCON, INC.
JERSEY CITY XXXXXXXX CSO, INC.
X. XXXXXXXXX AT EAST WINDSOR II, INC.
X. XXXXXXXXX AT MARLBORO TOWNSHIP III, INC.
X. XXXXXXXXX AT NEWARK URBAN RENEWAL CORP. III, INC.
X. XXXXXXXXX AT SOMERSET VIII, INC.
X. XXXXXXXXX AT READINGTON, INC.
X. XXXXXXXXX AT HOPEWELL I, INC.
X. XXXXXXXXX AT NEWARK URBAN RENEWAL CORP. IV, INC.
X. XXXXXXXXX AT NEWARK URBAN RENEWAL CORP. V, INC.
X. XXXXXXXXX AT PLAINSBORO III, INC.
X. XXXXXXXXX AT MAHWAH IV, INC.
X. XXXXXXXXX AT POMPANO BEACH, INC.
X. XXXXXXXXX AT JERSEY CITY III, INC.
X. XXXXXXXXX PROPERTIES OF NEWARK URBAN
RENEWAL CORPORATION, INC.
X. XXXXXXXXX AT NORTH BRUNSWICK IV, INC.
X. XXXXXXXXX AT BRIDGEWATER IV, INC.
X. XXXXXXXXX AT SOUTH BRUNSWICK, INC.
X. XXXXXXXXX AT PERKIOMEN I, INC.
X. XXXXXXXXX AT VALLEYBROOK, INC.
X. XXXXXXXXX AT OCEAN TOWNSHIP, INC.
X. XXXXXXXXX AT PLAINSBORO I, INC.
X. XXXXXXXXX REAL ESTATE OF FLORIDA, INC.
WESTERN FINANCIAL SERVICES, INC.
X. XXXXXXXXX AT XXXXX, INC.
X. XXXXXXXXX PROPERTIES OF RED BANK, INC.
X. XXXXXXXXX AT HANOVER, INC.
X. XXXXXXXXX AT LAKE CHARLESTON, INC.
NEW X. XXXXXXXXX DEVELOPMENTS OF FLORIDA, INC.
X. XXXXXXXXX COMPANIES OF METRO WASHINGTON, INC.
X. XXXXXXXXX AT XXXXXXXXXX I, INC.
X. XXXXXXXXX DEVELOPMENTS OF METRO
WASHINGTON, INC.
X. XXXXXXXXX AT XXXXXXX VILLAGE, INC.
X. XXXXXXXXX AT WOODMONT, INC.
X. XXXXXXXXX AT FAIRWAY VIEWS, INC.
X. XXXXXXXXX AT CAROLINA COUNTRY CLUB I, INC.
X. XXXXXXXXX AT CHAPEL TRAIL, INC.
X. XXXXXXXXX TREASURE COAST, INC.
X. XXXXXXXXX AT UPPER MERION, INC.
X. XXXXXXXXX AT MAHWAH VI, INC.
X. XXXXXXXXX AT MEDFORD I, INC.
K. HOV INTERNATIONAL, INC.
X. XXXXXXXXX AT MONTCLAIR, INC.
X. XXXXXXXXX AT BULL RUN, INC.
X. XXXXXXXXX AT SULLY STATION, INC.
X. XXXXXXXXX AT SPRING RIDGE, INC.
X. XXXXXXXXX MARINE, INC.
X. XXXXXXXXX AT RIVER OAKS, INC.
X. XXXXXXXXX AT XXXXX CREST, INC.
X. XXXXXXXXX PROPERTIES OF ROUTE 35, INC.
STONEBROOK HOMES, INC.
X. XXXXXXXXX AT XXXXXXX TRAILS, INC.
X. XXXXXXXXX AT LAKES OF BOCA RATON, INC.
X. XXXXXXXXX AT LAKE CHARLESTON II, INC.
X. XXXXXXXXX AT LAKE CHARLESTON III, INC.
X. XXXXXXXXX AT BRIDGEWATER VI, INC.
KHIPE, INC.
X. XXXXXXXXX AT FAIR LAKES, INC.
X. XXXXXXXXX AT CAROLINA COUNTRY CLUB II, INC.
X. XXXXXXXXX AT VALLEYBROOK II, INC.
X. XXXXXXXXX AT PARK RIDGE, INC.
X. XXXXXXXXX AT BELMONT, INC.
X. XXXXXXXXX AT XXXXXXX TRAILS II, INC.
X. XXXXXXXXX FAIR LAKES XXXX, INC.
X. XXXXXXXXX AT PEMBROKE SHORES, INC.
X. XXXXXXXXX AT CAROLINA COUNTRY CLUB III, INC.
GOVERNOR'S ABSTRACT CO., INC.
X. XXXXXXXXX AT COCONUT CREEK, INC.
X. XXXXXXXXX AT POLO TRACE, INC.
FOUNDERS TITLE AGENCY, INC.
X. XXXXXXXXX AT BERNARDS IV, INC.
X. XXXXXXXXX AT PERKIOMEN II, INC.
X. XXXXXXXXX AT XXXXX XX, INC.
X. XXXXXXXXX AT UPPER MAKEFIELD I, INC.
X. XXXXXXXXX COMPANIES OF CALIFORNIA, INC.
X. XXXXXXXXX AT TERRAZA, INC.
X. XXXXXXXXX DEVELOPMENTS OF CALIFORNIA, INC.
KHC ACQUISITION, INC.
X. XXXXXXXXX AT STUART ROAD, INC.
X. XXXXXXXXX AT HIGHLAND VINEYARDS, INC.
X. XXXXXXXXX AT BALLANTRAE, INC.
BALLANTRAE HOME SALES, INC.
X. XXXXXXXXX COMPANIES AT WILDROSE, INC.
X. XXXXXXXXX AT GREENBROOK, INC.
X. XXXXXXXXX AT XXXXXX ESTATES, INC.
X. XXXXXXXXX AT CARMEL DEL MAR, INC.
X. XXXXXXXXX AT XXXX RANCH, INC.
X. XXXXXXXXX AT PRINCETON, INC.
X. XXXXXXXXX AT RARITAN I, INC.
X. XXXXXXXXX AT CALABRIA, INC.
X. XXXXXXXXX AT SENECA CROSSING, INC.
X. XXXXXXXXX COMPANIES OF MARYLAND, INC.
X. XXXXXXXXX DEVELOPMENTS OF MARYLAND, INC.
X. XXXXXXXXX AT EXETER HILLS, INC.
X. XXXXXXXXX FLORIDA REGION, INC.
X. XXXXXXXXX SOUTHEAST FLORIDA, INC.
X. XXXXXXXXX AT BERLIN, INC.
X. XXXXXXXXX AT EAST BRUNSWICK VI, INC.
X. XXXXXXXXX AT BEDMINSTER II, INC.
X. XXXXXXXXX AT INVERRARY I, INC.
X. XXXXXXXXX AT MAHWAH IX, INC.
X. XXXXXXXXX AT NORTHLAKE, INC.
X. XXXXXXXXX AT HOPEWELL IV, INC.
X. XXXXXXXXX AT LOCUST GROVE I, INC.
X. XXXXXXXXX AT CASTILE, INC.
X. XXXXXXXXX AT TIERRASANTA, INC.
X. XXXXXXXXX AT XXXXXXX, INC.
X. XXXXXXXXX AT BERNARDS III, INC.
X. XXXXXXXXX AT XXXXX VI, INC.
X. XXXXXXXXX PROPERTIES OF NORTH CENTER
DRIVE, INC.
BALLANTRAE DEVELOPMENT CORP.
X. XXXXXXXXX AT LA TROVATA, INC.
X. XXXXXXXXX AT RANCHO CRISTIANITOS, INC.
X. XXXXXXXXX AT TANNERY HILL, INC.
X. XXXXXXXXX PROPERTIES OF N.B. THEATRE, INC.
X. XXXXXXXXX AT CRYSTAL SPRINGS, INC.
X. XXXXXXXXX AT THE CEDARS, INC.
X. XXXXXXXXX CONSTRUCTION MANAGEMENT, INC.
X. XXXXXXXXX ACQUISITIONS, INC.
X. XXXXXXXXX AT BURLINGTON II, INC.
X. XXXXXXXXX AT BURLINGTON III, INC.
X. XXXXXXXXX AT BALLANTRAE ESTATES, INC.
X. XXXXXXXXX AT SMITHVILLE, INC.
X. XXXXXXXXX AT JEFFERSON, INC.
X. XXXXXXXXX AT UPPER FREEHOLD TOWNSHIP I, INC.
X. XXXXXXXXX AT HERSHEY'S MILL, INC.
X. XXXXXXXXX AT DOMINION RIDGE, INC.
X. XXXXXXXXX AT PORT IMPERIAL NORTH, INC.
X. XXXXXXXXX AT UNION TOWNSHIP I, INC.
X. XXXXXXXXX AT EAST BRUNSWICK VIII, INC.
X. XXXXXXXXX AT MANALAPAN II, INC.
X. XXXXXXXXX AT HOPEWELL V, INC.
X. XXXXXXXXX AT HOPEWELL VI, INC.
X. XXXXXXXXX AT XXXXXXX XXXXX, INC.
X. XXXXXXXXX AT THORNBURY, INC.
X. XXXXXXXXX AT XXXXX VII, INC.
X. XXXXXXXXX SCOTCH PLAINS II, INC.
X. XXXXXXXXX AT MARLBORO TOWNSHIP IV, INC.
X. XXXXXXXXX PORT IMPERIAL URBAN RENEWAL, INC.
X. XXXXXXXXX AT EAST WHITELAND I, INC.
X. XXXXXXXXX AT STONEGATE, INC.
X. XXXXXXXXX AT CRESTLINE, INC.
X. XXXXXXXXX AT SAN SEVAINE, INC.
X. XXXXXXXXX AT SYCAMORE, INC.
X. XXXXXXXXX COMPANIES OF SOUTHERN CALIFORNIA, INC.
X. XXXXXXXXX AT SMITHVILLE II, INC.
X. XXXXXXXXX AT STONY POINT, INC.
X. XXXXXXXXX AT XXXXX CANYON, INC.
X. XXXXXXXXX AT TUXEDO, INC.
X. XXXXXXXXX AT BRIDGEPORT, INC.
X. XXXXXXXXX AT SARATOGA, INC.
X. XXXXXXXXX AT CHAPARRAL, INC.
X. XXXXXXXXX AT OCEAN WALK, INC.
X. XXXXXXXXX AT LOWER SAUGON II, INC.
X. XXXXXXXXX AT STONEGATE, INC.
X. XXXXXXXXX AT BARRINGTON, INC.
X. XXXXXXXXX AT HAMPTON OAKS, INC.
X. XXXXXXXXX AT P.C. HOMES, INC.
X. XXXXXXXXX AT P.C. PROPERTIES, INC.
X. XXXXXXXXX AT SUMMERWOOD, INC.
X. XXXXXXXXX AT THE XXXX
X. XXXXXXXXX'X FOUR SEASONS OF THE PALM
BEACHES, INC.
X. XXXXXXXXX AT WALL TOWNSHIP VIII, INC.
X. XXXXXXXXX AT NORTH JERSEY ACQUISITION, L.L.C.
K. HOVNANIAN CENTRAL ACQUISITION, L.L.C.
K. HOVNANIAN SHORE ACQUISITION, L.L.C.
K. HOVNANIAN SOUTH JERSEY ACQUISITION, L.L.C.
K. HOVNANIAN AT MANSFIELD I, L.L.C.
K. HOVNANIAN AT MANSFIELD II, L.L.C.
K. HOVNANIAN NORTH CENTRAL ACQUISITION, L.L.C.
K. HOVNANIAN AT XXXXX VIII, L.L.C.
K. HOVNANIAN AT BERNARDS V, L.L.C.
K. HOVNANIAN AT WANAQUE, L.L.C.
K. HOVNANIAN AT XXXXXXX I, L.L.C.
K. HOVNANIAN AT WINCHESTER, L.L.C.
K. HOVNANIAN AT MIDDLETOWN, L.L.C.
K. HOVNANIAN'S FOUR SEASONS, L.L.C.
K. HOVNANIAN AT MENIFEE, L.L.C.
K. HOVNANIAN AT NORTH BRUNSWICK VI, L.L.C.
K. HOVNANIAN AT CARMEL VILLAGE, L.L.C.
K. HOVNANIAN AT XXXXXXXX, L.L.C.
K. HOVNANIAN AT BLUE HERON PINES, L.L.C.
K. HOVNANIAN AT XXXXXXX, L.L.C.
K. HOVNANIAN AT XXXXXX HEIGHTS, L.L.C.
K. HOVNANIAN AT BERKELEY, L.L.C.
K. HOVNANIAN AT KING FARM, L.L.C.
K. HOVNANIAN AT SOUTH BANK, L.L.C.
K. HOVNANIAN AT PRINCE XXXXXXX, L.L.C.
K. HOVNANIAN AT LAKE TERRAPIN, L.L.C.
K. HOVNANIAN AT GUTTENBERG, L.L.C.
K. HOVNANIAN AT KING FARM, L.L.C.
K. HOVNANIAN AT SOUTH BANK, L.L.C.
K. HOVNANIAN AT XXXXXXX, L.L.C.
K. HOVNANIAN AT JERSEY CITY IV, L.L.C.
K. HOVNANIAN AT LAFAYETTE ESTATES, L.L.C.
K. HOVNANIAN AT UPPER FREEHOLD TOWNSHIP II, L.L.C.
K. HOVNANIAN AT XXXXXXX, L.L.C.
K. HOVNANIAN AT XXXXXXX, L.L.C.
K. HOVNANIAN AT SOUTH AMBOY, L.L.C.
K. HOVNANIAN AT UPPER FREEHOLD TOWNSHIP III, L.L.C.
K. HOVNANIAN AT BRENBROOKE, L.L.C.
K. HOVNANIAN AT BLOOMS CROSSING, L.L.C.
K. HOVNANIAN AT SPRING HILL ROAD, L.L.C.
K. HOVNANIAN AT ST. MARGARETS, L.L.C.
K. HOVNANIAN AT PARAMUS, L.L.C.
K. HOVNANIAN AT WILLOW BROOK, L.L.C.
K. HOVNANIAN AT WEST MILFORD, L.L.C.
WHI HOLDING CO., INC.
By: ______________________________________
Name:
Title:
FIRST UNION NATIONAL BANK, as Trustee
By: ______________________________________
Name:
Title:
EXHIBIT A
[FACE OF NOTE]
X. XXXXXXXXX ENTERPRISES, INC.
10 1/2% Senior Note Due 2007
[CUSIP] [CINS] _______________
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 October 1, 2007
Initial Interest Rate: 10 1/2% per annum.
Interest Payment Dates: April 1 and October 1, commencing April 1, 2001.
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 10 1/2% Senior Notes Due 2007 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.
10 1/2% Senior Note Due 2007
1. Principal and Interest.
The Issuer promises to pay the principal of this Note on October 1, 2007.
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 10 1/2% 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
April 1, 2001.
The Holder of this Note is entitled to the benefits of the Registration
Rights Agreement, dated October 2, 2000, 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.
A-3
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 10 1/2%. 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.
2. Indentures; Note Guaranty.
This is one of the Notes issued under an Indenture dated as of October 2,
2000 (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 $50,000,000 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
guaranteed 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.
A-4
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 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.
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 Trustee, 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 Trustee 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 following such Signature of
in principal amount in principal amount decrease (or authorized officer of
Date of Exchange of this Global Note of this Global Note increase) 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
______________________
10 1/2%
SENIOR Notes due 2007
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 October 2, 2000 (the "Indenture"),
relating to the Company's 10 1/2% Senior Notes due 2007 (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 ? 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.
B-1
X. XXXXXXXXX ENTERPRISES, INC.,
as Issuer
By:______________________________
Name:
Title:
HOVNANIAN ENTERPRISES, INC.,
as Issuer
By:______________________________
Name:
Title:
[GUARANTOR]
By:______________________________
Name:
Title:
FIRST UNION NATIONAL BANK,
as Trustee
By:______________________________
Name:
Title:
B-2
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 COMPANY 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 COMPANY) OR (G) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH THE APPLICABLE
SECURITIES LAWS OF ANY
X-0
XXXXX XX XXX XXXXXX XXXXXX 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 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 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.
10 1/2% Senior
Notes due 2007 (the "Notes")
Issued under the Indenture (the "Indenture") dated as
as of October 2, 2000 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
E-1
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.
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
prearrange the transaction in the United States.
E-2
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.
10 1/2% Senior
Notes due 2007 (the "Notes")
Issued under the Indenture (the "Indenture") dated as
as of October 2, 2000 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.
10 1/2% Senior
Notes due 2007 (the "Notes")
Issued under the Indenture (the "Indenture") dated as
as of October 2, 2000 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.
G-1
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.
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
G-2
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.
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
[Xxxxxx Guaranty Trust Company of New York, Brussels office, or its
successors or assigns, as operator of the Euroclear System] OR
[Clearstream Banking, societe anonyme]
Re: X. Xxxxxxxxx Enterprises, Inc.
10 1/2% Senior Notes due 2007 (the "Notes")
Issued under the Indenture (the "Indenture") dated as
as of October 2, 2000 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.
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
H-1
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.
10 1/2% Senior Notes due 2007 (the "Notes")
Issued under the Indenture (the "Indenture") dated as
as of October 2, 2000] 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.
H-2
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 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,
[XXXXXX GUARANTY TRUST
COMPANY OF NEW YORK, Brussels
office, or its successors or assigns, 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
