EXHIBIT 4.1(a)
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X.X. XXXXXX, INC. AND THE GUARANTORS PARTY HERETO
7.875% Senior Notes due 2011
______________________
Thirteenth Supplemental Indenture
Dated as of August 15, 2001
______________________
AMERICAN STOCK TRANSFER & TRUST COMPANY,
Trustee
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TABLE OF CONTENTS
Page
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ARTICLE ONE
Scope of Supplemental Indenture; General
ARTICLE TWO
Certain Definitions
ARTICLE THREE
Covenants
Section 3.01. Repurchase of Notes upon Change of Control.....................23
Section 3.02. Limitations on Indebtedness....................................24
Section 3.03. Limitations on Restricted Payments.............................24
Section 3.04. Limitations on Transactions with Affiliates....................27
Section 3.05. Limitations on Dispositions of Assets..........................28
Section 3.06. Limitations on Liens...........................................29
Section 3.07. Limitations on Restrictions Affecting Restricted Subsidiaries..29
Section 3.08. Limitations on Mergers, Consolidations and Sales of Assets.....30
Section 3.09. Reports to Holders of Notes....................................31
ARTICLE FOUR
Miscellaneous
Section 4.01. Governing Law..................................................31
Section 4.02. No Adverse Interpretation of Other Agreements..................31
Section 4.03. No Recourse Against Others.....................................31
Section 4.04. Successors and Assigns.........................................31
Section 4.05. Duplicate Originals............................................32
Section 4.06. Severability...................................................32
-i-
THIRTEENTH SUPPLEMENTAL INDENTURE dated as of August 15, 2001
("Supplemental Indenture"), to the Indenture dated as of June 9, 1997 (as
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amended, modified or supplemented from time to time in accordance therewith, the
"Indenture"), by and among X.X. XXXXXX, INC., a Delaware corporation (the
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"Company"), each of the Guarantors (as defined herein) and AMERICAN STOCK
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TRANSFER & TRUST COMPANY, as trustee (the "Trustee").
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Each party agrees as follows for the benefit of the other party and
for the equal and ratable benefit of the holders of Notes (as defined herein):
WHEREAS, the Company, the Guarantors and the Trustee have duly
authorized the execution and delivery of the Indenture to provide for the
issuance from time to time of senior debt securities (the "Securities") to be
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issued in one or more series as in the Indenture provided;
WHEREAS, the Company and the Guarantors desire and have requested the
Trustee to join them in the execution and delivery of this Supplemental
Indenture in order to establish and provide for the issuance by the Company of a
series of Securities designated as its 7.875% Senior Notes due 2011 in the
aggregate principal amount of $350,000,000, substantially in the form attached
hereto as Exhibit A (the "Notes"), guaranteed by the Guarantors, on the terms
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set forth herein;
WHEREAS, Section 2.01 of the Indenture provides that a supplemental
indenture may be entered into by the Company, the Guarantors and the Trustee for
such purpose provided certain conditions are met;
WHEREAS, the conditions set forth in the Indenture for the execution
and delivery of this Supplemental Indenture have been complied with; and
WHEREAS, all things necessary to make this Supplemental Indenture a
valid agreement of the Company, the Guarantors and the Trustee, in accordance
with its terms, and a valid amendment of, and supplement to, the Indenture have
been done;
NOW, THEREFORE:
In consideration of the premises and the purchase and acceptance of
the Notes by the holders thereof the Company and the Guarantors mutually
covenant and agree with the Trustee, for the equal and ratable benefit of the
holders, that the Indenture is supplemented and amended, to the extent expressed
herein, as follows:
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ARTICLE ONE
Scope of Supplemental Indenture; General
The changes, modifications and supplements to the Indenture effected
by this Supplemental Indenture shall be applicable only with respect to, and
govern the terms of, the Notes, which shall be limited in aggregate principal
amount to $350,000,000 in one series, and shall not apply to any other
Securities that may be issued under the Indenture unless a supplemental
indenture with respect to such other Securities specifically incorporates such
changes, modifications and supplements. Pursuant to this Supplemental Indenture,
there is hereby created and designated a series of Securities under the
Indenture entitled "7.875% Senior Notes due 2011." The Notes shall be in the
form of Exhibit A hereto. The Notes shall be guaranteed by the Guarantors as
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provided in such form and the Indenture. If required, the Notes may bear an
appropriate legend regarding original issue discount for federal income tax
purposes.
ARTICLE TWO
Certain Definitions
The following terms have the meanings set forth below in this
Supplemental Indenture. Capitalized terms used but not defined herein have the
meanings ascribed to such terms in the Indenture. To the extent terms defined
herein differ from the Indenture the terms defined herein will govern.
"Acquired Indebtedness" means (i) with respect to any Person that
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becomes a Restricted Subsidiary (or is merged into the Company 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 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 or any Restricted
Subsidiary) and (ii) with respect to the Company or any Restricted Subsidiary,
any Indebtedness expressly assumed by the Company or any Restricted Subsidiary
in connection with the acquisition of any assets from another Person (other than
the Company 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 (i) or (ii) 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 or any Restricted Subsidiary) in the case of clause (i) or at the
time of the acquisition of such assets in the case of clause (ii), but shall not
be deemed Acquired Indebtedness.
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"Affiliate" means, when used with reference to a specified Person, any
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Person directly or indirectly controlling or controlled by or under direct or
indirect common control with the Person specified.
"Affiliate Transaction" has the meaning set forth in Section 3.03
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hereof.
"Asset Acquisition" means (i) an Investment by the Company or any
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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 or any Restricted Subsidiary or (ii) the
acquisition by the Company 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
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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 or any Restricted Subsidiary
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to any Person of any Property having a fair market value in any transaction or
series of related transactions of at least $10 million. The term "Asset
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Disposition" shall not include (i) a transaction between the Company and any
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Restricted Subsidiary or a transaction between Restricted Subsidiaries, (ii) 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), (iii) a transaction involving the sale of Capital Stock of, or
the disposition of assets in, an Unrestricted Subsidiary, (iv) any exchange or
swap of assets of the Company or any Restricted Subsidiary for assets that (x)
are to be used by the Company 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, (v) any sale,
transfer, conveyance, lease or other disposition of assets and properties of the
Company that is governed by Section 3.08 hereof, or (iv) 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
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Obligations, the capitalized amount thereof determined in accordance with GAAP.
"Bankruptcy Law" means title 11 of the United States Code, as amended,
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or any similar federal or state law for the relief of debtors.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and
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Friday which is not a day on which banking institutions in New York, New York
are authorized or obligated by law or executive order to close.
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"Capital Stock" means, with respect to any Person, any and all shares,
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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
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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
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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) entered into with any financial institution meeting the
qualifications specified in clause (c) above; (e) commercial paper rated X-0, X-
0 or the equivalent thereof by Xxxxx'x Investors Service, Inc. or Standard &
Poor's Ratings Group, 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).
"Change of Control" means (i) any sale, lease or other transfer (in
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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
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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; (ii) a "person" or "group" (within the meaning of
Section 13(d) of the Exchange Act (other than (x) the Company or (y) Xxxxxx X.
Xxxxxx, Xxxxxxx X. Xxxxxx, or their respective wives, children, grandchildren
and other descendants, or any trust or other entity formed or controlled by any
of such individuals)) 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; (iii) Continuing
Directors cease to constitute at least a majority of the Board of Directors of
the Company; or (iv) the stockholders of the Company approve any plan or
proposal for the liquidation or dissolution of the Company; provided, however,
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that a liquidation or dissolution of the Company
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which is part of a transaction that does not constitute a Change of Control
under the proviso contained in clause (i) above shall not constitute a Change of
Control.
"Common Equity" of any Person means Capital Stock of such Person that
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is generally entitled to (i) vote in the election of directors of such Person or
(ii) 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.
"Consolidated Adjusted Tangible Assets" of the Company as of any date
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means the Consolidated Tangible Assets of the Company 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
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period, on a consolidated basis for the Company and the Restricted Subsidiaries,
Consolidated Net Income for such period plus (each to the extent deducted in
calculating such Consolidated Net Income and determined in accordance with GAAP)
(a) the sum for such period, without duplication, of (i) income taxes, (ii)
Consolidated Interest Expense, (iii) depreciation and amortization expenses and
other non-cash charges to earnings and (iv) interest and financing fees and
expenses which were previously capitalized and which are amortized to cost of
sales, minus (b) 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
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determination date, the ratio of (x) Consolidated Cash Flow Available for Fixed
Charges for the prior four full fiscal quarters (the "Four Quarter Period") for
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which financial results have been reported immediately preceding the
determination date (the "Transaction Date"), to (y) the aggregate Consolidated
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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
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period of such calculation to (i) 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 or any
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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
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proceeds of the incurrence of Indebtedness giving rise to the need to make such
calculation);
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(ii) 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 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 (ii) 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
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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 (ii) thereof, as if it applied to the Person or assets involved
before they were acquired; and (iii) the Consolidated Cash Flow Available for
Fixed Charges and the Consolidated Interest Incurred attributable to
discontinued operations, as determined in accordance with GAAP, shall be
excluded. Furthermore, in calculating "Consolidated Cash Flow Available for
Fixed Charges" for purposes of determining the denominator (but not the
numerator) of this "Consolidated Fixed Charge Coverage Ratio," (1) interest on
Indebtedness in respect of which a pro forma calculation is required that is
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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
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Transaction Date; and (2) notwithstanding clause (1) 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
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operation of such agreements.
"Consolidated Interest Expense" of the Company for any period means
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the Interest Expense of the Company 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
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Incurred of the Company 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
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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
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excluded from such net income (loss) (to the extent otherwise included therein),
without duplication: (i) the net income (or loss) of (x) any Unrestricted
Subsidiary (other than a Mortgage Subsidiary) or (y) any Person (other than a
Restricted Subsidiary) in which any Person other than the Company or any
Restricted
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Subsidiary has an ownership interest, except, in each case, to the extent that
any such income has actually been received by the Company 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
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, (ii) except to the extent includable in Consolidated Net Income pursuant
to the foregoing clause (i), the net income (or loss) of any Person that accrued
prior to the date that (a) such Person becomes a Restricted Subsidiary or is
merged with or into or consolidated with the Company 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 (b) the assets of such Person are acquired by the Company or
any Restricted Subsidiary, (iii) 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, (iv) the gains or losses,
together with any related provision for taxes, realized during such period by
the Company or any Restricted Subsidiary resulting from (a) the acquisition of
securities, or extinguishment of Indebtedness, of the Company or any Restricted
Subsidiary or (b) any Asset Disposition by the Company or any Restricted
Subsidiary, (v) any extraordinary gain or loss together with any related
provision for taxes, realized by the Company or any Restricted Subsidiary and
(vi) any non-recurring expense recorded by the Company 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
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Net Income solely as it relates to clause (iii) of Section 3.03(a) hereof,
clause (iv)(b) above shall not be applicable.
"Consolidated Net Worth" of any Person as of any date means the
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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
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total amount of assets of the Company and its 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:
(i) Intangible Assets and (ii) appropriate adjustments on account of minority
interests of other Persons holding equity investments in Restricted
Subsidiaries.
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"Continuing Director" means a director who either was a member of the
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Board of Directors of the Company on the date of this 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
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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
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foregoing.
"Credit Facilities" means, collectively, each of the credit facilities
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and guidance lines of credit of the Company or one or more Restricted
Subsidiaries in existence on the date of this Supplemental Indenture and one or
more other facilities or guidance 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 any Restricted Subsidiary may incur indebtedness for working
capital and general corporate purposes (including acquisitions), as any such
facility or line of credit may 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 any 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
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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
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similar official under any Bankruptcy Law.
"Default" means any event, act or condition that is, or after notice
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or the passage of time or both would be, an Event of Default.
"Designation Amount" has the meaning provided in the definition of
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Unrestricted Subsidiary.
"Disqualified Stock" means any Capital Stock that, by its terms (or by
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the terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, (i) matures or is mandatorily
redeemable, pursuant to a sinking fund
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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 (ii)
is convertible into or exchangeable or exercisable for (whether at the option of
the issuer or the holder thereof) (a) debt securities or (b) any Capital Stock
referred to in (i) 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
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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 provisions applicable to
such Capital Stock are no more favorable to such holders than Section 3.01
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 3.01
hereof.
"Dollars" and "$" mean United States Dollars.
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"Event of Default" means:
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(1) the failure by the Company to pay interest on any Note when the
same becomes due and payable and the continuance of any such failure for a
period of 30 days;
(2) the failure by the Company to pay the principal or premium of any
Note when the same becomes due and payable at maturity, upon acceleration
or otherwise;
(3) the failure by the Company or any Restricted Subsidiary to comply
with any of its agreements or covenants in, or provisions of, the Notes,
the Guarantees or the Indenture and such failure continues for the period
and after the notice specified below (except in the case of a default under
Section 3.01 or 3.08, which will constitute Events of Default with notice
but without passage of time);
(4) the acceleration of any Indebtedness (other than Non-Recourse
Indebtedness) of the Company or any Restricted Subsidiary that has an
outstanding principal amount of $25 million or more, individually or in the
aggregate, and such acceleration does not cease to exist, or such
Indebtedness is not satisfied, in either case within 30 days after such
acceleration;
(5) the failure by the Company or any Restricted Subsidiary to make
any principal or interest payment in an amount of $25 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
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becoming due and payable (after giving effect to any applicable grace
period set forth in the documents governing such Indebtedness);
(6) a final judgment or judgments that exceed $25 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
or any of its Restricted Subsidiaries and such judgment or judgments is not
satisfied, stayed, annulled or rescinded within 60 days of being entered;
(7) 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;
(8) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that:
(A) is for relief against the Company or any Restricted
Subsidiary that is a Significant Subsidiary as debtor in an
involuntary case,
(B) appoints a Custodian of the Company or any Restricted
Subsidiary that is a Significant Subsidiary or a Custodian for all or
substantially all of the property of the Company or any Restricted
Subsidiary that is a Significant Subsidiary, or
(C) orders the liquidation of the Company or any Restricted
Subsidiary that is a Significant Subsidiary,
and the order or decree remains unstayed and in effect for 60 days; or
(9) 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 re-
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lease of a Guarantor from its Guarantee in accordance with the terms of the
Indenture and the Guarantee).
"Fair Market Value" means, with respect to any asset, the price (after
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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
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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 from time to time.
"Guarantors" means (i) initially, each of:
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C. Xxxxxxx Xxxxxx Builders, Inc., a Virginia corporation;
CH Investments of Texas, Inc., a Delaware corporation;
CHI Construction Company, an Arizona corporation;
CHTEX of Texas, Inc., a Delaware corporation;
Continental Homes, Inc., a Delaware corporation;
Continental Homes of Florida, Inc., a Florida corporation;
Continental Homes of Texas, L.P., a Texas limited partnership
(formerly Continental Homes of Austin, L.P.);
Continental Residential, Inc., a California corporation;
X.X. Xxxxxx, Inc. - Birmingham, an Alabama corporation;
X.X. Xxxxxx, Inc. - Chicago, a Delaware corporation;
X.X. Xxxxxx, Inc. - Denver, a Delaware corporation;
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X.X. Xxxxxx, Inc. - Xxxxx-Xxxxx, a Delaware corporation (formerly
DRH Regrem I, Inc., a Delaware corporation);
X.X. Xxxxxx, Inc. - Greensboro, a Delaware corporation;
X.X. Xxxxxx, Inc. - Jacksonville, a Delaware corporation
(formerly X.X. Xxxxxx, Inc.-San Diego);
X.X. Xxxxxx, Inc. - Louisville, a Delaware corporation;
X.X. Xxxxxx, Inc. - Minnesota, a Delaware corporation;
X.X. Xxxxxx, Inc. - New Jersey, a Delaware corporation;
X.X. Xxxxxx, Inc. - Portland, a Delaware corporation;
X.X. Xxxxxx, Inc. - Sacramento, a California corporation;
X.X. Xxxxxx, Inc. - Torrey, a Delaware corporation;
X.X. Xxxxxx Los Angeles Holding Company, Inc., a California
corporation;
X.X. Xxxxxx Management Company, Ltd., a Texas limited
partnership;
X.X. Xxxxxx San Diego Holding Company, Inc., a California
corporation;
X.X. Xxxxxx - Emerald, Ltd., a Texas limited partnership
(formerly DRH Regrem VI, LP);
X.X. Xxxxxx-Texas, Ltd., a Texas limited partnership;
DRH Cambridge Homes, LLC, a Delaware limited liability company;
DRH Cambridge Homes, Inc., a California corporation (formerly
X.X. Xxxxxx Sacramento Management Company, Inc.);
DRH Construction, Inc., a Delaware corporation;
DRH Regrem II, Inc., a Delaware corporation;
DRH Regrem III, Inc., a Delaware corporation;
13
DRH Regrem IV, Inc., a Delaware corporation;
DRH Regrem V, Inc., a Delaware corporation;
DRH Regrem VII, LP, a Texas limited partnership;
DRH Regrem VIII, LLC, a Delaware limited liability company;
DRH Southwest Construction, Inc., a California corporation;
DRH Title Company of Colorado, Inc., a Colorado corporation;
DRH Tucson Construction, Inc., a Delaware corporation;
DRHI, Inc., a Delaware corporation;
KDB Homes, Inc., a Delaware corporation;
Xxxxxxx I, Ltd., a Delaware corporation;
Xxxxxxx II, Ltd., a Delaware corporation;
Xxxxxxx VIII, Ltd., a Delaware corporation;
Xxxxxxx IX, Inc., a New Jersey corporation;
Xxxxxxx X, Inc., a New Jersey corporation;
SGS Communities at Grande Quay, LLC, a New Jersey limited
liability company;
and (ii) each of the Company's Subsidiaries which becomes a guarantor of the
Notes pursuant to the provisions of the Indenture. An Unrestricted Subsidiary
may become a Guarantor if it (x) is so designated by resolution of the Board of
Directors of the Company and (y) executes a supplemental indenture satisfactory
to the Trustee.
"Holder" means the Person in whose name a Note is registered in the
------
books of the Registrar for the Notes.
"incurrence" has the meaning set forth in Section 3.01.
----------
"Indebtedness" of any Person means, without duplication, (i) any
------------
liability of such Person (a) 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
14
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), (b) 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 (c) in respect of Capitalized Lease Obligations (to
the extent of the Attributable Debt in respect thereof), (ii) any Indebtedness
of others that such Person has guaranteed to the extent of the guarantee, (iii)
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 (iv) 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 (a) 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, (b) the maximum liability of such Person for any contingent
obligations under clause (ii) above at such date, net of, any unamortized
discount to be accounted for as Interest Expense in accordance with GAAP and (c)
in the case of clause (iv) above, the lesser of (1) the fair market value of any
asset subject to a Lien securing the Indebtedness of others on the date that the
Lien attaches and (2) the amount of the Indebtedness secured.
"Indenture" has the meaning provided in the Recitals.
---------
"Intangible Assets" of the Company means all unamortized debt discount
-----------------
and expense, unamortized deferred charges, goodwill, patents, trademarks,
service marks, trade names, copyrights, writeups 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
intangibles on the consolidated balance sheet of the Company and the Restricted
Subsidiaries prepared in accordance with GAAP.
"Interest Expense" of any Person for any period means, without
----------------
duplication, the aggregate amount of (i) 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
15
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 (ii) all interest actually paid by the Company
or a Restricted Subsidiary under any guarantee of Indebtedness (including,
without limitation, a guarantee of principal, interest or any combination
thereof) of any Person other than the Company or any Restricted Subsidiary
during such period; provided, that Interest Expense shall exclude any expense
--------
associated with the complete write-off 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 (i) Interest Expense and (ii) all
capitalized interest and amortized debt issuance costs.
"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
Indebtedness permitted to be incurred under this Supplemental Indenture.
"Investment Grade" shall mean BBB -- or higher by S&P or Baa3 or
----------------
higher by Moody's or the equivalent of such ratings by S&P or Moody's.
"Investments" of any Person means (i) all investments by such Person
-----------
in any other Person in the form of loans, advances or capital contributions,
(ii) all guarantees of Indebtedness or other obligations of any other Person by
such Person, (iii) all purchases (or other acquisitions for consideration) by
such Person of Indebtedness, Capital Stock or other securities of any other
Person and (iv) 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 Notes are originally issued
----------
under this Supplemental 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.
16
"Marketable Securities" means (a) equity securities that are listed on
---------------------
the New York Stock Exchange, the American Stock Exchange or The Nasdaq National
Market and (b) debt securities that are rated by a nationally recognized rating
agency, listed on the New York Stock Exchange or the American Stock Exchange or
covered by at least two reputable market makers.
"Moody's" means Xxxxx'x Investors Service, Inc. or any successor to
-------
its debt rating business.
"Mortgage Subsidiary" means any Subsidiary of the Company
-------------------
substantially all of whose operations consist of the mortgage lending business.
"Net Cash Proceeds" means, with respect to an Asset Disposition, cash
-----------------
payments received (including any cash payments received by way of deferred
payment of principal pursuant to a note or installment receivable or otherwise
(including any cash received upon sale or disposition of such note or
receivable), but only as and when received), excluding any other consideration
received in the form of assumption by the acquiring Person of Indebtedness or
other obligations relating to the Property disposed of in such Asset Disposition
or received in any other non-cash 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 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 (i) 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 (ii) 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)
in-
17
demnities for and liabilities arising from fraud, misrepresentation,
misapplication or non-payment of rents, profits, insurance and condemnation
proceeds and other sums actually received by the borrower from secured assets to
be paid to the lender, waste and mechanics' liens.
"Notes" has the meaning provided in the Recitals.
-----
"Paying Agent" means the Trustee or any successor paying agent.
------------
"Permitted Indebtedness" means (i) Indebtedness under Credit
----------------------
Facilities which does not exceed $1.0 billion principal amount outstanding at
any one time; (ii) Indebtedness in respect of obligations of the Company and its
Subsidiaries to the trustees under indentures for debt securities; (iii)
intercompany debt obligations of the Company to any Restricted Subsidiary and of
any Restricted Subsidiary to the Company or any other Restricted Subsidiary;
provided, however, that any Indebtedness of any Restricted Subsidiary or the
-------- -------
Company owed to any Restricted Subsidiary or that ceases to be a Restricted
Subsidiary shall be deemed to be incurred and shall be treated as an incurrence
for purposes of the first paragraph of the covenant described under "Limitations
on Indebtedness" at the time the Restricted Subsidiary in question ceases to be
a Restricted Subsidiary; (iv) Indebtedness of the Company 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; (v) Purchase Money
Indebtedness; (vi) Capitalized Lease Obligations; (vii) 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; (viii)
Indebtedness secured only by office buildings owned or occupied by the Company
or any Restricted Subsidiary, which Indebtedness does not exceed $20 million
aggregate principal amount outstanding at any one time; (ix) 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 (x) Indebtedness of the
Company or any Restricted Subsidiary which, together with all other Indebtedness
under this clause (x), does not exceed $30 million aggregate principal amount
outstanding at any one time.
"Permitted Investment" means (i) Cash Equivalents; (ii) any Investment
--------------------
in the Company 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; (iii) any receivables, loans or other consideration taken by the
Company or any Restricted Subsidiary in connection with any asset sale otherwise
permitted by the Indenture; (iv) 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
18
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; (v) Investments in Currency Agreements or Interest Protection
Agreements described in the definition of Permitted Indebtedness; (vi) any loan
or advance to an executive officer or director of the Company or any Restricted
Subsidiary made in the ordinary course of business; 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; (vii) 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; (viii) Investments in
interests in issuances of collateralized mortgage obligations, mortgages,
mortgage loan securities or other mortgage related assets; and (ix) Investments
in an aggregate amount outstanding not to exceed $100 million.
"Permitted Liens" means (i) Liens for taxes, assessments or
---------------
governmental or quasi-government charges or claims that (a) are not yet
delinquent, (b) 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 (c) encumber solely property
abandoned or in the process of being abandoned, (ii) 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 (a)
are not yet delinquent or (b) 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, (iii) Liens
(other than any Lien imposed by the Employee 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, (iv) 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 (i)(a) of the definition of "Indebtedness"), in each
case incurred in the ordinary course of business of the Company and the
Restricted Subsidiaries, (v) attachment or judgment Liens not giving rise to a
Default or an Event of Default, (vi) easements, dedications, assessment district
or similar liens in connection with municipal or special district financing,
rights-of-way, restrictions, reservations, other similar charges, burdens, and
other similar charges or encumbrances not materially interfering with the
ordinary course of business of the Company and the Restricted Subsidiaries,
(vii) 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 and the
Restricted Subsidiaries, (viii) Liens
19
securing Indebtedness incurred pursuant to clause (viii) or (ix) of the
definition of Permitted Indebtedness, (ix) Liens securing Indebtedness of the
Company or any Restricted Subsidiary permitted to be incurred under the
Indenture; provided, that the aggregate amount of all consolidated Indebtedness
--------
of the Company 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 (ix) 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), (x) Liens securing Non-Recourse Indebtedness of the Company
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, (xi)
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, (xii) Liens on property or assets of the Company or any
Restricted Subsidiary securing Indebtedness of the Company or any Restricted
Subsidiary owing to the Company or one or more Restricted Subsidiaries, (xiii)
leases or subleases granted to others not materially interfering with the
ordinary course of business of the Company and the Restricted Subsidiaries,
(xiv) 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, (xv) 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, (xvi) any right
of a lender or lenders to which the Company or a Restricted Subsidiary may be
indebted to offset against, or appropriate and apply to the payment of such,
Indebtedness any and all balances, credits, deposits, accounts or money of the
Company or a Restricted Subsidiary with or held by such lender or lenders or its
Affiliates, (xvii) 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 and its Restricted Subsidiaries, (xviii) Liens for
homeowner and property owner association developments and assessments, (xix)
Liens securing Refinancing Indebtedness; provided, that such Liens extend only
--------
to the assets securing the Indebtedness being refinanced, and (xx) Liens
incurred in the ordinary course of business as security for the obligations of
the Company and its Restricted Subsidiaries with respect to indemnification in
respect of title insurance providers.
"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.
20
"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 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 and the Restricted
Subsidiaries; provided, however, that (i) the aggregate principal amount of such
-------- -------
Indebtedness shall not exceed such purchase price or cost and (ii) 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.
"Rating Agencies" shall mean (1) S&P and (2) Moody's.
---------------
"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 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 or any
Restricted Subsidiary pursuant to the terms of this Indenture, but only to the
extent that (i) the Refinancing Indebtedness is subordinated to the Notes or the
Guarantees, as the case may be, to the same extent as the Indebtedness being
refunded, refinanced or extended, if at all, (ii) the Refinancing Indebtedness
is scheduled to mature either (a) no earlier than the Indebtedness being
refunded, refinanced or extended or (b) after the maturity date of the Notes,
(iii) 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 (iv) such
21
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.
"Registrar" means American Stock Transfer & Trust Company or any
---------
successor registrar of the Notes.
"Restricted Payment" means any of the following: (i) the declaration
------------------
or payment of any dividend or any other distribution on Capital Stock of the
Company 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
or any Restricted Subsidiary (other than (a) dividends or distributions payable
solely in Qualified Stock and (b) in the case of Restricted Subsidiaries,
dividends or distributions payable to the Company or to a Restricted
Subsidiary); (ii) the purchase, redemption or other acquisition or retirement
for value of any Capital Stock of the Company or any Restricted Subsidiary
(other than a payment made to the Company or any Restricted Subsidiary); and
(iii) 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).
"Restricted Subsidiary" means any Subsidiary of the Company which is
---------------------
not an Unrestricted Subsidiary.
"S&P" means Standard and Poor's Ratings Group or any successor to its
---
debt rating business.
"Significant Subsidiary" means any Subsidiary of the Company which
----------------------
would constitute a "significant subsidiary" as defined in Rule 1-02 of
Regulation S-X under the Securities Act and the Exchange Act.
"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.
"Successor" has the meaning set forth in Section 3.08.
---------
"Supplemental Indenture" has the meaning provided in the Preamble.
----------------------
"Trustee" means the party named as such above until a successor
-------
replaces such party in accordance with the applicable provisions of this
Indenture and thereafter means the successor serving hereunder.
22
"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 or any Restricted Subsidiary, and neither the Company 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, (i) in each case, to the extent that the
amount thereof constitutes a Restricted Payment permitted by the Indenture, (ii)
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 (iii) to the extent such Indebtedness is a
guarantee by such Subsidiary of Indebtedness of the Company 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 or any Restricted Subsidiary. Subject to the
foregoing, the Board of Directors of the Company or a duly authorized committee
thereof may designate any Subsidiary to be an Unrestricted Subsidiary; provided,
--------
however, that (i) 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 3.03 hereof, to the extent provided therein, (ii) the Company must be
permitted under Section 3.03 hereof to make the Restricted Payment deemed to
have been made pursuant to clause (i), and (iii) after giving effect to such
designation, no Default or Event of Default shall have occurred and 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
-------- -------
(i) the Indebtedness of such Unrestricted Subsidiary as of the date of such
redesignation could then be incurred under Section 3.02 hereof and (ii)
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 3.02(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 Subsidiar-
23
ies; 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 (i) the sum of the products obtained by multiplying (a) 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 (b) the number of years (calculated to the nearest one-
twelfth) that will elapse between such date and the making of such payment by
(ii) the sum of all such payments described in clause (i)(a) above.
ARTICLE THREE
Covenants
Section 3.01. Repurchase of Notes upon Change of Control.
------------------------------------------
(a) In the event that there shall occur a Change of Control, each
Holder of Notes shall have the right, at such Holder's option, to require the
Company 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 interest to the
Repurchase Date.
(b) On or before the thirtieth day after any Change of Control, the
Company 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 Company 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 Company (or an agent
designated by the Company 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 Company.
(c) The Company will comply with applicable law, including Section
14(e) of the Exchange Act and Rule 14e-1 thereunder, if applicable, if the
Company is required to give a notice of right of repurchase as a result of a
Change of Control.
24
Section 3.02. Limitations on Indebtedness.
---------------------------
(a) Until the Notes are rated Investment Grade by both Rating
Agencies (after which time the following covenant will no longer be in effect),
the Company 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 this
Supplemental Indenture will not prevent the incurrence of: (i) Permitted
Indebtedness, (ii) Refinancing Indebtedness, (iii) Non-Recourse Indebtedness,
(iv) any Guarantee of Indebtedness of the Company represented by the Notes and
(v) any guarantee of Indebtedness incurred under Credit Facilities in compliance
with this 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 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 3.03. Limitations on Restricted Payments.
----------------------------------
(a) Until the Notes are rated Investment Grade by both Rating
Agencies (after which time the following covenant will no longer be in effect),
the Company will not, and will not cause or permit any Restricted Subsidiary to,
directly or indirectly, make any Restricted Payment unless:
25
(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
3.02(a) hereof; and
(iii) immediately after giving effect to such Restricted Payment,
the aggregate amount of all Restricted Payments (including the Fair Market
Value of any non-cash Restricted Payment) declared or made after the Issue
Date 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 April 1, 1998 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 June 9, 1997
or any issue or sale after June 9, 1997 of Qualified Stock (other than to
any Subsidiary of the Company) and (2) the issue or sale after June 9, 1997
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) $86.0 million, which is equal to
----
the aggregate principal amount of the Company's 6-7/8% Convertible
Subordinated Notes due 2002 that were converted into the Company's Common
Equity prior to the Issue Date, plus (d) in the case of the disposition or
repayment of any Investment constituting a Restricted Payment made after
the June 9, 1997, an amount (to the extent not included in the calculation
of the 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 the Consolidated Net Income referred to
in (a)), plus (e) with respect to any Unrestricted Subsidiary that is
----
redesignated as a Restricted Subsidiary after June 9, 1997 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 June 9, 1997 and only to the extent not
included in the calculation of the Consolidated Net Income referred to in
(a)), an amount equal to the lesser of (x) the proportionate interest of
the Company or a Restricted Subsidiary in an amount equal to the excess of
(I) the total assets of such Subsidiary, valued on an aggregate basis at
the lesser of book value and Fair Market Value thereof, over (II) the total
liabilities of such Subsidiary, determined in accordance with GAAP, and (y)
the Designation Amount at the time of such Subsidiary's designation as an
Unrestricted Subsidiary, plus (f) $50 million minus (g) the aggregate
----
amount of all Restricted Payments (other
26
than Restricted Payments referred to in clause (C) of the immediately
succeeding paragraph) made after June 9, 1997 through the Issue Date.
(b) Clauses (ii) and (iii) of paragraph (a) will not prohibit: (A)
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 this Indenture; (B) 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 (C) 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 $20 million in
the aggregate since the Issue Date; provided, however, that each Restricted
-------- -------
Payment described in clauses (A) and (B) of this sentence shall be taken into
account for purposes of computing the aggregate amount of all Restricted
Payments pursuant to clause (iii) of paragraph (a).
(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 the paragraph (a), Property other than cash, Cash Equivalents
and Marketable Securities shall be deemed to be equal in value to the "equity
value" of the Capital Stock or other securities issued in exchange therefor. The
"equity value" of such Capital Stock or other securities shall be equal to (i)
the number of shares of Common Equity issued in the transaction (or issuable
upon conversion or exercise of the Capital Stock or other securities issued in
the transaction) multiplied by the closing sale price of the Common Equity on
its principal market on the date of the transaction (less, in the case of
Capital Stock or other securities which require the payment of consideration at
the time of conversion or exercise, the aggregate consideration payable
thereupon) or (ii) if the Common Equity is not then traded on the New York Stock
Exchange, American Stock Exchange or Nasdaq National Market, or if the Capital
Stock or other securities issued in the transaction do not consist of Common
Equity (or Capital Stock or other securities convertible into or exercisable for
Common Equity), the value 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.
27
Section 3.04. Limitations on Transactions with Affiliates.
-------------------------------------------
(a) Until the Notes are rated Investment Grade by both Rating
Agencies (after which time the following covenant will no longer be in effect),
the Company 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 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 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 $10 million, the Company shall have (x) obtained the approval of a
majority of the Board of Directors of the Company and (y) either obtained the
approval of a majority of the Company's disinterested directors or obtained an
opinion of a qualified independent financial advisor to the effect that such
Affiliate Transaction is fair to the Company 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 $50 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 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 3.03, (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 this
Inden-
28
ture)) and (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.
Section 3.05. Limitations on Dispositions of Assets.
-------------------------------------
Until the Notes are rated Investment Grade by both Rating Agencies
(after which time the following covenant will no longer be in effect), the
Company 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 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
shall be deemed to be consideration required by clause (y) above for purposes of
determining the percentage of such consideration received by the Company or the
Restricted Subsidiaries. The Net Cash Proceeds of an Asset Disposition shall,
within one year, at the Company's election, (a) be used by the Company or a
Restricted Subsidiary in the business of the construction and sale of homes
conducted by the Company and the Restricted Subsidiaries or any other business
of the 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 a Net Cash
Proceeds Offer for the 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 Net Cash Proceeds Offer 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 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 Net Cash Proceeds Offer
shall have been made, exceed 5% of Consolidated Tangible Assets and (B) in
connection with any 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 this paragraph to the extent that the aggregate 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 Dispositions that has not yet been con-
29
verted 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 3.06. Limitations on Liens.
--------------------
The Company 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 this 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 3.07. Limitations on Restrictions Affecting Restricted Subsidiaries.
-------------------------------------------------------------
The Company 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 leases and other agreements that restrict the assignability thereof) on the
ability of any Restricted Subsidiary to (i) 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, (ii) make loans or advances to the
Company or any other Restricted Subsidiary, or (iii) transfer any of its
properties or assets to the Company or any other Restricted Subsidiary, except
for (a) encumbrances or restrictions existing under or by reason of applicable
law, (b) covenants or restrictions contained in Indebtedness in effect on the
date of this Indenture as such covenants or restrictions are in effect on such
date, (c) 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, (d) 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 than those under the agreement creating
or evidencing the Indebtedness being refunded, refinanced, replaced or extended,
(e) any Permitted Lien, or any other agreement restricting the sale or other
disposition of property, securing Indebtedness permitted by this 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, (f) reasonable and customary borrowing base
covenants set forth in agreements evidencing Indebtedness otherwise permitted
30
by this Indenture, (g) customary provisions restricting subletting or assignment
of any lease governing a leasehold interest of the Company or any Restricted
Subsidiary, and (h) 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.
Section 3.08. Limitations on Mergers, Consolidations and Sales of Assets.
----------------------------------------------------------
Neither the Company 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 Guarantees
or this Indenture (as an entirety or substantially 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 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 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 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) 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 (in the case of a transaction involving the Company),
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 this Indenture and (iv) unless prior to such transaction the
Notes are rated Investment Grade by both Rating Agencies (after which this
clause (iv) shall not apply), immediately after giving effect to such
transaction, the Company could incur at least $1.00 of Indebtedness pursuant to
Section 3.02(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 or any Guarantor.
31
Section 3.09. Reports to Holders of Notes.
---------------------------
The Company will 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 will 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.
ARTICLE FOUR
Miscellaneous
Section 4.01. Governing Law.
-------------
The laws of the State of New York shall govern this Supplemental
Indenture, the Securities of each Series and the Guarantees.
Section 4.02. No Adverse Interpretation of Other Agreements.
---------------------------------------------
This Supplemental Indenture may not be used to interpret another
indenture, loan or debt agreement of the Company or a Subsidiary. Any such
indenture, loan or debt agreement may not be used to interpret this Supplemental
Indenture.
Section 4.03. No Recourse Against Others.
--------------------------
All liability described in paragraph 13 of the Notes of any director,
officer, employee or stockholder, as such, of the Company or any Guarantor is
waived and released.
Section 4.04. Successors and Assigns.
----------------------
All covenants and agreements of the Company and the Guarantors in this
Supplemental Indenture and the Notes shall bind its successors and assigns. All
agreements of the Trustee in this Supplemental Indenture shall bind its
successors and assigns.
32
Section 4.05. Duplicate Originals.
-------------------
The parties may sign any number of copies of this Supplemental
Indenture. Each signed copy shall be an original, but all of them together
represent the same agreement.
Section 4.06. Severability.
------------
In case any one or more of the provisions contained in this
Supplemental Indenture or in the Notes shall for any reason be held to be
invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provisions of this Supplemental
Indenture or of the Notes.
S-1
SIGNATURES
IN WITNESS WHEREOF, the parties have caused this Supplemental
Indenture to be duly executed, all as of the date first above written.
X.X. XXXXXX, INC.
By: /s/
-----------------------------------
Name:
Title:
S-2
GUARANTORS:
C. Xxxxxxx Xxxxxx Builders, Inc.
CHI Construction Company
CHTEX of Texas, Inc.
Continental Homes, Inc.
Continental Homes of Florida, Inc.
Continental Residential, Inc.
X.X. Xxxxxx, Inc. - Birmingham
X.X. Xxxxxx, Inc. - Chicago
X.X. Xxxxxx, Inc. - Denver
X.X. Xxxxxx, Inc. - Xxxxx-Xxxxx
X.X. Xxxxxx, Inc. - Greensboro
X.X. Xxxxxx, Inc. - Jacksonville
X.X. Xxxxxx, Inc. - Louisville
X.X. Xxxxxx, Inc. - Minnesota
X.X. Xxxxxx, Inc. - New Jersey
X.X. Xxxxxx, Inc. - Portland
X.X. Xxxxxx, Inc. - Sacramento
X.X. Xxxxxx, Inc. - Torrey
X.X. Xxxxxx Los Angeles Holding Company, Inc.
X.X. Xxxxxx San Diego Holding Company, Inc.
DRH Cambridge Homes, Inc.
DRH Construction, Inc.
DRH Regrem II, Inc.
DRH Regrem III, Inc.
DRH Regrem IV, Inc.
DRH Regrem V, Inc.
DRH Southwest Construction, Inc.
DRH Title Company of Colorado, Inc.
DRH Tucson Construction, Inc.
DRHI, Inc.
KDB Homes, Inc.
Xxxxxxx I, Ltd.
Xxxxxxx VIII, Ltd.
Xxxxxxx IX, Inc.
Xxxxxxx X, Inc.
S-3
By: /s/
-----------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Treasurer
SGS COMMUNITIES AT GRANDE QUAY,
LLC
By: Xxxxxxx IX, Inc., a member
By: /s/
-----------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Treasurer
and
By: Xxxxxxx X, Inc., a member
By: /s/
-----------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Treasurer
X.X. XXXXXX MANAGEMENT COMPANY,
LTD.
X.X. XXXXXX - TEXAS, LTD.
X.X. XXXXXX - EMERALD, LTD.
DRH REGREM VII, LP
By: Xxxxxxx I, Ltd.,
its general partner
By: /s/
-----------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Treasurer
S-4
CONTINENTAL HOMES OF TEXAS, L.P.
By: CHTEX of Texas, Inc.,
its general partner
By: /s/
-----------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Treasurer
DRH CAMBRIDGE HOMES, LLC
DRH REGREM VIII, LLC
By: X.X. Xxxxxx, Inc. - Chicago,
a member
By: /s/
-----------------------------------
Name: Xxxxxx Xxxxxx
Title: Treasurer
XXXXXXX II, LTD.
CH INVESTMENTS OF TEXAS, INC.
By: /s/
-----------------------------------
Name: Xxxxxxx Xxxx
Title: President
S-5
AMERICAN STOCK TRANSFER & TRUST
COMPANY, as Trustee
By: /s/
-----------------------------------
Name:
Title:
Exhibit A
---------
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY OR A
NOMINEE OF A DEPOSITORY OR A SUCCESSOR DEPOSITORY. THIS SECURITY IS NOT
EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN
THE DEPOSITORY OR ITS NOMINEE EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED
IN THE INDENTURE, AND NO TRANSFER OF THIS SECURITY (OTHER THAN A TRANSFER
OF THIS SECURITY AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE
DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER
NOMINEE OF THE DEPOSITORY) MAY BE REGISTERED EXCEPT IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
ISSUER 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 AN INTEREST HEREIN.
A-1
X.X. XXXXXX, INC.
7.875% SENIOR NOTES DUE 2011
No. CUSIP No.:
X.X. Xxxxxx, Inc., a Delaware corporation, promises to pay to __________________
or registered assigns
the principal sum of Dollars on August 15, 2011
Interest Payment Dates: August 15 and February 15, commencing February 15, 2002
Interest Record Dates: August 1 and February 1
Dated:
X.X. XXXXXX, INC.
By:
----------------------------------------
Name:
Title:
By:
----------------------------------------
Name:
Title:
American Stock Transfer & Trust Company, as
Trustee, certifies that this is one of the
Securities referred to in the within mentioned
Indenture.
Date:
By:
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Authorized Signatory
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X.X. XXXXXX, INC.
7.875% Senior Notes due 2011
1. Interest.
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X.X. XXXXXX, INC. (the "Company"), a Delaware corporation, promises to
pay interest on the principal amount of this Security at the rate per annum
shown above. The Company will pay interest semiannually on August 15 and
February 15 of each year, commencing February 15, 2002, until the principal is
paid or made available for payment. Interest on the Securities will accrue from
the most recent date to which interest has been paid or duly provided for or, if
no interest has been paid, from the date of original issuance, provided that, if
there is no existing default in the payment of interest, and if this Security is
authenticated between a record date referred to on the face hereof and the next
succeeding interest payment date, interest shall accrue from such interest
payment date. Interest will be computed on the basis of a 360-day year of
twelve 30-day months.
2. Method of Payment.
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The Company will pay interest on the Securities (except defaulted
interest, if any, which will be paid on such special payment date to Holders of
record on such special record date as may be fixed by the Company) to the
persons who are registered Holders of Securities at the close of business on the
August 1 and February 1 immediately preceding the interest payment date.
Holders must surrender Securities to a Paying Agent to collect principal
payments. The Company will pay principal and interest in money of the United
States that at the time of payment is legal tender for payment of public and
private debts.
3. Paying Agent and Registrar.
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Initially, American Stock Transfer & Trust Company (the "Trustee")
will act as Paying Agent and Registrar. The Company may change or appoint any
Paying Agent, Registrar or co-Registrar without notice. The Company or any of
its Subsidiaries or any of their Affiliates may act as Paying Agent, Registrar
or co-registrar.
4. Indenture.
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The Company issued the Securities under an Indenture dated as of June
9, 1997 among the Company, the Guarantors and the Trustee, as supplemented (the
"Indenture"). The terms of the Securities and the Guarantees include those
stated in the Indenture and those made part of the Indenture by reference to the
Trust Indenture Act of 1939 ("TIA") as in effect on the date of the Indenture.
The Securities and the Guarantees are subject to all such terms, and Holders are
referred to the Indenture and the Act for a statement of them. Capitalized
terms not defined herein have the meanings given to those terms in the
Indenture.
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The Company will furnish to any Holder upon written request and
without charge a copy of the Indenture and the applicable Authorizing Resolution
or supplemental indenture. Requests may be made to: X.X. Xxxxxx, Inc., 0000
Xxxxxxxxx Xxxx., Xxxxx 000, Xxxxxxxxx, Xxxxx 00000, Attention: Chief Financial
Officer.
5. Redemption.
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Except as set forth in the following sentence, the Securities will not
be redeemable. The Company may redeem Securities, at any time on or before
August 15, 2004, with the net cash proceeds of one or more Public Equity
Offerings by the Company, at a redemption price equal to 107.875% of the
principal amount of such Securities, plus accrued and unpaid interest, if any,
to the date of redemption; provided, however, that at least 65% of the aggregate
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principal amount of Securities, excluding any Securities held by the Company or
any of its Affiliates, remains outstanding immediately after the occurrence of
such redemption. Notice of any such redemption must be given within 60 days
after the date of the closing of the relevant Public Equity Offering.
Notice of redemption will be mailed at least 30 days but not more than
60 days before the redemption date to each Holder of Securities to be redeemed
at his registered address. Securities in denominations larger than $1,000 may
be redeemed in part. On and after the redemption date interest ceases to accrue
on Securities or portions of them called for redemption, provided that if the
Company shall default in the payment of such Security at the redemption price
together with accrued interest, interest shall continue to accrue at the rate
borne by the Securities.
6. Denominations, Transfer, Exchange.
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The Securities are in registered form only without coupons in
denominations of $1,000 and integral multiples of $1,000. A Holder may transfer
or exchange Securities by presentation of such Securities to the Registrar or a
co-Registrar with a request to register the transfer or to exchange them for an
equal principal amount of Securities of other denominations. The Registrar may
require a Holder, among other things, to furnish appropriate endorsements and
transfer documents and to pay any taxes and fees required by law or permitted by
the Indenture. The Registrar need not transfer or exchange any Security
selected for redemption, except the unredeemed part thereof if the Security is
redeemed in part, or transfer or exchange any Securities for a period of 15 days
before a selection of Securities to be redeemed.
7. Persons Deemed Owners.
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The registered Holder of this Security shall be treated as the owner
of it for all purposes.
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8. Unclaimed Money.
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If money for the payment of principal or interest remains unclaimed
for two years, the Trustee or Paying Agent will pay the money back to the
Company at its request. After that, Holders entitled to the money must look to
the Company for payment unless an abandoned property law designates another
person.
9. Amendment, Supplement, Waiver.
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Subject to certain exceptions, the Indenture or the Securities may be
amended or supplemented with the consent of the Holders of at least a majority
in principal amount of the outstanding Securities and any past default or
compliance with any provision relating to the Securities may be waived in a
particular instance with the consent of the Holders of a majority in principal
amount of the outstanding Securities. Without the consent of any Holder, the
Company and the Trustee may amend or supplement the Indenture or the Securities
to cure any ambiguity, defect or inconsistency, to provide for uncertificated
Securities in addition to or in place of certificated Securities, to create a
Series and establish its terms, to remove a Guarantor which, in accordance with
the terms of the Indenture, ceases to be liable in respect of its Guarantee, or
to make any other change, provided such action does not adversely affect the
rights of any Holder.
10. Successor Corporation.
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When a successor corporation assumes all the obligations of its
predecessor under the Securities and the Indenture, the predecessor corporation
will be released from those obligations.
11. Trustee Dealings With Company.
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American Stock Transfer & Trust Company, the Trustee under the
Indenture, in its individual or any other capacity, may make loans to, accept
deposits from, and perform services for the Company or its affiliates, and may
otherwise deal with the Company or its affiliates, as if it were not Trustee.
12. No Recourse Against Others.
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A director, officer, employee or stockholder, as such, of the Company
shall not have any liability for any obligations of the Company under the
Securities or the Indenture or for any claim based on, in respect of or by
reason of, such obligations or their creation. Each Holder by accepting a
Security waives and releases all such liability. The waiver and release are
part of the consideration for the issue of the Securities.
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13. Discharge of Indenture.
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The Indenture contains certain provisions pertaining to defeasance,
which provisions shall for all purposes have the same effect as if set forth
herein.
14. Authentication.
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This Security shall not be valid until the Trustee signs the
certificate of authentication on the other side of this Security.
15. Abbreviations.
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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 Gift to Minors
Act).
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ASSIGNMENT FORM
If you the Holder want to assign this Security, fill in the form
below:
I or we assign and transfer this Security to
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(Insert assignee's social security or tax ID number)
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(Print or type assignee's name, address, and zip code)
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and irrevocably appoint
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agent to transfer this Security on the books of the Company. The agent may
substitute another to act for him.
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Date: Your signature:
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(Sign exactly as your name appears on the
other side of this Security)
Signature Guarantee:
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Signature must be guaranteed by participant in a recognized
Signature Guarantee Medallion Program (or other signature
guarantor program reasonably acceptable to the Trustee)
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[FORM OF NOTATION ON SECURITY 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 Securities, whether at maturity, by acceleration or otherwise,
the due and punctual payment of interest on the overdue principal and interest,
if any, on the Securities, to the extent lawful, and the due and punctual
performance of all other obligations of the Company to the Holders or the
Trustee all in accordance with the terms set forth in Article Nine of the
Indenture and (ii) in case of any extension of time of payment or renewal of any
Securities 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 Security by accepting a
Security waives and releases all such liability. This waiver and release are
part of the consideration for the issuance of the Guarantees.
Each holder of a Security by accepting a Security 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.
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The Guarantee shall not be valid or obligatory for any purpose until
the certificate of authentication on the Securities 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:
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Title:
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